Vancouver Rental Market Discussion

[Klazu]

We have been seeing 15 different suites and just when we started feeling hopeless with the offering and prices in this city, a surprise contender appeared in Coal Harbour. What are your thoughts on the Denia building that is part of the Waterfront Place complex? It is right by the water along West Hastings Street. Very quiet location right by the Seawall with nice landscaping and water features. The suite we saw is only on the 14th floor, but offers great water and mountain views from two balconies.

It is quite different from 45th floor of One Wall Center, but the suite is large with great layout and a very appealing price. There is carpet in all rooms which is a deal-breaker, but we have inquired owner's interest in replacing it with laminate or hardwood for a higher rent.

The building was designed by my "favorite" architect James Cheng and was developed by Aspac Developments Ltd. Denia was built in 2003.

[Klazu]

Well that was a bummer. We just heard that the owner is not interested to replace carpet floors, even though we would be ready to pay $200/month more.

One would think hardwood floors are a no-brainer when you are renting out, as most people wooden floors over carpet (at least outside of bedrooms).

I think the building (or its sister next door) would otherwise be a nice place to live. I justlearned that Aspac Developments built also the three Harbour Green towers, which are pretty high-end.

[cornholio]

Originally Posted by Klazu

Well that was a bummer. We just heard that the owner is not interested to replace carpet floors, even though we would be ready to pay $200/month more.

One would think hardwood floors are a no-brainer when you are renting out, as most people wooden floors over carpet (at least outside of bedrooms).

I think the building (or its sister next door) would otherwise be a nice place to live. I justlearned that Aspac Developments built also the three Harbour Green towers, which are pretty high-end.

Should be a no brainer in concrete buildings but in wooden buildings not so much. Sometimes I think people just get lazy and people are still used to wood out here. Single family homes, townhouses, most low level apartments etc are still crappy wood with crappy sound insulation and carpets are a better choice. But yeah, real concrete (not the fake stuff developers seem to be getting away with now a days) go with hardwood or tile or what ever and throw a rug over it if you want.

[cornholio]

Originally Posted by twoNeurons

Toronto's a fantastic place to live. Much better city vibe for a Skyscraper enthusiast. All that being said, Vancouver is overpriced and has been for a while. Prices, despite what the media reports, have been falling or stagnant for over a year now. Puff pieces in the paper make it seem like Chinese investors are buying up the whole city.

The amount of debt we're racking up is epic.

Prices for condos yes. Prices for single family homes just seemed to have a had a shot of adrenalin over the past 6 months.

[cornholio]

Originally Posted by Klazu

That's the thing - I would never trade Vancouver for Toronto's bigger salaries. I love Vancouver for what it is and in my mind other cities don't compare to it.

It is so unfortunate that Vancouver is the only major city with this mild climate. For me the climate is not the reason to live specifically in here and I wouldn't mind a tougher winter, but I do realieze it is The Reason for many to live here. For me it's the mountains and the closeness to nature that is the number one reason to live here and nowhere else.

But I can help to think how life in that 67th floor condo would be like. Pretty damn sweet, I bet.

There is nature and mountains all around Seattle and Portland and Eugene and Fresno and LA etc. and in between. The west coast has plenty to offer. The only difference between Vancouver and the rest of the west coast is immigration policies, banking practices and lower paying jobs. As for me I enjoy the nature here, I am out most weekends in the bush at the very least, but I can tell you I don't see anyone that is buying around me enjoying the nature as well. Actually I have no idea what they do or where they work. My point is there are plenty of nice places on the west coast, and around the world.

[Klazu]

Originally Posted by cornholio

There is nature and mountains all around Seattle and Portland and Eugene and Fresno and LA etc. and in between. The west coast has plenty to offer.

No denying that, but USA and Canada are quite different countries. Although I like many cities in the States, I would never want to live there due to several reasons. I wish Canada would have more large cities on west coast for snow refugees to retire to.

That's a good point about sound insulation. Didn't think about it, but isn't it more a factor to people living below you than oneself?

[whatnext]

Originally Posted by cornholio

There is nature and mountains all around Seattle and Portland and Eugene and Fresno and LA etc. and in between. The west coast has plenty to offer. The only difference between Vancouver and the rest of the west coast is immigration policies, banking practices and lower paying jobs. As for me I enjoy the nature here, I am out most weekends in the bush at the very least, but I can tell you I don't see anyone that is buying around me enjoying the nature as well. Actually I have no idea what they do or where they work. My point is there are plenty of nice places on the west coast, and around the world.

Fresno? Not even in the same league, and Eugene isn't really either.

[Klazu]

What is considered a good ROI for a rental apartment in Vancouver? One rental agent told us that 3% return would be considered good or even very good.

If one assumes that the new owners didn't seriously overpay for our current unit, they should have paid around 1.5 million for it. There are and have recently been several similar units on market for 1.5-1.65 million and I am pretty sure haggling would get you this place for around 1.5 million.

With that price our current rent should yield 2,86% ROI. That is of course on the cheap side, but our highest offer would mean 3,28% return for their investment. Their ask price would mean a ROI of 3,84%. This is all of course excluding Strata fees, property taxes, etc. but what do you guys think about those numbers?

The suite has now been on market for 4.5 weeks for the +35% markup price and there has been very little interest towards it. Soon after they listed it for the first time there was supposed to have been "lots of interested viewers", but surprisingly every single one of them cancelled just 15 minutes before the scheduled viewing. We called their BS on that case, but after that there has actually been three couples to see the place. I don't think two of the couples were serious at all and the third viewer made a pass on it.

I can imagine their desperation growing every day and we have already heard comments like "we would love to keep you if you just change your mind" from the rental agent. It is definitely a different tone than earlier, but we are not budging with our best offer. I think both we and them will run out of time and we have to schedule a move-out crew next week (already quite late!). We have not found anything nice enough or worth the prices people are asking, so we are now considering moving to a furnished suite for few months. It is double the hassle, but will allow us keep looking without being against an immovable deadline like we currently are.

[WarrenC12]

Don't budge. They will either come to their senses, or regret it later.

[logan5]

Higher than normal rent probly means higher turnover, consequently you end up losing money. Plus all the headache of finding good new tenants. Not worth it in my view. Shortsighted greedy landlords. (Sorry landlords).

[Homeowner]

Originally Posted by Klazu

Well that was a bummer. We just heard that the owner is not interested to replace carpet floors, even though we would be ready to pay $200/month more.

One would think hardwood floors are a no-brainer when you are renting out, as most people wooden floors over carpet (at least outside of bedrooms).
.

These days you have to opt for flooring over carpets. It would be a deal breaker for me. I had to replace carpets at a condo I owned and although it has been steamcleaned when the tenants left, there was some liquid (could be drinks/ pet urine) that seeped into the carpet no visible to human eye but when the flooring installers ripped out the carpets, and flip it upside down, I can see many stains underneath. Quite disgusting.

[Homeowner]

Originally Posted by Klazu

The suite has now been on market for 4.5 weeks for the +35% markup price and there has been very little interest towards it. Soon after they listed it for the first time there was supposed to have been "lots of interested viewers", but surprisingly every single one of them cancelled just 15 minutes before the scheduled viewing. We called their BS on that case, but after that there has actually been three couples to see the place. I don't think two of the couples were serious at all and the third viewer made a pass on it.

I can imagine their desperation growing every day and we have already heard comments like "we would love to keep you if you just change your mind" from the rental agent. It is definitely a different tone than earlier, but we are not budging with our best offer. I think both we and them will run out of time and we have to schedule a move-out crew next week (already quite late!). We have not found anything nice enough or worth the prices people are asking, so we are now considering moving to a furnished suite for few months. It is double the hassle, but will allow us keep looking without being against an immovable deadline like we currently are.

With the unit overpriced, it'll just end up sitting. There could a possibility that the rental agent inflated the rent figures just to get the owner to let them manage the place. Similar to a realtor giving the seller a higher than market value of their home so the owners would let them list the property.

Someone with that much $ to spend on a luxury condo would probably be in no hurry to rent it lower and can afford to wait it out. I would stand firm on your price and not budge. Also I wouldn't want to go back as these people aren't even reasonable to deal with in the first place.

[GMasterAres]

Originally Posted by Klazu

What is considered a good ROI for a rental apartment in Vancouver? One rental agent told us that 3% return would be considered good or even very good.

If one assumes that the new owners didn't seriously overpay for our current unit, they should have paid around 1.5 million for it. There are and have recently been several similar units on market for 1.5-1.65 million and I am pretty sure haggling would get you this place for around 1.5 million.

With that price our current rent should yield 2,86% ROI. That is of course on the cheap side, but our highest offer would mean 3,28% return for their investment. Their ask price would mean a ROI of 3,84%. This is all of course excluding Strata fees, property taxes, etc. but what do you guys think about those numbers?

The suite has now been on market for 4.5 weeks for the +35% markup price and there has been very little interest towards it. Soon after they listed it for the first time there was supposed to have been "lots of interested viewers", but surprisingly every single one of them cancelled just 15 minutes before the scheduled viewing. We called their BS on that case, but after that there has actually been three couples to see the place. I don't think two of the couples were serious at all and the third viewer made a pass on it.

I can imagine their desperation growing every day and we have already heard comments like "we would love to keep you if you just change your mind" from the rental agent. It is definitely a different tone than earlier, but we are not budging with our best offer. I think both we and them will run out of time and we have to schedule a move-out crew next week (already quite late!). We have not found anything nice enough or worth the prices people are asking, so we are now considering moving to a furnished suite for few months. It is double the hassle, but will allow us keep looking without being against an immovable deadline like we currently are.

You're kind of simplifying how it goes when you rent a unit out you purchase. ROI is important, but not everyone buys a unit with a fixated ROI based around rental income in their plans. Some people don't even care about rental income from a unit. If they paid for the unit outright, the only return they need is enough to cover ongoing Strata/maintenance fees. It comes down to how much they paid and if not 100%, what the mortgage is on the unit.

As for pressure, again it depends. Someone buying a $1.5 million condo unit in Wall Center Downtown Vancouver I doubt is pressed to rent it out. It would be a bad investment to put yourself in a position where you absolutely need to.

Their rent increase to me underlines that fact, that they are not in a rush to rent nor is rent a primary motivation for their purchasing the unit.

If for example they had enough to buy it outright as a real-estate market investment, then they just need enough rent to cover strata, property tax, etc. which would likely require only a few months out of the year at the highest rate rented. They then just sit on it for 5-10 years and flip it.

So without knowing their financial situation and the final buying price + how much they actually purchase % of the selling price, it's just speculation.

Like I said though, based on their rent increase and all the information you've posted here regarding similar units in the building and other landlords' asking around the neighborhood, my suspicion is they aren't pressed to rent and probably purchased entirely for the location and resale value. Rent is just a nice to have.

[Klazu]

Originally Posted by Homeowner

There could a possibility that the rental agent inflated the rent figures just to get the owner to let them manage the place. Similar to a realtor giving the seller a higher than market value of their home so the owners would let them list the property.

We don't of course know how it really is, but this could be a very plausible explanation. Just like you say, either the rental agent exaggerated to get their business or the real estate agent to sell the property. Very common thing thing that a buyer should see through.

Originally Posted by Homeowner

I would stand firm on your price and not budge. Also I wouldn't want to go back as these people aren't even reasonable to deal with in the first place.

Yeah, we are not planning to budge and in this process we have lost our willingness to be dealing with these people. Of course if they would come to their senses on this last minute and a new lease would be signed, we would not have to see them in person as they live in Asia and never visit Vancouver. But even then, just remembering all the discussions and tone they have taken with us... It has not been very collaborative or friendly and makes for a bad foundation to do any business.

Originally Posted by jhausner

If for example they had enough to buy it outright as a real-estate market investment, then they just need enough rent to cover strata, property tax, etc. which would likely require only a few months out of the year at the highest rate rented. They then just sit on it for 5-10 years and flip it.

I hear what you are saying and I am sure they didn't buy the unit with their last pennies. They certainly bought it as an investment and potentially for their kids to move into later in life (they traveled to Canada to give birth to both of their kids for them to get Canadian citizenship).

Flipping the unit for profit is of course possible, but units in One Wall Centre are not that great investment. Prices for these units have been pretty stagnant for years (easy to google old sale prices from 5-7 years ago) and in the last 14 years values have only increased by 50% from 1M to 1.5M. I think there are many properties elsewhere in Downtown that have increased their value A LOT more than that since 2001. Interestingly enough even units that have had extensive renovations done to them (in the magnitude of 300-500k) have only sold for a little over 1.6M, so the building is not an investor's dream AFAICS.

Although I doubt their livelihood depends on the rent they will be able to charge from this suite, their recent messages indicates that they don't have all their ducks in the row. There has been lots of arguments like "Why can't you just pay more? Why be so difficult (over something as trivial as this)? Your best offer is totally unacceptable and de-values the future rental potential." I cannot really comprehend most of their arguments and how are they approaching this. It is as if they cannot understand at all how much money +35% increase is to normal people. Like said, to us this as simple as "same amount of money as we pay for our car and insurances" - so a pretty big deal. As if people would have extra thousand a month to throw towards accommodation just like that, or anyone would be willing to.

I don't know. There is definitely some change in tone in their latest messages after we told them that we are already packing our stuff in here (which we are) and booking a moving crew next week (which we will be). I don't know if they think we are just playing games and bluffing, but we certainly aren't. With every passing day we are actually more and more excited about moving out and starting saving big by renting somewhere else cheaper. That just doesn't seem to occur to them at all which is strange.

[red-paladin]

It does sound as though you wouldn't want to have them as your landlords, even if they drop the price at the last moment, unfortunately.

[whatnext]

Originally Posted by Klazu

....I hear what you are saying and I am sure they didn't buy the unit with their last pennies. They certainly bought it as an investment and potentially for their kids to move into later in life (they traveled to Canada to give birth to both of their kids for them to get Canadian citizenship).:

Originally Posted by Klazu

....Flipping the unit for profit is of course possible, but units in One Wall Centre are not that great investment. Prices for these units have been pretty stagnant for years (easy to google old sale prices from 5-7 years ago) and in the last 14 years values have only increased by 50% from 1M to 1.5M. I think there are many properties elsewhere in Downtown that have increased their value A LOT more than that since 2001. Interestingly enough even units that have had extensive renovations done to them (in the magnitude of 300-500k) have only sold for a little over 1.6M, so the building is not an investor's dream AFAICS.

Although I doubt their livelihood depends on the rent they will be able to charge from this suite, their recent messages indicates that they don't have all their ducks in the row. There has been lots of arguments like "Why can't you just pay more? Why be so difficult (over something as trivial as this)? Your best offer is totally unacceptable and de-values the future rental potential." I cannot really comprehend most of their arguments and how are they approaching this. It is as if they cannot understand at all how much money +35% increase is to normal people. Like said, to us this as simple as "same amount of money as we pay for our car and insurances" - so a pretty big deal. As if people would have extra thousand a month to throw towards accommodation just like that, or anyone would be willing to.

I don't know. There is definitely some change in tone in their latest messages after we told them that we are already packing our stuff in here (which we are) and booking a moving crew next week (which we will be). I don't know if they think we are just playing games and bluffing, but we certainly aren't. With every passing day we are actually more and more excited about moving out and starting saving big by renting somewhere else cheaper. That just doesn't seem to occur to them at all which is strange.

I was surprised how many units are for sale in there. And at how high the maintenance fees are! Sure, everyone's going to say "but it includes air conditioning!" but I'd prefer a unit that didn't require it. I often wonder how seniors who've downsized to a condo and are on a fixed income cope with escalating maintenance fees, not the Wall Centre crowd I know, but I think a lot of purchasers forget about that long term expense.

[Homeowner]

Originally Posted by whatnext

Sure, everyone's going to say "but it includes air conditioning!" but I'd prefer a unit that didn't require it. .

IF A/C is a must, I'd suggest CAPITOL RESIDENCES. Other than this and L'HERMITAGE, there are not a lot of buildings in downtown with A/C. Most of those type of buildings with A/C are only around Coal Harbour or the Falsecreek north area.

[st7860]

Air conditioning is a useful amenity to have. Not only does it keep the heat down, it'll help keep mildew and mold away.

Here's a hint for dealing with landlords that try to boot you out. Bait them into not returning your security deposit - in BC, its easy to get double your deposit if the landlord doesn't return it in 15 days.

[WarrenC12]

Many new builds have A/C now. I'd say anything completed in 2012 or later has a good chance of A/C.

As for not needing it, good luck. You need a shady spot that gets a good breeze in the summer. Global warming and all...

[Klazu]

Yeah, I don't think A/C is that rare, at least in the budget range that we have been seeing. that being said, there have been units without it, so it is worth specifically noting it. Even in our temperate climate it does come handy on fairly many days a year.