Will the property value increase once complete?

[building babel]

I've got to get the bedroom walls fixed first.

Last summer, when the plumber punched through to the bathroom to install a new shower without wrecking the tile, I discovered that they were the original 1908 plaster and lath walls! I always thought it was odd that they were developing little cracks here and there, but assumed that it was just poor installation of the drywall when the place was renovated. Anyway, the hole in the bedroom wall was fixed, but I've got to get the walls taped and plastered and painted before I get someone to put down new carpet.

 

[scarberiankhatru]

Renovating century-old houses is lots of fun...you're amazed at the quality of one half, and shocked at the other half.

 

[TdotTrickyRicky]

Abeja, your specific case may pan out but generally there are some flaws in the logic. One, legal rooming houses are incredibly profitable so they essentially max out the valuation of a property and hence would make stiff competition for a single-family residential conversion. Two, price appreciation is stalling so the smart money has already been made in the downtown convert-to-sell niche. Guys are still doing it and making it work but more and more are finding they aren't squeezing out any profit at the end of the excercise. In the long-run you can't lose buying low-rise real estate in the old city of Toronto because frankly prices while high are still incredibly low by international standards, but short-term schemes are tightening up.

 

[building babel]

Sometimes people just buy a house in a neighbourhood they like and fix it up to live in. The quick-flip-for-a-profit motive of middlemen doesn't figure into the equation and neighbourhoods are revived without those sorts of people.

 

[Urban Shocker]

The largest of the three houses I mentioned earlier - the one at Broadview - has just sold. It is in dreadful condition but listed for $789,000 and was only on the market for a week or two. It could dazzle again, with enough spent on it, and was featured in Post Homes last Saturday. The bourgeoisie and their kids are moving into the neighbourhood in droves these days.

 

[vultur]

Abeja, your specific case may pan out but generally there are some flaws in the logic. One, legal rooming houses are incredibly profitable so they essentially max out the valuation of a property and hence would make stiff competition for a single-family residential conversion. Two, price appreciation is stalling so the smart money has already been made in the downtown convert-to-sell niche. Guys are still doing it and making it work but more and more are finding they aren't squeezing out any profit at the end of the excercise. In the long-run you can't lose buying low-rise real estate in the old city of Toronto because frankly prices while high are still incredibly low by international standards, but short-term schemes are tightening up.

Old thread but thought I'd throw in my 2 pennies.

International housing prices mean absolutely SQUAT to a local market. The local market is determined by local population and employment factors. Unless you can teleport your Toronto house to London it has absolutely no relevance.

I greatly detest this argument because of the ridiculous logic (broker driven) that underlies it. Real estate is not a commodity that can be imported/exported. Look to our local job market and immigration stats and you'll find the magic behind real estate prices.

FYI, I suspect that while single family houses have appreciated well in recent years, over time the inflation adjusted return would not exceed the frictionless return found in a simple S&P/DJIA index fund. The magic of homebuying is the forced amortization of debt. This cannot be accomplished with 40 year mortgages!

I'm not suggested to those in need of housing to no consider a purchase as a primary residence, but I am suggesting that the returns are not as assured as many believe them to be. Buying a home, renovating it and selling it is a BUSINESS, not a investment. I believe the margins are under 20% for those skilled at it.

As an aside, the new condo market in Toronto is now dominated by investor syndicates preparing to cash out their preconstruction profits on completion. This trend will be exacerbated by the interruptions in the capital markets. I'd hate to be sitting on a pre-construction condo contract today that I don't intend to occupy myself. Losses are all but assured throughout the city.

 

[Observer Walt]

As an aside, the new condo market in Toronto is now dominated by investor syndicates preparing to cash out on their preconstruction profits on completion

Vultur, this is not the first time you have posted statements to this effect. Do you have actual evidence to support this, and if so could you further enlighten the rest of us?

I do not claim to have extensive insider information, but I do follow the Toronto market closely, for business reasons and just out of personal interest. I am not hearing these stories.

BTW I will agree with some of your other points, specifically the practice of buying run-down houses to renovate and resell. This business was lucrative ten years ago, it is much less so now, and I have personal knowledge of a couple of recent situations involving people who have been burned.

 

[vultur]

OW,

I appreciate your comments. The information is floating around out there. Have a look around and you'll notice buying syndicates dominate preconstruction purchases. I won't sheppard this info to the source, but it is easy to find if you are so inclined. Look in the obvious places- where would you think that big spec buying would occur?

 

[bloke]

In "transition neighbourhoods"...
In high demand areas...