The Capital Stack
4 ways we find multifamily deals
Last week we reviewed the criteria we look for a deal to have before we will consider purchasing it. This week we will review exactly how we are finding/found the current deals we own.
Cold calls- The best deals are always founds off market. Cold calling is a great way to get in touch with apartment owners to see if they are willing to sell us their property. Cold calling can be very frustrating and time consuming. However, it is a very cost effective and also provides excellent results. We use CoStar to acquire the contact information for the owners of properties we have interest in. CoStar is a great asset and has information on properties both on and off the market.
Direct Mail- Another effective way to gain direct contact with the owner/owners of multifamily properties is through direct mail. We use CoStar to develop a list of off market properties that fit our buying criteria. We keep the context of the letter very simple and relay that we are interested in purchasing their multifamily property. We list our past acquisitions in order to relay our experience to the seller. We have a folder inserter mail machine as well as a bulk mail permit that allows us to mail letters in large quantities. We usually mail around 500 letters at a time. We buy postage stamps in bulk and hand stamp each envelope. We find our letters have a lesser chance of being mistaken as junk mail with a hand placed stamp. In most cases we will received a email or call from a owner interested in selling within 2 weeks of sending the mailer.
Network- Over the years we have built a strong network of like minded real estate investors. There are two types of investors that we have and will continue to work with. The experienced investor who is looking for us to assist with the workload and the inexperienced investor who has not yet purchased a deal on his/her own. The inexperienced investors want to bring us in as the lead GP so they can see first hand how to purchase a multifamily property. In 2021 the majority of the deals we purchased came from our network. The investors bringing the deals to us often got in touch with the seller through cold calls or direct mail.
Brokers- We review properties listed on the market by brokers on a daily basis. We continually search broker websites, Loopnet, CoStar and others. We have close relationships with brokers who we have purchased properties from in the past and often they will notify us of a deal before it hits the market. Typically the deals trading on the market and even the “pocket listings” we received from brokers are more expensive then what we find off market through cold calls and direct mail.
Major Market News
|Off Market Deals|
According to an article by Brandon Turner, (one of the founders of Bigger Pockets) How to Find Off-Market multifamily properties “there are approximately 5,700 small multifamily properties for sale on the MLS. However, there are more than 4 million small multifamily properties in the United States.” The article makes the point that there are many multi-family owners who are not looking to sell immediately but would “entertain the thought”. Check out this article for more great information on off-market deals >>https://www.biggerpockets.com/blog/off-market-multifamily.
Tips and Tricks
|Check out some popular real estate terms:|
Pocket Listings: A pocket listing is when a broker knows a seller that wants to sell but does not want to put their property on the market. The broker keeps the listing quiet and shops it privately to their buyer pool in hopes that someone will purchase. This makes the process much easier and smoother for all parties involved.
How we meet other investors: Over the years we have been fortunate to have many investors reach out wanting to partner with us on deals. Here’s how we have met most of these great people:
Social media- Social Media is the #1 Most potential partners or investors will reach out to us through various social media channels, links below, and the conversation starts there. Usually just a quick question but every once in a while someone has a deal they want us to look at with them and that’s when it pays off.
Podcasts-Often times publishing podcasts will get potential investors or partners interested to learn more about what we do and how we do it. Then they’ll usually reach out through social media with questions that we are always happy to help with.
Networking events- Local and national for real estate specific events. Linked a few photos from the recent Real Estate Lab public launch/networking event in Tampa that I spoke on a few different panels at and met a ton of great people.