15 at 5 #16: Single Family Sellers Vs. Multi-Family Sellers

What is going on? We are back, 15 at 5. So this is a really good topic, I think. Uh, sorry we're a little late today. Uh, we had a deal that we had to, um, lock up, and as we know, time kills all deals. So I wasn't gonna wait, um, to get that thing, uh, signed. So that's why we're a little bit late for this one. But, um, Say, what's going on, man?

You get it? Did you get it signed?

Yep, got it signed. There's actually two people on title. The husband is still on title too, but he's like super cool. He's gonna sign it, no problem. Um, so shouldn't have any issues there. Um, but real quick, so this one I just want to talk about single-family sellers versus multi-family sellers. I think there's a key distinction, um, and Isaiah really brought this, brought this up, um, I don't know, maybe a couple months ago for the first time. It really started noticing a difference between when we're reaching out to a single-family seller versus when we're reaching out to a multi-family seller, right? They're two different avatars. Typically with single-family sellers, you're gonna have distress in their personal life, or you may have asset distress. There's two different types of distresses, right? With multi-family owners, and we're talking about when I say a multi-family owner, I'm talking about an investor. Right. They, they might be a mom-and-pop. Like, you're going to see those mom-and-pops in that 2 to 4 units for multifamily. But I'm talking about someone with an investor mindset, right? They're not— they don't really have much distress, right? The property's cash flowing for them, right? So they might just have personal reasons why they need to sell the property, right? Might not be asset distress. So they're— and Isaiah will explain this, but they're typically just looking for an offer, right? We've had so many deals deals. I mean, I mean, probably like 3 to 5 deals, right, where they're just like, what's your offer? Give me an offer, I'll sell for the right price. And you give them an offer and they sell it, right? But there's no real, I guess, pain there. Maybe there's, there's some— they're sick of dealing with it. Um, but touch on that, Isaiah. Touch on the multi-families and what you've noticed is like the big difference, um, with all of your outreach to multi-family owners through email.

Yeah, so I'd say the biggest difference is, uh, sophistication of— and let me know if you can hear me. I don't know if my Wi-Fi is coming through right good right now. Yes.

Yeah, I can hear you good.

Okay, cool. So I'd say for the investor, my Wi-Fi is bad.

See, it's tough in the Airbnb.

Okay, it's all good. So I'd say the multifamily side though, they're more sophisticated, a lot more sophisticated, and they're a lot more logic-based compared to the single-family side that we were dealing with is more emotional-based. So it's just kind of just two different avatars, like you said, Jake. But yeah, so with a lot of these multifamily owners, for them to sell, just all based on the numbers. And same for like the buyers, same for us, it's It really comes down to the numbers. The numbers work for us or not. And there's a lot of different ways to structure these deals, because they're just inherently more sophisticated, because we're dealing with people that I'd say have pretty big portfolio. So they're just, "Hey, if the number works for me, let's make it happen." And they just want us to hear, just hear an offer from us, because their big thing too is they don't want to waste They don't want their time being wasted by us just going to lowball them or something like that. So it's pretty, it's a totally different thing. So the actual outreach too, initially reaching out to them, it's not like quick sale, cash kind of thing. They don't, that doesn't really care about for the investor. Maybe, maybe for like a small percentage of them where they, say for example, a multifamily owner, they have problematic tenants. Where they just don't want to deal with the tenants, so they would sell pretty quick. But right now in the marketplace, 2023 in July, that's not really the case. They're just like, hey, you can give me this number, it works for you, let's make it happen. So I don't know if that kind of answers your question. There's a lot to kind of jump in there, but that's what I see going on.

Yeah. My apologies to the people, it's kind of laggy because I have bad Wi-Fi here. I'm still in Italy. Tending to some family things, but, um, so I don't have the best Wi-Fi. Um, but yeah, I think the— what is beneficial, right? Because in the single-family world or wholesaling, it's a lot of no closing costs, no realtor fees, cash, right? Um, quick close, right? It's urgency, wanting to sell quickly, right? That's not necessarily in the multi-family space. It's not always urgency, right? Because what are the 3 things that we that most multifamily owners find the most value in? I think it's the no brokers, no broker commission, right? Minimal disturbance of tenants. Um, and is it— what is there another one?

Yeah, like basically like being— be flexible on closing so we can do any kind of closing timeline because a lot of these investors, they're savvy, but they'll be probably doing a 1031 exchange. 1031 exchange is quickly— is basically a way to defer your taxes by When you sell a property, you trade it into another like-kind property, another investment property. And there's kind of a closing timeline that's associated with that. So if you're accommodating to the investor, that goes a long way. And then the big thing you said is the tenants, not disturbing the tenants is pretty vital because these investors, they don't want to sell a property to a buyer that they don't even know who's actually going to close. So Usually when you buy a property, people in general, they want to see the property, but you're just going to go there, disturb the tenants, tell the tenants that, "Hey," basically just alarm them that the seller is selling. That could hurt them. Maybe the tenants don't pay rent. So that's definitely something that they don't like to do. So what we offer is, "Hey, we're only going to go in there once. We need to see the property, but we won't disturb the tenants. We'll be very quick, quick, in and out. And yeah, we can do it really quickly compared to these other investors. So it's a totally, totally different offer compared to what we're doing with the single-family side.

Yeah. And I think it is more about volume of offers with multifamily. I think relationship is big. Obviously, it's a big relationship game. But I think, uh, oh, for one, you need to definitely know your real estate lingo and be able to know what you're talking about, because they'll just run— if it's an actual investor, they'll walk all over you if you don't know what you're talking about, you know what I mean? It's not like a single family, it's not like, it's not like Sally and Joe down the road looking to sell their house. It's like this guy owns 50 units. If you don't sound like you're intelligent, know what you're talking about, he's gonna just hang up on you, um, and just drill you with what's your offer the entire call. So you have to be able to control the conversation a little bit when you're talking to those larger multifamily owners for them to kind of give you the respect to actually stay on the phone. Um, I think on the single-family side, with especially with wholesaling, it's much more emotional. It's much, it's much more emotional. These people are in some sort of distress, right? Um, they need help getting out of the situation. A lot of times they are looking for the cash quick close. Um, but we use a sales process, right, when we're going through these leads. And the sales process is really an information gathering process. The purpose of the sales process is to figure out what is the issue, what are the real issues with the other side, right? Maybe it's not, it's not just about price. Maybe there's other things involved, right? Maybe we need to help their daughter find another place to live or figure out these things, right? So that's the purpose of the sales process. Um, but it can be a little bit more difficult to get through the sales process with a larger multifamily owner because they are just so price-oriented, right? They're so logical. There's like, what's your price? What's your price? The only reason I want to sell this is if it makes sense at a good price, right? Um, so I'd say one of the big differences is as an investor, you're obviously looking at it from a return perspective, so they're very focused on price. A lot of the single-family owners, they're not savvy in terms of investing, so they're not necessarily too focused on the price. They're more focused about their problem getting solved. So it's two different approaches, right? Um, obviously budget is a component of our sales processes, so we're still looking to figure out what the price is on the single-family side, but it's only a component, right? There's typically other things going on, whereas on the multifamily side, um, they can have pain, but a lot of it has to do with price. So I still use the sales process on the multifamily owners. I'll still go through and gather the information, right? I'll figure out what the story is. Um, there always is some motivation to sell though for multifamilies, right? It might not be real pain like the single-family side, but there always is some sort of motivation. So I like to uncover that, figure out their price, figure out the decision makers. That's huge, right? Do they have partners? So you can still use a lot of the sales process, but I've noticed that I have to be quicker when I go through it, right? I have to be strategic. I have to be really with the savvy people. I have to be very potent with my questions. I can't be redundant. I can't be asking a ton of questions. I have to make sure that the questions I do ask are getting me a lot of information because I know I only have so much time on the phone. And, and I guess on that, on my— while on my soapbox, um, I just— that's why I think when you're starting in the business, single-family is a great place to start, um, because it's much more simple. You can build up your confidence talking to sellers before you go to the multifamily side, because multifamily, you have to get everything in single-family plus a bunch of other stuff, right? Um, what are the rents? What's the unit count? What's the parking situation? What is the lease terms, right? What are they? Yeah, the month— are they month-to-month leases, yearly leases? So a bunch of other information, but yeah, I think those are the biggest things.

And going off of that too, Jake, is they're making money every month, a lot of these owners too. So there's not that much of a motivation as well because they can just hold on to the property and it's investment for them. So just making money every month. So it's a lot kind of hard. You have to really dig in. Of why they're looking to sell and why it would make sense for them to sell in the first place. So that's something to consider as well. Also, yeah, just all— yeah, like I said kind of earlier, but actually getting in there and scheduling the time to see the property, because it's other people's lives at hand too, because there's tenants in the property as well. That makes it more difficult to do this business right off the bat compared to a single-family owner. It might just be you're talking to the direct owner and they live in the property, or, uh, there's no one living there kind of thing. So it's easier on that front, but there's obviously a lot of other things. That's just one aspect as well.

I think one important point to bring up about— because the point of our— of the sales process on the single-family side is to make it not all about price, right? We're not just trying to throw offers at the wall and see what sticks, which is a strategy and it works, right? It's a quantity game on the single-family side. We're trying to do a little bit more than that and understand people's problems and present solutions that are not just about the money, they're about solving other things. Um, but I think one of the important aspects of talking to multifamily sellers and making offers with multifamily sellers is putting deadlines on your offers, right? Because yes, you have to make all these offers, but how do you um, create urgency when they don't have any pain, right? Because on the single-family side, essentially there's some sort of issue, and if they don't get it solved, like, it's like a disaster, right? So they— there's urgency for them to take your offer. Where's the urgency on the multi-family side? It's a cash-flowing property. You give them an offer, they just sit on it for forever. So you have to put deadlines on your offer, and with that, you have to be willing to walk away. Like, um, like, we had to walk away from a deal today that we put an offer on and we don't completely take ourselves out of it, but you have to be willing to step away from the deal. You say, "I need an offer. I need a decision in 2 days." If you want some respect, you have to be able to be like, "Okay, we're going to go on to some other deals," which we do have other deals, and then circle back in a few weeks and see if it's something you can work out then.

Yeah, whoever needs the deal the less, has the most power. Uh, so yeah, that's exactly, exactly, exactly.

Whoever needs to deal less wins, right? Because it's just, it's just the fact of the matter. But, um, but yeah, that's single family versus multifamily. I think they're two— they're very similar. They're very similar, um, in a lot of ways. I think those are the ways that they're different, but they're very similar in the ways of reaching out, right? Lead generation is essentially the same, right? You're calling, you're texting, you're emailing. You're essentially getting them in the door, you're gathering information, and you're trying to provide solutions, whether that's price or other things. But yeah, one and the same, right? But those are the key differences.

And I'll say one thing to end it is another huge aspect for the multifamily side that owners would like to know is credibility. That goes like a such a long way. So say you're starting out, borrowing credibility is like massive. Like with my mentor initially, I would just like borrow credibility. Like, "Hey, like we own like 300 units." Majority of it's him, but now we've built a portfolio so we could say for ourselves. But borrowing credibility when you don't have it in order to like these owners to take you serious is massive. So highly recommend doing that. And the single family side, I don't think you have to do it that much. Obviously, you have to say you have close, kind of sound confident, but they're not like really, uh, digging into you and seeing if you're legit or not compared to the multifamily side. So credibility.

Yeah, exactly. Yeah, because back to your point, right, they want to make sure you're legit because they don't want you wasting their time going in there disturbing the tenants, alarming them that it's going to be sold, and then you just back out because you're a tire kicker, you know. So that's why I think it's important to go build relationships at meetups and find people who do have experience and portfolios and, that will let you be their partner essentially on these deals, right? Um, I think that's huge for starting out. It's like you don't have to lie about it and you don't have to fake it till you make it because you're not lying about anything. You go meet people and they can literally be your partner on the deal. So you can tell people, this is my partner, we have X amount of units, right? Um, I think it's a great way to get started with, with the multifamily. But that is it. Anything else?

No, I think that was good. That was great stuff.

Yeah, I think it's a good topic to talk about, right? Single family versus multifamily. It's definitely a difference. But either way, as long as you're taking action, you're going to learn. So that's it. 15 at 5. I don't know, maybe I'll do a poll on my Instagram and see what people would like to talk about next week. But open for suggestions. Have a great week, guys.