What happens if things go bad?
by Steve DeVoe
(Mississauga, Ontario, Canada)
After reading your book I'm more intrigued than ever. But I'm curious, particularly since a lot of this comes from the U.S., what happens if/when the market makes a correction.
I can't help but envision owning x number of homes, the market drops by 10% or more(if we are in a bubble not an outlandish possibility)and all your rent to own tenants realize the house is worth substantially less then they have it optioned for. They no longer are willing to pay a higher rent since they know they likely are not buying the house at the agreed price any longer. Further, it seems conceivable to me that if they know they are going to loose their deposit anyway if they opt not to buy at an over market price at the end of the lease they will just walk away.
Is it not a possibility that in a down turn (Similar to the U.S. today) that you could end up with a substantial part of ones portfolio vacant and thus a real problem with cash flow to cover the mortgage payments?
What has happened to your U.S. members where the values have dropped by huge percentages?