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Get More Listings: Pursue Absentee Owners

June 02 2020

prospectsplus pursue absentee ownersAs various states ease lockdown mandates and life starts to at least minimally resemble what it used to look like, the real estate market is on track to be far better than many had assumed.

No, we probably won't see the fiery spring real estate markets of yesteryear, but the housing market may just prove to be the bright spot in the economy.

Things have changed, however, from buyer preferences to how homes are shown. Have you vegged out enough on Netflix over the past few months or are you ready for the new world of real estate?

We've found a couple of niches that we think will be especially worth your time and effort to pursue in a post-lockdown real estate market. One of these is landlords, aka "absentee owners."

Who are they?

"There are about 8 million individual landlords in the U.S., those who typically own between one and 10 properties," according to Diana Olick at CNBC.com.

She goes on to state that these landlords "manage half the rental properties" in the U.S., with 48 million tenants.

Many of these landlords bought their properties between 2012 and 2014. Sure, the big guns (institutional investors) bought then as well, but almost half of investment properties were purchased by the individual landlord – the "Mom and Pop" investor.

Then, in 2018, the share of small investor activity in the housing market soared to 60%, according to Core Logic's "Home Investor Report."

Most of the homes these smaller investors buy are starter homes, by the way – in huge demand in the current market, as you well know.

These investors are prime targets, right now, for listing opportunities. Your audience, then, will be landlords who bought investment properties between 2012 and 2018.

Their pain points

The COVID-19 pandemic created a perfect storm of unemployment, closed businesses offering zero jobs to replace those lost and a government financial rescue program that isn't seeing cash flowing to landlords.

Your audience of absentee owners doesn't include the REITs with numerous rental properties and quite deep pockets.

Again, they're the small investors, many living paycheck-to-paycheck, just like the rest of us.

Their biggest pain point right now is how, without rental income, they'll make their mortgage payments without begging for forbearance and facing a huge payment when it's all over. That is, if they qualify for forbearance.

In California alone, it's estimated that 85% of tenants couldn't pay their rent in May, according to SpectrumNews1.com.

The news site also claims that "… banks don't have an obligation to help landlords."

Even if they are granted forbearance, there are other expenses involved in owning rental property, such as maintenance.

Frighteningly, nearly 60% of small landlords "…said they did not have access to any lines of credit that might help them in an emergency," according to a March survey conducted by Avail, a rental platform software company.

Ouch.

Thankfully, you can help these people.

What's in it for you?

I think it's safe to say that those landlords who bought their property at the bottom of the market (after the Great Recession), and haven't borrowed against it, are sitting on a ton of equity right now.

And the facts bear that out.

Alcynna Lloyd at HousingWire.com claims that the average real estate investors who bought their properties in 2012 "… have seen their home equity climb by 261%."

That pencils out to an average $141,000 in equity.

Imagine being the one who delivers news like this to landlords who are going deeper and deeper into debt the longer the pandemic goes on.

The best approach

Other investors find the absentee owner niche quite lucrative. Because of this, there's a very good chance that your prospects will have received at least one "yellow letter" from an investor/flipper.

The yellow letter is a direct mail piece that is either written by hand (or created to appear to be handwritten) on a sheet of that yellow, lined paper from what is often called a "legal pad."

This technique supposedly brings results for these investors, which is why so many of them use it.

Direct mail is the best approach to potential clients in this niche and a letter is a perfectly acceptable marketing piece – at least for the first touch. Do yourself a favor, however, and don't use yellow paper. Make your letter professional and valuable.

The first step to take when approaching this niche, however, is to determine which area of town you'll farm. Then, order an absentee owner list.

If you decide you don't want to use a letter to introduce yourself, there are several other approaches to consider:

After you've decided on the medium for your introduction, all of the above are well-suited as follow-up material. Which brings us to the next step: Schedule a direct mail stay-in-touch campaign. It doesn't matter if your "touches" are monthly or quarterly, as long as they are consistent. Don't give up if you don't hear back from these prospects after the first few mailings.

Right now, many absentee owners are second-guessing their role as a landlord. Many are quite motivated to get out from under the financial burden.

Their pain points are very real, very urgent and you offer the ideal analgesic: sell now.

To view the original article, visit the ProspectsPLUS! blog.