All Forum Posts by: Doug Pretorius

@Brian Gibbons I've never done a deal where the seller had to contribute toward negative cash flow. I personally wouldn't feel comfortable setting it up (for myself or an assign) for a long period of time, because the seller would quickly forget the pain and desperation they felt and want to move on.

I liked the way you pitched it to them though, showing them how they'd be better off with a few hundred a month out of pocket compared to their alternatives.

@Geoffrey F. The payment would be an odd thing to lie about but I suppose it could happen. Personally I take everything at face value at this point and if the seller doesn't give me numbers I can work with I wish them luck. All of that info can be verified once you have the property under contract.

Besides, if someone is going to lie to you upfront you might want to think twice about being in a long-term deal with them.

@Geoffrey F. I love these situations and will buy from these sellers all day long. But NOT with that payment. Even assuming the $1250 is PITI it's still too high to stay in the middle.

Like @Brian Gibbons said, your only option here is to do a lease option assignment. You should be able to assign it for $3-$5k, but I believe you will have a hard time moving it with that payment. You'll have to decide if it's worth it for you to try.

If you have any interest in doing these types of deals. I'll tell you that I would be looking for a PITI of about $800-$900/month to make that mortgage/price work. I would expect to make roughly $150-$200/month cash flow.

@Sarah Grise Since you posted this in the creative finance forum I would imagine you're interested in trying something other than conventional loans (although the advice you've already received is excellent).

For me it's all about owner financing. Besides your imagination, the only limit with owner financing is your ability to find motivated sellers and negotiate deals with them. Your credit, debt ratio, and track record are rarely--if ever--an issue.

@Paul Ewing Interesting. I don't think I've ever seen an FSBO with a handwritten sign. All the FSBOs around here either buy one of those "House For Sale" signs from Home Depot or they sign up with one of the FSBO websites that provide signs.

Let's not forget that the GTA and GVA and maybe Montreal (I'm not familiar with the Montreal market) are the main culprits here. They have a history of boom-bust real estate cycles and because they represent such a large percentage of the country's population and in turn real estate sales, they skew the numbers.

However, outside of these few metro areas many cities and towns how much more stable real estate markets. They don't go up as much or as fast and so they won't come down as much either.

Case in point. Back in the early '90s prices in the Toronto condo market fell by as much as 50%. But an hour away here in Kitchener-Waterloo prices only fell 9 or 10%. That's pretty much the biggest price correction we've ever had here, and I'm sure there are lots of other cities with similar stories to tell.

@Justin H. Welcome to BP! Always good to see fellow Canadian's around here. Best wishes with your investment plan. I rented to students one year and decided it wasn't for me, too much management. But I know plenty of people here in Waterloo who have rented to students for decades with success. Of course it's a bit different now with the city working with the largest investors to push all of the students out of private homes and into high rises.

@Nathan Duncan The only one on your list of potentials that I've read is Millionaire Real Estate Investor. If you read between the lines you'll notice that a large percentage of the investors interviewed for that book made their fortunes from lease options in particular, or seller financing in general. Which I find very interesting considering the book is written by the founder of a real estate agency that claims to be investor-friendly and yet they don't support lease options, or any seller financing for that matter, LOL!

Absolutely! Even though it's only an hour's drive away, Toronto has always had more of a boom-bust real estate cycle, while Kitchener is more of a steady rise. While small towns north and west of us have pretty much been buyer's markets since they were first settled :)

@Karen Margrave The Kitchener metro area in Southern Ontario is pretty much same old, same old. We never had the big run up 9 years ago, or the crash, and we're not going anything like the major cities across Canada now either.

Sales in March were up from last year but still down slightly compared to the 5 year average. Prices are up about 7% which is a bit hotter than our 5-6% annual average.

All in all we have a very diverse and stable economy and a very steady seemingly unstoppable rise in prices.