Buying an apartment building off market
Years ago, finding an apartment building for sale off-market was like finding a four-leaf clover. They were rare, and if the deal went through, it thrilled both sellers and buyers alike. Nowadays, buying real estate off-market is more common, but there are plenty of misconceptions about purchasing these properties.
Buying an apartment building off-market is an excellent way to invest in real estate. Why? It is more convenient, there is less competition, and bargains are simpler to find. So what is buying “off-market” anyway?
Purchasing Off Market Apartment Buildings
Finding a determined seller with a quality apartment building not listed on the MLS (multiple listing service) is an ideal situation. These sellers usually want to keep knowledge of the sale from becoming public. Also, they might not want to list the property for sale at that moment in time. Sometimes they want to know if there is any interest from buyers without investing an enormous amount of time or money advertising the apartment building. Essentially, very few people know about the property. Why is this important?
- Limits the competition. Fewer bidders make it easier to get a great price.
- Potential buyers can take their time. Without the pressures of multiple buyers to compete with, you can analyze the property and the market to make sure it is a wise investment.
- Flexible negotiations. This is important in a seller’s market. Buying off-market prevents bidding wars and escalating prices.
Finding Off-Market Properties
Locating apartment buildings not listed on the MLS is challenging. If you are beginning your real estate investment journey, discovering these off-market gems is even harder. This drives many investors to abandon the search, and they return to more traditional methods of buying apartment buildings. This lowers ROI since they pay top dollar for the property. Therefore, it’s vital to learn how to find off-market apartment buildings.
There are certain websites that discreetly list these properties, but few investors know of them. Often the seller lists them on a website exclusively, which significantly narrows the number of buyers they must deal with. Some of these websites require a membership, which whittles down the number of potential buyers even more.
Here are a few methods to discover a valuable apartment building for sale off-market.
- Locate a real estate agent in the area you wish to invest in that specializes in off-market properties. These realtors often have a list of properties available off-market to show you. Better yet, contact a few realtors letting them know about your interest. The worst-case scenario is they will put your name on a waiting list.
- Networking is always an effective tactic, especially if you are an established real estate investor. If you know people in the real estate industry, ask them for help. Often they will know of several properties not on the MLS and will be thrilled to share them with you. First-time investors should ask friends, family members, and business associates if they know of sellers who haven’t listed a building yet. One of them might even own a building they haven’t thought about selling, but you will have planted the seed. Guess who they will turn to first if they decide to sell?
- Direct marketing is hard work, but it can pay big dividends. There are several ways to do this. First, property ownership is a public record. Go to your local government center and request a list of people who own apartment buildings in the area you’re interested in. Then you can write to the owners, letting them know of your interest. For the biggest impact, consider handwriting these letters. A personal touch goes a long way in sales, and they will remember your note before they do the mass-mailed piece.
- While you are at the local government center, you can discover some other worthwhile information. Who’s getting a divorce or declared bankruptcy? These individuals or companies are often looking to unload valuable investment property.
Direct to Seller
Bypassing the middle man comes with some risks, but it can be lucrative. You don’t have to look for a “For Sale” sign to find great apartment buildings to invest in.
- Drive around areas you are interested in. If you notice an apartment building you are interested in, take note of it and contact the owners. This is important if you notice a slightly run-down apartment complex in a nicer area. Often, the owners need cash. Send them a note telling them of your interest. The worst thing that could happen is they say no. If you don’t live in the area, drive through it virtually using Google Maps.
- Put ads up on Craigslist and social media stating your interest in purchasing apartment buildings. How you phrase the ad is important. Ask questions like, “Are you tired of performing maintenance on your building?” “Ready to cash out on your rental properties?”
- Contact the owners using tremendous tact. Often they don’t know they want to sell, and you will need to persuade them. Let them know from the beginning that you are not a broker. You are an investor. If they are not interested, thank them for their time. Better yet, send them a handwritten thank-you note. When they decide they are interested, they will remember you first.