How Our Rent‐To‐Own Program Works

Information For Future Home Owners

THE SHORT-CUT TO YOUR FAMILY’S NEW HOME

Move in to your family’s beautiful new home NOW. Choose almost any home on the market!

Follow the plan, and in 2 to 4 years you’ll get a mortgage and OWN it!

Don’t spend the next few years rentinga place that doesn’t feel like home.

THIS PROGRAM IS FOR YOU IF YOU …

don’t have the 20% down payment the bank wants are self employed or an entrepreneur have a good income but a poor credit rating are in (or should be in) a consumer proposal lack an established credit history or are new to Canada have credit challenges due to recent job loss, divorce,

bankruptcy or health issues you are a self-starter and will follow our application

process, provide us your documents in a timely fashion, and promptly reply to email and phone calls (we don’t have time to chase non-serious clients)

HOW DO YOU QUALIFY?

We will first check to see if we can help you get a mortgage. If you can’t (or the interest rate would be too high), we then see if you qualify for a Rent To Own plan.

Income should be 30% or more of home value - eg. a $250,000 home requires $75,000+ income (pre-tax)

Bad credit is OK – we’ll help you fix it Bankruptcy or Consumer Proposal are OK – as long as you

are discharged before your lease ends Paperwork – thorough proof of income etc.

You will be applying for a mortgage when your lease ends, so think of this as a "pre-application" that helps us put you into a home NOW, and gives you the step by step plan you need to follow to qualify for a mortgage when you need it.

HOW DOES IT WORK?

Screening process – many documents required, just like a mortgage application. We will need your credit report from EquiFax.ca

Down payment of $7,000 to $10,000 ($12,000 to $15,000 if the house is worth $300,000 or more)

After we’ve qualified you on income and down payment, the fun part begins - house shopping! We then 1) find an investor to work with you and 2) assign you a local realtor who specializes in RTO, to help you choose almost any home that’s for sale (publicly or privately). The home must be urban and preferably less than 25 years old.

We will do our best to get the investor to put a winning offer on the home you want, before someone else buys it. This is not always possible, so you may have to select a different home.

YOUR COSTS

Down payment due 2 – 4 (or more) weeks before moving in

Just before moving in, you pay first (and in some cases last) month’s rent

Every month, your lease payment consists of a “Base rent” amount plus a “Purchase Option” (down-payment-builder)

Example: If your base rent is $1,500 and your purchase option is $300, you pay $1,800 a month rent, and your accumulated down payment after 3 years is 36 months x $300 = $10,800 plus your initial down payment

WHAT WILL YOUR RENT BE?Your total rent consists partially of your purchase credit, which builds your end-of-lease down payment percentage requirement. If your down payment target is 20% while someone in a similar house has a 10% target, your rent will be higher than the other person’s. It’s all based on your eventual mortgage requirements. Your rent will not change during your lease.

Calculations vary from one landlord to the next – the total monthly rent is usually between .0065% and .0080% of the initial house value (higher for cheaper houses, lower for expensive ones – like normal rent). Please understand we can only provide you with estimates here. All of these terms are open to negotiation by both landlord and tenant prior to striking a deal.

Initial House Value Range Of Possible Rent Purchase Credit$180,000 $1300 to $1550 $150 to $250$200.000 $1400 to $1600 $150 to $250$225,000 $1500 to $1700 $200 to $300$250,000 $1600 to $1750 $200 to $300$275,000 $1700 to $2000 $200 to $350$300,000 $1850 to $2200 $200 to $400Beyond $300,000, rent and purchase credits vary – ask for details. Most investors prefer to stay under $300,000.

BUYING YOUR HOME

Your purchase price after 2 - 4 years is pre-determined. If you wish, you can buy the house at pre-determined pricing at ANY time during your tenancy. Buy-out pricing is based on an annual appreciation of usually 3% to 5%, based on the initial price the landlord pays for the house. The first round of appreciation applies to day 1 – day 365 of your lease, the second round applies to day 366 to day 730, and so on.

You acquire your own mortgage and officially buy the house from your landlord in a private sale (no realty fees). You will have built up a down payment of usually about 5% - 10% of your end-of-lease purchase price.

If your down payment requirement, to get a mortgage, exceeds the credits you’ve built up during your RTO lease, you will need to have saved the extra funds to make up the difference when you apply for your mortgage.

Your “Purchase Option Contract” (separate from your lease) obligates your landlord to sell the house to you at ANY time during your lease.

A WIN-WIN FOR YOU AND YOUR LANDLORD

Landlords are fed up with tenants who don’t respect their properties RTO tenants have pride of ownership and a greater sense of responsibility (not to

mention better income and personal qualifications) Landlord earns small annual appreciation included in the buyout price (Note: your

landlord will of course buy the house as cheaply as possible at the outset) If your buyout price is slightly less than future market value, this is free equity to you If your buyout price is slightly more than future market value, you’ve still gotten out

of the rental game and transitioned into ownership of a permanent family home years ahead of schedule. Also – remember that your landlord, not you, is paying 3 -5% interest on their mortgage while you are renting

The rent-to-own process gives you personal hands-on mortgage qualification assistance, credit repair and access to great lenders. Credit repair combined with home ownership gives you a dramatically more powerful financial position

At buyout time, your private purchase has $0 real estate fees, saving you $5,000 to $10,000 in most cases

You’re paying only slightly higher than normal rent (and getting credit), while the landlord pays mortgage principle and interest and property tax during your lease

Landlord also pays all up-front real estate fees, usually $5,000 to $10,000

YOUR RESPONSIBILITIES

Your lease will describe your duties ...

Lawn care, snow removal General maintenance Rent payment schedules Consequences of late rent payments Deductibles for damages, appliances etc.

YOUR PROTECTIONS

Your Lawyer is your first line of defense to review the deal, review your contracts, and provide their professional advice and experience

Mortgage agent, mortgage industry laws, professional code of ethics

Realtor, real estate industry laws, code of ethics – in many deals, a realtor is also involved in the process of finding the investor, and negotiating for you

Tenant and Landlord Acts, by province Purchase Option Contract prevents owner from

attempting to sell home, change title ownership etc. Lease Agreement – standard protections

“WHAT IF?” … We ask tenants to take their end-of-lease mortgage qualification seriously. There is a plan which

must be followed. Credit repair steps and goals will be made clear.

But “Stuff Happens” … so if needed, you can ask your landlord to add time to your lease … or ask for vendor financing. Any such arrangements are strictly between you and your landlord.

Down payment credits are non-refundable. If they were, your landlord will usually end up losing money when the lease ends. If your landlord loses title to the property for any reason, they DO owe you your down payment credits back.

Comparison #1: Car lease: down payment and monthly payments – most of what you pay is interest, not purchase credit, and you then buy the car at often above value … or do it all over again with a new car, again and again

Comparison #1: Home foreclosure – down payment (equity) is lost to arrears and legalpenalties - similar to doing RTO then not buying the home

The real question is “What is your comfort level?”. It is up to YOU to decide whether you believe you are 80%, 90% or 99% certain that you can follow the plan and get your mortgage – and whether or not that number fits your risk profile and will allow you to move forward.

DISCLAIMER AND LEGAL INFO

The terms of this disclaimer must be accepted to access and use RTO Partners documents or join our email updates list or use any RTO Partners web site content or standalone document. This document is an interest seeking document only. No information, forward looking statements, or estimations represent any final determination. This document is for general information purposes only. While the information presented in this investor interest seeking document has been researched and thought to be reasonable, in general, real estate investment is highly speculative, real estate values can go up or down, and thus RTO Partners AND/OR ITS AGENTS CANNOT AND DO NOT GUARANTEE ANY RATE OF RETURN OR MARKET VALUATIONS OF ANY PROPERTY AT ANY TIME. User of this document acknowledges and agrees that RTO Partners and/or its agents are not in the business of real estate consulting and are not classified, or presenting themselves, as real estate experts, professionals, or developers but preliminary information providers. The reader further acknowledges and agrees that RTO Partners does not assume and hereby disclaims any liability to any party for any loss or damage caused by the use of the information contained herein or errors or omissions in the information contained in this investor interest seeking document to make any investment decision in the venture referred to herein, whether such errors or omissions result from negligence, accident or any other cause. Note, however, that buyer participation is secured by agreements including but not limited to a lease agreement and a purchase contract. Buyers should conduct their own investigations, analysis, due diligence, draw their own conclusions, and make their own decisions. Any areas concerning taxes or specific legal or technical situations should be referred to lawyers, accountants, consultants, realtors, or other professionals who are licensed, qualified or authorized to render such advice. IN NO EVENT SHALL RTO Partners AND/OR ITS AGENTS BE LIABLE TO ANY PARTY FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER ARISING OUT OF THE USE OF THE INFORMATION CONTAINED HEREIN.

MOVING AHEAD ...

Visit our web site or contact us any time to complete an application or ask us questions.

Toll-Free: 877 813 6171

http://www.RTOpartners.ca

Sue@RTOpartners.ca

ADDITIONAL TOPICS ...

Rent-backs (accessing your equity by selling your house to a landlord, renting for a few years, then buying the house back) – see http://RTOpartners.ca/rent-to-own-financing

Debt Relief (even if you don’t decide to do RTO, most of our clients have some debt problems, and should visit http://RTOpartners.ca/debt-relief to find out what most credit counselors and trustees will not tell you – and maybe lower your debts by 50%-70%.