Successful businesses have solid teams. Look at all the great businesses that are around and that have been around and you will see that they are comprised of excellent teams. Ask the CEO of any of those companies how they have achieved great success for their company and I would expect all of them to mention the people around them – their teams. In real estate it is no different. If you are planning on building a successful business, then you will need to create your team to be in line with your model. Successful business people always surround themselves with successful specialists. In this episode we will talk about one of the more critical team members that will help you grow your business.
Real Estate Brokers: Your real estate business will only grow if you can find and buy deals. Real estate brokers are going to be one of your best sources of deal flow. If you are buying apartment buildings, then you need a commercial real estate broker, not a residential agent and there is a big difference. In the commercial apartment world brokers/agents are typically always farming for new listings. The goal is to list, list, list and with that they should be able to sell, sell, sell.
Finding the best brokers and getting them to take you seriously is challenging. Most quality brokers aren’t advertising for your business, they are busy listing and selling properties, so you need to seek them out. Find them by going on to loopnet.com and looking up the brokers that have listings. Also go to the major commercial broker websites, like Cushman Wakefield, Colliers, Marcus and Millichap and CBRE to find out if they have agents in your areas. You want to contact several of the brokers and start telling them what you are looking for. Get on their mailing lists and get a meeting set up with them. Your goal is not to get one agent that will bring you to everyone else’s apartments, but to find several brokers that have their own listings and “off market” deals.
Building the relationship with those brokers is important. They need to know that you’re serious and they need to know you are looking. If you tell them one time that you want to buy and are serious, but never contact them again, please don’t expect many, if any deals. If you connect with them through email, phone, text, etc several times each month, then they will start to get to know you and feel much more comfortable with you. Don’t be a pain in the butt, by always calling them, but also, don’t be too quiet.
Analyzing and offering on broker listing will also help them understand that you are serious and understand what you are looking for. Many brokers, especially in a hot market, will send you properties that are being sold on pro-forma (Pro-forma is a future value, showing increased rents, etc). You will need to run your own numbers in order to decide if it is a good deal for you. If the numbers don’t work, then thank the broker and tell them why it doesn’t work for you. I always tell them if the seller is able to go down to my price or be creative, then I would be interested in putting something together. Eventually you will need to offer on a deal. My suggestion is not to offer on every deal, but only deals that you think could have, at least a small chance of getting done. By doing this, you will show the broker that you are serious, as well as gain experience in negotiation and potentially get a deal.
Be ready to actually buy a property. It’s ok to form a relationship before you are ready to buy, but make sure the broker knows that. If you are just wanting to look at pro-forma’s, rent rolls, P&L statements to get comfortable, then let them know that. It’s really easy to say “Hey Jim, I’m wanting to put an apartment under contract in 6-12 months, but until then can you send me the offering memorandum on your current and new listings and if you have any that you recently sold, could you send me those as well, so that I can get comfortable with the market?” Once you tell a broker that you want to buy an apartment building, then be ready to perform. If you make an offer, you must be able to buy that building if it is accepted. You will quickly burn bridges if you cannot do what you say you can do.
Real estate brokers can also add a ton of value with referrals. They will know property managers, lenders, attorneys, title agencies, appraisers, inspectors, contractors, etc. They live and breathe this business and have heard the good and bad about other specialist’s from their other investors. Always ask them for referrals.
Last thing that I will say about real estate brokers is that you will form relationships with several brokers in one market, so be respectful of all the brokers that you meet. If a broker brings you a potential deal, then use that broker for the deal, don’t take it to your favorite broker to get it across the finish line. Same goes with if a broker brings you a listing that another broker in your network has listed or has already presented to you. Kindly tell that broker what is going on and you will all be better off for it. It is very important to be honest and up front.
To hear more check out our podcast episode: https://soundcloud.com/user-650270376/powc-35-apartment-series-part-3-working-with-brokers
In the next article we will talk more about building your team, what to look for and what questions to ask.
To your success!