Sales Are Down, But Values Are Up?

Posted on January 7, 2011 by admin

First off, 2010 wasn’t just a bad dream, instead 2010 really was just an extension of the last few years which have really been a nightmare for Alberta Real Estate values. The official 2010 CREB statistics are out now and total sales for single family homes in Calgary and area were the lowest in ten years. What a difference from only five years ago when we were setting sales records.

For a slightly more positive view, condominiums were not affected quite as bad; they were only the lowest in nine years. See, much better. To really let both of those sink in, you also have to understand that the Calgary population has increased by over 100,000 people in the area since then.

In a normal market, the increase in the population would help offset the slowdown in sales, but as many of you are aware, we definitely do not have a normal Real Estate market in Alberta! Our economy is so tightly woven into the oil and gas industries that we are well known as a boom or bust economy and no matter how many times we say, “This times different”, it really isn’t.

We still get caught, we still buy in, and we continue to buy our homes and our properties and our toys, no matter how often we see the down side of the cycle.  Now part of it may just be ingrained optimism, after all when an area has this much sunshine, how couldn’t you be just a little more upbeat? Or perhaps deep down we understand that in the big picture, as long as we can look down the road, owning your own property is a good thing.

How else can we explain the other interesting statistics that have also come out regarding prices? Both the average selling price in Calgary for 2010 and the median selling price of both single family homes and of condominiums has risen from the 2009 Real Estate statistics. Let me just repeat that as it’s so unique, prices are continuing to go up, while the number of actual sales continues to decrease.

That’s not normal folks. When sales decrease, there is less competition for a product or service and the prices are supposed to decrease to keep pace with lessened demand. Yet our market doesn’t seem to work that way.

So back to my optimism theory then. Could it be true that many of us still believe that a home is a good investment and that it’s still a good time to buy? We’ve gone through a few years of the bust part of our cycle, so shouldn’t we start to be a bit more optimistic about the possibilities?

Could it be there is a possibility that we may have another shot at the boom side of the cycle and the possibility that perhaps there is still some upside to Real Estate? Time will only tell and I was hoping it would have been a couple years earlier, but I think we may get to see things really turn around in 2011, but then perhaps I am just being optimistic!

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2010 Be Gone!

Posted on January 1, 2011 by admin

Does anyone else feel like a weight has been lifted off of their back? As soon as the clock struck midnight, I immediately felt more optimistic about the pending year before us.

The last couple of years have had some pretty severe impact on our business and I know from talking to many other people, I wasn’t alone.  The recession played havoc across Canada, but here in Alberta it was a real wake up call. As usual, we went from boom to bust in a relatively short period and the repercussions have dragged out for far too long.

Now I’m not saying we had it worse than other places. In fact, we came out quite good considering the impact it had. It’s actually quite likely that our worst point was actually better than other provinces peak; we just cannot see that perspective because it is so close to us.

To help us move forward for 2011, Karen and I sat down for our usual New Year’s Eve Goal planning and strategizing for the year and from what we have put together, as long as we stay on plan, it will be known to us as “The Turnaround Year”. If you haven’t thought about what you are hoping to accomplish during 2011 yet, the sooner you sit down and plan the better. Here is an old post that may help with that, Goal Setting Techniques.

Anyway, I don’t want to drag this initial post of the year out to long so I am going to wrap it up, after one last story. Often my posts have been revolving around problem tenants and negative issues, so last night it was great to receive this comment from a former tenant who just happened to find my blog and read about a former problem tenant who will forever be known as SWAT boy.

Hi Bill. I used to rent one of those rooms in the Beddington house. Just wanted to say that you are a good person and a great landlord. I realize that these rooming houses are a great deal of work and are very exhausting. You have helped so many people in need of affordable accommodations over the years. It is just too bad that the workload and problems outweigh the rewards. I just wanted to let you know that you have made a difference in many people’s lives and to thank you for all that you did to help me out when I knew you. Best wishes to you and your family. Darren

If that’s not a sign that things are changing, I don’t know what it could be! Happy 2011 everyone!

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Free Gift for Christmas

Posted on December 22, 2010 by admin

This Book Could Be Worth a Million Dollars to You.

That is the headline above the title of Napolean Hill’s famous book,

Think & Grow Rich

If you haven’t read it, you probably should. Will it make you an instant millionaire, no, will it show you how to become rich, well no, but it may help change your thinking about what you need to do to become significantly better off.

Becoming wealthy starts with a few simple techniques and then requires plenty of hard work and this book can give you some ideas about where to begin. Anyway, that’s where the free gift part comes in.

This book was originally written in 1937 and the information buried inside the book is still relevant today. It’s copyright has expired and it is now freely available online, so if you don’t already have a copy on your bookshelf, here is an opportunity to read it on your computer, your iPad or even your phone if you have the capability.

You can download it here, Napolean Hill’s Think & Grow Rich

I hope you enjoy it as much as I did. I have two copies of the paperback version and I try to read it at least once a year! Happy Christmas!

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Why Don’t They Screen Tenants?

Posted on December 16, 2010 by admin

Ironically, I am writing this just a couple of weeks after having problems with a rooming house tenant who seemed to have a split personality. My screening of the rooming tenants usually involves nothing more than a phone conversation, which is not ideal, but simply how that type of rental works.

A regular rental property with longer term tenants is an entirely different beast though. So here are some of my thoughts on screening tenants.

Screening Tenants

As a landlord and a property investor, this question haunts me. When I initially became involved with rental property one of the biggest points that was driven home to me was how important it is to screen potential tenants. Yet, I continually hear stories from other landlords about their problem tenants and how they never completed any screening or reference checking.

Continue reading →

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No One Saw It Coming – The Aftermath

Posted on November 30, 2010 by admin

As with many of my tenant stories, we never really know what triggered someone going slightly off or believing they could do what ever they wished. It seems this holds true with this story as well.

Karen and I went to the property last week and gathered up the fellows goods. There were a few surprises, like the coffee cup/ashtray in the picture. It turns out he left his suitcase, his charger for both his cell phone and his notebook computer, almost all of his clothes along with a couple suits, quite a few books, pay stubs and several pamphlets from Alcoholics Anonymous along with meeting dates.

I also found the name of the company where he was working and followed up with them today. He hasn’t been seen in a couple weeks. They even contacted his emergency contact and they have no idea where he is as well.

In the end it remains a sad story about an individual who seems to have fallen off the wagon and now has disappeared from the planet, for the moment anyway. It’s difficult to not feel badly for him, but where should you draw the line?

We provide safe (well, he probably would disagree at this point about that), clean, comfortable homes for working men and we hit bumps along the road. As I explained earlier, we have dozens of boring stories of individuals who stayed with us, paid on time, left the rooms in perfect condition and received full refunds, it’s just these types of stories that seem to give us cause for reflection about how life can change quickly for some.

Perhaps this is just a  reminder to us of how good we really have things? I know many people are having challenges with the slower economy, and the resultant pressures associated with it. We all just need to remember the good things the majority of us have. I have to assume the majority of folks reading this still have a roofs over their heads, hopefully loving families and good friends around them as we do.

Just so I don’t leave this on too serious of a note, we managed to grab some of the “graphic evidence” of the assault. Hopefully this doesn’t cause you to become too woozy seeing all this carnage!

Best we can tell by all this “blood” he was lucky to live through the encounter. We can only assume by following the trail that he made it safely to the closet in the upper corner where he must have fastened some type of tourniquet to allow him to survive.

P.S. The wine glass that this “blood” came from was safely tucked in the closet as well.

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He Never Saw That Coming!

Posted on November 25, 2010 by admin

I hope you have been enjoying this story so far, if you haven’t read part 1, which was titled I Never Saw That Coming, you really need to start there; otherwise, it’s just not as much fun! You can go directly there by following this link, I Never Saw That Coming!

So, we left off with me heading to the property to deal with the tenant problem and Karen calling the police to send them to the property while I was in transit. If there was an actual assault that was going to be filed, I wanted to make sure I brought the police in and had some control of the situation. Especially if he was going to attempt to file some type of lawsuit against me as he stated.

I was only a few blocks from the property when the dispatch office called and suggested for my safety that I not enter the property until the police officers arrived. He informed me they were on their way and should be arriving shortly, so I let him know I would wait outside in my vehicle for them. Continue reading →

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I Never Saw that Coming!

Posted on November 24, 2010 by admin

Strange night last night, it seems I get to say that far too often, hmmm. It appears one of my tenants may have a bit of a drinking problem. I was sitting at viewing night for my girls’ dance class when one of my rooming tenants called. The phone was on vibrate, but I noted the name and number and was going to call after the class.

Five minutes later an email comes in on the phone from another tenant in the same location with the subject “Assault”. Now I had to read it! Both tenants have been great, but I knew they didn’t like each other that much.
From the email, it appeared that the tenant who called, had assaulted the tenant who emailed me. First, this seemed entirely out of character for either of them, second I was stuck in a dance class for another forty minutes. So I emailed back replying I was tied up for another thirty minutes and would call right after.

This didn’t sit well with him as he emailed back even more upset, so I replied back I could have him moved to another property within a couple of hours where he would be safe. Apparently, this was just more gas on the fire. He replied, with the following line in his email “I am stunningly superior in intelligence and education, and you are frankly facing a lawsuit, is that really a road you want to go down?” My demeanour shifted and suddenly I became much meaner and significantly less tolerant. Continue reading →

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Pissed Off at Tenants

Posted on November 17, 2010 by admin

This post has been a long time coming, so let me back track a bit for you. It was during 2009 my former business partner managed to find some contacts within Calgary Urban Project Society (CUPS) that needed housing for individuals.

In 2009 I was renting out over 50 furnished rooms in nine different properties throughout Calgary. These were ideal cash cows during the economic boom as they were safe secure places for working men to stay when they landed in Calgary. However, as the economy faded in 2008 and 2009, these workers dried up and we went from having people on waiting lists to over 50% vacancies.

At the time this new source of tenants seemed like the perfect fit for us, single men looking for housing and guaranteed payment via government checks. Unfortunately, in hindsight this fits into the EPIC FAIL category. Continue reading →

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Foreclosure in Calgary – A Conclusion To The Story

Posted on November 12, 2010 by admin

Going through a foreclosure has been quite an eye opening experience for me and I felt it was a story that needed to get told.

Ultimately, it comes down to my responsibility to make good on the terms and conditions of a mortgage that I signed for, but going through this has helped me understand how little control property owners have and how much the banks control your life.
Again, to recap ( you can start the story here, Foreclosure in Alberta) , I had a rental property that generated positive rental income that was coming up for renewal. Unfortunately, for me, the lender decided they didn’t want to renew leaving me with a property that had dropped in value enough that it was worth less than the mortgage and in the end a big problem for me.

I had a couple of options, sell it and pay the difference between the mortgage amount and the sale value, or get a new mortgage. To get a new mortgage I would need to put down 25% or more of the current value which meant throwing another $70,000-80,000 on a property that would likely take five years to get back to even on.

Additionally, due to our company split with a former partner that dragged on for two years, I most likely wouldn’t even be able to qualify, creating an even bigger challenge. So at this time it appeared more effective to list it, take the $20,000 loss and move on.

To fast forward, after having the property listed for almost three full months, we finally sold it, but at an even lower price than anticipated and with over $6,000 in legal costs from the foreclosing lawyer alone! I’ve been hesitant to tell how much this cost me, but in the effort to make full disclosure I need to bring it up.

So I went from having a property that only about six months prior was making me a few hundred dollars a month profit, we had never missed a payment in the three prior years of the mortgage, the property was in very good condition (as per the bank’s appraiser) to having to go through the foreclosure process and paying over $50,000 to sell the property, pay the lawyers, pay the Realtor and deal with renovations, miscellaneous costs and this doesn’t even include the time involved!. A $50,000 loss, all because this particular lender didn’t want to renew, can you see why my opinion of banks has lessened?

Now fortunately I was in a situation where I could cover this (not without some significant pain), but what if this was a normal homeowner? Now we have talked to other people since (even a mortgage broker), who insisted the lender has to renew if you have never missed a payment and everything is current, but it’s simply not true. Legally the bank does not have to renew, it’s just never been an issue when property values had been continually going upwards, so while they didn’t have to renew, it became standard policy to just allow people to renew, although based on current mortgage rates.

So who are the people in most jeopardy right now? While highest on the list are other landlords, but there are many homeowners who also purchased in the 2007 time frame with three or four year terms on their mortgage that may find themselves in similar situations this year or next.

While the lenders have every legal right to protect themselves from potentially being stuck with a property that is mortgaged up to its current value or higher, where does this leave the mortgage holders? Is the system setting itself up to create bigger repercussions down the road? If a homeowner finds himself stuck with a potential $50k cash hit and they don’t have it, would bankruptcy be a better option so they can walk away from other debt as well?

If they do decide to go into bankruptcy, they can walk away from the debt, leave the bank with the property and avoid a loss like I took. Meanwhile allowing other creditors also stuck taking a loss. So who would that affect?

I guess as long as the bank and the shareholders don’t get hurt everything’s OK? Perhaps I am off base here, but am I wrong to think that perhaps the banks (many of whom were directly involved in much of the initial financial crisis), should be helping people through tough situations, and not making it worse? I know, I may be living in a rose coloured idyllic world, but can’t I dream too?

The big lesson to learn from all of this is as long as you don’t own the property out right, you don’t have control of the situation. Banks can change their processes, how they deal with clients and situations and the clients are powerless. Mind you I am writing this from a  slightly skewed state of mind! So while it’s unlikely this will ever occur to the majority of the population, individuals like myself who invest heavily in Real Estate definitely have to be aware of some of the trials and tribulations to that hit us during some of the economic swings that occur in the long cycle of holding investment property.

And in case you were curious, because we sold the property prior to the Stay Order no longer being valid, we avoided having a foreclosure on our credit history. So in another year, once we get all our taxes, company split up paperwork all finalized and figured out, we can go back out and theoretically let the banks drag us through this again!

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End of an Era

Posted on November 5, 2010 by admin

Can you believe it was almost seven and a half years ago that Karen and I started this adventure in Real Estate? We made the decision to start investing in Real Estate in early spring 2003, attended a phenomenal Ron LeGrand seminar in Edmonton in June, bought our first investment house as part of our plan in August, then had four more purchased within a few more months and were well on our way.

It was also during 2003 that we joined the Real Estate Investment Network or REIN as it’s referred to usually, which helped evolve our mindset into buying and holding property. I remember attending that first meeting in October of 2003 full of excitement and optimism, not quite sure what was going to unfold before us during the next seven years, but definitely looking forward to it with nervous apprehension. This was back when rumours were circulating that they were capping the membership at 500 members!

We made some great friends through the organization, learned systems that Karen tweaked and modified to fit our needs and learned more than we ever thought possible. It helped push us to that next level that so many people talk about all the time. Partially by seeing people “just like us” taking action, buying property and succeeding.

Since that time using REIN systems and our own modified versions, we have bought almost 50 properties and at one time were holding and actively managing around 25 properties. We lived through the early years where we were just scraping by and taking advances on credit cards to cover mortgage payments, knowing we had a goal and ceaselessly moving towards it. We also had the crazy times during 2006 and 2007 when at one point we were able to buy five properties within a four month time frame (that was a crazy summer!).

There have been some incredibly wonderful things happen for us during these times, from being able to leave a very good paying job and being able to work from home. I had freedom from financial worries and job stresses to spend time with my ailing mother as she was going through the later stages of cancer. We also had the ability to move into a great home in a great neighbourhood that was much more ideal for my family.

There have also been some less wonderful events. The sudden loss of my father, the loss of a friendship due to a business partnership, the recent hardships we have seen during the downturn of the economy and the foreclosure I have recently been writing about.

When we initially joined REIN, we rarely missed a meeting; usually both Karen and I would try to attend. We have attended what used to be their Quickstart Weekends half a dozen times bringing friends, relatives, anyone we thought who could benefit from learning what we had. I even attended Quickstart twice in Toronto (once with Karen!).

Then as time passed, some of the information became a bit repetitive as it had to be brought up again every couple of years as new people joined. While it was always refreshed and presented from slightly new angles, once you had seen it two or three times, it wasn’t quite as exciting. This eventually lead us to missing more and more meetings, which wasn’t a truly bad thing, as we would receive audio CD’s of the meeting a couple weeks later, but even these became repetitive over time. It’s now been a year and a half since I attended a live meeting and probably six months since I listened to one of the CD’s which brings us to an end of an era.

With all the other activities in our lives, Karen’s art and her Jazzercise and my steadily growing internet marketing business, we know that Real Estate isn’t quite center stage for us anymore. While we are continuing with our current portfolio and I will be keeping up with my postings and information about what is happening in the Real Estate market here, we have made the decision to end our REIN membership.

We still have nothing but good to say about REIN, we love how Don Campbell was able to educate us and to help us reach many of the goals we set, but some things have to end eventually. I’m not even sure what the current membership numbers are for REIN, last I heard bandied about, was around 6,000 members now which is phenomenal.

So, we raise our glass to Don and the REIN group and say thank you for everything you have helped us accomplish!

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My Foreclosure Story, Part 3

Posted on November 3, 2010 by admin

Here we go with part three of my saga with Xceed Mortgage, the lender who wouldn’t renew a mortgage and the ensuing problems you face trying to sell a property in a slow market. So the quick recap is as follows, we had a rental property that was profitable that had its mortgage term coming due. The lender in this case, Xceed Mortgage Corporation, has decided to start getting out of offering mortgages on rental properties.

Initially they offered us a one year term at 8.1%, but then pulled the offer back about six weeks before the term was due. This gave us six weeks to get tenants out, paint the interior of the property and prepare it for sale.

Unfortunately, for us, we had bought the property in the spring of 2007 with an 80% mortgage and after all the lender’s fees were rolled into the mortgage, we ended up near 84% Loan to Value. Then with the subsequent price decreases since then, we found ourselves now owing more on the mortgage than the property was worth. Our only option was to sell it and then pay the difference, or at least the only ethical way to go for us!

While the mortgage was due in the beginning of July, this left us the slow summer months to sell the property and this summer turned out to be slower than anything we had seen in years. We finally ended up with an offer mid September, but by this time, the lender had started foreclosure proceedings to protect themselves and we were scheduled for a foreclosure hearing just five days after the purchaser removed all their conditions.

Once I had the entire sales paperwork in hand (purchase contract, waiver of conditions) I called the foreclosing lawyer’s office, but had to leave a message as they were unavailable. So with no call back to me by the end of the day, I then called again first thing the next day, leaving me only around 25 hours until the hearing. This time I was actually able to talk to someone.

When I was finally able to update them on the situation, I was surprised to find out they still wanted to go to court. Their reasoning being that just because conditions were removed didn’t mean the buyer would be able to actually close. I later found out there was also some additional reason to go to court, but more on that later. So it was off to court.

Foreclosure court is pretty busy these days and although the room was full of lawyers, there were only a couple homeowners who showed up, which really surprised me. By not appearing you have absolutely no chance, but by making an appearance there is always an opportunity to be given more time or some type of option.

Anyway, about 45 minutes in, the court finally called our case and up the foreclosing lawyer and I went. I had brought along the sale documents, the condition waiver and bank statements showing I could easily cover the difference a couple times over.

When I explained this to the judge, the lawyer immediately mentioned she wasn’t aware that I had funds to pay it out and then brought up that I could just as easily leave for Florida the next day with the money. This is what I find challenging. I’m trying to do the right thing. I’m taking responsibility for everything and I get discounted as someone who would run off with essentially a drop in the bucket. In hindsight, the lawyer may be trying to protect her client, but whatever happened to people doing the right thing?

Since this was new information for the lawyer, the judge suggested we discuss it in the outer meeting rooms, so off we went. The lawyer was quite insistent that what we should do was put the order for sale through (which would damage my credit rating as once the foreclosure goes through it appears on your credit history, prior to the actual order for sale, it’s all just water under the bridge that never shows up). I explained how this would affect my credit history to which she told me my credit was already messed up due to the foreclosure. At this point, I realized she didn’t know how much I knew about the process and it reaffirmed she really didn’t have my best interests in mind.

I offered to her to put an estimate of what was outstanding in trust with her, but she explained this was too difficult for her office to do. My mind was questioning this, as how hard is it to sit on a pile of money and then return any excess?

We kind of ended up at a stalemate, but went back into the courtroom
We explained where we were and the judge ended up giving us a stay on the order until October 22nd which was the closing date. A stay is a delay on an order going through. So in this case the Order for Sale was postponed until October 22nd, the closing date of the purchase contract. Now as long as we provided the shortfall, the buyer closed and the funds were all in the lawyer’s hands by end of day October 22nd we would be good. No hit on our credit, no foreclosure on our name and we would be less one property and less a large pile of cash. Definitely, what I would consider a win for us!

Once the judge gave us the stay, the foreclosing lawyer wouldn’t even look at me. It wasn’t until I talked to my lawyer later in the day, that I found out why. You see each stage that the foreclosure moves through allows her to charge more. With the foreclosure process as each stage moves along there is a set rate that the lawyer can charge.

By having the order stayed, in effect, the order wasn’t put through and she couldn’t charge me as much. You see, the bank doesn’t have to pay this amount it comes out of the homeowner’s pocket as the mortgage holder gets all legal costs passed onto them. That is if there is any money to be received from the homeowner.

Bottom line when it comes to a foreclosure, it is in the best interest of the lawyer to take the home away and give it to the bank as this is how they can personally profit the most. It doesn’t matter if this isn’t in the banks best interest (the bank really doesn’t want the property, they just want to get paid) or your best interest (and you don’t want a foreclosure on your name!). Personally, I think it’s a fatal flaw in the system.

I’ll finish this up next week, but I hope you are learning from this and finding it helpful and educational. If you ever want to find out how the entire foreclosure process actually works, I recommend you go visit my friend Harold’s site, www.canadahomebuyer.ca which is full of information about the foreclosure process and includes many videos explaining different steps and stages of the process.

For the conclusion of my foreclosure story follow this link,

Dealing with Xceed Mortgage and Foreclosure

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My Foreclosure Story Part 2

Posted on October 28, 2010 by admin

These posts are meant to help other current or potential Real Estate investors to be aware of what is currently occurring out in the market. I’m a big boy and I have done quite well in the market over the years, but many of the rules change when the economy isn’t as robust. So sometimes you win big, sometimes you lose big, the important point is to be sure you know what is going on, try to prepare as well as you can for problems and just to be aware of the big picture!

To recap the previous post about my foreclosure problem, I had a profitable rental property that a lender (Xceed Mortgage) decided not to renew the mortgage when it came due. Initially they had provided me the option of renewing for a year at a crazy rate of 8.1% (effectively double the going rate!), but then with only six weeks left before the mortgage was due, they pulled this offer as well.

In most cases in Alberta, a foreclosure involves the property owners falling behind on payments. In our particular case, at no time ever during this mortgage did we ever miss a payment or were we late with a payment. The lender in this case simply didn’t want to continue lending money for rental properties, most likely since it wasn’t as profitable and they felt it had become riskier due to the economic slowdown. The reality is, the rental market seems to be getting more and more solid with more people returning to the rental market as they lose their homes or come here for work.

In the end, they did finally inform me they would extend me another 60 days to sell the property which gave me until the first week of September to sell the property. With the incredibly slow summer Real Estate market, we had some significant issues. To help the process along, we initially under priced the property to entice it to sell quicker, but there was such little action as time wore on, our pricing became closer to market value. Near the end of the sixty day period, the property still remained unsold, so the lender began the foreclosure process.

Now the standard length of time for a foreclosure to get processed in Alberta is usually six months, but in the case of a property with minimal or zero equity this time frame can be shortened to days or weeks, depending on the circumstance. Unfortunately, we were in a negative equity situation, so we understood the foreclosure process would likely be quite short for us.

Finally, near the end of September, someone came through the property that felt it was ideal for them and we ended up with an offer on the table. Initially the offer was much lower than we hoped, but we were able to negotiate it up to a point that although not ideal, we could make work. Additionally, it had a closing date of just over a month which was ideal. We just had to wait one week for the conditions to be removed for it to be official.

As it turns out, it was while we waited we found out our court date for the foreclosure hearing was just five days after the conditions were supposed to be removed. Condition day also happened to be a Friday and as we waited through the day, it wasn’t until early Friday evening we received verbal confirmation that conditions were removed and the next morning that our Realtor had the faxed documents available.

So Monday came and once I had all the sale and waiver documents in hand, I contacted the foreclosing lawyer’s office and had to leave a message as the person I needed to talk to was unavailable. By the end of the day, still no reply, so now I was rather anxious. First thing Tuesday I again call in and finally get a hold of the person I needed to talk to chat with.

After updating her about the sale, the waiver of conditions and how we can now cancel the hearing, she requests copies of everything and has to confirm some things and will get back to me. Hours later, she calls me back and informs me that since there is still a chance the sale could fall through if the purchaser cannot close for some reason. Due to this, they won’t cancel the hearing, so now I know where I have to be Wednesday morning!

Watch for part three next week! I’ll discuss some of the aspects of attending foreclosure court, some of the aspects of why the system is designed to actually make it harder for homeowners to recover and how it is a fantastic cash cow for the lawyers doing the foreclosing.

To read part three, follow the link

Xceed Mortgage Foreclosure Part Three

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Today’s humorous tenant email

Posted on October 27, 2010 by admin

You can tell things are picking up for our shared accommodation properties by the number of humorous emails I get. It’s always fun to observe that people will go above and beyond when it comes to overlooking the obvious.

Today’s email question regarding my shared accommodation property (capitalization optional!):

“is there anyone else sharing the home during november? ”

Here’s a portion of my ad (I bolded and blued the important part):

“We have safe secure properties in Ogden and Dover (SE Calgary) with furnished rooms that are available today. If you just need a place for a week while here working, or if you are just looking for a temporary solution while you are between places we have a home for you. Don’t worry about locking yourself into the wrong place, stay with us for a week at a time until you find suitable full time accommodation and take all the pressure off.

All properties are male only and based on single occupancy and you will be sharing the home with up to four other individuals and you all have access to the kitchen, which is stocked with everything you need to cook and eat with, the shared laundry (at no charge, so you can save your quarters and loonies!) and multiple bathrooms. Our properties even include wireless internet access, allowing you to connect your notebook, gaming console or even desktop PC if you have the appropriate hardware.”

All they have to do is read!!! The idea of only advertising on the internet was meant to help us end up with better quality tenants, but sometimes it just doesn’t work!

Tip of the day for landlords, write your ads up to be as descriptive as possible, especially when advertising on line as they typically have no limits for how much you write, then just have fun reading replies! Try and stay away from the ones who didn’t have either the energy or the where with all to read the whole ad!

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My Foreclosure Story

Posted on October 22, 2010 by admin

I had written an article a while ago outlining some of the difficulties I was experiencing with banks not renewing mortgages and I actually ended up with some calls and emails from various readers and investors telling me they had been going through similar experiences. Well here we are a couple of months later and I’ve almost ended my second experience, although not quite as smoothly as the first property.

Just to recap, several of the lenders out there are currently either getting out of the mortgage business all together (GMAC), getting out of mortgages on rental properties (Xceed Mortgage Corporation) or simply pulling out of Canada (Wells Fargo). So any mortgages they currently have in place are simply not being renewed leaving many potential mortgage holders in the lurch. From the lender’s perspective, they are simply protecting their investors, but at the same time, they are putting some pretty intense pressure on many mortgage holders.

The one property we had financed through GMAC was an example of a company getting out of the mortgage business and not renewing. We were in a good situation as the property had been purchased in 2005 had gone up significantly in value and we actually had three months notice from the lender they were not renewing. So not only did we have time, we also had equity, which if it became necessary we could relinquish some in order to move the property faster.

This was about the best situation we could be in as we were ready to sell the property anyway. So that’s what we did and everything went well, we even closed the sale just a few days prior to the mortgage being due so there was almost no payout penalties involved.

The second property however, didn’t work out quite as well. With the decrease in values of many properties out there, it’s not uncommon for a property bought during the peak in 2007 to currently be worth about the same value as the mortgage and in some cases even less. It was the latter for us on this second property. To make it worse, the lender, Xceed Mortgage, initially indicated they would renew, although for a shorter term and for a significantly higher rate of 8.1%. Yes, you read that right 8.1%!!!

It was six weeks prior to the mortgage coming due they informed me, via email, they were now pulling their generous offer and not renewing period. Here I was with a property that was currently generating money, but in a negative position due to the values dropping and being forced to sell it when I could have simply weathered it for a few more years and potentially broken even. Instead I was being forced to sell, had to remove tenants that were in place, complete painting and minor renovations to make the property easier to sell in a flat market and I had six weeks to sell it. You can probably already see me doing the happy dance.

Fortunately, the bank generously provided me with 60 extra days to sell the property. Since the mortgage was due at the beginning of July, this gave me the incredibly wonderful months of July and August to sell, two of the slowest months possible for Real Estate. As you can imagine, this didn’t work out so incredibly well as during this time values seemed to drop even more.

Now you have to understand, we were not trying to dodge responsibility, we took the mortgage out, we understood the ramifications of signing a mortgage and we want to do the right thing. Since the mortgage was higher than the listing price of the property, there were additional challenges when selling. First, we had to prepay the realtor’s commissions, which we did. Second, we also set aside a sizable amount of money to cover the loss and ensure the lender would get paid in full. Third, we priced the property lower than the other properties in the area in order to help it sell quicker, even though we knew this meant more money directly out of our pockets.

Yet even after all this, as we approached mid August, still no sale and at this time not even an offer! Things were looking rather bleak and then we received the Demand Letter from the lender’s lawyer indicating they were starting the foreclosure process. This meant additional pressure and more costs associated with selling the property.

As this is turning into a rather long tale (as many of mine tend to be) I will continue with part II next week, so be sure to check back and find out what happened. Also if you have similar stories I would be very interested to hear how things are going for you.

You can find part two here,

Foreclosure With Exceed Mortgage Part II

 

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Town & Country Sales Fall, Luxury Home Sales Boom

Posted on October 7, 2010 by admin

It’s rather ironic to see the two headlines show up within a few days of each other and to realize both are occurring at the same time, but this is the current reality. It’s been explained that the slowdown in the outlying areas around Calgary has been directly related to the slowdown within Calgary itself.

The surrounding area is simply taking a lead from what occurred within the city during the summer months when Calgary’s entire housing market slowed to a crawl. Part of the slowdown is valid as the economy is only slowly gaining ground and people are still feeling out what will happen, but much of it has to do with uncertainty and fear that we aren’t completely out of the entire recessionary period.

It’s very common for surrounding areas to feel the economic slowdown of a major center in the months following its slowdown. As Calgary slowed during the summer months, the economic benefits that many areas derived from the city also dried up. This is the ripple effect at its finest and it shouldn’t come as a surprise that we are seeing the slow down expand from the main center outwards.

As we see the market get slightly stronger during the fall buying season, this once again will ripple out to surrounding communities. Unfortunately, upwards growth ripples tend to move much slower than other way, so it may take longer for it to fully impact.

So that explains the fall in sales for the outlying area, but why on earth would we now see the luxury home sales jump so drastically at the same time? So first, just to define what a luxury home is, these are the properties priced at $1 million dollars or more. Obviously, these aren’t the types of property that the average person purchases. At the same time, they’re a little reminder for us of how much money is actually in the region.

So the big question from this should be, Why are people spending so much on a home right now? I wrote earlier in this article that the rest of the housing market slowed to a crawl, do the folks at the top of the market know something we don’t’?

My own personal view on this is the people with the money to spend have been sitting on the sidelines waiting to see how everything would play out. Now that they have made it through what they feel is the worst they can see the future, so to speak, and in most cases feel that there will be more opportunity coming forth over the next five years plus.

Realistically, the majority of the people purchasing these million dollar plus homes are also not getting CMHC insured high ratio mortgages. It’s more likely that most are smaller mortgages as a percentage that an average home buyer providing them even further security. They are actually exposing themselves to very little risk (unlike a 95% Loan to Value first time home buyer) and are taking advantage of reduced prices making it a smarter decision for them.

Will this enthusiasm trickle down to homes below the million dollar mark? Eventually it will, but we are still dealing with different challenges and a significant amount of fear as to whether we are through the worst. So while I previously held fairly high hopes for the fall market to rebound, I am starting to believe more of the recovery of the overall housing market will be pushed back into the spring market of 2011. So while the headlines are giving us a portion of the story, you really have to look behind the headlines to determine what may really be happening.

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