Euphoria of Winning the Deal

Euphoria of Winning the Deal

I always find property acquisitions fun, even if they’re stressful. There’s the thrill of finding a deal you believe in. One that promises to generate a great investment return. Then there’s the psychology behind bidding: what to offer in the first round, and then again in the best and final. Once the deal is awarded, there’s both the joy of victory and the sobering thought of, “What did I get myself into?”

Next comes the dual-tracking of working on (and negotiating) the purchase and sale agreement (PSA) and raising the necessary capital, both debt and equity. Negotiating the PSA can be contentious, but fundraising can be even more tense. When we’ve had discretionary investment funds, this part is easy. We simply call the capital from investors. But when it’s a raise for a single deal, nothing feels certain until the money is in the bank.

The due diligence period sets the key deadline. Usually, it’s 30 days after signing the PSA. In that time, we must determine 1) the capital budget, 2) the equity commitments, 3) the loan proceeds, and 4) whether we still like the deal. A lot has to happen quickly, because at the end of these 30 days, our deposit becomes non-refundable. Our investors aren’t on the hook for that deposit, we are.

From there until closing, the transaction should be on cruise control. We meet with our new property management team, finalize the loan documents, and collect investor dollars and subscription agreements. Surprises can still happen, but adequate planning in the first 30 days, combined with clear expectations for investors, can smooth out the uncertainty.

Finally, the transaction closes. Title to the property changes hands. The entire deal team congratulates themselves. And months of hard work, stress, and sleepless nights has paid off.

Has it?

Now the Real Work Begins

The hard work truly starts with closing. We’ve bought properties in the past where we knew we were money good on day one. We think that’s the case with our latest investment. More often than not, though, a smart acquisition price is less of a windfall and more of an insurance policy against future stress. The real investment returns come from executing the business plan.

Sometimes the business plan can be a total rebrand and renovation—unit renovations, amenity creation, reimagined exteriors, and modern branding. Other times, it’s about improving building systems in the era of high insurance costs, to position the property for a better future sale. Deferred maintenance can scare off potential buyers and renters, so focusing on these non-revenue generating improvements may be necessary.

Markets also change quickly, and your strategy must adapt. I’ve yet to see a business plan work out exactly like it was planned. Sometimes things move faster, sometimes slower, and may even need to be retooled. But this is where the real returns are made, through the actions you can control. If cap rates fall or rents rise exponentially, you’ll get credit for good timing. In the absence of that, it’s disciplined execution that generates above-market performance.

Asset Management

So how can the business plan be executed according to your underwriting?

Assuming there isn’t an exogenous shock like a pandemic or an unprecedented wave of new supply, it comes down to focus and discipline. Asset management is the bridge between a promising acquisition and realized returns. It requires:

• Partnership with property management. Clear communication and accountability ensure that leasing, operations, and renovations stay on track.
• Monitoring performance versus projections. Regularly reviewing KPIs and financials keeps surprises from snowballing into problems.
• Flexibility. When the market shifts, rents plateau, or expenses creep up, pivoting quickly can preserve and even enhance value.
• Investor stewardship. Transparent updates maintain trust and reinforce the long-term relationships that make future deals possible.

In short, acquisitions are exciting, but they’re only the beginning. The real test is whether you can deliver on the business plan. That’s where the value is created, the returns are earned, and reputations are built.