How I'm Handling Sellers in a Changing Commercial Real Estate Market

How I'm Handling Sellers in a Changing Commercial Real Estate Market...  In this Gould Mine mini-episode, we take a closer look at a hotel deal that almost closed in New York City. We were on the brink of signing when the sellers decided to hold onto their hotel, influenced by the fluctuating market. In this episode, I'll share why it’s important to act fast in today's market conditions, and how changes in interest rates and the political climate can impact your commercial real estate deals....

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Transcript

•  What's up gold miners I want to talk about Sellers and especially in this environment with interest rates changing pretty much on the daily. At this point there's so much fluctuation. There's so much volatility. There's so much uncertainty in the marketplace you layer on top of that not just the economic conditions but also the political climate of the country right now and there's so many things. There's so many extraneous factors that are rocking the boat so to speak and so one of the things that I'm noticing and just had this happen to me on a deal recently where my partners and I were negotiating on this fantastic deal. In New York City.
•  We had had gotten all the way uh basically to the point where sellers were ready to sign off on our on our purchase agreement and they backed out last minute.
•  Saying hey.
•  We decided that we're going to just hold on to this hotel and whereas 3 months beforehand they were like all gho about selling it. At first I was upset but then also at the same time had to recognize that this a rapidly evolving landscape and so what I recognize in the deal is the the determin the tremendous upside in the deal. But there was some some risk kind of up front but now where the rates were and where the market was three months ago versus where it's at now. I think that there's a lot more certainty in certain parts of the country and for certain asset classes as for hotels.
•  I think at that point there was too much upside for the owners in terms of holding on to the property and so like if I were them I would have held on to it.
•  But of course I wasn't going to tell them that and so I think it's important for us to recognize that right.
•  Now because of the fluctuating market conditions that and this is a reminder to myself that we got to be quick if we see a deal that we really like and like we're serious about it. This isn't the time to like you know play commercial real estate and like take 3 months to make a decision and like go through all the stuff and like oh well maybe we'll do it and we'll negotiate and all these things like no like now you've got to be quick to act and really quick to strike while the iron's hot and while the sellers are still in a position where they need to sell their assets because a lot of these people they do need to sell or they'd like to sell given the current market the uncertainty and everything and so if you can strike while the iron's hot you're going to be in a much better position to take advantage of good opportunities and we moved as quickly as we could. They were the ones that were dragging their feet on this particular deal and I think they were dragging their feet for a reason. But it's a lesson and a reminder to all of us that as investors when we are in acquisition mode and we find a good deal. Don't dilly-dally do not drag. Your feet do not like take months on end to make a decision strike while the iron's hot just because the opportunity is here today does not mean. It's going to be here tomorrow and that just doesn't go for the for one particular deal. It goes for the overall Market as well. We don't know when these conditions are going to change and all of a sudden. The sellers are going to be a lot more in control right now for most asset classes. It is more a buyer Market than a sellers market and so I would encourage all of you who are in acquisition mode. Right now do not let this opportunity pass you by it was certainly a great reminder for me and it's put me in in fierce fierce acquisition mode like I'm leaving town next week. I'm on a plane I'm going to tour a bunch of hotels until we make an offer and that's just the mode that I'm in right now because I know hey. I don't know how many more at bats me and my partners are going to get before the market conditions turn again and so we've got to stay hungry and we've got to strike while the iron is hot. This is Danny G everyone hope you found this gold nugget useful stay mining everyone oh.