Today, my guest is Stewart Heath. Stewart 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 Stewart a bout 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.