Real Estate

Spike in Pre Con Assignment listings?

  • Last Updated:
  • May 21st, 2017 8:38 am
[OP]
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Sep 8, 2007
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Way Out of GTA

Spike in Pre Con Assignment listings?

With the slowdown has anyone noticed an upsurge in the book a house pre con assignment flippers coming to market? Anyone know flippers that are getting nervous about the gigantic financial obligation they have and now thinking "maybe I need out?"

But if they can't sell maybe they can rent that $1mln detached for $2k a month.

No offense to flippers, just want to know the mood.
NO AGENTS PLEASE - I must be representing agent, no co-op commission.

2 EXCLUSIVE assignment deals for 2 FREEHOLD townhomes. If these units close and hit the market, you will be going into a bidding war and paying $600+ for the units.

You will need roughly $80,000 upfront to take over the deal until closing.

LOCATION: Whitby (Dundas St. E. & Garden St.)

CLOSING: 1 unit ready in 2 months, 1 ready in October 2017

FINANCIALS:
• Asking Price: $550,000
• Original purchase Price from builder: $340,000 & $380,000
• Original deposit: $30,000
• Call me about financials and how to make the deal work

DETAILS: Freehold, 1 unit @ 1504 Sq.Ft. , 1 unit @ 1490 Sq.Ft., 3 bedrooms, 3 bathrooms, backyard, parking, all appliances included.


Call me about this or any other project that you would like to discuss. I get exclusives weekly for preconstruction and off-MLS deals.
http://www.kijiji.ca/v-house-for-sale/o ... nFlag=true
17 replies
Newbie
Mar 2, 2016
76 posts
14 upvotes
These sound like pretty good deals to me. If original purchaser paid 340k the. The profits should be at least 200k and thats what the buyer is supposed to have as cash upfront. But if they really asking for 80k until closing, its a good deal.
Penalty Box
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Dec 16, 2015
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hmm a cool 200k profits.....................................they're not worried at all!!@
Member
Jan 31, 2016
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Toronto, ON
That ad has the vibe of a latenight infomercial.

Supposed to be a real estate sales professional?

Act fast!!!!!! Before we have to close on this condo and lose our deposit.
[OP]
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Ketchenany wrote:
May 18th, 2017 7:55 am
That ad has the vibe of a latenight infomercial.

Supposed to be a real estate sales professional?

Act fast!!!!!! Before we have to close on this condo and lose our deposit.
One thing I was looking to highlight is that this flipper still makes great profit at both $500k and even $450k. So if things weaken are they just going to close on it...Or capitulate and take whatever the market will bear and still make out like bandits. I doubt the flipper has the financial ability to close on 2 properties and then what rent it out? Maybe but unlikely.
Deal Fanatic
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Mar 31, 2008
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cartfan123 wrote:
May 18th, 2017 8:55 am
One thing I was looking to highlight is that this flipper still makes great profit at both $500k and even $450k. So if things weaken are they just going to close on it...Or capitulate and take whatever the market will bear and still make out like bandits. I doubt the flipper has the financial ability to close on 2 properties and then what rent it out? Maybe but unlikely.
There's increasing scrutiny from lenders, especially on multiple properties. And due to the the whole HCG thing, other alternate lenders are swamped and taking alot longer to approve loans.
Member
Jan 31, 2016
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Toronto, ON
Along to same topic.

Dumb question maybe, but I assume any and all profit made from an assignment sale must be reported to CRA as capital gains?
[OP]
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Ketchenany wrote:
May 19th, 2017 12:11 pm
Along to same topic.

Dumb question maybe, but I assume any and all profit made from an assignment sale must be reported to CRA as capital gains?
Should be but let's just say 'pre con book-a- house flippers' aren't generally into ethics or the law (paying taxes) if you know what I mean.

Hence why it's been on the Feds radar for tax avoidance/evasion. And there should be a paper trail if the CRA wanted to follow the money from when builder first sells the house to the flipper then to the ultimate owner. Either the flipper or ultimate buyer would have had to make a substantial deposit or withdrawal.
Sr. Member
Feb 9, 2013
886 posts
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Mississauga
• Asking Price: $550,000
• Original purchase Price from builder: $340,000


Question about capital gain tax.

Scenario 1:
If owner makes this as primary residence, lives for about 1yr. Say value after 1 yr is $650,000 then sell.
$650,000 - $340,000 = $310,000 capital gain is non-taxed.

Scenario 2:
If owner rents this out after closing, for about 1yr. Say value after 1 yr is $650,000 then sell.
$650,000 - $340,000 = $310,000 capital gain is TAXED, (on all gains)?

Scenario 3:
If owner rents this out after closing, for about 1yr. Say value after 1 yr is $650,000 then makes it his/her primary resident and lives for a year then sell at $750,000.
What portion is taxed, and what portion is not, from $340,000 to $750,000?
[OP]
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jdu0ng wrote:
May 19th, 2017 12:39 pm
Question about capital gain tax.

Scenario 1:
If owner makes this as primary residence, lives for about 1yr. Say value after 1 yr is $650,000 then sell.
$650,000 - $340,000 = $310,000 capital gain is non-taxed.

Scenario 2:
If owner rents this out after closing, for about 1yr. Say value after 1 yr is $650,000 then sell.
$650,000 - $340,000 = $310,000 capital gain is TAXED.

Scenario 3:
If owner rents this out after closing, for about 1yr. Say value after 1 yr is $650,000 then makes it his/her primary resident and lives for a year then sell at $750,000.
What portion is taxed, and what portion is not, from $340,000 to $750,000?
There is a deemed disposition/acquisition at the date it becomes a primary residence at fair market value (FMV)...in this current FMV at conversion date is $650. $310 is taxed as capital gains. Then it turns into principle residence (deemed acquisition at FMV) so $100k increase is not taxed as part of the principle residence exemption..
Deal Addict
Feb 9, 2009
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jdu0ng wrote:
May 19th, 2017 12:39 pm
Question about capital gain tax.

Scenario 1:
If owner makes this as primary residence, lives for about 1yr. Say value after 1 yr is $650,000 then sell.
$650,000 - $340,000 = $310,000 capital gain is non-taxed.

Scenario 2:
If owner rents this out after closing, for about 1yr. Say value after 1 yr is $650,000 then sell.
$650,000 - $340,000 = $310,000 capital gain is TAXED, (on all gains)?

Scenario 3:
If owner rents this out after closing, for about 1yr. Say value after 1 yr is $650,000 then makes it his/her primary resident and lives for a year then sell at $750,000.
What portion is taxed, and what portion is not, from $340,000 to $750,000?
Scenario 3- not taxed since that is the owners primary residence for the year regardless of you renting for 100 years before that.
Member
Jan 31, 2016
372 posts
89 upvotes
Toronto, ON
Thank you. Settled an argument with a co worker who said it is not taxable. They have since back tracked and said it is easy to get away with not reporting.

I guess if the CRA wanted to they could essentially monitor all sale ads for assignments either by realtor or buy owner for further tax investigation. Wonder what would happen if they passed a bill opening up all builders files for assignments for the last 5 yrs to the CRA.
Deal Addict
Sep 12, 2006
1090 posts
125 upvotes
Never understood these types of postings. It's not the buyers that have to "Act Fast" with 2 months until closing. Price isn't that great for the area, why would anyone do them a favour and buy this before they have to close? Same thing happened with the Eldora towns at Yonge and Finch when pretty much all of them were listed for assignment and not many of them were actually sold before closing. Only in our irrational market...
Deal Addict
Feb 9, 2009
4175 posts
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alex_d10 wrote:
May 19th, 2017 1:09 pm
Never understood these types of postings. It's not the buyers that have to "Act Fast" with 2 months until closing. Price isn't that great for the area, why would anyone do them a favour and buy this before they have to close? Same thing happened with the Eldora towns at Yonge and Finch when pretty much all of them were listed for assignment and not many of them were actually sold before closing. Only in our irrational market...
For buyers make no difference they are getting market value but a brand new never lived in house. Some people want to buy quick but want a newer house, etc.
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Jul 14, 2008
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Ontario
Ketchenany wrote:
May 19th, 2017 1:05 pm
Thank you. Settled an argument with a co worker who said it is not taxable. They have since back tracked and said it is easy to get away with not reporting.

I guess if the CRA wanted to they could essentially monitor all sale ads for assignments either by realtor or buy owner for further tax investigation. Wonder what would happen if they passed a bill opening up all builders files for assignments for the last 5 yrs to the CRA.
If I recall correctly, the CRA hired a bunch of new hires years ago with one of it's purposes to locate these assignment flippers who are getting away with not reporting. If you're earning good money on the transaction anyway, no need to play games with the CRA. That's just stupid, and potentially, very costly. And yes, I've been told by professionals in the RE industry to do such a thing in the past - who of all people should know better.

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