How To Find Multifamily Properties – Ultimate Guide 2020
July 06, 2020
In good times and bad, multifamily properties with five or more units, aka commercial property, can be an excellent investment. Sometimes, the biggest challenge is how to find multifamily properties. In this article, we’ll explore how to find multifamily properties so that you’ll know where to look.
Best Websites to Find Multifamily Properties
If you want to know how to find multifamily properties, we suggest you start with the web. In our estimation, the top three websites are Zillow, CoStar, and LoopNet. Bear in mind that many real estate agents dislike these websites because they create competition.
All three share similar strengths and weaknesses.
Here are four reasons to use a website to find multifamily properties.
- Early Search: You don’t have to wait until your real estate agent or a lawn sign alerts you to available properties. These sites give you the ability to suss out exactly the type of property you want. They also set expectations as to price, location, and value. Moreover, you can better defend against agent happy talk when you know the market landscape in your area.
- Immediate Exposure: Sellers can immediately expose their properties to buyers by listing them on one of these websites. Millions of consumers can learn of properties this way. Most MLS services do this automatically. The effect is to expand the pool of potential buyers, both local and remote.
- Market Health: Buyers and sellers can look at listings on these websites to gauge the relative health of neighborhoods. The listings can also expose bargain properties. Additionally, you can make sure your real estate agent isn’t embellishing a property’s virtues and ignoring its vices.
- Avoid Agents: Sell-by-owner listings bypass agents. This may be a plus if the seller passes along some of the savings to the buyer. Buyers can use these savings to pay for a buying agent to protect their interests.
- Unrealistic Prices: These websites use algorithms to estimate a property’s value. The algorithm usually depends on tax records and perhaps nothing else. Often, these estimates fail to incorporate a property’s specific good and bad points that impact value. Nothing replaces the importance of a tour, whether in person or virtual. You also want to know comparables and, ideally, the contents of an engineer’s report.
- Agent Payola: The agents listed on the website entries pay for the mention. You have no inkling whether these agents are the best or even competent. You don’t even know the listed agents have anything to do with the property. Do not assume that these agents are somehow vetted by the websites – they aren’t.
- Job Security: If you somehow think that these websites will eventually replace real estate agents, think again. Many buyers and sellers require a personal relationship with an agent. But these websites may decrease overall demand for agents, which should help weed out the weak ones.
Finding Offline Properties
While the internet is a great resource for how to find multifamily properties, it’s not required. This list shows how to find multifamily properties without going online.
- Buyer’s Agent: These worthy individuals act on your behalf to ferret out the best deals specifically for you. They may use online resources, so that you won’t have to do so. Often, the seller will pay the buyer’s agent’s commission, making it a free resource.
- Short-Sale Agents: You can work with a short-sale agent to find pre-foreclosure properties. Often, lenders will consent to a short sale to avoid foreclosure costs. Short-sale agents specialize in finding properties in which the seller is highly motivated.
- A Cruel Year: Ask your agent to find suitable properties that have been languishing unsold for at least 365 days. Many times, the sellers will crawl over broken glass to unload these properties. Just make sure you get a great price and understand the cost of needed repairs.
- Lawn Signs: Keep your eyes open for “For Sale” signs. These properties might not be listed online. This is a great way to get properties at reduced prices.
- Word of Mouth: Pay attention to stories about available properties that might be worth seeing. Some may waste your time, but occasionally you’ll uncover a gem. Referrals from friends, family members, your social network, or business associates can be useful. Always hand out your business card to new acquaintances and ask for contact as appropriate.
- Seek Out Pocket Listings: Often, agents don’t put their best deals online – these are pocket listings. They include HUD homes, REO’s, Freddie Mac and Fannie Mae inventory, and auction houses. This practice occurs everywhere, but especially in New Jersey, Florida, California, Dallas, Nashville, and New York.
- Real Estate Investor Associations: Join one and get access to probate deals and other hot items.
How to Find Off-Market Multifamily Properties
An off-market property is not for sale on the local MLS. Buyers can benefit from these properties because they have less competition, avoiding pricey bidding wars. For sellers, off-market properties provide privacy. That’s important when a public offer to sell can spook existing tenants. Furthermore, off-market sales can avoid embarrassing publicity if you are in financial distress. In addition, sellers can avoid looky-loos by keeping properties off market.
Video: Uncovering Off-Market Multifamily Opportunities for Unlimited Deal Flow
If you want to know how to find off-market multifamily properties, here are some ways:
- Proprietary Marketplaces: These are companies that maintain private lists of available properties. You can access these lists when you engage with these businesses.
- Direct Mail: These are mailings targeting owners who may want to sell their properties. Often, this plants the idea of a sale in the minds of owners who hadn’t considered it.
- Contractors: Owners often repair their multifamily properties before putting them up for sale. If you can find contractors who do this type of work, you have a great source. Not only can you learn about pre-listed items, you also gain insights about property conditions.
- Investor Clubs: You can network with fellow real estate investors, especially if you have a property to sell. Buyers may hear about an off-market property this way. Moreover, buyers can often learn about the inventory, strategy, and the status of sellers and their properties.
- Drive the Car: You can scout the neighborhoods that interest you for interesting properties. If you see something you like, you can contact the owner and make an offer. Distressed properties might sell for a lowball price – it’s worth a try.
- Wholesalers: These are worthy persons who find property deals, get them under contract, and then flip the purchase rights to an investor. The wholesaler collects a finder’s fee from the buyer. Expect to invest in some rehab on these properties.
- Auctions: You can land an off-market deal at an auction for mere cents on the dollar. Sometimes, you need pay only the back taxes. These properties will require extensive repairs.
- Public Records: If you come across an off-market property with an anonymous owner, check the public record. The county clerk’s office should have the property registration. Use that to contact the owner and make an offer. They may be impressed by your doggedness in tracking them down.
How to find multifamily properties? One interesting tool is a heatmap analysis of real estate properties. The tool uses colors to distinguish values of the different metrics you pick. You’ll find websites that offer this service for a fee. In return, you may be able to identify multifamily properties that promise above average returns. Heatmaps are quick and easy, as long as you don’t mind paying for the data.
How Assets America® Can Help
If you’ve located a desirable multifamily property require a loan of $10 million or greater, contact Assets America®. We can arrange funding promptly and with substantially less underwriting hassle that most typical banks require. Call us today for a confidential conversation – we’re confident you’ll appreciate our professional service. Our motto is: Commercial Financing | Personal Service | Outstanding Results.
Frequently Asked Questions
What are the biggest mistakes while looking for apartment buildings for sale?
Lookout for the following mistakes:
- Not having a viable business plan.
- Using excessive leverage.
- Hiring clown-car management.
- Not having local market knowledge.
- Making a bad deal.
- Lousy market timing.
Any of these can deal you a gigantic hurt.
How is the current market for the multifamily industry?
Frankly, the pandemic has made it a great time to purchase multifamily properties on the cheap. Many owners want to get out at any price. Their panic can be your fortune, especially when you team up with Assets America®!
How can I get excellent financing for multifamily properties?
Assets America® is your one-stop solution for multifamily financing. Our proprietary network of private lenders and banks can finance almost any viable project starting at $10 million.