Sunday, May 20, 2007

Suite Mother of a Deal

I must be feeling some added confidence lately, or it's the lovely Spring rain that's got me in the mood to take the gloves off and go after individual advertisements in town.

Today I'm right pissed at some deceptive bs coming from none other than Sooke's fabulous development on a bog: SunRiver Estates.

Several weeks ago, they started a Suite Deal! advertising push that showed how you can get into a home "cheaper than rent" (they claim) if you have 25% down, amortize over 40 years and have tenants in your 2 bed basement suite. Fair enough. But over the weeks some things have changed, but others have not. Your out of pocket expenses haven't changed apparently, despite a 0.25% jump in interest rates. How'd they do that?

Simple. They just upped the rent you'd charge your tenants. If only it were that simple.

The first add I noticed claimed a monthly rental income of $848. I didn't balk at that too much. You can't get a similar brand new 2 bed suite in town for that price. I figured there may be some Langfordites that would be willing to pay that and have a 20-minute commute to work. But when interest went up, strangely enough, so did the rental market value in SunRiver. Now that $848 is $950. That's over 10%. And that isn't reflective at all of true market value for similar suites in Sooke.

I couldn't find any vacant SunRiver suites to see what they are actually asking. But if only it were that simple that you could just assume that kind of debt no questions asked. Too bad you won't qualify for that at the bank. If you show up at the bank counting on rental income to make your mortgage payments, as I understand it, they will only accept it with a one year signed lease guaranteeing the payments, and they only count half the rent as actual income.

The most brilliant thing about their pricing though, is with an unfinished suite roughed in, you save $20K in purchase price. Want them to complete it for you? Pay the extra, no problem. Except that the actual costs of finishing that space according to a contractor I know, closer to $10K without cheaping out on appliances and furnishing's. He figured he could do up that SF on the cheap for $8K. If you are at all handy with finishing, you could self contract the drywall and taping, paint and finish yourself, get your flooring installed professionally, and the cabinets, and you could get it done for closer to $6K.

Ah, the things they just don't explain to you in advertising.

14 comments:

Vicguy said...

I always thought that development sounded shady. Expecting someone to rent way out there to buffer the pain on a brand new place is BS. I thought the idea was lower prices on new housing because you are living in the sticks and you shouldn't need a secondary suite.

Yes I was told by a mortgage broker that they wanted a signed one year lease before counting any calculations based on a suite.

Aren't one of those Sunrise developers the Basi guy in the government fraud trial going on right now ? Thought there was some info in the pretrial that mentioned this development.

hhv said...

I hadn't heard that before... what I've heard about it is that land is a reclaimed bog and that owners should expect major structural issues as lots settle and water levels creep up/down depending on the layout of the lot.

Vicguy said...

Yep,shady stuff alright:

"April 3, 2006: Basi faces four new charges of fraud and breach of trust for allegedly taking $50,000 from two developers with Sunriver Estates Ltd. in connection with an application to remove land from the Agriculture Land Reserve. The developers also face charges."



http://www.canada.com/victoriatimescolonist/story.html?id=fcdc0ddd-761f-41f5-a297-bf00238ef75b

hhv said...

I'd like to say I'm not surprised...

Anonymous said...

Renting limitations: In the CRD area at least (it may actually be a provincial law), landlords may only increase rent as follows:

1) Once per year with 4 months in advance written notice to tenants.

2) To a maximum ammount of 2% above inflation rate per annum. So if inflation is 2%, that means 4% max (10%? I don't think so!).

3) This is true for the length of your tenant to landlord rental contract.

Caveats:

a) I do not know if it is legal for a landlord to modify the rental agreement to specificaly state that he/she may raise rent at a frequency or rate higher than that. Even if it were legal, it could only be done at the beginning of the contract, unless.... (and this is a loophole that some landlords are starting to use...)

b) If your tentant contract does not renew AUTOMATICALLY on a month to month basis and has an expiry date. I.e. You have a fixed 1 year contract with the landlord, and then after that your contract is over and you must write/sign a new contract, then obviously it's fair game for new terms to be established, including a rent change to any specified amount the landlord may wish to impose - realistic or not. This loophole is also a great way for landlords to be able to terminate rental contracts & kick tenants out if they are not to their liking because in BC, it's pretty damn hard to get rid of (bad) tenants. You have to claim & PROVE that either:

i) You want to do MAJOR renovations in the suite and require the tenant to move out.

ii) YOU _need_ to move into the tenant's suite for some justified reason (i.e. you just sold your house, and all you have left is a condo that a tenant of yours is renting from you).

Even in such cases you must then give the tenant a minimum of 3 months written notice OR 2 months written notice + 1 month's of rental pay (landlord pays tenant 1 month's rent in cash).

Those are the rules. FYI, I am both a landlord with a house I partially own & a tenant where I actually live.

Cheers,
Anon

hhv said...

Anon,

you are correct. but a landlord can up/down rent whenever a suite is vacant by any amount he/she chooses.

Anonymous said...

This is off topic but funny

We were talking about the baby boomers appetite for consumption. There is a new book out called Boomsday by Christopher Buckley.

CHRISTOPHER BUCKELY has taken a dull subject-the budget crunch tht will occur when America's baby-boom generation retires- and made it funny. The boomers have voted themselves impossibly genersou pension and health-care beenefits that will have to be paid for by younger taxpayers. Since young people are, on average, much less wealthy than the old,this strikes many of them as unafair.In Mr. Buckley's latest Washington satire, they do something about it.

Cassandra, the heroine0,has hadenought of her selfish elders. As a teenager, she got into Yale, but found her fther had spent her college fund on his dotcom start-up. So she joints the army, which pays college fees if you serve long enough. Stationed in Bosnia, she is given the job of showing around a visiting congressman, who take the wheel ofher Humvee and drives it drunkenly into a minefield. They survive the explosion bu tht earmy is so embarassed by the inevitable speculation that the two were having sex that Cassandra is discharged. So she never goes to Yale.

Instead she ends up working for a dodgy public-relations firm, representing mink ranchers, porn shops and the north Korean governmnet. At night strung out on Red Bull, she blogs about fiscal responsibility. The United States is so indebted that foreigners are refusing to lend it any more money. Inlfation is exploding. Congress responds by raising taxes on the under 35s but not the retirement age. The Association of Baby Boomer Advocates (ABBA) demands ever more good things, subsidies for Botox and motorised scooters for those too lazy to walk. On her blog, Cassandra calls for "action against gated communities known to harbour early retiring Boomers". Riots reupt on golf courses in Florida. Suddenly, the issue is front page news.


this might be fun to read .

Roger said...

hhv
I fired up the computer this morning and went to your blog to see what was happening in the Victoria real estate market.

I was shocked to see your comments on Sunriver Estates. Here we have a real estate developer who is trying to help FTBs get into the market with a suite deal and the posters are questioning the motives. Please consider the following:

1. The rent for a basement suite is subject to market demand. Don't you know that everyone wants to move to the Victoria area!! When they get here they find it a bit expensive so their first thought is - lets move to Sooke. This is causing pressure on the Sooke rental market. It is not surprising that rents have jumped a $100

2. Most people love a quiet drive in the country. The daily drive from Sooke on the winding road with the other commuters is a relaxing way to start the day. Heck, you can even do a little shopping in Langford on the way home at night.

3. There are probably some owners in Sunriver that did not buy a house with a suite and now find themselves struggling to make payments on their mortgage, recent Sooke tax hike, heating and electricity bill. If they sell their house they can move into one of these suites and they can continue to live in Sunriver. Talk about a backup plan!!

4. Sunriver charges more for finishing the suite than other contractors because of the quality of their work. Why not visit their show home and examine the attention to detail in their baseboards, window and door trim. You will be amazed and won't be able to stop talking about it to your friends.

5. Some FTBs do not realize how much fun you can have as a landlord. With the right attitude you can join the late night parties and meet new friends. Eavesdropping on tenant arguments is better than second hand gossip. Having a BBQ with the tenants is better than eating alone.

Remember, not all developers are in it for the money. Some just want to help folks get their dream house.

vicguy said...

yes roger,nothing like some good ole palm greasing to make me feel like someone is finally looking out for my interest and giving me the best deal possible while building my dream house on some swamp land,lol.
I wonder how much bribe money it took for phase 1 ? :)

HouseHuntVictoria said...

I hadn't looked at it like that Roger, maybe we'll buy, finish it ourselves and live in the suite and rent out the upstairs for $1800/month. that way, in 25 years when we've built up enough equity to swap places with the tenant, it truly will be like "moving up" in the housing market.

Anonymous said...

There are definite problems with Sun River Estates. If you are intending to purchase in this subdivison a building inspection should be mandatory. And for God's sake don't use the one the agent refers you to!!!

Siobhan

Anonymous said...

I realize this is an old thread, but really have to comment. All the BS about the suites is just that. Suites in Sunriver rent for 850 - 950 plus utilities easily. The advertising was not misleading (IMO.) Most of this "anti" posting was completely wrong in fact, in law, and in reality. Shameful posts.

We live in Sunriver and love it. Our home is very well built to the standards that we expected. Have a look at the website at SunriverEstates.com. We would echo their advertising. By the time we moved in our home had apreciated approximately double our down-payment You simply cannot buy the neighbourhood in Victoria proper. The security that we feel here does not exist in Victoria.

I think to make the unfounded posts on a public website as I read here is litigious at best, maybe criminal.

As for all of the other "bear postings" I bet you guys would love to wind the clock back about 4 years with a bit of hind-site. I have a friend with this attitude. He's been holding off since the average home was $250,000. He continues spending his retirement, adding his consumer debt, and complaining that the city needs to provide affordable housing - more BS. We all make decisions in life.

As for the future, you know what's going to happen should the prices come down 20%? I'm going to buy another home and so is everyone I know (barring a complete interuption with the econony,... no, actually I will be ready to absorb those properties as well.)

The owner of this site or the poster of the original "suite mother of a deal" should do at least a little research before posting such blastfamous words. This site should be removed.

Anonymous said...

If I had $200,000 sitting around today I might consider a purchase just south of us as a rental. Loonie is still strong, but predicted to drop, interest rates still low, US housing likely at bottom in some cities. Seems like a good set to me.

Anonymous said...

Someone considering purchasing at SunRiver Estates should really think twice; the builder Citta Construction has a very shift way of doing business. They cut a lot of corners, and the fit and finish "quality of product" is poor! When you discover something has been done wrong, and bring it to their attention, they call it "Industry Standard" and brush it off. Many of the homeowners on the street I live on have numerous issues with Citta and are very upset (lawsuit started) about their disregard for you as the homeowner. Basically once they have your money you are up the creek! They do not inform you of your "1 Year Home Owner's Warranty" through the warranty company, and wait until the one year warranty has run out, Citta customer care instruct you that "Citta" will take care of all deficiencies on "their 1 year walk through" but they don't! They make you wait more than a year for your 1 year walk through so you have no recourse with the Home Owners Warranty. The "man in charge of Citta" thinks he is God! He will not listen to anything you say - He knows it all and calls all the shots and even contradicts his tradesperson's knowledge and suggestions in order to save themselves money on fixing their mistakes!!!! And he will fire anyone who disagrees with his opinion!