The rental market is full of potential buyers. But very few agents have figured out exactly how to tap into this prime lead source.
There is a trick to it. Master this method, and you’ll be turning renters into your next buyers in no time!
This post was originally published in April 2019. Here’s the new and improved version!
The Secret to Turning Renters into Your Next Buyers
Here’s the big secret to success in this niche: you need to partner with community managers to offer a no-lease-break fee program for renters who buy from you, and brand this as a Renter-to-Homeowner Program. This program makes you the go-to agent for all renters in those apartment communities.
How a Renter-to-Homeowner Program Works
From the renter’s perspective: This is a helpful homebuyer program that waives the lease termination fee when renters use you as their buyer’s agent. As long as the renters work with you, they can get out of their lease at any time to buy a home without paying any fee to terminate their lease early.
From your perspective: You are effectively paying the lease termination fee out of your commission. In many cases, this amount will be far less than a standard 30-35% referral fee would be.
From the community manager’s perspective: The termination fee typically more-than-covers the vacancy loss. Managers have nothing to lose because you are paying the tenant’s lease termination fee So the community manager is willing to promote you as their partner in the Renter-to-Homeowner Program.
Your Renter-to-Homeowner Program can also a good leasing feature for the community managers. Many prospective renters are hesitant to sign a lease when they are considering buying a home. When prospective renters raise concerns about lease terms, the community manager can assure them that your Renter-to-Homeowner Program will release them from their lease. This could just be what the leasing agent needs to close the deal.
How to Launch a Renter-to-Homeowner Program
Here’s a simple seven-step plan of action to effectively launch your Renter-to-Homeowner Program.
Step 1: Schedule Meetings with Community Managers
Start by reaching out to local community managers to schedule an introductory meeting.
Focus on apartment communities with renters who are most likely to qualify as buyers. Higher-end communities typically require good credit and sufficient monthly income, so they are prime targets for your Renter-to-Homeowner Program.
When you call the community managers (yes, call; emails are too easy to ignore), simply explain that you have a marketing idea for your real estate business that could also boost the bottom line for that specific apartment community. Then ask if you can treat them to lunch (or coffee if you’re on a tight budget) to discuss the idea.
They may want an overview of the idea before agreeing to meet with you. And that’s fine. Explain that you’d like to launch a Renter-to-Homeowner Program at the community, in which you would cover the renter’s lease-termination fees if they buy from you.
Stress that the termination fee should more-than-cover the vacancy loss and simply having the program will help the leasing agents close renters who are concerned that the lease term could limit their buying options.
Otherwise, treat this as any other appointment-setting cold call. By the way, if you need a little help with your cold calling skills, check out The Book of YES! by Kevin Ward. It’s a conversation guide for real estate agents that provides exact scripts for prospecting, appointment setting, listing presentations, overcoming objections, etc.
Contact the managers of all suitable apartment communities. You want to hit them all before your competitors find out about your new strategy and try to beat you to certain communities.
Step 2: Wow those Community Managers
Before you meet with the managers, do your homework. Find out how long apartments stay vacant in your local market. And how much the community stands to make by accepting the lease termination fee and re-renting the unit.
In Los Angeles, for example, the standard lease-termination fee is equal to two months’ rent. But apartments typically stay on the market for less than three weeks. So on a $3,000/month unit, the community comes out $3,750 ahead by allowing the renters to use your program to break the lease.
(And yes, you’d pay the hefty $6,000 lease break fee out of your commission. But with the median home price in LA currently at $831,000, that $6,000 fee is still under 25% of your 3% commission)
Also, make sure the community manager knows that she will be able to reset the rental rates for the vacated unit, which will likely mean the apartment can be leased at a higher rate for the renter that moves in after your renter/buyer vacates.
You should also remind the manager that your Renter-to-Homeowner Program helps the leasing agents overcome a common renter objection. Many renters have concerns about the lease term affecting their ability to buy. Can you find stats in your market about how many renters have this concern? That would be a powerful number in your meeting with the community managers.
Finally, assure the managers that you’ll take care of everything. You’ll provide the promotional materials for the Renter-to-Homeowner Program, you’ll make yourself available to answer all the renter’s inquiries about the program, and you’ll personally handle the payment upon COE. All the community managers have to do is provide your promotional materials to the renters.
Then close the deal. Ask the community manager directly if she’s ready to let you roll out the program.
Step 3: Have the Community Managers Promote Your Renter-to-Homeowner Program
So how would you like the community managers to promote your Renter-to-Homeowner Program?
Here’s a simple, but effective, marketing program for each manager to implement in his or her community:
- Post a flyer in the common areas of the community
- Email the residents to let them know about the new Program
- Include your flyer and/or brochure in their marketing materials for prospective renters
- Provide you with mailing addresses for the units so you can make direct contact with the residents via postcards (most managers prefer this method to door hangers which can look spammy in the apartment hallways.
This leads us to the next step…
Step 4: Contact the Residents Directly
Once the community managers have laid the groundwork at each community, it’s time for you to introduce yourself to the residents.
A direct mailer postcard is a cost-effective, time-efficient way to make this happen.
Your mailer should highlight 3 facts:
- The renters don’t need a full 20% down. They may qualify for a 3.5% down FHA program.
- Owning can be less expensive than renting.
- They don’t need to worry about their lease-end date thanks to your Renter-to-Homeowner Program.
You can either create your own mailers in Canva (if you’re not familiar with Canva, check out Canva for Real Estate Agents for a quick introduction) or purchase an inexpensive postcard template online.
This personal introduction may turn up a few leads. But the next step will likely be even more effective…
Step 5: Host a Free Buyer Seminar for Residents of Each Community
Step Five in launching your Renter-to-Homeowner Program to educate your prospective buyers. A few weeks after your initial mailer, send invitations to the renters to attend a free Renter-to-Homeowner Seminar.
Make this a high-end event. Have complimentary wine and cheese plates. High-end apartment communities often have an impressive clubhouse space you can use for the event at no cost! Hosting the event on a weeknight evening will give you the best chances of using the clubhouse. Just talk to the community manager to schedule a day and time.
Your presentation at this seminar should be polished and professional. You want to outline the steps required to transform these renters into homeowners. And earn the trust of the audience. Show them that you are the authority in your market!
Again, you can either create your own presentation in Canva or purchase a template online. Either way, here’s a basic outline for your presentation:
- Introduce yourself and offer some quick credentials (nothing too detailed; just assure them that you’re qualified to present this seminar).
- Explain the basics of your Renter-to-Homeowner Program. Highlight the fact that you are the only agent with this no-lease-break-fee program for this apartment community.
- Explain why now is a great time to buy:
- Low interest rates
- Low down payments
- Affordable monthly payments
- Etc
- Outline the buying process
- Getting pre-qualified
- Starting the home-search
- Making an Offer
- Opening Escrow
- Becoming a Homeowner
- Go into a bit of detail on each of those steps in the buying process.
- Explain why you are the best person to help them through this process
- Show off your client testimonials.
- Open the floor to questions.
- Invite them to meet with you one-on-one to discuss their unique needs.
Then stick around for a while after the presentation to answer any questions your new clients weren’t comfortable asking in front of the group.
Step 6: Follow Up With Interested Renters Until They Buy or Die
You know the drill. Once you have an interested lead, you follow up with them consistently…forever.
Every lead gets added to your CRM. Then it’s standard lead follow-up protocol.
Step 7: Farm Those Communities for Long-Term Success
Your first round of contact at these communities may lead to a few closed deals this year. But what about next year?
Keep your pipeline full by repeating steps three through six every six months. Apartment turnover is generally fairly high, so you’ll have some brand new contacts in each marketing round. And it never hurts to remind the original group that you’re here and ready to serve them!
That’s it! Seven simple steps to launch your Renter-to-Homeowner Program.
Get Started Today!
If you’re short on time and you need a little head-start, pick up the Complete Renter-to-Homeowner Program bundle through our partner Etsy shop, Key Real Estate Designs, and launch your Renter-to-Homeowner Program today!
