Four Steps to Find a Multifamily Deal

Finding deals is tough work. When you are starting out, you worry about raising money. That’s your biggest fear: What happens if I get a deal under contract and can’t get the money?” Hopefully you have a contingency in the contract for that. The deal falls through and you move on. That doesn’t mean you should just put offers in on anything. If you can’t raise the money, you are just wasting your time.

Once you have a good banker and have figured out how you will raise money, you need to find a deal. Let’s work through the steps:

1: Criteria

Figure out your investment criteria. Determine what size, type, location, amenities, price, color, or anything else are you looking for. Make a detailed description and try to be as precise as possible. Won’t that limit my options? You can always relax something or ask for a range: “I’m looking for 16 to 50 unit multifamily building, mainly 2 beds 1 bath, near the arena, and without a pool.”

2: Network

Word of mouth is the best way you will find deals. This is the first through fourth step and is done continuously. Here are a few places to network:

  • Any events hosted by your bank
  • Real estate meetups
  • Calling commercial real estate agents and meeting them for a drink
  • Church groups
  • Kid’s school activities

Any place where people get together and talk is a great opportunity to mention that you are a real estate investor and you are looking for a sixteen unit apartment building (or whatever you are looking for). People love to be helpful and frequently either they have one or know someone who does and can introduce you.

3: Internet Search

Brokers usually maintain a website that lists their offerings. Search for commercial real estate [your city] and browse. You can also try the much-maligned LoopNet or CREXi. Other websites include Reonomy, CoreLogic, and CatysList. These websites will be pretty low-yield but they have some free options. You can also purchase lists, which you can use for the next step.

4: Letters

This step involves sending letters out to multiple owners asking if they would like to sell. It can get expensive if you let it. You first need a list of owners. The cheapest is to get on your favorite satellite mapping software and look for a roofline that looks like an apartment building. Switch to the street view and confirm. Write down the address. Next, do a lookup with your county to find the owner and write it down. A more expensive, quicker way would be to use a skip tracing program. Even quicker would be to skip the mapping and use software from the previous step to purchase a list.

Write a yellow letter and send one to everyone on your list. Repeat this letter sending campaign seven times with different letters and styles (many sellers need multiple touches until they decide to sell).

Keep repeating these steps and you will get yourself to that deal. It takes a while to get started, but soon you will have too many to deal with!

Dr. Equity

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