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BlogArrowReal Estate MarketingArrowThe (Nearly) No-Effort Way I Found My Last Multifamily Deal 
Real Estate Marketing Oct 12, 2020

The (Nearly) No-Effort Way I Found My Last Multifamily Deal 

Chiagozie Fawole
Expertise:
2 Articles Written
man driving luxury sedan looking out passenger window

Sometimes the simplest things give you the best results.

Three years ago when we moved to Syracuse, I noticed an apartment complex at a major intersection on my route home from work. It appeared to be the size I was looking for, and each time I drove past it, I told myself I would try to find the owner and make an offer.

With the new city, new job, new baby, and so on, that desire to track down the owner remained a wish for another two years.

In July 2019,  I finally sent postcards to the owner. I wasn’t conducting a particularly robust marketing campaign, but in my “trying out” the DealMachine app, I also set up automatic mailings—and forgot about it!

One quiet evening in November, I got a call from the owner. He had been out of the country and came home to find my postcards. He wasn’t interested in selling the building I had asked about but wondered if I would be interested in another seven-unit he was looking to offload.

Um, sure!

He gave me the numbers—they sounded amazing! I was a bit hesitant when I got the address, but after a little while, I snapped out of it and went to take a look. We closed on this building right when the COVID-19 lockdown started.

Related: Real Estate Marketing: How to Save Time & Get Better Results (Hint: Virtual Assistants!)

The Deal

Details about the property:

  • 7-unit apartment complex
  • Fully rented with some tenants on public assistance (ahem, gold in this COVID era)
  • Each unit has its own furnace (meaning I won’t pay for tenants’ heat in cold Syracuse!)

first-multifamily-deal

The Numbers

We negotiated price and terms. He was planning to list it with a Realtor but instead let us pay what he would have gotten after Realtor fees were removed.

Details about financing:

  • Seller financed
  • 20% down, amortized for 20 years, but due in 5 (no banks were involved)
  • Expected cash-on-cash return: 53%

What Is Driving for Dollars?

If you're looking for multifamily property, don't ignore the good old "driving for dollars." The idea behind driving for dollars is that you spot potential investment opportunities as you drive around neighborhoods of interest.

I think of driving for dollars in two ways:

  1. Intentionally driving for dollars, and
  2. Spotting “dollars” when you drive.

Driving for Dollars Step by Step

You may think of driving for dollars when searching for properties to wholesale or rehab; but it works just as well with multifamily properties.

Related: Driving for Dollars Bible: Finding Distressed Properties and Marketing

Step 1 – Find the Property

Depending on your goals, you specify your target property type, and take note of properties that meet your criteria as you drive. Look for tell-tale signs of age, vacancy, or distress (i.e., tall grass, undisturbed snow, a full mailbox, etc.).

For the deal I described above, it was simply the location and property type that caught my attention.

Step 2 – Find and Contact the Owner

When you find a property that matches your criteria, contact the owner.

While I found this owner’s mailing info on the app I used, I could quite easily have looked it up on the city’s property assessment website and sent him postcards myself. I could also have used a skip tracing service to find a phone number or email address.

Irrespective of the method, the key thing that made the deal successful was persistence. People may not respond to the first or third mailer they receive. Keep at it!

In this case, I was able to be persistent without even having to remember to be. I’d forgotten what I had set in motion via DealMachine.

But even that makes a point! Set up systems so that your business doesn’t rely on YOUR remembering.

where-are-the-notes

“What do you say to the owner?” you might wonder. Here’s what I write.

I saw your property on 123 Main St. Would you be open to selling?

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Nothing complicated. The worst they’ll say is “no.” If they do, you come back in a few months!

And if they say, “Yes”?

Step 3 – Make an Offer

You’re now direct to the seller. You can negotiate both the price and terms.

  • Price: Remind the seller they would be saving on Realtor fees, and negotiate a price that reflects that.
  • Terms: You can negotiate owner financing (either partial or full financing), negotiate the down payment, as well as the amortization and duration of the loan. Don't forget creative ideas like lease options.

The key is to understand what the seller really wants and structure the deal in such a way that works for you both.

Wrapping Up

Here’s the real gem about this deal: The owner says he’ll be selling the original property I asked him about in a few years. Guess who will be waiting and ready to take it off his hands?

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What other simple ways have you found mouth-watering deals?

Share with a comment below.

By Chiagozie Fawole
Chiagozie is a board-certified pediatric anesthesiologist. She got started as a real estate investor four years ago, during residency. Through fellowship training and her first few years as an atte...
Read more
Chiagozie is a board-certified pediatric anesthesiologist. She got started as a real estate investor four years ago, during residency. Through fellowship training and her first few years as an attending physician working full-time, she grew her portfolio to 27 units at its peak. She enjoys helping other physicians get started building profitable rental portfolios and runs the SavvyDocs in Real Estate platform.
Read Less
20 Replies
    David Ekpin Developer
    Replied 3 months ago
    Awesome, thanks for sharing! What is your exit strategy?
    Chiagozie Fawole from Syracuse, NY
    Replied 3 months ago
    For this one we plan to do minor upgrades to the units as tenants move out, and refinance in a year or so. Not pushing it though, as we see which way things are going nationally.

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    Cassandra Williams Rental Property Investor from Honolulu, HI
    Replied 3 months ago
    What is your process of determining the offer price considering no realtor fees?
    Chiagozie Fawole from Syracuse, NY
    Replied 3 months ago
    I look at properties that have sold recently in the area, and build in the discount I want on the deal.

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    Stephen Schmitt Real Estate Agent from Liverpool, NY
    Replied 3 months ago
    Great story and welcome to Syracuse!

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    Chryssa Rich Investor from Boise, ID
    Replied 3 months ago
    I love this strategy. Sometimes people can be "thinking about" selling for a long time before they pull the trigger, especially in areas where multifamily properties sit for a while. Question for you: Why do you look for aging or distressed properties? Aside from the obvious lower price, do you take it as a sign the owner doesn't have their heart in it anymore?
    James Wesley from Seattle, WA
    Replied 3 months ago
    There's a myriad of reasons why the owner is not taking care of their properties: * Doesn't have the money to take care or it * Don't have eyes on the property and managing from afar * Don't have the resources to take care of the property * Lost interest * Health issues * Divorce But digging into their why will lead you down the path of the best purchase scenario.

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    Egeline Denis from New York, NY
    Replied 3 months ago
    This article is encouraging especially for someone like me. I like the easy system you provide for those starting in the real estate market.

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    Barbara Cordon
    Replied 3 months ago
    Hi Chiagozie, I am from Rochester ny as well. I am looking to purchase my first rental property. How is the market in syracuse? Do you have rentals in rochester? I have been looking in the east side of the rochester suburbs with not much luck. Any insight into these 2 markets will be much appreciated!
    Stephen Schmitt Real Estate Agent from Liverpool, NY
    Replied 3 months ago
    Hello Barbara, the market in Syracuse has speeded up quite a bit as there's a lot of NYC investors not only buying for investment but moving here. We have started getting larger companies such as Amazon building the second largest distribution center in the country and Microsoft coming in with a "Smart Cities Technology” hub, one of only 3 in the country. We have higher than normal cash flow (I believe we were #12 in the country) but properties are only on the market for a few days and going over asking lately. Still, there are plenty of good deals.

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    Chiagozie Fawole from Syracuse, NY
    Replied 3 months ago
    Hello Barbara! I still own a few rentals in Rochester, primarily close to the U of R. Send me a message, and I can connect you with my people

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    Tamar Hermes from Los Angeles, CA
    Replied 3 months ago
    @Chiagozie Fawole I love this! Thanks for showing that it does not always have to be difficult and if you are intentional and put in the right effort, you can make it happen. #inspirational

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    Larry Turowski Flipper/Rehabber from Rochester, NY
    Replied 3 months ago
    Great post! We talked a few talked a few year’s ago about your first deal here in Rochester. I ended up buying an 18 unit that is working out pretty well. I’ll have to give deal machine a try.
    Chiagozie Fawole from Syracuse, NY
    Replied 3 months ago
    Ooh nice! Congrats!

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    Brian Wagers Rental Property Investor from Northwest Arkansas
    Replied 3 months ago
    Nicely done Chiagozie!
    Chiagozie Fawole from Syracuse, NY
    Replied 3 months ago
    Thank you!

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    Anthony Watkins New to Real Estate from Dallas, TX
    Replied 3 months ago
    Great write up. I have a question about "20% down, amortized for 20 years, but due in 5". What was the logic/benefit behind this decision? Why amortize over 20 if it's due in 5 anyway?
    James Hal Cathey
    Replied 3 months ago
    20% down payment of the agreed upon price. Amortization for 20 years brings the monthly payment down hedging against the current times and freeing up capital for improvements to the property she plans to make. She will be refinancing in a short period of time before the 5 years are up replacing the current note with a new one. During the refinance if all went well she will get her capital back and possibly have an infinite return.
    Chiagozie Fawole from Syracuse, NY
    Replied 3 months ago
    Precisely!

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    Bolanle Akinronbi
    Replied 3 months ago
    Great find!

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