PAUL: Tony, we both own businesses on the Sunshine Coast. What is it about this region that makes it such a great place to want to invest?

TONY: I think there are many factors, not the least of which being it's a beautiful place and people are very friendly. I find whether it was when I owned restaurants or I’m working as a commercial Realtor with other business owners to help facilitate the sale of businesses, the community is very supportive and very much into supporting local and buying local. I find that community support to be a major factor when you're either buying a business or starting up a business. Everyone is happy to see local success stories.

TONY: The other thing I find – no matter what industry is – there isn't a lot of advertising done here on the Sunshine Coast, BC. If you do understand marketing a little bit and are willing to apply a percentage of your business’ profits to an advertising budget, it makes it quite easy to gain substantial market share in a relatively short period of time.

PAUL: And from a personal or a family standpoint, this is a really nice place to live. It's safe. It's quiet. As you mentioned, the community is accepting of new businesses, but it's also accepting of new people.

TONY: Absolutely. With COVID and everything else, we saw a younger demographic buying here on the Sunshine Coast, BC and there have been businesses that have popped up to help support that demographic. And I think we'll continue to see that as the collective consciousness of Vancouver is becoming more aware of the Sunshine Coast. We're starting to see families and entrepreneurs migrate to the Sunshine Coast, much to the chagrin, I guess, of a lot of the retirees that were not super into having to compete with a younger buyer demographic.

TONY: But now it seems to be balancing out a little bit. We're not seeing as many young people coming because a lot of them are being called back to work in Vancouver. But for the ones that are coming, commuting a little bit to the city is a viable option. But another buyer group is either buying or opening a small business here on the Coast.

Real estate is (relatively) affordable

PAUL: Our real estate market had a really big run up in prices over the last couple of years – and maybe other places in Canada will roll their eyes when I say this – but compared to Vancouver we're still relatively affordable on the Sunshine Coast.

TONY: Absolutely. You get a lot more for your dollar than Burnaby for example, or Vancouver. Definitely on the North Shore. And it is still very much a country lifestyle over here. The Sunshine Coast has a lot going for it, and especially if you're in that age group where you've got young kids or you're planning to have kids. It's a super safe environment and everyone's very friendly. I don't think I've had keys for my house for the last 15 years or so. There isn't a lot of crime going on.

TONY: It’s a nice place. And when you stay here for too long and then go into Vancouver or a larger city, it kind of freaks you out a little bit.

PAUL: Yeah, it's a little bit of a culture shock.

What businesses are needed on the Sunshine Coast, BC?

PAUL: You've convinced me that it's a good idea to buy or own a business on the Sunshine Coast. What kind of things are needed in Gibsons?

TONY: The main one that I feel we definitely need is a better ride share or taxi service. We are very limited on the amount of taxis that we have, and there is no Uber here. So it can be quite problematic to be going out somewhere and knowing that you can't get a taxi. You either have to rely on family members to pick you up, or accept that you’ll have a long walk home.

TONY: The other benefit to a more reliable ride share or a taxi service is that it would reduce people's needs to get their cars on the ferry, which in turn, would reduce congestion at the ferry terminals. If you walk on to the ferry in Horseshoe Bay, outside of the bus, there’s really no other reliable public transportation option on the Sunshine Coast.

TONY: The other upside to having more taxis/rideshares is that a lot of people that visit from the city stock up at Costco or Walmart or their local Vancouver grocery stores before coming here. Our local Sunshine Coast businesses lose a lot of that revenue that could be going into the local community. Visitors decide they need to bring their car, so they may as well stock up in the city before getting on the ferry.

TONY: We could use more places that cater to teenagers. There needs to be more bubble tea shops or that type of thing.

Hospitality is big business on the Sunshine Coast, BC

PAUL: Our biggest industry on the coast is tourism, so I would imagine there's a lot of demand for businesses that serve visitors. Restaurants, hotels, and anything tourist related.

TONY: Yeah. What I’ve heard from talking to business owners, is that when COVID first happened, Vancouverites would visit the Sunshine Coast to “holiday in their own backyard.” When that happened, businesses saw a big boom on the Sunshine Coast. Anything that caters to visitors has done really well with that spike in tourism.

PAUL: Something I personally find is that we're short on tradespeople. So whether you need a handyman to come to the house or an autobody mechanic or something like that, there always seems to be a shortage on the Sunshine Coast. Have you experienced the same thing?

TONY: Absolutely. My family had a lot of renovations done (like I imagine a lot of people did over the last year or two). And that's what we found. There was a lot of waiting for trades. Whether it's people to install flooring or tilers or carpenters or electricians, everyone seems to be really, really busy and there's a lot of pent up demand.

TONY: There's a huge opportunity over here for anyone that's in construction and is reliable. I quite often sell homes to people that are moving to the Sunshine Coast and are in the trades, so I'm fortunate to be one of the first people in the region to build relationships with them. But what I find is that within three months of starting their business, they're so busy that even a “preferred customer” like me can't get them to come out on short notice. So there is a huge demand for that on the Sunshine Coast.

Existing business vs starting new

PAUL: When we talk about owning a business on the Sunshine Coast, you really have two options: you could start from scratch or you could buy an existing business. I think sometimes there's a romance with saying, “I’m going to start my own thing.” But what would be a benefit to buying a business that already is in place?

TONY: The benefit would be the money that the existing business owner has already invested in the business. So setting up counters and storage and, depending on what type of business you’re considering, cutting a larger space into smaller rooms and offices, that kind of thing. Getting tradespeople right now is very hard and is quite expensive. Any kind of space, no matter what the business is, if you're starting from scratch, you’re probably looking at investing a minimum of $15,000. That’s just to get it set up, get your permits, etc. The sky's the limit on on a final dollar figure. So potentially saving a lot of money on start up costs would be one benefit.

TONY: If someone's selling an incorporated business, quite often that incorporation has existing relationships with suppliers and existing staff. Bank accounts are already set up, as well as phone numbers and websites and social media accounts and all that stuff.

TONY: The benefit to the buyer here is that with all that stuff already in place, the business is turnkey. A new owner can walk in and just take it over.

TONY: If it's an asset sale (ie – a sole proprietorship, which a lot of the businesses on the Sunshine Coast are), then what typically happens is that employees will be laid off and paid out whatever severance they're owed. Then the new owner rehires those employees and their start date would reset.

TONY: Goodwill is another benefit. Goodwill is an intangible benefit that adds value to the business. This includes things like the business’ reputation, the amount of word-of-mouth referrals, and the emotional connection customers have with the business’ name.

TONY: If there isn't an existing business for sale that you can purchase, then you don't have any choice but to start from scratch. At that point, you're looking for the best location that you can get. For businesses that do start from scratch, it’s important to have some sort of marketing plan in place before you begin. Make sure that you establish regular hours, and that you’re available when you say you’re open. Do what you say you're going to do, sometimes more, but never less. All the businesses that I've been involved with that started from scratch and have followed that mantra have been successful.

PAUL: Home prices on the Sunshine Coast, BC are way up over the last couple of years. Is it a similar scenario for commercial or industrial properties?

TONY: Quite often, whether it's a share or an asset sale with the business, the owner won't own the property that they're operating out of. They're typically tied into a lease. In that scenario, one of the subjects of the offer is them making sure that they can secure a lease for another five years or five years plus a five year renewal on a 10 year lease. If you own a business but and you don't own the property and you don't have a lease, it's a much harder sell because a new owner is outlaying money only to potentially discover that the landlord may not renew that lease or drastically increase the rent.

TONY: Commercial property itself has experienced quite a boom. Businesses that don’t own their property or location, not so much. Restaurants, for example, are having struggles now, with employees, that kind of thing. But the takeout restaurants seem to have done really, really well over COVID.

TONY: It’s very specific to different businesses, but in general, we have not seen a run on businesses like we did on residential homes. I think that's partly because the majority of people that were driving the prices up had jobs where they felt that they could work from home. They weren't leaving Vancouver to start a new life on the Sunshine Coast – they were just taking advantage of the ability to relocate and work remotely.

Do interest rate increases affect the Sunshine Coast, BC? 

PAUL: The biggest recent change to our real estate market – well, not just ours, but nationally – is that we saw a pretty substantial interest rate increase in July. I'm wondering how that Bank of Canada interest rate increase has affected our market here on the Sunshine Coast, BC?

TONY: I think it's had the desired effect. I'm not sure that interest rate decisions are being made to specifically slow real estate markets. I think it’s being done to get ahead of inflation. I feel it's inevitable that these increases were going to happen, given what's been going on in the last couple of years. The federal government has basically been printing money and handing it out to keep the economy going. Now the Bank of Canada is tasked with getting a handle on the subsequent inflation. As a result, interest rates are going up.

TONY: Our Sunshine Coast real estate market, prior to this last full point increase, was already slowing down. This slows it down even further. From everything I’ve read, it's highly likely we're going to be in a recession next year. I think that we're going to see a continue adjustment of prices down until Q1 of 2023, maybe Q2. And then the Sunshine Coast, BC will be in a buyer's market. And how long that lasts is anyone's guess.

Sellers should adjust expectations 

PAUL: In our recent sellers’ market, housing on the Sunshine Coast was so hot that prices increased every month. Is the inverse now true? The real estate market is cooling and now prices are falling every month?

TONY: Yeah. I’m seeing buyers sitting on their hands. Personally, I've noticed that over the last six or seven weeks, the only offers that buyer's agents are getting out of their buyers are lowball offers or offers that sellers think are ahead of the market. Sellers need to adjust their expectations, because a lot of them still believe that their homes are worth what they were worth last year at this time. And it's just not true. It's just not the facts.

TONY: I'm going to have to have a few hard conversations with a few of my listings and get that expectation adjusted. If sellers aren't willing to change their expectations, then they're going to be chasing the market down. There isn't really a lot anyone can do. There's going to be more interest rate increases before the end of the year, from everything I've read. If that’s the case, the Sunshine Coast will continue to settle into a buyer's market.

PAUL: If there's continued downward pressure on prices, what’s your advice to sellers in this kind of market?

TONY: If you have an investment property that you're making good money on – say an Airbnb that is zoned correctly and licensed – and you're making good money on it, you're probably better off hanging onto that because I don't see the desire for people to vacation close to home diminishing at all. I'd probably hang onto those properties.

TONY: If it is something that you NEED to sell, it’s different. If you have an Airbnb that’s in an area that’s being re-zoned or re-regulated and you’re being forced to sell, I'd get on it sooner rather than later. We are seeing a lot of inventory coming on the Sunshine Coast real estate market. I track it through my market reports and I can see an increase in inventory and a decrease in sales. Buyers have much more to choose from, and that's going to continue to increase for the next little bit.

TONY: Traditionally, July is slow. Generally, summer's a slow time because people put real estate on the back burner and go on vacation. I think that's the case even more so this year. People haven’t been able to freely vacation over the last couple of years and now they’re taking full advantage of a degree of normalcy this summer. You see what's happening with airports and rental cars. There are a lot of people vacationing. When they get back in September, will there be a run on the market? Very likely no, and it's just going to be quiet between now and the end of the year.

TONY: This means if you’re looking to sell, you really want to make your property appealing to buyers. Sellers also need to get ahead of the market and not overprice their property or they’ll end up chasing the market down. I see a lot of sellers doing this right now. In the last week I think I've seen seven or eight substantial price reductions. I’m seeing $250,000, $120,000, $80,000 price drops. Ten to 15 per cent of the asking price has been taken off some listings, and that's what needs to happen if you’re serious about selling. People that do that are seeing their homes sell.

  

TONY: Buyer's agents are having trouble getting buyers to write anything other than lowball offers. My advice to sellers that receive one of these lowball offers is to not be offended, and respond to the offer. The worst thing you can do is get a lowball offer and not respond to it. You don't know if the buyer is legitimate and starting negotiations by feeling you out. But it's worth getting your agent to at least respond to the offer, even if you don't change your price at all, to see if the buyer is just trying it out. Buyers know there are some desperate people selling their homes. There are some desperate people out there right now that are overextended and can't make their mortgage payments so they need to sell, and buyers are taking advantage. Not too long ago, we saw sellers taking advantage of a lack of inventory and holding offers and using marketing strategies like that.

TONY: Now buyers feel like they can get a pound of flesh out of the sellers. That's the reality of the market right now. If you’re a seller and it takes you three months to figure that out, then you're going to be leaving money on the table when you actually do sell. If you don't need to sell, this might not be the best time to do that.

Exposure and price are key

PAUL: If you're in a position where you do have to sell, and you're a motivated seller, I've heard you say pricing and exposure are the keys to getting a house sold.

TONY: Absolutely. There are two things that sell homes: one's exposure the other one's pricing. If you're priced right and the house isn't selling, that means not enough buyers are being exposed to your listing. Quite often, I’ll run across a For Sale By Owner service that leaves the marketing to the homeowner. And the property doesn't sell simply because buyers weren’t aware of it.

TONY: If you work with a Realtor that sells a lot of homes in a specific area and knows how to market a home appropriately, then odds are anyone that could potentially want to buy your house is going to be aware of it. Those stats are readily available. If you're working with a real estate agent, they can give you that information: how many people saw your property, what kind of response you’re getting, and how it stacks up against other comparable properties.

TONY: When you're armed with that information and you know that you have lots of exposure, then a lack of offers and a lack of showings means your price is too high. In a market like we’re seeing on the Sunshine Coast, BC right now, you can't wait for the market to catch up to your price. You've got to get ahead of it. There isn't really any point in having a listing that isn't getting any showings. If you don't really need to sell, now isn't the time to be testing the waters.

BC expands its speculation tax

PAUL: The interest rate increase was a big story coast-to-coast across Canada. A little bit closer to home, BC’s provincial government recently expanded its speculation tax, but these changes do not include the Sunshine Coast. I'm wondering what your thoughts are? Is this exclusion a good thing or a bad thing for the Sunshine Coast, BC?

TONY: It depends on what your position is. If you're a seller, the exclusion is going to potentially make the Sunshine Coast appealing to a certain type of buyer. In the last few months, I had buyers from Europe buy property here on the Sunshine Coast, BC. In one case, it was because they wanted to get their money out of Germany, because its proximity to Ukraine. So, I have seen some investors considering our region.

TONY: The Sunshine Coast, BC not having a speculation tax in place makes us more appealing to those potential buyers. We haven't had speculation tax for a long time and, in my experience, I haven't seen that exclusion driving a lot of foreign investment. I don't see a lot of Mainland Chinese buyers buying here and parking their money. I'm sure there's some, but not a lot. Our main buyer group is still retirees. And we got a bump from younger buyers that felt that they could work from home. That's what spiked our real estate prices on the Sunshine Coast. We're not seeing a huge number of foreign investors driving prices up, even though that is a common misconception people believe to be the case.

TONY: I would assume that the province, or whoever's making decisions related to the speculation tax, is looking at things like density and median house price. And if that’s the case, they might be looking at the whole of the province and seeing that the Gulf Islands and Whistler and the Sunshine Coast doesn’t have the same density or prices as other regions, and this is where they want to push foreign investment money. Because I'm sure that the province still wants that investment, but they don't necessarily want it in places that are already higher density and higher priced.

TONY: So I think if you're a seller, the speculation tax is a good thing. Potentially, if the Sunshine Coast starts to see some of that foreign investment, that'll help curb the correction in price. If you’re a buyer, the lack of a speculation tax on the Sunshine Coast might not be seen as a positive. But overall, I think that the Sunshine Coast being excluded from the province’s speculation tax is a benefit to our real estate market, because it does make our region appealing to investors that don't want to pay that tax.

Tony's August 2022 listings

PAUL: Our focus this month has been businesses and commercial spaces. With that in mind, what commercial spaces or businesses do you have for sale on the Sunshine Coast, BC?

TONY: I have quite a few. It's been busy. I have noticed an uptick in activity on the commercial side, both with people inquiring about them, and with people getting in touch to sell their businesses.

TONY: I have a higher profile one, a business coming on called Sluggers Gym, which is a fantastic, long established gym that's going to be listing in the next couple of days. There's one called Ideas Space, which is a tutoring business which is across from the high school. That's really successful. A lot of really nice restaurants. I've got one up in Sechelt called Ty's Bistro. That's a really good opportunity for someone right in the hub of the CBD area in Sechelt. There’s The Pink House, which is a restaurant down in Lower Gibsons. Long established, lots of goodwill in that one. They've recently done a bunch of upgrades. That’ll be an excellent opportunity for someone.

TONY: And then there's a florist in the Upper Gibsons. The florist is a great little business that really takes advantage of its proximity to Vancouver. I won’t name all the businesses, but if people want to check out my website, they can see everything I have listed and they can request that I send them an information pack.

link to Tony's commercial listings  

TONY: I also have some raw spaces coming up. If people have a vision and none of the business I have listed work for them and they want to create something new, these spaces could be a good fit.

PAUL: Do you also have an outfitter that's for sale?

TONY: Yeah. Alpha Adventures. There's actually three locations on the Sunshine Coast, BC. One of them is seasonal up in Pender Harbour, with two fixed locations. One is in Lower Gibsons, right in the marina. And their main store is in Wilson Creek. All three of those locations are included in what's on offer. They've done so well over the last couple of years. The owners are school teachers that have built the business up over the past decade or so, and now they're ready to move on, with the kids getting a bit older.

TONY: Alpha Adventures is a really good opportunity with really good financials. Year-round as well. They rent kayaks, ski rentals up at Dakota Ridge, they do guided tours...

PAUL: And there’s also a retail component. If you want to go buy hiking boots or camping equipment or whatever.

TONY: Yeah. And they’re the exclusive dealer for a lot of their products and kind of have the market cornered.