November 4, 2024 • 52 mins
What if securing capital for your rent-to-own business was as simple as connecting with the right financial partner? Join us for an enlightening episode with Thomas Murphy from Capital Concierges, who shares his transition from the jewelry industry to a key figure in rent-to-own financing. With his wealth of experience and a network of 50-60 financial institutions, Thomas provides valuable insights into how businesses can secure the capital they need, whether it's for inventory, new locations, or partner buyouts. His pragmatic approach to navigating the financial challenges in today's economic environment will offer listeners useful strategies to manage cash flow and accommodate customers with credit challenges.
Thomas takes us deep into the unique dynamics of the rent-to-own industry, underscoring the critical role of tailored capital solutions. We talk about the hurdles faced by RTO businesses when traditional financing avenues aren't viable due to their perceived high-risk nature. Drawing from his own career journey, Thomas shares how mentors have been pivotal to his career development and how his experience in the industry allows him to provide practical solutions for entrepreneurs. From flexible payment plans to the concept of balance on rent, we explore the operational dynamics that contribute to the success of RTO businesses.
Aspiring entrepreneurs and existing RTO business owners will find this episode especially valuable as Thomas offers practical advice on crafting a solid business plan that instills confidence in lenders. We touch on the need for a financial safety net and explore options like express lines of credit and SBA loans. Thomas also highlights the importance of supporting small RTO dealers, particularly in challenging economic times, ensuring they are well-positioned for success when the economy improves. Prepare to be inspired and equipped with actionable advice to help you thrive in the ever-evolving rent-to-own sector.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Hello everybody.
Listen, today we're doing ahead-to-head and I want to talk
to you guys about something thatwe don't always have here on
the show.
This is something unique,always important to rent, to own
, but not something that wealways talk about Right now.
I'm talking to Thomas Murphy.
Now he's a managing member ofone of the companies that I
think is going to be superimportant to you.
Now.
Capital Concierge is somethingthat you don't hear every day
(00:31):
but you need every day, and I'mso glad to have Thomas here.
Thomas, how are you doing today?
Speaker 2 (00:35):
I'm doing really good .
Speaker 1 (00:36):
Thank you for having me, sir, absolutely so.
I know that everybody'swondering.
Right now we're talking aboutsomething that everybody needs a
rent to own, but we haven'tspilled the beans.
What exactly is it that CapitalConcierge does, and what do you
offer to the rent to ownindustry?
Speaker 2 (00:51):
Well, thank you for asking that.
Capital Concierge is a businesscapital broker, In other words.
We have, we work with 50, 60different lenders of all
different types, depending onwhat the capital needs of the
business is.
And so what I do is if, when aclient comes to me, I do kind of
a soft interview with them.
(01:11):
It's like okay, how much areyou looking for?
I need, I don't know, 400,000.
Okay, what do you need it for?
Is it for inventory?
Is it for new trucks?
Is it for a new location?
Is it a partner buyout?
So I'm going through peelingthat onion back of trying to
find out exactly what it is,because I have multiple lenders
and by having multiple lenders,I have certain lenders that are
(01:33):
really good at this thing and acertain lenders that are good at
that thing.
And so what I'm doing ispeeling that onion back,
interviewing the client andasking them what it is.
I ask them questions abouttheir personal financial
situation How's your creditscore?
Lenders are very risk adverseand they're always.
It drives me crazy, but acredit committee is always
(01:57):
saying when this thing goessouth, how are we going to get
our money back?
And that's an important aspectof rent-to-own and I can talk a
little more about that.
But again, what we're lookingto do is I have a rent-to-own
background.
Don't know if you'd like for meto go into that a little bit,
but-.
Speaker 1 (02:13):
Well, we do, because here's the thing when we're
talking about and this is one ofthose times in the economy
where everybody's like I don'tknow what to do Everything's
getting expensive, capital'sgotten more expensive, real
estate has gotten worse,everything's more expensive.
But I've got to figure outwhat's right for me.
And when you're talking toThomas, he's got the ability to
(02:34):
help you out, specificallytailored to rent to own.
And I don't know if you guysknow this, but when you go into
a bank, if you go into afinancial institution, rent to
own is looked at a little bitdifferently, because we handle
business differently.
Now, the RTO industry knows alot about this, but you might
not, and the truth is we have alot of big guys out there.
But then you have the guys thatare trying to build their brand
.
For instance, myself, I wouldlove to build a brand, but
(02:56):
capital is something that Idon't know a lot about.
How do you raise the capitaland how do you go about that?
Well, this is the opportunityfor you guys to understand how
it works and, more importantly,how to get it.
So you do have a rental-ownedbackground where you understand
how the day-to-day works beforeyou got into Capital Concierge,
correct.
Speaker 2 (03:11):
Yes, absolutely.
Speaker 1 (03:14):
So where did we start ?
Where did you start?
Speaker 2 (03:15):
Well, it started back in 1985.
I was working in the jewelrybusiness wearing three, three
piece suits every day, and Iwanted I was over on the East
coast of Florida and uh, downSoutheast and I wanted to get
back to where I'm from, the landarea, daytona beach area.
And uh, a good friend of minethat I went to high school with
(03:37):
was working for champion rentown.
It was based it's a based outof Daytona beach.
And he says, hey, well, we'relooking for manager trainees.
And I said, okay, well, whatdoes that look like?
And he says, come on and overan interview.
And what have you?
I interviewed they go okay, youlook like a strong candidate,
We'd like to hire you.
And I said, okay, well, again,what does that look like?
Well, you started as a deliverydriver.
Speaker 1 (03:57):
I'm like okay, that's where you start.
Speaker 2 (04:01):
If grew up in the furniture business, when I was a
teenager, working for a guywhile I was going to high school
and delivered furniture andappliances and what have you.
So I felt very comfortable withthat because I do well to do.
It was a little bit of atransition going from working in
a jewelry store to back on atruck delivering appliances and
picking up furniture and thingslike that, but it all worked out
(04:22):
.
I did that for about six months.
They said we'd like to promoteyou to a collector.
At the time Champion had, Iwant to say I don't know maybe
60, 70 stores at the time.
So I became a collector, workedfor a guy named Wendell and he
taught me the collectionbusiness.
(04:43):
And you know I've been in salespretty much all my life and
grew up in a sales background.
Father was a CEO or was a salesmanager for a dairy company and
so in collections it's a lothas to do with sales.
Like, hey, I'm here to help youright now.
You're past due on your on yourpayment.
Payment, let me, how can I helpyou?
(05:04):
Give me something to work with.
So I was able to actually closemy book at a zero delinquency
one week.
It was only one week, but I was.
I still say that that was oneof my uh.
Never forget that uh.
But working with customers inthe rent to own business, you're
providing a service thatincorporates a product right,
they need a washer but whatyou're really selling is weekly,
(05:26):
biweekly, semi-monthly ormonthly payments, because you're
making that affordable into theguy's budget.
How does he get paid is whenyou want to collect your money.
So I did the collections job forabout six months and then after
that they promoted me to storemanager.
I'll never forget the districtmanager that promoted me.
He's like I don't think you cando it.
(05:47):
You'd be our youngest managerin all the stores.
I don't know, but I'm going tohave to give you a shot.
I was like, wow, thank you forthat vote of confidence, sir.
Anyway, I was the youngeststore manager in a small town
called the Land.
It was maybe 20,000 people andwhich.
(06:08):
I went to high school there andwhat have you.
So I knew the area very welland again I I crushed it.
Speaker 1 (06:14):
You know I did so how long?
How long were you in this spaceof of actually being in the
rent zone as far as operationsconcern?
Speaker 2 (06:22):
First three years I was a driver, collector and
store manager and did that forthree years.
They transferred me to Kissimmee, decided that I was going to
leave the company and startselling product back to the
rent-owned industry, stillstaying in the industry.
I did that for about two and ahalf years and I was selling to
(06:43):
Champion, based out of DaytonaBeach.
And the director of operationsat the time says you know, we
really need a buyer and we thinkyou'd be really good at that
and what do you think?
And at the time the company Iwas working for wasn't doing
exactly what I wanted to do andnot making the money I wanted to
make.
And I said you know, I'mwilling to give it a shot.
(07:05):
So I went back to Champion astheir director of purchasing,
merchandising and service At thetime they had about 100 stores
and was with them for threeyears as the director of
purchasing, merchandisingservice.
By the way, I forgot to saythat Larry Sutton was my mentor.
He was a Champion affiliatepartner over in the Tampa area
and Larry Sutton is a great guyand I call him my rent on mentor
(07:29):
.
Speaker 1 (07:29):
Well, he still has the, he still has the moniker
the Godfather rent.
He's been doing this so long andI know there's so many people
look up to him.
Uh, I had a chance onopportunity to speak to him one
time probably not as much as youhave, but a great conversation
and I'll be honest with you,every time that I have a chance
to see him or listen to himspeak or whatever's going on,
read about him I have to takethat opportunity because he has
(07:50):
a wealth of knowledge and heloves this business.
It's something that I reallyenjoy.
Speaker 2 (07:57):
And so I've got a little bit that'll tie the rest
of this in, if you want me tofinish.
So in 1993, I was with them forthree years again, six years
total.
In 1993, transamerica was thebig finance company for the
rent-owned industry.
When I first started as a storemanager, it was BorgWarner.
Transamerica bought outBorgWarner and in 1993, all of a
(08:19):
sudden I started gettingpurchase orders turned down and
I'm like well, what's going on?
I talked to the CFO at Championand come to find out
Transamerica was exiting therent-to-own space.
Oh and so, which was aninteresting time, because at
that point so Champion startedgoing to the bankers and saying
(08:43):
to the bankers like well, wehave a six, I don't know six or
eight million dollar line withTransamerica and we'd like to,
we're looking for a replacementfor that.
Like, well, what do you do?
It's like, well, we, we offerfurniture and appliances and
bedding and things like that.
We work with a credit challengecustomer.
And and the banker would stopand say, well, what you work
(09:06):
with credit challenge customers,yes, sir.
And the lender, the banker,would say, let me get this
straight.
You want me to loan money toyou so you could loan it to
somebody else that I wouldn'tloan to?
Yeah, you got it, great, no,thank you.
Here's a coffee mug.
Thank you for coming in today.
So Transamerica whenTransamerica exited even though
they said if we were going tokeep anybody in the space it
(09:28):
would be champion, but they saidwe have to exit the whole space
Shortly after that, there was agroup of guys that bought a
leftover portfolio fromTransamerica called Texas
Capital Bank.
Texas Capital Bank was based outof, still is based out of,
dallas, texas, and at one timethey had over $200 million out
(09:49):
on the street to the rent-to-ownindustry for new store startups
, inventory, all the differentthings like that.
From what I understand and it'sfrom what I understand is that
eventually the people wanted tosell the bank and the acquiring
banks didn't like the rent-owned.
The bankers kind of look atrent-owned as a little bit of a,
(10:11):
not a selective, not one oftheir more sought-after business
.
It's a high risk, high risk,yeah.
What they don't understand isthe business owners tend to be
blue-collar millionaires, butthey're dealing with a credit
challenge customer.
But they also know how to dealwith a credit challenge customer
by knowing that when is yourpayday?
We need to make your pay.
You get paid twice a week.
(10:32):
We want you to pay twice a weekso that they know how to manage
that cash flow.
That's that providing a servicethat incorporates a product.
The customer needs a washer,but they need that financial
management situation where theycan break that wash machine up
into an affordable weekly,biweekly, semi-monthly.
Speaker 1 (10:50):
Well, affordable chunks.
I mean, we're dealing withpeople that are having
situations in their lives where,if they could go in and buy it,
they would have, but insteadthey're allowing us to at least
own it for payments on end,depending on, however it is 52
weeks, 78 weeks, 24 months.
That they can own it eventuallyExactly end, depending on,
however it is 52 weeks, 78 weeks, 24 months that they can own it
eventually with the option toreturn, and I'm sure that that
(11:10):
plays a part in it as well Notonly the option to pay over 78
weeks over something that theyprobably wouldn't have been able
to get credit on, but now theyalso have the option to return
it, which means that you're notlocked into getting that
profitability.
They do have the option toreturn it, and then you'd have
to sell it to somebody else.
Does that scare a lot oflenders when you're talking
about getting capital?
Speaker 2 (11:29):
Well, you start talking to lenders and they
start dissecting the businessand they want to learn more
about it.
The fact is that the balance onrent, which is all the
remaining weekly, biweekly,semi-monthly or monthly payments
can do, is called the balanceon rent.
(11:50):
Most stores average store 500accounts will have $1.5 million,
$1.6 million or whateverremaining balance on lease.
But for gap purposes, theaccounting purposes, they don't
recognize that on the balancesheet, and so bankers' balance
sheets are one of their.
It's, like you know, thestandard issue three-piece suit
for a banker, and he understandsa balance sheet.
(12:11):
So when you start talking aboutrent-owned and the fact that
the customer can return theproduct at any time and stop the
financial obligation, it's likewell, wait a minute, you know
how does that work.
Speaker 1 (12:22):
Well, there's a thing called a keep rate.
Speaker 2 (12:24):
There's a keep rate in industry somewhere averages
in the 50 percentile, whateverit means.
Out of a hundred people thatcome into the store, 50 of them
will retain ownership by payingit off.
The other 50 are going toreturn it because they couldn't
afford it, they don't need itanymore and things like that,
and so rent to own is the kingof recycling product.
I've taken pressure washers tosofas and chairs that were
(12:50):
really in bad shape andamazingly they come out
beautiful.
So the bottom line is that asyou start talking to a banker
like that that doesn't computein his head, he doesn't
understand it.
One of the values of CapitalConcierge.
Because of my rent-to-ownbackground, I also owned a
lease-to-own company, which islike creating a virtual
rent-to-own store in a furniturestore.
There's many of them out therenow, like Progressive and what
(13:14):
have you, but the bottom line isthat being able to talk to a
banker and explain to them howit works and what happens in
case of default and thedifferent things like that, I've
been able to tee up lendersthat understand the rent-to-own
business and I've done a ton ofdeals with them and they've all
worked out fine.
So I get a certain amount ofrespect with the lenders that I
(13:35):
work with because I understandthe business and I understand
talking to the dealer and whathe's going through.
So I'm like a go-between rightthe banker.
I have multiple lenders and Ihave a client.
Like I was telling you before isthat when I speak to a client
and client will tell me, likeokay, I need X, y, z, like how
(13:58):
much money are you looking for?
What do you need it for?
Is it a partner buyout, is it anew location?
Is it a need inventory money,all the different things.
So I have different lendersthat I interview that client and
then decide where's the bestplace to take it.
The nice thing about CapitalConcierge is that if you come to
me and we and I present you toone particular lender and that
(14:20):
lender says, no, I've got otherlenders.
Speaker 1 (14:23):
So you're?
You're basically a one-stopshop for somebody who needs
capital for the rental industryspecifically.
So let's say I wanted to go andI wanted to open up my own
business.
I can call you up.
I mean, I have the operationalknowledge.
I understand how to rent weekly, bi-weekly, semi-monthly,
monthly.
I know how to pay bills.
But getting it open thatrequires capital.
(14:44):
Right, I have to find abuilding or I have to find a
lease space.
I have to get trucks available.
I have to make sure that I havea certain amount of capital
away so that I can pay my laborfor such amount of time.
I have to find product and talkto vendors and say, hey, I need
this much product at start andI'll probably be ordering from
then on.
And then, instead of goingeverywhere for all those, I have
(15:06):
the ability to come to you.
We can discuss numbers, becauseyou understand what it takes to
open and what is a good amountfor what I'm looking for, and
then shop those around and findthe best deal for the both of us
, right, something that you cansay is presentable and something
I can say I can afford.
Speaker 2 (15:22):
Well, I work with several different rent to own
franchise uh companies, um, uh,and, and because they know I
understand the rent to ownbusiness, you know there's a,
there's, there may be a storemanager out there that's been a
store manager for 10 years andhe's like you know what?
I'm ready to be an entrepreneurnow.
And so they'll go to thefranchisee.
(15:45):
They'll talk, they'll sharewith them the franchise
disclosure document that'll showsome estimated costs to start
up and things like that.
And then he's like well, wow, Ididn't realize it was quite
that expensive.
I don't know that I have thecapital for that.
It's like well, we work with agentleman named Tom Murphy with
Capital Concierge.
I do a fair amount of SBA loans,sba 7A loans Without real
(16:08):
estate.
It's a 10-year term, noprepayment penalty.
The nice thing about the SBA isthat the government guarantees
that loan by 75%.
So what's nice about it isyou'll go to a lender.
The bank is loaning you themoney for the funds.
But if they're a preferredlender then they can approve you
(16:29):
and in case of default thentheir exposure is only 25% of
that loan.
So if it's a million dollarloan, the most that they can
lose is $250,000.
What that does is it gives thebanker more confidence in maybe
taking a deal Maybe theywouldn't do on their own as a
commercial lender but with thatSBA loan at the SBA deal it
(16:53):
gives them more confidence.
So a young gentleman you know hewanted wants to be an
entrepreneur.
He understands the rent to ownbusiness and he he's like.
So what does that look like?
So one of the things that Ideveloped is what I call kind of
a pre-qualification run whereI'll ask him some questions
about his personal credit score,his personal net worth, his
(17:16):
available cash, different thingslike that.
So One of the lenders that I doquite a bit of rent-to-own
business with, actually typicalSBA is prime rate, which is
currently 8.5%.
Typically the markup is 2.75.
(17:37):
I have the one lender that willgo 2.25, which is a half a
percent off of the rate, whichcan make a pretty big difference
after 10 years.
They'll also lay a revolvingline of credit alongside that
SBA loan.
So in other words, if they needa million, three to say a
million dollars, for ease ofmath to open it up, it's a 20%
(17:57):
equity infusion.
So that's $200,000.
They typically like for you tohave a little more in your bank
account in case things get introuble.
They know you got a littlerunway.
But then they'll also lay $ 75,a hundred thousand dollar
revolver alongside of that.
So what I tell you know, when Iwas a champion, I was on the new
(18:18):
store startup team, if you will.
So we were opening a ton ofstores at the time.
You get one store that comesout of the gate really hard, and
so I say that a new store eatslike five existing stores as far
as inventory-wise, yes, yes.
And so, in other words, whatyou've got to make sure is
you've got the capital to feedthe beast.
That thing comes out of thegate really hard.
You've got to make sure you'vegot the cash, because the last
thing you want to do is run outof cash and not be able to buy
(18:40):
the inventory.
Speaker 1 (18:41):
Ultimately, they say in the industry, getting to 500
accounts is the big goal,because at that point you start
cash flowing, your fixedexpenses are covered and you
start to break out and in orderto do that, you have to have the
capital to go to your vendors,to go where you need to go and
say hey, I need more product,this is selling good, this is
(19:01):
not selling good, so I'm goingto buy more of this and more of
that and then, before you knowit, you have another
showroomroom and hopefully,you're going to sell through
that quite a few times becauseyou're trying to get to that
mark, which makes the tough I'msorry to interrupt you.
It just makes it tough if youdon't understand how that works,
because the capital needed isto refill your showroom every
single time you sell through it,and if you're selling 500 BOR,
(19:21):
that's quite a bit.
Speaker 2 (19:23):
Well, two, what you run into is a huge cash deficit
when you open a rent-to-ownstore.
You know, okay, maybe you'llsell a little bit of retail here
and there, but that's not thegame that we're in.
So in the rent-to-own businessyou say your average cost of
goods what?
$400 these days.
And then so you buy a piece ofproduct for $400, a customer
(19:44):
comes in and let's say it's awasher and dryer pair.
Okay, let's say you get for the, you give them a deal for the
first week.
You get $10.
Okay, you spent 400 and youjust took in $10.
You got a $390 deficit rightout of the get-go.
Speaker 1 (20:01):
And that's that's right.
Speaker 2 (20:02):
Just getting even that's not any profitability,
that's just getting your productcost back, and so when I work
with rent-owned dealers,especially because of my
background, we spend a lot oftime talking about projections
and business plans.
Absolutely.
Business plans is pretty muchyour plan, but, more importantly
, the projections of being ableto make sure that you've got
(20:22):
your cost of capital covered,your rent covered, your pay
factor coverage, your trucks,you know all the inventory
things like that and so andthat's one of the some of the
things that the confidence thatcomes from the lenders that I
work with, knowing that I'mhelping them along Well, you're
operation savvy.
The nice thing about this, too,is that the most of the SBA
(20:44):
lenders I work with pay me areferral fee, so my cost to the
client is covered by the lender.
Oh, that's great to hear.
So I'm working for free, so tospeak.
But that also puts me in it towin it to with them.
From a standpoint of I'm in itto win it.
Their success is my success.
So I get that loan across thegoal line, I get them all
squared away, they close theloan I get a little referral fee
(21:06):
.
Speaker 1 (21:07):
So let me ask you a question, because everybody
right now is talking about howthings cost more.
That's just part of life, andinflation happens.
Unfortunately, inflation'shappened a little bit more
recently, but it's going on.
So in a simple world, we try tokeep it as simple as possible,
because I know there's a lotmore to it.
If I was to come to you and say, hey, I'm looking to open a
(21:29):
rent-to-own location, what isthe general cost for a location
now where you can say this isprobably a safe number?
Speaker 2 (21:40):
that you'd want to get started with.
A lot has to do with thedemographics From a standpoint,
are you in a small town?
Are you in a medium-sized town?
At what kind of competitionYou're better to be a big fish
in a small pond, so to speak.
Right and so at Champion, wewere always like we went to
Atlanta but we never went insidethe perimeter.
We were on the outside of thesesmaller towns or whatever like
that.
So work with one particularfranchise, location franchise or
(22:08):
that typically a startup storeis $600,000.
Speaker 1 (22:12):
Is it six.
Now.
The magical number that Ialways heard coming up through
the ranks was 500.
Speaker 2 (22:17):
Well, again, talking about the prices going up,
different things like that.
So typically they want to havea core base of 600.
An SBA lender is going to lookfor 20% equity in that situation
.
They also like for you to haveanother 10% of that loan amount
as in personal runway, in casemaybe the thing ramped harder
(22:41):
than expected or maybe it rampedslower than expected.
Now you've got a longer timebefore you get to that magic
number of 500 accounts.
So you know a lot of what I dois spend time with the client
and you know what are yourexpectations and are you
prepared?
Do you have other access tocash?
Because you know I've hadfranchisees come in and say I
(23:06):
don't think I need $600,000.
I think I can do it for 450,000.
And it's like, okay, whathappens if that thing comes out
of the gate really hard?
And you because basically webreak down, like on the FDD, for
example, on a franchise, it'llsay you need so much for the,
for the trucks, you need so muchfor your initial showroom
inventory, you need yourbackstock, you need your
(23:27):
computers, your counters andsignage and all the different
things like that.
So we break those buckets downinto into what we call a sources
and use form.
So here's all the things thatyou have uses for and here's
excuse me here's the, here's the, the sources of where that
money's going to come from.
So then I always tell them youneed a contingency plan of the
(23:52):
unexpected, if you will.
Speaker 1 (23:53):
So now cutting into this, because that was a really
broad question how do I open oneup?
And you're saying it costs thismuch because there's so much
involved in that.
But then you had said earlierit's also possible to dissect it
and say I need this forvehicles, I need this for a
buyout, I need this for justfurniture or, let's say, product
.
Someone can do that as well.
So it's not just for somebodywho's looking to open up their
(24:16):
own brand, their own store andinto the RTO industry.
It could be for somebody who'salready open, saying hey, I need
capital for a specific item ora specific thing.
I need it for vehicles becauseI need new vehicles or new
vehicle wrap.
I need it for more furniture, Ineed it because I'm running out
of space.
I know that I can do morebusiness, but I need to lease
somewhere else.
I need more floor space, and soI'm going to need some capital
(24:39):
for that, because now I've gotto build out only for build out,
though I don't need it foreverything else, because I kind
of have everything else.
I have my brand name, I'mcopyrighted, I have all that, so
our trademark, but now I justneed it for this so they can
still come to you, thomas, andsay, hey, this is my specific
goal with RTO in mind, and youcan still go into it and say
let's take care of it this way.
Speaker 2 (24:59):
If it's an existing dealer and he's two years or
older business-wise, and has aFICO score of, say, 700, maybe a
little less, but preferably alittle more I have a special,
what I call an express linethat's up to $150,000 that I can
close in as little as two weeks.
So it's up to $150,000 on a 10year term, no prepayment penalty
(25:20):
.
So if he's like, look, I wantto move into a new space, it's
bigger, going to need a littlemore inventory, but I've already
got 450 accounts, but you'regoing to need new signage and
probably going to need anotherbox truck and those things are
not inexpensive by any stretchof the imagination.
But what's nice is that if hedoesn't feel like he needs 150,
(25:41):
he only needs 95 or 100, we cando those and it's an affordable
payment over a 10 year term.
The key to that is it's noprepayment penalty.
So he gets a year down the roadand he's got into the new
location and he's grown hisaccounts by 200 and he's really
cashflow and great.
He can pay that thing off earlyand stop the interest rate.
(26:03):
So that's part of that wholeinterview process where we're
trying to dissect what the guyreally needs and what he really
wants to do.
Because, you know, I almostlike a consultant for being able
to say did you think about this, did you think about that?
Did you?
You know, maybe we need to,maybe you need to plan for this
or what have you.
So you know most people whenthey, when they come up with a
(26:27):
plan, maybe they didn't thinkabout all the points that they
need to.
So I try to dialogue with themto let's uncover all the let's
left no stone unturned to makesure that you you know you said
you wanted a hundred, but basedon what you told me and we've
started that bucket, we startedbuilding okay, we need so much
for this and so much for thatand so much for this and so much
for that.
So part of what I am is asalesperson to the bank.
(26:52):
So in other words, you come inand you want to open a new store
and I get all your information.
I'm helping you build the storythat goes to the banker,
because what the banker is, he'sthe salesperson to the credit
committee.
So we do a really good job ofselling the banker on you, your
background, your personalfinancial situation, all the
(27:16):
different things like that.
So we build that story.
I call myself a storyteller,but part of that storytelling is
being able to understand one,how to communicate with the
client, but two, also know whatthat banker's looking for, what
kind of points do we need tomake sure that we hit and
sometimes maybe a client's alittle bit softer on one of
(27:39):
those points that we need tomake to the banker, but he's
also stronger on multiple.
So my job is to sell the bankerand then the banker's job is to
sell the credit committee onwhy this loan makes sense and
how this gentleman will besuccessful and different things
like that.
Absolutely.
Speaker 1 (27:54):
So what you're doing is making sure that whoever is
in the need of capital, they'renot just walking in and saying
anything to anybody.
They've got you to prep them,sit down and talk with them and
say, hey, these are the cases,these are the things that
they're looking at, these arethe touch points that somebody
in this situation is going to belooking at, and so what you
want to do is be ready for thosesituations by doing this,
(28:15):
saying this, and you want tobolster up exactly what's going
on, but you want to put it in away where they understand.
You're okay, you might notunderstand everything right now,
but let's sit down and we'lltalk about it.
So at the end of this one, wedo go into talk to the bank or
whatever loan institution thereis.
They feel as comfortable withyou as I do, and that's how you
make it work.
From Capital Concierge.
Speaker 2 (28:36):
And part of what I started to say is that when I
get a client, I do basically aninterview, and then what I tell
them is that I'm going to sendyou a personal financial
statement and a resume.
And a resume is not somethingthat you would go find a job
with, but it's more like Iworked here and I did this and
that's showing the rent to ownexperience.
So, uh, and.
And then on the personalfinancial statement, you know,
(28:59):
oftentimes they don't fill themout, right, you know.
So it's like okay, so that'scoming to me, I'm, I'm getting
that information, I'm reviewingit with them.
It's like hey, you know this.
I think this is the wrong spot.
The you know this over here, bythe way, do you have, is this,
do you have any home furnishingsand do you have any jewelry?
Do you blah, blah, blah?
Okay, we need to put that onthere as assets.
(29:20):
What we're doing is we're we'rebuilding that store building
and so that that I'm looking atit before it goes to the banker.
I made a mistake early on in mycareer at capital concierge
where I sent all these forms toa gentleman asking him to fill
them out, and never looked atthem.
Hit the forward button to anemail and the lender calls me
(29:41):
and says, tom, did you look atall this?
At all this makes, makesabsolutely no sense.
There's no way this guy's goingto get a loan and I'm like wait
, wait, wait, wait.
And then, after going back tohim, he filled it out wrong.
But I made the mistake.
It was one of my first deals.
I just hit the forward button,send him all the information to
fill out.
I hit the forward button and itwasn't.
So again, I am part of CapitalConcierge is being able to build
(30:07):
that story.
Build a story, tell the story,make sure it's clear and
accentuate the positives and notthat I would ever hide anything
from a lender from an integritystandpoint.
In other words, when we'rebuilding that story, we're
telling that story, we're goingto obviously accentuate the
positives the best we can.
Speaker 1 (30:25):
But we got to see it on the right light.
I mean, when you're doing that,you don't want somebody to
always say, hey, there's a lotof risk, there's a lot of
challenge, there's a lot ofadversity going on, and not see
what we have to offer on theother end.
We're doing this a long time.
Yes, the product comes back,but we also refurbish it, we
take care of it, we also put itback out.
And it's a possibility that,even though we had this amount
that we were going to set for it, if we really take care of it,
(30:47):
we really refurbish and we putit out there, we could actually
make more than those marginsthat we expected.
Speaker 2 (30:51):
I remember when I was a store manager looking at now
I'm really going to date myselfperpetuals which is basically it
was all of a paper scenariobefore we went computerized.
Rent-to-own industry is expertsat recycling product, touching
up the wood and cleaning it upand making it look as
(31:12):
presentable as possible.
And the nice thing about it is,on a pre-rented unit they
discount the term.
They don't discount the paymentright.
So if it did cycle out and goout for three months and come
back, they didn't lose anyrevenue because they didn't
discount the rental rate, theydiscounted the term on it.
So I think it's a phenomenalbusiness and certainly it's got
(31:36):
some bad press in the past andpeople like to say you're taking
advantage of poor people andwhat have you?
At Champion, I was fortunateenough to be a part of focus
groups where they bring incustomers and I'll never forget
this one lady.
We were behind the glass wherethey couldn't see us and the
moderator's asking this lady.
He's like well, mrs Jones, wesee that you have a Whirlpool
(31:59):
washer and dryer here.
Yes, yes, I do, and that's $34a week.
What have you?
Whatever the number was backthen, okay, and the moderator
said Mrs Jones, do you realizethat you're going to pay twice
as much for that washer anddryer pair from Champion than if
you went and paid retail for it.
And the lady says listen, honey, I'm a single mom with three
(32:23):
kids.
I got two jobs.
I'm not dragging my kids downthe laundromat at 11 o'clock at
night and one of these days thatWhirlpool washing dryer is
going to be mine.
I know what I'm doing, don'tinsult me.
And that kind of for her, thatkind of changed my life.
Speaker 1 (32:41):
Well, I mean, it's one of those things like I think
that a lot of people see itjust from a monetary standpoint,
right, they say, if I was towalk into some place and I gave
you money, I should get this.
Okay, granted, when has thatever happened?
When's the last time that youwent to any furniture dealer and
you just put money down and youdidn't have to worry about
delivery?
You don't worry about warranty,you don't worry about how long
(33:03):
it's going to last you?
You're going to make all ofthis payment at one time, or are
you putting it on a credit card?
Because it's one of thosethings like if you don't
understand it, then you don'tknow it.
It's easy to say that, sure, Icould pull out a credit card and
I could just pay it, or I coulddo it in just cash.
And what am I not paying?
Because I'm doing it by that,some people say, well, it's
easier to pay in cash.
(33:23):
Well, if all of us had cash, wewould just be doing cash
transactions.
Credit would be nowhere to befound, right, we wouldn't have
things like Progressive, whereyou can buy it.
That way, people buy payments.
Well, that's the thing is thatpeople settle on the payments
because that's what they canafford.
It's easy to say, hey, I havemy whole check and I'm going to
take my whole check and put iton my sofa.
That's beautiful.
And if you can do that, thatNow you've got a phone bill, now
(33:44):
you've got a car bill, nowyou've got insurance, now you've
got water, you've got light.
So if you had that ability, itwould be easier.
We wouldn't have these programs.
And then, on the other side ofthat is when somebody puts it on
credit, the first thing you seeis what you bought.
I bought it for $799.
Taxes, it comes to $860, itdoesn't go down to $820.
(34:07):
It'll go down to $859 and $39is going to go towards whatever
interest rate that you're paying.
Okay, so it doesn't look likeit because you're not seeing all
of it Now, as you go down theline in adverse situations
compared to rent to own, whereyou can say this is your balance
, this is what you're buying,but this is your balance.
You have 78 weeks at thispayment.
This is what you're buying, butthis is your balance.
(34:28):
You have 78 weeks at thispayment.
This is what the cost is.
And, as you come down, this iswhat it's going to be, and you
probably have an early purchaseoption where you can pay it off
for less.
Well, guess what your creditcard is going to say.
This is your statement.
It doesn't look like it's goingto be any different Next month.
It doesn't look much differentNext month.
It doesn't look much different.
It goes down a little bit and alittle bit.
The only time that you'rereally going to see big chunks
is when you're down into thelast 10%.
How much have you spent?
(34:49):
I don't really know, but youknow what your rental-owned
agreement tells you what you'regoing to spend.
Your rental-owned agreementtells you that I'm not only
going to do that for you, I'mgoing to deliver it for you, I'm
going to service it for you,I'm going to to help you with
the price.
You can do that with yourcredit card company all you want
to, but it doesn't make adifference.
Speaker 2 (35:09):
I got another story for you.
I got transferred to Kissimmee,which is out by Disney, what
have you and this lady wouldcome in every week and she had
opened her wallet out and shehad I don't know six accounts
and she's paying us like $220every week, wow.
And I noticed that she hadAmerican express gold card in
(35:30):
her wallet and I uh three, youknow, every week she'd come in.
You know, when you're in a rentowned store, you get to know.
You get to know your customersand build a relationship and
after about the fourth week Icouldn't take it anymore.
I said, ma'am, I have to ask youa question and it's probably
the most stupidest thing I'veever done in my life.
(35:50):
She's like, well, what's that,tom?
It's like you come in here, you, you, you have a history, you,
you.
You have done 20, some accounts, and now our kids are getting
older, so suit for herselfbecause she's passing that one
down to her children that areabout to come out.
I said I've got to ask you.
You've got an American Expressgold card in your wallet.
(36:13):
Why are you renting to own?
And she says, tom, let me askyou a question now.
What would you do if I calledyou up here?
What time do you close at night, seven o'clock.
What would you do if I calledyou at 6.
Six, 59 tonight and told you myrefrigerator's not working?
Well, I'd load you up arefrigerator in the van and I'd
bring it out myself.
(36:34):
He said you just answered yourown question you can't find that
anywhere else.
I'm here for the service.
I know that I I know I'm payinga little more for it, but you
guys take care of me.
Anytime I've got a problem, youguys take care of me.
Speaker 1 (36:48):
Well, that, just that just speaks monuments to the
RTO industry, and that's one ofthose things where I like to.
I really would like to saythere are people out there.
They're young minded people whoare hungry entrepreneurs that
are ready to kind of make thatjump and say, hey, you know what
?
I've seen enough rent-a-centers, I've seen enough errands.
I've seen enough of the bigguys.
(37:08):
I want to open a brand too.
I want to put my stamp on theRTO industry and enjoy this
space along with everybody else,and so I see Capital Concierge
as a way to get that done.
So how did you end up there?
You're in the business, you'redoing operations for a long time
.
What made you decide I want tofund the RTO industry?
Speaker 2 (37:29):
Well, as I told you, I owned a company called U-Own
which is still in existence,which is basically what I call a
virtual rent-to-own.
We'd go to retailers and fortheir credit challenge customers
when they got turned down forthe five year no interest
presence they sell and we wouldbe an option for them.
As I'm working with all these,these furniture stores
(37:51):
throughout the United States,you know they're always saying
you know I need you to pay me asquick as possible because I
need money.
And I kept hearing that over andover and over again of how you
know, I got you, got to pay mequick, because this is pay me as
soon as you can, because I needcashflow to go out and buy some
more inventory.
And so, after hearing all this,I didn't grow up.
(38:13):
I'm not a banker.
I didn't grow up with a financedegree or anything like that,
went to college but I didn'thave a finance degree.
But at the end of the day, Iwas like there's all these
dealers out there that areneeding money.
You know, and you know I'd liketo try to figure that out and
credit card processing and allthe different financial services
(38:35):
.
I offer other financialservices alone, just besides
capital lending.
But at the end of the day, Iyou know.
Speaker 1 (38:44):
You saw a need and you decided to fill it.
I saw a need and I decided tofill it.
Speaker 2 (38:47):
You know, sometimes along the way I've questioned
what you know.
Did I make a great decision orwas it?
But at the end of the day Ienjoy helping people, and that
may sound corny.
Speaker 1 (38:58):
No.
Speaker 2 (39:00):
But I and I know more about how not to find lenders
and how not to find capital forfor people that I do probably
know how to, but but because itwas challenging and and as as
there was more of a need, youknow, in the rent owned space,
again you're you're dealing witha single store operator, a
(39:21):
multi store operator.
Again you're dealing with asingle store operator, a
multi-store operator.
What I found from a marketingstandpoint is that I do what I
call spider web marketing.
I help the guy that has onestore because he goes fishing
with a guy that's got threestores, that sits on the trib
board or an APRO board, that'sgot 10 stores or whatever, and
so I know that if I help a smallguy out and if you go to my
(39:43):
website, capitalconciergecom,you'll see recommendations on
there.
Like Tom really spent time withme, understood what I needed
and helped me do what get done,what I needed to get done, and
to me, you know, yes, we allneed money to pay for our
groceries and what have you likethat, but I really do enjoy
helping people.
I really do so, you guys got tounderstand.
Speaker 1 (40:06):
Going through the, the RTO world, I come across
Tom's booth and it was.
It was really interesting tosee because in this situation,
like I said, there's not a lotof people pushing this instance.
I've got people pushingfurniture and, and you know,
different rugs and hey, this isa, this is a new GPS software
for your whatever and yourdrivers.
And, as you're going through, Ithink you were really the only
(40:29):
one there with that mindset.
Speaker 2 (40:31):
For the last, to my knowledge, the last, I don't
know six or seven years.
I've never seen anybody thatwould what I consider.
You know I also work as abusiness development for a debt
buyer.
So when rent-owned stores havethese charge-off accounts that
(40:52):
are set in their filing cabinetthat don't generate cash, I have
a debt buyer that can buy thosecharge-off accounts and turn it
into cash.
It's another way for thatcompany to gain capital.
Speaker 1 (41:03):
Now that's so you're turning out to be a guy of many
traits here, many hats, and sowhen you were talking about an
SBA 7 loan, you were talkingabout a quick, express loan.
It sounds like you have anarsenal of different things that
somebody can use to get fundedfor different situations.
I do.
How many different loans arethere available so that somebody
(41:27):
can say, hey, you know what.
You probably do have somethingtailored to me.
Speaker 2 (41:30):
Well, again, we go back to the client interview,
onboarding processes, if youwill.
I'm a trip vendor as well as anationwide member vendor as well
, but I put out a loan recap,you know, depending on what your
situation is.
Do you have an 800 plus FICOscore?
Do you have?
(41:52):
Is your, how's your net worth?
I'm always, I'm always askingquestions to and part of that
sometimes can feel a littleintrusive to some people, or
what have you.
But at the end, you know, doyou have any charge offs?
Do you have any bankruptcies inyour, in your past, things like
that.
But what I'm doing is is I'm,I'm, I'm putting all the puzzle
(42:14):
pieces together in my mind as Iask you, I'm, I'm clicking
through lenders and saying okay,let's say nope, nope, you can't
go to that guy.
He just said this.
But you know I've got, I've gotbank financing that if somebody
that's an 800 plus FICO score,I can get them bank rates or
basically prime, prime rates,which is currently eight and a
half.
We're hoping the feds are goingto drop at 50 basis points,
(42:35):
which is a half a point,sometime late September.
Speaker 1 (42:39):
Let's see, let's see, we're hoping.
Speaker 2 (42:40):
But late September, let's see, let's see, we're
hoping, in other words.
But I've got things that thatgo down like the like the
express line for up to $150,000.
That's what I call lightdocuments.
Sba can be a pain sometimes,depending on what, what it is
that you need and how much youneed in your circumstances.
I've got, I've got, I've evengot a process for someone that
(43:02):
that's needing a sizable amountof money but has a high debt to
income ratio on their personalcredit.
I've got a process that canhelp them pay off their existing
personal lines to get theirpersonal credit score up and
then, once they qualify for theloan, then that process is paid
(43:23):
back.
It's called a new.
I call it the revolving balanceadvance program.
So I'm trying to figure outways of how I can help people.
One of the things that I havefound in this space is that
there's a thing called merchantcash advance, which I related to
a payday loan for a consumer,and those things can be a wheel
(43:44):
that you get on.
It's just really hard to getoff because it's just like a
payday loan for a consumer, andso I have I try to do everything
in my power not to do that If aguy comes to me and said I need
$50,000, I need it really quick.
But I also explained to themthat it's a very high APR.
It's an advance on yourreceivables.
(44:05):
So they don't call it an APR,much like in the rent-owned
business.
There's no APR in rent-owned,there's lease fees.
So, this is an advance fees.
But I ran across rent-owneddealers that will call me and go
man, I've got five MCA loansand they take weekly payments
out of my account.
Uh, as it cause, it's anadvance and it's crushing me.
(44:28):
Can you help me?
I was like, oh man, I hate tosee that.
Let me see what I can do.
So and I've talked to someclients that that are in some
trouble, so to speak, with MCAloans.
It's like let's develop a plan.
I can't help you right now, butI can tell you what you can do
to get yourself in the bestplace where I can help you.
So I I do a lot of pro bonowork, I guess is the best way to
(44:51):
say it, but at the end of theday, I believe that my
reputation is is one of mystrongest, what I hold near and
dear to my heart, and I wouldnever want somebody to say that,
tom Murphy steered me wrong.
Speaker 1 (45:06):
Well, I mean you've got what you said was 85, I
believe you said you started in85?
.
Speaker 2 (45:13):
In the rent-owned business 1985.
Speaker 1 (45:14):
So you've been in the business a long time.
You've probably seen a lot morethan some other people have
seen.
You've seen both sides of thefence from the vendor side, from
the buying side, from theoperation side.
Now, from the capital side,you're offering a lot of
different sources of knowledgeto get somebody funded for a lot
of different things that theyneed in the RTO industry, which
is absolutely amazing.
(45:35):
And if you guys want to knowmore about it, tom, how can they
find?
Speaker 2 (45:38):
you Capital concierge with an?
S dot com is my website.
I am a trib vendor.
I'm a nationwide member thathas run direct as well.
Speaker 1 (45:55):
I did see an 800 number on there as well, right,
yes?
Speaker 2 (45:58):
800-897-1409.
My email address is Tmurphy atcapital concierge with an S.
I didn't realize how difficultconcierge was to spell when I
came up with the name.
I love the name, but in otherwords, it's one of those weird
spelling names ConciergeC-O-N-C-I-E-R-G-E-S.
(46:18):
Some people leave off the S,off of the concierge, because
we're multiple people, so wemade it plural.
So, but I'm truly here to help.
If you've got any of yourlisteners have questions that
they just want to ask me aquestion, I'm here.
I'm here to help in any way Ican.
Speaker 1 (46:35):
You've got the information to reach out to Tom,
but if you have a question andyou want to ask the show, or if
you want to ask the show so thatwe can bring it up in a later
conversation or so that we canbring it up to Tom, feel free to
hit me up at Pete at the RTOshow podcastcom.
That's our email.
But you know, as always, youcan always find us online.
You're going to find us onFacebook, instagram, linkedin
and, of course, now YouTube.
(46:56):
Look us up anywhere you want tothe RTO show podcast.
We're everywhere that you wantto be.
Also, make sure that, as you'redoing this, you let somebody
know hey, do you need anything?
Do you need any capital?
Do you need anything that'sgoing on right now, especially
to our dealers that have one,two, three stores.
They might be in a crunch rightnow and this is one of the most
important times that we've gotto get through because, listen,
(47:18):
rto industry is super needed inAmerica right now and if they
can make it through these hardtimes, that'll be set up prime
time for when the economy kicksback in, and hopefully in a
couple of months.
That's exactly what's going tohappen.
Regardless of which way youpitch.
I want you guys to know thatwe're rooting for the RTO
industry and that's why Tom'shere, because, listen, there's
nothing more important thancapital when it comes to making
(47:39):
your business run.
So if you guys again have anyquestions, please feel free to
hit us up.
That's Pete atTheRTOSHowPodcastcom.
You can hit me up online aswell at TheRTOSHowPodcastcom.
That's the website.
You can see us here.
You're also going to see thisinteraction here on our videos
as well as on YouTube, and, tom,I can tell you I really
appreciate having you on theshow because, out of everything
(48:01):
that we do talk about whetherit's operations, whether it's
collections, whether it's saleswe seldom talk about the
background and it's so importantto know that we have somebody
out there who's helping us outand funding this so that we can
make it happen.
So, guys, we appreciate yourtime and I will tell you, as
always get your collections low,get your sales high.
(48:21):
Have a great one, thank you.
Hello everybody.
Listen, today we're doing ahead-to-head and I want to talk
to you guys about something thatwe don't always have here on
the show.
This is something unique,always important to rent, to own
, but not something that wealways talk about Right now.
I'm talking to Thomas Murphy.
Now he's a managing member ofone of the companies that I
think is going to be superimportant to you.
Now.
Capital Concierge is somethingthat you don't hear every day
(00:31):
but you need every day, and I'mso glad to have Thomas here.
Thomas, how are you doing today?
Speaker 2 (00:35):
I'm doing really good .
Speaker 1 (00:36):
Thank you for having me, sir, absolutely so.
I know that everybody'swondering.
Right now we're talking aboutsomething that everybody needs a
rent to own, but we haven'tspilled the beans.
What exactly is it that CapitalConcierge does, and what do you
offer to the rent to ownindustry?
Speaker 2 (00:51):
Well, thank you for asking that.
Capital Concierge is a businesscapital broker, In other words.
We have, we work with 50, 60different lenders of all
different types, depending onwhat the capital needs of the
business is.
And so what I do is if, when aclient comes to me, I do kind of
a soft interview with them.
(01:11):
It's like okay, how much areyou looking for?
I need, I don't know, 400,000.
Okay, what do you need it for?
Is it for inventory?
Is it for new trucks?
Is it for a new location?
Is it a partner buyout?
So I'm going through peelingthat onion back of trying to
find out exactly what it is,because I have multiple lenders
and by having multiple lenders,I have certain lenders that are
(01:33):
really good at this thing and acertain lenders that are good at
that thing.
And so what I'm doing ispeeling that onion back,
interviewing the client andasking them what it is.
I ask them questions abouttheir personal financial
situation How's your creditscore?
Lenders are very risk adverseand they're always.
It drives me crazy, but acredit committee is always
(01:57):
saying when this thing goessouth, how are we going to get
our money back?
And that's an important aspectof rent-to-own and I can talk a
little more about that.
But again, what we're lookingto do is I have a rent-to-own
background.
Don't know if you'd like for meto go into that a little bit,
but-.
Speaker 1 (02:13):
Well, we do, because here's the thing when we're
talking about and this is one ofthose times in the economy
where everybody's like I don'tknow what to do Everything's
getting expensive, capital'sgotten more expensive, real
estate has gotten worse,everything's more expensive.
But I've got to figure outwhat's right for me.
And when you're talking toThomas, he's got the ability to
(02:34):
help you out, specificallytailored to rent to own.
And I don't know if you guysknow this, but when you go into
a bank, if you go into afinancial institution, rent to
own is looked at a little bitdifferently, because we handle
business differently.
Now, the RTO industry knows alot about this, but you might
not, and the truth is we have alot of big guys out there.
But then you have the guys thatare trying to build their brand
.
For instance, myself, I wouldlove to build a brand, but
(02:56):
capital is something that Idon't know a lot about.
How do you raise the capitaland how do you go about that?
Well, this is the opportunityfor you guys to understand how
it works and, more importantly,how to get it.
So you do have a rental-ownedbackground where you understand
how the day-to-day works beforeyou got into Capital Concierge,
correct.
Speaker 2 (03:11):
Yes, absolutely.
Speaker 1 (03:14):
So where did we start ?
Where did you start?
Speaker 2 (03:15):
Well, it started back in 1985.
I was working in the jewelrybusiness wearing three, three
piece suits every day, and Iwanted I was over on the East
coast of Florida and uh, downSoutheast and I wanted to get
back to where I'm from, the landarea, daytona beach area.
And uh, a good friend of minethat I went to high school with
(03:37):
was working for champion rentown.
It was based it's a based outof Daytona beach.
And he says, hey, well, we'relooking for manager trainees.
And I said, okay, well, whatdoes that look like?
And he says, come on and overan interview.
And what have you?
I interviewed they go okay, youlook like a strong candidate,
We'd like to hire you.
And I said, okay, well, again,what does that look like?
Well, you started as a deliverydriver.
Speaker 1 (03:57):
I'm like okay, that's where you start.
Speaker 2 (04:01):
If grew up in the furniture business, when I was a
teenager, working for a guywhile I was going to high school
and delivered furniture andappliances and what have you.
So I felt very comfortable withthat because I do well to do.
It was a little bit of atransition going from working in
a jewelry store to back on atruck delivering appliances and
picking up furniture and thingslike that, but it all worked out
(04:22):
.
I did that for about six months.
They said we'd like to promoteyou to a collector.
At the time Champion had, Iwant to say I don't know maybe
60, 70 stores at the time.
So I became a collector, workedfor a guy named Wendell and he
taught me the collectionbusiness.
(04:43):
And you know I've been in salespretty much all my life and
grew up in a sales background.
Father was a CEO or was a salesmanager for a dairy company and
so in collections it's a lothas to do with sales.
Like, hey, I'm here to help youright now.
You're past due on your on yourpayment.
Payment, let me, how can I helpyou?
(05:04):
Give me something to work with.
So I was able to actually closemy book at a zero delinquency
one week.
It was only one week, but I was.
I still say that that was oneof my uh.
Never forget that uh.
But working with customers inthe rent to own business, you're
providing a service thatincorporates a product right,
they need a washer but whatyou're really selling is weekly,
(05:26):
biweekly, semi-monthly ormonthly payments, because you're
making that affordable into theguy's budget.
How does he get paid is whenyou want to collect your money.
So I did the collections job forabout six months and then after
that they promoted me to storemanager.
I'll never forget the districtmanager that promoted me.
He's like I don't think you cando it.
(05:47):
You'd be our youngest managerin all the stores.
I don't know, but I'm going tohave to give you a shot.
I was like, wow, thank you forthat vote of confidence, sir.
Anyway, I was the youngeststore manager in a small town
called the Land.
It was maybe 20,000 people andwhich.
(06:08):
I went to high school there andwhat have you.
So I knew the area very welland again I I crushed it.
Speaker 1 (06:14):
You know I did so how long?
How long were you in this spaceof of actually being in the
rent zone as far as operationsconcern?
Speaker 2 (06:22):
First three years I was a driver, collector and
store manager and did that forthree years.
They transferred me to Kissimmee, decided that I was going to
leave the company and startselling product back to the
rent-owned industry, stillstaying in the industry.
I did that for about two and ahalf years and I was selling to
(06:43):
Champion, based out of DaytonaBeach.
And the director of operationsat the time says you know, we
really need a buyer and we thinkyou'd be really good at that
and what do you think?
And at the time the company Iwas working for wasn't doing
exactly what I wanted to do andnot making the money I wanted to
make.
And I said you know, I'mwilling to give it a shot.
(07:05):
So I went back to Champion astheir director of purchasing,
merchandising and service At thetime they had about 100 stores
and was with them for threeyears as the director of
purchasing, merchandisingservice.
By the way, I forgot to saythat Larry Sutton was my mentor.
He was a Champion affiliatepartner over in the Tampa area
and Larry Sutton is a great guyand I call him my rent on mentor
(07:29):
.
Speaker 1 (07:29):
Well, he still has the, he still has the moniker
the Godfather rent.
He's been doing this so long andI know there's so many people
look up to him.
Uh, I had a chance onopportunity to speak to him one
time probably not as much as youhave, but a great conversation
and I'll be honest with you,every time that I have a chance
to see him or listen to himspeak or whatever's going on,
read about him I have to takethat opportunity because he has
(07:50):
a wealth of knowledge and heloves this business.
It's something that I reallyenjoy.
Speaker 2 (07:57):
And so I've got a little bit that'll tie the rest
of this in, if you want me tofinish.
So in 1993, I was with them forthree years again, six years
total.
In 1993, transamerica was thebig finance company for the
rent-owned industry.
When I first started as a storemanager, it was BorgWarner.
Transamerica bought outBorgWarner and in 1993, all of a
(08:19):
sudden I started gettingpurchase orders turned down and
I'm like well, what's going on?
I talked to the CFO at Championand come to find out
Transamerica was exiting therent-to-own space.
Oh and so, which was aninteresting time, because at
that point so Champion startedgoing to the bankers and saying
(08:43):
to the bankers like well, wehave a six, I don't know six or
eight million dollar line withTransamerica and we'd like to,
we're looking for a replacementfor that.
Like, well, what do you do?
It's like, well, we, we offerfurniture and appliances and
bedding and things like that.
We work with a credit challengecustomer.
And and the banker would stopand say, well, what you work
(09:06):
with credit challenge customers,yes, sir.
And the lender, the banker,would say, let me get this
straight.
You want me to loan money toyou so you could loan it to
somebody else that I wouldn'tloan to?
Yeah, you got it, great, no,thank you.
Here's a coffee mug.
Thank you for coming in today.
So Transamerica whenTransamerica exited even though
they said if we were going tokeep anybody in the space it
(09:28):
would be champion, but they saidwe have to exit the whole space
Shortly after that, there was agroup of guys that bought a
leftover portfolio fromTransamerica called Texas
Capital Bank.
Texas Capital Bank was based outof, still is based out of,
dallas, texas, and at one timethey had over $200 million out
(09:49):
on the street to the rent-to-ownindustry for new store startups
, inventory, all the differentthings like that.
From what I understand and it'sfrom what I understand is that
eventually the people wanted tosell the bank and the acquiring
banks didn't like the rent-owned.
The bankers kind of look atrent-owned as a little bit of a,
(10:11):
not a selective, not one oftheir more sought-after business
.
It's a high risk, high risk,yeah.
What they don't understand isthe business owners tend to be
blue-collar millionaires, butthey're dealing with a credit
challenge customer.
But they also know how to dealwith a credit challenge customer
by knowing that when is yourpayday?
We need to make your pay.
You get paid twice a week.
(10:32):
We want you to pay twice a weekso that they know how to manage
that cash flow.
That's that providing a servicethat incorporates a product.
The customer needs a washer,but they need that financial
management situation where theycan break that wash machine up
into an affordable weekly,biweekly, semi-monthly.
Speaker 1 (10:50):
Well, affordable chunks.
I mean, we're dealing withpeople that are having
situations in their lives where,if they could go in and buy it,
they would have, but insteadthey're allowing us to at least
own it for payments on end,depending on, however it is 52
weeks, 78 weeks, 24 months.
That they can own it eventuallyExactly end, depending on,
however it is 52 weeks, 78 weeks, 24 months that they can own it
eventually with the option toreturn, and I'm sure that that
(11:10):
plays a part in it as well Notonly the option to pay over 78
weeks over something that theyprobably wouldn't have been able
to get credit on, but now theyalso have the option to return
it, which means that you're notlocked into getting that
profitability.
They do have the option toreturn it, and then you'd have
to sell it to somebody else.
Does that scare a lot oflenders when you're talking
about getting capital?
Speaker 2 (11:29):
Well, you start talking to lenders and they
start dissecting the businessand they want to learn more
about it.
The fact is that the balance onrent, which is all the
remaining weekly, biweekly,semi-monthly or monthly payments
can do, is called the balanceon rent.
(11:50):
Most stores average store 500accounts will have $1.5 million,
$1.6 million or whateverremaining balance on lease.
But for gap purposes, theaccounting purposes, they don't
recognize that on the balancesheet, and so bankers' balance
sheets are one of their.
It's, like you know, thestandard issue three-piece suit
for a banker, and he understandsa balance sheet.
(12:11):
So when you start talking aboutrent-owned and the fact that
the customer can return theproduct at any time and stop the
financial obligation, it's likewell, wait a minute, you know
how does that work.
Speaker 1 (12:22):
Well, there's a thing called a keep rate.
Speaker 2 (12:24):
There's a keep rate in industry somewhere averages
in the 50 percentile, whateverit means.
Out of a hundred people thatcome into the store, 50 of them
will retain ownership by payingit off.
The other 50 are going toreturn it because they couldn't
afford it, they don't need itanymore and things like that,
and so rent to own is the kingof recycling product.
I've taken pressure washers tosofas and chairs that were
(12:50):
really in bad shape andamazingly they come out
beautiful.
So the bottom line is that asyou start talking to a banker
like that that doesn't computein his head, he doesn't
understand it.
One of the values of CapitalConcierge.
Because of my rent-to-ownbackground, I also owned a
lease-to-own company, which islike creating a virtual
rent-to-own store in a furniturestore.
There's many of them out therenow, like Progressive and what
(13:14):
have you, but the bottom line isthat being able to talk to a
banker and explain to them howit works and what happens in
case of default and thedifferent things like that, I've
been able to tee up lendersthat understand the rent-to-own
business and I've done a ton ofdeals with them and they've all
worked out fine.
So I get a certain amount ofrespect with the lenders that I
(13:35):
work with because I understandthe business and I understand
talking to the dealer and whathe's going through.
So I'm like a go-between rightthe banker.
I have multiple lenders and Ihave a client.
Like I was telling you before isthat when I speak to a client
and client will tell me, likeokay, I need X, y, z, like how
(13:58):
much money are you looking for?
What do you need it for?
Is it a partner buyout, is it anew location?
Is it a need inventory money,all the different things.
So I have different lendersthat I interview that client and
then decide where's the bestplace to take it.
The nice thing about CapitalConcierge is that if you come to
me and we and I present you toone particular lender and that
(14:20):
lender says, no, I've got otherlenders.
Speaker 1 (14:23):
So you're?
You're basically a one-stopshop for somebody who needs
capital for the rental industryspecifically.
So let's say I wanted to go andI wanted to open up my own
business.
I can call you up.
I mean, I have the operationalknowledge.
I understand how to rent weekly, bi-weekly, semi-monthly,
monthly.
I know how to pay bills.
But getting it open thatrequires capital.
(14:44):
Right, I have to find abuilding or I have to find a
lease space.
I have to get trucks available.
I have to make sure that I havea certain amount of capital
away so that I can pay my laborfor such amount of time.
I have to find product and talkto vendors and say, hey, I need
this much product at start andI'll probably be ordering from
then on.
And then, instead of goingeverywhere for all those, I have
(15:06):
the ability to come to you.
We can discuss numbers, becauseyou understand what it takes to
open and what is a good amountfor what I'm looking for, and
then shop those around and findthe best deal for the both of us
, right, something that you cansay is presentable and something
I can say I can afford.
Speaker 2 (15:22):
Well, I work with several different rent to own
franchise uh companies, um, uh,and, and because they know I
understand the rent to ownbusiness, you know there's a,
there's, there may be a storemanager out there that's been a
store manager for 10 years andhe's like you know what?
I'm ready to be an entrepreneurnow.
And so they'll go to thefranchisee.
(15:45):
They'll talk, they'll sharewith them the franchise
disclosure document that'll showsome estimated costs to start
up and things like that.
And then he's like well, wow, Ididn't realize it was quite
that expensive.
I don't know that I have thecapital for that.
It's like well, we work with agentleman named Tom Murphy with
Capital Concierge.
I do a fair amount of SBA loans,sba 7A loans Without real
(16:08):
estate.
It's a 10-year term, noprepayment penalty.
The nice thing about the SBA isthat the government guarantees
that loan by 75%.
So what's nice about it isyou'll go to a lender.
The bank is loaning you themoney for the funds.
But if they're a preferredlender then they can approve you
(16:29):
and in case of default thentheir exposure is only 25% of
that loan.
So if it's a million dollarloan, the most that they can
lose is $250,000.
What that does is it gives thebanker more confidence in maybe
taking a deal Maybe theywouldn't do on their own as a
commercial lender but with thatSBA loan at the SBA deal it
(16:53):
gives them more confidence.
So a young gentleman you know hewanted wants to be an
entrepreneur.
He understands the rent to ownbusiness and he he's like.
So what does that look like?
So one of the things that Ideveloped is what I call kind of
a pre-qualification run whereI'll ask him some questions
about his personal credit score,his personal net worth, his
(17:16):
available cash, different thingslike that.
So One of the lenders that I doquite a bit of rent-to-own
business with, actually typicalSBA is prime rate, which is
currently 8.5%.
Typically the markup is 2.75.
(17:37):
I have the one lender that willgo 2.25, which is a half a
percent off of the rate, whichcan make a pretty big difference
after 10 years.
They'll also lay a revolvingline of credit alongside that
SBA loan.
So in other words, if they needa million, three to say a
million dollars, for ease ofmath to open it up, it's a 20%
(17:57):
equity infusion.
So that's $200,000.
They typically like for you tohave a little more in your bank
account in case things get introuble.
They know you got a littlerunway.
But then they'll also lay $ 75,a hundred thousand dollar
revolver alongside of that.
So what I tell you know, when Iwas a champion, I was on the new
(18:18):
store startup team, if you will.
So we were opening a ton ofstores at the time.
You get one store that comesout of the gate really hard, and
so I say that a new store eatslike five existing stores as far
as inventory-wise, yes, yes.
And so, in other words, whatyou've got to make sure is
you've got the capital to feedthe beast.
That thing comes out of thegate really hard.
You've got to make sure you'vegot the cash, because the last
thing you want to do is run outof cash and not be able to buy
(18:40):
the inventory.
Speaker 1 (18:41):
Ultimately, they say in the industry, getting to 500
accounts is the big goal,because at that point you start
cash flowing, your fixedexpenses are covered and you
start to break out and in orderto do that, you have to have the
capital to go to your vendors,to go where you need to go and
say hey, I need more product,this is selling good, this is
(19:01):
not selling good, so I'm goingto buy more of this and more of
that and then, before you knowit, you have another
showroomroom and hopefully,you're going to sell through
that quite a few times becauseyou're trying to get to that
mark, which makes the tough I'msorry to interrupt you.
It just makes it tough if youdon't understand how that works,
because the capital needed isto refill your showroom every
single time you sell through it,and if you're selling 500 BOR,
(19:21):
that's quite a bit.
Speaker 2 (19:23):
Well, two, what you run into is a huge cash deficit
when you open a rent-to-ownstore.
You know, okay, maybe you'llsell a little bit of retail here
and there, but that's not thegame that we're in.
So in the rent-to-own businessyou say your average cost of
goods what?
$400 these days.
And then so you buy a piece ofproduct for $400, a customer
(19:44):
comes in and let's say it's awasher and dryer pair.
Okay, let's say you get for the, you give them a deal for the
first week.
You get $10.
Okay, you spent 400 and youjust took in $10.
You got a $390 deficit rightout of the get-go.
Speaker 1 (20:01):
And that's that's right.
Speaker 2 (20:02):
Just getting even that's not any profitability,
that's just getting your productcost back, and so when I work
with rent-owned dealers,especially because of my
background, we spend a lot oftime talking about projections
and business plans.
Absolutely.
Business plans is pretty muchyour plan, but, more importantly
, the projections of being ableto make sure that you've got
(20:22):
your cost of capital covered,your rent covered, your pay
factor coverage, your trucks,you know all the inventory
things like that and so andthat's one of the some of the
things that the confidence thatcomes from the lenders that I
work with, knowing that I'mhelping them along Well, you're
operation savvy.
The nice thing about this, too,is that the most of the SBA
(20:44):
lenders I work with pay me areferral fee, so my cost to the
client is covered by the lender.
Oh, that's great to hear.
So I'm working for free, so tospeak.
But that also puts me in it towin it to with them.
From a standpoint of I'm in itto win it.
Their success is my success.
So I get that loan across thegoal line, I get them all
squared away, they close theloan I get a little referral fee
(21:06):
.
Speaker 1 (21:07):
So let me ask you a question, because everybody
right now is talking about howthings cost more.
That's just part of life, andinflation happens.
Unfortunately, inflation'shappened a little bit more
recently, but it's going on.
So in a simple world, we try tokeep it as simple as possible,
because I know there's a lotmore to it.
If I was to come to you and say, hey, I'm looking to open a
(21:29):
rent-to-own location, what isthe general cost for a location
now where you can say this isprobably a safe number?
Speaker 2 (21:40):
that you'd want to get started with.
A lot has to do with thedemographics From a standpoint,
are you in a small town?
Are you in a medium-sized town?
At what kind of competitionYou're better to be a big fish
in a small pond, so to speak.
Right and so at Champion, wewere always like we went to
Atlanta but we never went insidethe perimeter.
We were on the outside of thesesmaller towns or whatever like
that.
So work with one particularfranchise, location franchise or
(22:08):
that typically a startup storeis $600,000.
Speaker 1 (22:12):
Is it six.
Now.
The magical number that Ialways heard coming up through
the ranks was 500.
Speaker 2 (22:17):
Well, again, talking about the prices going up,
different things like that.
So typically they want to havea core base of 600.
An SBA lender is going to lookfor 20% equity in that situation
.
They also like for you to haveanother 10% of that loan amount
as in personal runway, in casemaybe the thing ramped harder
(22:41):
than expected or maybe it rampedslower than expected.
Now you've got a longer timebefore you get to that magic
number of 500 accounts.
So you know a lot of what I dois spend time with the client
and you know what are yourexpectations and are you
prepared?
Do you have other access tocash?
Because you know I've hadfranchisees come in and say I
(23:06):
don't think I need $600,000.
I think I can do it for 450,000.
And it's like, okay, whathappens if that thing comes out
of the gate really hard?
And you because basically webreak down, like on the FDD, for
example, on a franchise, it'llsay you need so much for the,
for the trucks, you need so muchfor your initial showroom
inventory, you need yourbackstock, you need your
(23:27):
computers, your counters andsignage and all the different
things like that.
So we break those buckets downinto into what we call a sources
and use form.
So here's all the things thatyou have uses for and here's
excuse me here's the, here's the, the sources of where that
money's going to come from.
So then I always tell them youneed a contingency plan of the
(23:52):
unexpected, if you will.
Speaker 1 (23:53):
So now cutting into this, because that was a really
broad question how do I open oneup?
And you're saying it costs thismuch because there's so much
involved in that.
But then you had said earlierit's also possible to dissect it
and say I need this forvehicles, I need this for a
buyout, I need this for justfurniture or, let's say, product
.
Someone can do that as well.
So it's not just for somebodywho's looking to open up their
(24:16):
own brand, their own store andinto the RTO industry.
It could be for somebody who'salready open, saying hey, I need
capital for a specific item ora specific thing.
I need it for vehicles becauseI need new vehicles or new
vehicle wrap.
I need it for more furniture, Ineed it because I'm running out
of space.
I know that I can do morebusiness, but I need to lease
somewhere else.
I need more floor space, and soI'm going to need some capital
(24:39):
for that, because now I've gotto build out only for build out,
though I don't need it foreverything else, because I kind
of have everything else.
I have my brand name, I'mcopyrighted, I have all that, so
our trademark, but now I justneed it for this so they can
still come to you, thomas, andsay, hey, this is my specific
goal with RTO in mind, and youcan still go into it and say
let's take care of it this way.
Speaker 2 (24:59):
If it's an existing dealer and he's two years or
older business-wise, and has aFICO score of, say, 700, maybe a
little less, but preferably alittle more I have a special,
what I call an express linethat's up to $150,000 that I can
close in as little as two weeks.
So it's up to $150,000 on a 10year term, no prepayment penalty
(25:20):
.
So if he's like, look, I wantto move into a new space, it's
bigger, going to need a littlemore inventory, but I've already
got 450 accounts, but you'regoing to need new signage and
probably going to need anotherbox truck and those things are
not inexpensive by any stretchof the imagination.
But what's nice is that if hedoesn't feel like he needs 150,
(25:41):
he only needs 95 or 100, we cando those and it's an affordable
payment over a 10 year term.
The key to that is it's noprepayment penalty.
So he gets a year down the roadand he's got into the new
location and he's grown hisaccounts by 200 and he's really
cashflow and great.
He can pay that thing off earlyand stop the interest rate.
(26:03):
So that's part of that wholeinterview process where we're
trying to dissect what the guyreally needs and what he really
wants to do.
Because, you know, I almostlike a consultant for being able
to say did you think about this, did you think about that?
Did you?
You know, maybe we need to,maybe you need to plan for this
or what have you.
So you know most people whenthey, when they come up with a
(26:27):
plan, maybe they didn't thinkabout all the points that they
need to.
So I try to dialogue with themto let's uncover all the let's
left no stone unturned to makesure that you you know you said
you wanted a hundred, but basedon what you told me and we've
started that bucket, we startedbuilding okay, we need so much
for this and so much for thatand so much for this and so much
for that.
So part of what I am is asalesperson to the bank.
(26:52):
So in other words, you come inand you want to open a new store
and I get all your information.
I'm helping you build the storythat goes to the banker,
because what the banker is, he'sthe salesperson to the credit
committee.
So we do a really good job ofselling the banker on you, your
background, your personalfinancial situation, all the
(27:16):
different things like that.
So we build that story.
I call myself a storyteller,but part of that storytelling is
being able to understand one,how to communicate with the
client, but two, also know whatthat banker's looking for, what
kind of points do we need tomake sure that we hit and
sometimes maybe a client's alittle bit softer on one of
(27:39):
those points that we need tomake to the banker, but he's
also stronger on multiple.
So my job is to sell the bankerand then the banker's job is to
sell the credit committee onwhy this loan makes sense and
how this gentleman will besuccessful and different things
like that.
Absolutely.
Speaker 1 (27:54):
So what you're doing is making sure that whoever is
in the need of capital, they'renot just walking in and saying
anything to anybody.
They've got you to prep them,sit down and talk with them and
say, hey, these are the cases,these are the things that
they're looking at, these arethe touch points that somebody
in this situation is going to belooking at, and so what you
want to do is be ready for thosesituations by doing this,
(28:15):
saying this, and you want tobolster up exactly what's going
on, but you want to put it in away where they understand.
You're okay, you might notunderstand everything right now,
but let's sit down and we'lltalk about it.
So at the end of this one, wedo go into talk to the bank or
whatever loan institution thereis.
They feel as comfortable withyou as I do, and that's how you
make it work.
From Capital Concierge.
Speaker 2 (28:36):
And part of what I started to say is that when I
get a client, I do basically aninterview, and then what I tell
them is that I'm going to sendyou a personal financial
statement and a resume.
And a resume is not somethingthat you would go find a job
with, but it's more like Iworked here and I did this and
that's showing the rent to ownexperience.
So, uh, and.
And then on the personalfinancial statement, you know,
(28:59):
oftentimes they don't fill themout, right, you know.
So it's like okay, so that'scoming to me, I'm, I'm getting
that information, I'm reviewingit with them.
It's like hey, you know this.
I think this is the wrong spot.
The you know this over here, bythe way, do you have, is this,
do you have any home furnishingsand do you have any jewelry?
Do you blah, blah, blah?
Okay, we need to put that onthere as assets.
(29:20):
What we're doing is we're we'rebuilding that store building
and so that that I'm looking atit before it goes to the banker.
I made a mistake early on in mycareer at capital concierge
where I sent all these forms toa gentleman asking him to fill
them out, and never looked atthem.
Hit the forward button to anemail and the lender calls me
(29:41):
and says, tom, did you look atall this?
At all this makes, makesabsolutely no sense.
There's no way this guy's goingto get a loan and I'm like wait
, wait, wait, wait.
And then, after going back tohim, he filled it out wrong.
But I made the mistake.
It was one of my first deals.
I just hit the forward button,send him all the information to
fill out.
I hit the forward button and itwasn't.
So again, I am part of CapitalConcierge is being able to build
(30:07):
that story.
Build a story, tell the story,make sure it's clear and
accentuate the positives and notthat I would ever hide anything
from a lender from an integritystandpoint.
In other words, when we'rebuilding that story, we're
telling that story, we're goingto obviously accentuate the
positives the best we can.
Speaker 1 (30:25):
But we got to see it on the right light.
I mean, when you're doing that,you don't want somebody to
always say, hey, there's a lotof risk, there's a lot of
challenge, there's a lot ofadversity going on, and not see
what we have to offer on theother end.
We're doing this a long time.
Yes, the product comes back,but we also refurbish it, we
take care of it, we also put itback out.
And it's a possibility that,even though we had this amount
that we were going to set for it, if we really take care of it,
(30:47):
we really refurbish and we putit out there, we could actually
make more than those marginsthat we expected.
Speaker 2 (30:51):
I remember when I was a store manager looking at now
I'm really going to date myselfperpetuals which is basically it
was all of a paper scenariobefore we went computerized.
Rent-to-own industry is expertsat recycling product, touching
up the wood and cleaning it upand making it look as
(31:12):
presentable as possible.
And the nice thing about it is,on a pre-rented unit they
discount the term.
They don't discount the paymentright.
So if it did cycle out and goout for three months and come
back, they didn't lose anyrevenue because they didn't
discount the rental rate, theydiscounted the term on it.
So I think it's a phenomenalbusiness and certainly it's got
(31:36):
some bad press in the past andpeople like to say you're taking
advantage of poor people andwhat have you?
At Champion, I was fortunateenough to be a part of focus
groups where they bring incustomers and I'll never forget
this one lady.
We were behind the glass wherethey couldn't see us and the
moderator's asking this lady.
He's like well, mrs Jones, wesee that you have a Whirlpool
(31:59):
washer and dryer here.
Yes, yes, I do, and that's $34a week.
What have you?
Whatever the number was backthen, okay, and the moderator
said Mrs Jones, do you realizethat you're going to pay twice
as much for that washer anddryer pair from Champion than if
you went and paid retail for it.
And the lady says listen, honey, I'm a single mom with three
(32:23):
kids.
I got two jobs.
I'm not dragging my kids downthe laundromat at 11 o'clock at
night and one of these days thatWhirlpool washing dryer is
going to be mine.
I know what I'm doing, don'tinsult me.
And that kind of for her, thatkind of changed my life.
Speaker 1 (32:41):
Well, I mean, it's one of those things like I think
that a lot of people see itjust from a monetary standpoint,
right, they say, if I was towalk into some place and I gave
you money, I should get this.
Okay, granted, when has thatever happened?
When's the last time that youwent to any furniture dealer and
you just put money down and youdidn't have to worry about
delivery?
You don't worry about warranty,you don't worry about how long
(33:03):
it's going to last you?
You're going to make all ofthis payment at one time, or are
you putting it on a credit card?
Because it's one of thosethings like if you don't
understand it, then you don'tknow it.
It's easy to say that, sure, Icould pull out a credit card and
I could just pay it, or I coulddo it in just cash.
And what am I not paying?
Because I'm doing it by that,some people say, well, it's
easier to pay in cash.
(33:23):
Well, if all of us had cash, wewould just be doing cash
transactions.
Credit would be nowhere to befound, right, we wouldn't have
things like Progressive, whereyou can buy it.
That way, people buy payments.
Well, that's the thing is thatpeople settle on the payments
because that's what they canafford.
It's easy to say, hey, I havemy whole check and I'm going to
take my whole check and put iton my sofa.
That's beautiful.
And if you can do that, thatNow you've got a phone bill, now
(33:44):
you've got a car bill, nowyou've got insurance, now you've
got water, you've got light.
So if you had that ability, itwould be easier.
We wouldn't have these programs.
And then, on the other side ofthat is when somebody puts it on
credit, the first thing you seeis what you bought.
I bought it for $799.
Taxes, it comes to $860, itdoesn't go down to $820.
(34:07):
It'll go down to $859 and $39is going to go towards whatever
interest rate that you're paying.
Okay, so it doesn't look likeit because you're not seeing all
of it Now, as you go down theline in adverse situations
compared to rent to own, whereyou can say this is your balance
, this is what you're buying,but this is your balance.
You have 78 weeks at thispayment.
This is what you're buying, butthis is your balance.
(34:28):
You have 78 weeks at thispayment.
This is what the cost is.
And, as you come down, this iswhat it's going to be, and you
probably have an early purchaseoption where you can pay it off
for less.
Well, guess what your creditcard is going to say.
This is your statement.
It doesn't look like it's goingto be any different Next month.
It doesn't look much differentNext month.
It doesn't look much different.
It goes down a little bit and alittle bit.
The only time that you'rereally going to see big chunks
is when you're down into thelast 10%.
How much have you spent?
(34:49):
I don't really know, but youknow what your rental-owned
agreement tells you what you'regoing to spend.
Your rental-owned agreementtells you that I'm not only
going to do that for you, I'mgoing to deliver it for you, I'm
going to service it for you,I'm going to to help you with
the price.
You can do that with yourcredit card company all you want
to, but it doesn't make adifference.
Speaker 2 (35:09):
I got another story for you.
I got transferred to Kissimmee,which is out by Disney, what
have you and this lady wouldcome in every week and she had
opened her wallet out and shehad I don't know six accounts
and she's paying us like $220every week, wow.
And I noticed that she hadAmerican express gold card in
(35:30):
her wallet and I uh three, youknow, every week she'd come in.
You know, when you're in a rentowned store, you get to know.
You get to know your customersand build a relationship and
after about the fourth week Icouldn't take it anymore.
I said, ma'am, I have to ask youa question and it's probably
the most stupidest thing I'veever done in my life.
(35:50):
She's like, well, what's that,tom?
It's like you come in here, you, you, you have a history, you,
you.
You have done 20, some accounts, and now our kids are getting
older, so suit for herselfbecause she's passing that one
down to her children that areabout to come out.
I said I've got to ask you.
You've got an American Expressgold card in your wallet.
(36:13):
Why are you renting to own?
And she says, tom, let me askyou a question now.
What would you do if I calledyou up here?
What time do you close at night, seven o'clock.
What would you do if I calledyou at 6.
Six, 59 tonight and told you myrefrigerator's not working?
Well, I'd load you up arefrigerator in the van and I'd
bring it out myself.
(36:34):
He said you just answered yourown question you can't find that
anywhere else.
I'm here for the service.
I know that I I know I'm payinga little more for it, but you
guys take care of me.
Anytime I've got a problem, youguys take care of me.
Speaker 1 (36:48):
Well, that, just that just speaks monuments to the
RTO industry, and that's one ofthose things where I like to.
I really would like to saythere are people out there.
They're young minded people whoare hungry entrepreneurs that
are ready to kind of make thatjump and say, hey, you know what
?
I've seen enough rent-a-centers, I've seen enough errands.
I've seen enough of the bigguys.
(37:08):
I want to open a brand too.
I want to put my stamp on theRTO industry and enjoy this
space along with everybody else,and so I see Capital Concierge
as a way to get that done.
So how did you end up there?
You're in the business, you'redoing operations for a long time
.
What made you decide I want tofund the RTO industry?
Speaker 2 (37:29):
Well, as I told you, I owned a company called U-Own
which is still in existence,which is basically what I call a
virtual rent-to-own.
We'd go to retailers and fortheir credit challenge customers
when they got turned down forthe five year no interest
presence they sell and we wouldbe an option for them.
As I'm working with all these,these furniture stores
(37:51):
throughout the United States,you know they're always saying
you know I need you to pay me asquick as possible because I
need money.
And I kept hearing that over andover and over again of how you
know, I got you, got to pay mequick, because this is pay me as
soon as you can, because I needcashflow to go out and buy some
more inventory.
And so, after hearing all this,I didn't grow up.
(38:13):
I'm not a banker.
I didn't grow up with a financedegree or anything like that,
went to college but I didn'thave a finance degree.
But at the end of the day, Iwas like there's all these
dealers out there that areneeding money.
You know, and you know I'd liketo try to figure that out and
credit card processing and allthe different financial services
(38:35):
.
I offer other financialservices alone, just besides
capital lending.
But at the end of the day, Iyou know.
Speaker 1 (38:44):
You saw a need and you decided to fill it.
I saw a need and I decided tofill it.
Speaker 2 (38:47):
You know, sometimes along the way I've questioned
what you know.
Did I make a great decision orwas it?
But at the end of the day Ienjoy helping people, and that
may sound corny.
Speaker 1 (38:58):
No.
Speaker 2 (39:00):
But I and I know more about how not to find lenders
and how not to find capital forfor people that I do probably
know how to, but but because itwas challenging and and as as
there was more of a need, youknow, in the rent owned space,
again you're you're dealing witha single store operator, a
(39:21):
multi store operator.
Again you're dealing with asingle store operator, a
multi-store operator.
What I found from a marketingstandpoint is that I do what I
call spider web marketing.
I help the guy that has onestore because he goes fishing
with a guy that's got threestores, that sits on the trib
board or an APRO board, that'sgot 10 stores or whatever, and
so I know that if I help a smallguy out and if you go to my
(39:43):
website, capitalconciergecom,you'll see recommendations on
there.
Like Tom really spent time withme, understood what I needed
and helped me do what get done,what I needed to get done, and
to me, you know, yes, we allneed money to pay for our
groceries and what have you likethat, but I really do enjoy
helping people.
I really do so, you guys got tounderstand.
Speaker 1 (40:06):
Going through the, the RTO world, I come across
Tom's booth and it was.
It was really interesting tosee because in this situation,
like I said, there's not a lotof people pushing this instance.
I've got people pushingfurniture and, and you know,
different rugs and hey, this isa, this is a new GPS software
for your whatever and yourdrivers.
And, as you're going through, Ithink you were really the only
(40:29):
one there with that mindset.
Speaker 2 (40:31):
For the last, to my knowledge, the last, I don't
know six or seven years.
I've never seen anybody thatwould what I consider.
You know I also work as abusiness development for a debt
buyer.
So when rent-owned stores havethese charge-off accounts that
(40:52):
are set in their filing cabinetthat don't generate cash, I have
a debt buyer that can buy thosecharge-off accounts and turn it
into cash.
It's another way for thatcompany to gain capital.
Speaker 1 (41:03):
Now that's so you're turning out to be a guy of many
traits here, many hats, and sowhen you were talking about an
SBA 7 loan, you were talkingabout a quick, express loan.
It sounds like you have anarsenal of different things that
somebody can use to get fundedfor different situations.
I do.
How many different loans arethere available so that somebody
(41:27):
can say, hey, you know what.
You probably do have somethingtailored to me.
Speaker 2 (41:30):
Well, again, we go back to the client interview,
onboarding processes, if youwill.
I'm a trip vendor as well as anationwide member vendor as well
, but I put out a loan recap,you know, depending on what your
situation is.
Do you have an 800 plus FICOscore?
Do you have?
(41:52):
Is your, how's your net worth?
I'm always, I'm always askingquestions to and part of that
sometimes can feel a littleintrusive to some people, or
what have you.
But at the end, you know, doyou have any charge offs?
Do you have any bankruptcies inyour, in your past, things like
that.
But what I'm doing is is I'm,I'm, I'm putting all the puzzle
(42:14):
pieces together in my mind as Iask you, I'm, I'm clicking
through lenders and saying okay,let's say nope, nope, you can't
go to that guy.
He just said this.
But you know I've got, I've gotbank financing that if somebody
that's an 800 plus FICO score,I can get them bank rates or
basically prime, prime rates,which is currently eight and a
half.
We're hoping the feds are goingto drop at 50 basis points,
(42:35):
which is a half a point,sometime late September.
Speaker 1 (42:39):
Let's see, let's see, we're hoping.
Speaker 2 (42:40):
But late September, let's see, let's see, we're
hoping, in other words.
But I've got things that thatgo down like the like the
express line for up to $150,000.
That's what I call lightdocuments.
Sba can be a pain sometimes,depending on what, what it is
that you need and how much youneed in your circumstances.
I've got, I've got, I've evengot a process for someone that
(43:02):
that's needing a sizable amountof money but has a high debt to
income ratio on their personalcredit.
I've got a process that canhelp them pay off their existing
personal lines to get theirpersonal credit score up and
then, once they qualify for theloan, then that process is paid
(43:23):
back.
It's called a new.
I call it the revolving balanceadvance program.
So I'm trying to figure outways of how I can help people.
One of the things that I havefound in this space is that
there's a thing called merchantcash advance, which I related to
a payday loan for a consumer,and those things can be a wheel
(43:44):
that you get on.
It's just really hard to getoff because it's just like a
payday loan for a consumer, andso I have I try to do everything
in my power not to do that If aguy comes to me and said I need
$50,000, I need it really quick.
But I also explained to themthat it's a very high APR.
It's an advance on yourreceivables.
(44:05):
So they don't call it an APR,much like in the rent-owned
business.
There's no APR in rent-owned,there's lease fees.
So, this is an advance fees.
But I ran across rent-owneddealers that will call me and go
man, I've got five MCA loansand they take weekly payments
out of my account.
Uh, as it cause, it's anadvance and it's crushing me.
(44:28):
Can you help me?
I was like, oh man, I hate tosee that.
Let me see what I can do.
So and I've talked to someclients that that are in some
trouble, so to speak, with MCAloans.
It's like let's develop a plan.
I can't help you right now, butI can tell you what you can do
to get yourself in the bestplace where I can help you.
So I I do a lot of pro bonowork, I guess is the best way to
(44:51):
say it, but at the end of theday, I believe that my
reputation is is one of mystrongest, what I hold near and
dear to my heart, and I wouldnever want somebody to say that,
tom Murphy steered me wrong.
Speaker 1 (45:06):
Well, I mean you've got what you said was 85, I
believe you said you started in85?
.
Speaker 2 (45:13):
In the rent-owned business 1985.
Speaker 1 (45:14):
So you've been in the business a long time.
You've probably seen a lot morethan some other people have
seen.
You've seen both sides of thefence from the vendor side, from
the buying side, from theoperation side.
Now, from the capital side,you're offering a lot of
different sources of knowledgeto get somebody funded for a lot
of different things that theyneed in the RTO industry, which
is absolutely amazing.
(45:35):
And if you guys want to knowmore about it, tom, how can they
find?
Speaker 2 (45:38):
you Capital concierge with an?
S dot com is my website.
I am a trib vendor.
I'm a nationwide member thathas run direct as well.
Speaker 1 (45:55):
I did see an 800 number on there as well, right,
yes?
Speaker 2 (45:58):
800-897-1409.
My email address is Tmurphy atcapital concierge with an S.
I didn't realize how difficultconcierge was to spell when I
came up with the name.
I love the name, but in otherwords, it's one of those weird
spelling names ConciergeC-O-N-C-I-E-R-G-E-S.
(46:18):
Some people leave off the S,off of the concierge, because
we're multiple people, so wemade it plural.
So, but I'm truly here to help.
If you've got any of yourlisteners have questions that
they just want to ask me aquestion, I'm here.
I'm here to help in any way Ican.
Speaker 1 (46:35):
You've got the information to reach out to Tom,
but if you have a question andyou want to ask the show, or if
you want to ask the show so thatwe can bring it up in a later
conversation or so that we canbring it up to Tom, feel free to
hit me up at Pete at the RTOshow podcastcom.
That's our email.
But you know, as always, youcan always find us online.
You're going to find us onFacebook, instagram, linkedin
and, of course, now YouTube.
(46:56):
Look us up anywhere you want tothe RTO show podcast.
We're everywhere that you wantto be.
Also, make sure that, as you'redoing this, you let somebody
know hey, do you need anything?
Do you need any capital?
Do you need anything that'sgoing on right now, especially
to our dealers that have one,two, three stores.
They might be in a crunch rightnow and this is one of the most
important times that we've gotto get through because, listen,
(47:18):
rto industry is super needed inAmerica right now and if they
can make it through these hardtimes, that'll be set up prime
time for when the economy kicksback in, and hopefully in a
couple of months.
That's exactly what's going tohappen.
Regardless of which way youpitch.
I want you guys to know thatwe're rooting for the RTO
industry and that's why Tom'shere, because, listen, there's
nothing more important thancapital when it comes to making
(47:39):
your business run.
So if you guys again have anyquestions, please feel free to
hit us up.
That's Pete atTheRTOSHowPodcastcom.
You can hit me up online aswell at TheRTOSHowPodcastcom.
That's the website.
You can see us here.
You're also going to see thisinteraction here on our videos
as well as on YouTube, and, tom,I can tell you I really
appreciate having you on theshow because, out of everything
(48:01):
that we do talk about whetherit's operations, whether it's
collections, whether it's saleswe seldom talk about the
background and it's so importantto know that we have somebody
out there who's helping us outand funding this so that we can
make it happen.
So, guys, we appreciate yourtime and I will tell you, as
always get your collections low,get your sales high.
(48:21):
Have a great one, thank you.
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