Create A Network Of Commercial Brokers Feeding You Deals
What is the leading indicator for your success in buying a profitable apartment building?
Rookie or veteran, without a steady stream of potential apartment deals coming across your desk every week, you won’t be doing many deals. With consistent dealflow, however, it becomes a numbers game, and doing the basic things right, deals are just a matter of time.
One very effective way of creating dealflow is using commercial brokers. Of course, sourcing deals through commercial brokers has the benefit of being “free”. They find the deal, the Seller pays the broker a commission when you buy.
When starting out, you can use brokers and their listings to practise on; to get over your initial nerves talking with real estate professionals, and do deal analysis on the listed properties in the process.
The main benefit of using commercial brokers though is you are able to leverage their network. Each broker has done a lot of work to go out and meet apartment owners, to network and meet people who know apartment owners, and to do all of the work associated with listing a property once finding an apartment owner wanting to sell. When you build a relationship with a broker and he/she knows what you are looking for, you get the benefit of all of that.
Even more powerful is when you build up a network of brokers, with all of their networks, individual and combined, reaching out into the local market and beyond working to pull in deals that fit your buying criteria. It’s pretty powerful, and not hard to get up and working for you.
Here is what to do:
- Go to Loopnet.com and search for “multifamily” in the market you are interested in, in the size range of units you are interested in.
- For each listing, call the broker. You may play phone tag a bit, but when you get on the line with him/her, obtain from the broker the basic information about the property.
- While still on the initial call, if the property fits your basic buying criteria, get the broker to send you more info in income and expenses so you can do deal analysis. If the property doesn’t fit your buying criteria, give the broker a detailed description of what you are looking for. e.g. “Class B properties, over 50 units, at least 20% vacant, … “.
- If the broker has sent you more info and the deal makes sense, proceed with a LOI. If there are problems with the property and it ends up not being a deal, call the broker back, explain to him/her why, and finish the call by repeating to them your buying criteria.
- Call the broker two weeks later, and then every two weeks going forward, to see if they have found any deals that fit your buying criteria.
- Repeat steps 2-5 for all brokers with listings generated in step 1.
The key ingredient to this being effective, is trust. On each call with each broker you must build rapport, and trust. You build trust by asking specific questions of the broker, knowing what you are talking about, and not wasting the broker’s time. Small talk is out, just brief conversation, to the point, and strictly business. (You can be friends later after you have made the broker some money.)
Do this successfully, and you have a network of broker networks now looking for anything that moves in your market that will make you money.
Some of the brokers will drop out, because they really don’t come across much of the product you are looking for, and that’s fine. You will also come across brokers who specialize in deals that fit your buying criteria. Add them to your network. The end result is, you have every broker in your local market who wants to work, tapping their networks and bringing you deals.
To keep your network alive you need to maintain the regular bi-weekly contact. Though for this minimal amount of maintenance you receive high quality dealflow, and deals closing one after the other.