5 Things To Do When Apartment Building Deals Are Hard To Find (Like Now!)

by | BiggerPockets.com

A lot of apartment building investors are having a tough time finding good deals.

As syndicators, we have it even harder because we need to provide a good return for our investors and leave a slice of the pie left over for us. But what kind of returns are reasonable?

I started a Bigger Pockets forum thread posted entitled “What Kind of Returns Are you ACTUALLY Seeing?” because I wanted to see what kind of deals people are actually doing and what kinds of returns they’re seeing. In the 22 responses as of the time of this writing, the responses were quite varied but at the same time they had a common thread:


So, whew, it’s not just me -;)

Nevertheless, this doesn’t change the fact that we need to do deals, right? I suppose we could sit on the sidelines for the next 5-10 years and wait for the market to change, but what’s the fun in that? Plus, isn’t there anything we can do in the meantime?

Here are 5 things other investors are telling me we can do NOW when apartment building deals are hard to find.

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1. Re-Evaluate Our Returns

What returns should we be looking for? And what should those returns be for our investors if we’re syndicating?

This is a difficult question to answer because (as usual), the answer depends. It depends on:

  1. Who your investors are and what returns they’re happy with;
  2. How stable the asset is that you’re purchasing; and
  3. Your track record.

If your investors are sophisticated investors, they’ll want to see returns of 15% – 20%. If you’re dealing with friends and family investors, they will be ecstatic with returns of around 10%. If you’re taking money from high-net worth individuals, they’ll be looking for returns somewhere in the middle. If you have a solid track record and are investing in stable properties in good areas, then you can get away with lower returns in each category.

The lesson here is: re-evaluate the kinds of investors you are seeking to raise money from. Getting 15%+ average annual returns when you’re syndicating a deal is REALLY tough to do right now.

It’s not impossible, but it’s much harder. So instead of talking with sophisticated investors, you may consider raising money from friends, family and acquaintances so that you have a better shot of finding deals that will work for your investors.

Related: The Real Way to Evaluate a Real Estate Deal… If You’re a Rehabber

2. Consider Other Real Estate Strategies

The real estate market changes constantly, and the good real estate investor proactively adjusts his strategy based on that changing market.

Some apartment building investors I’m talking to have already changed their strategy or are seriously considering it. For example, instead of buy and hold multi-family properties, you might consider building a portfolio of single family houses.

I haven’t come to that conclusion myself because I haven’t given up on apartment buildings yet, but it’s something I need to strongly consider also.

3. Mail Letters to Apartment Building Owners

I did this back in 2005 and 2006 as the market was white hot and anything listed had multiple offers above asking.

It cost money and time and the response rate was low and the success rate even lower. Then the market crashed and deals were everywhere, and so I stopped mailing letters and relied on my brokers and wholesalers to bring me deals.

It may be time to dust off the old marketing play book and get back to basics: mailing out letters to owners of apartment buildings and waiting for the phone to ring.

Related: The Ultimate Guide to Using Direct Mail Advertising to Grow Your Real Estate Business

4. Expand Our Network to Increase Deal Flow

Another option is to work to expand our network of commercial real estate brokers.

We may have had some success with a handful of brokers that have been feeding us deals. We may have to hit the phones and cold-call more brokers so that we increase our deal flow. Then we can also call property managers, attorneys, even residential real estate agents, all of whom might know of a property owner interested in selling without a broker.

I still think that good brokers are the best way to find deals. I think I can do better at expanding my network to increase deal flow. How about you?

5. Expand Our Geography

If you’re looking in only one area, it may be time to consider investing out of area.

It will take some additional time and money to do but it can be done. I’ve decided to expand my geography from Washington DC to Baltimore and Richmond. It is more work since you have to learn multiple markets and build networks in each area, but sometimes you gotta do what you gotta do.

Watch my video blog post “Everything You Need To Know About Investing Out-Of-State (In Under 5 Minutes)” for some more ideas on this topic.

What Are You Doing to Find Deals?

I think a lot of people want to hear what’s working and what’s not.

Be sure to leave your comments below!

About Author

Michael Blank

Michael Blank is a leading authority on apartment building investing in the United States. He’s passionate about helping others become financially free in 3-5 years by investing in apartment building deals with a special focus on raising money. Through his investment company, he controls over $30MM in performing multifamily assets all over the United States and has raised over $8MM. In addition to his own investing activities, he’s helped students purchase over 2,000 units valued at over $87MM. He’s the author of the best-selling book Financial Freedom With Real Estate Investing and the host of the popular Apartment Building Investing podcast Apartment Building Investing podcast.


  1. Ben Leybovich

    You forgot another thing to do – call Ben Leybovich and release pent-up frustration…hahaha

    I disagree Mike. Accredited people expect to see close to 20% IRR – and they should. Watering down our underwriting and accepting lower returns, is not a problem. The problem is that inherent to lower returns is heightened risk!!! We have fiduciary duty to our investors – first don’t loose, then make money. There are times in the cycle when the best thing to do is nothing – this may be one of those times. Every broker I speak with tells me stories about people being over-extended in every way. The market is feeding itself , they say, and you are too smart for it – wait. Now is the time to build networks Michael – this bubble will end badly for the current buyers and we’ll step in!

    Nice talking with you yesterday. Train your investors to realize that no return is much better than a loss. Stay true to your underwriting, and in fact sharpen it, as I mentioned yesterday.

    Sounds good but very hard to do!

    • Michael Blank

      Ben, I love our conversations! They prove that even though we might not agree on some things there are still valuable lessons we can learn from each other!
      WRT the expected IRR, that depends to a large degree on (a) the type of investors you’re dealing with, (b) the kind of asset you’re buying and (c) your track record. I can tell you that the investors I am currently entertaining are a mix of friends & family and high net worth individuals of intermediate sophistication. They are thrilled with returns in the 12% to 15% range. On the other hand, sophisticated (possibly institutional) investors won’t consider anything under 15% !
      While the returns are one thing, what is crystal clear from your comment and I agree with is that we shouldn’t water down our underwriting guidelines. That will get us into trouble because it raises the risk. If after maintaining our underwriting criteria and increasing deal flow we can’t find a deal, then you’re right, it’s better to continue looking. While we should have a sense of urgency to find deals, we should never compromise our investing criteria!

  2. Michael,
    I agree with the returns you’re trying to achieve for your investors. I like to be able to tell my investors that their Cash On Cash return will be in the 5 to 9% range, and that their annualized return over a 5 to 10 year period will be in the 15 to 20% range. I run my numbers very conservatively, and expect to exceed those projections, however I’d rather promise low and deliver high.

    One question for you: Its my understanding that the IRR (Internal Rate of Return) takes into account the time value of money and usually looks lower than the annualized return that I use for my projections. Do you distinguish between the IRR and the Annualized Return (Cashflow plus profit at sale divided by equity in)?

    By the way, I really enjoy your podcast & encourage anyone investing in apartments to subscribe on itunes.


    • Well…I scrolled down the article section on Bigger Pockets and I see that Ben wrote a very good article about IRR. It sort of answers my question. However I’d still like to know if you show your investors the IRR which takes into account the time value of money, or if you show them the CCR (what I like to call the annualized return) which only takes into account cash flow, profit and the money in.

  3. Michael Blank

    Brian – it depends on who your investors are. If they’re sophisticated and/or institutional investors they will use language involving “preferred return” and “IRR”. My investors do not. They’re friends and family and high net worth individuals. The concept of IRR is not something they’re used to talking about, for them, they want to know their annualized return. So for these kinds of investors, keep it simple and don’t introduce confusing terminology (“a confused mind says no!”).


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