How do you build a solid multifamily portfolio? Usually one property at a time. Sure, there are aggregated portfolios for sale for those that have portfolio acquisition money. But for the rest of us, we buy one property, then we buy another. And after a while, we have a portfolio.
My first on-line real estate purchase was in 2003. It was a single-family house in a nice neighborhood. I made my second on-line real estate purchase in 2005 paying just over two million dollars ($2.0M) for a multifamily apartment complex. I’ve been hooked on Internet search ever since.
Shop Globally, Buy Locally
It’s an every day occurrence that people shop the Internet to learn about product features and prices. Then, very often, they will look to purchase that same item locally based on price and availability. The same is true for Internet multifamily property shopping. Most shoppers are looking for a local property. It’s a mistake, however, to rely exclusively on local resources to identify available multifamily assets. The internet provides us with the ability to search globally for local assets.
Lenders Near and Far
Pick a lender (any lender) and a review of their apartment loan portfolio will reflect mortgage loans near and wide from the home office. Wells Fargo has loans coast to coast. Same with Bank of America and two dozen other lenders.
When looking for a local property make sure the search includes REO (Real Estate Owned) websites of national lenders. One cannot assume that all local property is controlled by local lenders. This leaves too many assets out of the search.
Fannie Mae and Freddie Mac have billions of dollars in assets for sale. Granted, most of their for-sale assets are mortgages, but not all. Some are bread and butter multifamily apartment assets in major cities.
Get Lost, Get Found
It’s fine to “get lost” on the Internet for a time while searching for deals. It’s not fine to stay lost. Time is money. Have a plan on how to utilize your time on-line while property shopping. Like going to an auction, you price points and market area should be determined in quiet (off line), not in the heat of the moment (while searching).
There’s little reason to spend a day looking at multi-million dollar deals if your price point is much lower. Have a plan. Stick to the plan. Focus on finding deals that will work for you. Take into consideration available financing and current financial underwriting standards.
Local Knowledge, Global Search
The biggest time-waster is fooling ourselves in terms of property shopping for deals that are out of our ability to obtain. Even then, accomplishing a global search for a specific locale (one or two markets) only has value when you have superior knowledge about that market.
If you know nothing about a market, why are you searching there? If that’s the case… you’re just surfing.