Sechelt Development - The Watermark at Sechelt

[Skook]

September 6, 2013 Update

It’s time for an end of summer update on the developments I have profiled to date. So, let’s begin with the ‘Watermark at Sechelt’.

Do you mean the pricey new 104 unit, 2 building condo complex with the dog kennels on the half-underground parking level that looks out to sea by the pebble beach from the last open waterfront space in the centre of Sechelt so very near to the recently expanded St. Mary’s Hospital that pushes the local caviar on its website? Yep, that’s the one.

Well, guess what? We have the first two unit flips - units 400 and 401 at 5665 Teredo St which is the now newly completed Phase 1. I know it is now open for business because the owner of Unit 400 tried to back out of the purchase by listing the unit in June as an “Assignment of Contract” sale with SC Realtor Bob Michor (see ad in post above). So, the fact it is now on the MLS means only one thing - the balance owing has been paid and the unit is his/hers or theirs lock, stock and barrel.

Had someone bought that “Assignment of Contract”, they would have got the unit for $799,000; now, it can be had for $839,900 meaning the owner decided “what the hell” and matched Unit 401’s list price. Unit 401 went on the market August 1st and Unit 400 joined it on August 28th.

If these owners manage to sell these waterfront units, there’s an added bonus - they get a visit from the tax man. Vancouver blogger, Whispers from the Edge of the Rainforest, had an interesting post back on Aug. 29th informing us that Canada Revenue Agency is tracking down condo flippers in both Toronto and Vancouver (don’t forget the Sunshine Coast is a REBGV member!). Whispers wrote,

Quote:Seems that anyone who bought a condo unit pre-construction, then sold for a profit without actually moving in, is liable for capital gains tax, and must also repay the GST/HST refund that residents receive.

Whispers quoted from and linked to a news article that appeared in the Toronto Star, Tax auditors target condo sellers in hunt for ‘flippers’ (I recommend reading this article - it’s very interesting.)

Quote:Folks who’ve sold condos or houses less than a year after taking possession seem to be the prime focus of CRA auditors so far, but tax lawyers are advising clients they could be at risk of a tax bill for at least 50 per cent of any gains made if they’ve sold before living in the property 18 months to two years.

So, let’s see…Unit 401 was purchased outright back in 2011 for $740,905 (likely includes the 5% presale discount offered at the time) and it’s listed now at $839,900. If it sells at list, that is nearly a $100,000 gain and if the taxman wants 50% plus any tax owed…hmm, want do you think? Has this been good return on investment?

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In addition to these flips, I stumbled onto this yesterday on a SC Property Management website.

Now, I wonder who wants to rent out Condos (note it is plural) that have balconies with or without Ocean Views? Could it be another investor perhaps who bought more than one unit? Like maybe a Realtor who ‘bought in’ hoping to make a little profit from a hot, new development? Could it be the developer, who has a finished building with only just a tad over half the units sold?

It just so happens there’s another owner who wants to rent their unit, too. I stumbled onto this Holywell Properties website notice (another local Property Management company) back on Aug. 21st only at that time the unit was listed at $1250/mth but yesterday when I checked the rent had been reduced - nice big banner announcing the fact. No doubt, the drop was due to Malaspina’s rental listing appearing on the scene. Unit 410 faces Teredo St and definitely has no oceanview.

Good luck, guys because you are going to need it. Who would want to rent these units when you can rent a whole oceanview townhouse at the Wakefield for a few sous more. Heck, you can find detached houses with oceanviews in that range. And, more and more owners up and down the SC will be looking in every nook and cranny and under every rock trying to find the rare, elusive renter because they haven’t be able to sell their ‘investments’ and need someone in it or the insurance jumps.

So, here’s the updated Watermark spreadsheet. Anything in blue was added since I last offered updated information.

‘OL’ represents ‘Owner List’.
‘L’ is ‘Developer’s List’

The gold boxes were the units declared ‘sold’ by the developer on the Watermark website way back when I started this thread. The ‘green’ box initially was indicated as sold on the website floorplan but then that ‘sold’ notice disappeared. The boxes with the asterisk (*) had no corresponding MLS ‘Sold’ info and thus were likely ‘Contracts to Purchase’ and would now be paid-in-full with Phase 1 declared ready for occupation - probably happened just around the time the rains returned, too.

So, the developer indicated 25 units in Phase 1 (5665 Teredo) had presold and since 2011 only 3 more units have sold for a total of 28 or 54% of the units available (out of 52). With Phase II (5725 Teredo St), there were 15 presales in 2012 and 12 confirmed sales to date in 2013 for a total of 27 or (52%) of units available (out of 52).

I said in an earlier post that I thought Watermark would be Sechelt’s Coal Harbour; and, after seeing these rental listings and the number of units still unsold, I think I might be right.