Written by: Elliot Funt, Real Estate Advisor, Engel & Völkers Vancouver
How do I make money from land rezoning due to the Broadway Plan?
This is a pretty straightforward method of investing that can simply be chalked up to buying condos or homes in areas that will increase at a far greater rate than the city as a whole. The tricky part is finding good deals in a sea of MLS listings, particularly as there are a number of considerations that impact each available building site. This is why it is imperative to hire an expert in this area to guide you into a good investment.
What is the City of Vancouver’s Broadway Plan?
Screenshot showing the area covered in the Broadway Plan, as shown on page 6 in the Broadway Plan (credit, City of Vancouver, 2022).
The Broadway Plan encompasses a 500-page document created by the City of Vancouver, which covers the community planning area between Vine Street to Clark Drive and between 1st and 16th Avenue. This plan is what guides city planners, developers, and many other stakeholders in their day-to-day decision-making. It came into effect as of September 2022 and will guide planning over the next 30 years.
The Broadway Plan is presented in a very clear, and dare I say, concise format; though given the sheer volume of information, it is difficult to digest. Simply put, you need to know what you're looking for and where the best opportunities are hidden, albeit in plain sight.
The Broadway Plan document can be found via this PDF (link to City of Vancouver website):
“show me the money”: High-Rise Rezoning Under the Broadway Plan
Areas marked for high-rise development are the most crucial component of the Broadway Plan from a real estate investment perspective. These areas can be observed on a broad scale on what is currently pages 64 and 65 of the Broadway Plan document. There are four neighborhoods covered under the plan: Kitsilano (partial), Fairview, Mount Pleasant, and False Creek Flats (partial).
I have screenshotted one section (page 188) which relates to zoning in Mount Pleasant below. What we are primarily looking for are currently low-rise opportunities within the orange areas and the red/dark red areas. Within those areas, there are still many factors to consider; this serves as a starting point. For example, in Mount Pleasant, most of the areas marked for "High-Rise" development will permit up to 20-story buildings, while "Mid-to-High-Rise" will permit up to 12-story buildings. The best part is that I can show you similar opportunities in the other neighborhoods as well.
Screenshot of Mount Pleasant Neighbourhood Land Use shown in the Broadway Plan on page 188 (credit, City of Vancouver, 2022).
What is a Cash Flow Positive Property?
A cash flow positive property is a property where your mortgage and other associated costs are lower than the monthly rental income you receive. While virtually anyone can achieve this with a substantial down payment, in the context of real estate, most Realtors® consider a property cash flow positive when it meets this criteria with only 20% down (which is quite challenging given the current real estate prices).
The Myth of “Cash Flow Positive” Properties In Vancouver
Simply put, I cannot find you a cash flow positive property (with only 20% down) in the City of Vancouver or any surrounding area within approximately a 2-hour radius of Vancouver, especially considering the high interest rates of 2023. In reality, even before the rate increases, this was a lofty goal. While there are opportunities in some other parts of BC and certainly across North America that offer positive cash flow, most of these opportunities come with a significantly higher risk of property values decreasing or remaining stagnant. What makes Vancouver real estate so appealing is its landlocked nature and the continuously increasing population, which keeps housing prices rising, even in a slower market.
What Down payment Do you recommend Using this rezoning investment strategy?
This is a strategy that works best for investors putting down roughly 50% (suggested) or more. The suggested amount represents the figure that balances your monthly mortgage costs and all expenses relative to the long-term unfurnished rental income you receive over a 5-year period. The primary benefit you gain here is from the eventual buyout of the condo at an above-market rate.
This is unless you have a significant extra cash flow to put into the condo every month or are simply considering one of these buildings to live in yourself, thus avoiding paying someone else's mortgage.
What is the minimum Amount of money I need to get started?
While more is better, 5% down on any condo valued under $500,000 is the minimum. This option is quite suitable for first-time home buyers with small down payments, provided they have relatively high and stable incomes. As a bonus, no property tax is applicable if you are a first-time home buyer purchasing a condo under $500,000 (with a partial tax credit available for amounts under $525,000).
Have A Bigger Budget? And/or wish to build something yourself?
I am well-versed in the intricate needs of large-scale investors and builders, including commercial multifamily unit investment, of which the Broadway Plan presents numerous opportunities. Let's schedule a time to discuss any of your unique requirements.
The Broadway SkyTrain Line is already Under Construction, are you sure it’s not too late?
Probably the most common question I get asked, and the answer is absolutely not. SkyTrain construction began in 2021 and is expected to be completed in 2026. The Broadway Plan itself was only implemented in 2022, and nearly all opportunities available to average investors are still open. Some gain will occur at the time the SkyTrain is operational/near operational, though most of the gain will occur when the building is sold to a developer or large investor.
How Long Will I Need To Hold the Property?
The majority of available properties are intended for longer-term investments. In theory, some of these long-term investments could be held for up to 30 years, given the scope of the Broadway Plan. However, the goal is to find you buildings with a high likelihood of being bought out within 10 years.
One of the key factors in this is the building's life expectancy and land value. Needless to say, the worse the building, the higher the likelihood of it being redeveloped. So, contrary to standard intuition, start searching for the worst and oldest buildings in a particular subarea.
Need to Sell Prior To Strata Windup?
Even individual condo sales before a looming building sale tend to command higher prices as more large-scale investors enter the market with expectations of future development. That said, the most substantial returns are realized during a strata windup. If you can't wait for that, don't hesitate to inquire about similar projects outside the Broadway Plan.
A strata windup occurs when 80% of the building's owners, known as the strata corporation, vote to sell the building and its associated land.
If you currently own a property and plan to sell in the near future, be sure to reach out to me. I have the expertise to secure a higher price for your condo compared to many other Realtors® who may not fully understand the intricacies of the Broadway Plan or those of strata windups.
an added benefit of being my client
I offer specific recommendations for select buildings, and this information is exclusively available to my clients. Start your search with me today.
The concept here is that over the next 5-10 years, my clients, collectively, will form voting blocs of pro-sell investors within the buildings they invest in, thus increasing the combined ability to reach the 80% margin required for selling. It's worth noting that many strata corporations have as few as 15 to 40 owners.
Above and beyond My typical realtor® Services, there are several key things I do For My clients:
Provide estimated rental revenue for your prospective purchase.
Comprehensive Pro-Forma analysis for your purchase.
You will receive access to my exclusive Buyout Value Calculator for strata windups.
Research current market trends and statistics specifically related to square footage, bedrooms, and the sub-areas. Lots of fun information to look at!
Create building-specific searches so you will be notified when a new listings in these specific high-development building opportunities become available.
Keep extremely up-to-date on changes to city planning, building development, and maintain a knowledge far beyond that of most, if not all, other Vancouver realtors.
Elevate your property search with my exclusive recommendations for handpicked Broadway Plan buildings.
Contact me to get started today at Elliot@Funt.ca or (778) 991 - 3868 (text, phone, or WhatsApp).
Elliot Funt - Real Estate Advisor with Engel & Völkers Vancouver
