Creating a laser focus criteria for your multifamily investment search

In my previous post I talked about a good way to reach out to multifamily brokers and get their attention by using a lender or mortgage broker as a referral source.

This post is about having a laser focused criteria chambered for the conversation with the multifamily broker.

You need to understand one thing, the brokers get paid at closing so it's their best interest to bring only the top buyers to the negotiations table. The ones they feel the most comfortable that they will close.

The broker will try to understand where you are on your journey to purchase a multifamily property. 

Do you have experience in multi family? How many deals have you closed on already? How many properties have you toured already?

If he feels that you are a tire kicker or just at the beginning of the process he will probably send you the deals that are already on the market. The deals everyone had already seen and no one found interesting.

It's kind of like your kid asking for her first car. Would you go get her a brand new Lexus or will you let her do the research, suggest some beat up yet safe cars so she can get her preferences aligned before committing to a big purchase. 

Same here, no broker will pull his prized "off market" deals and offer them to you unless they have full confidence you can close.

I can't promise you that having a laser focus criteria for your multifamily investment search will get every broker to take you seriously immediately but I can promise you that without one they will treat you like someone that is not ready to purchase just yet.

So after all this intro, let's talk about what your criteria needs to include in order to be considered "laser focused":

• Area - Metro/City/Neighborhood/etc.
• Asset class - A/B/C/D
• Area class- A/B/C/D
• Size: in units
• Budget: in USD
• Expected cap rate: percentage
• Expected COCR (Cash On Cash Return): percentage
• Expected Annualized Returns: percentage
• Stabilized vs Value Add preference
• KP availability

Do you have to have all of these items, no but it will be very helpful if you know exactly what each means and what values you are willing to accept.

In my next post I will review each of the above mentioned terms, explain what they mean and the possible values so you can figure out for yourself what values you want to put into the template and speak to it intelligently.