Tell me what you think about "pre-sale" condos

[03ozwhip]

Talking to a guy at work that has invested in a few pre-sale condos. They won't be built til '26 -'28 but it seems awfully ponzi scheme-ish and I wanted your take on this.

For reference, its based from this realtor Joel chase. I've reached put to one of our beyond realtors to see what he has to say, haven't gotten a response quite yet, but am I missing something here? Maybe not scammy but, something off...
https://www.facebook.com/share/k4JKt...ibextid=qi2Omg

[jabjab]

I'd ask Jordan on his thoughts. Generally I would stay away from condos but there are a few good ones.

[Xtrema]

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Talking to a guy at work that has invested in a few pre-sale condos. They won't be built til '26 -'28 but it seems awfully ponzi scheme-ish and I wanted your take on this.

For reference, its based from this realtor Joel chase. I've reached put to one of our beyond realtors to see what he has to say, haven't gotten a response quite yet, but am I missing something here? Maybe not scammy but, something off...
https://www.facebook.com/share/k4JKt...ibextid=qi2Omg

It may not be a scam but risky AF.

You are betting that nothing happens between now and delivery and the price holds out.

Remember a bunch of people got burnt when 2008 financial crisis comes thru and capital chain broke for the developer? And all the presale buyers got is a hole in the ground and lawsuits?

But if you are bullish on Calgary RE, it's a cheap way to cash out and flip it on delivery.

[03ozwhip]

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It may not be a scam but risky AF.

You are betting that nothing happens between now and delivery and the price holds out.

Remember a bunch of people got burnt when 2008 financial crisis comes thru and capital chain broke for the developer? And all the presale buyers got is a hole in the ground and lawsuits?

But if you are bullish on Calgary RE, it's a cheap way to cash out and flip it on delivery.

Ok see that's what I was thinking myself, just risky based on how condo prices are, it's a tough one and I know it's all timing.

The whole 2008 fiasco is what made me think about condo prices and how risky it could be, since we all know they don't necessarily follow the same price increase rules as SFH.

[vengie]

Best asset class

[max_boost]

only guarantee is 5% gic or whatever
good luck

[Xtrema]

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Ok see that's what I was thinking myself, just risky based on how condo prices are, it's a tough one and I know it's all timing.

The whole 2008 fiasco is what made me think about condo prices and how risky it could be, since we all know they don't necessarily follow the same price increase rules as SFH.

I don't have a grasp of how many condo units are coming online. But driving around beltline and the burbs, it seems to be a fuck ton.

Delivery in 4 years, market would be totally different then.

[ExtraSlow]

You are making a gamble, and there's a few ways you can lose. Just understand the downsides.

[03ozwhip]

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You are making a gamble, and there's a few ways you can lose. Just understand the downsides.

Ya im pretty understanding of the market and even the condo market, ive bought and sold quite a few houses and condos over the last 20 years.

[mr2mike]

History is setting up to repeat when this bubble pops.
A lot of bag holders. Don't be one.

[gwill]

I didnt see what the scam was in the link. All I saw was a realtor who comes across worst then a used car salesman.

Why would you need the realtor for a pre sale? They provide zero value unless they get you into a project well before anyone else. I'm going to guess that's not happening with that guy..
How many local projects have people lining up for condos not ready for many years?

[ercchry]

It worked out for sugarphreak during the last Calgary “bubble”

Worked really well in Van and TO… does lightening strike for the 1000th time? Who knows

Worst case (besides never getting a unit delivered) is 20% down + the shortfall of appraised value at possession) and rent it out till a recovery… but Calgary isn’t good at condo recovery. So if you’re good with that kind of capital outlay and being an accidental landlord for many a year… have at it

[03ozwhip]

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It worked out for sugarphreak during the last Calgary “bubble”

Worked really well in Van and TO… does lightening strike for the 1000th time? Who knows

Worst case (besides never getting a unit delivered) is 20% down + the shortfall of appraised value at possession) and rent it out till a recovery… but Calgary isn’t good at condo recovery. So if you’re good with that kind of capital outlay and being an accidental landlord for many a year… have at it

This is exactly my thoughts on the whole situation. I just hate to tell a friend that invested so much into this kind of thing, how risky it is here in calgary at least.

He's likely made some money at this point, but 2 and 4 years from now, we all know how much can happen in RE over the course of that time.

I basically summed it up as high risk, with possibility of a scam just based of the realtor aspect of it.

[dubhead]

A little more in tune with the Edmonton condo market since I owned one up there, finally got rid of it and never thought I would feel so good about handing over a cheque for 40k just to get rid of something. Speaking with our condo manger who became our property manger and he indicated that most builders stopped building condos and start building rental towers because there's just no money to be made in condos, I think this is a similar situation down hear.

[max_boost]

i think so yup
a lot of these new builds seem to be rentals only

[Sugarphreak]

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It worked out for sugarphreak during the last Calgary “bubble”

Worked really well in Van and TO… does lightening strike for the 1000th time? Who knows

Worst case (besides never getting a unit delivered) is 20% down + the shortfall of appraised value at possession) and rent it out till a recovery… but Calgary isn’t good at condo recovery. So if you’re good with that kind of capital outlay and being an accidental landlord for many a year… have at it

Yeah it was pretty good timing for mine to say the least. It was even late by almost a year and because they sent me an occupancy letter, they paid my rent for like 8 months while the value of the unit skyrocketed.

With that said, you are basically leveraging hard with no carrying cost other than your downpayment. So you get the full benefit of market increase, but you don't pay things like property taxes, utilities, or condo fees.

If the market appreciates, it is a big win. However if the market falls, you can end up underwater on it.

My personal opinion is that the Calgary condo market isn't that lucrative. If it was my bet, I'd be looking at townhomes.

[Xtrema]

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I basically summed it up as high risk, with possibility of a scam just based of the realtor aspect of it.

Chances of this isn't 0 on presale.

[03ozwhip]

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Chances of this isn't 0 on presale.

Yep, ive seen it happen in strathmore, that's a big reason I've only ever flipped SFH and never condos. Well one condo, guess what, I lost on that one lol

[gwill]

If you think the condo markets going up why not buy one today that can be rented immediately? The new condos have a massive premium your paying based off today's pricing.