urban multifamily syndication

The Most Unique Way to Find Off-Market Apartment Deals

There are countless ways to find apartment deals, from common methods like brokers to unique approaches like cold calling to meetup groups.

 

However, the most unique approach I’ve come across is a lead generation strategy by James Kandasamy – who I interviewed on my podcast. Using the following seven step process, James found the majority of the assets that make up his 340-unit portfolio, including two apartment communities. What’s his secret? He texts the owners!

 

This process can be used to find any type of deal, whether you are a fix-and-flipper, wholesaler, SFR investor, etc. But for the purpose of this post, you will learn how to apply this approach to finding apartment communities.

 

1. Identify a target area

 

First, select a target market. If you haven’t already, check out this blog post where I outline a step-by-step process for selecting and evaluating a real estate market.

 

2. Identify a property class

 

As a value-add apartment syndicator, I invest in class B property types. If you are a turnkey investor, you’ll pursue class A opportunities. If you are a distressed apartment investor, you will pursue class C or D opportunities.

 

3. Define additional investment criteria

 

For me, my additional investment criteria are the number of units and age of the property. We want properties that are 150+ units and that were built in 1980 of newer. Based on your investment strategy, what factors do you look for in a potential deal (i.e. equity, delinquent taxes, recent evictions, signs of distress, sales date range, etc.)

 

4. Obtain a list of properties

 

Using online resources like the county auditor site or ListSource, create a list of properties using the three pieces of information above (market, property type/class and investment criteria).

 

Additionally, you want to find properties that were purchase 5 years or more ago. James has found that owners who’ve purchased a property in this time frame will have likely built up enough equity to accept a below market offer price because they’ll still make a profit.

 

5. Find the owner’s contact information

 

For properties listed in an individual’s name, you should be able to locate the owner’s contact information when you pulled the list. If it is listed under an LLC name or a property manager, use skip tracing software to get the owner’s phone number and/or mailing address. Here’s a good resource for how to track down owner information, JF1065: How to Track Down Vacant Property Owners with Larry Higgins

 

6. Conduct a marketing campaign

 

Send marketing information to the list of property owners, either via direct mail, phone call or text message. That’s right. A text message!

 

James actually obtained the majority of his deals via text messaging. His initial message is, “Hi. I’m a prominent investor in (insert target area). I saw your property at (insert property address) and am interested in buying it. You can sell it directly to me without any broker’s commission. Would you like to talk further?”

 

Standard replies he’s received and that you can expect to receive are:

 

  • If they are interested
    • You can talk to XYZ member of me team
    • Can I have more information about you and your business?
    • What can you offer me?
  • If they aren’t interested
    • I am not interested in selling right now
    • I am not selling anytime soon

 

7. Follow-up

 

Regardless of the response, follow-up is key. James said that most people will send out one batch of letters and then forget about it.

 

If the owner is interested, you need to obtain the rent roll and the trailing 12 months financials to determine an offer price.

 

If they aren’t interested, James recommends following-up (via direct mail, phone call, or text message) every 3 to 6 months to gauge their interest in selling again, to build rapport and be top of mind for when the owner is interested in selling. It’s all about timing.

 

For every 500 marketing pieces James sends, he receives a 1% response rate. Of the 1%, he will close on less than 0.1%. But as long as you’re persistent and follow-up, you’ll find that 1% of owner’s who are interested in selling.

 

COMMENT BELOW: Do you use or have you come across a lead generation strategy more unique than texting owners?

 

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