I've been working at a small fund dealing in Manhattan and Miami investments for 3 years, and I am constantly noticing how slow and ineffective the managing partner is at getting deals done. Now, I get a small salary, but most of my income is made from a bonus based on a percentage the deal flow, so I mostly rely on deals to be done in order to make a living. For the last 2 years, the managing partner has pretty much sabotaged every deal we've come across and it's really taking a chunk out of my lifestyle. What should take days, takes us weeks to get done. If I introduce a deal, he lingers on it for weeks before making an offer, then complains that it's gone by the time he acts.
This is an actual example and did happen:
I get access to a great property in the SoHo, a beautiful corner pre-war office building. 10,000sqft floorplates with almost 360 light and great views over the top of most of the surrounding buildings. The retail is so prime, it makes me salivate.
Day1: I tour or canvas the building/area the same day I find out about it. I want to know everything going on in the immediate area and take this into account with my analysis. When I get back to my office, I do a quick write up and analysis, and it looks really promising. I call up the managing partner and he wants to take a look. Great.
Day 2-3: I've distributed all the received DD material (I always skim the DD material asap on an interesting building to make sure nothing pops out). Nothing looks out of place, pretty straight forward deal as far as I can tell. I call the partner to make sure he's received everything and is reviewing. We arrange a morning call to discuss the details after he reviews the materials. I am finishing a more detailed 10 year model of potential returns, cashflow projections, IRR and etc. I recommend flipping the retail and cashing in on retail rents at a multiple of what the current tenant was paying.
Day 3-4: Call the partner to discuss the details. He hasn't even looked at the numbers or the DD material yet. He will do so ASAP. I foward him my more detailed analysis.
.....(Note, this partner lives outside of manhattan, so he drives in to look at deals).
Day 12: He calls me and tells me he just visited the building and likes it. I suggest an immediate offer (we have a template) and discuss terms. I suggest sub 30-day closing, as this thing will not last long in the current market. his assistant is in charge of writing up the offer. "We'll submit it by tomorrow".
...
Day 20 (hopefully): The offer finally gets submitted with 60 day dd, 30 day closing, an obscenely low deposit, etc etc. I call him up completely dumbfounded because I know that this offer is going to be either ignored or completely countered and this will set us back at least a week compared to a more aggressive buyer.
Usually, this is pretty much the end of the line as someone invariably offers the seller a better deal, and the managing partner complains about how we're always "2 steps behind" and blah blah.
If, on the off chance that the seller entertains the deal at all. the following happens:
Day 22-30: Contract is negotiated by lawyers. No one other than me has even looked at the DD material yet, except for a cursory glance.
Day 40: Contact is still being negotiated for random reasons, but the partner is at least looking at the DD materials now.
Dat 41: Finally in contract. I am surprised.
Day 50: Passive partner has to fly in from miami to inspect the building.. every...damn...time.
He's always completely passive on the deal, as he refers to me on everything, so he might as well not even be there. Just a time sink. He gets a commercial leasing broker to tour the building with us and project the future rents for office and retail spaces. This takes him about a week or two, and the broker just quotes current market prices and then adds a 3% perpetual growth rate in argus, so I have to spend the rest of the week explaining why the broker is an idiot and why it took this guy so long to do such a basic projection.
Day 51: Managing partner has to randomly fly out of town for 2 weeks. Apparently it's to raise money for the deal (what?!).
Day 65: Partner wants 15 more days to review.
Day 65-70: Spend the week debating the potential of the building with the leasing broker, the costs to "renovate" the building despite it being in a well maintained and updated condition.
Day 70: I get a call from him "I don't know, the entry cap is so low, we are hardly breaking even from financing."
We discuss it and he decides to think about it until the end of the day. At 6pm on a friday, he emails everyone to say he's backing out of the deal. He doesn't pick up the phone.
Day 71: I get a call from him "I changed my mind, lets get back into this deal". I call the seller, hoping to salvage it. It's already in contract again and will close in 10 days. I call and relay the bad news. The managing partner complains about how we're always 2 steps behind and how there are no good deals. I want to reach over the phone and strangle him.
Day 100: Read in the paper that the buyer repositioned the retail and flipped the property for almost DOUBLE what they paid for it.
I am at a loss for what to do. I've invested so much time and money (living expenses on an almost non-existent paycheck) that I don't know if I can even afford to move on. Any ideas?
Leave. The day you feel smarter and more capable than your superiors is the day you should consider leaving.
Seems frustrating.
I would sit down with him one and one and politely discuss these issues.
Lol right, thats exactly what a managing partner wants to hear from his bitch analyst. "hey managing partner, you cant raise capital for shit"
Leave. Jobs like yours aren't a dime a dozen, but you've probably got the resume to make a move. You're clearly working for a jackass.
Wow, how is this guy even a partner? I'm assuming he came from $ and made his own firm, or he is older and just doesn't have the drive anymore. Either way he shouldn't be making the decisions. Stay put for the time being. Network and get out as soon as the right opportunity comes your way.
Best time to look for a job is when you have one.
Well the main reason I joined was because the passive partner (PP) is a long time family friend and very successful in the field. He is supremely well connected and intelligent, but also extremely busy. The problem is that he doesn't know anything about new york real estate. Since he's so busy doing his thing, he needed someone like me to be his eyes and ears locally. The PP seems to be the deal maker, not the MP. Every deal I have heard about them making has been via the PP. Now, the PP has full faith in my decision making (technically, so does the MP), but the MP doesn't make a move without hearing directly from the PP, who is pretty much uninvolved and neutral. It's like trying to get a 4 headed chicken to walk straight.
I actually have been doing job interviews, and the major problem comes up when they ask me how many deals we've closed. I'm also pretty young, so that might not help either. Major flags are raised when you work for a firm that doesn't buy anything for the majority of the time you are working for them, especially when you are the only other person on the team. Its me, the passive partner and the managing partner. I mean, how would you react if you interviewed a guy claiming to be the main consultant/analyst for an investment group that doesn't have any investments in the city?
If I tell the truth, and call out faults of a higher up, I look bad and people might think I'm just passing blame. If I don't, I look like I am not a closer or a go getter or something. It's really been kicking my ass for the last few months. I try and upsell my abilities and responsibility, but without evidence or some kind of solid proof that I kick some ass, I've got nothing to stand on.
The other issue is my confidence may be shot. I don't even know if my modeling/presentation skills would parlay into another company due to how informal our process is.
I wanted this job to be a portfolio and capital building exercise. Something to give me a solid financial and reputational foundation to start making my own moves in the industry.
dude, you are fine. take a deep breath, look in the mirror, and tell yourself that "you are the shit". Keep telling yourself that until you believe it. Step one would be to boost your confidence, because no one is going to take a chance with you if you don't even believe in yourself (not trying to be an ass at all. You would be surprised by how much people can read into your confidence in an interview, date, or any activity for that matter).
Secondly, I see where you are coming from with the whole family friend ordeal. If the passive partner is truly a family friend, then go to him and voice your opinion. He is vested in this company so I am sure he either is aware of the issues you are having, and if not, it should be brought to his attention.
Regarding interviewing, never talk bad about the firm you are working for. Be ready to explain that you have underwrote 10/20/50/100 deals, but ultimately you have only closed x because your firm is really selective and the others didn't fit into your firms strategy. I get what you are saying about not having a lot of deals to show for it, but as long as you turn that negative into a positive you will be fine.
Fair enough. I will work on this.
I have actually voiced my opinion to the passive investor. He 100% understands where I am coming from but admits that he can't do much because the MP is the one bringing the majority of the money to the table. I am in the process of trying to find ways to transfer some of the MP's responsibilities to myself, allowing us to at least process potential deals faster. If I can find a way to get this to work, I'd be a lot better off than if I started fresh elsewhere.
"He 100% understands where I am coming from but admits that he can't do much because the MP is the one bringing the majority of the money to the table."
Ding ding ding. Welcome to Real Estate. This is far from unusual and most shops are terribly unreliable for this exact reason.
The best thing to do is to rally support from all the other decision makers, have them on your side when you discuss the deal with the MP, and then team up to address his problems in a scheduled meeting with the express purpose of finalizing the offer. If you can get everyone else on board he will have a much harder time damaging your deals.
Rally up all the other decision makers as in... the passive partner, the only other person at his shop? lol. Yes i completely agree that the more people in your firm to support why you believe certain investments are a solid play, the better chance you will have the decision maker putting his stamp of approval on it.
Ultimately the OP is in a tough position because there is a total of 3 people at his shop, and the other person besides the dumbass managing partner is hands off and isn't even located in the same state (Florida vs NY). Voice your opinion to your family friend and explain that he needs to step up, or leave because you are wasting too much valuable time in your career. I am assuming you are somewhere around 5+ years of experience. If things do not change in the immediate future and you stay there any longer you are really hurting yourself.
I think the best thing for me to do is find something better.
So here are my options:
1) Find a new employer: I will need the passive partner to let me take some credit for a major deal that was wrapping up when I joined them. This should give me some solid pull in the job market. My upside is pretty much capped but at least I can make a living until something better shows up, possibly working with my current firm on the side in hopes they do close something in the near future and I get something to show for my effort over the last few years.
2) Start my own fund: The passive partner has shown interest in investing with me. I was personally waiting until I had some more closings under my belt before doing this, but this may be an option. Hopefully the managing partner might back me up as well, because he is a major fan of my work, all things considered. Ideally, I'd start a fund based around both physical real estate and investing in real estate related services (startups, brokerages, etc).
Obviously, I'm more interested in option 2. I think it's time for me to practice what I preach, and stop having to be beholden to the whims of a superior of some sort. I already have some people in mind who showed interest in this idea as well.
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