The Best Deals Are Often on the MLS

The Best Deals Are Often on the MLS

“The best way to think about investments is to be in a room with no one else and to just think. If that doesn’t work, nothing else is going to work.” – Warren Buffett

This post is about the time I stopped to just think and realized there was an opportunity to make multiple millions of dollars staring directly at me.

I can confidently tell you that some of the best real estate deals you will ever find are on the MLS. Over 90% of 2 – 4 units in the MLS have incorrect or blank financials. Let me explain how I know this.

I started my real estate career like many people – buying my first property. It was a small 1-bedroom condo in Bonita because, quite frankly, that’s all I could afford.  I knew I had to start somewhere. A year later I bought my next condo. It just kept snowballing from there as I implemented many of the real estate portfolio practices we teach our clients, including cash out refinancing. I still hold that condo in Bonita, along with every other property I have bought since then.

After starting my real estate portfolio and during my transition from active duty Naval officer to the Navy Reserves, I went on to get a Masters in Real Estate from USD and a MBA from UCLA Anderson School. Upon graduation from USD, I started my career in commercial real estate at one of the top commercial real estate brokerages in San Diego.

For nearly a year I cut my teeth in commercial brokerage, learning and soaking up as much information as I could. While I realized it wasn’t the career path for me, I also quickly learned the financials of commercial real estate should be applied to 2 – 4 unit complexes, but most often were not.

How did I know that? At this point I had switched from commercial real estate to working for a mid-size residential brokerage. One day I printed off the listing sheets for all the 2 – 4 unit properties actively for sale in the MLS. I took these print outs home, sat around my living room and laid them all out – hundreds of pieces of paper. I analyzed them carefully, highlighter markers and pens and pencils strewn about the living room floor, and realized that more than 90% did not have the correct financials and/or zoning information.

Eureka! I realized there is an opportunity to get some great deals right in front of me on the MLS because agents simply don’t know how to market 2 – 4 unit properties correctly.

You see, there is a major gap in knowledge between commercial and residential real estate agents. That is because commercial agents are trained in the financials but selling one off small 2 – 4 unit complexes isn’t going to make them the paycheck they get from their commercial deals. They usually won’t pick up the phone from a mom and pop investor ready to sell their multi-unit property.

And residential agents are never trained in the financials unless they go to school for it or have been trained in commercial real estate. Residential agents are great at selling a condo or single family home, so that is how they market a multi-family property, pointing out its “cute” features.

I don’t know about you, but I don’t care about a waterfall countertop when I’m buying a 2 – 4 unit property, I want to know the CAP rate and GRM and zoning.

I started my brokerage team because I saw this gap in knowledge and built a team that specializes in being detectives of the MLS. We searched the MLS to uncover these opportunities that are right in front of us and are not being marketed correctly. By doing this, we’ve made our clients millions and millions of dollars and gotten them deals right on the MLS.

And, when our clients decide to sell for whatever reason, they know they are getting the best advisor because we will fully analyze their property and market it correctly, bringing in the type of buyer who knows the value they are getting with the property, often selling for tens of thousands or more than list price because we have marketed the property with financials and zoning, not on the updated water faucet in the kitchen.

I encourage you to not dismiss the MLS. There are dozens of deals every day on the MLS, you just need to know where to look and how to analyze a property. As investors, you don’t need to know all those details, but you do need to surround yourself with a team of people able to help and advise you.