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episode # 179

Advanced Tips for Buying New Condos & Investment Properties in Vancouver with Craig Anderson

Nobody knows the new condo market better than Craig Anderson. Starting his career over 20 years ago in project marketing, Craig has worked every facet of new condo development, from project inception to marketing strategies to handing over the keys at completion. Learn from the guy who advises developers on what to build for this market! Currently Director of Marketing and Sales at Magnum Projects Ltd., Craig not only sells presales but buys them himself. He sits down with Adam & Matt to share his pro tips and metrics for how to choose the best unit in a new development that will not only save you cash but offer the best return. Time to level up!

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Episode Summary


 

About Craig:

Craig is the Director of Marketing and Sales at Magnum Projects. He’s been working in the real estate industry for 20 years. Craig grew up in Marriot and came to Vancouver in 1989 when he was young for the opportunity it provided. He started working in real estate after being recruited by guys on his hockey team in the early 2000’s. Craig has always focused on pre-sale real estate selling new homes. He started on the display floor, but he was always interested in the marketing side. He has worked for some different companies eventually joining Magnum as the Director of Marketing and Sales. He has worked in various markets in BC and has also had the opportunity to work in other areas of Canada and the USA.

On why he likes working in the pre-sale market:

Craig likes the excitement of being associated with the launch of a presale building. It provides for a rewarding and dynamic work environment. He also loves the sales side in regards to understanding the buyer and the buyer’s needs and how the product design can work for people. Thinking about suite mixes, suite sizes, amenity programs are things that he finds very interesting. Creating buildings that match the buyers in the market and their needs. Smart design for the target market.  It very important to have a collaboration between architect, interior design, developer and marketing and sales. This allows a building that is right for the marketplace.

On the value add that marketers provide to a presale launch:

The marketing team can drive a price point if they understand who the buyers will be. They are also problem solvers – for example, spaces with long hallways or other areas that are not well utilized can be delineated into lock off spaces (spaces with separate beds and kitchens that can be rented or used for guests). Similar programs have been used for different buildings that Craig has worked on. Searching for efficiencies to maximize space for buyers and revenue for developers. Lock off spaces are gaining popularity because they add so much value, but securing sufficient parking can sometimes be an issue.

On the presale market right now:

The presale market has transitioned recently where marketers have to rely on the fundamentals, building relationships with buyers and adding value. When the market was very hot, a criticism was that a building would sell itself. Although this had never been the case, today’s market has been a bit more challenging. Craig and his team are reaching out to people with interesting and engaging opportunities to get deals done. They are currently working on Soleil in White Rock and Park West in West Vancouver / North Vancouver. These projects have specific buyers that are interested in these buildings. Marketers need to cover a lot more ground in today’s market and are closing less deals as a percentage of registrants, but the market continues to be healthy.

On the Vancouver market on a broader scale:

The Westside of Vancouver can be looked to as a bell weather. The price points in West Vancouver area creating opportunities for buyers that have not been available for 2-3 years. Mortgage rates continue to be low which is creating great opportunities for buyers. We have started to see a market pickup in June and July, so buyers are starting to take advantage of this market.

On the profile of the type of buyer that is out right now:

Shopping maps for real estate are increasing. People are focused less on specific areas and more on value and deals. In a slower market, people do not get as specific to areas and are looking across the realm. They don’t mind driving a bit for quality and value. This is in all demographic segments from the first-time buyer to the downsizers. Value maps have been shifting for buyers. It also seems that projects further east are very popular, especially under certain price points – under $500-$600K. Smaller product in central Surrey is doing very well. Abbotsford and Mission markets are also getting great traction. People are still looking to get into the market for investments and these are markets that people can get into and they may provide cash flow opportunities. In this market, people start to focus more on cash flow vs capital appreciation.

On what he likes about presales from a buyers’ perspective:

When he personally buys presales, he always goes in looking at what the building will look at 25 years from now. He always approaches real estate from a buy and hold strategy and never looking as a flip. He also looks for things like a 1 bedroom + den versus a 1 bedroom. You may get $1,600 / mth rent for a one bedroom from a single person, but a couple would be willing to give you $2,000 / mth rent for a unit with a den. The cash flow is better for a unit with a den that easily justifies the additional purchase price. This also might attract better tenants and tenants that stay longer with the additional space. True dens that work in a space are very flexible and make all the difference for renters.

An interesting thing Craig does for his tenants is that he provides them a free week at his cabin on Pender Island. He owes a vacation property, but doesn’t always have the time to use it. By making it available to his tenants, he adds value for them and builds a good landlord tenant relationship. His tenants are more likely to stay longer and treat his property better because they feel he also cares about them.

Renters watch the market by $25 increments. You can find the market by pricing using this strategy. If you can also add additional value for them, it is all the better.

On tips for investing and what makes a good investment.

You can’t get a significant amount of money for a presale unit on the top floor vs a lower floor. The rent for these two units will be very similar. You should always be looking for the most floor space you can be getting on the lowest floor. Renters are looking for value and rent corresponds to that value. A view may offer a small rent premium, but not enough to justify the cost of purchasing the higher floor unit. If you can provide value at a lower floor you can achieve a rent that corresponds to the price you paid to purchase the unit.

You can also look for different floor plans with variances – creative space. This will allow you to have something unique when you go to sell it and you will not be competing with other units with the same plan.

Cash flow is always important. It is best to focus on cash flow over appreciation. All of Craig’s investments were brand new presale homes. It is also always a good idea to get approved for a presale mortgage at the time of purchase. Once you are approved, there are no lookbacks. Getting this done at the beginning is best because the appraisal is done at this time as well. This will take this part off your mind and has been dealt with.

Parking and storage are always good investments. If you can purchase these things and rent them out, it provides great cash flow that can go towards paying your strata fees. People will always need parking spots and in most buildings there is a wait list for additional parking. The world of storage is a fast growing industry, so purchasing additional storage is always a good investment.

On peoples plan for their presale home:

How will it be used? If it is an investment, think about the monthly costs – strata fees and property taxes. There is a different in these costs between a 1,000 sq ft 2 bedroom or an 850 sq ft 2 bedroom. The difference in fees over 25 years for the larger space might not make sense from an investment perspective. You would be better off purchasing a smart designed smaller 2 bedroom to save on costs. Renters are looking for value in $25 increments and if they have decided they are comfortable with a smaller space, that works for them and the rent might not be drastically different from what you could get for the larger unit.

Another tip, try to purchase the millwork that is in the display home. This is traditionally expensive stuff and will add value to your unit.

On greater Vancouver markets he likes:

New Westminster has 5 transit stops, 28 min to downtown with great services and amenities. You can also go the other direction – very central. It has nice older buildings and lots of new developments at an affordable price-point when compared to Burnaby and other similar markets. It also has great community feel.

There were some older townhomes built in the 1990’s in New Westminster. The market is begging for townhomes right now, so it is a great area for development. Lots of developers are interested in this market at this time.

On if he is seeing negative effects due to the slower presale market:

Craig has been working with well known buildings with established developers. He hasn’t been seeing any problems for people unable to close or anything like that. There is still value in these investments as rents are still very strong. If other projects have been shelved, it will put additional pressure on the rental market. People are still moving to Vancouver and people will still need places to live. For that reason, he doesn’t think their will be too many problems.

On predictions for the market in the next 1-5 years:

New Westminster and Burnaby prices have started to settle now. Burquitlam is a great and upcoming neighbourhood with a 10 acre park, a YMCA and great transit. Keep an eye on Burquitlam and New Westminster in the next 1-3 years. They will be very popular. The West Side of Vancouver is also starting to look like a good buy and a lot of value is coming up over there.

Victoria, BC is up and coming with the tech sector as well. If you are thinking of the long-term hold strategy, Victoria is a great buy.

 

Five-wire:

1. Favourite neighbourhood in Vancouver: Douglas Park

2. Favourite bar or restaurant: Keefer Bar

3. First place he brings someone from out of town: Olympic Village. It is a good jumping off point to have a meal and then head out in any direction.

4. A piece of advice he would tell his 18-year-old self: Explore other real estate markets and pay attention to other markets if you visit them. Sit and listen to the locals talk – this will give you great insight on the real estate market.

5. Something he has purchased for under $500 recently that’s positively impacted his life: Soccer ball for his 9-year-old daughter.

 

Learn more about Magnum Projects.

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