Thursday, June 06, 2013

Good To Know: Long Distance Closing

I am currently closing on a property that is located in the maritime. This time last year I was doing the same thing with a different property also out in the maritime. When talking about investing in real estate over there I always get asked when do I go view the property. It seems to baffle people that I do not. The next question I get is how do you close on a property over there. Well here is how you do it.

The first thing you need on site is a property manager. I get recommendation from my realtor and I Google for property managers. Once I have a list, I start calling and interviewing them. In a future blog I'll go in greater details on how I select a property manager, but just quickly make sure to discuss their rate, their services, and payment method. The first one I contacted for this particular property wanted to have access to a bank account that would have $10K in it at all time. He would collect rent pay all utilities and other charges that would incur and then pay himself and deposit whatever was left. This is not a bad deal if you are a brand new uneducated real estate investor I suppose; but I want to maintain the control.

Once I selected my property manager, I arranged for him and his contractor to inspect the property and to give me their honest opinion on the building. They can tell you what repairs needs to be done and offer a quote; the quality of the current tenants; if the current rent is within the current market rate and so on. Note at this point I have yet to sign a contract with the property manager. This is a great time to "test" them, how do they operate, how hard are they to reach, and so on.

I do the same for insurance companies, to make it a little easier and faster, I ask the realtor who is the current insurance company. It seems easier for them to insure a property that is already in their database.

Once your property gets the "Okay" and you are ready to move forward and close on the deal. You will need a lawyer in the same province as the property you are purchasing. In my case we only purchase property through corporation and I have a corporation in that province for that task that was set up with said lawyer.

I also have a local lawyer that will notarize all the paperwork that was sent from the original lawyer. Once that is done I scan all the document to PDF, send it to my lawyer in the maritime and courier the paperwork. This does seem to speed up the process a little bit.

The last thing you need to do is transfer the money into the lawyers bank account and the deal is done. Most lawyer's office will have multiple accounts in multiple banks making the transfer process easy. Chances are you can complete this whole thing from your own bank.

And this all it takes. A lot of people shy away from purchasing in other provinces then the one they live in, but once you get your team in place there is no reason to lose out on those great opportunity.