Building The Right Team
The NBA, NHL, and MLB recently held their 2023 draft, and for all of my local teams, the Washington Wizards, Washington Capitals, and the Washington Nationals. The debate centered on drafting for overall best available talent or trading picks for position players through free agency that can shore up the team's weaknesses.
Both the Wizards and Nationals are in a tear-down rebuild cycle, so their decision is more straightforward: you seek the overall best talent in the draft with the hopes of a championship-caliber team over the next 3 to 5 years.
Building the right team to take down multifamily deals takes a very similar mindset and here at Saorsa Capital Investments, we pride ourselves on being a full-service real estate investment company with a team that can do it all. However, the reality is that getting deals done in Commercial Real Estate may require different team structures, and dynamics to optimize for success.
Here are the basic components of a General Partnership “GP” team, and the value they bring to a deal:
Acquisitions: This team is responsible for finding deals. They generate off-market leads and build relationships with brokers to source on-market deals. Once a deal is located, they are responsible for underwriting the deal and submitting offers on qualified deals. After the deal is under contract, they will manage the entire due diligence process, secure financing from the lender and oversee the closing process.
Risk Capital: The time between signing the purchase sales agreement and closing the deal is known as the due diligence phase. During this phase, certain costs are incurred by the GP which include the earnest deposit, legal fees to create various contracts, inspection costs, and appraisal costs. Most of these expenses are due before reaching the closing table and must be paid even if the deal doesn’t close. The Risk Capital Team provides this capital upfront. If GP’s do not close the deal the capital is forfeited; hence the word “Risk”.
Investor Relations: This team is responsible for generating interest from passive investors before finding a deal, securing commitments to fund the equity investment, and ongoing communication with investors while the business plan is executed.
Loan Guarantors: The loan sponsor is someone or a team with a net worth equal to the principal loan balance and liquidity equal to 10% of the principal loan balance at closing. Ideally, the sponsor covers the experience and financial requirements thus satisfying two key requirements from lenders.
Asset Management & Operations: Responsible for the ongoing asset management of the deal after close. They ensure that the property management company is implementing the business plan, which includes conducting weekly performance reviews with the site manager, frequently visiting the property, analyzing the market and the competition, and addressing any issues that arise.
For every deal, you need the right “players” on the team, and, the saying goes, your network is your net worth, so we're always interacting with various investors and groups to assess who might be a good fit for a future deal or opportunity. We believe we have put together a team of “all-stars” at Team Saorsa, and we are constantly working to identify and foster star partnerships that will make us stronger.
