I'd like to ask you, Marc Pégulu, what is the biggest risk?
So, you know, fall for what we talked about today, I would say for for us, the biggest or biggest risk would be having, I would say the wrong awareness or for low awareness about the technology and what it can do. We think that we have really a unique and huge opportunity in this law technology. We are extremely happy to have the opportunity to speak with you. For example, because you are helping us, I would say, to make sense to give a purpose to the technology itself. And this is the awareness I'm speaking about. Today, we are already, you know, willing to make sure that we are not seen as just, you know, new technology, you know, to always push the limit of the technology. We want to make sure that our customers and their customers understand that they have at hand now, technologies capable of bringing much more environmental friendly type of building and more social responsible type of building for their customers.
Today, my guest is Marcin Drozdz. He is a managing partner at M1 Real Capital. And they're focused on acquiring value add properties throughout the southeast us. And just a minute we're going to speak with Marcin whoreson, about attracting capital for multifamily syndication.
J Darrin Gross
I'd like to ask you Marcin Drozdz, what is the biggest risk?
I was gonna say if it's an insurance question, I'd say the replacement risk right now is the biggest thing that is certainly ringing in my head. But if we're speaking in general, contextually as the biggest risk, I think, right now, the biggest risk is not doing anything, and sitting on the sidelines and pontificating on what's going to happen next. Because you know, regardless of where we think things are going to go, and regardless of political leanings, left, right center, wherever you're at wherever you're going. Ultimately, if you stand still, if you stood still, for the last 12 months, you're you you experienced erosion of purchasing power, like you've never seen. And we've always known that inflation was kind of never we never, I don't know anybody that believes that inflation historically was 2%, or 3%, or whatever. We were told it was historically, but let's assume that was accurate for what it for the purposes of what we're talking about. Today. They're flat out telling you, it's six, seven, whatever, 8%. And that trend is only compounding. So for anybody who's sitting still and figure trying to figure out how to move forward. I think that is the absolute biggest risk right now.
Today, my guest is Jeff McKee. Jeff is a real estate syndicator. He's a limited partner in 1500 doors. He's also a general partner on 10 properties with over 2500 doors, and 200 million assets under management. And in just a minute, we're gonna speak with Jeff about multifamily apartment investing.
I'd like to ask you, Jeff McKee. What is the biggest risk?
Yeah, I mean, I would say, you know, from like a property casualty, some of the areas that we invest in are on the Gulf Coast, you know, whether we're invested in Corpus Christi, Jacksonville, Florida, you know, all these places. And so, you know, we do you review and have great insurance on our properties. And so it's in case there's, you know, fire flood, you know, that kind of of a damage, which, you know, it happens occasionally, in these communities. And then you also need the business continuity insurance in terms of, if we displace guests, maybe to a hotel or another community while their unit is getting repaired, maybe there was a flood or there was fire, we also need the business continuity, to make sure any rents that we would have lost that were covered on that. So yeah, we're basically, you know, well insured. And so that's something that, you know, we're very cognizant of, of in terms of, you know, where are we with, you know, FEMA flood map, you know, where are we, with this, and in terms of any hazards that we got on the property. So that's probably the first one. And then lately, you know, in a rising interest rate, the second area of risk, and we're trying to mitigate is trying to put a rate lock, so trying to lock in the rate before it keeps creeping up on us. And so then that would, would be another one, basically, we're fortunate in the US to have a lot of fixed rate long term debt. So we're just very careful of the adjustable rate mortgages, the arm products out there, because, you know, they could, you know, creep up over time. And so when we're putting a lot of debt on these properties, you know, 3040 $50 million loan, or trying to look at the rate law, and be able to manage that. And sometimes, you know, we pay a bit extra to get that type of insurance, the rate lock cap, so we try and put a cap on any interest rate, that we're locking in long term debt. And so those would be two areas, you know, kind of the property casualty and business continuity. And then the second area in rising interest rates, having a rate cap and paying for a lock and, and underwriting that expense. To give you some assurances of your debt payment won't escalate much over time.
J Darrin Gross
I'd like to ask you, Chris Prefontaine, what is the biggest risk?
Probably gonna throw a different twist at this fire, especially coming from the insurance side of things. Look, the market my opinion, the market is going to keep changing. It has for decades, I've been out for three decades, it will continue to change. So people get all caught up with the media and all it's going to change. And the risk is that the risk is not there. The risk is you not knowing how to navigate. As it changes, you call it the storm. And when you know how to navigate when the market changes. You're not You're not at risk, because you're not a bob and weave, you're not a pivot, you know how to structure the deal after the deal. And you know how to be keyword adaptable. That's it. It's not the strongest, it's not that smart. It's the most adaptable. And then how do you do that? How do you mitigate that that risk? How do you get in that mode? My opinion, you find someone that's been through at least two or three storms to use your word, and then you lean on them? Constantly. There were two times in my career, I didn't have that person 1994 ish in 2008. And the only times I had a headache. So every other time in life, I've had a mentor that I could call up and go, Hey, Darren, what do you think about this? What would you do here? I'm a little a little perplexed. That mitigates your risk, and that lets you be more adaptable.
Today, my guest is Erik Oliver. Erik is the regional manager for cost segregation authority. In just a minute, we're going to speak with Eric about cost segregation, what it is, how it works, and the benefits for real estate investors.
J Darrin Gross
If you're willing, I'd like to ask you, Erik Oliver, what is the biggest risk?
Yeah, you know, for me, as you know, I didn't have any investment properties when I started doing cost segregation. And so by working with clients all the time, and seeing the value of owning real estate, I've started to get into real estate myself. And I think the biggest risk for me is, I went back and forth, do I need a property management group? Do I not? Do I manage these myself, you know, I actually live by my investment properties, I can don't step over what is the saying don't step over $1 to save a penny, you know what I mean? Let the experts do it. There's a reason that they're property management experts, there's a reason that your CPA should be filing your taxes, and you shouldn't be doing it yourself unless you know what you're doing. And so I think, the biggest risk for me that I've had to learn just that let the experts do it. And I see it all the time in my industry, where people do their own taxes. You know, I've seen people who make, you know, in the millions of dollars and have very sophisticated tax returns, and they're doing their own taxes on TurboTax. Because they don't want to pay a wealth advisor or a CPA who has the experience. And I'm like, what you're gonna pay that qualified CPA who understands real estate to do your taxes, you're gonna get back tenfold in the amount of deductions. And you know, the left the reduction in your tax liability. And so I think, if I can just share one thing, and that is surround yourself, you can't be an expert in everything, right? And so know where your faults are, and be humble enough to say, I'm not a tax expert, or I'm not a property management expert. I'll tell you just a quick story. I learned that the hard way. My very first investment property was actually when I lived in Virginia, I moved out of Virginia, I moved to New York. And I said, I don't want to sell my house. I'm going to just rent it in Virginia. And I'm going to do it myself. So I put an ad out there I met with some potential tenants, I found some they seem like the nicest people in the world. I didn't know I should do a background check. I didn't know that I should run their credit. There's my first gig, right? So Micah, they're nice. They sat down, they talked to my kids, we had a great conversation. They rent I rent the house to him, I moved to New York. And I never hear from him again, right? They paid their rent, the first two months. Great on time was perfect. But then the people that kicked them out of their old place started garnishing their paychecks. And that's when they stopped paying my rent. And had I done a background check. This all would have showed up but I didn't want to pay the 10% management fee. I'm like, I want that for me. And so surround yourself with I didn't know what I was doing. I thought I did but I didn't. And I should have been humble enough to say, Erik, you don't know what you're doing. And so humble yourself and say, what are you good at? And you'd be the expert in that. But we can't be experts in anything and in everything. And so surround yourself with people who are good property managers, good lenders, good CPAs good attorneys, good insurance agents, right? And let them be the experts and take their advice and be okay paying for that expertise, because you're going to come out ahead in the long run.