Rent to Own Seminar

Lease Option Rent To Own Seminar
Real Estate Investors Education & Mentoring
Welcome!

Copyright 2011 – World Wealth Builders – All Rights
Reserved


Disclaimers

Information, strategies and opinions contained in this presentation are
provided for general information and convenience only. Since the particulars
of each situation may differ and information may change rapidly, one must
seek appropriate, qualified professionals advice before acting based upon
any information provided by the World Wealth Builders or any affiliated
association.

Reserved


“How to make Money $$
Lease Option/Rent to Own”
Canadian Real Estate Investment

Reserved


Want to learn fast, then…

Copyright 1993-2012 – – World Wealth Builders – All Rights
Copyright 2011 World Wealth Builders – All Rights Reserved
7/24/2012 Reserved 4


What is it?

• What is Rent to
Own/Lease
Option?

5
Tuesday, July 24, 2012


Where is the money?
How to make money with
it?
1.Option $$ upfront
2. Above market rent $500-
$1,000 Cash flow a month

3. No capital required
4. Guaranteed return
6


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


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”

• 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…


Basics of Your Marketing Efforts

• Expose your services to many people
• Attract the attention
• Drive them to take actions
– Call or email you
– Leave their contact information
(sign-up form on landing page/squeeze page)


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

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

20


Explaining RTO Simplified

Tuesday, July 24, 2012 21



24


Where & How to find investors
• Who you know is important; Who knows you is critical
• Networking
– Physically attending PREIG Canada network
meetings/events
– Social media – Facebook, Twitter, Linkedin
– Need to show up. Need to be consistent.
– Establish relationship with “Center of influence”
• Referral, Referral, Referral
– Current investors
– Real Estate agent, Mortgage agent
– Hair dresser/cell phone story
– Having lunch


What to do with potential investors?
• Be passionate with your investment
strategy
• Establish rapport
• Share the stories of your project
• Tell them enough to generate interest, not
enough to make decision. Decisions are
for follow-up meetings
• Focus on helping them to understand


Feasibility Analysis
Lease Option Feasibility Analysis:
Dash Board Lease Term: 3-Year
Investor Tenant Tenant Monthly
Result Matrix DCR Profit % Down Payment
Current Value 1.36 70% 10.3% $ 2,080
Target 1.10 60% 10% $ 2,000

Description of the property: 1930 Ashwood
Type of Property: Free Hold
Monthly Market
Current Purchase Price: $265,000 Rent: $1,600
Other Ont.
Land transfer tax City $2,450
Rehab cost/setup cost: $2,000
Avg. Annual
Closing legal fee $2,500 Appreciation 5.0%
Assignment fee $7,000
Adjusted Cost base: $278,950
Annual property
tax: $3,500
Annual
After Repair Market Value: $290,000 Insurance: $1,000
Selling commission: 4.50% $13,050

Financing:
Initial Cash
1st Mortgage Investment $66,950
1st Mortgage Amount 80% $212,000 DCR(Free Hold) 1.36 Debt coverage ratio
Interest rate 4.00%
# of Amortization Years 30
2nd Mortgage
RRSP 2nd Mortgage Amount $0
2nd Mortgage Interest rate 14%
Total Mortgage $212,000

Lease Option Arrangement: Note: Input field are highlighted in
Initial Down Payment $10,000 yellow
Monthly Rent (% of avg. rent) 100% $1,600
Monthly Option Premium
(% of avg. rent) 30% $480
Monthly Condo Fee $270
Tenant Total Monthly payment $2,080
Monthly Option Bonus $200 (extra money to credit to Leasee's downpayment)
Tenant's Preferred Length of
Lease (# of Year) 3

Tuesday, July 24, 2012 Copyright 2012 – Rent to Own Specialist Canada – All Rights Reserved 28


Priceless Gifts

Receive
your
Search for GIFTS
the clues
Go to
www.WorldWealthBuilders.com
Copyright 2010 – World Wealth Builders – All Rights 29
7/24/2012 Reserved


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


The “Bag of Tricks” or Apprenticeship
• We still have many more tools in our “Bag of Tricks” like how
to pull a RTO project together and how to run the project to
ensure that we are making money at the end.
• What else you may want to know:
– How to choose a house for RTO?
– How to negotiate the best deal from seller?
– How to save money in renovation?
– How to deal with tenant issues?
– How to deal with investors?
– How to structure a RTO joint venture ?
(make money now, make money along the way,
and make money at the end)
– How to sell the property to RTO tenant at the end of the term?.....


How to get the rest?
• You got a lot of useful tools today, you can
use right away
• World Wealth Builders is offering a full day
training course to provide you all the tools
• It will be in September, 2012 in Toronto
• The cost is $1995 per person. Two can
attend together at $2995.
• After you attend the course, you will know all
of our bag of tricks. We may even partner
with you in projects…. Copyright 2012 – Rent to Own Specialist Canada – All Rights Reserved 32


Today is your lucky day!
• Further discount from the price
– twist the arm..but never break it!
• Most of you can attend the course for half price
Provided you buy the lunch for me

• You can make money with us now
– For every person you refer to attend and pay
for the course, you will get $100 cash
– When you refer 4 pay attendee, you attend
the course as complimentary
Tuesday, July 24, 2012 Copyright 2012 – Rent to Own Specialist Canada – All Rights Reserved 33


Lease option Rent to own
Canadian Real Estate
Apprenticeship – LIVE
Tuition fee $2495.00 plus HST

WorldWealthBuilders.com/live
Reserved


Lease option Rent to own
Canadian Real Estate
Apprenticeship – LIVE
Today Special $995 plus HST
Dates: September 2012

WorldWealthBuilders.com/live

Reserved


Mentoring & Coaching for Real Estate Investors

Book an appointment for 30 minute Complimentary mentoring/coaching now!


Tuesday, July 24, 2012 Reserved 39


Thank You!

www.WorldWealthBuilders.com
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Rent to Own Seminar

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