I recently traveled to the Pacific Northwest to explore Portland and Seattle, and was really excited to have the opportunity to summit Mount St. Helens while I was there. It was a great experience, and here are 3 things that it taught me about commercial real estate:
1. Pre-Diligence is Important
Prior to this trip, I had never been out to Mount St. Helens (MSH) and don’t know anyone else who has, so I needed to do my own pre-diligence in order to understand what I was getting myself into. I discovered that you needed a permit to climb over 4,800’ (the summit is 8,365’) and that they only sell 100 permits per day between April – October (I climbed in July). I also found out that you pick your permit up at a hotel near the mountain, where to park, length of the route, and estimated time it takes for a round-trip summit. I then read reviews from people who had recently climbed the mountain, and learned various things including that the summit was still covered in snow. Bottom-line, I understood what I was getting myself into.
If you’re listing a property for sale or lease, pre-diligence is a must. Pre-diligence are items that give you a clearer understanding of the property, and allow you to market it more effectively. This list can include an ALTA survey, current appraisal, floor plan, site plan, capital improvements for past 7 years, phase 1 ESA, plat map, easements and restrictive covenants, etc. It takes more time, more money and is more work, but will help alleviate any surprises at closing, and you’ll understand more about the property than anyone else.
2. Things Don’t Always Go as Planned
Three days before my summit attempt, the weather looked great – clear, sunny, low wind, and perfect temperatures…. but weather changes, and this time it changed for the worse. It snowed the night before I summited, and on the day of the climb it was cold, windy and rainy with limited visibility. I had two choices: forgo the climb (I only had a permit for that day), or suck it up and climb on. I chose the latter. The nice thing about bad weather is that I was one of the only people on the mountain that morning, and the only person on the summit when I reached it, creating a pretty surreal experience.
Everyone has had issues when putting deals together – regardless of how much pre-diligence you do – you can’t stop Murphy’s Law. The buyer can’t get financing, the appraisal comes in too low, there’s a fire at the building next door and it affects your building… who knows, stuff happens. When things don’t go as planned, you can either hang it up, or figure it out and drive on.
3. The Summit is Only the Halfway Point
When climbing a mountain, it’s easy to think of the summit as the finish line. It’s not – you still have to make it back down, and most injuries and deaths occur on the descent. Why? You’re tired and worn out, you let your guard down, you get lost, mountains are steep, rocks are loose, etc. It’s important to realize that you’re not done, until you’re home safe.
The same thing happens when we sign a lease or a sale contract… we feel that we’re done! Chalk up another win! But then it falls apart during due diligence, because you didn’t perform any pre-diligence and weren’t aware that the property used to be a gas station before it was a strip center. Oops. Now you’re stuck in a crevasse with no way out – a deal’s not done until it’s done.
Whether you’re climbing a mountain or working a deal, if you keep these three things in mind, you’re more likely to be happy with the end result.
Wanna see more from my climb? Check out this 30 second video clip of the entire trip.