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Earn at least 20% a year, buying rent to own properties with the tenant already included. They take ownership in 2 or 3 years.
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Investing Information
Invest in a Rent-To-Own property and enjoyabout 25% ROI per year
Non compounded, starting from your mortgage date Based on typical cash outlay and 80% LTV Assumes buyout from tenant after 2-3 year lease,
at pre-agreed price Assumes that warrantees cover most physical problems Assumes no unexpected major costs Does not include your costs for gas, meals, accounting, etc. Your money is NOT pooled – agreements are solely between
you and your tenant(s) Your profits are subject to Capital Gains tax
Through Multiple Points Of Leverage:
1) 20% down payment controls 100% of house (normal real estate leverage)2) You sell the house to your tenant at 3%-5% annual appreciation3) Monthly cash flow and purchase credits from tenant 4) Decrease in mortgage balance over time, paid for by tenant
Dozens of Canadian companies and individuals regularly do deals that pay investors 15% to 35%! But the RTO business model is not yet a widely-known concept, and some real estate investments require “accredited investor” status and are therefore not widely known.
And of course, every single deal/property involves risk, and different kinds of real estate investment structures involve different kinds of risk. RTO Partners strives to create the highest chance of a high return. In fact our proposals are designed to deliver a profit even if the tenants do not buy the house.
You are investing in Canada, not foreclosures in the USA or resort developments on another continent. These are investment properties you can visit without getting on a plane.
You are helping Canadians to become home owners.
These are not just people looking for the next place to keep their stuff - these are “Homeowners In Training” who have chosen to pay a down payment up front, PLUS additional down payment credits every month, knowing that they have to buy the house from you in 2-3 years or lose that money.
We REQUIRE our investors to have a “tenant-first” attitude.
Type #1 is the most common – a family does not qualify for a mortgage but they want to move into a permanent home now, with the plan of buying at the end of their lease.
Type #2 is “Rent-Back Financing” or “RTO Financing” where the client already owns the home – they need to sell it, stay in it as a rent-to-own, and use the equity to recover from debt, divorce, health problem etc. They also use the equity to pay a larger-than-normal down payment and in some cases, prepay 6 to 18 months of their rent.
Usually a 20% down payment to buy the house. Your own credit rating etc. will determine your down payment and interest rate. All costs are covered in the spreadsheets we provide investors included in every tenant proposal.
Investor Participation Fee (or “Tenant Locator Fee”) is generally 50% - 70% of the initial down payment, with the goal of delivering you at least 25% per year non-compounded ROI, assuming successful completion. This fee is payable to RTO Partners within 2 weeks after your receipt of down payment. HST applies to this fee.
Lease Agreement - Your tenant pays you the first month’s rent, plus down payment, prior to moving in. Details of the lease are negotiated between you and your tenant.
Purchase Option Agreement - The tenant is also paying you $200 to $500 (included in the rent) every month (depending on house price, amount of up-front down payment, end-of-lease down payment target, etc.).
Tenants come through advertising, mortgage brokers, realtors, model homes, referrals, web search traffic etc.
We prioritize tenants based on income, credit score, job duration, personality, etc. Less than 10% of candidates are approved by our screening process.
The highest-qualified tenants are the first ones that we match with investors.
Based on a $200,000 home:
You make a $40,000 (20%) down payment and get a mortgage of $160,000 when you take ownership.
The pre-agreed appreciation of the home will usually be 3% to 5% per year.
Based on a 4% appreciation, these are the tenant’s buyout prices …
First year purchase price (day 1 to day 365) is $208,000.00.Second year purchase price is $216,320.00.Third year purchase price is $224,972.80.
You can simplify things by hiring a property management company to help you collect rent, deal with any physical problems and so on. You decide how hands-on or hands-off you wish to be. Can be as cheap as $50 a month.
The tenant is responsible for lawn care, snow removal and general maintenance (unless alternative arrangements have been agreed to in the lease).
You will decide in the lease what your responsibility will be for repairs. Your tenant (the Future Home Owner) is responsible for everything else. There is generally a deductible the tenant or investor pays per month or per incident.
Tenant is responsible for repairs to any damage they cause that’s not covered by warranty.
Investor and tenant may privately agree to different terms and include them in the lease.
3 Things Can Happen:
1) Tenant buys house – privately, as per the Purchase Option agreement – you pay no real estate commissions.
2) Tenant requests lease extension - we encourage investors to offer this option to good tenants. We discourage evictions when they’re not absolutely necessary.
3) Tenant fails to qualify, and moves out (due to divorce, unemployment, death, forced to relocate, credit not fixed, etc.) - you keep all purchase credits, which outweigh the time and cost of finding a new tenant or selling the home.
(Outcomes 2 and 3 will change your ROI. It is still possible to get an annual ROI of 10% or higher even if the tenant does NOT purchase the house. We have the spreadsheets to prove it.)
your own advisors – lawyer, realtor, mortgage agent
laws regarding real estate, mortgages, leasing, etc.
industry-standard practices and paperwork
if needed, tenant’s credit repair and mortgageeligibility steps and goals will be managed by On Your Side Debt Relief ™
your ownership of real property
We are assuming you will have 80% financing – we cannot rewrite deal proposals for lower LTV, as this would be punishing the tenant in order to help you achieve your ROI.
There is room for negotiation, within reason, regarding down payment, rent, deductible terms for damages, etc. – but we do not tolerate investors who attempt to rewrite the normal, basic industry rules or dictate how we do business.
The terms of this disclaimer must be accepted to access and use RTO Partners documents or join our email updates list or use any RTO Partners web site content or standalone document. This document is an interest seeking document only. No information, forward looking statements, or estimations represent any final determination. This document is for general information purposes only. While the information presented in this investor interest seeking document has been researched and thought to be reasonable, in general, real estate investment is highly speculative, real estate values can go up or down, and thus RTO Partners AND/OR ITS AGENTS CANNOT AND DO NOT GUARANTEE ANY RATE OF RETURN OR INVESTED AMOUNT OR INVESTMENT TIMELINE. User of this document acknowledges and agrees that RTO Partners and/or its agents are not in the business of real estate consulting and are not classified, or presenting themselves, as real estate experts, professionals, or developers but preliminary information providers. The Investor further acknowledges and agrees that RTO Partners does not assume and hereby disclaims any liability to any party for any loss or damage caused by the use of the information contained herein or errors or omissions in the information contained in this investor interest seeking document to make any investment decision in the venture referred to herein, whether such errors or omissions result from negligence, accident or any other cause. Note, however, that investor participation is secured by real estate. Investors are required to conduct their own investigations, analysis, due diligence, draw their own conclusions, and make their own decisions. Any areas concerning taxes or specific legal or technical situations should be referred to lawyers, accountants, financial specialists, realtors, or other professionals who are licensed, qualified or authorized to render such advice. IN NO EVENT SHALL RTO Partners AND/OR ITS AGENTS BE LIABLE TO ANY PARTY FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER ARISING OUT OF THE USE OF THE INFORMATION CONTAINED HEREIN EVEN IF RTO Partners AND/OR ITS AGENTS HAVE BEEN ADVISED OF POSSIBILITY OF SUCH DAMAGE. RTO Partners AND/OR ITS AGENTS SPECIFICALLY DISCLAIM ANY GUARANTEES, INCLUDING, BUT NOT LIMITED TO, STATED OR IMPLIED POTENTIAL PROFITS OR RATES OF RETURN OR INVESTMENT TIMELINES.
