Table of Contents - Say Hello to Cash Flow with Rachel Oliver
Dave Debeau [00:00:09] Everybody, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. Today, we're coming to you with a very special guest, and that is Rachel Oliver. And Rachel is known as the cash flow queen. I love that title. And she's got a very good reason for that. And that is because she and her husband focus on doing a rent to own deals in Ontario and they definitely know their stuff. In fact, almost three hundred and fifty rental deals. Rachel, you don't look old enough to have done that many deals so quickly. My goodness. So you must definitely have a machine going. She's not just a real estate entrepreneur. She's a wife. She's a mother. She's got kids running around. She's dealing with all of this stuff. So, yeah. Rachel, it's great to have you on the call.
Rachel Oliver [00:01:04] Thank you so much for having me, Dave. It's a pleasure.
Dave Debeau [00:01:07] All right. Well, let's jump in. First things first. How did you get involved in this whole crazy world of real estate investing in the first place?
Rachel Oliver [00:01:14] Well, I think like most people, there's a trigger. When I had my first child, I got diagnosed with breast cancer. And at the time I was working in the corporate world and I was climbing the corporate ladder, as a matter of fact, and juggling being a first time mom, being on math leave and all these things basically just made me realize that I need to kind of pause and take a step back and really evaluate how is I spending my time. And I was dedicating so much of my time to the corporate world that I really needed to create a space where I can spend more time with the people I love my family and take more of a concerted effort at self care, because once I got through the cancer and all the treatments, I really needed to put my health first, because without my health, it's kind of the whole saying up when the oxygen mask drops. Who do you put it on first to make sure that your loved ones can survive? So it was kind of that kind of an aha moment. And I realized that I'm not going to be able to replace my income just investing in mutual funds for the rest of my life or parking my money in offices and ask fees. I needed to have something a little bit more substantial, a little bit more predictable kind of cash flow to replace my job income. And I figured that the real estate market is going to be able to do that for me. But the real estate market is very broad. There's a lot of different strategies to it. So it took a little bit of figuring out, but that's really what prompted it
Dave Debeau [00:02:39] very, very cool. Yeah. So it's interesting. I was just talking with another guest the other day and it was a near-death experience for him that that really created that clarity as well. So it's a shame that sometimes some of us have to have that sort of an experience. But again, that's the silver lining to things. Right? So that got you started. So, OK, so you kind of clued in the real estate was the way to go. How did you go from that epiphany to getting into rental real estate investing? How did that process happen in a nutshell?
Rachel Oliver [00:03:13] It was such an easy process and it wasn't a quick process. I wish it was. You know, I had to obviously go through kind of getting healthy first and getting kind of back into the workforce and kind of creating some stability. And when I felt a little bit more balance in my life, I started being more comfortable processing the different information that was on the market. One of the defining moments was when one of those US based companies came to town and said, hey, come on in for a free weekend and we will sell the crap out of things. But you're going to sit there for free and listen to it. When I got out of that weekend there, then a very quick introduction to how cold and callous and pitch oriented this market can be, as I actually kind of cut through all of that crap. And I listened very clearly to what what are the different ways that people are creating cash flow. And the strategy that stood out above all else was lease options. I think the other guys called Lease Options and Canada here. I think we refer to it as rent to own. And that really resonated with me. I love the aspect of creating some significant cash flow for me and my family, but at the same point doing something valuable for another family and helping them overcome their barriers to homeownership and helping them actually become homeowners against all odds in many cases. So that was really kind of the defining moment. And then, of course, I started looking around what's happening in the real estate market here in Ontario, who's doing rent owns, how are they working, who's succeeding? And I was not very impressed with what I found out, but that's really how it started.
Dave Debeau [00:04:45] All right. Very cool. So roughly, what was it that you jumped in with both feet and got started with rental?
Rachel Oliver [00:04:52] When I realized that I can't find anybody in the Ontario market to do rent owns the way I felt they needed to be done. Everyone was kind of saying, yeah, the rental strategies, great, really cashflow positive. You can make a lot of money, especially when the tenants don't exercise the option to purchase and walk away. And I'm like, I wouldn't be doing it for that, I really wanted to help families and everybody was saying there's a 50 50 chance there's a 50 50 success rate, but you make up profitably regardless. And I got to have well, I want to make unprofitably not at the expense of someone failing, but at the joy of them succeeding. And nobody was doing Renton's that way. So I finally realized, you know what? If I can't find somebody to do it the way I feel it should be done, let me do it myself. So luckily, I work with a with my husband very closely, and he brings to the table very different perspectives than I do. He's a numbers guy. And we kind of looked at the numbers and we looked to see very closely where were the gaps in how ringtones were being executed in Ontario. And we thought, well, if we just fill in those gaps, if we just make this model a little bit more homebuyer centric and less about the investor, we as the investors will naturally get our rewards out of it. And that's exactly what we ventured out to do. So we did a quick refinance of our personal residence, pulled out some capital and decided we'll help for families. And that was enough of a validation for me that this model could work. And I thought, well, I could now adopt this model to start figuring out how to replace my job income. And that's kind of how it all got started.
Dave Debeau [00:06:18] All right. So, Rachel, I'm really, really curious if you don't mind walking us through for the folks that aren't super familiar with rent, let's look at two scenarios, if you would. The first scenario is the way the other guys are doing it. How does that typically look? How does that what is that model? And and where were the gaps that you saw in there? And then the second way would be how do you guys do it and what are the differences and what what kind of effect does that have on the end outcome?
Rachel Oliver [00:06:48] Can we do that? So what we were noticing is that a lot of a lot of energy from the investor side was being put towards adding appreciation on that property and almost inflating the appreciation to the point of unrealism. So in a rental, you obviously buy the property today, for example, at five hundred thousand dollars. And in three years from now, those home buyers that are renting to own it from you are going to be buying it at an appreciate purchase price. Well, a lot of the other guys, we're appreciating the property at eight, nine, 10 percent per year, which made the future by extremely high. And when those homebuyers would go to their bank to try to exercise the option to purchase, the bank would do their own appraisal. And they say, well, the purchase price on this property should be five fifty and your sellers charging you five eighty. And those buyers wouldn't have enough to to make up the difference with their own funds. That was one issue. The other issue is that they were not helping in structuring a process where these homebuyers could build up a bigger down payment in order to qualify for a mortgage at the end of the rental process. So helping them build up a bigger down payment is the whole point of helping someone through through this. And they were basically leaving it up to the home buyers to figure it out on their own. They would basically say, you know, you come in with three percent, that's enough for me. Pay down my mortgage, buy this property at five hundred and eighty thousand and come up with your own down payment funds and your own closing costs. Well, of course, these homebuyers are in this situation because they don't know how to manage their money to save up a bigger down payment because they don't know how to figure things out in terms of closing costs. So we realize that they're going to need a more equitable future purchase price of Y priced properties at eight, nine, 10 percent, which is basically kind of a hope and a prayer. We decided, you know, we're going to go with a three and a half to four and a half percentage in annualized appreciation. And also simultaneously, we realize we need to help these home buyers really, really work on their mortgage readiness. They need to be accountable to somebody kind of like going to the gym. I always equate it to that. When you go to the gym and there's a trainer there waiting for you and telling you what to do, when to show up, you're going to feel obligated to do what the trainer does even if you don't want to. Technically, you're doing it for yourself, but you almost don't want to let the other guy down. Renshon works exactly the same, and that's what we tapped into. We tell the home buyers how much of a down payment they're going to accumulate through a process and how much they need to pay. Each month. We verify that they have the affordability to do so, and we keep them accountable for the full thirty six month term. And when they know we're checking up on them, well, guess what happens? Magic. And at the end of the rental process, they are also buying a property that is on par with what the banks value it at, and they have a 10 percent down payment credit and they've done the work to repair their credit and essentially qualify for first time homebuyer mortgage. And they take ownership of the property. And we sleep very soundly at night because of this. So those were the two main differences. I could go on, I could do an entire hour on this training, but those were the two main differences that we changed. And it's worked out for the better. We have a 90 percent success rate.
Dave Debeau [00:09:57] Well, that's awesome. That's impressive. Yeah, I've I've got a little bit of experience with Rent to own myself. Rachel Inuvik. That was what one of my pet peeves as well was. What I call the the churn and burn guys, so they just get anybody with a pulse who can pay the rent into the property, hopefully a big non refundable auction fee up front. And then they're really hoping that the people would fail so that they keep their money and get somebody else in there and do the same thing over and over again. Gives everybody a bad name, that's for sure. So, yeah. So in a nutshell, what you're doing is you're pricing the property fairly into the future at a realistic appreciation rate. You're making sure that your buyer has some capital getting into the deal. Chances are you're probably helping them plan that down payment in installments with with additional funds and on top of what they're paying for rent, which automatically goes into some sort of an account that builds up over the time. And during the whole time you're babysitting them, you're you're holding them accountable and you're making sure that they follow the process so that they can close on that deal at the end of the term. I've got a
Rachel Oliver [00:11:08] proposal that you put in the baby. The baby sitting is exactly what we're doing. I mean, we've systemized it and we has a bit of a professional polished to it now that I think about it over the years. But it's true. In essence, we're babysitting them, but these people need it. This is, I think, the essence of the rent strategy that you don't go into this and kind of think is a fallacy about it, that it's a set it and forget it, because everybody's looking for a passive solution with real estate. Right? Everyone wants things just to go tickety boo without you putting any effort into it. And that's not the case. Rent owners are really designed to help a homebuyer overcome a certain challenge or a certain habitual behavior, and it doesn't come from a sedative for everybody. So the reality is most investors, they want to profit with rent owns, but they don't want to do the babysitting part. And that's where we come in. And that's a problem that we solve in this market.
Dave Debeau [00:12:00] It's a huge part. I was that was a big headache when I was doing the business was keeping on top of that, making sure you've got a dullard in that. You sure that you're consistent about it? So, yeah, that is huge. So for people who aren't familiar with Rent Own as the active investor partner, how do you profit from a deal? Why don't you just kind of paint that picture? What does that look like?
Rachel Oliver [00:12:22] So as the investor, what you're essentially benefiting from, it's kind of like a I guess, a very equitable solution to try to help homebuyers build up a bigger down payment, because the more of a monthly down payment credit they give me, the higher my cash flow is over the course of the rent to own and the higher their down payment accumulation is. So it's really when when it's benefiting them because it's kind of like a forced savings. That's pretty substantial. The average Canadian is not going to be able to put aside six hundred or seven hundred dollars a month. We have some tenant buyers that can afford to put aside eight hundred dollars a month, but they won't do it on their own unless we're babysitting them, unless structured program around it. And they are in our rental and process. But because they're putting in six, seven, eight hundred dollars a month in a down payment credit each month, that actually adds to my cash flow. So a lot of people say to me, well, why are ringtones so cash flow rich? You must be ripping people off. And I think that notion comes from some of the legacy stuff that you were talking about with the other kind of mentality. But in our in our model, the cash flow comes from actually helping homebuyers accumulate a bigger down payment credit. And the other benefit is that there is a capital gain component with rent to own. So at the end of the process, obviously, in addition to the monthly cash flow, we sell the property at an appreciated price point. And there's been mortgage pay down. There's no maintenance and repairs. And I have a great capital gain. When you combine that capital gain and the cash flow, I kind of look at it as my return on investment annually. And it's phenomenal in that my return on investment generally is about twenty five percent. So every dollar I invest is I'm generating about twenty five cents on the dollar, maybe 12 cents of that is coming through the cash flow profit and the other 13 cents is coming to me from the capital gains. So that's kind of how I like to look at the profits.
Dave Debeau [00:14:13] Make sense. So Rachel, it can all be sunshine and flowers. Twenty four seven with rent on what are some of the the drawbacks we see the big positives. The big buzz is amazing cash flow compared to that same house as a normal rental. We see big positives as having a lot less to do with property management because that responsibility is put on your tenant buyer's plate right there. Homeowners and training, as I used to call them. There's all sorts of benefits. So this is fairly short term deals. You're in and out in about three years, if I understood correctly, all of that sounds great. What are some of the pitfalls?
Rachel Oliver [00:14:56] So some of the pitfalls I mean, we've ironed out a lot of pitfalls over the years, but the biggest hurdles are things that we can't really control when we're dealing with a husband and wife dynamic or spouses. Sometimes they get separated or divorced, and that's not necessarily the fault of the rent to own. Of course, that is more just that could be life where I noticed that being more of an issue actually is when we were back, way back when we started doing rent to own reify rescue type of deals. So, for example, somebody owns a house. They have a first, a second, a third. And, you know, the list goes on. They have multiple mortgages on it and they can't make ends meet. They're about to go and they're basically about to lose their house to the bank. And I think underneath all of that, there's a lot of strain. There's a lot of marital stuff that, you know, finances rip peoples relationships apart. And I think that's really what was happening underneath. And we were coming in with a good heart to try to save those deals. And we would put together the proper rent on structure and then about six, seven months and we find that he moved out or she moved out. And the one that stays in the matrimonial home doesn't have the income to support the monthly payments to make it work or to qualify for financing and exercise the option to purchase at that time or further out in the future. So they they're stuck. They're stuck basically having to default and abandon ship. That is probably the saddest experience we've ever had. And we very quickly tuned in to the fact that we are not reef rescue type of people. We prefer to work with home buyers that have gone to the bank. This is their first purchase, or maybe they're a blended family. After both parties have gone through some nasty divorce, they have blemishes on their credit. The bank turns them away because five percent is not enough. And they come to our program. They want to rent it through us. Well, they're starting fresh. They're coming in with optimism and things can only go up from there. Those are ideal homebuyers in a rental and process and we've seen much greater success. So everyone who makes it to the end of our program really does qualify. So it's one hundred percent success rate, but it could be the odd divorce separation or even a job loss. Sometimes a job loss can frighten people off. And even though we'll work with them and we'll go to an extension or we'll reduce the monthly payments for short term, they sometimes don't have the confidence in their ability to succeed and they walk away. That's the disheartening part. That's probably the saddest part of all of this, that you try to help and you do your best, but you lead people to water and they don't drink. That's you know, you can't save everything
Dave Debeau [00:17:32] you can about a thousand all the time. And and a mentor of mine early on said something that always sticks and sometimes you just can't fix stupid either. And that's a very good thing. But definitely awesome. Rachel. Yeah. So hats off to you. Just out of curiosity, you've done almost 350 rental deals. How many of you typically have on the go at any one time?
Rachel Oliver [00:17:59] Well, we generally have so active rent to own deals. Like right now we think the numbers about sixty five, sixty eight. But of course it ebbs and flows because some deals are two years, sometimes they're three years and sometimes they're four years. And then we're constantly getting new deals coming in. So we're constantly juggling people, new people coming in, managing the existing deals and turning over the deals that are completing. So it's a little bit of a daisy chain of events, but we're screaming, I would say on average, maybe about twenty five to thirty people a week.
Dave Debeau [00:18:33] Wow, that's great. That's great. Rachel, time flies when we're having fun. And I could literally sit here and chat with you for hours because I'm a random guy myself. So it's always fun to talk about this stuff. Before we started filming, I noticed you've got a book. Do you happen to have that?
Rachel Oliver [00:18:50] And I do. Yeah. There you go. De la Renta, unofficial guide for home buyers. My husband and I coauthored this because there were just so many people not understanding how a legitimate rent own is put together. And we just couldn't keep answering all these questions on phone calls and emails. So we decided we'll put together Canada's first and only resource that anyone can access us on Amazon.com.
Dave Debeau [00:19:18] Excellent. And if people want to find out more about you, Rachel, and what you're up to with rent own and maybe even get a copy of the book, what should they do
Rachel Oliver [00:19:26] so they can email me Rachel at Hello, Cash-Flow Dot. Or they can visit us at Kellow Cash Flow Dossie. I have a video up there where I explain the ins and outs of how the Renshon strategy works and how one investor actually created nearly sixty thousand dollars a year in annual income by helping seven homebuyers rent to own through our program. And they can also request the electronic version of our book. I'm happy to share free to spread the wealth of knowledge.
Dave Debeau [00:19:55] Awesome. Rachel, thank you very much. Has been a lot of fun. And hats off to you for what you and your husband. You're your adult business.
Rachel Oliver [00:20:02] Thank you so much, Dave. I appreciate that.
Dave Debeau [00:20:05] All right, everybody, take care and we'll see you on the next episode. Bye bye. Well, thanks very much for checking out the property profits podcast. And you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.