For REO agents, business diversification is no new concept. As the housing market stabilizes, and REO numbers dwindle to less than 400,000 nationwide, agents are again looking for new outlets of income.
Coming as no surprise to some, skyrocketing home prices joined with a struggling job market and new generation of homebuyers, has led to an exploding single-family rental sector. According to Pro Teck Valuation Services, 2.5 million single-family homes have become rental units since the mortgage crash. Millennials, who should be next in line to become homeowners, continue to shy away from the decision for multiple reasons, and the pattern doesn’t seem to be changing. Real estate agents and brokers are beginning to cater to this booming market by getting their
feet wet with single-family rentals, but the sector is still developing and is not easy to infiltrate. Prospective single-family rentals are easier to find than one might think, as long as the agent has a creative mind and a little gumption.
Asset management companies and investors are the most convenient way to acquire listings. Many well known companies are beginning to draw into the SFR market, including Blackstone’s Invitation Homes, AmericanHomes4Rent, Colony American Homes, and Waypoint Homes’ rental division, Starwood Homes. Choose reputable asset management companies to apply to, and showcase yourself properly on your resume/ bio. Remember, companies who do not know anything about you will be much less likely to use you. Lisa Shepherd, Executive Director of Property Preservation, Assero24, says when looking for possible agents, her company “looks for agents who are responsive and know the cities”. She goes on to explain that they “want an agent who really understands the urgency of meeting timelines.” As with most property management companies, they consider this to be one of the most important qualities in agent prospects.
Susan Speer, Vendor Manager, Chronos Solutions has the same perspective on traits that an agent dealing in the non-traditional housing market should possess. Speer looks for reliability in the agents, as well as knowledge of the community and the tasks involved with the project. The competition between agents is fierce with property management and investment firms, and only the highest qualified will be successful. “It’s not about you for us; it’s about finding a buyer,” explains Speer. “It’s all about time.” That way of thinking seems to be the general consensus behind most asset management and investor relations companies, so when dealing with these prospective clients, make sure to be on your game.
On the opposite end of the spectrum, private real estate presents a vibrant and less touched sector of the SFR market. Many people choose to sell their home on their own, especially if they are not looking to sell quickly. Looking for these sellers and presenting options and scenarios including turning the home into a single-family rental can be of great benefit to both the seller and the agent. However, as with any new platform, there are downfalls. For example,the owner may want to sell the property to simply be rid of the pressures and responsibilities of owning the home, or because they are moving a great distance. Good relationships with private investors can be productive in this situation, and can provide an option for the seller that benefits both parties.
Consideration of property management options is imperative before acquiring listings in the SFR market. As the agent, will you focus on the facilitation of transactions of single family rentals, or will your agency pursue a division of property management? Most portfolio owners prefer their SFR homes be managed by a management company rather than taking on the responsibility themselves. Many real estate agencies are beginning to offer these services as well as buyer and seller services. There are new obstacles that come with new business platform, such as renters, yearly contracts, and maintenance and repairs.
After a plan of action has been decided on, listings should be gathered. These can be found through many of the same investors, hedge fund companies, and mortgage servicing companies used in the REO field. New connections with private investors and single renters is imperative with SFRs, according to a new study by Nolo.com. The study shows 85 percent of SFRs are owned by individuals with a portfolio of 4 or less homes. This can be easily facilitated through social media marketing, such as Facebook, Twitter, and Instagram communication.