In our first podcast, Jake and I had the pleasure of interviewing 30 year veteran Rick Gentry, real estate broker from Cushman Wakefield. We were fortunate to land Rick on our very first deal, a 25 unit multi-family property. Little did we know that Rick would be an integral part of the next few deals we closed on. We learned early on that a Real Estate broker is a vital team member and indispensable for your success in multi-family investing.
In this article, we are going to describe what qualities to seek out in a broker, what you as an investor need to bring to the table to attract these top notch brokers, and what kinds of questions you should ask your broker.
Rick has extensive experience in all facets of real estate, from land development, to construction, to managing and selling apartments. He started out with smaller properties, but he saw as we did the potential in multifamily investing. The fact that he owned and managed apartments was the one deciding factor that attracted us to Rick and we knew that he would locate deals for us based on our specific criteria.
He also was vital in building our team members. He was able to refer a home inspector, a mortgage broker, and certain contractors because he had those contacts from his previous deals. Rick speaks the lingo of a real estate investor, and words such as Cap Rates and Cash on Cash returns are part of his vocabulary.
Brokers are a key member of your team also because they can bring you deals before they hit the market, thus allowing for less competition and a better purchase price. Deals that have not been listed yet are called “pocket deals”. The broker is keeping these deals in his or her pocket and is going to shop this deal to his preferred buyers, hopefully you.
Where do you find a qualified real estate broker? Here are a couple of places.
- Loopnet. This website does not have many great deals, but it does have brokers that list properties. We scour for brokers that have multiple listings in a particular market and then make contact. WE build repoire with the broker and give him our pitchbook so he knows we are serious players and he
- Other Team Members: Ask other team members for a referral. Usually, a management company can recommend brokers in their market. Other team members to ask are Home Inspectors, Lawyers, contractors, and mortgage brokers.
- IREM.org: great website that lists management companies. It is a good start to interview potential management companies in your market
- Chamber Of Commerce: Every city has a Chamber of Commerce, and it is worth the effort to call and ask for a referral. Visit their website and you will usually find a plethora of brokers.
- Real Estate Investors Association (REIA): great venue to network with other professionals in the real estate industry. Go online and locate the group that is located in your market.
How do you start up a conversation with a broker?
We used a script in the beginning to help with our nerves and to make sure we didn’t forget anything. With a bit of practice, a script will become unnecessary.
This is the script Jake and I use when introducing ourselves to a broker:
Hi, my name is Jake. I am an investor in the Knoxville, TN area and I am looking to purchase apartment buildings in your market. We like to buy B and C type properties that contain between 30 to150 units. We like to buy properties that have at least a 10% cash on cash return and a cap rate of at least 8. We specialize in purchasing apartments that are run by mom and pops, which allow us to add value and increase the cash flow.
Would you have any properties that fit this criteria?
What do you need to bring to the table when trying to recruit brokers?
The number one rule is to follow through on everything you say that you are going to do. For instance, if the broker is expecting a Letter of Intent faxed over by 4 PM, make sure he gets that letter. Make it as easy as possible to do business with yourself. Do what you say and say what you do.
Secondly, have a plan in place and communicate your plan to the broker. Jake and I give our pitchbook to prospective brokers, and it gives us instant credibility. Most investors barely have a plan, let alone an entire business plan spelled out for brokers to review. Visit JakeandGino.com to view our pitchbook.
The third rule is to be educated and know the real estate lingo. Having knowledge of the market is crucial because you can ask specific questions about that particular market.
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What are some questions to ask your potential broker?
- How long have you been selling multi-family properties?
- Do you own any real estate?
- How many properties did you sell last year?
- Why is the owner selling?
- What is the unit mix and what is the current market rent for the area?
- What is the value play on this particular property?
- Have there been any offers on the property?
- What is the tenant mix?
- Is there any deferred maintenance?
- Is the owner willing to hold paper?
- Have you sold any property in the area?
- Can you send me over any comparables?
- Can you help me build my team?
As you can see, finding the right real estate broker is essential for your success in this business. Not only will they bring you deals, but they will also help you build your team.
We hope this article helps you find the right broker that will deliver countless deals. Leave us a comment down below and let us know what questions you are asking when interviewing potential brokers.
Source: This article was published with permission from Jake And Gino