Exclusive 150 Redpath Investment Analysis Video
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Coming this Fall to Yonge & Eglinton, 150 Redpath Condos is a new condo development by Freed Developments and CD Capital Developments currently in preconstruction at 150 Redpath Avenue in Toronto.
150 Redpath Video Transcript
Introducing 150 Redpath, at Yonge and Eglinton, by Freed and Capital developments. This video’s going to show you why 150 Redpath is an amazing investment opportunity and I’m going to tell you why I’m buying a unit at Redpath myself, but first, let me answer a common question that I often get from first time investors. The question is “Why should I invest in a pre-construction condo? Wouldn’t it be better to buy something resale and start collecting rent right away?” It’s a valid question and it’s one that I had when I first started investing in condos. I want to show you exactly why I learned that you should always go with pre-construction, and why 150 Redpath is the best project to invest in right now.
The first reason why you should always buy pre-construction is that condos are commodities. A condo is not like a house that can be completely renovated inside and out. You only have control over the inside of your condo unit, not the building itself. Styles change, preferences change, and building technology is constantly improving. Because condos are commodities, people always want to be in the newest condos. The newest buildings always have the highest demand from buyers as well as renters, so when you buy a pre-construction condo, you know one thing for sure. Whenever you take possession of it, it will be brand new. It will be the most in demand compared to surrounding buildings.
The second reason why you always want to buy pre-construction when investing in condos is what I like to call “The secret sauce” of condo investing. The recipe for the secret sauce is to buy condos under current market value. In the financial world, this type of investing is known as arbitrage, taking advantage of the differences in markets. This is how the smartest people generate wealth in any market, whether you’re talking about condos or currencies or any other commodity out there. The best way to explain this concept is to show you an example, and right now, the best example of this is 150 Redpath. There it is, the building there, 150 Redpath, designed by Peter Clewes of Architect’s Alliance, interiors by Johnson Chou, it’s a 38 storey building, great amenities, right at Yonge and Eglinton. We’ll get more in to the building itself a little bit later, but I want to compare 150 Redpath pre-construction with existing resale buildings in the same neighborhood.
There you are at Yonge and Eglinton, there’s 150 Redpath in the neighborhood, and we’re going to compare it with a few buildings. Republic, Minto Quantum, 900 Mount Pleasant, 83 Redpath, 88 Broadway, and also we’re going to look at MYC which is just a couple of blocks south there, didn’t quite fit on the map. Let’s look at 150 Redpath versus the current resale buildings in the market right now. In terms of price per square foot, what are these buildings trading at? Quantum North is built in 2007 and you’re looking at $630 a square foot. 83 Redpath, built in 2010, 630 a square foot. 88 Broadway, Republic, 900 Mount Pleasant, and finally MYC, which is actually the newest building and interestingly enough, it is also designed by Peter Clewes of Architect’s Alliance. Very similar architectural style to what 150 Redpath is going to look like, doesn’t have nearly the amenities of 150 Redpath, not even close, but wow, you can see that it is trading at a very healthy figure, $730 a square foot, so that leads me to the question of where is 150 Redpath.
150 Redpath, believe it or not, is priced only at $610 a square foot. That’s an average price for the whole building, and you actually have some units that are starting from only $549 a square foot. Plenty of units available under $600 a square foot in this building, so 150 Redpath is priced way below current resale prices in the area. Let’s compare 150 Redpath to the other 2 buildings in the neighborhood by the same developers. Art Shoppe condos, of course, launched this year, huge success, 550 units sold in just 60 days, remaining units there now are selling at $730 a square foot. 155 Redpath, right across the street from 150, remaining units there are selling for 670 a square foot, and again, 150 Redpath, from 549 a square foot and only 610 average for the whole building.
Let’s talk about the investment potential, how this actually plays out in real life. Let’s just go back and say you did buy a resale condo, one of those condos today that we mentioned and you rented that out and you held it for 5 years, what would that look like 5 years from now? You’re looking at again, today’s average resale value again, $653 a square foot is about the average of those buildings I mentioned just a minute ago, and if the price is increased by, let’s say a conservative number, 3% per year for the next 5 years, you’re looking at an average price somewhere around $757 a square foot, so if you did that, you bought resale, and 5 years from now, you sold it, you’ll be looking at an 80% return on your downpayment, assuming a 20% downpayment. That’s not too bad, but here’s the thing. When you’re buying pre-construction at 150 Redpath, you’re buying below today’s current average market values, so if you’re buying approximately 610 a square foot, you’re buying way down there, you’re not buying at $653 a square foot. On average, you’re way below, and so, your return looks a little something like this. Instead of an 80% return, you’re looking at a 120% return on your downpayment. Much, much better. That’s 50% better if you’re doing the math on that.
Much better idea, in this case, to buy 150 Redpath pre-construction, but it gets even better. You see, in 2020, those resale buildings that today average $653 per square foot, those buildings will be 10 to 12 years old by the time 2020 rolls around, and 150 Redpath, of course, will be brand new. New buildings always sell at a premium to older buildings. Again, condos are commodities, we talked about this already. If we’re buying 150 Redpath today, 610 a square foot, 5 years from now, the resale condos are selling for about 757 a square foot on average, it’s going to sell for something more than that number. What number that is exactly, it’s probably 5 to 10% higher than the average of a 10 year old building, let’s call it 5% higher, $795 a square foot, so you are looking at an ROI not of 80%, not of 120%, but a 152% return on your investment. Wow.
Buy at a discount, sell at a premium. This is arbitrage. This is the “Secret sauce” of pre-construction condo investing, and this is why 150 Redpath is a great investment opportunity. Now let me tell you the reason specifically why I’m buying at Redpath. As I’ve mentioned, I’m buying at Redpath, I have bought a unit actually at the sister building, 155 Redpath, right across the street. Why I’m buying, first of all, as I’ve mentioned, the pricing is below the current market values. When you buy below current market values, pre-construction, it’s really a no-brainer. You know that the value is going to be much, much higher by the time that the building is finished.
Second reason is the LRT. It’s no secret that the LRT is coming to Eglinton, it’s under construction, and it will be completed in 2020. This is going to totally transform Yonge and Eglinton in to the second biggest transit hub in the entire GTA, and I know that in 10 years, Yonge and Eglinton will be where Yonge and Bloor is today, so that time to get in is right now before the LRT is completed.
Third, the neighborhood. Yonge and Eglinton is already one of the best neighborhoods in Toronto, even without the LRT. The 5 billion dollar investment is only going to make it that much better. Having properties at Yonge and Eglinton is very important to me to have in my portfolio.
Fourth reason is rental demand. Yonge and Eglinton has always historically been a very strong renter’s area. If you look at the statistics, 76% of people rent at Yonge and Eglinton, and the average income’s about $76,000 a year, with many of those households being single person households, young professionals living alone. There’s definitely a shortage of rental units available and we’ve seen rental rates at Yonge and Eglinton higher than many of the prime areas downtown because of it, so I want to be a part of that rental market for sure.
Next reason is the developers. Triple A developers, Freed and Capital developments, they’re the best selling developers in Toronto in 2015. Freed buildings have been proven time and time again to outperform other surrounding buildings in the resale and the rental market. Bottomline is they build a quality product with high end finishes, very cool buildings that people want to live in. I’m very excited to see the finished product here.
Finally, it’s the building amenities. The Freed factor. It’s all about the high end, luxury lifestyle that comes with living in a Freed building, and this building really takes it a notch higher. They’re going to have a 24 hour diner right in the building itself. The diner’s going to deliver to units in the building, to the rooftop pool. There’s even going to be dry cleaning, dog walking services available in the building, party rooms are spectacular, everything is just over the top, infinity pool on the roof … I know that these intangible factors are what really drive higher than average rental rates for a building like this, and that’s why I am buying at Redpath.
Thank you very much for watching this video. I hope you found it useful. I hope you’re interested in learning more about 150 Redpath. You can go to truecondos.com/150-Redpath to get the investor package or you can enter your email in the screen if you see a pop up on your screen right now, just send your email in there and you will receive the investor package right away. Once again, for truecondos.com, I’m Andrew La Fleur. Thanks for watching and we’ll talk soon.