Most investors look in the wrong place to find investment property for sale. Take a quick look on the internet for investment properties and you may think that it’s not possible to find a good property for sale that is not over priced. The key when you are looking for investment real estate for sale is to understand that the best deals are not usually advertised. If you’ve read my latest book, “Commercial Real Estate Investing” then you probably already know that the key to finding good deals on real estate investments is in creating relationships with real estate brokers.
“Pocket Listings” of Investment Property For Sale
Some of the very best deals on investment real estate come from something known as a “Pocket Listing”. This is when a broker knows about a property for sale, but they have not yet officially announced it to the rest of the buyers who are looking for a property. With single family homes, this announcement is usually done by adding the property to the MLS or Multiple Listing Service. With a commercial property, the public announcement can be adding the property to Loopnet.com, mailing a postcard out, or by adding the property to the company’s website.
Why All Investment Property For Sale Is NOT Equal
The real estate brokers job is to get as much as possible for the investment property depending on the owner’s situation. If the owner of a property is in no hurry, and has no compelling reason to sell quickly, then the broker can price the property aggressively and wait for a retail offer to come in. On the other hand, if the seller is motivated by a divorce or business partnership that is coming undone, or perhaps the seller is dealing with an urgent medical condition, then the broker’s job is to get the investment property for sale quickly, even if it means lowering the price or offering some creative financing terms.
So ideally, you are going to work to create a situation where the property needs to be sold quickly, the seller is motivated, but the broker has not yet released the listing to the public. This is the pocket listing situation that you are looking for. The problem is that you can’t simply call up a broker that you don’t know and ask them “Do you have any pocket listings for me?” The answer is going to be no.
The reason for this is that when a broker does have a pocket listing, in most cases the broker is going to call the investors that they know and trust to offer them the opportunity to get a great deal on an investment property before they release the property for sale to the general public.
So your goal when calling or looking for commercial property for sale should be twofold.
1) Get the information about the property including all the income and expenses
2) Create a connection with and get to know the real estate broker
Your best deals probably won’t be the advertised commercial properties that you initially call about. Instead, once you create a connection and rapport with the broker, you’re in a position to get access to pocket listings which is where some of the very best investment property for sale can be found.