Lotus Condos (Shiupong) - Real Estate -

[FSGIRL]

Does anyone have any thoughts on the investment value of this building? I purchased in 2005 and am wondering if 18 Yorkville is a proper comparison for recent sales....the location is the same, but not sure about the quality of finishings....should I be worried?

 

[Bentley]

I'd say the right suite there would be an excellent investment.

Think of the things on your side.

1) You're in Yorkville. It's the high end area of downtown and that will never change. Prices will always rise there. Even if the condo "bubble" bursts, the condos in Yorkville will not be impacted much, if at all. I'd worry if you bought on the lakeshore or up near te 401.

2) You have the Four seasons building going up just behind you. This is the most exclusive building in the city (except for maybe the suites at the hazelton hotel that was just built) and certainly the most prestigious. The entry level unit in the four seasons residences are 1.9 million, and over $1000/sq ft. When the buildings are completed in 4 years or so, your value will have grown significantly.

3) very close access to both the bloor and yonge subway lines. transportation is key for buildings downtown.

4) The general market for condo's is going to continue in good shape. The baby boomers are the largest segment of the population and over the next 10-15 years most of them will have retired. The empty nesters are selling their big suburban houses and buying condos. On top of that the empty nesters buying these condos are generally middle to upper middle class so demand for higher end areas (ie. Yorkville) will stay high. That's why I say I'd be worried if you bought in the lakeshore or other young professional areas. They have less money and as the housing market starts to drop (we're seeing signs of that now) they'll be more inclined to purchase detached homes as opposed to condos. Also I say if you bought the right unit, because a bachelor or tiny 1 bedroom isn't what these baby boomers want. But a larger 1 bed and den, or 2 bed will always be in high demand.

I don't know for sure about comparibles, but I can tell you that 18 yorkville has very small units and the finishes are average at best. Depending on what sort of finishes you bought and what size unit you bought, it is probably the best comparible you'll find. The low-rise building on scollard across from the Lotus development would also probably be a good comparible to look at.

Hope that helps!

 

[FSGIRL]

Thanks Bentley, it does help to hear another opinion. I did buy a 1+ den but it is small, about 725 sf. Upgraded to wood vs. laminate floors and have a corner unit w/balcony. My doubt comes in when I look at the building facade and windows going in......I know it is early, but I am not impressed with the quality of materials to date and wondering if the building's finishings will effect the investment much, even with the great location. I will be living in the unit, but hope to rent it out in a couple years.

 

[Bentley]

It's say that is an ok size and the fact that you upgraded the finishings is great.

Location alone, mixed with the fact that the four seasons will be steps away will keep the value of that unit strong. And If you plan to live in it for a while that's even better. Rent it out once the four seasons is complete. That's when you'll get top dollar for it.

 

[Observer Walt]

I would tend to agree with Bentley's well-taken comments. Location, location, location is the old mantra in real estate and that hasn't changed.

725 sq. ft. is not a bad size for one bedroom plus den. It's in line with many other projects. Corner visibility also can't hurt.

 

[investor]

Hello forum,

New here, so bare with my inexperience with message boards. I believe that I can shed some light on the discussion.

This project has been plagued by years of delays and I believe a change in ownership. It is an inferior yorkville location and does not have the curb appeal of an 18 yorkville. I agree the facade is not looking pretty and I wouldn't bank on any appreciation here at all upon completion. The upscale/luxury market is literally going to be flooded with speculators looking to dump completed units and this project will be among those hit the worst.

A basic rule of thumb in real estate investing holds that a property's net income should more than cover the cost of 100% financing. This term is referred to as positive leverage. I suspect that in the case of this building (or 18 yorkville for that matter) the net income wouldn't come close to positive leverage and any investor would simply be feeding it in the hopes of generating a gain on a sale sometime in the future. While that trend can be justified in retrospect, I believe that is a dangerous gamble to delve into this kind of speculating (not investing) and most people (yourself included) will end up getting burned badly. The investor component of condo sales has accelerated recently to levels not seen since the 80s recession (look at the remax report) and this market is looking incredibly tenuous in my opinion as a long term real estate investor.

 

[urbandreamer]

I'd buy a Lotus Elise instead. Not a wise investment of course, but good for impressing the locals on Yorkville Ave

Lotus has a spectacularly ugly design and the location is in the armpit of the 'ville; however, I suspect more infill will occur around the area (even at the masonic temple?) and in 20 years may look better. But Lotus the condo is the kind of c.2000 condo Toronto has been blighted with: yuck.

Investor: do you flip houses condos or stocks? PM me with the details if you're into flipping tsx venture stocks.

 

[investor]

Let me be blunt but fair- if the projected net income can generate at least a 6% return on the cost of the unit then I suggest you go ahead and keep it.

If not, you are probably better off walking away from your contract and letting some other poor soul deal with the headache.

 

[Observer Walt]

Investor, I don't know what you mean by "walk away from the contract". If you mean fail to close on the contract when required, there would be undesirable consequences as I'm sure you would know. If you mean dump it back on the market immediately upon closing, she would almost certainly be ahead, given that she bought at 2005 prices, but where would she then live, unless she owns another place that she hasn't mentioned?

I've already said that the location is good; not the very best in the city, but getting close to it. The project itself is perhaps not "top of the line" for Yorkville, but that's ok, it may well be more likely to hold up in the longer term, for that very reason.

FSGirl states that she intends to live in it for a couple of years. Elaborating on my earlier comment, I would say to her, go ahead and do that. The reasons why it seemed like a sensible purchase two years ago haven't changed.

When you are ready to move on to another place, assess the situation at that time and see whether it makes sense to rent or to sell. It will depend on the market at the time, and your own personal circumstances (eg. would you need the money to fund your next purchase, etc.) I don't know anyone whose crystal ball is so good that they could advise you on that, at this time.

 

[FSGIRL]

Thank you Observer Walt for the advice, I tend to agree with your assumptions. I bought at 2005 prices of $429/sf and have been tracking comparables (18 Yorkville) at $518/sf....even if the Lotus re-sales fall below market comparables (discounted for building amenities/quality), I believe the investment is a good one. I also agree with Bentley and others on the location, and believe that because this corner is the ugliest in Yorkville, it has the great opportunity to appreciate as improvements are made. Thanks everyone for your feedback!

 

[urbandreamer]

That's true.. Milan (phase 2 and 3 to follow over the next decade?) will be within view and it wouldn't surprise me if some of those rundown lowrise buildings just north of the reference library meet their maker someday. I guess I am disappointed a gorgeous brick "flatiron" building wasn't built on the Lotus site--does Toronto need yet another "dead" patch of grass at this corner?

 

[investor]

Thank you Observer Walt for the advice, I tend to agree with your assumptions. I bought at 2005 prices of $429/sf and have been tracking comparables (18 Yorkville) at $518/sf....even if the Lotus re-sales fall below market comparables (discounted for building amenities/quality), I believe the investment is a good one. I also agree with Bentley and others on the location, and believe that because this corner is the ugliest in Yorkville, it has the great opportunity to appreciate as improvements are made. Thanks everyone for your feedback!

$450 per square foot sounds about market price to me FSGIRL. 18 Yorkville has a much stronger curb appeal and the development itself is attractive. Unfortunately for them, the views will be dramatically obstructed upon completion of the FS tower, if/when that comes to fruition as imagined.

 

[urbandreamer]

Well since most of Toronto highrises offer views of the 98% ugly view of old Toronto highrises, staring at a gorgeous Aa FS highrise or two from 18 Yorkville would actually be a GOOD thing. I mean the view from 18 Yorkville as it stands today is pretty dreary.... Why are views so precious to highrise dwellers anyhow? When I lived in the Annex the only view I had was of the neighbours' bathroom, the rundown wreck of a backyard and garage behind the house, and a front porch view of a few houses across the street--not much of a view at all considering most of the time was spent staring@TV not@neighbours (well the hottie who sunbathed nude one summer next door... So staring at fellow rich folk in condos across the alley would ultimately please me more than a view of Yorkville's dreary 3rd rate parking garages, office buildings and the occassional fire truck.

 

[TOCad]

its been awhile now... anyone that actually live in the building care to comment on quality, noise, general feeling of living here (are you happy?) what are the downsides?
I live in the area currently, and looking to stay in the area

thanks