J Darrin Gross
I'd like to ask you, Peter Badger, what is the BIGGEST RISK?
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?
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?
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.