Within Canada, one of the hottest real estate markets is in the Greater Toronto area. However, just as in any crowded, urban center, you’re going to pay a lot for a little (in terms of square footage). So while some people enjoy the city lifestyle, other people want room to spread out. That’s why the Niagara region is becoming popular in Ontario – a lower cost of living, more available acreage for the dollar, and a quieter lifestyle.
According to the Toronto Real Estate Board, the average cost of a home is $727,928 in Toronto – and approaches $800,000 if you want to buy in the 905 area code. That won’t drive off everyone – but there are some people who have started to look outside the city. The Niagara Association of Realtors reports that home values are rising there too, about 24 per cent now in comparison to this time last year. However, the average price of a home is significantly lower — $345,294. Prices can go well past $500,000 on the high end, but you can still save a lot of money in comparison to what you would find in Toronto, and you can get a lot more house and land for your money.
Commuters may blanch at the thought of the ride in from Niagara to Toronto, but it won’t always be like it is now. The GO regional express train network is set to offer weekday service to Niagara Falls by 2023, and new stations are also set to open in Grimsby, with upgrades set to come to Via Rail stations in Niagara Falls and St. Catharine’s. So moving now might mean a bad commute for a few years, but then things will smooth out. The time to consider is now, though, because supply is already tightening, and some homes are seeing offers as high as 40 per cent over the asking price. People who are moving out from Toronto, Hamilton, Oakville or Mississauga made a killing on their homes, making more than twice what they would pay in Niagara, so they aren’t worried.
So what does this mean for HOSI investors?
“Rent to own” has taken on a whole new meaning in the last eight or nine years. Now that bank lending guidelines have become so tight, particularly in the areas of income verification and credit score, many people who would have had an easy time getting financing before the 2008 housing collapse now don’t have that same ease of credit, including in the Niagara region. This is where various alternate forms of financing come in. Private lenders require significant down payments – often as high as 30 or 40 per cent, so people who don’t have that kind of money on hand can find themselves stuck in the rent cycle with no apparent way out.
This is where investors can come in. Even if you don’t have enough liquidity to buy a whole property yourself, you can come in with other investors to purchase a property through HOSI’s system, and then start making profits from a lease purchase.
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 us 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 five grand. This will eventually go toward the down payment at the end of the agreement, but for now it goes into a savings account.
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 that the payment includes a monthly contribution toward that eventual down payment. 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 all the money – the deposit, the rent and the extra payments for down payment credits.
But in most cases, the borrower/tenant fixes his or her credit or income history issues over the course of the lease purchase agreement. 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 this system. So at the end of the lease purchase, you walk away with the principal you invested – plus three years of rent payments.
Interested in what HOSI has to offer? Give one of our rent to own specialists covering the Niagara 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 HOSI is the right investment choice for you.