I remember when I first started my commercial real estate brokerage. I was constantly brainstorming ways to compete with the much bigger and well-known names in town. I mean, how was I going to compete with these internationally known commercial real estate firms?
I actually had some pretty good ideas, and we were even doing alright for ourselves. The problem was that we were constantly scratching and clawing to get that new listing. Every commercial real estate agent in town was competing over the same listings and the same buyers. It got to be really daunting.
This isn’t just a commercial real estate thing. The residential market is even worse. Each market has hundreds or thousands of agents all chasing the same deals. Granted, some agents focus on larger houses, some do REOs, some stick to certain areas, etc., but it’s still so hard to stand out from such a large crowd.
By chance (if I believed in chance), I got a listing for a small assisted living facility (known as an Adult Foster Care in Michigan). In the process of marketing this property to other assisted living owners, we naturally picked up a couple other listings. These listings were for even smaller adult foster cares.
As I was doing my research to figure out the best way to valuate these things, I realized that there weren’t many sold comps and the current listings out there were valued all over the place. That’s when it hit me, this market doesn’t even exist. Of course, the bigger commercial real estate firms were listing and selling the larger skilled nursing facilities and retirement communities, but nobody was touching these AFCs.
I finally figured out how I was going to compete with the bigger names. I wasn’t going to compete with them at all. We went all out learning everything there is to know about the adult foster care business and put our focus into listing and selling them. We bought the biggest booth available at the Michigan Assisted Living Association’s Annual Conference and bought the biggest prize for the exhibitor drawing.
At the conference we didn’t say “we’ve done a few AFC deals”, we said “We’re the leaders in AFC deals!” We sent mailers out to all of the AFC owners in the state letting them know that we’re the leaders. Within weeks we started getting calls from people saying, “I heard you guys are the ones I want to work with if I want to sell my AFC.” And that’s exactly who we are.
We’re not competing with anyone over the same deals anymore. We’re just the ones that do the deals. Now, I’m not a fool. I know that it won’t stay this way forever. It’s only a matter of time before somebody else sees what we’re doing and decides to jump into our market. Am I worried about it? Not at all. We were the first to establish ourselves as the experts in the market and the first name that everyone began to know as the AFC brokers. I’m sure somebody else could come in and be successful in this space, but we’ll always be two steps ahead.
Are there other similar niches out there waiting to be captured? Absolutely. There are brokers out there doing great specializing in bed and breakfasts in their market. Not all markets have the B&B experts, though. I know somebody that does a great job specializing in small “scuzzy” motels/hotels. Another huge opportunity lies in the small multifamily property market, the 2-4, or 2-8, unit properties. The reason is that most commercial real estate firms are going after the larger multifamily deals and looking right over the smaller deals. Most residential agents don’t have the proper knowledge and experience to effectively sell these types of properties. There are plenty of similar opportunities out there as well.
So, who’s going to do these deals? Somebody who’s done competing and is ready to own their market.