All Forum Posts by: James Ma

Almost all the info you need is available for free online or from buying books (much cheaper than mentors or courses and usually has 99% of the same info), or through networking and people will give you advice too. Most mentors can show you and teach you what the books would and some people do learn better in person but paying 8K out of your 13K in savings is way too much of your working capital. I think its a HUGE mistake personally and recommend you try to put in sweat equity on your own to study real estate books, build networks and learn from people here.

I would also question what you're getting out of the mentor... I've kept hearing stories of these types of "mentors" or courses for sales or real estate and then they often to lead to more courses that you have to pay for to get more "secrets" or contacts etc. with promises of riches. I worry you may be getting into something like that.

3 Votes

Sold a property at end of October and there was a special levy being voted on by the strata (HOA) so my notary advised they had to holdback proceeds from the sale in the event that the strata votes and passes the levy.

The levy options were:

i) Increase strata fees by $100/mo and with one time charge of $1200

ii) Increase strata fees by $200/mo with no one time charge

During that strata meeting, I'm told that they were unable to legally conclude the vote as the votes were counted after the official end of the meeting. Furthermore, a complaint was raised there was no option presented for no strata fee increase and only a one time fee. Long story short, the vote on levy failed.

So its been about a month now and I've asked my notary to advise if they can release the funds. They responded today that the property manager has asked them to hold the funds longer as they are going to vote on the issue again in another month or so.

Since this is a new meeting and new vote, am I legally entitled to get my holdback funds back? Should the new owner have to cover these fees since it is a new meeting about 3 months post-completion of the real estate sale and the original levy vote failed?

0 Votes

Understanding how to make my money work harder for me and leverage

6 Votes

@Account Closed Since they are still paying rent, it makes cash for keys a lot less profitable which actually is a good thing for you since the financial impact is lesser while you work to evict. Usually cash for keys is best to get out people who are already gaming the system and will sit in your place for 3 months not paying a dollar.

Things I'd consider:

- If they have good credit and income to make a civil suit worth it then I wouldnt offer anything which is why I try to find good credit tenants so they have something to lose and sue for the entirety of the amount.

- If cash for keys makes sense, you just determine the offer value somewhere between your opportunity cost of lost rent vs potential income of renting it back out.
Ie. You are losing $1000/mo in rent and expect to take 3 months to evict. You could rent to new tenant after a month to find a good tenant at $1000 so that's a $2000 "gain". If she moves for anything less than $2000 its essentially money in your pocket that you wouldn't have had.

0 Votes

Options to help improve your borrowing power to get the rental:

- Pay down your mortgage on primary

- Ask a friend or family with good credit and income to co-sign the mortgage agreement

- Invest as a sponsor in a syndicate deal

- Find credit unions or hard money lenders to work with you at higher interest rates than big banks

1 Vote

I'd offer a % return on his investment and then a profit split thereafter since you are managing this investment.

Example of a JV split:

He'll get 8% preferred simple return on his money. Any profits above this return will be split 75% to him and 25% to you as compensation for your management fee.

You could charge only an acquisition and management fee instead if he feels the split is too rich for you or you could offer to cap the 75/25 split at a certain dollar value and thereafter, it defaults to a 90/10 split representative of the cash contributions.

2 Votes

Ok to answer your question about tax efficiency, you always want to leverage bank's money to buy where possible when interest rates are low as you can use the cash elsewhere for better returns (ie. stocks or other REI deals)

Yes you won't be able to write off any mortgage interest expenses but other than that, you can still write-off depreciation, expenses etc. so its not a huge impact. The bigger concern you should have is that instead of only putting in 7K into this deal you had to put in 35K, but that being said the returns if your numbers are correct and you've accounted for expenses and maintenance appropriately are HUGE

Originally posted by @Craig Dieterich:

Thanks for all the input/advice. I feel like it's a good deal that makes sense, but obviously several others on here feel differently. I agree there is always risk with tenants, the quality of the rehab work, the area, taxes in that area, etc. I think I covered my bases by calling the assessors office to get accurate property tax info, had a home inspector go through both units thoroughly since I could not be there, and also found a local PM that said these units should be easy to re rent if the current tenants left. Also, the current tenants have been there for 3 months so far and the inspector said they had been keeping the place very neat and clean. One tenant is a disabled veteran which I like because it means guaranteed money for rent. Again, my real original question with starting this post was about whether its a good idea to pay cash for a deal from a taxation perspective. But as many here pointed out, taxes are inevitable, and if I'm paying them then it means I'm making money.

0 Votes

That sounds like a great deal if your numbers are correct. Net $8000/year so you'll pay this off in 4.5 years, thats a wicked return even paying full cash.

0 Votes

For me, I am DCA into index funds while I wait for a good target to buy into for my syndicate which I believe will yield stronger returns than the stock market

0 Votes

Its up to you if you want to do them before/after the application, but I would definitely pre-screen before wasting your time with a viewing. I like the idea of application first, then pre-screen call to help save me some time screening unqualified candidates or ones that are not really serious.

However, the only holdback about application before the screen, I ask for credit check consent which a lot of people may get hung up about but when I discuss over the phone it can help smooth over the nerves about it. Also I'd need their SIN # (although "optional" is kind of mandatory for them to provide or the credit check is useless) and most people would be very wary of providing that online before meeting someone so unfortunately I have had to still just field all calls first, then do the viewing and then let them apply if they're interested.

Originally posted by @Eric Brantley:

@James Ma

I like the pre-screening questions before applying. I have 10 standard questions that I ask as well, but I’ve only asked them to tenants that viewed my property in person. Do you think I should put “contact me” before submitting application? The con to that would be the additional calls/emails that may not be as serious.

0 Votes

All Forum Posts by: James Ma

James Ma has started 3 posts and replied 274 times.

Post: Paying 8,000 for Real Estate mentor?

Post: Strata (HOA) Holdback Issue

Post: What 1-3 pieces of advice do you wish you'd known 20 years ago?

Post: Month to Month Tenants Not Paying Rent Increase

Post: How to get started with high DTI

Post: What is a fair percantage in this partnership?

Post: First purchase...Did I screw up?

Post: First purchase...Did I screw up?

Post: What would you do with 70k cash during Covid?

Post: Tenant Application Process