Tough guy

hand1

From time to time he’s written me emails chewing my tail off. Whenever I got bad press, he believed it and skanked me. As far as I know, he’d some biker guy in Ottawa who occasionally sends me notes and orders me to post them on this blog.

I don’t know him any better than I know you. Just that his name is Mike. He’s a tough guy. At least I thought.

A month ago he wrote and told me he’d bought a POS for back taxes, with a winning bid to the city. After slapping on some paint and drywall, he said, he’s make some serious coin. But first there was some old guy who lived there – and tons of his crap – to get rid of.

I did not respond. And today this note arrived:

Garth, I have gotten myself into quite a project in more ways than one. If you recall I purchased my storey and a half brick wartime house in central Ottawa  through a tax sale in late November. So I knocked on the door with my registered letter in hand to talk to the (former) owner expecting the worst. The 70 YO man, Mr. MacPherson, has lived there since ’71 having inherited off his parents.

Mac is an only child, who has a literature degree and speaks 3 languages. They came from Edinburgh Scotland in 1954 to ottawa. He was a free lance writer and unfortunately did not contribute to CPP. Hence he is “living” on 520$/month OAS.

He was overjoyed when I told him what I paid as he was expecting considerably less, closed bids started at 45k$. He should net about 155k$ from the courts after the dust settles.

Although you could call him eccentric, think hoarder, he is physically and mentally healthy. Just seems like a lost soul who never married or had kids. Neighbours only have good things to say about him. I took him to Service Canada last week and applied for a pension supplement with him. He told me he feels like he is stealing asking for it. I also have been helping him find new accomodations, helping him fill in the paperwork for city housing and driving him to see apts. We went and got him a pay as you go cell so he can be reached.

I probably paid close to fair market value for the house, the next of 47 bidders being 26 k$ lower than me. One nice thing is that Mac has agreed to pay for half the dumpster and has been working dilligently to help me clear debris and even helped take down a 45′ manitoba maple in the backyard.

Hopefully the money transfer will happen this week and we can get Mr MacPherson into his new place for Jan1st. I have already had an unsolicited offer for 10k$ above my costs on the place which I’m seriously considering. I’m hoping to keep my total under 230k$ all inclusive, typical neighbourhood prices range from 260-300k$ so there is not huge money to be made, this one will be a private sale, no agents to steal my equity.

I guess everything happens for a reason.

Funny thing is my father died 30 years ago and would be 70 now. My 15 YO son never had a grandfather.

This weekend cutting down that big tree, there was a good vibe between us all.
Mike

I feel it.

86 comments ↓

#1 Jake on 12.08.09 at 8:59 pm

Great story Mike. I’m sure the old guy will teach you a lot of great lessons if you continue to give him the time. It sounds like you can do a lot for him as well. It’s nice to be reminded of what really matters now and then.

#2 Jed Row on 12.08.09 at 9:05 pm

Clearly Mike’s not a banker. Or Mac would be wandering the streets for the extra $300/month.
Nice note though, given the season.

#3 Weston on 12.08.09 at 9:08 pm

Fairness in this day and age speaks volumns!

#4 Jake on 12.08.09 at 9:16 pm

#103 TheBigLebowsky from yesterday,
I have thought about the Trailer Park Boys many times when considering the state and future of our economy. As the great trailer park supervisor Jim Lahey once said, “The winds of sh$t are in the air.” If things get really bad, I plan on looting parking meters and gumball machines. Now that I think about it, we could probably learn a lot about living with less from that show.

http://www.youtube.com/watch?v=5FyoNARq19w&feature=PlayList&p=82052C12E172B09D&index=2

warning…. a couple of swears.

#5 Fool me once... on 12.08.09 at 9:42 pm

Well, its good to see that the human side of things still exists once and a while. This feeding frenzy we’re witnessing causes great desensitization and a lot of pain to those that often don’t deserve it. I’ve seen a lot of stones thrown at an older generation blamed for all our woes. In reality my generation (early 40s) has enjoyed the fruits made possible by the sacrifices of the previous gen. They deserve our respect, not our selfish finger pointing.

#6 Mike on 12.08.09 at 9:46 pm

Garth…. put the drugs down and back away slowly.

#7 T.O. Bubble Boy on 12.08.09 at 9:53 pm

Isn’t there a saying about the greatness of a country being defined by how it treats its sick/elderly/etc.? That may be tested when this bubble pops — we’ll all see if the Conservative “every man for himself” mantra holds up when people are relying on generosity to get by.

Back to Mr. Carney (and indirectly, Flaherty and CMHC) – he’s hearing the messages from everywhere now:

http://www.google.com/hostednews/canadianpress/article/ALeqM5gZlckmcr3MghgRtHQHOgNZTdk-Sg

“The C.D. Howe Institute’s 12-member monetary policy council’s median target for the overnight rate was for one per cent in the second half of 2010.

The council said the central bank should give a strong signal that when the overnight rate moves up, it may be quick and large. They also suggested the bank rein in the housing market by raising the required down payment on government-insured mortgages.”

At least Garth has 12 more people that agree with him.

#8 TorontoBull on 12.08.09 at 10:05 pm

102 from testerday BDG YYC / HOPE & A PONY !

thanks again for the elaborate response. I do think however that we can get lost on this site arguing why prices SHOULD go down. Very little attention is paid on why they hadn’t gone down. Many of us missed the boat big time on timing the bubble burst here. So I have been asking myself why, and in my opinion there are 2 important factors:1 easy credit 2 demographics
while Garth writes about the baby boomer bomb, he does not discuss the eco boomers which represent the largest cohort since the boomers. And they are the one buying now. So perhaps there is still some pent-up demand left…

#9 Jon B on 12.08.09 at 10:05 pm

Uncharacteristically warm and fuzzy.

#10 Boombust on 12.08.09 at 10:22 pm

Well!

Ain’t that nice!

#11 Boombust on 12.08.09 at 10:23 pm

Actually, it sounds like one of the Global BC Mike McCardell dreary “human interest ” stories.

#12 Dr.C. on 12.08.09 at 10:50 pm

Nice story, just in time for Christmas. Thanks. It’s nice to read about how well people can act towards each other in such situations.

#13 Herb on 12.08.09 at 11:01 pm

Mike (not #6), I salute a human being.

#14 nonplused on 12.08.09 at 11:02 pm

#7,

Carney will not raise rates until the dollar is at $0.80 US and unemployment is trending towards 5%.

In the US, Bernanke will not raise rates until the housing market stabilizes.

Both countries are willing to devalue their currencies to achive this. The alternative is rightly viewed as a return to the credit collapse, which is wrongly viewed as worse than inflation.

The governments haven’t been very good at getting inflation going yet, but give them enough practice and they will figure it out.

#15 GrimWeeper on 12.08.09 at 11:56 pm

Thank you Garth for posting Mike’s note, and thank you Mike for remembering the “Golden Rule”.

#16 Dr.C. on 12.09.09 at 12:02 am

Great story just in time for Christmas time.

I really enjoyed that, thanks.

#17 kitchener 1 on 12.09.09 at 12:24 am

Thats a great story, Ive followed, bid on and even won tax sales in the past, but even in that game, there are too many people chasing returns so the risk increases yet the yield decreases.

Im glad that a small time guy won that tax sale and is helping out the previous owner. If it would have been on those large companies that bid all the time, buddy would have been served and kicked out by now.

Maybe everything does happen for a reason.

in regards to profit, its the same old story:

Everyone claims to have gotten a crazy deal and made X amount (varies from 10K-100K) in a few months/year time in RE. But the true value is not known until it sells and all costs are factored in.

#18 Coho on 12.09.09 at 12:57 am

T.O. Bubble Boy #7 wrote,

Isn’t there a saying about the greatness of a country being defined by how it treats its sick/elderly/etc.? That may be tested when this bubble pops — we’ll all see if the Conservative “every man for himself” mantra holds up when people are relying on generosity to get by.

If you had a friend or relative particularly of working age between 20 and 50, you’d know that Canada is far from great towards them. Disability means poverty in this country. Canada has already failed the test in this regard.

Many disabled people have the capability of being very productive employees but employers avoid them like the plague. Discrimination is rampant in this country. Even though there are laws against discrimination, it is hard to prove, thus the laws are toothless.

It’s not a stretch the notion of illegal policy dictated to employers by their insurance providers not to hire anyone with a visible impairment. The federal government knows the reality but pretends it doesn’t exist. Thus, many disabled people fall through the cracks because they are denied employment AND federal government support and are forced onto a provincial welfare program which pays $800 per month.

Most people are oblivious to this until they or a family member has the misfortune to become disabled and go through this rude awakening. That is when the facade of a “great government” is seen through. We learn the hard way.

#19 Nostradamus jr. on 12.09.09 at 12:58 am

Garth, you getting soft on us blogging such a nice story?

…I predicted you would nearly 500 years ago.

The U.S. is well on its way bankrupting the world, save for Vancouver BC.

Nostradamus jr.
.

#20 Onemorething on 12.09.09 at 1:56 am

Ottawa, the Capital of Canada and with over 1.2M people in the region where you can still feel the small town spirit amoungst the residents sounds like it hasnt changed since I left 8 years ago.

Boomers living in TO or VAN need to cash out and find a small town Canada place to step off too.

Growing up in TO and my wife in VAN, we both agree that Ottawa was a great place to live. If Canada is a future consideration to live once again, it will be there!

Good on ya Mike! Pizza and Quarts on me at the Prescot next time in town.

#21 LB on 12.09.09 at 2:20 am

Way to go Mike!

Speaking of our parents generation, wasn’t there a time when mortgage interest rates were not for terms of 1,2 or 5 years but were for the duration of the amortization period – usually 25 years? Is it possible that interest rates WILL stay down and banks re-adopt this strategy in mortgage lending? Perhaps the days of banks earning huge short-term profits from debtors will instead come from depositors, while smaller, but steady long-term profits for banks will come from those who carry big mortgages? This assumption might explain the current demand for housing.

#22 confused and a little crazed on 12.09.09 at 4:00 am

yeah well

i see the other side of people in vancouver . there was a guy who moved into elderly parents home with pregnant wife and demanded this and that . he screws up and gets his wife pregnant w/o job, The elderly parents ( 70-80 years old) takes him and pregnant wife in for free …no rent or expenses.

instead of thank you. he yells at them for not providing accomodations acceptable to his standards. What are the old folks suppose to do. they live on limited pensions. They need it to pay for medications and food .

he moved out …finally but then asked for money to start an RESP for the grandchild. Class act..yells at them then ask for money.

the mysteries of ying and yang. ( can we appreciate the good without the bad)

We all get old sometime

#23 fred jotel on 12.09.09 at 5:57 am

You are making the old man pay for half the dumpster!!!???? LOL Oh sorry you are only making 10,000 profit on the place.

#24 Ratpick on 12.09.09 at 7:00 am

Seems like it was only yesterday that people insisted THIS boom was different because, “unlike the 80s, there are no speculators.”

Nice story though.

#25 David Bakody on 12.09.09 at 7:57 am

It’s Christmas time ……. interesting

#26 David Bakody on 12.09.09 at 8:02 am

Reality Check for those who want a good Christmas and feel being a Greater Fool will do it.

National News:

Japan economic growth slowing, not strengthening, government says

TOKYO – Oops, Japan’s economy isn’t doing so well after all.

The government revealed Wednesday that the world’s second-biggest economy grew far less in the third quarter than it first estimated, unnerving investors and economists who believed the recovery was gaining momentum. It turns out the economy is actually slowing.

Early morning markets down!

I suspect when the big three went south not everyone ran out and bought a new Honda/Toyota or one of those big flat screen TV’s

#27 AJ on 12.09.09 at 8:05 am

Great story- great person.

#28 Herb on 12.09.09 at 8:15 am

Reading between the lines, it’s just about over. Two headlines in The Ottawa Citizen show where we’re headed:

1. The big one on the front page –

Homebuilding explodes in capital:
Rowhouse construction 136% ahead of last year’s pace as housing starts zoom in fall>

Translation: developers are building for the first-time/low-end market. (Later in the article, there is a report on a condo-sales event, with the broker claiming “We’ve never experienced – and I’ve been in the business for 27 years – such a frenzy of people wanting to buy real estate.” ) http://www.ottawacitizen.com/business/Homebuilding+explodes+capital/2318840/story.html

2. The lead in the “Business Section” –

Recovery on target, bank says:
Bank of Canada warns of ‘significant fragilities,’ but maintains record low rates”

Translation: The rationale for artificially low rates is just about gone. The finger is poised on the interest reset button. http://www.ottawacitizen.com/business/Recovery+target+bank+says/2318954/story.html

Actual journalism justifying freedom of the press and meeting its purpose of informing the public would connect such dots, but not a newspaper living on real estate, sportainment and retail advertising. My semi-annual subscription renewal crisis-of-conscience is about to recur.

#29 Ben on 12.09.09 at 8:27 am

I feel it too.

Good on you Mike for helping the fellow apply for the GIS – that will make all the difference for him.

#30 Sid on 12.09.09 at 8:53 am

The echo generation is causing alot of the buying activity now especially in condos. Many have money from living at home with their parents saving up and/or from parental loans. This bubble will stop when the market starts to believe that prices are on their way down. It’s impossible to predict and the direction is often not rational.

I’m sure the boomers selling off their homes for retirement will be a factor eventually but for now I think that many of these people are prideful about their health and age and feel that selling a home for retirment is admittance that they are ‘old’. Is there a chance that they will stay at home longer than anticipated?

Garth, an article about generations and their impact on the crash would be interesting?

#31 Downsized and Delighted on 12.09.09 at 9:42 am

It’s a sad commentary when simply being a decent human being is viewed as a great moral achievement.
Reminds me of other stories where someone finds a wallet with alot of money in it and we are all supposed to be in awe that it is returned to the rightful owner.

#32 conf in Tor on 12.09.09 at 9:46 am

jkimba:

I was # 90 yesterdays comment about T.O being a commerce center and hub for jobs. i asked, is it possible?
You provided good insite and examples of why it is possible. i appreciate your comment.

#33 pezzazz on 12.09.09 at 9:51 am

Garth, you better get these “nice” stories out of the way. It isn’t going to be long until the blog dogs (myself included) are recounting stories of us (buyers) putting their (distressed sellers) balls in a vice and starting to squeeze. These stories won’t tickle the heart strings but they are filled with more battlefieldesque glory.

ps merry christmas

#34 Steve Mate on 12.09.09 at 10:14 am

This is a warming story. Garth, in your position as a pundit you get visibility into both the financial and human side of real estate. These are inseparably linked, but in the media the connection easily gets lost.

In this blog, there are comments about real estate being a ‘home’, and not an investment. Some have commented that you are buying a patch of dirt and a place to sleep.

But this story about the tax sale finally puts it together coherently for me. I believe in the contrarian viewpoint and going against the herd – and I hope to purchase a comfortable and affordable home in the future. But, I perhaps feel some inner remorse knowing that I’m ‘hoping’ for personal bankruptcies to rise.

The gentleman that purchased the home in the story bridges the gap for me. He acted out of self-interest and profit making, but then acted generously towards others.

The central banks have ultimate power in controlling the herd. But the herd is still made up of individual people, and each one of them has their own heart.

#35 Nicky on 12.09.09 at 10:19 am

I think Mike should stay close to Mr. MacPherson, he has more life lessons to learn.
He felt a good vibration from this and he’s right.
It’s called love and compassion.
Very lucky for the two of you to meet.

#36 tech4monkies on 12.09.09 at 10:48 am

– Be the change in the world you want to see –

That says it all.

cheers

#37 smartalox on 12.09.09 at 11:11 am

I can’t believe that posters are calling this a warm-hearted story. It looks to me like this Mike got us taking advantage of this poor homeowner’s lonliness to help the poster make a buck. Clearly the letter was written to assuage his guilt at driving a decrepit old man off of his ancestral home just to make a buck. Whaddya say Mike, will you have the old pensioner over for dinner when this is all over? Set him up with a cut of your profits? Visit him in his apartment to make sure he’s got enoug to eat, or isn’t wasting away? What’s the old man going to think the first time you don’t return his call?

I am intrigued by one thing Garth: can you post more details on how to buy depressed or foreclosed properties at firesale prices? This sounds like just the ticket for a young guy like me to get a home and a livelihood for me and my family. Sure, I recognise that restoring such a property might take a little work, but the thought of using ‘sweat equtity’ as a noun, instead of a verb, intrigues me.

Suck and blow much? — Garth

#38 jess on 12.09.09 at 11:16 am

“Neighbours only have good things to say about him”

…if they truly KNEW this man they would have known about his dire situation and as good beings responded compassionately with help before POS. This story reinforces the definition that the word neighbour simply means living side by side.

#39 Cara on 12.09.09 at 11:20 am

What a great story.

Guess you never know who’s behind the letters – even if Mike is a “biker type” after all he apparently still has a heart.

Mr.MacPherson got lucky this Christmas. So did Mike.

#40 PeckedToDeathByDucks on 12.09.09 at 11:26 am

“TARP bailout extended 10 months” – yea, we can stop it at any time, but now is not the time.

Look, there is no liquidity problem…we only drank half the bottle, we can stop any time, but for now we will just drink a little wee bit more. Hic. Tis the Paperprestidigitizer Season.

—————-Commercial————-
PTDBDEnterprises introduces the newest in underwear. It’s been a rough couple of years in the stock markets. Your boss has cut you off the Internet. Your briefs are in tatters, your shorts are frazzled, your panties are bunched and your jockeys have lost their whip. It’s time to update your drawers with new Wireless equipped briefs which connect with the stock markets. Our underwear are equipped to receive and echo the full force of government stimulus as our Stimubriefs vibrate with every stock market rise. Fellow cubicle dwellers will envy your exstatic yelps and yips. Your boss will scowl with puzzlement. Discreetly enjoy each day’s rise as you move forward. :-)

#41 Nostradamus jr. on 12.09.09 at 11:38 am

There is a reason Atlantic Canada has such inexpensive Real Estate………Atlantic Canada is nearer to Europe than is Western Canada

…unfortunately Atlantic Canada may one day soon be “overrun” with bankrupt, European refugees escaping Europe’s Financial Armagedon

1/”””Social unrest across Europe is growing as Euroland’s economy collapses……Research Associate Stephanie A. Kelton and Senior Scholar L. RandallWray foresee a real danger that these nations will be unable to prevent an
accelerating slide toward depression that will threaten the existence of the European Union (EU).”””

2/
“””Fundamentally and technically I see no reason the US dollar cannot and should not retrace half of the decline from the top near 90. If that happens, and I think it is highly likely, equity and commodity bulls will feel like they were hit by a ton of bricks.”””

http://globaleconomicanalysis.blogspot.com/

hmmmm, Elite wealthy Asians chose to invest in Hongcouver over Halifax for a reason.

…Uncle Nostradamus jr. repeatedly predicts, once Bernanke is reconfirmed, the stock markets will be crashed, then watch the rush back into the US dollar.

…If Bernanke is not reconfirmed, same scenario.

Could be wise to invest a portion of one’s net worth into U.S. currency.

Nostradamus jr.

You personify the season – whimsy and fruitcake. — Garth

#42 curioustoknow on 12.09.09 at 11:46 am

This is plainly amoral. This sale should be invalid. This man could not pay his taxes because he did not know he could get guaranteed income supplement.

Obviously there is a mental problem when an educated man does not know that a program as old as the GIS can resolve his financial problems.

This sale should be annulled, the man allowed to stay in his house.

This is not right for the buyer to keep this house. Go the distance man, give it back.

#43 T.O. Bubble Boy on 12.09.09 at 11:50 am

Apparently BRIC countries aren’t immune:

“Bad bank loans a threat to Russia: S&P”

http://www.theglobeandmail.com/report-on-business/bad-bank-loans-a-threat-to-russia-sp/article1394013/

One point I found interesting:
“The Russian central bank has cut the benchmark interest rate nine times this year from 13 to a record low of 9 per cent to spur lending, but the market is still far from a revival.”

9% central bank rate!!!! (all time low!)

How do I open a Russian ING Account?

#44 BDG YYC / Scariest Post of the Day !!! on 12.09.09 at 12:26 pm

Nominations:

#23, #37. #42

Hope I didn’t miss any.
Its early they probably won’t hold up.

#45 jube jube on 12.09.09 at 12:55 pm

@ #31.

Agreed. Hold a door open for a little old lady and your a hero. What happended to treating people fairly, and with dignity, not because you have too, but becasue your F**** should. Life is too short.

#46 BBCOQ on 12.09.09 at 1:10 pm

Just a comment and question to all across Canada:
Here in Vancouver, and the suburbs that I live in, a dirty little secret is that homelessness is growing. It is largey caused by addiction and mental illness but a seruious contributor is lack of affordable housing. In my area trailer parks and lower end housing are being replaced with expensive condos as the demand for housing moves out to the burbs. This story is an example of what is happening here in Vancouver and the surrounding areas. Many find basement suites or move further out but some have ended up homeless as they simply cannot afford the market price for housing.
Not everybody can live in a shiny new condo or McMansion and how many of us, if we missed a few paycheques would not be able to survive. To add fuel to Garth’s fire of concern, if your mortgage rate doubles can you afford the home you have now? If you you had to pay cash could you afford that car?
How many people out there do not have a pension or adequate savings for their retirement? Take heed because you could be Mac!

#47 Jake on 12.09.09 at 1:10 pm

Hey Garth,
Yesterday CBC’s The National did a report on the costs that will be incurred as the new Copenhagen agreement is implemented. Ideologies aside, can you offer any sort of advice as to how the new taxes will effect our economy? The National suggested that the costs would be $19 Billion as the total cost to Canadians, and $45 Billion as the total cost to Canadian businesses. Both of these numbers are per year. When discussing the $19 billion, the CBC’s commentator reassured the audience that it was not a large number. She said it was only as much as Canada spends on its military……..? Anyway, some food for thought. Here is the clip:

http://www.cbc.ca/video/#/News/TV_Shows/The_National/ID=1353941596
(Environment talk at 35:30)

PS, The treaty will be signed unless there are some other major scandals surrounding it. Barack Obama was originally going to attend early, but is now posturing himself to be the Savior of the world when he attends on the last day with Nobel peace prize in hand and signs the papers. He will be able to bypass congress because the US Environmental Protection Agency ruled that carbon dioxide is a danger to humans this week. Canada has agreed to commit to whatever the US commits to. Anyway, it is going to happen, so any thoughts as to how this may effect the average Canadian would be greatly appreciated.

#48 George on 12.09.09 at 1:15 pm

Great piece glad to see the story can the kind of mileage your site can put on it.

#49 PeckedToDeathByDucks on 12.09.09 at 1:26 pm

More good vibrations:

The Mexican Fisherman

Rules For Being Human

#50 jess on 12.09.09 at 1:51 pm

affordable housing and the word investor….A juxtaarticular fracture?

reits+developers+pension funds does not make affordable housing

BlackRock’s real estate unit teamed up with New York-based Tishman Speyer Properties LP to buy the Manhattan developments for $5.4 billion in 2006, a deal that included $500 million of Calpers’s money. BlackRock has since written down its investment to zero as property prices plunged, attempts to refinance debt were hobbled by the credit freeze and a move to increase rents was blocked by tenants. BlackRock and Tishman are on the verge of defaulting on $3 billion in loans against the 80-acre complex, Manhattan’s largest residential community.

San Francisco-based MacFarlane Partners, which helped Calpers invest in affordable housing through a joint venture, California Urban Investment Partners LLC, resigned as manager of that partnership in October.
==========
new york times

#51 prairie gal on 12.09.09 at 1:54 pm

In other news…

http://www.cbc.ca/canada/saskatchewan/story/2009/12/07/sask-fire-code-evictions.html

Pual Ehmann, the landlord in this story, is also a realtor.

#52 prairie gal on 12.09.09 at 1:55 pm

sorry – its Paul Ehmann. People like this make me physically ill.

#53 BDG YYC on 12.09.09 at 1:56 pm

#47 .. Jake

Back of the napkin – using 9,000,000 ish households (ballpark)

Total Cost to Canadians $19,000,000,000 – works out to about … $2,100 per household per year.

Total Cost to Business $45,000,000,000 – works out to about … $5,000 per household per year.

You might want to check the mechanics. Don’t know if its a grand total/combined number as far as tax revenue or not.

Consumers/households ultimately pay for “business costs” /taxes. Either way, I’m sure everyone is eagre to pay up. Oh joy, a new PONY.

#54 Jeannie on 12.09.09 at 2:19 pm

Big hug to you Mike for changing one life for the better.
This is truly a heart-warming story, and loved it that Mac is a fellow clansman.

#55 dd on 12.09.09 at 2:27 pm

#41 Nostradamus jr.

You contradict yourself.

How is Vancouver going to be the centre of the known world if commodities crash? Remember Vancouver is the export hub for raw materials.

PS. I totally agree with Garth comment about you. Keep up the good work.

#56 kitchener 1 on 12.09.09 at 2:48 pm

RE#37 buying tax sale homes for dirt cheap.

Warning- LONG POST

Its not going too happen. Here is a simple explanation of how it works, In Ontario anyway.

Once someone has not paid property taxes for a set time, (min is 3 years but its usually 5-6 years before they go too auction) the township puts the property up for tax sale to recover the back taxes plus interest plus whatever fees they incured trying to recover the taxes. The minimum bid amount advertised by the township is the total of backtaxes, interest, and costs incured.

99% of good properties get redeemed and the ones that are left are usually non buildable plots of land that might have enviromental restrictions ususally only of value to adjacunt home owners. Many commercial properties have MOE work orders against them.

In a tax sale, the deed that you receive is free of all liens, mortgages EXCEPT for crown corporation liens. So when ever a house goes for sale that has a mortgage, the bank will pay off the back taxes and resell the home to at least recover some debt.

Bidding is done in a silent auction where the property is advertised and people send in their bids via mail or proxy. The previous owner has up until the deed is registried into your name to pay the taxes and redeem his property– this is Ontario (in Quebec, i think its 2-3 years) Every region has different rules and laws. Things might be different in Alberta then Ontario.

Its a crowded market with a lot of professionals buyers and large RE companies competeting with each other, are there deals?, YES, every year there are a few gems. BUT a lot of people overpay or pay market value.

The homes or properties can not be inspected before the auction and some homes are even occupied. You are buying the homes “as is, where is” without a guarantee of even vacant possesion. Please note that it is extremely rare for a single family home to go to tax sale, I would say that maybe something like 5% of all tax sales in Onario are of homes, most of which are redeemed.

Being in the tax sale game requires capital and a lot of it!! There are no mortgages in that game, when bidding you put in a 20% bank draft of your total bid and when you win you have 1-2 weeks to come up with the rest. Dont come up with the rest and you lost your 20% deposit.

In regards to having the older gentleman pay for half the dumpster. The owner or the property that has been sold in a tax sale is entitled to the proceeds after taxes have been paid, he has one year to claim it from the town/city.

ie.
back taxes on a home are 20K (min bid amount)
home sells for 150K at auction
150k-20k taxes= 130K that the owner will receive from the city/township etc.. if they claim it.
The city just wants there money back and is not entitled to the excess proceeds, it used to be that the city would just cut a check to the owner, but now, its up too the owner or the owners estate to make the claim and get the money.

There have been a few cases where, because of the frenzy involved in getting a tax sale property, the actual property sells for more then it would have on MLS.

It always amazes me, most of the properties that are sold through tax sales would just sit on MLS for months and even years, but because its a “tax sale” people end of overpaying for them.

Like I said, there are some great deals to be had, if you are looking for a “hunt camp” or land, but as far as single family homes in cities, slim to none.

That and every bid that you put in of a property can run you easily $500, think of title/excution searchs/maps/ gas to drive to the property and see it/ consulting with a lawyer if you so choose/ market research, reviewing zoning in that particular tax sale etc… So, its not like you just show up at a car auction and bid. Sure you can bid blind but thats just crazy.

#57 Larry on 12.09.09 at 3:06 pm

#41 Your an idiot.

#58 Barb the proof reader on 12.09.09 at 3:15 pm

“he’s written me emails chewing my tail off”
— Garth

Garth,

Good thing Mike didn’t cannibalize ‘Mac’ MacPherson whilst “helping” him off his land. He’s surely licking his lips though as there’ll be plenty of ‘Macs’ to eat when rates go up in the new year.

I for one, hope that Mike appreciates his “freedoms”, because at least Mike had a choice about his actions. On the other side of life, polar bears have no choice.

#59 AxeHead on 12.09.09 at 3:17 pm

Good story Garth. We need this once in a while for perspective, hope.

Reminds me of an older woman I talked to who lived throught the depression. She said it was depressing. She said that when hobo’s came and knocked on her door, she gave them a bag lunch even though she had scarce for her family but thought it the right thing to do. The hobo’s would thank her, offer to do work around the house to pay back, and generally were appreciative and respectful.

I seriously doubt that this is the way the homeless and downandouters will act during depression #2. I think they’ll be pounding at the door and demanding with bats vs knocking and asking with hats in hand.

This small story sort of stems this realist vision I have.

#60 AxeHead on 12.09.09 at 3:19 pm

#37 is a bigger idiot than 41.

#61 Confused in Victoria on 12.09.09 at 3:29 pm

Mike,

You are a good man. This will be passed on to your son.

#62 omg on 12.09.09 at 4:14 pm

Can somebody tell me what POS means?

I search the net and just come up with cash register systems?

Power of sale. — Garth

#63 prairiegopher on 12.09.09 at 4:19 pm

Hey Garth, you should do a segment on this Paul Ehmann out of Regina. What a total reversal from this story. Shows the kind of greed and deception that one person can have. Oh, and did I mention this guy is a realtor. Same people we turn to for advice on the most significant purchase you will make in your life, gee who would have believed it!!

#64 Soju on 12.09.09 at 4:27 pm

If the guy was so kind, he would give the owner his place back once his finances are better. Besides that, Mike is an opportunist plain and simple.

#65 Nostradamus jr. on 12.09.09 at 4:45 pm

Larry & Axehead

…You fail to forsee the future, my East coast, free ride Canadians.

…When Europe invades the Atlantic Provinces with countless refugees….your half yearly EI supplements will be cut down to a fraction.

Western Canada will secede faster than you can say…Seal and flipper pie.

…European refugees are educated, they will bring their families….Quebec’s snow removal industry cannot sustain new citizens…why else do you think Quebec hides behind a “racist French tilt”?

…Sorry, Eastern Canada’s future is toast.

Nostradamus jr.

That was your last, inane, us-versus-them post. Contribute something useful to the discussion or stay in the basement watering your children. — Garth

#66 Popeye on 12.09.09 at 4:54 pm

#28 Herb on 12.09.09 at 8:15 am
————————————————-
That Ottawa article is just another example of main stream media spinning the facts. The headline reports the (36%) increase in starts month over month, but fails to mention that starts are down (24%) year over year (what would your headline be if you read the following research?):

http://www.cmhc-schl.gc.ca/odpub/press/2009/2009_12_08_0815_EOO.pdf

#67 $fromA$ia ( :PY ) on 12.09.09 at 5:04 pm

#65,

Be gone tard or run with the Conservative party.

#68 ALBERTAGUY on 12.09.09 at 5:29 pm

I can feel the love.

#69 bill on 12.09.09 at 5:41 pm

Hey Merry Christmas everyone, cool christmas story Garth. And Mike despite what some have said here ,you are humane in your dealings.
For those that think Mike is an evil opportunist ,why dont you contribute to the wellbeing of others in Macs place . I am sure city hall has a list of people you could help.
With my busy life,I have found it advantagous to donate cash to various organizations. The Union Gospel Mission being one of our favourites.

#70 Canada Bubble on 12.09.09 at 5:52 pm

I got a email from a realtor, and like to share with you:

Recessions are so yesterday…

Times have changed!
Well, that was fun.

The recession is over. Prices are back where they were before it all started and multiple offers are back. If you’re a buyer, you may have noticed that there’s nothing left to buy. The ultra-low interet rates are the driver now, and when it’s cheaper to own than it is to rent, the surge of new buyers changes the real estate landscape.

So what does that mean to you? Well, as a buyer, it means get in there! Get pre-appoved, hire a professional real estate agent (ahem) and then go shopping. Write lots of offers and don’t be afraid to get aggressive. We have lots of tips to make sure you get the home you love. Call us.

SELLERS: Get your property on the market already will ya!

There’s a surplus of buyers out there, and multiple offers are the norm. If you’re waiting until after Christmas or even the Olympics to sell, you’re not alone. How many other sellers will be doing the exact same thing? Will it still be a your market in March? I think probably not. It may seem inconvenient to list over the holidays, but allot of it is in your control. Moving dates are negotiable and showings can be arranged based on your schedule. That’s part of the joy of listing during a sellers market. The only thing out of your control is the market so when it’s in your favour: seize the opportunity! Call us to make it happen.

Thanks for reading and sharing!

#71 jess on 12.09.09 at 6:00 pm

praire gal,

“fire officials said the renovations didn’t conform to residential fire regulations”

…How do these reno’s get rented before they get inspected? Could these renters sue the city for lack of inspection? I have read an article about condo owners kitchener that are doing that.

#72 john m on 12.09.09 at 6:03 pm

Heart warming story…except for—-“One nice thing is that Mac has agreed to pay for half the dumpster and has been working dilligently to help me clear debris and even helped take down a 45′ manitoba maple in the backyard.”————

#73 graham peacock on 12.09.09 at 7:04 pm

#70

Typical real estate agent…
A great time to buy…is even a greater time to sell!
Can you say”conflict of interest”!!!!!
#@!&*@#!

#74 Nostradamus jr. on 12.09.09 at 7:21 pm

“”That was your last, us-versus-them post.””
-Garth

???

Are you refering to…

1/
…Canada vs Europe

or

High English vs public school/bathroom coloquilisms incl…tard, idiot

or

Western Canada vs Eastern Canada

2/
…Anyone else remember the USSR breaking up, Colonialism in Africa, and both the Roman & British Empires disintigrating.

Nostradamus jr

#75 Seilfworcehtsa on 12.09.09 at 7:26 pm

72 John m

Yes, it warms the cockles of my heart….the question is: how did Mac do it? This canny Scot managed to avoid the taxman all his working days and thus avoided paying into CPP to boot. With 150 grand in his pocket, subsidized rent and a grand or more from the taxpayer every month he is more to be envied than dispised.

#76 AGIN on 12.09.09 at 7:51 pm

Re: #65 Nostradamus jr.

“That was your last, inane, us-versus-them post. Contribute something useful to the discussion or stay in the basement watering your children. — Garth”

Garth, you are too harsh on him today. We’ll miss The Village Idiot

#77 JO on 12.09.09 at 8:10 pm

Nice story. Most of his actions are sensible and the “right thing to do”..that said, i see a few posts indicating the buyer should have done more…how come ? One poster suggested the old man was somehow not educated enough to make a proper decision…that’s where the line stops..since when is it anyone’s responsibility to give up something or do something because of another’s incomptence or imprudence ? If the seller had very low income / did not know about what was available to him (living off our tax money due to his inability to save / keep working), that is his problem. I am sick and tired of this blame the victim mentality that permeates many in our nation…but i am glad to see the buyer doing something nice..and worthy.

Eventually, when the majority of these speculators and weak hands who bought homes in the last 3-4 years face shocking problems, you can count on them to blame everyone else but their greedy / incompetent selfs and to go ask for a bailout/handout from our politicos..effectively making anyone prudent enough / responsible pay for their failures…i wonder how many will like that ? Accountability folks…moral hazard…do the right thing.
JO

#78 Mike on 12.09.09 at 8:12 pm

1)The dumpster is a 30 cu yd bin, the house is so packed with stuff you must walk sideways to navigate. we have already placed out a complete 50′ of lotline garbage at the curb 2 weeks in a row.
The only items of mine going in the bin are roofing shingles and the tree. Is it not the sellers responsibility to clear their belongings?
2)I paid all my cash on hand to complete the purchase. I’m currently staying with friends until the house is empty.
I am responsible for the $300/month tax bill and was using the cash to earn some of my living expenses. the 1000$ rent was a figure that “Mac” came up with. I had the same figure in my head.
3)I have made a genuine connection with this man. This is not a friendship of convenience. Maybe it is the fact we are both misfits.
4)The old age supplement is not largely advertised by the feds, you have to know about it.
5)I have been perusing POS houses for about 6 months now.I chickened out on 2 of them and missed opportunities to make some serious quick money. With this one I was in a position where I needed a place to live so didn’t just jump in with both feet, I swan dove in. Trust me, I’m not going to get rich on this deal.
6)In spite of his meagre income, “Mac” donates money to the Salvation army bimonthly. It also happens to be the only charity I regularily give to.

Mike

#79 Davinci on 12.09.09 at 8:42 pm

“Golden Rule”

Those that have the gold makes the rules.

Board to Propose More Flexible Accounting Rules for Banks
http://www.nytimes.com/2009/12/08/business/08account.html?_r=4&ref=business

In other words the banks have and will be doing what ever they like when it comes to accounting practices and reporting.

#80 Dan in Victoria on 12.09.09 at 9:00 pm

Well Mike, we all have little lessons that we must learn along the way. It’s your turn.It’s a test. I read this last night and thought lets see how people react. It’s amazing isn’t it? You run the whole gauntlet of human emotions, all the way from bad to good.
Glad to see the old fellow having some guidance, and help from you. If we all quit worrying so much about the money (nothing wrong with that, just be balanced) and worried and cared more about one another it just might be a better life for us all.
A smile, A handshake, A hug they don’t cost anything but they mean so much.
You came with no money, you’ll leave with no money. Never forget that.
I just hope that the things that I do while I am here will leave it a better place.

#81 Increasing that 1% on 12.09.09 at 9:19 pm

Good that Mike at least did some-thing to try to help

Many sad situations showing the lack of comprehensive care that exists for so many- let alone the lack of care that leads one into these situations

Kudos (minus any scandals) to Salvation Army

#82 CalgaryRocks on 12.09.09 at 9:45 pm

I am intrigued by one thing Garth: can you post more details on how to buy depressed or foreclosed properties at firesale prices?

In Calgary they used to be available at the Courthouse and also online in the Calgary Herald sometimes.

I wouldn’t say that you can get them at firesale prices though. The sale needs to be approved by the judge and he’s going to look for close to market price.

#83 beauty in lala land on 12.10.09 at 9:29 am

Merry Christmas, Mikey. You got so much more than a property deal.

#84 maria on 12.10.09 at 11:38 am

Mike, good luck to you and to the previous owner.
How about thinking now, about the future for your son and your possible grandchildren?
If you plant a new tree for the one you cut down, you will be helping the air that they will need to survive …

#85 tech4monkies on 12.10.09 at 2:42 pm

With the blog post of “Shame”, this seemed fitting. Kinda scary if your in this situation:

“Canadian sub-prime lenders seek billion-dollar government bailout”

http://www.globeinvestor.com/servlet/story/GI.20091206.escenic_1390721/GIStory/Email#

R1E1, LOL, thats a classic! – I will continue my daily regiment of washing down vast amounts of childrens chewable vitamins with jack daniels in an attempt to ward off the infection (as seen on TV from MSM). So far so good.

#86 Lisa on 12.10.09 at 3:07 pm

That’s a great story. Thanks for sharing it. I really do hope they all live happily ever after.