WING TIPS

I recently posted a saying on social media that I keep in mind: “It doesn’t matter what others are doing. It matters what you are doing.” There is a corollary statement that is just as important in business and life: “It doesn’t matter what others are getting. It matters what you are getting.” Emphasizing this point in a business transaction some years ago helped me navigate a tense situation and close a very lucrative deal.

I was buying an apartment building on Beacon Hill in Boston. The building was on the higher end of the price range, but for my purposes, this was not a ‘deal killer.’ I had different plans for the complex and was more interested in getting the terms I needed, including the owner taking back a sizable second mortgage.

We agreed on a purchase price which made the owner very happy. To incentivize him to take a second mortgage, I also decided to pay him a much higher interest rate on the second than he could get in any other secured investment at the time. He agreed to give me the second mortgage, which enabled me to execute my plan.  He got what he wanted, and so did I.

“He Took Me To The Cleaners” 

I heard from the real estate broker that the seller was thrilled with the deal. He told the broker he believed that I was an amateur and had negotiated a bad deal for myself and a great deal for him.

When we were closing and signing the documents, the seller noticed that I was being dispersed a large amount of cash. He was confused as to how I, as the buyer, was getting money at the closing. I didn’t offer an explanation and only said that was how I had structured the deal. The seller became visibly irritated because of his lack of understanding of my deal structure and the cash I received. In his mind, he had given me the second mortgage because I didn’t have enough money to buy the building.

I reminded the seller that when we both walked into the room, he was delighted with the agreement we had negotiated. It wasn’t until he had seen aspects of my side of the deal which he didn’t understand that he had become irritated.  My polite and respectful advice to him; “It doesn’t matter what I am getting. What matters is what you are getting, and you are getting everything you wanted.”  Still aggravated, the seller reluctantly acknowledged this fact, and we closed the deal.

The Rest Of The Story

The seller didn’t know that I had a different purpose for the structure. I planned to convert the building from apartments to condominiums, and my financing arrangement with the bank considered this fact. My initial goal was to get ownership of the building with as little cash out of pocket, and his second mortgage helped me do just that. After closing, I put a new financial structure in place that reflected the new plan, which also took out his second mortgage, so I never had to pay him the higher interest rate. Finally, 80% of the current tenants qualified to buy their units, and the remaining units sold quickly. It was a relatively fast and lucrative deal for me.

A Quote To Consider!

Focus on yourself and what you want, not others and what they have.

-- Captain William “T” Thompson, Esq.