All Forum Posts by: Robert Gunther

Thanks for all the input to my comments.

Thought I would post an update.

I did not revise my offer, they did (after 260ish days) sell the property at full ask of $749,900.  I do not know who bought it yet or when they take possession.

I did end up buying a different property, a 3/plex with 3 beds & 1.5 baths with each unit being about 1,000 sq ft.

I'm happy with the outcome, the big advantage with the place I ended up buying:

1) Units are side-by-side not up/down so less noise transfer between units

2) MUCH better area

Hopefully the new owners next door take care of the property and fix it up and improve the quality of the tenants.  I have had problems renting in the past because of how trashy the house next door is.  The way the buildings are on the lot, the tenants of both buildings look across at each other.  When the house next door has a bunch of crap all over the yard, it turns potential tenants off.

This is apparently the 2nd buyer that is attempting to buy the place, as some other investor contacted them when it was first listed at $850k.  He was told they had a couple of offers but they fell through.  Of course, I assume the selling agent is lying anyway.

If someone has to finance this property, I think the banks will turn them down after they get an inspection (if the seller lets them do an inspection).  In the listing it states the owner is not aware of building condition, selling AS-IS.  That is a dead give away they are well aware of the problems.

Just wanted to share my current situation and hopefully get some input.

In 2017 I purchased a 4-plex building.  It shares a driveway with a sister building next door (the buildings & lot are exactly the same). The owner of next door is a major slum lord, no repairs to the building, overcharges for rent, usually 50% of the tenants are drug dealers. They refuse to pay for any shared expenses (snow removal, driveway repair).  One of their tenants uses my lawn mower to do the yard because they will not pay for yard work or provide a lawn mower.

I paid $470,000 for my property which was the going rate at the time.  Constructed in about 1970, building in OK condition.  Newer replacement windows, new exterior doors (originally the building used hollow core interior doors with a screen door as the exterior).

I approached the owner of next door sometime in 2019 to see if they would be interested in selling.  They said yes, they would be interested and wanted $600,00 - $650,000 and to make them an offer.  I made them an offer and 3 days later they came back and said they now wanted $800,000.  I would need to send them an offer, along with $50,000, no inspection of the property permitted.

That price was way out of line with the market, even his $600k was high.  I should mention these buildings are in a D neighborhood.  In fact it is the worst street in the city.  I pulled a bunch of comps and provided them to the owner.  He said thanks, but it is not right for me to be insulting his building.  Do not speak to any of my tenants and hung up.

Now advance to January 2021 and the property hits the MLS, with an asking price of $850,000. Again, his price is totally unreasonable, considering the location & condition. The building needs all new windows & doors and has a massive mold problem. I have not been in the attic but from photos and knowledge of my own building there is not enough insulation in the attic which has caused mold to form from heat transfer through the ceiling. The mold is showing through the ceiling, known as ghosting, black mold has grown all over the ceiling edges and down the walls. No one should really be living in there, I think the city could condemn if they were aware of it.

They have attempted to 'repair' it by skim coating over parts of the ceiling and painting over it, of course it just grows right through because they are trying to hide it and not fix it.

After 6 months and no sale, they drop their MLS ask price to $749,000.

I contact my agent at the start of Sept and said I would be a buyer at $600,000.  He attempts to contact the listing agent, the agent will not speak to him via phone - only text, which makes communication difficult.

The listing agent (who is also the property manager) said they have an offer, with subject removals coming off on Sept. 10th.

So I sit and wait to see if the deal closes on the 10th.  11th passes, 12th passes - still listed.  On the 14th I see what appears to be a group of 4 coming to view the property.  I get my agent to contact the selling agent to see what is going on.

The buyers could not get the subjects removed on the 10th, so they gave them an extension to Sept. 25th.  He asked why they did not contact him, knowing he has an offer.  She stated she must do what is best for her client (speaking to potential buyers might help her client!).

I asked to put in a backup offer, if I could get it accepted that should prevent them from giving the other buyer another extension if they can't get their subjects removed.

Finally on Sept. 22 I submitted my backup offer.  Very clean, at least I think so.

* No inspection (I already know it is full of mold) and all units need full remodels.

* No financing condition

* Was requesting vacant possession of unit A in the building, which would require them to do an eviction of the tenant on grounds that I would be owner occupied.  Totally legal here, but would take from 2 - 6 months if the tenant files a dispute with the rental board.

* My offer was for $650,000

I did not think they would actually take the offer at that price, but was hoping they would counter.

Their reply came back - NO, no counter and mentioned they would not do the eviction for owner possession either.

The buyer in 1st position should have their subjects removed by Saturday the 25th.

I will submit a revised offer of $700,000 on Friday 24th, so at least they know there is someone who is genuinely interested and hopefully they will counter with something.

I believe the building needs $200,000 in work to restore it to about the same condition as my building. That would make the ARV $900,000 which is so far above market it is not even funny.

One advantage for me to own both properties is the potential to build additional units on the combined property, that would be a long term thing but there is plenty of space between the two lots to add another 4 - 6 unit building.

Any suggestions on how I should deal with this seller/agent?

Reading over what I have just written, the answer is clear - I should just walk away from this deal - it is not a good deal.

Your number seems odd.  950k for land in Kelowna, that must be some piece of land.

With an appraisal of only 1.2 million?  You don't have enough room from the land price to build on.  How much are they expecting construction to cost?

I did not know you could have a multi-family, different owners and not be a strata.  I assume this must be in Rutland, since on the Kelowna side that is as bad as it gets.  The fewer number of units the more problems repairs become.  You can imagine those other three owners probably don't want to put a single cent into the place.

I have a 4-plex in Vernon, worst block in the city.  We had one shooting next door, drug dealers up and down the block.  All the homeless people hooked on drugs is the problem in both Kelowna & Vernon.

Rent seems high, strata fees seem low to me at first glance.

@Eric Wilson a true single family house in Kelowna is not going to happen at that price. I just did a search for a stand alone single family, it is technically in Kelowna but most would not really consider it to be in the city. MLS number is 10162840 @ $319,000 asking. New construction 2 bed / 2 bath.

It is possible to get a townhouse in that price range for sure though, so you may want to consider that.

In general the cheaper properties around Kelowna will be in Rutland and on the West side (West Kelowna) will be found in the Glenrosa area.

Check out realtor.ca and you can get a feel for prices.

The city has seen a massive increase in prices since 2016 (double in many cases).  Things have slowed down a lot, days on market are increasing but prices have not really come down yet... but they should start coming down I think (hoping).

Hi Eric, just to clarify you are looking for a single family home in Kelowna and your budget is $300,000 ?

Cory, you are late to the party.  The Kelowa market has exploded in the last few years.

One condo I have in Kelowna, 2 bed, 2 bath, 1300 sq. ft. was worth $185,000 in mid 2016.  Today that same unit is worth $325,000+.  That is with no improvements to the unit to force appreciation (not even paint).

In early 2016 I purchased a condo in Vernon.  Price was $192,300 for a 3 bed, 2 bath + 1 car garage.  Just today the unit 1 floor above (exact same floor plan) just sold for $279,000 and is in much worse condition than my unit.

Prices in Kelowna have been on a rampage since late 2015 and Vernon is on the rise, but not as bad as Kelowna yet.

Finding a property that provides cash flow is probably a dream at this point.  The bigger question with the market going up so much where are we in the market cycle in BC?

How many years ago was that?!?  The Canadian banks are getting more and more conservative.