Ozzie Jurock
Sun
During the last few weeks I have received a number of questions. I picked out a few of these, because I thought they might be of general interest. I have changed them a bit, taken out intros and ‘Ozzie you are great’ (but that was hard) and just give you the nuts and bolts. Here goes:
Q: I want to buy a home that is being built in B.C., but I have not as yet sold my house in Edmonton, which is proving difficult during this downturn. I am told I will lose the house that is under construction if I don’t buy it now without a subject clause. I was hoping to sell my current house at a price that would cover my new house. If not I feel trapped and may have to get an interim mortgage and then sell the BC house. Any suggestions of how I could proceed?
A: Please, whatever the pressures are…never write an offer without including a ‘subject to the sale’ of your property – particularly at the top of a market (as now). In reversals, you could get seriously hurt. Imagine making two mortgage/tax/hydro etc. payments. In real estate, there is always another deal that you can make. Sell your Edmonton house first…then with a firm offer on it…buy your BC house. If you can’t get this house…so what…next!
Q: I keep hearing that I could buy an assignment of a pre-sale from a buyer that tied up a pre-sale one year or more ago, but does not want to close. I understand that could be a good deal. But where do I find these assignments?
A: Your Realtor will have access to all that are listed. For ‘by owners’ and ‘realtor ads’ go to www.craigslist.com. Click on real estate. Type in assignment. If only eight or so show…retype assignments (yep, with the ‘s’.) you will find 280 this week. They are also advertised in the Real Estate weeklies…as well your Realtor should have access to most of them. If you ever do buy a presale by way of assignment…do not pay the person their profit before the unit is finished. Pay it only upon closing with the developer.
Q: Where do I go find foreclosures in the US?
A: There are a number of websites that purport to sell you foreclosure lists or teach you how to buy foreclosures in the US. Some are real and some are just trying to get you to pay fees with questionable results. In every troubled city (i.e. Stockton, Phoenix, Las Vegas there are weekly auction/foreclosure sales). Go to the city’s website and take note on when the next one is…and go there. It will be an eye opener – some are in terrible areas and awful shape. Review the tips I wrote here a few weeks ago. Every state is different: California wants you to declare world income, Florida charges Canadians three times the tax rate of a Floridian etc.
Q: I am interested in selling our one year old home but would like to rent it back from the buyer (sign a lease, etc) we would like to rent back while we build again. We think that if we build one more time we should be close to mortgage free. Are there sites, etc where investors look for this opportunity to buy a home with a guaranteed renter?
A: There are no websites as such but your Realtor could list your home with a clause (owner will rent property back at ‘x amount’ for one year). You could also post it on a ‘by owner’ website or on craigslist.com.
At deal time, your lawyer could register a lease on the title so that you are assured you can stay there for the year. There will be many buyers that may be happy to buy now and move in later, in the meantime have the income…Just be specific: I will sell my house for ….x dollars and I will pay precisely x dollars a month for precisely one year … or something like that. Sometimes these things do not work, because owners are haggling from start to finish and never tell what exactly they are prepared to pay on rent. They do not specify who will cut the grass, do minor repairs etc.
Be clear and it can be done.
Q: I have an opportunity to purchase view property and build a new house on spec in Sorrento, near Salmon Arm. This is a popular location for retirees and I know lot prices have tripled in the area. Is this area a “Hot Property”? Is there going to be continued growth in this area? Thank you for sharing your knowledge.
A: We love the Shuswap, have recommended it for years. However your success or lack thereof will depend on:
1. YOUR expertise of building a spec home long distance.
2. Your correct research of what else is available in the market there now.
3. Your management of costs, timetable (when exactly to market), target buyer, quality realtors, etc.
4. Go to city hall and check out exactly what you can build, the zoning, etc.
5. Check reputation of developer (if any) and study his/her building scheme.
You are not buying or building ‘the market’. Bad buildings or inexperience have sunk many builders in HOT areas as well.
Q: I am at age forty and I would like to retire by 55 or sooner. I still have a sizable mortgage on my property although the property is worth twice what I owe. Should I use the equity to generate income at 55? Or can I take my RRSP savings and buy a revenue property?
A: You could certainly buy rental property in a market where rents to price ratio makes sense (i.e. $70,000 condo with $700 rental income in say Kamloops or?) and you could own it by the time you are 55. Whether to do it…with a couple of headaches and work is a personal choice. You cannot take money out of your RRSP to buy revenue properties … unless you wish to pay the taxes. You can only take money out of a self directed RRSP if you invest in mortgages (even put one on your own house- First or second) and/or a Canadian Corporation’s shares. Depending on how much your RRSP is, and what your current mortgage is … that may be an option.
Most of the questions I get these days have to do with: “Is this a good market?”, “Should I wait?” or “Is the boom over?” And so on. In 38 years I have never seen the “great deal of a lifetime” advertised (or if I did, it turned out it wasn’t). I have never seen a Realtor who really liked low ball offers, including myself. I have never read in the paper that “This is without doubt the best market ever”, when it really was. I also have never subscribed to the theory that one should wait, let life, ideas, pundits, gurus, worries, stress storm in on us … and to defer our actions to a better day.
In Real Estate investment – the only time to do it is NOW. Always. There are no perfect markets, no perfect situations, no 167 secrets to make that great buy. There are only the actions that you take. Identify a neighbourhood, look at everything that is for sale there, look at everything that sold there, do it for a little while (oh, yes, I forgot, the only real secret: “It is work!). Get an idea of what really presents value and then take action. So, line up your team, your professionals, your Realtors, your mortgage brokers, your bankers, your home inspectors. Talk to them, see them, work with them and make a lot of offers. In life you do not get what you deserve, you get what you negotiate. All good deals are negotiated.
Ozzie Jurock
President of Jurock Publishing Ltd.
web: www.reag.ca
email: [email protected]
© The Vancouver Sun 2008
