New condos being built in Downtown...worth it?
The wife and I were looking at perhaps buying one or two units to hold as pre-builds investments. We've seen adverts for tivo and the one right on the water. Judging from what has been sold (Undoubtedly bought up by the developers and realtors themselves), they seem to be in great demand.
We've been doing this in Vancouver (buying condos pre-build, and then selling right before turnkey...flip before even "owning"), and it's turned out pretty good since there is always demand for this sort of thing out there,
however in nanaimo? I've only been back for 3 years, so I don't know how the Condo market really is doing...and if these new ones going up will be worth investing in, let alone having the consumer base to sell to.
To me, the success of the condo development hinges upon the gentrification of the downtown core, and the revitalization of the NNC area...to which, it seems like development may drag on and on...
I would be extremely careful of flipping in the current market. The US market has already started to flatten, and I have been involved in real estate deals for some time. I don't go for flipping houses though, as that dings you with taxes and other risks. I am always on the lookout for ROI and passive income on real estate.
In this market, I have not found a single home on the Nanaimo market in the last 2 years that provided a resonable ROI for rental purposes, and given that the current market forces are being driven largely by Canada's energy companies (high prices of oil etc.) I would not touch it.
Especially given that in the last year my house gained 36% value. 36%!!!! That is insane, the normal number is around 4%. There will come a point where the market turns down as it has in the US. The "hot" sectors in the US have started running into trouble, and the regular sectors are flat. In that kind of market, flipping is a very risky venture because you could be left holding a property that you cannot flip. This is exactly what happened in the 1970s and early 80's (when there was ALSO an energy crisis, and the same point in the business cycle as we are now.)
But that is my take. I only look to purchase real estate if it provides a 15% or greater ROI. If not, I won't touch it.
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Last edited by Mr. Flibble; 08-16-2006 at 02:23 PM.
15% ROI is pretty high. Are we talking commercial or residential?
Both. 15% ROI is actually fairly low if you manage it right.
I have seen 25% ROI and greater. But not in this market, not a chance.
the market is slowing down here too...slowly but surely it is moving out of a seller's and into a buyer's market, how long that will last is hard to say.
My uncle is a mtg broker dealing with a lot of business right now on the waterfront and things are still hopping for him.
I think we all know that prices right now are inflated, it's just a matter of how long they will stay that way. I think (though I am not an expert) we have seen the peak for now ~
Yiye! That word is scary: Gentrification
Originally Posted by nathanenge
Last edited by riverrat; 02-10-2009 at 06:04 PM.
It's this type of **** that makes it difficult for the average Joe to buy a place anymore. If it was my call, purchasing residential real estate for the sole purpose of making a buck would be heavily taxed.
Hrm, I might agree.
Originally Posted by Chilled
However, I wonder what the benefit of allowing such transactions is? I'm sure George will tell us that the free market applies to real estate with the same far-reaching social benefits as it does with the rest of trade.
Actually Gerry, it does. The reason that real estate is currently priced out of range of the average consumer should be a simple warning to anyone who wants to buy a house... Dont buy one now. Many investors own more than one house, that is, a house other than the one they live in. The problem is that many dont understand what ROI is. They are using the same buy and sell techniques that were present in the market during the dot com boom.
The deflation of the bubble is happening in certan areas in the US right now, and is not happening in Canada yet because our economy is based around Oil and Mineral resources. Guess what is trading at all time highs? Thats right, oil and gold, not to mention many other things that Canada provides the world.
Having said all that, if you were to pass a law preventing people from making money from selling a place too high, would you also pass a law preventing people from selling too low? If not, why not?
The long and the short of it is, that the prices are too high because of low interest rates, and a frenzy of people who believe that they are going to get rich in real estate. They all totall forget the realestate collapse of the early 80s, which happened right after the energy crises of the 70s (sound familiar?).
The fact is, that anyone looking to buy a house now, should start saving their pennies big time. The reason is, when supply exceeds demand, prices fall. And, since many investors have purchased extra homes that LOSE money every month, they will become desperate to sell. Then, you have a buyers market, and the ppl with the expensive houses will want a law to be passed that keeps housing prices from falling or some such. However, you, the buyer will be laughing because you will have waited for the collapse, and you will be able to sweep in and buy a good deal.
It is just the way these markets work, many uneducated ppl become enthusiastic about getting rich, so they buy in way over their heads, driving the market to unrealistic prices. That will be good for you in the long run if you have the patience to exploit that.
Taxation of Investment Property
I believe Chilled was talking about taxing people more on Investment Property, not on houses that sell for too much money.
Currently the tax regulations are that if a house is your "primary residence" (you have lived in it for one year) then you do not pay tax on the income you receive when you sell it.
Investors frequently cheat by pretending they actually live in a house by sending their mail to that residence, when in reality they are renting it out. There is basically no enforcement.
It would be fairly easy to set up a system that makes it possible to tax people on investment property in way that discourages a lot of 'property speculation'. For example, those who own more than one property at a time, or who buy and sell frequently could be taxed more--or at least flagged in the tax system for further investigation. Even better would be a limit on the amount of properties that could be owned in one city at one time, in order prevent the superficial inflatation of local property prices or a monopoly on the market (similar to business laws).
Unfortunately, those in municipal positions are often there in order to manipulate the zoning laws so they and their family and friends can make money off of property speculation. That is likely what is really behind the campaign to encourage 'investment' in Nanaimo.
Theoretically, the benefit to the community of lots of property speculation in a city is that the economy will improve.
If you already own a house, you're laughing. If not--we calculated that a couple would have to be making a combined income of $150.00 dollars per hour to buy the same property they would have been able to purchase 15 years ago.