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 $$?

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?
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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)

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
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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

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

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