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The now-derelict house at 28 Woodfield Rd. was purchased by Vansan in April, 2013, for $490,000. It was sold conditionally last week for $691,500 as part of a court-ordered process.

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The recent sale of an abandoned house in the Leslieville area of Toronto may serve as yet another cautionary tale for real estate speculators: The days of easy money flipping houses in Toronto may be over.

Exactly who is to blame for the undoing of Vansan Properties Inc. – which owns 28 Woodfield Rd. – is currently being disputed in court. Vansan owns two other abandoned houses at 113 and 115 Brooklawn Ave. in the Cliffside neighbourhood near the Scarborough Bluffs. 28 Woodfield was conditionally sold last week for $691,500 (it was initially listed for $800,000) as part of a court-ordered process initiated by a private lender. That lender appears to have loaned more than $1-million to the various investors in Vansan to bankroll the latter stages of the house-flipping.

It’s unclear who exactly will benefit from the proceeds of the sale of 28 Woodfield Rd.

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With the volume of detached-house sales way down in the GTA since 2017, and prices softest in the million-dollar-plus market, there seems little hope for a happy ending for this group of flippers, says Scott Ingram, an agent with Century 21 who alerted his Twitter followers about the Woodfield house last week.

“The easy money days are gone and would-be flippers are going to have to be much wiser in choosing properties, smarter with their budgeting and actually adding value with their work,” Mr. Ingram says. “Construction costs and costs of capital having risen, there’s a lot more risk in flipping. This should really separate the wheat from the chaff.”

The now-derelict house at 28 Woodfield Rd. was purchased by Vansan in April, 2013, for $490,000 and then sat half-demolished and empty except for raccoons for years. Vansan also purchased a larger chunk of land at 115 Brooklawn for $850,000 and set about tearing that house down, splitting the lot and constructing two new houses. None of the three houses were ever finished, even as real estate prices soared in 2016 and 2017.

The house at 28 Woodfield Rd. sat half-demolished and empty for years.

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“A lot of people have made money in the past 10 years flipping properties. The market was going so well that they didn’t even have to choose the properties wisely or do a good job. The fast-rising market could cover up their mistakes and still make them look smart,” Mr. Ingram says.

Neighbours of the Brooklawn houses – a street that has seen many large renovations or new-home infills in recent years – are particularly sick of seeing the “dump” on the corner.

“There was a dumpster full of garbage for 18 months, then they dumped all the garbage on the front lawn and took the dumpster away,” says Caitlyn Thornton, who has lived across the street for 20 years. “Police took a homeless woman out of there about a month ago.

“There’s a number of lots around here where this kind of thing has happened; cowboys thinking ‘Oh, it’s a quick buck.’ They don’t know what the hell they are doing.”

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Other neighbours have complained to the city and their local councillor, Gary Crawford, on numerous occasions and there is a notice from the city – dated April 19 and taped to the garage doors – ordering the owners to properly secure the building against intruders.

Land-registry documents illustrate a tangled financial web where over the years a parade of different companies and individuals loaned money to Vansan, sometimes using Woodfield and Brooklawn and other private residences as collateral. Different parties – investor Brent Westgate, Oakville-based businessman Mario Biasini and Aurora-based contractor Joe Silva – at different times are named as authorities signing mortgages for Vansan in amounts ranging between $92,000 and $392,000 and for interest rates of between 12 per cent and 15 per cent.

Attempts to obtain comment from the three men were unsuccessful.

"We lent them money to build and they didn’t build. It just seemed to me that it wasn’t an organized business,” says Ciro Varriale, a private lender who loaned Vansan $392,000 in 2014, but says he never really got to know the parties involved. “That whole thing was very strange. There was some hostility between the group.”

Then in June, 2014, Mati Siddiqui entered the picture, a private lender and real estate investor based in Mississauga who ponied up $800,000 at 15-per-cent interest to consolidate and clear a number of smaller debts, including the money owed to Mr. Varriale. In December, 2015, Mr. Siddiqui loaned Vansan another $220,000 through another company he controls called Shahan Enterprises Inc.

With Mr. Siddiqui's money, the projects at Brooklawn kicked into high gear, and the shell of two modern homes began to take shape. But according to neighbours, contractors would come and go, sometimes complaining of not being paid. Construction liens have been placed on the houses. Eventually, construction stopped before the interior of the houses were finished.

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Construction on 113 and 115 Brooklawn Ave. stopped before the interiors were finished.

Shane Dingman/The Globe and Mail

Mr. Siddiqui didn’t want to speak on the record, but his son, Muhammad Ali Siddiqi (who spells his name slightly differently), president of Mississauga-based property developer Veritas Group, said the company ran into trouble last year after the federal financial regulator brought in changes to mortgage lending that incorporated a stress test for most borrowers.

“Basically everything was going fine up until last year when the mortgage rules changed and [Vansan] realized that there was not much money left over, because the prices went down significantly for those properties when the mortgage rules changed,” the younger Mr. Siddiqi says. He says the Brooklawn houses were initially expected to fetch $1.8-million each in the hot Bluffs market. Now, he expects that if the houses were finished, they might only earn $1.5-million, and even that amount is, “questionable because there’s a stigma around them.”

Mr. Siddiqi said his father has a power of sale over the properties in order to force a sale and recover money, but he also says the Vansan partners are fighting him and each other about the terms. “It’s a big legal mess: You’ve got a situation where everybody is going to be badmouthing everybody else and the truth will come out in the courts. There are parties that are fighting over control of Vansan, which has nothing to do with Mr. Siddiqui; he doesn’t care who owns Vansan, he just cares about recovering his money.”

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