I will read the other comments after I respond to your post:
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Originally Posted by littlewenzi
Just signed for the units yesterday, but think I am not getting a good deal out of it just want some thoughts. Not an experienced buyer, so your help is greatly appreciated. My overall experience with this transaction haven't been great. The rep from Concorde seems shady and not very helpful. My own real estate agent was pretty helpful, but there were some surprise at the end (read below)
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Define shady? If you mean they were putting pressure and not completely answering questions, welcome to the club, every sales person does this because they are pressured to sell or lose their jobs. You have to keep pressing them unfortunately and be honestly willing to walk out.
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Details: Bought 2 units (Surrey Park Ave by Concorde) (One was bought by my parent)
2 units, same plan, one on 18th floor, other on 32 floor.
Both same plan (C), 515 sq feet + ~50 sq ft balcony
FYI, the plan C is that one that they have in the showroom
There are 3 of these units with this plan left, the last one is on the 5th floor (by fifth, I meant 2nd, since it goes to 5 after ground, iirc).
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And I thought my 1 bedroom was small. That seems pretty tiny.
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Price (Both were the original asking price, they wouldn't budge on the price. we did not specifically said a lower price point, just ask them to lower the price.:
Unit 1 $233,900
Unit 2 $240,900 (IIRC, dont have it on me)
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Ok for reference, I got my assessment for this year and it was pretty much static from the year before. $233,000 for my 1 bedroom on the 21st floor, larger than yours. So I think you've probably paid a bit of a premium for your units just an FYI.
Not surprising they wouldn't budge, I have yet to see a developer budge on sales price of purchases by plan (aka pre-sales). There is no pressure for them to and they typically like to give 'incentives' which you have to judge to be good or not.
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Down payment schedule
1. 5% on signing
2. 5% May 2014
3. 7% Sept 2014
4. 3% Feb 2016
5. The rest on completion (est. summer 2016)
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That's not bad. For investment purposes you need at least 25% down so I'm assuming the 'rest on completion' is 5% more? Providing you aren't borrowing the money for the down payments, you're in not that bad shape from an investment purpose.
You qualify for a standard mortgage and 25% of $233,900 would be give or take around $175,000. Add tax and such and that's not too bad. I will warn you though that rent rates currently in the area aren't necessarily sufficient to cover full mortgage of $175,000 with current interest rates when you factor in property tax and strata fees (and other fees like rent management if you go that route).
So be prepared to eat some money per month for the next 5 or so years at least. There are a lot of apartments coming on the market around King George, so I'd imagine prices will stay fairly static and unless something drastic happens, rent will only go up near inflation which isn't a lot.
On my apartment when I go to rent it in 6 months when we move, I am already prepared to eat about $250 a month which I can afford no issue on this property until rents increase enough to compensate for increased interest rates and my losses. We shall see when we get there but just a big caution.
If you expect these properties to make you money in the next 5 years, keep in mind that may not happen. Now 5 years is from today so seeing as completion is in 2016, that gives you maybe around 3 years to eat costs.
Rule #1 in investment, hope for the best, plan for the worst.
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"deals"
From Concord
1. Half price locker (Originally $3000, now $1500 additional)
2. Referral Program (Since we bought 2, I "refer" my parent, so we each got $1000 back in Visa Gift card 7 days after we sign)
3. Furniture move in bonus $3000 each
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What size locker? Hard to see if that is a great deal or not. Just for reference, I rent a locker at U-Haul which is one of the cheaper out in Port Kells. I have an 8 foot by 6 foot by 15 foot high locker, costs me about $850 a year. So if your locker is the same size, you pay for it in a couple years so I'd say good deal. If it is tiny, that bumps up to more years to pay for it. Still _probably_ a good deal as storage in smaller units is hugely at a premium and you almost require having storage space somewhere if you (or your renters) want to 'live' comfortably.
Visa Gift cards I hate. You can't turn them into cash and it forces you to buy stuff. If you already had to buy stuff then you can sort of see it as a good thing. I personally hate gift cards and always prefer money back.
Furniture move in bonus, what is that? Like they pay you when you move in to buy up to $3000 in furniture? What are the requirements if any? Like do they force you to buy from a specific place? Does it _have_ to be furniture? Is it contingent on you moving in because you said this is an investment property so you won't move in? Can't know if that is good or not. I would again prefer to see $3000 cash back.
Concord did that with their last sales here. $15,000 'decoration' bonus. I was like "Seriously? Who spends that much on decorations you're insane." Cash always good.
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From my real estate agent:
1. My agent actually bought a unit as well, so he referred me, so I got $1000 Visa gift card back.
2. My agent also said he will give me his $1000 referral card as well.
3. My agent will give rebate me back $2500/ unit, so $5000 in total. (but he said I wont get the money until completion (Est. Summer 2016). This was the surprise, he never mentioned anything about the getting the $5000 until completion. I was under the assumption that I will get it 7 days after signing (like the referral program). When asked why I won't get it till 2016, he said that he doesn't get paid from this sale until 2016. When I heard that I was lost, I have never heard of real estate agent getting paid from the developer until completion. I always thought they get their share after the contract is set in stone (ie. after 7 days of signing).
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Referals are nice but again Visa Prepaid cards are a pain unless you had a lot of stuff you wanted to buy and absolutely needed. :|
As for your agent, typically they get paid half up front then half at closing. My agent had the same thing with our townhouse unit. He was paid half up front and gave us $500 back, then will get paid half at closing and will cover our legal costs. I'm fine with that because I know how much he was making and it is more than fair given his services.
I have not heard about them being paid only at closing though, they do typically get some money up front. You should have been able to find out though how much he would get and when. Concord can be probed to find out too I'd imagine. Not sure if they are obligated to disclose, but I've never had anyone say no.
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On a side not, another surprise I had was this:
Previously, Concorde Agent said that there is a rental agreement bonus, which was 6%/year for rental income guaranteed. When I went to sign it, she told me that I only get that 6% IF if don't take that $3000 furniture move in bonus 
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Well the question you have to ask yourself is do you need a rental management company to handle your rental or are you willing to do it yourself. I always suggest to people that are capable to consider doing all the homework then trying to manage it on their own. If you're unwilling to attempt to manage your properties on your own, then you maybe shouldn't invest if you don't have many units. Different if you owned say 10 or more properties spread out, but 1 or 2, should be able to manage.
That said, if you do want the rental company to handle it and to wipe your hands of that burden and a bit of risk, again always factor in full cost. Remember the 6% even if you did get it would not be forever. Typically it is for 2 or 3 years max then rates go up to regular. It's like Telus deals when you sign up for Optic. They sell you $X per month but in the fine print it says in 6 months it goes up to $Y which is a LOT more and will make up for the discount in less than a year on a 3 year contract.
Be careful with insentives. Nothing comes for free in this world.
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I was never mentioned of this up till the very last moment when I sign the contract. And here's the "deal" with the 6%.
1. You still need to pay a $75 management fee
2. The 6% does not start until the first of 2 calendar month after I get the keys. (ie. If I get the key on Sept 10, then I don't get rent till Nov 1) Even if during this time the property is rented, the money goes to Concorde/management company and not to me.
#1 + #2 was not mentioned right up till the last minute when we signed the contract. I ended up picking the $3000 deal. I guess I will find my own tenant.
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Or you walk from the contract. If you just signed, you have 7 days to pull out. That's always an option.
That said like I said above and you pointed out, you can handle it yourself and save not just 6% but all the fees. There are risks but it is something to consider for sure.
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So there you have it, I felt somewhat pressured when I signed it, so I need to settle down and evaluate the whole deal.
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Always happens. It's part pressure it is also often nerves. Doesn't matter how many times you sign contracts, you always get nervous and that just makes it seem more pressure filled than it is. Remember you can always say no (well up to a point of course once the contract is signed.
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Sorry if this seems like information overload, but I really couldn't explain it with less words. My deadline is this Sunday, so hope to hear experience from you guys.
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No problem. I'm sure you'll get various opinions. At the end you have to do what is comfortable for you. Just keep in mind that you will not have to qualify for a mortgage until 2016 when closing happens. There is some added pressure to your life though that you maintain your credit ratings and don't go into major debt in that time. You will also have the added pressure of sitting under a contract and watching interest rates slowly rise which they will over the next 2-3 years.
As long as you are prepared to pay I would say 6-9% interest, and assume you may not rent it for full mortgage value so will eat some costs, and you are able to budget, qualify, and eat those costs, then you're in good shape. Investment real-estate isn't always an immediate win situation. It can be risky though less so that many other investment options, but it is also longer term with gains coming over the long haul. Don't expect to flip the units quick if something goes wrong financially and get out of it fast especially if you have lease agreements in place with tenants.
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On a side note, other deal (gov incentive)
1. I was told I will get a rebate of around $4000 upon completion if someone lives in the apartment (whether rented out or I live in)
2. First time home buyer (if I decide to live in it)
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First time home buyer requires you to live in it for at least 1 year. It also has to be the first home you have purchased period OR your spouse. So if you have a girlfriend that qualifies as a spouse or a wife who have purchased a property already, you will not qualify as a first time home buyer.
Rebate, what is that on? Do you mean GST rebate? On brand new properties you get a GST rebate that helps cover the GST you have to pay. Only on brand new builds you don't get it on previously owned. There are a few ways it works but be prepared that sometimes depending on your lender, you have to pay the GST up front on closing time then apply to the government for the rebate.
So have some extra cash available to at least cover legal fees and GST at closing. You have a few years. Now this depends on if you are renting or living. If you are living on $233,900 you'd pay around $7800 in GST. You may have to pay that right at closing then submit for your $4,000 rebate. That means you would need $7800 up front then will get the $4k about 2 or 3 months later.
On investment, you will be paying more around $11700 in GST on your purchase and you WILL need that at closing because the rebate requires you to prove you have a tenant which you can't really do at closing.
Same deal you would submit for your $4k rebate. So that does mean at the end you will need for investment to foot about $7500 extra on top of your down-payments at closing after you get your rebate. Be prepared.
This stuff all adds up quick.
If this is your first ever place and you're renting right now, I may actually suggest you seriously consider moving in yourself for a year. Qualify for first time home buyer, get your rebate, live in it paying your mortgage until you get a feel for the property without the added pressure of day dot first purchase having to rent it out.
Unfortunately I don't know your situation and you may already own (assuming you don't since you mentioned first time home buyer rebate). It does mean you live in the unit and will need to either move out eventually and rent yourself, or buy a second place and move in there then rent the apartment out.
That would be far less risky. You would also have the benefit of seeing how your parents' rental property goes.
Also keep in mind for property tax you don't get the same rebates from the city so you'll pay about $700 a year more in property tax versus living in it. You have to account for that too. $1500 a year = $125 a month added to your monthly costs.
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My questions:
1.how would you rate the deal, fair or which side had the edge
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On new builds, developer almost always has the edge. So is it fair, I wouldn't say it is completely unfair but it really depends on 1) what you plan to do with the property in the longer term and 2) what you want out of it.
If you want a quick flip to make money, you lost our and Concord squarely won.
If you want to live in the unit for a while then rent it out after a year or so, then it's probably a lot closer to fair.
If you want to simply invest and rent it out, given price and costs of ownership, right now it is not fully fair to you as you _will_ eat costs for a number of years. That may (and probably) will change in 5 to 10 years.
If you still own the property in 10 years and it is in good shape and you have a good tenant, you'll make money and a fair amount of equity.
Again it depends on 1 and 2 above how you would judge it fair or not.
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2. $5000 rebate from agent at completion, is it true they don't get paid till completion?
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I'm certainly no expert but I've never actually heard of this. Instead I've always been told half up front, half at closing. I guess it comes down to the developer and I didn't use an agent for my Concord apartment purchase so not sure how they handle agents, but again I've never heard of that so I'm a bit ify on that. Others may know better though.
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3. I thought I could bargain for less, but nah. Concorde didn't drop a penny. All the deal from Concorde was offered and not negotiated. My agent's deal was negotiated from $2000 ->$2500 rebate / unit. Do you think it is reasonable for them to not drop the price (because it is the last 3 unit available with that plan. (BTW: I was told it is the last 3 unit with that plan, I never see any "book" or list with what's sold and what's not. So the Concorde Sales can be BSing and I wouldn't know. When I went to other, like Century, they would have a mock up apartment, showing which unit is sold and which is left. If I had the money, I would buy other. But that is out of the question.
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I rarely see new purchase units drop in price unless they are pressured to do so let alone when you're negotiating. My townhouse dropped by $25,000 from the original selling price only because they weren't pushing it then when they started construction they had pressure to unload the last townhouse unit in the development. They dropped the price and I walked in and purchased it then.
I ran the risk of someone else buying it at the higher rate but it was a risk I was willing to take. So yes they can rebate and discount, but if there is no pressure, very rare, especially if as you said there truly were only 3 units left. That's about as no pressure as you can get for a developer.
Your agent may have had the advantage based on what they purchased and the availability or may have done a lot of business with Concord or had the push to just walk away if Concord didn't budge. I would bet on the "has done a lot of business." Welcome to the business world.
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So Should I  or  ?
Wenzi
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Only you can answer that.
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