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Today's Real Estate Market with Dave Gross from Market Mondays Live in L.A. · Earn Your Leisure

0:00
Speaker 1: Money.
0:01
Speaker 2: It comes with a lot of questions and Fidelity can
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Speaker 2: help you get answers. Visit Fidelity dot com slash black Wealth.
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Speaker 3: To learn more.
0:12
Speaker 2: This episode of the Market Monday's World Tour is brought
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Speaker 2: to you with limited interruption by Ally.
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Speaker 4: I want to take your banana, butter, you take my banana.
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Speaker 1: It's on, It's on.
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Speaker 5: I was going to say, will you married?
0:50
Speaker 3: Speaking about referrals, thank you appreciate it? How to come
0:56
Speaker 3: up appreciated.
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Speaker 4: Speaking about referrals right, and the power relatelationships. Remember the
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Speaker 4: guy who I said, if you ever get a chance
1:05
Speaker 4: to see him, pick his brain. His name is David Gross. Yes,
1:08
Speaker 4: so he's actually a legend and he's here right now.
1:12
Speaker 1: Actually Dave.
1:16
Speaker 3: Clapping up with David Gross.
1:22
Speaker 1: That worked in your phone from Man.
1:26
Speaker 3: Yes, Inspect.
1:29
Speaker 4: The marathon continues Man in theme and theme with the
1:32
Speaker 4: marathon obviously, if you don't know who Dave Gross is,
1:35
Speaker 4: David is a He's actually a neighborhood kid. He's from
1:37
Speaker 4: South Central and he moved, Yes, he moved away when
1:43
Speaker 4: he when he was a kid. He worked on Wall
1:44
Speaker 4: Street for twenty years, you know, became huge in the
1:48
Speaker 4: world of business, but wanted to move back home, and
1:51
Speaker 4: when he when he moved back home, he wanted to
1:54
Speaker 4: work with somebody that had a lot of buzz in
1:57
Speaker 4: his neighborhood that where he's actually from, and you know,
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Speaker 4: he's from the same neighborhood, so he had some connections
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Speaker 4: to him. And that gentleman's name was Nipsey Hustle, and
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Speaker 4: he was able to become partners withn't it And a
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Speaker 4: lot of those business moves that you see the venture nine, Vendor, ninth,
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Speaker 4: Victor ninety and all of the real estate plays and
2:16
Speaker 4: all of that that was that was Dave Gross.
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Speaker 3: He's the one that was leading there all that round.
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Speaker 3: So clapping up with David. So we're in La. We
2:27
Speaker 3: got my brother Dave.
2:28
Speaker 4: You know, Market Mondays we always talk about stocks, but
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Speaker 4: the live show we always talk about real estate. That's
2:33
Speaker 4: something that's extremely, extremely, extremely important. And we can't have
2:37
Speaker 4: this conversation on Market Monday's Live without having a real
2:41
Speaker 4: estate conversation.
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Speaker 1: So Dave, actually, before we get into the real estate conversation,
2:46
Speaker 1: that was taking notes your your ten commandments. When we
2:50
Speaker 1: first connected, we didn't talk about any business. We broke
2:53
Speaker 1: bread and heard your insane takes on hip hop Yeah,
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Speaker 1: that was a legendary legend. That was legend your whole team,
3:01
Speaker 1: which I respected. You had your whole team. I met everybody.
3:03
Speaker 1: I took pictures of Michael backstage earlier. I never forgot
3:06
Speaker 1: how funny he is. So we built a real relationship,
3:11
Speaker 1: you know, just we broke bread as brothers, and that
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Speaker 1: opened up a lot of doors for us. You know,
3:15
Speaker 1: happy to give referrals and now I'm you're giving You're
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Speaker 1: sharing your platform with me. So having real connections with people,
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Speaker 1: that's that's key.
3:23
Speaker 3: That's a fact. That is a fact.
3:25
Speaker 4: They hold the mic a little closer. Yeah, for sure,
3:27
Speaker 4: Thank you, thank you. All right, So let's get into this.
3:31
Speaker 4: So what are the primary drivers of real estate market
3:36
Speaker 4: right now?
3:37
Speaker 1: There's one driver of the real estate market right now,
3:40
Speaker 1: and that's the FED raising rates. They have their their
3:43
Speaker 1: foot on the neck of the real estate market. Actually
3:46
Speaker 1: every market, every market.
3:47
Speaker 3: Yeah, all right, are we sweet? Are we in a
3:54
Speaker 3: bear market? And? Uh? If so, when will we come
3:57
Speaker 3: out of it?
3:59
Speaker 1: You know what? Real estates? Real estate's a little bit
4:03
Speaker 1: unique in that you can't track prices. There's not like
4:07
Speaker 1: a real time kind of pricing mechanism like the stock market.
4:11
Speaker 1: The stock market trades every day, they're in disease, you
4:13
Speaker 1: can price the whole market minute to minute. Real estate
4:16
Speaker 1: isn't like that. But if you ask real estate professionals,
4:19
Speaker 1: is the market off twenty to thirty percent from its peak?
4:22
Speaker 1: For sure? And so if that's how you define a
4:24
Speaker 1: bear market, they were probably in a bear market. And
4:28
Speaker 1: when will when will that turn? You know, when will
4:30
Speaker 1: the FED stop raising rates and when will they start
4:32
Speaker 1: cutting rates? That'll probably be the inflection point in this market.
4:36
Speaker 1: But I think there's probably another leg down to go
4:39
Speaker 1: in real estate before we get there.
4:42
Speaker 6: So we have the crypto fallout, Silicon Valley bank falling out,
4:47
Speaker 6: how our institution is able to make money, and how
4:49
Speaker 6: are we able to use them making money to make
4:51
Speaker 6: money for us as retail investors?
4:53
Speaker 1: So institutional investors in real estates, isn't There's something interesting
4:58
Speaker 1: that happened in twenty nineteen, twenty eighteen nineteen, and then
5:02
Speaker 1: after the FED use their shock and all metrics in
5:06
Speaker 1: twenty twenty, there was so much money raised in real estate, right,
5:10
Speaker 1: There's so much. There's tens of billions of dollars sitting
5:12
Speaker 1: on the sideline in real estate, and everyone's waiting for
5:18
Speaker 1: everyone's waiting for a free fall before they step in.
5:20
Speaker 1: But the fact that there's so much money waiting on
5:22
Speaker 1: the sidelines pretty much in short there's not going to
5:24
Speaker 1: be a complete collapse like two thousand and eight. So
5:28
Speaker 1: what most institutions have been doing, Like, no one did
5:30
Speaker 1: anything in the second half of twenty twenty two. People
5:33
Speaker 1: are still pretty dormant right now. But what people are
5:36
Speaker 1: what institutions are doing, They're providing high interest rate loans
5:41
Speaker 1: kind of short duration two years, and then to developers
5:44
Speaker 1: who are stuck in projects, to people who bought a
5:47
Speaker 1: value add project they were going to turn it around
5:50
Speaker 1: and refi in three years. Well three years ago, no
5:53
Speaker 1: one saw rates blowing out five hundred basis points, right,
5:57
Speaker 1: So now they go to refi, they can't, So they
5:59
Speaker 1: got to go to institutional lender and say I need
6:01
Speaker 1: three million dollars or if it's a large project, ten
6:04
Speaker 1: twenty million dollars. So that's how institutions are making money,
6:07
Speaker 1: basically high yield collateralized loans. Could I do a follow
6:11
Speaker 1: up real quick?
6:12
Speaker 3: Yeah?
6:12
Speaker 6: Yeah, someone to ask me this last night because they
6:14
Speaker 6: had a three percent interest rate on her home.
6:16
Speaker 1: I'm like, great, job.
6:17
Speaker 6: How long do you think it would be before rates
6:20
Speaker 6: finally come back down to those loans of twenty eighteen,
6:22
Speaker 6: twenty nineteen.
6:23
Speaker 4: Day when you talk like, just try to hold because
6:25
Speaker 4: I think it's an echo on the back.
6:27
Speaker 3: So yeah, it just act like you're a wrapper.
6:31
Speaker 1: The people are notoriously bad at making predictions about interest rates. Yeah,
6:36
Speaker 1: a year and a half ago, do you think anybody
6:37
Speaker 1: saw this? No one? So when will we see three
6:41
Speaker 1: percent again? The ironic part of this is we'll see
6:46
Speaker 1: rates go down after the Fed raising rates starts to
6:49
Speaker 1: break the economy. Once things start breaking, then they'll be
6:53
Speaker 1: forced to cut rates. And if they break things enough,
6:56
Speaker 1: then they'll cut rates significantly, maybe down to that three percent,
7:00
Speaker 1: but probably not inside five years. I'm guessing five years.
7:05
Speaker 3: So we got some time.
7:06
Speaker 2: So are there bright spots inside of this market where
7:09
Speaker 2: like individual retail investors can say I could be optimistic
7:13
Speaker 2: about this because you talk about the interest rates. Yeah,
7:16
Speaker 2: it got down to three right now? Thirty year fixes
7:18
Speaker 2: at seven percent? Should we be optimistic?
7:22
Speaker 3: Saying?
7:22
Speaker 2: All right, well, you know that the adage is don't
7:25
Speaker 2: don't wait to buy real estate, buy real estate and wait, like,
7:29
Speaker 2: should we be optimistic?
7:30
Speaker 1: Yeah, there's another saying, when there's blood in the streets,
7:34
Speaker 1: you buy real estate. All right, So one of the
7:38
Speaker 1: messed up things about investing, or it's a cynical aspect
7:41
Speaker 1: of investing, to stress yields opportunity. Yeah, right, So it's
7:46
Speaker 1: everyone was excited to buy real estate a year and
7:49
Speaker 1: a half ago, two years ago, when prices were setting
7:53
Speaker 1: records month over month for a year straight, quarter over
7:56
Speaker 1: quarter for a couple of years straight. You just locked
7:59
Speaker 1: in losses by at the peak. And so I'm sure
8:01
Speaker 1: in talks about this all the time when it comes
8:03
Speaker 1: to stocks. It's scary right now, but if you can
8:07
Speaker 1: make the financing work, it's much better to buy something
8:10
Speaker 1: forty percent cheaper than it was a year ago. Absolutely,
8:12
Speaker 1: So that's one thing to be you know, optimistic about,
8:15
Speaker 1: is to stress yields opportunity. The second thing is there's
8:19
Speaker 1: just real estate is such a massive asset class. It's
8:22
Speaker 1: a three hundred trillion dollar market. It's the biggest asset
8:25
Speaker 1: class in the world. And that's because you include residential
8:28
Speaker 1: real estate and that globally. So there's always opportunity everywhere,
8:34
Speaker 1: and always in real estate there's opportunity, and it just
8:37
Speaker 1: it moves, and it changes from different asset classes, so
8:40
Speaker 1: from office or retail to industrial storage spaces, multifamily and
8:47
Speaker 1: single family is going to be an opportunity in this
8:49
Speaker 1: country in almost every major city for the next decade
8:52
Speaker 1: because we have a shortage housing. So things are stressful
8:56
Speaker 1: now and they're scary, but there's opportunity.
9:01
Speaker 4: So all right, let me ask you this, what are opportunity?
9:04
Speaker 4: What are the opportunities in this market?
9:08
Speaker 1: So two years ago, people who had never invested in
9:15
Speaker 1: real estate, everyone wanted to jump into the market. A
9:18
Speaker 1: lot of those people bought deals, value add deals or
9:20
Speaker 1: bought deals are going to flip. Some people even started
9:23
Speaker 1: to develop. They're going to be hurting soon, and again
9:28
Speaker 1: this is just the fact of life. They're going to
9:32
Speaker 1: be hurting and they're going to sell at a price
9:34
Speaker 1: that they're not going to like, but the buyer is
9:37
Speaker 1: going to like. And that's going to happen a lot
9:39
Speaker 1: over the next two or three years. It hasn't really
9:42
Speaker 1: accelerated downward at this point, but it's gonna start once
9:45
Speaker 1: people actually start selling things. Right now, everyone's been trying
9:48
Speaker 1: to hold on. They've been trying to see if things
9:50
Speaker 1: were going to stabilize the market was going to change.
9:52
Speaker 1: The faed's going to bail them out. So one big opportunity.
9:56
Speaker 1: The people who made the most money in real estate
9:58
Speaker 1: over the past decade. They bought in two thousand and
10:01
Speaker 1: nine twenty ten when everyone was scared, when no one
10:04
Speaker 1: had capital, and they sold in twenty seventeen, twenty eighteen,
10:08
Speaker 1: twenty nineteen. They made generational wealth. So that's one source
10:12
Speaker 1: of opportunity. You know that distress. But people in La
10:15
Speaker 1: So if I if I was someone starting in real
10:17
Speaker 1: estate right now in California, southern California, I think the
10:22
Speaker 1: ADU market is. I think that's a massive opportunity. And
10:27
Speaker 1: I know that the world is rough right now, but
10:29
Speaker 1: it's going to be an opportunity for the next decade.
10:31
Speaker 4: Well talk about what does anybody know what ADU is?
10:36
Speaker 1: They all know, you guys are amazing, I all know,
10:38
Speaker 1: all right, they all know.
10:39
Speaker 3: Does anybody not know what ADU is? That's okay.
10:44
Speaker 4: So the few people that don't have a suspicion that
10:48
Speaker 4: there's more people that might not know what is the ADU.
10:51
Speaker 1: So ADUs they call them granny flats, tiny homes, accessory
10:57
Speaker 1: dwelling units, is the formal name, but this audience they
11:01
Speaker 1: probably get what house hacking is. This is house hacking
11:03
Speaker 1: two point zero. So you have a single family house.
11:06
Speaker 1: You know, land is the most expensive thing in southern
11:09
Speaker 1: in California. Right, there's a cost of construction or building
11:12
Speaker 1: a house, but land is a thing they're not making
11:13
Speaker 1: more land in La or in La County. So if
11:16
Speaker 1: you have a single family house, you can build a
11:19
Speaker 1: tiny home in the back. Actually you can build a
11:21
Speaker 1: couple of them. And if you think about it, building
11:24
Speaker 1: a five hundred square foot structure or an eight hundred
11:27
Speaker 1: square foot structure, it's less capital intensive, it's a shorter
11:33
Speaker 1: time frame to build it, and you're still getting incredible
11:36
Speaker 1: rents for it. And so from a legislative standpoint, the governor,
11:41
Speaker 1: the mayor, every politician in the state has been trying
11:45
Speaker 1: to push legislation to streamline it, make it easy, make
11:48
Speaker 1: it attractive. Everyone views it as a way to address
11:53
Speaker 1: housing and affordability. And I think it's a massive opportunity
11:57
Speaker 1: for people to get started with not a lot of.
11:58
Speaker 3: Capital, really quickly.
12:00
Speaker 2: And so as far as opportunities, what are the zoning
12:05
Speaker 2: parameters for that? Right, So, if I have a property
12:09
Speaker 2: obviously I got to go through my town or I
12:10
Speaker 2: got to go through my local municipality. Are there zoning
12:14
Speaker 2: laws that say you can't do this.
12:16
Speaker 1: No, So recently that both the state and county they've
12:19
Speaker 1: been passing laws to make it so that you could.
12:22
Speaker 1: It's still there's still nuances, and there's still complexity which
12:26
Speaker 1: jams people up, but it's changing every day. It's one
12:30
Speaker 1: of the few things that almost every politician, regardless of
12:35
Speaker 1: which side and the how they're one, in this state,
12:37
Speaker 1: is behind because there are some structural issues in housing
12:41
Speaker 1: that are built up over the past sixty years in
12:44
Speaker 1: this state that make it unaffordable. But this is a
12:48
Speaker 1: solution that everyone is seemingly embracing.
12:51
Speaker 6: You've worked on the institutional side, and I always tell everyone,
12:54
Speaker 6: regardless of what you're investing in the principles all the saying,
12:56
Speaker 6: what parallels do you see between the stock market and
12:59
Speaker 6: real estate to help them mitigate risk and also maximize
13:03
Speaker 6: the upside potential when they are investing.
13:08
Speaker 1: You know, the greatest similarity I think between real estate
13:11
Speaker 1: and the stock market and basically every asset class. Everything
13:14
Speaker 1: is a it's a cost of capital game. It's it's
13:19
Speaker 1: how much how much are you paying for your capital,
13:25
Speaker 1: and that dictates how much you can make on your investment.
13:29
Speaker 3: And so.
13:32
Speaker 1: You gave an example a while ago you said, you know,
13:35
Speaker 1: somebody had a three percent mortgage. Right, So two years ago,
13:40
Speaker 1: institutional real estate investors buying multi family buildings, buying you know,
13:45
Speaker 1: office buildings. You guys have heard of cap rates. Yeah,
13:50
Speaker 1: everything in really and multi family was a four cap
13:52
Speaker 1: or a five cap. That's because you could borrow three percent.
13:55
Speaker 1: So if you can borrow three percent and you can
13:57
Speaker 1: make a four percent return, you're making money. And the
14:00
Speaker 1: more leverage you have, the more money you're making. Right now,
14:04
Speaker 1: when interest rates blow out to seven percent, you obviously
14:08
Speaker 1: can't take a four percent return. Now you're looking for
14:12
Speaker 1: an eight percent or a nine percent return. So you
14:14
Speaker 1: have positive leverage that resets pricing in the market. It's
14:18
Speaker 1: the same thing in the stock market. Every large investment
14:22
Speaker 1: firm in the stock market, they have an embedded cost
14:24
Speaker 1: of capital how they run their business, right, So the
14:29
Speaker 1: way they can when when their cost the capital goes up,
14:33
Speaker 1: the way they make money on their investments is they
14:34
Speaker 1: buy their investments at a lower price. So that's why
14:37
Speaker 1: risk gets repriced in rising rate environments and everything is
14:40
Speaker 1: cheaper as the follow up.
14:42
Speaker 6: Do you think that's why Vanguard and Black have went
14:44
Speaker 6: so heavy into the rental space to offset the losses
14:47
Speaker 6: in the stock market.
14:50
Speaker 1: I think they went so heavy into the and you're
14:53
Speaker 1: talking about the single family market. I think institutions were
14:57
Speaker 1: forced into doing that because all of the large investment
15:02
Speaker 1: firms were, you know, they're handful of their handful of
15:06
Speaker 1: markets in this country like San Francisco, New York, LA,
15:10
Speaker 1: where there three four or five hundred million dollar real
15:14
Speaker 1: estate assets, and so all the big investors were circling
15:17
Speaker 1: the same assets, and the pricing went crazy and they started
15:20
Speaker 1: being There became regional players who were kicking ass, buying
15:23
Speaker 1: thousands of single family homes in Memphis, in LA, in
15:27
Speaker 1: every market. And they weren't competing with institutions. They were
15:29
Speaker 1: competing with mom and pops, and they were eating the world,
15:33
Speaker 1: you know what I mean. So then the Black Rocks
15:35
Speaker 1: and the Vanguards and the big investor said, we're fighting.
15:39
Speaker 1: We're knife fighting each other for subpar returns. They're fighting
15:44
Speaker 1: local investors and they're beating us. So that's why they
15:47
Speaker 1: started doing it.
15:49
Speaker 2: I'm tied of Sam because we obviously we talk about
15:51
Speaker 2: a lot of companies that we talk about layoffs, and
15:55
Speaker 2: we talk about people not going back to work, and
15:57
Speaker 2: so what that leaves is vacancies in commercial real estate.
16:00
Speaker 2: I wonder from your perspective, what do you think the
16:02
Speaker 2: outlook is for the space of commercial real estate? If right,
16:06
Speaker 2: people don't go back like they say that they're not
16:09
Speaker 2: doing in DROs right now, where we see sort of
16:12
Speaker 2: a pullback or maybe a crisis in the commercial real
16:14
Speaker 2: estate space.
16:16
Speaker 1: Yeah, for sure. I think everyone who everyone who's built
16:20
Speaker 1: a career and has a massive portfolio in office or
16:23
Speaker 1: retail beyond pens and needles, probably beyond pens and needles,
16:28
Speaker 1: trying to figure out an exit and trying to figure
16:29
Speaker 1: out how to transition. I think what's going to happen
16:33
Speaker 1: in large office spaces and in central business districts will
16:37
Speaker 1: be repurposed into multi family or makes use. There'll be
16:40
Speaker 1: multi family, be retail, some office. But it's going to
16:44
Speaker 1: be a generational kind of transformation in the real estate market. Again,
16:50
Speaker 1: people are bad at making predictions. Maybe five years from
16:52
Speaker 1: now we're all back in the office five days straight.
16:56
Speaker 1: Who knows it hasn't happened yet, And as much as
16:59
Speaker 1: bank in real estate firms or pushing it, you know,
17:02
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Speaker 1: Firms are resistant, so it's not going to happen in
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Speaker 1: the next tour three years. So what do you do
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Speaker 1: to You know that your portfolio of office space that
20:04
Speaker 1: you're sitting on, that you have to surface that on,
20:06
Speaker 1: that's increasingly banked vacant, So there will be some seismic
20:11
Speaker 1: shift and change. Now, I think you asked the question,
20:15
Speaker 1: do I think there's distress coming in the market or
20:18
Speaker 1: something like that. You guys were talking about Silicon Valley
20:21
Speaker 1: Bank earlier. Yeah, that's lightweight Silvergate, that's lightweight commercial real
20:26
Speaker 1: estate will be the thing that breaks this economy.
20:29
Speaker 3: What hot take?
20:33
Speaker 1: That's not a hot take?
20:34
Speaker 3: That's that said, so cash he doesn't show emotion.
20:38
Speaker 2: We learned that from personal No for real, If the
20:42
Speaker 2: fact that he's smiling is telling.
20:45
Speaker 6: SVB is lightweight, how big do you think the commercial
20:51
Speaker 6: bubble losses will be?
20:55
Speaker 1: I can't peg it, but it's in every real estate
20:58
Speaker 1: is everywhere. Go outside, throw a rock, you're gonna hit
21:01
Speaker 1: real estate, office, retail housing will be more insulated. Right,
21:07
Speaker 1: People aren't going to stop paying their rents and rents rents.
21:11
Speaker 1: Rent growth is slowing down, some places going backwards, but
21:14
Speaker 1: rents rarely go backwards. But there are certain asset classes
21:18
Speaker 1: where they're just going to be pain and it's just
21:19
Speaker 1: such a big market, like the exposure to Silicon Valley Bank.
21:23
Speaker 1: Are the startups who bank there, you know what I mean?
21:26
Speaker 1: Not much outside of that, and all of them will
21:28
Speaker 1: probably be made whole silver Gate. I don't really know
21:31
Speaker 1: much about that situation, but let's assume that's a loss
21:34
Speaker 1: and nobody really cares. But if you guys follow the
21:39
Speaker 1: Real Deal or read the New York Times the real
21:42
Speaker 1: estate section every day of the past two months, there
21:47
Speaker 1: have been black Rock and Blackstone. They've defaulted on properties, right,
21:53
Speaker 1: and that's going to continue happening. If the FED keeps
21:56
Speaker 1: pushing interest rates to the point where people can't service
21:59
Speaker 1: their debt, you.
22:00
Speaker 6: Think it's the global or just contained in the United States.
22:05
Speaker 1: I think, what when the US sneezes, the rest of
22:08
Speaker 1: the world catches the cold.
22:12
Speaker 3: So look the one Look.
22:14
Speaker 1: So it sounds like what I'm saying is all bad,
22:16
Speaker 1: But the ship is already happening. The FED has already
22:21
Speaker 1: raised rates to you know, to where they are now. Right,
22:24
Speaker 1: there's there's one indicator of distress in the markets, the
22:31
Speaker 1: twos tens. That inversion inverted your curve, right, yep, so
22:36
Speaker 1: always and then when it's disinverted, it hasn't been this
22:39
Speaker 1: inverted in the past forty years. A recession always foules, right,
22:44
Speaker 1: So it's already happened. It just happens with the lag.
22:47
Speaker 1: And I'm saying all this, And I'm not telling people
22:49
Speaker 1: to be scared because everyone here there earners, Everyone here
22:52
Speaker 1: has some capital they want to invest. And I told
22:55
Speaker 1: you earlier. People that made their money in real estate,
22:58
Speaker 1: they made it buy it. You make your money when
22:59
Speaker 1: you buy real estate, not when you sell. You make
23:02
Speaker 1: your money when you buy. So the people who bought
23:04
Speaker 1: in two thousand and nine and twenty ten when shit
23:07
Speaker 1: was scary. They just took profit, you know, over the
23:10
Speaker 1: past three or four years, and that's what you guys
23:12
Speaker 1: are gonna do. But yeah, I think commercial real estate
23:16
Speaker 1: because it's such an important and such a large asset class.
23:18
Speaker 6: What quick follow up if you if you're sitting up
23:21
Speaker 6: here and you're like, man, I just heard you say
23:22
Speaker 6: that the world's going to fall apart. How do you
23:25
Speaker 6: expect me to put my capital into the market to
23:27
Speaker 6: buy assets even though I know long term it's going
23:30
Speaker 6: to work, but I can't even afford to like suffer
23:33
Speaker 6: for those three years or seven years. What advice would
23:35
Speaker 6: you give them if you were like twenty years old
23:38
Speaker 6: or twenty five years old and you were sitting up there.
23:40
Speaker 1: I'm going to answer your question with the question, no,
23:43
Speaker 1: I am been doing my move, go ahead. How what
23:47
Speaker 1: kind of mindset or what kind of time frame do
23:49
Speaker 1: you encourage people to invest over on market? Mondays or
23:52
Speaker 1: do your rad Panda.
23:53
Speaker 6: Group minimum of five minimum five ideally tend to thirty.
23:57
Speaker 1: Okay, so two years ago and this this is one
24:03
Speaker 1: of the paradoxes of investing. Yeah, everyone feels good when
24:07
Speaker 1: every market is up. Oh yeah, everyone feels great when
24:10
Speaker 1: every market is setting a new high every day. Is
24:13
Speaker 1: that the best time to buy? It's the worst time
24:15
Speaker 1: unless you're my manum trader. Worst time. It's the worst
24:18
Speaker 1: time to buy as a long term investor. When would
24:20
Speaker 1: be the absolute best time to buy.
24:22
Speaker 6: When there's absolute disaster in the street at the absolute
24:25
Speaker 6: bottom if you could pick an absolute bottom.
24:27
Speaker 1: But no one can pick an absolute bottom.
24:32
Speaker 6: Are you if I made your money, can I get
24:34
Speaker 6: the hell?
24:35
Speaker 1: Yeah? Maybe we can pick some bottom for him?
24:39
Speaker 3: All right?
24:40
Speaker 6: I mean it would be dope if we called off
24:42
Speaker 6: the bottom for him and totally win. To invest y'all
24:44
Speaker 6: want to get rich. You know trading and investment has risked.
24:48
Speaker 6: Please consult your advisor. I forgot that, Dave. Dave, let
24:52
Speaker 6: me ask you this. Let me ask you this before.
24:54
Speaker 6: I want to make sure this is important.
24:55
Speaker 4: What are financing strategies and tactics that people can use?
25:02
Speaker 1: So for local investors or novice investors or people getting
25:05
Speaker 1: started real estate. Now, one of the best financing strategies
25:09
Speaker 1: is probably going to be seller financing. So when you
25:12
Speaker 1: go and buy, you go buy a house from someone
25:15
Speaker 1: you know a year ago they wanted all cash. They
25:20
Speaker 1: were getting priority to all cash buyers to close quick.
25:23
Speaker 1: Now people want to get close to the price they
25:27
Speaker 1: think their house is worth, right, and so to get
25:29
Speaker 1: close to their price, they'll be flexible with structure. So
25:32
Speaker 1: nowadays you don't have to bid all cash. You're definitely
25:35
Speaker 1: not bidding over someone. But you can go try to
25:38
Speaker 1: buy a million dollar house dummy numbers. You get a
25:41
Speaker 1: first mortgage from a bank for five hundred. Now you
25:44
Speaker 1: have sellers, so we'll take back two hundred, three hundred
25:47
Speaker 1: to get the price they want. Now you as a buyer,
25:49
Speaker 1: you will negotiate with them the term, the rate, etc.
25:53
Speaker 1: But increasingly people were resorting to that in this environment,
25:57
Speaker 1: and a lot of people were closing deals, closing deals
26:01
Speaker 1: using that financing strategy.
26:03
Speaker 2: Dave, you're from southern California, and so I'll be remiss.
26:07
Speaker 2: We would be remiss if we didn't tell them about
26:10
Speaker 2: opportunities that they can invest in right here in southern
26:14
Speaker 2: La So California. What are some opportunities for the people?
26:17
Speaker 3: Now?
26:18
Speaker 1: I touched on it earlier about ad US, and you know,
26:24
Speaker 1: venture back firms they've been on their back foot. You know,
26:27
Speaker 1: it's been hard to raise cash but one of the
26:28
Speaker 1: emerging areas that's been raising more money relatively, it's prop tech,
26:34
Speaker 1: But within that there are a lot of ADU centric
26:37
Speaker 1: firms that are being venture backed. So I do believe
26:41
Speaker 1: that out of this current, this emerging kind of crisis
26:45
Speaker 1: that we're going into, there will be a couple of
26:48
Speaker 1: unicorns in this ADU space. So I think individuals, you
26:52
Speaker 1: could walk down your block and look at somebody that
26:55
Speaker 1: has a large backyard and go say, hey, I can
26:57
Speaker 1: put up some money. I can help you with the permit,
27:00
Speaker 1: I can help you, you know with manager process. Have
27:03
Speaker 1: you ever thought about an ADU in your backyard? So
27:06
Speaker 1: that's one area that I'd be looking into if I
27:08
Speaker 1: was just getting into real estate right now. Other opportunities
27:11
Speaker 1: would be a lot of local investors in your market.
27:15
Speaker 1: There's some of those investors who are probably coming up
27:17
Speaker 1: short with proceeds because now they got to refi the
27:20
Speaker 1: house that they bought and they fixed up, and you
27:23
Speaker 1: know when they underrode it, you know, they assumed interest
27:27
Speaker 1: rates were going to be at four percent. Now they're
27:29
Speaker 1: getting less money, so they can't take all the money
27:32
Speaker 1: out to pay back their first loan. So now they
27:34
Speaker 1: got to go to someone else and say, you know,
27:36
Speaker 1: I need whatever. You can step in and act like
27:39
Speaker 1: institutions and you can offer someone that high that high
27:42
Speaker 1: yield two year loan in this market, how great would
27:47
Speaker 1: it be to hide out with stops are going to
27:49
Speaker 1: be sideways or down clip fifteen percent a year, twenty
27:54
Speaker 1: percent a year collateralized by real estate.
27:57
Speaker 6: So let's say I have an amazing group of friends,
28:00
Speaker 6: shout out to all y'all, and we're here the opportunity
28:04
Speaker 6: to invest in southern California. How do we get us
28:07
Speaker 6: together as a collective to be able to pull money together,
28:10
Speaker 6: to be able to invest and boy these properties safely?
28:14
Speaker 1: You know what real estate networking communities are some of
28:16
Speaker 1: the most There's so many active and robuff communities out there.
28:21
Speaker 1: So I'd say tap into your local markets. So if
28:24
Speaker 1: you're from the IE, tap in there. Their meetups out
28:27
Speaker 1: to y'all. If you're from the OC, there are groups there.
28:31
Speaker 1: If you're in LA, there are hundreds of real estate
28:34
Speaker 1: meetup groups. You just got to go meet people, pound
28:36
Speaker 1: the flesh, shake hands. But start with your circle. Like
28:40
Speaker 1: everyone in here is, I can assume some things about them, right,
28:45
Speaker 1: they want to better themselves. They're focused on creating wealth.
28:50
Speaker 1: They probably surround themselves when people add value. So start
28:53
Speaker 1: with that group, create your own kind of network, and
28:56
Speaker 1: then expand that.
28:58
Speaker 4: Before we leave. So I feel like everybody comes to
29:00
Speaker 4: these type of events. It's for three different reasons.
29:02
Speaker 3: Right.
29:02
Speaker 4: It's educational, that's obvious, but it's also inspirational and motivational
29:07
Speaker 4: as well. So it's important for people to be inspired
29:10
Speaker 4: and to be motivated, not just educated. So you neighborhood kid,
29:16
Speaker 4: but you've actually accomplished the amazing things. And real estate
29:21
Speaker 4: development because we talk about real estate investing and buying
29:23
Speaker 4: a home. But I want to talk on a high
29:25
Speaker 4: level before we leave. I know Don Peoples to somebody
29:28
Speaker 4: that are close with. We had an opportunity to talk
29:30
Speaker 4: to him in Madison Square Garden. You were in the
29:32
Speaker 4: process of buying the ball went Hill Mall. That didn't
29:35
Speaker 4: work out, right, But talk about maybe that or just
29:38
Speaker 4: talk about real estate development on a high level, because
29:42
Speaker 4: I think it's important for them to hear that, to
29:45
Speaker 4: see themselves and you and you somebody that's doing at
29:48
Speaker 4: extremely high level with NBA players and entertainers and hundreds
29:51
Speaker 4: of millions of dollars of deals and you know, commercial buildings.
29:54
Speaker 4: I want them to really just understand that.
29:57
Speaker 1: Yeah, and you said it's important to be inspired. It's
30:00
Speaker 1: funny you brought up Don Peebles. I was inspired by
30:02
Speaker 1: Don Peebles. I read both of Don's books at some point,
30:06
Speaker 1: and I made it a mission to meet Don and
30:09
Speaker 1: to add value to Don. So I held a symposium
30:14
Speaker 1: for NBA players who wanted to invest in real estate
30:17
Speaker 1: and invited Don to come and be a keynote speaker
30:19
Speaker 1: at start a relationship. So fun I'm taking part of.
30:22
Speaker 4: This add value, add value. That's extremely a point that's
30:25
Speaker 4: by sale the time.
30:27
Speaker 1: So Don, and he'll tell you, you know, if you
30:29
Speaker 1: talk to him, he'll tell you that I've articulated to him,
30:32
Speaker 1: like you're a major motivation for me to think about
30:34
Speaker 1: development because development is development can be blood sport. You know,
30:38
Speaker 1: it's super capital intensive. You have millions of dollars tied
30:43
Speaker 1: up for years. If you're the developer, you're you're taking
30:46
Speaker 1: a lot of the risk, meaning you're signing for the loans,
30:49
Speaker 1: completion guarantees, all sorts of guarantees are embedded. I mean
30:53
Speaker 1: you when you do development, but once you get into
31:00
Speaker 1: once you get into the system and the flow of things.
31:02
Speaker 1: You borrow twenty million dollars from the bank and you
31:04
Speaker 1: pay him back. They almost have an infinite checkbook for you,
31:08
Speaker 1: you know what I mean. And so the way that
31:11
Speaker 1: that Don is still aspirational to me, and so I'll
31:14
Speaker 1: use him, not myself, because I'm far from there. But
31:17
Speaker 1: Don has a billion dollar portfolio because he built buildings
31:22
Speaker 1: paid banks back. That solidifies a relationship. Banks are in
31:27
Speaker 1: the business of giving out money. They like lending a
31:31
Speaker 1: lot of money against one asset that they can vet.
31:33
Speaker 1: It's more efficient, they can believe in it. And so
31:36
Speaker 1: real estate development is one of the most scalable things
31:40
Speaker 1: that an individual or a small group can do. Don
31:43
Speaker 1: has a team of ten people, maybe you know, and
31:46
Speaker 1: he has a couple multi billion dollar projects going on
31:49
Speaker 1: right now. I have a team at a team of
31:52
Speaker 1: eight people. When I was going after the ball in
31:55
Speaker 1: Hills Mall, I was doing it in partnership as a
31:57
Speaker 1: large developer. But to be in pursuit of a billion
32:00
Speaker 1: dollar deal with a team of less than a dozen
32:03
Speaker 1: people and the money that was on the backside of that,
32:07
Speaker 1: had we been successful, you can create dynastic wealth, you know,
32:13
Speaker 1: within a decade, a couple of decades if you get
32:15
Speaker 1: it right in development dynastic dynastic. That's a great word.
32:19
Speaker 6: Well, final question for you before we wrap. So you
32:21
Speaker 6: have a very lean team. What traits are you looking
32:24
Speaker 6: for when you're putting people on your team to decide
32:26
Speaker 6: if they should be there or if you should hold
32:28
Speaker 6: off on hiring.
32:29
Speaker 1: And I'm going to use I'm going to use somebody
32:33
Speaker 1: who show me right now that Rashaan and Troya met
32:37
Speaker 1: my associate Brendan, so Brendan started sending me emails. I
32:42
Speaker 1: think he hit me up on social media. First, I
32:46
Speaker 1: don't think I responded, but then he started sending me
32:48
Speaker 1: emails and I don't. I don't know how long it
32:51
Speaker 1: took me to respond to him. And then one day
32:55
Speaker 1: he sent me a handwritten note. And then I was like, damn,
32:57
Speaker 1: I'm not living right if I don't at least respond
32:59
Speaker 1: to him. So he sent me a handwritten note and
33:04
Speaker 1: then we went out to lunch and he told me
33:05
Speaker 1: his real estate journey and he's like, look, I just
33:07
Speaker 1: want to learn. He was like, I come work for
33:08
Speaker 1: you for free. And it was it was a dope
33:11
Speaker 1: conversation because because he was passionate. He was persistent. Like
33:15
Speaker 1: somebody shouted, great soft skills. I don't know what kind
33:18
Speaker 1: of competition you guys are doing, but she should get
33:20
Speaker 1: some points for that.
33:22
Speaker 6: You want to come up here, So what's your name?
33:29
Speaker 3: Come get a thousand?
33:30
Speaker 1: Oh, there we go.
33:35
Speaker 4: It's going to take five minutes to write a check,
33:38
Speaker 4: you know, So as he's writing a check, well, we'll
33:41
Speaker 4: take you to show.
33:42
Speaker 1: So you know, it was clear when I talked to
33:45
Speaker 1: him that he had the hard skills. He was smart enough.
33:47
Speaker 1: Most people were smart enough to be successful at real
33:50
Speaker 1: estate and finance or anything. But he just showed that
33:52
Speaker 1: he had that dog in him. And that's what mattered
33:55
Speaker 1: to me. And for different roles, I'm looking for different things,
33:59
Speaker 1: but added to personality persistence, Yeah, just being determined man
34:05
Speaker 1: and not giving up. I think that's the most Those
34:08
Speaker 1: are the most vital aspects of success in pretty much
34:11
Speaker 1: any fields.
34:12
Speaker 4: Before we leave, while Ian's writing is checked, a quick answer, well,
34:17
Speaker 4: I just I just want to say, I just want
34:19
Speaker 4: to I want to just know shit, people be taking
34:21
Speaker 4: money out of their homes right now. And I also
34:23
Speaker 4: just want you just to speak on the legacy of
34:24
Speaker 4: Nipsey hustle, because I think that's important being that way
34:27
Speaker 4: in LA.
34:28
Speaker 1: I think it's the timing is tricky to be well,
34:31
Speaker 1: it depends on what you're taking money out of your
34:33
Speaker 1: home for, because I mean, if you're doing a refire
34:35
Speaker 1: cash I refile, you're borrowing at seven percent, So if
34:38
Speaker 1: you're going to make more, if you're going to put
34:40
Speaker 1: in something that's gonna make you more than seven percent,
34:42
Speaker 1: then it can make sense. Right, that's the only reason
34:45
Speaker 1: you should do it. If there's a positive arbitrage there.
34:48
Speaker 1: The legacy of Nipsey Huls So I think everybody in
34:51
Speaker 1: this audience, everybody in LA everybody in California, everybody who's
34:55
Speaker 1: a hip hop fan, those just all love and respect.
35:00
Speaker 1: Like a quote that became his, I don't know whose
35:03
Speaker 1: it was, but it became his, the highest human act
35:06
Speaker 1: is to inspire. He was one of the most inspirational
35:09
Speaker 1: figures and entertainment, one of the most inspirational public figures
35:14
Speaker 1: of our generation. So you know, he sparked. He sparked
35:18
Speaker 1: a thousands, tens of thousands of people to run their
35:21
Speaker 1: marathon and be down and diligent in their journey. And
35:25
Speaker 1: that's incalculable. You can't You can't put a price tag
35:28
Speaker 1: on that. You can't quantify that. All money in this money.
35:33
Speaker 2: They final question, and you could ramble it off if
35:37
Speaker 2: you like, in any type of order. But obviously real
35:39
Speaker 2: estate is not a regional sport. It's a global sport.
35:41
Speaker 2: And so I know you have investments throughout the country.
35:44
Speaker 2: Are the specific areas inside the country or maybe internationally
35:47
Speaker 2: that you're looking at as a hot spot for the
35:49
Speaker 2: next maybe five years?
35:52
Speaker 1: You know what this is? This might be a boring answer,
35:55
Speaker 1: but like I keep saying, you know, real estate is
35:58
Speaker 1: a capital markets game. So it's like where where is
36:02
Speaker 1: money willing to go? And so right now institutions are
36:05
Speaker 1: willing to lend and invest in Florida, all throughout Florida.
36:09
Speaker 1: So I'm looking at things in Florida. I'm pretty close
36:12
Speaker 1: a couple of things South Florida. I'm looking in and
36:15
Speaker 1: around Day County because that's where the money is going,
36:18
Speaker 1: you know, and so that's how you have to orient yourself.
36:21
Speaker 1: But randomly Nashville, have a trip to Nashville. Have a
36:26
Speaker 1: trip to Nashville in the next couple of weeks to
36:28
Speaker 1: go scout some things. You know, I'm in a couple
36:30
Speaker 1: of mastermind groups, and everyone's been killing it in Nashville,
36:34
Speaker 1: and it's it's been pretty much.
36:35
Speaker 4: You know who else said in Nashville people people, Yeah, okay,
36:41
Speaker 4: you're going in there here.
36:42
Speaker 1: You know, I'm not a bad company. Then bad company then,
36:45
Speaker 1: but it's getting.
36:45
Speaker 3: Any said Florida.
36:46
Speaker 1: Also, Yeah, so you know what great minds absolutely arners.
36:52
Speaker 1: What's going on.
36:53
Speaker 3: Listen.
36:54
Speaker 2: E y l U is relaunching, revamping, retooling. That's why
36:57
Speaker 2: we're creating a new educational eperience that's more expensive, shy
37:01
Speaker 2: telling what.
37:01
Speaker 3: We got hes twenty twenty three.
37:04
Speaker 4: We've got a lot in still a lot playing for
37:06
Speaker 4: you guys.
37:06
Speaker 3: So you know that EYLU already includes.
37:09
Speaker 4: Monthly financial planning calls with me, book club calls with Troy,
37:13
Speaker 4: real estate calls with MG the mortgage got access to
37:16
Speaker 4: the Home Buying Blueprint Volume one and Volume two. Part
37:20
Speaker 4: of the revamp will include twenty seven local chapters from
37:23
Speaker 4: across the United States, live interactive teaching hands on not
37:28
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37:33
Speaker 2: The biggest just got bigger.
37:35
Speaker 8: Head over to e y l University dot com. That's
37:38
Speaker 8: EYL You n I V E R s I t
37:44
Speaker 8: Y dot com.
37:46
Speaker 1: See you there,