A True Story! (Part 1 of 2)
Guest Column by Moe McIlwain, Realtor, Keller Williams Ottawa
Investing in real estate is usually sound and can help you achieve wealth in your lifetime. I should know: I am a young Real Estate Sales Representative and I believe in what I sell.
The fact is real estate investment is a relatively simple business, if you buy it
right; you usually come out on top. They say you make money in real estate when you buy, not when you sell!
Before I got into Real Estate Sales, I always wanted to be an investor. The fact is, like most of the public, my belief was: you have to have money to make money. My true life story goes on to show that this is a limiting belief that has hindered and will
continue to hinder generations to come.
My first property hasn’t been easy to get (this is a long story, so brace yourself). My hunger started from a young age, in my teens, but my true focus in a six month span got me the best first home purchase I could imagine.
In September 2006, I made a deal on a two-bedroom apartment condo on a Rent to Own basis (because I had a down payment of just $1000. I signed a ten month lease with an option to buy after the lease. I was lucky that I didn’t have the down payment because the condo was a bad investment. So I never exercised the option and baled.
Still, I was hungry to find my next ‘purchase’ and I did, thank God: a triplex which was a terrific buy and which I was able to find even before my lease was up!
I was looking at investments in a different way. I had studied with Dr. Bruce M. Firestone at Carleton University’s School of Architecture (an awesome and inspiring course called ‘City Planning and Organization’). By attending the course, reading books, listening to CDs and picking the brains of other investors, I really learned a lot. Within six months, my dream became a reality!
While bored at the office, a fellow Realtor friend of mine was there; we call him the
“King of Vanier” and I decided to pick his brain. “What do you think of
this triplex at 123 Maurier Avenue (not the real address)?”
He replied: “It’s ok, if you want to live in shot-gun alley!” After laughing, he said I know a property on Honesty Road that looks good; let me tell you about it. This property was out of my price range, but he knew the owner, the realtor and showed me what past properties had sold for. These properties were sold 15%-20% below asking price. He said “Whenever you want to see it let me know, we’ll go together.” I booked the appointment ten minutes later.
The unit was outdated and dirty, but in an area that is gentrifying and close to many amenities. The rents were low, which was great, because that meant I could add value by cleaning it up and renting it for more and, of course, it would be worth more. (As income grows so does value!)
After two quick showings, I put an offer in. I knew it was the one. We ended up agreeing on a price that was 20% below market value! The owner was happy to cash out and I was
happy to buy in. All we had to do was wait until closing…but now the drama begun.
I understood my situation was different because I had been self-employed for only about a year, so I had to have a private lender. Banks only lend money to people who don’t need it (i.e., those with lots of collateral and good JOBs). But I was introduced to a
mortgage broker who was supposed to get deals done at low rates but it turned out, he was a slime ball.
My instincts told me not to trust him but I went with him anyway to save money. The process was unprofessional to say the least. I was promised a low rate, which I got but with high upfront fees. One week before my closing date, I got a call saying: “The lender wants you to owner occupy a unit in the building on closing!” But I had already told them I was not going to occupy it and, furthermore, under the Tenant Protection Act, I was not in a position to occupy it.
Shift forward to closing day—they took away the mortgage commitment.
I was homeless and on the hook for $252,000!
There was no way I could get the mortgage with just 5% down (which is what I was supposedly approved for). I had been lied to, I should have listened to my
instincts (always follow your instincts! And I should have remembered what Bruce told me: “Trust is the Number 1 thing in business and life.”
…to be continued