Quotations by Don R. Campbell

If you need to arrange financing in order to buy the property, you will want to include a conditional clause such as "Subject to buyer obtaining financing satisfactory to the buyer on or before (insert number) of days from acceptance of offer." Be sure to include "satisfactory to the buyer" in this clause to ensure that not just any financing will force you to remove your condition. If you can get financing but it doesn't fit your system, you will want to have the option of not accepting it. On most small properties, such as single-family homes, condos and duplexes, 21 days is sufficient. [2009] - Don R. Campbell

Sophisticated investors avoid placing specific dates on their contract conditions, Instead, they use a specific number of days after acceptance. For example, rather than "Subject to buyer's lawyer's approval by May 11, 2010", the statement should read, "Subject to buyer's lawyer's approval within 14 days of acceptance." That way, if the negotiations go back and forth for a while and the vendor finally agrees, to the contract two weeks after you started the process, you are not under any additional time constraints. [2009] - Don R. Campbell

Multiple Offer Strategy - You will create two clear and distinct offers, for example: one that focuses on a higher price with a longer closing date, and a second one that focuses on a shorter timeline, yet with a lower price. Another example would be: one offer at a lower price and no vendor take back (VTB) mortgage and another at a higher price with a VTB. [2009] - Don R. Campbell

The most effective way to get your offer accepted is to attach a cover letter to every Offer to Purchase you submit. The job of this letter is to clearly communicate to the vendors why he or she should accept your offer; it points out the highlights of the offer and any additional information that the vendor would find comforting, ,such as your experience and maybe even a testimonial or two from previous vendors from whom you have purchased. Keep the letter short and to the point. Sign it in blue ink, so it doesn't look like a photocopy. [2009] - Don R. Campbell

Private money is made available through Mortgage Investment Corporations (MICs). Put together through a Mortgage Broker Office, they represent an amalgamation of private investors' funds. MICs tend to lend on the strength of the property versus the borrower. Most private lenders will go as high as 85% financing, and a few may even push that to 90. This can be expensive money. However, it can also be a lifeline you can use as you buy a property that is extremely undervalued or under-rented. [2009] - Don R. Campbell

As an investor, you must find a broker who has substantial experience in investment property financing, completely different from an average broker whose focus is on home buyers. Make sure they are an accredited member of the Canadian Association of Accredited Mortgage Professionals (CAAMP) and come with extensive references from fellow investors. Search the discussion forum at www. myREINspace.com to find the best one for you. [2009] - Don R. Campbell

Many investors have had the experience of being turned down by a banker at one branch, only to get a mortgage at another branch of the same bank. The relationship you create with a person counts for a lot more than most of us realize. Choose a banker who's very experienced in residential real estate investing. [2009] - Don R. Campbell

Almost any bank will give you 1/4 percent to 3/4 percent rate reduction just for asking; a quality mortgage broker will be negotiating on your behalf to get these reduced rates. You can even get more in some circumstances. With personal lines of credit, it's not unheard of to receive below the bank's prime rate if it is secured on a piece of property. [2009] - Don R. Campbell

Unlike the purchase of a personal residence, it is impossible to get "pre-approved" for an investment property. The property, and the cash flow it creates, plays a major part in the final approval from the bank...not just your credit score and history. [2009] - Don R. Campbell

There are a few banks out there that offer PLCs (personal line of credit) you may choose to avoid. Here's what to watch out for: a. The bank requires a minimum monthly payment on a secured PLC, made up of a combination of the interest and some principal. A common amount for these payments is 3% of the outstanding balance (as opposed to interest only, which is usually less than 1% per month) . b. The PLC has an annual or monthly fee. c. The bank makes you re-apply for the PLC or package service each year. d. The bank places the PLC interest rate on their "personal loan base rate" (or some other fancy name) which is 0.5% or more above prime. You may think you're getting a prime plus 2% rate, when in fact you're being charged prime plus 2.5%, or even more. [2009] - Don R. Campbell

Some bankers include your credit potential in their TDS (total debt service) calculations. This means that if you have a credit card or PLC (personal line of credit) with a significant unused balance, a banker may calculate what the payment would be if you maxed the credit card or PLC, thus reducing your ability to obtain a mortgage. If your banker insists on doing this, go somewhere else because other lenders may not be required to underwrite that way. [2009] - Don R. Campbell

When bankers see a lot of inquiries on your file, they regard you as a credit seeker. And even worse, if there are no recent loans, mortgages or credit cards to match each inquiry, they'll assume you were declined for financing at another institution, and therefore you must be a bad credit risk. (Please note: Your own inquiries about your file at the credit bureau's office are not recorded on your file in most jurisdictions). [2009] - Don R. Campbell

Beacon Score: Credit scores range from 400 to 850; The average consumer has a score of 700; First-rate bankers want a score of at least 640; Second-level bankers want a minimum score of 600 or higher. The number of inquiries on your file can negatively impact your score. Unsophisticated investors who shop loans to many institutions, or apply for a bunch of credit cards as a way to invest in real estate, will have lower scores. [2009] - Don R. Campbell

Most banks have a list of acceptable appraisers. When appraisers do appraisals for a bank, they tend to protect their trusted position with the bank. When they do appraisals for vendors, they tend towards the higher end of the range. [2009] - Don R. Campbell

The question "Do you agree?" is a powerful tool. Use it often and use it early to encourage the other party to keep repeating the word yes! [2009] - Don R. Campbell

Make an offer that is crazily low. It usually brings a startled response from the other party. You then say, "Well, what did you have in mind?" Psychologically, the vendor will choose a figure closer to his or her bottom line because he or she will try to minimize the difference between the two numbers. A word of caution: don't use this technique unless your relationship is quite strong. This tactic can cause anger in the other party; you could lose face in the negotiation and the vendor may outright refuse to negotiate with you. [2009] - Don R. Campbell