How a Billion Dollar Real Estate Developer Qualifies a Deal
Mark Mascia, who has 12 years of experience in real estate developing residential units, retail and mixed-use properties, and office space with a total portfolio value approaching $2 billion, is one of many speakers who will be presenting at the 1st annual Best Real Estate Investing Advice Ever Conference in Denver, CO February 24th to 25th.
In a conversation with Mark all the way back in 2015, he provided his Best Ever advice, which is a sneak preview of the information he will be presenting at the Best Ever conference.
What was Mark’s advice? He explained the most effective way to qualify a development deal.
How To Best Qualify a Development Deal
The main way Mark qualifies an individual development deal is to determine if it fits his company’s long-term criteria. He determines the “likely scenario” and the “worst-case scenario.” He wants to be comfortable that even the worst-case scenario still meets the investment objectives.
Advice in Action – For a development deal, as with real estate investing in general, so many things can go right, but so many things can go wrong, too. Some issues you have control over and some you don’t, says Mark. You really have to protect yourself by setting the tone with the worst-case scenario and making sure that it is something you are happy with before you start.
By determining the “likely” and “worst-case” scenarios, Mark typically reaches out to the team in the specific market, not just to verify that the deal source is credible – by performing background checks and checking all references – but also to learn more about the market.
Each individual market is the same in a lot of respects – they are in America, so there will be a lot of the same brands, people, and demographics. However, each market is much nuanced with government restrictions, incentives, and other important factors differing from market to market. Mark always starts with a due diligence team of local professionals who have done at least three projects in a similar market. He then brings them to the table to ask them the important questions. While Mark and his team are the experts in the development process, they aren’t experts in an unfamiliar individual market.
If they don’t have a direct connection or can’t find an expert in a specific market, Mark’s group won’t invest. The benefit of having this nationwide investment approach is that they can be very selective and don’t have to do every deal that meets their criteria. Most of what they look for is a diamond in the rough, says Mark, so they look at an immense number of deals to find the few that work for them.
Advice in Action – The key to finding local experts is networking. Everything in Mark’s business is about networking. You would be surprised that even on a national basis that the real estate industry is quite small. There are many people, but it is a small world, so everyone is two or three degrees of separation from the person you need to meet. There are many national organizations where Mark knows a lot of people who also know people in the local markets in which he invests.
Mark will go through those avenues to find local people that his friends or people he has worked with in the past can refer. If that fails, Mark looks at permits that are being pulled in the local area and reaches out to the individuals involved with those properties.
By networking, you aren’t paying to learn, explains Mark. The people you meet have already learned everything and have made all the mistakes that need to be made in order to move forward. Your goal should be to leverage their experience the best you can.
The main way Mark qualifies a deal is to determine the “likely scenario” and the “work case scenario” and see if both outcomes fit into his long-term investment criteria. If he isn’t comfortable that both scenarios will meet is investment objectives, he won’t invest.
To determine these scenarios, Mark relies heavily on his boots-on-the-ground team members in the local market. If he doesn’t have a direct connection or can’t find an expert in a specific market, he won’t invest.
Want to learn more about real estate development, as well as information on a wide range of other real estate niches? Attend the 1st Annual Best Ever Conference February 24-25 in Denver, CO. It’s the only real estate investing conference whose content and speakers are curated based on the expressed needs of the audience. Visit www.besteverconference.com to learn more!
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