Muskoka properties

[twinn1]

Long time lurker here, I have posted before under twinn but cannot locate my password.  Question for you pro's on here.  I have noticed a large drop in prices of cottages listed on MLS over last year, do you still feel its viable to bid on tax slae properties? I am looking for imput from those who have actually built on vacant land.  I am seeing a lot of waterfront cottages for sale in the 100-200K area and with lot services running approx 50K(Well/Septic/Hydro@$1000/feet etc..) not sure if it is still worth bidding on properties.  Any thoughts

[Pfm1011]

There is still deals out there in this game, there is also tonnes of crap.  You are right about servicing costs , so when you bid you had better like the land  and have a very good idea of the local market.

[Larry]

That's correct. And very important go and see the lots you want to bid on, do not believe everything you see posted here.
Also, talk to neighbours and contact some real estate agents to get a feel for the market.
Just learning here
Larry

[Larry]

You really have to have the skills when talking to people, have to know what to say and how to say and when to say things. This is not something you can easily learn, as I noticed. Some skills you are born with. Obviously, you would not go and tell a neighbour or a real estate that you are bidding on a tax sale property.

[Pfm1011]

Also, talk to neighbours and contact some real estate agents to get a feel for the market

Absolutely the worst plan in the world...NEVER  repeat NEVER ,and just for good measure, NEVER  talk to anyone ..especially neighbours.  The neighbours will simply scoop the land and double their own lot size.  Real estate agents...please ..they are a trustworthy lot .. How can you get a feel for the market from a real estate agent?  These scum will tell you anything to con you out of your money..If you go to buy in love canal they will tell you its a popular neighbourhood, ..'This development is famous..its in all the papers"     and in a tax sale they will end run you in a second and then have the balls to phone you in a month to see if you want to buy the piece you asked about..at twice the price they paid

Just use the MLS and remember that the prices on there are ASKING,  Not sold.   MLS listings are also subject to getting a building permit and environmental  not "as is where is" like a tax sale piece.   In the north there are MLS listings that are 2 to 3 times value fishing for suckers and unfortunately some suckers still come along.

If you have access to the info, check neighbourhood sales, not listings of unsold.

When it comes to cottage country many of the sales up there are just silly.  And you are right , they are dropping but I'm still expecting a big drop after this fall as people are finally realizing that the boom is over and the new assessments come out.  If  you want a deal on land there is many tax sale deals but forget popular cottage country like muskoka.

[twinn1]

PMF... I agree with you 100%, NEVER mention anything to the neighbours, what kind of business acumen is it when you are inviting the  competetion to bid against you?

I too am waiting for the drop in cottage country prices, I would say that in some areas they are already down 20-30%.  Cottages used to be a cash game a few years ago then banks started giving mortgages on cottages with heavy restrictions(ie. must be four season home with well/septic etc...) I have a feeling that a lot of Muskoka cottage buyers tapped their HELOC's in order to buy their cottages.  With lenders being more cautious and the real estate market and the economy in general cooling in the GTA, a lot of cottages will be up for sale. 

[speedfreeksteve]

Cottage prices may have dropped abit but I think we're close to a bottom. Sales volume is at the highest right now that they've been in past 18 months. People know that it's now or never to save a few bucks on what they would've paid in 2005. I have some friends currently looking and they have both lost properties they liked by taking a week to think about it.

As for building on an empty lot, I did it. Here's what I remember roughly:

320' drilled well - $7500 installed w/pump and pressure tank
driveway, some regrading and some clearing (one acre lot) - $3500
septic - $5000ish
foundation - $16000 + $1200 for concrete floor (basement).. would've been about $6000 for basic foundation (no basement)
permits - can't remember

I'm sure I forgot other stuff.. but these costs above are a small fraction of the total cost of a full cottage when you add up drywall, finishings (trim and baseboard), framing, plywood, shingles, flooring, plumbing, furnace, doors, decking, etc.

[Frank]

320' drilled well - $7500 installed w/pump and pressure tank
driveway, some regrading and some clearing (one acre lot) - $3500
septic - $5000ish
foundation - $16000 + $1200 for concrete floor (basement).. would've been about $6000 for basic foundation (no basement)
permits - can't remember

I'm sure I forgot other stuff.. but these costs above are a small fraction of the total cost of a full cottage when you add up drywall, finishings (trim and baseboard), framing, plywood, shingles, flooring, plumbing, furnace, doors, decking, etc.

Speed, your memory is fading, you have just begun to scratch the surface.  I am currently building, and of course every site is different.  In my case we decided on a full, walk-out, basement...we had to blast the rock and that added $20m to the cost, but I now have some really nice landscaping boulders to move around, and I won't have to buy stone for a few features I want to include.  We are also over 300 feet from the road and I ran underground hydro primary to my own transformer ... cost approx. $12m right to electrical box in garage. 

We are anticipating a total cost of approx. $400m for 2000 square feet with a two car garage attached, and a 600 square foot guest loft above.  Again, full walkout basement with foam block foundation, and a geo-thermal heating system (it's the way to go, and if anyone is interested please contact me).  Should round out to about $200 per foot.  Building permit, development charges, etc. were cheaper than big cities, but they are going up.  Septic costs depends on number of bedrooms, and plumbing fixtures...ours was $8,000 (two bedroom, two bath and kitchen/laundry).

Really depends on what you plan on building, and how much you plan to do yourself.  Guy down the street is building a monster cottage that will put him out $1.2million (not including land).  Ours should be worth 7 or 8 by the time we are done, and my kids can pay the capital gains tax when I croak - I don't really care what the Muskoka market is doing short term (except for the property tax implications), since this is a long term investment.

[twinn1]

Speed, how long ago did you build that cottage, your prices are sound very low.  I still think cottages have a way to go down but who knows there are two schoools of thought re cottage prices.
1. High gas prices will make cottage/boating less affordable for those that are already in heavy debt, they will sell their cottages and toys to maintain their Mcansion in the city.  This the view I agree with(A family memeber works at a mjor bank as a FA, tells me that their are a crazy amount of people who are overleveraged.
2. Baby boomers will retire and look to move out of the city, they will sell their city properties for a nice profit and build out in cottage country, thus increasing the price and demand for properties.  I think that this has already started but I beleive that real estate market will correct in the GTA and Canada in general and  and by the time the majority if baby boomers hit retirement, there city properties will be worth less then they are now.

Frank, is the property your developing in Gravenhurst? Off of M lake? Kind of sounds like the one that you out bid me on a few years ago? With all of that blasting you mentioned.... if it is Congrats, that was an awesome property, I think your bid double of what my bid was(Approx 35K).  At that time, I thought it was too much as there were other cottages for sale on the other side of the lake selling for 150-200K, but these were just basically cabins, nothing as eloborate as you mentiond. 

[Frank]

Yup, you won't get anything on that lake for under $250 - even the most run down since the lots are worth min. $150, and there is one listed for $1.6 (doubtful they will get that).   Beauty is the proximity to hogtown...start getting north of Huntsville, and the gas prices will eat you up.   Sold my place north of North Bay for that reason - but prices that far north are actually increasing since the widening of the highway.

[Pfm1011]

Frank

I trust you will post some picts as it gets nearer to completion, Sounds like a nice little getaway...is this the one penny lot??

 Oh the 12k to be 300 ft from the rd, best money you every spent.  Drives me nuts when a see house on the front of a property. They save 10 k on a 300k or 400k project and drop the final value by half

[speedfreeksteve]

Started building in 2002, but really took my time. Did most of the inside stuff myself.

Sure those prices were low.. I really shopped around. The concrete floor was the biggest deal I got. Some local guys wanted 5-6 grand but I fortunately found some guys from Orillia to come up and do it for a good price (and they did a good job).

Fortunately I got a sloping lot with no solid rock. Just a bunch of big boulders. Significant regrading and blasting was one cost that I didn't have to worry about, just lots of chainsawing, some pitrun (gravel & sand) and a few good runs with a dozer.

Had the septic done by a guy that lives 2 mins away, so I think that factored into the price.

Just don't get one quote on ANYTHING, prices can and do vary ALOT.

Good luck with building.. at some point when you try to think about how much you've spent you'll probably decide you don't want to know. At least I got the land cheap (not from a tax sale).

Speed, how long ago did you build that cottage, your prices are sound very low.  I still think cottages have a way to go down but who knows there are two schoools of thought re cottage prices.
1. High gas prices will make cottage/boating less affordable for those that are already in heavy debt, they will sell their cottages and toys to maintain their Mcansion in the city.  This the view I agree with(A family memeber works at a mjor bank as a FA, tells me that their are a crazy amount of people who are overleveraged.
2. Baby boomers will retire and look to move out of the city, they will sell their city properties for a nice profit and build out in cottage country, thus increasing the price and demand for properties.  I think that this has already started but I beleive that real estate market will correct in the GTA and Canada in general and  and by the time the majority if baby boomers hit retirement, there city properties will be worth less then they are now.

Frank, is the property your developing in Gravenhurst? Off of M lake? Kind of sounds like the one that you out bid me on a few years ago? With all of that blasting you mentioned.... if it is Congrats, that was an awesome property, I think your bid double of what my bid was(Approx 35K).  At that time, I thought it was too much as there were other cottages for sale on the other side of the lake selling for 150-200K, but these were just basically cabins, nothing as eloborate as you mentiond. 

[Dave2]

Twinn1 / Speed et al:

1.  Cottage prices will come down because of US mortgage financing problems. George Bush said it better
     then I ever could "Wall Street got drunk" .  We are still seeing the hangover like early in the morning
      after a good party.

2. Canada in much better shape but we will still see the effects.  I pulled out of Mutual Funds and have sold a lot of my real estate including all in big city. (Family had been there since the 1830's)

3.  When you are already an hour from the city makes the vacation property drive much easier.  In my case for my tax sale purchase well less then 1/2 an hour on good country roads that will never get a traffic jam.
Gas not a factor in my case because of local proximity.

4.  I try to keep my tax sale purchases local so I can properly research.  As you pro's have commented
     construction costs in rural property are not cheap, but if you are not rushed you can keep them under
     control.  I will let the big boys do the high end Muskoka. 

5.  In such an environment you have to buy at the right price.  If a fool wants to pay more so be it.  PFM and I had an extensive exchange about that earlier in the spring.  (See Galway posts). 

6.  My interest now is another possible aftermath of the mortgage mess in the States that seems to escaped the esteemed members of this board.  Recently I have seen two cases where mortgage holder screwed up and did not redeem taxes.  One of which happened to me personally on a property I bid on but had to scramble at last minute because  I had expected it to be redeemed. 

Tendency was in last few years for mortgage issuer to sell the mortgage to whomever.  Maybe the "whomevers" don't know how to administer a mortgage.   If so will result in a much better class of tax sale property coming up for bid in future. 

I smell blood but will need a little more evidence to find the body.  Then I have to stay out of the way of the big sharks here.  The only saving grace for us "Remora" fish (If you know biology) is that the big sharks will be busy feasting in Muskoka.   This may leave a few scraps for us poor folks in eastern Ontario.

enjoy as they say we live in interesting times.

Dave2   

[Pfm1011]

Its not only cottages where the bargains are coming. All toys are on sale. I have been dying to get a 35 to 40ft  sail boat and although the market is down ( 35% due to exchange) I think more bargains to come within the year as the bloodshed continues in the US.

As per cottages , I still think more discounts to come ( after the fall) but if you are a keeper, who cares what dip the market takes, Means nothing unless you are mortgaged and need to renew.  If you are keeping it it is only good news as you can kick the assessment value down. I still think we are looking at 2000 to 2003 prices as the bottom. And I base this entirely on best guess and not one shred of evidence ( pulled numbers out of ones butt so to say)

However all this has no effect on tax sales ...POS on the other hand...bargains ( as long as you understand the POS valuation scam ) For those who don't here is the basic summary.

If a bank sells a POS property for below value they can be sued by the previous owner. Therefore banks ask ridiculous prices in order to avoid any possible litigation.  Banks have appraisals done using local sales ( not taking into account the POS house is usually in substantially worse shape as someone who cant afford a mortgage payment isn't renovating or tossing in a new kitchen)  The banks then value the POS house equal to or higher then the highest sale in the neighbourhood and then ask 15 to 20% more.  Unfortunately many idiots see POS and presume its a deal. They overpay like crazy as they are moron deal hunters ( who all go away crying) .

So as a general rule if you pay more then 30% below ask on a POS you have been screwed.   This is the same as Repodepo in Toronto . The asking prices are higher then retail and some morons get ripped as they pay close to ask. However some good deals there if you are lucky.

Baby boomers will retire and look to move out of the city, they will sell their city properties for a nice profit and build out in cottage country, thus increasing the price and demand for properties.  I think that this has already started but I beleive that real estate market will correct in the GTA and Canada in general and  and by the time the majority if baby boomers hit retirement, there city properties will be worth less then they are now.

Very good point which trashes my theorys... Toronto and GTA  continue to cement over every piece of grass and build condos everywhere and the city is turning into a complete concrete Sh*thole.  Anyone who can is moving out and trying to go where you can actually breathe.   Places like Barrie Collingwood and Huntsville  are  the recepients of the refugees , at least until they get stupid and cement over everything. ( Barrie is targeted for cement)    Ontario has the worst planners on the planet, build condos to hold the people and put in more stop lights. Build a green zone to look good then send out an order for the citys to stack the people at 150 to 200 per acre outside of it.   Green zone great plan, Order to stack the people..bad plan but saves a the province a pile on highways and public transit.   Every time you see a new condo being shoehorned in..dont blame the town , blame the province.   Lets not even touch the destruction of the harbourfront in Toronto. Every other city in the world cleaned up the harbours in the 70s and 80s  and made parks....Toronto sold the whole lot off to "friendly" developers.  Pricks even tried to condo exhibition park until the province stepped in and stopped the deal.

[Pfm1011]

http://www.placestogrow.ca/images/pdfs/FINAL-GUIDE-ENG.pdf

Go to page 6 for a list of pavement targets ( essentially where not to go if you want to breathe and actually see grass)

The plan can make sense but doesnt allow for grass in the urban areas, So to see a park you have to go outside the citys as the density targets dont allow for any green zone inside the cities  ..Concrete jungles..  The province dumps these tagets on the citys, Any city that wants a nice downtown has to build mega highrises if they want space for parks. Several cities are fighting the province.  IE Niagara wants single family homes so people can have a nice standard of living and actually have a back yard  ..Province wants condo blocks stacked up like cordwood