If you’re not paying yourself, its not business, its a hobby, and that’s the cold hard truth of it.
Michelle Cooper, is a money mindset coach, as well as a speaker and author – she’s also an accountant within her own accounting firm called Alchemy Advising and Mentoring; Michelle works with clients all around the world. She was mentored by Mike Michalowicz, who is the author of Profit First, she believes it’s really important that people understand, that profit matters, not revenue.
“I don’t really care, if you’ve got a 100 million dollar business, I care about how much profit did you make. There’s too many people out there, who are in business, and they’re not paying themselves. They’re living client check to client check, and they think that in order for their business to be successful, they just need one more client, or I’ve got to do this other launch, or I’ve got to buy the next investment property, and then it will be all okay. That’s not usually the case, we have to figure out why you’re not making profit right now, in your business. Everybody’s in business for different reasons, but you’re not in business to work for free.”
What do you hear as the most common, limiting beliefs, that come up when people are going through the real estate process?
Well, when I am talking with other investors, its like, “Oh well, I don’t have enough money to invest in this property. What do we do there?” Even some of the real estate investing courses I took, the stuff that coming out was, “When I was younger, I was told that money doesn’t grow on trees,’ and some of the people they want to go into real estate investing for all the right reasons, but then they struggle with money aspect of it. There’s actually only about a 5 percent success rate of people who take the courses, and actually build it into a business. So when I’m working with people on their money mindset, its a great activity, to uncover some of the deeper beliefs, is to ask the people around you, “What was it like when I was born? What was it like in our family? Did we have a lot of money, no money? What was going on, do you know?” That could be asking sibling whose older then you, or grandparents, or aunts and uncles, those kind of people who were around.
Then the most basic thing is to start with, what did you hear your parents say? “Money doesn’t grow on trees.” All of these sayings are based in fear, lack, and scarcity, and they come from a very real time in our history, there wasn’t a lot of money, there just simply wasn’t. Our grandparents, and for some of us our parents, experienced the depression, they experienced rationing, especially in the prairie provinces of North America. Where people came over from Europe, and they traveled into the central part of the country, it sounds like it was hell to be honest, right? When I talk to so many of the people, that I talk to that live in prairies, they have this mentality of having to work the land. And being in that feast or famine cycle, and that we’ve got to work really hard, we have to sacrifice and suffer, because that’s basically what their family had to do to survive. We just carry that forward, without even knowing, and some of the greatest scientific discoveries right now, are around how we carry forward genetic trauma, right? And we carry it in our DNA, in our cells, we carry these stories and these beliefs, and they are part of us. We can start to uncover them, and expose them for what they are, they’re just stories, they actually have no relevance on the world that we live in today. Which, has always been, and is extremely abundant. We live, and we operate in a field of infinite abundance, as long as we chose to lower the walls to seeing it. We build up these walls, “Oh, I’ve gotta work hard, or long hours, or I have to sacrifice, or suffer.” I had a call with a client the other day, and what we came to understand is that she actually thought, in order for me to have money, my body has to be sacrificed. I have to physically be working, or somehow my body has to be involved in this process, its really simply not true, right? It’s really about uncovering these stories, and letting them go through forgiveness, and gratitude.
Our thoughts create our reality, that is a proven thing. What you see in front of you right now, is your reality, whether that’s super awesome, or its hell on earth, that is showing up purely on the basis of your thought. Your thoughts come from your belief system, and they lead to your feelings, which leads to your actions. It’s a cycle, when you have a belief that money’s hard to make, that leads to thought of, “Oh, I’ll never have any money, because its so hard to make,” that’s crappy, that doesn’t feel good.Which leads to these feelings of crappiness, which leads to action, or non action. Not doing anything because its so hard, I can’t possibly get off the couch, and do that. It’s like digging a ditch, which leads to no money, and it’s a circle, that goes round and round., five primary drivers of our being. Not everybody likes it when I say, ‘Your reality, it’s yours based on your actions, you did it.” Really coming to terms with that, it’s not somebody else’s fault, no one is coming to rescue you, this all puts you in a very empowered position, to create your new reality, you can co-create your reality with the universe, as soon as you come to terms with the fact that you created it in the first place.
What is your top advice for money mindset?
The best piece of advice I can give to your people, is when you maintain a beautiful state of mind, you’re open to unlimited, infinite possibilities. And you don’t have to micro-manage where the money comes from, you just have to be open to it coming, and when you open that door it can come flooding in. Just be conscious, that you don’t have to know the how, you don’t have to know the what, you do have to know the why.
What types of programs or services do you offer?
I work with clients as well, in coaching situations, I offer one on one coaching, so they can work with me in business coaching. I also run a couple different programs, so I have an amazing program for 2019, called Leap, which is specifically designed for women entrepreneurs, and I’m really excited about that, its a twelve month journey that encompasses all the conscious aspects of business, works on the mindset, brings in all of the conscious tools, like meditations, tarot, numerology, Reiki.
It brings everything together, and uses the tangible dollar and cents skills that I have, to create a highly profitable business model, and so that’s really exciting, its by application, so if anybody who is watching is interested, you can message me, and we can have a conversation. However, I do offer Money Rockstars, which is a course about uncovering your limiting beliefs around money, and how to instantly get that taken care, so that you can change your reality, change your actual bank balance by doing that work. I offer, Manifest, which is a two month manifesting course, which you just went through Shawna, so you can probably speak to that. It kind of builds on the Money Rockstars, moving out the stories, but it brings into process, a ritual of manifestation, that has worked extremely well for me, using the laws of the universe, and you have co-created an entire new reality over the course of the last couple months.
“You never know from one day to the next in this business what that is gonna be. And that’s what I find so exciting about this business, is there’s always something new, and I’m always learning something new. Because you can’t possibly know everything there is to know about real estate investing. There’s just too much to learn!”
For our most recent ‘Ask An Expert’ Facebook Live, we invited Shelley Hagen to share her real estate investment story. Shelley started her real estate investing adventure back in 2001. At the time, she had been working for the phone company, back in Regina, Saskatchewan, and at the time, they were doing a downsizing, offering a voluntary severance package. She decided it was time for to go and do something different.
Her and a friend decided to take a look at options that were available to them; both had an interest in real estate investing but didn’t know how to get started. So they looked for some training and education, to help themselves along. They began building a network of people that could help them grow their business. Thy got their start in Regina where they bought 48 units, most of which were single family homes. And then they ventured into the Gatineau, Quebec market, and bought another 48 units there. So within the first year, they had about 96 units.
Since then they’ve bought properties, and owned commercial properties in Manitoba, properties in Saskatchewan, Alberta, now looking to do some land development in British Columbia. Shelley has also done some investing in Phoenix, Arizona, as well as Vegas. Beyond investing, Shelley does training, she’s been a mortgage broker and has helped people get funding.
Here are some questions Shawna asked Shelley:
What are your thoughts on investing in the US?
Shelley: Well we’ve been investing in the US since 2003, Carol and I. We were down there before the market went crazy. Back in 2003 the market was priced right, there was good activity going on down there. We started in Dallas Fort Worth, Texas, and then we moved into the Phoenix market. And we had done a variety of different things while we were down there, wholesaling, fix and flip. Then we got into rentals and rent-to-own in the markets, mostly in the Phoenix market. We were there when the market went crazy, within 3 months, the market in the Phoenix area went up over $100,000, which is a real red flag when you’re in real estate. Whenever you see that happen, you know something’s gonna happen behind it. It can’t be sustainable to keep growing like that. And so, of course, then along came the global financial crisis in 2008 that really tanked the market there. And we started investing heavily then, during those years when the market was down, 2008 to 2010. And we were able to pick up properties for a really good price at that particular point.
Prices have gone up substantially. The markets that we were in were some of the ones that were hardest hits, and they responded fairly quickly as a result. And so at the time as well, when we were going down there, the Canadian dollar versus the US was at par. So we could take our Canadian dollars down and buy. Now you have a different situation. Now you’ve got 20, 30 cents difference on the dollar.
Are there still real estate investing opportunities in the US?
Shelley Hagen: Absolutely. There’s 360 million people live there, there’s millions of properties, there’s always opportunity. It doesn’t matter what market you’re in. But you really need to keep in mind a couple of things. First of all, what is the exchange on your dollar? Are you making enough money down there to make it worth your while to take your Canadian money down there and have it parked in a property? It’s very difficult to get financing on a single family home, and so if you’re gonna be going up market into commercial properties, a little bit easier, but the price points have gone up. The prices are not anywhere near what they were after the crash. The prices are, in most markets, back to where they were before the crash happened. In some cases, even higher than what they were before.
So you’ve got to work your numbers, make sure it makes sense, and find a good team, just like any other place. Doesn’t matter if you’re going to invest in Winnipeg or Toronto or wherever, you need to have a good power team that can help you find those good deals, and you need to have things set up so that you have the right people working with you. And it’s all about finding the deal. It’s gotta make sense, you know, gotta make sense. Cash flow, does it make sense for me with tying up my money for that long, and paying the extra exchange?
And just picking a market. Some of the markets are pretty hot right now, and so it’s a numbers game. You gotta put in lots of offers before you get the right deal, but you just gotta be patient and just keep doing it. So there is opportunities.
Are there considerations when it comes to managing real estate investments from afar?
Shelley Hagen: Typically, most people buy and they don’t go live in Dallas or Phoenix or wherever you’re looking to buy. Or you might go down there on a winter vacation to get away for a couple of weeks from the winter, but during the rest of the year someone has to maintain that. And the costs can add up real quick if you’re not managing that well, and if you don’t have the right management team to manage that property. So all of those things come into play. Keep those things in mind.
It can be very lucrative. It can be very lucrative, just like here. You know, you can go invest though in Canada as well, and still make money as well.
You’ve invested in so many different strategies. Is there one strategy you prefer over another?
Shelley Hagen: That’s always a good question, people ask me that all the time. So from a single family home perspective, I like the rent-to-own program, which I know you and Bernie are also focused on doing, too. I call it my worry-free rental program. I just find I tend to get better tenants in most cases in those situations. I also do fix and flip, but the market has to be right to do fix and flip. You know, you just need to assess where you’re at with market and get it for the right price. I do like commercial property. Bigger properties if I’m gonna hold for rental, I would prefer to get into something a little bit bigger, wherever possible.
Tell us about Fix and Flips?
Shelley Hagen: Fix and flips are a lot of fun because you get in, you get the whole creative outlet, pick the paint, and the flooring, and you see what it looks like, a sow’s ear when you start out and a silk purse at the end. It’s very gratifying, and it doesn’t take that long usually to do them. Four to six weeks on average. And so you’re in and out, and you see your end result real quick, and it makes you feel good, going through it.
I always say when I teach people about rehab, I always say, “I guarantee you, the very first one, you’re gonna spend too much money. Just guarantee it. Because you’re gonna go in and you’re gonna do things that you wouldn’t, shouldn’t do. Or that you are not gonna make any money, and you’re gonna, at the end you’re gonna go ‘Oh, I just wasted so much time doing this, and effort. And I really didn’t need to do it, it didn’t make a big deal.'” But it comes through time and experience.
What challenges do you see for new real estate investors that they’re facing in today’s market, if any at all?
Shelley Hagen: Well certainly, depending where you’re at, if you’re in Canada, some markets are very high priced. And some of the lending criteria’s gotten much tougher than it had been when I got started in this business. So it is, it can have some challenges for you getting going. But again, we do want to work out with other people wherever we can and bring in joint venture partners to help you grow your business, which will help offset some of those other factors going forward.
So that’s probably the biggest thing right now, is price and financing. The financing is the bane of my existence as a real estate investor. The banks will give you all kinds of money, and then they don’t wanna give out money. And then they’ll give all kinds of money, and then they pull back. And it’s just the way it is.
Goes in cycles, all the time. And we’re going through one of those changes right now.
If you can give any advice, what kind of advice would you give a new investor getting started today?
Shelley Hagen: If you’re just getting started, and you’re still working, the advice would be to really get focused and spend some time at it. You can do this with a couple hours a week to get things started, and you really need to be marketing, marketing, marketing. And to be networking. Meeting as many people as you possibly can, which I’m sure you can relate to people as well, Shawna, is getting that whole presence, right? People need to know who you are, to get out there. And you’ll find, the more people you meet, the more deals you’re gonna do, and the more money you’re gonna make. And so you gotta get started and you gotta build a brand. Build so people know who you are.
And to focus on a database of people who can come in as joint venture partners and help you. Friends, family, close business associates, who can help you build your business, and you give them a good return on their investment as a result of them helping you, you’ll help them. Make it a mutually beneficial to everybody going forward.
The rent to own process can have many ups and downs, but having experts who are there to guide you can save you a lot of time, frustration and heartache. In our latest ‘Ask The Expert’ episode, we talked with Calgary real estate expert Sue Saunders who walked us through the process of finding the perfect home.
This topic hits close to home for Shaw-Roco founder, Shawna Roch, “I was actually at a point in my life where I went through a divorce and I was struggling to keep my existing house and thought I could keep it. But it turned out I was coming close to a foreclosure. So I had to decide what to do. So in that situation, I ended up finding Sue. She sold my house for me and then I purchased a condo. And now here we are over 16 years later, it was the start of this friendship. And she kept in touch with me all these years which is why I was excited to have her share the process for finding a home.”
What is the process of finding and buying a home?
After you’ve contacted Shawna and you’ve determined that you’ll participate in the Shaw-Roco rent to own program, then we’ll engage a real estate expert, such as Sue Saunders. We’ll discuss things like budget, your wish list now your wish list, including your ideal home (single family, attached, detached, two-storey bungalow, split level, garage, finished basement, bonus room, big yard back alley etc.) We’ll cover questions such as, do you want to be near the LRT? Do you need to be near schools? Do you want a backyard? Are you handy and interested in a home full of projects, or do you just want to move right in?
Then we move on to other details. We walk through the real estate map and we’ll determine the desired communities and get your preferences set up in the system. Then we’ll choose a few dates for us to go out together based on your preferences. If you work through the day, you may want to go out looking at homes in the evenings or weekends – it is based on what works best for you.
After you’ve spent some time looking at homes with our real estate expert and you’ve finally found one that you’d like to call home, that’s when Shawna and the team at Shaw-Roco are looped back in. They will typically join you on a second showing of the home, to make sure that the property is the right fit.
The next step is writing a purchase contract – Shawna will sign it and numbers are finalized. Of course, the exciting part is moving in and you’re probably wondering when that happens!
Typically, you’re going to have a few conditions on the sale because we want to make sure that the house is worthy and worth the amount of money that you’ll pay for it. Once that’s done, we sign off that your home is conditionally sold or under contract. Once we’ve completed sign-off, and you’ve given the notice or the waiver, you’ve officially bought your home. It’s now time to pack.
On possession day you check out the property and make sure it still looks the same, everything’s in good shape. If everything is good-to-go, you get to move in!
What is the best time to buy a home in Calgary?
There’s a season for everything thing. And this happens to be the season for real estate, usually in the middle of January till the end of May – but June is usually when the majority of homes are sold. We take a break for the summer.
What do you need to consider before buying a home in Calgary?
When we talk about buying a house, we need to think about the long run. Is the area somewhere we want to be 5-10 years from now? How much is this house going to be worth down the road?
Having somebody like Shawna and Sue to help guide you is important. We know that everybody has their own story and their own situation, so integrity, trust and compassion is how we approach every rent to own situation. And that’s why we only team up with experts like Sue, as well as mortgage people, home inspectors, lawyers so that our tenants have a whole team behind you and you’re never alone.
There is no doubt, if you have bad credit, purchasing a home can be challenging. But before you throw in the towel, learn about how rent to own works when you have bad credit.
Example: let’s say you can’t qualify for a mortgage because your credit score is too low and debt-ratio too high.
The first step in qualifying tenant buyers for a mortgage is to make sure that clients can reasonably reach their goal of homeownership, within a reasonable amount of time.
After reviewing the application, terms will be determined. These terms depend on qualifying for the option-to-purchase (which typically ranges between 2-4 years.) However, tenant-buyers have to qualify to exercise their option to purchase. What that means is that of the two contracts they sign when they enter into the rent to own program (Lease Agreement and Option to Purchase) they have to have the ability to be able to purchase. Let’s say that at the end of three years you want to back out, that means that you don’t exercise your option to purchase and you lose whatever money you put into the deal (e.g.: down payment, plus rent x the number of months you lived in the residence.)
The next step is putting a plan in place that outlines step-by-step action that must be completed before qualifying. Typically your mortgage broker will walk you through a plan that prioritizes the order you should pay debts off. This is designed to bring your credit score up and your debt-ratio down. In most cases, the mortgage broker will complete the pre-qualifying process about six months prior to the end of the rent to own term to make sure that you still qualify.
Finally, there are many follow-ups to make sure that everything is on track with your finances. If something has changed, typically the investors will offer an extension on the agreement; however, the options are dependent on the mortgage type.
If you have a question about our rent to own program or real estate investment here in Calgary – get in touch!
Home Inspections are an important piece of the home-buying process. It’s a chance to reduce your risk when purchasing a property and for rent-to-own agreements, it allows us to make sure that the homes we’re buying are safe and sound for buyers.
As a real estate investor, I’ve got to be diligent and work with professionals to mitigate risks of a property purchase. Kerry Oxford with Oxford Inspections is one of the professional team members that we rely on when we’re buying our investment properties. Her background, experience and home inspection process are second-to-none. Below is a Q+A session we had over on Facebook Live. (Video Below)
Can you tell us about your background?
When I was a kid and even today, my parents were always about the fixer-upper and home improvement. So I grew up in that world. My grandfather was a cabinet maker and when I was 15 I was laying tile. I knew how to paint walls, I had it all figured out. At that point, but you know what it did for me is it, it created for me this love of homes of making things better and improving and so on and so forth. Later in life, I took up I took up the task of doing some other stuff. I’ve been in the industry, became a journeyman welder and then a mechanical engineering technologist, and I use those skills and discovered a passion and a drive to make things better to improve things again in the industry. I also learned about engineering principles, about structural engineering principles, as well as mechanical and structural analysis. So then next step – home inspection.
I continued to do renovation as a hobby and then I developed a following of people in Calgary who would knock on our door to help solve problems. And we realized that we become this trusted source of advice and assistance for our friends, neighbors, and their circles and we wanted to take this trust equity a step further and wanted to build on it and to help more people tackle homeownership and so Home Inspection just seemed like the natural place to head into a now we want to improve this industry, too.
Can you tell us about Oxford inspections?
We believe the key to being a happy homeowner is understanding and managing whole maintenance. So whether you do it yourself or you hire someone else, it’s important to pay attention to your largest investment and we want to help homeowners with this. We’ve been in business since 2015 bringing experience from my history and my husband’s history. We are licensed, insured in the province of Alberta and this profession is regulated in the province of Alberta as well. So there are requirements. We are Certified Professional Inspectors and members of the Association International Association of Certified Home Inspectors. We protect our clients through a 90-day buyback guarantee, which we’ll talk a little bit more about in a minute and we help you plan your future through preventative maintenance planning and education and a service.
Can you explain to us why a home inspection so important?
When you make an offer to buy a house, you have an impression of the condition of that home and you made that offer based on that impression. Your home inspector does the work of verifying that the property is in the condition you expected it to be in. We are your insurance against major defects that could end up costing you a lot of money. A home is a series of systems in constant change interacting with each other and the environment in which they exist occupants also imposed were on the home, simply by living in it. And this means the conditions you found when you bought the house will change over time. So it’s important to regularly check in and ensure that nothing’s deteriorated or become damaged and regular inspections, coupled with a solid preventative maintenance plan will save you thousands on repair costs and a lot of stress.
What’s involved with a typical home inspection? How long do inspections take?
It takes us typically four hours to inspect a typical detached family house. Some inspectors might do it in less time but you’re not getting the opportunity to get a full comprehensive inspection. To give you an idea, there are nine sections to a standard Home Inspection those sections of your home are the roof, the exterior structure, electrical heating, cooling insulation and ventilation, plumbing, the interior. Within each section, the inspector has a list of required items which he or she describes and provides recommendations on. So for example, an inspector might describe the type of exterior finishing (your cladding) on your home, such as “vinyl siding its condition: missing sections with exposed building rap” might be one way of describing the house and provide recommendations to contact a qualified siding professional to replace the missing pieces and inspect the rest. So that would be a typical entry. There’s a wide range of options that your inspector might include including thermal imaging. That’s where we use this little tool, you might see our full appliance inspection or follow up care. There are also some specialists that they might bring to the site. For example, if you have an acreage the inspector might bring a septic or well technician – someone who can inspect those specialized pieces of equipment. So that’s very important if you have that kind of equipment on the property that you’re looking to buy.
Are there any restrictions on home inspections?
We also need to talk about the limitations of an inspection imposed by law. The Alberta government has restrictions on what we can do and what we can talk about. For example, a home inspector in Alberta is not allowed to provide estimates on the cost of anything that they recommend or that they find. It used to be something that inspectors did, but not allowed anymore. We are there to be your own unbiased third party and it’s not a good idea for us to get into a discussion of cost but there are lots of people that can help you with that other limitations are imposed by our professional association. So as inspectors we cannot perform repairs on homes that we’ve inspected as we’re your unbiased third party, we get paid whether or not you buy a house and our job is to tell you the condition of the house and that’s how we protect you from a conflict of interest situation.
Why do inspections take so long?
That’s because we take the time to test your appliances, we perform thermal imaging throughout your home, we also make a point of entering addicts and crawl spaces with feasible. We take a lot of pictures and that’s why it takes longer. We encourage you to come with us on the show. Follow us around and ask questions. The only thing you can’t do is climb our ladders for safety reasons but crawl under the deck with us if you want! We’re happy to take you on that journey because it’s about learning and that’s what we’re here for. We’re here to help you understand your home, so you’ll be safe, warm and dry for years to come.
What’s included in the report you provide prospective home-owners?
It’s the beginnings of your planning tool and that coupled with the home binder is going to empower you to make decisions to keep your home in good condition over time. It’s a comprehensive linked PDF (electronic) with images and illustrations to assist you in understanding our findings and their implications. There are recommendations for resolving any issues that we find and it helps you to prioritize home maintenance and plan for future work. We provide links to further information like on an energy efficiency programs. We also include information relevant to any peculiar items we found in your home. So for example, in one inspection we found a sauna in the basement and so we went looking for the manual so we could provide that to the client. So if you don’t know what this thing is, or how it works it’s nice to have that piece of information to rely on at the back of our report. You’ll find links to our entire library and thousands of documents you can go through that will assist you with home maintenance.
Can you tell us more about Home Binder?
Home Binder is a cloud-based subscription service we provide free of charge to all of our inspection clients. With Home Binder you can keep information about your home handy and securely stored, you can plan home improvement projects, keep pictures for insurance claim purposes, stay on track with home maintenance through regular email reminders, be automatically advised of recalls on your appliances right away, budget maintenance and renovations, find trusted local service providers and wow potential sellers with sellers reports.
We give a little extra assistance to first-time homebuyers and that’s in the form of by Bryan Baeumler’s book. That’s a free gift if you’re a first-time homebuyer. And the reason why is because many first time homebuyers are buying fixer uppers and we want to make sure you don’t make some of the same mistakes you’ve seen on Bryan’s show. He tells you about all the mistakes and how to correct them.
Do you need help with your home inspection? Learn more about Oxford Inspections.
Rent to Own agreements are designed to create mutually beneficial relationships between the home purchaser and the financing or investment company.
If you’re interested in securing a property which you can call your own, we may be able to help you. Shaw-Roco Solutions is pleased to offer our “Homeowners Solution” program which provides excellent opportunities for new home purchasers to successfully enter the real estate market – even with bad credit or complex personal situations.
Individuals interested in a rent to own agreement, would meet with a real estate investor (such as Shaw-Roco Solutions Inc.) and start the process. The first step is filling out a comprehensive form to become qualified for our rent to own program. This is where you’ll answer a few questions surrounding your home ownership histories, such as have you owned a home previously? have you been through bankruptcy or foreclosure? what is your ideal monthly rent? etc.)
Once you’ve filled out the form, we touch base to set up a meeting. As we move along in the process, we discuss specific options based on your unique situation. Terms are typically between 2-3 years and you will usually have an opportunity to choose your own home. While certain conditions will apply, we understand that it is in everyone’s best interests to have you move into a home that you truly love – which is perfect for your situation. Having our Homeowners working with us to select the perfect property benefits for everyone. You can select a property that you will enjoy for several years (which is important for long-term agreements and purchasing plans) and you can even make small renovations and improvements to the home in many situations.
With the ability to choose your home, customize it to fit your needs and preferences, and begin making payments towards the final purchase of the property for yourself, Rent to Own agreements provide multiple benefits for families in many situations.
Once the agreement reaches maturity, new home purchasers will have contributed to an options payment program that will go towards your option to purchase. Depending on the specific arrangement, this is usually an opportunity to access traditional financing and completely purchase the home independently. Alternatively, if something has changed with the purchaser’s situation other options may be available.
For more information about Rent to Own and to arrange a free, no-obligation consultation please Contact Us Today at 403-933-2838 or firstname.lastname@example.org
Step-by-step tenant buyer process (Rent-to-Own, Calgary Alberta)
Danelle has an extensive background in real estate, not only as a mortgage broker but also as an investor. With more than 15 years experience as a mortgage broker, she offers her clients hands-on experience and real estate knowledge. Over the years she has experimented with different real estate investing strategies in pursuit of experience and specialization. To date Danelle has personally completed more than 20 real estate transactions; typically in some form of creative real estate investing. She’s also dabbled in rentals and flips, self-builds, long-term rentals, rent-to-own, vendor take backs, lease options, mortgage lending and borrowing. With her background, she gives clients and investors confidence knowing that in many cases she has actual experience.
How does this relate to qualifying tenant buyers?
“Let me first say that I think rent own is a brilliant strategy when done correctly…it kind of became a means for me to provide my clients that didn’t quite qualify for a mortgage today with an alternate solution,” she said. “… usually when a client is coming to me, they are done with renting so they want to be able to make the home [their] home, which is hard to do when you know that you’re just renting temporarily.”
What does the process look like?
(1) The first step in qualifying tenant buyers is to make sure that clients can reasonably reach their goal of homeownership, within a reasonable amount of time.
Example: let’s say you can’t qualify because your credit score is too low and you have five credit cards that are maxed out (debt-ratio too high.)
After reviewing the application, they determine the terms. Terms depend on qualifying for the option-to-purchase (most typically range between 2-4 years.) Tenant-buyers have to qualify to exercise their option to purchase. What that means is that of the two contracts they sign (Lease Agreement and Option to Purchase) they have to have the ability to be able to purchase. Let’s say that at the end of three years they want to back out, that means that they don’t exercise their option to purchase and they lose whatever money they put into the deal.
(2) After taking a full application and analyzing the application, the next step is putting a plan in place outlining a step-by-step action that must be completed before qualifying. Danelle would walk you through a plan that prioritizes the order you should pay debts off. This would bring your credit score up and debt-ratio down. Six months prior to the end of the term, we make sure we do the pre-qualifying to make sure that they still qualify.
(3) Similar to a coach, Danelle regularly follow-ups with her clients and completes checks quarterly to make sure that everything is on track. If something has changed, typically the investors will offer an extension on the agreement.
Example: perhaps you need more time.
The first factor that would affect the agreement is the mortgage. Since the mortgage is in investors name they must know ahead of time – because they would have to renegotiate at the current interest rate. If they have to renegotiate interest rate it can affect the agreed upon rental rate.
The other factor is that the extended appreciation added to the purchase price.
If the extension varies between 3 months or 6 months, they would need an open mortgage rate. Depending on what it is, their rent would be adjusted according to that.
On the flip side, if you look for a four-year term but end up only needing three years, there is a pay-out penalty for the mortgage. In this scenario, the tenant buyer is responsible for the payout penalty.
(4) Finally, she assists with obtaining the mortgage approval and everything right through to closing.
Shawna was joined by Danelle Cole for our first episode in our Facebook Live Series “Ask An Expert”
Danelle is a Senior Associate at The Place to Mortgage. During this live show Danelle and Shawna discussed the process for qualifying tenant buyers for rent to own programs.
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👉 Are they licensed?
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📆 Next Facebook Live Wednesday at 7pm MST – mark your calendars!
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👉 How long have they been a realtor?
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📆 Next Facebook Live Wednesday at 7pm MST – mark your calendars!