How to Effectively Reach Out to Owners for Off-Market Deals
I work in Acquisitions for an REPE firm in the Midwest dedicated to Multifamily investments. While we are growing at a steady pace, we're not big enough to routinely be competitive and take down on-market deals just yet. We have had some deal flow from some small off market opportunities but nothing consistent. I want to really contribute to our firms deal flow by improving this process.
For everyone with experience in this realm, what do you think is the best way to reach out and source off market opportunities? I really want to avoid coming off as spam want to reach out in a way that really moves the needle.
Any advice would help greatly.
Following.
The best way, easiest, most surefire way is by cold calling owners in volume, over a long period of time, and making sure to follow up with those who are higher probability leads.
This is the "marketing" part of real estate that people think is easy, but takes a lot of work. You can layer on SMS, email, and postcard marketing to get more touches. But basically, you need to talk to 100 people to get 5 leads, and you need 20 leads to get one deal. Unless you can define a more targeted approach.
I'll DM you though, I think I can help with a software solution I'm building as someone who spends all my day hunting for off-market properties and was frustrated with the other software out there for this workflow
Agreed, and to further this point, try and add-value however you can when you call. Nobody likes a "taker' attitude, and alot of brokers and prospectors use this approach when calling, so try your best to have something to offer when you call and then transition to inquiring about a specific property. We have a saying that goes "add value always in all ways"/
Every owner needs something or has some frustration going on in their life and if you can be a resource to help solve that, then the deals start flowing. Easier to do as a broker, but can very much be done on principal side as well (let them know about deal that might work for them but doesn't work for you, intros to lenders and other 3-party contractors they may need, etc)
Deals come out of nowhere all the time and if you aren't top of mind then you may never hear about it till it trades. Principal to Principal deals occur often, but only get done because both parties are familiar and trust each other enough. They need to feel like they aren't getting fleeced by either party and feel like the hassle and price premium of a listing process isn't worth it for the ease of transaction with a familiar party. That takes time, and it's called the "real-ationship" business for a reason.
Pretty much this - the guys sourcing regular off market deals are effectively in-house brokers and tend to be much more salesman or entrepreneurial types than finance guys (and usually have a team of analysts or a dedicated finance team to support them in that regard).
It's a constant grind of driving/browsing Google Maps, identifying good sites, databasing them, using research tools to identify the owners, calling the owners, hoping for the best, and occasionally getting a lead that 90% of the time will go nowhere. Definitely not for everyone.
Generally 95% of owners of good sites are getting calls from other investors all the time and will politely (or not so politely) tell you to fuck off. Of the remaining 5% probably 2% are not looking to sell or will only sell for an absurd price. Another 2% aren't selling today but are open to keeping in contact (ACTUALLY KEEP IN CONTACT on a reasonable basis based on the context they give you - if you never follow up they'll forget your name. This is where having a CRM like a regular old broker comes in handy). That leaves you a very, very small market of real sellers to work with in the near term.
Agreed. I do think those are overly optimistic numbers. Would imply over 200 deals if one makes 100 calls per working day.
Not OP, but curious about what software you're using if you wouldn't mind dming me as well.
At my firm, one time we had a piece of land we needed (one of a few that got combined) but the owner was stonewalling us. Apparently the MD on the deal offered him and his family box seats for the local NFL team to agree to a 30 minute call (before he wouldn’t speak to us). As the story goes by the end of the call he agreed to sell.
We made a lot of money on that deal, so seems like it was a good investment
Get lunch with a few young and hungry newly minted associates at your target market's brokerage shops. They want commissions too, spitball ideas with them and see if they have any ideas. Through this you'll find one or two hopefully that are sharp and eager to help you bird dog - they know the tricks on finding and reaching sellers, and having been in brokerage for their career, are better at it than I would be as an acq analyst. This keeps you on acq underwriting, etc. and gives bored brokers something to gnaw on - keeping the right talent focused on their talents.
As a side note, I'm also at a smaller multi REPE shop, and it's tough to beat out the low cost of capital buyers but the answer I found is dealflow. I helped build some tools that cut our underwriting time per deal in half which allows us to sift through nearly everything of interest on the market and let the winners surface. This isn't exactly what you're looking for and isn't quite as helpful in a slower market but right now I hear it's tough to convince anyone to sell - either they are distressed in some way, bought in the last year and a half and would be underwater on a sale, or see no reason to sell in a soft market when they can just hold the yield for a bit.
Your desire to contribute to your firms deal flow is respectable, good luck! If you'd like, I could send you info about a place where you could source your multifamily investments (sales and finance comps are integrated with listings) and a brokerage division that could finance your deals for no more than $16K (doesn't matter how large the deal size is and whether it's equity or debt). PM me if you're interested, I think it'd be a great resource for you.
Can you share with me too please?
For sure, please private message me
You can make cold calls like the neanderthals above or you can sign up for a ringless voicemail service and send 100,000 voicemails in a few hours programmatically at scale.
What’s the hit rate on those? Can you personalize all 100,000 of them to sound genuine and include the owners name, property and why you’re calling?
The point of cold calling is to get the owner on the phone and build a relationship with them in hopes of doing a deal.
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