Hi Joshua, glad to answer your questions,
Congratulations on your entry into outside equity, I wish you luck with it.
Yes, the deals are more scarce and it is more difficult to identify opportunities as the obvious and easier deals are quickly identified and funded. This requires one to be more imaginative and preemptive in your approach. I am always looking for subtle signs of distress, thinking of new and better uses or property, learning regional growth trends and trying to anticipate markets.
For this property, I easily noticed that it was out of place- not being developed in a highly desirable and economically vibrant area. It was an easy find but a difficult deal to put together- thus the reason it remained undeveloped. Because of the trying legal issues, complexities of title and the age of the problems; no one even wanted to deal with the property. It is like the ugly girl in kindergarden that makes it to high school where everyone just views as good ole plain Jane, the good friend and student. Then when she goes off to college, all the new students notice that she is a most beautiful and vibrant woman that all the guys want to date. Humans are just creatures of habit that get used to their paradigm and don't tend to change our views and interests unless forced.
Thus looking for old and tired properties and figuring out new ways to use it, new approaches to development, or how to overcome long standing problems can open new doors of opportunity. The most important part is always to be looking. You need to observe what works in other areas, where others came up with great ideas and then follow suit in your area.
There is also the tries and true methods of networking, letting lawyers, real estate agents, contractors, pool service companies, landscapers that you are looking for people with properties that are facing difficulties. Most importantly, you need to convince them that you have the abilities, the resources, and the drive to make it happen.
On this deal, I coordinated all the solutions needed to overcome the issues. I pushed forward over and over again as others began to fade on interest or belief it could come through. It is an emotional roller coaster that you need to be determined to stay on till the end.
What made this deal more difficult is that an option was not even being considered by the owner. Having spent years and years being approached by all types of visionaries without the money nor experience to purchase and develop the properties, he was not going to entertain another dreamer. He needed to see full money along with a zero contingency offer. It required me to put together a professional offering package that answered all questions, showed and proved probable outcomes, and also bring together an experienced team to develop.
Often what many newbies to project syndication believe is that if the can point to a potential opportunity, they are tied into the equity through the end. One needs to understand that you need to bring ongoing value to the project to obtain a piece. You need strong relationships with developers, attorneys, capital sources and more.
When you do have a good project, you need to have multiple capital sources which you have identified and built relationship with over the years. Not every project fits every investor, you need multiple capital sources with different appetites and goals. In this case, the ideal capital partner was one who does development so they understood the deal but who had too many projects going to work on such a big one. A capital source that was inexperienced was scared by the hair on the deal while a super experienced and under worked developer wanted to take the whole deal. It just took shopping.
So I recommend that you develop as many relationships as you can with those who will add value to your team as well as with a wide range of investors. Get to know and understand your relationships with regards to their goals, their talents, and the integrity.
I hope the above gives some understanding to help those trying to syndicate there next heal.
Bob
