Calgary, Alberta · Member since 2016 · 17 posts · 4 votes
Hey, I was wondering if anyone knows of any investor meetups in Calgary, AB Canada. I'm looking to connect with some people who have done a few deals and get a bit of guidance on how to start out.
Realtor · Calgary, Alberta · Member since 2020 · 19 posts · 14 votes
5y
@Andrew Dutcher the sellers don't need to have paid off the mortgage. In an AFS you agree to a price and contractually agree to purchase, but you don't close (and, in Alberta, title doesn't transfer) for X number of years down the road. In the meantime, you (the buyer) assume all the carrying costs and full responsibility for the property. As part of the agreement, there are checks and balances to make sure you make your payments to the seller and that seller in turn continues to pay the mortgage and property taxes. You leave the seller's mortgage in place. You are free to rent the property out, renovate, assign the contract, etc. It's easier to set these deals up when you are dealing directly with the seller, but it's not that hard to find off-market properties if you are willing to put in a little legwork and make some phone calls. I found the duplex deal on kijiji, I think - it's under contract for another two years and because I've totally taken it over, I was able to arrange to renovate and add secondary suites on the lower level. AFS is a type of seller financing, which makes it different to something like a lease with an option to buy structure where it's still a landlord-tenant type of arrangement rather than a buyer with alternative financing. (**Note for others reading this: this is how it works in Alberta - the exact mechanism and terms used vary from province to province and state to state)
Have you spoken to a mortgage broker? I would find a mortgage broker that is familiar with investing and chat with them for ideas. They typically have access to hard money as well as creative ways for you to get your deal done. Have you thought about a 5% down CMHC loan, where you could buy a bungalow as your primary residence and add a basement suite (or buy one with a suite)? House hacking a BRRRR on a 5% down loan is a great way to get started!
From what I have seen, hard money will be in the 11-16% range, with 1-2 points. @Travis Hewlett makes a good point, a mortgage broker is probably the best way to find hard money, I called about 14 lending groups and the majority say they only work through mortgage brokers and won't talk to investors directly. If you are seriously considering HML @Owen Langis could certainly help you out, he is an investor as well so I'm sure he would have solutions for you if you are looking to BRRRR or renovate into a house hack.
Thanks! I have spoken to a few mortgage brokers and they have had great suggestions but I still haven't found a way to get started despite my lack of cash at this time. I love that idea of house hacking a BRRRR with a 5% down payment and makes it much more attainable. The trick in my situation is to convince my wife to move with our two kids into that situation, easier said than done lol.
That's really helpful to know that there is a bit of a gateway to get to HML. I've connected with @Owen Langis, but maybe having a detailed convo may be fruitful and see what the possibilities are.
@Andrew Dutcher Look for a place with a self contained basement suite. It allows you and the tenant to be separated and would work better for your family.
Realtor · Calgary, Alberta · Member since 2020 · 19 posts · 14 votes
5y
I'll second the suggestion of using an Agreement for Sale structure - low barrier to entry and you can buy yourself some time to rehab/create equity, and set yourself up to qualify to refinance in 2-3 years (at the end of whatever term you negotiate for the AFS). Using this strategy on a duplex or small multi-family also allows you to either house hack or cashflow over the course of the AFS - plus have the benefit of market recovery/appreciation and principal paydown.
Realtor · Calgary, Alberta · Member since 2020 · 19 posts · 14 votes
5y
There are several groups in Calgary including the Creative Real Estate Academy, which is headed up by Carolin Ricciardi of Kardia Real Estate. Their special interest is in creative real estate financing (Agreements for Sale, VTBs, JVs of various kinds). There is a monthly charge for the Facebook group which is well worth it (IMO) - and then if you really get into it, there is a course - but like I say, the Facebook group is terrific. I got started with them this summer and bought a duplex in Calgary (with an AFS contract) which I've been renovating by adding two legal conforming suites. I learned a ton and implemented fast so I got off to a terrific start and am now looking for my next deal. It's an active and growing group and Carolin is super-supportive and genuinely helpful. I found several other REI groups in Calgary, all of which have Facebook groups, but they vary in terms of how much real guidance they offer and to be honest, I found CREA to be so helpful I didn't really feel the need to go looking elsewhere. That said, as I move along the REI road I don't think it's possible to have too big a network! I'd love to hear about other Calgary groups and networking opportunities - please post your findings!
@Nicole Tate-Stratton thanks so much, that makes a lot of sense. Have you completed a deal this way? I would like to hear how you went about structuring the deal or how you would structure it. I have reached out to a few agents to see if their sellers would be interested in setting up an AFS but it is usually the case they have not paid off the mortgage, and cannot do this strategy because of this. I’m not sure if there is a better way of finding sellers that would be able to do AFS, but I would be interested in hearing if others know a good way here in Calgary.
Realtor · Calgary, Alberta · Member since 2020 · 19 posts · 14 votes
5y
@Andrew Dutcher the sellers don't need to have paid off the mortgage. In an AFS you agree to a price and contractually agree to purchase, but you don't close (and, in Alberta, title doesn't transfer) for X number of years down the road. In the meantime, you (the buyer) assume all the carrying costs and full responsibility for the property. As part of the agreement, there are checks and balances to make sure you make your payments to the seller and that seller in turn continues to pay the mortgage and property taxes. You leave the seller's mortgage in place. You are free to rent the property out, renovate, assign the contract, etc. It's easier to set these deals up when you are dealing directly with the seller, but it's not that hard to find off-market properties if you are willing to put in a little legwork and make some phone calls. I found the duplex deal on kijiji, I think - it's under contract for another two years and because I've totally taken it over, I was able to arrange to renovate and add secondary suites on the lower level. AFS is a type of seller financing, which makes it different to something like a lease with an option to buy structure where it's still a landlord-tenant type of arrangement rather than a buyer with alternative financing. (**Note for others reading this: this is how it works in Alberta - the exact mechanism and terms used vary from province to province and state to state)
@Nicole Tate-Stratton that was a fantastic explanation, I guess I misunderstood the requirements for AFS, so thank you for clarifying. That sounds like an amazing deal that you found on Kijiji, where you were able to add the basement suites and likely add a lot of value to the property. I guess I will have to start looking for some off market deals. What are your plans once you have totally taken it over? Are you going to get a mortgage with a bank? Refinance?
Realtor · Calgary, Alberta · Member since 2020 · 19 posts · 14 votes
5y
@Andrew Dutcher to be honest, I’m not quite sure. I’ll assess a little further down the road and see what the markets are doing (Calgary is soft at the moment but I expect it will recover before too, too long). As long as it’s cash-flowing, I might decide to hold for longer and refinance with a commercial mortgage before the AFS closes. It will also depend a bit on what else I’m trying to do at the time and whether I want to sell and cash out completely. One of the things I like about this particular deal is that I have several exit options. I’ll try to remember to post an update closer to the time!