Where do I find multifamily properties deals?

The number one question I hear from first time multifamily investors is "Where do I find deals?"

It's not uncommon to hear them say:

• I checked Loopnet but everything on it is overpriced
• MLS has almost no multifamily properties
• I can't get the brokers to return my calls
• ...

Well, these are all true statements. These first time multifamily investors are not making excuses they are correct about all of the above, the MLS hardly ever have any multifamily properties and when it does, it's usually overpriced and the agent has no idea how to handle the sale of a commercial deal.

If it's on Loopnet, it's already been viewed and analyzed by thousands of multifamily investors and if it's still up there after 12 hours, it's an overpriced deal.

I'll tell you a secret, may commercial agents put a property on Loopnet AFTER it's already under contract or sold so they can capture leads of potential multifamily investors.

Honestly, there is nothing I can do to help with the first two. However, I CAN help you with the third.
What I realized when I was trying to score my first multifamily property is that in order to get the commercial agent to take you seriously you will need to have two things:

1) Get a referral from a commercial lender

This is the best way to make sure the broker pick up the phone or return your call.

Reach out to a few well established commercial lenders or Commercial Mortgage Brokers in the market you are looking to purchase your first multifamily property and tell them that you are in the process of purchasing your first multifamily investment property and you would like them to review your financials so when the time comes they can get you financed faster.

At this point they will usually ask for tax returns, personal financial statements and other financial information about you. When you provide them with the information they will analyze it and will be able to tell you what size of loan they believe you could get approved when it's time to close.

So far you established a rapport with the lender and got a confirmation to what size of deal you should be looking for. This will help you with the laser focus criteria you will need in item #2 below.

When the analysis process is done, it's time to ask the lender for "a little favor". Ask him to send an introduction email or phone call to a few of the top brokers he is doing business with to let them know he has evaluated your financials and that you are ready to purchase a multifamily investment property up to X dollars.

This essentially tells the commercial brokers you are not a tire kicker and you can close. Brokers don't get paid if you can't close so they want to make sure that you can before they spend time on you and offer you their pocket listings.

2) Laser Focused Criteria - Even if you got a stellar referral from the commercial lender, if you call a broker and tell him something like: "I'm looking for a multifamily property. size doesn't matter, can be 5 units or 500 units" you will get a fake smile and an empty promise to get back to you.

You really HAVE TO know how to speak their language and have answers chambered for questions such as:

• What's your budget?
• What is your desired area/city/neighborhood?
• Are you looking for a class A or class C area?
• What cap rate are you looking for?
• Are you looking for a stabilized property or value add opportunity?
• Are you looking for a class A or class C property?

If any of the things I mentioned above are not crystal clear to you then you are not ready to talk to the brokers.

My next post will be about Creating a laser focus criteria for your multifamily investment search. I'll talk more about how to build your criteria and how to communicate it to the commercial brokers you talk to.