I previously stated that I began doing some smaller commercial real estate deals in Michigan. During my tenure in California and with my newfound access to Asset Managers in charge of selling portfolios of REO properties and NPLs, I attempted to no avail to connect them with investors and put some larger deals together. One of the first things I noticed is that with the bigger numbers, there are more egos involved. Whether it’s the person in the position to make the decision or who has access to the sellers or buyers, the higher the prospective financial gain, the chance for people to display unethical or unscrupulous behavior amplifies. I’m a firm believer in the biblical doctrine that one should not be unequally yoked and this applies to business as well. To put the amounts in perspective, the deals ranged from $5 million to $70 million.
One lesson that I learned very fast was to avoid deals with too many individuals involved better known as daisy chains. To clarify, a daisy chain comes into fruition when seller A contracts a property to seller B who then contracts to it to seller C and so on until it finally reaches the buyer. Everyone says they don’t like them but you find people trying to middle man deals all the time and that can be potentially problematic. Not saying that all daisy chain deals fail but I haven’t met too many people in the industry that say they work. Most of the people who are really in the business are emphatic about staying away from these type of deals without certain protections in place. These deals typically don’t result in a sale for various reasons. A few reasons include, people going around each other despite signing non-disclosure, noncompete agreements; the added fees to the transaction or the property never being under contract initially or being sold and the other participants aren’t aware.
After my fair share of shredded daisy chains and faux buyers mixed with a little circumvention, I became a bit discouraged and turned off. I realized that I would ensure that I operated my company and deals on a higher level to not only benefit myself but my clients and investors. I ensure deals are done with high integrity and transparency along with the proper written documentation or agreements in addition to vetting the parties involved. This time also showed me the importance of honing in on your specific type of client and best meeting their needs or solving their problems. Those experiences were necessary to teach me and the learning continues. My clients like to save time and money while building their personal and/or business investment real estate portfolios. I appreciate the epic people I encounter everyday who choose The Thomas Agency, LLC or The Thomas Agency of Georgia,LLC to help them “Build Legacies, One Property At A Time.” Stay Epic my friends!
Art Image by: Arztsaumi Courtesy of: freedigitalphotos.net