Hamilton remains one of the up-and-coming cities within the Greater Toronto Area – but prices are on the rise there, just as they are everywhere else in the region. Prices have gone up considerably in the last 12 months – but you can still buy a home in just about any part of the city for an average price of less than $500,000.
The city has a blue-collar history, but with younger people moving into the city, that will change as industry changes as well. George O’Niell, CEO of the Hamilton-Burlington Realtors Association, compares Hamilton to Queen West in Toronto – but across the whole city, rather than just a neighborhood. You get a lot of artists moving to Hamilton because of the raw, urban feel of parts of the city, but you also get younger couples looking to enter home ownership in an area that is about to boom.
One of the most highly rated neighborhoods in Hamilton is Crown Point East. In a young and hip city, this is the youngest and the hippest neighborhood. Independent eateries and other establishments are popping up left and right, and GTA home buyers who want the most for their money are moving in.
Not to be outdone, Crown Point West has seen its property values almost double over the last five years. Even so, you can still get a significant discount here in comparison to the rest of Hamilton.
A lot of investors look in Gibson – because you can get a couple of properties for what one would cost you just a few blocks away. The houses tend to be older and smaller – but you also get some streets with homes that date back to the Victorian era – even holding the original decorative trim.
Finally, the St. Claire neighborhood is red-hot. A lot of properties are going by at least $100,000 over list price, if not even higher. Stinson Properties has been taking some of the older buildings in the area and turning them into loft apartments, such as the Stinson School Lofts project, which converted a schoolhouse that dates back to 1894.
So what does this mean for HOS Financial investors?
Hamilton is the type of market that excites real estate investors. A lot of the buyers here are looking for their first home purchase, and they’ve chosen a city where they can get more home for less money. This also 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 guidelines are 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 well structured “rent to own” program could help young buyers avoid staying on the rent cycle when their bank says no. 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. This is not the case as Rent to Own is becoming more and more of a main stream solution for consumers who can not get mortgage approved by their bank.
In the aftermath of the 2008 USA 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 consumers who would have qualified for loans before – and have the means to purchase homes in upscale parts of Canada, including the Hamilton 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 or Rent to Own 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 Hamilton 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.