I'd like to ask you, Craig Berger, what is the biggest risk?
Craig Berger 42:57
Darrin, you're really good interviewer, you're asked some great questions, and you're really smart. Our biggest risk, my biggest risk is taking a finite amount of personal resources and growing a business. I'm hiring I'm buying deals and having the investor of last resort or the backstop in any of my deals if if a deal needs more money, I really don't do capital calls. I've I've always invested out of my own pocket and the very few limited cases where one of our deals or properties is needed more money. So I've got a number of demands on my personal resources, most of which revolve around growing a business. So that's my biggest risk. How do I hire top flight and top quality, talented sea level executives, investor management, personnel, acquisition personnel, back office personnel, with my resources, how do I go out and buy quality deals when when I have to raise the money in a finite period of time. And so those are those are some of the biggest risks on our assets, we've really paid mostly prices that I feel really good about. So I don't feel like any of our projects are a risk. You know, again, that's one of the great things about multifamily. We're buying below replacement cost we're buying into a business that is fairly stable overall so I like the the multifamily and commercial real estate business. And we've never lost money on any deal yet knock on wood. And hopefully, hopefully we won't. So you know, my risks are more around corporate level. risks and how to scale a business with, you know, limited limited personal resources. We have exited, you know, a number of properties over the last year. So my resources are a lot less limited than they were a year or two ago. But they're still limited in terms of growing the business and hiring talented people that need and deserve to make, make a make a living.
Today, my guest is Todd Nepola. Todd is a commercial real estate investor manager there excuse me, investor and manager. He deals in retail and industrial properties, class B and C properties. And they own and operate and lease and manage several million square feet in of these properties.
J Darrin Gross:
I'd like to ask, you know, Paula, what is the biggest risk?
Well, I know you said you don't want an insurance that needed insurance answer, but I'm gonna tell you as a real estate owner, the biggest risk is not knowing working with a good insurance broker. So I'll give you a real quick story again that the second building I bought one of the guys I rented space to restore tires, and the tires caught on fire. And when I was told that I got that there was a fire first I thought someone was kidding me. I drove there. So the whole street shut down. And it was burning 50 feet to discard for just a few tires. I mean, maybe 50 100 tires. I want to ask the firefighters when they're doing this that there's really nothing we could do. It's just gonna burn out. And I was like, Oh my God, my whole building burned down. And it did. And when I went and called the insurance company, I was my neck Call first thing in the morning, I got a hard lesson in insurance about being underinsured and not devalues, we're off. And I realized that I was on the hook for a lot of this damage that was going to really eat it. And I said, this is terrible. Nobody ever explained this to me, I just assumed you buy insurance if there's a problem, but save me is that it was a total loss. And by being a total loss, if there was I had to pay the maximum insurance policy, then they gave me money for demolition and cleanup. So I was safe. But had it only been a fire that was contained to one room, I was really going to pay the price because I wasn't properly insured. So that went back to probably around 2005, or six that fire. And ever since then I said you really really must work with a good insurance agent, especially in Florida, as we're talking now it's storming outside, if you're not aware of your liabilities on hurricane insurance, wind insurance, fire slip and falls, if people don't know things like you know, it won't be your fault. Someone could fall on your property, and you will do nothing wrong, not even have a pothole, but you're going to get sued. So what do you expose for? And I find every time I take on a property management account, and I asked owners this question, they simply don't know. And that's why it's really, really important you work with a good insurance agent, that's more important than tenant risk. Because if a tenant leaves, I can replace it, that's more important than a problem with the vendor because I could get a new vendor. But if you're not probably insured, something happens and you're going to share this liability, you're not ready for it. It could bankrupt you.
Today, my guest is Spencer Hilligoss. Spencer is the CEO and co founder of Madison Investing a real estate investment firm specializing in real estate syndications. As a passive investor and active syndicator. He understands the unique challenges that busy professionals face when starting out in their real estate investing journey. Spencer's mission is to arm investors with a know how they need to make confident investment decisions tailored to their individual life goals. Prior to pivoting to real estate, Spencer held several executive roles in the financial technology industry, including positions at Intuit and gusto. forging a 13 year track record of building high performing teams across five companies, three of which are valued at over a billion dollars. Throughout his career, one thing has remained consistent his ability to keenly focus on professional development, helping teams and individuals reach their full potential. Spencer is a member of the 2021 Forbes real estate Council and has been featured in publications such as Business Insider, when he's not shifting the way people think about investing, you can find him listening to metal, adding to his tattoo collection and jogging through the Bay Area with his wife and two sons. Ask him about the time he played on stage in San Francisco at the Vans Warped Tour. And then just a minute, we're going to speak with Spencer about playing financial offense versus defense. But first, a quick reminder, if you like our show, CR e PN radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment. We'd love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you're there, please subscribe. With that I'd like to welcome my guest, Spencer Hilligoss, Welcome to CRE PN Radio.
J Darrin Gross
I'd like to ask you, Spencer Hill, what is the biggest risk?
Oh, my goodness. I love that question. And I say my goodness, because it is such a intelligent question. And I wish that someone could really couldn't go back in time yet again, and tell myself that every decision in life is a risk decision. Without exaggeration, and you and you already know this far, far better than I do because of your experiences, which is amazing. And I respect so much Darren, walk out the front door, you're making a risky decision, you know, drive your car and make an arrest decision. What is the biggest risk? I think the biggest risk as ethereal as this sounds. And I'm happy to drill down and make it less ethereal and make it more pragmatic or useful for people if they'd like, but this is genuinely what I believe. I think that the biggest risk posed to most people in life right now is a lack of curiosity. And what I mean by that is a lack of curiosity about their sources, like we're talking financially, of course, I would say they're not curious about how they make money and have what what is their money do like what they work for it. They know that they know what their income is, they know that they aren't really curious about well, do I need to does this have to be the way that I do this? What I'm curious, can I am I a human as a professional, capable of doing a different thing? Can I go do a side hustle? If I don't have any money? Could I be capable of generating a capital engine, fancy way of saying simply a way to build more investable capital outside my day job, which is more which is where most wealth is built. It's not in people's salaries. People don't build their net worth. In their day job. They build their net worth, by going out and building a business by going out and investing by going out and doing something on nights and weekends by It runs the gamut. And there's so many wonderful ways to go do that, that are free to start with and educate on now, like college courses. Sure. I'm talking pragmatic stuff. And so I encourage people to find a curiosity and that includes, I thought taxes were boring. I don't think they're always fun, but I certainly think they're pretty fun now compared to many years ago, and most people would hear that statement and think I'm absolutely crazy. And that's fine. But get sure is about your money and get curious about what you're capable of, if you are not happy with your circumstances, or if you don't have a plan B, C, D, E, F, to insulate yourself against the other many risks in the world. And so maybe I don't know if that's necessarily barking up the completely wrong tree in the wrong forest altogether. Darrin, but that's, that's what I chalk up if I had to give a single answer to what's the biggest risk is a lack of curiosity and people just sitting there to do the same thing over and over working hard, truly, is not working smart.
Today, my guest is Jacob Vanderslice. Jacob is a principal at Van West Partners, a Denver based real estate investment firm, focusing on acquisition and management of self storage centers and other opportunistic real estate. Throughout the United States, Van West has established a track track record with over 195 million in real estate assets. And in just a minute, we're gonna speak with Jacob, about self storage, investing in self storage during an economy of change. But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple of things you can do to help us out. You can like, share, and subscribe. And as always, we encourage you to leave a comment. We'd love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you're there, and please subscribe. With that. I want to welcome my guest, Jacob Vanderslice, welcome to CRE PN Radio.
I'd like to ask you, Vanderslice,
JACOB VANDERSLICE 43:50
what has got a few thoughts here on the biggest risk? Yeah, risk is a subjective thing to a degree based on who you're talking to. I look at risk as the as the mitigation of a loss of principle. So what is the story on this deal that would have to occur where we would see a loss of capital, and we look at that more carefully than we do the upside scenario. upside is a lot more difficult to quantify. But finding a story that creates downside is what we try to just eliminate. And having in real estate finance when someone crashes and burns. It is almost always because of a cashflow issue. It's always a cash flow issue. There's there's certain circumstances where you can fail not because of cash flow, but you know, something maybe bigger COVID, for example, but we watch our cash flow very carefully, specifically in self storage. And when we buy a given deal, there are two risks to that to that acquisition. I think outside of things we can't control interest rates and cap rates where rates going to be involved. yours where Cap rates going to be in five years, we don't know, right, we can make a forecast we can be conservative. But we can control is our is our net operating income and and our revenue, we have control over that to a degree. But the two risks on a given storage acquisition, we believe are rents where rents today and where rents going to be, and is that revenue stream achievable and reasonable that we've written into our model. And secondly, it's kind of getting in the weeds. But property taxes, I think, are a major risk. And property taxes and self storage are variable just like any asset class from market to market, they're a lot higher in the Midwest than they might be in Denver. But because storage leases much like multifamily are basically full service, meaning the the tenant doesn't pay the property taxes, those come straight out of the bottom line. So if you're accruing for property taxes incorrectly, and you get reassessed, that's going to be a material change in your net operating income as well as the total value of your property. So that's something rents and taxes are something we really analyze very carefully. And to mitigate the risk on the property tax side, we accrue for a tax bill, that's a worst case scenario. So that it is inconceivable the property taxes in the in the foreseeable future will ever go above this figure. And that's what we approved for. And typically, we come in well below that figure, sometimes we get lucky, sometimes it just doesn't get reassessed. We'll do some creative transfer, things where we buy the entity versus buy the deal. But I know that seems kind of in the weeds. But if you think your property taxes are gonna be 100 grand, and then 140. That's a massive Delta. If you put a six cap or a five cap on that 40k In noi, you've missed the mark on your deals value by lots of money.
Today, my guest is Oliver Fernandez. Oliver is a business owner and real estate investor that has successfully completed over 80 million worth of construction projects and accumulated a real estate investment portfolio valued at 150 million in the past nine years. And in just a minute, we're going to speak with all of her about adding value through quality construction and multifamily real estate.
J Darrin Gross
I'd like to ask you, Oliver Fernandez, what is the biggest risk?
Yeah, this is a really interesting question. And, you know, my mind went a couple of different directions, but the direction that it just keeps going back to is the biggest risk is not being intentional about what you want to do. And the reason why that's the biggest risk is because when you become 8090 100, or whatever your time is, and you look back on your life, and you're like, did I do everything I wanted to do, I don't want to ever be in a situation where I was like, Man, I could have done this differently or I could have done that differently. Alright, I really, I didn't, I didn't really focus on what I wanted to do here. I didn't want to focus on what I want to do there. I want to look back and just say I was super intentional. I did everything that I said I wanted to do. And I didn't leave any stone unturned. I didn't, I didn't leave any, any any opportunity that I really was excited about it. But I didn't have the courage to go for it. Like I don't I don't want to be in that situation. So I want to focus on being extremely intentional about my life where I want to go or family go where team to go from my businesses to go. Because I also know the opposite side of that when you're not intentional and you're just letting the the world just kind of control you and put you in situations. You know, that's never a good situation. So the biggest risk is not being intentional about life.