Ugly House with Potential in Toronto

[Youngdue]

I found a motivated seller with Bangalow that needs lots of work. Seller is a woman with two children and she is seperated. The house has 2 bedroom, 1 bath, 1 kitchen...she is trying to build 2 bedroom, 1 bath in the basement and she got permit to put addition to the house, some of the work is underway, but she got no money to finish the repairs.

The seller is asking $305K and the loan balance is $270K (RBC) with assumable mortgage at 5.2% which expire in Nov. 2011. Her payment is $914 (including taxes and insurance) every two weeks. Title is only on her (the seller) name, not in her ex-husband`s name.

I have done some research and here is what I found:
Market Comps. varies from $237K to $340K
It needs a lot of repairs like tearing walls, building new bathroom, 2 bathroom, some foundation work. It doesn`t look like livable, but they are living there because they have no other place to live.

Also, I found that Assessment value is $262K (2009) and $299K (2008), that is before she start putting the additions to the house. According to the land registry she bought in 2002 for 93K but she said she paid 186K in 2001. She refinace the house a year ago.

I am thinking of putting it under option to sell it to a renovator. What should I offer? What do anyone advice or suggest to do? I want to help this family even if I only make a couple of thousand dollars.


Thank You.
Karma

 

[tonypeters]

Karma,

I am not aware of all the details, but from what you have shared, I do not see much opportunity here. One word of caution: Remember what I told you about stepping over the "charity" line? While you must always ensure that you create a Win, Win for all stakeholders involved, you cannot always help everyone. That`s the reality of this business.

Remember the other thing I told you; you should NEVER want to purchase a house MORE than a Seller wants to sell it!

Hope this information is of assistance to you?

Good luck!

QUOTE (Youngdue @ Feb 18 2010, 08:06 AM) I found a motivated seller with Bangalow that needs lots of work. Seller is a woman with two children and she is seperated. The house has 2 bedroom, 1 bath, 1 kitchen...she is trying to build 2 bedroom, 1 bath in the basement and she got permit to put addition to the house, some of the work is underway, but she got no money to finish the repairs.

The seller is asking $305K and the loan balance is $270K (RBC) with assumable mortgage at 5.2% which expire in Nov. 2011. Her payment is $914 (including taxes and insurance) every two weeks. Title is only on her (the seller) name, not in her ex-husband`s name.

I have done some research and here is what I found:
Market Comps. varies from $237K to $340K
It needs a lot of repairs like tearing walls, building new bathroom, 2 bathroom, some foundation work. It doesn`t look like livable, but they are living there because they have no other place to live.

Also, I found that Assessment value is $262K (2009) and $299K (2008), that is before she start putting the additions to the house. According to the land registry she bought in 2002 for 93K but she said she paid 186K in 2001. She refinace the house a year ago.

I am thinking of putting it under option to sell it to a renovator. What should I offer? What do anyone advice or suggest to do? I want to help this family even if I only make a couple of thousand dollars.


Thank You.
Karma

 

[housingrental]

I`m wondering about the 93K purchase price. Something doesn`t add up with what you`ve wrote.
How much $$ into addition and other area`s have there been so far? What is cost of, and value added once complete of addition?

QUOTE (Youngdue @ Feb 18 2010, 10:06 AM) I found a motivated seller with Bangalow that needs lots of work. Seller is a woman with two children and she is seperated. The house has 2 bedroom, 1 bath, 1 kitchen...she is trying to build 2 bedroom, 1 bath in the basement and she got permit to put addition to the house, some of the work is underway, but she got no money to finish the repairs.

The seller is asking $305K and the loan balance is $270K (RBC) with assumable mortgage at 5.2% which expire in Nov. 2011. Her payment is $914 (including taxes and insurance) every two weeks. Title is only on her (the seller) name, not in her ex-husband`s name.

I have done some research and here is what I found:
Market Comps. varies from $237K to $340K
It needs a lot of repairs like tearing walls, building new bathroom, 2 bathroom, some foundation work. It doesn`t look like livable, but they are living there because they have no other place to live.

Also, I found that Assessment value is $262K (2009) and $299K (2008), that is before she start putting the additions to the house. According to the land registry she bought in 2002 for 93K but she said she paid 186K in 2001. She refinace the house a year ago.

I am thinking of putting it under option to sell it to a renovator. What should I offer? What do anyone advice or suggest to do? I want to help this family even if I only make a couple of thousand dollars.


Thank You.
Karma

 

[Youngdue]

Tony,
Thank you for the feedback. The seller decided to let the house go for $275K (her mortgage balance is 270K). So, I put in under option contract for for $275K. My exit strategy is to assign to renovator for a fee. When I assign the contact to investor, do I have to pay land transfer tax and closing fee in smultaneous closing?

thank you
Karma



QUOTE (tonypeters @ Feb 18 2010, 05:51 PM) Karma,

I am not aware of all the details, but from what you have shared, I do not see much opportunity here. One word of caution: Remember what I told you about stepping over the "charity" line? While you must always ensure that you create a Win, Win for all stakeholders involved, you cannot always help everyone. That`s the reality of this business.

Remember the other thing I told you; you should NEVER want to purchase a house MORE than a Seller wants to sell it!

Hope this information is of assistance to you?

Good luck!

 

[tonypeters]

Karma,

I would recommend that you speak with your lawyer, but if you structure the deal correctly, you should not have to pay the land transfer tax, because you will not be taking title to the property. Essentially you are "moving the paper" to someone else for a small (finders) fee.

However, a word of caution here; you have mentioned that the property requires a LOT of work, so make sure that you do not make ANY promises to the Seller that you can`t keep! In other words, you should ONLY take the property under "Option", that way you are NOT legally obligated to close on it if you are unable to flip the property. Make sure the Seller fully understands this, otherwise you may create more hardship for them.

Hope this helps?

Tony

QUOTE (Youngdue @ Feb 24 2010, 10:04 AM) Tony,
Thank you for the feedback. The seller decided to let the house go for $275K (her mortgage balance is 270K). So, I put in under option contract for for $275K. My exit strategy is to assign to renovator for a fee. When I assign the contact to investor, do I have to pay land transfer tax and closing fee in smultaneous closing?

thank you
Karma

 

[Pheenix]

Karma
I`m with Adam on this one - story isn`t lining up properly.

Also an incomplete or poorly executed reno can have a seriously negative impact on the value. You may even have trouble finding a contractor type to take it on, at any price. Try and factor this in, and then deduct she what would have to pay an agent to help her get out. This might help you get a sense of where she really needs to be on price, $275 might not be low enough.

Her best option might be the `option` you have proposed because you replace an agent at a fraction of the cost to her and she will possibly get a higher net. In addition to Adam`s concern I would look at what her take aways are. If she refinanced a year ago to fund the reno project, is the value there - or has she spent or pocketed it, and if the value is not close to market, its alls win for her and she leaves no room for others, including you.

If the option is going to cost you more than a token amount (I mean REALLY small) there may not be an opportunity for you to get anything, other than a learning experience (which you may be happy with).

 

[housingrental]

Good post Pheenix.

Karma - Your thoughts on my post above and his?

 

[Youngdue]

Hi, I agree with both of you that the what the seller said she paid $186K in 2001 and the land regristray shows $93K in 2002. I discussed this with the seller that she thinks it`s a mistake in land registary...she own the house since 2001. I also think the seller is probably right, and my realtor may be incorrect...anyhow, I don`t think I will close the deal unless I find a renovator who is living to close the deals. In the process I am able to build some relationship with potential buyers and renovators in the future as I try to market this house just to help out the owner and if I sell it, I will make a small fee.

--Karma

QUOTE (housingrental @ Feb 25 2010, 09:36 PM) Good post Pheenix.

Karma - Your thoughts on my post above and his?