Hamilton real estate flippers bring ‘hoarding house’ back to life

Alex Pal wore a full Hazmat suit to step inside the two-storey brick home in Hamilton's Crown Point West neighbourhood for the first time.

Called one of the worst cases of hoarding in Hamilton" by CHCH TV, the house on Kensington Avenue North was featured in an evening news segment last summer. His team acted fast.

They identified the house through online searches and dropped off a business card at the owner's doorstep on behalf of Pal Property Solutions. Pal said the owner called him back within 10 minutes.

Pal launched the Hamilton-based real estate business that he now runs with his wife, Kaely, in 2014. Their five-person team specializes in property redevelopment, especially for distressed homes and buildings, and has worked on dozens of homes in the Golden Horseshoe area.

The Crown Point flip eclipsed what they expected to make in Hamilton's pandemic housing market: the owner sold the property to Pal's company for about $150,000, he said. The renovation work cost another $150,000. According to land registry documents, the property sold for $645,000 in January.

The properties where we're buying are not ones that we would be competing against with first-time homebuyers, for example, or [those] downsizing or upsizing," Pal said. The profit margin on this house was an anomaly ... It doesn't set the right expectations" for others looking to get into the business, he said.

Pal's team is usually able to walk through a property and inspect it prior to making an offer. In this case, they went in blind because of the mounds of garbage, feces, and rats in the home, he said, with garbage removal filling 28 dumpster bins at a cost of more than $20,000 for cleanup alone.

The three-bedroom home was gutted to make way for extensive upgrades to the interior framing, insulation, electrical, plumbing, and a new roof outside. Flipping distressed homes tends to be an emotional roller-coaster for neighbours, he said.

At the beginning, they're kind of hostile because obviously it's a disruption to their daily lives. Then on the back end ... you let them finally walk through it, and they're just ecstatic," Pal said.

But the polarizing effects of gentrification are not lost on Pal, who said his line of work - especially in a pandemic real estate market - can feel like a double-edged sword when investors get blamed" for rising house costs. On one hand, he noted that flipping distressed properties adds more livable housing supply to the market, and on the other, gentrification is linked to less affordable options.

It is possible to reconcile the two with policy interventions at all levels of government - from funding the construction of affordable housing at the federal level; to closing the loopholes on rent controls that lead to renovictions at the provincial level; to municipalities using publicly-owned land to build rent-geared-to-income housing, said Brian Doucet, a professor at the University of Waterloo's School of Planning.

The root issue is that in Canada, we think of housing both as a use value and exchange value. It's a home, it's a place where we live. But it's also a commodity, it's a speculative investment ... and you can't have both succeeding," said Doucet, who also holds a Canada Research Chair in Urban Change and Social Inclusion. He is leading a four-year study on gentrification and the Toronto-to-Hamilton migration, and how it is shaping neighbourhoods and the city.

Larry Pattison, a member of Crown Point Community Action Team and editor of its online publication, The Point, appreciates rebuilds that maintain the historic bones" of neighbourhood homes while adding to their lifespan.

Pattison, a former trustee at Hamilton-Wentworth District School Board, said he bought his Crown Point two-storey home for $154,000 in 2012, noting that a bungalow across the street recently sold for $550,000.

The only tough thing is to see some of our families being displaced because they can't afford the rent anymore," he said.

On West Avenue North, in the Landsdale neighbourhood, Pal's team is working on renovating another property, he said. The investors he works with are his clients, and by extension, he thinks of future tenants the same way and tries to cater the renovations to a home that they would be proud to live in.

I'm not sure if a lot of investors see it that way, and I hope that it does come back," he said.

Vjosa Isai is a reporter at The Spectator covering Hamilton-based business. Reach her via email: visai@thespec.com.