Have been in the industry for a few years and always been wanting to do some small deals on the side. For folks who have gone through similar situations where you have no track record of doing deals on your own, how did you get broker's trust at the very beginning and have them start sending you real off-market deals?
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Hi Associate 1 in RE - Comm, just because I'm a bot doesn't mean I don't have feelings...I'm hoping these links are helpful. If not, feel free to throw monkey shit at me...
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If those topics were completely useless, don't blame me, blame my programmers...
Unless your broker is a very close buddy, your not going to be getting any love from brokers starting out. If they are established brokers they already have their go-to buyer list, so at the very least you are going to be seeing a deal that's already been passed through by their favorite buyers. From my experience, the following helps to start seeing good deals from them: (i) participate in some of their marketed processes (even if not bidding competitively or to win), (ii) let them see you have a lot of other deal flow and can close other deals (I.e. if your not going to bring me an off market deal, I'm not going to do anything with you), (iii) remain in close contact with them and meeting up at industry conferences/events, (iv) let them know you will protect their fee in any instance and (potentially) let them invest the fee in the deal, and (v) sometimes I would involve them by asking them to call a certain owner/property on my behalf.
So, the best way to start doing your own deals is by identifying them yourself and cold-calling the owners directly. The old-fashioned way
I think you have it backward. How are brokers going to get my trust, because I honestly don't believe a thing those snakes say until I see source docs
Aka you are looking for unrealistic cap rates and aren’t buying anything. Kewl
Hows deal flow buddy?
You ok?
Deal flow isn’t bad. The problem is the feckless buyers who will do and say anything to sellers to win the award only to break their word and ask for retrades anytime the treasury jumps 10 bps.
but I’m sure you would never do that given your distrust of brokers and most likely impeccable character.
tbh, my big problem is trying to deploy all the fees raked in during 2021-2022. You feel me? Any ideas on how to resolve that problem?
Weird flex but ok
Rolling over that easy. I take it your boss is one of those “all cash” buyers during the buyer interview, only to decide he wants/needs debt when rates go up a few bps. Or he can’t get the special city/county approval he promised wouldn’t impact his underwriting.
stay in your lane and stick to picking things up from the printer before you start spewing garbage about brokers next time.
Bruh. Everyone knows brokers are scummy. The majority add no value and just add platitudes to the conversation "This asset has a story!!". So just chill and hope that the deal flow comes back for you. Stay in your JLL Investment Sales lane and keep cold calling owners. Maybe one day a principal side opening will be in your future.
Just take what I said and rearrange the words. Clever. Is that what it takes to join the buy side? You must be at the esteemed shop of Tides Equities.
And you have done nothing to refute the point that people on the principal side can be just as scummy as the brokers you paint with a broad brush.
take your L and go enjoy the 4th
this response is for the both of you. but whether or not someone was in the right or wrong, i always find it interesting when small demeaning arguments start online. i don’t think either of you left feeling good and i don’t mean to be a hyper pacifist, but at the end of the day irl y’all probably could/would be friends. ik y’all get it, you’ve lived life and worked. just remember everyone loves the dudes spreading positive vibes - whether or not it’s an anon forum or real life.
and happy 4th!
Isn't the whole point of a broker to weed those people out?
What actual value does a broker provide to their client (assuming their client is the Seller, in this case) if not to advise on the real bids vs the bullshit ones? A first grader could pick the biggest number.
I'm not going to sit here and claim all buyers are wholesome, trustworthy people... but at the end of the day a broker is a middle man. They don't provide any value, so it absolutely is on them to explain why it is they deserve so many points of commission, to defend the assumptions they're selling. Every time this discussion comes up, everyone bitches and moans about how I or someone else must hate brokers... and they never manage to actually give a concrete example of how a broker provides value. Even you, purporting to be defending brokers and blaming "feckless buyers," have only mustered up an argument which makes plain the fact that brokers don't actually do anything.
If you're a seller then yes its the brokers job to gain your trust. If you're a buyer, the broker holds the cards, and its your job to get them to trust you.
Except this implies that brokers aren't doing right by sellers. Theoretically, if I am a buyer, any offer I make should be passed on to the client. So why do I need a broker's trust? The very concept that a buyer needs something from a broker basically proves that brokers are useless at best and actively pernicious at worst.
I guess one could argue that having a good relationship with a broker means they'll advocate for you... but that's super fucked up when you think about it for five seconds. A broker's duty should be to help their client sort through real offers from ones that are flimsy and full of contingencies (or the possibility of re-trades). If they're pushing a seller in a particular direction, they're already abrogating their duty.
Or if you want to look at it from a buyer's perspective, a good relationship might mean you get better or more accurate data or context for whatever the broker is showing as historical expenses/revenues/etc. But once again, that merely implies that a broker doesn't actually do anything except help conceal the truth, which will inevitably come to light anyway when a real diligence process gets started.
No matter how you look at it, the only way a broker provides any value is by lying to one party or another. In other words, brokers are to real estate what crypto is to finance: the only real use case for both is for fraud.
It's like any other case - some may be that you are best off finding someone you can connect with (similar circles, a meetup/discussion group, networking group, etc) or potentially showing your seriousness/interest - repeated analysis of on-market deals asking for their thoughts, or a cohesive plan/example of how you'd look to other deals and what you may ask of them. I imagine it will take a few discussions with a collection of brokers before finding one that may reciprocate. Broadening your geography/focus may help in targeting brokers so you can have a large enough funnel to settle on what it is in particular you're looking for (maybe you have this but simply hadn't shared).
Good luck!
You can also improve your chances of getting to best and final by agreeing to use their debt team to finance the purchase. This is a common practice among the most ethical companies....
Check out the podcast The Breneman Blue Print https://podcasts.apple.com/us/podcast/how-to-quit-your-job/id1600500612…;
This episode discuss how to quit your job but basically you need to do a deal on your own to create a track record first before you can gain the trust of others.
Backoffice_Boss you are a clown for claiming a "principal side opening" is a be all end all for JLL Investment Sales. This is not IB v. MF PE, people on the principal side of RE make a living. They are not ballers with very few exceptions. I live in a major metro, have worked at two well-respected development shops (one with a built-out fund), and routinely meet younger brokers out earning me by leaps and bounds. I don't do too poorly either. They are raking in deep into seven figures, some are not even 30. They plan on cold calling until they are dead, that is what salespeople do. Most of them have worse degrees, lower intelligence, and less RE knowledge than you. Sad!
To the other posters who claim brokers do not add value, they do what acquisitions in REPE/development shops do not want to do. They vet buyers, they process the paperwork, they prepare marketing materials. No VP of acquisitions wants to do that. No one is forcing a fund or development firm to use brokers and pay them a fee. Everyone on the principal side can readily do the brokers' work if they so choose.
I take back what I said about Backoffice_Boss potentially having more RE knowledge than any broker at CBRE/CW/JLL/Colliers etc. In July 2022 he wrote, "I am going to graduate in Dec 2022. I am currently interning at a REPE in NYC with a chance of a return offer. I am also actively recruiting for FT and have interviews with shops across the United States. Economically what considerations should I make when it comes to accepting an offer? What major metropolitan area do you get the most bang for your buck? I am lucky enough that my college debt s around 26k but I want to start building capital to start doing small deals as soon as possible. I feel like where and who I decide to work for is going to be a very important first step. Thanks in advance."
You are in for a very rude awakening at what your likely trajectory looks like in this business. I am assuming you are not rich, since rich parents do not allow their children to take out student loans for undergrad. Good luck with the small deals, make sure brokers do not know how you feel about them.
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