Review of Epic Alliance and their Hassle-Free Landlord Program
Are you interested in getting rental income because you know that it will help you with your financial goals, but…
- You don’t want to get 3 am phone calls from tenants saying that the toilet needs to be fixed.
- You don’t know how to select a good house with a solid foundation that isn’t going to bleed you dry with repair costs.
- You don’t want to be stressed about unforeseen vacancies and worry about how to cover the mortgage costs.
This was how I felt in 2018…
You might have noticed from my other posts that I have rental income. I earn $700 in rental income (before taxes) every month.
You might be surprised to find out that…
- I didn’t do it the traditional way and buy a property, get renters and manage the issues myself.
- I actually don’t manage the tenants OR pay for repairs!
How does this happen?
if you make a purchase, I may earn a small commission, at no cost to you.
I earn this rental income PASSIVELY through the Hassle-Free Landlord Program at Epic Alliance.
Since there aren’t many detailed reviews about Epic Alliance and the Hassle-Free landlord program online, I know this review will help readers make a more informed decision.
One thing you should know:
Epic Alliance is currently only available to Canadian investors, BUT…
It will be open to U.S. investors by the Spring of 2020! I heard this news directly from the owners – they haven’t even announced it on their website.
If you’re curious about new or upcoming opportunities with Epic Alliance:
In the meantime, here’s my experience and more information about Epic Alliance.
In this post, I’ll cover:
- Who is Epic Alliance?
- What is Epic Alliance offering investors?
- How does the Hassle-Free Landlord Program work (with an example)?
- How does the flip program work (with an example)?
- My experience with Epic Alliance including pros, risks, and learnings
Let’s get started!
Who is Epic Alliance?
Epic Alliance connects investors and tenants in the purchase, management, and sale of properties. Here are their most recent stats I attained directly from the owners:
- They manage over 300 properties in Saskatoon, which is a portfolio of $50 million dollars.
- They have a team of over 45 skilled tradespeople.
- They work with 133 investors.
What is Epic Alliance offering investors?
Epic Alliance offers 2 investment opportunities:
- Hassle-Free Landlord Program: You become the landlord and own a rental property for 2 years (you sign a 2 year contract). Every month within that term, you get a rent cheque for 15% annual return of your down payment and closing costs.
- Flip Investing: You invest a lump sum into a house flip. At the end of the flip (which is typically between 1-6 months), you get a 12% annual return for your investment.
How does the Epic Alliance Hassle-Free Landlord Program work?
Here are the steps to join the program:
- Contact Epic Alliance so you can evaluate together what your investment goals are and whether the Hassle-Free Landlord Program is the right fit.
- Select the property/investment you’re interested in proceeding with.
- Contact a mortgage broker or bank to get a mortgage pre-approval. Make sure you let them know you are purchasing a rental property.
- Get a real estate lawyer.
- Purchase the house from Epic Alliance and work with your real estate lawyer to complete the paperwork and submit the down payment and closing costs.
- Before the house closes, get the house insurance.
- Rent the house back to Epic Alliance for 2 years. Epic Alliance will sublease the property to a tenant.
- Every month from the day you take possession of the house, Epic Alliance will send you the rent, which you will use to pay the mortgage, insurance and property taxes. The remaining amount, which will equate to the 15% annual return of your down payment and closing costs, will be your payout.
Throughout the term, Epic Alliance will manage all tenants. Any repairs, maintenance, and vacancies will be managed AND financed by Epic Alliance.
I recommend that every time you get a quote, whether it’s for the mortgage, insurance or real estate lawyer, share it with Epic Alliance so they can confirm that it works with their numbers for when they calculate the monthly rent payout.
What happens at the end of the 2 year contract?
You have 3 options:
- Extend the contract for another 2 years. At the end of those 2 years, you have the same 3 options again.
- Sell the house back to Epic Alliance at the same price you purchased it. As you’re selling the house for the exact price you purchased it, there are no capital gains. Epic Alliance will also issue you an invoice for the principal that’s been paid down, which is how they get paid.
- Keep the house (and dissolve the contract with Epic Alliance) and pay them for all of the expenses and repairs they did to the house during the 2 year term. Exercising this option would only make sense if the house had a large appreciation.
If you’re confused with these options, it might make sense to go over how real estate investors with rental properties make money.
There are 3 ways:
- Rental income by leasing out the property to tenants: cash flow after paying all the expenses like the mortgage, insurance etc.
- Appreciation: increase in the property value from the initial purchase price
- Mortgage principal paydown: the growth in equity after paying down the mortgage
With the Hassle-Free Landlord Program, you get the rental income.
If at the end of the contract you decide to sell the house back to them, Epic Alliance gets the appreciation and mortgage principal paydown.
If you choose to keep the house and dissolve the contract and pay the applicable fees, you’ll get to also keep the appreciation and mortgage principal paydown.
All of these terms will be outlined in a lease agreement and rent-to-own contract.
If you would rather get paid fully or partially in mortgage principal paydown as opposed to rental income, they can customize a payout structure.
Hassle-Free Landlord Program Example
Here’s an example using a 15% annual return:
- You purchase a house for $175,000.
- You fund the down payment of 20% = $35,000.
- You get a mortgage for the remaining 80% = $140,000.
- Closing costs would be roughly $3000.
At the time when I was looking to participate, they had 24 houses available ranging from $115,000-315,000. In speaking with the company, they attain around 5 houses a month so the inventory is constantly changing.
Your total investment would be $38,000 ($35,000 down payment + $3000 closing costs).
Your total return would be $11,400 (15% * $38,000 * 2 years).
This return would be paid out as $475/month ($11,400/24 months) in the form of rent. In that same monthly rental payment, Epic Alliance will also give you cash to pay off the mortgage payment, property taxes and insurance.
Here’s how Epic Alliance would pay you each month:
- Mortgage payment = $799 (using a 2 year fixed term mortgage rate of 3.5% amortized at 25 years)
- Property taxes = $160
- Insurance = $150
- Cash flow = $475
In this example, the total rent paid to the investor each month would be $1484 ($799+$160+$150+$475).
At the end of the 2 years, if you decide to renew the contract, you will continue to collect the same monthly rent for another 2 years.
If you decide to instead sell the house back to Epic Alliance, you will sell it to them for the original purchase price of $175,000. They will issue an invoice for $7286 (amount of mortgage principal that has been paid down over that period).
How does flip investing work at Epic Alliance?
Flip investing is much simpler. Here are the steps with an example:
- You give them a lump sum. For this example, we’ll use $150,000. The last time I inquired about this, $150,000 was roughly the minimum they were accepting, but you should inquire to confirm if you’re interested.
- They use this money to purchase and renovate a house. It’s likely that the house will be made available to investors in the Hassle-Free Landlord Program.
- When the house is sold, you get your return. In the example, you would get $1500 (12% * $150,000 / 12) for each month you loaned them money.
They typically have short-term flips of 1-6 months. When I was researching real estate financing opportunities, this was one of the shortest terms I came across. If this flip took 3 months, you would get $4500 ($1500 * 3 months).
My experience with Epic Alliance
It’s been 1 year since I invested with Epic Alliance and I’ve had a good experience with them thus far.
I have only invested in the Hassle-Free Landlord Program, but I’m seriously considering doing the flip in the future.
The hardest part of deciding whether to invest was when I discussed the opportunity with my family and friends. Naturally, I received a lot of concerning questions and comments like:
1. You’re investing in Saskatchewan? Why are you not investing in markets you know like Vancouver or Toronto?
Honestly, I’ve never been to Saskatchewan. According to the Saskatoon Region Association of Realtors, the average house price grew by 10% between September 2018 to 2019.
If I found opportunities in Ontario or Vancouver, I would invest there because I would love to occasionally drive by the house. Unless I partner with someone, the housing markets in Ontario and Vancouver in the areas I’m interested in are out of reach.
2. Why don’t you just do this yourself? Purchase an investment property and rent it out?
I have heard so many horror stories about the unexpected potentially huge costs of being a landlord. This ranged from paying huge repairs to going through the landlord and tenant board and legal channels because the tenant doesn’t pay rent or refuses to leave. I just didn’t want to go through any of that.
I could go through the learnings of doing this myself, but this would require extra time that I would want to spend doing other things. I didn’t want to be a landlord. I wanted to be a passive investor.
I also love the idea of partnering with someone who has knowledge and experience in this area.
3. You don’t know this company from a hole in the wall and you want to do business with them?
I heard about Epic Alliance through a real estate investment group in Toronto. I had gone to one meeting and was on their email list. I heard about the Epic Alliance opportunity through one of their webinars.
I barely knew anybody through the process from the real estate investment group to the people running Epic Alliance.
The first time I met Rochelle from Epic Alliance was actually AFTER I had taken possession of the property. She just so happened to be in town for business and asked if I would be interested in meeting.
That said, I did my research:
- I looked up everything I could learn online about them including their website and social media accounts, presentations, interviews, and reviews. (I even looked up the social media accounts of the reviewers of their product.)
- I had several calls with Rochelle and asked numerous questions.
- I had the real estate lawyer review the contracts.
- I did due diligence on the house, which I’ll discuss below.
I was new to this whole world of real estate private lending and it felt scary. It’s not the most commonly known way people invest.
When I started getting serious about this opportunity, I was excited, but incredibly anxious. I lost lots of sleep worrying that this was a scam.
When I decided to go for it, my stomach was still in knots, but I knew that nothing ventured is nothing gained. I had been looking at other real estate opportunities and this was the best fit.
Now that it’s been one year and I’ve been able to reflect, I’m so glad I did this!
Epic Alliance Pros
Here is what we’ve liked about our experience with Epic Alliance and the Hassle-Free Landlord Program:
- Rental payments have come on time every month.
- There’s security. If there is a default in rental payments, I still have the house, which I can sell.
- I have not received any communication from tenants. In fact, I don’t think the tenants even know the house is owned by someone else other than Epic Alliance because Epic Alliance is their point of contact.
- This rental income is a way to diversify from the stock market.
- If I want to continue renewing the contract with Epic Alliance every 2 years, I don’t have to resubmit all of my income statements and re-qualify for a mortgage. It’s as simple as signing on the renewal form dotted line. This is ideal if I’m in retirement and are no longer earning a full-time income.
Risks with Epic Alliance
Like with every real estate investment, there’s risk involved:
- They were established in 2014. They’re a young company, but 5 years is much longer than most start-ups. A little more than 50% of startups make it to their 4th year.
- As the house owner, if anything happens to the house and an insurance claim needs to be filed, my insurance would go up. As I don’t oversee the tenant management process, this is not within my control. That said, Epic Alliance has over 100 properties so they have way more experience than I do selecting and managing tenants! It’s definitely not in Epic Alliance’s best interest to be negligent about tenant management as in the end, it’ll be their property.
- They had an average 3.4/5 stars for their reviews on Google. This was alarming! When I read through the reviews, I noticed the 3 one star reviews had spelling and grammar mistakes. The 1 star reviews claimed to be from renter or from a person who knew someone who used to work with them, or they were just vague about their position. There were no 1 star reviews from investors. It’s certainly a judgment call, but I chose to ignore these reviews.
- I used my HELOC for the down payment as opposed to using cash. In other words, I borrowed money against my house to make this investment happen. I initially got this idea from the book Rich Dad Poor Dad, which is one of the bestselling personal finance books of all time. (You can check it out on Amazon or Audible, the world’s largest selection of audiobooks. If you don’t have Audible, you could get a free trial for 30 days, which gets you 2 free books.) To some, using your HELOC is too risky even though it’s a common real estate strategy. There are many schools of thought on this. Like the above point, this is another factor that depends on your risk profile.
Here’s the biggest risk:
How do I know this house is worth the price they mentioned?
I don’t know how to evaluate house quality. If they default on rental payments, I could be left with a “lemon”.
Ultimately, even though Epic Alliance showed us their appraisal, I wanted to get a house inspection done by a third party. I knew it would be an extra $420 that would eat into our profits, but we wanted to be certain. We knew we could always deduct the expense if we went ahead with the deal.
The house inspector confirmed that the property was good. Do I regret this expense? I would do it again without question.
Note: If you don’t want to proceed with a house inspection, you could go the cheaper route of searching land property records (usually under $100). Check for liens and anything that doesn’t match what you’ve been given.
Learnings with Epic Alliance
In this process, here are 2 things I’ve learned that I would have done differently:
1. Prepare if property taxes go up substantially.
As the current property taxes are only taken into account in the initial calculation of the monthly rent owed, there’s no practice to address an increase.
While property taxes usually go up once per year and the contract is 2 years, you’ll only see a maximum of 2 increases.
For us, property taxes have gone up by $11/month within 1 year. It’s a small amount and Rochelle actually rounded up when she did the initial calculation, but it might be worth mentioning how this can be addressed if property taxes do go up substantially.
2. Go with a LOCAL mortgage broker/bank and real estate lawyer.
Local professionals are up to date with local laws and practices.
I initially went with a non-local mortgage broker. They validated all of my numbers and did an appraisal on the property, but there was an issue at the end.
The house I was purchasing was on 2 lots. In order for the bank to fund the mortgage, we would have to merge the 2 lots into 1, which would cost extra money. I found out later that this was a very common practice among older properties in Saskatoon.
In the end, I decided to go through a different mortgage broker to avoid the additional fees. I went with Char Weightman who is on the Epic Alliance team.
I highly recommend proceeding with Char. She was quick to process all of the information in the mortgage approval process. She was able to get a mortgage through a bank without us having to incur the additional legal fees of merging the 2 lots into 1!
Learn from my mistake and just go with Char or a local mortgage broker from the beginning! You won’t have to undergo an additional credit check!
Final Thoughts about this Epic Alliance Review
If you’re interested in learning more:
Connect with Epic Alliance and book a discovery call.
If you would like to chat further about my experience, let me know. I can walk you through the process in detail, tell you which insurance agency and real estate lawyer I used etc.
If you have any experience or stories about real estate private lending, share it in the comments!
Hi Jacqueline. I enjoyed your review of Epic. I am doing some research to perhaps invest as well. I am in a different position than you. I am 60 & have not handled my finances particularly well and am not retired yet(if ever!). I am having a hard time convincing my wife this may be a good investment option.Your page is very clear but I wonder who pays the legal costs when you sell to Epic? They get the difference in mortgage pay down but do we have to pay our legal costs out of our own money or do we deduct from the mortgage pay down we send back to Epic? Thank you, sincerely, Steve.
Thanks for your comments and great questions, Steve. As long as you use their lawyer when selling the property back to Epic, they will cover the seller’s legal closing costs.
What happens if you exit after the 2 year contract? What are all the fees involved with selling it back? Taxes, closing fee, and mortgage penalty fee? At the end of the day, is it really 10-15%?
Thanks for your comment and questions, Harry. I actually just exited the 2 year Epic Alliance hassle-free landlord program contract. The reason is because the interest rates are low and we want to use that money towards another real estate opportunity. Now that I’ve gone through the closing process with Epic Alliance, I can confirm that there are no closing fees as long as you use their lawyer. There’s no mortgage penalty fee because you’re signing a 2 year fixed term mortgage that ends. You’re right that you would be paying taxes, but this would be the case for any other income you earn.
Hi Jacqueline, will you be discussing the real estate investment that offers a better investment rate then Epic Alliance? Great website!
Thanks for your kind comments, Lisa. I ended up investing with my brother who’s on the management team at Bold Properties.
Excellent Summation. I am still not clear who pays the insurance fees. It sounds like I get money from Epic to pay all the expenses. Sounds like a lot of work on my end. I have many other investments and love the 15% hassle free returns as long as it actually is 15%. Was your exit strategy truly hassle free? and when you had to pay back the principle pay down, how easy was it to do?
Thanks for your comment, Angie. You technically pay for the insurance (as in it comes out of your bank account), but Epic Alliance pays you this amount for the insurance in advance in the form of a rent cheque. Yes – the exit was very straightforward. They sent me a report card summarizing the activities over the 2 year period at the end. The lawyer handled everything including the principle pay down. I definitely recommend you check all of the numbers with them and the lawyer so there are no mistakes.
Great post, just wanted to make sure I am following correctly on the option 2: sell the house to Epic Alliance where they would issue an invoice of $7286? Are you saying they will pay you the difference between original purchase price – |2 years of principal pay down ($175000 – $7286 = $167,714)?
Thanks for your message, Kate. When you go with option 2 and sell the house back to Epic Alliance, they will issue you an invoice that amounts to the principal pay down. In other words, you will have to pay back the principal pay down of $7286. That’s what they get from the deal. If you go with their lawyer when selling it back, the lawyer will ensure this pay down is applied accordingly. You can use that invoice to lower your rental income that year.
Hi Jacqueline,
So in option 2 the returns would be less than 15% right, since the investor will be invoiced the principal paydown?
Thanks for your question, Jim. I just posted a response to Rolando who had the same question. All the best on your investment journey!
At the end of 2 yr and paying back the principal pay down of $7286 if you calculate the net ROI then its way less than 15%
Thanks for your comment, Rolando. I can see why you would think that the principal pay down should be deducted from the 15%.
Just to clarify, Epic gives you the money to pay down the mortgage every month. You’re not paying for the mortgage. The 15% that they give you is in addition to the expenses (like the mortgage) that you need to pay on the house every month.
At the end of the 2 year term, since you’re selling the house at the exact same price that you purchased it and the house has been paid down due to them giving you the mortgage payments every month, if you were to keep the principal paydown, you would be making 15% + principal paydown, which is not the agreement. I hope this makes sense!
Hi Jacqueline. Great article. I am considering investing with EPIC. Their fund a flip interest payment has decreased over the years from 15% to 12% and is now 10%. You had mentioned that you have found a better real estate opportunity with a better interest rate. Will you be sharing what that opportunity is? Thank you.
Great Article. Had questions if you don’t mind helping with:
1) how does Epic earn from this apart from appreciation?
2)what is the tax angle on the rent receipt? Can i deduct interest exp, property taxes , insurance from the rental income?
3) i see Jodie from beyond the bank also mentions them. Is it the same if i go through Jodie or Epic?
Thanks
Thanks for your comment!
1) Epic gets the principal paydown at the end of the transaction if you sell the house.
2) I highly recommend consulting an accountant on what you can deduct given your situation.
3) From what I remember, Jodie went through Epic’s fund a flip program. If you want to proceed with Epic’s programs, you’ll have to go with Epic directly.
I hope this answers your questions. All the best!