As real estate agents, at the end of the day, we’re in business to make money, and our bottom lines don’t discriminate. Complaints about the market changes over the past few years just make me shake my head. I like to look at change not as an obstacle, but as an opportunity. For agents, one of the biggest changes is the opportunity to make money in rentals.
Here are a few reasons I think every agent should think about taking on a few rental listings:
While I’m sure it’s not “The Year of the Landlord” everywhere, when sales slow down people still need places to live. And while most agents focus on residential sales, the reality is that there are a ton of renters out there.
Here in Manhattan, our rental market is truly on fire. New York is an exceptionally rental-centric city, where about 70% of available housing is for rent. In February 2012 Citi Habitats’ research reported a vacancy rate of a mere 1.25%. In the same month, the average apartment rented for $3,376, just $18 shy of the market’s peak back in May 2007.
This trend may seem like an anomaly; however, statistics show the rental market is thriving in many markets. A recent Reuters release reported the national apartment vacancy rate is at a 10-year low.
If agents can open their minds to using their market expertise in a different way, they can take advantage of rental activity to help grow and sustain their business.
Simpler, faster transactions
While one “for sale” property can take six months to even a year to close, depending on price and market conditions, good rental agents can expect to close four, five, or even six rental transactions in a single month.
Buying or selling a home is a huge investment decision that requires a lot of paperwork and includes many interested parties; sellers, buyers, lawyers, mortgage brokers, banks, etc. If you add all of the unexpected issues that can arise and endanger a deal, rentals should be an obvious thought.
In rentals things are a lot simpler and faster. Rental deals are less complex and take less time to close because:
- you’re primarily dealing with one party, the renters, clients who likely view their move as temporary;
- most renters want to find a place as fast as possible and view renting as a small, necessary investment; and
- in many markets, landlords require minimal paperwork, just a credit check and income verification in most cases, because their objective is to fill vacancies quickly .
Future owner leads
Another great reason to consider rentals is that almost every buyer was once a renter.
Agents looking to stay in the business more than three years need to remember this. Working with someone on a rental today and letting them know you also help buy and sell property generally builds connections that can benefit you down the road.
As I said, I’m completely biased. Rentals have been good for my business. But I do think one mark of a good agent is their ability to change with market conditions, and change quickly. Diversifying your business model is key to weathering the ebbs and flows. If you cultivate strong skills in both rentals and sales, you will truly be unstoppable – no matter what’s happening in the market.