Real estate can be a competitive field, and with so many new investors vying for the same inventory, it’s becoming more difficult to secure good deals. However, even though the industry is packed with skilled professionals, it doesn’t mean that it’s impossible to get outstanding agreements with sellers. It just takes a bit more work.
One of the most crucial things new real estate investors need to realize is that working smarter is always better than working harder. Below, 15 experts from Forbes Real Estate Council share their methods for increasing the chances of landing a great investment deal and explain why the strategy they use is so effective at finding the best leads.
Forbes Real Estate Council members share strategies for sourcing a good deal.
Photos courtesy of the individual members.
1. Find Your Investment Niche Early
Find your investment niche early in your career. Focus on a specific strategy, a particular neighborhood or a certain property type. While you cannot constantly keep an eye on the entire market, you can learn all there is to know about a niche and always be aware of what’s going on there. Choosing a focus will make it feasible to find deals within your niche despite the overall competition. – Taylor Valore, Mashvisor
2. Leverage Big Data
Using big data to identify which deals have the best cap rate, gross rent multiplier and price per square feet combination tends to be a good way to immediately know which deals stand out among new listings and price reductions. We process every listing from the MLS and CoStar using software programs, calculate all of these metrics and share the most promising listings with our clients. – Deniz Kahramaner, Altasa
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3. Work With An Experienced Broker
Working with a broker that is experienced and qualified in the area you want to purchase in and the location is essential. This will ensure that you, as an investor, are getting the best properties based on the relationships the broker you are working with has with the market, other agents and even people that want to sell. – Galit Ventura-Rozen, Commercial Professionals, Inc
4. Don’t Go With A Generalist
Build your team of advisers with people that are experts in their field and niche. I have engrossed myself in the single-family rental investment space. Becoming a master of your craft and knowing all aspects of your niche will enable your clients to not only know you are the one to go to but ensure they are finding the right investment. – Noel Christopher, Renters Warehouse
5. Expand Your Reach
Keep growing your reach—you need to be the person that sellers, as well as those with access to sellers, are coming to when they have something great. As a continuation, you also need to build a reputation as someone who keeps their word, meets deadlines, closes transactions on time, etc. – Andreas Johansson, Berkovitz Development Group LLC
6. Get Creative With The Capital Stack
Get creative up and down the capital stack. A great real estate investment does not always involve purchasing real estate or stepping into the equity. Equity is only one component of the capital stack. Investors can also provide preferred equity, debt or a hybrid capital instrument. Ignore the crowd. – John Lettera, RealFi
7. Establish Yourself As A Problem-Solver
I let people know I can help solve real estate problems. Not all properties can be sold retail. Older homes need repairs, or maybe it is the case that the parents need to move out of the home and their children are faced with having to spend money to get mom and dad’s home ready for sale. Offering solutions to sell properties that don’t meet the “retail” market is a great way to find a deal. – Nancy Wallace-Laabs, Profitable Landlord System
8. Look For Distressed Or Foreclosed Property
As a real estate broker and investor myself, I always look for distressed, off-market and foreclosed properties. In today’s market, it’s almost impossible to find a good investment on MLS or Zillow. I’ve built a successful strategy where I constantly get off-market and foreclosed properties before they are auctioned. One of the strategies is contacting homeowners before they lose the property. – Valon Nikci, Link NY Realty
9. Search The ‘Unlisted’ Market
Finding a good investment property requires searching the “unlisted” market. This is where you should be partnering with a true local real estate investment expert. Local experts will be able to use their resources and connections to find the perfect fit. – Marco Del Zotto, LIV | Sotheby’s International Realty – Breckenridge CO
10. Look For Markets Experiencing Growth
Look for markets that are currently experiencing growth and invest in those markets. To do this right, you’ve got to be aggressive and committed. Not all investors take advantage of excellent returns because they get lazy once they experience minor success. Investing well means treating profit as a starting point, not the end of the line. – Michael McMullen, Prominence Homes and Communities
11. Cooperate With Professional Institutions
Cooperation with professional institutions is crucial. Both state and private companies offer investor-compliant real estate to investors who do good for urban development. Here, too, you have to be able to diversify. Various new construction projects in Germany have shown us that there is still enough space in terms of price to be able to place good investment deals. – Ehssan Memarpuri, VII GmbH & Co. KG
12. Build A Strong Network Of Agents
Good real estate investment opportunities come from a strong network. Build personal relationships with a number of agents from different brokerages in a given market for greater access to off-market or distressed opportunities. Competition for good deals is strong, so early access to a larger pipeline of opportunities will help you differentiate and win over the long run. – Megan Micco, Compass
13. Develop Relationships With Attorneys
Having relationships with attorneys can significantly increase your lead pipeline. Distressed properties from divorce or probate sales can be bought at a steep discount. Clients trust their attorney’s advice, so a referral from them carries a lot of weight. – Ron Costa, The Eighty Two Group
14. Focus On Keeping The Pipeline Full
Finding the best investment opportunity is all about keeping the pipeline full. Attend or host highly focused virtual networking events for different types of investors and specialty investment brokers where they share business intelligence as a way to increase their individual top-of-mind ranking with each other. Help niche experts become “the guy” when a referral source says, “I got a guy.” – Richard Lackey, City Commercial Real Estate, Inc.
15. Look For ‘Value-Add’ Deals
Finding good real estate deals has always been difficult. It’s harder today with more competition but mostly because the market has made everyone look like great investors. This will change when we have a market correction. Keep looking for “forced equity” or “value-add” deals that will help hedge a downturn. Avoid investing in deals where the primary strategy is that it will go up next year. – Ken McElroy, MC Companies