You’ve decided to get started with apartment building investing, and you’re excitedly calling brokers. But you’re stumped by these two questions you get over and over again:
- What is your capacity to buy this property?
- What multifamily experience do you have?
You don’t have the cash or experience, so how do you respond?
Let’s think about why you’re getting these questions. It’s because you sound like a newbie.
But it doesn’t have to be this way. I’m going to show you a technique that will avoid these kinds of questions 85 percent of the time.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Here’s What a Newbie Sounds Like
Brokers deal with newbies and tire kickers every day. Over the years, they’ve been thoroughly trained to spot and handle them. Once they identify you as a newbie, it’s difficult (and time consuming) to change their perception of you.
Many newbies will contact a commercial real estate broker and say something like this: “Hi, my name is Sam, and I’m interested in purchasing multi-unit properties with solid returns. Can you send me over some deals?”
Related: 3 Simple Steps to Increase the Value of Your Multifamily Property
First of all, you’re not using the right language. And second, you’re not proactively addressing the two main questions every broker has when a new investor calls in: Do they have the money and do they have the experience? In other words, can they close?
I’m going to show you how a little bit of training can make all the difference so you are NOT perceived as a newbie.
How to NOT Sound Like a Newbie
Instead, say something like the following: “I work with a group of high net worth individuals, and we are expanding into the Atlanta market. We already have property management company XYZ on board and are continuing to build our team locally. We’re looking for deals in the $1M to $2.5M range with at least an 8% cap rate on actuals, and we would consider light to medium renovations but no re-positions. Is there anything you have in your pipeline that you can send over for me to review?”
Here’s what you’ve done:
- You addressed the money part because you say you’re working with high net worth individuals, implying that you have the means to close.
- You addressed the experience part because you’re working with a property management company, and you say you’re “expanding,” implying that you already have property elsewhere.
- You’re using the right language like “cap rate” and “re-position” (lingo for “really big renovation”).
Educate Yourself and Use Scripts
The bottom-line is this: If you don’t want to sound like a newbie, educate yourself so that you’re using the right language. To educate yourself, read books, buy a course, or attend a seminar. Learn the language and basic financial concepts. In fact, one of the best things you can do is to learn how to analyze apartment building deals. The more you do, the less you sound like a newbie, and the higher your confidence grows.
Related: The Real (Often Overlooked) Reason Many Multifamily Investments Fail
And then use scripts so that when you email or call the broker for the first time, you’re proactively addressing their main concern: “Can this person close and should I take them seriously?”
By educating yourself and using the right script, you communicate to the broker that you have the means to close and have a team in place that can close and manage the property. As a result, you’ll be taken more seriously, brokers will return your phone calls, and you’ll do your first deal faster.
[Editor’s Note: We are republishing this article to include the author’s video. Let us know what you think with a comment!]
How do you overcome your lack of experience when trying to land deals?
Share some other tips and tricks you’ve used to be taken seriously by commercial real estate brokers!