The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
The most common due diligence question asked by most new investors has to due with track record, and while track record is important it’s not the end all be all of due diligence. More new investors should ask about what kind of meaningful connections can be made to build trust between the investor and the investment firm. With open trust and open communication paired with track record, a new investor will know they’ve made the right decision.
Richard Wilson: What is the number one smartest due diligence question a new investor could as a commercial real estate investment firm when getting to know them?
Louie Soffner: Thank you, Richard. I think that we found that most investors tend to ask about our track record from previous real estate investments that we’ve completed in the past. And although I do understand the value of having a good track record, I don’t necessarily think that that’s the most important question they should be asking as far as performing due diligence on our company. I think new investors should really be asking about the team responsible for the investments and the value that they bring to the table. We feel that developing trust, having open communication between the investor and the manager is key, a new investor is ultimately investing with the firm and not just in one specific deal. I think it’s very reasonable for any investor to want to speak with or meet with most of the team members that are guiding his or her investment, anywhere from the CEO to the company to the analysts or maybe support staff behind the scenes. And I feel that our company, the Beach Company, has done a really good job in offering those interactions early with potential investors, whether it be in in person meetings, Zoom meetings obviously with the pandemic, email correspondence, phone conversation. I think all these interactions tend to lead to a sense of comfort with our company, and then we can also speak to our track record as support for what we’ve accomplished in the past and will strive to accomplish in the future. Ultimately it’s our goal as an investment firm to create lasting partnerships for current and future investment opportunities alike, and that begins with creating trust between the investor and the management firm.
Richard: Yeah, great. Yeah, it seems like all investing is about building trust and getting enough trust to move forward on something of course.