No Cash Acquisitions

Warren Buffet once said: “I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in business. I read and think. So, I do more reading and thinking, and make fewer impulse decisions than most people in business.” Oh, how I wish those words and actions were undertaken in an earlier life when the onward daily addiction of deal making was the first and foremost consideration! Going forward, it will be my pleasure to share, on occasion, real estate investment and development books, articles etc., from authors I know and have dealt with, and/or have alternative respect for and trust in. The first shared offering is a manual authored by mentor Virgil Opfer and Dan Harrison, entitled “ 100 EQUITY MARKETING FORMULAS ”, which is always kept by my desk. Each formula has a one-page explanation that further opens up my mind to solution-based ideas using non cash equities to create Cash and Cash Flow, Partnerships, Down Payments, Financing, Leasing, Options, using created Mortgages/Notes to acquire, sell, structure, etc. etc.

One of the true rewards of business travel outside our local geographical markets to attend meetings, marketing sessions, and symposiums is that we get a chance to reach out, meet and build relationships with like minded entrepreneurs ready to share their ideas, life experiences, and values. One extraordinary mentor to many of us is a long-time associate, Virgil Opfer. He has been a catalyst in sharing concepts and ideas that we all have readily been able to use back in our individual home markets. In upcoming articles, Virgil has graciously allowed me to share his knowledge on topics such as extended land development ideas, as well as a wonderful book he wrote outlining 100 Equity Marketing Formulas. Last month our article ventured into “Partnerships”. This month, Virgil has agreed to allow me to extend the Partnership dialogue by offering an article he wrote regarding a partnership structure that will surely activate creative minds and bring together complimentary skill sets. It is presented below, as written by Virgil, except for some very minor tweaking. I trust this article will be a benefit to the reader.

I remember a teaching moment during the 2008 recession that will forever be remembered. It involved a partnership discussion regarding a slow-moving large land development I had brought money to. My friend and long-term Managing Partner was Bill Stonaker who was apologizing for the slow movement in selling off pad sites, creating build-to-suits etc. that entailed this particular business plan. The Investor Partner quickly intervened with the following wisdom. Before investing, they independently reviewed project research and analysis presented including normal “Blue Sky”, “Most Likely”, and “Worst Case” profit scenarios; Even with best laid plans, due diligence, underwriting etc., history shows unknown future speed bumps occur that are ultimately viewed from the rear-view mirror instead of future proforma spread sheets; Saying that, the Investor Partner noted the number one reason for initially investing was because of Bill’s personal integrity, which was just as important as his well-known amortized development knowledge. Cash call assistance was then quickly offered out for any current or future perceived shortfalls needed at that particular point in time. No further questions asked! And, the project has ultimately proven to be an absolute "HOME RUN" for all investor partners.