There’s money in housing

Hugh Carter is a wealthy plumber.  Just like the character in David Chilton’s financial guide, The Wealthy Barber, he did it using a simple and straightforward strategy.

Carter made his fist real estate investment at 18.  “I had just started working at a shake mill and I knew some day I’d want to build a house,” said Carter, who lives in Esquimalt.  “So I took all my money and the baby bonus that my parents had saved for me and I put it all down on a lot for $6,500.  I had it for 15 years and sold it for $27,000 and paid off my house.  So I was a home owner – mortgage-free—at 33.”

Close to 20 deals later, he has made close to $1 million in real estate.  Now he wants to tell others about it.  His new self-published book, Hidden Profits in Your Backyard, is available at local bookstores.

The formula is simple, he says, and there are thousands of opportunities in Victoria.  His $20 book outlines the 12 types of residential lot developments from panhandles to stratas, and offers tips on what to expect when you attempt to subdivide or rezone.

Carter’s trades experience helped him get his start.  A journeyman plumber and pipefitter, during slow periods when he was laid off at Yarrows Shipyard, he bought houses and fixed them up.  The 10-year period from the mid-1980s to the mid-1990s was when he made most of the deals.

The gregarious author, 48, is also an army reservist who has completed two tours of duty as a peacekeeper in the Middle East.  A few years ago he qualified as a mortgage broker as well.

Knocking on doors to look for sellers has never worked for him.  Instead he sat down with his zoning maps and MLS catalogues and started looking for buys.  Now with the MLS online, research is even easier, he says.

The process isn’t always smooth.  A few years ago, he bought a duplex, selling it again in three weeks for $20,000 more.  On the deal’s closing date, the tenant burned the place down.  “I had already let the new owner go in to do some renovating.  What a mess,” he said.  He ended up with $10,000 profit after insurance costs.

Because of another bad experience with destructive tenants, he avoids revenue property as an investment, preferring to make money on the resale value of the house.  Secondary suites are an exception, he argues, as long as you are not an absentee landlord.  Also, residential mortgage money is easier to come by than a regular investment loan, says Carter.

Carter’s approach isn’t all business.  He owns a Gorge Road motel that he hopes will become a social housing development.  A director on the Burnside Gorge Community Association, he already donates a few units in his motel for emergency social housing.

Despite the economic uncertainties, he believes there are more opportunities than ever in real estate.  The boom is due to several trends, says Carter.  “Thirty years ago there was the trend of Canadians going south for the winter.  There’s another trend where folks from the southern United States are coming here (for the summer) because of our moderate weather.”

Carter has advice for parents who want to help their adult children.  “What’s our greatest asset?  Our children,” said Carter.  “So take the equity out of your house, give it to your kids now and let them do a project like this.  All of a sudden after two projects they have a house paid off, they put a suite in the basement and that’s the equivalent of a pension.

While ornery neighbours or flip-flopping municipal councilors can add uncertainty to the process, he believes real estate is a solid investment.

 “It’s almost risk free.  The precedent has already been established,” he said.  “The only down side is that you end up owning a house.”