REAL ESTATE: Denser On The Inside – “A legal multi-family dwelling in the heart of First Shaughnessy, with 8 suites generating almost $150,000 per annum.”

REAL ESTATE: Denser On The Inside – “A legal multi-family dwelling in the heart of First Shaughnessy, with 8 suites generating almost $150,000 per annum.”

multifamily
1926 Cedar Cres, Shaughnessy, Vancouver West-side
7,305 sqft 1912 SFH, on 121×149 lot
Sold 27 Nov 2012 for $4.49M
Taxes $18K pa

Realtor blurb: “Once in a lifetime opportunity to own this classic craftsman style home that is a legal multi-family dwelling in the heart of First Shaughnessy. With 8 suites generating almost $150,000 per annum this is the perfect holding property. The lot is 121×149 and the house is 7,305 SF. There are two “owner suites” that have been completely updated, each with their own laundry and parking.”

‘Almost’ $150K rental income, minus $18K tax, minus maintenance, minus property management cost, minus unexpected lost rent/lower rent — what’s the actual cap-rate on this?
The deal for the buyer is probably premised on rising property prices.
– vreaa

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COMMENT:

Sign of the Future ?

This caught my eye as an example of what the Future may hold.

This home was at one time a wealthy person’s   ” Single Family Home”, given this Shaughnessy  area was reserved for the Wealthy. However, note the house was built just prior to the Great Depression in 1926.

Many wealthy people went bankrupt…and either lost these homes , or had to find other sources of revenue to stay afloat.

So, ……….then what happens to these Mansions ?

Many of them were converted to rooming houses. Bedrooms would be rented out and  other facilities shared (ie Bathrooms, Kitchens etc.    BTW I have seen the inside of many of these Shaughnessy conversions. Also, many mansions were also converted into Care homes .

This implies that the market for these homes as SFH had dried up. The prices likely collapsed.  Their  economic viability was now as a conversion to   multi- family rental units.  In addition, given the Great  Depression and the post war years… there was demand for cheap affordable housing.  So one could have a wealthy owner in one house….and right next door a home rented out to 10 different people.

Now many of these are LEGAL..and have been for years…. and grandfathered zoning as well. Some have been updated and remain as rentals.

If you are in the area, simply drive around the neighbourhoods…one can usually tell…semi- run down and have steel or wooden fire – escapes up to the top floors. However, this scenario was often limited to this once wealthy area, with scattered parallels elsewhere.

 

That was then…..this is NOW. All throughout Metro Vancouver, we have tens of thousands of McMansions built over the last 25+ years. Many of these are over 6,000 sq ft…..close to the size of this old Shaughnessy Mansion noted above. 

What is their future…?

Isn’t it obvious?

By catering to an exclusive clientele, mostly Offshore money, is this sustainable? Will a family of say 2 adults and 2 children be able to sell these homes , and at what price ?  I think again, the answer is obvious. Peak prices are over and in major decline. Thus,  we will have a huge inventory of large homes and no SFH market.

People will become forced to become landlords…or investors will aim to make these rental units. I have already seen this scenario. A friend of mine sold his approx 3000 sq.ft.house , I drive by it frequently.   The front yard was paved, and on the fence are number 1 – 10…ie parking spots.

Now, my understanding is that this is not Illegal..ie these are not self – contained illegals suites..people are simply renting “rooms”. However, this will create friction, noise and parking problems, and run down the neighbourhoods.

Regardless, it is logical to conclude that what they did decades ago with oversized  SFH Shaughnessy Mansion homes when the market collapsed will be repeated all over Metro Vancouver with the oversupply oversized McMansion homes built in the last 25 +years .  IMHO, it is unavoidable and as I said, already beginning.

Stay tuned

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