Renting Is An Increasingly Popular Alternative For Real Estate Agents, Would-be Buyers
June 1st, 2011
If you can’t sell it, rent it! That is becoming the mantra of many successful real estate agents around the country who are finding that while the home sales market is a tough one with downward-spiraling commissions and buyers who just can’t finance traditionally, the rental market is starting to boom [1]. In fact, many agents are reporting that their rental clients are often prosperous people who have “one or two houses” already that they just cannot sell, but want or need to change homes without taking on the obligation of an additional mortgage. “I know we’d be selling a lot more houses if people could sell their houses in other parts of the country,” explains one agent, adding that renting will work just fine in the interim.
In Florida, census data indicates that nearly 25 percent of properties in many areas are being rented rather than purchased by the current residents [2]. In fact, many investors are moving into that market, purchasing homes and renting to tenants who have made verbal and sometimes even contractual agreements to buy sometime in the future. People are “renting at this point to see what happens,” explains one investor, who believes that clients will buy when they think that the market has truly hit bottom and the prices won’t get any better or that they will buy when the job market improves and they are not worried about having to move for work.
Either way, the trend for investors is definitely to own cash-flowing rentals at this point in time, and for would-be buyers to “test the waters” by renting first. Are you involved in rental real estate investments?
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Let us know what you think of renting first, buying later in the space below.
[1]http://www.nwcn.com/home/?fId=122913293&fPath=/news/local&fDomain=10222
[2]http://www.wptv.com/dpp/news/region_c_palm_beach_county/west_palm_beach/rental-market-much-more-appealing-to-potential-buyers
June 1st, 2011 at 7:47 AM
While this is certainly one strategy to maintain a property prior to actually selling it, another often overlooked strategy is to offer Seller Financing. Traditional financing IS difficult to secure, even Mr Yun has been quoted to say that up to 20% of all applicants are being denied. These are people who want to buy, but can’t.
As a property seller-or the agent of one-you can attract this additional 20% of potential buyers-That Your Competition is Turning Away-by offering seller financing. (RE agents-Don’t be afraid of seller financing, it’s not FSBO and you can still get paid just like a traditionally financed sale)
The best part about these additional buyers is that they are discouraged, which makes them hungrier to buy, which means they are more likely to make concessions that will benefit the seller. This is important if you need the capital from your property sale and are planning to later sell the note and cash out.
How you structure the deal and the actual note you create will dictate your final outcome when it’s all said and done.
There are many factors that will influence-either positively or negatively-the overall value of your note. It is important you create a “good” note, if you are going to meet your goals.
June 1st, 2011 at 9:02 AM
What I’m not reading much about is the following strategy ; Buying and then selling with owner-finance terms .