No need to throw out the bath water with the baby!

[bizaro86]

Forgetting about the fact that you`ve already put in a bunch of money so far (its a sunk cost), if you`re going to put another 10k into real estate, is this the property you`d pick? Knowing that it has a 245k first against 270k value, plus a second mortgage putting the amount of mortgages over the value of the property?

I`m afraid I don`t know any BC realtor`s, since I`m in Calgary.

Best of luck to you,

Michael

QUOTE (springforward @ Oct 27 2010, 08:57 PM) Michael,

My guess is that in today`s market the house is worth less than $300,000, perhaps by $30,000-$40,000.

When you were talking about the second mortgage being registered were you meaning with Land Titles? What if the 2nd was never registered period and not signed by the title holder?

Can you recommend a lawyer in BC?

Even though the property might be able to get back on track to be mostly self supporting you figure the Reserve fund withdrawl and the inflated 2nd mortgage plus the extra costs (to stop it from bleeding red ink) make it a dead horse?

Cheers

 

[Thomas Beyer]

QUOTE (springforward @ Aug 28 2010, 12:35 PM) On advice from a lawyer I recently put a caveat on the title for my 25% ownership.
This is a good first step.

You can apply to the court for property ownership to you .. depending on your agreement.

Did you invest EQUITY (i.e. ownership) .. or as a LOAN (secureable as a mortgage) ?

In the agreement you signed: What rights does the manager have ? What rights do you have ? [ send it to me if you wish]

QUOTE (springforward @ Aug 28 2010, 12:35 PM) Can someone tell me how that might help me if the property goes deliquent? What is the process that happens if it goes bankrupt? Will I lose the total investment?
The first mortgage holder will eventually force a sale via the court system as he has a mortgage and then you will get nothing if the mortgage + legal fees + realtor fees exceed the property value !

QUOTE (springforward @ Aug 28 2010, 12:35 PM) Will the bank come after me?
no

QUOTE (springforward @ Aug 28 2010, 12:35 PM) The VTB mortgage was never registered against the property; does my cavaet prevent that from going on in the event they try to add it to the title?
A 2nd mortgage would now be 3rd, behind your caveat. They go in order as they are listed on title. Whose VTB though ?

 

[springforward]

QUOTE (gwasser @ Oct 27 2010, 08:49 PM) You`re welcome. Don`t worry about the numbers in my example. Its intend was to make you think about your real numbers and about how much is left. At this point, if you still feel you want to put more money in, then don`t commit until you have all financial data of your JV company and without MR. X in the game. He lost enough of your dough!

But, as Michael suggested, it seems most of your funds are gone. So really, what is your upside here?


Yes, I agree it has been good for me to view the investment from that perspective. Right now for me to consider investing money into the project in it`s current state is not necessarily an ideal investment. I admit I have been focussed on chasing my initial investment and trying to figure out a way to get it back. It is hard to want to accept it might be gone. What is frustrating is that there isn`t many good, solid options for justice or even the return of my investment.

Where the project is at now:

On Monday the bank will want another payment to keep it from the foreclosure process and to keep their lawyers at bay. We had the owner of the company (Mr.X and his former business partner) sign off on ownership of the property this week. Myself and the other investor now have a 45% share each in the project and the other investor remains with 10%. If we are to move forward it will cost us about $2500 - $3000 each to keep the property rolling along. The place is fully occupied and the rent should cover expenses. If we are to go this route there are a few issues I need to come to terms with first (I only have about 24hrs so I need to think fast):

1) Do I believe that a longterm hold on the property (say 10 years) will be enough time to recoup the initial investment of $54,000 each plus our cash injections and hopefully a bit of growth? Basically is in likely that in 10 yrs we could see the house increase in value by $75,000?

2) It appears the 2nd mortgage holder was never registered with a caveat and didn`t have a signed agreement with the investor who holds title to the mortgage . . . is it likely he would have grounds to pursue the project legally? It seems the unreasonable agreements he signed were with the investment company and perhaps he would pursue them. We are willing to work with him but so far he has been unreasonable and not willing to come to the table.

3) Is this a property (though not an ideal situation) a great opportunity to "pay a $2500 tuition" to further the real estate learning and perhaps recoup the initial investment, etc. ? Myself and the other investor are willing to share the financial management of the project. We haven`t worked well together initially dealing with all this but we have learnt how to get along and delegate tasks and work with each others strengths. Perhaps this house is an education that we should carry on with. For sure it is not a perfect or ideal situation.

Any comments are appreciated!

Thank you!

 

[Thomas Beyer]

QUOTE (springforward @ Oct 31 2010, 10:42 AM) 1) Do I believe that a longterm hold on the property (say 10 years) will be enough time to recoup the initial investment of $54,000 each plus our cash injections and hopefully a bit of growth? Basically is in likely that in 10 yrs we could see the house increase in value by $75,000?

likely .. what is it worth today ?

QUOTE (springforward @ Oct 31 2010, 10:42 AM) 2) It appears the 2nd mortgage holder was never registered with a caveat and didn`t have a signed agreement with the investor who holds title to the mortgage . . . is it likely he would have grounds to pursue the project legally? It seems the unreasonable agreements he signed were with the investment company and perhaps he would pursue them. We are willing to work with him but so far he has been unreasonable and not willing to come to the table.

whose 2nd mortgage ?

it appears you invested EQUITY i.e. a beneficial ownership .. that is NOT a mortgage ! Register a caveat on title re your ownership interest as this means in a court hearing you must be contacted and can state your view .. and will usually be given the option to assume property outright and bring 1st mortgage current !!!

does property cash-flow ?
who is managing it today ?
can you manage it ?
can you bring mortgage current ?

QUOTE (springforward @ Oct 31 2010, 10:42 AM) 3) Is this a property (though not an ideal situation) a great opportunity to "pay a $2500 tuition" to further the real estate learning and perhaps recoup the initial investment, etc. ? Myself and the other investor are willing to share the financial management of the project. We haven`t worked well together initially dealing with all this but we have learnt how to get along and delegate tasks and work with each others strengths. Perhaps this house is an education that we should carry on with. For sure it is not a perfect or ideal situation.
likely it makes sense to invest a further $2500 to save over $50,000 !

Likely you can work with bank and bring mortgage current .. or wait for bank to start foreclosure and then apply via court to have property transferred to you after you bring mortgage current.

"foreclosure" means: a bank application for a forced sale .. and any beneficial owner or caveat holder can state their opinion n court as why this forced sale is not a good idea !!

 

[bizaro86]

QUOTE (springforward @ Oct 31 2010, 11:42 AM) On Monday the bank will want another payment to keep it from the foreclosure process and to keep their lawyers at bay. We had the owner of the company (Mr.X and his former business partner) sign off on ownership of the property this week. Myself and the other investor now have a 45% share each in the project and the other investor remains with 10%. If we are to move forward it will cost us about $2500 - $3000 each to keep the property rolling along. The place is fully occupied and the rent should cover expenses. If we are to go this route there are a few issues I need to come to terms with first (I only have about 24hrs so I need to think fast):
This is a big pro. If you don`t have to legally fight this person, you can save all the legal fees it would take to do so, so all you`d need is the mortgage arrears.



QUOTE (springforward @ Oct 31 2010, 11:42 AM) 2) It appears the 2nd mortgage holder was never registered with a caveat and didn`t have a signed agreement with the investor who holds title to the mortgage . . . is it likely he would have grounds to pursue the project legally? It seems the unreasonable agreements he signed were with the investment company and perhaps he would pursue them. We are willing to work with him but so far he has been unreasonable and not willing to come to the table.
This puts you in a pretty strong negotiating position. If he doesn`t have any documentation proving you owe him money, I think I would stop paying him unless he`s at least willing to discuss options with you.


Michael

 

[gwasser]

QUOTE (bizaro86 @ Oct 31 2010, 01:32 PM) This is a big pro. If you don`t have to legally fight this person, you can save all the legal fees it would take to do so, so all you`d need is the mortgage arrears.




This puts you in a pretty strong negotiating position. If he doesn`t have any documentation proving you owe him money, I think I would stop paying him unless he`s at least willing to discuss options with you.


Michael


Sounds like you are seeing some light at the end of the tunnel. All without a lawyer. Still only consider new money based on its investment merits.