Engaging Apartment Brokers - Key Questions?

New to Real Estate · OH/TN/FL · Member since 2016 · 135 posts · 35 votes

I've been doing a lot of reading and research on how to engage brokers that deal in small to medium apartment buildings. Up until this point, I haven't actually reached out to any though. I'm interested in an 18 unit apartment building and would like suggestions on key questions to ask when contacting the listing broker. I know I need to ask for the T12, offering memorandum, and rent roll but what are some other questions to ask? Additionally, what questions should be in the initial correspondence versus later in the conversation? Any suggestions or tips would be appreciated!

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Joel OwensBusiness Member

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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

I do commercial retail these days as a developer and a principal broker.

I have buyers fill out a financial statement or give me one they have already made out for review before I spend any huge amount of time with them.

The broker before answering a bunch of questions from you will want to know 2 quick things.

1. Is this buyer a flake or real? Meaning can they buy with their own funds with cash or easily qualify with financing and some down OR are they not showing financials and talking about no money to little money down type junk that isn't relevant today?

2. Are they realistic in their return expectations? If they want pricing in the cycle of 3 years ago they are out of touch with reality.

If a buyer has little to no financials, weak credit,no track record, crazy buying structure, and wants pricing that no longer exists that's a non-starter.

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Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
9y
@Account Closed I'd do with your land what I am doing with my 89 acres in Columbus county NC. Look at every option to look at what is possible. If you give me a PIN, I'll give you my opinion;) If it's not been managed over the years, that kind of acreage can get out of hand and overgrown. Then it takes some effort (and expense) to get it back in shape. I am speaking from experience...
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Account Closed
OP
New to Real Estate · OH/TN/FL · Member since 2016 · 135 posts · 35 votes
9y
Originally posted by @Elizabeth Wilson:

@Account Closed - Good for you! We are also looking for multi-family units in Memphis! Have you attended the Memphis Investor Group Multifamily meetings? They are lunch meetings once a month. You can find the schedule here: http://mig.clubexpress.com/ You don't have to join MIG to go. Just show up for lunch! Great folks there with lots of wisdom and lots of wannabe owners like me! :) Let me know if you decide to go so we can meet!
I haven't yet. I actually work in Cincinnati, OH so technically, I'm not local at the moment. I do plan to attend when I visit Memphis again. My in laws live there so we visit quite a bit! Thank you for sharing the schedule and reminding me to put that on the top of my list of REI things to do. When I'm in town next, I'll certainly reach out so we can connect!
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Elizabeth Wilson
Real Estate Investor · Memphis, TN · Member since 2016 · 940 posts · 695 votes
9y
@Account Closed - Sounds great! Please do!
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Account Closed
OP
New to Real Estate · OH/TN/FL · Member since 2016 · 135 posts · 35 votes
9y
Originally posted by @David Dachtera:

@Joel Owens,
Neither your investor A nor investor B sound like someone I'd want to do business with.
Investor A might be the right guy, but doesn't know how to achieve his goal. He's not educated. He knows he shouldn't be using his own money / credit, but doesn't know how to do it within those constraints.
Investor B doesn't know he shouldn't be using his own money or credit. He's not educated, either. Sure, you can prey on him and get your fees and commissions, but I wouldn't consider that either proper or ethical.
My ideal would be Investor(s) C. This/These guy(s) should come in talking about his/their business(es), their business resources and financing and their investing goals for the commercial MF being sought.
My $0.02 ...
Thanks David for adding another perspective to the conversation! In your opinion or experience, what are the best questions or introduction to lead with when first engaging a broker?
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Account Closed
OP
New to Real Estate · OH/TN/FL · Member since 2016 · 135 posts · 35 votes
9y
Originally posted by @Chris Martin:

@Account Closed I'd do with your land what I am doing with my 89 acres in Columbus county NC. Look at every option to look at what is possible. If you give me a PIN, I'll give you my opinion;) If it's not been managed over the years, that kind of acreage can get out of hand and overgrown. Then it takes some effort (and expense) to get it back in shape. I am speaking from experience...
Thanks Chris! I'll definitely be looking into it more in a few months. I'll be sure to consider multiple options before deciding a plan of action.
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Bruce Petersen
Rental Property Investor · Austin, TX · Member since 2017 · 254 posts · 265 votes
9y
I would ask for the materials you stated and if not familiar with the area of the listing I would drive the property and neighborhood and if still interested I would schedule a tour of the property.
You will be looking for the bad stuff (foundation, roofs, lots of exterior wood rot, etc...) on a tour and also what state the made-ready units are in to determine what if any updating you may need to do to get the rents you are projecting
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Account Closed
Boston, MA · Member since 2017 · 95 posts · 102 votes
9y
It's purely a relationship based business. Don't expect them to cater to you when you simply call them. It's a lot of networking. But if you have pre-existing relationships, you should leverage those.
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David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
Originally posted by @Account Closed:

Originally posted by @David Dachtera:
@Joel Owens,
Neither your investor A nor investor B sound like someone I'd want to do business with.
Investor A might be the right guy, but doesn't know how to achieve his goal. He's not educated. He knows he shouldn't be using his own money / credit, but doesn't know how to do it within those constraints.
Investor B doesn't know he shouldn't be using his own money or credit. He's not educated, either. Sure, you can prey on him and get your fees and commissions, but I wouldn't consider that either proper or ethical.
My ideal would be Investor(s) C. This/These guy(s) should come in talking about his/their business(es), their business resources and financing and their investing goals for the commercial MF being sought.
My $0.02 ...
Thanks David for adding another perspective to the conversation! In your opinion or experience, what are the best questions or introduction to lead with when first engaging a broker?
Well, my approach is to let others speak first to determine their needs, then address those needs. That is the basis of almost any business relationship, whether I am the buyer, the seller or the broker.
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Account Closed
OP
New to Real Estate · OH/TN/FL · Member since 2016 · 135 posts · 35 votes
9y
Thanks @Bruce Petersen! I'm somewhere between still assessing the neighborhood and preparing to schedule a tour of the property. I especially appreciate your comment on keeping a lookout for the state of the made-ready units and determining what/how much updating needs to be done.
Definitely understand and agree with that @Account Closed, that certainly makes sense.
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