Search This Blog

Wednesday, December 22, 2010

alternative housing or the future of real estate?

The City of Vancouver allows any RS1 and RS5 zoned property to put in a laneway house provided it meets some siting criteria. That same house can already be built to its maximum FSR and still be eligible. It can have a self contained secondary suite and still be eligible. So that is now turning a single family dwelling into  a 3 family dwelling. This is a good thing, That original home would be worth over a million in all likelihood, add the cost of a suite and laneway and you are  at 1.4 easily. If someone had a big down payment they could buy it and rent out the 2 extra dwellings to pay off the mortgage. But how can this help the average Joe, starting out with a decent paycheck and working hard but no chance to buy a 1.5 mill property!?

 Joe probably has friends in the same boat. If those 3 friends each bought a part of the property. Joe could get into home ownership ( without starting in a closet in the sky) for about $500,000.! These arrangements can be created by contract. All 3 parties are on title in an undivided interest and a seperate legal contract spells out what percentage each owns. Harder to get a mortgage, yes, harder to sell, yes but Joe can own! and plant what he wants in the garden and change the kitchen cupboards and all those delightful things that come from home ownership.All 3 parties have the pride of home ownership . Coming to a neighborhood near you? perhaps the next Real Estate wave, if the mortgage brokers can find any easy way to structure this.


  1. Good post, Kim, and a good idea.

    Financing it may not be as hard as you think. Vancity has a "Mixer Mortgage" that's designed for this situation: two or more people (friends or family) pool their capital and take out a single mortgage.

    The biggest challenge in your scenario is the contract between co-owners. It needs to be well documented by an experienced real-estate lawyer, and the co-owners need to agree on a "sale" clause when one party wants to sell, and a "divorce" clause when the partnership goes sideways.

    Before the agreement is drafted, the partners need to clearly agree on their reasons for doing this: how long the partnership will exist, how each will continue to put money into repairs & maintenance, etc. Like all marriages, it will take work and compromise.

    That's a lot of work to get into home ownership but for some, it's their best option.

  2. Thanks Dan, you are absolutely right. My first purchase was done with a friend when I was 24, we had a thorough contract complete with
    "shotgun clause" If I offered to buy him out, he had the right to instantly buy me out for that price- thus ensuring a good offer would be made. We never used the clause, that was 22 years ago,We ended up married with 3 kids.

  3. Let's hope he never uses the shotgun clause now, eh!

  4. Thats for sure Dan, you know-
    they say marriage is like playing cards-
    you start with 2 hearts and a diamond
    and end wishing for a club and spade.....
    thankfully we are happily married! : )