Posted by: Daryl & Wendy Ashby | November 25, 2010

The Way In

Victoria’s real estate market may look sewn up, but there are still pockets of land that have development potential, even for the newbie investor. As is the stock of trade phrase goes, “Location, location, location”, but for the savvy investor, the right location may be one that is filled with shopping carts, not manicured lawns.

Call it counter-intuitive, but your taste doesn’t really matter. Successful developers get richer by investing in dumpy neighbourhoods and for the small-time investor, those areas represent “The Way In.”

Find a part of town where you’d never take your kids, let alone raise them. Then take a look around. Is the property near major traffic nodes? Is there a glimmer of character underneath the grime of those dilapidated buildings? If you’ve got a good eye and the time for research, you’ll find an area in transition.

Look for an area where stores are being renovated from mom-and-pop to national franchises. If the local grocer is changing to Choices and there are plans for a London Drugs, you know the area is on the move

The streets of Yaletown in Vancouver are a prime example. In 1991 the streets of Yaletown were only active during the day, when the light industries were in operation. By night, it was bleak, largely reserved for male and female prostitutes. The area was so dumpy when the developer started construction, passersby would stop and ask, “Are you building another warehouse?” They’d reply, “No we’re building residential.” They would shout back, “Good Luck!”

Then, the developer sold 1230 Hamilton in Yaletown for $160 per square foot, but today it is in the $500 to $600 per square foot range. The same can be said about the Metropolis on Richards St. in Vancouver and Bastion Development’s Montreux project on West 2nd Ave.

The secret is not to follow big-project developers, as they move like elephants. By the time they start a project, the prices have risen to their expectations. By the time they’ve completed the project, it is generally to late to invest. You have got to be there when the development is a mere glimmer in the city planner’s eye.

Search out city policies by talking to city officials in their planning department. When the city authorizes a study, it generally affects density, which increases the tax base. That is the time to make an offer. remember the process could take a few years to rezone, so make an offer that gives you the time you need for closing.

It doesn’t have to be a $10 million property, it could start with a small warehouse that other developers have passed by.


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