How to Find Off-Market Commercial Property Deals

The best deals are often those that others don’t know about, and this is especially true in commercial real estate. Knowing how to find off-market commercial properties and structure offers can help you acquire properties that otherwise wouldn’t be available. You could discover bargain deals, highly desirable properties, or other great commercial real estate deals others don’t know about.

What Does Off-Market Mean in Real Estate?

Off-market properties aren’t actively marketed by the seller. They don’t have the property listed with an agent, for sale on a major industry database, or even on alternative sites. These simply aren’t on the market, but that doesn’t mean the owners won’t be willing to sell if an attractive offer is made.

Off-market deals are sometimes referred to as “pocket listings.” Pocket listings are technically situations where an owner is willing to sell if a desirable offer is made. Agents and brokers often keep these “in their pocket,” sharing them only with investors who might be highly interested.

Why Invest in Off-Market Commercial Properties?

Finding off-market commercial properties can afford investors access to better deals than what’s currently listed for sale. Investors might negotiate deals more favorable to both them and the current owner, and they might get access to highly desirable or unique properties.

In essence, these are insider deals for those who can find them. The key, of course, is being able to find one.

Potential Benefits of Off-Market Commercial Properties

Pursuing off-market commercial properties can present multiple benefits. A few of the advantages that these deals offer are:

• Access to Exclusive Deals: Some of the most desirable properties never enter the open market. Having access to these off-market deals can significantly enhance an investment portfolio.
• Less Competition: Other investors don’t know about an off-market property and thus won’t make purchase offers. Less competition can be beneficial when negotiating the terms of a sale.
• Reduce Fees: Sometimes, off-market property deals can be made without involving a seller’s real estate agent. This reduces the commissions that have to be paid, and even a small reduction in commissions can lead to large savings when property deals are seven or eight figures.
• Deal Structure: Many owners may not have even considered selling their property. This allows buyers to structure and offer how they’d like to. While negotiations certainly can change the structure of a deal, how an offer is initially made can frame the discussions.
• Privacy: These deals can often be done quietly, outside the public’s eye. This is a minor consideration for most, but it could benefit sellers (or buyers) with business or personal reasons for not advertising a property transfer.

7 Tips on How to Find Off-Market Commercial Properties

To be successful with off-market commercial properties, you must know how to find them. Here are some methods that investors use.

1. Network with Industry Professionals

Real estate agents, brokers, and attorneys often have inside information on off-market properties. They may know of owners who have expressed interest in selling (pocket deals) or be able to guess an owner’s willingness to sell if the owner has been a client.

Networking with commercial contractors could also yield some opportunities. Owners may be more inclined to sell if they have major repairs or maintenance to complete, and contractors would be most likely to know this. These opportunities could present a beautiful opportunity if you can get a great deal on a distressed property.

2. Utilize Direct Mail Campaigns

Direct mail can still yield results. Sending personalized letters or postcards to property owners expressing interest in their property can sometimes uncover off-market opportunities. Even if owners aren’t willing to sell, they may file your information for a future date when their thoughts change.

3. Work with Wholesalers

Real estate wholesalers specialize in identifying off-market properties and selling them to investors.

They usually have standing purchase agreements that owners have agreed to. Wholesalers will then sell those agreements to investors looking to purchase. You’ll pay a markup to the wholesaler, but this is one of the most reliable ways to find off-market deals. They’re still often better than what’s actually listed.

4. Use Public Records and Data

Property records, tax information, and legal filings can reveal properties that may soon be available for sale. This approach requires extensive and sometimes tedious research, but there’s a chance you could find an incredible deal if an owner is facing foreclosure, a tax lien, or needs to sell for personal reasons.

5. Subscribe to CRE Data Providers

Commercial real estate data providers maintain databases of properties that aren’t listed in the MLS. Provided information often includes owner contact information, market and submarket data, sales comps, rental comps, and other details.

You’ll usually need to pay a subscription fee, but the fee may be small if you’re looking to buy multiple commercial properties. This is often one of the quickest ways to screen many potential properties, and it’s also an easy way to get owner contact information.

Some CRE data providers include Reonomy, CoStar, and CRE Collaborative.

6. Driving for Dollars

Driving for dollars requires boots on the ground (or wheels on the road). Drive around and look for properties that might be of interest. A potential property could be unique, in an ideal location, or appear distressed.

Actually spending days and weeks driving is an inefficient way to find properties, and you don’t know that any potential ones identified will work out. Always watch for potential properties as you go about routine driving, though. You could see a property when running errands, commuting to work, or going on a road trip.

7. Calling “For Rent” Signs

If you’re looking for a smaller property, you might try calling owners when they have a “for rent” sign posted. Sometimes, owners may be more willing to sell if they’re between tenants.

Calling for rent signs is most likely to yield results with properties that have few units. This may be a good strategy if you’re looking for a multifamily residential property with only a few units, or a commercial property with just one or two spaces. Larger properties regularly have at least some units or space available for rent.

Wrapping Up

Finding off-market commercial properties requires patience, strategy, and a strong network. The benefits of less competition, privacy, speed, and access to exclusive deals can provide great returns on the effort, though. Begin researching opportunities, and you might find good opportunities to add to your commercial real estate portfolio.