Cold Calling for off market deals
Pretty simple question, but for those of you who buy deals yourself, or source off market acquisitions (not listed, no broker involved) for a PE firm, how do you broach the topic of making an offer on a property with the owner? Do you get to the point and ask if they would consider an offer, or use a more delicate process? curious what different techniques people have for picking up off market deals and getting someone comfortable with looking at an offer.
That's because, for the most part, these guys are stretching the truth. If the guy is a one man shop (or very lean team) and only does 1-2 deals a year, then yes, i would be inclined to believe him/her. However, groups that are doing heavy deal volume are rarely sourcing all of their deals "off-market."
If I meet people that try to brag that they only sourcing deals off-market, I usually try to feel them out on what their process is/was. A lot of times a guy is friends with a broker, and this broker knows a deal is coming to market (eg. lost the BOV/marketing pitch), and has a really small window to transact "off-market" because he understands the seller's pricing target. This broker is then off to the races to find someone to buy the building, literally calling everyone in his Rolodex. but in all honesty, it's going to be brought to market in a month or two.
Guys love the off-market story because it's that. a story. you are the "only person" who has an opportunity to buy this building. Therefore it must be a steal. It's a debatable topic, but often times off-market buys yield lower returns. Sellers have an over inflated pricing target and the Buyer(s) love the story and can pitch the hell out of it to their committee.
From my experience, the true off-market deals can take 1-2+ years to come to fruition. It's a lot of discussions, courting the seller, and convincing the seller that you are going to pay a "market" price w/o the stress of going to market, paying a broker, and the unknowns that come along with it. And yes, one could get lucky and have a super quick "off-market" process from initial discussion to acquisition closing, but this is rare IMO.