Investing in Whistler Real Estate

Hi everyone, I’m James Garbutt. And I’m Denny Dumas. And this is the Garbutt Dumas Real Estate Podcast.

Denny: Whistler podcast number two. This one I am super curious about and have a lot of questions about investing in Whistler. If you have thought about Airbnb property up there, where to find them what to look for, because there are a couple of different phases, would it be called zonings? I don’t know. Properties that allow Airbnb versus properties, what would be phase two. I’ll let you summarize, because I don’t really understand the full scope.

Nick: The full scale thing of like for Phase Two basically you get owner usage of 56 days a year. So you get a 28 days in the summer, 28 days in the winter so kind of May to November November, to May.

And when you think Phase Two, think of the hotel properties so, Four Seasons, Weston, the Pan Pacific’s, The Delta. The Hilton is zone phase one, but I say it’s phase two anyway, like it’s for all intents and purposes, it’s phase two. So it’s all the hotel properties are the phase two properties. 

The Phase One properties are, you’ll find majority or majority of them you’ll find either in Creekside, Whistler village or The Benchlands. There’s a few little pockets around like Nicholas North you know, Cypress Estates and then Englewood Greens, Golden Wood and then Muirfield Crescent. Those are zoned for nightly rentals and rezone Phase One. And there, it’s basically you have unlimited owner usage. You can rent it out monthly, you can live in it. You can rent it out, minimum one you can do nightly rentals on it, that’s where you can do your own Airbnb, you can manage it yourself or get a property management company to manage it for you. Whereas in the hotel properties, they do everything for you. It’s basically as turnkey as it gets.

Denny:  So maximum usage. Phase two was what, 56 days?

Nick: 56 days a year.

Denny: You can’t use it more than that.

Nick: You can but it’ll be you’ll pay. Right, like you can’t. Yeah. 

Denny:  So what like, what’s the advantage of an owner? Why would you want to own in Whistler?

Nick: I find, I find in the past that a lot of our clients and buyers use it as a place to just kind of park some money. You know, they don’t, especially it’s especially popular for more foreign buyers like from the US where they know that they’re only going to be in Whistler., say two weeks a year. They come up for you know, that week long ski trip in the summer they come up once in the sorry, the ski trip in the winter and then the summer trip and then the rest of the time they just, they put it into the rental pool they generate the income off of it and that’s it. 

Denny: What would the financials look like on something like that? Because are those more like hotel room style units? 

Nick: Yeah, like you can’t do anything to them. You can’t renovate them like you follow, you follow the Four Seasons Protocol, you follow the Pan Pacific or the Western protocol. Like you’re not ,you’re not putting up your own artwork or anything like that. You’re, you’re doing what they tell you to do. 

Denny: So you’re almost like a 50/50 partner in a hotel room with this hotel company.

Nick: Yeah, something like that.

Denny: What would financials look like because you were saying management fees on something like that are quite a bit higher than like if you hire your company to run it for you.

Nick: Yeah, there’ll be anywhere from 40 to 55%. Kind of now, it just really depends on, depends on the company. It depends on the complex. There’s just a lot of factors, I guess, that are involved with it. The financials, I mean, for the most part, and this is kind of across the board with Phase One, Phase Two from what I’ve looked at like and this is you know, no mortgage or anything. Your return on these properties in Whistler is anywhere from about 1.8% to 5%. And on average, you’re looking at about 3%.

Denny:  Okay. What are these types of units roughly cost?

Nick: Like something in the Four Seasons? Right now like just a hotel style king bed studio unit, would be $500-$515.

Denny: And are you buying a specific unit? 

Nick: Yes.

Denny: You own unit 505? It’s not like timeshare.

Nick: No, it’s not like timeshare. Yeah, you own like that’s your, your unit you’re on, your own title. Okay, that’s yours.

Denny: Do you own the stuff in the unit?

Nick: Good question. No.

Denny:  Like, do you own the bed or is that the property of the hotel? 

Nick: It’s the property of the hotel and that’s what your, I mean, that’s what your strata fees go to go to pay for it, right? So, no, you don’t. You can’t sell it and take the bed out and be like I’m taking this with me. Now, it doesn’t work that way.

Denny: So let’s say roughly $500 to $550,000 per unit. What do you think that would gross in income per year?

Nick: Well, the Four Seasons, that’s a good question, you’re kind of putting me on the spot with this one.

Denny: Just roughly.

Nick:  I’m just going through the financials in my head right now. I can I can visually see them in my head and I’m just trying to remember what..

Denny: While you do that, I’ll say you’re spending $500K condo you’re putting roughly $100,000 down. $400,000 mortgage right now is probably in the range of $2,500 bucks a month-ish. 

Nick: Yeah, that’d be probably about right. 

Denny: And then what would a strata fee in a unit be like?

Nick: Well, that’s the thing like in, in places like, in complexes like the Four Seasons. The Westin,  the Pan Pacific, like your strata fees are pretty, pretty high. There’s a lot, especially in the Four Seasons like you’re going to be anywhere from $600 to $900 a month in strata fees. So I mean, as far as what you’re going to gross on a unit like that. Like I said, I’m just going through all the numbers in my head. Right now, I can see them, all the line items and everything. You’re going to be about 55-60 I would say.

Denny: so that’s a 40% management fee. So your net income is about $30 grand. 

Nick: Yeah. 

Denny: 35 grand. Your mortgage is $2,400 a month plus let’s say $700 a month for strata fee. So that’s roughly $32,000 to $33,000 expenses roughly. So you’re close to break even then.

Nick: Yeah. And that’s kind of right. Like, again, it’s more, it’s lifestyle. I mean, I always tell people, first and foremost I’m like you’re buying in Whistler because of lifestyle and then the financial side of it comes, comes afterwards.

Denny: But in Phase One, I guess with property values today, you’re gonna mean negative cash flow per month, but like I know a few people who bought properties in Whistler and five years ago, and they’re, they’re probably making $20 or $30 grand a year with Airbnb. 

Nick: Yeah. 

Denny: But that property value doesn’t exist anymore. 

Nick: No.

Denny: Welcome to Greater Vancouver. 

Nick: Yeah.

Denny: Real Estate in BC. 

Nick: Yeah, it’s pretty, it’s pretty crazy. When it’s all, when it’s all said and done like with the prices the way they are now like I mean a two bedroom. So like a Phase One, a two bedroom Phase One will gross, I mean, I know a few units that we manage and I have a two bedroom condo and in Eagle Lodge in Town Plaza and Ithink this year, I mean, about $110,000 gross. 

Like I’m saying like now when we do revenue projections, like we used to do a projection for a two bedroom condo or townhouse in the Village or The Benchlands would be you know we’d do at about $70 to $72,000 gross for the year. And now we’re seeing it’s $90 but it’s higher than that. Like the way you know your average winter rate is about $750 bucks a night.

Denny: That’s a two bedroom?

Nick: That’s a two bedroom. You know, on average, you’re averaging about $500 a night throughout the year. You know the shoulder season obviously it’s less, the winter season it’s obviously more. 

You know, occupancy rates are about 60% to 65% for the year, so anywhere from what 215 to 245 days a year. Your property will be, should be rented. The Phase One’s nice I mean if you have the wherewithal and you have the time to manage your own property, especially nowadays with like Airbnb and you know you can put a coded lock on your door and use your phone to open it up. You know if you have that time I find most people don’t but if you do have that time and that wherewithal, you’re gonna save yourself 25% you know, right off the top. So that’s what $22,000 say if it’s grossing $90,000 you’re saving yourself that you know, and we’re happy to help but I mean, you know at the end of the day you got to, you got to do what’s best for you. So the other, the ability to do it, I’d say I’d say do it.

Denny: Probably the more difficult thing is like organizing cleaners and being able to check in on cleaners and things like that, right? 

Nick: Yeah. 

Denny: What, what all does managing an Airbnb entail? So obviously communication where people are gonna stay there, sharing door codes, check in, check out details, organizing cleaners. 

Nick: Yeah, I mean, so it was a way we kind of go about it and manage it. So there’s a front desk in Deer Lodge in town Plaza. And if you buy in Eagle lodge or Deer Lodge or Bear Lodge, your strata fees actually include the front desk service. So clients of ours that we have that don’t necessarily own in there, they can pay a subscription every year basically to the front desk service. 

Denny: Okay.

Nick:  It’s like $1,000 bucks a year or something that’s based on, based on check ins but so basically, we get the property up and listed it’s on our site, it’s on Airbnb, it’s on VRBO we get a booking, it goes straight into the system, then then we communicate with the with the renter. They go to the front desk and that’s where they get checked in. 

We don’t rent to anyone under the age of 28. So they go, they show their ID. The nice thing about having the front desk service like, on Airbnb, they only hold the deposit for 24 hours. So if there’s anything that happens, you’re kind of, you’re kind of hooped whereas our front desk, they take the credit card imprint and they hold it for seven days, because sometimes the cleaners don’t get in there right after the booking depending. So yeah, so we organize the cleaners. We have a couple of handy people you know, at our at our service, so if something needs to be taken care of, you know, we’ve got boots on the ground, basically.

Denny: Can we go  through the numbers of a Phase One unit? Let’s use that two bedroom specifically. What’s the market value of something like that right now?

Nick: Like $1.0. Well, anywhere from $1.5- $2.0.

Denny:  Let’s say low end, let’s say $1.5. So you’re roughly you’re, gonna put 300k down. So you have a $1.2 million mortgage, that mortgage say it’s not pretty. It’s probably $7,000 a month. 

Nick: Yeah. 

Denny: Your gross income is about $110K. If you use a property management company, let’s take off $25k. That’s $85 grand. Your mortgage is going to be close to $80. And then what’s a strata fee on a unit like?

Nick: So strata fee, you’re gonna be $700 a month.

Denny: So that’s another eight or $9,000 plus $1,000. So let’s say $10 grand that $1,000 for the front desk stuff, let’s say roughly $10 grand, so you’re all in cost per year it’s going to be $90-ish.

Nick: Well and you still have your property taxes, which are say $4,000 a year. 

Denny: Let’s say $95K.

Nick:  Yeah. And then you’ve got your Tourism Whistler fee as well.

Denny:  What does that entail?

Nick: So everybody that has any properties in Whistler that have, that do nightly rentals pay a tourism was their feet Tourism Whistler fee. Tourism Whistler is a nonprofit so they have to market Whistler to the world and get people into the beds. So everybody that has a nightly rental property pays. Even don’t do nightly rentals, you can sign an affidavit that says I’m not  because some of the Phase Ones aren’t used for nightly rentals, the GST is paid on them. And so people use them residentially but you’ll still pay $350 bucks a year to Tourism Whistler. 

But if you do do a rental on it, it’s basically it’s basically based on bed units in the property. So I mean, for two bedroom now it’s, I think now about four depending on the complex $1,400 to $1,600 Sorry, a year.

Denny: A lot of these buildings that are Phase One are what age, they’re like 80s 90s?

Nick: Yeah. 94-96 Yeah, that’s kind of on on average, everything’s kind of 94 to 96 like, especially like, you know, on Northlands Boulevard, a few and up in The Benchlands were built kind of 88 to 91. But most of the stuff is kind of 94 to 96. 

And then a few of the newer buildings were, you know, the Pan Pacific village center was 2000 and it was either 2002 or 2005. The Four Seasons was 2005. First Tracks Lodge and Creekside was 2008 I think, if I remember right. But there’s not there’s not a lot of new, like everything’s hitting that kind of 25 to 30 years now,

Denny: In, in a building like that,et’s say there’s 100 units. What percentage of would be used for Airbnb in this Phase One buildings?

Nick: 85% to 90%. 

Denny:  So, majority.

Nick: Yeah, majority of them there’s not too many people living in.

Denny: Being a heavy investor, do you, are you finding the stratas postponing maintenance on those buildings? Like 25 years is, there’s a, there’s a number in a strata building where a lot of things start to come up right. The elevator might start to come up. The roof probably needs replacing if it hasn’t, parkade membranes. You know, like windows will be in the next five to 10 years. Maybe right?

Nick: It’s happening. Yeah, there’s a couple of complexes in Whistler right now where they’ve done big cash calls. Glacier Lodge right in the, right on the Upper Village right across from the Fairmont I think they have what was it,  $22 or $25 million slated, that’s going through. Ironwood over in Blueberry one of my clients owns in there. We were having a conversation and they’re doing a $250,000 cash call.

Denny:  Each unit?

Nick:  Each unit. 

Denny: Are you prepared for that Karl?

Karl: I don’t know.

Nick:  if you want another good story. I listed a property. I’m not going to say the I listed a Phase One property in the Village last week and kind of knew that something was up because they you know, you know something’s up when they want to start crossing off the commission section of the listening contract and stuff right. So I was like yeah, what I was I’m pretty easy, easygoing when it comes to stuff like that and like it either works or it doesn’t I’m not going to. 

So, so anyway, but I didn’t quite catch on what was what was happening. But the building itself is like, and it’s again it this building. Well, this building was built in 1980. And so there’s a lot, the land value is there, but there’s a lot coming up in this building. And so these particularly units sell significantly lower than what a regular Phase One would sell for. Plus the management structure in there is a little bit different than you’d find in most Phase Ones. You actually have to use their front desk which is not normally the case with Phase Ones. 

So long story short, we ended up getting three offers on it, in the first day. Two are unconditional, one wasn’t. But you know, so we had an accepted offer. The conditional, we took the conditional offer,. That conditional offer went through the strata and all that and they were like, No, we’re out. And then the seller cancelled the listing the next day because found out that everyone voted against actually doing what, the work that needed to be done. 

So the reason they were selling was because there was potentially $200 to $250,000 coming down the pipe to pay for the unit. So, so there are a few complexes in Whistler that, you know, like you said, parking membranes, it’s all of this maintenance that’s coming up, that’s where I also say, you know, if you, you know, having a high strata fee isn’t necessarily a bad thing, especially considered depending on where they’re allocating it. 

Denny: Sure.

Nick: You know, do you want to have a, you know, a big cash call at the end of the year and you want to, you know, slowly save up for it, which you know, good complex like Montebello, you know all of their owners saved up for seven years for the new roof. Now the roof’s done. They don’t have to worry about it for the next forty years.

Denny: Exactly. Is there any available land that is in Phase One zoning or it is 100% built out?

Nick: To purchase?

Denny:  Yeah.

Nick: The area is kind of talked about in, actually don’t know if it’s going to be Phase One or not. Where the tennis center is. 

Denny: Yeah. 

Nick: I don’t know if that’s just, I should find that out actually.

Denny: Why is that prolonging so why like, why is it taking so long?

Nick: Many different reasons. We don’t have enough time.

Denny:  Mostly political? 

Nick: Yes, yes. Many different reasons. 

Denny: But eventually there will be some new condo buildings, right?

Nick: There will be townhouses. I mean, there are different little pockets, I but what the zoning would be I don’t, I don’t know actually off the top of my head. I should find out how to figure that out. That’s how I got into into real estate actually, was I was working for the Evolution Project in Creekside and they brought me on to go and learn and then to help out ,they were going to do it was going to be 47 individual townhome units up on Base Two. They were basically going to flatten everything in Base Two and it was going to be like Whistler’s premier ski in, ski out. 

And at that time I was working with Playground Real Estate which was the sales and marketing arm to Intrawest Developments. Fortress bought Intrawest back in 2008 or whatever it was, the whole world collapsed. They said no more new development. My six months or my year contract with Playground turned into six months but I had worked into that they would take care of my real estate license. So I spent the winter skiing and studying for my real estate license and here we are 15 years later anyway.

Denny:  Is there, obviously Whistler is getting quite expensive. Looking at a one bedroom Phase One I think we talked about like entry level would be like around $1.1.

Nick: Yeah, say a million.

Denny: Is there, is there much in terms of like fractional ownership opportunities?

Nick: Yeah, yeah, there is. I mean, and we’ve seen that, you know, I was just looking at the numbers the other day and we’ve seen that increase to you know, everything kind of went by the wayside for a long period of time. And now everyone just kind of wants that, that piece. 

I mean, realistically on a two bedroom, like I’ve got a couple listings in Legends, like Legends is…

Denny:  That’s Creekside?

Nick: Yeah. So then you know, crunching the numbers on that without a mortgage on it. You’re looking at about 1.8% When it’s all, all said and done on your return. And that’s on a $315,000 purchase. 

Denny: And that’s 50% ownership. What is that? 

Nick: No, it’s quarter. 

Denny: That’s a quarter. 

Nick: Yeah. So what 13 weeks a year. 

Denny: Is that Phase Two? 

Nick: No, Phase one. 

Denny: Okay. 

Nick: So it’s basically it’s, it’s four owners on 1 title.

Denny:  Okay. 

Nick: It’s how they do it and then you just rotate. 

Denny: So how does selling those work?

Nick: Same as, same as normal. Like same as..

Denny: What if one, if one quarters wanting to sell, one person out of the four?

Nick:  Yeah, just want your so basically, A, B, C, and D. And it’s an each, each owners treated individually. So basically when you buy, you’re buying, like if you’re buying a, so every four years you get Christmas and New Year’s. So when you decide if you want to have it rented out, or if you want to use it. Some people they want to use it exclusively and other people you know, they’ll come up and use it when they can but rent it out, you know majority of the time.

Denny: And are you, if you own Block A, are you getting the rental income a quarter percent from the entire year or sorry? A quarter of the entire rental income from the entire year? Or are you just getting rental income from Block A?

Nick: Well, they actually they, just changed. Well, not just that. Yes, but yeah, it works a little bit differently now where it used to be pooled, it’s not, it’s not pooled anymore. 

Denny: Okay. 

Nick: So it’s based on your, on your unit. 

Denny: Because then you’re in control. If you’re, if you’re sharing 25% of the yearly rental income, Block B uses it 100% for themselves..

Nick: Yeah.

Denny: Then that’s a little bit unfair.

Nick: Yeah, exactly. And that’s the thing too, like in the Phase Twos as well, like, you know, if you, whenever you’re using your property like for your own personal use, you’re not in the rental pool, like you’re not generating, you’re not generating revenue. So if you come at Christmas time to use it with your family, you’re ,you’re missing out on the Christmas, New Year’s, President’s Week, March break, Easter, like those are kind of the the prime time. So if you’re buying it for revenue, don’t ,don’t come at that time to use it.

Denny: Let’s wrap up. If you, well, Whistler’s always been a dream of mine and one day I will own something in Whistler, so one day I will give you a call. 

Nick: Okay.

Denny: But if you’re thinking about investing in real estate in Whistler, this is your guy. We will throw his Instagram in the podcast notes but Nick Soldan Harriss, @NickSHWhistlerRealtor thank you very much for joining us.

Nick: Thanks buddy.