The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
For many seasoned and experienced investors, they wish they could go back in time and ask the right questions back then that they know now. While you can’t go back in time, new investors can learn what those questions are and how they can help them to avoid a costly mistake or business decision. When entering into new partnerships, make sure your terms are laid out clearly and completely, as your idea of a partnership agreement may differ greatly from another’s.
Richard Wilson: How would you do things differently in growing your commercial real estate investment company if you were starting all over today knowing what you know now?
John Manes: I would’ve picked a horse on equity and I would’ve picked a horse on debt based on what I know now back then. One of the things I didn’t tell you is I sourced a VC company out of Dallas early on that wanted to do 200-300 million dollars worth of storage, I created the business plan, I created the brand, I created everything. All the Powerpoint slides, everything for them to go do the dog and pony show like I do now, right? I created all of that and in the end they sent me an employee term sheet and they told me they were going to make me a partner the whole time. So, knowing that kind of stuff now, I ask the right questions now to know what that looks like, right?
Richard: Before you’ve had the baby together, right? That’s something I’m in the middle of right now with a dental clinic chain just about to help them, or advise them, or maybe join their board, but I told them before I do really much of anything we need to have our agreement in place and have expectations on the table, right? Because my assumption of what a partnership looks like might be very different from theirs. Especially after I’ve given them all of the goods of my brain; ideas, just like you did, and hard work, etc. So most people have to learn that the hard way – like us. You know?
John: I’ve learned it a couple of times the hard way.
Richard: Yep. We call that being “Wall Streeted”.
John: Right, that’s funny!
Richard: You’ve got to watch out for people when you’re young, so…
John: I’ve done that both on the equity side, and I’ve done it both on the debt side and knowing what I know now, I wouldn’t have done – I would ask the right questions back then to understand where their head was. That’s where I’m at when I said I’ve walked away from over a billion dollars worth of equity, it’s because I know how to ask the right questions now.
Richard: Right, right. Got it.