Finding Off Market Multifamily Deals
There are many sources to find off market multifamily properties. here is a list of a few places you could begin your quest.
Looking at listings online through MLS and other listing platforms like Crexi or Loopnet is the most common place for investors to scour the market for a potential deal. However, not every property that is sold on the market is listed and advertised to the public. Deals that aren’t listed online are called off market deals or pocket listings when they are held by a real estate broker. These properties have the potential to be very lucrative for those who know how to find them.
In 2019, MLS Statement 8.0 Clear Cooperation Policy was put in place by the National Association of Realtors. The goal of this policy was to create some regulations on pocket listings/off market deals. The policy requires that brokers list a property on MLS within one day of marketing to the public; this includes posting it online, putting up yard signs, sending out flyers, or any digital communication. However, to compromise, brokers can limit who can see these listings on MLS, and can choose to only show a listing to their clients.
Despite these regulations, you can still find off market listings on rental properties, and these serve as a great way for investors to locate lucrative deals. However, because these listings aren’t being shown to the public, finding them is more time and effort consuming. While there are many ways to get your eyes on some off market deals, the most effective way to make this happen consistently and with longevity is through networking. Below is a list of 5 ways you can find off market multifamily properties in your area:
5 Sources of Off Market Property Deals
There are numerous ways that people find deals around their area. As a general rule the more work you put in to finding the deal the better margin you will have, however sometimes the extra work is not worth the hassle.
Brokerage/Real Estate Agents
Brokers who have years of experience have developed robust lists of people on the buying and the selling side. This means that the firm will have off market listings already in hand or on the horizon. Connecting with brokerage firms that do business in your target areas is vital for your success. These firms make it very easy to get connected by hosting events and luncheons and sending out newsletters and new listings to those on their email list. Once you’ve connected with a brokerage firm and you start getting familiar with their agents you’ll start to catch wind of good deals. Eventually, as you do business with them, you’ll start to hear about new pocket listings earlier.
Other Investors
Building relationships with other investors is another great way to find some off market deals. You can often find investors at local real estate groups like REIN Nashville. Partnering with other investors and creating syndications is a great way to find deals that would normally fly under your radar. Syndication has become quite a popular method of financing deals in the past 20 years. However this is often about knowing the right people and being in the right place at the right time.
Contractors/Builders
Builders and contractors have a firsthand look at what’s happening with investors and their properties on a daily basis. Having a network of contractors is beneficial beyond having a team to work on your property once you do purchase it. Builders often have insight into distressed property owners who are potentially selling a property. In addition, there are many great local builders here in Nashville, TN who are looking for potential buyers of renovated rental properties.
Wholesalers
Networking with wholesalers, who are constantly making cold calls and searching for potential sellers, is an easy way to find potential deals. Although you may pay a premium on a wholesale property, you avoid the legwork required to find the initial seller. *RIA is not a wholesaler. As a brokerage firm we represent both buyers and sellers every single day. It is not our goal to make short term gains. We are always looking for long term clients that want to work with us.
Pound the Pavement
Real estate has always attracted people willing to hit the streets looking for deals. Sometimes, this is the best place to start, requiring nothing more than a little extra attention while you are driving. During your commute, take a detour through a neighborhood looking for a duplex, triplex, quadplex, or another small multifamily. You can usually spot them quickly by the number of cars parked outside. Note details like condition and the number of units. If a property is in disrepair, it could be due to a landlord who has “given up” and may be more willing to part with their property. Keep a record of these properties in a notebook or spreadsheet and build up a database. Eventually, track down the owner, make contact, and get a sense of their plans for the property.
Conclusion
Finding off-market listings in Nashville or wherever you may be is not hard. However, multifamily investing is not a get-rich-quick scheme; it takes work and time but has proven to be an excellent way to build wealth in the long term. To find the deals that make you the most money, develop a strategy, implement it, and then hone it over time. If you are a networker, find real estate agents and other investors to network with. If you enjoy the hunt, then start changing your driving patterns and scour neighborhoods, building your database of properties. However you go about it, there are deals out there that will either launch your multifamily investing business or take it to the next level.
