Edmonton Real Estate Investors Association Message Board › ERPIA minutes August 14, 2012
Sherwood Park, AB
Edmonton Revenue Property Investors Association August 14, 2012
At 7 pm upstairs in Rosies southside bar & grill, Jim our associate VP introduced Brent Davies our president. New members introduced themselves. In the Western areas of Canada, Home ownership is now 70% and starts in the West will outpace those in the East. Immigrants come to where the jobs are and Alberta and Saskatchewan have a net increase in population growth. Our first guest speaker was Sherilynn Milson and her website is www. QDhomeQuest .com.
Shrerilynn started her company almost 2 years ago. She is now quite experienced in the lease option business. Here are some pro’s:
If the tenant trashes the place and does not buy it, you get to keep the big deposit.Tenants maintain the property and you get to keep all the cash. Higher quality tenants and they treat the home like their own Tenant pays all repairs and the cash flow is higher. The risk is lower. The sale price and date are preset. You know the cash flow and return on investment. It is easier to attract investors and joint venture partners.
Cons: quick exit - cash flow will end in 1 to 3 years. All profits are taxed as regular income. (no capital gains.) Banks do not like the deals and they are harder to finance. Tenants may not buy if the price drops
Term varies depending on the individual case. ie a one year term if the tenant is waiting to sell their home back east. Sherilynn covers all possibilities with her contracts and teaches the tenants how to repair their credit. There is a high risk of failure. There are 2 ways to do the deal. Tenant first or property first process. The biggest challenge is finding a qualified tenant (buyer).The profit can be excellent.
Our next guest speaker was Barry McGuire, a very experienced Real estate lawyer. Barry teaches a one day course on lease options. It is now a home study course. He bought his first property while a law student. You need to screen tenants vigorously for the best chances of success. Only take a deposit if you think they will qualify for a mortgage in 2 or three years. You need a knowledgeable lawyer to make sure you have all the forms in place. If someone defaults, everything stops and you need to have a meeting. Even if they pay the rent in 14 days, they have lost their rights.
Jim gave us the 5 minute economic update. Average days on Market is now 40 days.