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What if………..

I’m sure as a Real Estate Investor you have had a few ‘What if…’ moments. Let me tell you about a  ‘What if…’ that happened to us in the last 2 years. This ‘What if’ concerns a Lease/Purchase of a single family residence. This one was a little too close to home, pardon the pun.


We had a very close friend, many people called him Uncle Bob, he had dinner with us several times a week, sometimes lunch and/or breakfast too. He lived quite a distance from his actual family so because I am a Real Estate Investor I thought I was in a position to help them all, and make a reasonable profit too. We discussed with them ways in which they could all live together, without paying more each month than they paid in rent. After many discussion, everything was coming together.

We checked out a few houses and they decided on the one they wanted, price was right, payments were less than the total they paid separately. The utilities were controllable and everything worked out great (there was a problem with the mortgage company but that is another story).  They, (Uncle Bob, his daughter, her spouse and her brother) all moved into the house, the few repairs needed were completed, everything being safe, secure and liveable. Uncle Bob – in his late 70s, was going to be looked after on a daily basis, he now lived with his immediate family and he was also close to his friends.


What happened 6 weeks after they all moved in was completely unexpected. Uncle Bob passed away.


When Uncle Bob was a young man, he was definitely not a saint, but for his last 40-45 years he was on the straight and narrow, never cheated anybody, and wouldn’t knowingly let anyone be cheated. We felt pretty secure in knowing that Uncle Bobs family were going to continue with the original plans, after-all the lease/purchase contract was in the daughters name, (Uncle Bob being too old to satisfy the mortgage requirements). No big deal, right?

Wrong! Background checks were flimsy because of Uncle Bob being a close family friend.  What we didn’t know until after the funeral, and the weeks following, Uncle Bob was paying for everything – his off-spring (hard to call them children) were milking their Dad for everything they could, everything was charged to his credit cards.

Due to the minor problems (mortgage) at the beginning of the move, we offered to help pay the extra expenses they had incurred, we paid 50% of the total storage and moving costs. Before the last lease payment we received, we were asked to pay the balance of our promise. We, true to our word, paid.

The next month, 2 weeks after Uncle Bob died, we received that months lease payment, we didn’t know we  weren’t going to receive any more payments. The off-spring were/are NOT as honourable as their father.

They didn’t pay the following month, and after receiving a lease payment reminder, we received an email

advising they were seeking legal representation ‘Without Prejudice’, well what else could we do – we got our lawyer involved too.

– they didn’t pay another dime,

– they allowed the basement to be damaged – water leak and never reported it.

– they ignored the eviction notice,

– they lost their sizeable deposit/down payment

– they ignored the notice to appear at the Landlord and Tenant hearing,

– they ignored the judgement of the Landlord and Tenant judge.

– they ignored the sheriffs ‘vacate by date’ notice

– they skipped out before the sheriff did arrive to evict them.

– they are now hiding from the courts,

– they are hiding from business’ – landscapers, electrician, plumber, car mechanic,

– they will lose their summer vacation accommodation (trailer & site), money owed. And credit check.

– they are now blacklisted, Credit check.

– they are hiding from a collection agency,

– they can’t get credit cards (as if they could before)

– they will never know who may find out – new landlords, possible employers, licensers, magazine subscriptions, Credit check.

– they will not be able to get insurance for their car, tenant insurance or any other kind of insurance. Credit check. Credit check.

– they are players, they know how to work the system, but they are still not too smart.

– they do not know what it is like to be trusted and respected, to walk down the street without looking over their shoulders.


‘What if‘: What if we never lease/purchase a property to someone we love and respect again? Yeah! that’ll work. Emotional contracts and deals will never be in our portfolio again. Hard lesson – learned well. And we can walk down the street without looking over our shoulders. My biggest concern is Uncle Bob and his disappointment with his own off-spring.

Investing in Real Estate? Great!

Don’t ask family or friends for money before reading this

Every new investor is told to get as much money as possible in your bank account – the more money you have in the bank the better the mortgage rates and easier to obtain. Ask your family and friends to invest their money with you, everything will be in writing, legal, they know you the best and have more trust in your character, than the bank does, and they know you will always pay them back, with interest. Do you think they will invest with you because you are such a great person. This may be true, yes, you are a great person, you are reliable, and you are the most sincere, trust-worthy, loyal, honest, dependable and generous. Hold on ONE MINUTE; Even though everything above is absolutely true, there is one other thing to think about, which should be the number one consideration, regardless of how much money is involved;EMOTIONS… STOP looking through Rose Coloured Glasses. The friends or family may be more in need of that money in the future, before your promise to re-pay is due. Life happens – emergency repairs in their home (flood, fire, plumbing, tree falls on house, anything), emergency trip. Downsized, accident and the car needs repairs, another baby on the way and they have to move to a bigger place or add a room to their house. Emergency trip out of town – sick relative, funeral. Unless your family and friends is Mr. Trump, Mr. Buffett or other multi-billionaire, they will probably need their money back before you are ready to honour your contract. If you don’t think this could happen, do some research on family lawsuits at your local courthouse, read the newspapers, watch Judge Judy on TV. Parents sue their children, children suing their parents, siblings suing siblings. If there is a death in the family emotions are even more intense. Friends are slightly different, but the results are always the same. If hard earned money is involved, brotherly love or life-long friendships mean nothing. I would like to suggest, if you have done your due diligence and the investment is really a good deal, at the most ask them co-sign the loan, you will be wholly responsible for the loan repayment, and the family dynamic will not be interrupted. Unless you miss any of the payments, of course. You could always give them a thank you gift when you are financially flush. Before you ask your family or friends for financial help in investing – make sure YOU can afford it.



Christine Gilmet is an experienced Real Estate Investor, FUB Investing Inc, and a partner in Free Student Housing Canada. Creative investing is the art of the deal, with everyone leaving the table feeling as if they won.