Buying a new Half-Duplex in Calgary

[RossNeufeld]

Hey guys, I was not totally sure where to post my question, so I figured general should cover it.

A little background I guess, I currently live in Red Deer AB and am going to be moving to Calgary. I have one property in Red Deer already, its a suited house that cash flows $1100/month.

This place in Calgary I am looking at buying is for me and my future wife to live in personally. Its a two story half duplex, that`s 1340sq/ft on two floors.
Its located in Auburn Bay in the "Echoes" area. For those who do not know this area, there is a brand new hospital currently being built and is due to open in late 2011. This is a cool bonus for my soon to be wife, as she is currently finishing her 3rd year of her nursing degree and living a few blocks away from work would be awesome! As well I think having the hospital near by would help keep the value up on the property.

Heres the kicker, every Rein meeting Ive been to is very against buying un-finished properties, and keeping the emotion out. But do to this being a Home for me and my family to come, There is already a level of emotion that cant be left out. This property is not finshed yet, but is due to be done in July this year. The foundation is poured, and Framing is partially up as of two days ago when I was last there. The company is asking $312,000 for the house, and has a "promotion" of $13,000 which can be used for upgrades, or cash back at possesion, or it can be put towards the downpayment which is also nice for us. As we are currently saving and paying for a wedding, we cant come up with the downpayment in time. The sales person did say that they would be open to an offer, as the house is being built as a "spec" home and we wouldnt be able to pick all the trim, cabinets, etc... The property is on the end of row, and has a very large lot in comparison to the rest. Its 72ft across the front and 12ft at the back and 110ft long, vs 25ft wide and 110ft long.

So my questions are this;

1. What are some things to watch out for when buying new that might not be obvious?
2. How come they can have a $13,000 cash back?
3. With building cost`s being cut down in todays economy, how can a person go about getting the best price?
4. What is a fair price for a house like this?
5. Would the hospital being built have any effect on this area?

Any other comments or questions would be greatly appreciated!!

Thanks guys!

Ross Neufeld

 

[RedlineBrett]

So my questions are this;

1. What are some things to watch out for when buying new that might not be obvious?

-Make sure the builder isn`t going under and that lots are selling in the area you want otherwise it will have a `construction zone` feel for a long time!

2. How come they can have a $13,000 cash back?

-Builders are providing all kinds of incentives to unload inventory. Many buyers aren`t feeling too sorry for them given the gouging and poor service they provided during the boom years. Also - this $13k cash back might not work as easy as you think if the lender won`t count it as part of the DP. They generally want to see YOUR money in the deal! It might just end up as being trimmed off the purchase price and you will be left having to come up with the cash to close. Check with your lender on this.

3. With building cost`s being cut down in todays economy, how can a person go about getting the best price?

-Builders don`t work quite the same way as the resale market. Typically the sales staff have been provided with set pricing levels and won`t work with any other offers so you have to shop around for the best price. My advice would be to ask if they look at offers lower than the current asking price and ask who you could talk to if you were interested in the property but not at the price they want. Many of the smaller builders are easier to work with when it comes to negotiating.

4. What is a fair price for a house like this?

- Really depends on everything being offered on the feature sheet. But I would talk to a realtor about getting comps on the resale market. If the builder is in really tough trouble they could discount further and end up selling the same unit as yours for much less given their margins on construction... This makes it basically impossible for you to sell for what you paid for if new units are being sold for less than what you paid!

5. Would the hospital being built have any effect on this area?

- It may, but not for years. It won`t help values so much as it will allow you to get higher rents and better tenants if you were to ever treat the property as a rental. If you are looking at this location specifically from an investment point of view you would owe it to your $$ to consider some other areas.

Any other comments or questions would be greatly appreciated!!

- new builds are not your only option. Have a look on MLS or find a good realtor in town to see if you can`t find better value on the resale market. You might be able to find properties with finished basements and landscaped yards in better locations than the new build for a very comparable $.

Thanks guys!

Ross Neufeld

Good work on asking the questions first and good luck!

 

[RossNeufeld]

Wow, thanks Brett! thats a big help forsure...
They did say I can use the 13k for a DP if I wanted to, But I was thinking I may be better off just taking it off the asking price, then I would not be paying intrest on that money... Make sense?

Now you wouldnt happen to know any good relators in Calgary would you?

Thanks again!

 

[markbrad]

If you are set on buying new, make sure the builder is accredited with either National Home Warranty, or Alberta New Home Warranty. This puts resposibility on the builder to own up to defects and fix them. THe warranty program will cover defects in the event the builder refuses or goes under. Also, as a spec, you may be able to choose paint colors, flooring etc if you buy before paint stage. You can get a flooring allowance (if you go over, you pay the difference) a lighting, cabinet, etc etc allowance. Otherwise beware of the CHEAP stuff builders can and will put in. At least look at other properties they have done and specify finishing must be to the same standard as xxxxx house if you are satisfied with it.

Mark

 

[RossNeufeld]

Thanks Mark, I`ll make sure to look into that as well!

Once again, I appreciate the help guys!