Blake Leavitt is a multifamily and commercial broker at KW Commercial. In this episode, Blake shares the marketing tactics he uses to get in front of buyers and sellers at the optimal time. He also shares how he is overcoming a 90% drop in his market’s sales volume in the past year and how he identifies which properties are likely to sell in the near future.
Blake Leavitt | Real Estate Background
- Director, Multifamily and commercial broker at KW Commercial
- Portfolio:
- Principal of a 48-unit property in Las Vegas
- Two LP positions spanning over 3,000 units
- Based in: Las Vegas, NV
- Say hi to him at:
- Best Ever Book: Shift by Gary Keller
- Greatest Lesson: Contact owners and keep in touch with them, otherwise another broker will get the listing.
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TRANSCRIPT
Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and today I'm here with Blake Levitt. Blake is based in Las Vegas, Nevada. He is a director and multifamily and commercial broker with Keller Williams Commercial. He specializes in brokering multifamily, and has a unique marketing strategy that allows him to set record-breaking prices in his market for the multifamily properties that he sells. I'm interested in hearing more about that. He is also an investor, a principal in a 48-unit property there in Vegas, and he has two LP positions spanning over 3,000 units. Blake, can you tell us a little bit more about your background? And then I want to hear about this marketing strategy of yours.
Blake Leavitt: Sure. Thanks, Slocomb, for having me on. I really appreciate it. So my background is I got into real estate when I was 19 years old when I dropped out of college to buy my first fix and flip house back in 2012. I renovated it and sold it for a five-figure net profit. Then in 2015 I got my real estate license and started out as a residential real estate agent. I started doing that, helping people buy and sell homes, and then in 2017, that's when I started brokering multifamily and commercial real estate. The reason why I decided to make the change was I've always wanted to do commercial real estate, since everything is all about the numbers and making them work, and I've just always been analytical and great at numbers.
So in 2020 though, that was the year where everything for me started to take off, as I realized this was the opportunity of a lifetime to take action, and just start doing deals. I was out there doing deals, building my business, doing marketing, and that year was the best year I had, and I earned well over six figures. And then in 2021, that was the year where I earned over seven figures, and became a millionaire at 28 years old. Later that year, in December 2021, that's when I closed on my first commercial multifamily deal as a principal, that was 48 units. And I got the property at a great price, because it was heavy value-add, plus since I had such a great year, I needed a large deal to do a cost segregation study on, so that I could defer the income taxes.
Slocomb Reed: That makes a lot of sense. Blake, you acquired that 48-unit in 2021?
Blake Leavitt: Yes, correct.
Slocomb Reed: Gotcha. And it was a heavy value-add. What's happening with it now?
Blake Leavitt: Now we've really got it up and running. So we did a full exterior renovation, renovated that common areas, have renovated units on tenant turns, and now it's performing pretty well. We're also still doing renovations on tenant turns, but everything's been going great.
Slocomb Reed: Nice. So Blake, you were getting into brokering multifamily at a time that records were being set all over the place for valuations, and a lot of that buffered by the low interest debt that was available to seemingly everyone to buy multifamily. Tell us more about how your marketing strategy led to your success.
Blake Leavitt: When I was taking listings, I was doing something unique, where I was marketing the properties to my buyer database that I'd built up. How I built that up is just going through the property records; it takes a lot of work, but you can find all the buyers and sellers in the property records basically. So I did that, and started reaching out to owners, and a lot of those owners were buyers. And then I also do a lot of marketing on social media, which I rarely see any other brokers using social media marketing.
Slocomb Reed: So what we're talking about right now is how you build your buyers list. And you went into public record information to figure out who current owners were for the sake of adding them to your buyers list?
Blake Leavitt: Yes, correct. And then also how I built my buyers list was just by reading articles of properties that sold, and it would always state who the buyer and sellers were. And then I would research those, and reach out to them and add them to my list.
Slocomb Reed: Gotcha. And what has been the results of your social media marketing? Is it helping you attract more seller clients or more buyers for your listings?
Blake Leavitt: Definitely more buyers.
Slocomb Reed: Tell us about that. How is it that you're getting in front of buyers for your deals through social media?
Blake Leavitt: I have an Instagram account and a Facebook account, and I've promoted properties on there, with the hashtags; that shows up that way. And then also I've done paid advertising before, where I can advertise my listing, say, in San Francisco, California, or in Seattle, Washington, where the price per units there are so much higher in Las Vegas, and then investors see that and they're like, "Wow, this is a great deal, the price per units here compared to the price per units there."
Slocomb Reed: So using the Meta platform algorithms for targeting prospective buyers, or for creating your target audience, you're using geography and finding very expensive places to live and very expensive apartments to operate because of how nice the cost per door looks in Las Vegas... What other metrics are you using?
Blake Leavitt: Other metrics on social media, or other metrics in general?
Slocomb Reed: For the sake of creating a targeted audience for your social media advertising, what are you looking at other than where people are located with regards to who you're targeting to be buyers for these properties?
Blake Leavitt: Basically, it's just those cities, and there's algorithms in there where you can target people, say, making a certain income, or that have a certain net worth.
Slocomb Reed: Income and net worth, that makes sense as well. What is it that you're doing to get in front of sellers, and get listing agreements? I imagine you have some fairly stiff competition and some people who've been in the game significantly longer than you have, that you're competing against as a broker.
Blake Leavitt: Definitely. So to get in front of sellers, I've done direct mailers, reaching out to them via email, and calling them as well.
Slocomb Reed: Let me paint a picture here... Please remember, I'm on Team Blake Levitt. You're young, you're inexperienced, you're new to the industry, you haven't taken a lot of listings... Why is it that sellers are picking you?
Blake Leavitt: Why is it that sellers are picking me? With my track record of listings I've sold; they've been pretty aggressive. I guess I'm personable, they do like working with me... I do put my cell phone on all marketing materials, instead of my office phone. So whenever buyers and sellers reach out to me, they can reach out to me anytime. So basically, seven days a week. And if I'm up when they're calling, I'll answer the phone and respond.
Break: [00:08:59.10]
Slocomb Reed: We're recording this second quarter of 2023. It's a very different climate than it was in '20 and '21. What types of listings are you looking to take right now?
Blake Leavitt: That's a great question. So in 2020 and 2021 in the Las Vegas market our cap rates went as low as 3% to 4%. And right now, I'd say they're around 5% to 6%, and on the smaller and midsized property, some of those are trading all the way between 6% to 8%. So the listings I'm trying to take right now, it's basically listings that are priced around market value, or still have a cap rate between the 5% to 6%. Where the market's at, it's been pretty tough lately, because there's still that gap between the buyers' bid prices and the sellers' asking prices. So a lot of buyers and sellers are still in price discovery right now. But there are still deals getting done; our sales volume has dropped over 90%, but there's still a few deals here and there getting done that gives some type of guidance on what the cap rates are and where the expectations are.
Slocomb Reed: Blake, we can't just glaze over - the transaction volume in Las Vegas is down 90%? From when to when?
Blake Leavitt: The sales volume has dropped about 90% year over year. So what that means is when the interest rates are low, and everyone was buying and selling, there was 30 multifamily properties selling a month in our market. And now there's about three to four properties selling a month.
Slocomb Reed: That being the case, and with you being a broker looking to transact, how do you identify which properties or which sellers are actually going to sell, with the market conditions that we're experiencing currently?
Blake Leavitt: There really hasn't been any motivated sellers just yet, because a lot of sellers - their loans haven't come due. There was a lot of people that bought in 2021 with three year loans. So in 2024, those loans are coming due; it'll be interesting to see what happens with those. But right now, the sellers I'm seeing transact, they're transacting right now just to still take advantage of aggressive prices. Because as long as the sellers have been raising the rent on the property and keeping the income up with the market rent, they can still get a good price at a 5% to 6% cap rate.
Slocomb Reed: So it's not about seller distress or a seller sense of urgency to sell now before the need for a liquidity event or something that's going to happen to their financing; it's more about which properties will still receive the premium that we got so used to the last couple of years?
Blake Leavitt: A lot of sellers aren't willing to transact at this moment because they're still used to the 3% to 4% cap rates. They're like, "Oh, I saw we could get 3% to 4%. Now it's 5% to 6%." But a lot of sellers, it's like a wait and see what happens approach still.
Slocomb Reed: So which ones are the ones that are selling currently?
Blake Leavitt: Right now the ones that are selling, they're not really that motivated, from what I know... But the ones that are still selling, they're taking advantage of the current market, as the price per units right now are still high compared to where they were several years ago.
Slocomb Reed: I'm maybe reading between the lines here, Blake, but it sounds like you're saying that everything that lists still sells. There are only 10% as many sellers willing to sell at the current moment. It's not specific to the property condition, like they NOI condition? Has meat been left on the bone for someone else to come in and add value, or is it practically turnkey? There isn't anything about the condition of the property. Currently, it's simply the people who decide to list, sell and they get the price they're looking for?
Blake Leavitt: So everything is still determined by the cap rate. Buyers, they won't purchase any more at low cap rates. They want a much higher cap rate right now. There's been an increase in listings, but those properties, a lot of them haven't sold just because the cap rates aren't where they need to be, and buyers want a higher cap rate, and the seller still want that lower cap rate on a lot of them.
Slocomb Reed: Are you saying that the properties that are going to market and selling right now are effectively being operated optimally with a solid NOI? Or is it the ones that are experiencing some distress where there's a lot of value that can be added by a future buyer for which they're purchasing at a relative discount?
Blake Leavitt: The ones I've seen sold recently, they've sold at around a 6% cap rate. So they've had good NOI in place, and around a 6% cap rate; that seems to be attractive to buyers right now.
Slocomb Reed: So the ones that are selling in Vegas right now are the ones that have current cash flow, effectively.
Blake Leavitt: Yes, correct. And do you know what those buyers are planning to do with the property? Are these firms that are just looking for cash flow, they're gonna hold long term? Or are these people who are looking to force appreciation, drive up the NOI in the next few years, and then sell?
Blake Leavitt: They were purchased as value-add opportunities. So the buyers, they'll force appreciation, go and renovate the property and raise rents.
Slocomb Reed: It will be interesting to see over the next few years whether or not they succeed. Blake, are you ready for the Best Ever Lightning Round?
Blake Leavitt: Yes.
Slocomb Reed: What is the Best Ever book you've recently read?
Blake Leavitt: The Best Ever book I've recently read is Shift by Gary Keller. It talks about the current market and where you just have to double down on lead generation right now.
Slocomb Reed: What is your Best Ever way to get back?
Blake Leavitt: Best Ever way to get back is my 48-unit property I currently own, we work with the county to house homeless people there. So it's a program where we rent to homeless people, and the county pays their rent. And we help them work with the county to help the person get back on their feet, and the success rate, it's about 90% success rate so far, where the person becomes self-sufficient, and within a year they can pay their own rent now.
Slocomb Reed: I believe it's a fairly nationally-acclaimed program that Las Vegas has for housing their homeless population. You're not the only landlord doing that there, are you?
Blake Leavitt: No, there's other landlords as well.
Slocomb Reed: What is your Best Ever advice?
Blake Leavitt: Best Ever advice - take action, don't wait, and just start contacting people.
Slocomb Reed: Where can people contact you?
Blake Leavitt: They can go to my website, which is blakemultifamily.com, for brokerage. I also have another website for acquisitions. It's blakerealtyventures.com. My email address is Blake [at] Blakemultifamily.com. And my phone number is 702-809-8387.
Slocomb Reed: You really do put your phone number on all your marketing materials. Those links are in the show notes. Blake, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show. Leave us a five star review and share this episode with a friend you know we can add value to through our conversation today. Thank you, have a Best Ever day.
Blake Leavitt: Thanks, Slocomb.
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