Homeowners often imagine getting rich in their sleep when they dream of being a landlord. Then, once they start, it’s much more work than they expected and not the easy cashflow they were hoping for.
You can prove to these landlords that selling will make their lives easier.
The burden of proof is on you, but you don’t have to look hard to find reasons selling is often the better choice. Being a landlord of a single property won’t net homeowners enough of a return to turn down a hassle-free sale. In short, the amount of time and energy they put into managing a rental property often isn't worth the financial return.
If they simply view the property as an investment — as they should — you can win them over on these points. They’ll want to sell; they just don’t know it yet.
Recent surveys show landlords only last three to five years.
Most owners get tired and get out. The sooner you can convince someone to sell, the more they save in money and time. That's why so many real estate investors go after landlord leads.
This is another point to make to the owner. Many landlords end up selling to an investor for the speed and convenience of the sale, but ultimately end up losing money.
Map out the time the average landlord spends dealing with his or her property.
Bring it to the listing presentation, or send it in your pre-listing packet. Add up time spent monthly dealing with tenants, collecting rent, looking at repairs or hiring people for repairs and even searching for tenants.
The tenant search is a huge hassle. Unless they have a long-term tenant, things like showings, lease negotiations and insurance policies take huge amounts of time and will each time a tenant moves out.
All of that may not seem like a lot, but add it up per month, and it comes out to hundreds of hours a year. If you visually show the owner the magnitude of this time commitment — and compare it to time spent doing other things — you can have more of an impact.
Renters that break leases or don’t pay on time cause a lot of hassle.
No landlords envision themselves having to be aggressive to collect rent or evict any tenant when they start. It’s something that happens often, however.
There’s always a chance their next tenant could pull this. It’s very tough to predict when it will happen, even with financial and rental background checks. Out-of-state tenants may not show up on the rental history background check.
Compare this type of hassle to how easy it is to sell with you.
Directly comparing how simple you can make a sale vs. the stress of dealing with horrible tenants should be a big part of your pitch.
Instead of dealing with paperwork and chasing down tenants, the owners can be relaxing while you market their home. Being a landlord will drain them mentally, so prove it to them.
Break down their financial cost and compare it to a CMA.
First, send them a CMA for the property and mention what you think you can get for their home. If it’s a great time to sell in their market, even better. It’s not like they can raise their rent because of a hot housing market, but they can sell for higher with you.
Property taxes, repairs and inspections are all costs that add up. Marketing costs also apply every year (or less) if they have to find a new tenant. All of this, plus time spent, equals a giant financial burden.
Show them how much you can get for the home. In a lot of these cases, the landlords won't make as much as they thought renting after these factors are weighed in. You can convince them it’s better financially to sell with you.
Long-term wear and tear on the home is overlooked in these situations.
Simply, these landlords don’t think about the long-term effects of people living in the house. Unless they plan on renting forever, they will most likely have to make serious renovations if they want to sell it for a decent price down the road.
It’s also rare to see a landlord who gets things repaired or redone without trying to cut costs when they have tenants living there. All of this depreciates the home’s value.
All you have to do is make them aware of this. You can make them so much more money selling a newer house than they can make if they decide to sell after years of renting.
Show the owner some prices of common renovations required after renting for a few years. Bathroom and kitchen renovations are the most common.
Getting these leads isn’t hard.
These FRBO (for rent by owner) leads are easy to find online if they're listed on sites like Zillow or other leasing sites. You can easily find a home accepting tenant applications, then convince the owners not to go that route.
This may be tougher than convincing an owner who already has tenants or has had them for years, and has dealt with many of the pitfalls of renting.
The best owners to go after are rental listings that are closed from seven to ten months ago. You can find both first-time landlords or seasoned renters this way.
All you have to do is pull up closed rentals on the MLS. Then, find the homeowner’s name and contact information in the public records. You can find the phone numbers on whitepages.com.
If the person is a new landlord, ask him or her if the rental process has gone as smoothly as he or she imagined and lay out some of the comparison’s I’ve mentioned here.
If you're dealing with landlords who have rented their properties for a few years, they've most likely dealt with their fair share of annoying problems. These people should be easier to win over.
Most of these owners just need to hear from the right agent.
A lot of these landlords know about the hardships of renting, but perhaps because their homes previously expired or they worked with bad agents, they're turned off from the idea of selling.
Our members have the added benefit of immediately appearing as experts with our MyBooks program. An agent who mails one of these owners a book is going to have a much easier time convincing them to sell than someone without this incredible marketing tool. Learn more about our program here.
Joe Nickelson is a real estate professional dedicated to helping home buyers and sellers achieve their dreams of owning property, and helping real estate agents stop using the sometimes-vicious tactics that weigh on their consciences. He believes that the Smart Agents books will, quite literally, change people’s lives for the better. Check out his full bio here!