Jason...What happened to your 8 unit?

I'm excited to share my experience with finding multifamily deals by going directly to owners, instead of just relying on brokers. I want to tell this story because it's special to me, as someone with cerebral palsy and a speech impediment.

When I first started approaching owners directly, I was worried that they wouldn't be able to understand me due to my speech impediment. But I quickly realized that this was just a limiting belief that I needed to overcome.

About a year ago, my sales rep was able to connect with the owner of an 8-unit apartment in Kansas City through LinkedIn. It was difficult to find his phone number online, so we tried emailing and sending mail with no response. Finally, he responded via social media and my sales rep was able to get his correct phone number. They scheduled a time to talk and during the call, I could tell that the property was distressed and under-capitalized, and that the owner was open to selling because he wanted to get into short-term rentals in a nearby city.

Prior to our appointment, I researched everything I could find about the owner online. I looked at his business website and every picture and post he had on social media. I even studied his relatives' social media pages. I remembered Donald Trump's advice about being the most prepared person in the room, so I focused on learning the seller's motivation and who the other decision-makers were in his family.

By the end of our call, I found out that his dad was the real decision-maker and he wanted to transition to short-term rentals to build cash flow for his mom, but he wasn't ready to sell at the time. So for the next 8 months, I followed up with the seller by sending birthday cards, real estate articles, pictures of him holding cash that I pasted on a picture of the property, and calling him every month to strengthen our rapport.

During those 8 months, a lot happened. A broker listed the property (without the owner's knowledge), and his dad (the real decision-maker) got diagnosed with cancer, but he still kept saying he wasn't ready to sell. He also disclosed to me that the city served him a notice that he had been ignoring for a year to fix a retaining wall that was collapsing in the back parking lot. It would cost him $25k based on a bid he got. It sounded to me that he did not have $25k laying around to take care of the repair.

Finally, everything changed in November 2022. He said his dad passed away during Thanksgiving and he was ready to revisit my offer. I updated my underwriting and sent him a letter of intent (LOI). I offered him a deal that was 10 years, 100% seller financing, 10 years interest only, but I would fix the deferred repairs and give him a 10% retaining ownership so that his mom could get maximum cash flow from the interest payment and their share of cash flow.

I showed the seller that seller financing would allow him to make more money over 10 years and save on taxes compared to if he sold the property outright today. I convinced him to order the broker to remove the property listing so we could do a direct-to-seller deal.

The seller said his family liked my offer so I booked a flight to Kansas City as soon as the seller was available to meet in person. I met the owner at a local restaurant before visiting the property. I took two different crews of contractors to the property to get bids.

We discovered that the roof and HVAC system were 20 years old, the parking lot needed to be repaved, the retaining wall needed to be fixed, and all of the interior units hadn't been updated since 1960. After our meeting, I handed the seller a thank you card and he said, "you are a professional," which was music to my ears.

In my revised underwriting, I had to account for the higher repair amount than expected and reserves. I explained to the seller that I am glad that he hasn’t been forced to spend a cent on the interior of the units yet, but we can reasonably expect that things will break in the next 10 years of owning the property. Therefore, we need to budget for proper reserves. We don’t want to end up paying for the repairs ourselves out of pocket. I also pointed out that the cost of material and labor will get more expensive over time (not cheaper).

After presenting my offer to the seller, I felt it would be helpful to provide a replay video of my presentation that he could share with his family. I wanted to ensure that everyone involved had a clear understanding of the details and benefits of my offer. To my delight, I later discovered that the video had been viewed 12 times within just three days. This gave me the confidence to believe that the seller was taking my offer seriously and considering it carefully. The replay video not only helped to clarify my offer, but it also gave me valuable insight into the level of interest and engagement from the seller and his family.

After a week of anticipation, I got an email from the seller explaining that his family decided that they just wanted to sell the property outright instead of seller financing. Therefore, I had to make an offer that was lower than the original offer we agreed on because they were no longer doing seller financing. Unfortunately, the seller rejected the final offer despite me throwing the kitchen sink at him and using every negotiation strategy that I picked up from the Grant Cardone and Donald Trump books that I have been studying up to that point. I was crushed, but understood that everything happens for a reason.

One month later, everything changed for me when I enrolled in a Grant Cardone course. During the course, I met an investor who had closed a deal for a 1,000 unit property in Georgia by going direct to the owner. However, it took him two years of persuasion to get the deal and convince his seller to sell to him. I couldn't help but reflect on my own experience, spending (now) ten months just trying to communicate with my potential seller for a mere 8 unit property. That's when I realized that the effort it takes to close an 8 unit deal and a 1,000 unit deal is almost the same. So, I decided to push myself to think bigger and set my new minimum deal size at 40 units. I started studying how to become a better deal closer and realized that I needed to develop a killer instinct. When I was growing up I had always been taught to avoid being pushy, but in business, that doesn't work. I may not be religious, but I believe that missing out on this deal was a wake-up call from God telling me to think bigger and step up my game.

Nothing fuels me more than people doubting me. People have doubted me all my life. Just understand that when you bet against me you are betting against the will of God. I was put on this Earth to show what is possible. I’ll see you at the finish line.

Below is a picture of me sitting on the staircase of the apartment building mentioned above.