In this economy, if you’re a residential agent trying to carve out a living selling houses and ignoring an opportunity to sell rental property, then you’re like one stranded on a roof top in a flood who turns away a helicopter rescue because you’re waiting for a boat.
Look, this isn’t the time for you to pick and choose opportunities.
Regardless what you’re perception about what a real estate agent should do, it is not confined to selling people houses. Yes, you’ve become comfortable with showing mister and missus customer a house where they can live and raise their children with a nearby school where the little ones can start their education, but that’s not the reality in this economy.
In this economy, most buyers are more concerned about the nest egg they’ve accumulated then little Johnny and Mary skipping off to kindergarten. Mister and missus customer are more consumed with the thought that whatever their nest egg is worth today could be worth less tomorrow and in turn put little Johnny and Mary’s future in peril.
In other words, in this economy, must buyers are less interested in house hunting than they were several years ago and more devoted with trying to hold on to their money in order to “keep” their money.
Fair enough, so rather than continuing to present mister and missus customer with a plan that involves selling one personal residence in order to buy another personal residence why not take a different course of action and start presenting them with opportunities to invest their money.
Here’s the idea.
1) Get your customers thinking about investment real estate, whether a condo, single-family residence, or larger multifamily complex.
2) Run the numbers. Show them the annual cash flows and rates of return they might expect based upon certain purchasing prices, rental income, operating expenses, and financing. Chances are good that they will be better than the dismal rates offered by money markets and CDs.
If your customer doesn’t have liquid funds, get them to think about refinancing their home. Retirees with empty nests might not go for the idea but those still planning to provide for a child’s marriage or education could see it as a feasible option.
To get started, determine the amount your customer can afford to invest. Then establish with the banks how much your customer can borrow to buy rental income property. Run the numbers again to arrive at a price range for potential properties that is both realistic and comfortable for the customer. Finally, search your marketplace for those properties and present them to your customer along with a sound real estate analysis that breaks the numbers down for them and shows them what cash flows and rates of return they can expect to receive.
If you can’t find a property that fits, get creative. Depending on your customer’s financial criteria, you might be able to suggest a foreclosure or short sale. Contact local developers and contractors. Many are sitting on large inventories they might be more than glad to unload. Remember, any property that can be purchased right and rented can provide a perfect rental property opportunity for your customer.
Okay, but to make it all work, you must present yourself less as a salesperson and more as a “partner”. Your customer must be assured that you really do care how they spend their money and are genuinely interested in helping them protect their investment. To do this, avoid the temptation to suggest a property that you merely think might make a good investment and instead, provide sound data and numbers they can rely upon to make a wise investment decision.
Here’s the bottom line. By doing this, you can generate a commission for yourself you would have otherwise missed, and in the process you create an investor customer that potentially can mean more business for you in the future.