Have you heard about all the listings real estate agents are getting with FRBOs (For Rent By Owner)? Have you even heard of FRBOs? If not, you’re in the right place. This is a beginner’s guide for turning these vacant rental property leads into listings. Read this guide and listen to this interview with Zach Zaleski, a prospector who drove 30% of his $18 million in volume directly from FRBOs, so you can discover if this lead type is right for you.
Beginner’s Guide to Listing Multiple Properties With FRBOs
1. Who Should Read This Guide
2. What’s a FRBO?!
3. The Three Types of Absentee Owners
4. The Attitude of a FRBO
5. Key Financial Concepts FRBOs Want You To Know
6. One Lead Can Generate Multiple Listings
7. How To Build FRBOs Into Your Schedule
8. The 3×3 and 8×8 Calling System
9. Starting the Conversation
10. Follow Up in Half the Time
11. How Long Until You See Results
12. Where to Find FRBO Leads
1. Who Should Read This Guide
Are you looking for new leads to try, but feel like there’s just not enough time in your day to do all the research so you can get the ball rolling? Well you’re in luck. This beginner’s guide to FRBOs has everything you need to start working this new lead type with confidence.
Because let’s face it, prospecting the same lead types every single day can burn you out. And depending on your market’s conditions, there may not be the volume of leads you need. If you’re running into these challenges, then this guide to prospecting FRBO leads might be right for you.
Still worried? Take this advice from FRBO master, Zach Zaleski: “The main thing I would say is, just be open to what’s out there. I’m constantly looking at new ideas based on what other people are doing, and I’m always open and willing to try different things. That was how it started off.”
2. What’s a FRBO?!
Now that you’ve qualified yourself as a potential FRBO prospector, let’s get clear on the basics:
FRBO (pronounced, FUR-BOW) is an acronym for “For-Rent-By-Owner.” These leads cover two basic types of non-owner occupied properties: vacant rental properties (currently “For Rent”), and about-to-be vacant rental properties (will be “For Rent” soon).
FRBOs are typically owned by independent landlords or multi-property investors who have listed their property for rent, but can’t (or are tired of trying to) lease it out, so they’re stuck with the emotional stress of working with tenants and paying out-of-pocket for mortgage and property tax expenses.
Unlike FSBOs (For-Sale-By-Owners), FRBO leads have less of an emotional attachment to the property and are more open to working with real estate agents. That’s where you step in.
Because most agents don’t know what a FRBO is (or that they even exist), no one is calling them. That makes this lead type a high-value, low-competition opportunity to add to your Lead Stack.
3. The Three Types of Absentee Owners
Now that you know what a FRBO lead is, let’s take a few moments to get familiar with three different types of owners and why they’re important:
1. Owners by default
These absentee owners typically rent their properties due to circumstance (like an inheritance) rather than business strategy. When presented with an opportunity to cash out, they’re usually more willing to sell so they can avoid the continued aggravation of managing the property and its tenants.
2. Active Investors
These are your “diehard investors” who, if they sell, would likely buy another property for a 1031 Exchange (to defer capital gains tax). These FRBOs are business-minded and numbers-oriented, which means you must be too. This Cash Flow Calculator will help you work with these investors.
3. Reluctant Liquidators
These property owners would cash out, but often don’t for fear of capital gains tax. Your job is to help remove their reluctance and keep them informed. Simply connecting them with an accountant will help them realize, “It’s not coming out of your pocket. It’s coming out of the equity in the property that’s been building up.”
4. The Attitude of a FRBO
Another thing that sets absentee owner leads apart from other lead types is their willingness to hear you out and have a constructive conversation. Where FSBOs (For-Sale-By-Owners) are often combative, and Expireds tend to be angry, For-Rent-By-Owners are usually surprised by your interest in their rental, which makes them much more willing to have a conversation!
Most agents don’t know about FRBO leads, and most absentee owners aren’t expecting calls from real estate agents (much less from someone offering solutions to their pesky property problems). This means you’ll have far fewer people hanging up on you, and far more contacts who are willing to talk.
5. Key Financial Concepts FRBOs Want You To Know
Take a moment and put yourself in the shoes of a FRBO lead: if an agent approaches you about investment opportunities and doesn’t seem to know what they’re talking about, are you likely to work with them?
Just like any other lead type, you need to know your prospect’s desired outcomes. This is how you’ll build trust and be able to influence them to list with you. With most FRBO leads, all it takes is an understanding of basic financial concepts to establish this trust. Nail your “numbers knowledge” to impress these investors, and answer questions they didn’t even know they had.
FRBO expert, Zach Zaleski, explains it this way: “You definitely want to educate yourself on things like CAP rates, cash flow, and ROI (return on investment). So jump on Google and search, ‘language of investors’ or ‘working with real estate investors’ to get up to speed, and make your conversations count!”
Here are a few helpful links to help you get started:
Commercial Real Estate Investing 101
Real Estate Investing For Dummies Cheat Sheet
The Real Estate Agent’s Ultimate Guide to Working With Investors
6. One Lead Can Generate Multiple Listings
Something FRBO leads offer (that other lead types don’t) are multiple listings from a single lead. It’s not uncommon for investors and landlords to own and rent several properties at once, which can be overwhelming for them to manage.
Zach says, “That’s one of the huge things for me about the ‘For Rent by Owners‘ – the potential to do multiple deals with people. It’s not just a one-off kind of transaction. You often find people who own three, four, five, or even a half dozen properties.”
Depending on the circumstances, consider offering up your time and services to get one of their properties rented, so you can build their trust to eventually get others listed. Owners might use this initial rental transaction to test your skills and communication for a long-term business relationship.
The key is to focus on the lifetime customer value. Don’t be shortsighted and pass up an opportunity to build trust just because rental commissions are small. Focus on building trust, even if you break even. The relationship equity will be well worth it in the long run.
7. How To Build FRBOs Into Your Schedule
Now that you know what a FRBO is, how to earn their trust, and what this lead type can do for your business, let’s look at how to incorporate them into your prospecting schedule. Your schedule is what fuels your real estate engine.
Some agents like a goal-oriented schedule. They track and analyze their numbers every day to make sure they’re making the progress they need. For instance, they know on average how many calls it takes to get an appointment, a listing, and a sale. Other agents (like Zach) prefer a more flexible schedule with simple time-blocking.
Zach’s daily schedule has him early to rise, exercise, then on the phones for three hours of team prospecting. “I’m very strict about the nine to noon time-blocking,” Zach says. “This is when we’re on lockdown in lead-generation time. And we find that, when we do it consistently, we hit our goals!”
So whether you like a flexible schedule or you like to track every day down to the minute, find what works for you and implement it. The important thing is consistency. The more consistent you are with your schedule, the easier it will become to integrate this lead type into your business.
8. The 3×3 and 8×8 Calling System
One of the biggest tragedies in real estate stems from unrealistic expectations on how many call attempts an agent should make for each lead. They call a lead once, but if there’s no answer, they move on and never call them again.
The tragedy is, agents falsely conclude their leads are “no good” and miss out on listings they would’ve otherwise gained if they had a calling system in place.
Zach recognizes this problem and follows a simple, yet comprehensive, calling system to extract the maximum numbers of listings from FRBO leads.
It’s as simple as this: When you call a new FRBO lead and don’t get a response, start by calling them back every day for three days in a row. Then, if you still don’t get ahold of them, call back once a week for eight weeks straight. That’s it.
“It works because other agents will give up sooner, and it’s usually on those later (eight) contact points where you strike gold!” Zach says.
9. Starting the Conversation
Once you’ve got a solid prospecting schedule with a thorough calling system in place, it’s time to get on the phone! You may be thinking to yourself, “But where do I even start? I’ve never prospected FRBOs before… what am I going to say?!” Not to worry. Everyone’s gotta start somewhere. So here’s the exact script Zach uses when prospecting absentee owner leads.
Zach: “Hello, is the property on 123 Main Street still available?”
Owner: “Yes, it’s still available.”
Zach: “Great! My name is Zach, and I’m a real estate agent at [say your brokerage name here]. I was just calling to see if you’ve considered selling. I couldn’t help but wonder, if the equity position is right with the property, would you maybe consider a sale as opposed to renting it out again?”
Then depending on the flow of the conversation, you can use these probing questions to uncover why they have the property and where you can help them:
• Why are you renting the property?
• What are your plans with it?
• Are you planning on holding on to it for a while?
• Did you have an exit strategy when you bought the home?
• What is your exit strategy?
• Have you thought past holding onto the property forever?
That wasn’t too bad, was it? Use these questions to build a rapport, and help FRBO leads analyze their own situation in ways they probably haven’t before. You’ll feel a magical moment when you’ve opened their eyes to the benefits of selling rather than renting.
10. Follow Up in Half the Time
A common FRBO objection is, “I’m going to give it another month to try and get it rented, then I’ll think about selling.” Experienced prospectors recommend chopping the time they say in half and calling back early.
Zach’s interview reveals, “If they tell you a month, we‘re going to call them in two weeks. If they want to wait six months, call them in three.”
The logic behind this appraoch is people tend to make decisions much sooner than they plan on. Following up early gives you a competitive edge over other agents who accept these objections and move on.
And while you should have a follow up system in place for all of your leads, it’s especially valuable for FRBOs because they will actually want to hear from you again in the future.
11. How Long Until You See Results
There are going to be growing pains with any new lead you try. But once you get a taste of easy conversations and multiple transactions from a single property owner, you’ll understand why FRBOs are the underrated lead type that most real estate agents don’t even know about.
With that said, when should you start seeing results?
Some agents will get lucky and take listings right away. But to confidently understand their long-term impact, most successful FRBO prospectors recommend you commit to three months of regular dialing (longer than that if you’re not using a dialer).
As Zach puts it, “You’re going to be nervous. You’re not going to say the right things. But with a lot of repetition you’ll become comfortable and understand the kind of conversations you’re gonna have with people.”
Once you do it enough (and consistently), you’ll see results, which in turn will motivate you to keep testing and trying. “When you walk away from closing a half-million dollar house and you get your check for 12 or 15 grand,” Zach says, “that goes a long way in alleviating most people’s pain and even makes them eager to jump back on the phone.”
12. Where to Find FRBO Leads
Now that you know what FRBOs are, the financial opportunity they offer, and a few simple, proven approaches to implement, you may be thinking to yourself, “I want to try FRBOs, but where do I find them?!” Look no further.
Landlords and property management companies post ads on popular rental websites. These sites are a good option for real estate agents who have a very limited budget and aren’t regular daily or weekly prospectors.
But for agents like Zach Zaleski, who understand the value of their time and the productivity gains you get from subscribing to a professional service, REDX FRBO Leads are a better choice.
The Challenge Before You
If you want to be successful at something, you can’t quit. Even the most successful FRBO prospecting agents don’t have any more or any better information than what’s written here. They’re successful because they failed often, learned from their mistakes, and always got back up to try again.
So the challenge before you is to adopt a “Never Stop Trying” mindset for your business. And if FRBO leads sound like the opportunity you’ve been looking for, then you must commit to a regular prospecting routine that includes at least 90 days of calling FRBOs.
With enough patience and perseverance, you might just surprise yourself with how far you can go. As Zach puts it, “You’ve gotta decide what you want, and get it.”
About REDX
REDX offers real estate professionals a complete all-in-one prospecting platform for generating listing appointments. The platform includes seller leads, a dialer with up to three lines, and a lead management tool for simple follow-up. REDX maintains the position that all agents should be compliant with state and federal telecom laws – learn more here. Call (800) 731-7339 option 1 to learn more about prospecting FSBOs, Expireds, FRBOs, Pre Foreclosures, GeoLeads, and our Power Dialer – or visit www.redx.com
