experts: real estate column Wednesday, September 03, 2008

Buying US Foreclosures Requires Caution

Is it a good idea to buy foreclosure property in the US? And other questions answered by Ozzie Jurock.

By Ozzie Jurock

'Judge others by their questions rather than by their answers' -Voltaire.

I'd like to thank my readers for all the fine questions. I have picked a few to answer for your perusal:

Question: I am looking at purchasing a place down in Arizona - in Scottsdale, to be exact.

I am wondering is a foreclosure the way to go? Or would you suggest to head down and look at several places yourself?

Answer: In my real estate investment courses, I tell my students that if they do not look at the property they want to buy for themselves, I am going to hit them with my laptop.

Whether it is a foreclosure or not, but particularly if it is a foreclosure, 60 per cent of the foreclosure deals offered are NOT a deal.

Of course, you should go down yourself.

Also, look up some of my past columns to watch out for the (considerable) pitfalls, do's and don'ts about investing in the U.S.

All articles are posted on

I am also hosting a Land Rush USA seminar on Sept. 6 from 9 a.m. to 3 p.m. in Vancouver.

Containing five speakers, it will be held at the Marriott Pinnacle Downtown Hotel at 1128 West Hastings St.

Topics will include U.S. foreclosures and auctions, as well as areas to stay away from and to buy in.

Tickets are $97 (for Albertans, $67 each, or two for $97), with pre-registration required.

Question: Is it illegal to hire a friend from another town that I have bought real estate in to manage my B.C. property?

She is not a licensed property manager, but I trust her and would work with her.

People have been intimidating her and telling her it is illegal for her to even show my property to a potential renter for me. Is this true?

Answer: In B.C., property managers must be licensed.

However, there are exceptions, i.e., an owner of a suite in a strata building can manage that building without having a license.

You can also hire anyone you like as a property manager. That person becomes your employee.

However, your friend cannot set up a trust account. She would collect the rent and post it directly to your bank account or to an account you set up for that purpose in that town.

She would bill you for her services and you can pay her. It is not illegal.

Question: I am buying a commercial building for $1.5 million in Prince George, B.C.

I have $500,000 down and am looking for a $1-million mortgage.

I am having trouble finding financing. The owner does not want to carry any himself.

Answer: Assuming that it is a good deal, that it cash flows and brings enough income to service mortgage and down payment, try your local credit union.

If that does not work, try the owner again. Likely if you have problems getting a mortgage, so will another buyer.

It then becomes a matter of negotiation. In life you do not get what you deserve ... you get what you negotiate.

Ask the owner if he knows that if he carries $1 million of financing he can defer his capital gain for up to five years.

Plenty of commercial owners are not aware of this. That may change his mind.

Question: Hello, I am going to be renting out a high-end apartment I own furnished, long-term, and was wondering if there is a set list of what is expected to be supplied in a furnished suite.

Answer: I assume you are going for the higher weekly rental income and your building qualifies.

A weekly tenant looks for good central location, high-speed Internet and phone -- and at the high-end, flatscreen TV in living and master bedrooms, dishes, linen, etc.

A good example is found on any ski lodge advertising.

You may also have to supply maid services and belong to a good rental management service that has connections worldwide to supply a stream of weekly tenants.

Question: My mortgage broker suggests that because I have decent equity in my home that I should use the home equity line of credit to invest in rental property.

My two-level detached home was assessed at $510,000 and I have a $116,000 mortgage remaining, which would give me an approximately $345,000 line of credit.

If I were to look for a similar house, I would need to partner up with someone. The other option is to purchase a condo or apartment -- then I may be able to go on my own.

Answer: There are really two issues here. First, the mortgage money you owe does not show up on a credit report -- but your new credit line will.

It may hinder you in your other borrowing. You may wish to consider getting a mortgage instead.

Second, a similar home of $510,000 value would have (after $345,000 down) a mortgage of $165,000 owing.

Your total debt would now be $510,000. You would need a rental income of $3,500 or so to cover the credit line and (new) mortgage payments.

It may be possible to achieve that in a family home.

However, if cash flow is your goal, you may be better off looking to a good solid smaller town where you may get a fourplex or sixplex, which may make the cash flowing faster.

Question: I was wondering if one person was to pay cash for an entire house, but he listed the deed as a partnership between his wife, sister and brother-in-law.

What rights would the wife have if she wanted to leave that house? Would the wife automatically get half?

Would the other two relatives get anything? How would that work?

Answer: The persons registered on the title own the property proportionally.

Your sister and brother-in-law will own half of the house. Your wife and you the other half.

Your wife automatically gets half of what only YOU own (even if not on title at all) in a divorce settlement and vice versa, not what your sister owns.

Hopefully, the partnership/joint venture that you plan to set up is well discussed with all parties ahead of time.

It is sad to see how many well-intentioned family joint ventures fail because of different expectations the parties have.

Question: I currently own a condo in North Vancouver. I'm looking at selling my condo and buying a building in the Hamilton and Kitchener, Ont., area that would create a cash positive situation through rentals.

I know that the appreciation here would be greater; however, with that comes a huge mortgage.

Do you think this is a sound move? Also, is that area a good area to purchase in?

Answer: It would depend on how attached you are to your current condo, how much you are getting for it and what you would like to accomplish long term.

Depending on how old you are, extra cash for you and your family (passive income) can sometimes be the very best decision.

As far as investing in Hamilton and Kitchener goes, they are well-situated cities with strong fundamentals.

Kitchener also has an eight-day Octoberfest - that alone may be a good reason.

However, you are not buying the city, you are buying "the deal." Research, research, research and do not buy long distance - go there.

* * *

There have been so many questions that there is not enough room here for all answers.

However, you may find the answers to most questions at

I love questions in general, although some, of course, have no answer ... for instance:

- Why do developers cut down all the trees and then call the streets "Elm Street" and "Fir Avenue?"

- Why do we drive on "parkways" and park on "driveways?"

- Why are they called "apartments," when they're all stuck together?

- Why do they call it a "building?" It's finished. Why isn't it a "built?"

- If "price" and "worth" mean the same thing, why are "priceless" and "worthless" opposites?

- Is there another word for "synonym?"

Keep those questions coming.

Published in The Calgary Herald, August 30, 2008

Ozzie Jurock, FRI, is a Vancouver-based real estate expert and motivational speaker who is the publisher of Jurock's Real Estate Insider at He teaches real estate investment courses in Alberta and B.C. at Canadian journalist Peter Newman, in his book Titans, called him a real estate guru. Donald Trump features him in his latest book, Trump: The Best Real Estate Advice I Ever Received. You can reach Jurock at 604-683-1111, or e-mail him at

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