Yesterday, Coach Michal told the story of the Apartment Deal That Just Couldn’t Die. It just goes to show you never know with a deal. This one rose out of the ashes and closed in a very short period of time.
If you haven’t already signed up for the apartment buying webinar this Saturday, please go to http://www.DianesSeminars.com right now to claim your seat.
Today, Michal is going to share some of the points that make a great apartment deal. I’m turning it over to Michal now:
When you sign an apartment purchase agreement, a host of activities are set into motion – very much like spinning plates. Here is a partial list of those activities:
- Raising Equity
- Securing Bank Financing
- Producing a Property Plan
- Producing a Private Placement Memorandum
- Forming a Legal Operating Entity
- Performing an Inspection
- Performing Physical Due Diligence
- Performing Financial Due Diligence
- Preparing an Operational Plan
- Hiring a Manager or Property Management Company
- Securing Insurance
- Retaining a Closing Attorney
This is just a partial list and several of these items have dozens of tasks attached to them in order to get them completed.
One of the biggest things we teach is the importance of putting together a quality team to get all of these tasks completed. In some cases one highly trained person may be able to get a deal like this done all by themselves, but once they are operating a portfolio of communities, you need a team.
The critical point to all of this though is that you know what needs to happen on day one so that you can get a lot of these activities happening concurrently. If you wait too long to get going on these tasks or wait for one thing to get done before starting another you will run out of time and the deal won’t close. That is not good. Your reputation is everything, so you must do what you say you are going to do.
When I did my first deal this process took about 120 days and I negotiated hard to be able to have all of the time I thought I would need to get all of these tasks accomplished. In looking back on that deal I know that God was looking out for me as in today’s market very few sellers would be that patient – and that time frame would be 90 days at the most and most likely 60 days with some hard money extensions.
On this “deal that wouldn’t die”, we had our ducks in a row and were able to set ourselves apart from other buyers by offering to close, with financing in a little over 45 days. Although I don’t recommend putting yourself behind the 8-ball like this if you can help it, I will say that being able to project that level of confidence and knowing that you can perform in this manner, will make some deals that seem unreachable, possible.
Forming effective teams and executing efficiently are two concepts that we spend a lot of time on in my training. Having the confidence and ability to close a deal can mean the difference between adding units to your portfolio or constantly just missing out on getting a deal.