Here is a common scenario in Calgary, I have seen it so often I’ve lost track. A ‘want-to-be’ builder acquires a property, often of dubious development merit. Plans are possibly made, sometimes even approved by the City to a DP pre-release level (but not ‘released’ as that requires an influx of real cash, far more than the DP permit fee). Often the DP has lapsed once the property hits the market, a sign of the duration over which these events unfold. During this multi year process the speculator (let’s not give them too much credit) does some homework and realizes there is no hope he can do what he originally planned. Either he hasn’t got the skills or believed incorrectly he could outsource the build while sitting on the beach. Let me tell you that is a bad strategy for an investor. More like a debacle recipe. So a couple years have gone by and the complete POS house is evidently now un-rentable, to the speculator that is a sell signal I guess. So our ‘Developer’ looks for the easy way out, he tacks on a ‘couple $100k’ above what he purchased for and lists it on mls.

Somehow the lapsed or non existent plans justify a value add of hundreds of thousands of dollars. It seems like the failed developer deserves all of the future profits of the finished project on his way out. A pretty rendering is acquired to fill out the listing, viability of the design be damned. Talk about a ‘whif’ of multi family building potential somehow translating into another builder purchasing a drastically overpriced land deal. I don’t do pretend builder bailouts. The market needs to school these people. They speculate on land they can’t build on and undermine the business model of serious builders by artificially inflating inner city land value. When someone skips town on a project, that is an indicator they wouldn’t have been a good partner anyway. Is flakiness a characteristic you want in a JV or as someone in charge of your investment funds? It shows when things get hard, they dont have what it takes to overcome a challenge. Building is a constant challenge and the best builder overcomes hurdles and eventually becomes adept at avoiding and neutralizing problems.