I currently own two single family rental properties and have been pretty successful with both of them. I am now interested in garden style apartment buildings and want to start reaching out to owners of properties in my area to see if they are interested in selling. I am asking if anyone has a template or advice on how to structure such a letter and if/how this strategy has been successful for you in the past. Thank you very much!
For what's it worth, I've been send letters to long time apartment owners for the last two years if not more. Virtually no response. I started to include formal LOIs (letters of intent) in the last couple of mail rounds and got a few negative responses. My guess is that formal LOI shows to the owner that I am serious and somehow prompts them to reply.
I plan to gradually increase my offers until someone bites.
@Michael Peters I bought a 200+ unit deal on a DM campaign so it does work and the process can be time consuming, see this link:
For DM you need to send letters consistently, about every 10 to 14 days. Your letters need a strong headline, good copy and the most important a CTA (Call to action). What are you asking the seller to do - call you, send you financials, etc.
I don't share my letters, but as a tip, what you need to do is put yourself in the shoes of the seller. What are their challenges and pain points.
In your copy you need to solve their problem so they outreach to you.
@Brian Adams , thank you! I'm looking forward to adding a DM campaign to my cold calling and broker-relationship-building efforts. I appreciate the actionable tips and I'm encouraged by your success with this strategy.
I have had very good luck getting in touch directly with owners of multifamily assets, but it has been very difficult carving out a deal. I believe it is because these owners typically are more knowledgeable about real estate and would rather go through a broker to achieve full value. In some cases, I have had owners back out of a contract and go to a broker.
That is not always the case and sometimes they do bite. I would include an LOI with the letter, but be prepared to spend a large amount of time negotiating terms.
Let us know how it goes. Seems interesting.
But you have to ask yourself: Is this the best and highest use of my time? There are specialized brokers who will save you time (most important), hassle and money because they have the existing relationships and infrastructure in their chosen market.
I would actively look at the broker/local investor route as it is easier and helps you be more efficient esp. at this stage of the RE cycle where everyone is demanding more than what their property is worth.
Have to agree with @Omar Khan on this. Make sure it's the best use of your time (calling brokers may be a better use of your time since they have properties where owners are already wanting to sell) and figure out what size of properties you're wanting to pursue. Direct mail will give you a higher response for the smaller mom and pop type properties. As @Brian Adams mentioned, figure out what their pain points are and write it so that they will feel confident and reach out to you.
Brokers will save you time but won't save you any money. They work for sellers and are obligated to get the highest price possible.
Consider this example. A property is worth $5M at the open market but the owner is out of state and out of touch. He may think that $4M is a terrific price, considering that he bought it for $500K 30 years ago.
If a broker is involved, a buyer would end up paying $5M. If a buyer found that seller directly, chances are that he may get the property for $4M.
$1M in instant equity is worth a few years of mailing campaign.