Rent to Own Real Estate in Canada with Rachel Oliver

Rent to Own Real Estate in Canada with Rachel Oliver



so you're not managing a property in a rent owned but you're managing people so it's not as hands-off as people think although what I'm not managing tenants and toilets per se I'm managing a relationship with the future buyers of my property and why am i managing that relationship because I want to get paid on time and I want to know that the exit that we have planned is going to happen at the date and the price point that we had intended what is up you guys Matt McKeever here with Rachel one of the mothers of real estate again and so we're actually going to dive down into Rachel's investment strategy so Ren tones so rent owns actually I'm really interested in talking to you about them because it seems to be one of those unicorn strategies that lots of people hear about and I know you mentioned in another video and I'd love to hear your perspective people seem to really love her hate the idea right to owned people they're doing rent tones it seems like they've done one it didn't work damn it and they hated it or that's all they do these days and so do you mind maybe shedding some light on rent to owned why why is there such a polarizing experience when it comes to rent owned investing that's a great question Matt I think the polarizing experience comes from the fact that people have mismanaged expectations of what red tone is and what rent owned isn't when I got started that was very clear everyone had very different experiences and most roads led to a rent own not completing as planned and of course every everyone's definition of as planned is different but for my perspective I'm an investor so everyone that I had talked to said that their rent owned didn't complete as planned but they still made out very profitably so they wanted to keep on doing it because as an investor if you fail to help you tenant fire get to the end and actually qualify for financing and exit favorably as the investor you actually make more money and that's the allure of it however that wasn't the model that I really wanted to gravitate to I really liked the essence of rent to own because it allowed me to help another family overcome some of their setbacks and get into homeownership that's really what appealed to me and the bonus was that I don't have tenants and toilets to deal with I have above average cash flow and I have sustainable repeatable profitability because for me it was really important to use real estate to replace my corporate job income and my husband's corporate job income and those were hefty paychecks and I couldn't do it knowing that oh you know my appliances might break down this month Oh in a few years from now I'm gonna have to you know fork out 15 grand to fix the roof oh I'm gonna have a vacancy for three months all of that created so much volatility so I was really attracted to the rental model and everyone that I talked to kind of said yeah it's a 50/50 chance of you actually succeeding and I kind of thought oh it doesn't have to be that way there must be a different way of making it work and that's kind of where we owned in on what wasn't working and we found the gaps and we started to fill those gaps to make the strategy sustainable for us as investors to get that repeatable paycheck if you will but at the same point that actually comes from helping a home buyer successfully go through the rent own process so when we're talking about rent owned maybe we should just kind of break down exactly what that means so what do you mean rent owned ah yes so rent owned 101 a home buyer can't qualify for a mortgage today's mortgage guidelines are quite strict and they're going to continue to get stricter but you know life happens people have credit challenges they might be saving 5% but that's not enough if you have blemishes on your credit and they're motivated to get into homeownership they have homeownership mentality they're tired of renting and they're ready to make that move but they just can't get there the conventional way they might not have the money for a private mortgage they might not be able to come up with a big enough down payment for a be lender scenario so rent Olin presents a great opportunity for them in comes the private investor the private investor has 20% down the private investor has great credit the private investor doesn't want tenants and toilets and the private investor wants a strategy that is not kind of the long-term build your wealth strategy but more of a get in and out quickly because the average rent owned is about three years long so when you have kind of that type of an investor and you have a homebuyer that needs help you marry them and a rental arrangement is made now a fundamental component of rent to owns is understanding whether you're approaching it from property first or from the people first angle and you've heard that right some people buy a property below market value they add some lipstick push the appreciation value and instead of bringing in tenants that will rent it out for however long they want people that are going to rent to own it and treat it as their own take care of maintenance take care of repairs and give that investor a peace of mind high risk based on my experience based on my research and we've done you know we're getting close to 300 of these rent to own that's what my husband and I have done over the course of our kind of rental and career you know it's taken ten years there it's not a factory but it's a model that we were just constantly improving on and constantly evolving and in those ten years of doing these rent-to-own deals we identified the good the bad and the ugly property first rent owns tend to be riskier people first red tones different ball game when you work with a home buyer figure out their budget figure out their needs what is it really going to take for them to succeed in that rental and process then you help them find a property you've got to know your market fundamentals this is where that training comes in you need to know what a great property is because as an investor you're holding title to that property and if that tenant buyer can't pay on time or defaults on that rental agreement you got to know how to execute on the various exit strategies and then the chances of rent-to-own where people first versus property first the chances of people first rental and going sideways are much lower in fact we have a 90 percent success rate so 9 out of 10 people that we work with in our rent owns complete the process successfully we have that repeatable cash flow and they exit into their own mortgage at the end we wash our hands clean pull out the profits and move on to the next rent to own and it's rinse and repeat so essentially with rent to own once you've facilitated the initial deal it's much more hands-off than a traditional investment property that's buying hold that's misconception number one yes and no in order to get that home buyer to do what they need to do in the rental and process and become mortgage ready and pay on time and improve the credit and settle some of their you know collection items that has caused their credit blemishes in the first place there's a little bit of work required so you're not managing property in a rent owned but you're managing people so it's not as hands-off as people think that is the biggest misconception that we thought we thought okay well set it and forget it mentality and although what I'm not managing tenants and toilets per se I'm managing a relationship with the future buyers of my property and why am i managing that relationship because I want to get paid on time and I want to know that the exit that we have planned is going to happen at the date and the price point that we had intended so for me a big chunk of what the success factor of rent owns represents is maintaining that relationship ongoing dialogue and communication with the homebuyers all the way through that three-year rent own term and that's what we've really gotten good at and I like to call it the secret sauce of our success that's awesome and so let's you maybe just hinted at it but let's touch upon the mothers of real estate course so do you mind maybe just extrapolating on that a little bit further for people you guys are focusing on really diving into building the foundation the fundamentals of information so well they actually be learning about rent to own or is it more about just learning how to become an initial investor that's a great question so to do anything in real estate you have to know how to move forward from a foundational point of view so picking the right property picking the right market putting the contracts together running the numbers all of that stuff is fundamentals and rent-to-own is an advanced strategy that allows you to apply the fundamentals so if I didn't know how to analyze a spreadsheet if I didn't know how to run the numbers and how to consider various exit strategies I wouldn't be as successful as I am with it today and I'm able to focus and refine as I go forward but it's always anchored in the fundamentals awesome so people want to find out more of mothers of real estate you can jump into the video description down below all the link both the mother's real estate as well as their specific course I highly recommend you guys check it out I was given the demo and essentially just I really enjoyed the different templates and Excel documents they gave I think that for a lot of us investors it's really easy to gather that initial high-level information but then when it comes to actually doing the tactics and actually actually tune on the deals that's where things like workshops and documents can really help us sink our teeth and to understand the fundamentals that we can go out and execute thanks again so much Rachel for joining me and so if you guys enjoyed this video smash that like button hit the subscribe button if you're new to my channel and until next time remember making like it's a team sport there's more than that money in this world first I'll make it like you're not saving it I mean like what's the point thanks guys