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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: Category: real estate
Mar 28, 2024

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. 

Mar 26, 2024

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.

 

Mar 21, 2024

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.

Mar 19, 2024

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.

 

Mar 14, 2024

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.

Mar 12, 2024

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.

 

Mar 7, 2024

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.

Mar 5, 2024

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.

 

Feb 29, 2024

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.

Feb 27, 2024

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.

 

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