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Condominiums on near Jarvis St. And Queens Quay East on March 10, 2021.Fred Lum/the Globe and Mail

Jamal Hejazi, an Ottawa economist in the private sector, has no work pension plan. So, he saved and invested in income properties to provide for his old age.

Then COVID-19 struck.

The economy plunged. People lost their jobs in droves. Many stopped paying rent, and as the months went by, the losses piled up for property investors.

Mr. Hejazi, 49, had acquired close to 20 properties over the previous 15 years. Not only were they assembled to support his retirement but they were also part of a succession plan for his children.

However, fortunately for him, his portfolio of investment properties appears to have emerged relatively unscathed from the COVID-19 vortex. “My rental income has held up well,” he told The Globe and Mail. “I attribute it to my screening process for tenants.”

“Some landlords worry about one or two months of vacancies, so they hurry the vetting along,” Mr. Hejazi said. He takes pains to dig deep into references, pay stubs, applicants’ online profiles and other aspects. But the most important thing is taking the time and expense to pull credit scores. They are the best predictor of who will be a good tenant, he finds.

Yet, COVID-19 has adversely affected his real-estate investments on another front.

He was planning to add more holdings to his collection of condos, townhouses, single-family dwellings and land. But listings have become pricey in 2021 because of the scramble by Canadians to buy houses after interest rates had dropped so much in 2020.

There are two types of property investors, according to Mr. Hejazi. One type is looking more for capital gains, and the other is looking more for good “cap rates” – net income as a percentage of property value. “I am in the latter camp, since my investing is long term for retirement.”

Last year, he canvassed his network of realtors, property managers and other industry contacts to find some value-priced opportunities. “I get good ideas from them because they are the larger operators in their area, so they pick up lots of info from their wide dealings,” he said.

“There were no urban properties where cash flow covered the cost of carry adequately. But in areas outside the city, I heard of some good cap rates, and made a few purchases in 2020.”

His last rental acquisition was in December, when he grabbed a deal in Pembroke, Ont. Rented at $1,900 a month, the property was scooped up for $270,000. He turned down nine prospective tenants until he signed two professionals from a Toronto-based chartered accounting firm. Mr. Hejazi said his cap rate will be 6 per cent to 7 per cent depending on how estimated expenses, such as maintenance, play out.

About the same time, he picked up some parcels of land zoned for duplexes, with plans to put up prefab houses. “Buying small lots in rural areas and building on them is more cost-effective than buying urban homes. With prefabs I can use my control over construction to keep costs down.”

Mr. Hejazi has been able to get cap rates “well in excess of 6 per cent” throughout his investing. In previous years, he could find good bargains in the urban centres. More recently, he earns these high cap rates by buying in the more rural or smaller communities.

He plans to keep avoiding urban areas in favour of outlying areas – although the window of opportunity is getting smaller, even out in town and country. Brokers are now telling him that they are seeing more people coming in from Toronto and bidding for those more remote properties.

Because the banks don’t lend to investors with more than three to six residential properties, he has become a member at credit unions to obtain financing to keep growing. Their loan rates have been about a percentage point higher but they are more receptive to investors who are developing community businesses and properties. This is especially true of the smaller credit unions.

A current lender, Motor City Community Credit Union, is located in Windsor, Ont., where several of his properties are located. He likes that Motor City assesses his properties on the basis of their profitability rather than applying “cookie-cutter” formulas.

Over all, COVID-19 hasn’t hurt his property portfolio much. Indeed, it may have delivered a net benefit. His rental income is still steady, which he says allows him to pay down a good portion of his mortgages every month. And while exorbitant real-estate prices have slowed his growth plans, they have significantly increased the value of his existing properties. Through selective property sales during his retirement, he plans to use some of the gains for future living expenses.

Larry MacDonald can be reached at

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