Frustrating financing

I’m writing this post from beautiful Sayulita, Mexico today. A long time ago we decided we wanted to set up a life that allowed us to leave Canada for a few months in the winter and our investing portfolio has allowed us to do that. While for the most part we aren’t working during our time away, we are still managing properties and working on deals from a far. One of the deals we are working on is currently falling apart. Don’t you hate it when that happens? 

We co-own the mixed use commercial residential building and our partners in that deal are starting to think about their exit strategy. We saw this as an opportunity to buy out their half and be full owners increasing our net worth. Our lender told us we could make this happen just a couple weeks back and now is telling us a different story. The original deal would require $80k from us but now it’s going to take $200k. That’s a big jump!  Humph! Our minds are working over time trying to think of another way to pull this deal back together but so far we’ve got zilch. 

Here are the options we’ve considered so far: 

• First, attempt to turn this back in our favor by seeking out other financing options.

• Second, do a vendor take back mortgage from the partners. This entails paying the partners out over time. They get the price they want plus interest but it is a riskier way of doing things.

• Third, leverage other investments in our portfolio. This is probably our least favourite option because we don’t want to tie up capital. The intent is to pay down the mortgage with the money made from tenants not with our cash.

• Fourth, continue to be partners. Fortunately, our partners are not in a rush to exit and we quite enjoy working with them :)

• Fifth, sell the property. This option obviously does not achieve the original goal but could be a feasible work around.

This is where we are at this week. Stay tuned to hear how this all turns out! 

See you on the flip side!