Today my guest is Dr. William "Bill" Danko. He is the co author of The New York Times bestseller, the Millionaire Next Door, and also his newest book, Richer Than a Millionaire.
I'd like to ask you, Bill Danko. What is the BIGGEST RISK?
Yeah, I think when people are just so blind to well, for example, in Miami Beach right now. There are a lot of people with very beautiful houses on a flood plain or a rising ocean. And one of the things that they're doing in Miami is raising the roadways and creating culverts to drain off the water. What seemed like a good idea at the time to build a house next to the ocean is, in retrospect, not a very good idea. So sometimes we bring this on ourselves. And, you know, I remember reading a book from the 1950s, how to build your dream house for $3,500. And it was kind of a classic and chapter one talks about first select the building site on a hill as opposed to on a floodplain. Okay. People walk into these problems, I think in a, in a naive way, saying, oh, there's land available on the build. Okay, so that's one thing being just not being prudent, okay. But also in minimizing risks. If you do have some pretty good assets, you know, one thing that I have seen with some high net worth individuals and one thing that I use myself is that for example, my timber, my rental property and a lakeside property, I have not my primary house, they're all individual limited liability companies freestanding, then all three of them are held in a limited partnership. So my physical assets are divorced from my my might, my liquid assets and so having some good legal structure is certainly very good in terms of minimizing the risk as well as having your umbrella policy from your insurance company, but having the ability to separate your assets through like the LLC s and then that limited partnership. That is something that is Well, one thing I use And I endorse. And it works for me. My accountant likes it because he gets to do all these extra tax forms every year. Right? I don't. But but but it's okay. It gives me peace of mind. And then in terms of, there's a societal risk. You know, we talked about a lot of lessons here you know about frugality and the 20% and living below your means and all that stuff. And that's all important. Those are good, solid lessons. But at the end of Franklin's essay on the way to wealth, he really summarizes it so well. The people heard the message, agreed with it, and then practice the contrary. The problem is change is hard. People are going to walk into traps. They don't understand the risk they're getting into. What we have to do is be better students. And let's take on some personal responsibility and don't expect the government to bail us out. But build, don't build in a floodplain. You know, don't drive recklessly. You know, a lot of things depend on how our society behaves. And that's going to be the thing that minimizes risk. So I think risk is all the stuff that we take on ourselves. Because we just don't do the homework.
Today my guest is Anthony Scandariato. Anthony is the co founder of Red Knight Properties. They are a multifamily syndication firm. It's a vertically integrated doing both investing and property management. And in a moment we're going to speak with Anthony about both multifamily and property management more specifically.
Darrin: Anthony Scandariato what is the BIGGEST RISK?
Yeah, I mean, the BIGGEST RISK is to me it's always on the buy. So you have to always buy right you have to always run your numbers. You To run a sensitivity analysis, you have to understand, you know, if downside base case and upside, and if the downside scenario still makes sense, then it's a good deal. So the BIGGEST RISK is people not buying right? You know, we always not running these analysis because markets change, and right now they're changing every day. So, you know, you have to incorporate those into your numbers, and we always do, you know, what happens if, you know, I can't get the rents I wanted? Or what happens if I can't refinance or sell for this cap rate? And, you know, what happens if interest rates go up? And, you know, I have to therefore increase my exit cap by 3300 300 basis points. Am I still gonna make a decent return on my money as opposed to putting it in the stock market? And the answer is yes, then that checks my box. But we have a whole criteria of that but the base versus people overpaying for deals just today. Deal doesn't necessarily mean it's a big deal.
Today. My guest is Alex Fleiss. Alex is the CEO of RebellionResearch.com. They're an artificial intelligence company. He's also an instructor at Cornell Engineering. And in just a minute we're going to speak with him about AI and the potential to disrupt real estate.
Darrin: Alex Fleiss what is the BIGGEST RISK?
Alex Fleiss Well, you won't forget my last name because my cousin is Heidi Fleiss, of 1990s fame and Dennis Hof's widow, but I'd say the BIGGEST RISK is the unforeseen risks without a doubt, which obviously is manifest in the COVID-19 Black Swan event or the S&P debt downgrade of the US government in 2011. The unforeseen risks is always always the worst risk, but it's very, it's very hard to worry about risk, you know, because there's, it's almost a it's really endless. I think about my, you know, my, my, my Papi and 911 some people told him Don't take any insurance out for terrorist events, and then other people telling him to take more. And so but Terrorist are gonna blow up the building. That sounds ridiculous, but then of course, what six weeks later happened. And so, you know, we're living in, you know, in times where the unexpected is expectedly happening now. Whether it's America's Cup, the best comeback of all time, the idea of winning seven Sailing races in a row. So unlikely I'm a sailor. And so I got to play the odds that are just almost impossible. But, you know, we're getting to these kind of new. We have such a globally connected world, which obviously has nothing to do wiht sailing. But, you know, it presents more and more and more potential risks against the globally connected world. If a risk arises in India or China, it will travel faster than ever did before because we didn't have that connection in the world that we have now.
Today my guest is Omar Khan. Omar is a Chartered Financial Analyst. He's advised on over 3.7 billion of capital financing and merger and acquisition transactions. He's the principal at boardwalk wealth you The syndicated multiple large deals across the US. And in just a minute, we're going to speak with him about raising capital, working with institutional investors.
I'd like to ask you Omar Khan, what is the BIGGEST RISK?
Not having enough liquidity. You could have the greatest asset in the world, if you don't have enough liquidity, none of it, you can survive. A lot of times when you're in trouble. All you need to do is run down the clock and survive. And liquidity offers you that, that comfort, or another word, a lot of times, you know, we are humans, when we're put under undue stress, we tend to do things that we would not do when we weren't under stress. So the liquidity is the cushion that allows you to not mentally put yourself under stress or be backed into a corner for no reason. So even during trying times, you can, for lack of a better word, continue to do business as usual while you're scrambling to do everything else, right. And you're not foreclosed upon, nobody hates you, you're not dying.
My guest is Tenny Tolofari. Tenny is a co founder of Exide Capital Investment LLC, a multifamily real estate investment focused company based in Washington DC. And in just a minute we're going to speak with Tenny about the myth of finding, find the deal and the money will come.