what do i do first...find the property or the investor?

Question

I do have a few listings that I'm looking at and I am contacting other brokers for more listings on apartment buildings...so do I continue till i see something worth to deal and then find the investors of is this something that has to be done at the same time...i want to get a better perspective on this.

Sandy S Harris · Answer

This is the exact area that I am working as a wholesaler-smaller multifamily, mostly mom & pop owned buildings. I totally agree with Don Konipol, if you can't add any value, then you're really not in business. There is no value on the MLS or LoopNet for these types of deals. But, I am looking for 'smokin deals' and as such I'm going right to the source; direct marketing to find props that are not listed. I want the sellers that are distressed in some way: code violations, problems with capital, or just plain tired of being landlords. This is my niche and it's how I solidify my position in the transaction.

To the other point of the OP...why not do both simultaneously?? As other posters stated, finding a deal is by far the most difficult part. And it is true that buyers will find you if you have a good deal. But there is no harm in cultivating those relationships while you find your deals, as long as you don't waste the end buyers time.

To the other point of the  OP...why not do both simultaneously?? As other posters stated, finding a deal is by far the  most difficult part. And it is true that buyers will find you if you have a good deal. But there is no harm in cultivating those relationships while you find your deals, as long as you don't waste the end buyers time.

Monica Breckenridge · Answer

I'm going to say something that may be opposite than what's posted.  I could go either way, but I had a friend who recently got a bad reputation so that is why I am changing my opinion.

I would say if you don't have the ability to close with your own funds or private or hard money funds, then you need to find the investor first.  The reason why is if you don't close and you couldn't find the investor you will get a bad reputation among realtors and they won't even consider your offers.  You also need to know whether your offers make sense to potential investors.  I know that some wholesalers don't understand all the numbers.  So if you can find a good investor and find out what numbers make sense to them, you can become their birddog/wholesaler.

On the other side if you find a good deal and are under contract, you can always find a buyer.  They will come out of the woodwork's.  But if you don't have a good deal, then you won't see investors lining up to buy the house.  So evaluating the deal right the first time is key.  If you are presenting bad deals to investors you could quickly  be known as the wholesaler who fudges numbers.  Investors who have cash will quickly not take you seriously and people talk and word spreads fast.  If somebody see's you as a joke, people will spread the word.  It's a tough business, but you want to start out right and build a good reputation.  That is why I think you should start by getting the investors lined up and find out how to evaluate the deal for them.  Each investors numbers are different.

Jimmy C. · Answer

Thanks for the tips here guys. Ive been considering direct marketing to get off market commercial deals. What Sandy said above clicked. It makes no sense to tie up a deal off loopnet, and makes perfect sense to go direct to owners of multifamily property.

Sandy S Harris · Answer

Thanks for your words of encouragement Don Konipol. It really means a lot coming from you-I am a big fan of yours, and always learn something new by reading your posts!!

George Lekas · Answer

Find your investors first!  Even with shrinking inventory and rising prices, it's still easier to find great deals than it is to find private money, especially if you're new and inexperienced.  Trying to get a complete stranger to loan their money to someone with no track record is extremely difficult.  It's frustrating, particularly when you know for SURE that you have found the absolute best real estate deal in the history of real estate! LOL    All kidding aside, I was taught that, like Monica said, if you find the deal, the money will come.  Sadly, that just hasn't proven to be true in my neck of the woods.  Do your homework, check and double-check your numbers, and find your money first!

Don Konipol · Answer

Sandy S Harris, you understand the value added role perfectly and I have no doubt you are ( or will be )very successful in the wholesaling role.

Don Konipol · Answer

In a commercial deal, where investors are sophisticated, and where these same investors have licensed agents hunting Loopnet, etc. to find good deals, what value can a wholesaler bring to the table?

In single family home arena, many if not most agents are not investor savy, so the wholesaler can act at information gathering, evaluation, etc., or as the link between the non - investor oriented agent and the investor buyer.  But, I have rarely seen this need in the commercial arena.  I guess I don't see the value added proposition.

Byron Thomas · Answer

find the property price it right & the investors will come

Leo Kingston · Answer

You're asking a good question, Sam, and others are giving good responses. If you stand back and imagine that you are an investor who is looking to put his cash to work, think about what you would want. Would you be interested in talking to a guy with no properties to talk about? If you have found properties for other investors and they are happy with you, that is a good start. If not, then you are simply going to have to find deals so that you have something to share with the investors you contact.  Eventually, if you are able to put investors into some viable deals, they may let you know what they are looking for and that will really get you off and running. Good luck!

Don Konipol · Answer

Are you talking about acting as a wholesaler?  Very difficult to do on commercial property unless you have an ability to identify undervalued properties greater than that of most other investors.  If you have that ability you bring value to the proposition; if not you are a third intermediary in a two intermediary deal, either cutting into somebody's commission or adding to somebody's cost without providing value.  Long term this just does not work out.

what do i do first...find the property or the investor?

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