Interested in Rent-toOwn? | New Homes & Condos
Tony Miller
Interested in Rent-to-Own? | New Homes & Condos Rent-to-own offers individuals and families (who are called tenants in this article) who are unable to qualify for a mortgage the opportunity to become home owners. Typically, the tenants are unable to qualify for a mortgage because of poor credit or are self-employed. Rent-to-own is sometimes called lease to own and is comprised of two parts: the rent part which is when the tenants live in the home that was purchased by an investor, and the ownership part which is when the tenants exercise their option to buy the home from the investor. While renting the home, the tenants work with nancial professionals to repair their “bruised creditâ€? and increase the down payment that is needed until they can qualify for a mortgage and buy the home from the investor. Most RTO programs last 2 or 3 years but the duration can be shorter or longer depending on the situation. Here is some general information about how rent-to-own works: • Rent to own has two main strategies: Tenant first strategy This is when the investor nds tenants and then buys a suitable home that is rented to the tenants until they can qualify for a mortgage. It is a popular strategy because it allows the tenants to go house hunting and select the home they desire as long as it is within their budget. As a result, the tenants are more committed and emotionally tied to the home and will usually keep it well maintained. Property first strategy This is when the investor already owns the home and then looks for tenants to enter the rent-to-own program.
Interested in Rent-to-Own? | New Homes & Condos
Interested in Rent-to-Own? | New Homes & Condos • When tenants enter a rent-to-own program, they pay a one-time option payment followed by monthly option payments over the course of the program. The monthly option payments are in addition to the market rent that the tenants pay. The option payment funds that are collected provide investors with higher monthly cash ow and are used towards the down payment and closing costs when the tenants exercise their option to buy the home. • In rent-to-own, the tenants are responsible for the repairs and maintenance of the property which makes management simpler and helps reduce the investor’s expenses. • Rent to own has a poor reputation in Ottawa because of investors who took advantage of people for their own nancial gain. Don’t be like those investors. Remember that the investors who are successful in closing a high percentage of rent-to-own deals are the ones who do it for the right reasons which are to help people become home owners and create situations where everyone wins. • Make sure your investing team includes the following professionals who are knowledgeable with rent-to-own: Realtor, mortgage specialist, accountant, lawyer, and credit repair expert. It is very important for investors to understand that rent-to-own is an advanced strategy and suf cient investing experience and rent-to-own training is needed before trying it. This article simply glances over the topic. If you want to learn about rent-to-own, I recommend that you pick up Mark Loef er’s book Investing in Rent-to-Own Property: A Complete Guide for Canadian Real Estate Investors as well as Barry and Donna McGuire’s Rent-to-Own Success! In Canada study program.
Interested in Rent-to-Own? | New Homes & Condos
Interested in Rent-to-Own? | New Homes & Condos If you need to discuss about rent to own, second mortgage, bad debt, reverse nance, renew mortgage with mortgage specialist. Contact Gord Davis Financial Services Gord Davis can be reached at 23 Dundegan Dr Kanata ON K2L 1P7 Canada | gorddavis@bell.net | 613-218-5244
Interested in Rent-to-Own? | New Homes & Condos