Negotiating With “Tired Landlord” Sellers—Don’t Make This Mistake

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Have you ever heard the expression “Tired Landlord?”  This is a common phrase we use to describe what we think are “Motivated Sellers” who own rental properties.  These “Tired Landlords” can make excellent Seller candidates for us to buy properties from, but there’s one big risk:  we can accidentally make inaccurate assumptions about them and what drives them.  In this episode, Jeff breaks down the topic of “Tired Landlords” into three distinctly different sub-classifications of “Tired Landlords,” so that you can be sure you understand exactly which type you’re negotiating with, and can ultimately be far more successful in your negotiations.  

Episode Transcript

Have you ever heard the expression “tired landlord”? Like you’re looking at a property, talking to a seller and you think, Oh, this is a tired landlord. Yeah, of course you have; we’ve all said and heard that expression. And we think of a tired landlord as being kind of one of the categories of a “motivated seller” but there’s actually different types of tired landlords. And it’s really important that we understand which type we’re talking to. Because if we don’t, if we mis-categorize one, then the way we have our conversation with them is going to fall on deaf ears, and we’re not going to get our proposal to buy their property accepted. So in today’s episode, we’re going to unpack this conversation and talk about the three different types of tired landlords. Let’s cue up the theme song and jump right in.

Welcome to Racking Up Rentals, a show about how regular people, those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting We Buy Houses signs are just looking for “motivated sellers” to make lowball offers to. You see, we are people-oriented deal makers, we sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.

Hey, thank you for joining me for another episode of Racking Up Rentals. Show notes for this episode can be found at thoughtfulre.com/e185. Please do us a big favor, and do yourself a big favor, by hitting that follow or subscribe button in that podcast app of yours. It really helps to make sure you don’t miss anything, of course, but it also sends those platforms a message that tells them you are listening, it makes them want to spread the show to other thoughtful real estate entrepreneurs. Thank you so much for doing that. Onward with today’s episode.

Like I mentioned in the intro, the term “tired landlord” is a really common one. We use it all the time, and there’s a reason it’s an important idea. It is a very valuable type of seller audience that we might very well find ourselves talking to. But there is a danger though, a risk in making some assumptions or generalizations about these people. And when we make those assumptions or those generalizations. The problem is that it can lead to us not getting our proposals accepted actually getting them declined because we kind of missed the mark and misunderstood this particular person because we’re sort of bringing our own assumptions and our own thoughts and expectations about what a tired landlord is. And I think that there are three different types. And there could be more. But I think, at least these three important categories of tired landlords that I want to walk through with you. And I think that there are also some real subtleties that are in the distinctions of these different classifications of tired landlords. So I want to walk through these here today so that you can have an idea that when you’re talking to your next seller, who you might think is a tired landlord, you’ll know which type of tired landlord they are.

So the first type of tired landlord is what we’re going to call the “I can’t take it anymore” tired landlord. This landlord is almost a cliché; this is the landlord who is actually probably reflecting some of our assumptions and generalizations about tired landlord, they’re frustrated, they are fed up with tenants. They are possibly might not be tenants necessarily might be fed up with the property itself, and the repairs for it and that kind of a thing. They might be tired of responsibility. overall feeling like it’s a tether on their leg, preventing them from doing other things in their life. That could be very well depending on where they’re located, feeling frustrated, and they can’t take it anymore as it relates to the laws around landlord tenant relationships. Where I live and do business, that’s a pretty common thing, actually, as the laws shift to be more and more oriented towards protecting tenants more than landlords. There are landlords who just can’t take it anymore, either in practicality, right? Like they’re, they’re experiencing an actual problem that the law is not helping them with or in principle, and they just hear about these things happening and they’re well they’re not actually having a problem. If they don’t like the principle and the spirit behind that, and it just sort of rubs them the wrong way, conceptually, so these are people who think, yeah, they’ve said, I can’t take it anymore. I’m out.

Now every, every person who is motivated is really typically motivated, either towards something that they want in their life or away from something that they don’t want in their life, right. And in this case, this motivated, tired landlord is motivated to be away from something they’re trying to get away from that level of frustration and other things that are causing that frustration. This is what we might call distress. But if they’re going to do seller financing, which is one of our favorite topics here, of course, they’re going to do seller financing from a perspective of distress, meaning like they might do seller financing, simply to make it easy to sell their property, because they’re just done, they want to be done right now, they’ve had enough. So this is our first category. But while this might be the one that kind of generally reflects the cliche ideas, we have about a tired landlord, this is not the only category. So let’s just know that this category does exist. And some of the people you talk to will be in this category, but not all of them. And maybe even not most of them. Let’s move on and talk about the second category.

Let’s call the second category, the “I’m ready to do something different” tired landlord. Now, this is a really, really distinctly different animal. This is not a person who is distressed, whatsoever, they’re not frustrated, they are motivated by moving not away from something in their life, they’re motivated by moving toward something else in their life. But that motivation to move towards it is important to them, but not urgent, it’s a cute, right, it’s not like they’re saying, I really want to spend more time in Hawaii. And that really has to happen by next month, you know, most of the time, they’re just ready to move towards something else. But there might not be a lot of extreme timeliness to it. So when these folks do seller financing, and when we buy their properties with seller financing, the motivations for them doing so completely different than our first category of the truly frustrated, “I can’t take it anymore” landlord.

When our second category here, the “I’m ready to do something different” landlord, is selling us their property with seller financing, it’s usually because that seller financing is an enabler of their increased freedom. And, or, but probably both, it is also a way for them to defer their capital gains tax, which we have talked about a lot on this show or at least help in the deferral of capital gains tax and the easing of the overall pain associated with capital gains tax. So these people, if they’re going to sell us their property with seller financing, are doing so from a position of strength, from a position of abundance, like their current situation is not that bad anyway, and so they’re not doing it out of distress. They’re doing it from a place of freedom and abundance.

The third category that I want to share with you is kind of related to category number two, but it’s sort of distinctly different. And this is one that might not be nearly as obvious or you might think that this is a really small audience. And it may be as a small-ish audience. But even just yesterday, after I had already drafted my outline for today’s episode, I met with a seller who, when I started talking to them, I realized this is exactly who they are as well. And I would call this third category the “my spouse or loved ones want me to stop” tired landlord. Now, if you know anything about how we tend to go about intentionally seeking to buy properties with seller financing off market and the type of marketing we do you know that we’re targeting landlord owners, right? Not owner occupants, landlord owners who’ve owned properties for a long time. And when you talk to enough of those people, you start to see a trend emerge; it’s really not hard to see that a lot of these people are at a place in their life where they’re, let’s say 65 to 70 years old, and this property they’ve owned for quite a while. It’s been good to them. They’ve done well. They’re happy, they like it, actually.

But when you get to be 65 or 70 you start to question and your loved ones start to question, the idea of being on a ladder, sometimes if you’re one of those hands on landlords, and you start to question elements of stress or things that they want you to spend your time doing differently. Maybe, maybe you as the 65 year old landlord are happy with the way you spend your time but your spouse or your kids or say, Hey, I know I want you to move, I want you to go on this trip with me around, take a cruise for two weeks. And I don’t want you to be distracted with your phone ringing with maintenance requests and things like that. And so it’s not so much driven by maybe the main contact you’re talking to, but by the loved ones of the main contact. And I’ve definitely bought properties from people in this category in the past. And like I said, I just had another seller a couple days ago that was exactly like this.

What’s really unique about this type of tired landlord is that it’s not really that they want to do this; in fact, they might feel a little bit reluctant to do it, they may have been resisting this transition in their own life for a long time. But perhaps the mounting, feedback, inquiries, requests, appeals, whatnot, by their loved ones are making them feeling feel like they have to at this point. So that reluctance certainly plays into our negotiation as well. So they are moving away from something, but they’re moving away from something that they don’t really want to move away from, but that they feel obligated to move away from.

So you can see that as we start to talk to our sellers, these are very, very, very different motivations. And if we were talking to a seller, based on the wrong classification, it could be really disastrous, especially when we go to present our proposal, right? Here’s the simple example of this. If you’re talking to a seller who’s in the second category, the “I’m ready to do something different” category, this is the non-distressed moving towards something else category. Category number two, if you’re talking to that seller, and about to make a proposal, and your proposal is framed as well, I know how badly you want to get away from these tenants and, you know, this upcoming roofing project and before this new landlord tenant thing goes into effect, and so here’s the deal that I’m proposing to you – that is going to land on deaf ears, because you are speaking to the wrong person, you’re making incorrect assumptions about them, and who they are, what they actually want, what they don’t want, etc.

So we need to know our audience. This is the number one most fundamental principle of kind of everything we talked about on this podcast as it relates to negotiation. And we have to make sure that we are not mis-categorizing them out of our own generalizations and our own assumptions. Know your audience. Don’t make assumptions. Don’t make generalizations, and you’ll always, always have a much higher likelihood of success in those negotiations.

That’s it for today’s episode of Racking Up Rentals. So again, show notes can be found at thoughtfulre.com/e185. Please do yourself a big favor by subscribing or following the show in your podcast app. And even better if you could take a second to rate and review the show. Oh my gosh, I am so grateful for every one of those. It really helps with the show, as well. And it gives me feedback, helps me decide how we can do better, and make adjustments in the show. Thank you so much for that.

Did you know that we have a Facebook group for Thoughtful Real Estate Entrepreneurs? It’s true. We’d love to have you join us over there as well. It’s a nice, tight, vibrant community called Rental Portfolio Wealth Builders; either look that up in Facebook or if you want to make it easy, just type in group.thoughtfulre.com and we have programmed the magic of the internet to take you right to that page and Facebook. Thank you so much for being here again today. I will see you in the next episode. Until then, this is Jeff from the Thoughtful Real Estate Entrepreneur signing off.

Thanks for listening to Racking Up Rentals where we build long term wealth by being win-win dealmakers. Remember: solve the person to unlock the deal and solve the financing to unlock the profits.

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