Utilizing the services of a broker can be advantageous for you when you are searching for multifamily properties. The key to working with a broker is to build a relationship and “train” that broker into knowing exactly what you look for in a multifamily property. Here are some tips to guide you in what you say to a broker to find the right properties for you.
When you contact a broker, you need to be very precise in the details that you give him regarding the types of multifamily properties that you are interested in. You are basically “training” the broker to search for deals that fit your criteria. The more precise and the more knowledgeable you are in the types of property you desire, the more you will convince that broker that you are a serious buyer.
Brokers do not want to waste their valuable time searching for properties if they do not have a serious buyer. They are not going to jump through hoops for someone that comes to them and says “do you have any deals for me?” Certainly they have deals because that’s what their business is all about. Brokers want to know what kind of deals you need.
The first question you need to ask when you find a property that you are interested in and you call the broker whose name is in the listing is whether they are actually the listing broker or if they are just a “recycler”. You need to be sure and get to the listing agent so you can get all of the particulars of the deal.
Once you are speaking with the listing agent, here are some examples of precise information that you can give to him to show that you are a serious buyer:
1. I’m looking for Class C properties.
2. I’m looking for “X” number units (this can be 10-50 or 50-200, whatever the case may be).
3. I’m looking for properties that are less than $25,000 per door.
4. I’m looking for properties that have value plays.
5. I’m not opposed to rehabs.
The criteria listed above would be enough to show any broker that you are a serious buyer and you know exactly what you want.
If a broker asks you where your funding is coming from you can reply “I represent a group of private investors and we get our down payment from private sources.” Another possible response is “We have a syndicate of partners that provide the down payment.” You could also just simply say, “I’m a serious buyer and I have the wherewithal to do these transactions and I’m looking to build up a relationship with someone who has deals for us.”
The important thing to remember when you are dealing with a broker is that you need to be educated on the types of properties that you are looking for. You need to be able to communicate to the broker that you are a player. If you implement the preceding tips, you will be able to communicate effectively and confidently with brokers.
We had a great webinar on how to use social media marketing to grow your business.
Social media marketing is not just for your kids. It’s a marketing force that’s FREE and you need to include it your marketing arsenal for finding deals & dollars.
Ken just closed his first apartment – using none of his own money. He found his Seller using my direct mail technique but he’s modified it to get monster returns – like 20+%. If you are not doing direct mail to find motivated sellers, you absolutely need to be.
Listen as Ken reveals how he’s modified my approach to triple the response rate.
80% of success is showing up.
You can’t close the deal if you don’t show up!
Lance goes on to say:
“You know, just meet the first one. The thing will take care of itself. Enrique also said it “Money loves speed”. It’s just a matter of the “universe conspires on our behalf” – part of that mentality. But show up! But you gotta show up!”
As we Americans enjoy yet another Memorial Day – free and secure at home – we have lots to be grateful for. We remember those Americans who went before us and made the ultimate sacrifice so that we could enjoy our freedom and the unlimited opportunities before us.
We honor these men and women by remembering them, by expressing our gratitude for them and their family’s sacrifice – and by building on their service to grow this nation.
I urge you to remember them in your daily gratitudes – and to express daily gratitude for the freedom they provide for us.
Wishing you a safe and joyous Memorial Day,
Lance
There are various reasons why an owner of a multifamily property is looking to sell their property. You can use the seller’s motivational factor to assist you in approaching them. The motivating factor in selling a property can also enable you in locating sellers.
There are various public records that you can access and databanks at your disposal if you know what it is that you are looking for. Here is a list of some motivating factors and how you can transform that information into potential leads.
Divorce can be a motivating factor to sell. You can access divorce filings by contacting your local county clerk’s office.
Poor property management is also a big factor in a multifamily property owner wishing to sell. If you can find out which management company is running poorly operated properties, then you can find out who the owners are and contact the owners directly.
The death of a multifamily property owner is also a reason to sell. You can check to see what estates are in probate court and get your contact information there. Often in estate scenarios, you run into a bunch of family members who know nothing about managing property and they are looking for a buyer to take away that burden.
Multifamily properties that violate city code violations can be a great indicator of someone who would like to unload their headache. You can access city code violators by contacting your local city code enforcement office. There may be a fee to purchase the list.
A history of fire code violations can prompt property owners into selling as well. The owner may wish to get out from under the necessity of updating the facilities to meet fire code requirements. You can check with the city fire marshal to find out how to access that information.
Along this same line, you can also check out properties that are currently under some type of litigation. The owner of a property that is under a cloud of legal hassles is likely going to be extremely motivated to sell.
Owners who have become delinquent in paying the property taxes on their multifamily property may be looking for a buyer. Your county clerk’s office will have record of properties that have delinquent property taxes.
The factors that motivate a multifamily property owner to sell can be diverse and will definitely vary from person to person. It is not necessary to dwell on the “why” behind an owner’s deciding to sell as it is to make the most of that information. The reasons behind selling can both give you access to sellers and give you leverage in approaching them.
Direct Mail is the best technique to use when trying to generate leads and find sellers of multifamily properties. It is such a simple and effective tool and it costs you very little. Here are some tips on how to use direct mail marketing in your multifamily investing business.
Direct mail marketing merely involves mailing letters to the owners of multifamily properties in your target area and asking them if they would like to sell their multifamily property. The great thing about this technique is that you can utilize it in any city; you do not have to use it just for your hometown.
Let’s say that you go on vacation in another city. You can find out all of the people in that city who own multifamily properties in your hometown. You then send them a letter asking if they are dissatisfied with the multifamily property.
If they are dissatisfied then you let them know that you would like to buy it. You then tell them when you will be in their city and when you can meet with them. A good response rate is 1% but an average response can be anywhere from 2-5%.
Direct mail is a two-step process. First, you need to identify your target market. Second, you need to deliver your message. The more precise you are with your target market, the more precise you can get with your message.
For example, an out-of-state owner may have a different message than someone who is a local Section 8 owner who self manages the property. An out-of-state owner who does not self manage has a property management company. Your message may be tied to the dissatisfaction of the management company.
A possible message to that owner could be, “Are you dissatisfied with not knowing what’s going on in your property? If you are dissatisfied, I can alleviate that problem.”
You could send the local owner of a Section 8 property the following message: “Are you tired of waiting six months to get your first payment? Are you dissatisfied with people tearing up your property? I’m a local owner and I can quickly take this problem off your hands.”
The more precise you can get on your target market and identify with their emotional pains and create a message that connects you to relieving that pain, the better your response rate is going to be.
Once you have defined your target market and you have narrowed your message to address that target market, you need to figure out how to access those people. The simplest thing you can do is to sign- up with the subscription service at www.propertyinfo.com. It is a paid package that goes straight to the appraisal district database and allows you to sort all owners of 4-20 units; all owners of 20+; all owners in a price range; all owners in a zip code; and all owners that live in a state. An Excel file is created that you can download and that becomes your mailing list.
Direct mail marketing is a great tool for reaching out to prospective sellers of multifamily properties. You need to remember to define your target market and customize your message to address the needs of that particular market. The key to successful direct mail marketing is addressing the needs of the seller.
Multifamily Success LIVE student, Brett Shefland, shares his thoughts on the seminar:
“Hi, this is Brett Shefland. I just finished Lance Edwards’ Multifamily Success LIVE here in Las Vegas, NV. It was an excellent three day presentation. Everything Lance had promised, he delivered on. What I really liked was the small class size; it felt like a community and we began our networking here.”
Lead Generation is at the heart and soul of any business and it is no different with multifamily investing. Are you at a loss as to how to track down sellers of multifamily properties? There are five solid resources for finding motivated sellers. These five sources are direct mail, brokers, www.loopnet.com, bird dogs and other venues.
Of these five resources, direct mail is the most effective technique. This simple technique involves mailing letters to owners of multifamily properties in your target area and asking them if they would be interested in selling.
The wonderful thing about this technique is that you can employ its use in other cities. If you are going on vacation, you can find all of the people in that city who own apartment complexes in your hometown and then send them a letter asking if they are dissatisfied with their multifamily property and let them know that you would like to buy it. Let them know when you will be in their city and when you would be able to meet them.
The second resource for finding motivated sellers is brokers. Probably the easiest method of finding brokers is through www.loopnet.com. You can get very specific about the type of property that you are looking for. You can enter a zip code with a price range and it will give you a list of all those properties that meet your criteria that are on the market.
When you are looking at the properties, some of them will have brokers. You can get the broker’s name and call him. Do not email the broker. If you are not going to even bother to pick up the phone to call then how serious are you? You should call the broker and say, “I saw your listing on www.loopnet.com. Can you tell me about it?”
After the broker tells you about it, then you say “that’s not exactly what I’m looking for. Let me tell you what I’m interested in.” Now you can tell him precisely what you are looking for. The more precise and the more knowledge you convey, the more confidence you will build in that broker that you are a serious buyer.
Loopnet.com is also a resource for finding motivated sellers. Once you find a multifamily property on Loopnet.com, you can call the seller up and negotiate. You can ask for the financials and see what is missing. If anything, Loopnet.com is a great place for you to “practice” negotiating with sellers.
The fourth resource for finding motivated sellers is the bird dog. The bird dog is someone who is out hunting deals. Their goal is to find something that looks like a deal and then they hand it to you to do the work. Bird dogs are informal brokers who scour the market for deals and then match the deals to buyers.
The fifth resource, “other”, is basically a catchall for all other types of resources in finding multifamily deals. A few of these resources are estate attorneys, Laundromat service operators, plumbers, property inspectors and insurance agents.
These five resources offer you great opportunities for attracting and getting in touch with sellers. If you utilize these resources you will have multitudes of potential sellers at your disposal.
The most important part of multifamily investing is finding the deals. The person who controls the deals holds the “keys to the kingdom”. Every business has two core elements: marketing and innovation. With apartments, you are always marketing for three things: deals, money and tenants.
Finding deals is the biggest part of real estate. It is simple but it is not necessarily easy. It does require work and if you do it right, it actually becomes boring to use the system. You will have to sift through many chunks of coal to find your diamond in the rough. In many ways, it is a numbers game but you do not want to waste too much of your time evaluating the chunks of coal.
You need to nail down what exactly you are looking for. The number one thing you are looking for is a motivated seller. You are looking for an owner who is ready to move his property on very advantageous terms. You are looking for deals that have value play.
Value play is increasing NOI, increasing occupancy, and creating equity. The property you are looking at is under market and you can create quick value with it. You will discover that apartments are owned by entities such as LLC’s or limited partnerships.
Even if there are a number of people involved in the partnership, there is probably one person that is doing the most to tell the other partners to get out of the partnership and sell. That is the person that you want to get to. The important thing is not to be consumed with why somebody would sell at a discount.
Some reasons why somebody might sell at a discount are landlord burnout, a need for cash or poor property management by a third party. Again, the “why” does not matter; it has no bearing on the situation. Your job is to find people who are eager to sell at a discount.
The second thing you market for when pursuing multifamily deals is tenants. Marketing for tenants is what your property manager will take care of for you. But you have to be aware that if you do not keep those places full, you are not creating value. If your property manager is doing his or her job effectively, then your occupancy rate should reflect that.
The third thing you market for is, of course, money. There can be cash in the deal but it is an investor’s cash and not yours. Or there may be no cash in the deal when a seller does all of the financing.
Your ability to market for deals, tenants and money, will greatly affect the types of deals you find and affect your ability to move properties. Do not neglect the importance of marketing in your multifamily investing business.
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