Rent-to-own real estate investing can fund lifestyle changes—just ask Daniel St-Jean.
St-Jean, now an investor and fundraiser who worked as a consultant for the federal government in Ottawa, and his wife Laurel began investing in 2010, and by 2014 their cash flow was so strong that they decided to move to Niagara-on-the-Lake where Laurel pursued her wine making ambitions. Having an income that wasn’t tied to a single location also helped the couple achieve their dream of traveling for six months of the year.
“We needed to build a business to cover a $120,000 income in Ottawa, so we started investing in 2010 with a five-year plan, and four years in we made enough cash flow to kiss our jobs goodbye and move,” said St-Jean. “From Day 1, we started with rent-to-own, which means we own the house but after three years our tenant buys it from us, so we don’t technically own a lot of doors but we’ve set up 51 rent-to-own deals. We bought 12 houses on Niagara-on-the-Lake for buy-and-holds, but at the height of our rent-to-own strategy, our cash flow was $18,500 a month. That’s how we were able to move away from Ottawa.”
The key to the strategy is raising the money to facilitate the deals, he added. Moreover, the couple diversify their investments, as well, choosing sectors like, among others, green energy, but fundraising is an imperative, says the charismatic St-Jean, who will be hosting a 20-minute virtual presentation on Nov. 3.
“We use the rent-to-own strategy because, of all strategies, if you do it well it has the least problems. People choose the house they want to buy from you in three years, give their $20,000 deposit, and then become responsible for things like deferred maintenance, snow removal, and if it floods they call the plumber, not me. Picking the right strategy is a good way to start because you need to protect your cash flow,” said St-Jean. “I raised the funds for every single deal—that’s $29 million for 63 total properties—by using other people’s credit to buy the houses through joint ventures with us.”
Fundraising might be the important facet of St-Jean’s strategy, which he’ll be imparting to attendees at next month’s event. One concept he will teach is “connectworking.”
“As opposed to networking, you build connections,” he said. “At the end of last year, I probably sent 1,700 best wishes for New Year’s. I keep track of people and whenever anything comes around, I reach out to them. Most people do networking like they’re on a hunting trip. What they need to do is ‘connectworking,’ which is more like gardening.”
St-Jean’s recipe has brought him much success, and it’s even culminated in a book he authored called Milk & Cookies for Success. Still, he says he couldn’t have done it all alone—he has surrounded himself with a team of professionals, most of whom are real estate investors and understand the lay of the land.
“I have a team of people—realtors, lawyers, mortgage brokers, accountants—who are good at what they do because they’re investors, and that makes a difference. There’s a big difference between a realtor who isn’t an investor and one who is because the latter will understand your questions and can answer them adequately, so select a team of experienced people,” said St-Jean. “The property manager is also key—is the person themself a landlord? How long have they been a landlord for? How many doors do they have? Find the best people you can and bring them into the fold.”
When you flip houses, you are not usually intending to live in the house; rather the strategy is to sell the property as fast as you can so as to avoid paying taxes and other expenses on the property. While there will obviously be initial costs that you will need to budget for, house flipping can be done with few resources and little experience.
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