Because a lender pulled out of Canada, when one of our mortgages came up for renewal, we are required to find a new one.
We figured we might as borrow all we can from this property's equity.The left over funds are going to finance downpayments on a few more houses. (that's the plan anyways)
We put an ad on our version of Gumtree, saying we are willing to do Rent to Owns.Prices are down, so it seemed like a great time.Response was unbelievable.In 10 days we have had 53 replies asking for help, of which 30 seem to be serious.We will be lucky to be able to help 4. (not bad for about $40 K)
There is also a property I like, that is a money making machine. This will be my first purchase, because of the cash flow.It won't be a Rent to Own initially.
Price of property is $150K for a 4 bedroom house, and 4 mobile homes (14X 60) all on 2.23 acres. Just on the outskirts of town. Perfect location.The owner collects $2430 a month.Mortgage would be $986 month. Taxes and insurance would be about $5k a year. That's cashflow of $1443 a month. His rents are grossly undervalued.
Without a raise in an eyebrow, we would easily get an extra $650 a month. This is why we will need to ask for vacanct possession.
For the Rent to Own's, we needed a straight forward formula. Here is what we think will work.
Listed price + 20%= purchase price
Purchase price amortized 20 yrs @ 5% = Rent (month)
Downpayment is 1 % purchase price
Option amount is 4 % of purchase price divided by 24 mo.
We will have $25 K minimum for our profit
We will have $800 a month minimum for rent
These in a couple of years will fund even more properties, and the snowball effect will have began.
At first , with our Rent to Own we have now, I wanted the tenant to fail. She did, and we gave her a second chance.It was only four months into it....she had another 20 months to go. Figured we would let the banks decide, and see if she qualifies when it is time for her to purchase the property.
We have had such a positive feedback from these applicants from our Gumtree. They are all so truly excited they may be able to get them into a home. All they need is a bit of help.It makes a person feel great.
We have purchased 2 properties with vendor holding the mortgage 90 % with us providing 10% down.Another vendor held a second mortgage.So we did have help ourselves. (of course it was to the vendor's advantage to sell these properties, that were on the market forever...)
I know these profits don't sound large compared to Australia's properties, but for this part of Nova Scotia, it is very acceptable.
Should the tenant fail, we also get to keep the 5% downpayment on top of the market rent we enjoyed for those 24 months. No repairs or maintenace while the tenant is there.
Unless they trash the property, there is no downfall. Any regular tenant can do that, but these tenants would want to take care of a home they think will be theirs.
We figured we might as borrow all we can from this property's equity.The left over funds are going to finance downpayments on a few more houses. (that's the plan anyways)
We put an ad on our version of Gumtree, saying we are willing to do Rent to Owns.Prices are down, so it seemed like a great time.Response was unbelievable.In 10 days we have had 53 replies asking for help, of which 30 seem to be serious.We will be lucky to be able to help 4. (not bad for about $40 K)
There is also a property I like, that is a money making machine. This will be my first purchase, because of the cash flow.It won't be a Rent to Own initially.
Price of property is $150K for a 4 bedroom house, and 4 mobile homes (14X 60) all on 2.23 acres. Just on the outskirts of town. Perfect location.The owner collects $2430 a month.Mortgage would be $986 month. Taxes and insurance would be about $5k a year. That's cashflow of $1443 a month. His rents are grossly undervalued.
Without a raise in an eyebrow, we would easily get an extra $650 a month. This is why we will need to ask for vacanct possession.
For the Rent to Own's, we needed a straight forward formula. Here is what we think will work.
Listed price + 20%= purchase price
Purchase price amortized 20 yrs @ 5% = Rent (month)
Downpayment is 1 % purchase price
Option amount is 4 % of purchase price divided by 24 mo.
We will have $25 K minimum for our profit
We will have $800 a month minimum for rent
These in a couple of years will fund even more properties, and the snowball effect will have began.
At first , with our Rent to Own we have now, I wanted the tenant to fail. She did, and we gave her a second chance.It was only four months into it....she had another 20 months to go. Figured we would let the banks decide, and see if she qualifies when it is time for her to purchase the property.
We have had such a positive feedback from these applicants from our Gumtree. They are all so truly excited they may be able to get them into a home. All they need is a bit of help.It makes a person feel great.
We have purchased 2 properties with vendor holding the mortgage 90 % with us providing 10% down.Another vendor held a second mortgage.So we did have help ourselves. (of course it was to the vendor's advantage to sell these properties, that were on the market forever...)
I know these profits don't sound large compared to Australia's properties, but for this part of Nova Scotia, it is very acceptable.
Should the tenant fail, we also get to keep the 5% downpayment on top of the market rent we enjoyed for those 24 months. No repairs or maintenace while the tenant is there.
Unless they trash the property, there is no downfall. Any regular tenant can do that, but these tenants would want to take care of a home they think will be theirs.
