Some real estate markets in Canada, like Toronto and Vancouver, are skyrocketing, pulling even average home prices up north of $800,000. Then there are cities like Ottawa, which have a greater diversity in their home prices, which means that a wider spectrum of buyer will have interest. In 2016, the average home sale price in Ottawa was $387,068 – significantly lower than in Toronto, but you also have a lot more cottages and bungalows in Ottawa than you’ll find in Toronto. The 360 neighborhoods in the Ottawa area range from the Ottawa River to the St. Lawrence River, and then from Quebec to Perth.
One of the best neighborhoods in Ottawa is Constance Bay. This sits less than a half-hour from Kanata, where the tech industry has settled in. This used to be a neighborhood dominated by rental cottages open for the summer season, but many owners have been turning their homes into dwellings you can occupy year-round. You sacrifice a bit in square footage, but then you’re also right on the water. You get all of the access to recreation on the water without the price of those neighborhoods on the water right by downtown.
Carleton Square, near Carleton University, has become a popular neighborhood as well. Many of these properties are student rentals, so if you’re an investor, you can make a lot of money from kids moving in and out of the property each semester. The schools in the area are also solid, and Carleton Square has the only beach in Ottawa, so some young families are moving into the area as well.
Fringewood (up by Stittsville, Munster and Richmond) doesn’t always jump right out to real estate investors, because it’s stuck behind an area zoned for industrial construction, and there are newer subdivisions that often draw realtors more quickly. However, these homes tend to be a little larger than the newer ones, and while you might end up in an older home that needs some refreshing in terms of flooring, paint and fixtures, you can get a real value – and the chance to make those upgrades yourself.
Ottawa East is much like the Glebe neighborhood – even though the Glebe gets a lot more press. If you’re willing to live in an up-and-coming neighborhood that’s still within walking distance of trendy restaurants, then think of this one. A lot of the homes here date back to World War II, and as you approach the canal, the homes get even older – and even larger, with more history – as you approach the canal.
So what does this mean for HOS Financial investors?
Ottawa represents a real spectrum in terms of home prices. In this type of market, an investor has choices as to the price point of the home in which he or she invests and can even diversify risk by investing in multiple properties. 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 consumers get out of the rent cycle and become a homeowner using HOS’s Rent to Own Program. A lot of consumers think “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 Ottawa 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 Ottawa area, 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.