Why You Should Sell Rental Property in This Slumping Economy

 With the slumping real estate market, many real estate agents are finding themselves struggling to keep afloat. 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 now face the reality that selling real estate may not be profitable, moreover, that it may even get worse before it gets better.

Okay, but given the sagging real estate market, why would it make sense for residential real estate agents to start selling rental income property? Wouldn't it be better to stay put in your own backyard, clinching the familiar, avoiding things new? I say no.

Foremost, if you're a residential real estate agent, face the facts. That in this market "sellers still don't get it and buyers won't pay for it." Most sellers believe they can stick on any price tag and get someone to bite, when buyers in this market are not willing to pay what they regard as an unrealistic price to some delusional and pigheaded seller still living in 2005.

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

Here's the point.

Real estate agents are in a dire situation with few options. Think about it. You can suspend your license, you can bite the bullet and hope for a change, 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 rental income property.

    Whereas homeowners may not be in pursuit of a replacement house, they could be ready to make an investment.
    Whereas homeowners typically won't sell on a moments notice, investors normally have a price they will entertain.
    Whereas homeowners may turnover one property in five years, investors habitually buy and sell multiple income properties.
    Whereas retirement might mean hunkering into a house, it commonly signals a designated time to unload management-intensive rental property.

You get the idea. Selling rental property offers a ton 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? You might be surprised to learn that it's not that difficult.

    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.
    Secondly, recognize the importance of numbers to real estate investing and think about buying real estate investment software to help you present those numbers in a professional fashion to sellers and buyers.
    Research your local market and acquaint yourself with income 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.
    Call your customers and ask whether they want to invest or perhaps own a multifamily property for you to sell. Discuss the market, present your numbers. Let them know you work with income property.
    Announce to your colleagues that you're equipped to service rental property and prepared to pay a referral fee. Start attending meetings that promote investment property.
    Watch the classifieds and call on land or units listed by FSBOs. A colleague of mine called on a vacant lot listed by a FSBO who turned out to be an investor and subsequently listed about 100 apartment units for the guy.
    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 rental property gives you the opportunity to diversify your residential 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.