Archive for April, 2012

The Ernest Avenue Condos in London Ontario

Tuesday, April 10th, 2012

P1210207As realtors we find ourselves working with people from all walks of life-everyone from the presidents of airplane companies looking for executive rentals with private landing strips to people arriving here in town by Greyhound looking first to find a mortgage broker who is willing to work with them on getting 100% financing.
What do you do when you met someone who tells you that they want to purchase the lowest priced condo for sale in town? Do you try and reason with them and tell them that everything in the very bottom end price range of the market is priced that way for a reason? Is it best to try and shy away from the entire situation, knowing full well that at the end of the day the amount of time and energy that it will take to put together such a deal might help to drive you that much closer to the poor house? Few people outside of our industry realize the amount of time, energy and co-ordination that it takes to make a deal like this go together.
Now let us share with you a little secret. There are some one bedroom condos for sale in the south end of the city in White Oaks which frequently sell out in the $50,000-$57,000 price range and two bedroom units that sell out in the $65,000-$69,000 price range. We are talking about the condos at 1580-1590 Ernest Avenue. It’s difficult to believe that a monthly mortgage payment on one of these units would most likely be less than a monthly car payment on a four or five year old Dodge Journey.
What do you get for your money for something priced in the $50,000’s? Well you do get a convenient south end location next to a park and within eyesight of the Rick Hansen Public School. Also close by is the South London Community pool, the Jalna Library, a T.D. Bank, the White Oaks Mall and a grocery store. Buses too are at the door.
One might ask the question that if it is such a good location and if prices are so reasonable then why are these selling prices so low? Well the main reason is that this cluster of six buildings is of the three level walkup design. Many buyers are not thrilled with this arrangement and not everyone is able to, or wants to carry groceries and baby carriages up two or three flights of stairs. Then to there is the aspect that the condo fees include all of the heating and hydro costs which is something landlord/investors typically do not like to see. In the case of the one bedroom units the condo fees are somewhere in the $240.00 per month price range.
Place yourself in the shoes of a landlord for a moment renting out one of these units for lets say $675.00 per month. After paying the monthly mortgage cost, the property taxes, the condo fees and after factoring in ongoing costs for other minor improvements that doesn’t leave very much of a return. Then to there are always the possibility of special assessments for everything from balcony repairs to enhanced security features. Being a landlord can at times be a challenging experience.
Thanks to the wonders of the internet our website has become one of the areas leading condo websites. Occassionally we do get calls from “out of province” investors who own units in these complexes and most often the purpose of these calls is to pick our brains as to why the resale prices in these complexes never seem to go up. That seems to be a major fly in their ointment. It is often difficult for us to offer any meaningful words of encouragement and what often complicates these conversations is the aspect that many of these owners have never actually seen the insides of their units. What this means is that their perceptions of the overall conditions of their units are difficult to quantify. Just because a unit has a new paint job and new counter tops in 2009 doesn’t mean that it is in tip top shape. In one of our March blogs about the Jacksway condos in north London we talked about the consquences of having a high ratio of absentee landlords.
As a reader are you now sensing a lack of enthusiasm on our part in reference to these units as being blue chip investment vehicles? Let us be brutally honest in saying why this is so. Prices on these units have remained flat over the last six or seven years. As real estate agents we have access to our Board’s database which gives us these statistics. Imagine purchasing a unit back in 2005 only to be told now that if you are thinking of selling odds are after real estate fees and lawyers fees you will not even be able to get back what you initially put into it!
It’s all in a way very much a catch 22 situation. Should we be encouraging our clients to buy into these complexes when real estate values never seem to improve? Why not purchase a student rental property instead? Yet then again if the purpose of this exercise is to find a warm and comfortable place to live – a place to escape from the rental rat race then this perhaps is it. This is the way we have learned to see it anyways!