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A vacant office is rented as a shell. (Photo Credit: David Potter/Construction Photography/Avalon/Getty) … [+]
Where can you find the best deals in the ever-changing real estate market? Given today’s trend of digital connectivity and social influencers, online may seem like a good place to start. A quick search may bring up web listings and services featuring several properties in your area.
However, my experience has shown that in the world of commercial real estate, many options are slow to open up to the public. Additionally, finding a good investment property usually requires multiple (or more!) viewings. If you only visit one place, there is no other place to compare. Looking at only a limited number of properties can put you at risk of overpaying or missing building details that differentiate you from your competitors.
Whenever a new investor asks me for advice on sourcing a deal, I always share that it’s really a numbers game. In my experience as an investor, I have looked at dozens, even hundreds of opportunities before making a purchase. Following this process means having a good pipeline in place. If you have a system, you can monitor trades over time and find good deals. Let’s break this approach down into steps you can take as you build your own real estate portfolio.
Step 1: Establish a pipeline tracker
You will need a place where you can store information about your property. You can also initiate this in Excel or another database system. For each possibility, include the location address, property link, property broker or owner contact information, and transaction metrics. Adding details allows you to quickly analyze and determine if a property is in range.
Step 2: Review exposed options
Look for online property listing sites. There are a number of sites, such as Co-Star and LoopNet, that list what is usually sent by brokers. Keep in mind that what you are looking at is an opportunity the broker has decided to share publicly with the public. The best deals may not be readily available to the widest audience, and these sites don’t offer a glimpse of off-market opportunities.
You can also search the broker’s website. Start by identifying the most active investment distributors in your area. In some secondary and tertiary markets, brokers may act as generalists. For example, a sales intermediary may also offer services as a leasing intermediary. Add anything you find in these locations to your pipeline tracker.
Step 3: Build a relationship with your broker
Call us when you find the name of a broker active in your area. Meet and get to know them, and ask them to share any useful information. As you build relationships, they may tell you what they have in their pipeline (especially if you’re a new investor, it can take time to form these connections). , but they are worth it in the long run!)
Step 4: Canvas the Region
There is no substitute for going outside and taking a walk in your neighborhood or driving through the area you are considering. In a recent online search for commercial properties in Connecticut, he found only two listings. As I drove through the area, I spotted several commercial establishments in front of me with “for sale” signs. We also found some interesting places that are for rent and may have vacancies. All of these can enter the pipeline as potential targets.
Step 5: Identify Vacant or Improperly Managed Properties
Again, you may need to do some research and then call. If you find properties that seem abandoned and inactive, find out why. Check out data providers like Reonomy to get information about properties and owners. Then contact the owner and ask if they have plans for the place.
After performing these first steps, you’ll have the beginning of a pipeline that you can use as a resource. Remember that the most important part of finding a bargain is the follow through. Sometimes the best opportunities are those that have sat on the market for months or disappeared from the market. Looking back at them, you may find that sellers’ motivations have changed (especially in this market). We may reduce prices or change terms. Then you will be able to move forward and acquire a great fortune. Over time, pipelines can become a valuable tool to help build portfolios and realize investment goals.
