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.

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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.


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.