Broker relationships are a frequent dilemma for many new investors. How do you approach a broker? How do you prove you’re a real investor? How do you keep their interest if you’re not actively closing? How do you get their attention with no past experience? I asked all of these questions when hunting my first deal. In this post, you will learn the methods that we followed to scale into 50+ unit apartment deals via broker relationships.
Broker relationships can be extremely fragile. Without a track record or already established rapport, it’s extremely difficult to be taken seriously. Why? Because brokers are constantly fending off model junkies, one time e-mailers, and learners. Very few people actually intend to do a deal or even respond.
You may be thinking -- not me! I’m ready to do a deal. I have done the upfront work and research. I have the capital ready on the sidelines.
If so, then you’re ready to build your broker network.
The main goal is to build trust and differentiate yourself from the endless supply of tire-kickers.
You will be on your way to deep broker relationships (deal flow!) if you can execute on these three techniques.
On the topic of relationship building we like to think of professionalism as akin to mirroring. Mirroring is the behavior in which one person unconsciously imitates the gesture, speech pattern, or attitude of another. In this case you’re not imitating the broker, you’re imitating a professional investor. Professionalism is a differentiator. It builds trust, displaying commitment and competence. If you can show that you spent the time, money and effort to look like you belong. Then you’re already elevating yourself from the majority of tire kickers.
Simple ways to display professionalism:
- have a website and email signature
- have a logo
- use professional profile pictures (i.e. social profiles, gsuite, slack, etc.)
- communicate effectively - speak & write at a high level
- be concise and specific with your criteria
- be timely and consistent
Get involved! Be a part of the community. Staying active is the easiest way to separate yourself from the pack, yet requires the most commitment. As the saying goes, the squeaky wheel wins the deal. If you can maintain consistent activity over the long-term you will see deals before others. For best results, weave in your new found professionalism and track engagement along the way.
Simple ways to get active:
- do what you say you're going to do (i.e. if you see a deal and tell the broker you will get back them after u/w. Get back with them.)
- persistent follow up (be careful to not over do it)
- engage on social channels
- meet in person to tour or for coffee
When actively building our network we like to make sure we’re building real relationships. We like to understand what the broker likes to do on the weekends. Her favorite sports team. Where she went to school. We also like to get out and meet the brokers in person. Many times we have uncovered deals over a lunch meeting. Deals that would have surely gone unnoticed otherwise. Brokers are sociable people and they like to know that the other party is committed enough to take the time to meet.
Demonstrating competence is an extremely effective way to build trust. While effective it’s very costly in time. You can't fake competence. You need to put in the work before building broker relationships so that you can carry high level conversations.
Simple things you need to know to demonstrate competence:
- show you know exactly what you're looking for
- show some market knowledge
- be curious, ask calculated questions
- understand deal metrics
- know the lingo
- let the broker know what you're up to, what deals you've looked at, LOIs sent
Before we enter a market we ensure that we have a sense of what kind of deal we can take down based on the market’s capabilities. We ask ourselves questions such as: What’s the median cost per unit in the last 9 months? What cap rates are deals trading at? Average rent in X neighborhood? If we can answer questions like these, we know we have an understanding and can proceed with speaking to brokers.
We hope this helps you in getting on track with your broker network. If you’re a serious investor and can display some glimpse of these methods, then you will see deals. At the end of the day you’re just building trust. If you stay consistent and commit over the long term then you will prevail. Be patient and do the work necessary up-front.