Off market... lets say 20 unit Help

8 Replies

So this is not pertaining to any specific property just yet but my question is, if i soon give an offer or LOI for lets say a 20 unit complex that i identified through direct mail and my cold calling efforts, what team members will i need to help me complete the deal? So i have bought several residential multi family properties before and for one, they seem easier only because i am familiar with all the due diligence that i need to do and two, they have all been on market so i was working with an agent and title company. Do i call a local commercial broker and offer to pay them to help me through the process? Hire RE attorney that knows the ins and outs? i just feel like there is more to the commercial side with reviewing all the leases, property disclosures, surveys, inspections and so on that i might miss something for my fist couple deals of this size. Maybe im way off in my thinking. Any input is much appreciated! Thanks!

@Justin Hannah yes you should meet with a few banks / lenders to get prequalified so you look stronger going in. 

You will want to use a real estate attorney who does commercial and multifamily, a good property manager as they will help with due diligence and lease audits etc. inspectors that do multifamily and surveyor.

Check out https://joefairless.com/ and get his book and theres also tons of info on multifamily due diligence.

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@Greg Dickerson thanks for the input. I have spoke to many banks and should be good to go on that. Joe fairless is a great resource and I need to read more of his content. 

@Greg Scully I was thinking the same thing I just wasn’t sure if that’s ok to offer a broker. I have contacts with commercial brokers out of this particular state and I can tell the good from bad by the deals and frequency that they send me. It might be hard to tell who is good or bad by just asking them to help me and I’ll pay you sort of thing. Any advice for finding a fair broker that will put my interest first? Thanks 

@Justin Hannah Ask for referrals on BP or other forums and interview them specifically about going direct to seller and being a transaction facilitator for investors. If you bring a seller to them with a negotiated price in hand, you've done a lot of the hard work.  

Most markets have a handful of brokers that close the majority of commercial transactions.  I'd focus on finding them.

@Justin Hannah

Properties with less than 20 units have the highest default rate in the industry. This is true for a variety of reasons, but one of the biggest culprits is lack of experience with the buyer.

You're thinking about the right things, a team is crucial. The top 3 resources that I'd want before buying a 20 unit ...

1) A property manager who I trust and with whom I've worked with in the past

2) An evaluation of the market from an experienced analyst using local knowledge (perhaps from the property manager)

3) A source of money, whether it be you, a bank, an investor, or all three.

Attorneys, accountants, brokers -- all are important, but they come later in the process.

@Justin Hannah

It's good to ask for feedback and you've received a pretty good one here. I would also suggest reading books specifically on MFH investing. Start with David Lindahl book on multifamily millions and Steve Berges on buying and selling apartments. Also, look into joining local MFH organizations to network with the local investors. A quick google search produced the following: https://www.iaahq.com/ Joining an organization such as this one could be a good source for professional referrals you need to build your team. 

My best!

@Justin Hannah I would research local meetups in your area and network with others who are already in that space that can help guid you through. You can hire an attorney and surely they will take your money if you offer it. If you plan to close the deal with them, they may guide you through it. Or a big fan of bringing commercial brokers in the deal cutting them a slice for not finding the deal. Not a fan of that. Simply put find someone in your market to partner with it who has more experience. Hope this helps.

I would definitely consider a broker or someone with a bit of experience (mentor/friend?) with the exact type of transaction you are seeking to complete. The other tips of local PMs, Lenders, and attorneys are gold as well.