Welcome to Commercial Real Estate Pro Networks C R E P N Radio, Episode Number 250. Thanks for joining us. My name is J Darrin Gross. This is the podcast focused on commercial real estate investment. Risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio. Let's get into the show today. My guest is Anna Meyers. Anna is an apartment syndicator with Grocapitus based in the San Francisco Bay Area. They currently have over 1800 units. And in just a minute we're speak with Anna about asset management. But first a quick reminder, if you like the show, C R E P N Radio, please let us know you can like you can share or subscribe or and subscribe, you can do it all. And as always, we'd love to hear from you. If you want to leave a comment. We'd love to hear from our listeners. Also, if you'd like to see how attractive our guests are, be sure to check out our YouTube channel and you can find us at commercial real estate pro network. With that, I want to welcome my guest. Anna, welcome back to C R E P N Radio.
Anna Myers, what is the BIGGEST RISK?
What is the BIGGEST RISK of well I'm going to tie it back to a To Asset Management because there are, there are risks with investing in real estate. And I think it's a risk if if people aren't watching the bottom line and keeping track of their investments. So I think that, that you need to have your handles hand on data and keep on keep on, you know, keep on task to make sure that to mitigate the risk of things going wrong. So the risks are, you know, occupancy could could go way down because you're not watching the issues, you could have a lot of delinquency coming in. Of course, you could have a lot of natural disaster come or something like that. But there's a lot of things you've got to keep your eye on, on on an asset. And those are the risks that I believe the asset manager like like you know, the asset managers responsible for under Standing those risks and mitigating them and and seeing them before they happen so that we can pivot. And we do that using data and always being on task I, in 2019, I spent over 450 hours in Asset Management meetings, just Asset Management meetings, I'm not talking about meetings, Asset Management meetings 450 hours, it is something you have to be very dedicated to. And it's you know, it's a team of people so I do believe that the job of the of the asset manager is to mitigate risk for the investors.
Welcome to Commercial Real Estate Pro Networks CREPN Radio, Episode Number 249. Thanks for joining us. My name is J Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Where we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio. Let's get into the show. today. My guest is Mansoor Ghori. Mansoor is the co founder and CEO at Petros PACE Finance. And in just a minute we're going to speak with him about PACE financing, what it is, and how it can help commercial real estate investors. But first, a quick reminder, if you like this show, CR e pn radio, please let us know. You can like, share or subscribe. And as always, please leave a comment we'd love to hear from our listeners. Also, if you'd like to see how handsome our guests are, be sure to check out our YouTube channel. And that's a Commercial Real Estate Pro Network on YouTube. With that, I want to welcome my guest Mansoor. Welcome to CREPN Radio.
Mansoor Ghori, what is the BIGGEST RISK?
Mansoor Ghori 32:55
So I'll kind of dress this from a PACE perspective because I think from For more of a higher level perspective in terms of the economy, etc. I don't necessarily see a downturn in the economy as a risk to the PACE in which you actually think that is an opportunity. Because all the rest of the money in the capital is going to get tighter. And PACE will provide an opportunity for them to help them get projects done even in a downturn. I think from a PACE perspective, the thing that I worry about most is that we have to make sure that the way that PACE deals are being done that are being done with with diligence underwriting they're being done in a way where these things can get rated, securitized and sold to investors.
If there are people that come in and don't do it correctly, I worry that there could become issues in the pace industry or it could be deals up below. up, you know, if you think about PACE in general historically, there has hasn't been any major blocks and PACE in commercial pace. And since the history of PACE, right, that's on the commercial side. I'm not saying that. So on the residential side, but on the commercial side, they're being underwritten, like normal commercial loans. And so they're being that they're a lot safer from from that perspective. Our worry is that people are going to come into the space as it becomes more active and starts growing, and they do it incorrectly. So we've tried to find ways to mitigate that.
So we created something called a C PACE Alliance, which is an industry group of pretty much every major commercial pace lender, the service providers that are working on that are part of the PACE, the commercial space area. And what we're doing is we're creating templates templates on how to underwrite templates on how to administer templates on what the statute for these programs should look like in each new state, so that there is a box that everyone can play inside and not go outside the box. That makes sense?
Today my guest is Dave Morgia. Dave is raising money for multifamily syndication. He's based in the Big Apple, New York City. And he's also the host of the podcast Making Money in Multifamily. And in just a minute, we're going to talk with Dave about raising money for syndication. But first a quick reminder, if you like the show, C R E P N Radio, please let us know. You can like and share, you can subscribe. And as always, we'd love to hear from our listeners. You can leave a comment I also want to remind you if you'd like to see how handsome our guests are, be sure to check out our YouTube channel. And that's Commercial Real Estate Pro Network. With that I want to welcome my guest, Dave, welcome to C R E P N Radio.
Dave Morgia, what is the BIGGEST RISK?
Yeah, so thanks for the prep before the show because I gave it some thought. I'm going to interpret this one as the biggest risks to myself. And my pride. And basically that I have now over the last year exposed myself into this field and made it public through these channels, whether it's a meetup or a podcast or, you know, Instagram, whatever social media. So the, the fear that goes along with failure is the biggest risk to me because I pretty much don't want to be able to say that I didn't do it. I don't want to have my tail between my legs and say that I failed. And I think there's you know, some healthiness to having some fear. But then also, to kind of mitigate that risk, like you talked about is the thing that I've done is just go in further and double down because I mean, what else is there to do but just to try even harder to make sure that I do what I say I want to do.
So for me it was Yeah, just just keep going. I don't know your experience with podcasting, but I didn't have any and I just kind of figured it out. I didn't know anything about syndication. You know a little while back. It's been more than a year obviously for that, but um, but I didn't know any thing, you know, at some point in my life and just learning and absorbing and doing as much as I can today and this week and this month to get to the point where I won't have that fear ever and I might have, you know, some type of fear. But to know that I made it that was the biggest risk for me and is the biggest risk for me is to make sure that I now get that first deal done and, and get success in this industry. So I guess that's how I took it.
Today my guests at Lee Fjord. Lee is a multifamily real estate property manager syndicator real estate investor and he's based in the arch city, St. Louis, Missouri. And in just a minute we're going to speak with Lee about finding value add deals in your local market. But first a quick reminder, if you like the show, C R E P N Radio, please let us know you can like you can share subscribe. And as always leave a comment we'd love to hear from our listeners. Also, if you'd like to see how handsome our guests are, be sure to check out our YouTube channel and you can find us at commercial real estate pro network. With that I want to welcome my guest Lee Welcome to C R E P N Radio.
Lee Fjord, what is the BIGGEST RISK?
I would say the BIGGEST RISK in our business in this business of commercial multifamily is is interest rate risk. I think right now. We are at a wonderful place in time and economy with respect to our ability to get low interest rate loans with very, you know, high value to purchase or low downpayment purchase properties, low interest rates, and I think that you know, cap rates in the valuation of commercial property is directly associated with those. So, if you know, if interest rates rise to eight to 10%, then which they have been in the past before, then we're and your loan comes due, then the cap rate on your property is going to increase which is going to decrease the value of your property and you're going to be in a hard place. So, I try to mitigate that by first of all as quickly as possible, I try to return the initial investment back to all the investors, first of all, and then whether it be through cash flow distributions or refinancing the property so that removes their initial investment into the property and after that, Everything should be, you know, should be considered, you know returns.
So after that, so that's my number one goal. So, I try to remove the risk by removing their initial, you know capital from the deal then we try to refinance our deals into long term debt options 10 years if possible or longer at the lowest possible interest rate, of course, and then you can offset that risk by either having a higher higher down payment or, you know, loan to value ratios, you can take out loans, and as opposed to 15% or 85% loan to value you can do you know, 75% loan to value leave a little bit more money on the table. And, you know, those are really the, and then also, I guess the last and final option for that, that you can remove risk is by putting your properties under non recourse to So then you're removing the potential risk of having any other assets that you as a, an owner or partner or an investor on a deal for potential loss if the property were to, at one point in time be, you know, faced with a, you know, needing to be repositioned or refinanced during the worst of times, then the end of the day, the worst thing that can happen to you at that point, if it's a non recourse property, or non recourse debt is the bank will take the property from you.
They can't seize your personal income, they can't seize your personal home, they can't go after your retirement accounts. So that's our goal. Our goal is to return the initial investment back to our partners and investors as quickly as possible and refinance into a long term debt solution at the lowest possible interest rate. That is As a non recourse loan
Today my guest is Gene Trowbridge is a commercial real estate broker, CCM syndicator. An author, he wrote the book, it's a whole new business. He's a speaker, a real estate attorney, and a founding partner at the corporate securities law firm Trowbridge, Sidoti LLP, and an expert in real estate syndication. And in just a minute, we're going to speak with Gene about syndication law, and the issues with regulation, the private placement. But first, a quick reminder, if you like the show, CREPN Radio, please let us know you can like, share and subscribe. And as always, you can leave a comment we'd love to hear from our listeners. Also, if you'd like to see how handsome our guests are, be sure to check out our YouTube channel. And that's Commercial Real Estate Pro Network. With that, I want to welcome my guest, Gene, welcome to CREPN Radio.
Gene Trowbridge. What is the BIGGEST RISK?
Okay, well, you talked about avoiding minimizing and transferring. Okay? So avoiding the risk. In my best legal language; Don't do this! That's how you avoid the risk of being a syndicator. Just don't do it. And what is the biggest risk, the biggest risk is really, the investors. Never the property properties will get empty and go into foreclosure and all that you can always deal with that. Excuse me, but you can't deal with the investor whose life changes in the middle of a project.
That's really the BIGGEST RISK.
So simply how to avoid the risk is to don't do it. Well, if you're going to do it, then the question is how do you minimize it? Okay, you might minimize it by the investors you choose. You could have a strategy of only dealing with accredited investors who are rich and smart, who have enough money where they can handle the risk of your investment. That might be a good one. Another way to minimize it is make sure your manager LLC is free form correctly so that people can't get at you. If there's trouble, and maybe two, this is kind of an asset protection answer. Maybe you want to be an LLC yourself, and then that LLC becomes the member of your manager LLC. So they really have to go through multiple loops.
Every once in a while, I think asset protection gets a little carried away, you can have two very too many of these LLCs and tax returns and all that stuff. But that's not uncommon for the manager to be an LLC and have the member of the manager be LLCs the one thing you don't want to be, is an individual manager. Yet 30 investors up there, and Gene Trowbridge is the individual manager. There's no protection for Gene Trowbridge from those 30 investors. I'm in the LLC with all the other investors are kind of protected from the outside world. But any investor can go after me for everything I have. So we want the manager to be have the layer of protection the LLC.
When I did it, it was a sub s corporation. Same protection, but today different issues that I was trying to deal with insurance and employees and all that stuff. But today almost everyone is ais aan LLC.
And then the last one How do you transfer the risk?
I don't know if you do.
I don't know if you do I think one thing I would say is the manager LLC is constructed in such a way that it has no assets. All you want you don't want your let's say there's a commercial real estate broker listen to us and he has an office with 20 salespeople and own some buildings. That's not going to be the managing member. We're going to form a brand new entity that's clean. And the only thing the managing member actually ever gets his some cash distribution for the fees and some stuff subordinated interest that might occur in the future. Okay?
So there's nothing in there. Okay? So don't syndicate.
Minimize your risk by having limited liability protection around you at least one or two layers. And then make sure that nothing in your syndication world, really at any time has any value. Now I do get I do get asked this question, should we buy directors insurance?