We Are All Different
Before any transaction, an honest self-assessment: what role are you ready to play, what is changing, and which benefits do you actually need?
By Darryl McCullough4 min read
Every owner is different. Risk tolerance, age and stage in the cycle, business plans, long-term objectives, and time horizon all shape what a good transaction looks like.
Those facts change. Before discussing structures, take an honest inventory of where you are now and what you want the equity to do next.
What type of investor are we at this time in the cycle?
- Institutional investor
- Institutional lender
- Passive investor
- Private lender
- Value-add investor
- Property user
- Builder or developer
- Speculator
What is our current or long-term situation?
- Need cash
- Need income
- Want out of management
- Want out of negative cash flow
- Mortgage coming due
- Geographical change
- Entity dissolution
- Too many properties
- New opportunity
- Partners disagree
- Health
What is our current or long-term objective?
- Corporate expansion
- Retire passive
- Spend talent
- Recognize value
- Consolidate
- Corporate disposition
- Acquire more assets
- Too much inventory
- Convert to paper
- Change benefits
What are our current or long-term wants and needs?
Cash. Industrial. Mortgages and notes. Homes. Businesses. Cottages. Mini-storage. Multifamily. Campgrounds. Condominiums. Building lots. Offices. Warehouses. Development land. Retail commercial. Resorts. Hotels. Motels. Mobile home parks. RV parks. Timeshare memberships. Agricultural property.
What will we do to complete a transaction?
- Add cash
- Add or create paper
- Add property
- Exchange a portion
- Take on a problem
- Partner with others
- Manage
- Move loans to a new property
- Lease back or guarantee income, if the documents and credit support it
- Discount or buy-back option
- Options
Honest answers to these questions give the transaction a useful starting point.