Turning a tenant into a buyer
As a full-time Canadian real estate investor, we must create various forms of deals to be able to build income and portfolio. We can produce this through short-term holds, creating deals without using any of our own money or incurring any liability, as well as building our portfolio with long-term holds. The latter does not always mean being a landlord. There are many other ways of creating long term holds with monthly income and equity growth.
Most tenants realize that their money is aiding in paying off the landlord’s mortgage. They are getting no return on their money or building no equity. It is quite possible to convert many tenants into home owners.
Identifying a particular tenant that may want to become a home owner is not that tricky. You must look for stability in their job as well as their rent payment history. The other indicator is if they have started a family. They may be in a single family home, one-unit of a duplex, triplex, or fourplex, but ultimately, showing this person the benefits of someday owning this property will also have benefits to you.
So we can turn their rent into a situation where they will purchase the property at the end of a specified term at a specified price and have a down payment at the time of sale.
To create this, you must be well aware of the tenant’s credit situation. They must be consciously trying to rebuild their credit as well as build up money to utilize as a down-payment. As part of the system we create a forced saving plan for them.
We can have the tenant put money together in an initial deposit (doesn’t have the be a lot of money), and then continue to do a series of smaller deposits, coupled with their monthly rent, thus building up the 5% down-payment at the end of the pre determined term. This could be 1-5 years, perhaps even longer.
One great thing about this program is your property turns into a maintenance free property. Once a tenant is going to be owning your property at the end of a term, they are now very consciously aware of how your property looks, the property maintenance, as well a lot of the day to day tenant issues with your property.
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Successful Landlording – Turning a tenant into a buyer