Baby, we got a bubble!?

[johnr]

Apparently, our building has been on the "black list" with agents because of our lawsuit with the developer (David Mirvish).

It's also very difficult to find a bank lender willing to provide a mortgage for 1 King due to the hotel/commercial component.

 

[Civdis]

Here is a breakdown of my revenue and costs

Revenue - $2000 This is an average over 12 months for my suite in the hotel pool

Condo Fees - $540
Taxes - $375

Net - $1085 before mortgage payments

I will let others figure out their optimum capital structure but this gives you an idea of possible returns. I can tell you that I have $116,000 left on my mortgage at a variable rate of 2.25% (got it pre 2008). My payments are right around $1000 per month but I am paying down $800 per month in principal. Our condo fees have actually been decreasing due to profits from the food and beverage portion of our Hotel. I am happy with the return considering I get to use my investment as an "urban cottage".

I am in the commercial property development business and believe me, the returns are much better than condos in DT Toronto. However, the risks are also higher.

 

[ISYM]

It's called stigma civdis. It will eventually go away - mostly anyway as some will always recall this particular piece of history.

This is my favourite residential building in all of TO. I can stand for hours and stare at it or for just as long, admire from within, the marriage of vintage and new.

... The joke is that we own all aspects of the building, are paying our debt down through profits from operations, paying suite owners a healthy profit every month, and seeing our condo fees drop. The problem is nobody understands our condo corporation. Bottom line is that there are great buying opportunities at One King that won't last forever. Where else can you buy a studio 40 floors up with magnificent views, a historic lobby, connected to the path with a return of $2k per month for less than $250k. I sense there may be a lot of envious Trump investors out there.

 

[cdr108]

Here is a breakdown of my revenue and costs

Revenue - $2000 This is an average over 12 months for my suite in the hotel pool

Condo Fees - $540
Taxes - $375

Net - $1085 before mortgage payments

I will let others figure out their optimum capital structure but this gives you an idea of possible returns. I can tell you that I have $116,000 left on my mortgage at a variable rate of 2.25% (got it pre 2008). My payments are right around $1000 per month but I am paying down $800 per month in principal. Our condo fees have actually been decreasing due to profits from the food and beverage portion of our Hotel. I am happy with the return considering I get to use my investment as an "urban cottage".

I am in the commercial property development business and believe me, the returns are much better than condos in DT Toronto. However, the risks are also higher.

Net $1085 * 12 = $13,020 annually net income / $250,000 = 5.2% NOI >>> that's alot better than condos in dt TO.

how often are you in the pool vs. get to use your property?

my other Q is how is it you're able to get a mortgage with a variable rate of 2.25% ???
are you using a mortgage from your principal residence or another residential property b/c no big 5 lender will give you that rate for a commercial property !

 

[Ric]

"A high tide floats all boat". There is something in the wind though, the tide is moving back out to sea.

Somethings up .....I can feel it.

 

[adeel]

"A high tide floats all boat". There is something in the wind though, the tide is moving back out to sea.

Somethings up .....I can feel it.

thats an ominous thing to hear, esp from an agent....any particular reason you feel this way?

 

[Civdis]

cdr108,


I probably use my suite a total of 4 weeks per year. I live int the GTA burbs but enjoy using the suite with my wife and family.

The mortgage rate I got was pre-recession. I have a number of mortgages at that rate so yes, I got lucky. The only problem is that the 5 year terms on the loans are almost up. It was a good run while it lasted though. The upside is that I should be able to renew right around 3%, and have paid a hell of a lot of principal off in the past 5 years.

I would love to see a similar breakdown of these numbers at the Trump. I just can't see how they make any money.

 

[cdr108]

cdr108,


I probably use my suite a total of 4 weeks per year. I live int the GTA burbs but enjoy using the suite with my wife and family.

The mortgage rate I got was pre-recession. I have a number of mortgages at that rate so yes, I got lucky. The only problem is that the 5 year terms on the loans are almost up. It was a good run while it lasted though. The upside is that I should be able to renew right around 3%, and have paid a hell of a lot of principal off in the past 5 years.

I would love to see a similar breakdown of these numbers at the Trump. I just can't see how they make any money.

thanks for the reply civdis,

my Q though is not the fact that you got a low rate of 2.25%, but was that a commercial loan?
i suspect you may be using another residential property as collateral, unless you're stating it's being used as long-term rental and not as a hotel pool so the lender is viewing 1KW as residential and allowing the residential mortgage rates to prevail.

commercial property loans are currently 5-6%, no where as cheap as residential.

 

[interested]

thats an ominous thing to hear, esp from an agent....any particular reason you feel this way?

I'd like to hear what you are hearing/seeing to lead to this.

On the PRECON market for condos, for sure this is happening.

I am getting routinely PRECON offering discounts, free parking, lockers, discounts and also agents being offered 5%. I have even been told of 6% to the agent though have not actually seen that.

I notice also that there is slowly more product hitting market.

Also, I notice that the Toronto real estate agents have become more vocal about the Toronto Land Transfer tax complaining people are choosing to buy in the 905. While they were upset before, I suspect the reason they are complaining now is that the absolute number of purchasers may be going down and they are seeking to stimulate purchases by drawing back the 905 sales which are presently having an advantage.

All this makes me "feel" like Ric that something is happening.

The other issue is that in May the stock market fell about 8%; a significant retracement and since until then since 2009 when the market started to recover people were making money, I suspect people felt richer. Just my guesses.

One additonal thought....I hear that bidding wars while still occurring are happening far less routinely and often faultering....all this suggests things may be going back to a more balanced market, perhaps on their way to a buyer's market. I note David Rosenberg had a brief blurb in one of the newspapers saying "1 down and 1 to go" referring to Vancouver as in a correction now with TO to come.

 

[Southoftheborder]

Just saw on some channel, maybe Bloomberg, that the rate of appreciation in big Canadian cities is unsustainable. That means hot money is moving in. If banks heedlessly lend the inflated prices, then the banking system is headed for a familiar-looking collapse. The banks have to ease up and lend a reasonable amount, forcing buyers to come up with ready cash of their own. Or Canada could be Greece or Iceland.

 

[MAU]

"A high tide floats all boat". There is something in the wind though, the tide is moving back out to sea.

Somethings up .....I can feel it.

Only when the tide goes out do you discover who's been swimming naked.

 

[CN Tower]

Just saw on some channel, maybe Bloomberg, that the rate of appreciation in big Canadian cities is unsustainable. That means hot money is moving in. If banks heedlessly lend the inflated prices, then the banking system is headed for a familiar-looking collapse. The banks have to ease up and lend a reasonable amount, forcing buyers to come up with ready cash of their own. Or Canada could be Greece or Iceland.

Troll.

 

[interested]

It's called stigma civdis. It will eventually go away - mostly anyway as some will always recall this particular piece of history.

This is my favourite residential building in all of TO. I can stand for hours and stare at it or for just as long, admire from within, the marriage of vintage and new.

But should one buy in it?
Civdis has certainly made a "reasonable" cash flow argument. On the other hand, until the stigma goes away...assuming it eventually does, it has not been a good investment from the capital appreciation point of view to date.
I am not judging but asking whether one should consider "investing" in this building if one were an investor.

 

[CN Tower]

But should one buy in it?
Civdis has certainly made a "reasonable" cash flow argument. On the other hand, until the stigma goes away...assuming it eventually does, it has not been a good investment from the capital appreciation point of view to date.
I am not judging but asking whether one should consider "investing" in this building if one were an investor.

It's reasonably tainted. This sucker is one phone call away from a massive special assessment for structural defects. Let's get real. Avoid.

 

[Southoftheborder]

Troll.

Wonder if there were people in Sodom or Pompei who reacted this way to warnings. Or among Bernie Madoff's "investors".