Flipping houses in Dunbar

Many Franks pointed out this article over at BiV about house flipping in Dunbar. and points out how the math might not always be as appealing as it first sounds:

“A well-backed investor leveraging 20% down financing [around $400,000] would yield over 100% [on their cash investment],” said Derek Tinney, Landcor Data operations manager.Vancouver realtor Ken Leong, who admits to a brief – and heady – history of flipping condominiums for himself and clients, said it takes more nerve and cash to speculate on Vancouver’s detached-house market than during the exuberant days of condo flips a decade ago.

Leong said that if house price increases go soft – as in the current condo market – investors could find themselves financially under water fast.

Buried below the big numbers and cherry-picked examples are some important details:

[I]f an investor bought a house for $1 million and flipped it a few months later for $1.1 million, he or she would have to pay $18,000 in B.C.’s property purchase tax. Realtor commissions to sell the house would total around $33,500. The capital gains tax, likely at the highest tax bracket, would be roughly $30,000.“So now your $100,000 gain is down to less than $20,000, and you still have to add in the carrying costs of financing of around $4,000 per month while the house is for sale,” he said.

“It would be hard to make a big profit on such a flip,” Leong said. “Actually the government would make more than the investor.”

The last sentence is key.

Read the original article here.

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fookem
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fookem

I would guess that HAM acquired $20 M of RE in West Van alone today!

Remember though are no reliable stats according to Garth but in any case he sees no ‘evidence’ that’s it’s more than 5%.

Our premier ays too bad, so sad.

Rennie says get used to it!

Remember June 24th rally.

StupidityCheck
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StupidityCheck

When Krusty and Coleman talk about “not messing with the market”, they’re full of it.

http://www.vancouverobserver.com/opinion/opinion-very-little-about-housing-situation-result-free-market

w
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w
fanaticallybroke
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fanaticallybroke

@3

That is very sad. We are a community that accepts and is inclusive. However the laissez-faire attitude of our politicians is part of the problem.

racism = ugly and unacceptable

letting fugitives and hot money come here is also unacceptable, and one is leading to the other is seems.

pacificrim
Guest
pacificrim
#3, #4 That is very unfortunate. Leadership denying the problem doesn’t help either. Meanwhile the province is busy selling everything underneath. Renminbi trading hub touted as business boost Concerns about Vancouver’s skyrocketing housing prices will not deter B.C. from courting overseas investment, provincial Finance Minister Mike de Jong said one day before the Pacific Finance Summit begins. ‘We are a trading nation,’ B.C. finance minister says, downplaying concerns about further real estate inflation As for fears that the opening of more potential investment with China would drive up real estate prices and living costs further, de Jong said they are not as closely linked as some suggests. “Vancouver is a high-priced market because there’s a finite amount of single-family homes. That has not changed. That will not change,” he said, reiterating the province will not discourage investment activities in B.C.… Read more »
pacificrim
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pacificrim

“We are not going to punish homeowners. They’ve earned it.”

Is this millenial entitlement I have heard so much of ? By what amount of genius did they inflate their houses ? How can a supposed free market choose winners and losers ? Where can I read their bios so I can learn how to earn millions myself ?

mls watch
Guest
mls watch

Skook, any stats from the Sunshine Coast or the Islands? Thanks.

pacificrim
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pacificrim

Besides conflating businesses investments that have ongoing productive value, with RE speculation, is disingenuous.

Softy
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Softy

“laissez-faire attitude of our politicians is part of the problem.”

The people of BC wanted a government of salesmen and that is what they have had for the last decade. Voters must love what has happened to the province.

Polozi Scheme
Guest
Polozi Scheme
Reports point fingers over who’s driving up Metro Vancouver property prices http://www.theprovince.com/business/Reports+point+fingers+over+driving+Metro+Vancouver+property+prices/11141419/story.html On the question of affordability, two distinct narratives have emerged from the offices of Premier Christy Clark and Mayor Gregor Robertson. At issue is whether hundreds of millions in annual fees charged to developers by Vancouver City Hall are causing housing prices to rise, or whether the true driver of Vancouver’s obscene price surges is the dominance of wealthy investors. A new study commissioned by Vancouver rejects Victoria’s argument that the city’s soaring take on development fees — specifically Community Amenity Contributions (CACs) — is forcing housing prices to rise. The real “culprit,” says the report from Coriolis Consulting, is that Vancouver “has become part of a global real estate market,” with strong demand from foreign investors as well as Canadian investors and local home buyers. That finding… Read more »
charles
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charles

The following numbers are from the credit market summary data table released by Statistics Canada last Friday:

At the end of March, 2015 the total household, government (all levels) and business debt in Canada (bottom line of the credit market summary data table – total debt outstanding) was $5.89 trillion.

In the first 3 months of this year the total debt outstanding in Canada increased by $122 billion. For that 90 day period it increased at a rate of $1.35 billion per day.

In the calendar year 2014 the total debt outstanding in Canada increased by $258 billion. In 2013 it increased by $287 billion. In 2012 it increased by $272 billion.

The start date of the data table can be changed by clicking on the “add/remove data” tab at the top of the page.

http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3780122

Softy
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Softy

OTTAWA — The Canadian government takes a “zero tolerance” stand on tax evaders and is currently conducting audits on property owners in B.C., according to the Canada Revenue Agency.

But Vancouver immigration lawyer Samuel Hyman said neither the federal nor B.C. governments are doing enough to crack down on people who pay sky-high prices for Canadian houses but don’t pay taxes on their global income

Read more: http://www.vancouversun.com/news/Zero+tolerance+evasion+Ottawa+claims/11142016/story.html#ixzz3dI9ssh2J

LS in Arbutus
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LS in Arbutus

Hmmm – Canadians hit the wall at the same time as China. Imagine Vancouver housing then….. this will not end well….

http://www.nytimes.com/2015/06/15/opinion/chinas-unsettling-stock-market-boom.html?smid=fb-share&_r=0

Individual investors appear to have flocked to stocks in part because the once-booming Chinese real estate market, which produced big profits for speculators, has cooled. Some investors now see stocks as the next good bet.

southseacompany
Member
southseacompany
“Rate hike could leave mortgage holders stretched, survey finds”, CBC News with video http://www.cbc.ca/news/business/rate-hike-could-leave-mortgage-holders-stretched-survey-finds-1.3115612 “About 15 per cent of respondents to a survey done for Manulife Bank of Canada said they would have difficulty making payments if their mortgage payments went up.” “Nearly half said they couldn’t manage a 10 per cent increase in their mortgage payment.” “”Having your payments go up 10 per cent sounds like a lot, but if you have a $200,000 mortgage and interest rates go up one per cent, that’s a 10 per cent increase in your mortgage payments,” said Manulife Bank CEO Rick Lunny said. “So there’s not much room here for those people.”” “It is likely the Fed will raise rates by one quarter of a point only this fall and the Bank of Canada may not follow immediately, but mortgage rates also… Read more »
West Coast Woman
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West Coast Woman

In many of the recent articles in the media it has been stated that people who flip property pay capital gains tax on their gains. Yet for many years it has been the law in Canada that profits from property flips are income gains, not capital gains.

If the federal government was really serious about going after income tax evaders, perhaps it should start by ensuring those who flip properties (condos and houses) are fully taxed on their gains as income gains not capital gains.

fanaticallybroke
Guest
fanaticallybroke

Finally the MSM is waking up

Why does a Richmond neighbourhood with many expensive mansions also appear to be one of the city’s poorest?

The upscale neighbourhood of Thompson, where properties typically sell in the $1-million to $3-million range, ranks high for poverty, according to Statistics Canada figures.

But former Richmond Mayor Greg Halsey-Brandt said the predominantly single-family Thompson neighbourhood has “the most expensive homes and the second highest level of household poverty” in Richmond because many residents under-report their global incomes to Canadian tax officials.

http://news.nationalpost.com/news/canada/why-is-richmond-neighbourhood-with-many-expensive-mansions-also-one-of-the-citys-poorest?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NP_Top_Stories+%28National+Post+-+Top+Stories%29&ref=yfp

patriotz
Member

@16:

Halsey-Brant doesn’t seem to understand that the StatsCan income statistics are based on the voluntary and discredited household survey.

Households may or may not be correctly reporting their correct income to CRA, but CRA doesn’t release statistics below the metro level.

Tiger
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Tiger
George
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George

@ Patriotz #17

Nice try, Patriotz. Census tracts in Richmond have shown high poverty rates for the last several censuses, not just the most recent census from 2011 when the methodology was stupidly changed by the Conservatives to be a voluntary household survey. The 2006 census was done the old way, it wasn’t a voluntary survey, and that census also showed high poverty rates in Richmond.

patriotz
Member

@19:

It’s still StatsCan data not CRA data. Responding to the old long form census was compulsory but StatsCan had no way of confirming the accuracy of income data given.

Those such as Halsey-Brandt claiming that poverty statistics in Richmond are based on underreporting of income to CRA are simply wrong.

loopy
Guest
loopy

So let’s get data ! No poverty ? Let’s get data ! No foreign investment ? Let’s get data ! Why discredit all reports instead of pushing to get the data ?

The big loophole is satellite families living in mansions and driving lambos and white beemers, having no official income, taking advantage of all the social net designed for those really in need.

If it’s self-reported, is in their self interest to claim poverty then they get welfare checks.

Investor program contribute less than refugees.

Sure is legal under current rules, but there are big loopholes.

http://www.chinasmack.com/2014/videos/chinese-in-canada-drives-bmw-to-claim-grocery-gift-cards-reactions.html

RFM
Guest
RFM

#7

Skook is on extended sabbatical but updated several threads over at http://vancouverpeak.com/index.php
before leaving.

Unlikely to update further until late July or August.

southseacompany
Member
southseacompany
“Janet Yellen’s clout today is especially hefty: Don Pittis”, CBC News http://www.cbc.ca/news/business/janet-yellen-s-clout-today-is-especially-hefty-don-pittis-1.3115351 “If you live in a cave and survive on nuts, berries and the odd roasted squirrel, what U.S. Federal Reserve chair Janet Yellen says today won’t make much difference to your life. At least not right away.” “But for the rest of us, from Saskatoon to Shahjahanpur, what she says will matter.” Costlier mortgages “In other parts of the world, including Canada, rising rates would mean an increase in the cost of lending. In the bond and mortgage market, interest rates have been tumbling steadily for years. Hitting the inflection point would change all that.” “Here in Canada a heavy burden of consumer borrowing would mean the cost of carrying loans was on the way up. That would leave consumers with less to spend and could stall Canada’s… Read more »
southseacompany
Member
southseacompany

“U.S. mortgage applications fall as rates hit highest level since October 2014: MBA”, Reuters

http://www.reuters.com/article/2015/06/17/us-usa-economy-mortgages-idUSKBN0OX17K20150617

“Applications for U.S. home mortgages fell last week as interest rates rose to their highest since October 2014, an industry group said on Wednesday.”

mls watch
Guest
mls watch

Thanks. Found it.
I will have a look at Gary Little too, but I like Skook’s graphs better.

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