Here is your chance to discuss anecdotes of silly speculators, flipped out flippers, negative cash-flow ninnies, etc. Please keep it clean and on topic.
I heard a story recently of a real estate agent buying 3 pre-sale condos in the Whalley area of Surrey. No assignments allowed so this agent must take possession. These condos have no chance of positive cash flow given the price and the current rents in the area. What will happen if these condos don't sell? Don't sell above the price paid? What if this agent's income goes down and the mortgages don't get paid?
Seems like really poor diversification as far as an investment strategy goes. Too risky for me. Do you have any stories?
I heard a story recently of a real estate agent buying 3 pre-sale condos in the Whalley area of Surrey. No assignments allowed so this agent must take possession. These condos have no chance of positive cash flow given the price and the current rents in the area. What will happen if these condos don't sell? Don't sell above the price paid? What if this agent's income goes down and the mortgages don't get paid?
Seems like really poor diversification as far as an investment strategy goes. Too risky for me. Do you have any stories?
9 comments:
I wonder how many people out there are in the same situation. They piled into spec homes / condos thinking it was a sure thing and now as the homes complete the financial poop really hits the fan.
I think village was advocating declaring bankruptcy if things flop.
So this agent can't sell the assignments, but what about flipping once they are complete? What's the difference, more transaction fees?
mohican, that graph is hilarious!
ok, port moody anecdotes... we are looking to rent something in PoMo for April 1, lots of buildings completing right now & every one of the places we've looked at are investor owned. one guy took equity out of his house in PoCo because "it wasn't doing anything for him" to buy a place in Newport which he plans to rent & then sell and retire early. Another place is actually 2 apartments bought by three friends for investment purposes. Another one was owned by a realtor.
Lots of places for rent and for sale in these building, 10+ for sale in each right off, its a flipperama!
sorry, meant graphic not graph...
roflmao!
Selling an asset that you don't own yet is called... selling short. Condo pre-sales are actually short selling by the developer.
Why do people sell short? Yeah right.
Talking of looney flippers, i saw this article in today's New York Times. http://tinyurl.com/yo89vv
"Mr. Miller said New Yorkers had been reluctant to buy because of the feeling of an impending crash. “Last summer, a lot of information was being dumped on the consumer: stories about the glut of condos in Miami, Washington, D.C., and Las Vegas, exacerbated by the constant debate on the blogosphere about housing bubbles, mixed together with a barrage of negative predictions,” he said in a telephone interview"
I sure hope smeting similar doesn't happen here.
Earlier in the article they quote a 31 year old bedding designer who's having trouble finding a 1 bedroom below 750k. $750k??? What kinda bedding does she design? How could she possibly earn enough to pay this mortgage? The world is baffling.
NYC bedding designers typically make between 40 and 50 K, so we can assume that the person in question has help from her parents or is a really exceptional bedding designer. NYC is a bit special because a lot of people bring their own money or make money at a level that is out of whack with the rest of the country. I get the feeling there is less of that in Vancouver.
I'll use my own story. Sold in Dunbar in 2003 to wait out the crash. $700k. Pressured into buying by wife and kids in 2005-about the time I first started reading vHB-We paid $1.1 million on an asking price of $990k. Sold in September of 2006 for $1.65 million-to wait out the crash in 2007. Hope to hell I'm right this time. (We still own a sizable chunk of land and house in the burbs). I am not a flipper but you never go broke taking a profit. I think BC Housing Market Blogger is actually a lady and didn't have the cojones for this game. I think VHB correctly felt his work was done (and he is actually Rob Chipman).
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