I'm 63 years old and working on my retirement for my wife and I.
Being a first time investor I came across a five unit apartment advertised as a Vender Take Back (VTB) in Hanover, Ontario (Canada) in December 2009. That's where the owner hold's the mortgage for a certain amount of time while the buyer sets up the financing. The original listing of the property was attractive because of location and the size of the property. I envisioned it would be easy for me to manage and a great entry level commercial property to get in on.
I contacted the seller directly and the seller wanted to get full the asking price of $295,000 and offered 9.5% financing on his VTB. This wasn't going to work for me as I told the seller you can't have it both ways and closed out the conversation with “Good luck with your building”.
I walked away, but I did not give up. After a few more meetings, I picked it up for $279.000, down from his asking of $295.000, with a VTB financing rate of 3.5. The owner was a real don't wanter since he had family problems. I think that was a major motivating factor in negotiating our terms.
In this case, I worked out a full year at 3.5% with the owner and I eventually was able to secure a long term commercial mortgage/note with a rate set at 4.5%.
As far as repairs on the building – just a few new windows needed replacement. All units came rented with one single fellow being there 20 years.
It has a positive cash flow of $1,800 after expenses. This was truly a WIN/WIN deal. Being part of the REICLUB has helped me as a new investor and reading Rich Dad, Poor Dad.
I am happy to report that I'm having fun looking for the next deal…
Thank you for being part of our success!