Expert: Phil Nicols - 10/27/2007

Question
There are no experts for BC real estate, but if you can awnser my question thats great! if you cant then no biggie either! alright so I'm 19 and I have got $80,000 in savings. There is this investment opporunity in Surrey BC, putting 5% down (VIP PACKAGE) in a CONDOMONIUM, these condos are not built yet so all the client has to pay is around $12,000 to get the condo with no downpayment no interest no nothing. The condo is worth $240,000, and when the condo is built I can flip the condo price around to $340,000. Thats a $100,000 profit and I only paid $12,000. Sounds like a PROs to me...but every real estates job is to sell for commision. They hardly tell the CON's, are there any cons to look out for? Any risks involved in this investment because it sounds like a hell of a investment to me? What should I ask n look out for? I'm 19 so im really cautious...thanx!

Answer
Navi

I would go for it because a) you are 19, you can't get hurt - or you have lots of time to recover.

b) you have lots of cash savings (let me know how you made that kind of savings at 19!)

c)  I don't know anything about the BC market but from what I hear on the news, its a growth market which is good.

I would check sales of other condos nearby. what did they sell for? what are they currently asking etc?

can anyone buy the same or similar for less?

heres the downside of condos...

1) they have to become registered as a condo  and until they do, its an APARTMENT! therefore, you could be stuck PAYING RENT while they get registered! rent cn be LARGE!

a real estate buddy ran into this where we are (near Toronto) he couldn't carry the loan and the rent which was (at that time) 1500/m) and ended up WALKING away from a 40k DP!! - that was like 15 years ago so it would be worth more now)

2) you don't really know what the TMI will be. (taxes maintenance and insurance) they can only "guess and budget" .

whats the history with the developer as well? are they on the stock exchange? if so has their stock being going up or down?

Google them at very least to see if they are being sued for anything.

-- is there a chance they WON'T complete the project?

those are the downsides - other than that from what you are telling me, if you did your homework (don't take the agents word for it - do you own investigations) it sounds like a good deal.


oh, one other way you could get F'ed.. where we are, there were some waterfront condos being built - th first tower sold out.. THEN (only after) they announced the SECOND tower which would be developed RIGHT IN FRONT OF THE FIRST, BLOCKING THE WATERFRONT VIEW -RENDERING THE OTHER TOWER NEXT TO USELESS! (well, diminished value at best!)

best, Phil