I wont make you read the whole post to find what you came for. Take a look at the list and then scroll down for the details.
1. Call brokers
2. Network with people in the industry
3. Underwrite properties
4. Put in offers
5. Close the deal
It's no secret that making it in real estate or any other business you might be trying to build takes lots of work and dedication. Real estate is a relatively simple business, but the key to success is following the steps and seeing it through until you reach your goals. For most, including myself it takes time and you will probably go through ruts where you feel like nothing is going your way. That's ok, just keep on the path and eventually you will make it. Your goals cannot be negotiable.
I will admit that calling brokers is not the most glamorous or exciting. Many times, especially when you are cold calling brokers it can be difficult and challenging. You need to make a lasting impression and work to cultivate a relationship with multiple brokers. This is because brokers hold the majority of the deals. Sure there are off market deals that can be found but many of the properties go to the brokers in the industry and if you want first dibs you need to be on the brokers mind.
In order to do this you need to somehow prove that you are able to close a deal. If you are just starting out with no track record this will be more difficult but you can combat objections by being quick with your responses, using industry terms (such as NOI, cap rate, per door cost, etc.) and giving the broker feedback when (s)he shows you a potential deal. Also be sure your search is narrow - don't ask for all of the apartment buildings between 10-1000 units in all of the US, maybe ask for 20-50 unit buildings in a few different cities that you know well. When you do finally put in an Letter of Intent (LOI), give reasons for your price and terms.
Being professional will go a long way. Prove that you are in this business for the long term, you don't want to be categorized and black listed as one that doesn't understand the business, isn't a closer or anything else that wont get you new potential deals! Following up and following through is key. Next time you are on the phone with a broker ask how many calls they get a week and how many people actually respond when they send them a potential deal. You might not need to do as much as you think to stand out.
Network with People in the Industry
This goes beyond the brokers. Multifamily real estate is a team sport. In the past I've written that you need time, money, skill and persistence to make it in real estate but you don't need all of it. That's where the team comes in, you need to fill the void where you lack. To do this you need to create meaningful connections with people whos strengths are your weaknesses. This includes the professionals such as mortgage brokers, brokers, managers as well as other people that might be trying to make it in real estate like yourself. Having a well rounded and professional team will allow you to scale much quicker then if you attempted to do it all by yourself.
Networking can happen all over the place now. You can do it digitally through Meetup groups online, on Facebook groups and blogs such as BiggerPockets. You can also go to real estate, business and networking events in person. Great places to find these are on Meetup.com and BiggerPockets.com as well as looking up other local real estate groups in your area, chances are there will be a couple.
Not only do you want to network with people that have strengths that you need in your business but as you talk to more people you may find people that are interested in what you are doing and just want to follow along for now, and maybe team up later.
If your goal is to buy properties then you need to understand how properties run. You should be looking at new properties all of the time and looking at as many as you can. The more you review and underwrite the faster you will get at underwriting, also the quicker you may find a good deal that is worth moving forward on.
It is also a good idea to be underwriting similar properties in similar areas. As you do this you will begin to get a very good idea of the expenses in the area along with vacancy rates, rental rates based on property type, number of bedrooms and bathrooms, square footage and the different neighborhoods in your target cities. Having a solid handle on these numbers will then allow you to know what you can pay for a property in order to get the returns that you are looking for.
I like to set a goal of reviewing a certain number of properties in a given time period, keep your goal ambitious and remember that this is a numbers game. There is a very small chance you will find that the first property you underwrite is a good deal but after underwriting 50 or 100 maybe you will have found at least one.
Put in Offers
There are different schools of thought on this. Some say to put in an offer on every property that you underwrite but to me that's like shooting at a grain of rice from 1000 yards away - you'll always miss your target. I think if your putting in a low ball offer on everything you look at you wont be taken seriously. But this comes back to the other steps that we have already went through.
As you get to know your brokers more and more they should give you potential deals to review that fit your criteria. As you give them feedback this will narrow the listings that they show you and when you underwrite these new deals you will then be able to tell the broker what you feel comfortable paying.
You can then put in an offer on the property. If you do put in a low ball offer be sure to say why you feel this is what the property is worth, give examples based on market comps, sold properties and why the Profit and Loss statement supports your offer price and not the listing price. Be prepared to get rejected but understand that you need to continue this process with both good and bad offers on properties you like until the broker and buyer like an offer of yours.
Instead of putting in an Letter of Intent (LOI) many times I will say on the phone or in an email "Hey Mr/Mrs Broker, I really like this property for X, Y and Z but I am also concerned about the required capital expenses or the vacancy rate or lack of collections (etc.) but I feel this property is worth $XXXX, do you think I should put in an LOI?" At this point they should give you an answer, if they say no then review the numbers once more with them to see if you missed anything. If you didn't make sure to be professional, thank them for their time and let them know you are ready to close but just need the right property to come along.
Close the Deal
Eventually you will get a signed LOI and go into contract. You want to be a closer and the broker and seller want to close the deal just as much as you do, maybe more. This is a team effort with everyone involved and at times can be stressful. Use your broker as a resource to help you through the contract until you get to the closing table. Close the deal and become an investor and owner in real estate! Once you close on a property you may be shown more potential deals from your broker, especially if you were easier to work with.
From here you want to continue going through the 5 steps again and again as you scale your portfolio. Continue to close deals building your business and flourish as an entrepreneur. It takes, time, dedication and persistence but its not complicated, always continue to take action.