The Ridgeview Report
3 Ways To Find Multifamily Deals
In last week’s newsletter, I reviewed the specific criteria I use to evaluate potential deals before buying. This week let's take a look at the strategies I have used to find the multifamily properties I currently own and the approaches I will continue to utilize moving forward.
Contacting Sellers Directly
My decade-long experience as a multifamily broker has significantly shaped my deal-finding strategy. The majority of my investments were bought by directly reaching out to sellers. To offer the most value to the person I'm calling, I maintain a database that contains detailed notes from our past conversations. I maintain regular communication with these owners and am always sure to come prepared with market information that they may find interesting. I have found they often appreciate learning about recent property sales and as well as new multifamily developments coming near them. By nurturing these relationships, I hope that they first think of me when they decide to sell, potentially saving them from paying a commission fee to a real estate agent. In addition to phone calls, I also send letters, postcards, and emails. This allows me to maintain consistent and frequent contact, in hopes that I remain at the forefront of their minds as an active buyer.
How to Gain Direct Contact
To locate accurate property info for owners in my area I employ a virtual assistant (VA) who helps me with my property research. I provide the VA with a list of specific properties I'm interested in, and she runs the LLCs associated with those properties through the Secretary of State Business Search. Her task is to identify the registered agents of those LLCs so that we can run their names through skip-tracing software. Through skip-tracing, we obtain email addresses, cell phone numbers, and addresses associated with the owners. Equipped with this information, I make cold calls to begin contact and initiate a relationship with the property owners. Once I have established contact I follow up with warm calls, regularly checking in with these owners and further establishing a relationship.
Brokers
To maintain a solid relationship with local brokers, I make sure to regularly check in to remind them I'm actively looking to buy. Brokers are busy, and a couple of reminders a year go a long way. I don't ask for a buyer’s fee. I want to be at the top of the broker's list, a nd asking for part of their commission is a great way to ensure they stop sending me deals altogether. Lastly, when buying properties, I avoid offering one price, and then asking for a reduction later (with a few exceptions). Brokers aren't fond of buyers who negotiate every step of the way to the closing table. Just like asking for a split of their fee, renegotiating the purchase price is a great way to get taken off a broker's shortlist! If unforeseen issues like foundation problems, water damage, or financial discrepancies do arise, I may have to renegotiate the price as a last resort.
Reputation is everything when buying medium and large multifamily deals. My top priority is to have access to brokers' deals as soon as they become available. The same commercial broker that sells me a deal today might have another deal for me to buy 6 months later. Earning a reputation as a difficult buyer could save money on the current transaction but will cost me future deals in the long run.
Network
Deals can arise through many channels: lenders, appraisers, title companies, friends, property managers, and fellow investors. Real estate professionals often have established connections with sellers who might not be actively promoting their properties but are open to selling. I make it a point to inform each of these groups that I am actively looking for real estate opportunities and inquire if they are aware of any property owners looking to sell. By leveraging these networks, I increase my chances of uncovering potential deals that may not be widely known in the market.
Market News
Perks & Incentives Benefit Buyers and Brokers New York City’s slowing market has led sellers and developers to go beyond traditional offerings to attract potential buyers. A recent article by TheRealDeal (May 15, 2023) highlights the increasing frequency of perks and incentives offered to buyers and brokers in real estate transactions. These perks range from luxury amenities, such as access to exclusive clubs or fitness centers, to more practical incentives like covering closing costs or offering customization options. Brokers, too, are benefiting from this trend, with developers providing bonuses or higher commissions as an incentive for bringing in qualified buyers. This shift towards offering additional benefits aims to differentiate properties and motivate both buyers and brokers to complete successful deals. Source: TheRealDeal. (2023, May 15). Perks rise for buyers, brokers to make deals.https://therealdeal.com/new-york/2023/05/15/perks-rise-for-buyers-brokers-to-make-deals/
Tips and Tricks
Terms:
Cold call - Cold calls refer to initiating communication with individuals who have had no prior interaction or relationship with the caller. These calls are typically unsolicited and serve as a means to introduce oneself and explore potential opportunities.
Warm call - Warm calls involve reaching out to individuals with whom some form of prior connection or relationship has been established. This could include contacts who have expressed interest, interacted positively in the past or have shown potential for collaboration. Warm calls are characterized by a higher likelihood of receptiveness, as there is an existing familiarity between the caller and the contact.
Overall, warm calls benefit from the foundation of a preexisting relationship, while cold calls aim to initiate contact and establish a connection from scratch
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