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Investing In Rent-to-Own Housing

Investors | JAAG |

Investing in rent-to-own housing can be a great way to build wealth and earn passive income. With a rent-to-own property, a tenant rents a home for a period of time with the option to purchase the home at the end of the rental period. This type of investment can be a win-win for both the investor and the tenant.

Benefits of Investing in Rent-to-Own Housing for Investors

For investors, rent-to-own properties offer a steady stream of rental income, as well as the potential for appreciation in the home’s value. Additionally, the tenant is responsible for maintaining the property and paying for any repairs or upgrades, which can save the investor time and money.

For Investors:

  • Provides a steady stream of rental income
  • Potential for appreciation in the home’s value
  • Tenant is responsible for maintaining the property and paying for any repairs or upgrades
  • Can save the investor time and money

Benefits of Investing in Rent-to-Own Housing for Tenants

For tenants, rent-to-own properties offer a chance to live in a home they may not be able to purchase right away. The tenant has the opportunity to save for a down payment and improve their credit score while living in the home. When the rental period ends, the tenant has the option to purchase the home, which can be a great way to achieve the dream of homeownership.

For Tenants:

  • Offers a chance to live in a home they may not be able to purchase right away
  • Opportunity to save for a down payment and improve credit score while living in the home
  • Can be a great way to achieve the dream of homeownership

How Does Rent-to-Own Housing Work?

A client completes an application and let’s say are approved for a home at $250,000 based on their situation.

The investor purchases a three-bedroom, two-bathroom home for $250,000. The investor then rents the home out to a tenant for $2,000 per month which includes a rent-to-own option consideration. The rental agreement states that the tenant has the option to purchase the home for $300,000 within the next three years.

  • The tenant moves into the home and begins paying $2,000 in rent each month. The tenant also pays for any repairs or upgrades to the property as outlined in the rental agreement. After three years, the tenant decides they want to exercise their option to purchase the home.
  • The tenant has saved enough money for a down payment and has improved their credit score. The tenant then obtains a mortgage loan and purchases the home for $300,000 as outlined in the rental agreement.
  • As the investor, you have been receiving a steady rental income for three years, and have now sold the property for a profit. The tenant has been able to live in the home, save for a down payment, and improve their credit score, which helped them to purchase the home they were renting.

It’s important to note that the scenario described above is just one example and the terms of the rental agreement can vary, such as the length of the rental period, the option fee, and purchase price. It’s essential to have a clear and legally binding agreement with the tenant that outlines the terms of the rent-to-own arrangement.

How Does a Joint Venture Partnership Between a Rent-to-Own Company & A Private Investor Work?

Example 1:

A joint venture partnership between a rent-to-own company and a private investor can be a great way to invest in rent-to-own properties. This type of partnership allows the private investor to invest in rent-to-own properties without having to manage the properties themselves, while the rent-to-own company handles the tenant screening, lease agreement, and property management.

In a joint venture partnership, the rent-to-own company finds a qualified tenant and handles all aspects of the tenant screening, lease agreement, and property management. The private investor provides the capital to purchase the rent-to-own property, typically a single-family home or a small multi-unit building and obtains the mortgage. The rent-to-own company then finds a qualified tenant and handles all aspects of the tenant screening, lease agreement, and property management. In return, the private investor receives a percentage of the rental income and shares in the appreciation of the property’s value when the tenant exercises the option to purchase. The rent-to-own company, in turn, receives a percentage of the rental income and an agreed upon management fee for their services. Both parties then split the profits when the tenant purchases the property.

This type of partnership allows the private investor to earn passive income and build wealth over time, while the rent-to-own company can increase their portfolio of properties and earn a management fee. It’s a win-win for both parties.

However, it’s important to understand that a joint venture partnership is a legally binding agreement, and it’s essential to have a clear understanding of the terms of the partnership. This includes the percentage of profits, management fee, and responsibilities of each party. It’s also important to do your due diligence and research the rent-to-own company to ensure they have a good reputation and track record of successful partnerships.

Example 2:

A private investor, John, is interested in investing in rent-to-own properties but doesn’t have the time or experience to manage the properties on his own. He partners with a reputable rent-to-own company, JAAG Rent to Home, which specializes in managing rent-to-own properties.

The partnership between John and JAAG Rent to Home works as follows:

  • JAAG Rent to Home finds a qualified tenant and handles all aspects of the tenant screening, lease agreement, and property management.
  • John provides the capital to purchase a rent-to-own property, which is typically a single-family home or a small multi-unit building and obtains the mortgage.
  • JAAG Rent to Home finds a qualified tenant and handles all aspects of the tenant screening, lease agreement, and property management.
  • John receives a percentage of the rental income and will share in the appreciation of the property’s value when the tenant exercises the option to purchase.
  • JAAG Rent to Home receives a percentage of the rental income and an agreed upon management fee for their services.
  • John and JAAG Rent to Home split the profits when the tenant purchases the property.

In this example, John gets to invest in rent-to-own properties without having to manage the properties himself. He can rely on the expertise and experience of JAAG Rent to Home to handle all aspects of the tenant screening, lease agreement, and property management. In return, the rent-to-own company gets to increase their portfolio of properties and earn a management fee. This partnership allows both parties to benefit from the investment.

This is just one example of how a joint venture partnership can work, and the terms of the partnership can vary. It’s crucial to have a clear and legally binding agreement that outlines the terms of the partnership, including the percentage of profits and management fee.

Should You Invest in Rent-to-Own Housing?

When investing in rent-to-own housing, it’s important to do your due diligence and find a property in a desirable location with good schools and amenities. You should also make sure that the rental price is in line with market rates and that the purchase price is fair. Additionally, you should have a clear and legally binding agreement with the tenant that outlines the terms of the rent-to-own arrangement.

Investing in rent-to-own housing can be a great way to build wealth and earn passive income. By providing tenants with a chance to achieve homeownership, you can help them achieve their dreams while also building your own financial future. Contact our team to start investing in rent-to-own housing today.

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Rent-to-Own: A Smart Investment for Parents and Children

Investors | JAAG |

Investing in a rent-to-own property can provide parents and their children with a number of significant benefits. In this blog, we will explain the benefits of investing in rent-to-own properties for families.

Benefits of Investing in Rent-to-Own Property

Long-Term Financial Gain

One of the main benefits is the potential for long-term financial gain. By purchasing a property and renting it out with the option to buy, parents can earn rental income and potentially see appreciation in the property’s value over time. This can help them to build wealth and secure their own financial future.

Real Estate Experience

Becoming a landlord through a rent-to-own investment can also provide parents with valuable real estate experience. This can serve as a stepping stone for them to make further investments in the future and expand their portfolio.

Path to Homeownership

Another important benefit is the opportunity to provide a path to homeownership for their children. Many young people today struggle to afford the high down payments and closing costs associated with traditional home buying. Rent-to-own allows them to live in a home and make monthly rent payments that go towards the purchase price of the home. This can help them to save for a down payment and improve their credit score, making it easier for them to qualify for a mortgage in the future.

Furthermore, rent-to-own can also provide children with a sense of stability, as they can live in a property long-term without fear of being evicted or having to move frequently. This can also provide a sense of continuity for parents, knowing that their children have a stable and secure place to call home.

Rent-to-Own Property Investment Example

Mrs. and Mr. Smith, a couple of parents, are looking to invest in a property that can provide them with a long-term financial gain and also benefit their child. They come across JAAG Rent to Home, a company that specializes in rent-to-own. They find a property that suits their needs and budget and decide to purchase it with JAAG Rent to Home.

JAAG then rent the property to their child, who is currently struggling to save for a down payment and improve their credit score to qualify for a traditional mortgage. The child pays the rent, which goes towards the purchase price of the home. The rent-to-own agreement also gives the child the option to purchase the home at a later date, with a portion of the rent paid credited towards the down payment.

In this scenario, the parents are the private investors, and their child is the tenant. The parents are able to earn rental income while they wait for the child to be ready to purchase the home. Additionally, they also gain valuable real estate experience, and the child can live in a stable and secure home while working towards homeownership.

Why Should You Invest in a Rent-to-Own Property with JAAG Properties?

Investing in a rent-to-own property for your children can be a smart financial move for parents too. It offers the potential for long-term financial gain, valuable real estate experience, and the opportunity to provide a path to homeownership for their children. Before entering into a rent-to-own agreement, seek legal and financial advice to make sure that it’s the right fit for your financial situation and goals. Contact JAAG Properties to learn more.

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Socially Responsible Rent-to-Own Investment Opportunities

Investors | JAAG |

Socially responsible investing (SRI) is a type of investment strategy that considers both financial returns and the impact of an investment on society and the environment. Impact investing is a subset of SRI that specifically targets investments in companies or funds that have a positive social or environmental impact.

Investing with Socially Responsible Companies

One popular socially responsible investment option is investing in companies that promote environmental, social, and governance (ESG) principles. This can include companies that prioritize renewable energy, diversity and inclusion, and ethical business practices, like JAAG Properties.

Impact Investing

Another option for socially responsible investors is impact investing. Impact investments are made with the intention of generating measurable social or environmental impact alongside financial returns. Examples of impact investments include investments in renewable energy, affordable housing, and microfinance.

JAAG’s Rent-to-Own Investments

Rent-to-own companies, such as JAAG Properties, are another option for socially responsible investors. Rent-to-own companies provide an alternative to traditional homeownership by allowing renters to live in a home while they work towards owning it. This can be a particularly beneficial option for families or individuals who may not have the financial means to purchase a home outright.

Offering Investment Opportunities Aligned with Your Values

Overall, socially responsible investing offers a way for investors to align their financial goals with their values. By considering the impact of their investments on society and the environment, investors can make a positive difference in the world while also earning a return on their investment.

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Why Would Someone Purchase a Home Through a Rent-to-Own Provider?

Rent to Home | JAAG |

Prospective homebuyers are increasingly exploring alternative paths to homeownership. One such avenue is the rent-to-own model. This path offers a middle ground between renting and traditional home purchasing, providing individuals with an opportunity to ease into homeownership through a rent-to-own provider.

What is Rent-to-Own Housing?

Rent-to-own housing, also known as lease-option or lease-to-own, is an agreement in which a tenant rents a property for a certain period of time, with the option to purchase the property at the end of the lease. This type of arrangement can provide benefits for both the tenant and the landlord, as it allows the tenant the opportunity to purchase a home without the immediate financial commitment of a traditional mortgage, while also allowing the landlord to sell the property at a predetermined price.

5 Reasons to Use a Rent-to-Own Provider

There are several reasons why someone might choose to purchase a home through a rent-to-own provider.

1. Build Credit & Save for a Down Payment

Rent-to-own housing can be a great way for tenants to build credit and save for a down payment. A portion of the rent paid each month is often credited towards the purchase price of the property, which can be used as a down payment when the tenant is ready to purchase the property.

2. Flexibility

Rent-to-own housing can provide more flexibility than traditional home buying. Tenants can test out a neighbourhood or home before committing to a purchase, and they can move out at the end of the lease if they decide they don’t want to purchase the property.

3. Stable Housing

Rent-to-own housing can provide a sense of stability, as the tenant has the option to purchase the property at the end of the lease, rather than having to move again.

4. Non-Traditional Credit History

For tenants who have a non-traditional credit history, renting-to-own may be a more viable option than a traditional mortgage. Rent-to-own providers may be more lenient when it comes to credit requirements, making it more accessible to those who may not qualify for a traditional mortgage.

5. Improve the Property

Tenants may have an opportunity to improve the property while they’re renting it. This can increase the value of the home and make it more appealing to the tenant buyer in the future.

Why Would Someone Purchase a Home Through a Rent-to-Own Provider?

Maria is a tenant who is interested in purchasing a home, but currently does not have the financial means to do so. She has a non-traditional credit history and may not qualify for a traditional mortgage. After being approved for JAAG’s Rent to Home Solution, Maria works with a real estate agent to find a home of her choice, considering her purchase price budget. Then JAAG Properties buys the property and Maria enters a rent to own agreement, moving in immediately and pays rent to JAAG. After 3 years, Maria will then buy the home from the rent to own company and become a homeowner.

In this example, Maria has the opportunity to build credit and save for a down payment while renting the property. Maria also has the flexibility to move out at the end of the lease if she decides she doesn’t want to purchase the property and finds a more suitable one.

Choose JAAG Properties as Your Rent-to-Own Provider

Rent-to-own housing can be an appealing option for those looking to purchase a home but may not have the immediate financial means to do so. It can also be a great way for landlords to increase the potential selling price of their property. As with any real estate transaction, it is important for both parties to completely understand the terms and conditions of the agreement, and to have legal representation.

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What are The Pros and Cons of Purchasing a Home Through a Rent-to-Own Company?

Rent to Home | JAAG |

Rent-to-own companies offer a unique opportunity for individuals to purchase a home without the traditional financial commitment of a mortgage. This type of agreement allows renters to pay a monthly rent, with a portion of that rent applied as a credit towards the purchase price of the home. However, as with any real estate transaction, there are both pros and cons to purchasing a home through a rent-to-own company.

Pros & Cons of Purchasing a Home Through a Rent-to-Own Company

Pros

One of the biggest pros of renting-to-own through a company is the ability for renters to build credit and save for a down payment while living in the home they hope to purchase. This can make it easier for renters to qualify for a traditional mortgage in the future. Additionally, rent-to-own agreements can provide a sense of stability, as renters have the option to purchase the property at the end of the lease rather than having to move again.

Another benefit of rent-to-own companies is that they often provide legal representation and support throughout the process, which can be particularly helpful for first-time home buyers who may not be familiar with the legalities of purchasing a home.

Another benefit of renting to own is that, when it comes time to purchase the home, the purchase price is often lower than market value. It’s important for renters to thoroughly research and compare prices before entering into a rent-to-own agreement. 

Finally, an added benefit is the fact that when someone enters a rent to home agreement, the purchase price is pre-determined so at the end of the term a renter knows exactly what they’re paying. If they wait, future home prices may be higher. Additionally, the rent-to-own term allows the renters to ‘test’ the house and neighbourhood without the obligation of purchasing. If they don’t like either, they can move out at the end of the term.

Cons

There are also some cons to consider when purchasing a home through a rent-to-own company. One of the biggest cons is that if the renter decides not to purchase the home at the end of the lease period, any option fee or equity will typically be forfeited. 

Purchase a Home Through JAAG Properties

Overall, purchasing a home through a rent-to-own company can be a great option for individuals who are not yet financially ready to purchase a home outright. However, it is important to weigh the pros and cons and fully understand the terms and conditions before entering into an agreement. It is also advisable to seek legal or financial advice to make sure the agreement aligns with your goals and financial situation.

Our Rent to Home Solution makes it easy to get your foot into the housing market, with our program offering agreements that are tailored to our clients needs. With a no-cost application process and no penalties for breaking agreements, you can start on the path to homeownership with flexibility and peace of mind.

If you are interested in purchasing a home through a rent-to-own company, get in touch with the experts at JAAG Properties.

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What is Rent-to-Own?

Rent to Home | JAAG |

 

Rent-to-own, also known as lease-option or lease-to-own, is a unique type of agreement that allows tenants to rent a property for a certain period of time with the option to purchase the property at the end of the lease. This type of arrangement can be incredibly beneficial for tenants who are looking to purchase a home but may not have the immediate financial means to do so. Learn what rent-to-own housing is, how it works, and the benefits of working with a rent to own company.

Rent-to-own Agreement

In a rent-to-own agreement, the tenant pays a predetermined monthly rent. A portion of this rent (known as the Rent Credit) is applied towards the purchase price of the property, which the tenant has the option to buy at the end of the lease period. This allows tenants to build credit and save for a down payment while also gaining a sense of stability as they have the option to purchase the property at the end of the lease rather than having to move again.

Rent-to-own Companies

Rent-to-own companies typically provide a wide range of services to help tenants navigate the rent to own process. They can help tenants to build credit and save for a down payment, as a portion of the rent paid each month is often applied towards the purchase price of the property. Rent to own companies also provide legal representation and support throughout the process.

It’s important for tenants to fully understand the terms and conditions of the agreement before signing on. This should include the length of the lease, the purchase price of the property, and the portion of the rent that will be applied towards the purchase price. It is also important for tenants to have legal representation to ensure that the agreement is fair and legally binding.

Key Takeaways

Overall, rent-to-owns can be a great option for those looking to purchase a home but may not have the immediate financial means to do so. Rent to own companies can provide additional resources and support to ensure a successful transaction for both parties. If you’re interested in rent-to-own housing, it’s important to research your options and fully understand the terms and conditions of the agreement before signing on.

Example of a Rent-to-own Housing Agreement

John is a tenant who is interested in purchasing a home, but currently does not have the financial means to do so. He finds a rent-to-own company and is approved. They agree on the following terms for their rent-to-own agreement:

 

  • John finds a home within his approval price
  • The lease will be for a period of three years.
  • The purchase price of the property is $300,000.
  • John will pay $1,500 per month in rent, with $300 of that rent applied towards the purchase price of the property.
  • At the end of the three-year lease, John has the option to purchase the property for $320,000, with the $10,800 he has saved from the rent applied towards the purchase price.

 

If John decides not to purchase the property at the end of the lease, he could forfeit the amount saved towards the purchase price.

In this example, John has the opportunity to save money towards the purchase price of the property while renting it. It’s important for John to consult with legal representation to ensure the agreement is fair and legally binding, and to review the terms and conditions of the agreement.

 

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The Most Frequently Asked Questions About Rent-to-Own Housing

Credit Score | JAAG |

Rent-to-own homes, also known as lease-option or lease-to-own homes, are an appealing housing option for Canadians looking to buy a home. These types of homes allow renters to live in a property while they work on improving their credit or saving for a down payment, with the option to purchase the home at the end of the lease period. However, many people have questions about this type of housing option and its specifics. Here, we will list and answer the 10 most frequently asked questions (FAQs) about the rent-to-own housing industry in Canada.

1. What is rent-to-own housing?

Rent-to-own housing is a type of agreement where a renter can live in a property while they work on improving their credit or saving for a down payment. At the end of the lease period, typically three years, the renter has the option to purchase the home at a pre-agreed price. This type of housing option is beneficial for renters who may not currently qualify for a traditional mortgage, but wish to become homeowners in the future.

2. How does rent-to-own work?

In a rent-to-own agreement, the renter pays a predetermined monthly rent, which will include a portion of the rent being applied towards the down payment credit. The renter will then have the option to purchase the home at the end of the lease period, typically three years, at a pre-agreed price. This allows the renter to save for the down payment and work on improving their credit score during the lease period, making them more likely to qualify for a traditional mortgage by the end of the lease period.

3. Who is eligible for rent-to-own housing?

Rent-to-own homes are often a good option for renters who may not qualify for a traditional mortgage. Renters can use the time during the lease period to improve their credit score, save for a down payment, or address any other issues that may be preventing them from obtaining a traditional mortgage. However, it’s important to note that rent-to-own may not be available in all areas, so it is important for buyers to research their options in their desired location.

4. What are the benefits of rent-to-own housing?

Rent-to-own homes offer more stability and flexibility than traditional renting. Those who choose to enter a rent-to-own agreement are able to establish roots in a community and may even be able to make improvements to the property, such as painting or landscaping, that can increase its value. Additionally, rent-to-own homes can provide an opportunity for renters to become homeowners who may not qualify for a traditional mortgage.

5. Are there any downsides to rent-to-own housing?

Rent-to-own agreements may not be available in all areas, so it is important for buyers to research their options in their desired location. Additionally, rent-to-own homes may require a higher down payment or higher monthly rent payments than traditional rental properties. It is also important to note that rent-to-own agreements are typically more complex than traditional rental agreements and it is important for both the renter and the homeowner to fully understand the terms of the agreement before signing on.

6. How much of the monthly rent goes towards the down payment?

The amount of the monthly rent that goes towards the down payment is typically predetermined between the renter and JAAG Properties. JAAG Properties will determine the amount needed to save enough credit to build the renter’s down payment. It’s important to agree on this amount before signing the rent-to-own agreement, to ensure that you are comfortable with the amount being set aside each month towards the down payment.

7. What happens if the renter decides not to purchase the home at the end of the lease period?

If the renter decides not to purchase the home at the end of the lease period, the agreement can stipulate that the renter must vacate the property or extension terms. Any option fee or portion of the rent that was applied towards the down payment could be forfeited or a portion returned minus costs associated with selling the home. It is important for both the renter and the homeowner to fully understand the terms of the agreement before signing on, so that both parties are aware of the potential consequences if the renter decides not to purchase the property.

8. Can rent-to-own agreements be broken?

Rent-to-own agreements can be broken, but there may be penalties for doing so. It is important for both the renter and the homeowner to fully understand the terms of the agreement before signing on. This will ensure that both parties are aware of the potential consequences if the agreement is broken. It is also important to consult with legal or financial professionals to help understand the terms of the agreement and potential consequences of breaking it.

9. How can I find rent-to-own homes in Canada?

There are a few ways to find rent-to-own homes in Canada:

  1. Online real estate listing websites: Websites such as Realtor.ca and Zillow allow you to search for rent-to-own homes in your desired location.
  2. Rent-to-own companies: There are companies that specialize in renting homes with an option to purchase. These companies may have listings of properties that are available for rent-to-own. With JAAG Properties, the client picks the home based on approval amount. 
  3. Private landlords: Some private landlords may offer a rent-to-own option on a property they own. This can be found through online classifieds or local newspapers.
  4. Real estate agents: Real estate agents can help you find rent-to-own homes in your desired location. They may have access to listings that aren’t publicly available and can help you navigate the process.

It’s important to research your options in your desired location and consider factors such as price, location, and condition of the property, as well as the terms of the rent-to-own agreement. It’s also advisable to consider consulting with a financial professional to make sure the Rent-to-Own agreement align with your goals and financial situation.

10. What are the differences between renting from a rent-to-own company and a private landlord?

There are a few key differences between renting from a rent-to-own company and a private landlord:

  1. Structure: Rent-to-own companies typically offer homes that are specifically designated as rent-to-own properties and have a set process in place for the rental period, option fee, and purchase price. However, with JAAG Properties, you can choose any home within the agreed purchase price. Private landlords may offer a rent-to-own option on a home they own, but the terms may vary and may not be as structured as with a rent-to-own company.
  2. Resources: Rent-to-own companies may have more resources and experience in handling the unique aspects of a rent-to-own agreement compared to a private landlord.
  3. Flexibility: Private landlords may have a set of terms and conditions that need to be followed, whereas with a Rent to Own company, the terms may be more flexible and open to negotiation.
  4. Support: Rent-to-own companies may have a dedicated team to support you throughout the process, whereas a private landlord may not have the same level of support.

11. How much of a down payment do I need when renting to own?

We require that you have at least a 3% down payment, as well as an annual household income of at least $100,000. 

12. Can I choose my home?

Absolutely! Once your application is approved, you’ll receive a purchase price for your new home. You’re welcome to choose any home within the agreed range. We’re also happy to recommend properties within your price range that will meet your needs.

13. Who owns the property in a rent-to-own agreement?

JAAG Properties becomes the property owner. We purchase the property and you can then rent it from us. You make payments to us each month, which include rent, property taxes, insurance, and savings for your future down payment.

14. Who pays for property maintenance in a rent-to-own agreement?

You are responsible for maintaining your new home. Prior to move-in, we’ll ensure that your new home is inspected by a Certified Home Inspector so that you are aware of any essential repairs and the essential repairs can be completed before you move in.

15. Can I make improvements to my home?

Of course! Unlike in a traditional rental agreement, you are free to renovate, decorate, and make your home your own.

16. Can I qualify if I have bad credit or no credit?

Yes! Our Rent to Home Solution is intended to help you raise your credit score, pay down debt, and generate savings so that you can later qualify for a mortgage. Our team is eager to help you build a more positive financial future!

17. How long is the Rent-to-own term?

Typically, our Rent-to-own terms last 3 years. However, we may offer longer or shorter terms depending on your unique circumstances.

18. What if I don’t qualify for a mortgage at the end of the rent-to-own term?

If you can’t qualify for a mortgage at the end of your term, there are options to extend your Rent-to-own agreement until you can qualify. We designed the program to help you become a homeowner, and we’re dedicated to working with you towards that goal.

JAAG Properties: Supporting You Throughout The Rent-to-own Process

It’s important to thoroughly research and understand the terms and conditions of any rent-to-own agreement, whether it’s with a company or private landlord. It’s also advisable to seek legal or financial advice to make sure that the terms of the agreement align with your goals and financial situation.

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What Is The Difference Between A Rent-to-Own Company and a Private Landlord?

Rent to Home | JAAG |

Rent-to-own homes, also known as lease-option or lease-to-own homes, are an increasingly popular housing option for Canadians looking to buy a home. These types of homes allow renters to live in a property while they work on improving their credit or saving for a down payment, with the option to purchase the home at the end of the lease period.

When it comes to finding a rent-to-own home, there are two main options: working with a company or working with a private landlord. Both options have their own set of pros and cons, and it’s important to understand the differences between the two before making a decision.

Rent-to-Own Company VS. Private Landlord

Rent-to-own companies are companies that specialize in providing rent-to-own homes to renters. These companies often have a portfolio of properties available and may have more structured agreements and professional management. They also may allow clients to work with a realtor to find and choose their own home on the market. On the other hand, private landlords may have only one property available for rent-to-own, and the agreement and management may be less formal.

Pros & Cons of Working with a Rent-to-Own Company

The benefits of working with a rent-to-own company include having access to a wide variety of properties, professional management services, and structured agreements. Due to the nature of structured agreements, rent-to-own companies can offer more flexibility than landlords.

Pros & Cons of Working with a Private Landlord

Landlords may be more flexible with the terms of the agreement and may be willing to work with renters to find a solution that works for both parties. However, the downside to working with a private landlord is that there is less security and less professional management, which can make the process of renting and buying a home more challenging.

Work with JAAG Properties to Rent-to-Own a Home

In conclusion, working with a rent-to-own company or a private landlord both have their own set of benefits and drawbacks. It’s important to weigh the pros and cons and choose the option that best fits your needs. While companies can offer more properties, professional management and structured agreements, private landlords already own the house and move in can be quicker, but less security and management. Ultimately, the decision will depend on the individual’s needs, preferences and what they value most in an agreement. If you need quality advice and expertise on rent-to-own homes, contact JAAG Properties to learn more.

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How is A Rent-to-Own Purchase Price Calculated?

Rent to Home | JAAG |

What is a Purchase Option?

A rent-to-own purchase, also known as a lease option, is a type of real estate transaction in which a tenant rents a property with the option to purchase it at a later date. One of the key elements of a rent-to-own agreement is the purchase price, which is the price that the tenant will pay to buy the property.

 

How is Purchase Price Calculated?

The purchase price for a rent-to-own property is typically calculated in one of two ways:

Fixing the Price at the Beginning of the Agreement

The first way in which the purchase price for a rent-to-own property is typically calculated is by setting the price at the beginning of the agreement and not changing it. This means that the tenant will pay the same price for the property, regardless of any changes in the real estate market.

It’s important to note that rent-to-own providers will typically add an appreciation rate to the purchase price of the home to offset potential increases in the market value. This option is beneficial for the tenant as they are able to lock in the purchase price of the property at the beginning of the agreement, and it provides them with a sense of stability in terms of their future home ownership costs. However, it may not be as beneficial for the landlord/seller, as they may miss out on the opportunity to increase the purchase price if the real estate market were to go up during the duration of the agreement.

Current Market Value of the Property

The second way in which the purchase price is typically calculated is based on the current market value of the property. This means that the tenant will pay the market value of the property at the time of purchase, which may be higher or lower than the original purchase price agreed upon. This option is more beneficial for the landlord/seller as it allows them to capitalize on any increases in the real estate market during the duration of the agreement. However, it may not be as beneficial for the tenant as they may end up paying more for the property than they initially agreed to or unable to buy the home if the price increases too much.

In both cases, the purchase price does not include fees or closing costs associated with the sale of the property. These may include real estate agent fees, title search fees, and other expenses that are typically incurred when buying a property. It’s important for the tenant to be aware of these additional costs, and to make sure they are included in the down payment, so they can budget accordingly.

It’s important to note that the tenant will usually have to pay an option consideration at the beginning of the rent-to-own agreement. This fee gives the tenant the right to purchase the property at a later date, and it is typically applied to the purchase price.

 

Price Breakdown

A rent-to-own purchase price is calculated by either fixing the price at the beginning of the agreement or base it on the current market value of the property. It’s important to have a complete understanding of how the purchase price is calculated before entering into a rent-to-own agreement and it is recommended to seek professional advice.

Here is an example of a rent-to-own purchase price breakdown:

  • Original purchase price: $300,000
  • Option Consideration: $5,000
  • Rent: $1,500 per month
  • Rent credit: $300 of rent paid each month

In this example, the tenant would pay $5,000 as an option consideration at the beginning of the agreement. This fee gives the tenant the right to purchase the property at a later date, and it is typically applied to the purchase price.

The tenant would also pay $1,500 per month in rent. In this example, $300 of the rent paid each month would be credited towards the purchase price.

After three years of paying rent, the tenant would have credited $15,800 towards the purchase price, and the property’s market value is now $320,000.

The mortgage amount in this scenario would be $304,200 ($300,000 original purchase price + $10,800 rent credit – $5,000 option consideration).

 

Final Takeaways

It’s important to note that this is just one example of a rent-to-own purchase price breakdown and terms can vary depending on the specific agreement. The rent credit percentage, option consideration, and market value of the property at the time of purchase can also vary.

It’s important for the tenant to carefully review and understand the terms of the agreement before entering into a rent-to-own agreement. It’s recommended to consult with a real estate attorney or financial advisor to ensure that the agreement is fair and reasonable.

Ready to navigate the Rent-to-Own purchase process? APPLY NOW

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Can Newcomers To Canada Get A Mortgage?

Immigrants | JAAG |

Newcomers to Canada can face many challenges while trying to establish their new lives in an unfamiliar environment. Language barriers, cultural differences, and social norms can make it difficult to accomplish even the simplest of tasks. Of course, one of the biggest concerns for new arrivals can be finding secure housing, a place to live and call their own.

Acquiring the necessary financing to purchase a home in Canada can sometimes be a struggle for newcomers. They may have difficulties meeting the requirements of traditional lenders under typical mortgage programs, due to their lack of employment history, financial instability, and unestablished credit in Canada. While some who are new to the country may have sufficient finances to begin the homebuying process, others may need support to meet mortgage requirements.

There are solutions available for newcomers hoping to become homeowners. Several financial institutions, including many of the big banks, offer mortgage programs for new immigrants. But it’s important to note that there are certain criteria that will need to be met in order for newcomers to use these services. There are also rent-to-own housing options available to assist potential home buyers in purchasing their new home. Services, like JAAG’s Rent to Home Solution, are designed to help get newcomers who are struggling to meet mortgage requirements into homes sooner.

In most cases, in order to qualify for newcomer mortgages, new immigrants will need to be able to prove they have immigrated within the last 5 years. As well, they will need to be in Canada as either a permanent resident, a landed immigrant (in the process of getting permanent status), or on a valid working visa. Newcomers will, in most cases, also need to show proof of employment, typically with a minimum of 3 months on the job. Some exceptions for this may include prior arrangements for housing through an employer.

Of course, if new Canadian immigrants wish to utilize these types of mortgage programs, they will also need to meet the minimum down payment and qualification requirements set by the lenders. Some minimum down payment requirements can be as low as 5%. While others can be as high as 35%, especially if newcomers to the country don’t have a Canadian credit history or don’t qualify for an insured mortgage. Lenders will also look at other aspects, such as your debt to service ratio (which could include debt outside of Canada), and apply a mortgage stress test to ensure your eligibility.

As an alternative to using a newcomers mortgage program through one of the major financial institutions, potential homeowners can apply for a rent-to-own housing solution. For example, JAAG’s Rent to Home Solution provides newcomers who qualify an opportunity to find and live in their home now while they save and build credit for the future purchase. Typically, a rent-to-own contract, like JAAG’s, would have the client lease the home for 3 years with the goal of purchasing the home at the end for an agreed upon predetermined price.

During the lease period, part of the monthly payment is set aside to establish the down payment needed to qualify for the mortgage. Clients are encouraged to use the lease period to save money and establish a good credit score, to improve their chances of getting the best rates possible. Clients are also offered guidance and education through credit coaching and financial services to help them develop financial stability. At the end of the 3 year lease period, successful clients have the option to purchase the home for the predetermined price.

There are solutions available for newcomers to Canada who wish to become homeowners. For those who can meet the criteria set out by traditional lenders and big banks, mortgage options for new immigrants are a viable option. However, for those who are grappling with lender requirements, there are alternatives available, such as a rent-to-own housing model. Trusted and recognized rent-to-own companies, like JAAG Properties, offer simple financing solutions to experience homeownership while working toward financial readiness.

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