Despite the fact that the average home price in Brampton has gone up 35 per cent in the last 12 months, this part of the Greater Toronto Area remains one of the most affordable. Given the high demand, that may not remain true for long, but it is a trend that you can take advantage of, whether you plan to live in Brampton or purchase Real Estate Investment property as an investor.
The primary area of growth in the Brampton market is in detached, single-family homes – particularly on the higher end of the market. The average selling price for a home as of April 2017 was $668,827, up from $481,153 12 months before. The luxury homes – particularly in those neighborhoods Streetsville Glen, Vales of Castlemore and the Riverstone Community – sell for between $1.1 million and $2 million.
So what does this mean for HOS Financial investors?
Brampton is the type of market that excites real estate investors. A lot of the buyers here are upwardly mobile, which means that they may be pushing the limits of what they can borrow. You’re also looking at couples who are looking to start a family and are ready to leave that apartment/condo lifestyle behind. The way lending is working right now, a lot of people who apply for mortgages will experience difficulty in gaining loan approval despite having the means to afford the payments on a home, and so a “rent to own” program could help them stop the rent cycle and become a home Owner. A lot of people think that “rent to own” means looking down a small set of listings on the back of the classifieds and having to settle for much less in terms of quality. However, in the aftermath of the 2008 housing collapse, more and more people are hearing “no” from traditional lending sources. Bank lending guidelines have become much more conservative, particularly in the areas of credit score and income verification. That means that a lot of people who would have qualified for loans before – and have the means to purchase homes in upscale parts of Canada, including the Brampton Region – need alternate forms of financing. If they don’t have the large down payments that private lenders ask for, then they often end up looking for lease purchase agreements.
Even if you don’t have the money to purchase an investment property and put it on a lease purchase or Rent to Own agreement for two or three years, you can still pool with your funds with the money from other investors and buy a property through the HOS Financial system utilizing Joint Venture.
Here’s how it works. You invest, either as a sole owner or as part of a group, in a property. In many cases, a borrower/tenant has approached HOS Financial with interest in a particular house, and then you invest in that house. The borrower/tenant then puts down a deposit – typically a minimum of 5% of the Purchase Price. This will eventually go toward the down payment at the end of the Rent to Own agreement, but for now it is your security deposit.
Then the borrower/tenant starts paying rent each month. The rent is set at or near the top of the local market, and then on top of base rent the payment includes a monthly contribution toward that eventual down payment. This extra amount is known as an option Credit, Credit you will give the tenant when they exercise the option to buy the house at the end of the Rent to Own Term. You benefit from the interest on that money – and in the unlikely event that the borrower/tenant cannot qualify for bank financing when the lease term ends, you get to keep most of the money – the deposit, the rent and the extra payments for down payment credits.
But in a very high percentage of our Rent to Own Programs, the borrower/tenant fixes his or her credit or income history issues over the course of the lease purchase agreement and exercises the option to buy the house. HOS Financial screens potential borrower/tenants just as carefully as the banks do, and we have developed a reliable system for identifying people who are (and are not) likely to succeed in tour Rent to Own program. So at the end of the Rent to Own Program, you walk away with the principal you invested plus the Monthly Cash Flow and Profit on the Sale to the Tenant. At that time, you can either invest in another property or pursue other opportunities.
Interested in what HOS Financial has to offer? Give one of our rent to own specialists covering the Brampton Region a call today. We have helped many investors turn a profit that rivals gains from mutual funds and stock investments without the risk that the markets represent. We look forward to talking to you and helping you decide whether HOS Financial is the right investment choice for you.