Build Your Investment Team on a Solid Foundation of Mutual Trust and Respect
Usually, my articles for this magazine focus on a property that I find is a great case study in terms of situation, numbers and process, thus offering valuable lessons for other investors. However, for this issue, I want to discuss the value of trust, which I deem to be the foundation without which any case study is not even possible. I have asked my attorney, Pavielle Dortch, to contribute her comments and insights as we explore the vitally important trust relationship between an investor and his or her attorney.
Abhi Golhar: This year, my firm, Summit & Crowne Partners, experienced massive growth at an unexpected and rapid pace. We expanded from Atlanta to Charlotte, and now are looking to capitalize on residential and commercial flip-and-hold opportunities in Jacksonville, Tampa and St. Louis.
Through the ups, downs, tough mornings and late nights, there is nothing better than knowing your legal counsel is ready, willing and able to grind it out with you, side by side. Growing my team, including selecting an intelligent, capable and experienced attorney, has been one of the most rewarding experiences I have had.
Pavielle Dortch: When building your invewstment team, it is very important to understand that each individual plays an integral part in making the transaction happen. As an attorney, I have had the opportunity to interact with teams of different calibers. Some teams are fluent in their system, while others are barely holding it together. The key difference between Team A, the more effective team, and Team B, the “barely holding it together” team, is that there is a breakdown in trust.
AG: Additionally, great attorneys—though they may not even be aware of it—often assist in identifying holes in a business operation to encourage Team B to become Team A. This is fantastic for an operator like me who constantly needs to sharpen the process and model, in hopes of gaining a favorable outcome at the year’s end. There’s nothing worse than not performing on a contract and allowing the mistake to perpetuate through your business model, making your attorney doubt your abilities as an investor. This was a frequent occurrence in the beginning of my real estate career, until I realized I was the problem, not the solution. I let myself become fearful of outcomes beyond my control and did not rely on my attorney to make up for the strength I lacked.
PD: As with any relationship, when trust is missing, the relationship becomes unproductive and ineffective. This is simply because neither party feels able to rely on the other. Recently, an investor abruptly moved his closing from another firm to my firm. According to the investor, the first attorney failed to provide competent service in the time allotted. In this situation, the investor’s trust was broken.
AG: I encountered such a situation myself, and it can cause challenges during any point of a real estate transaction, including closing. When investors feel their attorney is lackadaisical in communication, transaction-specific structure or knowledge or ability to get deals done, they will be hunting for another one. However, the success or failure of any relationship starts from the initial due diligence performed by the investor. As I do with my property investments, I look at 100, interview three and pick one.
PD: One mistake I have noticed in the team-building process is that many investors “happen upon” their attorneys. An investor may pick an attorney because the attorney closed the investor’s first deal, the attorney has the lowest fees, or the attorney can complete a certain type of closing. The problem with this selection process is that the relationship is not built on the investor’s confidence in the attorney’s ability, but instead is based on necessity or convenience.
Rather than selecting your attorney based on necessity or convenience, pick your attorney the way you picked your contractor, your financier or your business partner. Take the time to cultivate a relationship with your attorney. Attorneys are people, too. And, we will move mountains for clients we trust. So, what does that mean?
As much as you rely on your attorney, your attorney relies on you. We do not rely on investors solely for financial gain. We look to our investors to maintain their credibility, provide support and information when needed and to be honest with us. For example, as an attorney, I am not likely to make an investor’s file my top priority if the investor has a history of not completing his or her transactions. Further, it makes my job extremely difficult if I am operating on half-truths or no information at all.
So, as you can see, trust goes both ways. And, it will always affect the type of service you receive. With that in mind, please remember that each party plays an important role in the process. Thus, you should build your team on a solid foundation of trust. Because, once trust is lost, it is hard to get back.
0 Comments