June 2008

The Kaufman Lofts in Kitchener Waterloo – an Investor’s Perspective

The historic Kaufman Lofts in downtown Kitchener have been a ‘destination’ building ever since construction on the condo conversion was announced.

People tell me “I want a Kaufman Loft!” Even if the loft is a bit smaller or pricier than another condominium they were looking at, the design, location and prestige put the project over the top.

Originally built in 1908, the building was formerly the Kaufman Footwear Plant.

One client saw a 750 sq foot unit in Waterloo for $135,000, and preferred the 710 sq foot Kaufman Loft at $210,000. The loft has a ‘cachet’ that just isn’t seen in most other developments in the area.

OK – people want to buy these to live in… but this brings us to the question: Is this an appealing real estate investment?

One of the biggest factors is location.

Located right on the corner of King St and Victoria Street in Kitchener, Ontario, it sits across from the brand new Downtown Kitchener Health Sciences Campus – which will house the University of Waterloo School of Pharmacy, the McMaster School of Medicine and the UW Optometry School.

OK – the condo’s are across the street from the new university campus. Sounds pretty good so far – let’s look into it a bit more.

• The school is projected to have 480 undergraduate and 70 graduate students, 50 faculty and staff.
• Upon completion, the UW Downtown Kitchener Health Sciences Campus expected
  to bring hundreds of faculty members and staff to the city’s core each day.

This is no ordinary campus – it’s a campus full of people studying to be professionals, not regular undergraduates.

Most of these students tend to be academic-focused, want a nice, clean rental property near campus, and demand little else.

For the convenience, cleanliness and cachet, they’re usually willing to pay a premium.

I’ve seen 1 bedroom units renting between $1,000 and $1,200 a month, depending on upgrades and square footage.

Pretty healthy rental rates, but not a surprise when you consider how tight the rental market is in Kitchener Waterloo right now (click to read Vacancy Rate Falls in Kitchener Waterloo – Again).

What are the condos like inside?

This gorgeous 1 bedroom condominium at Kaufman (410 King Street West) just hit the market a few days ago for the low price of $180,900

It features polished concrete floors, twelve foot high ceilings, exposed ductwork and access to a roof top patio.

More things your future tenants will appreciate are the upgraded cabinets, luxurious Kitchen featuring a granite island,
stainless steel appliances, electric fireplace and an upgraded deep soaker tub.

How have these units performed for investors so far?

Great question! Let’s take a look at some numbers.

“When the lofts were first introduced to the market by the builder, prices ranged from $114,990 for a 515 sq. ft. unit, to $197,990 for a 1,120 sq. ft. unit. On a per square foot basis they averaged $203. Today, on the resale market, sold units have ranged from just under $150,000 to $299,900 with an average per square foot price of $281. For those original buyers of Phase 1 units (those who
purchased prior to the builder adding two storeys, increasing the number of units from 113 to 155 and the prices to an average of $249 per square foot) that means they have seen an average appreciation of 38 percent.”(source Exchange Morning Post (Exchange Magazine, March 17 2008)

Since Exchange published the story above, recent sales of condos in the complex have had listed prices between $164,900 and $219,900.

Currently there are available units with listed prices between $173,500 and $335,900.

If you are interested in learning about how a Kaufman Loft in Kitchener can fit into your real estate investment portfolio, call me now @ 519 570 4447.

I promise you a free, no obligation, educational discussion about your personal real estate goals.

Doesn’t get much easier than that.

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Kitchener Waterloo’s Favourite Real Estate Agent** wants to show you how Real Estate
Investing can make you wealthy. Benjamin works with people from all across
Ontario and Canada – and recently, the world! – helping them build wealth
through smart real estate investments.

Benjamin is a Sales Representative with Keller Williams Golden Triangle
Realty in Kitchener Waterloo and would love to answer any questions about
buying, selling and owning a rental, income or investment property.

You can reach Benjamin at Benjamin(AT)BenjaminBach.com or call
him at 519 570 4447

**Gold Award, Kitchener Waterloo Record Readers Select Awards 2007 – 2008

Good Debt, and Kitchener Waterloo as an Investment Destination

A few conversations going on around the Internet today . . . Jump in – either here or at the original blog posts (click through the links to get there).

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Brian Brady thinks Canada is headed for a Real Estate slowdown, and he asks a local for some ‘on the ground’ reporting.

In Canada’s ‘Wealth Building Guy’ Defends Kitchener Waterloo Real Estate, I tell Brian why I think that Kitchener Waterloo offers Real Estate Investors a great place to let their equity grow at accelerated rates, and why I feel Canada’s economic situation is very different from what we’re seeing in the US right now.

…There are three major post secondary institutions in Kitchener Waterloo, with a medical school almost completed.

…

We are the heart of Canada’s Hi Tech sector (the Blackberry everyone loves is made in Waterloo, 5 minutes from my office)

We have a very strong FIRE [Finance, Insurance & Real Estate] sector.

We have a VERY diverse economic base.

When I spoke with Benjamin Tal last month, a head Real Estate analyst in Canada, he singled out Kitchener Waterloo as the bright spot for Real Estate investors in Ontario. I agree, and my clients do too – voting with their wallets.

People from Toronto, Montreal, Vancouver, Calgary, New York, California and recently even Kuwait are attracted to our low prices and great economy. Condos from 130Ks (they’re nice!), newer single detached homes in *nice* areas from the $230,000s – and we’re less than 1 hour away from Toronto, and Pearson International Airport. [ed: Waterloo Regional also flies to international destinations]

Just like in the US, there are some areas where, to me, prices feel high. But Canadians as a whole have not embraced the sub prime lending that the US has seen in recent years, and *most* Canadians aren’t buying huge homes they can’t afford, without equity. Clearly, there are always some who do, and independent of the economy, they’ll get burned, almost every single time.

Investors in Canada should be looking to areas where they can get a great, reliable, steady return on their investment – Kitchener Waterloo fits the bill in every regard, and you don’t need to plunk 35% down like most of us Canucks would have to when buying stateside.

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At AgentGenius we’re having a great discussion on Good Debt vs Bad Debt, prompted by Seth’s blog this morning. 

I said… 

Bad Debt = borrowing to buy a depreciating asset or experience (shoes, boat, car, most vacations)

Good Debt = borrowing to buy things which increase in value (real estate, businesses, collectibles) or increase your value (targeted education and training, for example).

Pay off your bad debt ASAP. Take on Good Debt, in small doses, after loads of education.

Jennifer in Louisville added "They get told by the media and self-proclaimed “experts” that they should cut up their credit cards, and get rid of all their debt so they can be financially sound. When in reality, most persons that are considered wealthy (other than by lottery winnings, or inheritance) – had to go into debt at some point to get their product/business off the ground."

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Ben Asks:

Have you had to shift your paradigm about debt to include Good Debt ? 

How did YOU do it ?

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Kitchener Waterloo’s Favourite Real Estate Agent** wants to show you how Real Estate Investing can make you wealthy. Benjamin works with people from all across Ontario and Canada – and recently, the world! – helping them build wealth through smart real estate investments.

Benjamin is a Sales Representative with Keller Williams Golden Triangle Realty in Kitchener Waterloo and would love to answer any questions about buying, selling and owning a rental, income or investment property.

You can reach Benjamin at Benjamin(AT)BenjaminBach.com or call him at 519 570 4447

**Gold Award, Kitchener Waterloo Record Readers Select Awards 2007 – 2008

Vacancy Rate Falls in Kitchener Waterloo – Again

The downward trend continues for real estate investors in Kitchener-Waterloo, Ontario.

Luckily its a downward trend in vacancy rates my clients are currently experiencing.

More specifically, ‘Vacancy Rates (%) in Privately Initiated Rental Row and Apartment Structures of Three Units and Over’ in the real estate investment properties they’re acquiring.

CMHC (Canadian Mortgage and Housing Corporation) released their Spring 2008 Rental Market Statistics (you can read it as a very long PDF at this link), containing a wealth of information on vacancy rates, availability rates, average rents etc., all broken down by geographic area and type of property.

The Private Apartment vacancy rate in the Kitchener Waterloo CMA (which includes Guelph, Guelph-Eramosa Township, Cambridge City, Waterloo City, Kitchener City, North Dumfries Township, & Woolwhich Township) is 2.0%.

This is in contrast to the apartment vacancy rate in Ontario, which now sits at 3.1%.

Several cities, including Hamilton, Windsor, and Oshawa, are now showing vacancies rate higher than the provincial average.

Kitchener Waterloo is the tightest rental market [ed: lowest vacancy rate] in Ontario, next to the Sudbury CMA.

We’re seeing a very strong demand for clean units in good locations – but that seldom changes.

What are YOU seeing on the ground?

Has renting your units become easier in recent months ? I’d love to hear what you’re experiencing in the market.

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Kitchener Waterloo’s Favourite Real Estate Agent** wants to show you how Real Estate Investing can make you wealthy. Benjamin works with people from all across Ontario and Canada – and recently, the world! – helping them build wealth through smart real estate investments.

Benjamin is a Sales Representative with Keller Williams Golden Triangle Realty in Kitchener Waterloo and would love to answer any questions about buying, selling and owning a rental, income or investment property.

You can reach Benjamin at Benjamin(AT)BenjaminBach.com or call him at 519 570 4447

**Gold Award, Kitchener Waterloo Record Readers Select Awards 2007 – 2008