Stucked with a New condo, What should I do

[RedlineBrett]

QUOTE (housedoc @ Oct 27 2009, 07:50 AM) You`re free to dislike the way I ask them, but I don`t think blackballing is cool.

The guy came on here looking for help and you put him down. His situation is bad enough without having people make his problems feel worse without offering suggestions.

it`s the age old saying. If you can`t say anything nice then....

 

[DaveRhydderch]

The great thing about investing is its all about the numbers. Run the real numbers with various scenarios. The downtown rental market is PACKED with renters now, so plan on rent being a bit lower.

If you can get out of the deal, do that. Otherwise, here`s some scenarios:

1. You break the deal, get sued for the difference and lose.

2. You break the deal, don`t get sued.

3. You pay the remaining, rent and hold. You could furnish it, or not - cost/rent for both

4. Advanced techniques like sellering financing, rent-to-own

5. Pay the difference, sell for a lost. Send me an email to [email protected] and I can tell you what units are ACTUALLY selling for. Not just listed.

Consider all the factors. Most lost here, money not made because you can`t invest in a good property, legal fees, etc.

Good luck,

Dave

 

[Alvaro Sanchez]

If I were you, I would have the contract review by a lawyer and have it canceled as soon as he finds something wrong with it.

QUOTE (forzani @ Oct 25 2009, 03:36 AM) Hi All the experts here:

I bought this NUERA condo back in 2007 in Calgary, when the house price was at its highest. The price in the purchase contract is 440K

The new condo will likely take possession next June. But the current market price in the adjacent building with same floor plan is on MLS for only 370k. So I am under water by about 70K. My down payment is 40K already (10%).

I talked to the sales for several time asking if they could adjust the price. I was told not possible.

What should I do? Walk away? Would I be sued? What else can I do?

 

[forzani]

Thanks to everyone who provided valuable advice of how to handle the situation. Here is the update.....

I took the contract to a lawyer, who reviewed and found no problem.
I had to take possession of the condo in August
I advertised the unit a week ago and I got a tenant today
The rent is almost 1800/month, which is a little higher than the area`s similiar condo ( i don`t know why there is still tenant wants my unit)
I almost break even

thanks againn to everyone. I hope by next year the price can increase and I can get rid of it.

 

[anadooby]

For all those saying he made a mistake and has to live with it - a contract is a contract, not fair to the builder I respond with he was a sucker to a salesperson who likely insisted the value would go up up and UP. Happened to many people - even economists can`t predict the future so why would a salesperson who is driven by commissions?

If if we can bail banks and automakers out...... you know where I`m going..... the builder or consumer ...?

You never know - we may all end up being in a similar situation and we won`t want to hear about "contracts". Positive cash flow sure - but with increasing vacancies in the rental market and rental prices going down while interest rates go up - who is going to pay your FULL bills plus leave you with some positive cashflow? Not those renters who are looking to pay a lower market price. Interesting read though. Reminded me of those silly cell phone contracts we easily become victims of.

BRAVO to those who have been in this situation, held on through the rough times and paid their payments. You know what you are doing - and obviously doing it well. You didn`t "go there", by selling your assets to someone by insisting it will only go UP in value.

 

[invst4profit]

Congratulations.However as soon as I read your resent post the hair stood up on the back of my neck.
I always assume the worst possible scenario and although I do not want to add anymore stress to what has likely been very stressful for you I can`t help but ask, Did you thoroughly screen this tenant?

For a tenant in this market to pay above market, and as you yourself say you do not know why, concerns me that your inexperience may have lead to "potentially" another problem.

Sorry don`t mean to add more stress but the world is full of less than honorable people.

 

[housingrental]

anadooby - What exactly are you proposing? Should the investor have all the upside when things go right but be saved from any downside risk from other people`s money who didn`t make the same money losing investment? Shouldn`t the investor choose alternate purchasers if not willing to take on the risk?

 

[housingrental]

I second Greg`s post

 

[jseib]

Reading how many people here think its perfectly fine to stick someone else with their losses honestly makes me sick.. As landlords how often do tenants leave us with a mess or unpaid rent etc.. We don`t like it then, why is it even remotely acceptable to pass large losses off to someone else when the shoe is on the other foot?

I don`t know about the rest of you but the only time I ever really learn anything worthwhile is from a mistake..

Not saying the author did anything wrong but buy a bad investment, which most of us have probably done or will do at some point..

 

[Berubeland]

I`m surprised you got financing.

Last year one of my owners closed on three condos purchased pre-construction and the bank had an appraiser come out and check out all three of them, fortunately resale units were selling for $50,000 more.

 

[Goodstuff]

QUOTE (jseib @ Aug 14 2010, 03:41 PM)
Reading how many people here think its perfectly fine to stick someone else with their losses honestly makes me sick..






Are you kidding??? I just took possession of a new downtown condo in Calgary that I pre-purchased back in 2006. It was supposed to be finished two years ago. I had my contract checked out by a lawyer who told me I couldn't get out of it. If I could have I would have without a second thought. Like you say, a contract is a contract. They promised to have it done and ready to move in in 2008. Funny, but I don't recall them offering me any compensation for the delay. You'll get no sympathy from me for the poor builders - the poor builders who greedily overbuilt and destroyed housing prices for the next decade.

 

[housingrental]

As opposed to not building and having higher costs of ownership, higher costs of rent, less supply of housing = less choice = higher costs = more poverty???
What do you propose?

As for your delayed possession couldn`t you have chosen to enter into a contract prior to purchase that had penealities written into it if the closing was to be after X date? Ofcourse... much like you choose to enter into the contract that you did....

You willingly take on the rights of the contract that benefit you but don`t think you should be responsible for the obligations of the contract that you`ve agreed to?

How does that work?

QUOTE (Goodstuff @ Aug 15 2010, 02:40 AM) Are you kidding??? I just took possession of a new downtown condo in Calgary that I pre-purchased back in 2006. It was supposed to be finished two years ago. I had my contract checked out by a lawyer who told me I couldn`t get out of it. If I could have I would have without a second thought. Like you say, a contract is a contract. They promised to have it done and ready to move in in 2008. Funny, but I don`t recall them offering me any compensation for the delay. You`ll get no sympathy from me for the poor builders - the poor builders who greedily overbuilt and destroyed housing prices for the next decade.

 

[DaveRhydderch]

Good job on getting the condo situation taken care of.

I do a lot of work in downtown condos in the area. The fortunate thing about the area is that it is a desirable place to live being so close to the C-Train. Obviously things are overbuilt right now, but I believe you`ll be able to rent this unit for a while successfully. I don`t see 440 by next year, but maybe 2 years with some mortgage paydown you`ll be good to sell.

 

[jwilbrin]

QUOTE (jseib @ Aug 14 2010, 03:41 PM)
Reading how many people here think its perfectly fine to stick someone else with their losses honestly makes me sick..




I don't think anyone in this discussion has suggested sticking it to the developer but rather has encouraged the poster to try and re-negotiate a better deal. If you read his original post there is quite a spread between when he signed the contract and took possession.



Trust me, every developer in the city re-negotiated or has at least tried to re-negotiate their construction contracts after the big flop. I deal with some of the cities largest contracting companies on many of my projects and I have heard directly from them that they had to cut their contracted hourly rates for many of these developments. It got to a point in late 2008 thru 2009 where many companies were phoning me up to see if we had any small jobs to just keep their staff busy so they wouldn't have to go through lay-offs.



I had the priviledge of meeting a very interesting and creative developer at a Christmas party last december who builds small boutique condos. I asked him about how he faired during this period. His response was that they were really worried when things first started taking a downward turn but at the end of it all he ended up making $10,000 more per unit after closing on them in 2009.

He was smart and immediately re-negotiated all his contracted hourly rates and drastically cut his costs. He said some of his contracted hours dropped by as much as $30/hour to prices he had not seen since the late 90's early 2000's.



So what does this mean. He sold his properties at 2007 high rates; built the properties at late 90's construction rates and pocketed a healthy profit. Yes, he had a few buyers try to get out of their contracts or re-negotiate which he declined of course.



I'm not saying that all developers have enjoyed this success because we know many have been hurt. But we have to remember to always treat our RE investments as a business and at least try to negotiate and re-negotiate a deal as situations change; but to do so with integrity and where the situation warrants it.

 

[wealthyboomer]

QUOTE (Goodstuff @ Aug 15 2010, 12:40 AM) Are you kidding??? I just took possession of a new downtown condo in Calgary that I pre-purchased back in 2006. It was supposed to be finished two years ago. I had my contract checked out by a lawyer who told me I couldn`t get out of it. If I could have I would have without a second thought. Like you say, a contract is a contract. They promised to have it done and ready to move in in 2008. Funny, but I don`t recall them offering me any compensation for the delay. You`ll get no sympathy from me for the poor builders - the poor builders who greedily overbuilt and destroyed housing prices for the next decade.

Cite an Act of God — “unlikely events,” clause in the contract to cancel the contract & justify not paying. (if you have such or similar clause)

Point to a “force majeure” clause in the lending agreement that allows the borrower to delay completion of the building if construction is hampered by things like riots, floods or strikes. That clause has a catch-all section covering “any other event or circumstance not within the reasonable control of the borrower,”

“Would you consider the biggest depression we have had in this country since 1929 to be such an event? “A depression is not within the control of the borrower.”

Donald Trump is doing the above, why not do the same?

 

[BrianPersaud]

QUOTE (RedlineBrett @ Oct 26 2009, 11:22 AM) Oh Brother

Thank you for adding nothing to the thread with your condescending post. Hopefully whoever reads this thread remembers this the next time you ask for advice.

have you tried renegotiating

Check this video out (Vancouver and Amacon)

http://cosmos.bcst.yahoo.com/up/player/pop...;src=canadanews

 

[Dan_Eisenhauer]

This is an interesting thread.

Let`s remember that these contracts are ALL written by the developer/builder to be as developer friendly as possible. It is highly unlikely that the developers will negotiate any clauses which would allow a purchaser an out down the road. As one smart lawyer finds a loop hole, as was mentioned early in this thread, word gets around and that loop hole is closed. Developers write contracts that cannot be gotten out of. They often have millions of $$$ on the line and cannot risk having their purchasers run when things get rough.

I got into Edmonton at the very top of the market, and all of my investments are worth much less than I paid for them. One is upside down, and others have just a smattering of equity in them.

The important thing is that they are producing positive cash flow, so LVR (loan to value ratio) is irrelevant until I decide to sell.

 

[JimWhitelaw]

QUOTE (housingrental @ Aug 14 2010, 11:27 AM) anadooby - What exactly are you proposing? Should the investor have all the upside when things go right but be saved from any downside risk from other people`s money who didn`t make the same money losing investment? Shouldn`t the investor choose alternate purchasers if not willing to take on the risk?
But I`m too big to fail!

 

[sjd]

QUOTE (TerryF @ Oct 25 2009, 08:34 AM) I was in the same boat but hired a lawyer to review the contract and see if there was a way out of the contract. They found the out I needed, contract was voided, and I got the deposit refunded. A friend also got out of their contract. Get a lawyer who specializes in contracts. My lawyer told me that most contracts have deficiencies of some kind or another. If your contract has a deficiency it may be enough to void your contract.

If you just walk away, you will lose your deposit and you could also be sued for the difference in $$ if they have to sell it to someone else at a lower price. So it your case, it could mean you owe the builder another 30k if they successfully sue you!
Terry,
Can you tell me the name of the lawyer you used? We are in the same position and would appreciate any help.

 

[BrianPersaud]

QUOTE (Dan_Eisenhauer @ Oct 26 2010, 11:45 AM) This is an interesting thread.

Let`s remember that these contracts are ALL written by the developer/builder to be as developer friendly as possible. It is highly unlikely that the developers will negotiate any clauses which would allow a purchaser an out down the road. As one smart lawyer finds a loop hole, as was mentioned early in this thread, word gets around and that loop hole is closed. Developers write contracts that cannot be gotten out of. They often have millions of $$$ on the line and cannot risk having their purchasers run when things get rough.

I got into Edmonton at the very top of the market, and all of my investments are worth much less than I paid for them. One is upside down, and others have just a smattering of equity in them.

The important thing is that they are producing positive cash flow, so LVR (loan to value ratio) is irrelevant until I decide to sell.

Any lawyer can argue anything....and if there good...they`ll win. Just ask Jackie Childs