Sometimes, you have to learn things the hard way. Or, you can learn from the mistakes of others. We’re focusing on the latter today as we cover some common mistakes CRE pros make, especially if they’re new.
Before you make that next (or your first) commercial real estate deal, keep these scenarios and warnings in mind.
1. Closing Too Early
Look, we all want to close on time or early, but you need to make sure that you’re not closing prematurely and that everything is approved and ready. Zoning approvals need to be granted, there may be extension fees you need to be aware of and you need to be sure you have a thorough understanding of the taxes on the property you’re buying. Do your due diligence and close when it’s the right time.
2. Signing Up Poor Clients
Whether it’s a bad fit or bad financials, poor clients can provide exponentially increasing drawbacks for your portfolio. Lapses in rent can disrupt cash flow and affect future projections while problem tenants can cause issues including chasing off more ideal clients in the same complex. As a rule of thumb, don’t sign up clients you know are going to be a bad fit, even if they’re the only ones that currently have interest in your property.
3. No Bank Backing
Do you have an existing banking relationship? Loans are often approved or rejected based on banking relationships and CRE pros who have an established loan application process and history. Even an existing relationship with your prospective bank for another type of account can speed up the process for your commercial real estate loan approval.
4. Taking Things Personally
Low-ball offers can test even the most patient of us, but try not to overreact to, or be insulted by, these offers. You never want to alienate sellers by offering them and put off buyers by reacting negatively to them. Even if you’re far apart on amounts or contract details, responding and maintaining the negotiation process is a good long-term decision even if that’s just politely outlining where you need to be at on the deal and moving on to reclaim time.
5. Talking About Deals Prematurely
Similar to closing too early, you don’t want to discuss deals before a contract or lease is signed. You can ruin any leverage you have, or, even worse, divulge information that would cause the signee to have second thoughts.
6. Relying On Emotions Over Facts
Commercial real estate is a fun industry. In building your portfolio, we’re sure you’ve found that certain properties are more appealing than others. It’s important to keep in mind that your properties are not collectables with sentimental value and that you have to be careful about getting too attached to properties and sell, buy and lease based measurable data, projections and your goals as a CRE professional. Also, be cautious about offering incentives or no-profit deals to those you have personal relationships with.
7. Not Utilizing Technology
Whether you’ve been trained using old-school methods or you’re simply used to using spreadsheets to track information, it’s time to upgrade your methods. The most successful CRE pros automate the manual, time-consuming tasks they have to deal with every day and focus on the bigger picture instead. You can do the same if you invest in the right commercial real estate software.
Ready? Request a demo of Quarem today and see how it can help you avoid common CRE mistakes like these.