Rent to Own Update

Alfonso Salemi of JAAG Properties shares his insights and updates related to the Rent to Own market in Canada. 

Sarah: Next up, we have Alfonso, and Alfonso is the king of rent to own. Alfonso, I don't know how much rent to own you have, but I'm sure you can give us a bit of an intro of who you are in terms of a rent to own guru. I know a lot of people know you from the REITE Club and all that good stuff and from the podcast, but what is happening in the RTO market these days?

Alfonso: Yes, absolutely. So, to date, we are just approaching 220 rent to own projects. And just before the new year we celebrated hitting 100 completed rent to own a project. So, I don't like to be the self-proclaimed king, maybe I should wear a crown to hide my haircut but anyways, we definitely have been lucky that we've had put in place a great program for our clients, for our investors, for all the real estate professionals, mortgage brokers, and realtors that are out there on the call as well, too.

So, really quickly, you know what? I was just looking through the stats, earlier today in preparation for tonight and in the Pickering, Ajax, Whitby, Oshawa, Durham, Borough, Bowmanville, Newcastle area. We're probably done with maybe just under about 20 projects. I think we're at 17 or 18 projects in that area. Now, we started our business in 2014 when we incorporated, we started doing rent to own in 2013 when we were buying properties in that area.

Definitely, there were like two or three that started the purchase prices, which sounds crazy maybe to some that are new to investing and looking in the area now and doing some research today. The average purchase price from December to January in the Oshawa region is approaching $900,000. And I'm sure in different spots, even more reaching over a million.

We are still getting quite a bit of applicants in or around the area now from the mortgage experts. The key point and the reason that we've been able to complete a hundred successful properties is that we want to make sure that our clients are able to qualify for the financing on the exit price.

So, when we're looking at eight, nine, hundred thousand, a million dollar properties, we need to make sure that the clients number one, have the income to support it and also have the income to save up for their future deposit in the rental program. When they qualify at the end of the program, they're going to qualify with more amazing mortgage experts like Claire Drage or other mortgage brokers or at the bank.

So, they need to check off those boxes of credit income in down payment. Whether it is the Whitby, Ajax, Pickering area, Bowmanville and even in Newcastle now we're starting to see a couple more people moving in and around that.

The other part that I wanted to mention as well is in our rental programs, we work with all different types of properties as well too. It's not just single family homes, but we've done condos, whether they're freehold or part of condos, condo associations as well as high rise condo buildings as well. We definitely need to incorporate those costs of condo fees and maintenance and everything that's required when you're living in those properties again, to make sure that the client is in that financial position to qualify for the property.

Like you mentioned, Sarah, it's the highest growth or quickest growing area in the province. I guess year over year, the last few years, and as the purchase prices continued to escalate the quality of its clients, the tenant buyers also need to, right?

So, higher incomes, higher down payments or option considerations. And just to piggyback off of Natasha there, when it comes to property management they are taking care of the property. So, for those that maybe aren't familiar with the rent to own model or what we are now branding the Rent to Home model. Get in touch. We can definitely share a little bit more about how we do it and how we underwrite our clients, find our clients that are just aren't ready for conventional financing today. We're able to help them. 

So, if you are specifically looking in that area, maybe you already have a few rental properties in that area and your clients have been there for two or three or four years. And if they move out, maybe you can put some other clients in there at more market, more like market rent. Typically, we're looking at a minimum of 3% of the purchase price as our minimum down payments. So, for those property managers and people that have clients in that area or others, yeah, definitely want their clients to possibly move out of their program or move out of their rental property and get into a rental program.

That's definitely another option as well too. We've been working with some property managers to assist that as well too, because again, if they've been good clients and they've been there for three, four, and five years, that means they've been paying on time and there's been good things. Maybe some hiccups along the way, but you want to get those higher rents to match what's going on in the market. And we've definitely seen an increase over the last few years. Happy to discuss more with anybody out there in The REITE Club nation.

Sarah: Amazing Alfonso and Rent to Home, that is pretty cool. I like that, resonated with me, Rent to Home instead of Rent to Own. Very cool.

Alfonso: That's right..