210: 20 Best Ways to Find Off-Market Deals

SHOW NOTES FOR EPISODE 210: 20 BEST WAYS TO FIND OFF-MARKET DEALS

In today’s real estate marketplace, especially in multifamily, competition is stiff.  There is limited product and way too many people willing to pay more than asking price to acquire the great properties. In this episode, Bill shares 20 creative strategies investors can implement to locate great off-market deals at reasonable prices.

Introduction

• In today’s market, especially in multifamily, competition is stiff.  If you are a newbie, it’s even more difficult because their “pocket listings” are only going to their best clients with proven records.  Buying smart – under-market – is much more difficult than it has been in the last 10 years.
  • Why?
    • The market is hot and has been over the last 5-10 years
    • Institutional and foreign investors are willing to pay a premium to acquire multifamily properties – even more than asking price
    • There has been heavy investing activity for the last 10 years ago, properties have appreciated significantly and now owners are seeking to sell and cash-out to reap their profits and pay-off investors. There are also those who have large balloon payments due
    • Yet, at the same time, there are a number of investors who want to do 1031 exchanges and because of the narrow window, are sometimes paying more for properties than they might, just to meet the 1031 “buy” deadline.
  • What you can do?
    • First off, we know that there are still deals out there – you just have to dig a little deeper, try a little harder
    • Some investors are changing their criteria. For example, some are buying smaller properties – 30-50 that are under the radar of institutional/foreign investors and often owned by mom & pops.  They are just easier to buy
    • Be prepared:
      • Identify and research your top 3-5 markets
      • Get finances in order:
        • Credit score
        • Secure financing
        • Get your partners, KPs and sponsors secured
      • Make sure you are set in your criteria
    • Focus on “direct-to-seller” targeted efforts. This is where most good deals are being found

Here are 20 different off-market strategies you might consider if you are trying to acquire off-market deals.

1. Broker Pocket Listings

• Still the number one source of good deals
• Most common
• Tougher for newbies today
  • You need to find brokers who will still work with newbies
  • Maybe target small, boutique brokers — not franchises
• Once you buy and are successful, pocket listings come easier because brokers know you can close and they are more apt to “invest” in you
• You should still be building relationships
  • Find your top markets and start contacting brokers that are selling typyes of properties you seek (look in loopnet.com)

2. Wholesalers

• They’re doing the leg work (direct mail/calls, etc.) to find off-market opportunities
• They charge fees ranging from 3-5%
• Where do you find wholesalers: BiggerPockets.com, ConnectedInvestors.com, Facebook Groups, LinkedIn and ask for referrals from other investors
• Keep in mind that they’re acting as “middlemen,” and you’re likely to get the same deal you’d get if you went direct to the source.

3. Facebook Groups

• Do FB groups search in your area of interest:
  • Real estate investors
  • Multifamily
  • Small multis

4. Direct Mail

• Get lists through ListSource.com or ProspectNow.com
• Mail to your target market
• Sort by criteria
• Write compelling letter with email and phone response (Answer your phone or get VA!)

5. Cold Calling

• Obtain list first (see above)
• Hire skip tracer to identify owners – Lexus/Nexus & TLO
• Call and text!

6. Craigslist

• Regularly scan (or hire VAs to scan)
• You can also place an ad that you are looking to buy

7. eBay

• Regularly scan eBay real estate listings for sale (or hire VAs to scan)
• Commercial real estate for sale

8. For-Rent Ads

• Best for smaller properties
• Call to track down owner

9. Health Violations

• Check county/city records

10. Real Estate Portals

• Realtor.com, Zillow.com, Trulia.com, Redfin.com
• Especially good for multis – friends ask Realtor friend to list because they don’t know commercial brokers

11. Loopnet

• FSBOs
  • Not necessarily off-market
  • But still “direct to seller”
  • Owner-financed properties
• Here is the link to find Loopnet properties taken off-market: http://www.loopnet.com/Apartment-Buildings-Sold/

12. Property Managers

• Contact PM companies that handle the types of properties matching your criteria
• Ask if they know properties that may be distressed on going on the market soon (they’ll probably want you to keep them as PM) or may want broker fee

13. Appraisers/Inspectors

• Sellers may have property appraised or inspected prior to sale

14. Auctions

• Good for distressed or foreclosed properties
• Auction.com, Bid4Assets.com

15. Google Maps

• Online cruising or mapping for dollars
• Identity top neighborhoods in your target market
• Make sure you know the date of the picture
• Cruise B class neighborhood f class properties

16. Apartment Vendors

• Electricians, carpet installers, roofers, plumbers, HVAC professionals, pool repairmen, lawn care professionals, etc.
• People involved in the servicing of apartment communities may likely have insider information on communities that are being neglected.

17. Eviction Records

• Check city/county records for properties with many evictions

18. Old listings on MLS or LoopNet.com over 6 months old

• The older the listing the more likely sellers will be to negotiate
• If you don’t have access to the MLS (Multiple Listing Service), you can sometime get access through realtor friends or just look at other real estate portals like Realtor.com, Trulia, etc and get the age of the listing as well.

19. Real Estate Investors

• Regularly connect with other investors by phone, REI club or Meet-ups, etc. or set up coffee meeting during the week
• Let them know your criteria
• Ask if there are projects they turned down but may meet your criteria

20. Foreclosures

• Both single family and apartments
• Bank Websites
• Here are special links to help you find foreclosed apartment
  • https://www.biggerpockets.com/renewsblog/2009/09/16/find-apartment-building-foreclosures/
  • https://www.biggerpockets.com/rei/bank-owned-reo/
  • https://budgeting.thenest.com/buy-foreclosed-apartment-complex-29987.html
  • https://www.bankforeclosuressale.com/apartment-foreclosures.php
  • http://www.loopnet.com/bank-owned-properties-for-sale/

In Summary

If you plan to implement any of these strategies, you’ll need to develop a strategic plan that plugs into your daily schedule:

• Identify markets
• Hire VAs or bird dogs
• Purchase mailing lists
• Mail to top 3 markets every 30-60 days
• Set your schedule to call 50 people on target list per week (obtain good scripts)
• Meet with people in your target twice a week for coffee
• Make 10 network phone calls per week
• Send 20-50 emails a week
• 30-60 minutes of online research per day
• Plug in to your schedule

Well, I hope that helps you.  That’s it for today!

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