FAQ on our RRSP and Lease to Own Mortgage Investing Programs in Real Estate in Calgary and Area

We are sticklers for making sure our investors understand precisely what they are investing their money in and the risks and rewards associated with the investment. You need to be able to make educated and informed investment decisions, and therefore we feel that absolutely everything should be in the open in a simple to understand format, with no fine print. Here are our Investor’s FAQ, if you have any more questions or are interested in our programs, please Contact Us at any time:

Mortgage Investing

Lease to Own

Mortgage Investing FAQ

What is the minimum investment?

$10,000 is the minimum investment required. This would be a 2nd mortgage, and your interest would be registered on the legal title of the property.

Is it difficult to transfer my registered account over to Olympia Trust?

No, their business is providing self directed registered accounts; check out their website for more information at http://www.olympiatrust.com/plans/index.php. All it really involves is signing the appropriate documents.

Will I have to pay income tax if I transfer my RSP (or other Registered Account) to Olympia Trust?

You are not withdrawing your RSP, so therefore there are no tax consequences. You are simply transferring your registered account from one institution to another.

How long of an investment commitment is needed?

That depends on your wishes and the strategies we’re using at that time. We do our best to match our investor’s desires with our particular investments, which are typically 1-3 years locked in. Sometimes we engage in longer term strategies such as ‘Buy and Hold’ which could mean a longer investment term, or, we may require a short term renovation loan which would likely be 6 months or less. Ultimately, we will sit down together and determine what will work best for you, and see if we have an investment that fits.

What rate of interest will I earn?

We will pay 6% on a first mortgage, and 8-12% on a 2^nd mortgage depending on the length of term and loan to value ratio.

How safe and secure is my investment?

The mortgage you lend us is registered against the legal title of the property. This provides you security because if or when the property is sold you must be paid back your investment from the proceeds. Also, in the worst case scenario of the borrower defaulting on their payments, you can take action to take over the property. This is the benefit of investing in a physical asset such as a home…try and recover your investment money from a mutual fund gone array!

Lease to Own FAQ

What happens if the tenant-buyer doesn’t make a payment?

The tenant buyers are thoroughly pre-screened by the mortgage broker on our team to ensure the monthly payments are manageable for them based on their income, and they are provided the tools they need to help them save and manage their money. They are also informed of the extreme importance of making all payments on time and in full. We work with the tenant buyer to help them succeed in buying the property and will look at the circumstances on a case by case basis, but if they are not able to fulfill their contractual obligations and continue making payments then we will be forced to evict them.

What happens if we’re forced to evict the tenant buyer?

In this unlikely scenario, the tenant buyer would lose their Initial Lease Option Deposit, and we would find another tenant buyer. Finding another tenant buyer should take no longer than 1 month, and we would collect an Initial Lease Option Deposit from them as well. This is why we say you have a Predictable return on your investment, because however unlikely, things do sometimes happen. We will do our best to find another tenant buyer as quickly as possible, and work with you to determine the best way to proceed with the investment.

The investor should note that although having something like this happen sounds risky, in reality there is a large demand for Lease to Own homes and it would not be difficult to replace the tenant buyer. The investor’s return on investment might also increase due to the collection of a second Initial Lease Option Deposit, but this would be determined on a case by case basis.

* This is an extremely rare circumstance; we do everything in our power to make sure our tenant buyers are capable of following through and buying the home. They are strenuously screened to make sure they are capable of making their payments, and equally important is the fact that they have an owner’s mentality rather than a tenant’s, due to the nature of our program.

Is a reserve fund required to cover unexpected expenses?

Yes, typically we will have 1 months expenses put into a reserve fund in case of emergency, but it will vary by house sometimes.

How long is the Lease to Own term?

1-3 years typically, depending on the length of time needed for the tenant buyer to qualify for a mortgage. How long you want to invest for also dictates the term, we try to match our investors and buyers as best as possible.

What will my ROI (Return on Investment) be?

The ROI will vary slightly with every deal, but conservatively you should earn an annual minimum of 20%; we can show you an estimated total profit and ROI on each deal.

In the Joint Venture Investment Program, what is the cash flow process each month?

All of the monthly payments from the tenant buyer are deposited into the bank account and all outgoing payments are set to auto-withdraw as well. We manage the bank account and oversee all accounting.

How do you qualify your tenant buyers?

Tenant buyers are carefully screened with our mortgage broker. We determine together their maximum house purchase price, monthly payments, and the cash they have available for the Initial Lease Option Fee upfront. Their credit is also analyzed, and if damaged, we work with a credit counsellor to make sure what needs to be done to repair it is done. This includes an action plan for the tenant buyer, which, if they follow, will take them down the path to being able to qualify for a mortgage at the end of the term.

What happens if the tenant buyer cannot qualify for a mortgage at the end of the term and cannot buy the home?

This will have to be determined on a case by case basis, since the factors for why the tenant buyer could not qualify will help determine our course of action. We always do our best to find an equitable situation for all involved, with the ultimate goal being the tenant buyer being able to purchase the home.

Again, all of our tenant buyers are strenuously screened to reduce this risk as much as possible. The worst case scenario for the investor is they might have to extend the Lease to Own term with the tenant buyer, sell the home to someone else, or find another tenant buyer.

How do you determine how much the tenant pays each month?

The tenant buyer pays monthly market rent for the home, plus an extra payment for the Monthly Lease Option Deposit, which is applied to their down payment at the end of the term. Our Lease Option Credit Program is great to help them save for a 7-10% down payment by the end of the term to increase their chances of qualifying for a mortgage. It also helps to improve the Investor’s cash flow!

What happens if the house is damaged?

The occupant is a tenant buyer, meaning that they intend to buy the home after the Lease to Own term, and thus will likely treat it like their own. Assuming they follow through with buying it, it doesn’t matter to you if they damage the house. If, however, they damage it and do not purchase the home, they lose their Initial Lease Option Deposit they paid upfront (minimum 3% of their purchase price), along with all other monthly payments. The risk has been significantly reduced by both the type of program we have and the amount of “skin in the game” the tenant buyer has; a regular landlord has neither of these advantages.

Is there a house inspection done?

Yes, unless it’s brand new, each home will have a certified inspection done to avoid unexpected and costly repairs, to ensure everything is to code, and to make sure the home is in great shape for our new tenant buyer!

Investing FAQ