3483 replies to this topic

[tjv]

As I said yes at today's price if things were purchased today. However, as I said most building are owned by the same for at least a decade. Taking average suite price way down.

As well most of the suites truly have no value for much longer because according to Citified they all need torn down

I am having a hard time understanding if units "were purchased today".  that's what they are worth in the fair and open market today.  Just because say someones grandfather bought a house for 25k and its now worth 1.4 million, it shouldn't be sold for 1.4 million?  So if I buy stock for $20 a share and its now worth $100 I shouldn't be demanding a decent return on the current value of the stock?  I am going to continue to demand 10+% on the current $100 value.  If you don't give me that return I'll sell it and buy something else, same goes for real estate investment

 

Maybe these apartment buildings need to be torn down, as long as someone is paying 200k+ per suite they can do what ever they want.  Cap rates on apartment buildings are in the toilet, often well below 4%.  They are a horrible investment, the only thing that makes them attractive for the short term is the capital appreciation because of the red hot real estate market

[sdwright.vic]

For accounting principals you do not claim you asset at what value you is today. Only the price you paid, and that's all you can claim as the value of the asset till a sale occurs and a new actualized value can be determined. So if you paid $1,000,000 for something, for accounting purposes it is only worth that amount of money until you actually sell it.

[tjv]

yes and no, I have heard those accounting principles many times before, however when I figure out my net worth today I calculate, for example, that my 100k car is today worth 30k and my house that I paid 400k is today worth 3 million

 

Regardless anyway you slice it, apartments are worth today 200k per suite.  If the government wants to purchase 2010 suites of older rental stock that will cost them minimum $402 million for most likely a bunch of 50 year old buildings.  Since the government probably wants new purpose built rental stock and with government inefficiencies it will probably be somewhere between $800 million and $1 billion

[Mike K.]

The value of the asset can also decline, and you report that devaluation on your taxes.

Dwellings can decrease in value just like any other asset. In many cases real-estate purchases are more so about the land than the structures on them, and an old apartment building in need of major upgrades may actually be a liability.

[sdwright.vic]

Yes depreciation is a tangible item for a car. And for your personal net worth, sure market value potential is fine. But if your a corporation (that I may invest in) then no, the value of property is what you paid for it.

[lanforod]

Yes depreciation is a tangible item for a car. And for your personal net worth, sure market value potential is fine. But if your a corporation (that I may invest in) then no, the value of property is what you paid for it.

 

Sure, but how does that at all apply to government subsidized housing? It doesn't. The government would have to pay current market rates to purchase. If they managed to talk current owners into this scheme, I'm certain those owners would only act based on the current value of the building, not their original purchase value.

[spanky123]

Sure, but how does that at all apply to government subsidized housing? It doesn't. The government would have to pay current market rates to purchase. If they managed to talk current owners into this scheme, I'm certain those owners would only act based on the current value of the building, not their original purchase value.

 

The Government doesn't seem to have a problem (over)paying for property it wants. Ask the owners of the Tally Ho or Super 8 whether they ever thought they would be able to sell their properties anywhere close to what they got.

[VicHockeyFan]

Warch Stew Youngjust propose a big housing campus.  He won't be taking any of the $375 ones though.

[tjv]

The value of the asset can also decline, and you report that devaluation on your taxes.

Dwellings can decrease in value just like any other asset. In many cases real-estate purchases are more so about the land than the structures on them, and an old apartment building in need of major upgrades may actually be a liability.

True, but that's only a temp devaluation when you sell you have to pay full taxes on the value you depreciated before the capital gains deduction kicks in

 

Warch Stew Youngjust propose a big housing campus.  He won't be taking any of the $375 ones though.

Sounds like a smart man.  Maybe CoV residents should beg him to run for mayor!

[sdwright.vic]

The value of the asset can also decline, and you report that devaluation on your taxes.

Dwellings can decrease in value just like any other asset. In many cases real-estate purchases are more so about the land than the structures on them, and an old apartment building in need of major upgrades may actually be a liability.

Which is the basis of my point. These older building are coming closer and closer to being land value only. That is why I made my analysis on existing complexes being given incentive to redevelop what they have owned for over a decade.

If you do my plan, you slowly double the existence of rental stock, maybe even triple dependant on property size. Supply increases, decreasing rents. No expense land purchase needs to be done, as in most cases the land is already bought and paid for.

$10,000,00.00 interest free loan with the caveats I listed above... your building suites at market value. That value will lower as more suites come on line. Municipalities will not be allowed to stand in the way as this will be a federal and provincial initiative.

If a replacement program occurred, where complexes were built at the appropriate density to the lot size, you get to the point where you have affordable rental stock.

[sdwright.vic]

Sure, but how does that at all apply to government subsidized housing? It doesn't. The government would have to pay current market rates to purchase

I am not concerned about subsidized housing in what I am proposing. I am making more housing at market, and the market will drive down prices with more supply that meets demand.

I am sure there are many developers and landlords that are pleased with the crisis though.

[spanky123]

Which is the basis of my point. These older building are coming closer and closer to being land value only. That is why I made my analysis on existing complexes being given incentive to redevelop what they have owned for over a decade.

If you do my plan, you slowly double the existence of rental stock, maybe even triple dependant on property size. Supply increases, decreasing rents. No expense land purchase needs to be done, as in most cases the land is already bought and paid for.

$10,000,00.00 interest free loan with the caveats I listed above... your building suites at market value. That value will lower as more suites come on line. Municipalities will not be allowed to stand in the way as this will be a federal and provincial initiative.

If a replacement program occurred, where complexes were built at the appropriate density to the lot size, you get to the point where you have affordable rental stock.

 

The problem with your model is that developers will now be competing with thousands of units of Government owned rental stock that they can price at whatever they need for political gain as the taxpayer will pick up the tab. I doubt that you will continue to see a rush to try and redevelop existing units (even though they may be fully depreciated and increased density and rents available) when they are still producing a reasonable income. 

Edited by spanky123, 14 May 2018 - 08:53 AM.

[lanforod]

^ this. If you're in the black already, why would you jump back into the red for 20+ years?

[tjv]

recent sales of apartment buildings in Victoria

 

Address                                         Total price       per door          date

2925 Qu’Appelle Street Victoria    $6,050,000    $183,333       Nov 2017

1555 Jubilee Avenue Victoria        $5,250,000    $250,000      Oct 2017

1510 Clive Drive Victoria               $9,185,000    $540,294       Aug 2017 (this is a new luxury building)

2181 Haultain Street Victoria         $8,450,000    $216,667       Aug 2017

 

Which is the basis of my point. These older building are coming closer and closer to being land value only. That is why I made my analysis on existing complexes being given incentive to redevelop what they have owned for over a decade.

Ignoring the 3rd building on the list which is new and more luxurious than the others, the first two buildings were built in 1969 and the 4th was built in 1955.  Those 3 buildings sold comprised around 65% building value and 35% land.

[sdwright.vic]

I don't want anything to be government owned though. Mine is to get complexes where the land is owned redeveloped at higher density and rented at market. The only government involvement would be the interest free loan. I already showed above you can redevelop and still show a profit.

[sdwright.vic]

BC Assessment for the above properties:

2925 Qu’Appelle Street Victoria $6,050,000/$183,333 Nov 2017
Total Value
Assessed as of July 1st, 2017 $5,789,000
Land/Buildings
$2,095,000/$3,694,000

Previous Year Value
Land/Buildings
$4,604,000
$1,904,000/$2,700,000

1555 Jubilee Avenue Victoria $5,250,000 $250,000 Oct 2017
Total Value
Assessed as of July 1st, 2017 $4,163,000
Land/Buildings
$1,522,000/$2,641,000

Previous Year Value
Land/Buildings
$3,537,000
$1,360,000/$2,177,000

1510 Clive Drive Victoria $9,185,000 $540,294 Aug 2017 (this is a new luxury building)
Total Value
Assessed as of July 1st, 2017 $7,522,000
Land/Buildings
$1,800,000/$5,722,000

Previous Year Value
Land/Buildings
$5,414,000
$1,638,000/$3,776,000

2181 Haultain Street Victoria $8,450,000 $216,667 Aug 2017
Total Value
Assessed as of July 1st, 2017 $8,397,000
Land/Buildings
$2,593,000/$5,804,000

Previous Year Value
Land/Buildings
$6,229,000
$2,359,000/$3,870,000

[spanky123]

I don't want anything to be government owned though. Mine is to get complexes where the land is owned redeveloped at higher density and rented at market. The only government involvement would be the interest free loan. I already showed above you can redevelop and still show a profit.

 

What I am saying is that the private sector is not going to be in a rush to build/redevelop rental properties now that they will be competing against the Government in 'market priced' units. 

Edited by spanky123, 14 May 2018 - 11:17 AM.

[VicHockeyFan]

What I am saying is that the private sector is not going to be in a rush to build/redevelop rental properties now that they will be competing against the Government in 'market priced' units. 

 

That's a legitimate consideration.  Do I want to develop a rental apartment today, knowing the government is about to plow $90M (or $600M Mike says) into rentals?

[spanky123]

That's a legitimate consideration.  Do I want to develop a rental apartment today, knowing the government is about to plow $90M (or $600M Mike says) into rentals?

 

Not only are they putting money into rentals, the whole thesis behind owning 1,500+ market and near market priced units is to pay for operating and supporting the 450 odd $375 units. You think that having units sit empty (because they are competing against the private sector) and having to get more money from the taxpayer to cover the shortfall is something that they will do? Heck now, the units will get dumped at whatever price it will take to fill them.  When they have the 450 units filled then they will claim success and ask the taxpayer to fund another 2,000 rentals.

[Mike K.]

That's a legitimate consideration. Do I want to develop a rental apartment today, knowing the government is about to plow $90M (or $600M Mike says) into rentals?

I suspect what we’ll find is the CRD will be engaging local developers to bring the projects to completion.