Swing and a Miss
I was envisioning writing a very different article this week as I have been working on another tremendous deal that was just about to close and then the deal blew up.
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In an earlier article, I wrote “Learn from our Deal of the Year” which was about a 10-unit property we acquired late last year.
Earlier this year, I learned from my agent that the property next door was in trouble. It was a 10-unit building in poor condition, half occupied and in bad shape. I was very excited and I ask my agent to quickly reach out to the listing agent and discussed the condition and how I put the deal together next door.
We agreed on a possible structure and we approached the seller who was on board with a short sale, then we approached the bank. Just like in the earlier deal, the bank had to visit the property before they would seriously consider the low price point (about 50% of loan balance). Unlike the earlier deal which was a Fresno local bank, this deal was financed by a Tri County bank, which is to say the bank was larger and a lot of the decision makers were not located in Fresno.
As the bank was arranging to see the property, I was required to put together financial statements in several layers of detail, a plan for the property along with a proposed budget. Just like the previous deal, I was open with the agents, the seller and the bank and we were all working towards a successful transaction that would benefit all parties.
Then, it happened!
Disappointment came and killed the deal.
Apparently, two of the key contacts I was working with were leaving the bank — one quit for a better job, and the other one was getting ready to retire at the end of the month. The bank decided to move the transaction review from my local contact who was on board to a resource that was 3+ hours away and had never seen the property and the condition it is in. This new contact was very rude, and without any notice just killed the deal and said basically pay cash or move on we won’t consider the deal you are proposing.
Couple of things:
First, I don’t mind losing deals as it happens but this guy was so rude I felt like calling the head of the bank and letting them know what I thought of their employee.
Second, as I have said before, this is a people business. I won’t let one bad apple throw me off my game, but boy, I wanted to light him up. Instead, I thanked him for his time and consideration. I took a shot at tweaking the deal but I don’t hold out hope. I spent a ton of time on this deal and I am greatly disappointed by the turn of events. But I understand that disappointments happen in this business.
Deals can fall apart at the last minute.
– Private or Passive investors will commit and then change their mind last minute (or go dark).
– Lenders will change their mind and terms.
– Renter’s will damage houses and need to be evicted.
– Negative surprises happen.
Don’t let disappointments get you down. They happen. Just move on.
In this case, I did several things when disappointment struck on this deal.
First, I tried to tweak the offer and terms to better meet the banks needs but I don’t hold out a lot of hope. Then, I called my contact who is retiring and I thanked him for his time and commitment and apologized that we could close this deal. Lastly, I had several other deals in play and I just changed my focus from this monster deal to the next monster deal.
Don’t let disappointment distract you from your end goals as it is part of the journey.
Keep plugging away