Today, my guest is Corinn Altomare. Corinn is the co founder of Hearth Fire Holdings, a real estate investment firm dedicated to creating durable wealth through innovation and real estate and technology. And in just a minute, we're going to speak with Corinn Altomare about how to turn your real estate investment goals into reality.

https://hfirecapital.com/

Ph: (818)378-1524

J Darrin Gross:

If you're willing, I'd like to ask you. Corinn Altomare, What is the BIGGEST RISK?

Corinn Altomare:

for self storage, specifically? And I'll go there. First, something that we keep a very close eye on is over saturation, because it is such a niche market kind of service and real estate and business. So that's something that we head off very early in our underwriting process. We use a number of technology tools that not only track existing inventory in any given market or region, but also what's coming in the pipeline, what kinds of either zoning, zoning applications or new development, new construction permits are out there to make sure that we are not either buying or developing in a market that's already teetering on the brink of over saturation. So that's something very specific to what we do in self storage that we look at that's a primary risk, I would say, just because it's the laws of supply and demand. So that's something that we keep a close eye on throughout the acquisitions and due diligence process. We also verify that when we visit potential new acquisitions in person and tour the market, make sure there's nothing that we missed virtually, that we can then find out while we're there, in person, on the ground, and then on a more macro level, I mean, there's, there's so much in in our world that we can't control, and so that the biggest risk is simply the unknown, unknowns, and I can't solve or protect against those other than, other than building our team and business on the best possible quality and caliber of people that we can at the end of the day, you want to be able to know and trust who's at your side in a storm. And while it's very it's tough to it's really tough to know who it is you're doing business with, and to get to know people and vet them, especially, especially when you're you know, considering investing with somebody right and considering handing over a decent portion of your retirement or your savings. I very much believe that it comes down to people. The wrong people can take the best deal and turn it upside down. The right people contain can take something that's, you know, on paper, pretty modest, but through their commitment, through their integrity, through their work ethic, deliver on what that is supposed to be, what that is supposed to return to our investors. So for me, the end of the day, it's all about the people that you surround yourself with, that you trust, that you invest with.

https://hfirecapital.com/

Ph: (818)378-1524

Today, my guest is Josh Goldberg. Josh has over 20 years of experience founding and operating businesses in solar energy and technology. Josh is currently the CEO and co founder of Sunstone Credit, a technology enabled Clean Energy Financing platform that helps businesses go solar.

Sunstonecredit.com

[email protected]

J Darrin Gross

I'd like to ask you, Josh Goldberg, what is the BIGGEST RISK?

Josh Goldberg

Well, I'll throw you a bone first. So when you go solar, we actually require that all of our borrowers have insurance on the system. A lot of times it's covered in the underlying property insurance, but it is a great asset. You do want to make sure it's insured. Weird things happen, like hurricanes and whatnot. So there's, and we actually have had a casualty event where something happened to the system, unfortunate, but insurance covered it, and we got made whole. The borrower got made whole. Everybody was happy. So I think, like for us as a business, you know, we're 40 person startup, and so there's a lot of risks. Some of them are execution, right? Like, can we continue to deliver a great we sit in between three parties. We partner with capital providers to deploy capital, we partner with solar installers who offer our financing, and we partner with business borrowers, right? We have to deliver a seamless, efficient experience as we grow, and we have to keep getting better and better and better at it. So the our biggest risk, I think, is just execution. Can we kind of control it? But at the end of the day, like, like interest rates, right? Interest rates, their problem for a lot of for a lot of reasons. As rates rise, our cost of capital rises, as our cost of capital rises, we have to pass that on, right? And so, I mean, we've seen just like, an innate and an 80 basis point increase in Treasury rates in the past month. Unfortunately, despite the fact that rates were coming down, right? And so that that at some point makes our our capital more expensive, and at some point, if, if our cost of capital keeps getting more expensive and utility rates don't rise, the deal is not quite as good, right? So that's like a risk that it's kind of out there in the world. I think another risk is this is a relatively immature market, right? And so I mentioned like referral all works, like, if the one business owner has a great experience, they'll offer folks. If they don't have a great experience with us, or with the installer, or with solar in general, they will detract folks don't go solar, right? And so I think it's incumbent upon us to help, and then we spend a lot of time helping make sure that our borrowers are getting what they think they're getting right. We're a little parochial, because we want them to have, like, a fantastic experience. I think as the market matures, though, that'll be less of an issue, because, you know, you'll have higher quality installers, and some of the newer entrants who aren't good will kind of filter that out. But really it's like, this is everyone's first time doing it right. And so you just you can't afford to have bad experiences. You can't afford to have buyers. You know, they think they're saving 20% they only save 10. Well, they're gonna be upset, right? So how can we kind of nip that in the butt? Or they think that their utility is going to pay them for the surplus, but not that they don't, right? So how can we make sure that they're kind of getting what they felt they're getting? And really, I think that's that's key, because if I think this, if done right, it's a fantastic experience for everyone involved. The installers create local jobs in their communities. We deploy capital and make a decent return and grow our business. Our borrowers save money. They can save money and they can up. They can invest in their in their properties. They can get higher sell prices. If they're owner occupied, they get more cash flow for themselves. Maybe they can grow their business. They can, if you're a farmer, you can hedge your rates into the future. That's great, as long as it works, right? And so really, it's just great customer experience, expectations met, which is all about reducing risk, right? High quality installer, long term financing. Make sure the proposal is accurate, get it insured. So if you know, reduce risk, and you got a great producing asset that will save you a lot of money. And that's what we do.

Sunstonecredit.com

[email protected]

Today, my guest is Kip Sowden. Kip is the Chairman and CEO of Rreaf Holdings. Kip has over 37 years of experience in commercial real estate with a strong background in real estate brokerage, mortgage banking, acquisition development and asset management. And in just a minute, we're going to speak with Kip Sowden about investing in multiple commercial real estate asset classes.

J Darrin Gross

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

Kip Sowden

Yeah, I think that, you know, with every investment opportunity, there's risk and reward, right? And so we're always looking for, you know, ways that we can, you know, mitigate risk and generate, you know, outsized returns given the risk profile. And I think there's a lot of that's done through, you know, our vertical integration, as we discussed earlier. And I think a lot of it's done through, you know, on the commercial real estate side, it's done through the asset classes that you're in and the locations that you're in. I mean, if you're buying and developing in markets where demand is exceeding supply, you certainly lower that risk and you create theoretically better positive returns, right? And so it really boils down to, you know, the sponsor doing their diligence on the underwriting, you know. 

But there are you know, things that you don't count on or don't foresee, and how do you deal with those you know you mentioned, and being in the insurance business, I mean, you know, as well as I do, insurance is at an all time high for all, you know, product, you know, type, and it's something we've got to deal with every day. I doubt there's any sponsor that underwrote both taxes and insurance on the on their P and L's to the levels that they are today. And can you offset that on the revenue side, you know, you've got to be in the right asset classes. You've got to be in the right markets, and you've got to have, you know, room in your underwriting to account for the unaccounted, you know, for the unexpected, I should say. And I think that Rreef does do that. 

Well, you know, when we have things that we didn't underwrite. I want to make sure that, you know, well, we're not throwing off a 15, you know, cash on cash return. We're throwing off an eight, you know, which is still good, you know. And you have those kind of misses. We're also, you know, we don't have to sell. I mean, we're not a fund that has timeline, so we're going to sell and buy when it makes sense to sell and buy. And, you know, I think all of those things help mitigate the risk as people look at investing in, you know, commercial real estate, insurance and taxes, you know, higher than they've ever been.

Yeah.

And I think they're very, very important. You gotta have them.

https://rreaf.com/

Email: [email protected]

Today, my guest is Seth Jones. Seth is the CEO of Hygia Living Corp, where he and his team have developed Superstratum, the first patent pending process to remove mycotoxins from homes. And in just a minute, we're going to speak with Seth Jones about Building Related Illnesses and the impact and what you can do.

Contact info:

https://hygia.life/crepn

Superstratum.co

J Darrin Gross

I'd like to ask you. Seth Jones, what is the BIGGEST RISK?

Seth Jones:

Well, I have what I think is an interesting answer, because being in the space of health and chemicals regulation and compliance is from the federal government is a huge risk. And that was always the biggest risk of our company, especially because we we set out to do something different, new. It was extremely high risk when we started for many reasons. You know, many reasons, as as all startups are, but particularly because we were entering, you know, a highly regulated space and trying to do something a little bit different. And that risk, actually, we had the EPA shut us down last year, in December, after about three years of building the company, and they shut us down for what they deemed compliance issues with certain things we were saying on our labels, and that's because the EPA regulates very tightly anything related to mold, bacteria, any chemicals that you use to mitigate what they deem or pests. And there were, there was no awareness about mycotoxins, and there were no products, no registrations, you know, no acceptable levels, very little information even out there about mycotoxins. And, you know, I had hired all sorts of Consultants and attorneys to try and guide us and tell us, you know, help show me where that risk was, and then so I could make a decision on how to position our products and our company within that landscape of risk. 

But what I found out was they were not well, let me say it a little bit differently. No one really understood that landscape, and I had to, I had to learn it myself the hard way. So the biggest risk for for us, I would say there's a lot of risk, but that's whether it's the biggest, it's, it's, it was the most pertinent to us, because it wound up, you know, actually being an issue that we navigated successfully through and through that process, we wound up de risking our company, because now we know the regulators, and we shook their hands, and they've told us what's acceptable, you know, we were able to ask those questions and and that has given us a much clearer path forward In terms of, you know, how we speak to customers, how the EPA, you know, essentially wants us to behave, and what they want us to say, and where they want us to stay out of without, you know, certain registrations and things. So, yeah, I would say that would be the BIGGEST RISK.

https://hygia.life/crepn

Today, my guest is Jeremy Thomason. Jeremy Thompson is the Managing Principal at Convolo Capital, where he focuses on acquisitions and equity relationships. Convelo is a boutique private equity firm specializing in multifamily assets in Georgia and Texas, and in just a minute, we're going to speak with Jeremy Thompson about social impact initiatives that are good for residents, employees and investors.

Contact info:

Website: https://www.convolocapital.com/

Email: [email protected]

J. Darrin Gross

I'd like to ask you. Jeremy Thomason, what is the BIGGEST RISK?

Jeremy Thomason

Okay, man, this is a great question. We are sitting here. I don't know when this will air, but we're sitting here on a on a Fed day. So the obvious answer to me would be interest rates. And so honestly, I'm not going to answer that, because that's just an obvious answer. And I actually have an insurance license too, and I sit in Texas, and so it'd be very easy for me to say, well, it's the high cost of insurance. That's an insurance that's just a really big problem right now for our industry. And in Texas, renewals, everybody's scared when their renewals come up, because it's just going to be a bad news story. So it'd be easy for me to say, well, it's insurance, and those interest rates and insurance are not really controlled by us in a lot of cases, so they do represent big risks. But I'm going to say it is something that I've learned through this last cycle. And so it's related to insurance and interest interest rates, there is a tendency, I think, in our space, to want to go chase whatever the absolute best deal is. So I'm going to use lending as an example. Three years ago, the whole space thought that the forward curve on interest rates was going to have near zero interest rates. And everybody institutional capital, everybody thought, You know what, the best deal in town is to go ahead and do a floating rate loan, and you'll cap yourself, you'll protect yourself with an interest cap, and you'll be fine. I. Obviously, we'll go into it. That was a mistake, mistake by our industry. We nobody could see coming. 500 plus basis points of interest rate movement within a year never happened like that before, and it just it's put a lot of stress on our industry. Similarly, insurance, the insurance markets call it catastrophic risk, high probability, high frequency, all of those different things, coastal all those things have put an upward pressure on rents, and we couldn't anticipate it. So my answer is, on the risk. Thing is, it's the risk of uncertainty. And so how am I going to answer this? I'm going to answer this by saying I am much better off working with someone that has experience in the space and taking risks off the table. So floating rate loan at 2.9 I could have gotten a fixed rate loan at the time with a little less leverage at four, but that 125 basis points was sure nice in my modeling, but I should have taken risk off the table because I only had a five year hold. So uncertainty is my answer. It's the uncertainty, and the way I'm answering it is, I, my job as a fiduciary to my investors is to take as many risks off the table as I possibly can, because there, God knows that there are so many different risks that I can't control and are going to hit me. So if I can eliminate risks and how I underwrite or how I use products and services, or how I look at a particular basis of a property, and take as many risks off the table as possible, then I'll be left with still a substantial amount of risk, execution risk and unknown risk, but my job is to eliminate risk, and I can do that in different ways, because there's all kinds of different risks. But the answer is the uncertainty risk to your question, Darrin, I know that may be too vague, but that's what I worry about, is uncertainty, and how I have learned in this last cycle is it's better for me to have certainty at a little higher price than it is for me to just hope that everything's going to be fine and chase the better priced product, whether it's insurance, whether it's interest rates, whether it's a contractor, certainty wins because I can underwrite I can underwrite certainty.

Contact info:

Website: https://www.convolocapital.com/

Email: [email protected]

Today, my guest is Sujata Shyam. Sujata is a real estate investor, underwriter, short term rental operator and fund manager, after using her student loans to flip her first house during her MBA, she spent four years underwriting multifamily acquisitions for institutional buyers. And in just a minute, we're going to speak with Sujata about the math behind the money, how to snowball your wealth through real estate syndication. 

Contact info:

www.luxecap.com

[email protected]  

Podcast:  Passive Income Unlocked