We are excited to announce our new regular newsletter highlighting distressed properties for sale in Ontario. For the past 3 years, we’ve publicly promoted ourselves as a Cash Home Buyer. We’ve received many inquiries from interested sellers, and unfortunately, we’ve had to decline some very good offers. We’ve been looking to team up with other real estate investors who are able to approve a purchase request when our company cannot. As both a private money lender and cash home buyer, sometimes we lack the capital to buy houses outright. Other times, the property is outside of our general service area.
Instead of buying all houses directly, we also plan to share selected home sale inquiries with our network of buyers via a newsletter. For the many Ontarians who are looking for a great deal on a new property, this can be a great resource for finding new deals. If you are interested in signing up for the newsletter, you can fill out the form below.
What are Distressed Properties?
A typical definition of a distressed property is a piece of real estate that has been physically or financially neglected by the owners. The typical outcome for owners of these properties is either selling the property on a rush basis or having a mortgage lender sell the property. Sellers in these situations often need to reduce their prices to incentivize buyers.
When looking at distressed property deals, it is important to understand what to expect. Most of these properties have unique issues you won’t find on MLS-listed properties. Here are some of the most common issues you’ll see with distressed properties:
- Eviction Potential: Owners facing or soon to face eviction via Power of Sale.
- Poor Condition: Properties in extremely poor physical condition.
- Junk and Pest Issues: Presence of substantial junk on the property, along with pest problems.
- Occupancy Challenges: Aggressive tenants or other occupants who refuse to leave the property.
Buyers who are willing to overcome these hurdles can demand discounts on the purchase price. Once the issues with the property are resolved, the new owner can usually flip the property for a healthy profit.
Possible Challenges and how to Navigate them
The key benefit of buying distressed properties is the amount of discounts you may be able to negotiate relative to the property’s current market value. Buying distressed properties is most recommended for experienced real estate investors who are able to address common issues. Here are some key skills and resources that many successful real estate investors have when dealing with distressed properties:
- Access to large amounts of capital quickly. In situations involving eviction, the homeowner cannot wait for a typical mortgage to be processed, as the lender can take and sell the property before financing can be arranged.
- Expertise in residential construction and a renovation team. Since many distressed properties are in very poor condition, it is vital that the buyer has prior experience with home repair and renovation. These renovators should also be able to assist with any junk removal requirements.
- Knowledge of landlord-tenant law and the Landlord Tenant Board. If a buyer inherits a bad tenant, it’ll be their responsibility to remove them. Processing an eviction can be complicated and costly, and mistakes can delay the process by many months. It’s strongly recommended to involve lawyers or paralegals for assistance.
It is very important to understand the costs and timelines associated with overcoming each of these hurdles. Successful real estate investors always do their best to account for all possible expenses on a property before estimating the potential profit from a future sale.
Overview of the Ontario Real Estate Market
In the ever-evolving Ontario real estate landscape, recent trends indicate a shift towards a buyer’s market, presenting a unique context for those interested in distressed properties. According to the housing statistics page on CREA, we can see the following real estate trends:
Sales and Listings Dynamics: We’re seeing a downtrend in home sales, with a 7.6% drop from last year. Conversely, there’s a surge in property listings, the highest in over five years for this period. This divergence is leading to a buildup of inventory??.
Buyer’s Market Emergence: The sales-to-new-listings ratio has decreased to 37%, signalling a buyer’s market. This trend is echoed across major cities, including Toronto, Mississauga, and Brampton??.
Economic Factors: Rising interest rates have dampened demand, but the market is poised for change. Factors like immigration and a potential interest rate decrease could affect demand, affecting property prices??.
This market scenario offers intriguing prospects for distressed property investors. The increased inventory and buyer-centric market may yield more opportunities at competitive prices. However, investors should approach with caution, given the potential for market shifts.
What to Expect in Our Newsletter
The newsletter will be sent out with property details every time we have a distressed sale to share. Judging from our past activity, this would be 1 email every week or two. The newsletter will state the basic facts about the property as well as any images if they are available. It will clearly state any conditions or deadlines involved so that buyers can make a more informed decision. The newsletter may also include tips on what to look for or recommendations of specific service providers to assist with the transaction or remediation of the property.
Expertise and Support from Mortgage Broker Store
If you are curious about distressed properties or private mortgages, feel free to contact us directly. For more than a decade, Mortgage Broker Store, led by Principal Broker Ron Alphonso, has been helping Ontario homeowners get mortgage financing despite their difficult financial circumstances. In cases where mortgage approval was not possible, we’ve personally purchased houses in order to stop pending evictions.
Jonathan Alphonso, a licensed mortgage and real estate salesperson, is often the first point of contact for new inquiries. Jonathan helps to guide clients through their options and recommends a specific path forward. Typically, this path involves getting a new mortgage, but in cases where a new mortgage is not possible, selling the property is often recommended. Jonathan will prepare and send out the newsletter, ensuring all marketing materials and arrangements comply with the relevant laws and regulations.
We often provide advice to people looking to buy distressed properties. If you’d like more advice or opinions before making a serious offer on a property, we’d be happy to offer a consultation. As experienced cash home buyers, we can discuss the steps involved in the process and what to look for. We can also suggest a course of action based on your financial goals and ability. We can also discuss private mortgage lending as an alternative way to make money compared to buying real estate.
How to Subscribe
Currently, we are collecting email addresses, and the first newsletters are planned to be sent out in January 2024. If you would like to be on the mailing list, please complete the form below.
That wraps up our announcement of the upcoming Distressed Property Sales Newsletter. With insights, tips, and the latest listings delivered right to your inbox, this newsletter will provide exclusive deals you won’t find elsewhere. Remember, whether you’re looking to invest or seeking a private mortgage solution, Mortgage Broker Store is here to help. So, don’t miss out – fill in the form below to subscribe and join our community of savvy investors. We’re excited to have you on board and can’t wait to share our first issue with you in January 2024!