Yes, You Should Sell Rental Property During This Slump

By Author: James Kobzeff
Total Articles: 44
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Many real estate professionals are struggling to keep their business profitable during this recent slump in the real estate market.

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 must now contend with sagging profits, and the reality that things could get worse before they get better.

So why would it make sense for residential real estate agents to start selling rental income property? Given the sagging real estate market, wouldn't it be smarter to stay put, clinching the familiar, avoiding things new? I say no.

Face the facts. As a residential real estate agent you understand this market all too well. That "sellers still don't get it and buyers won't pay for it." That most sellers think they can stick on any price tag and get someone to bite while buyers refuse to pay what they regard as an unrealistic price to a delusional and pigheaded seller still living in 2005.

Now, consider how all of it directly impacts your business. Your listings are mostly over-priced, ...
... offers you submit are normally rejected, and rather then facilitating the ebb and flow of negotiations required to close a transaction, you find yourself in the middle of a tirade between buyers and sellers trying to persuade one as to why the other is not obstinate.

Here's the point.

As a real estate agent, you're in a dire situation with few options. Think about it. You can suspend your license, hope for the best and try to ride out the storm, 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 real estate investment property.

1. Whereas homeowners may not be in pursuit of a replacement house, they could be ready to make an investment.

2. Whereas homeowners typically won't sell on a moments notice in response to your cold call, investors normally have a price they will entertain.

3. Whereas homeowners may turnover one property in five years, investors habitually buy and sell multiple income properties.

4. Whereas retirement might mean hunkering down into a house, it can also signal a designated time when some seniors like to unload management-intensive rental property.

In other words, selling rental property offers real estate agents many 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? It's really not as difficult as you may think.

1. 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.

2. Secondly, recognize the importance of numbers to real estate investing and think seriously about buying real estate investment software to help you present those numbers in a professional fashion to sellers and buyers.

3. Research your local market and acquaint yourself with rental 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.

4. Call your customers and ask whether they would like to invest in rental property. Discuss the market, present your numbers. Let them know you work with income property. Perhaps they own a rental property they would like you to sell.

5. Make your colleagues aware that you've made a committment to work with rental property, and that you will pay a referral fee, or maybe share the transaction with them.

6. Watch the classifieds and call FSBOs selling units or land. A colleague of mine called on a small vacant lot listed by a FSBO who turned out to be an investor and subsequently listed about 100 apartment units for the guy.

7. 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 multifamily property gives you the opportunity to diversify your real estate 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.
James Kobzeff is the developer of ProAPOD - superior real estate investing software since 2000. Create a cash flow analysis for rental properties in minutes! Go to => www.proapod.com