Despite the current economy, deals are still happening-and that means thorough due diligence tactics are more important than ever, said Gregory Fowler, managing principal of Fowler Property Acquisitions, who moderated the conference's panel on due diligence.
The panelists?Al Campbell, treasurer of Mid-America Apartment Communities; Keith Harris, executive vice president of Laramar Group; Matt Rotan, principal or Apartment Realty Advisors; and Marc Swerdlow, general counsel for Waterton Associates?discussed the priorities and pitfalls of today's due diligence process.
"Speed is still king in the current environment," said Campbell, who warns that the rapid closing of deals is yet another reason to take the time to make sure all of your affairs are in order. The biggest priority, Rotan adds, is to dig deep. "I don't see enough of my clients digging in and getting deep into the background," he said.
Still, there are a number of challenges to getting deals done in the current economy, especially when faced with a credit crunch, growing shadow market and general sense of uncertainty, Harris said. Another concern for Harris was how to deal with the growing number of broken condo deals. "We're dealing with deals where the lender has taken it back," he adds. "You have the physical risks of understanding the rehab and the other risk is a mezzanine lender who doesn't want to talk to the loan originator." As a result, communication has become vital to work around these broken deals.
And most importantly? Don't cut corners, Swerdlow said. "Some people will only walk 10 [percent] to 20 percent of the units, but you will regret it; you can get so burned during due diligence" he adds.
