How to purchase multi-family with no realtor

Question

Hi All! I’m a relatively new investor and looking for some advice.

I have previously purchased three multi-family properties, but all with a realtor. I'm doing a walk-thru of a new multi-family on Friday which neighbors a building I already own. The new building is not on the MLS and was referred to me from my property manager after a conversation he had with the maintenance crew indicating the owner wants to sell.

If the walk-thru goes well, I intend to make an offer. The question is "how". Verbal first? How do I obtain a P&S and any additional paperwork/documents to complete the deal? From an attorney? I'm assuming I will also need attorney at close.

I’m looking for some advice from any BPers that have experience with this type of scenario. Is there checklist available that I could follow to ensure I’m not missing any steps? I don’t really know where to start…I could add my realtor into the loop, but would like to try this myself and not pay the commission. At the very least, this will be a great learning experience for me.

Thanks in advance.

-Kevin

Account Closed · Answer

If you like the opportunity and feel there's a chance to make a deal, put your offer and deal terms in writing and submit a non-binding letter of intent to the seller. Give them something to respond to and then negotiate. It won't be binding until you sign a purchase agreement.

Troy Sheets · Answer

If you've done 3 purchases through this same agent they should be happy to walk you through it and handle the paperwork for a nominal, flat fee. The agent will have to check with their broker but, since you're a repeat customer with more deals likely to come their way, they'd be crazy not to help you out. That said, you can't go wrong with a RE attorney handling it or using a title company to walk you through it, if they're willing. Many are owned by attorneys so they may be one stop shopping for you.

Kevin Kovalsky · Answer

@Michael NotoThank you for your response. You make some good points and will take them into consideration. I worked with this same agent on three previous deals and probably will work with him again on future deals.I don’t necessarily have a direct marketing campaign, but I’m starting to find some non-MLS opportunities via targeting specific owners and networking. I’m comfortable managing the tenants/properties but don’t have a good grasp of how the close these non-MLS as this will potentially be my first one.Based on your experience, do most agents accept a flat rate, opposed to standard commission, to manage the close process in these non-MLS scenarios?

Michael Noto · Answer

@Kevin Kovalsky Is this a realtor you are looking to have a long term relationship with? If not, why not just put the deal through him this way the agent and the attorney both make a little bit of money?The agent will probably really appreciate you getting him in on this deal and will go the extra mile for you when needed in the future.I will give you an example of something I am going through as an agent. Keep in mind being an agent is not my main source of income.I have been helping a guy (a new investor) look for a single flip and have been educating him on investing a lot as well. Which I really like doing by the way and do not mind taking the time to talk to newbies at all. The way I work it is I only make a client sign a buyer agency for the properties we are going to go look at, I don't make people sign exclusives.He recently told me that he purchased a multi-family property (5 units) and that he used the listing agent for his realtor to get a better price. Now, predictably this guy is now trying to reach out to me asking me for different issues dealing with this 5-unit (closing, managing once it closes, etc...). Do you think I am going to take my time now and deal with this guy?He could have paid a little bit more on the purchase and had a realtor (for his entire career) that would have had his best interest at heart. Now he is in a tough situation he has never dealt with before with no one to guide him.

Kevin Kovalsky · Answer

Hi @Ray H. Thanks for checking in.The property looks promising however I was only able to see one of the units. I'm making arrangements to see the other two units before making an offer.My options for presenting an offer and proceeding are the following:Use my current realtor at flat rate pricing to manage the dealUse an RE attorney at flat rate pricing to manage the dealI'm leaning toward using an attorney so any references you can provide would be great!-Kevin

Ray Hurteau · Answer

hey @Kevin Kovalsky how did it go? i could refer you to an attorney i know to help with the P&S. reasonable pricing (flat rate) and i've used her twice.

Kevin Kovalsky · Answer

@Darren Budahn, @Sean S. Thanks for the feedback.@Anthony Davis Great information and advice!I haven't agreed to any terms yet (my walk-thur is tomorrow) but will take everyone's ideas into consideration. Thanks again!

Anthony Davis · Answer

@Kevin KovalskyAlways use a real estate attorney to close your deals.Good title companies that have real estate transactions in volume numbers can produce smooth closings. Some may not be familiar with your particular situation, so inquire about their past experiences.Title companies should not be used for assignment transactions, so just make sure you have exit strategies built in to your contract.The state that you are buying in should have a general contract that realtors utilize for offers. Staples, a Office Max, or dome other big box business store may sell real estate contracts. Also, Google or bing, your "state and purchase contract or state and offer to purchase contract" to see if the state's contract is available online.Also, when using a Realtor, Real Estate Attorney, or Title Company ask the questions concerning the closing process that you are uncertain about. You could call an re attorney to ask about the steps before moving into the contract phase, or set up an appointment and let the attorney know that you are considering buying in the near future and wanted to be as knowledgeable as possible to ensure a smooth closing. I hope this helps in some way if not but to create a spark of thoughts for ya.All the best,Anthony Davisbreadandbutterhomes@gmail.com

Darren Budahn · Answer

You can just go to a title company and they can most likely walk you and the seller through the whole process. This is assuming you and the seller have already agreed to all the terms. Personally, I would get an attorney though just to cover my backside and make sure the paperwork is done legally and correctly.

Kevin Kovalsky · Answer

@Jesse WatersThanks for the quick response and advice. Yes, I have already done my analysis so have a good idea of the numbers and know my max offer. I'm more concerned about the back-end process (i.e. contract stuff) without using a realtor.I have spoken with the owner twice while he seems motivated he wouldn't divulge a price of what he wanted, but he said this building and another multi-family were giving him the most trouble and wanted to get rid of them.Good luck on your two new acquisitions!