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When Do You Seal the Deal in Real Estate?

August 12, 2010

In a slower market like most of North America is experiencing, when is the right time to make a purchase?  I think it comes down to the question: Is it a residential personal property or a resort property purchase?

Residential:

If it’s a residential property the main focus for the property is not investment but instead shelter and forced savings.  Whether the market is declining or stable we all need a roof over our heads and thus not so dependant on timing.  The important factors are interest rates and income that will factor into the mortgage and affordability.

Resort:

If it’s a resort property, your purchase could be for two reasons – as an investment or a lifestyle choice.  As an investment, using an accountant and having a look at the revenue statements together with purchase price will decide your ROI (rate of return on investment) thus helping you make your decision.

As a lifestyle choice, it’s mostly based on emotion – where you are at in your life and personal enjoyment.  Because we can take our computers and work with us on vacation it is making more sense today to pack up the family and have a place to go to on a more regular basis.  Making a lifestyle choice purchase comes down to having a tangible asset opposed to having your money tied up in something you cannot touch like the stock market.

Timing:

A very important part in purchasing a resort property is timing due to a number of factors.

  • seasonality (ski season, summer season, holidays, low rental season, school, personal holidays)
  • mortgage rates
  • exchange rates
  • economic stability
  • weather patterns
  • your tax year
  • purchase price

We’ve decided to touch on a couple of the above points that relate to Whistler.  First and far most: our ski season.  Most people choose to purchase prior to ski season to maximize their rental revenues during the peak season… i.e. Christmas/New Years is a popular time to bring families together.  Historically this time of year has had phenomenal snow by mid December.  For our American friends, their Thanksgiving falls in late November and this has typically been a popular time to take possession of a property.  For both our local community and investors great consideration needs to be paid to homes with tenants.  There are strict regulations under the BC Tenancy Act in regards to dealing with homes involving tenants… 60 days notice or are the tenants under a locked in lease?  More detailed information can be found at:   http://www.rto.gov.bc.ca/         

      

Closing:

Typically a property takes anywhere from 30 -90 days to complete.  Although closings can happen earlier and if the property is under construction it could take a lot longer.  If the property is owned from someone other than a Canadian, a clearance certificate is required and could take up to 8 weeks or longer.  Completion for a quarter share property can be orchestrated towards the next months owner’s usage.

Conclusion:

When it comes to purchasing real estate (especially in a resort) working with a local licensed real estate representative will always be your best choice. Start your search for a home with the end dates in mind, be pre-approved for the financing and make sure your deposit can be liquified within a one week time frame.

Special thank you to Carolyn who help write today’s blog while aboard the BC ferry – Women of Whistler fishing derby!

Happy Negotiating!

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