All Forum Posts by: Sean Kollee

I encountered a seller in a tough position via my adword campaign that links to my cell number.  I took a call from the seller who was looking for a fast cash sale.  I investigated the property and found out a number of features

1. it was part of a foreclosure process

2. property was not listed on MLS

3. the court or bank had given the seller some time extension to try and sell themselves

4. property needed 'some' repairs, according to seller, and was used as a rental, now vacant (I figured that means beat up and not clean at best - likely needs some real work).

Based on this substantial evidence I assumed the seller was very motivated and would be ready to make a deal quickly to save himself from the foreclosure.  I needed to find out more about the market value, and I looked at some listed comps (spoke to my realtor as well) and it seemed to top at about 400k in a clean condition.  I spoke to the seller and he figured it could use 20k in repair work and that he had it appraised at 430k.  Based on this he was willing to offer me a deal at around '405k'.  I don't think this was a great deal even buying at 350k, which was likely my upper limit for a rental in this area.

Obviously this is an unworkable investment.  I tried to get creative and offer something like I would take over the loan and he could walk away.  That didn't get me anywhere, nor did he disclose the payoff balance.    

In all the recent marketing I have done for motivated sellers, this person was perhaps the most truly desperate to sell, yet was one of the least motivated. He was facing foreclosure and had a rough property not in turn key condition, did not want or could not sell on MLS, and was willing to call up a stranger to try and dump the property, and we are in a good sized recession. Yet, when calling me, a cash buyer and full time investor, the seller wants to get 100% of retail, does not want to pay a realtor commissions, wants a fast unconditional close, and does not want to give a discount to the buyer to account for market conditions, higher vacancy and poorer rent prospects.

This attitude of supposedly motivated people to resist selling a property at a distressed pricing level is not unique, in fact I encounter it regularly (every call I have had in recent weeks).  I have bought two properties from motivated sellers this year, but both were significantly less motivated than their circumstances suggested they should have been.  This is the second seller I have dealt with who apparently would rather get sunk by bankruptcy and second mortgage loans than do a deal with me.  

I have begun to think it is a form of stubborn pride that people in what have been good markets for real estate appreciation have ingrained in them.  When they bought, they felt they had locked in a nice annual gain, and now that the recession hit they can't fathom taking any kind of loss.  It seems their personal self respect won't allow them to dump a losing property at anything but a break even figure.

I guess my question here is how do you get deals when the sellers are so unrealistic, even when they are in a desperate circumstance?  Perhaps this is a numbers game and I need to  get in touch with dozens more sellers to tease out the few that are actually motivated?  

http://calgary.ctvnews.ca/mobile/rocky-view-county-quashes-handmade-little-house-on-the-prairie-1.3164173

View the recent article of the guy who built a tiny home in the md of rocky view. He came home one day and found an eviction notice on his door His crimes; - no permit to build a tiny house on someone else's land with their permission - not connected to grid - no fees for bureaucrat to pocket - not paying property tax - despite being a renter they want to take money from him somehow The real issue here is this person found a way for himself to live off grid without supporting the fee collectors. Have a look at the news article in the calgary herald.

It is very true the Calgary market can look awful on the surface for investors.  Just the other day someone offered me a 'deal' priced at 218 X the monthly rent.  Prior to that two motivated sellers tried to dump their northeast two bedroom condos' on me for $250k, equally terrible deals that come with $300 condo fees and $1750 tax bills, for apartments that maybe rent for $1200 (more likely are vacant for months on end).  No way to make that work unless you like to lose money every month.  Apparently we are a appreciation based market rather than a cash flow based market.  It is puzzling though how a property that already does not cash flow can further appreciate.

Despite this there are full time investors doing deals right now in Calgary. Some are rehabbing, putting suites in basements, marketing to distressed sellers and getting deals, and finding deals on the MLS. Not every segment is weak, and some segments are appreciating. For example, inner city land has increased in value by $50k in the last 6 months, bidding wars have been seen, and over asking prices received, and is now hard to even get at any price.

One factor working against finding deals is the average Calgarian tends to be educated, market savvy, has resources and may want to sell but is not really motivated. They tend to be motivated to sell to you for full retail and of course they don't way to pay those obscene realtor commissions! They tend to view the sale of a property as a matter of pride and consider whatever they paid a couple years ago to be the floor price for whatever they want now (+ another $50k for their trouble), despite major market changes to the downside. You will find endless numbers of unrealistic sellers on kijiji, comfree, and the MLS. Some of the worst sellers are realtors themselves who invest in a property and feel entitled to make $100k on every deal, regardless of what the market does, because they are 'professionals'.

It is rare to find a truly motivated seller, who needs to sell for cash and is willing to accept a discount. This does happen though, and I know investors doing deals all the time.  You may have to get more creative if you are looking for that elusive rental property and leverage whatever it is unique about your personal investment situation (house hacking, etc).  I am working on a build to rent model that will  work in select inner city neighbourhoods.  This has recently become allowed to changes in zoning.  Knowing zoning in Calgary gives you a big upper hand vs other local investors that don't take the time to learn about what is possible.  This type of investment is only available to a small segment of the market so is way less competitive. So that is the strategy I am leveraging to create my own deal.

Good luck with finding deals in Calgary, it is done here every day.

The biggest hurdle and obstacle you face in these ventures is two fold; 1 excessive rules and regulations that outlaw what you want to do, or at least don't explicitly allow it. You will find a bylaw, rule, zoning category, land use type or some other obstacle. Most often these are useless red tape bureaucracy issues backed by some bureaucrats that will take your money to fund their benefits and pension plans. They will often be very uncaring and disinterested in your business success and instead focus on their endless book of regulations. 2 cost of complying with the regulations you can overcome or get around. You may find the professional fees insurmountable despite your best creative efforts. The 'white collar fees' can be engineer and planner type costs that are disproportionate to what you need to accomplish. You will be surprised and dismayed by what simple tasks cost to get approval or designed. These two obstacles are layered on top of the usual real estate investor challenges of marketing and financing a project.

Few comments : You can get a counter depth fridge. Slightly more costly than standard depth. Generally dishwasher just goes in a 24 inch cavity created by two other boxes or a filler strip if against a wall. I don't like otr microwave fan combo units. We had a rental and it broke and was replaced twice. Hard to install and impossible to repair. Over the fridge cabinets tend to be extra deep otherwise they cannot be reached and are very non functional. In combination with a 24 inch gable piece or a framed and Drywalled return you'd cover much of your fridge. I use less boxes because my installer charges by the box and my fabricator charges by the box as well. I only use undermount sinks because they work well with quartz or granite counters and can be bought for less than 150$. I don't design my own kitchens. This is a designers job. My designer would do a better kitchen than this in 1-2 hours than I could so it is well spent money. I posted a blog on bigger pockets kitchen concept design to completion. Could check that out for more detail.

I have only ever done kitchens with dishwasher adjacent to the sink. Much more practical for draining dishwasher.

Yes I am I have two of my own strategy that allows me to not have to purchase a negative cash flow worn out 50 year old grade c building.  a) build multi family - register condo - sell units.  b) build multi family and hold for long term cash flow and mortgage pay down.  I currently own properties that will allow me to pursue both strategy (a and b), and I have finished multiple projects using strategy a.  These are highly targeted locations in the SW inner city that allow this to this model to be viable.  Needless to say these properties are not easy to come by and require significant cash to pursue.  Strategy b is best accompanied by a rezoning application to allow the land to be converted from r2 into a multi family zone, and yes this is a perilous process.

I build inner city town homes and have two projects in my pipeline. One scheduled as a build to rent concept that could be replicated on select inner city lots with great potential. The other model is the standard build to sell spec project.

Have done this twice. Both times due to installer error. First install left inadequate slope so water could pond. This looked terrible. We raised the drain, put down a new waterproofing membrane, thinset and tile. Worked fine. Used a different Tilesetter second time around and vowed never to have this happen again. Curb was still ok just had less rim height around the perimeter. It helped to use a thin mosaic tile to reduce the height creep on the base.