Today, my guest is Bishoy Habib. He's a highly experienced real estate and business attorney with over 12 years of legal practice in Florida and New York. And he has successfully represented prominent Developers Investors and Financial Institutions in more than 1000 transactions totaling $12 billion. And it just a minute we're going to speak with Bishoy Habib about Creative Deal Structuring.
Contact:
instagram:@attorneybishoy
Tiktok: @attorneybishoy
Linkedin: Bishoy M. Habib
Ph: 813-553-2699
J Darrin Gross
I'd like to ask you Bishoy Habib, what is the BIGGEST RISK?
Bishoy Habib
I think risk is a dirty word. And I don't think it should be, because I think that obviously, it has a negative connotation. But I tell my clients all the time, that I deal with business people, right i I like dealing with sophisticated parties like yourself and kind of people who can, you know, are a little bit more aggressive. That's just the nature of business people calculated risk. And that's the name of the game, I always tell them, anything we do is going to be a risk, any investment you make is going to be a risk. Anytime you place money. Anytime you buy a property, anytime you partner with someone, there's going to be risk. How much can you stomach? What's the potential return? What's the potential downside? Right? So I love that you asked that question, because that's a topic that comes up and a conversation that comes up with me and my clients, and then always ask have to ask them how much what risk are you willing to take? How much do you love this deal? If you want me to negotiate it more aggressively, because you don't care, it's less risk to you, but you probably don't get the deal versus the other way around. So risk is something I deal with every day as an all my all my kind of positions, but especially as an attorney. But I'll give you a good, you know, kind of a high level answer. I think the biggest risk is not taking a risk I do I think that the times that I've wanted to do something, whether it's in a personal professional capacity, and I've decided that I don't want to put myself out there or I don't want to, you know, embarrass myself or I don't want to take that risk and lose this money. A lot of times I've kind of regretted that. And so that's those are the lessons that I've learned is like, you know, it just go for it, just do it. And it was the same concept when I opened up my own businesses last year. I mean, it did take me 10 years to get to that point to build up that confidence. But I tell you what, within a month, I knew that that was the right decision. For me it was the best decision I ever made from a career perspective is to open up my own practice as an attorney. It's risk, right? You just got to take that chance. But the people in my opinion, who never succeed are the people who never take that risk and people who never put themselves out there. So, to me, the biggest risk is not taking a risk. I always tell you know, whoever will listen, it's like, you know, you calculate you think about it, but I will feel 100 times better trying and not succeeding and just know okay, well, this wasn't for me, or how do I get better and get to the goal versus just thinking about it in the back of my head like man, should I have done that? I should have done that. Right. So that's the biggest risk to me.
Today, my guest is Travis Watts. Travis is a full time limited partner investor and the director of investor development at Ashcroft Capital. He dedicates his time to educating investors who are looking to be hands off when it comes to real estate investing. And in just a minute, we're going to speak with Travis about mitigating risk and maximizing returns with portfolio wide insurance.
Contact Travis:
J Darrin Gross:
If you're willing, I'd like to ask you, Travis Watts, what is the biggest risk?
Travis Watts:
So I really haven't changed? You know, this opinion since I started investing in syndications years ago. And it's that as a limited partner, if you're going to invest in a real estate, syndication, whether it be office or multifamily, or car washes, industrial, whatever it may be, you really have three primary risk categories. You know, again, not just three, but three primary risk categories. That is the operator that you're investing with, that is the market you're investing in. And that is the deal itself. I've always put the most emphasis on the operator, right? So bet on the jockey, not the horse. And I think again, that's more important than ever, as to this, the shake up in this market cycle shift that has been, you know, unwinding over the last two and a half years with interest rates and capital markets and cap rates going up and valuations coming down. Who are you working with as an operator? What connections do they have? What's their track record? What's their level of transparency? Are these folks really in it to have your best interest? And what are they doing about the things that have popped up? And what are they changing to mitigate risk moving forward?
Contact Travis:
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.