Stinky Stuff and Assignment Deals
As I write this, I am flying home from the beautiful island of Antigua located in the Caribbean. To me, there is nothing better than getting away and spending time relaxing, kite surfing, dining, and exploring. However, after being away for 10 days, I also cannot wait to get back to what I love—the business of real estate. While traveling, I often find myself snooping around at the real estate market, searching for deals, and asking local agents what are some good real estate investments in their markets. As a side note, I do not believe in buying recreational property locally or abroad as part of my investment portfolio. If you are curious at to why, drop me line and I will explain in detail.
This is my wife and I’s second trip to Antigua, where we once again stayed at the charming Dutchman Bay Cottages owned by David Fuller. David and his family have a long history with this brilliant island. David, being a third generation Antiguan, knows his island, the people, the politics, and of course, the real estate market. David’s family owns or has owned large tracks of land, as well as a number of the surrounding islands around Antigua.
When quizzing David on property values, good buys, and the next island opportunity, he was quick to respond. David said that islands are no different than cities and areas in BC when it comes to property values. There are good areas, bad areas, up-in-coming areas, and political or environmental real estate plays. In BC, a real estate political play could mean having the inside scoop on where the next hospital, sky train line, or hydro dam will be built. The thing about real estate political plays in BC is that they are very public and can often take years or decades to materialize. In turn, these political plays are often not worth the tedious investment in playing the waiting game only to find the next political party does not agree with the previous parties’ decision. However, David shared with me that politic real estate plays in Antigua can happen swiftly, without much opposition with the rewards tending to be very generous. To emphasize his point, David showed me a large piece of property that was essentially taken away from an individual and given to a family member of the reigning political party—that is what I like to call “stinky stuff.” In Antigua, it truly is a game of who you know. I am not so sure that the “stinky stuff” would fly in BC, even if your last name was Trudeau.
While kite surfing in Antigua I injured my knee on a bad crash. David was kind enough to take me to his friend and physiotherapist, Danny, for a treatment. While driving there, he showed me through an area that was an environmental real estate play. No, not a pipeline blockade or the building of a hydro dam, but a crisis that hit the Caribbean in 2011 that is still causing grief—the crisis of sargassum seaweed, or “stinky stuff” as it is known in the Caribbean. Sargassum is an algae that blooms into seaweed. This outbreak is so large that researchers have named it the Sargasso Sea out in the middle of the Atlantic Ocean where the algae grows. The Atlantic water and wind currents take large pieces of sargassum seaweed from way out in the Atlantic and wash it ashore on the beautiful beaches of the Caribbean, including Antigua. It piles up on the beaches and eventually decays, often causing a foul odor releasing sulphur compounds that rust metals, damage homes, and cause respiratory and health problems.
The result of the “stinky stuff” piling up on the beautiful beaches of the Caribbean has negatively affected property values. Stunning homes and properties are being offered at significantly lower prices than similar properties on the non-seaweed beaches. David, like any seasoned investor, has been doing his research on this awful seaweed. He searched out the top expert of the stinky seaweed and learned that the Sargasso Sea was most likely a result of the BP oil spill back in 2010. It is great that he learned a possible cause for the seaweed, but can he now learn a cure to rid the seaweed for good?
If someone could come up with a solution, these devalued properties could become brilliant environmental real estate plays. Unfortunately for the property owners and real estate investors looking for a good environmental play, there are currently no solutions other than cleaning the beaches with tractors scooping it up, or large seaweed pickers built specifically for the “stinky stuff.” But, like all serious investors, one needs to be persistent! David is that persistent investor as he continues to reach out to the top seaweed experts in hopes of finding a long-term seaweed solution. I am quite positive that once David receives that positive news that the seaweed issue has been solved, he will be the first to make an environmental real estate play.
What are some of the environmental or political plays that are currently happening in the Fraser Valley and Vancouver? The multiple provincial and federal influencers, such as multiple jealousy taxes, and lending and qualifying rules and regulations, have certainly cooled the market. The luxury market has some incredible buys; however, it is the presale assignment opportunities that are brilliantly poised for the astute investor. Many speculative investors bought presale condos and townhome properties 12-24 months ago hoping to cash in on assigning the contracts to other buyers. Unfortunately, with the market cooling and prices not riding a rocket ship to the moon anymore, many of these speculative investors are now struggling to close because of challenging mortgage qualification rules. Here is the environmental or “stinky stuff” play we been waiting for. I have seen many of these presale deals being assigned at the original purchase price, or for even less! Today, cash is king, or better yet if you can qualify for a mortgage. Call us today if you want to find a “stinky” good deal on an assignment.
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