How to Find Off Market Deals
Every real estate investor is dreaming about finding that perfect off market deal. If you’re not familiar with off market deals, they relate to multifamily properties that aren’t marketed in traditional methods on the Internet or shared with everyone. These deals are generally available from brokers who often call them “pocket deals,” because the broker is holding the deal close to his or her pocket. Very often the broker has a close relationship to the owner and is given the listing. At other times, the owner reaches out directly to investors or syndicators to make the sale happening. There are many reasons why off market deals are more attractive, but I believe the two biggest ones are a better price and a faster process. Off market deals prevent me from getting into a bidding war with other syndicators or investors. This is especially important now because prices on multifamily properties have escalated well beyond reason, simply because everyone wants to jump on the multifamily bandwagon. At times people bid up the price simply to “get the deal,” with the result being an overpriced property. As for a faster process, off market deals mean that I don’t have to spend time on marketing the property or spending time with many different buyers.
The key, of course, is to find off market deals. I use a variety of tactics to find those off market deals, which I will share with you in this article.
Finding Property Owners
One way of finding off market deals is to find property owners. To do that, you’ll need to do some homework.
There are some free resources available to you. Start with the county assessors websites, which have property listings. Many documents have information that is attached to the property listing, including the owner’s name(s).
You can also use paid resources to find the owner of a property. They vary in price, but you can try PropertyShark, YardiMatrix, CoStar and ListSource. The Internet has a wealth of information available; so once you have an address of a property that appeals to you, hit the computer.
Cold Calling or Mailing Owners
The biggest reason to place a cold call to a multifamily property owner is that you get to speak with him or her directly. There’s no broker or agent involved, and you can use your own unique approach when calling. You’ll want to have a call “script” available when you do connect, but as I’ve learned, you don’t want to stick to the script. Let the conversation unfold and then make changes as needed.
For example, you could call the property owner and state that, “I’m calling about your property on (street name). I buy multifamily properties and I currently own (number) units. I passed by your property yesterday and was wondering if you’d consider talking about selling it?”
It’s that simple. Direct, honest and you quickly get to the point. The owner will probably ask you questions like, “How did you find me? How much are you willing to pay? You mentioned you have (number) of units - tell me about your experience in real estate investing.” On the other hand, he or she may say “No.” In that case, you’ll need to try to find out why they’re not interested.
The fact is, everyone who owns a multifamily property has a “pain point.” You’ll just need to find out what the owner’s pain point is. If they continue to decline, ask permission to stay in contact with them and then be sure you reach out every 3 to 6-months. You might send an article on a similar property or a comparative of a property that recently sold. The bottom line is to keep your name in front of the owner so if they do reach a point where they are considering selling, your name will come to mind.
Mailing property owners instead of cold calling is another option. It takes less time if you automate the process. You can do that by developing a template letter that goes out to the property owner.
Whether you call or mail, if the owner’s initial response was “no”, you should stay in touch on a regular basis. You’ll need to determine the best timing approach, whether to contact them monthly, quarterly or possibly every 6-months. Include pertinent information like information on comparable properties that sold in the area or articles of interest. Circumstances constantly change, and while the owner’s initial response was, “not interested,” that may change several months down the road. If you’re consistent in putting your name in front of the owner, you’ll ultimately get the results you’re looking for.
Contacting Property Management Companies
In addition to targeting owners directly, contacting property management companies can generate results. They’re close to the owners, and will know when one of those owners is considering selling. Just call and ask if they’re aware of any deals that may be available.
Contacting brokers is another tactical approach. Like property managers, they’re close to the owners. Look for brokers who have a strong market presence, and ask to meet with them to talk about what you’re looking for. Focus on one or two key brokers in the market you’re targeting. Like cold calling or mailing, consistency is the key. Be persistent and meet with them on a regular basis. Be creative and find a way to stand out from others.
In addition to contacting owners directly or property management companies, there are some additional people that you should network with in order to find off market properties. They include contractors, real estate attorneys, and wholesalers.
Contractors are an ideal group as they are aware of real estate opportunities in a specific area and can often direct you to opportunities they’ve seen. Networking with real estate attorneys can also help you find off market deals. They generally represent owners as well as creditors that want to be paid, which can be a valuable source of coveted pocket listings.
Wholesalers often buy contracts of real estate properties and then assign those properties to an interested seller within a short period of time. Just be sure to request that you can be in direct contact with the seller once the properties are assigned.
Building a Thought Leadership Presence
Cold calling and mailing are keys to ongoing contact with owners, brokers, and others. But building a thought leadership presence can help you reach your target audience while building your brand identity at the same time. So, what is a thought leadership presence? It’s using the Internet to showcase your knowledge in multifamily properties as well as your interest in acquiring additional properties.
You could start with a blog or publish white papers and content on the Internet using your website. In addition, you could create a podcast or a YouTube channel of your own where you can be on camera discussing your track record, asking to talk to owners about purchasing their properties, or have guest interviews with people who are knowledgeable in the multifamily arena. Creating online content for property owners can be a great tool, and owners will contact you when they are ready to sell, since they will have read or watched your content and know who you are.
In addition, you could arrange your own meetups with property owners using well-known real estate influencers who would speak to your group. The goal is to introduce yourself to property owners as well as the industry professionals who know the owners, and continue your brand building activities with the targeted groups.
Outreach to Apartment Vendors You never know who personally knows the owners of multifamily properties, but vendors - carpet installers, HVAC pros, landscape company owners, electricians, plumbers - all the tradespeople who are hired to work on apartment buildings could be a wealth of information on property owners. They have inside knowledge because they’re the ones in contact with owners.
You could build a relationship with them by using their services on other properties you may own. Or, you could refer them to others who may need their services. The key is to find out which properties are either in disrepair or neglect, because those are the properties where the owner may consider selling.
Finding off market deals can help you acquire a property at a better price than conventional listings, and the process can be expeditious. To find an off market deal, call or mail property owners and consistently stay in front of them. When they’re ready to sell, your name will be top-of-mind. There are many resources available to help you find out the owner(s) of the properties you’re interested in, so use them. Also, reach out to property management companies, brokers, contractors, vendors, and real estate attorneys to help you locate off market deals. Use the same persistency you use with cold calling or mailing, and you’ll achieve the results you’re looking for.
Are you a real estate investor and interested in learning more about passively investing in multifamily properties? Click here to download the Top 5 Critical Deal Components any Passive Investor Must Examine.
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About the Author
Ellie is the founder of Blue Lake Capital, a real estate company specialized in multifamily investing throughout the United States. At Blue Lake Capital, Ellie helps investors grow their wealth and achieve double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.
Ellie is the host of REady2Scale, a podcast that focuses on the "APS" of real estate: Asset, Process, and Strategy. Each episode discusses how investors can scale their real estate portfolio and/or businesses.
She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.
Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.