Category Archives: Rent To Own

Guelph Rent to Own Homes Community

Recently we created a Google community called Guelph Rent to Own Homes.  We truly believe that everyone deserves a chance to own a home and in todays fast paced real estate market, the dream seems to be slipping away for many.

Join the Google Community Page: Guelph Rent To Own Homes

guelph rent to own homes community

There is Hope For Owning a Home

There is hope though and we endevour to shed some light on this subject by bringing together local experts, renters, and investors to discuss the pros and cons to rent to own homes. We need your support to make this community vibrant and filled with useful knowledge and experiences.  Personally I have never created a community before and could use some advice on this as well. We look forward to your involvement.

Join the Google Community Page: Guelph Rent To Own Homes

Guelph Rent To Own Homes 

Get the keys to your new home in Guelph

For More Information on Rent to Own Homes in Guelph visit guelph-real-estate.ca

 

 

How Does a Rent to Own Work

How Does a Rent to Own Work?

A Rent to Own program, also known as a Lease-Option Agreement, is designed to assist individuals who have difficultly obtaining a mortgage or have credit issues. It provides a way to re-build credit scores and accumulate a larger down payment before they need to qualify for a mortgage. In other words you get to live in the house of your dreams now.

rent to own homes in Guelph can be an exciting opportunity

What Are the Benefits?

A potential home buyer may be able to pay for their current rent without difficulty, yet cannot qualify for a mortgage because of credit difficulties in the past even though often times a mortgage is less than their current rent. On top of that the real estate market continues to grow every year at an average rate of approximately 6%, which keeps many people from ever saving enough money to buy a house. It reminds me of dangling a carrot in front of a disabled rabbit on a treadmill.

A rent to own program solves these problems by allowing you to live in your dream home now, build your credit, save money, and stabilize a future purchase price.

The Rent to Own program that we offer includes a consultation with a Credit Specialist. This person will give you a snap shot of your finances and help create a road map of your future. They will also work with you one on one and provide credit counseling to you throughout the term. This FREE service provides guidance to you on how to efficiently and effectively rebuild your credit. It is not a magic potion, or a quick fix diet, you have to do the work, but you will have expert guidance along the way.

What House Do I Buy?

In our rent to own program, we sit down with you and decide what properties fit your requirements. We are real estate sales professionals so we shop for the property with you just like a regular buyer would. When you find the right house, we may buy the property ourselves, or have one of our investors purchase it for you to move into as a Rent-to-Own tenant. A portion of your monthly rent will be credited each month to apply toward your down payment when you exercise your option to purchase.

rent to own homes in guelph are an excellent opportunity for investors and buyers

Rent to Own Step-By-Step

You fill out an online application for the Rent to Own program or print one out from our website and fax or e-mail it back to us.
We review your Application and have our mortgage specialist check your credit to get a financial snapshot of what your credit looks like today. Our mortgage broker will get back to us with your approval and let us know what maximum house price you can afford based on your income.

You start looking for properties on the MLS or Private Sales in the area(s) of your choice within the price range you have qualified for.
Once you find a home you are interested in, we will draft an offer to purchase and negotiate the deal with one of our investors as the purchaser. You will also sign a lease with the option to purchase for this house. This agreement will be between you and the investor.
You put down a small down payment that is 100% credited toward your purchase price when you buy at the end of the term. (example $5,000).

You get to move into the home under the Lease to Own program!
You will accumulate monthly credits toward your down payment each month as you pay rent. Any improvements you make are yours because you will eventually own it. We will pay for a credit specialist to work with you during the Lease to Own term to help you repair any credit issues that need to be taken care of for you to be able to qualify for a mortgage to buy your home.

When the lease is up you will get a mortgage of your own or assume the current mortgage in your own name and be the proud owners of your home.

Here is an example of a typical rent to own program:

Example Rent-to-Own

 

Initial Down Payment

$5,000

Generally about 2.5% of the purchase price of the home, or $5000, whichever is greater.
Total monthly payment
Monthly Rent portion
Monthly Option portion

$1700
$1400
$300

Utilities not included.* Numbers vary depending on the property.
Lease Term

2 Years

1-3 years based on your credit
Agreed to purchase price at the end of the lease period

$300,000

Locked in at the beginning of the term when you sign the Option to Purchase Agreement.
Down payment saved over the lease period

$7,200

($300 x 24 months)
Total down payment saved

$12,200

$7200 + $5000 (initial down payment)
Amount owing to purchase house after 2 year lease.

$287,800

This amount can be financed with a first mortgage from a bank or other lending company.

We are delighted to help people attain their goals of home ownership. We pride ourselves with our out-of-the-box thinking to help people get a leg up on life. Your experience with us will be positive and enjoyable. We want you to refer us for everything related to real estate!

Contact Us: 226-780-0202

For more information visit us at www.source4homes.ca or www.guelph-real-estate.ca

Rent to Own in Guelph

Guelph Rent to Own

Have you ever thought to yourself, “why am I paying rent, when I could have a house of my own for the same money?” If you have, you are not alone. So with this thought you head off to the bank with a skip in your step because you are about to buy a house! After all it makes sense right?  With interest rates so low, you can buy your own house and be paying less than your current rent!  Sounds exciting.

20 minutes later you slowly walk out of the bank with your head down… you were just informed that your credit isn’t good enough and you do not qualify for a mortgage. Most of you would just stop there and accept the fact that this world is cruel and backwards. That just doesn’t make sense… If you are paying less than you are now then how come you can’t get a mortgage?

There is hope though!  “How can this be?” you ask. There are thousands of people out there just like you already living in a home with the same credit problems.  They just found a way, which I am going to show you in a second. Maybe your job is good, but you just have a little too much debt, or you have been bankrupt in the past, perhaps you are new to the country.  Whatever the situation, you have hope from something called rent-to-own or lease-to-own.  Some media present this alternative as a dangerous scheme by business savvy entrepreneurs who feast on unwary helpless victims. There is some merit to these reports, so be ware, but like every profession or business there are crooks and heroes. So having said that, there are more good deals than bad deals.  In fact I have access to several trustworthy investors who are willing to help people get a leg up in life.  Of course they do make a profit but are more than fair with the terms and have a strong desire to help people build their credit and live in the home they eventually purchase at the same time.

So This is How it Works

The concept is simple really, you see the problem isn’t that you cannot “pay” for the home, it is simply that according to the bank’s preset rules something in that formula doesn’t click. That could be anything from student loans, a car payment, maybe you missed a few payments along the way. I won’t get into the details of why you didn’t “fit the mold,” but will focus on how you can “break the mold.”

In comes the investor.  Why would an investor help me, you might ask. Well an investor wants to make money, that is their primary goal and real estate is a proven investment. They have good credit and some cash reserves, so they want to buy a rental property.  Most investors will just buy a typical house or student rental and proceed to rent it out and collect cheques.  Somewhere down the road they sell it and make more money. The risk in this concept is that not every tenant is guaranteed to take care of the property, or even pay the rent for that matter. Then the sale; that’s not guaranteed either.

Imagine that they could find a renter who is guaranteed to take care of the property and is actually willing to put money into improvements. Why would a renter do this? Because they will eventually own it. They will also make all the payments because if they don’t the contract becomes void.  Lastly the problem of ownership is solved because there is an agreement to purchase at a set date for a set price. The banks like to lend money for these types of deals.  It is a win, win, win for all.

How Does a Renter Benefit?

A renter will benefit because they will get to live in a house that they will eventually own while building their credit. They will also feel comfortable in adding improvements to the home because they will get to enjoy the results after ownership is achieved.  They also have the benefit of knowing what they will pay for the property at a fixed time.  If the market goes up really fast, then they can feel comfortable in knowing that they are gaining equity, rather than always being behind the market. (aren’t able to save faster than house prices rise).  Sometimes the market does go down, but history has shown somewhere around a 3% annual gain on average.

The greatest benefit for the buyer is that they have special guidance in repairing their credit and have a team of professionals who are guiding them. If your Realtor or Investor is not willing to refer professionals who can build your credit then this is a sign that they are not looking to help you.

How Does a Rent to Own Work?

Good question. A simple answer is better than a long winded and confusing one, but a good conversation with your Realtor after reading this article (I would be this person) is definitely required. So here it goes… Ok, so you start off by meeting with your real estate team which includes the agent, investor and banker to determine what your current situation is. After all you can’t determine how to get where you are going if you don’t know where you are currently at. After you figure out a time frame and how much you can afford at the end of that time frame, you will talk with the real estate agent to determine what you want and what is available. You then set out to find a house. Once you find a house that you love, the Realtor will construct a purchase offer in the name of the investor with a side agreement between you and the investor to lease the property for a period of time (usually 2 years), with an option to purchase at a pre-determined  price. Sounds simple, so what’s the catch?

The catch is that the investor needs a guarantee that the property buyout will actually take place, so they will require a non-refundable deposit. This amount will depend on the investor and is usually 5% of the property value but there are some who only require as low as 2%.  Often they ask for rent with an extra portion on top which is held in trust and applied to the eventual purchase (a down payment). The reason for the extra amount is to assist in the savings for a down payment. The last part is the purchase price, the investor will require the buyer to agree to an eventual purchase price of at least 2% per annum above the original purchase price.

If a property were purchased foe $200,000 the future purchase price in two years would be