Positioning with Brokers (with real world example)

2d ago (edited) in 🔨 TOOLS AND RESOURCES

Hello, All. Yesterday, during the Power Hour call, we talked about how to position a low offer to brokers without jeopardizing a relationship. As luck would have it, I had this exact situation this morning. The thread is below.

My goal with this message:

Get my offer to them (which is much lower than asking price)
Not jeopardizing my relationship with a broker that can likely help me in the future.

You will see how I positioned appreciation and respect and then asked for permission to send the low offer, should he be interested. Hopefully, this helps you with your communications with brokers 😀

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~ My message to the brokers on a 12,000 sq ft deal listed for $550,000:

Hey, Matt -

Thanks for sharing this with me. I have done a first pass on the underwriting and am a bit off from your number. Let me know if you want me to send over what I think.

I respect you and your position with your seller, so I don't want to throw a number your way that causes any issues with your client.

For context (since you and I have never worked together) - I own/operate seven facilities (one in MS) and am looking to expand with value-added opportunities.

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~ The brokers response to me:

Hey Dave - thank you for diving in, I would love to know what you are thinking so I can have some feedback for the seller. I would love to stay in touch and build a relationship!

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My positioning with my offer (always add the context to support your number):

Hey, Matt -

I appreciate it and look forward to staying in touch and doing a few deals together. For this deal, I am interested (all cash) around $400k. Below is some context as to how I came to that number. ~ market rents have already been achieved

~ rural location; customers will have to drive past 3 to 4 other facilities to get to this one, which creates price pressure

~ CAPEX investment is meaningful; to run my model, I need to put a fence around it. $10/ft, and 400 ft, plus gate and motor is a $50k investment

~ low occupancy; in my model, I underwrote to 85%, which is a bit higher than current

~ this price gets me to a 13%+ CoC return; there are lots of deals we could all invest in that would give us 10-11% CoC without any work (mailbox money)

Let me know your thoughts, and if you would think it would make sense to write up an LOI, I could do that.

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Goals met!