In the world of real estate investment, many things can set your firm apart. Maybe it’s your contacts. Your reputation. Your brand. Your teams. Or maybe it’s the way you do things.
A meticulous, process-driven approach that’s been honed over many years and deals can improve your win rate, help you avoid costly mistakes, and make brokers and sellers more willing to work with you. However, establishing a robust process is only the first step. If that proprietary information is only in your managing director’s head, no one else can access it. To give your whole team a clear path to follow and build repeatable advantage, you’ve got to document, enable, and guide those processes systematically.
Defining and structuring processes makes them repeatable, allowing your teams to execute with speed and confidence and ensuring they’re using proven strategies. If you’re managing a larger pipeline of opportunities encompassing multiple asset classes, each with its own unique lifecycle, spread across various geographies, it’s even more critical. Creating a system for your firm’s key investment processes allows you to extend and amplify the value of your wisdom and experience, setting your whole team up for success.
Process efficiency: Why it matters and what stands in the way
When it comes to securing investment opportunities, time is always of the essence. With multiple parties often bidding on the same assets, acting swiftly and decisively can mean the difference between securing a promising investment opportunity and missing out. To gain a strategic advantage, you need to be the first one to the table with a compelling offer. In addition, meeting the strict due diligence deadlines that are typically set during the negotiation phase requires you to execute efficiently—ensuring each aspect is addressed thoroughly and in a timely manner.
While it might seem like rushing through these steps, and possibly even skipping some, will allow you to move faster, the opposite is actually true. As the saying goes, “Slow is smooth, and smooth is fast.” In the bigger picture, establishing a structured process for every dealmaker to follow on every deal will save you considerable time and resources. But the way most firms operate can create barriers to efficiency that must be recognized, and addressed.
Everyone does things their own way
One of the primary challenges in real estate investing is lack of documentation when it comes to process. When everyone on your team is operating independently, there’s no consistency in how deals are approached, evaluated, and ultimately executed upon. This can have wide-ranging impacts on your firm’s performance and outcomes, especially when you’re dealing with complex investments.
No visibility into ongoing activities
To manage deals efficiently when multiple stakeholders are involved, clear communication and effective collaboration are critical. But without a centralized hub to track tasks, team members don’t know what the others are working on. As a result, they may end up doing the same task more than once, wasting your valuable resources—or tasks may be overlooked completely, which can cost you an opportunity.
Plus, when information isn’t being shared, any issues that arise remain known only to a few individuals. Lack of awareness therefore hinders your ability to resolve issues quickly as well as your ability to learn from mistakes, which filters down to the whole team.
Doing things “the way we’ve always done it”
Firms often change their processes when making higher-order changes—for example, moving into new asset classes, tightening screening protocols, or shifting the focus from buying stabilized assets to developing properties. But without proper documentation and centralization, how can you apply the valuable insights you’ve learned from past deals to future work?
When everyone is doing their own thing, it’s difficult to disseminate what you’ve learned throughout the organization—whether we’re talking about prior adjustments or new strategic directions. This barrier to iterative improvement can lead to the recurrence of avoidable yet impactful errors that can hold up due diligence and throw deals off course.
Strengthening your process: Standardizing for quality and consistency
To reap the benefits of high-quality investments, deal teams need to follow best practices from initial screening to closing. But as teams grow, it becomes harder and harder to maintain consistency. Applying knowledge uniformly across team members, deals, and asset classes starts with documenting your proprietary processes for each investment stage.
The goal should be to create a clear, structured system that anyone can easily follow, whether you segregate duties and implement specialization across your teams, or leave it up to each team to designate tasks on a per-project basis. Documentation also allows you to share knowledge with the least experienced dealmakers, shortening the learning curve.
By continually testing and refining your processes, you can make incremental improvements to drive continually better outcomes. With your whole team following the same guidance, you can learn from collective experience and input—compounding the value of that knowledge for every team and project, and for the business as a whole. Let’s look at the key steps you should document and standardize.
Key investment deal processes
Deal screening: The first step in any possible investment deal is recognizing the opportunities that align with your portfolio. Establishing a standardized evaluation framework will help you be sure you’re only considering deals that are a good fit, and that you’re not letting good opportunities pass you by. Emphasis should be on swift, informed decision-making to effectively prioritize your resources.
Underwriting: Once you’ve established your interest in a potential deal, it’s time to collect all the information you need to ensure accurate underwriting—including conducting market research, generating assumptions, creating multiple underwriting models for various outcomes. Sometimes you even need to complete the investment committee memo before you start bidding. Documentation for this step should take the form of a template that team members can use every time, with standardized underwriting models and outputs, such as deal overviews and comparison reports.
Bidding: In addition to submitting a letter of intent (LOI), when you start bidding it’s important to make sure you’re ready to mobilize if your offer is accepted. That means understanding the tasks associated with the critical path and being ready to execute on them. For example, if you need an environmental study, do you have a trusted consultant available who’s within your budget?
If you need a preliminary meeting with city staff to determine whether or not they’re development-friendly, do you know the timeline and have materials to present? Briefing the team on their immediate tasks will enable your team to move swiftly into due diligence—without wasting time on prep work you could have done in advance. Preparing a list of “deal killers” to look for will also allow you to identify these factors quickly, so you don’t waste time.
Due diligence: Now that you have access to detailed property information, it’s time to uncover any potential deal-breakers as well as value drivers before due diligence expires. The shorter the due diligence period and the more compelling the offer, it’s vital that you have a thoughtful plan in place to guide thorough evaluation and enable your team to make an informed decision quickly.
Closing: When it’s time to close, you have to be ready to finalize the financing, execute all legal documents, and confirm that any issues you discovered during due diligence have been addressed. To ensure seamless transition to ownership and management, documentation of the closing stage should include guidance for having capital ready to go, whether it’s centralized or raised by the specific project team, finalizing agreements, and laying out a clear plan for integrating the newly acquired asset into your portfolio.
How Technology Can Help you solidify your process and scale your business
In today’s real estate investment landscape, technology plays a critical role in standardizing processes—especially as you scale. It’s impossible to give growing teams access to repeatable workflows and maintain consistent execution without it. Here are the top ways you can leverage a purpose-built real estate deal management solution to create structure and clarity around your processes, standardizing performance and empowering your teams to achieve more deal pickups.
Define and document your process
Look for an agile solution that allows you to create workflow templates for every investment type, from stabilized assets to complex development projects that require detailed due diligence. This makes it easier to thoroughly track and manage every step of the process across deals and teams—from start to finish.
Streamline deal progression
Within your workflow templates, structuring each deal into stages lets you guide deals progressively as the tasks within each stage are completed. This approach ensures meticulous attention to detail and complete accountability throughout the lifecycle of each deal.
Improve transparency
Global reports give you a holistic picture of tasks and status across all active deals. This helps you understand how your teams are performing, ensure that your processes are being adhered to, and identify any issues that need to be resolved. A robust report should roll all the tasks from each deal up into a single view and be filterable by assignee, task status, and deal. Generating these reports weekly will help you keep your teams aligned on priorities.
Stay informed with real-time notifications
When you’ve got multiple deals progressing at the same time, keeping track of tasks and events can be a challenge. With real-time notifications, you can easily keep tabs on significant events—such as task assignment or completion and when a deal advances to the next stage. That way, you always know exactly how far along each deal is and can make sure your team is prepared to execute on the next steps.
Empower your teams and elevate your process with Altrio
Thoughtful, fine-tuned process can be one of your firm’s top assets—but only if it’s clearly structured, documented, and accessible by all. Origin by Altrio makes it easy to do just that. With customizable workflow templates, structured deal stages, on-demand reporting, and real-time notifications, you can empower even the least experienced members of your team with the highest-level wisdom and experience, ensuring consistent performance across teams, deals, and time. That’s the power of a purpose-built deal management platform.
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