When evaluating potential opportunities in commercial real estate, some people like to move fast, snapping up deals before anyone else does. Other people prefer to be more deliberate and avoid buying a lemon. David Malcolm, a San Diego real estate executive with five decades of experience, thinks differently, and it has done well by him and his business partners.
“When you’ve been in commercial real estate as long as I have, people bring opportunities to you,” he explained. “You don’t have to go hunting quite as much.
“Then, to sort the winners from the losers, go fast and go slow,” he explained.
Go fast, go slow. It’s not a Zen Buddhist koan, but rather a deliberative process. In his 50-year career, Malcolm has earned the highest commercial real estate designation (CCIM) in the U.S., and handled sales, acquisitions, and loan negotiations of more than $4 billion. Here is one key to his success.
When an attractive opportunity comes his way, David Malcolm wants to move fast. “Good deals will not wait for you,” he noted.
If it looks good, the first thing he does is to tie it up right away and make sure it is his for the taking. He might get an option, sign a non-binding (or even binding) letter of intent or do whatever it takes to get an exclusive.
“Not next week, not in 72 hours,” he emphasized. “Today!”
You can always cancel, but you can’t hesitate and expect the opportunity to remain on the table.
Once you have tied up an opportunity, you have bought the time to do your due diligence. Is the opportunity what it seems and, if not, do you still want to proceed?
“I will always spend the time – more time than others are willing to spend – to understand the risks as well as the rewards,” he said. That may include spending money when you cannot afford to make a mistake.
Consider the chance to buy an apartment building, something Malcolm, as President of Cal West Apartments, does periodically. Why go slow?
“There is something in every transaction that is not readily apparent,” he answered. Like what?
Maybe termite damage you cannot see and the building is in need of serious work or unsalvageable. Maybe toxics in the soil that could create health risks or liability for remediation.
Or asbestos in the “popcorn” ceilings, dry wall, or mud and tape used to cover seams. Think there won’t be because the building is too new? What if illegally imported materials were used, Malcolm asked rhetorically.
Understand policy risks, such as pending rent control measures or banning natural gas appliances, which would mean expensive retrofitting.
Dive deep into any covenants, restrictions or other encumbrances. Are there problematic lease terms, options, foreclosure risks or recording problems?
Malcolm has long learned to put in the requisite time and more. “Like hockey star Wayne Gretzky, I want to skate to where the puck is going to be, not where it is” he said.
Bottom line – get in on the action right away and then make sure you have all the information before committing irrevocably. Go fast, go slow. It will pay off in the long run.
About David Malcolm
David Malcolm is an established figure in the San Diego real estate scene, with his expertise as a real estate professional, entrepreneur and community leader. His accomplishments include graduating from the esteemed Presidents Program at Harvard Business School, in addition to being a licensed real estate agent and broker and a Certified Commercial Investment Member (CCIM). David has lent his strategic guidance to a range of public and private companies, as well as holding numerous municipal and statewide public offices. His contributions to the community are widely recognized.
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