Why Big Real Estate Deals Need Structure (Literally)

The story about the discovery of an increased potential for major earthquakes on the West Coast should be an important reminder for real estate investors and professionals instead of a story that gets passed by. It should be a reminder to explore or verify the status of your building(s), whether residential or commercial, and revisit your insurance coverage.

 

Two specific experiences I have had over the past 30 years come to mind upon reading the below linked story. The first came during my time working in the Los Angeles area. A broker and investor event I attended had a geologist speaking about and showing photos of how he examines building foundations to determine whether or not they could withstand earthquakes. He went into details like the how the direction of cracks in the walls was an indicator. Knowing this is huge when inspecting a building for a potential transaction.

 

Years later, the other experience was seeing a presentation from an investor that was part of a group which lost more than $10 million on a project. He explained that their large apartment building had a major fire which forced evacuation. It turned out the building was under-insured and the eventual settlement left them millions of dollars short of what they needed to renovate. They had to walk away and lose significant money. He was able to return to investing because of his ability to consult and advise building owners about all of the steps to take to be prepared for significant emergencies, and went on to become a successful investor again.

 

Those factors are (or SHOULD be) major parts of preparation to acquire or sell properties, especially on the West Coast. However, they don't show up when you "only" run the numbers when making determinations about a potential transaction. Finding or making a property or opportunity meet the aforementioned standards could either save or make millions of dollars. Having the right information and being "first in" on a deal can be a huge gain. If your plan is not thorough enough, and you don't have all of the research you need, in this case, it would be your "fault" it didn't work out.  

  

https://abc7.com/post/earthquake-san-andreas-fault-cascadia-subduction-zone-could-linked-trigger-double-quake-oregon-state-university/17967234/