Contacting an apartment owner

[Breanne A.]

Hello! I could really use some suggestions for my first time reaching out for a potential deal. I would like to contact the family that owns the apartment complex I currently live in to see if they are interested in selling, however, I am new to the business of REI and I have to be creative.

The owners owe little, to nothing, on the property (unless there was a refinance that I was unable to see). It is a 9 unit complex in Ocean Beach (San Diego) with solid rent and great potential, given some TLC and updating. 

This is a very expensive area so I do not have the 20% down payment, or the income for a conventional loan, which means I have to see if they are willing to seller finance.

How do you think I should approach them? By phone? Letter? Knock on their door? And how should I approach the seller financing aspect?

I know I am asking a lot, but any advise is much appreciated!!

[Justin R.]

First, awesome that you're thinking about ways to put this together. You said you're new to REI, so I'll guess this would be your first transaction. Have you run through numbers to figure out at what price you think the property makes sense? To be blunt, this a very ambitious first step.

Forget for a moment about how you'd contact the owner - think about what you'd bring to the table if you got that meeting with them.  What do you have that they either know they want, or don't yet know they want?  If it's true that you have neither capital nor experience, think about what else you have that could compensate.  Are there problematic tenants they'd do well to get rid of?  If it's owned by a family, do they seem like they're really not interested in running it well?

To be honest (coming from an owner of multis in San Diego and thinking about putting myself in the seller's position), there's absolutely no way I'd seller finance to someone without experience and at least some capital.  We're talking seven figure property here.

My suggestion would be to:

1. Learn as much about the owner as possible.  For example, do they own other properties?  How is title held?  Do they have other business interests?  Experienced and financially sophisticated business owners are very different from accidental landlords.

2. Approach the owner with as strong and credible a proposal as possible.  This means having partner(s) who have what you don't - experience and capital.  A pitch that says, "I'm one of your tenants and I'm working with partner X (who's done this before)..." is much more credible than "I'm one of your tenants and I want to buy your building, but I can't afford it, so I'm asking you to help me."  :)

This would be a high-value deal and putting something like this together is involved.  IMO, you'd really benefit from partnering up.