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Driving for Multi-Family Dollars


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There are many ways to find a deal, countless strategies to employ to find that one property that brings you to the closing table.  There is the MLS, or Multiple Listing Service, Broker referrals, Bandit signs, word of mouth, lead generating software the list is endless.  One such strategy, and perhaps my favorite, we use here at BulMac is one coined driving for dollars.  Driving for dollars is a simple concept, it is a term coined by real estate investors for simply driving around to find properties that suit your investment goals that you would not find via other means mentioned above.

How it Works

To start you must identify where you will be driving, this could be a city, town, neighborhood or even a street.   This becomes your target area, depending on your market this area could be very large or very small, when we target a location we generally then dial it down even further to target neighborhoods within our target area. Once you identify your target area it’s time to hit the streets, this can be done alone however it works better if you have a partner, there will be a lot of notes and pictures to take and your head will be on a swivel best to have one set of eyes on the road.

Simple, or is it?  This strategy works well if you’re looking for single family units in a given neighborhood mainly because they are everywhere, drive down any street in your target area and you will have homes to look at, you could cover 100 homes in a mile.  So how do we apply this to multi family, after all you don’t see 100 of them in any given mile on any given street.  There are two weapons that I employ to overcome this hurdle I will outline below.

Know your market, this is the one tool in your tool box that will serve you in just about every strategy for finding properties be it driving for dollars or searching the MLS, it’s the duct tape of finding deals.  If you know your market you know where to look, this doesn’t take a ton of research or a huge time dedication.  You are doing market research every day and don’t even realize it even a simple drive to work can provide valuable information on your market.  Most people live within 20 minutes of where they work, you probably do too.  Every day you drive to and from work, more than likely using the same route each way, every day.  How much do you know about the real estate in between? how many buildings that meet your criteria do you pass? Chances are you cant say and that’s ok.  Leave 20 minutes early and take note of what you pass so you can come back later, take the side streets home and soak it in, this little detour will give you a start on where the buildings are. Multi-family units are pack animals where there is one unit or complex there are likely others, that building you spotted off the highway on your way to work is likely accompanied by a few more.  Look at the zoning in your market, a quick search on the municipality’s website will tell you where Multi-family units are allowed, this is where they will be.  Look at apartment rental websites, craigslist and Facebook market place and note where they are advertising rentals, as I said they are pack animals where you find one there will be more.  Talk to your friends and co-workers about their apartments where they are and how they like the area.  Learning your market is easier than you think and most of the work you are already doing, you just need to take note of the things you are already seeing, hearing and talking about. Every trip to the store, work, church or an evening out can be your market research.

The next tool I want to talk about is Google, Google can be your best friend or your biggest enemy, it’s a tool when used appropriately can be a big asset but when you rely solely on Google without any of your own knowledge it can be a set up for a big letdown.   So how do we use google to drive for dollars, it’s a search engine isn’t it?  Google street view is a powerful tool, it allows you to virtually drive for dollars without leaving your desk, and you can even do it on your phone.  You can virtually drive down just about every street in your target location stopping wherever and for as long as you need, you can zoom in and out and see a property from different angles.  You can get a good idea on age of the property, deferred maintenance needs, number of units, number of vacancy’s, quality of the leases, and even contact information in some instances.  Sounds pretty good doesn’t it but wait we mentioned a down side, as with everything there is good and bad to virtually driving for dollars so let’s talk about some of the downsides.  The images are all time-late, meaning they are images taken at some point in the past that is unknown to you, they can be 10 days old or 10 years old what you see may not necessarily be what you get so you must be careful, remember this is a tool to use to help you drive for dollars not a substitute for it.  You will still have to drive the properties that you find via this method if for nothing else but to verify the validity of what you think you know about the property.  You do not want to spend hours researching a potential deal just to find out someone beat you to it and its now a beautiful fully functioning unit at its highest and best.

What do we hope to gain?

What are we looking for, what information that can be gained while driving for dollars whether in person or virtually?  There are a number of insights that can be gained the most valuable are; number of units; Occupancy; deferred maintenance needs; lease quality; management issues; who manages or owns the property and feasibility.  Now let’s talk about how to get this information,  what we are looking at and how to leverage it into actionable Intel:

Electric Meter Pans

Number of units, there are a couple of ways to ascertain the number of units a property has from the street or parking lot.  The easiest is simply counting the doors 4 doors equals 4 units in most cases.  However no two properties are the same some units have multiple doors, could have been converted or maybe there is only one entry door to the building.  Look for electric meters, each unit will typically have its own meter or pan 4 meters 4 units, remember however that the common area’s like hallways, exterior lighting, courtyards, and shared systems like heating and cooling in some cases all need electricity too so more commonly a 4 unit complex will have 5 pans.  Another easily seen way to count units are the mailboxes, many buildings and complexes have 1 centralized mail box with separate boxes for each unit, keep in mind these mail boxes often have one or two boxes for packages, these boxes are generally larger than the rest so a 4 unit building may have 4 smaller boxes and one or two larger ones.

Occupancy here is pretty easy to figure out

Occupancy, this can also be judged from the street in some cases using the same tools.  One easy que are the windows does a unit have all the blinds open or missing, are there drapes on all but one or two units?  Can you see clear through the unit from front to back? Often this is a clue that the unit is empty.  Look at the electric meters again, does one of the pans have a blank installed where the meter should be? In some municipality’s when the units go vacant the electric company removes the meter and ties the unit into the shared meter so the Management Company or owner only has to worry about one bill while keeping service to the unit to facilitate showings.  This will also tell you it’s been vacant for some time, typically they aren’t going through the trouble of pulling the meter if it’s only vacant for a week or so.  The mailbox may also provide some information do all of the boxes have names but one? Has the lock been removed? Is the box left unlocked and open?

Lots of differed maintenance here.

Deferred maintenance can be easily determined to an extent as well, does the roof need repair? Are the windows in good shape and of good quality?  Roofs and windows tell you a lot, if they are new then money is being spent on the property, these are big expenditures, an investment in these systems is a clue that the owner is in fact taking ownership.  It doesn’t end there however, are there lights out, are the dumpsters over flowing, is the parking area neat, grass cut is the building clean?  These are simple little things that are easily taken care of and relatively cheap. Most of these items should be addressed through maintenance personnel on a weekly basis, however if they are not being addressed and being allowed to fester it is a telltale sign that there are deferred maintenance issues within, if they are not taking care of the cheap easy fixes they are not addressing the large expensive ones either until they have to.

Cars with obvious mechanical issues, expired inspection and missing tags.

Lease quality, I want to say right of the bat that this is subjective there is no way to tell for sure the quality of tenants occupying a property based solely on observation of the property, everyone has their own circumstances, these circumstances don’t necessarily determine who they are.  I cannot say enough that I am not classifying the quality of the people but rather the lease from a business perspective.  There are two areas to focus on when trying to gauge the quality of the lease the parking lot and the exterior of the units themselves; First one I look at is the parking lot, I am looking specifically for a couple of things; are the dumpsters over flowing with trash, is trash left on the ground around the receptacle, is the parking lot heavily littered? Then the cars in the lot, are there a lot of cars for the time of day?  I look for expired registrations or cars without plates, cars with obvious mechanical issues (missing wheels, broken windows etc…) flat tires, cars that look like they haven’t moved in a long time and or commercial vehicles.  Secondly the exterior of each unit, are they decorated, do they have appropriate window coverings, are they using a quilt as a drape?  Are the patios or entry ways clean and free of debris, are there personal effects strewn about, are the window screens intact? Are their people hanging out outside during the “work day”?  These all provide clues if the tenants are showing pride of ownership in their rentals or are, they simply residing in them.

Poorly maintained signage means management issues.

Management issues, much like the preceding paragraph all of these things are very telling of the management issues that may be going on in the property.  All of the above issues are management issues at their core, it is the responsibility of the person or entity managing the property to identify and correct these issues.  One or two of these items may not indicate a problem but as they add up their sum equates to a Management issue.  Management problems are my favorite, mainly because they are simple (not necessarily easy), and cheap to fix which equates to quick value add.  With management issues normally comes sub par rents, another easy way to add value to the property for the new owner.  Another key management issue give away is poorly maintained signage, good property managers want you to know two things; first who they are and second how to reach them. Good management will ensure the signage is well maintained easily readable and posted prominently on the property, after all if you can’t quickly assess those two things neither can a prospective tenant.  The prospective tenant isn’t going to do a whole lot of research on the how to contact the rental office they will simply move on leaving those vacant units to sit there.

Finally the owners, not all properties are managed by a PM, some especially smaller ones are self-managed.  Look at the sign, by now after driving around you likely see the signs for the big players in the market you can quickly spot the outliers. Does a quick google search of the number on the sign return to a PM company or do you get a name and address.

What do we need?

Finally the tools you need to successfully drive for dollars are quite simple, a car, or computer for virtual driving, a note pad and a camera.  Take notes on each property, take down number of units, address, any other info that stands out that pictures might not capture.  Take pictures of anything you think is relevant, do not rely on your memory as you may look at 100 properties in one day and I assure you they begin to blend together. When you get back from your trip the real fun begins but more on that later.  Once you have your list of prospects go back at night and on the weekend and see if anything changes if there are any new nuggets to capture.

Driving for dollars is by far my favorite strategy to identify potential properties, it gets you in the market you gain valuable intel, its cheap, its easy and at times it’s a lot of fun.  This is only one of many strategies I use and when you combine them you are well on your way to finding your next property Good luck and have fun.

1 comment on “Driving for Multi-Family Dollars

    How to Get To the Deal With Direct To Seller Investing. – BulMac Properties

    • February 26, 2020 at 1:03 pm

    […] my last article I covered driving for dollars, how to find potential properties (read it here: https://bulmacproperties.com/2020/02/03/driving-for-multi-family-dollars/ ) Now lets take it a step further and find out how to turn that potential property into an […]

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