5 Ways To Find Motivated Apartment Sellers
Motivated sellers are the life blood of any real estate venture, and especially with apartment investing. The most reliable way to make money with apartment investing is not to wait for wait for market appreciation, but to look for deals where you can force appreciation by improving the property.
Opportunities for forced appreciation occur in properties with correctable deficiencies such as deferred maintenance, poor management,vacancies and below market rents. You are looking for properties with the right things wrong with them so you can buy them, correct the deficiencies, thereby increasing the income. By increasing the income on the property you force the appreciation of the property within a short period on time.
The top five ways to find properties with the right things wrong with them are:
1) Commercial real estate brokers. To find good apartment deals you want to find a broker who works only in apartments. Avoid the agent who makes their bread and butter in residential and does a bit of commercial on the side. You can find the full time apartment brokers by looking in the newspaper in the Apartments For Sale section. The key to finding a broker who will bring you deals is giving them very specific criteria for the deals you want buy. For example: “I’m looking for 30-100 unit properties that are at least 25% vacant and in Class C areas. What won’t work is, “I’m looking for good deals, call me when you get one.” Tell the broker exactly what you want, with confidence, and the deals will come.
2) Evictions. One thing that makes a seller motivated is pain. There’s nothing quite as frustrating and painful for an apartment owner as a tenant who has stopped paying the rent. It’s painful because the tenant is still taking up space in the property, but no money is coming in from that unit, so the landlord has to go through the messy process of eviction to get his property back. Evictions are good leads to pursue because they allow you to catch the landlord at a time when he wishes he didn’t own the property, and is highly open to selling. You can find evictions at the Clerks Office, or the Recorders office in your County courthouse. Have an assistant search the records and collate the list of property owners every week, then send the owners a letter offering to buy their property.
3) Out of town owners. This is a very motivated group of apartment building owners, when things begin to go wrong. The fact that they are in one place and the property is in another city or state, and the management company charged with handling it for them is no longer an ally but taking advantage of the situation, puts out of town owners in a vulnerable situation. They are not in control and when the time comes, want to sell fast. In some states you will be able to buy lists of out of town apartment owners from a list broker. In other states you will need to contact the recorders office in the county of the property and buy the list. Once in hand, you can the out of town owners a letter or a postcard every 3 months or so, offering to buy their property.
4) Classified ads. Classified ads in daily newspapers are a reliable source of leads for apartment deals. In either the Real Estate Wanted or Real Estate Services section of the paper, run the ad, I Buy Apartment Buildings. All Areas, Any Condition. 310-555-1212. You will get all kinds of owners calling, but often enough there will be the perfect property with all the right things wrong with it.
5) Driving neighborhoods. This is a highly under utilized method of finding great deals. When you are out looking at other properties, or just checking out neighborhoods doing your own market research, make a list of all the apartment buildings in the area looking a little ragged around the edges and in need of work. The advantage of this approach is you have already seen the building and know the neighborhood. All you need now is a property owner who is having trouble with managing and wants out. Compile a list of all the apartment buildings you see in the neighborhood you are looking at, then send them a letter offering to buy their building. How much competition do you have with this approach? I’ll tell you … zero.
These are five highly effective methods to get a steady stream of motivated apartment sellers calling you with highly profitable deals. Do you know how lucky you are to know about these? Get started getting motivated apartment sellers calling you today.