On Market Vs Off Market SFR Portfolio Sales

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Adam: Hi, my name’s Adam Stern. I’m President of OwnAmerica currently the biggest and best real estate platform for trading single-family portfolios. I’m your host for the REI Classroom. I thought I’d talk about on-market marketing of single-family rental properties versus off-market.
Mike: This REI Classroom real estate lesson is sponsored by TheInvestorMachine.com, Flipnerd’s private investor coaching program and your blueprint to investing success.
Adam: Everyone knows when they’re selling real estate, they can call any real estate brokerage or agent locally and get good service and have their listing find its way to the MLS. There’s a massive apparatus out there to sell empty for-sale homes to homebuyers. But, when it comes to selling a single-family rental property with a tenant in place or multiple single-family rental properties, or a portfolio, I should say, there’s really no market out there.
We’ve experimented with the MLS, and what we’ve found is there’s really not a good fit for rental properties going in the MLS, particularly because there are not the right fields for the MLS to market these properties in terms of what the return metrics are and what the important information about a tenant and the income is. And most of the people that are looking on the MLS and other portals that lead to the MLS, like Zillow and Trulia, they’re homebuyers and they like to buy homes in a particular way which means inspecting the property before they actually make an offer.
The way that portfolios and even individual single-family rental properties are bought is generally driven by an off-market strategy. So when you look at the pros and cons of going on-market versus off-market, in order to go on-market through a local broker using your MLS, you generally need an empty property without a tenant in place. You can try, if you want to, to sell a property with a tenant in place on the MLS, but I think what you’re going to find is you’re going to be asked for access and you’re going to be asked a lot of things by homebuyers that are looking at it as a home instead of an investment.
What we’ve been able to do at OwnAmerica is create an environment where all the particulars about the income and the expenses and the operating margins of a property or a portfolio of properties are brought to the forefront. And the way we go about doing this is not by having access to the MLS, which we don’t list properties on that channel. We use all the other channels that are considered off-market, which include, of course, OwnAmerica.com. We have a strategy where we as a company market these things nationally to a big database of owners that have portfolios that are being tracked on our website, which means we have a lot of owners that are tracking value on our website. Those owners are also buyers because the owner that owns five might very well want to own 20. And we have buyers that are just coming to our site to buy properties.
So having an online platform is helpful. Utilizing local agents to market the portfolios locally to REIAs and investment clubs and local investors that they build a base of, we’ve been having a lot of success with that. And that’s still off-market because it’s, again, not on the MLS. What we’re finding is the creation of a network of buyers that understand what it’s like to not have access to good-quality inventory is robust. And we’re gathering a lot of them on a platform like we have at OwnAmerica.com, but also finding a lot of them out in the field.
And it’s really a beautiful thing because the demand is out there and now, what we realize by offering free valuations to attract inventory on OwnAmerica.com, there’s plenty of inventory. So off-market doesn’t seem so off-market anymore. In fact, I would say off-market is almost a better way to get a portfolio sold than an on-market strategy by going on the MLS. Just my experience with it. Thanks for watching.
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