More Canadians are utilizing the Rent to Own (RTO) solution these days. These are people who want to own but cannot qualify because of credit and they are tired of renting. Typically an RTO contract runs 2 – 3 years, sometimes longer depending on how long it will take to improve one’s credit rating. The client finds a home that they want to own and an investor buys the property for them. Part of the rent is credited towards down payment and closing costs, but because there is risk to the investor, a (refundable) deposit is required.
We have done several over the years and all have been ‘successful’ for client and investor. Most RTO programs have ‘Options’ to buy at the end, whereas our program represents a bona fide purchase by our clients (from the investor) from day one, the first day of occupancy. All parties have a clear expectation of timeframe, dates, price etc., and are focused on completing the transaction. We coach (educate) the clients and make sure they are following our advice to gradually improve their credit so they will qualify for an institutional mortgage. We also create a budget and we oversee spending habits to keep people on tract.
An RTO is an excellent solution for self-employed who have good income. We have done a few for single parents, for divorcees and we also do them to help people ‘Save’ their homes. This involves people who may lose their homes as a result of financial problems and who just need time to turn things around. Rather than default on the mortgage and go ‘Power of Sale’ an investor buys the house from them and they repurchase it back in future at a specified price, so there are no surprises. This approach can work very well and the family is not uprooted during critical years of child rearing.
With poor/bad credit you must have good job(s)/income as we must see that you are capable of qualifying so you can successfully complete the transaction in future.
Most are so thankful at the end for the experience with all they have learned and they are well equipped to continue on a path to financial security and wealth. If you know anyone who may be interested in an RTO solution, please call us for an appointment today.