Edmonton Real Estate BlogRecently posted or modified blog posts in the category - Edmonton Real Estate Investinghttps://www.bestedmontonrealestate.com/blog/Copyright BestEdmontonRealEstate.com2022-03-15T09:36:38-07:00tag:bestedmontonrealestate.com,2012-09-20:3346Investing vs Mortgage Payments: What's Your Priority?Not sure whether to put more of your resources toward investing or whether you should pay off your mortgage faster? This "investing vs mortgage payments" dilemma is common for many Canadians.
Investing or paying off a mortgage faster is one of the biggest questions many people want the answer to. It's a question most people struggle with in their quest for financial freedom. The truth is the answer to this question depends on different factors. Each situation is different, and you must understand your situation before you decide. If you'd like more information on whether you should invest your money or whether you should pay off your mortgage faster, then you'll find this information valuable.
Investing vs Mortgage Payments
In this post, we’ll take a look at why it might be better to pay off your mortgage first in some situations, how to do it, and why it might sometimes be a better option to invest your money first.
(Learn more about your options for investing in real estate <a href="https://www.bestedmontonrealestate.com/real-estate-investing-options/" target="_blank">in this post</a>)
Should you pay off your mortgage faster?
For many people, the dream is to get out of debt and start living their lives. Waking up and not having to worry about making a mortgage payment is the dream of many. For this dream to become a reality, a person must get rid of their debts first.
A mortgage consists of two parts, and they are the principle and the interest. The principle is the amount of money you've borrowed, and the interest is the amount you have to pay for borrowing that money.
Whether or not you should invest your money or pay off your mortgage faster depends on what you're trying to accomplish financially. For instance, if you pay off your mortgage faster, you’ll get out of debt quicker and save more money.
There's also the option of investing your money while making regular payments to your mortgage, which gives you a head start on your savings. You can have an emergency fund and money if there's ever a situation that arises. The truth is there are positives to both.
The Benefits Of Paying Off Your Mortgage Faster
Obviously, the first significant benefit is that you get out of debt quicker, thus making it easier to save more money. This is not the only benefit, though, because the faster and more money you pay to your mortgage, the less money you have to pay over time.
When you get a mortgage, it typically comes with an amortization schedule. This plan determines how much money goes to the principal and how much goes to interest over several years.
Although this helps you stay on track, it causes you to pay more money when paying off your mortgage.
However, if you were to pay extra money to your principal, you would end up paying less money towards the interest on your mortgage.
(Find more information about the mortgage process <a href="https://www.bestedmontonrealestate.com/the-mortgage-process/" target="_blank">in this post</a>)
Paying off your mortgage faster comes down to paying more to the principal. The lower the principle, the less money you'll have to pay in interest. First, you must find out if there are any prepayment penalties.
Any extra cash you have should go to your mortgage. Accelerated or lump sum payments are what you do to pay off your mortgage faster.
Another benefit to paying off your mortgage faster is the financial freedom that comes with it.
By paying off your debts faster, you'll have more money to save and do other things with. Imagine being able to build your savings, invest in your children's future and have money to do things you want to do and not worry about losing everything. By paying off your mortgage faster, you give yourself this freedom.
It’s a good feeling to know you own your home, and you don't have to worry about making monthly mortgage payments.
Again though, if your situation is different, there is always the other option of investing your money first.
Investing First Mortgage After
Although getting your mortgage paid off faster is a good thing, there's another side where you invest your money while sticking to your regular payment schedule. There may be times when it's better for a person to invest first while paying their mortgages.
For instance, if you are self-employed, your mortgage interest is tax-deductible, and this deduction reduces your taxable income.
(Speaking of taxes, take a look at this post next: <a href="https://www.bestedmontonrealestate.com/blog/edmonton-tax-assessment-vs-market-value/" target="_blank">Edmonton Tax Assessment vs Market Value</a>)
Also, investing your money earlier means you get to take advantage of the power of compounding earlier. In turn, this gives you the chance to have more money in the later years of your life.
The biggest problem for most people when paying off their mortgage faster is not having money in times of emergency.
It’s always a good idea to have an emergency fund. But if you are focused on paying off your mortgage fast, there could be a situation where you need money, and you don’t have it. A situation can force a person to take another loan, thus adding to their debt. So, there are also positives to investing your money first rather than pushing everything towards your mortgage.
Conclusion
The decision to invest your money or pay off your mortgage faster comes down to your unique situation.
Paying off your mortgage faster can mean financial freedom earlier and not worrying about the debt later on in life. However, it's also a good idea to continue paying your mortgage and investing your money first, which helps you build a safety net if an emergency ever arises. Take your personal situation into account first, and you'll be in a better position to make the right decision.
As always, we're here to discuss your needs when it comes to finding the perfect property for you.
<a href="https://www.bestedmontonrealestate.com/contact/" target="_blank">Click here</a> to get in touch with the Best Edmonton Real Estate team today!
Did you learn a lot about investing vs mortgage payments in this post? Here are three more posts to read next:
<a href="https://www.bestedmontonrealestate.com/blog/tips-on-buying-a-home-in-edmonton/" target="_blank">Tips For Buying A Home In Edmonton</a>
<a href="https://www.bestedmontonrealestate.com/blog/benefits-of-buying-a-home-in-the-winter/" target="_blank">Looking for a New Home? Here are the Benefits of Buying in Winter</a>
<a href="https://www.bestedmontonrealestate.com/blog/benefits-of-buying-a-home-in-the-winter/" target="_blank">3 Signs You are Overpaying for a House</a>
This post was first published in 2017, but it was updated in 2022 just for you.<a href="https://www.bestedmontonrealestate.com/blog/tips-for-running-an-airbnb-property/" target="_blank"></a><a href="https://www.bestedmontonrealestate.com/blog/tips-for-running-an-airbnb-property/" target="_blank"></a>2022-01-14T11:17:00-07:002022-03-15T09:36:38-07:00Gerard Hagantag:bestedmontonrealestate.com,2012-09-20:125635 Reasons Investing In Real Estate Is A Smart Move<br />There are more investment opportunities than ever before. But if you're like most of us, you<img src="https://assets.site-static.com/userfiles/573/image/Reasons_to_invest_in_real_estate.png" alt="Reasons to invest in real estate" class="img_box_right" style="float: right; margin: 1px; border: 1px solid black;" width="450" height="253" /> need to pick and choose which opportunities you take advantage of carefully. If one of those opportunities you've been considering is investing in real estate, then this is one post you can't afford to miss! We know how overwhelming it can be to dip your toes into the world of real estate investing or investing in general. By learning as much as you can about the benefits and drawbacks of certain investments, you're giving yourself the best chance of success and a great ROI!
Today, we'll share reasons why investing in real estate is a smart move, as well as how to start.
5 Reasons Investing in Real Estate is the Right Move
Generating cash flow
Not every investment is known for its ability to generate cash flow. Investing in real estate, on the other hand? Once you pay off your mortgage and operating expenses, the net income you receive from this investment is cash flow you can save or invest in other ways!
(It's important to choose your investment properties wisely. <a href="https://www.bestedmontonrealestate.com/blog/tips-on-buying-a-home-in-edmonton/" target="_blank">Visit this post next</a> for some tips about buying a home in Edmonton)
Tax benefits of investing in real estate
Another big draw when investing in real estate is the tax breaks and deductions it can come with.
When you own a rental property in Canada, you can deduct all kinds of rental expenses from your taxes.
These include:
Advertising
Insurance
Interest and bank charges
Office expenses
Professional fees (includes legal and accounting fees)
Management and administration fees
Repairs and maintenance
Salaries, wages, and benefits (including employer's contributions)
Property taxes
Travel
Utilities
Motor vehicle expenses
Other rental expenses
Prepaid expenses
(Source: <a href="https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html" target="_blank">Government of Canada</a>)
(To get the best return on your investment, it's important to make sure you aren't overpaying for the property to begin with. With that in mind, here's another post you'll want to read next: <a href="https://www.bestedmontonrealestate.com/blog/3-signs-you-are-overpaying-for-a-house/" target="_blank">3 Signs You are Overpaying for a House</a>)
Building equity and wealth
Investing in real estate doesn't mean you'll build equity and wealth overnight. However, as you pay down the property’s mortgage, you’ll begin to build equity!
The great thing about equity is that it becomes part of your net worth. That way, you'll have more leverage to continue buying rental properties. Then, you can generate even more cash flow and wealth as your investments grow.
Appreciation
Investing in automobiles? Not the best idea if you're hoping your investment generates a great return. But when it comes to investing in real estate, you'll have the peace of mind of knowing more investments appreciate over time.
Of course, this means it's important to keep an eye on the market when you're buying and selling to ensure you have good timing. (We can help with that!)
But it's not only when it comes to selling your investment properties where you can enjoy the benefits of appreciation.
Because property values and the cost of living also go up, this means you can increase your rental rates from time to time. That way, you're also increasing the cash flow you get from these properties at the same time.
(Considering adding concrete countertops to your investment property? Find out if they're worth it <a href="https://www.bestedmontonrealestate.com/blog/concrete-countertops-are-they-worth-the-investment/" target="_blank">here</a>)
Diversifying your portfolio
Let's turn to <a href="https://www.investopedia.com/articles/mortgages-real-estate/11/key-reasons-invest-real-estate.asp" target="_blank">Investopedia</a> to explain this next reason to consider investing in real estate:
"Real estate has a low—and in some cases negative—correlation with other major asset classes. This means the addition of real estate to a portfolio of diversified assets can lower portfolio volatility and provide a higher return per unit of risk."
<br />Did you learn a lot about investing in real estate in this post? Here are three more posts to read next:
<a href="https://www.bestedmontonrealestate.com/blog/benefits-of-buying-a-home-in-the-winter/" target="_blank">Looking for a New Home? Here are the Benefits of Buying in Winter</a>
<a href="https://www.bestedmontonrealestate.com/blog/edmonton-tax-assessment-vs-market-value/" target="_blank">Edmonton Tax Assessment vs Market Value</a>
<a href="https://www.bestedmontonrealestate.com/blog/edmonton-tax-assessment-vs-market-value/https://www.bestedmontonrealestate.com/blog/real-estate-supply-and-demand/" target="_blank">Real Estate Supply And Demand</a>
2021-12-24T09:45:00-07:002022-03-15T09:08:17-07:00Gerard Hagantag:bestedmontonrealestate.com,2012-09-20:2875Study the REIT Market Before Taking the Plunge<br /><img src="https://assets.site-static.com/userfiles/573/image/REIT_Market.png" width="450" height="253" alt="Investing in a REIT" class="img_box_left" style="float: left; margin: 2px; border: 2px solid black;" />So you’re looking into investing in a REIT. Just as in any financial enterprise, doing a bit of investigation into the REIT market before taking the plunge could help you get the maximum return. One decision you’ll face is whether to make that REIT a private or public one.
What's a REIT (Real Estate Investment Trust)?
Before we discuss taking the plunge into the REIT market, let's first talk about what real estate investment trusts are, to begin with.
<a href="https://www.reit.com/what-reit" target="_blank">REIT.com</a> shares this helpful definition:
"REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet several requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer many benefits to investors."
(Not sure whether you should invest or pay off your mortgage faster? <a href="https://www.bestedmontonrealestate.com/blog/investing-vs-paying-off-your-mortgage-faster-which-one-is-right-for-you/" target="_blank">This post</a> helps you determine which option is right for you)
Study the REIT Market Before You Invest
Having an RIET, or real estate investment trust, is one way to diversify your financial holdings.
Investors are becoming more interested because of the housing market’s current state and its ups and downs. They are also taking a second look because firms such as Allied Properties <br />REIT is <a href="https://www.alliedreit.com/press_releases/allied-properties-reit-announces-continued-expansion-in-western-canada-and-toronto-with-179-million-in-acquisitions-and-90-million-public-equity-offering/" target="_blank">continuously expanding in Western Canada,</a> to the tune of $179 million in acquisitions and a $90 million public equity offering.
However, it's incredibly important to study this market before investing in it. To start, you'll want to know the differences between public and private REITs.
(Are you curious about buying real estate with Bitcoin and cryptocurrency? Learn about this concept <a href="https://www.bestedmontonrealestate.com/blog/buying-real-estate-with-bitcoin/" target="_blank">in this post</a>)
REIT Structures
The primary difference between public and private REITs is their structure.
A REIT in a public offering takes its valuation on a property’s current market value. That means if an announcement comes along that causes that particular market to decrease and you invest in that particular REIT, you aren’t necessarily purchasing the property’s true value.
Private REIT investments have their valuations done based on a private appraisal. The properties you are investing in are done so at their appraised value.
(Are you also considering investing in a new home this winter? <a href="https://www.bestedmontonrealestate.com/blog/benefits-of-buying-a-home-in-the-winter/" target="_blank">Here are some reasons</a> this season is the best time of year to buy!)
Important Considerations About the REIT Market
Other things to consider with a public REIT include:
Public REITs are publicly traded, resulting in fees and commissions being charged. That decreases your unit value. Private REITS are not constantly on the block, thus not racking up these charges. These tend to better hold their value over the long run.
Private REITs make it easier to access your money. If a property in your portfolio shows an increase in value, you can take advantage of that by withdrawing funds or refinancing to provide money for new projects.
Investors thinking of jumping into REITs should seek advice from an accountant or lawyer to not miss out on the tax advantages available to those in the securities market.
Do your research and find out who manages the REIT you are interested in. Look into their history and the individuals on the management team. You entrust your money to that team because you have no say on how the portfolio runs once you’ve invested.
Also, look into the lease situation. Putting your money into an REIT that has long-term leases with the due dates staggered keeps your cash flow coming in at a steady pace. Avoiding scenarios when all or most leases expire at once could avoid putting a serious kink in your return.
Did you learn a lot in this post? Here are three more to read next:
<a href="https://www.bestedmontonrealestate.com/blog/edmonton-tax-assessment-vs-market-value/" target="_blank">Edmonton Tax Assessment vs Market Value</a>
<a href="https://www.bestedmontonrealestate.com/blog/investment-risks-worth-thinking-about/" target="_blank">Investment Risks Worth Thinking About</a>
<a href="https://www.bestedmontonrealestate.com/blog/buying-or-selling-during-the-covid-19-pandemic/" target="_blank">Buying or Selling During the COVID-19 Pandemic</a>
This post was first published in 2019, but it was updated in 2021 just for you.<a href="https://www.bestedmontonrealestate.com/blog/buying-or-selling-during-the-covid-19-pandemic/" target="_blank"></a>2021-12-10T06:53:00-07:002022-01-23T22:59:34-07:00Gerard Hagantag:bestedmontonrealestate.com,2012-09-20:2869Investment Risks Worth Thinking AboutWhen investing in real estate no one really wants to think about risk any more than they have to. But it is best to know the potential problems and risks that you take when you sign on that dotted line. Here are some to pay special attention to.
Looking at Economic Risk
Canada’s economy and the real estate market are in good shape, much better than that of other global markets. Foreign investors are increasingly turning to Canada as a place to safely invest funds. Domestic investments are also doing well. Still there are risks to consider.<br /><br />One is the interest rate. Right now and throughout 2013 the rate is expected to remain low. The rate has been low for quite a while and we need to avoid becoming complacent. Eventually things will start inching up. For now the Bank of Canada’s governor Mark Carney has decided to leave the rate at one percent. The risk is that when the rate starts to go up, it will go up too quickly and do some serious damage to your cash flow. If the rate goes up high enough, you could go from a positive to a negative cash flow. <br /><br />You can help keep interest rates somewhat stable by taking out financing for a longer term, say anything between five to ten years. This will give you a predicted payment amount for a fixed number of years and you will be better able to manage your cash flow and have a steady pay down on that mortgage. Another idea is to take out CMHC mortgage insurance, which can give you a discount off your interest rates for as long as you hold the mortgage. Currently, availing yourself of both options can get you a ten year rate of between three and four percent.
Managing the Vacancy Rate
At present, landlords are enjoying low vacancy rates in most metro areas across Canada. CMHC recently released a report that covered 35 of the major metro area in Canada. The average vacancy rate nationwide was 2.3 percent in April of this year. That is lower than the 2.5 percent seen in the prior April. The thing with having such a low vacancy rates that odds are that it will go up rather than down. <br /><br />Avoiding a rising vacancy rate is not always possible. But you can put the odds in your favour by investing in an area where the economy seems to hint at continued or future low vacancy rates. Look for area with growing employment, a steady increase in population, plenty of construction and development projects in the works and that already have low vacancy rates.
The Political Part of the Equation
Rent control is a form of risk that should be considered. Each province has its own rules. As an example, PEI, Ontario, Manitoba and British Columbia all have rent control laws on the books that require landlords to raise rents using provincial guidelines. Not only that, the rules can change. Take Ontario for example. Their rent control legislation required landlords to use the Ontario Consumer Price Index for increasing rates. But, in 2013, that law changes and landlords will only be able to raise rents up to 2.5 percent. <br />Knowledge of rent control laws and pending legislation in areas you are planning to invest is your best bet in avoiding or at least mitigating this type of risk. <br /><br />Licensing also varies from one province to another, and often from one city to the next. Going back to Ontario for an example, we can look at Waterloo which just passed legislation that added new fees payable by the landlords. In Hamilton, a proposed new bylaw may allow that city to further regulate rental units that have between one and six units. Landlords are fighting this but it’s too soon to see what the outcome will be. Just as knowledge is your friend as far as rent control, knowing about the licensing laws in a potential investment area can also help you avoid that risk.
Property Risks
If you haven’t done your homework and/or don’t know what you are doing, the very act of selecting a property is a risk. Buy a property that has unforeseen repairs in the works and that’s money out of your pocket. That’s called a negative cash-flow investment. Not a good idea for a novice investor. These can be managed by seasoned investors but are still risky. <br /><br />Things you should consider are your available cash flow, rental rates, risky tenants, properties not up to code, environmental concerns, accuracy of cash flow and structural problems. The key here is to study. On your own you can read books or study online, perhaps even find a mentor. Find a REALTOR® that deals with investments, that is key to avoiding risks. <br /><br />Looking at the vacancy issue, this can also have an effect on your cash flow. If a property has a consistent high vacancy rate it could adversely affect the value. It could be due to the screening of the tenants or the conditions/reputation of the property itself. Properly vetting your potential tenants including credit checks and following through on references can go a long way in preventing at least some vacancy risk issues.<br /><br />Unexpected expenses can be an investor’s worst nightmare. Most investment properties run on a budget, usually a pretty tight one. Having an expensive surprise can dampen your cash flow. Getting your prospective investment inspected by a professional and asking for information on the buildings history of maintenance and prior work can help you make a more informed decision as to whether this property is the right one for you.2013-01-03T11:28:00-07:002019-08-20T17:19:37-07:00Gerard Hagantag:bestedmontonrealestate.com,2012-09-20:2867Could A Real Estate Slowdown Actually Help Investors?While we’re becoming accustomed to the stories about slower home sales and declining property prices, it doesn’t all have to mean bad news. If you are an investor thinking about getting into the property game, these very things that are making some people nervous could actually give you a leg up on your venture. There are ways that the downturn can really work for you.
Property is Less Expensive
<br />Property prices across Canada are dropping. If you have your own capital or a way to finance your purchase, this may be the time to act. First-time homebuyers may be put off by the downturn, particularly if they must use conventional financing. But, look beyond the media hype and you might find a silver lining, favoring investors.
Rental Market is Stronger
<br />Some potential home-buyers are choosing until the market stops dropping and instead are staying in the rental market. That’s good for you if you are buying rental property. Currently there is an avid interest in this part of the real estate market, with some vacant units getting 20 or more inquiries. The real estate market as a whole may be cooling, but the rental market is definitely heating up.
Buyers are In the Driver’s Seat
<br />Certain parts of the country, particularly Vancouver, Montreal and Toronto, are fast becoming a buyer’s market. Even properties that are experiencing bidding wars often go for below the original asking price. Sellers, particularly those who have had their listings up for a while, are just accepting lower offers. That means great deals for investors.
Low Interest Rates
Canada’s interest rates are still at historic lows. There are also fewer buyers seeking financing, so the lending agencies and banks are hungry for business. Investors in the know believe that the time to buy is now.2012-11-30T18:55:00-07:002019-08-20T17:28:00-07:00Gerard Hagantag:bestedmontonrealestate.com,2012-09-20:2851Investment Opportunities Near Arena, Airport Projects in EdmontonEdmonton’s proposed downtown arena may still be an undecided issue, but if it does happen, real estate investors might want to check out the local neighborhoods for property up for sale. That arena will spark a wave of redevelopment, and if you already own a bit of property, you will be in the driver’s seat. The same could be said with neighborhoods near the airport property project, another controversial issue. <br /><br />Don Campbell, somewhat of a real estate guru and author of a book called “Secrets of the Canadian Real Estate Cycle” is encouraging potential investors to take the plunge. If these projects go ahead, and that is likely, then Edmonton’s economy would pick up substantially and neighborhoods surrounding these projects will find their property values increasing. <br /><br />This is on top of the fact that Edmonton is already in an economic upturn. Campbell notes that real estate cycles usually have a gap of between 18 to 24 months after an economy starts to either dip or swing upwards. Alberta is having a lot of people immigrate to the province and most of them will rent before buying.<br /><br /> That is already evident from the 4.7 percent vacancy rate this past April, compared to the 5.2 percent seen in April of 2010. Rents are also increasing, going from $994 to $1,029 for an average two bedroom during that same comparative period. At present, there is more interest in investing from people out of province, and even overseas. Campbell thinks Albertans should take advantage of the opportunity before prices really take off.2011-10-28T17:39:00-07:002019-08-20T17:39:33-07:00Gerard Hagantag:bestedmontonrealestate.com,2012-09-20:2840Vendor Take Back<img title="vrndor_take_back_mortgage_242" src="https://assets.site-static.com/userfiles/573/image/vrndor_take_back_mortgage_242.jpg" alt="vrndor_take_back_mortgage_242" width="242" height="207" />
A VTB is not some sort of STD, it is a term used in Real Estate which stands for "Vendor Take Back Mortgage". Better stated, a VTB is when the Seller of a property is willing to offer some or all of the financing on that particular property.
There are many different forms of VTB's, we have helped Buyers purchase a home where the Seller acted as the bank and held the entire mortgage. Other times it has amounted to 95% of the property value, but more often it amounted to 80% of the property value. Other main factors to consider with a VTB are the interest rate, amortization and term (length) of the financing. We have seen Sellers offer 6% interest rates all the way up to 9% rates. The amortization is usually between 25-35 years with a term of 1-5 years depending on the Seller's situation.
Occasionally, a VTB can be used to top up traditional bank financing. We would ask the Seller to provide us with a second mortgage (they take second position behind the bank) to minimize the money a Buyer had to put down in order to purchase the property. A vendor take back mortgage can also be used to bring the loan to value up on a property. Meaning if you have 20% to put down and the bank will only loan you 65% of the property value, we would ask the seller to hold the other 15%.
Benefits of a VTB for a Seller include:
The faster sale of your home in a slow market
A higher interest rate which equals a higher price for your property
You can delay Capital Gains Taxes until the VTB is paid out (This benefit applies to investment properties)
Benefits of a VTB for a Buyer or Investor include:
A smaller down payment is usually required
Your monthly payments may be less depending on the structure of the deal (balloon payment at the end of the term)
Minimal qualification is required
Vendor Take Back Mortgages are always advertised so the best way to find out is to ask. If you have any more questions or want to know more about VTBs feel free to drop us an email or give us a call.
<br /><br />Related Links
<a href="https://www.bestedmontonrealestate.com/west-edmonton/" target="_blank">West Edmonton Homes</a>
<a href="https://www.bestedmontonrealestate.com/before-accepting-an-offer/" target="_blank">Before Accepting An Offer</a>
<a href="https://www.bestedmontonrealestate.com/property-search/site-map/" target="_blank">Edmonton Real Estate</a>
2010-08-09T07:07:00-07:002019-08-20T17:57:43-07:00Gerard Hagantag:bestedmontonrealestate.com,2012-09-20:2837What is a SIMO?A “Simultaneous Close” or SIMO is when you “buy” a property on paper, and sell it to a buyer on the same day.
Here is a step by step on how to set it up.
1. Find a property, and get it under contract. Some important things to include in the terms are the following:
Make sure you leave yourself some time to find a buyer, make your conditions period at least 2 weeks long, with a closing of at least 4 weeks.
Under terms, explain that you need access to the property within 24 hours notice for showing to other investors, inspection, etc.
Give a small deposit, and make sure that you write in that your deposit is refundable.
Indicate that you have the option to market the property.
2. Once you have the property under contract, have your REALTOR®® and lawyer review the documents. It is highly recommended you use a real estate specific lawyer for this type of deal. If you are unsure, start making calls. Ask them if they are familiar with a double close or simultaneous close. If they say no, find another lawyer.
3. Once you find a buyer, do up the purchase contract. It should look similar to your purchase contract with the seller. A few important tips are this:
Get a larger deposit than what you gave in your purchase contract.
Put the new buyers conditions removal date earlier than yours, in case anything were to happen, you could always re-sell to someone else.
The Closing date MUST BE THE SAME as the closing date on your purchase contract with the seller.
4. After both purchase contracts are signed, you will have a purchase contract with the seller, and a buyer will have a purchase contract with you for the same property.
5. Keep in touch with your REALTOR®® and lawyer, and make sure things are all going smoothly. All 3 parties will need a different lawyer for this transaction, the original seller, yourself, and the buyer.
6. On the closing date, the property will transfer through your name, the lawyers will put your buyer’s money in trust, and use it to pay the seller, and you collect the difference minus lawyer’s fees.
Advantages:
Neither the buyer nor seller know how much you will make.
You can do this with little or no money down.
Typically you can do these with end buyers, and make a much larger profit.
You control both the buying and selling contract.
Disadvantages:
You will need to utilize and pay a lawyer.
The title transfers through your name.
If you have any questions feel free to let us know...<br /><br />Related Links
<a href="https://www.bestedmontonrealestate.com/southwest-edmonton/" target="_blank">South West Edmonton Homes</a>
<a href="https://www.bestedmontonrealestate.com/st-albert/" target="_blank">St. Albert Homes</a>
<a href="https://www.bestedmontonrealestate.com/property-search/site-map/" target="_blank">Edmonton Homes</a>
2010-01-04T15:07:00-07:002019-08-20T17:58:36-07:00Gerard Hagan