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Survival in the SFR Market Requires Unorthodox Acquisition Strategies

10-12 SFRS_LiveCoverageWith more and more investors entering the single-family rental space, that means more competition. And more competition means getting creative when it comes to acquiring investment properties.

"It comes down to looking outside the box," said Brennan Reid, CEO of Florida-based Joyce Reid Capital. "Everyone knows how to buy REOs and knows how to buy off MLS. The thing is looking into other acquisition strategies."

Reid was a panelist in the Property Types and Acquisitions discussion of the Property Acquisition Lab of the inaugural Five Star Institute Single-Family Rental Summit in Las Vegas on Monday, October 12. Moderated by OwnAmerica CEO Greg Rand, the panel also included Sepehr Bekam, Principal with Dyson Investment Properties, Chris Crippen, Managing Director, US Residential Asset Fund, and Eddie Speed, President/Founder of Note School.

"Strategic alliances are been very huge for us," Reid said. "A lot of the leads we get actually stem from our management company, and we're able to source for our management company and make it a win-win there as well. The probate market is something we're really honing in on and it's been very good to us."

Reid said he receives properties from his attorneys who have suggested the services of Reid's company to the attorney's client.

"They're sitting down hearing their clients problems or issues," Reid said. "Maybe they inherited a home in Florida but they live in Texas. Maybe they don't have the means or the management to take over that property. If someone inherits a home out of state, they don't have the funds for the property taxes or to rehab the property. It's just a headache and additional expenses they didn't expect, and now they have to take on. So we're offering an exit strategy for us to come in and close quick and pay cash. So either we can put that into a management program or we can offer cash for that asset to liquidate, buy it at a discount, and then sell it to our management partners for a buy and hold asset."

"We're not the only players in the game anymore. So we're adapting and finding other ways of finding these people and getting to them first."

As a prime example of looking outside the box to acquire properties, Reid said funeral homes have even become a source from which to gain new assets. Reid said he tells the funeral homes that when they hear clients are looking to liquidate to please let him know, and his company will offer the funeral home client that option.

"I was actually very reluctant at first, because it is a funeral home," Reid said. "But actually what we find is they're very grateful that we're stopping by and offering our services, because they're the ones sitting down with their clients and seeing this on a day-to-day basis, and they don't have that option to give the client."

The many changes in the market just in the last three years have required a shift in strategy.

"In 2012 to 2015, you saw that huge spike in the SFR market," Reid said. "The general market's going up, but the yields are going down. It also offers another incentive for the investors. You're not buying on the yield, you're buying on the appreciation of the asset. I think like it comes down to changing  your strategy and adapting to the markets themselves."

Reid said for about a three-year period between 2010 and up to 2013, his company was able to target homes, watch them through auction, and then buy them at auction. But with the REO market getting thin, more people are finding out about the auctions and getting in on them.

"We're not the only players in the game anymore," Reid said. "So we're adapting and finding other ways of finding these people and getting to them first. Whoever does the most marketing wins, so we really focus on doing as much volume in marketing and reaching sellers as we possibly can."

Editor's note: The Five Star Institute is the parent company of DS News, DSNews.com, The MReport, and TheMReport.com.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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