Anyone had luck contacting owners directly for 100+ unit properties?

Question

I am looking for 80-200 unit properties in and around DFW where the competition is very tight. I know it would be a long shot, but I've sent a few letters directly to owners and am thinking about doing a lot more of it. I realize these are typically sophisticated owners that know exactly what their properties are worth, and know when they want to sell. Reading Ken McElroy's book he mentioned thats how they find the majority of their properties. He obviously makes a much bigger impression with his track record and organization than I do, but I'm thinking I need to start trying it. Dave Lindahl has written that he does it as well.

Guess I'm just fishing for success stories to motivate me!

Brian Burke · Answer

I'd also be interested to hear the success stories regarding the direct-to-seller approach.  Being a 100+ unit owner myself, I know that hardly a week goes by where I don't get a call or letter from a broker where I own property. The brokers know who the owners are and they consistently approach us to see if we want to sell.  I'm much more likely to call one of them (by now I know them all on a first name basis) than respond to one of the letters or postcards that I get from investors trying to buy direct. Not only do I know what my properties are worth, I also want as many buyers competing for it as possible.

I suppose that in a market where buyers are scarce that might be a different story.

I've taken a few of Dave Lindahl's classes and I know he's had success buying direct.  My hunch is that even Account Closed would acknowledge that Dave has probably bought more units from brokers than mailers.  That doesn't mean that mailers are a waste of time, but I think they are not the path of least resistance. But maybe they are the path of highest reward?  I wouldn't know, but I hope someone jumps in here and tells about the huge success they've had buying direct.

Anyone?........Anyone?.........Bueller?  (Showing my age with that movie quote!)

Paul Timmins · Answer

@Tom Lafferty

I work for Dave Lindahl. He finds deals through mailings, networking with brokers and property managers. He just picked up three properties about 1,000 units in 3 different states FL, TX and the carolina's.

Paul

Douglas Dowell · Answer

Dong what happened to Grandpa's automobile @Brian Burke .

I have used direct mail for sellers in the past fresh from a bootcamp.  I did get a few bites here and there.  No deal at the time but I believe direct to seller works in any market it.

Michael Tempel · Answer

This is pretty much the only way I have had good luck buying properties at a discount.  Once a broker, commission and of course public competition is involved the price almost always gets pushed up immediately (low hanging fruit).   We will buy from a broker of course, but usually end up paying more unless it is a discount broker with a set 10,000 fee for example.   The only exception is when we jump in quickly with a solid offer and PA agreement before the market has a chance to respond....most sellers know this and let the market respond though.

I network with brokers quite a bit and make it clear we are really looking at pre-market deals mainly.  You will be surprised at the list that comes up, of course being able to perform is key to gain access.

We use Costar to look at existing properties that are not on the market (you can view any commercial property).  It is expensive, but you can pretty much decide if you want to buy a property before even making a call to the owner.   I haven't done a lot of this, but blind offers are an option....it is hard to ignore a piece of paper that has an actual offer on it for your property....takes more time to put together, but probably will increase percentages of responses (hopefully not negative) significantly.

We also use a few brokers to make calls to owners for me and pass call on to me when it makes sense for a set fee.   This is a great way to cover a lot of ground and avoid having to make all the calls yourself.  A lot of times I will identify a list and then have them make contact.  I am a broker myself, so I have debated on putting a team of RE agents together, but like not having that liability by using other brokers instead.

I think the shortest form of contact is best (in person is more effective than calling...calling is more effective than a personalized mailer......personalized mailer is more effective than a general postcard).   I get mailers all the time for 103 or interested buyers etc.  Most of the time I toss them, but if they are good I create a template to modify and use myself, but honestly have stayed away from mailers at this time, so I can't say anything either way on their effectiveness.  I might have to give it a shot :-).

There are some other techniques...that probably are not as common lately such as software that shows properties that are behind on taxes or mortgage payments, those are usually good owners to contact if possible, this is my plan when the market slows down again.

I am surprised no one mentioned banking relationships, I was working with a group that bought 700 units this way.   Banks see the whole deal and when it is suffering will often offer it to the best party to manage during receivership and often sell at a discount to move things along.   I always know it is a good call when a bank reaches out to us on a property that has run into issues.

Overall the best strategy is to network like crazy, show a great track record and keep looking even when it looks hopeless (you should see what people are paying in our market right now....it feels hopeless....but I am going to take my own advice).

Account Closed · Answer

That's so cool! I've read his books and they are among my favorites :)

Kyle Evans · Answer

@Tom Lafferty I just wanted to post real quick saying congrats on even thinking of purchasing something that big!

I'm sure it will change your live for the better.

Best of luck with everything and keep us updated on the process!

Kyle

Tom Lafferty · Answer

thanks @Nick Keesee , good to hear!  Obviously there's nothing to lose by trying it.  I also am hoping that should I run into someone that decides to sell in the future, I will be taken seriously in a pool of other offers due to the fact that I was interested before.  Maybe wishful thinking but I've seen several situations where something small put someone on top when there were several competitive offers.

Wade Sikkink · Answer

I would guess that the answer to this is heavily market dependent.  I imagine that a hot market like DFW this kind of approach might be tough to work since owners may already be getting barraged.

Tom Lafferty · Answer

@Brian Burke  I'm afraid you're probably right.   I think it would have to be an extremely strong offer that they felt was very close to what they'd get on the market.  Most of the properties I'm targeting are family owned and mostly free and clear, but the brokers do know them well.  I'm also having brokers approach owners of properties that are not for sale on my behalf, as it seems like that would work better than going after them myself.

Still curious though....

Dmitri L. · Answer

Interesting thread! Would love to hear more opinions from folks with fist-hand experience.

My first thought was that maybe you'd have better chances targeting distressed properties specifically, but at the 100+ unit level, it's likely that a property does not stay "distressed" for long before the investors or bankers step in with some drastic measures

Anyone had luck contacting owners directly for 100+ unit properties?

Most Popular Reply