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Looking for some advice - words of wisdom

R

rjmcleod

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Aug 7, 2008
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I`ve been given some information from a friend of mine, whom got her business partner to call me and we chatted last night for a bit about an opportunity.

Basically, he`s working with an investor in Calgary who is looking into buying 60 new condo units but due to the amount of mortgages one can have under one name, they need some assistance. What he told me is that if the investor buys 2 condos, the bank requires a 5% downpayment; anymore and it`s 20%.

So, what they are looking for is for me to get approved for a mortgage on the condo. They will put 30,000$ down as a deposit towards the condo, plus they give you 6 months worth of post dated cheques to make the monthly payments. After the 6 cheques are done, they meet with you and you sign away from everything and they go and sell the condos.

According to him, the investor is risking me actually signing the property back to him after the 6 months, and he said that I would get the $5000 after a few weeks. It makes sense to me that they are saving money but I just wanted some feedback on what you think of this...? My friend said she did it and got the 5g`s in a matter of weeks. The guy sounds like a decent guy and has some other opportunities for me. I get that I could just walk with the property and try and sell it for myself and that the investor would be trusting me to sign the title back to him.

Thoughts?

Thanks,
Rob
 
Oh No ... sounds like the `Straw-buyer` fraud is coming back... there are so many ways to make money in Real Estate without having to resort to this type of transaction.Without going into too much detail, this is the type of transactions we educate people to run away from... however we can not tell you what you should do.

What you can do is to talk to this `investor` and tell him that you will provide FULL DISCLOSURE to the bank and lawyer EXACTLY what you and the `investor` are planning to do, and if the bank providing you the mortgage and the lawyer completing the closing tell you this is ok and not Mortgage fraud, then you should still proceed with caution.

But my suspicion if you tell the `investor` that you are going to provide full disclosure to the bank of the transaction he will not be interested in dealing with you.

IMHO this is Mortgage fraud (or an extreme `grey area` transaction)... but if your lawyer and bank providing the mortgage (with full disclosure to the facts) say this is ok... I would still be hesitant.

Run this scenario by your personal Lawyer and see what they say
 
How would this be deemed mortgage fraud?
Sorry if I sound like a total nOOb. I am. I`m currently talking to some smart people and reading books and reading online forums trying to find out as much information as I can but I would like to understand this situation completely.

I can imagine a few scenarios:
A) I keep the property and the investor is out his investment. I then sell it or keep it or whatever I want.
B) I get my $5k, I sign the property back to the investor and things are all good.

But does this sound right? That he needs to have someone else`s name on the mortgage so he can save the 15% on the downpayment? I`ve been talking to some mortgage counselors and trying to get this information.

Thanks for the advice about the full disclosure
style_emoticons
I will keep that in mind if I move forward.

Thanks,
Rob

QUOTE (RussellWestcott @ Aug 7 2008, 10:53 AM) Oh No ... sounds like the `Straw-buyer` fraud is coming back... there are so many ways to make money in Real Estate without having to do this.

Without going into too much detail, this is the type of transactions we educate people to run away from... however we can not tell you what you should do.

What you can do is to talk to this `investor` and tell him that you will provide FULL DISCLOSURE to the bank and lawyer what EXACTLY you and the `investor` are planning to do, and if the bank providing you the mortgage and the lawyer completing the closing tell you this is ok and not Mortgage fraud, then you should still proceed with caution.

But my suspicion if you tell the `investor` that you are going to provide full disclosure to the bank of the transaction he will not be interested in dealing with you.

IMHO this is Mortgage fraud... but if your lawyer and bank providing the mortgage (with full disclosure to the facts) say this is ok... I would still be hesitant.

Run this scenario by your personal Lawyer and see what they say
 
looks like a good decision... does any of the information in those links you provided look familiar to what the `investor` is proposing to you?

You may want to talk to your friend who has completed this deal with this `investor`, and give them the same information, or better yet ask them to talk to their lawyer and be proactive.

As mentioned earlier there are so many ways to legally make money investing in Real Estate... one does not have to resort to these transactions.

You may want to look at surrounding yourself with like minded Real Estate investors to help support your goals...

Cheers
 
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