Finding Our First Deal

Do you remember the first day of junior high school? Do you remember how nervous you were after all of the shows you watched growing up. You know... where the older, bigger kids stuff the younger kids in lockers and pour milk on their heads? Do you remember trying to find your classes, trying to look cool in front of the older kids? Trying to act like you know what you’re doing, but you have no idea? Well, to me, that is exactly what it felt like throughout the process of my first deal in multifamily real estate.

Where do you start? Who do you align yourself with? Is anyone going to take you seriously? These are the types of questions that will run through your head constantly in Real Estate. There are thousands of courses and mentorships and things you can get caught up in, but finding the right people and information for you is crucial. When we set out to find our first deal, the first thing Matt and I did was found, and paid for a mentorship. I had a solid amount of experience in Real Estate on the single family and property management side, however commercial real estate is a COMPLETELY different beast. I researched and researched and was able to find a great mentor named Justin Brennan the owner of multifamily schooled (https://www.multifamilyschooled.com/) who simplified everything and gave me the tools I needed to take down my first deal.

The first item you will want to learn was commercial real estate lingo. There is nothing that will turn people in the multifamily world off more than someone who has no idea what they are talking about. In the single family world, you can use a couple of terms and get away with knowing absolutely nothing for a long time, just go talk to 99% of Real Estate Agents… In multifamily, there is a level of sophistication you need to survive. Next, you will need to learn how to analyze a deal, this more than anything in my opinion is the most crucial step when starting out. Again, multifamily is nothing like single family when figuring out a value, it's not pie in the sky, “my neighbor sold for x, so my house is worth x + $20K…” It has to do with the income and location of a property, and your investors profit has to do with how much more income you can produce out of a property in the future than it is currently making. The last critical step you need when getting started is learning how to find a deal. Once you learn these 3 steps and you practice until you feel comfortable, then it's time to get to work.

If you know nothing about the first 3 steps I just outlined, then in my opinion you need to take a class or find a mentor/mentorship. Somebody who is going to walk you through step by step on how to get your first deal, which is exactly why Justin Brennan’s mentorship was great for us. He broke down how to find, analyze, and execute a deal in 90 days. 

The first thing Matt and I did was study everything Justin had to teach us, we watched all of his social media content, followed everyone he mentioned in his posts and everyone they mentioned on their posts. We learned the lingo, learned how to analyze a deal and how to find a deal, then we acted.  I hopped on Crexi and Loopnet (the Zillow/Redfin of commercial properties) and looked at every deal in our buy box throughout about 5 different markets, analyzed them, found a price I would pay for the property and simulated writing an offer on all of them. Once I did that, I looked at who the brokers were for every one of those properties, wrote their name and phone number down and looked in to how many deals they had done (Crexi/Loopnet will tell you this info by clicking their names). Once I did that, I started to call every broker that was active and doing deals. Connecting with them and sharing who I was and what I was looking for. Then I asked all of them about the deal they had listed and any others they were working on. Then I shut up and listened intently to what they were saying. I learned a lot about what to say, what not to say and everything in between. 

Based on the information I gathered from all of the brokers (We are talking about dozens of brokers that I called), I would ask for the financials of their deals and then analyze the deals again with the updated info. Once I did that, I would call back and further my conversations with the brokers. Doing this was so impactful because brokers are called out of the blue several times a day by crappy investors saying “Hey, can you send me your off market deals.” So, calling back and engaging with them on the deal they have listed lets them know you are serious and builds trust and rapport with them. 95% of the deals I called on, I had no interest in buying, but the brokers didn’t know that. What happened next? Nothing… So I called every broker back at least once a week for a month or two until I found a deal worth going after.

Then what happened??? I wrote an offer... aaaaannnnd was laughed at… I didn’t care, I wrote about 10 more offers on properties that I didn’t have too much interest in buying, but now the brokers started to see I was serious and was ready to move so I was added to several email lists where brokers send their deals out typically a week or two before they put them on the market. 

Everything I did to that point was to get the off market deals sent to me, but these brokers weren’t dumb, they knew I was young and had minimal experience, but following up and connecting with them several times, most of them were happy to send me their deals. Once that started to happen, there were better deals being sent to me and we wrote a couple more offers until one hit!! We had an accepted letter of intent (offer). I will discuss how that went next time, but in regards to finding that first deal, everything I did to get that offer accepted was hard work. So many doubts and so many times I had nothing new to say to a broker I had called for 6 straight weeks, but I did it anyway. Built so many quality relationships and met a lot of cool people, which come to find out, making those connections is 90% of the commercial real estate world. Next time I'll tell the story of when we flew out to Kansas City Missouri to meet with the seller of a 22 unit apartment building.