Strata Meeting

I went for a strata meeting today. This is the annual meeting and the only meeting for each year. We have three owners, and there are only four units in this townhouse building. The longest owner, a lady in her fifties, was born locally and has owned her unit for 15 years. Another owner, Francis, is from Mexico, and he owns two units. He bought both units in 2003. I bought the unit in Dec 2004.

It is very interesting to see the market movement from our purchasing prices. The lady bought in 1993, for $108K. The market peaked about two years after she bought, then went all the way down to below $80. The market started to recover in 2002, but Francis was still able to buy his units at around $85K. I bought a year and a half after Francis bought, at $111K. So basically, the time difference between when the lady and I bought is 11 years, yet the prices were about the same. Francis bought at the best time, 10 years after the lady bought.

The current price for these units is about $180K.

It is also interesting to look at the rent situation. The lady lives in her unit so there is no rent. Francis bought with two good tenants who have not moved since, but with the rent control, his rent for both units are at $750/month. I bought with a tenant for a rent of $750, but soon after the purchase the tenant moved and I raised the rent to $850. There are turnovers after that, and the current rent is $950, while Francis is still getting rents of $750 each. These are identical units.

Last June when we had the annual meeting, Francis was thinking of selling and offered me both units at $155K each. The market asking price at that time was $159K. I told him I would buy if he was willing to accept $145K. He did not agree so there was no deal. I do not regret because I was not in a mood to buy and after that my money was used somewhere else, but still it looks like a opportunity lost. The lady said her unit was recently appraised at $178K.

I have not been to the city for almost a year. There is a lot of construction going on, mostly condos. There is also more traffic than last year. I drove by my other properties and then visited my property manager and the realtor, both of whom witnessed the last downturn. Both of them say it looks exactly like the last cycle repeating. I am a little worried, will the flush of condos add to vacancy rate later? Or maybe there will be more buying opportunities in the near future?