Discover how to find great apartment investments in hot markets. Multi family real estate investors have been complaining that there aren't any good deals left in today's market. But the reality is that there are always great deals if you know exactly where to look for them, even in the hottest of markets, such as what is illustrated on this video, in the Bay Area of California. You'll learn how others are doing it and how you can too. Don't wait to invest in multi family real estate just because some people think all the good deals have been taken. Instead, find out how to find them and go out and use the hot markets to your advantage!
The Hot Market
Are you having a hard time finding great apartment deals in your market? Many investors complain that all the great deals are taken, everything is overpriced, and there's way too much competition. These three comments are very valid, very legitimate complaints if you are in a hot market.
The multifamily apartment industry is hot. It has been hot for years and will be for years to come. So the question is, how do you find great deals in hot markets?
Finding the Deals
We have two students, Dave and Andrea that bought two apartment buildings back-to-back, month one and month two, in what I believe is the hottest apartment market in the entire US, Northern California. Not only did they find and land these two deals, but both deals were priced under market, with under market rents, which is a huge upside.
Our students find the best deals are found off the radar screen. Brokers don't know about them, they can't be found on Loopnet, or even on the MLS. You must find your deals in what our company calls the "shadow inventory".
Dave & Andrea's Story:
Dave and Andrea connected with our company, Commercial Property Advisors, for hands on training and step by step coaching every step of every deal. They knew that they wanted to get involved with Real Estate and began researching online for someone to train them to invest in commercial real estate until they found our Youtube Channel and ultimately joined our team.
How They Found Two Deals in A Hot Market
Dave and Andrea soon began connecting with our team and doing the homework that we require in order to learn all of the ins and outs of the business. Soon they were instructed to start making phone calls to reach out to brokers and get a real feel for their market.
Dave and Andrea began sending out letters diligently. Many owners are in tough situations, and taking time to talk to them personally can make a world of difference. Dave and Andrea spent hours building and nurturing relationships with owners and brokers, before finding a deal.
A Relationship Business
Commercial real estate investing is a relationship business. You have to give your time and energy to the owner, because no matter how good the deal looks, if the people you are working with do not form a connection with you, the deal will not happen.
Their first deal was a five unit apartment building that needed work, but had a lot of upside potential. The next step for Dave and Andrea was to find a lender that could see the property's potential.
Soon they found a local banker who knew the market well enough to immediately get excited about their deal. He offered them a loan-to-value of 75%, which is almost unheard of in Northern California where the average LTV is 55%-65%.
As a property's NOI goes up, the value of the property will also go up. Dave was able to increase the rents, thus forcing the property's equity by fixing and repairing the apartments. This allowed him to refinance and take money out to purchase a second property.
Dave and Andrea's exit strategy was to refinance the property, pull out the down payment, and then use that money to purchase another property.
The second deal was once again directly with the property owner, and found through batch letters. It was a six unit apartment below market rent.
Words of Encouragement from Dave
If you are thinking of entering the world of commercial property investing, then you should really focus on your "Why". What is your driving force that's going to create the passion to really work hard and accomplish your goals.
One thing Peter mentions is having the right mindset to be a successful investor. Do not make excuses, just believe in yourself, and go for it. Hard work pays off.
I am so thankful to both Andrea and Dave for sharing their story. I truly hope you have found it encouraging. Here are some of the key learning points you have learned from this blog.
1.You don't need a certain degree or profession to be successful in commercial real estate investing: Dave is a truck driver and Andrea is a nanny.
2. Have Powerful Whys: Dave and Andrea had powerful whys. They wanted to buy back their time by trading time for dollars. They focused on their retirement goals.
3. Target Owners Directly: They did not use any brokers, they used CPA's proprietary techniques on creating letters and a very targeted list of property owners to go after. There are certain specifications and criteria that helps determine which ones are most likely to sell. We figured that out over years and years of practice.
4. Learn What to Do Once You Find the Deal. Many people understand how to find owners directly, but our training is based upon what you do after finding great deals. What you say and how you build a rapport to understand a owner's motivations is what helps you structure a great deal.
I have a video on Youtube called "The Three Tips on How to Get Owners to Say Yes to Your Offer." Watch that video after this one to learn exactly how Dave and Andrea got owners to say yes.
5. Market Rent Increase: Both of Dave and Andrea's deals were able to be renovated and have their rents increased. The first deal actually resulted in a 45% increase in rents once renovations were complete.
6. Having the Right Mindset: Dave mentioned my video called, "Do You Have the Right Mindset to be Successful in Commercial Real Estate?" The video has really helped Dave get over his fears when it was time to speak with owners and brokers, interview property managers, so you have to be in the right mindset to win.
7. Caring is Key: Lastly, we are a commercial real estate company, which is a company that must work directly with people and in order to do that successfully we must really honor them. You have to be patient, work hard, and you will get results.