Sorry Kath I'm very confused now. I take it you are not doing a wrap but something different. I don't understand the difference between a wrap and rent to own can you please explain a bit more.
My understanding is that a wrap and rent to own (the same as we call a "lease option") are different.
With a wrap, both parties are committing to the purchase/sale at the outset. With the wrap, there's no "option"; from day 1, the tenant has already committed to buy the property. You, the wrapper, take out a mortgage in your name (since they can't get one), and they pay you a premium (both in capital price of the property, and interest rate) to you for holding the mortgage for them.
So in a wrap, you buy a property at, say, $100K at 6%, 100% financed, and your P&I repayments are $7,800 per year. You on-sell it as a wrap to somebody else (effectively with vendor finance), for say $125K at 7.5% interest, and their P&I payments to you are then $11,200, and you profit $3,400 per year. Tenant/owner pays all outgoings; your only expense is the mortgage. Usually you also get a deposit out of the tenant/owner, which reduces your ongoing cashflow but gives you a lump sum now. Effectively, they're paying you $3,400 per year for having assisted them to buy a house with your ability to borrow. There is usually a provision whereby the "owner" can refinance with a conventional lender after a certain time period, so in practise they don't usually go for 20-25 years, because the purchasers can get more attractive terms elsewhere (unless they've really screwed up their credit). But wraps can go for 25 years.
Wraps are legally very tricky in Australia, particularly in QLD where the tenant can demand the title once they've paid 30% of principal. For that reason, I understand that most "wrappers" in Australia actually use lease options, which are much simpler and more flexible.
The lease option, by contrast, has a fixed duration, maybe 3 years. In the first 3 years, the tenant is a TENANT, but they pay a premium on top of market rental in order to have the option to buy for up to 3 years at the pre-determined price. So, from a cashflow (ignoring deposit) perspective, if market rent is $100 per week, the tenant would usually pay something similar to if you were doing a wrap, so maybe $220 per week. This would usually consist of market rent $100, non-refundable option fee $60 (giving the option to buy for $125K any time in the 3 years), and deposit $60. So if all cruises along for 3 years, the landlord has had $160 pw rent instead of $100pw, has had the lump sum deposit that may have been given at the outset, and the purchaser has "saved" $60 per week for 3 years, or a bit under $10K. If they'd also put down $15K deposit at the outset, then they now have $25K "deposit", and only owe you another $100K. So they go to their lender, only need an 80% lend (to borrow $100K against a purchase price of $125K), and can prove - via having paid $220 pw rent for 3 years - that they can meet repayments.
The big advantage with lease options is that it's very simple if the purchaser wants to walk away; they've just paid $160 per week rent instead of $100 for as long as they were there. I believe with wraps a purchase agreement has actually been entered into and it's much messier for either party to walk away from. With the lease option, there is no purchase until the option is exercised.
I know a few people who've wandered down this road, and their experience is that it's very hard to find people who'd be suitable to take on as wrap clients, and that often the arrangements don't last very long, people walk within 6 - 12 months. From a profit perspective, that can be attractive, but it means it requires a lot of effort in sourcing new wrap clients. It's far from passive, in other words.
I think this strategy works a lot better in the USA (don't know about Canada) because there are so many people who are undocumented and can't get conventional mortgages, even though they may be creditworthy. Their credit rating system (the FICO score) is also much more fine detailed than our exception reporting system, and every missed credit card payment or returned cheque lowers your credit score, so you're viewed as having "bad credit" for much smaller offences in the USA than here. People who'd have no trouble getting a mortgage in Australia, may have huge difficulty if they had the same history and were in the USA.
But in Australia, creditworthy people who can't get a mortgage are much thinner on the ground, which is why I don't think wraps/lease options are going to be as widespread here.