Joel,
I remember you sharing this deal with me when we met in Calgary. Based on what I already know of the vendors underlying motivation and personal situation, I really don`t see how you could possibly make this one work.
Remember what I said: You should NEVER want to purchase a house MORE than somebody wants to sell you their house! If you do, you stand a very good chance of inheriting their problems! As a "sophisticated" real estate investor you have the unique ability to "solve peoples seemingly impossible problems", but only if you can create a Win, Win for everybody involved!
Please don`t take my comments the wrong way, as they are not intended to offend, but in my opinion the only Win, Win in this deal is...Seller Wins, Seller Wins!
The fact of the matter is, the house is upside-down from a mortgage/market value perspective.
You mentioned that Genworth is willing to pay out TD and set-up a structured "payment plan" with the vendor, right? As it sits right now, the mortgage company has their equitable and beneficial interests protected as they have first charge on title. So my question to you is this; are they willing to accept a purchase price (from you) of $335k? I am not sure why they would, but if they are willing to do this...GREAT!
Now assuming they go along with this, are they also agreeing to provide you with clear title when you close? And with "no strings attached"?
If they are, it looks like (as long as you have performed all of your due-diligence) you can pick this house up under market value. If this is the case, I am not sure where the Vendor fits in here? While I strongly promote a Win, Win for all stakeholders involved in a transaction, I am not quite sure WHY you would agree to allow them to benefit from any future equity appreciation over the period of time you hold the property. After all, you will be taking on plenty of "risk" yourself with respect to future market conditions, as there are absolutely NO guarantees which way things could go. Please do not get me wrong, as I do agree that the "fundamentals" do look promising, but the fact of the matter is...there are NO GUARANTEES!
The company I mentioned to you is called "Debtor Advisory Canada". A fellow REIN member along with his brother operate the businesses out of Calgary and Vancouver. The Calgary (REIN) member`s name is Brian Zerff. I do not have his phone number, but I do have his brothers. You can contact David @ 1 (604) 325-5534.
If I am missing something here please let me know, but based on what I see on the surface, I would not touch this deal!
I hope my feedback is of assistance to you?
P.S. another tip when dealing with people that are in financial trouble; NEVER cross the (this is what I would recommend you do) advice line! Let the professionals do that.
QUOTE (joelast @ Jan 25 2010, 05:46 PM) I have been urged to seek your opinion on this deal that I have Tony. What I have proposed makes sense in my mind, but my mind might be out to lunch. I have a divorcing couple with a big beautiful house that is about 50k upsidedown at today`s market value. If using a realtor to sell, it will be close to 70k up side down. It appraised at 353k with market value of 360, they will accept my 335k offer and I split the gain 50/50 from today`s appraisal to the appraisal when my tenant buyer purchases two-three years away. It has a TD mortgage of 405k. It is my understanding that if Genworth the insurer will pay out the td mortgage and set up a payment plan for the outstanding now... why not later when my tenant buyer has two-three years of mortgage pay down and market appeciation to help shrink the gap down to a manageable amount. My purchase price is 25k below the market price and I will get 50% of the appreciation till my buyer gets new financing. If you disagree ... then fine. I`ll accept that, and I`ll drop this deal. What is the # for these owners to seek guidance on this financial issue. You were telling me about them at your workshop but I did not get the # from you as I was still convinced I could do something with this. show me the way of the force Tony... don`t want to be on the dark side. Joel
By the way I attached what I offered to then
