Third Party Acquisitions (TPA) as a distinctive discipline within the real estate market has a long reach but a short history. In fact, it’s only been around for as long as Offerd has; this is the company that started it. That’s why, despite huge gains already accrued by the parties actively involved, this activity still feels like an outlier to some. It’s time to fix that.
In this short blog series, we’ll offer quick takes on the TPA capability: why it’s flourishing, how it works, and how each company can develop and derive customized benefits from it. To the dealmakers who like to get deals done, this is for you.
Let’s start with the basics. Why would anyone outsource this function? Do sophisticated investment firms really need help locating worthy properties around the country?
Here’s the thing: In a business environment undergoing constant transformation—especially through the unprecedented growth of data-guided decision making—multifamily investment practices have largely stayed the same. Within most investment firms and acquisition departments, the sourcing is done in-house. Dedicated individuals research, identify, organize, structure, negotiate and eventually close all deals, regardless of geographies, competitive concerns or other complications. In certain cases, investors engage third-party brokerage firms, but there’s not much alignment here, and for a simple reason: most multifamily brokers are focused on the sell side.
In current scenarios, the buyer evaluates 100 or more properties, digs in on 30, negotiates on 10 and eventually, maybe, sometimes acquires. . .one. The entire effort requires massive expenditures of time, money and manpower, sowing doubt in any quantifiable ROI. (And we’ll get more into this later, but there may be an even greater cost in missed opportunities.)
On the flip side, starting with a smaller target base wouldn’t work either. In almost any acquisitions function, worthy deals come from the largest funnel—the more prospects that go in at the top, the greater the ROI is at the bottom. That makes all of the labor-intensive legwork unavoidable. . .unless there’s a service that just happens to maintain relationships with property owners, track assets around the country, gauge their viability and even monitor related factors such as neighborhood income, local employment, schools, etc., all on an ongoing basis. Given that so many multifamily assets are off-market, that makes this information even more valuable. The Offerd TPA offering means getting a customized list that perfectly aligns with tightly drawn search parameters in a very short time.
This is why the idea of retaining a TPA provider is so revolutionary—it upends the traditional understanding of every investment initiative.