J. Darrin Gross
I'd like to ask you Vimal Patel, what is the Biggest Risk?
Yeah, so as I mentioned, right now, the biggest biggest risk right now is again, having having the personal guarantee that you have on your debt, right, the loan, you know, the cost of operations has gone up, you know, the fixed cost has gone up, the revenue has not gone up in that percentage. So, so coming out of the COVID, getting extensions, and now dealing with inflation and rising interest rates and the rising costs and so forth, you want to maintain that because again, if you start slugging lagging on your, on your mortgage payments, if you can pay and your your liquidity during the network is digging up, you know, that that's a huge concern, because that pretty much underlines your future your assets that you hold your your future for kids. You know, that's that's the biggest, biggest, biggest part of it. Obviously, the other part Hand in Hand goes with it again, as I mentioned about the hurricane, right, we went to the hurricane, you know, and again, we dealt the billing and insurance companies is a huge challenge in this part, it took us, you know, seven months to kind of settle the claim and get the funds. In the meantime, we had to use our own line of credits, and get more debt to rebuild, continue rebuilding, and while while we were negotiating and fighting the insurance company, you know, having having the M the property coverages is the biggest factor because we just went through that part, right coverage, the right deductible, knowing your coverages and be able to ability to to have a plan in place should disaster occur, right, you're not scrambling to find the right resources who to sue to get into this, but as a public adjuster with his attorney, or whether it's a mitigation company or whatever the case may be right so you got to have those plan in place because absolutely the day of the disaster the after the disaster. There'll be a million other people lining up and digging a great job for you and then you will overpay them that job, you know, and they'll run away so so those are the two bad to experience a huge aspect of the latest my experiences in fire the risk mitigation risk factor that Family, you know, we used to be concerned about this, why the dad is concerned, you know, you had to start building reserves to have knowing COVID. And then situations that Makara you know, minimum in that building six months worth of results for your mortgage payment that way that we need to down in our period, you're still able to kind of manage it and then hang on to your, your, your, I guess the credit part of it your net worth and then you know, your credit scores.
Today, my guest is Raphael Collazo. Raphael is a licensed commercial real estate agent who specializes in investment in investment properties. He's also the author of before you sign that lease. And before you buy that building comprehensive guides to leasing and buying commercial real estate. And in just a minute, we're gonna speak with Ralph about how to analyze and assess retail real estate investment opportunities.
J. Darrin Gross:
I'd like to ask you, Raphael Collazo what is the Biggest Risk?
Yeah, no, I think we kind of touched on it a little bit early on. And I think that's just a broader risk as a whole. I mean, you know, it's somewhat out of our control what's going to happen over the next six to 12 months, I mean, the Feds gonna have a part to play but, you know, geopolitical issues that have been arising and supply constraints or, or things that we're at work trying to work through, but it's going to be reality for quite some time. So as far as the risk is concerned, if you're a property owner, and you're in the retail space, in particular, just working with your tenants understand getting a pulse on how they're doing, you know, talking to them, just being that that their relationship, because again, they as tenants are supporting you as landlord, and vice versa, it should be that type of relationship. So in situations where we go into a, you know, an economic recession, which is likely going to be the case, you know, working with your tenants to try to get them through it if you can, and if not, then obviously repositioning the space to be, you know, attractive to to particular users, and understanding that, you know, what you could maybe charge two years ago, may not be realistic today. But that's going to change going forward. I mean, as you know, we go through recessions, and then we eventually come out of recessions. And so, you know, again, it's better to keep a tenant that's good than to lose one and then have to replace them. And I'm sure that's the case that you've dealt with in all different property types.
Today, my guest is Matthew Baltzell. Matthew is the former host of the real estate journeys podcast, a top 400 business podcast. And he is a real estate investor with a portfolio of 743 units and four years of asset management experience.
J Darrin Gross
I'd like to ask you, Matthew Baltzell, what is the biggest risk?
Yeah, so I thought about this. And I didn't know I was formulating this thought. I mean, I've had this thought before, and it's always constantly stuck with me. And so, you know, there's a movie called Schindler's List, right. And in the movie, somebody asks Schindler, and they say Schindler, like why do I never? Why do we never see you drink? And he says, You know, I never drink. Because the reason why I don't drink is because when I drink, I give up all my power. And when I first heard that, I was like, Whoa, I was blown away, right? And so when you have your power, right, you have leverage, you actually have power. And when you say things, like, I can't go to the movie, right? It's like, you're giving up like, your power instead of like saying, I choose not to go to the movie. Like, I don't want to go to movie Hey, can you come over for dinner tonight? I can't make it like you can make it but you choose not to make it right. So basically, giving up your power is one of the greatest risks. So if you're giving up your leverage within your business, you're giving up your risk, right? If you're, if you're, if you're giving up, you know, cutting corners on underwriting deals, you're you're giving away you're giving away your risk, you're giving away your power. So I would say giving up your power is the greatest detriment that a person could do. And giving up my power, my voice, my opinion, my skill set. That to me, would be the greatest risk.
Today, my guest is Kurt Uhlir. Kurt is a globally recognized marketer, operator and speaker. He's built and run businesses from startup to over 500 million in annual revenue, assembled teams across six continents and been a part of the small team leading an IPO of $880 million.
J Darrin Gross:
I’d like to ask you, Kurt Uhlir, What is the biggest risk?
The big key is risk in my personal business. And I think in most people's businesses, actually, what am I wrong about today? And I like I don't know what I'm wrong about in my business today. But I can guarantee I'm wrong about at least three fundamental things. And I say that from too many decades is already working and not enough hours sleeping, realizing. Like I know one thing and feeling right and feeling wrong feels exactly the same until you realize your wily coyote out over the ledge and you realize in that moment, I've been wrong about a fundamental belief in my business for the last three months, three years, and something's come out wrong. And so I do a lot to in my personal life or my business life there to try to de risk that by putting people around me that have full transparency into what I'm doing and the decisions and my thought process in business. Some cases, those are paid mentors and coaches, other times or masterminds where people that are in similar, often non competitive businesses that are trying to accomplish the same growth trajectory, tried the same things, and fully exposed, hey, here's why. Here's how I'm making this approach. And be very give other people permission to speak into cordite. I think this is what you're missing. Comana that times where it's like, you realize, oh, God, I've been putting in a lot of resources, millions of dollars in some cases. And I realize I've been fundamentally wrong, and I just lost it all, man. And we've been really nice to somebody could have given me that insight beforehand. So I've, I've been in that wrong situation too many times. But I've also saved millions of dollars, by having close people in those relationships, point out things to me that I really thought I was right about, until they started pushing me on it. And I realized through kind of that discovery, now, there's much more riskier than I think, and I need to change path before I write that next check.
Today, my guest is Julie Blank. Julie serves as the chief operating officer at new standard equities, where she leads the firm's corporate multifamily operations, Investor Relations and asset management.
J Darrin Gross:
I'd like to ask you Julie Blank, what is the biggest risk?
Well, a couple of months ago, my answer might have been different than now that you know, the market has been changing so drastically with the I think with the speed and magnitude of the interest rate increases, it has, you know, spooked investors, it's you know, put some weight in the cell of borrowing. But there's still a lot of capital out in the market. You know, investors want to do deals, they, they need to place capital. So deals still get done. But I think the the risk that we're looking at now is being able to continue to do deals, but looking at the severe impact that the interest rates will have on your cash flow. You know, especially for us what we do, we're value add, so our, you know, our cash on cash is, you know, already a little low, we're more about, you know, when we when we dispose of the asset. So when you are in a area that we are and interest rates are increasing, we have to really step back and really scrub the underwriting be a little bit more conservative, educate our investors, you know, some investors have stopped investing, some have become a little bit more cautious, rightfully so. And then, you know, we have other investors that are still going, Hey, let's figure out how to make it work. So it's really just being able to realize that the market is changing now, and that it might continue to be that way for the next, you know, couple of years, not only on the acquisition bid on our existing deals, like I mentioned earlier, in our conversation is, you know, some of our deals, we have floating rate so it's being able to step back and forecast and look at what the risk might be, how do we overcome the risk and be more proactive right now. So I think a lot of it's going to come down to just kind of protecting cash flow and being able to underwrite new deals, and realize that we're not going to get to the, you know, 1819 20% returns that we were able to underwrite, you know, a few years back and be be satisfied that we might get 11 or 12%, which is still really good as a return and that you know, apartment investment is still the top You know, real estate investment type. And we've been in difficult cycles before in real estate, and we've survived. So yes, there's a risk, we're not going to be stupid, we're optimistic, we're cautiously optimistic. But we also know that real estate is still a good investment in apartments in particular, especially the asset class we're in, we're B class. So we're right in the sweet spot that the markets are gonna are doing well, the economy's doing well C's go to B's, when the economy starts to not go so well, the A's go to B's. So we were we're a bit protected as far as the as you know, occupancy and rents and stuff. But I think we still have to realize that there, there's going to be some risk and some hits on our cash flow because of the interest rate increase, but I think it will, won't make us stop doing deals, we just have to be a little bit more cautious and, and work with our investors much closer. So that we you know, have a better understanding of where we are and where where it's going to go. I don't have a crystal ball. I wish I did. But it's hard to say things are have moved so fast, that I think just taking a step back and looking at things closers is something we need to do. But at this point where we're continuing to operate business, as usual, with continued focus on being aggressive, as much as we can with rents, which is going to help overcome the, a little bit of the interest rate increase in the inflation, and continuing to work in our technology platforms to get all the information we can to make good decisions. That's where we are.