Presale Condo Investment : BrentwoodFIVE vs Gilmore Place

[connect2source]

cornholio, my responses were in reply to GilmoreStations request for advice. I base my advice on a vast amount of past experience but don't predict future values or future rates of interest. I highly recommend real estate purchases, be it pre-sale or re-sale as long-term investments and 40 years of data clearly illustrates long-term investments in real estate in Greater Vancouver produce solid gains.

I don't recommend flipping a pre-sale upon completion for many reasons including the fact that it doesn't fall within my long-term strategy and it's typically a terrible time to sell as many others are doing the same which means a lot of competition and the risk of a 'distress sale' comparable.

Holding a real estate asset for 5 years or more will very likely insulate you from a correction as it did for my clients in 2008.

If you want a Realtor who recommends a short time or 'flip' strategy, you're talking to the wrong guy.

[Pinion]

Wasn't Vancouver's condo slump closer to 2012 than 2008? That's the only time my condo went way down anyway.

Not that I disagree with your point.

[djmk]

If I had to make the choice, I would put the money at Brentwood. It is much closer to shopping amenities, entertainment, better transit options north and south, BCIT.

Gilmore is not pretty. There is the transfer station, industrial park to west, home depot to the south, potential flooding with the creek behind it.

[connect2source]

Originally Posted by Pinion

Wasn't Vancouver's condo slump closer to 2012 than 2008? That's the only time my condo went way down anyway.

Not that I disagree with your point.

Good point, yes, in the city we saw a brief price drop, more in market value rather than assessed value, then mostly recovered in about 12-18 months, from 2011 to 2013 we saw prices remain flat, assessments dipped a bit but market value stayed pretty much the same for about 2-3 years, limped forward a bit in 2014 then took off late 2014.

[rickvug]

If I were you and looking for a condo investment I'd actually go for the exact opposite end of the spectrum. I'd go for really old buildings near rapid transit where you can get units for $200k (one bed) to $350k (two bed). Do the unit up nicely, up the rent to top of market, and suck up the higher fees. I bet you'll be cash flow positive. You also won't be hit much by depreciation as that's all baked in. It is the land and future possibility that is the real potential windfall over a long time horizon (I bet you'd do nicely regardless). If you're near Skytrain - or where Skytrain will be in the case of Broadway - your strata can look to sell in the future for highrise or 6 story wood-frame building. Given land values and the selling prices on new construction I think you'll see a lot more of this in the future. Hell, look to build up a position in a single building over time to help get to that magical 80% mark. Here's two good introductory reads: http://vancouversun.com/storyline/wa...ew-legislation and https://www.biv.com/article/2017/1/f...unanimous-vote.

Disclaimer: Note that I'm not personally doing this ATM but it has crossed my mind. I'd want to do a lot more of my own due diligence first. Run the spreadsheets and make sure you're doubly sure before you jump in. Watch out for value traps where you'd be hit with large assessments.

[cornholio]

Originally Posted by connect2source

cornholio, my responses were in reply to GilmoreStations request for advice. I base my advice on a vast amount of past experience but don't predict future values or future rates of interest. I highly recommend real estate purchases, be it pre-sale or re-sale as long-term investments and 40 years of data clearly illustrates long-term investments in real estate in Greater Vancouver produce solid gains.

I don't recommend flipping a pre-sale upon completion for many reasons including the fact that it doesn't fall within my long-term strategy and it's typically a terrible time to sell as many others are doing the same which means a lot of competition and the risk of a 'distress sale' comparable.

Holding a real estate asset for 5 years or more will very likely insulate you from a correction as it did for my clients in 2008.

If you want a Realtor who recommends a short time or 'flip' strategy, you're talking to the wrong guy.

You did not answer my question.

What will be the effect on re sale prices of pre-sale units bought today, when upon completion interest rates will be around 4 points in Canada, as opposed to the 0.5 points today?

We are in the early stages of normalization, this is not news, it has been well known that this will happen since 2007. It was supposed to happen 2012ish, thery pushed that back to late 2014, then to 2015. Then more delays. Now the wheels have begun to turn. The US is at 1 point today and will almost certainly have 2-3 more rises this year alone. They are shooting for 4 points as a goal right now. good paper

[whatnext]

Originally Posted by rickvug

If I were you and looking for a condo investment I'd actually go for the exact opposite end of the spectrum. I'd go for really old buildings near rapid transit where you can get units for $200k (one bed) to $350k (two bed). Do the unit up nicely, up the rent to top of market, and suck up the higher fees. I bet you'll be cash flow positive. You also won't be hit much by depreciation as that's all baked in. It is the land and future possibility that is the real potential windfall over a long time horizon (I bet you'd do nicely regardless). If you're near Skytrain - or where Skytrain will be in the case of Broadway - your strata can look to sell in the future for highrise or 6 story wood-frame building. Given land values and the selling prices on new construction I think you'll see a lot more of this in the future. Hell, look to build up a position in a single building over time to help get to that magical 80% mark. Here's two good introductory reads: http://vancouversun.com/storyline/wa...ew-legislation and https://www.biv.com/article/2017/1/f...unanimous-vote.

Disclaimer: Note that I'm not personally doing this ATM but it has crossed my mind. I'd want to do a lot more of my own due diligence first. Run the spreadsheets and make sure you're doubly sure before you jump in. Watch out for value traps where you'd be hit with large assessments.

Interesting, I posted this on another thread but it's worth posting here. It's in regards to Toronto but I imagine it's similar here:

..The number crunching also reveals that approximately 95 per cent of investment properties purchased in 2016 are losing money every month, which suggests that the buyers are counting on price appreciation to produce a profit....

http://www.theglobeandmail.com/real-...ticle34380897/

[Jebby]

Are you paying cash or taking out a mortgage?

How long as you thinking of holding for?

[GilmoreStation]

Definitely mortgage to take advantage of the power of leveraging. I have 15% down for $625K at the moment in liquid assets. By buying presale, i can save money during the 5-year construction timeframe.

[Jebby]

Originally Posted by GilmoreStation

Definitely mortgage to take advantage of the power of leveraging. I have 15% down for $625K at the moment in liquid assets. By buying presale, i can save money during the 5-year construction timeframe.

Will monthly rent even cover the mortgage+property taxes+other taxes?

[WarrenC12]

Originally Posted by GilmoreStation

Definitely mortgage to take advantage of the power of leveraging. I have 15% down for $625K at the moment in liquid assets. By buying presale, i can save money during the 5-year construction timeframe.

I'm not sure how you "save money" over the 5 years given:

1. the developer has that money (15% of $625k = $93k), you don't have it to invest and make $3-4k/year easy on dividends.

2. if property values drop and your place is only worth $500k at completion, you're forced to complete at $625k or give away your deposit.

3. you still have to live somewhere for 5 years, ie: rent.

I'm sure you've considered these things, but by entering into a presale agreement, you're taking on risk. Just like the developer is by buying land and building expensive condos in this market.

If I would have bought 2 presales instead of 1, I would have been able to flip 1 and have live in the other mortgage free. But hindsight is 20/20, and when I was signing the pre-sale agreement, I had to be comfortable completing the sale at the agreed price and living with the expected mortgage payment forever.

[Alex Mackinnon]

Originally Posted by GilmoreStation

Definitely mortgage to take advantage of the power of leveraging. I have 15% down for $625K at the moment in liquid assets. By buying presale, i can save money during the 5-year construction timeframe.

"The power of leveraging" is a kind way of saying being indebted as hell.

You are aware that if the condo prices slide back down to 2014 levels you'll be way underwater thanks to the "power of leveraging". If they normalise to historical average levels, you'll probably need to come up with another down payment just to keep your mortgage.

You may as well be planning to buy Bre-X shares on your visa card.

[GilmoreStation]

Originally Posted by WarrenC12

I'm not sure how you "save money" over the 5 years given:

1. the developer has that money (15% of $625k = $93k), you don't have it to invest and make $3-4k/year easy on dividends.

2. if property values drop and your place is only worth $500k at completion, you're forced to complete at $625k or give away your deposit.

3. you still have to live somewhere for 5 years, ie: rent.

I'm sure you've considered these things, but by entering into a presale agreement, you're taking on risk. Just like the developer is by buying land and building expensive condos in this market.

If I would have bought 2 presales instead of 1, I would have been able to flip 1 and have live in the other mortgage free. But hindsight is 20/20, and when I was signing the pre-sale agreement, I had to be comfortable completing the sale at the agreed price and living with the expected mortgage payment forever.

There is no way you will ever see any 2-bedroom condo that is less than 5 year old near transit in the 500's ever again in Burnaby (unless if it's super close to a cemetery)

Nor will you ever see any 1-bedroom in the 300's for buildings under 5 year old near skytrain in Burnaby ever again

[Klazu]

Originally Posted by GilmoreStation

There is no way you will ever see any 2-bedroom condo that is less than 5 year old near transit in the 500's ever again in Burnaby. Nor will you ever see any 1-bedroom in the 300's for buildings under 5 year old near skytrain in Burnaby ever again.

Never again? Now that's optimism.

[VarBreStr18]

If indeed the long anticipated BIG ONE happens in BC , causing widespread destruction. Then nobody wants to live in Vancouver, property value plummets.... condo will be $300000 or less again.

[GilmoreStation]

Money is rapidly losing value every year, your $500,000 won't buy much in 5 years (maybe a townhouse in Langley / Abbotsford?) after these two condo projects are completed.

[Pinion]

Originally Posted by VarBreStr18

If indeed the long anticipated BIG ONE happens in BC , causing widespread destruction. Then nobody wants to live in Vancouver, property value plummets.... condo will be $300000 or less again.

Or if interest rates go up by 1%.

[rickvug]

Originally Posted by GilmoreStation

Money is rapidly losing value every year, your $500,000 won't buy much in 5 years (maybe a townhouse in Langley / Abbotsford?) after these two condo projects are completed.

Please define rapidly for me.

[retro_orange]

Originally Posted by rickvug

Please define rapidly for me.

I think he's living in the same fantasy land where China posts over %7 growth year over year and some still believe it but with little to back it up these days.

#alternativefacts

[cornholio]

Originally Posted by GilmoreStation

There is no way you will ever see any 2-bedroom condo that is less than 5 year old near transit in the 500's ever again in Burnaby (unless if it's super close to a cemetery)

Nor will you ever see any 1-bedroom in the 300's for buildings under 5 year old near skytrain in Burnaby ever again

Let me put on my logic hat.

I think you just showed your cards. Your agenda here is not to get advise but rather to give it...

And why would someone give advice like this when not solicited? In sneaky way on-top of it.