First let me say that I really like this new project by Aspen Ridge Homes.
But there is one massive red flag with this development that might cause me to encourage my buyers to look elsewhere; at least in the interim.
I say “maybe” and “might” because I’m not sure what direction they’re going to move in…
I don’t mean to confuse you all with words like “might” and “maybe,” but it gets even more complicated than that.
I love this building for renters.
I hate this building for buyers. Maybe…
Vu Condos opened its doors a couple of months ago, and those doors weren’t attached to the hinges nor was there any glass in the frames…
Possession was given, keys were handed out, but the building is FAR from being finished.
For this reason, I love this building for renters. I have already leased two units in the building, and both of my clients paid significantly under market rent. Why? Because the building is far from being finished!
In order to get somebody to rent your $1800/month condo that has no amenities, no finished common areas (picture no carpet, wallpaper, or light fixtures in the hallways), and a complete mess on every single floor and around the property, you’re going to have to offer the condo at $1600/month.
There is an inherent discount for properties that are almost finished.
So, I love this building for renters since most of them only care what the inside of their unit looks like and they get a $200/month discount, but I worry about this project for buyers.
There are TWO towers at Vu Condos, and only one of them is finished. So possession has been given to the owners in this tower, and thus they have started to pay their occupancy fee.
Question: how long will the owners continue to pay their occupancy fees?
Answer: until the building is registered.
So when is the building going to be registered?
Well, probably after it’s finished, which is a long, long way away!
THIS is what worries me about Vu: if the developers plan on registering the entire complex as ONE condominium corporation, then the first people to take possession will be paying tens of thousands of dollars in occupancy fees!
The second tower isn’t scheduled for completion until July 1st, 2010.
So the first problem with this situation is that current owners, er, “occupants” will be listening to and watching construction until next summer. But the bigger concern is: do they have to wait for the second tower to be completed before the developer begins the lengthy process of registering the condo?
If that’s the case, we’re looking at almost two years’ worth of occupancy fees!
Let’s work with a virtual timeline for a moment.
October 1st, 2009 – first owners are given possession
February 1st, 2010 – second phase of possession takes place
July 1st, 2010 – owners in tower-two are given possession
January 1st, 2011 – building is registered
This means that the people who took occupancy in the first completed tower will have been paying occupancy fees for twenty-one months!
I can’t stomach the thought.
One of the reasons why I almost opted out of West Side Lofts even though my investment had risen substantially on paper was because there were talks of registering BOTH towers as one condominium corporation.
Tower-one is going to be completed in June of 2010, but the second tower hasn’t even started yet!
It it took two years to build the second tower, I’d have to wait idly by and throw money away as I “occupy” but don’t own my unit.
This wasn’t an option for me, and I would have opted out of my deal despite my significant paper-gain.
Fortunately, the good folks at Landmark Developments came to their senses and decided to register the first tower, first, and the second tower, second.
Makes sense, doesn’t it?
A contrarian might argue, “The people in phase one paid less than the people in phase two, so it’s ‘fair’ that they have to pay occupancy fees longer.”
But that contrarian would be a pie-in-the-sky, equality-rules, socialist who believes in “Participation” ribbons at science fairs…
I see a potential problem at Vu Condos depending on how the developers decide to proceed with registration. I have asked several people at the project, and so far nobody has given me a straight answer.
There are “kinks to be worked out” and “the wheels are in motion” but this is an issue that can make or break this investment for investors, or force would-be buyers to look elsewhere.
I love the building and I think despite its size (similar to 313-323 Richmond) and the fact that the northwest corner is adjacent to a shady part of Jarvis Street, I think the building will be a success.
But I would NEVER consider buying one of these units through the developer or on assignment if I had to wait two years for the building to be registered.
Until I find out what the plan is – until I see in writing in a 200-page disclosure statement that the towers will be registered separately, I’m shying away from this project and advising my buyers to do so as well.
I pity the buyer who elects to pay occupancy fees for two years.
Hopefully all the buyers out there know the rules regarding registration…
LC
at 11:26 am
Occupancy requirements in Ontario are surprisingly low in standards. If the builder is short on funds they just need to pass a few life safety tests, ensure there is power, water and flushable toilets. And voila. Occupancy and cash flow to offset any shortfalls. It’s a short term solution but can lead to long term problems with their performance audits if they aren’t careful with the buildings during this shared occupancy/construction phase.
BobbyV
at 12:27 am
so you’re looking at approx $25,000 to $30,000 in fees down the drain ……. that is hard to swallow indeed.
VuOwner
at 5:22 pm
Sorry to burst your bubble, but you should have done some research on the Vu Condo.
Each Tower has its own registration Date. The Completed Tower is being registered next week. People in that building are paying phantom mortgages from October/November to February/March only.
David Fleming
at 8:24 pm
@ VuOwner
Thanks for the update – great to hear.
I was proposing somewhat of a “what if” scenario.
But with condos scheduled to be completed in July of 2010, I’ll believe the PROPOSED registration date when I see it.
VU SELLER
at 9:23 am
Another point to consider: I recently did a unit assignment at The Vu and it was in contract that I was not to pay closing costs and instead, pay an assignment fee. Long story short, Aspen Ridge screwed up in the wording of their contract and the purchaser’s lawyer found the loophole, leaving me stuck with paying the assigment fee ($2600) AND closing costs for a unit I’ve never even seen the inside of.
Left a terrible taste in my mouth and I will be sure NEVER to support any of Aspen Ridge’s projects again.
lk
at 12:09 pm
Your information, opinions and comments were so wrong.
for this project.
I took 1st occupancy mid May 2010. You are correct, when I moved in the building was still incomplete. We were told the building would be registererd in about a month. I was skeptical about the time frame.
The builder put extra workers to substantially finish the building for the registration.
June 30,10 The South tower was registered. The north tower was registered before the North Tower.
I sold two (2) units on assignment and the assignee got full benefit of my downpayment money which was returned to me only after closing. (June 30,2010). They paid $20,000.00 down for the assignment, as apposed to my $80,000.00+
Yes I paid the $3,000.00 closing costs in addition to the realty fees.
The assignees only had to pay less than one month occupancy fee and the other a month and a half.
The amenities are completed and fully functional.
I am confident the next building this builder completes, will be better. The Vu was their first high rise undertaking and surely a learning experience.
David Fleming
at 1:41 pm
@ LK
I’ve admitted on countless occasions that I was wrong about the registration of Vu Condos.
Consider this a broad opinion of condominium developments where there are two towers being constructed, and they are being registered TOGETHER instead of individually.
It’s been happening quite frequently, and buyers in the “Phase One” get stuck paying fees for almost two years.