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Taking your time with due diligence

Measure twice, cut once.

That’s a good motto for construction, and for investing.

For some, due diligence means box checking, and a desire to “close the deal”.

For Alliance, the goal is to confirm that it is a property worth acquiring and what the right price should be.

A good diligence requires you to gain a deep understanding of the context. I like to take my time with due diligence.

I make a point of personally visiting every single property, before Alliance buys it. I want to see it with my eyes. I want to walk the neighborhood and get a feel for the local community and infrastructure

I always ask to sit down face-to-face with the seller, tenants, selling agent, and other stakeholders.

It’s incredible what you can learn when you know the right questions to ask… and make the time to ask them in person.

Not everything important is on paper, and Alliance goes the extra mile to learn what we can.

Of course, it doesn’t matter how good a property is, or how thorough our diligence, if the price is wrong. The numbers absolutely must work, so we apply rigorous financial guardrails around the deals we will do.

Any real estate professional can run a decent financial analysis. Staying disciplined is much harder. At Alliance, we are willing to be creative, as when we started buying for cash up front. But we remain extremely careful about the preferred returns we promise investors, the cash buffers we’ll need to protect investments, leverage ratios, and our exit plans. 

Over many years, Alliance has built a sterling reputation. We don’t over-leverage, don’t over promise, and don’t ask investors to bail us out with additional cash infusions. We look at every deal, apply only appropriate levels of creativity, and accept that sometimes, the numbers simply don’t work. Our willingness to walk away is why we deliver consistently excellent returns.

Wishful thinking has been the undoing of countless investors. With our rigorous diligence process and financial guard rails, Alliance won’t fall into that trap. Optimism is for gamblers. Top level investors focus on discipline.

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