Today, my guest is Seth Jones. Seth is the CEO of Hygia Living Corp, where he and his team have developed Superstratum, the first patent pending process to remove mycotoxins from homes. And in just a minute, we're going to speak with Seth Jones about Building Related Illnesses and the impact and what you can do.
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J Darrin Gross
I'd like to ask you. Seth Jones, what is the BIGGEST RISK?
Seth Jones:
Well, I have what I think is an interesting answer, because being in the space of health and chemicals regulation and compliance is from the federal government is a huge risk. And that was always the biggest risk of our company, especially because we we set out to do something different, new. It was extremely high risk when we started for many reasons. You know, many reasons, as as all startups are, but particularly because we were entering, you know, a highly regulated space and trying to do something a little bit different. And that risk, actually, we had the EPA shut us down last year, in December, after about three years of building the company, and they shut us down for what they deemed compliance issues with certain things we were saying on our labels, and that's because the EPA regulates very tightly anything related to mold, bacteria, any chemicals that you use to mitigate what they deem or pests. And there were, there was no awareness about mycotoxins, and there were no products, no registrations, you know, no acceptable levels, very little information even out there about mycotoxins. And, you know, I had hired all sorts of Consultants and attorneys to try and guide us and tell us, you know, help show me where that risk was, and then so I could make a decision on how to position our products and our company within that landscape of risk.
But what I found out was they were not well, let me say it a little bit differently. No one really understood that landscape, and I had to, I had to learn it myself the hard way. So the biggest risk for for us, I would say there's a lot of risk, but that's whether it's the biggest, it's, it's, it was the most pertinent to us, because it wound up, you know, actually being an issue that we navigated successfully through and through that process, we wound up de risking our company, because now we know the regulators, and we shook their hands, and they've told us what's acceptable, you know, we were able to ask those questions and and that has given us a much clearer path forward In terms of, you know, how we speak to customers, how the EPA, you know, essentially wants us to behave, and what they want us to say, and where they want us to stay out of without, you know, certain registrations and things. So, yeah, I would say that would be the BIGGEST RISK.
Today, my guest is Jeremy Thomason. Jeremy Thompson is the Managing Principal at Convolo Capital, where he focuses on acquisitions and equity relationships. Convelo is a boutique private equity firm specializing in multifamily assets in Georgia and Texas, and in just a minute, we're going to speak with Jeremy Thompson about social impact initiatives that are good for residents, employees and investors.
Contact info:
Website: https://www.convolocapital.com/
Email: jeremy@convolocapital.com
J. Darrin Gross
I'd like to ask you. Jeremy Thomason, what is the BIGGEST RISK?
Jeremy Thomason
Okay, man, this is a great question. We are sitting here. I don't know when this will air, but we're sitting here on a on a Fed day. So the obvious answer to me would be interest rates. And so honestly, I'm not going to answer that, because that's just an obvious answer. And I actually have an insurance license too, and I sit in Texas, and so it'd be very easy for me to say, well, it's the high cost of insurance. That's an insurance that's just a really big problem right now for our industry. And in Texas, renewals, everybody's scared when their renewals come up, because it's just going to be a bad news story. So it'd be easy for me to say, well, it's insurance, and those interest rates and insurance are not really controlled by us in a lot of cases, so they do represent big risks. But I'm going to say it is something that I've learned through this last cycle. And so it's related to insurance and interest interest rates, there is a tendency, I think, in our space, to want to go chase whatever the absolute best deal is. So I'm going to use lending as an example. Three years ago, the whole space thought that the forward curve on interest rates was going to have near zero interest rates. And everybody institutional capital, everybody thought, You know what, the best deal in town is to go ahead and do a floating rate loan, and you'll cap yourself, you'll protect yourself with an interest cap, and you'll be fine. I. Obviously, we'll go into it. That was a mistake, mistake by our industry. We nobody could see coming. 500 plus basis points of interest rate movement within a year never happened like that before, and it just it's put a lot of stress on our industry. Similarly, insurance, the insurance markets call it catastrophic risk, high probability, high frequency, all of those different things, coastal all those things have put an upward pressure on rents, and we couldn't anticipate it. So my answer is, on the risk. Thing is, it's the risk of uncertainty. And so how am I going to answer this? I'm going to answer this by saying I am much better off working with someone that has experience in the space and taking risks off the table. So floating rate loan at 2.9 I could have gotten a fixed rate loan at the time with a little less leverage at four, but that 125 basis points was sure nice in my modeling, but I should have taken risk off the table because I only had a five year hold. So uncertainty is my answer. It's the uncertainty, and the way I'm answering it is, I, my job as a fiduciary to my investors is to take as many risks off the table as I possibly can, because there, God knows that there are so many different risks that I can't control and are going to hit me. So if I can eliminate risks and how I underwrite or how I use products and services, or how I look at a particular basis of a property, and take as many risks off the table as possible, then I'll be left with still a substantial amount of risk, execution risk and unknown risk, but my job is to eliminate risk, and I can do that in different ways, because there's all kinds of different risks. But the answer is the uncertainty risk to your question, Darrin, I know that may be too vague, but that's what I worry about, is uncertainty, and how I have learned in this last cycle is it's better for me to have certainty at a little higher price than it is for me to just hope that everything's going to be fine and chase the better priced product, whether it's insurance, whether it's interest rates, whether it's a contractor, certainty wins because I can underwrite I can underwrite certainty.
Contact info:
Website: https://www.convolocapital.com/
Email: jeremy@convolocapital.com
Today, my guest is Sujata Shyam. Sujata is a real estate investor, underwriter, short term rental operator and fund manager, after using her student loans to flip her first house during her MBA, she spent four years underwriting multifamily acquisitions for institutional buyers. And in just a minute, we're going to speak with Sujata about the math behind the money, how to snowball your wealth through real estate syndication.
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Podcast: Passive Income Unlocked
J. Darrin Gross
I'd like to ask you, Sujata Shyam, what is the BIGGEST RISK?
Sujata Shyam
So with what I do, Darrin, where we. Invest as a fund of funds, where we're investing as a group, and placing that capital as one investor into a property or an opportunity of sorts. In in my view, the biggest risk by far that's out of our control is the operator. So the operator, you know, we have trust in the operator. We're basically betting on the jockey. In a sense, there's lots of things we control for can't control for. Do we like the deal? Do we like the market? Do we like the property? Do we like the business strategy? But we're trusting the jockey to execute the business plan, or the operator, as we call it. So the biggest risk for me, really is that the operator either, mostly it's that they start, they start acting in their own self interest, rather than in the interest of all the investors. And we try to put lots of controls on that, but ultimately, they can still cause a lot of trouble if they decide to, if they get squeezed, or if they decide for some reason to get too aggressive, that is by far the biggest risk that we have to look out for, and that's why trust in an operator and trust in the people that you operating with, and that they have not only the integrity that's needed, but also the capacity to manage the types of deals that they're doing, as well as the decision making ability to know, have I gone too far? Am I, is this like a little too far outside my capacity? Do I need to scale it back so that I don't put investors capital at risk? That's really the biggest risk, is the people.