I hear about wholesaling more and more and sounds great, but is anyone actually doing it in Vancouver British Columbia ( BC ) Canada or the Lower Mainland?
Interested to learn more about success stories from people wholesaling in this area.
In your overheated market, it's quite doubtful anyone is making a go of it wholesaling. Wholesaling is a tough gig in Canada as a whole due to the relatively small markets and differences in financing from the U.S.A.
@Pawan J. As a former longtime resident of Surrey and downtown Vancouver, I can say that you're probably you have a number of roadblocks to wholesaling in the Lower Mainland. For starters, I'm not even sure if their purchase and sales agreements allows for any sort of assignment of contract or new buyer, etc.
I suppose what you might consider is finding a couple of flippers and rehabbers and coming to some sort of agreement with them whereby you find the properties, lock them up somehow, and collect some sort of finders fee.
Yes indeed, "Wholesaling" should not be taking too literally in Canada, (yet) - as the market is entirely different, but conceptually, it appears to be a valid process, (speaking from my inexperience) - yet of course, not nearly as easy as USA.
And yes indeed, the Lower Mainland is for people with deep pockets. Vancouver Island is half the price or lower. But, (from my limited experience), the right to assignment of the contract is the key element to the Wholesaling contract and without which the process is illegal, and it is a clause that wholesalers include in any contract. The trick of course, (other than finding the deal in the first place), is to buy at a low enough price that we are still able to sell quickly at below market value.
The "finders fee" concept you mention is essentially what "Wholesaling" is all about, (to me). I agree with you that the contract should be up front & honest, making it clear that our business is not extortion, but a service we provide to match buyers & sellers, and charging a fee for our service.
Something to keep in mind, in any business and every endeavor, is to not argue for limitations, (emphasize the reasons why something will not work), and instead focus on possibilities & opportunities. Whether we think we can or cannot, we are correct. We will always find evidence to support our convictions.
The act of assigning a contract is not illegal. We frequently make offers under one company and assign the contract to a different entity for Close. We have also had arms-length third-parties offer to purchase a contract from us prior to close on more than one occasion.
The key difference between the assignment as we use it and wholesaling is intent. We always enter into an Agreement of Purchase and Sale (APS) with the intention of purchasing and taking possession of the property. A wholesaler, on the other hand, typically has no intention to take possession of the property his/herself.
Now, paying finders or referral fees is where you can run into legal issues in some jurisdictions.
hi and thanks all.
@patrick Britton thankfully assignment of contract is completely legal here in Canada, in fact I did it on my last deal however I signed it from myself to a holding company with some investors that we are flipping. It is a whole overheated market @Roy N. however I think the concept would still be the same in any market as long as you can find the deals before they hit the MLS and at a discount of course. In some areas the competition and demand is so high that I feel to get deals in those areas you have to get them before they hit the MLS. Thankfully we have always found great deals on the MLS (deceased estate, sat on market too long) but in order to do 4-6 flips a year profit sharing with investors I need to source more deals faster, without competition to ensure a low purchase price. I like how you think @Ross McKenzie have to be positive, but low sell high and there are always people who need to sell quick. In fact the more I see little happening here on wholesaling the more I see opportunity!!
Thanks for sharing Patrick ! I like you attitude :)
Thanks Roy! Sorry for my goof up - typing illegal when I meant to say legal, (having illegal on the brain - as Patrick seemed to imply that assigning a contract was shady). I will endeavor to proof my messages in future.
I would rather do REI your style, owning-wholesaling rather than assigning - as it appears to be a cleaner & more attractive way of doing business. And intent does make a difference. I imagine that a "subject to assignment" clause is not going to be attractive to any buyer. The trick here is ideally having multiple buyers before offering to purchase - not an easy thing to do when starting an REI business, and even less so in BC, where profit margins are slim.
Just for clarity, we are buy-and-hold investors and do not wholesale.
We have had offers, from third parties, to purchase contracts prior to Close. Only on one occasion did we sell our right to purchase and, prior to agreeing to assign our contract, we met with the Vendor to explain what was happening and offered them a small portion of the fee we collected for the assignment.
Many Thanks Roy. I understand. I'd still like to be able to Buy & Hold, and then sell tomorrow if conditions were favourable, (or keep/rent for as long as it seemed to be an effective investment), and be free from the stress of time constraints & overly complicated contracts & legal ease than may accompany Wholesaling . Regards.
@Ross McKenzie the main issue here in BC if you actually buy and hen quickly I sell is the property transfer tax and legal costs.
In BC it is very simple to wholesale. on the purchase agreement where you would write your name, you would instead write "[your name] and or assignee". That's it there is no subject clauses required and many people do this (as I did) with the intention to actually purchase the property in a company name or wife's name etc but need to get an offer on the table asap.
@Ross McKenzie check out our website and past projects as returns are anything but slim in vancouver. With prices higher it means margins on clips are higher!!
Thanks Pawan for assignment detail. Love your website, and your amazing projects. Ross
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