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we're gonna be talking today about how to negotiate a multi-family deal um there's a lot of different ways to do it this is our way and so i think it's the best way for us it may not apply to your specific situation but you're still going to find some good content you'll see why we're actually going to go through and fill out an loi it's going to be our template loi which i'm also going to share with you at the end of it so we're going to go ahead and when you receive the uh recording email for this webinar there'll be a link to a dropbox link um there'll be a dropbox link in that email for this document it's gonna be obviously sterilized without our letterhead and everything else on that and some of our specific nomenclature but you will receive the loi template which you can use to submit lois on your very own multi-family property so we want to jump in and be sure to type your questions in the question and answer box as we go through so step number one in negotiating a multi-family deal is having a multi-family deal to negotiate and i talk about this often um and you have to have your broker relations set up in advance so we're not gonna spend a lot of time on that but you number one have to have broken relations because you have to have deal flow having broken relations gets you deal flow and that could be anything from just being on their email chain or having you know communications with them so they're talking to you about deals so so we're going to skip all that section go right to having a deal so you receive a deal now normally when we receive deals it's going to be through an email offering we're going to talk about on market deals on market deals are going to receive a you know coming soon or you know new offering from whoever it is you know different brokers cushman wakefield walker dunlap cbre nkf jll any of the major brokers they're going to send out an email with the deal you're going to click on the deal offering sign the the ca which is the confidentiality agreement and you're going to get the financials from that property the number one thing or the very first thing i do when i see a new deal and number one it's fitting my criteria it's fitting my market it's it's fitting everything that i need so i'm already to that point i've already qualified the deal in my mind the number one thing i'm going to do is reach out to the broker i'm going to ask him to question him or her two questions i'm going to ask what's the guidance and what's the cfo that's called for offers date the guidance is what is the pricing guidance that you have on this deal that may seem a little bit different to some of you may seem counterintuitive and we'll talk a little bit more about that but i want to know where they have priced this deal so that's num number one so i'm gonna get the price i'm gonna get the cfo day cfo date it's gonna be the call for offers that's gonna give me the time frame so how quickly do i need to get out and take a look at this property how much time do i have to get to underwriting um how much time do i have to discuss it with the managing partners to make sure we're all on board so that gives me the time frame step number and so what i do want to stop for a second and talk about getting the guidance price the guidance price is very very important a lot of times i hear people talking about underwriting a deal and it's got to hit their criteria and they offer the price that makes sense for their model and that's fine you don't want to bid more than you can obviously you have to hit your return metrics that you have set for your specific you know buyer pulls or investors but don't offer on a deal that where you're offering way lower than their guidance it's just a waste of time so the reason i get that guidance first off is because if i can go ahead and put into underwriting real quick i can tell at that price i can tell whether that deal is going to work or not at a high level and then we'll tighten it up or sharpen our pencils as i say as we go on but i can tell you right now that the guidance is very valuable now that that guidance price is going to be your entry level price uh yeah and we do have a question i'll go ahead and address that is guidance the same as whisper price yeah pretty much um there's different terms for it another term that's more on the broker side is bov or broker's opinion of value it's the same thing it's where they're guiding you to bid on this property um and i'm just here to tell you that it's gonna go most of the time i can say 95 of the time that price is going to go up from that guidance i've never seen it go down in the in the past several years down from guidance i've seen it come in at guidance but i've never seen it go down so that is the starting number the starting number not the end number so you want to get that and then start your underwriting price process and then go ahead and get you know go from there it frustrates brokers when you um put in an offer much lower than what they gave you the guidance on it's like well were they even listening to me that's that's literally what they say i have many conversations with many brokers and they really appreciate you know offers that are on target the rest of them are just dismissed that you know there are going to be groups that are going to hit the guidance and if you're way below that just because it hits your metric don't even offer on it it's it's not doing you any good it makes you it will make you seem less legitimate in the buying process okay so that's that's my first um piece of advice to you if you can't offer the guidance price um based on your metrics then then don't offer on that now i will give you a caveat on that that is for um a little bit larger deals definitely not for mom and pop that's going to be a little bit different because you're probably dealing with a local local broker and if it's listed with a local broker they probably have a price like this is the price and you just have to pay that price and you may negotiate that down from there that's a little bit different i'm talking about institutional or mid-range multi-family you know 100 units plus is what we're talking about here so when you're dealing with again i'm going to run through the brokers that i deal with on a regular basis it's going to be cushman wakefield walker dunlap bracadia nkf um cushman wakefield i said that one jll um so those are the the ones that we deal with most and this is the same process we go through with all of those once we get that number and we've qualified all of our underwriting and the deal is good okay so we're going to skip all the details of all the underwriting and all the work that's involved in that because we're getting in the meantime we're getting pro formas from our management company we're get we're you know checking out all the comps we're touring the property so that's just stuff you do you know on top of this this is about negotiating the deal so as we're doing that i'm touching base with the broker and i'm just getting a feel like hey how's the interest on this are you getting more interest than you thought less interest than you thought you know how's your pricing coming do you think it's going to be at guidance or you know and you just keep that contact going that's very important because if you reach out right at the beginning and then they don't hear from you all the way until call for offer cfo date then they're going to assume that you're not really interested and so they may dismiss you in their minds with some people that have been in more contact with them throughout the process so don't be annoying but but stay in contact maybe shoot an email hey you know we're checking out the comps everything looks good on this property excited to put an offer on you know on whatever date they've set so make sure you stay in contact make sure you keep them close to you um and one one question that we have at this point in time is uh don't you think that a lot of these properties are overpriced by the broker overprices relative um to the returns that you're trying to meet um if the you know the cap rate is not out of way out of whack with the market it may be higher in per door price than what some of the other properties are but if you can hit your return metrics and it's a good cash flowing property and you there's a lot of upside there then you know in my opinion there is no such thing as an overpriced property if it if it's making money it's making money that's the end of the story now you know i'm not gonna pay you know a three and a half cap for you know charlotte property but you know within reason if it hits your metrics and it's making money then the prices is kind of irrelevant at that point in time the only thing you have to pay attention to at that point is is resale so if you have a real tight cap rate let's say you're in the low fours you know in a charlotte market let's just say then when you go to sell you're probably going to have to sell for a higher cap rate than what you bought it for so you'd again if you're able to do that and still hit your irr numbers or your cash on cash numbers then that's fine that's not really an issue and you want to always underwrite for an expansion anyways but i don't want to get too deep into the underwriting i want to stick on with the negotiation um so as we get to the cfo day i've already toured the property touring the property there is some value you can drive the comps drive the property get a feel for it see how many you know see like what kind of cars are in the parking lot um are they in good shape are they broken down um are there a lot of cars during the day i know it's a little bit tough with kova to tell that and it depends on whether you're looking at a cb or a property on how that may be because some of our a properties there's a lot of cars a lot of people are consultants that are working from home now with cobit so it's it's harder to judge that than it was before covid but you can drive the comps you get a feel for the sub market but the biggest benefit to touring the property is getting face-to-face time with the broker showing interest showing your knowledge of the market showing you know i try to go out to lunch with the broker afterwards if i can just try to build that relationship as much as possible that's all part of the negotiation process and you know talk yourself up talk about you know how much experience you have you know if you don't talk about you know different deals that you've been a part of or you know do the best you can it's kind of like an interview just do your the best you can to put yourself forward in the best light possible as you move closer to best and final date i usually wait till the actual call for offers date that date is a little bit tricky um so on that date a lot of people are waiting they're waiting till all the offers come in and then they're calling the broker and say okay where is the cutoff going to be for best and final and i and i i misused the term i said when best and final comes up earlier when call for offers come up you're calling the broker on that day and the number one question i'm asking him is what is the best and final cutoff okay and what does that mean that means that on average depending on the market and the deal you're going to have 20 or 30 groups bidding on this property they're not going to take all 30 and get another bid they're going to take the top five and when i say top five it's not always the top five in number it's the top five like most legitimate groups okay so let's say this group looks good this group looks good um and their offer is with guidance and they'll give you a cut off like if you're below you know let's just say 20 million then anybody below 20 million is not going to best the final okay and then you know if if you can't hit 20 million you know even if guidance was 19 and he's telling you uh they're telling you best final cutoff is at 20 then it's not going to do you any good okay you say well we can't hit that sorry you know we'll see at the next one but hopefully you've underwritten it well enough where you have some expansions because remember that that guidance price was the starting price um all right so after that now on call for offers day there's going to be um a lot of people delaying and trying to wait to the last moment so they're like the last group in to the group to get better guidance to get a better feel a lot of groups won't even offer till the next day if some if the call for offers date is on friday some groups won't offer until monday that's not necessarily a problem you just want to listen to the broker in those cases i've done that i did that this week matter of fact i had a deal i was working on the call for office was friday i called the broker and he said i'm still waiting on some stuff to come in i don't have good guidance for you now he's not going to tell me exactly where everybody else is at but he's going to give me a range he's like why don't we wait till monday let's touch base monday and uh we'll get a better feel then so and that's what we did the thing you got to be careful about with not offering on the cfo day is the seller if the seller is someone that's really paying attention like a really you know experienced seller they're paying attention to who offered on time because one of the things they're looking at is can this group close this deal and can they close it on time and if they can't even submit an loi on time that's your letter of intent then how do i know they can get their inspections done on time or the psa sign the purchase and sale agreement how do i know they're going to be able to get any of that done on time so be careful with delaying offering your loi past the cfo date just talk to your broker get guidance from them and that's really where that relationship comes into play you know and it's i have personal relationships with the broker where i'm talking about you know some of the younger brokers you know who who you know where they're going on vacation or you know even their dating life you know talk about those things you know because i'm interested and it helps build the the relationship right so you have to be on that level um i have one question um you don't have your own broker representing representing you you work with the listing broker directly usually question that is correct this is not like single family real estate where you have a buyer and seller broker this is just the listing broker there's only one broker on the side they're working for both sides but remember that they're working for the seller the most and the more that they get for the property the more that they making commission so it's a hockey stick kind of thing like if they hit their bov the broker pending the value then they get this amount if they you know but then from there if they get let's say just 50 000 more it goes up and so they they're trying to push it as well so be mindful of that um that's where again those relationships come into play where you learn to trust your brokers but there's no um buyer broker seller broker in the space that we're in there there may be sometimes in your smaller and your duplexes and maybe quads you're going to see that sometimes all right so call for offers comes in you're in you made it to best and final you said here it is you you offer it you send the loi in um and i'll come back to the loi in a minute so you send the loi in and then you have best and final okay usually they're going to send you a questionnaire you're going to have to fill that out it's going to have who's who's in your group you know who the managing partners how many assets do you own um how many properties have you bought in the last 12 months have you ever dropped a deal that means you put it under contract and couldn't close it if so why um you know again total portfolio do you own in this sub market um if so how many units what's your entry cap rate what's your per unit expense year one uh what's your noi year one different questions like that it's pretty you know detailed um i don't think it's used as much as people would like to think it is but it's still a necessary step and then you're going to submit that questionnaire completed with your second offer and so at this point you're talking to the broker okay what's the seller most interested in is he interested in terms that's you know hard money earnest money closing time frame or is he are they uh interested more in um the purchase price you know is it just a dollar figure for them or is it i want surety to close so find out what that group the seller group is wanting and then talk to your broker and get that guidance so your second offer is going to be a little more detailed or guided towards the specific seller desires to make it more make yourself more example desirable to that seller so you're going to submit the second offer and then they're going to usually have what they call buyer interview calls so they're going to have the questionnaire that you submitted in front of them this is going to be the broker the seller and your group whoever's in your group managing partners or whatever is on the whoever's on the gp and you're going to have a call and you're going to um they're going to ask you questions about you know whatever so it's it really is a whatever type thing they're trying to get a feel for are you legitimate are you a tire kicker um you know and are you gonna be able to close this deal after that then usually they'll try to get a third bid from you um and just hear me when i tell you that every single deal that i've ever been in they've said there's not going to be a third round there's not going to be a third round but every single deal i've been in there's been a third round okay so just know that it's going to be the case so it's a it's a delicate process to know how much you should leave in the tank per se to offer on that third round so after that then it's really just up to again your relationship with the broker and are they going to kind of push you as the the best buyer for this property um and do you have the best price so at that point it's really not in your hands and you know you win some you lose some and it can be frustrating you put so much work hours and hours of work in that deal all the way up to that point just to lose it at the end happens all the time uh one thing i'll tell you is do not get upset with the broker because they pick somebody else because that's going to burn bridges for later deals just say oh man that's thanks i appreciate all your help let's get the next one and just move on um i've seen groups get upset i've heard groups get upset and it does not do you any good so just move on it's not meant to be okay [Music] and i'm going to answer the question there's a question about loi um or the same loi or is it different one so i'm going to get into that in just a minute i'm going to look real quick at the questions then we're going to jump into i'm actually going to fill out an loi in front of you and then i'm going to put this loi template without our stuff in there for you to look at so let me just look at the question answers how can you trust the broker if they tell you there are multiple offers on the property uh guaranteed there's multiple offers on the property um it's i you know i know the brokers i play golf with them if i can i go out to lunch with them if i can you know unless they're just down and dirty which you know i don't think any of them are that i've met there are going to be a lot of people especially at the level we're you know these are internet international buyers so we're dealing with west coast east coast you know all over the place [Music] um all right and then again the question what is whisper price whisper price is the same as guidance kind of what is that i just we just use guidance what's your guidance on that so i'm going to do that one do certain properties or markets have cfo dates with no offers being obtained i've never seen that happen usually because the brokers have underwritten this deal ahead of time and they've done their research and they know what they can get for the property and so they're not going to even list it if they don't think it's reasonable that's going to hurt their business later on when they go to try to sell someone else's property it's like well last time you told me you're going to sell my property for this much and i didn't even get an offer so we're not using you again so they're very careful to make sure they don't list something that is not going to be sold all right so i'm going to minimize the question answer and the chat box for a second i'm going to go ahead and share my screen all right hopefully every everyone can see that um this is my i'm gonna pull up my chat over here all right so this is our loi ah there we go everybody can see that if you can put it in the chat box say yes all right awesome all right so this is our loi template we are gonna give you this gratis in the webinar recording email so please use it we use it all the time i used it three times this week so all right and this is in template format if you've never worked with templates before i'm going to show you real quick look up here at the developer page developer tab if you don't see that in your word just google how to add the developer tab to your word documents this is how we do things like add calendars some of this may be second handy to you but for some it may not be so and same thing here i can put on my broker's names i can go up to developer and click on properties and i can add i can add any brokers so when i go to fill it out i just have to click on the drop down and pick a broker okay that way i don't have to type it every time and i avoid mistakes human error so i have the date obviously i just clicked today um this is all the letterhead which you can you know change all that as desired we i took all that out of the one i'm going to send to you so i'm picking this one again you can pick christian way new uh nkf new mark knight frank jll cbre capstone brickadia whoever you work with put that in there uh letter of intent i'm gonna put and if i click on this you see it pulls up property name i'm just gonna type the property name in there city you can see the little header right there state abbreviation i've added in here the states that we buy in okay so you you can add again you just go up to properties and you can add a delete as needed over here okay so and put it in the property name city state and then this is a lot of you know mumbo jumbo i'm not going to get a lot into all of that but i want to go over at a high level kind of what we are focused on so purchase price that's the number one so spell purchase price spelled so i have it very spelled out if you will so this is where you're going to spell out the amount you know whether it's 10 million 1 million 40 million 500 whatever you're gonna put that there and then you're gonna go here purchase price numeric okay and then you're gonna put obviously the numeric digits there uh the purchase price shall be payable at closing in cash that's or its equivalent cash you know obviously from debt most likely unless you um have been blessed more than most um and then earnest money deposit i want to talk about that a little bit earnest money is um you know kind of your escrow money or your you know you're going to put that down to prove that you're interested in the property or you have some skin in the game all right so right here pre-dd earnest money that's pre due diligence earnest money okay i'll i'll get to that a little bit so you can spell that out let's say um now on average you want to put the total earnest money at two percent but that is pre due diligence and post due diligence so one percent is what i recommend free due diligence and once you've done all your due diligence and the deal is fine and you're gonna move forward with it and there's no problems then you're gonna put in your second round of earnest money and that should be around another one percent what i do is do two percent round it down to the nearest whole number divided by two you know so half of it goes pre-due diligence and half of it goes uh post-due diligence okay um and i'm not watching my um q a so i'll get to those questions in a minute um okay so there's your um money payable into escrow with third party escrow agent after agreement is signed that's the agreement is determined up here and that's the psa or purchase and sale agreement um there's your numeric uh oh this is how much you're is going to be non-refundable so this is your hard money what you're doing with hard money is you're saying okay here's my earnest money let's just say it's a hundred thousand dollars and you're gonna put the digits there and i'm gonna say fifty thousand of that hundred thousand is non-refundable that means i don't care what i find in due diligence i'm that money i have underwritten this so well that no matter what i find you know we'll be good now i do put a couple contingencies on that that's going to be um non-refundable contingent on updated title survey and most recent positive phase one environmental test results okay so if there's something wrong with the title that's going to be a problem and we want to be able to get that money back survey if you know there's a property issue property line issue or a building's over a line or something that's going to be an issue or phase one environmental so there's ground contamination or something that's just going to completely kill the deal those are the only contingencies i put on my hard money hard money is very very valuable uh bargaining chip this shows the buyer how interested you are and how serious you are so if you really want a deal and you really know you sharpened your pencil put as much here as possible so you know we've gone up as as high as you know half a million or actually uh 700 000 was the highest hard money like non-refundable earnest money we've done on a deal so far um and you know that's that's risky and it's scary and that's where you trust that you've done your risk mitigation and you've done your homework on the due diligence prior to putting the deal under contract all right so you're to that point and then you see right here an additional and here's you're gonna put how much this is the second round of earnest money so after you've done all your unit walks your lease audits you've had your property condition report from your lender all of those things are done you're going to go ahead and release the rest of the funds in and so just real quick this may be confusing follow me if i put a hundred thousand dollars initial fifty thousand dollars being hard day one the additional that rest the other 50 000 is gonna go hard after due diligence and this other amount that i'm putting in here whether it be another hundred thousand just for this case all right so you're going to have a total of 200 000 in there now that's non-refundable because you checked everything now all you're doing is waiting on the bank to to finish the paperwork and get the loan done that makes sense to everybody you have inspection period due diligence just puts the time frame on it this is you can if you scroll over you'll see the things that i change you can see right there there this is a changeable metric um some buyers or some sellers want to close quickly and they're going to test your ability to close quickly by shortening that time frame they you i've seen it as low as 21 days on due diligence and so that is a bargaining chip these are called terms due diligence earnest money hard money those are all terms that are negotiating chips it's not just price okay that's one of them but it's not the only one um so pay attention to that um there's a lot of legal mumbo jumbo here you can read through when you get the copy of it and then on or before 30 days after satisfaction of the inspection contingency set forth and paragraph three okay so 30 days to do our unit walks lease audits all the rest of it then we after that's done all the money goes hard and then we have another 30 days to close this is when the bank's finalizing everything they're checking you know occupancy and rent roll and you know get an appraisal and all that you got 30 more days to do that um you can put an extension in here which we have built in but you see it's it's highlighted here okay 30 days our usually what we do in the first offer is just do real basic no hard money first offer you know go as close to best and final cut off as possible and leave yourself 30 days due diligence 30 days after that in a 30-day extension and then in second round is where you start to negotiate that okay and once you've negotiated that sometimes they'll say we don't want to give you an extension we have to close by this date and we're not going to give you an extension now that's risky because maybe your bank drags its feet and you can't control that and it goes past the 30 days so you have to really have confidence in your debt team at that point all right and then the only other changeable metric is right here where you can do any um state and again i have the drop downs or county taxes you know there's just legal stuff there i have my signature already pre-done in the um so i don't have to fill any of that out what i do is get this all filled in and i convert it to a pdf and i submit that in as my offer okay now i'm going to stop share there i know that was like drinking out of fire hydrant and you know i apologize for that but i'm doing i'm doing the best i can to give you as much content as possible so i'm going to pull back up my q a box and let's see if we can go through some of these questions um and so i'll go back to the question what are you actually submitting on the second and third round the redone loi or a brand new one so i save the word template that i just was showing you even though i converted it to a pdf i saved the word one in that format and i put them both in our system and i you know call it version one and so when i go to second round i am going to update those terms in that loi but i'm just going to change the specifics that i am changing like those terms that i went over i'm going to save that as version 2 both in a word and in a pdf i'm going to resubmit that and then third round same thing all right uh what's your go-to website to check commercial comps so you know we don't do any commercial uh real estate it's all multi-family but multi-family we and commercial quite frankly uh we use costar costar is the most comprehensive data website that you can get your hands on and it's very very valuable it shows you historical vacancy rates occupancy you know everything you can possibly want to know about the property but do verify because there are mistakes in that even even that as much as it does cost [Music] all right okay yep a little spelling error in the in the loi so yeah if you see any of that in there just go ahead and get it get it corrected no big deal um and we just got a question about survey i'm not going to be able to get to that this time because we're we're going to be focused on the um on the negotiation side of it but we'll definitely be dealing with some of that other stuff in some of the following webinars so sorry i can't get to that question is the escrow used as part of the down payment yes any of the earnest money is is taken away from the the total purchase price so it's not just money loss it goes towards the the um the property but it's held in escrow and is not actually hard or is not actually effective if that's a better term that makes more sense to people until the terms have been met within the contract um we're going to find that doc okay so the document you're going to receive an email when this recording comes out it is going to have a link a dropbox link to this document it's not going to have my letter my logo and my name and our attorney's name in there okay so it's going to be blank you can add those things in there but it's going to have all the fill-in blanks that i it's going to be everything else that i just showed you with the states and you can adjust you know what states you purchase in but that you can use that the legal jargon is correct and that that's been sent to our council but have your council check it because you're liable for your own documents this is just some content that we find helpful but all we are i'm not a legal professional so make sure you check that with your legal professional any tips and tricks on negotiating off market deals yes glad you brought that up off market deals are really are rarely i shouldn't say that not really but rarely are they truly off market in that no one else is looking at it but you off market deals is uh built a relationship with the broker he knows what i'm looking for he gives me a phone call and said hey there's this deal i think you might like and then i get the specifics of it and he you know he or she gives me the details of the deal and we go from there typically they've done that and had that same conversation with um two or three other groups um most of the time there has been the rare occasion uh we just closed the deal and that was the the deal we were the only ones looking at it and we just negotiated the price so on that in that case it's a lot more straightforward they pretty much just give you the price that if you can hit it you can get it and but a lot of times it's a little bit higher so they're kind of testing the market to see if they can get it before they go full market so if they can hit pretty close to their bov broker opinion of value before they go through all the process of having to put together an uh offering memorandum and all that listing and tours and all the rest of it if they can get pretty close to that off market then they're going to do it so it's not like you're going to get a huge discount most of the time on an off market deal you know i say maybe one percent maybe the discount on that so it's not going to be huge uh let's see if you don't have costar then where do you go um man there's so many um different sites out there you can use apartments.com because that shows you a map with different um apartments on it and you can kind of get a feel for which ones are your competition but i don't want to get too deep into that what percentage changes from loi one two and three um that is totally dependent on the deal uh i had one this week um it changed first round a couple hundred thousand dollars second round a couple hundred thousand dollars third round 1.5 million so you can't ever tell uh what it's going to do and so that's where the constant communication with the broker comes into play and at that point i'm like that's yours buddy you know if you can spend that kind of money on it uh we cannot and you know again it's frustrating when you put that much work into it and you're right there and all of a sudden something just blows out of the water and you're like you're shaking your head like i don't know how the deal makes sense because numbers are numbers and usually everybody's pretty close to each other but if i had to put a percentage on it i would say two percent variance if i had to put a number on it so hope that answers your question when does the due diligence day start and is there a minimum or max days for dd um due diligence starts the day usually the day the psa the purchase sale agreement is signed that usually takes about a week seven days or so after the acceptance or you're awarded the deal so then your council will start going back and forth on the purchase sale agreement so you'll get a draft your council will redline it you'll send it back they'll redline that one and you'll send it back you go back and forth finally you sign it they counter sign it and then that starts due diligence you wire your earnest money deposit and you're off to the races there's no minimum or maximum i wouldn't go much lower than 21 days unless you're have super powers on due diligence any special or different clauses to add to loi due to covid there are the only things we put in for covid is in the purchase and sale agreement the loi is much it's just a summary really of the terms and doesn't get into that much detail uh let's see and i'm not i apologize i'm not gonna be able to get to all these questions i have so many um and i apologize for that uh let me just scan through and see what we can get to is there a benefit to having a buyer broker and is it usual to sign an agency agreement there's no such thing at at the level where there's no such thing as a buyer agent that's just they're just is not um ever offer a cap rate price tip against against inflated financials uh no because in the purchase and sale agreement they have to represent accurate financials that's part the whole deal is defunct if they've misrepresented their financials so i'm not really worried about that how do you find brokers who have these off-market deals uh i i think i've used the word relationship probably 15 to 20 times in this particular webinar and i will say it three more times relationship relationship relationship if you do not have a relationship with a broker you're not going to get a deal period end of story and a discussion you might as well just do something else get to know your broker go out to eat with them whatever they like to do find out what they like to do if they like to go to an nfl game take them to an nfl game if they like to watch hockey take a hockey game they like to watch or go to an art gallery see if you can find one and take them to that and invite their husband wife a significant other whatever relationship it comes down to that and then past that it's ability to execute and so once you've done a transaction with that broker they know that you can execute and then it's like the the picture of a jet taking off you know that you burn most of the fuel taking off but once you're up to cruise altitude you're you're much you're burning much less fuel when before you've bought your first deal you're going to burn a lot of energy trying to get your first deal but it will happen you just keep on you know keep on keeping on here's a broker input i usually give buyers a short window on off market deals before sending to another buyer just to be fair that's a very yeah that happens a lot um hey i need to know something real quick uh by the end of this week if you can get on this deal and that's where your ability to turn around deals really quickly comes into play so um off market deals that is that is a true statement so thank you for adding that um you know and that a lot of times we've just had to turn them down because we can't turn something around that fast we're working on three or four other deals and this off-market deal comes in like i need an answer by you know tomorrow and i'm just like man i can't get to it you know so i just let it go and it may have been the best deal in my life but it's just i can only handle so much uh letters of intent become legally binding when do they become legally binding do you have to get the person's sale agreement to have a legally binding deal yes um i typically that's the case it's rare honestly in my experience that you get a counter-sign loi i sign it i send it in really that's just to like get the ball rolling and then say okay the deal's yours and we go to work working on the purchase and sale agreement and that's really the legally binding document to be honest with you i've never had a double signed loi in any transaction that i've had so typically no the purchases or the loi is just to get you the basic terms to now when you get to the psa you send them a copy of the loi to counsel and they use that for their draft i we're almost through the question so on the question answer i have not even looked at the chat box yet is there a script that you originally use when talking directly with the seller or listing agent if so can you share it if not where can we possibly find one how should we go about creating one thanks um so it's a little bit more organic than that um it's not very scripted i'm typically not talking to the seller personally um i do get to know sellers in the space but on a different level i am trying to just build relationships so when we do put an offer on a property through a broker that seller who's in the background who i'm not communicating with knows oh that's passiveinvesting.com i remember those guys i met them at nmhc and you know we we talked about deals in the southeast right so those relationships again come up but i really i rarely have conversations with the seller and if it's fully listed or fully marketed i am very careful never to contact the seller even if they're my best buddy um you could really upset a broker or feel like they're you're trying to cut them out so be careful be respectful of the process and follow those guidelines um again the template loi is going to come out in the email that's another question how do you differentiate who is a local broker versus an institutional broker okay so it's just institutional brokers have local offices so your big jll mkf cushman wakefield you know whoever it is um they are going to have a southeast team and then they're going gonna have you know let's just say a rally team a charlotte team a charleston team a greenville team or you know atlanta team a jacksonville team so they're under the umbrella of the big broker but they have sub offices so you got to get to know each group of brokers in each sub market and you have to remember who's in each sub market so you'll have two or three for this broker in charlotte two or three for this program charlotte two or three for this broker and charlotte and you're dealing with that same brokerage firm but a couple different brokers in you know raleigh or jacksonville or wherever so it's you know a crm or anything like that is a good thing to use to keep that straight i just put them in my phone as you know such and such brokers firm and i put the sub-market in there and i mean i get to know them to the point where i'm i remember it now but when you're starting out it's kind of hard to do um crm um what crm do we use constant contact is what we're using right now that's more on the investor side to be honest with you um but contactually is one that i've seen a lot of people use because you can kind of put it in buckets so you could create buckets for charlotte you know raleigh jacksonville or where whatever market you're in i'm just using some that we do and you can create buckets and put brokers in those buckets and sub buckets of each brokerage firm so that one i like because of the compartmentalization of um that platform all right so that's going to be about all the time we have and i apologize for not being able to answer all the questions for you there's a lot in the chat that i did not get to so again hopefully it wasn't too overwhelming for you um always feel free to email me brandon passiveinvesting.com with any questions we're glad to help as we are able um this content and much much more are available at the multifamily investor nation summit coming up in january of 2021 and also go be sure to check out passiveinvested.com if you're interested in investing and go to our current offerings uh tab and check out what we have there and we're working as hard as we can to get some more stuff out but be sure to check us out again we have a webinar next week and more great content so be sure to join us often and be sure to tell your friends about us and we'll do the best we can to get you on down your journey on multi-family and share the content that we've learned along the way and help to uh make it as easy as possible for everyone else that wants to get into this great industry so again thanks for being with us today and join us next time