I got a call around 3pm this afternoon from the CBC who were doing a story on the latest condo to “go cheap” in a big blowout campaign. They wanted to get a couple quotes about what I thought of the deal and of people camping out.
At 4:30 they came to my office and away we went. Like all good interviews a good couple of minutes got edited down to soundbites. Here is the result:
I think I need to clarify a few things. I never said that buying a presale in this market isn’t a good idea. The whole quote was in regards to a question on investors who were looking buy and make money. That is clearly a gamble. You are paying today’s prices for tomorrow’s (or in Beasley’s case, 2012′s) delivery. It is also unclear what I was referring to what was going to happen to the building. True, several buildings have gone in to receivership or cancelled while just a hole in the ground, but none of them were by developers with the reputation that Amacon has nor had the sales success that the Beasley has had. I also framed my answer on buying presales in general as an option one should only really look at if it is an opportunity that you personally wish to take advantage of for yourself and that it is a place that you would really want to live in. Fact is that the assignment market, even below cost, is dead, and some places do not even allow you to assign a property or place very strict restrictions on your doing so (such as windows of ability or limitations on representation). Buy a presale today and be prepared to take possession.
On the Beasley’s sales promotion, it has been a huge success. Frankly, few of the units offered truly outstanding value. One such example, which the couple in the video I believe is waiting for, is the studio unit at $219,900. This is actually far below the next barely comparable unit available in the city by at least $30,000. Trouble is, as far as I know (and please correct me if wrong), there is only one of those available. That said, get up to the higher floor units of larger sizes and you can find some “not new” but rock solid properties out there right now for less than what the Beasley asks. That was my main point on investors. If you are an investor putting 20% down (as the Beasley demands) on a $350,000 then you are looking at financing $270,000 at most and that would cost about $1075/month. You should be able to rent out such a unit for more than that which covers that cost. You should be able to rent it out at that rate to cover that plus your strata fees and taxes which would be no more than $1350-$1400 total. So your carrying costs become null and you get the benefit of being able to sell at anytime (not something you can do with the pre-sale.
Three years is a very long time to wait and a lot can happen in that time. Jobs can come and go. Health issues can pop up. You may move out of the province. There are numerous reasons that crop up why people can no longer complete on the project they once so dearly wanted. In a rising market, these issues rarely cause trouble as you can just flip it, and often at a profit. Today? I wouldn’t bet on it. Buy a presale and know that you are committed for better or worse.
So is it a good idea or a bad idea? Only you can decide for yourself but I would caution that if price is your only motivating factor then you should probably reconsider.
Vancouver, BC 