The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
When conducting your due diligence process, focusing on risk before anything else helps you to make more conservative and careful deals. When risks are property and thoroughly assessed, the returns become secondary benefits in a solid deal. Consider everything that can go wrong, and factor this into your underwriting process.
Richard Wilson: What is unique about your commercial property due diligence process?
Ben Marks: I think what is unique about us is, again, this gets back to my comment earlier about brokers making like principals, I think there’s so many brokers that don’t understand their role, and that specifically what I mean is that their role is asymmetric. They’re taking asymmetric risk. And when I say asymmetric risk what I mean is they get a commission regardless of whether this deal is good, bad, or indifferent. Where as principals, we have got to live with this for the duration. And so, what I’ve found, and this is true for every broker not just in commercial real estate where there’s stock broker or any sales person, they’re selling you upside and that’s all well and good, but the way we underwrite things, because again we’re risk averse and we don’t necessarily need home runs, we underwrite 80-90% of our time is underwriting the risks first and all the things that can go wrong. And then the return is almost secondary. And so I think focusing on risk almost more than anything else is perhaps what differentiates us from most of our competitors.