The most hands-off real estate investment option?

by Justin da Rosa08 Jun 2016
Investors looking to make impressive gains requiring little effort may not need to look much further.

One company is offering rent-to-own investment options that are so hands-off, they’re likened to GICs.

“We manage everything for the three years and at the end of the three years, we sell the property to the tenant buyer,” Jim Pellerin, an investor, coach, and owner of Innovalty Investments, told Canadian Real Estate Wealth. “That happens quite often, the success is quite high. And our return for the owners is usually 14-15% per year.”

Pellerin, a 25 year investor veteran, developed what he refers to the GICs of the real estate investment world – turnkey solutions that require little effort from investors.

“As part of our arrangement with owners, we guarantee their rent for three years. Even if the tenant doesn’t pay, we continue to cover all their costs,” he said. “We also cover any maintenance and repairs for that three year period. This becomes a totally passive, totally hands-off, totally turnkey solution for owners. Really it’s almost like a GIC.”

His company seeks out tenant buyers, who enter a rent-to-own agreement for a home owned by investors. The agreement usually lasts three years.

“The investor provides the down payment and the closing cost, usually about 22% of the overall purchase price in Ottawa, and then they also qualify for a mortgage,” Pellerin said. “In our case, our investors like that they’re 100% ownership; they’re the ones on title.”

Pellerin seeks out motivated buyers who desire home ownership but who may have damaged credit. And for the three year period, the tenant pays rent, while also saving for a downpayment and the investor earns returns.

“The [investors] have to get qualified for a mortgage, do the agreement of purchase with the Realtor, and they have to go with the lawyer to finalize the transaction,” Pellerin said. “So total effort is very minimal.”

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