How to Get Brokers to Bring You Deals & Master Multifamily Due Diligence
In this powerful episode of the Lifetime CashFlow Podcast, seasoned multifamily broker Beau Beery reveals how to build strong broker relationships and confidently handle the due diligence process. If you’re serious about landing off market deals and scaling in multifamily real estate, this is your playbook.
Broker Relationship Essentials: Get Deals Before They Hit the Market
Skip the public listings: The best deals never go live. Top brokers reserve them for trusted buyers. Your job? Become one of them. Stay top of mind: Reach out to brokers every 3 to 4 months. Use a CRM to track and stay consistent. Show you’re serious: New to the game? Lead with proof of funds or a financial statement. This builds instant credibility.Respond fast: Always get back to brokers within 48 to 72 hours. Yes or no, just don’t ghost them. Respect commissions:Always clarify how a broker gets paid, especially with off market deals. Integrity matters. Close deals: Nothing builds your rep like closing. The more you close, the more deals you’ll get.
What NOT to Do With Brokers
- Never bypass your broker: Going directly to a seller? That’s a fast way to get blacklisted.
- Avoid re-trading unless necessary: Only ask for price reductions if a major issue is uncovered during due diligence.
- Be realistic: Don’t ask for 9% caps on Class A properties in hot markets. It kills your credibility.
- Don’t touch their commission: If the deal doesn’t pencil, that’s not the broker’s fault.
- Don’t sit on deals: Always communicate promptly. Time kills deals, and relationships.
Must Have Due Diligence Documents
- Income Statements & Tax Returns: At least 2 years plus year-to-date. Tax docs = real income.
- Rent Roll: Check unit mix, lease terms, and actual rent collected (economic occupancy).
- Bank Statements / Delinquency Reports: Verify real collections.
- Utility Bills & Vendor Contracts: Scrutinize recurring expenses like lawn care, pest control, etc.
- Property Tax Bill: Get the actual bill, not estimates.
- Leases & Amendments: Review all leases, especially in 50+ unit properties.
- CapEx History: Review invoices for the last 5 years. Know what’s been fixed (or hasn’t).
- Environmental Report: Always get a Phase 1 Environmental. No surprises.
- Trial Balance Ledger: Look at repairs and recurring unit-level maintenance. Goldmine of insight.
Build a Bulletproof Buying Team
Multifamily real estate is about relationships, speed, and execution.
If you want brokers to bring you the best off market deals, you need to:
- Build trust
- Act quickly
- Communicate clearly
- Close reliably
Be the investor brokers want to work with.
Nail your due diligence, surround yourself with an experienced team, and stay consistent. That’s how you build momentum and unlock your next level.
How Do You Get Brokers to Bring You Deals?
Build strong relationships by staying in regular contact, proving you’re a serious and reliable buyer, acting fast on opportunities, and consistently closing deals.
The Bottom Line
Multifamily real estate is about relationships, speed, and execution.
If you want brokers to bring you the best off market deals, you need to: Build trust Act quickly Communicate clearly Close reliably
Be the investor brokers want to work with.
Nail your due diligence, surround yourself with an experienced team, and stay consistent. That’s how you build momentum and unlock your next level.
Want more high level multifamily strategies? Subscribe to the Lifetime CashFlow Podcast and join Rod Khleif’s Multifamily Bootcamp to learn from the best. Because in this game, who you know and how you perform determines how fast you scale.
Take action. Build relationships. Close deals. That’s how you create lifetime cash flow.
How To Get Brokers To Bring You Deals – Rod Khleif with Beau Beery – Ep #141
Here’s some of what you will learn:
• Due diligence of the Acquisition process
• Important things you have to do prior when going to contract.
• Why brokers will help you find the best assets.
• How to get brokers to bring you deals.
Beau Beery Bio
Beau Beery is a dynamic individual whose unique perspective and experiences bring fresh insights to any conversation. While specific details about Beau’s professional background and achievements are currently unavailable, Beau’s presence promises engaging and thought-provoking dialogue. Known for a distinctive approach and authentic voice, Beau connects with audiences through genuine storytelling and relatable experiences. This episode will showcase Beau’s ability to inspire and challenge listeners, making it a valuable addition to the platform. Outside of professional endeavors, Beau is known for a passion that fuels creativity and connection, adding a personal touch to every interaction.
You can learn more about Beau Beery at:
www.beautodd.com
Full Podcast Transcript: Ep #141 – Beau Beery on How To Get Brokers To Bring You Deals
Introduction
Rod Khleif: Welcome to another edition of How to Build Lifetime Cash Flow Through Real Estate Investing. I’m Rod Khleif, and I’m thrilled you’re here. I know we’re gonna get a ton of value from the gentleman we’re interviewing today. He’s name is Beau Beery, and he is owner of a commercial real estate brokerage up in Gainesville, Florida. I’ve known Beau for quite a while now. I will tell you, he adds a ton of incredible content to people he’s doing business with. I get emails from him regularly. He’s co-owner of a 90 plus agent, award winning real estate brokerage firm. His specialty is the purchase and sale of multi-family assets, which is what we talk about on this show.
Rod Khleif: We are gonna get a ton of value from him today, Beau, thanks for being here, buddy.
Beau Beery: Yeah, man, no problem. I’m happy to do this. This’ll be fun.
Rod Khleif: Yeah, this will be a lot of fun. Now guys, we are gonna dig in deep to really the acquisition process, the due diligence, what to review before you go in. I mean what to review once you’re in the due diligence period. Beau is an expert at all this so we’re gonna dig deep on this. Some of this content may not be as fluffy as you like but it’s really important. So hang in there with us because if you’re serious about this business this is information you must have.
Rod Khleif: Beau, before we start, tell us a little bit about your background, how you got in the business and a little bit more about you.
Beau Beery: Sure. My first sort of real job, if you will, was I worked for Trammell Crow Residential, back in the late 90s. At least at that time, they were one of the largest apartment developers in the country. I was just On-Site Manager of a 400 unit apartment community. I did the leasing, I did the management, and it was there where I got sort of that first taste of watching 1000 people pay for a $30 million asset. I thought to myself, “Man, I got to get in this business. This is amazing.” I never saw the owners. They’re just kind of a ‘on autopilot’.
Rod Khleif: Right.
Beau Beery: Through that process Trammell Crow paid for education. I got my real estate license. I then went back and did my Master’s Degree in real estate from the University of Florida, which is one of the top five graduate real estate programs in the country. I’d also done my undergrad in marketing from UF. Upon graduation, I worked for a local, or I guess the main local developer here in town. Just did various shopping centers, office buildings, apartments. In 2011, I joined forces with Todd Rainsberger, J Parrish and Susan Parrish to acquire Coldwell Banker here locally. Ever since then I’ve been doing brokerage for the masses, if you will. My specialty is multi-family. It’s what I love. It’s what I know. It’s sophisticated, there’s numbers involved. There’s no emotions. It’s just business and numbers, and that’s what I like.
Rod Khleif: Yeah, it’s very empirical. You have to leave the emotions out of it. That’s what’s so beautiful about it, if you understand the numbers. All things being equal of course, you wanna check out the areas… All things being equal but it really is numbers driven.
Beau Beery: Yeah.
Pre-Contract Steps & Broker Relationships
Rod Khleif: Let’s get right into it. Let’s talk about the important things you have to do prior to going to contract. Let’s go right into that.
Beau Beery: Let me just put a couple of things out there, even before that is, generally speaking, any kind of multi-family asset that is on a website, that is email blasted around, that’s a big caution. I would go into those slow, and with a lot of trepidation because most good multi-family brokers — or let’s just call it, the best of the best — they’ve already got a pool of buyers that they know, have done business with, that show up to closings. Typically, when something that’s any good at all hits the “market”, if you’ve seen it, come across it on your email, or on its own websites, it’s probably already been shopped around.
Beau Beery: Inherently, it’s already got something to overcome, or what have you. Now listen, they’re still good deals out there that you may come across on the websites. It happens. Some brokerages, just by the nature of the way they do business, they put everything out there, period, no matter what. There are few of those but there are some things you can find on there.
Beau Beery: I don’t see any other way to find good assets other than, number one, you got a broker or several brokers that you’re working with on a regular basis, and you’re very close with, that you’re keeping contact with them. I’ll tell you how you do that. Or secondly, you’re doing that work yourself. Frankly, that has to be full-time. Finding good assets, that is a full-time job.
Rod Khleif: Sure.
Beau Beery: That is what I do all day long. If you’re not gonna have some brokers that are in your pocket, that are in love with you, and you’re in love with them, you’re the one that needs to find the properties. You’re the one making the phone calls all day long. You’re the one that sort of drip marketing yourself into them, and you’re keeping contact with them.
Beau Beery: That leads me to, how do you get brokers to pay attention to you, and to bring you deals. Do you want me to go into that, Rod?
Rod Khleif: Absolutely. No, let’s do that next because everybody’s encountering that right now because if you haven’t taken down a deal, for example, you’re new. It’s very difficult to get a broker to take you seriously. I tell people on the show here, it’s very important to follow up with a broker if they send you a deal. I want you to dig in from a broker’s perspective, how does somebody get noticed? How does somebody get taken seriously?
Beau Beery: Good. Let me give you five things that you should do and five things that you should never do.
Rod Khleif: Okay. Awesome.
Beau Beery: Some of the things you should do are: you need to be updating your broker a couple times a year, just to stay on top of their mind. Now that seems obvious, but let me make sure you understand. You are only as good… As a broker, I tell my brokers this all the time: you are only as good as your last touch with your customer. And likewise, as an investor, you’re only as good as your last touch with your broker. Because, listen, you could think you have the best relationship in the world with a broker and vice versa, and that guy could be at some social meeting or a dinner event, and he runs into some other investor, and they’re having a beer, and they’re talking about, “Oh, I used to live there.” “Oh, I know that guy, and I know that guy.”
Beau Beery: And all of a sudden, it’s like the next day they’re best friends. That guy gets some apartment complex that he’s doing a BOV on, and guess who’s he gonna call? It’s the guy who is fresh on his mind. I’ve seen it happen a million times. I’ve lost tons of deals myself with customers who I thought were like my blood almost. It’s not someone who’s trying to be a prick.
Rod Khleif: Right.
Beau Beery: It’s human nature. Like you had offered someone…
Rod Khleif: Sure. Sure. If you find somebody new, and they tell you they’re interested in deals… By the way, guys, a BOV is a broker’s opinion of value, for those of you who didn’t know what that meant.
Rod Khleif: But absolutely, that recurring contact is critical. I tell people get a CRM and use a CRM so you stay in front of these people, you need to stay in front of. CRM, by the way, guys, is client relationship management software and there’s lots of free ones, or practically free ones online. If you’re gonna do this business, you have to do it for the long game. You have to develop those relationships and stay on top of them. We’re talking about brokers now but the same thing applies to bankers and lenders.
Beau Beery: Right.
Rod Khleif: But let’s go back to brokers. Stay in front of them regularly. I think two times a year frankly is, in my opinion, not enough but I think every couple of months. Every three months you send him an email to say, “Hey, I’m still looking, how are you?” Or a phone call, or have lunch, or whatever.
Beau Beery: Yeah. Absolutely. From a broker to an investor, we have to limit ourselves so we aren’t annoying because those investors are getting calls from dozens of brokers. But once we’re in the reverse, when the investor is keeping in touch with us… It’s like you can call me every three or four weeks. That’s great. That shows me motivation. That shows me that you’re in the game to win. Because ultimately, all we give a crap about is that you show up to closing.
Rod Khleif: That’s right. You don’t get paid unless the closing papers get signed.
Beau Beery: Right.
Rod Khleif: Motivation, I’m sure, is a big factor in your decision-making as to who you’re gonna deal with.
Beau Beery: Yeah.
Rod Khleif: Yes? Okay.
Beau Beery: You’re right.
Rod Khleif: What else? You said five things.
Beau Beery: Number two is, if you don’t know that broker — he doesn’t know you — show him that you have proof of funds. That could be a letter from your lender. It could be something from your CPA or financial advisor but something that says, “Hey, this guy has enough assets; enough ability to buy a $5 million complex, a $2 million complex, a $20 million complex.” Because we get calls all the time and emails all the time, just like you do.
Rod Khleif: Sure.
Beau Beery: From folks saying, “Hey, we’re looking for an apartment complex, value-add, hundred plus units…” When someone shows us a financial statement or shows us a bank account… You can have their information blanked out or whatever. We’d know that these guys have the capacities, that sort of check mark is off that part of it.
Rod Khleif: Guys, let me interject… That’s great. Fantastic advice. Remember this, guys, this is a team sport, okay? So if you’re out there and you don’t have the proof of funds then go find somebody that does. Bring them in on the team. If the net worth requirement isn’t there, find somebody, put them on the team, and get the net worth requirement that you need to get the financing, because it’s a team sport. This is not a singles game… Please continue.
Beau Beery: Yeah. Number three, and this is a big one.
Rod Khleif: Okay.
Beau Beery: When we bring you an investment, I need you to act extremely fast on the deal. Now, let me make sure you understand what I mean by that. I don’t mean that in 48 hours you need to know everything about the property, and turn in an offer that’s… Bam, bam, bam. I just need to know in 48 to 72 hours whether you want to take a run at this or not. Because you have to understand, if I’m bringing you something off market, then as a broker, I don’t wanna look incompetent to my seller. First of all, if I’m coming to you it means that you’re a real deal guy that I believe can bring the best value to my customer who I’m representing. So if I come to you, I can’t just talk to one or two people and let them take two weeks to decide whether or not they wanna see it or underwrite it. If it’s a no, that’s totally cool. I respect that. But tell me quickly, alright?
Rod Khleif: Yep.
Beau Beery: … That’s a killer.
Rod Khleif: No. That’s so simple. That’s so obvious but so important for people to hear. So that’s awesome. Great.
Beau Beery: Yeah.
Rod Khleif: Keep going.
Beau Beery: Alright. Number four, if an unlisted seller – someone who’s got a property that I found, it’s not on the market – he’ll take an offer. If that guy won’t pay me or won’t pay the broker for procuring, we need to have an understanding before I even bring you something like that, that you’ll pay me, because this is an unprotected world sometimes in doing some of the deal-making from the broker’s standpoint. So if the best listings are not on the market then that means there’s not usually a sign listing agreement up front, or…
Rod Khleif: ‘Cause this market’s really hot, guys.
Beau Beery: Yeah.
Rod Khleif: You’re talking about integrity.
Beau Beery: Yeah.
Rod Khleif: Bottom line: if you haven’t got integrity you may get one deal, but this is a small world. I mean it is. In this commercial real estate world, you screw a person once or twice and you’re done.
Beau Beery: You’re dead forever.
Rod Khleif: You’re dead forever.
Beau Beery: Definitely.
Rod Khleif: Basically, what we are saying, guys, is if he has an off-market listing and he brings you to that seller to put the deal together – because sellers are funny guys, they sometimes refuse to sign anything until you show them a contract – they won’t list it, but if you bring him a contract, great. But you got to protect your broker. You need to make sure they get paid. Alright, awesome.
Beau Beery: That’s right. Listen, no broker is going to get paid from a seller but then tell you he’s not, and then have you pay him so he gets double commission.
Rod Khleif: Right. Right. No…
Beau Beery: Like that’s gonna show up on a ________ [bad audio].
Rod Khleif: Oh, yeah. No, no, no, no. Integrity goes both ways. Brokers are held to a very high standard, governed, watched, and regulated, so that’s not gonna happen. But no, if he’s not getting paid from the seller, he’s gotta get paid – so don’t…
Beau Beery: That’s right.
Rod Khleif: Don’t be pennywise and pound-foolish.
Beau Beery: Alright, the fifth thing you should do is close on deals. The more you close, the more deals you’ll see from more brokers. Now, if you come across something that has, say, 55 dead bodies under the building or something horrendous that was unbeknownst to anybody, I get it if you don’t close. Or if something needs to be redone or re-traded – but generally speaking, the more you close, the more deals you’re gonna see.
Rod Khleif: That’s a no-brainer. Once you close, then you’re really taken seriously. That’s so critical but like you said, if the due diligence shows things that weren’t disclosed or there was misrepresentation – significant, not minor stuff – then that changes things a bit.
Beau Beery: That’s right.
Rod Khleif: You should at the very least try to re-trade or renegotiate. Alright, awesome, awesome.
Beau Beery: Alright, five things you should never do, Rod.
Rod Khleif: Okay.
Beau Beery: Never, ever go around a broker directly to their client.
Rod Khleif: Again, integrity. Integrity.
Beau Beery: I shouldn’t have to say this but it goes on all the time.
Rod Khleif: Sure.
Beau Beery: Sometimes a guy thinks he’s being innocent. Sometimes he is just trying to save something – but that’s the worst thing you can do. Listen, you may win in that one situation, but you’re gonna lose overall, let me tell you.
Rod Khleif: Same, same, same. It really is. It will shock you guys how small this world really is in the commercial multi-family space. In any business, frankly, you just do the right thing.
Beau Beery: Yeah. Alright, number two (of the things you should never do) goes to what you should do but don’t renegotiate or re-trade a deal with a seller unless there’s some huge surprise. I just hit on this but let me give you a couple of examples: there are folks whose business plan is actually to put deals under contract at whatever price they can, just so they can get the property off the market as soon as possible. They get through 44 days of the 45-day due diligence period. They’re in close communication or action. They’re acting like they’re super into it – so that the seller’s making plans with the money and all the stuff – and all of a sudden, “I need a million dollars off, bro” or “I need $200,000 off.” That’s a horrible thing to do. Number one, you will never do another deal with that seller. Number two, I will never bring you another deal. Number three, it just makes you look bad, and that word spreads like wildfire, man. The most dangerous thing in the world, Rod, is the stuff that’s being said about you that you don’t even know is happening.
Rod Khleif: Sure.
Beau Beery: That stuff spreads in this world…
Rod Khleif: Got it.
Beau Beery: In the multi-family field so quickly. I know a number of people who are just frustrated—they can’t do deals—but I know what their reputation is in the market because of things they’ve done over the last few years.
Rod Khleif: Yeah. There you go. There you go.
Beau Beery: Yeah.
Rod Khleif: Okay. Common sense stuff, guys.
Due Diligence Documentation
Beau Beery: Number three, obviously, never sit on a deal that a broker brings you. We talked about that.
Rod Khleif: Right.
Beau Beery: I talked about how it’s okay to pass on a deal, so I’ll move past that one. Number four, don’t give a broker impossible purchase criteria.
Rod Khleif: Give me an example.
Beau Beery: I get calls all the time from folks who are saying, “Hey, I’m looking for a stabilized C asset in an A location with a 9% cap rate.”
Rod Khleif: [chuckles]
Beau Beery: It’s like, get out of my way… That is just ridiculous. It doesn’t exist. Not only that… it’s not even considered a unicorn. That’s like a double unicorn with a horse butt and doglegs. It just doesn’t make any sense.
Rod Khleif: No, definitely not on market. That’s for sure. I don’t even think they can find something like that off market. But no, we’re in a hot market right now, so be realistic.
Beau Beery: Right.
Rod Khleif: I get it. I get it. And unless you’ve got an off-market campaign – like we do mailers and we teach it in my course on how to find off-market deals – if you’re dealing with brokers, don’t expect a 9% cap rate like he just described. It’s not gonna happen today.
Beau Beery: Yeah.
Rod Khleif: Maybe when the market contracts but not today.
Beau Beery: That’s right.
Rod Khleif: Yeah.
Beau Beery: Alright, fifth and final thing you should never do with a broker – this goes back to not going around them. But I want to make sure this isn’t misinterpreted as broker greed. I’m trying to teach you how to get more deals. The fifth thing is: don’t ever ask the broker to reduce his already contractually obligated commission in order to solve an issue that came up in the transaction to closing. That has nothing to do with the situation. For example, you’re involved in a deal and the seller gave you a document that you relied upon which ended up not being completely true. The seller thought it was true; it’s not; the attorneys reviewed it; it’s going to cost the buyer some money… So why come back to the broker and say, “Come off your fee, say 30%?” What does that have to do with me? I just brought you the deal; I brought the two of you together. I’m certainly willing to budge or throw something into the deal, but asking for a disproportionate cut just doesn’t make sense.
Rod Khleif: Yeah, no, it’s out of whack. It happens a lot in residential as well.
Beau Beery: True.
Rod Khleif: The bottom line is, if you want more deals from the broker, you gotta think about these things. I mean, I have to be honest, I’ve made concessions before – I did it on my personal residence – but in the multi-family space, if you want deals from a broker, you have to take very good care of that broker.
Beau Beery: Yeah. The key word is “proportionate.”
Rod Khleif: Okay.
Beau Beery: All of us are deal-makers.
Rod Khleif: Right.
Beau Beery: I’ve certainly budged on commissions many times because if both parties are taking a hit, it’s one thing. But if you’ve got a $10 million deal and there’s a $100,000 discrepancy (a 1% difference) and you come back asking the broker to take a 30% hit – that just doesn’t make sense.
Rod Khleif: Yeah. No, I get it. That makes complete sense… Alright, let’s move into what to ask for before you start your due diligence – or rather, what to ask for during the due diligence phase.
Essential Due Diligence Documentation
Beau Beery: Okay. Some of the things I always want buyers to ask for are income statements or tax returns – sort of like the gold seal, if you will.
Rod Khleif: Sure.
Beau Beery: I like them for the previous two years and year-to-date. So, for example, 2015, 2016, and year-to-date 2017. Now, obviously when you’re looking at tax returns, there’s a lot of fluff sometimes included to reduce taxes, so you may need to peel through those and remove what you consider fluff. But generally tax returns are far more accurate.
Beau Beery: For investors with over 75 units using robust property management software, income statements are reliable. When you get under 50 units, you might get an Excel spreadsheet, but that’s why tax returns are even better – they’re the top ones.
Rod Khleif: Okay. Now, you’re not always gonna get them – but if you do, you can assume the income portion is accurate and you can tie in expenses. It’s better than just taking the seller’s word for it.
Beau Beery: Right.
Rod Khleif: What else?
Beau Beery: Obviously, a rent-roll. To me, a rent-roll is one of the most important documents because often I’ve done deals where the only documentation available was a rent-roll. With today’s technology and available data, even if you have no detailed expense documentation, you can sometimes get good estimates. The National Apartment Association puts out a report each year covering operating expenses across 4,000 properties – broken down by region, age, size, etc. You can get pretty close to the actual numbers, from administrative expenses to property management, and build your own pro forma. The rent-roll shows unit mixes, security deposit details, and often hints at tenant quality.
Rod Khleif: Right.
Beau Beery: So you want to check for replacement dates; start and end dates are important on the rent-roll. You want to see scattered end dates rather than all leases expiring in the same month.
Rod Khleif: Right. You don’t want a bunch of leases expiring at the same time.
Beau Beery: Exactly. And then bank statements are key. They clear up any issues that a rent-roll might not reveal, such as tenants who aren’t paying.
Rod Khleif: Just a moment on the rent-roll, buddy.
Beau Beery: Sure.
Rod Khleif: In fact, perhaps you can expand on that now. The rent-roll is very important and that report from the National Apartment Association is killer – we often give that report to our coaching clients to help come up with reliable percentages.
Beau Beery: Right.
Rod Khleif: Use those averages when you don’t have detailed expenses – they get very, very close.
Beau Beery: That’s correct.
Rod Khleif: Back to the rent-roll, remember to look at economic occupancy – just because a tenant is on the rent-roll doesn’t mean they’re paying.
Beau Beery: That’s right.
Rod Khleif: Now speak to that – maybe in relation to bank statements.
Beau Beery: Yeah. Bank statements help clear that up because rent-rolls are owner-generated and might be overly optimistic. With a bank statement, you can verify the actual inflows and outflows.
Rod Khleif: Right.
Beau Beery: And if you can’t get bank statements, ask for a list of delinquencies, another document showing what each tenant owes.
Rod Khleif: Correct.
Beau Beery: Also, I like to collect the last three months of utility bills that the owner pays – for the clubhouse, common areas, etc. Match those to the income statements for clarity. And ask for all vendor contracts such as the lawn care guy, pest control, laundry services – all small details count.
Rod Khleif: Sure.
Beau Beery: For instance, I once worked on a deal where we assumed the cable agreement was cancellable with 30 days’ notice – but it wasn’t – and led to a $10,000–$12,000 monthly cost. Details matter.
Rod Khleif: That’s a lot of money.
Additional Documentation & Building Your Buying Team
Beau Beery: Next, ask for the most recent property tax bill. Sometimes property appraiser websites have errors or outdated numbers – get the actual bill. If available, also ask for any prior title policies or surveys.
Rod Khleif: Sure.
Beau Beery: Also, make sure to get copies of all leases and any amendments. For properties with 50 or more units, consider having a property manager help you review these documents because leases can hide nasty surprises.
Rod Khleif: If you’re in the 50+ unit range, that’s one of the things that many property managers will help you with by reviewing leases.
Beau Beery: Absolutely. Read every single lease if you’re doing it yourself.
Beau Beery: Then, get a list of capital expenditures from the past five years. Look for invoices, contracts, or deals that were made – it can help you plan future maintenance and even schedule reminders in your CRM.
Rod Khleif: Right. If you’re getting bank financing, they often require escrow for future CapEx expenses.
Beau Beery: Exactly. Typically, the industry average is between $800–$900 a unit per year based on what people actually spend, although pro formas may only budget $250 to $500 per unit.
Rod Khleif: Okay. I thought it was under $500.
Beau Beery: Yeah.
Rod Khleif: And lastly, get any environmental reports – always get a Phase One Environmental Report, even on a seller-financed deal. It’s better to pay a little now than face a huge cleanup later.
Beau Beery: That’s right. Quick war story: I once bought a deal I knew had environmental issues – I never got a Phase One – and ended up facing complications that could’ve been avoided.
Rod Khleif: Doesn’t matter who caused it; if you own the property, you’re responsible.
Beau Beery: Exactly.
Rod Khleif: And one other thing: if you’re dealing with any governmental official – an inspector, EPA, or building inspector – always reduce the conversation to writing. Send an email summarizing what was discussed and agreed upon.
Beau Beery: Rod, you just gave a $300,000 tip – that’s the average cleanup cost.
Rod Khleif: Yeah. Well, there you go.
Beau Beery: Lastly, I always ask for a trial balance ledger. It’s a report (sometimes called something different) that shows all the individual repairs per unit. This helps identify recurring issues so you can anticipate future maintenance.
Rod Khleif: That’s what you’re referring to. If you see the same repair repeatedly, you know it may need replacement in every unit.
Beau Beery: Exactly.
Rod Khleif: Let me ask you a question: I tell my coaching clients to speak with past contractors who worked on the property. Find out what problems they encountered and what might come up later. Do you recommend that?
Beau Beery: Yeah, absolutely. It’s easy to do when you’re in due diligence.
Rod Khleif: Right.
Beau Beery: Nobody would stop you from doing that. The trial balance ledger often tells you who was paid and what was done. Give those contractors a call – it’s super forensic.
Rod Khleif: Right.
Beau Beery: If you’re putting millions of dollars into a deal, why not do it? You can’t see what’s hidden – like foundation work, drainage issues patched up but not properly fixed – and those can be very expensive.
Building Your Buying Team
Rod Khleif: Okay. Good stuff. So what’s next? What sort of a buying team do you recommend having and why?
Beau Beery: Even before going into contract, if you have the relationships and the right folks who can show up quickly, I always suggest that when you’re touring the property, bring a property manager. They offer insights on the physical aspects of the building, the neighborhood, and market trends – sometimes insights that contradict what the offering memorandum shows.
Rod Khleif: That is very, very good advice. Guys, if you don’t have a property that’s 300–400 units, you should still bring a property manager to tap their market experience.
Beau Beery: Yeah.
Rod Khleif: Now, any advice on finding the best property managers for a particular property?
Beau Beery: When I’m managing over 100 units, I don’t mess around. I go for the big dogs – those managing lots of properties. There might be uneducated thoughts that if they manage many properties they won’t focus on yours, but if they aren’t managing many, there’s probably a reason. I want a property manager with lots of units for two reasons: it shows they’re good, and they have tremendous marketing synergy if they manage similar assets.
Rod Khleif: Sure.
Beau Beery: Once you get under 50–75 units, it’s a toss-up. You want the best manager in the market, but sometimes it makes sense to also talk with local guys who manage 10, 20, or 30 unit communities. They can often give you a ballpark number.
Rod Khleif: Absolutely. And beyond size, ask them who they’re managing for – call their other clients to verify their reputation. If they refuse, that’s a red flag.
Beau Beery: You can find out more from their customers than any research you do.
Rod Khleif: I like it. Other team members?
Beau Beery: Other team members – if you don’t have one yet – include a phenomenal maintenance crew. Bring your maintenance guy along because they’ve taken all the service calls and have valuable observational knowledge. If you don’t have a maintenance guy, bring a general contractor to point out issues you might miss.
Rod Khleif: Absolutely. Or at the very least, get a GC if you don’t have your own maintenance guy.
Beau Beery: That was the next guy I was gonna say.
Rod Khleif: Oh, next on the list. Okay.
Beau Beery: And then, in my second or third tour, I always bring my banker. I want him to see the asset firsthand, smell it, touch it – to know it as well as I do and be involved in the deal.
Rod Khleif: That’s very good advice. Now let me ask you about financing for a second. When you say “banker,” are you talking about your mortgage broker or regional banks dealing with conventional loans?
Beau Beery: Again, it depends on the asset. For a localized asset under 60–70 units, I like to consider local lenders who can offer good terms. But when you get into the bigger arena, local bankers may not fully understand it, so you need to talk to the big boys – even if they’re from a neighboring state.
Rod Khleif: Right.
Beau Beery: These bankers aren’t just bankers. They’ve underwritten tens of millions or even billions of dollars. They see things that you might not.
Rod Khleif: Sure. They’ve even forgotten things that we won’t know until much later.
Beau Beery: Exactly. They’ve taken back properties and know why – often due to physical issues that we might overlook.
Rod Khleif: Yeah. Okay. Well, listen, we are unfortunately running out of time.
Beau Beery: All good.
Rod Khleif: I was hoping we could delve into what to look for in the financials, but maybe we can cover that in another episode.
Beau Beery: Sure.
Rod Khleif: Guys, I really like Beau, and I hope you check him out if you’re interested in buying property in the northern half of Florida – or the whole state. Do you handle the whole state or primarily North?
Beau Beery: Central and North Florida.
Rod Khleif: Central and North. So if you have any interest there, definitely check him out. He’s a good guy. Thanks for being on the show, my friend. You added a ton of value.
Beau Beery: Yeah, man, I appreciate the opportunity.
Rod Khleif: Absolutely. Alright, take care.
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