Table of Contents - Helping Tenants Through Rent-to-Owns with Rachel Oliver
George El-Masri [00:00:02] Thanks for joining today, I interviewed Rachel Oliver from Clover Properties, she specializes in rent to own, as you guys will probably remember in the past. I interviewed Alphonso from Jegue Properties, who also did rent to own. We kind of had a different sort of conversation. It was interesting to hear her perspective because she's really focused on helping tenants buy homes and creating that Win-Win situation. Not to say that anyone or any other company isn't. But what I found was that she has a passion for helping people because her she comes from a family of immigrants. And when they originally came to Canada, they didn't have very much and weren't able to create that sort of opportunity to to purchase a home. So with all that said, we had a good conversation. We talked about the returns. You can expect certain tax implications of of the additional cash flow you get from rent to own. And we also, for anyone who might be on the tenant side, we kind of break down the process a little bit from from that perspective. So hope you'll enjoy. And just a reminder. So I've been working on some multiunit opportunities and well, in St. Catharines, a little bit in Hamilton as well. If you have any interest in four to six units, reach out to me. We can have a discussion about it. You can call me directly six four seven seven one nine two zero four zero. Or you can email me George at Well-off Dossie. I'd be happy to have a conversation with you. Looking forward to it. Enjoy the episode. Welcome to the War podcast, where the goal is to motivate and inspire and share success principles. Today, I'm here with Rachel Oliver and just a quick, quick intro. She is a multi award winning real estate investor and entrepreneur. She's often featured in the Canadian Real Estate Wealth magazine, podcasts and industry events as an expert on rent to own. Rachel retired in 2009 to spend more time with her family and invest in rent to own properties. And over the last 10 years, she's done nearly 350 rent to own deals, which might actually be higher now. I don't know if that was written a while ago. And she's also the author of an Amazon best selling book, Rent to Own Essential Guide for Home Buyers. Her and her husband operate Clover Properties, which is a rent to own company. And when I spoke to Rachel, she basically said, we're going to talk about how to generate a thousand dollars a month in cash flow in today's real estate market without hassles or tenants and toilets. So that's going to be the main, main focus today. And first of all, Rachel, welcome to the show. Thank you for coming. Thank you so much. All the way to be here. All the way from Stoneville.
Rachel Oliver [00:02:35] Yeah, Snowville, actually, we have way more snow.
George El-Masri [00:02:37] Yeah, I know. All right. I have some friends on Stoneville. I think I've been there maybe once or twice.
Rachel Oliver [00:02:42] It's pretty far that they call you over to help shovel.
George El-Masri [00:02:45] No, they didn't. They definitely not. Yeah. So why? The way I like to start off is by asking you about your childhood so you can tell me a little bit about where you grew up, what you remember from your childhood, and then we'll go from there.
Rachel Oliver [00:03:01] Wow. We're going really far back. So I am not originally born and raised in Canada. I was actually born in Ukraine. And back then it was part of the Soviet Union. So it was a very regimented childhood where you had to focus on going to school. We started school younger in the Soviet Union. So I remember finishing grade one. I remember it was all about being studious and listening to your parents. It was a very militant kind of domestic upbringing and family dynamic, not just in our own family, but I think that was just a cultural norm. And my parents wanted a better future, more opportunities for me. I'm an only child. And they decided that, you know, with with all this stuff and uncertainty in the Soviet Union back then, it might be better just to emigrate to a country that had more opportunities and Canada was the land of opportunity.
George El-Masri [00:03:54] Wow. It's amazing how many people I interview that are born from immigrants basically, or their parents are immigrants, I should say. So that's really cool that I had no idea you were Ukrainian. I thought you had like a Canadian name or something. But that's not the case.
Rachel Oliver [00:04:08] I have lots of names and it's a KGB identity. So we're not I'm going to have to tell you, but I'll tell you.
George El-Masri [00:04:17] All right. Fair enough. I won't ask too many questions. I guess I'll be careful. Do you have any any good memories from your childhood, from being in Ukraine, in the Ukraine?
Rachel Oliver [00:04:27] Yeah, I remember that there was a lot of emphasis on spending time as a family and going to the ocean in the summer and taking summers off. I don't remember my parents having to to, you know, work in grind things. It was obviously it was a communist era. So I think there was a very different mentality in that, you know, you work you contribute to your community. But family first and we would have planned vacations where we would go away to the ocean for two months at a time. And it wasn't very customary to wear bikinis for little girls. So all my childhood photographs are really embarrassing because I'm standing in a pair of panties in these ocean in the ocean. And my parents, of course, have proper bathing suits on is like, what is this ridiculous outfit? I can't even show this to my own children because it's embarrassing.
George El-Masri [00:05:16] How old were you at that point?
Rachel Oliver [00:05:17] I think I was five or six.
George El-Masri [00:05:19] Yeah. So you're still young? Yeah. Yeah.
Rachel Oliver [00:05:21] But, you know, still I think a five or six is a girl. You you start to be a little bit more self-conscious and here you are in the middle of an ocean wearing underwear just like all the boys around you. And then on top of that, my parents cut my hair like I literally had to like a boy haircut. So if you just take a quick glance, you think I'm a boy. So those are my childhood memories being at the ocean and feeling like I look like a boy. Right.
George El-Masri [00:05:44] Did you make your your kids do this? Do you have kids? But I do.
Rachel Oliver [00:05:47] I have I have an eight year old and a fourteen year old and both of them have beautiful long hair.
George El-Masri [00:05:52] And you covered them up early.
Rachel Oliver [00:05:54] Covered them up in proper bathing suit.
George El-Masri [00:05:56] Yes. OK, sounds good. All right. So obviously you do a lot of rent to own stuff. That seems to be your focus. How did you get into rent to own and when did you first start?
Rachel Oliver [00:06:07] So I've always been entrepreneurial minded and I always kind of was in the corporate world kind of covering this entrepreneurial lifestyle. And I I was kind of like thinking, how can I get into the world of real estate and. Create an opportunity that can sustain me and my family and and kind of leave my full time job. So I noodled it for a long time and I was doing a lot of research in back in 2009, I attended an event that was hosted by an American company that was coming to town. You know, the usual the American companies that come to town. You do come to their five hundred dollar workshop and you learn all about their different investing strategies. And they covered about 12 different strategies. And one of them was lease options, or at least to own or rent to own. And I was really interested in learning about how that worked. And that was where I first learned about it. And I realized that this is not just an American concept. This is something that we can actually apply in Canada and started doing a little bit more research. All the while I'm working full time. I had a very, very demanding corporate job, was climbing the corporate ladder in an engineering company so male dominated and to the time we had one child and I just came off of math leave and I was like, oh my God, for me to really climb up this ladder, I'm going to have to put in 70 hour weeks. And although I loved what I did, I really loved spending time with my family more. And I was doing this research in the background. And then I got essentially, you know, there was a personal setback. I think we all fall into a situation where there's a personal trigger. So if I kind of had to go back even further, what triggered me to pursue this path more aggressively was I got diagnosed with breast cancer after my first daughter was born. And it was a shock to my system. I she was only six weeks old. So here I am trying to enjoy being a brand new mom. And I get this devastating news. It's in a very aggressive breast cancer. There's a lot of surgical procedures, treatments that I have to kind of basically go through. And I lost literally six months of my life. I blinked. Six months went by. My daughter was now crawling and I hadn't really experienced being a new mom yet. And in about six months, I have to go back to work. And when I got back to work, I was just like, I want to be with I want to be a mom. I want to enjoy my time with my child. And here I'm being pulled into this very busy, very competitive landscape of the corporate ladder. And I thought, you know, I got to escalate my research into how I can make real estate work. And then I got a little bit more intentional with my research and started digging around who's doing rent, who owns in our local market. And a lot of the people I spoke to were were kind of saying, yeah, Rintoul's are great. You can make tons of money at them because most people fail and rent owns. And I kind of thought, well, that's a little bit weird. You know, if you're using the rent own strategy to help another family succeed, why why would you be making money if they fail? I want to make money and have them succeed. And everybody who was doing homes was saying, not a chance. It's not going to happen. So my husband and I thought and my husband's very conservative, my husband, I call him Mr. Know, his nickname is Mr. No. His initials are no, because Neil Oliver, by his personalities to the Teamster, know he's like, I don't know anything about the strategy. I don't know how it works. I don't I don't have the money saved up. I don't. No, no, no, no. So I had to keep on searching out ways to convince them. And I finally finally found a way to convince them. And it was about the numbers. He was all about the numbers. And when I made him do the numbers and showed him on paper and I'm not a numbers person, so it took me a while to get to this point, to be convincing and not, you know, basically execute me on the spot because my numbers were off. I started showing him the numbers and he said, oh, OK, I see I see what you're on to. And really, the numbers show that we can create a lot of cash flow without having to worry about maintenance and repairs. But the challenges that we couldn't really do Renton's through somebody else, everybody out there that was putting rental and deals together that knew how to do it was really who we were going to because we wanted to invest through other people. I didn't want to do the work. I just wanted to be passive. But everyone I talked to was very discouraging because they said Renton's don't really work. It's a 50/50 chance that you're going to help these people. And I didn't want a 50/50 chance. I wanted, you know, a rock solid opportunity to help someone. So I finally said to my husband, I think we're going to have to do rent on our own way. We're going to need to tweak the model. We're going to have to analyze where the gaps are and fill in those gaps to give families an opportunity to really succeed with this while we're making lucrative cash flow. And he said, OK, let's let's try. And that's kind of how we got started.
George El-Masri [00:10:48] Very cool. OK, so you this was around twenty nine, you were saying. Correct. I don't know if you know this, but I was with the rock star for a few years. I was an agent and a coach with them for a bit. I was I was told by some people that Dominic were the pioneers of bringing rent to own to Canada. What are your thoughts on that?
Rachel Oliver [00:11:10] I love Dominic. And if they feel that they're the pioneers, all the power to them, I don't
George El-Masri [00:11:14] think they said it. I think somebody said it above them.
Rachel Oliver [00:11:18] Fair enough. You know, they have a huge community and a huge following, and I have a lot of respect for what they have done. Yeah. So I wouldn't be in a position to challenge it. My goal was never to bring rent to, own to and my goal was to make rent to own work in Canada and starting with our own backyard in Ontario. So maybe they brought it to Canada, but maybe we're the first company to actually make it
George El-Masri [00:11:40] work, right? Yeah, no, that wasn't meant to be like an insult or anything of that sort. I was just wondering because you were around at that time, I don't know if it was around that time that rental actually started to become a thing in Canada or if it was before that or after that. I'm not really too sure about the timing.
Rachel Oliver [00:11:56] Well, when we when my husband and I wrote this book, one of the things we had to do was kind of go back in time. How long has Rentoul been around in Canada? And the research that we found suggested that it was around in the 70s, going back into the 70s in Toronto. And there was a documented case of a lady who basically rented to own her landlord's property. And they just basically had some sort of a contract handwritten, almost like on the back of a napkin. And this lady ended up fulfilling her obligations as a rental owner and landlord was gracious enough to honor it. And she exited the rental and successfully and her daughter went on to tell that story. So we actually talk about that in our book. So, you know, I think behind the scenes, people have been doing rent to owns, maybe not giving it an official name, but they've been kind of doing this behind the scenes privately. Anyway, what we did was we basically took that private arrangement and we systemized it and we made it a little more sophisticated and we made it a little bit more effective for all parties involved, because when you have, you know, an investor left to their own devices and then you have a home buyer who's generally very naive and the two of them are kind of working off of their own individual agendas. And there's nobody in between keeping the other party accountable or in line. Rent owns tend to deviate from the plan of how they're supposed to go. Right. And usually it's in the advantage of an investor because investors are savvy and they know how to set things up so that they don't fail and they don't lose money, whereas a home buyer is a little they need a bit more handholding there in that situation because they're a little bit more naive and maybe they're a little bit unrealistic. There's a whole bunch of other dynamics in play. And we found that somebody needed to be kind of the intermediary between the two to say, you know, investor here are the equitable guidelines for you and home buyer. Here are the equitable expectations for you. And if you follow these expectations and if the investor does what they're supposed to do, everybody is going to have the proverbial win win. And that's exactly what we did. We became that intermediary because what was happening is at the beginning, we did our own first for rent to own. So we refinanced our personal residence. We grabbed equity and basically used it to to do our first few deals in the days when you can get financing with zero down. Remember those days?
George El-Masri [00:14:22] I'm not really I was too young.
Rachel Oliver [00:14:23] Oh, well, yes, they're a little bit older than you, but those are the glory days. And we kind of, you know, maxed out. We weren't able to borrow anymore money, but our phone kept ringing and homebuyers were still saying, I need to rent to own, can you help me? And was like, OK, so we'll just call friends and family and see if they can take a mortgage. And then our friends and family would say, well, I don't know how to put this deal together. You guys know how to do this. So I'll just pay you. And can you just broker this relationship for me? And we said, yeah, for sure. It'll save you time figuring it out. And we know that our process already has a little bit of runway and it's working in some capacity. You know, little did we know it wasn't perfect. It took a while to to tweak it and perfected and with every you know, every three years a rental deal turns over and you start to learn where are the opportunities for improvement. And before we knew it, we have a waiting list of investors who want us to put together deals for them because there's a huge learning curve in making a rent to own successful.
George El-Masri [00:15:19] Yeah, of course. Yeah, definitely not. It's not the super simple to do it if you have no experience in it. So I think most of the people that are listening have an idea of how rent to own work. But in case someone doesn't, do you want to just like very briefly describe the process from the tenant buyer's perspective and from the investors perspective?
Rachel Oliver [00:15:37] Yeah, absolutely. So the tenant buyer is really, to me, the foundational piece of a successful rent to own. So home buyer who goes to the bank and the bank kind of looks at their credit situation, says, hey, you have a few blemishes, maybe you were divorced, maybe you went through a bankruptcy, maybe you're new to the country. You don't have enough credit history or job history. And for whatever reason, the bank says you're not creditworthy with just five percent down. But if you have 10, 15, 20 percent, we can help you. Well, most people have been saving up only five percent, naively thinking that they that's going to be enough. So in that situation, they can't get a conventional mortgage with just five percent down and some credit blemishes. But in a rent to own, they can technically create a situation where they can put five percent down, give that to a private investor who will then take title. On a property and rent to own that house over a certain period of time, usually it's a thirty six month commitment for both parties. So the investor takes title on a property. They have a mortgage, they put their 20 percent down and and Clover properties essentially matches the two. We're kind of like a matchmaker and we make sure that the contracts are in place and they're equitable contracts that make sense. And the numbers work and the affordability is there. That's the key. The home buyers have to be vetted for affordability. And if they can afford the payments, they have no reason not to succeed in a rental program that we put together. And then the investor basically has a kind of a profit center from two places. They create cash flow each month because this home buyer is buying this property in installments so their monthly payments are larger than their typical rent would be. And on the end, when the homebuyer buys that property from that investor at a future purchase price, which is a little bit higher than the original purchase price the investor paid, there is a capital gain. So the investor is making a cash flow and a capital gain. The home buyers building up a bigger down payment. They're improving their credit and they are building up equity in that property because any maintenance, any repairs, any improvements, they make, those add value to the property and that value stays with that home buyer once they take ownership and buy that property from the investor.
George El-Masri [00:17:46] Right. OK, and just out of curiosity, because there are different companies that are doing the rent to own thing, is there anything that you're doing a little bit differently from other companies?
Rachel Oliver [00:17:57] Well, I'd like to say our experience really has been driving our success. We've been at this for almost 11 years. We've helped nearly three hundred and fifty families. That was a recent bio. OK, with the recent numbers, what we do differently is usually our secret sauce is in, first of all, the screening process. We really do believe in a very, you know, school of hard knocks screening process. Renton is not for everybody and honestly, it is a needle in a haystack. And that haystack is getting bigger with the way the real estate prices are going. So our screening process is pretty intense. And then once a home buyer gets into our program, we don't leave them to their own devices. We nurture them, we guide them, we keep them accountable. And that's what people really love. When you're held accountable, like when you go to the gym and there's a trainer waiting for you at the gym and tells you to do a certain workout, you'll do that certain workout because a trainer is there to guide you. And that's what our program really is. We we guide the home buyers, we empower them. We keep them accountable all the way through. And that makes a huge difference. When we weren't doing that, we saw our success rate a little bit shakier. Maybe, you know, seven out of ten rent owns a good comp. But when we started to add the extra layer of of guidance and support, our success rate went up to nine out of ten. So we have a 90 percent success rate with the home buyers that are in our program. So that in of itself, I think, speaks volumes to how established our processes. And then the other component is we're very different in that the investors that we work with are families helping other families. We're not an institution. These these families have been cherry picked and they're all motivated to help another family through the Rantzen process. And they're on title faithfully. They're lending their credit to the situation and they're really, really in this to help another home buyer. It's not just about the profit for them. And I mean, there's there's a lot of things that we do inside of their home process. But one of the things that makes us very different is that our home buyers have a chance to build up equity. And that's the difference between them wanting to continue renting versus them being committed to the rental and process. We're not greedy. We are not maxing out the appreciation rates that the investors are charging. We want those homebuyers to exit below market value, leave a little bit of money on the table. I think Nick and Tom actually preach that to and I really subscribe to that approach.
George El-Masri [00:20:25] OK, yeah. When you're when you're speaking, I can tell that you seem like you really want to help the tenant buyers and it seems like a main focus of yours. Why is that? Why do you why do you want so badly? Not so badly, but why is it that you're so supportive of of these families and trying to help them get into a property?
Rachel Oliver [00:20:46] Well, first and foremost, you know, I I am a mom. I you know, I'm I'm a family. I represent a family. So I kind of grew up, you know, going back to my childhood. I grew up with the notion of you treat other people the way you want to be treated. And I take that even further. I treat other families how I want my family to be treated. And I would never want to have somebody put me in arms in the way of harm and set me up for failure where I, I sacrifice the roof over my kid's head. So for me, it's so important to be able to give other families an opportunity to come into a rental and scenario that gives them peace of mind that they have the best. Possible chance of success and then maybe I think a part of it comes from my you know, my family came to this country as immigrants and we didn't have a silver spoon. We were not born with a silver spoon. My parents didn't have anything really to, you know, money wise to put down on a property. When we moved here, we we rented and we rented rundown apartments because that's all we could afford in any amount of money that my parents had, they put into a restaurant business. And the restaurant business, I'm sure you can imagine, is very, very difficult, especially for a couple of immigrants that don't even speak English. And I just remember being young. I was nine when we came to Canada and we landed in Winnipeg. Speaking of snow, that's where we landed. And I just remember, you know, observing how how many hours a day they were working and trying to communicate in a language that was foreign to them for all intents and purposes, and learning the new customs and working and juggling so many things. And they scraped all their money together to send me to a private school. They were paying a ten thousand dollar a year tuition just to give me the promise of the opportunities that they really sought out in this country. And I. I just really feel that. If my parents had somebody back then guiding them on how they can create, you know, some more equity by by using their resources and their money differently, put it into real estate, grow your money inside of equity, and use that money as a springboard to secure your for your future. I think they would be so much further ahead as they near retirement. And I think that's really at the heart of why I do what I do and why I'm so passionate about helping families establish roots and create a more stable future financially.
George El-Masri [00:23:17] Yeah, it sounds like that's kind of your mission. Is that have you have you put that into words like a mission statement or something like that?
Rachel Oliver [00:23:23] No, it's a great point that you bring up. I don't you know, I just do this I don't really often dove into or analyze. Why am I so motivated? Why am I so driven? But I think you make a great point. It would be a great way to articulate the mission.
George El-Masri [00:23:37] Yeah, exactly. All right. So one thing that you caught my attention with, which I think a lot of the listeners will be interested in, is how to generate a thousand dollars a month in cash flow. So if you want to kind of speak to that,
Rachel Oliver [00:23:51] well, you know, we know that the Ontario market and other parts of Canada have seen some exponential growth, especially in markets that are ideal for real estate investors, where there's demand for rentals and, you know, and properties are going up in value. One of the things I struggled with when I thought about becoming a real estate investor was, of course, I gravitated to the standard by rental properties and I'll be the glorious landlord and I'll have these wonderful tenants and I'm going to have all this juicy cash flow. And then when we started looking at properties with our real estate agent, all I saw were properties that needed to have a prop here for the listeners. I am holding up a plunger like a clean plunger, but I didn't want to have to deal with these plungers. And then the tenant calls in the toilets that they're clogging and the locks that they're breaking. And all of that was just going to eat into my returns. And the returns weren't that generous to begin with. And I was like two hundred and eighty dollars a month in cash flow on a good property. And this is going back about, you know, 11 years, maybe 12 years. And two hundred eighty dollars isn't so bad now that now that I see how the numbers play out and that was one zero down payment was still in effect and you didn't have to tie up a lot of your own capital. So your ROIC was still exponential. If I knew back then what I know now, I probably would have been scooping up those properties. But over the years, I kind of stuck to my guns. No tenants in toilets, no tenants and toilets. And and the rent to own strategy allows me to fulfill that. But it also satisfies the need for cash flow with a rent to own. You have a lot of leverage because home buyers are giving you five percent to in today's market. I as an investor have to tie in 20 percent into that property. And in some cases, for it to cash flow, I'd have to even put down thirty, thirty five in a rent to own. I'm I'm very happy with my cash flow. I'm putting in 20 percent. But the home buyer that I'm helping rent own has five percent. So when the rental on kicks in, they're five percent goes to me. So I'm really tying up now only 15 percent of my capital. So I have a lot more leverage. So that generates a nice, you know, annualized return for me where I'm seeing, you know, I'm seeing about twenty five cents on the dollar from every dollar I invest. I'm generating about twenty five percent in profit. And that twenty five percent or let's say that twenty five cents on the dollar, about twelve of it, of about 12 cents comes to me through my cash flow each month, which is great because I'm getting my return on investment every month and then the other 12 cents or twelve and a half cents comes to me at the end of the rent own through a capital gain. So I've got kind of my every day money coming through and I've got my capital gain. And that cash flow rich aspect comes from the fact that our rent own program helps homebuyers establish a bigger down payment credit. So if today they have only five percent through our rent own process, they're building it up to ten percent. Well, how are they building up? They give me the initial five and then the balance of that five percent. They pay me in installments over the thirty six months. So if they're giving me an extra seven, eight hundred dollars a month as forced savings towards their future purchase of this property, that actually translates into my cash flow. So the secret sauce in the success of our rent home process is actually helping homebuyers build up a bigger down payment credit because they're building up a bigger down payment credit. I actually, as an investor, generate more cash flow and I increase their chances of successfully exiting into their own mortgage because they have more money saved up. And lenders want to see homebuyers have a bigger down payment these days.
George El-Masri [00:27:30] Yeah, absolutely. So first of all, I want to say it's the first time anyone's ever brought props to the podcast. So congratulations. No to. You mentioned seven, eight hundred dollars of additional rent. Is that something that you're seeing regularly, that you're able to get seven hundred over market or over share market rent?
Rachel Oliver [00:27:53] I think that's where the misconception is that I'm not actually charging anyone over over their rent. What I'm basically saying is that in order for them to qualify to purchase a house, they need to have a bigger down payment. So today they have only fifteen thousand and they need to have thirty thousand dollars to actually qualify for a mortgage. The other fifteen thousand has to come from somewhere. If they're renting, they're going to have to put themselves on some sort of a formal savings process or savings plan where they, you know, they they deposit the money into a bank account and not touch it or, you know, I don't know, maybe they're going to come into a lottery win or some sort of an inheritance. But that's kind of, you know, a big gamble. What we're basically saying is that, listen, you have enough income to put aside six or seven hundred dollars a month. You're not disciplined to do that on your own and not touch that money. But the money is there. So I'm going to do it for you. And in exchange, you get to live in a property that you are working towards owning yourself. So it's not like we're charging them over and above. We are basically doing the work for them that they themselves can't do. So that translates into us collecting the future down payment in installments over the course of the three year term. So a lot of people think a rent to own is OK. It's you know, you're going to be charging eight hundred dollars over and above the market rent. That's the furthest thing from the truth. What it is, is a US receiving the down payment from a seller in installments over three years. And that money stays with me because I am the seller of that property. Right.
George El-Masri [00:29:29] OK, that's that's understandable. And the reason that I asked that question is because I understand that certain people will do different tiers and a rent to own. So they might say option one, you can spend twenty two hundred dollars a month and we'll take away two hundred dollars of that and put it in a savings account for or apply it towards your purchase at the end. Option two will be twenty four hundred, four hundred bucks a month, whatever, and so on and so forth. So that's what I figured. But it's understandable that basically you're not using that money, you're not keeping that additional rent for yourself, but you're applying it towards the purchase price at the end.
Rachel Oliver [00:30:04] Exactly. It comes off of the future price, but it's still my money because I'm the seller. So technically, I don't physically have to give the money back to them. I just have to recognize that it's coming off of the future sale. So it's it's kind of a it's a nonrefundable incremental purchase price, essentially. So today they don't have the full thirty thousand. So today they're going to give me fifteen thousand. And over the next thirty six months they are going to give me, I don't know what is it, eight hundred dollars a month for 36 months on top of the original 15. And then when they go to buy this property for five hundred thousand dollars while I've already received thirty thousand dollars from them so that now they're going to go to their bank and get a mortgage for four hundred and seventy thousand, because I as the seller already have 30 of their money. And it makes it kind of a very transparent, very predictable, very repeatable scenario and it makes everybody comfortable in terms of what the outcome is going to be. I think the multitiered model creates some volatility because it's it's not clear. It's to me simple, stupid. I'm not a numbers person. So make it so stupid and simple for me that I don't have to guess. And I find that the less guesswork that there is, the easier it is for people to to commit and the easier it is for people to stick to. And also, George, I just want to touch another point that you this multi-tier model, I am familiar with it. I think Rockstar was doing Renton's That Way. Another differentiator between how rock stars rent to own model works and how clever properties model works. Is that where people first rock star's property first? And it's a very different arrangement. In our book, we talk about the difference between property first rent to own and people first rent to own. And we tried both on our journey of figuring out how to perfect the rental and process for everybody involved. And we realized that when a home buyer gets to go house hunting and shop the regular MLS and pick from properties that any any conventional home buyer would pick from, they were that much more emotionally committed to the process of renting to own because they they got to go house hunting. They got to feel that the butterflies in your stomach when when you feel that, oh, this is the one and when people were that committed to it, they overcame obstacles and challenges and got much better at managing their money and got much more excited about fixing their credit blemishes. Whereas when we kind of thought about the idea of buying a property, adding some lipstick to it, forcing the value, and then instead of renting it out, bring in a rent owner and then capitalize on the appreciation. The abandonment rate in that scenario was about 50 percent people what kind of six months, eight months, nine months into the wrenching process, they would reassess the layout of the house, don't love it as much, don't really like the neighborhood. As much as I thought I'd like the neighborhood or, you know, the school isn't as good as I thought. And they start finding reasons to abandon the commitment to rent, to own, and they walk away. And then we're stuck with a property that we really, you know, didn't want to keep in the first place. When a home buyer gets to find the property on their own, when they get to pick it, when they're emotionally connected to that property and they have a financial commitment in there as well through the initial down payment, that the results are astounding. So that's why we're very people first and property second.
George El-Masri [00:33:26] Right. That makes a lot of sense. You're at 90 percent success rate, so that I'm sure that has a big part to do with that. OK, great. I want to ask you, I know you're not an accountant, but maybe you can kind of just speak to this a little bit. What are what would be like an efficient or effective way to plan as an investor, if you're if you're in a rent to own because you're getting the additional cash flow and then you're getting capital gain at the end. Is there any advice on that?
Rachel Oliver [00:33:56] So, one, I'm not an accountant. Thank you for that disclaimer. But, you know, as an investor, I've obviously seen different things happen and the CIA is constantly changing things on us. When we first got started, Sciarra didn't even, you know, have any specific guidelines and rules around rental and properties. They just treated them as a regular investment property. Now, there's all these distinct guidelines, whether it's a rental or whether it's a property with intent to sell. And they you know, obviously they tax it differently with rent owns, you have your cash flow. So, for example, on average, we have anywhere from eight hundred dollars a month to a thousand dollars a month on a typical property in the three, four or five hundred thousand five hundred thousand dollars price range. So it's not a huge price point for high cash flow. But what that really means is that investors that can afford to take on those types of mortgages have to be aware that that's going to be recognized as active income and active income is taxed at your your tax rate. And if you're in the highest tax bracket you can imagine, that's going to, you know, give the government a lot of income from your cash flow. The good news is that there's lots of cash flow to share with the government. But if you want to be a little bit more conservative, which is what we did from the beginning, the advice we got was if you're planning to do two or three rent to own, incorporate, because you should do this. First of all, from the standpoint of minimizing liability, minimizing exposure, keep your business separate from your personal, which made total sense to me. And we did it that way. And then you can, of course, take advantage of a whole bunch of retained earnings and dividend payouts, which allows you to limit the tax implications. You're never going to avoid taxes. In fact, I love paying taxes. And every year I'm paying more taxes, which means that I'm making more money. So it's not all bad. But there is kind of another tax consideration that I've seen recently surfaced. And again, I'm not an accountant, but there is a capital gain at the end of the rental own process. And I do have some investors who don't want a lot of cash flow. They want the deals that have a higher capital gain. And there are certain ringtones that allow for that. And, you know, it really depends on if a home buyer has a huge initial down payment beyond the five percent, then they don't need to build up as much of a down payment credit each month. So the cash flow goes down. But what that means is that more of them, if they're coming in with a sixty thousand dollar down payment and the deal requires me to have one hundred thousand dollars in. So now I'm only putting in forty thousand dollars of my money because that 10 buyer's offsetting sixty thousand. So I'm no longer making twenty five cents on every dollar I've invested. I'm now making 40 cents on the dollar and the majority of his coming it's coming in through a capital gain which has certain tax benefits too.
George El-Masri [00:36:39] OK, how so. Obviously this whole system as a tenant first system requires a tenant. So where are you finding your tenant buyers?
Rachel Oliver [00:36:49] That's a great question. So again, are are Amazon best selling book, which I'm very, very proud of. It was probably the first resource in the Canadian market talking about the good, the bad and the ugly of rent to own. And we put this book out about five years ago on Amazon Dossie, and it became a best seller in Canada, but also in the US and Australia and UK. So a lot of people, I think, are finding us through that book. And it's not just your home buyers that are reading the book. I think a lot of real estate agents are picking up that book because they want to know how to service their clients
George El-Masri [00:37:23] that agents spend money on everything is books marketing?
Rachel Oliver [00:37:28] Well, especially the ones that actually do care about finding a way to solve a problem for home buyers. And I do feel that there's got to be a nurturing streak to a successful real estate agent. It can't all just be about the trends. Final volume, there has to be an element of I truly want to help people and those types of people are buying our book and they're reading it and then they're passing the book on to somebody who might benefit from it. So I think a lot of people are now finding us. There was a time when we advertised on Kajiji when we first got started. It was, you know, Craigslist, Kijiji, where everybody else was advertising. And it was really hard to win over people's trust. I remember people back then and, you know, before identity theft was a thing, people were still a little bit leery about sending you their personal information so you can screen their pay stubs, their credit reports, their job letters. I mean, this is personal information that we assess in the process of screening a homebuyer to make sure that they're a good fit, to make sure that they can afford the rental program that we're putting together for them. And, you know, back in those days, it was a slow uphill climb. But over the years, as we just continued to lead with education, honestly, people start to find us and people are referring people. And I don't even know who the source of the referral is these days. And I'm grateful that I get the phone call. You know, Mary Smith in London told me to call you. I've no idea who Mary Smith is, but thank you, Mary.
George El-Masri [00:38:50] Yeah, that's really cool. I didn't expect you to say that. But you start to realize certain things the like. For example, in your case, the book is generating a lot of leads for you. That's not something that comes to mind for me when I first think about how to generate leads. But that's that's so cool that you were able to do that. Like something that I recently discovered is that Instagram is a great source. I'm not saying that anyone should be doing that, but the people that are active on Instagram are able to build relationships with people and generate business from it. So that's just another example. So writing a book might be good for some of the people that are listening.
Rachel Oliver [00:39:25] I think you have to think about it. What is your end game? And we always lead, not necessarily from a point of view of how can we do more rent to own? Because when we wrote this book, we are only about 50 rent to own. And and what really drove us to write a book was that we were getting phone calls from people who were locked into rent to own deals that were property first. And they were saying, you know, I'm in this situation where I've got this weird structure and I'm not sure I'm going to be able to qualify for a mortgage where they you know, they put me into a rental deal where at the end of it they will determine how much money I'm going to have to spend to buy this house. And it's all vague. Can you save me? Can you help me? And we were like, you know, you should have saved yourself. You should have done your own research. You should have had the wherewithal to do your own due diligence to protect you, your family and your money and its hard earned money for these families to for them to scrape together. Ten, fifteen, twenty thousand is a lot of effort because they're in a different income class or different income situation, different life situation. And we realized that there was just a lot of people are saying, well, there's nothing out there. I couldn't have armed myself with educational tools because I couldn't find any. All I could read was the horror stories and the Toronto Star. And we thought, oh, my goodness. Well, let's distill all of the knowledge. We have to give everybody no excuses to access a legitimate resource to help them understand what questions to ask, what answers to listen for. And that's how this book was born. So is really born more out of a desire to stop people from calling us and asking us to save there. But we wanted them to save their own.
George El-Masri [00:40:55] But right now, that makes a lot of sense. And I can say that as a realtor myself, when I see someone when I speak to someone who's currently renting and I mention a rent to own, there is quite a few people that will tell me I would never do that. I had my cousin in or my sister did a rent to own and they got burned. And I would I'm just going to stay away from that whole process. And it takes a bit to explain to them that there is a proper way of doing this to to get a successful result for the tenant buyer.
Rachel Oliver [00:41:24] Absolutely. You know, there's different there's bad apples in every industry, first of all. So let's just call a spade a spade. You know, you have that accountant, you have battlers, you have that real estate agents, bad mortgage agents. There's bad apples in every industry. So whenever you're the consumer and you're looking to align yourself with any service provider, I think it's just common sense. You have to do the research. You have to figure out who are these people, how established are they, what kind of a track record do they have? And I think more consumers need to take a little bit more responsibility and time in order to to do the due diligence rather than just blindly on a hope and a prayer hope that this investor that put this property up for rent to own on a Kajiji ad has my best interests at heart. Absolutely not, because they're looking to cover their own. But and it's up to you to cover your own bat. And there's very few arrangements where they can come to a company like ours and we could represent their interests and the investors interests. And we do it in a way that makes sense for both parties. And it's unfortunate. Renton does have a little bit of a shady reputation because people have dabbled with it and they've dabbled with it without the proper knowledge. And it's not the investors fault that the investors just looking out for their own family. I really do put the onus back on the home buyers. They should have done more research and they should continue to do more research is more Rentoul and companies are popping up. I think there is going to be a trend. The demand for Renton is probably going to grow despite the people that are you're kind of hearing from. Oh, I would never do that before they say no to something. They really should arm themselves with the proper knowledge rather than just the one off story from somebody's bad experience. Because my bad experience doesn't necessarily mean it's the rental one's fault. It might mean that those home buyers went in blindly on a hope and a prayer and didn't ask the right questions. So why is it the fault of the rent to own, right?
George El-Masri [00:43:17] Exactly. Yeah. So basically, if you want to learn how to avoid mistakes as a tenant buyer, get the information. Read a book. Do your research. Figure it out.
Rachel Oliver [00:43:28] Absolutely. The rent own essential guide for home buyers is on Amazon.com. You can get it in eBook. You can get it in paperback. It's there for you. No excuses.
George El-Masri [00:43:36] Yeah, exactly. All right. Just a quick OK, one thing before we move on to the next topic, you kind of mentioned about building cash flow without the hassles of tenants and toilets and whatnot. Part of the whole like, toilets thing, I'm assuming, is because tenant buyers are going to take care of their home better than a regular tenant will.
Rachel Oliver [00:43:55] Bingo. And that was really an important consideration. I'm not dealing with tenant mentality. I'm dealing with homeowner mentality. I'm dealing with people who have pride of ownership. Again, they've gone house hunting. They've picked this property. They see themselves in this property for years to come. And they see how they're going to, you know, paint the walls, how they're going to upgrade the countertops and and all the power to them. And because this is a private arrangement not far off of a private like a second mortgage in a second mortgage, you don't call the second mortgage holder and say, hey, my tap is leaking. Can you come over here and and fix it? Or, hey, you know, I have a a broken window. Can you come over and fix it? No, you wouldn't call the bank that's holding your mortgage. You wouldn't call a private investor that's holding your mortgage in a rental. And it's the same thing, you know, rent to own. They're on the hook for all maintenance and repairs responsibilities. But the key is to find properties that are move moving, ready. The key is to have properties that are not going to be a money pit for these home buyers so that their finances aren't drained, trying to solve these little, you know, nit picky issues. You still want them to enjoy living in a home that is functioning right?
George El-Masri [00:45:03] That's that's a good point. And that's one of the main benefits of a rent to own. I was doing a little bit of research before you came, and I based on stats, can the average income in Canada in twenty seventeen was about forty six thousand dollars a year. So if you're able to make eight hundred dollars a month of cash flow doing the strategy, if you have about four or five rent to owns, you're able to basically replace the average Canadians annual income. Would you agree? Would you agree with that?
Rachel Oliver [00:45:33] Yeah, absolutely. And it's kind of a disheartening statistic, isn't it? Yes. And that was my mission at the beginning. I really wanted to exit my corporate job and I really wanted to use a real estate strategy, a sustainable real estate strategy to put food on the table for my family because I saw so many real estate investors being cash poor. Yes, they have these assets. They're not cash flowing. And any cash flow they have sometimes gets eaten up by having to fix toilets and clogged sinks and such. But I, I really wanted to leave a corporate job and have a sustainable, repeatable income. And the way we set up ringtones allowed for that. And after about four ringtones, I realized, oh, I can do this. And if I had two more ringtones and if I add up as many as ten and keep them going and revolving over the next few years, I'm further ahead. And not only am I replacing my income, I'm actually replacing my husband's income. And having said that, we we were not in the forty seven thousand dollar average bracket. We were in the six figure, both of us. So for us, we needed to do a lot of ringtones in order to replace our income. And that's what really led to this kind of rinse and repeat sustainable strategy. But, you know, we can't take on every single deal that comes our way. There's a lot of home buyers that can afford and want to get into a rent to own process. So that's why we have a network of investors, families just like us that are trying to help other families. Rental.
George El-Masri [00:47:02] Very nice. Yeah, it sounds like you've done a great job and I appreciate that you care so much about the people that you're working with on both sides of the deal.
Rachel Oliver [00:47:10] Yes, absolutely.
George El-Masri [00:47:11] Thank you. Yeah. All right. Let's move on to the next section, which is the random five. Oh oh, my goodness. I don't know why everyone gets scared when I say that,
Rachel Oliver [00:47:20] because I feel like there's a buzzer and I have to answer. And just five
George El-Masri [00:47:24] seconds.
Rachel Oliver [00:47:26] And then what happens? The buzzer goes like this.
George El-Masri [00:47:28] Then you owe me five dollars for every question you don't answer.
Rachel Oliver [00:47:31] That's a great way to monetize this podcast. No one is called the well off.
George El-Masri [00:47:36] Yeah, right. OK, so first thing that comes to mind, you can answer the first. Question is, how would you describe humanity to an alien civilization?
Rachel Oliver [00:47:46] Wow. Humanity to an alien civilization. Well, do I have to use words or can I draw things for them?
George El-Masri [00:47:53] Or you can do actions if you want charades.
Rachel Oliver [00:47:57] Yeah. So the gist of it would be that we're you know, there's lots of us. We have these mines and half the time we're using a small portion of our mind and the other half the time we're using even less than that. And we're walking around like zombies and oftentimes not really aware of our our purpose and our potential. Hmm.
George El-Masri [00:48:18] Wow. That's that's a cool question, because it really tells you a lot about the person that's answering it so well.
Rachel Oliver [00:48:24] I had to dig deep on that one because it's not the kind of thing you think about. But I can totally see myself acting this out with charades and drawing this out on a on a piece of paper.
George El-Masri [00:48:34] Yeah, very cool. All right. If you woke up and could walk through walls, what's the first thing you do?
Rachel Oliver [00:48:40] So I'm kind of like invisible walking through walls or I you know, I can walk through walls and still be visible.
George El-Masri [00:48:48] Use your imagination.
Rachel Oliver [00:48:50] Oh, my goodness. I could walk through walls. What's the first thing I would do? Oh, that's crazy. I think I would walk into what would you call it, the oh my God. Donald Trump's office, I want the White House and what is his office? The fact is,
George El-Masri [00:49:11] is that the
Rachel Oliver [00:49:11] Pentagon, the Pentagon said I would walk into the Pentagon and I would just I'd like to be invisible so I can actually hear without any prejudice that I'm in the room what the heck this man is doing.
George El-Masri [00:49:25] OK, fair enough. All right. Have you ever had a crush on a fictional character? And if so, who was it?
Rachel Oliver [00:49:33] No, I you know, I'm sorry, I I've always had a crush on on actual humans, Rob Lowe.
George El-Masri [00:49:39] OK, all the way. All right. Fair enough. No fictional characters. What's the one thing you refuse to share?
Rachel Oliver [00:49:48] The one thing that I refuse to
George El-Masri [00:49:50] share, these are hard ones today, I have to say,
Rachel Oliver [00:49:53] oh, so you change them up, you change them up. So I try the random. I couldn't have even gotten trapped by some of the others. That's the one thing that I don't want to share my hairbrush.
George El-Masri [00:50:07] OK, yeah, that makes sense. Did you have a bad experience?
Rachel Oliver [00:50:10] Well, I have two daughters at home who can't seem to to keep track of the four hairbrushes that they each own. And for some reason, my hairbrush is always implicated in some sort of a girl fight. And I'm left without the hairbrush. So I refuse to share my hairbrush. That's it, period.
George El-Masri [00:50:27] OK, makes sense. And the last one is what success principal do you live by?
Rachel Oliver [00:50:34] I think it's a treat others, the way you would want to be treated and the way I want to be treated is I want to elevate and enrich people and I'd love a dose of that back. Mm hmm.
George El-Masri [00:50:45] Very nice. Yeah. And that goes very well with your whole rent to own system and being good to others. So that's great. And before we end things, do you want to share how people can reach you and what services you provide? Although it's pretty pretty clear.
Rachel Oliver [00:50:59] Well, we work with investors who want to generate passive cash flow above average, anywhere from six hundred a month to a thousand dollars a month on properties where they don't have to worry about tenants in toilets. We put together the turnkey deals and you can reach me at Raichel at Hello Cash Flow Dossie.
George El-Masri [00:51:16] Very nice. OK, well thank you so much for making the trip down to Fosterville and I look forward to staying in touch with you.
Rachel Oliver [00:51:23] Rachel, thank you so much. I look forward to that too.
George El-Masri [00:51:27] Thanks for listening to this episode. I hope you enjoyed the content. And as a valued listener, I'm giving away a sample letter of intent. This letter is used once your potential CO venture expresses interest in working with you. It outlines the general structure of the deal and intentions of both parties. You could visit w w w well off dossie forward slash letter to receive your free copy w w w well off dossie forward slash letter.