This case study illustrates the lucrative opportunities that value-add buildings present for real estate investors. When looking to acquire a value-add property, Equiton looks for older buildings in good locations that can be purchased below market value with opportunities to extract value and increase revenue. For these reasons, Wellington Place was the perfect building to add to our portfolio.

Wellington Place – A Prime Value-Add Property in Hamilton, Ontario

Wellington Place, the largest property in our portfolio, is a 1970’s multi-residential building with 364 units located in Hamilton, Ontario. Through our market research and due diligence process, we discovered that it’s located in an up-and-coming neighborhood, minutes from transit, the downtown core, the First Ontario Centre, close to hospitals and a short commute to McMaster University. There are also many new development opportunities popping up in this urban area.

We purchased this property off market and 10% below market value for $54.3M in March 2021. During our walkthrough, we noticed it needed repairs, renovations, and many updates – but we saw what others didn’t: the potential for dramatic increases in revenue and value!

Maximizing Returns: Adding Value to Wellington Place

We unlocked the hidden value of the building by discovering and optimizing underutilized spaces. We renovated an area on the first floor to create a new rental suite and transformed another space into a new commercial unit. Together these reclaimed spaces bring in approximately $4,000/month in rent, adding an estimated $1M in value to the property.

The rent of one unrenovated suite at Wellington Place was $1,416. After our renovations and improvements, we could rent that same suite for $1,925, an increase of 36%.

Increasing Revenue and Value: A Success Story in Real Estate Investment

Equiton initially invested $16M into Wellington Place, plus an additional $5.5M in capital expenditure and major improvements in the first 2 years of our 5-year plan. Improvements included a new roof, new windows, upgraded balconies, a new heating system, retrofitted lighting for environmental efficiency and the list goes on! After these improvements, Wellington Place was appraised for $84.3M – that’s an increase of $30M from the purchase price and an incredible return on investment of 139% in 2 years!  This is the power of a value-add building.

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