How to approach brokers when cash isn't ready?

Question

I'm a partner in a couple smaller complexes that we bought summer of 2019 and beginning of 2020. Covid definitely slowed our ability to turn the units, but regardless, we'll hopefully be able to refinance our money back out for both in the next 6 to 18 months. FWIW, they did not come through a broker, so there isn't a previous broker relationship built by those properties.

I want to introduce myself to local brokers and get to know them, but also don't want to be (or appear to be) a tire kicker. I will have money in the future to buy more, but not right now and no definite date when I will.

How can I get with brokers without them feeling I'm wasting their time? Or maybe they're used to talking w/ people in a similar situation as me?

Arn Cenedella · Answer

@Dustin Beam

Being open and upfront is always the best policy.

Lay it out for the broker honestly. I own MF now and will be looking for more in the future. I can’t buy right now but I want to build a relationship with you and get on your email list. I’m happy to help you in any way I can. What can I do for you? It might be simply sharing your current rents with the broker. If the broker is it it for the long haul, they will respond is a positive matter.

If you are not honest, and broker finds you can’t do a deal now even though you represented otherwise, your name will be mud with that broker and probably every other broker in town.

As a broker and investor of 40 years, my time is valuable and I don’t like anyone to waste it.

Be upfront and honest.

Adam Lacey · Answer

@Dustin Beam I haven't had brokers ask me too much about funding until I submit LOI's. As mentioned above, just be real with them and if you find the right broker, they will be real with you. Focus on providing value to them and start to build those long term relationships that you're looking for.

Dustin Beam · Answer

Sounds good, thank you. We'll likely be looking for anything from 12-50ish units, really depends on how closely the two are refinanced and what kind of deals we are able to find.  I'm always transparent if asked so if they want to know my situation, I'll let them know. I just don't want to go into a situation where they all think I'm another BSer giving them a call. I imagine that happens often to them.

Charles Seaman · Answer

@Dustin Beam My recommendation is to start reaching out to brokers and don't even mention money.  Building relationships takes time and you'll often have to look at many deals before you find one that you like.  Most brokers in the commercial space (5 residential units and up) will typically ask you how you plan to fund your deals, but they won't typically ask for proof of funds or anything similar unless they doubt your ability to close.  So work on being confident in your delivery and not having the funds available at the onset of your contact with them likely won't be a hinderance.

If you're looking at multifamily complexes that are 4 units or smaller, then it might be a different ballgame, but my best suggestion there is to reach out and find an experienced investor friendly broker that understands how investors operate and won't question you much.

Mike Cosmah · Answer

@Arn Cenedella put it perfectly! Some brokers may not be receptive to you but that's ok. Contact several in the areas you're interested in, create a relationship with them and be upfront about your situation. You'll find out pretty quickly which brokers you would prefer to deal with. Good Luck!

Mack Benson · Answer

I think you may be making too much out of not having funds immediately available. As you said you already have a couple deals under your belt so you have the experience of making it through multiple closings. Depending on the size of the property, many times funding is not in hand until shortly before the closing. As long as you know how and where the funding will be coming from and you can demonstrate that you have the ability to close the broker should feel comfortable with you as a buyer. I literally just read an article on this topic on Friday, https://jakeandgino.com/how-to.... It may help alleviate some fears you have.

Arn Cenedella · Answer

@Dustin Beam

Wasn’t suggesting you would be dishonest, just encouraging you to not mind trip over the “right” approach or how to present it. Just be transparent just tell it like it is. Nothing else to do.

Steve Morris · Answer

"How to approach brokers when cash isn't ready?"

Am a broker - Just be honest about your situation and best guess what/when you can seriously look.  Ask to be added to their mail list and you can get a sense of the market.

Be honest with me and I'll take you a lot more seriously, I can't think I'm the only broker like that since lot of guys get run down a lot of rat holes by "buyers" with a "bunch" of money.

Dustin Beam · Answer

Being dishonest was never a consideration, FWIW. Just curious the best way to approach them when I'm still setting myself up for the next purchase. Wasn't sure if they would be receptive or if it's typical for them.

Arturo Herrera · Answer

Curious to hear other people's advice as I too am struggling this

How to approach brokers when cash isn't ready?

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