What sets you apart from your competitors?
That’s a question that solo real estate investors may not be used to asking themselves. But if you’re in business, any business, from a Fortune 500 corporation to an individual investor, you need a good answer to that question.
Don’t worry, we won’t leave you high and dry after causing an existential crisis. Here are six ways that any real estate investor – and especially rental investors – can excel and set themselves apart from the average investor down the street, without needing a massive team of marketers or a huge budget.
1. Become the #1 Authority on Your Local Market
You’ve probably honed in on a few neighborhoods you like for investing. Assuming your picks are good, it’s now time to become not just an expert, but the authority on those few neighborhoods.
Are there any development plans in the neighborhood? What new businesses are moving in, and when? How are rents trending? How are property prices moving? How is the supply of available housing, and sales volume? Are there any demographic shifts taking place? What industries do the residents work in? What do they earn in a given year? How are the schools? Are the schools improving, stable, or worsening? (Captain Obvious – if the latter, you have a problem.)
Some of the information above can come from research, but most of it comes from knowing plenty of people in those neighborhoods and staying in the loop. Find local business owners who are heavily involved in the community, and make friends with them. Become a regular at local cafes, bars, restaurants. You should grow to love these neighborhoods, become a fixture in them, spend as much time there as you can, knowing as many in-the-know people there as you can.
Beyond staying on top of neighborhood trends, you should also understand the residents inside and out. You need to know what makes them tick; what they love, what they hate, what impresses them, what doesn’t. Maybe they love tech and will jump all over a rental property with smart home tech? Maybe parking is the biggest concern for them?
If you understand the residents, you can tweak your properties and rental listings to attract them like a siren song.
2. Off-Market Referrals: Lead Machine
Most people hate networking. With a fiery passion.
Which is why the few people who take the time to do it well can simply clean up in any given market.
Fortunately, you’re already halfway there. You’re already becoming friendly with local business owners and residents, as part of your push to know target neighborhoods well. Let them know you’re always on the lookout to pick up houses or multi-family properties or whatever it is you buy.
Develop them as “bird dogs,” offering a referral fee if they pass information your way about someone who’s looking to sell.
But don’t stop there. Your business card should specifically ask for referrals for your target property profile. So should your email signature.
Join local civic organizations like the chamber of commerce and non-profits, and attend every event that you can. Introduce yourself to people. Guess what the first question they’ll ask is: “What do you do?”
You can even get to know delivery people, especially postmen/women, utility workers, etc. who work the neighborhood, asking if they’ve come across any vacant properties.
You can’t be everywhere, but you can outsource your eyes and ears to everyone you meet in the neighborhood.
3. On-Market Deals: Be First
You probably can’t make an all-cash offer, and you don’t want to make the highest offer, so how can you beat other buyers for on-market deals?
By being the first offer.
This requires being extremely proactive, but anyone can do it. You need auto-email alerts set up, for deals in your neighborhoods that meet your criteria. You need a responsive Realtor, who can get you in the door within an hour of you calling them. You need to be willing and able to drop what you’re doing to go walk through promising properties as soon as they’re listed, and willing and able to make same-day offers.
If you’re lucky, the seller will accept your offer before your competitors’ offers start rolling in.
But to do this, it helps to sweeten the deal by offering to settle quickly.
4. Easy Access to Fast Funding
This often means hard money lenders, but not always. Do you have relationships with several local (or regional) hard money lenders? Can you count on them to settle within two weeks?
How’s your credit? Even hard money lenders feel more comfortable lending to borrowers with good credit. If your credit score isn’t above 750, start taking your credit history more seriously, and boost it up.
What about local community banks? Do you have relationships with them, for permanent financing on your rentals? How quickly can they settle? See if you can get them down to three weeks, by building trust and relationships with them (and possibly with a lightning-fast title company).
It should be no surprise that the recurring theme here is “relationships.” Build trust with lenders, keep your borrower profile strong with good credit and documented income, so they’ll be able to streamline your loan and settle quickly.
5. Renovation & Updating Expertise
Not all investors feel comfortable doing updates and renovations. Other investors spend too much on them. You can beat them all by being willing and able to knock out renovation projects for less money.
Who can guess what word we’re going to use next?
You guessed it – this is all about relationships with contractors and handymen. You need reliable, talented, and affordable contractors for every specialty and every price point. Some jobs call for a quick, inexpensive handyman to go in and knock it out. Other jobs need full permits pulled and coordinating plumbers, HVAC contractors and general contractors together to move quickly and efficiently. It also doesn’t hurt to get to know the zoning board in the areas you invest in!
This takes experience and expertise, alongside relationships. If you don’t have any of those things, partner with somebody who does. You’ll learn much faster, and develop those contacts faster as well.
Hey, we never said it was easy to gain competitive advantages, only that anyone can do it!
Bonus tip: while you’re at it, make sure to tenant-proof your rental to withstand a siege!
6. Rent Automation & Turnover Expertise
Making money as a landlord and rental investor means finding good tenants, collecting the rent on-time every month, and minimizing turnovers (when most losses occur).
We can help you with tenant screening, through our partnership with credit bureau Transunion. And soon, we’ll be able to help you with automating rent collection, when we launch options to collect rent by bank transfer, credit card or deduction from the renter’s paycheck.
Beyond thorough tenant screening and automating your rent collection, you can also become a master at filling vacant properties quickly. Having relationships with all those contractors will help – you can call the right guy (or gal) for the job, and have them spruce up the property in a few days. From there it’s a matter of marketing and showing the property.
One option is to pay a leasing agent to fill your vacant properties for you. They can advertise and show the property, but they won’t be as motivated as you are to find the absolute best tenant. It’s also a wasted opportunity to get direct feedback about what prospective renters like and don’t like about your unit.
Remember, you want to be an absolute expert on your neighborhoods, and part of that means knowing your target clientele in deep detail. Not just who they are, but what they want in a home, what they prioritize.
And hey, since you’ve become a regular around the neighborhood and know all those local business owners, there’s a good chance you’ll never even have to advertise. Often your network will refer you a tenant when you tell them you have a vacant unit!
Be a Niche Expert or Be Average
Sure, you can invest all over town. But if you really want competitive advantages over other investors, become an expert in a few neighborhoods. Choose them carefully, because it takes a hefty investment of time to become an expert in a given neighborhood, with a broad network there.
For investors who take the time to cultivate a niche, they’ll find the rewards impressive. After all, how many other true experts are out there investing in these two or three neighborhoods? Probably very few.
What techniques have you found to develop an edge over other local investors? Don’t be greedy, share the wealth! And speaking of sharing, pass this article on to other investors to help them with their game, too.