The FORT Podcast: Step by Step Acquisition Process at Fort Capital – How You Transact Matters!
On this episode, Chris breaks down how Fort Capital transacts and acquires properties. He starts with the company’s emphasis on how important their process has been to their success, who’s involved, and what type of deals they pursue. Then he breaks down each step of the acquisition from the time a deal is brought to their attention to closing. Enjoy!
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(01:12) – How You Acquire Properties Matters
(03:03) – Who’s involved in the process?
(03:31) – Pursuing Off-Market & Light-Market Deals Instead of Auctions
(04:53) – Acquisition Consultants
(06:36) – Running a ‘Quick Check’
(08:00) – Deal Pipeline Folders
(08:45) – Weekly Deal Meetings
(12:13) – Investment Committee Meetings
(12:53) – Drafting an LOI
(13:45) – Project Kick-Off
(15:19) – PSA (Purchase Sale Agreement)
(15:54) – Writing an Investment Memo
Listen to FORT #81 for more details on Investment Memos
(18:33) – Raising Capital
(21:07) – Bank Financing
(22:50) – Getting Entities Developed (Bank Accounts, Titling, Administrative Tasks)
(23:19) – Property Management Due Diligence
Listen to FORT #97 for more detail on Due Diligence
(23:48) – Huddle-Up Before going Hard on Our Money
(24:38) – Wrap Up
Episode Summary
With an adept understanding of market dynamics and a keen eye for lucrative property investment opportunities, Powers has solidified his and Fort Capital’s footprint in the Texas real estate landscape. The episode dives deep, shedding light on the intricate, multifaceted, and often challenging world of real estate acquisitions and investments.
Navigating through the bustling arena of property investment, Powers elucidates the comprehensive process that we adhere to when executing deals. Us at Fort Capital, recognized for its strategic acquisitions in the real estate domain, maintain a vibrant and continuous process involving several team members, each playing a pivotal role at various stages of each deal. At the essence of our strategy is a profound appreciation for off-market or lightly marketed deals, which are typically shielded from the ubiquitous auction processes. We employ a three-pronged strategy to identify and acquire such properties: nurturing robust relationships with brokers, engaging strategic acquisition consultants, and leveraging internal deal sourcing.
Powers underscores the paramount importance of the transaction process in real estate deals, emphasizing that it’s not merely about securing a good purchase price, but ensuring a smooth, efficient, and effective buying process. This not only minimizes internal friction but also fosters positive relationships with external stakeholders, including bankers, brokers, and vendors. The podcast navigates through the company’s detailed and strategically crafted process of keeping property lists up-to-date, which stands as the backbone of the firm’s smart investment moves.
An integral part of our acquisition strategy involves the deployment of acquisition consultants. These individuals, or sometimes entities, work in tandem with the firm, facilitating a consistent flow of deals by collaborating with top real estate professionals and utilizing the resources, processes, and leads available at Fort Capital. The consultants, sometimes brokers, are integral in ensuring that we not only identify but also capitalize on off-market deals, providing them the first look and opportunity to make a bid and acquire.
The strategies adopted by us aren’t merely transactional in nature. The firm goes above and beyond, implementing a detailed review and underwriting process to determine the viability and profitability of potential deals. Quick checks and thorough underwriting processes, sometimes involving two-page models filled with assumptions, or in-depth models involving discounted cash flow analysis, are part and parcel of our approach to ensure each deal is not only viable but also aligns with us and our investors’ financial objectives.
Capital raising forms a crucial component of the acquisition process, with the team at Fort Capital engaging in a detailed process to determine the capital stack, ensuring it aligns with our business plan, and maintaining transparent and continual communication with investors. We employ various strategies to secure capital and ensure each deal is financially viable, aligning with investor interests and ensuring optimal profitability.
Bank involvement and securing loans play a pivotal role in the acquisition process, where we ensure each deal is not only financially viable but also maintains a level of liquidity and financial security. We send deal packages to at least three banks, ensuring we have a variety of options and financial strategies to select from. Every term sheet, even those not agreed upon, are stored and utilized for future reference, aiding in data analysis and future deal negotiations and strategies.
Administrative and preparatory work forms the backbone of each acquisition, with the team setting up entities, drafting legal documents, setting up bank accounts, and liaising with the title company to ensure every deal is not only legally compliant but also maintains a level of operational efficiency. Property management, along with other team members, conducts detailed due diligence, ensuring each property acquired is thoroughly examined and that all legal and operational facets are in order for a smooth transition post-acquisition.
The FORT is produced by Straight Up Podcasts