experts: real estate column Wednesday, August 30, 2000

Where the Deals Are

Creating a deal is much more an art than a craft --- it certainly isn't a science. You can make, save --- or lose --- a lot of money in how you structure your deal.

By Ozzie Jurock

Creating a deal is much more an art than a craft --- it certainly isn't a science. You can make, save --- or lose --- a lot of money in how you structure your deal. In fact, the proper structure often will make the difference between being able to buy a property or not.

You don't want to do things backwards. You don't want to select the ideal property and then see how you can tailor the deal. What you want is to have an idea of the deal you want to make and then go shopping for properties that will fit within the parameters of that formula.

In most cases there is no such thing as a firm price. Oh sure, every once in a while you'll find a vendor who says he want's a certain amount and won't take a penny less and really means it. These are the exceptions rather than the rule. And these properties aren't really for sale. They're on the market but they are not really for sale. Almost all of the time, a firm priced property is an overpriced property.

Remember the axiom: ?In Life, you do not get what you deserve, you get what you negotiate.? While that apply to all your living transactions it really apply to your real estate ones.

I am always astounded at people telling me this a good market or this is a bad market and then make their investment decisions in real estate based on it is a ?good market.?

As we speculated before: There really are no good or bad markets, only good or bad deals that you personally make ? period. Most ?good deals? are created, not advertised, not some ?good market? creates them. In fact I have seen the absolute worst deals transacted in so called ?good markets? and the best ones in so called ?poor ones?.

You also want to go against the grain. Which brings me to British Columbia where the current perception is of a ?bad market?. Good. For an investor that is the proverbial music to the proverbial ears.

This year of 1999 I have seen the best deals in 10 years. Townhouses that sold in 1989 in Newton, going for the same $79,000 price they brought in 1989. Houses in Surrey down 25% over the same price achieved in 1995. (A good market!).

In fact, prices PAID for investment type older condos in Vancouver are far lower then in most cities in Canada even though this market has a much better upside. Here, everybody trots off to Calgary to buy condos in conversions at $150,000 plus because the market is ?hot?, whereas in Vancouver new or newer units go begging for less. At the same time our vacancy rate is still very low and rental values received are excellent. Properties cash flow again ? in BC.

For instance the Greater Vancouver Real Estate Board reported in the first 8 months of the year 55 sales in the Westside below $100,000, many of those as much as 20% below asking prices:

WestSide sales

Address Class Price S Price Ag Bd Bt Fl
W 11TH AV AP 75,000 70,000 OT 1 1 800
W 11TH AV AP 79,000 72,000 OT 1 1 900
BURRARD ST AP 80,000 72,000 20 1 1 486
W 11TH AV AP 79,500 75,000 OT 1 858
CARDERO ST AP 92,500 75,900 30 1 1 620
DRAKE ST AP 84,900 78,000 21 1 407
PACIFIC ST AP 88,000 82,500 21 1 1 412
WEST BOULE AP 105,000 85,500 42 1 1 750
BARCLAY ST AP 99,000 86,000 30 1 1 595
HEATHER ST AP 106,000 90,000 18 1 1 534

The same fine RE board also reported 93 such sales under $100,000 on the East side, 6 under $60,000, 11 under $70,000 and 31 under $90,000. Go into New Westminster and find 76 sales under $100,000. A half a dozen sold under $40,000 (co-ops) and some 45 properties sold under $60,000 (Strata). Some deals sold for 14% lower than already low asking prices($72,000 list sold at $62,000). Some as much as 20% lower ($105,000 to $85,000). Even accounting for some leaky problems - many buildings in Burnaby, New Westminster and Vancouver have NO leaky problems, but get tarred by the same ?wet brush? - there are excellent buys in the market. The same apply to most suburbs. (Of course, read the strata council?s last year?s minutes, get a building inspector to check it out).

An investor, armed with the knowledge of ?negotiating? and the CERTAINTY that BC will recover again has a wonderful opportunity to do well.

And not just in Vancouver.

In Jurock?s weekly ?Facts by Fax?, we have featured in June/July a deal in Ferguson (building lot) for $3,900 with $390 down and $60 per month. A deal in Smithers for $5,900 with ditto terms. Building lots in Anglemont (Shuswap) for $8,000 where the owner carries the whole amount (unless you just had your TV repossessed). We noted a 54-acre waterfront beauty in the Tulameen WITH a goldmine on it for $139,900. We featured condominium blow-outs in Agassiz (near Hope/Harrison Hot Springs) from $28,000 to $38,000, in Campbell River at $28,000 to $40,000. Most of these units are renting at between $450 to $600. By the way, we also found some 10,000 sq.foot building lots in Hawaii (another bad market) for $3,000.

All this speaks of a BC market that is shaking out. With housing starts in record low territory (Good, no new product hitting the market) and existing deals ?blown out? by some cash strapped developers the bottom is near (1999 early 2000). We expected a slower summer and we still note a spotty market, but the savvy buyer will not chase the faraway deals in the ?good markets?, but rather select well placed real estate right here in BC.

 

jurock.com

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About the Writer
Ozzie Jurock is the president of Jurock International Net, Editor of Real Estate Insider Publication and Author of Forget Location

 




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