TO BUY OR NOT TO BUY | PORT MOODY PROSPECT
Well after some detailed investigation into the renovation budget, property zoning and allowances, future developments in the area, and asking price we have determined that…they are asking too much. A few pointed questions to their realtor gave us a clear indication that the asking price was not going to budge into a reasonable level for our comfort and return on investment calculations. Here is the quick breakdown of how it looks:
Asking Price: $680,000
Renovation: $180,000 – $200,000
Potential Market Value Post Reno: $800,000 – $850,000
Return on Investment: -$10,000 – $60,000 (ROI in the red…hmmmm…)
This one doesn’t make sense for us. Although we would end up with essentially a brand new house top to bottom in a good area with good future potential we are not looking at this place as a ‘forever home’. This is a 5-10 year home and as such the return on investment needs to be higher or at least breaking even to be a consideration.
The reason for this? In order to make up a shortfall of $10-60,000 in 5-10 yeas we would be relying solely on the market value to increase. Now, traditionally in the Greater Vancouver area this is not far fetched, however, it is still a gamble to start out ‘in the hole’ rather than starting from zero or a positive market position. Given the shorter timeframe we need to be starting from a positivity position for our goals.
The result…we keep looking.