Vancouver's Real Estate Market

[donk.]

Originally Posted by Badhobz

Fuck you wobobobbobo chugs

If you dare try this shit with me I’ll give you blankets laced with smallpox. Wait a minute they probably got immunity now…. Illl give you a shit load of garbage fent !!!

[Mikoyan]

Originally Posted by bcrdukes

For those of you in Richmond and aware of the recent ruling of the Cowichan land ownership, are you folks aware of this?

https://x.com/tablesalt13/status/198...304586452?s=46

Summary (as per X post)
"Canadian man who has owned Richmond, BC home since 1975

has been told by his mortgage lender that they WONT RENEW HIS MORTGAGE

because the BC Supreme Court has given the TITLE OF THE LAND the Cowichan Native Tribe"

Yeah, it's all over the news here and National Post. It's a chunk of Richmond, east of Silvercity Richmond. My understanding is that it's where a village used to be. Map here:

https://www.cbc.ca/news/canada/briti...case-9.6944656

[Fafine]

Originally Posted by Manic!

Just a heads up. The rental market is softening. I would not make an offer based on current rent rates. Seeing more apartment buildings for sale. Made an offer on one in feb and it was rejected. Just got an email they are taking offers again.

Nice, how many units is it?
Share the listing?

[JDMDreams]

Rs slumlord group buy? You don't even need fent just sprinkle some al keyhol

[Badhobz]

Fent from Ching Chong’s is cheaper. They have +50 resistance to alcohol

[Hehe]

Originally Posted by donk.

"Can you please send in your offer again, we need to sell now"

"Ok my offer is 50% of my original offer"

This is more or less what we did back in 2009. Sometimes as low as 30%.

Any downturn is good time for us. I'll elaborate in a bit.

Now, getting back to cap rate. For those who doesn't know, cap rate is basically (rent per year received)/(sale price)=cap rate.

Now given the equation, in order to get higher cap rate, you either need to adjust the rent per year or price or the price. Regardless what happens, the higher the cap rate, the better the property as a deal. Different property types have different cap rate on the market. Something like a hotel usually demands 10%+ whereas a warehouse is probably 4% (figures in the US market, as it's the market I'm familiar with)

In YVR, given the increase in property prices in the last few decades, we have grown to accept extremely low cap rate. I haven't checked for a while, but it used to be that 0.5-1.5% cap was the norm here. But it's no longer the case. Since it's no longer increasing and even decreasing, we are seeing deals that circle the 4-6% range, at least on a proforma level.

Now, getting to downturn is good. There are many landlords in YVR that has had very crappy cap rates because they thought RE in general would continue to grow in value. Banks were ok with it because that's what the market dictated. Now, the cap rate of the market is increasing rapidly. Making financing their property difficult.

Remember the bank's calculation on valuation? x*cap=rent or rent/cap=value. The cap went from 0.5-1.5 to 4-5. Using the same 50k yearly rent as an example. at 1%, the property was valued at 5M given the 50k/1%. Now with the cap rate increased to 4%, the value becomes a mere 1.25m at 50k/4%. And if they were putting 30% down to finance it, they are now severely underwater. Bank would no longer be willing to finance it at 5m valuation. Thus, the landlord needs to sell. And this is where we go in.

Of course, the example might be rather extreme. But the idea is there. If bank/lender is unwilling to finance it at a much higher valuation, the landlord or the borrower has 2 options, either pay off the debt, or prop up whatever difference to make it to 30% downpayment or 70% LTV (Loan To Value). This was one of the reasons why some sellers were willing to take huge cuts on their price because they either make up the difference, or risk losing their entire portfolio.

Realistically, 2009 was kind of a once in generation event. So, I don't think the market now anywhere in Canada is quite there. But the concept doesn't change.

And why I thought it was a good time to start writing this? Because now it's an awesome time to be starting to do your research. You need to start checking on new listings, be it for lease or for sale on a daily basis. So much so that if I ask you what's the going price in whatever area that you dedicate yourself into, you can tell me without thinking twice. Only this way, when something comes onto the market, you know if it's a good deal or not.

Let me put it this way... if I ask you about the listings I posted before and they were asking for 4m, was it a good deal? It's now at 3.3m, is it a good deal now? Tomorrow it drops to 2.8m, is it a good deal then?

Without knowing the market, you don't know what a good deal is. I've had deal of lifetime that I didn't get because I didn't know the particular market well enough. And by the time I looked at all the data, they have already had an accepted offer.

In short, know what cap rate is and the market you want to be in. This way, when a deal comes along, you can pick it up before anyone else.

[JDMDreams]

^^ would the down turn be bad then? Considering valuation is down as rents are dropping and vacancy are high due to tariffs and economic uncertainty. So even at a cheaper price, unless you have a renter to fill it you are still eating all the payments unless you drop rent low enough to attract someone to fill it.

[jing]

R$ REIT plz

[Hehe]

Originally Posted by JDMDreams

^^ would the down turn be bad then? Considering valuation is down as rents are dropping and vacancy are high due to tariffs and economic uncertainty. So even at a cheaper price, unless you have a renter to fill it you are still eating all the payments unless you drop rent low enough to attract someone to fill it.

Not if you are the buyer and you have means to pay for it.

The idea is to go in and offer whatever you feel like offering. We used to write offers valid for the day. They either take it or leave it. Usually the idea was not to get it at say 50% of the asking, but rather find those that would counter.

Those that do counter, usually meant that they needed the money and couldn't let any potential buyer to go to waste.

When the market is good, seller can be picky. But when it's bad, you'd be lucky if you even get an offer.

But rent had rarely decreased in the long term. We are seeing rent decrease because we had a unnatural run of increases and it's returning to the mean price line. But if you were doing your math base on mean/average price or even on the lower side, there could be great deals to be had.

And the idea is this... we have had properties when at 2008 peak, they were selling for 3-4% cap. And we went in at 10-12% cap. By the time the whole 2008 nightmare ended and market returned to normal, we were making a killing as we were able to raise the rent to market while paying peanuts to finance it. It's something I'd elaborate later on. But the general idea is what I just said.

[EvoFire]

TL;DR buy low sell high.

Everything Hehe has said is honestly common sense, but 1) common sense isn't common, 2) you need to have the knowledge to back it up.

For a very specific example, I've learned this from some business owners I've talked with. No two warehouses are the same. You need to know your geographical market, what the warehouse design/layout is good for.

There's a lot of flat warehouse space in Richmond, it's great for storage if your turnover isn't huge and your business is built on high margin low volume. But if you have a ton of volume with low margins, that space isn't going to be useful for you, you are going to want a dock, or multiple docks. And also consider your neighbours and space, can you get a 40ft container in, are you going to be able to load/unload 24/7?

You need to understand if there's a market for the space on offer, and then decide if you want to take a educated hedge if that's worth the price they are asking, and if the cap rate is there.

[Manic!]

Originally Posted by Fafine

Nice, how many units is it?
Share the listing?

It's 39 unit's they want 8.3 million. Not worth it. it's located on the Island.

[westopher]

What you want to do is buy something that makes you money, then after you make money, you sell it for more. All you need is a few million to start. It’s fucking simple. Hold on while I write a book about it.

[bcrdukes]

It's evident folks here don't have an issue drumming up a few million here. HEHEHEHEHE