Skip to main content
Welcome to
super saver spring
offer ends april 20
save over $140
Sale ends in
$0.99
per week for 24 weeks
Welcome to
super saver spring
$0.99
per week for 24 weeks
save over $140
// //

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.

Story continues below advertisement

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.

Story continues below advertisement

“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.

Story continues below advertisement

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 mccolumn@yahoo.com

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies