Utah Realtor Saying Impossible to Find Deals @ 20% off Market

[David Healey]

My wife and I are going to move our family (three kids) into a fourplex in Utah in the next few months. We've read Brandon Turner's books which say that in order to get a good deal we should be putting in offers at 20%-40% off the market value, shoot for 10% forced appreciation in the first year, and settle for no less than $200/unit Cash Flow. 

We have spoken with a couple realtors in Utah who tell me that this criteria is absolutely impossible. I realize that in order to find these great deals we'll have to put in several (40+) offers per year. Is it realistic to expect realtors to put in this many offers to help us find these great deals? Anyone in Utah finding these deals? If so, did you use a realtor?

[Skyler Smith]

Hey David, great to have you here! Very smart to get reading, and I think @Brandon Turner might change some of his strategies with agents after he ends up getting his license, but his advice is solid.

Sorry you've struck out with agents so far. Good news though, I think it might be in the way you're pitching your agents (and possibly not finding the right ones.) Here are my thoughts in no particular order.

Make sure you understand the implications of your numbers. When you say they need to cash flow $200 per unit, give your agent something more to work with. If you're putting 30% down then it's much easier to get that cash flow. If you are putting 3.5% down on an FHA it's a whole different story.

I ran in to the same issue as you when I started out, and I ended up getting my license for that very reason. There's more to it than just having the agent fire off the offer, but I'm sure you'll find someone to do it once you know how to approach them. In the same way you want to present your best face to the bank and use terms a bank will want to hear, I'd practice how you approach a Realtor.

You'll want to suggest that they set you up with automatic "hotsheet" emails with your criteria, so you will always know when a new multi family building pops up or changes price. It's free for them and keeps them from missing anything.

It sounds like you're planning on making offers every other week, so keep in mind how much your agent will be making per hour if you only buy one property a year. I've had clients asking me to do exactly what you're talking about who understand that it would be too much work to call the listing agent, ask the normal questions about the property, tell them a little bit about my client, explain that we've got an offer, but also why it's coming in low - and why they should take it anyway - so they ask me to just submit the offer and be done with it. Imagine the listing agent getting an email from an agent they haven't talked to on a property they haven't seen or shown for an FHA at 40% below asking price. How do you expect that offer will be presented to the client? Perhaps consider calling the listing agent yourself and do some of that leg work. You might never have to work with that listing agent again, but your Realtor almost certainly will.

Be the type of client an agent could only dream of. Get a mini pitch deck together, maybe build a spread sheet that you can fire off that practically writes the offer itself. I would die if a client asked me to write an offer and emailed me this info:

MLS:

Tax ID:

Purchaser: (e.g. my cool LLC)

List price:

Offer price:

Highest I'll go:

Highest I'll REALLY go: (gotta find an agent you trust to use this one)

Concessions:

Special inclusions/exclusions:

Home warranty: (yes/no)

Due diligence deadline:

Financing/appraisal deadline:

Settlement deadline:

I could write that offer in 5 minutes and be on my way, especially if you already had a chat with the listing agent. ("Yeah I just wanted to personally introduce myself and let you know that I do have an agent, it's Skyler and he'll be sending my offer over shortly. The property looks great, but it needs X and I'll have to get in there and Y, so the offer is coming in at $Z for that reason.")

Finally, you'll have to be buying some place like Ogden or Box Elder county to really score some of those awesome multifamily deals. Otherwise they'll never let it go for 20-30% below market if it's on the MLS the way things are going now. Shoot me a private message and count me in on your next round of agent interviews. I think we could work something out.