The long-term rental strategy continues to be the preferred method for building a strong, resilient investment portfolio. As a broker or lending partner, you can expect loan activity to increase as the Fed interest rate receives its third cut of the year. This positions you as a uniquely valuable investment partner, not only able to guide your clients to suitable financing options, but also advising on acquisition and refinancing strategy. The brokers who can master these techniques to help their clients reach their investment goals are sure to grow their deal pipeline in the coming year.
Read on as we go over the key strategies brokers and lending partners can use to strengthen their client relationships through the long-term rental strategy, and the financing options you can offer to facilitate that process.
First, let’s quicky cover the benefits of long-term rental investments and how they add value to a real estate portfolio. These properties provide investors with steady, reliable income that can become a foundation for continued portfolio growth. Their predictable returns combine with strong appreciation potential that allows investors to easily build equity which can then be used to fund further acquisitions. Additionally, they require less active involvement than vacation rental properties or short-term projects like home flips, which means owners can hire property managers to take care of day-to-day operations while they focus on building and growing their portfolios.
Brokers and lending partners play a crucial role on an investor’s team since you help guide their acquisition, financing, and long-term strategy. You should strive to learn about your client’s long-term investment goals, so that you can match them with the most suitable financing options. You can also offer your expertise along with your market knowledge to help them conduct due diligence and make smarter acquisitions that are more likely to provide stronger returns. Staying in regular contact with clients once a deal has closed is important, not only to ensure their long-term strategy is being fulfilled, but also to stay top of mind when the time comes to discuss financing for new deals.
Long-term rental investors can become some of your best clients and an excellent source of repeat business. The investors who succeed with one rental property and utilize its portfolio building advantages will often return to you for refinancing or new acquisition loans. Investors with large portfolios will also want to explore portfolio financing options, which can simplify the management and monthly payments for large portfolios. It’s crucial that you offer value beyond financing; sit down with the client to discuss their long-term strategy, and help them map out a path that will facilitate their success. Both you and your clients can win by becoming a key advisor on their investment team.
Let’s cover the financing options and resources you can utilize to help your clients find success with long-term rental investing. A smart investment in a growing area can end up being much more profitable than the baseline, but only if you take the time to conduct research. Make use of tools that help you perform due diligence; data aggregators such as ATTOM data allow you to get up-to-date information on specific markets & neighborhoods and help you identify trends over time to make smarter investment decisions.
In terms of financing options, offering a variety of options enables you to match clients with the perfect fit for their deal scenario. For example, Debt Service Coverage Ratio loans are a powerful tool that qualify properties for financing based on net operating income rather than the borrower’s credit history. They also have less limitations than conventional mortgage loans, and can often be approved much faster. Similarly, you should offer bridge financing to help investors secure properties in competitive markets, and portfolio loans for more experienced investors.
We want to end with some tips on how to increase your presence in the long-term rental space and start closing more loans. You can position yourself as a long-term rental expert by providing educational value to investors and offering a variety of financing options, ranging from traditional mortgages to DSCR loans from private lenders. You can highlight the benefits of the long-term rental strategy through blog posts & on your social media profiles, and host webinars to help inform these investors. This opens the door to starting a conversation about the investor’s goals, and how financing empowers them to reach them. You can also prove your expertise by educating clients on the benefits of the specialized financing options you provide, and how they enable investors to meet their goals sooner.
In order to maximize the returns on your clients’ investments, partner with a lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors and lending partners. If you are looking to offer rental property financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.