Commercial Real Estate Pro Network: Recent Episodes
Commercial Real Estate Pro Network
Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss today's opportunities, problems & solutions in Commercial Real Estate.
J Darrin Gross
I'd like to ask you, Jason Leeds, what is the BIGGEST RISK?
Jason Leeds
I don't know if I have a specific thing off the top of my head, but one of the quotes I really like when I when I think about risk is that it's not the things that you don't know that get you in trouble. It's the things that you think you know for sure that just aren't true, right? I think that was Mark Mark Twain, and so I think what that means for us and and in our business is really around just always always turning over rocks and trying to figure out what's next. I mean, we're we're an engagement business, right? And we're there. There's a lot of things competing for people's attention and their time and their presence now. And what our goal is is to you know help make spaces that whether they're in offices or restaurants that people want to return to again and again and again. And the only way to do that is to continue evolve, continuing to evolve, and so you know the biggest, I guess, the big biggest risk. What that means for us at the end of the day is just staying static.
https://www.dartcorenterprises.com/
Today, my guest is Alan Fruitman. Alan Fruitman has helped more than 1000 investors purchase several billion dollars of triple net properties. Tenants include Chase Bank, Chick Fil A, Chipotle, McDonald's, and many others. He also wrote the triple net property book,
https://1031tax.com/
J Darrin Gross
I'd like to ask you, Alan Friedman, what is the BIGGEST RISK?
Alan Fruitman
The biggest risk is what comes next. I'll call it the unknown. So we live in a world of the internet, Amazon, artificial intelligence, and I think the biggest risk is trying to really understand and make value judgments of what's coming next? What tenants will be here? Blockbuster Video disappeared. It's no longer needed. The world evolved, and it's no longer needed. So I mentioned a lot of tenants through this podcast. Which ones will be here in 10 years, 20 years, 30 years? What will AI replace? What will Amazon replace? Well, let's go back to McDonald's. When you're driving down the street in this year 2046, 20 years from now, are you still going to be hungry and not be able to order it online and now? Delivered on your lap when you're between appointments and need to catch a quick meal, I think so. If you're if you're Firestone Tire, Amazon can deliver tires to you in your garage, but who's going to put them on? So I think there's certain industries that will pass the test of time. Will Walgreens be here in 20 years? I don't know. Amazon delivers pharmaceuticals, and and other companies deliver. Mark Cuban as a delivery company for pharmaceuticals, and others will do more and more of that. So I think understanding what comes next and making value judgments in my world-that's the risk we need to be prepared for.
https://1031tax.com/
Today, my guest is Dan Wardrope. Dan Wardrope is the founder of Flexible and the author of The Instant AI Agency an Amazon best-selling book that reveals a radically different way to make money with AI in 2026, and in just a minute we're going to speak with Dan Wardrope about How AI Can Help Your Business.
https://www.skool.com/ai-automation-agency/about?utm_source=skooldotcom&utm_medium=website&utm_campaign=discovery_search_group_link
J Darrin Gross
I'd like to ask you, Dan Wardrope, What is the BIGGEST RISK?
Dan Wardrope
Yeah, so I explained at the start of the call by Journey, which has took me all the way from being a basketball player. To starting a job, to typing that into Google, make money online, to running an SEO agency, to selling other people's products via affiliate marketing, to running a paper lead agency, to getting involved with AI. At every stage of that process, there was a massive obstacle, or a massive. There was something in that in my journey at that point in time that said, "It's all going to hell. It's all over. You might as well give up now and and go get a job somewhere. But from my experience, and I've been doing this a little while now, is that every time there's an obstacle or a point where I'm holding my hands up and going, I can't do this anymore. That's when a breakthrough is made, and that's when you're able to innovate and go to the next level. So the biggest risk for me personally is to not look forward to that moment in time, to when the next thing's going to happen, and not and not tackle that as an opportunity, and turn the turn my back on it, and give up because it's hard. It's hard to do, especially as you get a little older and you've got less energy than you used to have. So for me, adversity, looking at adversity and not facing it, is is the biggest risk for me personally, if that makes sense,
https://www.skool.com/ai-automation-agency/about?utm_source=skooldotcom&utm_medium=website&utm_campaign=discovery_search_group_link
Today, my guest is Nick Khamsopa. Nick Khamsopa is the CEO of Hudson Housing Lifestyle, building workforce communities across the Hudson Valley, where working families truly belong. And in just a minute, we're going to speak with Nick Khamsopa about the affordable housing crisis.
https://hudsonlifestyle.com/
J Darrin Gross
I'd like to ask you, Nick Khamsopa, what is the BIGGEST RISK?
Nick Khamsopa
Yes, based on this is the seed capital, because the seed capital that we need to pay from applying the property from 3 million or 30,000 per unit, we need to spend that two and a half to $3 million to entitle it. When it's fully entitled, we gain parking six to $8 million per location equity. So we went from 30,000 to 120,000 per unit. When these times 100 unit with over 12 million, so the biggest risk is to explain it to an accredited investor, saying that we need help procuring the capital to tie or secure this land, so we can engage in pre-development and underwriting the grant right away, because it takes six to nine months for that grant, and the capital come in from the bank to for the construction bank to close on the loan,
https://hudsonlifestyle.com/
Today, my guest is Muriel Touati. Muriel is a French entrepreneur based in New York City, and the CEO of Exit 3D Studio. After building her own business and sitting on the buyer's side, she now helps B service founders build businesses that are transferable and buyer ready. And in just a minute, we're going to speak with Muriel Touati about how to close the four structural gaps that silently kill valuation.
https://www.exit3dstudio.com/
J Darrin Gross
I'd like to ask you, Muriel Touati, what is the BIGGEST RISK?
Muriel Touati
Yes, upon me, the biggest risk is to not have that acquisition engine, because not only it helps solve the four structural issues at once, if it's done well, but also if you decide to really sell, you will get a higher valuation. You will not get discounted. You will not get all this earn out or this alt back. You will get what you want, because a business that is only working with referrals has a 60% 60% customer concentration, like 60% of the revenue are coming for, like, with from two clients, let's say world of mouth, the founder is still managing everything, or they are another person taking care of one key things, it's also a risk, like you want the knowledge to be amongst everybody, like have a good knowledge base, so anybody can be replaced if you don't have the system, all of that, so this acquisition engine and all the system around help solve all those issues and the revenue predictability and also when you go to sell instead of getting one time or two times your EBITDA you can get a beautiful four five or six time EBITDA, because business buyer like me could be, you know, buyer operator, we want those, you know, turnkey business, and also the big guys like the private equity, they love this business too, and they are ready to pay cash for it, so it's a win-win.
https://www.exit3dstudio.com/
Today, my guest is Mark Halpern. Mark is the CEO of Wealth Insurance.com and one of Canada's top estate planning and life insurance advisors. For over 30 years, he's helped successful families and business owners pay less tax and leave more legacy with a mission.
https://wealthinsurance.com/
J Darrin Gross
I'd like to ask you, Mark Halpern, what is the BIGGEST RISK?
Mark Halpern
Great question, Darrin. And I'm glad you're asking it. So, I'm on a bit of a mission, Darrin, and that is I want to inspire and educate professional advisors to be incorporating this insurance and philanthropic planning into clients' estate plan, so I'm on a mission for that. Okay, because people don't know about it. So, what is the main thing for me that the biggest risk is, is that everyone should know that they have three possible beneficiaries to their estate: three: one is family, one is the tax department, and one is charity or impact, and each of us can only pick two of those. Which two would you pick? Most people would say I take family and I take charity. So, with proper planning, you can be remembered for leaving a lot of money to charity, as opposed to writing a big check to Washington, and this is all legal, all given the kiss of blessing from the tax department, that people don't realize that charitable donations on death can actually be used to mitigate up to 100% of estate taxes, 100% that means for every dollar of tax that you owe, and you give $2 to charity, you turn $1 of tax into $1 of charity. Now you remember for giving $2 to charity, as opposed to $1 to the government. So that's the risk is not getting to that, as I said before, while the sun is short. Design it, because a lot of people have become very successful in their life, but they want to become significant, and your kids, you know, this is not about disinheriting the family, of course. You know, charity begins at home. Giving to charity is not about disinheriting your kids, it's about adopting causes that you care about and disinheriting the tax department, and that gives people a tremendous feeling of accomplishment in life. I've had clients who've tried thinking about the fact that they have not done anything yet of significance, right. So, if we can use house money, money that's on the table that doesn't belong to you, to make a difference in this world, how great would that be? And we have a, we have a pretty ambitious goal. Our goal is to create a billion dollars a year of charity. We're building a national community of 100 professional advisors and charities. If each of us are creating $10 million of current charity or future charity for legacy giving, often just by converting tax into charity, you've got 10 million times 100 that's a billion dollars a year, and our goal is to have that in place by 2030 the end of 2030 and we've already got about two dozen already attached to this, so it's a very, it's a great thing that gets me up in the morning, and I get excited about my biggest risk personally now is not having enough time to actually execute on this this goal, because that's my mission, and it's a big risk, because nobody else can do it, it's only me. So, on, you know, I have a lot of ambition around that, and it gets me very excited, and I love to see company advisors. I have a, I have an amazing mentor and coaching program called Power of platinum.com It's been around for five years now, over 200 advisors have gone through it, become experts in what we're talking about, and the nice part about that is the fees that they pay actually good on my charitable foundation, so it's a way for me to create more charity, help more advisors, and do good in the world.
https://wealthinsurance.com/
Today, my guest is Gregory Kovsky. Gregory is the president and CEO of a regional business brokerage and commercial real estate firm called International Business Associates, and in just a minute we're going to speak with Gregory Kovsky about why it is prudent to have a real estate licensed merger and acquisition broker facilitate the sale of your business,
https://ibainc.com/
J Darrin Gross
I'd like to ask you, Gregory Kovsky, what is the BIGGEST RISK?
Gregory Kovsky
Um, I believe uncertainty in the economy is the biggest risk. I, I believe people can successfully play on the field when they know the environment. You can win a football game in the sun, the rain, the snow, if you can plan for it and develop a stride. Energy to execute in that environment and I believe the same is true in business, but like recently when you're seeing tariffs change, when you're seeing COVID roll through the economy, when you're seeing high interest rates or different elements changing tax environments in states that may make it more attractive or less attractive to be an entrepreneur. To me, those type of things makes it harder for people to commit capital, invest and act in the economy, so then you end up with people on the sidelines waiting for more certainty to occur.
https://ibainc.com/
Today, my guest is Michael Pouliot. Michael is a fourth generation real estate entrepreneur and the CIO at Carbon Residential, where he focuses on workforce housing in high-growth southeast markets, and in just a minute we're going to speak with Michael Pouliot about the 2026 Multifamily Marketplace.
https://www.carbonresidential.com/
J Darrin Gross
I'd like to ask you, Michael Puliot, what is the BIGGEST RISK?
Michael Pouliot
The biggest risk, as it relates to property, right, or, you know, property, the property business, so yeah, the first thing I thought of was I think the biggest risk is, you know, really having strong operations, honestly, and then that comes back to your people, your process, and your technology, and so really, you know, property management, managing assets, although, yeah, obviously we raise capital from individuals or institutions to buy these properties day to day. Our life is about managing, you know, property and day to day property, and then also the business plans and what we've promised investors and the business plan that we struck when we closed, and so the, as your, as you continue to grow the business, you need to continue to grow as a business leader, and then so all your people, and so that I think is your biggest risk is getting to a getting growing too fast, potentially, or just allowing the having operational systems that just are not equipped to handle the stage of your company, and so, and I think that can happen very quickly, that those things can fall out of lockstep as you grow, or as you know, you just don't take, you know, you take your eye off the ball sometimes, and so I think it's really important to make sure that you've got people who are focused on on the day, people who are focused on the week, the month, the quarter, the year, and the decade. You don't have to have that many people focused on the decade, but you should have someone, or a couple people, who are just so that we know where we're going, and that way you know the business can can grow in a sustainable way with a good culture. People like working there, and I think that's the biggest risk over time to generating or creating and sustaining a business is having a good culture. People are thriving and they feel fulfilled, they can grow, and if you provide that, then you don't have to do, you don't have to become, you don't have to be the hero, you don't have to always jump in and help with things. In fact, doing that actually hurts, you know, the ability for the for the business to be successful. We were talking about our children before we started here, and it's not unlike a child, it's like you can't always step in and. And tie the shoes, just, you know, it's okay if, if we're five, you know, we'll just be five minutes late, we'll just work on this, and then you'll learn the skill, and now you can tie your shoes, and so I think there's a patience and a willingness and a space to take risk and make mistakes, and all of that is kind of in that culture realm, which I think is, you know, probably I think the biggest risk in property.
https://www.carbonresidential.com/
Today, my guest is Oscar Hedaya. Oscar is the CEO of Space, the company behind the Space Safe. Oscar has selected, excuse me, Oscar has scaled multiple businesses and now focuses on modernizing physical security for commercial and hospitality environments to reduce operational and liability risk. And in just a minute, we're going to speak with Oscar Hedaya about The Space Safe,
https://www.thespacesafe.com/
J Darrin Gross
I'd like to ask you, Oscar Hedaya, what is the BIGGEST RISK?
Oscar Hedaya
Yeah, I mean, the biggest risk in general for.. I'm in the security business, you know, so I'm in this business for a reason, you know, I think that there's so much theft out there, and there's so many reasons for people to need to steal, that for me, that's that's one of the biggest risks, that if you don't protect yourself and be preventative, then you're risking the fact that you're going to. Of lose a lot more without being preventative.
https://www.thespacesafe.com/
Today, my guest is Koliah Fuzzy Jardine. Fuzzy, as he's known, is the co-founder of HUI Mastermind. They empower Native Hawaiians and locals to build generational wealth through real estate investing in their homeland, the Pono Way. And in just a minute, we're going to speak with Fuzzy Jardine about his journey from prison to real estate investor.
https://www.instagram.com/hifuzz/
J Darrin Gross
I'd like to ask you, Fuzzy Jardine, what is the BIGGEST RISK?
Fuzzy Jardine
Well, in the development space, and without what I'm doing today in the Hawaii market, it's one of the most expensive markets. Is the biggest risk is, I think not keep doing what I'm doing, right, investing in real estate, because it's only going to go like it's only going to go up, right? So, if you sit on the sidelines and waiting for the interest rates to drop, then it's going to be too late by the time you get started, you can keep waiting, waiting, waiting. So, I think that's one of the things for me, as a developer, the biggest risk is, you know, listening to the chatter outside, like I'm focusing on, I know what I do best, I know where I need to be buying in at, and I know what my building costs, you know, is that how much. Well, it, it costs, and then I know my end results. So, the, my biggest, the risk will be not to keep doing what I'm doing.
https://www.instagram.com/hifuzz/
Today, my guest is Rod Santomassimo. Rod is the founder of the Massimo Group, the leading coaching organization for commercial real estate brokers worldwide. He is a five-time best-selling author, a patented inventor, and a former Division One athlete. And in just a minute, we're going to speak with Rod Santomassimo about how Commercial Real Estate Brokers can use AI to improve their deal flow,
https://massimo-group.com/
J Darrin Gross
I'd like to ask you, Rod Santomassimo, what is the BIGGEST RISK?
Rod Santomassimo
I think, the by far the biggest risk today is what we talked about. It's AI. AI is the biggest risk, and there's different risks. You mentioned the three forms of risk, right? So that the risk from an AI, from a business perspective, there's the adaptability risk. You know, if I do not adapt to the AI, what's the true risk to my business? Well, it could be said some, some sectors are AI proof, right? My, my, the girl who cuts my hair, right? Maybe she needs an AI reception bot to make sure that I could be there on time, right, and their schedule is clear, so she's not really AI proof, she's not. But there's that adaptability risk. How adaptable is your service, your product to AI? And if you don't do anything about it, you know what's the impact, the risk of your business bottom line. There's certainly the implementation risk, right? So that will now implement. If I implement the risk, what's the cost going to be? What's the timing going to be? I'm working on something right now. I wrote the developers and said, did you realize I announced this in November 2024 So now we're 18 months and you still haven't delivered. I would never have thought that when I announced it in November of something we're working on with AI, right? So that risk implementation risk really matters. If you think you can go and develop an AI platform overnight, I don't care if you're using lovable or Claude code, it's not - it's not a truly scalable platform, right. And the third, without doubt, is compliance risk, and that comes in several forms. First, there's there's those that use AI chat bots, and it outputs something that's total crap - they call it chat crap, and you post it right, or you share it with the client as fact, right? So, so now you look like an idiot, they're just what it is, right? There's also a compliance risk, and us dealing with the FCC, and, and seeing all the hurdles you have to take to truly leverage AI as tech spots and call bots, you do not want to be on the wrong side of compliance list risk, that's going to cost you dearly, right, especially if you're doing international work, like where the rules and regulations in Canada compared to the US are vastly different. They are, in fact, we pulled our AI bots off for a while in Canada and have recently put them back on because we're in compliance, something called CAN spam that can cost you millions. So that's what I mean by risks. You look at those risks, the adaptability, implementation, compliance - those are risks I'm thinking about every single day, and how we handle those risks from a business building standpoint.
https://massimo-group.com/
Today, my guest is Jerry Vinci. Jerry explains why most communities are unprepared for the silver tsunami, this demographic wave, and what leaders must do now to get ahead of it. And in just a minute, we're going to speak with Jerry Vinci about how to win the silver tsunami demand surge.
https://www.linkedin.com/in/jerryvinci/?isSelfProfile=false
J Darrin Gross
I'd like to ask you, Jerry Vinci, what is the BIGGEST RISK?
Jerry Vinci
I would definitely lean on the Senior Living industry for sure. To answer that question. I think the biggest risk for sure, and this goes back to our capital facing services would just be the operator selection. You know, a lot of people might think it's like cap rate compression or labor shortages or even like regulatory changes, but, you know, those are obviously all real. But that that the risk is that you partner with an operator that can't actually do what they said they're going to do in a specific market where that assets located. You know, again, you've got to look at like, what are the competitors doing in that space and and it's, it's the dominant risk, in my opinion, just because the consequences compound for years before they actually fully show up. I What else can I say about that? Yeah, like operator I guess, kind of what I was just describing about the different asset value depending on occupancy. You know, operator failure doesn't always look like operator failure. You know, when it comes to senior living, occupancy can drift because, you know, you're dealing with older residents who, for any given reason, can can leave or move out. But, uh, you know, a building can document see, can drift from, say, like 92% to 82% over 18 months. But nobody can explain why. And that's that goes back to something like, maybe the aggregator dependency on those third party leads that are coming in, or maybe their reputation has decreased slightly over that time period, but nobody's really paid attention. But you know, going from a 4.8 star rating to a 4.3 or something like that holds more weight than people might realize, and even even like something might not show up on a quarterly report, it might show up in a larger report, but they're not. They're not seeing it because it's, it's a slow drip, you know. So I think, just from from a risk assessment perspective, it's always going to come back to that operator and how that operator is able to maintain or increase performance of that asset.
https://www.linkedin.com/in/jerryvinci/?isSelfProfile=false
Today, my guest is Guffy Wright. Guffy Wright is a multifamily insurance expert 20 years or with 20 years experience helping operators protect and grow equity. He built the Mahoney Group's Real Estate Practice, oh, and to over 100 million in premiums, and has created tools that turn insurance into strategic advantage. And in just a minute, we're going to speak with Guffy about why your insurance broker might be your biggest competitor
https://www.linkedin.com/in/guffy-wright-752679b
J Darrin Gross
I'd like to ask you, Guffy, Wright, what is the BIGGEST RISK?
Guffy Wright
The biggest risk is apathy, status quo, if you don't have clarity, safety and direction on a large and spend on your asset. I think that's the biggest risk. Is apathy, not treating insurance like you would your own debt and your own clients. That's the biggest risk.
https://www.linkedin.com/in/guffy-wright-752679b
Today, my guest is Joey Mure. Joey Mure has been helping individuals achieve financial freedom through faith driven strategies that align values with Sustainable Passive Income Creation. And in just a minute, we're going to speak with Joey Mure about Sustainable Passive Income Creation.
https://www.wealthwithoutwallstreet.com/
J Darrin Gross
I'd like to ask you. Joey Mure, What is the BIGGEST RISK?
Joey Mure
I think the number one risk facing America right now, which me included, is the onset of AI. And I don't think people are paying attention to how quickly it is making things that were solid, confident, type ways of making money obsolete. And let me just I'll share this with you. I'm a part of a mastermind. And there was a gentleman who spoke in March, and it kind of it woke me up to this. I already knew that this was a risk, but he said something very profound. He said he's in a room of about 80 people that are highly successful, coaches, mentors, influencers, things like that, online and, you know, marketing and stuff like that. And he said, if you're not asking the question, 90 90% of you are out of business in two years. And he said because being people that have information are completely obsolete at this point, the only people who will surpass AI are actually going to be icons. These are people who you immediately associate with a product or a service, right? And he gave some examples. He was like, what's what? What is Richard Branson's brand? You know, a handful of people probably know what his actual brands are, but they they recognize who he is, because he's an icon, and AI is not going to get rid of an icon. But if you're just building, if you're just regurgitating information from one person to the world. You're You're obsolete. You have to become absolutely like somebody who people will follow. You have to become the person who's not just information, but implementation, actual results. And that's why I say, you know, Russ and I are result leaders, not just thought leaders. We do the thing that we're telling you to do, and we report on exactly what's happening, good or bad, because we want to be authentically in your corner to say, hey, you can do this. Look, we're doing it right here. This is how this works. And there is a there's going to be both a big risk with AI and a humongous opportunity. And the biggest opportunity is to become authentic and to become real, because in an age of AI, everybody's going to be searching for what is real. Everything seems fake.
https://www.wealthwithoutwallstreet.com/
J Darrin Gross
I'd like to ask you, Pamela Eyring, what is the BIGGEST RISK?,
Pamela Eyring
I think the biggest risk that you can control, but is the assumption that your people that you've hired or even has worked for your company for. Long period of time knows what they don't know. And I think that assumption is a risk, because a lot of times they say, Well, you should already know this. This is common sense, but it's not, not today. You can't control the tariffs. You can't control the political scene right now, or war. We have no control over that, but we have control over our people and their development, and so that's where you mitigate the risk, is get them training, whether it's internal, with you being, you know, your supervisors or leaders, actually coaching, you know, one identifying that there are professional standards in your company. That's your culture to identifying you know individuals, either outside and hiring them in or internal to teach what they don't know, even if it's a refresher for some what is the others? Are they using it like business cards, as simple as that. I mean, these are low cost risk avoidance is in developing your people, and then create those opportunities for practice, invite them, give them, stretch them a little bit. And then lastly, I would say, you know, really reinforce that that practice so coaching them. And say, you know, Darrin, that was great. You really did wonderful. You know, speaking to this group, they got, they understood the message of what we do, clearly and articulate. You know, you were very articulate with that, and very masterful in your follow up suggestions. So giving them feedback, or don't ever wear that again, because it is not acceptable. But again, this is, this is what I would say to to to mitigate and reduce that risk, is invest in your people in this area. Because nothing else, even the the interest rates you can you can't control, you can negotiate, but you can't control all of this, but you can help and develop your people where they're making that impact. Because, like I said, it's, it's People to People business in CRE.
https://www.psow.edu/
Today, my guest is NIV Davidovich. Nib is the managing partner of Davidovich stone Law Group, a landlord centered law firm in California, providing a full slate of legal services to the landlord, property manager and developer communities. And in just a minute, we're going to speak with NIV Davidovich about landlord tenant law and related topics there.
www.Davidovichlaw.com
E: niv@davidovichlaw.com
Ph: 818-661-2420
J Darrin Gross
I'd like to ask you. Niv Davidovich, what is the BIGGEST RISK?
Niv Davidovich
Risk in being a real estate owner?
J Darrin Gross
However you wanted to. It's up to you to find what you consider to be the biggest risk.
Niv Davidovich
I guess I'm I'm somewhat tainted, because the things that I deal with are either the expensive evictions or the expensive or difficult habitability claims. So to me, I'm always going to see that as the potential risk. I can't really necessarily speak to market conditions, you know, because I think the people who bought the offices in 2019 they never thought that their class, a landmark buildings are going to crater in price by two thirds. But obviously, having a global, you know, pandemic, it's just not something you, you know, put on your pro forma. So that's probably the biggest risk, but it's probably going to happen the least amount of times in terms of regular, regular risk, it can be these lawsuits, because it's very easy for the tenants to find tenant attorneys who are going to file them on contingency. And there's a proliferation, proliferation of these types of attorneys happening in California. And I'll explain why personal injury, even though it is viewed as, Oh, those are the ambulance chasers and sort of like the low class attorneys, they're making way more money than a lot of these, even white shoe lawyers. So the the barrier to entry to get into personal injury is so high now because they're spending so much money on advertising and marketing. I'm talking about some of the big boys are spending millions of dollars, millions, plural, of dollars, every month, not year month, and that's because there's just a lot of money there. But in order to keep up with them, you need to spend that much money. If you can't, well, I'll move on to a different area where I can also make similar money. So they moved into employment Well, now there's people spending all of that money in employment law, also hundreds of 1000s, if not millions, of dollars every single month to get these employment claims. Because in California, get a good employment claim, you can really hit it big. So that barrier to entry became very big, and so they moved on to the next thing, which is the tenant habitability claims, where you can also potentially hit it big. Now it's not as big as the PI and it's not really as big as the employment, but lower barrier of entry as well. And so all these new lawyers who are coming out of law school every year that are more entrepreneurial and business minded, they need an area to get into that they can just open their shingle and just start doing it. And happens to be that habitability is something they can do. So that's happening a lot more. And if you don't have the proper insurance, you. Have one claim, it can kill you.
www.Davidovichlaw.com
E: niv@davidovichlaw.com
Ph: 818-661-2420
Today, my guest is Gary Eastman. Gary is an attorney turned entrepreneur who has built a thriving national surety bond brokerage business into one of the most misunderstood sectors of finance, or in one of the most misunderstood sectors of finance, and in just a minute, we're going to speak with Gary about performance bonding, also known as charity bonding.
https://swiftbonds.com/
J Darrin Gross
I'd like to ask you, Gary Eastman, what is the BIGGEST RISK?
Gary Eastman
Okay, so this is a great question, and I think there are two risks that kind of embed themselves in everything that we see today, at least from the surety bond perspective. One financing risk, right? Because those are the you know, the amount of capital available is going down if the cost of capital is going up. And the second part is labor. We are, we're short of labor, and so we're going to continue to be short of labor. So those two things are an interplay all the time. And so we see, you know, bonds being able to help minimize that risk, both, both of those risks. And so if you're a real estate developer, right, your financing risk is set again. It's set up. And how we do it so you get the bond so that you can make sure that the project's done, you can get clients, you know, into the space and start receiving, you know, some sort of return on that. The second part, of course, is labor. You know, you don't want to hire somebody who then turns around and you know, they're all their subs have disappeared, or they're doing something else. And so bonds have, you know, given you a way to basically minimize both those risks. We see that in every part of society now, and places where we didn't see it five years ago. So bonds is a tool, not the only tool that you can use to go out there and start minimizing that risk, mitigating that risk, before it happens. And then, of course, the other thing is, if there is a problem, we like to jump on this quickly to mitigate the risk down so that we don't have massive lawsuits and problems going out there. Yeah, I've been doing this since 2008 and I have been fortunate that I am none of my clients have involved in a protracted litigation, which, as an attorney, warms my heart, but those are the things that we see all the time that we're trying to eliminate, if possible, and then mitigate when they
do.
https://swiftbonds.com/
Today, my guest is Beau Turner. Beau Turner is the founder of Abundant Mines, a Bitcoin mining company built with one purpose to make passive crypto and infrastructure investing simple, secure and sustainable. And in just a minute, we're going to speak with Beau Turner about demystifying Bitcoin.
https://home.abundantmines.com/about-us
https://www.linkedin.com/in/beau-turner-445732251/
J Darrin Gross
I'd like to ask you, Beau Turner, what is the BIGGEST RISK?
Beau Turner
Well, I think the Bitcoin network itself is very challenging to find any sort of risk in, and I think that would be surprising to most people to hear. But part of the reason it is such an incredible innovation is how it is designed to be resilient in almost any case. I mean, like, short of a forever nuclear winter and the Internet going down forever everywhere, there's not really a legitimate way to take this network out. So what I would say the risk is for our business, since we're in the mining space, is that we're actually in the physical world. So Bitcoin is a unique asset among assets, because it is digital. It's theoretically indefinite. It doesn't have a lifespan. It doesn't have a half life. It can exist forever. When you get into mining, people are usually getting into mining to outperform Bitcoin, to get, you know, the tax advantages of depreciating equipment, to get the income stream. But when you enter into the mining space, the risk that you're taking is that now you're dealing with the physical world, whereas you weren't, if you were just doing what you do, which is, you know, hold Bitcoin and cold storage digitally. And so you have to be very careful. And I mentioned, you know, briefly, our story of our first experience getting into mining in the physical world. And so the people that you work with, to me, are the most important risk to account for. That kind of goes untalked about. Your environment matters a lot. So we were, we were hosting originally in Georgia, which is a very hot, humid climate for you to run computers that are going 24/7 so we've, we've decided to locate in the beautiful state of Oregon, where we've got pretty cool climate, year round, lots of renewable power inputs and very low natural disaster risk. There's a pretty good set of reasons why you see a lot of the largest data centers and hyperscalers in the world choosing to make Oregon and the Pacific Northwest a home. That's part of it. And then we mentioned energy risk as well, which I think that's, that's probably the key economic risk. You know, the other things I talked about were more like, Is my asset going to exist? What can, what can, critically threaten me, actually owning this thing and it being safe? The energy risk is more about the business model, insulation. So, you know, energy pricing has gone up for most people, across the board, almost everywhere. The way that we guard against that really is just diversification. So we have sites in many different utilities. We have six facilities right now and building two more, and they all have a totally different energy procurement situation. They're all in different utility jurisdictions. That helps us with mitigating outages, but it also gives us insulation to the energy markets themselves. So those would be the key risks that I would highlight, and the ways that we uniquely tackle them.
https://home.abundantmines.com/about-us
https://www.linkedin.com/in/beau-turner-445732251/
Today, my guest is Andy Matthews. Andy is a real estate lawyer at Stoel Rives LLP in Seattle, Washington, and in just a minute, we're going to speak with Andy Matthews about Real Estate Law.
https://www.stoel.com/people/andrew-l-mathews
https://www.linkedin.com/in/andrew-mathews-8716453/
J Darrin Gross
I'd like to ask you. Andy Matthews, what is the BIGGEST RISK?
Andy Mathews
Well, that's a great question, and I know you framed it as switching gears from our last topic, but I think there's a way in which it, it is related to the use of things like AI. And my answer is, the biggest risk that I can think of is failure to stay on top of the things that that impact you and your industry or your your realm, and that applies equally to to me and my clients. I mean my clients, like I said, you know, if we're still using the the AI example, ignore AI and its and its offerings to their great detriment. And for me, I mean, AI is one example, but just, I think, I think the the risk that I face as a lawyer. It's really easy to to spend my days, as you alluded to, you know, like, like every other lawyer out there I I charge my day is based around the billable hour, and so anything that that I do that's not a work that that is billable to my client, is something that that is outside of what are the Core expectations of me as as a, as a, as a lawyer in my firm. And yet I my if I were to focus solely on the billable hour, I would be doing both myself and my clients a great disservice, and for that reason, I spend a good chunk, I try to spend, anyway, a good chunk of every day on things that I that I don't have the ability to Bill any client for. But the purpose is to make sure that I'm staying ahead of the game, that I am aware of what's going on in the industry, that that in which my clients operate, so that you know when, when, when a client does come to me with a problem, that I am able to bring a level of expertise to it, that that is helpful to them, and that that is is not just legal advice, but advice based on a business, business judgment and business understanding of how they are operating.
https://www.stoel.com/people/andrew-l-mathews
https://www.linkedin.com/in/andrew-mathews-8716453/
Today, my guest is Michelle Hamilton. Michelle Hamilton spent 30 years as a strategic leader in commercial real estate and the AEC sector, before focusing on one of the biggest challenges in enterprise technology, the gap between AI investment and actual workforce adoption.
She founded spark AI strategy to help organizations close the gap, and was recently recruited by answer rocket, a global AI transformation firm serving mid market and fortune 2000 companies to design and lead their new AI adoption and change management division. And in just a minute, we're going to speak with Michelle about how to bridge the AI gap between corporate roadmaps and workforce reality.
https://www.linkedin.com/in/michellehamiltonai/
J Darrin Gross
I'd like to ask you, Michelle Hamilton, what is the BIGGEST RISK?
Michelle Hamilton
I think the biggest risk. And it doesn't matter how big of a company you are, you could be a small business, a two person shop, or a 10,000 person shop, if you start investing in AI tools, technology, and you don't invest in your people and teach them how to use it for the outcomes you are expecting, then you will not realize your ROI and waste your money. It is the people that have to be invested in so that they understand how to use this unbelievable piece of technology to continue doing their job, so that they are not only creating incredible efficiencies, but it is also allowing them, as humans, to go back to being humans and not being stuck behind a computer screen for eight hours a day, but actually having their AI work alongside them so that they can continue to build business and build relationships, human to human, you have to invest in the people alongside the technology, and don't assume that your IT department is the one that should be providing that they are there to protect you, not to explain to the Business Development Division how to take it to a conference with them.
https://www.linkedin.com/in/michellehamiltonai/
Today, my guest is Jens Nielsen. Jens Nielsen immigrated from Denmark in 1996 and after a successful career in IT, he followed his passion for real estate and coaching and became a full time real estate investor and certified high performance coach. And in just a minute, we're going to speak with Jens Nielsen about using systems and mindset to create financial returns and meaningful impact.
https://jensnielsen.us/
J Darrin Gross
I'd like to ask you, Jens Nielsen, what is the biggest risk?
Jens Nielsen
Yeah, I mean, the way I look at risk is now is little bit different. I look a lot more protecting the downside. Right in the past, it was all well here, all the ways it can go well and, you know, we can make a lot of money and so on. You know, practical experience has shown that it could also go bad, and if, when it does, make sure you protect your downside, right? So that could be, you know, insurance is one way. I mean, as I mentioned before we started recording, we just had a fire in one of our buildings that shut down the whole building for months. I mean, that's where we have to transfer the risk to the insurance company, obviously. So that's one thing. But even in deals that may not go so well, you know, we try to protect capital and so on. But if that doesn't work, are we actually protecting ourselves through, you know, doing non recourse loans and other things like that, right? So I'm really focused on right now protecting the downside, because the downside is what can crush you, the upside is what gives you wealth, right? And so that's has been that has been more and more in my mind to protect the downside, if that makes sense.
https://jensnielsen.us/
Today, my guest is Gino. Barbaro. Gino is an investor, certified money coach, entrepreneur and podcast host. As an entrepreneur, he's grown his real estate portfolio to over 1900 multifamily units and 450 million in assets under management, and in just a minute, we're going to speak with Gino Barbaro about multifamily investing and money coach.
https://jakeandgino.com/
https://www.youtube.com/@barbaro-360
J Darrin Gross
I'd like to ask you, Gino Barbaro, what is the BIGGEST RISK?
Gino Barbaro
That is an excellent question. I can look at risk from my own perspective in my life as when I look at risk, what is the risk of not doing something? If I had been at the restaurant back in 2008 and I would have said, You know what? It's too risky. I've got a nice little small business. I'm hanging out. I'm doing okay, and that's what a lot of people out in society right now. They have a comfortable job. They're not looking around. They think that there's no risk involved in that. Whatever you do in this world, whether you're working for yourself or you're working for an employer, there is always risk involved. Choose risk accordingly. I had that picture in my mind of, you know, becoming getting into my 60s and being stuck in a kitchen doing something that I hated. What's more riskier than that? I mean, I don't care how much money I lose and doing whatever, but to me, that picture was scary as hell. There was a lot of risk involved in that, and I didn't want to live my life that way. Now, how do you mitigate the risk? I remember being in the laundry room with my wife. It was around 2012 and I looked at her, I smelled like garlic. I just come home from the restaurant, and I said, Julia, I can't take this anymore. I need to leave New York, and I need to get out of the restaurant business. And she looked at me, and in about three seconds she said, Okay. I was shocked that she actually said, okay, but I think she looked at the pain on my face. Now, the reason why I'm telling you this story is what I proceeded to do after was to try to minimize the risk. At that point, I was all in with real estate. I said to myself, If my wife is give me the grace, and is giving me the permission to get into this venture full time. I need to give it my all. I need to learn, and I need to dedicate time and become an expert in the craft of real estate. Forget about single family homes, forget about self storage, forget about Bitcoin. Focus on multifamily, and I proceeded over the next three to four years to really become an expert in investing in real estate, that's probably the best tip that I can give you on minimizing risk, is to become an expert in whatever you're getting yourself into before you put that first dollar into an investment exhaustive join mentorships groups, go out there and learn how to become an. Investor, read tons of books, see what other people have done as far as becoming experts in that specific area. To me, that was the best thing. When she said, Yes, I couldn't let her down. And I knew that, and it's funny, because she had confidence in me. She knew that I was going to work hard. So for me to know that I'm like, I can't let her down. I can't let my family down, so that's why I plowed in. I even ended up opening up the Jake and Gino community because I knew that was a way for me to start learning. I started a podcast because Darrin gross told me would be a great idea. I wrote a book. All of a sudden, I'm learning all of these things about real estate. That's probably one of the better ways to actually start mitigating the risks is by becoming an expert in what you're doing, ultimately, you're trying to avoid the downside risk. And then for us in the real estate space, we created that framework. And I work with frameworks, whether it's buy, right, manage, right, finance, right, whether it's the three pillars of real estate, whether it's a negotiation framework that we use, you have to really understand to limit that downside risk you're looking at it, and for us to limit the risk is to have more of a long term approach. If you're trying to do something with a short window and less time, there's more risk involved in something like that. But we know if we buy an asset, we buy it with good fundamentals, we buy it in a good market that's growing, if we are able to be able to cash flow, put good debt on that. That's going to limit my downside risk going forward. Now.
https://jakeandgino.com/
https://www.youtube.com/@barbaro-360
Today, my guest is Daniel Daly. Daniel didn't start in real estate, but after he scaled an automotive startup to 600 million, then built a cross border European real estate portfolio. Today, he leads a Portugal Golden Visa eligible hospitality fund focused on experiential assets, and in just a minute, we're going to speak with Daniel Daly about short term rental properties.
https://globalipllc.com/
https://www.linkedin.com/in/daniel-daly1/
J Darrin Gross
I'd like to ask you, Daniel Daly, what is the BIGGEST RISK?
Daniel Daly
The biggest risk for investing in short term rentals in Europe, from my perspective, it's the same as any other investment in real estate. Maybe Location, location, location. So you know, the biggest risk is, did I pick the right place to invest in? That is the location where everybody wants to go. Am I in? Ring one, that avoids the risk. Ring two, minimizes the risk. Ring three, it's risky, right? You're further away. It's cheaper, yes. But generally risk one avoids risk ring one avoids most of the risk is, I want to be in a location where people want to go to, where people are visiting, where are things that they want to make their trip easily accessible, whether it's train, bicycle, walking. So that was the biggest risk is, what's the location? Do we feel confident in it and minimizing the risk would then just be if, for some reason, we couldn't afford that ring one to go to ring two. But I do everything that I can to avoid ring two. I don't want to minimize the risk. I want to avoid it by being as close as possible to having the perfect location that people want to come and stay at.
https://globalipllc.com/
https://www.linkedin.com/in/daniel-daly1/
Today, my guest is Mark Shuler. Mark Shuler RA is a licensed architect in the states of Washington and Texas with more than 35 years of professional experience as an architect, engineer, business owner and real estate investor as president of SGRE investments, Mark pursues value add opportunities that leverage his professional background and capitalize on his skill sets as an architect and real estate investor, and in just a minute, we're going to speak with Mark Schuler about the reasons why multifamily value add investing make a great investment strategy.
https://www.linkedin.com/in/shulerarchitecture/
J Darrin Gross
So if you're willing, I'd like to ask you. Mark Shuler, what is the BIGGEST RISK?
Mark Shuler
I have a pat answer for that. The biggest risk to real estate is government.
That's what I was alluding to. And beginning of this conversation, the West Coast Seattle is as Uber blue as it gets. You have a lot of well meaning city councils and county councils trying to address significant housing crisis that exists throughout the entire country right now. And they, rather than letting the markets Mark operate efficiently. They get in there and they they throw roadblocks in it, and we can't produce enough housing as a consequence, then we have a supply problem, and they enact rent control and other pieces of legislation that make the operation of real estate even more difficult. I That's why I left Seattle. I can't do it here anymore, specifically because of that. So that's one thing you know. You've got to look at the the risk posed by your local government, and see if that you know, if you can develop hedges against that risk. I when I first got into the business, I could do that in western Washington, but they it just became apparent after a while, there was so much legislation being layered on that the hedges were disappearing left and right, and so I made the choice that I couldn't do it here anymore. I had to find marketplaces that were more fair. And also, I will say this is a political side. I mean most politicians, politicize housing as if it's a fight between corporate interests and you know, you know tenants who don't have any control over their lives. You know, that's the nature of renting. Most operators I know are very hard working people and are doing the best they can in a pretty oppressive regulatory environment. There's no cabal of operators out there colluding and setting rents. And Berkeley just learned a big ass lesson about this where they. They tried to sue. Who was it? You know, that online platform, real page, claiming that real page was setting rent prices in the marketplace, and they were like taking them down real page. Those are, those are some tough guys, and they did not back down from a fight. Sued the shit out of Berkeley. Berkeley tucked tail and back down because they knew they were going to lose and lose big. So this issue is very emotional. It gets very politicized. It plays well on an election cycle, and so I just get tired of it. I just want to do my job. I really want to do my job and not have this white noise distraction that I have to deal with. But unfortunately, that's what that's the biggest risk I see in real estate right now. Then you you layer on top of that, this the politics in general, what I what really concerns me. Now, in addition to that, the other big risk is, this is just our political environment. It's so but, you know, bifurcated, and it's so politicized and the conversations are so extreme, there's no more middle ground, and there are only two or three things that control our entire economy, oil and bonds. And you know, if it seems like every time Trump opens his mouth about tariffs, the bond market Spike 25 basis points, I was in the middle of a refi three weeks ago, and he, he kind of went on his tariff tantrum again, cost me $250,000 that's, that's the impact bond rates have on, you know, the cost of doing business. I was in the middle of refi. I had to do nothing but suck it up and, you know, sign that loan in one day, I lost $250,000 on a refund. So government is a, you know, housing is one of the most nuanced and market driven things I can think of. It responds to supply and demand. The players are in it, who are in it, who are really good their market, they're they're watching this all the time. And contrary to popular belief, the margins in real estate are thin. They're not that great. So if the market swings wildly like that, how do you how do you do business? You can't make you can't plan for 612, 18 months down the road, which is that's the long, the length of time we think about. We're thinking in terms of multiple years cycles. And when you have this volatility in marketplace, how do you make business plans? That is in large part why we have such a housing crisis in this country that and the cost of labor, the cost of materials, has spiked dramatically. It's just more expensive to put up housing. But then you layer on all this government nonsense, this is really hard to build housing, and that's and as a consequence, supply, demand being what it is, price of housing goes up, rents go up. I don't know a developer out there that would not love to build affordable housing, but they can't afford to do so. That's my soapbox.
https://www.linkedin.com/in/shulerarchitecture/
Today, my guest is Caleb. Christopher Caleb is the founder of Creative TC, DOS Guard and Creative Title Company. He's a cyber security expert specializing in creative finance, risk management and ethical business building, and in just a minute, we're going to speak with Caleb about Creative Finance Mechanics.
https://creativetc.io/
J Darrin Gross
I'd like to ask you, Caleb, Christopher, what is the BIGGEST RISK?
Caleb Christopher
I'm going to answer with a categorical answer. I think the biggest risk is any risk that you either refuse or fail to identify and seek to address, like you talked about, what bucket can I put it in? Can I transfer it or do I have to accept it? But the ones where you don't have the eyes wide open, the ones that catch you unawares, are the biggest risks. So I think the biggest risk comes from a reluctance to engage either JV partners or consultants or attorneys or any general education, leaving yourself open to be blindsided by something you didn't see coming.
That is very well said. Eyes wide open and make sure you understand the risk. That's good. Caleb, where can listeners go if they'd like to learn more or connect with you?
https://creativetc.io/
Today, my guest is George Thomas. George Thomas is the founder of Financial Freedom Builders, an organization helping families build confidence with money. And in just a minute, we're going to speak with George Thomas about Money and Wealth Building Concepts.
https://www.thefinancialconstructor.com/
J Darrin Gross
If you're willing, I'd like to ask you, George Thomas, What is the BIGGEST RISK?
George Thomas
By far, the best the biggest risk, is not investing. You know, to darrin's point about, can you avoid it? You could try to avoid it. You can put it into the savings account, and you could, you know, avoid the market because you're worried about what could happen with your money. You could, but you run the risk of having to work tirelessly and getting nowhere the rest of your life. So that that so that moves that, that moves that away. The second piece is, is, can you? Can you mitigate it in some regards? So you, you can do things to help you mitigate some by understanding what the strategies are when it comes to investing, right? Does carry risk? Yes, you could be in the wrong investment, and it could turn into a true disaster. So what you do there to mitigate is to get the education you need to be able to use what you know is necessary for you to get to your end destination, which is financial freedom. And then you talked about transferring risk. Transferring risk is, is you can transfer risk through investing. If you enter strong, long standing companies at discounted prices. If you can do that, all strong companies eventually, although they go on sale, they do rebound and then continue upward, because they are true companies that are profitable revenue generating with significant shareholder interest. So if you can get strong blue chip companies at a discount and then enter your investing, you're transferring the risk back to the company to help to for them to continue to perform and be those companies. So if you're into Microsoft, your videos and all these other ones, again, this is just examples, not financial advice, but if you can find these companies at a discount that can help you transfer some of the risk and concerns you may have about investing, transfer it back to the company that you're investing into for them to continue to perform. So the greatest risk is not investing, because if you don't invest, how exactly are you planning to get to your end destination with your financial goals for you and your family and most people that don't invest end up working tirelessly and long and missing out on important things that were important in their life, and if they would have just had just a little more of their most valuable asset time, they would have been able to do and enjoy life the way that they ultimately would have. So that, to me, is a great risk and not one I'm worth taking. So we got into investing.
https://www.thefinancialconstructor.com/
Today, my guest is Nick Deangelo. Nick Deangelo is known as the Fixed Income Goat in real estate circles, with a $206 million plus portfolio, and in just a minute, we're going to speak with Nick Deangelo about fixed income.
https://saintinvestment.com/
saintinvestment.com/book
J Darrin Gross
I'd like to ask you, Nick Deangelo, what is the BIGGEST RISK?
Nic Deangelo
The biggest risk, I'll give you the biggest front side and the biggest backside. Biggest front side is always going to be due diligence on our side, we have beaten that to death. We have overlaid many economic factors. Our due diligence confidence is at an all time high. But what I see in the marketplace is many people not doing the due diligence to a real, true conservative estimate of outcomes that is the biggest risk. And we saw that the last few years. And we see the back end of what that looks like, the optimistic, the rosy projections, things like that, and that's consistently what we see. And then on the back end, let's talk portfolio strategy. We have over 600 mortgages. We got, you know what, 19 syndications that we've done, the number one risk that I've seen on that side is not thinking long term. I know I beat that to death, but in the same vein of the underwriting and being over rosy with your projections and not really looking at the real numbers and the real economic data on the back end of a portfolio, if you're not thinking long term, and you're not thinking. How these pieces come together, and you're not thinking about how the management performs consistently over a long period of time, then you see shortcuts evolve. You see bad systems evolve. You see all kinds of shorter term thinking that lead to much bigger, snowballed problems later on. So if people are heavy on their due diligence on the front end and know exactly what they're trying to target and whether or not something is specifically in their Buy Box or not, and how to get that information effectively. That's one piece. And then on the back end, it's building everything for stress testing over a long period of time, thinking about a portfolio in that same vein. So if you're doing those two things, I think you're going to be very, very, very well hedged against stress and risk in the future.
https://saintinvestment.com/
saintinvestment.com/book
Today, my guest is Cary Prejean. Cary Prejean, is the founder of Strategic Business Advisors LLC. Cary vision is to work with business owners to dramatically improve cash flow and profits, business autonomy and long term strategic planning. And in just a minute, we're going to speak with Cary Prejean about maximizing profits and cash flow.
https://strategicbusinessadvisors.org/
cary@strategicbusinessadvisors.org
J Darrin Gross
I would like to ask you, Cary Prejean, what is the BIGGEST RISK?.
Cary Prejean
You talk about big risk for business owners,
J Darrin Gross
yeah, however you want to, however you want to identify it.
Cary Prejean
Well, I mean, that that's why I deal with business owners, right? The biggest risk for them is, is not paying attention. You know, not paying to get lost in the weeds, not paying attention. What's out there, not. Not, not anticipating some threat, as you call it, and they don't know they have they haven't even thought about it. They haven't even seen it. So there's no mitigating it. There's no transferring it. There's no navigating around it. It just hits you like an iceberg. You know, you have to pay attention to that kind of stuff, and that's why it's good to have, as you said, you know, you come in and you you take a very risk, Central, centric approach to what risk are out there, and what can you mitigate? What can you alleviate? What do you what can you transfer? I think that's a I've never heard it discussed that way, but I like the approach. So if you're not, if you're not paying attention to everything that's out there, it's not just insurable risk, but other risks that are out there, you're going to get blindsided. You know, you fly blind. If you fly blind, you will hit something eventually.
https://strategicbusinessadvisors.org/
cary@strategicbusinessadvisors.org
J Darrin Gross
I'd like to ask you, Charles Gaudet, what is the BIGGEST RISK?
Charles Gaudet
Well, we mentioned risks earlier, of you know, between the marketing risks and the operational sales risk and all that other stuff. But right now, there's the risk of the unknown. And when I say that every single business is being disrupted by AI already, as it sits right now. The thing is, is, if you look back at 2025, and you ask most people, have you been disrupted by AI? Most people will say, No. You'll ask them, okay, what have you found about your business? And they might say, well, leads have been harder. Sales have been harder. Business just feels harder. And when you ask them why, they'll say things like, make a political maybe it's Trump, maybe it's the economy, maybe it's this, maybe it's that, but it's this. Is the thing that they don't realize. They actually have been disrupted by AI. You see, 60% of all their organic traffic has disappeared between January of 2025, and December of 2025 that traffic disappeared because of AI. If you go to Google and you type in any of the buying search terms, you'll notice AI overviews start to get respond with different answers and so forth, and they're not just giving the website. If you go to perplexity and you type in a perplexity, they give you answers. They don't just give you the website. If you go to Atlas, for those who are using it, or chat GBT, you know, they'll give you answers, they don't give you the website. And so the result of that is we are being disrupted by AI as it stands right now. Do we think that trend is going to continue? Well, yes, it's going to continue. And there's disrupting technologies that unlike the web, when the internet came around and it was like, if you're not on the internet, then you don't exist, that took years before it got to that conclusion where, if you weren't on the internet, that didn't exist. But now what's happening is Google didn't ask your permission to change their algorithm. They just did it, and that started to reduce the search. There's a new browser that's coming out that Google will be launching any minute now that it's already on beta, called disco. Nobody really knows what's the impact that disco is going to have on organic search behavior. I have a client, eight figure client, and I was able to take him into the future and show him some of the future browsing activities that are going on. And you know, when this goes live, the impact. And so we typed in a buying keyword, and what ended up happening to him is AI literally said, here's the reviews of everything that's going on. The thing is, is you can also do it yourself. Would you like me to create a system and a and the emails and this and that, to do it yourself? And he was like, wait a minute, what's happening right now? And I'm like, This is why I'm showing you this, because we can prepare if we know in advance another situation. Somebody turned around, he has a product, and they go, let me take you in the future. Let's take a look what's going to happen. He put it into the into the product, and it said, here's the reviews and here's my concerns. Would you like me to show three other products based on everything that I know about you that might be better suited. And he goes, what is happening right now? I didn't think my competition would be AI. I thought it was going to be the other products in the category. And this is why we're taking you into the future, so we don't know how the extent of the disruption that we're going to be faced with, but we do know we're already being disrupted, and we will continue to be disrupted, so there are still some core fundamental things that people can put into place and into action to minimize that disruption. Have a strong unique advantage, continue to put out great, high value content that people will consume. To build that loyal fan base, build your following, build your community, build that brand awareness, and that will help to to mitigate build partnerships. Partnerships are wonderful way that helps to mitigate the. Impact of AI, but everybody's going to be everybody's going to be disrupted. The beautiful thing is that what you will see by the end of this year, the people who are the most strategic are going to have an outsized advantage over everybody else, and you will begin to see a case shaped bit of the economy. The most strategic people are going to go ahead, and they're going to get a massive advantage, and those less strategic are going to fall by the wayside, because AI is going to they're fighting for survival. AI is going to continue to guide you towards the best competitor, the best company, the best service, the best product, and it's going to continue to align itself with the best so you can't afford to be mediocre anymore. You have to be strategic.
https://predictableprofits.com/
https://www.linkedin.com/in/charlesgaudet
Today, my guest is Charles Gaudet. Charles is the CEO of Predictable Profits. He has helped clients generate over a billion in revenue by solving The Founders Trap where successful entrepreneurs become their businesses biggest bottleneck, and in just a minute, we're going to speak with Charles Gaudet about escaping The Founder's Trap.
https://predictableprofits.com/
https://www.linkedin.com/in/charlesgaudet
Today, my guest is Christopher Tiessen. Christopher is the president and CEO of Klaus Multi Parking America Inc, Christopher Tiessen spearheads the US sales and operation subsidiary of a global leader in premium parking systems, Clos multi parking, GmbH.
https://us.multiparking.com/
J Darrin Gross
I'd like to ask you. Chris Tiessen, what is the BIGGEST RISK?
Christopher Tiessen
The biggest risk, in my mind, is for our industry, that we're seen as a commodity is as seen as somebody that is not necessary between because before they go into the risk of getting mechanical parking and maybe the system not working, I will just, you know, let the whole project go away and not do the project. So that's our biggest risk that all of our companies in this industry are working against, and also that conventional parking is more attractive still than mechanical parking, even though we have so many advantages to it, and it's more of the company behind it to actually manage these risks, and, you know, take on these risks of the uncertainties of our client, and just put them in ease. That mechanical parking is the step to the future. It's only the step to the future. It is always already present here, and that with this, you can open doors to your development that you did not think before. And typically, if we have developers in there, have been using mechanical parking for the first time. They don't go back because it's just opened so many doors for them.
https://www.abgmultifamily.com/
Today, my guest is Ashley Garner. Ashley is a seasoned real estate entrepreneur and founder of ABG and Associates with over 30 years of experience, he combines analytical rigor and hands on property management to consistently deliver strong, cash flowing returns to his investors. And in just a minute, we're going to speak with Ashley Garner about value add, deal making, real world stories and lessons from transforming underperforming properties into profitable, high yield investments.
https://www.abgmultifamily.com/
J Darrin Gross
If you're willing, I'd like to ask you, Ashley Garner, what is the BIGGEST RISK?
Ashley Garner
I think the biggest risk is to be under capitalized and and ultimately, you know, a property can go up in value, or the the P and L can show a profit, but if you don't have enough cash flow to pay the bills or make the repairs that you need to make, or make the improvements you need to make, then you you're in a tight spot, and that puts everything at risk, and that's an avoidable risk to not be under capitalized. But the temptation is so great a lot of times to say, I'm going to just manage this myself and save that money, or I'm going to turn units out of operations. I'm going to use the money from operations to improve units. And then, unfortunately, then a water leak happens, or something happens, and you need to do 10 at once. Well, you don't have enough money to do 10 at once, and now you can't rent them, and you're in trouble and so, but if you've got a nice. Just reserve pile of cash, so to speak. Then you you may not enjoy spending it all right now, but you can, and you can stay online, and you know you can survive. So being without enough capital is 100% in my opinion, the biggest risk. And I know that's not necessarily an insurance thing, but I know you didn't ask for just an insurer. I do. I do have a I do have a physical risk that i is my number one but, but the under capitalization is my biggest risk.
https://www.abgmultifamily.com/
Today, my guest is Kenny Bedwell. Kenny Bedwell is a seasoned real estate investor and entrepreneur known for helping high income professionals identify and acquire short term rental properties that generate strong cash flow. And in just a minute, we're going to speak with Kenny Bedwell about short term rentals versus boutique hotels.
https://www.instagram.com/kenny_bedwell/
https://www.linkedin.com/in/kenneth-bedwell-9680a8113/
https://www.strinsights.com/
J Darrin Gross
I'd like to ask you. Kenny Bedwell, what is the BIGGEST RISK?
Kenny Bedwell
So you know, I the biggest risk. I think that this the answer I was going to give you originally, and I kind of talked about it, so I'll move on from it, but it's regulation. Regulation changes. You're in trouble that is a huge risk to any investment. But the risk that I don't really hear often talked about. In our space is actually safety, guest safety. So I'll give you a stat. This is a real stat by there's a there's a guy Justin Ford, he's a safety expert in a short term rental space, and guests are so people are more, 10 times more likely to have an accident in a short term rental than in a hotel. And so there is an inherent amount of risk with hosting people in a property, especially people on on vacation. 70% of people that go on that stay at short term rentals admitted that they like to, you know, drink when they're on vacation. There's nothing wrong with that, obviously, but like, 70% of people, adults who are going and staying in a property are going to drink it when alcohol is involved. And there's, you know, the that increases the chances and the risk of things happening. And I personally, too, I mean, I could go and do a whole story with you that we could do a whole nother podcast episode on where I've had, I've, I've been in lawsuits before, of short term rentals for slip and falls and other things where people were not being careful. And I swear to this day I would, I would love to get the data and the metrics on this, how low people's IQs drop when they go on vacation, because they drop pretty fast. It's crazy. Some of the questions I get where it's like, yeah, just, you know, turn that on, or press that button that says on, and you're good to go. You know, like, people don't really think critically when they're on vacation. And, I mean, why would you you're kind of putting that, you know, putting everything on pause and taking a break, but that increases risk of accidents actually happening. And so I know, I know, you know, you know, you kind of mentioned, like, oh, about it, you know, it's not about insurance, but for short term rental host, it really is. It is very, very, I'm a testament to this personally, it's very important that you get really good insurance, because that it can save you on a rainy day. And you also need to make sure that you have you work with your insurance company and know, you know, if you need to have extra signage or, you know, the the smoke detectors, carbon monoxide detectors, fire extinguishers, is, are they easily accessible? All of my fire extinguishers are mounted in places that you can visibly see. And I've got multiple I put extra safety things in all of my properties because it's just to protect people, because the likelihood of that happening is so much higher than just a long term rental or someone staying at a hotel. And so all these things are super critical. And you know, the last thing that you want this is really, this happens every single year. It happens. Find out, you know a child drowned in your pool. You know, that's a big lawsuit on your hands, and so it's so important that we have these protections, especially short term rental hosts and hotel owners as well, that that protect us in the event of any of these worst case scenarios happen, because they really do, and we can't, you know, turn a blind eye to that other people happen and say, Oh, that won't happen to me.
https://www.instagram.com/kenny_bedwell/
https://www.linkedin.com/in/kenneth-bedwell-9680a8113/
https://www.strinsights.com/
Today, my guest is Joe. Downs. Joe is a lifelong entrepreneur with business ventures spanning securities, mortgage, hospitality and real estate industries. He co founded the bell Rose group to pursue opportunities within the niche Self Storage sector of commercial real estate, and in just a minute, we're going to speak with Joe downs about pro storage. What is it and why we need it.
Joe@Belroseam.com
https://selfstorageacademy.com/
J Darrin Gross
If you're willing, I'd like to ask you, Joe downs, what is the BIGGEST RISK?
Joe Downs
To me, it's, I'll give you, I'll give you, all right, you just want the biggest I'm gonna go right to base. To me, it's change. It's sort of what I just alluded to, if we were, if, if we still thought, because we weren't out there interviewing and investigating other third party management companies. If we refuse to do all that and just head in the sand, we would probably start falling behind other storage facilities, other competitors, who are managing their facilities better than we are. And the reason for that is because of technology. And I alluded to that earlier, and so that's just a small example, but to me, the biggest reason is AI. The single biggest reason is of change. The biggest change agent is AI. So if we're not, and you might say, What does aI have to do with storage everything? Because AI has AI can infiltrate if you allow it and choose to. And I highly suggest you do every, every part of your business in life, AI can have an impact on positive or negative. So you have to be, not only aware, you have to be in tune. So I I worry about, if you're asked, what keeps me up at night? It's not, we're well insured from an insurance standpoint, right? You know, I think when you're in commercial real estate, there's always that lender risk of a covenant and loan doc somewhere, you know, whatever. But that doesn't keep me up at night. It's because even then you could, you can negotiate, and you got attorneys to work you out of it. To me, it's falling behind the AI curve. And because that will directly impact how we find customers, how we source deals and pro storage, I'm using it not only to source locations for properties better and faster than we can do on our own. I'm we're creating a GPT right now to market to the businesses, the 17,000 businesses in Greenville, South Carolina, that are within 10 miles of our facility, that's, I don't think we've gone vertical yet. The grounds cleared and and I think they're, they're getting ready for pad sites. Maybe they started pouring. I haven't seen an update in last in a week, but we've got to fill that facility. So how are we going to do that before all the small bay flex guys get get the word out that they're putting that they're available to receive your business? Well, we came up with an ingenious way to create a GPT that's a relocator. So a GPT is just anyone can create them. If you learn how to win on chat, GBT, it's GPT is it stands for generative now I freeze when I put myself in the spot. Now I'm freezing generative performance transformer. No pre trained generative, pre trained transformer. So it's really just an engine. It's the greatest employee that you could ever have, right? It doesn't need to sleep, eat, take breaks, anything. It does what you tell it to do, but that's the key. It does what you tell it to do. If you don't tell it to do, it won't do it. So we have created a GPT that we will put out in front of every business market, to all the businesses out there and say, Hey, if you're say, Hey, if you're looking for space, here is a here's a simple tool that's free. Put in your name of your business, where you are, where you'd like to be, square foot, square footage you need for space in the entire Greenville market area. It will then, because we'll program it, go out, go on, crexie, loop, net, loop, net, everything. It'll find all the space that's available that meets the criteria for Darrin gross to move his ABC, XYZ widget business, because he's got 1000 square feet now, and he needs 2000 or he's got 500 or no square feet, and he needs something, right? It'll return those results for you, and included in it will be our facility with all kinds of unit sizes. So there is an example of how we're using AI, not only source the location, but also source the customers that will fill the location, right? So and that if we, if I was asleep at the wheel with AI, wouldn't have any of that, maybe I'd be successful regardless. I don't know. Maybe, if, maybe the if you build it, they will come. Principle would happen. I don't know, but I'm not willing to risk it. I'm not willing to risk it with my investors money. So the to me, it's, I'm I'm harnessing the power of AI. It is absolutely incredible. It keeps me up at night for good reasons. And I told you before the show, because it's like a drug. It literally, you know the saying, If you dream it, you can make it happen, or wherever that cliche is. This is literally, AI literally makes it happen. It's just up to you to program it. So I'm excited about it, even though you asked me what's what's a risk, the risk is not staying up with not learning it, not immersing yourself in AI, because if you don't I know everything, I just said, sounds cool and and proactive, but if I'm not proactive, someone else will be, and they might be, and I don't care what you're doing, what business you're in, someone who's doing what I doing, I'm doing, is going to have a direct effect on your business, probably to the negative if you don't not only get ahead of the curve, but keep up. So to me, that's the biggest risk. It's kind of that standing still and not evolving.
Joe@Belroseam.com
https://selfstorageacademy.com/
Today, my guest is Peter Roisman. Peter Roisman is the CO founding principal, President and CEO of REV, the multifamily leasing company, a Houston based venture established in 2019. Under his leadership, REV has become a trailblazer in multifamily leasing management and training, and in just a minute, we're going to speak with Peter Roisman about leveraging data for improved multifamily leasing results.
rev-leasing.com
https://www.linkedin.com/in/peterroisman/
J Darrin Gross
If you're willing, I'd like to ask you, Peter Roisman, what is the BIGGEST RISK?
Peter Roisman
Well, the biggest risk, in my mind, for besides physical property itself, is the occupancy and and and the rental rates. So if you have an underperforming leasing team. And your occupancy drops into the 80s, you know. And at one point, 15% of the properties in Houston were under 85% you're at risk. That is, that is a high risk, too. So in to flip that, to address that risk, you have to be high performing at leasing, which, which means you're not at risk at all. You're lowering or reducing or removing risk. If you're a stabilized property performing at a high level, leading your sub market, yeah, that that one, you can check off the risk. You can still have storms, you can still have the other things that happen on a property. But if your revenue streams are solid. You You should never have a financial risk that way.
rev-leasing.com
https://www.linkedin.com/in/peterroisman/
Today, my guest is Brent Kesler. Brent Kessler was a chiropractor, and after implementing the money multiplier method, Brent paid off $984,711 in third party debt in 39 months, he became so passionate about how powerful this concept was, he began sharing it with others, and in just a minute, we're going to talk with Brent Kesler about Infinite Banking through the Money Multiplier Method.
https://themoneymultiplier.com/
https://themoneymultiplier.com/brent-kesler
J Darrin Gross
And so if you're willing, I'd like to ask you. Brent Kesler, what is the biggest risk?
Brent Kessler
Yeah, well, let me answer it a couple different ways on there. But so as far as a risk, okay, as far as in our business, and what we do when you have this type of policy, I tell people all the time, there is no risk at all, because nobody's ever lost money in a whole life insurance policy. But then I stop, and I say, wait a minute, there is one risk. The risk is you, the risk is you the client and how you use the policy. So you're the only one that can screw this up. You are the only one that can screw this up. The insurance company is not going to screw it up. So who do you know better than you. So you're the risk factor now, as far as a risk also when I because, again, I invest in in properties. I have short term rentals, long term rentals, Airbnbs, vrbos. I have raw land. And I do a lot of private lending in the real estate world. I lend to individuals for houses, even to cars. And I also lend into big property developments and to big communities, to real estate developers where I'm providing a portion of their financing to build these big developments, like we got one right now going in Covington, Georgia, another one in Fort Collins, Colorado, where these are big housing projects, right? Well, look, I've been doing this quite a long time, and I've learned a lot as I've gone through this, and the one thing I've done to really lower the risk, because anytime you invest money, you invest money, you are assuming some sort of a risk, okay? So that's why the insurance policy that I talk about is not, is, is just not an investment, because you can't lose money. See an investment, it can go up or it could go down, right? So there's a risk involved. But I would say to avoid risk, that's your greatest at right, just as far as, especially as far as in the real estate world, is to be in first position in everything that you do, be in first position. How do I know that? Well, I've been in second position. Did it always work out? No, as a matter of fact, and I guess if I would have known you were going to ask me this question, I would have wore this shirt that I have, and it says, if you're not first, you're last. That's what my T shirt says. If you're not first, you're last. So I protect myself by being in first position. And I want the collateral on any money that I'm loaning. I want that collateral to be, I want that collateral to be at least equal to, if not greater than, the loan amount that I'm actually loaning. Now I might have to spend some time and energy going out and chasing down and trying to get that or get the collateral, which is going to be a pain in the butt, but you would much rather have the collateral than not have it. One more thing I want to point out from my own personal experience. A couple years ago, we experienced hurricane Ian. Part of my portfolio of rental property is in Captiva Island, Florida, North Captiva Florida. I own a property. If you go out and you take a look at it, just for a rental it's called Captiva Beach, sunset.com beautiful property sits right on the Gulf of Mexico, and it sleeps 18 people. It's all short term rental. It gets about 350,000 a year in the annual rental. I pay back in 21 I paid 1,760,000 for the property. I'm about to sell it. I'm about to sell it for a very discounted rate, because I'm selling it to my son, who is a property manager, and he's buying it for $2.4 million in January, he's getting a great discounted rate, even though I paid one, seven, selling it for two, four, I did okay. Got all the rental income on top of that when Hurricane Ian came through. So I had insurance on the property. It didn't flood, but it had wind damage. And let me just tell you, if you live in Florida, you guys know you probably don't even want to buy flood insurance because it's so expensive. And if it and it does, and it's a lot of limitations of what it covers, but I had wind insurance on that property. It took me a while, but I almost got a million dollars on my insurance claim from the damage on that property. Now, a lot of people think, Wow, a million dollars. You got a million dollars from the property. Well, that property was shut down for about two years, which means it couldn't be rented. I had to do all the renovations. Had to pay for that, had to pay for that all out of pocket, because it took a while for the insurance company to pay on that property. So did I really make money? No, I didn't make money. I did okay, but I didn't make money because I lost all that rental income. But, but I but, but, but I do think my lucky stars that I had insurance on that property, because if not, I would have taken all of that hit.
https://themoneymultiplier.com/
https://themoneymultiplier.com/brent-kesler
Today, my guest is Travis Watts. Travis is a multifamily apartment investor, public speaker and the Director of Investor Development at Ashcroft Capital. And in just a minute, we're going to speak with Travis Watts about Lessons Learned Through the Market Cycle 2022 to 2025.
speakwithtravis.com
https://www.linkedin.com/in/traviswatts1234
J Darrin Gross
I'd like to ask you. Travis Watts, What is the BIGGEST RISK?
Travis Watts
I would say, in 25 we talked a lot about market and rates and the discounts, and you know why we're bullish, or why I'm bullish on multifamily, I would say it's more than ever. It's the operator that you're about to invest with. Okay, do they have a lot of distress on their books? Are they losing properties currently? Are they not? Not that any single answer to that is like a red flag and rule them out. But you want to dive a little deeper and make sure that they're dedicated to staying in this business. Because what we've seen is a lot of these student deals and programs and things, folks that got involved in 21 and 22 doing their very first deals are some of them are walking away from the business. You know, they gave it a few years. They're not making money. They're leaving it behind to do something else, and they're for selling properties or they're foreclosing. So you just want to be, you know, up on your due diligence with is this operator going to going to survive this storm, and do they have the dedication to stay in the sector, you know, for the next 510, years, whatever the business plan is for the deal you're looking at.
Today, my guest is Danielle Ash. Danielle Ash is a partner in the real estate group and co chair of the ground leases practice as well as the impact practice at Adler & Stachenfeld, a law firm based in New York that is solely focused on real estate. And in just a minute, we're going to speak with Danielle Ash about Demystifying the Reality of Affordable Housing Returns and Risk Profiles.
https://adstach.com/attorneys/danielleash/
J Darrin Gross
I'd like to ask you. Danielle Ash, what is the BIGGEST RISK?
Danielle Ash
Well, I'm going to give a self serving answer, and then I'm going to give more of an investor based type answer. So the self serving answer, I think, is, you know, people come to me from all different sectors of real estate and at all different parts of their career, from early stage developers, sponsors to, you know, super high net worth sovereign wealth funds, who've been investing for 50 plus years. And I do think one of the biggest mistakes or risks that people face is not having good counsel involved in their transactions, having transactional counsel who has the combination of wanting to explain the risk to you and able to do it in a way that you understand, and also not getting in the way of the transaction Just to look smart or kind of win the point. You know, there's a balance of trying to identify risk and be creative about how do we structure around that risk? How do we get you the protections you need? How do we think about all the different ways that bad things could happen and you need to address? And how do you help your investors? Protect your investors in the long run through those but at the same time, what good is it if you can't close the deal right and knowing the difference between what risk is worth cutting the deal over and what risk is something that you can find a mitigation for? So that's on the self serving side, because you know, all the time I see attorneys who aren't really doing that extra work, or where clients come to me and they they've done a deal, and they didn't see this issue before, and now they're facing it, and they need real explanation as to, like, why we have to think about it on the investor side, I will say that, you know, just thinking about policy for a second. Now, there's been a lot of change in policy at the federal level, at state levels, everywhere right now, it's a bit of a crazy time for trying to follow what's happening. And while there has been a lot of great gains for, you know, the Low Income Housing Tax Credit for changes in that policy, I do think that, and I'm borrowing this from one of my clients, Sharif Mitchell, at Northern Liberties, that the risk of a lot of those policies is actually on the populations being served by affordable housing. And we don't always think about those sort of tertiary elements. We don't always think about the fact that, you know, they still have to put food on the table, that they have to figure out how they're going to get you know their children to school, you know that they have to commute. All those costs come into play, and what we've seen over the last few years with a lot of affordable housing, especially coming out of covid, is you have a lot of high arrears issues coming up, because tenants have to choose, do I pay my rent, or do I feed my kids? And when you have policies that make those potential decisions harder, or where they're losing potential benefits, you know, in some states, it's very hard to get your tenants out for non payment, and so a lot of them are going to take the risk that, you know, maybe I'm just going to feed my kids instead. And so I do think that's something important to think about. That when you're putting together a capital stack, you're looking at the population, you're figuring out, how are you going to serve that population, how you're going to work with those people to ensure that they have the capacity, they have the other resources they need to stay in that housing is that really is going to impact the value of your asset in the long term as well?
https://adstach.com/attorneys/danielleash/
Today, my guest is Mark Goldfinger. Mark Goldfinger is the General Manager Head of North America at Mindspace, a global flexible workspace provider that redefines the workplace experience for companies of all sizes, and in just a minute, we're going to speak with Mark Goldfinger about flexible workspace solutions.
https://www.linkedin.com/in/mark-b-goldfinger-mba-7aa73928/
J Darrin Gross
I'd like to ask you, Mark Goldfinger, what is the BIGGEST RISK?
Mark Goldfinger
I think it's great question. I think in the co working ecosystem, or in the flexible office space, you know, ecosystem, I think one of the biggest risks is landlords starting to take on the opportunity to create their own turnkey sublet solutions for smaller companies, and kind of take business from us. Now, I don't think that they're able to really run the hospitality arm that we are, because that's not their business, and we put a lot of pride into that. But I think that's definitely one thing we look at. I think the other thing is really looking at, you know, do people continue to believe in human interaction and being back in the office environment with people, and I think as long as they are willing to agree that that is really valuable, then I think we can continue to run and drive this business and agree that the sky is the limit.
https://www.linkedin.com/in/mark-b-goldfinger-mba-7aa73928/
Today, my guest is Chris Zona. Chris Zona is a partner at Mandelbaum Barrett PC in New York, and a trial attorney specializing in Complex Commercial Litigation, and in just a minute, we're going to speak with Chris Zona about Turning Conflict into Capital Litigation as a Real Estate Investment Tool.
https://www.linkedin.com/in/chris-zona/
https://mblawfirm.com/professionals/christopher-t-zona
J Darrin Gross
I'd like to ask you, Chris Zona, what is the BIGGEST RISK?
Chris Zona
Sure. So I think it really fits within what we're talking about. I think the biggest risk for investors that are in this this realm is that you need to be comfortable with taking over a potential non performing note, right? Like there is no way to avoid risk when you're making this sort of play. So what you need to do is kind of, you know, balance minimizing the risk through your diligence process, because you don't want to take on something that you're not ready to you don't want to overextend in taking it on, and then kind of balance that with the, you know, maximize your return on whatever risk, wherever in the risk matrix that you fall right, they always say higher risk, higher returns. Was very true. You know, if you're going to buy a very, very non performing loan, you're going to be, you know, probably up on the tier of of the extension of capital, and you need to mitigate whatever risk, make sure that you have a cap stack in place to do that you don't want to take on additional debt in order to kind of engage in that strategy, because now you're becoming another note holder as well as being the Enforcer.
And then make sure that on the back end, that you're prepared for whatever the downside of your investment is, and that your investors, if you're running a management that you're openly communicating with them, timeline and the potential downfall, as you've said, there's the nice thing about this strategy is, if you're not a very, very specific strategy fund or investor, you can minimize the downside by how you enter and what your exit looks like. If you're flexible in what your exit looks like, then this could be a very attractive strategy, because you know, if you don't need to exit the property and return your to your investors capital within a short period of time, then maybe you can stay in that property longer, hopeful, hope that the note holder turns it around.
https://www.linkedin.com/in/chris-zona/
https://mblawfirm.com/professionals/christopher-t-zona
Today, my guest is Travis King. Travis is the founder and CEO of Realm, where he is responsible for overseeing all aspects of the organization with a particular focus on culture, strategy and investments.
https://www.realmlp.com/
J Darrin Gross
I'd like to ask you. Travis King, what is the BIGGEST RISK?
Travis King
It's a great question. It's actually really hard to try to encapsulate it in one thing, so maybe I might give a multifaceted answer, if that's okay with you. One thing I would say that is paramount in real estate, and I alluded to it earlier, is the only real way I know to lose money in real estate is to lever inappropriately. So leverage at the end of the day, that's how you lose control of your properties, right? And that happens. So then I you peel that onion a little bit and say, Okay, well, how does that happen? Right? How do you run into problems there? And I think there's two main areas that I would focus on as kind of sub points. Number one is going to be making sure that you're checking your assumptions and making sure that they stand up in a lot of alternative scenarios you might not have considered, right? A perfect example was back in, remember, during the housing bubble of of 2008 when everything popped, they realized at one point that there was no way to even show you know, potential negative drop in housing values, right? That's a great example of just a a glaring error of saying, Well, you got to be able to test some of your assumptions. And I think you really need to beat them up and test them under old under ultimate scenarios that could happen. Black Swans do happen, right? And I think that sometimes it doesn't even need to be a black swan. And we've seen things where we've preached to folks over and over to say, in multifamily as an example, if you were to go through and change your rents just by 10 or 15% on a multifamily property. And then, you know, the cap rates move, you know, a little bit. You know, you have cap rates move 50 basis point because the markets in a little bit of turmoil, right? And your occupancy gets hit by five 10% just all these things are fairly small changes. It could be 15 to 20% of the value of the property. So if you're if you're buying something, you know, that's very highly leveraged, you could find yourself in a very difficult position very quickly. The second thing I would say is be careful who you're doing business with. A lot of times it really comes down to making sure you have the right partners. Some of the biggest problems I've seen happen are are doing business with the wrong people. And I think that that's where you run into problem, regardless of what your dollar of what your documents might say. If you're not dealing with trustworthy people that are putting integrity first and foremost, that's an easy way to get into trouble. So eyes wide open on who you work with. Do your do your background checks, talk to people, get references, referrals. Move slowly. I think you do those two things together and stay conservative in your capital structure. You avoid, you avoid a lot of pitfalls.
https://www.realmlp.com/
Today, my guests are Bill Kannatas and Ben Salzberg with Self Storage Developers. And just a minute, we're going to speak with Bill Kanatas and Ben Salzberg about Self Storage from Dirt to Doors.
https://self-storagedevelopers.com/
J Darrin Gross
I'd like to ask you Bill Kanatas and Ben Salzberg, what is the BIGGEST RISK?
Bill Kanatas
I look at two different risks, one as an investor slash investment, and one is a developer slash development. Um, so if we're talking about the development aspect first, because, as I mentioned earlier, Ben and I spend our money up front first, before we go to the investors looking for their money, we do a lot of work upfront to mitigate that risk, and in any development, nothing ever goes perfect, as much as we think it's going to be great. It's not going to rain tomorrow. We're going to have sunshine for three weeks, and the bulldozers will be out there, and all sudden, we get rain for three weeks, and the holes we just dug flood, right? So you gotta be able to have that in your underwriting. Right? So when I tell somebody it's going to be 10 to 12 months, you know, I underwrite it 14 months, in case we have an additional four months of interest reserve or operational losses. So we try to mitigate all that risk upfront. When you're looking as an investor, slash investment. Then, you know, the advice I always give to my own friends is look at the first let's start with the development team, right? Do they know how to develop you know, whatever it is, is it a Starbucks? Is it self storage? Is it car washes? Make sure you're right with the right development team, or make sure they have experience, obviously. Make sure that you believe in the area. You know. Is there a reason to put one in Bosie, Idaho, or is there one to put it one in Manhattan, you know? Is there a demand for self storage? And then who's operating it? Is it the Bill and Ben show? Or is it, you know, an operator who knows what they're doing? Is it the first time they're operating? Or do they have, you know, billions of dollars of annual revenue in this space? So I think there's various checklists to kind of mitigate that risk. And then at some point you gotta say, I'm all in and and dive in and know that if there is any problems, your partners will communicate that with you, right? Because it's very, very important to always have communication, you know, with your lender, with your investor, with your general contractor, with the village. You know, Benz, an elected official. And when you're working with the communities, you have to perform. You can't tell them one thing and do something else, right? So communication for me is always the best,
Ben Salzberg
And then I agree with you on that bill, you know, making sure the constituents in the area, which are mine and that they're they like what we're building and developing in the community, and to mitigate that risk of any type of Fallout, of people being frustrated, being built self storage in the neighborhood, um, you know, that's that, that risk. And of course, then there's, you know, you want to make sure that the job is insured in case somebody gets hurt, you know. And that goes with you Darrin, you know, you have to, you know, PNC, make sure that it's everybody's covered.
https://self-storagedevelopers.com/
Today, my guest is Philippe Lanier. Philippe Lanier is the principal at East Bank Inc, a DC based developer with 2 million plus square feet of trophy office, luxury retail and residential assets in the greater DC region. And in just a minute, we're going to speak with Philippe Lanier about commercial real estate's evolving intersection with technology and culture.
Eastbanc.com
J Darrin Gross
I'd like to ask you, Philippe Lanier, what is the biggest risk?
Philippe Lanier
Just to answer, because you gave me a little bit of a chain, one of the first important steps sitting in my feet. And to simplify for your audience, if you are an owner, you are an owner of real estate, is to recognize that the world changed and you lost a lot of money, and not bury your head in the sand. The value was fundamentally changed, and it's not coming back. And once you can emotionally get over that, you know, then you're then you're thinking about how to apply what I know and what I have left to rebuild it and to create something great. And that's where we are right now. I think the worst is in theory over and then, how do we reassess where we are as owners, what we've had lost, and how do we build something new? The you know, the biggest risk is if you haven't absorbed that, but you think that help is around the corner, if you run out of time, then you're out of the game. If the banks foreclose, then you've lost all sweat equity. It's very difficult to start again. So to make sure, you put yourself in a position where you're not hoping for a situation to change. Imagine that interest rates away may maintain high for a while. Imagine that this stuff is not going to get easier for longer. Make sure that you're you're running a company that doesn't, you know, lose money every month in salaries. That might mean you have to let some people go that that's just where we. Are. And then, then you solve for the risk of of things not getting better. And then, and then, yeah, then you, you just work hard and build
the pain is real, but I love the the advice to, you know, say, Just admit it, and, you know, go forward from there, as opposed to keep looking for the the silver bullet, or, you know, something that's going to come and save the day, because that, that is, that's, that's really wise.
Eastbanc.com
Today, my guest is Josh Bauchner. Josh is a partner in the landlord tenant and litigation practices at Mandelbaum Barrett PC in New York. He brings a depth of experience and dedication to his practice, where he's involved in complex commercial litigation and class action lawsuits, and in just a minute, we're going to speak with Josh Bauchner about the Nuisance ADA Lawsuits.
https://mblawfirm.com/
J Darrin Gross
I'd like to ask you. Josh Bauchner, what is the BIGGEST RISK?
Josh Bauchner
Well, the biggest risk here is getting sued by one of these serial plaintiffs, with one of these attorneys who's just in it for for the fees. To answer your question, I think ADA compliance planning, bringing in one of these testers, like we discussed, to assess the premises and make any determinations as to what's not compliant, then do an assessment as to what the cost would be to potentially bring it into compliance. Is it something that you could readily do, putting up the handlebars in the bathroom stall, for example, perhaps changing the front entrance door to provide handicap accessibility, or is it cost prohibitive? If the bathroom is downstairs and you can install an elevator, there's really no way around that to gain access. And then the challenge becomes with respect to shifting that burden, the landlords are doing that right. So in most lease agreements, most commercial lease agreements, the landlords are including an indemnification obligation where they're shifting the burden onto the tenant to both ensure compliance, remediate the premises in the absence of compliance, and if sued, pay for the landlord's fees and costs. It challenges again, the tenant doesn't necessarily recognize that obligation in Louise when they're signing on, and they certainly don't recognize what the costs that they're at risk of incurring are going to be if they are sued. And so unless they're a really big business, you know, $100,000 hit to your bottom line could put you out of business, and then again, it becomes the domino effect. Great. So now they are out of business. They've shut down. They've got six more years on their lease term. They vacated the premises. Now the landlord suing the tenant because they've reached the lease the landlord has to find the new tenant to mitigate it just creates a whole host of unintended consequences, all because, again, these serial filers think they're doing right,
https://mblawfirm.com/
Today, my guest is Jennifer Brener Seay. If you're a developer who wants your projects to become more than just buildings, today's episode is for you. Jennifer Brener Seay is the founder and CEO of Art Plus Artisans, who's rewriting the playbook on real estate development by transforming commercial real estate. And in just a minute, we're going to speak with Jennifer Brener Seay about the ROI of Art.
https://artplusartisans.com/
https://www.linkedin.com/in/jennifer-brener-seay/
J Darrin Gross
If you're willing, I'd like to ask you, Jennifer Brener Seay, What is the BIGGEST RISK?
Jennifer Brener Seay
So I'm going to give you two Darrin, one of the biggest risks, I think, is just having solid contracts, and the contracts are there to protect you from all different kinds of risks. So, you know, we're a small business. We've been in business for for 23 years. I think for a long time, I had a very simple contract that I don't think was probably protecting me from what could go wrong. And it was actually a real estate developer friend of mine, as we were going after and winning these bigger and bigger projects, you know, 15 floor ground up brand new builds, and we were going to be installing huge sculptures, he was like, You need a better contract. You need a better contract than this. So we really have worked to strengthen our contracts, to protect us, to protect the artists, to protect the clients, and in addition to that, or as a risk to the business and the economy, I, as a business owner, have never really focused on one vertical, because I got lucky in the 2008 recession that I had just taken on a big our first really big higher education project and our first Assisted Living Project, when kind of everything was hitting the fan at that time and corporate was falling apart. And it really showed me that in a business as niche as mine, I need to. To be diverse in the kinds of projects that we take on. So if one sector is having a hard time, we do not have all of our eggs in that basket. So we we work in in all areas of commercial real estate and with different kinds of companies and different industries to protect ourselves from things in the economy that I have no control over.
https://artplusartisans.com/
https://www.linkedin.com/in/jennifer-brener-seay/
Today, my guest is Blake Rogers. Blake Rogers is the co founder at Steel Peak Properties. Steel Peak is a Southern California based real estate investment firm focused on acquiring and improving industrial outdoor storage assets throughout the western US, and in just a minute, we're going to speak with Blake Rogers about outdoor storage properties.
https://steelpeakproperties.com/
J Darrin Gross
I'd like to ask you. Blake Rogers, What is the BIGGEST RISK?
Blake Rodgers
Sure. So I think in in our space, we say this all the time to to our investors, because they ask us this question as well, what? What's, what do you think the biggest risk is here, guys with this asset class? For us, it's really, since we're buying single tenant deals. I think it's the single tenant nature of these deals. We're buying vacant sites a lot of the time. So the risk for us is you either lease it or you don't, and you either do it in the amount of time that you said you would or you don't. So that, I think that for us is just being hyper focused on, you know, how long is it going to take us to do this. What are all the other, you know, properties in this market leasing for making sure we have all the data and that we're and we're underwriting the amount of time that we need to to lease these up, and that we're buying a product that these tenants want, and that's not going to sit there for a long time, because that's, that's the way that, the way that we can really get hurt, but we can control this risk, though, this isn't, you know, just like a macro risk. A lot of guys in our space got hurt pretty bad four or five years ago when interest rates went crazy during covid, and so that was a huge risk, and some of those guys just didn't foresee that coming. And so that's that's one thing, but for what we can control in buying these types of properties, it's really determining how long do we have to lease this and making sure that we we execute on that business plan.
https://steelpeakproperties.com/
Today, my guest is George Otel. George is the seasoned entrepreneur with over 10 years of experience in real estate and finance, and in just a minute, we're going to speak with George Otel about business finance.
https://bizfunding.net/lander
https://www.linkedin.com/in/georgeotel/
J Darrin Gross
If you're willing, I'd like to ask you, George Otel, what is the BIGGEST RISK?
George Otel
The biggest risk when it comes to funding, is not looking for funding early enough, because the biggest risk is when people call me that they need funding yesterday. So it's I tell people you always have to look for funding, even if you don't need it, because when you need it, you may not find it where you may be. Tweaks. Expensive because of your situation. Let's say you got to look for funding when you're doing good, when you're doing great, because the lenders see less risk in you, because when, when you desperate, you you have a need your fire, fire you're burning, then that's a risk. So for the risk, they want to get more premium. So that's, that's how it works. The biggest risk is like, if, if you always got to look for funding, because it's you got to have funding options lined up, because you always growing. You're looking for equipment, you're looking for working capital, even lines of credit. We have lines of credit. So I tell people you rather have those lines of credit and not use it, then you need it and you don't have it, because that's that's another thing. So for example, there's a lot of loans do right right now for the there's a lot of balloons, though, and banks will like to when you approach them, like five, six months in advance to your balloon. You don't want to wait two months because it's too late. It's going to take two, three months to go to the process. So once the balloon is done, it's you're going to be in default. So it's because you got to refinance before that. So the biggest risk is not looking for funding early enough. And again, in good times, the banks, local banks, are really good. I love my local banks, but we are in uncertain times, a lot of volatility, and they don't like risk, so they avoid risk. Also private money lenders, they more risk. They have more appetite for the risk. And there is a small premium, and obviously it's worth it, because you'd rather pay a small premium and get your funding lined up, then have no funding option and be in a unpleasant situation. So also working with a funding finance broker like our company, because we have multiple options lined up. So basically, when the clients come to us in 1015, minutes conversation, initial conversation, we present them multiple funding option. We ask them about how they position their assets, the cash flow, how everything works. Then we present the Multiple option, because when you go to the bank, to to the local bank, they give you one option, and he said yes or no, but we have different options lined up. So if this one doesn't work, we're moving to the next and so on, until you get the funding and you getting the to the results you you need.
https://bizfunding.net/lander
https://www.linkedin.com/in/georgeotel/
Today, my guest is Pete Neubig. Pete is the co founder and CEO of VPM solutions, and in just a minute, we're going to speak with Pete Neubig about the Benefits of Hiring a Remote Team.
https://www.vpmsolutions.com/
J Darrin Gross
If you're willing, I'd like to ask you. Pete Neubig, what is the BIGGEST RISK?
Pete Neubig
So the biggest risk for VPM, well, I would say for us, the biggest risk is, at the end of the day, we're a payment processor, okay? You know, even though we have all these whistles and bells where you have this marketplace and you have these searches and you have this training, you have this video, if I can't pay people, I'm out of business. And so my biggest risk is that we are connected to stripe, and if stripe decides to cancel or go belly up. You know that I cannot process payroll. So to me, that's my biggest risk. So I do what I can to make sure that my relationship with stripe is good. And you know the challenge with having a payment processor, it's not normal to have two of them, and so we don't have to payment process. That's my biggest risk.
https://www.vpmsolutions.com/
Today, my guest is Marcy Sagel. She's the founder and principal of MSA interiors, with over 30 years of experience shaping multifamily housing, student living and senior housing and more. And in just a minute, we're going to speak with Marcy Sagel about From Blueprints to Brilliance, designing multi family spaces that rent.
https://msainteriors.com/
J Darrin Gross
I'd like to ask you, Marcy Sagel, what is the BIGGEST RISK?
Marcy Sagel
I'm going to answer that in a few parts, because there's different aspects of the job that can be different risks. So when we pick materials for a project, we have to make sure we're working with tried and true materials, okay, materials that are not going to fail on a job, for instance, in the units, if we select a, you know, vinyl plank flooring, we want to make sure it's going to last. So we only work with manufacturers that we know are going to give us a solid product, not we're not trying to test some new product on different people. We really want to make sure that those stand the test of time from a risk standpoint. So that's probably one of the biggest things. The second thing is the furniture. We also specify all of the furniture, and are an installation. So we put all of the furniture into warehouses, and we have to make sure that the warehouses are bonded and insured and going to be doing replacement if there's any problems. And we use it. We use warehousing all over the country, and so we do a lot of due diligence to make sure that risk is minimal, and we work with a lot of the same vendors so that we make sure that we have very, very, very solid in warehousing around the country. Really, really important to our job. There's so many aspects of that the material goods that we order are sent directly to those warehouses. They have them come in on camera. They're signed for. If there's any look or damage to any box or item or palette, they immediately are under record with us to open it up, inspect it and give us a photo and report immediately, within 24 hours, so that we can report it to the manufacturer, and we want to make sure that our, you know, installations go as smoothly as possible. We have a really good track record with that, and the reason we do is because we use really good receivers. They receive it, they're knowledgeable. They take a picture of everything coming in, it's got an item number, it's got a quantity number, and then we have it on record that we can then log into their software and see all of those items online and match it up to our spreadsheets. It's very, very, very organized, and we like it that way, so we only work with groups that are very organized and can follow sort of the regiment that we're used to, so that we can minimize any of the risk.
https://msainteriors.com/
Today, my guest is Lissette Calderon. Lissette is the founder and CEO of Neology Group, a vertically integrated, lifestyle driven residential and commercial real estate firm that specializes in transforming undervalued neighborhoods into sought after communities, and in just a minute, we're going to speak with Lissette Calderon about solving for housing's greatest need, a focus on workforce communities.
https://neologylife.com/
J Darrin Gross
If you're willing, I'd like to ask you. Lissette Calderon, What is the BIGGEST RISK?
Lissette Calderon
Well, I think in today's world, probably the biggest risk you have is uncertainty. And how do you underwrite uncertainty? You know what happens next? How do you underwrite whether it's Harris insurance numbers, construction costs, what does that uncertainly look like, and what, how do you underwrite that? So, you know, how do we do it? You know, we really can't avoid it because, you know, we're developers. So of course, our job is, you know, we really think about a how do we minimize it? So we make sure that, you know, every project, you know, is built, oftentimes, by the same team, the same architect, the same project, and, you know, same contractor, and so forth. And then, you know, we enter into a guaranteed maximum price contract, so ahead of time, we already know what that number is going to look like. Of course, we're building contingencies. So we minimize those uncertainties, so that that's, that's always the hard part, and then in terms of, you know, transferring the risk, and then the insurance, and that's probably how you get to a little bit of the avoiding the risk. You know, especially in South Florida, one of the things that people always talk about is kind of like sea level rise, flood level and how does climate play into what we're doing? Well, I can't move our projects out of South Florida because they're in South Florida, you know, the, you know, number of our projects. So in terms of transferring the risk, you know, we think about Master policies. Our projects are on master policies. So again, we're looking at the risk, kind of throughout the entire portfolio, not just on one independent portfolio and that that has been, you know, very effective for us in terms of mitigating our insurance expenses. Because really, the two biggest uncontrollables that we have as operators are real estate taxes and insurance. So real estate taxes, we've really been able to address that in Florida through, you know, kind of this statutory. Uh, you know, or an instance now that live local, and, you know, we're really able to address that and work with that. And then, from an insurance standpoint, it's always, you know, the next big challenge. And the way insurance numbers, you know, have gone up historically, and we've been able to mitigate that through the master policy and, you know, and how do we avoid, to the extent possible, avoiding is we build really well, you know. So we've got the flood panels, and we build that the right elevations, and we put in, you know, kind of the right, you know, glazing and glass and everything that Mills meets or exceeds the South Florida building codes. And then, you know, we try to go into neighborhoods that we know make sense from a you know, kind of climate standpoint. So Isla pad is up on a ridge. And so we really take into account a lot of these things, and we think about it. And, you know, it's always very exciting to us, you know, after, you know, a big storm, you know, where you'll see kind of flooding on the streets, and some of these pictures that go nationally, our areas, you know, are immediately dry right after the storm, so it's, you know, and I guess that's how we probably avoid it. We build in great locations, and we build a great product, you know, how do we minimize it? We get into, like, you know, guaranteed maximum price, and really kind of understand what the uncertainty and really try to mitigate that uncertainty. And then, terms of transferring, it's, you know, we look at master policies and how we put those in place.
https://neologylife.com/
Today, my guest is Allen Buchanan. Allen Buchanan is an S, I, O, R, and is a nationally recognized commercial real estate broker, columnist, speaker and creator of the sequence success framework. He's also a principal at Lee and Associates in Orange County, California, and in just a minute, we're going to speak with Allen Buchanan about building a successful career in commercial real estate.
https://www.linkedin.com/in/allenbuchanan/
http://www.allencbuchanan.com/
J Darrin Gross
If you're willing, I'd like to ask you. Allen Buchanan, What is the BIGGEST RISK?
Allen Buchanan
Darrin, for me, the BIGGEST RISK is relevance. And I use this in a micro sense, in a macro sense. The micro sense is, I'm 68 years old, and so I realized that I'm on the back nine, maybe the last three holes of my career. And so maintaining relevance with those with whom I deal, first and foremost, family members, clients, friends, etc, there's then a relevance in terms of the commercial real estate profession. I know you've had guests on your podcast that specialize in artificial intelligence, and if you look at the ways in which artificial intelligence is chipping away at what all of us in the sales profession do, you'd have to realize that there's a greater risk that at some day, commercial real estate brokers become, you know, irrelevant. So to me, that's the biggest risk that we face, both on a micro and a macro level, going forward.
https://www.linkedin.com/in/allenbuchanan/
http://www.allencbuchanan.com/
Today, my guest is Bob Lachance. Bob Lachance is the founder and CEO of Riva Global, the leading virtual assistant staffing company for real estate investor professionals. Excuse me for real estate professionals, and in just a minute, we're going to speak with Bob LaChance about virtual assistants for real estate professionals.
https://revaglobal.com/
https://www.linkedin.com/in/boblachance/
J Darrin Gross
I'd like to ask you. Bob Lachance, what is the BIGGEST RISK?
Bob Lachance
Well, for my virtual I'll give you two answers. My virtual assistant company, it is AI, so stepping ahead of that, and in being aware of that and training our virtual assistants be to become experts on that, that now gives me the insurance I need to stay in business as a real estate professional, I would say, you know, if your niche is rehabbing properties or niches commercial, train yourself on another niche, just in case something happens, right? So, for instance, in the residential real estate world, wholesaling is starting to become more challenging in some states. So if you're just a wholesaler as an example, start buying and holding to offset those risks. Start learning how to rehab to offset so offset those risks. So it's really putting more tools in your tool belt and whatever industry you're in. So I would say that would be, that'd be something to do. And I started real estate 21 years ago, and where you start is never where you end, right? I mean, you could probably attest to that, Darrin, you probably didn't start in insurance, insurance brokerage and things like that. You've probably gone through a series of experiences for you to get where you are now.
https://revaglobal.com/
https://www.linkedin.com/in/boblachance/
Today, my guest is Brian Roberts. Brian Roberts is with Dandelion where he serves as director of business development, and in just a minute, we're going to speak with Brian Roberts about high performance, Earth powered geothermal heating and cooling.
https://dandelionenergy.com/
J Darrin Gross
I'd like to ask you, Brian Roberts, what is the BIGGEST RISK?
Bryan Roberts
Yeah, of course, the biggest risk, one of the biggest risks, I would say, for geothermal HVAC systems is late integration into the project. If a developer brings us in after the mechanical engineering the MEP is finalized or or even well underway, we're.
Often trying to retrofit a solution into a system that wasn't designed to support it.
There can, at times, be a little bit of a knowledge gap. Many architects and engineers will default to legacy HVAC systems simply because that's what they're most familiar with. And we see some missed opportunities because geothermal wasn't on the table early enough. So I would say it's really important that we get involved in the conversation early.
That's that's a huge risk for us to not be involved early enough. On the flip side, if, if I look at it from the developers perspective, those developers who don't go with geothermal, their risk is future obsolescence. You're looking with fossil fuel systems that may soon be out of code, that are unattractive to future buyers, or burden with expensive retrofit requirements and and on top of that, you're leaving major tax credits on the table that are available to offset the upfront costs and make it possible for you to enjoy lower operating costs over the long haul.
https://dandelionenergy.com/
Today, my guest is Adiel Gorel. Adiel is one of the leading experts on real estate and real estate investment in the United States and around the world. He is the author of five books, including his Amazon bestseller, Remote Control, Retirement Riches. And in just a minute, we're going to going to speak with Adiel Gorel about The Miracle Real Estate investment, Sitting in Plain Sight.
https://icgre.com/event/
J Darrin Gross
Adiel Gorel, what is the BIGGEST RISK?
Adiel Gorel
With your permission, I'm going to riff the answer, not going to be one sentence, just a few sentences to me knowing what I know now, funnily enough, the biggest risk is doing nothing at all, because later in the future, you say, Oh, my God, I could have owned three houses. Okay, so doing nothing is a very big rate, but Okay, fine. Within the realm of actually doing stuff and buying rentals or buying property. To me, a big risk is buying junk and buying junk. It's easy to say, don't buy junk, but junk is very attractive. Why? Because people have a notion about cash flow, and typically, the worst the home, the worse the neighborhood, the worse the city on paper, the cash flow looks better. Life doesn't happen on paper. So the biggest risk is to buy junk. It's like in software, garbage, in garbage, out. I know people say, Well, we're gonna fix it. No, really is the was the fix up good? Okay, so to me, not buying new is a big risk, mitigating it. Buy new in good areas, but related to your sphere, I also consider it a risk to be under insured. You need to be well insured on your property and get the maximum liability insurance that your insurance agent can offer. Of course, we make it so that it all taken is taken care of for you. But I recommend never being, you know, under insured, because that's an opening for risk.
https://icgre.com/event/
Today, my guest is Andy Gurczak. Andy is the founder of All City Adjusting, a licensed Public Adjusting firm with a focus on making sure the clients get what they truly deserve from their insurance claims.
https://allcityadjusting.com/
Ph: (708)655-4186
J Darrin Gross
I'd like to ask you. Andy Gurczak, What is the BIGGEST RISK?
Andy Gurczak
Biggest Rsk? Cut me up. Cut me off guard, not you know what I'll say, not maintaining your home. I think a lot of people the biggest risk is people not maintaining their home, and then homes falling apart, having damage which they all expect the insurance to cover. And it's not, you know, singles falling off your window, caving in, you know, two by fours leading to the left, drywall peeling. Those are all prevented, like, those are all maintenance of your home. And so the biggest risk I I think, is, is just people then expecting the insurance company to be their warranty, their handyman and everything and and it be done for free, and you probably see it on your side too as an insurance broker.
https://allcityadjusting.com/
Ph: (708)655-4186
Today, my guest is Richard Ross. Richard is the CEO of Quinn Residences. Quinn Residences is a is a leading institutionally backed owner, operator and developer of dedicated Rental Communities in in the southeastern United States.
https://live-quinn.com/
J Darrin Gross
If you're willing,
Richard Ross
You're asking, what keeps me up at night is that?
J Darrin Gross
That's right. Richard gross, what is the BIGGEST RISK?
Richard Ross
So people in this business typically would say interest rates, and certainly the elevated level of rates has been a factor. My opinion on interest rates is, as long as they're stable, I can deal with them like I can price my product, if you will. What keeps me up at night today, and you sort of alluded to it, is regulation and legislation, particularly anti renter bias, and that's mostly local. I'm talking rent control. I'm talking prohibition against renting because somehow we are impeding people from buying homes. The facts don't bear that out. But you know, you can get a law passed that says you can only rent five homes and 100 home subdivision. Well, that's a problem for me. It's a problem for you, probably, as a owner of rental property. So that's, that's would be the biggest risk today is, is a sort of a myopic approach and an anti renter bias that a lot of local municipalities have.
https://live-quinn.com/
Today, my guest is Vince Gethings. Vince is the co founder of Tri City Equity Group and the owner of Wheelbarrow Profits Academy.
Vince@wheelbarrowprofits.com
https://www.vincentgethings.com/
https://www.linkedin.com/in/vincent-gethings-50420a137
https://www.instagram.com/vince.gethings/
J Darrin Gross
If you're willing, I'd like to ask you, Vince Gethings, what is the BIGGEST RISK?
Vince Gethings
What I've seen, it'd probably be over leverage. I know it's kind of the easy answer, but a lot of the issues that I've seen of people being forced their hand is forced to take action is because they're an over leveraged position and they don't have they don't have the working capital. They don't have the liquidity to kind of weather the storm. So they're being forced to take action where a lot of kind of more seasoned investors are sitting on their hands right now, and they can afford to do so, and they're not, they're not being forced to do, to buy or sell. So that, that is what I see right now. As far as the biggest risk of the people that you know we had, we had the survive to 25 mantra, all in the last two years. And that's the that's not working. So maybe it's survived for 26 527, but, um, but, and I think, I think that could have been a lot of that could have been prevented if just keeping keeping leverage in check. And, yeah, that's probably the, probably the biggest one. I can probably go half a dozen more, but that's one I'm going to go with.
Vince@wheelbarrowprofits.com
https://www.vincentgethings.com/
https://www.linkedin.com/in/vincent-gethings-50420a137
https://www.instagram.com/vince.gethings/
Today, my guest is Brian Seidensticker. Brian Seidensticker, he founded Tax Sale Resources, TSR in 2010 and in 2017 Brian partnered with software developer SDA solutions, a comprehensive workflow management system. And in 2020 Brian launched mount North Capital, a 506 C fund, providing capital to tax deed investors. And in just a minute, we're going to speak with Brian Seidensticker about Delinquent Tax Investing.
https://www.taxsaleresources.com/
J Darrin Gross
If you're willing, I'd like to ask you, Brian Seidensticker, what is the BIGGEST RISK?
Brian Seidensticker
I guess, you know, as far as buying tax deeds or the fund itself, it's for you to to, for me to interpret. Well, I think it's, it's from a tax, just tax sale properties, taxes and taxes in general, the biggest risk is the underlying property value, right? That That alone addresses the you know, is this, is this lien going to am I going to be able to make a return on this lien or this deed at the end of the day, or not? And that that is your number one risk? Right is, is assuming that you can, can make sure that your underwriting process addresses that right, and that you can't eliminate it, because things can happen right? I've certainly seen and been and been involved in a property that was purchased and then, for whatever reason, gets demoed, or, you know, has a fire break out, or whatever, what you thought that property value was right is no longer there, right? And so, you know, either your model has to address that loss, right, or you have to, you know, accommodate for that loss in value. And so, you know, for example, tax lien folks try to ensure that okay, the loss in value from things that could happen like that, ultimately, still, you know, if I'm willing to that property less than 5% a lot of things can happen and you're still okay. Right? In the worst case scenario, on the tax deed side, it's not that easy, right? A lot of things can happen, and all of a sudden you thought you're in a great position, and all of a sudden you're upside down. But managing that asset value, underlying asset value, is the number one risk by far.
https://www.taxsaleresources.com/
Today, my guest is Eddie speed. Eddie speed is the founder of Note School, and in just a minute, we're going to speak with Eddie speed about opportunities in private, note investing.
noteschool.com/crepn
https://noteschool.com/
J Darrin Gross
I'd like to ask you. Eddie Speed, what is the BIGGEST RISK?
Eddie Speed
Losing my money and losing my money means that I bought a note and I don't get enough recovery to go pay off my investment and still make a yield. So that could be that that could relate to non performing notes. Performing notes, it does everything down the line. It's like at the end of the day. That is why I like buying first mortgages with a cushion between what the collateral is worth and what I invested in the note. And that's the simplest form to say at the end of the day. That's my safety net, that cushion between what the collateral is worth and what my investment is in that note.
noteschool.com/crepn
https://noteschool.com/
Today, my guest is Sandeep. Patel Sundeep is the CEO and co founder of Avana companies, an asset management and fintech firm that specializes in commercial real estate, private credit, lending and investing. And in just a minute, we're going to speak with Sundip about the impact of return to Office trends on the hospitality industry.
https://avanacapital.com/
https://www.linkedin.com/in/sundipbpatel/
J Darrin Gross
I'd like to ask you Sundip Patel, what is the BIGGEST RISK?
Sundip Patel
That's a great question. Darrin, by the way, so the biggest risk that I foresee, and in our business, is the underestimating of the impact of AI and to our business and everything we do, from assessing risk, evaluating risk, to, you know, funding that risk, the entire process. So we as a company have taken some bold steps to get ahead, to understand how we can apply AI and what it will mean. As as you remember when we started the conversation, my mission was to create jobs and maintain jobs. I live with that fear today, because you're asking me, what's the biggest risk? This is the risk that keeps me awake in the middle of the night when I think that I'm underestimating the true impact of AI that's coming really fast upon us and the sweeping impact it will have across all businesses, not just mine, but even others. And right now, I'm focused on making sure mine and my employees are upskilled and ready and changing fast so we can do more with less, but at least be ahead.
https://avanacapital.com/
https://www.linkedin.com/in/sundipbpatel/
Today, my guest is David Blumenfeld. David is the co founder of Next Rivet, a Silicon Valley based consultancy dedicated to assisting traditional physical businesses and leveraging digital technologies. And in just a minute, we're going to speak with David Blumenfeld about how AI is transforming real estate.
david@nextrivet.com
https://nextrivet.com/
J Darrin Gross
I'd like to ask you. David Blumenfeld, what is the BIGGEST RISK?
David Blumenfeld
We're going to answer it a couple different ways, if that's okay. So I think I mean, and this, this first one might, might seem like a self serving answer, but I think the risk for real estate companies in general for not looking at technology. And again, it doesn't have to be the biggest, you know, the biggest, the newest, the the flashiest, but if you're not incorporating technology into your your your day to day operations, whether it be from a marketing perspective, a company, a leasing perspective, Building Management, etc, you are getting left behind and and the good news for you is that the real estate industry moves slow, but as it gets more and more competitive from insert certainly In certain asset classes, office being one of them to not be investing in kind of future proofing your building and your company is going to come back and bite you in the long term and so and both from a just an operational perspective, but also eventually, eventually from a recruiting perspective, where people who are going to you're going to want In your company are not going to want to work. Want to work at your company if you're not forward thinking. From a tech perspective, I think the biggest concern right now, excitement and concern certainly is with AI and things like conversational AI, like chat GPT, we have, we have clients who their legal departments come in and we can't use AI at all. And I think the concern, the practical concern there is, there is a risk of, if you're using kind of a, you know, chat GPT, or Microsoft co pilot, one of these, or Google Gemini, is it, depending on the information you're putting in to have, let's say you're like, I want to put, you know, I use it a lot for writing better copy, maybe of writing a better email than I wrote already, because I realized I'm just not saying that quite right. But you know, there's it's much more powerful than that. You can put in financial data, for example, that would spit back a spreadsheet for you, or different analysis that might you know normally take hours on in Excel. There is risk when you start to upload proprietary information from a financial perspective, but the but you need to kind of balance that risk with what you're what you're using those tools for, because they are very powerful and very efficient as well. So I think it's making sure you don't swing the pendulum one way or the other, like you need to certainly use AI in your business. But I think if you're going to start to do a lot of things through AI, you know, there are ways to protect the information that you're you're putting out there, and you don't have to just throw something in chat GPT. You can have an application that's specific to your company, that leverages AI, but may be able to spit out kind of your your own private version of chat GPT, so to speak. So you just need to be, you just need to understand the implications and the risks of of if you're using kind of a generic service, you know, be, you know, there is a risk that you're putting that data, not it's not necessarily means that those companies are going to use it against you, but you are uploading that information into into the cloud. And I think it's funny, you've seen a lot in America around like, Oh, we're going to ban Tiktok because we're worried about China, you know, stealing all this data. Well, China's come out with a lot of new AI platforms. Lately, nobody's talking about the data privacy implications. Like, I would be much more concerned about using, putting anything in a in a Chinese AI software platform versus, you know, my social media via Tiktok. So it's, it's just funny how people are not thinking about things holistically. And I think that's, that's just what you need to make sure you need to do. But again, as I said in my earlier very common beginning of, you know, the beginning of the conversation, don't get into analysis paralysis, where you justify doing nothing because you have to overthink it over and over again.
david@nextrivet.com
https://nextrivet.com/
Today, my guest is Simon Isaacs. In 2015 Simon moved his family from London to West Palm Beach, Florida, where he became more involved in the local real estate market after seeing an opportunity, and in just a minute, we're going to speak with Simon Isaacs about the real estate market trends.
https://isaacsrealestate.com/
J Darrin Gross
I'd like to ask you, Simon Isaacs, what is the BIGGEST RISK?
Simon Isaacs
Wow, I would say the biggest risk here. Big Question, the big question.
Demand. I. Demand is the biggest risk here. You know, demand for
properties, demand, if you know you only need one event, one weather event, and everybody ends up leaving. So I would say demand and weather are the biggest risk in my book,
yeah, clearly, in Florida, you're, you're one, you know, one, one major weather event, or something like that from, you know, sour people souring on the on the place, or at least, and it
doesn't even need to be a major weather event. It just has to be enough that people are concerned and they don't want to deal with it, right?
And let me ask you this, do you feel that that's a a local attitude, or do you think it's more of a public perception that gets promoted, you know, news, etc, after an event,
public perception, you know, we end up, you know, whether it's the tornadoes, the winds, etc, it stays on the news, which obviously we want to be alerted, you know, you want the warnings and things like that. But, um, the news definitely makes it drag out a little bit longer. But it is a serious it's a serious event, you know. And the tornadoes were an eye opener last year, because everybody thinks it's hurricanes and flooding, but that's not the case. So it's that public perception is, you know,
https://isaacsrealestate.com/
David Codrea, co-founder of Greenleaf Capital Partners, discussed the hidden opportunities in small strip malls near new construction developments. He emphasized the importance of long-term cash flow and the resilience of retail despite negative perceptions. Codrea highlighted his investment strategy, focusing on retail and office spaces, and his preference for smaller, local service-oriented businesses. He noted typical investment sizes of $2-4 million and a preference for 3-5 year leases. Codrea also stressed the importance of efficient operations, quick tenant turnover, and the role of time as a critical risk factor in his business.
https://www.linkedin.com/in/davidcodrea
J Darrin Gross
I'd like to ask you. David Codrea, what is the BIGGEST RISK?
David Codrea
For me, what I see as the biggest risk that impacts my business the most is time.
So it looks at it, there's a huge benefit to time, but there's also a huge risk if you are not able to get the ball moving on things so extended vacancy or or even just time to make a decision if it takes too long for your organization to get things through, to make, get, get approval for something, or make a decision on what you're going to do with this tenant or that tenant. I think that that can lead to a lot of risk. Because one, you've got an organization that doesn't really know, like, hey, which? How are we making a decision? When? When are we going to make the decision? And no one knows you have, you know, opportunities that can be missed because of inability to move.
And I think we've, if you look at business as a whole, a lot of times, really, really big companies. These look like the 10 biggest companies that are out there. It used to be that big companies would get slower, and now the more the shift is, some of these big organizations are just getting faster and faster and faster. If you look at Amazon, they're they've just been pushing to go faster. It used to be you get something delivered in a couple days, and then it became next day. And now it's like, Hey, can we do the same day? Like they're getting faster. I think they're realizing that time is time is the biggest risk that they have to for them to lose a customer in my business, you know, I'm not Amazon, but if we don't get back to people, we're going to lose them. You know that that mentality is shifting through to everyone. Everyone Everyone wants everything right now. So if you don't have a way to do things faster and avoid that loss of time, that's the biggest risk that's out there. And probably for any business.
https://www.linkedin.com/in/davidcodrea
Today, my guest is Joel Miller. Joel Miller is the author of the best selling book, Build Real Estate Wealth. Enjoy the Journey of Rental Property Investment, and in just a minute, we're going to speak with Joel Miller about the Journey to Real Estate Wealth.
https://www.joelmillerbooks.com/
J Darrin Gross
I'd like to ask you. Joel Miller, what is the BIGGEST RISK?
Joel Miller
Well, I'm going to surprise you with the answer, but it's going to be two pronged here. From a financial standpoint, I will say that rental property can be a source for risk, which is why you typically should form an entity that you hold your properties in that protects your personal assets from things that might happen within your entity related to those properties. And on top of that, you know, I do recommend carrying replacement costs insurance on your properties and. A commercial liability insurance. You know, on top of that, to pick up where the liability coverage on your your underlying insurance is. So that's my financial part of that answer.
But the other prong I want to talk about is relationships. The risk is in losing relationships. You know, I am well known when I'm talking to like teaching the landlord one on one classes and masterminds and stuff like that. I am known for saying this thing, that if I had a choice of losing all my money or losing all my relationships, I would lose all my money in a heartbeat, because my relationships will help me get my money back. And if I have no relationships and a pile of money, what good is that? You know that that's failure. You know, as far as I'm concerned, so it's important to build and maintain relationships that are sometimes lifelong and sometimes might be for one project or something like that, because those are the people that are going to get you from point A to point B, and you've got to be that person to somebody else as well. You know it goes both ways, and so what I say is, don't make a withdrawal from a good relationship just to make a deposit in your bank account.
https://www.joelmillerbooks.com/
Today my guest is Creek Stewart. Creek is an expert survival instructor and author of survival hacks and the best selling Build the Perfect Bug Out Series has been featured on The Weather Channel. The Today Show, Fox and Friends are just a couple places where Creek's been featured, and in just a minute, we're going to speak with Creek about get down to this Mastering the Art of Preparedness.
https://www.creekstewart.com/
J Darrin Gross
If you're willing, I'd like to ask you Creek Stewart, what is the BIGGEST RISK?
Creek Stewart
That's a great question, and I think most people would probably expect me to say that it's being lost in the woods or being struck by a natural disaster. But I guess I'm going to get real personal on this one I me personally being a wilderness survival instructor and a preparedness consultant. I see all of the bad things and think about all of the bad things and think about all the scenarios, right? And it's really easy for me to get caught up, just too much in all of the things of this world. And so I think my biggest risk is thinking that they, that they, I don't know, giving, giving them too much value, versus the things that are eternal, right? The things that last forever our life and these little natural disasters that happen, even though I'm in this business and even though I sell books on the subjects, they're just little tiny blips in this lifetime of eternity. And so for me personally, it would be to consume myself with the thoughts of the temporary things versus the eternal things. And I'm going to quote scripture on you. I always, I always think about this verse from Colossians, you know, set your mind on the things above and not on the things of this earth. And so my strategy for navigating that is to take time each day and try to spend time in solitude and prayer and reading scripture, and, you know, try to dig in a little bit deeper to the eternal side of things, so that I just don't focus so much on the negativity and the temporary.
https://www.creekstewart.com/
Tilden Moschetti, an investment fund and syndication attorney, discussed Regulation D (Reg D) exemptions for raising capital. Reg D allows unlimited funds from accredited investors without advertising, with 98% of deals using it. Rule 506(b) allows non-accredited investors, while Rule 506(c) requires accredited investor verification. Accredited investors must earn $200K annually or have $1 million in net worth. Moschetti emphasized the importance of communication to mitigate risks and maintain investor trust. He noted that only 1-2% of cases lead to legal action if proper documentation is in place. His firm's turnaround time for Reg D filings is two weeks.
https://www.moschettilaw.com/
J Darrin Gross
I'd like to ask you Tilden Moschetti, what is the BIGGEST RISK?
Tilden Moschetti
I'd say that it's lack of communication. So and that's which is unfortunate because it's also the easiest to fix, right? So lack of communication will lead to failure to identify risks, whether it's, you know, the kind of risks we think about in in the insurance game, like, you know, fire and hazard risk, right? We know those things are there, but communicating with your property manager, communicating with your tenants, communicating with those kind of people, can all help identify, hey, yeah. And by the way, the sprinklers never work when we do the testing, or whatever those those things are that can help reduce that risk. But certainly in my world, things go bad when you don't talk to people. So if I could have the best deal in the world, send people their regular checks, but all I'm doing is sending them money, and if it just looks like a black hole, then investors are always going to be thinking, there's something wrong, you know, I don't I don't have any kind of transparency. I don't understand what's going on. Maybe this guy is ripping me off where it could be completely not true. But if I don't communicate, there's no way that they can ever know. And so I'd say, you. By far, almost every risk kind of boils down to that lack of communication, or at least communicating a lot, and really kind of understanding and listening and talking and kind of figuring out what's going on on any kind of asset is going to, at the very least, you know, reduce that risk, or help you identify it, or help mitigate it in some manner.
https://www.moschettilaw.com/
Today, my guest is Rich Lee. Rich Lee is a top lawyer, or was a top lawyer for two companies, and richly experienced the reality that dispute resolution today is driven by pain due to legacy dispute resolution forums and courts. Rich set out to change this with New Era Alternative Dispute Resolution, or ADR, and in just a minute, we're going to speak with rich Lee about dispute resolution.
https://www.neweraadr.com/
J Darrin Gross
I'd like to ask you Rich Lee, what is the BIGGEST RISK?
Rich Lee
I'll answer that kind of in like two parts really quickly, right? The first is, I think, you know, in the real estate industry, and actually in business in general, I think the biggest risk, you know, in a lot of just kind of business dealings is the relationship, right, and and maintaining good relationships, whether it's with an existing, you know, Counterparty, or, you know, a future counterparty or a former Counterparty. Relationships are everything you know. And so all the things you do right to mitigate that you know both before, and then, of course, you know during a relationship. And then, God forbid, you know if something sours in that relationship, I think that's, you know, it's critical. And something that I think is is often overlooked for us as a business, right? The thing that I will think about all the time, and that we obsess about is, you know, frankly, and it's, it's still related to the relationship, it's the user experience, you know, both on the platform, you know, on our actual technology platform, but also just the experience overall, and the experience for all the people that would be involved in in, you know, in a dispute on our on our platform, which is both, you know, the plaintiff, the defendant, the two sides who are actually in a disagreement, their lawyers, Right? So that's two more parties, and then the arbitrators and mediators themselves, you know, and their experience, you know, administering and adjudicating a case on our platform. And so it's something that we obsess over a lot in terms of, you know, both the people we hire, you know, finding the best people who are smart, bias towards action empathetic, right? So even your interactions with us are positive. And then, of course, everything, every product we design, every feature we add, every additional process we create, even every new rule or any rule change we make right to to our arbitration rules, always with that kind of end user in mind, and like what the experience is going to be. And, of course, fairness above all else.
https://www.neweraadr.com/
rich.lee@neweraadr.com
Today, my guest is Kelly Stratton. Kelly Stratton is the President and Chief Product Officer and founded Quire in 2010 to transform the manual, air prone Technical Report development process she experienced for more than the first 10 deck the first decade of her engineering career. And in just a minute, we're going to speak with Kelly Stratton about three trends that will define technical report management for project driven businesses in 2025.
https://openquire.com/
Kellys@openquire.com
J Darrin Gross
I like, to ask my guests if they can look at their own situation. Could be your clients, the economy, you know, whatever it is that you, you identify and consider to be the BIGGEST RISK?
Kelly Stratton
Yeah. And when you ask, like, the first thing that pops in my head, because I, you know, as the chief product officer, and I kind of help drive like, what is our product going to be, you know, today, versus, you know, six months from now, a year from now, and you know, we have a really strong feedback loop with our users, and they have a mandate for us about, how can we make a difference in their work lives and in their work product? And both those things are really important to me, because this is a bit like our platform, is a space they spend a lot of time in. And, you know, so, so you have that, but then you also have this, this powerful energy around AI, and how do we incorporate that intelligently and effectively into our product? And again, the mandate from our customers is, you know, is pretty specific. They want to be able to access their past experience. They want to be able to interact with their and harvest their intellectual property, and it that that you know, you know, again, I use the phrase institutionalize that knowledge that's really important to them. You know, in the past, it's just, you know, write the report and put it in the file folder, and then it's on to the next one. But there's an awakening around this, like, hey, no, this isn't just an archive this that that we never look at again. How can we use this as a tool to make train our team and improve our reports and our process going forward? So I think just getting creating products where we give them access to their content, smart, yeah, powered searching, and we, we don't step outside of that too much, right? That we give them kind of the the access to their historical information, that that can really make a difference, and we deliver on it. So I think for me, is continuing to keep purpose built as our North Star, and we introduce risk if we spread ourselves too thin and are not incorporating kind of that feedback with our customer for things that they want, and then the things that we know how our product makes a big difference in how AI kind of supports both of those things. So. That's how I'd say that risk is getting AI right for our customers, helping lead them away being lead the way for them, being their innovation partner, and not spreading ourselves too thin.
https://openquire.com/
Kellys@openquire.com
Today, my guest is Steve Austin. Steve Austin is the founder and CEO of Revitalization Unlimited, where he focuses on structuring the company's investments to maximize value for the portfolio. He has a diverse entrepreneurial background and has started companies in several different sectors. And in just a minute, we're going to speak with Steve Austin about preserving historically significant real estate.
https://www.revitalizationunlimited.com/
J Darrin Gross
I'd like to ask you, Steve Austin, what is the BIGGEST RISK?
Steve Austin
That's a good question, I think right now for specifically for us, there's a tremendous uncertainty around the future tax policy. There's a lot of talk about, you know, closing the IRS and putting in tariffs, and so there's a lot of speculation and and stuff swirling around right now. So I think that presents a significant risk to us, but, but just, you know, kind of getting away from, you know, the regulatory risk, you know, I think, for for anybody who's out there in business, in in particular, raising investor capital right now, the, I think the biggest risk is, is just, you know, are you able to build a repeatable, scalable process in your business, you know? So for us, that's, you know, how do we source deals? How do we underwrite deals? How do we close deals, you know, what? What are the right structures for the deals, you know, and kind of systematizing that is, is kind of my view of risk mitigation from from a business perspective, because, you know, at the end of the day, investors, you know, they have a lot of options with their money, and you know what, what you're asking them to do is to trust that you have the right process to consistently, you know, generate. Returns. And you know, my answer to that is often risk management. You know, to your point, you know you can, you can avoid a lot of risk just by being cautious in, you know, not using a lot of leverage and debt and things like that. So, you know, we while, while taxes are a component of what we do, you know, we're also trying to generate returns, you know, without a lot of risk. You know, a lot of lot of folks refer to that as risk adjusted returns, right? And you know, so when you're buying buildings debt free, it certainly gives you a much wider, you know, birth to operate in, in my opinion,
https://www.revitalizationunlimited.com/
Today, my guest is Tudor Vasiliu. Tudor is an architect turned architectural visualizer and the founder of Panopticon, an award winning high end architectural Visualization Studio serving clients globally. And in just a minute, we're going to speak with Tudor Vasiliu about virtual storytelling, how narrative driven property marketing is replacing traditional showrooms.
Linkedin: https://www.linkedin.com/in/tudorvasiliu/
J Darrin Gross
If you're willing, I'd like to ask you Tudor Vasiliu, what is the BIGEST RISK?
Tudor Vasiliu
Oh, that's that's a hard one. Um, I mean, I can speak about so many things, but at the end of the day, the base of of of how we how we interact with people and how people interact with each other. I believe, you know, from my standpoint, is empathy, empathizing with your with your family, with your friends, with your clients, with everyone around you. I think that's a great way to navigate life and the loss of empathy is when the bad things happen. And I think, you know, we can be seeing that across the world, and nowadays it's everywhere, and we're asking ourselves, why is that happening? I don't think there's a, there's a easy answer to that, but there, you know, the the answer for me is try to keep that, keep alive that old sense of of old time, empathy that we were educated with, you know, the values that our parents instilled in in us and the education instilled in us, and even if you know the world is so much faster nowadays and so much more selfish and so on. Why not? You know, stick into those. Um, good old love and appreciation for the other. And I think this is the way we can make a better place, or make the world a better place, not losing that empathy. If we do lose it, I don't know, just slap, slap out ourselves over the head and snap out of it. Because it's not by being selfish and by being self centered that we will, you know, make the world a better place or make an impact. So just caring for for the other next to you, and with that attitude, it's just you would probably achieve a lot in life. That's how I'd see it. Darrin
Linkedin: https://www.linkedin.com/in/tudorvasiliu/
Today, my guest is Mike Cossette. Mike is a world traveler and a REMAX broker, owner in Central Texas. He has 20 years as an agent investor who owns and manages multi family, short term rentals, commercial assets, a Florida Island and recently has had four kids in less than four and a half years. And in just a minute, we're going to speak with Mike Cossette about long term success with market volatility.
https://www.linkedin.com/in/mikecossette/
YouTube: askmikecoss@gmail.com
J Darrin Gross
I'd like to ask you, Mike Cossette, what is the BIGGEST RISK?
Mike Cossette
Well, Darrin, I appreciate all your insight, and I really appreciate that that question. And I like the three phases that you just went through, because that is going to help me restructure how I think about my own risk. I really that that was a nice little light bulb you gave me my personal risk. And I think a lot of investors might be seeing this now, and if they're not, if they're new investors, this is something that is vitally important is over leveraging. I think everyone you know says, Keep X amount of dollars, six, nine months of you know, costs, you know, capex, or what have you in the account I want. I think everyone should increase that because, as you mentioned with the global warming and fires and hurricanes and those black swan events. Everything can be going perfect, but it's what you don't and can't expect or predict that can sink the ship. And we're experiencing that now. Everything you know, even tough, markets going fantastically, you know, fine, and then boom, hurricane hit, no money coming in six months before insurance can even lift a finger, and that can sink a lot of ships, and it almost sunk ours so, and we're still waiting, waiting to see if it will. So I think that is the biggest thing is for so long, we've been going fast, borrowing 232, and a half, three and a half percent interest. Then, why wouldn't you buy this? Cash Flows? Everything makes sense, and capital is available. Government's printing money. Everyone's got their hand out. People are moving fast and not stopping, and assessing their portfolios the way they should be, and really setting aside the emergency funds that are necessary. I think that is, in my opinion, the biggest risk and my biggest risk.
Today, my guest is Matt Buchalski. Matt is a serial business builder, sales leader and multi family investor with nearly two decades of experience, and in just a minute, we're going to speak with Matt Buchalski about strategies for establishing quality returns and passive income in commercial real estate investing.
https://www.linkedin.com/in/matthewbuchalski/
matt@ownwell.com
J Darrin Gross
I'd like to ask you. Matt Buchalski, what is the BIGGEST RISK?
Matt Buchalski
I think the biggest risk as an owner, slash general partner, is reputation risk.
And I think reputation risk comes in two different forms. Right? Number one is your own personal reputation, right? How do you handle yourself during the hard times? How do you screen opportunities as they come into your inbox and really gage which ones are worthy of you putting your name reputation on, and frankly, capital into, because I put capital into every deal that we do, right? So I think there's reputation risk from that perspective, the other perspective, though, and this is kind of the little further downstream, but the reputation risk of.
How you run your assets right? What happens to you and your community ecosystem by putting the wrong resident profile into your units? What happens if you're not screening your residents properly and they throw parties or they you know, they have bad actors that you know frequent your communities, other people are going to want to move out, and other people will move out, and they won't tell you necessarily why in most cases, right? That's your reputation on the line. That's your your sign at the edge of that asset that carries, you know, kind of your branding on it, and so you need to make sure that everything that you do on running that asset helps build and enhance the reputation of that asset. Otherwise, it takes a long time to undo that.
https://www.linkedin.com/in/matthewbuchalski/
matt@ownwell.com
Anne-Michelle Wand, an international real estate expert, discussed her journey to financial freedom and her investments in Panama. She highlighted the ease of property ownership for foreigners in Panama, the use of attorneys for contracts, and the stability of the US dollar. Anne-Michelle detailed her strategy of raising all capital upfront to minimize risk, avoiding mortgages, and ensuring solid land investments. She plans to build a multi-family project targeting the over-55 and digital nomad markets, raising $6-7 million. She emphasized the importance of minimizing risk through solid financial planning and the potential for passive income through real estate investments.
https://www.passive-profit-partners.com/
https://www.linkedin.com/in/cr8grtsuccess/?originalSubdomain=pa
J. Darrin Gross
If you're willing, I'd like to ask you, Anne-Michelle Wand, what is the BIGGEST RISK?
Anne-Michelle Wand
Well, I think I touched on it before. I think the one of the biggest risks is over leveraging your product and the so that's how I've created this whole business model to minimize risk by having all the money paid up front and owning the building outright and then having the ability to refinance it when conditions are favorable, in order to pull out investors money that that's that's that allows you to to withstand any downturns, delays or economic factors that may be happening in the outside world. And still, you're still going to have cash flow the way I've designed the project. It's going to break even at 23% so anything above that should be cash flow back to the investors.
You know, it'll start out small, it'll grow and people will also have the ability there'll be a section in there where people can actually come and enjoy a vacation or or for the over 55 live there full time. So your amount of return will vary depending on how much you use your. Property. You know, that's, that's how I see. You know, minimizing risk is putting the solidarity there of the land. Land, you know, generally doesn't go down in value. And if it does, it goes back up on a on a scale. You know, may go up and down a little, but if you crack it over 20 years, goes up. They're not making any more of it. And especially land on a Caribbean island that's a very desirable land, whether it's right on the ocean or not. Another wonderful factor about Panama is we don't have hurricanes, so people can get out of the hurricanes. We don't have earthquakes. It's it's safe there for your land too. You just need to make sure it's elevated and not right on at sea level for the rising seas that is happening.
https://www.passive-profit-partners.com/
https://www.linkedin.com/in/cr8grtsuccess/?originalSubdomain=pa
Today, my guest is Carl Moose. Carl is a seasoned executive with nearly 30 years of experience spanning business development, mergers and acquisitions, real estate and energy solutions. And in just a minute, we're going to speak with Carl Moose about how renewable energy can turn your property into a high performing asset.
Ph: 630-785-0031
Web: greenlightenergy.solar
E: carl@greenlightenergy.solar
J Darrin Gross
If you're willing, I'd like to ask you, Carl Moose, what is the BIGGEST RISK?
Carl Moose
Yeah, so as a property owner. And when I'm dealing with property owners, anytime you make a change to the building, or you install something on the building, like solar, you know, there's, there's some risk there. I mean, you know, obviously their first concern is, you know, are you going to put poke holes in my roof, and is my roof going to leak? So that's one of, one of the considerations. The other is, you know, weather, you know, they ask, well, you know, are these going to blow off if we get a, you know, big weather storm, or is hail going to damage these? And you know, the answer is, possibly, you know, if the storm is big enough, and if the hail is big enough, you have that, you have that risk. And then, of course, you know, they they ask about, are they going to work, right? And so there's enough data out there with regard to whether the solar panels are going to work, and we know the sun's going to be there, right? So that's not, that's not an issue.
The question then becomes, you know, are these things actually going to work? And there's enough data out there that to support, you know, our response to that, which, yeah, they're going to the way that we install them, the way that they're designed, they they will perform. So those are the questions that we get from business owners, you know, with regard to, you know, if I, if I make this change and go ahead and put solar panels up there, those are typically their concerns.
Ph: 630-785-0031
Web: greenlightenergy.solar
E: carl@greenlightenergy.solar
Today, my guest is Matt Spagnolo. Matt is a former residential and commercial agent turned capital raiser now in capital markets with Colony Hills Capital as fund co manager, and in just a minute, we're going to speak with Matt Spanolo about capital markets and alternative investments.
https://www.colonyhillscapital.com/
https://www.linkedin.com/in/matt-spagnolo/
J Darrin Gross:
I'd like to ask you, Matt Spagnalo, what is the BIGGEST RISK?
Matt Spagnolo:
Yeah, I would say the biggest risk in multi family has to be interest rates, right? Interest rates are something in I like to say the biggest risks, at least with what we do at colony, is something that we can't control, right? We believe in our team and the systems and processes that we've put in place, what we can control, we can live with with that, right? But what's tough is the items that we can't control, like you said, insurance and interest rates. So we've made a shift to help on the insurance side of things. Right? If the properties we had invested in Texas and in Florida in the southeast that maybe are seeing a higher jump in insurance, we are going to these properties in the northeast, like I mentioned, we're making that shift geographically. The insurance number itself might be high in the northeast, but the only thing that we care about as an operator is what is the year over year change? As long as that's consistent and relatively predictable, that's what's important to us, right? Because we can underwrite to that. But if you're in some of these states where it's very unpredictable, you could see a huge increase one year, and then it flat lines for a year or two, and then there's another massive increase. That volatility is something that that worries us. So we are going to markets where the year over year change, regardless of how expensive it is, is consistent and is relatively predictable, and has been for 15 to 20 years. So that's something that we're doing to try to eliminate that insurance risk, however, interest rates, one, nobody knows where they're going. And two, if they did, they probably wouldn't, wouldn't be working. They'd be they'd be on wall street somewhere. But right, it's up to the Fed to kind of control the Fed funds rate, and then that will also affect some of the other rates that we see in multifamily right? And even with Fed funds rate coming down, we've seen that the 10 year has has gone even higher recently. So that's that's something that we can't control. What we can do is make sure that we're buying our deals right at a good cost basis, but the sale right our cap rates, what we're buying and what we're selling at, really just depends on what the interest rate is. I mentioned earlier. We want to buy with that positive leverage. If the buyer on the back end of a deal that we are selling is using the same strategy, their purchase price is going to move not depending on the income of the property, but on what the interest rate is, right, if they have to get a new loan. So that's that's such a risk, and it's a very big one. But if we think that interest rates are going to find some sort of normalcy, or flat out, or flat line here, between that four to 6% range, I think that's something that we would, we would love to see, is, is some stability, right? Regardless of what the number is, just again the year over year change being consistent. So to answer your question, I'd have to pick interest rate risk.
Today, my guest is Katie Kim. Katie Kim is a visionary real estate developer and educator specializing in transforming overlooked urban spaces into thriving community enhancing developments, and in just a minute, we're going to speak with Katie about how to scale your real estate portfolio.
https://www.katiekim.com/
https://www.linkedin.com/company/thekatiekim/
https://www.instagram.com/thekatiekim/
https://www.youtube.com/@TheKatieKim
J Darrin Gross:
I'd like to ask you. Katie Kim, what is the biggest risk?
Katie Kim:
The biggest risk is it all not working out right and not going to plan, pretty much.
So we when we step into a development, I want to answer in two parts.
I want to answer an insurance side of risk, because I think insurance is a great way to do risk, and it's definitely part of our risk mitigation plan. But when we and when we step into putting together the development structure, it's more than what are you offering your investors, right? It's who's on the team in the development and what are they seeing as a risk and putting all those feedbacks and comments into that risk mitigation plan for the development itself, and communicating that to our investors and our bank and all of our team, and then also contingency, contingency, contingency on the financial side, for sure, but how do you make sure you have plan? A, B, C, D, you know, really, EF all the way to Z for each item in the plan, in the process.
So, you know, a couple of the projects we started, I mentioned Keller station as one of our developments. You know, we were in the middle of construction when COVID hit, you know. So now you gotta look at, okay, you want businesses to come into a place where they can't open, they can't get going, they can't launch. And some of them are retail, some of them are customer facing, some of them are restaurants and coffee shops. And looking at that plan and how do you shift and pivot? And that's where I really go back to network. And who do you have in your network?
How are you building your network? Because they're your biggest resource. They're your biggest cheerleaders. They're going to really, you know, think outside the box, bring their their expertise in their lane to really help the Miss risk mitigation. You know, we were the success story at Keller station was, you know, our, our coffee shop there, CXC coffee. They have grown 3x you know, since COVID, they pivoted. They actually did some really cool marketing during COVID. They did a curbside pickup because they didn't have a drive through.
We had a couple retail businesses. Hello, headband. Who does headbands and scrub apps? They have the softest fabric. They they actually moved into their first retail location from their home in March 2020, so you think, like right during the COVID shutdown, and they were actually so busy online, they would sell out within like three minutes, sometimes 30 seconds, and they couldn't even open their store because they couldn't keep inventory in they were just so it's, it's, how do you leverage your team to really enhance whatever the goal is, if it's growth, if it's risk mitigation, if it's, you know, avoiding that, that issue, leveraging that, and one way we do It, specifically with insurance, is we have our insurance agents, look at our contracts, look at our policies, where we where we, you know, at risk, right? And some of the policies, when people put together investment deals, as you know, is, you want to make sure you have a policy to protect your investors, protect your officers, as well as the building like it goes past just that physical structure and sitting down with someone you know, like yourself, where you can say, okay, hey guys, I want to show you where you're exposed, right. Here are some things. Here's some ways we can cut your premium without cutting a coverage. And that is where I see a lot of people.
Such as yourself coming as a strategic partner to the team, versus, hey, I'm just selling this product. I'm just selling this, this policy, right? You're coming from contribution, you know, with, you know, everything you're doing with the podcast and educating your audience. You're educating them to be, you know, again, to walk with you and then run with you. So where they come back and say, Hey, how can we get our monthly payment down, but not give exposure, right? Not given to more risk and and I think if people start to ask questions, right, and come from Curiosity, bring their team as truly strategic partners in their plans, then it really changed the game.
And that's that's where I would encourage people to go, especially when they're looking at risk. And risk mitigation is you're paying these people for their service, yes, but are you leaving money on the table by not leveraging their mind and their strategy and their strategic capability in your deals and into your network, and that is where I think a lot of people do leave a lot of money on the table.
https://www.katiekim.com/
https://www.linkedin.com/company/thekatiekim/
https://www.instagram.com/thekatiekim/
https://www.youtube.com/@TheKatieKim
Today, my guest is Jamison Manwaring. Jamison is a multi family real estate expert and CEO of Neighborhood Ventures, a leading real estate investment company utilizing crowd funding to enable investors to invest in multi family properties.
https://neighborhood.ventures/
https://www.linkedin.com/in/jamison-manwaring-a8188625/
J Darrin Gross:
I'd like to ask you, Jamison Manwaring what is the BIGGEST RISK?
Jamison Manwaring:
The biggest risk that I see today is continued oversupply of housing. And we always go back to econ 101, that it's supply and demand. And we have a lot of demand in our markets that we cover for housing. There are not enough people who can afford to buy a home, so more and more people are renting. But we've built a lot of apartments also. So if the supply of new apartments is stronger than the demand, then price either stays the same or can potentially move down. And so as I'm looking out the next few years, it really is when this new supply starts to go away and we get to more of an equilibrium with our supply and demand. The past few years, the biggest risk has been what would happen with interest rates, and where do we where do we land? And I think now we've kind of gone through that. Right now, what I'm looking at is future supply, what will happen in 2025 and as a appears right now, 2026 2728 the demand, the supply falls off a cliff. I do think, besides the the supply, what happens with insurance, is a hot topic right now, because we just saw what happened in with the fires in California, we're having a big blizzard right now on the southeast that is, is freezing people, and it's going to cause cause problems. And insurance is in some people think insurance is kind of a broken model when it comes to commercial real estate and how many and how you make insurance work. In some cases, when you buy an older building in Arizona, you might get one bid from an insurance broker, and that's all you can find one company who will will put insurance on the 1960s building, even if the building is all up to code and has updated electrical panels and other things, maybe one, one person, so one company where six, seven years ago, you'd have three or four quotes. So insurance is in a really precarious spot. And I do know it's hard in some places to get insurance. In Florida and Texas, with the hurricanes, and now with California, so that that we think it, I think it'll figure itself out, and whether that means higher premiums or or adjusting risks in other ways, so that there'll, there'll be a marketplace. But it is definitely a hot topic in something if you're an investor or an operator, you need to stay on top of because it's a changing landscape right now.
Today, my guest is Justin Goodin. Justin is the founder of Goodin Development, a multi family development firm based in Indiana that enables busy professionals to invest in real estate without the demands of being a landlord, and in just a minute, we're going to speak with Justin Goodin about multi family development.
J Darrin Gross:
I'd like to ask you, Justin Goodin, what is the BIGGEST RISK?.
Justin Goodin:
So I mean, my job as a developer is to obviously build a project on on time, on budget, you know, multiply my investors equity. The biggest risk for for my position is the uncertainty in the market in that, you know, three year time frame down the road when we go to, you know, one, lease up the property, sell the property. But you know, we have no idea where interest rates are going to be, where Cap rates are going to be, how the market is going to be in in three, four or five years down the road. So that, I think, is the biggest risk to me as a developer. I could build an amazing project on time, on budget, but when I get to the finish line, I go sell the property. Who knows where the market is going to be, who knows where interest rates are going to be? But I did everything right on my part for the past three years. It just so happens now that cap rates expanded values are down. Maybe that affects my refinance proceeds. Maybe that affects the what the buyer can pay for my property. So I would say, yeah, just the uncertainty of how the market is going to be in three years is my biggest risk as a developer.
https://goodindevelopment.com/
https://www.linkedin.com/in/justingoodin/
https://www.instagram.com/justin.goodin/
Today, my guest is Jon Howard. Jon is currently pushing the boundaries of architecture, as the associate principal science sector leader at HED of America's oldest and largest architecture engineering design firms, and in just a minute, we're going to talk with Jon Howard about the future of scientific workplaces.
https://www.hed.design/
https://www.linkedin.com/in/jon-howard-aia-cdt-6056604/
J Darrin Gross
I'd like to ask you, Jon Howard, what is the BIGGEST RISK?
Jon Howard
I think the BIGGEST RISK, from my perspective, and I'll take, I guess, my client's perspective on this, is making sure that if you're a science based tenant or or even a owner, like a you own a building and you want to attract science based tenants, making sure that the whatever facility they're going into can meet the needs of those types of tenants. I think we've seen, luckily, not too often in my own personal experience, but we have seen in the industry, you know, a building being built for maybe a single tenant, even if it was a lab tenant, being built for a tenant or a tenant type that doesn't have the kind of the metrics that a science based tenant will be looking for. So, you know, making sure that the Structural base spacing is adequate, or is on 11 foot module, that's kind of the rule of thumb, so that you can have all your bench benches laid out efficiently and have enough space to walk around and not run into a column, making sure you've got enough floor to floor height. So typically, what we try to look for with a prospective tenant is making sure that the building can accommodate a 15 foot floor height so that they can accommodate all the ventilation systems and everything that go into a lab space. Or sometimes, if it's not that high, designing enough floor mechanical space in the floor area to kind of make up that kind of lack of ceiling area that you you would be missing. So I think just from my own perspective, especially with investors that are real estate developers that are looking into getting into the sciences, I think the biggest risk is landing that tenant and then the tenant not being able to get into the building, or having some serious issues with the building that they weren't cognizant of. So what we do here at H, E, D is often we'll work with landlords or tenants to to help them assess in a building asset and make sure that it can accommodate whatever tenants they're looking for, or if it doesn't recommend. Some upgrades that might be needed to attract those tenants. Or in the tenants perspective, you know, create a list of things that need to change before you can sign a lease or or what have you so, because if, if you're locked in and the building doesn't work, then that that can be a major issue, especially for science tenants that have, you know, an ROI that they have to adhere to, and, you know, develop a product to market at a certain time frame.
https://www.hed.design/
https://www.linkedin.com/in/jon-howard-aia-cdt-6056604/
Today, my guest is Christopher Schlierman. Chris is based in Arizona with a background in tech and real estate, and today is the president of Corona capital. And in just a minute, we're going to speak with Chris Schlierman about how to align your heart and mind.
https://thec2way.com/
https://www.linkedin.com/in/chris-schlierman-b03bb391/
J Darrin Gross
If you're willing, I'd like to ask you. Christopher Schlierman, what is the BIGGEST RISK?
Christopher Schlierman
Uh, two things on a personal front, the person you marry is the BIGGEST RISK. On the professional front, it's choosing the place you're going to work. And getting that would go with investment too, of like, who you're going to invest with, the person, not the company, putting an emphasis on the people that you're going to align with, if you're going to partner with somebody, if you're going to go take a job from somebody, you're going to invest in somebody. There's a person behind it, right? Like, there's always, it's always a person you're investing in a company, well, there's a CEO, there's a founding team, there's a real estate project that you're going to invest in. Well, there's somebody who's running point on managing that project. If it's a taking a job somewhere, it's taking a job working for somebody, whatever, there's always a person that's behind every deal. The BIGGEST RISK is always on the people side, whether it's personal or professional, it's, do you actually know this person? Or now are you going to go in to, you know, get in lockstep with this person? Is always going to be the BIGGEST RISK..
https://thec2way.com/
https://www.linkedin.com/in/chris-schlierman-b03bb391/
Today, my guest is Jamie Seale. Jamie is the is a content writer at Clever Real Estate, the leading real estate education platform for home buyers, sellers and investors, and in just a minute, we're going to speak with Jamie Steele about Rent versus Buy cities.
https://www.linkedin.com/in/jaime-dunaway-seale-660028158/
J. Darrin Gross
If you're willing, I'd like to ask you, Jamie Seale, what is the BIGGEST RISK?
Jaime Seale
That's a tough question. I will tie it back to real estate, because I feel like that's, you know what we're talking about here with this study, what I do, and I think buying a home is a huge financial decision. It's a lot of a lot of money, a very long term commitment. So I think the biggest risk is probably just getting yourself into a situation where you have more house than you can afford. Maybe it's, you know, buying a a. And a half million dollar home in San Francisco when there are much more affordable options and in Cleveland. But I think it's very important to stick to your stick to your budget, crunch those numbers ahead of time and know what you can afford, know what interest rate you can, you can afford, and what sort of mortgage you're going to be able to afford, long term, taking into account the unexpected and hidden costs of homeownership. You know, you don't want to find yourself, you know, house poor, I guess, for lack of a better word, but just Yeah, doing your research ahead of time, and really not getting yourself into a situation where you can't, you know, afford a place to live, I think is it would, it would. It's a great way to minimize that risk.
https://www.linkedin.com/in/jaime-dunaway-seale-660028158/
Today, my guest is Kevin Bupp. Kevin Bupp is a seasoned commercial real estate investor, top podcast host and author of the Cashflow Investor with over 1 billion in real estate transactions under his belt, and in just a minute, we're going to speak with Kevin Bupp about the real estate market, specifically the mobile home park investment strategies he uses.
https://sunrisecapitalinvestors.com/
https://www.linkedin.com/in/kevinbupp/
J. Darrin Gross
If you're willing, I'd like to ask you, Kevin Bupp, what is the BIGGEST RISK?
Kevin Bupp
It's a great question. Darrin, and I would say that I'll take it. I'll answer from a from an investor's perspective, and and I'll use a reflection back on 2020, 2021, 2022 when rates were incredibly low, there was lots of transactional activity, lots of transactions probably being overpaid for lots of risky debt that was put into place that ultimately didn't seem risky, but it had a timing risk associated with it. And if I don't execute this business plan, or if rates go up, or things that are outside of my control, if they occur, then my business plan, you know, gets flushed down the toilet, basically doesn't work. And so I i. So I think being a disciplined investor, I think that's it, that just just, you know, sticking to the fundamentals have never changed, right? I mean, the fundamentals have not changed. They didn't. They don't change when the rates go down. They don't change when the rates go up. We can all financial engineer a deal to make it look like it works on paper. But you know, when the tide rolls out, which it, which it has, you know, now we're seeing a lot of, lot of, what, what, what? We were praising people for Great job. Great deal. They were buying it. Now tide went out, and now there's a lot of distress deals because of the capital stack was a big risk. The timing of rates, when, when they, you know, went, you know, to historical, I guess at the historical rate, they rose in a very short period of time. And so for us, it's a, you know, just staying disciplined, being very disciplined with our Buy Box, looking at a lot of things and getting beat out in a lot of offers back when, when, when the when, times are crazy. A lot of transactions were happening. We didn't buy a lot. We weren't competitive buyers. It was very frustrating. But saying discipline to that allowed us to and not not skipping the fundamentals of, does this thing actually, cash flow does? Does this make money? Or is this a is the only way that makes money is if the market, at the timing of the market works in my favor and nothing, no black swan events happen. Rates don't go up. They stay the same. Is that the only way I make, I make money, and if that's that was, if the answer was yes, then we would pass on it. And so I think to stick into the fundamentals. They never change. They never will change, being honest with yourself and just sticking to that Buy Box. I think, I think that's how, that's how we avoid risk. We didn't grow like everyone else did during those couple of years. We grew, but not by gangbusters, like a lot of our competition has, but that put us in a great position. Last year was a one of our biggest year. It was, it was our biggest year until this year, as far as acquisitions and new opportunities and deals that truly fit our Buy Box. But it we were prepared. We were ready. We've never stopped distributions to investors. Our investors have continued received you know, quarterly distributions on a regular basis. And so us mitigating that risk back during the heyday, you know, and when things are going crazy, allowed us to really capitalize and take advantage of the opportunities that have presented themselves now over the last couple of years, so, and I think will continually allow us to do so in the coming years. So don't know if that's a good answer for you, but hopefully that, hopefully that's something.
https://sunrisecapitalinvestors.com/
https://www.linkedin.com/in/kevinbupp/
Today, my guest is Dan Lopez. Dan Lopez is the Chief Technology Officer at Neural and in just a minute, we're going to speak with Dan Lopez about Neural’s ability to better prepare and predict extreme weather events.
https://www.neural.io/earth
J Darrin Gross
I'd like to ask you. Dan Lopez, what is the biggest risk?
Dan Lopez
I love that question. Darrin, I think we always go back to the Donald Rumsfeld, the unknown unknowns, and to peel away the unknowns so that you have more insights to make better decisions more rapidly. Give you a a position and essentially the high ground where you can now make decisions with a clear head. I think that is the biggest risk, is shoving our heads in the sand and hoping that it all goes away and it's just not and we have to, especially for risk transfer. How do we get local to state to federal to global markets to understand how to interplay with each other? Because this is not going away.
https://www.neural.io/earth
Today, my guest is Kyle Kuderewski. Kyle is the operations manager at Web Street, an investment platform allowing people to passively invest in online businesses and digital assets. Kyle is an engineer turned investor entrepreneur. He's leveraged his attention to detail and knowledge of systems to create a well oiled operation at Web Street as they scale. And in just a minute, we're going to speak with Kyle Kuderewski about investing passively in cash, flowing digital assets.
https://www.linkedin.com/in/kkuderew/
kyle@webstreet.co
J Darrin Gross
I'd like to ask you, Kyle Kuderewski, what is the BIGGEST RISK?
Kyle Kuderewski
Yeah, I think this one for me, thinking about the investing risks all the time and whatnot, but I have to zoom out. And I like to go on a personal level, level here, and this is kind of why I got out of more of a corporate role, and what kind of led me down this investing path and this entrepreneurial path. So to me, I think the biggest risk is becoming too focused on immediate tasks and losing sight of long term strategic goals. So it's easy to get caught up in day to day demands and miss those opportunities for innovation, for growth. And what I mean by that is like, what am I doing day in and day out at my previous engineering job is that getting me where I want to be long term with the way my life's built? If I want to be able to work remote, or if I want to spend more time with family, or whatever the case is, I need to craft a life around that. So you talked about mitigating it. This is actually written here on my desk. I I schedule regular big check, check in big picture, like review sessions, where I assess my progress against my goals and identify where I need to adjust. And then the other way I mitigate that is I build accountability by sharing these goals with a colleague or a mentor. Mentors are huge, huge tool I use so that they can provide feedback and tell me, like, Yo, you're getting out of line here. This is not leading you toward the goals you want. You're too focused on the day to day, whatever the case may be. So to me, that's a really big risk, and it can you can lose tons and tons of time, years and years of your life if you're not paying attention to those big picture goals.
https://www.linkedin.com/in/kkuderew/
kyle@webstreet.co
Today, my guest is Edie Weintraub. Edie Weintraub is the visionary founder of Terra Alma, a boutique real estate advisory dedicated to shaping walkable, community centered spaces and fostering local connections. And in just a minute, we're going to speak with Edie Weintraub about creating vibrant hubs where people gather.
Website: https://www.terraalma.com/
Linkedin: https://www.linkedin.com/in/edieeverywhere/
J Darrin Gross
I'd like to ask you. Edie Weintraub, what is the BIGGEST RISK?
Edie Weintraub
Yeah,I think for us, you know, we are commercial real estate brokers for real estate agents, and so we are typically paid on commission only. And so if that deal doesn't come to fruition, that lease doesn't get signed, we don't get compensated. And so here, what I have to offer is my my network, my knowledge and my time, and so we are taking a significant risk every day in choosing who are the clients that we opt to work with. Because, you know, we might put a lot of time, energy and effort into deals that might not come to fruition. So it's, it is definitely the roller coaster. It's not a merry go round. And so I know that our field is not necessarily for everyone, but I do think that we're able to mitigate it in regards to balancing out our portfolio with some consulting opportunities where we're educating brands as well as developers on how to go about creating. Spaces that ultimately will attract the right tenants that they want. So we do try to balance that as much as we can, but I think it's important and we share with all of our clients that how we get compensated and why they should opt to work with us, but also realizing that we're investing in our time in them as much as they're investing their time in us.
Today, my guest is Jay Connor, the private money authority, and in just a minute, we're going to speak with Jay about raising private money.
J Darrin Gross
I'd like to ask you, Jay Connor, what is the BIGGEST RISK?
Jay Conner
Well, when you ask that question, Darrin, the first answer that comes to my mind is definitely not a traditional answer. I'm thinking about Charlie Jones. Charlie Jones is known for his quote that says, within the next five years, there's two things that will have the biggest impact on your growth within the next five years. Those are the new people you meet and the new books you read. So my answer to the question, what do I see is the biggest risk? The biggest risk I see is someone being happy with the copasetic and the static and missing out on all the opportunities that this world has to offer and that God has to offer. And how can you learn about these opportunities? Is what Charlie Jones says, The people you meet and the books you read my good friend Tom Crow, who was the founder of wholesaling Inc, which was the largest wholesaling instruction Company in the nation, Tom preaches, read eight pages a day. Just read eight pages a day of a non fiction book, autobiographicals, biographies, self improvement. Do that? Commit to that and join very reputable networking groups or masterminds, people of like minded goals. So the biggest risk that I see Darrin are people missing out on all that there is out there to be offered by staying static and not embracing and being committed to self growth. By the way, just as an aside, success is a lousy teacher. Success is a lousy teacher. It's where we fail. It's where we make mistakes that we actually grow. I was so blessed six weeks ago to meet John Maxwell in person and have a chat with him. He was our keynote speaker, one of the masterminds that I'm a member of and the audience member asked him says, What do you what's the one thing that you attribute your success to? And John Maxwell says, Well, I just fail more than anybody else. He said, You know, our wins are only about 30% of what we try, but if somebody else tries 10 new things, they fail seven times, they win three times. I'm going to try 100 new things, I'll fail 70 times, but I got 30 wins.
Today, my guest is Mark Willis. Mark Willis is a certified financial planner and is a man on a mission to help you think differently about your money, your economy and your future. Mark is a three time number one best selling author and the owner of Lake Growth Financial Services, and in just a minute, we're going to speak with Mark Willis about Buying Back Debt.
J Darrin Gross
I'd like to ask you, Mark Willis, what is the BIGGEST RISK?
Mark Willis
Well, I was thinking about this some the biggest risk is, is there's so many layers to your great question, and with enough time and enough adult beverages, you might get even deeper than this. But here's a good start anyway, there's a quote by Terry Smith. He says there are only two types of people when it comes to market timing, people who cannot do it and people who have not yet realized that they cannot do it. So what do I mean by that? What does he mean by that? Well, what I mean by what, I guess I'm taking away from that, is we are our biggest risk, the arrogance that comes with humanity's arrival syndrome. And this is something Nelson Nash came and showed me. He said the biggest threat to human survival is the arrival syndrome, and that is the idea that we have made it, that we have found the pinnacle of existence, that we know it all, that we know what the market is going to do tomorrow, or that we know how to buy our next car that, or we know how to invest In real estate, or we already have figured out that whole life insurance is blank, whatever bias we have right to use today's examples. But this could expand itself to everything. We know what the future government's going to look like, or where taxes are headed, or you know what our kids are going to do when they graduate college. We don't know nothing is, I think, the refrain of avoiding the arrival syndrome. So to me, that is the biggest risk.
Today, my guest is Corinn Altomare. Corinn is the co founder of Hearth Fire Holdings, a real estate investment firm dedicated to creating durable wealth through innovation and real estate and technology. And in just a minute, we're going to speak with Corinn Altomare about how to turn your real estate investment goals into reality.
https://hfirecapital.com/
Ph: (818)378-1524
J Darrin Gross:
If you're willing, I'd like to ask you. Corinn Altomare, What is the BIGGEST RISK?
Corinn Altomare:
for self storage, specifically? And I'll go there. First, something that we keep a very close eye on is over saturation, because it is such a niche market kind of service and real estate and business. So that's something that we head off very early in our underwriting process. We use a number of technology tools that not only track existing inventory in any given market or region, but also what's coming in the pipeline, what kinds of either zoning, zoning applications or new development, new construction permits are out there to make sure that we are not either buying or developing in a market that's already teetering on the brink of over saturation. So that's something very specific to what we do in self storage that we look at that's a primary risk, I would say, just because it's the laws of supply and demand. So that's something that we keep a close eye on throughout the acquisitions and due diligence process. We also verify that when we visit potential new acquisitions in person and tour the market, make sure there's nothing that we missed virtually, that we can then find out while we're there, in person, on the ground, and then on a more macro level, I mean, there's, there's so much in in our world that we can't control, and so that the biggest risk is simply the unknown, unknowns, and I can't solve or protect against those other than, other than building our team and business on the best possible quality and caliber of people that we can at the end of the day, you want to be able to know and trust who's at your side in a storm. And while it's very it's tough to it's really tough to know who it is you're doing business with, and to get to know people and vet them, especially, especially when you're you know, considering investing with somebody right and considering handing over a decent portion of your retirement or your savings. I very much believe that it comes down to people. The wrong people can take the best deal and turn it upside down. The right people contain can take something that's, you know, on paper, pretty modest, but through their commitment, through their integrity, through their work ethic, deliver on what that is supposed to be, what that is supposed to return to our investors. So for me, the end of the day, it's all about the people that you surround yourself with, that you trust, that you invest with.
https://hfirecapital.com/
Ph: (818)378-1524
Today, my guest is Josh Goldberg. Josh has over 20 years of experience founding and operating businesses in solar energy and technology. Josh is currently the CEO and co founder of Sunstone Credit, a technology enabled Clean Energy Financing platform that helps businesses go solar.
Sunstonecredit.com
Josh.Goldberg@Sunstonecredit.com
J Darrin Gross
I'd like to ask you, Josh Goldberg, what is the BIGGEST RISK?
Josh Goldberg
Well, I'll throw you a bone first. So when you go solar, we actually require that all of our borrowers have insurance on the system. A lot of times it's covered in the underlying property insurance, but it is a great asset. You do want to make sure it's insured. Weird things happen, like hurricanes and whatnot. So there's, and we actually have had a casualty event where something happened to the system, unfortunate, but insurance covered it, and we got made whole. The borrower got made whole. Everybody was happy. So I think, like for us as a business, you know, we're 40 person startup, and so there's a lot of risks. Some of them are execution, right? Like, can we continue to deliver a great we sit in between three parties. We partner with capital providers to deploy capital, we partner with solar installers who offer our financing, and we partner with business borrowers, right? We have to deliver a seamless, efficient experience as we grow, and we have to keep getting better and better and better at it. So the our biggest risk, I think, is just execution. Can we kind of control it? But at the end of the day, like, like interest rates, right? Interest rates, their problem for a lot of for a lot of reasons. As rates rise, our cost of capital rises, as our cost of capital rises, we have to pass that on, right? And so, I mean, we've seen just like, an innate and an 80 basis point increase in Treasury rates in the past month. Unfortunately, despite the fact that rates were coming down, right? And so that that at some point makes our our capital more expensive, and at some point, if, if our cost of capital keeps getting more expensive and utility rates don't rise, the deal is not quite as good, right? So that's like a risk that it's kind of out there in the world. I think another risk is this is a relatively immature market, right? And so I mentioned like referral all works, like, if the one business owner has a great experience, they'll offer folks. If they don't have a great experience with us, or with the installer, or with solar in general, they will detract folks don't go solar, right? And so I think it's incumbent upon us to help, and then we spend a lot of time helping make sure that our borrowers are getting what they think they're getting right. We're a little parochial, because we want them to have, like, a fantastic experience. I think as the market matures, though, that'll be less of an issue, because, you know, you'll have higher quality installers, and some of the newer entrants who aren't good will kind of filter that out. But really it's like, this is everyone's first time doing it right. And so you just you can't afford to have bad experiences. You can't afford to have buyers. You know, they think they're saving 20% they only save 10. Well, they're gonna be upset, right? So how can we kind of nip that in the butt? Or they think that their utility is going to pay them for the surplus, but not that they don't, right? So how can we make sure that they're kind of getting what they felt they're getting? And really, I think that's that's key, because if I think this, if done right, it's a fantastic experience for everyone involved. The installers create local jobs in their communities. We deploy capital and make a decent return and grow our business. Our borrowers save money. They can save money and they can up. They can invest in their in their properties. They can get higher sell prices. If they're owner occupied, they get more cash flow for themselves. Maybe they can grow their business. They can, if you're a farmer, you can hedge your rates into the future. That's great, as long as it works, right? And so really, it's just great customer experience, expectations met, which is all about reducing risk, right? High quality installer, long term financing. Make sure the proposal is accurate, get it insured. So if you know, reduce risk, and you got a great producing asset that will save you a lot of money. And that's what we do.
Sunstonecredit.com
Josh.Goldberg@Sunstonecredit.com
Today, my guest is Kip Sowden. Kip is the Chairman and CEO of Rreaf Holdings. Kip has over 37 years of experience in commercial real estate with a strong background in real estate brokerage, mortgage banking, acquisition development and asset management. And in just a minute, we're going to speak with Kip Sowden about investing in multiple commercial real estate asset classes.
J Darrin Gross
If you're willing, I'd like to ask you, Kip Sowden, what is the BIGGEST RISK?
Kip Sowden
Yeah, I think that, you know, with every investment opportunity, there's risk and reward, right? And so we're always looking for, you know, ways that we can, you know, mitigate risk and generate, you know, outsized returns given the risk profile. And I think there's a lot of that's done through, you know, our vertical integration, as we discussed earlier. And I think a lot of it's done through, you know, on the commercial real estate side, it's done through the asset classes that you're in and the locations that you're in. I mean, if you're buying and developing in markets where demand is exceeding supply, you certainly lower that risk and you create theoretically better positive returns, right? And so it really boils down to, you know, the sponsor doing their diligence on the underwriting, you know.
But there are you know, things that you don't count on or don't foresee, and how do you deal with those you know you mentioned, and being in the insurance business, I mean, you know, as well as I do, insurance is at an all time high for all, you know, product, you know, type, and it's something we've got to deal with every day. I doubt there's any sponsor that underwrote both taxes and insurance on the on their P and L's to the levels that they are today. And can you offset that on the revenue side, you know, you've got to be in the right asset classes. You've got to be in the right markets, and you've got to have, you know, room in your underwriting to account for the unaccounted, you know, for the unexpected, I should say. And I think that Rreef does do that.
Well, you know, when we have things that we didn't underwrite. I want to make sure that, you know, well, we're not throwing off a 15, you know, cash on cash return. We're throwing off an eight, you know, which is still good, you know. And you have those kind of misses. We're also, you know, we don't have to sell. I mean, we're not a fund that has timeline, so we're going to sell and buy when it makes sense to sell and buy. And, you know, I think all of those things help mitigate the risk as people look at investing in, you know, commercial real estate, insurance and taxes, you know, higher than they've ever been.
Yeah.
And I think they're very, very important. You gotta have them.
https://rreaf.com/
Email: kip@rreaf.com
Today, my guest is Seth Jones. Seth is the CEO of Hygia Living Corp, where he and his team have developed Superstratum, the first patent pending process to remove mycotoxins from homes. And in just a minute, we're going to speak with Seth Jones about Building Related Illnesses and the impact and what you can do.
Contact info:
https://hygia.life/crepn
Superstratum.co
J Darrin Gross
I'd like to ask you. Seth Jones, what is the BIGGEST RISK?
Seth Jones:
Well, I have what I think is an interesting answer, because being in the space of health and chemicals regulation and compliance is from the federal government is a huge risk. And that was always the biggest risk of our company, especially because we we set out to do something different, new. It was extremely high risk when we started for many reasons. You know, many reasons, as as all startups are, but particularly because we were entering, you know, a highly regulated space and trying to do something a little bit different. And that risk, actually, we had the EPA shut us down last year, in December, after about three years of building the company, and they shut us down for what they deemed compliance issues with certain things we were saying on our labels, and that's because the EPA regulates very tightly anything related to mold, bacteria, any chemicals that you use to mitigate what they deem or pests. And there were, there was no awareness about mycotoxins, and there were no products, no registrations, you know, no acceptable levels, very little information even out there about mycotoxins. And, you know, I had hired all sorts of Consultants and attorneys to try and guide us and tell us, you know, help show me where that risk was, and then so I could make a decision on how to position our products and our company within that landscape of risk.
But what I found out was they were not well, let me say it a little bit differently. No one really understood that landscape, and I had to, I had to learn it myself the hard way. So the biggest risk for for us, I would say there's a lot of risk, but that's whether it's the biggest, it's, it's, it was the most pertinent to us, because it wound up, you know, actually being an issue that we navigated successfully through and through that process, we wound up de risking our company, because now we know the regulators, and we shook their hands, and they've told us what's acceptable, you know, we were able to ask those questions and and that has given us a much clearer path forward In terms of, you know, how we speak to customers, how the EPA, you know, essentially wants us to behave, and what they want us to say, and where they want us to stay out of without, you know, certain registrations and things. So, yeah, I would say that would be the BIGGEST RISK.
https://hygia.life/crepn
Today, my guest is Jeremy Thomason. Jeremy Thompson is the Managing Principal at Convolo Capital, where he focuses on acquisitions and equity relationships. Convelo is a boutique private equity firm specializing in multifamily assets in Georgia and Texas, and in just a minute, we're going to speak with Jeremy Thompson about social impact initiatives that are good for residents, employees and investors.
Contact info:
Website: https://www.convolocapital.com/
Email: jeremy@convolocapital.com
J. Darrin Gross
I'd like to ask you. Jeremy Thomason, what is the BIGGEST RISK?
Jeremy Thomason
Okay, man, this is a great question. We are sitting here. I don't know when this will air, but we're sitting here on a on a Fed day. So the obvious answer to me would be interest rates. And so honestly, I'm not going to answer that, because that's just an obvious answer. And I actually have an insurance license too, and I sit in Texas, and so it'd be very easy for me to say, well, it's the high cost of insurance. That's an insurance that's just a really big problem right now for our industry. And in Texas, renewals, everybody's scared when their renewals come up, because it's just going to be a bad news story. So it'd be easy for me to say, well, it's insurance, and those interest rates and insurance are not really controlled by us in a lot of cases, so they do represent big risks. But I'm going to say it is something that I've learned through this last cycle. And so it's related to insurance and interest interest rates, there is a tendency, I think, in our space, to want to go chase whatever the absolute best deal is. So I'm going to use lending as an example. Three years ago, the whole space thought that the forward curve on interest rates was going to have near zero interest rates. And everybody institutional capital, everybody thought, You know what, the best deal in town is to go ahead and do a floating rate loan, and you'll cap yourself, you'll protect yourself with an interest cap, and you'll be fine. I. Obviously, we'll go into it. That was a mistake, mistake by our industry. We nobody could see coming. 500 plus basis points of interest rate movement within a year never happened like that before, and it just it's put a lot of stress on our industry. Similarly, insurance, the insurance markets call it catastrophic risk, high probability, high frequency, all of those different things, coastal all those things have put an upward pressure on rents, and we couldn't anticipate it. So my answer is, on the risk. Thing is, it's the risk of uncertainty. And so how am I going to answer this? I'm going to answer this by saying I am much better off working with someone that has experience in the space and taking risks off the table. So floating rate loan at 2.9 I could have gotten a fixed rate loan at the time with a little less leverage at four, but that 125 basis points was sure nice in my modeling, but I should have taken risk off the table because I only had a five year hold. So uncertainty is my answer. It's the uncertainty, and the way I'm answering it is, I, my job as a fiduciary to my investors is to take as many risks off the table as I possibly can, because there, God knows that there are so many different risks that I can't control and are going to hit me. So if I can eliminate risks and how I underwrite or how I use products and services, or how I look at a particular basis of a property, and take as many risks off the table as possible, then I'll be left with still a substantial amount of risk, execution risk and unknown risk, but my job is to eliminate risk, and I can do that in different ways, because there's all kinds of different risks. But the answer is the uncertainty risk to your question, Darrin, I know that may be too vague, but that's what I worry about, is uncertainty, and how I have learned in this last cycle is it's better for me to have certainty at a little higher price than it is for me to just hope that everything's going to be fine and chase the better priced product, whether it's insurance, whether it's interest rates, whether it's a contractor, certainty wins because I can underwrite I can underwrite certainty.
Contact info:
Website: https://www.convolocapital.com/
Email: jeremy@convolocapital.com
Today, my guest is Sujata Shyam. Sujata is a real estate investor, underwriter, short term rental operator and fund manager, after using her student loans to flip her first house during her MBA, she spent four years underwriting multifamily acquisitions for institutional buyers. And in just a minute, we're going to speak with Sujata about the math behind the money, how to snowball your wealth through real estate syndication.
Contact info:
www.luxecap.com
Sujata@luxecap.com
Podcast: Passive Income Unlocked
J. Darrin Gross
I'd like to ask you, Sujata Shyam, what is the BIGGEST RISK?
Sujata Shyam
So with what I do, Darrin, where we. Invest as a fund of funds, where we're investing as a group, and placing that capital as one investor into a property or an opportunity of sorts. In in my view, the biggest risk by far that's out of our control is the operator. So the operator, you know, we have trust in the operator. We're basically betting on the jockey. In a sense, there's lots of things we control for can't control for. Do we like the deal? Do we like the market? Do we like the property? Do we like the business strategy? But we're trusting the jockey to execute the business plan, or the operator, as we call it. So the biggest risk for me, really is that the operator either, mostly it's that they start, they start acting in their own self interest, rather than in the interest of all the investors. And we try to put lots of controls on that, but ultimately, they can still cause a lot of trouble if they decide to, if they get squeezed, or if they decide for some reason to get too aggressive, that is by far the biggest risk that we have to look out for, and that's why trust in an operator and trust in the people that you operating with, and that they have not only the integrity that's needed, but also the capacity to manage the types of deals that they're doing, as well as the decision making ability to know, have I gone too far? Am I, is this like a little too far outside my capacity? Do I need to scale it back so that I don't put investors capital at risk? That's really the biggest risk, is the people.
Today, my guest is Jaime Seale. Jaime is a content writer at clever real estate, the leading real estate education platform for home buyers, sellers and investors. And in just a minute, we're going to speak with Jaime Seale about the best and worst places to live in 2024 according to Americans.
J Darrin Gross
I'd like to ask you, Jaime Seale, what is the BIGGEST RISK?
Jaime Seale
I think I'm going to try and tie this back to the survey. And our our business at Clever, which is helping people buy homes. And buying homes is certainly a big risk, especially if you're doing it, if you're trying to move and doing it in a place you've you've never been to before. Taking that, taking that leap is a is a big financial decision. It's a lot of money. A lot of people go over budget on their on their home purchase. So that is, I think that's a risk, but it definitely has a lot of benefits, as far as being able to to to build wealth, and having a stable place to to live.
Today, my guest is Dr Eli Karlin. Eli is a partner in Chief Investment Officer at Sphere Investments. Dr Karlin is overseeing the investment of over 1 billion in healthcare real estate, focusing on medical offices, surgical facilities and post acute care. And in just a minute, we're going to speak with Dr Eli Karlin about health care real estate investment opportunities.
J Darrin Gross
I'd like to ask you, Dr Eli Karlin, what is the BIGGEST RISK?
Eli Karlin
It's a great question. I think we live our lives based on risk assessment, whether we like it or not. We all do it in this area. I think I'll break it down into two fundamental risks as it relates to the healthcare, real estate sector, right? Healthcare and real estate versus sectoral risk, right? Healthcare in that segment, I think there's, there's three main categories that I would, I would focus on and that keep us up at night.
One is the regulatory so all the regulatory changes, they happen very quickly and sometimes unbeknownst to just members of the public. And so we spend quite a bit of time focusing on regulatory changes within the healthcare sector, understanding what the government is doing as they're the largest payer in the US and most insurances follow what the government sort of process looks like.
So that's one in terms of financial risk. It leads into regulation as well the reimbursement cuts, I think that's been quite challenging for our sector, those reimbursement cuts in different sectors, especially long term acute care. Long term acute care throughout covid was a darling of the healthcare industry. They had ventilators. They were able to bring in those patients, and yet Congress cuts those reimbursements and the type of patient that visits as new or else to go. So financial risk is certainly one of those under the healthcare sector. And then lastly, change in delivery of care. We are in an environment where technology is moving very quickly. We chatted briefly on the primary care provider losing some of their practice in either through private equity or through technology and so forth, and reshifting of the healthcare environment. So I think the change in how care is delivered in this country certainly falls in that in that category. So those three under the sectoral components are where we focus and try to look ahead and see, how do we mitigate those risks, but transfer that? And so forth. And then in terms of real estate, you know, and certainly as it relates to healthcare, number one, obviously, tenant, tenant credit worthiness, right? Making sure that whomever we have, and you know, you asked a question earlier about leasing, we don't. We typically, in our acquisition strategies, 90% leased or above, right? Our portfolio today is about 98% occupied, so we try to mitigate that, that risk prior to an acquisition, whether we bring in a provider or what have you, through diligence or even prior to that. But certainly the credit worthiness is quite important in understanding where, how they're getting reimbursed. What is their their longevity? How do they work in the long term that they don't, you know, they don't falter, like we've seen many healthcare systems that stewards a great example, right? You had a lot of great outcome, you could say, in the past, and today, well, they're no longer early around, right? And a lot of bankruptcy. So that's a big one for us in terms of the real estate specific angle. And then, of course, the fragility of the business model for healthcare, right? It sort of backs into the financials again. It gets into things are changing. We're seeing that happen very quickly. Procedures are changing, as we discussed earlier, the pharma component. I mean, look at bariatric care. Bariatric care is slowly dying, right? I mean, with those mpig and all the other, you know, pharma components, bariatric care, is an industry that is, that is in decline, and so we need to be be conscious of that fragility of the business model. It's not as recession resilient as everybody would have imagined. It may be in some sectors, but healthcare and maybe better than others. But there is, there's risk there. And then, of course, the obsolescence of assets. That is from a real estate standpoint, probably the biggest one we look at is we're buying a building today. Will it stand the test of time in three, 510, 15 years? Will this asset be obsolescent? And as we discussed earlier, you bought a 10 years ago, a 30,000 square foot orthopedic asset that today is probably closer to eight to 10,000 feet with the same utilization. And so, you know, going forward, will a tenant renew? Why would they renew? Why not go somewhere else? So that's the third so those combined, I would say, are the, the big risk items that we look for. I realize not the not so pretty tied up in 111, word in a bow. But from our perspective, those are the those are the main focuses and the risks that we try to mitigate. Or, like you said, transfer.
Contact info:
Website: SphereInvestments.com
Linkedin: https://www.linkedin.com/in/elikarlinmdmba/
Today, my guest is Reza Raji. Reza is the Senior Vice President of Vantiva, Smart Spaces, Internet of Things, division with a rich history of driving IoT innovation. Reza has transformed industries from smart homes to commercial enterprises. And in just a minute, we're going to speak with Reza about applications for Vantivas, new Smart Security camera, the Vantiva Peek, how it works and its applications.
J Darrin Gross
I'd like to ask you, Reza Raji, what is the BIGGEST RISK?
Reza Raji
For the operator you're talking about for?
J Darrin Gross
Yeah, for however you want to capture. It's up to you.
Reza Raji
Yeah, yeah, yeah. So I think you know the when it comes to insurance and risk at self storage, there's fundamentally two right. There is the facility, insurance and liabilities related to facilities. You know, there's rain damage or there's intrusion and somebody steals stuff off the front store, things like that. And, of course, there is the there is the unit the renters possessions that are at risk of somebody coming in and stealing them or even getting damaged right through water or storm or something like that. And there's insurance products, as you know better than I do, insurance products for both of those, right? And the platform that we have for smart storage is really designed to deliver that peace of mind and that risk mitigation, if you will, for both common area and the smart unit in self storage for for alerting in a timely fashion that there's a water leak. As you know, water damage builds rapidly in terms of cost, if it's not detected early, if there's intrusion you want to know as soon as possible, somebody's somebody broke into a facility, or somebody's broken into a storage unit.
So all of that are is really that peace of mind that I was talking about, both for the Self Storage operator as well as the renter and and we're actually talking to part of our customer base is insurance companies that deliver insurance products for self storage, right, believe it or not, because they understand the value. Look, 15 years ago, it would be 15 minute session or 30 minute session to explain the value of smart cameras and what that. Does we know door ring Bell, doorbells, ring doorbell, sorry, not what they do, what benefits they provide the consumer. We don't have to do that. People understand what they can do with a ring doorbell, what they can do with with a nest, you know, camera, what it does, what we do need to do is, is package that and convey that and deliver that for self storage tenants. And I think that peace of mind and that risk reduction is something the insurance companies are very interested in right now in self storage, because it's augments and enhances the insurance product they're selling, not only that, but also it produces the the risk liability that they're on the hook for.
The same way that insurance, you know, residential insurance companies, home insurance companies, give a discount if you have a monitored security system. That's the same thing that hasn't happened yet, but we foresee that going in that direction. It's like, why not pass on some of that savings, to to the to the customer? Because now there's a way to monitor and manage that
risk.
Today, my guest is Dale Wills. Dale is an experienced real estate developer who has been involved in the industry for more than 25 years. He is the owner and founder of Center Companies, and since 2011 he's overseen the development of more than 1500 homes across 50 projects. And in just a minute, we're going to speak with Dale about the investment opportunity in single family homes.
Contact:
Website: https://www.centrapartners.com/
Linkedin: https://www.linkedin.com/in/dalerwills/
J. Darrin Gross
If you're willing, I'd like to ask you, Dale Wills, what is the BIGGEST RISK?
I think there's two parts to this. One on the insurance side is I'm a huge believer in surrounding yourself by the best people, and insurance is huge risk. I'll use an example. In the Midwest, it's almost impossible to get mold coverage. So if I build a house, mold grows, I've got no insurance coverage. Now, I can get a rider, but if I don't have an insurance agent that's a pro that really knows their stuff, I've got massive exposure, because mold risk is one of the biggest risks in the Midwest, and so if you don't have somebody that knows their stuff, you almost might as well not even have an insurance policy, you know. So don't you know? I don't want to disparage agents, but you know, the guy you buy your auto insurance from and your homeowners insurance is not your guy when you start having rentals or you're in big trouble. So that's one thought I had from a risk standpoint.
I think the biggest risk is what you don't. Know, you know what? What do you not know? And that's where I think it's important you have experts around you, because even then, you can get in trouble. You know, where we've done projects and we thought we knew everything, and we tested the soils, and we tested the ground, and we had the best of the best experts, and we started digging, and we find five feet under the ground there was an old abandoned gas station that we should have known about. That's a pretty big risk. And so that's what I worry about it if a friend Keith Cunningham teaches a principle, when you look at any deal, identify what's the best that can happen. And you know, if that's really easy for entrepreneurs to do, we always can see the best that can happen. So we have this long list what's the best, then what's the worst that can happen? And then I we look at that. If there's not a long list of the worst that can happen, we don't do the deal, because there's always a negative to every deal you do. There's always a drawback. And if we're not seeing it, we're missing something. So we need to go back and look. What are we missing? Once we've done that, we say is the worst case scenario? Can I live with that in order to get the best case scenario? And if I can't live with the worst case scenario, we pass on that deal. But I but that still answer. What you don't know if is your biggest risk. For us, that's our biggest risk is the unknowns, and some of it, it's unknowns you can't predict, you know, we talked about the covid. You can't predict that, but you better be ready to be able to shift pretty quickly.
Today, my guest is Joseph Viery. Joseph is the founder of US Tax advisors Group Inc, a publicly traded company, and a firm that works mostly with real estate investors, helping them save hundreds of 1000s and sometimes even millions of dollars on tax and they do that by using cost segregation.
Contact info:
Website: ustagi.com\get-started
Free Estimate: https://ustagi.com/get-started/
Ph: (888) 263-1663
J Darrin Gross
Whatever it is that you identify and consider to be the biggest risk.
Joseph Viery
Politics.
J Darrin Gross
And again, for Yeah, and again for,
Joseph Viery
Sorry, it's really the big one, because, like, I'll give you a real good example. We're talking about there's a concept called bonus depreciation and and bonus back in the tax other than the Trump tax law was, remember, I said I find short life assets, they're they're primarily five, seven and 15 year assets. Any asset under 20 years is subject to bonus depreciation. It was 100% until 22 and then last year, 23 is 80. This year it's 60. Bonus depreciation, I think is completely overrated. Don't forget, we did not have bonus depreciation for my first 12 years of doing cost seg. So I don't consider it's just the timing of the benefits is all bonus means. But bottom line is, Congress passed bonus depreciation extension, and it's been sitting in the Senate since January or February, February, thing since February. So politics is just really one of the things that, you know, I don't have a crystal ball, and that's one risk, Boy, I wish I could buy from you Darrin, an insurance policy against bad mistakes by by politics.
Contact info:
Website: ustagi.com\get-started
Free Estimate: https://ustagi.com/get-started/
Ph: (888) 263-1663
Today, my guest is Michael Tran. Michael Tran is an Associate Vice President at Colliers International, specializing in Multi-tenant Flex Industrial Properties, with over 900 plus real estate transactions over the last decade. And in just a minute we're going to speak with Michael Tran about multi tenant flex industrial properties.
Contact: Michael Tran
E: m.tran@colliers.com
https://flexbusinessparks.com/
Social Media X: @michaeltrancre
Instagram: @michaeltrancre
C: 817-501-0024
J Darrin Gross:
I'd like to ask you, Michael Tran, what is the BIGGEST RISK?
Michael Tran:
So BIGGEST RISK, I want to say our team has taken on this stuff is in 2018, we realized, and we felt bad when we would see these trade at $30 below what we could sell certain assets for. And I said, Hey, guys, like, we like this stuff. This is a product we believe in, you know, why don't we work it a little bit harder. And, you know, we started devising a plan back in 2018, to say, hey, this has got to be the next asset we are the forefront of and helping investors with. So that was one big risk, we we really took a step forward. And because we originally were doing 50%, office buildings 50% flat. And so it was good to have both the buyers are kind of the same already. But now they're all really just switching over to this just because it's easier to manage. And so, you know, 2020 heads still popular. 2022 are like, okay, we're making waves in this space. Now, what can we do that might pay off in the long run. And so I'm telling you about working with our research team, which has been a two year project at this point where we're building out the algorithm trying to find the heat maps of where to build these. And helping developers get into the states. A lot of those guys that we have helped. We did this service for free. And like I said, we've done over 40 of these in the last few years and doing you know site plans for them trying to help them figure out how much square footage you can put in there. That has been, you know, one of the ways we've put a lot of time and energy that we never knew we were ever gonna get back into this space as well. And then also our team we wrote a book flexpays domination, to help investors who are also looking to get into this if they don't feel comfortable reaching out to us yet. There's a book you can buy. It's on Amazon He has a 60 day fast action plan as well. And we wrote that book last year, released it a few months ago. And we just need more of these to sell. Just because we feel that, you know, we want to make sure you can capitalize on what you're investing, and make sure you get the most money for what you're building out there. Because we, it genuinely hurts me to see people sell these at below market value. And so, yeah, that's that's how we, that's been the risk on our end is, you know, the book, doing all those evaluations for free. I'm still doing some to this day, which I don't mind I'm just saying it's, it's been a risk that we all kind of took upon ourselves to say, hey, let's help these guys out. Let's actually get some of these some more parks on the ground and make sure that you know, we're helping investors do really well on their asset class that their switch into.
Today, my guest is Bishoy Habib. He's a highly experienced real estate and business attorney with over 12 years of legal practice in Florida and New York. And he has successfully represented prominent Developers Investors and Financial Institutions in more than 1000 transactions totaling $12 billion. And it just a minute we're going to speak with Bishoy Habib about Creative Deal Structuring.
Contact:
https://levacylegal.com/
instagram:@attorneybishoy
Tiktok: @attorneybishoy
Linkedin: Bishoy M. Habib
Ph: 813-553-2699
J Darrin Gross
I'd like to ask you Bishoy Habib, what is the BIGGEST RISK?
Bishoy Habib
I think risk is a dirty word. And I don't think it should be, because I think that obviously, it has a negative connotation. But I tell my clients all the time, that I deal with business people, right i I like dealing with sophisticated parties like yourself and kind of people who can, you know, are a little bit more aggressive. That's just the nature of business people calculated risk. And that's the name of the game, I always tell them, anything we do is going to be a risk, any investment you make is going to be a risk. Anytime you place money. Anytime you buy a property, anytime you partner with someone, there's going to be risk. How much can you stomach? What's the potential return? What's the potential downside? Right? So I love that you asked that question, because that's a topic that comes up and a conversation that comes up with me and my clients, and then always ask have to ask them how much what risk are you willing to take? How much do you love this deal? If you want me to negotiate it more aggressively, because you don't care, it's less risk to you, but you probably don't get the deal versus the other way around. So risk is something I deal with every day as an all my all my kind of positions, but especially as an attorney. But I'll give you a good, you know, kind of a high level answer. I think the biggest risk is not taking a risk I do I think that the times that I've wanted to do something, whether it's in a personal professional capacity, and I've decided that I don't want to put myself out there or I don't want to, you know, embarrass myself or I don't want to take that risk and lose this money. A lot of times I've kind of regretted that. And so that's those are the lessons that I've learned is like, you know, it just go for it, just do it. And it was the same concept when I opened up my own businesses last year. I mean, it did take me 10 years to get to that point to build up that confidence. But I tell you what, within a month, I knew that that was the right decision. For me it was the best decision I ever made from a career perspective is to open up my own practice as an attorney. It's risk, right? You just got to take that chance. But the people in my opinion, who never succeed are the people who never take that risk and people who never put themselves out there. So, to me, the biggest risk is not taking a risk. I always tell you know, whoever will listen, it's like, you know, you calculate you think about it, but I will feel 100 times better trying and not succeeding and just know okay, well, this wasn't for me, or how do I get better and get to the goal versus just thinking about it in the back of my head like man, should I have done that? I should have done that. Right. So that's the biggest risk to me.
Today, my guest is Travis Watts. Travis is a full time limited partner investor and the director of investor development at Ashcroft Capital. He dedicates his time to educating investors who are looking to be hands off when it comes to real estate investing. And in just a minute, we're going to speak with Travis about mitigating risk and maximizing returns with portfolio wide insurance.
Contact Travis:
Speakwithtravis.com
J Darrin Gross:
If you're willing, I'd like to ask you, Travis Watts, what is the biggest risk?
Travis Watts:
So I really haven't changed? You know, this opinion since I started investing in syndications years ago. And it's that as a limited partner, if you're going to invest in a real estate, syndication, whether it be office or multifamily, or car washes, industrial, whatever it may be, you really have three primary risk categories. You know, again, not just three, but three primary risk categories. That is the operator that you're investing with, that is the market you're investing in. And that is the deal itself. I've always put the most emphasis on the operator, right? So bet on the jockey, not the horse. And I think again, that's more important than ever, as to this, the shake up in this market cycle shift that has been, you know, unwinding over the last two and a half years with interest rates and capital markets and cap rates going up and valuations coming down. Who are you working with as an operator? What connections do they have? What's their track record? What's their level of transparency? Are these folks really in it to have your best interest? And what are they doing about the things that have popped up? And what are they changing to mitigate risk moving forward?
Contact Travis:
Speakwithtravis.com
Today, my guest is Richard Crouch. Richard is a commercial real estate attorney and principal at the Virginia law firm Woods Rogers, where he chairs the business group. He's built his legal practice on the foundation of commercial real estate over the past two decades. And in just a minute, we're going to speak with Richard about Contractual Remedies. Get it right before things go sideways.
Contact: https://www.woodsrogers.com/
Email: richard.crouch@woodsrogers.com
Cell: 757-353-0969
J Darrin Gross
I'd like to ask you, Richard Crouch, what is the BIGGEST RISK?
Richard Crouch
I would say, and there are a few concepts within this, but I would say probably the biggest risk is not having the self awareness to recognize your own limitations. And what I mean by that is, there are a couple ways that this can play out. Certainly when transactional volume is humming along at a steady pace, commercial real estate attorneys are very busy. And this could probably apply to a number of professions. But sometimes the pace at which we must work, particularly with the mindset, the time kills, deals, and that's the mindset that we we live by. But sometimes that pace can preclude extensive deliberation on important sophisticated matters. And so I would say one of the ways to mitigate that risk is obviously you have to review every deal. on a case by case basis, no two deals are exactly the same. But you do need to have certain preventative measures in place to basically back check yourself, basically have certain things, whether they be templates, templates, checklists, and so on, where on every deal, although some issues will leak out more than others, that you're basically looking at every single issue, that could be an issue, and disclosing that to the client. And if the instruments or the language of the deal, address it, you tell the client, how they address it, if they don't address it, you reveal that to them as well. And that's something that, from a practice management standpoint, definitely improves the consistency and the reliability of our product and our clients ability to rely on that. Some of the other things in terms of just recognizing your own limitations is, you're only one person and you can't do it all yourself. Sometimes it's a function of physical time, you can't do it. Sometimes it's an issue of being cost effective. And using perhaps a, a less season but more affordable attorney on your team to help you review certain documents or prepare certain documents. So that's a that's a critical component, as well as basically being able to look at your team, surrounding yourself with people you trust. In fact, these may be people that in some aspects, they have strengths scenario there that are stronger than your own, and being able to rely on them, pinpoint their strengths, have them work well together, so that you have some redundancy on deals that increase basically responsiveness, the maintains the quality of the deal, and keeps you cost effective, as well. And also, and I guess the last thing, in terms of how limitations can be a risk is not being able to delegate when you should, and I know this dovetails maybe with the with the prior principles, but it does basically limit your bandwidth and your ability to expand your own business and your own practice by not being able to trust those that you've trained around you and grown around you to basically have the same the same skills that you've learned as well. So those those are the general risks. One that I encounter. And those are some things that over almost two, two dozen years of practicing, that we put in place to really mitigate those at least as an attorney.
Now for our clients, I would say probably the biggest risk is similar to what I was saying before is being too hasty. to land the deal, get the deal, finish the deal. Without properly properly documenting what happens when things go wrong?
I'd say that's probably the biggest issue. And sometimes we see this with less experienced syndicators is they're so eager to get the deal, they haven't really thought through how they're going to get it financed, or how they're going to raise the equity. And so oftentimes, there's a bit of a scramble there. So that's another thing where, in terms of being prospective, and forward looking, it's helpful to not lose sight of those and more important things, because without the equity and without the financing, it's it's definitely very difficult to actually get the deal done.
So there's some of the things that we basically highlight for our clients to be to be mindful of, and again, to just always be always be transparent and honest. And I say this quote, often that a, an honest man doesn't have to remember what he said. And I think that's very good. Good and very good tip for anybody who's particularly handling other people's money to live by.
Today, my guest is Joe Caltabiano. Joe is the CEO of Healing Realty Trust, a data driven self managed real estate investment company with a portfolio of healthcare related real estate assets dedicated to serving the mental, behavioral and physical health sectors.
Website: https://healingrt.com/
Email: Joe@healingrt.com
J. Darrin Gross:
If you're willing, I'd like to ask you, Joe Caltabiano, what is the BIGGEST RISK?
Joe Caltabiano:
So in real estate, you know, I think the number one risk as you're looking to grow a real estate portfolio is access to capital. And that access can come in the form of equity or debt. But you know, as you have tightened tightening of free cash flow for people, maybe their investment dollars are a little smaller. And as we sit as a private REIT, unlike a public company, you know, where you're, you're, you're picking up multimillion dollar checks, you know, our check size, again, the minimum for qualified investors is 250,000. Those are regular people a lot of times, so they are impacted by, you know, what's going on in the world. So access to capital, not only on the equity side, and what's in people's pockets today, but also access to capital through the lending institutions and banks. So kind of blending out, you know, where that where that risk is, and ultimately, what's your cost of capital, because if you build a model that anticipates x as a return, and you're wildly off, because access to capital became lack of access to capital creates a higher cost of capital, because as the pools shrink, you're paying more to get that money in either the form of equity or in the form of interest rate. So access to capital is by far the driving factor of of kind of number one risk thing for us. So what that means is, I talked to more investors than I did in both of my previous industries, you know, my hit rate for success is probably lower than my fragile ego thought it would be when I when I got into this space, but talking to more investors, you know, spreading a wider net to talk to more people. And then on the debt side, it's talking to more banks and more lending institutions. Because unfortunately, until you have that bully signed deal with them, things can happen. I've seen banks close, I've been in mid underwriting where the board decides to shut off lending, you know, and that's, again, they do that to protect themselves. It's never anything personal with you, because they wouldn't have given you the term sheet. But when a board says we're not lending more money, there's very few things you can say to the loan officer, to get them to open up that vault and give you capital. So you know, talk to more investors talk to more banks, casting a broader net, and really just getting out there and playing the hand to hand combat game which, which I certainly enjoy. But again, when we launched healing Realty trust, you know, a year plus ago, I would have thought there was more capital than then maybe I was able to stumble into.
Today, my guest is Kamyar Rezaie, a UCLA Economics graduate. He's been a driving force in real estate industry for over 20 years, beginning in real estate or excuse me residential real estate before transitioning into commercial in 2008. And in just a minute, we're going to speak with Kamyar Rezaie about commercial real estate financing options in 2024.
J Darrin Gross
If you're willing, I'd like to ask you, Kamyar Rezaie what is the biggest risk?
Kamyar Rezaie
The biggest risk, which I see is because I faced in 2000, era eight era where the banks basically got hit hard, no one had money, first on the bank side or on the on consumer side. So the biggest risk in my industry is if the banks don't lend anymore, you know, then everything comes to a halt. And there will be no movement, you know, and you know, we always need money even at the higher rates, low rates, you always need money, you always have to have refinances, you always need purchases, to continue. The biggest risk is, you know, banks stop lending.
Today, my guest is Zachary Beach. Zachary is a returning guest and is an Amazon Best selling author of The New Rules Real Estate Investing, and the co host of Smart Real Estate Coach Podcast. He's a partner, the CEO and a coach at Smart Real Estate Coach. And in September 2020, they re re released revised edition of the Real Estate On Your Terms book, which has Zachary co authored. And in just a minute, we're going to speak with Zachary Beach about real estate on your terms, making real estate deals in her excuse me Making Real Estate Deals Happen in 2024.
J Darrin Gross
And so if you're willing, I'd like to ask you, Zachary beach. What is the biggest risk?
Zachary Beach
Yeah, I'm glad you brought that like, it's interesting the way you walk through all that, because that's essentially what we're trying to do is minimize risk as much as possible. Warren Buffett always said that they all make all the best investors out there, not specifically real estate, look to minimize the downside and maximize the upside. And I think that's exactly what we've done here. We're creative financing. Because right when we buy a piece of real estate, we're not personally guaranteeing the debt. So we are not taking on the risk of the debt. It's actually on the seller, so we're actually pushing it back to the seller. And then what we're then doing is we're actually not taking on the full risk of the property either because when we go sell on rent, oh, we're actually pushing the risk now to the tenant buyer for handling any and all responsibilities of the property because it's tied to his option. So it's very interesting that you hear that. So our biggest risk when it comes to these two deals. One, if it was a subject to deal, the biggest risk always involves is the due on sale clause. So then how do you manage that do on sales cause risk? Well, you buy a product, we buy the property in a trust. And then because the Garn Saint Germain act of 1982 allows you to transfer ownership of a property for state or tax planning purposes. So we use that to try to manage the risk. And then there's lots of insurance companies nowadays. I actually have a due on sales calls insurance now, as well. So that's where we we certainly minimize that. So then what? So then if we look on the buyer side, what's our biggest, our biggest risk? Now our biggest risk is if our buyer defaults, on a on the on the option or the rent to own deal, which means that we gotta go to traditional tenant law, which means now we're gonna deal with an eviction. So when we look at that, those are going to be our biggest risks involved when we do our best to manage that tenant buyer risk by getting as big of a non refundable deposit as possible, because it's less likely they're going to default if they have more money involved in the deal.
Today, my guest is Darin Davis. Darin is a real estate leader with 20 plus years of experience and has led through market shifts with over a billion and projects. And he's co founded Club Capital. And in just a minute we're going to speak with Darin Davis about Multifamily Syndication opportunities in 2024.
J Darrin Gross:
I'd like to ask you, Darin Davis. What is the biggest risk?
Darin Davis:
Yeah, and it's not a black and white answer. So and I get asked this question.
You know, a few times but and it's I look back the the biggest risk personally for me was if I didn't take any, okay, the fear, I accepted the risk by doing my first few deals, knowing I probably was not going to make a ton of money. All right, I just, and I accepted that personally, mentally, emotionally. Because I said, There's no way I can, I can figure some of this stuff out. So the risk there is there was accepted risk, and I took it, okay, education, knowledge, experience, it best thing I ever did. And they were small at the time. I mean, they were big at the time, but they I look, I fast forward to 20 years. I mean, they were the greatest things I ever did. Okay. And I always think about, you know, I've had a lot of broken bones, I was a crazy kid, I tried all kinds of things. And I always, I always thought about atrophy as an as an answer, okay. You know, you know, when you break your arm back in the old days, they put plaster cast on us, you know, today, I think you're walking around with a knee surgery, four hours later, whatever they do, but everybody knows what atrophy as you take the cast off your arms, half the size of your other arm, you know, looking at that, but I kind of sat back and said, you know, what you can either, you know, waste the time and the knowledge that you've learned by doing nothing, okay, which I think is incredibly risky. Or you can spend that time and knowledge to do something that will propel you and or your family to some place that you're going to go. Or if you want to take it to the next level, you can invest. And when I say invest, I don't mean like, physically invest, but make that commitment and that investment in yourself and your family to actually go out and execute. And I used to say something, I've said this a long time. And actually, I kind of forgot about it. But I used to say, education without execution is just entertainment. My three E's, you know? And to me, that's, that's the risk that I will not accept me, you know, so not really an insurance answer. But you've got to take some emotional and mental risk, and even some financial risks, and I've lost money, there's no doubt about it. On my own money, okay. I've lost money. And but I look back, and I'm happy that I did what I did. I learned a lot. Now, if you don't, if you don't change your ways that you've learned those lessons, then that don't do it. Okay. But if you're willing to accept that, hey, I can take that risk, I can live with it, and I can learn and move on. That's, that's powerful.
Today, my guest is Anna Olin. Anna is one of the pair of the pioneers of Z Life Sustainable Luxury Real Estate, originating the English Hotel in Las Vegas. And they are renowned for their innovative M8Trix Model. And in just a minute, we're going to speak with Anna Olin about Z Life's newest initiative, Midtown; revitalizing downtown Las Vegas.
J Darrin Gross
If you're willing, I'd like to ask you Anna Olin, what is the BIGGEST RISK?
Anna Olin
Yeah, thanks. Well, I will make sure my insurance broker is listening to this with this podcast as I as I answer this, which actually I have Have a great relationship with my insurance broker shout out to John, he's been awesome for us. So I do actually love him. You know, I think in the industry as a whole, we always see the biggest, I think risk is the cost risk, right, and the cost of materials, the cost of time and cost to build, which I think our system and building the M8Trix and being in construction for so long, our entire system in existence on this planet now is was built to mitigate that. So when I look at our risks, specifically for Z Life, you know, our biggest I think our biggest risks is what is the market going to do, and nobody has a crystal ball and I can listen to a million podcasts and say, it's going to do this, it's gonna do that interest rates are gonna drop, they're not going to drop whatever. So I think, for us, the way we look at it is location is always going to be key, right location is always going to be the driver, that's going to be the consistent factor, whether markets up or down, no matter what's happening. The second is always going to be how, how flexible are we with the asset. So physically, the physical asset cannot be repositioned? If it needs to be to address the risk, or if something happens if there's a crisis. So you know, if it's, we went in with the intention of okay, we're building apartments, but now they have to be hotels, can the asset be repositioned easily and with with little cost, you know, as painlessly as possible. So so that's something that we always look at, that we try to address up front is the what ifs. And if there is a change in market, we started the English hotel three months into the pandemic, which was an absolute nightmare. It was so funny when we first designed this system, the M8Trix system and I apologize for the the long answer here to your question. But we designed the system around recession proof, we wanted to build a recession proof model that even during a recession, the the asset would be able to produce the pandemic hit. And we've now changed from being a recession proof model to a pandemic proof model. So so so we know that our model works, but it's having the you know, the ability and the flexibility to reposition our asset, and not just that, but you know, our portfolio overall the vision overall to to address market changes. I think aside from that, that physical answer to that is the emotional and mental, you know, flexibility as well, to recognize that and be willing to make those changes. I've seen so many assets, so many projects get cancelled or put on hold, because of market condition changed or something happened, and the owner just doesn't have the flexibility emotionally to look at look at the project in a different way and how to maybe repurpose it or move it around so that it can work is that it's kind of just a hands up open, it didn't work the way it did we have to cancel it, it's gonna sit, you know, while it's gonna sit, thank you for the next 10 years. So I think that's that's how we approach that and how we approach risk. And it really being as flexible as possible, not just with the the physical product, but with our mindset and our leadership and how we approach that.
Today, my guest is Jerry Rosengarten. Jerry is the real estate developer who came up with the idea and build new york city's iconic Bowery Hotel. And he's an author of the book Jump on the Train, Dyslexic Entrepreneurs 50 Year Ride from the Leisure Suit to the Bowery Hotel.
J Darrin Gross
I’d like to ask you, Jerry Rosengarten, What is the BIGGEST RISK?
Gerald Rosengarten
If you own real estate, you're always at risk. Always. Somebody falls on your property somebody else there's a fire These are the things that you're going to always be risk. As far as the biggest risk is building the real estate. To build it, catastrophic things can happen. I had a crane fall in a building I was building Bowery, another building that was built. Seven, also a 17 story building. And the crane fell and knocked out the eighth and seventh and sixth floor of the building. Now, no one's living in the building. But that crane sits next to other buildings. And if it went another way, different story. I think that's the biggest risk that I know.
J Darrin Gross and Zach Lemaster discussed a turnkey investment strategy for single-family and small multi-family properties in the southeast US, highlighting low acquisition costs and potential for cash flow. J Darrin Gross and Zach Lemaster then explored strategies for creating a retirement income through real estate investing, including leveraging depreciation and creative financing options. They emphasized the importance of reverse engineering the investment strategy and maximizing real estate investments through 1031 exchanges and tax advantages.
J Darrin Gross
I'd like to ask you Zach Lemaster, what is the BIGGEST RISK?
Zach LeMaster
Oh, man, we're gonna get deep here for a sec. Darrin, I'm gonna get on my soapbox. But the biggest i and this is investing in general, buy, I truly feel this isn't this cliche, I truly feel that the biggest risk is doing nothing with your money, and not not paying attention to it. Because if you want to live the same life you're living now later in life than that, that's what you can do, right and one, one event could wipe you out one event and a health event, a loss in your job change in the market could completely wipe you out, you start over. So I just want to say that first and foremost, the biggest risk you can do is nothing. But when you're investing, I think there's there's so many different ways to evaluate risk. I actually think leverage D risks your investing. I like the idea of having adequate property insurance in place, we have portfolio policies and umbrella policies on all of our properties, we also do risk by having the right entity structure in place on our portfolio and separating it that out from each other and personal assets. We have all life insurance policies set up we invest for retirement vehicles, which are protected accounts, we also invested trusts, as well as having LCS those are all like portfolio structure that I think can de risk situations. Having the right insurance policy in place, I think is certainly important. But the the and there's so many different ways to answer this right at doing nothing is the biggest risk. And then I think secondary to that investing arbitrarily without knowing what you're investing in investing out without fully understanding something or having a plan and strategy. That is probably the next biggest risk that I see in investing real estate, it's a beautiful thing because you can man, you can really de risk it quite a bit. First and foremost, you're investing in a physical asset you're investing in and that's why we like residential real estate because it's human necessity housing, that's never going to go away. People always need a place to live and especially if you're in that kind of workforce housing, location like those are areas where you will always have demand and then you properly insure the property. You protect your assets with right entity structures. You have the right insurance brokers and professionals providing guidance bay that actually understand your goals. I think that is the biggest way to de risk so I probably went on too many And is there Darrin? So let me let me stop there.
Today, my guest is Ashley Tison. Ashley is an attorney, professional speaker and a founder of OZ Pros, a full service opportunity zone advisory firm. And in just a minute we're going to speak with Ashley Tison about Opportunity Zones for real estate tax mitigation.
J Darrin Gross
I'd like to ask you, Ashley Tison, what is the BIGGEST RISK?
Ashley Tison
Well, in the context of what we do, the BIGGEST RISK is audit. Right? So inside of Opportunity Zones, right, that's the, that's the thing that would unwind your deal. So all of these plans that you've made, if you can't survive an audit, then you're going to do it all for naught. And so in stepping into that, there's a number of ways that you do you try to avoid the risk, you try to mitigate it. And then you know, ultimately, we're, we're actually and we need to talk with you about this, we're working on an insurance product or exactly that, that will cover audit, actually covering the price of the audit, and then that will ultimately cover any kind of indemnity for will have an indemnity threshold, but it will cover up to an amount that the IRS said that you were incorrect on. And, you know, the easiest way is, like I said before, is to just have a really solid and organized audit trail that reads like a book. And that is presented in a storybook format. And, you know, that's the best way to mitigate it. And then secondarily is to have good professionals who can assist you with processing the audit with the IRS. And then, you know, ideally, we're going to be able to put together this, you know, are trying to figure out an insurance product that will then insure it. So, great question. I love it. And I love the fact that you're posing that question to everybody, because everybody should be looking at that, as it relates to every element of their life, how can they mitigate risk? And how can they deal with it effectively. And that's both inside of opportunity zones that's within their taxes as a whole that's within their real estate deals. I would say even that it's within kind of life itself relative to family and business continuity, that they ought to have a plan in place in order to be able to address potential situations down the road where they may not have access to the infrastructure that's available today. And I think that that's awesome that you're encouraging your clients to think about that kind of stuff. That's what we do with Cinterion is we help people with kind of continuity plans.
Today, my guest is Rob Finlay. Rob Finlay is a certified property manager and is a commercial real estate expert with a broad portfolio of success stories developed through hands on work and multigenerational industry experience with decades of experience in every facet of care from analytics to acquisitions, operations, to finance and more. Rob's insights are derived from real world wins and cutting edge industry innovation. And in just a minute, we're gonna speak with Rob Finlay about strategy changes needed for commercial real estate owners and asset managers in the shifting markets.
J Darrin Gross:
I'd like to ask you, Rob Finlay, what is the BIGGEST RISK?
Rob Finlay:
So not sure if there's one specific one and just so you know, hopefully, I I can give you one right now, that is top of mind for me, right? Because insurances. Property Insurance is property insurance that has been spoken about and and fortunately, we have people like you that help us, real estate owners get through that through that mess. The one thing that that property insurance people aren't going to help us with is what I see as this great risk is compliance and corporate risk. There is this thing out there for anybody who's in real estate, I want everybody who's in real estate, who are all your listeners to understand, if you have not heard of what this corporate Transparency Act, or CTA, whatever it's called, is right at CTA, look it up. But actually make sure it's corporate Transparency Act. The corporate Transparency Act is where anybody who's in commercial real estate, anybody who's in real estate, anybody who has an LLC, and it must file with the US Treasury, any type of beneficial ownership, any type of direct control any type of indirect, like, all these different requirements. And I think where most real estate people are, they're like, Okay, you know, my attorney will deal with this, or my accountant will deal with this, the accounts don't want to touch it, the attorneys will have to do an incredible amount of research to see. And then you have to track it and do all this stuff. If you don't, so right now, if you file an LLC, if you create an LLC, I think you have like 60 or 90 days to file. But in 2024, so this year, you must file this, this, this, this form with the Department of Treasury for all of your entities. And if you don't, it's a big one. These are like you're talking about, like, hundreds and 1000s of dollars of per day, fine. So what I would say is, for me, from a risk standpoint, is one, this is administrative and corporate risks. That typically will fall under the radar until probably December, probably last week in December, when I will now need to go get information and do all this work for all of my entities and try to load it up into some US Treasury database, right? So for me, like I'm gonna have to go sit there and put out by the systems are going to crash. It's like, it's like all of a sudden telling everybody, Hey, you have to file your taxes. But we're not doing it until the last possible second, and you don't know what you're not All right, you don't have none of the paperwork. So, to me, there are a lot of risks out there, right? You could go into data risk, you can go on, you know, all this other stuff. But quite frankly, this is risk that can be avoided, well, actually, I don't know, can you avoid you can't avoid it, because you have to do it. Right. You can minimize it by being proactive. And third, you could probably transfer it There are companies out there that that will handle it for you. So yeah, you can't avoid it. But you can minimize it by being proactive and looking at it now, not December 31.
Today my guest is Neal Bawa. Neal is the founder of Grow Capitis an online multifamily investor education platform, experienced syndicator, developer and his attention to the data has earned him the moniker "The Mad Scientist of Multifamily". And in just a minute, we're going to speak with Neal Bawa about the Upcoming Multifamily Distress in the Marketplace.
J Darrin Gross
I'd like to ask you, Neal Bawa, what is the BIGGST RISK?
Neal Bawa
So I'll give you two risks that affect insurance prices, and all other forms of prices in the United States. So one is a bigger, sort of more, you know, overarching risk. The second one is, is well known to us this. So the first one is climate change, we are continuing to see devastating impacts of climate change in many markets. It is a political, you know, issue where, you know, half of America doesn't want to acknowledge what is happening in markets like Florida and Texas and many other markets, like California, for example. But insurance costs are absolutely skyrocketing. And what's interesting is that it's even happening in markets that are not as impacted. So for example, Chicago is not considered to be a market that's highly impacted by climate change. But I just renewed my insurance for a triplex that I own on Brandon Avenue in Chicago. My insurance went up 58% 58%. And I went through a very detailed process of shopping it. So the climate change, is it an evolving thing? So it's not one of those? Yeah, you know, we've had insurance almost doubled in the last three or four years. I think we're done with that process. That's a nonsensical answer. I am not seeing any evidence that we are, quote, unquote, done with climate change that we're done with the insurance hikes, there's no doubt in my mind that we will continue to see double digit insurance hikes at least into the foreseeable future. So that's really the first biggest risk. The second largest risk is to inflation. So it's not necessarily directly tied to insurance, I'm sure insurance will go up because of it. The second largest risk is that there is a now an increasing chance that the United States will get into a shooting war with China in 2027. By 2026, the Chinese navy will achieve parity with the United States by 2027, they will be stronger than us, the chances of a shooting war are high. If that happens, we could have a year with 100% inflation in a single year.
Today, my guest is DJ McClure. DJ McClure is the VP of sales and business development at National Flood Experts driving strategic growth through partnerships and tailored cost saving solutions. And in just a minute, we're going to speak with DJ McClure about innovative flood insurance solutions.
J Darrin Gross:
I'd like to ask you, DJ McClure. What is the BIGGEST RISK?
DJ McClure:
I think right now, one of the BIGGEST RISK that I see among many is the number of properties that are, you know, approaching a debt restructure, you know, there's a lot of short term bridge that for a lot of properties that's coming due. And so one or two things are going to happen, obviously, they're going to be able to, if they're able to put together the funds to structure a refinance, you know, it's likely going to be into a different loan structure or excuse me a loan program, predominantly, your Fannie and Freddie type programs being, you know, the more fixed set options in a lot of cases. And this has a dramatic increase on the flood insurance coverage requirements. And so you could take a property that's only paying maybe a few 1000, a building, and the new requirements, you know, could add and more than double or triple the cost of what they're having to pay per building.
And this isn't always something that somebody knows is coming. So if you're looking at a debt restructure and you're in a flood zone, you know, sooner than later, you want to have our team or someone look at that. Because not only could you increase the value of the property going into the refinance, which could reduce, you know, the cash in potential that may be required by being able to show that lender a higher valuation with a better noi.
But you're also avoiding that flood insurance coverage increase that would come with that. And then the other option of that being the same as if a seller or excuse me, an owner is forced to sell because the refinance is not possible. Nonetheless, that flood insurance cost is counting against that sale valuation. If you're having to sell in that scenario, you're probably already selling at a lower valuation than your business plan has at that point. So again, if the flood insurance costs can be reduced, again, that helps on that sale valuation to try and recoup as much of those investor dollars as possible.
Today, my guest is Joey Klein. Joey is the host of Tech Talk podcast or the Tech Talk podcast. Joey is a seasoned commercial real estate broker focusing on representation of corporate tenants across a range of industries. based in Atlanta, he is deeply involved in urban focused developments, and transit expansion advocacy, particularly in Georgia and the Southeast.
J Darrin Gross:
I'd like to ask you, Joey Klein, what is the biggest risk?
Joe Kline:
Sure.
I don't have an insurance related answer. So that's, that's good. I have to say, I do think that your industry is a very fascinating one. And I think if we had more time, I'd love to throw some of these back at you. Because insurance is a very rapidly changing industry over the past couple of years as well. I look, I think that any Anyone, anyone who makes their money solely via Commission has to constantly be thinking about risk. And if you're not, you probably won't be doing it for very long. So it is something that I think about a lot, sometimes too much. And Atlanta is as well as the commercial real estate in general, right? Unless you're in a really small tertiary market. Valdosta, Georgia, right, you kind of have to be a jack of all trades, okay, there's not enough of one food group to really, you know, feed you. In a market like Atlanta, you really have to specialize. Okay. What I've tried to do is within my special specialization, diversify, that's how I think about risk. So my specialization is that I only represent tenants, I do absolutely no work whatsoever on behalf of landlords marketing buildings. That's not to say, I don't think there's anything wrong with that there are absolutely guys I know who do both sides of it. And they do well with it. I have very simply chosen to, for that to be my line in the sand, I only do work with tennis. However, within that work with tenants, certainly since 2020, I have tried to diversify the areas in which I do work and in which I target prospects, you know, potential clients. So I was very, very heavy into, you know, sort of growth stage early stage technology companies at the start of my career, and part of that was because I enjoy spending time with those people. And part of it was because as a younger guy starting out, it's a little bit easier to get a meeting with the, you know, CEO, who's your age at a 10 person company than the managing partner at a law firm. Okay. And when 2020 came, you know, those those were some of the really hardest hit companies, not only because venture funding dried up, not immediately Of course with them. But also they were some of the ones that took the most to work. So ever since then, I have diversified who I work with right more of a focus on professional services and finance, right those are some of the biggest uses of office space recently. A A good portion of business focused on not pure industrial manufacturing, but more of flex Flex is basically the office in the back the warehouse in the front, all right. So you know I helped a large water meter company establish kind of an HQ To where they had a big office there a warehouse and manufacturing, not only was that diversified type of group that I work with, it was also extremely interesting. You know, I do some sort of pseudo hospitality work, I have a social club that I'm working with right now he wants to set up a location in Atlanta, likely it will be in an office building, but it's a different use. So my, my risk assessment has been that, while I am not trying to be a jack of all trades, in terms of just any industry out there, that it's really important, especially right now to change, not change to increase the types of people and industries that you have in your orbit.
Today, my guest is Jeremy Friedman. Jeremy is with Stoic Equity Partners. And they have a portfolio of 10 Self Storage Flex Industrial assets in the southeast, totaling $48.8 million assets under management and 500,000 square feet located in Georgia, Mississippi, Florida, Alabama, and Arkansas. And in just a minute, we're going to speak with Jeremy Friedman about Why Invest in Flex Industrial Real Estate.
J Darrin Gross 0:00
And I'd like to ask you, Jeremy Friedman, what is the BIGGEST RISK?
Jeremy Friedman 0:05
But as we discussed before the call, that's actually the one largest risk item that we that does keep us up at night and that we're working diligently on at the moment is our insurance. And I think it's so this is not to be clear to your listeners, you did not prompt me for that at all this is this is our biggest risk at the moment, as we see it. We being located on the coast, the Gulf Coast of Alabama, and we have several coastal properties in Pensacola, Florida, Baldwin County, Alabama, we are being hit with tremendous increases in all of our property insurance, especially in the wind policies. And they're becoming increasingly hard to get. And to give you a couple and give your listeners a couple of examples we have we have a property in Pensacola, Florida and we put it under contract the insurance was in this was under contract and 2022. The insurance policy was $27,000 a year. By the time we closed on it in early 23. That policy had renewed to $47,000 from 27. However, we needed a new policy in the same carrier. And I will not name names with the same carrier quoted us a new policy one month after they just renewed for 47 at $72,000. I just yesterday got a quote for this year's renewal. And it will it will go to just under six figures. It's $99,000. So from 27, so quadrupling, in two years, essentially. Now, the problem at that facility is we have gross leases at that facility. Now, we have been very successful at getting the tenants to renew at significantly higher lease rates. And all we have to do is say, Hey, guys, y'all know what's going on with insurance, property taxes and expenses. This is the new rate, and they've all signed it. And so we've luckily been able to mitigate that all of our self storage facilities are gross rents, of course. So the these higher operating expenses are a drag the NOI a lot of our facilities, thankfully, our net leases, however, you know, we there's a limit to the total rents that these these tenants will pay can pay, right. So if the cam charges increased significantly, that lowers what we can get out of them for rent, or, you know, what we can attract new tenants for for rent. So we consider this an extreme risk of our industry, nationwide and all aspects of real estate commercial real estate. So this is what keeps us up at night we work with, we work with a large broker, an international broker who carries a pretty big stick. But we're still having a very hard time controlling these costs. We're working on putting together some master plans we are working on, we're exploring a captive policy that we can bring in house and manage ourselves to try to reduce the expense and and potentially be able to save money and or, you know, be able to refund money back to those certain assets after after a period of time. We see the risk is to twofold one is rate. So all of the insurers have increased their rate tremendously, but we also see it on the replacement cost side the total insured value of these properties. Because you know, we buy it at one price. And as you know, I mean we are well aware we're buying it below replacement costs. But we get in arguments all the time about what is replacement costs with our insurers and of course with coinsurance. We can't be underinsured or else that leaves us very, very vulnerable in the long run, so, you know we don't see replacement costs or construction costs coming down anytime soon. You know, so you know that part of the the insurance premium, I think is for probably all going to have to stomach. Hopefully though we can get some more competition back in these cat markets in these in these high rated higher risk markets to be able to bring the rates back down. But I think I think it you know, I think though with the replacement costs, where they are truly where they are, and where they probably will remain, it's going to be hard to get any real relief here for for a while. And I think it's all going to have to transfer through eventually to the tents and it's all going to continue to keep rolling down and held the consumers and so I mean, I think we see inflation continuing for many years, we don't see it under control by any means. And which is also why we like you know, multi tenant value and flex industrial properties where we can raise continue to push rents. So that's a long story to say insurance keeps me up at night. And, you know, what we're, how we think about it and what we're trying to do to help mitigate that risk.
Today, my guest is Christian Gore. Christian is the founder of G1 Capital Partners. And in this industry expert who have orchestrated real estate transactions worth approximately 9.5 billion across the across the United States. And in just a minute, we're going to speak with Christian Gore about leveraging AI and Machine Learning or Data Aggregation to make informed decisions about where and why to invest.
J Darrin Gross
I'd like to ask you, Christian Gore, what is the BIGGEST RISK?
Christian Gore
That's a great question. I would say, generally speaking, I would say geo geo political risk, that, that can significantly kind of affect what the Fed does or doesn't do. Yeah, we've, there's a lot of things going on overseas. I know we were fortunate enough not to kind of have to, you know, be involved with it daily. But there's there's significant geopolitical risks in our view going on right now. That, you know, who knows what, what what can happen, but there's a direct correlation with the Fed and kind of seeing what what they have the ability to do negatively to our business. So yeah, that would be off the cuff that that would be my, my biggest fear or risk looking forward and really in the near term in the next 12 months, in my opinion.
Today, my guest is Dan Thompson. Dan is a seasoned financial advisor and investor. And in just a minute, we're going to speak with Dan Thompson about Tax Advantaged Investing.
J Darrin Gross
I'd like to ask you, Dan Thompson, what is the BIGGEST RISK?
Dan Thompson
I think the BIGGEST RISK is to sit idle and do nothing to be so paranoid of risk that you take no risk. And there are some very predictable ways to get your money working and invested. And still keep the risk down. But it just kills me sometimes when I talked to somebody felt, in fact, they just talked to a potential client just yesterday, who's sitting with $1.7 million in a 4% CD. And just like said, That, to me is more risky than putting the money out at, quote, unquote, risk and having it grow for you. Because if you're not at least going to keep up with inflation, you're going backwards every single year.
Today, my guest is Joel Friedland. Joel has been in the industrial real estate world for over 40 years. He buys industrial properties, all cash and no mortgage. And in just a minute, we're going to speak with Joel Friedland, about syndication of industrial properties in the Chicago area.
J Darrin Gross
I'd like to ask you, Joel Friedland, what is the BIGGEST RISK?
Joel Friedland
I'm afraid I can't give you just one. Because there are actually multiple risks. I've been doing this for 40 years, and I can tell you exactly what I struggle with with risk. Number one risk debt. If you have debt and anything goes wrong, you are screwed. So that's why we do our deals, debt free, no mortgage, that's number one. Number two in industrial, vacancy. When a building's vacant, and it's a single tenant building on a net lease when the tenant leaves. It's either 100% vacant or it's 100%. Leased. So vacancy vacancy vacancy, it's it hurts us so badly. We need to keep our buildings occupied. The third one is your area, which is risks that have to do with losses, trucks hitting the sidewall of a building, which happened to us two weeks ago. Flooding roofs that a tree falls on, you know, those insurable risks. Those are really big for us. So Basically, it's almost as if we are a homeowner. And we have all the same issues as a homeowner, except we have a tenant that pays rent instead of us occupying the house. And that's the fourth risk if you do a deal with a tenant with bad credit collections.
Today my guest is Ben Spiegel. Ben Spiegel is a successful investment manager with a decade long track record deploying over 300 million into special situations across diverse asset classes. And in just a minute, we're going to speak with Ben Spiegel about Syndication of Luxury RV Parks in southern Alabama and Mississippi.
J Darrin Gross
I'd like to ask you, Ben Spiegel, what is the BIGGEST RISK?
Ben Spiegel
So, land, like I said, we were talking on our economy. When we started our conversation before the podcast began, landlords are Sue land that landlords sued 25 times more than the next business than the next highest sued business. So we're already in a very elevated risk, risk type of business. So I think the major form of risk obviously, when you have ambulance chasers out there looking to profit off of almost any opportunity they can. And so it depends really, it for example, I own a multifamily in Bridgeport, Connecticut, which is, you know, about an hour away from me, and I found a tenant was putting marbles in the lobby, to try to encourage a slip and fall because she's unhappy about her current lease situation. I mean, I've really, I've seen it all. And so but what I went, I think what it comes down to protecting yourself is, when I first started and to give advice, when I first started in this business, I'm just looking to just minimize expenses, minimize expenses, minimize expenses, go with the lowest cost insurance carrier possible, whoever offered the lowest premium I'm dealing with. Now, after having over having over a decade of experience in this industry, I am more than willing to pay a premium for my insurance provider, knowing not necessarily that my deductible is lower, but knowing that they will be there to cover me. If it's not, it's not if it's when I was going to be sued by a tenant for a slip and fall, or maybe there's asbestos in the building, I don't know about that somehow found there, it really can be a there's 100 different things that can be I'd say that, you know, the, the greatest risk is just, it's just being a landlord and being in the position that provides a you're providing housing to people and that the what I guess what I'd like, you know, is just to really not skimp on insurance expense. And, you know, in terms of just like overall risk, I think we're seeing it right now, especially in syndication, a lot of syndicators, were willing to go with variable rate loans, you know, four or five years ago, just to get a lower rate, you know, overall rate in that in that moment, not looking at the future in terms of how rates could move. So that just comes back to just the general principle of having a longer term hold view of your investment, and really be willing to sacrifice a little bit of cost up Friday to potentially to hedge yourself for the long term environment. So that's what I would say on the I, in addition to just general liability and business replacement, business, income replacement insurance, also just in terms of when you're just kind of have a long term view when you're looking at financing and really tenant selection, and even the build quality when you're doing renovations, when you buy a building that has deferred maintenance Are you just going to put a bandaid on it and move along and just keep chugging along. But what you find with that is, you know, a couple months later, there's 20 More band aids as opposed to just biting the bullet in the beginning. Spending the upfront cost is uncomfortable and it's not it doesn't feel great in the moment of sort of curing all deferred maintenance just immediately after acquisition. But I am telling you, it will save you money in the long run over the long run. And it's in my opinion, it's a huge competitive advantage if you're willing to have have that operating strategy.
Today, my guest is Maxwell Wu. Maxwell is the founder of Fulcrum Lending a direct balance sheet lender for multifamily properties nationwide. And in just a minute we're going to speak with Maxwell about nationwide multifamily lending and credit investing.
J Darrin Gross
I'd like to ask you, Maxwell, Wu, what is the BIGGEST RISK?
Maxwell Wu
I think the BIGGEST RISK, you know, right now in this market It is price fluctuation, right? investors do not like uncertainty. It's almost like a natural thing that the universe wants some order there. And we don't have a threshold to go off of a baseline they go off of it's very hard to see what the future looks like. What do all those words mean? Right? You know, again, you mentioned insurance. And I think a lot of investors, and I'm sure a lot of your listeners have noticed insurance costs skyrocket 3050 100%, of what it was previously. And that's for a multitude of reasons that, you know, we can drone on about, and maybe that's something you're able to add in here. But besides in middle class materials, labor, unexpected, you know, natural events, natural disasters happening. These are all things where, you know, folks didn't think there'd be such a destructive hailstorm in Texas, right. You know, these are things that truly anomalies, black swan events. Again, market does not like uncertainty. But how do you buttress against that against these headwinds? It's you got to Proform it appropriately and do that scenario analysis. And whether we do that for line item expenses, or really on a more macro basis, what happens if interest rates go up another 50 bibs? 100, VIBs 150 bibs, what to do to the property, right? So, sensitizing is a is a great way that we see the kind of hedge against risk or rather go in eyes wide open and say, if this does happen, what's the result? What can we do, right? To your point, what is preventable weather things that you can transfer risk on. So that's, that's how we view risk. And that's how we assess it. And that's how we had it. But in terms of, again, answering your question, what do we think the biggest risk is, is, you know, the highest levels of uncertainty, right. But if you want to be more specific with regard to real estate insurance is is is certainly out there. And making sure that you have the right folks that has seen have seen, you know, where policies were previously in the high inflationary times. And in times of stress, or for limited credit supply, look, or liquidity in the market, right? All these things inform premiums and cost of really insuring these properties, which any lender you go to any good lender you go to is going to require that you have a very strong insurance policy on the property.
Today my guest is Matthew BrodnIk. Matthew is the Chief Investment Officer for EQT Exeter's North American industrial real estate platform. EQT Exeter, is the real estate division of EQT, a purpose driven global investment firm with 244 billion of total assets under management. And in just a minute, we're going to speak with Matthew Brodnik about the current North American industrial real estate space.
J Darrin Gross
I'd like to ask you, Matt Brodnik, what is the BIGGEST RISK?
Matt Brodnik
I mean, I think I mean, I've been harping on tenant demand all this time. And as I mentioned, you know, tenant demand hasn't disappeared, it's, it's still there. I mean, you know, we talked about demand, kind of reverting to the mean. And right now, I'd say demand is fallen below the mean, a little bit, which is expected. I mean, tenants lease a lot of space and 21 and 22 leads to more than it turns out, they may need now, but they, they're not giving it back, they still still need it. And I think what happens in recession, which we haven't seen, we're not in a recession right now. And there's talk right now with the Fed that, that this whole idea of a soft landing, you know, employments near 100% Here, you know, we still have economic strength and growth, and as long as we do tenants are going to need space. And I think the biggest risk for us right now is is is recession, and, you know, tenants actually giving space back like they did during the global financial crisis, and that demand disappeared. And I think then, you know, it's, that's the, that's the big concern, that man going, you know, really, you know, falling through. And, you know, we talked about it, you know, if you talk to an office investor in 2021, during the pandemic, you know, they didn't forecast that this whole return to work thing would, or this work from home thing would last for four years. They didn't even see it as a risk at all. So I think, and that's what's killed the office world, right, is that tenant demand is completely disappearing, and not just disappear, but there could be giving space back, it's going backwards. So that's the risk, we see is this whole integrated environment. You know, maybe there's a another black swan event, something that happened, obviously, we talked about as a black swan event, maybe you can't predict what it is, but it seems like, you know, war in world between Russia and Ukraine and, you know, Israel and everything going on in the world, that is a real risk that something else comes in, there's another shock to the system. So that kind of demand, that's the thing that we you know, we stay up at night thinking about and, and focused on.
Today, my guest is Frank Xia. Frank is an ex engineering director in tech startup where he specialized in pricing and decision making. He is passionate about AI and investing in real estate and alternative assets. And in just a minute, we're going to speak with Frank Xia about deal underwriting and raising capital for B and C Class multifamily deals in Dallas, Texas.
J Darrin Gross
I'd like to ask you, Frank Xia, what is the BIGGEST RISK?
Frank Xia
I think the biggest risk for me is, I think, interest rate right now, and how I choose to, I don't think I can transfer that. But I think I can minimize it number before for a few for a few strategy. Number one is I just invest less deals, because the less you invest, the less risk you expose, right. But if you don't invest anything, then you have no income. That's not an option. So you have to participate in debate, but you can participate very strategically. So that's number one. Number two is you can use a fixed rate mortgage to alleviate your risk, right. Instead of few years back, everybody is using floating interest rate with two years of recap. So we learned the lesson, we're going to be more conservative using a fixed rate mortgage. So that's number two. Number three is that we are looking for a cheaper price. We're giving us more buffer so that we can tolerate this kind of waste. So these are the three things we're going to be doing. But the biggest risk to us right now our interest rate.
Today, my guest is Michael Salafia. Michael is the Founder and Managing Partner of Stax real estate LLC, a platform for sale leaseback of single tenant Net Lease real retail assets, located in Miami Beach. And in just a minute, we're going to speak with Michael Salafia about the benefits of triple net sale lease backs for both investors and tenants.
J Darrin Gross
Michael Salafia, what is the BIGGEST RISK?
Michael Salafia
As an investment manager, it's the fluctuations in interest rates are our biggest risks that we are dealing with at the moment. That changes that become very, the changes of interest rates are somewhat predictable to a degree and we'd get communication from the Fed. Our challenge is the market reaction or slow reaction and and kind of gauging how slow the reaction is going to be to the shifts. So getting getting sellers to understand that, you know, interest rates are not at three and a quarter. They're now at seven and a quarter. So your five cap property that you think is worth a five cap is now worth an eight cap and getting them to swallow that pill. That's that's been the biggest challenge.
Today my guests are Mike Merrigan and Bo Kort. After being best friends for 25 years, Mike and Bo started doing business together in 2015. He started purchasing buildings together in Texas. This partnership captured or catapulted their success. Together, the duo has found multiple eight figure companies in Houston motorsports cord industries and Mojave storage. Since the partnership began, 2015, Mike and Bo have built their portfolio of 43 companies have over $150 million in commercial real estate. They're involved in 14 different industries, motor sports, industrial fabrication, special T services, construction and self storage to name a few. And in just a minute, we're going to speak with Mike and Bo about the Power of Partnership, how to scale a business in any industry.
J Darrin Gross
Mike Merrigan, and Bo Kort, what is the BIGGEST RISK?
Mike Merrigan: I'll go first, if you're, because you're an insurance, one of the best feelings I've gotten, as far as an insurance thing, and looking at risk is once I had it explained to me, once I did get some assets, an umbrella policy gives me a lot of comfort, never had to use it. But I feel like it's a good investment. So if you're talking about literally insurance, I like the fact that I have an umbrella policy to protect things that I might not be thinking of. So I love having that. And I think it's a good value. And I'm glad to have it, and I don't think I'll ever not have it. On the other side of just generally speaking risk. One of the things that I learned, the biggest risk is not taking a risk, not taking the chance of buying real estate, I don't care, then buying an index fund, throwing your 10% every year, or every month, or whatever. But the biggest risk in life is don't take a risk. And guess where you're going to end up. If you can draw a picture, you're going to be just fine, you're going to be 30 pounds overweight, you're going to have a retirement that's going to be small, and you're going to just live this life, as opposed to take a few risks. Get a little older, take care of yourself, physically eat where you want, stay where you want, live, where you want, do what you want, it's a lot happier life, don't take a risk is the biggest risk and take in my opinion.
Bo Kort:
I agree completely. Gonna be hard to follow that one because I wanted to so Trump. I would say the other thing that I was thinking of is, is that in risk, and in real estate investing, is just staying disciplined and don't get emotional over things. And I think partnerships help in that, you know, like Mike talked about, he's good at one thing I'm good at another. Another thing that we lean on each other about a lot of times is we'll come up with a deal, and we'll have a feeling about it. We'll be in the office, and we'll spend hours just going over it and this and that. Okay, what do you guys want to do. And then one of us usually speaks up and goes to a call tomorrow. Tomorrow, nobody makes a decision that we're supposed to call him tonight. So call them back and let them know, we're not going to talk to him till tomorrow, you know, I mean, just let them know, something came up, whatever it is, and we sleep on it, we come back, and just make sure that we're not being emotional about the decisions that we're making. And because of being like that, and a lot of that is Mike's good about that to hold us all accountable for for things like that. But um, it has saved us tremendously on not making mistakes. And mistakes are good, and you learn from mistakes. And that's why you start small so that you don't have the type of mistakes that crumble you. But you educate yourself from those mistakes and it keeps you to be disciplined and not get too emotional about things. And your old self will be thanking your ass whenever you're whenever you got the money coming to you. Because you were disciplined, persistent
Today, my guest is Weina Zhang. Weina is the CEO and founder of the Z Life Company, a ground up developer builder based in Las Vegas. And in just a minute, we're going to speak with Weina Zhang, about Z Life and the use of their proprietary model to develop mid rise projects that are changing the path for young adults to enter the urban housing market.
J Darrin Gross
Weina Zhang, what is the BIGGEST RISK?
Weina Zhang
So the reason the we crave matrix system, like you said, was 20 years, his parents are from the line, we meet him lies, minimalize excuse the language. A lot of risk already. Right. But still our risk is. So like you said, the Fed. How can I give affordable housing for middle class? Right? The really the interest rate, right? So that's, that's I cannot control ever one problem I need to solve that. Right. So that's the that's really the biggest obstacle. The interest rate See, I solved the parking I solved the HOA, I solved the great location, beautiful glass condo, small, you know, not like super, like super 505,000 square foot. But there's a fed? Yes. That's the risk of I don't know if you call feather risk. Other than that, I think. Yeah, I don't think there's a lot of risk on me. Other developer? Probably, but not me.
Today, my guess is Sridhar Sannidhi. He is a 30 year it professional turned full time real estate professional. And it just a minute. We're going to speak with Sridhar about multifamily syndication and development.
Today, my guest is DeLisa Guerrier a of Guerrier Development, a commercial real estate development firm in Nashville with over 500 million and projects at various stages of development. And in just a minute, we're going to speak with DeLisa Guerrier about how she dropped her first choice, her first career choice in medicine to pursue real estate with her husband.
J Darrin Gross
I'd like to ask you to DeLisa Guerrier a, what is the BIGGEST RISK?
DeLisa Guerrier
Well, I think that there is a huge risk in what we do every day by, you know, investing capital into ever changing markets. And, you know, each project is different as to how much capital that is, and, and, you know, it is a risk. I mean, real estate investing is a risk in itself. And that's what, that's what ours isn't, you know, I, I'll tell you how, how I look at it, markets change, just like what we're in right now. And there was this profound lesson that I learned when I was in college, and I'll share it with you. My sister and I were driving from California to Nashville, we just got our brand new cars. It was my second year of college, and my mom was driving the car in front of us. And she and I were taking turns driving mine. And we came through some place in Oklahoma or something, and there was this huge, big storm. So we caught my mom and we said, what do we do, you know, do we pull over and she said, We're gonna keep moving, we're gonna move slow, we're gonna move cautiously. But we're gonna keep moving. And when we got out of it, she said, if we'd stopped, we'd still be in the storm. And that is how I look at market shifts. That is how I look at, you know, our risk taking it's, we move, we move cautiously, we pay attention, and we, you know, don't don't make any sudden, sudden movements. But, um, you know, we keep moving. So
Today, my guest is Mandy McAllister, and she is a multifamily real estate investor, mindset ninja and connector. She spent the bulk of her career in medical device sales, chasing sales and commission checks. In 2021. Mandy left her W2 to lean on the financial independence she built through real estate investing, and he now serves as CEO of Go Bundance Women, a tribe of healthy wealthy, generous women who choose to lead epic lives. Her real estate expertise includes repositioning underperforming assets to increase cash flow and value. A portfolio is currently comprised of 373 doors of B class workforce housing, furnish student housing, and a motel reposition. She's most proud to be a mama to her hilarious seven year old son Duncan, who coincidentally wants to be a real estate investor when he grows up. And in just a minute, we're going to speak with Mandy McAlister about small multifamily investments, joint venture instead of syndication and the power of your tribe.
J Darrin Gross
I'd like to ask you, Mandy McAllister, what is the BIGGEST RISK?
Mandy McAllister
I really believe that the BIGGEST RISK is doing nothing, that there's risk all around us. And no matter. I'm a very risk adverse person, I have followed the script. I am a farm kid who does stuff the right way. And it wasn't until I realized that no matter what it takes not taking a risk is the is a risk. It's a choice boards, leaning into my money getting eaten by inflation. So there was a book that was kind of all the rage recently through governance women called the psychology of money. And my primary takeaway there is I don't need to be perfect in my decision making. I just need to be reasonable enough. And if I'm reasonable enough in that risk mitigation, and the idea of real estate, everybody always needs a roof over their head. Maslow's hierarchy of needs, tells me that this will have demand till the end of time, right? You don't need to buy a Bitcoin, you don't need to buy a stock certificate, you need a roof over your head. So how can I lean into the thing with the strongest demand ever? And be reasonable enough in the process, so that I am winning, rather than just leaning back in letting inflation eat away at my mouth?
Today, my guest is Mark Khuri. Mark is the co-founder or co-founder SMK Capital Management in 2010. SMK is a boutique private equity real estate investment firm, focusing on recent recession resistant investment opportunities. Mark has created and managed over 65 Real Estate partnerships with investors. And in just a minute, we're going to speak with Mark Khuri about strategies to create a recession resistant real estate portfolio.
J Darrin Gross
I'd like to ask you, Mark Khuri, what is the BIGGEST RISK?
Mark Khuri
I'd say today J, a lot of people think economy, recession, downturn, asset values dropping, etc. All of that is top of mind, but it's not the biggest risk for us, the biggest risk has, for many years has been the same. And it remains today and its people. So we are a private equity firm. We are inherently trusting others to operate the assets that we're investing in. And so people risk number one for us, Jay, and one of the hardest to, to mitigate against because people by definition can be mysterious and difficult and hard to understand and complicated. And so a lot of that risk for us is reduced by working with people for a number of years, it takes a long time to get to know them, see if they're really good. And if the business plan wants you to go left, but the economy is telling you to go right what do you do? Do you have the right people that can steer the ship that can adjust in the middle of the the operation and continue to always have the investors best interest in mind? So for us, it's definitely people risk.
Today my guest is Todd Pigott, Todd is the principal and President and oversees Zinc Financial and the Zinc Income Fund. Founded in 2007. Zinc Financial is a licensed lender having originated and serviced close to $1 billion in loans with a loss ratio of less than 1/8 of a percent. And in just a minute we're going to speak with Todd Pigott about making money lending to fix and flip operators.
J Darrin Gross
I'd like to ask you, Todd Piggott, what is the BIGGEST RISK?
Todd Pigott
In my opinion, and I evaluate that all the time, what's our biggest risk? I manage $100 million. Right now other people's money throughout our fund, what's the risk that I'm trying to avoid? I can predict the interest rates, I can look at the metrics provided by the GSA for portfolio performance and assess risk there. I can look at absorption rates and assess risk there. I can look at the borrower got good cash down, got good credit backgrounds clean, I can assess risk. They're my biggest concern of risk, and what I do every single day. And I think if there's any time for this to happen, it's it's now my biggest risk that I view as a potential threat to my specific platform, is a calamity outside of housing that will cause housing or real estate to collapse. I believe that housing today is extremely safe. We have 1.8 months of inventory. We have construction. We don't have a wave of foreclosures. We have a shortage of housing and all these point to stability right now except for little pockets here and there down 5% You know you 99% of list prices and my biggest concern. My biggest concern is a calamity outside of housing that will quickly affect housing, a terror attack political dysfunction, a drop in our currency war, war war. You know, everybody can call me a crazy for these things. But I believe that in 2023 The chances of some type of calamity occurring outside of housing or real estate that will affect housing or real estate is as likely. And I think that we're, we're, we're seeing some of that we're seeing things happen politically, society, currency, or even even globally, we're seeing things happen that we've never seen in our lifetime. And so I think if one of those events occurs, that would send housing into an into a spiral. And so that is, here's how I look at this, though, that is something that I don't have control over. I don't know what's gonna happen there. And if it does happen, I tell my investors this, our worst scenario is that we have a classic event outside of housing, that causes a deep decline in asset values across the nation, both in stocks and everything else. So what do we do? I tell them this, at least I've got real estate, I've got a home with a first position lien, we're a borrower with good credit, put down 20%, I can get in my pickup truck, and drive to that property. And we at least have that. So we, he bought it for 400, he put down 60 to 80, we're into it 320, we thought it was gonna be worth 550 and the whole world fell apart. At least we can get in our pickup truck and drive to that property. And I've got a property that somebody has to live in, we will freeze the fund, freeze it. And we will be renting those or holding those for cash flow as as entry level housing until that calamity starts to dissipate. So my investors are coming. So what's the what's the worst thing that can happen? The worst thing that can happen is a calamity outside of housing. At that time, we would at least freeze the fund. And we would at least have assets that we would stabilize with renters for positive cash flow until that calamity dissipates. So that's how I plan on mitigating that that risk threat. And I think that risk threat is potentially real, potentially real, something out there is going to happen five years, 10 years, three years, I don't know it's going to cause a discourse and affect us. I don't have control over that. You don't have control over that. But the best way to protect about that is at least have some type of plan B or extra strategy and we do.
Today, my guest is Paul Ross. Paul is a is an author, speaker, elite sales trainer of neuro linguistic programming. And in just a minute, we're going to speak with Paul about how to get your prospects to convince themselves to by using the power of subconscious programming.
J Darrin Gross
I'd like to ask you, Paul Ross, what is the BIGGEST RISK?
Paul Ross
I have to say it's context dependent. But if you were to ask me in general broadly, the biggest risk that you can take is to be risk adverse and to need to get absolute clarity before you take an action step. If you're adverse to risk and you need absolute clarity before you act. You then risk can be an emotional risk risking rejection, although I never get rejected, I only discovered the lessons that I didn't know that I had learned. So being risk averse. And as part of that meeting to be certain before you take a step into the unknown, see if you can step into the unknown without needing a guarantee of success and let the other person give them radical permission to have their first response to you. Then something magical opens a doorway to grace the doorway to results that you wouldn't otherwise get if you can get it you need to guarantee.
Today my guest is David Goldfarb. David is the managing partner at Xtreme Action Park Elev8 Fun, EA Properties and Primetime Amusements. And in just a minute, we're going to speak with David about the opportunities in indoor adventure parks.
J Darrin Gross
I'd like to ask you, David Goldfarb, what is the BIGGEST RISK?
David Goldfarb
So if I'm going to, if I'm going to make this unrelated to let's say, insurance or to anything, from an operational standpoint, I think the biggest risk that we're seeing, or at least I'm seeing in these in picking these locations, is you don't want to go into a location where the mall operate. Operator is like a Slumdog real estate mall operator. So you want to avoid that at all cost. And even though you have a separate entrance, leading into your building, the fact that you're going into a mall, where they are basically treating the property as if it was a warehouse, so to speak, not the way the Simon properties do not the way Washington prime group does. Not not the way you know, some of these, you know, other large mall operators run in this type of environment, I would avoid at all costs. So So you know, there are there are certain certain players out there, and I'm not gonna mention names. But there are certain players out there that have been buying distressed moles. And if you happen to buy a piece of property that's attached to that distress mold, the way they run their operations really is it's unfortunate, because when you're attached to what I would call almost a bad neighborhood, if I'm referencing that, no matter how nice your house is, you're still in a bad neighborhood. So that's what I would avoid at all cost.
Today, my guest is Joseph Woodbury. Joseph is the founder and CEO of Neighbor.com marketplace, disrupting the 500 billion self storage industry. And in just a minute, we're going to speak with Joseph about how neighbor.com is disrupting the Self Storage business.
J Darrin Gross
I'd like to ask you, Joseph Woodbury, what is the BIGGEST RISK?
Joseph Woodbury
Yeah, isn't an easy answer. For me. Ironically, I think most people's largest risk is is is in their industry or in their business itself. And, and I certainly think of risks there. But we've kind of talked about the storage industry, it's it's very robust, it's not going anywhere. It doesn't respond to recessions. You know, during the oh eight recession, when most real estate asset classes contracted by 60%, storage grew by 5%. So it's very, like, counter cyclical and recession proof. And so actually, I identify our biggest risk as a company is, is we're influenced not just by the storage industry, but because we're a software technology company, we're influenced by the venture capital industry. And if you look at other large marketplaces that have gone before us, they've raised a lot of capital to get to where they are. Airbnb is a $80 billion company, they just joined the s&p 500. So they are, you know, one of the most important companies in the United States of America. But they raised about $10 billion in capital to get there. You know, Uber raised north of $15 billion, and capital Instacart and DoorDash have both raised I want to say six or seven or $8 billion in capital. So most major marketplaces raised large amounts of capital today, you know, we operate in every city in all 50 states, we've raised a measly, you know, $65 million in capital. So I often ask myself the question, you know, will we be able to raise, you know, those those billions of dollars in capital, like marketplaces that have gone before us to reach the potential that they have, they have reached as mainstay brands in the United States. I think that's, that's the biggest risk. You know, when I, as the CEO, sit down and think it's not the storage piece. Renters love us hosts love us host earning money. renters are saving money, they keep growing, they keep transacting, they keep coming to the platform. It's, it's, you know, we're dependent on this venture capital industry. And it goes through different cycles. It's in a pretty bear cycle right now. And that'll continue to happen and it'll keep going through bear and bull cycles. But will that affect us, you know, years down the road? You know, what we go through some bear cycle that forces us to use other means of funding and that sort of thing?
Today, my guest is Grant Pruitt. Grant is the co founder and president and Managing Director of White Box Real Estate LLC. Grand Lodge the firm has a tenant focused real estate advisory investment sales and development firms to specialize in offering a custom tailored approach. And in just a minute we're going to speak with Grant about the commercial industrial real estate of the market in Dallas, Fort Worth, Texas.
J Darrin Gross
I'd like to ask you Grant Pruitt, what is the BIGGEST RISK?
Grant Pruitt
Sure, I'll give you the micro first and I'll give you the macro. So from a micro standpoint, with primarily offices in the state of Texas, the biggest risk is the the perceived safety of the cities. As long as the cities in the state of Texas are perceived as relatively safe, we'll continue to see that inbound migration, the schools have always been an issue. And people always talk about schools. But the minute people don't feel safe, that's when you see a flight to other parts of the country where they do perceive that safety. That's the map the micro, from a macro standpoint, it's probably going to be the same concern tomorrow, and next year, 10 years from now, 20 years from now, it's always the lending facilities for me, because I'm in commercial real estate and always quiz people and say, who owns all the real estate in the United States, because the United States is different than some other parts of Europe and so forth. The banks, the banks own the real estate, because they have loans on most of the real estate that's out there. And when we have hiccups in the lending facilities, that's where we have real trouble. We saw it in, you know, the 1980s 2008. Anytime that banks fail, anytime we see issues with lending, potentially alternative vehicles that that create more risk? That is a huge concern.
Today my guests are Joe Moye and Dan Grosswald. Joe is the CEO and leads Beeps efforts in the safe testing of electric autonomous vehicles to serve the needs of public and private communities. And Dan Grosswald is the president of Mattamy Homes, and he oversees homebuilding and Land Acquisition Operations in southeast Florida. And in just a minute, we're going to speak with Joe Moye and Dan Grosswald about how Mattamy is creating a blueprint of communities of the futures with Beeps autonomous shuttle network woven into their tradition community in Port Lucie, Port St. Lucie, providing equal access to mobility, easy access for shopping, groceries, and more.
J Darrin Gross
I'd like to ask you, Joe Moye and Dan Grosswald, what is the BIGGEST RISK?
Joe Moye
Yeah, I'd be happy to start with that. I think, you know, the the autonomous technology mobility area has done, it's probably done itself a little bit of a disservice of all the lofty expectations of these George Jetson scenarios of vehicles zipping all around our roadways in autonomous mode. And, and I don't think it's because anybody was derelict in their visions, I think it was just the reality that this is a walk before you run technology. You know, one of the things that we've hit on here that's so important, is starting with planned route, controlled speed environments, where you're able to mitigate a lot of the complex interactions, one would typically have one, you know, much more sophisticated or much larger routes for the traveling of a vehicle. You know, it is the technology is getting better and better every day, as you and I talked about before the call even applications, beyond moving people, you know, if you're moving boxes, or luggage or anything else, same type of technology that's being advanced to perceive an environment and be able to navigate a course. And so, you know, I think, I think it's important as an industry, that we, you know, evolve this together in these more controlled environments and not set false expectations of these vehicles will be able to go anywhere, anytime, any speed tomorrow. And I think from a risk perspective, you know, that dramatically reduces, you know, the chance that, you know, something would happen, but, but I'd also say, you know, at the end of the day, and you probably know these statistics better than I but you know, 43,000 people perished on us roadways. Last year alone, you know, incredible tragedy, the property damage associated with that, you know, the quality of life damage associated with that 94% of that caused by human error distraction impairment, these vehicles respond in a scenario three times faster than a human can identifying something and actuating a break, and they're never distracted, right, they're not staring at an iPhone, they're not going into the town center for a couple of drinks and getting behind the wheel. And that's, you know, that can't be lost in this, this is about, you know, saving lives and reducing risk as it relates to one of the biggest threats, you know, in our country today. So, So anyhow, that would be my my soapbox speech on that topic.
Dan Grosswald
We'd look at it from three perspectives. You know, first, the biggest, the biggest risk, really, from our perspective is human failure, the vehicle itself and the technology itself is, is very good. And as Joe pointed out, is better than a human being in terms of its safety factor. Really, what happens is either for packing a human acting from the outside of the system, you know, crashing into it, or taking advantage of the vehicle is a risk, not the vehicle or the system, or when it's not an autonomous mode, it's actually riskier than when it is in autonomous mode, sometimes the vehicle has to be manually moved. So the risk factor increases slightly, they're over when it's in autonomous mode. But the other the other two things. So we decided purposefully to create the dedicated path for the reasons that Joe mentioned earlier. So that helps us minimize the risk that it's not interacting on an open road or parking lot system as much as otherwise would be if we didn't have the trails. So and we did that for a reason. And finally, we've decided to have the CDD operated, so from a developer point of view, having to do CDD own and operate the vehicles gives us, you know, some sovereign immunity from what we would otherwise be exposed to as a corporation. So that's kind of how we viewed the risk and how we've tried to mitigate or transferred as you mentioned earlier,
Today, my guest is Owen Barrett. Owen founded Rayven to decarbonize existing buildings at scale. Rayven has the world's first net zero real estate investment platform, every property they buy is converted to true net zero, no offsets involved by partnering with 1000s of authentic retail impact investors. Owen, Rayven, Owen and Rayven, and every single investor will decarbonize the world, one apartment building at a time. And in just a minute, we're going to speak with Owen Barrett about impact investing, you can invest and help lower the carbon footprint of commercial real estate.
J Darrin Gross
I'd like to ask you Owen Barrett, What is the BIGGEST RISK?
Owen Barrett
Yeah, I think it's easy. It's climate change. I think it's climate change. For a number of reasons. From a utility perspective, I mean, look at the heatwave that we have going on now, in the Southwest US, how are utilities going to keep up with all that demand? Assuming that this is like the new normal. From an from an insurance perspective, we're seeing major insurers pull out of entire states, because the climate risks are too high state farm just pulled out of California due to wildfires, and Florida due to Hurricane risks. So there's so many adverse effects of climate change that are going to just perpetuate through all different pieces of the economy. Agriculture is a huge one too. I mean, thinking about your food supply and how that's gonna get affected. There's just there's so many risks of climate change, that it is just mind boggling to me that it's not everybody's number one priority to do everything in their power, whether as an individual or corporation and institutional investor to solve this as fast as possible, because I think we're moving entirely too slow.
Today my guest is James Gosse. James is an is Executive Managing Director of transaction services at NXT CRE. NXT CRE supports commercial real estate lenders find properties for their exiting borrowers that match their exiting 1031 needs. And in just a minute, we're going to speak with James about how the price of interest rate caps is making it near impossible for borrowers to use floating rate debt.
J Darrin Gross
I'd like to ask you, James Goss, what is the BIGGEST RISK?
James Gosse
Well, a great question. And certainly, you know, the topic we were just touching on by the way, Darrin, I think, you know, oftentimes, so people are aware interest rate caps are often referred to as insurance policies for your interest rate. So I just found that an interesting aside, the biggest risk for us and this is a good question. You know, it's one of the things that If I'm honest, sort of this probably keeps me up at night more than other things. It's, you know, it's not making people aware of who we are, it's not not being able to get our message out to the right people. Right, that that's the risk I see. And again, we're obviously doing what we can to eliminate, mitigate, minimize all that kind of stuff. That said, you know, to us, that's the biggest risk, obviously, there's, there's other market forces and things like that, but just from what we can control. You know, to me that that's the biggest risk is we have something that when we explain it correctly, and when we have the right, people were talking to light bulbs go on. And when we have the discussion with lender partners, they go, of course, we want to do this with you, right? Of course we'd like so, but it's just a function of the risk is that we don't communicate it right. Or the risk is that we don't communicate it to the right audience or, you know, whatever the case. So, to us, it's a an exposure again, and I see this very much. So we've got a guy, I think the gentleman who set me up to this, Tim, is outstanding, and he's spends all of his time trying to figure out how do we make sure the market is aware of us has the right perception. And again, that's one of the reasons we were so pleased to join CCI M, their member Advantage program? Again, for us, it's a, I would say an exposure or, you know, making sure we get enough exposure is our Biggest Risk.
Today, my guest is George Pino. George is the CEO of Commercial Brokers International, a full service commercial real estate firm, headquartered in Los Angeles, California, with over 27 affiliate offices around the US. And in just a minute, we're going to speak with George bout Keys to Getting Started Investing in Commercial Real Estate in 2023.
J Darrin Gross
I'd like to ask you, George Pino, what is the BIGGEST RISK?
George Pino
Biggest risk? Um, I'm gonna answer that as the biggest risk I see for investing in real estate when you're just getting started. Because that's kind of what we're talking about as well. And the biggest risk there, I think, is, we see this happen a lot. And you'd mentioned like jumping on the bandwagon. You know, I'm constantly getting calls and our offices getting calls over the last month and a half about adaptive reuse for office space. And yet people have no clue what that is or what to how to go about it. But they hear about it, and they read it and I want to do this not understanding the whole business of it. And that right now, at this point, it's just too cost prohibitive for the most part. It may not be especially if the government's come in and give some incentives. So you know, I think one jumping on the bandwagon but I think that correlates into the ultimate answer, which is not doing your homework or due diligence ahead of time. Just here's my investment money. This is what I heard was going to happen. This is what I'm going to do. You know, I I think the program that you're looking at, you're talking about as far as an insurance company, you know, identifying the risks, mitigating the risks, transferring the risk, absolutely correct in any type of aspect, and investors should be looking at that as well, you know, identifying what the risks are, and then mitigating and we're transferring it. Part of that is also not understanding what's going on in the future or reading that. And, you know, we don't have crystal balls, I don't have a crystal ball, no one has a crystal ball that I'm aware of, was at the Magic Castle a few weeks ago, they had a crystal ball there, but I don't trust it. So. But when you're looking at the future, though, you can still kind of see what's happening, you know, what laws are going to come into place, you know, if it's going to be a headache, if you know if you know, right now there's, you know, insurance industry, at least in Southern California, we're having some issues, you know, there's a lot of carriers are pulling out of California. And that's going to cause an increase in your insurance rates. Now, if you're in a single tenant net lease or net lease property, sure, you're looking at what the tenants are going to pay for that. But you have to think a little bit further, if your triple net expenses are too high, and they're going to offset by trying to lower the rent. So it can't just be a complete passer, you have to think about what's going to work for everybody. And also, the last thing you want is to pass through expenses that cause your tenant to go out of business. So you have to really think about how to go about that and how to plan for that action. And a lot of people don't don't really think about that. I mean, speaking of insurance, I just got a insurance person, I had a company that just denied insurance on a property because the neighboring property had too many homeless people based on aerial photos. So the insurance companies are getting very picky and pushing and that's been an issue. But you have to understand that going in if you're investing that this is going to just be part of my investment strategy here my expenses, they may be this today. But in reality after I close escrow, it's going to be here, and a lot of people don't really look at that and have a plan for that action. They're just kind of looking at that snapshot today. And I think that's the biggest risk that they have if they're just not taking the whole picture in.
Today, my guest is Scott Lyons. Scott is with the global commercial construction firm DPR. And that's where Scott is the national commercial core market leader where he is directly responsible for understanding the needs of DPRs customers and delivering predictable results. And in just a minute, we're going to speak with Scott about leading your commercial construction team through these volatile economic times.
J Darrin Gross
I'd like to ask you, Scott Lyons, what is the BIGGEST RISK?
Scott Lyons
So I think the biggest risk for us Darrin is is is making decisions around in kind of moment of duress, and let me kind of explain what I mean there. So what you won't get imagine that, hey, you're going into a recession will or we think there might be a recession? Maybe it's soft landing, who knows, but guess what interest rates are up there and a whole lot of is many projects opportunities out there, we better sell a bunch of work. We better just, you know, be the squirrel that goes out and just grabs, you know, every night that we can. And that rarely works out. And so what we're doing to mitigate risk really, Darren is just like, radically just discipline decision making. And so in other words, don't go out and overextend ourselves, don't go remote, don't take on projects, for customers whom we don't know. And because histories, you know, history is a great teacher, and just a lot of times that doesn't work out. And so what we're trying to do is, stay the course, be disciplined, make great decisions, work with customers, whom we just value and really can deliver for and who wants to, you know, and that's, you know, the risk is just panicking. And so we're not, we're not going to do the opposite of that, and just stay steady. Because of the macro factors, you know, of interest rates and economy, hopefully, this debt ceiling deal gets, you know, done by Congress. We can't control that, but we can control our decisions.
Today, my guest is Bruce Mack. Bruce is an in demand national speaker real estate investor involved with over $90 million in transactions. He's an author and the founder of platinum trust group has a licensed financial advisor at trust expert, Bruce empowers investors to achieve significant tax mitigation plus bulletproof asset protection through his proprietary IRS compliant trusts. Over 80% of his clients are real estate investors, ranging from owning just a few doors to over 3000. He educates on the ideal alternative solution to 1030 ones for capital gains treatment, as well as the best entity for holding assets that hands down are superior to LLCs, or corporations. Bruce has an exceptional relevant training for newbie investors as well as seasoned pros with multimillion dollar portfolios. And in just a minute, we're going to speak with Bruce, about how a trust can protect you and your assets, provide tax mitigation and help you transfer your wealth to the next generation.
J Darrin Gross
I'd like to ask you, Bruce Mac, what is the BIGGEST RISK?
Bruce Mack
I think, for me and for my clients. undoubtably the biggest risk is to not have a trust because the the exposures that are out there in today's litigious environment are so massive that you unfortunately, if you don't have one, you could be wiped out. And therefore, without a doubt that would be my my direct answer.
Today, my guest is Ran Eliasaf. Ran is the founder and managing partner at Northwind Group. Ran founded Northwind Group in 2008. And oversees all company investment activities across its equity and debt strategies. Today Northwind group has over $3 billion in assets, assets under management. And in just a minute we're going to speak with Ran Eliasaf off about the rise of office to home conversion in commercial buildings.
J Darrin Gross
I'd like to ask you, Ran Eliasaf, what is the BIGGEST RISK?
Ran Eliasaf
Our biggest risk is determining the value of the collateral we're lending on? It's never a scientific answer. You can get all the appraisals, you want third parties and all of your internal knowledge. But eventually, a value of an asset is only what somebody else would be willing to pay for it as a term at a certain point in time. So we spend a lot of time on the writing and diligence thing and trying to determine what's the value and then what's our LTV, what's our loan to value. And that's where we focus most of our engine, that's the biggest risk, because if you gave a loan and you find you're at 50%, LTV, and then you realize you're at 80 or 90, then then that's that's a big problem. That's a big risk. What we do to mitigate that risk, first of all, we lower their LTV. If you know two years ago, we learned that 65% LTV, now we're more around 54% LTV to we kind of focus on asset classes that are less volatile, like residential in New York City where there's, you know, yeah, prices can shift. But the chances of, you know, the value of residential in New York dropping 50% is less likely than it is for an office building, for example. And that's where we're the biggest risk for us. And that's where we focus on.
Today, my guest is Fernando Angelucci. In the past four years, Fernando has built a real estate portfolio of over $200 million and self storage assets across the country. And just a minute, we're going to speak with Fernando Angelucci about investing in self storage.
J Darrin Gross
I'd like to ask you Fernando Angelucci, what is the BIGGEST RISK?
Fernando Angelucci
So I would answer that with actually there being three things that we look at in our business. So the first being compressed cap rates, the second being oversaturation of given markets, and the third being reconnaissance competition are basically competitors, they have unlimited capital. So let's let's dissect each one of those press cap rates, has been an issue in the storage space for the last 10 to 15 years. That's partially because of just the easy money policies that we've been in for last 10 years, and that capital needing a home that has yield, but then also the fact that self storage used to be kind of this ugly asset. And if you weren't getting a 15% cap rate, day one, you know, what were you doing, then all of a sudden fortune and Money Magazine start talking about it as an attractive alternative asset, and that cause this floodgate of institutional capital come in compressing all the cap rates. So because of that, it creates a very competitive acquisition environment. And it also creates an environment in which middlemen can strip a lot of upside, aka brokers, right. So one of the ways that we decided to mitigate that was to shift our business from retail, aka buying on market to off market acquisition strategies, where we're the only one at the table. And then to switch from acquiring stabilized assets to only buying value add or building self storage, where we can force a ton of appreciation. So that was one of the ways that we were able to mitigate the compressed cap rate environment. Now, recently, with interest rates, increasing at such a high velocity, we've had this mismatch between sellers and buyers, or sellers still think their facilities are worth what they were in 2021. And buyers looking ahead and and saying, hey, well, you know, my debt service coverage ratios are not gonna allow me to Buy at your price. So one of the ways that we've gotten around this is by saying, basically getting creative. If you want the price from March 2021, I want you to carry the financing at rates and terms similar to what was available to me in March 2021. So that's one of the ways that we get around the compressed cap rates. A lot of people don't realize that the price is only half of the equation, the financing around. That asset is also a huge component that basically no one ever looks at, I'm willing to buy your property at twice the going rate if you give me a 0% 30 year loan, because then I'm still paying the same amount I would have if I bought it at the going market rate with the going market capital or financing structures. So that's how we overcome compressed cap rates. The second piece is the problem of oversaturation. Because of this rush of institutional capital, you see these land grabs occurring where larger operators are trying to basically stick a flag in a market. The other piece of this is that you're seeing a lot of investors switch asset classes because of the construction costs, you know, storage produces roughly the same rent per square foot that multifamily gets. However, to build a Class A multifamily facility you're at 400 $450 a foot were to build a Class A self storage facility that gets similar rents. You're at 100 In 20, to 150 bucks per foot. So you have this, this transfer of capital and investing pressure coming from different asset classes. And that's causing a drop year over year and in the sort of supply index numbers. So the one way to mitigate this is the importance of underwriting and getting third party feasibility studies to make sure that you're not wearing rose colored glasses, and to truly deep dive into hyper specific markets where you're looking at all of the competition and a five mile radius and seeing if this area is saturated, versus the five mile plot down the road. And then the last piece, of course, is is the REIT competition, they have basically unlimited capital that is needed deployed, they've raised a lot of equity, a very cheap cost, they've raised a lot of debt that is long term at very cheap costs. And typically, they have a longer investment timeline than some of the smaller counterparts, you know, when they're investing in 30 year horizons, I'm usually investing on five to 10 year horizons. So that means that they can usually stick it out and drop flags in a market that right now doesn't make sense. And they're willing to lose money on because when the population moves in, they can take and be the first ones to take advantage of that. So there's a few ways to get around this, you know, the first is to avoid, you know, downtown primary markets, you know, don't build in downtown Miami. And as opposed to doing that, go to secondary or tertiary markets, or go to the, you know, the suburbs, or the exurbs of some of these primary markets, or even some of the rural areas around these primary markets like we are. So that's one piece. And then the second piece of the competition is if you can't beat them, join them. So that's one of the strategies that we employ, in which these REITs they do not have the bandwidth, nor do they want to waste the manpower on negotiating one deal. But if you do all that legwork, and you bring them a 20 property portfolio, now it makes sense for them to use all that manpower to underwrite and see the feasibility of that. So there's the, this, this aggregation that is occurring right now in our industry that's causing a lot of opportunity for those that are willing to play along bet that feeding chain, if you will.
Today, my guest is Mason McDonald. Mason is a former hospital CEO turned full time land flipper that utilizes his profits to invest in commercial real estate. And in just a minute, we're going to speak with Mason about how you can profit from land flips.
I'd like to ask you Mason McDonald, what is the BIGGEST RISK?
Mason McDonald 34:58
Yeah, um, I expect my answer to be a little different than what people might expect. I mean, I was the CEO of a psychiatric hospital. So in terms of a risk management perspective, there's, you know, in terms of over regulation and high risk, there's about, that's about as high risk of an environment as you could ever imagine. But for me, the greatest risk that I have is, I fail at this entirely and have to go get a job again. So, you know, me being my own boss, and, you know, getting to live life on my own terms. And having financial and geographical freedom, the biggest risk for me is I fail, and I have to go get a job again, which is what 99% of the population already does, because the margins in this business where if I set my Buy Box criteria based on market data, which is what's available to everyone at 50% or less, I could liquidate and get all of my money back all of my investors money back and be able to walk away, but that's not going to happen, you know, or should it happen, it's not the end of the world. But yeah, the riskiest thing to me is ever having to get a job again. So maybe not not exactly the answer, you know, that that's expected or wanted, but that's what it is for me.
Today my guest is Henry Stimler. Henry is the Executive Managing Director of global commercial real estate at the firm Newmark, whose team financed 4.4 billion in deals in 2022 alone. Henry's core focus is origination and brokerage in large multifamily debt and equity transactions. And in just a minute, we're going to speak with Henry about the impact of the current economic factors on the commercial real estate industry. And we'll drill down into multifamily housing.
J Darrin Gross
I'd like to ask you, Henry Stimler, what is the BIGGEST RISK?
Henry Stimler
I think the biggest risk is not doing, I think more is lost by inactivity than activity. The biggest killer of deals is time, time and dalliance and not getting it done. So I'm a very big believer in that you have to jump in. Right, you have to be all the way in you can't be you can't be partially pregnant. And you have to have conviction in your decisions. And if you don't have conviction, that's the biggest risk. If you are Wofully. If you don't, if you want to buy it, if you don't know how you're going to run it. That's the biggest risk to me. So when I see clients who are unsure, who are not confident their decision, I see that as a red flag, I think you've got to make moves move quickly. That's the best way to mitigate risk. If you see a deal that you like them make sense. You got to move quickly, one to wrap it up to to get the right debt in place, rate, lock your debt, take that risk off the table and move quickly. So that's what I see as the biggest risk is not having conviction in your decisions and not having the gumption to go forward and get it done.
Today, my guest is Nick Prefontaine with Wicked Smart Real Estate and Common Goal. And Nick's an author, a trainer and investor. And in just a minute we're going to speak with Nick about how you can overcome the challenging times ahead.
J Darrin Gross
I'd like to ask you Nick Prefontaine what is the BIGGEST RISK?
Nick Prefontaine
What is the biggest risk? So the biggest risk to me is not following that voice in the back of your head. Now I'd like to frame that in, in a few different ways if I can. So when I was in the hospital, that voice was no, they said, You're gonna make a full recovery. My parents were, that was their goal, you're gonna make a full recovery, I followed the voice that said, No, you're gonna run out, then all throughout my life, no matter what I'm doing, as a successful realtor, as a successful real estate investor. And then as I moved into being a coach, and a trainer with smart real estate coach, as well as still do deals, I've always had that voice in the back of my head, which has told me that I have to be speaking and sharing my story, and helping others that are going through a trauma life challenge or adversity and helping them get through to the other side. I think the biggest risk is not listening to that voice and rationalizing it away. Two years ago, I reached out, I got to a point. And I reached out to my mentor to have a to have a conversation with her and share my, my goals and my vision about what I wanted to do. And I said, What do you think I should do? She said, the speaker salon in New York City, our community for six weeks in a row in New York City. That was in the fall of 21. During that she presented or pitch the idea of working with her one on one, she helped speakers to build out their speaker platform and really fine tune their craft and their message. And I said, Yes, I didn't know how I was going to do it. But I said yes. And a week later, I walked in with her. And without her. And without listening to that voice in the back of my head, I wouldn't have common goal and the speaking Korea that I have to go stay. And she was one that actually helped me develop the step system, which I trust, which I touched on support, trust, energy and persistence. I know we didn't have time to really go over that today. But if any of your listeners are interested in downloading the free ebook step, where they're going to learn all about support, trust, energy and persistence, they can go to Nick prefontaine.com, forward slash step two, download the step system for free today.
Today, my guest is Todd Drouillard. Todd is the sector leader of the manufacturing and product development sector within the national architecture and engineering design firm H E D. And in just a minute, we are going to speak with Todd about how the pandemic has changed the supply chain.
J Darrin Gross
I'd like to ask you, Todd Drouillard, what is the Biggest Risk?
Todd Drouillard
The biggest risks that we face, right, right now, and it's, it's nearly on every project both large and small, it's the the actual long lead times to get either equipment or the materials. And what that comes down to is that, you know, it's really risk to both cost and to, to, to the schedule, you know, it's been, the biggest thing is, is the, so what happens is, you know, a project gets started gets planned, you know, you know, the architect has engaged, we're doing the work, the engineering has been done, the project goes out for, for, for, for, for a bid. And long Behold, some of the equipment that's been best supplied for the project, it could be things like roofing, insulation, roof deck, mechanical, electrical equipment here, and we find out that it that it's a long lead time, and it's beyond the project time. So you'll never get at level one was just a accident, you know, in the amount of time that you thought it would would take. So it's extending the schedules. And as everybody knows, time is money. Especially when you have, you know, you know, all the contractors with their hands in their pockets, you know, you need a you need equipment, you need goods, you need all this thing, all these things to put the pieces, you know, like in place. So, so the biggest risks that we're seeing now is lead times on really equipment and products. And there's ways so there's a couple things that that that we do in the, you know, they like industry to help to help I minimize that. And a couple things that that that we always try to try to try to sell is kind of doing you kind of plan from plan in from the from the worst case back. So it's kind of like planning in real Verse And here's a way to repurchase, or to pre, to pre to pre like, order all, all, all this equipment and have it brought brought to the site within, you know, blah, blah, blah reasonable time, so then it can get installed. So it's that, that idea of, you know, just in time, you know, if you can plan ahead, and, and it takes time, and it takes, you know, takes a, you know, it takes a good a good design team to kind of think ahead, but if that's all done, there's really no risk at all, you know, and it's really hard to kind of push off that, that risk when you're at the, the, the, the will of, of, you know, multiple, you know, folks trying to procure all like, all these things. And one way to do that, again, you know, this to pre pre, pre, like, ordered, you know, you know, these things. And, of course, there's risk in that and, you know, you know, you know that piece of well, because you have to have a lot of trust. But, you know, and there's really not a way, like out of it, unfortunately, until the lead times come come down. But you know, that, you know, that's probably the biggest risk that I face on on like a daily, you know, party, and I'm sure they can, you know, the owners can tractors and everybody else is having the same, you know, like the same like issues?
Today my guests are Shawn Buchheit is the chief operating officer for Fountain Life, and Gloria Caulfield. Gloria is the Vice President of Strategic Alliances for Tavistock Development Company. And in just a minute, we're going to speak with Shawn and Gloria, about how Master Plan communities can lead to healthier living.
J Darrin Gross
I'd like to ask you, Sean Buchheit and Gloria Caulfield, what is the Biggest Risk?
Shawn Buchheit
Well, for us, it's overextending, you've heard all the wonderful the ecosystem that's there at Lake Nona and Tavistock there's so many incredible opportunities to do exciting new things. For us, it's really important to us to remain focused on our core business, and while we are who we are, and prioritize all all the amazing opportunities that we have part of being part of an ecosystem like that, so just again, overextending for us and it would be our business, our biggest risk.
J Darrin Gross
Gloria, anything from you, or,
Gloria Caulfield
Yeah, I mean, I think our biggest risk is not being true to our mission. I mean, in, you know, we, we have this whole mission and vision statement that I mentioned earlier, to create the ideal place to inspire human potential through innovative collaboration. And when you have a mission statement like that, I mean, it's, it's a pretty lofty goal. And, but it also is a filter for us. Like it's a filter of organizations we want to be associated with or not associated with, you know, the types of businesses that really are good fit within this, because it's really the sum total, but it's going to ladder up to fulfilling the mission. And, you know, real estate development is tricky. I mean, it's always fraught with various challenges. But at the end of the day, are you able to really fulfill the dream that you've created or not? And, to me, that's the biggest risk. And so far, I think we're run a phenomenal path to continue to do that.
Today my guest is Adam Sharif. Adam is the founder at nxt CRE an open bank FinTech supporting the CRE market. nxt CRE partners with lenders to enable them to keep a line of sight on their borrowers activities, who are paying off a loan and seeking to enter a 1031 exchange. And in just a minute, we're going to speak with Adam about how FinTech can help you find 1031 buyers for your property.
J Darrin Gross
I'd like to ask you, and I'm sure what is the biggest risk?
Adam Sharif
for us is the biggest risk for anyone else. And that is uncertainties. Okay, no one no uncertainties. It's the opposite of having a line of sight, right? There's no one, no one can sit there and tell you exactly what's going to happen. Everyone can guess. So that's one of them. But I liked it recently. One, this question was asked of Warren Buffett. And and I love his answer. Basically, he said political risks international political risks, like wars, and Ukraine, and such, and, and maybe the next pandemic, those are what he worries about the most, those are the things that he can't control. Those are things that that could create even greater uncertainty all over the place. So I'm gonna go with that answer. I like, personally, anyway. And when he when he gave that answer, I thought it was fantastic. We can we can talk about the micro, the, you know, the interest rates, and, and, you know, all kinds of stuff, inflation and deflation, we can do all that sort of stuff, but answers got to be things you can't see, you know, things you can't do anything about, those of those are the biggest risks and, and they're not always very, they're not transferable. Those are nervous, you can transfer to other people, those are the ones that you're going to have to, you know, handle yourself. And which makes business very exciting. And also, you know, stressful.
Today, my guest is Chris Larsen. Chris is the founder and principal of Next Level Income he has been investing in and managing real estate for over 20 years. While still in college. He bought his first rental at the age of 21. And from there Chris expanded into development, private lending, buying distressed debt, as well as commercial offices and ultimately syndicating commercial properties. He began syndicating deals in 2016 and has been actively involved in over 1 billion real estate acquisitions. And Chris is passionate about helping business investors become financially independent. And in just a minute, we are going to speak with Chris about why and how he invest in cash flowing businesses like car washes, in addition to real estate.
J. Darrin Gross
I like to ask you, Chris Larsen, what is the Biggest Risk?
Chris Larsen
Yeah, so I think everybody's talking right now out there, and about interest rates and cash flows. And you can mitigate those, you can lock in interest rates, you can set money, you can increase your reserves that you have out there. And those those are all good things. For sure. But I think the biggest risks that that we face, and we kind of talked about this in an indirect manner. It's people, it's people, you know, do you have the right people on the team? If you're an investor? Are you investing with the right people? Are you investing with somebody who's just a sole operator without partners? What if something happens to them? Obviously, I'm acutely aware of that I lost my father at age five, I lost my best friend in college at the age of 18. So I know that, you know that there's, there's things you need to put into play. So things like life insurance, estate planning, are probably more apparent to me when it comes to that. But if you're if you're an investor, I would ask that question. I would say, hey, you know, Chris, how Are you addressing this issue? How was the team built out? So if something happens to that fantastic operator that you have that came from the medical production facility, you know, how's the team structure, something happens to him? You know, where's the point of failure when it comes to that? What we do we put systems in place. So I really, I really like kind of the methodology of optimizing the solution, and then automating that solution and ultimately outsourcing that solution. So again, that's optimized, automate, and outsource. And if you do that, that doesn't mean you release control of it. But after I opt, optimize or iterate, you know, engineers, they iterate right, you iterate, you get better, you get better. And then you figure out how do you how do you automate that and oftentimes with automation, it's it's bringing on technologies that may be better than people. So we have we have certain technologies that we use, like our, our customer, our CRM system, where it automates responses, and it's able to check logs, and then it's able to say, Okay, did did, did we check this box for Darren yes or no, and then maybe it moves it to an individual so that, you know, a human can address that situation. And then finally, that outsource piece, if you can, if you can automate something, and then outsource it, that means that, you know, if, if something happens to me, then my partner or one of our employees can address that situation. And I think that's, that's really important, because it handles two situations, one, immediate downside risks there. But it also reduces your upside risk. And what I mean by that is, as you scale, quality can go down. So how can you scale a business, but increase the quality and increase the benefits that you get from scaling? And I think that is really, you know, talking about the risk, but also talking about how you can use that as a competitive advantage as well.
Today, my guest is Franco Perez, Franco grew up in a family that experienced unstable housing. Today, Franco is on a mission to create affordable housing in Silicon Valley. And in just a minute, we're going to speak with Franco about how mobile homes are the easy answer to the housing crisis.
J Darrin Gross
I'd like to ask you, Franco Perez, what is the Biggest Risk?
Franco Perez
I think, for this conversation is one of the biggest things is really the advocacy and you mentioned politics. You know, what one of the big risks are people not understanding the value of these mobile home parks, and them advocating for these to be closed down or redeveloped into rentals into rental property? You know, these. That's what I'm fighting for right now with our conversation on the Congress meeting. And that sort of thing is protecting these parks, making sure we keep affordable housing available. And that's one of the big risks that I see because a quick government change could really change the landscape of these opportunities for so many people. And we need to protect these mobile home parks and create guidelines and policies to make sure that there's always going to be opportunities and social mobility for the middle class to be able to, to to own assets and stuff like that as well. So that's, to me, I'm finding is one of the biggest risks of our industry.
Today, my guest is Mike Kaeding. Mike is the CEO of Norhart, where they design build and rent apartments. Norhart is transforming the way apartments are built and managed by incorporating technologies and efficiencies that have revolutionized other industries. And in just a minute, we're going to speak with Mike about how Norhart is disrupting the housing crisis.
J Darrin Gross
I'd like to ask you Mike Kaeding. What is the Biggest Risk?
Mike Kaeding
Such a good question. I'm going to answer it in three parts, three levels. The first level is the surface level, which is today's some of the bigger risks of the economy. Specifically rise in interest rates has that has a negative effect and debt proceeds used to fund new construction and just deals in general. But if we take it a step further deeper, which you realize is that those kind of problems happen all the time. It's this year, it's interest rates next year, it might be employment. After that it might be a supply chain, just something totally different. And so the deeper level, the deeper risk, there's level two, is making sure you have the right people. Because if you have an amazing quality team that can solve the biggest, most challenging issues, they solve those problems, they start unlocking doors and making things happen that you didn't know could happen. They have the capacity to pivot and change with the changing times and the changing market. So that's the level two tickets one step deeper, and maybe the deepest level for me, I think the biggest risk in life is not utilizing your life to the fullest potential. You know, as I mentioned earlier, my dad died at a relatively young age. And I haven't asked myself the question, how do I want to spend the minutes I have here on Earth? It For Me, a big part of that answer is I want to make some kind of meaningful, positive impact on the world. So I think the biggest risk we all face is selling ourselves short not trying to make the biggest impact we can and not living the life that we know we can live.
Today, my guest is Rick Kalvoda. Rick is the President of the Analytics Branch for the Americas of Altus Group, which is a service provider of intelligence to the global commercial real estate industry. Rick has over 30 years of experience in commercial real estate consulting with a focus on valuation and management. And just a minute we're going to speak with Rick about Data Insights into the Quickly Changing State of the Commercial Real Estate Market. But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple of things you can do to help us out. You can like share and subscribe. And as always, we encourage you to leave a comment. We'd love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you're there, please subscribe. With that I want to welcome my guest, Rick Kalvoda. Welcome to CRE PN Radio.
J Darrin Gross
I'd like to ask you, Rick Kalvoda, what is the Biggest Risk?
Rick Kalvoda
Yeah, I think. So operating expenses of which, you know, insurance is is a big component, you know, the risk, I think, right now have ownership of commercial real estate. I think right now, and this kind of goes back to the uncertainty and what's going to happen with inflation, what's going to happen with interest rates, what's the Fed going to do is just, it's the uncertainty. And as the Fed continues with that increases, the biggest risk right now is is there, you know, is there a global financial crisis, you know, you starting to see the stress on some of the banks, you're starting to see, as I mentioned, with some of the, you know, blending or the borrower's, you know, handing keys back to the lenders, you're starting to see some of that, at the same time, slowing economic growth, you know, and also increase inflation, all that stress to the economy that if we go into a recession if we continue to have higher interest rates and that that's going to have an impact not just on commercial real estate, but across all asset classes, but then specifically, commercial real estate and especially with, you know, the amount of lending done by the regional banks, which you know, are, over the past couple of weeks have seen this stress is, that's probably the biggest, you know, concern out there is in biggest risk for our investor and for our clients, is just what happens, you know, the overall macroeconomic picture and there's just so many different things impact again, on top of that, you know, back to your comment just on insurance is just with the, you know, you just think of the climate risk and everything that's, you know, happened this year, and, and how that impacts, you know, commercial real estate, whether it's rising, you know, ocean levels, etc, is, all of that has, you know, so our clients, the owners and operators of that commercial real estate, not only have to think about that, but then the macroeconomic you know, side of it as well. So, so a lot of risks now, hence the uncertainty, but that's, we're all here to help the industry out, you know, in times of risks like that,
Today, my guest is Anne Hollander, and is the CEO of Lobby CRE, a Thirty Capital Company. And she is making an impression in CRE and tech as one of few CEOs with a background in both real estate operations and rapidly scaling technology companies. And as an expert in strategic strategic planning. And in just a minute, we're going to speak with Anne Hollander about balancing return and risk with data backed asset management.
J Darrin Gross
I'd like to ask you Anne Hollander, what is the Biggest Risk?
Anne Hollander
I am happy to take on this challenge. So over the course of our conversation, I think we've talked about a number of areas of risk, right, we're seeing expense growth, quite a bit in the operations, which, frankly, is a lot of ways the silent killer. We've talked to them about the debt side of this and understanding your positions within debt and understanding it a much deeper level where you sit today and what risk you're taking on within the debt that you have either existing today on the on your existing assets, or in the future as you're doing deals. Frankly, you know, when I begin to look at, I think there's also equity risk as well for capital call unexpected capital calls, if the to an asset and debt aren't mitigated particularly well. So opening up new risks potentially on the equity side, and either not being able to return as much as you're expecting, or potentially even being underwater in what those returns look like. The three of these things, though, can all be also, the other uncovered risk, or perhaps the area that we haven't talked about at this point is the fact that a lot of information is being sent around quite a bit very freely and openly within an organization and, and then outside of the walls of the organization that can be highly sensitive or are particularly damaging to organizations. If you think about, okay, when was the last time that I took a look at my models that I had that had all of my investor information in it. And it's all sitting in Excel, Excel can't be secured. We don't necessarily know where it goes, who it's shared with. We don't know how they access things. We don't know if they if somebody is modifying something within that document, sending it back sending it around. And so Excel becomes essentially a game of telephone where everybody's got their hands on it, and hands in it. For the most part, you know, fairly innocuous but not not in a place where we can necessarily even assess what if anything has changed or information has been borrowed or stolen back out of that document as well. I think the one thing that we don't talk about much in the commercial real estate space is the technology risk and the data risks that people run when they're using you know, tools that seem extremely convenient, but then have a complete lack of any level of accountability to them. Excel being probably the number one offender other potential tools also offender as well.
Today, my guest is Maya Weinreb Maya is an entrepreneur and a real estate investment bookkeeping specialist. Maya's been doing bookkeeping for almost 20 years, and is a QuickBooks Pro advisor. Before she started her bookkeeping firm, she held the position of CFO for a marketing company in Los Angeles. And in just a minute, we're going to speak with Maya about what does every real estate investor need for their books.
J Darrin Gross
I'd like to ask you, Maya Weinreb, What is the Biggest Risk?
Maya Weinreb
Yes, I thought about this, I thought about this. I think the biggest risk right now, for real estate investors, for clients, for entrepreneurs, for individuals, for everybody right now, is the fact that the IRS just hired 87,000 new auditors. And you know, we saw articles about that a lot at the end of last year. And I don't know if they're all hired, and they're all implemented. But what does that mean to an individual? What does that mean to an investor? That means that they're, they're 87,000 times more likely to get audited, at least not saying I'm a mathematician, so maybe me No, that's not the exact math, you math it. But to me, that's 87,000 More people who could potentially go and audit your business, your investments. So it just makes it so that all of the things that you're supposed to do that you kind of said, well, no one's ever audited me and it's never really been a big deal. Now is the time to get all of your ducks in a row. Because you are have to map it correctly. Let's just say there's 87,000 More people who could try to audit you than there were before those 87,000 more resources to do that, because the IRS doesn't have time to deal with all of our stuff. Right? They're they're busy going after big fish. And we know ways. You know, there's many tax strategies to minimize risk to not look like you have a bunch of red flags that might get audited, and that's great. So we want to keep doing all those things. For instance, if you have an S corp To make sure you have payroll, that's the biggest red flag, you know, a lot of real estate investors aren't S corporations, their LLC, and so it's different. But sometimes they have holding companies that are s corpse, things like that. And if the IRS audits, you, they're gonna want to see your books, they're gonna want to see receipts for everything, they're gonna want to see bank statements. And on things like business meals, or whatever, that a lot of people not gonna say, a lot of people, some people every time they go to dinner, or have dinner by themselves will consider it a business expense. And the IRS is gonna want you to prove that it was a business expense, and who you went to dinner with. And that needs to be, you know, written on the receipt or in your books for it to make sense, your 1099 that you're like, Well, I'm not going to turn 99, the plumber because it's never really been that big of a deal. It might start being a big deal. There's there are rules written into the IRS code of what happens if you don't file a 1099 on someone, and you allow you know them to work for you under the table. And it's not that big a deal. There's rules and there's big penalties, there's penalties for filing a late 1099, there's penalties on not filing a 1099. And they have not that I know of to this day actually implemented those penalties because they haven't really had time to deal with all of the 1099 filing, for instance, as an example. But now they have 87,000 More people who might be taking a look at that. And in the IRS being the IRS, if they find something that you did wrong, they might try to go backwards and audit you the last seven years. So now is really the time to make sure that we have all our ducks in a row, that we're using the same tax return to get our investments that we use to file with the IRS that we are filing our 1090 nines on every single person that's a service provider, that we have detailed receipts on everything. And I think that while I hope that we can continue, you know, just being risk averse, and and not creating things that are red flags, I don't know that that's the case anymore, that might be changing. They might be you know, I'm really trying not to swear, they might be getting harder on us. And so in order to avoid risk to mitigate risk to minimize risk, you got to have all your legal bookkeeping, IRS ducks in a row. And I don't mean to say that there's some big monster that's terrible and scary, because they're not. And they're all you know, pretty much all IRS agents and auditors are nice people and they're helpful and they're just doing their job. And it's not to say don't go make money or go hide in a corner, you know, make money, they can't talk to you. If you're not making money, go do something, you know, go go buy that property, go do that cool thing you're doing. But just have all your ducks in a row so that nothing can ever come back and build, you know, tear down your empire that you built.
Today, my guest is Bronson Hill. Bronson is the Managing Member of Bronson Equity. Bronson is a general partner in 2000 multifamily units worth over 200 million and CO leads a large inperson multifamily meetup in Pasadena, California called FIBI Pasadena Multifamily. Bronson is also the host of the Mailbox Money Show Podcast. And he understands the investor mindset. Having spoken individually over the phone with over 1300 investors and having raised over 30 million for real estate and his ATM machine fund deals. Bronson is the author of How to Use Inflation to Your Advantage. And as a regular contributor to YouTube and his blog. He is also the capital raising coach at Kingdom REI, a faith based group, helping investors find deals and raise funds for large real estate deals. And in just a minute, we're going to speak with Bronson about how to use inflation to your advantage.
J Darrin Gross
I'd like to ask you, Bronson Hill, what is the Biggest Risk?
Bronson Hill
So I think there's a lot of risks. And I think, you know, sometimes we see risks, and we don't, you know, we tend to have inactions. I think inaction is probably the biggest risk for that I see, for most people, I've had now close to 1500 conversations with individual investors. And I just see analysis paralysis is real, we get busy, we have stuff going on, we don't take action. And all sudden, we're like, well, where's, you know, gosh, I really wish I missed out on this, I missed out on that. And it's not that we have to take massive action and you know, go from 0% invested in alternative deals to all of a sudden 100% invested. It's just, you know, taking small steps and saying, you know, one of my things that I tell people is, you know, against analysis paralysis is, you know, go to meetups, give yourself a timeframe. Okay, in the next two months, I'm gonna go to this many meetups, I'm gonna, you know, get on deal sponsor list, we have our own deals that we do, we have people connect, and Ben wants to reach out and get on our list and hear about our deals, they can do that at Bronson equity. And, you know, what happens is as you do that, then you give yourself a time frame, you analyze, you know, five to 10 deals, and you say, Okay, I've give myself 60 days, and I'm going to invest in one or two deals, and you just do it, and you say, Okay, I'm gonna do this, and I'm gonna choose, and it's probably gonna go just fine. And the big thing we have to get over is the fear of making a mistake, or that we're gonna do it perfectly. And perfection really is a myth. Like, there's no way you know, it's all about learning. And so why don't we learn even when we don't do things perfectly. And so I think really, the biggest risk that I see is just inaction is just not actually taking the steps for eight years, or six or eight years, I went to meetups and didn't do anything. I mean, I had about one rental, but it didn't do any action. And it wasn't until I was I actually made the decision that I'm actually going to change my life. And there was a point I remember where I had said, you know, I'm in my job, and I want to leave my job in three years. And I just made that decision is going to do it. And Tony Robbins says this quote, he says, it's in your moments of decision that your destiny is shaped, in your moments of decision that your destiny is shaped. And so in that moment, my my, my destiny started to shift. And I began, I was able to do it in three years, I was able to leave my full time great 200k Your job, because I had made a decision that I was going to really just do whatever it took, and I was the I was working hard. I was hustling, but I knew it was a season. And I think for a lot of people and it doesn't mean you had to do it the way I did it where you had to be fully active and raising big money and all the all the stuff but there's a lot of people that make a lot of money. And there's a money problem. And it's not that I don't have money, it's that I have money, I don't know what to do with it. Right? So that's a problem. So you know, there's gotta there's ways you can educate yourself and really find ways to take action. So I think that's the biggest risk is inaction.
Today, my guest is Stuart Heath. Stuart is the founder and CEO of Harvard Grace Capital, a private equity real estate investment firm that helps people build wealth faster through hands-off real estate investing, generates passive income, reduces risk, and maximizes tax efficiencies. And just a minute, we're going to speak with Stuart about the hidden mistakes to avoid and key criteria to look for when evaluating potential passive property investing opportunities.
J Darrin Gross
I'd like to ask you, Stewart Heath, what is the Biggest Risk?
Stewart Heath
I am willing, and I will dive into the pool. I think it's a brilliant question. To me, the biggest risk is tenant selection. It's not an insurable risk. You know, I do live in Tornado Alley. So you know, severe weather can be a risk but you can insure around that the biggest risk is essentially the income from the property. And the income from the property comes from tenants. And it is a professional, I think it's a professional expertise that is developed to be able to underwrite a new tenant for a lease. It's not just the first person that called and say, and is willing to pay you the deposit. And I use that example, because I've made that mistake before. But if you will take, you know, an hour's worth of due diligence, either residentially or even commercially, and check into them yet third party reports, and do reasonable and customary means of verifying what what the tenant is telling you. And yet, then, then you will most of the time, select a proper tenant. If you don't do that homework, your property will have income problems. And so what is a bad tenant? Well, number one is bad tenant that doesn't pay. That's one. But part and parcel with that is people who don't pay usually bring other kinds of people to your property, whether it be multifamily, whether it be to your commercial office, your storage space, whatever, I have seen this over and over and over again, which actually begins to make other tenants feel uncomfortable. And so now your problem is a lot worse than just the one guy who's not paying. And it was also easily headed off. By doing some basic due diligence on the front end, that's the biggest risk I have in what we do. There are obviously other kinds of risks slip and fall risks, and we get sued by somebody whose coffee was too hot or whatnot. And, again, that's insurable risk, we carry general liability as well as property coverage and, and on most of our properties. Like, we also get business interruption insurance, or, like, if a tornado takes out a lot of our storage buildings will, you know, we're, we're not only going to get repaid to have that rebuilt, but we will get income that we're missing from those units that were that the tenants can't use. So, but the biggest risk is the one that's not insurable. And that, to me comes down to tenant selection.
Today, my guest is Victor Bell, Victor is transacted over $59 million in real estate transactions in seven states, including Hawaii, Arizona, Texas, North Carolina, Ohio, and Michigan. And in just a minute, we're going to speak with Victor about how to succeed in real estate in 2023.
J Darrin Gross
I'd like to ask you, Victor Bell. What is the Biggest Risk?
Victor Bell
Well, if I can give an honest answer, it's short is not taking risk at all. Because it's real. I'm a real estate guy. So I take a look at all risks and try to assess it as like, Hey, how can we minimize risk and get the match return, even if to other people that return is not a very big. So a prime example like when I look at an apartment building deal, and I really like it, we start sizing the deal up, first thing we do is we look at the debt, we find a debt person, and then I try to get an insurance person on the team to say, hey, what do you think the insurance needs to be here? Could you give me an idea to quote and arrange? Because I recognize like, hey, there's two things that are gonna happen. And the most important thing to me is to make sure that I de risk my opportunities by saying, hey, there's a nicer thing. But we have insurance, we have somebody that can take a look at this and say, Vic, this is risky, or this is, you know, there's the cost is what you're looking at. And here's why. So I think the quality of asset going up, like we said, is the best way to de risk because it removes some of the question long term and short term and have somebody on your team that is in like, for guys like yourself, and it isn't an insurance thing. It's just real for me. I want to know, like, I don't gamble, when I go to Vegas, I go for conferences, I don't step one foot and play a slot machine, I don't do any of that stuff. So it isn't that I'm not aware of risk. But if you don't take any risk whatsoever, that's a loss. And then you also need to mitigate that risk by having people on your team who understand risk assessment, guys like yourself. But that's an honest answer. Even when I call the bank, I'm like, hey, what can go wrong here, guys, and then they'll tell me, or someone on my team or our broker, like like, I'm all about having people around me that can point out my flaws, because I have them like any other investor, I, you know, bright eyed, bushy tailed my want. So I hope that answers the question. And it's not, you know, may not be what everyone else looks at. But I'm always asking that same question like, like, if I don't take a risk, there's a major risk in itself. But if I do take this risk, what does that mean for me and my investors? And who could I get to point out the things that specialize in that, that I may not even consider? You know, even if it's cost, I gave it the insurance product on this things, arrange the roof about $800, you know, as opposed to, as opposed to you underwrote it, and budgeted around about four 450 That matters. And I'm like, Oh, why? Well, you know, paneled boxes need to be changed out, this needs to be done, like, like, all the things that most people just take a look at things that don't think about. But that's how I see risk, you know, take it, but understand the risk you're taking and why.
Today, my guest is Roland Gib Stewart. Roland is an investor and a recently published author. He and his ex wife started with to $285 and have built that to $30 million in real estate and is still going and in just a minute we're going to speak with Roland Gib Steward about how you can build wealth through real estate.
J. Darrin Gross
I'd like to ask you, Roland Gib Stewart, what is the Biggest Risk?
Roland Gib Stewart
I think right now, the biggest risk is the availability of money. Okay, so we got a lot of money available today, right? So in July, when we, the country hits its debt limit, what's going to happen? Are we going to all collapse? Is this whole thing going to just the glass is going to break? And we're going to all be wondering, Can Can, can I really get the money out of my credit card? I want to eat this week. I'm having fun. How do I continue this? So my biggest concern right now is that somebody's gonna push us over the edge, which I think will damage the entire world's economy, and our country will never be covered. And I don't want that for my kids or my grandkids.
Today my guest is Neal Bawa. Neal is the founder of Grow Capitus, an online multifamily investor education platform. He's also an experienced syndicator developer, and his attention to the data has earned him the moniker the Mad Scientist of Multifamily. And in just a minute, we're going to speak with Neal about the Feds Gambit with rising interest rates and their impact on commercial real estate.
J Darrin Gross
I’d like ask you Neal Bawa, what is the Biggest Risk?
Neal Bawa
The biggest Risk is to keep doing what you were doing before. Right now we are at a point where we need to pivot. So you know, you name three things. And so I'll go through those three and tie them back to the biggest risk. This change right now may not be a good time to buy multifamily. In fact, I don't want to buy multifamily until about July this year, when something known as the spread, which is a portion above Sofer is likely to to drop it might even just collapse. So I basically want to wait until that time in terms of transferring risk. Yeah, I want to go out and have my distressed fund by not buy properties, but invest money into properties. Because when I invest money into properties that are that are distressed right now have negative cashflow. I'm doing what Darren mentioned, I'm transferring my the risk from my investors to the existing investors of that property. So if they change their mind would allow me to come in as preferential money. I'm coming in ahead of them. And I'm transferring the risk of ownership of the property while I'm getting ownership of it to someone else. It's somebody else's risk is the GP and the LPS risk, not my LPs, their LPs. So if I can transfer risk successfully, I'm looking to do it by recapitalizing existing properties that I like nothing wrong with the property, just the interest rates are killing it. One day, the interest rates will go away and the property will do well, again, I want to own this property, but I don't want to buy it from the market because I think that the price is too high. So when I recapitalize somebody else's property and put my investors in pole position and transfer the risk.
Today, my guest is Anna Kelley. Ana is a former top ranked financial relationship manager for Bank of America's private bank. She also worked for AIG for 20 years in the corporate and affluent Markets Group focused on creating products for ultra high net worth individuals, banks and institutions. Anna has been investing in real estate since 1998, and has held active ownership of a rental portfolio valued at $300 million across Texas, Pennsylvania, Florida, Tennessee and Maryland. As a sponsor, Anna seeks strong multifamily investment opportunities to help her partners and investors meet their financial goals and grow wealth on a tax preferred basis. She brings her decades of experience with both traditional investments and real estate to help others overcome fears, increase knowledge, mitigate risk, and make wise investments in real estate. Anna is passionate about creating a meaningful impact in the lives of her residence and communities. And is also a sought after speaker real estate coach and a four times Amazon number one best selling author. And in just a minute, we're gonna speak with Anna about real estate investing through market cycles.
J Darrin Gross
I'd like to ask you Anna Kelley, what is the Biggest Risk?
Anna Kelley
I think the biggest Risk right now is not knowing how high inflation might get for how long and how that might impact both the interest rates over the next decade and cap rates over the next decade. And so with that risk comes a few things that we really have to look at. One, as we talked about is what kind of debt are you putting on your properties? So the question is, when you when you're trying to create value for a commercial asset, you're really focused on noi, and you're focused on on the cap rate. And so these things that that we can't control are these factors that impact interest rate and cap rate? And so we have to look at what can we control? What risks can we control? Since we can't transfer that risk? It's going to be what it is, what can we do to mitigate some of that risk, one of the things is investing in really strong, resilient markets, right? If you're investing in a class C property and a Class C town with not a whole lot of good jobs, industry, diversity and not population growth, you know, more demand than there is supply, you're going to really struggle. So if you want to mitigate risk, you need to be in areas that still need way more product than what there is demand for towns that have lots and lots of jobs so that if some businesses or industries get really hit hard, they're still resilient, and there's elevated wages and affordable, affordable living in those areas. So the market in which you invest is critical. And then the other thing is, you need to be able to control your expenses, what other expenses can you cut, or make sure that they're fixed for some period of time, so that they're not an additional variable that could impact your noi, and bring your value down as a nature of that? And so, you know, an insurance answer is basically, where do you invest? So I'll give an example. I'm from Texas, and I'm from from Houston, and Houston has had a significant flood risk over the last couple of years because of hurricanes in certain areas of the city. Now, it's a 10,000 square mile major metro. So Houston is extremely large. And there's pockets that do not have flooding, and that are much less risky. Well, I want to buy assets there, because if I buy in an area that has had some flooding, I wouldn't be surprised if my insurance goes up another 30 or 40%, like it has over the last couple of years. So you've got to get really good at where are my expenses? And where can I invest and what assets are going to give me the best outcomes, given all of the uncertainty to increase my noi to bank on where I can increase my noi by increasing income and cutting expenses. While I can't mitigate, you know, the interest rates and the cap rates that we ultimately have.
Today, my guest is Greg Brooks. Greg is a partner in Rocket Station and oversees everything, business development, and marketing. Greg is the National Director of Business Development at rocket station, an outsourcing company that helps real estate businesses hire experienced virtual assistants. And in just a minute, we're going to speak with Greg about improving your process with virtual assistants.
J Darrin Gross
I'd like to ask you, Greg Brooks, what is the Biggest Risk?
Greg Brooks
For me, I think it's the pace of how quickly technology is changing how quickly global workforces is changing. And I think it's a risk, especially in the real estate space, for those that are still trying to operate the same way they were in 1995, or two, even 2005, or even 2015. What we've seen a lot both on the technology side, obviously, US servicing on the staffing side, providing a virtual option. I mean, just like everything, the decisions that you have to make as a business operator are just accelerating, you have to make them faster, there's a new software and new technology, a new tool, a new resource out there every second every trade show every corner. So having an effective way to vet those to find the ones that are going to work for your business and are going to fit, but then also getting people on boarded into them and changing existing policies and procedures and processes and weigh the ways that you operate to be more efficient, it takes a ton of human capital. So that's something that I see I know, even just within our company, you know, in a short time becoming as big as we are, you know, that that that the evolution of technology and say a lot of the podcasts that I listened to AI is kind of the word of the here already, you know, 25 days into January. And I think that puts a lot. I mean, it puts a lot of risk on the owners in terms of making the right choices, finding the things that are going to last and actually take you to the next level and which of the things are kind of fly by night, you know, not not as good as as advertised. So I see ICT technology and then that globally expanding workforce, you know, really becoming something that especially in the real estate world, people need to be aware of and be talking about consistently, in order to make sure that you don't get left behind because I guarantee your competitors. They're making sure they're not going to be left behind either.
Today, my guest is Edward Ring. Edward founded New Standard Equities in 2010 and serves as its chief executive officer Edward has transacted over $2 billion of real estate over an illustrious 25 year career. And in just a minute, we're going to speak with Edward about the relation between interest rates and cap rates.
J Darrin Gross
I'd like to ask you, Edward Ring, what is the Biggest Risk?
Edward Ring
I think the biggest risk I'm facing right now is not having the patience to to get comfortable with the knowledge base that I have, and what I see on the horizon. So I'm, I'm a person that tends to slow down when other people are rushing. They want me to make a decision quickly. So I peel back and take a moment, take a pause. I do my best work when I'm thoughtful. And I assess. And I think that that's the risk that most humans not just in real estate, but most humans face is that they are making decisions without actually understanding the fundamentals surrounding the problems that they are faced with. And I think that folks out there would, would do well to get educated, and to really make sure that they're arming themselves with intelligence and intelligent reporting. So they understand the markets that are in they understand the risk, reward calculus, and they understand what, what they're facing. And if they understand all of those factors and are comfortable with them, then it's pretty easy to make the right decision or at least a decision. And time will tell if it's been right or not. But at least you're eliminating the one single factor that everybody has and that's your own ignorance. If you can eliminate your own ignorance, man, you're gonna do great.
Today, my guest is Ryan Gibson. Ryan is the co founder president and chief investment officer of Spartan Investment Group. Ryan has organized over 200 million of private equity for Spartans projects across the country. And in just a minute, we're going to speak with Ryan about real estate investing and development.
J Darrin Gross
I'd like to ask you, Ryan Gibson, what is the Biggest Risk?
Ryan Gibson
Yeah, so I would say your biggest risks are external threats. Things like cap rate expansion, you know, property values declining, really can't control that. Interest rate, risk, etc. But I would say my focus that I'd like to share is five main things that I look at, in underwriting a deal. In I can do this in 10 seconds. I look at revenue growth year over year, and is it reasonable? Does the business plan, identify if that revenue is achievable based on the market study that you've done, somebody else has done or an operator's done? The second thing I look at is insurance. So insurance costs are not going down. So if you have not pro forma added, that your insurance expenses are going up, I usually don't like the deal anymore. As much. The second thing that I access risk, or the third thing is property taxes, property taxes are not going down, property taxes are going up. And if you're not planning on property taxes, at least doubling over a five year hold period, I don't think we've assessed the risk and the opportunity. The third thing I look at is expense to gross our revenue to expense income. So Egi, expense to gross income ratio, I guess there's another way of saying it Egi. That's if you make $1 of revenue, what percentage will be your operating expenses. And so in self storage, I'll look at a deal. And I'll say, you know, I expect to see between 35 and 40%, expense to gross income ratio, meaning that if you're collecting $1, I expect to see 35 to 40 cents for that dollar and expenses, and all your utilities, insurance, property taxes, all that stuff before debt service. If I see that number 20%, or 15%, I don't think there has been enough assessment in the underwriting to really accurately depict the worthiness of that deal. And the last thing I look at is cap rate. Because cap rate, you know, we love to everybody loves to think that they're the best operator, they have secrets and things like that. But at the end of the day, cap rates drive the value, they drive, the value, they drive, the exit strategy they drive, the market really drives where a lot of these assets can perform. And yeah, we can control and do our best. But that cap rate really makes an impact. I mean, one $1 on a 6% cap rate means $15 evaluation. So yes, operating income can do that. But I like to see an investment where you can stress test it. And that you can actually show the cap rate getting worse than what you bought it for. Not from your operations, but just market cap rates. So if you buy something going in cap rate at 5%. In today's market, I'd like to see that it can exit at a market cap rate of 6% and still be profitable. So when I assess risk, I look at those five things and underwriting and I and I really kind of stick to my guns on that. That's how I can look at a deal in 30 seconds. No, have they adequately assess the risk? Of course, there's tons of more things that you need to do beyond that, but those are kind of my five quick checkboxes on any opportunity.
Today, my guest is Fred Moscowitz. Fred is an educator and best selling author who has trained countless investors from all walks of life on how to create passive income streams on their own. As a fund manager Fred manages a mortgage note Investment Fund, and is considered an industry veteran within the note investing arena. But it teaches the concept that individual investors are able to step into the shoes of the lender through note investing, and effectively be the bank. And in just a minute, we're going to speak with Fred about mortgage note investing.
J Darrin Gross
I'd like to ask you Fred Moscowitz. What is the Biggest Risk?
Fred Moskowitz
Wow, this is a great question. There's, there's many, many risks. That's a big part of what we do is known investors is get good at understanding what they are. As I said earlier, diversification is is a great way to manage risk and the note portfolio, but some other other areas, it's really getting good at doing your due diligence before purchase. As I said, I dedicate a large portion of my book to this topic because it's so important. It's prior to buying, running your due diligence and surrounding yourself with the right individuals to help you whether it's vendors its data providers, to give you the resources and information. It can be an another area super important. Is counterparty risk when you're buying a note, who are you buying from? This is a big one. You want to make sure you're comfortable with who and this goes for any any business transaction. Are you comfortable with who you're you're entering into a business transaction with with them as a person with their company, their reputation and track record industry, I feel like this is something that often gets overlooked, or doesn't get enough attention to it. Because deals can go bad transactions can have problems, they can go bad. And so what's very important is how is the other person going to respond and cooperate and work with you to solve a problem that comes up? Because we live in a far from perfect world? And so you want to know, how is the other person going to show up and resolve this issue. And that matters so much, so much, so that you're comfortable, that you can work through an issue, you can still be friends at the end and walk away knowing that everyone got a fair transaction. And you're looking forward to doing the next deal again, in the future. There's nothing worse than walking away from a transaction saying never again, am I going to deal with this individual or this company, or this client, it's so all these headaches, it's the worst feeling in the world. And so that's something you can avoid upfront. Something you can easily avoid upfront. And that that's, I would say, a huge risk that a lot of people neglect to think about or talk about.
Today, my guest is Aaron Weiche. Aaron is the co founder and CEO of LeadFerno. A text messaging platform for businesses to close more leads faster. Aaron is an entrepreneur, founding and leading multiple companies and digital marketing agencies over the past 20 years. And in just a minute, we're going to speak with Aaron about lead generation marketing via text message.
J Darrin Gross
I'd like to ask you Aaron Weiche, what is the Biggest Risk?
Aaron Weiche
So here's the first thing that comes to mind to me. And that is not being connected to your customer. So to me, in all kinds of aspects I've talked and written about this recently, with so many people looking inside of so many industries, with a downturn slowdown, whatever that might look like. Those are the kinds of times where you need to be more connected than ever to your to your customer, so that they understand the value you still bring. As you change and adapt how you might deliver, or price or what's going on in the market, things like that. You need to have that personal connection with them. If you haven't been keeping in touch with your customers, if you're not staying top of mind, if you're not solidifying the resource you are and how your expertise helps them out no matter what the market looks like timing opportunity, any of those things like it's just slowly eroding the chance away of once that opportunity might surface for them because too much distance has built up. So I'm just a massive proponent in running your business where you really know and understand your customers and you're finding the right touch points that enrich their relationship with you keep keep you in contact and keep you connected with them. So that you're always just a text or a phone call away from what their need is. And they really feel like you you're a valuable resource in a relationship and a connection sense instead of just a transactional sense.
Today my guest is Shannon Robnett. With over 25 years of experience Shannon has been involved from start to finish on over $350 million in construction projects, and is dedicated to sharing his experience and expertise. And in just a minute, we're going to speak with Shannon about the multifamily marketplace.
J Darrin Gross
I'd like to ask you Shannon Robnett. What is the Biggest Risk?
Shannon Robnett
You know, in my business, the Biggest Risk is taking on the project and having things like prices increase on commodities. You know, we started a construction project. And our lumber costs estimate went from 3 million to 9 million. We locked in on the way up and caught it at about five and a half million, but it was still a two and a half million dollar Upswing on that. Those are the risks that we take as developers on brand new ground up. And so there's always that question that you have to ask and it comes back to your underwriting? Do you have the runway to absorb this? Can you get from here to there so that you're not, you know, your framing is in the first third of your job? If you've used all your contingency in the first third of the job? How are you going to finish the rest without additional cash? So are you properly capitalized? Have you underwritten correctly? Do you know that three years from now when you're built out on a 200 unit apartment complex that you've you're going to be able to sell those are the risks that we take that that sometimes keep me up at night?
Today, my guest is Dan Brisse. Dan is the co founder and principal at Granite Towers Equity Group, where he oversees the Operations, Acquisitions, Investor Relations and Asset Management. Dan is resident of southern Washington and is also a former professional athlete. As a professional snowboarder for over 13 years, Dan took home multiple X Games gold medals, and was known as one of the top urban snowboarders in the world. Dan's drive for excellence and success transpires into Granite Towers real estate portfolio. Dan is also the co host of the podcast, Keeping It Real Estate, and the co author of Four steps to Successful Passive Investing. In just a minute, we're gonna speak with Dan about the multifamily marketplace for 2023.
J Darrin Gross
I'd like to ask you, Dan, Brisse, What is the Biggest Risk?
Dan Brisse
Yeah, I would say that there's a couple boats the the one biggest one is get your debt right. In this market, particularly if your debts wrong, they can blow up the deal, and you can lose the entire deal lose all investors equity. So I'd say that that right now is the most important piece if you're looking for the one biggest risk.
Today, my guest is Doug McKnight. Doug has over 30 years of experience in capital markets. He specializes in maximizing portfolio performance while maintaining balanced risk versus yield relationships. And in just a minute, we're going to speak with Doug about the future of the commercial real estate market in 2023.
J Darrin Gross
I'd like to ask you, Doug McKnight. What is the Biggest Risk?
Doug McKnight
Well, you know, when I think of risks, just in general, I think of what I said earlier, I think of what is my mission? What is my purpose? what's the end game, and then I try to measure the risk that's involved can achieving that. And I'm really, you know, at the core, that's what risk is right? risk reward. It's another way to say it. We are quite risk averse. Now. Let's face it, real estate is a risky investment. Now, that dirt is going to be worth something, right? It's not like it goes to zero. But a real estate course over the years, it's been considered an alternative asset. It's really become more of a mainstream asset over the last seven or eight years, but it's still a risky investment. And it's an illiquid investment if you are an investor in the real estate itself, versus maybe a REIT stock. And you're investing in something that actually has risks but as don't quit, right So, you know, those are variables that you have to weigh as an investor. As an owner operator, there is potential risk in every single element of the lifespan of owning that asset. From the day that you can begin your underwriting and your due diligence, if you're not conservative enough, if you're not realistic enough, if you're not understanding the market, or the data that you're being provided by the seller, whatever the case may be, if you're not doing that properly, that is a big risk. If you underwrite the asset, incorrectly, you know, there's an expression that you always want to make money on the buy, right? And then when you're after you've acquired Well, during the acquisition process, you have the risk of not putting the capital stack together properly, which is what we've already talked about, what kind of debt do I want to buy? What variable debt? Do I want fixed rate debt? If I'm going to do floating rate, debt, variable debt? Am I going to go buy red caps in order to protect that exposure to interest rates? Certainly, with the rise in interest rates, you know, that is sort of, you know, and then, and then during the lifespan of ownership of that asset? Have you managed it properly? What's the risk of mismanagement, and that is a huge risk. It's also add, it's not a risk that can really be measured. Now I like to call the operational side is that is the secret sauce, because you can buy an asset, right, you can have phenomenal capital structure, which you can manage you right into the ground. So that's a big that that is a big element of risk. From an asset management standpoint. That is where insurance comes into play. We often joke that we're probably over insured in every asset we have. But I will tell you an interesting story. So we own a hotel in Pensacola Beach down in Florida. And it was one of those 70s 80s Vintage outside of corridor hotel that we basically took off why we just did it, we revitalized it, we put in a lazy river, we put in all these different, really cool features. We put a restaurant tiki bar out of the beach, we did all these things to this property, and it was performing amazingly well until the hurricane came along, okay, well, the hurricane hit the property, but really, visually didn't do any damage. Now, it messed up the pool, Lazy River, brought all the sand and brought all the rain and wind knocked a little bit off the roof, but really no big deal, we thought. But given the quality of the insurance that we had on the property, you know, our inspectors and adjusters come ahead and add to their credit, they found moisture within the walls. And they deemed it that it needed to be much more extensively repaired. Well, given that is back in the 70s and 80s, prior to current building code. The bottom part of that hotel was below sea level. Well, you can rebuild below sea level, right. So the the short part of the long story is that we completely tore down that entire property. And we're now in the process of finalizing the high rise, it's going to be an amazing property. We've already returned our equity to our masters, we're still going to own it, it's going to be newer, fresher, and it's going to be a whole lot more bad. And the good news is is not only did to no one can hurt, which is that's the best part. But our investors, us you know we have a new a new asset. And if we did not have the proper type of insurance. In that situation, everybody would have failed. And that speaks I believe to the focus that has to be put on insurance because often times you And of course, it depends on your lender depends on what you're required to go out and do but, but sometimes you'll see situations where assets are not properly insured, whether it's a fire at an apartment community, or whether it's a hurricane at a hotel or etc. So we are a big believer in being properly, properly insured. So, you know, I'm a big fan of insurance.
Today, my guest is Jay Conner. Jay is a proven real estate investment leader and is known as the “Private Money Authority”, without using his own money or credit, Jay maximizes private money to buy and sell properties, with profits averaging $71,000 per deal. And in just a minute, we're gonna speak with Jay about how to find and access private money to grow your real estate portfolio.
J Darrin Gross
I'd like to ask you, Jay Conner, what is the biggest risk?
Jay Conner
So let me get a little clarification on that there. And so are you asking what's the biggest risk from the standpoint of the borrower or real estate investor? Or what's the biggest risk from the standpoint and perspective of the lender, the private lender?
J Darrin Gross
There's no no framing of this. It's how you choose to frame it.
Jay Conner
Well, so I'll quickly I'll quickly answer both. All right. So what's the biggest risk for you, the real estate investor, that you're borrowing money? Well, one big risk is you better know what the real value of that property is? How are you determining what the value of the property is? Well, in my case, I've been doing business with the same realtor since 2004. My realtor tells me the after repaired value of my property, so you've got to have a firm grip, and and credible way of establishing wants to value the property number two, what's the risk? You need to know? What's the maximum that you should pay for a property all cash? What's the maximum you should pay? I mean, what is your formula? Right? You know, so you need to know. And of course, I got the formula. What is the maximum you should pay for a property? What's the third risk? Who's on your team? Who is on your team? Like, I still don't do this business by myself? My team. I mean, I'm like the orchestra director. Right. So who's on my team? Well, I can't do this business without my realtor and a relationship there. I for sure can't do this business without my real estate attorney. I mean, my business is that big risk, if I don't have a good real estate attorney, I've been doing business with the same real estate attorney firm since 2003. I get my title searches in less than 24 business hours, you know, speed, you can't make money in this business and you know, in slow motion, right? So I gotta get my inform, I gotta get my title searches quickly. Thirdly, if I'm in doing rehabs, who's who's on my team, as far as my general contractors, who's getting the job done. So my biggest risk, your biggest risk is number one, who's on your team number, and the team member is gonna give you the value. And number two, you got to have the knowledge on what's the maximum that you should be offering on a property, those are the risks for you, the real estate investor and borrower. Now let's talk about the risk for the private lenders, right? Number one, the private lender, better know what kind of loan to value they're loaning on that property. Right? You got a property that's worth $300,000. But they better not be loaning $300,000 on that after repaired value. That's why we give them we're only borrowing 75% of the after repaired value. Number two, what kind of security and again, are they really getting a deed of trust or mortgage, it's recorded on public record. I mean, I'm a private lender, I don't care who my relationship is, whether I'm not borrowing unsecured funds, I want my funds secured by the mortgage or the deed of trust. Thirdly, as the borrower I want and I require to be put on the insurance policy as the mortgagee. And guess what, as the as the as the lender loaning money out. If there's a claim against a house, I want my name on that insurance check. Along with the owner of that property, as the mortgagee, I want them to have the right to sign off on that check. Before who I loaned the money to get set check, I want to be named as the lender on the title policy, I want to be protected. And here is my final word on that. And that is depending on my relationship with the borrower, I may require as the lender a personal guarantee. Okay, so you know, when I loan money out, depending on my relationship with the borrower, I may or may not require them to sign a personal guarantee. Again, that's going to come down to how well you know that person and you know, in this world of private money, I don't care how many safe safeguards you got in place. There's this thing called trust, tr ust between the borrower and between the lender and so that level of trust is going to determine as to whether I require a personal guarantee on that note or not.
Today, my guest is Dr. Pranay Parikh. He's a medical doctor serial entrepreneur and a podcast host. His unconventional journey to medicine helped him learn the skills to excel in entrepreneurship and real estate. Over the past 16 months, he's bought over 200 million in real estate and helped hundreds of others invest in real estate without being a landlord. And in just a minute we're going to speak with Pranay about time management, real estate and entrepreneurship.
J Darrin Gross
I'd like to ask you, Pranay Parikh, what is the biggest risk?
PRANAY PARIKH
So for commercial real estate, it's always debt, right? I mean, if you think about it, that's your biggest obligation every month, right? Every month doesn't matter. If there's a fire, there's a tornado, you have to pay the lender, right? Otherwise, they take the property back. So you can get that risk to zero by paying all cash. And that's possible, but you're gonna get a couple percent return. So you got to figure out where in the risk spectrum Am I comfortable, you know, and we, our last deal was about 60%. So we put a downpayment of about 40%, which you know, you and I would put down about 20% for our house, so this is much higher, but what that does is it decreases your loan payments, so your obligation is a lot less, right, you can get fixed debt, or adjustable debt, you know, within adjustable debt, you can get up by a rate cap means you pay money upfront, almost like points, so that the interest rate won't go above a certain amount. And you could do that for two years, you can do that three years. So you could make that very tight. So you know, that you have an interest rate of three, and it can only go up to four, or you can get looser, where you get have started off at three and it could go up to six. So there's a lot of ways to try to, to, one, get rid of it pay cash, pay as much cash as you can to, to mitigate it right? Doing a fixed interest rate. So the rate, the risk of interest rates going up is on someone else. Or you can transfer it to someone else by buying a rate cap where if it goes above a certain amount, someone else is going to pay that interest. So I think debt is super important. In 2008 multifamily commercial real estate actually did okay. But the people that did have problems were the ones that had bad debt, or they had debt that was coming due, and they couldn't refinance or get out of it. I think we've learned a lot of lessons. And I don't think that's going to happen again. The debt markets are a lot better. 2008 was just we, we didn't know what to expect, you know, and it was an issue with the debt because the debt was the biggest issue. No one else was giving out debt. Now we have supply chain war, all this other stuff, but it's not the debt markets that are having issues. So if you're looking at your own properties, if you're looking for an investment, really dial in focus on the debt and ask them about it like what what about this, do you think is going to minimize our risk of the bank taking the property back?
Today, my guest is Xiao Yuan Xiao is the managing director of Hagmann Capital and manages the day to day operations as well as leading all bond structuring and negotiations or Hagmann capital portfolio. And in just a minute, we're going to speak with Xiao about TIF bonds. That's the Tax Increment Financing bonds, and what they are and how they're used.
J Darrin Gross
I'd like to ask you, Xiao Yuan what is the biggest risk?
Xiao Yuan
Yeah, you know, like any financial product, I mean, it truly is interest rate risk. So, you know, it's not something that you can eliminate, you can, you know, transfer to some extent, you can minimize, to some extent, but, you know, on a day to day perspective, I mean, we do have a fee, it is, you know, anytime we buy a bond, anytime we, you know, look at look at any type of these financings day to day, you know, proceeds can essentially get diminished simply because, you know, 10 year Treasury goes up by 1520 basis points, right. And so, you know, that's something that, at least we spent a lot of time thinking about is just how do we minimize the interest rate risk, and we do have kind of a few vehicles that we, we utilize that minimize interest rate risk, both for ourselves and also for the developers that are, you know, seeking our capital. And, you know, kind of a big way that we do that is, you know, we created a rate lock mechanism, anytime we buy a bond. So, you know, whatever the interest rate is on the bonds, what we would do is, you know, we can say, hey, we can lock in the rate for the next five to six months, and typically, the way we do that is through kind of a series of different slots, and, and then, you know, sort of other interest rate management tools, right. So, but, you know, on any given day, I mean, what I think about the most is, you know, how do we minimize interest rate risk, because that's ultimately sort of the, you know, volatile interest rate risk is really the sort of the enemy of, you know, slow, solid, consistent return.
Today, my guest is Douglas Kiersey. Doug is the president of Dermody Properties, and oversees all of the company's operations and strategic initiatives, including capital formation, acquisition, development, and investment management activities. He is a member of the Dermody properties advisory board and chairs the company's executive and investment committees. Since Mr. Kiersey has joined the firm Dermody Properties has developed and acquired industrial logistics assets with an aggregate value of more than $5 billion. Mr. Kiersey has more than 30 years of experience in logistics properties in more than 20 major US markets. He is a member of the Urban Land Institute, and the society of industrial and office realtors. And in just a minute, we're gonna speak with Doug Kiersey, about the intersection of work from home and he commerce.
J Darrin Gross
I'd like to ask you, Doug Keirsey. What is the biggest risk?
Doug Kiersey
Well, it's interesting, you should ask to ask that question. A question that I asked myself and I asked our team when we're considering an investment is, what is our risk adjusted return look like? And so I know, or my investors know, if they want to put their money in the so called Risk Free investment, that's also known as the US 10 year treasury, that presently they can get a return of about 3.7% a year? Well, I'm taking a lot more risk than that. And so what kind of a risk premium Dubai and Dubai investors and our company demand in order to take a number of risks. And here are some of the risks, the risk that we build these buildings and no tenants show up. So I'm taking demand risk. There's the execution risk of building the buildings, can I build them on time and on budget, so I'm taking construction risk. While we try to mitigate that as much as we can. I'm taking interest rate risk, because our construction loan is on a floating rate basis. So I have to be able to understand what that looks like over the course of a three year construction loan term. And I'm taking long term interest rate risk, because I put permanent debt on the project, what does that look like three or three to five years from now. And lastly, I'm taking valuation risk. So when I create this income stream, when I build these buildings, and I listen to great companies, and they pay me rent, and I'm creating this massive income stream, what does that income stream going to be worth five years from now. And that's really the biggest risk. So I can I can, I can do all these things and manage all these risks. But I don't really know, five years from now, what that income stream is going to be worth because a lot of that is reflective of the Feds activities and where our interest rates going to be. So we tried to skate to where that we think that puck is going to be in five years. But that's the biggest risk in our business. So we can have taken all that into account. When we look at levered returns for a project, like the logistics campus in the Chicago suburbs. We're looking for high teens and low 20s kind of pro forma returns with appropriate and conservative underwriting on each one of those stocks that I mentioned. And so if my risk free investment is 3.7%, for the 10 year Treasury, and I'm going to do all this, I want something in the teams, that least.
Today, my guest is Russ Morgan. Russ is the co founder and partner had wealth without Wall Street, an online community that seeks to re educate business owners and families on how money truly works. And in just a minute, we're going to speak with Ross about what is investor DNA and why you should only invest when following yours.
J Darrin Gross
I'd like to ask you, Russ Morgan, what is the biggest risk?
Russ Morgan
The biggest risk is lack of access to cash. The biggest risks, preventing people from being financially free as they have no access to cash is what keeps us going to work every day. Right? It's, I have to be able to make the mortgage payment, I have to be able to make the student loan payment, I have to create the income in order to go on that once a year vacation, pay the cell phone bills, and they have no access to cash. So I have no ability to go buy assets, that would create a passive income to exceed or pay for those monthly expenses.
Today my guest is Rick Elmore. Rick is an entrepreneur sales and marketing expert, and former college and professional football athlete and the founder of simply noted, and in just a minute we're going to speak with Rick about simply noted, it's a proprietary technology that puts real pen ink or pen end to paper to scale handwritten communication, helping businesses of all industries scale this unique marketing platform to stand out from their competition and build meaningful relationships with clients, customers and employees.
J. Darrin Gross
I'd like to ask you, Rick Elmore, what is the biggest risk?
Rick Elmore
Yeah, it's a great question. You know, I think I don't know if this is a cliche answer. But I think the biggest risk is not taking the risk. You know, I was somebody, before I started this business, who was not a huge risk taker was kind of like, in my bubble, I stuck to a plan. You know, I was very regimented, scheduled, I had that athletic background where your life is just completely booked for you, and really didn't know what was on the other side. And then being an entrepreneur, starting a business, doing anything, you know, larger than yourself takes risk. The bad thing about taking risk if you don't learn from your mistakes, so you don't learn from things that you failed in, in those risks, then those risks weren't worth it. But if you're taking risks, and you're failing, and you're learning and you're growing, then those risks are worth it. And that was something that, you know, even when I first started, I really didn't understand, but it took me about a year to where I was like, I have to get us on my comfort zone, I have to take more risks. I have to try things I don't understand. And you know, Fast forward four years, we have 1000s of clients, we've built robots for building software and nothing I've had experience with, but it was me constantly living outside my comfort zone, taking those risks that has allowed us to scale this company to where we are today.
Today, my guest is Andy Gurczak. And he is the founder of all city adjusting a licensed Public Adjusting firm, and he immigrated to America from Poland with his family at the age of nine. And after working in the construction industry, more specifically Fire Restoration, he discovered his true calling public adjusting. This discovery was largely thanks to herb Johnson, the first African American public adjuster in Illinois who took Andy under his wing.
J Darrin Gross
I'd like to ask you, Andy Gurczak, what is the biggest risk?
Andy Gurczak
I think my answer if it's not insurance related would be fear. Fear would be the biggest risk. Like you said, Fear is what holds people back is you want to transfer that risk. You said you want to minimize that risk. Fear. To me, when I look at the what's the risk? Well, the risk is fear. If I don't do something and being scared to go out there and do something, we'll call that PA or to me, that's a risk. Because your your fear is holding you back. And you're you can't avoid risk. Right? You can minimize it, you can transfer but you can't avoid it. So I would I would say fear is what kind of was in my head the whole time. I don't know if the right answer. Quick, quick answer.
Today, my guest is Brad Hansen. Brad has been in the mortgage business for 18 years helping clients meet with home financing goals. He also is a real estate investor and loves to educate others on how to build wealth through real estate.
J Darrin Gross
I'd like to ask you, Brad Hansen, what is the biggest risk?
Brad Hansen
Yeah, that's a good question. You know, I think, you know, there's a couple of them. Number one, I mentioned a few of these number one, I think you have to be really careful. Trying to do too much too quickly, right? It's like anything, the more experience you get, the better you'll be at IT knowledge. So I always say, they walk before you run, right? And make sure that you're not, you know, if you're gonna buy an investment property, do it in an area that you know, do it, do it in such a way that you're going to minimize the risks, right? You know, that you have professionals help you, right? You know, the value of the home, you're not overpaying. It's going to cash flow, those kinds of things. So, you know, one of the risks is that you have a home that has a negative cash flow, right, let's say you overpay and rates are high right now, right? So your rates, your payments going to be relatively high, but let's say you have a payment, that's 3500. But you can only rent it for 3000. Well, now all sudden, you've got a $500 a month negative cash flow. So, you know, again, knowing what you're getting into and not just, you know, it can be as you said, it could be a little bit kind of glamorized a little bit, right. That's a lot of hard work. You know, are you going to are going to hire a property management company? Are you going to manage yourself? Are you going to hire a handyman to help take care of repairs, you know, those kinds of things? Because stuff goes out, right? Are you going to set aside money for maintenance? So there's a lot that goes into it, I would say, you know, that's a risk. But it can be mitigated by educating yourself, surrounding yourself with with professional so walk before you run is another one. The other risk potentially is home values might go down. Right. Now, while we don't necessarily think the environment similar to what happened in oh eight, where we saw 25 to 30% declines, because of the oversupply and the the lot of other things that were happening with the home financing wasn't great. We don't think that's the same environment we have, if you overpay, you could see values go down, but that I think that can be mitigated to a degree by what we talked about earlier. If you're going to buy it, don't expect it. It's going to give you the return on investment that you want to just the first year or two might take multiple years for that. So like anything, it is a risk. It's money that can be lost. But I think I mean, I honestly think the big Guess risk is that negative cash flow, maybe buying a property again, I always recommend that you get a really thorough inspection, you found a property that had that you didn't do an inspection. And you ended up having to put a new roof in or you had other issues, right. So like you, you know, again, I'm not insurance you there are things that insurance can protect you from, but insurance can't necessarily protect you from buying a home that is in disrepair and needs a lot of work. Right. So those are probably the biggest risks that I see. And there's ways to mitigate those and be prepared for them. But yeah, those are those are probably two of the biggest ones I've seen.
Today, my guest is Paul Neal. Paul is the founder and Principal Funding Strategist. At Vantage Point Commercial Capital. A firm that focuses on helping entrepreneurs and real estate investors win by funding their growth in dreams in non traditional ways.
J Darrin Gross
I'd like to ask you, Paul Neal, what is the biggest risk?
Paul Neal
Well, I think the biggest risk that business owners and entrepreneurs face today and into the foreseeable future, is what I call big, big government, big technology, big media, even big banks. We've seen it over COVID, it's been in our face, that there's a there's a, there's a movement to sort of aggregate the power up into the hands of the few again, whether it's a government media, big business is, you know, is a threat to small business and entrepreneurs. Because, you know, we're, we're free agents, we're out there on the street, we're the ones that are building the community, we're hiring employees, we're caring about our customers caring about her families, giving back to the community, we're the ones that want to be able to exercise, you know, free and independent thought. And we have these forces that are aligned against us. And again, you COVID You know, who did they shut down? Well, they didn't shut down Amazon, they didn't shut down Walmart, but they shut down the, you know, the mom and pop that at a coffee shop, they shut down the church, they shut down, you know, anything they that didn't sort of fall into this, this large monolithic group that that could be controlled. And and I'm not saying there's any sort of force behind it, other than the fact that it's just natural, right, that, that, that, that we're sort of in a battle here that we all want control. And it's easier to control, the smaller the smaller number of levers that control, you know, sort of larger, larger economies, and without getting really deep and off of that, and I just think that we're in a fight, and I think as entrepreneurs, that for us to be to survive into the future that we need to stick together and realize that, you know, I don't I don't think our issues are, you know, most business owners that I know, regardless of the color, their background, their creed, whatever, they just, they just want to work with customers and serve people. And they want to do the best they can. They want to work in excellence, and we just have to stick together. And so we can all win together. Because I think when we win as entrepreneurs and business owners, our families when our communities win, and ultimately, society wins.
Today, my guest is Stuart Keller. Stuart is currently the head of Investor Relations syndication division, focused on senior living communities throughout the US.
J Darrin Gross
I'd like to ask you, Stuart Keller, what is the Biggest Risk?
Stuart Keller
You know, I would say, you know, I think what we all experienced, experienced collectively as a nation in 2020. And 2021, was, you know, a pandemic, that disproportionately impacted the senior population, you know, the impact to you and I was a lack of availability to get a haircut, you know, some small mom and pop a lot of a lot of small stores, and, you know, mom and pop businesses went out went out of business. For for the senior living population, there was COVID restrictions, not allowing new movements into the resident into the communities, you know, just a a significant impact, which hurt both occupancy, which drove down the net cash flow, but also the ability for new residents to want to move outside of their homes where they felt, you know, safe and secure. So I would say definitely, you know, if there was a repeat hope to god, there isn't of 2020 I would say that that's probably the single single biggest risk factor and senior living.
Today, my guest is Leonard Atlas. Leonard is with Mission Profitable Inc. Leonard is an author, speaker and sales trainer working with commercial real estate professionals around the world. And in just a minute, we're gonna speak with Leonard about the 80/20 Pareto principle. And he's got a presentation "From Brooklyn to Bel Air".
J Darrin Gross
I'd like to ask you, Leonard Atlas, what is the biggest risk?
Leonard Atlas
Just a clarification, do you mean to me or to my clients,
J Darrin Gross
You can frame it for your for yourself or your clients, however you however you'd like to frame?
Leonard Atlas
Well, I've spent so much time thinking about my clients. So the biggest risks of my clients is wasting the two commodities that you can never get back. You can only spend, you can never get back. And that's their time and their reputations. And far too many people have confided in me that they waste so much time with the wrong people. They didn't know what this qualification looked like they didn't know how to go about doing it tactfully and politely and not to burn the bridge. And when I say disqualification, it simply means to say to somebody, look, Charlie, this, this particular deal may not be the right one for us, you already got somebody on it. I'm a little late to the game, whatever. But does it make sense for us to stay in touch for future opportunities for future deals, so we're not talking about disqualifying them forever. We're just acknowledging if this current transaction, whether it's a renewal or next, or whatever it is, if this one's already allocated, and I'm too late, and I'm not getting it, why would I want to invest any more time, money and resources into it? So the time and again, that awareness I have reduced once people realize what the time is worth. Because let's face it, if you're making $10 an hour, you're gonna function one way, if you're making $100, now you're gonna function differently. And if you're 1000 miles now you're gonna function even more differently, and you're gonna delegate and more people do other things, and you're gonna stay focused on what you do to make 1000 miles an hour. So time, but about reputation as well. reputations? Well, and I'll tell you something in closing, I did a lot of interim things during COVID. Because there were no workshops, there was no trainings that whole this whole industry shut down for two years, two and a half years. And I met many wonderful people. But I met a group of people that I titled as fakes flakes and frauds. You have no idea? No, I avoided the entire PPP industry. And the PPE industry, I avoided those I was asked immediately masks and gloves because people don't have access to people in real estate. I want nothing to do with that at all at all. But ultimately, I would network and broker and do things and you know, make a living. And you have no idea how many fraudulent bios, fraudulent documents, Photoshop documents, absolute scam artists, people would send me a link and say, look at this person, they would just convicted a fraud from another state from another this from it. And other than that, I had one guy who claimed to buy and sell hospitals. And somebody checked it out to me. And he called me and said, This guy is wanted by the Orange County Sheriff on 89 counts of fraud 89 Counselor fraud. So I say that you because reputation is almost worse than time. Look, you spend time you can't get it back clearly. But when you burn a reputation, and you can't call that person back and they tell you never call me back, I never want to hear from you again. You know that kind of stuff. how devastating is that? And the way to reduce and minimize that is by using ad 20 and having a create a set of criteria. Who are the people that are acceptable for me to engage with and work with And I have no tolerance for fakes, flakes or frauds. That's my own personal thing. So my risk is falsely being associated with the with the wrong people that will waste my time, which equates to money and damage my reputation. So I got injured both for both my clients and myself. Life is too short, there's too much opportunity out there, there really is too much abundance out there. Once you determine your criteria for what is acceptable, what is not acceptable, all of a sudden, now you're guarding, guarding protecting your time and your reputation. I hope, I hope that helps answer the question.
Today, my guest is Jaspreet Baveja. Jaspreet is the director of funds strategies. And he has a BA in Management Information Systems from Florida International University and a computer engineering degree from Penn State University. He has been investing in real estate since 2013. And full time since 2019.
J Darrin Gross
I'd like to ask you Jaspreet Baveja, What is the Biggest Risk?
Jaspreet Baveja
Oh, man, I think I think shifting market trends is the biggest risk, because you never know exactly when it's going to start, you could be in the middle of a transaction when it hits you the hardest. And that makes you lose a deal. Because the market shift changed the valuation, the market shift changed the loan, the lender was willing to give you the market shift changed the rent rates you were expecting to put on your underwriting. And so it's the overall market. Because whether the market is changing because of interest rates, or geopolitical or any, you know, natural risks like Hurricane Ian, that we have now, anything that changes the market to shift, I think is the biggest risk because that is something that is not entirely in your control. And like you said, it's not easy. If you have an insurance claim, sure, it's easy to transfer risk to that insurance company and say, Alright, well, that's what we got you for, let's file a claim. But if you have a deal that's going south, because the property was worth 25 million when you put the offer in for 25 million, and now the market shifted, because the rent rates slowed down, and the interest rates went up. And the biggest job provider that was in the market in that particular area just decided to up and leave like Apple decides to leave San Jose for all this, you know, for some reason, that's going to be a big market shift that you as an operator or as an investor or anything, have no control over. And so that's going to automatically shift all your underwriting all your projections of returns. And so I think the biggest risk is the market shift, whatever the cause may be.
Today, my guest is Joanna Frank. Joanna is the CEO of Fitwel, where she advances design and development practices to foster healthy and engaged communities. And in just a minute, we're gonna speak with Joanna about healthy building designs.
I'd like to ask you, Joanna Frank, what is the Biggest Risk?
Joanna Frank 36:51
the people in your buildings, because as we've talked about it is people that really decide value by what we value as people and our society translates into the value of your asset. So that kind of comes back to why location, why is this location more valuable than another location it is because we, as people value those attributes. And we can see that and we can correlate it with real data, right. So we as people value being in a neighborhood that is walkable, and there is a lot of data, a lot of stats that shows the direct correlation between the increasing amount of walkability of the location and that increase in value. So, so we as people are going to, we're going to decide when a building or when a property is really good for us and good for our businesses way before the physical risk that we're going to see if we're talking about climate change as an example. flood risk is a good one, just because if you're looking at flood risk from a When will my property flood physically, that is obviously the risk to the bricks and mortar way in advance of that physical event of flooding, that property is going to lose value, because of the perception from people of the risk of that flood, I am not going to move my business into that building, because that building is in a flood zone. And I don't want to take the risk of whenever that flood occurs because of the disruption to my business because of putting my people in harm's way. So the value and the risk associated with that flood is happening way in advance of the physical flooding, because we as people aren't going to be building that into our assessment of value. Likewise, the temperature change, right, some cities, some regions are going to become less and less optimum for people to thrive, and therefore that's going to start to affect people's willingness to move there. Right? If it's 120 degrees on the high street, like that is no longer an optimum environment for people it is actually suboptimal, right. So now you have an issue about value for that real estate, the buildings will be fine. But as people will say, I don't want to live that right, that's too hot. I don't want to have air conditioning on all the time. And then of course, we can have a whole energy conversation. Likewise, air quality, the air quality is going to affect my quality of life, my tenants and my my family. I'm going to start to bake that into whether I value this location or how I value this location. So it is people that are really driving value of real estate and it is people who are going to be the greatest risk factor because of climate change. And because of all of these other societal changes way in advance of buildings starting to have the Like, you know, physical implications on buildings?
Today, my guest is Kevin swilled. Kevin is the CEO of Thirty Capital Financial, a commercial real estate debt advisory firm and pioneer in the defeasance space. Kevin is an accomplished executive with experience in acquisitions does dispositions, financing, capital raising asset and property management.
J Darrin Gross
I'd like to ask you, Kevin Swill, what is the Biggest Risk?
Kevin Swill
Right now the Biggest Risk that we have our borrowers that are out there that either need to sell their asset, one because their partner is a fund, and the fund will only hold an asset for five years. And their underwriting and their performers over the last. You know, look, we've been in a great situation for the last What 10 to 12 years where interest rates have been historically low. But again, people that have been in the industry for 20 years know that you know, the average loan should be on a commercial real estate should be anywhere between Let's say six and a half to 9%, based on the asset class, but people have forgotten that. So for me right now, where I see the greatest risk are people that were involved with partners that have a hold period, and are now in a situation right today, as we speak today on this on this call, that have no choice but to sell their asset, or refinance to buy their partners out. And they're in an environment where they may have a loan that they were only paying two and a half 3% on when they got that loan. But now, they're looking at paying almost 6%. And the question is, who's gonna buy that? Who's gonna buy that if you understand the market, but to understand the underwriting of the asset, it can become cost prohibitive. So I have, for example, the founder of our company, Rob Finley has a portfolio, and he has put up a couple of his assets for sale, every one of them has now been retreated, and retreated to the point where he's taken it off the market, because it doesn't make sense. Because interest rates keep rising to the point where for buyer, it's almost becoming cost prohibitive. And they're waiting for the markets to really slow down, let's see what happens. You know, everyone talks about recession, where is the risk for the borrower, it's when they're being pushed or forced forced to sell their asset, because they have partners that it's their mandate. That's where I find some risk. Whether or not, it makes an opportunity for someone that is going to buy and be able to renegotiate almost like a distressed asset, they may get lucky. Or the borrower is going to have to renegotiate with that fund, or that, that borrower that partner, and ask for a one year extension, because of where the market is. But that's where I think the risk is, I think the risk is anyone that's trying to sell right now are being forced to sell is going to have a difficult time finding a buyer that makes the numbers work. Until we can really figure out because, again, for the last 10 to 12 years, anyone that owned property, they were making cash. Just it was like a cash cow. And you know, and unfortunately, we're in different times now. And the cash slows down. And it's it's an interesting, it could be an opportunity for some, but it's a very high risk for others. And you know, interest rate risk is hurting everybody in every industry, I think, right now until we can figure out what's going on with the inflation, until we can figure out what really is going on with interest rates. And on top of all of this in commercial real estate, you have no more LIBOR than we've had for almost a century. And now all of a sudden, it is converting to Sofer. So again, it goes back to the floating rate and the bridge loans that were based on LIBOR, come July of 2023. If you're not a sophisticated borrower, overnight, you're gonna get a letter that just said, By the way, by by, by not law, but by regulation, we have to change your LIBOR to sofr. And your LIBOR might have been when you got it very, very low. But in July of 2023, it might be double. And that's a risk you're going to take so we tell everybody, let us help you, or review your loan documents. Make sure that if you have a LIBOR loan, that you call your advisor, you figure out a way to convert it today over to Sofer while they're pretty pretty close in pricing. Because you don't know what's going to happen by next year and July of 23 There isn't any extension to that there will no longer be any LIBOR. That's the risks.
Today my guest is Jason Astor. Jason is the managing director at KBA Lease Services nationwide lease auditing service that works on behalf of commercial tenants to recover rent overcharges and reduce occupancy cost.
J Darrin Gross
I'd like to ask you, Jason Aster, What is the Biggest Risk?
Jason Aster
In my little space, the Biggest Risk is willful blindness to what you should be paying for your lease. You spend a lot of money and time getting into these major leases, hundreds of 1000s of dollars in legal fees, brokerage millions and brokerage fees depending on what party you are, you know, FF and E fit out for you 200 bucks a square foot a huge amount of money getting into them. I think you mentioned this before. It shouldn't be your duty, if you're going to spend this amount of resource to get into it to make sure you're getting what you're supposed to add of it. So the biggest risk is just being willfully blind and not having an expert. Look at it behind the scenes. The interesting thing about risking our space and kind of in relation to the way you describe your day to day work is is operating expense pass throughs is a risk adjustment. That's what it is the landlords back in the 70s, they just charged rent. Like a lease when you were a kid in an apartment, like you paid your rent, and they factored in some amount into it. And then one day, their insurance policies when there was a fire now the rent another, what do you do? You got to pass it through, you have to shift the risk. operating expense theory is a shifting of the risks that landlords have said, You're backing this up, it's too much risk. look and think about all the things inflation is happening too fast rents not enough, I don't have the ability to Jack my rent though. My insurance policy taxes are going up. Right, the union rebar bargained for something right 32, BJ in New York bargained for better fringe benefits. And now I have to pay that, I have to figure out how to reallocate the risk of operating my building across my tenant that basis because I can't bear it anymore. That's what operating expenses are, they're an adjustment of risk. What's happening now from a risk perspective, other than just please Don't bury your head in the sand, pay whatever the landlord tells you is inflation. How do you avoid inflation? It's hard. And Elise, because least has happened one time and then you sit in, right? In your world insurance, landlords pay a fortune, as you know, for insurance, and they have every right to pass that through, guess what they can't control the cost of insurance. So if inflation increases the cost of insurance or some pandemic increases the cost of insurance or some you know, environmental thing, they got to pass that through. So that's construct that's considered an uncontrollable cost, right landlord can't control insurance, they can't control taxes, they can't really control within reason, the amount of money they spent for utilities. So when you negotiate a lease, landlords will fight as they should, to say, I can't control these these things, we're gonna call them costs, I can't control, you just gotta pay your pro rata share, it is what it is, I'm not going to fluff it up, I'm not going to put a percentage on top of it. So if I pay $1, for insurance, and you have half my building, I'm passing through 50 cents to you. And that's fair. The other bucket of things, all the other things cleaning security, right? You know, certain common use of things that is controllable, who you hire, what rate you pay for it would cost to manage your building is a big number. Sometimes those are controllable expenses. And that's where tenants can start to adjust their risk, including caps to, I guess, Cap inflation, right? If inflation is causing the rise of payroll, payroll is going up in the CPI is going crazy. What do you do? Well, if I think about it in advance, well, you know, inflation is usually around four to 5%. What if I kept kept some of these costs that the landlord can control? Now I'm adjusting my risk, because I don't have to worry that if we hit a hyperinflationary period that I'm ever going to pay more than this 5% cap on these costs. Now these this is only fair to a landlord, if these are costs the landlord can purportedly control. That's the road, right? That's where you need lawyers. How do you argue what's controllable, if I'm a landlord, I would go I can't control payroll, I'm in I'm in a union state. They tell me pretty good argument that I call BS. But you know, if you're a tenant, you're not well represented, you know, you're right, you can't control, right. But there's all these like, really interesting nuances. And it's all about shifting risk. It's all about shifting the risk of operating one way or another. And the bigger the better the tenant, the less risk they're going to assume. And the more they're going to push back on the landlord. And in today's market, landlords are happy to have tenants. So you will see, if you are a company looking to negotiate a lease, maybe you're negotiating a smaller one, but you're still negotiating, you might actually have an opportunity to adjust some of their shifts, some of them it's back to the landlord in the operating costs of us. That's what I would say in the landlords are going to do the opposite. Right, rents are going down in some markets. I mean, I mean, this is insane market, right? You go to the middle of Manhattan, and rents have never been higher commercial office rents. One Vanderbilt Hudson Yards one Manhattan recipe show $250 a square foot people are gobbling it up. Three blocks over on Third Avenue. Can't give it away for free, crazy. So if you're a landlord, and you happen to have great product, you're pushing the rest of your tenant. You want to be in here. If you have a half empty building that was built in 1976, and nobody wants to be there, it's a free for all.
Today, my guest is Craig Berger. Craig founded Avid Realty Partners in 2015. After spending more than a decade on Wall Street as a multi award winning equity research analyst. The firm's portfolio has grown meaningfully in recent years, and includes acquisitions and operations of over 14 150 units in secondary and tertiary markets throughout the United States.
I'd like to ask you, Craig Berger, what is the biggest risk?
Craig Berger 42:57
Darrin, you're really good interviewer, you're asked some great questions, and you're really smart. Our biggest risk, my biggest risk is taking a finite amount of personal resources and growing a business. I'm hiring I'm buying deals and having the investor of last resort or the backstop in any of my deals if if a deal needs more money, I really don't do capital calls. I've I've always invested out of my own pocket and the very few limited cases where one of our deals or properties is needed more money. So I've got a number of demands on my personal resources, most of which revolve around growing a business. So that's my biggest risk. How do I hire top flight and top quality, talented sea level executives, investor management, personnel, acquisition personnel, back office personnel, with my resources, how do I go out and buy quality deals when when I have to raise the money in a finite period of time. And so those are those are some of the biggest risks on our assets, we've really paid mostly prices that I feel really good about. So I don't feel like any of our projects are a risk. You know, again, that's one of the great things about multifamily. We're buying below replacement cost we're buying into a business that is fairly stable overall so I like the the multifamily and commercial real estate business. And we've never lost money on any deal yet knock on wood. And hopefully, hopefully we won't. So you know, my risks are more around corporate level. risks and how to scale a business with, you know, limited limited personal resources. We have exited, you know, a number of properties over the last year. So my resources are a lot less limited than they were a year or two ago. But they're still limited in terms of growing the business and hiring talented people that need and deserve to make, make a make a living.
Today, my guest is Todd Nepola. Todd is a commercial real estate investor manager there excuse me, investor and manager. He deals in retail and industrial properties, class B and C properties. And they own and operate and lease and manage several million square feet in of these properties.
J Darrin Gross:
I'd like to ask, you know, Paula, what is the biggest risk?
Todd Nepola
Well, I know you said you don't want an insurance that needed insurance answer, but I'm gonna tell you as a real estate owner, the biggest risk is not knowing working with a good insurance broker. So I'll give you a real quick story again that the second building I bought one of the guys I rented space to restore tires, and the tires caught on fire. And when I was told that I got that there was a fire first I thought someone was kidding me. I drove there. So the whole street shut down. And it was burning 50 feet to discard for just a few tires. I mean, maybe 50 100 tires. I want to ask the firefighters when they're doing this that there's really nothing we could do. It's just gonna burn out. And I was like, Oh my God, my whole building burned down. And it did. And when I went and called the insurance company, I was my neck Call first thing in the morning, I got a hard lesson in insurance about being underinsured and not devalues, we're off. And I realized that I was on the hook for a lot of this damage that was going to really eat it. And I said, this is terrible. Nobody ever explained this to me, I just assumed you buy insurance if there's a problem, but save me is that it was a total loss. And by being a total loss, if there was I had to pay the maximum insurance policy, then they gave me money for demolition and cleanup. So I was safe. But had it only been a fire that was contained to one room, I was really going to pay the price because I wasn't properly insured. So that went back to probably around 2005, or six that fire. And ever since then I said you really really must work with a good insurance agent, especially in Florida, as we're talking now it's storming outside, if you're not aware of your liabilities on hurricane insurance, wind insurance, fire slip and falls, if people don't know things like you know, it won't be your fault. Someone could fall on your property, and you will do nothing wrong, not even have a pothole, but you're going to get sued. So what do you expose for? And I find every time I take on a property management account, and I asked owners this question, they simply don't know. And that's why it's really, really important you work with a good insurance agent, that's more important than tenant risk. Because if a tenant leaves, I can replace it, that's more important than a problem with the vendor because I could get a new vendor. But if you're not probably insured, something happens and you're going to share this liability, you're not ready for it. It could bankrupt you.
Today, my guest is Spencer Hilligoss. Spencer is the CEO and co founder of Madison Investing a real estate investment firm specializing in real estate syndications. As a passive investor and active syndicator. He understands the unique challenges that busy professionals face when starting out in their real estate investing journey. Spencer's mission is to arm investors with a know how they need to make confident investment decisions tailored to their individual life goals. Prior to pivoting to real estate, Spencer held several executive roles in the financial technology industry, including positions at Intuit and gusto. forging a 13 year track record of building high performing teams across five companies, three of which are valued at over a billion dollars. Throughout his career, one thing has remained consistent his ability to keenly focus on professional development, helping teams and individuals reach their full potential. Spencer is a member of the 2021 Forbes real estate Council and has been featured in publications such as Business Insider, when he's not shifting the way people think about investing, you can find him listening to metal, adding to his tattoo collection and jogging through the Bay Area with his wife and two sons. Ask him about the time he played on stage in San Francisco at the Vans Warped Tour. And then just a minute, we're going to speak with Spencer about playing financial offense versus defense. But first, a quick reminder, if you like our show, CR e PN radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment. We'd love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you're there, please subscribe. With that I'd like to welcome my guest, Spencer Hilligoss, Welcome to CRE PN Radio.
J Darrin Gross
I'd like to ask you, Spencer Hill, what is the biggest risk?
Spencer Hilligoss
Oh, my goodness. I love that question. And I say my goodness, because it is such a intelligent question. And I wish that someone could really couldn't go back in time yet again, and tell myself that every decision in life is a risk decision. Without exaggeration, and you and you already know this far, far better than I do because of your experiences, which is amazing. And I respect so much Darren, walk out the front door, you're making a risky decision, you know, drive your car and make an arrest decision. What is the biggest risk? I think the biggest risk as ethereal as this sounds. And I'm happy to drill down and make it less ethereal and make it more pragmatic or useful for people if they'd like, but this is genuinely what I believe. I think that the biggest risk posed to most people in life right now is a lack of curiosity. And what I mean by that is a lack of curiosity about their sources, like we're talking financially, of course, I would say they're not curious about how they make money and have what what is their money do like what they work for it. They know that they know what their income is, they know that they aren't really curious about well, do I need to does this have to be the way that I do this? What I'm curious, can I am I a human as a professional, capable of doing a different thing? Can I go do a side hustle? If I don't have any money? Could I be capable of generating a capital engine, fancy way of saying simply a way to build more investable capital outside my day job, which is more which is where most wealth is built. It's not in people's salaries. People don't build their net worth. In their day job. They build their net worth, by going out and building a business by going out and investing by going out and doing something on nights and weekends by It runs the gamut. And there's so many wonderful ways to go do that, that are free to start with and educate on now, like college courses. Sure. I'm talking pragmatic stuff. And so I encourage people to find a curiosity and that includes, I thought taxes were boring. I don't think they're always fun, but I certainly think they're pretty fun now compared to many years ago, and most people would hear that statement and think I'm absolutely crazy. And that's fine. But get sure is about your money and get curious about what you're capable of, if you are not happy with your circumstances, or if you don't have a plan B, C, D, E, F, to insulate yourself against the other many risks in the world. And so maybe I don't know if that's necessarily barking up the completely wrong tree in the wrong forest altogether. Darrin, but that's, that's what I chalk up if I had to give a single answer to what's the biggest risk is a lack of curiosity and people just sitting there to do the same thing over and over working hard, truly, is not working smart.
Today, my guest is Jacob Vanderslice. Jacob is a principal at Van West Partners, a Denver based real estate investment firm, focusing on acquisition and management of self storage centers and other opportunistic real estate. Throughout the United States, Van West has established a track track record with over 195 million in real estate assets. And in just a minute, we're gonna speak with Jacob, about self storage, investing in self storage during an economy of change. But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple of things you can do to help us out. You can like, share, and subscribe. And as always, we encourage you to leave a comment. We'd love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you're there, and please subscribe. With that. I want to welcome my guest, Jacob Vanderslice, welcome to CRE PN Radio.
I'd like to ask you, Vanderslice,
JACOB VANDERSLICE 43:50
what has got a few thoughts here on the biggest risk? Yeah, risk is a subjective thing to a degree based on who you're talking to. I look at risk as the as the mitigation of a loss of principle. So what is the story on this deal that would have to occur where we would see a loss of capital, and we look at that more carefully than we do the upside scenario. upside is a lot more difficult to quantify. But finding a story that creates downside is what we try to just eliminate. And having in real estate finance when someone crashes and burns. It is almost always because of a cashflow issue. It's always a cash flow issue. There's there's certain circumstances where you can fail not because of cash flow, but you know, something maybe bigger COVID, for example, but we watch our cash flow very carefully, specifically in self storage. And when we buy a given deal, there are two risks to that to that acquisition. I think outside of things we can't control interest rates and cap rates where rates going to be involved. yours where Cap rates going to be in five years, we don't know, right, we can make a forecast we can be conservative. But we can control is our is our net operating income and and our revenue, we have control over that to a degree. But the two risks on a given storage acquisition, we believe are rents where rents today and where rents going to be, and is that revenue stream achievable and reasonable that we've written into our model. And secondly, it's kind of getting in the weeds. But property taxes, I think, are a major risk. And property taxes and self storage are variable just like any asset class from market to market, they're a lot higher in the Midwest than they might be in Denver. But because storage leases much like multifamily are basically full service, meaning the the tenant doesn't pay the property taxes, those come straight out of the bottom line. So if you're accruing for property taxes incorrectly, and you get reassessed, that's going to be a material change in your net operating income as well as the total value of your property. So that's something rents and taxes are something we really analyze very carefully. And to mitigate the risk on the property tax side, we accrue for a tax bill, that's a worst case scenario. So that it is inconceivable the property taxes in the in the foreseeable future will ever go above this figure. And that's what we approved for. And typically, we come in well below that figure, sometimes we get lucky, sometimes it just doesn't get reassessed. We'll do some creative transfer, things where we buy the entity versus buy the deal. But I know that seems kind of in the weeds. But if you think your property taxes are gonna be 100 grand, and then 140. That's a massive Delta. If you put a six cap or a five cap on that 40k In noi, you've missed the mark on your deals value by lots of money.
Today, my guest is Oliver Fernandez. Oliver is a business owner and real estate investor that has successfully completed over 80 million worth of construction projects and accumulated a real estate investment portfolio valued at 150 million in the past nine years. And in just a minute, we're going to speak with all of her about adding value through quality construction and multifamily real estate.
J Darrin Gross
I'd like to ask you, Oliver Fernandez, what is the biggest risk?
Oliver Fernandez
Yeah, this is a really interesting question. And, you know, my mind went a couple of different directions, but the direction that it just keeps going back to is the biggest risk is not being intentional about what you want to do. And the reason why that's the biggest risk is because when you become 8090 100, or whatever your time is, and you look back on your life, and you're like, did I do everything I wanted to do, I don't want to ever be in a situation where I was like, Man, I could have done this differently or I could have done that differently. Alright, I really, I didn't, I didn't really focus on what I wanted to do here. I didn't want to focus on what I want to do there. I want to look back and just say I was super intentional. I did everything that I said I wanted to do. And I didn't leave any stone unturned. I didn't, I didn't leave any, any any opportunity that I really was excited about it. But I didn't have the courage to go for it. Like I don't I don't want to be in that situation. So I want to focus on being extremely intentional about my life where I want to go or family go where team to go from my businesses to go. Because I also know the opposite side of that when you're not intentional and you're just letting the the world just kind of control you and put you in situations. You know, that's never a good situation. So the biggest risk is not being intentional about life.
Today, my guest is Zachary Beach. Zachary is the an Amazon Best Selling Author of The New Rules of the Real Estate Investing. And co host of the Smart Real Estate Coach Podcast is a partner, COO and coach at Smart Real Estate Coach. In September 2020, they released a revised edition of Real Estate On Your Terms, which Zach co authored. And just a minute, we're going to speak with Zach, about real estate on your terms, how to create continuous cash flow now without using your cash or credit. But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple of things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave common we'd love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube and commercial real estate pro network. And while you're there, please subscribe. With that, I want to welcome back my guest, Zack Beach. Welcome back to CRE PN Radio.
J Darrin Gross
I'd like to ask you, Zachary Beach. What is the biggest risk?
Zachary Beach
Yeah, it's a fantastic question. Because it's something that we talk about quite often. And it's something that we talked about a lot with our, our students, and that's because we help a lot of students leave their corporate jobs, and become real estate investors or become business owners, because it's our big belief that the W two is the biggest threat. Who is the biggest risk because you have zero control over the outcome of whether or not you have a job or not, there's too many other parties involved. There's too many other people that that can control your destiny. It's not until you put the risk or you go outside your comfort zone and start building the life that you choose through either real estate investing or business. That way you can start taking control of your life. No, all the predictions are right now that we're about to go into a downturn. I mean, nobody can really predict me in the billionaires can predict, but the feeling is that we're shifting. And when there's a shift, there tends to be layoffs, there tends to be businesses out there cutting back on their labor, and they start really consolidating. So you just never know, if you're the one that's going to get cut back on as as being you know, instead of w two. So that is why there's a large group of people that are consistently and we're starting to see it are consistently applying to be you know, in our programs that have corporate jobs, and they're looking to first and foremost, offset expenses by building a real estate portfolio. And then secondly, once they go ahead and build that portfolio, create a transition plan to now be in control of their business, and be in control of their lives. And you the amazing thing is once you see people transition and escape that that job, the new life that's built into them in the acceleration process of their life, personal development, their wealth, how it dramatically starts increasing, once they have full control of it and can consistently day in and day out work on building that better life. So the W two in my eyes is always the biggest risk when it comes to you know, say real estate investment when it comes to you personally inside you live.
Today, my guest is Jason Stubblefield. Jason has been investing in real estate for over 10 years. He started with single family homes and have since moved into the multifamily real estate space, he scaled his portfolio to over 100 multifamily units. In just a few years. Jason grew up in a lower class family and was always mindful of the tenants he served. That concern led him to the transition company into the affordable housing space. His company is now devoted to helping solve the affordable housing crisis while maintaining strong returns for his company and his investors. Prior to becoming a full time multifamily entrepreneur, Jason spent over 11 years in the software development, and has a Bachelor of Science degree in computer science from the University of Memphis. He is also a United States Marine Corps veteran.
J Darrin Gross:
I'd like to ask you, Joe Moffett, what is the biggest risk?
Joseph Moffett
Well, I'm going to answer it from the perspective of a mindset. And because I think it applies in insurance, real estate, the economy, politics, whatever it might be. And the biggest risk I see as individuals not being flexible. And what I mean by that is having the flexibility to see things in different ways than they would traditionally look at it from, it takes courage to look at both sides, or all sides of a story, a situation and investment, a product to really have your due diligence on what's the best way to go. So people that I find that say, it's one way, it's this way, let's go it's my way, or the highway type people like they are in so much danger, they are at such higher risk of failure, and even under the illusion that they're going to be successful because of it. And they may be but at what expense, but they are at a higher risk. And someone who is more flexible, they're open to seeing both sides, or all sides are open this, you know, change direction or going down a path. I know. For me, I remember I had a term policy, and I realized, you know what whole life was a great insurance policy, that product for me, and then I actually unknowingly because I didn't know all the details, I actually went through my whole life policy, when I didn't know that the product was designed to be able to take out a loan against my principal that was compounding annual. So anyway, you live and you learn. But I wasn't I wasn't flexible enough to see all sides and understand it. So I would say the biggest word I can say is are you flexible? And if you're not, how can you be even more flexible? Because in today's times, you know, the strategy in real estate last year in the last two years, that strategy isn't working now. And if you think it's good enough, you're not flexible and adapting with the market, you're not going to have the success you're looking for. In fact, you could actually harm yourself and or cause yourself to go in the opposite direction. So flexibility is my answer.
Today, my guest is Joseph Moffett. Joe is a he received his master's in performance psychology. He is an entrepreneur, a real estate investor, a co best selling author. And he's worked with Tony Robbins for almost a decade. He is also the CEO of master life by design. And he's done over 22,000 Peak Performance calls. And today we're going to speak with Joe about business mindset coaching in life and real estate.
J Darrin Gross:
I'd like to ask you, Joe Moffett, what is the biggest risk?
Joseph Moffett
Well, I'm going to answer it from the perspective of a mindset. And because I think it applies in insurance, real estate, the economy, politics, whatever it might be. And the biggest risk I see as individuals not being flexible. And what I mean by that is having the flexibility to see things in different ways than they would traditionally look at it from, it takes courage to look at both sides, or all sides of a story, a situation and investment, a product to really have your due diligence on what's the best way to go. So people that I find that say, it's one way, it's this way, let's go it's my way, or the highway type people like they are in so much danger, they are at such higher risk of failure, and even under the illusion that they're going to be successful because of it. And they may be but at what expense, but they are at a higher risk. And someone who is more flexible, they're open to seeing both sides, or all sides are open this, you know, change direction or going down a path. I know. For me, I remember I had a term policy, and I realized, you know what whole life was a great insurance policy, that product for me, and then I actually unknowingly because I didn't know all the details, I actually went through my whole life policy, when I didn't know that the product was designed to be able to take out a loan against my principal that was compounding annual. So anyway, you live and you learn. But I wasn't I wasn't flexible enough to see all sides and understand it. So I would say the biggest word I can say is are you flexible? And if you're not, how can you be even more flexible? Because in today's times, you know, the strategy in real estate last year in the last two years, that strategy isn't working now. And if you think it's good enough, you're not flexible and adapting with the market, you're not going to have the success you're looking for. In fact, you could actually harm yourself and or cause yourself to go in the opposite direction. So flexibility is my answer.
Today, my guest is Trevor Bacon. Trevor is the CEO of Parcl a blockchain based platform that allows users to invest in digital squarefoot physical real estate and neighborhoods around the world. And in just a minute, we're going to talk with Trevor about utilizing digital real estate as a hedge against inflation.
J Darrin Gross:
I'd like to ask you, Trevor Bacon, what is the biggest risk?
Trevor Bacon:
Great question. Yeah, aside from the table stakes, which is just execution that we're focused on every day, I think there's their security is the security and transparency is something that we take very seriously. And we obviously identify that as, as a risk point, both for the actual product, but also for our community and reputation. So we take security on both the data side and the blockchain side. Very, very seriously. We've had multiple, multiple audits, we have audit firms on retainer, to make sure that every line of code is audited before we put it on the blockchain. And expose it. So that is something that we view as a risk, we do our best to manage it. And as you say, mitigate it through checks, protocols, just time spent in development. And then that's something that we'll continue to make more robust as we expand.
Today, my guest is Charles Chandler. Charles is the co founder and CEO of My Tennessee Home solution, a real estate solution company composed of veterans dedicated to hard work and service in the civilian world, just as they were during their time in service to their country. Currently transitioning out of the military. Charles looks to help others use their God given gifts and talent to help themselves and others.
Today, my guest is Charles Chandler. Charles is the co founder and CEO of My Tennessee Home solution, a real estate solution company composed of veterans dedicated to hard work and service in the civilian world, just as they were during their time in service to their country. Currently transitioning out of the military. Charles looks to help others use their God given gifts and talent to help themselves and others.
J Darrin Gross:
I'd like to ask you, Charles Chandler, what is the biggest risk?
Charles Chandler:
As a as an officer risk mitigation, risk management is a daily thing that gets communicated because we have risk at certain levels that we can mitigate and whatnot. So definitely appreciate that question. Because it again, it just ties into multiple things that I'm involved in. And so for us, and our team, really the biggest risks that we that we've experienced on and I can say this probably for both single family and multifamily has been not contacting the correct people and more so meaning on the multifamily side, getting into Build playing architects code, permitting, all kinds of different departments that we didn't even know existed at all, and then on the single family side, somewhat the same as far as zonings. What, what can or can't be done to certain houses, and again, that just being more So internally, kind of putting blinders on thinking of us individually, we have to solve this and figure this out and not. And that might be inherent as well, kind of a as a weakness on the military side, and more type a strong willed, will I'll get this done kind of thing, and not realizing that there are so many outside resources that are that are postured to really take down a lot of those potential obstacles that you're going to face. And so that on the multifamily side, that's been a continuous learning experience, especially right now with who it is that we need to talk with. And so biggest risk was kind of tied to not only taking a ton of massive action, which is great, but almost too quickly, and not realizing who is it that we need to talk to, who's out there who's available, who's a resource, or at least pausing just to even think of that question. And so that is the biggest risk for us, because that could potentially lead to where you're at a point of potentially no return, or there's going to take even more cost to potentially fix or mitigate something that that has happened. So thankfully, we've we're not at that we're not there and reach that that point. But we definitely saw that as a big learning lesson in internal conversations as far as risk.
J Darrin Gross:
I'd like to ask you, Charles Chandler, what is the biggest risk?
Charles Chandler:
As a as an officer risk mitigation, risk management is a daily thing that gets communicated because we have risk at certain levels that we can mitigate and whatnot. So definitely appreciate that question. Because it again, it just ties into multiple things that I'm involved in. And so for us, and our team, really the biggest risks that we that we've experienced on and I can say this probably for both single family and multifamily has been not contacting the correct people and more so meaning on the multifamily side, getting into Build playing architects code, permitting, all kinds of different departments that we didn't even know existed at all, and then on the single family side, somewhat the same as far as zonings. What, what can or can't be done to certain houses, and again, that just being more So internally, kind of putting blinders on thinking of us individually, we have to solve this and figure this out and not. And that might be inherent as well, kind of a as a weakness on the military side, and more type a strong willed, will I'll get this done kind of thing, and not realizing that there are so many outside resources that are that are postured to really take down a lot of those potential obstacles that you're going to face. And so that on the multifamily side, that's been a continuous learning experience, especially right now with who it is that we need to talk with. And so biggest risk was kind of tied to not only taking a ton of massive action, which is great, but almost too quickly, and not realizing who is it that we need to talk to, who's out there who's available, who's a resource, or at least pausing just to even think of that question. And so that is the biggest risk for us, because that could potentially lead to where you're at a point of potentially no return, or there's going to take even more cost to potentially fix or mitigate something that that has happened. So thankfully, we've we're not at that we're not there and reach that that point. But we definitely saw that as a big learning lesson in internal conversations as far as risk.
Today, my guest is Dave Dubeau. Dave Dubeau is a real estate entrepreneur, best selling author, speaker and investor, attraction expert. And in just a minute, we're gonna speak with Dave about raising capital.
Today, my guest is Dave Dubeau. Dave Dubeau is a real estate entrepreneur, best selling author, speaker and investor, attraction expert. And in just a minute, we're gonna speak with Dave about raising capital.
J Darrin Gross:
So Dave Dubeau, what is the biggest risk?
Dave Dubeau
The biggest risk in my mind, for real estate investors is relying solely on their own financial wherewithal to create their portfolio. So this might sound self serving, because I'm in the business of helping people to raise capital. And maybe it is, but you know, that's what I focus on. So just like you focus on insurance, so I see so many people get stuck and stay stuck with a real estate portfolio that just doesn't really do much for them. Because they don't know how or they're not willing to grow using other people's money. So they stay stuck with one or two or three properties in their portfolio, which is better than nothing, for sure. But it's not, it's not going to allow them to create that real estate dream they had in the first place, which is usually to create enough passive income to be able to quit the jlb. Right, or be able to retire early, or whatever it is. So that that is the biggest risk is just staying stuck. Because you're not willing to expand by partnering up with other people.
J Darrin Gross:
So Dave Dubeau, what is the biggest risk?
Dave Dubeau
The biggest risk in my mind, for real estate investors is relying solely on their own financial wherewithal to create their portfolio. So this might sound self serving, because I'm in the business of helping people to raise capital. And maybe it is, but you know, that's what I focus on. So just like you focus on insurance, so I see so many people get stuck and stay stuck with a real estate portfolio that just doesn't really do much for them. Because they don't know how or they're not willing to grow using other people's money. So they stay stuck with one or two or three properties in their portfolio, which is better than nothing, for sure. But it's not, it's not going to allow them to create that real estate dream they had in the first place, which is usually to create enough passive income to be able to quit the jlb. Right, or be able to retire early, or whatever it is. So that that is the biggest risk is just staying stuck. Because you're not willing to expand by partnering up with other people.
Today, my guest is Aviva Sonenreich. She is the owner of Warehouse Hotline, leveraging advanced marketing techniques to maximize your commercial real estate results. She is also the number one commercial real estate broker on TikTok. Where her handle is @realestatesource and has over a million views. And in just a minute we're going to speak with Aviva about Warehousing and TikTok.
Today, my guest is Aviva Sonenreich. She is the owner of Warehouse Hotline, leveraging advanced marketing techniques to maximize your commercial real estate results. She is also the number one commercial real estate broker on TikTok. Where her handle is @realestatesource and has over a million views. And in just a minute we're going to speak with Aviva about Warehousing and TikTok.
J Darrin Gross
I'd like to ask you, Aviva Sonenreich, What is the Biggest Risk?
Aviva Sonenreich
I genuinely feel like the biggest risk is not taking risk at all. And not learning the pros and cons to risk that I think in our lives, our risk tolerance, can and will change and you need to assess what risk makes sense, when, for example, I feel like I can be riskier now because I don't have kids, that could change in three to five years, and I will have mouths to feed so I can't maybe make some of these really risky decisions in investing or working or any, in any capacity. But what I've noticed is that the I love the thought thinking about risk and reward and the I find the biggest and the best things happen with the most risk, right? The bigger the risk, the bigger the reward. And so understanding that and doing it in a way that is comfortable to me or you I think not having that conversation with yourself is the biggest risk of all.
J Darrin Gross
I'd like to ask you, Aviva Sonenreich, What is the Biggest Risk?
Aviva Sonenreich
I genuinely feel like the biggest risk is not taking risk at all. And not learning the pros and cons to risk that I think in our lives, our risk tolerance, can and will change and you need to assess what risk makes sense, when, for example, I feel like I can be riskier now because I don't have kids, that could change in three to five years, and I will have mouths to feed so I can't maybe make some of these really risky decisions in investing or working or any, in any capacity. But what I've noticed is that the I love the thought thinking about risk and reward and the I find the biggest and the best things happen with the most risk, right? The bigger the risk, the bigger the reward. And so understanding that and doing it in a way that is comfortable to me or you I think not having that conversation with yourself is the biggest risk of all.
Today, my guest is Dale Watchowski. Dale is the President CEO and COO of Redico. Dale has more than 30 years of real estate experience in both local and national platforms with a diverse spectrum of expertise in acquisitions, development, capital markets and operations. And in just a minute, we're going to speak with Dale about trends in real estate trends in commercial real estate development.
Today, my guest is Dale Watchowski. Dale is the President CEO and COO of Redico. Dale has more than 30 years of real estate experience in both local and national platforms with a diverse spectrum of expertise in acquisitions, development, capital markets and operations. And in just a minute, we're going to speak with Dale about trends in real estate trends in commercial real estate development.
J. Darrin Gross
I'd like to ask you, Dale Watchowski, What is the Biggest Risk?
Dale Watchowski
Yeah, so Well, I could speak on on this topic for hours. But but I'll start by by just you know, offering a general thought and it's it's nothing that that that I'm sure your listeners haven't haven't heard already and in know very well but, but risk is inherent in our business. Being in the real estate business as an investor is, is you know, we're no strangers to risk and, and, you know, as developers, you know, I'm part of a pretty optimistic lot. And I think you've probably heard it said before that you have to be a dreamer. And you have to be a very, you know, an optimist to be a developer. And, and I would say that I'm probably the exact opposite of that. So I tend to focus on the downside, and, and, you know, my team here, as always temper that, you know, because I'm always pointing out the risks inherent in everything that we do, but but I'd say that, you know, you know, speaking outside of, you know, the risk inherent, you know, that inherent in the insurance industry, I'm gonna, I'm gonna go to kind of market risks right now, and I'm going to tell you that, that to our conversation earlier, my biggest concern is around, you know, our Office users and, and, you know, are we going to be able to retain them? You know, will, you know, will we go back to the office? What form? Will we go back to the office? And what's it going to cost me, you know, to build out space that is attractive to my office users? And, and, you know, what did we do during this time of transition, you know, when your users are only looking to renew on a short term basis, which is really what's happening right now. So, you know, so what the, the impact of, of all of that might be is that is the capitals becoming much less scarce, you know, for Office owners and developers. And because the, you know, like, the capital markets are pricing in the risk inherent in that business. And so, and so I see the development of capital playing significantly into the office market. And, and so, I also see on the residential side, I'm gonna move to another area of our business. And in this translates into, you know, both our market rate, you know, traditional multifamily uses, you know, of any age, right through, you know, a multi generational platform, that will include senior housing, but, but affordability is a major factor. And, you know, while we were not acquiring bundles of properties, you know, in multifamily, you know, over the course of the last five years, you know, we certainly were looking at, you know, the trades that were being done out there, and, and you know, what had happened is we took a, you know, an affordable stop, and we said, Okay, we're going to, we're going to improve a kitchen, or we're going to improve the common areas. And what we're going to do is we're gonna increase the rent by 20%. Okay, and now you factor in inflation, and what's that going to do to, you know, the housing stock that's out there that would have otherwise been affordable? And then the other factor is, how are we going to build housing that, you know, that that our our tenants can afford, you know, given inflationary pressures? So, so I'd say that there's a lot of pressure on the residential space, in that, in that we're going to have to be responsive to the needs of the general population, which is, you know, how do I afford to live? And maybe that's why multifamily or rental housing is so, so attractive, and probably the reason why we're looking at single family rentals. You know, it's an alternative to single family ownership. And so, you know, what I see, you know, as a trend right now, in this is intergenerational, is that is that people are underemployed. And so that'll probably change, but, but then kind of moving over to the senior space. You know, what I've seen is a trend is that many of many of the boomers throughout this recession, or this throughout the pandemic.
By the way, I happen to believe that we're probably in a recession right now, but at least the real estate recession but, but that said, many of the boomers have have retired, or they've left the workforce. And, and then those same boomers that we're trying to attract into our senior business. They're not like, you know, the greatest generation in World War Two generation, they don't have savings. They don't have equity in their homes. They don't have pensions, and they don't have 401 K's, you know, which is what really drove our business and enabled us to maintain occupancy levels, you know, over the course of the last 10 years. So we have very few of those residents left and, and very few of our residents now, you know, how the kind of money that they would need to move into one of our properties. So what's happening is that they're moving in on a need driven basis, and they're moving in at, you know, 85 rather And then 75, which is where they were 13 years ago when I came into the business. And so and because of that, they have more health needs. So we have to find employees to serve their needs. Okay. And, and those employees are out there. You know, so, you know, how do you, you know, how do you mitigate that risk, and I think you mitigate the risk by trying to play in the middle markets and build a product that's affordable, you, you know, you try to, you know, not just attract and pay your employees well, but you, you try to retain them by, by offering them a great, you know, work environment, and, and then what you're going to have to look for is a way in which to retain your talents, even after they, they don't have the ability to pay any longer. And so we're, we're looking for different forms of assistance to bring into our business. So a lot of factors play into this. And I think I could, you know, as I said, I could talk about it for an awful long time. And, and that doesn't even, you know, bring up the risks that we have today, that present themselves, you know, as a result of, you know, geopolitical pressure and in the environment that we're dealing with. In the US, we started our conversation before this call, the environment that we're dealing with is one that's quite obvious through, you know, the heat that were that were incurring right now. And in the fact that we have to keep these buildings running well, throughout, you know, extreme temperatures. So So there are a lot of challenges. I think you hit on a interesting topic.
J. Darrin Gross
I'd like to ask you, Dale Watchowski, What is the Biggest Risk?
Dale Watchowski
Yeah, so Well, I could speak on on this topic for hours. But but I'll start by by just you know, offering a general thought and it's it's nothing that that that I'm sure your listeners haven't haven't heard already and in know very well but, but risk is inherent in our business. Being in the real estate business as an investor is, is you know, we're no strangers to risk and, and, you know, as developers, you know, I'm part of a pretty optimistic lot. And I think you've probably heard it said before that you have to be a dreamer. And you have to be a very, you know, an optimist to be a developer. And, and I would say that I'm probably the exact opposite of that. So I tend to focus on the downside, and, and, you know, my team here, as always temper that, you know, because I'm always pointing out the risks inherent in everything that we do, but but I'd say that, you know, you know, speaking outside of, you know, the risk inherent, you know, that inherent in the insurance industry, I'm gonna, I'm gonna go to kind of market risks right now, and I'm going to tell you that, that to our conversation earlier, my biggest concern is around, you know, our Office users and, and, you know, are we going to be able to retain them? You know, will, you know, will we go back to the office? What form? Will we go back to the office? And what's it going to cost me, you know, to build out space that is attractive to my office users? And, and, you know, what did we do during this time of transition, you know, when your users are only looking to renew on a short term basis, which is really what's happening right now. So, you know, so what the, the impact of, of all of that might be is that is the capitals becoming much less scarce, you know, for Office owners and developers. And because the, you know, like, the capital markets are pricing in the risk inherent in that business. And so, and so I see the development of capital playing significantly into the office market. And, and so, I also see on the residential side, I'm gonna move to another area of our business. And in this translates into, you know, both our market rate, you know, traditional multifamily uses, you know, of any age, right through, you know, a multi generational platform, that will include senior housing, but, but affordability is a major factor. And, you know, while we were not acquiring bundles of properties, you know, in multifamily, you know, over the course of the last five years, you know, we certainly were looking at, you know, the trades that were being done out there, and, and you know, what had happened is we took a, you know, an affordable stop, and we said, Okay, we're going to, we're going to improve a kitchen, or we're going to improve the common areas. And what we're going to do is we're gonna increase the rent by 20%. Okay, and now you factor in inflation, and what's that going to do to, you know, the housing stock that's out there that would have otherwise been affordable? And then the other factor is, how are we going to build housing that, you know, that that our our tenants can afford, you know, given inflationary pressures? So, so I'd say that there's a lot of pressure on the residential space, in that, in that we're going to have to be responsive to the needs of the general population, which is, you know, how do I afford to live? And maybe that's why multifamily or rental housing is so, so attractive, and probably the reason why we're looking at single family rentals. You know, it's an alternative to single family ownership. And so, you know, what I see, you know, as a trend right now, in this is intergenerational, is that is that people are underemployed. And so that'll probably change, but, but then kind of moving over to the senior space. You know, what I've seen is a trend is that many of many of the boomers throughout this recession, or this throughout the pandemic.
By the way, I happen to believe that we're probably in a recession right now, but at least the real estate recession but, but that said, many of the boomers have have retired, or they've left the workforce. And, and then those same boomers that we're trying to attract into our senior business. They're not like, you know, the greatest generation in World War Two generation, they don't have savings. They don't have equity in their homes. They don't have pensions, and they don't have 401 K's, you know, which is what really drove our business and enabled us to maintain occupancy levels, you know, over the course of the last 10 years. So we have very few of those residents left and, and very few of our residents now, you know, how the kind of money that they would need to move into one of our properties. So what's happening is that they're moving in on a need driven basis, and they're moving in at, you know, 85 rather And then 75, which is where they were 13 years ago when I came into the business. And so and because of that, they have more health needs. So we have to find employees to serve their needs. Okay. And, and those employees are out there. You know, so, you know, how do you, you know, how do you mitigate that risk, and I think you mitigate the risk by trying to play in the middle markets and build a product that's affordable, you, you know, you try to, you know, not just attract and pay your employees well, but you, you try to retain them by, by offering them a great, you know, work environment, and, and then what you're going to have to look for is a way in which to retain your talents, even after they, they don't have the ability to pay any longer. And so we're, we're looking for different forms of assistance to bring into our business. So a lot of factors play into this. And I think I could, you know, as I said, I could talk about it for an awful long time. And, and that doesn't even, you know, bring up the risks that we have today, that present themselves, you know, as a result of, you know, geopolitical pressure and in the environment that we're dealing with. In the US, we started our conversation before this call, the environment that we're dealing with is one that's quite obvious through, you know, the heat that were that were incurring right now. And in the fact that we have to keep these buildings running well, throughout, you know, extreme temperatures. So So there are a lot of challenges. I think you hit on a interesting topic.
Today, my guest is Vimal Patel. Vimal is the President CEO of Q Hotels Management, which develops and owns and operates hotels in Louisiana and Texas. He has been featured by Fox Business News Week, the Associated Press nerd wallet, authority magazine, nola.com, and others. And in just a minute, we're going to speak with Vimal about hospitality real estate.
J. Darrin Gross
I'd like to ask you Vimal Patel, what is the Biggest Risk?
Vimal Patel
Yeah, so as I mentioned, right now, the biggest biggest risk right now is again, having having the personal guarantee that you have on your debt, right, the loan, you know, the cost of operations has gone up, you know, the fixed cost has gone up, the revenue has not gone up in that percentage. So, so coming out of the COVID, getting extensions, and now dealing with inflation and rising interest rates and the rising costs and so forth, you want to maintain that because again, if you start slugging lagging on your, on your mortgage payments, if you can pay and your your liquidity during the network is digging up, you know, that that's a huge concern, because that pretty much underlines your future your assets that you hold your your future for kids. You know, that's that's the biggest, biggest, biggest part of it. Obviously, the other part Hand in Hand goes with it again, as I mentioned about the hurricane, right, we went to the hurricane, you know, and again, we dealt the billing and insurance companies is a huge challenge in this part, it took us, you know, seven months to kind of settle the claim and get the funds. In the meantime, we had to use our own line of credits, and get more debt to rebuild, continue rebuilding, and while while we were negotiating and fighting the insurance company, you know, having having the M the property coverages is the biggest factor because we just went through that part, right coverage, the right deductible, knowing your coverages and be able to ability to to have a plan in place should disaster occur, right, you're not scrambling to find the right resources who to sue to get into this, but as a public adjuster with his attorney, or whether it's a mitigation company or whatever the case may be right so you got to have those plan in place because absolutely the day of the disaster the after the disaster. There'll be a million other people lining up and digging a great job for you and then you will overpay them that job, you know, and they'll run away so so those are the two bad to experience a huge aspect of the latest my experiences in fire the risk mitigation risk factor that Family, you know, we used to be concerned about this, why the dad is concerned, you know, you had to start building reserves to have knowing COVID. And then situations that Makara you know, minimum in that building six months worth of results for your mortgage payment that way that we need to down in our period, you're still able to kind of manage it and then hang on to your, your, your, I guess the credit part of it your net worth and then you know, your credit scores.
J. Darrin Gross
I'd like to ask you Vimal Patel, what is the Biggest Risk?
Vimal Patel
Yeah, so as I mentioned, right now, the biggest biggest risk right now is again, having having the personal guarantee that you have on your debt, right, the loan, you know, the cost of operations has gone up, you know, the fixed cost has gone up, the revenue has not gone up in that percentage. So, so coming out of the COVID, getting extensions, and now dealing with inflation and rising interest rates and the rising costs and so forth, you want to maintain that because again, if you start slugging lagging on your, on your mortgage payments, if you can pay and your your liquidity during the network is digging up, you know, that that's a huge concern, because that pretty much underlines your future your assets that you hold your your future for kids. You know, that's that's the biggest, biggest, biggest part of it. Obviously, the other part Hand in Hand goes with it again, as I mentioned about the hurricane, right, we went to the hurricane, you know, and again, we dealt the billing and insurance companies is a huge challenge in this part, it took us, you know, seven months to kind of settle the claim and get the funds. In the meantime, we had to use our own line of credits, and get more debt to rebuild, continue rebuilding, and while while we were negotiating and fighting the insurance company, you know, having having the M the property coverages is the biggest factor because we just went through that part, right coverage, the right deductible, knowing your coverages and be able to ability to to have a plan in place should disaster occur, right, you're not scrambling to find the right resources who to sue to get into this, but as a public adjuster with his attorney, or whether it's a mitigation company or whatever the case may be right so you got to have those plan in place because absolutely the day of the disaster the after the disaster. There'll be a million other people lining up and digging a great job for you and then you will overpay them that job, you know, and they'll run away so so those are the two bad to experience a huge aspect of the latest my experiences in fire the risk mitigation risk factor that Family, you know, we used to be concerned about this, why the dad is concerned, you know, you had to start building reserves to have knowing COVID. And then situations that Makara you know, minimum in that building six months worth of results for your mortgage payment that way that we need to down in our period, you're still able to kind of manage it and then hang on to your, your, your, I guess the credit part of it your net worth and then you know, your credit scores.
Today, my guest is Raphael Collazo. Raphael is a licensed commercial real estate agent who specializes in investment in investment properties. He's also the author of before you sign that lease. And before you buy that building comprehensive guides to leasing and buying commercial real estate. And in just a minute, we're gonna speak with Ralph about how to analyze and assess retail real estate investment opportunities.
Today, my guest is Raphael Collazo. Raphael is a licensed commercial real estate agent who specializes in investment in investment properties. He's also the author of before you sign that lease. And before you buy that building comprehensive guides to leasing and buying commercial real estate. And in just a minute, we're gonna speak with Ralph about how to analyze and assess retail real estate investment opportunities.
J. Darrin Gross:
I'd like to ask you, Raphael Collazo what is the Biggest Risk?
Raphael Collazo
Yeah, no, I think we kind of touched on it a little bit early on. And I think that's just a broader risk as a whole. I mean, you know, it's somewhat out of our control what's going to happen over the next six to 12 months, I mean, the Feds gonna have a part to play but, you know, geopolitical issues that have been arising and supply constraints or, or things that we're at work trying to work through, but it's going to be reality for quite some time. So as far as the risk is concerned, if you're a property owner, and you're in the retail space, in particular, just working with your tenants understand getting a pulse on how they're doing, you know, talking to them, just being that that their relationship, because again, they as tenants are supporting you as landlord, and vice versa, it should be that type of relationship. So in situations where we go into a, you know, an economic recession, which is likely going to be the case, you know, working with your tenants to try to get them through it if you can, and if not, then obviously repositioning the space to be, you know, attractive to to particular users, and understanding that, you know, what you could maybe charge two years ago, may not be realistic today. But that's going to change going forward. I mean, as you know, we go through recessions, and then we eventually come out of recessions. And so, you know, again, it's better to keep a tenant that's good than to lose one and then have to replace them. And I'm sure that's the case that you've dealt with in all different property types.
J. Darrin Gross:
I'd like to ask you, Raphael Collazo what is the Biggest Risk?
Raphael Collazo
Yeah, no, I think we kind of touched on it a little bit early on. And I think that's just a broader risk as a whole. I mean, you know, it's somewhat out of our control what's going to happen over the next six to 12 months, I mean, the Feds gonna have a part to play but, you know, geopolitical issues that have been arising and supply constraints or, or things that we're at work trying to work through, but it's going to be reality for quite some time. So as far as the risk is concerned, if you're a property owner, and you're in the retail space, in particular, just working with your tenants understand getting a pulse on how they're doing, you know, talking to them, just being that that their relationship, because again, they as tenants are supporting you as landlord, and vice versa, it should be that type of relationship. So in situations where we go into a, you know, an economic recession, which is likely going to be the case, you know, working with your tenants to try to get them through it if you can, and if not, then obviously repositioning the space to be, you know, attractive to to particular users, and understanding that, you know, what you could maybe charge two years ago, may not be realistic today. But that's going to change going forward. I mean, as you know, we go through recessions, and then we eventually come out of recessions. And so, you know, again, it's better to keep a tenant that's good than to lose one and then have to replace them. And I'm sure that's the case that you've dealt with in all different property types.
Today, my guest is Matthew Baltzell. Matthew is the former host of the real estate journeys podcast, a top 400 business podcast. And he is a real estate investor with a portfolio of 743 units and four years of asset management experience.
J Darrin Gross
I'd like to ask you, Matthew Baltzell, what is the biggest risk?
Matthew Baltzell
Yeah, so I thought about this. And I didn't know I was formulating this thought. I mean, I've had this thought before, and it's always constantly stuck with me. And so, you know, there's a movie called Schindler's List, right. And in the movie, somebody asks Schindler, and they say Schindler, like why do I never? Why do we never see you drink? And he says, You know, I never drink. Because the reason why I don't drink is because when I drink, I give up all my power. And when I first heard that, I was like, Whoa, I was blown away, right? And so when you have your power, right, you have leverage, you actually have power. And when you say things, like, I can't go to the movie, right? It's like, you're giving up like, your power instead of like saying, I choose not to go to the movie. Like, I don't want to go to movie Hey, can you come over for dinner tonight? I can't make it like you can make it but you choose not to make it right. So basically, giving up your power is one of the greatest risks. So if you're giving up your leverage within your business, you're giving up your risk, right? If you're, if you're, if you're giving up, you know, cutting corners on underwriting deals, you're you're giving away you're giving away your risk, you're giving away your power. So I would say giving up your power is the greatest detriment that a person could do. And giving up my power, my voice, my opinion, my skill set. That to me, would be the greatest risk.
J Darrin Gross
I'd like to ask you, Matthew Baltzell, what is the biggest risk?
Matthew Baltzell
Yeah, so I thought about this. And I didn't know I was formulating this thought. I mean, I've had this thought before, and it's always constantly stuck with me. And so, you know, there's a movie called Schindler's List, right. And in the movie, somebody asks Schindler, and they say Schindler, like why do I never? Why do we never see you drink? And he says, You know, I never drink. Because the reason why I don't drink is because when I drink, I give up all my power. And when I first heard that, I was like, Whoa, I was blown away, right? And so when you have your power, right, you have leverage, you actually have power. And when you say things, like, I can't go to the movie, right? It's like, you're giving up like, your power instead of like saying, I choose not to go to the movie. Like, I don't want to go to movie Hey, can you come over for dinner tonight? I can't make it like you can make it but you choose not to make it right. So basically, giving up your power is one of the greatest risks. So if you're giving up your leverage within your business, you're giving up your risk, right? If you're, if you're, if you're giving up, you know, cutting corners on underwriting deals, you're you're giving away you're giving away your risk, you're giving away your power. So I would say giving up your power is the greatest detriment that a person could do. And giving up my power, my voice, my opinion, my skill set. That to me, would be the greatest risk.
Today, my guest is Kurt Uhlir. Kurt is a globally recognized marketer, operator and speaker. He's built and run businesses from startup to over 500 million in annual revenue, assembled teams across six continents and been a part of the small team leading an IPO of $880 million.
J Darrin Gross:
I’d like to ask you, Kurt Uhlir, What is the biggest risk?
Kurt Uhlir
The big key is risk in my personal business. And I think in most people's businesses, actually, what am I wrong about today? And I like I don't know what I'm wrong about in my business today. But I can guarantee I'm wrong about at least three fundamental things. And I say that from too many decades is already working and not enough hours sleeping, realizing. Like I know one thing and feeling right and feeling wrong feels exactly the same until you realize your wily coyote out over the ledge and you realize in that moment, I've been wrong about a fundamental belief in my business for the last three months, three years, and something's come out wrong. And so I do a lot to in my personal life or my business life there to try to de risk that by putting people around me that have full transparency into what I'm doing and the decisions and my thought process in business. Some cases, those are paid mentors and coaches, other times or masterminds where people that are in similar, often non competitive businesses that are trying to accomplish the same growth trajectory, tried the same things, and fully exposed, hey, here's why. Here's how I'm making this approach. And be very give other people permission to speak into cordite. I think this is what you're missing. Comana that times where it's like, you realize, oh, God, I've been putting in a lot of resources, millions of dollars in some cases. And I realize I've been fundamentally wrong, and I just lost it all, man. And we've been really nice to somebody could have given me that insight beforehand. So I've, I've been in that wrong situation too many times. But I've also saved millions of dollars, by having close people in those relationships, point out things to me that I really thought I was right about, until they started pushing me on it. And I realized through kind of that discovery, now, there's much more riskier than I think, and I need to change path before I write that next check.
Today, my guest is Julie Blank. Julie serves as the chief operating officer at new standard equities, where she leads the firm's corporate multifamily operations, Investor Relations and asset management.
J Darrin Gross:
I'd like to ask you Julie Blank, what is the biggest risk?
Julie Blank:
Well, a couple of months ago, my answer might have been different than now that you know, the market has been changing so drastically with the I think with the speed and magnitude of the interest rate increases, it has, you know, spooked investors, it's you know, put some weight in the cell of borrowing. But there's still a lot of capital out in the market. You know, investors want to do deals, they, they need to place capital. So deals still get done. But I think the the risk that we're looking at now is being able to continue to do deals, but looking at the severe impact that the interest rates will have on your cash flow. You know, especially for us what we do, we're value add, so our, you know, our cash on cash is, you know, already a little low, we're more about, you know, when we when we dispose of the asset. So when you are in a area that we are and interest rates are increasing, we have to really step back and really scrub the underwriting be a little bit more conservative, educate our investors, you know, some investors have stopped investing, some have become a little bit more cautious, rightfully so. And then, you know, we have other investors that are still going, Hey, let's figure out how to make it work. So it's really just being able to realize that the market is changing now, and that it might continue to be that way for the next, you know, couple of years, not only on the acquisition bid on our existing deals, like I mentioned earlier, in our conversation is, you know, some of our deals, we have floating rate so it's being able to step back and forecast and look at what the risk might be, how do we overcome the risk and be more proactive right now. So I think a lot of it's going to come down to just kind of protecting cash flow and being able to underwrite new deals, and realize that we're not going to get to the, you know, 1819 20% returns that we were able to underwrite, you know, a few years back and be be satisfied that we might get 11 or 12%, which is still really good as a return and that you know, apartment investment is still the top You know, real estate investment type. And we've been in difficult cycles before in real estate, and we've survived. So yes, there's a risk, we're not going to be stupid, we're optimistic, we're cautiously optimistic. But we also know that real estate is still a good investment in apartments in particular, especially the asset class we're in, we're B class. So we're right in the sweet spot that the markets are gonna are doing well, the economy's doing well C's go to B's, when the economy starts to not go so well, the A's go to B's. So we were we're a bit protected as far as the as you know, occupancy and rents and stuff. But I think we still have to realize that there, there's going to be some risk and some hits on our cash flow because of the interest rate increase, but I think it will, won't make us stop doing deals, we just have to be a little bit more cautious and, and work with our investors much closer. So that we you know, have a better understanding of where we are and where where it's going to go. I don't have a crystal ball. I wish I did. But it's hard to say things are have moved so fast, that I think just taking a step back and looking at things closers is something we need to do. But at this point where we're continuing to operate business, as usual, with continued focus on being aggressive, as much as we can with rents, which is going to help overcome the, a little bit of the interest rate increase in the inflation, and continuing to work in our technology platforms to get all the information we can to make good decisions. That's where we are.
Today, my guest is Kyle Tushaus. Kyle is a partner with Pine Ridge capital. He has a background working for family offices under a sponsorship model focused on acquisition.
Darrin Gross:
I'd like to ask you, Kyle Tushaus, what is the biggest risk?
Kyle Tushaus
I think, right now everybody's kind of afraid of inflation, which is an interesting business environment to be in for real estate, because everybody kind of gravitates towards this industry is a safe haven. I think you can kind of take that a step further and think if I'm going to de risk myself from inflation, and I'll say inflation, I don't think is actually the risk of getting at its eventually I think there's a risk that I think a lot of people are not thinking about some are but I haven't seen any media headlines about it. But within real estate, right, you might say okay, well what's my what's my best inflation hedge within an inflation hedge? Right. And that would be a property that I can mark to market more often, right? So the reason why consumer durables doesn't do well, and inflation is because I can wait 10 years to buy my next car or washing machine. But bread and butter, I'm gonna buy that more often. And so that price can keep going up every time I transact. So how can I mimic that in real estate and well, the properties that get marked to market more often would be better and inflation environment. So hotels get marked to market every single morning. So it should be the best inflation hedge, but you've got the dual side of that sword, it says it's also discretionary spending. So be very careful on that front. But then, so maybe I'm okay with every year, say in multifamily. You know, the, the triple net 25 year lease would probably be the worst, depending on how that lease got written. So there's obviously a spectrum even within the inflation hedge that is our industry of commercial real estate. But the thing I haven't heard enough people talking about, and the thing that scares me the most and influences a lot of how we're going into these, these, this first phase of deals is that the labor risk that is kind of bubbling under the surface where you see a lot of these value add deals, I mean, people have been ever since 2008, value add has been kinda like the everybody, everybody and their cousin is getting into this idea of renovating a property and popping the value of it. But I think there's going to be a massive moving target into how well you control those costs. And so for like an interesting data points since about the early 70s. Productivity, or I'm sorry, compensation has gone up 115%, since the early 70s, which sounds great hiring 10 or 15% increase in compensation. And that's for non supervising roles. So the roles, the jobs that are actually doing the thing.
While productivity of the same jobs has gone up almost 250% During that same time, so there's this massive difference in the throughput that's being provided by somebody in our job versus what they're getting out of it. And I look at the landscape of people now for the first time in four years even know what inflation is. Our socio socio economic landscape is not great, there's a lot of political strife. And I feel like that gap is probably going to get closed to some degree. And so I see a big risk factor in those business models that are going to be very reliant upon labor as an input, because I think we're about to see a compression of that gap. And I think rightfully so, I mean, you look at some of the numbers, and it's just, I might be a little jaded, I came out of, I came out of school, after the Oh, eight collapse. And so I don't, I don't really have the, I don't have that much of an experience through that run up. But, you know, you look at what was accomplishable with, say, your bass degree, or even no degree 3040 years ago versus now and how much you know, someone's having to work to get the same throughput in terms of quality of life. I don't see it continuing status quo for much, much longer, maybe, you know, we kick the can a little bit longer, but I don't see people being willing to do it. And the great resignation might be sorted a first little cue of it. But yeah, I think I think what's about to follow inflation is and we talked about energy prices going up housing prices going up, when labor prices keep going up. And right now it's the remote workers that are driving, you know, the leverage in those negotiations, it'll eventually get to all labor. And if your investment thesis is heavily dependent upon labor, I would think of some ways to lock that in ways that we mitigate that, right? If I if I see a value add deal. It's got to be in a market where I've already got a pretty good relationship with the GC. And I can go to them and say, Do you want to be part of the GDP tranche? And so with that, I can say, you're now going to have equity incentive, not just, you know, hourly rate, or markup incentive. So, you know, let's put together a budget of do not to exceed and you control that cost, but you're also in our cap stack. Now, you know, outside of that, I would be very worried about taking that GC risk, because I hear horror stories of colleagues having guys walked off the job for $2 more an hour. And, you know, it kind of sucks when you've already pulled the debt on the deal. And you got, you know, this bridge loan kind of clock ticking away at you, but then you look at the data and you're kind of like, well, I don't necessarily disagree with it. I mean, someone offered me more you probably do the same thing. And so I think it's something that needs to be taken into consideration when you're when you're underwriting because I do think that's the next big wave to follow in this. disinflation run up.
Today, my guest is Tom Dunkel. Tom has a background in corporate finance, and over 25 years of real estate and investment experience. Tom brings extensive experience to Belrose storage group, taking the company from a startup to a world class organization. And in just a minute, we're going to speak with Tom about self storage syndications.
J Darrin Gross
I'd like to ask you, Tom Dunkel, what is the BIGGEST RISK?
Tom Dunkell 36:38
Like lots of business owners out there daring and we have a number of different different risks that we're faced with on a daily weekly annual basis. In the, like, in storage, as I, as I mentioned earlier, we're avoiding development projects, because we just see a lot of risk in those right now with with supply chain issues, labor issues, material cost issues, and it's just not really in the DNA of our company. So we're avoiding that one entirely. On the facilities that we do buy, we minimize risk by not over leveraging by being conservative with our projections. And of course, we use insurance to make sure that the physical plant is properly insured. But as far as our biggest risks our business there, and I would say, it's really, it's really me, it's really me and our leadership team. The business can only grow and go so far as we're able to take it. So we have to be the best that we can be we have to be we have to be educated and smart and and hire the right people and bring in the right partners. Because if any of those things get out of out of whack, you know, we're not going to reach our potential and that's what we're we're here to do or reach our potential and provide value to our investors. So we're always looking for ways to improve ourselves and improve our business. As I mentioned earlier, we do have core values, we do have a purpose. And so we use those as our guideposts every day in our decision making. But you know, we're always looking for better ways to do business to take care of our investors and just be good good members of our of our business community.
Today, my guest is Neal Bawa, Neal is a technologist who is universally known as in real estate circles as the mad scientist of multifamily. Besides one of the most in demand speakers in commercial real estate, Neal is also a data guru process freak and announced an outsourcing expert. Neal treats his $1 billion multifamily portfolio as an ongoing experiment in efficiency and optimization. And in just a minute, we're gonna speak with Neal about real estate, disruptive trends tokenization and property or prop tech.
Neal Bawa, what is the biggest risk, Neal Bawa The biggest risk to the commercial real estate market. So I'll stay away from single family. The biggest risk to commercial real estate family is that the jobs back in 2014, made it very easy to raise money raise have syndicators raise money. And what has happened today is syndicators have become such a massive percentage of the overall multifamily market, that they are inflating the market far, far beyond its fundamentals, not just beyond its fundamental fundamentals, but far far beyond, because their ability to raise money has accelerated far beyond, and far quicker than the property's ability to raise rents. And so that has created a situation where there's a very, very aggressive, all ships raising effect, that is making these properties go far beyond their fundamentals. And that is a very risky situation. We're all in it. I'm in it, even though I'm doing new construction, I'm still in it. And so it's something that we have to really watch very, very closely. I do not believe that it's possible for this bubble to deflate, it has to burst. And so I'm, I'm just being very cautiously watching this to see if there's any evidence of it bursting. And it probably isn't ready to burst yet simply because rents are rising so fast. So to me, the point at which the bubble could burst is, you know, the Feds raising interest rates very, very quickly, they have to do their job because inflation is under control, which means and the Fed is only once out of 10 times succeeded in engineering a soft landing, which means that there's only a 10% chance that we'll have a soft landing, this time, there's a 90% chance we'll end up in a recession. So when that happens, rents could fall. And that I think is the point of greatest risk for the commercial multifamily market that has been flooded by syndicators including myself since 2014. So we've had eight years of crowdfunding and the syndicator flood, we have not seen the bubble bursts, all bubbles by their nature must first. I don't believe in bubbles deflating. It happens sometimes I don't think this one will deflate. So I'm curious to see what happens when rents drop a bit in a recession. And luckily, they don't tend to go down a lot in recessions. Sometimes they won't even go down at all in recessions, right? So most US recessions, rents haven't decline. But if they do start declining, I'm, I wonder what happens to the industry at that point.
Today, my guest is Nobu Iguchi. Nobu is the co founder and Managing Partner of Agya Ventures, prior to Agya, Nobu worked at Bridgewater Associates as a senior investment professional. And he holds a BS in chemistry from Yale and his MBA from Harvard Business School. And in just a minute, we're going to speak with Nobu about the Creator Content Economy, and how it can help real estate investors.
I'd like to ask you, Nobu, Iguchi, what is the BIGGEST RISK?
Nobu Iguchi
Yeah, this very deep question, but I think the, let me try kind of the short term and the long term, if I may, I think in the short term, so, you know, this is this is May, right, May of 2022, the world is looking, increasingly uncertain. The economies looking increasingly after the inflation is through the roof. There's no, no indication is subsiding. And there's not a question that the Fed is going to keep raising interest rates. And even if they keep raising interest rates, which is basically I think, at this point, given, the question becomes, you know, is the interest rate? Is inflation actually going to come down? And what's the, let's say, stabilize the 4% 5%? I mean, is that acceptable to the Fed? And the likely answer is no, because they want the 2% interest rate, which is good for the economy, and that's their mandate.
So if that's not acceptable, they may have to keep bringing interest rates even further up, which is a substantial risk for the, for the asset for the assets, asset prices, in general real estate, and also public market assets and private market assets. And, and also, it's an it's a risk to the economy. So it could lead to more job losses, unfortunately, and so on. So in the, in the short term, that's, that's, to me seems like a huge risk. For many of us a different context, it could be about our jobs, let's say, from an investor standpoint, for portfolio companies, the companies that we've invested in, I think there's a huge risk, they should prepare for it. So you know, for example, having not just having six months of cash in the bank, but you know, 18 months of cash in the bank, just in case, you know, there's a substantial food, our economy, they find it challenging to raise capital, and so on, and so forth. Real Estate operators. Again, it's the same where, you know, even though COVID, you know, in the United States seems to be to a large degree, you know, not a big, big factor anymore, and people are coming back to the office, perhaps that's going to have a substantially negative impact on our company's willingness to have more office space. Right. So I think that, to me, seems like a short term, big risk of like, in as big as through what the buffer should be, in each case, in one's case, to see it to prepare for the future. In the long term, what we see is an apology I have alergies today.
But in the long term, what I would say is, even though, let's say with that sort of Outlook, technology companies, you've seen NASDAQ down a lot, you've seen venture valuation down a lot, right? And so on and so forth. But in the long term, we're very bullish still in, in, in technology, on technology, and in fact, are some of the best technology companies, including the say, Airbnb in the in the in real estate space, came out of basically a recessionary period. So even though that seems like a huge risk to have technology exposure, in the long term, there's a ton of risk in not investing in technology. So we talked about web three as one example. You don't have to necessarily invest in every single web three company or like, you know, adopt anything that comes out, but is keeping track of what's in the face. And even investing, let's say, as a real estate operator or investor and so on and so forth. And some of these, I think, actually, in a lot of ways mitigates risk. because there is a risk of obviously investing in failing in that, but also also other risks, which is you don't invest. And five years, 10 years later, you're kind of left behind. Right. So I think saying the short term there is the kind of inflation risks that could lead to potentially a recession that could lead to asset price. Coming down even further, in the long term, long term, that the risk is not investing in technology, and thereby being left behind.
Today, my guest is Jake Harris. Jake is a best selling author on distressed commercial real estate with over 18 years of experience in real estate, construction and investment management, and has been featured as a national speaker on his expertise. Over the past six years, he has managed and developed and acquired over $200 million in projects and over 250 million in the development, or he has over 250 million in his development pipeline. In just a minute, we're gonna speak with Jake about what to do before investing in distressed real estate.
I'd like to ask you, Jake Harris, what is the biggest risk?
Jake Harris
So, I mean, I'm gonna give you kind of It depends, because depends on who who you are, as an investor, an LP investor investing into a deal. I think your sponsor Are as your biggest risk. And so because they're the ones that's kind of captaining the ship, I think if you're someone that's buying real estate, your biggest risk is the purchase, actually, because and maybe you've heard this or maybe you haven't heard this is you make all your money on the purchase. And if you overpay for an asset, it's very, very difficult to correct course, and trim out the expenses. And then you're kind of, you know, writing this, you know, failed investment out. And sometimes it takes so much more energy to even get out of it, then, you know, and you'd be like, all I'm trying to do is get my money back. And I see a lot of that right now. And alas, and actually, this morning, I was talking with a buddy, I realized I did not buy a single property and 2021. And actually, so far in 2022, I haven't this is the longest period of time that I have gone without buying a property. I think in the last 20 years, I think this might be one of the only years I have not actually bought real estate at all, any property, and over a year time period. And so I was looking back at that. And I was like, Wait, I didn't even realize that happened?
Well, because I have a very disciplined, you know, like buy acquisition model that I'm looking at. Part of it is because I lost my ass in the subprime meltdown, I became a millionaire. And then I had a negative network. I remember sitting on the street corner in Tucson, I was crying. I was like, you know, a grown adult, crying, and sobbing and praying, dear Lord, can I be worth no money. And there are so many aspects of my life that I look back at that moment of that rock bottom. And the least important of it was the losing the money. The least important of it was going from a millionaire to a negative net worth and wanting to start over at zero, I was 7580 pounds overweight, my relationships sucked with my family, the girl I thought I was going to marry it dumped me. You know, there was so many other things. And so lots of people focus on the money risk of things, and they forget about them 80 or 90%, that is the real life. What is your relationships like, you can make more money, you can't rekindle the time of your relationship with your spouse, your kids, they kind of go away that opportunity to live those those, you know, Bucket List adventures, you grind, grind, grind, grind, and all of a sudden you realize you're 60 7080 years old, and you don't have the health to go travel and do those other things. Those are important. And so it depends on the category.
As a human, I think the biggest risks that we're currently facing, is not pursuing the things that excite us that we truly, really want and living a very fulfilled life. And so I'll give you a Maslow's Hierarchy of Needs of premises. When you get and you're trying to figure out how to pay bills, you're just in a survival mechanism, you get to a levels of and I'm assuming that your audience members are starting to elevate up into that, because they're thinking about investing is they've gone beyond some of those levels. And they're starting to get into the self actualization kind of topper end of the pyramid of Maslow's hierarchy of needs. And so then they're trying to figure out what they are or who they are, what's their purpose in life. And myself, and this is a constant struggle. And I think everybody has it is like they need to give themselves that validation or approval. Sometimes it might be a millionaire, sometimes it might be making the New York Times bestseller list. But what happens is you stop thinking about what everybody else wants for your life, and you start leaning into the purpose of what you are put on this planet for.
And then, because money doesn't equate to happiness, your success and making money is not what makes you happy, you've elevated up to that. And I think there should be an extra category on Maslow's higher hierarchy of needs, is when you're living your purpose and life in the service of others, is when you unlock true happiness is when you unlock the ability to then really impact the world. Because what you're doing is you're serving people that couldn't give you back and just not about a transactional equation of how do I make more money or know how can I benefit them? And they give me $1 back? How can I do this and you're elevated out of trading time for money into an investment that you have a certain free, you're living your purpose, and you're pouring it into the world in the service of others is when you will unlock true true value and I think that's what we're all really Seeking, we have to get through some of these levels of validation, we have to get through this of self actualization we have to get through this. And again, this is also part of my own journey. So to me, the risk and the biggest risks that we're all facing is not pursuing that. However, that mechanism looks for you.
Today, my guests are Alison Williams and Anna Ramos. Allison is the Senior Vice President and Chief Production Officer at Walker Dunlop. And Anna is a managing director for the West Coast and mountain regions. And in just a minute, we're going to speak with Allison and Anna, about commercial lending strategies for multifamily.
I'd like to ask you, Alison Williams, and Ana Ramos, what is the BIGGEST RISK?
Alison Williams
Anna, do you want to start?
Ana Ramos
Yeah, you know, it's interesting, because I think there's a lot of risk in what we do. And I think I'm pretty aggressive. I think we underwrite our loans pretty well, we're at a 125 120 debt cover over breakeven. Yes, we are a non recourse loan, but we vet it out the client. So when I assess risk, I'm looking at risk. It's more for the borrower, the risk of capturing the rate in today's environment, I the way we underwrite the way we get our values, the way we package the file. I think the agency when you look at agency, historically, our losses are very minor. So if being as in on the origination side, I would love to be much more aggressive and see more. But we don't we don't see that a lot. So it's really hard to speak on that, at least for me, because we don't see a lot of that the losses are there. They're unheard of. And it's very, very small. Just because of the way everything is packaged and the way everything is the way we underwrite the transaction, the property the sponsor, the management and we service the loans and how often we service and how involved we are with the loans from beginning to end and also through the life of the loan. So for me, it would be more the borrower side that today I think it's really critical, especially in today's environment is to lock that interest rate because of the risk and the volatility.
Alison Williams
I'd echo Ana's comments, but I'll take a slightly different take. And I think what concerns me the most when I think about today is affordable housing. There's just a massive demand for affordability right now. And every market with the amount of rent and growth that we've seen in every city. I'm currently in Tampa, we had 25%, and rent growth year over year. And we're just starting to see, you know, just the lack of affordability. And with a lack of vacant land and where you can build and raising, you know, construction costs and rising interest rate, it's going to become much more challenging to build affordable housing to fit the needs of, you know, the average American. So I think that, to me, is when I think about the future, and my daughter and that kind of stuff, I just think about like, wow, we've got to tackle this affordable housing crisis that we're dealing with right now.
Today my guest is Rod Khleif. Rod is a multiple business owner, and philanthropist who's passionate about business highperformance real estate and giving back. And just a minute we're going to speak with rod about the investor mindset.
J. Darrin Gross
I'd like to ask you, Rod Khleif. What is the biggest risk?
Rod Khleif
I will tell you to, Today is June 8. And I have to say that because who knows what will happen to things are changing daily right now. But and I know this alehrer in a week or two, but But right now, the biggest risk that I have alerted my students to on several occasions is the debt markets. Okay, that I mean, it is crazy out there right now. And and I'm going to tell you that it when you're performing a multifamily right now, you need to do some worst case scenarios, like if you're planning on getting in, right now, the most common debt is bridge debt. And that is very, can be very honest debt. And, and because you have a business, you have a business plan, you got to adhere to that business plan. Otherwise, you know, what's could be non recourse can become full recourse. So it's very, very important that you do what you say you're going to do. And some of those have short fuses like three year timelines, and we could be in the midst of this recession in three years. So I would encourage you to do absolute worst case scenarios as it relates to interest rate, you know, take out interest rate, when you refinance, we just did, we just put 138 unit under contract, by the way, if if, if you were accredited, we it's a phenomenal deal. 54,000 A unit which is unheard of in an emerging market in Arkansas, so so if you're interested text partner to 72345, and get on our portal, because we'll be presenting that probably about the time this goes live. And it'll be a very short, it's not a big raise. So it'll it'll subscribe very, very quickly. But that that's a really good deal. But the point is, you know, we did worst case scenarios, what happens if the interest rates 8%? And can we still be okay? And yes, we could and so, you know, most people aren't doing that. Most people aren't, aren't stress testing these deal strongly enough? You know, and, and I think we're gonna see some upset when I'm, we're going to snap up some deals where they didn't do it right. You know, and I hate to say it, but that's likely going to happen, people are still overpaying, and they're not paying attention to that risk. And so I think that's the biggest risk right now. That's the first thing I thought of when you when you prepared me for that question earlier, Darrin, because I really, that jumped right into my head. So
Today, my guest is a returning guest, Brent Bowers. Brent is an investor and coach with a focus on buying and selling land. And in just a minute, we're going to speak with Brad about the business of buying and selling land and investing strategies.
I'd like to ask you, Brent Bowers, what is the biggest risk? Brent Bowers
I think the biggest risk is me dying. And my children and my wife getting taxed to death with this real estate that they're probably going to sell because I didn't set up a plan with trusts properly. I didn't have proper life insurance, like it talks about this, this great book that I read called, become the Rockefellers and using a whole life policy to, you know, be your own bank. So I think that's a huge risk. And it's like, I'm just recently learning about these things and implementing these things, to where I can fund this policy for, you know, maybe I get a chunk of money 10 20,000, I can fund this policy, and now my, it'll pass to my family tax free. And then oh, maybe I need that 20,000 Later, I can borrow like 90% of it at two or 3% interest. And that 20,000 is still making the 6% interest with the dividends and all this stuff. So I think that's a huge risk. Business owners not having that and talking to you there and about that sort of thing. Because the Rockefellers set it up to where it passes on. That's why they still have money six generations later, and the Vanderbilts don't really have as much money as they used to. So that's a huge risk, taxes, and death, to the things that we're all pretty much guaranteed.
Today, my guest is Marc Pégulu. Marc is the vice president of Internet of Things product marketing and strategy for Semtech Wireless and Wensing Products Group. And in just a minute, we're gonna speak with Marc about the IoT of things with commercial buildings, and how low raw sensors are being deployed to help builders, owners and residents overcome some of the biggest challenges for smart applications with commercial buildings.
J Darrin Gross I'd like to ask you, Marc Pégulu, what is the biggest risk?
Marc Pégulu
So, you know, fall for what we talked about today, I would say for for us, the biggest or biggest risk would be having, I would say the wrong awareness or for low awareness about the technology and what it can do. We think that we have really a unique and huge opportunity in this law technology. We are extremely happy to have the opportunity to speak with you. For example, because you are helping us, I would say, to make sense to give a purpose to the technology itself. And this is the awareness I'm speaking about. Today, we are already, you know, willing to make sure that we are not seen as just, you know, new technology, you know, to always push the limit of the technology. We want to make sure that our customers and their customers understand that they have at hand now, technologies capable of bringing much more environmental friendly type of building and more social responsible type of building for their customers.
Today, my guest is Marcin Drozdz. He is a managing partner at M1 Real Capital. And they're focused on acquiring value add properties throughout the southeast us. And just a minute we're going to speak with Marcin whoreson, about attracting capital for multifamily syndication.
J Darrin Gross
I'd like to ask you Marcin Drozdz, what is the biggest risk?
Marcin Drozdz
I was gonna say if it's an insurance question, I'd say the replacement risk right now is the biggest thing that is certainly ringing in my head. But if we're speaking in general, contextually as the biggest risk, I think, right now, the biggest risk is not doing anything, and sitting on the sidelines and pontificating on what's going to happen next. Because you know, regardless of where we think things are going to go, and regardless of political leanings, left, right center, wherever you're at wherever you're going. Ultimately, if you stand still, if you stood still, for the last 12 months, you're you you experienced erosion of purchasing power, like you've never seen. And we've always known that inflation was kind of never we never, I don't know anybody that believes that inflation historically was 2%, or 3%, or whatever. We were told it was historically, but let's assume that was accurate for what it for the purposes of what we're talking about. Today. They're flat out telling you, it's six, seven, whatever, 8%. And that trend is only compounding. So for anybody who's sitting still and figure trying to figure out how to move forward. I think that is the absolute biggest risk right now.
Today, my guest is Jeff McKee. Jeff is a real estate syndicator. He's a limited partner in 1500 doors. He's also a general partner on 10 properties with over 2500 doors, and 200 million assets under management. And in just a minute, we're gonna speak with Jeff about multifamily apartment investing.
J Darrin Gross I'd like to ask you, Jeff McKee. What is the biggest risk?
Jeff McKee
Yeah, I mean, I would say, you know, from like a property casualty, some of the areas that we invest in are on the Gulf Coast, you know, whether we're invested in Corpus Christi, Jacksonville, Florida, you know, all these places. And so, you know, we do you review and have great insurance on our properties. And so it's in case there's, you know, fire flood, you know, that kind of of a damage, which, you know, it happens occasionally, in these communities. And then you also need the business continuity insurance in terms of, if we displace guests, maybe to a hotel or another community while their unit is getting repaired, maybe there was a flood or there was fire, we also need the business continuity, to make sure any rents that we would have lost that were covered on that. So yeah, we're basically, you know, well insured. And so that's something that, you know, we're very cognizant of, of in terms of, you know, where are we with, you know, FEMA flood map, you know, where are we, with this, and in terms of any hazards that we got on the property. So that's probably the first one. And then lately, you know, in a rising interest rate, the second area of risk, and we're trying to mitigate is trying to put a rate lock, so trying to lock in the rate before it keeps creeping up on us. And so then that would, would be another one, basically, we're fortunate in the US to have a lot of fixed rate long term debt. So we're just very careful of the adjustable rate mortgages, the arm products out there, because, you know, they could, you know, creep up over time. And so when we're putting a lot of debt on these properties, you know, 3040 $50 million loan, or trying to look at the rate law, and be able to manage that. And sometimes, you know, we pay a bit extra to get that type of insurance, the rate lock cap, so we try and put a cap on any interest rate, that we're locking in long term debt. And so those would be two areas, you know, kind of the property casualty and business continuity. And then the second area in rising interest rates, having a rate cap and paying for a lock and, and underwriting that expense. To give you some assurances of your debt payment won't escalate much over time.
Today, my guest is Chris Prefontaine. Chris has 25 plus years experience in real estate as a builder, developer, realtor, real estate investor. And he's also a best selling author. He's got a couple of books, real estate on your terms, the new rules of real estate investing and real estate investing for women. And in just a minute, we're going to speak with Chris about building the team. But first a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment, we'd love to hear from our listeners. Also, if you'd like to see how handsome Our guests are, be sure to check out our YouTube channel. And you can find us on YouTube at commercial real estate pro network. With that I want to welcome my guest, Chrisc welcome to CRE PN Radio.
J Darrin Gross
I'd like to ask you, Chris Prefontaine, what is the biggest risk?
Chris Prefontaine
Probably gonna throw a different twist at this fire, especially coming from the insurance side of things. Look, the market my opinion, the market is going to keep changing. It has for decades, I've been out for three decades, it will continue to change. So people get all caught up with the media and all it's going to change. And the risk is that the risk is not there. The risk is you not knowing how to navigate. As it changes, you call it the storm. And when you know how to navigate when the market changes. You're not You're not at risk, because you're not a bob and weave, you're not a pivot, you know how to structure the deal after the deal. And you know how to be keyword adaptable. That's it. It's not the strongest, it's not that smart. It's the most adaptable. And then how do you do that? How do you mitigate that that risk? How do you get in that mode? My opinion, you find someone that's been through at least two or three storms to use your word, and then you lean on them? Constantly. There were two times in my career, I didn't have that person 1994 ish in 2008. And the only times I had a headache. So every other time in life, I've had a mentor that I could call up and go, Hey, Darren, what do you think about this? What would you do here? I'm a little a little perplexed. That mitigates your risk, and that lets you be more adaptable.
Today, my guest is Erik Oliver. Erik is the regional manager for cost segregation authority. In just a minute, we're going to speak with Eric about cost segregation, what it is, how it works, and the benefits for real estate investors.
J Darrin Gross
If you're willing, I'd like to ask you, Erik Oliver, what is the biggest risk?
Erik Oliver
Yeah, you know, for me, as you know, I didn't have any investment properties when I started doing cost segregation. And so by working with clients all the time, and seeing the value of owning real estate, I've started to get into real estate myself. And I think the biggest risk for me is, I went back and forth, do I need a property management group? Do I not? Do I manage these myself, you know, I actually live by my investment properties, I can don't step over what is the saying don't step over $1 to save a penny, you know what I mean? Let the experts do it. There's a reason that they're property management experts, there's a reason that your CPA should be filing your taxes, and you shouldn't be doing it yourself unless you know what you're doing. And so I think, the biggest risk for me that I've had to learn just that let the experts do it. And I see it all the time in my industry, where people do their own taxes. You know, I've seen people who make, you know, in the millions of dollars and have very sophisticated tax returns, and they're doing their own taxes on TurboTax. Because they don't want to pay a wealth advisor or a CPA who has the experience. And I'm like, what you're gonna pay that qualified CPA who understands real estate to do your taxes, you're gonna get back tenfold in the amount of deductions. And you know, the left the reduction in your tax liability. And so I think, if I can just share one thing, and that is surround yourself, you can't be an expert in everything, right? And so know where your faults are, and be humble enough to say, I'm not a tax expert, or I'm not a property management expert. I'll tell you just a quick story. I learned that the hard way. My very first investment property was actually when I lived in Virginia, I moved out of Virginia, I moved to New York. And I said, I don't want to sell my house. I'm going to just rent it in Virginia. And I'm going to do it myself. So I put an ad out there I met with some potential tenants, I found some they seem like the nicest people in the world. I didn't know I should do a background check. I didn't know that I should run their credit. There's my first gig, right? So Micah, they're nice. They sat down, they talked to my kids, we had a great conversation. They rent I rent the house to him, I moved to New York. And I never hear from him again, right? They paid their rent, the first two months. Great on time was perfect. But then the people that kicked them out of their old place started garnishing their paychecks. And that's when they stopped paying my rent. And had I done a background check. This all would have showed up but I didn't want to pay the 10% management fee. I'm like, I want that for me. And so surround yourself with I didn't know what I was doing. I thought I did but I didn't. And I should have been humble enough to say, Erik, you don't know what you're doing. And so humble yourself and say, what are you good at? And you'd be the expert in that. But we can't be experts in anything and in everything. And so surround yourself with people who are good property managers, good lenders, good CPAs good attorneys, good insurance agents, right? And let them be the experts and take their advice and be okay paying for that expertise, because you're going to come out ahead in the long run.
Today, my guest is Lauren Coville, Lauren is a CPA and the Vice President of Finance at Occupier. Occupier is a lease management software solution, empowering real estate teams, finance professionals and tenant rep brokers to collaborate on the entire lease lifecycle, and maintain compliance with lease accounting standards. And in just a minute, we're gonna speak with Lauren about how new lease accounting standards are impacting organizations and their care processes.
J Darrin Gross
I'd like to ask you, Lauren Covell, what is the BIGGEST RISK?
Lauren Covell
The biggest risk in my mind is understating the level of effort required to maintain compliance with ASC 842, a lot of people are just rushing to get implemented under a 842. But really, in my mind, it's a race to the start, that where the going gets tough is maintaining that compliance. And if you don't have those processes established, or if you're not leveraging software, you know, you're going to open yourself up to a lot of risk. And so without, if you can, maybe give the standard a little bit more credit, then you can think about, okay, where do I need to improve my processes? What people do I need, what resources do I need in order to maintain compliance with ASC 842. Because what got you to comply with the old standard is not going to get you where you need to be, as we talked about, there's massive risk in manual error, even if you are certain that everything is accurate, there could be a fat finger, that will be a formula reference error, there are so many things that can go wrong in these massive XML files. And then you have the risk of not interpreting ASC 842 correctly, that if you don't have the technical expertise in house, that's also going to be a pretty big risk. And I think, you know, of course, when you think about the insurance policies, you're never going to absolutely move that risk to someone else besides the finance team or transfer it right. But there are ways that you can mitigate that. And I think the biggest way that you can mitigate is start thinking through your processes. And whether or not you should be leveraging software to help you from a capacity standpoint, really helps you like leaps, make leaps and bounds in your transition to 842. And also, obviously, make sure that you're compliant with everything.
Today, my guest is Omni Casey. Omni has been a real estate investor, broker and coach for nearly 20 years. He invest in small to mid size multifamily, cash flowing real estate from Virginia to Hawaii. And in just a minute, we're going to speak with him now about investing in cash flowing small to mid size multifamily properties.
J Darrin Gross I'd like to ask you Omni Casey, what is the biggest risk?
Omni Casey
That is a great question. I think there's a lot of little things you can point to you mentioned environment and and you know what's going on in the world. You know how that might affect your individual acid at the time or your strategy at the time, but my answer is probably a little bit more abroad, you know, because what I've found over the years, no matter who's in office, right, no matter what's going on in the world, you can be successful in what I do in real estate investing, and you just got to be willing to change your strategy, when you understand what's happening there. So I think the biggest risk is really not understanding the rules to whatever game you're playing. So understanding the rules is so important. And some people don't even understand the game, so maybe not understanding the game. And then, like what I'm doing, you could actually choose to play a different game, right? There's, there's a very common game out there, I'm like, Well, if I can get good at my own game, no one was actually in my space playing the game that I'm playing. So I don't have a lot of competition. So it's actually much easier for me, because I created the own rules to my game. Once this picks up, then maybe I gotta go figure out how to create a new game. And so when you're looking at some constants that we think are constants, and maybe they change, how does that affect vote, for example, um, a lot of talk about inflation, right, we're north of 7%, and who knows where it's gonna go. And, but that's a rule, that's a rule in the game. And if, you know, I use the analogy of gravity quite often, like if gravity changed today, like if the like, if, for whatever reason, gravity was at 50%, and people like borderlines started to float away, we would have to change the rules to how we live our day, right, we'd probably have to wear heavier clothing and you know, not jump around, or whatever the case may be. But we'd have to adapt and get used to it. And so 7% 8% 10% Inflation is crazy. But as long as we're adapting, and we know what to do, we have to invest differently, like my investment decision today is different than it was five years ago, based on inflation. Same thing with insurance. Well, same thing with interest rates, if the interest rates continue to rise, alright, that changes my strategy, my strategy is drastically different. But understanding that all they are just rules to the game, I gotta shift what I'm doing. So it's really a self analysis of what your goals aren't what you're doing, and understanding that everything that's going on around you are just rules to a game, if you understand them, you can use it to your advantage.
Today, my guest is Zack Flora. Zach is the vice president of market growth at the Center for Active Design, and Active Design Advisors Inc. And in just a minute, we're gonna speak with Zach about how commercial and industrial building owners can increase their property valuations through green ins initiatives.
J Darrin Gross
If you're willing, I like to ask you, Zack Flora, what is the biggest risk?
Zach Flora
Yeah, Darrin, absolutely. And I'm going to come at it from the point of their real estate community. And there's this growing need to be able to kind of measure and implement green and healthy building initiatives. And I think the biggest risk to the real estate community today is to not understand what it means to be a healthy building, not understand what it means to what those concepts are around creating a healthy building and to neut to narrowly focus in on kind of one set of aspects. So if it's an industrial to narrow to narrowly focusing on maybe things like workplace injury or commercial office space, to narrowly focusing on things like indoor air quality, or to say we're doing energy efficiency, and that's going to be enough. Being the healthy buildings are this idea of healthy buildings are relatively new, even though the evidence base has been around for for 100 years, companies and the real estate community specifically, they need to understand exactly how their buildings are performing against a set of related metrics. So that they can begin to figure out how to manage and measure the risk related to health. And, you know, we can come back to that, that office environment, we have low occupancy rates, still, we're struggling to get people back into the office, if you don't know how your properties are actually impacting health right now, you're not going to be able to make the effective changes to build that trust and reduce and mitigate that risk moving forward, you're not gonna be able to figure out how do I prevent reduced occupancies in the face of maybe a future contagious or respiratory infectious disease outbreak like COVID-19, we are not going to understand how do I control for mental health issues and social equity issues that my employer that my tenants and their employees are asking about. So not being able to kind of look at the broader picture, understanding where you are, where you're starting from. So you can make a really strategic and informed plan moving forward is, I think the biggest risk to saying you're not gonna be able to see some of the returns we talked about, unless you know exactly where you're starting from and setting goals and being able to meet them, you're not going to be able to see those kind of the suitability of tenants, you're not going to see that return on investment. Because maybe you were too narrow in your focus, or maybe you didn't know where to start, and you didn't know where you are. So you didn't start appropriately, in kind of retrofitting or designing or implementing healthy buildings in your culture.
Today, my guest is Vinney Chopra. Vinney is a multifamily syndicator, Senior Living care facility developer, an author, a podcast host, a mentor, family man, he's a lot of good things. And in just a minute we're going to speak with any about the opportunities in multifamily and senior living.
J Darrin Gross Let me ask you this, what do you see, is the BIGGEST RISK that you face in this marketplace? And just kind of the near future, as you, you know, work with your your investors and trying to totally coach steward for their money?
Vinney Chopra
Totally, you know, I'm so glad you're asking that. I've raised like, close to 200 million or so. But you're right, investors want to save money? What if when you die, you know, or something happens to you, right? What what's the risk involved in that, and then when I took the key man's insurance, and then our daughter is in it, now, she'll step up as President, my wife is also injured, our legal, you know, team and everybody, our accounting department itself, the other parties, you know, during the properties we buy, so there is insurance to be gotten at every point of the property, the loss of income insurance, those are the risks also, if some burning, you know, something fire comes, are like that. So, that is other risk. The other risk, which I got hacked, you know, I think I'd like to mention, is the cybersecurity risk. And that's a big one nowadays, you know, with everything going through, through the computers and everything. So, you know, there are so many different directors, insurance risk is another one. You know, the big thing is contractors who work with us to do capex jobs and everything, we try to save money, but it's not worth saving money, unless we want to make sure contractors are well bonded in also have, like, you know, millions of dollars of insurance, right, you know, when they come to work at our assets? I don't know if that's the question, you were really posing, the biggest risk I find is that you want to do legal way to raise money, and then take care of the investment of the investors. They know, fiduciary responsibilities the right. So as a CEO, I definitely have always felt each asset I bought, I bought 37 Now or something, you know, and I'm on the loan on all 37 Not too many GPS, you know, cold GPS or anything, I don't believe in that. Maybe just three I have done it, you know, and then with my partner integration now, you know, like that, but other 27 or eight, I was the only person but, you know, the key thing is, you got to mitigate the risk for investors and mitigate the risk for the well being of your company. So you are in the right business. You are there, you know, Because insurance, it's an investment, I always look at it as an investment. It's not an expense, because I had lawsuits of $3 million $4 million lawsuits, which I, because of insurance, I walked away with giving zero money, zero money, and they settle the mediated and all that stuff. You know, so when you are in a business entrepreneur, like me and anybody, there are risks involved in people suing you and other stuff like that. So I always feel insurance is an investment, you know, yeah.
Today my guest is Blake Templeton. Blake is a seasoned real estate and cryptocurrency hedge fund manager who is passionate about helping investors invest confidently into alternative asset classes like blockchain technology, cryptocurrency and specific sectors of real estate. And in just a minute, we're going to speak with Blake about wealth building through alternative assets.
J. Darrin Gross
If you're willing, I'd like to ask you, Blake Templeton, what is the BIGGEST RISK?
Blake Templeton
Yeah, the BIGGEST RISK hands down Most definitely. For every single investor across all industries, is the inflation. The inflation is the largest thing that's eating away. Unbeknownst to you. It's a largest tax known to or unknown to you. It's the largest expense you had that you don't calculate. So inflation now being 15% When it was supposedly 2%. A decade ago, you could probably do pretty well. It's just kind of forgetting about it. But now 15% is the largest risk. Because if you're not producing more than 15% Especially if on your cash flow. If you don't have a good strategy and you're still having to pay taxes on it. You're not producing 15% on your money, then your company pletely losing in investments the whole time while you think you're producing good results. So what we have to do as a good steward, we've got to realize that, you know, unconventional world events, beckoned us to be good stewards with unconventional strategies. And we have to back in and reverse engineer into what good strategies are in an unconventional time. And what we do at Warren capitals, we do that with self storage, and mobile home cart, and mobile home park communities and then cryptocurrency in two separate funds, limiting the downside and making sure we outpace inflation, and in the fund, self storage and mobile home park fund. Once all your money's back in your pocket, then it's an infinity return. So now your these funds get to go back and go back to work. So we beat that risk in that way. And then in cryptocurrency, our mission is to always outpace a Bitcoin. So that that allows us to, we take that cryptocurrency is like digital real estate. So if you think about it being digital real estate, then we're able to go in and tray narratives or sell narratives back and forth and create a much much much higher return return, which allows us to always outpace, which allows us to outpace inflation. So that's the largest risk that if we have a set it and forget it mindset, if we kind of have our head in the sand and don't really know what I've got, I just know I have a lot of something that a lot of something can become nothing really quickly if you don't have a good stewardship set in place.
Today, my guest is Mike Sowers. Mike is the CEO of Commercial Investors Group, a private equity company that repositions commercial real estate assets across the United States using their proprietary software cre tools. And in just a minute, we're going to speak with Mike about the opportunities for our listeners that you opportunities to invest in our franchise with his software, or also opportunities for accredited investors to invest passively in one of their deals.
J. Darrin Gross If you're willing, I'd like to ask you, Mike Sowers, What is the BIGGEST RISK?
Mike Sowers
I think the BIGGEST RISK is that your ego gets too big, and you think you have it all figured out. Humility is, I think, the strongest asset that any company or individual can have in life, and it's one of our core values at commercial investors group, our system is working really, really well, our software is super sweet. We feel like we have a really good grasp on the market metrics. And we feel like we have the ability to analyze deals, but at the end of the day, we are always humble, and making sure that we're constantly staying in the zone of learning, and getting better, and trying to find new ways to do things that might work better and trying to stay on the cutting edge. That's the mistake, I think at a corporate level a lot of companies make is they do really well. And they're one way and they put the blinders on and they lose sight of what's happening in the market. And the markets change quickly. And so that's why during COVID, a lot of people went under, especially people in offices, and we're heavily invested in office, and we did better in COVID than we've ever done in any prior year. And I think I would attribute that to the fact that we maintain humility, and are willing to learn and willing to admit, in areas that we have issues. In fact, every single week, I spend 90 minutes with my entire management team, putting the issues on the table and working through.
Today, my guest is Daniel Cocca. Daniel is a New York corporate attorney by trade. And he co founded Alpha Investing a private capital network that connects investors with institutional real estate private equity investments. As a firm Alpha has invested in over 4 billion of real estate assets. And in just a minute, we're going to speak with Daniel about some of their investments and how they go about investing at Alpha.
J Darrin Gross
I'd like to ask you, Daniel Cocca, what is the BIGGEST RISK?
Daniel Cocca
So as a, I call myself a former lawyer, I guess you're always wire risks are near and dear to my heart, right? You'll see 10 pages of risk factors in the documents that we send out. It's something we think about a lot. The over simplified answers, your question is that we look at deals really, with a matrix with two columns. One column is execution. The other column is market driven appreciation, right? Execution is something that we can mostly control. There are some things like supply chain and whatnot that may fall outside of our control. But usually, we can figure out ways to get ahead of the curve on those things. And the partners that we work with, we have zero doubt about their ability to execute. These are not newcomers to the real estate world. These are your tried and true groups with with long track records of success, right. And so that leaves the other column, the market driven appreciation, and that's the real unknown. And there are a lot of factors that go into that. But I think in this present moment today, you know, February 2, the thing that we're all thinking about is interest rates, right? And, you know, it was a day or two ago, that Bank of America shocked the world and said there's going to be seven rate hikes this year. And everyone said, like, what, like who like what's going on over there, right? And it wasn't, though that long ago, like, four or five, six months where, okay, rates are gonna hike up the middle 2022, maybe we'll see one or two. And then it was like three, and then it was like maybe three or four. And so we'll see what happens with with interest rates. Because, you know, as I'm sure your listeners know, the cost of borrowing is a very important component of pricing, whether you're a buyer or a seller, right. And in the historical wisdom has been that interest rates and cap rates move together, right? Meaning, you know, interest rates go down. So to cap rates, because your cost of borrowing goes down, you can pay more for a property, right. But what we saw and 1718, give or take, especially during that period of time, where we had seven rate hikes in a quarters was that that really wasn't the case, you know, rates were going up, but cap rates were still compressing. And I think what a lot of people concluded is that there's a lot of dry powder in real estate right now. Some of that is from the crowdfunding world, a lot of that is from no just general real estate, private equity that has record amounts of money on the sidelines. And so the real question is what will happen? You know, once rates really start to pick up, will you see, cap rates start to go up? If that does happen, I actually think would be a good thing, particularly for folks in our position, because, you know, we underwrite pretty heavy cap rate expansion into our deals. If cap rates stay flat, or compress, that means a home run, right? Investors get a ton of proceeds at exit, right? But also means it's very challenging to redeploy that capital, because pricing is so aggressive. And so there's a happy medium where you're getting really strong returns, but then you also have places to redeploy that capital, where where it makes sense, right? And what we'll find out over this year is really what happens to pricing. You know, a lot of the deals that we invest into, are you know, floating rate variable rate debt, right. And people like that type of debt over agency, you know, government, Freddie, Fannie get because there are very seldom are very small prepayment penalties, which allow us to exit much faster when you're in a rising price environment, right. But will people then transition to longer term fixed rate agency debt again, like that's certainly certainly possible. And so, that's a long way of saying not just interest rates, but the response to interest rates is, you know, the biggest risk to this space. The worst case scenario, and this isn't a bad worst case scenario, but but it is a worst case is that rates continue to move upward and cap rates stay flat or continue to compress because what that means is that when you're buying a three and a half cap today You're buying a really a two and a half cap at the end of the year, right, you know, apples to apples. And so that just starts to get really uncomfortable. there supposed to be a positive spread between interest rates and cap rates. And so, you know, if you buy, you buy to two and a half, and you have four and a half or 5% debt, you know, even a cash flowing deal effectively looks like new construction, right? Because there's no cash flow in the first year or two. And you're basically making a bet on the residual value. And so long answer to your question, probably not a particularly unique answer, but in this moment in time, February 2 2022, you know, interest rates and pricing response to interest rate change, that's the biggest risk that I see.
Today, my guest is Ken Van Liew. He's a real estate investor and his career has taken him through flipping houses new construction and development and assisted living. And in just a minute, we're going to speak with Ken about real estate development in investing.
J Darrin Gross
I'd like to ask you, Ken Van Liew, what is the BIGGEST RISK?
Ken Van Liew
Yeah, I, you know, I think, you know, you can look at risk in a couple of different contexts, you know, you know, one, you obviously want to look at the risk, you know, of your personal life, and I've been in situations where I've done big projects where, you know, where I've, you know, placed all my assets in a trust and, you know, things work to go array, you know, in the sense of building projects, you know, and a lot of cases I used to have to put up performance bonds, you know, so, you know, it was a large sense of, you know, similar it's like a personal guarantee, you know, and when the bonding company steps in which you're you know, being insurance must be very familiar, you know, we used to get into, you know, sub guard policies and, you know, because you know, bonding was very expensive. The construction in the high rise we talked about before, the construction portion of it was always the highest risk, right. Some of those contractor contracts are in the neighborhood of $50 million, you're buying, you know, curtain walls from all different parts of the world, you know, I was traveling to Italy and Canada and, you know, making sure things are getting on the boat and time and, you know, all these little things, everything had to work like clockwork. And, you know, in that world, it was, it was extremely risky. And what we used to do is, you know, we would bond every single trade, if we had to, or if I couldn't bond the trades, I would have to sub guard the entire project, in order to satisfy the bank, you know, in case something happened on this, this, this mechanism was in place to save the day. You know, and, and I guess, you know, if you're just looking at an investment, you know, there's risk with that, you know, you want to make sure, you know, you're buying an asset, you know, there's not going to be this huge capital expenditure, you know, my, my expertise in building buildings, you know, I can go in and, you know, jump in an elevator shaft and tell you, you know, when the things going to, you know, you know, kind of die, you know, I can go and look at Central HVAC plants from building data centers, and, you know, what's know what's going to happen. So, you know, I think the biggest risk with with people buying existing assets, is not knowing what they're looking at, you know, and then all of a sudden, you're like, you know, shoot, I gotta, you know, upgrade the electrical service to 400 amps to get the tenant upstairs. And that means digging the road. And I had these two dentists that had the building in White Plains, they wanted to convert it, the residential, but we needed to upgrade the gas service in the water service, and they waited too long. And then they started building 400 unit next door, and I'm like, Guys, you got to pull the trigger. Now, you know, so those are the kind of risks, you know, not knowing what you don't know, or not, like we said before, recognizing what you don't know, and, and, you know, getting out of your own way, you know, because our egos, you know, I think, you know, sometimes on a personal level, so, so there's all different kinds of levels, I think all different kinds of contexts. You know, so, you know, I talked about personal existing assets, how the development is viewed and how, you know, I think that insurance aspect comes into play. You know, you know, in that in that case,
Today, my guest is Kim Daly, she has spent the last 20 years helping people achieve financial freedom by enabling them to find the perfect franchise opportunity. She is recognized as one of America's top franchise consultants. And she is an international best selling co author of franchising, freedom, and the founder of and the founder and the host of Kim daily TV. And in just a minute, we're going to speak with Kim about franchises, and all the opportunities they possess.
J Darrin Gross
I'd like to ask you, Kim Daly, what is the BIGGEST RISK?
Kim Daly
So I help people take one of the BIGGEST RISK with most of their life savings for most of them that they will ever take, saying yes to their dreams to own a business. And I do this every single day. So I am very acquainted with the conversation about risk. I think the biggest risk is regret. I think that if you have the dream in your heart to do something that is out of the box that is unordinary that is extra ordinary, and you don't take the risk, you will regret it more than if you do do it. Even if it doesn't work out. The BIGGEST RISK has to be regret.
Today, my guest is Houman Mahboubi. He is a leading authority on commercial real estate sales, purchases, management and leasing with JLL in Los Angeles, California. And in just a minute, we're going to speak with Houman about the impact of COVID on the Los Angeles commercial real estate, and what's going on down there.
J Darrin Gross:
I'd like to ask you Houman Mahboubi, what is the biggest risk?
Houman Mahboubi
I think that BIGGEST, BIGGEST RISK is to take on more than you think you can handle? You know, because you don't want to put self inflicted pressure on yourself. There already is daily pressure on the work that you do. I call it good cholesterol versus bad cholesterol, right? So stick to the good cholesterol take on as much as you can handle. Understand, what is the worst case scenario? If your business does fail, you know, are you going to be homeless? Are you going to be fractured and level that you can't function anymore. So as much as it's important to be all in and take every effort or measure to be successful in your endeavor, just make sure that if for whatever reason, like the pandemic Thomas, we think we can troll so much. But on a, you know, molecular level, we're all the same, and we're all equal. And when it comes to things like that we're all you know, one, believe it or not, just know that any endeavor you pursue makes, make sure that if it doesn't go well, you'll still be okay, you know that it's not going to any way change your life for the worse. So don't take on more than you can handle and try to be a hero or let your ego get in the way to say I'm here to do what I meant to do whatever my capacity is, and I will let the universe guide me in that unfolding and for me to do what I need to do. But that's a very good question. Because the risk factor, you don't want it to completely turn your life around where you can function anymore. And I think that goes for investments as well, you know, don't be over leveraged, how much debt are you taking on? You know, what if the picture looks incredibly clear, and there's no way there's maybe one in a million chance that, you know, this thing's gonna fail, but that one in a million, it's one of the decks in the card, one of the cards in the deck that can account make it happen like someone winning a lottery. So don't ever be overleveraged don't ever be a pessimist be an optimist, but just know that if all else fails, are you going to be okay, tomorrow? Are things going to be fine? And if the answer is an implicit Yes, then you know you're on the right track. If it isn't, and you are going to cause damage to yourself and the loved ones, then most definitely, it's not a smart risk to take on.
Today, my guest is John Michell. John is a serial entrepreneur, and has created the top application in the world for the top book in the world, on success, Think and Grow Rich. And in just a minute, we're going to speak with John about how you can apply the science of success to leverage yourself.
J Darrin Gross
I'd like to ask you, John Mitchell, what is the BIGGEST RISK?
John Mitchell
You know, I think the biggest risk is, is not taking control of your life and letting life go wherever is gonna go rather than you directing your life. And, and I see that when I turned 50. And of course, is that pressure and what was going on with my mom, I realized, man, I got to step up and make this thing when I'm want it to be, I can't say yeah, I was too often in my 30s and 40s, I would push off well, you know, I'm, I'm gonna be really successful, just down the road a little bit. And, and when down the road, a little bit never came. I'm like, Whoa, I gotta I gotta step up here. And so I think that, that the risk is, is that you end up taking this precious life and not making the most out of it.
Today, my guest is Steffany Boldrini. Steffany is originally from Brazil, and moved to Silicon Valley 20 years ago. After a successful career in tech sales, she decided to focus on commercial real estate investing, where she has achieved over a 36% cash on cash returns. She is also the host of the Commercial Real Estate Investing from A to Z Podcast. And in just a minute, we're going to speak with Stephanie about how to manage your assets remotely.
J Darrin Gross
I'd like to ask you, Stephanie Boldrini what is the biggest risk
Steffany Boldrini
For myself personally that I am in right now would probably be cryptocurrency. I avoided it for a decade that I know it, unfortunately. And finally decided to put some money there. I think that is my biggest risk today. I put a little bit of money there. But you know, I had a very shortly epiphany right now talking to you that, you know, when the government printing so much money, there's also $200 billion, that crypto crypto mining that was created out of thin air right. So is the government really interested in in making them illegal? I don't know. Maybe not. Because that is keeping the economy going. Right? There's $200 billion more out there, that people are spending or trading and it's that the government did not even have to print themselves. So will they really make it illegal? Which is what I thought for the last decades? Maybe not?
Today, my guest is David Moore. David is the CEO and co founder of Equity Advantage. In 1991. He and his brother Tom started Equity Advantage after a successful real estate investment career. David is a nationally recognized expert on 1031 Exchanges, and a former board member of the Federation of Exchange Accommodators. And in just a minute, we're going to speak with David about how to execute a 1031 Exchange.
J Darrin Gross
David Moore, what is the BIGGEST RISK?
David Moore
The BIGGEST RISK for an investor on assets, so the biggest risk in an exchange or what what in what?
J Darrin Gross
I let you I'll let you frame framing how you how you see what is the biggest risk could be there are.
David Moore
So I My biggest concern right now is just government changing the rules on my clients, you know, in the middle of a transaction or after somebody purchased something, and I just see so many situations today where you have to look at somebody's intent and what they're trying to accomplish versus what the laws are actually there allowing them to do versus what those laws were actually intend to do. Now, if I look at just complexity, and I'll just say as far as insurance products, I'm not a huge fan of limited liability companies for holding property. And and if you look at what was proposed, and Biden's build back better, it You rarely ever see an asset held by a corporation these days, because if you and I own an asset and a C Corp or S corp, we just want to go different directions, just taking the asset out of the corporation is going to trigger taxes that that nullify any benefit of an exchange, you're stuck in that entity, they want to go mark and mark it on distributions from limited liability companies to so where we talked about community versus non community property states, even with spouses with LLCs, I've got clients that will have a single LLC for all their properties, I've got clients that will have an LLC for each property, I've got clients that don't use any old C's, I would say, good stout insurance policy, I'm a bigger fan of than the old C's because of the complexity of moving assets with the LLC. Now, as I said, if we're in a community property state LLC is a lot easier to work with, and it is where we live. So, you know, that's one of my concerns. But my biggest concern right now is just the government changing the rules on stuff. And an example of that would be here, we've got the City of Portland and once more housing, and you can argue whether you think VRBO is housing are not, you know, obviously people have sort of shifted instead of long term rentals and renting to people directly. They're going to use that mechanism so they don't have to deal with some of the rent control laws. So you know, the Multnomah County changes rule says Okay, so we've got a number of clients with the retirement with retirement accounts, self directed IRAs 401k plans that buy rental houses and they were using VRBO for that thing and it worked very well. So they've got these assets. That's property that's available and all sudden the city can Any state somebody makes a law change. So no, boom, now you can't own these things you can't VRBO unless it's owner occupied property. So now every client I've got that had properties used that way with a retirement account, by law, they can't occupy your, you know, use that property anyway, so that no longer fits. So everybody that had those things now has to sell them and go do something else. So it's, it's tough when when we've got bureaucrats out there changing laws on things they don't understand at all. And they change the rules. And then so rent thing, you know, that vacation from Brent, sorry to sound callous on it, but nobody's giving the landlord that property owner, a vacation from paying the debt service. And everybody assumes that landlord is wealthy person. And I will be the first to tell you, I've got so many clients, they are land rich cash for everything they've got in that stuff, they've worked their tails off throughout their lives to accumulate some pool of real estate. And, and they're not wealthy people, you know, they need that that's what they live off of. And they're good people. And the other thing I'm seeing a fundamental shift in is, with the rent control laws and the changes and what property owners are able to do, you're seeing a lot of those people put up the the white flag and they're exchanging out of these assets they can no longer afford to deal with and into these passive investments, the DSTS, the ticks, that type of stuff. Now, what the government people don't understand, I would say is that the mom and pop that owned the property, they cared about the tenants, they knew the tenants, they really it was a different situation for them, they cared and by the way, you know that $4,300 Move out charge if you don't do it correctly, that hurts the mom and pop, well, what do you think of REIT a real estate investment trust, I'm seeing a fundamental shift in the ownership of our local property going from local people to institutional ownership from somewhere else. They don't care, it's a different deal. So it's just there's lots of things happening out there. And and I think it's all calculated. And so my concerns are just rules changing on people with with really no thought from the government of the true repercussions of those changes. And I see firsthand how it impacts my clients, and it's not good. So that's what really bothers me. Most, you know, as far as the insurance, the liability stuff, the LLCs, like I said, a good insurance policy is going to take care of that. You know, the other thing that is always out there to is with, for my businesses, we're moving money all the time. So, you know, we're concerned with all the wire fraud stuff, I mean, that's a huge thing. So having the policies, the insurance policies in place that are going to protect us, because, you know, the business owners got a lot of responsibility, let's say out there in liability if it's not taken care of correctly. So that's something unfortunately, it's just out there and seems to be growing and growing. And I really don't understand how they can't put a stop to that with a flip of a switch. Anything that's wired has to be received by somebody. I mean, you just locked down that money for 48 hours or something, don't allow it out. I would think that would change that whole thing a lot. But you know, nobody seems to be looking at solutions like that.
Today, my guest is Ashleigh Wilson. Ashleigh is the CEO and founder at AuditMate. Ashleigh is open sold multiple small businesses by the age of 20. Until ultimately landing in the elevator business. And in just a few minutes, we're going to speak with Ashley about AuditMate. It's the world's first elevator escalator auditing and management software.
J Darrin Gross
I'd like to ask you, Ashleigh Wilson, what is the biggest risk?
Ashleigh Wilson
Safety and compliance. Every elevator is is inspected, safety tested and inspected. So you need to make sure that your certificate is consistently up to date, and that your testing has been completed. Now the way that we can avoid this risk, start with your service contract, making sure that you ask your elevator company, what state required testing or city required testing is is what intervals and what tests; all of them. Because they'll say they may say hey, you have to do this every one year in this every five years. And there's fire service testing that the owner can do, or the elevator company can do get the elevator company to tell you everything that's required and who can do it. And who if they can train the owner. Get that covered under your service contract, that's going to be the cheapest way to do it. And making sure that you're transferring that ownership or that responsibility on to the the elevator company. The second is going to be tracking that certificate expiration date, the state can be past due. So waiting for the state to come out and perform your testing is risky business, put a calendar invite on your on your schedule, so that you reach out to the state before your certificate expires, and send them an email, please come inspect my equipment. If you can't come inspect my equipment on time, can you write me an email granting me temporary coverage or temporary certificate until you can come complete the inspection. Some generally the the state inspector will write you an email and say this email serves as your temporary certificate until we can come out and inspect your equipment. That way you have that in writing from from the inspection company and from the elevator company. So making sure passengers are safe on the equipment and making sure that your compliance is up to date with the state endorsee.
Today, my guests are Nick Earls, and Eric De Nicola. Nick and Eric are full time real estate investors, developers and founders of winterspring capital, a private equity firm based in Boston, Massachusetts. Together they have developed over $56 million in multifamily assets with another $40 million in the pipeline. And their work includes value add affordable housing development, and luxury multifamily condo developments in the southeast us. And in just a minute, we're going to speak with Eric and Nick about their experience and how you can learn and identify and, and grow your multifamily portfolio.
J. Darrin Gross
I'd like to ask you, Nick curls and Eric de Nicola. What is the biggest risk?
Eric DiNicola
I think in the business we're in and because we're in, you know, a few sort of real estate verticals, if we focus say just on the condo development They're, I feel like there are two major risks. One is sort of the political and municipality risk in the city or building. And I'll get into that a little deeper in a second. And then the other one is sort of a macro risk right now or in potentially, you know, the Fed raising rates over the long term, it does, you know, potentially reduce buying power for individuals, and we're selling condos. So the way we kind of, we don't necessarily think at our firm, that's going to happen. So at least not in the immediate future, there's potentially too many consequences for that on a macro scale. But these two things that we see, so when you're dealing with a city like Boston, there's so much red tape, that if you get into a project, without sort of a backup plan, or a worst case scenario, still kind of breaking even, for example, a very simple way to put it would be you buy a property in a three Family Zone, you should make sure if you had if you get denied for your variances, you get denied the Zoning Board of Appeals, you could still develop a three unit property, that would always break even the worst case, because by the winter, the why you can do that you don't need special permission, you're in a three Family Zone, you're allowed. So look at that scenario, if that scenario loses a lot of money, then you probably shouldn't get into it without protecting yourself and minimizing that risk either by having a contingency that Nick spoke about, or some sort of backup plan. So that's kind of the local political municipality risks, because in Boston is just very difficult to develop. And it's getting harder and harder, you know, not even every year, it seems like every month, there's much more red tape. And like I said, the other thing would be more interest rate risk, when you're selling condos. Buying Power does go down for buyers as interest rates go up. So one way we kind of, you know, try to eliminate that is we say, okay, look, where's the market at right now, a lot of developers project out oh, you know, the markets increased at this rate, this is the value of homes, you know, a year ago, this is what they're at now continue with that project that I'm going to sell them for this this much higher than they are now. We don't do that we project as is, even if it's two years old, even sometimes with like a 10% hit to see what this still work. And if it doesn't, you know, we second guess that project. So that's kind of how we try. That's how we see to the biggest risks we see. And those are kind of the ways we would eliminate them in our business. But also just the idea of diversifying within real estate where you have the different asset classes that we had, and the different types of verticals that were involved with, is sort of another way or to risk minimization.
Today, my guest is Catherine Tindall. She is a CPA and partner at Dominion Enterprise Services, a concierge tax advisory practice. And in just a minute, we're going to speak with Catherine, how to get the most out of your CPA relationship, and some general tax planning strategies for real estate investors.
J Darrin Gross
I'd like to ask you, Catherine Tindall. What is the BIGGEST RISK?
Catherine Tindall
I say, you know, the BIGGEST RISK that I see, just from my professional perspective of the kind of cases that I diagnose and deal with on a day to day basis, the the main area of loss I see for people is that they, they do a set it and forget it strategy when it comes to dealing with their tax situation. And a lot of people because it's so technical, they don't have a way of assessing whether or not they're doing everything that they can unless they're going to take the time to learn how to do it themselves. And so I'd say for most people who get involved in real estate or who get, you know, start having a lot more going on economically, that it's, it's worth it to take the time to reassess your situation, get a second set of eyes, to make sure that you're not missing out on things because it can be 20 to 50% of your yearly effort. You're kind of working for the government, right if that's how you deal with, you know, paying your tax. And so to just not re examine that every once in a while, you can really be losing a lot of the effort that you're putting in just for, you know, things that are very easy to change, like just filing paperwork for splitting out entities or adding a kid to payroll or things like that. So that's what I see is the biggest risk. And a lot of the times once, once those things are set, and times gone by sometimes we can go backwards to save the tax. But more often we can't, it's once it's done, it's done. I had someone recently where they, they tried to execute a 1031 exchange on their own. And they didn't do it correctly. And they didn't, they didn't meet the timing requirements involved with it. And so they ended up with like over $200,000 in tax that could have been very easily deferred. You know, they were aware of the strategy, they had an intermediary involved, but they just didn't execute correctly. And so I think that's the biggest risk I see for people is, you know, to try to DIY too long, or to just set it and forget it, and not realizing that this, it's another area of being able to really maximize your wealth is being more strategic with you know, that tax number.
Today my guest is Anthony Coniglio. Anthony is the president and chief investment officer of New Lake Capital Partners. New Lake is the leading provider of real estate capital to state licensed cannabis operators through sale leaseback transactions, and third party purchases, as well as funding for builders to projects. New Lake owns a geographically diversified portfolio consisting of 27 properties across 10 states with a tenants. And in just a minute, we're going to speak with Anthony about the cannabis business and the opportunities to invest in real estate for with cannabis tenants.
J Darrin Gross
I'd like to ask you, Anthony Coniglio, what is the BIGGEST RISK?
Anthony Coniglio
Yeah, the risk I worry about most right now is and I worry about everything. And my team, they were they were here, you know, our team would laugh right now just they'd be nodding their head saying is he worries about everything. What I worry about most right now is the federal legalization. Impact on our tenants. I keep telling people in the industry, be careful what you wish for. You all want federal legalization, but it will not come in the form of okay, it's legal, keep doing what you're doing. It will come with massive regulation. And so I look at for our tenants, how will they be able to manage through that massive regulation? Are they doing what they need to do to get through the FDA? Right? Because these are consumable products? Are they doing what they need to do to to avoid issues around branding and how they're communicating with people and some of the restrictions about how you will communicate around this product? And so I spend a lot of time trying to make sure that we really understand not just a federal legalization will happen. But how does it happen? What will the regulatory impact be on the industry and our tenants and our prospective tenants really having the capability to navigate what's likely to come out of them at them, because I think many people in the industry underestimate the amount of regulatory burden that will be hoisted upon this industry upon legalization. And so, you know, it's interesting, you said, avoid minimize and transfer. I'm not sure how we do any of those with that particular with that particular risk. But that's where I spent a lot of time worrying about. And maybe that's why I work because I can't avoid, minimize or transfer.
Today, my guest is Chad Griffiths. Chad has been an industrial real estate broker since 2005, and an investor since 2014. And in just a minute, we're gonna speak with Chad about industrial real estate. But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple of things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment, we'd love to hear from our listeners. Also, if you'd like to see how handsome Our guests are, be sure to check out our YouTube channel. And you can find us on YouTube at Commercial Real Estate Pro Network. And while you're there, please subscribe. With that, I want to welcome my guest, Chad, welcome to CRE PN Radio.
J Darrin Gross
I'd like to ask you, Chad Griffiths, what is the Biggest Risk?
Chad Griffiths
Right now as I see it, the Biggest Risk is that we are forced into another shutdown or lockdown in the market. And I hope that that doesn't happen. I think everybody has fatigue from from this past two years that we've been going through this. And I think everybody wants to get back to business. But I think from the standpoint that if the medical community starts making more issues of this, and if the if some faction of the of the public starts pushing for more, more measures, then then I can see that happening, unfortunately. And if it is for good cause if that is the best course of action, and people agree on it, then then it is what it is. I'm not going to argue it. I'm not going to be that guy with a pitchfork out there saying we can shut down. I just I really hope that we don't. If we do, I'm concerned that how long this is going for, it's just going to lead to a whole set of problems. And that isn't just the immediate ones of of some businesses not being able to be open and the corresponding pressures of revenue and their continuing expenses. But even just what happens with the government's reaction to another shutdown, because I think that that would mean more stimulus, more spending, more money printing and considering everything that we've had to go through in the last two years. I'm concerned that all this spending is just going to lead to some sort of inflation and, and even though the feds are saying it's transitory and and we should be able to get a handle on this, I'm still concerned that this is this is more than just a short term transitory problem. And I like to really only are the I shouldn't say the only, but the biggest ammo that the feds have to fight inflation is just increase in interest rates. So I think that that's coming, I think we're gonna see, I think we're gonna see inflation in the near term, or continued inflation in the near term, I think we're gonna see upward pressure on interest rates. And this This is the status quo like this is if nothing else changes in, in what we're dealing with right now. And interest rate increases is not good for for, for real estate, because it's now costing that much more to borrow. That's a that's, I think that that this happens anyways. But if we have to do another round of of shutdowns and lock downs, and, and the government prints more money and adds more to it than I think that just adds another level to to inflation and, and trickles down to interest rates. So that that's probably the biggest risk that I see right now. But I mean, you mentioned it as well, there's, there's, there's so many areas where we could be terrified of we could be the geopolitical risk, economic risk that like it's endless. And I guess the only solace that I take it in myself is that, in the 16 years that I've been in this business, there's always been risk. Every, every time you open a newspaper at any day, over the last 16 years, and there would have been the media trying to sell us fear about what's all these bad things going on. And I think that that's just, that's a reality that we have to deal with is that there's always going to be that, that risk on the one side, but that's what makes a market and makes a market that there's going to be people that that look at that risk and say, Okay, now we're sellers, and then there's people like me who are more optimistic and not ignoring but maybe suppressing that risk and mentally, who are saying, well, now it's time to buy, like I see a lot of reasons to be optimistic on this. So I think that's what actually makes them a market is that you've got people that are fearful, and you have people that are optimistic, and that the fearful part does weigh on me, I am cognizant of that. But I I still balanced that by just thinking that over the long term, there's there's going to be blips on the radar, there are going to be things that manifest like, like we saw this last two years, there are going to be issues that we have to deal with. But over the long term, US and Canada have shown an amazing ability to keep trending upwards. So I'm still optimistic long term. But that, to answer your question, that's the interest rates being the ultimate outcome, I can see interest rates going up at some point in the future.
Today, my guest is Michael Hironimus with Duckridge Realty Services. He provides private asset and portfolio management, market analysis instruction. He's an instructor for market analysis. And he's also a CCI M chapter president. And in just a minute, we're going to speak with Michael about the current commercial real estate condition of the various asset classes and trying to look beyond the current situation and where things might go.
J. Darrin Gross
I'd like to ask you, Michael Hieronymus, what is the BIGGEST RISK?
Michael Hironimus
Oh, goodness, the biggest risk. If you're just talking about the commercial real estate industry, overall, I would say the biggest risks that I can think of at this point would be dry up and liquid and access to debt. And a significant shift in interest rates. A lot of the acquisitions that have been occurring have been at, you know, compressed cap rates, and so forth. If we have a large push on interest rates, there's one of two things that can happen either your risk premium, the cap rates are built upon us is going to compress even further, which is probably going to mean to drive people out of the the asset type, or you're going to have increases in capitalization rates, which is going to have severe effects on valuations for all the asset types, really. So I would say that's the biggest risk at this point. The other risk to that I think, at least off from an investor perspective, and, you know, we try to we try to balance this out and be conservative is that and I've seen this in the past, we saw this in the great financial crisis where sort of whatever has happened in the past people project into the future. And so we have these, you know, great rental increases, you know, you're looking at industrial multifamily, even, you know, some increases in retail and office and you go and you try to extrapolate that out into the future, I would say that there's a risk there in that. If you're anticipating those rental increases to continue on. At infinite, that you probably know it underwriting very well. And you may be setting yourself up for risk and potential issues in the future, I would be looking at forecasted demand, looking at jobs, how they're shifting within your metro area, how looking at the changes within the different industries that are focused on your asset type, and be conservative in your underwriting because I think once again, there's there's going to be maybe a slowdown in the future things can't run 100% Hot for forever. So once again, if if these supply chain issues continue, and if interest rates expand, it may signal cooldown in the economy and those rental increases may not continue in the future. So I would say one of the biggest risks is just you know, be conservative in your underwriting when you're doing your acquisitions, and make sure that those those are all increases, make sense and buy on actuals. Today, don't don't buy on anticipated returns in the future.
Today, my guest is Martin Saenz, Martin is the managing partner of BeQuest Funds. Together with his business partner Sean Muneio, Martin co founded BeQuest Funds with a dual purpose of helping investors grow their wealth and helping mortgage borrowers stay in their homes. He has directly helped over 1000s of families, stay in their homes, and countless more through the influence of his mentorship. And in just a minute, we're going to speak with Martin about note investing.
For information about Insurance for Lenders click: https://www.buildinginsurancerisk.com/insurance-for-lenders.html
J. Darrin Gross
I'd like to ask you, Martin Saenz, what is the BIGGEST RISK?
Martin Saenz
I would say compliance, being out of compliance, so missing something in the due diligence process, such as you buy a loan that's outside the statute of limitation, and you and you begin legal activity on that loan, then then you could be held liable as an organization. So there's a risk that way? Property, the collateral, right? That's it, that's really what's backing the the obligation at the end of the day. So not having force placed insurance on a senior lien mortgage note in the house burns down, then, you know, you're not going to get paid, you know, you need force placed insurance, errors in emissions from an insurance perspective. You know, there's just there's, there's so much, you know, we say paper, but this paper is full of words that are written by attorneys. And there's a lot of those pages. So so, you know, just making sure that, you know, say all the promissory note, all the collateral files have been signed and initialed by the, by the, by the bars. And whereby, you know, they're validating that debt to, you know, to be there and existence. And so I would say some of those and then licensing to I mean, you have to have certain licenses to operate in certain states. So if you're, if you're operating out of compliance from a licensing perspective, then you can have a state regulatory body come down on you with fines and in they could they could prohibit you from operating in that state.
Today my guest is Tom Cruz. Tom is a 33 year old real estate investor based in Wilmington, North Carolina. After graduating from UNC W. Tom started wholesaling real estate and then graduated to bind single small multifamily properties. And in just a minute, we're going to speak with Tom about Section Eight real estate investing.
J. Darrin Gross
I'd like to ask you, Tom Cruz, What is the BIGGEST RISK?
Tom Cruz
I would say the biggest risk in not even section eight housing, but just investment house air rental properties is going to be the tenant selection, because if you think about it, buying the property is very low risk, you can always refinance it, you can always sell it, you can always rent it, you'll always have that demand there, especially if you're buying affordable housing under 100. Grand right. But with a tenant, depending on where you're buying, the risk can be can be huge. I mean, if you're buying in the Northeast, and you put a wrong tenant in there, you could be waiting months to get the tenant out. Obviously, if you're buying in North Carolina, in the southeast, it's a lot more landlord friendly laws. So we can get a tenant out for 150 bucks in three weeks, and they're out by the sheriff. So and also you have the tenant the the damages from the tenant. So if you don't screen the tenant properly, or if you're lazy on that part, me, it could cost you 1000s of dollars, a lot of which, you know, you're gonna be out of pocket for because your security deposit won't handle it, Section Eight is surely not going to come in and handle the damage that a tenant calls independently. So I would say the biggest risk in rental properties is putting the wrong tenant in your asset. Um, and the best way to mitigate that, like I said, is through screening.
Today, my guest is Peter Badger. Peter is an entrepreneur investor, who has been successfully investing in ag development projects since 2016. And he recently joined Farmfolio’s executive team as the chief strategy officer. And just a minute we're going to speak with Peter about the value of owning farmland.
J Darrin Gross
I'd like to ask you, Peter Badger, what is the BIGGEST RISK?
Peter Badger
The BIGGEST RISK is the macro risk that you, as an owner or investor, do not follow a very data driven due diligence process before you buy. And so I can sit here with my risk matrix and my process, and I go through it. And that's the irony of this, you need to have a risk process, a due diligence process to follow Darrin and most people don't, if I had $1, for every time somebody took a recommendation from a friend, or went to the internet, downloaded a nice glossy marketing brochure and trusted somebody. I there's a there's a famous quote from Ronald Reagan, when he met Mikhail Gorbachev. And I don't know the Russian saying, but it was basically trust, but verify. And that's what you have to do. So the biggest risk for me is that you don't verify you don't have a process, you don't have a due diligence matrix with all these areas to look at, you don't follow the data to make sure that what people are telling you is actually true or not, that they have the track record that they have considered all these aspects in that asset class that you're considering owning.
Today, my guest is Lance Pederson. Lance is the Founder and Managing Partner of Verivest, and the host of the Real Estate Risk Report Podcast.
J. Darrin Gross
I'd like to ask you Lance Pederson what is the BIGGEST RISK?
Lance Pederson
Yeah, I mean, this is a bias answer but I wouldn't be doing what I do if I didn't believe it. I believe that the lack of oversight and I mean is as it pertains to a limited partner investing into a deal that's controlled by somebody else is just if no one's watching what's going on that's the biggest risk that you're more than likely not being compensated for you know, in whatever return you've been quoted so to me to your to your three step thing I don't know how to transfer it because there's no you know, no one's writing I mean, I've seen a few where you can insurance on stuff like this but that's ridiculous but you can minimize it right? And I think that's what veribest does, is we just we just minimize it. Is it foolproof? No, it's not but it's a big deterrent, right and you take that off the you take that off the table so once again much like concerns the cost of the monitoring and even the light touch in the way we do it to keep that cost down it's certainly minimises what I believe is your biggest risk is just some go sideways they stick their head in their sand and they start moving money out of the deal and you don't become whole because of it. How many times have you heard that?
Today, my guest is Jim Oliver. Jim is the world's foremost authority on the infinite banking concept, and has dedicated his career to breaking the financial shackles that bind people in businesses to unnecessary taxes and interest expenses. And in just a minute, I'm going to speak with Jim about infinite banking.
I'd like to ask you, Jim Oliver, what is the BIGGEST RISK?
Jim Oliver 42:29
I think the BIGGEST RISK is inflation. And I think that because the dollars in our pocket, are going down in value so fast, that if we have a bunch of dollars sitting around Fiat dollars, then we're in trouble. I mean, if if you gave your kid $20, to put it in a savings account today, you'd be doing them a disservice. Because that $20 isn't going to be worth very much as we go along. And my example of that is when I was a kid, we could buy about five candy bars for $1, right? Maybe a few more, and now you can't even buy one. So if the dollars in my pocket are going down in value, how do I combat that? So my, you know, I could say taxes, but taxes are gonna go up and down. And I believe taxes have to go up based on our that, right? But inflation is really a stealth tax. Because the dollars are going down in value and every time the Federal Reserve prints money, then my value is going down, that's a threat to me, that's a risk to me. And the only way to that I know of to well, by the way, you could take all your money and put it in cryptocurrency and get out of the Fiat system, okay. And I'm not discouraging somebody to do that. And I'm not encouraging somebody to do that. Okay, but but you can get out of the Fiat system, which is one of the reasons that these cryptocurrencies these digital currencies exist, right? And then, but, but you could also you can buy assets, because if I own assets, that are appreciating in value that are that I have tenants and in customers that pay me to use my space, if it's real estate, or if it's a business, I can raise my prices, if it's real estate, I can really raise my rent. I can keep up with inflation. So that's the biggest risk, and that's the answer and how to mitigate that risk.
Today, my guest is Marc Betesh. Marc is the CEO and founder of Visual Lease, which helps to improve the financial, legal and operational performance of commercial leases. And a former commercial real estate lawyer who has helped companies in fortune 500. Companies navigate and manage their leases.
J. Darrin Gross
I'd like to ask you, Marc Betesh, what is the BIGGEST RISK?
Marc Betesh
I think the BIGGEST RISK is under estimating what's going on right now, I just think about the discussions I've had here and prior conversations about, for example, the office market. If you don't, we nobody likes to see negativity, nobody likes to predict doom and gloom. But if you're not fully informed, and understand the trends that are going on, you are going to make bad decisions. And so you really need to look at all the information you can understand human behavior, understand what's predictable, what's not predictable, you're never going to predict things that are not predictable, but you need to be able to understand the things that that are and, and and use your own common sense to determine where you think things are going. The the real estate markets, the one thing we know for sure is that they're not going to stay the way they are. So now the next step is how will they change? That's part of this conversation and other conversations and looking at, you know, kind of look in the mirror and try to figure out what would you do? What would you do if you were placed in that position? What decision would you make for yourself for your family? And, and what makes you think that you're any different than anybody else? These are all human human decisions that we're faced with in normal decisions. And you know, when you get in the car in the morning to commute to work, and you know, you don't have to, what's the human decision you're gonna make? I hate this. I, you know, before we before we put up with it, it was something that we didn't have a choice about. When you start to have choices, you start to think about those choices. And so when you talk about risk, the risks to me, I mean, we could quantify all kinds of risks, but the real risk is, is being uninformed. And and and trying to believe series that you don't truly own yourself. Look at your own behavior. Look at the way people behave. And then you'll you you, instinctively all of us, all of us instinctively know what's happening. We may not like it. We may not be used to it. But we understand that and just you have to you have to rely on that gut.
Today, my guest is Ken Gee. Ken is a CPA and real estate broker. He's also the founder and president of the KRI Group of companies, which he started in 1997 with a purchase of a 28 unit apartment building in Cleveland, Ohio. Since the beginning KRI has evolved into a full service real estate company that specializes in multifamily apartment investment, syndication and property management services. KRI has owned more than 55 million worth of multifamily properties and managed over 15,000 apartment units, collectively worth more than $1 billion.
I'd like to ask you Ken Gee, what is the BIGGEST RISK?
Ken Gee 33:57
Sure, the biggest risk right now as I see it in the market, is it's very difficult to find deals, that will work. And the reason I call that a risk, is, if we're not able to make the deal work, and someone else does the deal, it probably won't work for them either. So the risk here is that people will do deals that they really shouldn't do, just to get the deal, right. If you've ever heard of FOMO fear of missing out, there is a lot of that going on. And if we you know, if we do lose a deal, it's probably because someone else was concerned about missing out, they're willing to pay more to make deals that didn't make sense. A because maybe they're inexperienced, or B, they just want to get in the game because they're dying to get in the game. So that's the biggest risk. I don't that's a risk to me, but I think that's a risk to the entire industry. Because when people do things that they shouldn't do, you you need to hope you're in a growth market. That's going to go fast enough to allow you to grow out of your mistakes. And if you're not, then you're going to get stuck with them, and it's going to impact the market. So that's the biggest risk. Now having said that, the number one reason we do multifamily is because I can't find a better risk adjusted return profile. Everybody needs a place to live, they just, they just do, I can't figure out a way to make that go away, I can figure out how to not need an office, I can figure out how to not need storage, I can figure out how to maybe not need medical, right, think about all the different assets, real estate asset classes, retail strip centers, I can figure out a way for that demand to really significantly decline. But what I can't figure out is a way for you to not need a place to live. So as long as I have that, I view that as a relatively low risk asset. And then if we're able to take that asset improves 1525 35% plus annual returns for our investors, I see that I look at risk very similar to the way the way you do, I shouldn't be able to get those returns with this level of risk. But because we're good at what we do, and because it's real estate, and it's leveraged appropriately, it we really are able to get a significant return. So the number one risk back to your question, is people doing deals that they shouldn't do, because it's it's going to hurt the entire industry as a whole eventually.
Today, my guest is Lauren Hardy. Lauren is a real estate investor with a people first approach to business, investing in hundreds of properties in our career, Lauren has the unique reputation of being a virtual investor having not lived in many of the states she's invested in. And in just a minute, we're going to speak with Lauren about how virtual investing differs from investing in your home market, and how to determine the right market for you.
I'd like to ask you, Lauren Hardy, what is the BIGGEST RISK?
Lauren Hardy 41:31
For wholesaling houses, specifically, the biggest risk, I would say I've seen a lot of people do this would be spending too much money on marketing. And by not making any money. I mean, just too much money and overhead expenses, not enough profit, not enough revenue. I see that a lot. There's a lot of people that will listen to a podcast like this and get real excited. And then they'll start a TV ad and spend, you know, $5,000 a month on a TV ad, but they've never closed a deal before. And they don't they don't know how to put a deal together. They don't know how to comp the house out. They don't know how to talk to a seller. They you know, they have absolutely, you know, just don't know what they're doing. And the next thing you know, is they could they go broke. So I think it's the overhead expenses. When you're just starting out. People spend a lot of money trying to get into wholesaling houses, they send out direct mail campaigns, a big one was direct mail campaigns, less people are going straight for TV, but direct mail campaigns, they'll they'll hear on YouTube university to send out you know, 5000 postcards a month, and some of these people they don't have that kind of money to play around with but they'll do that and they'll do it for six months straight. And they'll not realize you know, this isn't going anywhere and you're not just going to get that one deal that got you $100,000 at the end of six months, but they keep going thinking that that deal is going to come and then they just end up you know broke. So I think that's the biggest risk right there.
Today, my guest is Michael Zuber. Michael is a former Silicon Valley accounting professional turned full time real estate investor and the author of one rental at a time where he promises if you can get to four doors, it will change your life. Additionally, he he hosts the every day, I want to say the everyday daily YouTube channel, one rental at a time, where he dispenses tons of useful info investor knowledge by discussing current events and their effect have effect on the real estate market. And he also has a panel of real estate experts. He interviews regularly for additional knowledge. And he's also got an online course. And he's got a challenge to get to 500 deals of which I have participated in here and grateful member of his audience there and I can't encourage you enough to check him out. And in just a minute, we're going to speak with Michael about rentals and rental market.
J. Darrin Gross:
I'd like to ask you, Michael Zuber, what is the BIGGEST RISK?
Michael Zuber
So the biggest risk? And again, I asked myself this all the time, right? Because I look at it, I go, what is my biggest risk? And if I can, if I can survive the downside, right? up through all those things, those that I think about it all the time. So in my portfolio, my biggest risk that I've been working on all year is variable interest rate risk. I have commercial loans, I own apartment buildings. And those loans reset 357 10 years, depending on what you have. And over the last year, I have feared that I could see at point of refi, where rates, you know, I had a rate of three and a half. I was like, what happens if this is seven, seven and a half? Right? So what I had been doing actively over the last year or so is taking all of my loans and looking for ways to get 30 year money. One thing you can do because there's now for the first time, really in the last couple years are these vendors called non qm lenders, non non qm lenders. And I work with a lender who has taken all of my apartment risk and allowed me to get 30 year money at 3.99%. So it's not a Fannie Freddie loan, it's a 3.9 non qm lender. So I've been I've been actively working to get all of my apartment buildings, and I'm even paying prepayment penalties on one of my loans. Because I I'm deathly afraid of interest rates shooting up. And if that happens, of course, apartment buildings, if rates go to seven cap rates, gotta go to what 910 and then the valuation calls and they're gonna say, hey, you're now in technical default and you got to cut a big check. That freaked me out for a while. So I've been working very hard to Take all of my just double rate mortgages on apartment buildings and go get 30 year money even if I have to, even though my payment goes up slightly now, I'm okay with that. So that was the biggest one for me. Cuz I looked out years ahead and go, wow. Because again, I've been through the last crash, what caused the last residential crash? It's all those adjustable rate mortgages that popped up that and their payments reset. I looked at that going, Oh my God, if that happens to my apartment buildings, and then the cap rate goes up and the value is cut in half. You know, where do I go? So that was a big one for me. So that's, I'm working on my last one right now.
Today, my guest is a returning guest and a favorite. His name is Vinney Chopra. Vinnie is a multifamily syndicator, Senior Living care facility developer, and also a mentor for investors and an author and a podcast host and on and on and on. And he's multi talented. And in just a minute we're gonna speak with Vinney about the opportunities in multifamily and also senior living.
Vinney, what do you see is the biggest risk?
Vinney Chopra 32:17
Wow, that's a very good question. You know, they're not see that, as a businessman, any entrepreneur should always, always always get the insurance, you know, to come back the risk, because we syndicators are using other people's money, you know, to get into LLCs, and buying these properties and all that, if there is a slip and fall, or if the contractor came on the property, not properly insured. I just believe that we need to have the highest amount of insurance and umbrella insurance at the same time to directors insurance, I've had that in the past cyber insurance I've had that. I've been, you know, before big lawsuits, but I just kind of walked away from them, because I had people like you, you know, who really took care of and they were able to write good policies. Were they settling mediated and settled? You know, with the, with the plaintiffs, I think, right, you know, defendants via the defendants, right, ya know, all those things happen in life. So we should really always be looking around us what can go wrong, right. Even in the due diligence side, when you said, you know, risk involved, a lot of risk is there because we get the key to the property, then it's our choice. I mean, it's our baby, no matter what we did. So we need to really mitigate the risk, I call it you know, by taking proper measures about like, I talked about, like sewer lines, running the cameras through, and then, you know, foundation people, termite people to come digging deeper into, you know, if there is some termite and mold and all that stuff. So, no, those risks are there. As business people, we need to, it's the small amount we pay, it's an investment. That's what I say. I mean, one time in my life, I was paying 1.2 million 1.2 million insurance premiums for by so many properties. Yeah, yeah. You know, so that way, it was definitely definitely needed help, you know. So the risk factor is very much there, and especially for us syndicators, and we need to really listen to people like you. Definitely.
Today, my guests is Stephanie Walter. Stephanie is a capital raiser syndicator and the CEO of Erbe Wealth. She recently retired and sold her insurance agency of 16 years by following the key principles she's learned from her wealthy investors. And in just a minute, we're gonna speak with Stephanie, about how to unlearn what we've been wired to think about money.
J Darrin Gross
Stephanie Walter, what is the BIGGEST RISK?
Stephanie Walter
I think you know what? That's a good question. I think that the biggest risk, if it comes down to people investing in syndications is I guess, really understanding the team of people that you invest with? Seeing that they have a track record. I actually have, on my website of, I think about 30 questions that I get from almost every investor, and they involve risk and how to mitigate it. And so that's definitely a good, a good, you know, spot to start. I think the largest risk that I've seen personally of you know, people who have invested in syndications and kind of maybe not done so well, the last few years, I think, and knowing your market, or at least, being with people that really understand the market, that they're working in. That that I think, is huge. Because, you know, we've seen dramatic differences, like I said, between say, a B property, how it's performed through COVID versus a C property. As far as rent collections, we've seen differences in the way that you know, that these properties have done in Florida as opposed to say, Indiana You know, there's just there are definite you know, things about these these different markets that either you need to trust the you know, team that's bringing you these deals, but these are there are risks, you know, and you're doing your due diligence is is definitely important.
Today, my guest is Frank Furman. Frank is the co founder and chief growth officer at Pad Split, a real estate technology company headquartered in Atlanta, Georgia. Landlords list their properties on pad splits marketplace and are connected with workforce renters. In a shared housing room rental model. Landlords earn 120 229%, higher net operating income on average, versus traditional single family rental model, while working members of our community have a more affordable place to live.
J. Darrin Gross
Frank Furman. What is the biggest risk?
Frank Furman
Yeah, I feel like I've been talking about risk the whole time. Maybe I shouldn't put on a sunnier face to start. But yeah, it's a great question. It's, it's funny ask because I oftentimes get asked about insurance, that tends to be a smaller challenge for passport houses, because ultimately, it's a rental property, the big risks and insurance that, you know, your kind of homeowner's policy or, you know, kind of landlord policy would cover are the same, you know, risk of a tornado is the same risk of tornado, you know, we, we can be blamed for many things, but typically not for controlling weather. So, you know, that tends to be relatively straightforward. To me, the biggest risk to our business kind of gets to your point, certainly about zoning, but it's, I'd say less is a distinct zoning question and more. But certainly one around like kind of government involvement and prohibition. I mean, it's it's, I guess, you could broadly call it the the NIMBY movement, being weaponized and certainly you've seen it with, with other startups, certainly in the space and an Airbnb is a great example, where, you know, Airbnb, their core offering of letting people rent out their properties was essentially legal everywhere in the United States 10 years ago, you know, there there may be some small exceptions and you know, we can have the debate about you know, whether or not they should have been paying hotel tax in this map, but generally, it was just kind of off the books. No one even thought it was that strange If in 2005, you said, Hey, I'm going to run out, you know, I'm going to leave my house for a week, and I'm going to have someone pay me for the, you know, to live there for a week, no one would say do you would have no issue at all. Now, obviously, they, you know, they grew, they got a ton of coverage. And, you know, they're they're issues that people use party houses and you know, a bunch of guys come into a residential neighborhood to go to a, you know, for a big football game, and they are throwing a kegger and neighbors are mad. You know, I get it. I also live in a quiet neighborhood. I have kids, you know, I like I, we all have a little bit of the the nimbyism in us, right, especially on, you know, work nights and that kind of thing. So, so I get it. They also, of course, have a very powerful competitor and kind of hotel companies and so on let's consolidate and well resorts. So there's, there's a little bit of that, too. So, you know, fast forward to 2021, and many municipalities have either straight prohibitions that are new, you know, they've been legislated into existence, or pretty onerous requirements on Airbnb, and in some cases aren't actually been easy for them to answer, right. Because one of the unfortunate things about our kind of the way the politicians think about these things is like, they think Airbnb is operating all these units when clearly they're not, you know, they're, it's a marketplace house or operating a unit. So Airbnb doesn't know what's going on, or doesn't check the maintenance or, you know, whatever. That would be almost impossible for them to do. So. Okay, fine. But they've, they've obviously faced a lot of headwinds, but they were able to get big enough and secure enough that they could kind of attack them head on for us. You know, I anticipate some of the same sort of challenges. We, you know, we're in the workforce housing business. And, you know, everyone loves workforce housing, except in their street, you know, except in their neighborhood, except in their town, you know, they want they want it to be somewhere, you know, they want to get their Starbucks coffee at the you know, for cheap, but, you know, they don't they don't want to house the barista, so, okay, fine, we're gonna face some of the same headwinds, but can we get to a size and scale quickly enough, fast enough, become accepted enough to where you're, you know, not necessarily too big to fail, but where you can face those challenges head on, and where the, you know, the disruption of blocking things as at least as much as, you know, the disruption that you're causing, because, you know, real estate and renting, you know, that's it's not always an easy business, you know, we have challenges, you know, as I like to say, our, our residents are cut from the crooked timber, that is humanity, you know, and they, they sometimes fall short of what they'd like to do, you know, predominant good people, but sometimes they can only Park like jerks, you know, sometimes they, you know, cause trouble. You know, that's, that's just the reality of it. When you have a couple 1000 these people, it's inevitable. So can we get big enough, fast enough and really create enough value in the marketplace that, look, the hadn't there, headwinds are coming. You know, that's, that's inevitable, but we can face them with kind of a worthy challenge. And when communities say, Hey, you know, we don't actually like workforce housing in this town, we'd say, Okay, well, we're already here. So, you know, what's next? Do we need to tell you where they are? Do we need to, you know, this or that? How do we conform and meet it? But have it not be such an onerous? You know, have it have to have the scale to where we can meet it?
Today, my guest is Anton Mattli. Anton is the CEO at Peak Financing, where he brings his decades of experience in commercial and investment banking, private equity and commercial real estate. And in just a minute, we're gonna speak with Anton about commercial debt financing, the changes terms and the challenges we're currently facing in this market.
J. Darrin Gross:
I'd like to ask you, Anton, Maddy, what is the biggest risk?
Anton Mattli
Yeah. Obviously, as you mentioned, risk is everywhere. A lot of risks that can be mitigated at least right and Insurance obviously is a is a is a perfect tool for that some risks cannot be mitigated and they it brings me back to the financing side and forever on investments, as well as for our our clients. I would say the biggest risk is really that when you own a property, that you potentially lose that property, even though it cash flows. And this is we have seen it in 2008 and 2009. And oh, we get back to that time period. But doing market disruptions, you will have a situation potentially, there you may not get financing, as it will be available today. And if you get financing, it might be at at terms that your noi and cash flow cannot support. And this is my view is really the biggest risks that one is, is owning a property and one is in a in a financing situation, and is not ready for for that black swan event, during which one potentially would have to refinance or sell the property. So my solutions recommendation really is for that is is make sure that you have lower leverage, or a longer term of the loan, so that you're not caught off needing to sell the property, or refi the property the loan that is in place doing such a black swan event, which essentially means is that one should always have at least one year, ideally two years of a remaining term on the long left. To avoid such a black swan event, right, when we look back to 2000 de 2009, if you had to refinance a property right during diverse period of time, it was not available for for for a lot of the borrowers. However, if one was able to wait it out for another year to two years financing came back and didn't lose the property. And that is I would say is probably my my biggest fear of from a risk perspective, but also something that can be resolved by just keeping the term of the loan locked out for long enough, so that won't get snow caught in the middle of such a black swan event.
Today my guest is Barry Greenfield. Barry Greenfields local works since 2011, has a new take on co working spaces, which means a win win for those with empty offices and leases on their hands, or for small businesses leaving big leases, or for empty law firms. And in just a minute, we're gonna speak with Barry about local works and how that works.
J. Darrin Gross
I'd like to ask you very Greenfield, what is the biggest
Barry Greenfield
For Local Works, the biggest risk we have going forward is not growing quickly enough, there's a huge market out there that we've already proven, exists and can be profitable. And in order to scale at the pace, we need to scale add, probably require some form of investment, you know, we're adding, we're trying to add three or four locations every two months. But in reality, to get to where we want to be in terms of a real hyper growth company, we probably need to be adding five or six locations a month. And part of the problem is, we spend so much time making sure each location is successful. And that requires a lot of manpower and a lot of focus. So we've turned down opportunities that we probably should be taken. And if local works is going to grow to compete with these other large companies that are in the press all the time. We need to start taking not turning away that business and find a way to fund a larger team that can handle you know, growing to 250 to 500 locations. So it's nicely a risk to the company failing, it's just a risk to the company being even more successful.
Today, my guest is Chris Craddock. Chris is the nationally certified life coach in leadership and one of the top real estate professionals in the world, closing in 30 to 65 deals a month. Chris is the host of the uncommon real estate podcast, a real honor and an entrepreneur. And in just a minute, we're going to speak with Chris about how to turn dead leads into explosive into an explosive revenue stream without increasing marketing cost, and completely eliminate the need for expensive marketing channels.
J. Darrin Gross
I'd like to ask you, Chris Craddock, what is the biggest risk?
Chris Craddock
Yeah, I think the biggest risk is not having a great partner, and therefore, Sending on deals that you shouldn't have sent over, they get cannibalized where you could have gotten a deal on it. And the partner, is it somebody that's a trustworthy person of integrity that will send that that deal back to you. If, if you're off, you know, if you've sent it over to them. So that's, that's the deal. The second, you know, the second risk is very much like it, which is being so afraid to send over deals, because you're afraid of being cannibalized that you make no money on that front, too. So that to me, those are the two, the two biggest risks that you're gonna, you're gonna see.
Today, my guest is Mark Meyers. Mark is a former Marine Corps Sergeant brings over 20 years of successful business operation ownership and high level consulting experience to the table for his clients and financial advisors that he works with his company peak profit solutions and its affiliate partners have helped 1000s of individuals increase profit and permanently reduce their annual tax bill to help them grow or better grow their business and accelerate their wealth. And in just a few minutes, we're going to speak with Mark about how to reduce your active income tax bill without replacing your CPA or investment strategies. Also, we might talk a little bit about how to eliminate long term capital gains on the sale of appreciated assets.
J. Darrin Gross
Mark Myers, what is the biggest risk?
Mark Myers
Thank you for that question. And it's a good one. And I'm glad that you opened up the box to not make it have to be an insurance Specific because that's a, as you know, very well. Risk is is huge and mitigation and transfer of risk is really important. But I would say in my context, in the in the way that I help business owners or the way that I help individuals that are, you know, transferring assets or selling appreciated assets, it's the risk that you take for not slowing down. And looking at how to keep more of your profit is huge. Because if you think about every single year, you're earning income as a business owner, if you're overpaying your taxes, if you're really if you're paying retail, on your taxes, and you have no legal obligation to pay retail tax, you can pay wholesale tax, you know, Judge Learned Hand said it best he said, You know, there are two tax systems in America, one for the informed, one for the uninformed, both are legal. So I think the biggest risk is to not take the time to get help and understand the and the informed area of tax law, because every single day, every single week, every single year that you're earning income, you could be paying 2030 40% more than you should to the IRS when you don't have to. So I think that's the biggest risk is overlooking profit that you you're, you know, you don't even realize is there money that you really should be keeping that you don't realize it's there, because you're not taking the time to spin and focus on that risk. Right. So that's really I think the most important risk that people that business owner should look at is where can they mitigate taxes? And where can they keep more of their profit in their in their pocket?
Today my guest is Dave Spooner. Dave Spooner is the co founder of Innago, a property management software designed to simplify life for small to mid sized landlords. He's been involved in the real estate technology space since 2013. Working to enhance the way landlords and tenants communicate. And in just a minute, we're going to speak with Dave about property management software and how it can make your life better.
J. Darrin Gross:
I'd like to ask you, Dave Spooner, what is the BIGGEST RISK?
Dave Spooner
It's a great question. It's something we think and talk about a lot, you know, especially as a small company. We were founded four and a half years ago now a little over four and a half years ago now. And we're at an inflection point, kind of an extended inflection point where we've grown really Really quickly and we're continuing to grow. And it's really accelerating more and more people are finding us, more and more landlords are giving us great reviews online, we're the word is out that Innago is a premier product for small to midsize landlords. And we're growing faster than we've ever gone before by exponential figures, right, which is great. It's very exciting. But the risk that comes with that is in growing the team, right and building our team internally, in finding great employees, it's easier to have quality control on your team when it's just you and five other people 10 other people 15 other people, but as it grows beyond that, it becomes harder and harder. And that's where we are right now where we're growing pretty rapidly. And we're expanding our team and trying to find good talent and making sure that that talent is acclimated effectively, so that they're happy so that they enjoy working here, so that they feel fulfilled, but they're also providing great value to the to the rest of the team and to our clients. That's our that's our biggest risk right now. It's just continuing to find good team now team members. And to relate that back to real estate. I think that's ultimately a place that landlords and real estate investors get to right, if you're purchasing your first property, your first couple properties, it's easy to control a lot of that stuff, it's easy to do quality control, but as you grow bigger, you have to have a great team, right? You got to have a good broker, you got to have a good a good insurance guy, of course, right? You got to have a good lawyer on your team, maybe a tax guy, a CPA, maybe you hire internally, right? You hire your own property manager, it's the same risk that other folks have. We're experiencing it on a bigger scale right now. And that's, that's our biggest risk, something we think about a lot, something we talk about a lot. So we're gonna make sure to mitigate as much as possible.
Today, my guest is Yoel Mayerfeld. Yoel is the CO CEO with Chase Properties, where he oversees the company's asset management and financing. Mr. Mayerfeld joined Chase Properties as the Director of Finance in 2005. And in just a minute, we're going to speak with Yoel about a winning investment in retail. While others have been quick to move away from the asset class Chase has been thriving in retail.
J. Darrin Gross
If you're willing, I'd like to ask you, Yoel Mayerfeld, what is the BIGGEST RISK?
Yoel Mayerfeld
Sure. Well answer in a couple of ways. And risk, as I mentioned, from, you know, how I was trained in in my professional life is really what I'm always first focused on, you know, whenever we're looking at an opportunity. I'm always spending a lot more time on what can go wrong than what can go right. Because capital preservation is our sort of number one goal. From a you know, I would I was looking at my calendar yesterday and saw that we had this podcast and Robbie, who set this up with you wrote in the notes that one question you like to ask is about risk. I should be I should be repair at night, and I happen to be talking to a friend of mine. It's a CEO of a large real estate company public read, and I said, Oh, you know, I, I'm interested in what I'm going to say about what my largest, what I think the biggest risk in this industry is what do you think the biggest risk is? And he said, Well, for sure, the biggest risk is capital markets, freezing up, because whenever that happens, it really puts us in, in a bind. And to be able to, to borrow, which we saw, you know, certainly after the oh eight recession and during COVID. But for me, that isn't at all, what I think has the biggest risk and I think part of that is our strategy, which one thing I didn't get into is that we are low leverage borrowers, which I think differentiates us. So a even when capital markets are tight, for our lower loan to value needs. Usually there's more room for us than for others. Our bankers always tell us they can sleep at night with us better than they can sleep at night with many of their other real estate borrowers. So I just thought that was interesting. I think that would be what a lot of Retail real estate or real estate investors in general would say it's the biggest risk. But for us, we're so focused on the real estate, and it performing with or without debt, we're really not about the financial engineering part of real estate, which, at these low cap rates, I think every real estate investor has had to become somewhat more of a financial engineering, trade than a real estate is a real estate great trade, which is where we really try to stick with. So. So for us, that wouldn't be it for us really on our answer on the retail side, which has been the bulk of our experience and our, in our investment. The biggest risk is the, you know, we can't perform well, for attendance don't perform well. So our biggest risk is, is is these retailers, not figuring it out. And and right now they've been, you know, our portfolio, the sales that tenants report to us are stronger than they've been even pre COVID. They're figuring out their integration of bricks and mortar and online. So they're doing that well. But the day that they don't, the day that they they let you know, competition like Amazon, innovate quicker, you know, figure it out in a way that that puts them at a disadvantage. That's a big risk to us, we need our our tenants to do well. So that's on a more micro to the retail aspect for for more of a macro perspective, as real estate investors generally, which is what we are, I would say it's the risk of the unknown. After living through COVID, you know, you mentioned insurance, you know, we have what we feel is, you know, really good insurance for our portfolio and thought of every scenario. You know, we weren't covered for lack of rent during COVID, when your retailers couldn't pay. So I think the unknown is the biggest risk. So the mitigant, I would say, has has been, our diverse diversification is sort of like the answer for all kinds of risk for investing. And adding multifamily and industrial was a huge help now, for COVID. Because our retailers couldn't pay rent during COVID, because their stores were closed. Our industrial properties all paid rent, our multifamily properties all paid rent. So that diversification was huge for for during that three month period of COVID, that helped us sleep better at night.
Now, even the retail properties it was it was very temporary, and it was a stressful few months when those stores were closed, but we defer the rents for most of our retailers, because our lenders allowed us to defer our loan payments. So all worked out fine. But having that diversification was really a mitigate for, for us, globally. And then the diversification even in within our retail portfolio of mixed geographies, mixed tenants for different credits, so that when, you know, the Siena brands struggled and dress barn closed, it was such a tiny percentage of all of our tenancy that it was very easy to to move beyond that fill, fill some of those dress barns and most of our portfolio continue to thrive. So we were Okay, so the answer to mitigating some of these risks that I think about it continues to be diversification, which has really helped us.
Today, my guest is Dr. Hank, Dr. Hank is a mental scientist and a wealth maker who helps people become their greatest possibility. And in just a minute, we're gonna speak with Dr. Hank about the power of your thoughts and how they affect your outcome.
J. Darrin Gross
But take a look and identify what what you consider to be the BIGGEST RISK? Yeah, again, for clarification, I'm not necessarily looking for an insurance related answer. Yeah, yeah. If you're
Dr Hank
Don't worry, you're not gonna get one.
J Darrin Gross
Yeah. Well, that's, that's we're now looking for one second. That's good.
Dr Hank
Yeah, we're in alignment my friend. Yeah, that actually, so so what you explain, for example, as risks, that those are very practical steps, and, you know, very good steps on to avoid risk insurance, it's an excellent way. And I have insurance. And again, it is the name of the game. You know, there's health insurances ways to insure your money, and, you know, all kinds of wonderful, wonderful thing. So I'm all for insurance. However, an answer to your question, the biggest risks that any of us can take, is to get disconnected with our higher power. When we fully disconnected, you actually never can fully disconnect. But when you disconnect enough, away from your higher power, that that's where you commit suicide. So the greatest risk is being disconnected because then you you don't have to worry about insurance, you're not here anymore. But more importantly, I'm what we want, is when you're connected, that you will be guided to, for example, this show, Derek, you're amazing Joe, and how to help people whether it's, you know, in this particular show on mindset, now powerful and important it is, you know, or on insurance that you know, if you don't have so you will be led to people circumstances, events, and thoughts, your own thoughts, that will lead you to the perfect light, the light that you're looking forward to have. So the biggest risk is to rely on just your analytical mind. And the and the opposite of that I want you to do that is to get connected. And you do that through breathing your breath. Deep breaths is a great way to get connected through meditation to get connected, to quiet your mind to do things such as the joy shop, that will get you connected, and you will literally be given all the answers to where there won't be any risk in your life at all. I love it. That's great.
Today, my guest is Brett Swartz. Brad is considered one of the most well rounded capital gains tax deferral experts and informative speakers on the west coast. His audiences are challenged to create and develop a tax deferred transformational exit wealth plan using the Deferred Sales Trust, DST so they can create and preserve more wealth. Brett is the founder of the Capital Gains Tax Solutions, and the host of the Capital Gains Tax Solutions Podcast. Each year he equips hundreds of high net worth business professionals with the DST tool to help their high net worth clients solve capital gains tax deferral limitations. And in just a minute, we're gonna speak with Brett about Deferred Sales Trust.
J. Darrin Gross
'd like to ask you, Brett Swarts, what is the BIGGEST RISK?
Brett Swarts
Sure, so I'm gonna apply it to the Deferred Sales Trust cuz we didn't actually touch on this, but I think this is really important. So it has to do with asset protection, right? So the more you own and the more you own in your own name and or that's not an LLC or that doesn't have proper insurance, the more you could be liable and have higher risk of somebody suing you and taking that asset okay. So by essence, owner's ownership, and Rockefeller said it well he said own nothing control Everything right? And and the idea was asset protection. So how do you lower risk? Well, on the deferred sales trust, guess what, you become the lender. You don't own the trust. So what you don't own, they can't take from you. Right by default. Now, could a creditor, you know, if they get a judgment against you? And could they potentially get the income off of the trust? Yeah, that's that's common. Right. But could they force the the the ownership, that's not the person that they got the judgment against? to do anything there? No, because they don't own it. So we do love that about the deferred sales trust, who does take and mitigate some of the risk? So I think part of the answer is the risk of just lots of ownership. Instructors are better not insured in a proper way that could be subject to judgments. If there's a way to mitigate that, I think that's that's really good. And I think that's probably the biggest risk I can think for this conversation here. That makes sense Darrin?
Today, my guest is Trevor Mauch. Trevor is the host of the Carrot Cast Podcast and the CEO of Carrot, one of the nation's fastest growing companies, according to Inc Magazine, where they have helped the nation's top real estate investors and agents plant over 3 million online leads in just five years, closing 1000s of deals with their software and training. Trevor lives in Roseburg, Oregon with his wife and three kids, and is passionate about using business to fuel your passion and amplify your impact that are the impact you want to make in the world. Part of the impact he's passionate about making is helping entrepreneurs unleash that entrepreneurial dream of finally unlocking that freedom, flexibility, finances, and impact that you've dreamed, but have you yet to be able to fully make happen. And in just a minute, we're going to speak with Trevor about online marketing and how to attract an audience and remain relevant.
I'd like to ask you, Trevor mock. What is the BIGGEST RISK?
Trevor Mauch 39:22
Man, this is a good question. So four years ago, we started when we do our annual planning, one of the first things that we do, like we'll set numbers and goals and stuff like that. But then right after that, we do an exercise where it's like, it's kind of kind of a SWOT, I guess you could call it but it's like what could kill us? What What can kill this business? Because oftentimes, we ignore those things that truly could take us out and they take us by surprise. And so the things that the top of that for us are, if since we're so heavily focused on Google, and not all the leads for our clients come through Google searches, it could be from pay ads and things like that. But we're very heavily focused on Google, if there was a major change in Google and we got are caught with our pants down, and our websites all sudden, for some reason weren't exactly what Google is looking for. That would be decently catastrophic. And so we take that go, Okay, how do we make sure that that's front and center in our product? Whenever we're looking at anything product related? How do we make sure we're always relevant in Google, we're staying ahead of the curve or websites or fast things like that. The second one day, and I'll just give you two here is being Frank right now in this business. I've been building a leadership team, we had an outside company come in, and did a really good audit for three year vision moving forward. So we all kind of knew what were the weaknesses, what were our blind spots, and I had kind of known it. But what what came up is that I am too key on the strategy side in a way to many parts of the business where people from all around the company see me as innocent as necessary on the strategy. And I'm like, Oh, my gosh, I totally didn't lead well there in those certain spots. Because if I'm that key, if something happens to me, they all feel this thing's gonna fall apart. And so we got around a table, it's like, how do we make this not true here? What what's in my brain? Where do we need to upgrade leaders? You know, keyman insurance, that is an actual thing that we did about a year ago, when we did that, and it's given me peace of mind for me and my co founder for sure.
Today, my guest is Adam Gilbert. Adam is the president of the firm commercial, where he leads a team of agents specializing in commercial real estate sales, leasing, land acquisition, development, government relations and value add entitlement deals. And in just a minute, we're gonna speak with Adam about value add entitlement deals.
J. Darrin Gross
So let me ask you, the question that I do ask people is, what is the BIGGEST RISK? Is that what you? Would you? You would, you know, your BIGGEST RISK would be just that?
Adam Gilbert
Yeah, I mean, yeah, this is probably on the riskier side of the type of investment deals that I do. So I mean, I have a shopping center that I'm doing a value add facade enhancement on, you know, that's a tangible asset, these entitlement deals, I would say they're on the risk there, they are probably the biggest risk in terms of deals that I do. Because again, if I'm unsuccessful in getting the entitlements, I've now just pissed away all my money for something that I was able to create no value on. But the if I am successful, then the returns are high enough, you know, 5x 10x, to justify that risk. And, you know, what I equated to is off playing poker, you know, I try to do as much due diligence as I can. And if I'm holding two kings, if I'm holding a great hand, I can still lose, you know, but I'm taking a calculated risk. And knowing that I'm willing to make a bet, because I've, I think that this is where this particular property and this project needs to go.
Today my guest is Victor Jiracek. Victor is a real estate fix and flipper based in Gainesville, Florida. He completed 40 excuse me 20 flips last year and is on pace to do an additional 30 flips for this year 2021. Ironically, his best flip was a $64,000 net profit deal that almost that he almost backed out up. And in just a minute, we're going to speak with Victor about what makes a successful flip, and how to get started to do your own flips.
J. Darrin Gross
I'd like to ask you, Victor Jiracek, what is the BIGGEST RISK?
Viktor Jiracek
Yeah, no, I think that's that's great question, happy to answer it. I'd say it's all about the numbers. So I always teach and preach. It's like profit margin, like margin of error, like how much you know, profit, do you have potential in the deal, because if anything goes wrong, like a takes longer than you want, or doesn't sell for as much as you want, you have to go over repairs, like that's all going to eat into your profit margin. So the more profit buffer or profit margin you have, the better. So again, it's all about the numbers. And there's been a lot of deals where like we set out to make 30 40,000. That's, that's great. And then one issue came up, and then another issue came up and another issue came up. And then we walked away with 10,000. But luckily, we had that initial, you know, profit buffer to work with, or else we would have been in the red. So with that same example, like if we initially wanted to make, we said, like, Hey, I just want to make 15,000. Like, if I can make 15,000 on this, I'd be happy. And then the issue comes up in that issue, another issue another issue, and then suddenly, you're in the red. So that happens a ton. So that's why I recommend in terms of risk, like just protect yourself, like if you buy any, any property for the right price, like every single thing can go wrong, and you can still be profitable. But again, it's you make money when you buy is, is the segue from that. But it's really like profit margin buffer, just in case anything goes wrong, and it will go wrong. That's the other thing. It always takes longer than you want. And it always costs more than you want.
Today, my guest is Joe evangel. St. Joe is the executive coach with over 5000 hours of experience under his belt, as well as the CEO and partner of one of the top Self Storage development companies in the country. And in just a minute, we're going to speak with Joe about the opportunities in self storage and what you can do to level up your investment game.
J. Darrin Gross:
I'd like to ask you, Joe, evangelist at what is the BIGGEST RISK?
Joe Evangelisti
Absolutely. And I have insurance background as well. So I mean, I'm not going to answer from an insurance perspective, but I understand where you're coming from. And, and look, I think insurance is one way, you know, we could talk about risk, but really, when we're talking about risk in life, and we're talking about risk and success and growth and contribution and creating something that, you know, when we talk about legacy, wealth, or legacy building, I think about legacy as when I create that thing, there's some kid 100 years from now, who's never heard my name, who's going to be impacted by that, because his grandfather, and Father, you know, taught that, you know, took it down the line and created that long term legacy and wealth, right? In order to create that there's no way you can do it without risk, right? Everything we do is risk, you drive your car to work in the morning, it's a risk, but you don't not work, right, you don't not go to your job. It's the same thing, I think in our industry, is there's going to be a lot of risks. But the one way that we can create risk mitigation is through proper due diligence through making sure we check all of our boxes through thinking 12 months to two years in advance or five years in advance in some in some cases, right? So, you know, when it comes to like, let's say Self Storage development, for an example, there's a lot of outliers, right, the market could change the the the price of materials right now has gone through the roof. And so we build in contingencies for these things, we pay attention to the what ifs, we look ahead to, you know, making sure that we ask the right questions and do the proper due diligence. You know, we don't buy sites that, you know, used to contain an underground oil spill or you know, have major water issues or any that type of thing. So I think the best way to mitigate risk when you're in the development business and in your in the construction business, is to do the proper due diligence, like you see here, most of the nightmare stories of big developments gone wrong. It's because someone forgot to ask the right question. someone forgot to do the right study, someone skipped paying for the feasibility report and just went in all in on a gut feeling. You know, one of the things about these big deals that I like is there's so many people involved in the approval process, right? It goes through 20 different hands before we say yes, and before we even decided to go take investor money in. So we want to make sure that we're mitigating the risk to create the best possible upside, knowing that it's going to go wrong, that we have problems, things happen, right, and then being surrounded by really good problem solvers. So when they come up, we have a plan B and A plan C and a plan D.
Today, my guest is Manny Renteria. Manny is a 15 year veteran of the solar industry, and has been designing commercial solar systems for over eight years. He is a founder of one up solar, an industry leader and residential, nonprofit and commercial solar installs in San Diego. And they are expanding their reach to the entire country. And in just a minute, we're going to speak with Manny about the opportunities in solar for real estate investors, and specifically more commercial aspects.
if you're willing, I'd like to ask you, Manny Renteria, what is the BIGGEST RISK?
Manny Renteria
So the biggest risks that we run as a nationwide consultancy, and myself myself personally, as a consultant that has, that has a phone with with over 1000 clients, and that call me You know, every other day is, is, is not meeting the performance, right. So I've, I've made this mistake, you know, when I, when I first started consulting, in the consulting business signing agreements, on behalf of service providers, so I would be the the in between the service provider and the customer. And so, in this agreement, I'm the one presenting disagreement to the customer and saying, hey, these are all the benefits of, you know, doing solar with, with my, with my service provider. And so in these agreements, it's it's not, it hasn't been a standard to have a performance guarantee. And that I think, is the biggest, biggest ticket item for me, for my customer. And for him, even for the for the service provider, is to have that, because now without that I cannot sell anybody's product, I cannot promote or sign anybody's agreements, unless there is a performance guarantee, which covers me, and it covers my, my, my client, in this case. And what that is, is very simple if if your system is, is out there and is producing power, but the power that it's that it's supposed to be producing, let's say I presented you with a proposal that says, hey, this, this system is is supposed to produce 10,000 kilowatt hours every month, okay. And for the first year, you know, multiply it by 12, that's 120/3, whatever that is, right. So, so they sign up based on the fact that you showed them, you know, a performance estimate on the proposal that they signed, and then the agreement didn't really have any performance guarantees. And what happens is, a year later, when this system underperforms significantly, and and your customer ends up with with a system that doesn't produce or meet their needs, and on top of that, now they have a huge utility bill, why because all the power that they didn't produce is now coming from the utility and now they have this extra bill on top of whatever, you know, if they're financing, then they have the only have two bills. And so what ends up happening is I have to go and explain why the system is underperforming, or whether or not they need more panels. And I'm stuck in between, you know, explaining to the customer, hey, you know, your system didn't produce because these trees are still in the way or something like that. So it's really, really important that that a performance guarantee is set in place by any service provider. And then that performance guarantee has some sort of sort of sort of monetary compensation in in the event that the system underperforms in a certain year or every two years and typically what a performance guarantee does is every two years if the accumulated power doesn't equate to this much you get reimbursed at this rate. So that to me now is is one of the biggest risks that I that I've had moving forward. And so now I always look for that in service providers to give me that performance guarantee. Otherwise, I'm out there, you know, exposing myself and my company as as you know, as being untrue or just on I don't know, just not not trained, I guess
Today, my guest is Charles had cell. Charles is the CEO of EA property care, a prop tech company based in Boston that provides smart building solutions for landlords and developers that operate over the cellular network. And in just a minute, we're going to speak with Charles about tech for property that can help boost your net operating income.
if you're willing, I'd like to ask you, Charles. Hansel, what is the BIGGEST RISK?
Charles Hadsell 32:36
Yeah, sure. Darrin, I think, you know, when I thought about this, I think the biggest risk I think about is technology rescue, you know, even even alluded to it a little a little earlier in our discussion, right of kind of the early generation water bugs having so many like false alerts that it kind of caused the owner to like be dead in because the alerts and now you have a real issue. And now you're, you miss it. So I think technology changes rapidly, you know, and this kind of comes back to my time and some doctor as well, we look at the pace of innovation on putting more electronics into smaller places and asking like these, you know, end nodes of the network to do a lot more you rather than sending it back to some centralized server, you're having decisions made at the very edge of the network. So reliability is like is like very important for these, these these applications. And I think with semiconductor technology, reliability is continually improving. But there's always that risk of a component failing at the wrong time and leading to like a bad outcome. You know, so that's why we kind of like to take the approach of kind of layers of redundancy, you know, like, so for example, like to prevent, like water loss in your basement or in the basement of a building, have a sensor to tell you, if someone left the exterior door open, then have a sensor that tells you it starts to get cold, then a sensor to tell you that there's a water problem, you know, so you have kind of three layers of redundancy there that could kind of prevent, prevent a disaster. So So that's kind of how I think about risk is like a technology is changing rapidly, you need a platform that could adapt to that. So you're not kind of stuck in the stone age's with the platform that's, you know, out of date are no longer relevant. And then also like the kind of I say that the connectivity risk, you know, of a, that power outage happens, what happens to your system, we saw what happened in Texas, you know, a few months ago where all that led to all that damage. So that's why we covered this a couple different places on the show today, you know, cellular i think is the right technology medium for these IoT systems and these rental property and like landlord applications, just because it's up, it's up when everything else is not up. So that's kind of my overall kind of thought of you technology risk is kind of the big one and that's how we really like to wrap your head around minimizing the impact and putting redundancies in place.
Today, my guest is Matthew Ricciardella. Matthew is the founder of Crystal Spring, excuse me, Crystal View Capital and has over 18 years of experience in the real estate industry. Crystal View Capital is a private equity real estate firm that specializes in acquisition and management of self storage facilities and manufactured housing communities across the United States. Known for its in house acquisitions and management team and unique company culture. Crystal View Capital is vertically integrated, disciplined to its investment strategy and has a proven track record since a firm's launch in 2014. And in just a minute, we're gonna speak with Matt about self storage facilities in manufactured housing.
J Darrin Gross:
I'd like to ask you, Matt Ricciardella, what is the BIGGEST RISK?
Matthew Ricciardella:
Well, I think it's a great question, obviously. And I think there's a lot of answers to that question. But I've, I've thought about this, obviously, in depth. I think, for me personally, in what we do, by far, the largest risk is overpaying for an asset. You could take a good investment and make it a poor one, by paying the wrong price. Or vice versa, you could take a mediocre investment and make it a wonderful one by paying the right price. So we focus diligently on not overpaying. And the way we do that. There's a term actually I think, Charlie Munger had this term, which is Warren Buffett's partner. And he said that risk is inextricably bound up in the price that you pay for an asset. And I think that rings true for me in a major way, the way we mitigate that risk to answer the other part of your question, Dan, is, by and large, we don't compete with the rest of the buyer pool that's out there. way we do that is we buy most of our properties off market. So we create a bond in a relationship with a seller where we're dealing direct with them without a broker. And that's how we put probably 80 to 90% of our deals together. Right now, as I mentioned, the two asset classes are white hot. Because of that. There's bidding wars, there's auctions, you have to compete in those auctions, and you offer the highest price and you win. But question I have is, Are you really a winner? Or are you a loser? I mean, you paid more than everyone else out there. So we like to focus on finding our deals without competing. And I think that's how we lay off the risk. So as you would use the term in the insurance world where we mitigate our risk to a large extent.
Today, my guest is John Stoeber. John uses his background in finance to build financial models and analyze multifamily properties from a number of different perspectives. He currently owns and operates 34 apartments in Little Rock, Arkansas, and is looking for deals in growing markets. And in just a minute we're going to speak with john about partners deals in the skill set you need to do your first deal.
J. Darrin Gross: I'd like to ask you, John Stoeber, what is the BIGGEST RISK?
John Stoeber
Right now, I still think COVID. And just the environment we're in is the biggest risk, especially if you're dealing with C class properties, you tend to deal with residents who are on the lower end of the socio economic scale. So these are the people that you know, their servers, waitresses, receptionist, they actually have to go into work. So if there's a shutdown, like, they're not going into work, or if they get COVID, like, and they may not have a job anymore. So I think that is a huge risk, like from a property perspective, but also with this, like the home market right now. And it you know, it's February 2021. Like the whole market just seems crazy. If you're, if you and your listeners have been, like paying attention. I mean, just look at gamestop, AMC Dogecoin. It's just like it seems very unstable right now. Kind of bubbly and frothy. And like, I don't know if the lending market is going to be the same 12 months from now where people are able to get loans so freely. And if you can't get loans, that really drives down the number of buyers who can buy a property, which in turn is going to drive down values.
Today, my guest is Erik Hayden. Erik is the founder of Silicon Valley based urban catalyst, named by Forbes and Sorenson impact Center has a top 10 opportunity's own fund. And in just a minute, we're going to speak with Erik about opportunity's own funds, and the potential for investors in the next 10 years.
J. Darrin Gross:
I'd like to ask you, Erik Hayden, what is the BIGGEST RISK?
Erik Hayden
Sure, and this is a great question, because this is what every investor should ask whenever they invest into a property or a fund is what is the risk versus return because that's what matters when you're looking to make your investments. When you look at ground up real estate development, which is really what urban catalyst is, you really have to compare it to a group that goes out and buys existing stabilized real estate assets. Because you have a much better idea of what you're getting into, if you're buying an asset that has a tenant, it has a cash flow, it's already in existence, and if it's a piece of dirt that I'm going to build a building on, and there's a whole future. So really in, in ground up development, there are four major risks. The first is pre construction risk, and that is, am I going to be able to get building permits and approvals from the city to build the buildings I say, I'm going to build. And here in downtown San Jose, that risk is significantly mitigated, really, because the local government wants to see development happen. And they're very clear with developers early on in the process as in way before we enter into the contract to buy the land, say, here's what you can do, here's what you can't do. And they've been really true to their word on that. So as far as other jurisdictions here in the Bay Area in California, it's not quite as easy in a process so that risk is much higher in other jurisdictions here in downtown San Jose, that risk is significantly mitigated. The next risk that we look at is called land development risk. That's there are things associated with the land that you just can't see. I mean, there's environmental contamination. There's liquefaction geotechnical risks, there can be underground structures that you don't know about. There can be landslides, there can be water tables, all sorts of stuff. And of course, we do a lot of studies before we acquire any property to make sure that we know everything that we can possibly know. But I'll tell you, one of the reasons why I like doing development in downtown San Jose is because it's flat, I know it's flat, I know that there's a high water table, so I don't build any underground parking garages. And I do all those studies to make sure I know how to mitigate, you know, build my structural systems for a geotechnical standpoint and my foundations, and how I'm going to clean up any environmental contamination that's associated with the property, I need to be able to put, when I say put a number in a box, right, you got to understand how much your risk costs. The next type of risk associated chronic development is construction risk. And this can be a bad one. But in order to mitigate that, we do a couple of things. The first is, and this is a bank requirement, every ground development project we do, we need to have a guaranteed maximum price contract with our general contractor. So we use third party general contractors. And really the way that those work is they say, here's the price we're gonna build this building for. And if we go over that price, it's on us not on you. Now, a couple caveats to that. The first is it has to be a large enough general contractor that they can handle those cost overruns, if they happen, so you can't have them just go out of business on yet. The second is, their bidding a set of plans, those plans better be clear up your architect, let's hope they didn't forget to put doorknobs on the third floor. Because if they did, that cost is on you as the developer. So we have a team of 12 development and construction professionals here at Urban catalysts, where we have a ton of experience diving through those construction plans to make sure that they're accurate and complete, so that we get the best price on our guaranteed maximum price contract. We also, of course, carry contingencies associated with the project so that there are cost overruns, we have money to pay that. And then the last thing is a risk that everybody's going to take, which is market risk. The difference between a grounded development and a project that's existing is we're anticipating what is market risk several years from now, because our buildings take a while to build. So that looking into the future market is that additional risk, we mitigate that risk by doing business here in Silicon Valley, one of the best real estate markets historically in the country, one of the last places to go into a recession, one of the first places to recover. Those are the four types.
Today, my guest is Mike Zlotnik. Mike is known in real estate circles is Big Mike, due to his stature. But more importantly, He is known for his personal integrity, and for having a keen understanding of the financial aspects of successful real estate investing. Mike is the CEO of TF Management Group, LLC, and is a real estate fund manager. And in just a minute, we're going to speak with Mike about the best commercial real estate investing opportunities coming out of COVID-19.
Darrin Gross:
I'd like to ask you, Mike Zlotnick, what is the BIGGEST RISK?
Mike Zlotnik
So great there. And thanks for that. Three, three ways to manage to kind of risk avoided. mitigate it and obviously transferred. I when I grew up being a mathematician, so we've looked at risk too. And I've learned there's two elements to risk. Number one, it's likelihood. Number two is impact. So what what I do is I look at risks and try to figure that figure that out. So likelihood, and impact are the two key variables that drive all the decisions. And I would say the number one risk on a grand scale of things, and for the entire real estate market. And I think about it, it's not necessarily my biggest fear, because I feel that the the impact is huge, and likelihood is low, very low. But the interest rates going up a lot. So take a look at what has happened to the 30 year bond, where we are recording this February 10. I don't know when it's gonna come out, maybe it's live. But I looked at the data since the beginning of the year, and the 10 year Treasury and in a 30 year Treasury moved quite a bit. The yields have gone on on a 10. year from from point 94, up to 118. If I if I'm committed fluctuating obviously on on a 30 year from 1.66 to 1.9697 in that range. And these are very substantial moves. If you're a bond investor, you lost 20, maybe even more percent of your investment in 30 days. This is how sensitive this stuff is. And the whole real estate industry is heavily dependent on low interest rates. It's like a fuel when the rates drop, it's a fuel for real estate fire. When the rates climb, cost of capital goes up cap rates go up now. This is directional moves. But what the United States is doing, they're printing huge amount of debt basically borrowing and spending the money for the stimulus and everything else. So our debt to GDP ratio is getting out of control. Nothing new here, right? We've known about this, but it's getting progressively worse, it's that the risk is accelerating. So there's only one solution, unfortunately, that we've seen it in the world out there to Japan model there is going to go negative. Now, as crazy as it sounds, it's the opposite of the risk that I'm talking about. So the rates go negative probably will be pretty good for a lot of real estate investors, as the cost of capital will drop. But there's also a possibility of effectively runaway inflation, as the government continues to spend without the brakes, unless fat comes in, that's basically manipulation of rates, that the Fed has unlimited checkbook, and they can buy all the bonds that are issued by the Treasury and push other rates down. But at that point, what do we have, we have a central bank that buys everything, just to get the rates to the point where they can service the debt on, you know, one, the liabilities of the United States government, unfunded liabilities plus the real debt. So the problem is, this could turn into a runaway hyperinflation. And the rates will actually jump substantially. And it happens, it will be essentially devaluation, massive devaluation of the dollar. And it can happen, I've seen other countries do this. So your strategy of artificially keep the rates lower and lower and lower. It works until it doesn't. And if it doesn't, that becomes a cliff. And that cliff triggers hyper inflation. And it could cause substantial grief on the on the older all the lines, everything rolling the debt service, it'll be massive squeeze, because of the debt to GDP ratio is so out of control, that if rates climb, we have a massive collapse of the of the of the over oversized debt portfolio, the whole the whole national debt plus all the private debt. So it's a possibility to risk, what can you do about it? It's hard, it's hard to come up with a great strategy, obviously. likelihood is, is pretty low, I do think that the Fed will not let that happen. In the long run, it's just they can't, I mean, we're gonna have a bigger crisis, a different type of crisis than we're dealing with now.
You could, you could sort of play some, some derivatives to protect yourself, you can build in if you're, if you're if you're an expert trader, you could hedge against that. But in the short run, I would essentially caution people who don't think the rates can go up, they actually can, and they are showing some movement today.
Today, my guest is Jonathan Feniak. Jonathan is an attorney and partner at Colorado LLC attorney.com. In his position, he helps business owners at nearly every level in nearly every industry with asset protection, estate planning and business formation. And in just a few minutes, we're going to speak with Jonathan about asset protection, and how to keep your assets.
J. Darrin Gross
But if you're willing, I'd like to ask you, Jonathan Feniak, what is the biggest risk?
Jonathan Feniak
I think the biggest risk is failing to budget for asset protection. When you are an owner of commercial real estate, you know the numbers you know how much it's going to cost you for your your garden or how much it's going to cost you if you're if you're including the heat, how much it's going to cost you and to budget for all of these things to figure out what the cash flow is going to be on on the business and I think you need to budget for asset protection. And as your empire grows, as you're making more money from your investments, your asset protection should grow. Increasing your policy limits to more than the minimums. Having a, you know, an auto policy with the minimums that are allowed by state law, I think is insanity. How are you maxing out on insurance in some areas and there's a lot of my clients are maxing out on insurance on the most they can get, right? It's $1,000,000.02 million or $3 million policy with a million dollars max per claim, how can you get more insurance? How can you protect yourself, limit your downside, and say, this is a this is an expense of running this business empire, it's it's incredibly important to re evaluate that just like you're going in reevaluating your service providers to reevaluate an ongoing basis, you talk to your insurance agent, what more can I do? If you're maxing out there? And then you start thinking about what structures can I put in place to protect my assets in the event of one of these credit events or, you know, catastrophe striking, and it's gonna cost you money, there's a business decision to be made there. But continuing to to increase over your protections, revise your structure so that you add in more protections. I think that's the biggest risk that people have is they're not properly budgeting for asset protection and risk management.
Today, my guest is Scott chop and Scott is the CEO and founder of the Urban Pacific Group of Companies along the Long Beach, California based real estate development company, founded in 2000. They focus exclusively on workforce rental housing communities throughout California. And in just a minute, we're going to speak with Scott about multifamily opportunities for workforce housing in California.
But if you're willing, I'd like to ask you, Scott choppin. What is the BIGGEST RISK?
Scott Choppin 57:16
Yeah, no, great question. You know, like I mentioned, when we before we began the interview, like real estate development, and you could say a real estate investment really is entirely a risk mitigation, you call that minimize? So I'd say squarely in the in the middle there. Really, at the end of the day, you know, investing and development are a risk you like there require risk to be taken to produce these returns that we're describing. Right?
Always the trade off. And so really where I've arrived in my career, where I am now, is to be risk mitigating everywhere we can and so like, I'm not, I'll fill in the answer some more. But, you know, there's many, many places that we've mitigate risk. But here's, here's my answer. Is it really around a philosophy and a style and approach to how you mitigate risk? And I'll give you an example what I mean. And by the way, this like this risk mitigation is a fundamental tenet of our business. In fact, I would say it's probably the most important one because we have so many different exposures to risk in so many different areas, right? market demand with tenants, interest rates with like, debt, return here six with, with investors, governmental agencies who oversee us, right? talked about California, right, that's a that's an increased risk. So when I was a young project manager, I worked for my costs. And basically, part of my job, the way I work with Mike and the way he had his project management team structures, as a project manager, you basically were responsible for the full life of a project, from finding the land all the way through to completing it and handing it over to the asset management team after his lease. Right. And that was very unusual. You know, maybe call it cradle to grave, you know, beginning to end have your describe it. So what that did is that threw me as a young project manager into, like, you didn't have to find new deals if you didn't want to, but I was, like, incredibly ambitious, to, to grow my knowledge. You know, I knew I wanted to be a developer, you know, running and forming my own company, like I knew that, you know, to have the wave, you know, since I was 18. And but what I remember was looking at land, and I had good teachers. But when I would look at stuff, it was everything, I couldn't make it work. There was no project that I looked at that I couldn't figure out or thought I couldn't figure out how to problem solve, right? There's no deal. I can't figure out the hairiest deals with environmental issues, tough neighborhoods, tough cities, whatever, right? I go, Oh, I could go in there. I could figure out a way how to do it. Right. And what I figured out dawned on me years later, is that by having that approach, I took on an incredible amount of additional risks now when I worked for the company was their risk. And of course, they were smart about it and only gave me so much, you know, rope to hang myself on a deal. But when I got out on my own, you know, I continue to learn these lessons. And now it's, in fact exactly the opposite. There's almost no deal that makes it through the underwriting, right? And I'm, in fact very fast. And we can talk to our internal teams who bring us deals, people, partners, people bring the like, I'll No, no, no, no. And why that's important is because it's a philosophy, philosophical approach to mitigating risk, meaning, acknowledgement of a risk and a willingness to mitigate it. And I'm willingness to say no, if it's unmitigated, right, that's up for us, there's some risk that can't be transferred. Right, the construction risk, under a personal guarantee to a lender is not, I can't shift it to anybody else. In fact, it's funny, in the old days, we was used third party GC is right to construct our buildings. And then in 2005, the market was really peaking and we had a hard time getting GCS. And we brought all of our construction operations in house, like our project managers are superintendents, they'll work for us, you know, we were the, you know, became the default builder, if you will. And I remember a headhunter does to you don't do that, you have to shift the risk to the GC. And this is what I told them. I said, at the end of the day, I hired the GC as the developer and I give the bank a personal guarantee, I sit in between those two people, or those two companies. And if the GC screws it up, I still own the risk. I mean, it may look like I shifted it to him. And contractually, I did shift the obligations of building a building. But if he screwed up enough, or in the, you know, time or money, like it's gonna flow back to me. So where I told this headhunters I go, look, yes, I'm bringing some of these risks in house, but it also allows me to control and get direct access to the field, to the subcontractors to the owners of the subcontractors, because the GC that sat in between me, he had his own agenda, he had his own profit to increase, he had his own stories that he told the subs, you know, and, you know, sometimes that was good, but if the person didn't have good ethics, or they were trying to, you know, manipulate which people do in that business, I mean, all business suppose, I found it to be incredibly like it was I took on more risk that I could then not even control, or I had to, like, go through people to try to control it. And of course, when they have their own agenda, they're not gonna let me control it if it's against their agenda. So this is a way for us to can control really minimize that risk, we still took on risk. But by having that direct access, we minimize that. So if you take that story, and then you apply it to every possible facet of the real estate development process, at every time we underwrite, every time we buy land, we build the building, we rent units, we're looking to constantly always look at it from the standpoint of what if this fails, what if the spread doesn't achieve what we think it's going to achieve? Maybe we better look at it at a lower rate to be more comfortable that we've mitigated that risk. And why save that way is because people who are entrepreneurs are naturally risk takers. And you're, in most cases, your own worst enemy. And that, you know, in other words, you're a risk taker, you're built to take risks, and you do take risks, then the job becomes how to take risks that don't blow you up. And that's your own learning. That's, in fact, networks of people around me that I use that my teams internally, like, I encourage people like, dude, you got to tell me, no, more of the famous saying, I'm as I'm a great problem solver, I cannot solve a problem I don't know about, bring me all the problems, don't hide anything, don't cover it up or try to mean you know, if I can help solve, you solve a great, I'll do that. But I want everything fleshed out. Because you know, when you then get all the full picture, it's then I mean, my job, our job as a company is to problem solve and mitigate risk. And we do that 1000s of 1000 times in a deal to every day, you know, over you know, the two or three year lifecycle of that development project. So I know that was a really long and winded answer, but it's really like, it's like having a mental model of how you approach risk and you do it, you know, every day in your business, you know, as you know, your insurance and underwriting risk. But I would always advise, particularly people who are coming new into the business to like, you know, hear these words. And you know, a lot of times go here and they go, Well, I'm different, I can do better. I'm a better problem solver than these guys. And that's fine. But like know that that risk doesn't go away just because you think that way. In fact, arguably you increase your risk because there's stuff you don't see. You can't admit to yourself that you have blind spots and need help from others to go dude, you miss that thing. Better watch out for that right and, you know, got all kinds of betters around me that you know, I'm like, dude, tell me like, donate it. You know, I don't like bad news. I don't like surprises. But you know, what I like worse is, you know, bad news and surprises that now I'm late to the game on.
Today, my guest is Eric Voyles. Eric is the Executive Vice President and Chief Economic Development Officer of Tex America Center, which operates one of the largest mixed use industrial parks in the United States. in Texarkana, Texas. And in just a minute, we're going to speak with Eric about the COVID effect and the opportunities created from COVID in rural markets in an in an industrial and flex space properties. And, but be first.
J. Darrin Gross:
I'd like to ask you, Eric Voyles. What is the biggest risk?
Eric Voyles
For you? No, I'm looking at it from the perspective of my clients, you know, the people I work with their biggest risk is potential for failure. And if you fail, when you expand many times you drag your entire company down with you. And so I always try to help people understand that not only is being in charge of an expansion if you're in a larger company, a potential career limiting assignment. But, you know, you you could you could actually if it's your own company, you know, you could have complete financial failure of your business, if you make the wrong choice. And so that's why we focus most of what we do. I'm trying to help people drive down that risk of relocation. You know, we began the process I mentioned I come out of economic development. So we began the process of once I got here of assessing the property. We looked at what are our costs, and really have tried to understand our cost structure. Then we've and we've tried to understand what companies need that structure. Then we've tried to understand what, you know, the political risks that might be involved with our property. And so there weren't really incentives available. So we have worked aggressively to put incentives on the footprint that you can get access to. And again, that that kind of ties back to financial. But you know, it also demonstrates that we are 100% committed to your company, to work with you, in the long run to achieve not just profitability, but stabilization in the shortest time frame possible, then we'll work with you to grow profitability. So all of this is really important when people are making decisions, we try to understand our market so that you can build a business plan that you can have confidence in, you can take it to the bank, you can take it to your board of directors. So you know, we many times are helping people collect the data that they need to put into their business plan. And you know, if it's good, and you can make your decision favorable for us, that's great. If if it doesn't match up to something else, that's great, too, because we've helped you make a decision. So you can move on, it allows us to focus on other things. So my entire our entire thought process in this is risk mitigation. And by doing this, when someone decides that we're the right place, what we've seen is those companies tend to be successful, they usually are willing to come back and provide testimonials for us about what we've done, that they didn't realize they needed help with at the time, but the things we did made a difference in their startup and their stabilization and in their long term profitability. So that that's what we focus on. I think that is the biggest issue that that corporate executive or that business owner has to address when they're trying to expand, they need to think about what are the risks associated with making this decision, and they need to choose the right place.
Today, my guest is Matt Sullivan. Matt is the founder and full time Chief Executive Officer of quantum Mari, a serial entrepreneur. He's the founder of crowd venture.com, and a co founder of two real estate funds. And in just a minute, we're going to speak with Matt about how a home equity agreement works and what it can do for you.
J. Darrin Gross:
But if you're willing, I'd like to ask you, Matt Sullivan. What is the biggest risk?
Matt Sullivan
Well, I think the answer is relatively straightforward, because from an investor's perspective, it's a real estate investment. It's an equity investment. And so the risk to the investor is that the value of the underlying real estate decays to the point where they no longer have an interest because their equity interest has been reduced. Now, as you quite rightly say, so that is the risk, how do you mitigate that risk? How do you reduce that risk? How do you remove that risk. So the way the contracts are written, there are protections in there for investors. So, when we value the property, in some cases, we'll build in a little bit of a discount so that if the value of the property doesn't go up very much, or in fact stays the same, there's still a return in there for the investors. But really, the way that we look at the risk for both sides is it is absolutely directly correlated to the value of real estate. And so there are no extraneous risks that I'm aware of, there's no sort of risks that would not be sort of directly related to whether the value of the property goes up or goes down. So that's actually quite easy to quantify. Because we know from an investor's perspective, what the returns are going to be if the property goes up, what they're going to be if the property goes down, and the same for the homeowner, if the property goes up significantly, they're going to have a bigger share of the equity that they're going to be going to be paying. If it goes down, the homeowner actually benefits because they may not have, they may have to pay back far less than they originally received. And the other thing to mention is for our business as a whole, the biggest challenge, which is a bit like a risk, is education is getting people to understand what this Anneli what this animal is, how it's not debt, how it is not too good to be true, how it is a viable financial tool. So I hope I'm not mixing apples and pears there. When I'm talking about sort of, you know, risks and challenges, but I didn't, you know, I, we are seeing far more interest and willingness from homeowners funnily enough to investigate these types of alternative funding options. So, I mean, risk is a word I, I'd like to finish on opportunity, rather than risk however, that, hey, you
Today, my guest is Rich West. Rich is the general manager at Lightbox, where he oversees their lender and valuation business. Prior to joining Lightbox, he spent 13 years at CBRE. Most recently running the Americas valuation business, the largest valuation firm in the world. And in just a minute, we're going to speak with rich about lending volume trends and commercial property tech tools like light box valuation.
Darrin Gross:
I'd like to ask you, Rich West, what is the BIGGEST RISK?
Rich West
Okay, so the biggest risk for me and I'm going to come at this from my years of experience, looking at buildings, right? And, and living through the, you know, the 2007 2009 era, living through this era. biggest risk in my mind is not talking to your tenants and understanding what your tenants are doing. What what your tenants mindset is how your tenants business is doing? Because in the end, that's really what drives virtually all value is what the heck, what value is the tenant getting out of the space? And how is their business doing and, and, and what are their problems? So So to me, the biggest risk is being disconnected from what your tenants are doing, you know, whether it's a building you own, or if it's a building that you're you're looking to purchase.
Today, my guest is Ari Rastegar. Ari is the founder and CEO of Rastegar Property Company has earned a reputation as a thought leader in real estate with his innovative technology driven investment strategies. And in just a minute, we're going to speak with Ari about opportunities that Biden's sustainability initiatives will bring.
Darrin Gross:
I'd like to ask you Ari Rastegar, what is the BIGGEST RISK?
Ari Rastegar
The biggest risk is ego, always to me, you know, and I say that in whatever instance that you're working on, you know, as you know, whether as a CEO, as a father as a husband, you know, early in my career, and I'd like to, I'd like to believe that I've improved on this a little bit. I don't know if my wife would agree with me entirely at home. But, but but the key is looking for the right answer. And we touched on that before, and it's really being collaborative, and it's really, you know, taking yourself out of the equation, because a lot of times I'm not the consumer, so there might be a countertop that I want to install. And I love this red, I'm just using I'm just using a random color, but I might not be the consumer. And so doing a focus group, you know, asking other believable people bringing up their, you know, using collaboration to find the right answer. And, you know, whether it's a father talking to our children, and I might think that, you know, this is the way that I should be talking to them or teaching them or disciplining them, but is that their love language? Is that the way they shouldn't they need to be spoken with? Is that the way that they need to be nurtured? Is that the way that I need to show up for my wife does she need me to listen to me listen to her, or does she need a solution and you know, and really taking myself out of the equation and and and that's been one of the biggest evolutions of Rasta Gar. Is is really that is that's the biggest risk, because when we think we're right, and Mark Twain said it best he said, it's not what, you know, we don't know that gets us in trouble. It's what we know for sure. That just ain't so. And and I think that's been the biggest learning experience for me. And the thing that I've really, you know, really focused on. I think, some of my childhood friends would say that was a little bit more of an arrogant man, earlier in life, and I'm looking to find a little bit more humility there, but not humility in the sense that I think less of myself or less of, you know, less confident, but thinking less about myself and thinking more about what that end user consumer is, our investors, the property themselves, investments themselves, and all the other facets that come together.
Today, my guest is Joe Bell. Joe is a real estate and wealth expert coach. He's been featured as one of Alaska's 30 nines. He's top 40 under 40. And Joe Bell is an expert in helping real estate professionals build legacy, retirement and wealth. He's the founder of Legacy Beyond Listings, and the author of Assets, Acquisitions and Abundance. And in just a minute, we're going to speak with Joe about how to focus on your market, build your team, and create real wealth and freedom in your real estate business.
J Darrin Gross:
If you're willing, I'd like to ask you, Joe Bell, what is the biggest risk?
Joe Bell
Yeah, well, an insurance related answers sometimes a really good step. But beyond that, right? Um, you know, the some of the biggest risk is, is when you you think you know it, all right, you get to that point where you reach the pinnacle. And as soon as you start to feel like you're there is one of the biggest opportunities to actually get swept off the mountain. I think a lot of us out there, I know myself experienced that, when COVID hit, and we lost $900,000 in investment. It quite frankly, just caught a lot of people with their pants down, myself included. And I was I was to a point where I felt like, you know, I was doing pretty well. And I knew quite a bit of of what there was to know out there. But it was a humbling moment where I had to take a step back and go, No, we're not even close. Right. So, you know, the biggest risk is to get to that point and stop learning, stop progressing, stop evolving, both as an investor and as a human. You know, so that that, to me is one of the biggest risks outside of all your general pitfalls that typical new investors run into and, you know, trying to trying to do stuff before they really know what they're doing and that sense. So yeah, for me, it probably applies to a more seasoned individual that has been around the game for a little while, but there is there's no Pinnacle. It's a continual evolution and just focusing on that.
Today, my guest is Keaton Patel. He is a high performance coach who helps motivated real estate entrepreneurs create more income and impact by aligning their thoughts, emotions and actions.
Darrin Gross:
If you're willing, I'd like to ask you, Keaton Patel, what is the BIGGEST RISK?
Ketan Patel:
It's a great question. So basically, for me, my business Mukhi Capital. I do underwrite deals, conservatively, a very, very conservative outlook. So for me, the biggest risk is not getting the variety of investments to my investors, I work with one or two sponsors, I really, really limit everything because I just don't see the quality deals out there in the market that meets the criteria I want them to meet. So for me, the biggest risk has been finding additional sponsors that are you know, giving a little bit more variety to the business and to to minimize it. I'm doing what I can and taking actions and changing the strategies.
Today, my guest is Mike Fried. Mike is the president of all American public adjusters licensed and appointed Insurance Claim consulting firm and Aftermath Consulting Group, a large loss consulting firm, he has extensive experience as an independent adjuster.
Darrin Gross:
If you're willing, I'd like to ask you, Mike Fried. What is the BIGGEST RISK?
Mike Fried
For me and our company, its liability. We don't have the ability to make a mistake. We have to be forensic. And we have to get everything right the first time, there's really no going back to the well for us, especially if we get something wrong. So we constantly educate ourselves with certifications with continuing education really means specifically, its liability against making mistakes. And the biggest mistake we have oftentimes is communication, where either we communicate too much, or occasionally we communicate not enough. And it's hard to meet the expectations of all the clients there. But for us to avoid risk professionally, it has to come down to being mistake free. It's your claim. And you're hiring somebody and frankly getting paying them a lot of money. We don't really get the luxury of making mistakes, because it's my bond you're going to come after if I screw it up. So oftentimes, to avoid risk, we have to be thorough, we have to be very expeditious and we have to avoid mistakes while doing both of that both of those. So avoiding risk for us is as simple as avoiding liabilities. And and really it's it's with industry education, it's with communication. And we do the best we can to be mistake free. But it happens
Today, my guest is Dave Beau Dave is a real estate entrepreneur, best selling author, speaker and investor attraction expert based in beautiful British Columbia, Canada.
Darrin Gross:
I'd like to ask you, Dave Dubeau, what is the biggest risk?
Dave Dubeau
Well, do you mind if I give you two answers? No, we will. So the biggest risk is staying stuck. That's the biggest risk, right? Just trying to sell finance your deals and not growing your portfolio because you're not going to achieve what you wanted to real estate in the first place. Okay? So beyond beyond the hoody, Flutie whoo, whoo, kind of big risks. The tangible risks, the biggest tangible risk I see with people when it comes to raising capital is crossing the line with the Securities and Exchange Commission or your your local authority. I see people making this mistake a lot. And sometimes they get away with it for a while, but eventually it catches up with them. And it can cause a whole world of hurt and expense that you don't want to go through. So the process I've walked through through here today is a very good one. And it also I also highly, highly recommend, talk to a real estate lawyer in your area, explain what you want to do, and see what do you need to have set up to do it properly, maybe you don't need anything, if you're bringing somebody on board, as not only a money partner, but actually a joint venture partner in a deal, you might not need to do anything, because they're your equity partner. And they're actively involved, not just with money, but they're actually doing something. So you might be exempt that way. But make sure that however it is that you're bringing your investor partners on board, you are compliant, and you're not crossing the line with the Securities Commission.
Today my guest is Shannon Robnett. And for the last 40 years, he lived in Boise, Idaho. He's been building and developing there for over 25 years. And two years ago, he moved to Puerto Rico for tax purposes, but still has three companies in Boise. And in just a minute, we're going to speak with Shannon about the benefits of new multifamily ground up construction.
Darrin: Shannon, Robnett, what is the biggest risk?
Shannon Robnett: I think in my business, the biggest risk is having the wrong people in the right places. You know, you talk about risk transfer. You know, I've always found that when I, when I'm looking for a property management solution, I need something that's customized to me that that is looking after my property like it's an asset. And so I could do that. And I could make that happen. And I could, I could become a pseudo property manager. But why not go find the best property manager in the valley that I've always admired and wanted to hire? And why don't I hire him and make him an offer, he can't refuse to make my mind machine run smoothly, and take that risk out of it. Now, I know that I have somebody that's tied to the bottom line that's financially responsible to me, for the well management of our assets, that's doing it in a phenomenal way. And I've done that in in several key places in my business. And I think that when you when you aren't taking care of your people, when you're not looking at the personnel you have, I think you're taking some pretty big risks. And so having great people that are in it, to win it that are part of your team, I think is the biggest way to mitigate that risk. And the biggest way to ensure that you're going to be successful is because you're partnered with the right people, you're working with the right people and you've hired the right people.
Today, my guest is Brent Bowers. Brent was an army officer spending way too much time away from home. And he knew he needed to make some changes. And that is when he found land and the ability to create a passive income with land. And in just a minute, we're going to speak with Brent about how to build passive income through land. That gives you a life that allows you to do what you actually want to do.
J. Darrin Gross:
Brent Bowers, what is the biggest risk?
Brent Bowers
Yeah, I want to talk about a property we buy. It was late 2017. It was the last vacant parcel of land in a mobile home park. And it was from a lady her husband had died. And he was a builder. And he pretty much he went bankrupt. So long story short, we had to reactivate his his LLC to be able to take ownership of that piece of land. And we went through all these steps and I had a buyer already lined up for $16,000 that I found on Craigslist. So I had about $900 into reactivating this LLC back tax his lawn service fee from the city and paying the seller so the seller really only made like 200 bucks off of this parcel land. Well, when I had sold this parcel for 16 grand to another builder that was going to put a brand new modular home on that title company found out that there was $157,000 IRS tax lein on it. So I did not do my due diligence in the beginning and run, like owners and encumbrances or O & E is what we call it, or even a title search at that point, you know, I was kind of just shooting in the dark. So I was just, I was so sad because I mean 2000 beginning of 2018 at this point like that, that was life changing, like I had just had I had a brand new baby, first first child. And actually, no, that was my second child by then let me let me back up that second child. But that would have been game changer, you know, a profit of 15 grand basically. So what I did was I waited a year I cried a bunch now, continue refining my system continue buying land, but I never took that deed into my name. Like, I never took ownership of that. And this poor lady would call me and never return a call. She's like, are you ever going to record that deed? Because I'm still receiving calls from the city and blah, blah, blah, I would just ignore because I was scared. I didn't know what to do. $157,000 IRS tax lien I didn't want to take on that I was like, Man that would bankrupt us from the very beginning. So long story short, I found a title company A year later, heritage title. They said, Listen, these things sometimes fall off, let's figure it out. So they cleaned everything up. I still did not take ownership of this. But it was good to go. So like go ahead and sell it, you're good. It's dropped off. The IRS drops these things off every so many years. I don't know how it works, just called dumb luck, or God blessed me I would say it was probably God, God's blessing, which we you know, you get lucky. The more you do that, the more God bless you. Um, so long story short, I found another buyer I think this time was on Facebook marketplace or buy sell groups, but found another buyer for 35,000. So one year later this I got confidence in myself in my process. So I doubled the price basically, I also got $5,000 down, I only had 980 into the property. So I got $5,000 down and it's a 52 and a half month term at 534 a month so I'm still getting $534 a month and I will be for another I think two two years two and a half years on this property but that's the biggest risk not checking the chain of title making sure that if J Darrin Gross leaves this property to Brent Bowers and you leave out Jay we just broke the chain of title so that's that's one risk and two is doing your background your due diligence and your title search and making sure there's no IRS tax liens or encumbrances or city liens. You name it. So there's my risk story.
Today, my guest is Jonathan Tuttle. Jonathan is the principal at Midwest Park capital, a mobile home park fund. And in just a minute, we're going to speak with Jonathan about trends and opportunities going forward in 2021 and beyond, in commercial real estate.
Today, my guest is returning guest Vinney Chopra. Vinney is a real estate investor. He's a syndicator. He's an author. He's gone full cycle on multiple syndications. And in just a few minutes, we're going to talk to him about the new venture he's invested in, which is the senior multifamily living and why Senior Living multifamily is so essential.