How to Find Off-Market Commercial Deals

Compared to finding off-market residential deals, finding off-market commercial deals is much more complicated and takes a lot more time than just doing a direct mail campaign or reaching out to people on Craigslist or Bigger Pockets. Commercial deals are much larger with much more sophisticated buyers and sellers on both ends, and most people in this space have much deeper pockets, so it’s about how you as a new real estate investor or experienced real estate investor in the residential space can get into the commercial space and begin to get these off-market commercial deals in your pipeline. There are a couple of ways that I’ve done it in the past which I will share with you.

Broker Relationships

Many people on the commercial side of real estate are what are called commercial real-estate agents or commercial real-estate brokers. The difference between these commercial real estate brokers and a residential real estate broker is that the commercial brokers normally do this full-time. Residential real estate agents could have another side job or could work at night or work during the day and they’re just a real estate agent for part of the day. They don’t so much go out and find deals and pick up leads and do tons of marketing to get these deals. Most deals come in to them or pass through them or they’re based on referrals and they just help people find places to live.

But it’s a very different dynamic once you get into the commercial space. This is because these commercial real estate brokers are working full-time to find deals for their investors, selling these deals to their investors, and meeting with the sellers who are sophisticated investors who have owned these buildings for a very long time and are now looking to liquidate. These are the types of people that you need to build these relationships with.

One of the ways that I’ve done it in the past is by going to LoopNet.com, searching in your city, looking at people who are showing up the most with the most multifamily listings or whatever commercial real estate deal you’re looking for, whether it be retail, office, multifamily, mixed-use. Go and look at the listings that are there and then see which names keep popping up, and then give that broker a call and maybe talk about one of the listings that they currently have and maybe tell them why it does or why it does not work for you. Explain to them your criteria and what you’ve been doing and your experience in real estate, that you’re looking to take it to the next level and get into the commercial side of things.

They’ll be very responsive to you in that moment and maybe they’ll send you a couple of deals. But after that point in time it’s up to you to continue building this relationship with these commercial brokers and the markets that you’re trying to do these deals.

I recently read in a book that when you continue to reach out to these commercial real estate brokers they’ll continue to have you in mind, which makes sense. But then also whenever you get a deal from one of these brokers, then instead of emailing back “No, this doesn’t work, thanks, but keep sending me stuff,” you need to pick up the phone and call this broker again and continue to build a relationship. Build a relationship with this person so that they feel more inclined to give you these deals instead of sending them off to their other investors.

The way that these deals work is these commercial real estate brokers who are doing this full-time have a list of a hundred investors who fit a certain criteria for this kind of deal that pops up. This commercial real estate broker will have their top three people who will see this deal first because they’ve had repetitive success and buy a lot of deals through this commercial real estate broker. If it goes through them, then he shows them to the top-ten people. If it goes through them, then he shows it to the top twenty-five. And then after that he will just blast it out to everybody. When you’re beginning you’re going to be in that top 100 list, which means that something like 25 people have already seen this deal before you and you’re getting the last pickings.

It sucks when you’re starting off, but there are still some great deals to be found just being on somebody’s list. The point is to do a deal with a broker and then you get higher up on their list, do another deal with a broker and you get higher up on their list, until you’re in this broker’s top three list and they can continue to send you leads and deals.

Many investors who are in the commercial space use these commercial brokers to get these commercial deals and they’ve been very successful in doing so. The more broker relationships you could have in a certain neighborhood, the more deals you can see. The more you can analyze, the more offers you can place and the more deals you can do every year.

Direct Mail

Direct mail is going to be a little bit different than the direct mail that you might be sending to single-family home owners who have lived there a long time and are maybe distressed with back taxes or a mortgage that’s hanging over their head and they’re underwater. Therefore, the direct mail campaigns that you’re going to be sending out to these commercial real estate owners are going to be a little bit different.

You’re still going to explain who you are, what you’re looking to do, that you have cash, that you can close quickly, etc.. These multi-family mailings may not be sending five thousand a month, two thousand a month, they might be very concentrated, so you actually might find twenty-five properties in your city that you really like, that you wish you could buy, and then you put them on a twelve-month or two-year plan of mailing them, and you can create a custom message for each one saying, “Hey, I like your property, it’s located here, this neighborhood is really good, and I’d love to buy the property from you, have you thought about selling it, I can close quickly, I have financing in place, I’m ready to go, I have property management, etc.”

Direct mail is one of those ways that you can generate these leads by yourself and also deal with the investor on the other end and work out something creative where the seller can provide you seller financing. They just like the cash flow but they want to get another property. There are many options here which you can begin to work out once you start to do these direct mails to real estate investors who own these commercial properties.

These are my top two recommendations that I have. Of course there are many other ways to find these off-market commercial deals but these are the top two that I’ve used in the past and that I recommend you try out first before doing anything else.

Let me know if you have any other questions or need any help! Reach out.

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