3NDeveloper

@realEstateTrent Submit an LOI regardless, and tell them to call you if the owner changes their mind.

What's your next move?

Negotiation strategy is a fun topic. When leverage is arms-length, and interest is mutual, the vast majority of negotiations follow a very similar pattern: - Initial LOI pushes for a wide array of unnecessary chips, which can be traded away later - Follow a 'tit-for-tat' approach, in which each side wears out the other on what they want - Eventually, an 'equilibrium' is found, and if that middle-point is within a tolerance zone for both sides, then a deal will effectuate The alternative approach is a clean cut initial offer, which has extremely limited tolerance for movement. Both tactics are effective, but the former is more common in lease negotiations, and the latter is more common in sales transactions. Where negotiations can become very interesting is when leverage is lopsided. This is where you hear the most entertaining stories of how a particular strategy was pulled off. The most common? Negotiating a price the Seller desperately wants, dragging out the LOI/PSA process, dragging out the escrow process, then slamming the Seller with a massive price reduction at the last second. If a Seller is in financial distress and has limited/zero alternative options, they may be forced to accept. This happens more than you may think. My favorite one? This only works under very niche circumstances: - Leverage is entirely sided towards one party - The counterparty is highly logical, and driven by the numbers, and will agree to a lesser deal than they want if they still benefit somehow - The counterparty has to transact with you, and no one else (e.g. Landlord-Tenant relationship, in which the lease is terminating on a high performing store with no extension options left, and no immediate relocation options available) I've found that sometimes, when all these stars align, it's best for your counterparty to simply think you're crazy. Like actually batshit insane. I had a blend & extend deal which followed the parameters above. I penciled the pro-forma rent at $180k-$200k/year. Decided to interview a few brokers, and get input on valuations: - Broker #1: $180k - Broker #2: $150k - Broker #3: $400k I knew Broker #3 was completely off with his number. I did not care that he was wrong - I pushed him hard just to see how entrenched he was that he's right. He was completely confident in it, and did not bend an inch on his assessment. So confident, in fact, that he gaslit me into (briefly) second guessing myself 😂 Structured a commission agreement in which he's paid 3x if he signs a lease with a new tenant - in effect, making him indifferent to killing a transaction with my existing tenant. (This is an extremely high risk maneuver that I would not recommend, but I only did so because I knew how lopsided the leverage was in this particular situation. A key element was I maintained a backchannel with the COO in case my broker's negotiations soured, and I needed to 'clean up' his mess) Puffed him up, then sent him into the negotiations and told him I will not accept a penny less. Very quickly after, the deal landed at $275k/year, 3% annual bumps, and a happy Tenant. In some situations, you need the other side to think you're absolutely nuts to maximize your position. This is not a political post 😜

@realEstateTrent It's very simple - just hope for the best. Focus on what's in your field of influence (e.g. family, friends, work), and don't sweat what you can't control.

Doubt it. This creates too much exposure for Sellers during the transaction process, and shifts the burden fully onto a Seller for representations made / documents produced. What happens when a Buyer closes escrow, and finds out the building square footage is off by 5%? It's always a good practice to give Buyer's a proper due diligence period just to avoid post-close issues. I've received 7-day DD offers before from Buyers, and I counter them with at least 15 or 21 days.

@realEstateTrent Save more 😂

Hey help ‘em out

@BillAckman Nice 😂

I couldn’t have said it better myself.

@YOCspread Bingo

@3NDeveloper Partner

Working on a development project which has environmental contamination (former gas station site). Not my cup of tea, but there is a long story behind this. Engaged my environmental consultant to perform a Phase 2 investigation, and to provide a recommendation on how to handle the matter. He does so. His recommendation feels too 'light' 🙃 I decide it's best to get a second opinion, and hire a very well known, national company for this. - Proposal is presented - Contract signed - Retainer funds wired Off to the races. ETA: 10 Business Days (ending last Friday). On Thursday, I send a follow-up to check-in on the status. "The report is under final review - we're expecting to get it to you by tomorrow" Okay - nice 🥳 Friday rolls around - no report. Monday rolls around - no report, but I get an email notification that I have a package being delivered by USPS. Tuesday - nada Today - my USPS package arrives. I open it. It's a gift box of fancy pecans, and a note from this environmental company about how important my relationship is to them 🤨 How much is this upcoming report going to end up costing me? 😂🤣

@skylarromines No and yes - not your conventional insurance. I have a Rep & Warranty from the Seller that the property never stored hazmat. Seller is a City with deep pockets.

@3NDeveloper Hope you got environmental insurance pre phase 2

@reelestateDave @Dodgers Unfortunately for us 🥲

@3NDeveloper @Dodgers Seems like someone was just having fun on costar 🤣

Is @Dodgers stadium for sale at a 22% cap? Seems like a deal to me!

Need to understand who your counterparts are, and adapt the negotiating style around them. In SoCal (LA) - you need to leave room in the offer to negotiate. These Sellers expect it, and need to go through the process of 'fighting' for their best deal. Only way that happens is if they provide counter, and get countered back. It is what it is. With Tenants/institutional players - I always provide the terms upfront, and (honestly) tell them there is very little room to negotiate. Take it or leave it. With LA-based Sellers, I leave a lot more room for negotiations. It's simply part of the process. I agree with David - it is akin to a poker game.

@twallyweb No luck needed. You got this.

Everyone please wish me luck on tonight’s planning commission

@pathfinder17m @FromWhiteCastle For a stabilized business with longevity, yes. Very low. For a brand new business that launched a few months ago, it’s interesting. Fashion brand with 13 customers in it when we visited (every other adjacent retailer was empty at the time), and this was a very small store.

@3NDeveloper @FromWhiteCastle $70K/mo gross sounds low for a retail business

I love working with 'mom and pop' tenants, but they have their quirks. One of my (more fun) projects was the conversion of an industrial building into a retail showroom - one of those rare situations where it works well. Space leased up quickly to a notable operator, and they eventually outgrew the space. Took it back out to market - 6,000 SF (not an easy pill for many to swallow). LOI comes in from a local business, and terms are agreed to within days so I request financials. TT financials finally arrive. The annual negotiated rent is equivalent to their entire 2025 Gross Sales. Oh boy😂🤣

@pathfinder17m @FromWhiteCastle They sent their P&Ls via text message with no explanation. Apparently, it's a brand new retail business that posted $200k in the first 3 months of opening. Seems interesting.

@FromWhiteCastle @3NDeveloper my thoughts exactly

I asked them to help me make it make sense. Apparently, they have been operational for only 3 months and posted over 200k in gross sales. P&L was accurate, but they should have clarified how new their business is 😅 Trendy tenant for a trendy building in a trendy submarket. Zero TIA, immediate rent commencement, and a personal guarantee. Might do a deal with them 🤷‍♂️

@3NDeveloper So you said yes immediately? 😁

@Tmac4real1 I believe in missing all the shots you don't take, but I also believe in not gambling with russian roulette 😂

@3NDeveloper Tenant:

@michaeljburry The subscription is worth every penny, and I have told all of my closest friends to sign up. Appreciate your long-form writing.

Thank you all for your interest in what I am doing here and on SS. I am actively working on posts some of you are expecting - GME Part 2, the Heretic’s Guide Part 3, the LULU and Palantir pieces. After these are done - or maybe before - I imagine the content and stocks covered will become more unexpected in nature. All paid subscribers today already have their lifetime subscription rate as long as they stay current. Those who received a subscription to Cassandra Unchained over the holidays have this month to consider continuing the subscription at the initial founding rate. On February 1, the subscription rate for new subscribers will move to $49/month or $439/year.

I never understood this 'scare tactic' of threatening to dump bonds purely to flood the market and hurt the US Government. It's tantamount to cutting off your nose to spite your face. Short-term: Seller will need to price the bond at a massive discount to market value, and will book a guaranteed loss. That $180B may transact for $120B-150B, depending on the intensity of the sale. Maybe even $100B. Seller takes that immediate loss. Bond buyers will scoop them up immediately, especially given that investments flow based on relative yields (e.g. US Treasuries yielding 5% will be substantially more attractive than, let's say, Nigerian bonds yielding X%). The more moronic consequence is that all sovereign bond yields are really priced relative to US Treasury yields, which are the baseline for 'lowest risk' assets. If USTs reprice, then sovereign debt reprices more intensely (credit spreads increase greater for 'lower quality' investments; in other words: literally every other sovereign debt in the market). Congratulations - you played yourself.

Dear Trump. Here’s a deal. Back off from Greenland and Norway will not destroy your economy by unloading the 180bn usd of your debt owned by the Norwegian Oil Fund