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.
| +51 | Leave brokerage to be GP | 12 | 4h | |
| +45 | New Comp Database - Google Form (Now with Data Validation) | 24 | 3h | |
| +24 | Seeking Career Guidance in Real Estate Development Post-Graduation | 3 | 1d | |
| +23 | Going out on your own | 4 | 7h | |
| +22 | REPE/Development GPA | 15 | 2d | |
| +21 | Real Estate = complicated + underpaid | 15 | 6h | |
| +17 | MSRE/MSRED with no RE experience; Naive to think I’ll land a job afterwards? | 4 | 4d | |
| +17 | Fisher Brothers | 6 | 7h | |
| +16 | UC Berkeley MRED vs Columbia MSRED? | 2 | 6d | |
| +15 | Spreads over SOFR/UST | 1 | 6h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
I call the owner, tell them what the purpose of my call is and ask if they’ll sell. If they say no, I at the very least ask if they’ll take a look at an offer. Rarely do I tread lightly, unless I find something during the course of my research that would warrant it.
Aspiring_billionaire is this a big part of your sourcing strategy and how successful has it been? Currently considering a role that would focus on deal sourcing with this strategy.
you might as well go work at m&m
Always dumbfounded by people who say they only buy deals off market. How the fuck do you source enough volume?
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.
When I was in brokerage we always had a short period where we would market in discreetly by reaching out to the ole rolodex.... would only accept an offer if it was at or very near what we were planning on listing it for anyways. So yeah I agree most of the times it really is just a good story line to make people feel like they got a bargain
agree with all that. We're a lean group and can close rn with all cash at some pretty high numbers so we have a pretty unique advantage right now in terms of searching for off market stuff. Especially given the times, and the distress associated. Thats why im curious for peeps strategies
Got a reference sheet the other day from a group i work with a lot and half the deals we did together were marked off-market.
What really happened? Told them it was a limited marketing process to friendlies because the seller would only let me take it to a small group for confidentiality concerns. Odds are most groups didn't see it, but far from off-market. I think off-market really means it didn't hit RCM.
They don't give a fuck - they just either don't want to compete, or are simply saying this as a value prop to equity to prove out they do more than just wait on OMs. The small time dudes saying it are just making up for lack of volume / inability to compete with the big swinging dicks.
l
Webinar: How I Closed a $275 million dollar deal with ProspectNow
I 've spoken to Ken - he's is arguably one of the most lethal people I've ever had to chance of being on the other end of the phone with. His awareness and attention to (subtle) detail on how to effectively communicate over a phone (depending on who you're talking to - i.e. mom and pop in the South, Institutional equity guy in NYC,etc.) is crazy. He's a killer. A true pro. And he's cashing the checks to prove it.
I know a couple of people that close 3-5 juicy off market deals per year by calling. Oddly enough they all work in the shadows and operate independently.
that’s dope thanks for sharing . yea idk why people act like off market deals are impossible to find. if you do the right research and work smart, they’re out there for the taking
I work for a company that tries to source deals almost exclusively off market. You are dealing with sellers who may or may not be motivated to sell, maybe they just want to get a sense of the value. They also are generally unpreparred to provide they information you need to adequately asses the asset. The conversion rate on calls/mailers or whatever is also increibly low.
I'm pretty sure most people are stretching the truth on "Off Market." I think they just tell clients that to make them think they are the only ones that could have gotten the deal done.
Best thing: Perform well for a broker who has a decent team. Tell him you'll cover any fees they can't get from the seller, any deal they don't know they'll get the listing - they'll try an offer with you first.
Once you see these opportunities - do something about them. Can't get a clean RR - make an educated guess and work in a clause that you need to see the numbers before the number is final. If the broker needs an offer regardless to try to get the listing, give it to them. They'll keep coming back with more.
As a broker, the easiest intro I can get is "ay bro this group wants your shit, let me get an offer to you". Even if you're off on pricing, i'll say i can do better if i list it.
well you explained exactly why that defeats the purpose. I don’t want you to use my soft offer as leverage with a potential seller in order to secure a listing, and then “do better” for them.
questions for everyone to opine on 1) do you do the actually cold calling or hire people? if you’re doing the calling is it because you don’t trust anyone else with the dialogue? is this the best case of your time and how much time in a day do you spend calling? I’m assuming you have other things in your plate to worry about?
2)how do you know what the property is worth with no financials (income and expenses) and story for the broker? do you know the value of the building before calling?
3)what software do you use for owner information when trying to find contact info?
4) what’s your pitch on the phone? how do you court an owner to just sell out of the blue? clearly if they thought of selling they would’ve done something by now no?
5)what’s the process of tying the actually property once there’s interest?
From an acquisitions perspective?
1) Probably you or a more junior person who works in Acquisitions.
2) You can estimate, i.e. rents are x in this area and based on what type of tenant it is (more mom and pop, etc).
3) Probably property shark/reonomy/CoStar all services you have to pay for.
4) Introduce yourself, explain who you are/you own x buildings and are looking to expand or you have a name in the industry. Say you're interested in buying it, would they sell and what at what number and would they share the RR, expenses, etc so you can put an offer together.
5) Informal offer that where owner is interested, LOI, Hard Contract (time for DD and closing could be 30 days for each, 45 for each, 30 days and 10 an structure it different ways) - line up financing for it during this time or can be an all cash offer.
Nihil itaque provident aut sunt et molestias. Id quo ut suscipit explicabo sed expedita sit. Aut consectetur nihil impedit nobis architecto dignissimos dolor officia.
Omnis quasi odit quibusdam sed deleniti. Reprehenderit laudantium non est blanditiis molestias quasi a. Sunt dicta sed inventore. Eos fuga odit excepturi minus similique consequuntur modi. Unde itaque laboriosam rerum consequatur vitae quo. At quasi hic qui officiis.
In et sed quia sit in voluptatum aperiam veniam. Alias accusantium repellendus aut modi asperiores. Temporibus dolore eligendi adipisci quis tempora laboriosam enim. Fuga eveniet neque tempore in quo velit.
Earum eveniet temporibus sed. Laudantium et velit adipisci quidem. Facere non molestiae aut perferendis vitae officiis cum repellendus. Earum asperiores modi porro deleniti voluptas. Laborum ex et recusandae perspiciatis ut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...