In this Podcast episode and YouTube video I cover how to go about getting your first deal in an area you've never been in.
I've done this a few times now (Texas, Baltimore and Washington DC), and I'm currently applying the process to an area I'm just getting into: Richmond, VA.
But the process is the same, and you can use it to learn the area, build a team, and get your first multi-family building deal.
Here are the steps:
- Step # 1: Compile a list of potential team members (brokers, property managers, attorneys etc) then contact them by phone and email.
- Step # 2: Build rapport and trust with the broker before meeting him by analyzing any deals he sends to you and giving him feedback.
- Step # 3: Plan your first trip to the new area to maximize your time.
- Step # 4: Meet with each of your potential team members in person.
- Step # 5: Make sure you continue to stay in touch with each of your team members as you look for that first deal.
While it's always better to invest in your own back yard, sometimes you need to go out of area to look for deals that meet your criteria. Even if you ARE investing locally, the process of building your team and looking for your first deal is the same: compile a list of potential team members, cold-call them, set up an in-person meeting, look at a few deals, then stay in touch after wards.
I'll talk specifically about what I did a few weeks ago in Richmond, and then I talk with aspiring multi-family investor Scott Isley as he describes his trip to Nashville, TN in search of his first apartment building.
Let's Get Started!
Listen to The Show on iTunes
Click here to listen on iTunes.
Listen to the Podcast Here
Watch the YouTube Video
Also watch my 5-minute YouTube Video on this same topic.
Links from the Show
The Bigger Pockets online real estate magazine (where Michael is a weekly contributor, see all of his articles here)
Tweetable Topics
“The Best way to find deals and build your team is through good commercial real estate brokers”. (Tweet This)
Love these episodes where you break things down, step by step. In a future episode, can you talk a little bit more about lining up financing before finding a deal. Scott said he had to provide POF letters before the real estate brokers in Nashville would make an appointment with him. But we constantly hear that in real estate investing find the deal first and then line up the money, that money always emerges to invest in a good deal.
I totally understand how having a POF letter will show that an investor is serious and ready to do a deal. But if one is going to use private lenders or get a non-recourse commercial loan or some combo of the two, exactly what kind of POF documentation can a newbie realistically hope to get in advance before identifying the property? Is a private lender going to be comfortable signing a piece of paper committing to an exact dollar amount to be invested at some indeterminate time in the future before a deal is identified?
With private lenders, what is your process? Do you have notarized commitment letters from your private lenders specifying how much money they’re willing to lend and under what terms, etc. before you’ve identified a property? I thought it was enough to get verbal commitments from people before a deal is identified and an offer is made. Do you do the PPM and form the LLC in advance of the property being found?
What exactly will a commercial real estate broker typically want to know about your prospective financing/funding source when you’re still scouting for properties?
What’s reasonable/unreasonable for them to ask you to provide in advance before a property has even been identified?
It would be very instructive to hear you talk more about this on a future episode of the podcast.
Thanks, Michael!
I am trained as an urban planner and an economist. Here are some demographic, geographic and economic indicators I use to analyze areas for real estate investing:
http://projects.nytimes.com/census/2010/map
It can be found by googling “census bureau mapping America new York times” the 2010 map is more recent and gives changes from 2000-2010. The 2005-2009 map gives more detailed indicators such as education, vacancy rates, etc. I could play with these apps for days and along with Google Street view get a very good sense of an area without ever setting foot there.
Thanks Calvin for sharing!