Market Rental Property Like a Pro | How Real Estate Agents Gain Customer and Colleague Respect and Business

Browse the listing inventory of any real estate office and you should expect to see some rental properties listed for sale by a residential real estate agent. Mostly duplexes or triplexes, but occasionally residential real estate agents are also selling rental property.

Having been a real estate professional myself for the past thirty years, I applaud any colleague with enough grit to sell real estate, let alone income property.

But that's where my admiration ends, and my complaint begins.

You might call it professional pride, even intolerance. Yet it irks me when real estate professionals list a rental property for sale and then do not include basic elements about the property others as myself can use to sell that property.

In the MLS listing, for instance, residential agents typically do not include essential income and expense data about the property. This is frustrating because it necessitates a call to that agent, which easily could be avoided if the agent merely took a few minutes to present the income property properly.

Allow me to to pass on two tips that will make you look like an investment property pro when you are selling investment property and in turn will gain you the respect (and perhaps additional business from) real estate investors and colleagues.

Show the Data Completely

Here is a list of essentials that you want to include in every one of your marketing packages.

1. Price (no comment needed)
2. Number of Units (no comment needed)
3. Unit mix. Are the units two bedroom one bath, three bedroom two bath, and so on? How many units are there for each configuration?
4. Gross scheduled income. This is the potential annual rental income as if all units were occupied and collecting realistic rents (current rents, not pie-in-the-sky).
5. Operating expenses. The dollar amount spent annually to keep the property running. Property tax, liability insurance, utilities, trash collection, maintenance and repairs, and so on. Depending on the number of units, this should be somewhere between 25-50% of the gross operating income. With duplexes, for instance, tenants usually pay for trash collection, and utilities normally associated with laundry facilities in larger complexes, or landscaping costs do not exist.
6. Rent per unit. Show the current rent for each unit. In cases of larger apartment complexes, show a rent-range by unit configuration.
7. Capitalization rate. This is optional in the MLS listing, but it can help generate interest. Simply divide the property's net operating income by the asking price to compute it.

Present a Marketing Package

Prepare a marketing package (or "executive summary") that you can send to those inquiring about your income property listing.

Whereas, the MLS is meant to broadcast the listing and peak interest in the property, the marketing package fills in the blanks investors and colleagues want to know. In addition to the obvious like price and address, a marketing should also include

1. Income and Expense Statement
2. Property Description
3. Property Features
4. Current Loan Information
5. Proposed Loan Information - Show the annual debt service and cash flow before tax (net operating income less mortgage payment)
6. Rates of Return such as capitalization rate, gross rent multiplier, cash on cash return. The more eloquent the better, so you might also consider adding calculations for price per unit, price per square foot, expense ratio, break-even ratio, and debt coverage ratio.
7. Property Picture

Remember, your goal is to sell your rental property listing.

Therefore, why not present it in a way that would appease investment property specialists, perhaps get them interested, and at the same time make you look more professional for knowing how to sell rental property. Plus, it's a great way to show your real estate investor how proactive you are about marketing rental properties.

James Kobzeff is a real estate professional with over thirty years experience and is the owner/developer of ProAPOD Real Estate Investment Software.