Step-by-step guide to generating off-market deal flow (broker ed)

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Off market deals are those not listed to the general public. These deals are typically superior due to limited competition.

You get access to these deals by going direct to owner (more likely) or through broker networks.

I will be focusing on the broker network in this post.

These brokers you're contacting have buyer lists. This list is tiered. Top tier buyers see the deal first (reputation of closing). If they pass, the next tier gets a look, and so and so forth. You can see how the worst deals get filtered to the bottom of the tier list.

The name of the game is to work your way up this tier list.

Here's a step-by-step guide on how to do that.

1. Email the top 15 brokers in the area that focus on your asset class

In this case “top” means most active. You can gauge this by transaction volume in the trailing 12-24 months. These are the hustler's. They are the ones with the deals. **Having access to CoStar makes this very easy. If you don't have access you can find these brokerages via google. Look for the firms that focus on your asset class. Search "asset class" + "brokerage"

PRO TIPS

  • Contact the associates. She is hungry to do a deal, which means your goals align. Don't reach out to the Managing Director. She is unlikely to care about your 8 unit deal.
  • The real gold mines are the smaller niche brokerages. Find those.
  • When reaching out make sure you’re very concise in what you are looking for. Provide a bulleted list of your criteria. This displays professionalism and seriousness. Differentiate yourself from the dozens of tire-kickers that email these brokers daily.

2. Follow brokers on social

This will provide you with an opportunity to engage, learn interests, and will help keep a pulse on their work. Also, if you post productively they will see that you are a serious investor.

PRO TIP

  • Follow up/engage as much as you see fit. Become their friend. You're trying to build trust. The best way to do that is through consistency and commonality.

3. Make your follow up call

2-7 days following your initial outreach. Give the brokers a call. Whether they responded or not. This is part of the relationship building process. Easier to convey to personality on the line. Also, gives you another excuse to chat.

4. Create a system to track follow ups

The best deals will take time. It typically takes 5-7 touch points to get the good stuff. If you build a relationship organically and continue to stay in front of them you will see good deals.

PRO TIPS

  • CRM software is not necessary (but convenient). When starting out give Excel, Notion, or Trello a go. These have standard templates you can use.
  • Don't follow up too much. If they aren't sending anything, default to following up every 2-3 weeks. Be persistent but not annoying. There's a fine line. Switch it up, make calls, touch on social, call, etc.

5. Uncover new brokers and repeat the process

As you educate yourself and have conversations you will uncover more brokers. The low-key (but active) brokers are usually great connections to have.

6. DEALS!

Continue this process and you will uncover deals the fly-by-nights are not looking at. This is already an advantage. Understand this will take patience. You will be shutdown and ignored. Keep pressing (politely).

Why volume of deal flow is so important

It’s a numbers game. The lifeblood of quality deals stems from consistent deal flow. The more deals you see the more efficient your underwriting. AKA the better your ability to pass on mediocre deals. Once you're confident you have consistent deals in the pipeline, you will have no problem closing the door on that average deal.

@Austin Sine

Thanks for the post, very encouraging and helpful.

I get nervous and hesitant about following through on this method as a part time investor. I feel like I would want to stay near the top of that brokers list but I don’t have the capacity or desire to purchase multiple properties per year. I believe it’s still important to begin that relationship as you laid out, but would my low deals per year deter them from me?

@Keaton M. Appreciate the words! 

That's a great question. The fact is, broker's want to work with people they know will close. BUT broker's will also work with people that they like who show competence. Stay active, be honest with your goals and criteria, and follow up on what you say. EXAMPLE: if they send you a deal and you tell them you will follow up with feedback. Make sure you follow up. Let them know what you liked and didn't like about the deal. So many "investors" reach out once and disappear. 

Great advice! I love having off market deals in my pocket. It is my favorite part about real estate. Dealing with competent investors who have a serious interest prior to reaching out is tremendously helpful and preserves valuable time for investors who are actually interested and qualified.

7) Do a few deals in town, brokers will find you.

Realize, that most brokers with "off-market" (ie unlisted) don't have an exclusive and there may be a bunch of other brokers walking it around.