Today, my guest is Linying Zou, and two years ago, excuse me two years after graduating from Boston College, Business School Linying bought her first multifamily investment. She had a new job. But very soon after she started, she realized that the job was not going to provide her the financial freedom she wanted. So she set out on her own to achieve her goal. And she started Akris capital.
Linying Zou, what is the biggest risk?
Well, as owner operator of real estate right now, the biggest risk is a prolonged recession and sustain high unemployment. And if there are no more government stimulus, because that will really affect our collection and, and its collection numbers. So that is really the Biggest Risk.
Today my guest is Trevor Crow, founder of Crow Legal LLC, Trevor founded Crow Legal LLC to deliver sophisticated and practical legal solutions for companies looking for an alternative to a large law firm. His focus in business transactions include complex joint ventures, and syndicated real estate deals.
I'd like to ask you, Trevor Crow, what is the BIGGEST RISK??
So in my mind, that is assuming that there is no risk in certain actions and or in the status quo. So, you know, for me, I started this firm, which seemed like a big risk at the time. And I started in 2018. But at the, you know, because I was coming from a firm, a well established firm that, you know, paid me and I was, you know, never worried about the paycheck and it just came, and I knew there was business there and as business was going to keep coming in, and so it seemed like a big risk for me to, to go out on my own. Now. Now I look back at it and I think I was at a much bigger risk staying at that firm than I am now. And it kind of goes back to my roots of graduating law school in 2009. And seeing that the the people who had got terminated the attorneys that got let go or laid off. Were not the attorneys with big books of business. Those attorneys always have a place. And so if you have clients, if you have relationships you have, you know, people who know like and trust you and come to you do work for them, you always have a place to anywhere you want. Or you could write your own ticket by starting your own firm. And, you know, the firm I was at was a great firm, great attorneys loved it there. The problem was that I was the corporate guy doing all the corporate work for other people's clients. And so at the end of the day, you know, my risk was, as I look back at it now, it was more of a risk for me to be there than it is now because now I have my own clients. I have those relationships, direct relationships, and when they have issues that come to me, and and so I can write my own ticket a lot more than I could At the prior firm, and so I think, you know, often people think that certain, whatever society says, or whatever seems normal and safe might not always be normal and safe because, you know, big, big fortune 500 companies will lay you off. And, and that happens all the time. And so just having that job doesn't necessarily mean you're safe. And so, you know, I think bottom line is sometimes take what seems like a risk might actually be safer in the long run.
Today, my guest is Lior Gantz. Lior is the founder and editor of the free number one rated financial newsletter, wealth research group.
I'd like to ask you, Lior Gantz, what is the biggest risk?
`So I think COVID-19 is changing a lot of habits that people have some habits changed faster for certain people, some habits have not changed and some habits are slowly starting to change. And it's very important to see that you're not kind of touch with what's happening. In other words that you don't think that the way that you're being changed by COVID-19 is the way that your clients are being changed by COVID-19. Therefore, you will take your business one way because that's what personally is happening to you your own personal experience was your, your clients are, are looking at a different route to go forward and you're going to lose them to competition. So the biggest risk right now is not understanding how your client has changed if it changed, and I think that's really important for people to to stay on top of now, if you're an employee, which most people are, your client is your boss, you need to see if he's changed. If his business is more vulnerable, you should look at moving to a different business. His business is full of problems, but he also has a way to get through it, then you can bring a lot of value by solving problems and you can move ahead in the company. So just think of that, understand that everyone right now is experiencing either multiple problems or other experiencing a boom, because basically the government has benefited if you want to be part of that, be part of that. In other words, go with companies that and with industries that have a huge tailwind or go to the victims because you're going to have opportunities to make a huge significant significant impact on them. Because they need so many new ideas and some fresh solutions. So either or, but just know that this is a phenomenal time to show your value that is the key point. Just think of the experiment that no business would have ever taken to close down or to put all the employees home. These are unheard of. And they've happened now. So you have to be unconscious that and that is the biggest risk losing the mindset of your clients because he's changing you're no longer understand what he wants and what he needs.
Today, my guest is Jason Salmon with Kay Properties and Investments. And in just a minute we're going to speak with Jason about Delaware Statutory Trust and 1031 exchanges.
I'd like to ask you, Jason salmon. What is the biggest risk?
Jason Salmon 59:25
Well, the biggest risk with any investment is losing your money. I mean, that's really it. So then the question becomes how to mitigate that from there. So you talk about avoidance. And again, I'm compelled to tell people that anytime they make investments in private placements, there are risks, including what I just mentioned, no guarantee of returns, no guarantee of profits, no guarantee against losses and one can lose their money. So the way to avoid that is by not investing and you know, putting it onto the mattress, I guess, and then you have to figure out you know, what the match protected by, you know, because anytime it gets outside of, you know, under your thumb, you know, that's, that's one thing as far as minimizing and and, you know mitigating for me and our clients is diversification. So, you know, when one has all their eggs in one basket, they then are incurring concentration risk. So then again just because one diversifies doesn't mean that they're avoiding the risk, but they are spreading that risk around.
So we love the fact that DSTs give most investors the opportunity to diversify. And, you know, that's, that's a big motivator, and that's part of my day to day and I remind people of that all the time. Beyond that, though, one also has to determine what their own appetite is for risk. I mean, I've had people tell me that they're, you know, in a great place in life and they want to bring it on, you know, so we talked about with these deals, any of them, it's a risk adjusted return. Now, there are deals and I don't want to get into returns, you know, it's just not something that we can do through this venue. But, you know, returns could be all over the board. So that's, you know, your, what your annual returns are, and it's a risk adjusted return. But for us, you know, it's about you know, when you talk about diversification, we're talking about real estate, so diversify in some cases across asset classes, type of real estate, diversify across geography. In some cases, some people love certain geography, you know, it's okay. It's things we talked about, and diversify across asset manager, different people running the deal. Sometimes people just like certain deals that certain asset managers are running. So That's different ways and different permutations than that when we work with clients, we can mix and match to kind of try to mitigate that risk by way of diversification. But just because people diversify doesn't mean that they're protected from risk. And as far as transferring. You know, for us, I can't really claim to be able to do that, because there is inherent risk, you know, with private placements, it is available to accredited investors. So one, you know, has to have be at a certain point in life, and in the spirit of that has to be comfortable with the potential for loss. And that's why you hear all that, you know, all those disclaimers disclosures with any investing, whether you see it kind of on a screen, or you're working with your friendly neighborhood, financial person, these are all parts of it. And I'm sure this is part of your day to day, but yeah, I mean, there's risk, but hopefully, you know, again, through understanding, I think that's the most important thing, know what you're getting into, you know, manage the risk by really understanding what's behind it. For us. It's real estate. So the great thing is, you know, I oversimplify it sometimes, but really, it's just a tenant or tenants in a building or buildings and their ability to pay their rent. And or, you know, does the deal have debt on it? Could there be a foreclosure? That could be trouble, if that's the situation? So these are things that we talked about, what are the chances that happening? Something on, you know, without alone on it, you know, what does that mean? What's, what's kind of what are some worst case scenarios from a real estate standpoint, you know, as they weigh into each of these respective investments, but again, with any investment, you know, one does have the risk of losing principal.
Today, my guest is David Silliman David is the CEO of Eazy Do It and he's here to speak with us about Opportunity Zones, and Opportunity Zone Funds.
I'd like to ask you, David Sillamon, what is the BIGGEST RISK?
David Sillaman 38:47
I see. Okay, the absolute BIGGEST RISK to the whole program is going to be fraud. Alright? Fraud because these are private by design to be between you and me as individual investors into development, Alright? They're long term in nature, which means that we're not thinking about it every single solitary day. As an investor, we already know going into whatever we're putting our money into long term, years, six years, 10 years because of how every last one of these and it's such a brand new market that, you know, there's no not not a single Opportunity Fund has a major prior performance track record. So taking money in from an investor promising them that we're going to do this, we're going to do that, and then closing up or never even filing the right way to begin with causing, you know, detriment to the investor from a tax standpoint, thinking that here they're deferring and now they've been collecting interest on taxes that are due because the fund never did the right thing. And the people behind the fund made it look so great. That, you know, they took the people's money and ran. And when we look at look back at the history of track record of government programs, I speak truth on this because I built and operated one of the most successful loan modification companies on the East Coast was called Cornerstone group 175 employees, two call centers. I built a multimillion dollar business on the back of a government program once before. Fraught the proverbial saying of a few bad apples will ruin the entire basket was absolutely true in that program. We heard horror stories that people that you know gave money to companies out in California told don't make your mortgage payments and then ended up losing their houses and the company's closed up shop. That program was very dramatically changed through legislation and strokes of Penn from executives at the White House. This program has an immense amount of propensity for overwhelming overwhelming Change in an amazing way opportunistic way, in America, an amazing way to make a lot of great money. What it lacks because of how it's written, there is no set platform yet. There is no set directory yet. There is no set, hey, this is the proper process and what you need to be able to do when you build one of these things and so that way, all the way down the supply chain, it's transparent and everybody can get into it and know that okay, no matter what, that doesn't exist yet, because this market is a brand new financial market that is penetrating both real estate and business. And within that it has to grow. And it's like a baby right now that's teething. It has the ability to do amazing, and the legislative support behind it is bipartisan. But at the same time, biggest concern would be fraud. The second biggest concern I think that would be to go along with fraud and I briefly touched on it, I think it probably plays into that fraud. The biggest way is right now, as an opportunity fund being private, you've got SEC compliance, you've got, you know, state compliance, blue sky laws plus whatever your corporate entity, you know, is both, you know, registered in and foreign because most of the time, you're gonna have two entities at a corporate level with these, just a lot of this is still the compliance side. And that would be the the second biggest risk, none of them are performing. Proven. And I can't tell you as an investor, hey, listen, you know, this fun is performed at a 10% interest rate of return for the last 10 years. Not a one, I can tell you that, hey, my company has done you know, $50 million in development projects and so you can trust us. But at the end of the day, as an investor, you know, and that's that's the risk is at the moment because there is no centralization on really, you know, what it looks like? You know, from that mass propensity of fraud, and then you couple that with no performance, they're ultra ultra ultra high risk investment vehicles with huge upside potential, but also really high risk up front.