Every Broker Wants To Know The Answer To This One Question

[Dan Handford]

I made a post yesterday about how we (including @Brandon Abbott) spoke with 7 brokers in one afternoon in Charlotte, NC. These brokers were all in the 100+ multifamily investment space and I found it interesting that every single broker asked us this question:

"How are you capitalized?"

After thinking about it further, this makes absolute sense. As a broker representing a seller they want to make sure that any buyer they bring to the table can actually close the deal.

Before you go visit brokers, make sure your story of capitalization makes sense.

If you can sell them on your capitalization strategy, then they will be more likely to go to bat for you. The broker will try to sell you to the seller upon submitting your first LOI.

Contrast that, if you do not explain your strategy for capitalization then the broker will likely not sell you to the seller. As a matter of fact, the broker will sometimes convince seller not to sell to you because he does not believe you can actually close the deal.

What do you think? Also, do you have any other tips for talking with brokers that you have learned from your own personal experience?