Another day, another questionable business practice.
I’m almost at the point where nothing surprises me anymore. Almost, but not quite.
Listings are coming out at Quad Lofts where I believe the “owned” parking isn’t really owned…
My car is in the shop right now and I’m driving around in a PT Cruiser – the only rental car that Enterprise had at the time.
It’s the worst car I’ve ever driven. You step on the gas pedal and the car revs but you barely go any faster!
Nonetheless, I’d love to pull up my PT Cruiser and park it in the middle of all those Ferraris. “Hey boys, can I play? I know, I know – I don’t have a Ferrari, but clearly I do have more self-esteem than any of you…”
My torrid love affair with Quad Lofts has been well documented.
When the building had its debut, I wasn’t a fan. I didn’t like how prices there were 15% higher than neighbouring buildings just because it was “hip” and happened to back onto the Brant House and West.
Eventually, prices rose all over King West and when Freed’s projects began to take top spot on the podium, prices at Quad Lofts suddenly didn’t seem so unreasonable!
In fact, I put three clients in Quad Lofts in 2010, all of whom I believe received a great deal relative to what else was selling in the area.
I’ve seen a few properties come and go at Quad Lofts in early 2011, but there is a new trend that I don’t like and it has to do with the listing of the properties themselves.
Let’s say a property comes onto the market for $429,000 – it’s a 1-bedroom-plus-den, 2-bathroom unit of about 810 square feet and it has parking and a locker.
You evaluate the merits of the property and then move forward.
One of my biggest pet peeves is when a listings says “1” under “Parking Spaces,” and then you scroll down into the fine print and read “Parking is Rental – Owner Paying $150 Per Month.”
Or even worse is when the owner doesn’t even rent a spot, but the listing reads, “Parking Available For Rent In Building.” That means “Go find your own parking, buddy!” Yet, they still list the unit showing “1” parking space.
What I don’t like about the Quad Lofts listings that I’m seeing right now takes this non-parking idea one step further.
First, some background…
Once upon a time, Cresford Developments was planning a condo called “MODE” on Adelaide Street West. As I have commented on this very blog before, I’ve seen a few projects from this developer end up falling through (can anybody say “MYC Condos?”), and I wasn’t surprised to see that even during the pre-construction condo boom where condos were growing like moss on a rock, Mode never went ahead as planned.
The land sat there for quite some time, as residents of 19 and 23 Brant Street passed by it every day, but we all knew that one day it would become a condo.
And eventually, “Lofts 399” were launched!
Some people called this “Quad Lofts – Phase Three,” but the decision has been made to try and differentiate the project from the original Quad and play off the address on 399 Adelaide Street West.
For example, when you go to their website – www.lofts399.ca, you are greeted with a the simple text that reads “There are 399 ways to enter.” However, if you’re like me, then you are severely disappointed when you click on the link and you realize that in fact there is only ONE way to enter, and not three-hundred-and-ninety-nine.
So what is my contentious issue with parking at Quad Lofts? And what does this have to do with Lofts 399?
Well it seems that underground parking spaces at the future site of Lofts 399 have been made available to any interested owners at 19 and 23 Brant Street.
More than a few owners at the existing Quad Lofts have taken advantage of this “promotion,” and have contracted to purchase parking spaces when Lofts 399 is completed.
Do you see where this is headed?
So now you have a unit come up for sale at 23 Brant Street that claims to have an “owned” parking space, but when you scroll down and read the broker’s notes, you see this:
“Parking To Close In Phase Three. $22,000 To Be Paid On Closing. $3,000 Deposit Already Paid.”
Does that sound like parking is “owned” to you?
Look, I realize that not everything you see in advertising is exactly as it’s intended. We’re constantly inundated with car commercials where they say, “Starting at $19,900” and the fine print reads “Actual model shown – $31,750.”
But isn’t this slightly misleading the consumer?
What bothers me even more is that the fine print on the MLS listing that explains how parking isn’t actually owned (unless you pay $22,000 in 2-3 years when the building is completed) only appears in the broker’s notes. This means that any consumer viewing this listing on www.realtor.ca or www.mls.ca has no idea that the parking isn’t owned.
So you look at the photos, you run your financial numbers, and perhaps you decide you can afford this place! Maybe this is “the” condo for you!
But alas, tis not to be. Because as soon as you get serious about the property, you’re told that “Whoopsee! The parking isn’t actually owned, it’s just figuratively owned!”
So here is my question: Is the asking price of the condo based on the value IF it had the parking space?
Are we seeing sellers price their units and taking a $25,000 parking space into consideration, even though they’ve only paid a $3,000 deposit?
Perhaps we are!
Perhaps these sellers are deciding that the future value of the parking space has to be considered.
But a tangible $25,000 parking space today and a future $25,000 parking space in 2-3 years aren’t the same thing to me.
Assuming you have to spend $150/month for three years to rent a space until your space is ready at Lofts 399, you’re out of pocket $5,400. So is this $25,000 space actually “worth” $19,600 to you?
And how do you feel about having to come up with the balance in 2-3 years? This means that you can’t amortize the cost of the parking space as you would if it were owned! If you bought a $450,000 condo with parking, you could get a mortgage for that entire amount (less downpayment of course). But if you bought a $425,000 condo and then had to pay for parking separately in 2-3 years, you’d have to come up with a lump sum of cash!
This is apples and oranges here, folks.
If you’re a 5% downpayment buyer on this $450,000 condo with owned parking, then you’re paying $22,500 in cash for your downpayment.
And if you’re a 5% downpayment buyer on this $425,000 condo with parking in 2-3 years, then you’re paying $21,250 in cash for your downpayment, and then $22,000 in cash for your parking space in 2-3 years. What if you can’t afford it?
There’s the rub, I believe. These listings are misleading buyers into thinking they can afford something when they likely can’t.
There are a lot of tricks I don’t like seeing on MLS, and this is just the newest version.
Although as bad as this is, it pales in comparison to calling a 3-foot by 3-foot nook a “den.” More on this later…