Finding Deals From Absentee Owners In Three Easy Steps
All real estate investors are on the quest to find deals that nobody else is working on. Instead of focusing on rehabs and flips there are other options available. One of the options is working with a type of motivated sellers: absentee owners. These are out of area of area rental property owners who do not live in the property. In almost every market this is a much bigger niche than you may think. There are several amateur investors who purchased rental property without fully grasping what it takes to be successful. Within a few months they realize they are in over their head and are slowly losing money. They would welcome an opportunity to sell the property and simply move on if they can find a willing buyer. Here is where you come in. With the right type of marketing and approach you can quickly secure a deal you otherwise may not have. If you are looking for a unique niche here are three easy steps to work with absentee owners.
Data collection. An absentee owner can be a new investor who purchased rental property before they were fully ready. It can be a homeowner who decided to rent their property while the market is hot. It can even be an investor who decided to dabble in an out of state market. The main theme is that they are all owners of rental property who may be frustrated with the process.
- The first step in dealing with them is accumulating as much data as possible. There are several different ways you can find absentee owners depending on your budget. If capital is tight you can start by driving for dollars. Drive your local area and look for properties that are run down with overgrown lawns and bushes. This isn’t a guaranteed sign of an absentee owner but it is a pretty good indicator. You can also reach out to rental listing sites, primarily craigslist. Track the rental listings that you have seen for several weeks and send them an email. You can also take a trip to town hall and match the tax records with the property address. Every address that is not the same as the property has an absentee owner. If you have a larger budget to work with you can find these lists through a dedicated company. Reach out to a few to ensure that you are getting the most updated information you can find. Once you have gathered your data you can move on to step two.
Lead generation. Your goal is to turn your data into leads which will ideally turn into deals. There are several different ways to reach your owners depending on the information provided. If you discovered the property while driving for dollars you should knock on the door. When, and if, the tenant answers you should ask for the owner. Assure them that nothing is wrong and you are simply an investor who is considering making an offer on the property. Leave your business card and ask if they have a way to get in touch with the owner.
- If your data is limited to a mailing address your only option is to send a postcard or letter. Start by typing a generic letter. You want the message to be as personal as possible. Let them know that you can solve their rental property issues and eliminate the headache forever. You need to spend whatever time and money it takes to handwrite the letter. If the mailing looks like it is from a big company the odds are they may not open it. You can also incorporate an email campaign or reach out by phone if you have a number. Before doing either you should prepare a script for what you are going to say. Explain that you got their information through the tax records at town hall. Ask them if they enjoy being a landlord and if they have considered selling. The odds are that they may say no and you have your in to move on to step three.
Make offer. Absentee owners are like any other potential seller in that you need to find their motivation. In most cases the answer is pretty straightforward. They are not making as much money with the property as they thought. There is a good chance that they are losing money when you factor in the repairs and seasonal maintenance. Your objective is to get the property for a price that you are comfortable with. This may mean obtaining it through a short sale. At first the owner may scoff at this notion. They will ask you why they would do a short sale if they are breaking even. You need to explain that unless they have ample reserves they are only one major repair from foreclosure. What would they do if the furnace stops working or their tenant suddenly stops paying? In as little as four months a foreclosure can be filled and can stay on their credit report for years. This can do significant long term damage.
- You also need to tap into their frustration regarding dealing with tenants, travel to the property and a declining property value. You can fix this by making some simple upgrades once you take ownership. Don’t press the homeowner for an answer immediately but if they are talking to you they are at least interested. Plan on following up with them every month. What you will find is that they will call you when the inevitable issue happens with the property and they need to sell quickly. You are now in a position to make an offer that works for you.
Absentee owners are a lead generation option you should have in your tool bag. Depending on your market you can decide just how aggressively you want to pursue them