lease2own

Does the tenant have a choice to pay the option premium?

2008-03-25T23:56:00.002-04:00

I had a couple of interesting questions today on the model that we use.

The first was: Does the tenant have a choice to pay the option premium?

And the answer is:
No. The tenant doesn't really have a choice about the rent premium. You are essentially helping them save for the down payment. If you don't charge them a premium that they can get back, they won't be able to save for the down payment. They also have much less skin in the game and, as such, may walk on you.

The second question was: If taxes and condo fees go up a year into the agreement, would you raise the payments to the tenants (who are in rent-to-own) or can you do that?

Answer:
In our model we pay the property taxes. So any increase there is ours to eat. As for condo fee increases, you could pass them on to the tenant. In all of the condo deals we have done we are talking about increases of $10 a month so we don't bother given the short ( 2 or 3-year) duration of the relationship. When you ask "can you do that?", know that you can do pretty much whatever you want as long as you don't contravene the Landlord Tenant Act. And the tribunal prefers not to get involved in lease option details such as deposit, rent premiums, and condo fees. (Tribunal assumes that the landlord is responsible for the condo fees)

--Bob Hudson AKA "Lease to Own" Bob

Anything special in the lease option contract?

2008-03-24T21:10:00.001-04:00

I have been asked many times if we have anything special in our lease option contract.

Here are two answers: "Normal" and "Since bad tenant".

Normal - the lease option agreement is essentially a rental contract with the terms of a possible future purchase laid out. As a rental contract it needs to spell out the conditions for tenancy, including initial deposit amount, monthly rent amount, duration of the agreement, behaviour expectations, and terms eg. who pays for utilities, etc. The possible future purchase indicates the date and future strike price at which we will sell to the tenant/buyer - if the tenant/buyer opts to purchase. They do not have to, but will forfeit accumulated rental credits if they do not.

Since bad tenant - we thought we were doing the right thing by clearly delineating all of the cost elements of the relationship eg. initial payment, monthly base rent, monthly rent premium. When we ended up at the Landlord and Tenant Board, the LTB member was not at all interested in any of the numbers except for the agreed monthly rent. This meant that the only way to get compensation for the rent premiums (and an amount of the initial deposit still owed) was to go to Small Claims Court. Such things are beyond the jurisdiction of the LTB. We would have been better to bundle as much as we could into the stated rent.

--Bob Hudson AKA "Lease to Own" Bob

2007-12-25T00:27:00.000-05:00

Complements of the Season to One and All.

2007-12-22T16:37:00.001-05:00

If you're going to be thinking, you may as well think big.
--Donald Trump

Earn $500 Learn about Lease-To-Own (Brampton)

2007-11-22T22:42:00.000-05:00

Earn a $500 credit towards our lease to own program by attending this seminar

Learn how to own your dream home with our Rent-To-Own program

When: Tuesday November 27, 2007 at 7:00 P.M.

Where: RE/MAX Real Estate office, 2 County Court Blvd., Suite 150, Brampton, ON. It is next to the Swiss Chalet on Highway 10, South of Steeles

Please RSVP to ebrahim@bds.ca or thomaswong@rogers.com

2007-11-13T20:53:00.000-05:00

Give yourself something to work toward - constantly.
--Mary Kay Ash

Beautiful New House for Rent

2007-11-12T13:20:00.000-05:00

Beautiful New House for Rent
Price: $1,475.00
Street address: 642 Windflower
Location: Kitchener

** EARN UP TO $200 PER MONTH, RENT-TO-OWN YOUR HOUSE**
CALL EBRAHIM 416-671-0837
THOMAS 416-806-9568

Beautiful clean, new house wanting to be your home. An open concept detached house in a great area. Spacious main floor with open concept kitchen and living room overlooking a fenced backyard. 3 spacious bedrooms upstairs provide lots of room for a growing family. Both bathrooms have modern fixtures. You will be proud to have people visit.

The basement is finished with a large area for an entertainment centre, living space and play area for your young ones. This home has a private drive and attached spacious garage. This is a non-smoking home, perfect for a family with sensitivities.

Positioned within walking distance of a terrific shopping centre and with great highway access taking you to anywhere in Kitchener within moments.

The area is a quiet, well maintained neighbourhood that promotes a family atmosphere. This is the perfect location to raise your family in while you commute to work.

Why continue to rent when you can own. Call today about our rent-to-own program, it is easier than you think!

Call EBRAHIM at 416-671-0837 or THOMAS at 416-806-9568, or send us an email.

Canada's Best Lease Option Seminar

2007-10-14T18:05:00.000-04:00

Canada's Best Lease Option Seminar - October 27, 2007

Lease Option is a very effective and safe real estate investment strategy.

Best of all, it provides win-win opportunities for both investors and tenants.

In an intensive day of hands-on training, you will learn to use our proven Canadian system to:
1) Use the lease option strategy for substantial gains
2) Identify and buy suitable properties
3) Find and qualify potential lease-to-own tenants
4) Finance deals with money from bank and/or Joint Venture partners

What did others say about our seminar?

"Awesome course, Awesome Value! Very well prepared & presented...Lets talk business!"

"Great Course! Bob, Theresa and Thomas are very professional and deliver a wealth of information. Highly recommended!"

"...All the Lease Option Questions are answered & all suggestions are taken into account. The way Thomas & Bob do Lease Options, the strategy they use is far ahead of the curve."

"... Great course overall, cleared up a lot of Lease-to-Own questions. I would strongly recommend this course to fellow investors!!"

Event Info
Novotel - Toronto Airport Hotel
135 Carlingview Drive, Toronto
(on Carlingview, next to the Airport, just south of Dixon Road)
October 27, 2007 Saturday
8:30A.M. - 8:30P.M.

The first step

2007-07-05T22:28:00.001-04:00

The distance isn't important; it is only the first step that is difficult.

2007-06-12T10:56:00.000-04:00

"Circumstances may cause interruptions and delays, but never lose sight of your goal. Prepare yourself in every way you can by increasing your knowledge and adding to your experience, so that you can make the most of opportunity when it occurs.''
--Mario Andretti

2007-04-24T11:42:00.000-04:00

Lifes lessons learnt

Alway, always do your due diligence

Lease to own

2007-03-08T14:10:00.000-05:00

What is "Lease to Own"

"lease to own" is where a qualified tenant rents a house or condominium for a predefined period, with the intent to purchase the house at an agreed time in the future, for an agreed price.

They are willing to pay a premium on their rent which will be returned to them if they chose to purchase the property.

At the end of the lease to own term, they have the option and not the obligation to purchase the home.

Happy New Year !

2007-01-01T23:25:00.000-05:00

May 2007 bring health, happiness and prosperity

Happy Holidays To One And All

2006-12-24T21:05:00.000-05:00

Happy Hanukkah, Happy Kwanzaa, Merry Christmas and Eid Mubarak.

Have a wonderful, safe holiday everyone

What is the best way to make money in real estate?

2006-12-21T23:34:00.000-05:00

Buy property without using any of your own money.

Seems like a no brainier, but you will meet people that still believe that it's a good idea to use there own cash and credit to buy real estate.

How much real estate could you invest in if you never needed to use your own money?

This is simply called using leverage.

But the opposite of using leverage is to pay ALL cash for property and own it free and clear.

Why do some people still want to own real estate free and clear?

Because they believe that they are making more money if they borrow as little as possible to buy it.

Lets look at 2 examples to see which example makes more money.

Example 1.

Use $40,000 of your personal savings to buy a house with 20% down and get a loan for the rest.

You may cash flow $400 per month.

And on this one house you will also be getting -

A) equity build up like a personal saving account.

B) good appreciation as the house goes up in value.

C) great tax deductions that will lower your tax bill.

Example 2.

Use a $80,000 new business line of credit instead of your own CASH and buy 2 houses.

You may cash flow $200 per house per month for a total cash flow of $400 a month.

And you are making money on TWO pieces of investment real estate instead of one.

Your also getting -

A) Double the equity build up.

B) Double the appreciation.

C) Double the tax deductions.

AND YOU NEVER USED A DOLLAR OF YOUR OWN CASH.

The entire down payment came from a new business line of credit!

Real Estate Investors

2006-11-24T15:07:00.000-05:00

Why are some real estate investors who get into this busines so successful, happy, positive and charged?

And yet other's who start in real estate investing just don't seem to get it?
They're stuck in a rut, can't get started, sabotage themselves, etc.

In my view, the difference is in their level of confidence.

Those who have confidence move at a much faster pace, achieve success in their investing faster, build their cash flow, experience not only financial success but a personal growth too.

Those without confidence seem too afraid to do anything bold, move at much slower pace, achieve minor results, if any results at all.

If fact, most of the time these people don't know what to do. They try something, it doesn't work, they can't think of any other options or ideas to get it going again.

Well, the thing about confidence is - it's not God given.

When we venture into a new stretagy of real estate investing - we hardly know - we don't have much confidence - it's natural.

We gain confidence as we learn about the subject and apply what we learned.

There are only 2 fundamental ways to learn:

1) By doing, making mistakes, adjusting, persisting, coming up with solutions for a multitude of problems and continuing to move forward.

2) By doing everything the same way as above, except shortcutting the learning curve by absorbing the experience (ways to avoid mistakes) and smarts (ways to focus on things that produce results in leaps and bounds) of others who've gone before.

Why re-invente the wheel, just perfect it.

Which way of learning do you think successful real estate investors use?

You see, we can't avoid making mistakes altogether. But if you had a choice, would you rather not make basic fundamental investing mistakes? instead of repeating the same old mistakes over and over again?

There are hundreds of different things that have happened to a lot of beginner real estate investors in our industry and they have figured out how to deal with them (or better yet to prevent them). Here again, Why re-invente the wheel, just learn from others mistakes.

That's a no-brainer. Yet it's amazing how many people would rather befriend ignorance, by making and learning from their own mistakes all the way through thier real estate investing life

That's a long and tough road.

Homebuyers are motivated by a dream

2006-11-21T00:07:00.000-05:00

It is the dream of every North American to own a home someday.

We are specifically talking about homebuyers who applied for mortgages but were rejected.

They may even have tried to get a mortgage for "people with bad credit" -- and were still declined.

What about those who did not even try to apply, because they don't believe they could get a mortgage.

These homebuyers want to switch from throwing away their hard earned money on rent to building equity in their own home.

There are several important factors that motivate these homebuyers to get them to make the transition from rental to home ownership:

1) Pride of ownership.

2) Knowing that nobody can ask them to leave and sell the house from under them.

3) The opportunity to remodel the house to their liking.

4) The opportunity to tell their friends and relatives 'they bought a house'.

These homebuyers are concerned with both price and payments, but mostly to the extent as to whether or not they can afford the payments and ultimately qualify for a mortgage.

The most important thing for them is the fact they can buy and own the home now.

Therefore, our job as smart real estate investors is to offer these homebuyers the opportunity of home ownership with owner financing

Owner financing is an item in low supply and a relatively high demand.

Profiting From Financing

When you help homebuyers with finance who can't get a mortgage on their own to get into a home you get to make a good profit.

Why?

Because, as I mentioned before, when you are providing a commodity in scarce supply you can ask and receive a premium on the price and payments.

Is this fair deal for all parties? Absolutely.

You are offering the homebuyers the opportunity that doesn't exist for them otherwise.

The only other choice they have is to wait until their credit situation changes and until they save enough money for a down payment.

This alternative is actually much more expensive for them than doing business with you.

Waiting and saving could easily take them 3-4 years.

In an area with growing housing prices it means they could be paying $30-50,000 more for the same house you can sell them cheaper today.

Ultimately they will likely be paying escalating rents during those 3-4 years it takes them to get to the point of being able to qualify for a mortgage.

lease2ownbob

2006-11-09T11:29:00.000-05:00

My good friend and Mentor Bob Hudson has a great blog on lease to own.

Bob and his partner Thomas have a good handle on how the lease to own strategy works, please visit his blog.

http://lease2ownbob@blogspot.com

Benefits of Lease to Own

2006-10-25T16:29:00.000-04:00

Build ownership in a home while you rent/lease it.

Easy credit approval, even with previous financial difficulty or bankruptcy.

Home ownership for self-employed individuals, despite business debt.

Live in your new home even though your previous home is not yet sold.

Flexible Lease-To-Own terms from 12 months to 36 months.

Simplified home mortgage financing at end of lease term.

Fixed purchase price of the home at inception of lease.

Minimal "purchase option fee" (down payment) compared to a traditional home purchase, which could require 10%-20% or more of the purchase price as a down payment.

No obligation to purchase in the event your situation changes.

What happens next

2006-10-24T23:48:00.000-04:00

Step 1: Locating your Home

Upon locating a home that meets your needs, you enter into a Lease-To-Own arrangement, which comprises a Standard Lease Agreement and also an Option To Purchase Agreement.

The Standard Lease Agreement is typical of any residential rental arrangement; however the Option To Purchase Agreement secures you the right to purchase the home at a future date and at a pre-determined price.

Rental/Lease Period

The Rental/Lease period is arranged for a period of time, usually up to 12 to 36 months, which may vary depending on how much time is required for you to be approved for your mortgage.

Step 2: The Mortgage Approval

Prior to the Purchase date, a Mortgage Specialist will work with you through our 'Do You Qualify Program'. This process walks you through the mortgage application and approval.

At the end of the defined lease term (12 to 36 months), you obtain financing to purchase the home. Since your option fee and any additional monthly amounts paid have built your equity in the home during the lease term, and you have been living in the home for the past year (or two years, etc.), and assuming your monthly lease payment history is good, and your other credit obligations have been corrected or maintained in good standing, the lendor will be more receptive to providing you a mortgage. Essentially, your credit management and lease-to-own arrangement present you as a better credit risk to lenders. In addition, no additional down payment may be required when you purchase the home because of the equity you have already established, compared to the value of the home.

Step 3: The Purchase Date

The “Lease Option” is your right to purchase the home on (or perhaps before) the agreed upon Purchase Date. As long as you hold this “Option” agreement, the home cannot be sold to another person without your consent.
The Purchase Date is your Closing Date. This is the day you officially take possession of the home.

What is Required?

To get you in the door of your new home, the following would be required:

Find your home

To set up a Rental/Lease agreement, initially you will need to provide the 1st and last Month’s Rent/lease.

This rent/lease amount covers the standard housing expenses. Depending on the type of property, utilities would be separate.

A Down Payment(earnest deposit):

This is usually 2 or 3% of the purchase price of the home. Usually $10,000 +, however arrangements could be made with as little as $5000!

Verification of Income:

A job letter and proof of income (recent pay stub, T4 or Notice of Assessment)

After you have moved and settled into your new home, a Mortgage Specialist will contact you to arrange your 'Do You Qualify' Mortgage Consultation. During the consultation, the Mortgage Specialist will advise you of any additional information that will be required for a successful mortgage approval and closing date.

The Standard Lease Agreement and the Option To Purchase Agreement are fulfilled and terminated when you purchase the home.

You now own the home!

2006-07-19T00:26:00.000-04:00

Perhaps you are a newlywed, or have recently been promoted, or your family is growing and you need a larger home. Regardless of your situation, you have recognized that renting the way you have been is no longer working out, and now you want to own your first home…well you can!

Lease-to-own a home is the easiest way to transition from being a “Renter” to being a “Home-Owner”. Whether you have a poor credit history, or don’t have the down payment and closing costs typically needed to qualify for a new mortgage. Let’s look at how this is done…

How Does the lease2own Home Program Work?

The purpose of the program is to buy you the time needed to qualify for a mortgage.
Three Simple Steps Towards Home Ownership:
Step 1: Rental/Lease period.
Step 2: The Mortgage Approval
Step 3: The Purchase Date….
Home Ownership!