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Quick Turn Lead in Ontario

flanabum

Private Mortgage Specialist / Investor
REIN Member
Joined
Mar 28, 2008
Messages
29
Hi Everyone,
I have a lead that I have been negotiating with the last couple days since I left the Ron LaGrand seminar on saturday......I would sure appreciate input on what direction to take on this one....... Single family house in Hamilton ( they have lived there 20 years)
Asking price- $80,000
ARV- $120,000
Existing mortgage- $65,000 - @5% (matures feb 2012)- monthly payment $403 (not including taxes)
**Payments in arrears - 3 months **
Owner states she is very motivated.....willing to sell for mortgage owing....plus extra to clear personl debts ( that``s where she comes up with $80,000....but I think I can still negotiate lower)
1500 sq ft- 2bed/1 bath
taxes- $160/month (current)
NEEDS repairs......small leak in living room ceiling from bathroom upstairs ( small continuous small drip x 2 months... ceiling has been opened to view, but no repair attempted yet) : roof - 20 years old- some shingle missing- but no evidence of water damage to house : furnace is 18 years old- entire house needs to be painted and updated.
I am not quite sure what is the best way to purchase..... ? on contract, ?AFS, ?cash........ I am not sure what the best way is to address the fact that they will have a payout penalty if they cash out their mortgage before feb2010.
If I use the MAO calculation for a cash deal....this is what I come up with.......... $120,000x 70%- ($10,000 repairs)= $74,000
OR $120,000 x 70%- ($15,000 repairs) = $69,0000
And as for my exit strategy......I am thinking to wholesale it as "a handyman special", or should I consider to sell with owner financing, or lease option "as is" ?
I have not gone to see the house yet, nor have I checked comps....... I really think this is worth my while to pursue, but I would appreciate your thoughts before I continue .
Thanks
Sue Flanagan
 
L

lanedry77

Guest
Guest
Hi Sue,

You have a handful of options here, but my take on it is that there`s more that needs to be done than you should get involved with PLUS it`s a good deal.

So I would go in and offer her $68,500. This will pay out her mortgage and cover her legal costs, and give her a bit of breathing room on her other debts. It might not get rid of her other debts, but keep in mind that her other commitments are not your problem.

write the property up using a straight purchase contract (no AFS), and immediately file a caveat on the title of the property to establish your claim in the house. This will protect you from them selling it to someone else, and it may also slow the foreclosure process.

then, as soon as you have the contract and the caveat filed - call and email every handyman/reno investor you know. Tell them about the property and tell them you will sell the house for only $73,500.

Once you have someone, assign the original contract for your fee of $5,000. You get paid immediately, and you`ve made $5,000 for never even owning the house.

sure, you might be able to charge more than $5,000 - but you can make that up in volume. Don`t try to retire on this one deal, or it will eat you alive and you will not be able to sell it.

Plus, $5,000 buys a nice celebration dinner. in France.




Thanks,

David.
 

flanabum

Private Mortgage Specialist / Investor
REIN Member
Joined
Mar 28, 2008
Messages
29
QUOTE (flanabum @ Nov 2 2010, 04:23 PM) Hi Everyone,
I have a lead that I have been negotiating with the last couple days since I left the Ron LaGrand seminar on saturday......I would sure appreciate input on what direction to take on this one....... Single family house in Hamilton ( they have lived there 20 years)
Asking price- $80,000
ARV- $120,000
Existing mortgage- $65,000 - @5% (matures feb 2012)- monthly payment $403 (not including taxes)
**Payments in arrears - 3 months **
Owner states she is very motivated.....willing to sell for mortgage owing....plus extra to clear personl debts ( that``s where she comes up with $80,000....but I think I can still negotiate lower)
1500 sq ft- 2bed/1 bath
taxes- $160/month (current)
NEEDS repairs......small leak in living room ceiling from bathroom upstairs ( small continuous small drip x 2 months... ceiling has been opened to view, but no repair attempted yet) : roof - 20 years old- some shingle missing- but no evidence of water damage to house : furnace is 18 years old- entire house needs to be painted and updated.
I am not quite sure what is the best way to purchase..... ? on contract, ?AFS, ?cash........ I am not sure what the best way is to address the fact that they will have a payout penalty if they cash out their mortgage before feb2010.
If I use the MAO calculation for a cash deal....this is what I come up with.......... $120,000x 70%- ($10,000 repairs)= $74,000
OR $120,000 x 70%- ($15,000 repairs) = $69,0000
And as for my exit strategy......I am thinking to wholesale it as "a handyman special", or should I consider to sell with owner financing, or lease option "as is" ?
I have not gone to see the house yet, nor have I checked comps....... I really think this is worth my while to pursue, but I would appreciate your thoughts before I continue .
Thanks
Sue Flanagan
Thanks for the awesome input David........ and I love that you have started "yellow letters" for canada......you will be hearing from me soon to order some !!
Sue
 
L

lanedry77

Guest
Guest
My pleasure Sue.

Good luck on this deal - it sounds like a home run to me!

be sure to let us know how it goes.


Thanks,

David.
 

BrianPersaud

0
Registered
Joined
Sep 27, 2007
Messages
326
QUOTE (flanabum @ Nov 2 2010, 04:23 PM) Hi Everyone,
I have a lead that I have been negotiating with the last couple days since I left the Ron LaGrand seminar on saturday......I would sure appreciate input on what direction to take on this one....... Single family house in Hamilton ( they have lived there 20 years)
Asking price- $80,000
ARV- $120,000
Existing mortgage- $65,000 - @5% (matures feb 2012)- monthly payment $403 (not including taxes)
**Payments in arrears - 3 months **
Owner states she is very motivated.....willing to sell for mortgage owing....plus extra to clear personl debts ( that``s where she comes up with $80,000....but I think I can still negotiate lower)
1500 sq ft- 2bed/1 bath
taxes- $160/month (current)
NEEDS repairs......small leak in living room ceiling from bathroom upstairs ( small continuous small drip x 2 months... ceiling has been opened to view, but no repair attempted yet) : roof - 20 years old- some shingle missing- but no evidence of water damage to house : furnace is 18 years old- entire house needs to be painted and updated.
I am not quite sure what is the best way to purchase..... ? on contract, ?AFS, ?cash........ I am not sure what the best way is to address the fact that they will have a payout penalty if they cash out their mortgage before feb2010.
If I use the MAO calculation for a cash deal....this is what I come up with.......... $120,000x 70%- ($10,000 repairs)= $74,000
OR $120,000 x 70%- ($15,000 repairs) = $69,0000
And as for my exit strategy......I am thinking to wholesale it as "a handyman special", or should I consider to sell with owner financing, or lease option "as is" ?
I have not gone to see the house yet, nor have I checked comps....... I really think this is worth my while to pursue, but I would appreciate your thoughts before I continue .
Thanks
Sue Flanagan

Quit analyzing and get your comps and go see it. Make the offer
 

flanabum

Private Mortgage Specialist / Investor
REIN Member
Joined
Mar 28, 2008
Messages
29
QUOTE (flanabum @ Nov 2 2010, 04:23 PM) Hi Everyone,
I have a lead that I have been negotiating with the last couple days since I left the Ron LaGrand seminar on saturday......I would sure appreciate input on what direction to take on this one....... Single family house in Hamilton ( they have lived there 20 years)
Asking price- $80,000
ARV- $120,000
Existing mortgage- $65,000 - @5% (matures feb 2012)- monthly payment $403 (not including taxes)
**Payments in arrears - 3 months **
Owner states she is very motivated.....willing to sell for mortgage owing....plus extra to clear personl debts ( that``s where she comes up with $80,000....but I think I can still negotiate lower)
1500 sq ft- 2bed/1 bath
taxes- $160/month (current)
NEEDS repairs......small leak in living room ceiling from bathroom upstairs ( small continuous small drip x 2 months... ceiling has been opened to view, but no repair attempted yet) : roof - 20 years old- some shingle missing- but no evidence of water damage to house : furnace is 18 years old- entire house needs to be painted and updated.
I am not quite sure what is the best way to purchase..... ? on contract, ?AFS, ?cash........ I am not sure what the best way is to address the fact that they will have a payout penalty if they cash out their mortgage before feb2010.
If I use the MAO calculation for a cash deal....this is what I come up with.......... $120,000x 70%- ($10,000 repairs)= $74,000
OR $120,000 x 70%- ($15,000 repairs) = $69,0000
And as for my exit strategy......I am thinking to wholesale it as "a handyman special", or should I consider to sell with owner financing, or lease option "as is" ?
I have not gone to see the house yet, nor have I checked comps....... I really think this is worth my while to pursue, but I would appreciate your thoughts before I continue .
Thanks
Sue Flanagan

David,
I have another question......can you explain in a little more detail about the "purchase contract"...... where do I get this?? and what details do I need to put on it. I have gone through all my notes from the Quick Turn Course last week and can`t find specific mention of this method . Is this the canadian version of some of Ron LaGrand`s methods?? I have an appointment to see the house tomorrow, and would like to have all necessary documents with me to close the deal while I`m there. I am assuming that the details on the contract are used for my lawyer to file the caveat??? I`m not even sure if I`m asking the appropriate questions concerning the purchase contract....so any and all details on how to do this will be helpful

Thanks........
Sue
 

GaryMcGowan

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Registered
Joined
Mar 12, 2008
Messages
736
I don`t know the Hamilton market like some but I know there are few streets that many investors will not even look at because there is no exit and the areas are war zones. Make sure you have your exit plan(s) before you sign off on any documents. The numbers may look ok but only if you have a buyer or you know you can move the property with ease.
As for documentation you can use a Purchase and Sale Agreement with an Agreement For Sale Financing Schedule (which describes how you will create the financing with the sellers). Yes the Lawyer will place a caveat on the title however in Ontario it is called a notice. If you choose a AFS when you place this on the title and this will trigger the Land Transfer Tax.

Good luck !
 
L

lanedry77

Guest
Guest
QUOTE (flanabum @ Nov 2 2010, 07:47 PM) David,
I have another question......can you explain in a little more detail about the "purchase contract"...... where do I get this?? and what details do I need to put on it. I have gone through all my notes from the Quick Turn Course last week and can`t find specific mention of this method . Is this the canadian version of some of Ron LaGrand`s methods?? I have an appointment to see the house tomorrow, and would like to have all necessary documents with me to close the deal while I`m there. I am assuming that the details on the contract are used for my lawyer to file the caveat??? I`m not even sure if I`m asking the appropriate questions concerning the purchase contract....so any and all details on how to do this will be helpful

Thanks........
Sue
Hi Sue,

By `purchase contract`, I mean the form that a realtor would use to write an offer to purchase. Here in Alberta, it`s Called the "Residential Real Estate Purchase Contract" and is produced by the Alberta Real Estate Association and given to realtors.

Many REIN members might have one, and any realtor should be able to email you a PDF version of one so you can print it over and over again yourself.

In fact, Gary should have one.


The contract will have things like the address, the legal description (if you have it already, if not - don`t worry about it), the price, the terms, the conditions (make it conditional on "subject to the review of the buyers lawyer" as a generic catch-all), and so on.

QUOTE (GaryMcGowan @ Nov 2 2010, 08:49 PM) I don`t know the Hamilton market like some but I know there are few streets that many investors will not even look at because there is no exit and the areas are war zones. Make sure you have your exit plan(s) before you sign off on any documents. The numbers may look ok but only if you have a buyer or you know you can move the property with ease.
As for documentation you can use a Purchase and Sale Agreement with an Agreement For Sale Financing Schedule (which describes how you will create the financing with the sellers). Yes the Lawyer will place a caveat on the title however in Ontario it is called a notice. If you choose a AFS when you place this on the title and this will trigger the Land Transfer Tax.
And Gary makes a great point - I don`t know the area this house is in, so I`m assuming it`s actually a house you want.

If you wouldn`t go there in the late evening - DON`T BUY IT! of course, if you have a condition on the contract, there`s really no risk, but I think you get my point.


Thanks,

David.
 

flanabum

Private Mortgage Specialist / Investor
REIN Member
Joined
Mar 28, 2008
Messages
29
QUOTE (DavidSandbrand @ Nov 3 2010, 12:10 AM) Hi Sue,

By `purchase contract`, I mean the form that a realtor would use to write an offer to purchase. Here in Alberta, it`s Called the "Residential Real Estate Purchase Contract" and is produced by the Alberta Real Estate Association and given to realtors.

Many REIN members might have one, and any realtor should be able to email you a PDF version of one so you can print it over and over again yourself.

In fact, Gary should have one.


The contract will have things like the address, the legal description (if you have it already, if not - don`t worry about it), the price, the terms, the conditions (make it conditional on "subject to the review of the buyers lawyer" as a generic catch-all), and so on.


And Gary makes a great point - I don`t know the area this house is in, so I`m assuming it`s actually a house you want.

If you wouldn`t go there in the late evening - DON`T BUY IT! of course, if you have a condition on the contract, there`s really no risk, but I think you get my point.


Thanks,

David.

Thanks Gary and David......don`t I feel silly....I was thinking you had some other fancy "contract"

And yes....I am aware of some of the "not so great areas of hamilton". I`m pretty sure this house is in a nice area....but will confirm when I check in with a local realtor tomorrow before I meet with the sellers....wish me luck.....This could be my first "quick turn" deal....but if not, it has still been a valuable experience to help me learn more for this avenue of investing.
thank you for your advice.
sue
 

Ellensamiec

0
REIN Member
Joined
Sep 25, 2007
Messages
29
QUOTE (GaryMcGowan @ Nov 2 2010, 10:49 PM) I don`t know the Hamilton market like some but I know there are few streets that many investors will not even look at because there is no exit and the areas are war zones. Make sure you have your exit plan(s) before you sign off on any documents. The numbers may look ok but only if you have a buyer or you know you can move the property with ease.
As for documentation you can use a Purchase and Sale Agreement with an Agreement For Sale Financing Schedule (which describes how you will create the financing with the sellers). Yes the Lawyer will place a caveat on the title however in Ontario it is called a notice. If you choose a AFS when you place this on the title and this will trigger the Land Transfer Tax.

Good luck !

Hi

It`s good to hear about and work through a deal like this. Good Luck Sue! Does anyone know if there is another way to protect our interest in a property without registering the AFS and triggering land transfer tax? Can another type of Caution or perhaps collateral mortgage be used?

Thanks,

Ellen
 

GaryMcGowan

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Registered
Joined
Mar 12, 2008
Messages
736
QUOTE (Ellensamiec @ Nov 3 2010, 11:51 AM) Hi

It`s good to hear about and work through a deal like this. Good Luck Sue! Does anyone know if there is another way to protect our interest in a property without registering the AFS and triggering land transfer tax? Can another type of Caution or perhaps collateral mortgage be used?

Thanks,

Ellen

You can take the property over using Power Of Attorney Document that the Lawyers can draft up.
If you place money into a property that you do not own you can register a second mortgage or lean on it.
You can use a Joint Venture Agreement, may be there is an opportunity for both sides to make money. You just found your next JV Partner and they already have a house. You can turn the house into a rental or a Rent To Own investment.
 
L

lanedry77

Guest
Guest
Gary - will registering a notice on title trigger land transfer taxes if the purchase is not by way of an agreement for sale?


Thanks,

David.
 

GaryMcGowan

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Registered
Joined
Mar 12, 2008
Messages
736
QUOTE (DavidSandbrand @ Nov 3 2010, 01:24 PM) Gary - will registering a notice on title trigger land transfer taxes if the purchase is not by way of an agreement for sale?

Thanks,

David.

As far as I know, Land Transfer is only triggered when you
A) buy a home and Title transfers to the new owners.
B) buy a home by way of an agreement for sale and choose
to place a notice on the title.

You would want to do this so you protect your investment/property that you now control. For a few thousand dollars it is should mean very little in the big picture.

Better to ask the question to a Lawyer from Ontario.


I wrote earlier that a caveat is called a notice. It is also called a caution in Ontario.
 

Ellensamiec

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REIN Member
Joined
Sep 25, 2007
Messages
29
QUOTE (GaryMcGowan @ Nov 3 2010, 12:46 PM) You can take the property over using Power Of Attorney Document that the Lawyers can draft up.
If you place money into a property that you do not own you can register a second mortgage or lean on it.
You can use a Joint Venture Agreement, may be there is an opportunity for both sides to make money. You just found your next JV Partner and they already have a house. You can turn the house into a rental or a Rent To Own investment.

Gary, Thanks for your input. Those sound like great suggestions. Is a notice just another term for a Caution? I have registered JV agreements with a Caution at the time of closing a purchase. Can you register the Power Of Attorney on title?

Thanks,
Ellen
 

EdRenkema

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Sep 18, 2007
Messages
1,230
Its been said already but I`ll say it again, be careful where you buy down there, get somebody knowledgeable in the city to have a look at the deal, preferably not s/one aching to kill the deal.
I just bought one on Cannon east of Wentworth that is in a pocket of sketchy neighbourhoods, be aware of what you are getting into, these are tough areas but... cashflow abounds!
Feel free to contact me.
 
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