23 Ways to Identify Qualifying Buyers (… And How to Build a Commercial Buyers List)

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Networks aren’t free.

Ask anyone who pays $20,000 a year for a country club membership, or $50,000 a month for a summer share in the Hamptons.

Or the person who graduated from HBS (Harvard Business School) or Wharton.

They all do it to network with the powerful in their industry.

In fact, each quarter I go through what I call a “network audit”.

A network audit is when you take about an hour or so each calendar quarter and really dig down to see if you’re surrounded by people who are helping your business or aren’t adding value.

It’s why I always tell people here that they need to link out the losers who aren’t adding any value at best, or may be sinking the value of your “reputational equity” at worst.

It’s also why people travel cross country go to industry conferences, to meet with like-minded individuals. It’s why I spend about $100,000 each year between various masterminds and social clubs. All to build my network.

And regardless of what your high school shop teacher told you, it’s not what you know, it’s who you know. And that is power. Sals-rules-2

And there are very few things in your career as sacred as your business relationships. In fact, I’ve said before to people before that I’d rather streak naked down Broadway than to relinquish who my buyers or investors are. Make sure you always hold your cards closest to your chest.



Sals-rules-2Today I’m sharing with you a few questions you ask any prospective purchaser of assets.

This information should be maintained on your favorite platform for keeping track of ever-changing information (Excel, Google Sheets, Text doc., etc.)

So now that we have this out of the way, let’s talk about QIBs or…

Qualified Institutional Buyers.

These are the industry participants who are actively buying commercial real estate assets. These come in many shapes and flavors but this post will concentrate on how to qualify these investors.

We’re not going to be talking about mom and pop buyers, we’re all going to be grownups here and learn to deal with the grownup men and women. OK? Good. You may now continue reading.

Planning and Preparation

Ideally, when you’re doing this you’re going to want to scratch this information down during a call into your Deal Book.  I recommend a clean, standard Wall Street issue black notebook to set yourself up like a pro..

Then, hire someone on Fiverr to transcribe your scanned chicken scratch into a nice, easy to use and formatted Excel Spreadsheet.

As an aside, some of our more successful intermediaries have used this same device to clandestinely record their calls and to have a transcriber later fill out the Microsoft Excel spreadsheet.

If you don’t have Excel, you can use Google Sheets. This helps them to keep the conversation moving, and smooth. And after you finish this blog post you’re going to see why this may be a good idea for those starting out.

Disclaimer: Use this tip at your own risk…)

Remember to keep the tone conversational so you don’t come off as a sterile IRS Revenue Officer examining them. And relax!

Now, to the 23 questions you’ll need to drill down on a prospective purchaser of assets…

Industry Experience Sought – What You Need to Know

1. Past history experience in this business.

Why It’s Important

This is the question that will tell you exactly the caliber of professional you’re dealing with.

What You Don’t Want To Hear

What you never want to hear is that they are only doing single family deals and they are eager to get into their first commercial deal.

If you hear this, run like your hair is on fire.

Ask yourself this question in the back of your head:

Do I trust this person with my wallet?”

It’s a yes or no question.

Not “well, he seems like a nice guy, let me waste my precious time and see if I can help him as he’s massaging my ego”. That’s a fools bet. Either he or she has the capacity and willingness to close or they don’t.

If they can’t close, then they have stolen money right out of your wallet. Simple.

Ideal Answer

What you do want to hear is that they have been in the business for years, through up and down markets. The principals know each other for years and they’ve done this work before.

They know the asset class and markets they’re in well. They have infrastructure and management in place to integrate any new acquisitions into their portfolio relatively quickly.

2. Size of deals in the past they have taken down.

Why It’s Important:

There are no better qualifying questions you can ask than those that require a specific answer. Now, hopefully you’re beyond the point here that you’re seeing if they’re real.

You’re simply drilling down so that you’re not showing them deals that they couldn’t possibly take down.

And at the same time you are solidifying your credibility as being an industry player.

What You Don’t Want To Hear:

Anything vague or the ominous “we’ll look at all sizes”. That just means they are not a legitimate principal bid on your deal and you’ll look like a fool on the other side of the trade.

Put it another way, if you’re buyer isn’t qualified, and you have an escrow going hard in a matter of weeks, you’re going to be taken to the cleaners and your seller will laugh all the way to the bank because you couldn’t perform while you get nothing but embarrassment.

Ideal Answer

Anything quantitative. Meaning numbers are mentioned.

The idea answer would be that your buyer focuses on middle market-sized assets up to $40 million per asset. Smallest they look at (following this example here) is that they wouldn’t look at anything smaller than $5 million per asset.

3. Reliance on external financing.

Many larger institutional buyers have bank financing already set up with lenders in the tens-to-hundreds of millions of dollars.

I’ve personally have seen some in the billions.

This means that they have already done all of the necessary pushups for the bank to extend them financing. Now it’s use it or lose it time.

This is good for you as it means that they can move quickly and there is a certainty that your buyer can execute.

Why It’s Important

Have you ever tried to buy a house, perhaps your own personal residence and get a mortgage?

It’s kind of painful, but more than that, it takes a lot of time.

Would you rather work with a buyer who has a lender begging and pleading for them to take their money?

Or one that has to jump through hoops.

Time is your enemy here when crossing trades.

Ideal Answer

Search out and target buyers who have existing lender relationships that allow them to move fast.

4. Capital limitations.

This is very important critical intel to know.

It’s not invasive – if you’re asking the right person. There are many types of buyers out there, and each one of them have different sources of capital

And each one of those sources have different costs of capital. For example, a publically traded REIT will usually pay cash for stabilized assets as they can simply issue more shares of stock.

The proceeds of those share sales must be invested into assets that are throwing off free cash flow.

A smaller partnership or syndication may be have more capital constraints. Usually, this means they have to go out and smurf the equity capital in at $50,000 to $100,000 increments.

Although many of them will tell you they have a fund set up, they still have to do a lot of handholding to get those funds…

….And that can take time because the plastic surgeon is road biking in Italy until next week with his friends.

…And of course the fun-loving dentist wants to run it by his partner first (code word for “wife”).

…And the 300-pound golf club guy who nobody knows what he does but you swear he lights his cigars with c-notes at the country club suddenly last week just “invested in another deal” and is tapped out.

…And the prudent professor is not suddenly not interested because of some social or environmental reason linked to the deal, such as the town refuses to implement a mandatory composting program.

(Yes, all of these above are based on my real life experiences. The professions have not been changed to protect the innocent… but you get the idea.)

Not only that, but now they have to go out and qualify for the debt and the debt doesn’t like the basis they are buying the asset at.

So there’s a lot of things that your buyer has to do right before you touch gold.

That’s not to say you need to throw the baby out with the bathwater. These smaller partnerships are great for deals that have loans already in place they can assume I mentioned before here.

Why It’s Important

If you understand what your buyer’s financial capabilities are, then you can show them deals that make economic sense to them. And they will love you for it.
No one with $5 million in equity sitting in the bank wants to be shown a $100 million Class A office complex in a Tier 1 City.

People will think you’re a poo flinger. Don’t be a poo flinger.

Again, if your date was allergic to shellfish, you wouldn’t bring her or him to an Oyster Bar on a first date, right?

Ideal Answer

You ideally want to hear that they have a strong balance sheet or some sort of a fund or JV structure in place where they can move quickly on an asset. This could also be a line of credit or a fund whose balance sheet they can borrow against.

Every buyer has a box – and you’re job is to find out what they can place into that box.

5. Average monthly purchasing power.

Why It’s Important

Many larger institutional buyers take in massive amounts of capital each month. For example, a publicly traded REIT as I alluded to before has mutual funds and Financial Advisors (RIAs mostly) selling their REIT funds to their clients.

What most Intermediaries don’t realize is this poses both and opportunity and a challenge to the REIT.

To the REIT, it means that they have a proverbial gun to their heads to pay their investors a current yield or return.

To you, the Intermediary, it means that you can position yourself very, very well if you can fill their box of what they are looking for.

Other buyers can be university endowments and non-profits, which take in massive donations and need to be placed somewhere to fund operations, scholarships or causes.

Some family offices own businesses that throw off a lot of free cash flow from their operations. As a result, these family offices want to place that cash into real estate assets in the form of equity.

One very successful Intermediary at one of our conferences stated he had networked with a prominent Midwest single family office (“SFO”) who were looking to deploy approximately $100 million per year in just equity.

So assuming this SFO has strong established lender relationships – which they all do as banks fight for their deposits – then that could be about $800 million to $1 billion per year they need to deploy.

Now you hopefully understand why just hitting the forward button on a 22MB PDF will not grow your business…but destroy your reputation.

If this Intermediary had done just that, he would be quietly blacklisted and added to the spam filter. Don’t be a loser.


Ideal Answer

Although you’re not going to hear it a lot, you’d do well to find one, maybe two sophisticated buyers with these deep pockets.

Take interest in their business. Really make it a point to provide them meaningful institutional coverage. And protect them with your life. These are the relationships that matter not just in business, but in life too.

(NOTE: Want access to my business vault? Right now I’m offering access to my systems, strategies, templates, trainings, and recordings. It’s all included in The Investor’s Syndicate, and all available to you here.)


6. Monthly volume or bandwith.

Why It’s Important

To the uninitiated, this may mean dollar volumes.

However, the truth be told, you’re not the only person showing these buyers stuff. And if you are, then you should have stopped at Question 1 above.

You want to know how much deal flow they’re seeing on a monthly basis. How much of it is meaningful vs. how much is just noise. Be better than everyone else by taking the time to understand a little how they work.

Ideal Answer

In a perfect world, you’ll want to know which times of the month is the busiest and do your best to not bother the Chief Investment Officer (“CIO”) or Portfolio Manager (“PM”) during those times.

Generally speaking, the end of the month is when these CIOs and PMs are under a lot of pressure to get deals closed, and the same can be said for the end of fiscal quarters.

What this doesn’t mean is that if you show them a deal on Day 1 that they will close it on Day 30.

Each buyer has their own policies and procedures, however, most deals in our experience close outside of 45-60 days if things are moving along quickly.

Questions You Will Ask

7. In the past twelve months, what has been the average size of the transactions you have purchased?

Why It’s Important

Markets change. Buying appetite changes. An aggressive buyer in 2007 who might have bought at the peak and didn’t buy much in 2009 or 2010 when the credit boom abruptly ended.

Just like in residential real estate, your buyer’s most recent trades does tells a story. This story that might tell if they’ve changed their risk profiles, or if their financing has changed for the better or worse.

Another way to phrase this would be “what are you doing differently today than what you did say 12-18 months ago?

Ideal Answer

We’re review our holdings on a quarterly basis. Sometimes we’re not just buyers, but when the time is right, we’ll be sellers in to strong markets.

We used to be bids on Class B [office, multifamily, etc.] but, because [cap rates have compressed, insert reason here] we’ve moved into other markets where we can still get a strong current yield. So we’re still active in these MSAs, just outside a little more.

You want a substantive answer like that one. Not one that says “rain nor shine, we’re buying everything!” Because that is a bona-fide sign of a non-principal buyer.

8. As far as purchasing power, what are your minimums and maximums per transactions?

Why It’s Important

This affects the deal as it allows you to know if they have internal caps on what they can buy or deploy meaningfully. Some firms like to diversify, meaning they’d rather have three Class B office buildings than one Class A office building in a Tier 1 city.

The minimums are the most telling, here’s why.

Most investment firms – regardless of whether they invest in real estate or venture capital or private equity – have minimums.

A $2 billion investment fund doesn’t want to be bothered with a pesky $1 million apartment condo. They need to move lots of money – efficiently and quickly.

Ideal Answer


Just last week at a conference in NYC a family office I met had an axe that looked like this:

  • NNN Grocery Anchored
  • $20mm min invested
  • Adjacent to Tier 1 MSAs
  • 4-5% Cap Rate desired

Now, would you feel more confident going on the hunt after hearing this level of specificity?

9. In meeting your maximum per transaction, is there a percentage that comes from external financing?

Why It’s Important

Now we’re going a little deeper here. But you’ll want to stay with me on this one.

Depending on who your institutional buyer is, some of these players may do what are called club deals. And no, retail investors don’t do club deals.

Club investments and co-investments can be used interchangeably to define the same thing, but there’s a large category of investments, which one term would not define if it’s in the other category.

Club investing has been around a long time.

These are essentially family offices or private equity firms getting together to do the big mega deal. Those club investments can be, 5 or 6 groups putting $10 million, $1 billion; it doesn’t matter whatever the size, they would get together, get married in order to make the investment. They wouldn’t merge. They’d simply just pass a hat around and throw in an equity contribution.

Another way to phrase this would be: “When the opportunity calls for it, would you entertain a club deal structure with another shop?”

Of course, they probably will have their own relationships. So if you’re bringing a suitor to the party, you need to make sure that they are qualified.

You can add immense value by creating a situation where you can combine many qualified buyers together to share the risk of one deal.

Think about how you can add value to your buyers by structuring all of the risk away from them and you will be seen as a rock star who is respected and gets his or her calls answered.

Ideal Answer

You would want to hear that they’ve had great experiences working with equity co-investors in a few of their deals and are receptive to new shops to work with.

If you do find new funds or SFOs to work with, then you better make sure that you vet them hard by experience in that space.

What you may hear is that they don’t like this structure and they prefer to be on their own. That’s fine. Let’s move on.

10. When the situation calls for external financing, what impact on your buying process will that have?

Why It’s Important

Many times some buyers will be using external capital sources to acquire an asset.

And like everything else in life, there is a cost associated with that capital.

Here we talk about the cost of capital.

A larger buyer as we discussed before may have an existing line of credit with a larger bank and can borrow at 4%. So they can bid higher than, say, a smaller buyer who is reliant upon hard money or bridge loans that costs them 9%.

Equity is more expensive and the profit splits, called the promote is different for each deal and owner-operator. A deal where you have to give up 50% of the beans you may look at differently than if you only had to give up 20% of the beans.

More on that later in a different post.

Ideal Answer

This is more of a testing of the buyer’s experience.

If you think they are small potatoes, this will smoke them out. What you’re really saying is “what is your yield requirement (or “yield bogies)”?

For that you know in your gut are larger, they will tell you that they are not that sensitive to costs of capital as they have a lot of equity of their own (low cost of equity) or revolving lines of credit that are cheap and allows them to aggressively bid on assets.

Think about it…

If you theoretically could buy a rental property and the interest rate on your mortgage was 4%, you could afford to pay more for it than the person whose interest rate was 7% and achieve somewhat of the same free cash flow each month.

11. Do you look at only stabilized transactions or will you also at value-added projects as well?

Why It’s Important

Some buyers are only value-added buyers, and most are stabilized buyers. This is the apples and oranges, are you allergic to shellfish question.

Value-added buyers have the infrastructure in place to rehab an asset. They want to buy at a low basis and add value. That’s what they do day-in, day-out.

Stabilized asset buyers don’t have that infrastructure, or have told their investors that they are only buying stabilized assets, and would rather place in new management and just clip coupons.

Ideal Answer

Specificity of what they want, combined with a story of a deal that they’ve done if value-added. Such as how it was sourced, and what they did with it.

On the other hand, perhaps something more absolute-sounding, like they are obligated to only be in the stabilized space because that is what their investors, board, patriarch (of the family office) want them to be.

Don’t try to convince them otherwise. Just give them what they want.

12. What about opportunistic properties, will you joint venture with a qualified developer/operator?

Why It’s Important

If you’re talking to the right people, you’re going to hear that some buyers aren’t only buyers, but can also act as a capital partners in a joint venture.

This is the question that could open some doors to more deal structuring opportunities.

For example, you’ve identified a hotel operator who is experienced turning around large hotels in large Tier 1 cities and getting them flagged, a single family office may be interested in partnering with that operator by providing the financing.

You don’t know yet where in the capital structure but you don’t care really at this point; the specifics will be hammered out when you have something to show them.

Ideal Answer

Again, specificity is the best answer here with a story of a “case study” of how that opportunity was sourced and how it was structured.

Just sit back and hear the stories. You’ll learn a lot here.

Demographic Limitations

13. What parts of the country are you currently not looking at?

Why It’s Important

Not all cities are equal and each city has different economic drivers that affect, among many other important factors, overall job growth and property values.

A stellar example of this would be how the price of oil has driven jobs out of areas in North Dakota and Houston, Texas. Any investment in these areas would be highly-speculative bet on the price of oil trading much higher, something these sophisticated buyers really don’t like to do.

Also, don’t be shocked if your buyer isn’t interested in Hawaii or Alaska, they’re simply too far and too much of an expense for most buyers in the contiguous 48 to manage effectively.

Ideal Answer

Look for your buyer to tell you in no uncertain terms where they don’t want to me. And don’t send them anything that is not in their box.

14. How often do you review where you are or want to be demographically?

Why It’s Important

Markets change and with that pricing changes.

A buyer or SFO who probably was buying a lot of stuff in gateway cities – usually meant to refer only Los Angeles, San Francisco, Miami, and New York – may be looking more inward into secondary cities that are larger.

The reason for this? Generally it’s pricing.

When markets are hot, at a certain point cap rates compress – or lower to a point where it doesn’t make as much economic sense to buy an asset in that city.

For example, Class A multifamily in NYC may be trading at a cap rate of 2.00%.

And let’s say the 10 year Treasury note is trading at a yield of 1.40%. This is called the risk-free rate as it is the theoretical rate of return of an investment with zero risk. Most people have full faith that the US Treasury will return all of their money.

So why would a sophisticated buyer not just buy a bunch of 10 year Treasuries and not have to worry about tenants, toilets and management?

(The reason is a subject for another blog post which will discuss that different capital sources have different needs, however, for the sake of this example, we’ll say that the return is not high enough.)

What is such a buyer to do?

They move inward into secondary cities where cap rates are higher and they can get a better return, levered or unlevered.

Ideal Answer

A great sign that a buyer is active in a market is if they talk about where they are now and where they want to go – and why.

This will tell you which economic indicators they’re looking at, and to a larger degree the amount of risk that they want to take.

Many buyers are sensitive to markets and asset classes that are economically heavily concentrated to one industry or business cycle that could affect their entire investment.

As mentioned before, this could be housing related oil in the Bakken Formation or offices in Houston, to office rents in Silicon Valley.

(NOTE: Want access to my business vault? Right now I’m offering access to my systems, strategies, templates, trainings, and recordings. It’s all included in The Investor’s Syndicate, and all available to you here.)


Investment Matrix – Questions to Ask 

15. In what cap rate range do you typically purchase assets?

Why It’s Important

This question really narrows down what your buyer would consider to be a meaningful opportunity or not.

When we’re talking about cap rates, we’re talking about stabilized properties which fit this general criteria: 

  • Building Occupancy: needs to be at market, today at least 90% leased.
  • Building Leases: rates need to be at current market rates (not below or above).
  • Tenant Rollover: the property should not have a significant amount of tenant rollover (expiring leases) in the short term, or at the same time.

Ideal Answer

The cap rate will most notably be expressed as a range, such as “we like to get in to these assets at an unlevered 4 or levered 7 to a 9. Anything higher than that has to have a story as to why it doesn’t need a lot of work to get it stabilized.

Consequently, higher cap at the buy means that there is something operationally that may not be right with the property and may spook your buyer if they are not value-added owner-operators.

Whatever they say, place it into your Deal Book and move on.

Don’t try to fit square pegs into round holes.

16. Do you look at assets on IRR or as a multiple dollar amount invested?

Why It’s Important

Many years ago when I was out on the street with a tin cup in my hand doing a raise, I met with a Japanese-based retail asset manager.

While I was preparing the deck, I made it a point to express the returns as a multiple dollar amount invested.

What does this mean? If I give you a dollar, what is the return? Is it 1:1.05? 1:1.20?

(This is also sometimes called the “lift”.)

I did have a separate slide made just to show the IRR just in case.

At the end of the meeting, he told me he appreciated that I had expressed target returns as a multiple of the dollar amount invested because as he simply stated in his own words that I never forgot, “my pensioners can’t eat an IRR [they can only eat cash flow]. 

Perhaps best explained on a separate blog post, however, the IRR is not the unique identifier that measures all projects and is not without its faults.

Meaning the IRR must be found by using mathematical trial-and-error to derive the appropriate rate.

Also, IRR does not measure the absolute size of the investment or the return.

This means that IRR can favor investments with high rates of return even if the dollar amount of the return is very small. For example, a $1 investment returning $3 will have a higher IRR than a $1 million investment returning $2 million

Lastly, to beat the IRR dead horse a bit more, another short-coming is that IRR can’t be used if the investment generates interim cash flows. Finally, IRR does not consider cost of capital and can’t compare projects with different durations (timelines).

Ideal Answer

This is explicitly contingent upon who you’re talking to. If it is patient money such as a SFO, the IRR may be more meaningful to them as they get it.

Retail investors (mom-and-pops) may be impressed with the IRR, because they simply are less sophisticated and, well, numbers have an absolute authority to them on an emotional scale.

Larger and more sophisticated players will probably want to see both. Just like in any other business, know who your prospective buyer is and what keeps them up at night.

17. Where do you like to be in the capital stack?

Why It’s Important

This question demands specificity when it comes to talking about the joint ventures with experienced operators.

It will also smoke out any flakes you may be speaking to.

All money is the same color but that money in the capital structure has different rights and remedies.

In the Total Real Estate Capital Strategy blog post, we talk about this a little.

Debt has lower risk with a capped upside, much like you don’t share the profits with your lender after you sell your house for more than what is owed on it. So conservative investors will want to be the “debt piece”.

Equity has the most risk, but has an uncapped upside. Meaning if you put $10,000 down on that same home and you made $200,000 after the mortgage was paid off, you have a huge upside.

Ideal Answer

You’ll hear that these buyers who are open minded to joint venture will tell you that they like coming in as mezzanine (the “mezz piece”) or preferred equity.

What you really want to hear is that they have friends who will do the debt piece. Now, here is where experience is talking, so pay attention.

There isn’t a more expensive or marriage to arrange then having two institutions who have never done business together try to hammer out the terms of the Interceditor Agreement.

The owner-operator will often pay $50,000 in legal “R&D” and have nothing to show for it, meaning the parties will never consummate the marriage. I’ve seen it happen before.

Usually it’s a smaller local lender who is providing the debt that the buyer knows, but has no idea what capital structure is and, as you guessed it, gets schooled hard on how capital structure works on the buyer’s dime, only later to get spooked.

So the ideal answer here would be for your buyer to mention the names of some funds, SFOs or real estate-happy endowments that they’ve worked with together.

Yeah, we’ve worked with MSD Capital before and they don’t mind investing behind us in the capital stack on these deals where we’re buying fee.

Translation: “We have a relationship, they know us, and they trust us. We summer together in Cotuit and can easily draw the docs up quickly as we’ve been though these types of deals together in the past.”

18. Are assets (stabilized opportunities) with existing debt structures that can be assumed attractive to you?

Why It’s Important

For you the Intermediary looking to arb  a deal, those deals with assumable loans are very attractive to smaller investors who may not be as capitalized as they would like to be at this point. So that’s good. Just make sure you’re following these rules here…

For the bigger guys, absolutely.

As long as you’re getting them in at a strong basis. See 2a of this post here to see what I mean by a strong basis. Most all of those skyscrapers and Class A properties in Tier 1 cities all have assumable loans.

The only rub could be that your buyer has a credit line with an “unused facility fee” that compels them to use that facility. But those cases are rare.

Ideal Answer

Yes. All day, and twice on Tuesday.

19. If Non-Performing, how far into the foreclosure process can it be before they won’t be a buyer?

Why It’s Important

Real estate is a human business. Its run and managed by humans who by their very nature are prone to mistakes and greed. Not all of them, but some.

Then there are the other group of bad operators who you will undoubtedly come across. These were inexperienced, weak owner-operators.

All of this makes real estate as a market very ineffecient.

What does that mean? It means that a commercial building may trade for a deeply discounted price for any of those reasons above.

That’s how people have created wealth with this asset class since Moses.

If a stock were to be priced inefficiently, it would be efficient within 7 nanoseconds.

Now that we got that out of the way, you need to know exactly what the lifecycle is for distressed real estate.



You can swipe the blueprint here.

Generally speaking, when a loan goes into default, the lender can chose to file the Notice of Default (“NOD”) or not.

And if the lender does file the NOD, then the borrower can file bankruptcy (“BK”) as a last gasp to save their project (and the perceived equity they have in that project).

So the level (or price) of that loan goes down sharply when the lender files the NOD because there is bankruptcy risk.

So when you’re crossing these trades, you need to know what your buyer’s risk tolerance is.

Download the blueprint and place it next to your Deal Book to follow along with. Then place next to your buyer’s profile the exact place where they like to be in the lifecycle.

There are two types of defaults:

  • Monetary Default: Most severe. Think non-payment of loan’s principal and interest. 
  • Technical Default: Can be anything like the balloon not being paid off on time (“maturity default”), inadequate reserves being held, failure to provide a P&L to the lender, or the loan officer is getting a divorce and is cranky because you remind him of his wife’s later model…

Side note: What people don’t understand is that the covenants in just about every single commercial loan is written in the lenders favor, so you’re in essence in technical default right after you close… it gives the lender an opportunity to call the loan due.

What you will see will be a lot maturity defaults as sellers are facing their loans ballooning with banks less likely to refinance them aggressively.

Ideal Answer

Don’t be shocked if not all of your buyers are interested in defaulted commercial mortgages and first trust deeds. There is a lot of risk there that some don’t want to take.

But the answer I’ve heard in the past that I especially like follows this narrative:

We don’t mind the hair on some of these deals. We’ve got in house counsel that is prepared to work these opportunities through and we’ve prepared to bid aggressively if the asset / building fits our wheelhouse.”

Put it another way, they’re not afraid of performing a little bit of legal triage to create value.

This is not to be confused with a value added opportunity which is doing open heart surgery on a building restoration.

One is pushing paper and using lawyers, the latter is physical and management heavy lifting.

The Decision Making Process 

20. What is their position within the Organization / Contact Information?

This is a question that you may not get an answer to on the first date.

What you’re trying to figure out is if the person on the other line has decision making authority or not.

Smaller investors (mom and pops) have themselves an their “partner” (translation: spouse…).

Ideal Answer

Simply put that they tell you their title. Vice Presidents, Presidents, Managing Directors – even more so – all have some decision-making authority.

These are institutions that have a tiered organizational structure.

Spoiler Alert: Look for the smaller mom-and-pop buyers to say they’re the “CEO” but can’t make a decision on their own… I mean really.

What you should do first is to check out their LinkedIn® profile to verify if this is a buyer you should spending your precious time with in the first place, but you better make sure you’re wearing the right clothes to the party first…

If you’re dealing with an Analyst or Associate, you should become their new best friend as those are the guys and gals whose job it is to source deals. Don’t make it a point to disrespect them as they are younger. They will make you a lot of money.

21. What is their decision making process?

Why It’s Important Critical

Most institutional buyers and investors have what’s called an Investment Committee.

This is a committee that gets together usually telephonically to discuss a particular investment memorandum that a lower level employee – usually an Analyst or an Associate – put together and circulated via email to the principals.

It’s a standard convention of checks and balances.

Smaller mom-and-pop buyers and investors don’t have an Investment Committee as they don’t have any committed capital to deploy from investors pooled into a fund-type structure.

So they are lone cowboys trying to (inefficiently) scrap together $1mm in $50,000 increments from doctors, dentists and rich uncles to buy your deal.

Ideal Answer

Let me just paraphrase what I hear most often.

We have committee meetings on [Monday, Tuesday, first of the month, etc.] to go over our deal flow. Usually we go over about 4 deals that are of interest to us. When we like something, you’ll be hearing from me for more information we need. Then we usually proceed with a Letter of Intent (remember, we’re dealing with buyers, not capital sources).

From there we know they’ll be some back and forth before we agree on a level. Once we achieve that level we then go hard on due diligence and other associated costs.“

22. Time frame for decision and due diligence.

Why It’s Important

If you have a hard close date on the other side of the trade, you want to know that no one is dragging their feet.

With that said, in order to get respect, you need to show respect. And make sure that you opportunity has been qualified correctly to the best of your ability – and is truly a deal – before showing it to your buyer.

Merely sending a 20MB PDF attachment adds no value whatsoever. Don’t even think of sending an appraisal… You and your children will be blacklisted for life.

Ideal Answer

There isn’t an ideal answer. Each shop runs according to their own time line. Family offices may be slower. REITs will be faster. It really depends on how large the shop is.

23. Mandatory information they need and criteria for purchase.

Why It’s Important Critical

Time is valuable – and theirs is probably more valuable than yours. You’re trying to cultivate a relationship with these buyers.

So you want to know how to tee up an opportunity – on a silver platter. 

The people who buyers hate dealing with are those who don’t know their deal. They don’t know anything. In The Investors Syndicate we have a live video series called The Deal Clinic where we dig into these deals.

Have you ever been at a restaurant and asked the waiter if there are onions in the scalloped potatoes? If he or she said “I don’t know”, that would be a liability to the restaurant as the patron may be allergic to onions.

The Analyst or Associate at your buyer’s shop is thinking this: “If this deal is so damn good, then why can’t you give me what I want? Specifically the crust cut off of the bread?

Are you really expecting a $500,000 fee for crossing this trade when you can’t tell me anything about this deal other than saying ‘it’s in the attachment I sent to you’? You’re a rube. Never call me again.

That is how relationships are destroyed.

So here’s the key takeaway: if you are starting out, spend more time on cultivating a meaningful buyer’s list than chasing deals.

The buyers are the ones who will feed you for life, protect them like family and perhaps, just perhaps, you may be invited to a few closing dinners this year.

When Tony Robbins writes a book about stock market investing, that a sign of a top.

When everyone including Snooki from Jersey Shore has a house flipping show, that’s a sign of a top.

Be cynical at best, paranoid at worst, and it will be hard – if not impossible – to lose money.

(NOTE: Want access to my business vault? Right now I’m offering access to my systems, strategies, templates, trainings, and recordings. It’s all included in The Investor’s Syndicate, and all available to you here.)


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Salvatore M. Buscemi
A former investment banker for Goldman Sachs in NYC, Sal is one of the nation’s leading authorities when it comes to investing in residential and commercial real estate. He’s raised over $50 Million in capital for his real estate hedge funds.


Salvatore M. Buscemi

About Salvatore M. Buscemi

A former investment banker for Goldman Sachs in NYC, Sal is one of the nation’s leading authorities when it comes to investing in residential and commercial real estate. He’s raised over $50 Million in capital for his real estate hedge funds.



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