Your Fraser Valley Real Estate Market Update
  
Last month's property sales in the Fraser Valley were 29.3 per cent below the 10-year sales average for June and were the second lowest total for the month since the year 2000. The number of new listings also decreased in June, coming in at 9.6 per cent below the 10-year average for the number of listings received during that month.
Here is the summary of the market for June
Total Sales Processed - 1,306
Total New Listings - 2,810
Total Active Listings - 8,516
For the Fraser Valley region, the average number of days to sell an:
Apartment (Condos) -37 Days
Townhomes - 31 Days
Single Family Detached - 37 Days
Of the total transactions Fraser Valley Real Estate Board processed:
379 were Townhouses
374 were Apartments (Condos)
489 were Single Family Detached
HPI Benchmark Price Activity
Apartments/Condos
Benchmark Price - $409,800
Price decreased 1.7% compared to May 2019
Price decreased 9.6% compared to June 2018
Townhomes
Benchmark Price - $525,200
Price increased 0.5% compared to May 2019
Price decreased 5.9% compared to June 2018
Single Family Detached
Benchmark Price - $960,100
Price decreased 0.4% compared to May 2019
Price decreased 6.1% compared to June 2018
For the most updated market information on what is happening in your neighborhood, give me a call at 604 308 6404 or e mail at RealtorNischal@gmail.com.
The support of a real estate expert goes a long way when navigating a busy market in the Fraser Valley..
Reminder: As you know that I am in real estate investment and sales and my passion is to bring buyers/sellers together. Who have you talked to in past couple days that might be thinking about buying/selling in British Columbia or anywhere in Canada (I am blessed to be a part of a huge network that I meet/talk-to on regular basis which is the backbone of my business that my clients benefit.
Also, we offer a $500.00 referral fee to anyone that leads to successful completion of a sale.
HOW COMMERCIAL REAL ESTATE IS VALUED
If you’re new to investing in commercial real estate, you might be curious exactly how the value of a property is calculated. For single-family, the value is determined by the market, so your best bet for establishing how much a property is worth involves looking at residential sales comparables (or comps) in the area.
But one of the benefits of multifamily is the fact that you can influence a building’s value by increasing the amount of money it generates. What other factors (beyond income) go into assessing the value of commercial real estate? How do you do the math for any given multifamily property?
THE VALUE-ADD STRATEGY
Imagine there are two apartment buildings of similar size and circumstance located in the same neighborhood, one valued at $2M and the other at $2.5M. Our business model involves finding the $2M property and making changes that increase the amount of revenue it generates. Most commonly, this involves renovating the units, adding amenities and improving curb appeal—which allows us to raise rents.
Increasing our overall income increases the value of the property, making it worth $2.5M, just like the building down the street. Now we can either sell it for a profit OR do a cash-out refinance. The beauty of the second option is that it allows us to return the investor’s principal while they continue to get checks in the mail based on the building’s cashflow!
BY THE NUMBERS
The question is, how do we know that property increased from a value of $2M to $2.5M? Here’s the formula for determining a building’s worth:
VALUE = NOI divided by CAP RATE
Coming up with a building’s “net operating income” or “NOI” for short is pretty straightforward: it’s the property’s income minus its expenses (but before the mortgage payment – also called “debt service”).
The other variable is the capitalization rate, usually referred to as the cap rate. And that number requires a little additional explanation.
FEATHER IN YOUR CAP
The first thing you need to understand is that the cap rate reflects the expected return on an investment property, and it is expressed as a percentage of the investment’s original cost. Also important to note, the cap rate has an inverse relationship with the value of a property. In other words, the lower the cap rate, the higher the price and the higher the cap rate, the lower the price.
So, a property with a lower cap rate is more profitable, right? Well, it’s not quite that simple. The cap rate is determined by the market and varies by asset type (office space, self-storage, multifamily, etc.), asset class and geography. Your broker or appraiser will know the cap rate based on comparable properties in the area, but in general, a class D building in a run-down area will have a higher cap rate, while a class A multifamily property in an upscale, gated community will have a lower one.
Think of it this way: We can live with lower returns when the cap rate is low because we are working with less risk. On the other hand, we want to be sure that our return will be high if we take on the challenges associated with a higher cap rate, like lower demand in a rural community or security concerns in a blighted area.
The crucial takeaway here is that commercial real estate is valued based on its income. Increase the income and you raise the value of the property.
How Home Depot was started?
Do you know who Bernie Marcus and Arthur Blank are? They are the Masterminds behind Home Depot. You've heard of that before right?
Bernie got fired from his job as CEO of a California based Home Improvement store called Handy Dan. He was 50 years old.
You're 50 years old and you get fired. You're supposed to quit. You pack it in and say screw it, I'm done. Not Bernie. He grabbed the CFO who was also getting fired and they moved out of California and made the trip East to Atlanta GA. They weren't quitting, At 50 years old Bernie was just getting started.
Home Depot today has a market cap in excess of 200 Billion dollars and it is the largest Home Improvement store on Planet earth. Handy Dan? GONE.
Started by a couple of people who got fired.
The lesson?
NEVER QUIT!!!!!
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