Rent to Own Investing in Canada

If the last decade has taught Canadians anything about preparing for the future, it’s that you can’t put all of your financial eggs in one basket. Job security was all well and good for our parents (or maybe our grandparents), but now layoffs are a way of life throughout just about all sectors of the economy. So if you’re depending on one or two salaries for all of your income, you’ll find yourself in a financially awkward position if you or your spouse loses a job.

Diversification of income is the best way to hedge your bets against the loss of a job, an extended illness, the end of a marriage, or some other life change that can lead to financial catastrophe. One way to build a secure income stream is to develop a real estate portfolio which can contribute regular revenue to support your family’s budget. The good news is that you can build this stream of income – it just takes time and diligence. As this stream gets larger and larger, your life can change in ways you might never have thought possible. Here are six reasons why you should start Investing in Real Estate today.

Freedom to walk away

So you find yourself locked into a job that you are not happy in. It’s a well-paying job, and you’re good at it. You’ve worked yourself into a position of relative security, but you’re also burned out. You’re tired of putting up with the same cycle of meetings, trips, red tape – with all of the same stress. With a new line of money coming in, you can decide when it’s time to walk away from that job which has been draining your life force for so long. You won’t feel the need to pursue those raises and promotions with the same vigor if you have other forms of money coming in the door.

Opportunity to find balance

So you’re working 70 hours a week. You eat your lunches at your desk, you have three cocktail nights a week entertaining clients, and your dinner meetings put you in bed at 9:30 or 10:00 at night more often than not. You don’t see your kids, you’ve forgotten who your spouse is, and you can’t see your feet anymore, because you don’t have time to head to the gym to work off all that rich food and drink you’ve been taking in during those long work days.

Your doctor tells you that you need to cut back on your hours and bump up your time that you spend walking (forget running, at least for now). Your wife tells you that your son is getting ready for to start studying for his driver’s license, and you thought he was in middle school. Where did the time go?

If you have revenue coming in from real estate investing – the sort of revenue that can allow you to take a step back, you can start saying “No” at work. You can start delegating some of those evening presentations and go home to your family. You can take everyone to the park – and you can teach your son to drive.

Wanna get away?

This is the slogan for the U.S.-based carrier Southwest Airlines. But don’t you find yourself asking that now and then? I’m not just talking about a weekend in New York City, or even a week at the shore. What if you could go to Tahiti for a month? Or the Maldives for two months? You’ve worked hard; you’ve certainly earned a ton of money for your company. Isn’t it time to treat yourself and your family as well as you treat your company and your clients? Imagine a month without an alarm clock, without a set slate of meetings. Use this time to recharge, to figure out where you want to go next in life.

Doing what you’ve always wanted

Just because you’ve put in 20 years in a particular career doesn’t mean that you have to spend the next 10-20 years doing the same thing. Maybe you’ve always thought about a different career — maybe you’ve thought about going back to school. Or have you wanted to open your own restaurant? These sorts of options become possible when you have significant income coming in from your real estate investments. Leave behind the career in which you have excelled – and built up equity in your life – and tackle the challenge that you’ve dreamed about.

Send your kids off to college

If you’re still at that point in life where kids tuitions are in the future, and you have the means to invest in real estate, do it now so you can have the rental property mortgages paid off by the time your kids graduate – giving you monthly income on properties with a clear title which may enable you to pay for their education. If you’re coming to this a little bit later in life, then it’s something you can consider for your grandchildren – or simply to fill your own retirement coffers. Which brings us to the last benefit…

Early retirement?

Why work until you’re 65 or 70? Why work until you’re 60? If you have the money coming in, and you can downsize your lifestyle to the point where the rental income takes care of what you need and a little bit more, why are you still punching a time card? Seriously? Isn’t it time to think about yourself and your loved ones? This is where a real estate income stream can change your lifestyle significantly.

But why rent-to-own properties?

The traditional image of rental property investing involves you buying a house and owning it as a series of tenants move in and out. As time goes by, you’re the one stuck making the repairs and the renovations. When one lease runs out, you’re stuck looking for a new tenant. If you have to hire a management company to do the job for you, then you’re paying them fees from your monthly income.

Rent-to-own programs maximize your financial return while minimizing your risk at falling into some of the financial traps that end up costing investors at their bottom line.

Here’s how it works. HOS Financial screens a borrower/tenant, and (in many cases) they work together to find the property that the borrower/tenant wants to buy – eventually. The borrower/tenant is still working on improving his or her credit, but in the meantime they want to go ahead and move into the property and start making payments.

You provide the financial investment that purchases the house. Instead of just collecting two months’ rent (the first rent plus that security deposit), you get a security deposit of at least 5% of the purchase price of the home. So if you’re investing in a $250,000 home, that means that you get at least $12,500 up front. You’re not going to get that sort of up-front cash from a typical tenant. Then, you receive monthly payments from the borrower/tenant. We pull a percentage of that payment out – it goes into a savings pool that the borrower/tenant will use as a down payment when they qualify for a bank mortgage at the end of the Rent to Own Program.

At the end of the Rent to Own Investment, the borrower/tenant takes out a mortgage and purchases the house from you at a Pre-Determined Price sat at the beginning of the Rent to Own Program. You either recoup your funds in full, or you can invest in another property and collect that security deposit and rent during that new term.

Here’s why investing in rent-to-own properties makes more sense than buying homes under Buy – Rent and Hold and renting them to a series of tenants over the long haul.

  • You’re not in charge of upkeep. Rent-to-own contracts put the borrower/tenant in charge of managing (and paying for) repairs and improvements. You won’t get any calls in the middle of the night about a leaking water heater or a car crash into a garage door.
  • You don’t have to do the screening. At HOS Financial, we screen each borrower/tenant’s credit thoroughly and walk them through a mentoring program to help them get their credit where it needs to be so that they will qualify for that Mortgage at the end of the Rent to Own program.
  • You don’t lose money between leases. When one term comes to an end, you’re not stuck paying mortgage, utilities and other costs in between tenants, the house is sold. You also don’t have to put out ads for potential tenants, and you don’t have to waste time interviewing them. When one term comes to an end, you get your money back or you get the chance to reinvest with another property.

So here’s the last question – why should you choose HOS Financial?

We have been Canada’s leader in rent-to-own programs for over 15 years. We also have Diamond Status with CAROP (the Canadian Association of Rent-to-Own Professionals). We go through regular audits in the areas of compliance, credit mentoring, underwriting standards, and exit strategies, and we also have to meet benchmarks for success rates for both tenants and investors.

According to Canadian Real Estate Wealth, rent-to-own is about to take off in Canada – there are so many people with the funds to purchase homes but whose credit is keeping them away from mortgages at the present time. They are turning to rent-to-own to start the path toward owning the homes they want – and Real Estate investors can benefit from this surge in interest. Give us a call at HOS Financial and start Real Estate Investing today!

Comments are closed