There is a class of homeowner in America that is neglected by our industry. They own a type of property that has a very particular benefit to a specific kind of buyer, but most of the practitioners in our business don’t know what to do with it. We were able to attract and capture these sellers’ listings under circumstances that break all the “rules” of what is supposed to be possible. To put it another way, the things that sellers typically consider important were not important to these sellers, once they met someone who understood the value of what they had.
Consider this. Of the 500 listings we captured, in every case:
- We don’t have an office in the market.
- We never met the seller face to face.
- They had never heard of us before our marketing reached them.
- We have 0 percent market share in their area.
- We had no track record of success at the time.
So how could this happen? Why would a seller look past the dozen real estate companies with market share, offices in town, brand names and top agents at the ready — and choose us?
Because they own houses with tenants in place, and our industry is in the homeownership business.
Think about it. Your phone rings and the voice on the other end of the line says, “Hello. I have 25 houses that I want to sell.”
You say, “Great!”
They say, “They are all leased and occupied by tenants.”
Your heart sinks. Your enthusiasm evaporates. What sounded like a windfall a moment ago is suddenly a burden. How do you sell houses with tenants in them?
In almost every case, the sellers we spoke with told us they had contacted their local brokerages and were told that the best way to sell these homes was to wait until the tenants were gone, clean them up and sell them to a homebuyer. To the owner of a portfolio of stabilized rental homes, this is akin to selling a successful restaurant for value of the forks, spoons, bar stools and kitchen equipment.
To these sellers, who painstakingly chose, fixed, leased and managed a portfolio of rentals for a profit, this is blasphemy. Why break up a business into parts? Isn’t there a buyer out there who would value the fact that it’s a performing business? The answer is: yes, of course.
It’s interesting to note that the commercial brokers they contacted weren’t much help either. “Houses? We don’t list no stinking houses!”
So they are left out in the cold. When they heard from us, using something as old school as a direct mail campaign, they were intrigued. We explained that we understood that what they had built was valuable intact, and we would work to find a buyer for the whole portfolio. We coined the category of “Stabilized Portfolios” and started a marketing channel based on the standard principals of real estate marketing: good packaging, the right price, mass distribution on the Web, and targeted marketing via mail and email. It works.
Incidentally, every one of those portfolios of listings was referred to a local broker in town who could provide the local presence, personal touch and brand identity. We sourced the opportunities and brought the global marketing campaign, and the local brokerage provided all the traditional benefits. The sellers didn’t sacrifice anything.
There are 14 million rental property owners in the U.S. today. Make that 14 million neglected homeowners who will need to sell someday. If we build it, they will come.
Greg Rand is CEO of OwnAmerica, a national network of real estate brokerage companies that represent housing as an asset class. OwnAmerica provides the technology, training and marketing systems to real estate brokerages that pursue the single-family investment sector.