How Rent-to-Own Real Estate Helps Families Buy Homes After Banks Say No

Jeff Belanger (00:00)
ton of money, right? And there’s a lot of money on the line and they just could not do it. So they came to us and the first instinct is we’ll help them definitely. Let’s see what we can do. But then the deal was, we found out the deal was firm. So the only way to, and all the cards are in the seller’s hands. So.

I like, I think sugar is better than salt. I use that scenario. And it’s all about the approach, right? Convincing the seller’s lawyer that the path to least resistance is to let us use an investor to close on the property. We’ll put the family into a rent to own. We’ll transfer this, the deposit into the statement of adjustment. We’ll give a brand new $85,000 deposit on the transaction so that everything is

equaled out

Michelle Tack (02:19)
Hi, I’m Michelle Tack, the leader of the podcast for Real Estate Pros, fueled by investorfuel.com. We have a great guest for us today that I’m super excited to introduce. Jeff Belanger, if I pronounced that correct, Jeff, specializes in helping families go from…

renting to owning and has a very specific purpose to do that and is going to share with us his business model and the things that he does. Jeff, you want to do a bit introduction on yourself.

Jeff Belanger (02:52)
thank you for having me, Michelle. Yes, I am Jeff. It’s actually got a little bit of a French flair to it. So it’s Belanger, but you know, that’s the little French Canadian in me. And yes, I’m the CEO of HOS Financial.

Michelle Tack (02:54)
Absolutely.

Yep.

Jeff Belanger (03:05)
And our primary focus is that we create structured paths to homeownership for families who are being turned down by traditional lenders by utilizing high net worth investors. And then for them, we’re generating extremely strong socially responsible returns. And we call this profit meets purpose.

Michelle Tack (03:25)
I love that. Can you go a little bit more into what your main focus is? Describing the business a little bit more and where you’re operating in because you’re Canadian. If you’re all the provinces or not and what have you.

Jeff Belanger (03:37)
Sure. Yeah.

Yeah, so first of all, know, HOS, we’ve been around since 2005. I actually joined the company in about 2016. I became the CEO in 2022. Prior to that, I was I was a business consultant focused on process and business improvements and manufacturing and so forth. And I just fell in love with real estate. And I realized that there was a really big gap. There’s a lot of hardworking

families out there that are being turned down by banks and traditional lenders. And if they all had one thing in common, they want home ownership. And just because the bank says no, they don’t stop searching. So in the HOS model, we’ve done, like I said, 1,300 of them in about 25 years across Canada, everything from Canloops, BC, all the way out to St. John’s, Newfoundland.

And in our model, we kind of have two sides of our business. There’s the client side, and those are the families that need help.

And then there’s the investor side. Well, without the investors and bringing the income, the credit and the equity, ⁓ there’s really no ability to help the families. So there’s two sides of that. And we work off of two core values in our business. One is the exit strategy for the family. You you’re going to have families come to you that have really, really bad credit profiles, right? And of course, if we know at a day one that we can’t fix the problems to get them

mortgage at the end, then we’re just not going to accept them in the program. Okay, we’re not these private, you know, network of, you know, private investors that will do private mortgages with glass ceilings and, you know, endless renewals, because I’ll tell you, what ends up happening to those families is after about four renewals, they lose their home. Right. And our job is to create the ownership path, not take it away. So we have to

focus on an exit strategy for them and then we have to focus on affordability and obviously you think that they have to be able to afford the place that the house to live the rent and so forth but I look at affordability being much bigger than the word affordability I like to refer to it as balance

Michelle Tack (06:57)
Mm-hmm.

Jeff Belanger (06:57)
So I know we were

talking earlier about how, you know, when we think about balance and affordability, you know, in a program for rent to own, it would be really, really easy for me to set really, really low rent and get a endless supply of families wanting to come into my program.

Michelle Tack (07:14)
You

Jeff Belanger (07:15)
But the problem is with low rent, there’s low profit and with low profit, there’s no investors, not low, no investors, right? That’s how it works. And you know, so the other, but the other way to think about it is, what if I set the returns for the investors really, really high? Well, then I’ll never get clients to have the affordability to come into the program. So the most challenging part of the business is to find the good balance. And I like to say it this way that cause I’m an investor myself. And so.

Michelle Tack (07:20)
Mm-hmm.

Mm-hmm.

Jeff Belanger (07:45)
So the balance is finding the somewhat unrealistic expectations of investors for really high returns, which we know we all want to make good money, but to be able to balance that with a compassion for the family’s affordability. Nobody wants to be house poor. I own the house, but I can’t afford to do anything. So that’s kind of the essence of how our team really focuses on putting together a project. Without the investor, we don’t have anything, right?

Michelle Tack (08:03)
Absolutely, absolutely.

That’s all.

That’s awesome. know, one is I love the, you know, passion not to, you know, not to be redundant that you have for the outcome for the family. Certainly, you know, I told you I’m half Canadian, but in the United States, I wish we had followed that in 2007. And in fact, the majority of my cousins in Vancouver that own property didn’t lose their homes and hadn’t flipped them and, you know, were able to, you know, now have great equity.

⁓

Jeff Belanger (08:42)
Yeah.

Michelle Tack (08:43)
And so that goes to another thing that I’m really impressed by is how do you keep your machine there running smoothly? Because clearly there are cutoffs that you’re looking for, certain metrics, certain filters that you need to have to start with someone. But more importantly, how do you keep the efficiency of your business ⁓ running to its ultimate state?

Jeff Belanger (09:09)
Yeah, you know, and I like to think that one of the most key factors in this is the word commitment.

because it just, it embraced, that word embraces every aspect of this business. I mean, you have my commitment, you have my team’s commitment to coach these families because we got to improve their credit. We got to keep them on track. They got to be paying their month. You know, we like to say we’re mortgage, we’re mortgage payments and training, right? So commitment on our side is obviously a factor, but think about from the investor, what are they doing? They’re committing to use their personal financial wealth

Michelle Tack (09:35)
Right, right, right.

Jeff Belanger (09:45)
their personal financial credit score to obtain a mortgage on a property and and invest a large sum of money in order to help this family. So that’s a big commitment and it has to be recognized right? But then but then you have this family commitment and it isn’t it does it stop it does not stop at paying your rent.

Michelle Tack (09:58)
Right, absolutely.

Jeff Belanger (10:07)
because you’re in this position, because you need to make a change to your credit profile, your income stability, the way you report your income. I mean, know how many times I’ve heard that story?

every time it comes up all the time where people are like in college and when I was young they told me that the best method was to be an entrepreneur and own your own business and and do what you can to not report the income right and and hide from the tax man and don’t report it and then all of a sudden you go to get a mortgage and they decline you for the exact thing that they taught you years and years how to do right so these families often need to be retrained and that is a big commitment it’s the

Michelle Tack (10:43)
Yep. Yep.

Jeff Belanger (10:48)
It’s a three to five year plan to fix somebody’s credit profile if they’re dealing with a four or 500 beacon score.

Michelle Tack (11:32)
Yeah, but you know what the model is because you’ve invested yourself and you have a very good understanding of every element along the way that needs to be accomplished because you’re investing your time and effort and your people’s time and effort for that period of time before that person acquires that property. that alone is a commitment that a lot of folks don’t do, lot of businesses don’t do. So I admire you for that.

Jeff Belanger (11:42)
Yeah.

Yeah.

And you know what?

We actually tie some of our revenue to that successful exit. Right? So it’s like, listen, we have to be fully engaged in this process because some of our revenue is actually tied to the successful exit of this program.

Michelle Tack (12:05)
That’s awesome. That’s great.

Yeah.

And that’s a true, we like to say in sales a win-win, but that’s a true, when you have a true win-win, that is a great business relationship that, you know, or a personal relationship, what have you, but that’s admirable. Now, every operator I know has a moment that where things got real. Maybe a deal went sideways or a time they had to pivot fast. Can you maybe bring something up like that in the last six months that has occurred in your business for the team? Because we all know everything isn’t just

Jeff Belanger (12:43)
Yeah, sure.

Michelle Tack (12:46)
a 20 minute video and go spend thousands of dollars and get into real estate. It’s a little bit more challenging than that.

Jeff Belanger (12:56)
Yeah,

I have a story of a family that came to us and at first my team was there’s no way we can help because it’s already a firm offer. So this is a family ready to purchase a home, okay? And they went to a lender and the lender approved them.

shortly after and now we’re waiting for that time period for close, right? It could, you know, it was about a month away, a month and a half away. The lender declined and rescinded their mortgage. Now this family is firm on the transaction, right? And so they came to us and at first it was like, you know what, we don’t have enough time. We don’t have enough time. And I’ll tell you, when they came to us, it was so dire.

They were four months into extensions. Instead of a $40,000 deposit, they had given enough money. They were now up to $85,000 on the line on a firm offer. They wanted this house so bad. They had amazing income. Obviously, it was their credit profiles and so forth that were killing their ability to get a bank loan. we went to the, you know, obviously we want to help.

in that situation. but we went to the lawyer for the seller and they said, no, go away.

Michelle Tack (14:11)
⁓ thanks.

Jeff Belanger (14:12)
Go away. We are going to put the deal in tender.

we went into tender and that meant that the family was gonna be sued, right? And in this particular market, houses that are being appraised, you know, something for 900, a few.

Michelle Tack (14:25)
point.

Jeff Belanger (14:33)
you know, and because we’re in Canada market and in the Toronto region in this particular case, you know, I could easily drop 10 % in a month, right? We’re just this terrible particular market. so the good thing is the appraisal was coming in solid, but the lent, the lawyer would not.

Michelle Tack (14:42)
Right, yep.

Jeff Belanger (14:53)
The delays have been so much and the seller was dire. They had to get out. They were holding, you know, two properties and they couldn’t afford to do it anymore. And so I believe that sugar is better than salt when it comes to it, right? And it’s all in the type of communication, realizing that…

You know, there is a solution to this where we can get everybody out successfully and in a reasonable amount of time. And an investor on the line, they were ready to take the file from us. We’ve done the due diligence and qualified the tenant.

Michelle Tack (16:08)
Jeff, you had mentioned when we spoke, getting prepared for the podcast today, that you’ve had challenges with some customers, but you were able to pivot. And I always want to share those things to make things.

knowledgeable to folks that sometimes with operators, every operator I know, things come up and they have to pivot quickly and find solutions. So it’s not just, hey, you dabble in a little bit of real estate and everything goes well. So I’m wondering if you could talk to that a little bit.

Jeff Belanger (16:41)
Sure, let me give you a story of one that happened just a few weeks ago. And I gotta set the stage with where this family was. So they had initiated an agreement of purchase and sale to purchase a home in Toronto. And they got an approval for the mortgage and they were all set to close on the transaction with a $40,000 down payment on a $900,000 property.

Michelle Tack (16:46)
Okay.

Jeff Belanger (17:04)
And prior, between that period of waiting from firm to go and actually close the transaction, they had about a six week time period. And during that, the lender pulled out.

during that period. Now they’re a firm offer and the seller was patient enough, they offered them an extension, which they had to pay more money for. And then they had to start paying fees. And four months later and four extensions later, they still weren’t able to close and get a mortgage.

Okay, now this means that the seller’s lawyer is ready to tender the deal. They’re basically going to cancel the purchase transaction and they will sue this client for damages and they’ve accumulated $85,000 in deposits on this agreement to keep it open.

Michelle Tack (17:56)
Holy

cow, that’s a ton, right?

Jeff Belanger (17:58)
ton of money, right? And there’s a lot of money on the line and they just could not do it. So they came to us and the first instinct is we’ll help them definitely. Let’s see what we can do. But then the deal was, we found out the deal was firm. So the only way to, and all the cards are in the seller’s hands. So.

I like, I think sugar is better than salt. I use that scenario. And it’s all about the approach, right? Convincing the seller’s lawyer that the path to least resistance is to let us use an investor to close on the property. We’ll put the family into a rent to own. We’ll transfer this, the deposit into the statement of adjustment. We’ll give a brand new $85,000 deposit on the transaction so that everything is

equaled out

the client will then get their $85,000 back. And I’ll tell you this is something that I bet you there’s thousands of realtors out there who have fallen trapped to these types of situations where a lender pulls out the client can’t close and the deal dies.

Michelle Tack (19:03)
Yep, yep, absolutely. That’s incredible.

Jeff Belanger (19:03)
Right. And so we’ll rescue those types of deals. Right. And they are, they

are difficult to do. The negotiations are very intense. Everybody is extremely emotional. Right. You know, the, the clients are worried about losing their 85,000. The sellers are worried about having to put the house back on the market in a, in a, in a very, you know, buyer market, not a seller’s market. so we were able to turn that around. It took weeks of hard work. I probably.

Michelle Tack (19:17)
Absolutely.

Jeff Belanger (19:32)
put in a good 50-60 hours myself just in the negotiations and the contracts to get that repositioned. And you know what? Today that family is loving their new home. They sent me pictures of they opened up the swimming pool last weekend. I thought it was a little bit cold myself but…

Michelle Tack (19:44)
Absolutely.

Awesome. I was gonna

I mean Toronto area that seems pretty cold if it wasn’t that, you in the province.

Jeff Belanger (19:54)
Yeah,

yeah, I think the biggest thing is to always keep in mind that there’s always another strategy, right? And it comes down to, you know, the negotiation skills and how open-minded you’ve got to be able to sell the seller in this particular case, that the value is in how quick I can close versus putting it back on the market. Right. And we were able to, we closed in about three weeks. Yeah.

Michelle Tack (20:03)
Yeah.

Yes. Right. You know one thing…

awesome. Tell

me a little bit what your next goal is for the business. What are you looking at to try to improve, change, know, what have you purchased? I’m not sure what that, I mean, I don’t, we spoke about, but if you could share that with the team, that’d be awesome.

Jeff Belanger (20:31)
Yeah

Yeah. So if there’s one thing that I know that we’re not great, we’re not marketers. It’s the unfortunate part. mean, I hate social media, you know, you know, and I don’t believe I was standing alone in that, in that crowd. Right. I think there’s a lot of people that just don’t enjoy doing it. I’m trying to get out into more of these types of events, you know, podcasts and so forth. You know, I find investor groups to be very, very difficult because believe it or not,

Michelle Tack (20:50)
Haha! No I love, I am.

Yes.

Jeff Belanger (21:10)
we’re all looking for the same thing, right? But if there’s people out there that are looking for opportunities, I get opportunities out of the woodwork.

Michelle Tack (21:18)
Yes.

Jeff Belanger (21:21)
I mean, you know, there is, there is this sense that rent to own can be a preditorial type of market, right? That there are a lot of cowboys in the industry. And if I’m getting a thousand leads a month and closing five to six deals a month, that means there’s a lot of families that I’m not accepting, right? And that’s a true indication that I’m not preditorial. Cause if I was preditorial, why wouldn’t I take all 1000?

Michelle Tack (21:21)
Yes.

Right.

Right.

Jeff Belanger (21:50)
Right? So I think there’s a real fine line between making sure you’re getting the right deal and now linking it up with investors. And that’s the tough part. That’s the tough part. Yeah. So I got to change the way we today we do peer to peer. So every investor that comes in will physically learn the program from me.

Michelle Tack (21:51)
Yeah.

Absolutely. Yeah. Yep, I understand that.

Yeah, yeah, yeah.

Jeff Belanger (22:12)
their contracts will be designed and we’ll nurture them through every step of the process with my contracts and administration team. But they’re initially being taught by me what the program is, okay? And how to read a pro forma and understand the ins and outs. mean, like, now the next step for us really is getting into the family offices. And I’ve really…

Michelle Tack (22:25)
Yep.

Yeah.

Jeff Belanger (22:36)
really think that profit meets purpose is the right strategy. I believe there’s a lot of families out there that really look for ethical investment strategies. And what better than helping a family find a way to home ownership, right? Yeah.

Michelle Tack (22:52)
Absolutely. And

that’s why we exist as a group, is to help folks find investors, find opportunities, and also learn.

And sometimes you have to spread the wealth around to make that happen. But in the long term, it is in the interest of growing your network, getting repetitive business. look, I really appreciate you’ve been great. I love the profit for purpose concept. I commend you on that. But before we close for today, would you give the audience how they can contact

Jeff Belanger (23:02)
Yeah.

Michelle Tack (23:32)
you. ⁓ know, ensure it’s a Canadian marketplace. Let’s just make sure everybody knows that. But Jeff, can you share your contact info?

Jeff Belanger (23:33)
Sure.

Yeah, so certainly, mean, obviously we have to remember that in Canada, we have restrictions on residential purchases, right? so it’s, know, foreign investors are, you know, are kind of restricted anymore. Well, they’re not restricted as long as you want to pay the high tax to do it, I guess, right? But my contact information, the best way to get ahold of me is with my email address at jeff @hosfinancial.com and it’s H-O-S as in homeowner soon. That’s the abbreviated. So that’s the best way is by email.

Michelle Tack (23:47)
Sure. Yep.

Right, yeah, yeah.

Jeff Belanger (24:09)
But I’ll share my business number, which is 647-933-2936. You can also check us out at hosinvestors.ca. I have a LinkedIn account, Instagram account for HOS Investors as well. So we’re starting to do some posting. Just this week, we started our first little three-day campaign and hopefully start to see some changes and some growth on the investor side.

Michelle Tack (24:27)
Good?

Well, that’s great. I really want to thank you, Jeff. And for those that are on the podcast, keep checking in. We have a variety of content available, depending on your interest and the areas that you want to focus in on. And if you find today’s podcast valuable, please subscribe. Thanks again, Jeff.

Jeff Belanger (24:52)
Great, great

to have, thanks for having me, I appreciate that.