Making The Purchase And How To Avoid Frustrations
One of the biggest parts of the Rent to Own process is purchasing the investment property. The first step is for us to evaluate the market and find properties that meet our investment criteria – – mechanical systems (furnace, air conditioning, roof, windows) as close to new as possible, excellent interior finishes, priced at market value and most importantly, with the ability to cash flow.Essentially, these are properties with the “wow factor” that will have tenants lining up and willing to pay a premium.
We then take you out to look at the prospective properties and once you’ve made a decision, it’s time to submit an offer to purchase. Our objective is to get our investors the best possible deal, and we’ll always try to shave a few thousand dollars off the asking price. The properties we recommend as potential investments are the most desirable entry level homes on the market.
It goes back to our mantra of “beautiful homes in beautiful neighbourhoods”. Generally, these properties will sell very quickly and for an amount within 1% to 2% of the asking price.
To avoid disappointment and frustration, it’s important to have realistic expectations when it comes to making an offer to purchase. Expecting to purchase a turn-key property of this caliber for 8% to 10% below asking price is just not going to happen. When you stop to break down the numbers, the difference that trying a few thousand dollars off the price has on monthly cash flow is negligible.
For example, the mortgage on $258,000 will carry for $995 per month. The same mortgage on $253,000 will carry for $976 per month. The difference is less than 65 cents a day! For the cost of a half cup of coffee are you willing to give up a return on investment of 30% to 50% or more?