21 Proven Ways to Find Off Market Apartment Buildings
There are many benefits to both you and an apartment owner for doing an off-market deal. And it’s important you know the reasons WHY it’s beneficial to the owner so you can negotiate with pure intentions since BOTH of you will benefit. This will greatly help your success rate.
Three ways the apt building owner (i.e. seller) benefits from doing an off-market deal:
1. Save money because there’s no commission to a broker. That can be between 2% – 6% of the purchase price. On a $5,000,000 property 4% is 200k worth of savings.
2. They get their money faster. Instead of having to wait for the broker to put together an Offer Memorandum which can take weeks (or months) to complete, they can simply share the financials and current rent roll with you. Once you look at that then you put it under contract, do your due diligence and close. By doing it this way they get paid faster. Not to mention all the time it takes AFTER the Offer Memorandum is created to do property tours, qualify buyers, etc.
3. It’s less hassle for them. There are no property tours with multiple people. There are no multiple question and answer sessions with prospective buyers. There are no random people poking around the property disturbing the tenants. There are no rumors around the apartment community that it’s being sold which could negatively affect tenant and/or vendor relationships.
Three ways you (i.e. buyer) benefit from doing an off-market deal:
1. Save money.
You’re not involved in an auction-type process where the broker is doing their job of finding the highest paying buyer who will close. Instead, you’re working directly with the owner and getting a fair price that isn’t artificially bid up from other buyers.
2. More creative financing opportunities.
By working directly with the owner you learn their pain points, goals with the transaction and what they ultimately want out of the deal. This can be used to structure something creative with them that meets their goals and yours.
3. Close faster.
Instead of having a broker relay messages, you are speaking directly to the owner which can help expedite the process.
By the way, we enjoy working with brokers and usually get a lot of value by working with them. However, off-market deals where brokers aren’t involved are the best deals to do because of the previously mentioned reasons.
Before we get into the tactics I also want to mention that there are only two ways for you to get an off- market deal.
1. You Talk to the Owner Directly
2. You Talk to Someone Who Knows the Owner (i.e. wholesaler, friend, electrician, etc.)
a. There would likely be some sort of compensation to the middle person
The ideal scenario is to talk to the owner directly every time but that’s not reality. Sometimes there are middle people who make the intro and they are very valuable because it could be a service professional who has a network of lots of owners they can refer you to.
Therefore, your tactics should target owners directly AND people who know owners. Some of the below tactics do a better job a targeting one over the other, however, you should make sure to do things that reach both.
Now that we’ve set the framework, let’s dig in.
Here are 21 PROVEN ways to find off-market apartment buildings:
1. SEO (Search Engine Optimization)
In order to do SEO you must have a website since you’re optimizing your rankings
When picking your keywords think like an owner thinks in your market. So instead of
“sell my apt building now” which isn’t a term an apt owner would likely put into a search bar, instead do keyword phrases like “increase my NOI.”
SEO is oddly neglected when it comes to apt building buying. There’s a bunch of people
doing it for single family homes but not apts. This is a huge opportunity!
2. Start a Meetup
Depending on your focus this can be targeting owners directly, people who know owners or both.
For example, you could create an Apartment Investing Meetup where you only focus on apt investing. Do this even if you own ZERO apts. Just invite owners to speak at the meeting. Mortgage brokers, insurance agents, lenders, appraisers, property managers, CPAs and attorneys would also love speaking at the event.
Respond to the “for rent” apt ads on Craigslist by asking the owner if they’d be interested in selling. Someone with an apt to rent is losing money on that apt at that moment in time so they might be motivated to unload the property.
5. Cold Calling
Pull a list of owners from listsource.com based on your acquisitions criteria and hit the phones.
6. Direct Mail
Good old direct mail is still a good way to find deals if you have your criteria, lists, and message optimized.
7. Drive by then Calling Owner
Many apartment owners we know have acquired deals via cold calling apartment buildings they’ve driven by and signs of distress.
8. Attorneys, Bankers and Mortgage Brokers
They know investors. They also want you to do more deals so they can do business with you.
9. Eviction Court
Go look up the court docket and see who is evicting their tenants. If you see a pattern you might find a very motivated landlord wanting to get rid of the headache.
9. Property Management Companies
They know where the skeletons are buried because they manage the good, bad and ugly.
They’ll know if an owner wants/needs to sell and if you build a relationship with them you might get introduced to a very good deal. Plus, they want your business so they can manage the property as well.
Caution: if you buy from a property management introduction, before going with that property management company you’ll want to double check that the reason the property is being sold isn’t because of the property management team’s errors.
10. Create a YouTube Channel
This is a way to reach a ton of people. But you know that already, right? Figured. Well…are YOU on YouTube posting videos at least weekly?? If not, why not?? If video isn’t your thing then don’t do this but if it is then this can be a great platform to build a relationship with people and get access to larger deals via introductions.
Consistency is key then improve quality over time. Plus, have a centralized theme (i.e.
Apt Investing, Raising Money, Finding Off-Market Deals, etc.)
11. Title Company
They could be a good referral source for equity too because they know the groups that are currently closing on apt communities.
They are good people to know. Even if you don’t get a deal from them you can ask them
about the deals you do come across.
15. Apartment Association Meetings
Lots of owners. Lots of professionals. Lots of opportunities. Just Google this for your local area. They tend to cost a couple hundred a year to join.
16. Real Estate Investing Meetings
You likely won’t find too many big-time apt owners but you will find a lot of people who are doing wholesaling and might be a bird dog for you.
17. Building Code Violations
Lookup code violations in your county. That tells you who is slacking on their maintenance and who might be needing to sell.
18. Delinquents on Taxes
If they aren’t paying taxes they have big trouble ahead…. Maybe you can step in and be a problem solver for them.
19. Start a Blog
Start a blog and interview the best multifamily professionals. They will be flattered you’re interviewing them and it will let you get to know the top people in the industry. Who, in turn, likely are apt owners or know apt owners.
Electricians, carpet installers, roofers, plumbers, HVAC professionals, pool repair people, lawn care professionals, etc. ANYONE who is involved in the apt building business. They are on the front lines of the business and are excellent people to know and talk to. Refer people to them first before asking them to do it for you.
21. Connecting with Local Connectors
Fitness trainers, residential real estate agents, insurance sales people, etc. Your local market is full of people who make it their business to connect with others. Why not meet THOSE connectors and leverage each other’s network?
For example, you could talk to a fitness trainer and tell her that you are focused on
buying apt communities. If she knows of anyone to please let you know. In return you can refer people to her – perhaps tenants of your building. It’s a win-win. Always look for the win-win and ALWAYS give them something first before asking for anything in return.
Ok, so you have 21 PROVEN ways to get off-market deals. What is your next step?
Create ONE THING for owners.
You MUST have a reason to talk to owners and build a relationship with them.
That can be a meetup, blog, YouTube channel, a fancy flier that solves a problem for them, etc.
Then focus on doing the distribution or promotion of that ONE THING.
For example, if you create an Apt Owner Meet-Up then focus on getting your first speaker, a venue space and attendees. You can do this even if you don’t have ANY experience.
Two other tips:
1. Whatever you pick, do it CONSISTENTLY
2. Evaluate after 6 months of doing it consistently. We live in an instant-gratification culture where people ignorantly expect to get immediate results. It doesn’t (usually) happen that way. It takes time. Consistent action. Constant improvement.
If it doesn’t work then tweak it or try another tactic. ALL of these tactics work BUT all of
them might not work for YOU because YOU have UNIQUE TALENTS and SKILLS. You’ve got to match up the tactic with what you’re uniquely good at doing. That might take some trial and error. It’s not about doing all these tactics. It’s about doing one incredibly well.
Now go take some action!