In this podcast episode I have the privilege of getting the perspective of an experienced commercial real estate broker of how to be taken seriously as a buyer, especially if you don't have a track record or are raising money from others.
Charles talks about how to build credibility with brokers (and how to avoid being tagged a “newbie”). His answers are encouraging to new investors, I think, because he didn't say that he discounts the newbie investors. But there are certain things a new investor should do BEFORE they pick up the phone and call on a commercial real estate listing.
First impressions are important!
Here are some of the questions we cover
- What's your biggest fear when you get a call from a potential buyer you don't know?
- What can the investor do to gain your trust and build credibility so that you take them seriously?
- What advice do you have for newbie investors who might not have a commercial real estate track record?
- For syndicators especially who don't have the cash sitting in an account, what can a syndicator do to address the “proof of funds” issue?
- How do you like the buyer to behave once you send them a deal.
- What are some things you've seen investors do that you strongly recommend against?
- What advice do you have for investors trying to find deals?
- What tips do you have for investors for dealing with you?
- What is driving the market right now? Who's out there buying stuff at low cap rates and why?
- What is your market outlook for the region and nationwide?
Here were the key takeaways:
- Have at least one prior banking relationship: you can get these by networking with local lenders and brokers. Do this before looking for deals.
- Learn to speak the lingo. Educate yourself, analyze deals. Then call the broker.
- Tour the property. Allows you to build rapport with the broker and earn their trust.
- Start a little smaller to get into the game.
- Who have you recruited to your team so far? What investors or partners are on board?
The key is to tell a compelling story that the broker can tell to the seller. The more compelling the story and the more of this upfront work you've done, the more likely it is that the broker (and seller!) will take you seriously, even if you've never done a deal before or are raising money from others. He also advised investors to analyze the deal quickly and get back to the broker with feedback. Only about 25% of buyers actually do this, and analyzing the deal quickly will immediately set you apart from other potential buyers.
How to Connect with Charles
Charles can be reached at charles.wentworth at cbre-richmond dot com. Enjoy!