What is a “double whammy?”
You’ve heard the term before many times. You’ve probably used it yourself before on occasion.
It was also a really bad movie from 2001 with Denis Leary, Elizabeth Hurley, and Steve Buscemi that managed to still get a 5.7 rating on IMDB. As embarrassed as I am to admit this, I watched Double Whammy one lonely night in university on CHCH television, channel 11, circa 2002-2003, with commercials, and I honestly have no idea why…
The term “double whammy” can essentially be used to describe any situation in which there are two of something.
However, I think the term, when used in its correct form, references two things that, when combined, have a greater impact than their collective sum.
For example, if you have pain caused by both physical and emotional trauma, it’s two pains, but combined they are far worse.
It’s a classic double-whammy.
Now, in another case, if you found a condo that was both tiny and expensive, and it was tiny because of how expensive it was, but also expensive because of how tiny it was (I’ll explain this in a moment), then that’s a classic double-whammy too.
An old friend of mine emailed me last week with the following:
Hey Dave – I was re-reading your multiple blog posts on the horrors and pitfalls of pre-con condo buying in Toronto. I re-read them quarterly because they help me keep the pre-con temptations in check…you must understand, these temptations are…overwhelming at times. Sometimes I can’t control myself! These blog posts are like bible verses that keep me from sinning. “Heavenly Fleming please forgive me!” lol.
In one of them you mentioned you have a client that does pre-con purchases as investments and I was wondering if you’d be willing to share the contact someone with first hand experience could walk me through it. I know it’s a lot to ask and if you aren’t comfortable with it when I totally understand.
So people are still curious about pre-construction condos in Toronto?
I thought that ship had sailed.
I wrote my friend back and said that I wouldn’t feel comfortable connecting him with my client, but more to the point, my client doesn’t “invest” in pre-construction anymore for a multitude of reasons.
Also last week, I asked the TRB readers to post suggestions for future blog topics and we received this:
More on that in a moment, but first, a client of mine is preparing to list his downtown condo for sale later this month and we’re currently renovating the place.
New floors, new light fixtures, changing out the hardware on the doors, painted kitchen cabinets, and a full paint-job throughout. While we got to chatting on Friday, he sent me this text message, among others:
He then proceeded to introduce me to a project called “The Goode Condos” which is a development being built at 37 Parliament Street.
It almost bothers me that the word “good” is spelled incorrectly, but society in 2021 loves to say, “heyyy gurl” because it’s cool, or “U R 2 sweet.” I’m just a 41-year-old cynic, so what do I know.
I mean, maybe “Goode” is the surname of the builder? Maybe I have no bone to pick?
Except that their catch-phrase says otherwise:
It’s all good.
Remember that stupid catch-phrase from 2001?
Bump into a guy at the bar waiting for a drink: “It’s all good, bro,” which means “I’m sorry.”
The waitress tells you they’re out of your favourite beer: “It’s all good,” which means, “No worries.”
Or your annoying buddy with the frosted-tips in his hair, the puka-shell necklace, and the thumb-ring says, “It’s all good” to anything and everything, but he says it like, “sallguud.”
I don’t love this catch-phrase.
But I have a larger problem, and it’s the following:
The best downtown Toronto condo opportunity in 2021
How do you define “best” though?
If you’re reading this on Monday morning from the sales centre at Graywood Developments, just remember: you opened the door to this…
First and foremost, combining a silly catch-phrase like “it’s all good” with some nonsense about this being the “best opportunity” is actually a double-whammy, but not the one I wanted to talk about today.
Today, I wanted to talk about a different double-whammy and it starts with a conversation about $455,900 condos in Toronto.
If you could afford a condo in downtown Toronto for $455,900, would you be interested?
The average 416 condo price is over $720,000, and just from cruising MLS or House Sigma, I think you’ll find that buying condos under $500,000 is near impossible.
So a $455,900 condo? Piques your interest right?
Okay, but let me switch gears for a moment and go in a completely different direction.
Let’s say that, oh, I dunno, I asked you if you wanted to live in a very clean, very comfortable…………………dorm room.
What does this remind you of:
I know what you’re thinking.
You’re thinking, “David………..most dorm rooms don’t have balconies!”
And you’re right, that’s fair.
But are we really at the point in Toronto where we’re combining LIVING/DINING/KITCHEN/SLEEPING?
The only thing that stops this from being a supersized jail cell is the wall the separates the bathroom from the rest of the space. Put the toilet in the living room, and voila! It’s Wentworth in there.
Folks, this is something I’ve never seen before in Toronto. It’s a 263 square foot condo.
And if you’re playing along thus far, you’ve put two-and-two together and have come to realize that the $455,900 condo I speak of, and this 263 square foot jail-like unit, are in fact one and the same.
I’ll save you the calculation: it’s $1,733 per square foot.
Ready to talk about pre-construction investments now?
Not only is this condo merely 263 square feet but it’s also priced at $1,733 per square foot!
A classic double-whammy!
I mean, if this 263 square foot condo were modestly priced at “only” $1,000 per square foot like so much of the downtown core, and was available at $263,000, then you might accept the silliness of the size and layout in order to achieve an unheard-of price point.
Or, if you found a condo priced at $455,900 that happened to provide 450 square feet – a small size indeed, and among the smaller condos in the city, but functional nonetheless, you might be interested in the unit.
But put together the price and the size and it’s a double-whammy!
It’s a wham that Adam West and Burt Ward would be proud of.
It’s a wham that George Michael and Andrew Ridgeley would be proud of too.
And I ask again: how in the world is this an “investment?”
There’s absolutely, positively, nothing to justify this valuation of $1,733 per square foot. Not only that, as a pre-construction “investor,” you’ve got to consider the additional costs that lay ahead. Wait until you get a call from the sales centre inviting you to “come and choose your finishes!” They’ll remind you to bring your cheque-book, since most people don’t settle for the standard finishes, and you’ll end up paying for upgrades, no doubt about it. And just wait until closing when fees, levies, and charges you had no idea existed are added to your tab. I’m not talking about “closing costs” like that of a resale transaction where you pay for legal fees, disbursements, et al. I’m talking about potentially tens of thousands of dollars of fees that most pre-construction buyers don’t know exist.
It’s not unreasonable to assume that a condo sold or $1,733/sqft could end up costing the buyer $1,850/sqft after all is said, done, and added in.
But let’s just assume we could actually secure this “deal” for only $1,733/sqft.
What are neighbouring properties selling for?
How about right next door at 39 Parliament Street?
This condo was completed in 2000, so there’s no comparison between the two buildings, of course. But if real estate is really “location, location, location,” then what the hell are we talking about?
The last sale in this building was for a 549 square foot unit in August.
What did it sell for?
That’s $911 per square foot.
Oh, it’s such an old building! Built in the year 2000 when some of you weren’t even born! What an awful place to live!
So………would living next door be worth $1,733/sqft then?
Immediately north of 39 Parliament Street is another condo: 33 Mill Street, called “Pure Spirit” and built in the year 2010.
The last sale in there?
A 1-bed-plus-den with parking for $740,000.
How large was it?
850 square feet.
That’s $871 per square foot.
Condos.ca shows the average price in the building at $1,003 per square foot, so if you want to chalk up the last sale to an outlier, no problem. But this is still $730/sqft less than the pre-construction building two doors over, which has yet to be completed, which could be delayed, come with deficiencies, have a prolonged occupancy period where you pay a fee on a unit you’re supposed to own, and which could have egregious closing costs.
Because the hallways have nicer carpet?
Classic magic beans scenario.
However, it’s apparently a “once in a lifetime opportunity.” I mean, I know I heard somebody say that. Somewhere. Who was it?
Oh, it was the developer, who has this on the website:
A chance to own a part of history!
Unlike every other condo in the city, that is?
Wait, wait. This isn’t entirely fair, since this is, apparently, the last parcel of land to be developed in the neighbourhood, so it really is a “once in a lifetime chance,” if your lifetime ends soon.
Wait, wait. I read that wrong. This is “one of” the final parcels of land to be developed, so with an indeterminate amount of future parcels that could be developed, anywhere from one to, say, fifty, I’m not exactly sure their “chance to own a part of history” bullshit carries any weight.
Look, all cynicism aside, and yes, there has been much of it – I’ve been writing about the pitfalls of pre-construction condominium buying (notice I didn’t say “investing”) since I started this blog in 2007.
If you want to invest in a condo in The Distillery District then go buy something you can see in person, walkthrough, and inspect, next door at 33 Mill Street. You can also review the condominium’s financial documents via the status certificate and make sure you’re making a sound investment.
Or, you could buy magic beans.
These magic beans also come with an eyelash from a random salesperson, and everybody knows that if you wish on an eyelash, there’s a good chance that your wish will come true.
The coffee company Nabob has a slogan that reads, “Better beans, better coffee.”
Better beans, eh? This got me thinking: as good as the $1,733/sqft magic beans are, can we possibly do better?
A-ha! We can!
A project called “The Capitol” at Yonge & Castlefield which was “launched” on September 14th, 2021, as though it were a ship leaving the harbour on its way to save the planet from extinction!
Google “The Capitol Condos” and look at the first 4-5 links. They’re all ads with URL’s that sound like they might be the actual sale centre website, but they’re not. They’re bottom-feeding real estate agents who cyber-squat URL’s when new projects are launched, and then create websites to look like they belong to the developer. These agents look to capture contact information, which they either use to attempt to sell magic beans, or they sell this info back to the developer.
But that’s merely the sauce for the beans!
The beans themselves, in this case, come in the form of condos that are rumoured to cost around $1,900 per square foot.
Rumoured, since the whole industry is soaked in this cloak-and-dagger nonsense, which is probably how you get people to shoot themselves in with their own gun in the first place.
Check this out:
Note the following items grouped together:
“Residences Starting from the $1M”
“Upto 3,000 SQFT”
That’s not a typo above. I wrote “Upto” because that’s what the pamphlet says. It’s their typo.
Regardless, note they have sheepishly put the $1M figure next to the 3,000 square foot figure, as though these numbers aren’t mutually exclusive.
At $1,900 per square foot, you might expect to get a 526 square foot condo for $1,000,000.
And unless a developer can cram two bedrooms into 526 square feet, I’m going to assume that this building might be the first of it’s kind: million-dollar one-bedrooms!
Ah, that’s been done before, of course. But not at Yonge & Eglinton!
Magic beans. They never lose their charm.
And there’s no shortage of people lined up to buy these magic beans. Trust me, you can actually see the lineups outside of sales centres!
So, to the blog readers that asked about pre-construction “investments,” there you go. $1,900/sqft. It’s a lead-pipe lock, I tell ya!
Now, if you’ll excuse me, it’s time for my lunch. I just paid $9.00 for this sandwich, so after I eat half, and take a small bite out of the second half, I’ll see if I can sell that near-half for $7.50…