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Most of us assume that when it comes time to buying a building, whether it be a house or a million dollar structure, that there are only two ways to do it: Pay cash or get a mortgage. Well I’m here to tell you that there are many, many other ways to do creative financing.
The two easiest ways are standard text in our real estate purchase forms:
#1. Assuming another’s mortgage
We don’t see much of this or at all these days because the interest rates are at their lowest. When they do go up, why wouldn’t you want to assume the sellers rate at 3.75%. By assuming their mortgage and financing the rest to make up the selling price and you could potentially save a lot of money over the rest of their term.
#2. Balance of sale
This is a great tool if you believe that you can increase the value of the building within a few years or know that you will be able to pay it off when the term is due. The way it works is that the seller **“lends” you a certain amount of money at an agreed upon rate for a limited time (usually 1-2 years). You
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pay them the interest either monthly, quarterly or annually for the time period on the total amount borrowed from them and at the end of the term or sooner, you pay the full amount back. This works if you are low on cash or wanting to keep your cash. After the 1-2 years renovating or re-renting (apartments) and increasing the value of the building, you refinance and pay the vendor back.
**”lends”: The vendor doesn’t really hand over the money, it’s just that you don’t give him the amount until a later date.
Great benefits:
You get the chance to improve the building and increase the rents for refinance.
The vendor receives money through collected interest (if the deal needs sweetening)
Delays the capital gains for the Vendor
Gets the building sold!
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I added this article because I love real estate and educating people on the matter. If you would you like me to work for you, call me 514-402-8444 or EMAIL ME!
To search properties go here www.Montreal-Properties.com
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After signing at the notary, you enter your new home all excited. You walk around inside and you start noticing things missing that you knew were suppose to be part of the sale. Or maybe you notice that the vendors took the bathroom mirror. Isn’t that a fixed item? Or that they’ve ripped out the built-in shelves which have left behind a wall in dire need of repair. Or they’ve left junk in the garage or somewhere else in the house. What about if they’ve left the place filthy mess? Or maybe you’re the buyer and the blinds which were supposed to be left on the living room window are now gone.
For some of us this may seem really odd that people would do such things. Well I’m here to tell you that it happens more then you would like to think. A lot of these issues cannot be solved by a walk-through before hand either. I’m usually the first to hear about it. “So now what? What do we do now?” I’m asked.
Normally the agents get involved and contact each other with the details and try to work things out. Sometimes it works out and some times though what is done is done and the vendors don’t want to hear that
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they’ve left junk under the steps and to come and clean it up. Legally yes they are responsible; however what can you do about it?
This is a legal issue now and this is where I’m supposed to say consult your lawyer. “Consult your lawyer”. I’m also a bit more realistic than that and I know people just want to know of something that they can do. I see two options here. #1, to forget about it and chalk it up as part of a (shitty) experience. #2, Try and fix the problem.
Fixing the problem: Take a lot of pictures and document everything. If something costs money to fix or clean up, keep the bill. Send everything to the other party with a letter explaining (without prejudice) that you would like to be reimbursed. If that doesn’t work, then you might have to take them to small claims, if you so chose.
Sorry that I don’t have better news then that. If any readers have any other great ideas, I would love to hear about them. On a top note, the market right now is still hot hot hot!
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I added this article because I love real estate and educating people on the matter. If you would you like me to work for you, call me 514-402-8444 or EMAIL ME!
To search properties go here www.Montreal-Properties.com
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Does the Vendor need their money months before the signing date? Do you need to be an owner months before you need to move in? Does the vendor need a place to stay after he signed the deed over to you? These are all possible, legal ways to sweeten the deal.
There is a clause in the promise to purchase contract where it’s written that if the occupancy of the premises is to be subsequent to the signing of the act of sale,
then the purchase price shall be adjusted by an amount equal to an amount per month, calculated from the date of signing of the act of sale to the scheduled date of occupancy, as compensation for the SELLER’S occupancy of the premises during that period. The SELLER shall continue, during that period, to assume the heating, electricity and general maintenance costs relating to the premises occupied.
That’s a mouthful taken straight from the promise to purchase Annex A. Basically it would be best to cover your costs. So make sure that you include, municipal taxes, mortgage, insurance and condo fees if there are any. Any extra expense that you want covered. The seller while living there will take care of the utilities and maintenance.
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The only argument that I get from clients is that they will bring up, “What happens if they don’t leave?” Well it’s the same difference whether if the signing and occupancy are the same day. It’s all a matter of trust. I trust that since we have all this legal jargon in place that it will protect me.
Another tid bit of information to know is that the seller is not renting or paying rent; he/she is paying compensation. Big difference, which means that they are not subject to the Regie du Logement rules.
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I added this article because I love real estate and educating people on the matter. If you would you like me to work for you, call me 514-402-8444 or EMAIL ME!
To search properties go here www.Montreal-Properties.com
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I get a lot of phone calls from people looking at getting into flipping houses. I know I get these phone calls because of the mindset that we are in a recession. I’m not sure what clearly defines recession, however I don’t think this is it:
The Greater Montreal Real Estate Board sent out their monthly report and the headlines read: “Sales in Montréal Area Surpass Record-Breaking 2007 Levels. It read on saying that Sales in the Montréal Metropolitan Area increased by 51 per cent in November 2009 compared to November 2008. The 3,411 transactions were enough to surpass, by 4 per cent, the record-breaking sales levels of November 2007.”
One of my clients/friends is a professional house flipper. He’s been working at this for over a year now. He’s flipped one house; not because he doesn’t work hard, but because that’s all he’s found. He works at it everyday which includes many phone calls, analyzing, charts, research, meetings, did I mention analyzing? After one year doing it full time, he’s starting to shy away from full time flipping and is getting into part time flipping and full time buy & hold.
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My point of writing this is not to discourage buyers who want to “get in the real estate” business, but to let you know that IF flipping is the journey you would like to take, I would suggest to first find that person who has been flipping and start interviewing them to see if this is for you.
Real estate is a business and there are many ways to approach it. You may think because you have limited funds that short term is a great way to build equity. From all the books, mentors, investors I’ve consulted most all of them would suggest buy and hold just for the tax breaks alone. In fact some investors think that positive cashflow is a bad thing. However that’s another article to write.
Happy Buying!
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I added this article because I love real estate and educating people on the matter. If you would you like me to work for you, call me 514-402-8444 or EMAIL ME!
To search properties go here www.Montreal-Properties.com
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