Without a track record, how can I be taken seriously by brokers and sellers? I have never done a deal before, will brokers talk to me? How can I connect and earn the trust of brokers and sellers when they haven’t even heard of my name? These are questions that have always been asked of me by newcomers in real estate investing.
In one of my podcast episodes, Mark Kenney and I discussed this topic. Building relationships, gaining credibility, and winning the trust of brokers and sellers are common problems that many getting into real estate syndication face. Fortunately, there are many ways to overcome them. I’ll be sharing with you now ten essential tips that Mark Kenney, a seasoned real estate entrepreneur, recommends to overcome these challenges. Mark, the founder of Think Multifamily, has extensive experience in property evaluation, acquisitions, and operations and has earned a top-notch reputation among the multifamily investment community. You can listen to our full podcast here.
#1 Have a Track Record
“If you don’t have one, you need to go borrow one. Legitimately borrow one from somebody else,” advises Mark. Telling a broker that you are partners with someone well-known in the industry gives instant credibility to you as a novice in the community. “If you are in a coaching program, then you can leverage your coach as a partner and I can tell you that elevates the discussions with brokers in a much favorable way,” adds Mark.
But, how do you find that person who will lend credibility? Mark suggests attending events e.g. BiggerPockets, REI meet-ups and conferences, and making online and social media connections to meet industry luminaries. There are individuals who have gained valuable knowledge and skills in this field that are willing to teach others and become potential partners. With a mentor’s vast experience, a newcomer can learn valuable real-world lessons that no courses could teach.
However, Mark advises newcomers to contribute value such as skills, service, and financial resources to potential partners. “You need something of value to bring them. If you don’t have something of value, the reality is most people won’t bring you in, because they’re just too busy, so you need something of value,” he adds.
#2 Have Clearly-Defined Criteria
Be specific with the types of property you’re looking for. Write down the criteria and communicate them to brokers directly. It shows the brokers that you are organized with your business and are serious about achieving what you want. It also shows that you want to work efficiently and are keen to waste no time on deals that don’t fit your criteria.
Mark cites the following example to clearly define your criteria. “If what you want to say is ‘I’m looking for a mid-80s construction, pitched-roof, around 5000 sq.ft., rehab, 100-plus units in these locations, a Fannie or Freddie, which means I need to be 90% or more occupied for 90 days or more’” the following will help clarify your specifications and define your ultimate criteria.
Apartment building: typically mid-80s construction, a minimum of 100 units, Class B, rehab between $4,000 to $6,000 a door, occupancy – initially, Fannie or Freddie’s occupancy, needs to be 90% or higher for 90 days or more. Physical attributes: pitched roof not flat roof, central heating and cooling.
#3 Meet Face to Face
“People will always say they want to be in business with people they know, like, and trust. You can develop that much faster face to face,” shares Mark.
While digital communication has advanced extensively, face-to-face meetings are still relevant components in the real estate business. They can facilitate more effective communication, develop rapport with clients and connect people on a deeper level. This helps build strong relationships, and ultimately, helps you achieve your goal. “Take the broker or the property management company for coffee or lunch because you’re developing that relationship. Make your meeting more productive by touring a property to give you an idea of what the market has to offer. Face-to-face meetings show time and financial commitment and tell them you’re serious,” adds Mark, reminding us that it’s always best to tie face-to-face meetings around a property tour to make the broker’s time worthwhile.
#4 Do Your Homework
As a piece of property is listed, the broker will have put together an “offering memorandum” or OM, which contains all the information and photos of the property, including information about the sub-market. This can vary in length (from 10 pages to 60 pages or longer) but Mark strongly advises studying the contents and understanding at least the basic information.
“Brokers spend a lot of time putting together the OM so as a matter of respect, those who receive it should know the stuff in there. Don’t ask the broker the basic questions that you can read from there,” advises Mark, adding that knowing this information will make you look more credible to brokers.
“Know the number of units. Know the roofs are two years old. Know the units are individually metered. Know it has aluminum wiring. Those things that you can rattle off show that you’re serious, that you actually spent the time to do your homework,” stresses Mark.
#5 Do What You Say You’re Going To Do
“If you say, “I’m going to meet with you” or “I’m going to put an offer in”, make sure you follow through. When you commit to something – even if verbally and not legally binding – do it and do it right. In our business, you want to be known as a man or a woman of your word,” tells Mark.
Putting your words into action shows your sincerity and integrity as a person, qualities essential in building credibility and earning the trust of people you deal with. In any business, being known as someone who keeps their word even in things that seem small or insignificant will help your business thrive. People will trust you and keep your relationship strong enough to refer others to you. When you break a promise, you hurt the people around you, they stop believing you and taking you seriously, and you lose out on great opportunities. Practice the habit of keeping your word and people will see you as someone who knows how to get things done.
#6 Don’t re-trade
A re-trade occurs when the buyer renegotiates the purchase price of a property to a lesser amount after initially agreeing to purchase at a higher price. This usually happens after the initial steps of the sale have been done, and the seller will lose heavily by backing out of the transaction. As a buyer, you should avoid re-trades because brokers and sellers will see this as taking advantage of the seller, who may not have any other prospective buyers. Although re-trades can also happen for legitimate reasons, this can be prevented during the due diligence process where flaws or defects should be discovered and disclosed by the seller.
“Don’t go back on things you should have been able to see at the time of due diligence or on things that were disclosed to you. Don’t say, “We found out that we need to paint the building and the cost of painting is $70,000. How could you not have known that when you looked at the property before you went on a contract? Better be known by brokers and sellers in the industry for not re-trading,” cautions Mark.
#7 Be A Good Loser
“Let’s face it, you can not always win deals. Best to accept that this business is a long-term game and you’re going to lose more deals than you’re going to win and you’re going to be disappointed. So, learn to be a good loser,” advises Mark.
No one wants to be a loser, but even more so, no one wants to deal with a sore loser. What is the cost to your relationship or the cost to your reputation among brokers when you get upset, have an outburst, or be passive-aggressive when you don’t get a deal? Yes, even the most genial person can sometimes struggle to deal with frustrations – but don’t let those negative emotions get in the way of your relationships. Mark advises to take losing gracefully, learn why you lost, don’t quit, and raise your game. If you’re not willing to lose, then you’re never going to win.
#8 Give Brokers Feedback on Deals
Building a relationship based on trust begins with open communication. This holds for a buyer and a broker’s relationship. When you take the time to contact a broker to tell him what you think about a deal that you’ve put effort into studying, you’ll be seen as a serious and trustworthy buyer.
“It is always good to tell your broker honest feedback about deals that he’s offering, letting him know that you’ve reviewed them and being upfront why you think it does or does not work rather than just saying nothing and leaving it hanging. The advantage is, one, the broker learned something, and two, they start understanding your mindset and what you’re really looking for,” advises Mark, emphasizing that giving good and instructive feedback will make finding deals faster and easier since you’ll receive more deals that fit your criteria.
#9 Don’t screw a seller
“Don’t screw a seller, even if you can. The real estate industry is a small world. You never know who you’re going to be buying from, never know who you’re going to sell to,” cautions Mark.
Mark cites a few examples of deals where one-upmanship in contracts prevailed but negative consequences eventually had to be dealt with by the wrongdoer. As this industry has become a community where everybody almost knows everybody, word of mouth can make or break a player’s reputation. Hence, whatever transgression you commit will eventually catch up with you and can damage your status and destroy your business. So, it is best to be ethical and fair in all your dealings.
#10 Don’t be a jerk (Be easy to work with)
“Don’t be a jerk or the reverse – be easy to work with. I tell brokers, -I want to make this the easiest transaction that you can do. Make it easy for everybody involved. Make it easy for the broker. Make it easy for the seller,” recommends Mark.
Character and behavior play a significant part in building relationships that impact your business. Capitalize on your good character, be mindful of your common pitfalls, and be understanding of others. Be empathetic and you are likely to form stronger relationships and will be easier to work with. As Mark says, “It doesn’t matter whether you can execute, doesn’t matter how much money you have, or how smart you think you are, the reality is people don’t want to work with jerks.”
FINAL THOUGHTS
The real estate business is a relationship business, a people-centered one in a tight-knit industry. So, as you establish your track record and build your business, it matters to understand yourself and to know and live out business ethics and your values. It matters how you treat people because ultimately, your relationships that foster trust and respect becomes the cornerstone of your success.
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Life Bridge Capital is here to guide you in the world of multifamily investing. If you’re interested, we’ll be happy to talk to you. You can email [email protected] and reach out, and we’ll schedule a call.
