Greg Rand used to be like any other real estate agent. He was the managing partner at a family brokerage, Better Homes and Gardens Rand Realty, in New York’s Hudson Valley. Occasionally, he dabbled in commercial real estate.
Bouncing between residential and commercial real estate, Rand came to the conclusion there was an in-between market — a single-family home as an investment, not a shelter — that wasn’t being addressed by the residential brokerage community.
Commercial real estate investors typically shun single-family homes. And single-family residential buyers think mainly in terms of finding a good place to live. But there was another group out there buying single-family homes as investments.
Rand concluded residential brokerages weren’t very good at serving these buyers. "That was an open space, a niche, in the market that wasn’t being addressed," he said.
That’s when Rand had a better idea. He was going to give the residential brokerage community the competence needed to address the pure investor. So, two years ago he left his Better Homes and Gardens Rand Realty office and founded OwnAmerica in Rye, N.Y.
"In 2010, it became evident to me that at the other end of this housing crisis there would be an investment boom," Rand said. "For more than a decade I had seen this gap in the business, and it was time to fill the void because I had total faith that as painful as this crash was, it was going to be an alarm bell attracting investors. If the industry wasn’t equipped to support those investors, it was going to miss the boat."
OwnAmerica’s mission is to train and equip the residential brokerage industry with tools, technology, education and Web content — in short, everything needed to attract and service the residential home investor side of the market.
"Our industry still focuses on homeownership," Rand said. "If you look around, you don’t see training courses, designations, marketing tools, brochures for the single-family home investment. If you open the Google browser and look for a phrase like ‘real estate investing,’ every single major residential brokerage firm disappears. What’s left is the info-marketer, the click here to be coached … folks."
Rand has a good point. In many busted cities such as Phoenix and Las Vegas, investor groups have been swooping up hundreds of homes in one blow. Financial institutions, mortgage servicers and now even the government-sponsored enterprises (GSEs) have come to realize the quickest way to eliminate the foreclosure problem is to sell portfolios of REOs to investors. While investors do buy cheap, they often also pay in cash.
Rand estimates 23 percent of all home sales in 2011 were to investors. That’s a big part of the market to be ignored.
"This industry is so damn competitive, but it’s hard to differentiate yourself," Rand said. "We all sell the same MLS and we charge kind of the same way. Everyone is doing the same thing in the same way with a different logo on the business card. Differentiation is difficult, yet here is almost 25 percent of the market that no one is fighting for."
Investors and homebuyers are different markets, and the vernacular is different, Rand said. "Brokers and agents need to learn how to analyze the investment market and properties and help investors plan a portfolio."
With OwnAmerica, Rand hopes to essentially be an "outfitter," educating customers, training staff and supplying the agency with everything needed to reach out to investor buyers.
I’ll let Rand explain it all: "We educate and train agents; equip agents with marketing and collateral materials; supply prospecting tools and scripts; offer a turnkey investment seminar; supply access to a mini-website called the Investor Center, which includes an analysis tool that projects future cash flow, return on investment, etc.; offer a four-hour consumer training course; and supply a property reporting system."
Ed Forman, president of Watson Realty Corp., a Jacksonville-based company that operates in northeast Florida, started working with OwnAmerica in October 2011 because he liked the "turnkey" aspect.
"We could have created a system of our own," Forman said, "but Greg offers a turnkey operation."
Forman also liked the fact that OwnAmerica not only boasted a marketing system, but a training component as well — plus there was training for the consumer.
Another client of OwnAmerica is RE/MAX of Barrington in Barrington, Ill. Its broker-owner, Paul Wells, said, "I’ve been an investor for about 25 years, but it was hard to translate what knowledge I had into something people could understand. Greg just made it much easier to grasp some of the figures as well as the general concept."
The "trick" about OwnAmerica is that it is simple, Wells said. "It was easy for me as an agent and easy for my agents to understand. The program is done online and takes about six to 12 hours to encompass everything. The second real benefit is that I can hand tools to the buyers or investors that are also easy to understand, easy for them to figure out what their true returns are on the investments."
OwnAmerica is hitting the market at a good time.
"We saw evidence that investors are really coming back to the marketplace," Forman said. "They are finding the market is beginning to bounce back. So, they are buying at a time when properties are starting to appreciate, interest rates are at an historic low and rents are high. A fair amount of people exited homeownership through short sales and REOs. They need housing and will be renting homes for a couple of years until they can buy again. We have a shortage of rental housing."