Quote:
Originally Posted by Cypherus
I have also noticed the one bedroom condos here at Ultra have been terrible at resale - costing the investors lost rental income while they are listed for sale. There are almost 30 one bedrooms for sale in the building, with only one 2 bedroom for sale. The 2 bedrooms are snatched up so quickly because they are just better when it comes to resale value. The way I see it, why pay a certain amount of money to get a one bedroom condo when you are 80% there from getting a 2 bedroom condo which will improve the resale. Let's face it, people don't make money off renting the one bedroom condos (perhaps some small net rental income) but they are really banking on the capital appreciation of these micro suites and one bedrooms which for Surrey will not happen in a number of years (unless you participated in Concord's deep discounted one bedrooms in Park Place when they were introduced to market for quick sale).
I just think that the Prime is looking to quickly cash in on the hyped buying frenzy for micro suites but in the long term I believe these will be money losers for the investor if they have to service a mortgage.
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Yah I wouldn't take poor business sense as equating to bad investment. Anyone who buys a unit be it a 1 bedroom, 2 bedroom, micro-suite, or heck townhouse with the expectation to turn around and sell it immediately for a large gain or any gain is an idiot and has bad business sense. That doesn't mean buying these units can't be or isn't a good investment.
The quick flip though especially in Surrey Central where the market it saturated right now with a lot of projects on the horizon, is non-existent. The same thing happened around Edmonds a number of years ago and Metrotown more recently. If you bought at the start the unit prices went up slightly but then stayed relatively stable for many years before finally going up again once the building stopped.
I have a former colleague who purchased a unit in Edmonds for around $200,000 years ago. He ended up selling it for about $240,000 a few years later so earned a bit of money (was his primary residence so no capital gains) on it but the market was saturated as there were a bunch of other buildings going up. Today if he sold that unit, he would net $400,000+ given current market around there.
He sort of kicks himself but at the same time he had to sell because they were starting a family and they needed the money for a downpayment on a house out in Surrey. So for him it was ok but it just shows how many of these types of investments need to be long term if you want to make any good amount of money.
In Surrey Central right now, even for 2-bedroom condos, the increase in property values has been relatively flat. An example is my 1 bedroom. First year completed it shot up from the $150,000 I paid to $230,000. It has since hovered around that including last year's assessment.
Why? Because there are a lot of condos being built. Even if it dropped slightly it would have to drop below probably $180,000 for me to actually "lose" money on my return (doing quick math in my head so could be a bit off). It won't drop by $50,000 any time soon I don't think.
So I rent it out for enough that it pays for itself. Even though I am basically not making a profit on the unit, it pays for itself and a little bit extra to deal with unforeseen expenses which are virtually none given it is < 5 years old. But that was my long term plan. Live in a few years then move into something bigger and rent it out.
I may sell it one day but that will likely be in 10 years or so. By then you'll have virtually all the buildings around King George Station built up and more services and population base out in Surrey Central so I'd imagine the value will inch up from the $230,000 mark. Even if it stays the same over the next 10 years or raises to maybe $300,000 in that time, I still make a healthy profit on it and would deem it a good investment because the rent will go up over the next 10 years + my mortgage will go down meaning my equity will be even greater than it is today.
You're correct though that there are a lot more 1 bedrooms around and available so anyone expecting a huge profit is in for a surprise. Even if I sold today I'd make over $60,000 in profit if not a bit more after capital gains and fee and such.
I don't think anyone would laugh at a cheque for that amount of money.
At the end though it is still a gamble. Real-estate if invested in properly can be a relatively safe investment and lead to some good money in the longer term (look at the top billionaires in the world, many are in real-estate). But it is still a gamble and you do always run the risk of losing money on an investment. Some of it will always just be guess work and trying to predict the future.
I can educated guess how things will unfold in Surrey Central in the next 5 to 10 years, but I could be completely wrong at the end of the day who knows.
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