Today, my guest is Richard Crouch. Richard is a commercial real estate attorney and principal at the Virginia law firm Woods Rogers, where he chairs the business group. He's built his legal practice on the foundation of commercial real estate over the past two decades. And in just a minute, we're going to speak with Richard about Contractual Remedies. Get it right before things go sideways. 

Contact: https://www.woodsrogers.com/

Email: richard.crouch@woodsrogers.com

Cell: 757-353-0969

J Darrin Gross

I'd like to ask you, Richard Crouch, what is the BIGGEST RISK?

Richard Crouch

I would say, and there are a few concepts within this, but I would say probably the biggest risk is not having the self awareness to recognize your own limitations. And what I mean by that is, there are a couple ways that this can play out. Certainly when transactional volume is humming along at a steady pace, commercial real estate attorneys are very busy. And this could probably apply to a number of professions. But sometimes the pace at which we must work, particularly with the mindset, the time kills, deals, and that's the mindset that we we live by. But sometimes that pace can preclude extensive deliberation on important sophisticated matters. And so I would say one of the ways to mitigate that risk is obviously you have to review every deal. on a case by case basis, no two deals are exactly the same. But you do need to have certain preventative measures in place to basically back check yourself, basically have certain things, whether they be templates, templates, checklists, and so on, where on every deal, although some issues will leak out more than others, that you're basically looking at every single issue, that could be an issue, and disclosing that to the client. And if the instruments or the language of the deal, address it, you tell the client, how they address it, if they don't address it, you reveal that to them as well. And that's something that, from a practice management standpoint, definitely improves the consistency and the reliability of our product and our clients ability to rely on that. Some of the other things in terms of just recognizing your own limitations is, you're only one person and you can't do it all yourself. Sometimes it's a function of physical time, you can't do it. Sometimes it's an issue of being cost effective. And using perhaps a, a less season but more affordable attorney on your team to help you review certain documents or prepare certain documents. So that's a that's a critical component, as well as basically being able to look at your team, surrounding yourself with people you trust. In fact, these may be people that in some aspects, they have strengths scenario there that are stronger than your own, and being able to rely on them, pinpoint their strengths, have them work well together, so that you have some redundancy on deals that increase basically responsiveness, the maintains the quality of the deal, and keeps you cost effective, as well. And also, and I guess the last thing, in terms of how limitations can be a risk is not being able to delegate when you should, and I know this dovetails maybe with the with the prior principles, but it does basically limit your bandwidth and your ability to expand your own business and your own practice by not being able to trust those that you've trained around you and grown around you to basically have the same the same skills that you've learned as well. So those those are the general risks. One that I encounter. And those are some things that over almost two, two dozen years of practicing, that we put in place to really mitigate those at least as an attorney. 

Now for our clients, I would say probably the biggest risk is similar to what I was saying before is being too hasty. to land the deal, get the deal, finish the deal. Without properly properly documenting what happens when things go wrong? 

I'd say that's probably the biggest issue. And sometimes we see this with less experienced syndicators is they're so eager to get the deal, they haven't really thought through how they're going to get it financed, or how they're going to raise the equity. And so oftentimes, there's a bit of a scramble there. So that's another thing where, in terms of being prospective, and forward looking, it's helpful to not lose sight of those and more important things, because without the equity and without the financing, it's it's definitely very difficult to actually get the deal done. 

   So there's some of the things that we basically highlight for our clients to be to be mindful of, and again, to just always be always be transparent and honest. And I say this quote, often that a, an honest man doesn't have to remember what he said. And I think that's very good. Good and very good tip for anybody who's particularly handling other people's money to live by.

Today, my guest is Joe Caltabiano. Joe is the CEO of Healing Realty Trust, a data driven self managed real estate investment company with a portfolio of healthcare related real estate assets dedicated to serving the mental, behavioral and physical health sectors. 

Website: https://healingrt.com/

Email: Joe@healingrt.com

J. Darrin Gross:

If you're willing, I'd like to ask you, Joe Caltabiano, what is the BIGGEST RISK?

Joe Caltabiano:

So in real estate, you know, I think the number one risk as you're looking to grow a real estate portfolio is access to capital. And that access can come in the form of equity or debt. But you know, as you have tightened tightening of free cash flow for people, maybe their investment dollars are a little smaller. And as we sit as a private REIT, unlike a public company, you know, where you're, you're, you're picking up multimillion dollar checks, you know, our check size, again, the minimum for qualified investors is 250,000. Those are regular people a lot of times, so they are impacted by, you know, what's going on in the world. So access to capital, not only on the equity side, and what's in people's pockets today, but also access to capital through the lending institutions and banks. So kind of blending out, you know, where that where that risk is, and ultimately, what's your cost of capital, because if you build a model that anticipates x as a return, and you're wildly off, because access to capital became lack of access to capital creates a higher cost of capital, because as the pools shrink, you're paying more to get that money in either the form of equity or in the form of interest rate. So access to capital is by far the driving factor of of kind of number one risk thing for us. So what that means is, I talked to more investors than I did in both of my previous industries, you know, my hit rate for success is probably lower than my fragile ego thought it would be when I when I got into this space, but talking to more investors, you know, spreading a wider net to talk to more people. And then on the debt side, it's talking to more banks and more lending institutions. Because unfortunately, until you have that bully signed deal with them, things can happen. I've seen banks close, I've been in mid underwriting where the board decides to shut off lending, you know, and that's, again, they do that to protect themselves. It's never anything personal with you, because they wouldn't have given you the term sheet. But when a board says we're not lending more money, there's very few things you can say to the loan officer, to get them to open up that vault and give you capital. So you know, talk to more investors talk to more banks, casting a broader net, and really just getting out there and playing the hand to hand combat game which, which I certainly enjoy. But again, when we launched healing Realty trust, you know, a year plus ago, I would have thought there was more capital than then maybe I was able to stumble into.

Today, my guest is Kamyar Rezaie, a UCLA Economics graduate. He's been a driving force in real estate industry for over 20 years, beginning in real estate or excuse me residential real estate before transitioning into commercial in 2008. And in just a minute, we're going to speak with Kamyar Rezaie about commercial real estate financing options in 2024.

J Darrin Gross

If you're willing, I'd like to ask you, Kamyar Rezaie what is the biggest risk?

Kamyar Rezaie

The biggest risk, which I see is because I faced in 2000, era eight era where the banks basically got hit hard, no one had money, first on the bank side or on the on consumer side. So the biggest risk in my industry is if the banks don't lend anymore, you know, then everything comes to a halt. And there will be no movement, you know, and you know, we always need money even at the higher rates, low rates, you always need money, you always have to have refinances, you always need purchases, to continue. The biggest risk is, you know, banks stop lending.

Today, my guest is Zachary Beach. Zachary is a returning guest and is an Amazon Best selling author of The New Rules Real Estate Investing, and the co host of Smart Real Estate Coach Podcast. He's a partner, the CEO and a coach at Smart Real Estate Coach. And in September 2020, they re re released revised edition of the Real Estate On Your Terms book, which has Zachary co authored. And in just a minute, we're going to speak with Zachary Beach about real estate on your terms, making real estate deals in her excuse me Making Real Estate Deals Happen in 2024.

J Darrin Gross

And so if you're willing, I'd like to ask you, Zachary beach. What is the biggest risk?

Zachary Beach

Yeah, I'm glad you brought that like, it's interesting the way you walk through all that, because that's essentially what we're trying to do is minimize risk as much as possible. Warren Buffett always said that they all make all the best investors out there, not specifically real estate, look to minimize the downside and maximize the upside. And I think that's exactly what we've done here. We're creative financing. Because right when we buy a piece of real estate, we're not personally guaranteeing the debt. So we are not taking on the risk of the debt. It's actually on the seller, so we're actually pushing it back to the seller. And then what we're then doing is we're actually not taking on the full risk of the property either because when we go sell on rent, oh, we're actually pushing the risk now to the tenant buyer for handling any and all responsibilities of the property because it's tied to his option. So it's very interesting that you hear that. So our biggest risk when it comes to these two deals. One, if it was a subject to deal, the biggest risk always involves is the due on sale clause. So then how do you manage that do on sales cause risk? Well, you buy a product, we buy the property in a trust. And then because the Garn Saint Germain act of 1982 allows you to transfer ownership of a property for state or tax planning purposes. So we use that to try to manage the risk. And then there's lots of insurance companies nowadays. I actually have a due on sales calls insurance now, as well. So that's where we we certainly minimize that. So then what? So then if we look on the buyer side, what's our biggest, our biggest risk? Now our biggest risk is if our buyer defaults, on a on the on the option or the rent to own deal, which means that we gotta go to traditional tenant law, which means now we're gonna deal with an eviction. So when we look at that, those are going to be our biggest risks involved when we do our best to manage that tenant buyer risk by getting as big of a non refundable deposit as possible, because it's less likely they're going to default if they have more money involved in the deal.

Today, my guest is Darin Davis. Darin is a real estate leader with 20 plus years of experience and has led through market shifts with over a billion and projects. And he's co founded Club Capital. And in just a minute we're going to speak with Darin Davis about Multifamily Syndication opportunities in 2024. 

J Darrin Gross:

I'd like to ask you, Darin Davis. What is the biggest risk? 

Darin Davis:

Yeah, and it's not a black and white answer. So and I get asked this question.

You know, a few times but and it's I look back the the biggest risk personally for me was if I didn't take any, okay, the fear, I accepted the risk by doing my first few deals, knowing I probably was not going to make a ton of money. All right, I just, and I accepted that personally, mentally, emotionally. Because I said, There's no way I can, I can figure some of this stuff out. So the risk there is there was accepted risk, and I took it, okay, education, knowledge, experience, it best thing I ever did. And they were small at the time. I mean, they were big at the time, but they I look, I fast forward to 20 years. I mean, they were the greatest things I ever did. Okay. And I always think about, you know, I've had a lot of broken bones, I was a crazy kid, I tried all kinds of things. And I always, I always thought about atrophy as an as an answer, okay. You know, you know, when you break your arm back in the old days, they put plaster cast on us, you know, today, I think you're walking around with a knee surgery, four hours later, whatever they do, but everybody knows what atrophy as you take the cast off your arms, half the size of your other arm, you know, looking at that, but I kind of sat back and said, you know, what you can either, you know, waste the time and the knowledge that you've learned by doing nothing, okay, which I think is incredibly risky. Or you can spend that time and knowledge to do something that will propel you and or your family to some place that you're going to go. Or if you want to take it to the next level, you can invest. And when I say invest, I don't mean like, physically invest, but make that commitment and that investment in yourself and your family to actually go out and execute. And I used to say something, I've said this a long time. And actually, I kind of forgot about it. But I used to say, education without execution is just entertainment. My three E's, you know? And to me, that's, that's the risk that I will not accept me, you know, so not really an insurance answer. But you've got to take some emotional and mental risk, and even some financial risks, and I've lost money, there's no doubt about it. On my own money, okay. I've lost money. And but I look back, and I'm happy that I did what I did. I learned a lot. Now, if you don't, if you don't change your ways that you've learned those lessons, then that don't do it. Okay. But if you're willing to accept that, hey, I can take that risk, I can live with it, and I can learn and move on.  That's, that's powerful.