New Deals Are the Priority, but Consider Your Motivations Before Diving Into That Next Opportunity
Today more than ever, GPs are feeling the tension in their commercial real estate strategy. There’s a lot to consider and tackle on a daily basis: finding new deals, conducting due diligence, navigating funding and closing processes, seeking to add value for investors and partners, and producing and reporting on results every day thereafter.
While the industry has been thrown a number of curveballs over the past year, opportunities are still available. What matters more is that you and your team are focusing on the right opportunities. In today’s complex market, you don’t want to waste valuable time and resources on deals that aren’t likely to succeed or that don’t fit your own goals.
Here, we’ll discuss a few key considerations for ensuring your commercial real estate strategy is on track for strong performance this year — and in the years to come.
Three Focuses to Strengthen Your Commercial Real Estate Strategy
1. Check Your Motivations
What is it about this deal that interests and drives you? Your “zeal for the deal” must be balanced with careful and thorough research and an understanding of how long it will take to add value for your investors. Doing an upfront assessment — using available data along with expected variables, and even that feeling in your gut — is critical to gaining an understanding of your potential return. Other factors must be considered as well, such as the potential impact of market cycles and conditions and even the feasibility of the deal.
- Get more pre-investment tips and recommendations to know whether you’re making the best possible decision for yourself and your investors.
2. Get Proactive with Planning
You already know that location matters — seek to understand the area that the asset is located in. Is it an up-and-coming neighborhood? A high traffic area? Properties in attractive areas reduce liquidity cycle risk. Apart from this golden rule, the financial aspects of your commercial real estate strategy matter here as well — ensure that you fully understand the capital that you’re raising. Leverage must be carefully assessed to ensure it’s in alignment with investor expectations, as it can impact your return on the deal.
- Learn how to find the right deals for you and your investors. Download our guide to efficient deal sourcing here.
3. Seek to Simplify Workload
You’re going to have a lot on your plate after the deal closes, which is why reporting must be streamlined. Communicating progress and results doesn’t require complex reporting that your investors don’t have time to read anyway — focus on what matters, how it aligns with your original goals and expectations, and automate the process wherever possible. Be consistent, and don’t do any ad hoc reporting unless it’s essential.
- Reporting is just one of many investor relations features you need to streamline your workload. Explore others here.
Make Every Deal a Success with Covercy — a Complete Investment Management Platform for GPs
The tips provided here are just a sampling of the many ways you and your team can ensure that the deals in your pipeline are the right opportunities for you — and for your investors. In many ways the road ahead can appear uncertain, but with a refined focus and a strong platform for making your workload more efficient and automated, you’ll be able to build a clearer, stronger commercial real estate strategy and maximize its results.
At Covercy, we’ve built the first comprehensive commercial real estate investment management platform for GPs. Combining fundraising, asset management, investor relations, automated distributions, and banking-embedded capabilities into a single platform, Covercy is the solution your firm needs to make 2023 your most successful year yet.