Before you can negotiate and perform due diligence on a piece of commercial real estate, you have to find a deal. And history has proven that those who look at the most properties have the best chance of finding something really good. So what are the different methods to find a deal to buy?
On-Line Listings
The internet has brought a lot of advantages to society and one of them is the ability to look at a number of properties quickly. But the first step is to choose a niche, as real estate on-line is sorted by type, such as multi-family or self-storage. Loopnet.com is one of the old standards, but many niches have their own specialized websites, such as Mobilehomeparkstore.com for mobile home parks. Remember that many sellers place price tags on-line that are too high, as they are hoping to find a sucker, so you will need to renegotiate the prices down most of the time.
Brokers
While only a fraction in number of single-family home brokers, commercial real estate brokers often field ten, twenty or thirty properties at one time, so they can ramp up your volume of deals quickly. Once again, you have to choose a niche as most brokers are highly specialized. Marcus & Millichap is one of the largest firms, but they have branches all over the U.S. The trick is to reach out to each and every broker in your particular niche and get on their email lists to receive constant updates on their listings.
Direct Mail
One of the most effective methods of finding a property is to do good, old-fashioned mailings of postcards or letters to property owners and have them call you if they’re interested in selling. The general rule is that you should get a 1% return on your mailing – so if you send 500 you should get 5 people to call you with potential deals, which is plenty. To do this properly you have to take the addresses for properties you find on-line and then go to the county tax assessor’s database and get the name and address of the owner.
Cold Calling
This technique is normally the scariest, but it’s really not as hard as it sounds. Using the owner and address information from the tax assessor, you get the phone number on the internet and place a call. It’s a whole lot easier sometimes to send something in writing first and then calling to see if they received it and if they have an interest in selling their property.
Friends and family
One resource that many buyers overlook is simply spreading the word among friends and family that you are looking for a certain type of property. If you think about it, most people know literally hundreds of people so if you talk to ten people you’re probably hitting 1,000 potential references. While the lowest odds of these five methods, you should not avoid it. We have bought many deals over the years that were sourced from people we know.
Conclusion
Finding a deal is not just a first step: it’s essential. These five methods should produce a huge volume of potential properties to choose from. And when it comes to commercial real estate, volume is essential.