There are no deals, nothing pencils. I used to say it too. Here are my own numbers from six months of screening, and how many at bats one accepted offer takes.
In September I was at the Value Add Network event in Minneapolis. Great room, new deals going up on the board. It's always inspiring to look at how other folks are succeeding.
Alongside all the success stories, I heard the most common obstacle. There are no deals. Nothing pencils.
Then my friend Cole presented. He is on a whole other level when it comes to acquisitions. He had a slide showing how many deals he has to look at (hundreds), then how many LOIs he has to submit (double digits) to get six deals under contract.
I used to say "there are no deals" too
I definitely had this same objection in the past, before I knew what levers I had to pull. Everything listed was overpriced, the good stuff traded before I heard about it, and half the brokers I called never called back.
Then someone I respected asked me a question I could not answer: how many deals did you look at last week?
I did not have a number. Not even a rough one. That was the actual problem.
Deals trade every day
I am not going to tell you it is easy right now. Volume is off the peak. But deals trade every single day. The only difference with the people winning them is that they have more at bats.
My numbers from the last six months
To illustrate, I pulled my numbers from the last six months:
- 77 deals screened per month. Screened means anything from a two-minute look at an OM to half an hour on a rough underwrite.
- 8 LOIs per month
- Half an accepted offer per month
That means one accepted offer costs me about 152 properties screened and 16 LOIs written. Your ratios may not be exact, but they will be in that proportion. Triple digits at the top, double digits in the middle, single digits at the bottom.
Work backward from the deals you want
So the useful question is this: how many days do I need to screen 152 deals? Because that is roughly the magic number where I land one accepted offer.
Screen one a day, every day, and you get an accepted offer every five months. Call it two a year.
Want three a year? That is 450 deals screened, about nine a week.
And you work from that. If your Crexi, CoStar and LoopNet searches bring in fewer value-add opportunities than that, maybe it is time to expand your market. Or add two coffee meetings with brokers, or a direct-to-seller campaign. Whatever it takes to fill the top with opportunities you can vet.
Start by knowing your own ratios: deals looked at, offers submitted, offers accepted. Pick the number of deals you want this year. Multiply your activity to match it. You will no longer be saying there are no deals. Frankly, you will soon be saying deals are galore.
