The Pre-LOI Litmus Test: Are You Chasing a Deal or Building a Business?
This one is for the operators, the active investors, the teams behind the deals...
In multifamily investing, there’s a palpable excitement that builds when a promising deal hits your inbox. The Offering Memorandum boasts impressive numbers, the location looks good on a map, and the pressure to act feels immense. This is “deal fever,” and it’s one of the most dangerous afflictions for an aspiring investor. It narrows your focus to a single question: “Is this a good deal?”
But what if that’s the wrong question entirely?
The most successful operators—the ones who build lasting wealth—ask a different question, long before a deal ever crosses their desk: “Is my team ready to execute on a good deal?”
The difference is profound. One is a transaction; the other is a business.
Your Team Isn't Part of the Deal; Your Team Is the Business
Many novice investors think they’ll assemble their team after they get a property under contract. They see a checklist of professionals—a commercial lender, a property manager, an SEC attorney—as items to tick off during the due diligence period. This is a critical mistake.
Your expert team isn't just a supporting cast for a single transaction; it’s the foundation of your entire investment business. Having these relationships in place before you even consider submitting a Letter of Intent (LOI) accomplishes several goals:
Credibility: When you submit an LOI, brokers and sellers want to know if you can close. Naming your experienced lender, your attorney, and your property manager proves you are a serious, professional operator, not a rookie hoping to figure it out as they go.
Speed & Accuracy: With a team in place, you can underwrite deals faster and more accurately. Your property manager can provide realistic operational expenses, your insurance broker can give you a real quote, and your lender can confirm financing terms, making your financial analysis robust and defensible.
True Due Diligence: The 30-day due diligence clock is a sprint. It’s not the time to be interviewing contractors or vetting SEC attorneys for the first time. True due diligence begins months or years in advance by building a roster of trusted partners who are ready to deploy the moment a viable opportunity is identified.
Stop Chasing and Start Building: Chasing a deal means you react to whatever the market gives you, often scrambling to perform due diligence with an untested team. Building a business means you proactively create a robust acquisition framework capable of handling any deal that fits your criteria.
At Gold Moon Capital, we didn't start by looking for a property. We started by building a foundation—a network of legal, financial, and operational experts. Our investment strategy of targeting value-add assets with +16% IRR potential is only possible because our team and systems are in place before we ever make an offer.
So, before you analyze another rent roll or schedule another property tour, take a hard look at your own operations. Is your team assembled? Are your systems in place? If the answer is no, the most valuable investment you can make right now isn't in a property—it's in your own foundation.
Interested in learning more about how a prepared, systematic approach leads to superior returns? Connect with the Gold Moon Capital team to discuss our investment philosophy.
