While most people agree that “renting sucks,” many also despair about ever getting into a home that they will own, especially with the recent escalation in prices.
A recent survey showed that, on average, to get into a single-family home in Canada requires spending 55% of your income for those at the median income level (meaning ½ have a higher income and ½ have a lower income). For Vancouver, the number was higher: 88%.
Imagine spending 88% of your monthly gross income on housing! That’s likely more than your take-home pay. The maximum allowable to qualify for a mortgage, though, is 39%, less than half of that. It means you’ll have to make more than double the median income to qualify for a single-family home in Vancouver.
Yes, you just jumped to the right conclusion: single-family home ownership has reached the domain of the rich. Most of us will have to be happy with something less: a townhouse or condominium—or a move to somewhere else.
The quest to get out of the suction of renting (did you catch the pun?) has driven increasing attention to rent 2 own as an option.
The federal government proposed such a program in their election platform last fall. Some municipalities are getting into the game, North Vancouver recently announcing a program that sounds great but seems to violate all the rules we professional operators are required to live with.
In this environment, it may be tempting to grab anything that you find that offers a home ownership possibility at the end of a rental term.
In this environment, it may also be tempting for unreputable types to take advantage of people’s desperation because such desperation is fertile ground for frauds and scammers.
Professional rent-2-own operators, though, run programs that are designed for your success. So it’s important to make sure, when considering rent-2-own, that you are dealing only with reputable, ethical, professional rent-2-own providers. You should do considerable due diligence before getting into any rent-2-own contract.
So, how do you know? Here’s a checklist:
- Are they setting you up for win-win? Is their success correlated with your success, or with your failure?
- Do they collect a reasonable deposit at the beginning and have a plan to get you eligible for a mortgage? Anything less than a 3% initial deposit on the value of the property is a recipe for potential disaster.
- Do they have extensive paperwork and lawyer-drafted contracts? Never get into something with informal paperwork or simply verbal agreements!
- Do they advise you to seek Independent Legal Advice (ILA) before signing your documents?
- Are they transparent with what will happen to your deposit if you default on the deal?
- Do they have a credit coaching component in their program?
- Are they going to be with you throughout the deal, or will they be assigning your further interaction to a third party?
- Do they have a professional team with whom they work—lawyer, realtor, credit coach, mortgage broker, etc.–or are they a “one-man” show?
- Are they a member of a professional association that holds them accountable? The Canadian Association of Rent to Own Professionals (CAROP) holds its members accountable for professional and ethical conduct, for creating win-win scenarios, and for adhering to a prescribed Code of Conduct.
I would not deal with any operator who is not a member of CAROP. They may be reputable, but how do you know? I would wonder: “Why haven’t they joined CAROP?”
Fraser Valley Rent 2 Own meets all the above criteria. You can be sure that you are always dealing with a professional who has your best interests at heart when you deal with any member of our team.
We will enter a rent-2-own agreement with you only if we are confident you will succeed in the end. You should have the same standard of confidence.
