Experienced investors know there is no magic formula to discovering the best investment deals. There’s no reason to work on deal that doesn’t fit the a lender’s criteria. For Alex Modell, an associate at Maxim Capital Group, sourcing quality investments is about hitting the pavement with a mix of strategies. “There’s no secret sauce. It’s cold calling, searching through online listings and platforms, similar to RealAtom, and being top of mind with mortgage brokers.”
Whether a private real estate investment firm like Maxim Capital Group, a hard money lender, or alternative or traditional lender, top investors utilize these strategies to target the best commercial real estate deals.
Word-of-mouth from trusted contacts can be a great resource when it pursuit of the right deal. One of the benefits of providing top notch service for existing clients is they typically run in circles with developers, owners, and operators that qualify for similar funding.
“Existing clients have led to great deals for us because they’re your best marketing tool,” said Modell. “They’re able to say firsthand what a pleasure it was working with us as a lender and how quick and easy the process was.”
Referrals can come from existing personal or business relationships, smaller firms operating in a niche area, current or former clients, and LinkedIn. Nurturing professional relationships and taking care of received referrals continues seeding future investment opportunities.
Sometimes the best way to find a gem is to roll up the sleeves, break out the contact database and make some cold calls. Start with an existing or former client list before searching classifieds or online listings. Read the news. New or expanding businesses often need capital– don’t be afraid to ask if they need a loan.
Mortgage brokers constantly receive new clients. Keep in touch with the right brokers on a regular basis. Let them know the benefits of a borrower working with your firm. Consider creating a email mailing list specific to mortgage brokers with regular updates on the lending packages available. When the right deal comes along, your name should be first on that broker’s mind.
Modell knows that technology has improved the deal-making process tremendously, from sourcing leads to conducting due-diligence. Using an online marketplace cuts out the middleman, which translates to reduced fees for the borrower and investor. Plus, being able to view the borrower’s successful track record and loan-to-value instantly is an added bonus. “Starting a relationship with a borrower that has a strong track record is very important to us because it shows that if the transaction goes sideways, they will find a way to ensure everyone becomes whole at the end,” said Modell.
Today’s marketplaces provide lenders with the right data they need to judge a deal upfront. Lenders can program specific criteria and receive leads that match, making finding the right deal more efficient. A marketplace, like RealAtom, is specific to the commercial real estate properties and facilitates deals ranging in value.
Building the right relationships and using the right tools is vital in finding the best CRE deals. Focus on the target developers and owners that match your investment criteria and deploy a mixed approach involving traditional and online marketplace sourcing to land on the quality projects.
Alexander H. Modell is currently an Associate at Maxim Capital Group, a real estate investment firm in New York City. Mr. Modell is focused on mortgage originations, investor relations, and business development.