Landlords as a Source For Properties and Cash Buyers

"Landlords as a Source for Properties and Cash Buyers"
As a real estate investor, I’ve always liked finding the path of least resistance, the most direct route to payday. That means finding ways of finding properties, buyers, lending, etc., that include the fewest obstacles. In this post, I’d like to discuss calling on rental properties as a way to find available properties for purchase, and also potential cash buyers for your properties.
Landlords are an interesting breed of people; since I am one, I can say that. Like most people, we get frustrated or tired, and many landlords have properties that they wish they could get out of. Their most vulnerable time is when the property is vacant, as they must shoulder the costs, and may have repairs that need to be done to make the property attractive to a potential renter. Plus, maybe they have depreciated the property so that it is no longer worth as much to them, or they are advancing in age and can no longer care for it, or have just finished with the tenant from He##! At any rate, they may have entertained thoughts of selling the property, but took the path of least resistance and are offering it again as a rental.
This represents opportunity for investors, and one that not many investors tap into. Since the property has operated effectively as a rental, it may be a good rental property for landlords that you have on your buyer’s list. Or it may be a possibility for a lease option, seller finance, or a sandwich lease option.
Equally important is that if you handle the phone call correctly, contacting landlords may lead to an addition to your buyer’s list.
When I call a landlord, I reference the rental ad that led me to them, make sure I am speaking with the right person, and then ask them to tell me a little more about the property. This is familiar ground for them, they also want to “sell” me on the property, so they are going to talk a lot, especially if I encourage them with positive statements and additional questions. I let them assume that the property is for me and my family.
At the conclusion of their property description, I will respond with the following, and it is important that you make this positive and “light.” We don’t want to damage the good rapport that we have established: “Wow! This sounds like a great property, exactly what we are looking for! There is one important thing for us, and that is that we would also like to be able to purchase the property, either now or in the future. Have you ever considered selling down the road?”
There are only three possible answers to this question: Yes, No, or Maybe. If they respond with a yes or a maybe, they have just identified themselves as a potentially flexible seller, who will rent the property, or sell it. We also know that they are willing to let someone move into this property with just a deposit and a month’s rent, so they are not desperate for cash. There are possibilities of lease options, seller finance, or possibly even a discounted cash purchase on this property, so set an appointment and go visit the property.
But what if the landlord says No, they are not interested in selling the property down the road? Well, that can also be a good opportunity, so at that point I will say: “I certainly respect that, and appreciate your candor. One thing I did not indicate earlier is that I am an active real estate investor, and sometimes I find properties that are screaming deals as rental properties. Are you, by any chance, looking to acquire additional rentals?”
If the landlord identifies him/herself as being in acquisition mode, you can ask them to provide you with their purchase criteria details and how soon they would be interested in purchasing a new property, and let them know you will diligently look for properties that are a match for their needs, and bring them good matching deals.
In summary, landlords have problems with properties too, and these problems represent opportunities for investors who will work with them to solve the problem, and use the strategies that we learn in the program to construct deals.