Rent To Own with Brandy Mullen

[MUSIC PLAYING] Welcome, Brandy, to Homeowner AF. I'm so happy to have you here. Before we get started, I'll tell everybody how we connected, which was through shout out, Sunshine Speakers in Aurelia. They are a Toastmasters group of wonderful individuals. And Brandy and I were able to connect through that. And she has quite an interesting business that she runs. And I'm going to let you, actually, Brandy, present yourself, because I think you can probably say it a bit more concisely than I do. So tell us what you do. First off, thank you for having me on the show. I am super excited to be here and love the shout out to Toastmasters, highly recommended to anyone. Our business is rent-to-own. So my company is called Scrub Properties. We're helping people across Canada who are getting turned down by banks. We're helping them transition from homeowners to renters-- or, oh, other way around, from renters to homeowners. My goodness. So anything from people who don't quite have enough of a down payment saved, but they want to get into a home now. So we've had lots of people that their landlords have decided to sell their home. And they were saving for home ownership, but maybe aren't quite there. And they don't want to continuously do moves. Or they're just tired of being told, hey, you have to move. And they want their own home. Or if they have some credit issues, we help them improve their credit score or create a credit score if they don't have any credit in order to qualify for a traditional mortgage in the future. So we help people if it takes around two to four years. If we think we can help them within that time frame, we'll help transition them. So they'll be able to go out and pick their home, live in it, and then do the work to be able to qualify for a traditional mortgage with the support of our team. Amazing. Amazing. So, Brenda, you said that you guys are Canada-wide. Can you list a couple of the municipalities that you have properties in? We are as far west right now as Alberta, Edmonton, and Calgary. And we are right out to the East Coast in St. John's, Newfoundland. Wow. That is incredible. Very cool. So rent-to-own, I was completely unfamiliar with it when I first met you. And actually, as soon as I met you online, I Googled your company. And I thought it was so interesting, and I wanted to learn more. But before we get into that, I want to know how you arrived at rent-to-own as a business model. What drew you to real estate and also to the specific way of investing? Great question. So I was always fascinated with real estate. When my parents split up when I was nine, they both went out and bought a duplex. And so we sold our family home, and they both bought homes but with an apartment in it. And that's how they were able to balance those increased expenses individually. And then my dad went on to buy more properties. And I, at age 12, would be in there at midnight between tenants helping paint, staying out for the way of the carpet guys as they were ripping out carpet and doing things that landlords do and watching my dad struggle. And he had some bad tenants or tenants that really didn't like him. When you take black spray paint and spray paint baseboards without covering up the floor or walls, you are sending a very strong message to your landlord. And I saw firsthand some of those nightmare stories that you hear about tenants. But I was still curious about real estate. And so when my partner and I got together, I just recently graduated university and we were going to buy a house. And we weren't married at the time. And we looked at my financial situation. And I had student debt. I had a brand new car loan. And I was new in a job. So I had full-time employment, but I didn't have two years experience. And I was a huge liability. The mortgage agent in me is cringing a little bit. Right. A bank wouldn't even give me a $5,000 unsecured line of credit. And so my partner, who's now my husband and my business partner, we bought a house using just his mortgage qualifications. And so that was a really interesting point for me because I had done all the right things and went to school, got the good job. But nobody had taught me financial education. So nobody taught me don't buy the brand new car. I thought I deserved it. I finished university. I got a great job. I finally deserved to drive something that's not a clunker. And I went out and bought myself something brand new. Not knowing anything about mortgages at that time. So we get our mortgage, or my partner gets the mortgage. And we look at-- I'm looking at the paperwork of that 25 years, like, after year one, you'll owe this much money all the way to 25 years. And I'm looking at his paycheck and my paycheck. And I thought, something's not right here. So we start working. We realize we are kind of living paycheck to paycheck. We're paying down some of our house. But I want a little bit more. And so I tried multi-level marketing. I was given a DVD on Robert Kiyosaki. And he was talking about how multi-level marketing is a great entrepreneurial adventure. And, you know, big brother, that everything seems to be connected to your devices. Well, I swear, all of a sudden, all this rich dad, poor dad, Robert Kiyosaki stuff started coming to me. And so I sign up for things. Once in a while, I like to sign up for all sorts of free things that come my way. And so on a Facebook ad, there was a two-hour free seminar with Robert Kiyosaki. And I thought, oh, I know that guy. I listened to one of his DVDs. And it sounded good. So I signed up and then was bombarded with reminders. So I get home from work. I say to my partner, I've signed up for this two-hour seminar tonight. It's down the road. Do we do it? Do you want to come with me? He says, yes. And we show up and it's about real estate education. And I went, oh, this is interesting, because I had this previous interest in learning about real estate. And here I am. And then, of course, we're in the sales funnel. So the free two-hour workshop is to sell us a three-day weekend course, which we hesitantly jump in and do. And then the rest of the story, that's when we learned about rent to own. And all the different ways that you can invest in real estate. So we were just thinking, like I was thinking, you buy a house with a basement suite in it, and you rent it out, and that's how you make money. I wasn't thinking that there was any possibility of doing anything more creative than that. So learning about fix and flips, buying small apartment buildings, and rent to own, and rent to own. My husband and I went, wow, that's cool. And I went right back to that black spray paint night where I showed up, and I thought, how do we get good tenants and not deal with that headache and hassle of people not paying rent or destroying your property? And all of a sudden, it seemed like that just made sense to me. I'm like, we can invest in real estate with this beautiful end product that we're helping other Canadians who are probably just like me, went to school, got the good job, bought the brand new car, and aren't able to qualify or whatever situation that they're in, and we can help them qualify and make some money in doing it. So that really appealed to both of us, and I really thought about my situation and without my partner that I would have been renting for a couple of years and trying to figure out where I went wrong in my process of getting to home ownership. So yeah, that's how I started. It's so interesting you explaining the necessity of having better tenants, but then also the humility and the willingness to then change something that you're doing, because if you want a different outcome, then you have to change your actions. And I think that scaffolding approach to supporting the tenants is, as an educator-- and I know yourself, you're an educator as well-- it just makes so much sense. And it's so human too, which I love about the premise. I think really, as educators, when you reflect on your own education process, I don't really remember learning anything about financial education. I remember them bringing in a guest speaker to talk about RRSPs. And I think it was some salesperson from a bank that actually came in and spoke to us about investing in RRSPs, but that's the only financial education that I remember receiving. And for a young person, that seems so far away. And even going into a bank, even I feel when I go into a bank by myself, I feel a little uncomfortable. So I think that representation is really important when we're talking, especially to kiddos, young kids, about financial literacy. And I was actually doing a podcast with another guest, a realtor, and she goes into schools and speaks about financial literacy from young kids all the way up to their parents. And I think that approach, because there's then an actionable step. I think that approach is so much more effective rather than saying, oh, talking about money as if it's this thing that's above us that we don't actually have right now, I really think that there's value in talking about actionable things that kids can start right now doing. So that-- and I mean, that's a bit of an aside. But I really do think that we are doing youth service by not showing them people like themselves who are doing things with their money and building wealth. And hence, the need, I think, for this podcast. So I do appreciate you sharing what you know. And to get a little bit more into the rent-to-own program, can you tell us a bit about who your client is? I know you mentioned that they may have credit challenges. I'd imagine maybe some new Canadians who are building credit. But who is your client? Our clients are very diverse from young people in their 20s to people in their 50s with all sorts of different life circumstances. So we have some young couples in our program that were in the middle of the pandemic living in their parents' basement and said, whoa, we need to get out of here now. And a lot of them were watching their friends buy houses and said, hey, how come we can't buy it? Like, what are we doing wrong? And-- You may not have generational wealth. Unfortunately, that's probably the only thing that is a miss for you. Yeah, so yeah, parents who can't afford to give them that down payment or one of them was in a contract position. So that was negatively impacting their ability. So even though their salary was quite high, because they weren't that long in a contract position, another one was an entrepreneur who was making good money, but writing off a lot of it. So therefore, it looks like you're not making good money. So then that's a conversation with the accountant involved in the accountant. And just looking at, so how can we do this for the next few years so that you can show more money on the books? And some people don't want to do that because they don't want to pay the government money. And then we just say, OK, well, if you pay this amount of money, then you're going to be able to qualify for a mortgage. And then for the next couple of years, just use that same laptop and that same vehicle and those things. And then you can replace them later on after you're in your home and you need some more business right off. So having some of those different conversations with young people, small business owners, again, of all ages, people who are divorced, their family structure looks different. We have helped people who tried something during the pandemic and then it didn't work and they had to sell their house and go back to working for somebody. So they went out and bridged out into entrepreneurship at probably the worst time. And a lovely couple who then had to get themselves out of trouble, sold their house, helped their daughter who was in a bit of financial trouble too and then moved to different provinces. So we're seeing a lot of that too, where people are moving cities or provinces. They're saying, you know what, housing affordability in this city is just-- it's never going to be-- we're never going to make enough income based on the prices in cities like Toronto and Vancouver. And we're seeing people move to different cities and different provinces and saying, OK, we want a home and we're going to do rent-to-own and get started right now. So yeah, lots of different options. That's really interesting. So pretty much anybody who's having some challenges becoming a homeowner for a variety of reasons. So I'm going to ask you a question, a kind of chicken egg question. Do you folks source the property and then source the tenant? Or do you find the tenant and they find their own property? Or does it work a completely different way? We are people first. Love that. We are people first. We find the people. So sometimes that's hard because people don't know that rent-to-own exists. They don't know that we exist. So we've been busy trying to build our brand and get our names out there so that people can find us when they've heard no from the bank. And then we give people as much as we can of the home buyer experience as possible while they're in our program. So they're going out with the realtor. They're setting their parameters. We work with mortgage brokers to work backwards to determine, OK, so in my case, it would be pay off your student loan, pay off that car, or sell that car and buy a car cash, if you can. Make sure you don't have any credit debt. Whatever the reason it-- whatever it is that they are missing for traditional lending, we kind of work backwards and give them a plan. And then we send them out shopping within their price range. They pick the home. They pay for the home inspection. And now they only have to pay for the home inspection once. And that's at this point, because in two to three years, typically, they're going to buy the house off us. And at that point, they know all the little intricacies of the home. There's no surprises there, because they've been living there for a couple of years. So that is one expense for them. And then they're paying utilities maintenance and repair, just like you would as a homeowner. They've got our team with them. So we're using expert home inspectors. We're reviewing the home inspection for them. So this is really great as a first time home buyer too, because as a first time home buyer, you have no idea. And every profession, not all realtors are built the same. Not all home inspectors are built the same. So we have almost 10 years of experience in rent to own now. And we're working with a team of professionals that we know are going to look after our tenant buyers, making sure that they get a great home. And we reduce any risks of them buying a home that's going to be a money pit with the home inspection. And then they get in there, and they can fix it up and do whatever they want to it, which I think is lovely. Because as a renter, some renters go in, and they do things to improve the property that they're living in. But that benefits the landlord. That doesn't benefit them. In our program, that benefits our clients, because we have a predetermined future purchase price, which means any sweat equity that they're putting into that property goes right into their own pockets. So if they're building a fence, if they're updating a 1980s style home with some paint, anything that they do to improve that home is going to increase the value of the home for them, because they have a predetermined purchase price. And it makes it theirs, right? And it makes it theirs, yes. In a way that you can't when renting. I know that that, for me, when I bought my first home, that was a huge mindset shift, that kind of the thought of making do for now, as opposed to the thought of building for the future. And that then really translates into all areas of your life. So I think that that's a real gift, that your clients get to enjoy that while they're working towards home ownership too. And I think that the way you folks are finding the properties and finding the tenants, I think that that is a beautiful model so that you're really matching somebody with something that they want. You're not selling somebody on something that they don't want or that they don't need. It's really a good fit. So I'm going to segue into another question that arose as soon as I googled rent to own. And I'm sure anybody else who's listening to the podcast has googled rent to own. And you're presented with some scams or people saying that they've been taken advantage by such a program. I am a huge proponent and advocate of finding your dream team. So I think that working with anybody in the finance or real estate space, because it is a huge investment, probably the biggest one you will ever make, you need to ask questions. And not everybody you meet is going to be your person. So if I am an individual looking to enter into your program or anybody's rent to own program, what things should I be cognizant of and what should I be asking of the individuals that I want to work with? Great question. And kind of leading into what I said about other professions that not all realtors are created equal, not all rent to own companies are created equal. And I think that definitely was one of our concerns was starting our business is how do we create a great name and a great brand that people can trust when there are companies that maybe operate a little differently out there in the market. And so I think it's really important that you take your option to purchase contract and seek independent legal advice. So when you're looking at a company that you want to work with, when you have their option contract in your hand, they should be advising you to seek independent legal advice. I would also say if it seems too good to be true, I would really stop and ask that question. I have seen the no money down rent to own programs. I haven't looked into them in detail, but I would say if it seems too good to be true, what's going on there? Like why would somebody let you choose a home, pick it out by without you putting anything down into it? So that to me might be a little bit more risky. You would want to look at any references that they have. Do they have any reviews online? And you want to spend some time asking them questions about how they operate, what happens if. So in our circumstances, like when you look at our contracts, they're very black and white. Of course, because they have to be just like any mortgage documents that you would receive from any bank, they are very black and white. You want to take a look at and say, okay, well, what's going to happen if I'm struggling to make a rent payment or I miss a day? So I'll give you an example. Our very first tenant buyers bought a house in Barry in 20, we bought them a house in Barry in 2015. We predetermined the purchase price for 2017. Between 2015 and 2017, the market went way up. And one month, they were late one day. She just forgot to send me the money. It was an e-transfer, she forgot to send it. Oh my goodness, Brandi, I'm so sorry, sent it, no problem. According to our contract, that would break the contract. But that's a human moment, right? That's a human moment. She wasn't trying to be deceitful. She did not pay for eight months. They looked after the house, they improved it, they did everything, they were fantastic tenants. And so in 2017, we had agreed upon the purchase price in 2015. And not only was that way below market value, but they had also put a ton of sweat equity and made that place beautiful. So they bought that house. It was the cheapest house in Barry that was sold in 2017. - I bet. - I guarantee. And they had a ton of equity in the home. And so you wanna make sure you're working with somebody that isn't going to say, well, they were late for rent on one day, you broke the contract. Now I get all the money, you don't get the house. Which I think, I mean, that would be extreme, but people are human. Why they would do that, would they do that? I don't know. You hear horror stories about every profession, but that would be maybe the conversation that you would wanna say, okay, well, what happens if this? And really, if you can get in touch with anyone else who's done the program through the company that you're working with, that might be a great way to really ask a lot of good questions and figure that out. If they have video testimonials or testimonials online, and really get a sense for the people behind the company. Because I think that's the most important thing. Because at the end of the day, for us, we were super grateful. Our first rental experience, we had great tenants, we made our money. We would have made a lot more if they walked away from the house, sure. But at the end of the day, our peace of mind and the fact that I slept well for two years, knowing that they were looking after the property and became homeowners, that's what I wanted. I didn't want to be dealing with spray-painted houses, right? - And as a business owner, and we do on this podcast, talk a lot about entrepreneurship, that's a sustainable business practice. Being kind and understanding and empathetic, especially when you're working with the biggest purchase of somebody's life and supporting them through it, is just basically good business. So I would absolutely agree. And I encourage everybody when they speak to real estate agents or mortgage agents, ask them if, A, there might be somebody they can put you in touch with to chat with. Or look at their Google reviews. Ask for video testimonials. Look at their social media pages people are interacting with them as tenants. Like, oh, you helped us so, we've helped us so much. We loved our experience with you. That's valuable. That will tell you kind of what kind of business the individual is running. So I think that's great advice, Brandy, thanks for that. So when I interview people, I always ask them to promote anything else that they are doing. So, and I think that you may have something that you released not too long ago. I have created a guided journal for people who don't journal or who want a little bit of assistance journaling. And it's about goal setting and manifesting your goals. So great for tenant buyers. So great for people who wanna be homeowners because the first line at the top is about your goal. So it's I am. So if you wanna be a homeowner, you would be writing I am a homeowner. And then the action steps that you will do each day to get there. So it's a quick three-minute journal. You write in it morning and night. It has that manifestation piece of believing that that is possible, that hope for homeownership that you can do it. And then it's the steps to get you there. So it's obviously more generic, so it can work for anyone. We used it to reach financial freedom in our business. So be able to replace our job income in our business. That's what my partner and I used this method after we reached financial freedom and we're able to, we're in a position where we could leave our jobs. That's when I said I really want to now share this with other people and help them achieve whatever goals or dreams that they have. - That's incredible. And Brandy, actually we haven't talked about the journal at all, but I'm so glad that you shared that. Journaling has been huge for me in my career transition. And I think it's so helpful whenever you're making a change. Or like we said before, when you see the outcome and you want to change the outcome, the actions then have to change. And it does start with your mindset. And I'm a huge fan of, or proponent of manifestation and how that plays a role in your life. And that gives you actionable steps to follow, right? I think that's such a great creation. And where can people find it? Of course, put the link in the show notes, but where can they head to? They can head online to Amazon or Walmart or Indigo, Barnes & Noble. There's, I think there's over 30,000 different distributors, but the big ones are the ones that I've listed there. So available online, it's not in any stores yet. I'll say yet, 'cause that is one of my goals is to get it into some local stores, but definitely online. And there's two versions. There's a paperback and hardcover version. So whatever your preference is. - So I'm learning about you, Brandy, that you do everything worldwide, or everything nationwide, worldwide. (both laughing) That's amazing, awesome. Well, oops, sorry, just had to pop up there. So that is it for my interview, but I want to thank you so much for sharing all of your knowledge about rent-to-own and about finding great professionals that are a good fit for you. And for talking about your journal, I think that these are things that are really gonna help all of my listeners. And I think it's a great option. And can, how can people reach you if they want to learn more? - Ooh, on our website would be a great place to start. So that's Sprout Properties. So www.sproutproperties.ca. We are all over social media. So if you're a TikTok fan, you can find Sprout Properties on TikTok. If you like Instagram, Facebook, Twitter, we are on all those social media platforms. And of course, you can reach out directly to us through our website under Contact Us Now. So that's how you would find me. But my social media manager, if you message me on any of those platforms, then that will, if you're looking to talk directly to me, then they will reach out and find me. - Awesome, I'm so excited. I hope that people are excited about the program and take advantage of the support that you folks offer. I think it's a really incredible opportunity. - Thanks so much for having me. - My absolute pleasure, Brandy.