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Want to own a house but don’t have the money?This Toronto tech company can become an owner resident with a 2.5% down




Toronto entrepreneur Jordan Taylor rented a nice two-bedroom condo for $ 3,000 a month while trying to find a way to withdraw his savings enough to buy into the real estate market.

Later, 30-year-old Taylor saw an ad on Instagram for Toronto’s “real estate technology” company Key. It aims to help people build a foothold “decades early” on a local real estate ladder with a 2.5% down payment. Instead of saving the typical 20 percent that delays the building of fairness.

The company runs a so-called “innovative shared model” where people can become co-owners of condominiums and live there, giving them the opportunity to build fairness over time. increase.

The key is the latest in the trend towards split ownership, which is a way for people with reduced purchasing power to enter the market due to rising real estate prices in the city.

But unlike other companies such as Addy Invest, BuyProperly, RealtyShares, where investors buy stock in the building and make a profit from rental income, Key is where people live in units and the company is “owner-resident”. I request that it be what I call. In a condo owned by another investor.

But like any other real estate, one expert points out that if the market is sluggish, there are still inherent risks.

Taylor toured the condo this spring and decided to become an owner resident on April 12. He officially moved to a two bedroom in the West Queen West area on June 1st.

“It took me years to be able to transfer ownership of all kinds. Key helped me hack the entire timeline myself,” he says.

The owner resident pays a monthly fee — a little cheaper than the market rent. The more you invest, the less your monthly fee will be.

These monthly fees will be used for utilities, building maintenance, property taxes, financing costs and more. Owners Residents also pay a proportional amount of repair and maintenance.

The “owner-resident” also pays $ 50 per month for ownership of the condo. They can choose to increase their monthly payments and take over the mortgage after three years and finally try to take ownership.

For Taylor, that all means paying about the same amount as he rented a previous condo. This includes monthly capital.

“I’m excited that this worked so well for me. The timing was perfect. It was easy to set up and the stars were really aligned,” says Taylor.

Daniel Dubois, who co-founded Key with Rob Richards, states that the company’s mission is to “create a world where real estate is the source of freedom and prosperity.”

“We will address two of the biggest challenges associated with being able to own a home for Canadians. The first is a large down payment and the second is the ability to qualify and serve traditional mortgages. “Dubois continues in an interview.

There is no bank involvement in ensuring mortgage approval, but residents must show, among other things, that they have a stable income and have the means to make monthly payments. ..

According to Richards, Toronto currently has 800,000 condos that are primarily owned by investors and rented to “aspiring owners.” In the latter, soaring home prices have made ownership dreams even more out of reach. Faster than wages.

The key works by partnering with the real estate owner (people who already own the condo) to secure the unit. Key states that this real estate investor’s capital is coordinated with the owner’s capital to “make up for the cost” of home ownership.

Key states that the majority is profitable by becoming a suite real estate manager, building real estate fairness, a digital exchange and market for owners and residents.

There are owner and resident contracts that are outside the scope of the Home Leasing Act. With the Key, residents can be notified of a short 75-day move-out and can bring back their accumulated shares. You only have to pay Key a 1% transaction fee for the stock you invested.

The property owner cannot sell the condo for the first three years, after which the owner resident must be notified 6 months in advance. The latter have the first veto — they can apply to buy the unit at a fair market price.

The company plans to expand its reach to single-family homes, semis and townhouses soon.

The company recently completed a beta test with 20 participants in 14 condo suites in downtown Toronto.

Key predicts that owner and resident capital will rise by 30% over the next five years, based on real estate market performance over the last five years. However, Key warns that new resident owners are at risk of their real estate falling.

Matti Siemiatycki, a professor of geography and planning and director of the Institute of Infrastructure at the University of Toronto, states that Key’s model “still needs a lot of scrutiny.”

“(Key) has fairly large players in venture capital and private equity involved in this. Those people will also want a return on their investment. Their long-term hold is these. Does it mean that it is in the evaluation of the (condominium) unit?

“Is it a profitable play here? How are (investment) returns generated, especially if the unit is rented below or at market rates? A little more about how that part works. I want to know, “says the professor.

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