Blog reader Jimbo had asked a question in the comments section on Monday’s blog, and I realized, at first, that I needed clarification.
Upon calling my father, and starting to chat, I realized that this conversation is a blog post unto its own.
I’ve heard bits and pieces of the following stories at least a dozen times each over the course of my life, and for the most part, the facts and figures are the same. But time has a way of distorting the details, so I wanted to start from the very beginning, and get the full story on my parents’ real estate endeavours.
What started in 1978 when my parents were 31-years-old and 30-years-old respectively, lasted until 1992 when they made their final purchase, on behalf of the family, that is.
The markets described in these stories, as well as the market participants, the process, and the real estate industry itself, are completely different from what we found find today. So at the risk of confusing the timing of this post with the COVID-19 pandemic, and insinuating that similar tough times are ahead, let me be clear: this post is merely for fun, and the timing is coincidental.
Thanks for reading!
David: “So are you bored or what?”
Dad: (long pause)……….yeaaaaaaaah
David: “Don’t worry, we only have two more months of this…”
Dad: “Are you keeping busy?”
David: “Yeah, I mean, I’m spending at least twenty-four hours per day growing my moustache.
David: “One of my blog readers was asking a question today and I wanted to get some clarity before I responded. I had written something about the two spec properties you bought on Logan and Carlaw, and I got everything jumbled up with Parkhurst.”
Dad: “Heward. It was Logan and Heward.”
David: “Ah, okay! Well, I meant to ask the other day, what did you pay for 128 Parkhurst Boulevard?”
David: “You remember exactly, eh? After forty years?”
Dad: “I’ll never forget it! I overpaid, and I flogged myself for years!”
David: “Dad, you sound like every single buyer that ever purchased real estate – that you overpaid.”
Dad: “No, I did! I overpaid! $261,000 and it was way more than I needed to, I found out in the end.”
David: “Yeah, Dad, but again, this is like every conversation I have with a buyer….”
Dad: “Dave, the house was listed at $239,900 and there were two bids of $239,900. I came in with a bid, and Duncan (not his real name, agent is still in the business) told me that I’d have to come in higher. So I bid $261,000, and weeks later, Duncan told me that the one guy only came up five grand.”
David: “Geez, that’s crazy! It’s like the same process forty years later?”
Dad: “There were two bids at the full list price, I came in at $261,000, and Duncan told me that the one guy stuck to his guns, and the other guy came up to $245,000. So I bid $261,000, overpaid, and I flogged myself for years after.”
David: “So how did you come up with that number: $261,000?”
Dad: “I was stoned.”
David: “You were what?”
Dad: “It was 1981, I used to smoke dope every night back then. So I was totally stoned, and I overpaid.”
This is about the time when I realized that these stories could make for an interesting blog post.
While the industry has changed, the process is different, and the market cycles are not aligned, perhaps we can learn from stories of yesteryear. If not, then at the very least it makes for an interesting blog.
David: “Dad, I assume you have nothing better to do right now, so let me start from the beginning.”
Dad cracks the seal on a Diet Coke.
David: “What did you pay for Airdrie?”
Dad: “Eighty-eight thousand.”
David: “Wow, you remember that, and this was, what year?”
Dad: “1978. Just before Julie was born. We were living in an apartment on Saint Mary Street and we looked all over the place, but we ended up at Airdrie.”
David: “Do you remember the number on Airdrie?”
Dad: “169, I think? Or 69? No, it was 269! 269 Airdrie Road. I think. Ask your mother.”
David: “So you paid $88,000 for Airdrie and that was in 1978, and then you bought 128 Parkhurst Boulevard in, what, 1981?”
Dad: “Yep. You were born at Aidrie in 1980. It was a really neat little house. Tiny though. Three bedrooms and a bathroom, small kitchen, little dining room and a little living room at the front.”
All the Leaside semi-detached are the same original footprint, and I’ve been in a hundred of them. But my Dad is reminiscing!
David: “So 1981 comes along and you need more space, and Duncan shows you Parkhurst?”
Dad: “No, Ralph.”
David: “Ralph. Ralph? Wait, Ralph? Oh my God, I remember that name. I remember Mom talking about him. Wasn’t he a hairdresser?”
Dad: “No, he was a real estate agent, then he became a hairdresser!”
David: “Oh, right. So like half the agents who will be out of the business when this COVID-19 business dies down then.
David: “So you bought Parkhurst through Ralph, not Duncan?”
Dad: “Yep. Duncan was the listing agent and I hadn’t met him yet. I was very loyal to Ralph, perhaps to a fault. He was a really terrible agent.”
David: “So was he stoned too, when you put together that bid for $261,000?”
David: “So you bought Parkhurst for $261,000 in 1981 after winning a 3-person ‘bidding war,’ and then what happened with Airdrie?”
Dad: “Well we listed with Ralph…”
David: “Oh God…”
Dad: “Yep, it didn’t go well. I think I listed at something like…….$239,900.”
David: “Wait, you paid $261,000 for a 4-bedroom detached, and then listed a 3-bedroom semi-detached for $239,900?”
Dad: “Yep. It was a mistake. The market is gangbusters and you become irrational. You think you’re gonna get your price. But it was a mistake.”
David: “No kidding.”
Dad: “Ralph never said ‘no’ to me, he just went along with it. He didn’t offer any advice.”
David: “We have a lot of those agents in the business now, they’re just order-takers. They let their clients tell them what to do, because they’re afraid that if they stand up to the client, then they’ll lose the business, even though they’ll lose the business if they don’t stand up to the client.”
Dad: “Yep. That’s what happened with Ralph. We were on the market at $239,900 and it was way too much, just a God-awful amount of money. Then the market turned, and things got nasty.”
David: “The market turned that quickly?”
Dad: “Yep. We were in a 90-day contract with Ralph and it was awful. Nobody was showing the house and Ralph had no clients of his own. He was a terrible agent. But he was sharp though, he had a Masters Degree in Chemistry from York University. The brokerage was called Canada Permanent Trust. His broker let us out of the agreement.”
David: “So then you ended up listing with Duncan?”
Dad: “Duncan came to us. He was worried. He had three or four deals in the balance that could have gone south, and he listed Airdrie and took no fee.”
David: “Really? He listed it for free?”
Dad: “Yes! It was his idea! He was the listing agent for Parkhurst, and if we couldn’t sell Airdrie, then we couldn’t close Parkhurst. And the seller of Parkhurst was Mr. Goulding, who had bought up the street, which was another property that Duncan had listed.”
Mr. Goulding was the father of one of my best friends, Fraser, who I met in Grade One. Ironically, Fraser and I were born on the exact same day. My mother saved the “Birth Notices” in the newspaper, and his birth was the one listed immediately after mine.
David: “So this was a true domino-effect. If you didn’t sell Airdrie, then Duncan would lose three deals.”
Dad: “Possibly more, because who knows what the sellers of the house up the street had bought. They probably bought through Duncan, and it could have been another one of his listings. The domino-effect was awful back then. Deposits were small, people could get out of deals.”
David: “So you switch from Ralph to Duncan, and this is somewhere around three months later?”
David: “What did you sell Airdrie for in the end?”
David: “WHAT? You started at $239,900 and you got $148,000?”
Dad: “Yep. The price was high to start, I’ll admit. But then the market went south in a short period of time.”
David: “And the purchase of Parkhurst was firm, right? Not conditional on the sale of Airdrie? I guess that wasn’t uncommon back then?”
Dad: “At that time, yes, it was uncommon. It depends on the market. There were times when houses were sold conditional on the sale of existing homes, but not at that time. Not when the market was roaring like it was. We bought Parkhurst unconditionally so we had to sell Airdrie.”
David: “So you sold Airdrie, moved into Parkhurst, closed Airdrie, and what was the interest rate back then?”
Dad: “We paid $88,000 for Airdrie in 1978 and I think the rate was about 10.5%. Then we bought Parkhurst and the rate was probably about 13-14%?”
I immediately get out my mortgage calculator.
David: “So if you paid $261,000 for Parkhurst and you, for argument’s sake, put down 20%, then with a 14% interest rate, on a 25-year amortization, you’d be paying $2,526.31 per month. Oh, and only 97% of that payment is interest.”
Dad: “That’s how it was in those days.”
David: “And rates went up even higher, right? This is when you bought those two spec properties?”
Dad: “Yep. 22.5%. I’ll never forget it.”
I’m showing the historical peak online at 21.46% so Dad is right.
David: So Logan and Heward?”
Dad: “Yep. 48 Heward Avenue, and if I recall……..I think it was 240 Logan Avenue.”
David: “What year was this?”
Dad: “1981 or 1982, that I don’t remember exactly. But I paid $42,000 for Logan and $48,000 for Heward.”
$48,000 for 48 Heward sounds a bit too coincidental. I looked it up, and there is no 48 Heward Avenue. I really wanted to know which property this was!
Dad: “I was partners with two other guys: Jimmy, who was my friend from many years prior, and a lawyer in my office named Donald Jones.”
(Not their real names. My Dad made me change the lawyer’s name, even though I told him that a 73-year-old retired lawyer probably didn’t frequent TRB)
Dad: “They were both pieces of work. Partners are the worst. I learned the hard way, don’t have partners, just do it yourself.”
David: “Yeah you’ve told me that a lot over the years, but I’ve discovered that myself through my own adventures.”
Dad: “Jimmy was a piece of work. He really was. Let me tell you – I caught him at our wedding, me and your Mom’s, he was sneaking out of the wedding with a full bottle of scotch under his arm. Who does that? Who steals from their buddy’s wedding?”
One of my wife’s “best friends” invited two wedding crashers to our wedding. The best-friend pretended afterwards that she didn’t know them, and had no idea why they showed up, but we saw the three of them on video dancing and talking all night. He was a sex addict who was cheating on his wife, and she was his assistant. My wife isn’t friend’s with that girl anymore, than God.
Dad: “And Donald, boy, he was a miserable, cheap son of a bitch. His father taught him to nickel-and-dime every chance got. Skim, shave, fight for every penny.”
David: “So great partners, you say?”
Dad: “Well, Donald put up the deposits, Jimmy did the renovations, and I took out the mortgages in my name and paid the monthlies. I ran the properties. But we were all supposed to share in the costs, and those two didn’t pay a dime. They both cried poor.”
David: “So when did you sell them, and for how much?’
Dad: “We were paying 22 1/2% interest and it was killing us. The houses were rented for, I think, $600, and $700 each.”
Paying $42,000 for a house, with an $8,400 down payment (that’s 20%), and paying 22.5% interest over a 25-year amortization means a monthly payment of $605.28. So if these houses were rented for $600 and $700 each, with minimal property tax, no land transfer tax on the purchase, and minimal utilities, these were basically cash flow neutral. But with a mere $3 of the $605.28 per month going towards principal repayment, there’s no return, like there is in 2020 when you’ve got a 50/50 split between principal/interest.
David: “Okay Dad, so I ran the numbers and the property was break-even.”
Dad: “No, it wasn’t the cost that was killing us, it was the work! Landlording is tough, Dave. It’s miserable.”
David: “Give me some examples.”
Dad: “The toilet is plugged, and some tenant doesn’t own a plunger. You can leave it be, and risk a flood that you have to fix, or you can get down there on a Sunday and unclog their shitter. How about the lawn? Mow the lawn? Mow my lawn, your tenant tells you? I had a hand-mower from Parkhurst that I’d put in the back-seat of my Cadillac Seville and after a day at the courthouse, I’d go down there and mow the goddam lawn in a three-piece suit.”
David: “I didn’t like being a landlord either.”
Dad: “Well I was doing all the work myself. I put a third-storey on Logan – with a sun-deck! I probably spent $20-$25K on that. I renovated Logan too. But Jimmy and Donald didn’t pay a penny. I had to take out a line of credit to get the funds, and the interest rate was criminal.”
David: “So when did you sell?”
Dad: “I sold Logan for $102,000, I think in 1982 or 1983. Another lawyer bought it, and she was speculating. She put a renter in there. I made money on it, but not much.”
David: “What about Heward?”
Dad: “The person who rented Heward was disabled and she put in a ramp. I didn’t have the heart to sell the house and kick her out, so I kept it another year or two. She left, and the market actually went up in that time, so I made money.”
David: “Anything else memorable about this?”
Dad: “I hired some bikers to do the reno on Logan. That’s what they did back then. But I ran out of money because the two other guys wouldn’t pay a cent, so the property sat there, gutted, vacant, for some time. I remember that, boy!”
David: “Did the other guys show up to get their profits?”
Dad lets out a huge laugh…
Dad: Yeah, that was the best part. Donald Jones, that piece of shit. Just a miserable man with bad character. What a crook. I never saw him once when we owned those houses, but I’ll never forget him showing up at Parkhurst, driving a shiny red Corvette, getting out and walking up the driveway to pick up his cheque.”
David: “So you didn’t transact in real estate again until you bought Bessborough in 1992. I wrote about this on my blog last year, I think. I remember you and Mom looking at real estate for what seemed like years.”
Dad: “Yeah that’s true, we were in Parkhurst in 1981, and had a spare bedroom. Neil was born in 1982, and you guys were growing. We’d need a bigger house eventually.”
David: “You looked for years, right?”
Dad: “Yeah, we did. Duncan was our guy by then. Ralph was out of the business very soon after we sold Airdrie and bought Parkhurst, and Duncan knew we wanted a bigger house so he was always calling us with listings.”
Notice how Duncan “called,” because there was no email, and no Internet, and all the listings were found via word-of-mouth, and the “hot sheets” that were printed by the Toronto Real Estate Board, and always several days out-of-date.
David: “I remember the listings for Bessborough. You had them on the dining room table at Parkhurst, and I was 11-years-old, and couldn’t understand why the seller kept reducing his price.”
Dad: “The seller was in big financial trouble. He had lost his job and he was offering the house privately at $999,900.”
David: “I also remember you on the phone with Duncan saying ‘the lot’ over and over. I had no idea what a lot was.”
Dad: “Well it was a double-lot! It was a 70-foot frontage in Leaside! Semi-detached were on 25’s. Detached started at 28, there were 30-footers, and the bigger ones were on 35’s and 36’s. But this was a 70 x 150!”
David: “Yeah I learned that pretty quickly when I saw the house for the first time. So what happened with the purchase? How long did this take?”
Dad: “Well the seller had it privately for $999,900 for some time, and then he was at $899,900. I only learned this after the fact, since I guess it was such a monster price that nobody looked at it. He had it at $799,900 too, I think. Or maybe that was the price he was going to market with?”
David: “So Duncan called you about it, when?”
Dad: “He called me and said, ‘You gotta see this house, it’s on a double-lot, and the seller needs to sell.’ This was on a Friday morning, and the guy was going to market on the following Monday, I think at $799,900?”
David: “Dad, that can’t be right, you bought it for $565,000.”
Dad: “No, I think so. I think it was $799,900. Or maybe it was $699,900. But we saw it on Friday morning, and we bid $565,000 on Friday night because he was going to the MLS on Monday. Then the guy signed back, and I said ‘fuck it.’ Take it or leave it.”
David: “Do you remember what he signed back at? Was it over $600K? Closer to his list?”
Dad: “No. I don’t.”
David: “Okay, so then he came back and said he’d take $565,000?”
Dad: “Yep. And it was a done deal. $565,000, our first bid price, and the list was $699,900. Or maybe $799,900 but I don’t know.”
David: “Yeah I wrote about this on my blog last year. I’ll never forget, answering the phone – Julie’s hand-me-down pink phone, and you said, ‘We bought it.’ Then I dropped the phone and started to cry.”
Dad: “Yeah you weren’t real happy about that.”
David: “So then what happened with Parkhurst?”
Dad: “Well we listed with Duncan immediately, and I think we started at $399,900. Then as you know, we were $389,900, $379,900, and $369,900.”
David: “Any action?”
Dad: “We had a low bid early on from the guy who eventually bought it. I think he was at like $320,000 or something.”
David: “I remember the listing sheets on the dining room table, and the price coming down by $10,000 at a time.”
Dad: “The guy came back a month later and offered $360,000.”
David: “I thought you sold for $362,000?”
Dad: “I did. I signed it back for $362,000.”
David: “Oh my God, Dad.”
Dad: “I wasn’t kidding when I said I flogged myself for overpaying on Parkhurst in 1981. That $261,000 stuck with me for years, buddy. You have no idea what $21,000 was back then, it was a lot of money. You can’t even imagine.”
I told my Dad that the other bid was $245,000, so it was really only $16,000 and not $21,000, and he would have still had to beat the other bid by a few thousand, etc. You can’t always win by $1.
Dad: “Twenty-one thousand dollars!”
David: “So the guy accepted $362,000?”
Dad: “Duncan said to me, ‘You’re not really going to do this, are you?’ And I said, ‘Watch me.’ The guy took the $362,000 and it was done. They’ve been there now for twice as long as we were there. We were there from 1981 to 1992, and they’ve been there from 1992 to 2020.”
David: “I tried to sabotage that sale many times. I took down the FOR SALE sign twice. I threw my rubber fake vomit on the floor when I knew buyers were coming through.”
Dad: “Yeah, you had it reaaaaal bad. Moving to a big house and all…”
David: “I was a kid, I didn’t know any better. The new house was like living in a different city, to me.”
Dad: “Don’t forget, we bought the house in April and didn’t move until September. We renovated; put on an addition.”
David: “So you paid $565,000 and how much was the renovation?”
Dad: “The contract price was $351,000, but I learned pretty quickly how little that means. I fought with Keith every single day for months on end. He was a crook. Substituting materials, taking short-cuts, arguing that features and finishes weren’t in the contract and were additional.”
David: “So how much did you pay in the end?”
Dad: “Oh, I paid close to the contract price because I’m a mean son of a bitch and I was all over him. He couldn’t wait to be done with me. But if you add in the extras, the landscaping, I probably paid $400,000.”
David: “Okay so you’re in for $965,000 for a house in 1992 and you sell in 2007 for $2,400,000. Not bad.”
Dad: “Yeah, and what would it be worth now?”
David: “Oh geez, tell me you’re gonna ‘flog yourself’ again over this?”
Dad: “I could have kept it and made a lot more.”
David: “Right, but you also could have sold for $1,900,000 in 2008-2009 when the market turned.”
I believe our conversation then segued into hockey cards, and that was the end of the story.
I find this fascinating, but then again, I work in real estate. I live and breathe it. Some of you might not be able to understand the market back then, or might be bored out of your wits with this dialogue. Some of you might not be reading this, because I lost you somewhere around 1982.
Then again, many of you lived through this, and have similar stories.
I’d love hear them. I really would.
We might not be putting the kids to bed right now, but I’d love story-time, if any of you are willing…