Tired of cold calls and dead ends when approaching off-market multifamily deals? You’re not alone. Getting sellers to talk numbers, especially about unlisted properties, can feel like pulling teeth. But what if there was a way to quickly gauge their interest – without demanding financials upfront?
That’s where this lightning-fast method comes in, it lets you estimate a property’s value and present a tentative offer in 60 seconds or less. This sparks dialogue, reveals the seller’s price expectations, and saves you from wasting time on unviable deals.
Here’s how it works:
- Know your cap rate: This key metric reflects your desired return on investment. If you’re unsure, research local averages or use your preferred target rate.
- Gather simple intel: Ask the seller two vital questions:
- How many units are there?
- What is the average rent per month?
- Crunch the numbers: Apply this formula:
- Monthly income = Number of units * Average rent
- Annual income = Monthly income * 12
- Net operating income (NOI) = Annual income – (10% vacancy)
- Estimated value = NOI / Cap rate
- Make your move: Present a verbal offer range. For example, if your calculation gives a $1 million value, offer between $900,000 and $1.1 million.
- Read the tea leaves: The seller’s reaction to your range is telling.
- Intrigued? They see potential – proceed to requesting financials for a formal offer.
- Dismissive? Move on – they’re likely outside your ballpark.
The beauty of this method:
- Fast and efficient: No need for lengthy financial analysis or back-and-forth emails.
- Minimal data required: Two simple questions get the ball rolling.
- No pressure, no offense: A range offer protects you from making a lowball proposal.
- Quick identification of hot targets: Focus your energy on promising leads.
Remember, this is an initial gauge, not a guaranteed deal-closer. Be prepared to adjust your offer and negotiate based on actual financials. But Bill Ham’s method gives you a powerful tool to cut through the noise and spark meaningful conversations with potential multifamily sellers, all within a minute.
So, the next time you encounter an off-market multifamily opportunity, skip the endless inquiries, and put this rapid-fire technique to the test. You might just surprise yourself with the results.
For more information like this check out my blog at www.realestateraw.com and join my Facebook group Real Estate Raw for Multifamily Investors.
Happy hunting!
Bill Ham
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult with a qualified professional before making any investment decisions.
