Table Of ContentINVESTING IN
Rent-to-Own
PROPERTY
INVESTING IN
Rent-to-Own
PROPERTY
A Complete Guide for Canadian
Real Estate Investors
Mark Loeffler
Allrightsreserved. No part of this work coveredbythe copyrighthereinmay be reproduced or
used in anyformorbyany means—graphic, electronic or mechanicalwithout theprior writ
ten permission of the publisher. Any request for photocopying, recording, taping or informa
tion storageand retrievalsystems of anypartofthis book shall be directed in writingtoThe
Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright license,
visit www.accesscopyright.ca or call toll free 1-800-893-5777.
Care has been taken to trace ownership of copyright material contained in this book. The
publisherwillgladly receiveany informationthatwillenablethemto rectifyany referenceor
credit line in subsequent editions.
Library and Archives Canada Cataloguing in Publication Data
Investinginrent-to-own property:acompleteguide forCanadianrealestateinvestors /
Includes index.
ISBN 978-0-470-73759-0
1. Real estate investment. 2. Renting to own. I. Title.
HD1382.5.L62 2010 332.63'24 C2009-906210-0
Thematerialinthispublicationisprovidedfori nformationpurposeso nly.Laws, regulations,
andproceduresare constantly changing,and theexamples givenare intended to be general
guidelines only. This book is sold with the understanding that neither the author nor the
publisherisengaged in renderingprofessionaladvice. It is strongly recommendedthatlegal,
on any information contained in this book. If such advice or other assistance is required, the
personal services of a competent professional should be sought.
Production Credits
Cover design: J. Vieira
Interior text design: J. Vieira
Typesetter: Natalia Burobina
Printer: Friesens
John Wiley & Sons Canada, Ltd.
6045 Freemont Blvd.
Mississauga, Ontario
L5R 4J3
Printed in Canada
1 2 3 4 5 FP 14 13 12 11 10
Table of Contents
Acknowledgements vii
Introduction 1
How to Use This Book 5
PART 1: GETTING STARTED WITH RENT TO OWN
Chapter 1: Rent to Own: An Overview 9
Chapter 2: Traditional Rental vs. Rent to Own 15
Chapter 3: Tenant-First Rent to Own: An Overview 27
Chapter 4: Building Your Network 35
PART 2: FINDING A TENANT
Chapter 5: Who Are the Candidates for Rent to Own? 57
Chapter 6: The Secret Is the Tenant-First Strategy 67
Chapter 7: The Tenant Application Form 81
Chapter 8: Qualifying Applicants 87
Chapter 9: Doing Your Due Diligence 103
Chapter 10: What Credit Bureau Information Can Tell You 109
Chapter 11: The Financial Analysis Spreadsheet 121
PART 3: FINDING AND PURCHASING THE PROPERTY
Chapter 12: The Tenant Finds a Home 131
Chapter 13: Financing the Rental Property 137
PART 4: THE PAPERWORK
Chapter 14: Various Agreements and Option to Purchase 145
Chapter 15: The Deal Closes 167
Chapter 16: Tenant FAQs 169
Chapter 17: Worst-Case Scenario 173
Appendix 1: Checklists 179
Index 181
Acknowledgements
Writing this book was something I never thought I would do. It just wasn't
in the realm of possibilities that I had envisioned for myself. It was a chance
workshop, with Philip McKernan, where I announced I was going to write a
book, after which I was introduced to Don Loney from Wiley, and he and his
colleagues have been incredibly helpful and supportive through this whole or
deal. In addition I would like to thank Don R. Campbell and the team from the
Real Estate Investment Network for supporting me over the years and helping
me to grow from a beginning investor just getting my feet wet to speaking to
large groups of investors and sharing my strategies.
This whole book could not have happened if not for the support and love of
my family, especially my wife Mary, who has supported me in every decision I
have made, good and bad. To my daughter Eleanor, I hope I can teach you the
lessons that have been so expensive for me to learn.
Introduction
Congratulations for picking up this book! Chances are, if you’re reading this
you’re interested in getting started in real estate investing, or are already an
investor who is looking for a new vehicle to help maximize your profits while
freeing up your personal time.
Before we start, I would like to encourage you to seek something known
as “ILA,” or independent legal advice, not just when practising the strategies
I put forth in this book, but also when drafting contracts, embarking on new
investment strategies, and most definitely before signing anything in relation
to deals. Never take what someone else says as fact until you have done your
due diligence (which we discuss in Chapter 9). You should always look out for
your own interests first and foremost, and take the necessary steps to protect
yourself in any real estate dealings.
Speaking of legalities, remember that the documents I have provided are
examples only and are presented “as is” without warranty of any kind. Be sure
to consult an attorney or other qualified professional to develop documents ap
propriate to your specific circumstances.
People typically get into real estate investing to experience a sort of free
dom. But whether real estate investing is a full-time endeavor or part-time side
business, many people quickly realize the investment vehicle meant to provide
financial and personal freedom quickly takes over their lives—and not in a
good way.
Traditional real estate investing involves either flipping a property or deal
ing with tenants in some capacity. We will not talk about flipping in this book,
so read on presuming my references are to tenant-related investment oppor
tunities.
The most common reasons so many people fail in real estate investing: frustration,
exhaustion, and negative cash flow!
