The almighty off-market deal. The deal everyone is looking for, but nobody can find. How do you get access to these deals when just starting in this industry? The short answer: 1,000 emails and 500 phone calls. The long answer: well read on and repeat the below steps 1,000 times. 

First some definitions. Off market deals are those not listed to the general public. These deals are the best deals. There’s less competition and the seller is usually in a must sell position. The term “off-market” is hardly used accurately in the real estate world. If an “off-market” labeled deal is sent from a broker, you are likely one of a dozen other investors looking at the deal. As you build relationships with these brokers you will begin to see these deals before the other dozen investors. The goal of this article is to help you climb the list of competing investors. Or even better, find deals with no competition. 

I’ve been in the brokerage business myself for just about 5 years now. In this article I have compiled some of my insights from the brokerage side. Hopefully this perspective helps other investors increase the quantity and quality of their deal flow.

Let’s get into it.  

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The deal flow stack

From a broker’s perspective. How do brokers think about funneling deals to outside investors? Well, it works like this. These brokers have buyer lists. This list is tiered. Top tier buyers (those with experience, or capital, or relationship, or all of the above) see the deal first. If they pass, the next tier gets a look, and so and so forth. You can see how the worst deals get filtered to the bottom of the tier list. The name of the game is to work your way up this list.

Here’s how you become a top tier buyer from day 0:

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1.  Email the 15 most active brokers in your market that focus on your asset class.

I gauge activity by transaction volume in the trailing 12-24 months. These are the brokers hustling everyday. They are the ones with the deals. Make your email professional and include a call to action. I like to set up a phone call to discuss further. [Access to CoStar makes this very easy. If you don’t have CoStar you can find these brokerages via google. Search “market + broker + multifamily”. Most brokerage sites have a “deals sold” page - use that to help gauge activity.]

Pro Tips:

• Contact lower level agents (i.e. associates). She is hungry to do a deal and is still building her relationships. In other words, your goals are aligned. Don’t reach out to the Executive/Director. She is unlikely to care about your 8 unit deal and has been building relationships for years.
• Find the boutique, single-asset focused brokerages. These are the gold mines. 
• In your email make sure you’re very concise in what you are looking for. Provide a bulleted list of your criteria. This displays professionalism and seriousness. Differentiate yourself from the dozens of tire-kickers that email these brokers weekly.

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2. Follow brokers on social

This will provide you with an opportunity to engage, learn interests, and will help keep a pulse on their work. Plus, if you post productively they will see that you are in the game and a serious investor. There’s two reasons why this step is important. (1) you get an inside look at how this person thinks and who they are on a more personal level and (2) it provides additional opportunities, or excuses to follow up.

Pro Tip:

• Follow up/engage as much as you see fit. But engage honestly. Become their friend. You’re trying to build trust and the best way to do that is through commonality. 
• Be patient. This takes time.

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3.  Make the calls

2-7 days following your initial outreach. Give the brokers a call. Whether they responded or not. This is part of the relationship building process. On these calls your focus should be on introducing yourself and finding a connection. You’re also trying to learn about the kinds of deals this broker primarily works on. If their deals don't fit your criteria ask them if someone in their office or a colleague can be of assistance. 

Bonus: if you set up an in person meeting. Bonus, Bonus: if the in person meeting is a tour of one their listings (whether you’re fully interested or not).

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4. Create a system to track follow ups 

The best deals will take time. It typically takes 5-7 different touch points to get the good stuff. If you build a relationship organically and continue to stay top of mind, you will see good deals. The follow up is where the deal will present itself. 

Pro Tips:

• CRM software is not necessary (though convenient). When starting out give Excel, Notion, or Trello a go. These have standard templates you can use.
• Don’t follow up incessantly. I would say every 2-3 weeks if they aren’t sending anything. Be persistent but not annoying. There’s a fine line.  
• Find unique ways to follow up. I.e. provide info on a deal you know about so they can get the listing or congratulate them on a closed deal.

5. Uncover new brokers and repeat the process

As you begin to expand your network you may come across brokers who don’t work on the projects you’re looking for. Ask these brokers for introductions to brokers that are better suited for your deal type. Do this with everyone you speak with. 

Pro Tip: 

• Draft a make-ready email for brokers/owners to forward to referrals. This way when you ask for a referral you’re not asking the broker to do any more work then clicking “send” on an email.

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6. DEALS!

It’s a numbers game. The lifeblood of quality deals stems from consistent deal flow.  The more deals you see the more efficient your underwriting. AKA the better your ability to pass on mediocre deals. Once you’re confident you have consistent deals in the pipeline, you will have no problem closing the door on that average deal. ‍

Pro Tip:

• If you underwrite a deal that a broker sends you (or anyone for that matter) make sure to provide feedback even if you decide not to proceed. This (1) shows professionalism and (2) helps the brokers identify your perfect deal. Don't leave these people hanging. They can easily find someone else. 

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At the end of the day all you’re trying to do is build trust. From the broker’s perspective they want to work with the buyer that has the highest likelihood to close and do so efficiently. Building this trust takes time. Be consistent, understand that it will feel like it’s going nowhere and all of the sudden, 6 maybe 12 months later you will get a call with a hot deal on the other side.