should i invest into L tower?

[plugk]

Plugk: what is your definition of investing? the discussion here mentions several options (buying at lower price, renting, appreciation, etc).

From my experience not all ppl think of "investing" using same terms, so what would make great "investment" for one, may not be the case for the next person looking at the same opportunity.

i'm not planning to live there, when it finish in 4 years, just sell it or rent it out.

 

[confusion]

I think a lot of people are missing something key here... Location!

- Right beside Union.
- Hummingbird for skating.
- Close to the Esplanade.
- St. Lawrence Market.
- Not so far from the Waterfront.

And the final nail in the coffin is... Development!
- New buildings south of the Gardiner are going to breath life into this area

So my answer is yes. If I had the money to buy on any floor on the L tower, I would.

 

[Yossi Kaplan MBA]

Calculating ROI

i'm not planning to live there, when it finish in 4 years, just sell it or rent it out.

Plugk, I'm not sure how big is the unit ans what is the configuration - bedrooms, bathrooms. For sake of argument lets assume 1+den at 700 sq. ft. - average downtown unit.

Purchase price: 700 x 585 = 409,500
deposit 20%
Financing 80% = 327600

Assume financing 80% at 4.5% x 25 yrs (conservative) = $1,813.18
Condo Fees approx 350/mo.
Tax approx .009 x 409500 / 12 = 300/mo.
Hydro 40/mo.
------
Total est. carrying costs = 2,500/mo.

If you can get 2500/mo. for this imaginary 1+den, regardless if you have parking or not, then you're more or less breaking even (note many assumptions used).

We have not included LTT, legal fees, other fees, broker's fee for rental listing if you use one, etc.

Basically repeat the exercise for your unit and you'll come up with your monthly cost estimate, then look around the area and see what are the rents and you'll know if it'll make a good rental or look elsewhere.

thx.

 

[cabbagetowner]

if you're breaking even at the end of the day, then i would take a pass. an investment that doesn't make any money doesn't make a lot of sense. if you think you can sell in 4 years for a profit (after all of your transactional fees), then you're dreaming in technicolour and it's 2004.

 

[simuls]

There is no way you'll be getting anywhere near $2500 for a 1+ in this location in four years. No way. You'll be looking at maybe, $1600. For investment, your downpayment will make you a lot more money elsewhere. With rental prices where they are, you basically can't pay more than $3-350/ft and have any sort of decent return.

 

[plugk]

There is no way you'll be getting anywhere near $2500 for a 1+ in this location in four years. No way. You'll be looking at maybe, $1600. For investment, your downpayment will make you a lot more money elsewhere. With rental prices where they are, you basically can't pay more than $3-350/ft and have any sort of decent return.

i don't think so too, wouldn't get near $2500 per month, what about just sell it? do you think it will sell it for $800 per sf. high floor, great view, one parking and one locker. at this location, yonge/front, with all these nice finishes.....

go for it or not go for it? need an answer within this week.

so far, i have 50/50 base on comment from others.

 

[urbandreamer]

Do not buy, if one person is trying to unload their unit at cost, I imagine there are many others....

Take you money and buy stocks in a solid blue chip company at the current low prices.

Or wait 2 years and buy in L-tower for 40% discount.

 

[AKS]

$800/sq ft would be very difficult to sell especially after the re-design. What's so special about Yonge and Front that makes it so much more special than any other corner? It will reach $800/sq ft over time. But not within the next 4 years. Maybe next 10-14 years. Current resale market is under $500 right now. It may drop to $400 or so. Depends how long this recession last it might go under. Some predict $300, but that would be difficult I think. Assume market recovers by 2010 and there's a run up. Do you think it will jump from $400 to $800 in 2 years?

I guess if you really like the building, you can rent it off and sell it later. There's only so much space left that I don't think there would be enough "ideal" locations left after the next RE boom but that's a long way off. If you really like the location and can't imagine buying anywhere else but there, then go ahead. Just have an open mind about buying resale which is cheaper in the market. If you want to buy pre-constructions. Wait for the next RE boom when resale prices aren't cheap and where pre-constructions are the better way to go. And hopefully building designs are better and won't fall into cheapening.

urbandreamer, I don't think 40% off L tower is possible ^^. If they had to sell it off that desperately the owner would probably just walk away from their 20% deposit than close.

I forgot to mention. If you really wanted a high end condo, then I wouldn't pass up this price. The miele appliances, smooth ceiling, etc. It would be hard to find all those nice features in new buildings without paying an arm and a leg for them. But I suppose you could "upgrade" old apartments to that it will cost you too. If you're just into renting, it's too fancy. If you're looking to sell, I don't think buyers really need it to fancy. They may or may not be willing to pay the extra high price for it.

 

[Solaris]

for that price, I would take my money and invest in a unit that is already under construction, you know for certainty what you are getting yourself into (within a defined timeline, L Tower is totally up in the air at this point)

also, the redesigned L Tower is no different than any typical condo, the selling price is not justified ... if you are simply looking for a 'great view' in that area, go see what you can pick up from Success Tower 1 or something

I second urbandreamer's comments ~ if this person is trying to off-load their agreement now, I'm sure there's plenty more of them out there ... my guess is because prices are / or going to fall below 'agent preview' prices (FACT: this has already happened @ Daniel's Merci condos, I'm not sure where else this is happening)

 

[simuls]

I wouldn't guess you'll see $800/ft here for at least 10-15 years.

 

[cdr108]

I wouldn't guess you'll see $800/ft here for at least 10-15 years.

I would go further and say maybe 20 years.

Now that this project has been dumbed down, it's not unique and no different than anything else unless you think Libeskind name has that much cache.

The going rate for pre-construction projects in the area is ~$450 - $500 PSF; and your guy is already asking ~$575 PSF + parking + locker.

Resale is going for ~$350 - 400 PSF in the same area.

Historically RE values typically double every 18 years; and we are on a downtrend after a bubble that saw values already double in 10 years.

 

[AKS]

I would go further and say maybe 20 years.

Now that this project has been dumbed down, it's not unique and no different than anything else unless you think Libeskind name has that much cache.

The going rate for pre-construction projects in the area is ~$450 - $500 PSF; and your guy is already asking ~$575 PSF + parking + locker.

Resale is going for ~$350 - 400 PSF in the same area.

Historically RE values typically double every 18 years; and we are on a downtrend after a bubble that saw values already double in 10 years.

You won't find pre-construction prices for $450-500 PSF in the downtown core. In 2008 they were selling pre-construction for $550+ PSF. 300 Front was selling at $575+ PSF. Charlie was $450+. I think London on Esplanade was around $500+ PSF back in 2006 or so? Currently resaling around $600 PSF. L Tower lower floors are selling at $585+ PSF. None of these prices include parking and locker.

I'm not sure about the resale of prices on the east end, but looking at MLS, the prices seem to be going for $400+ PSF. Cheapest 1+1 near the harbourfront area is $230k probably no locker and parking and a tiny room.
Some 1+1 go as high as 340k. Probably has parking and locker and an older building with more sq ft.

Anyhow just cuz housing prices depress now, doesn't mean there won't be another bubble in the next 15 years. But it will come down again after it hits another high. You just have to get out before it drops from the high. How much is the actual value of the condo/house and how much you sell it for are different stories.

 

[cdr108]

You won't find pre-construction prices for $450-500 PSF in the downtown core. In 2008 they were selling pre-construction for $550+ PSF. 300 Front was selling at $575+ PSF. Charlie was $450+. I think London on Esplanade was around $500+ PSF back in 2006 or so? Currently resaling around $600 PSF. L Tower lower floors are selling at $585+ PSF. None of these prices include parking and locker.

I'm not sure about the resale of prices on the east end, but looking at MLS, the prices seem to be going for $400+ PSF. Cheapest 1+1 near the harbourfront area is $230k probably no locker and parking and a tiny room.
Some 1+1 go as high as 340k. Probably has parking and locker and an older building with more sq ft.

Anyhow just cuz housing prices depress now, doesn't mean there won't be another bubble in the next 15 years. But it will come down again after it hits another high. You just have to get out before it drops from the high. How much is the actual value of the condo/house and how much you sell it for are different stories.

Projects east of Yonge St tend to be less expensive than west of Yonge.

MarketWharf, Vu, King East, all Streetcar development @ King/Sumach are going for $450-500 PSF.

Recently, there was an advert for Charlie and prices were starting <$450 PSF.

I agree that this is not the last RE bubble, just like this won't be the last recession. Just stating the historical longterm trend.

Last RE bubble peak value was 1989/1990 and those SAME prices were reached around 2005/2006 (not adjusting for inflation). So after 16 years, one had seen no increase in price and no return for the added risk.

 

[plugk]

it seen like more people said not to go for it.......

 

[AKS]

not the best indicator. It's an average and adjusted for inflation.

There was a huge spike between 1985-1989 while it has been a steady climb after the correction. Between 1996-2007 (11 year bull), average price increased by around 63%. Assuming market drops low of $400, within the next decade it should be around $650. Factoring in inflation, assuming average of 2% a year. I think it should be around $800 PSF within 10-14 years. Numbers maybe over or under somewhat. My math isn't so good, but something like that.