Tribeca | 84.5m | 27 fl x 2 | Completed

[Mille Sabords]

Originally Posted by michigan

I've just reserved myself an Essex on 22nd floor: I was not in Ottawa on Feb 25 and today someone has cancelled his reservation for it. It was listed for $321K+parking. I am wondering is it the same price you guys got on Feb 25th or did Claridge increase it already? If you still have the price list from Feb 25th, can you tell me how much it was? Or can anyone just post the price for any 1-bedroom on upper floors so that I will be able to compair it with the perice list I got today. Thanks!!!

The original price for that 22nd floor Essex was $311,000. It's at a great height, by the way. You'll be above the Bell building's parking garage. Likewise, whoever buys the small studio (the Peninsula) on the 27th floor for $277,000 (or $287 now) will be enjoying (or renting out) a kick-ass view.

[michigan]

I think Essex is facing the south while Bell building is to the North-East, so, the view will not be blocked. Am I right? You got me worried, Mille Sabords.

[Aylmer]

Can you imagine? The view from the 24th floor on the Mandarin is already enough to take your breath away! The hills look great from up high.

Whoever is planning on buying must have me over for Bridge.

[Mille Sabords]

Originally Posted by michigan

I think Essex is facing the south while Bell building is to the North-East, so, the view will not be blocked. Am I right? You got me worried, Mille Sabords.

You're right, my bad I looked too quickly.

[rakerman]

Usual puff-piece from the Citizen, in the Saturday edition

Modern sensation - March 6, 2010

[Proof Sheet]

Originally Posted by rakerman

Usual puff-piece from the Citizen, in the Saturday edition

Modern sensation - March 6, 2010

You were expecting literary criticism from an article in the Homes and Condo section of the Ottawa Citizen.

[Kitchissippi]

"I'm here to buy for myself," said Anna Kiefl, an agent with Royal Lepage's Performance Realty, explaining that she thinks Centretown will be a quieter place to live than the more lively ByWard Market. The downtown location also makes car ownership optional, a factor that influenced her decision.

Like a realtor would do without a car

[AznHalf]

I love the building and I'm an owner of a unit in Plaza II, but really isn't $500/sq ft a tad bit high? I think the exterior design of this building outstrips the Plaza 1 and 2 style (3 and 4 are more to the Tribeca style), but my only criticism is that this building really seems to have too many 1 bedroom units (7 bachelor/1 bedroom units vs 4 2 bedroom units).

The Plaza unit (2 bdroom + library) has only 1 bathroom? Where was the oversight there in that design? Nice size but 1 bathroom, what a huge drawback!

The Wellington unit (2 bdroom), the Grand (2 bdroom) and the Chelsea (2 bdroom + den) one question - really a standup shower shower in the master bedroom ensuite? Again, where is the design thought on this? The guest bathroom has a full bath, but the master washroom has a standup shower? This also makes no sense in these 3 units! If I'm paying $500+/sq ft you better believe that I want a full bath in the en suite. They have the bathrooms in these units reversed IMO.

I got my unit for much, much lower than that and I purchased recently in June 09 (approx mid $350/sq ft) and the unit has 2 full baths in the 2 bedroom unit, no stand up washroom cop-out. I think they made a great decision in designing this particular unit (although I could be slightly biased !!! )

Moreover, $500/sq ft is approaching current Toronto prices. I just don't see a big potential return on investment for a good 10 years at purchasing at over $500/sq ft.

Anyone else agree?

[AznHalf]

Personally, any investment that will return 5% per year is going to be a inherently RISKY (mutual fund or pure equities) where the initial principal is not guaranteed and could be lost (for example if you had your $80,000 invested in those vehicles prior to the crash that occured last year - your $80,000 could now still easily be down 30%). The current rates for a 5 year GIC is 2.9% (with banking bonus applied, since you have over $60k it would be +0.20% = 3.1%).

Not to mention the interest gained by the investments will be taxed by either capital gains (equities) or considered taxable income (GIC's). If you added in some to your TFSA (tax free savings account), that'd only allow $5,000 earning interest tax free, the $75,000 would still be taxed at each relevant rate.

Simply on the GIC investment 4 years at 3.1% (which is the 5 year rate, so 4 year would be actually lower, but for example sake bare with me) would be appx $10,000. That would be taxed at your income tax rate, which would be minimum 36%, if not higher, so that means that $6,400 in profit in 4 years or $1,600 of interest per year. Not so great!

In terms of stocks or mutual funds, well the profit is questionable to choice of stock, risk appetite and the 4 year timeline. These profits will also be taxed as capital gains (half of the profits will be taxed at your current income tax rate). So in the example given, $80,000 at 5% for 4 years would be appx $17,000 in profit. Half of these profits would be subjected to capital gains at your income tax rate, so $8,500 would be taxed at minimum 36% ($3060 gone to the tax man) which equals $13,940. That is $3,485 per year. Not that great on $80k either.

$80,000 downpayment (15% downpayment) would imply that the unit price would be approximately $535,000. I sure as hell hope for that price it is a 2 bedroom unit, which would indicated a high sq ft price of $550/sq ft in the smallest 2 bedroom, Plaza unit, to $467/sq ft for the largest Chelsea unit.

If you are under or around $500/sq ft you might be able to make a profit if it is lived in for 5-7 years before selling (praying for a continuing steady market). If you live there then it will be your primary residence, where all of your profit will be tax free.

Personally, I'm glad I paid approx $350/sq ft in Plaza 2 in June 09, lots of room to profit tax free. So glad the similar unit in Plaza 3 is already selling for $400/sq ft and that was at the pre-sale invite event. Sky's the limit from here! Can't wait for Plaza 4 to jump the price per sq ft to over $450.

[kmcma076]

I am not too familiar with the policies for this forum, but it seems as though this information has led to a whole other topic that should probably be in a different thread. I think it's a great topic for people to talk about - as the value of real estate is what people are willing to pay for it. If there are enough people willing to pay $500-550 per square foot - the market will sustain those prices.

At this point - I am advising a number of clients to continue to rent or to look into renting. Of course, this depends on their individual situation. For example, one couple is currently renting a two bedroom condo for $1300 per month including parking in an older building in Centretown. After factoring in property taxes, insurance, utilities, condo fees, etc - you could own a property for about $150k for $1300 per month. Obviously, where you make your money off owning vs. renting is the appreciation of the property. To buy vs rent for a similar property in their case, it would cost roughly 300k. This would have a mortgage payment of $1425 (10% down @ 4$), condo fees of $320, hydro cost of $100 (including heat), property tax of $225, additional insurance of $40 per month --> grand total of $2,110 per month or an additional $810 per month to own.

Owning a property certainly has a value attached to it simply by owning the unit and being able to do with it as you please, as well as the security of knowing that you will not need to move until you want to. Over the course of 1 year, you would save a total of $9,720. This would indicate that in the first year the property would need to appreciate over 3.25% to save money by buying vs. renting in this case. This does not include cost of buying, selling or maintaining the property.

There are so many other variables to consider, but in this particular case and in many others that I've seen - as prices continue to increase it is certainly making renting a lot more attractive to certain individuals. That being said - there has been an increase in the percentage of consumers intending to purchase real estate.

This is making investing in a condo and renting it out less attractive. For example, there is currently a 1 bedroom unit for rent in the Mondrian for 1250 per month (composition 01) - a similar unit recently sold for about 250k. This particular person paid 165k for the unit - so their monthly holding costs are roughly 1200-1250, which is decent (especially considering the appreciation of 85k or so). My point is - the days of getting these units for that price are gone and as prices continue to rise investing in condo's as a rental property is becoming less attractive (which is a good thing in my opinion, but Ottawa has a shortage of quality rental apartments - hopefully more projects like the Beaver Barracks development come along).

[rakerman]

Originally Posted by kmcma076

I am not too familiar with the policies for this forum, but it seems as though this information has led to a whole other topic that should probably be in a different thread. I think it's a great topic for people to talk about - as the value of real estate is what people are willing to pay for it. If there are enough people willing to pay $500-550 per square foot - the market will sustain those prices.

There is a new condo owners thread in general discussion. You might think about creating a condo buyers thread for anything that is about general purchasing considerations, as the per-building threads tend to be more about the individual building design and construction.

[AznHalf]

So, I stopped by the sales center today and picked up a pricelist and looked at the model.

So, it's the standard $30k more for parking spot. They are asking for 20%, not the usual Claridge 15% downpayment.

The Plaza unit, 2 bedroom 1 washroom is only on the 2nd and 3rd floor and there is only 2 units of this kind in the building. The one on the 2nd floor is $430k with a private terrace on the common area level and $410k for the 3rd floor unit with no balcony or terrace.

The other 2 bedroom units are the Grand and the Chelsea, both facing Metcalfe (West), on each floor. All the other units on the floors besides these 2 are 1 bedrooms. The Wellington is only on 2 floors and replaces the Chelsea on those 2 floors - it is slightly smaller but has 2 balconies (in the Chelsea the 2nd balcony is incorporated into the condo unit as livable footage - so the floorplan is exactly the same).

The price goes up $1k per floor from the 2nd to the 17th, then from there up it is $3k per floor and then the final couple of floors it goes up $5k per floor.



Again, what does everyone think about the large amount of 1 bedrooms/studio on each floor, seven units to be exact, and only two 2 bedrooms on each floor. Since, this seems to be priced at a more "classy" level - I personally would expect that it is more exclusive with less 1 bedroom units, hence less opportunity for rented units/less ownership etc (I'm assuming that 1 bedrooms are often bought for speculation/rental units, as opposed to 2 bedrooms).

[K-133]

AznHalf

I agree a little with what you are saying. The building is fairly pricey, though, if it is all it is expected to be, it will be worth is in the long-run.

For the investor who is looking to flip the unit from pre-build, this is likely not the building for them. At the same time, I have my reservations about such activity, because I feel that it carries the risk of creating instability of our realty economy through the illusion of 'false demand'.

My wife and I purchased a 1B+den in this building with the same concerns regarding the number of one bedroom units. In the end, we felt that this may not be such a risky factor because of the lack of competitive alternatives. Its amazing what a difference moving two blocks away from Bank street makes. For us, this building is all about the location and the 'presence' it is perceived it will offer.

We have no intentions of living in the unit, or in the immediate area, but for the market which we cater to, it is young to middle-aged professionals who come to Ottawa for finite periods of time that are looking for precisely this.

I've seen the arguments regarding the price point, and I don't believe we have to look further than the most highly sought after buildings in Ottawa for justification. Granted that Claridge is rarely among that group, the expectation is that they will be very close with this project while respecting their roots as a 'value' builder. The onus is on Claridge now to pull it off.

The average purchase price, for an average unit in this building (with parking) is more in the range of $360-370k (rather than the proposed $400k). This is a little above current market demands, while still allowing for future growth over the coming 3.5 years. This is not to say that I do not have concerns regarding current market pricing, but coming from the perspective of maintaining this unit over the long-haul, I am very confident in the investment value subject to the law of averages.

What is the primary concern about owning in a building with rental units? I'm guessing it is in regards to respect for the property. If this is the case, then the onus is on me to find respectable tenants. When lending $400,000 to someone, you can bet we are looking for a very respectable professional.

Nevertheless, it is the pricing which will also squeeze out a number of those looking for a unit to rent out - similar to those looking for the short-term buck. Does this forum have a poll? Perhaps we can create such a poll to extrapolate why people are buying in Tribeca (Rental, Flip, Live-In).

[michigan]

This is exactly what I am thinking. The only problem left for me is that I still don't understand why not to invest in the stock market in this case. If the "pre-build" price is not cheap but rather fair and you do want to invest long term the stock market should provide you with the same 7% average return + no headache of finding tenants, etc.
I guess if you are a real estate agent then you'd prefer buying real estate partially because you are overconfident in your ability partially because you can save something on the property management (rent ads, etc)
What do you guys think?

[K-133]

Originally Posted by michigan

This is exactly what I am thinking. The only problem left for me is that I still don't understand why not to invest in the stock market in this case. If the "pre-build" price is not cheap but rather fair and you do want to invest long term the stock market should provide you with the same 7% average return + no headache of finding tenants, etc.
I guess if you are a real estate agent then you'd prefer buying real estate partially because you are overconfident in your ability partially because you can save something on the property management (rent ads, etc)
What do you guys think?

From my perspective (a regular hard-working professional);

-1- If I index the stock market for inflation, how much would I have really made over the past 30 years?

-2- Through rent income, I have the opportunity to build equity using other people's money. Because everybody needs a place to live.

Let's assume that 7% per year in a general DOW mutual fund - for the sake of averages.

In 25 years, that $150,000 ~= $814,000.

With a renal unit worth $360,000 you'll mortgage $210,000 (with your $150,000 down). Let's assume that rent over that entire period covers 92% of the costs (11 of 12 months). Let's also assume a solid 6% interest rate on the mortgage throughout the period. Another assumption, is that the costs over that period are constant at about ~$2000 ($1350/m mortgage + $320/m maintenance + $333/m taxes). I realize that there are other expenses however, I also believe a solid 7% from the stock market is a bit of a fairy tale - unless you want to make it your full-time job. Of that $2000, your penalty will be $30000 8%*$2000*12*25) for the entire 25 year period.

Our final assumption - real estate will appreciate at a rate of 4% per year for the entire period.

$360,000 => $959,000 less carrying penalty of $30,000 => $929,000.

Further, as pointed out by others, there are other costs of ownership, and sale. All-in-all, you're breaking about even or very slightly behind with your 7% gain on other investments versus 4% in real estate.

Acquisition costs -> 1.5% of purchase = $5400
Disposal costs -> 6% of sale ~= $46,000
Income taxes owed on $210,000 gained from others toward principle payments ~ $73,000

With the market, I feel like I'm gambling in a Casino. With Real Estate, my gamble is that people will always need a place to live.

This is definitely a bit off topic. My apologies.

[michigan]

I've finally decided to walk away from Tribeca...Well, may be something else comes my way next year. Thanks everyone for advises!

[K-133]

Originally Posted by michigan

I've finally decided to walk away from Tribeca...Well, may be something else comes my way next year. Thanks everyone for advises!

There are plenty of projects and will be plenty more. Extrapolating from the brief conversation; a project which is a little less pricey will likely suit your personal needs better. Best of luck in your hunting!

[Yoji]

Originally Posted by michigan

I've finally decided to walk away from Tribeca...Well, may be something else comes my way next year. Thanks everyone for advises!

I also purchased a unit in the Tribeca and I'm trying to decide whether to keep it. After you decided to walk away, did the claridge sales representative make any effort to save the sale by offering some kind of incentive? Prior to that, were you able to negotiate any of the terms of the purchase/sale agreement, such as a lower deposit (i.e., <20%) amount? As a first time new construction buyer myself, I would certainly appreciate your insight, and the insight of anyone else who has negotiated a purchase with claridge.

[michigan]

I've just got my check back from the girl at the reception. I did not try to negotiate because I am sure that even with granite countertops, hardwood floors and 36" kitchen cabinets this apartment is $20,000 overpriced.
If Claridge will lower the price now and the word about it gets out they will have problems selling the units. I think they will add upgrades a little bit later (may be towards May). When I was getting my check back I've noticed about 20 more papers in the folder with "reserved but not paid for units".
which means that the units are not going fast.
I also asked about walls between units and found that these are going to be drywall. This also influenced my decision.
What else to say. I think that the location is great but I also know that there will be other buildings in the area. As for rent: it should be rentable but there will be big turnover. Young professionals tend to rent nice apartments when they come to town but will move to a cheaper place (next street) once they decide to save money (usually ina year)
For my purposes I prefer the ETFs. Sorry for the off topic stuff

[YOWetal]

Originally Posted by michigan

.
What else to say. I think that the location is great but I also know that there will be other buildings in the area. As for rent: it should be rentable but there will be big turnover. Young professionals tend to rent nice apartments when they come to town but will move to a cheaper place (next street) once they decide to save money (usually ina year)
For my purposes I prefer the ETFs. Sorry for the off topic stuff

Not sure about the moving to cheaper apartments theory, but looking at the budget it does look like the flow of young professionals into Ottawa will be slowing dramatically.