J Darrin Gross

I'd like to ask you, Rick Kalvoda, what is the Biggest Risk?

Rick Kalvoda  

Yeah, I think. So operating expenses of which, you know, insurance is is a big component, you know, the risk, I think, right now have ownership of commercial real estate. I think right now, and this kind of goes back to the uncertainty and what's going to happen with inflation, what's going to happen with interest rates, what's the Fed going to do is just, it's the uncertainty. And as the Fed continues with that increases, the biggest risk right now is is there, you know, is there a global financial crisis, you know, you starting to see the stress on some of the banks, you're starting to see, as I mentioned, with some of the, you know, blending or the borrower's, you know, handing keys back to the lenders, you're starting to see some of that, at the same time, slowing economic growth, you know, and also increase inflation, all that stress to the economy that if we go into a recession if we continue to have higher interest rates and that that's going to have an impact not just on commercial real estate, but across all asset classes, but then specifically, commercial real estate and especially with, you know, the amount of lending done by the regional banks, which you know, are, over the past couple of weeks have seen this stress is, that's probably the biggest, you know, concern out there is in biggest risk for our investor and for our clients, is just what happens, you know, the overall macroeconomic picture and there's just so many different things impact again, on top of that, you know, back to your comment just on insurance is just with the, you know, you just think of the climate risk and everything that's, you know, happened this year, and, and how that impacts, you know, commercial real estate, whether it's rising, you know, ocean levels, etc, is, all of that has, you know, so our clients, the owners and operators of that commercial real estate, not only have to think about that, but then the macroeconomic you know, side of it as well. So, so a lot of risks now, hence the uncertainty, but that's, we're all here to help the industry out, you know, in times of risks like that,

Today, my guest is Anne Hollander, and is the CEO of Lobby CRE, a Thirty Capital Company. And she is making an impression in CRE and tech as one of few CEOs with a background in both real estate operations and rapidly scaling technology companies. And as an expert in strategic strategic planning. And in just a minute, we're going to speak with Anne Hollander about balancing return and risk with data backed asset management.

J Darrin Gross

I'd like to ask you Anne Hollander, what is the Biggest Risk?

Anne Hollander  

I am happy to take on this challenge. So over the course of our conversation, I think we've talked about a number of areas of risk, right, we're seeing expense growth, quite a bit in the operations, which, frankly, is a lot of ways the silent killer. We've talked to them about the debt side of this and understanding your positions within debt and understanding it a much deeper level where you sit today and what risk you're taking on within the debt that you have either existing today on the on your existing assets, or in the future as you're doing deals. Frankly, you know, when I begin to look at, I think there's also equity risk as well for capital call unexpected capital calls, if the to an asset and debt aren't mitigated particularly well. So opening up new risks potentially on the equity side, and either not being able to return as much as you're expecting, or potentially even being underwater in what those returns look like. The three of these things, though, can all be also, the other uncovered risk, or perhaps the area that we haven't talked about at this point is the fact that a lot of information is being sent around quite a bit very freely and openly within an organization and, and then outside of the walls of the organization that can be highly sensitive or are particularly damaging to organizations. If you think about, okay, when was the last time that I took a look at my models that I had that had all of my investor information in it. And it's all sitting in Excel, Excel can't be secured. We don't necessarily know where it goes, who it's shared with. We don't know how they access things. We don't know if they if somebody is modifying something within that document, sending it back sending it around. And so Excel becomes essentially a game of telephone where everybody's got their hands on it, and hands in it. For the most part, you know, fairly innocuous but not not in a place where we can necessarily even assess what if anything has changed or information has been borrowed or stolen back out of that document as well. I think the one thing that we don't talk about much in the commercial real estate space is the technology risk and the data risks that people run when they're using you know, tools that seem extremely convenient, but then have a complete lack of any level of accountability to them. Excel being probably the number one offender other potential tools also offender as well.

Today, my guest is Maya Weinreb Maya is an entrepreneur and a real estate investment bookkeeping specialist. Maya's been doing bookkeeping for almost 20 years, and is a QuickBooks Pro advisor. Before she started her bookkeeping firm, she held the position of CFO for a marketing company in Los Angeles. And in just a minute, we're going to speak with Maya about what does every real estate investor need for their books.

J Darrin Gross

I'd like to ask you, Maya Weinreb, What is the Biggest Risk?

Maya Weinreb  

Yes, I thought about this, I thought about this. I think the biggest risk right now, for real estate investors, for clients, for entrepreneurs, for individuals, for everybody right now, is the fact that the IRS just hired 87,000 new auditors. And you know, we saw articles about that a lot at the end of last year. And I don't know if they're all hired, and they're all implemented. But what does that mean to an individual? What does that mean to an investor? That means that they're, they're 87,000 times more likely to get audited, at least not saying I'm a mathematician, so maybe me No, that's not the exact math, you math it. But to me, that's 87,000 More people who could potentially go and audit your business, your investments. So it just makes it so that all of the things that you're supposed to do that you kind of said, well, no one's ever audited me and it's never really been a big deal. Now is the time to get all of your ducks in a row. Because you are have to map it correctly. Let's just say there's 87,000 More people who could try to audit you than there were before those 87,000 more resources to do that, because the IRS doesn't have time to deal with all of our stuff. Right? They're they're busy going after big fish. And we know ways. You know, there's many tax strategies to minimize risk to not look like you have a bunch of red flags that might get audited, and that's great. So we want to keep doing all those things. For instance, if you have an S corp To make sure you have payroll, that's the biggest red flag, you know, a lot of real estate investors aren't S corporations, their LLC, and so it's different. But sometimes they have holding companies that are s corpse, things like that. And if the IRS audits, you, they're gonna want to see your books, they're gonna want to see receipts for everything, they're gonna want to see bank statements. And on things like business meals, or whatever, that a lot of people not gonna say, a lot of people, some people every time they go to dinner, or have dinner by themselves will consider it a business expense. And the IRS is gonna want you to prove that it was a business expense, and who you went to dinner with. And that needs to be, you know, written on the receipt or in your books for it to make sense, your 1099 that you're like, Well, I'm not going to turn 99, the plumber because it's never really been that big of a deal. It might start being a big deal. There's there are rules written into the IRS code of what happens if you don't file a 1099 on someone, and you allow you know them to work for you under the table. And it's not that big a deal. There's rules and there's big penalties, there's penalties for filing a late 1099, there's penalties on not filing a 1099. And they have not that I know of to this day actually implemented those penalties because they haven't really had time to deal with all of the 1099 filing, for instance, as an example. But now they have 87,000 More people who might be taking a look at that. And in the IRS being the IRS, if they find something that you did wrong, they might try to go backwards and audit you the last seven years. So now is really the time to make sure that we have all our ducks in a row, that we're using the same tax return to get our investments that we use to file with the IRS that we are filing our 1090 nines on every single person that's a service provider, that we have detailed receipts on everything. And I think that while I hope that we can continue, you know, just being risk averse, and and not creating things that are red flags, I don't know that that's the case anymore, that might be changing. They might be you know, I'm really trying not to swear, they might be getting harder on us. And so in order to avoid risk to mitigate risk to minimize risk, you got to have all your legal bookkeeping, IRS ducks in a row. And I don't mean to say that there's some big monster that's terrible and scary, because they're not. And they're all you know, pretty much all IRS agents and auditors are nice people and they're helpful and they're just doing their job. And it's not to say don't go make money or go hide in a corner, you know, make money, they can't talk to you. If you're not making money, go do something, you know, go go buy that property, go do that cool thing you're doing. But just have all your ducks in a row so that nothing can ever come back and build, you know, tear down your empire that you built.

Today, my guest is Bronson Hill. Bronson is the Managing Member of Bronson Equity. Bronson is a general partner in 2000 multifamily units worth over 200 million and CO leads a large inperson multifamily meetup in Pasadena, California called FIBI Pasadena Multifamily. Bronson is also the host of the Mailbox Money Show Podcast. And he understands the investor mindset. Having spoken individually over the phone with over 1300 investors and having raised over 30 million for real estate and his ATM machine fund deals.  Bronson is the author of How to Use Inflation to Your Advantage. And as a regular contributor to YouTube and his blog. He is also the capital raising coach at Kingdom REI, a faith based group, helping investors find deals and raise funds for large real estate deals. And in just a minute, we're going to speak with Bronson about how to use inflation to your advantage.

J Darrin Gross

I'd like to ask you, Bronson Hill, what is the Biggest Risk?

Bronson Hill  

So I think there's a lot of risks. And I think, you know, sometimes we see risks, and we don't, you know, we tend to have inactions. I think inaction is probably the biggest risk for that I see, for most people, I've had now close to 1500 conversations with individual investors. And I just see analysis paralysis is real, we get busy, we have stuff going on, we don't take action. And all sudden, we're like, well, where's, you know, gosh, I really wish I missed out on this, I missed out on that. And it's not that we have to take massive action and you know, go from 0% invested in alternative deals to all of a sudden 100% invested. It's just, you know, taking small steps and saying, you know, one of my things that I tell people is, you know, against analysis paralysis is, you know, go to meetups, give yourself a timeframe. Okay, in the next two months, I'm gonna go to this many meetups, I'm gonna, you know, get on deal sponsor list, we have our own deals that we do, we have people connect, and Ben wants to reach out and get on our list and hear about our deals, they can do that at Bronson equity. And, you know, what happens is as you do that, then you give yourself a time frame, you analyze, you know, five to 10 deals, and you say, Okay, I've give myself 60 days, and I'm going to invest in one or two deals, and you just do it, and you say, Okay, I'm gonna do this, and I'm gonna choose, and it's probably gonna go just fine. And the big thing we have to get over is the fear of making a mistake, or that we're gonna do it perfectly. And perfection really is a myth. Like, there's no way you know, it's all about learning. And so why don't we learn even when we don't do things perfectly. And so I think really, the biggest risk that I see is just inaction is just not actually taking the steps for eight years, or six or eight years, I went to meetups and didn't do anything. I mean, I had about one rental, but it didn't do any action. And it wasn't until I was I actually made the decision that I'm actually going to change my life. And there was a point I remember where I had said, you know, I'm in my job, and I want to leave my job in three years. And I just made that decision is going to do it. And Tony Robbins says this quote, he says, it's in your moments of decision that your destiny is shaped, in your moments of decision that your destiny is shaped. And so in that moment, my my, my destiny started to shift. And I began, I was able to do it in three years, I was able to leave my full time great 200k Your job, because I had made a decision that I was going to really just do whatever it took, and I was the I was working hard. I was hustling, but I knew it was a season. And I think for a lot of people and it doesn't mean you had to do it the way I did it where you had to be fully active and raising big money and all the all the stuff but there's a lot of people that make a lot of money. And there's a money problem. And it's not that I don't have money, it's that I have money, I don't know what to do with it. Right? So that's a problem. So you know, there's gotta there's ways you can educate yourself and really find ways to take action. So I think that's the biggest risk is inaction.

Today, my guest is Stewart Heath. Stewart is the founder and CEO of Harvard Grace Capital, a private equity real estate investment firm that helps people build wealth faster through hands off real estate investing, generates passive income, reduces risk and maximizes tax efficiencies. And just a minute, we're going to speak with Stewart a bout the hidden mistakes to avoid and key criteria to look for when evaluating potential passive property investing opportunities.

J Darrin Gross

I'd like to ask you, Stewart Heath, what is the Biggest Risk?

Stewart Heath  

I am willing, and I will dive into the pool. I think it's a brilliant question. To me, the biggest risk is tenant selection. It's not an insurable risk. You know, I do live in Tornado Alley. So you know, severe weather can be a risk but you can insure around that the biggest risk is essentially the income from the property. And the income from the property comes from tenants. And it is a professional, I think it's a professional expertise that is developed to be able to underwrite a new tenant for a lease. It's not just the first person that called and say, and is willing to pay you the deposit. And I use that example, because I've made that mistake before. But if you will take, you know, an hour's worth of due diligence, either residentially or even commercially, and check into them yet third party reports, and do reasonable and customary means of verifying what what the tenant is telling you. And yet, then, then you will most of the time, select a proper tenant. If you don't do that homework, your property will have income problems. And so what is a bad tenant? Well, number one is bad tenant that doesn't pay. That's one. But part and parcel with that is people who don't pay usually bring other kinds of people to your property, whether it be multifamily, whether it be to your commercial office, your storage space, whatever, I have seen this over and over and over again, which actually begins to make other tenants feel uncomfortable. And so now your problem is a lot worse than just the one guy who's not paying. And it was also easily headed off. By doing some basic due diligence on the front end, that's the biggest risk I have in what we do. There are obviously other kinds of risks slip and fall risks, and we get sued by somebody whose coffee was too hot or whatnot. And, again, that's insurable risk, we carry general liability as well as property coverage and, and on most of our properties. Like, we also get business interruption insurance, or, like, if a tornado takes out a lot of our storage buildings will, you know, we're, we're not only going to get repaid to have that rebuilt, but we will get income that we're missing from those units that were that the tenants can't use. So, but the biggest risk is the one that's not insurable. And that, to me comes down to tenant selection.

Today, my guest is Victor Bell, Victor is transacted over $59 million in real estate transactions in seven states, including Hawaii, Arizona, Texas, North Carolina, Ohio, and Michigan. And in just a minute, we're going to speak with Victor about how to succeed in real estate in 2023.