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…

  1. You don’t want to get 3 am phone calls from tenants saying that the toilet needs to be fixed.
  2. 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.
  3. 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?

Epic Alliance Saskatoon Reviews

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:

✅ Input your email on their newsletter sign up here.

 

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:

  1. 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.
  2. 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:

  1. Contact Epic Alliance so you can evaluate together what your investment goals are and whether the Hassle-Free Landlord Program is the right fit.
  2. Select the property/investment you’re interested in proceeding with.
  3. Contact a mortgage broker or bank to get a mortgage pre-approval. Make sure you let them know you are purchasing a rental property.
  4. Get a real estate lawyer.
  5. 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.
  6. Before the house closes, get the house insurance.
  7. Rent the house back to Epic Alliance for 2 years. Epic Alliance will sublease the property to a tenant.
  8. 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.

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What happens at the end of the 2 year contract?

You have 3 options:

  1. Extend the contract for another 2 years. At the end of those 2 years, you have the same 3 options again.
  2. 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.
  3. 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).

epic alliance real estate inc

 

How does flip investing work at Epic Alliance?

Flip investing is much simpler. Here are the steps with an example:

  1. 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. 
  2. 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.
  3. 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 properties

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 strategyThere are many schools of thought on this. Like the above point, this is another factor that depends on your risk profile. 

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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!

 

 

 

       

Review of Epic Alliance

 

What’s your review of Epic Alliance?