There are a lot of little things that go into the apartment industry. However, it doesn’t mean you need to do everything by yourself. With that being said, you have to be knowledgeable about it so you can instruct your management company to do those little things for you.

One example of those little things is based on the reality that most individuals, upon entering their homes, would rush to find the power for plugging in their cool gadgets. That problem can now be solved by installing a 4-dollar outlet in the house which does not only have the plugins but also have the little USB outlets for plugging the USB stuff into the iPhones.

Most of the apartments that were built in the 70s, 80s and early 90s don’t have those plugins. These plugins are now being added into the deals as a really nice selling feature simply because it brings something new and that it is something that the people need. In other words, it’s one of the things that you should be doing because it means a lot to people.

When it comes to finding apartment deals, there are actually two general ways to do it. While there could be more than two, these two general practices are deemed as the best.

The Direct Mail Route

When you do direct mails, you’re sending letters out straight to the owners of properties. It works really, really well with properties that are usually between 5 units up to maybe 50 and maybe a little bit more. The owners of these properties are probably more single-family guys who went big in their minds and then they did some stuff that is even bigger. You can get to them directly which is not a bad idea at all.

However, this practice may not be as effective when you’re dealing with bigger units. This is because when you have more than one hundred units, you would normally sell it solely with a broker.

One thing about getting to the owner is that you don’t have a broker involved. This will allow you to become a lot more creative. You can do things that you normally wouldn’t be able to do with a broker. What brokers only want to do is to sell the property because that’s really the only way they can get paid.

On the other hand, doing it directly with the owner sans a broker would allow for a lot  more creative finance. Perhaps they want to do an owner carry or they want to get taxed on all the money that they are about to make.

Another reason why direct mail can be a very effective way in finding motivated sellers that want to sell or that are looking to sell is the fact that it doesn’t require them to pay a 4 percent broker fee. Once they see you as a credible buyer, people would want to call you up. It’s all a matter of positioning.

Broker Relations                

The other way to find deals is referred to as broker relations. In this practice, you want to establish the markets that you like, and then you want to get to know all the main brokers in that area. You’re going to have these brokers send you all the deals in that market. Then you start having a nice pipeline in.

How The Direct Mail Method Works

The first thing you need to do when you want to get a direct mail campaign out to apartment owners is that you should go to listsource.com. It is a list-buying place where you can pull up any list that you’re looking for.

Once you are on the site, these are the things you should do next:

1. Choose your geography. Look for the small geography tab and choose the MSA that you’re looking for.
2. Find properties that were built between 1970s and 1990. You can do this by going to the property tab. Remember, we are looking for B and C properties which were mostly built in between the 70s and early 90s. This is a good way to get a good list. If the list seemed not enough, you can open it up. If there are too many entries, you can shorten it down.
3. Go to the property tab again then go to property type and choose multi-family residential apartments. Doing so will create you a list.

“It’s my hope and goal to entice you enough, that you will want to start multifamily investing.” Corey Peterson

Once you have created your contact records, you can start preparing nice looking birthday cards that are inside colored envelopes. They should look like they are happy birthday cards because people love opening that type of mail. If you have almost 300 names in your contact record, you can make the handwriting part a bit easier by hiring somebody to write those 300 contact records that will be sent out through mailing.

You can do the postcards which can allow you to get really creative and strong with the copy. It allows you to have a call to action. One of the best forms of call to action is a phone call because it is trackable.

Having said that, you should set up a phone number for each market and use it specifically for that market because you want to appear local. You can do this by going to callrail.com. Apart from being the cheapest solution, it’s a great way to track and record the calls.

Another useful system is called Podio. When you import CallRail into podio.com, you can create little seller leads deal in Podio. Now, every time a phone call comes, a new record is created. You now have something that you can work from. You can set up a new task to call back later and you can track your follow-up which is more important than just taking the call.

What You Should Do When People Call You

There are two things that you should be trying to do when those people do call.

First, you’re trying to determine the motivation level. You can do this by asking this question: “Are you wanting to sell your property or not?”

If the answer is ,”yes,” the next thing you want to ask about is the current rent roll. A rent roll is a list of all the units available and how much they’re rented for. If there’s an empty unit, it has a zero in it because it’s getting no rent.

Second, you should get at least a three months trailing P&L (profit and loss) statement. This refers to the last three months’ financials for that property. It will give you a little bit idea of the expense. A 12-month P&L trailing is even better since it will give you a lot better information. In other words, it’s either you get three months trailing or you get 12 months trailing in a current rent roll.

“The great thing about the direct mail method is that people are calling you.” Corey Peterson

How The Broker Method Works

Once you have identified the market that you want to go and be in, the next thing you need to know are the brokers in the area. One of the best sites to find them is loopnet.com. This is where a lot of brokers list their multi-family deals.

In this method, we’re not trying particularly to find deals. Instead, we’re trying to find the people who are listing deals and listing multi-family deals in the markets that we’re interested in. This would involve making a phone call to the broker himself which can be intimidating and nerve-wracking to a lot of new people.

One of the best ways to get used to it is to pick a market that’s not yours or a market that you don’t want to be in and then practice. Remember that brokers are trained to sniff out and find newbies and weed them out. They’re really trying to find people that are buying multi-families that can close and that they’re not tire kickers.

Talking to these brokers is all about the setup as well as about the confidence. You want to have extreme confidence when you’re talking with brokers.

You would also be looking for something like a momentum play which is your key word when you’re talking to brokers. With this key word, they’re going to know that you’re talking their language a little bit. Momentum play refers to something that’s already stabilized and that’s usually between 85 percent to 90 percent or 95 percent occupancy.

You can also do the so-called “micro repositioning.” It is when you’re just tweaking out some of the little things in units such as adding new lighting fixtures or putting some new switches.

Build some rapport with the guy and then start taking it to a personal level. One of the ways to start is by asking them what they like to do for fun in their city. When you start your conversation the next time, you can talk about the thing that he likes which should be the start of building a relationship. Remember that you’ll never get on someone’s shortlist unless you have relationship.

Another relationship strategy is calling brokers at least once a month. When you call them up, your whole goal is to ask them to get their marketing brochures. It’s called a broker packet. Once you have it, you can do a market analysis and follow up with feedback. Doing so will show that you’re working on the deals that they are sending. This is a very powerful strategy when you’re working with brokers because it shows that you’re giving a crap. Next, it’s going to allow you in their eyes to become a more credible buyer or a credible buying source.

The other thing that you can consider is that you may want to underwrite everything. Once you start getting this deal flow coming in, your job is to grind the numbers through the analysis. The analysis is everything. You’ll only be on the shortlist once you’ve called the broker back and responded to all the deals that they have sent you.

This is how it works and it’s just the way it is. You’ve got to create the relationship with the brokers in that market. It’s also just a matter of crunching the numbers.