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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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Presentation Transcript
rent to own lease option
Rent to Own/Lease Option
  • What is Rent to Own/Lease Option?
  • How to make money with it?
who am i
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
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
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
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
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
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
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
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
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
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
where how to get rent to own tenant
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
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
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
good bad ugly
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
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
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 thomaswong@rogers.com
  • Check out our iphone app http://www.app.cat/crazythomas
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