Trying different approach to MF investing - Am I crazy?

[Adam Sherritt]

Hey guys,

I'll start with my questions:

1. Do you know of anyone who has tried a strategy like mine?
2. In your professional opinion, Is it possible or am I wasting my limited time?
3. If I'm not being crazy, what advice would you have for me?

I am aware that in order for one to be motivated towards a goal they need to be actively working on that goal.  Motivation rarely comes first, and it can be fleeting.  I want to work on this, but I am struggling

I am having trouble moving the ball forward when it comes to investing in multi-family. Part of the problem is that my strategy is a little different from the normal route of acquiring buildings here in BiggerPockets, and I'm not really sure how to move forward. Hoping you guys could give me some guidance.

We have a couple of real investors (private as well as capital firms) that are interested in what we are calling our "Off Market Opportunities Program" as long as we can actually get the program to work. 

In a nut shell we have identified multiple underutilized 1960's era 5-20 unit buildings in our area that we believe would bring in higher rents if upgraded. These buildings are located inCOASTAL Southern California, all buildings have either a 0% vacancy rate, or close to it. They rarely, if ever, post available units online, its essentially all word-of-mouth.

The reason we are targeting buildings that are not currently for sale is because we believe in the power of just asking.  You'd be amazed the things you can get if you simply just ask.  We want to explore that philosophy in the multi-family market.

Another reason for us looking at buildings that are not for sale is that we are trying to reduce competition.  In Southern California, as in any hot market, (San Fran, Vancouver) the second a multi-family building hits the market, there is a sea of offers.  We are trying to find our niché. 

The problem is...these buildings are not for sale. This makes writing an offer difficult as I am not aware of their expenses. This also poses a problem because viewing the units is near impossible due to the 0% vacancy. Prospective tenants aren't very discerning regarding the units; due to the lack of supply they are just happy to get a place in town (affluent area, not a lot of lower income rentals.)

I have contacted all the buildings inquiring about rents, so I am generally aware of how much they bring in and what their mix is. But have no idea what their perceived CAP is (CAP is also hard to nail down due to almost no multifamily buildings being sold in the last few years in this area), nor do I know what their operating expenses are.

My strategy at this point is (and please, any input is appreciated): 

1. Locate potential re-positionable buildings. (done)
2. Estimate buildings current value based off current income, est. expenses, est. CAP, and est. improvement costs.
3. Est. what we believe the building could bring in post-improvements.  
4. Based on above, Write offer.
5. Send offer to seller and see if there's any interest in selling.
6. Adjust strategy and repeat.

Now, for the record I have never purchased a multi-family building. I have never written an offer. My background is in land development / entitlements.  But I am very interested in forced appreciation and creating a income generating portfolio.