For years we have heard the mantra, location, location, location in regard to three components of real estate we should focus on. I would contend that we espouse this new mantra: relationships, relationships, relationships.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

See if you agree or disagree with me after you hear about Randy Lawrence’s best deal ever.

3 Examples of the Benefits of Building Strong Relationships as a Real Estate Investor

Randy started his real estate career with small multifamily and had more of a buy and hold mentality. However, he became enamored with the big checks and quick payouts that come from flips. (He even compares flips to the immediate high of heroine!)

So, Randy began to focus on renovating single family and going for the quick fix instead of the long-term gains.

After years of working with single family residential, Randy and his wife decided to return back to their original intention of building a multifamily portfolio and focusing on the long-term gains. With the teams and systems in place, they had the confidence and ability to scale their business from smaller complexes to larger 80 to 100 to 200-unit complexes.

They spent the next year or so doing the groundwork of scouting out markets, researching economic trends, and cultivating relationships with commercial brokers.

Example 1

It has been awhile, but Randy and his team have built the reputation that they can perform, that they are not going to make a big deal out of something small, and that they have a long-term approach to things when doing business. So, when it came time to refer a seller who had a deal that was falling apart, a broker who had heard about them reached out to Randy and his team first.

Related: Best Deal Ever Show #10: Substitute Teacher Makes $80K on First Land Deal

This particular property was self-managed and mismanaged. The rents were lower than market and it was clean but outdated. It had the perfect ingredients for a great deal.

Example 2

There was a time during the negotiating phase of the deal when the seller actually jerked them around a little. However, refusing to be shortsighted about it, Randy decided to give the seller his way.

Interestingly, at the end of the deal, the seller told Randy that he was going to “hook them up” and that they would do another deal together.

Asking price was $3.87 million, and they gave it a renovation budget of $250,000. They were all-in at just over$ 4 million.

Example 3

To fund the deal, Randy was able to reach into his stable of long-time investors (some with 16 years' experience) and cobble together seven that contributed around $1.2 million for the equity needed.

Related: Best Deal Ever Show #8: Appealed Appraisal Adds $115K to Property Value

No small feat, but Randy’s desire to put people ahead of profits made this possible. (Case in point, Randy has many investors who were with him during the ’08 crisis. When everybody else was losing money, his investors didn’t see a loss, because taking care of the investors was more important than taking care of himself.)

With the property stabilized and continued oversight of the property management company to keep it performing to the best of its abilities, Randy was able to add $2 million of equity to his portfolio and $38,000 of cash flow in just one year’s time!

And now, Randy has leveraged these types of relationship to do five more large multifamily deals in the last year alone. I think the strategy of cultivating strong relationships speaks for itself!

What do you consider to be your best deal ever?

Share in the comment section below.