The complexity behind closing day

Now two months since we closed on our latest multifamily acquisition, I've been reflecting on something important. While our investors and email subscribers receive regular updates on the general progress of our deals, there's a whole world of activity happening behind the curtain that is vital to ensure a smooth closing day.

Today, I'm bringing you behind the scenes by sharing three main lessons we’ve learned over the years that help ensure a smooth closing day. 

On site just after closing day at a recent acquisition

General Partners must be ready to jump on small issues that could slow down the closing process.

While each person involved in the closing process – from lenders to title agents and more – play an important role, the General Partner ultimately bears the responsibility for getting a multifamily deal across the finish line. This means being vigilant and responsive to any small issues that arise, as these day-to-day tasks could be the difference between a successful sale and a delayed closing.

A recent example: Last year an insurance provider mistakenly sent the wrong form and designation to the lender, leaving me with the task of finding a solution just one day before our scheduled closing. Unfortunately, my usual insurance contact was out of town and unavailable to help. 

I had to act quickly. I worked to identify another contact within the insurance office who could provide the correct form. Despite the initial setback, we were able to resolve the issue and proceed with the closing as planned. 

Blog only tip: When finalizing agreements with services providers, such as insurance coverage, always inquire about alternative points of contact in case your primary contact is unavailable. This ensures continuity of service and minimizes the risk of delays or disruptions.

Prepare for the unexpected 

Another key takeaway from the example above is the importance of anticipating any and all obstacles before closing day arrives. As the saying goes, hope for the best but prepare for the worst.

This mindset is something I honed through my past experience as a SWAT Officer where having contingency plans is paramount. It involves envisioning the worst-case scenario in every aspect of an acquisition and devising multiple strategies to address those scenarios. It’s all about being flexible and adaptable. 

While the stakes are lower in real estate scenarios, the potential outcomes of last-minute hiccups should not to be taken lightly. 

Minimizing these risks protects your investment

Keeping a closing date on track saves you from not only the frustration, but also from a potential loss of revenue. Pushing back a closing by a few days or weeks might not seem like a major issue at first glance, but it’s important to put the situation into perspective. 

What do I mean by this? In pretty much every real estate transaction, the buyer places earnest money down, and by closing day this money would be non-refundable. In the event an issue arose and you could not close on your purchase, you could stand to lose tens of thousands of dollars of earnest money.

Bringing it all together for a successful close

As you can see, there's a lot happening behind the scenes that impacts the success of our investments at Invest Wise Capital. As we continue to explore multifamily opportunities, our team keeps these and other lessons at the top of our minds. Our proactive approach and diligence are key to safeguarding the success of our investments and ensuring a smooth journey to closing day.