Tag Archives: investment property

New Investment Property Hits Market

 

Investment Property

Recently we listed an investment property in Guelph that deserves your attention.  The reason is because it features a legal 3 bedroom apartment!

investment property in guelph

Why is This Great News?

The city of Guelph does not currently allow more than 2 bedrooms in a basement apartment.  There are also restrictions on the percentage of square feet that the apartment has in comparison to the main house.  This property, 75 Cedar St in Guelph, is what we called grandfathered. The legal status was granted before the changes of the by-laws and building codes, so it will remain with the property unless there are significant changes.

We love this investment property because it can generate up to $3000 per month.  The high quality finishes and modern decor appeal to the students and young people of the city.  The bus stop is close by and the University of Guelph is walking distance.

The other reason we love this investment property is because it can be flexible for a buyer.  It can be a family home, renting to a young couple in the basement, or it can be a full rental.  The 3 bedrooms on each separate floor are relatively easy to rent out.  In our experience 3 rooms are much easier to rent than 4 rooms.

if you want to learn more about this house click on the link below:

Guelph Investment Property

 

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

Guelph University Housing and Investment Property

Every year starting in January there is a sudden demand for student housing in Guelph Ontario.  This when students know that they have to start looking for the best accommodations for the following school year. Although this annual ritual may seem strange to the average citizen who assumes that August is when most students should be looking for a place to call home for the semester starting in September, it is not strange to the average student.

Conservatory Garden
Conservatory Garden

Many first year students were stuck single handedly trying to find mediocre accommodation the previous semester, and many settled for student residence with high costs and a lot of chaos! They are determined to avoid this mistake for the second year.  After all they are now veterans and are no longer timid, new freshmen.  They now know the ropes, and the secrets of university life, in addition have aquired a group of friends who all experienced the same crappy living arrangements.  They now, together, hand in hand, flood the Guelph real estate rental market ready to snatch up the best and most affordable living space! they will beat out the unaware new freshmen, many whom in January do not even know what university they will attend never mind where they will live!! Survival of the fittest in action.

So why am I concerned with this annual migration? Quite simple actually!  I am a real estate agent in Guelph, and work with investors who buy and sell rental properties, where these students will live.  I also have the honour of meeting these young aspiring university graduates in my quest to fill the properties I have sold to landlords.

On January first I will set out with the handfull of current clients to buy townhouses, detached houses, or condos, with the intention of providing a place for students to live.  These are the best type of investments in my opinion.  The reason is because students will always be there, I know they will pay the rent, if there are 4 students in a property, there are 4 sources of income, mommy and daddy usually foot the bill, and I know that if there is a problem they will leave.

How can you profit from student rentals? Look for information in my next post, I will tell you!

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