Getting your real estate license was only the first, maybe even the easiest, step in your real estate career. As a new agent, you’ll face a lot of challenges. The biggest one? Finding your first clients and building a healthy sales pipeline.
The dropout rate for new agents goes as high as 90 per cent. The industry is harsh. Not only is there a lot of competition. There’s also a lot of uncertainty.
The fact is that it will take you a considerable time to get to your first buyers and sellers. It will take even more time until you are closing enough deals per year so that you can ditch your second job and start doing real estate full-time.
The good news is that there are more ways to make money in real estate than just buying and selling.
We recently asked our clients about the best advice they could give to new real estate agents regarding their strategy.
The answer that came up on top was: do rentals first.
In this blog post, we’ll dissect rental leads and how they can provide you with a stable income that will allow you to do real estate full-time even if you are a brand new agent.
Why should you start with rentals?
Let’s be honest. When you decided to be a real estate agent, you weren’t thinking about rental properties. What you had in your mind was a picture of you opening doors to beautiful condos and houses and helping individuals and families find their forever homes.
However, the reality is quite different from what we see in real estate TV shows.
First, you’ll need to find your first buyers and sellers. That’s a huge challenge right there. For most people, acquiring a property is the biggest purchase in their lives. And as you might expect, they’d rather have an experienced and well-recommended agent help them make that purchase.
Even if you manage to find your first buyers and sellers quickly, you’ll soon learn that showing three properties and then putting in an offer for the favorite is not how real estate works in real life.
It may take months to find the perfect property for your clients. If your offer is accepted, it can take several months until your clients are ready to move in. This means you might have to wait a long time before you can celebrate your first big commission check. The time you might not have if you rely on your real estate job to pay your bills.
Yes, rental properties will not result in huge commission checks. But, they’ll provide you with a steady and regular income while you’re building your buyer and seller portfolio.
People who rent don’t have a lot of time until they move, which means that you’ll collect your commission within a couple of months tops.
If you are in a market with high demand for rental properties, you can easily earn enough commission from doing rentals only at the beginning. Then you can gradually move towards buyers and sellers.
Stable finances are not the only reason why you should start with rentals. Here are a few other reasons:
#1 People who rent turn into people that buy
Individuals and families who rent won’t be renting forever. By working with rentals now, you’re building a database of potential future buyers without the immense efforts and money needed for door-knocking, doing open houses, or distributing flyers or promotional postcards. Who knows, you might even help some of your rental clients realize that it makes more sense to buy in their situation.
#2 More experienced agents don’t like working with rentals
The competition for finding buyer and seller clients is huge. However, experienced and veteran agents don’t like or don’t have time to deal with rentals. As a new agent in a brokerage, you can offer your colleagues to take over their rental clients. In most cases, they’ll be more than glad to hand them over to you, and you’ll also show that you’re willing to do the hard work to succeed.
#3 Rentals are an amazing learning opportunity
Rentals are a great way to learn how the real estate industry works and build your sales, marketing, and customer relationship skills. You’ll quickly learn how to talk to clients, how to manage expectations, how to pre-qualify your leads, how to negotiate, etc. All this will come in very handy once you start dealing with buyers and sellers.
Tips for Dealing With Rental Clients
As you can see, dealing with rentals has a lot of benefits. However, like with everything, there are a few catches you need to consider, so you don’t make some rookie mistakes. Here’s what to pay attention to.
#1 Pre-qualifying your clients is essential
Before putting in the hard work of finding and showing properties, you need to pre-qualify the client to assess if it’s even worth working with them. You should do this as early in the process as you can. This way, you’ll avoid wasting your and the client’s time if it turns out that you cannot help them find the type of property they can afford.
#2 Pick a niche
Other than having a pre-qualification process in place, you might want to consider serving a particular niche in the market. You could choose to deal with artists who want studio apartments from which they can also work. You can decide to work with young IT professionals, as they have higher than average salaries and can afford more expensive rentals. It’s up to you.
Analyze what type of clients it makes the most sense for you to serve and then build a marketing plan around how you can reach them. With such a strategy, you can quickly become a household name in that niche, and people will start reaching out to you on their own.
#3 Stay in touch
Don’t be a transactional agent. Maintain and nurture your relationship with your rental clients. Lease renewals can be a good income generator in the future without the tedious work of finding and showing new properties. And as we mentioned before, those who rent today might decide to buy tomorrow. By maintaining a relationship with your rental clients, you’re positioning yourself to become their first choice when they decide to buy.
How Can I Find Rental Clients?
We’ve already mentioned that you can offer a helping hand to your senior colleagues in your brokerage and take over their rental clients. This is one way you can get your first clients. However, there are several other ways in which you can generate rental leads:
#1 Rental open house
Organize a rental open house event like you’d organize an open house for a “For Sale” property. Keep in mind that most people who’d come to such an event are already actively looking for a rental. If you approach them correctly, you could get more clients very soon.
#2 Talk to local property management companies
Visit local property management companies and offer your services as a showing agent. Yes, they usually already have established partnerships, but you can offer to do showings outside of working hours or over the weekends when their standard agents probably won’t show up.
#3 Online lead generation
Yes, you can generate leads from online advertising on Google and Facebook. And it’s not as expensive as you think. While many agents invest in online lead generation for buyer and seller leads, few do this for rental leads. That’s why the cost per rental lead has stayed low. While the average buyer lead will cost you $7-$11, the average rental lead costs $2-$3.
AgentLocator has a Rental Leads Program that can connect you with more than 50 online rental and lease leads per month for just $279/month. The Program includes ad management services (creating and running your Google or/and Facebook ads), a lead generation website, and a CRM system to nurture and follow up with your leads.
I Made $14K from Lease Leads in the Last 4 Months
As you can see, although rental and lease leads may not be as lucrative as buyers and sellers, they are one of the best ways to get your feet wet in the real estate industry. They provide for quick commissions and immediate pay while at the same time being an excellent investment into your future sales pipeline.