All Forum Posts by: Dale Degagne

This is somewhat of an impossible question because even though your post is detailed, it's still not going to cover every nuance when dealing with a family related situation. I would also be careful offering my grand parents $625 000 on $1M worth of
property. I can't imagine the family turmoil you would cause by buying a lifetime portfolio of work from them at a steep discount. Brothers, sisters, parents, aunts, uncles, cousins all may take significant exception to that.  But like I said....we don't have all the information.

Financing Options

Vendor Take Back - Figure out a formula that gives your Grandparents the benefit of stable income for X years.  Talk to them. See what they would like and find a Win-Win

Agreement for Sale - If they still have a mortgage on the property, you can do something similar to a Vendor Take Back, the difference is that they retain their name(s) on title until you've paid off the whole Agreement for Sale, then title transfers. During that transition time though, you get all rights/responsibilities of the property.  Together you determine what that means to a certain extent (ie. your grandparents may restrict your ability to say, demolish the buildings, or paint them red, or whatever).

Bring on Partners - If you have a friend/family/business partner with some extra cash you could bring them in and get a mortgage for each property and share the wealth.

Do what you said - Take on 1 at a time, work the property to a point where you can refinance and buy the 2nd, 3rd 4th etc.

Not sure where you are bobby but here (Canada....sorry...). Here I tend to buy appraisals from professionals.  If you went that route it sounds like you would need an "As Is" appraisal with assumptions because you want them to assume you're going to put $XXX 000 into the property and finish it with XYZ Countertops, and Y style flooring etc. etc.

You could also ask a real estate agent in your local area to help.  Again, it may be different there, but here, some/most would do it for free. Especially right now as it is the "slow season".  Spring market would be a different story.  The challenge there is that opinions may vary wildly and may or may not be super accurate.  

Hi @Troy F.,

I would start by checking where you would market your rentals.  If you would post them on Facebook, then look for those same ads and make a call from there.  A smaller home might gain a bit of a premium (3 room mates vs 6).  

I would also look at the cost of a 3 bedroom.  Students are industrious at finding deals.  If a 3 bedroom rents for $1200 and the rooms are $600, they'll just get together and rent a 3 bedroom.  If 3 beds is $1200, then you're probably closer to $425 to $450 per room.

Lastly, I would speak with other investors in the area. See how much they are charging.  

By the time you take those 3 steps, you should have a really good feel for what your rooms will rent for.

If it is a great offer why are you waiting?  This is a frustration I have.  As an agent I know you need to get the most you can for your client. As an investor I would rescind my offer and give you another one with 1 hour to decide.  It's either good enough to sell or it's not imo.

If this was a straight buy and hold I would not consider it. But if there was room to improve the building (which it sounds like there is) then I would definitely be interested at 1.7M if I was local.

I've experienced this too - where "investors" are all over properties and (by my numbers) must be accepting lower returns, or willing to leave loads of money in a deal when it's done, or being speculative. 

It's Frustrating.

I would say though that, being ready (cash in hand, low amount of conditions, pre-qualified etc) for the next best deal will go a long way and will help you purchase the next deal before everyone else is ready to go.

If you're having trouble finding deals that aren't getting snapped up you could try;

1. Driving for Dollars - Drive around til you see crappy looking places and approach the owner.
2. Pay special attention to the market during holidays, or long weekends while other investors are busy doing other things.
3. Look for things that other investors have passed over and be creative with how you can make it work.  In "hot" markets, if things don't sell quickly they lose their momentum and people start saying "oh it must be a bad deal". But it could just be an "ok" deal that you can turn into a great one because there isn't a line up of people throwing money at it.

DON'T QUIT EARLY!

I started investing when I was 20 and "stopped" when I was 28. I was earning enough from my rental properties that I was "financially free".  So I went and traveled and lived overseas for 6 years.  Fun right?

I also wasn't present to manage my manager and slowly but surely my income dropped...eventually to nothing.  

Now I'm 38, have sold all my holdings to bring my investments closer to home, and I'm starting again.  Maybe it won't take me 8 years this time....