Techniques for maintaining an edge in real estate investment.

Competing for the real estate investments has always been fierce; and that competition is now getting even tougher. The recent insurgence of Real Estate Investment Trusts and aggressive vulture funds has raised the rivalry for commercial property to new heights. As a result, we at Essex Capital

As a non-institutional real estate investment and development company, we often find ourselves in competition for properties with major national and international players. While we would like to credit our success to a magical formula, we know that there is no wizardry to an investor's ability to successfully secure important real estate opportunities. Our experience has taught us that there are a number of clear-cut guidelines that can be employed to level - or even tilt - the playing field in favor of the non-institutional investor.

Make a Commitment: One of the ways smaller investors combat perceptions and distinguish themselves in the market is through performance. Unlike many of the larger institutions, real estate trusts or funds, entrepreneurial investors have the ability to make commitments quickly. Investors with quick reflexes can often capitalize on opportunities before their larger, more institutional counterparts lumber into the picture.

Along with speed cornea the second half of this rule: Once the commitment is made, keep it. The quickest way to lose credibility is to fail to deliver what you have committed to.

Understand the Needs of the Seller: Typically, when structuring a transaction with a lender, bank or institution, an investor can expect to be dealing with a mid-level employee with his (or her) own agenda. Being sensitive to the bureaucratic issues that the lender might be dealing with, and understanding their needs can help close the deal faster and aid the lender in enhancing his stature in the company. Even when dealing with the most senior persons in an organization, understanding their needs and structuring the deal to meet those needs while achieving your own objectives will make closing the transaction easier.

Fight the Temptation to Become a "Flipper": No matter how tempting, an investor with an eye toward the future ought to fight the urge to flip properties. In the short-term, immediately selling the investment may be a means to profit, but, in the long-term, the investor may lose the respect and cooperation of sellers, or he won't be taken seriously as a closer of properties. Sellers are hesitant to sell to "flippers," fearing that (1) he might pull out of the deal prior to closing if a buyer can't be secured and (2) that the seller will be embarrassed by the higher price being achieved on the flip.

Don't Lose Sight of the Forest for the Tree: Entrepreneurs who rely on brokers for deal flow need to be cognizant of the value the broker brings to the deal; pay the commission, finder's foe or referral fee. The best way to insure that you are a broker's or finder's first stop is to pay the commission quickly, without reduction. This is by no means an altruistic approach. Failing to pay commissions is the surest way to insure that you won't see any future transactions that brokers are privy to.

Do Not Over-Negotiate: A sharp investor must understand the seller's limits and be able to feel out the absolute floor price. While REITs and other large funds may choose to argue over pennies, a smart investor can steal the asset away by knowing when the negotiation is over. Going for the last nickel may result in you losing the deal. This does not mean you should over-pay for assets. Negotiation is an art, not a science. Learn to read the negotiator to know how much room, if any, it left.

Don't Waste Your Time on Vanilla Properties - Have Some Vision: Unlike the beginning of the recovery, when smaller investors could buy institutional grade properties at significant discounts, standard, institutional-quality investments are now being won by institutions and larger investors, including the funds and REITs who are willing to pay more. Entrepreneurs should be focusing on opportunities that "have a little hair" on them. In other words, entrepreneurial investors need to look beyond the institutional grade opportunities and have a strong sense of vision in order to win at the acquisition game. An investor who can see and unearth the gem in the deal is an investor with vision - who will prosper favorably in the acquisition game.

Be Willing and Prepared to he Flexible: Real estate opportunities appear and disappear very quickly, especially in today's fast-paced market. An entrepreneur who is able to move and think on his feet and be flexible to changing deal terms is more likely to capture the deal by striking a bargain that meets the needs of all the participants.