Hi, Reader!

Of the 30+ deals I've owned, there's no question that the best ones were purchased off-market.

Off-market. It's become a catch-phrase in the real estate industry, and it's suppose to signal that THIS IS A GREAT DEAL!

It's a phrase that's used - and overused - a lot.

So what exactly are we talking about when we say off-market? Let's get into it.

I have hundreds of unread emails sitting in my Promotions tab of deal listings that have been blasted out by brokers. Occasionally, I'll scan the subject lines of these emails to see if anything catches my eye.

One eye-catching strategy that some brokers use is to market a property as an "off-market opportunity!".

Yes, this broker has blasted this deal to 10,000 people and is still calling it "off-market". While it might not be listed on Loopnet, this is not the type of off-market deal I'm talking about.

The best off-market deals are direct to seller, with no broker involved. You might also think of these deals as FSBO - For Sale By Owner. We can find off-market deals by tapping into our network and through marketing efforts.

Don't get me wrong: I'm not anti-broker. There is certainly a time and situation that using a broker is the right thing to do. In fact, most property owners should use a broker. When I sell a property, I almost always use a broker. A broker can help a seller get top dollar for their property. When I work with sellers directly, I even tell them this!

But the truth is that when a property owner chooses to sell off-market, they often have reasons beyond the dollars (more on that below).

Let's get into my top reasons for pursuing off-market deals.

1) Direct Contact with the Seller

When purchasing a property on-market that's listed with a broker, the Buyer generally doesn't have any contact with the Seller. Any communication between Buyer and Seller is filtered through the Broker (and often times two brokers). For typical deals, this can work fine.

For an off-market deal, being in direct contact with the Seller can have huge benefits. As a Buyer, I want to know the Seller's motivations, pain points, timelines, property condition, and if there is anyone else influencing the Seller. You simply don't get this intel when a broker is filtering the information. Knowing this information can allow me to work out a creative deal and easily solve issues that come up.

2) Little or No Competition

When properties are listed with a broker on the open-market, it draws attention and potentially many interested buyers. Off-market deals, on the other hand, are generally not mass-marketed and therefore don't bring as much attention and interested buyers. Competition drives the price of real estate up. Without competition, there is a possibility of purchasing at a lower price. For the majority of off-market deals I've purchased, I am usually the only one making an offer.

3) Distress

When an owner decides to sell off-market, there's usually a reason. And that reason is that there is probably some form of distress present. The distress is usually related to the condition of the property, but there could be other types of distress like non-paying tenants or personal issues with the owner. Buying a distressed property usually results in a lower purchase price and an opportunity to add value by improving the property.

With so many benefits to buying deals off-market, why should we ever buy on-market deals? Well, it's not all roses with off-market deals. So next week, we'll go into several of the downsides of spending (or wasting) time with off-market deals.

THIS WEEK ON THE PODCAST

Two episodes out this week. First, I talk with the SVN Chicago Next Level Team about leasing office space in the Chicago suburbs. The discussion includes advice for landlords that anticipate vacancy, what types of spaces are getting leased, patterns in leases, desired building amenities, and the opportunity that medical and lab space could provide.

Then, I talk with former professional football player, Dennis Havrilla. We discuss Dennis's unique investing strategy of net lease retail, identifying quality tenants, and the power of mentorships in our personal and professional lives.

Listen here on Apple Podcasts.

Listen here on Spotify.

Watch on Youtube.

I'd love to hear from you. Reply to this email or connect on Linked In.

PS: Were you forwarded this newsletter? Sign up here to receive it directly every Friday.

​​​​​

Did you miss a newsletter? Click here to look through the archives.

Curious about commercial real estate? Read The Top 6 Reasons to Invest in Non-Residential Commercial Real Estate. ​