1897 replies to this topic

[Matt R.]

Pro tip that’s probably 28/sq ft per year.

[Ismo07]

Pro tip that’s probably 28/sq ft per year.

 

yeah acknowledged twice.. Mike likes to rub my nose in each gaff...  still waiting on the $48M sale price info...

[Matt R.]

Oh sorry I missed that.

[Mike K.]

I missed it too, twice. What acknowledgment?

You’re just here to argue, I feel like.

[Matt R.]

I missed it too, twice. What acknowledgment?

You’re just here to argue, I feel like.

I am not.

[Ismo07]

Nope just explain with these numbers...  No just adjust the numbers to per year... 

 

We are really talking about residential here.  What I need help with is that you are suggesting the assessment value is used for the sale of the property to help determine the mortgage.  I'm not so sure this property has sold at any point.   think the builder still owns and can't find anything different.  Can we start there.  I know the lease should have been an annual amount.  The key here is the mortgage amount paid.  It's the biggest bugaboo... I know you want to highlight my mistake but let's move forward with this mortgage thing.  Rents are established... 

 

Now can you answer some of the questions?  Show me that the property sold for $48M without using assessed value please.  This discussion is really about rental rates and why they charge what they do.  You think they have to do to expenses, like if in some period vacancy went to 15% for a decent period the couldn't reduce rents... I think it's because it is what the market bares and they will try to make what they can, which is what it's all about in the end.  I don't know why the politicians are concerned about REITs and other companies buying these for the bloated revenue they make due to market.  I've yet to see politicians try and reduce food or energy costs but there you go.

 

I just like discussing statements that don't make sense...

Edited by Ismo07, 19 January 2023 - 02:37 PM.

[Mike K.]

Now can you answer some of the questions? Show me that the property sold for $48M without using assessed value please. This discussion is really about rental rates and why they charge what they do. You think they have to do to expenses, like if in some period vacancy went to 15% for a decent period the couldn't reduce rents... I think it's because it is what the market bares and they will try to make what they can, which is what it's all about in the end. I don't know why the politicians are concerned about REITs and other companies buying these for the bloated revenue they make due to market. I've yet to see politicians try and reduce food or energy costs but there you go.

I just like discussing statements that don't make sense...

I don’t like discussing statements that don’t make sense. That’s why I’m not taking the bait.

Ok, at least you admit that you don’t so much care about the numbers, and just have a predisposed conclusion.

It has saved us a great deal of time.

[Ismo07]

I don’t like discussing statements that don’t make sense. That’s why I’m not taking the bait.

Ok, at least you admit that you don’t so much care about the numbers, and just have a predisposed conclusion.

It has saved us a great deal of time.

 

Then don't make them.

 

I care about why you think it's necessary rent is $2,000 for 500 sq ft. which is what this was about.

Edited by Ismo07, 19 January 2023 - 03:57 PM.

[Mike K.]

I know, it’s shocking.

The easiest way to know why, is to run a condo purchase through the calculations.

A new 500 sq ft condo in the CoV is priced at $500k. At 20% down, the mortgage is $400k, at 5.5% for a residential use or a small time landlord who fudges the purchase as a residence for his kid, but intends to rent it out. That’s $22k per year just for the mortgage. Then add strata, insurance, property taxes, maintenance and incidentals.

[Mike K.]

For a long time in Victoria we had condo investors charging less than the upkeep cost of their unit because the rental market was full of old inventory and costs were kept low. They appreciated part of their costs being covered, and many of those investors purchased homes here ahead of retirement. It was a very common scenario in Victoria.

Over the last decade we finally saw new rental inventory built, which we had not seen for 20 years, and old inventory was sold off to investors, who carried mortgages and invested into upgrades and/or redevelopments. The market that was asleep for 20 years finally woke up, and we are seeing the results now. But the costs of this new inventory and the changeover are huge, and to get the new inventory plus the upgrades older inventory requires someone to pay for it.

That why, as the saying goes, higher density does not make things more affordable.

[Ismo07]

I know, it’s shocking.

The easiest way to know why, is to run a condo purchase through the calculations.

A new 500 sq ft condo in the CoV is priced at $500k. At 20% down, the mortgage is $400k, at 5.5% for a residential use or a small time landlord who fudges the purchase as a residence for his kid, but intends to rent it out. That’s $22k per year just for the mortgage. Then add strata, insurance, property taxes, maintenance and incidentals.

 

That's your apples to apples comparison?  That $48M assessed building would be sold for around $62.8M without the commercial...  That's not the way...

 

What do you think the costs of building that building would be and then keeping it to rent out....?

Edited by Ismo07, 19 January 2023 - 04:09 PM.

[Ismo07]

For a long time in Victoria we had condo investors charging less than the upkeep cost of their unit because the rental market was full of old inventory and costs were kept low. They appreciated part of their costs being covered, and many of those investors purchased homes here ahead of retirement. It was a very common scenario in Victoria.

Over the last decade we finally saw new rental inventory built, which we had not seen for 20 years, and old inventory was sold off to investors, who carried mortgages and invested into upgrades and/or redevelopments. The market that was asleep for 20 years finally woke up, and we are seeing the results now. But the costs of this new inventory and the changeover are huge, and to get the new inventory plus the upgrades older inventory requires someone to pay for it.

That why, as the saying goes, higher density does not make things more affordable.

 

Is that why living wage is $24/hr now?  Forget Victoria, I think we are seeing this everywhere....Iowa, Michigan, Nevada... Everywhere it looks like a 5-12% increase anywhere you look.

 

Montana rent prices increase more than national average, new data shows | KECI (nbcmontana.com)

 

The Washington Post reports a national rent increase of 11.3%, but Montana’s numbers exceed that. The data shows a jump of 14.7% in Yellowstone County, 18.6% in Gallatin, 18.9% in Missoula and 36.5% in Lewis and Clark.

 

“Landlords are facing, like all of us, inflationary costs, so rents would be going up regardless of other market conditions, but they’re going up way above the rate of inflation, because it’s competitive out there,” said McGrath.

Edited by Ismo07, 19 January 2023 - 04:24 PM.

[Mike K.]

That's your apples to apples comparison? That $48M assessed building would be sold for around $62.8M without the commercial... That's not the way...

What do you think the costs of building that building would be and then keeping it to rent out....?

No, it’s just an example brought down to a more relatable level.

You were asking about a 500 sq ft unit.

[Ismo07]

No, it’s just an example brought down to a more relatable level.

You were asking about a 500 sq ft unit.

 

I guess I've asked many questions but the linger unanswered... We can let it go.  Rental market pays well I think that the endgame.  As people keep coming rents will remain high and escalate considerably when people move around.  I can understand why governments might want to get involved.  Not everyone will be able to afford $2,000 a month.

Edited by Ismo07, 20 January 2023 - 08:30 AM.

[Mike K.]

I think I've equipped you with enough to go on.

 

But to your last point, that's why there are affordable/social housing projects. Have a look at what they are charging tenants who don't qualify for subsidies or rents tied to income, under the 'near market' or in some social housing projects even 'market' categories. That will give you the clearest picture of the costs involved, even with several factors decreasing costs due to government backing, favourable lending and non-profit ops.

 

BC Housing just announced this morning the completion of a project on Rupert Street in Vancouver, catering to what they call "middle incomes." The 52-units in the wood-framed building rent for $1,200 to $3,000 for studio-to-3BR inventory. The province provided $21.6M in "low-interest financing for the project." That low interest financing is a huge boon for a project.

[Mike K.]

If you do the math, that's $415,384/unit to build that structure. Not including the rest of the costs.

[Ismo07]

I think I've equipped you with enough to go on.

 

But to your last point, that's why there are affordable/social housing projects. Have a look at what they are charging tenants who don't qualify for subsidies or rents tied to income, under the 'near market' or in some social housing projects even 'market' categories. That will give you the clearest picture of the costs involved, even with several factors decreasing costs due to government backing, favourable lending and non-profit ops.

 

BC Housing just announced this morning the completion of a project on Rupert Street in Vancouver, catering to what they call "middle incomes." The 52-units in the wood-framed building rent for $1,200 to $3,000 for studio-to-3BR inventory. The province provided $21.6M in "low-interest financing for the project." That low interest financing is a huge boon for a project.

 

I still don't have enough to go on with your example, sorry...  I'd like to know final building costs of 1400 Quadra.

 

 

If you do the math, that's $415,384/unit to build that structure. Not including the rest of the costs.

 

Do you think developers get better building rates than say government contracts?  Any word on number of types of suites..  I know we wouldn't want to equate a studio with a 3 bedroom.  More math to do.

[dasmo]

I bought the crappiest house in Fairfield with the intention to build. It was $450k. Rented it out for cheap with the stipulation that it wouldn’t be upgraded and you will have to leave. Not looking up exact numbers but around $1500. I remember running the numbers and it cost me $9000 / year all in to carry the property. That was at 2.5% interest. It really needed to be over $2000 to make sense as a rental. 850 sq one bath three bed jalopy house. Capital appreciation saved the day but in a climate without that happening and much higher interest and higher expenses overall that same equation probably needs to be closer to $3k / month.

We need higher wages. Ask for a raise. Rase your rates. This is the way house prices have become affordable again over history. Not by nominal prices coming down.

[Mike K.]

Do you think developers get better building rates than say government contracts?  Any word on number of types of suites..  I know we wouldn't want to equate a studio with a 3 bedroom.  More math to do.

 

If they did, they wouldn't need low-interest government loans.

 

The press release is not very clear. It doesn't speak to whether or not that was the only loan, and whether it also included the ground floor component with retail. Lots of details left out.

[Ismo07]

If they did, they wouldn't need low-interest government loans.

 

The press release is not very clear. It doesn't speak to whether or not that was the only loan, and whether it also included the ground floor component with retail. Lots of details left out.

 

I don't mean loan rates, I meant would a developer build a building cheaper than if a government body ran the project,  typically?