While renting a house and selling Lamborghinis may sound radically different, there are some powerful similarities. If you do it correctly so that price will not become a major element in the buying decision, you must establish in the buyer's mind that he is getting something special.
Advertising people call the concept of something special a unique selling proposition (USP). Depending on the market this can become difficult. Some items are called commodities, which means that price is the only determinant.
So many landlords think that rentals are a commodity and tell me a house is a house and there is nothing you can do about that other than pour money on the house to make it prettier or nicer or bigger.
I will grant you that some commodities require more effort to make unique and valuable. You may not remember when no one wanted chicken wings. Chickens were a commodity until Perdue and wings were not only a commodity but an undesirable one until a savvy restaurant owner in Buffalo made them sexy.
Rental houses are also a challenge to create a unique selling proposition. Or, are they?
There are so many things you can do that will differentiate your product. Offering the truth about your product rather than trying to cover up is one thing. Offering to take pets, offering Section 8, or perhaps a short term lease. Lots of things that cost little and sound better than they cost.
We have found that offering the opportunity to buy a home for people with no or bad credit during a period when lots of people have no or bad credit is a plus and we developed a trademarked system called the Famous Rent to Own on Steroids Program that gives people with credit dings the opportunity to own a home in about a year.
Win-win for us and the tenant and a loser from real estate commission and bank fees. Lots of landlords tell me it is too costly for them, but that is simply not the case. It is a plus for the tenants and us as well.
One feature of the Famous Rent to Own on Steroids Program is that the tenant will get all of the rent paid in the entire first year returned to become his down payment if he buys the house. Two of the reasons why people do not buy houses are down payment and being able to qualify for a mortgage. So with the Famous Program the down payment problem is solved.
In addition we guarantee we will finance if the tenant-buyer makes 12 consecutive payments on time and maintained the house as though they own it already. So the down payment and the mortgage problems are both solved.
For a tenant who wants to own and wants to own while prices are low, it is a great plan. Lots of landlords refuse to do it because it looks too expensive for them. But if you consider that you save a real estate commission which is going to be 6 or 7% and probably save six months of mortgage payments while you looked for a buyer it starts to even out.
And there is no question that at least for now it is a unique selling proposition for the rentals of any landlord willing to use this strategy. The name is trademarked, but the concept can easily be ripped off.
But whether you choose this or another unique proposition, offering something unique that is of value to the tenants will separate you from the competition.
About the Author: George Beardsley has written extensively about finance and business starting as a financial reporter for the Chicago Tribune and was an editor for the publishing firm Dow-Jones, Irwin and is now a landlord in Florida. He has just published a new eBook called "911 for Landlords" available at http://www.911forlandlords.com with the information he learned during the last two years which has reduced his vacancies rates from 20 per cent to often zer0.
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