Rent to own has 2 main strategies and today I would like to talk about the best fit for the Calgary market at the current time. Both strategies still work, so those sandwich lease advocates can still work their magic but they will be having a tougher time finding motivated sellers willing to get their payments covered. Tenant first rent to own is the strategy that investors use when they have credit to qualify as well as down payment dollars to fund bank mortgages. This method works very well because you get to qualify a tenant buyer, let them loose with a realtor, then they PICK the house they want to use for the rent to own program. These tenant buyers will normally need very little credit repair (hopefully none) and they make good money from being a self employed business owner, or just simply do not have the whole down payment saved. This high quality tenant buyer will be much more likely to close because they do not have the credit issues, as well as picking the house they wanted to live in makes them much more invested in closing the deal at the end of the term. Tenant first works well if you have large capital reserves/credit capacity, if not you will run into the “brick wall of finance” with these just like buy and hold investors because you need new mortgages for each deal you plan to do. This is where partners come in, you will have to seek out joint venture partners to help you qualify and put in the down payments to gain new mortgages for each new deal. There are many people out there looking for a better return on their investments and rent to owns almost always have double digit returns year over year – that you can count on unlike mutual funds! Once the investor has seen the returns for the first deal they will be more than happy to do more with you so long as each deal is a win-win for both parties. Tenant first rent to own deals can sometimes be closed in less time because they buyers often have more money up front for the option deposit, and are often more motivated to close on the home to be able to call it their own! Rent to own is a great strategy to help people realize their dream of home ownership. Rent to own has two flavors, this one works best for the “taste” the Calgary market has right now!
To your success!