Crazy Thomas Rent-to-own training video #1 - Basics of RTO

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Crazy Thomas, lease option specialist, rent-to-own training series. Training #1 will cover the basics of rent-to-own your house. It covers information for both a rent-to-own client and a rent-to-own investor.

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Crazy Thomas Rent-to-own training video #1 - Basics of RTO

  1. 1. Sieze the opportunity Make the World your Osyster FREE Rent-to-own Training #1 The Basics of Lease Option CRAZY THOMAS Lease Option Specialist
  2. 2. Who am I? <ul><li>Crazy Thomas </li></ul><ul><li>Thomas Wong </li></ul><ul><li>Your rent-to-own specialist </li></ul><ul><li>A real estate investor with a process improvement background </li></ul><ul><li>Have done over 30 rent-to-own projects in the last few years </li></ul>
  3. 3. What is Rent-to-Own/ Lease Option? <ul><li>Rent-to-own your home </li></ul><ul><li>Lease with option to purchase </li></ul><ul><li>The program </li></ul><ul><ul><li>Small initial deposit (part of down payment) </li></ul></ul><ul><ul><li>Monthly payment (partly rent, partly toward down payment) </li></ul></ul><ul><ul><li>Option to purchase the house at the end of the lease term </li></ul></ul>
  4. 4. The Differences among Rent-to-Own’s <ul><li>There are no regulated way of Rent-to-Own </li></ul><ul><li>Potential variations: </li></ul><ul><ul><li>Initial deposit requirement from tenant </li></ul></ul><ul><ul><li>Amount of credit toward down payment each month </li></ul></ul><ul><ul><li>How to establish future purchase price </li></ul></ul><ul><ul><li>How to handle expenses during the term </li></ul></ul><ul><ul><li>Types of contract: </li></ul></ul><ul><ul><ul><li>Lease with option to purchase </li></ul></ul></ul><ul><ul><ul><li>Co-occupancy contract </li></ul></ul></ul>
  5. 5. Why Rent-to-Own? – Tenant <ul><li>Opportunity to buy a house under difficult circumstances: </li></ul><ul><ul><li>Not enough down payment </li></ul></ul><ul><ul><li>Bad credit or no credit history </li></ul></ul><ul><li>Lock in purchase price when saving up for the down payment </li></ul><ul><li>Pride of ownership and flexibility in upgrading the property </li></ul>
  6. 6. Why Rent-to-Own? – Landlord/Investor <ul><li>More or less worry free tenant </li></ul><ul><ul><li>Option premium </li></ul></ul><ul><ul><li>Tenant pride of ownership </li></ul></ul><ul><li>Saving in selling cost </li></ul><ul><li>Lock in profit and cash flow </li></ul><ul><li>Improve cash flow </li></ul><ul><li>Secure investment </li></ul><ul><li>Helping people and earn money (Feels Good AAh!) </li></ul>
  7. 7. What are the risks with Rent-to-Own? <ul><li>Tenant moves out during lease term </li></ul><ul><ul><li>Non-refundable option premium </li></ul></ul><ul><ul><li>Contingency funding in place </li></ul></ul><ul><ul><li>Property at good location and value </li></ul></ul><ul><li>Market condition changes – drop in value/not appreciate enough </li></ul><ul><ul><li>Buy below market value </li></ul></ul><ul><ul><li>Work with tenant to facilitate purchase/extend lease term </li></ul></ul><ul><ul><li>Non-refundable option premium </li></ul></ul>
  8. 8. Property or Tenant First <ul><li>Tenant or Property First? (Chicken or Egg) </li></ul><ul><li>It is dependent on: </li></ul><ul><ul><li>Market conditions </li></ul></ul><ul><ul><li>Investor preference </li></ul></ul><ul><ul><li>Investor financial capability </li></ul></ul>
  9. 9. What do you need for a Rent-to-Own project? <ul><li>To put a Rent-to-Own Project together, you need: </li></ul><ul><ul><li>A qualified Rent-to-Own tenant </li></ul></ul><ul><ul><li>A good property </li></ul></ul><ul><ul><li>Investor or investors to buy the property </li></ul></ul>
  10. 10. How to make money in a RTO project? <ul><li>There are 3 Key elements: </li></ul><ul><ul><li>Buy below market value (aimed at about 10% below market value) </li></ul></ul><ul><ul><li>Rental income during lease term (look for property at a good capitalization rate, market rent v.s. market value) </li></ul></ul><ul><ul><li>Property appreciation in value during lease term (look for property at good areas, target at close to 5% on average, set realistic expectation) </li></ul></ul>
  11. 11. The “Bag of Tricks” of Crazy Thomas <ul><li>We have many tools in our “Bag of Tricks” from finding tenant, finding investor to pull it all together. </li></ul><ul><li>We will cover them in the videos that you will receive next time. </li></ul>

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