Real Estate

Locked: Want to purchase my first home - I have some uh.. unique problems

  • Last Updated:
  • May 9th, 2021 5:10 pm
Deal Expert
User avatar
Feb 8, 2014
32149 posts
15427 upvotes
Socially Distanced
Syne wrote: Sounds about as spicy as white people cuisine.
No comment.

BTW many people want to get equity out of their house to invest with for higher returns, you can think of this as a workaround, you don't need to extract money from your house to invest with, you already have the money.
And with the higher returns you will be able to buy a house in the future straight cash.
In fact in Rand McNally they wear hats on their feet and hamburgers eat people
Member
Feb 16, 2007
465 posts
218 upvotes
Ontario
Syne wrote: These two things are entirely unrelated. I declared bankruptcy last year, prior to these earnings. You seem upset. If you can't help me, maybe you should just move along.

I'm not just going to stop working because I've declared bankruptcy. This is my full-time job. The liquidity problems are unique to cryptocurrency (for now) but you seem hung up on things entirely unrelated to my questions.

- I have money
- I want to purchase a home
- I have issues that might complicate the home purchase
- Can you help me?
Does your LIT know that you have money/crypto? If not, then that's fraud.
Newbie
Dec 17, 2018
34 posts
17 upvotes
- I've just declared bankruptcy. I have paid my trustee and I sign my discharge papers next week. I have $0 debt
None of the major banks will consider lending if you've just declared bankruptcy. They'll want many years to have passed since the discharge and a re-established credit history.

- I have somewhere in the ballpark of $50,000 - $75,000 in cryptocurrency
Has to be converted to Canadian dollars.

- I am 'unemployed' on paper, but I spend my entire day researching and investing in crypto
Unfortunately no bank will consider this as income.

- Should we just get a modular home around ~150k and start there?
Very, very difficult to get financing in the first place, and even more difficult for you according to your unique situation above.

- Is it worth talking to a private lender? Will they accept Bitcoin?
Private lenders will consider your situation depending on your location but imo this is not the path to take. A private lender is only worth talking to if you're able to get out of the private financing within a year or less. If there's no plan to leave the private lender, then you're much better off paying rent than paying the high interest plus the fees that come with private lending.

In short, the only place you'll find financing is probably with a private lender BUT private lending is not worth considering in your case.
Member
Jun 6, 2014
317 posts
145 upvotes
Toronto, ON
Bitcoin is convertible into cash. If you want to buy something you convert the Bitcoin to cash and pay with the cash.

And if you used your crypto to pay for your house downpayment. Where is your money for your continued investment coming from?
Jr. Member
Aug 28, 2014
128 posts
95 upvotes
Thornhill, ON
I’m in the same boat with my Crypto. I’ve read that if you pull out those gains into CAD or USD you’ll have to pay capital gains tax on that. Have you looked into that?
Deal Expert
May 30, 2005
49009 posts
10302 upvotes
Richmond Hill
Having seen your previous thread, I question whether this thread is for the kicks or not.

1) 75-100K isn't a lot of money for a property
2) You don't have a stable income to qualify for a mortgage - you are basically self-employed, which means you have to use your past two years of T4 to prove your income. Which brings me to the next point that
3) You don't have any T4's showing your income to qualify for a mortgage

If you earn as much as you claim to, your best bet is to go all in on some no-name coin and make 10X on it so you can buy the home outright.
Tons of things for sale!
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Newbie
Dec 2, 2011
76 posts
41 upvotes
ORLEANS
Thank you all for the interesting, at times amusing, rreading

OP, it is clear that you won't get the answers you are looking for here and possibly not elsewhere either. You may, nonetheless, want to reach out to a mortgage broker to get a more official and exact answer about your options or lack thereof. There are several who post in the giant mortgage thread on RFD.

I'd be curious to know how things work out for you. I hope you'll update this thread to let us know how what happens.
Deal Guru
May 9, 2007
14883 posts
4842 upvotes
Nanaimo, BC
In under to get an uninsured mortgage you need 20% down payment. So if a person had $75k down, that would qualify them for a $375k purchase ($300k mortgage). (Remember, there are costs associated with buying... conveyancing, lawyer’s fees, taxes, electric hookups, telephone/internet hookup, etc.) Are you going to find a property for under $375k?

Then consider what kind of risk you are. Would you lend money to someone who had your track record for paying debts? Or would you want a premium to lend that person money?

Consider the lender’s perception of your certainty of future income flow. Equity investment income is risky for cash flow. Potentially high profit investment are riskier for predicting cash flow and abilto make recurring debt payments. Cryptocurrency is among the highest risk “investments” going. Some view it more as speculation or gambling that investing.

You refer to possibly buying a “modular home” to build equity. I’m not sure whether you mean a “mobile home”. Typically, it is land value, not buildings, that give the significant appreciation of value. Mobile homes typically deprecate in value. A person might rent the “pad” for the mobile home, therefore have no appreciating asset. Alternatively, they may own the pad, as part of a strata, but pads do not appreciate like residential lots. A person can tear down a house on a residential lot and build a new house. They may be able to subdivide a lot. They may be able to rezone a lot. None of these apply to a strata pad.

Financial institutions are required to have “stress tests” for mortgages. “What happens if interest rates go up? Can this borrow manage the payments?”
The Office of the Superintendent of Financial Institutions (OSFI) unveiled its proposed changes on Thursday, which would require borrowers applying for uninsured mortgages—typically those with more than a 20% down payment—to qualify at their mortgage contract rate plus two percentage points or 5.25%, whichever is higher.
So if you could get a high risk mortgage at say 8%, the financial institution would have to test whether you could make payments at 10%. Given your history of not paying debt and your unpredictability (or even uncertainty) of income, I think that would be a tough test. It us challenging even those with stable, predictable income.
”The maximum amount that can be borrowed under the new rule would decrease by 4.5% (from $442K to $422K for a median-income household),” National Bank economists wrote. In comparison, they noted that the B-20 stress test implemented in January 2019 requiring homebuyers to qualify at the higher of either the 5-year posted rate or the contractual rate plus 200 basis points reduced purchasing power by 22%.
https://www.canadianmortgagetrends.com/ ... er-june-1/

You say that you were bankrupt a year ago and, “I actually work extremely hard and I'm paid very well for the work that I do. In fact, I've never a.) worked this hard -and- b.) earned this much - in my entire life.” If you can go from zero to $75k (before taxes) in a year, imagine how far you can go in a year starting with $75k. At that rate, you may be able to buy a house for cash in a year or two.

(You also say, “I'm not sure why people seem derisive about my choice of employment.”, so it appears that you would represent yourself to a financial institution as “self-employed”. They may well want to see cash flow statements of your self-employment and relevant income tax reporting. I’m assuming you have those.)

Turning zero dollars into $75k is something to be proud of. I wish I could do that, but I don’t have the stomach for the risk. I suggest that you have more confidence in your financial acumen than lenders might.

If you take the risk and succeed, you may become wealthy, own a home outright soon, and be offering mortgages to others.

If you fail without mortgage debt, presumably the worst case scenario is that you will be back to where you were a year ago.

If you fail, and have mortgage debt, you will have two bankruptcies early in life.
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Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
OP declared bankruptcy, dabbles in crypto and wants to buy real estate.

I mean... if that isnt a warning sign i dont know what is...
Deal Addict
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Apr 12, 2013
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Moon
First thing they will ask you is proof of income. What would you provide? That should already answer your question.
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Penalty Box
Mar 27, 2004
10493 posts
9009 upvotes
Toronto
i expect better quality threads from someone that has almost 14k posts.
Full-time Realtor
Deal Guru
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Dec 7, 2009
13885 posts
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MexiCanuck wrote: In under to get an uninsured mortgage you need 20% down payment. So if a person had $75k down, that would qualify them for a $375k purchase ($300k mortgage). (Remember, there are costs associated with buying... conveyancing, lawyer’s fees, taxes, electric hookups, telephone/internet hookup, etc.) Are you going to find a property for under $375k?

Then consider what kind of risk you are. Would you lend money to someone who had your track record for paying debts? Or would you want a premium to lend that person money?

Consider the lender’s perception of your certainty of future income flow. Equity investment income is risky for cash flow. Potentially high profit investment are riskier for predicting cash flow and abilto make recurring debt payments. Cryptocurrency is among the highest risk “investments” going. Some view it more as speculation or gambling that investing.

You refer to possibly buying a “modular home” to build equity. I’m not sure whether you mean a “mobile home”. Typically, it is land value, not buildings, that give the significant appreciation of value. Mobile homes typically deprecate in value. A person might rent the “pad” for the mobile home, therefore have no appreciating asset. Alternatively, they may own the pad, as part of a strata, but pads do not appreciate like residential lots. A person can tear down a house on a residential lot and build a new house. They may be able to subdivide a lot. They may be able to rezone a lot. None of these apply to a strata pad.

Financial institutions are required to have “stress tests” for mortgages. “What happens if interest rates go up? Can this borrow manage the payments?”



So if you could get a high risk mortgage at say 8%, the financial institution would have to test whether you could make payments at 10%. Given your history of not paying debt and your unpredictability (or even uncertainty) of income, I think that would be a tough test. It us challenging even those with stable, predictable income.



https://www.canadianmortgagetrends.com/ ... er-june-1/

You say that you were bankrupt a year ago and, “I actually work extremely hard and I'm paid very well for the work that I do. In fact, I've never a.) worked this hard -and- b.) earned this much - in my entire life.” If you can go from zero to $75k (before taxes) in a year, imagine how far you can go in a year starting with $75k. At that rate, you may be able to buy a house for cash in a year or two.

(You also say, “I'm not sure why people seem derisive about my choice of employment.”, so it appears that you would represent yourself to a financial institution as “self-employed”. They may well want to see cash flow statements of your self-employment and relevant income tax reporting. I’m assuming you have those.)

Turning zero dollars into $75k is something to be proud of. I wish I could do that, but I don’t have the stomach for the risk. I suggest that you have more confidence in your financial acumen than lenders might.

If you take the risk and succeed, you may become wealthy, own a home outright soon, and be offering mortgages to others.

If you fail without mortgage debt, presumably the worst case scenario is that you will be back to where you were a year ago.

If you fail, and have mortgage debt, you will have two bankruptcies early in life.
Thanks Mexi. Always valued your input in all things.
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Deal Guru
User avatar
Sep 21, 2007
13046 posts
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...
Sanyo wrote: OP declared bankruptcy, dabbles in crypto and wants to buy real estate.

I mean... if that isnt a warning sign i dont know what is...
WSB at it's finest lol. I hope it works out for OP somehow though. I'm with another poster on here.. throw another 10k into Dogecoin.. and hope it hits $1.. THEN if it does.. cash that out.. look for a stable job for 1-2 years then you'll likely be approved for a mortgage..

Also.. we are in a middle of a housing boom.. you're going to be paying crazy premium on properties...
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
Deal Addict
User avatar
Jun 24, 2002
3651 posts
1429 upvotes
BC
oasis100 wrote: i expect better quality threads from someone that has almost 14k posts.
Wisdom does not come from a high post count. There is a proverb about opening one’s mouth and being an idiot somewhere in there.

If you’re such a smart investor op, just pay cash after a few moons. Start paying taxes bum.
Newbie
Jan 11, 2021
14 posts
5 upvotes
The issue is that cryptocurrency is in a mania phase. Everything is going up and all “investors” think they’re geniuses.

Eventually, most coins will be worthless and this entire ponzi pump and dump scheme will collapse.

I know a few people that trade crypto full time. Research = following people on Twitter.

In my opinion, this is not a job, it’s a side hustle, and most will lose their shirts when it collapses.
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User avatar
May 27, 2007
16088 posts
4769 upvotes
Toronto
Jon Lai wrote: Having seen your previous thread, I question whether this thread is for the kicks or not.

1) 75-100K isn't a lot of money for a property
2) You don't have a stable income to qualify for a mortgage - you are basically self-employed, which means you have to use your past two years of T4 to prove your income. Which brings me to the next point that
3) You don't have any T4's showing your income to qualify for a mortgage

If you earn as much as you claim to, your best bet is to go all in on some no-name coin and make 10X on it so you can buy the home outright.
Thanks Jon. Can't tell if OP is serious, but I'm leaning more on not based on post history. Consider seeking some professional advice.
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