Sealing the deal is definitely rewarding and gratifying experience one can have. Acquiring a property for your real estate investment is not as easy as you think. Before inking that deal, there are several drawbacks and roadblocks that you have to anticipate and learn.
Today, I will be discussing the lessons I learned from a recent 80 unit apartment acquisition. I’ll be going to share my experience and knowledge as an investor in this industry. I believe that this with this I can help people who are considering investing or planning to enter the multifamily investment industry.
I am not perfect, I still making tons of mistakes but the important thing is that I learned a lot from those failures and it has helped me to improve myself and be a better investor as the day goes by. One of my goals today is to help people who also want to jump into the world of multifamily real estate investment by sharing my experiences and personal perspectives that can help.
1. Know the Market
Knowing the market is very crucial. For example, I am based in Indianapolis, Indiana, so most of my holdings are there. I also have some in Dayton, Ohio and Louisville, Kentucky which is where I bought that 80 units which was a new market for me. This makes it important to understand the economics of the market you are targeting.
Know the economics of the city such as the population growth, job growth, and unemployment rate. It should be best that the city has a diverse source of businesses wherein there are various industries in the city. Narrowing down with this information is very effective to make sure that you are going to a market that fits your strategy.
Also, one way to learn more about the neighborhood checking Trulia.com or Areavibes.com to see if there are high crime rates or search through Google if there are lots of schools surrounding that area.
2. Going Direct to Owner
Going off-market or going direct to the owner is perhaps one of the most effective means to find these properties. Direct to owner is the way to go. There are ways on how you can go on the market to buy a deal, which means you are purchasing on market that is going through a realtor or maybe a broker. For me, it has been super competitive, and the prices are just getting really pushed up with highest and best and also final call to offers.
What I’ve always done is go direct to the owners, it is more difficult, but you control your own destiny. I have been able to acquire 5 deals in the past 2 ½ years over unit count 400 all go direct to owners.
If you can utilize channels going direct to owners, there are multiple ways such as direct mail and cold calls which is our favorite. You have to convert them from not being interested in being interested.
3. Persistence
When going direct to the owner, it can be multiple touches that involved. For instance, I had 6-10 touches before I was able to get in touch with the decision-maker to give my pitch. Meaning, do not give up right away if the owner is not answering your calls or emails. Always reach out with them to develop or built that rapport.
4. Meeting with Property Management Companies
You will need to talk to the property management company to get their insights on the market and the sub-market. A reliable property management company can help you with the due diligence on the property.
Meaning they will help you walk all of the units once done with the contracts and put together a budget for the upgrades or renovations needed. You’ll be able to have a clearer understanding of the investment. They can also give you some good tips on the specific sub-markets.
5. Stay Close to Home
As much as possible, always pick a market that is close to your home. As a prime example, I had fired my previous property management team because it did not work out. I ended up self-managing as I think it would be more practical for me. A good company should always be hands-on and make sure that everything is fine and if you are on the self-managing. Always select a market that is close to you, so that it would be easier to check them, especially if there are some repair jobs going on.
6. It Takes Time
You have to have enough patience to get the deal done. It is not easy to get the deal done. You should not give up and always have that determination that you can get that deal sooner or later. If things are not working both of you and your partner or team should discuss ways on how to succeed in getting that deal.
Wrapping up, with the lessons mentioned above I learned from my recent apartment acquisition, I hope I can be able to help or provide useful information for the ones who are planning to invest in a new market or acquire a property. Don’t hesitate to let me know and I will be glad to offer you additional information.
P.S.
I’m giving away a copy of my book “From Zero to 400 Units”. Grab your FREE copy here. Also, I am hosting an Intensive Real Estate Investing Training. Will Take You By The Hand To Show You Exactly How This Works— Absolutely FREE! Book your COMPLIMENTARY Seat here. I am putting up an elite group for real estate entrepreneurs like yourself. If you wish to be part of the “The Real Estate Mastermind Group” take the free self-assessment test to see fit.