Mulit-Family Properties - Best Strategy for finding a deal?

Question

Hi All,

I'm wondering if anyone has any tips on the best strategy for finding multi-family housing deals for buy and hold?  I currently have set-up a recurring subscription with my real estate agent. I get sent an email almost daily from her MLS with new or changed multi-units, but they all seem to be overpriced or in real bad shape.  Is there another location or strategy to finding a good deal on a decent unit?

I sometimes get emails from Redfin and/or Loopnet, but I'm not a subscriber and I'm wondering if becoming a subscriber is worth the investment....or will I just find the same properties that I'm currently getting through the MLS subscription.

Thanks for your time,

Zeke

Jeff Petsche · Answer

@Ezequiel Bolwahnn I can tell you from my personal experience with searching "LoopNet" is the deals that don't sell in the open market/off market with commercial agents come to LoopNet to die. Most of the stuff on LoopNet is CRAP! I use LoopNet differently: I look at who the main commercial listing Brokers are and then I reach out to them personally. I let them know I found them on LoopNet, but the properties they had listed do not fit my criteria, and then I share my criteria with them and ask them if they could let me know when they come across something that might fit. I just started this about 3 weeks ago for properties in Columbus and Indianapolis and I've received a few calls letting me know about properties they have on their books or coming up.

As for working with real estate agents, and I say this from experience and because I am a real estate Broker in CA, MOST (90%+) of real estate agents hate working with investors. They don't see the BIG PICTURE when working with investors as a long term relationship with potentially a of deals together over the next several years. MOST real estate agents work for the NOW ONE OFF deal and move on to the next client I've been working in real estate for 14 years and I see this ALL the TIME. I for one love working in CA with investors because they take the emotional side out of buying real estate. I love working with those who are all about the NUMBERS and not about the EMOTION. But most agents representing the retail space don't feel the same way, or don't know how to really work with investors. Also, because investors are always looking for the deal, tend to look at 100 properties, make offers on 10% and get 1 to stick, and the offers are almost below market value, it's a lot of work for the agent and they make less money in many cases, so they would rather work their retail business, with retail buyers paying retail prices. Just my opinion!

As for where to find deals, look EVERYWHERE because you never know what might pop up!

I don't find MLS auto emails are worth anything. I get those to from agents I've had relationships with and I tell them to remove me. I want the off market properties they have a pocket listing on, and because of the relationships I build with other agents, I get the FIRST PHONE call before anybody else knows about the deal. That's where you want to be.

It's about RELATIONSHIPS!!!!!!!!!!!!!!!!!!!!!!!!!!!! That's where you get the deals.

I met an agent in my market through a MeetUp group and I knew he got a lot of off market properties in a specific area I had a client looking. I took this agent to lunch and during lunch I found out he was a huge USC football fan (I personally hate USC, but it's not about me). About a week later (this was last year) I still had not found anything for my buyer that worked out, so I invited the agent to lunch again and this time I showed up with two tickets to a USC football game and said, "next time you have a pocket listing in the area my buyer is looking, I want to be the first person you call"...Two weeks later I got a call, showed the property to my client and secured a deal. We closed in 30 days. RELATIONSHIPS!!!!

It's no different in our investment world. When I go to Columbus and Indianapolis next month to look at a few markets I'll be there to build relationships with boots on the ground who can help me find the properties I want.

Good luck!

Sarah Hansen · Answer

There's a few different ways to find off market properties. One way we've found if you're trying to snag a smaller unit (duplex, triplex or 4-plex) is to call off for-rent listings and signs. You can drive neighborhoods, check Craigslist / Zillow and get your realtor to send you rental listings from the MLS as well as the active for sale listings. Sometimes, you catch a landlord that doesn't really want to go through the entire tenant-screening process again to fill their empty unit, and is willing to sell. Maybe the last tenant moved out and left a mess, and they are fed up. You never know! You can try it with bigger units too, but those guys usually have a few more people to get through before you can actually talk to the owner. You get varying levels of motivation with this approach, but in our experience, many people will at least say, "Make me an offer."

You can also call property managers and see if any of their clients are thinking about selling, and if so, that you'd be interested. They probably won't tell you anyone upfront, but if you leave your info they may pass your name along if they know of someone considering it, especially if they think you'll continue to use them to manage the units.

If you have a target area, you can also write down addresses of multifamily units you like, then do a bit of digging in property records for owner addresses and equity. Then, send mailings out to owners with decent equity telling them you want to buy their units. I know there's also lists you can buy, but we haven't tried that yet.

Finally - and you have to have the right realtor for this - get your realtor to send you expired / withdrawn listings of past multifamily properties. You know, at least at one time, that the owners wanted to sell. Now, you need to do some digging to see if the same owners still own the property, or if they sold it off market, which the MLS wouldn't record. Use these listings to develop a direct mail campaign. This is a great way to find some off-market leads. If you want to create a win for your realtor, since they sent you the leads, you can have them get involved in the transaction to make a commission. If you don't want to offer this, you can at least tell them that if you get in touch with the owners, and they aren't willing to bite at your price but are still interested in selling, that you can recommend your realtor to get the listing if they want to try again. If you've been working with a realtor and have given them other business, they may just pull it for you without issue. It's not very hard for them to pull this list... This is one of the reasons my husband became a realtor, so we had easy access to this stuff for our own investments.

Good luck!

Ryan Lee · Answer

@Ezequiel Bolwahnn since you live in Arizona the best place to start is AZREIA. Great people, great networking, and they do a haves and wants. You can stand up and tell them how eager you are to find deals and see what they have that they might sell you or JV with you on. Gotta get active.

Mulit-Family Properties - Best Strategy for finding a deal?

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