When I got started in the business (with very little money but plenty of time), my Dad taught me real estate canvassing to meet owners. He knew that I did not know the market and the best way to learn it was to go out and see the apartment buildings themselves.
In this article, I am going to teach you what my Dad taught me. I am going to cover what canvassing is, the best way to get started, and how canvassing will translate into money in your bank. By the end of this article you will have a tool in your tool belt that most successful brokers and investors implement in their business but don’t talk a lot about.
Real estate canvassing is a very effective method for the newer investor/broker. The main idea is to get in your car and drive by all of the apartment buildings in your market. In doing this you will bump into owners, brokers, appraisers, and all sorts of industry specific professionals. Start up a conversation with them, let them know what you do and how you may be able to help them and you will begin forming relationships.
This works best in the spring time when owners are out organizing and spring-cleaning.
The first step in canvassing apartment buildings is to go down to your county courthouse and ask to see the plat map for your town or market you are interested in. If the area you are interested in is un-incorporated, you will need to go down to the township hall to get this information.
Find out what zoning district multi-family properties are in and look for that code on the map. You may be able to buy a map to take with you or they may even offer you one for free. If not, ask the clerk if you can take a picture and if they do not allow that, record the streets that the apartment buildings are on.
Once you know where the apartment buildings are at in your market, drive by them and take pictures. Also, jump out of your car and count the amount of electric meters, gas meters, and air conditioners. This will tell you how many units there are and/or who pays what utilities. In doing these things, you will get a great start in building a database and to know more about the properties when you are talking to owners.
A word of caution: some owners will feel threatened by your action. They don’t know who you are and what business you have on their property. Just tell them that you are an investor in the area who is trying to get to know the local market better. If they ask you to leave, then adhere to their request but unless there is a “no trespassing” sign posted, you should be ok. I actually had the cops called on me once and when they arrived they asked who I was. I showed them my business card and they told me it was legal.
Tip: Look for properties that have tall grass, peeling paint, or any other signs that the owner is not managing the property well. These are usually more motivated owners. Look for a “for rent” sign and call the owner. If there is no sign, knock on the tenant’s door and ask for the owners number. Let them know you would like to make some repairs to the building and need to contact the owner to give them a quote.
Lastly, you are probably wondering, “When/how do I make any money out of this strategy?”. Remember, this is one of the tools in your tool belt. You need to be making a lot of offers in order to find deals that are priced right. The more exposure you have in your market, the more owners you will be talking to and making deals with. Although this is not the fastest way to your first deal, this is probably the best way to build a thriving business if you could only pick one tool.
It will probably take you a few weeks to get to the point where you are making offers. It will probably take a few months until you get to the point where you have a property under contract and then a couple more months to close. So, if you put all of your focused effort into this one strategy, you are probably looking at a 6 month timeframe until you are cashing a check.
If you are a broker, you already know how you can make money at this. If you are a newer investor who does not plan to get a license, you can wholesale the property. If you find a good deal and you have a nice database of owners in the area, you can call all of the owners when you get a contract and ask them if they are interested in the property. All you do is sell the contract to them. You contract the property for one price, you mark it up a little bit, and sell the contract to another investor for another price. They will use their funds to close, so you can do this with virtually no money.
When I say mark it up a little bit, I am comparing the dollar amount to the value of the property. A little check in commercial real estate is around $10,000. An average check is probably more in the range of $50,000 and some go up into the millions.
Although this strategy isn’t the quickest, it is well worth doing. You may also want to add more tools to your tool belt.
Follow the steps above and you should be well on your well to your next apartment building deal.