Will local rents ever make investment sense?

For several years now it seems like the standard real estate investment model of an owner being able to make a profit from rent has been turned on its head.  Recent buyers going the landlord route are paying more in mortgage bills than they can bring in from current rent rates – they’re counting on capitol gains to fill in that hole and hopefully turn a profit in the future.

Hence today’s question for discussion: When will rental rates in Vancouver make sense from an investment perspective?  As I see it there are only a few ways to get there: local incomes rise so that people will pay higher rents, prices drop so that new landlords see a profit margin at current rates, or a combination of the two.

What do you think is the most likely scenario?

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lornetki sklep
10 years ago

What blog script do you use on your site ?

Franco
Franco
11 years ago

It is a very stupid and retard Question.

To reflect the property value inline with its market reality,landlord should increase the rent.

There is a huge gap between rent and property value in Vancouver;therefore, Vancouver homeowners and property holders should stop subsidizing those unthankful renters and priced them out of this vibrant and beautiful city once for all.The current rate can't keep going on for long.

Soon Vancouver renters will be priced out of Van also. Had the gap been filled by Chinese immigrants and local Chinese,Van properties will resume its usual rocket-pace appreciation again.

pricedoutfornow
pricedoutfornow
11 years ago

Oh please. Rich Asians? Give me a break. The wealthy people I know are rich for a reason….they don't like to spend their money!

The ones buying right now are likely up to their eyeballs in debt. It's beyond me why anyone would be buying right now…like I said before-if all the planes in the world starting crashing to the ground, would you really decide that now was the time to take a flight to Paris?

But apparently many in people in Vancouver have decided that yes, this is the time.

Wait and see.

Rich Asians
Rich Asians
11 years ago

89

"If they are so busy buying (cuz you know, the Asians are coming, bc real estate in Vancouver never goes down, blah blah blah) why are they at the same time SELLING???!!!!"

To capitalize on the appreciation, and buy back low. They will rent in the mean time.

That will be the inevitable answer of some poster, but we know the truth…

Sucks To Be Rich In
Sucks To Be Rich In
11 years ago

Wealthy Families Face Bankruptcy on Real Estate Crash

“Real estate is an incredible thing on the downside,” said Jason Green, a bankruptcy attorney based in Washington. “Equities can only go to zero. Property can go well below zero,” because of expenses such as property taxes, insurance and maintenance on primary residences, vacation homes and investment properties.

http://www.bloomberg.com/apps/news?pid=20603037&a

Girlbear
Girlbear
11 years ago

realpaul: Check out the listings online in Shaughnessy. If you look through the photos of the interiors etc…I would estimate north of 30% of the houses for sale there are Asian owned.

If they are so busy buying (cuz you know, the Asians are coming, bc real estate in Vancouver never goes down, blah blah blah) why are they at the same time SELLING???!!!!

Those crazy Asians.

realpaul
realpaul
11 years ago

2 out of every 5 working age Californians jobless says new study. Thats 40% unemployment in real terms, after all it ain't the teens and the seniors that are paying mortgages.

Holy Depression Batman !!!!!! What about the 'green shoots recovery' thats been touted? Bwahahahahahahaha , its all ( what you read in the newspapers) bullshit.

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/

read on
read on
11 years ago

#87, yup – long slow deflation = much more damaging (well, economically, if not politically) than a rapid crash followed by a sensible fundamental-based recovery.

bums up2
bums up2
11 years ago

Yalie:

64 you may be right about deflation and the corresponding low interest rates that accompany it, possibly for a number of years. But what makes you so sure that low interest rates will sustain RE prices? They’ve had low interest rates in Japan for 20 years, and current RE prices are half what they were 20 years ago.

Yeah and this is definitely something to be concerned about. A long period of deflation (or any economic stagnation, really) will probably drag housing prices for quite some time. Japan has trended down basically since their peak in 89 and it's conceivable our bubble could pop that same way.

Van Resident
Van Resident
11 years ago

Yeah, Schouw is the "high end" developer who just sold out an entire tower "Grace II" at bubblicious rates ($1,000+ sqft) and is running around pumping his new project "Artemesia". I'm sure he cleared double digit millions personally on that one – meanwhile, he has completely duped his previous investors and refuses to refund their deposits.

Even worse, there's a Rolls Phantom in the marketing materials for his projects ($375k+). Why doesn't he sell it and pay back the people that supported his projects?

Unbelievable.

NO -LYMPICS
NO -LYMPICS
11 years ago

# 81 realpaul

" BTW, I had a pleasent drive while shortcutting through Shaugnessy today ( both 1 and 2) and saw more listings than I have ever seen in one period. Whats up?"

=======

Remember Shaugnessy's old nickname when RE collapsed in the Great Depression.

Answer = POVERTY HEIGHTS !!!

Probably more bankruptcies per capita there than elsewhere.

The old money is probably dying out, that leaves a bunch of wannabees that are probably so highly leveraged , trying to sell, and can't sell…they only make so many rich people y'know.

realpaul
realpaul
11 years ago

That bad boy Roubini is at again. He's telling the truth and nobody likes it.

"“Unless in the medium term these issues of fiscal sustainability are addressed, and unless we mop up that excess liquidity from the financial system, eventually the financial markets and the foreign creditors of the United States might get more concerned about the sustainability of the U.S. fiscal deficit and about the U.S. being tempted to use the inflation tax as a way of resolving its private and public debt problems,” he said. "

And #79 CO, you just may be one of the 50% that the CTV report was referring to, Maybe you can misinterpret that too?

http://www.bloomberg.com/apps/news?pid=20601087&a

read on
read on
11 years ago

#78

I really would not want to owe millions to angry ex-pro hockey players. Those guys really know how to hurt you.

Bob Rennie in hell
Bob Rennie in hell
11 years ago

79 Condo Owner :

" THE ASIANS ARE COMING! YOU CAN QUOTE ME!"

Are you serious ? I think I will set up a marketing firm to sell condos before anyone else thinks of it.

" Vreb does not disclose the race of buyers, due to Canada’s new priv protection laws & racist policies!"

Yeah right, that's CaucASIANS driving in the BMW's and Mercedes

Q: How do you get from China to India?

A: Drive over the Patullo Bridge

realpaul
realpaul
11 years ago

The Recovery Lie Revealed

Most people are willing to swallow – hook, line & sinker – the notion that there's some kind of an economic recovery underway. However, the latest figures out in the Federal Reserve's consumer debt report (a/k/a/ Consumer Credit G.19) shows that the amount of debt being created had started to collapse again in July.

Why we're all so screwed

http://urbansurvival.com/week.htm

#79 WTF are you talking about? Are you seeing Asians in the pantry? Look up the actual immigration stats and maybe consider where you live. I just spent the after noon in Kitsilano and wasn't run over by any …..Asians'.

BTW, I had a pleasent drive while shortcutting through Shaugnessy today ( both 1 and 2) and saw more listings than I have ever seen in one period. Whats up?

NO -LYMPICS
NO -LYMPICS
11 years ago

I see on Garth's latest blog the topic is GOLD.

Now watch the morons invest in gold and flood THAT market.

The bait has been set….people never learn.

===============

I see this morning that the BC gov't is cutting even further, reducing grants to school PACs. The inital pro rata was approx $40 per student, reduced to $20 , now it may be cut down to $10 per student. All these funds were from BC Gaming, not taxes, and one carrot to make gaming palatable was that the benefits would flow to the various non – profit orgnizations. Now either gaming revenue is down or its simply another clawback and broken promise.

Condo Owner
Condo Owner
11 years ago

Bums up2 I love you man! is that you Mark?

#70 Realpaul extreme BEAR folds to an intellectual bear/bull working and making sense of our current RE market.

Appears bums up2 has done done quite well in Van current RE market (since 2002)and is not letting us know.

News Flash West Side Vancouver Avg price detached home over $1.2Mill.

Vreb does not disclose the race of buyers, due to Canada's new priv protection laws & racist policies!

If we had stats of where the buyers $$$ were coming from, we could understand better our local ridiculous RE prices!

THE ASIANS ARE COMING! YOU CAN QUOTE ME!

NO -LYMPICS
NO -LYMPICS
11 years ago

Re: Len Barrie Lighting owner tries covering Bear Mountain tracks http://www.theglobeandmail.com/sports/hockey/ligh… BY DAVID SHOALTS PHOENIX Tampa Bay Lightning co-owner Len Barrie is going to try to buy out the group of almost 20 current and former NHL players who invested in his financially troubled Bear Mountain Resort real-estate project. In the wake of accusations by Bear Mountain's former auditor that Barrie misappropriated funds from the company, the executive committee of the resort's parent company, Bear Mountain Master Partnership, has decided to try to salvage the millions of dollars invested by going along with a buyout, which was ordered by the project's main lender, HSBC Bank Canada, according to a source close to the company. The executive committee also discussed hiring a private investigation company to look into claims that Barrie owes Bear Mountain between $16-million and $20-million, some of which… Read more »

NO -LYMPICS
NO -LYMPICS
11 years ago

Re Schouw's GRACE project

http://www.jamesschouw.ca/grace.php

If you read through all the info, you can see the Grace's mission statement about sharing about 50% of net proceeds from the Grace with charities….

I guess there ain't any left over.

NO -LYMPICS
NO -LYMPICS
11 years ago

# 74

Wasn't James Schouw that person that built very hi end condos. I think he was profiled in the Sun several months back.

Seems like another developer that guessed wrong, but those who have pre-purchased may be SOL….we have heard these stories before.

Vancouver Old-timer
11 years ago

For those who think the interest rates are going to remain at historic lows, I have an interesting tidbit to relate. I have accounts at three different financial institutions, each account $100,000+, in the last week each bank has called trying to pressure me into locking into a 3 to 5 year rate at more than I'm getting in a 1-year cashable. The banks are obviously trying to hedge their bets and get their hands on some cheap money before the rates begin their precipitous rise. By the way, the banks were notoriously silent for the last few years my money has been socked away.

Van Resident
Van Resident
11 years ago

Condo developer problems?

Anyone else invest with James Schouw in one of his latest projects and then not get their money back or have their building built? I know several people in this position right now.

http://www.jamesschouw.ca/

This guy has taken a bunch of people's money and spent it on god knows what and won't return phone calls. He just finished the Grace project in Vancouver and yet somehow he is out of money – it doesn't make sense…

oracle
oracle
11 years ago

no it does not.

but this lady does 🙂
http://www.youtube.com/watch?v=jGC1mCS4OVo

Anonymous
Anonymous
11 years ago

Maybe people are not reporting their income. Any cash job ideas?

Noz
Noz
11 years ago

It's quite amazing…when Vancourites speak of housing/income ratios and see $1MM homes selling in areas where incomes are $50K or less, that's OK.

But when these same people see other markets, like Los Angeles say, and see $1MM homes selling in areas with higher income ratios, somehow that's wrong.

Is that what they mean by delusional?