The Chase: an investor finds the perfect money-making east end property
The Buyer: Jeff Reed, the 40-year-old owner of the real estate investment firm Priority Management.
The Story: Reed is no stranger to the real estate market— he makes his living renovating and renting houses, and he’s taken on four such projects in the past 18 months alone. He likes the east end because there are still plenty of affordable pockets in rapidly gentrifying neighbourhoods. The housing stock is old, so his business concentrates on major overhauls, which can scare off most amateurs. For project number five, he was looking for something he could really sink his tools into: a place with a low basement to excavate, a bungalow to pop a second storey onto or a badly configured space in need of gutting. He set his purchase budget at $500,000, planning to spend about $200,000 on renovations. The idea was to make a great home for somebody else—and a tidy profit for himself and his investors.
Main Street (near Danforth). Listed at $399,000.
This six-bedroom semi close to the Main subway station had been damaged by a basement fire in February 2011, but it had good bones—exactly the kind of place Reed was looking for. However, because the house was technically uninhabitable—it had no working bathroom or kitchen—the bank refused to finance it, so he had to pass. He still hopes to find other investors and return with an offer.
Hamilton Street (near Broadview and Queen). Listed at $699,900.
Reed’s agent, Andrei Angelkovski, showed him this 2,500-square-foot eight-plex of tiny, rundown bachelors. Reed figured he could quickly revamp the apartments and raise the rent. But a second viewing revealed faulty wiring throughout (he’d have had to open up all the walls), and the asking price was already beyond his budget. He decided the extra costs would eat into his profit too much, and he walked.
Wheeler Avenue (near Queen and Woodbine). Listed at $439,900, sold for $387,500.
This unusual, 1,000-square-foot, two-bedroom basement-less house in the Beach caught Reed’s eye immediately. It had been on the market for a month, and the owner already had a new place. Reed asked her how low she would go. Desperate, she said $400,000, which he offered on the spot. The seller’s agent balked, hoping another offer would materialize. One did, briefly, but when it fell through the seller got back in touch with Reed, saying she’d take the $400,000 after all. He countered at $385,000. She demanded a face-saving $2,500 more, and the place was his. Reed is in the process of adding a third floor. He plans to rent out the new, 1,450-square-foot house, furnished, for about $5,000 a month, and sell it in a few years.