If you are thinking of starting real estate investing then you can consider of the absentee owner as your leads. An absentee owner owns a property. But they do not live there or manage it. Or they can own a business but not be actively manage or involved in its day-to-day operations.
This is a hands off approach to investing in a nutshell. Let’s explore the concept of absentee owners and look into its pros and cons.
Understanding of Absentee Owner
This is a property owner who:
- Does not reside in the property
- Does not take an active part in its day-to-day management
- Has given their property to rent.
This can be anyone who purchased the property as a second home or a revenue generating investment property.
The absentee owner might live out of state. These properties may be left vacant or rented out to tenants for short-term or long-term stays.
- Inheriting a property through probate that they have no intention of living in or renting out
- Speculatively purchasing an investment property that is no longer needed
- Owning a rental property without a tenant and being unable to find a suitable renter
- Moving out of a property but not yet selling it.
The Different Types of Absentee Owners
There are several reasons that property owners become absentee owner. Make sure that your marketing message is targeted to their specific business goals.
To ensure that the marketing you do is as effective as possible you will need to understand what motivates absentee owners to consider selling their properties.
This will help to ensure you are targeting each of them correctly with the right message. It also means that the chances of your converting those leads into calls and then into prospects and deals.
Here are 4 main types of Absentee Owners and what motivates them to sell them:
a. Short Term Rentals
STR owners or short-term rentals especially real estate investor who bought real estate investment property during the pandemic may have gone over their budget to purchase the properties.
Along with the local municipalities implementing laws and ordinances making short-term rental properties harder to own and operate. It also creates amazing opportunities for you as an investor.
b. Long Term Rentals
Longer-term rental properties are another great opportunity. It is because you can find absentee owner ready to shift their business model away from rentals.
Cashing out the equity they have built up in the properties and getting away from being a landlord can be motivating. It is especially true when you put the right offer in front of them.
c. Inherited Homes
Homes that were inherited after a family member passed away also make a great deal for your client being an investor.
Many times the new owners of these homes are facing some stress in their lives. The probate process can take years to work through. So it means they will be more inclined to listen to your offer as prospective buyers in an effort to reduce their stress.
d. Vacation Homes
When property owners buy a second home to use as a vacation property and then face budget crunches at home. So to reduce the expense from estimated income their vacation property is typically the first expense that gets cut.
It means you can help them escape the financial pressure of letting them cash out their equity. They can have a great deal on the property at the same time.
Why Absentee Owners Are Great Prospects
Finding leads that already have the motivation to sell is how you accomplish that goal. It is significantly easier to ask them to sign on the dotted line when you already know they want to sell their home.
a. Higher motivation
The absentee owner often has higher motivation to sell their properties. It is because of the challenges and inconvenience related to actively managing a property from a distance. These challenges include
- maintenance issues
- property management company
- unexpected repairs.
b. Lack of emotional investment
Since the absentee owner do not live on the property they tend to have less emotional attachment to it. This lack of emotional investment can make the negotiation process more straightforward. This is because decisions are often based on financial considerations rather than sentimental value.
c. Not always be listed on the open market
Properties owned by absentee owners may not always be listed on the open market. By directly targeting absentee owners through off-market strategies real estate investors can avoid the intense competition typically found in traditional real estate markets. It also increases the likelihood of securing favorable deals.
How To Find Absentee Owners
Being real estate agents first you need to understand whom your clients are looking for and why they are motivated to sell their property. After that next step is building lists of absentee owners in the market you want to work in.
So if you are a real estate agent looking for potential rental properties here are some ways to find absentee owners who want to sell:
a. Prospecting Neighborhoods
If you are a real estate investor or an aspiring one visit the locations that interest you. A growing handful of cities are considered great places for passive real estate investing.
A home that looks like it has been vacant a month or more is a promising sign that the owner is not actively looking for a renter or the home is in financial distress.
b. Researching Tax Records
Your local tax assessor’s office is a great resource for property information with the owner’s contact information.
Most absentee owners live at a different primary residence. So they will likely have a different mailing address from the property you are interested in. The tax office may have a searchable online database.
Some offices need an account and charge a fee for information and records.
c. Scanning Rental Listings
Finding owners who may be facing landlord fatigue is relatively straightforward. To get started you will definitely need to check out popular websites like Foreclosures Daily or Listsource.
The key here though is making sure that you are looking for properties that have been submitted by individual landlords instead of the property management company.
These companies tend to help reduce landlord fatigue and eliminate one of the biggest motivating factors for absentee landlords to want to sell.
d. Purchase a List
Being a real estate agent you can also purchase a list of absentee owners from data brokers or lead generation services.
It is easy to purchase these lists if you want to make sure that the data is updated. If it has not been resold dozens of times.
You will also want to make sure you can use filtering specific criteria like
- home’s value
- equity in the property
- length of ownership
- other factors.
All these will help you make your direct marketing message even more targeted.
e. Using Absentee Owner Lists
Some companies do all the heavy lifting and compile lists of absentee owners based on several criteria. These lists vary in cost and quality and the investor has to put in the work and contact the leads.
Many licensed real estate professionals have access to the database tools running reports
- based on address
- equity in the home
- length of ownership.
When prospecting collect as much information as you can about a property and its owner. Once you have the list it is time to evaluate them to confirm if they are strong leads.
f. Online Databases and Real Estate Platforms
Property tax records may be accessible online through the county recorder. But accessing these records typically requires the property owner’s name. To get this information, a visit to the county recorder’s office is necessary. Same goes for MLS like Foreclosures Daily and Listsource.
Alternatively, there are online companies that provide free access to tax records. However, there may be associated fees for accessing particular information. Some of these platforms may also indicate whether the property is owner-occupied.
g. Cold Calling And Direct Mailing
Cold calling is still one of the best ways to get in touch with absentee owners. You can gather a lot of information over the phone about the neighborhood and its residents.
Ask the homeowner if the property owner is plugged into the community and might be able to give you a promising lead.
Direct mail is another great way to contact property owners. Sending a letter or postcard expressing your interest in their property may begin a dialogue with someone considering selling their property.
Final Thoughts
By using the strategies outlined in this guide, you will be able to identify the right target and understand what would encourage them to sell their property, making it easier to find motivated absentee owners.
