Why researching your rent-to-own company is important

While rent-to-own purchases are becoming more popular, it’s important to know who you’re dealing with, and to balance the risks and rewards.

According to Bob Aaron, a real estate lawyer with Aaron & Aaron, rent-to-owns typically surge in popularity during market downturns, and they’re also one of the few options people with bad credit have available to them. However, Aaron also says that it’s his preference to advise clients against entering such arrangements.

One way in which buyers get short-shrifted is by paying above-market rental prices than they would for a similar house, which, if the buyer chooses not to purchase the home, cannot be recovered.

“Rent-to-own helps when the seller can’t sell and when buyers can’t get approved for mortgages, but the way it often works is the seller gets the lump sum from the buyer/tenant which is used to underwrite the down payment,” said Aaron. “So if the buyer decides not to close, or can’t close, or can’t get a mortgage, all that money they paid up front and along the way is down the drain.”

He also says another problem with rent-to-owns is there aren’t any industry standard forms.

The buyer/tenant isn’t the only party at risk, though.

“A defaulting owner can stick the landlord-/investor with all kinds of arrears, mortgage taxes, utilities, and damages to the house, and the landlord/owner/seller is going to be stuck with those arrears and damages,” said Aaron, adding the courts don’t recognize rent-to-owns under the tenancy act.

“If the buyer- occupant is in default, it’s very difficult to get rid of them.”

There have been stories of unscrupulous rent-to-own companies in the media, but one in particular has taken a unique approach to the rent-to-own model, and has a 100% success rate of turning its renters into homeowners.

Dale Monette, CEO of Homeowners Now, explained to CREW that by empowering renters with everything they need to improve their credit scores, save money, and eventually own their homes, the rent-to-own model can become an exceptionally successful way to help families achieve homeownership.

Homeowners Now endeavors to get their clients both financially- and emotionally- invested in their future homes. by holding tenants’ down payments in trust. The company a client-first approach, which entails allowing the client to choose the home they want to live in and purchasing it for them.

“Some rent-to-own companies do a $0 down payment, but we want to get them financially invested by an initial down payment, typically 3% of the purchase price, and holding it in trust for them,” said Monette. “Based on our research, $0 down programs have a higher likelihood of the client walking away from the property, because they weren’t financially invested.”

Homeowners Now made the internal decision to return down payments should their clients default, but with a 100% success rate that’s never happened. One reason is the company does everything in its power to make sure its tenants have everything they need at their disposal.

“We actually pay for home inspection reports and appraisal reports, as well as the closing costs for our clients,” he said. “They don’t have to give us any more money for closing costs or legal fees – they just provide the down payment and monthly rent. We take care of the rest. When working with us, essentially our clients are working with a team of self-employed entrepreneurs, like realtors and mortgage brokers, so they stay directly in touch. We even help our clients with grants when they experience hardship, which ultimately helps them become successful in the rent-to-own transaction.”

As Aaron says, it’s important to have all documents perused by a lawyer. Equally as important is selecting a company that invests in its clients as much as it does in properties.

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Retiring early with real estate

Let your portfolio work for you: One investor gives his tips to become completely financially independent at any age.

By Sve Pavic, fulltime investor

Millennials have it tough financially- we’ve been told if we go to a respected University, study hard and get good grades we will land a great paying job. The reality? You graduate with loads of debt with no assistance or prospects of getting a great job and you return for more schooling thinking it will solve the problem. To add salt to the wound, house prices and rent keep increasing beyond reasonable affordability. As a millennial, I’m here to tell you that you can create your own financial freedom and you don’t need to settle and live in your parent’s basement into your 30s. In fact, I’m here to show you how we purchased our first house at 24, live for free by “house-hacking” and create passive cash flow for life.

What is house-hacking? The concept is simple yet powerful: purchase a house, create an income suite (e.g. basement apartment) and rent it out for passive income. The rental income from the apartment can either pay for the majority of your mortgage and living expenses, or you could even get paid to live for free. If you live in the main/ upstairs unit and rent out the basement, you can have the majority of your mortgage covered. If you go one step further and live in the basement/lower unit, you could not only live mortgage free but you could also have profit leftover in your pocket.

The first hurdle millennials and most people have to overcome is coming up with the downpayment. In our case, we lived below our means in order to save for a 5% downpayment. Another strategy is to borrow money from family, friends or private lenders. If required for financing, you could also ask them to act as a guarantor / co-signer.

Once we had the downpayment and financing confirmed, we purchased a detached fixer upper bungalow in the GTA which met all of the requirements for a potential basement apartment (e.g. ceiling height, separate entrance, zoning, parking, etc.). The house walkouts to a large backyard and backs on to ravine which is a major selling point for tenants. We built an open-concept legal 2 bedroom basement apartment with high-end looking finishes. We ensured we made the space look modern, bright and open so that it didn’t feel like a typical, dungy basement apartment. We started off by charging $1,250/mo (non-inclusive) with many applicants. Now we rent the unit for $1,450/mo (non-inclusive) and live mortgage-free.

Since then, we have refinanced the house based on the built-in equity and purchased another property which will be converted into a duplex. We are using this same strategy, except creating a 3-bedroom basement apartment and renting both units individually by room. The property is expected to cash flow more than $1,000/mo after all expenses. Once this duplex is complete, we will be refinancing and finding another property to expand our portfolio.

Rinse and Repeat until you reach your goals of financial freedom.

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Time to invest in tourism?

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

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Paris Chateau said to be world’s priciest home at $301 million

Chateau Louis XIV was sold to a Middle Eastern buyer, the people said, asking not to be named because the sale is private. Christie’s International Real Estate was involved in brokering the deal, one of the people said.

Cogemad, which developed the building, and Christie’s declined to comment.

The villa is in a 56-acre (23-hectare) park between Versailles and Marly-le-Roi and took three years to construct, according to Cogemad’s website. The house includes an aquarium, cinema and a wine cellar, while outside there’s a fountain covered in gold leaf.

“With elegantly planted parterres, a gleaming gold-leafed fountain, an infinite array of flowers, marble statues, bridle paths and a hedged labyrinth, the property’s park and gardens evoke the genius of Le Notre, ” Cogemad said on its website, referring to the gardener of King Louis XIV of France.

The previous confirmed record price for a home was set when a penthouse in London sold for about $221 million in 2011, Christie’s International said in September. Russian billionaire Mikhail Prokhorov lost a 10 percent down payment on a 390 million-euro villa in southern France after he failed to complete the purchase, a court ruled in 2010.

Bloomberg News
Francois de Beaupuy and Devon Pendleton

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Stony Mountain, Sainte-Mélanie, Delta, Blewett, Carden

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Finance minister announces down payment rule changes

New down payment rules will go into effective February 15, 2016.

“The Government’s role in housing is to set and maintain a framework that is equitable, stable and sustainable. The actions taken today prudently address emerging vulnerabilities in certain housing markets, while not overburdening other regions,” Finance Minister Bill Morneau said in a release. “They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth.”

The minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000, the finance ministry wrote.

Minimum down payment for properties up to $500,000 will remain at 5%.

The changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market, according to the ministry.

“This measure will increase homeowner equity, which plays a key role in maintaining a stable and secure housing market and economy over the long term,” Morneau said. “It also protects all homeowners, including many middle class Canadians whose greatest investment is in their homes.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Pisquid West, Madawaska, East Hereford, Rideau, The Points West Bay

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Real estate investment trusts offer up to 10 per cent yields

Real estate investment trusts (REITs) are mechanisms that allow the public to earn generous rental income by investing in commercial real estate. REITs pay out distributions that consist of capital gains, foreign non-business income, other income, and return of capital. Two types of REITs, in particular, offer 8 up to 10 per cent ROI.

The Artis Real Estate Investment Trust (TSX.AX.UN), which is a diversified REIT for commercial properties, has its net operating income (NOI) across industrial properties (24.1 per cent), retail properties (25.6 per cent), and office properties (50.3 per cent).

Primarily invested in Canada with some assets in the United States (representing approximately 28 per cent of its NOI), Artis REIT enjoys a 95 per cent portfolio occupancy rate and 255 leasable properties with a total space of 26.2 million square feet.

Artis REIT’s adjusted funds from operations (AFFO) per unit amount to $1.30 in 2015, with $1.33 AFFO per unit in 2016, making its 8.3 per cent distribution yield safe. Also, unitholders can re-invest Artis REIT distributions at a 4 per cent discount, permitting greater flexibility.

On the other hand, the NorthWest Health Prop Real Est Inv Trust (TSX:NWH.UN) covers rental income from 123 properties – in particular, hospitals and health care facilities across Canada, Australia, Brazil, Germany, and New Zealand. Hospitals contribute 33 per cent of its NOI, while other medical office buildings contribute 67 per cent.

NorthWest Healthcare Properties REIT boasts of a 95.8 per cent occupancy rate, with a similarly high AFFO payout ratio of 95.7 per cent. Its distribution is covered with a 9.5 per cent yield at $8.4 per unit, but the high payout ratio means that investors should take care to keep an eye on its occupancy rate.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Ariss, Sayabec, 150 Mile House, Buck Lake, Castleford

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House for rent in HAMPSTEAD (available Jan 2016)

House for rent in HAMPSTEAD (available Jan 2016):
-2nd floor, 4 bedroom,2 bathroom,2 outside parking for cars
-frigo , stove, dish washer, washer, drier
-In a quite neighborhood, close to school,bus161,close to grocery stores (5 min .to Cavendish mall),
-Asking for reference and credit verification
For more information or to see the house, please call:

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Magnifique maison de ville sur 3 étages

Située dans la ville de St-Lambert tout près du fleuve et à quelques minutes de marche de la station de train, cette grande maison compte 4 chambres à coucher et deux salles de bain dont une attenante à la chambre principale. Les planchers sont de bois franc et les plafonds d’une hauteur de 14 pieds donnant une prestance incroyable à la maison. Système de chauffage électrique, foyer au gaz, air climatisé central. Garage une place, balcon au dernier étage et cour arrière. Située tout près du pont Victoria et du fleuve St-Laurent ou se trouvent parcs et pistes cyclables.

2600 à 2650$/mois. Pour info, appelez au 514-999-9143 ou par courriel a : basile@montrealliving.info
Ou visitez notre site Internet au www.montrealliving.info

Huge townhouse spread on three floors

Located in the town of St-Lambert near the river and a few minutes walk from the train station, this house has 4 bedrooms and two bathrooms including an ensuite to the master bedroom. The floors are hardwood and the ceiling heights of 14 feet, gives an incredible stature at this house. Electric heating system, gas fireplace, central air. Parking for one car, balcony on the top floor, and backyard. Located near the Victoria Bridge and the St. Lawrence River where there are parks and bike paths.

2600 à 2650$/month. For info, call 514-999-9143 or by email : basile@montrealliving.info
Or visit our website at www.montrealliving.info

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Furnished bedroom 5 ½ logement in NDG – Near loyola campus

A furnished bedroom is available for rent near Concordia University Loyola campus. Our place is a medium size 5 ½ logement in NDG. It is close to plenty of grocery stores, banks, couple of restaurants, and of course Benny’s FREE public swimming pool. It is also close to the bus line 51-102-105, and the most convenient metro station is Snowdon.
The building is the medium aged duplex in a quit area. We live in the ground floor, then we have a nice porch to do BBQ, beside a big back yard for gardening or partying during the summer. A garage is also available to keep your bike inside during the winter. The house is fully equipped with every single thing that anybody needs to live!
The house is a convenient place to live for student of Concordia, Ecole polytechnique, or University of Montreal. The room is equipped with a king size bed, 3 drawers and 2 built in closets. So, you would have plenty of room to leave your stuff in. Washer and dryer are both in the basement. By the way, there is a lazy cat who also lives with us..!
About me:
I am a graduate student, studying at Concordia University. I usually cook for myself and get out of town on weekends. I am mostly into sport, and if I find any free time at home, I enjoy watching movies.
If you are interested, please send me a message.
PS: I can speak some basic French, too.

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