price had reached nearly $330,000. Such rises in home prices present opportunities to fix-and-flip inves - tors with capital on hand. Opportunities have popped up in places you may not have considered as well. Given changes to the food supply chain during the pandemic, demand for cold-storage facilities to keep food chilled has skyrocketed. So, you can have tons of success if you know where the opportunities are. However, you can’t close a good deal if you don’t have consistent access to capital. Access to capital is a problem many real estate entrepreneurs have encountered during the pandemic. It’s also probably why many investors had issues with disposition at the on- set of COVID-19, as potential buyers couldn’t access capital. According to CoStar, a commercial real estate data analytics firm, second-quarter transaction volumes declined by around 65%. So, if you needed to liquidate an as- set, you may have had trouble. Or, if you discovered a great deal, you may have not had the capital to close. We’ve seen such experiences first - hand. One homebuilder in Florida, hoping to capitalize on the housing inventory shortage, had a lender back out last minute on funding for the building of single-family homes. That’s because the lender’s funding sources, which were likely tethered to Wall Street or institutional capital, had begun drying up. The home- builder already had pre-sales, so this put his entire business at risk. Here’s what the home builder said about the importance of having access to capital: “It saved my business while most of my competitors had to cease operations.” Imagine if you had similar access to
only ensure you go after the right deals, but also that you’re in a posi- tion to have success. You also have to execute. It sounds easy, but many investors get lackadai - sical with their strategy. For instance, they may neglect to do good due diligence and enter into a bad deal. Additionally, you need the right culture. If you have a resilient, thriving culture, you’re more likely to endure and even accelerate growth during tough times, according to a Gallup study. That means you should focus on having a team with disci - plined thought, disciplined people, and disciplined action. Moreover, ev - eryone must be united and working towards a common goal. With the right strategy, right exe - cution, and right culture, you’ll be in a position to thrive in 2021. On to 2021 and beyond It’s easy to say let’s just be done with 2020. But thoughtful reflection can uplift us. We can learn a lot from this past year. 2020 has shown us the resiliency of the human spirit. Real estate is no easy game, yet here you are. You’re reading this and preparing for the road ahead. Take these lessons from 2020 into 2021 and beyond, and you’ll be in a position to not only endure good times and bad, but also excel in any environment. As it turns out, you don’t even need a crystal ball. •
capital that was virtually impervious to the market shifts? You could ensure virtually no good deal passes you by. This is why you must evaluate your sources of capital so that you can manage future fluctuations. Where you should get your capital What works for you may vary, but it is important to create certainty during uncertainty. Take steps while you can to: 1 Analyze where your current capital partner gets their funds. If that money is tied to sources they can’t control, such as a Wall Street fund, know you may have fewer options during a market downturn. 2 Find a lending partner that is solely reliant on their ability to garner investments. These private money lenders have a structure that allows them to continue lending, even during hard times. 3 Identify a stable, scalable source of capital, i.e. a line of credit. This gives you consistent access to funds. When getting a traditional loan becomes tough, that means you’ll have backup sources of cash. We’ve seen many investors open lines of credit during the pandemic for this very reason. LESSON #3 CULTURE IS EVERYTHING When Coronavirus hit, it imme - diately became clear: Only the elite organizations would survive and thrive. You can have a good strategy, but you also need a good culture to win in real estate. This begins with committing to a conservative approach, always doing your due diligence, and having more cash reserves on hand. This will not
DonWenner is Founder and CEO of DLP Real Estate Capital.
thinkrealty . com | 23
Made with FlippingBook Online newsletter