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 massive and passive income for ourselves. The way we do this is a continuous stream of income that is produced by 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 a very nice backend return.
Does your tenant want to change?
Most tenants realize that their money is just going to pay off the landlord’s mortgage. They are getting no return on their money and building no equity. It is quite possible that a tenant can be turned into a home owner. It does take the right kind of person (tenant) to want to change their spending habits from perhaps being irresponsible with their spending habits to becoming more responsible.
Identifying the need
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.
We can modify their rent into a payment so they can purchase the property at the end of the specified term at a specified price and have a down payment created at the time of sale.
To create this, you must be well aware of the tenant’s credit situation. The tenant must be willing to change their spending habits. 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.
The plan of action
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 predetermined term. This could be 1-5 years, perhaps even longer.
Maintenance free living
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. Pretty sweet…another win/win deal!
Canadian Wealth Builders offers many unique, practical, out of the box real estate investor trainings which offer the student hands on, in the trenches style instruction. To find out more, please go to www.canadianwealthbuilders.com
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