Severing Toronto Properties

I wrote a blog a couple of months back stating that the quick flip was dead. Well, it still is, however it did get me thinking about how can a small residential investor make money in today’s Toronto real estate market. There are always opportunities it’s just knowing where to look.

The History

Most Toronto neighbourhoods have been establishing themselves over the entire 20th century. Here was a period where homes were built on lots that were larger than what we are seeing today. It’s not uncommon to see frontages in older areas of 50, 60 or even as high as 100 feet. These lots are exactly what today’s smart housing investors are hunting for as they are perfect for severing. But not so fast…not all neighbourhood lots are created equal.
A couple of years ago I sold a property which had a 50 foot frontage and the original home was so perfectly located that the buyer was able to sever it into two 25 foot lots, demolish the double garage, build a new home and keep the original property. He was then able to sell not only the original home but the new build as well for an excellent return. Even if he had decided not to build he could have sold the severed lot, kept the original home and still made money. Not all severed properties work out so neatly, but it does illustrate the process.

The Process

Most severances don’t work this way and in almost all cases it will be required to tear down the original structure. Now, before you go running out to hunt for 50+ foot frontages there is a key component you have to know. Just because the lot has a huge frontage it will not be considered for severing if small lots are not already part of the existing local planning. Take our 50 foot as an example, so if the smallest on the street is 30 feet then you will never get permission for two 25’s. I have seen more Toronto Committee of Adjustment meetings shoot down guys who walked in with 100 foot frontages, ask it to be split into two 50’s…if there is no local 50 foot you will be declined. So the short answer, before you buy check the neighbouring frontages as they will dictate if it is doable.

The Costs

Severing a property is not cheap as you can expect to spend anywhere from $30,000 to $50,000 for all the required levies (school and transportation), taxes, sewer and water hook ups etc. But if you can then turn around and have a legal building lot that can be sold for land value then it is worth the trouble.
As a full time realtor I am always looking for opportunities for clients. Money making opportunities are out there, you just need to know where to look.