“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t Settle.” – Steve Jobs
The multifamily investment world is one that we at PassiveInvesting.com are passionate about. Because we are passionate about it, we feel that every aspect of it is “great work.” When you buy into this concept, you always look for ways to do what you do better. And while the temptation is always there to be satisfied with your gains and grow comfortable in your current state, we know we can never rest on our laurels. Therefore, we are constantly looking for ways that will make us better at our acquisition process. Here are a few ways we do that…
Know who you are dealing with:
Firm Structures: Some of you may have heard me say this before, but it is worth repeating. Not all brokers are created equal. Some brokerage firms are more like franchises, which are broken into small segments across the country. While they operate under one name nationally, they operate independently locally. This can present difficulties when dealing with them. After all, they may not want to share their contacts with a different regional team because they will not receive any commission on a deal that another team closes. Some that are “more regional” have referral fees for teams that refer buyers. This is better than the first scenario because it encourages work across lines for the benefit of both the buyer and the seller. This is why some firms, most often the corporate-owned ones, are more company minded. They encourage their brokers to work together to get the most deals closed regardless of which team closes the deal. Usually, this is accomplished through a shared commission structure. This is our preferred scenario because we can get the maximum reach in our markets of interest. If we have a deal that doesn’t work out, then the brokers for these types of groups are glad to refer us to another broker who may have something that will work for us.
Firm Cultures: It’s important to be aware of the nuances and culture of each firm. Think of it in terms of shopping for a car. At one dealership, you are bombarded as soon as you crack open the car door. They are more focused on a single sale than a relationship with you. While at another dealership, you instantly get the sense that they are truly trying to help and are interested in building a long-term relationship with you. They do this so they’ll be top of mind when you need a vehicle in the future. I am sure you can relate to the above scenarios and can even name the vehicle brand associated with each of these sales tactics. The same holds true for brokers. Some are relationship-oriented and some are transactional. Some want your business long term and will put in the effort to build the relationship and help you grow while some will only do so if it benefits them short term. I am not, in any way, saying that the different types of broker cultures make the individual brokers bad people. I am just saying that you need to know what you are dealing with.
Build Relationships: The only way to truly know who you are dealing with is to spend time with people. I try to learn about each broker’s life on a personal basis and get a feel for who they are and what drives them. It doesn’t take long to separate the sincere from the insincere.
Let Them Know Who You Are:
Be Real: As I have mentioned in a previous article, reputation is everything. We place the highest importance on that aspect of our business. Say what you mean and mean what you say. We must be honest and candid while maintaining a working relationship. This is accomplished through a confident humility or as I like to call it “being real.” As mentioned, it does not take long to separate the sincere from the insincere.
Build a Mutual Trust: It is important to let them know that you trust the guidance they are giving you. If they give you guidance and you disregard their advice, it may frustrate them. It will also give the impression that you do not trust them. This will lead them to distrust your ability to work together with them. Should you choose to disregard their advice, give them a detailed explanation of why so they are not surprised or disappointed later.
Reward Loyalty: After trust comes loyalty. Once I know I can trust someone, and they know they can trust me then we can build a loyal relationship. This is not strictly about dollars. It is about money to a certain extent, however the desire for money over personal loyalty is the first step to failure. One way we try to instill a sense of loyalty is to always let the listing broker who sold us a deal to also be the broker who sells the deal when the cycle is complete. This does two things. 1.) Because they want to sell the deal for us when the time comes, it encourages the broker to have a clean and successful sale with us which, in turn, strengthens our relationship. 2.) It encourages the brokers to bring us more deals off-market so they will have a large book of business going into the future. As we grow, they grow because they know that we will be loyal.
These are just a few ways that we at PassiveInvesting.com try to sharpen our game on the acquisitions side. In next month’s article, I will talk more about deal flow and process pre-Letter of Intent (LOI).