Canadian vs. American lease purchasing

[Doug Pretorius (ON) 9]

I've decided that this discussion (continued from the thread "how many deals are you doing") needed its own thread. Fellow Canadian's please join in with observations from your local market. Hope I don't offend anybody, but from the discussions I've had with other Canadian investors I think we can all identify with what I'm about to say...

 

The main issue seems to be that sellers have a very different attitude towards their homes here in Canada. I've said it before and I'll say it again, factors that make sellers ditch their property like a hot brick in the US, simply make Canadians turn to family, friends or the government for subsidy.

 

Because of that everyone here who's read my posts knows that I gave up looking for highly motivated sellers long ago, there simply aren't enough to base a business on helping them out of their bind.

 

In a way this is nice because you don't need to spend any time probing their reasons for selling. But it also means that marketing geared toward solving problems doesn't work.

 

Through trial and error I've found reactions to the main benefits of LP vary a bit from the comments of our US comrades:

 

1. No commissions - Canadians love this one, it's far and away the #1 benefit they latch onto.

 

2. No closing costs - this is a minor but somewhat appreciated benefit. It's minor because sellers pay very few closing costs as a matter of custom anyway.

 

3. Fast sale - Canadians feel they were born entitled to sell their homes whenever they want with ease, and if it doesn't sell now they quickly change their mind that "next spring" will be fine.

 

4. Tax benefits - I have yet to meet a single seller who cared one way or the other about this one.

 

5. Full asking price, maybe even more! - Same as #3. Canadian sellers believe they are entitled to their price in cash as a basic human right. The usual attitude when offered full price is: "Yeah, so? What have you done for me lately?"

 

6. No tenants or maintenance - the few landlords who find this to be a problem quickly turn into sellers and so it's no longer their problem. Oh yes, and they expect to sell for full price in cash on the date of their choice, or they will suddenly decide that it's not a problem anymore.

 

So as you can see, with only 1 of these 6 major benefits being of interest in Canadians it seriously cuts down on the number of willing sellers. The entire discussion then becomes... "Is saving $10-$15k in commission worth taking on the potential headaches of not being completely rid of the property?"

 

Some sellers say yes, until they find out that I'm going to sublet or assign the property. Then it's like: "Whoa there, bucko! If anybody's gonna be making money from this place it'll be me and me alone."

[mpine 0]

Might I suggest moving to America? or you could also probably write to some American congressmen/senators and ask them to finally stick an American flag in the soil and claim it for America, I don't think its to late yet ;-)

 

Have a great day,

 

Mike

[Adam King (MI) 1]

http://www.naked-investor.com/forums/index...?showtopic=2135

[Doug Pretorius (ON) 9]

Adam, man I forgot how fast you tucked tail from trying to do creative deals here! In the end that entire challenge resulted in zero closed deals as you know.

[Adam King (MI) 1]

Doug,

I'm not finding that funny whatsoever. I didn't tuck tail I CONFORMED! And you DID get a deal! And I got someone willing to do terms out of only 12 phone calls READ THE POST AGAIN! The deal was negotiated but the numbers didn't work and there wasn't enough time because of the fast foreclosure process in Canada.

 

This isn't about Canada being a bitch to invest in, this is about not conforming to your market. I love you dude, I just don't see why you guys are all complaining about doing deals when you should simply change your tactics. That's what we talked about and that's what Marco was doing. The guy is making millions up there. That tells me it can be done!

 

Let's allow this post to become positive. Let's start asking the right questions instead of complaining about how we "should" be doing things. Questions like; what are others in your market doing to be successful? Have I created enough of a network to have others bring me deals if my marketing isn't working? Do I have enough to offer for multiple acquisitions? Should I get into the mortgage aspect because of a hot seller's market?

 

These are just a few questions you should be asking so you can get ahead. I'm making multiple six figures in this crappy MI market while I hear people bitch all the time saying they can't do it. Then I say I can and they tell me I'm a fluke or a genius or some other excuse. The only thing that makes me different from anyone is this; I DON'T GIVE UP! And when I get kicked I don't complain, I just figure out whose kicking me and I bite their leg! And finally, I DO NOT EVER tuck my tail between my legs! That's why I spent the time in the first place helping you get going. And you may have forgotten your success after that challenge but I haven't. And I KNOW that's no coincidence whether we got a deal together or not!

Regards,

Adam

[Doug Pretorius (ON) 9]

You do lots of deals Adam so I guess you've forgotten the details. That deal did not fall apart because of the short foreclosure time, it fell apart because the seller wouldn't sign. I'm sure you agree that a deal is only a deal once it's signed and closed and the cash is in your hand.

 

Alright so we have to CONFORM to our market. Isn't that what I said? Creative deals are not available in sufficent quantity. So if you want to duplicate Marco's success:

 

Step 1: Have a millionaire father who invests in your deals.

Step 2: Marry a realtor who finds deals that aren't yet on the market.

Step 3: Buy conventionally and sell RTO.

 

As I said 2 years ago in that thread: I've never questioned whether investing can work, of course it can, if you have a rich money partner. My challenge has always been about CREATIVE deals, which is what this whole forum is all about.

[Adam King (MI) 1]

I started with nothing too remember? No credit, no money. As a matter of fact, it was you who I talked with in the beginning.

 

If you want to make money in REI with your market maybe you're right. You may need someone to help you, or you will need to do things the way you say you can.

 

Just get off your tush dude, you were on a roll, or at least it seemed that way.

Regards,

Adam

[Guest Guest]

Lets put this argument to rest already. I think you guys are pretty much saying the same thing.

 

Deals can be done in the U.S. and Canada. There are however several things that make creative real estate in Canada alot harder to do. I don't think buying creatively will ever go over well in eastern Canada. Unlike in the U.S. where you can be broke and creditless, you won't be able to accomplish the same in Canada. Its unfortunate because the allure of creative real estate was just that - no money, no credit but still get it done.

 

As i've said before, I'm in the process of aligning myself with a money partner and a very talented real estate agent. Both are very eager to get involved in selling creatively and I think thats the best option at this time (only option actually). I definitely understand what your going through Doug. I think you should 'get off your tush' and just keep looking for conventional deals too. I know alot of MC's marketing and negotiating strategy could still apply.

 

I have considered moving to the U.S. or getting involved in real estate in the future over there but for now, i'll make the best out of the Canadian market.

 

Goodluck and happy investing everyone!

[PokerNutter 0]

The above post was from me btw. Forgot to login...

[Gordon Holtner 0]

Mike

 

That is an interesting suggestion Mike but there is just one problem, you would have to shift a good portion of the population here too. We only like have one tenth of the good ol' USA's population that makes it more difficult too.

 

 

I've realized the same thing about the Canadian market I've tried to band together some investors who would get contracts checked for their province and let the others know about the modifications that would be needed. Unfortunately I have not found any people interested at this point. If we could do this and find a way to extend our reach into the other provinces maybe there could be enough deals for all of us to put something together.

 

Gordon Holtner