Rent to Own (RTO) is probably one of the most misunderstood aspects of what we do in this industry, but we would like to show you why it is good for business.
From being confused with financing, to wondering why it costs any more than simply paying cash, to having a negative perception of RTO in general, it’s important to step back and look at what this is objectively and why it is good for business. Of course, ultimately, what is good for business must be good for the customer. Our free market has a way of
Here is possibly the most misunderstood aspect of RTO in the storage shed industry: Viewing it as a “higher priced product” instead of viewing it as a service.
Here’s the deal. If you RTO a shed instead of paying cash, you will pay more. And depending how long you choose to stretch out your rental term, quite a bit more.
But here’s why: You’ve just bought a product and a service. RTO is an extremely popular service. If the service you are having provided (say the ability to rent a shed for a period of time, ultimately culminating in ownership) is equal to the investment required, you will buy. If the value of a product or service does not equal the price (at least in your own mind), you will not buy. It’s basic economics.
Interestingly, the market is saying authoritatively that the service RTO provides is equal or greater than the price.
And that is one reason RTO is good for business.
But let’s go ahead and address some of the common myths and misconceptions of the RTO industry. If you’ve been around RTO for any amount of time you’ve probably heard some or all of these statements, often well-intentioned but mostly ill-advised.
Myth & Misconception #1:
Paying cash is better.
Here’s the deal on this. It may be, but it may not be in some cases. It certainly is not if you spend the last of your cash and have an unexpected and urgent bill the following day. While it’s hard to argue against the value of using cash if you have plenty of it, it’s not an accurate statement in all situations.
You would need to know much more of their story to make a call on what’s best for them. Your job is to present all the information and let the customer decide what is best for them.
Myth & Misconception #2:
It takes advantage of the buyer.
To this we would ask, “Compared to what?” Having no space to store your belongings? Having your possessions exposed to the weather? Being frustrated with your life because your house and garage are cluttered beyond repair? Driving across town to the mini-storage you’ll never own?
We firmly believe if this service took advantage of the buyer it would not be surviving, let alone thriving.
Myth & Misconception #3:
It is too expensive.
Ultimately the law of supply and demand will answer this question. If it is too expensive, sales will dip, less people will take advantage of the service. But if the perceived value is equal to or greater than the price, they will buy.
This is also as good a time as any to mention the fact that most builders do not provide their own RTO, and most RTO companies do not build their own sheds. So this helps clarify what is happening here: Someone is providing the product, someone else is providing a service for the product.
Costs add up fast, and the risks are real. If we do not charge adequately for this service, it won’t be around to offer, and that’s not doing our customers any good either.
Myth & Misconception #4:
The interest rate is too high.
This one always makes us smile because it’s like comparing apples to oranges. Let us ask you this: How much is the interest rate on a $600/month, one-bedroom apartment? Maybe you need to know the total building cost to calculate it out?
Nope. It’s renting, not financing. There is no interest. There is simply a rental rate based on the size and style of the building. A building you won’t have to rent forever, by the way.
Myth & Misconception #5:
It is full of shysters.
In every industry, there are some unfortunate circumstances and motives. But we can say that we know enough of the people and companies in RTO firsthand to say with confidence that it is a great group of people.
Now since we spent some time dispelling some of the common myths and misconceptions, it’s only right that we focus on the value that RTO can offer.
Here are a few favorite value propositions for RTO:
1. Convenience and Ownership
It doesn’t get any more convenient than smack in your backyard. Plus, you can own it one day by making all your payments, or getting a significant discount by paying it off early.
2. Simple, Easy, Affordable.
It really is simple, it’s certainly easy, and it truly is affordable.
3. Low Risk, High Reward.
You really do get to enjoy the low risk and investment of a rental with the long-term equity gains of ownership. Not a bad deal when you think about it.
4. Opens Up Your Product and Experience to More People.
There are a host of people that get to enjoy your product and exceptional customer experience because of the “accessibility” that RTO provides. We always need to remain focused on the customer. What does the customer need or want? If we listen, they will always tell us.
Hopefully, this all helps in correctly understanding RTO and what it has to offer.
If you are already offering RTO, we encourage you to treat it well. Like many things it can be misused, but handled properly, it truly can be valuable.
And if you’re not currently offering RTO for your buildings, we encourage you to try. You just might like it.