experts: real estate column Monday, July 14, 2003

Deals - deals - deals

Where are the good deals in British Columbia for a real estate investor?

By Ozzie Jurock

This article appeared in The Vancouver Sun on June 21, 2003

Not a day goes buy without someone asking about this area or that, whether this market or that is a good deal, has good timing, and "what do you think?". Should I take that $500,000 no money down mortgage (but pay 6.5% interest) or should I take a credit line at prime?

I guess primarily, people want to be blessed ... they want someone to say: "it's ok, don't worry". Alas, in this fast moving market, there is no one to bless us ... It is, in any case, not as important to be blessed as to understand your investment objectives. Do you want price gain or income?

Everyone will agree that personal investment in real estate requires work. What usually comes as news is that the first work thats has to be done is on yourself. First, you'll want to define your investment objectives. What are you looking for? Is it cash flow? Do you want mortgage reduction so as to build up an equity base? Do you have staying power? Are you in for the long haul or are you a flipper? Do you enjoy the rough and tumble of personal interaction with people or do you need passive situations where you'll be left alone? You want to define and delineate these questions about yourself because the answers to them will determine the kind of property you buy.

Yes, there are 'deals' downtown ... where the average square footage price is $400. Is that a deal? Well, only if you expect prices to rise, but certainly not if you want a tenant to pay your mortgage.

There are 'deals' in New Westminster and Langley where the average square footage price is $120. Is that a deal? Yes, if you want a tenant to pay off your mortgage (these units you can pay off in 17 years with little down). But YOU have to decide what kind of an investor you are.

We are contrary creatures. We say one thing and then we do another. We pay lip service to the concept of what we think we should think and then we go ahead and do what it is that we really want to do. People act on emotion and then they justify with a rationalization. Read that last sentence again. It's very important. Please, please, please do not read this and think that we're talking about someone else. We're talking about you. The misunderstanding of not knowing your motivations and therefore coming to the wrong conclusions about the projected results translate into the difference between success and failure.

Having said this, here are some thoughts about areas for an investor (not a flipper!).

New Westminster

Last Friday the original capital of BC launched a new initiative. It highlighted the recent growth, successful projects and opportunities to developers, builders and interested others. I have always thought of New Westminster as undervalued and 'coming'. It has been behind our expectations as far as a rise in real estate values was concerned. After all, the 'Go' stations in Toronto saw huge developments sprouting up after opening and the LRT in New Westminster brings Vancouver within 20 minutes. Well, now we hear that while the City of Vancouver is contemplating doubling its development cost charges, New Westminster will do away with them. (That may make as much as $10,000 a unit difference). Consider this and consider that land is available in the $15 to $20 per buildable square foot range. New Westminster has strong character heritage residential neighbourhoods, a great park and rail system and - great plans.

It also had one of the highest population increases in the last few years and they make beer out of rice there (Budweiser) ... Hm?

Investments

  1. New Westminster deals - We found some 34 condos for sale here (look them up at www.worldwidereferrals.com) under $100,000 last Friday. One sample: Buy the condo listed at $80,000, put $10,000 down. Say it rents for $750 per month - has condo fees of some $120, and taxes at $75. On the $70,000 pay $388 (at 4.55% over 25 years - cash flow $167) or $548 (at 4.55% over 15 years - break even) per month.

  2. Deals? Lougheed Mall, Brentwood, Coquitlam, Port Coquitlam, Port Moody have over 180 condos for sale under $120,000 as of last Friday ... and over 60 under $100,000.

  3. Langley. As of this week there were 74 suites under $120,000, 44 under $80,000. We saw a unit at 119,000 2 bedroom and den, 1,300 sq. feet. Another 1 bedroom with pool at $69,900. All at www.mls.ca.

Or flip deals further afield?

  1. How about 95 suites in MacKenzie for $699,000 - $7,500 a suite? Yep, you see it right. Two apartment buildings at 47 and 48 units each. Built in 1970 and 1971 ... fairly good condition. The 47-unit one is in good shape ... needs a few patches on the roof, some work in the parking lot. 48-suite building needs work. Has been let go. 1 bedroom units rent for $495 per month, 2 bedroom units $600 per month. Price: $699,000 for both buildings. Employers in MacKenzie ... (lumber town, forest - based Abitibi, Slocan).

  2. Prince George, 3-bedroom side by side townhouse, rented at $550 per month, downtown. Price $42,250. Jurock.com/alpinevillage

  3. Quesnel, bare land waterfront strata lot in city limits, sewer, hydro all on lot line, Price: From $14,900 - RiverfrontWalks.com.

  4. Powell River, six side by side townhouses on 27,000 sq. ft. lot, $600-$650 income. All six ... Price: $260,000

There are no good or bad markets ... one good or bad deals you personally make. No one ever said: Oh, I made a lousy deal, but it is ok, it was in a good market. There are still great flips in today's marketplace. They usually take digging, they take work and inspection.

Ask questions. If the answers you get don't match the facts or if you just don't like the answers then find out why. And you do all of this before you buy because afterwards it's too late. You still make the most money on the day you buy. In real estate investment, the money you don't lose is twice as important as the money you win.

Yes, pearls are out there ... but you will have to do some diving. Or hire a good professional diver ... Realtor, Home Inspector, Notary Public, Laywer ... and have him or her do the diving.

Ozzie Jurock is the publisher of Jurock's Real Estate Insider an independent real estate advisory service. You can reach him at 604-683-1111 or e-mail ozzie@jurock.com.




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Related Links:

Worldwide Referrals Realty

Alpine Village, Prince George

Riverfront Walks, Quesnel

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