On being aggressive

I spend a lot of time on this blog talking about preventing bad things from happening on deals.

That’s what due diligence is all about: Trying to identify all of the things that could potentially go wrong on a deal and then either ensuring they do not or else planning to mitigate the negative consequences.

But sometimes deals surprise on the upside.

What do I mean by that? Sometimes you inspect and find out the units have more potential than you thought. Sometimes you find that rent controlled units you thought were occupied are, in fact, vacant. Sometimes the electrical was upgraded with permits, saving you from having to do it yourself. And so on.

The thing is, you never get to benefit from these positive surprises if you don’t make offers, get into escrow and see.

Now, I’m not advocating tying up deals that are way off working in hopes that something amazing will come to light that will save you. That’s unrealistic, because the likelihood of a material upside surprise is pretty low.

But, if a deal is on the margin, there is often something to be gained by being aggressive and getting control of the deal.

Sometimes, you find out that what was marginal is actually pretty sweet.