- Joined
- Jul 14, 2009
- Messages
- 28
After spending my life in BC I decided to move (May 2010) down to Arizona, started a real estate investment company and started to learn the real estate market. There are some amazing opportunities but learn before you leap. I took a lot of the knowledge learned at REIN and have applied it here. For those of you who have not yet attended the upcoming ACRE weekends ` Go. If you have questions about all the different laws and regulations, I started a free online education blog which contains information on all things real estate in Arizona.
My real estate company is now making money. FYI ` I am not a mortgage broker or Realtor but I hire many! The learning curve was tough. This is a foreign country so pay attention. It is not difficult but it does take some research. In anticipation of the Calgary All Day Power Workshop this upcoming weekend in Calgary I thought I would share some of my experiences ` from the fox holes.
Tomorrow I will chat about short sales and then on to REO or Real Estate Owned.
I heard all the hype about foreclosures and came down to take a look. I bought three of them to `fix and flip` and to see what type of returns I could generate. I was successful with this business model in Vancouver.
Here is my Coles notes version of the foreclosure process:
Our process in Canada is very different and our citizens have protection. This lack of protection creates a lot of different opportunities for the unscrupulous types hanging around the foreclosure auctions.
The homes are actually sold on the court house steps. Everyone ` their brother, mother and cousin is trying to scoop up the houses. It is mostly unregulated: you can register and even bid on your own.
You hire one of the bidding companies to bid on your behalf. You give them $10,000 up front before they will enter a bid for you. They may not be licensed and don`t need to be. You agree to pay them a $3,000 fee to complete the bidding process for you.
The foreclosure list is posted at 5:00 pm the day before the auction. About half the homes on the list don`t go to auction that day due to technicalities.
A driver from the bidding company drives the houses, uploads video of same and you log in to review.
If you want the house you contact the bidding company and place your bid. If your bid is successful, you have until 5:00 pm the next day to deliver the balance of funds to the trustee. Any later and you lose your $10,000.
Overzealous and maybe unscrupulous auction companies can get you to bid more than the house is worth so they can get your $3,000. This happens all the time. And we all know it is hard to sell right when you bought wrong.
The auction companies sometimes offer hard money terms, 18% interest with 20 ` 30% down. $750 writing fee and they want the money back, normally after 6 months.
Now it is 5:00 the next day, all went well, you were successful with your bid and you own the house. Here is what has happened to me and others I know:
The tenants did not realize the house was going to auction and are angry. They smash the house.
The home owners are angry and they smash the house.
The burglars also have access to the list. They know the empty houses so stop by and pick up the appliances and any copper from the air conditioning units or plumbing. Expensive problems happen overnight.
The tenant has a valid lease signed before the notice of default (NOD) was filed. This means you must honour the lease term unless you can get them to agree to leave. Then you have an expensive buy-out to contend with.
Cash for keys...I try to get the people in the home to agree to leave nicely. They normally stay for around a month. If you try to shift them sooner they may decide to smash the house. If they agree to leave nicely and leave the home in good condition then I give them a cheque for around $1,500 to $2,000.
Can you make money buying foreclosures? Yes. But it comes with a Really Big Buyer Beware. There is not enough time to do complete proper due diligence and as you are coming from Canada you don`t know the areas you should stay away from.
My company can assume the risk of a tenant smashing the house, refusing to leave, buying out the lease, and dealing with insurance as someone stole everything in the house overnight! We take the risk and we get paid for this. But it doesn`t have to be this hard.
This happened to me. I showed up at the door of a foreclosed property I just bought and the owners had no idea their house had been sold. The bank verbally told them their home modification has been approved. (This cannot happen in Canada. The bank would be in serious regulatory trouble.) The woman fell to the ground in shock, sobbing. I let them live in the house for free for six weeks, gave them a grand, and decided not to invest in any more foreclosed properties.
I have found I make better returns by buying Short Sales and REOs...and with a lot less emotional turmoil. The current market has an amazing amount of deals, some good, some not-so-good. Buy the market...not the house. See you all in Calgary!
My real estate company is now making money. FYI ` I am not a mortgage broker or Realtor but I hire many! The learning curve was tough. This is a foreign country so pay attention. It is not difficult but it does take some research. In anticipation of the Calgary All Day Power Workshop this upcoming weekend in Calgary I thought I would share some of my experiences ` from the fox holes.
Tomorrow I will chat about short sales and then on to REO or Real Estate Owned.
I heard all the hype about foreclosures and came down to take a look. I bought three of them to `fix and flip` and to see what type of returns I could generate. I was successful with this business model in Vancouver.
Here is my Coles notes version of the foreclosure process:
Our process in Canada is very different and our citizens have protection. This lack of protection creates a lot of different opportunities for the unscrupulous types hanging around the foreclosure auctions.
The homes are actually sold on the court house steps. Everyone ` their brother, mother and cousin is trying to scoop up the houses. It is mostly unregulated: you can register and even bid on your own.
You hire one of the bidding companies to bid on your behalf. You give them $10,000 up front before they will enter a bid for you. They may not be licensed and don`t need to be. You agree to pay them a $3,000 fee to complete the bidding process for you.
The foreclosure list is posted at 5:00 pm the day before the auction. About half the homes on the list don`t go to auction that day due to technicalities.
A driver from the bidding company drives the houses, uploads video of same and you log in to review.
If you want the house you contact the bidding company and place your bid. If your bid is successful, you have until 5:00 pm the next day to deliver the balance of funds to the trustee. Any later and you lose your $10,000.
Overzealous and maybe unscrupulous auction companies can get you to bid more than the house is worth so they can get your $3,000. This happens all the time. And we all know it is hard to sell right when you bought wrong.
The auction companies sometimes offer hard money terms, 18% interest with 20 ` 30% down. $750 writing fee and they want the money back, normally after 6 months.
Now it is 5:00 the next day, all went well, you were successful with your bid and you own the house. Here is what has happened to me and others I know:
The tenants did not realize the house was going to auction and are angry. They smash the house.
The home owners are angry and they smash the house.
The burglars also have access to the list. They know the empty houses so stop by and pick up the appliances and any copper from the air conditioning units or plumbing. Expensive problems happen overnight.
The tenant has a valid lease signed before the notice of default (NOD) was filed. This means you must honour the lease term unless you can get them to agree to leave. Then you have an expensive buy-out to contend with.
Cash for keys...I try to get the people in the home to agree to leave nicely. They normally stay for around a month. If you try to shift them sooner they may decide to smash the house. If they agree to leave nicely and leave the home in good condition then I give them a cheque for around $1,500 to $2,000.
Can you make money buying foreclosures? Yes. But it comes with a Really Big Buyer Beware. There is not enough time to do complete proper due diligence and as you are coming from Canada you don`t know the areas you should stay away from.
My company can assume the risk of a tenant smashing the house, refusing to leave, buying out the lease, and dealing with insurance as someone stole everything in the house overnight! We take the risk and we get paid for this. But it doesn`t have to be this hard.
This happened to me. I showed up at the door of a foreclosed property I just bought and the owners had no idea their house had been sold. The bank verbally told them their home modification has been approved. (This cannot happen in Canada. The bank would be in serious regulatory trouble.) The woman fell to the ground in shock, sobbing. I let them live in the house for free for six weeks, gave them a grand, and decided not to invest in any more foreclosed properties.
I have found I make better returns by buying Short Sales and REOs...and with a lot less emotional turmoil. The current market has an amazing amount of deals, some good, some not-so-good. Buy the market...not the house. See you all in Calgary!
