Sourcing My First Deal (Personal Investment)
Hello WSO,
I have some questions in regards to getting started on my first real estate investment. Basically, my goal would be to purchase a property and syndicate the capital stack so that I can leverage investor capital (and debt) to achieve the greatest return on my investment. I have some of my own money saved up (about $250k) and believe if I get the right deal I can get investors to pitch in capital as well (could potentially raise 1-2mil, maybe more). My main question is where can I find the best opportunities? I have looked allover loopnet and costar before and most of what I have found is crap that it seems like no one wants. Should I reach out to brokers and let them know I am a prospective buyer? Should I canvas areas of my town and call owners of properties I would want to purchase? Where do I go from there? My primary interest would be to purchase either multifamily or warehouse/flex-space. I am interested in long-term holds as well as fix & flip deals.
I appreciate any suggestions!
The listings are replete with opportunity if you look at each property listed as a blank canvass of opportunity. For example, that crappy, rundown motel that no one is interested in could be a nicely renovated no-flag extended stay hotel, or that crappy office building could be a public school for a land-constrained county, or that insanely small, un-usable lot could be a highly profitable home build if you can convince the county or city to grant you variances.
Great point. I guess I should analyze these listings from a more objective point of view in an effort to determine the true HBU. If I can repurpose an old vacant property into a new asset type and add value in the process, I could make a legitimate return. My concern would be seeing how this is my first deal, this would probably be more risky than something along the lines of rehabbing an old property and giving it a "face lift" in order to make it leasable or to increase current lease rates. But, it seems like you kind of touch on both ideas. Thanks again for the response!
I don't have the answer here, but I've asked the same question a few times. I'm often told "it depends who you know." Which I think is true - if you can get something before it goes on loopnet or finds its way to a cre broker.
Also, foreclosure auctions. I've only dabbled, but there are opportunities, especially if you have a vision for how to reposition a property.
I agree that it definitely helps when you know people in the market. I have seen opportunities from friends/acquaintances within my market that have typically appeared more promising than the junk on loopnet and broker blasts. I am hoping that by networking and speaking to as many people as possible, I might come across a legitimate opportunity that hasn't quite made its way to the market yet.
It's 2018 bro, start those on-market searches on Crexi and leave Loopnet to Joe Broker selling the "Unprecedented Barbershop Opportunity - Dominant Rust Belt Franchisee" in Youngstown.
I’m often told the best way to find good deals for straight forward facelift apartment renos is to canvas neighborhoods for potential absentee owners with some deferred capex built up and contact them directly. I have to imagine the success rate of this is maybe 1% and don’t know anybody who’s really pulled it off. Would love to hear some detailed success stories.
I know people that do this. Its not as successful as you think and to find that one good deal may take months or years. When you go straight to an owner asking to buy their property, the owner is not going to give you a deal, because you went to them. Very rarely will one actually sell and at a reasonable price. I am sure you can get many of them to sell to you, but the price may not be the best.
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