1 00:00:00,719 --> 00:00:03,239 If you've been following me for any given period of time, you 2 00:00:03,239 --> 00:00:07,409 know, one of my favorite things to discuss is this idea of the 3 00:00:07,409 --> 00:00:11,759 founders investment theory. The founders investment theory or 4 00:00:11,759 --> 00:00:15,059 sometimes we call it the fit is the bedrock for what 5 00:00:15,059 --> 00:00:19,799 syndications and funds need to do in order to set themselves up 6 00:00:19,799 --> 00:00:23,699 in the right manner, to think about their investments in the 7 00:00:23,699 --> 00:00:27,539 right manner. And to present those investment opportunities 8 00:00:27,539 --> 00:00:34,139 to the, to their investors in this video, is a blast from the 9 00:00:34,139 --> 00:00:39,059 past. But this is probably the best work that I've done in 10 00:00:39,089 --> 00:00:42,899 describing founder investment theory. I think it covers all 11 00:00:42,899 --> 00:00:47,729 the bases on why it is so incredibly important to make 12 00:00:47,729 --> 00:00:51,329 sure that you've identified your own founder investment theory, I 13 00:00:51,329 --> 00:00:54,869 know you'll find it useful. The founder investment theory is the 14 00:00:54,869 --> 00:00:59,879 most important thing that you can do. And think about for your 15 00:00:59,879 --> 00:01:03,479 syndication or fund. So enjoy this video. 16 00:01:14,460 --> 00:01:20,280 The founder investment theory is so important for what we do. It 17 00:01:20,280 --> 00:01:26,970 is really the heart and soul. It gives us guidance, it gives us 18 00:01:26,970 --> 00:01:32,730 guidance on what we need to do guidance on what properties we 19 00:01:32,730 --> 00:01:38,430 should be looking at, gives us an idea on how we can talk to 20 00:01:38,430 --> 00:01:42,630 our investors. And it even gives us an idea on how to better 21 00:01:42,630 --> 00:01:46,260 serve our investors and ultimately ourselves at the same 22 00:01:46,260 --> 00:01:51,720 time. So that is why it is so important. It is it's what we 23 00:01:51,720 --> 00:01:55,650 do. So let's go through founder investment theory. And we're 24 00:01:55,650 --> 00:02:00,540 going to go through it in a slightly different way today. So 25 00:02:00,540 --> 00:02:05,160 I want to go through it through the lens of what exactly we mean 26 00:02:05,160 --> 00:02:08,430 by these different complex, these different models and 27 00:02:08,430 --> 00:02:12,480 strategies, and how we can really leverage those different 28 00:02:12,480 --> 00:02:20,250 strategies to really be better served. So let's go ahead and 29 00:02:20,250 --> 00:02:23,160 get started. We're going to switch over to the whiteboard. 30 00:02:23,610 --> 00:02:29,250 All right, looks like we are there. So before I drew this 31 00:02:29,250 --> 00:02:35,640 diagram look like this. We had development, we had stabilized 32 00:02:35,640 --> 00:02:46,440 add value. We had value, value add, I'm sorry. We had 33 00:02:46,440 --> 00:02:57,300 undervalued. And we had cashflow. These are the four 34 00:02:57,300 --> 00:03:01,290 main types of strategies that exist in any developer in any 35 00:03:01,290 --> 00:03:05,640 property, real estate deal. So what I want to do is I want to 36 00:03:05,640 --> 00:03:09,300 expand each of those and really kind of dive into each and talk 37 00:03:09,300 --> 00:03:14,550 about what we mean by each. So let's go ahead and just gonna 38 00:03:14,640 --> 00:03:23,580 actually, let's go ahead and clear the board. That way we can 39 00:03:23,580 --> 00:03:33,810 start really, really fresh. And let's start with let's start 40 00:03:33,810 --> 00:03:39,720 with how we earn the money that we do. What are those things and 41 00:03:39,720 --> 00:03:42,060 the I've talked about these before, and these are the value 42 00:03:42,060 --> 00:03:48,090 add opportunities. But this really comes down to how we make 43 00:03:48,090 --> 00:04:00,000 money. How we make money. There's two ways that we make 44 00:04:00,000 --> 00:04:04,590 money, right. And there's two ways in every investment that we 45 00:04:04,590 --> 00:04:08,670 make money and one is cashflow. 46 00:04:14,370 --> 00:04:18,300 And the other is appreciation 47 00:04:24,810 --> 00:04:32,970 they're very, very linked and that they're very, very linked. 48 00:04:32,970 --> 00:04:38,550 So and this is cashflow of the investment. And this is the 49 00:04:38,550 --> 00:04:43,050 appreciation of what it would be today. And so it all boils down 50 00:04:43,050 --> 00:04:57,870 to our idea that value equals noi over cap rate or we could 51 00:04:57,870 --> 00:05:01,800 really look at it as Our cash flow 52 00:05:07,140 --> 00:05:18,510 equals our value times our cap rate. Or we could look at it as. 53 00:05:21,480 --> 00:05:28,530 And this this value here, if that is a value of if, if value, 54 00:05:29,340 --> 00:05:37,800 if appreciation is you have to bear with me on this one. I 55 00:05:37,800 --> 00:05:42,210 didn't draw this one out. So we're going live appreciation is 56 00:05:42,210 --> 00:05:53,190 the delta, the change in value? Which means that, that it would 57 00:05:53,190 --> 00:06:09,270 be the change in and a Y over the change in cap rate. Right, 58 00:06:09,300 --> 00:06:12,240 so that that would be the the change that's there. Is that 59 00:06:12,240 --> 00:06:17,430 right? Would it be the change in Capri? Now, this actually 60 00:06:17,430 --> 00:06:22,890 wouldn't be the correct term, this would be the this will be 61 00:06:22,890 --> 00:06:25,830 over the new cap rate. 62 00:06:32,490 --> 00:06:43,350 Right, so that would be the change of value. So let's go 63 00:06:43,350 --> 00:06:49,440 with that idea. So all we're trying to do, all we're trying 64 00:06:49,440 --> 00:06:54,720 to do is we're playing with this algorithm here, or this 65 00:06:54,720 --> 00:06:57,360 algorithm, it doesn't particularly matter for our 66 00:06:57,360 --> 00:07:02,580 purposes. So we're playing with that. And that's how we get our 67 00:07:02,580 --> 00:07:10,530 getting money. So let's start with, let's start with on the 68 00:07:10,530 --> 00:07:19,380 very bottom of this diagram, we have cash flow properties. 69 00:07:29,940 --> 00:07:33,030 Now cash flow property, all we're what we're trying to do is 70 00:07:33,030 --> 00:07:36,990 we're trying to, we're going to hold these properties for a very 71 00:07:36,990 --> 00:07:45,900 long time, we are going to put money into our pocket of our 72 00:07:45,900 --> 00:07:46,560 investor. 73 00:07:51,720 --> 00:07:55,920 As regularly and as consistently as possible, these are not 74 00:07:55,920 --> 00:08:00,150 complex deals, they're long folds. And so we're trying to 75 00:08:00,150 --> 00:08:04,170 just put money in their pocket, and eventually we'll sell it 76 00:08:04,200 --> 00:08:09,330 with appreciation. And so that's because we've got the value 77 00:08:13,080 --> 00:08:26,640 equals the NOI over cap rate. And so as noi goes up just over 78 00:08:26,640 --> 00:08:30,060 time, so if you own a property, that's big, you're paying 79 00:08:30,060 --> 00:08:33,180 regular rents, and maybe you're getting maybe it's an apartment 80 00:08:33,180 --> 00:08:35,820 building in a really good area, and you're getting rent growth 81 00:08:35,820 --> 00:08:43,110 of 5% every single year. Maybe that is that is driving up the 82 00:08:43,140 --> 00:08:48,210 appreciating appreciating value. So when you take that same noi. 83 00:08:49,230 --> 00:08:54,870 So the when you take that noi of x, and you add to it that 84 00:08:55,290 --> 00:08:56,730 increased noi 85 00:09:02,429 --> 00:09:10,979 then Then what you're actually doing is you're you're loading 86 00:09:11,009 --> 00:09:14,699 up this equation, so that this number is really, really big. 87 00:09:15,089 --> 00:09:18,869 And probably your cap rate is fairly stable and it's not 88 00:09:18,869 --> 00:09:23,579 changing much. That's really what is going on underneath the 89 00:09:23,579 --> 00:09:28,619 hood of what's there. So in order to make good money on 90 00:09:28,619 --> 00:09:32,189 these properties, what do we have to do? Well, they're always 91 00:09:32,189 --> 00:09:36,359 going to be in prime locations and they're going to be in we're 92 00:09:36,359 --> 00:09:41,759 going to be basically banking on rent escalate on escalations, 93 00:09:42,149 --> 00:09:54,539 but we always increase our noi. So I try to increase it. We need 94 00:09:54,539 --> 00:10:08,459 to increase our income and lower our expenses. So this is what 95 00:10:08,459 --> 00:10:13,859 we're trying to do. So our income is increasing naturally, 96 00:10:14,099 --> 00:10:19,529 because of rent escalations, or this type of strategy. 97 00:10:24,630 --> 00:10:27,300 You'll be looking for other opportunities. But really, 98 00:10:27,300 --> 00:10:31,320 that's what you're banking on, this is an audit a very hands on 99 00:10:32,280 --> 00:10:38,700 way to increase the value. And then you're going to lower the 100 00:10:38,700 --> 00:10:43,680 expenses. But again, this isn't really built into the system for 101 00:10:43,680 --> 00:10:47,820 a cash flow strategy. You're really just banking on these 102 00:10:47,820 --> 00:10:51,300 rent rent escalations that are very good. And you're hoping 103 00:10:51,300 --> 00:10:58,770 that that's that cap rate stays say stays safe, stable, right. 104 00:11:02,430 --> 00:11:05,820 So that's all you're trying to do is just your count. So the 105 00:11:05,820 --> 00:11:12,690 your driver here. So let's write that down. So the driver of your 106 00:11:12,690 --> 00:11:21,210 proposition of this strategy driver 107 00:11:31,980 --> 00:11:39,330 is rent escalations. That's what you're trying to do. What you're 108 00:11:39,330 --> 00:11:45,930 trying to do for let's go up the stairs up to here 109 00:11:54,870 --> 00:12:02,790 is, is this is also a longer play. But you're really looking 110 00:12:02,820 --> 00:12:08,220 at this value add component. And so you're ultimately looking for 111 00:12:08,220 --> 00:12:16,200 the increase in value to go up and you're doing that primarily 112 00:12:16,200 --> 00:12:20,850 for this kind of property. You're primarily doing it again 113 00:12:20,850 --> 00:12:22,440 from income 114 00:12:31,049 --> 00:12:38,699 and, and not really from changing your expenses, or from 115 00:12:38,699 --> 00:12:45,359 changing the cap rate. So where does that? Where does that 116 00:12:45,359 --> 00:12:53,609 change in income come from? With this, we've got it really coming 117 00:12:53,639 --> 00:12:58,109 down to a couple of different strategies that work. So we're 118 00:12:58,109 --> 00:13:01,019 looking for expiring leases, right. 119 00:13:10,980 --> 00:13:15,210 That's what we're we're looking for here and below market rents. 120 00:13:23,190 --> 00:13:27,930 So which tells us basically what our strategy is, so we're doing 121 00:13:27,930 --> 00:13:41,010 that by by looking for, for releasing either to existing 122 00:13:41,010 --> 00:13:50,070 tenants or to new tenants is one way to do it. Or we could also 123 00:13:50,070 --> 00:13:54,720 as a major play here, we've talked about this before talk 124 00:13:54,750 --> 00:13:55,890 about re measuring. 125 00:14:02,250 --> 00:14:05,400 So what we're talking about about re measuring re measuring 126 00:14:05,400 --> 00:14:09,240 is the strategy where you take a property that's already 127 00:14:09,240 --> 00:14:13,650 generating income, and you re measure that whole space. And 128 00:14:13,680 --> 00:14:17,730 measurement standards tend to be in almost every lease I've seen 129 00:14:18,360 --> 00:14:23,370 in every state is based around the Building Owners and Managers 130 00:14:23,370 --> 00:14:29,610 Association. So the standards that they use change over a 131 00:14:29,610 --> 00:14:34,530 period of time. And because it's the Building Owners and Managers 132 00:14:34,530 --> 00:14:39,330 Association, they want the space to be as big as possible. So 133 00:14:39,330 --> 00:14:42,690 it's no longer just measuring the inside of the space while 134 00:14:42,690 --> 00:14:46,020 the wall figuring out what the square footage is. It's now 135 00:14:46,020 --> 00:14:50,610 there are some exterior spaces that count because of overhangs, 136 00:14:50,610 --> 00:14:55,170 things like that. There are other ways to measure it that 137 00:14:55,170 --> 00:14:57,720 really increase the square footage and I've seen this 138 00:14:57,720 --> 00:15:03,870 increased by 10 20% Given and give, that's a huge amount. So 139 00:15:03,870 --> 00:15:07,260 if you're getting two bucks a month, let's do it on a year, 140 00:15:07,650 --> 00:15:13,380 I'd say you're getting $24 a square foot on, on rent, and 141 00:15:13,380 --> 00:15:21,600 you're increasing it by 20%. Let's look at it. So for that 142 00:15:21,600 --> 00:15:32,760 same space, you're getting $28.80. So you're getting you're 143 00:15:32,760 --> 00:15:38,880 getting that 20% More TASH, same cap rate. So what's the 144 00:15:38,880 --> 00:15:47,130 difference in the amount of money that's there, so that per 145 00:15:47,130 --> 00:15:51,090 square foot you've just added 146 00:15:58,200 --> 00:16:05,550 and let's say it's at the building is at a six cap you've 147 00:16:05,550 --> 00:16:11,010 just added $80 per square foot of value just by re measuring 148 00:16:11,520 --> 00:16:17,730 now, so on a 10,000 square foot building, you've now got 149 00:16:17,790 --> 00:16:22,770 $800,000 more cash that you've magically created out of 150 00:16:22,770 --> 00:16:28,110 nothing. So that's pretty amazing. So it works great. And 151 00:16:28,110 --> 00:16:37,320 it's a great strategy here. So let's put in what the driver is 152 00:16:37,320 --> 00:16:38,010 here. 153 00:16:43,290 --> 00:16:49,830 So our driver is increased 154 00:16:58,950 --> 00:17:09,690 rent dollars over the term. So do you see the distinction 155 00:17:09,690 --> 00:17:14,460 there's, there's a nuance here between the driver for 156 00:17:14,460 --> 00:17:18,360 stabilized add value and the driver for cash flow properties. 157 00:17:18,630 --> 00:17:22,590 So where the big driver for cash flow properties is just the 158 00:17:22,590 --> 00:17:26,430 natural rent escalations that are taking place. So in 159 00:17:26,430 --> 00:17:30,960 apartment buildings are a great example. So here in what it sort 160 00:17:30,960 --> 00:17:35,040 of near where where we are, right now is a is an area called 161 00:17:35,040 --> 00:17:39,480 Van Nuys, you may have heard of it. It is stocked full of 162 00:17:39,510 --> 00:17:41,580 apartment buildings, I don't even know how many apartment 163 00:17:41,580 --> 00:17:43,980 buildings there are hundreds and hundreds of apartment buildings 164 00:17:43,980 --> 00:17:48,300 there. They are a commodity at that point, because they are all 165 00:17:48,360 --> 00:17:51,390 basically the same, they all have to charge basically the 166 00:17:51,390 --> 00:17:55,440 same rent, there's nothing really differentiating one from 167 00:17:55,440 --> 00:17:59,040 another. Other than some maybe one has a little bit nicer 168 00:17:59,040 --> 00:18:02,610 fixtures than the others. But we're talking nuance here, if 169 00:18:02,610 --> 00:18:05,670 you go to Van Nuys, you're looking for just an apartment, 170 00:18:06,510 --> 00:18:10,140 it's all going to be basically the same cost within a margin of 171 00:18:10,140 --> 00:18:16,800 error. So the all that you're banking on there are these rent 172 00:18:16,800 --> 00:18:22,020 escalations. So is that natural rent that's climbing up every 173 00:18:22,020 --> 00:18:28,260 year, in order to to appreciate your property, it's a great 174 00:18:28,260 --> 00:18:32,250 place to go when as long as the those escalations are high 175 00:18:32,250 --> 00:18:36,330 enough that it makes sense, when they're not high, then it then 176 00:18:36,360 --> 00:18:39,630 it doesn't really add significant value to your 177 00:18:39,630 --> 00:18:45,270 investors. But here in the stabilized value add, we're 178 00:18:45,270 --> 00:18:49,170 talking about how do we take those existing rents, they're 179 00:18:49,170 --> 00:18:52,830 gonna, they're gonna escalate as well, but how do we like really 180 00:18:52,830 --> 00:18:57,540 shove them up in order to really, really bring them up to 181 00:18:57,540 --> 00:19:02,310 the highest level that they can be? So that is the nuance that 182 00:19:02,310 --> 00:19:07,170 takes place there. Then we're talking about 183 00:19:13,200 --> 00:19:16,020 memory, let's go down here and we'll talk about undervalued 184 00:19:16,020 --> 00:19:16,830 properties 185 00:19:25,530 --> 00:19:28,890 and undervalued properties, what we're really trying to do here 186 00:19:32,220 --> 00:19:37,620 so remember what an undervalued property is. It's very low cost 187 00:19:37,620 --> 00:19:42,780 per square foot and a very high cap 188 00:19:48,030 --> 00:19:52,890 and that's probably because of, or that could very well be 189 00:19:52,890 --> 00:19:56,010 because of renewing leases. 190 00:20:01,020 --> 00:20:02,010 So here 191 00:20:08,580 --> 00:20:13,860 we're not so much looking at the NOI as the main driver, what 192 00:20:13,860 --> 00:20:21,150 we're looking at is this cap rate. Right? Because what 193 00:20:21,150 --> 00:20:25,410 happens when all the leases have like one year left to term on 194 00:20:25,410 --> 00:20:29,010 them. And it's, you know, it's a office building or retail 195 00:20:29,010 --> 00:20:33,810 building or industrial building, the cap rate is just super, 196 00:20:33,810 --> 00:20:37,770 super high value is super, super low. And so you can buy these 197 00:20:37,770 --> 00:20:40,290 properties for very inexpensively, maybe they're 198 00:20:40,290 --> 00:20:45,480 selling it now just because they need to, they need cash for some 199 00:20:45,480 --> 00:20:51,150 reason. Or maybe it's because they are. They're afraid of 200 00:20:51,180 --> 00:20:56,490 what's going to happen if the if, if it turns or whatever. But 201 00:20:56,490 --> 00:21:01,200 so you're buying it at this very, very high Capri. And then 202 00:21:01,230 --> 00:21:06,360 you are counting on doing things that will decrease that capric 203 00:21:07,410 --> 00:21:11,580 things such as renewing leases. 204 00:21:16,619 --> 00:21:20,789 Now, there's a distinction here too, between renewing the lease 205 00:21:20,789 --> 00:21:24,299 for an undervalued property, and renewing a lease for the 206 00:21:24,299 --> 00:21:28,079 stabilized value add in the stabilized value add you've got, 207 00:21:28,319 --> 00:21:33,389 you've got a very normal vacancy factor that's going on, leases 208 00:21:33,389 --> 00:21:37,349 just are naturally expiring. And you're going to be able to 209 00:21:37,349 --> 00:21:41,789 release it without much concern in a undervalued property, 210 00:21:41,789 --> 00:21:47,099 there's going to be some element of it, where it is that the 211 00:21:47,099 --> 00:21:51,779 value of that lease, the fact that it has such little term is 212 00:21:51,779 --> 00:21:56,129 pulling that cap rate, or that value down, basically pulling 213 00:21:56,129 --> 00:22:01,319 that cap rate up and making it so it's undervalued in the 214 00:22:01,319 --> 00:22:04,919 marketplace. So maybe it was, I mean, imagine that you went in 215 00:22:04,949 --> 00:22:10,859 and there was a department store that's not doing very well and 216 00:22:10,859 --> 00:22:14,399 they've got one year left on the lease, we have this massive 217 00:22:14,399 --> 00:22:19,349 property, and then you've got this, you know, barely anything 218 00:22:19,349 --> 00:22:23,159 left on the lease. And that the fact that it's got so little 219 00:22:23,159 --> 00:22:28,529 term is just dragging that, that cap rate sky high in order to 220 00:22:28,529 --> 00:22:35,219 crush it. So that's what what is really going on in these 221 00:22:35,249 --> 00:22:42,899 undervalued properties is that low low cap rates. And so what 222 00:22:42,989 --> 00:22:56,759 are what are driver is your high cap rate 223 00:23:04,770 --> 00:23:14,160 actually, well, your your driver of making money is moving cap 224 00:23:14,160 --> 00:23:14,910 rate down 225 00:23:19,980 --> 00:23:23,700 to where the rest of the market or a normally positioned 226 00:23:23,700 --> 00:23:28,230 property would be, you're trying to move it down and that most of 227 00:23:28,230 --> 00:23:31,530 the time comes from renewing leases. 228 00:23:38,880 --> 00:23:48,480 So our fourth major category is of course your value add. Now 229 00:23:48,480 --> 00:23:52,590 here, you've got a bunch of things going on, right so this 230 00:23:52,590 --> 00:23:58,710 could be the what separates it from the stabilized value app is 231 00:23:58,710 --> 00:24:03,180 it's really not about just getting the just getting that 232 00:24:03,210 --> 00:24:06,180 increased rent dollars, you're really trying to get the 233 00:24:06,180 --> 00:24:10,680 increased total dollars coming in. So what you're trying to do 234 00:24:10,710 --> 00:24:13,440 is you can do any strategy to 235 00:24:29,100 --> 00:24:33,120 you trying to do really any strategy that raises that noi or 236 00:24:33,120 --> 00:24:37,680 lowers that cap rate at the same time. And so here this this is 237 00:24:37,680 --> 00:24:42,120 sort of the kitchen sink approach of what kind of fits in 238 00:24:42,120 --> 00:24:51,420 here. So we definitely have rent, rent growth and we 239 00:24:51,420 --> 00:24:59,970 definitely have renewing leases to change that cap rate. You 240 00:25:00,000 --> 00:25:05,070 Make changes. So what I'm trying to do is I'm trying to increase 241 00:25:05,070 --> 00:25:14,340 the income. And that can be any of these. So rent square 242 00:25:14,340 --> 00:25:19,800 footage, but that's really rent isn't it, or adding other 243 00:25:19,800 --> 00:25:27,930 income. Or here's where we finally see we're trying to 244 00:25:27,930 --> 00:25:32,910 lower our expenses, and lower them to such a point where 245 00:25:32,940 --> 00:25:39,420 suddenly we've got you know, as few expenses as possible now, 246 00:25:39,420 --> 00:25:44,250 that could even come in the form of transferring that risk from a 247 00:25:44,250 --> 00:25:50,460 existing lease structure on to a new lease structure that has 248 00:25:50,490 --> 00:25:55,380 different terms for paying operating expenses. So moving 249 00:25:55,380 --> 00:26:00,420 somebody from a modified gross to a triple net, moving somebody 250 00:26:00,420 --> 00:26:06,120 from a full service gross into a modified gross, that can all 251 00:26:06,120 --> 00:26:09,420 decrease those operating expenses, because really, it's 252 00:26:09,420 --> 00:26:13,140 just changing how your pool of money is. It's not actually 253 00:26:13,170 --> 00:26:16,830 neither of those strategies is actually lowering your expenses, 254 00:26:17,130 --> 00:26:21,510 it's actually really increasing your income, and how that comes 255 00:26:21,540 --> 00:26:25,350 in. But it also decreases the amount of risk that you're 256 00:26:25,350 --> 00:26:30,000 taking. Some of the other strategies, though, that do 257 00:26:30,000 --> 00:26:38,970 lower expenses would be suddenly submetering. other energy 258 00:26:38,970 --> 00:26:45,990 sources like solar and or just lowering your property taxes, 259 00:26:47,970 --> 00:26:52,770 all in an effort to raise your noi as high as possible. Now, 260 00:26:52,770 --> 00:26:56,910 we're also trying to change our cap rate. 261 00:27:05,550 --> 00:27:12,090 So we're also trying to lower our cap rate. And so there are a 262 00:27:12,090 --> 00:27:17,100 lot of things that affect the cap rate as well. So cap rate 263 00:27:17,100 --> 00:27:26,220 really is all about positioning. And so we've got term is 264 00:27:26,220 --> 00:27:29,790 definitely a major factor as we talked about in the undervalued 265 00:27:29,790 --> 00:27:34,560 properties. But it's also you know, just how your property is 266 00:27:34,560 --> 00:27:43,080 situated. So it could be your tenant mix. For example, if you 267 00:27:43,080 --> 00:27:50,100 have a retail center, that is almost all that's got 10 268 00:27:50,100 --> 00:27:55,800 tenants, and nine of them are service tenants where it's, you 269 00:27:55,800 --> 00:27:59,160 know, fix your cell phones, your h&r block, things like that, 270 00:27:59,670 --> 00:28:03,750 that is nowhere near going to be as low of a cap rate as 271 00:28:03,750 --> 00:28:07,140 something that's like all restaurants, all restaurants is 272 00:28:07,170 --> 00:28:10,620 always going to have a better cap rate, because they're just 273 00:28:10,620 --> 00:28:15,150 better tenants, and they pay more money, there comes out of a 274 00:28:15,150 --> 00:28:19,530 comes as a matter of rent. But it also comes as just the cash 275 00:28:19,530 --> 00:28:23,640 that's available, when you have a restaurant that's earning good 276 00:28:23,640 --> 00:28:29,370 money. The rent cost isn't as major of a factor. You know, 277 00:28:29,370 --> 00:28:33,420 it's between eight and 12%, normally, of what of their 278 00:28:33,420 --> 00:28:40,380 expenses, where it can be, you know, 20 to 30% of a service 279 00:28:40,380 --> 00:28:45,780 based business expenses is just the office, not the best way for 280 00:28:45,780 --> 00:28:49,200 them to choose that. But that tends to be the oftentimes the 281 00:28:49,200 --> 00:28:54,210 case, I mean, think about the cost of, of an h&r block, and 282 00:28:54,210 --> 00:28:59,250 how much that out expensive that rent is just to just in 283 00:28:59,250 --> 00:29:02,250 comparison to their operating expense, the only other expenses 284 00:29:02,250 --> 00:29:10,200 that they have really is as a as a franchise is the cost of the 285 00:29:10,320 --> 00:29:17,880 of labor. So it doesn't really, it doesn't add value to it. So 286 00:29:17,910 --> 00:29:22,470 changing that tenant mix can definitely decrease the cap 287 00:29:22,470 --> 00:29:27,090 rate, which would be a good thing. And then just changing 288 00:29:27,090 --> 00:29:33,840 perception. So this could be refacing, changing the 289 00:29:33,840 --> 00:29:37,830 architecture, making it the new cool hip building, even if it's 290 00:29:37,830 --> 00:29:41,160 not new and cool just making it a place that tenants want to go, 291 00:29:41,490 --> 00:29:45,810 because every landlord is concerned about vacancy. And so 292 00:29:45,810 --> 00:29:49,350 the more sexy that a property is, the more likely they're 293 00:29:49,350 --> 00:29:52,830 going to be able to release property and the better the 294 00:29:52,830 --> 00:29:57,180 perception is which lowers the cap rate, and then it adds that 295 00:29:57,180 --> 00:29:58,980 value. So 296 00:30:05,250 --> 00:30:06,570 So with these 297 00:30:12,090 --> 00:30:30,420 are driver is is both so it's it's raising noi by more dollars 298 00:30:31,260 --> 00:30:33,540 which can be rent or other income 299 00:30:43,800 --> 00:30:45,630 lowering expenses 300 00:30:52,830 --> 00:31:00,510 and also let's call it repositioning 301 00:31:06,510 --> 00:31:15,120 or a lower cap Okay. So you're really repositioning it for a 302 00:31:15,120 --> 00:31:22,560 lower Capri. Now, the the last strategy we talked about is 303 00:31:22,560 --> 00:31:32,400 develop and it is us kind of a special thing, but it actually 304 00:31:32,400 --> 00:31:36,300 is it follows the same general model. I mean, what are you 305 00:31:36,300 --> 00:31:49,830 trying to do here driver is to create an noi right, you're 306 00:31:49,830 --> 00:31:58,260 building a space in order to rent it out and have a cap rate 307 00:31:59,970 --> 00:32:02,760 and the lower the better, right? So you want to build the best 308 00:32:02,760 --> 00:32:06,750 building you can. So that cap rate is as good and as appealing 309 00:32:06,750 --> 00:32:11,520 in the marketplace as possible. If I'm a developer and I've got 310 00:32:11,550 --> 00:32:16,170 a chance to build for say a 311 00:32:21,480 --> 00:32:27,450 let's say let's say I've got two different facets food companies. 312 00:32:27,780 --> 00:32:35,310 Let's say we've got on one hand we've got a Carl's Jr, which 313 00:32:35,310 --> 00:32:39,630 generally does very good. And we've got an Arby's which 314 00:32:39,630 --> 00:32:43,980 generally doesn't do very good. The Carl's Jr. is going to make 315 00:32:43,980 --> 00:32:46,380 more money, it's going to have a lower cap rate because the 316 00:32:46,380 --> 00:32:51,330 marketplace appreciates the Carl's Jr. Much better. So in 317 00:32:51,330 --> 00:32:56,400 that's why it is has that higher cap rate. So I think this 318 00:32:56,400 --> 00:33:03,930 probably makes sense. Excuse my allergies today. So we've got a 319 00:33:04,980 --> 00:33:16,620 that is what we're doing, when we look at at the strategies and 320 00:33:16,620 --> 00:33:20,370 how those different add value strategies kind of play out or 321 00:33:20,370 --> 00:33:24,600 value add, I would say add value out of the different value add 322 00:33:24,600 --> 00:33:30,270 strategies play out and then in in the same strategies because 323 00:33:30,270 --> 00:33:33,750 it's really all the same thing removing the same kinds of 324 00:33:33,750 --> 00:33:38,460 things in order to create that value added for our investors. 325 00:33:39,480 --> 00:33:47,460 So, what is the next step of building out our our founder 326 00:33:47,460 --> 00:33:54,300 investment theory? It is we start identifying our niche 327 00:33:58,350 --> 00:33:59,790 which is property type 328 00:34:06,750 --> 00:34:09,660 we started thinking about what our property type is making sure 329 00:34:09,660 --> 00:34:12,810 that we understand what it is we should know as many things about 330 00:34:12,810 --> 00:34:23,340 it as possible. What how does it how do the main tenants make 331 00:34:23,340 --> 00:34:29,880 money what are the main ways that those tenants make money? 332 00:34:30,900 --> 00:34:45,330 What is the the main risks for those kinds of tenants? What are 333 00:34:45,330 --> 00:34:51,480 the what are the rest of the terms? What are the vacancies 334 00:34:51,480 --> 00:34:59,700 that occur? What are the lease types? How many tenants you're 335 00:34:59,700 --> 00:35:03,210 going to be be working out how hands on is it versus off. And, 336 00:35:03,510 --> 00:35:07,500 for example, if you've got a apartment building is much, much 337 00:35:07,500 --> 00:35:12,480 more hands on than a warehouse, you know, you're, you probably 338 00:35:12,480 --> 00:35:15,750 will only show up to the warehouse once you know to rent. 339 00:35:15,930 --> 00:35:20,700 And that's it, you probably don't need to go very often on 340 00:35:20,700 --> 00:35:23,070 apartment building, your property manager is going to be 341 00:35:23,070 --> 00:35:28,080 there many days a month, visiting the property, visiting 342 00:35:28,080 --> 00:35:32,160 tenants, making sure that things get improved, or that the 343 00:35:32,160 --> 00:35:38,040 toilets are aren't flushing or leaking or whatever. So those 344 00:35:38,040 --> 00:35:41,940 are the kinds of things in the property type. And then we've 345 00:35:41,940 --> 00:35:47,250 got our location you know, how far away is it from you where is 346 00:35:47,250 --> 00:35:52,380 it located, those are the things that fall into your niche. The 347 00:35:52,380 --> 00:35:54,990 last category is your risk profile. 348 00:36:00,480 --> 00:36:10,170 And we talked before about the spectrum, high risk, medium 349 00:36:10,170 --> 00:36:21,360 risk, low risk and somewhere on the spectrum is where your 350 00:36:21,390 --> 00:36:30,660 investors like to sit and hear to is somewhere on this spectrum 351 00:36:30,930 --> 00:36:40,950 is where your is the risk of your cause is part of the risk. 352 00:36:41,040 --> 00:36:45,810 So development tends to be high risk. cash flow properties tend 353 00:36:45,810 --> 00:36:51,000 to be low risk, stabilized value add tends to be medium risk. 354 00:36:54,240 --> 00:37:03,000 Value Add tends to be medium risk. And the undervalued 355 00:37:03,000 --> 00:37:07,110 properties tends to be low risk. So you see what happens here is 356 00:37:07,110 --> 00:37:13,560 that on this continuum, between high risk and low risk, we've 357 00:37:13,560 --> 00:37:23,250 also got the complexity of the strategy, the more complex the 358 00:37:23,250 --> 00:37:26,730 strategy, the higher the risk is going to be. It's just the 359 00:37:26,730 --> 00:37:34,080 natural part of what is there. And so that is also part of the 360 00:37:34,080 --> 00:37:38,010 risk profile. If you've got a bunch of low risk people, and 361 00:37:38,010 --> 00:37:41,580 you're doing development, it's probably not going to work out 362 00:37:41,580 --> 00:37:45,510 very well. If you've got a bunch of high risk, high rollers who 363 00:37:45,510 --> 00:37:49,050 like taking big, big chances, doing this deal where you're 364 00:37:49,050 --> 00:37:58,050 buying this, this four Plex in, in Beverly Hills at a 3.5 cap 365 00:37:58,050 --> 00:38:00,900 and you're just waiting for rents to increase naturally. 366 00:38:02,070 --> 00:38:04,860 They're not going to go for it. It's it's boring, and it's not 367 00:38:04,860 --> 00:38:09,630 going to happen. So it's this risk profile. I think I told the 368 00:38:09,630 --> 00:38:17,250 story of I may not have told it to y'all. So when I was putting 369 00:38:17,250 --> 00:38:21,240 a deal together, I went and there was a prominent doctor who 370 00:38:21,510 --> 00:38:25,890 I thought for sure was going to invest in the project. And I 371 00:38:25,890 --> 00:38:29,190 wanted to I thought, okay, there's no way that I can't get, 372 00:38:29,190 --> 00:38:33,420 say $300,000 from this guy, he's got a ton of money. I know he's 373 00:38:33,420 --> 00:38:38,880 sitting on cash right now without anything to do. And he, 374 00:38:39,090 --> 00:38:42,870 he doesn't have, he doesn't have anything to go in it. And he 375 00:38:42,870 --> 00:38:47,130 likes me, he knows me and trusts me. This was before I came up 376 00:38:47,130 --> 00:38:49,980 with founder investment theory. And before I came up with this 377 00:38:49,980 --> 00:38:55,290 idea of a risk profile. So I had lunch with this doctor. And so I 378 00:38:55,290 --> 00:39:00,360 said, Dr. S, here's this property, I'm syndicating I've 379 00:39:00,360 --> 00:39:06,330 got all this stuff. And then it's a great property, it's 380 00:39:06,330 --> 00:39:08,910 gonna make a ton of money and it's gonna make a ton of money 381 00:39:08,910 --> 00:39:12,330 because we're buying it at a, you know, at a low cost. We're 382 00:39:12,330 --> 00:39:15,480 going to wait for it to appreciate over five years and 383 00:39:15,720 --> 00:39:22,950 it looks like we're gonna get a nice 17% Actually, I think that 384 00:39:22,950 --> 00:39:29,970 one was actually 50 We're gonna get a nice 15% IRR. The tenant 385 00:39:29,970 --> 00:39:34,320 is safe. They're not going to do they're not going anywhere. It's 386 00:39:34,320 --> 00:39:38,520 really going to be superduper you're gonna love it. And he 387 00:39:38,520 --> 00:39:43,260 said he looked at me and he was like, Yeah, it sounds like a 388 00:39:43,260 --> 00:39:47,430 good deal, but it's not for me. And I was shocked because it was 389 00:39:47,430 --> 00:39:51,000 like well, why I mean if you can make if you got cash just 390 00:39:51,000 --> 00:39:55,140 sitting around. Why would you not take a deal like this where 391 00:39:55,140 --> 00:40:00,000 it's a good thing you know? 15% is a good return on a property 392 00:40:00,000 --> 00:40:09,750 with such low risk, I mean, it was 15%. Oops. It was 15% in 393 00:40:09,750 --> 00:40:16,110 risk, but it actually was like fairly low risk profile. In 394 00:40:16,110 --> 00:40:21,690 reality, it really sat here. Well, normally, if you're paying 395 00:40:21,690 --> 00:40:27,840 15%, it was higher. And he said, Tilden, I've got three pools of 396 00:40:27,840 --> 00:40:33,750 money that I that I use, okay. And this will explain why yours 397 00:40:33,780 --> 00:40:38,040 isn't a good fit. So I have this category of money. And this is 398 00:40:38,040 --> 00:40:43,080 where a large portion of my money is, is, is pooled. So I've 399 00:40:43,080 --> 00:40:52,050 got is very large pool and I it is super low risk. It's money 400 00:40:52,050 --> 00:40:54,990 that you know that a great recession could come that money 401 00:40:54,990 --> 00:40:58,950 is really not going anywhere we're talking, it's in like long 402 00:40:58,950 --> 00:41:02,790 term bonds, and it really is just going to sit there, and 403 00:41:02,790 --> 00:41:06,720 it's going to sit there forever. And it's my money that well, 404 00:41:06,720 --> 00:41:09,960 when everything goes to hell in a handbasket. I know that 405 00:41:09,960 --> 00:41:14,100 money's there, and I'm going to be very, very comfortable, even 406 00:41:14,100 --> 00:41:18,720 if the worst thing happens. So it's very, very low risk 407 00:41:18,720 --> 00:41:22,350 planning. Now I've got a category of money, that's maybe 408 00:41:22,380 --> 00:41:26,070 that's about a little bit smaller than my low risk 409 00:41:26,100 --> 00:41:30,180 category. But it's, it's a fairly substantial size. And 410 00:41:30,180 --> 00:41:38,010 this is my income money. And my income money basically pays for 411 00:41:38,010 --> 00:41:42,360 my standard of living so that I make sure that I've got, you 412 00:41:42,360 --> 00:41:45,510 know that I've got money coming in for the rest of my life, and 413 00:41:45,510 --> 00:41:49,500 I don't have to work or I don't have to really do anything, I 414 00:41:49,500 --> 00:41:52,740 get to go on trips, I get to spend money, and my income 415 00:41:52,740 --> 00:41:55,920 money, it pays me, you know, one to $2 million a year. And it's 416 00:41:55,950 --> 00:42:00,600 it's very comfortable. No, I'm I'm extremely comfortable. And 417 00:42:00,600 --> 00:42:05,610 I've got a great lifestyle. And I don't really have to worry 418 00:42:05,610 --> 00:42:10,950 about it. So the bulk of it is my income. And I said, Okay, 419 00:42:10,950 --> 00:42:13,590 well, that's two of them. But you know, I know that you put 420 00:42:13,590 --> 00:42:17,010 money into other into other projects, and you put money into 421 00:42:17,010 --> 00:42:19,260 some businesses, and you've told me about some of these 422 00:42:19,260 --> 00:42:22,410 investments that you've made in these venture capital things 423 00:42:22,410 --> 00:42:27,510 that you've been doing. He said, Yeah, that is my full around 424 00:42:27,510 --> 00:42:35,820 money, or play money. My play money, I'm not even really 425 00:42:35,820 --> 00:42:39,840 expecting to get that money back. You know, if I do, I 426 00:42:39,840 --> 00:42:45,600 expect to get like a 50% return or more. But my really my play 427 00:42:45,600 --> 00:42:49,680 money is there so that I can have fun, right? I enjoy 428 00:42:49,680 --> 00:42:53,790 investing. I like it, it's fun to do. And I like experimenting 429 00:42:53,790 --> 00:42:57,570 and seeing what happens. I like finding these these people who 430 00:42:57,570 --> 00:43:02,130 need money than just the capital to do these crazy things. And 431 00:43:02,130 --> 00:43:04,770 when they pay off, they're gonna pay off big time. But if they 432 00:43:04,770 --> 00:43:08,940 don't pay off, well, ultimately, it'll kind of evens out, because 433 00:43:08,970 --> 00:43:12,270 five of them won't pay off, but one will and it will do great. 434 00:43:13,920 --> 00:43:17,730 That's my play money. And my play money isn't very big. And I 435 00:43:17,730 --> 00:43:20,430 said well, okay, but this, this is one of those product 436 00:43:20,430 --> 00:43:24,270 properties to this was one of those projects where, you know, 437 00:43:24,270 --> 00:43:27,750 it's really got going to do that it's gonna, you know, it's, it's 438 00:43:27,750 --> 00:43:30,420 something where you get to be a part of it, and it's gonna be 439 00:43:30,420 --> 00:43:35,070 fun. And he's shook his head kind of smiled and said, Now, 440 00:43:35,100 --> 00:43:40,530 it's not say, it's, it's not play money, it's got, it's got a 441 00:43:40,530 --> 00:43:44,160 50% I'm looking for a 50% minimum return, you're talking 442 00:43:44,160 --> 00:43:49,380 about 15%. That's terrible. And this is like 15% In five years, 443 00:43:49,410 --> 00:43:52,860 I'm gonna get that money back. You know, if maybe if it was 444 00:43:52,860 --> 00:44:00,330 like, six months, I do something like that, but but been in five 445 00:44:00,330 --> 00:44:03,540 years, that's five years that I don't have that money to put him 446 00:44:03,540 --> 00:44:06,780 in things that are a lot more fun than your project. So it's 447 00:44:06,780 --> 00:44:11,130 not play money. And I said, Okay, well, you know, it's got 448 00:44:11,130 --> 00:44:16,830 to, it's going to be paying out dividends. And, and it fits that 449 00:44:16,860 --> 00:44:19,980 right. So it should be an income, it should be income 450 00:44:19,980 --> 00:44:23,970 money. They said, now, you just told me that the real money is 451 00:44:23,970 --> 00:44:26,760 made on the appreciation of the property because you're buying 452 00:44:26,760 --> 00:44:29,340 it for a low cost, and you're gonna sell it in five years for 453 00:44:29,340 --> 00:44:32,730 an increased cost when the rent bump cups. You know, the the 454 00:44:32,730 --> 00:44:36,210 amount that it's getting right now on the income, you know, is 455 00:44:36,210 --> 00:44:43,470 maybe 4%. So it's not not interested in 4% I need to get 456 00:44:43,470 --> 00:44:46,200 much better than that in order to live off. This is the money I 457 00:44:46,200 --> 00:44:51,090 live off. So it's not income. And we all know that it's real 458 00:44:51,090 --> 00:44:54,360 estate. So there's no way this thing's low rents. It just is 459 00:44:54,420 --> 00:44:58,620 it's just a property. It's backed by a good tenant, but you 460 00:44:58,620 --> 00:45:01,200 know anything good to happen. You know, they're not assigned 461 00:45:01,200 --> 00:45:05,040 as the US government, it's not low risk. So although your 462 00:45:05,040 --> 00:45:09,420 project sounds interesting, it's not anything that fits into one 463 00:45:09,420 --> 00:45:14,190 of my three categories of play money, income money or low risk. 464 00:45:14,940 --> 00:45:21,900 So you see what I did there? I went Dr. S, thinking that, just 465 00:45:21,900 --> 00:45:26,880 from the viewpoint of, I've got a really strong sound investment 466 00:45:26,880 --> 00:45:32,130 that should make a lot of money, and was really good. And I went 467 00:45:32,160 --> 00:45:36,690 into the meeting thinking that investors make a decision based 468 00:45:36,690 --> 00:45:42,180 on is this seem like a reasonably logical way in order 469 00:45:42,180 --> 00:45:47,070 to spend money? But that's not the way that investors actually 470 00:45:47,070 --> 00:45:51,240 think the investors think first stuff? Well, first, they want to 471 00:45:51,240 --> 00:45:58,620 know, does it make sense? Right, they want to know that the deal 472 00:45:58,650 --> 00:46:00,750 makes sense, they can kind of understand it, 473 00:46:01,320 --> 00:46:09,810 but most of it at least. So we've got this idea of does it 474 00:46:09,810 --> 00:46:18,630 make sense. And they do need to know that. But the making sense, 475 00:46:20,070 --> 00:46:27,120 is just a small piece of the puzzle. Because most of what how 476 00:46:27,120 --> 00:46:31,260 they make the decision is underneath the water. This is 477 00:46:31,260 --> 00:46:42,900 all logic. And this is all emotion. And if you come at it 478 00:46:42,900 --> 00:46:47,670 from looking at just as an investment itself, just like one 479 00:46:47,700 --> 00:46:51,510 thing, saying, Does this one thing makes sense. But there are 480 00:46:51,510 --> 00:46:57,150 a lot of other one things out there. That makes sense. But 481 00:46:57,150 --> 00:47:02,910 when you can hit off these kinds of things, and identify where 482 00:47:02,910 --> 00:47:06,870 does their natural risk profile lead them? Where do they like to 483 00:47:06,870 --> 00:47:10,590 sit? You know, then you're talking about all this stuff 484 00:47:10,590 --> 00:47:14,880 down here, all the emotion that it can make sure that it feels 485 00:47:14,880 --> 00:47:19,200 comfortable to them. And when you've got a strategy that they 486 00:47:19,200 --> 00:47:23,700 can kind of pick and understand. But it gives them something more 487 00:47:23,700 --> 00:47:27,690 than just kind of like, okay, that I understand it, it gives 488 00:47:27,690 --> 00:47:30,540 them an idea of something that they feel like they want to be a 489 00:47:30,540 --> 00:47:34,590 part of. Now, sometimes people want to feel like they can be 490 00:47:34,590 --> 00:47:38,340 part of a value add project, because they're taking a 491 00:47:38,340 --> 00:47:42,900 building that's been dilapidated and ugly, and they're being part 492 00:47:42,900 --> 00:47:46,650 of that whole thing that read reimagines it and makes it 493 00:47:46,650 --> 00:47:49,980 awesome. And they feel like that's my building, they can 494 00:47:49,980 --> 00:47:53,250 point to it and say, Yeah, well, you should have seen it before. 495 00:47:53,610 --> 00:47:58,590 Right? That's an emotional thing. It may make sense, in a 496 00:47:58,590 --> 00:48:03,210 logical portion. But not only does that in order to make sure 497 00:48:03,210 --> 00:48:08,670 that they feel secure about it as an emotional driver. And the 498 00:48:08,670 --> 00:48:13,260 same thing goes for this cash flow properties, right. So here, 499 00:48:13,260 --> 00:48:18,150 you've got investors who are afraid of all the things that 500 00:48:18,150 --> 00:48:21,600 could happen, they want something very secure, they want 501 00:48:21,600 --> 00:48:25,140 something very safe, and they want something Well, boy, those 502 00:48:25,140 --> 00:48:28,080 properties have always been good, they're always going to 503 00:48:28,080 --> 00:48:31,680 increase at that same level. And it gives them that sense of 504 00:48:31,710 --> 00:48:36,450 comfort. And so if you bring those same people and try and 505 00:48:36,450 --> 00:48:39,870 tell them how you can't lose on this development deal, of 506 00:48:39,870 --> 00:48:43,170 course, it's risky and a risk, it's all out there something 507 00:48:43,440 --> 00:48:46,620 you're appealing to the wrong person, because they don't have 508 00:48:46,620 --> 00:48:52,530 the emotions to drive it. And then you've got the you know, 509 00:48:52,530 --> 00:48:55,860 and there's the same can be said for the undervalued properties. 510 00:48:55,860 --> 00:48:58,770 And for the for the stabilize at Valley, we'll just use the 511 00:48:58,770 --> 00:49:01,800 undervalued properties as an example. You've got an 512 00:49:01,800 --> 00:49:04,890 undervalued property, you're going to this person and you're 513 00:49:04,890 --> 00:49:08,850 saying, Look, we're gonna get we've got this building for a 514 00:49:08,850 --> 00:49:13,590 real steal, we've got a bargain here. This thing is worth pet is 515 00:49:13,590 --> 00:49:16,740 worth much, much more than the pennies on the dollar that it's 516 00:49:16,740 --> 00:49:20,610 selling for. This thing is going at such a low rate and it's 517 00:49:20,610 --> 00:49:24,750 going to it's going to be a real, real great deal. This 518 00:49:24,750 --> 00:49:28,620 appeals to your bargain hunters. This is a great property. And 519 00:49:28,770 --> 00:49:32,910 the the logical part of it is really kind of small. I mean, 520 00:49:32,910 --> 00:49:36,270 you've met these people, right? You met people who are so in 521 00:49:36,270 --> 00:49:41,010 love with finding bargains that you tell them that it's 50% off, 522 00:49:41,370 --> 00:49:44,190 and they don't even look at the price tag at that point. And 523 00:49:44,190 --> 00:49:47,910 that's 50% off it must be a great deal. And so you're 524 00:49:47,910 --> 00:49:54,480 driving to this emotional spark. This is why fear exists. This is 525 00:49:54,480 --> 00:50:02,820 what it does, because it every piece of it from strategy to 526 00:50:02,820 --> 00:50:08,370 niche. And then we're talking about property type, to 527 00:50:08,370 --> 00:50:17,700 location. And the risk profile all feeds is serves this 528 00:50:18,240 --> 00:50:23,760 emotional part, before it even comes close to serving the 529 00:50:23,760 --> 00:50:29,460 logical part. So we can serve that. And it still makes sense, 530 00:50:29,460 --> 00:50:32,190 because this is why we do the underwriting, right. So we do 531 00:50:32,190 --> 00:50:35,910 the logical part. That's why we present good logical part, we 532 00:50:35,940 --> 00:50:39,690 have nice underwriting. So it all makes sense. But the whole 533 00:50:39,690 --> 00:50:43,830 story behind it is just to get to that emotional side, because 534 00:50:43,830 --> 00:50:47,400 once they've made the decision emotionally, they'll do whatever 535 00:50:47,400 --> 00:50:52,170 it takes to make that decision logically. And fit is the only 536 00:50:52,170 --> 00:50:56,670 way to really get at it in a way that makes sense to somebody 537 00:50:57,690 --> 00:51:02,700 where they can feel okay, doing it, you're trying to give the 538 00:51:02,700 --> 00:51:09,000 logical part of them permission to say, okay, to the emote 539 00:51:09,060 --> 00:51:12,930 emotional part, or look at it. In the converse, you're trying 540 00:51:12,930 --> 00:51:17,490 to do whatever you can, so that the emotional feels okay, so 541 00:51:17,490 --> 00:51:20,370 that the logic can just pick up the slack and pull up and the 542 00:51:20,370 --> 00:51:24,930 rest of the way there, that is founder investment theory and 543 00:51:24,930 --> 00:51:30,390 why it is so powerful. All right, so we're gonna do a 544 00:51:30,390 --> 00:51:34,980 little bit shorter talk today, because we've talked a lot, and 545 00:51:35,010 --> 00:51:39,690 I think we've really dived in, good, here's what I want to have 546 00:51:39,690 --> 00:51:44,730 happen. I want people to really spend some time thinking about 547 00:51:44,730 --> 00:51:48,660 this, because Boughner investment theory is not a light 548 00:51:48,690 --> 00:51:51,660 topic, it's not something there just because I think it's 549 00:51:51,660 --> 00:51:55,170 important to find the values of your company, and anything like 550 00:51:55,170 --> 00:52:00,780 that. It is because this is how you convince investors, this is 551 00:52:00,780 --> 00:52:04,950 how you choose Properties. And this ultimately, is how you 552 00:52:04,950 --> 00:52:08,460 yourself are comfortable with it, too. I mean, if you were one 553 00:52:08,460 --> 00:52:11,340 of these very, very low risk people and you were doing 554 00:52:11,340 --> 00:52:14,400 development deals, you had a very short life, you're gonna be 555 00:52:14,400 --> 00:52:17,640 stressed out and freaked out all the time. Or if you're just 556 00:52:17,640 --> 00:52:21,810 doing these various, these cash flow deals, and then but you're 557 00:52:21,810 --> 00:52:25,680 really like this crazy developer at heart, you are going to be 558 00:52:25,680 --> 00:52:30,810 bored out of your mind. So answering the question of 559 00:52:30,810 --> 00:52:36,540 founder investment theory is where you start. So think it 560 00:52:36,540 --> 00:52:41,640 through how do you do it for yourself. And then for once 561 00:52:41,640 --> 00:52:45,900 you've decided that, now you know how to start talking to 562 00:52:45,900 --> 00:52:49,620 investors, and how you can start lining up to their emotional 563 00:52:49,620 --> 00:52:53,250 side, but you also know how to start looking for properties. 564 00:52:53,250 --> 00:52:57,420 Because now you know, okay, I need something that's value add. 565 00:52:57,450 --> 00:53:00,960 And so I'm looking for these kinds of things. I know this is 566 00:53:00,960 --> 00:53:07,980 my niche, I know this is my this is my location, this is where I 567 00:53:07,980 --> 00:53:11,040 want things to be. And you can start having that conversation 568 00:53:11,040 --> 00:53:14,430 with brokers and start building out your listings and LoopNet 569 00:53:14,430 --> 00:53:18,450 and Craxi and wherever else you're looking the MLS and 570 00:53:18,450 --> 00:53:22,380 making sure that it all lines up. I know you'll find that 571 00:53:22,380 --> 00:53:25,980 useful. Again, it's about found our investment theory. 572 00:53:26,520 --> 00:53:30,600 Everything boils down to that that is what is will make you 573 00:53:30,600 --> 00:53:37,170 successful as a as a syndication or as a fun if you're thinking 574 00:53:37,170 --> 00:53:41,790 about that that fit every time. It's putting yourself into the 575 00:53:41,790 --> 00:53:46,020 right mind of your investor. Now this version of the fit, this 576 00:53:46,020 --> 00:53:50,400 was actually put together for people that I would coach on how 577 00:53:50,400 --> 00:53:54,300 to get started in real estate syndication. So it's obviously 578 00:53:54,300 --> 00:53:57,690 real estate centric, but it applies across the industry. 579 00:53:57,690 --> 00:54:03,540 It's an across asset classes. So it's that idea of fit that you 580 00:54:03,540 --> 00:54:07,410 have to be thinking of in order to be successful in this 581 00:54:07,410 --> 00:54:10,950 business. My name is Tilden Moschetti. I am a syndication 582 00:54:10,950 --> 00:54:14,490 attorney with the Moschetti Syndication Law Group. If we can 583 00:54:14,490 --> 00:54:19,800 help you with your Regulation D Rule 506(b) or 506(c) offering, 584 00:54:19,950 --> 00:54:22,920 please don't hesitate to give us a call, whether it's real 585 00:54:22,920 --> 00:54:27,030 estate, you're raising money for a business, whatever it is, we 586 00:54:27,030 --> 00:54:30,900 can help you put that together. We can talk about that your fit, 587 00:54:30,990 --> 00:54:36,060 strategize about that all in the context of making your your 588 00:54:36,060 --> 00:54:40,920 syndication or fund both investable through using the fit 589 00:54:41,190 --> 00:54:46,590 as well as compliant with the rules of the SEC. And the state 590 00:54:46,620 --> 00:54:47,580 regulators.