Vancouver Real Estate Blog

Getting a Commercial Lease

When planning on taking on a commercial lease for your doctors or dentist office, here are some tips:

1. Understand what the lease document says.

2. Know what you want, and make reasonable demands, always in writing to the landlord.

3. Include a bail-out clause in the event you are not making money and need to close shop.

4. Ensure any extra fees are reasonable, including: maintenance fees, utilities, property tax.

5. Negotiate with the landlord deftly and avoid ultimatums.

6. A lease agreement drawn up by a lawyer is more reliable.

7. Find a good commercial real estate agent.

Vancouver Real Estate Blog

Benefits of Living Near a Subway Station

These are the benefits of living near a Subway Station:

* The old adage “location, location, location” is true for real estate. Location matters.

* good transportation available

* many offices set up near sky train or subway stations for convenience, meaning more jobs are closer

* lower transportation costs

* higher home value

* greater resistance to price drops during recession

* more walkable areas

* robust transportation choice

* attractive neighbourhood, because many stores set up near the station

Vancouver Real Estate Blog

Is owning cheaper than renting?

Example #1: A luxury condo in Vancouver.

3 bedroom, 2 bathroom apartment in Kitsilano area.

Square footage = 1100 square feet.

Monthly Maintenance Fee: $365

It could rent out for $3300 per month.

Selling Price of $750, 000.

Downpayment of 10% = $75000, and $675, 000 mortgage. 3% interest rate, 25 year amortization.

Using the mortgage calculator (http://www.realtor.ca/Calculators/en-CA/calculator.aspx?Price=749000), monthly payments will equal $3200.

Property Tax: $2400 per year.

The mortgage payments and maintenance fee combined already exceed the amount of rent earned, and there is also property tax. It is not profitable to buy luxury condos for the purpose of renting them out. In the current market, as prices are not increasing, one cannot depend on future property value increases as well.

Example #2: a cheap apartment in Surrey

1 bed, 1 bath apartment in Whalley.

Selling Price of $180, 000.

Maintenance Fee: $180 per month.

Monthly Rental: $750.

466 square feet

Property Tax: $1000 per year.

With a down payment of $18, 000 for a 25 year amortization period mortgage, monthly payments are $767.

The cost of mortgage payments and maintenance fees in this example also exceed the monthly rental income. And this is assuming that good tenants are found, which may not be the case. I would say that since we can no longer count on rising property prices, it is not worth it to buy an investment property for the purpose of renting it out.

Owning is not cheaper than renting. Property prices have gone up over the years, while rental prices have not gone up as much. The owner of the apartment needs to pay property tax, maintenance fees, and also property transfer tax when he buys the property. The renter just pays the rent and has no worries. But over the long term, owners have a significant advantage over renters. Renters are continually paying rent to other people, while they themselves do not have their own place. Owners of their own properties are forced to pay mortgages which is akin to forced savings, and they do not need to pay rent to other people, but have their own house. Owners of properties are able to get home equity loans if they are in need of money, thus reducing the need to keep money in the bank for a rainy day. They are more secure, knowing they have their own property, and thus are more able to get married.