Rainy Day Indoors

Chapter One

John Blanche, 19 years old staying at home living on Lulu Island, during the worst rainstorm of the decade that was causing flooding. Many nearby cities were flooding: Seattle, Bellingham, Delta, White Rock, Surrey, Burnaby, Vancouver, and Everett. Surprisingly, his area was not being affected. He was stuck in his video games, playing COD (call of duty) and occasionally, he would switch to playing Minecraft. During, his intermission between the two games he went to his to internet to go to the email and checked it. He noticed that his last e-transfer from the money that he loaned to a friend had arrived. His friend had borrowed the money to in invest in two Quest-Trade portfolios. He borrowed a total of $20,000. He placed $10,000 in the Aggressive Portfolio and $10,000 in the Growth Portfolio. The aggressive portfolio grew by 20%, and the Growth Portfolio grew by 17%. He had paid in full, as he always does. John Blanche did not think it was normally ethical to charge friends interest on loans but because the amount was rather large he decided to charge a 5% compounded annualized interest rate with monthly payments, with his Honda Accord 2015 as collateral, it needed to be paid in five years. Today was the last payment.  

This gave him another great idea, seeing that his friend was great with managing his money and was a low financial risk. He rang his friend Jackie Stolberg, the one who gave paid back his loan.

Ring, Ring, Ring

Jackie Stolberg woke up, and from his afternoon nap.

Hello, Jackie, how are you?

I am doing fine Jackie said.

I am glad to hear that and to see that you have paid on time, just as you have paid every time.

Thank you. I have a business proposal, for you now said John.

Jackie said, go on. I am listening.

John replied, you know how you said you wanted to buy a property to live in, but could not afford one, because you only have almost enough for a down payment, and banks won’t lend you money right now, or its way to expensive, right?

Don’t remind me of that problem said Jackie.

Sorry, I did not mean to hurt you, but I am only saying this because I have a solution, and that was the whole point of this conversation replied John.

I’m sorry Jackie, he apologized.

Anyway, you were saying. Jackie continued.

Yes, so my proposal is this: we enter a contract where I buy the home fully for you, which includes paying for the down payment, and the mortgage, but catch is that you have to pay me back over time. I legally control the house, but you must pay for the repairs, renovations, electricity, water, taxes, etc., however, I will reimburse you for 20% of the monthly expenses that you incur in these categories. We can work out the other necessary details. I will give you the legal right to turn it into a rental property, giving you the ability to earn rent and gain from tax write-off from the interest, building depreciation, or repair/maintenance cost, and of course the appreciation it will have. However, any income that you do earn from this I want to take 80% of the revenues, thus, you will keep 20% of the proceeds concluded John.

That sounds interesting, not quiet a free lunch, but awesome. Let’s work on the details and hire an attorney now. When can I come over John?

Jackie, can you come over in like 20 mins?

Ya, but John, do you have an attorney?

Of course, I am an entrepreneur. I am worth millions—eight million dollars. I am self made. I have nearly the min requirement to start a bank which ranges from $10M to $30M. Just come over Jackie, sooner the better.

Chapter Two

Twenty mins later the doorbell rang a few times. John opened the door for Jackie.

Hey Jackie, how are you?

I am more than fine.

Anyway, do you want a drink Jackie?

Just water.

John quickly opened the tap and handed him the glass of water. Then walked him to table that he had set up for them to work on their ideas before approaching their attorney to set up the contract for them.

So, what terms do you want to include, said Jackie.

Well I looked up mortgage rates right now in today’s economy on GreedyRates.com and the interest rate average just happens to be equal to the number “e” or 2.718%, with monthly fixed payments and fixed interest on a five year term, and an option to refinance after the term. And the current annual inflation rate is 1.9%, but the inflation rate is projected to increase to 2% exactly, seeing as that is the case, I am prepared to offer you a 2.5% interest rate with the same terms of the banks. What do you think Jackie?

Well that seems too close to the banks average, I want a lower interest rate of interest and I want to get the 20% reimbursement on the inspections said Jackie.

Jackie, I do not think that you are in much position to negotiate, but I am willing to lower the percentage and throw in the 20% reimbursement on the inspections. What percentage were you thinking Jackie?

I am thinking 2.3%, replied Jackie.

That’s too low, replied John. My best and final offer is 2.4% said John.

That works, said Jackie.

I will issue a bond then and included in it will be all the additional notes. We will get the attorney to do this for us, said John.

That’s a deal, said Jackie. Alright, please call your attorney continued Jackie.

John had a fast conversation with his lawyer, Cam Warden, who said to meet at his downtown office in an hour. He has a about an hour to spare after they reach.

Chapter Three

After an hour of travelling, and preparation they drove down to his office and went up the four flights of stairs because the elevator was not working.

Hello, Cam, how are you?

John I am fine. I see you brought a friend, how are you guys?

I am fine, replied John. I am fine too said Jackie. I am Jackie by the way.

They shook hands.

So, I remember that you are wanting to enter into an agreement stating that you, John will buy a home for the your friend Jackie here, cover 80% of the expenses like electricity, water, repairs, and maintenance, anything else?

Yes Cam, we wanted to have in the agreement that I control the property and gain 80% of any cashflows that come from the property. Jackie will have the right to rent out the rooms.

A couple questions, and statements John. I expected you to know this, but that’s okay, I can explain this to you. What interest rate were you planning on using?

Cam, we were thinking 2.4% said Jackie.

Okay, I create a loan, but it would be in the form of a mortgage and it cannot legally include in Jackie having the legal right to rent the home out to other people, because then it will become a rental property and not a residential property, and he cannot live in it. At least that is what the rules are in our area. I am assuming you want to do monthly payments, with five-year term, non floating rates, with a fifteen-year mortgage.

No 30 years said Jackie, I need the payments to spread out longer because I need the payments to be smaller.

Wait, 30 years? I thought you wanted 15 years Jackie.

We didn’t even talk about that John, said Jackie.

I am here to help you out, said Cam.  If you pay me my retainer of $1,500, then I can help you write this agreement up and solve this minor problem. I am sure you have brought your retainer John. You have come to me for a few things in the past, said Cam.

Yes, oh sorry, thanks for reminding me said John. Here is my retainer of $1,500. Count it.

Cam counted the 15 $100 bills and put it in the currency counter, and it came up as $1,500.

Alright, now we are ready to get going said Cam.

My suggestion is 20 years?

No, Jackie turned to John and said how about 25 years period?

That is good, it allows me to have extended cash flow, and I get my money sooner.

Alright, that works for you guys we can include that in the agreement. What will happen if Jackie cannot pay?

Cam, then I will control the property, said John.

Oh right, said Cam.

Give me an hour. I’ll call you when it is done.

Chapter Four

The hour had passed, and the contract was ready to be picked up, but the office was closed. So, Cam called them and informed them about them about the situation that they can easily be picked up on Monday morning at 9 am sharp.

The next day, Jackie and John arrived late five minutes. The sectary at the front said you just missed him.

They bickered between themselves for a few minutes then they went to the secretary and asked her when Cam was able to meet them again. The secretary asked her what it was about.

John responded saying that we just needed a file from him. It would only take a few minutes.

Okay, if you guys can come back at one pm, then you can meet him and pick up the file.

Okay, they both responded simultaneously.

Chapter Five

Welcome, back what kept you? Said Cam.

Sorry Cam said John, I had a flat. Its all fixed now.

Oh, so sorry, said Cam. I am glad it is fixed now he continued.

Cam pulled out the document from the vault and handed John the document and asked them to sit down and read it over. While they read through the agreement, he explained it to them and showed them where to sign. They agreed, and signed the contract, smiling and in a great mood that day. However, three years later Jackie lost his job and contacted John telling him that. Consequently, being good buddies, they agreed that Jackie would be able to live rent-free in the home till he finds a job and live of EI for the time being.