Chumps stumped by Trump pump and dump

Over in Toronto there’s an ongoing saga of the hitherto poor real estate investment that is the Trump Tower.

Many buyers have tried to walk away from their investments are are being sued by the developer to make good on their agreements.

Buyers complain that vacancy rates for the hotel condo product are higher than forecast and the costs to cover operating expenses are too high.

A group of buyers attempted to escape from their contracts by complaining to the Ontario Securities Commission arguing that the developer provided financial projections which were too high and against OSC rules.

Unfortunately for them, the OSC has just decided that they will take no action on the matter.

“After a thorough review of the matter, we have determined not to pursue regulatory action,” Carolyn Shaw-Rimmington, a spokeswoman for the commission, said in an emailed statement.

The regulator began looking into the matter after a series of investors complained that they are losing money on the suites. Talon International Development Inc., the tower’s developer, has been at the centre of the controversy.

Read the full article in the Globe and Mail.

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VMD
Member

Battle of Vancouver – Nov 2012 Update:
SFH Battle Map
– As predicted, Bear Forces successfully captured New Westminster.
– Bear Forces also liberated South Surrey & White Rock at the FVREB front.
– The following Bull Territories are facing imminent defeat: Van East, Burnaby East, North Van, North Delta.

CONDO Battle Map
– Bear Forces claimed strategic Vancouver West and Burnaby East
– Bear Forces also gained Langley, but lost Maple Ridge & Pitt Meadows.
– Richmond became neutral

(see forum thread for full battle series)

curious
Guest
curious

Whats the deal with vancouver apartment prices?? how come they seem still so high seems like the average is 6-700 per sq ft for a newer concrete builiding! crazy i always thought that condos would be the one most drastically hit as they are such poor investments. but seems like they are holding much better against houses. i remember when 500 sqft was expensive wonder if we are ever going to get back to that!

News Junky
Guest
News Junky
Sorry this is off topic, but the state of the world is not good for my blood pressure. Who would have thought the day would come when Canandians– long known as hewers of wood and drawers of water–would start importing pine cones from China! Don’t we have all the pine cones we could ever need in Canada! BC Liquor Stores are decorating for Christmas and decided to import pine cones from China for their Christmas displays. It turns out the pine cones are infested with the brown fir long horned beetle– a species from Asia that is not native to North America. This beetle could make short work of our coastal cedar trees much like its cousins doing to our interior forests of spruce and lodgepole pine. Luckily the CFIA is destroying the infected pine cones. Our forests have been… Read more »
News Junky
Guest
News Junky

To make up for my off topic post, here’s some news this group will appreciate:

http://www.cbc.ca/news/canada/british-columbia/story/2012/12/04/bc-real-estate-sales-down.html

News Junky
Guest
News Junky
This comment by flexible on that CBC article I linked to is a real doozy: “It’s just the time of year. Before we know it we’ll see more stories in the news about all the off shore buyers snapping up BC. The next wave of baby boomers is just finishing up work in Ont & Alberta then they’ll be here snapping up homes. And the cycle goes on and on. When interest rates take a small move upward all the buyers sitting on the post will jump in to the market and off it’ll go again. ” Prices have to and will come down you say” well they just did by 1.7%. That’s about as much as we’re likely so see. Prices will only come down a cross this country if wages come down, way down and that’s not likely… Read more »
vangrl
Member
vangrl

BNN breaking news:

“Canadian Foreign Investment Rules Coming Fairly Soon”

real estate investment? or our commodity companies ?

vangrl
Member
vangrl

never mind, i think he’s talking about foreign takeovers

No Noise
Guest
No Noise

I actually thought they were going to realize that buying wasnt a good idea – deal closed back in mid Oct though – if they’d waited a little longer maybe they would have come to their senses – good deal though relative to the recent past – not the future..

http://www.rew.ca/news/house-hunter-chronicles-9-home-at-last

Anonymous
Guest
Anonymous

“Buyers complain that vacancy rates for the hotel condo product are higher than forecast and the costs to cover operating expenses are too high.”

Buyers in Whistler found that out years ago with the hotel condo units sold there. Most are down over 50% from presale prices last time I checked. All the while being in negative cash flow every month year after year. Nice investment.

News Junky
Guest
News Junky
Nice parallel to real estate bust in the 80s, pointed out in the Toronto Star: “Tuesday’s developments leave many buyers in a horrible Catch-22 — owing an average of more than $500,000 each on hotel-condo units that are costing them thousands of dollars per month to keep, and unable to get conventional financing from banks that are taking the view the units are commercial ventures rather than real estate investments. “That could mean you’re going to see buyers just walk away. We haven’t seen that in a while — since the (real estate bust of the) 1980s,” said mortgage broker Steve Garganis. “These are very specialized projects. They aren’t like conventional condos and lenders generally consider them risky. You have to have deep pockets if you are going to get involved in something like this.” One buyer who was interviewed… Read more »
News Junky
Guest
News Junky
This Toronto Star article is very much worth the read: “Younho Song saw in Donald Trump a way to attain what she wanted most in life — enough money to put her daughter through law school and a little income so she wouldn’t be a burden in old age. So did her good friend Young-Sook Lee. Together, the women — Song, 51, is divorced, Lee, 58, is widowed — pooled their meagre life savings to buy what appeared to be pure Hollywood gold, a stake in one of the glitziest highrise projects to hit the Toronto skyline, the Trump International Hotel and Tower. Today, Song and Lee fear they have not only lost their $100,000 deposit on a hotel-condo suite in the project, but that they continue to rack up thousands of dollars in outstanding maintenance fees and taxes each… Read more »
Anonymous
Guest
Anonymous

@News Junky: “That could mean you’re going to see buyers just walk away. We haven’t seen that in a while — since the (real estate bust of the) 1980s,” said mortgage broker Steve Garganis.”

Actually we are seeing it right now in Vancouver and saw it in 2008 as well. I am sure they saw it in Toronto in 2008 too. We should see lots more of this happen to condo presales completing in the near future that have a market value lower than the buyer requires for a mortgage.

Any guesses what these Trump units will sell for in a few months compared to the presale price? I say 60 cents on the dollar and that is before a major correction in other real estate.

News Junky
Guest
News Junky
It’s interesting how the Toronto Star article portrays the Trump tower investors as “amateurs” in the real estate world because they “barely speak English”. In Vancouver (and in TO to a lesser extent), don’t we have lots of HAM who have a great deal of experience with investing in real estate and who speak little English. Just because you have poor English, doesn’t mean you are new to real estate. Just imagine the news stories next year in Vancouver after the crashes well underway. Those rich HAM speculators from China were taken advantage of because they don’t know English. The realtors and the bankers scammed the HAM out of their money and the HAM were the victims because they don’t speak English. New immigrants with poor English skills signed contracts they didn’t understand….let’s bail-out the HAM because not doing so… Read more »
nada
Guest
nada
@News Junky: “In Vancouver (and in TO to a lesser extent), don’t we have lots of HAM who have a great deal of experience with investing in real estate and who speak little English. Just because you have poor English, doesn’t mean you are new to real estate.” Here we see how the same people are seen through different lenses. In Toronto, immigrant speculators are seen as being unsophisticated. Here, they are seen as being sophisticated, shrewd, having deep pockets and having just gotten off the boat from mainland China. Both of these perceptions are fantasy. I have to wonder about the comments and attitudes I see on this blog. Do you know any Chinese people (HK, Singapore, Taiwan)? Have you ever met someone from Mainland China? Just because someone has slanted eyes and a flat face doesn’t mean they… Read more »
Anonymous
Guest
Anonymous

@Anonymous:

I don’t see why they should sell at all if they are loosing money month to month. I wouldn’t take one as a gift. Who in their right mind would?

Patiently Waiting
Member
Patiently Waiting

“Younho Song saw in Donald Trump a way to attain what she wanted most in life”

This is the source of their problem. Why would Trump give away truly good investment opportunities to a bunch of nobodies? Even if he couldn’t handle a good opportunity himself, due to lack of funds, he would only turn to his personal network of old boys.

Now we see why the rich stay rich and the rabble get fleeced every time. This too we will soon see in Vancouver.

Anonymous
Guest
Anonymous

@News Junky: Just because you’re Asian doesn’t mean that you’re part of the HAM demographic. These people could easily have immigrated to Canada over a decade ago. Also they’re not Chinese. Their names look more Korean to me. It’s easy to take advantage of people that don’t speak the language. And you’re making huge assumptions on their real estate knowledge. I don’t know why everyone on this board jumps at the chance to blame their real estate woes on people from Asia when people are just as stupid everywhere else.

EinsatzgruppenVancouver
Guest
EinsatzgruppenVancouver
It is mind-boggling that someone in 2004 could watch this: http://youtu.be/v84n9lk0blA And then get out their chequebook and sign a pre-sales agreement. This “investment opportunity” reminds me of an old scam you sometimes see in casinos, where a guy approaches you and says he’s a professional gambler, he just needs your money to play with, and he’ll split the winnings with you. Well, if he’s so good at gambling, why does he need someone else’s money? Shouldn’t he be flush with cash? If this hotel was such a great moneymaking idea, well, um, why did the developer need individual investors? If it was so grand, why couldn’t they just go to a bank? Since 2010 or so, my wife and I have had a lot of fun traveling to vacation destinations around the USA. We’ve stayed in several places that… Read more »
Anonymous
Guest
Anonymous

@Anonymous:

Chinese are prone to speculation,gambling,corrupt and unhealthy lifestyle.

UnagiDon
Guest
UnagiDon
news junky
Guest
news junky
@Anonymous#17 “And you’re making huge assumptions on their real estate knowledge.” I am not the one making assumptions about anyone. The assumptions are contained in the Toronto Star article. The Toronto Star article assumes the investors are amateurs because they barely speak English. It is racist to assume that someone is amateurish or naive simply because they have poor English skills. It is the TO Star making the assumptions, not me. I am simply pointing out that a “great deal” of people who have poor English skills have a lot of experience investing in real estate. I don’t mean to say **ALL** Chinese are real estate sharks. There are some with poor English skills who may indeed be amateurs, there are others with a great deal of experience. It seems to me that the Chinese real estate investors in Vancouver… Read more »
news junky
Guest
news junky

@Anonymous

“I don’t know why everyone on this board jumps at the chance to blame their real estate woes on people from Asia when people are just as stupid everywhere else.”

My point exactly. The Toronto Star is saying that the Asians are the ones who are stupid amateurs and I am saying Asians are whites alike can both be amateurs or experts.

news junky
Guest
news junky
@Nada: “Do you know any Chinese people (HK, Singapore, Taiwan)? Have you ever met someone from Mainland China? Just because someone has slanted eyes and a flat face doesn’t mean they are rolling in cash and trading condos like poker chips. They aren’t any different from the Caucasians On Credit – people keep giving anecdotes about.” Um, how do you know I am not Chinese myself? For all you know, I could be a Chinese person who takes offense to the Toronto Star portraying me a real estate “amateur” simply because English is not my first language. In truth, I am not Chinese. But I grew up in Vancouver in the 90s so basically all my friends are Chinese. I never said anything at all about people with slant eyes trading condos like poker chips. Those racist metaphors all came… Read more »
news junky
Guest
news junky
Well it seems like I ruffled some politically correct feathers here. Let’s just cool our heads and think about this some more. We are in the early stages of a major real estate correction/crash. The Trump Tower in Toronto is probably the highest profile example right now of investors getting burned in the crash. A newspaper article is suggesting that because investors can “barely speak English” that means they are amateurs who deserve, at the very least, sympathy. Perhaps, these amateur investors even deserve to be let out of their contracts, as they have argued to the Ontario Securities Commission. So we can see how barely-speaks-English can become an argument for letting people out of their real estate contracts. EVERYONE on this blog should be concerned about an argument like that. If barely-speaks-English automatically means someone is a real estate… Read more »
Many Franks
Guest
Many Franks

@news junky: I think you’re making a little too much of this. The article says…

But in fact, many of the dozen or so buyers interviewed by the Star are amateurs. Some can barely speak English.

I don’t see a “because” joining those two clauses.

As for the idea that we should all be concerned that a poor understanding of English will be deemed a valid reason for breaking a contract — no, I don’t think any of us need to worry about that.

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