One of the keys to success as a real estate investor is finding properties to bid on but what if you can’t find any single family homes or multifamily properties to add to your portfolio of rental properties? The answer to this question is you will have to start searching for rental properties off market.
In this post we will share with you several tips you can use for finding off market rental properties.
How To Find Off Market Rental Properties
The major obstacle to finding off-market MFH opportunities—especially those that are 40 to 100 units, Class B to C+, in a 60-mile radius of a larger MSA (metropolitan statistical area)—is that many of the deals that are made on these types of properties are found through extensive networking, relationships, or referrals from one investor to the next (or one Realtor or industry insider to the next).
Let’s use the Charlotte MSA as an example of a larger metro area. It is primed for great growth and has been continuously expanding since the 2017 census. In fact, according to Wikipedia, the Charlotte MSA in 2017 had 2,525,305 residents and is the 17th largest city and 22nd largest metropolitan area in the United States—so, it’s really booming and attracting real estate investors.
However, finding good Class B MFH remains a problem for many serious investors in these types of areas.
In real estate, there are plenty of programs and online resources to search when looking for single family housing (SFH). But this is not especially true for MFH deals. So, what does a real estate investor do to locate a good off-market apartment building? Options do exist but thinking outside the box is imperative.
Driving for Dollars
The first option is the one that is missed by many when seeking these types of deals: Driving around throughout the area in which one is seeking the deal is often not even considered!
Since many listings are not posted or advertised anywhere, driving around can reveal good large-scale apartment buildings. Signs might be posted or a search for the property through online research or even court records can then be initiated.
A savvy investor can save time, money, and aggravation by simply hiring someone to do the driving through areas in which they have an interest in purchasing a property. It is possible then that a simple cold call to the owner or owners of the property can result in a potential deal to purchase being made down the road.
The reason for non-listings seems to be that sellers of MFH properties don’t have the time to waste on individuals who are not a good prospective buyer—especially on the larger Class B investment properties. Actively driving around looking for a property can make a seller more responsive to showing the property, as time was taken by the potential buyer initially.
Tapping Into Relationships
Another great option for finding these types of multi-unit properties is by establishing good relationships with brokers, insurance agents, property managers, and others involved highly in the real estate business. This is relationship and referral marketing at its best.
Establish Criteria for Your Search
Any type of serious investor in MFH properties in any large MSA should always have guidelines in place before they even begin their search.
These guidelines should include:
Identifying Criteria: Where to purchase, when to purchase, the overall size sought, the classification of an area/property, and of course, the costs of purchase. Overall, any potential investor must know how much they can afford comfortably and know what their financial expectations are. Any property, even Class B, must always bring in enough money to cover the initial investment and sufficiently provide enough dividend yield. Research is needed above all else.
Approaching Owners: This was touched on above. Finding a property that can be affordable and is attractive to a potential buyer can be achieved by cold calling owners, real estate agents, insurance agents, or others somewhat involved in the real estate investment field. Well-crafted letters can also be sent to those involved in any way in the real estate investment field.
Establishing Relationships With Others: This may be the very best way to find good Class B, large-scale properties. Relationships with the right brokers, insurance agents, attorneys, and property management companies can yield information on upcoming sales of Class B properties. Attending real estate meetup events, seminars, and conferences can be enjoyable, informative, and most of all, productive in the years following attendance. Maintaining solid relationships with brokers and others in the real estate field can really yield significant results in locating properties for years to come and garnering knowledge of impending sales long before these properties even hit the market. The old saying “the early bird catches the worm” really applies to this methodology. Relationships are everything!
Having Financing Options Identified: Whether financing privately with money already in-hand or financing with a loan or other options, it’s useless to even consider approaching anyone about a sale of a Class B large scale property without the necessary financing already in progress or fully established. No seller anywhere is going to seriously consider any potential real estate investor if the financing is not possible.
Source – Bigger Pockets
Contact 36 North Property Management
At 36 North Property Management we’re an excellent resource for sourcing, acquiring and managing investment properties in the Monterey area. To learn more about the services we can offer you contact us today by calling (831) 484-4604 or click here.