J Darrin Gross
I'd like to ask you, Xiao Yuan what is the biggest risk?
Yeah, you know, like any financial product, I mean, it truly is interest rate risk. So, you know, it's not something that you can eliminate, you can, you know, transfer to some extent, you can minimize, to some extent, but, you know, on a day to day perspective, I mean, we do have a fee, it is, you know, anytime we buy a bond, anytime we, you know, look at look at any type of these financings day to day, you know, proceeds can essentially get diminished simply because, you know, 10 year Treasury goes up by 1520 basis points, right. And so, you know, that's something that, at least we spent a lot of time thinking about is just how do we minimize the interest rate risk, and we do have kind of a few vehicles that we, we utilize that minimize interest rate risk, both for ourselves and also for the developers that are, you know, seeking our capital. And, you know, kind of a big way that we do that is, you know, we created a rate lock mechanism, anytime we buy a bond. So, you know, whatever the interest rate is on the bonds, what we would do is, you know, we can say, hey, we can lock in the rate for the next five to six months, and typically, the way we do that is through kind of a series of different slots, and, and then, you know, sort of other interest rate management tools, right. So, but, you know, on any given day, I mean, what I think about the most is, you know, how do we minimize interest rate risk, because that's ultimately sort of the, you know, volatile interest rate risk is really the sort of the enemy of, you know, slow, solid, consistent return.
Today, my guest is Douglas Kiersey. Doug is the president of Dermody Properties, and oversees all of the company's operations and strategic initiatives, including capital formation, acquisition, development, and investment management activities. He is a member of the Dermody properties advisory board and chairs the company's executive and investment committees. Since Mr. Kiersey has joined the firm Dermody Properties has developed and acquired industrial logistics assets with an aggregate value of more than $5 billion. Mr. Kiersey has more than 30 years of experience in logistics properties in more than 20 major US markets. He is a member of the Urban Land Institute, and the society of industrial and office realtors. And in just a minute, we're gonna speak with Doug Kiersey, about the intersection of work from home and he commerce.
J Darrin Gross
I'd like to ask you, Doug Keirsey. What is the biggest risk?
Well, it's interesting, you should ask to ask that question. A question that I asked myself and I asked our team when we're considering an investment is, what is our risk adjusted return look like? And so I know, or my investors know, if they want to put their money in the so called Risk Free investment, that's also known as the US 10 year treasury, that presently they can get a return of about 3.7% a year? Well, I'm taking a lot more risk than that. And so what kind of a risk premium Dubai and Dubai investors and our company demand in order to take a number of risks. And here are some of the risks, the risk that we build these buildings and no tenants show up. So I'm taking demand risk. There's the execution risk of building the buildings, can I build them on time and on budget, so I'm taking construction risk. While we try to mitigate that as much as we can. I'm taking interest rate risk, because our construction loan is on a floating rate basis. So I have to be able to understand what that looks like over the course of a three year construction loan term. And I'm taking long term interest rate risk, because I put permanent debt on the project, what does that look like three or three to five years from now. And lastly, I'm taking valuation risk. So when I create this income stream, when I build these buildings, and I listen to great companies, and they pay me rent, and I'm creating this massive income stream, what does that income stream going to be worth five years from now. And that's really the biggest risk. So I can I can, I can do all these things and manage all these risks. But I don't really know, five years from now, what that income stream is going to be worth because a lot of that is reflective of the Feds activities and where our interest rates going to be. So we tried to skate to where that we think that puck is going to be in five years. But that's the biggest risk in our business. So we can have taken all that into account. When we look at levered returns for a project, like the logistics campus in the Chicago suburbs. We're looking for high teens and low 20s kind of pro forma returns with appropriate and conservative underwriting on each one of those stocks that I mentioned. And so if my risk free investment is 3.7%, for the 10 year Treasury, and I'm going to do all this, I want something in the teams, that least.
Today, my guest is Russ Morgan. Russ is the co founder and partner had wealth without Wall Street, an online community that seeks to re educate business owners and families on how money truly works. And in just a minute, we're going to speak with Ross about what is investor DNA and why you should only invest when following yours.
J Darrin Gross
I'd like to ask you, Russ Morgan, what is the biggest risk?
The biggest risk is lack of access to cash. The biggest risks, preventing people from being financially free as they have no access to cash is what keeps us going to work every day. Right? It's, I have to be able to make the mortgage payment, I have to be able to make the student loan payment, I have to create the income in order to go on that once a year vacation, pay the cell phone bills, and they have no access to cash. So I have no ability to go buy assets, that would create a passive income to exceed or pay for those monthly expenses.
Today my guest is Rick Elmore. Rick is an entrepreneur sales and marketing expert, and former college and professional football athlete and the founder of simply noted, and in just a minute we're going to speak with Rick about simply noted, it's a proprietary technology that puts real pen ink or pen end to paper to scale handwritten communication, helping businesses of all industries scale this unique marketing platform to stand out from their competition and build meaningful relationships with clients, customers and employees.
J. Darrin Gross
I'd like to ask you, Rick Elmore, what is the biggest risk?
Yeah, it's a great question. You know, I think I don't know if this is a cliche answer. But I think the biggest risk is not taking the risk. You know, I was somebody, before I started this business, who was not a huge risk taker was kind of like, in my bubble, I stuck to a plan. You know, I was very regimented, scheduled, I had that athletic background where your life is just completely booked for you, and really didn't know what was on the other side. And then being an entrepreneur, starting a business, doing anything, you know, larger than yourself takes risk. The bad thing about taking risk if you don't learn from your mistakes, so you don't learn from things that you failed in, in those risks, then those risks weren't worth it. But if you're taking risks, and you're failing, and you're learning and you're growing, then those risks are worth it. And that was something that, you know, even when I first started, I really didn't understand, but it took me about a year to where I was like, I have to get us on my comfort zone, I have to take more risks. I have to try things I don't understand. And you know, Fast forward four years, we have 1000s of clients, we've built robots for building software and nothing I've had experience with, but it was me constantly living outside my comfort zone, taking those risks that has allowed us to scale this company to where we are today.
Today, my guest is Andy Gurczak. And he is the founder of all city adjusting a licensed Public Adjusting firm, and he immigrated to America from Poland with his family at the age of nine. And after working in the construction industry, more specifically Fire Restoration, he discovered his true calling public adjusting. This discovery was largely thanks to herb Johnson, the first African American public adjuster in Illinois who took Andy under his wing.