Posts Tagged ‘Real Estate Market’
With the slumping real estate market, many real estate agents are finding themselves struggling to keep afloat. The days when new listings produced multiple offers before the ink dried and open houses produced endless streams of anxious buyers are long gone, at least for now. Residential agents now face the reality that selling real estate may not be profitable, moreover, that it may even get worse before it gets better.
Okay, but given the sagging real estate market, why would it make sense for residential real estate agents to start selling rental income property? Wouldn’t it be better to stay put in your own backyard, clinching the familiar, avoiding things new? I say no.
Foremost, if you’re a residential real estate agent, face the facts. That in this market “sellers still don’t get it and buyers won’t pay for it.” Most sellers believe they can stick on any price tag and get someone to bite, when buyers in this market are not willing to pay what they regard as an unrealistic price to some delusional and pigheaded seller still living in 2005.
Now, consider how all of it directly impacts your business. Your listings are mostly over-priced, and offers you submit are normally rejected. Rather then facilitating the ebb and flow of buyer and seller negotiations as normal, you find yourself in the middle of a tirade, trying to persuade one as to why the other is not obstinate.
Here’s the point.
Real estate agents are in a dire situation with few options. Think about it. You can suspend your license, you can bite the bullet and hope for a change, or you can become proactive by diversifying your business with rental income property and maybe close one or two additional deals this year. Which would you choose?
Here’s what you’ll discover about selling rental income property.
Whereas homeowners may not be in pursuit of a replacement house, they could be ready to make an investment. Whereas homeowners typically won’t sell on a moments notice, investors normally have a price they will entertain. Whereas homeowners may turnover one property in five years, investors habitually buy and sell multiple income properties. Whereas retirement might mean hunkering into a house, it commonly signals a designated time to unload management-intensive rental property.
You get the idea. Selling rental property offers a ton more opportunities to make money than residential property, and as a real estate agent, you’re in the right place to seize it.
So how do you get started selling apartments with little or no experience? You might be surprised to learn that it’s not that difficult.
First, dismiss the idea that you need to become an investment expert. Deals are closed every year by hundreds of residential agents who know little about income-producing property. Secondly, recognize the importance of numbers to real estate investing and think about buying real estate investment software to help you present those numbers in a professional fashion to sellers and buyers. Research your local market and acquaint yourself with income property prices (listing and sold). Use the real estate investment software to create an APOD for each property. Study the cap rates. Become knowledgeable about rental property prices and rates of return. Call your customers and ask whether they want to invest or perhaps own a multifamily property for you to sell. Discuss the market, present your numbers. Let them know you work with income property. Announce to your colleagues that you’re equipped to service rental property and prepared to pay a referral fee. Start attending meetings that promote investment property. Watch the classifieds and call on land or units listed by FSBOs. A colleague of mine called on a vacant lot listed by a FSBO who turned out to be an investor and subsequently listed about 100 apartment units for the guy. Call property management firms in your area and ask whether any of their clients might consider selling or buying property.
Okay, but let’s talk turkey. Am I suggesting that apartment buildings are immune from the hardships of this real estate market, or that investors are on every corner ready to throw money at you? No, investment real estate is still subject to the same murky economy, investors can be obstinate too, and you still have to work at creating your deals.
But rental property gives you the opportunity to diversify your residential business. Rather than having to rely just on the whim of one type of buyer or seller, you can broaden your exposure to multiple types of buyers and sellers. It’s no longer one product you service, but many products.
Sure, it takes effort. But considering the challenge we face, having the backbone and good sense to become creative might see us through. And that, dear colleague, would make it all worth the effort.
By: James Kobzeff
One of the most efficient ways to invest in residential real estate is to do a lease/purchase. The reason a lease/purchase is so effective, is because it provides a win-win situation for both the seller/landlord and the buyer/tenant. For the owner, it provides a potential buyer and a tenant that will be willing to take care of the home. For the buyer, it provides the right to purchase the home for a fixed price, and time to save money and improve their credit. Here is how it works.
The owner and the buyer enter into a contract whereby the potential buyer agrees to lease the home for a set amount of time. At the end of the lease, the buyer then has the option of buying the home for the price agreed upon in the contract. In order to secure that price, the buyer pays an option fee up front. If the buyer chooses to buy the home at the end of the lease, he can apply the option fee and any other money saved toward the down payment. If they choose not to purchase the home, the owner keeps the option fee.
For the owner, the lease/purchase offers several different ways to make money from the home:
- The goal is to buy the home for 10-20% below market value.
- The monthly rent you collect will exceed your mortgage payment.
- You can right off mortgage interest and other expenses on your taxes.
- You pay down the principle on your mortgage and build equity in the house.
- The price of the home will appreciate.
- If the potential buyer decides not to buy, you keep the option fee.
This is just a basic outline of how a lease/purchase works and the opportunities it presents. It is still a real estate investment strategy that is unknown by many and discussed by too few. For more detailed information, a recommended read is “Buy Low, Rent Smart, Sell High” by Scott Frank and Andy Heller.
To apply this investment strategy in a growing real estate market, visit http://www.buyandsellnorthtexas.com.
By: Michael Stazko
I am going to sell my property without an agent. This refrain is being heard more and more these days as the Internet and real estate market evolves beyond the realtor-based transaction.
FSBO is an acronym meaning for sale by owner. The advantages of selling as a FSBO are numerous. With real estate commissions of six percent, you are looking at immediately saving tens of thousands of dollars in commissions. If for some reason this does not entice you, keep in mind you can use the savings to undercut the prices of similar homes in your area. This will move your house quickly off the market and let you get on with your life.
The key to selling your property is to be prepared. First, you need to find out the value of the property by looking at comparables in your area or trying an online valuation service. Once you have the value in mind, you need to determine whether this is acceptable. You also need to determine what you are really willing to accept as a sales price once haggling is completed. Always make sure you know your bottom line and stick to it.
The next step is list the property online on a FSBO site. Over 70 percent of homebuyers now find their properties online as the realize there is no need to endlessly drive around looking at homes that they may or may not be interested in. By going online, they can see what each home offers and then visit the appropriate property.
Given the use of the Internet by buyers, it is vital that you spend the time to upload pictures with your listings. You are only going to generate interest if the buyers can actually see the property. Every site allows you to upload digital photos and you should do so. Take care to show as much of the property as possible so that you can generate leads that are truly interested in buying.
Sellers wonder if they are correct to think they can sell their property without a realtor. With the Internet revolution, it is easy to do so and save tons of money on commissions.
By: Raynor James
