Managed Growth

August 24, 2010

While every business owner seeks to positively advance their company, there exists a fine line between growing and taxing an organization.

2010 has been an incredible year for Dover Realty Advisors – since last December, we have experienced a 50% growth in our group, including expansion through our recently added Cincinnati Regional Office. Our goal of growth into the multifamily markets of Ohio, Indiana and Kentucky has begun to be realized. Adding properties in Lexington and Louisville, Kentucky will be next on our horizon. Yet, despite the continued demand for our services, we are proceeding with caution, moving forward.

The key to success in this economic realm remains treading carefully; pausing for reflection and analysis even when things appear to be going “great guns” – in particular when it comes to people. For example, sometimes you need to take a look at utilizing contract employees and outsourcing particular functions. This approach serves to make sure your in-house staff does not become too stretched while keeping overhead in check. It also protects you should the need for right sizing come about.

Many companies are moving forward in this way with an eye in particular on how healthcare reform will affect operations beginning next January (2011). I’ve read the 2,000 page Act and am particularly concerned. The government says companies will be able to keep their health insurance plans but the Act says otherwise. Instead, with new dictates in place, many plans could go away and companies and their employees could find themselves faced with less desirable options – from both a benefits and cost standpoint.

The possible ramifications are not pleasant with resulting uncertainties sure to influence many companies to at least temporarily shelve thoughts of growth, even of the well-managed variety, for a more conservative wait and see approach.

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The Adversity Quotient (“AQ”): Understanding, Overcoming

August 18, 2010

Last time, I wrote about “EQ” (Emotional Intelligence) and its role in effective problem solving.  This time, I want to briefly examine another acronym, “AQ” and its role in turning obstacles into opportunities.

“AQ,” or “Adversity Quotient” is the brainchild of Paul Stoltz, Ph.D., who has authored several books on the topic, which examine dynamics related to overcoming adversity. What does it take to succeed in life? Why are some individuals able to overcome adversity while others simply give up? Stoltz adeptly takes a look.

How good are you at dealing with loss and/or unexpected change?

Many people, myself included, have experienced misguided career or business decisions. The key is in how you handle them. You’ve “stepped in it.” Now what? Scream…cry…moan and then move on. Get it out of your system within thirty minutes. Then, collect yourself, regroup and consider all of your options. You may have been dealt a “bad hand”; yet, if played correctly, it could turn into a winner.

At the end of the day, I always recommend, don’t waste time and energy worrying about where you want to be or what might have been. Instead, look forward and positively focus on what actions you need to take to get there.


EQ (Emotional Intelligence) vs. I.Q.

August 11, 2010

I am an avid reader – in particular when it comes to books on business philosophy and leadership.  Jack Welch wrote the book (actually several) on both.  Another outstanding author that delves into this genre is Robert Cooper, Ph.D., with “Executive EQ” and is worth a closer look.

Wikipedia describes “EQ” (Emotional Intelligence) as: “The ability, capacity, or skill to identify, assess, manage and control the emotions of one’s self, of others and of groups.” Studies have shown that incredibly intelligent people are quite often not successful in their personal lives nor, this book demonstrates, in business.  They are lacking, this theory postulates, in ‘EQ.”

Some have applied this theorem to the Obama administration and the failings of many of his Cabinet members.  They are “book smart” but, their detractors would say, perhaps too academic and, as such, lacking in the ability to focus and “see the forest through the trees” when tasked with effectively problem solving.

I have found over the years that most problems don’t require an overly sophisticated approach or thought process, which can often lead to “analysis paralysis.” Rather, great common sense and good judgment (both a function of innate emotion rather than high I.Q intelligence) lead to more efficient and effective problem solving and decision-making.

All of that said, brilliant minds are most adept at a specific type of problem solving; they are exactly who you want around when you are faced with a major financial catastrophe. When it comes to numbers, derivatives, trading assets and the like, their skills and talents shine most brightly.

As an effective manager, then, are you matching the skill sets of your people to the tasks to which they are most suited for?


Proforma merely a starting point in predicting a property’s potential

August 9, 2010

Have you heard the one about the real estate developer? He never met a proforma he didn’t like.

On the other hand, as an operator, I want to know, first and foremost, what something is going to cost me to operate. During my many years of developing and managing multi-family properties across the Midwest with Village Green Companies, I was known (affectionately?) as the “Budget Monster.” It was a title I relished borne of an approach that has served me (and my clients) well.

Every budget or proforma, first and foremost, has to be carefully developed and scrutinized. Dover Realty Advisors subscribes to a system of “sources and uses” which creates internal escrows; an inherent discipline for properly handling hard and soft project expenses – everything from legal to accounting to inspection work.

It is imperative that there is absolutely no guesswork where cash flow projections are concerned. If rents are too low and costs are off the return will not be there and what you thought would be a 10% return is suddenly 4%. You need to know where every dollar is coming from and where it is going.

Also key for analysis: What’s happening now in a particular area you are looking to develop. For example, are competing properties on the drawing board (a negative), or, are transportation/infrastructural improvements in the works (a positive).  How about with regard to the demographics of your potential customers? Are factors related to age and income lining up in your favor? Are these individuals there now? Will they stay? Are more coming? If you are going to have to wait 5 years for a particular neighborhood to transition in your favor, or, if it is poised for a downturn, more than likely that area is not ideal or even viable.

The proforma, then, should be a starting point for determining a property’s viability. From there, do your homework and then some.

Sometimes the best deal you ever did was the one you didn’t do.


Growing a service business

July 30, 2010

No matter your industry you are no doubt constantly focused on serving your existing clients with an eye toward new business. While some say that the day to day of maintaining and growing a business  is a balancing act of duties between the two, I would argue that one is much more important; yet, both are intrinsically linked.

Whether you focus on multi-family and turnaround or Receivership work like Dover Realty Advisors or any service business, I feel strongly that the key to long-term success is, first and foremost, doing an outstanding job for the client and customers that you already have.

It is a simple strategy, really: You worked hard to attract a particular client. You should work even harder to build and maintain a level of trust based on honesty, transparency and superior service. Do that enough times and with enough people and, suddenly, you’ve built not only a strong client and referral base but also a solid reputation.

In turn, that reputation and foundation of satisfied customers, referral sources and business partners builds referrals and new business.  Word always gets around when there is a “good thing” out there.

So, don’t get bogged down or distracted with worrying about where that next big client is going to come from. Fear is always unproductive.  Instead, stay focused on and dedicated to the customers that you have.  Treat them well and others will follow.


Credit where credit is due

July 23, 2010

As someone who has worked within and closely watched the real estate world for more than 30 years – both in Detroit and throughout the Midwest – I am often asked for my opinion on the current economy and where I think it might be going.  When looking at one key indicator, FICO, or, credit scores, the scene is far from pretty.

10 years ago, when the market was robust, just one or two out of every ten applications and scores we looked at had what we call “hair on them”; that is, some sort of “warning flag” that a particular person might be a risky tenant. Today, by contrast, six out of every 10 applications are suspect and risk from customer defaults is pronounced.

In turn, as managers and receivers for multi-family apartment and condominium properties, we have been forced to adjust accordingly. Where, in the freewheeling days of easy credit, we routinely offered security-deposit-free lease deals, now we must weigh fiscal responsibility with real and tangible risk; for example, a sliding scale menu of security deposit “breaks” (i.e. no deposit with a credit score of 750; reduced at 650 and full below 600).

It is an unfortunate ramification of risk mitigation today in an economy where a tenant is just as likely to walk away from their contract as honor it. If only these same individuals considered the long-term effects of thinking in the short term. Such irresponsible decision-making can come back to haunt in a major way down the road when trying to get a loan on a new home. Not to mention how a plummeting FICO score will adversely impact insurance costs – from health to auto. It is “pay me now or pay me later” via a slippery slope which can be hard if not impossible to recover from.

Can we recover? Yes. Will we recover? Absolutely. It will, though, take sacrifice and a new mindset to, in time, turn things around. How often have we seen it over the years? From crisis can come redemption.


I live to eat

July 14, 2010

I love food. Anyone who knows me knows that.

It is a part of my DNA and my heritage, going back to my childhood and growing up in New Haven, Connecticut where my father operated a luncheonette. I also worked there as an adolescent and during my early teenage years. Some of my fondest memories involve shucking clams on my back porch and enjoying authentic Italian food, especially Sally’s Pizza (arguably the best pizza in the U.S.) on Wooster Street in New Haven. Sundays meant neighbors gathering at our home for a special brunch that included (my favorite) sausage and peppers.

Food is important to me to this day. Some “eat to live,” I “live to eat.” In fact, I actually plan my vacations – whether east coast, west coast or overseas – around good food and outstanding restaurants.  When in New York, I still frequent one of my teenage haunts, Grand Central Station, where The Oyster Bar is outstanding and fair game. In San Francisco, I have to stop myself from eating my way entirely through their incredible Farmer’s Market.

It doesn’t have to be fancy. For me, it is all about the entire experience. A good meal with great service shared with outstanding company.  I am fortunate to have family and friends living in different regions of the country.  When making plans to visit we always discuss the pending menu.

I think it all comes down to an appreciation of individuals (in this case: food preparers and servers; wine growers; etc.) who strive to be the best and are passionate about what they do. In turn, it shows in the final product, which stands apart from the everyday. It’s what we strive for at Dover and why, I’m sure such experiences continue to resonate – for me and, in turn, my clients.