Wednesday, April 24, 2024
Small Town Riches


The Rent to Own Clients from Hell

rent to own

As a novice real estate investor, I still have lots to learn. Yes, I am enjoying success with two of the three rental properties (you’ll hear the story of my previous residence turned rental very soon), but the other rent to own gave me a large dose of life lessons!

Started off Great

It started off around the same time that I purchased the rent to own property in Stirling. The two clients came around the same time, but the latter was asking a lot of questions before deciding to jump in. It wasn’t a bad thing either. I was impressed with the questions being asked, which told me that the couple was serious about it, but was skeptical of how the process worked.

After a month or so, the couple decided that they were ready to dive in. They were a young couple probably in their late 20s or early 30s, engaged, and had a small child. The guy worked for a metal fab shop in Belleville making decent money, and the girl was just getting back into the workforce after having her child. She had just got a job at a restaurant.

They Had a House Picked Out

The couple had already decided on a house before we started the process. I thought that was great, but it turned out that the house was 90 minutes from me north of Madoc. My initial gut feeling was that it was too far away and that the home prices in the area were quite low. I thought about it and decided that since this was a rent to own that I wouldn’t have to go up there that much, and that I shouldn’t have to worry about resale for the same reason.  You’ll see why I should have went with my gut feeling later!

In terms of their income, I determined that they could afford the house and pay me the amount I needed monthly. They had $5000 saved up for the down payment, so we went over a rent to own agreement and decided on a 5 year plan.

Time for Purchase

Once everything checked out, we put an offer in and had it accepted. Once the offer was accepted the couple sent me half the down payment right away. I had my inspector go through the house the next day. Other than the kitchen being very dated and the furnace/AC probably with 5 years of life left, the house was in excellent shape and was well built.

I will probably write a post all about this, but I did initially have trouble with getting financing. I went to my friend at the bank first, but with their limited number of lenders available, we couldn’t find a solution that worked. I eventually found a mortgage broker in the area that could help me and I ended up signing a 5 year fixed mortgage to coincide with the 5 year rent to own agreement. This turned out to be a mistake that I will explain later!

This is When the Wheels Fell Off

With a week left until closing, I contacted the couple just to remind them that the rest of the down payment and the first month’s rent was due. They were quick to respond wondering if they could have an extra week to get all the funds together. Regretfully, I said that was ok. It turns out the couple started having relationship problems and she couldn’t get his share of the money right away.

What followed was 18 months of pure hell….

Every month I fought with them to get the rent money. Each time the money was late I would send them a N4 form which is used to notify the tenant that I will apply to have them evicted should they not have the money to me in 20 days. Usually I would end up getting the money with about 1 or 2 days to go.

In December 2015, I think the wheels finally fell off their relationship and I stopped getting money altogether. This time when I issued the N4 the 20 day period came and passed. This gave me the opportunity to issue a L1 form which allows me to apply to the Landlord and Tenant Board to have them evicted.

My Inexperience was Showing

A month after filing the L1 form a hearing was scheduled. I had no idea what to expect when I got to the hearing. I thought it was going to be a private hearing between myself, my tenants and a LTB rep, but what I saw was a room full of landlords and tenants waiting for their case to be heard one at a time. I had no idea that it was set up almost like civil court cases!

I thought I was going to be there awhile, but lucky for me the tenants didn’t show up and they deal with those cases first. Unlucky for me, I screwed up terribly on my L1 form which made my application for eviction null and void. What happened was I included the rent to own portion of the rent in the calculations for what they owed me. I was told by the LTB rep that I cannot legally require the tenant to pay that portion, which does make sense when I thought about it.

I was pretty embarrassed that my application was being publicly scrutinized, and the worst part was I had to start the whole process over again.

In the End

I never ended up having to file another L1 form. The tenants moved out on their own less than a month later, but pretty well left the house destroyed. I thought about cleaning it up and renting it again, but considering the area and all the trouble I’ve had with it I decided to renovate and sell.

In my next post I’ll let you know about my experience renovating this house and more lessons learned!

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About The Author

Kevin is the owner of He's an avid entrepreneur always looking for an opportunity to take advantage of. Kevin is an active real estate investor with four properties he manages. He also holds a full time job as a control room operator at a cement plant. Kevin also has a passion for Dogs and anything with wheels and a motor. Someday he hopes to open his own dog rescue.

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