The Exchanges

Q you exit at three Oh five. So it's like barely break even because by the time you pay the realtor fees and the transfer tax and the whatever, and the money that you put into it and all that sort of thing. Okay. Tell me about the house that you bought. Why did you buy it? How much was it? So you get the three Oh five on the exit.

A Yeah. And now it's a few years later. Have a bit more money to spend, and did not want to spend over 500. Decided I could, something in the 400. 304 hundreds, right? And this house was listed, so it looked at many mid-century homes, Put something, put another offer in on a short sale. They took so long to get back that by the time it w it was, it had gone down. So it wasn't even like that was still my offer. Right. It was like things like that. And it was a long time ago. So I don't remember exactly how many offers. I think I was an escrow on like one other place. This place pops up and it was at four 65. I remember that. Um, and It was a foreclosure, a true foreclosure. Yeah, with a bank and an agent. I don't think he was from there. I'd never heard. It was everything about it was kind of weird. The people had already, they had made some terrible design decisions for this mid-century house, and it was vacant. The pool was empty. So I think that helped a little in that It didn't show like there were, it probably lost a few people who couldn't see through it.

AI assessment note: “This place pops up and it was at four 65.”

Q Right. And how do you bring an institutional, uh, type of marketing or underwriting or what, what does that mean?

A It's sophisticated. It's comprehensive. We, we break things down on a financial level, very detailed with facts and figures in the current marketplace. We also, uh, speak to a lot of people in the market, people that are actually doing deals and escrows that are actually being done as we speak, which I believe is the most pertinent information in a market, especially the market like this, where it's volatile and changing all the time. So have your, you know, feet on the ground and really understand the market and specialize there for many, many years. It really helps you have an advantage when you're at the table because you know what's going on and you can talk about deals that are actually being negotiated or are non-contingent but not closed yet. Every broker can get comps. Every broker can, you know, Google MLS and see what's sold, but that's, that's just basic stuff where if you can talk about a deal and actually talk about the underwriting and know the details of the deal, because you're so in that market, you can actually have a conversation with a intelligent seller or buyer that is actually in the deal and you can see how a deal was made or was there, you know, concessions or any kind of sale discounts at the end, or did they retrade? So if I'm talking to someone today about a deal, I can say, well, that day was actually retraded and I gave a credit back to this. I I'l…

AI assessment note: “It's sophisticated. It's comprehensive. We, we break things down on a financial level”

Q Are you catering to the, uh, to like the digital nomads, and you're, are you trying to put amenities that somebody's gonna find useful?

A Yeah, I mean, that building is great for somebody who's coming in I get, like, somebody's coming to work on CSI, you know, on the east side or something, I don't know where different studios are, but, um, yeah, somebody's coming in to work for CSI. I've had the past two summers, I've had two Individual female interns, gals come, somebody was interning at Hudson jeans, which is in the arts district. The other one was, and their parents are just paying for it for the summer. Um, I've had, believe it or not, I've had two different older retired couples rent it for months at a time. And it's like, it's never who I would have thought would want that building, but one, they were renovating their Condo in Santa Monica. And they're like, we just want to live somewhere else for these months. We'll never live downtown. So we'll just do it. And then another, they were, they lived on a houseboat and they needed a place in between or something. And they came for like six months. And these are people like in their seventies. I was really surprised at that. And then, um, right now I have a guy who's like, I'm, I'm from San Jose. I want to live in LA and I Want to try out different neighborhoods, and he came for a month and extended for another month, and the next, um, guest I have, she's coming to scout for the Olympics.

AI assessment note: “I've had the past two summers, I've had two Individual female interns”

Q You could have retired in 2002, you chose not to. Uh, what is, what are the next, Five years look like? What's motivating you?

A I want to be the quarterback for my sons right now. Um, I think they are set on the right path right now. Um, I would like for them to succeed at a high level just because for the fun of it, because I think they can, and I know they can, and I know I can, um, advise them in a great way, and I think there's so much potential in what they're doing, and they can scale it to a big way. I've learned many years ago, if something you can duplicate, especially in the United States, you could, you could succeed at a super high level. And what they have now is something that they can duplicate and grow it to a high, high, uh, levels that, that it could be extremely rewarding.

AI assessment note: “I want to be the quarterback for my sons right now.”

Q Builders are advertising rates in the fours and fives while everybody else pays almost seven. What's the catch?

A Builders are advertising mortgage rates in the fours and fives while everyone else is paying in the sevens, high sixes to sevens. Is that real? That's the question I'm getting. And usually, yes, that rate is real. The question is, What you're paying for, and it's called a rate buy down. The builder pays money up front to lower your interest rate, either for the first year or two, or even for the life of the loan. So you've got to make sure, is this an entry, you know, sort of, maybe even gimmicky entry level, get you in there for the first year, you can pay four percent, and then after that it goes to market rates because the builder has bought down that first year. Is it one year? Is it two year? Or is it for the whole length of the loan? These things are very, very important. And if you think about it, it's just the same sort of thing that, that in, in tough markets, when you look at rentals, they're like, oh, the first month is free. Um, sure. Uh, when I look at a business deal, I'm looking at what is the rent for the entire year, and I take the 11 months payment, let's say the, uh, the 11 months payment is A thousand dollars a month. You know, you're really paying 11,000 dollars for that whole year. So your monthly rent is really, you don't get the first month for free really, right? You're, you're getting, you're paying 11,000 dollars for the 12 months, whatever that math …

AI assessment note: “it's called a rate buy down. The builder pays money up front”

Q know, they're certainly more than the, you know, 20 dollars that you can get for, for one that's readily available. Um, and then in that, Another column of that spreadsheet, I would have, you know, what I considered to be market value. Um, for that million dollars worth of art, do you have, do you have that column where you're like, this is what we think it's worth on exit?

A I do. I do. Um, I believe, and Jimmy may think I'm, I'm not sure what he'll say about this when I can't see him cause he's back behind me, but I believe we're in the 1.5 to two million at least present day. And this is all very new. We're still very startup. So, um, I'm, I'm impressed with the fact that I'm, I can see it. I can see the, because it's, it's, Some of the pieces have gone up already, um, a 150. Some of them have gone up 50 or 60%. So how do you make that average? Well, I see between one and a half to two million. However, also some of those pieces that are in that collection or the first or second collection, um, those are one of those, some of those that have gone to auction and have blown it out of the water and done, you know, five or six times what they thought it would do, right? They're expecting a 30% rate of return or 30,000 dollars and it's gone for One 2200.

AI assessment note: “I do. I do. Um, I believe... we're in the 1.5 to two million”

Q No, that's okay. I totally, totally get it. And, and what sort of, uh, what's your fee structure?

A Oh, so, uh, we take a one and a half percent fee per year, which basically pays for storage insurance, uh, any moving around of, um, of the pieces or anything. Um, we, because we're so new as well, we, I, I think we're, I think we're good there. I think we'll probably stay there. Uh, I didn't want to go into, I know we can go into the two and two and a half percent, but come on. Like, you know, we've all been in this, this fee world. I lived in that world, and I was at firms where they were charging like three and a quarter percent. Like, how are people making money, right? At the end of the day, we, I have a heart and a conscience. Like, yes, I love money. I'm greedy for myself. I'm greedy for my clients on their behalf. I want them to make the most. So the fees, I want to charge, you know, what's fair for us, but then also, um, what's going to cover the cost. So it, it may change as we move forward. We'll have to see.

AI assessment note: “we take a one and a half percent fee per year”

Q You know, what, What do you bring to the table that, that's unique? Why, why would I look to you to represent me maybe on the buy side and, and then also I guess we'll ask for the sell side, but let's start with the buy side.

A I mean, um, one thing I know for a fact that That me and my team have is that we have one person completely dedicated in the background, checking every property that hits a market. So if you're an independent broker, you know, I mean, we use the word kind of loosely because really I'm an agent, but in the commercial realm, we call those brokers, right? Because we're brokering a deal. But, uh, we have a dedicated person who's taking a look at every property that hits the market. Right. Every single day, every single moment. So if you're independent, not working with a team, you may not have that luxury as a buyer to have that one agent be just focused on looking for a deal for you. Right.

AI assessment note: “we have one person completely dedicated in the background, checking every property that hits a market.”

Q So, fire around. And, you know, these, some of these are deep questions. So, you know, I mean, I'm not going to comment. I'll stop myself from commenting because we could go on forever with them. But, um, What's your idea of perfect happiness?

A My father once told me there are three things that are your life's greatest blessings. One, you're blessed with your health, and that's the greatest blessing you could have, because if you have your health, you have everything, right? Two, to be blessed with a great partner, because that makes your life fulfilled. Three, blessed with great kids. So if you have all of those three, you have nothing to complain about. Right? And I truly believe that is very true. And you know, spiritually you have to be connected, uh, as well, which I am. Uh, and I feel that gives me peace inside. So every morning I wake up and I, I, I really, truly count how blessed I am, um, with friends like you, you know, so many friends, so many people that they, I think they love me and care about me. And so many people that I love and care about, uh, it's, it's reciprocated. It's what you hold in your heart. That's what people have for you. And I, I truly have nothing but love in my heart.

AI assessment note: “three things that are your life's greatest blessings. One, you're blessed with your health”

Q it makes sense. And what, what, what do you look for, uh, in a deal? I'm sure it's going to be like, well, it makes sense, but, uh, but you know, that, uh, our viewers don't know how to underwrite a deal like you do, uh, because you've been at it so long. So what, what do you look for in a deal? What's a, where do you find it?

A That's a great question. I would say the majority of what we have bought in the last many years is usually off market. And it's the same thing we do for our sellers and our buyers on the real estate team side, outside of investment, as we call it, 3000 owners a day to find somebody who's open, excuse me, a week, 3000 a week to find somebody who's open to an offer from one of our clients. And so we kind of approach it with this investor first mentality, like, Out of sellers that we talked to about a potential offer in their home, one out of five might be open to a direct offer versus going on the market. Like they, I had a great deal. Uh, she was retired from Boeing and she started rehabbing this house and ran out of money. And I'm like, I can get you more. Just let me sell it on the market. And she wouldn't let me do it. So she essentially forced me to buy it. And I bought it for four 60 cash versus what I could have sold it on the market for a 600 as is, but she didn't care. And I ran into that all the time. You know, one deal, it was a rock. It was awesome deal in Long Beach and same guys like, you know, he's in a wheelchair. It doesn't want to deal with anybody coming in the house. He's like, I don't want to be in the bathtub. If somebody walks in, I'm like, are you sure? Cause I can get you more. And I show them numbers, you know, cause I'm licensed. I gotta be a friend abo…

AI assessment note: “the majority of what we have bought in the last many years is usually off market”

Q do you mean it's not an asset, right? All we're saying is that when you own a home, you are paying the mortgage, you are paying the expenses. When you have an investment property, you are not. That is the difference, right? One brings money into your pocket every month. The other takes it out. Doesn't mean you can't make money on both. It's just, it is a different thing.

A And, and ultimately, you know, you have to live somewhere. So you're either going to own a home or you're going to pay rent. So, so there's going to be some, there's going to be some cash outflow, uh, for, for where you're living. And, and I don't blame people, my business partner, um, smart guy, you know, we, we invest together. And I, I, when I buy a house, I buy a value add house for myself. Correct. Um, and he just went, look at, you know, I work hard all day, you know, I've got a wife and a kid. I want to, you know, and he bought a house that was done, done, done, beautiful. There's no value add possible. Of course it did go up in value.

AI assessment note: “So there's going to be some cash outflow for where you're living”

Q Deep into, we're going deep into philosophy. Uh, so I'm an investor and, uh, architecture is an added cost. What design elements add great ROI?

A Um, I, I think it's relative to marketplace. Um, But I, you could start with sustainability. What sustainability factors do you have? Is there a clientele that's interested in that? Materials. Um, what, what, what building systems are there? What building systems are being used? Um, do you have heat pumps? Do you have solar? Um, does that give return on investment? Those are sort of the, the, the unsexy things. Um, How does the building take advantage of its site? We were talking about your place earlier. Every single property has some inherent characteristic to it that a building should take advantage of, and that can become the focus of a piece of architecture that, that makes it, uh, relevant to where it is. Um, every building has a micro view Of the site it's at, you know, that's how, that's how we build architecture. We go from macro to micro. So how did, how does that building take advantage of the site? And I don't mean it as an evasive answer, but I think that's how you have an architect who comes in and says, Hey, I'm looking at your, your site and the sun sets here. The wind blows from here. A neighbor's house is here. A hillside is here. How can we take advantage of that and Turn this piece of architecture to a responsive piece of architecture.

AI assessment note: “you could start with sustainability... do you have heat pumps? Do you have solar?”

Q Yeah, I mean, certainly. And, and you look at when, when especially you go into a nicer neighborhood, and then the cap rate, the return on capital goes down. But then, you know, you go into a terrible neighborhood, your cap rate's much higher. How do you balance that?

A Well, for example, I'll give you an example on the, uh, Palmdale area, because that's the area that I'm quite familiar with. Although we have few properties outside of Palmdale, but Palmdale has given us the best return. Why? Because you're buying it for a lower price and rental value. It's decent in Palmdale. Entry level is very affordable in Palmdale. So for a new investment, or I'm talking about Palmdale, Lancaster Valley. So the entry level for an investor Is easy in the Palmdale Lancaster area versus other areas. Like if you were to invest in a house in, in the valley or, you know, the west side, or, I mean, you're going to put in a lot of money, a lot of down payment, and when the house is vacant, there is a heavy mortgage that you have to carry.

AI assessment note: “Palmdale has given us the best return. Why? Because you're buying it for a lower price”

Q It gets layered, you know what I mean? But I guess your point is whether you can beat the, what would you say, 10%? S&P 500 on average as an active real estate investor? Yeah, a hundred percent. A hundred percent.

A So with the opportunity of some research, I, and you know, I'm not a stock guy, right? So I found this, this, uh, index called SPIVA. And what SPIVA stands for is Uh, it's an, it's an index. It's the S and P index versus active investor. So that's what SPIVA is S and P index versus active investor. And what that means very simply is if you have a passive fund, you buy, you buy, you know, if you buy a 100,000 dollars of the S and P index fund, nobody is saying, put your money here or there or wherever they're saying, you know, you've got a little piece of it all. An active investor is going to try and cherry pick. They're going to use all the knowledge information, uh, that they have to cherry pick those numbers. So Nicole's numbers are correct, you know, and that is when you look on a national average for whatever timeframe, uh, she looked at and I, I did check it out. It's not a bad timeframe. Um, you know, last 15 years, you know, real estate as a whole has gone up four and a half percent. So it's just like, That's true. And the S&P index as a whole, historically, has gone up 10%. That's also a true fact.

AI assessment note: “real estate as a whole has gone up four and a half percent”

Q So you, you wrote up there, great realtor. Are you, are you focused on one realtor? Are you a shopping realtors or what are you, what are you looking for in that great realtor?

A You know, in full disclosure, okay. Joey and I both, Own and run brokerages. So, you know, it's, we have a financial, we're vested financially in saying like, don't go for sale by owner, don't go represent yourself. So let's lay that out there. But I know enough about real estate. That I definitely could, you would think could do it without a realtor and I wouldn't do it. So the first thing I do is I tell a realtor, Hey, I'm in the business. I own a brokerage and I'm paying for your expertise. I want you to find me a buy. That's so great that I want to negotiate my, I want to negotiate your commission in the other direction. It's just like the home inspector. Oh, he's charging five 50. I'm going to negotiate with him. It's higher than normal. I'm going to pay him six 50 instead. That's who I want.

AI assessment note: “I'm paying for your expertise. I want you to find me a buy.”

Q Can I live with it for a period of time?

A Yeah. Well, you know, just, yeah, to the standard of that house. Um, the number I got back was, you know, we can make everything work. We can make everything right for 200 grand. And then, and then, I called, even though I'm, um, I'm a seasoned investor, uh, I know the area. I called, I called a phenomenal realtor who sells all the time in that area. And, and I asked him about the house. He's like, oh, I know the house. I go, okay, well, you know, he said, well, what, what's the price you're getting in at? And I told him the price and, and I said, but there's a lot wrong with it. He goes, well, what's it going to cost? And I said, 200,000 dollars. He goes, okay, well, you get the price that you're getting at plus 200,000 dollars. You're, you are, You now have a house that's done that has a massive upside. And so for that 200,000 dollars, I was getting a million dollars of upside. Now the crazy thing is, is I took somebody else's advice, which is great advice. You think after 25 years, why do I need advice? And, and, and the, the, the first thing That bugged me was, you know, it's got this giant, it's a giant, beautiful master bedroom. It's got great views, giant master closet. And if you, if you outfitted it with Ikea closets, which is not fitting for that house, the Ikea, the Ikea quality closets would be like a 75% better than what was there. So I'm like, well, As soon as I m…

AI assessment note: “As soon as I move in, the first thing I'm going to do”

Q Also, you know, you have the, you host the Radical Wealth Podcast, right? Which we're a part of here. What's the point of Radical Wealth Plan?

A One of the things that I found, and I really fell into this from being part of the brokerage business, is that realtors know a lot about real estate, for sure. Very successful realtors make a lot of money. And when I first got into the business almost 25 years ago, almost everyone knew more about real estate sales than I did. So I wasn't going to stand up and, and teach them how to sell real estate at that time. I do it now. But, uh, but one thing I also noticed is that there was not a correlation between how much money they made and how much wealth they built. Sometimes it went in opposite directions, which means, you know, the more somebody made, maybe the more debt they had, uh, being independent contractors, taxes are generally not taken out. So people spend based on, you know, checkbook spending, they're, they're spending more, uh, they're spending what's in their checkbook. They haven't allotted for some of their business expenses.

AI assessment note: “there was not a correlation between how much money they made and how much wealth”

Q but, you know, we improve all of them. And then over the next three years, we, we got rid of our proformas to get rid of four of them, but to keep the big one. And now the investors after year three have all their money back, and now they, they own, they, we, we still hold the largest asset. Like, how, how do you, how do you calculate that?

A What kind of, is it an infinite return or what, what is that at that point? Are we called an infinite return or what is it? Cause it really, that's what it is. It's not even your own money. Another interesting point that we didn't touch on is dividends, right? Cause a lot of stock guys will tell you that, Hey, my stock pays dividends, but so does your investment property because you're collecting rent. And if I think if you, I don't know what you can look this up, but I don't know, I don't know how much dividend Apple is paying right now for a long time, they weren't even paying dividends. Uh, But there is no way that If you, if you look at the percentages, what you're collecting on your rent, what your rental income is, and if you, if you measure it against the money that you put out, the percentage of dividend, if you want to call it, you're getting from a rental is definitely higher than what sort of dividend you, any sort of dividend you're getting from the stock.

AI assessment note: “is it an infinite return or what, what is that at that point?”

Q So, um, that is that curiosity, a curiosity of how to, how to unlock a puzzle?

A It's curiosity, even as something simple as like, we look at trees every single day, right? And we just, they become ubiquitous, right? We don't even like, we just don't even recognize it there, but yet they play this incredible role in our actually Ability to survive and be alive in this world, right? So it's, it's seeing things. It's starting to, to either read or meditate or to seek community, to open yourself up to new experiences that allows that curiosity to start to bubble. It's opening up new channels, essentially, in one's brain for these, these, these things to happen, for curiosity to, to, to, to come to surface. And so, um, but if you're not aware, If, if you don't know what you don't know, um, then you're never going to get there. So it's, it's, it's seeking curiosity. So if you're listening to this podcast and you're saying, well, yeah, that sounds great. How do I become curious? Well, you have to seek then to become curious. So buy a book on, on curiosity or, or knowledge or seek something new and exciting that you think you have an interest in. That alone starts your curiosity and your path. And then I think the next step is It's, it's being comfortable being in the uncomfortable situations. When you start to see curiosity or get to have curiosity, you're going to then put yourself in places where you can go with the community to meet other people that are doing…

AI assessment note: “It's curiosity, even as something simple as like, we look at trees every single day”

Q things. Um, but I think I'm going to wait for it to get a little more easy to use and not have to do the coding side of things. But even in the past year, a couple of people in the office have said it's become a lot better. It's like, in terms of how do you want to do this? What level do you want to do it at?

A I use it a lot and I do find that its greatest weakness is actually following very specific, uh, instructions. So a lot, it's like wonderful at iterating ideas or coming up with like broad concepts or, you know, mix these three types of architecture together and create this palette or, or something like that. But When you really need it to follow a set of rules because AI thinks differently than, than, you know, numerical logic, you know, you're, you're, you're the constraints of the constraints of computers were the, you know, they weren't thinking they were, you know, following, you know, one plus one equals two, as opposed to really iterating and going all over the place. So the, The iteration of the big ideas, and then, and then I find it personally difficult to take a big idea like that and say, have it follow these rules. Yes.

AI assessment note: “its greatest weakness is actually following very specific, uh, instructions”

Q However, also some of those pieces that are in that collection or the first or second collection, um, those are one of those, some of those that have gone to auction and have blown it out of the water and done, you know, five or six times what they thought it would do, right? They're expecting a 30% rate of return or 30,000 dollars and it's gone for One 2200.

A That is a real way to, to value it, because, you know, one of the things, and I think, I think David Osborne, my business partner, co-author, you know, had more right to stick it to me than I do to you, because, you know, you could, you could get a very equivalent piece that you have, and then that sells, oh, so we bought this for, you know, 75,000 dollars and it just sold, you know, a very similar piece just sold at auction for a 125,000. So you, you really can get great comps. Now our domain, our domain guy, unlike David and me, right? Unlike, unlike the two of us, the domain guy really has that too. He's like, all right, well, this is a three letter domain name and this sold at this price. And he, you know, you ask him any domain name and he's like, well, this is what This is the wholesale price. We put it up for auction right now. This is the price of somebody who really wanted it. Um, and so you, that is the sort of very specific knowledge that, that, uh, that you need. What is the, uh, in the collection now, what's the most expensive piece in terms of purchase price and what's the least expensive piece?

AI assessment note: “That is a real way to, to value it... you really can get great comps.”

Q What about it? What about it makes you, it's a good lot.

A It's a flat, big lot in a good on a good location. I said, I like it. Build it. I could build a house. They're a really nice two story. Cause I've done a lot of three story houses, big basement elevator houses. Um, but it's a lot of work. You know, it's, it's more time. It's more money. It's more potential for shoring issues. So. I said, I like this property. I go to meet with her. She's a former, uh, financial manager, I guess, you know, a wealth manager. She was a wealth manager. Okay. So she was a wealth manager for many years. Very smart. Older woman says, I want to, I'm going to tell you the story. Uh, she says, I want a particular retirement community. They have no space available. Ok, so what I need to do.

AI assessment note: “It's a flat, big lot in a good on a good location.”

Q what you did, where if we showed you a deal that was slightly better, but it was in a ski town, you would have said, forget it. Because you can pour your heart and because you have a day job and you're doing other things, right? You can pour your heart and soul into something that, that, that you have passion about. Whereas with ski rental, it'd be like, whatever.

A Yeah. And I also should say, I'm probably making it sound like I was more of a risk taker than I was because of course I didn't realize quite how bad things were getting and how like, you know, then the short sales all became fork. Foreclosures. And I'm saying now like, oh, town, there was a lot of vacancies, but at the time, like I'm looking back now and saying like, look at Palm Springs now compared to what it was then. I think when it was really a problem was like back in the nineties after that, um, they, there was like a spring break thing and then everybody left. And then, you know, that was like a really different time. And I wasn't here then, but, um, I think that it still seemed really cool to me and there wasn't enough going on and. As you know, I'm very into restaurants. I've been a food writer for many years, and, you know, I would see, like, kind of new, I'll say the word hip, restaurants kind of coming, a couple of them coming in, which I still use that as sort of a, of a factor, you know, when I see. Yeah, a barometer. I do. Like, I'm in Scottsdale a lot, as you know, and I see catches going in there, Din Tai Fung, um, They opened an Elefante, and I see these like LA, now that's not going on in Palm Springs, but I see those kind of brands in like a Scottsdale, and it, and it makes me think, you know, it, it's a, it's an interesting sign.

AI assessment note: “Yeah. And I also should say, I'm probably making it sound like”

Q Where on the arc do you want to find it?

A Right. Okay, so that's a great question. Uh, the, the early mistake that I made was when I was still investing in Pittsburgh, uh, there's an area called Oakland or the Civic Center, which is, uh, the home of University of Pittsburgh, which by the way has UPMC, which is a massive, uh, medical center, and it's a massive school. You've got Carnegie Mellon, massive school, um, you know, massive developments around there. And then And then there's downtown Pittsburgh, which was still a very vibrant area. And the, and the distance between the two was so small. And the properties that you could buy in between the two were dirt cheap. And I, and I saw some other people doing it too. There were some other smart investors that were grabbing these properties that were dirt cheap. And I'm like, let me get in the gap. And I do think that's a good strategy. And 10 years later, The gap hadn't filled, you know, now I didn't lose money on the properties because I actually ended up selling them to the other guy that was buying all those pieces of property. And now, you know, another 15 years later, he's made a fortune on them and good for him. And I'm not sorry I didn't hold on to them. And the mistake that I made was I wasn't measuring the acceleration of growth. And the acceleration of growth is A fancy way to say something that can be determined very easily. And what happens is when you've go…

AI assessment note: “you wait till like 20 or 25% of it is already developed”

Q You mentioned different classes and then you, you know, in an art fund you would, is there a particular, uh, investment philosophy you're using or are you using several?

A Um, I really am following what I would follow as an asset manager, as a portfolio manager. So I, I really do that emerging market, um, a small cap, a mid cap, a large cap, you know, you get into your blue chip as well. And then of course there's masters. So I actually think there's more categories in, if you're looking at a straight stock and mutual fund portfolio versus the families I'm working with now, it's a different level, right? They're, they're, They are allocating money into art, into large, large pieces of real estate as well, as well as their public portfolio, right? But your public portfolio, it's great. You need to have it because people ask me this all the time. Well, what do you think of stocks now? Because you don't really do your stocks and mutual fund and ETFs because you don't really do that. I do still do it because I have a private advisory side, right? So I don't manage money directly anymore. Your portfolio, if you do have anything invested, um, In the public markets that should be returning your beta, right? And I think this is probably language you're familiar with as well as your beta is going to be your, well, right now, some of my clients are getting about. 20 to 50% return from their market. Uh, but then you need alpha. So how are you adding alpha safely with real estate with alphas? You're like your piece that's going to, you know, blow up. You're …

AI assessment note: “I really am following what I would follow as an asset manager, as a portfolio manager.”

Q And what I mean by that is if you've got like a city epicenter and it can't expand outwards, um, it's a very different environment than a city epicenter. It spreads out maybe kind of like a, An asymmetrical circle or sphere and new epicenters develop, right? And that takes the overall future demand of the travel industry to move into that space. Um, if that makes sense.

A Absolutely. And perfect examples. I'll, I'll, I'll dig into that a little bit. Perfect examples are, for example, you know, you, you have a great city, pick a city, doesn't matter. Great city. And, you know, you can always, you can always expand. Um, Manhattan's on an island. You know, it's like you, yeah, you can go to Queens, you can go to Staten Island, you can go to the Bronx, or whatever, and people do, but the, but the island is not getting any bigger, and I, I was in Manhattan and experienced, um, and, and I was smart enough even that long ago, I didn't have the resources, or I should have just probably stopped everything and done it, you know, found the resources, but But I, I knew like we were sitting here, uh, that You know, there was, there was a place called alphabet city and in, uh, in, in New York and, and it's just, you know, if you were being mugged in alphabet city and you called the New York city police department, they'd be like, no, we're not, we're not coming. You know, it was just like, yeah, it was like, that's how bad it was. Um, and, and now, you know, it's, and I saw it starting to turn already because you could see You know, I wrote a whole thing on it, you know, in my book, it's like, you know, I saw the guy coming out of the building with the cello, you know, and I'm like, the guy comes out of the building with the cello, it's turning, you know, and…

AI assessment note: “Manhattan's on an island... but the island is not getting any bigger”

Q Right. One of the things that, uh, it's a question I answer all the time because I get it all the time. And that is, you know, when's a good time to buy? Are you looking at like, what's the market like now? You know, did you buy consistently? Let me put it this way. Do you buy consistently over time?

A Well, Any purchase you make, it's got to make sense. So you look at the best case scenario and the worst case scenario, for example. So let's say if you, if you're planning to hold a property, what's the return on your, on your investment? If it's going to be a rental, if it's going to be a flip with, you know, how much money you're going to put into it and what's the return on, on your investment as well. So, so if, if, if it's going to be a long-term investment and it's going to be a rental, it's going to have a nice yield You know, in, in, um, cash flow, uh, each year. So you gotta take all of those into consideration before you buy, uh, the property. It's gonna make, it's gonna make financial sense and it's gonna put money in your pocket if it's a rental.

AI assessment note: “Any purchase you make, it's got to make sense.”

Q So what sub-markets appear to be generating outsized returns and then down to the property level. So What is the estimated yield for each property that's available for sale? So like, let's say you start high level, see, okay, Colorado looks good. Then go one level deeper and like, all right, Telluride looks really good. Now here are the. 20 homes available in Telluride that might make a good investment.

A That analysis mirrors the advice that I give all the time because people read headlines and headlines are, I think it's important to know, like, you know, what What's the interest rate? What's the interest rate outlook? What's the, you know, average, the average home price is, you know, up, uh, is up to its highest point, uh, in history, and yet, You know, that average we know doesn't mean anything, because you look at the, when I compare the best market to the worst market, you know, since the peak of the market, Austin is down more than 20%, and Hartford, Connecticut is up more than 20%. So, you know, the averages don't mean anything to us, and that's why the real data analytics taken down to, uh, taken down to, to the sub-market, uh, you know, city sub-market Um, you know, all the way down to the property makes a big difference.

AI assessment note: “That analysis mirrors the advice that I give all the time because people read headlines”

Q so then, you know, so, so you've got this access that basically you're like, hey, um, you know, oh, I'm shooting for this little newspaper. You get the laminate, you get the access. Um, how do you distinguish yourself? Because, That's one way. So you got, you got that access, but how do you distinguish yourself from that to going to a paying job to, to, to creating a career?

A Right. Well, the first thing I did was I, you know, like I didn't ever assist anyone. I didn't really go to school. I started shooting snowboarding at 15. I grew up in Saudi Arabia for four years from the ages of like third grade to seventh grade. I traveled to 50 countries. My father's hobby was photography. So I picked up the camera at a really young age. I moved back to Northern California, you know, went to seventh, eighth grade, snowboarding, sport of snowboarding was birth. It started when I was, you know, in eighth grade with the Woody, the wood snowboard, Burton Woody, and me and one of my high school close friends, Justin Hosnack, his dad gave him his college tuition money, and we started the first snowboarding calendar. Like, we published the calendar. I still, I did three quarters of the photographs, You know, he took care of the business side. First year, we lost money. Second year, we broke even. Third year, started making money. And I was going to Europe. I mean, the two of us, he was from, he's, you know, Swiss-German, sort of from Europe, so his parents, like, the two of us were going to Europe at 16 years old. Like, just getting fucked up, two going to, like, it was fun. It was great, but it was, it's always a different time, you know, but it's not a different time. It's just like, I, I, when I was young, we would go to Hong Kong, and I was in I was 12 years ol…

AI assessment note: “we started the first snowboarding calendar... Third year, started making money.”

Q This is the money, you know, how, How can we tell other people other than you? This is where you, this is how you find that deal. How do we find the deals?

A There are some motivated sellers that they get a sell, right? They get a move for whatever reason. And that's the, uh, the buyer, the seller that you want to go after. Not the one that, you know, it doesn't matter when they sell it. Oh, they, you know, no rush. I'm taking my time, uh, this and that. So, so that's not the seller that you want to do business with. You want to do business with somebody that has some urgency, Uh, they've had some financial problems. You may think, oh, well, you know, take an advantage of some people that they have some financial problems. They got themselves in that financial problem. Not me. I had nothing to do with it. Sure. I'm trying to help them out and get them out of, out of their financial problem. Now, yes, they may have to discount the property some to, you know, to get to where they want to get or they, to sell what they want to sell. So it's, it's a win for them. They're getting out of their, The situation that they're in. And also, you know, it's a win for you because then it gives you a little bit of profits.

AI assessment note: “that's the, uh, the buyer, the seller that you want to go after.”