Let's talk about rentals

Real Estate Agent with Reynolds Realty Gulf Coast, Inc. SL3111304

Most REALTORS cringe when they think about handling a customer who is looking for a rental in our area. It is one of those LPA's or Low Paying Activities, and most agents refuse to deal with them.

 Our team however has developed a business model that is centered AROUND rental properties and it has been a huge success or us. The formula is very simple:

 Most people who are moving to our area are going to rent prior to buying, giving themselves a chance to get to know the area and see if they actually like it here (Most will decide they do, what's not to like). Because of this, we are able to establish relationships with future buyers in a buyers market. The second part of the formula is future listings. 99% of our clients are investors who have purchased property, mostly new construction, that they had hoped to "Flip" for a profit when the property was complete. With the downturn in activity and prices in our area over the last year, we are targeting these clients for our rental listings and will eventually have these properties in our listing inventory a year or two down the road. The third part of the formula is to have a commission structure on rentals that makes it worth while for an agent to show our properties. We do this by offering commission percentages comenserate with resale properties, unlike the majority of other brokers who offer minimal compensation to an agent who shows and rents their properties, typically only $100.00.

 With most agents in our area crying about the lack of business, our agents are all busy and building relationships with sellers and buyers of the future while generated a significant income now.

Let's talk about rentals....



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Rick & Ines - Miami Beach Real Estate
Majestic Properties - Miami Beach, FL

Great Post Lou - I NEVER turn down rentals, they are potential selling customers - most of the renters we deal with end up selling, Must of the people looking for rentals, end up buying. You are right on.


Dec 08, 2006 02:22 PM #2
Jay McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Exeter, NH
Real Estate Broker

We don't have a large market for rentals up here. I have a listing where the owner will sell or lease and i am showing it for lease at noon tomorrow. I feel that tenants will buy someday and they will look to me as I was the one that helped. It's also quick cash and everyone is usually happy.


Thanks Jay 

Dec 08, 2006 02:31 PM #3
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
Bright idea.  Farming while getting paid to farm.
Dec 08, 2006 04:20 PM #4
New Tampa Property Management
Rent New Tampa, Inc. - Tampa, FL

Lou, this is a very good post... I actually just opened my own company around this very principal and created a website centered around tenants searching for rental property. In two months I have placed 5 tenants and have 4 more lined up for move in the next 2 weeks! Yes, the referral fees being offered are quite pathetic in some cases, but if only a small percentage turn into real estate buyers in the next 2 years, that could still be at least 1 prospect every quarter, with a much larger upside. Of course, also offering property management services keeps the cash flow steady in this cyclical industry.

Feb 19, 2007 01:56 PM #5
Lou Sansevero

I just closed my 2006 quickbooks and my numbers show that a full 25% of my Net Commission Income is coming from Rentals!

 I've recently been chosen by a fellow agent to handle his investors Multi-unit investments for rentals. I have already put 4 units into our rental program with another 40-100 units coming in the next several months. I've closed my first rentar as a buyer...Yeah! since starting this whole venture.

I've noticed more and more agents raising their compensation amounts also, although the companies that have been around the longest have yet to get the message. I know have about 30 rental properties active with over 30 leases closed since July 2006.

 Another benefit I didn't mention in my prior post:

 As per the listing contract with my landlords, if the tenant that I placed in their unit RENEWS their lease, I am entitled to ANOTHER commission based on my original commission! If the rent goes up, my commission goes up. I've got over 10 rentals nearing expiration and will making a concerteed effort to ge the tenants to renew.

I'm also getting more "Rent to Own" listings that give me the opportunity to earn a full commission on the sale 1 year down the road. Many of these will be transactions that I get both sides on.

 If you are struggling in this challenging market, try rentals. It may keep you going until the market turns around or may become a way of life for your business.



Feb 20, 2007 11:13 AM #6
Lori Young
Young Realty Group, Inc. - Naples, FL
Explain the commission for rentals in simple terms.  I showed and wrote a lease agreement for $1300 per month.  Total value of the lease was $1300 x 12 = $15,600 The listing broker received %15 of that or $2340 commission from the owner.  I was told I would be compensated 3%.  The MLS states 3%.  What and how am I paid?
Jun 01, 2007 11:52 AM #7
Jay McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Exeter, NH
Real Estate Broker
Looks like you would be paid $ 468.00 based on the above scenario. 3% of what the listing agent received is how I read your question.
Jun 01, 2007 12:05 PM #8
Carol Marra
Fine Properties - Lakewood Ranch, FL

Hi Lou!

Good blog - you are so right about the LPA's.  I think I am turning into a rental agent and I don't want that title.  Your old team leader joined us - Bill Kelly.  But we are losing Shari Norwick to LWR Realty - I'll miss her!  So many agents are having a tough time now.  Hope you are hanging tough - how are things?     Take care, Carol Marra


Jan 28, 2008 09:03 AM #9
Howard Serena
Keller Williams Realty of Manatee - Lakewood Ranch, FL

Lou - Your a wealth of knowledge. Rentals are hot right now, and will be potential buyers down the road.

Oct 03, 2008 07:30 AM #10
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Louis Sansevero P.A.

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