Don't Trash My House! - Advice for Buying Occupied Foreclosure in Edmonton, Canada

[Ash Badry]

My biz partner and I found a great foreclosure here in Edmonton, AB, Canada that we want to hold as a rental. The property is being sold “as is, where is” and in our offer we must remove a clause that says “When the Buyer obtains possession, the Property will be in substantially the same condition as it was when this Contract was accepted”

The property is occupied and if they trash the place before they move out then it’s our problem. This is our hangup, we’re trying to assess if the risk is worth it. Compared to our average deals, financially this property would make us 10 to 25% more equity in our buy, renovate & hold strategy.

The property has been fully renovated (I think the work was done by the current occupants) and is in great shape which tells me they have pride of ownership and might be less likely to damage things on their way out.

Any suggestions on how we could mitigate our risk on this one? We thought we could try to get in touch with the current occupants and offer to buy their appliances (which are quite nice) since they’re not included in the sale and try to build some rapport that way. It is rare in our area for people to damage the property on their way out but the risk exists. Thoughts?

[Richard Dunlop]

I end up in this situation often.

Approach tenants/squatters/former owners friendly way

Put them on a SHORT-TERM WAY-BELOW-MARKET Lease (90 days 1/3 of market value) 

Gives you the opportunity to:

1)have rental application

2)Photograph the property condition

3)Record serial # of appliances furnace HW heater

4)Ask them what needs repair

5)Plan repairs/ remodel

6)Orchestrate an orderly move out 

7)Make sure they fully understand that they as Tenants are 100% responsible for any damage done in the term of their tenancy.