How To Make The Most of Rent-To-Own Programs in Real Estate

Bill’s most recent career focus has been in real estate development. This has enabled his team to build a $60M portfolio for himself and several high net worth investors. Bill started purchasing investment properties in 2010, and currently owns/manages over 350 rental properties in IL and FL, and flipped over 80 single family homes in the past 8 years. Bill has also assisted investors in flipping an additional 50 or so homes.

In this episode we dive deep into how Bill has structured his portfolio as a mixture of long term rentals tied to a rent-to-own program as well as short/mid term rentals that can be leveraged to charge a premium over median market monthly rent.

This episode is filled with nuggets of wisdom on how to run and operate these two strategies concurrently. There is a heavy focus on quality of build and quality of tenant for Bill so we spend a lot of time discussing how to achieve both of these while limiting costs.

// DON’T FORGET TO REACH OUT TO BILL POWERS

www.RTOproperty.com

Bill@RTOproperty.com

Completed development Page Flip or Flop: https://rtoproperty.com/completed-projects/

Bill Recommends Plus+ Vacation Rentals

https://www.plusvacationrental.com/

// QUOTES

"Assets are best held"

"When you can take the piece of the business that sucks the most time from you and eliminate them it enables you to focus on things that will make more money "

" The way we were able to accomplish managing so many rentals ourselves is we eliminated a lot of the leasing process. We had people sign three year leases instead of one year leases "

"You don’t have to squeeze every last dollar out of every transaction. These rent to own programs give people the opportunity to live the American dream and Build Wealth "

"We always try to build the highest quality product. We use the best contractors and the best equipment to ensure we can provide the best product. So we can charge a premium so we can attract the best quality tenants"

“The beauty of rent to own is the sale is built in already. You don’t have to worry about rent for three years. You do not have to worry about prepping the house for listing on the market. There is no commission because there is no broker involved”

// CONCEPTS

• When you are getting started you are going to make a lot of mistakes. That is ok, it is part of the process. You will learn from the mistakes and get better as you move forward
• Leverage your assets to acquire more assets. Leverage your network to find win-win situations you can both profit off of
• We do rent to own only and sign long term leases in order to limit the process of finding tenants
•A lot of rent to own programs have a low conversion rate of people that actually purchase. We do our best to provide our tenants with the resources they need to facilitate the transaction
• For rent to own programs we require a minimum 600 credit score, 3X monthly rent in income, Two Months Security deposit. $150 per month is applied to the principle
•Mid term rentals is a great strategy similar to air bnb. Instead of renting out by the day you do 60-90 day periods and you charge a premium
• By utilizing the short and mid term combined strategy we have been able to keep occupancy at high 80/low 90% which is great when compared to other hospitality/hotel like environments.
• The formula we use for our mid term is roughly 2X what our monthly rate would be. Mid term makes management a lot easier on our team as well
• In order to build a great contractor team, talk to people at your local Menards or Home Depot pro desk and ask them who the best ones are. Once you get somebody that is really good just take care of them.
• We use durable materials in order to mitigate potential damages to the home. We don’t do carpet because that is always short term. We use quality products and we are renting to quality tenants.

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// TIME STAMPS ⏲

0:00 - Introduction
0:30 - Craziest Transaction
3:10 - What got you into real estate and what has your journey been like?
9:00 - How Bill Structures his leases as rent to own only
12:55 - How much extra do you charge for rent in order to charge a rental premium?
14:45 - What were the biggest challenges you faced growing this business
16:00 - Tell us about what you are building in Florida
20:40 - Your long term strategy is to hold. What is your long-long term strategy?
23:30 - Are you filling mid-term vacancies with short term?
28:25 - Focus on income producing activities
33:30 - How did you build your construction team?
39:55 - How do you mitigate the cost of potential tenant damages?
43:45 - How to price 3 years in advance?
48:00 - Marketing
48:30 - How to reach out
51:30 - Flip profit margin targets