THE IMPORTANCE OF CRE INTELLIGENCE
Owning and operating commercial real estate comes down to having 3 CRUCIAL INTELLIGENCES and you may be surprised to find out which one is most important.
- FINANCIAL INTELLIGENCE
This takes place when you first analyze and underwrite a potential real estate acquisition. Here’s a tip…UNDERWRITE CONSERVATIVELY! Conservative underwriting is a safety net and is an essential element for a solid real estate deal. Some of the most basic expense items investors often overlook are management, vacancy, and reserves. So, unless you are buying the property all-cash, any lender is going to account for these 3 expenses in their underwriting, which will ultimately impact the loan amount they are willing to extend.
2. OPERATIONAL INTELLIGENCE
Here’s where property management skills come into play. This includes working with vendors, keeping up with the property, preventative maintenance and so on. It’s the difference between being a slumlord or being the owner of a property in which tenants actually to pleasure in residing at. You’ll almost never lose money operating your property with the mindset of the latter.
3. EMOTIONAL INTELLIGENCE
Hands down, this is the most important intelligence you can possess as a CRE owner, even more than financial and operational intelligence.
Real estate has always been and will always be a relationship business. By interacting with your tenants, landscapers and local community, you’re establishing a connection. This has the largest impact as an owner, as this familiarity makes it easier to negotiate a lease with a new/existing tenant, discuss pricing with landscapers, as well as influencing the township when it comes to obtaining a permit for a new build-out or approval for a variance needed.
At the end of the day, people work well with those they relate to. Can you make money being a jerk? Sure, you can. But, if you’re that person everyone enjoys working with, you can make more money!
DAN SALONIS, PROGRESS REALTY PARTNERS
Dan oversees all aspects of operations, including investment strategy, capital raising and strategic growth. He worked previously as an investment sales specialist with Marcus & Millichap, as well as a financial advisor with Summit Financial Resources, where he held his Series 7 license and worked with high-level Wall Street executives. Dan’s experience working with affluent individuals, and learning from some of the brightest minds in the commercial real estate industry, gives him a unique advantage in understanding the goals and objectives of high net worth investors and analyzing complex real estate transactions.
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