For Real Estate Investors...
Safe And Sound Real Estate Investment Group
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The ABC's of How Tenant-First-Rent-to-Own (TFRTO) Works... for Investors
See our rent-to-own your home website by clicking hereIMPORTANT DISTINCTION: We do not do "traditional" RTO (Rent-to-Own) where a company buys a house (or many) and THEN tries to find a tenant-buyer who will (hopefully) like the house and then will (hopefully) buy the house.

We use a strategy called "Tenant-First-Rent-To-Own". That means we find a qualified tenant-buyer FIRST, and then THEY, with the help of our realtor and investor(s), find THE house THEY really like, we buy it for them, and then they buy it from us at the end of the term. The rate of success with this strategy is almost 100%!!! As an investor in such a program, this is a KEY distinction you need to know about.

1. The General TFRTO Concept
  • We (SASREIG) find and ‘qualify’ a potential tenant-buyer (T-B)
  • The T-B finds a house they like (hence the name "tenant-first"), and that they want to buy in 3 years (typically)
  • We put together a joint venture with passive investors to buy the house
  • We rent the house to the T-B and give them the option to buy the house in 3 years
  • The T-B takes care of the property for 3 years
  • We (SASREIG) take care of the property management for 3 years
  • The T-B buys the house at the end of the agreement
  • The investors get their investment back, and they profit from the high interest we pay

“Tenant-first-rent-to-own frees you from the responsibility of repairs, maintenance and other time-consuming duties associated with being a landlord.” —Mark Loeffler (aka The Versatile Investor, owner of 50 doors) in his Canadian bestselling book Investing In Rent-to-Own Property

2. Why TFRTO Is a Good Deal for Our Investors
  • We (SASREIG) take care of ALL the property and business management (hands-off for the investors)
  • The T-B pays the mortgages, the insurance, the taxes and all the utilities
  • The T-B pays all the repair & maintenance (up to $500 per event / up to $1,500 per year)
  • SASREIG will cover the costs of repair & maintenance above and beyond those amounts
  • SASREIG covers most of the costs incurred by the investors so no (or very little) out of pocket disbursement for the investors (and NO cash-call during the 3 years of the deal)
  • The property is fully inspected prior to completing the purchase
  • The property will be sold in 3 years at a predetermined and agreed upon price at approximately 15% higher than the purchase price
  • The investors are guaranteed a certain rate of return on their investment
  • Bottom line, the investor benefits from all the advantages of being an investor and a landlord without any of the problems, hassles and headaches of managing tenants and properties
“Here is another perk to a tenant-first-rent-to-own system. Not only do the tenants gladly perform repairs and maintenance, they will also upgrade the property and enhance the curb appeal and the interior of the house. They take pride in how the house looks, inside and out—because it will soon be theirs! Instead of midnight phone calls from tenants complaining that the water heater is broken, imagine having your tenants call you to ask if it’s okay to replace the old carpet with hardwood flooring. My tenants have done all of the upgrades on my investment properties, everything from replacing floors, renovating kitchen, installing double-paned windows and low-flow toilets—you name it, they’ve done it. Are these not the types of phone calls you’d like to receive? Any investor would happily answer, ‘YES!’”
—Mark Loeffler (aka The Versatile Investor, owner of 50 doors) in his Canadian bestselling book Investing In Rent-to-Own Property


3. TFRTO has the potential to be a really good deal for the Tenant-Buyer

Typically, a potential T-B:
  • has a small “down payment” of at least $3,000 (minimum requirement)
  • is working on repairing their credit
  • has been through some life-altering events such as bankruptcy, foreclosure or divorce
  • has a good income but does not have any credit history or needs to improve their credit rating
  • is often self-employed or an entrepreneur
  • is doing everything they can to get their "foot in the door" for home ownership and they need some help!

4. Summary of the process to find a Tenant-Buyer
  • Potential T-Bs respond to our ads and visit our website where they fill the short form.
  • After several conversations, we send the potential T-B forms to complete and send them to our mortgage specialist who assesses them and gives us a green light (or red light).
  • We check references of potential T-B.
  • We meet with the potential T-B to review with them the details of the Tenant-First-Rent-to-Own process in general, and of their particular deal—amount of the option consideration, length of the agreement, amount available for monthly rent & other details.
  • The potential T-B lets us know IMMEDIATELY when they’ve found a property that suits them.
  • We put the potential T-B and our realtor in contact and they arrange with the seller’s realtor to visit the property.
  • If the house suits the potential T-B (and our investors), we make an offer (through our realtor).
  • We have the house inspected (we pay for the inspection)
  • Once the offer has been accepted, we fill out the various agreements with the potential T-B and receive a non-refundable Option Consideration Fee from them
  • Our mortgage specialist contacts the T-B to initiate the follow-up process -  his responsibility is to help the T-B improve their credit rating so that they can get their mortgage in 3 years to buy the property
  • We make the final arrangements regarding the closing date, the moving out date with the seller, and the moving in date with the T-B
  • We conduct a thorough pre-move-in inspection of the house with the T-B, while the house is empty, before they move in. The T-B gets a copy of the Move-in/out Inspection Checklist
  • The T-B moves in, and we (the T-B, the investors and SASREIG) all celebrate!

5. Then What Happens?

Six months before the expiration of the agreement, the T-B tell us whether or not they will exercise their option to buy the house they’re living in.

If the T-B opts to buy the house, they take the steps over the next six months to secure financing, with the help of our mortgage specialist, or with another specialist of their choice.

We close the deal with the T-B on the pre-arranged date, and the house is theirs!

All monies are disbursed per agreement to the investors.

This, in a “nutshell”, is how TFRTO works!


Questions?

Feel free to contact us by email or by phone (our contact information is here) to ask any question you want.

We look forward to make it work for you, to make it fun and profitable for you and for all involved.

  
Daniel G. St-Jean & Laurel R. Simmons
Professional Real Estate Investors

P.S.: If you want to know how TFRTO works from a tenant-buyer's perspective, go to www.RentToOwnYourHomeOntario.com
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