In today’s Syndication School episode, Theo Hicks shares 7 different ways to find off-market apartment deals through utilizing methods that allow you to be on your own personal coach.
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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: Hello, best ever listeners and welcome to another episode of The Syndication School series, a free resource focused on the how-to’s of apartment syndication. As always, I’m your host, Theo Hicks.
Each week, we air a podcast episode that focuses on a specific aspect of the apartment syndication investment strategy. For a lot of these episodes, we’ve given away free documents. Make sure you check those out, the free documents and the past Syndication School episodes, to help you along your journey, at http://syndicationschool.com/.
Today, we’re going to talk about off-market deals and more particularly how to use the internet and the variety of services on there to generate off-market apartment deals. There’s lots of ways to actually get off-market apartment deals tactically – so direct mailing, cold calling, you can text, you can put a bandit sign. But before you get to the point where you’re able to send out marketing information or calling owners, you need a list of owners first. In order to get a list of owners, you’re going to need to know what type of properties you want to target. That’s kind of the three steps to generating off-market deals is, what type of asset am I targeting? Who are those owners? How am I going to contact those owners?
Today, we’re talking about who are those owners and how do we get the information required to contact them. We’re going to talk about ways that you can do this online at home. I’ve broken these different strategies into three categories.
The first one is free, so these won’t cost you any money out of pocket, but there’s going to be a trade-off, whereas you’re either going to have to spend more time doing the strategy, or you’re not going to have a very targeted list.
The second category would be budget-friendly services or economical services. These cost money, but are a little bit less expensive than the third category. You should be buying lists one-off, maybe a subscription type deal, but it’s going to be a little bit less costly than the professional services. Not free, but you will be able to generate a more custom list.
The third category are going to be the professional services. These are the costliest, these are pretty expensive and runs into the $10,000 plus per year, but they’re very robust. Because not only can you create the most customized, hyper-targeted lists, but you’ll also have access to other services to help you grow your apartment investing business. We’ll talk about those when we get to that section.
Let’s start off with these free services, the ones that are probably the most interesting, most unique, whereas the other ones are kind of just, “Hey, you go to the website, click a few buttons and then you’ll get a list.” But if you don’t want to do that, it could be you don’t have the money and you want to have maybe other advantages, then you can use these free services. But the first one being a LoopNet. Yes, you can find off-market deals on LoopNet, even though LoopNet is a place where brokers will actually list their on-market deals. But since there are brokers actively on this site, the strategy here is to get in front of those brokers in order to get their deals before they’re listed on LoopNet.
To do this, you’re first going to want to compile a list of brokers who are on LoopNet. LoopNet has a ‘find a broker’ search function, pretty easy to find. You can type in your location and the type of property you’re looking at, multifamily, hit Search. The results will be all the brokers in that market who have a LoopNet profile that service multifamily, with their phone number and their email.
Then the next step is to make a first point of contact, either through email or through phone, introducing yourself to the brokers, providing relevant details on your background, why they should work with you, express interest in the fact that you’re looking to buy apartments, and then tell them, “Hey, here’s my investment criteria. Do you have anything?” If they say no, which they probably will say, or maybe they’ll direct you to some their on-market listings, say “Okay, well, thanks, I’ll take a look at those. And then I will follow back up in two weeks to see if you’ve got any new deals on the horizon.”
That’s the first point of contact. And then again, every two weeks, you will follow up with that broker. You can use a standard template where you say the same thing every single time, where you remind the broker who you are, “Hey, it’s Theo, we spoke two weeks ago. I told you, I’m looking for 150 plus unit Class B in this market.” You want to provide each time you contact them a piece of evidence that shows them that you are getting either closer to the ability to close or might have to have the ability to close.
For example, we got this strategy from an interview guest, Antoine Martell, and what he would do is he would say, “Hey, I just refinanced on a property and I’ve got x amount of dollars that I need to put to work,” or “Hey, here’s a screenshot of my bank statement with a million dollars that I can put to work,” right? Something like that, that shows that you’re making effort towards actually being able to close on a deal, as opposed to just saying, “Hey, I’m looking for a deal, what do you got?” Let them know, “Hey, I’m able to close.” This strategy certainly took a little bit of time, but you get an off-market lead.
What are the benefits of this LoopNet strategy? The first one – it’s free, as I mentioned. Secondly, that once you’ve created your list of brokers, the time commitment, surprisingly, is actually minimal… Because you’re using a template that you’re sending to the same brokers each week. The only difference is that last sentence. Once you’ve got your template, you’ll go to your computer, you’ll type in your last sentence, you’ll insert your screenshot and you’ll send your email to 20-30 brokers. Pretty quick.
Third would be that you know, right off the bat, that if you get a lead, the seller is already interested in selling. This is the only strategy that you know the seller is interested in selling if you receive that lead, because the broker wouldn’t be in contact with an owner who’s not interested in selling. You kind of skip that step of having to negotiate or convince them to sell.
Lastly, and maybe most importantly about this strategy, is the relationships you’re building with brokers. Eventually, you won’t have to even follow up with them, and they’ll just naturally send you the off-market deal. This has the opportunity to be the most hands-off strategy, even though it’s free. But the drawback, as I mentioned earlier, with a free list, is the lack of precision. You really don’t have any control over the types of deals the broker sends you. Sure, you can say, “I’m looking for 150-unit deals, Class B, in a certain market,” but they might send you all their off-market deals; they might not have any deals for you for a while. Whereas with the other strategies, you can target all the properties that meet your investment criteria.
And then of course, the strategy might take some time to work out, since you aren’t targeting people personally and you’re kind of waiting for the broker. It might take a little bit longer to find a deal that meets your investment criteria.
For Antoine, he followed this strategy for nine months before buying his first deal. But who knows, maybe it happens right away. But I think that this strategy is so fast and free… Everyone should be doing this if they want to find off-market apartment deals.
Something similar to this LoopNet strategy would just be going to commercial real estate brokerage websites instead. So rather than creating your list on LoopNet, or in addition to creating your list on LoopNet, you can search for the top commercial real estate brokerages in your market, and then reach out to them directly following the same strategy. “Here’s who I am, here’s what I’ve done, here’s what I can do, here’s what I want to do, do you have anything for me?” And then every two weeks following up. Just an extra way to build the list, just in case certain brokers aren’t on LoopNet.
From my experience doing this strategy, it seems like the smaller guys are harder to find by doing a Google search. That’s where LoopNet comes into play. But then the bigger guys, they are pretty easy to find. If you just Google commercial real estate brokerages in Chicago, you’re going to get thousands of search results and as you go down the list, open up a new tab, and then find that email address, find that phone number of the relevant contact.
The last free strategy is going to be the county auditor sites. All counties will have an auditor or sometimes it’s called an appraisal office. Most of these counties will actually have an online version of this; some sort of website you can go to access auditor or appraisal information. On these websites, there’s information on every piece of real estate in that county. Most of these—I haven’t come across one that’s not free. But most of them are free to access. You don’t need to pay any money to actually access the website. There might be potentially fees to access certain lists, but I haven’t come across that yet.
At the very least, every auditor site should have a property search function where you can input some level of information and then output a list of properties. Depending on the county, they might also have an advanced search function, which is ideal, because then you can target rather than a street or a specific neighborhood, you can target a street or a neighborhood or a school district or property type which you want to get to. If you need to get to property types, you can filter out all of the non-apartments. Usually, they’re going to have some filters; ideally, they have that property type filter.
Now, in addition to this property search function and advanced property search function, you might be able to skip all that and go straight to a pre-created list. Sometimes, the auditor will just have a list they update maybe every month or every few months, of all the properties with delinquent taxes, all the properties that are in pre-foreclosure, going into foreclosure, recent sales, things like that. But these lists aren’t super-easy to find, even if they are on there, and it will vary from county to county, which is one of the drawbacks we’ll get into in a second.
Now, how quickly you can get the info, either through pre-created a list or through a custom search — but how do you actually get the data? Well, obviously, if it’s just the list, you can just download that list. Ideally, they have a list specific to what you want. But the next best thing would beto have an easily downloadable list of all the properties in the market. This might be like a tax information list, where you can download a list of every single property in that market, and then you can just filter in Excel to pull out only the properties that you want to target.
Whereas in other counties, you’re not going to be able to download a super-detailed list. If this is the case then, this is where it gets really time intensive, because you need to manually input the data for every single property. If you’re in a smaller market, this might take you a week to do, but if you’re in a bigger market, and you don’t have the ability to download a list, then I would forego this strategy, because you’re going to be manually typing in property address, owner name, owner address, property value, and all the relevant information for a parcel, and you’ve gotta click ‘Next’ to the next parcel, and next to the next parcel, for 1000 entries, right? You’re not going to do that. But if they have an easy way to access and download the list, then this is a great way to generate a list, because it’s free, and it’s based off of all public information.
Now, obviously, there’s a few drawbacks of this strategy. The first one – I’ve already hinted at it… It’s that since each auditor site is going to be created and managed by the county, no two websites are the same. You’re going to have to kind of mess around on the site to figure out what it can and cannot do. Which means that the way you access a list is going to vary from county to county. Some counties might have these pre-created lists, some might have that full tax information list, some might have advanced searches, other ones might not. It kind of just depends.
Another drawback is you can’t really be super targeted here. Usually, you’ll be able to maybe filter based off of the number of units, but you’re not going to get the exact number of units. It could be five to 20 units, and then 21 to 40 units, and then 41 to 100 units, and 100 units plus. Or maybe you can filter based off of where the owner lives or something… But there’s not a lot of flexibility in targeting people, like some of the other services. But also since you’re looking at apartments that are usually owned by LLCs, they’re not going to even have the actual owners info on your list. They’re going to have some LLC information, which means you’re going to need to skip trace in order to identify the correct owner and their contact information. And then of course, unlike LoopNet, there’s no guarantee that anyone you mail to is even going to be interested in selling their deals.
The last note on this point is that if you are navigating the auditor site website and are having trouble finding a list, or the property search function, there’s usually an email address for the webmaster or some sort of assistant that you can email to ask them for help. I know for Cincinnati, you can get temporary login information to get like a back end access to their systems, so you can download a little bit better lists, faster. But overall, it’s not going to be very detailed.
Now, the next one that everyone’s heard about is going to be Listsource. Listsource pulls data from the public records. But rather than you having to do it manually, they have a software where you can input filters and then it’ll pull all properties that meet that criteria. This is geography, mortgage status, property information, demographics, foreclosure and other options, or they have some quick lists, like absentee owners, a list that tells you how much equity people have in their property, foreclosures.
What’s nice about Listsource is that you can access their build list function for free. So you can see what filters are available, you can see based off of the filters you’re looking at how many properties there are in that market… And then to actually get the list you need to pay money.
One of the drawbacks of Listsource is going to be similar to the county auditor, which is that you’re going to get a lot of LLC names and not the actual owners, so you’re going to have to do some sort of skip trace. The manual way would be to go to the secretary of state website and hope that the LLC of the properties incorporated in the states that the property is located in, and then you can find the contact information that way, or you can use a paid service like TLO, American Tracers, IDI, Delvepoint and Skip Genie to skip data. But Listsource – you type in your filters and then it’ll generate a list for you. And then you’ll skip through that list to get the contact owners information.
The second budget-friendly service is PropStream. PropStream is kind of in-between Listsource, and then the two bells and whistles full-service professional ones that we’ll talk about next… Because it seems like it pulls in the same public information that Listsource does, but the way you search is going to be different. In PropStream, it gives you a dashboard, a map you’d see on like apartments.com or Zillow, and you can type in your geography and then it filters that way and then it’ll output a map with all the properties on the map, and then a list would be on the right.
PropStream also has built-in a skip tracing capabilities for a fee. You can append the LLCs owner information to your list, without having to do that somewhere else. But unlike ListSource, you can’t really access anything on PropStream without paying. You can watch some videos, but you can’t actually go in there and mess around with the software or mess around the filters without actually buying the subscription. It’s similar to Listsource and the county auditor’s site; no guarantee that any of these people are going to be interested in selling, but you can create very targeted lists.
The last two are going to be the professional services, and this is CoStar and Yardi Matrix, which are essentially the exact same, with some minor differences. But they both have a similar map function as the PropStream, but way more detailed and way more robust; free skip tracing, so it’s going to automatically have the owner’s contact information. The reason why they have more info is because they pull from public records, but also have in-house research teams that are working full-time finding data on these properties.
So all the filters you can possibly think of will be on CoStar and Yardi Matrix. And also, you’re going to get a lot of extra tools for these; tools and services. The lists are going to be way more detailed, you’re going to have way more information on the property. There’s built-in sales and rent comp data, there’s market data and KPIs, there’s historical performance of the property… So once you actually find a property, there’s a lot of information on there that you can actually start your underwriting process, you can generate market reports to include in your investment summaries, lots of bells and whistles. The only difference between Yardi Matrix and CoStar is that Yardi Matrix has a little bit better sales and loan data, which means that their sales and mortgage ready filters are going to be better than CoStar’s.
And really, the major drawback is just going to be the cost. That’s really it. The cost of these. But if cost is not an issue, then these are the best ways to create your list.
So there you have it. Those are the seven ways. I kind of focused on the earlier free ones, because I think those are the most interesting, whereas the other ones are more like you buy it, you input information, and you get your list pretty easily.
If you want links to all these and more information on the people who use these strategies, we have a blog post called Seven Free and Paid Online Services to Generate Off Market Apartment Deals on our website. Make sure to check it out on our blog.
That’s all I have for today. Thank you for tuning in. Make sure you check out some of the other Syndication School episodes and download the free documents at http://syndicationschool.com/. Thank you for listening. Have a best ever day and we’ll talk to you tomorrow.
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