May 12, 2024

In investing, anybody can get lucky once, twice, even a few times. But to succeed consistently for years requires a rigorous process and real discipline.

Alliance focuses relentlessly on the investing criteria and financial guard rails that have enabled us to deliver consistent high returns for decades.

We start by knowing what we’re looking for. Alliance invests in triple net lease properties, preferably (but not exclusively) in the Medical Office Building (MOB) sector, and within the $1m-$25M price range. We also look for growing markets, strong demographics, and quality tenants.

These investment criteria help us narrow the field of possible investments so we can focus our time. By specializing, we also end up hearing about great deal opportunities that others miss. We have a network of friends in the real estate industry who think of us and send us a heads-up when our kind of property is coming onto the market.

Properties that fit our criteria still need to go through a very rigorous diligence process before we’ll commit our investors’ capital. This is where Alliance really shines.

For Alliance, due diligence is not a “box checking” exercise. Too many real estate investors get caught up in the pursuit of a big deal. But the goal is never getting to “yes.” The goal is to only invest in killer deals.

We do this, in part, by not treating assets as abstractions on a spreadsheet. Good diligence and good deals come from a deep understanding of context. 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 want to have a personal conversation with the previous owner(s) to get a feel for the situation.

To really understand a deal, I talk to people who know more than I do and really listen to them. 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 guard rails 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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