Man in the Mirror

“What!!! There is no way I weigh that much??”

It seems like just yesterday, but almost 15 years ago, my weight had skyrocketed to over 260 pounds. To give some context, today I weigh around 190 pounds and am in optimal shape at the age of forty-seven. Reflecting on that time, I distinctly remember asking the question (after a few moments of denial), “How the heck did I get here?”- “Why do I feel so crappy?”- and, finally, “What do I need to do to make this go away?”

The situation I found myself in created a lot of ANXIETY and a FEELING of helplessness in the context of a great NEED.

You're probably thinking right now, “Good for you, Dave, but what the heck does this have to do with my situation and commercial finance?” I am so glad you asked because my response is “A lot.”

When I found myself in an extreme situation, I had to look past my anxiety and look for concrete solutions. The point of this article is to acknowledge the ANXIETY you are FEELING and help you focus on your NEED to get your deals funded and get your project over the finish line with confidence.

Just as I had to confront my weight issue, this current market condition may have you asking similar questions:

• “How did I get here?”
• “Why am I so discouraged?”
• “What do I need to do to make this challenge go away?”

In this series of articles, my hope is that we at Integrity Capital can help answer these questions and provide some specific and reassuring solutions to get your deals funded. We will be diving into key concepts like:

• Getting to clarity
• Why the end matters
• Economic alignment
• Need vs wants
• Strategic ways to get deals done with a high level of confidence.

So, let’s begin with the first step that matters for you to get deals done - CLARITY.

What do we mean by clarity?

Let me start off by saying what clarity is not. “Clarity” is not the Zen dude on the floor making weird noises with yoga pants on (which is weird). It is not going through some long-drawn-out process, which only causes confusion and makes you want to pull your hair out. Clarity, according to Dictionary.com, is “clearness or lucidity as to perception or understanding; freedom from indistinctness or ambiguity.” Simply put, clarity is freedom from ambiguity! When things are clear, you have freedom from complexity, and confidence settles in. Clarity provides predictability, and confidence is the byproduct of predictability. If you want to proceed with confidence – get clarity!

How to get clarity? Why the end matters.

As a real estate investor and developer (or someone trying to lose 70 pounds), there is no doubt you have experienced confusion, ambiguity, and frustration, especially in this current economic environment.   Confusion, because things have not gone the way they were scripted in your mind. Ambiguity, because the market, your broker, and others seem to be sending different messages and therefore deals might be stuck and not moving forward, or possibly moving in reverse. Finally, frustration because daily you might be off course from your original plan or timeline. All three of these are quite frankly exhausting and can probably make you feel tired and hopeless at times... I get it, and you're not alone. Here is the good news: there is a way out of this, and it always starts with getting unmuddied....getting to clarity. And this begins at the end. Where do I need to get to? How do I go about getting there?

Economic alignment: Needs vs. wants

In starting with the end, you define the target of what you want to accomplish, and you compare this to the current economic realities. It may be, for example, to develop a 200-unit, build-to-rent community.  To achieve this, you need the obvious basics: land, city approvals, plans, a budget, and sufficient capital to fund the project (typically, equity & debt). But in putting together this plan to achieve this “end,” you may have to differentiate between the “have-to-haves” and the “wanna-haves.” (I may want to lose 10 pounds per day, but that isn’t very realistic.) If you conflate your wants with your needs, your project may be at risk of failure because your wants may be too unrealistic in this current market environment.  You may want a 7% construction loan at a 75% LTC, but the market isn’t there right now, so your needs may have to shift to align with what is realistically possible. If the higher rates and lower LTC blow up your proforma, then at least you have clarity. Or you may, with the aid of an experienced broker, need to come up with some alternative creative solutions. Either way, the plan is getting clearer.

Strategic ways to get deals done with a high level of confidence

Once you have aligned your wants with the current economic realities, you are able to zero in on what your bottom-line needs are.  Having this clarity will help you define your threshold parameters for financing, project size, budgets, timing, etc.  And then your attention can shift toward creative financing that will maximize your wants but, at a minimum, meet your needs.  Just like working with an experienced trainer to safely lose weight, the best way to achieve your objectives is to work with an experienced and creative debt advisor who has a variety of sources and strong relationships in the debt market and who may be able to combine multiple capital sources to create the best capital stack for your deal.  

Summary: Simple steps to clarity

In summary, whether you are trying to finance your project, lose weight, or simply order your life, I have outlined an approach that includes gaining clarity by starting with the end, aligning your needs with the current economic conditions, and working with a trusted advisor to help you get where you want to be.

Applying these principles usually means intentionally working through this process. Here are a few simple steps to get clarity and shaping a plan for what’s next: Timing, Temperament, and Tactics. Timing is blocking time off in your calendar for 45 undistracted minutes to give focused attention to this exercise. Temperament is getting yourself into the frame of mind to relax and explore the questions and possibilities. This may include choosing the right location, the right music, the right time of day, or anything else to get in the right emotional and cognitive state. Finally, tactics – jotting down the solutions and course of action that come to mind. Here are a few questions to help prime the pump.

• What is the actual problem I'm facing right now that's keeping me from reaching my objective?
• What are the things that can’t be changed? (fixed) What are the things that can be changed? (variables)
• How much control do I have over the variables? How can I influence those?
• Who are the top 3 people I need to talk with about this challenge to help solve it?
• What are the top 3 things I should do to make the biggest difference in the next 30 days?

If I can help you with this process, please contact me at 480-219-1205.  Remember, this simple exercise could be the breakthrough you need to get your deals over the finish line, so don’t procrastinate.