Investment firms continue to buy thousands of single-family homes that they intend to fix up, maintain and rent. These are not once and done house flippers. They see rental housing as providing an excellent return on their investment.
This is a real sales opportunity for building material companies with residential products. Before now it was impractical for building product companies to call on homeowners or small landlords. They had to let the customers come to them through contractors, dealers or big boxes.
The problem with this is you are at the mercy of those contractors, dealers and big boxes. They decide whether your product or your competitor’s is the one that is purchased. You have little say in this.
The Blackstone group owns 40,000 homes in 14 markets.
Other major players are Waypoint Homes, American Homes 4 Rent, Hyperion Homes and BLT Homes. What this means, is you can make one sales call and potentially be the preferred product supplier for 40,000 homes.
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Most manufacturers have sales people who focus on key customers like large builders, big boxes and others. They should have someone go after this business before someone like Masco Contractor Services ties this up and makes the product decision.
Here are some things to think about if you decide to go after this opportunity
1. You probably already call on large builders and keep the contractor out of making product decisions. This market can work in a similar fashion.
2. While they certainly have knowledgeable facilities managers in each market, the real owners are Wall Street financial guys who know very little about maintaining rental homes. They see everything as a spreadsheet. The best way into this market is to be able to tell your sales story with numbers. What’s the financial benefit of using your product?
3. No matter how experienced their facilities managers are, they are inexperienced in dealing with maintaining this many homes. Anything you can do to educate them and provide better solutions will be appreciated.
4. Price may be less important than speed and eliminating surprises. These customers are going to look at how much it costs them everyday a home can’t be rented until it is repaired. They will also be interested in service agreements and planned maintenance just like commercial and institutional buildings.
5. You may have to partner with a local contractor. Commercial contractors are used to service and inspection plans. Residential contractors are not so you will have to teach them.
The larger your market share, the easier it will be to take advantage of this opportunity. Because larger companies are slow to change, this also creates an opportunity for smaller, more nimble building product companies.