- Joined
- Mar 14, 2016
- Messages
- 8
Hello, we have the opportunity to purchase a home that was a grow-op but now has undergone remediation and has been Alberta health Services approved. What are the pit falls, is it a good idea?
Grow-ops yay or nay?
- Thread starter Calgary Trish
- Start date
- Joined
- Dec 14, 2013
- Messages
- 980
What are the savings on purchase price?
Can the vendor provide a search of record. I'm not sure about Calgary, but in Edmonton, you can perform a search of record for about $100 and you get it within a few days. The vendor must request. You will want to see everything that was identified in the AHS report and the contractors hire for remediation. For the right margin, I would buy a home that was remediated.
Can the vendor provide a search of record. I'm not sure about Calgary, but in Edmonton, you can perform a search of record for about $100 and you get it within a few days. The vendor must request. You will want to see everything that was identified in the AHS report and the contractors hire for remediation. For the right margin, I would buy a home that was remediated.
There are many variables here to consider, such as the size of your current portfolio, risk you are willing to take should you get stuck with the property and what you plan to do with the property.
Be vary careful here as many banks will not lend on these, especially if it ever had an unfit for human habitation order which will remain on title forever. We initially tried to purchase a property that had the "unfit for human habitation" in which we knew the restoration company that completed the work, and the order had been lifted, however our bank said the following "We will lend you on any other property but this one". When I inquired for the reasoning they stated that the banks are getting worried about underlying health issues on these properties. The owner had four other offers try and fail to get a mortgage.
We then approached the owner to assume his mortgage and we purchased it for no-money down and he paid us to do repairs etc prior to the sale. Once we assumed it, we refinanced with another bank 1 year later and pulled out the equity achieved to purchase another property We however accepted the risk that one day should we need to sell we may need to tear down and build, we do not pay off this property as aggressively as we do the others as we choose to achieve the most cash-flow that we can from it.
If you assume the mortgage and refinance with another bank, they are more likely to say yes if you have a strong portfolio and investment history, but you always take the chance that you may not be able to take the mortgage to another bank and be stuck with the current mortgage holder.
This kind of property in my opinion is not for the faint of heart and those who don't plan to hold long term. However this may be the kind of property for you if you wish for strong cash-flow (price dependant), low money down assumptions, and long term hold.
Lisa
Be vary careful here as many banks will not lend on these, especially if it ever had an unfit for human habitation order which will remain on title forever. We initially tried to purchase a property that had the "unfit for human habitation" in which we knew the restoration company that completed the work, and the order had been lifted, however our bank said the following "We will lend you on any other property but this one". When I inquired for the reasoning they stated that the banks are getting worried about underlying health issues on these properties. The owner had four other offers try and fail to get a mortgage.
We then approached the owner to assume his mortgage and we purchased it for no-money down and he paid us to do repairs etc prior to the sale. Once we assumed it, we refinanced with another bank 1 year later and pulled out the equity achieved to purchase another property We however accepted the risk that one day should we need to sell we may need to tear down and build, we do not pay off this property as aggressively as we do the others as we choose to achieve the most cash-flow that we can from it.
If you assume the mortgage and refinance with another bank, they are more likely to say yes if you have a strong portfolio and investment history, but you always take the chance that you may not be able to take the mortgage to another bank and be stuck with the current mortgage holder.
This kind of property in my opinion is not for the faint of heart and those who don't plan to hold long term. However this may be the kind of property for you if you wish for strong cash-flow (price dependant), low money down assumptions, and long term hold.
Lisa
- Joined
- Oct 24, 2007
- Messages
- 2,289
If AHS has been through the property and the order removed then yes it is safe to live in and safe to buy. Make sure you have a financing condition as it's possible the property is flagged with the insurers and that's tough to get around. Butt here is no latent defect anymore, the seller didn't even need to disclose that it was at one time a former grow op and you won't when you go to sell.