Thank you for the comment and I have to say you sound incredibly knowledgeable! It sounds like you have the, we'll call it 'issue', I had. I found that I had some much niche knowledge and wanted to show clients that I was the best, most knowledgeable option that I found myself 'info dumping'. Have you ever been out with friends and start talking and you realize you can actually see their interest in the conversation fading in their eyes?
My suggestion to eliminate a pitch, toss your script. Treat it like a conversation, like you're meeting them for dinner. For example, a first time home buyer more than likely isn't going to care about your 20 years experience in tax law (even though they should). Equally, an investor who has been doing this 10 years probably isn't going to need much explanation, but will want to know that you know what they need you to know. Here is a trick I learned - make it a point to ask at least 3-5 questions before you say anything about yourself. Keep the service mindset, when you call a plumber how does that conversation usually go? It's all questions on their end - Hello, how can we help? What is the issue? How big is the issue? Where is it specifically? How soon can you schedule? etc. They let you dictate their service by getting to know you and your needs.
You own a rental property or maybe a few. You’re managing just fine as a landlord and are not ready or do not need a property manager. Your tenant just notified you they plan on moving out and it’s time to plan out filling the vacancy.
If you haven’t done this before, it can become quite the time consuming headache. Once the move-out is done, you have to evaluate the unit, identify, schedule, and complete any repairs or renovations, research the market to see what the rent should be, did any of the repairs you did raise the rental value? Put up a sign, post online (which can be expensive), respond to the countless calls, emails, texts, (the phone call about random people just walking around looking in the windows). The headache of answering questions that were very clearly listed in the description (NO PETS gets “I have a lizard is that ok?”). Then you have the showings, scheduling, meeting them there, the no shows (over half that schedule), the same questions over and over, taking applications (is your head spinning yet?). Then, when you FINALLY have an application that is acceptable, they change their mind, or you now have to coordinate lease start date, writing the lease, meeting to sign, collecting the deposits, giving the keys, doing a walk-through… those were some very long run-on sentences.
If you’ve never done it before it can be daunting. Even if you have, you’ve probably lost track of how many times you haven’t felt like doing it or even how many times you’ve asked yourself why you’re doing it. After a tenant moves out is quite easily the most stressful, time consuming, dreadful part of owning rental property.
Did you know there is another option? Real Estate agents can list rentals just like a property that is for sale - it is called an exclusive lease agreement. Here are some pros and cons, including a run-down of the difference between a property manager and a rental listing.
With a property manager, most everything is handled by them. The move-out process, evaluation, scheduling of repairs, listing/advertising, showings, applications, lease signing, etc. In fact, if you have a property manager and you’re having to do more than potentially switch utilities (some cities do not allow managers to do this, it must be the owner) and approving applications...it may be time to start looking into new options. Listing a property for rent is included in the services and just another day at the office for them (or should be). They will often have their own lease, paperwork, screening and deposit collection process. Vacancy filling should be a breeze for you as the owner with a property manager.
You may be thinking “I don’t need all of that.” You may live near the property, do your own maintenance, have your own staff. You may just simply not want or need a manager and you don’t want to call them about renting it out and listen to all the pitches about all the other things they could do for you. You may just be sitting there thinking “I really don’t want to deal with this.” This is where an exclusive lease will come in.
An agent doesn’t have to be a manager to list rentals, however you will need to keep in mind many agents will not do rentals due to time and lack of knowledge. Optimally, you will want to interview agents to find out their knowledge of rental markets. Best case, you find an agent who is also a manager and is willing to do an exclusive lease without pressuring for additional services.
There are a few differences between the service you get with a property manager and an exclusive lease. An exclusive lease is an agreement to list your unit for rent. This will include listing on the MLS, various apps/websites, conducting showings and hopefully collecting applications (it is incredibly helpful if they have their own rental application process). The application will be sent to you and once an application is approved the contract is ‘fulfilled.'
What does this mean? Most importantly, you will need your own lease and documents. With an accepted application there are 2 options (which will depend on what the agent is willing or able to do - this is an important question to ask during the interview, especially if you do not live in the area).
Additionally, they will not be able to negotiate and because of this will more than likely be contacting you much more often for clarifications - as they do not represent the property as a manager 100% of every question and decision will still need to be made by you. For example, negotiating lease start date, lease term, housing vouchers, rent amount, pets, roommates or co-signers. Much of this can be covered and your position discussed before the unit is listed, but there are going to be questions. Unless they have predetermined explicit instructions, they will call you, even if it’s ‘grey’.
Exclusive Lease’s can be a great option for the “in-between” property owner, a owner who is not so overwhelmed or in a position that requires a manager yet not willing to endure the incredible time and stress that comes with filling a unit. Afterall, going out to dinner with friends or family sounds much more appealing than sitting at your unit for 20 minutes waiting for someone who won’t show up. If this sounds like you, this is a great option to explore and a very clean, effective way to solve your problem.
Disclaimer: This article was written and is the opinion of a licensed Realtor in the State of Ohio. The agent does not, and cannot directly speak to areas, regulations, or legal procedures outside of their licensed scope. It is highly recommended you speak with an agent specifically in the area of your investment property and/or a lawyer in considered prior to any contract of legal signing or action.
“This is how we’ve always done it.” Sound familiar? I’m sure you’ve heard this before, in fact I’d venture to say it is a universal statement that spans across every professional field. That statement is the business equivalent to “Because I said so” you heard from your parents growing up. Frustrating isn’t it?
The way it was always done was an effective strategy in the past. If it isn’t broken, don’t fix it worked back when the world evolved over decades. Today, technology has obliterated this idea. We have entered an exponential curve that is making the industrial revolution look like kids playing with tinker toys. It’s only going to grow, and with growth comes change. What used to take decades is not taking years and even down to months. The Apollo program to land on the moon began in 1963. The first moon landing was in 1969. Elon Musk announced in 2011 his idea for self landing rockets, and was mocked. In December 2015, we watched the first booster softly land themselves. The cell phone you are probably holding right now has 100,000 times more computing power then the computer used on the moon landing.
When I first started my licensing classes I heard the same thing over and over in the lessons “People will always need agents, people will always need homes.” Sound familiar? “You will always need a physical store for your products...too big to fail...the market can never crash...brick and mortar will never die.” I do believe there is truth in these statements but only through action. People still need to read the news, we will always need to know what is going on - but newspapers are failing because they refused to evolve with their customers' lives.
You’re at a restaurant and someone asks you “What do real estate agents do?” - If the answer is something along “We buy and sell real estate.” In fact, if your answer includes anything related to sales, you’re answering with a “how we’ve always done it” response and you’re wrong. If you think I’m wrong and that agents are in the sales profession; here’s another question - what is your product? You don’t own the homes you have listed, you don’t own the properties you’re showing, your clients don’t even pay you. To put this in a simple term: You are no longer a car sales representative working for a dealership (brokerage). You are a mechanic. You are a service provider and if you don’t start operating your business in that way - you will begin to see your clients shift just as newspapers did.
In the past, if someone wanted to sell their house and did not want to use an agent what were their options: put a sign in the yard, and take out an ad in the newspaper. It wasn’t effective, so yes, they called you to sell. That was your business. Today, if someone wants to sell their home they can put up a sign, post on apps and websites, even list on facebook marketplace for free. They can sell without you. You can talk until you’re blue in the face about how homes sell at a higher price with an agent, or quicker - but if they don’t want you; they don’t need you.
Agents today are in the business of service, consultation and education. Your job is not to sell property or sell yourself. People are tired of being sold - they want help. When working with a buyer or a seller your interaction goal should be to communicate and educate so much so that the next time they wanted to buy or sell, they could do it on their own. 9 out of 10 will call you anyways, because your service was so exceptional, you were so transparent, you focused on exactly what they needed - they trust your service.
If someone calls you because they want to sell on their own but have a few questions - Don’t tell them why it’s a bad idea, or try and convince (sell) them on why they should let you handle it. Throughout your life, how well has it gone over when someone TOLD you what you needed to do.They didn’t call because they needed any of that, they called because they need help - help them! Sure, they may sell it without you and you ‘lost’ that sale, but if they had already decided they didn’t want an agent that is usually because of an already established ill thinking - *hint* they probably HATE SALES PEOPLE. I promise if you help them, at some point they’re going to be sitting around with friends talking and instead of a full conversation about how they did it alone because agents suck they’ll say “Ya, agents are worthless and I’d never use them but you know, if I ever did need one I’d call (your name). They actually helped me with this sale and weren’t (insert expletive here) about it or try and weasel their way into pocket. They’re alright.” Maybe they will call you in 10 years, but you know who I bet will be a lot sooner - 1 if not all 5 of the people they were talking to because if you could actually get their grumpy friend to say they would call you, you must be good.
What is your service, if not selling. What is your product? Your product is you, your product is all I said above, your product is time. Focus on your experience, focus on your first impression. There are over 2 million agents nationwide, what makes working with you special?
When I started as an agent I listened to veterans, took advice, watched videos, went to classes, all to learn how to build my business. I taught about things like auto-emailing, client ‘touches’, cold calling, door to door knocking. The entire time, I kept imagining myself as a consumer - if you cold called me you would NEVER get an answer. I don’t answer numbers I don’t know - for this exact reason - I have a phone, I have the internet, if I need your service I will find you. Same with door knocking - I’m not sure when the change happened but life went from grandma always having a cake in her fridge for unexpected guests to hearing a knock at the door and contemplating if they will see me trying to hide behind the couch.
If it is one thing I’ve learned in the last 3 years - 9 times out of 10, my clients will know about a new home before I do. The world is no longer controlled by knowledge - here’s what I mean. In the past when someone wanted to buy a house what did they do? They had to call you. Brokerages were the only place they could find every home on the market. Savvy buyers waited for every Sunday paper and maybe, MAYBE had a few homes in mind when they called. 100% of anything anyone would ever want to know is literally in their pocket right now. “How to buy a house”, “How can I get a loan”, “Which agent sold the most homes last year near me.” It’s not just one source, they can literally pick from 100’s of apps and sites and find the exact 4 homes with 3 beds, 2 baths, with a fenced in backyard for their dog and a home office. Let me put the evolution as an agent very very simply: In the traditional sense, your job is no longer “selling”, you are not in sales - you are in service. Stop running your business like selling is your product.
I could write another 25 articles on a deep dive into operations, marketing, and client connection but when you are doing ANYTHING you need to ask yourself these questions and I promise you will see a drastic change in your interactions.
I’ll break this down quickly for clarity. A potential home buyer texts you a link to a listing on an app they found and would like to see. Do you call them back immediately? Let's look at it:
When you focus on selling, you are focused on telling. When you focus on service, you are focused on listening. That is my advice for the agents of the future. Listen and pay attention to the world around you, not just real estate. When a new piece of technology comes out ask yourself how this will make lives easier, how does it add value, how can I be a part of it? Stop trying to convince people to do what you want them to do and instead laser in on exactly what you could do to help, no matter the situation. I’d love to sign a new listing with every single phone call, just like everyone else. The biggest piece of advice; recognize that you are not always the right fit for someone, and they are not always the right fit for you.
Good read thanks for posting. I live 20 mins south of Youngtown and bought/sold/rented 6 properties. great market
It really is, my hope with this article is to encourage investors to see past population increase - yes, its a valid variable but I feel it often has to much importance placed on it. I'd also like to apologize to you and everyone that commented. Apparently, I had to set the notification to be sent for replies and I had assumed it was automatic. I didn't see until today that anyone had even seen this article.
@Benjamin Moody
Thank you for taking the time to draft this post, which is packed with insightful details. I am born and raised stark county and my husband and I will begin our investment career Q3 of 2021 via house hacking. We have been watching and learning the markets of the best schools (South Range and Canfield to be specific) and your post has encouraged our reasoning for this area with proximity to the larger cities for longterm buy and hold strategy.
I'm so glad I could help!! Don't be afraid to explore Poland, Boardman and Austintown school districts as well. These are the surrounding districts to Canfield and South Range. I don't know if you saw my profile or not but I am an Realtor/Property Manager in N.E.O. and investing myself. If you ever have any questions, I'm here - whether we ever work together or not; I just love helped and seeing this area grow.
Interesting article. What is your take about greater Cleveland market?
Great question Ari, in my opinion the greater Cleveland market is very similar to the Youngstown/Warren area I posted about. Realistically, most of the metro areas in Northeast Ohio sit relatively the same - with the exception of Ashtabula/Geneva which benefits from the seasonal vacation and boom of Geneva on the Lake each summer. There are 2 major differences I would mention in discussing Cleveland vs. Youngstown (or even Akron/Canton). Firstly, competition - Cleveland is a major metro area that is well known throughout the world. When I get a call from an international investor, it is 100% Cleveland, every time. Good properties are bought much faster, and generally create bidding wars that increase the sale price i.e. your total investment. Second, median income being $29,008 per household in Cleveland. This means that regardless of Cleveland (major city) or small metro areas - what your tenants can afford is relatively the same. Sure, there is a higher population which means quicker fills - but realistically the rent prices are going to remain in the same 'ballpark' area. More competition = more demand = higher prices. A fully tenanted tri-plex, with $2,400/month in rent could be listed for 175,000 in Cleveland; with an identical property, with $2,100/month in rent could be listed for $90,000.
My last note, if you would be looking to flip, or make a majority of your profit on the re-sell, then Cleveland is the way to go in my opinion (it's the steak entrée) but places like Akron, Youngstown, Canton and Warren will generate the same rental income with less investment potential.
The average single family home price in the United States is $295,300 as of June 2020(NAR). Multi-family residential (2-4 units) properties have followed a similar trend, some market areas reaching $200,000+ per unit prices. As an investor, you are constantly searching for new ways to make your dollars work for you. The common tactic in real estate investing is to look at higher populated area, where common sense says housing is in high demand. However, any money watcher knows as demand increases, so does price. What if I told you there was a market where rental demand has remained steady, even with a decline in population. Where the average single family home price is $89,000, 2-4 units properties, fully occupied, listed for sale for $59,900. Where realistic CAP rate goals for investments are 12-15% not 6-8%. Welcome to the Mahoning Valley in Ohio.
To begin, the Mahoning Valley refers to Trumbull and Mahoning Counties with Youngstown, OH and Warren, OH being the two major city areas. Since the 1970's this area has seen a relatively steady decline in population, making it rapidly fade from investment radars as all instincts would point to declined demand. However, with a college campus (Youngstown State University or YSU), with 87% of students living off campus, the Covelli Centre (concert, hockey, basketball, convention center), Vallourec Steel, Eastwood Mall (largest mall complex in the US by land ownership), Covelli Enterprise and the Debartlo Corporation to name a few items - this area has turned into an almost secret community; left unaffected by the growth of elsewhere. Being in the top 25 lowest cost of living; the Mahoning Valley has a average median household income of $24,361.00 (census.gov) - no, that isn't a typo.
Here is where it gets interesting. After the 2008 housing crash, property values dropped drastically and just recently started to recover. Yet, rent values has continued to increase. The current average as of February 2020 was $881/month (SFH, multi's and apartment complexes included). 46% of single family homes in Youngstown are renter-occupied. In Warren, OH a study was done in 2018 by the county zoning office and found that 57% of single family homes were registered with the city as rental properties - with projections that this number would increase to 68-74% by 2030. Keep in mind, these numbers do not include multi-family properties.
Why? It boils down to population and society. With the median income, most of the population cannot qualify for a mortgage. If income doesn't do it, credit will - low income mean less loan approvals; lower approvals means lower scores. Second, every year students graduate college and return to live with their parents until they can stand on their own. However, living in a low-income area means it will take a few years to build and save enough to be able to afford the cost of living somewhere else. Rather than buying a home for 2-3 years, almost 80% of the population between ages 25-35 choose to rent with the plan to eventually leave the area. Not to mention the 87% of YSU's 12,000 undergrad students who choose to live off campus. Lastly, there has been a resurgence in population; there has not been a decrease in how many leave, but rather how many come back. Realizing the benefits of such a low cost of living, people are starting to move back tot he area and choosing to commute to work etc. I should note, Youngstown, OH is 45 mins. from Cleveland, 45 mins. from Akron/Canton, 1 hour 20 mins. from Pittsburgh, and 2-2.5 hours from Columbus.
Let's step away from investing real quick, just to put this market in to perspective. I'd like you to do a quick experiment. Go ahead, open another tab and pull up your housing search platform of choice. This home pictured below is currently for sale: it is 5 bedroom, 3.5 bath, 6,086 sq. ft. It is move-in ready in an A+ school district and sits on 24 acres, including a private pond. My experiment is for you to put in that information and tell me what this property would cost near you, then scroll down.
Are you ready? The listing price for this home is currently $699,900.00 - that's right, there is only 1 comma in that price.
Purchasing in this area is unique. Unfortunately, you are more than likely not going to see the sale appreciation or drastic increase in appraisal value. No buying for $65,000 and 5 years from now selling for $130,000. As an investment strategy however, buying investment properties, enjoying your 10-15% CAP and knowing that at anytime - 1 year or 10; the minimum will be breaking even on the sale, making your rental income pure profit for the duration of ownership. This market is not a quick money scheme - rather a critical investment opportunity for sustained, profitable, long-term growth. A train that goes to fast will eventually crash, the trick is balancing the weight, watching to crossings, and finding the best speed to keep it moving. Welcome to Northeast Ohio.