I don’t believe that a very high percentage of buyers in Condo Land upgrade their units.
With the decided majority of buyers being investors this makes sense as the base creed of investors is “minimum in maximum out“.
I invest differently myself as my number one and number two investments have always resided in my home with me. I buy the nicest new home that I can afford at the time and I then pay it off in full.
If you want the key to successful investing in one nutshell, there it is.
And once you’ve gotten that step solidly in place, then and only then you can venture out into the “investment world“. I keep, and strongly recommend that you keep the two worlds from ever colliding.
I don’t buy into the “flawed logic” being sold by mortgage brokers that are “selling the concept of having consumers borrow against the equity in your home to have them invest in speculative real estate ventures“.
I have never bought into the idea of “leverage” as many uninformed academics (the Press) and other hustlers so strongly promote. Pick up a copy of the local FREE Condo Magazines and you’ll see the covers constantly taken by one of these mortgage brokers.
Keeping the two worlds apart allows you to do whatever it is that you feel is right in the “investment world” while protecting your “core asset” (your home).
Sun Tzu continually emphasizes the you “stabilize the home front before venturing out to war and only when the home front in taken care of do you venture out.
But anyway, to address today’s topic of “upgrading“, I want to share my recent endeavour to have my new (Million Dollar plus) home that is being built by a local developer in Oakville right near the lake.
These home are advertised by the developer as “an exclusive collection of just eighteen exquisite homes” who’s sales brochures promise “a Focus on Building Excellence“, and “Finished to the ultimate in perfection“.
Now, I’m an experienced buyer/investor and buyer’s agent and I would not ever recommend anyone to simply buy, site unseen over the Internet, but being familiar with the area and in a cash heavy situation requiring making an investment, I bought it without even returning from Florida to physically inspect the site.
I’m also always confident that I can get myself out of any jam that I get myself into and a do not recommend others to assume my personal logic.
So I proved to myself that I am not quite as conservative as I’ve convinced myself as being, but I’m fully aware that there are no great deals out there amidst the real estate buying hysteria that we’ve been going through over the past few years here in Condo Land. My philosophy is that there are always “sound buys” if you have the right information available to you.
I ran through all my conventional buying questionnaire with the developer (we had no agents involved) like “ceiling heights, door heights and construction (solid core / hollow core), countertop materials, sink styles (above or below mount), etc.”.
You see developers always give you the “minimum standard“. It’s like a decease with that comes from admitting to being a developer. This is one of the more startling realities of Condo Land, the developer’s fixation on only ever giving the “minimum standard” while being allowed to advertise that they are “creating the best’!
I was originally impressed with how attentive the developer was realizing that it was the day before Christmas that we decided on the house.
We were anxious to invest having spent a couple months wasting time, energy and resources pursuing two custom built homes in London Ontario only to discover that we were not being dealt squarely with.
I found this one on mls and when I saw the map location I jumped. You simply cannot buy a detached home in this prestigious area for under a couple million!
We actually got the developer on the phone on Christmas eve! He answer most of my questions immediately and those he didn’t have answers for (countertop material and sink styles) he promised he “would follow up with“.
I had come across a Listing on Realtor.ca and called the Realtor who I spoke briefly with but then did not hear back from (apparently they had had a listing but no longer had it). She had told me that there were “7 units for sales“. I couldn’t believe it!
With this location I was confident that I would have sold it out in weeks. My concern was that they would sell over Christmas and that we should buy ours on the spot!
We learned over the phone from the C.E.O., that there “were only 3 units left” so we asked them to prepare the sales agreement and email it to us for signing.
You don’t often negotiate on one-off pre-construction deals, it’s just not set up that way.
We wired them $100,000 and owned the unit. We had a “recession period” as the development is a “POTL”, unique form of condo applying solely to the road accessing the homes (but condo it is). It seems that I can totally get away from condo life but that’s not for a lack of effort!
Well ten months and two delayed “Occupancy Dates” later and not even having completed our “colour and materials selections” (kind of an important step in the process) and not seeing any construction on the home I started to get little radar warnings.
The sad reality of Condo Land, is that after your 10 Day Rescission Period (during which time you can get out of the deal) you instantly become “nothing to the developer”.
Common sense would tell you that they want to build a reputation and deliver the best quality possible in return for your trust and money right?
Once you’re in, you become more like a nuisance and the laws do not require the developer to communicate anything to you and they are constantly committed to “the course of least resistance“.
We were however, totally sold on the area after doing our thorough due diligence on the entire Oakville market. Not “emotionally sold” (I don’t allow that) but “logistically sold” as our home is always our Number ONE INVESTMENT!
We wanted to walk by the lake and enjoy the numerous parks and nature trails in the area, while still walking to restaurants, coffee shops and grocery stores, and most importantly be out of Toronto!
So, finally and with my radar going off on over-load, we were invited to attend Paris Kitchen’s (one of the city’s premier kitchen suppliers) customer centre and select our kitchen cabinetry.
If you are thinking kitchens, I have no hesitation in endorsing this company. They’ve been around a long time and I’ve known of their stellar reputation ever since I entered the condo game in the late 1970’s. We found Anne-Marie Gajdosik, their design consultant extremely helpful and informative, a true professional.
When we arrived, we were caught a little off guard as they Paris Kitchens handles only the kitchen cabinetry and could not show us any samples of flooring for us to choose to complement the kitchen, no countertops, or appliances.
The paper work from Paris Kitchens was the first time we had seen anything at all! Apparently the developer didn’t have or didn’t want to show us a decor centre showing the standard and upgrade selections.
Can you imagine having to select your kitchen cabinets without knowing what choices of countertop, sink style, tap style flooring colours and style and material would be integrating with it?
So I managed to talk to the developer, who told me that he had just lost a number of staff, including the selections person (my radar alarm levels adjusted upwardly!).
We offered to assist him by doing the selections ourselves. This wasn’t our first rodeo and we had done “colour selections” numerous times and were familiar with the paperwork and systems.
Even with my usual rather systematic questioning, I haven’t to this day, been able to gain an understanding of exactly what happened to his selection centre.
I’ve bought over a half dozen condos in the past decade and done colour selections with each one and it has always been a half hour discussion on samples presented by the developer in colour combinations usually so even the most basic interior design skills could not go wrong.
He actually told us on two occasion that he had the selections on display at his home office up in Richmond Hill but on having traveled up there on two occasion now and on the last one asking him “if all those on display were for these homes” and having him say “no“, I’ve had to adjust my sights to getting this deal done right myself.
After all, I was born at night but it just wasn’t last night!
So I tactfully informed him on his latest “Delay Notice” that he, in fact had just “noted for the record that he was going to be unable to uphold his position in the contract” by exceeding the “Outside Occupancy Date” set out in the contract.
If you are not familiar with this term and you are an owner or potential buyer of a pre-construction condo (from plans) you will want to be. You can read about it here at simplycharles.com, simply by searching “Outside Occupancy Date“.
All of a sudden, the playing field is levelled thanks to my understanding of the contract, which is something very few condo buyers and investor do, which is yet another critical error on their parts.
Not working with a buyer’s agent that can explain all of this to you going in is usually another one of these critical errors made by novice condo investors.
Well, here’s where it gets interesting as I drew the developer back to the bargaining table.
You see, if a developer delays your “Occupancy” to a date beyond this “Outside Occupancy Date” and you are aware of your right to serve notice of intent to terminate the deal (only within 30 days of passing the OOD), he loses, but only if you serve Notice within 30 days!
I fully intended to stay in the deal, but strategically had to have him “feel the loss” of this deal, and then real him back into the negotiating table to resolve areas of concern that I needed addressed.
Tune in for frequent updates as this story unfolds. It’s in real time.