As the housing market continues a slow and temperamental pace and the economic outlook is uncertain, it’s hard to ignore that many would-be-buyers are content with staying in the rental world. Despite the fact that it can be significantly cheaper to buy a house than rent, the U.S. Census Bureau reveals that homeownership is still low, and at this rate, that won’t change anytime soon. Louis Rosenthal, a real estate analyst at Axiometrics, predicts in his Forbes article that millennials will still be “driving the apartment market for at least the next 20 years.” While only time will tell if the housing market will truly bounce back, it wouldn’t hurt to consider working with rentals.
Like we said in our article, Why More Real Estate Agents Should Get Involved with Rentals, working in the rental industry can expand your networking portfolio and earn a little extra money. It’s a fast-paced world that tests your people skills and gives you a broader perspective. And, if anything, working with rentals can be helpful when houses aren’t selling. If you’re up for the challenge, here are some tips on how to start.
How to Approach Your New Demographics
You’re going to have to learn how to cater to your new audience. Landlords have very different needs than your usual clientele. Rather than selling, they’re interested in reaping the benefits of their property long-term. So when you approach potential clients, be sure to touch on how your experience can insure safety, quality, and legality.
First and foremost, landlords want to protect their property. That’s why they’re hiring you to find tenants. You have the marketing tools to attract good applicants and the experience to determine whether they’ll be good tenants. When meeting new clients, show examples or guidelines on how you’ll obtain the perfect tenants for them. This will help prove that your services are worth the cost.
Although this might seem like a no-brainer, try to reinforce your professionalism with your clients. The property owner wants to know that you’re taking their rental requirements seriously. So take notes. Additionally, every day your landlord’s rental is vacant, they lose money, so filling the vacancy as quickly as possible is mutually beneficial. When talking to new clients, give an estimated timeline on when the vacancy can be filled.
While some landlords will want to be more involved in the tenant selection process than others, you need to stay conscious of what is and isn’t legal. No one wants a discrimination lawsuit on their hands, and the faster you can prove that your clients can trust you with their property, the better. By showcasing that you will provide all of the applicants federal and state required notices (which ApplyConnect does automatically), you’ll start to establish that legitimacy.
When it comes to understanding your applicant’s needs, your previous showing experience will kick in. As long as you are clear about your clients’ rental requirements, you should be able to match your clients to a suitable tenant. You know how to sell!
Potential Liabilities & What You’ll Need to Learn
Of course, you won’t find any success in rentals if you don’t do your due diligence. Before talking to landlords, read up on your state’s landlord-tenant laws and review the Fair Housing Act. You might also want to talk to a lawyer when composing your contract.
Since you’ll be selecting or recommending tenants for your clients, be aware that any (early on) landlord-tenant violations or discrimination cases can tarnish your name. Additionally, you run the risk of accidentally accepting a bad tenant, which can ruin your trust with your current and potential clients. To protect yourself and your property owner clients, make sure your rental requirements are as objective as possible and are applied to all of your applicants. Utilize a tenant screening service that caters to real estate agents, like ApplyConnect, to make sure your client’s property stays safe.
When figuring out how much your services should cost, it’s best to ask around. Generally, commissions are based upon a percentage of the lease or are composed of one month’s rent, but your local area might have a different standard. SFGate has a good guide on typical commissions and fees for rentals.
With all clients and applicants, there are some necessary documents you’ll need. While I’m sure you’ll want to bring more than this for meetings, these are the basics you’ll need throughout the entire rental process. Some you’ll need to obtain from the property owner.
- A contract
- Rental application with FCRA disclosure
- Copies of the lease
- Any additional documents your clients want you or the tenants to have.
At this stage, you’ll need to build your client base. You need rental properties to list. While your real estate background gives you an edge, you’ll need to bring your A-game to convince landlords to use your service. This means showing examples, timelines, and objective numbers. Once you have that, you can progress to marketing, showing, and ultimately selling. Not a bad way to make some extra money?
Are you considering getting into rentals as a real estate agent? What materials will you provide to win over clients? Share your experience in the comments section below and be sure to subscribe for more tips!