February 7, 2019

JF1619: How To Find Your First Apartment Syndication Deal Part 4 of 6 | Syndication School with Theo Hicks

Part 4: 9 More Ways to Find Off-Market Deals

Don’t need much description and intro here. We’re continuing last episode’s focus on finding off market deals. Let’s get to it! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Joe Fairless: There needed to be a resource on apartment syndication that not only talked about each aspect of the syndication process, but how to actually do each of the things, and go into it in detail… And we thought “Hey, why not make it free, too?” That’s why we launched Syndication School.

Theo Hicks will go through a particular aspect of apartment syndication on today’s episode, and get into the details of how to do that particular thing. Enjoy this episode, and for more on apartment syndication and how to do things, go to apartmentsyndication.com, or to learn more about the Apartment Syndication School, go to syndicationschool.com, so you can listen to all the previous episodes.


Theo Hicks: Hi, Best Ever listeners. Welcome back to another episode of the Syndication School series –  a free resource focused on the how-to’s of apartment syndications. As always, I am your host, Theo Hicks.

Each week we air a two-part podcast series about a specific aspect of the apartment syndication investment strategy, and for the majority of the series – in fact all of the series – at some point, we offer a document or a spreadsheet for you to download for free. For this series we’ll most likely be offering the free document in the last part, to bring everything together… But all of these free documents, for past and future Syndication School series, as well as the actual episodes, can be found at syndicationschool.com.

This episode is going to be part four of what will be either a six or an eight-part series, entitled “How to find your first apartment deal.” If you haven’t already, I recommend listening to parts one through three, just to catch up to where we’re at now.

In part one we talked about the difference between the two main types of apartment deals – an on market and an off-market deal – as well as the overall factors that will ultimately win or lose you a deal, so kind of things to think about when you’re underwriting and reviewing deals and submitting offers.

Then in part two we talked about how to find deals from commercial real estate brokers – those are on market deals through them, as well as working on building up a relationship with them, to the point where they’re comfortable sending you their off-market opportunities. Then yesterday in part three we began to talk about how to find off-market deals, and the focus of that episode was on one of the main ways to find off-market deals, and that’s going to be a direct mailing campaign.

Again, check out those three episodes, either in the podcast, or you can go to SyndicationSchool.com and click on the links for each of those episodes. In this episode we’re going to finish off the list of ten ways to find off-market deals by going over nine more ways to find off-market deals. We’re not gonna go as in-depth into each of these strategies as direct mail, but again, these are proven ways that you can find off-market deals.

Number one is direct mail, number two is going to be cold calling. Essentially, this is gonna be the exact same as direct mail, but instead of sending out a mailer to your list, you’re going to actually call the owner of that property. So you’re gonna create of list the same way as a direct mailing campaign, you’re going to find motivated sellers the same way as you would for a direct mailing campaign, but rather than making a message and sending out a letter in the mail to the owner, you’re gonna wanna get your hands on the actual phone number and give them a call.

How you find their phone number is going to vary from city to city, state to state, county to county, but you can most likely find the owner’s phone number on either the auditor or appraisal site, or using a service like ListSource or CoStar. If you’re having trouble finding the owner’s phone number, you can do some skip-tracing, find the numbers of someone of a certain address…

So there are different ways to actually find the phone number, but what’s more important is what you actually say once you’ve given them a call. You will want to use a similar script to the one you use when you’re screening incoming calls for direct mail. But obviously, you’re not gonna be referencing a letter, so rather than saying, “Thank you for responding to my letter”, you’re going to just mention that you’re interested in buying their property and giving them a little bit of background about yourself, so that they know that — again, there’s two main things you wanna get across… One is “I’m interested in buying a property” and two, I’m experienced enough to actually close on the deal.” Then based on what they say – again, follow the same way you would screen incoming calls for direct mail.

So if they’re mad at you for calling them, then take them off your list. If they’re nice, but don’t wanna sell at the time, figure out why they don’t wanna sell, and then send them a follow-up letter and tell them “Hey, thanks for the phone call. I’m gonna follow back up in three months”, and then again, call them every three months until either they sell you their deal, or they give you some sort of referral to someone else who wants to sell a deal. If they are interested, then find out a little bit more about the property, again, following the same strategy as you would for the direct mailing campaign.

Now, this is kind of like strategy two, but instead of actually cold calling, something you can do instead is to actually text to the owner. Joe interviewed someone on the podcast named James Kandasamy, and he actually closed on two apartment deals by sending a cold text to the owner. All his text said was “Hi, I’m a prominent investor in X market. I saw your property at ABC Main Street, and I’m interested in buying it. You can sell it directly to me, without any broker’s commission. Would you like to talk further?”

Then the strategy for how to respond based off what they say – to learn more about the cold texting strategy, as well as the cold calling strategy, I recommend checking out episode 1273, where James Kandasamy talks about his cold texting and cold calling strategies. So that’s number two, rather than direct-mailing, follow the same approach as a direct mailing campaign, but don’t send out a mailer; call them or text them instead.

The third way to find off-market deals is gonna be through your team members. So I’ve already mentioned that the real estate broker is out there grinding for deals, and typically they will list them on the market to maximize that sales price, but if you build strong enough a relationship with them, they might send you those deals first, before they’re listed on the market… But your real estate broker is not gonna be the only people that you can actually find opportunities through, because remember, the ways to find off-market deals are talk to owners directly or talk to people who know owners, and your real estate broker, your property management company, your mentor, your mortgage broker, maybe even your attorney and your CPA are working with apartment investors, and they are going to know who’s interested in selling. And again, if you build a strong enough relationship with them, then they might be willing to give you some inside information on who is selling.

Again, not all of them are gonna do this, and some of them might not do it for ethical reasons, but if you work with your property management company and they manage properties from 40 different investors, at some point one of those investors are gonna sell. And if you are consistently in front of your property management company and asking them questions about “Hey, do you know anyone who’s selling any properties?”, then hopefully you’re the first person they come to with an opportunity. So that’s number three, your actual team members who actually know owners of apartment communities, and will know when they’re ready to sell.

Number four is going to be through your thought leadership platform. The thought leadership platform keeps coming back up, which is why it’s vital that you have one. Again, this is going to be your interview-based podcast or YouTube channel, and through that you’re going to be essentially building relationships with various real estate professionals who may know owners who are interested in selling their property, so they might bring you some deals.

Also, the people listening to your podcast, which is an even greater number – or watching your YouTube channel, or reading your blog… They might also themselves or know someone who is interested in selling an apartment deal that meets your investment criteria.

Same with your meetup group. Again, you’re actually meeting with these people in person, so the attendees and the speakers are active real estate investors; they may be apartment investors who are looking to sell a deal at some point, or they may know someone who’s looking to sell a deal at some point.

So the thought leadership platform – you’re reaching out to owners directly, as well as people who know owners directly. And for all these strategies, besides the cold calling and anything that you’re kind of directly speaking with an owner, they’re gonna take time. You’re not gonna talk to a real estate broker tomorrow and then have them send you off-market deals. You’re not gonna start a podcast tomorrow and have a listener call up and send you an off-market deal. It’s possible, but it’s highly unlikely, and if that’s your expectation, you’re just gonna be disappointed.

So these are gonna be long-term strategies to build up that lead pipeline, which is why you wanna do a combination of these things. You wanna be talking to brokers to get on market deals, sending out direct mailing campaigns, cold texting, building relations with your team members, working on that thought leadership platform, and the other strategies that I’m gonna go over here in a second.

Moving on, with that out of the way, number five is going to be to actually For Rent ads. This may be a little bit easier for smaller multifamilies, but I don’t see why it wouldn’t work for larger multifamily as well. So you wanna go to a website like Craigslist or Zillow, or Apartments.com, or when you’re driving through your market looking at For Rent signs… And when you see a For Rent sign, call that person up and see if they’re interested in selling. You’ll either speak directly with the owner, or a property management company. If  you think about it, if they’re listing a unit for rent, that means that they have a vacant unit, and that right there is a potential pain point for them. Maybe that unit has been vacant for multiple months, maybe it’s been vacant for half a year, or maybe they keep finding tenants and then the applications fail, or they move in and they skip out after a couple months… And for every 100 different listings on there, maybe one person is going through a hard situation renting that unit, and you find them at that perfect moment when they’re interested enough to talk to you about selling their property.

So for this one it’s kind of like a numbers age… The majority of the people that you call are not gonna have any interest at all in selling, at which point you follow up and build a relationship with them. If you do find that needle in the haystack who is interested in selling their property, this is essentially a free marketing strategy – it just takes some time to make the phone calls  – then your ROI is gonna be crazy high, finding that one deal by calling a For Rent ad.

Number six is going to be title companies. Again, title companies are closing on deals constantly, so they know who is buying deals… So since they’re closing on these deals and they know who is buying deals, then they may also know who’s also selling deals, and who’s interested and ready to sell a deal. So if you build a relationship with a local title company, you may have a head start on some of the deal before they hit the market.

On a related note, title companies can also be a pretty good referral source for finding investor capital, because they are constantly working with groups that are closing on apartment communities. If you find a great deal, then maybe that group will invest in your deal.

Again, don’t expect every title company to send you this in general, and definitely don’t expect them to send it to you right away. It’s all about building that relationship, and then over time you tell them your intentions to buy and raise money, and hopefully they hear that and provide you with referrals.

Number seven are going to be apartment association meetings, or really any meetup group in your area that’s not yours. So go online and find and join your local apartment association specifically. That’ll cost maybe a few hundred dollars  a year to join, but if you think about it, if you find one deal from that meeting, then the profits from that deal far outweigh any couple hundred dollars you’ve spent on membership fees. But while there, network like you would anywhere else, with active investors in your market. Tell the types of deals that you’re looking for, and where you’re investing. And about your team, and all the money that you’ve raised. Of course, people are actually gonna actively bring deals there to sell to people. Those investment opportunities that people are bring there, but also ones that are below the surface – maybe an owner is kind of interested in selling, but doesn’t really know he is until he’s talked to you and kind of got excited about selling you their property, or even down the line, someone you met reaches back out and says “Hey, I remember you were talking about properties in my market. I’m ready to sell mine, are you interested?”

So putting yourself out there and letting people at these meetings know what your intentions are, and eventually someone will reach out with a deal. And if not, you’ll obviously find some sort of value by attending these meetings – some other referrals, some piece of education or investment strategy you didn’t think about.

Alright, number eight are going to be vendors. This is a creative, interesting strategy, but again, the way you find off-market deals are either through talking to owners directly, or people who know owners… And how knows owners better than the vendors that are working at that property? These are the electricians, the carpet installers, the roofers, the plumbers, the HVAC professionals, or the pool repair people, the pool cleaning people, the lawn care people, the general contracts – really, anyone who’s involved with servicing an apartment. Since they’re servicing the apartment, they are going to know a) if the owner is interested in selling, obviously; they’re gonna hear complaints from tenants about maybe the owner or the property’s condition, or they’re gonna know overall the property is being neglected, which are all signs of a potential motivated seller.

Now, you don’t want to just start calling up your local electrician and your local carpet installers and start telling them that you’re an investor and that if they see any properties that are neglected to give you a call, because they’re not really incentivized to do that. So what would be better is to either hire them, or to do this strategy with people who are already working at your buildings. So it’s a little bit harder to use if you don’t own a building yet, but essentially maybe you need some electrical done, so you hire an electrician, and you’re sort of asking them, “Hey, do you work on other properties in the area?” He’s like, “Oh yeah, I was just over at ABC Apartments the other day, and I had contact with BEF Apartments…” Then at a point you can ask them, “Did you see any  properties that seem to be neglected?”, or kind of walk them through what types of properties indicate a motivated seller, and ask them to just send you a text with the address. Heck, you can even offer them some sort of finder’s fee, or bird-dogging fee for finding that deal for you if you end up closing on it. But again, don’t just hit up all of the local lawn care professionals and ask them to send you addresses. You wanna add value to their lives first, and the best way to do that is just to use their services, even if it’s for your residential home.

Number nine, and we’ve talked about this multiple times on this Syndication School before, and that’s Bigger Pockets. Of course, you can just post to the Bigger Pockets marketplace if you have a Pro membership, with your intention to buy a property, but more indirectly — as I said, post valuable content to the forums and the member blogs. In your signature, have a link to your website or a landing page of some sort if your main goal of using Bigger Pockets is to find deals, and then in your biography state the types of deals you’re looking for. Say “If you have any deals that meet these investment criteria, please go to this website, or feel free to reach out.” But if you just do that, no one’s ever really gonna go to your profile, so the whole idea is to post valuable content to the forums and member blogs;  people are grateful for you adding value to their business, they click on your profile or send you a direct message, and you build a relationship from there.

Once you let them know what types of deals you’re looking for, again, maybe one out of ten or one out of fifty people say “Hey, I’ve got this relationship with this owner who I know is interested in selling a property.” Or “Hey, I know this broker who sends me off-market deals all the time. If I don’t buy one, I’ll send it to you.” Again, putting yourself out there, letting people know your intentions to buy, displaying your expertise and your ability to actually close, and seeing what happens.

And then strategy number ten, which is kind of similar to strategy number eight – network with local connectors. These are people that aren’t necessarily real estate mentors or professionals, but they still are people who come in contact with a lot of variety of people every single day. These are gonna be your fitness trainers, your residential real estate agents, your insurance salespeople, your restaurant owners, hairstylists, barbers, teachers, mailmen… Really anyone in your local community who has a job that has them come in contact with lots of people on a daily basis.

Talk to them, strike up a conversation, let them know about your intention to purchase apartment communities, and essentially have them be your bird dogs. Tell them “Hey, if you  come across a property that…”, and lay out exactly what indicates a motivated seller. “If you find this type of property, send me a text with the address. If I end up closing on that deal, I will give you $500 or $1,000.”

So those are the nine other ways to find off-market deals. Just to reiterate again, the concept of the majority of these, besides obviously calling the For Rent ads, or the cold calling, cold texting and direct mailing, because those ones are more in your face, you’re talking directly to the owners – the other seven strategies are more of you talking to people who know owners… So they’re gonna be a little slower, you’re gonna have a little bit lower conversion rate, but ultimately if you focus on all ten of these – which is possible, because most of these are actually gonna be free, and most of them you’re already doing anyways for other reasons – over time you’ll start to build relationships with a ton of different people who know apartment owners. And you might only get a handful of deals through these sources, or you might get every single deal in the future from these sources. You don’t really know until you try it out.

Just to go over these ten again:

1) Direct mail

2) Cold calling/Cold texting

3) Through your team members

4) Through your thought leadership platform

5) By calling For Rent ads

6) Building relationships with title companies

7) Attending apartment association meetings

8) Finding deals through vendors

9) Finding deals through Bigger Pockets

10) Network with local connectors.

That concludes part four. To listen to part one through part three, as well as the other Syndication School series about the how-to’s of apartment syndications, visit SyndicationSchool.com. We’ll be back next week to continue this series, and we are going to go over some creative strategies, more in-depth, similar to how in-depth we went on the direct mailing campaign strategy, for  how to find deals in a hot market, for example.

Again, these ten that I went over today are more — not necessarily high-level, but I wanna go over some case studies of how investors have actually found off-market deals, just so you know that these strategies aren’t just theoretical; these are proven strategies, that have worked in the past to find off-market deals, and will continue to work in the future as long as you stay consistent with the strategies.

Thank you for listening and I will talk to you next week on Syndication School, as well as tomorrow on Follow Along Friday.

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