Keeping Deal Flow Alive When Your End Buyers Are Landlords
How do you keep your deal flow alive when you end buyers are landlords and buy and hold investors?
Pandemic lockdowns and ensuing restrictions, new policies and eviction bans have rocked everything rental property investors thought they knew about real estate. This might have put a dent in your deal flow if you’ve been wholesaling houses to them. So, how can you help them, and keep your business flowing?
The Big Eviction Ban Problem
Covid related restrictions and rules have impacted rental property operators in a variety of ways. One of the most notable is eviction bans. Regardless of them already being ruled unconstitutional, they are still out there.
In fact, new legislative bills like the Federal Disaster Housing Stability Act of 2021 are proposing both automatic and potentially never ending eviction bans.
That isn’t exactly making acquiring more rental properties very attractive to most buy and hold investors.
Here’s how you can help them, and keep your business firing on all cylinders too.
Serve Up Performing Rentals
No one wants to buy a non-performing rental with an occupant they may never be able to remove. Yet, the data suggests that the bulk of rental properties are performing well.
Find those with a track record and good tenants, and wholesale those deals instead.
Provide Deeper Discounts To Offset Risk
Investing decisions are all about the balance of risk and reward. If you can help lower your end buyer’s risk, and offer more promise of potential reward it could tip many more buyers in your favor, and lead to a lot more deals with each one.
One way to do this could be to offer deeper discounts to buyers; building in equity, and creating larger spreads for them.
Another option could be 12 to 24 month rental and income guarantees.
Turn Them Onto Smarter Leasing Structures
It is true that aside from Section 8 style government paid housing, the old traditional annual lease is probably dead. It is just far too much risk for any private and individual landlord to take on.
Yet, with a little creativity there may be many innovative leasing options that can avoid this attack on landlords, and help them pull in that cash flow.
This may include entire leases being paid in full in advance, switching to short term rentals, memberships, or even finding other ways to derive income from a property; such as renting it for storage or parking.
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