Aimed at individuals who cannot qualify for a home mortgage, a rent-to-own business model finds a receptive market
Photo: Alfonso Salemi and Adam Wissink
ADAM WISSINK AND Alfonso Salemi are in the business of helping people get on the property ladder. Their company, JAAG Properties, specializes in rent-to-own programs that have allowed more than 50 families to move into a house they can call their own.
Not bad for a business launched in 2014 by two partners who met via email.
“We were part of a network of people taking Robert Kiyosaki’s Rich Dad [real estate investment] courses,” says Hamilton-based Salemi.
The course focused on rent-to-own, Salemi explains, and when Wissink presented the online group with a deal that looked promising, he offered to come in as an investor. “We partnered on one property and decided to take it from there,” says Wissink, who also works as a London police officer.
Today, JAAG Properties has grown to be a million-dollar company with new properties being added to the portfolio each month.
The rent-to-own model offers individuals who are unable to qualify for a traditional mortgage the opportunity to move into a home and work towards ownership.
“Real estate agents and brokers have clients who want to
buy a property but can’t right now. We can fill in the gap to
get them there” —Alfonso Salemi
Clients may be unable to secure financing for a variety of reasons, Wissink says. Some are self-employed, young professionals, contract workers or recent immigrants. “A lot of banks want to see two years of job security,” he notes. Others may have faced bankruptcy due to a divorce or other challenges.
And with tightened mortgage regulations coming into effect at the beginning of 2018, including a stricter “stress test” for prospective home buyers, many families struggle to put enough money aside even if they do have good credit.
After a thorough vetting process that includes working with a mortgage broker and credit specialist, approved clients choose a home within a specified price range. But instead of putting down a security deposit, the property is purchased by JAAG Properties with private investors bridging the down payment gap.
On closing day, clients move in and lease the property, typically over a 36-month term. A portion of the monthly rental payment is set aside for a future down payment. Once clients qualify for their own mortgage, title of the home is transferred.
“We coach them and give them tools to succeed,” Salemi says. “There are checkpoints throughout the program to make sure they stay on track.”
JAAG Properties’ rent-to-own model is not for long-term renters or people earning an annual income of less than $50,000. But it can be an ideal choice for individuals who are motivated to own their own house. To date, 15 families have completed the process.
The program is a win for investors, too. “They get monthly cash flow and their entire investment back with a good return when clients complete the program,” Wissink says. “And since the renter is responsible for all repairs and maintenance, investors don’t need to put another cent into the property or constantly look for new tenants.”
Wissink and Salemi believe that rent-to-own will continue to grow. As founding members of the Southern Ontario Real Estate Investment Training club (SOREIT) and diamond members of the Canadian Association of Rent to Own Professionals (CAROP), they are actively educating real estate professionals on the benefits of the approach.
“Real estate agents and brokers have clients who want to buy a property but can’t right now. We can fill in the gap to get them there,” Salemi says.
Both partners see rent-to-own as a way to help families build a better future through home ownership. “Our clients are so appreciative,” Wissink says. “Their kids are running around on moving day. We have that pride and joy of working with people.” Nicole Laidler