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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: Page 2
Apr 14, 2022

Today, my guest is Zack Flora. Zach is the vice president of market growth at the Center for Active Design, and Active Design Advisors Inc. And in just a minute, we're gonna speak with Zach about how commercial and industrial building owners can increase their property valuations through green ins initiatives.

Apr 12, 2022

J Darrin Gross

If you're willing, I like to ask you, Zack Flora, what is the biggest risk?

 

Zach Flora 

Yeah, Darrin, absolutely. And I'm going to come at it from the point of their real estate community. And there's this growing need to be able to kind of measure and implement green and healthy building initiatives. And I think the biggest risk to the real estate community today is to not understand what it means to be a healthy building, not understand what it means to what those concepts are around creating a healthy building and to neut to narrowly focus in on kind of one set of aspects. So if it's an industrial to narrow to narrowly focusing on maybe things like workplace injury or commercial office space, to narrowly focusing on things like indoor air quality, or to say we're doing energy efficiency, and that's going to be enough. Being the healthy buildings are this idea of healthy buildings are relatively new, even though the evidence base has been around for for 100 years, companies and the real estate community specifically, they need to understand exactly how their buildings are performing against a set of related metrics. So that they can begin to figure out how to manage and measure the risk related to health. And, you know, we can come back to that, that office environment, we have low occupancy rates, still, we're struggling to get people back into the office, if you don't know how your properties are actually impacting health right now, you're not going to be able to make the effective changes to build that trust and reduce and mitigate that risk moving forward, you're not gonna be able to figure out how do I prevent reduced occupancies in the face of maybe a future contagious or respiratory infectious disease outbreak like COVID-19, we are not going to understand how do I control for mental health issues and social equity issues that my employer that my tenants and their employees are asking about. So not being able to kind of look at the broader picture, understanding where you are, where you're starting from. So you can make a really strategic and informed plan moving forward is, I think the biggest risk to saying you're not gonna be able to see some of the returns we talked about, unless you know exactly where you're starting from and setting goals and being able to meet them, you're not going to be able to see those kind of the suitability of tenants, you're not going to see that return on investment. Because maybe you were too narrow in your focus, or maybe you didn't know where to start, and you didn't know where you are. So you didn't start appropriately, in kind of retrofitting or designing or implementing healthy buildings in your culture.

Apr 7, 2022

Today, my guest is Vinney Chopra. Vinney is a multifamily syndicator, Senior Living care facility developer, an author, a podcast host, a mentor, family man, he's a lot of good things. And in just a minute we're going to speak with any about the opportunities in multifamily and senior living.

Apr 5, 2022
J Darrin Gross

Let me ask you this, what do you see, is the BIGGEST RISK that you face in this marketplace? And just kind of the near future, as you, you know, work with your your investors and trying to totally coach steward for their money?

 

Vinney Chopra  

Totally, you know, I'm so glad you're asking that. I've raised like, close to 200 million or so. But you're right, investors want to save money? What if when you die, you know, or something happens to you, right? What what's the risk involved in that, and then when I took the key man's insurance, and then our daughter is in it, now, she'll step up as President, my wife is also injured, our legal, you know, team and everybody, our accounting department itself, the other parties, you know, during the properties we buy, so there is insurance to be gotten at every point of the property, the loss of income insurance, those are the risks also, if some burning, you know, something fire comes, are like that. So, that is other risk. The other risk, which I got hacked, you know, I think I'd like to mention, is the cybersecurity risk. And that's a big one nowadays, you know, with everything going through, through the computers and everything. So, you know, there are so many different directors, insurance risk is another one. You know, the big thing is contractors who work with us to do capex jobs and everything, we try to save money, but it's not worth saving money, unless we want to make sure contractors are well bonded in also have, like, you know, millions of dollars of insurance, right, you know, when they come to work at our assets? I don't know if that's the question, you were really posing, the biggest risk I find is that you want to do legal way to raise money, and then take care of the investment of the investors. They know, fiduciary responsibilities the right. So as a CEO, I definitely have always felt each asset I bought, I bought 37 Now or something, you know, and I'm on the loan on all 37 Not too many GPS, you know, cold GPS or anything, I don't believe in that. Maybe just three I have done it, you know, and then with my partner integration now, you know, like that, but other 27 or eight, I was the only person but, you know, the key thing is, you got to mitigate the risk for investors and mitigate the risk for the well being of your company. So you are in the right business. You are there, you know, Because insurance, it's an investment, I always look at it as an investment. It's not an expense, because I had lawsuits of $3 million $4 million lawsuits, which I, because of insurance, I walked away with giving zero money, zero money, and they settle the mediated and all that stuff. You know, so when you are in a business entrepreneur, like me and anybody, there are risks involved in people suing you and other stuff like that. So I always feel insurance is an investment, you know, yeah.

Mar 31, 2022

Today my guest is Blake Templeton. Blake is a seasoned real estate and cryptocurrency hedge fund manager who is passionate about helping investors invest confidently into alternative asset classes like blockchain technology, cryptocurrency and specific sectors of real estate. And in just a minute, we're going to speak with Blake about wealth building through alternative assets.

Mar 29, 2022

J. Darrin Gross

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

 

Blake Templeton  

Yeah, the BIGGEST RISK hands down Most definitely. For every single investor across all industries, is the inflation. The inflation is the largest thing that's eating away. Unbeknownst to you. It's a largest tax known to or unknown to you. It's the largest expense you had that you don't calculate. So inflation now being 15% When it was supposedly 2%. A decade ago, you could probably do pretty well. It's just kind of forgetting about it. But now 15% is the largest risk. Because if you're not producing more than 15% Especially if on your cash flow. If you don't have a good strategy and you're still having to pay taxes on it. You're not producing 15% on your money, then your company pletely losing in investments the whole time while you think you're producing good results. So what we have to do as a good steward, we've got to realize that, you know, unconventional world events, beckoned us to be good stewards with unconventional strategies. And we have to back in and reverse engineer into what good strategies are in an unconventional time. And what we do at Warren capitals, we do that with self storage, and mobile home cart, and mobile home park communities and then cryptocurrency in two separate funds, limiting the downside and making sure we outpace inflation, and in the fund, self storage and mobile home park fund. Once all your money's back in your pocket, then it's an infinity return. So now your these funds get to go back and go back to work. So we beat that risk in that way. And then in cryptocurrency, our mission is to always outpace a Bitcoin. So that that allows us to, we take that cryptocurrency is like digital real estate. So if you think about it being digital real estate, then we're able to go in and tray narratives or sell narratives back and forth and create a much much much higher return return, which allows us to always outpace, which allows us to outpace inflation. So that's the largest risk that if we have a set it and forget it mindset, if we kind of have our head in the sand and don't really know what I've got, I just know I have a lot of something that a lot of something can become nothing really quickly if you don't have a good stewardship set in place.

Mar 24, 2022
Today, my guest is Mike Sowers. Mike is the CEO of Commercial Investors Group, a private equity company that repositions commercial real estate assets across the United States using their proprietary software cre tools. And in just a minute, we're going to speak with Mike about the opportunities for our listeners that you opportunities to invest in our franchise with his software, or also opportunities for accredited investors to invest passively in one of their deals.
Mar 22, 2022
J. Darrin Gross

If you're willing, I'd like to ask you, Mike Sowers, What is the BIGGEST RISK?

 

Mike Sowers   

I think the BIGGEST RISK is that your ego gets too big, and you think you have it all figured out. Humility is, I think, the strongest asset that any company or individual can have in life, and it's one of our core values at commercial investors group, our system is working really, really well, our software is super sweet. We feel like we have a really good grasp on the market metrics. And we feel like we have the ability to analyze deals, but at the end of the day, we are always humble, and making sure that we're constantly staying in the zone of learning, and getting better, and trying to find new ways to do things that might work better and trying to stay on the cutting edge. That's the mistake, I think at a corporate level a lot of companies make is they do really well. And they're one way and they put the blinders on and they lose sight of what's happening in the market. And the markets change quickly. And so that's why during COVID, a lot of people went under, especially people in offices, and we're heavily invested in office, and we did better in COVID than we've ever done in any prior year. And I think I would attribute that to the fact that we maintain humility, and are willing to learn and willing to admit, in areas that we have issues. In fact, every single week, I spend 90 minutes with my entire management team, putting the issues on the table and working through.

Mar 17, 2022

Today, my guest is Daniel Cocca. Daniel is a New York corporate attorney by trade. And he co founded Alpha Investing a private capital network that connects investors with institutional real estate private equity investments. As a firm Alpha has invested in over 4 billion of real estate assets. And in just a minute, we're going to speak with Daniel about some of their investments and how they go about investing at Alpha.

Mar 15, 2022

J Darrin Gross

I'd like to ask you, Daniel Cocca, what is the BIGGEST RISK?

 

Daniel Cocca  

So as a, I call myself a former lawyer, I guess you're always wire risks are near and dear to my heart, right? You'll see 10 pages of risk factors in the documents that we send out. It's something we think about a lot. The over simplified answers, your question is that we look at deals really, with a matrix with two columns. One column is execution. The other column is market driven appreciation, right? Execution is something that we can mostly control. There are some things like supply chain and whatnot that may fall outside of our control. But usually, we can figure out ways to get ahead of the curve on those things. And the partners that we work with, we have zero doubt about their ability to execute. These are not newcomers to the real estate world. These are your tried and true groups with with long track records of success, right. And so that leaves the other column, the market driven appreciation, and that's the real unknown. And there are a lot of factors that go into that. But I think in this present moment today, you know, February 2, the thing that we're all thinking about is interest rates, right? And, you know, it was a day or two ago, that Bank of America shocked the world and said there's going to be seven rate hikes this year. And everyone said, like, what, like who like what's going on over there, right? And it wasn't, though that long ago, like, four or five, six months where, okay, rates are gonna hike up the middle 2022, maybe we'll see one or two. And then it was like three, and then it was like maybe three or four. And so we'll see what happens with with interest rates. Because, you know, as I'm sure your listeners know, the cost of borrowing is a very important component of pricing, whether you're a buyer or a seller, right. And in the historical wisdom has been that interest rates and cap rates move together, right? Meaning, you know, interest rates go down. So to cap rates, because your cost of borrowing goes down, you can pay more for a property, right. But what we saw and 1718, give or take, especially during that period of time, where we had seven rate hikes in a quarters was that that really wasn't the case, you know, rates were going up, but cap rates were still compressing. And I think what a lot of people concluded is that there's a lot of dry powder in real estate right now. Some of that is from the crowdfunding world, a lot of that is from no just general real estate, private equity that has record amounts of money on the sidelines. And so the real question is what will happen? You know, once rates really start to pick up, will you see, cap rates start to go up? If that does happen, I actually think would be a good thing, particularly for folks in our position, because, you know, we underwrite pretty heavy cap rate expansion into our deals. If cap rates stay flat, or compress, that means a home run, right? Investors get a ton of proceeds at exit, right? But also means it's very challenging to redeploy that capital, because pricing is so aggressive. And so there's a happy medium where you're getting really strong returns, but then you also have places to redeploy that capital, where where it makes sense, right? And what we'll find out over this year is really what happens to pricing. You know, a lot of the deals that we invest into, are you know, floating rate variable rate debt, right. And people like that type of debt over agency, you know, government, Freddie, Fannie get because there are very seldom are very small prepayment penalties, which allow us to exit much faster when you're in a rising price environment, right. But will people then transition to longer term fixed rate agency debt again, like that's certainly certainly possible. And so, that's a long way of saying not just interest rates, but the response to interest rates is, you know, the biggest risk to this space. The worst case scenario, and this isn't a bad worst case scenario, but but it is a worst case is that rates continue to move upward and cap rates stay flat or continue to compress because what that means is that when you're buying a three and a half cap today You're buying a really a two and a half cap at the end of the year, right, you know, apples to apples. And so that just starts to get really uncomfortable. there supposed to be a positive spread between interest rates and cap rates. And so, you know, if you buy, you buy to two and a half, and you have four and a half or 5% debt, you know, even a cash flowing deal effectively looks like new construction, right? Because there's no cash flow in the first year or two. And you're basically making a bet on the residual value. And so long answer to your question, probably not a particularly unique answer, but in this moment in time, February 2 2022, you know, interest rates and pricing response to interest rate change, that's the biggest risk that I see.

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