Comments on: Laying Bets On Vancouver Realty

By: vreaa

vreaa — Wed, 26 Mar 2008 13:08:39 +0000

whitebear – You may be correct. The $1.8 million figure is via word of mouth, from the neighbour. (See the source blog).

By: whitebear

whitebear — Tue, 25 Mar 2008 23:02:07 +0000

Who told you that it was sold for 1.8M?

The MLS system indicates that it was sold at $1,701,500. Can any realtor double check the MLS system? Thanks.

By: Markoz

Markoz — Sun, 23 Mar 2008 14:33:37 +0000

I guess the most depressing thing about $1.8 million for dirt is that it demonstrates just how much money (some) people have and how little they expect in return for it. The rest of us either have to compete by spending more, accepting less or just abandoning the market entirely.

By: vreaa

vreaa — Fri, 21 Mar 2008 16:20:20 +0000

You are absolutely correct rob.
But that doesn’t make this any less of a gamble.

By: robchipman

robchipman — Thu, 20 Mar 2008 23:33:59 +0000

Its not the house that commands the value, its the dirt. Sells for 1.8 with the house. Remove the house and it will sell for $1,800,050.

By: Markoz

Markoz — Sun, 16 Mar 2008 15:00:13 +0000

vreaa -

The townhouse is to live in. He was thinking of investing in the bargain assignments. Interestingly, he said the townhouse was a good deal because the original owner had purchased it as an assignment but had “waited too long” to sell it so had started to pay real money like property tax, mortgage etc. and so was desperate to sell. He doesn’t seem to see the parallel between that and the situation he is proposing to get himself into. He has done well with his real estate purchases over the years so I guess he figures he can’t lose.

By: vreaa

vreaa — Sat, 15 Mar 2008 18:12:17 +0000

Markoz -

So, was your friend considering buying some of these ‘bargain’ assignments? Or is that what the townhouse was in the first place?

By: vreaa

vreaa — Sat, 15 Mar 2008 18:11:01 +0000

Gabby -

You are correct re tax implications if this is an investment property.
Of course, if this is an investment property, it also means that any profit from resale will be taxed, too.

By: vreaa

vreaa — Sat, 15 Mar 2008 18:08:14 +0000

Gabby -

Thanks for your thoughts. And thanks for highlighting a popular misconception when calculating the cost of RE.

It may seem surprising, but the exact amount of the downpayment makes very little difference to the overall numbers.

The crucial point is that you have to take into account the opportunity cost of the downpayment.

Regardless of exact downpayment, this property is ‘costing’ the new owner $1.8 million going forward, whether he/she borrowed it all, or whether they paid cash, or anything in-between.

By: Gabby

Gabby — Sat, 15 Mar 2008 16:53:51 +0000

sorry, i meant that should NOT presume a 5% downpayment when crunching your numbers and also remember that when purchasing real estate for as an investment property, all interest is tax deductible. So, although the carrying costs would still be high in this particular case, it may not be as high as you think