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Welcome to episode 26 of the Commonwealth Home Ownership real estate podcast! We have a very special guest today in the one and only Barry McGuire! For those of you who don’t know Barry, he is a veteran real estate lawyer with over 45 years of experience in the industry. He himself is a real estate investor who started investing 48 years ago. Barry is a popular speaker on the REIN stage with his “Tales from the Trenches” where he uses real-life stories of investor legal land mines to teach by example. Barry is also the co-author of “97 Tips for Real Estate Investors” which provides insights, strategies, and success stories to help you build wealth faster.

Barry is well-known for his Focus Workshops and Rapid Cash Flow programs which are intensive 1-2 days seminars that really push your investing business to the next level. 

Today, we do a deep-dive discussion on Agreement for Sales and Rent-to-owns so this is one episode you don’t want to miss! 

Show Notes: 

  • Discuss how Barry got started in educating others in creative real estate strategies
  • A lot more people are aware and want to get into creative real estate strategies nowadays vs 12 years ago
  • Try not to say “Agreement for Sale” when discussing with a seller as it can be confusing
  • Difference between AFS and VTB is that the latter requires qualification, whereas AFS does not require immediate qualification
  • AFS fell out of favor when CMHC came into the picture and buyers no longer needed to put down a 50% down payment
  • AFS has a place in a flat to negative market 
  • AFS can create a win-win for both parties in a negative market
  • Go over some pitfalls with the AFS strategy
  • Discuss the rights of the buyer and seller in an AFS deal
  • By filing a Power of Attorney and caveat on title, the buyer can have full control of the property
  • The seller still has the right to foreclose if the buyer doesn’t pay
  • It is a strategy that is still legal across Canada but not always well-known in all areas
  • RTO is to help those who want to buy but can’t afford it now for various reasons
  • RTO starts as a regular lease with an option for the tenant to buy; also known as Lease Options
  • RTO works best in a booming market
  • Figure out why tenant-buyer can’t buy and if it is a correctable problem
  • Find out what tenant-buyer can afford and give them strict parameters for what they can buy
  • Get option money from tenant upfront
  • Figure out the down payment required and what tenant-buyers need to pay you on a monthly basis for the length of the term
  • The final price has to be justified in the market at the time of sale
  • In a flat market, RTO may work better as an exit strategy
  • Predatory operators have given RTO a bad rep by taking advantage of vulnerable people but there are fewer of those than before
  • RTOs can be a lot of work requiring a lot of conversations with a lot of potential tenant-buyers
  • Discussed the pitfalls of tenant-first RTO strategy in a down market and potential ways to mitigate those risks
  • Part of the initial Option money has to be refundable
  • Need to work with a bank or mortgage broker who understands RTO deals; otherwise can be a pain in the ass
  • Expect a future episode with Barry where we will discuss Wholesaling and Joint Ventures
  • For more information on Barry and his courses, you can find him at: 
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