The CRE industry can be a really tough business, but these five things make it so much harder than it needs to be for us. Yes, I know hate is a powerful word. But CRE is a powerful industry, it’s Monday morning and we got some things to talk about CRE. So let’s jump right into it:
#5 “NO MONEY DOWN” CLOWNS
Infomercials have permanently etched “NO MONEY DOWN!” into our reptilian brains to where we instantaneously react with consumer fight or flight at the sheer utterance of these three words. And while that’s all well and good for buying cars, timeshares and craftmatic adjustable waterbeds, it’s an AWFUL thing for commercial real estate. Surprisingly enough I hear these three words so often I’m almost beginning to believe that they are real. HA! Just kidding. As much as I love helping investors by lending an audience and advice whenever I’m able, I’m never getting those 5 minutes of your awful ‘No Money Down’ pitch back. To all the No Money Down Clowns out there PLEASE just stop. You’ll save everyone much needed time AND hence yourself some money… for a down payment.
#4 UNREALISTIC EXPECTATIONS
It’s amazing how CRE gives us the opportunity to turn our dreams into reality. Whether it’s achieving financial independence, changing the skyline of a city, or using CREtech to disrupt the industry everything we do starts with a single vision. There’s nothing wrong with living in a world of infinite possibilities, but it has to be anchored to reality with the chain of knowing one’s limits. So before you list that swampland portfolio in Florida AND Arizona for $1mm/acre, request a 100% LTV loan, or ask someone “I’ve got a great deal! Can you close tomorrow?” ask yourself “Am I being realistic?”
#3 HORRIBLE MANAGEMENT
The revenue generating side of CRE is dominated by TypeA personalities typically operating with varying degrees of order and chaos within a rigid hierarchical power structure. Managers are often chosen based on seniority, current and immediate staffing needs, and politics before merit. The key ingredients missing in CRE is formal leadership training & experience. I’m not talking about being good at closing deals, I’m talking about motivating and influencing the people that surround you.
What should ultimately be a cultural error is turned phenomena by the low successhigh reward nature of the industry. We’ve all seen top talent from CPAs, CFAs, Series 7s, the Resi side and other forms of sales talent get chewed up and spit out by the meat grinder that the CRE culture and cycles often are. What’s worse is how often raw, promising and developing talent may leave their firms due to a lack of growth opportunities. This is largely due to a lack of effective leadership within the ranks of middle management, by no fault of their own. A bit more formal training, less formal employeemanager interactions and more emphasis on developing and keeping talent would go a long way for a lot of firms and the industry as a whole.
#2 BIG FAT LIARS
You don’t need to take a Gallup Poll to know that real estate ranks among the lowest professions for honesty and ethical standards we did beat telemarketers, car salespeople and members of congress (YAY!). Obviously our rank may be somewhat skewed by overaggressive Realtors who are “Going to sell this house today!” and their miscommunication with the uninformed nondeal making masses. Totally understand.
However, most of us in CRE have dealt with dishonesty enough times to know to protect ourselves and our clients through the standard checks and balances of reputation, dialogue and documentation. “You already have some offers yeah? Gotta close quick right? I need to sign a confi first because it’s supersecret huh?” We’ve been through this so many times it’s like waves crashing on the rocks. Whooooosh! No honest and ethical community should be so casual with slights of moral turpitude. To the habitual users of lies, embellishments, and omissions PLEASE JUST STOP. Save the B.S. for the telemarketers selling cars to congressmen. And to all the honest hard working CRE professionals it is your duty to have more fun calling out B.S. when you hear it. It will be awkward, but not for you. I promise.
#1 CLOSE MINDEDNESS
Doesn’t it just drive you crazy when people refuse to listen? This goes beyond having prospects hang up on your cold call, clients going radio silent and even beyond internal competition within your own firm. Close mindedness and resistance to change not only kills deals and relationships on an individual level, it topples organizations, institutions and industries heck even empires via the systemic permeation of leadership. It is the most dangerous issue facing the industry right now while at the same time providing the most opportunity.
Technology is making the world smaller, faster and more efficient. It WILL get less effective to exploit market inefficiencies with the rapidly outdating methodologies that SO many have prospered from, continue to use and worst of all have NO contingency plan. The world, it is a changing, and the CRE world is no different. So the question to ask one’s self and one’s leadership should be Do we want to be part of the change?
The answer is easy, the actions can be a bit more difficult. Clicking your heels three times while saying “CREtech” isn’t an endall beall solution. But here’s just a gentle recommendation: open your mind, be honest and use common sense. You might be amazed at what you find out there in the world and within yourself.