The Complete Guide to Mastering FRBO Leads

INTRODUCTION

FRBO leads can drive your revenue

FRBO stands for “For Rent by Owner.” For this discussion, we will use FRBO and “absentee owner” interchangeably.

Many top-producing real estate agents include FRBOs as part of their ongoing prospecting strategy for several reasons:

1. Many real estate investors own multiple properties, so building a relationship with these investors could provide the agent with a steady source of income.
2. FRBO clients are likely to buy and sell on a frequent basis for any number of reasons, so: More transactions=much more revenue.
3. Real estate investors often deal in cash transactions. One report by Redfin estimates that as much as 75% of ALL investor purchases are in cash.
4. Because agents often overlook the FRBO market, you can expect less competition when prospecting FRBO leads.

In this post, we will break down everything you need to know about working with for rent by owner leads.

UNDERSTANDING FRBO

Absentee owner defined

As suggested above, the absentee owner is one of the most overlooked revenue opportunities in real estate. Top industry performers have realized that building an absentee owner list is an excellent way to ensure repeat business and a steady income flow for years to come.

The best absentee ownership definition refers to a property owner who does not reside on or near their property. In other words, the owner is absent from the property’s day-to-day operations, maintenance, and management. An absentee owner might own rental properties, commercial real estate, or vacant land they do not use as their primary residence or business location.

FRBO is often used in rental properties, where the owner might hire a property management company to handle tasks such as tenant communication, rent collection, property maintenance, and repairs. This allows the owner to be more hands-off and not directly involved in the property’s management.

For example, a person who lives in one city but owns an apartment building in another and relies on a property management company to take care of tenant matters and property upkeep would be considered an absentee homeowner. The term is not inherently negative, but highlights the owner’s lack of physical presence and direct involvement in the property.

Absentee owner categories

The following are the three largest categories of absentee ownership:

• Residential Rental Properties: This is one of the most common categories of absentee ownership. It includes individuals or entities owning residential properties, such as single-family homes, multi-unit apartment buildings, and condominiums, but not living on the premises. These owners generate rental income from tenants who occupy the properties.
• Commercial Real Estate: Commercial properties, including retail spaces, office buildings, industrial properties, and warehouses, often have absentee owners. These owners lease the properties to businesses that use them for their operations. Absentee ownership in the commercial sector is prevalent due to the specialized nature of the properties and the expertise required for management.
• Vacation and Second Homes: Many individuals own vacation or second homes in different locations from their primary residence. These properties are often used for personal enjoyment, but the owners might need to be present for significant periods. Vacation properties might also be rented out when the owners are not using them.

FOR RENT BY OWNER LEADS

Market facts

Estimates vary for the number of absentee owners in the U.S, but here are a few relevant data points:

• General Rental Property Ownership: As of early 2024, there are approximately 16 million single-family rental homes in the U.S. A significant portion of these properties are owned by individuals or small investors rather than large corporations, which aligns with the absentee landlord profile (Source: NAR)
• Investor Trends: Institutional investors own about 2% of the 16 million single-family rentals, leaving the majority to small and independent landlords. Many of these landlords are considered absentee, as they do not reside in the properties they own and sometimes live in different states. (Source: Harvard Joint Center for Housing Studies).
• Multi-Family Property Data: Approximately 70% of multi-family properties are owned by individuals or small investors. Many of these owners manage their properties remotely, contributing to absentee landlord statistics. (Source: Enterprise Community Partners).
• Absentee Landlord Concentration: In metropolitan areas with high rental demand, such as cities in Florida, Texas, and California, absentee landlords are especially common. These areas have experienced rapid rental property acquisitions by investors who often operate from other states or regions. (Source: Azibo)

PROSPECTING FRBO LEADS

Leveraging Espresso Agent

Successful high-producing agents always have several investors they work with. Investors buy several homes and sell off those they no longer want. Having a few investors in your pipeline is a great sphere strategy for any agent. Investors are always considering when to cash out and looking to identify properties that meet their specific criteria.

Phone prospecting is the most effective and profitable way to build your absentee owner list.  Espresso Agent delivers fresh, verified FRBO leads every day, helping you build a robust network of investors who frequently buy and sell properties.

Other outreach strategies

While daily phone prospecting is the best approach to building an effective absentee homeowner list, there are other approaches you can use as well, including:

1. Use Public Records and Data Services: Utilize public records, such as property tax records and county assessor databases, to identify properties owned by absentee owners. Many real estate data services offer tools to help you filter and identify these properties based on ownership and mailing addresses.
2. Direct Mail Campaigns: Send targeted direct mail campaigns to absentee owners. Craft personalized letters highlighting your expertise in managing absentee properties and the potential benefits of working with you. Include your contact information and a strong call to action.
3. Online Marketing and Advertising: Create ads targeting absentee property owners on platforms like Google Ads, Facebook, and Instagram. Use specific keywords and demographics to reach this audience. Develop engaging content that addresses the challenges and solutions for absentee owners.
4. Networking and Referrals: Connect with other real estate professionals, property management companies, and real estate investors who might have insights into absentee property owners. Referrals from these sources can be valuable.
5. Attend Real Estate Investor Meetings: Attend local real estate investor meetings, seminars, and networking events. Many absentee owners are real estate investors; these events can provide opportunities to connect with potential clients.
6. Utilize Social Media: Leverage social media platforms like LinkedIn, where you can connect with property owners and property managers. Share informative content about absentee ownership challenges and solutions to establish yourself as an expert.

UNDERSTANDING FRBO LEADS

Characteristics and attitudes of an absentee owner

Here are some essential characteristics that define absentee owners:

• Individual Landlords: Most FRBO owners manage 1-5 properties. They’re not large institutional investors but smaller-scale individuals or families looking for income streams or long-term investment growth.
• Cost-Conscious: Many avoid property management services to save costs, taking on tasks like tenant screening, lease agreements, and maintenance themselves.
• Investment-Focused: Their primary goal is often income generation, tax advantages, or property appreciation over time.
• Limited Resources: They may lack advanced tools or the scalability of larger landlords, leading to operational inefficiencies.
• Risk-Averse: FRBO owners tend to be cautious about tenant turnover, legal compliance, or maintenance costs, as they often lack a team to handle these challenges.
• Skepticism of Sales Pitches: FRBO owners may be wary of agents, assuming the focus is solely on earning a commission. Establish trust by offering value before pitching services.
• Open to Education: Many are not industry experts and appreciate advice on things like current property values, the tax implications of selling vs. holding, and local market trends for rentals or sales.
• Emotionally Attached: Some may have personal ties to the property, influencing their willingness to sell or negotiate.

TIPS FOR PROSPECTING FRBO LEADS

Sample phone prospecting script

As suggested above, the most effective strategy for prospecting for sale by owner leads is using Espresso Agent’s industry-best FRBO leads to work the phones.

Solid phone prospecting begins with proven scripts. Espresso Agent customers have access to some of the best scripts in the industry. Below is an example of a popular absentee owner script:

• Agent: Hi, I don’t know if you can help me. This is ________ at XYZ Realty. I am calling because I came across the property you rent on 123 Main Street. Is that property still for rent, and are you also the owner?
• Owner:Yes, my name is Mr./Mrs _________, and I’m the owner. Do you have someone who wants to rent it?
• Agent:No, I don’t, but we do have renters and buyers who come in and inquire regularly, and I am curious, do you have other rental properties in the area?
• Owner:Yes, at this time, I have about a dozen in my portfolio. I purchased this one about five years ago, and I’ve been very happy with it.
• Agent:Five years! That’s great! You have found a good system for finding income-producing rentals in this area. Have you ever considered cashing out of your current real estate investments in exchange for something more lucrative, such as through an IRS 1031 tax-free exchange?
• Owner:Well, that is interesting, you should ask. I have one that is getting to be a bit older and is not bringing in the income I would like.
• Agent:That’s interesting. We see that in the area, especially with some of the newer up-and-coming units close by. Tell me a little bit more about that property. How long have you owned it, and what would be your ideal replacement for it?
• Owner:I’ve had this one for approx. 15 years. I should have gotten rid of it several years back. It’s a 3-bedroom 2 Bath in average shape compared to other homes in the area. I would really like to find something similar in size and style but over in the College District, closer to where the students like to live. How much could I get for this one in today’s market?
• Agent:That’s a great question. I would be happy to look into that and meet up with you one day when you have a few minutes. Would Thursday or Friday at two or 3:00 pm work for you?
• Owner:Yes, I have time on Thursday at 2:00 pm
• Agent: I’ll put that on my calendar then. By the way, Mr/Mrs_______, so that I am fully prepared for our meeting if what I say makes sense and you are comfortable with the estimated net sheet and my marketing;
  Are you prepared to put that on the market with me when I come out on Thursday?
• Owner:Sure, I’d like to hear what you say, but I would be willing to do that.
• Agent: Are there other decision-makers who need to be present or is it just you?
• Owner:No, it is just me.
• Agent: I look forward to seeing you on Thursday at 2:00 pm

A script like the one we sampled above allows an agent to control the pace and direction of a prospecting call. It’s important to remember that, with FRBOs, you’re trying to establish a long-term relationship instead of making an immediate sale.

To learn more about working with scripts, check out our post: COMPLETE GUIDE TO SUCCESS WITH REAL ESTATE PROSPECTING SCRIPTS.

FRBO MARKETING STRATEGIES

Tips to help your outreach

As with marketing to any real estate lead source, you must tailor your messaging when marketing to absentee owners.  Here are a few tips to consider:

• Focus on value: How can you help them maximize the value of their real estate portfolio by educating them on market trends and opportunities?
• Create compelling content:
  • Blog posts about FRBO challenges
  • Webinars on tax implications for selling rental properties
• Offer incentives: Such as FREE rental property valuations or FREE consultation about market conditions.
• Ger personal: Try reaching out with unique tools like Storytellr, Espresso Agent’s video tool that allows you to send personalized video mails.

For additional tips on working with absentee owners, check out the following Espresso Agent blog posts:

• ABSENTEE OWNER LIST
• EMPOWER AGENTS WITH FRBOs

CLOSING THOUGHTS

It’s about relationships

Remember, consistency is key when prospecting FRBOs. Develop a plan, track your efforts, and refine your strategies based on what yields the best results. Building relationships and demonstrating your expertise in managing absentee properties will help you stand out in this market segment.

The best way to help you manage the process of prospecting FRBO leads is to employ the advanced technology offered by Espresso Agent. In addition to our quality leads, you can get:

• Comprehensive CRM software to keep you organized and on-task with your follow-up.
• World-class dialer that allows you to make significantly more calls than by manually dialing.
• The best and most responsive customer service team in the industry.
• TODAY’S BREW brings you interviews with some of the top-producing agents in the industry who share their tips for listing success.

Working with FRBOs can transform your business. Let ESPRESSO AGENT show you how!

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