I See Dead Deals
Your CRE deal is DEAD. Deader than Bruce Willis in that 90’s movie *Spoiler Alert* but instead of dropping the deal and moving on, you keep making calls, pitching your deal, trying to make progress, but YOUR DEAL IS DEAD and there’s no other way around it. Hey, I’ve been there- everyone in CRE, and sales, has. Here are a few things I’ve learned to look for when I’m considering taking on a new deal, prospect or potential client. These work whether you’re a CRE intermediary OR investor:
Money Talks, Bullsh*t Walks
Virtually every single CRE deal requires 20% to 35% equity in the capital stack. YES, your equity needs to be CA$H and not a term sheet, legal settlement, land, Canadian bonds, tax incentives, etc. NO, strong equity positions alone do not guaranty your deal gets done. Simply stated, the more cash equity a sponsor has in a deal the better your chances lenders, brokers and investors will consider doing your deal.
No One Wants Your Deal
Go ahead and pitch your deal to some of the better firms or lenders for your deal. Ask them for their honest feedback. Go one step further and ask if they would consider doing your deal. If they don’t jump on board or sound anywhere close to saying yes, chances are no one worth a damn will either.
You STILL Don’t Have Your Sh*t Together
It’s no secret that in our “Best-Selling” FREE eBook ‘#CREhacks: Top 10 Ways to Finance CRE‘ a loan package took the #1 spot. You don’t always need a professionally produced loan package or offering memorandum, but you do need to present your deal with some semblance of order- we’ve built a business on this concept alone. Bottom line is, if someone is kind enough to take the time to look at your deal, PLEASE make it easy for them.
It’s Still NOT Closed
Good deals are hard to refuse and are often easy to close. So if it’s been a while and a closing is still nowhere in sight you have three options: stay the course, change something up, or kill the deal. It’s okay to chase the carrot sometimes, but not all the times. If you can’t come up with a strategy to get the deal closed you may want to seriously consider dropping the deal.
Money Isn’t Your Motive
Why are you working this deal? If your answer is anything other than getting PAID, taking your game to the next level, and building up your street cred- you may need to reassess your situation. For intermediaries- cutting your fees below market or on smaller deals is a really bad idea. If a client does not understand or appreciate your value, there’s probably even less of a chance they understand anything about CRE and their own damn deal.
It’s Not Ready Yet
So you have a prospect with a great deal. Now the deal just has to get rezoned, plans approved, get a lease signed, oh and there’s ZERO equity in it right now. Face it, when it comes down to it a lot of deals and prospects just aren’t ready. Unless a deal is ready to go, it’s usually best to kindly turn the business down and perhaps just look to make some periodic check ups.
Something Don’t Feel Right
If you ever feel like a prospect is less than upfront, honest and acting out of best faith- WALK. Always go with your gut too! If you have any professional experience and ability to read people, your initial thoughts are almost always going to be dead-on accurate. Don’t worry about any potential fees, relationships or future business- all of those things come after initial trust and respect are established.
Look CRE is a great business, but most deals don’t and won’t ever get closed. Period. And while optimism is certainly our most valuable intangible in the high-risk/high-reward CRE industry, don’t follow it blindly. So if you currently have a DEAD deal, just go ahead, pick up the phone and off that S.O.B. already.