Thomas Wong, Lease Option Specialist of www.rtosc.com, presented the technique and strategy of rent to own. How this can help real estate agents to turn dead leads to $$?
Magarpatta Nova Elegance Mundhwa Pune E-Brochure.pdf
Rent to own real estate strategy - turn dead lead to $ march 2012
1.
2.
3. Who want to make more money?
How?
Let me share some
ideas
LEASE OPTION
SPECIALIST
4. Thomas Wong
Crazy Thomas
Your rent-to-own
specialist
A real estate
investor with a process improvement background
Have done over 40 rent-to-own projects in the last
few years
5. Do you have Dead Leads?
What is Rent to Own/Lease
Option?
How can Lease Option help you?
Sunday, March 11, 2012 5
6. Dead leads (potential clients who cannot buy
a house)
Not enough credit to get a mortgage
Not enough down payment
Cannot get on title for the house purchase due to
family status changes
Cannot verify income
▪ Self employed without enough
reported income
▪ Not enough business history
7. Use Lease Option Strategy to:
“Turn Dead Leads into Dollars”
8. 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
9. 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
10. 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
11. 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!)
12. Tenant or Property First? (Chicken or Egg)
It is dependent on:
Market conditions
Investor preference
Investor financial capability
13. Benefits:
Less risk in having a vacant property
Easier to get investor to participate
Risks:
May not be able to buy the property at the best
price
Time constrain
Tenant may change their mind at the last minutes
Approach:
Target market
14. Benefits:
Buying below market value
Time to pick and choose
Risks:
Potential vacancy
Not as easy to find investors to participate
Approach:
Find Focus area and study well
Learn to distinguish motivated sellers
Learn how to look for value in a property
15. To put a Rent-to-Own Project
together, we need:
A qualified Rent-to-Own tenant
A good property
Investor or investors to buy the
property
16. Your “Dead Leads” can be our potential rent-to-
own clients
Once we qualify them, we will have a tenant first
situation
We will work with you as the buying agent and you
can still earn the buying commission
17. 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)
18.
19. 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
20. Mortgage Calculator Rent-to-Own Budget
Current Value of
Annual Family Income $70,000 property $ 333,753.91
% for mortgage payment 32% Appreciation rate 5%
monthly mortgage payment
amount $1,867 Term of program 3 year
Future purchase
price (at the end of
Interest rate 5.00% term) $386,362
Amortization years 30 Target down payment $38,636 10%
Allowable mortgage amount $347,725.69 Client initial deposit $10,000
monthly option
% down 10% premium required $795
Value of the house that can be
bought at end of lease term (3
years) $ 386,361.87 monthly market rent $1,800
Appreciation rate of the house 5% monthly RTO bonus $200
current value of house for
Rent-to-own $ 333,753.91 monthly RTO payment $2,395
Sunday, March 11, 2012 20
26. The decisions:
Is the project attractive to the investors
▪ Cash flow (DCR)
▪ Return-on-investment (ROI)
Can the tenant afford the property
▪ Save enough down payment at the end
▪ Affordable monthly payment
At what price should we buy this property at
Dash Board Lease Term: 3-Year
Investor Tenant Tenant Monthly
Result Matrix DCR Profit % Down Payment
Current Value 1.13 62% 10% $ 2,025
Target 1.10 60% 10% $ 2,000
27.
28. 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
29.
30. 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