In real estate, it’s all about location, location, location. But when you’re prospecting for new CRE clients, it’s timing that’s everything.
New client outreach bears more fruit when you connect with people in a position to make a move. Like when they’re flush with post-sale capital or are sitting on a distressed property. Finding these potentially motivated buyers and sellers isn’t hard if you know where to look.
Find buyers with cash from a recent sale A recent seller often has newly freed-up capital they’d like to redeploy on a new investment. And for those wishing to use a 1031 exchange to delay paying capital gains taxes, timing is urgent.
Sellers are under time pressure to use a 1031 exchange. They have just 180 days to close on the exchange or pay capital gains on profits. The urgency makes your service all the more critical.
But even sellers who aren’t worried about 1031ing are prime prospects. They likely have funds ready for investing.
Recent sellers are easy to find from closed listings. Just search for recent sales in a marketplace like biproxi. Then find out who owned the building last using county records or a title search.
Owners of distressed properties are often looking for a way out of an investment that’s no longer working for them. These potential buy-side clients are motivated to unburden their portfolio, and you can be the person to help them do it.
Properties can be in distress for many reasons. Maybe the owner doesn’t have the funds to update an older building. Or sagging market rental rates are leading to a negative cash flow. Or possibly someone inherited an asset but isn’t interested in maintaining it.
There are several ways to find distressed properties. You can “drive for dollars” by looking for buildings that show signs of disrepair—especially wear that’s out of line with other buildings in the area.
Another option is to search for pre-foreclosed and bank-owned properties on sites like bankforeclosuresale.com. Or find tax or loan delinquencies in tax and mortgage records.
These opportunities have another benefit. Distressed properties are perfect for the BRRRR investment method. So you can find buy-side clients for those properties, too.
When an investor purchases a couple of properties, that may be a signal that they have a lot of capital that needs new investments. Maybe they’ve recently sold a large asset or come into funds another way. In any case, you would be the perfect broker to help them find an asset in your geographic area.
You can position your pitch as helping an investor expand into your geographic patch. Say someone just bought two warehouses in downtown Chicago. You know the northwest suburbs better than anyone. Contact that buyer and let them know why your market is a great investment and how you can help them find their next warehouse purchase.
Locate trending buyers on Reonomy. Run a property owner search, then cross-reference it with recent sales.
The end of a lease term signifies a potential change for both property owners and companies that lease space from them. Catch each at this flux time, and you’ll be in a prime position to help guide them through it.
Owners may want to exit before a tenant’s lease runs out. That’ll free up their capital, and they won’t have the hassle of changing over tenants (or renegotiating a lease).
Tenants, on the other hand, may be ripe for purchasing instead of continuing to lease. Help them learn the benefits of being an owner/occupant vs. paying rent to gain their trust.
Finding this information isn’t always easy. Lease information isn’t publicly recorded. But with some pre-planning, you can unearth opportunities. Many property listings show the tenant's remaining lease term. Keep a running tally of the properties and leases in your area, then reach out as they get near the end of their term.
If rental rates don’t keep up with a building’s appreciation, the return on equity in that building will underperform. That’s a perfect time to sell and redeploy capital into a higher-performing asset.
Here’s an example. Say the owner bought a building for $400K 10 years ago. Net operating income then was $32K, which means the cap rate [add link to future biproxi post] was 8%. A healthy return.
But now the building is worth $1 mil and NOI is $64K. The new cap rate is 6.4%. Not bad, but much less than before. And if other properties in the market have a cap rate of 8%, it may be time to exit the current investment and redeploy in another.
To find these clients, concentrate outreach on the owners with buildings that have appreciated and explain how you can help them find a higher-performing asset.
Expired listings may be a sign of a frustrated owner who wasn’t able to sell their property before the end of the contract term with their agent. You can be the hero and help the owner get the asset off their books.
Find expired listings a couple of different ways. First, try a service like REDX. They compile lists with contact details of expired listings.
A Google search is another option. Enter a popular listing site like LoopNet into the query bar and add terms like “listings” and “expired” to the search query. It’ll bring you to the expired or out-of-date listings in those marketplaces.
As a broker, you bring a lot of value to owners who want to sell their property quickly and for maximum returns. Some owners don’t appreciate those benefits until they try the FSBO (for sale by owner) route. Be the broker who steps in when they’re struggling, and you’ll have a loyal client for life.
Find FSBOs in your market on platforms like buildingsbyowner.com or fsbocommercials.com. Or search listing sites for owner-financed properties. They may or may not be FSBO, but a higher percentage will be. You can also find multi-family FSBOs on Zillow.
With your target list in hand, prepare a value proposition that pitches how you, an experienced broker, can take them from “for sale by owner” to “just sold with broker.”
Casting too wide of a prospecting net will get you a list full of people who have no need for your services in the foreseeable future. That means more time spent chasing dead-end leads.
At biproxi, we’re fixing that. Every member of our community of investors, brokers, and other CRE pros is verified and held to a high standard of professionalism, integrity, and conduct. Each listing is a first-party upload, accurate, and up-to-date, which attracts serious investors. All so you can spend more time working with the people who elevate your business.