How to offer on an off market property.

How to offer on an off market property.

Member since 2018 · 3 posts · 0 votes

Good afternoon Bigger Pockets community. My name is Leon Robinson and I am wanting to get started in REI. My desire is to start out initially in multifamily. I want to rent a unit while living in the other. My ultimate goal is to own multiple large 100 plus unit complexes. With that being said I live in the Kansas City, MO area where multifamily available units are scarce. When good ones do come on the market they usually have multiple offers and I just don't bother getting into the bidding war or my offer is not competitive. Needless to say it can take the wind out of your sails after you have done the analysis on a property only to come up empty yet again. I am fearful of overpaying for a property and being caught in a housing crisis like what occurred in 2008.

I am a huge fan of Bigger Pockets. I especially enjoy the articles and webinars.  I have a potential off market duplex deal that I want to thank Brandon Turner and Sterling White for.  Brandon in one of his webinars mentioned driving for dollars. Sterling via one of his interviews with Brandon mentioned that  most of his deals were off market and  how follow up with the potential seller is so key.  Well one day about a month or so ago I went driving for dollars and found this property that was for rent. I called the owner and asked him if he was willing to sell the property to me.  To my surprise he said yes.  We have spoken several times and  he also showed me the property. Now my greatest challenge is to "Seal the Deal". I am hoping to meet with him later in the week to discuss an offer. I have a realtor, but I do not know their role in an off market deal. Is their role the same just as if the property were listed?

Would love any advice. Also if anyone has Sterling White's contact information that would be awesome. Sterling if you read this please do not hesitate to respond.

Thanks

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Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y

@Aireka Saint-Louis, good job finding a potential off-market deal and taking it this far.

  • To start, I recommend posting your deal analysis to the forums and letting some of the more experienced investors pick it apart. Make sure your numbers actually look good.
  • How are you financing?
  • You should still engage your agent. They can write the offer and guide you through the process. If the seller squawks about paying the commission, offer to pay your agent's commission and just work those numbers into your analysis. You really need a pro by your side.

Good luck! Let us know how it goes.

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  • Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
    7y

    @Aireka Saint-Louis, good job finding a potential off-market deal and taking it this far.

    • To start, I recommend posting your deal analysis to the forums and letting some of the more experienced investors pick it apart. Make sure your numbers actually look good.
    • How are you financing?
    • You should still engage your agent. They can write the offer and guide you through the process. If the seller squawks about paying the commission, offer to pay your agent's commission and just work those numbers into your analysis. You really need a pro by your side.

    Good luck! Let us know how it goes.

  • Rental Property Investor · San Diego, CA · Member since 2018 · 44 posts · 36 votes
    7y

    He pretty much accepted your verbal LOI! congrats!

    • Now you need to underwrite the deal
    • look at the market demographics, population, jobs, path of progress, etc
    • ask for the actual profit and loss statements
    • with a mortgage lender, find out what kind of financing you can get 
    • Offer a price that works with your investment criteria, E.G. IRR 15%, COC 9%, etc..

    There are a million things to consider in between all those bullet points. If you don't know where to start, I suggest taking the time and invest in your education or find a mentor that can help you now. Good luck!

  • Member since 2018 · 3 posts · 0 votes
    7y

    Thanks guys for the advice. This is so helpful. Financing with VA loan.

  • Chicago, IL · Member since 2016 · 16 posts · 6 votes
    7y

    Hi @Aireka Saint-Louis ,

    @Jeremiah Mon has done a great job covering next steps, but there are a few others I would suggest doing. Since you already know that the owner is interested in selling, then it’s on to step two. Step two includes submitting a purchase-and-sale agreement and researching comps to determine a good offering price. After negotiating an acceptable price, I would suggest requesting that the seller orders a title search (if not, do it yourself) on their property so that there’s no confusion about who the title belongs to during closing time. I would also recommend hiring an appraiser to determine the property’s value and then use a lender to help finance.

    I don’t know if this was much help considering the post was 2 months ago, but I hope it can add some value in the next property acquisition. Also, would you mind telling us what happened with the property after your initial post?

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