Betty Anne Tarini

Last month I assisted a client on the purchase of a four-plex in Calgary. The building was owned free and clear by the owners who were the original builders back in the 70's. Part of the challenge for my client buying the property was that the rents were extremely low. Using a income approach, it would most surely not appraise for mortgage lending purposes. After doing some research, we wrote up a purchase contract, offering the vendor close to asking price, which my client deemed to be fair market value, having purchased other similar buildings in the area. We asked the vendors to take back a $600,000 mortgage for a period of 18 months.

As part of the offer, we included a photocopy of the Tip #71 from the book, "81 Financial and Tax Tips for the Canadian Real Estate Investor", by Don R. Campbell, president of the Real Estate Investment Network or REIN(TM). This section of the book highlights the tax benefits to a vendor, whereby he can elect to defer the capital gains taxes over a maximum of five years.

Our offer was accepted and the listing realtor said that other potential buyer's had asked for a VTB, but that the vendor had been afraid. Apparently the sophistication of the investor client, and the information we included, which the vendor reviewed with his tax accountant, helped gain the confidence of the vendor.

In the end, the vendor gets better interest than a GIC on his money and my client got a nice mortgage at better-than-bank rate from the vendor. More importantly, he gained time to get the rents up to where they need to be (a process that could take up to a year under Alberta legislation) to have the building appraise when time comes to get a bank mortgage.

All in all a coup -- for both vendor and purchaser!

Betty Anne Tarini

CIR REALTY

Calgary, AB

403-830-3037

We all like to "keep our ducks in a row" but the ducks sometimes scatter when it comes to our investment portfolio. What we need to do is keep a "bird's eye view" if we are planning to buy several revenue properties.

Suppose you determine, as you look ahead, that you will require $8,000 per month in cashflow in order to a.) give up your day job b.) start a girls' school in Afghanistan c.) move to Bahamas d.) all of the above. You have estimated that 40 "doors", cashflowing at about $200 per month will enable you to hit that target. If you purchased 40 doors at an average of $250,000 per door you would require about seven and a half million dollars worth of mortgages.

But don't lay that on the loans officer at your local bank! They're liable to push that little red button under their desk! Most banks have a maximum of mortgage money that they will lend a client. You might be approved for two mortgages at your local bank and then, just when you're feeling like you're getting the hang of it, they say NO!

A good mortgage broker knows these caps and can help you develop a strategy. Once you "cap out" at one bank, you methodically move on to the next one, according to plan. Along the way, the mortgage broker will also work with you to determine your Debt Servicing Limit and the impact of the cashflow you get from the properties you own at that point. (Watch those "alligators" - but that is a topic for another day).

In conclusion, have a goal and then work with your team of professionals to develop a strategy for getting there. If you are investing in Calgary Revenue Properties, I would be happy to help along theway.

Dream Big and Live Large!

Betty Anne Tarini, Realtor®
Baxter and Associates Real Estate Services Ltd.
2607 7 Street NW
Calgary, AB T2M 3J1
c 403 830-3037
f 403 668-7571
eatarini@shaw.ca
www.bettyannetarini.com

Helping You Build Wealth through Real Estate
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