Real Estate

Advice Needed on Condo Assignment

  • Last Updated:
  • Jul 31st, 2020 12:55 am
[OP]
Newbie
Sep 26, 2012
7 posts
13 upvotes
Toronto

Advice Needed on Condo Assignment

Hi All,

I'm wondering if you could help shine some insight on an assignment deal. I ran across a motivated seller who has lost their job. They are looking to assign their condo in the Fort York area. Being a newer investor in Toronto, I was hoping to get your thoughts:

- Location in Fort York. What are your thoughts on this area? I will be living the condo for the first year or two to take advantage of first time home buyers.

- Condo is an oversized 1+1 unit with a terrace that is 730 sqft interior living space. Occupancy is this fall. The developer did not state the size of the terrace but this will be above and beyond the 730sqft unit. Purchase price including the assignment fee will be $600,000. Thoughts on this price? I know the condo market is being hit hard at the moment, but the psf seems lower than resale and other pre-cons in the area. The builder is selling remaining units at close to $1200psf (includes parking though). Third floor facing West

- Thoughts on the layout? I must admit the no window for the bedroom is a turnoff. However, the terrace makes up for it imo. I'm afraid of wasted square footage.

- Any other thoughts or advice?

Thanks All! Loving this forum. Appreciate all the help and knowledge you guys are putting out (both bears and bulls).

Note the terrace is the dotted line. The balcony is only for floors higher than the 3rd floor. The Floorplan I'm looking at will have the terrace the size of the dotted line, so bigger the balcony that is shown in the layout in the image.
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18 replies
Deal Guru
Feb 9, 2009
12363 posts
11258 upvotes
If units are going for $1200 psf and your getting it around $820 psf thats a hugeee discount...the seller is vastly underpricing this. If you can, steal it...it would take a major crash to even get to $820.
Deal Addict
Jan 28, 2017
1067 posts
1182 upvotes
Sanyo wrote: If units are going for $1200 psf and your getting it around $820 psf thats a hugeee discount...the seller is vastly underpricing this. If you can, steal it...it would take a major crash to even get to $820.
price is pretty much at a firesale, though I'm not a fan of the floorplan for the reasons below. Having said that, I'd strongly consider it assuming the assignor is actually only looking for 600k

-Hard to say how functional terrace will be without actual dimensions
-No real door or window in bedroom like you said. Though lots of newer condos have this issue so something to consider.
-Den looks out of place imo, doesnt look like it can be used as a 2nd bedroom, or a fully functional office space
-Not a fan of the trapezoid layout. What direction is it facing? Any buildings? If so, it will be dark inside
Sr. Member
Nov 25, 2009
621 posts
365 upvotes
Vancouver
bear20 wrote: price is pretty much at a firesale, though I'm not a fan of the floorplan for the reasons below. Having said that, I'd strongly consider it assuming the assignor is actually only looking for 600k

-Hard to say how functional terrace will be without actual dimensions
-No real door or window in bedroom like you said. Though lots of newer condos have this issue so something to consider.
-Den looks out of place imo, doesnt look like it can be used as a 2nd bedroom, or a fully functional office space
-Not a fan of the trapezoid layout. What direction is it facing? Any buildings? If so, it will be dark inside
Yes, that floor plan is definitely subpar. But at that price? Probably
Deal Expert
Feb 29, 2008
18729 posts
16943 upvotes
Tarrana & The Ri…
Don’t like the floor plan especially the interior bedroom and the linear kitchen. But the price is cheap. These will be pain points when you sell as well. This looks like the building by fernbrook.
Newbie
Jul 15, 2020
69 posts
51 upvotes
Something i like to consider is other buildings around it. I care about how much natural light it would get.

But i think price looks solid, check assignment fees and development charges if its capped.
Deal Addict
Mar 2, 2017
3124 posts
5983 upvotes
Toronto/Markham
OP, what are surrounding resale units going for per sq. ft at the moment?

What did the seller pay per sq. ft.? What year?
Realtor®
Deal Expert
Feb 29, 2008
18729 posts
16943 upvotes
Tarrana & The Ri…
FYI I bought my 1st condo on assignment around 2009. Same kind of situation where seller was worried about the market and wanted to get out. Didn’t even think about floorolans or finishes. Location was excellent and price was a steel. So I bought it. Even then I wasn’t cashfloe positive for the 1st few years. Might be the same situation here. The location is good. Under 1000 bucks per foot for a new building downtown is very tempting.

What are rents going for right now? Work out the numbers. I still think this is a good deal...but view, location in building, floor, etc are all factors.
[OP]
Newbie
Sep 26, 2012
7 posts
13 upvotes
Toronto
RichmondCA wrote: OP, what are surrounding resale units going for per sq. ft at the moment?

What did the seller pay per sq. ft.? What year?
Re-sale for buildings that are less than 5 years old are going around $950-$1050 psf I've noticed when looking through house sigma. The condo is about 3 minute walk to 17 Bathurst (The Lakefront Condos) which sells for $1300-$1400 psf but I think 17 Bathurst is a more upscale condo based on the amenities.

Seller bought it at $505,000 in late 2016 or early 2017. Condo is facing West.
Sr. Member
Feb 14, 2005
805 posts
579 upvotes
Toronto
A few thoughts:

Financial:
  1. Review the purchase agreement and figure out: deposit required? profits upfront or upon final closing? closing fees? development levies?
  2. Rental market is doing poorly and there are going to be a lot of condos coming online in that area (Zen King W, Playground, etc) all at the same time. Can you float this without issue for a few months? Alternately, can you float this if you rent it out at lower than market rates for the next few years?
  3. Maintenance fees are going to go up exponentially in the first 5 years. Factor this growth rate into your calculations.
  4. You said you're an investor: short-term flip or long-term appreciation? Think about capital gains tax, land transfer fees, realtor fees, etc and run your calculations to see if you actually net enough profit to make this worthwhile.
  5. All that said, price of the unit is cheap. You won't find anything like this on the open market.
Layout:
  1. Terrace is a nice sell to renters. If you're living there yourself, you'll be ticked off by the constant cigarette butts that will accumulate from inconsiderate people upstairs.
  2. 3rd floor isn't great for noise. Are you facing major streets? If there a party room below on the 2nd floor? Where's the loading dock (garbage removal) and garage door? Lots of noises that can tick you off if you live there.
  3. Even though its 700+ sqft, it's still a 1B+D unit and will command 1B+D prices. A same sized unit but having 2B would have similar cost of expenses but rent for more, so your rate of return will be higher.
  4. Functionally the layout has a lot of wasted space that you're paying maintenance fees for but unable to use. Starting from the living area, I'm having a hard time figuring out how your sofa and TV will be orientated without affecting access the bedroom, balcony, and terrace.
Deal Addict
Jan 5, 2020
1020 posts
1460 upvotes
lilorio1 wrote: Re-sale for buildings that are less than 5 years old are going around $950-$1050 psf I've noticed when looking through house sigma. The condo is about 3 minute walk to 17 Bathurst (The Lakefront Condos) which sells for $1300-$1400 psf but I think 17 Bathurst is a more upscale condo based on the amenities.

Seller bought it at $505,000 in late 2016 or early 2017. Condo is facing West.
I think that looking at ppsf is deceptive here. The unit you are looking to buy doesnt have the best floor plan and it is an oversized unit, which means that you would expect the ppsf to be lower.

You indicated that the average ppsf for a resale in the area is around $1000psf. This means that a 600sqft 1+den, which is a more standard size, should sell for around $600K.

That being said, given that this unit is oversized with not a great layout, you might not be getting a good deal. Also, oversized units are harder to resell, especially if it is a 1bedroom unit.

I'm not saying it's a bad deal, but you should really think it through.
Member
Jun 6, 2014
298 posts
128 upvotes
Toronto, ON
I think it all comes down to if you like it and if you can afford it.

And to say the seller is a motivated seller, that sounds like a realtor term. Because it sounds like the seller is going to make a decent profit off the assignment sale. I'd be a motivated seller too.
Deal Addict
Jan 28, 2017
1067 posts
1182 upvotes
raxen wrote: Functionally the layout has a lot of wasted space that you're paying maintenance fees for but unable to use. Starting from the living area, I'm having a hard time figuring out how your sofa and TV will be orientated without affecting access the bedroom, balcony, and terrace.
Haha, very true. I went into a condo sales office back in 2016/2017 looking for a 1bed unit, and the last one they had was a similar layout - 2nd/3rd floor unit with triangular living room and small window due to irregular shape. Asked the salesperson how do I fit a couch and TV in the living space that wont strain my neck - they told me get a hockey stick shaped couch :facepalm:

Fast forward 3 or so years, I saw the same unit on rental online. Fortunately wasn't too dark in there due to good exposure (facing street, no obstruction) - definitely check on the building blueprints and google street view OP.
Deal Addict
Jan 28, 2017
1067 posts
1182 upvotes
Newuserid wrote: I think that looking at ppsf is deceptive here. The unit you are looking to buy doesnt have the best floor plan and it is an oversized unit, which means that you would expect the ppsf to be lower.

You indicated that the average ppsf for a resale in the area is around $1000psf. This means that a 600sqft 1+den, which is a more standard size, should sell for around $600K.

That being said, given that this unit is oversized with not a great layout, you might not be getting a good deal. Also, oversized units are harder to resell, especially if it is a 1bedroom unit.

I'm not saying it's a bad deal, but you should really think it through.
Not to derail OP's question, but how much psf difference would there be can one ask for if say unit A (good layout, smaller sf) vs unit B (wasted space, larger sf - similar to OP's unit in question)?

Good layout as in boxy floorplate, minimal wasted space (i.e. no bowling alley hallways, useless den), large windows for bedroom and living area, L-shape/galley kitchen instead of bar-style kitchen, etc..
Newbie
Jul 15, 2020
69 posts
51 upvotes
Newuserid wrote: I think that looking at ppsf is deceptive here. The unit you are looking to buy doesnt have the best floor plan and it is an oversized unit, which means that you would expect the ppsf to be lower.

You indicated that the average ppsf for a resale in the area is around $1000psf. This means that a 600sqft 1+den, which is a more standard size, should sell for around $600K.

That being said, given that this unit is oversized with not a great layout, you might not be getting a good deal. Also, oversized units are harder to resell, especially if it is a 1bedroom unit.

I'm not saying it's a bad deal, but you should really think it through.
This is very true. Cant just consider $/sqf value on oversized units. Its 100-150sqf bigger than regular 1+1. Thats about 100-150k more expensive than other units. I think you are trying to live here and then after 2 years or so rent or sell right?

Not sure if it will sell fast at higher price. It will sell but not sure how fast. Also can you get more for rent if its a hold property?

3rd floor dont have floor premium, bigger units are usually cheaper $/sqf anyways. There are lot of assignments for sale these days. For 600k try 1+1 at fleur condo. Its next to 199 church and at the price 199 church is selling, i think it will be a good bet to buy a unit from a distressed seller there.
Sr. Member
May 3, 2010
679 posts
334 upvotes
OP, as a Condo owner and landlord myself, the price is hella good for the area and square footage. However, I have serious concerns about the layout when thinking from the tenant's perspective since your goal is to eventually rent it out.
  • The layout is not functional AT all. The Den is mostly a wasted space as it can only be used as sort of walk through corner office. It doesn't really separate from the foyer. So if a tenant wants a place with a private space he can use to work from home, the Den will not give him that
  • There is very little natural light coming in through the unit. And depending on where the balcony faces, what's in front of it and how high the windows are, the place could end up not being very bright during the day. Also, units with limited windows tend to look smaller and boxed even though the square footage might suggest otherwise.
  • A bedroom without any windows, a big no no. Good, professional tenants willing to pay market rental price value such things.
  • The living room layout is not functional. There is no place for the TV, unless it goes on the wall opposite the kitchen but then where would the couch go?
  • I have a condo with a nice, big terrace. But some idiots lived on the higher floor and I received constant complains from my tenants about cigarette butts and spits. Things got better when the idiots eventually moved out. But keep that in mind.
Member
Oct 22, 2017
215 posts
301 upvotes
I know the building you're referring to OP. I purchased a different unit in the same building in late 2017 but they had this layout available. From what I recall it was going for $470k at the time. I didn't end up going for this layout for the same reasons mentioned by others here. Price and location were great but I just couldn't get past the lack of functionality. I ended up going for Ortega 540.
Jr. Member
Apr 6, 2020
108 posts
72 upvotes
Toronto
I'm not about to read through all these comments, but beware of facing north and being at or near Gardiner level. I had a client send me a listing they wanted to see that was a "great deal". The Gardiner was literally outside of the bedroom and flat out told them I don't like the unit and they're going to hate it in a few months. I offered to refer them to another agent if they really wanted it, but I didn't want to be involved in a purchase that they'd hate afterwards
GTA Real Estate Agent
Sr. Member
May 3, 2010
679 posts
334 upvotes
mjkrealty wrote: I'm not about to read through all these comments, but beware of facing north and being at or near Gardiner level. I had a client send me a listing they wanted to see that was a "great deal". The Gardiner was literally outside of the bedroom and flat out told them I don't like the unit and they're going to hate it in a few months. I offered to refer them to another agent if they really wanted it, but I didn't want to be involved in a purchase that they'd hate afterwards
My experience is the opposite. I own a condo that is at Gardners level. Lived there, no issues. My tenant loves the big terrace and space. I havw never had a problem renting it out to good tenants.

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