How do you find deals?

Question

What strategies do you all use to find deals?

In this low cap rate dominated market the mls/loop net/Zillow etc listed properties don’t pencil out for the most part. I’m in California, so I’ve settled in investing out of the area, planning to stay Pacific Northwest so I can semi easily access the assets... have a few 1031 sales coming up soon that I will need to find replacement properties for, looking at multifamily or national tenant commercial. Where do I start? Obviously word of mouth, boots on the ground.. but for a starting point. Where do you start?

James G. · Answer

Hands down, the best way to find good deals is through relationships. You can send mailers, post ads, etc. But having relationships will bring you the "behind the scene" deals, and in addition, it will allow you to utilize OPT (Other People's Time). Do your market research, know what you are talking about, and then reach out to as many broker's/investors/wholesalers as possible and let them know what you are looking for. Most importantly, say what you do and do what you say. Investor's want to work with people who can close, so if you are going to tell all of these people what you can do, make sure you are ready to execute!

Alina Trigub · Answer

@Tony F.

Most of the deals come through long term personal relationships with the brokers and other investors in the area. Since you're investing out of state, the latter is not exactly feasible for you, unless you plan to narrow down your search to one area and frequent it. In terms of the brokers, you can find a lot of them here on BP or through recommendations from others. One such broker here is @Joel Owens - perhaps he can assist you.

As for the commercial property with national tenant, you may want to consider getting into "fractional interest" purchase.

Joel Owens · Answer

Tony if you are using 1031 money then syndicated type deals are usually OUT unless looking at a TIC ( Tenants In Common) model or DST (Delaware Statutory Trust) model. Those are generally low return investments that lock you in for a long period of time. They tend to have heavy upfront fees and costs to the investor to buy in. Most syndicators make money on growing equity and taking 1031 money has extra layers tied to it and expensive to do the DST or TIC.  So most sponsors for syndicates do not offer taking of 1031 funds because they avoid TIC or DST models. You also have to check if you qualify for the DST or TIC with a 1031 as an accredited investor etc. There are rules and regulations so you would need to check with your 1031 exchanger accommodator to make sure you stay in compliance.

That being said you can go the other way and buy something to own yourself directly with the 1031 funds. I generally get on a call with people that want to be my clients. I have lots of clients from CA that buy in other states. I have a network for properties on and off market, capital markets brokers, commercial retail attorneys, 1031 exchange companies, etc.

All my buyers commit to me 100%. If a buyer wants to be rogue and just go calling everyone I am NOT for them. With the relationships I have I can go further and faster than a buyer starting from square one. Also a random unknown buyer purchasing something in a space they are not know in it can be hard to win the deal.

Brian Juris · Answer

Tony - depends on what type of returns you want. You mentioned low cap rates in a somewhat disappointing manner. Sounds like you have a much higher risk tolerance, and if that is the case, you might be the perfect candidate for LP investor for new real estate developments. If so, your expected returns will be much higher than the low cap rates you mentioned. If you would like to know more, let me know.

Ronald Rohde · Answer

I've heard this logic before on the location to PNW. What is the difference between hopping on a flight to PDX or DFW? As long as its direct, with more than 2 flights a day, lounges, club access, etc. Why not broaden your scope to include any direct flights within 3 hours? You could include AZ, SLC, etc.

How do you find deals?

Most Popular Reply