Daniel St. Jean: Alfonso Salemi is a REITE club co-founder and is the President of CAROP the Canadian Association of Rent to Own Professionals. He's gonna share tonight the federal budget promise of support for rent to own programs, what it really means, and where the opportunity is like for real estate investors by the way JAAG, that's his business right there.
Alfonso Salemi: Thank you. All right. Working out the kinks getting back in person after a long time. So am I on mute? Can you guys hear me? Can you hear, see me? Am I on mute? Okay, good I'm just checking. All right, like Daniel said, we have our table over there, Mike. Wave, say hello to everybody. Mike is our rental home specialist.
Like Sarah had mentioned, and Daniel mentioned as well too, we've grown our team over at JAAG. If you want to win a JAAG swag package, make sure you enter into the draw. And we got some good swag stuff and some stuff for you. But it was on August 30th and actually even before that last year, there was a federal election.
During the federal election, there was mention of Rent to Own and I remember when that news article came out cause I got about, I don't know, 150 emails about saying, Hey, did you see Rent to own? The Prime Minister. Some people call them other things, but the Prime Minister mentioned rent to own. Did you see that? Of course we were well aware of that.
Towards the end of the year it was announced that they were looking for ideas. The federal government through CMHC was looking at different ideas on how to implement this Rent to own program. When the federal government and an organization like CMHC. Creates a website that anybody can go and put their recommendations about something, in this case, rent to own.
What do you guys think that means? Nothing. No, really? It was a real question. We're humans here? You can unmute yourself. Turn your cameras on. You can answer this question. What do you guys think that means? Endorse it. Pardon? They endorse. They endorse it. That's one thing. Any other thoughts when they're creating a website that anybody can go on and create and put in a recommendation?
Looking for input. That's a nice way to say they didn't really know much. About how to operate a rent to own program. At the beginning of the year through CAR Op Daniel had mentioned I've been on the board of Car Op since 2016, currently sit as the president of CAR Op, the Canadian Association of Rental Own Professionals along with the Canadian Federation of Apartment Association, we started putting together a proposal to CMHC and the federal government on how we thought a rent to own program would work.
That was submitted. I think the deadline was, I believe end of January or end of February. Don't quote me on that, but that was early part of this year. We submitted that. And now on August the 30th. They had put out some more information. Again, the Prime Minister, again, some people might call him something else, but the Prime Minister announced that yes, there was actually gonna be something to do with Rent Own.
That's what I'm gonna cover a little bit tonight. Again, I know it's August 30th because my inbox was filled with plenty of people. Some of you may even here in the room through all the different networks of people reaching out. And to me, what tells me is that myself through Jake Properties. We did a pretty decent job of being associated with Rent to Own and doing that when you hear it from the federal government and somebody reaches out or sends you a link to an article. We're gonna uncover a little bit about what what they're talking about.
What is the federal government actually doing? Please, you don't have to answer that question. I don't want any rude comments or anything like that. We don't wanna get political. Okay. So what is the federal government actually doing? So they are providing 2 billion in support or to support three key initiatives. The first creating 4,5 ,000 additional affordable housing units.
Now there's about what I would say a hundred or so of us maybe in the room. I think all of us have a different definition for affordable right, or affordable housing. Maybe some of our tenants have a completely different definition of what affordable means. Maybe some of our joint venture partners or money partners or private lender.
Maybe they have a definition of what affordable is. Anyway, that's what they said. They're creating 4,500 additional affordable housing units. They're creating at least 10,800 housing units and including 6,000 affordable units again. The federal government, they say they are creating this, but I bet you it's gonna be maybe some of us in this room or people like us that are actually gonna be doing most of this creating, but they'll take credit for it, don't worry.
Finally, the part that I'm excited about, creating a new five year rent to own stream under the Affordable Housing Innovation Fund. With a cool acronym. AHI, the Affordable Housing Innovation Fund. With the goal to help housing providers develop at least, and test rental own models and projects with the goal to help Canadian families across the country transition from renting to owning a home. And of that 2 billion, 200 million is going towards this Rent to Own initiative.
I'm really excited about it. It's something that is, you know, near and dear to my heart. The team my, co-founder, co-part, business partner, Adam. The team that we've built, that's something that we truly believe in, is that we think people should own their home. Deserving Canadians should own their home. When my family immigrated in the mid sixties, my grandfather came here. He didn't know what the heck to do. He had a job for two weeks before he actually got hired. Okay? So he was a hardworking guy. If you wanna know that story, come and find me later.
He did everything that he possibly could, but he didn't know the rules. Okay, there's some pretty athletic people in here. There's some people we haven't seen in a few years, and you guys got some bulk on you. You got working out looking good, work and doing these, all these different challenges. If you're willing to put the work in right and work hard, you should be able to own your home.
Again, he needed a little help. He didn't know what to do. He didn't know how to get into home ownership. Luckily he had, friends and family that helped him into getting into home ownership because loaning money or borrowing money, In Italy was just a little bit different than borrow or loaning money in Canada, right?
There wasn't like warnings or foreclosures or things like that. There was more, let's say, physical repercussions if you didn't pay on time or things like that. I'll let your imagination run wild with that. There he is, right? What a great head of hair. My goodness. So anyway, this is a direct from the Honorable Prime Minister Justin Trudeau. When people have a home of their own, whether they rent or they own, they are better.
They are better able to invest in themselves and invest in their communities. Our government understands that is only investing in people. That we can grow our economy tackling housing affordability is a complex problem and there's no one silver bullet. But announcements like this gives more people a place to call home and a real fair chance at success. I wanna just highlight one key part here. It's only by investing in people That you can do this.
Who is actually eligible for these things, right? First, it's the municipalities, provinces, and territories. Take for that. I don't know if it's people, right? But anyway second part, private sector developers and builders. Some of you guys might be those people in here or have ambitions to do that hey, that's pretty good. We're people right? But again, developers and builders, people. They are people for sure. They have to be.
They're also companies and organizations and things like that. The third nonprofit housing providers and community housing organizations. By and just by a quick show of hands, who's interested in nonprofit? thought so okay, that's enough about that. All so that's a third one. And then finally, indigenous governments and organizations. Of course, everything that's going on and what's been uncovered, they need a hsnd up as well too. I don't see people in that announcement, right? So again, I mentioned to you in the early part of the year we submitted a 30 page document, 29 and a half pages to be exactly correct.
Okay. And the comments and questions that everything that has come out, I have really no proof that they even read it. Because we a lot of the recommendations and if you want, some more information about that get your information to our table. I'm happy to share that information. It's public information through CAR Op, through the CFAA about those recommendations on how we thought a proper rent to own rent a home program should operate.
Again, I have no proof that they actually read it because a lot of the recommendations that we talked about, were actually getting money in the people's hands that need it. Just one quick recommendation cause we made over 19 of them and they were pretty lengthy. One was actually a an option consideration, aka a deposit match. In our program we have a minimum criteria. Somebody without no money can't enter into our rental own program cause they need that. I gotta find a better way to say this, but that skin in the game, right?
One of those things was that, hey, if you came just as an example to the Rent to own program and you had 2.5% deposit . Hey, why isn't the government or through CMHC match that so that you can have 5%, right? Which most mortgage brokers in the room, 5%, right? If you're T4 income, good credit, have what's the third one? Income down payment, right? That's the down payment piece, right? So 5%, that's a pretty good amount. Put it in the person's hands and then, hey, through CMHC we've all paid it.
Why not get that paid back? Cause the government's not just gonna give it out. They want to get it back but why not maybe tack that on to their financing at the end, or, maybe it's an additional like how we pay CMHC insurance fees, right? To get that recouped back again. That's just one recommendation over 19 that we're fully thought out planned. We had over, I think 15, 20 people on calls. We spent countless hours, putting our minds together, some really bright people, lawyers government lobbyists, trying to understand how do we pitch this to, the federal government.
Again 29 and a half pages and I can't really prove that they even read it. Anyway, these are the eligible applicants, and again, here are some of the criteria to actually be eligible. The in to be eligible, the proposal needs to demonstrate innovation. Your innovative approach can facilitate perspective buyers transitioning from renting to owning a home within five years. That's actually not too bad.
Typically, our programs are around three years, but we've gone up to four or five. That's a reasonable time period, right? If you need to save up, down payment fix your income or repair your credit, five years is actually a reasonable time for you to do that. Secondly, affordability. Your proposal supports housing affordability, which can include all units or design units with a given model or project. Again, when we get to that affordability, I think it's very subjective. I'd like to buy affordable shoes, but that might not be an the same definition for you guys.
Again, I don't go crazy. I have a son now, so I gotta be careful in the shoes spending buying shoes for him now. Anyway, so affordability, right? Needs to support the housing affordability, financial sustainability. Your proposal is financially viable or a plan is in place to ensure financial viability. That's not vague at all, right? I don't know, like financial viability, right? How do you define that now? Again, there's gonna be more information that's coming out. You're now able to apply for this program. They're gonna further vet this out and all this kind of stuff.
Finally, safeguards. Your proposal must have contractual mechanisms in place to provide safeguards and consumer protections to prospective home buyers. Absolutely. That's the one and that's why I saved it for last. That is absolutely the one that I think is the most important. There are, I've been saying this for years anybody can start a Rent to Own program. It is about completing it and selling it back to the tenant buyers. That is what the most important thing is, and that's why For years rent to own has been in the shadows or it's been, the ugly duckling of the investing world we're talking about the BRRRRs and multi-family and flips and preconstruction and res and all that kind of stuff.
I was at all these events for years and years. Emil you were at those events too way back in the day. And Emil was actually one of the first that probably one of the first talking about Rent to owns. He was doing this when I had hair. That tells you how long and how much experience that man has right there. But that is the most important thing is that because all of us, we all wanna be profitable, we all want to, systemize our life. We all want to customize our life, but do we wanna sacrifice the lives and hurt people doing it? I don't think so. And I don't think any of you do, because you wouldn't be in this room.
You wouldn't be in the right people in this room if that's what you wanted to do. So those safeguards is very important. That's why our screening process, our pre-qualification process through the program is really important. I think I don't know the exact numbers, but I think we turn away, I would say probably over 80% of the applicants, because they don't, they just don't cut it. They don't make it, Listen, I wanna play in the NBA, but I'm not like six eight, and can't dunk. And there's no way I'd even get a tryout because why? They don't wanna waste their time with me trying out on an NBA team.
From the same model or in the same concept, right? We don't wanna work with tenant buyers that are not committed, that don't wanna own their home. We stopped asking, Do you wanna own your home? And started asking why do you want to own your home? The same reasons we all have our whys and we do the things that we do. Sacrifice time away from family. Being in a banquet hall on a Tuesday night, away from our family. Because we have a why we want a network.
We want to grow our team, and we have those different reasons and so do those tenant buyers that want to be future homeowners and own their homes. That I think was probably one of the best things from this. Ultimately, to wrap this up, what does it mean for us, for investors? Okay, so first and foremost, rent to Own is becoming a little bit more mainstream.
I am so excited about that. Like I said, probably between the on the election trail and then as well as a few weeks back on October the 30th, more and more people are hearing it. It came out of the mouth of the Prime Minister rent to own. That is amazing to me. Being in this industry for almost a decade now and hearing it on the mainstream in government as a viable way for people to get into home ownership.
All of us now are looking at our portfolios and accounting doors and cash flow and all the things that it creates. But think about the first time that you bought your home, and if you haven't yet, think about how good it's gonna feel. But think about the first home that you bought, whether it was with, friends or family or was for your family. Just some personal news. I'm closing on my first family property on Friday.
You heard that right now family property. And I'm telling you, I had to convinced Amanda that I didn't need to go and look at properties, cause that's not what we like doing. We don't like walking through properties. Realtors, maybe you do, Sorry, we love you realtors, but I don't like looking and walking through properties.
But this was a family home guys I was looking at, the bathroom space, okay, this is where I'm gonna hang my clothes. All right. The driveways, the garage. Big enough guys. I went through all the fields and the emotions that as investors, we don't do that on investment properties, right? So I got all those fields. So think about when you bought your first home, your home, where you live, where you put your head, where you live today, when you bought that home, Think about that feeling. Okay?
Again, we know the current market conditions might create more demand. I don't know, something about these prime rate interest rates that in the news too, these days, right? It's going up higher and higher. It's creating a lot more demand. It is pricing out more people. Mortgage brokers put up your hands. Is every file that you guys deal with cut and dry? Simple? No? So there's more people that are gonna need a way to get into home ownership.
Now we're looking always on the investor side, right? How can we get the best money? The best deal? It doesn't matter about the interest rate, but when, interest rates go up 3% over the last, I don't know, since February, What's that? Eight months or so? Six months. That impacts people, right? A $400 increase on your payment, that changes somebody's life.
Right? $400 a month. Us we're like, Oh man, we gotta rent. There we go. Fill that. That's fine. $400. Okay, no problem. That's I don't know. What Dylan spends on his his shine on his beard there. But anyway that's a huge difference. Okay so other another another point here opportunities to partner with builders or nonprofit organizations or other eligible applicants. I showed you the people that are applicable there on there. For me, the way that I'm looking at it from our rental own business, this is a potential opportunity for developers, builders in the room.
Nonprofit organizations that help people get into home organization that don't have the expertise or knowledge to do rent to own. I'm looking at ways that I can help and partner them. That they can do that, and even maybe even some municipalities where our home base is out of London, Ontario. We were recently recognized by the Chamber of Commerce of one of the top four small businesses.
We even got a letter from the mayor. He had his picture on it and he signed it and everything. But again, ways that we can, participate or partner with people that are doing that kind of stuff. And then finally, Making an impact with your investment. I just, I spoke to Mark really quickly. Mark Baltazar, Mark, put up your hand if you haven't talked to Mark. You gotta meet Mark tonight. He's just a superstar in this room and in this industry. But making an impact with your investment. Now, think about what you're doing, right? There's people in this room that are creating housing opportunities. People that are coming had a conversation just as I think it was Ralph, two Ukrainian refugees now have somewhere safe to lay their head and call home.
That's the impact that we're doing. Yes. We look at cash flow statements, we look at the buildings, the bricks, the mortar, but it's the people. We talk about this. That's why we're all so excited to be back here in person. Cause we can shake hands and talk to people and and not be on mute. Making an impact with the investment, with the capital, with the financing, with the money that you do.
Those are just some things that, what it means for investors. Again, you know where to find me. I don't hide. I'm easy to find. I was making a joke with Allison. Wave your hand there. Yeah. On the Elevation team. It was years that we talked and I said, she said, This is my first REITE Club event. So put your hands together for Allison for first REITE Club event and I said jokingly to, I said, You're gonna have a horrible time.
This room is full of people that are shy, that don't wanna make connections and don't talk to people. Hopefully that they, everybody in here proves me wrong, Allison. But again, please get in touch with us and if you wanna know a little bit more about how we're making an impact, that's the website, jaagproperties.com/The New ROI. And just a spoiler alert, we all know what ROI stands for, but what we're changing the game and we're calling it a return impact. Thank you guys for your time.
It's amazing to see all of you guys here in person. A pleasure. Again, thanks for your time and attention and for listening to me tonight. Have a great evening and really excited for the rest of the night.
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