SS6: How to Work with Multifamily Real Estate Brokers

SS6: How to Work with Multifamily Real Estate Brokers

Welcome to Strategy Saturday. Today I am going to be discussing how to find and build relationships with commercial real estate brokers.

Watch The Episode Here:

Listen To The Podcast Here:

Talking Points:

  • Screen your brokers
    • What is your specialty? (Institutional grade or 5-20 units for example) The broker should let you know if they are going to be a good fit or not.
  • Finding brokers
    • A simple search on LoopNet; find out what brokers in your target market are selling assets similar to what you want to buy and contact them.
    • Referrals – from other investors (who are purchasing similar properties)
    • A great broker is worth every penny
  • Being taken seriously
    • Communication (fast responses to emails and deals)
    • Knowledgeable of the market and of similar properties
    • Reach out and touch base with brokers every 2 weeks (most do 1 month or longer)
    • Follow up on deals you do not get since they might not close
    • Resume, a complete team
    • Loyalty
  • Resources you can obtain from a broker
    • Property managers
    • Lenders
    • Vendors
    • Appraisers
  • Figuring out what you want (create a criteria sheet) – doing research on areas, classes, units
    • What is your target age for properties?
    • Target occupancy
    • Neighborhoods
    • Drive neighborhoods where brokers have sold properties and review them
  • Before you speak to a broker
    • Understand your targets – units, area, returns, level of renovation
    • Understand basic property analyzing – research market, review a deal; cash on cash, NOI, knowledge of cap rates
    • Have your team in place or part of it in place – your partners and your vendors
    • Look professional – knowing the lingo, knowing your team’s experience, ability to navigate
    • Loyalty
  • Never work off a broker’s proforma
    • Always use actual numbers: trailing 12 months of income and expenses
    • Rent roll
    • (If you can initially get P&Ls for the last 2 years get them)
  • A few things not to do or not to say to multifamily brokers or sellers:
    • Do not contact the property’s managers or tenants without the seller’s permission
    • Do not talk negatively towards the property, operations, listing price
    • Do not submit lowball offers on stabilized properties and if your offer is not at the list price; always provide a short summary as to why that is
    • Do not explain issues with financing, raising capital from investors or that this type of property is very different from your normal acquisitions or you have a day job and need to tour the property on Saturday afternoon – you will look very unprofessional
    • Don’t suggest anything shady – the most famous being beating the highest offer; agents and brokers are licensed professionals and they don’t want to deal with shady or dishonest people – be transparent and be honest
    • Your goal is to review the property and soak up everything they are saying. You will then review it on your own and make an offer or an explanation of why it will not work with a THANK YOU.

Transcript:

Charles:
Welcome to Strategy Saturday, I’m Charles Carillo. And today we’re going to talk about how to work with multifamily real estate brokers. Now it’s very important when you’re looking for brokers to screen the brokers. Okay, what is their specialty? Are they looking for example, are they working with institutional grade properties, say 200 plus units, or are they working on five to 20 unit properties?

Charles:
The broker should let you know if they’re a good fit or not for what you’re looking and if they are not a good fit, they should be able to refer you to a broker that is now, if you’re speaking to a real estate agent or broker and they don’t seem to fit what you’re looking for, don’t write them off completely. It’s always good to have a broker that maybe focuses on properties, not in your target, because they might find properties that come in, what you’re looking for. And they’ll reach out to you first before sending it somewhere else. If they have a deal for you, right? And you most likely don’t have that much competition since they don’t focus on that. A lot of real estate investors are only going to be looking for brokers that work in their own target. And they won’t veer from them, which is great. It makes perfect sense.

Charles:
But when someone has a property that doesn’t fit into the criteria, they usually work with who are they going to go to? And if you’re on their list, they’re going to go to you. So finding brokers, a simple search on LoopNet is great way to find commercial brokers find out what brokers in your target market are selling assets, similar to what you want to buy, and then contact them. Getting referrals from other investors who are purchasing similar sized properties in your area. If you want to buy a 10 unit and investors in your area, find out who they’re buying. Their 10 units from a great broker is worth every penny. And that goes, if you’re buying or if you’re selling, it’s very important to know that

Charles:
You want to be really taken seriously with these commercial brokers. We’re in 2021. It’s hot right now. The market for multi-family commercial, multi-family all over the country. You want to have fast responses to emails and deals. Someone sends you out something. You want your communication to not have any holes in it. You don’t want them to send you a deal on Monday and you not get back to them to next Wednesday. Very unprofessional don’t want to do that. They send you a deal on Monday, follow up with him, review it the same day, get back to them within 24 hours and tell them what your thoughts are on the property. You don’t have to do a full underwriting. It’s just the communication. You want to be knowledgeable of the market and of similar properties. A great way of doing this is to drive around, find out where they’ve closed on different properties.

Charles:
They’ve closed on in the area. They’ve been part of the transaction and drive those neighborhoods, drive those properties and tell them I liked what you had over on maple, but I didn’t like what you have over on Oak. And they’ll be very impressed that you spent the time to review their resume of properties they worked on and that’ll show them that you’re much more professional than other investors that are just reaching out and looking online at different listings. They have you reach out and touch base with brokers every two weeks, most do one month or longer. If you can keep it every other week, it’s going to put you on the top of the list. When a deal comes out follow up on deals. You do not get since they might close, just because something went under contract. There’s so many variables, especially when you’re getting into commercial real estate.

Charles:
There are so many different variables with inspections and due diligence and financing that make sure you keep in touch with them. And if, because a lot of other investors are already going to write off that property, if you stay on top of it, you’re going to be the first one in line. If that falls through, have a resume for your complete team, it’s super important to do that. So when you’re putting together your team, everybody that you have on your team for your, your immediate team, put them in the resume, show them what every person’s done, show them that you’re professional, you’ve closed on properties or that even if they’re smaller than the ones you’re looking for, or you have business experience or any type of real estate experience, these are all great things to show to the broker. You also want to be loyal to your broker.

Charles:
Super important. Someone sends you deals. Don’t go around, they’re back with someone at their, at their office or through a different office and try to get the deal. Make sure that you’re following up directly with them. And there’s no chance that they’re going to be cut out of the deal. Now resources you can obtain from brokers. Brokers are our great, great resource for finding other professionals like property managers, vendors, lenders contractors, appraisers, figuring out what you want. You want to create a criteria sheet, do research on the areas, classes and units. Okay. So if you’re looking for a specific market, you want to really drill down that market to specific neighborhoods, and then you can provide the broker with what neighborhoods, literally, what streets you’re looking for. And you can tell them, I want C plus I want five to 25 units. I want an area that’s going to be up and coming, possibly not on a busy road, whatever it might be that you’re doing, then they have something that they can put into their CRM and they’ll contact you when they have something.

Charles:
You’d also maybe leave it open a little bit more. If you’re really looking for a 15 unit property, maybe move that a little bit, a little range, a little wider so that if something comes in, they’re going to contact you one way or another and you can always tell them no. And if you get back to them fast them and say, listen, this isn’t for us right now, but please keep us on your list. That’s an, that’s going to be something that they’re going to reply. And they’re going to be very happy that you actually reviewed what you sent, what they sent over. What is your target age for the properties? So you want to know what your target ages for the property. You want to know what your target occupancy is for the property. So if you’re going into an area and you’re seeing C plus properties, light value add, well, they’re not going to be sending you something.

Charles:
That’s only 60% occupied, right? They’re gonna be sending you stuff. That’s 90% occupied. They’re going to know that when he drove different, he drove all the different neighborhoods. You’re going to review those properties that they have sold. And you can use that as comparing to the properties they’re sending out before you speak to the broker, it’s very important. You can, you can open the dialogue with what you’re doing, but before you get on the phone with them, understand all your targets. It’s, it’s really, really important. Like we’ve just gone through the units, the area, the level of renovation that you’re comfortable with. They’re not going to believe you most likely. If no one on your team has ever done a heavy value add or heavy renovation, and you are looking for properties that are a hundred percent vacant that are not going to believe that you can close on it.

Charles:
And they don’t believe you’re going to get financing and all these different factors that go into a large deal like that. They’re not going to buy it. And it’s not going to look like your professional, understand basic property, analyzing research the market. When you review a deal the cash on cash, the not net operating income, knowledge of cap rates. These are all very important when you’re talking to investors or when you’re talking to investors or you’re talking to brokers and when you’re knowledgeable of all these different items, you’re going to make it look more professional for you and your team in the broker’s eyes. Okay? Have your team in place or part of it in place, your partners and your vendors. When you’re going to talk to your broker, if they come to you and say, this is going to be a light value, add it’s $2,000 to $3,000 per unit that you’re going to have to do for work.

Charles:
Do you have this? Do you have this team in place? And you go, yes, I’ve got, I’ve got this contract over here and this GC over here, and they’ve done a property in the neighborhood in this. When you have all your ducks in a row, before you talk to them, it’s gonna look very, very professional. Even if you say I’m looking for a good property manager, but you have other parts of your team in line, even your attorney, your financing, whatever it might be, you can always get more referrals from there. But if you’ve, if you’ve made the effort to build your team, initially it goes a long, long way. Look professional, knowing the lingo, know your team’s experience in your ability to navigate. Okay. So you want to be able to navigate the whole commercial real estate spectrum. Okay. Very, very important. So when you’re doing this, you want to know all the different, all the different kind of metrics of when you’re analyzing a property.

Charles:
Because when you’re reviewing a property, you initially are going to go back and it’s gonna be very simple. You’re going to tell them with cash and cash, you’re looking for a cap raise. You’re looking for, make sure when you’re requesting this, it’s not completely off the wall. If the properties you’re looking for are selling all over the place for six cap, and you’re looking for a 10 cap. You’re not going to get a call back from the broker because nothing is going to pencil for your, your deal criteria with that. So make sure that you’re realistic. It’s very important. They don’t want to waste their time. Never work off the brokers performer when they send you a deal, always use actual numbers. This is just for you, right? Trailing 12 months of income and expenses. You want to get a rent roll. If you can, I can initially get P and L’s for the last two years, get them.

Charles:
But it’s really the main numbers you’re going to get when you’re getting a deal are going to be your 12 months of income and expenses and the rent roll, right? And that’s, that’s really what you need when you’re going through and going to do an initial running on the property a few months, things to look professional and a thing, things not to do or not to say to multifamily brokers, which is even as more important as a what to say to them. So you do not want to contact the property managers or the tenants without the seller’s permission. Okay. A lot of the listings will say, don’t bother the tenants. Don’t talk to the tenants. Don’t walk on the grounds. Anything like this don’t do. And even if it doesn’t say it don’t do a drive by is one thing getting out of your car and like looking in windows and stuff like this is a whole nother thing.

Charles:
When you do a drive by it’s exactly what it sounds like. You want to look at the gray of the property. Is there trash in the yard? What is, what is the current deferred maintenance from the road? What does the area look like? Which is probably even more important. What are the roofs look like? Stuff that you can see from the road very important from the road is the dry by you’re not going to be well-received if a broker hears back and says that they have a seller who from their property manager from a tenant is complaining about someone that’s looking and what are you doing there? Are you buying the property? Now? It makes a very hard, difficult time for the seller and the broker. Your broker is not going to be impressed. Do not talk negatively towards the, to the property, the operations or the listing price.

Charles:
You know, don’t go there and start telling them that property is in terrible shape. It’s run like crap. The listing price is too high. Just go and understand what your what’s going on at the property. You’re gonna make your own decision later on. You want to get a feel for the property when you’re walking in do not submit low ball offers on stabilized properties. Okay? This is something that you, if, if your criteria is not met, you’re going to have to be looking for different properties with different situations. But if your offer’s not at list price, you always want to provide a short summary to why that is. It’s very, very professional. So if a property is being sold for a million, you think it’s only worth nine 25. Tell the broker why? So here’s the numbers I have to fit. What we have to do.

Charles:
It’s nine 25. I feel there’s more work than what’s outlined here on the property. And this is why we came back. Do not explain issues with financing or raising capital from investors. If you’re raising money from investors or this type of property is different from the normal acquisitions of your a or your day job. So for example, if you’re talking to the broker and you’re ready to put in an offer and you’re getting serious, I don’t tell them that I hope it’s not a problem for raising capital or, you know, we usually buy five unit properties in this 50 unit is much different from what we’re doing. This is not going to show the broker that you’re serious, or that you can close. If this is their listing, they want to make sure that they’re going to sell the property. They don’t want to have their seller going through a whole process for two months or three months, and then have the person that they said could close, not close.

Charles:
So make sure that when you’re going, you’re, you’re alluding that you’re going to be able to close and that you’re able to be professional in the transaction. The other thing too, is that commercial real estate brokers aren’t ones like regular, real residential brokers and agents that are working at night, right there. W they’re not going to be working on Saturday afternoon. Don’t contact the broker and say, you want to see something Sunday morning. That’s not usually how it’s done with commercial brokers. It’s usually done a nine to five because the people purchasing, these are usually full-time in real estate. The other thing is don’t suggest anything shady to your broker. The most, the most famous being beating the highest offer agents and brokers are licensed professionals, and they don’t want to deal with shady or dishonest people be transient, DRI, be transparent and be honest.

Charles:
And that’s with any kind of business dealings, but definitely with the brokers. They’re just going to write it off. If they’re PR they’re paid on performance. So if you can’t close, or if it’s going to harm their reputation, they don’t want to do business with you. Your goal is to review the property and soak up everything they are saying, you will then review on your own and make an offer explanation why it will not work. And then thank them for showing it to them. Be very professional. And when you’re building rapport with brokers, let them know exactly how professional you are, the properties you’re looking for, and you’re going to do great and buying multifamily properties. So looking forward to another episode on Wednesday and another strategy Saturday next Saturday, have a great rest of your weekend.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar incorporated exclusively.

Links Mentioned In The Episode:

Are You a Fan? Subscribe, Rate, Review & Share – Click Here To Learn How

What question do you always wish I would ask but I never do?

Connect with the Global Investors Show, Charles Carillo and Harborside Partners:

Scroll to top