March 13, 2022

JF2749: Broker’s 4 Invaluable Tips for Finding Multifamily Deals ft. Beau Beery

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What’s the best way to find multifamily deals? According to Beau Beery, it’s having a good relationship with a broker! As a multifamily broker, Beau reveals how high-net-worth investors find and make deals, how they increase the probability of making more deals, and what you can learn from their strategies to scale your portfolio.

Beau Beery | Real Estate Background 

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Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I’m Slocomb Reed and I’m here with Beau Beery. Beau is joining us from Gainesville, Florida. He’s a multifamily broker specializing in conventional and student housing over 10 units in the northern half of Florida. He’s also the author of the book Multifamily Investors Who Dominate. Beau, can you start us off with a little more about your background and what you’re currently focused on?

Beau Beery: Yeah, sure, no problem. I went to the University of Florida back in the late ’90s, got a marketing degree, went to work for Trammell Crow Residential, which was the leading apartment developer in the country at the time. I was doing on-site leasing and sales, I got to understand the multifamily business from the ground floor, which is really, really awesome. I had great upline, and had great coaches. I went back and did a master’s degree in real estate at the University of Florida, which is currently the number one program in the country, graduate real estate program. Then I went and worked for a development group that mostly developed, owned, and managed office, retail, industrial, and multifamily. I brokered and managed the portfolio, I did that for 10 years.

Then I started to think, “Well shoot, I’m pretty good at this. What if I did this for 10 people? What if I did this for 20 people? What if I did this for 30 people?” The brokerage world was calling at me. So in 2010, I acquired a Coldwell Banker Commercial Franchise with some partners, and we just blew up, it was awesome. I did only multifamily brokerage while my partners ran the company. I was number one in the state of Florida almost every year for Coldwell Banker Commercial, and I was in the top three in the nation in all 40 countries for almost all of those years as well. I just sold that company to my partners last year, and now I just have my own boutique multifamily brokerage firm called Beau Beery Multifamily Advisors. I broker anything over 10 units, market rate, or student housing in the Northern half of Florida. That’s my story, brother.

Slocomb Reed: Nice. When did you buy the Coldwell Banker Franchise? How long have you been brokering multifamily?

Beau Beery: That was 2010 when I acquired the franchise; it was me and three other partners. We also had a Coldwell Banker Franchise, so we had about 90 residential agents. My partner’s ran that firm, and then we had about 12 or 15 commercial agents, and I ran that part of it. But I did nothing but brokerage for my side; I just brokered multifamily assets.

Slocomb Reed: 2010 is an interesting time to get into brokering multifamily…

Beau Beery: Yeah, man, for sure. Actually, it was interesting to just be alive in brokerage, period. When I acquired that company with the partners, we had a very limited number of months of reserves left; after 100 years of that business being in business, it was about to go under. Everybody was, everyone in brokerage; everyone in the market was struggling, they were barely surviving. We came on, and I mean within a few months, we just started killing it. When I came from working for one person to brokering for others, I had built a name for myself 10 years prior. So day one, when I acquired the Coldwell Banker Commercial, everybody who had been following me for 10 years was blowing up my phone for that first 30 days, and we must have racked up three or four dozen listings. I was the number one agent in the entire market year one, and then it took off from there. It was just a great story, it was good timing, and then I exited at a good time.

Slocomb Reed: Yeah, 2010 was a great time to get listings.

Beau Beery: Yeah, for sure. There were plenty of listings. It was finding the buyers man, that was the key. Now there’s that’s plenty of buyers and no listings. [laughs]

Slocomb Reed: Yeah. So you had 10 years’ experience before acquiring the commercial brokerage with Coldwell Banker in 2010. Fast-forward another 10 years for me Beau, 2020. The market’s been completely turned on its head. It usually turns on its head faster than every 10 years, but even prior to COVID, we were in a market where it was very difficult to find sellers and it felt like everyone was a buyer. I know in my conversations with commercial brokers, their buyers list has four or five digits, and that’s just the people who are getting the emails when they take a listing. So what is it that you’re doing now to get in front of listing opportunities to be on the listing, the selling side of multifamily deals?

Beau Beery: Yeah, I take a very digital approach to how I get my listings. It’s a system that I’ve been creating for years and years, and it’s an algorithm. I use a CRM called RealNex, realnex.com. What I did was, about 15-16 years ago, I exported every single apartment complex that exists in the Northern half of Florida, anything that was over 10 units. I exported from the property appraiser websites. Property appraiser websites are the only source of data that is accurate. All these other subscription-based websites that people subscribe to, they are not 100% accurate. They all get their information from property appraisers.

Slocomb Reed: Beau, I want to make sure we’re on the same page here. When you say property appraiser websites, are you talking about…

Beau Beery: Tax assessors.

Slocomb Reed: Yes, so you’re talking about local or regional government authority public records.

Beau Beery: That’s correct. County tax collectors are the only human beings, or the only websites, the only municipality, whatever you want to call it, that has the information on every asset, because they want to tax you. All the websites you subscribe to – CoStar, Reece, whatever it is – they have good information. Basically, what they’re doing is they’re assembling information into an easy-to-read format and they’re charging you money for. But it’s being input by a lot of young folks who don’t do real estate; so a lot of the data is incorrect. They don’t know what a qualified sale is, sometimes they don’t know the difference between market rate and student housing. There’s a lot of stuff that’s inaccurate. And I saw that. So a long time ago, I exported every asset, imported it into a CRM… And I’m leading to answer your question about listings; this is all part of the story.

So what you get from the property appraiser website, is you get a parcel number, you get an owner name which is always an LLC, you get an address, sometimes you get number of units, depending on the website, you get the age, you get what it sold for, and when it sold, and that’s about it. But oftentimes doesn’t give you the number of units, the bedrooms, sometimes the ages are not in there, the type of construction sometimes are not in there, the actual principal of the company and their contact information, how much value-add is left… Property appraiser websites don’t rank them, A, B, C, all this stuff. So I spent a tremendous amount of time and resources getting all of the physical data perfect. Everything about the physicality of the asset, who owns it, what they paid for, everything, and created a database. And over time, I tracked a number of indexes. I tracked when the mortgages end, I tracked when it last sold for, so I tracked all the sales. I can tell you what the number of months is someone’s going to hold it based on the type of asset, the size of it, the market it’s in, and most importantly, the type of owner, whether they’re a syndication or private. I track all of these sales in different silos. So as soon as someone buys a complex, I go ahead and put a date into the future of when I think it’s going to sell based on a bunch of other indexes that I’m tracking, combined with when the mortgages end, combined with the type of owner and when their equity is going to mature and they have to go ahead and sell for their investors… So there are all kinds of things that are intersecting, and I’m inputting in dates.

So every day when I walk in my office and I pull up my CRM, I pull up today’s to-do’s, there are two or three phone calls that I have to make to people who own apartment complexes that are ripe for selling today. These are phone calls that I put in last month, last year, or sometimes 10 years ago. It’s also discussions I have with owners. Over time, as you can imagine, I have lots of phone calls with owners who say, “Hey, Beau. Our loan doesn’t come up until 2025. We cannot sell before then. Our defeasance is too huge until 2023.” So I get that information. If their defeasance is too huge until 2023, I may start calling them in late 2022 or mid-2022 to start feeding them information, getting on their side, adding value to them, so that they think of me once that defeasance burns off, and now they’re capable of selling.

Slocomb Reed: Beau, this is fantastic. I know that there are some of our Best Ever listeners who do their own lead gen. The vast majority of them are not brokers, but a lot of people are hungry enough for good opportunities that they are going direct-to-seller. Especially when you say 10 units, going direct-to-seller is much more common for us investors in that 10 to 40 units space, because it’s much more likely that those mom-and-pop style owners don’t already have embedded broker relationships. First, let me ask you, Beau, in your experience, does that hold weight? Is 40 units a good metric? Under 40 doors, the majority of the owners don’t already have a brokerage relationship, but above 40 doors they do?

Beau Beery: Definitely not. To say the majority, absolutely not; they’re using brokers, period. Is there a greater chance under 40 units of getting a deal directly from the seller than above 40 units? Absolutely. But you have to understand, the guy who owns a 20-unit complex that is worth $2.5 million, he’s probably fairly sophisticated. That’s probably not the only one he owns, it’s probably not the only one he has transacted in the past. He’s not living in some silo somewhere, away from the world, and doesn’t understand that you can hire a broker and get 15 offers in two weeks. Everyone knows you can do that.

If you’re buying quadruplexes, duplexes, 10 or 12 units, there is a higher likelihood that that person isn’t in our world, transacting on a regular basis, and may entertain an offer from some guy he doesn’t know who calls him off the street. But logically speaking, when you own a reasonably good asset, you’ve probably transacted before, you’ve probably stayed with your ear to the ground, you’re probably getting calls from brokers every week educating you on the world, which is why 93% of every deal that sells over 10 units is done by a broker. That is an actual five-year study I did, it’s in my book right there. I studied 31% of every transaction over a five-year period where I literally called the sellers and I determined that 92.77% of every deal over 10 units was done by a broker, because it just makes sense for them to do so.

What I try to coach investors on is you can try to be the guy who calls the seller directly, because there’s a higher profit margin, or at least you think so, and your profitability per deal, over time will likely be greater than the guy who only focuses on network and the brokers. But the guy over here who networks with brokers has a much higher net worth than this guy over here. Because this guy is hitting base hits left and right, he’s doing way more deals per year; he doesn’t have to hit a home run every time, he doesn’t have to feel like he’s sitting around a fire drinking beer with his buddies and tries to brag about a deal he got direct from the seller. That doesn’t mean anything to this guy; he’s trying to build a huge treasure chest of assets. Because the more number of units you buy, the more powerful you become; because the more units you own, the more I as the broker want to bring you deals, because the sexier you look to the seller, the easier it is for me to sell you as the winning bidder in a multiple offer situation to the seller.

The guy who’s buying one or two deals a year directly from the seller, because he’s making as many phone calls as he can and he’s only getting one or two of those a year… And by the way, there’s nothing wrong with that, but that guy is never going to be able to compete against the guy who has nine complexes that he bought in the last 18 months using brokers. It’s a relationship business.

Slocomb Reed: Absolutely. Beau, I may be showing my Midwest-ness here when I talk about 40 doors… Because I’m based in Cincinnati, Ohio, and when you’re talking about predominantly C-class inventory – I’m not saying all the inventory in Cincinnati is C-class, but that’s what I’m focused on presently – one of the numbers that we’re pushing on if your property is 50% or more one-bedroom apartments… We’re just now seeing properties get around 65,000 a door. In your from-the-gut example of a 20 unit being worth 2.5 million, there are not a lot of 20 units at 125k a door in Cincinnati, at least in C-class areas, which I think lends itself to some more mom-and-popsmanship in a market like ours than a market like yours.

Of course, you have much better analytics than I do. I get what you’re saying about the investor who is networking with brokers, doing more deals, and building their network faster than the person who’s going off-market, trying to hit home runs. In the interest of giving you a platform, let me play devil’s advocate.

Beau Beery: Please.

Slocomb Reed: My ability to purchase is limited. And if I go to raise capital, I’ll be working primarily with sophisticated limited partners who have serious return expectations. So I feel like I need to hit homeruns. I have the wherewithal to do off-market lead generation and do a lot of digging to find a few homeruns this year, because a few homeruns this year is as far as my capital can stretch. And frankly, because I’m only hitting homeruns, I’m going to be able to perform, ideally, cash-out refinances within a 12, 18, 24-month time period, and get my capital back out so I can go digging for more homeruns.

Looking at someone in a circumstance like that, where capital and the ability to raise capital is a serious limiting factor, and understanding that the margins for forcing appreciation are often lower on brokered deals, why is it that I should be looking, or someone in this situation should be looking at brokered deals instead of trying to go direct-to-seller?

Beau Beery: It’s just to just increase the probability, it’s a statistical fact. Listen, the difference between someone who buys a couple of deals a year and someone who buys lots of deals a year – it’s not their smartness or the amount of equity they have or experience oftentimes, it’s how many deals the other guy sees. The more deals you see, the greater probability you have of getting in the game. That’s it. Now, that’s not to say, if you have the ability to have a junior or someone else on your team doing the letters directly to sellers, making the phone calls, whatever – awesome. Do it, because that doesn’t cost you anything. But if you are the only principal in your company, and you’re trying to pick up assets, and you have a limited time in your day, why wouldn’t you increase the probability of acquiring any asset? Why would you limit yourself to trying to find the only person who’s going to entertain an offer from some guy they’ve never met in their life, who calls him and says the right thing at the right time? That’s all I’m saying.

I get where you’re coming from, and it works for people, and if you’re good with picking up a couple of deals a year, that’s all good; there’s nothing wrong with that. I’m telling you information about how to become a giant. I’m giving you information about the most elite investors in the world. These guys are doing a dozen deals a year on a regular basis for 20 years. The only way you do that is networking with every broker, so that every broker brings you every deal that they come across, both before it goes to market, and after.

It’s just a statistical thing. I’m saying, if you’re going to spend your time somewhere, should you spend it to trying to find a needle in the haystack, or should you go to where the vast majority of the deals are? When you get good enough at and you build enough of a reputation of closing, you get to see the broker deals before they ever hit the market. You can be one of the limited number of people who see it before it goes out.

Slocomb Reed: Sam, that’s a very valuable point.

Break: [00:20:44][00:22:41]

Slocomb Reed: I want to ask about your database. You’ve used public record information and your own digging to accumulate a very powerful database that you use at a very high level to make sure that you’re having conversations with owners at the time that they are most likely to be selling.

Beau Beery: Right, oftentimes they don’t even know it.

Slocomb Reed: Yeah, totally. I want to compare that to the broker who gets a Costar subscription or buys a list and just starts calling people. Beau, how often, when you’re making your two or three phone calls in the morning, are you calling people who are already having conversations with other brokers, who have not gone to the lengths that you have to make sure they’re making the right phone calls?

Beau Beery: Every seller has heard from eight brokers that week, that’s a fact. Every one of them, from the guy who owns 12 units to the guy who owns a 1200-unit complex, they’re getting calls from brokers on a regular basis. There’s a couple of trains of thought on the brokerage side. Most national brokers – now, I’m going to do a general statement here, which is not fair, because there are going to be some anomalies within the national brokerages. But the national brokerages, the CB Richard Ellis, Marcus and Millichap, Colliers – all these are big, giant companies that are very, very good at what they do. They are investor-driven, they’re commission-driven, they want to do deals. So many of the agents, particularly the younger guys coming up, they are called demons. “Hey, my name is Beau Beery, do you want to sell?” “Hey, my name is Beau Beery, do you want to sell?” “Hey, my name is Beau Beery, do you want to sell?”

Slocomb Reed: Yup, I know a lot of those guys.

Beau Beery: Right, that’s their game. That’s good, it builds up a skill for that young person, it drives listings eventually, and those listings go to the head honcho broker. When I say head honcho – usually within national teams, there’s usually a two-partner partnership. There are always these two guys who are fantastic at what they do, they partner together, they have three or four juniors under them, they have analysts, and so on and so forth. Those juniors are doing the dialing for the dollars, they get a hot one, they turn it over to the major partner, the guy gets the listing, and they go to sell it.

What happens is everyone knows those shops. When they call, that’s what they’re going to ask for, is the listing, and they almost become white noise. For most investors, it becomes annoying. Now, I try to take the long game. The long game for me is I add as much value as I possibly can. When I’m making those several calls each morning, I’m not calling asking for a listing; I very rarely asked for listing. All I’m trying to do is add as much value as I can to their business. I’m talking to them about what rents are doing nearby, what amenities are driving up rents, what amenities can be added, sales that happen nearby, what construction costs are running for different things, changes in the market, just adding value. What I want is, when that person sees me show up on their cell phone, they answer the phone, because I’m going to add value and not ask for a listing.

Now, I will say this – a lot of the national shops do way more business than I do as a whole. They may not make more money than me as in net, because they have franchise fees, cuts with the house, junior, assistants and all these things, but they’re going to get more listings. So you as the investor should be networking with every one of those major brokers, because they’re fantastic at what they do. And when you go to sell, their selling point is they have national offices, they have offices in different countries, and so on so forth.

The reality is every broker has the same access, the same number of buyers, whether you’re a little old me, or your CB Richard Ellis. That’s what technology has done for this world. I literally have every human being on Earth, that owns every asset in the state of Florida, and everyone on earth who wants to own assets in Florida who doesn’t already. It’s literally a touch of a button that I have access to them.

So the two different approaches are just call, call, call, call, it’s a number of probabilities, and they’re going to get listings. They’re going to say the right things, especially if you’ve got some of these junior guys who are very good at what they do, they’ve got good verbal skills, so they get the listings.

And the partners they’re doing it for are making calls to their key prospects, doing the same thing. They already have prior relationships, they’re tight. I’m taking a different approach, because I’m not a giant national. I have to be more of a SEAL team member. I think long term. I want someone to look at me as someone who’s a true advisor, who is there to grow their portfolio, grow their business over a 30-year period. And I’ll do less deals, but I’ll have a waiting list of folks who want to work with me.

Slocomb Reed: Beau, as an apartment investor, let me say that I wish I had brokers like you calling me, offering to add value. I am a one-man band when it comes to being an owner-operator, for the most part. I have capital partners, but it’s my advice and my expertise that they’re relying on. I’m still trying to figure out what amenities in what areas are worth how much in rent increase… So if you’re an apartment broker in Cincinnati and you’re listening to this, get my contact info so that you can add value to me and all of my buddies who own apartments. What Beau is saying here is gold.

Beau Beery: Sure. And it works both ways. The thing is that you as an investor is in more competition by far than I am. For me, in the Northern half of Florida there are about 50 brokers that I compete against. You as an investor are competing against tens of thousands of people, but only a very limited number of those tens of thousands of investors are networking and building relationships with brokers, so that there’s this mutual adding value to each other. So I would encourage you to reach out to every multifamily broker in all the markets in Cincinnati, and create – not just a business relationship, but you talk about what you guys do on the weekends, your hobbies, wives, and kids, and over time you develop these personal relationships so that I like reaching out to you and telling you about amenities that people are putting in that are driving up rents, and how people are cutting down on bad debt. So brokers get to see from dozens and dozens of the top investors in the world how they’re operating tremendous businesses, and you can gain that information from them. They’re happy to share with you.

I have a lot of stuff in my head I love to share with folks; that’s why I have the YouTube channel and the book and all that. You just have to reach out to them. And for you to then be able to take some that information and share with your investors and some of your equity – that makes you look like the expert.

Slocomb Reed: Beau, are you ready for our Best Ever lightning round?

Beau Beery: Bring it on!

Slocomb Reed: Beau, what is your Best Ever way to give back?

Beau Beery: For me, it’s two things. It’s probably my YouTube channel. I put a tremendous amount of really high-quality content on there. It’s called Beau Knows Multifamily; it takes a lot of time, it’s a lot of research. Every time I do a deal and if something went bad or good, I’m putting out a video about it. My whole thing is trying to educate investors, both beginning to advanced level guys as much as possible, because the better everybody gets at this buying and selling game in multifamily, it makes my job easier; it brings up the level of that. And the second way is I take on a lot of calls from beginners. I’m very sharing of my time.

Slocomb Reed: Beginner investors or beginner brokers?

Beau Beery: Both. I’ve got more brokers that call me than investors, but I get a lot of beginning investors that call me, and I just have short conversations with them about the inventory that’s out there, what they need to do to prepare packages to hand to brokers, how they need to get letters of recommendation, who to talk to on the lending side, where they may find equity… I want to get them started, because to me as a 46-year-old, I’ve got another 15 years I want to do this. If I can grow some along, they’re going to stick with me for a long time; they’re going to want to pay me back if you will. Not that I’m doing it for that, but there’s a mutual respect. If I can help them, they’ll want to help me.

Slocomb Reed: What’s the Best Ever book you’ve recently read?

Beau Beery: My favorite book is probably Deep Work. I think the author is Cal Newport, and the whole premise is that there’s a two or three-hour window of your day where you want to carve out, where you cut out the whole world. You turn off the noises on your computer, you turn off your cell phone, you don’t check social media, your family doesn’t come in the door, and all you do is that one thing that nobody’s better at than you. For me, it’s interacting with my rank A customers, adding value in their lives and their business, so that we do more deals together. That two-hour window from nine to eleven in my business, I’m in this room, it’s completely shut off, and all I do is talk to my top customers. For you, it’s finding deals.

Slocomb Reed: What is the Best Ever lesson you’ve learned as a commercial broker?

Beau Beery: Man, I would say it is working with high-caliber, quality, empathetic, non-bull in a China shop type of investors. Because people who have bad reputations, people who re-trade assets, who bad-mouth assets, who renegotiate terms, who redline contracts to insanity, who do all the things that push a bad reputation, what happens is that crap rubs off on you. Even though you’re not that person, I’m the broker in the middle, and the more difficult the person is that I have to work with, that crap rubs off on me and the other party sees it, and they don’t know how to separate the two as much as they should. So I try very, very hard, in every transaction I do, I have a qualification checklist that I go through before taking on a listing, and most of the checklist has to do with the type of investor they are, the character.

Slocomb Reed: Beau, what is your Best Ever advice?

Beau Beery: My Best Ever advice is two things. Number one, if your overall goal is to accumulate as much units as you can, your whole job should be networking with as many brokers as you can. I go through a full process on how to do that in a book I wrote.

Number two, you have to become a master at the analytics. The reason there are 15 offers in two weeks on every deal is not because they’re smarter than you or better than you, it’s because they know the market like the back of their hand. They know as soon as the listing comes to market, they already know what that deal is worth, they know what they can take the rents to, they know what they can sell it for in three years, they know what the remodeling costs are going to be, they know who’s going to manage it, they already know who’s going to do the lending… They know all this stuff. I should be able to ask you about rents, absorption, sale prices, renovation cost, in any market, in any sub market you’re in. And the better you can get at that, the faster you can react.

Slocomb Reed: Beau, how can people get in touch with you?

Beau Beery: Three ways now. I’ve got a website, beaubeery.com. The reason you want to go there is because whether you invest in Florida or not, you’ll want to see all the metrics and the data I have for the markets that I cover. That’s the kind of data you want to master for your market. Second way is – I know I’ve mentioned it, but this is my book; you really need to get this. I don’t make a bunch of money selling books; I’m telling you because this is the inside stories between brokers and sellers and how they choose buyers.

And the third way is my YouTube channel, the Beau Knows Multifamily. I’ve got playlists on there for beginners, for advanced level guys, I’ve got analytics stuff on there… Every now and then I’ll put new listings on there before I send to anybody else.

Slocomb Reed: Awesome. Best Ever listeners, thank you for tuning in. If you’ve gotten value from this episode, please subscribe to our podcast and leave us a five-star review. If you know someone who would get value from listening to this episode with Beau Beery, please share this episode with them. Thank you and have a Best Ever day.

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