What is a niche? A niche is a specialized segment of the market for a specific product or service. A real estate investing niche, more specifically, is a specific audience, location, or property type for you to target to build your real estate investing business.
Why do niches matter? Because there are many types of property owners, several different kinds of properties, and varying regions, cities, and markets to target. You cannot possibly take them all on, not without juggling multiple marketing campaigns and headaches.
We will go over the three niche categories and several niches within each category. Based on your expertise and market, your goal is to narrow your choices down to the best 1 to 3 niches.
Category #1: Seller Niches
Seller niches represent those situations you find homeowners in who want to sell.
For Sale by Owner (FSBO)
What motivates a FSBO is the wish to not pay real estate agent fees. A lot of work goes into selling a property, probably more than a homeowner is aware of or anticipates. You can educate them, then offer to be the solution where the math looks good.
Pre-foreclosure or Short Sale
Homeowners who will lose their house because they fell behind in mortgage payments may choose to sell to cover what they owe. Foreclosure hurts their credit score and will delay them in buying another property. Oftentimes, they need to be educated of the impact of foreclosure and why they should not wait to sell. When working with this niche, you should also understand the ins and outs of a short sale. Sometimes the homeowner and the lender will agree to a short sale, so you can pay less than the existing loan balance.
Depending on the chapter bankruptcy filed, and whether the property is exempt or nonexempt, a homeowner’s property can be seized to pay off their debt. You can offer to buy it at an attractive price that covers what they owe.
Landlords with tenants that file for bankruptcy, and are granted an automatic stay, cannot afford the upkeep and/or mortgage on their rental. If you are willing to contract it, with its bad tenants still living there, you’ll give the landlord a way out, and they can use the sale proceeds to buy a new rental or walk away from the pain and stress of being a landlord.
Probate or Inherited Estate
Anyone who inherits property left behind by a loved one may be unable to shoulder the responsibility. It’s hard enough navigating probate and settling matters of the estate, without affording a second mortgage. You can offer to purchase the property, in addition to any belongings the seller does not want, to help alleviate their grief and stress.
When a person fails to pay taxes, the local authorities can put a lien on the property or seize and auction it off to pay the overdue taxes. You can buy the property, with its lien still attached, or the seller can accept your offer and use the proceeds to pay off the taxes and spare their credit score.
Burned Out Landlords
Landlords invest in rentals for a passive income, but sometimes things do not pan out. The rental may be too much trouble – problem tenants, expensive repairs and taxes, no positive cash flow, etc. Whatever the reason, you can help them get out. You can offer to buy the rental, with its issues and bad tenants, no evictions necessary, and the landlord can move on.
Home sellers who are moving to smaller living spaces because of life changes have emotional needs. They are leaving a place that has memories, and the move can be daunting. Not only can you promise a cash sale with a fast closing, but you can also offer to pay the seller’s moving costs.
Category #2: Property Niches
These are some of the most popular types of investment properties:
- Single-family houses
- Rentals and small apartment buildings
- Condos and townhomes
- Mobile homes (if the land is included)
- Commercial (retail or other)
- Expired Listings
You can focus on one property type when starting out as a new real estate investor, and then branch out. The property niches you choose should match the kinds of properties most of your cash buyers want.
Category #3: Location Niches
Where you invest is just as important as what you invest in: location, location, LOCATION! You’ve heard it before.
Region (of the Country)
Different regions of the country are more lucrative than others, depending on markets, current events, and your choice of investment properties. For example, suppose you look at a metro region, where business is booming. In that case, pockets are full, and population trends suggest a future housing demand, so you can profit off high demand and limited supply, and higher rents.
Cities or Towns
Within a region, some cities or towns fare better than others. Here are some things you should look into before investing:
- Local regulations and licenses
- High property taxes
- Rent controls
- Smart planning
- Public infrastructure investments
- Popular neighborhoods
- School districts
- Local amenities
How Do I Choose a Niche?
There are more niches than the ones listed above. It all comes down to your personal preference, level of skill and knowledge, circumstances and interests, and your cash buyers. It also hinges on market opportunities at the right time and place that you choose to invest.
Do your due diligence and research these and other niches. Whatever property or seller type, or location you choose to target, the key step after will be to properly market to your niches.
GoForClose Can Expertly Market to Your Niches for You
What if your role, as a real estate investor, was to solely focus on making sales and closing deals? True, you’d still need to be familiar with your niches – how to talk to different owners, and be aware of the advantages and disadvantages of seller alternative options, but what if you did not have to go looking for leads or manage marketing? What if there was someone else to do it all for you?
Introducing GoForClose, the only all-inclusive marketing agency for real estate investors. We have extensive knowledge and experience in real estate investing and working with all types of homeowners who are motivated to sell. We are familiar with every possible niche and how to market for the locations, properties, and seller personas you are most experienced with and interested in.
If you have questions or are curious to know more, request a free consultation below.