When you start looking at Whistler condos you inevitably come across the term "Phase 1" condo or townhome and "Phase 2" condo. What the heck does that mean?
Phase 1 refers to condos and townhomes in areas of Whistler that have zoning allowing the owner to do nightly rentals if they so choose AND have full access to the property with full owner use whenever it's not rented.
Phase 2 describes the restrictive covenant placed on the title of certain condo buildings by the Resort Municipality of Whistler that restricts the owner's use of their property to 28 days winter and 28 days summer. Rentals are done through the rental management in place with the building when you're not personally using the suite and you participate in that rental income subject to the management's rental management fee of course.
The four main differences between the two types of Whistler nightly rental zoned properties and why these differences affect their respective values are described in the video below. Give a watch!
The differentiating factors come down to these FOUR MAIN POINTS:
- Owner Use Restriction: Phase 1 condos have no owner use restriction while a Phase 2 condo hotel suite only allows the owner to use the property 28 days winter and 28 days summer for a total of 56 days. What I know is that many buyers in today's market would prefer to be able to use their property at their own discretion and the Phase 2 restrictive covenant does not sit well with some.
- Size and location: Phase 1 condos exist in many areas of Whistler such as Whistler Village, Village North, Blackcomb Benchlands, Whistler Cay Heights, Blueberry Hill and Whistler Creek. Lots of property location, size and style options to choose from. Phase 2 condos are located in the following hotel buildings: The Westin, The Four Seasons, Whistler Peak Lodge, The Coast Blackcomb Suites, The Pinnacle International, The Alpenglow, The Delta Whistler Village Suites, The Blackcomb Lodge, Pan Pacific Mountainside & Pan Pacific Whistler Village Centre. While some buyers really enjoy the ease of use of owning in a hotel, others would rather have a larger condo than what is afforded by the smaller hotel suite style Phase 2 condo units. They really are two different animals and it's a bit of an "apples and oranges" comparison between the two condo types from a size and location standpoint. For example, the great thing about The Westin and The Pan Pacific Mountainside is that they're smack dab at the bottom of the Whistler and Blackcomb gondolas so from a location standpoint it just couldn't be better.
- Rental Management Freedom: Would you prefer to manage your own nightly rentals or choose your own rental management company to handle the rentals for you? Then a Phase 1 condo will allow that. If you'd rather just use the rental management that's in place with the building and don't care to make any changes to that arrangement? Then a Phase 2 would work for you. You may get a lot more revenue from your property if you manage the rentals yourself using Allura Direct, VRBO or AirBNB because you're cutting out the middle man and saving that 40%+ rental management fee. Keep in mind that doing the rentals yourself can be more than a part time job for you and the drain on your time may not be worth it in the end.
- Renovation Options: With Phase 1 properties you have full freedom to do any improvements or renovations to the property you wish. Change the beds out, renovate the kitchen & bathrooms, replace the carpet, paint, or add new artwork. All of these things can bring dramatic value increases to your Whistler condo or townhome and Phase 1 ownership allows you to do that. With a Phase 2 condo hotel suite you cannot do any of these things. What you're buying is a suite in a hotel and you must keep the suite as-is. You're on the strata council's timeline for upgrades and you have little choice in the decor or styling of the suite.
- BONUS TIP: Phase 2 condos are more difficult to get bank financing on if you were planning to get a mortgage. Most banks are reluctant to lend on any property that has a restrictive covenant on title despite the revenue stream that they bring in. At any given point in time there are only 1 or 2 banks that will lend on Phase 2 properties in Whistler. When they do lend you will likely have to put as much as 50% of the property's value as a downpayment and you will be subject to higher than normal interest rates in the range of 1-2% above the bank's prime rate at that time.
Keep in mind that some of the Phase 2 condo styles have very few Phase 1 comparables. For instance, the smaller studio style units at The Cascade Lodge, The Delta Whistler Village Suites, The Westin or Whistler Peak Lodge don't really have any similar size studios in Phase 1 buildings to compare to so it's tough to make a direct comparison between the two.
However, some buildings such as The Cascade Lodge and The Coast Blackcomb Suites have one bedroom condos that are almost identical in size, location and finishing level to the one bedroom suites in The Aspens on Blackcomb. The Aspens is a Phase 1 building where these identical suites are selling for nearly FOUR TIMES the value of their Phase 2 siblings. It's unfortunate that back in the day the Phase 2 restricted condos were marketed by their original developers at prices that rivalled similar Phase 1 suites around Whistler but the factors outlined above have inevitably proved to impact their value in today's market. It's "horses for courses" though and Phase 2 condos do indeed fit the bill nicely for many.