* “Vancouver’s Lower
Mainland has had its
: ups and downs over

the years, but for most:

people ithas beena .
very good investment.

- But if vou were currently
looking for an investment in
real estate, is it‘a good place
to put your money now?
ies In an attempt to getan
answer to this question, I

*~ gandertook an analysis of the

economics of an investment
in real estate on the: North
Shore. -.:

This involved es' mating
the rent, mortgage pay- -
“ments, property taxes and
maintenance expenses for -
different homes in North
and West Vancouver.

*: The results. of this analy
sis are shown in the acconn -
:. panying table, .
: wen can see from the
ble that a North
Vancouver ‘detached home

f $300,000 would rent for a

Based on the description
of the homes in the ads, a
_ purchase price was.then esti-
mated for the rental proper-
ties.
The North Van’ ‘detached
home. that would cost |° ~
‘$300,000 and rent for:

- $1,800 is in the Central :

Lonsdale area and has three
‘bedroonis. ae

"The $260,000 attached |
- hame céntiig for $1,400 -

‘alse has three bedrooms and .

the $170,000 apartment.

-that rents for $850 has two -

bedrooms.

Both are in Lower
Lonsdale. :

~The West Vancouver
detached home-which sells

3186,000. West Van apart-

ment “has two bedrooms and.

GEMSHSSSTHSSSHHHSS*HSeSeosveeaseoseosseoovoseeaseeseaeenaen

ocean view.

Some explanation is also
in order for the expense
items.

The mortgage payments
are high because I assumed
thar the investor is financin ne
the entire purchase price o
the home.

Not everyone could or
.woutd finance the invest-
ment in this way,-but in fact
it is usually the best way to
do ié:from a tax planning
perspective 5 you can apply
any loss resuiting from the
excess of interest payments
and other expenses over rev-
enues to your other income.

If you did not finance it
this way and, for example,
put 25% down on the prop-
erty, then your monthly loss
. would be much less,
although you would have to-

- attribute some: cost to the

down payment amount.
The property tax num-
bers shouldn't require any
explanation except to note
“that the North Van homes

. are in the City of North Van

where the taxes are a bit
lower than in the District. .
‘The maintenance costs
‘for the attached home and .
the apartments were estimat-
ed by Jooking at the month:
ly fees associated with strata .

_ Properties having the 's saine

prices as the homes repre-
sented in the table.

For the detached homes,
the $150 monthly mainte-
nance cost was an arbitrary
estimate reflecting the fact
that there will be ongoing
costs associated with main- -
taining a home.

_“...from a tax
- planning
perspective ... you
can apply any ioss
resulting from
.. the excess of

‘interest payments:
and-other -
expenses over
revenues to your
other income.”

So what do ‘all these.”
numbers tell, us? Well ovr
first reaction might be that
North Shore residential real
: estate ‘isn? h
‘investmen

INTERIOR SIZE: 976 SQ. FT.

Come e eRe OK OT ORES FORME ees eOEDESEDoELTENS OS

word seecannasccaseeevacseesesasnese

OPEN HOUSE: By appointment.
LISTING AGENT George & uti Wits
"928-2911 a

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eovenecesce

eveveosessonsens

PECIAL FEATURES:
LOCATION, CONDITION, “PRICE!

‘eae ;
patio
water views. 1
pet welcome! —

Friday, October 1, 1989 — North Shore News — SS

Is this truce? Well that
depends entirely on what
you think will happen to the
price of housing over the
period of investment.

The far right column in
the table shows the percent-
age of the purchase price
that is represented by the

_ annual loss.

It also represents an esti-.

‘mate of the anntial apprecia-

tion in the property price
that you would need to real:.

_ize in order to make moncy:

on these investments. :

For example if the West _
Van apartment appreciates in
value by more than 1.5% a -
year then yo
bly be making money *.
(ignoring transaction costs,

“ tax-implications etc.) At the

‘other end of the scale, the
North Van apartment would.

"have to appreciate at least
- 3.7% a year to make money _

for you.
. Is this going to happen?
Well, as discussed several

times in this column, sales of

North Van detached homes

"are up this year and supply is

uite tight and it docs look.”

liké prices will appreciate by.
“at ‘least

28. over the next.
ar.

‘There i is ‘also 3 a. shortage |
f listings for Wes Nan.

outdoor.
w/partial .

ou would proba- :

been quite strong, if some-
what erratic,’so t! rere ‘isa’
good chance’ that we. will sec
at least'a 1:5% capital appre-
ciation in that marke d
Similarly the market for
North Van attached homes '
might be healthy cnough to
produce a.2.8% increase:in
prices over the next year:
On the other hand it is
unlikely that-any price °

increases for. West Van

. detached homes or North

Van apartments would bi ;
enough to cover the operat:
ing rental’ lose f supa

a lot of supply in .
-both of these :narkets ‘th

: represent a reasonable 47

vestinent, at icast ove the
next year or
- But would they be one of

’ the better: teal estate i