How to make profits with rent to own real estate investment
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“How to make PROFITS with Rent to Own” Real Estate Investment. Rent to Own/Lease Option. What is Rent to Own/Lease Option? How to make money with it?. Who am I?. Crazy Thomas Thomas Wong Your rent-to-own specialist A real estate investor with a process improvement background

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“How to make PROFITS with Rent to Own” Real Estate Investment

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“How to make PROFITS with Rent to Own” Real Estate Investment

Rent to Own/Lease Option

  • What is Rent to Own/Lease Option?

  • How to make money with it?

Who am I?

  • Crazy Thomas

  • Thomas Wong

  • Your rent-to-ownspecialist

  • A real estate investor with a process improvement background

  • Have done over 40 rent-to-own projects in the last few years

What is Rent-to-Own?

  • Rent-to-own your home

  • Lease with option to purchase

  • The program

    • Small initial deposit (part of down payment)

    • Monthly payment (partly rent, partly toward down payment)

    • Option to purchase the house at the end of the lease term

The Differences among Rent-to-Own’s

  • There are no regulated way of Rent-to-Own

  • Potential variations:

    • Initial deposit requirement from tenant

    • Amount of credit toward down payment each month

    • How to establish future purchase price

    • How to handle expenses during the term

    • Types of contract:

      • Lease with option to purchase

      • Co-occupancy contract

Why Rent-to-Own? – Tenant

  • Opportunity to buy a house under difficult circumstances:

    • Not enough down payment

    • Bad credit or no credit history

  • Lock in purchase price when saving up for the down payment

  • Pride of ownership and flexibility in upgrading the property

Why Rent-to-Own? – Landlord/Investor

  • More or less worry free tenant

    • Option premium

    • Tenant pride of ownership

  • Saving in selling cost

  • Lock in profit and cash flow

  • Improve cash flow

  • Secure investment

  • Helping people and earn money (Feels Good AAh!)

What are the risks with Rent-to-Own?

  • Tenant moves out during lease term

    • Non-refundable option premium

    • Contingency funding in place

    • Property at good location and value

  • Market condition changes – drop in value/not appreciate enough

    • Buy below market value

    • Work with tenant to facilitate purchase/extend lease term

    • Non-refundable option premium

Property or Tenant First

  • Tenant or Property First? (Chicken or Egg)

  • It is dependent on:

    • Market conditions

    • Investor preference

    • Investor financial capability

What do you need for a Rent-to-Own project?

  • To put a Rent-to-Own Project together, you need:

    • A qualified Rent-to-Own tenant

    • A good property

    • Investor or investors to buy the property

How to make money in a RTO project?

  • There are 3 Key elements:

    • Buy below market value (aimed at about 10% below market value)

    • Rental income during lease term (look for property at a good capitalization rate, market rent v.s. market value)

    • Property appreciation in value during lease term (look for property at good areas, target at close to 5% on average, set realistic expectation)

The “Bag of Tricks” of Crazy Thomas

  • We have many tools in our “Bag of Tricks” from finding tenant, finding investor to pull it all together.

  • Let’s look at a few of them

The Rent-to-Own Process

Where & How to get Rent-to-Own Tenant

  • Advertising: Kijiji, classified ad, signs, landing page/squeeze pages

    • Tips for Kijiji ads:

      • Pictures

      • Be specific about a property

      • Drive them to take actions (call NOW)

  • Referral, Referral, Referral

    • Current tenant

    • Potential tenant

    • Real Estate agent, Mortgage agent

    • Hair dresser

    • Tim Horton, Country Style…

  • Technologies: Iphone app, Youtube, Google adword

Expected Conversion Rate

  • 100-10-1 (100 people see your information, 10 people contact you, 1 resulted project)

  • A good Kijiji ad can expect about 300 people looking at it in 3 days

How to convince a potential tenant to work with our RTO program? (The first encounter)

  • Focus on establishing a rapport with the client

  • Clarify their understanding of Rent-to-Own

  • Gather as much information about them as possible

    • Current family situation

    • Current rental situation

    • Family gross annual income

    • Type of houses that they want

    • How much can they afford (monthly & down)

  • Set their expectation (realistic expectation)

  • Listen carefully and aim at providing them the benefits that they are looking for

  • Remember to ask for follow-up contact information and referral

Tool to set Tenant Expectation

Explaining RTO Simplified

Explaining RTO Simplified

Explaining RTO Simplified

Explaining RTO Simplified

Explaining RTO Simplified

Good, Bad & Ugly

  • Good cases: Guelph St, Oprington, Ecclestone

  • Bad:

    • City Place – Bad to Great

    • Wexford – Bad to Good, Thank God!

    • Hallen Rd – Bad to Not bad

  • Ugly:

    • Hansen Rd – Learning experience

    • Bramalea Rd – Turn Ugly to beauty

    • Bryant Crt – Ugly recovering in progress

Opportunity to Participate with Crazy Thomas

  • Cash investors (get 20% return per year for 1- 3 year terms)

  • Mortgage partner (get >50% return per year)

  • RRSP 2nd Mortgage investor (get 14% interest only return per year)

  • Assign contract with confirmed rent-to-own tenant from Thomas

  • Ask Thomas to help you to structure your own deals

  • Let Thomas mentor you on doing rent-to-own deals

Need more Information

  • Call us at 1-866-878-6884 ext 1 or 416-806-9568 and talk to Thomas for more information

  • You can also email [email protected]

  • Check out our iphone app

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