When to Walk Away from a Real Estate Deal

mortgage default foreclosure

Podcast Episode 82:
Diligence Time Bombs And Letters Of Intent.”

When trying out a new real estate investment strategy, it’s important to know when to walk away. In this Tale, an attendee of one of my creative investing workshops was ready to try an Agreement for Sale, and contacted me for help with a Letter of Intent. The deal turned into a Joint Venture, but there were too many red flags. Our investor walked away, and we can all benefit from the lessons learned!

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How to Defend Against Dishonesty

Invest Like Sherlock

Podcast Episode 71:
Some People Aren’t Honest.”

It’s sad to say, but there are dishonest people out there. Some real estate buyers, sellers, lawyers, and realtors will try to pull the wool over your eyes. A classic trick unscrupulous people use is to slip a clause into a document or take one out without you noticing. Luckily you can protect yourself from this and keep them in check by making sure to read contracts thoroughly, as well as to reread them after every round of negotiation and/or amendments. Vigilance is a necessary aspect of due diligence.

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Rent-to-Own aka Lease-Options

Podcast Episode 67:
“Coaching Successful Lease-Options.”

When a qualified tenant wants to be a homeowner, but can’t get a mortgage, investors can offer him or her a lease-option. This creative investment strategy is also known as rent-to-own. The trick is doing enough diligence on the tenant to make sure that they will be able to qualify for a mortgage at some point in the (relatively) near future. It also helps to get insurance in case something goes wrong. The tenant pays a non-refundable sum of money for their lease-option, and the whole deal can provide an excellent return-on-investment (ROI) for real estate investors.

Download the audio file HERE and the text/handout HERE.
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Do You Always Need Diligence?

Podcast Episode 65:
Diligence with Friends and Experts.”

It doesn’t matter who you are working with in a real estate deal, you still need to do your diligence. This means asking questions and reading the documents—even if dealing with a friend. Don’t assume an expert is infallible either; professionals can still be wrong or make mistakes.

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Multifamily Location Is Key

Podcast Episode 58:
You Are Buying the Neighbourhood.”

When buying a property, you are buying the neighbourhood and neighbourhoods are not homogenous. Do some diligence around schools opening or closing, new public transit soon or in the works, and rezoning. Check parking lots and dumpsters where you intend to buy; these will give you an informal tenant profile. Any environmental considerations?

Download the audio file HERE and the text/handout HERE.
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Inspecting a Multifamily Property

Podcast Episode 57:
All the Suites Look Just Like this One.”

When buying a multifamily building, inspect all the suites. Your vision of what is satisfactory and the vision of a seller anxious to sell are likely to be completely different. Failure to inspect meant substantial extra expense after closing for this investor.

Download the audio file HERE and the text/handout HERE.
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Inspection Issues

Clogged Pipes

Podcast Episode 49:
Nailing It Down.

When an inspection reveals problems with a potential property, these need to be fully resolved—even when they seem like they might be OK. Before removing conditions from, make sure to nail down issues so that they are 100%. Close or sort of isn’t good enough!

Download the audio file HERE and the text/handout HERE.
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Rent-to-Own Fiasco

mortgage fraud

Podcast Episode 45:
You Don’t Know What You Don’t Know.

A new real estate investor managed to avoid a rookie mistake. He was about to enter into a rent-to-own agreement with someone, but the paperwork was so vague as to be useless. Luckily he brought it to me, and I told him to run!

Download the audio file HERE and the text/handout HERE.
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Illegal Suites

illegal suites

Podcast Episode 44:
Illegal Suites Are Everywhere.

People often add onto or subdivide their properties, which can make diligence tricky for investors. Did the seller have a permit for a secondary suite? If so, did they actually build what they were supposed to? You need to figure these things out before purchasing or else you might not be able to use that extra suite.

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How to Deal with a Deceased Tenant (Follow-up)

Podcast Episode 43:
There’s A Dead Guy In My Suite! (Follow-up)”

This Tale follows up on the previous one about what you can do when a tenant passes away. Our example shows the steps taken by a landlord to deal with next of kin, and what happened when the family didn’t end up taking responsibility for the tenant’s estate.

Download the audio file HERE and the text/handout HERE.
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