All Forum Posts by: Oren K.

Not sure what the laws are in your local but here in Ontario, the land transfer tax is not trivial; 2% for most of Ontario and 4% in Toronto of purchase price. If it applies, make sure you account for it as in your example it would be $2,700 or even $5,400 extra.

I've seen this opinion expressed before but it was not what I found when I did a bunch of units in a building some time ago. Jut for material, HD wasnted almost 3x the cost for comparable quality I could get from dealing with someone my GC put me in touch with.

If you are only doing 1 unit and don't what any hassles (there are always some!), then perhaps, but when doing multiple units and if you have a GC that you have some confidence in, the price difference adds up.

Mike,

On the one hand commercial leasing is a VERY different world then residential. On the other hand, on this scale, I wouldn't worry about it too much.

As you will have 2 office units on one floor in a house, I am guessing that each office unit is under 1000 sq ft. At that size, it is unlikely you will be attracting 'national' tenants but rather a sole practitioner mom & pop operator (e.g. legal, medical, accounting, insurance, etc.). Presumably they are leasing from you rather then an 'office' building to pay a bit less and perhaps present a less formal environment.

One item that is often different between residential vs. commercial is if the landlord is willing to re-configure the space to the tenants needs. As an apartment, with rare exception, it is what you see is what you get. As an office, the layout may need to change. For example, medial use is very different from general office use. Apartments are almost always on 1 year leases but for commercial they are generally longer, especially if someone (you or the tenant) have put some money into setting it up.

Once you get past confirming the zoning issues, many of the things you deal with are similar / the same; What is the tenant going to pay as rent? What utilities are you / they responsible for. What are the eviction regulations, How do you deal with inter-tenant issues, etc, etc.

Your RE Commercial attorney will be able to give you a lot more guidance as they will know a lot more about the house, community, etc.

Good luck,

Oren

One point that I have not seen mentioned is the ongoing CAPEX / Reserve allocation; Common area upgrades / refinishing, Roof, Cooling Towers, Boilers, etc, etc. all have to be done at some point as you know from your residential experience.

A property condition report is well worth the cost (2-3K) on a deal this size.

As a Canadian, you also have to be aware of 'foreign affiliate' issues which your accountant should explain to you. Among other things, it means that doing a US 1031 exchange is a no-go.

See this presentation for more information.

http://www.mcmillan.ca/Files/186770_Federated%20Pr...)%20-%20Final.pdf

Oren

Generally speaking Cleveland courts (each municipality is a bit different) are Landlord friendly, particularly about non-payment of rent. Overall the process takes 4 - 6 weeks from the date you file for eviction; remember to follow the local laws / regs (your PM should know this inside-out).

Give them the 3 day notice ASAP as that starts the process and tell them that you will file for eviction as soon as legally allowed. It will take 2 - 3 weeks after you file to get in front of the judge. You may also want to tell them how this will impact their future ability to rent and possibly their credit history (tenant screening). To them it may be a lark (what can we get away with) but they are not thinking about the longer term consequences (typical).

If they don't pay up and it actually goes to court, your PM can show / testify that no funds were pro-rated and transferred from the previous owner for March rent as well as that no payment has been made. It will then be up to them to show that they did in fact pay.

What are they going to do - put Gandma on the stand to commit perjury. Commit perjury themselves and say that they didn't live there for March?

They will be given 7-10 days to get out.

A suck-y way to start out on a new property but such is life. If they are starting out this way, you probably don't want them as your tenants anyway as they will just be more problems down the road.

Derek,

We're around but spread much thinner for obvious reasons. As well, I would say most Canadians are engaged / investing in the US market, leaving even fewer investing in their own local.

@Roy N. and @Thomas S. are regular knowledgeable posters but if you really want to engage with locals, search for local members (see top right corner), start reading their posts and perhaps send them PM.

Oren

Thanks for the update / info. I agree and think the Bedford case will be get a similar ruling in due course.

An LOI is just that, a letter of intent with intent being the operative word. It is not a contract which is binding and enforceable so the agent / seller is not obligated to stop marketing the property. Even when a PSA is in place, generally there is nothing to prevent an agent from soliciting backup offers (other LOI's) in case you do not close for whatever reason.

The seller / agent seem to want to move forward with you but do not want to 'tie up' the property until they are more confident that you will close. Many sellers / agents consider the inspection (on your own, with a contractor or by an inspector) as a sign that the person is serious as it is a commitment of time and possibly some money. 

As well, an inspection 'should' uncover any issues / damage and can be addressed in the PSA vs doing it after contract and used for 're-negotiations'.

Good luck.