Buying &amp; Selling Multifamily
Great Morning, For those of you who buy or sell multifamily, what are some marketing techniques that you use to get responses from sellers and get them to work with you? This would be from an investor and agent standpoint.
[{"id": "g3l6l4h", "text": "From an investor standpoint I usually have the asset manager get BOVs from the 2 best brokers in the market then pick one based on valuation (is it reasonable and does the broker have conviction in that pricing level) and workload (is the broker launching any other deals at the same time that are a lot bigger or not differentiated that will take up his focus from me). Also if it\u2019s a secondary market if there\u2019s another deal about to launch that\u2019s similar I\u2019ll re-evaluate timing to decide if it\u2019s worth launching now as I don\u2019t want buyers to have to pick and choose between similar product - I want to make sure my deal is the center of attention for its market and size. As it pertains to launch I\u2019ll also clean up the property (seal and restripe, power wash, etc) so the asset is looking it\u2019s best before we launch the deal. \n\nBuy side is a huge range of stuff - sometimes it\u2019s direct deals with people (although not so much right now market is on fire) sometimes brokered transactions but overall I\u2019m on the sidelines, I find multi to be way over valued right now. I\u2019m trying to sell as much as I can while debt is cheap and people are paying way too much right now, and am fortunate I work in closed end funds so that I don\u2019t have to re-deploy capital. If I were a private owner or open end fund I don\u2019t think I\u2019d sell right now, there\u2019s no where to really redeploy right now and have accretive money. In private owner instance I\u2019d probably look to take out a cheap supplemental right now to pull out cash instead if I\u2019d created enough value that I was considering selling an apartment. \n\nAnyways my $0.002", "replies": [{"id": "g3ll538", "text": "Wow all that for less than a penny???  Wonder what we can expect for 2 cents.  J/k thanks for the insight.", "replies": [], "depth": 2}, {"id": "g3lopdv", "text": "All that for $0.002? I guess that follows the rule of always deliver more in service value than you receive in cash value. Thank you for your response. \n\n\nHypothetically speaking, if you were to sell using brokers what would make you consider another broker outside of the two best in the market? What information/value do you expect brokers to provide if you receive a random call/email from a them asking if you're looking to sell? \n\nWhat do you expect a buyer to say if you receive a call, text, or email stating that they're interestedin buying one of your properties?", "replies": [{"id": "g3m33xe", "text": "So typically I\u2019m only a seller when it \u201cfeels right\u201d - it\u2019s as much art as science. I\u2019ll have the AM run a rebuy on it to see that theirs no juice left to squeeze then take it out. I\u2019m always talking with brokers and tracking trades in the markets I play in so I try to be as literate as I can be on \u201cpulse valuation\u201d. Early in my career I worked for a really well known investor who would tell me that if you wouldn\u2019t buy your own asset at the price you can sell it at today, you should probably sell. I live by that mantra, and had subsequent experience with one of the fundamental investor hedge funds that taught me a lot about what basis matters and how to understand your margin of safety in a deal. \n\nNow all that being said, if some guy cold reaches out to me to sell my property, I\u2019ll hear him out but if I\u2019m not already inclined to sell the property I\u2019m not going to do so. Some of these guys are just like independent deal hounds, if they say they have a buyer great, I\u2019ll give them my strike price with a little bit of up margin and if they can hit it, great, if they can\u2019t no skin off my back. I\u2019ve honestly never sold anything this way, I\u2019ve never had compelling pricing come back. \n\nIf an independent buyer approached me about an off market deal if it\u2019s not in the ballpark I\u2019ll politely pass, if it\u2019s in the ballpark or way high I\u2019ll slow roll them and get a BOV done (usually by the person who sold it to us since they know the asset best and can turn a BOV back faster). Based on BOV make the decision to sell it or take it out for a broader process if for whatever reason the number is way higher than I think it\u2019s worth. \n\nAnyways my $0.0002. Cheaper for you this time!", "replies": [{"id": "g3przdz", "text": "Thank you again. I'm fine tuning my approach methods in order to provide the best possible value and service. When you're not the top broker yet you always have to learn in order to get better. If you're ever looking in the Florida market I'd be glad to help.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "g3lr3yu", "text": "With cheap debt, and assuming private/open ended, would you consider selling &amp; redeployment to development or is this too risk heavy for your tastes?\n\nCompressed construction carry can be very impactful on developer profit, as can present values on LTC, allowing for getting \u201cinto the game\u201d at a much lower equity hurdle than is typical. \n\nAs an investor with deep knowledge, you\u2019ll know works from a marketing stand point and performance stand point across your portfolio and can craft the design/spec to meet your ideals.\n\nNot necessarily applicable to you, but just a suggestion on what may be a redeployment alternative to buying existing assets that, as you pointed out, are valued to favour sellers across the board (generally - of course there are always deals out there) presently", "replies": [{"id": "g3m3uia", "text": "I mean candidly I\u2019m not super stoked on providing development equity right now - sure LP economics have gotten more favorable but it\u2019s a falling knife environment in a lot of places and I\u2019m not sold on the ability to get decent construction debt right now. I\u2019ve recently tried to refi some pre stabilized deals and was really underwhelmed by the strike coupon and LTV on them, would think that the dev market is similar even with recourse to the GP. YOC margin to spot cap is still pretty thin too which gives me pause - I\u2019m concerned about debt pricing post election if there\u2019s a blue sweep (although I was confident that was the case 2 months ago, now I\u2019m starting to think that in spite of himself Trump might pull it off). Lot of uncertainty right now has me on the sidelines of redeploying capital into anything, especially a development.", "replies": [{"id": "g3nke5l", "text": "Ya fair enough - I\u2019m up North so our circumstances are more stable and not as impacted (yet still impacted for certain) by the outcome of the coming election.\n\nConstruction debt rates up here are excellent (e.g., prime of 2.45 plus .5 with potential to be straight prime on a chunky deal). Refi pre stabilization is not a good look tho and I wouldn\u2019t look at that here either!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g3m3kkl", "text": "I don\u2019t respond to direct inquiries. They have proven to be a waste of time. \n\nLast one I engaged I said \u201cI\u2019m signing a listing agreement tomorrow for $339k. I\u2019ll entertain an offer of $300k today since I can save brokerage fees.\u201d He came back at $220k.  And wanted to chat on the phone for 20 minutes. Finally I said, let\u2019s stop wasting time we are too far apart. 45 days later and I\u2019m under contract for $315k. \n\nSo to answer your question, don\u2019t make ridiculous low ball offers.", "replies": [{"id": "g3psoo4", "text": "I don't believe it's a waste of time you guys were just too far off from each other. Sometimes deals workout and sometimes they don't. However, it allows you to gauge interest in your asset. You accepted a great offer knowing you had backup offers which provides you additional leverage when negotiating. Gives you the ability to say I have other offers on the table and not be lying about it. Congratulations on your closing!", "replies": [{"id": "g3px3x5", "text": "I disagree. An offer of 2/3 of the market value is a waste of time and generally acts to annoy the sellers. I can look at comps, both listings and closed sales, to understand the level of interest in my asset.", "replies": [{"id": "g3q8ttx", "text": "I understand that the offer was underwhelming. Why do you believe someone wanting to buy a property would seek to annoy the seller who has something that they want?", "replies": [{"id": "g3r5u9h", "text": "I don\u2019t believe they are trying to annoy sellers. I believe they follow some system where they spend an inordinate amount of time looking up property records to get the contact information for landlords in the hopes they will find someone who wants to sell under duress. In the process they contact a number of people who are not in duress trying to make a bottom feeder deal.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]