Landlords get a bad rap for being cold, insensitive to tenants’ needs and greedy. Sure, some of them are just that, but millions aren’t, as we’ve learned from some pretty heartwarming stories in the media during the pandemic.
Yet, they will suffer along with the meanies when the renter apocalypse, brought on by low demand for new leases begins.
OK, so “apocalypse” is a bit over-dramatic
But a low demand for new leases does seem to be on the horizon.
Of renters with leases expiring within the next six months, only 26.1% plan on renewing the leases, according to HousingWire.com’s Julia Falcon, citing a recent SatisFacts survey.
They’re feeling the pinch already in New York, where demand for new leases are “… are expected to fall significantly,” according to Max Mitchell at GlobeSt.com.
While we don’t know how many of these former tenants will decide to buy a home instead of rent, we do know that “… renters who pay more than $1,750 a month are the least likely to renew …” according to Falcon.
And you and I both know that the smartest move for someone paying that much in rent is to buy a home.
But they may not know that. It’s up to you to find them and let them know.
How do I find these renters?
We’ve established that there’s low demand for new leases, but how do you find these potential clients?
One agent we spoke with is taking a two-pronged approach to this particular group of possible buyers by targeting both the tenants and the homeowners (for listings). You’ll find some tips on pursuing landlords in our post Leverage Landlord Leads (1 Easy Way To Get More Leads).
While it’s easy enough to find the name and addresses of the landlords (absentee owners in your MLS records or your favorite title company can help). The tenants, on the other hand, are a bit more challenging to name.
The easiest way to target them by name is by buying a list. Experian.com sells renter lists as does DMDatabases.com.
The aforementioned agent we spoke with has chosen several farm areas with homes that rent for more than $1,700 a month.
Let’s convert these renters to buyers
You’ll most likely be using direct mail to reach out to renters, at least in the beginning, so you’ll need to come up with a campaign that you’ll perform consistently.
The first piece should, of course, be super-impressive. Whether you decide to send a sales letter or postcard or something else, ensure that it grabs their attention the minute they see it.
Topics to address include:
- Busting the 20% down payment myth.
- An explanation of how owning a home helps build wealth. Remember, the Census Bureau told us last year that the median net worth of a renter is $2,208 versus that of a homeowner: $199,557 (90 times that of a renter).
- If owning is cheaper than renting in your area, do point that out.
- A list of down payment assistance resources and government-back mortgage loans.
Consider hosting a first-time homebuyer’s workshop and send invitations to those on your renters’ mailing list. If you need help figuring out how to go about this, we offer tips here. Yes, these are tips for holding a home seller’s seminar, but they can easily be used for a buyer’s seminar as well.
After you make contact – follow up with something memorable
When you speak with a lead from your list, either by text, email or phone, follow up with a handwritten thank-you note.
Keep it simple. Something along the lines of what agent Brandon Grass sends after making contact:
‘Hey Jill, great talking to you. Thank you so much for your time. I look forward to the opportunity to work with you.’ And then I put my business card in there and seal it up,” he tells Brittany Ryan.
It’s highly unlikely any other agents in your market are adding this personal touch.
It’s important to start planning your renter campaign now, before everyone else catches on. Low demand for new leases seems ineitable, so take advantage and make renters your focus for the second half of 2018.