WHERE TO FIND DEALS
The place to start is where you know the market, which is code for where you live. Don’t try to go into new markets in the beginning. Shop where you live and stay close to where you live until you start to learn the market. The first market I ever shopped was within a ten-mile radius of where I lived. For three years, every weekend, when I wasn’t working my main job, I shopped deals, exhausting every broker in the market, and I never bought a deal.
What you learn from walking properties is ten times more valuable than what you will learn reading a book.
When I moved to San Diego, I realized I had learned a lot and walked away from some very good deals. Rather than regretting what I didn’t buy, I resumed shopping properties in the new market I had moved to. The difference was, this time, I had the confidence of KNOWING what I was doing, what I was looking for, what a good deal looked and felt like, and what a bad deal looked and felt like.
Within three years, I had collected five hundred units. Over the last twenty-five years, I have since bought and sold over $1 billion worth of real estate, in nine different markets, through all types of economic climates.
What I know today after doing this for years is:
1) Apartments are the best investment for protecting your capital, providing dependable cash flow, and appreciation over long periods of time.
2) It’s vital to know the market you are investing in today and looking forward over the next five to ten years.
3) Knowing the market starts with knowing where the deals are and who has them.
4) The brokers who have the deals you want are CBRE, ARA, Cushman Wakefield, Marcus & Millichap, Berkshire, HFF and a few private broker shops in each market. Of course, there are also the private sellers. By having the right technology, you can get access to the broker property intel and the data is priceless.
How you contact those brokers and what you say to them is too much for this introduction, as that is an art in and of itself.
I learned very quickly, the fastest way to get deals is to close on the deals you make offers on. Be a closer, stay true to your word, and never violate the trust of the brokers’ market. Once the market knows you are a real buyer (a closer) the game of creating wealth through real estate investing becomes possible.
The broker network is very small, and in most markets, only a few guys control all the apartment inventory, at least the good stuff. If they don’t believe in your ability to close, you will never get the good deals.
Brokers are very private, highly competitive, almost paranoid, and, for the most part, underpaid. If they don’t know you, they won’t even return your phone call. Once you get them on the phone you better be able to validate your story as a buyer.
Also, always deal with the listing broker. Whoever controls the listing, controls the deal. Find out who is controlling the inventory in your market. Just because a broker is the big guy in one market, doesn’t mean they represent well in another.
The next thing is, you have to know the market. When I say “Know the market,” this is what I mean: economics, job providers, rents, concessions, expenses, the growing parts of the market, dying parts of markets, the politics of the city, the home prices in the area, the overall economic conditions, occupancy, cost of insurance, flood zones, salaries, crime rates, walk scores, reviews, concessions, credit worthiness of the market, demographics of your tenants, competition, other sales, history of property going back five years or longer; everything and more.
You should know what the last buyer paid for the deal you are considering, and know how the property operated during the bad times. You must know the existing management company’s work ethic, and service, to unveil opportunities.
You should walk the property during the day, at night, and on the weekends. You should also mystery shop the property in person and over the phone.
When you are investing, there is a lot to research: KNOW, don’t guess. Listen to everyone, ask a lot of questions, but make sure you know what the reality is, not someone’s opinion. Remember the Russian proverb made famous by Ronald Reagan, “Trust but verify.”
Having a passion for property is the first step in creating true wealth in real estate. Educate yourself more by picking up my book, “How To Create Wealth Investing In Real Estate.”
GC, Cardone Capital.
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