Western Expresso

[steveosnyder]

Does anyone here know about assessment? For some unimportant reason I was looking at the property value map on the City of Winnipeg website and noticed something strange -- 681 and 691 Corydon. 681 is Saffron's restaurant and next door at 691 is the new place, Teo's and Mano A Mano. If they are both restaurants, and they both have approximately the same floor area, etc. why would Teo's/Mano A Mano have an assessed value about 17% higher when it is actually half the land area?

This just doesn't make sense to me... Saffron's takes up valuable (or presumably valuable) land on a highly valued strip, but this isn't reflected in the value of the property. The Teo's lot is about 6,900 square feet, Saffron's lot is 10,000, but Teo's is $728k and Saffron's is $624k

Am I the only person that is confused by this?

[drew]

^ the assessment of properties by the City is always estimated until such time as a property is put on the market and then purchased.

At that point, the assessed value should change to what the purchase price of the property was.

In this case, Saffron's has been there forever, so the assessed value is just an estimated increase year to year. And if the restaurant beside them is new, that would mean the assessed value is based on a recent purchase price.

Saffron's assessed value would be much higher if they ever decided to put that gold-mine up on the market.

[1ajs]

Winnipeg Free Press - PRINT EDITION
Breaking down the Bauhaus
Artist revisits high modernism in detailed miniatures and large-scale paintings
By: Steven Leyden Cochrane
Posted: 11/28/2013 1:00 AM



Though it's easy to overlook, the influence of Bauhaus design is evident in everything from apartment blocks and public sculpture to sans-serif typefaces and flat-pack furniture. Operating in Germany between the wars, the school championed a unified, modernist esthetic, favouring clean lines and stark functionality, one motivated equally by practicality and idealism.
Beyond architecture and design, the school sought to erase boundaries among disciplines, inviting distinguished visual artists such as Piet Mondrian, Wassily Kandinsky and Paul Klee to serve as lecturers. In Re: Build Them, his exhibition at the University of Winnipeg's Gallery 1C03, Ian August draws examples of Bauhaus and Bauhaus-inspired architecture back into the realm of fine art, investigating how the structures and the ideas behind them have held up over time.

http://www.winnipegfreepress.com/art...233724501.html

[steveosnyder]

Originally Posted by drew

^ the assessment of properties by the City is always estimated until such time as a property is put on the market and then purchased.

At that point, the assessed value should change to what the purchase price of the property was.

In this case, Saffron's has been there forever, so the assessed value is just an estimated increase year to year. And if the restaurant beside them is new, that would mean the assessed value is based on a recent purchase price.

Saffron's assessed value would be much higher if they ever decided to put that gold-mine up on the market.

Even back for the 2012 assessment (which would have been done in 2011) the next property over was more -- and this was a time when it was still the Red Cactus/that pizza joint. Also, I don't think the property changed hands, just the people who leased the property. The owner is still the owner.

[CoryB]

Originally Posted by Riverman

Heard this week that the Canadinns at HSC is losing a lot of money.

I think this is a case of room costs being too high. People needing a place to stay as a loved one is in hospital are often on an unplanned trip and looking for the cheapest place possible. In the past I know CanadInns has charged a premium for their hotels, specifically the Grand Forks property. Also, I know that a number of the flood evacuated First Nations have been housed at CanadInns properties which might be hurting the brands overall reputation.

[drew]

Originally Posted by steveosnyder

Even back for the 2012 assessment (which would have been done in 2011) the next property over was more -- and this was a time when it was still the Red Cactus/that pizza joint. Also, I don't think the property changed hands, just the people who leased the property. The owner is still the owner.

But Saffron's has never changed as long as I can remember, so the assessed value is going back probably 20 or 30 years.

Even if the neighboring property changed hands just once or twice in that time, that would explain why the City has the two assessed so differently.

[esquire]

Originally Posted by CoryB

I think this is a case of room costs being too high. People needing a place to stay as a loved one is in hospital are often on an unplanned trip and looking for the cheapest place possible. In the past I know CanadInns has charged a premium for their hotels, specifically the Grand Forks property. Also, I know that a number of the flood evacuated First Nations have been housed at CanadInns properties which might be hurting the brands overall reputation.

I'm sure the model works for them, but I don't get how CanadInns fills their hotels at the rates they charge. They essentially sell a Holiday Inn Express product at Westin prices.

For example, looking at hotels.com for a random 4-day period in February, the top 10 most expensive hotels in town are:

1. Delta $174
2. Fairmont $173
3. Inn at the Forks $171
4. CanadInns HSC $169
5. CanadInns Polo Park $161
6. Fort Garry Hotel $159
7. Fairfield Inn $155
8. CanadInns Express $145
9. Sandman $144
10. Hilton Suites $130

Unless there is some compelling reason that you need to stay at one of the CanadInns properties, why on earth would anyone pay that kind of money considering there are better and cheaper alternatives?

[alittle1]

Originally Posted by steveosnyder

Even back for the 2012 assessment (which would have been done in 2011) the next property over was more -- and this was a time when it was still the Red Cactus/that pizza joint. Also, I don't think the property changed hands, just the people who leased the property. The owner is still the owner.

On commercial properties, each year the City sends out Assessment information documents that show the profit and loss statement that he Owner reports. If tennants have changed and/or lease payment have gone up this reflects in the Income Statement on the property, therefore tax assessment will increase. If the property is Owner Occupied the owner can specify whatever amount he wants as the lease and or rental value the first time only. The City will then rank the lease or rental value on similar properties of like size minus the operating costs to arrive a net income value, this will become your New base rent.

However, the Owner then has the opportunity to reject the new assessed value based on different criteria the City didn't take into consideration. After a re-assessment is established, the Owner usually won't be bothered for 3 - 5 years, or unless there is a major expansion or renovation that involves building permits. If that happens, the whole process will start again until a NEW re-assessment is established on the property.

A few years ago I remarked on a property located at 53 Kingston Row that was a 2768 sq. ft home assessed at $120,000. while the surrounding properties that were lesser or similar in style/condition as the subject property were assessed at $325,000 to 524,000. The house was owned by Allan Richard Golden. You go figure that one out!

[steveosnyder]

Originally Posted by alittle1

On commercial properties, each year the City sends out Assessment information documents that show the profit and loss statement that he Owner reports. If tennants have changed and/or lease payment have gone up this reflects in the Income Statement on the property, therefore tax assessment will increase. If the property is Owner Occupied the owner can specify whatever amount he wants as the lease and or rental value the first time only. The City will then rank the lease or rental value on similar properties of like size minus the operating costs to arrive a net income value, this will become your New base rent.

However, the Owner then has the opportunity to reject the new assessed value based on different criteria the City didn't take into consideration. After a re-assessment is established, the Owner usually won't be bothered for 3 - 5 years, or unless there is a major expansion or renovation that involves building permits. If that happens, the whole process will start again until a NEW re-assessment is established on the property.

A few years ago I remarked on a property located at 53 Kingston Row that was a 2768 sq. ft home assessed at $120,000. while the surrounding properties that were lesser or similar in style/condition as the subject property were assessed at $325,000 to 524,000. The house was owned by Allan Richard Golden. You go figure that one out!

Then how does assessment work on surface parking lots? Is it a "lease" to the parking management company (PMC)? So the revenue generated by the PMC isn't in the profit/loss statement for the actual property owner?

[alittle1]

Originally Posted by steveosnyder

Then how does assessment work on surface parking lots? Is it a "lease" to the parking management company (PMC)? So the revenue generated by the PMC isn't in the profit/loss statement for the actual property owner?

If they use the Income approach to assess property values, it will be Revenue minus Expenses equals Net Income times a property type Factor equals Value. http://www.investopedia.com/terms/i/income-approach.asp

Or, they will use Comparative Property Analysis.

[steveosnyder]

Originally Posted by Riverman

Fill your boots.

If you gain equity in anything it is an investment whether it be a stock, property or a classic car. If you buy and sell homes to make money they are an investment. If you buy that same home and sit on it, it is still an investment. My home has appreciated by almost $250K since I bought it. That's not an investment?

From the dictionary:

'the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.'

Perhaps I should have said that a home isn't a smart investment... I guess it is, by definition, an investment.

First, you don't take into account the other costs of home ownership (the ones a renter wouldn't pay); home insurance, property tax, interest. Second, to liquidate your "asset" you have to sell the home or take out a line of credit. In one case you no longer have a place to live, in the other you have to pay interest. Third, it is unsustainable for home prices to out-pace wages, so you will (in the long run, the buy and hold method of living in your home) only keep pace with inflation/wages in the area.

[Riverman]

Deleted

[Riverman]

All costs of running the property - taxes, insurance, mortgage costs - are passed on the the renter. Landlords are not in the rental business for the renter.

Wise people buy a large home to accommodate a family and downsize later in life. A large chunk of the asset is returned to the homeowner, tax free. That sounds like a good investment to me.

If you consider home ownership to be a bad investment, how bad an investment is renting?

[steveosnyder]

I call buying a home and renting a cost of living. Both have their positives and negitives, but in my opinion ownership has more negitives than renting.

[steveosnyder]

Originally Posted by Riverman

All costs of running the property - taxes, insurance, mortgage costs - are passed on the the renter. Landlords are not in the rental business for the renter.

Wise people buy a large home to accommodate a family and downsize later in life. A large chunk of the asset is returned to the homeowner, tax free. That sounds like a good investment to me.

"If you can make money by owning a property and renting it, why shouldn't buying a home and living in it be considered an investment?"

Well, you make cash flow from the asset when you buy and rent. So the asset both appreciates in value and you make money from it. When you buy a house and live in it you don't get that positive cash flow so all you are left with is the appreciation in value. In both cases, in the long run the asset will appreciate at the pace of wages. If we consider some other tool (a spot welder perhaps) this asset doesn't appreciate, but it can still make you money, so ROI needs to be higher. That is why home owners can rent a property and make money, because both the asset keeps pace with inflation and they can make cash flow.

"Just buy a home that is a good size for the family you want, then when that family moves away you can downgrade."

First, this presumes your ideology won't change. I never thought I wanted kids, but now that I have one I want more. Second, this doesn't take into consideration that sometimes your circumstances change. What if I buy a home thinking "I'll have 5 kids" then suddenly I can't have children?

If I rent the whole time I can change when I feel... home ownership is not liquid.

[Riverman]

By renting you are doing two things: providing a roof over your head and making money for someone else. I'm doing the same as you except making money for myself alone.

That's the fact Jack.

[drew]

Originally Posted by Riverman

By renting you are doing two things: providing a roof over your head and making money for someone else. I'm doing the same as you except making money for myself alone.

That's the fact Jack.

Owning a house is usually a safe investment, but not necessarily a good one.

The "owning is better than renting" argument based solely on rent versus mortgage is a little over simplified.

Consider that by renting you simply pay the rent, some/all utilities, tenants insurance.

Consider that by owning you pay mortgage (principle and interest), (much higher) house insurance, property tax, and you need to factor in maintenance and upkeep.

The only "investment" you make with owning a house is the principle part of your mortgage payment. Provided your house increases in value.

If you decide to simplify your life and rent, and invest the same per month that your principal only payment would be towards your mortgage - how are you any worse off?

I would also argue that "throw away" costs for owning and renting are very similar month to month, especially once you factor in the cost of interest you "throw away" to the bank for your mortgage.

[steveosnyder]

Originally Posted by drew

I would also argue that "throw away" costs for owning and renting are very similar month to month, especially once you factor in the cost of interest you "throw away" to the bank for your mortgage.

The other thing I hear all the time: "my family bought their house in 1983 for $35k, it's worth $1 million now, man did they make a good choice!" But they forget the fact that the family paid interest.

Sure, that works out to around a 12% return per year, which isn't that bad, but in the 80's interest rates were between 13-20%, taking away a lot of that "profit".

[esquire]

Originally Posted by steveosnyder

The other thing I hear all the time: "my family bought their house in 1983 for $35k, it's worth $1 million now, man did they make a good choice!" But they forget the fact that the family paid interest.

Sure, that works out to around a 12% return per year, which isn't that bad, but in the 80's interest rates were between 13-20%, taking away a lot of that "profit".

If they didn't pay interest and had to pay rent instead, how would they have been any better off? At least the person paying interest eventually gains a significant paid-off asset to show for their troubles.

I have heard a number of people espouse the theory of "rent don't buy", but I haven't seen any real-life Winnipeg examples of someone coming out ahead that way. One of my friends is an accomplished financial professional and he rented right through the 2000s on that theory... he now openly admits it was a mistake to not buy into the market before the jump in prices.

[drew]

Originally Posted by esquire

If they didn't pay interest and had to pay rent instead, how would they have been any better off? At least the person paying interest eventually gains a significant paid-off asset to show for their troubles.

I have heard a number of people espouse the theory of "rent don't buy", but I haven't seen any real-life Winnipeg examples of someone coming out ahead that way. One of my friends is an accomplished financial professional and he rented right through the 2000s on that theory... he now openly admits it was a mistake to not buy into the market before the jump in prices.

You cannot count on the jump in prices that the local real estate experienced here. Just the same as you probably cannot predict stock prices jumping or falling drastically. Hind site is always 20/20.

Anyway it still comes down to how you invest your money. If you own, you are investing just the PRINCIPLE from your mortgate payment each month. Thats it. For me personally, out of the $1500 each month (give or take) we spend on "owning" our house, maybe $200 or $300 is a direct investment. The rest is gone, with nothing to show for it.

If you rent, and are smart with your money, you could just as easily invest that same sum of money into an RRSP, etc. and still come out the same in 25 years.

Home ownership is investing for dummies. But don't think for a second you couldn't have just as safe or as good an investment going a different route.