Many Canadian families dream of becoming homeowners, allowing them to live without being at the mercy of a landlord and have a property that future generations can inherit. Unfortunately, due to the rising cost of living and home prices, many young Canadians are struggling to save for a down payment and qualify for a mortgage. Many banks and other lenders have stringent requirements for mortgages, which makes it harder for various people, such as self-employed individuals, new immigrants, and those with damaged credit scores, to qualify.
Rent-to-own agreements present an alternative path to homeownership, where tenants rent a property for a set period of time before purchasing the property, giving them time to become ‘bank-ready’ and qualify for a mortgage. Home Owner Soon (HOS) Financial, Inc. has been championing the rent-to-own model since 2005 through its customized solutions; designed to help families who have been turned away by banks after experiencing life events that have negatively affected their credit scores. Founded by a group of mortgage brokers, HOS aims to help Canadians who are unable to get a mortgage directly from a bank to achieve homeownership through its client-first rent-to-own model.
According to Jeff Belanger, HOS’ chief executive officer, balance is one of the two core principles, which guides everything the company does. Using its team’s decades of experience in the financial and real estate industries, HOS is able to expertly balance the objectives of the investor, which is to earn higher than average returns, with compassion for the family’s financial position and the affordability of the rent-to-own program.
The second principle is an exit strategy. HOS believes that a rent-to-own agreement is successful only when the tenant is able to purchase the property at the end of the term. To achieve this, it screens potential clients thoroughly and crafts a personalized exit strategy that will enable them to get a mortgage within three to five years. HOS is able to achieve this through its strong process controls, skillful underwriting, and credit management featuring debt remedy that helps minimize tenant default rates. To date, more than 90% of HOS’ clients have successfully exited the rent-to-own program by obtaining a mortgage.
According to Belanger, a good benchmark for a rent-to-own agreement is the purchase price should be around 4.5 to 5 times the family’s annual income. However, many applications are requesting 7 or 8 times, which is not financially healthy for the client. HOS makes sure to communicate this to clients and screens them thoroughly to ensure a successful exit.
“We believe it's all about the exit,” Belanger says. “Our model makes sure both investors and clients have their interests aligned. The first thing that the clients ask is ‘What's the likelihood that I can really own this house in three to five years?’ On the other hand, investors want to know if they will be able to turn their money over and be able to make another investment in three to five years. In essence, both parties are asking the same question. Our job is to work with them to make it a certainty. We do that by using the rules of the lenders that we work with to qualify the client for a future mortgage today.”
Once the client has submitted their documents and agreed to the terms and exit strategy, HOS will look for an investor who's willing to work with the client and help them get to their end goal of buying a house. When these are in place, the client can start shopping for their house, either through their own realtor or through HOS’ network of preferred realtors.
As part of its plan to further grow the popularity of the rent-to-own model in Canada, HOS aims to bring on board more socially conscious investors who are willing to invest their funds and receive returns, which feature high monthly cash flow and above-average annual returns. Having facilitated more than 1,200 successful rent-to-own transactions, HOS has demonstrated its capability to create mutually beneficial agreements with a positive impact on society.
“The overriding objective in every rent-to-own program is to help families have their own home,” Belanger says. “For almost 20 years, HOS has helped thousands of Canadians enjoy the fruits of their labor while providing above-average rates of returns for investors. We believe that the rent-to-own market is not just about real estate; it’s a financially rewarding and secure investment vehicle that aligns with modern investor values of profitability and social impact.”
Media contact:
Name: Jeff Belanger
Email: [email protected]
