The idea that we ought to “treat others the way we like to be treated,” often known as the Golden Rule, has been the foundation for countless ethical, moral, and religious belief systems. This rule, while broad, has laid a foundation for understanding the good and the bad that has withstood the tests of time.
Inevitably, a basic understanding of the Golden Rule is key to maintaining healthy relationships. How can a property manager improve their relationship with their tenants? Put themselves in the tenants’ shoes and treat them the way they’d like to be treated. How can a syndicate sponsor improve their relationship with prospective investors? Again, they should put them in the investor’s shoes and treat them according to the Golden Rule.
While this basic ethic is obvious for many, it is also frequently overlooked. In fact, it seems one of the most common reasons we fail to develop the sorts of relationships we need for success is that we fail to think about what others might be thinking.
The importance of maintaining relationships is unavoidable in any industry. As long as a business—whether in commercial real estate or anything else—has a need for revenue, it will need to continue generating revenue from its existing customer base and convince additional customers the product or service is worth investing in. Both of these things require the careful building and maintaining of relationships. In response, all business people will need to be deliberate with the ways they interact with others.
Character and Consistency
When you meet a new person, you get a fresh chance to form a positive relationship. This is true for everyone we might happen to interact with, whether they are a prospective investor or anyone else. While we might not immediately know what we should say, verbatim, the Golden Rule at least gives us a basic framework for understanding what we should do.
Assuming you have a choice, what kind of person would you want to interact with?
To start, we want to know that the person we are interacting with is genuinely interested in our well-being. They want us to be better off, regardless of whether it directly helps them or not. We want to feel that the person we are speaking with cares about us, and consequently, if they can genuinely convince us that they do, we will be much more likely to want to do business with them.
We want to be able to trust this person and know that whatever they are telling us is true. In the commercial real estate space, anyone can claim that the investment they offer can yield a ten percent return on investment. But only some of the sponsors making this claim will actually attract the investment-base they need. Those that do, it seems, are the ones that able to illustrate the capacity to deliver on their promises.
At any given point in time, all prospective investors are going to have many different investment options available. Even within your narrow market, such as Chicago’s industrial real estate market, there will still be many competing alternatives. To attract capital, you must not only gain each investor’s attention, but also demonstrate that your offering is better than all available alternatives.
At first, this burden of proof seems almost insurmountable. But if you can begin by establishing a relationship with each of these individuals, your odds of distinguishing your firm from the unproven competitors significantly increases. In most cases, people would much rather invest with someone they know and trust than someone untested offering a marginally higher rate of return. Ultimately, it is as if the simple act of building trust is as good as delivering higher rates of return.
A sponsor that is hoping to attract an investor isn’t selling a specific property. They aren’t selling a specific return on investment. They’re selling a comprehensive package consisting of many different components, including possible trust. When trust is, in fact, included in this total bundle, its entire value significantly increases.
Building relationships can be challenging, but we all have a foundation that is remarkably simple. By continuing to adhere to the Golden Rule, by continuing to add value through trust, and by continuing to invest our relationships, we can position ourselves for long-term success. Knowing what to do isn’t the hard part—putting our words and ideas into action is what will ultimately make a difference.