Speaker 1: 0:20

The takeaway for any listeners out there is like, if you are going to be a custodian of someone's money, you should be reporting over reporting.

Speaker 2: 0:26

Yeah, and you should use every tool available.

Speaker 1: 0:28

Yeah.

Speaker 2: 0:29

Especially if it's free social media videos. I mean, it's not rocket science, and if you're not doing that, then you're not going to be able to keep up with the other guy.

Speaker 1: 0:38

All right guys, welcome to another episode of the Report. Today we got a little sunshine down here and we are in the studio in downtown San Diego. We got a meetup tonight another beers and deals meetup and I got a special guest who I first connected with out in Miami for his mastermind with Jordan Belford and Wes Watson and excited to have him on the show today. I got someone who owns half a billion dollars in real estate. I got my man, ryan Garland. Ryan, welcome to the show, thank you, brother.

Speaker 2: 1:03

I really appreciate the opportunity got my man Ryan.

Speaker 1: 1:04

Garland Ryan, welcome to the show. Thank you, brother. I really appreciate the opportunity. Dude, super excited to connect with you, obviously on this podcast, this conversation and our meetup tonight. But we first connected out in Miami. That was a good time out there with Jordan Belford, wes Watson. I got to meet Ryan Garcia on that weekend. That was a big, memorable weekend for myself and the team, so thank you for that.

Speaker 2: 1:22

Yeah, absolutely. You know, a change of atmosphere is nice.

Speaker 1: 1:25

Yeah, no, it always is. Especially being out here in Southern California, I feel like to get out east. I would say Miami is probably one of my top three favorite cities in the entire country.

Speaker 2: 1:34

I love Miami Every time. I go out there, I have a great time and meet really good people too. There's a lot of wealth there and it's kind of nice to be around like minded people.

Speaker 1: 1:41

Yeah. So tell me, how did this Miami mastermind about six weeks ago? How did it all come to fruition? What was the idea there?

Speaker 2: 1:47

You know what, I'm really big in kind of the institutional world right, I'm really watching what the market's doing and, believe it or not, I had a relationship with Jordan Belfort through some other friends of mine that had lived really close to him, actually in LA. When he was in LA and I was introduced to him, I don't know six, seven years ago, we became friends. My wife actually worked for another company. That was really close, that he kind of coached and spearheaded them going public and I thought you know Jordan Belfort, given his background, he's probably one of the smartest guys I've ever met. You know he's very, very sharp, not only on sales but when it comes to what the government's doing, what certain politicians are doing, where the money's being spent. All of the political side and mine and your business has ran so heavily on politics let's be honest, they drive the world.

Speaker 2: 2:33

Where the money's going is where the world's going to go. So what I wanted to do is bring some value to my network by bringing guys at his level in and share their secrets or some of the things that they're seeing, just to kind of help everybody kind of hedge and prepare for what the market's what's going to happen in the market.

Speaker 1: 2:50

Yeah, I agree Politics is huge. I mean politics also drives migratory patterns. I mean the direction in the states that people are moving in and out of a lot of that is political driven. Yeah, I mean you see a lot of people leaving California. You see a lot of people actually coming into California as well, for different reasons, right, or coming back to.

Speaker 1: 3:06

California, yeah, yeah. So all that stuff plays a factor. I mean, you know, for us buying boutique hotels, we're going into more liberal areas because there's more bureaucracy and red tape, but we actually like that as boutique hotel investors because those areas tend to have tighter Airbnb regulations, which we like for the hotel side which drives traffic to you.

Speaker 1: 3:25

Yeah, I own a short-term rental in Scottsdale that does really well, but I don't want to own a boutique hotel out there. There's 6,000 short-term rentals in the city of Scottsdale alone. So anyways, dude, we had a good time out there in Miami. That was a blast. I know the team had a great time. It was good to just connect with some folks out there. You and I didn't have a chance to chat too much. You were entertaining and hosting the whole event. It went really smoothly. Your whole team was great, so thank you for that.

Speaker 2: 3:48

No, you bet man. I'm really glad you came.

Speaker 1: 3:50

So, dude, I'm really excited to learn more about what you're doing in the space. I mean half a billion dollars of real estate. You got reggae offerings is your second reggae, I believe. You're in the hard money, the private money space. You're lending to real estate investors. So there's a lot of money changing hands here and obviously there's a lot going on, a lot of volatility in the capital markets right now. So a lot to talk about. But before we jump into all that stuff and the man cave stuff, I'm really interested in the man cave stuff and your developments. What are you seeing right now in this climate in terms of the capital markets, the interest rate environment and that sort of thing?

Speaker 2: 4:23

Well, I think there's a lot of volatility. That's not a secret. I think everybody's feeling the pressure. Where do I think the market's going to go? I think we have a soft landing, kind of on data, like data shows soft landing, but I think we all agree that a political shockwave could create different atmosphere for us. I believe that certain asset classes are going to thrive.

Speaker 2: 4:45

I think it's easy to track migration, and that migration is really in the baby boomer space. If you look at spending habits of baby boomers, they're going to go to where things are. You know, cost of living's down healthcare is a big deal for them. So I think, for the operators guys like you and other guys like me that are bullish and kind of have the back office and track record and have access to the right data they can make some pretty good bets on where to start investing. So I think, ultimately, anytime there's a downturn like I was sharing with you my 2008 experience there's always a way to make money, and so it's really just making sure you're positioned and maneuvered into that right space to capitalize on opportunity. So I think, at the end of the day, we're patient, we are watching what's happening, we've already started making shifts and moves and I feel very comfortable on where we're going to land.

Speaker 1: 5:38

Have you guys seen in the private you know you're funding other operators' deals private you know you're funding other operators deals. Have you guys seen a tick up in private funding and demand for it, since the rate environment has kind of doubled over the last 24 months?

Speaker 2: 5:52

So here's the secret sauce to private lending. So I manage a hundred million dollar debt fund. Now All of my fund is equity. The difference is that most hard money lenders go get a line of credit right. That line of credit is a floating rate line of credit against whatever assets they have in their fund. So, for example, you raise 10 million as an operator like me, as a fund manager lender, I can go get sometimes, depending on the nature of the market, another a hundred percent leverage against that. So now I have 20 million right.

Speaker 2: 6:18

My blended costs Cause that line of credit would say in a good interest rate environment is a 5%. I'm giving my investors a 10% interest. You know pref if you will cashflow. Now if I took 50% on this loan and 50% from this fund and I put it together, my blended rates right down the middle right Eight and a half percent that line of credit, because interest rates have spiked, that cost of capital for the lenders have gone through the roof. So what you saw was private lenders that had given a hard money loan to a guy at eight and a half 9% and as the interest rates spiked after that loan was already funded, when borrowers are looking for draws for the rehab, the cost of capital went over the initial note rate they gave their borrowers and they can't draw down. Now it's costing the lender more money to give that borrower his draw for his construction.

Speaker 2: 7:08

So what that did is? It closed a lot of doors. The ones that are surviving are the investors, that are, the fund managers that have equity capital, meaning they don't have any leverage against their fund. To answer your question more directly, we are seeing a huge shift in borrower activity. Meaning, like high demand areas like Nashville, tennessee, where we're headquartered, that's still booming, right, certain areas in Texas and certain like Scottsdale there's areas that are still booming and you're still seeing the borrowing activity there. But to second, the issue of lines of credit, you also have the same problem at an institutional level to the guys who are buying the notes off of lenders like us. So it's the same concept, right? Like on average, we would have a loan on our balance sheet, we would turn our loans every 12 days, right? So I'd fund a loan 12 days later, I'd sell the note, I get my money back and I'd do another loan.

Speaker 1: 8:00

Really yeah. So even these private bridge notes, you guys aren't keeping those in house.

Speaker 2: 8:05

So what we do is we'll fund the loan. But what I'm doing is with my institutional buyers, the ones who bought my note. I have a contract with them where I continue to manage servicing and fund control, so the borrower still communicates with us, so the borrower doesn't have any idea?

Speaker 1: 8:18

Nope, got it. What percentage of private lenders do that?

Speaker 2: 8:22

I would say 90% of them do.

Speaker 1: 8:23

Really yeah Interesting. I had no idea.

Speaker 2: 8:26

Yeah, here's why Because a lot of lenders only need $10, $15 million and they can do $30 million a month. Think about it For $1 million as an example and I'm turning that every 12 days let's just say that's twice a month that's $2 million. For every $1 million, that's $24 million a year. With $1 million under management, the number is $10 million. It's $240 million. It's a big number. You start looking at much larger numbers. So if you have again, if you start raising that $30 million, $40 million range, you can start doing a lot larger deals.

Speaker 1: 8:57

Okay. So let me just throw out an example and you tell me how this would work. So let's just say, for simple math, I got a project that's a $10 million project. I got a lender that's going to fund a $7 million worth of it and two points up front closing. So we pay the two points. They fund the deal. They go into the secondary market. They sell this $7 million note off to someone else, the buyer of that note. Are they just taking over the, let's just say, the 12% interest rate?

Speaker 2: 9:21

No, you're going to dig this.

Speaker 2: 9:23

So the reason why hard money lenders make so much money is because when I sell that note let's say for my fund right now I pay my investors 10%. If I charge you 12% and I sell the note, my institution gets the 10%, but I keep the 2% yield so my buyer can buy what we call a strike price. What strike price is that note buyer going to buy the note from me? So, for example, if I'm still managing servicing and fund control, that's a cost right. So if, even though I'm paying my investors 10%, if I get my capital back, I got to put it back to work, right, number one. But if that, if that, if I have an institution buy that note from me or a note buyer and let's say they buy it from me at 9%, right, because it's a great location. Borrowers has 20 deals in its track record, right.

Speaker 1: 10:09

Whatever Good down payment whatever, it is right Low risk.

Speaker 2: 10:12

I can negotiate what they're going to buy it at. So if the note rates 12% to you, I can sell that note for 9% cost. That 3% yield or spread comes to me every month, even though I've recaptured 100% of the original loan amount I funded.

Speaker 1: 10:27

I love that. And in addition to that, you captured the two points at origination, at closing, yeah, and so the more you can turn and burn per month, the more origination again. So you guys make a lot of money in the origination and the ongoing cashflow, the yield for servicing. So here's the hat. What's the hat?

Speaker 2: 10:43

I put the hat on and I go okay, from a fund manager level, I want volume, I want number, I want to do volume, I want unit count. Why? Because the more money I put out on the streets, the more money I'm going to turn over. It's not necessarily about the two points, because most of the time the two points go to the loan officers If I have loan officers, processors, overhead. So typically your origination fees is to cover your overall management costs. Where we make our money as a fund manager is that yield. When we sell the note and we get a 2% yield, 3%, whatever that number is, we're getting that as cashflow back to the company. So that's where the fund managers really make their money.

Speaker 1: 11:18

Wow, okay, that's a really interesting thing. I had no idea. I knew this happened in a lot of like residential commercial stuff, like more permanent debt stuff, right, like non-QM loans, but I had no idea this happened with bridge notes.

Speaker 2: 11:33

So you'll like this. So what happens is is guys like me. This is why a lot of investors like my particular model is because, as you know, I also develop projects so I can start working with more note buyers. Because here's what happens in the purchase called the MLPA master loan purchase agreement. Okay, so I have an agreement with my buyer.

Speaker 2: 11:51

All those buyers want it's typically like a, it's like an institution, you know you're talking about like Mitsubishi, you're talking about Wells Fargo. These are larger institutions. When they buy that note, they only want their yield. They don't want bad deals on their balance sheet and, as you know, you have foreclosures with hard money loans. So the risk goes up. But for the institutional buyers, if we had an agreement that says, if you have a notice of default or a foreclosure on your balance sheet after I sold the note to you, I'll buy it back. So now I buy back the note at 100% so they get their capital. Now they don't have anything on their balance sheet. Their investors are happy on the institutional side. I then buy it back.

Speaker 2: 12:28

I go through the foreclosure proceedings. I either take back the property, through whatever means. I repurpose the property, I sell it. Now, when I sell it, I give 70% of the profit back to my fund for my investors. I take 30% as a GP and I take disposition fees, reposition all that stuff in fees. So a guy like me, if I decide to take back a property, I make more money as a hard money lender.

Speaker 1: 12:49

And that's why, six weeks ago, you told me about an opportunity that you guys were taking back. Was that a note that you had sold in the secondary market and then you were taken back?

Speaker 2: 12:57

No, that was actually a 90-day loan I did for a guy and for 90 days. I didn't need to turn that over and so I just did a 90 day, kept it on my balance sheet, charge them a pretty good interest rate and some extra fees, so basically, as if I would have turned that paper over, I charged them the same thing in interest and more fees like six points to get the deal done, and I just left it in my balance sheet for 90 days. Now he never came back and never sold it. He didn't pay it off and I wanted to share this with you.

Speaker 2: 13:26

That particular deal, it's an Airbnb structure. He's generating $54,000 a month in cashflow and our mortgage payment was only 11,000 that he owed us. He stopped making the payments. The property is fully renovated and fully occupied. You know to give it whatever model you want, but it's it's. It's making tons of money and he didn't. He's not performing and I gave him five months. I gave him all these extensions. He stopped making the payments and I said okay, buddy, I got to start foreclosure on you, sorry, but you know. Mind you, it's valued at two and a half million and I think our note would pay off is with default interest and legal fees is like just under one five.

Speaker 2: 13:56

Interesting so there's a million dollars in equity there.

Speaker 1: 13:59

What? Um cause? You know, one of the the actually, the last asset that we bought was in December of last year and that was from our lender, and they do similar to what you do, but they're on a bigger scale. So they're a REIT and now I'm going to. I'm going to ask them hey, what do you guys do with these notes in the secondary market? But anyhow, so they sold us this asset up in Washington and same thing there.

Speaker 1: 14:19

That was a little bit different situation. This is a developer and developed the deal in 2021 and stopped making his debt service payments. He was developing condos in the area, cross-collateralized the condos onto this hotel, stopped making the debt service payments. They took it back before the end of last year and they came to us and they said hey, rich, we got to get this off our books before the end of the year. We're not hotel operators. We think you guys would be the perfect buyer. We can sell it to you at a good discount and uh, zero percent. Uh, you know, do the note zero percent for, uh, for six months. So we can kind of get this thing stabilized and on its way.

Speaker 2: 14:52

So that was the last one killer relationship. Yeah, so what they saw in you is what investors see in me is like, hey, your boots on the ground, you know how to get your feet, your hands dirty. You're gonna reposition that property. Yeah, these guys, they're suit and tie guys. They're managing a REIT. They have tons of oversight and a lot of compliance and a REIT is all based on income. So a REIT they don't sell their notes.

Speaker 1: 15:13

They can sell one-in-one shop but they balance sheet everything.

Speaker 2: 15:15

That's the real estate investment trust. So they have to balance sheet everything and cashflow. And then they get the tax benefit for investors, so they have to balance sheet everything. But they probably have a lot of money under management. They're probably pretty big right. So what happens is when a deal goes bad, they got to offload that thing, like as soon as possible.

Speaker 1: 15:31

So they get the depreciation while they have first trustee position on the real estate.

Speaker 2: 15:36

So it's the income? Yeah Well, not necessarily because they don't have ownership. It's a security instrument, it's a first TD, right? So what really the way it works on a REIT is you only get taxed on a percentage on the income that you get, on the dividend or the cash flow for the investors. So, for example, it's like 75%. So if you, let's say, for every thousand dollars that you make in cash flow, you're only getting taxed as if you only made $750. So that's the benefit for the REIT. And, as you probably know, 95% of all of our mortgages in the country, whether it's institutional level, 30-year mortgages, they're all real estate investment trusts.

Speaker 1: 16:12

They're all REITs? Sure, yeah, yeah. So I know a little bit about their model. I know they pay a preferred return to their investors. I think it's like I want to say around 8% or 9% and then anything above that. I believe they just split 50-50. And that's kind of their model.

Speaker 2: 16:25

Yeah, and that's very common because it's a private rate, I'm assuming, so they're probably more in. Hey look, I can produce 8%. We're going to be much more diligent and underwriting we're going to create a much tighter credit box. Better borrowers, better look at right, what have you? And then, when something like that were to go down, they got to offload that as soon as they can because it's all about cashflow. So the mindset of that fund manager or fund managers are we got a cashflow. We can't have negative stuff on our balance sheet, because they are going to report that to their investors and they don't want to see that they wrote bad loans.

Speaker 1: 16:57

Yeah, yeah, they do a lot of due diligence and I think their default rate is around 1%. They said right now it's creeping up closer to 2%, but they do a lot of due diligence. I mean a lot of these deals. They'll send people out a couple times once to walk their property in initial, and then the week of closing they'll send someone out to walk the property as well. But they do a lot of due diligence, which is very relationship-based, and you and I were talking before we started recording. I love working with lenders that are relationship-based, you know.

Speaker 2: 17:32

You know. So I could have gone bigger but I've just built so many relationships on the smaller side that I actually left one of my old divisions and went to Anchor Loans and they're a much larger company. This is years ago and because I moved over I lost a lot of my old relationships. That really kind of helped me put food on the table Right. So I just had it sick to my stomach and they were so big so I ended up actually leaving there and opening up my own division to keep those relationships in place. So I am a firm believer that you know your network is your net worth number one. But two, I've been doing loans for people that I've known their families and I've gone to birthday parties and you know getting married and you know these are now almost like family to me in some cases, you know. So I've been in the space 20 years, so it's been really good building those relationships. I got to stay small and keep that moving.

Speaker 1: 18:16

And as an investor, you know, it's like once I find that good relationship with a lender, like the ones that we work with, I'm like I tell the team like, hey, whatever we got to do to keep this relationship smooth, like when they sold us the Washington deal I said, hey, let's just make this the easiest, smoothest transaction for them as possible, because I want to continue to buy more of that stuff, you know, and I want to cultivate this relationship because I know you know finding good lenders like this in this space that can do these kind of deals- it's finding a needle in a haystack and it's hard now.

Speaker 2: 18:46

It was easier two years ago, right? So it's kind of going back to the original question of things bottling up. Yeah, definitely, the liquidity is not there. People are going more into a cash position and hanging on to cash because of the volatility. They don't know what's going to happen with war. We don't know what's going on in politics. People are really worried. So people are kind of hoarding their cash and people are. But I will say, because of some of the PR that's going out on kind of a soft landing, people are making investments again, but they're going to be a little more conservative. They're going to look at hey look, I'm looking at tax strategy. I need cashflow, I need liquidity. So, like your offerings, love your offerings. Look at your pitch deck.

Speaker 1: 19:18

Thank you.

Speaker 2: 19:18

Perfect. I think that's right up most investors' model. They don't want their money spent for too long, they want to be able to see how they're going to receive dividends, cashflow, and they want accumulation. You've hit it on the mark. You hit it right on the head, because most of your investors are probably boomers. They're all looking to retire or have retired. They need cashflow. They're worried about their future. They want to leave their wealth to their kids, right? So these are the common conversations. So if you're able to produce cash flow so they can enjoy their life by allowing their money to continue to grow and it's not stuck into something too long, you hit on the margin, so you hit on the market. So I think you're the niche that you've created. That's why I'm here. I love everything that you're doing.

Speaker 1: 19:55

I think you nailed it, buddy you know, four years ago, five years ago, when I started, I remember my first couple of raises, it was a lot of friends and family. Now we're starting to attract a lot of sophisticated investors investors that you know listen to the podcast or social media. They jump on a couple of quick questions and they're wiring their money in, whereas before it was a lot of long conversations with family and friends and back and forth, and it's just now becoming okay, this, this constant funnel and pipeline of, like investor capital, which has kind of been nice. But you know, I guess for the listeners out there that are just getting started, I mean, that's just. That's just the name of the game. You know, until you build that track record and establish yourself in the space, you're going to have to put in more work, you know.

Speaker 2: 20:43

You know, they say, if it was easy, then everybody would do it.

Speaker 1: 20:45

Yeah.

Speaker 2: 20:46

And I think that's kind of the underlying conversation you and I probably will have after this right.

Speaker 2: 20:50

Because we don't share all of our secrets, but the reality is is that it takes a lot of infrastructure to provide that security and red carpet treatment for investors to feel comfortable One being your track record, one being accessible and three, being able to have a real property they can drive, they can feel. You know what I mean. They need to be able to see where their money's going, and there's been so many negative actors out there and bad actors and we all hear the stories, so people are very cautious, which I agree. So the only way for us guys like you and I is to consistently level up and consistently provide a higher level of transparency than the next guy. And that's what investors really need, because when they get to a certain point in their life, the money they're investing they cannot lose. That's 90% of the conversations. So I really like the way your model is and how you're providing that transparency to your investors, because that's exactly what's needed.

Speaker 1: 21:42

Yeah, and you know what, Early on in my journey I had a co-GP that I did in my first couple syndications with old school guy out of the Southeast and 7,000 apartment units, but very limited reporting Report to the investors once a quarter, no photos, nothing like that, Just very short and kind of like high level doesn't share any of the numbers type of thing, and it was great. But like high level doesn't share any of the numbers type of thing, and it was great. But I'm like you know, when we started Summers Capital, I'm like no, we're going to do monthly reporting. I want photo, video updates, reviews, all the renovation progress, the good and the bad, and I put everything on social media. We'll do, like you know, we do meetups every single month. We'll do events with our investors, so we do the grand opening these properties. We invite all our investors out. We'll do, like you know, wine tastings. We'll, you know, basically let them all meet each other and it's more than just becoming a limited partner.

Speaker 2: 22:29

You know, when you're in our investor community and that's kind of how I want it to be Become part of the family. Yeah, you're part of the family.

Speaker 2: 22:33

We treat them all like family, and it's a lot more than that this sounds so cliche and cheesy, but one of the game changes for us and it's so funny because people are like, how did you do so well in raising money? And I'm like there was, I think I've narrowed it down. It was one thing that really got us over the hump on the first few deals was that we put a camera on site, a construction camera on site and really the back. The reasoning for it originally was two reasons One, because, depending on where we are geographically compared to the project, I want to be able to watch everything that's going on right. I want to know when my material is going to be there, how many workers I have there, right, what have you on the development. And then the second reason is is because of what happened in 2008,. There was so much fraud going on between contractors and draw requests and all that that.

Speaker 2: 23:20

If you put a construction camera on site that can be recorded, you can get your builder's risk policy to drop, so it's like a wash. You can get a camera, your builder's risk policy drops and it kind of becomes a wash. So I'm like, well, cool, I can watch this. You know, watch what's going on with the project and I can bring my builder's risk policy down. It's all in one.

Speaker 2: 23:40

So in the back of my head I'm like why don't I just provide access to my investors and they can watch it anytime? So with all the investors I think we have close to 400 in our, in our platform now and I don't get one phone call for updates, because we're so good at you know emails, video updates, portal updates. You know they can look on the camera during you know pillow talk with their significant other and watch what's going. They also get. So they can. They can turn the camera, they can zoom in, they can, you know time lapse it. They can see when the material is being ordered, I mean are being delivered. You know it's pretty cool. So that one thing it's good. It's just it's transparency and providing you know updates.

Speaker 2: 24:15

That's so good, that's all you need to do.

Speaker 1: 24:18

I like that idea. We policies can get quite expensive.

Speaker 2: 24:21

Well, and insurance costs are going through the roof. Think about what's going on in California right now.

Speaker 1: 24:25

But to your point, man, I think, like you know, the reporting is so huge. So we had, with the rains, we had the record rains late January, all over California and San Diego got like really bad. I mean, this podcast studio got flooded out. It told me my new construction building that I live in even the entire like top floor, which I live on, all the carpets had to be replaced and that's a brand new construction building.

Speaker 1: 24:47

So all the buildings got it. But, that said, we had four of the units at our new, newly renovated hotel get flooded out due to the rains and you know, did video updates completely transparent with all the investors, right?

Speaker 1: 25:00

I mean, I even put out stuff on social media for everyone to see the good and the bad, but like we didn't get one call from any investors of questions of what's going on just because we're so transparent with everything, and I think you know the takeaway for any listeners out there is like if you are going to be a custodian of someone's money, you should be reporting over reporting.

Speaker 2: 25:16

Yeah, and you should use every tool available. Yeah, especially if it's free social media videos. I mean, it's not rocket science and if you're not doing that, then you're not going to be able to keep up with the other guy. So if you're starting a new fund and you have to work harder and you're going to have to provide the updates that everybody else is doing, that are larger operators.

Speaker 1: 25:34

I agree With real estate investing, asset protection and protecting yourself from personal liability is huge. The best way to address this is to correctly set up your LLCs and entity structure. For us at Summers Capital, we use Prime Corporate Services to set up, manage and provide guidance for all of our entities, making it truly hands-off. If you want to learn more, visit Prime Corporate Services. Slash Rich Summers to book a free call and receive a special podcast listener offer Again. Visit PrimeCorporateServicescom. Slash Rich Summers to book a free call. Now back to the show.

Speaker 2: 26:10

So, before we jump into the man cave stuff, I'm so interested in it I want to know what is it like starting a debt fund? Well, it was kind of seamless for me because I was always a lender. That's how I got in the space 20 years ago. So I think it was a little easier because I already knew, you know kind of the underwriting models and I understood I have my my, have my support team, I had processors, underwriters, doctor, I already had all that. So I think a lot of the heavy lifting was done. But ultimately, because I was already raising capital for equity, I saw most of my investors are looking for diversification and as I become more savvy in the investment space, I knew investors are going to look for something that's a little bit more on the debt side, which has an evergreen structure, and something that's a little bit less risky. And that's exactly what a debt fund is.

Speaker 2: 26:45

The mortgage-backed security MBS market doesn't really get much more secure than that in real estate. That's why we're in the middle of getting approved with TD Ameritrade and Charles Schwab, so now we can work with every advisor in the country and say, hey, look, we're doing a mortgage-backed security fund. It's all equity, your investors get in, they get cashflow, but it's evergreen as well. So, to kind of answer your question directly, I think what it was. What it comes down to is is the last thing you want to do is raise money and not have anywhere to put it, because pretty soon your investors are like well, if you're not making me money, give me my money back. So I wanted open up a debt fund. They're the suit and tie guys came from an institution Morgan Stanley, what have you? And they've managed funds or a portfolio managed before at a larger scale. They try to peel off and do that, but they have no boots on the ground. They don't have relationships with agents and borrowers and do meetups and follow up with social media. They don't have any of that. So they go and open up a debt fund and then they try to spend a bunch of money in marketing and launch this new fund and you're having all kinds of issues because you're trying to establish relationships and you don't really know what you're doing Ultimately, where the risk is in your underwriting. So if you have a background in underwriting and you know who you're going to do your tri-merge account for credit and you know what servicer you're going to use. All you're doing is taking all your underwriting metrics, sticking it in a business strategy, opening up a fund with disclosures and going to your investors in your network saying this is what we're doing.

Speaker 2: 28:10

But there is a different kind of mindset. That mindset shift has been would I do that loan for myself? So most loan officers, they're just chasing the commission. They never really asked themselves would I do this deal for myself? That's really the idea. So when you're underwriting, you're underwriting for worst case scenario and when I've been doing as long as I've been doing it, there's things that I'll get on the phone with the borrower and I have that intuition now. Over all the years I've seen all the fraud. I've gone through lawsuits, I've sued people, I've gone after projects. I've done it all. So there's a certain intuition that comes with really managing a fund at a debt level.

Speaker 2: 28:47

When you're doing high volume, a lot of unit count, it's very fast pace. So it's definitely different than equity. You go hard raising the money, you raise the equity, and then it's kind of slow rolling. You do your job. Investors get to kind of sit back. When it's kind of slow rolling, you do your job at. Investors get to kind of sit back. When it's a debt fund, it's a constant hamster wheel new deals, new borrowers, new right and so turning paper, selling notes. So it is definitely a different space and you definitely have to have a larger team and more sophistication. So you have a fund admin, more tax strategy, larger institution, institutional players. You got to get a third party audit now right.

Speaker 2: 29:20

You got to get an SEC regulated audit and you have to provide all that information to your investors. So it's a lot more management. But again, remember, you have money coming and going constantly from draw requests, lending money, points and fees, extensions, service fees so that that that account is constantly being looked at by four or five people every day, making sure we're managing our books properly, getting ready for our audits.

Speaker 1: 29:43

So it's a lot of different, but what you said at the beginning of the show is you could have a $30 or $50 million debt fund and be turning $30 million a month because you're selling these off in a secondary market. That's pretty unique.

Speaker 2: 29:56

Yeah, it's a good model where you can. If you have a network like what I've established over the years, then I have consistent borrowers that are doing 20, 30 deals with me a year right, they have their whole family working for them, right kind of thing. It's their business, their life. When you have a handful of guys that are doing that type of volume, you don't need to go get new borrowers all the time. Now the risk profile goes down on your fund because you're not funding new borrowers and you know you can trade those notes because there are guys that have experience.

Speaker 2: 30:23

So when it comes to managing a fund, there's a lot of moving pieces to the debt side, but it can be pretty seamless. It just depends how big you want to go and how complicated you want to get right. We're nationwide 44 states. That becomes a little more complicated a lot of licensing, different rules and regulations in each state. Good thing is we have one law firm that keeps up on all that provides all of our loan docs, so a lot of that risk comes off of us too. So it's just making sure you have the right resources and you have the right underwriting skillset.

Speaker 1: 30:49

As far as risk tolerance in your debt fund, are you guys sticking to more cookie cutter stuff, or are you guys able to kind of do the riskier deals, but then you charge a little bit of premium in terms of the rate.

Speaker 2: 31:01

So you'll like this. So I kind of have a mindset of having a blend between keeping certain things on my balance sheet with a high yield, a little more risk because I'm not stressed about getting my hands dirty if needed to having a certain amount of capital where I can rotate right, where I can fund loans and sell notes. So what happens is when the market shifts like it is, what you'll see is that guys like me will put more on their balance sheet because the fix and flip model shrinked. Not as many borrowers are flipping properties. Right now it's hard to find inventory right and the spreads are questionable in some cases.

Speaker 2: 31:42

So as that shrinks, the capital I have under management I have to put out on to long term or longer term and sit on my balance sheet. So therefore, typically to get better deals, there's this separation between a million and a half and about 5 million. Where the majority of the risk is is in that space. So a million and a half to 5 million is where the majority of the risk is. Once you bump over that 5 million depending on what it is multifamily, boutique, build, something that you have it changes the risk profile significantly. So I love that profile between you know, 100,000 to a million and a half, and then I love that 5 million and over. I don't have anything sitting in that middle space.

Speaker 1: 32:12

Why is it that middle space 1.5 to 5, to where it's a little bit higher risk?

Speaker 2: 32:18

So you really have. So like, let's use California as as an example so like, for example, like you have, let's say, like new builds, because I get a lot of new build at a 500,000 to a million dollar budget. That's really kind of safe Once you start bumping up into that $2 million space. If you look at the exit strategy by them, they're going an institutional level, right, they're going to go to. Typically, your buyer is going to get a conventional mortgage at some level. Well, that's shrinking significantly and with interest rates climbing it's hard to find that income levels to qualify at that space. So you're always going to look at it from an exit side. So the data that I'm tracking is what are the people's spending habits and affordability at that space and what are the people's spending habits and affordability at that space and what are the lending criteria for an institutional or conventional mortgage. If that's having the hardest time, then that's a problem.

Speaker 2: 33:08

I'll use this as a funny example. You know how they say valets at Vegas. The valet guys are the ones that know everything that's going on. They're the ones that know all the secrets. The valet guys right. So out by me, it's the detail guys. Out by me on my projects, the guys that do all the details for the guys that have big boats, small boats, really expensive RVs, you know all that fun stuff.

Speaker 1: 33:29

In terms of like pulse of the economy? Yeah, because they see what people are spending, right, so they're just using one as an example. Kind of a funny conversation.

Speaker 2: 33:36

I just went and did a uh, just kind of a quick video with a guy that I've I've been friends with for 10 years and he owns it's called detail specialists. It's in Los, it's in Havasu and he's he's probably the biggest player there. So I always go in and I go to him and I say so what's going on in the market? Where's everyone spending their money right now? And he goes well, look, the guys that are buying boats right now, where the money's being spent is that million, million dollars and up.

Speaker 2: 33:57

So pretty much actually 650 and above on the boat purchasing space that you know, 150 grand to that 600,000, that space is basically dead. But all the ones underneath it, those are guys with money that just love buying boats and just having more to their inventory, or guys that are kind of getting into the space new families, what have you? So you're seeing that middle space, that middle market is has having an issue overall. It's the same concept of what's happening between white and blue colors a big separation on middle class. That's exactly what's happening when you look at, watch the where the money's being spent.

Speaker 1: 34:31

So now, as a part of that, within the boat example, because the folks that are buying the million plus boats are paying cash and they're in the ones that are paying 150 to a million. They're financing, but the interest rate environment is affecting their ability to borrow.

Speaker 2: 34:44

So you have a lot of guys, so most of those boats are cash buyers. Now, the reason why those guys buy cash is because you can go get a loan in 72 hours and get liquidity on it if you need to. So what you'll?

Speaker 2: 34:55

realize is, a lot of the wealthy guys will start buying those assets, cash. But if they need capital, they can just lean it real quick and grab it, but they still have their toys right, so they're just rotating. Oh, I need 300 grand for a flip. Real quick, boom, lean their boat, grab some capital, go flip a boat, flip it, pay off their boat again. It's like a line of credit. It's how these guys operate. It's pretty. It's pretty interesting that world.

Speaker 2: 35:16

But, what you're seeing is just not necessarily so. The interest rate environment is high. So most people right now that are buying boats, they are still leveraging, but it's still that because it's a luxury item, that's crunching too. So that's another kind of part of the conversation we can have is are the luxury markets trading? And some of them are and some of them aren't. It really depends on the area. And are they getting financing? Not necessarily.

Speaker 1: 35:55

You're hearing more cash acquisitions for sure. So that's really happening in pretty much everything, whether, regardless of what the asset class is, it's more cash buyers, less borrowing, because people don't want to. They don't want to borrow at 8, 9, 10 percent, and at that space you're at that a little bit with the cars. I mean my buddy, he's the manager, actually one of our investors too. He's the manager at the Ford dealership here in San Diego, and so I was talking to him the other day. I'm like yo, his name's Scott. I'm like yo, scott. What's going on with the car industry right now with the high interest rate environment? How have you guys been affected? And he said most of those buyers with the high cash, you know. So he's not seeing a big difference there, but the folks that are buying Mercedes, bmw and Lexus, they're seeing a dip because of this rate environment. You know, because those are the ones that are financing their leasing and all that sort of thing, and that's the point.

Speaker 2: 36:30

So you're seeing that that that affordability side is really crunching hard. So the ones that are really going to it's that separation, it's the people who've got the money are going to go buy those stuff and they're actually getting good deals. Because if you look at what happened in the pandemic I know this sounds kind of funny, but I'm going to tattletale here you know a lot of the PPP loans. They were giving those things out like they were butter and people were buying stuff with that all day long. So all of those luxury items just blew up. Cars and I couldn't tell you how many phone calls I got from past friends that literally did the same thing and I'm like, wow, I can't believe you used a PPP loan to go buy your Lambo, but now do they have them anymore? No, they don't. Do they have their boats anymore?

Speaker 2: 37:08

No, they're up for sale. So what's happening is the guys that were patient or have the money and have true wealth are sitting there waiting for those things to drop and then they go and strike better deals. That's what I did in 2000 when the pandemic hit, because I lost everything in 08. I stayed cash heavy and I went and struck a deal on my boat on a house, because everybody was fear dumping in the early 2020s. As soon as the pandemic hit, right around May June, everyone didn't know what to do yet, so I went and bought a truck that was, like, you know, $100,000 truck. I bought all these things at much, much larger discount and struck a huge deal on a property that was worth a million more because everybody was thinking 2008 again and I was going it's okay, I'm cash heavy, I'm going to go buy the assets, get the write-off, and my wife and I can. I can work at Del Taco if I want to, you know if I needed to but it worked in my favor.

Speaker 2: 37:55

Now all of those assets I can sell for much more, but I just played the cards. But again, I already had the experience. So that's what's happening with those guys right now. They're smart.

Speaker 1: 38:05

You're a big boat guy. I'm a boat guy too, but I'm more into like sailing, not like ocean boats, but you're more of a lake boat guy, right.

Speaker 2: 38:12

Well, mine's an offshore boat, so I grew up on a lake boat. I grew up on a lake, so I still love the river.

Speaker 1: 38:18

What kind of boat do you have?

Speaker 2: 38:19

So I got a 360 Doug Wright, so it's basically an all full carbon layup boat. It's all carbon fiber. It's about 5,400 pounds with 450s on it outboards. And I do 125 all day long, yeah, but my videographer and I will just sit in the front seat and drop it. We'll do 125 and we'll talk just like this, doing 100 miles an hour.

Speaker 1: 38:36

What's the length of that thing? 36. And was it twin outboards?

Speaker 2: 38:41

Twin outboards, yeah, how much horsepower 450s each Okay.

Speaker 1: 38:44

And what's the fastest you've gone in your boat.

Speaker 2: 38:46

That boat I've done. I think I did 124 is what it shows, but I just changed the offset and I think I can get into the 130 range now.

Speaker 1: 38:53

Wow I haven't tried.

Speaker 2: 38:54

I just got it serviced yesterday and adjusted.

Speaker 1: 38:56

And so we we're talking glass water, calm morning, like no wind at all right Now. You mentioned offshore. Can you really take this thing out in the Pacific Ocean?

Speaker 2: 39:06

I had it in Miami. Really Remember the boat on the side. That was my boat.

Speaker 1: 39:09

But that's still an inlet, though. I mean we're not— oh, I took it out we ran to the Keys that day. Did you really the day?

Speaker 2: 39:12

after.

Speaker 1: 39:15

So was it Sunday. What is that ride like?

Speaker 2: 39:18

Oh, getting down there was nice Coming back. It was windy and choppy. I'm like man. Give me a kidney belt.

Speaker 1: 39:22

So windy choppy, how fast are you comfortable running that thing?

Speaker 2: 39:25

Windy choppy, You're going 50 to 70.

Speaker 2: 39:27

It depends because a lot of times to pitch. So the cool thing about that boat because it's a tunnel what happens is the faster you go the more that is, and kind of the direction of the waves, if you will. But I can kind of skim over those waves as if I'm kind of flying over. So it depends on kind of the overall, the setup. But that boat the idea is it loves three foot, four foot chop all day long. I won't even feel, I just kind of skim over it.

Speaker 1: 39:54

And that was the same boat that you pulled up to Jordan Belford his place the Wolf of Wall Street for the podcast right, Same boat. That's pretty cool. Yeah, so he's got a dock in his backyard.

Speaker 2: 40:03

Yeah, so he's on one of the islands there in Miami. So as soon as he told me his address, I called him. I said, hey, well, I already have my boat, and then mind if I just pull up with my boat.

Speaker 1: 40:15

Actually it was much faster. It took us 11 minutes to property via boat. Is it harder to find the address?

Speaker 2: 40:19

No, I just Google mapped it and I was like okay this is this island, this house, and I looked at the color of the property.

Speaker 1: 40:25

Yeah, you can identify it Right, so I was like oh, there, it is Pulled right up. Yeah, I saw your boat pull up when I was. I was like pulling up to the the mastermind and I think you guys were just pulling up back from the podcast maybe, but it's very cool boat. I seen some shots online Like you got like helicopters and all that. Like what was that all about?

Speaker 2: 40:43

You know what. So that was more of like the grand opening, uh, and the ribbon cutting for, uh, our paradigm storage project in my Cavasoo. So as soon as we delivered our phase one, we were fully sold out. A lot of those buyers were serious players, either in the current community or some you know guys that are local here that wanted to buy and put all their toys in there. So I was like you know what? There's a lot of class, there's a lot of money guys. This basically they're all millionaires that are buying because they all bought cash.

Speaker 2: 41:07

So my largest unit, 300 grand. These guys are dropping you know 300 000 like their skittles, but they're paying. If you look at what they're putting in there, they're putting you know million dollar coaches, million dollar boats in there, so they're putting a ton of their toys. And so I said, you know what, we'll just deal with it with class. And I have a buddy who's got a chopper. So I was like I'll just throw my, put Paradigm on the side and go do a cool video shoot. And yeah, I had a good time.

Speaker 1: 41:28

Yeah, that's cool, man, that's cool. What does that boat cost? Brand new?

Speaker 2: 41:32

With that boat. You're probably at six real close to probably 700,000 right now.

Speaker 1: 41:36

Yeah, and you? You keep it in Temecula.

Speaker 2: 41:39

No, no, I keep it in Havasu.

Speaker 1: 41:40

How did you get it from Havasu? How'd you get it from Havasu to Miami?

Speaker 2: 41:47

So I have a guy who does all my hauling and it was funny cause we did a video and he's got 20,000 miles on that boat so far in this last 12 months, so I'd have a ship it to Miami.

Speaker 1: 41:55

I go to Tennessee, I'll ship it all over the country and I just fly him. Hey, I'm going to be in Miami this weekend. Make sure it's ready to go, yeah grab it and go.

Speaker 2: 42:01

Wow, he basically maintains the whole boat for me. He just took it and had it serviced for me. Goes to make sure my house is locked up in Havasu. Make sure he has a detailed side of it. Make sure my stuff's detailed.

Speaker 1: 42:16

I take clients out all the time, so I like. You have, let's go I'll do it all day.

Speaker 2: 42:20

We'll be there.

Speaker 1: 42:22

How long will it take you to get there, because I know that could be 20 minutes maybe. Because let's just say from Dana Point, let's call it Newport Beach. From Newport Beach, that's Dana Point, dana Point, it's about a 31-mile run, right.

Speaker 2: 42:33

If I did 100 miles an hour about two hours, 60, 70. Well, no, yeah, catalina, though from where long?

Speaker 1: 42:41

from dana point is 31 miles. It takes the ferry about two hours. How quickly can you get it?

Speaker 2: 42:46

we'll be there we'll be there, no problem. We'll be there in about on a cool nice morning, because you gotta do it in the morning right so we'll be there in 30 minutes oh, that's crazy. Yeah, that's fine I will literally have it shipped in a week if you want to do it damn so, let me know, me know.

Speaker 1: 43:00

Yeah, we'll run it. That would be fun.

Speaker 2: 43:02

And it's cool because you go to Blue Water Grill and I know all the guys there.

Speaker 1: 43:05

So just kind of lock up. So you just roll out for lunch and pull out. I take my clients out, damn so I take my and it's life changing. You know, I don't know if into it.

Speaker 2: 43:22

So that's life changing to you. If you do, you'll talk about it for like two weeks. But when I tell everybody, when you get in that boat and you go as fast as we do, that's a whole different experience.

Speaker 1: 43:28

Are you strapped in or how does that?

Speaker 2: 43:29

work you can. I don't have straps on that, but you do have a harness and a vest on. So not a harness but a vest.

Speaker 1: 43:34

Yeah, okay, dude that man. What does it feel like when you're doing 120?

Speaker 2: 43:38

like you're alive man. There's nothing better, bro. There's nothing better like. I'm such an adrenaline junkie. So whether it's dirt bikes, fast cars, it just doesn't matter. But I think the ultimate, the most fun I ever have, is in a boat. But I've also grew up going out, you know, to the river, so it's kind of in my blood at this point. But you know, I would say, getting on a boat going that fast, there's literally nothing better I don't know anybody who's done that. It's like this has been the best day of my life.

Speaker 1: 44:01

Yeah, yeah. Well, I'd love to take you up on it sometime, dude. So good transition here. Segway, you're raising $14, $15 million right now and you're doing a big project out in Havasu, multiple phases.

Speaker 2: 44:12

Yep, tell me about what you're doing out there with the man Cave stuff, so what. We've kind of realized that there's a niche and there's a demand really for not only the boat and RV storage like we've built right now. So we have we currently have for any of you that are watching on the North side of Lake Havasu, next to home Depot, there's 720,000 square feet of retail, which is the mall, and on the other side of the highway is the airport. And I struck a deal a couple of years back to build 225,000 square feet of boat and RV storage. But what we did is we condo mapped them and each unit's a for sale product. So that opens up doors to a much more like much larger pool of investors or buyers, and I'll go down that road later. So I'm building 225,000 square feet as we speak.

Speaker 2: 44:58

That same landowner has 18 acres on the opposite side of that my current project. I just struck a deal with him and we're buying that property for 4 million and then I'm coming in and building. It's a $58 million project. I'm raising 14 million. I'm going to rotate that on each phase build, sell and then rotate that capital right onto the next phase, and that is going to be a little different. So when we were selling our phase one, I love to, I'm a listener I listened to the market right. Two ears, one mouth. God gave it to us for a reason right, so I listened to my buyers, most of my buyers.

Speaker 1: 45:32

I wish everyone understood that though.

Speaker 2: 45:33

Right, right. So what's nice is my buyers and again, this is according to my broker and some of the conversations I've had people ask can you stay in, can you live in there? And you can't, based on zoning, and right. So I I started listening. I'm like, well, you know, for you to buy a three bedroom, two bath property out there, you got to be in the like eight 50 range and North of that to even be in. You know the acquisition side. So from a workforce affordability, there's just nothing out there. So it's like extreme wealth in essence out there or kind of like super retired, right. So you have that. You have that. That gap Right Again. Well, how do I fill that gap? And so with people asking, can I live in this? I go, well, shoot.

Speaker 2: 46:13

Basically, what we're doing and you already know this from the storage side is you know, you can compress your cost in a development if you do less stick build. Because you can compress your cost in a development if you do less stick build, because you can have your building manufactured while you're doing your horizontal improvements. So by the time your horizontal improvements are done and your foundation is cured, you can come and bolt this thing right up like they're Legos, right, and you can do it really quick. So, for example, in one of my buildings we built 36,000 square feet. We actually framed it up in one week, seven days.

Speaker 2: 46:39

Wow 35,000 square feet. We actually framed it up in one week, seven days. 30,000, 35,000 square feet, so you can build these things really quick. And I said, well, why don't we utilize those methods, design and build these where you can get conventional mortgage and build residential like are basically it's their, their glorified townhomes with large garages is what they are, right? So they're one, building their townhomes in each building, so they're condo mapped and then you buy the unit and it has you know, the largest is three bedroom, three and a half baths, 1600 square feet, super entertainment, and then it has a drive-through garage.

Speaker 2: 47:09

You have one side that has a 14-foot garage with a mandora cantilevered patio cover for kind of outdoor living space. And then you have the back has a regular two-car garage and kind of like an alley, so you could still have one 65-foot driveway where you could put your boats and your trailers and RVs and all that in one side. And then you have the other side has a two-car garage where you can park your regular cars in and out of. So in essence it's a drive-through. So we're building basically we call them the barn caves, but in essence it's a glorified man cave. So these are 28, 30 feet wide by 60 deep, so they're big garages, and then you have your living space just above it.

Speaker 1: 47:47

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Speaker 2: 48:32

uh, so on. Well, it depends, because you have some of them slope out, right so, but the garage itself is 14 feet, some places are 16, some, some places are 18.

Speaker 1: 48:40

Wow, yeah, yeah, immaculate, and so have they always been nicknamed the man caves, or is that something you came up with?

Speaker 2: 48:47

I kind of came up with it.

Speaker 1: 48:47

Really, I like it. It's catchy.

Speaker 2: 48:49

So you'll love this. So the barn dominium movement's a big deal right now. Barn dominium you ever heard're a barn. What the hell is a barn?

Speaker 2: 48:56

It's like a high end barn like like let's say, exterior skin it looks like a barn, like a high end barn back east somewhere, but when you walk into it, it feels like you know a high end apartment or high end home. And that's what you're doing is these guys are getting smarter to build shells with steel, which in some cases is better to build, especially depending on the atmosphere and where you live Right, but you build these and then what you do is you insulate everything like you would a regular house, and then foundation. You know basically everything you would do, whether it's sewer, septic, what have you and it's a real house. So what I'm doing is I'm utilizing the model of a barn, dominium, and I'm designing the interior like a barn, high-end barn, and then you're going to have your man cave below. So it's, it's. It's something. If you look it up, you'll understand it.

Speaker 1: 49:43

Yeah, I love that. What's the average square footage of of one of these that you're selling the man caves, and what does it sell for?

Speaker 2: 49:49

Average square foot is a thousand because I have smaller ones at like seven, 50, like one bedroom, one and a half baths, and then I have up to three bedrooms, three and a half baths, but my average is about a thousand. So the biggest is 1600 and change smallest is 700 and change average is about a thousand.

Speaker 1: 50:03

And what is the 700 and change one, uh, start at two 80, two 80 to purchase. And what does financing look like for that? Conventional? You can go to conventional mortgage 30 year. Yeah, Wow.

Speaker 2: 50:13

Yeah, so regular. So I and that's one of the biggest things is, I work with UWM a lot so we also have a mortgage division. So I basically pulled their policy and looked at the insurance policies on the nature of what you have to build these units, because we're kind of like spearheading the design. So the idea was to build these and stick frame just a certain areas which you kind of need to for certain infrastructure and then making sure that this can be financed through a conventional mortgage. So we figured it out.

Speaker 1: 50:38

So is the idea that someone would. I guess I'm trying to figure out your typical buyer. How are they utilizing this property? Is this something where they're living long site part-time, or are they just kind of using it for part of the year and they live in other part of the country the rest of the year? What does that, your average buyer, look like?

Speaker 2: 50:54

So let me tell you, remind me to talk to you about the gym that we're building there. Okay, so don't forget that. But to answer that, so you have a kind of. I originally was looking at it from an affordability side. Right, I have a conservative outlook as a fund manager. I'm going to stay in a conservative approach over the next five years. So if I build something that's in the affordability range, I'd be probably pretty smart. Right, you kind of can't go wrong.

Speaker 1: 51:17

Yeah, it's recession proof, right yeah. Or go wrong yeah.

Speaker 2: 51:19

It's recession-proof Right yeah, or recession-resistant. Yeah.

Speaker 2: 51:21

So the idea is to try to make sure that we're aligning the demand for the area and the affordability, spending habits and what have you and what people's needs are. What I love about this particular area is not only the mall that's on that side, but they also are building an urgent care there. So health care is a big deal, especially in a retirement community. Then you're looking at okay, what are the income levels for first-time homebuyers there, people that are just regular employed and live in the city. If I can build something that was affordable, where people can start buying homes and we can bring in workforce, we need it Because I'm dealing with labor issues, like everybody else did on construction. So I already see the issues and in my job I've been going out there for 30-something five years, so I know the issues that the city's having. So I also know that if I can marry up the demand with what city needs are, I'll probably have a pretty good investment right. I'll get the support. But what I'm seeing in these are the conversations I've had recently. So one of my investors, so a lot of. I've had a lot of investors. I have one investor has been with me for 17 years One of my investors I had a conversation with and they have cancer.

Speaker 2: 52:21

Husband has cancer and he has a big house up in the reserve up there. So he wanted to sell it, move back to California, be next to his grandkids. Well, his house, which is beautiful, it's a five bedroom, it's big, out there in Havasu he sold it for like 2 million bucks. But his kids he has two older kids that are my age and they have, you know, kids and they have. So he has grandkids. Well, they all go to the river and so they all store their boats at his house when he had it. Well, now they don't have a house to go to, so he goes. Well, hold on, ryan, I can buy this one three-bedroom, three-and-a-half bath for under $600,000. I can sell this house for $2 million and then I have a huge 30-foot by 60-foot man cave that I could park all my stuff in there. Yeah, and that's what these guys are, that's what. So that's one buyer.

Speaker 1: 53:06

Gotcha, so you can live there if you want to. Yeah, absolutely yeah, it's completely legal.

Speaker 2: 53:09

Yeah, one of my other investors, one of the reasons why he's reinvesting into this project. He's like Ryan I have condos around the world and I go and I love the lock and key. I just come, I go. No real overhead, no head, no maintenance. You know, I just kind of come. I live in it, I move, leave and I'll have to worry about anything.

Speaker 1: 53:24

You have that component. Could you buy one of these and Airbnb it out when you're not using it?

Speaker 2: 53:27

I'm not going to allow Airbnb's in that community. So, I'm going to own the HOA company, right, because?

Speaker 2: 53:33

that's my project. So I'm going to own the HOA, but I'm not going to allow it. And the only reason is is because Airbnb's in Lake Havasu insane. In fact, several of my buyers and not only my paradigm storage and several investors into this existing project, have sold their Airbnbs because of the management nightmare. And people go out there and party and they beat these houses up.

Speaker 2: 53:52

So the returns that you think typically Airbnbs make, it's just not that out there. Because you're constantly shutting down the house, having to fix problems, those deposits don't go very far, right, so they're getting tired of having to manage that and they're like well, hold on, I can rent this out and get the cashflow if I need to 1031, exchange into buying one of these units and rent those out and get cashflow. And, mind you, if you decide to rent these units out which you can your upscale buyer, they're going to probably make the payment and again, you have no maintenance. It's a metal box. Will you allow, like, 30 day rentals? Yeah, absolutely so. 30 day and up is fine. Yeah, so, mind you, these are those particular ones I'm going to sell. So I'm selling. So whoever the end buyer right buys it, I will allow, through the HOAs, for them to have, like a short term 30 year or 30 day lease.

Speaker 1: 54:41

Yeah, what's the HOA run there? So here's this is what I want to tell you. I'm not a big fan of HOAs, so let's talk about it.

Speaker 2: 54:47

So one of the biggest things I don't care who you are, I don't care if you're a millionaire. Everybody hates HOAs, right?

Speaker 1: 55:10

I have HOAs in my property. They always go up, they never go down, and they're they're typically older, demographic, where they never really had any power ever. And so now they get a little bit of power and they're like all anal with all this stuff. Okay, that's, that's one thing. But number two gripe is this Is there not real estate investors and entrepreneurs? And so all these projects, all the CapEx, all the repair maintenance, all that stuff that needs annual attention, they don't know how to go in price and how to negotiate the best deals, and so they're overspending. So their budgets just go up and up and up.

Speaker 1: 55:40

And you know, unfortunately, what I mean. What that means for the homeowners is their HOA payments are going to go up. And you know, unfortunately, what that means for the homeowners is their HOA payments are going to go up. And as the HOA payments go up, over time less buyers are willing to buy that unit, because it's a higher payment. And that higher HOA payment it's not paying down principal, it's not building equity, it's just a higher payment, it's a sunken cost, and so for that reason it puts a cap on the long-term appreciation of that condo or that townhome because of the HOA keeps going up. And so you know, as a single family home in the same market without an HOA goes up, let's say a hundred percent over 15 years, that condo with the HOA that just tripled over the same 15 years might only go up. You know, let's say 30% instead of a hundred percent that the single families are. And that's my biggest two gripes with the HOA.

Speaker 2: 56:27

So you're this. You just hit on kind of one of the main metrics, number one. What you just listed was literally dead on From us on the management side, when it comes to maintenance and upkeep, we're more definitely on forward facing, on materials and costs and so forth. So we're building, we're putting more concrete down, we're doing different landscaping, so the management is much lower.

Speaker 2: 56:42

But I also have an institutional mindset. If I build a million square feet of projects let's say it's a for lease product I can sell that to a big institution and they're going to look at big. Most of the time they're going to look at how I built and what materials I built. If I wanted to sell it to Goldman or what have you Right? So I've always kind of looked at it like I'm going to build a little bit larger, a little bit better, superior product, not only just to kind of get the PR in the in in the area, but also for an exit, and that's always been great. That's why we're selling our units over our competitors out there. But to piggyback off the HOA, you're going to dig this and this is kind of going to dig it.

Speaker 1: 57:14

Let's hear it.

Speaker 2: 57:14

So my current project, one of the biggest things, the reason why my project HOA costs are so low and we also get more buyers is because of how big the project is More units you can press your HOA costs right Per unit. So 208 units. My smaller unit, the 14 by 50s, it's like a $22 a month HOA. It's nothing. People love that.

Speaker 1: 57:34

Yeah, that's nothing. It's not even a conversation. It's $22. Dropping the bucket.

Speaker 2: 57:39

Yeah. So they're like oh, you got a dump station, you got security like, you got all the great stuff. So here we go, ready. So I'm very, like I said, I'm very sensitive to HOA. So when I was so this Barn Cave project because there's residential and it's Lake Havasu, it's Scottsdale, Las Vegas, it's hot out there, so what I'm doing is I have to build a community so, just like a regular apartment project, it's got to have a pool, it's too, hot out there not to have a pool.

Speaker 1: 58:02

Love that.

Speaker 2: 58:02

Just like insurance costs and what you and I just discussed in regards to your builder's risk policies, your insurance costs overall are going up. When I went to go bid out my insurance costs for that pool and for HOAs and to maintain that pool, it was like $58,000 a year and I was going like holy shit, this is way too expensive. Because now if I take that and I divide it by, you know my unit owners and square foot- Is that just for one phase, or that's the entire? Project, the whole project per year.

Speaker 1: 58:30

That seems pretty cheap.

Speaker 2: 58:30

No, no, no this is after I build it. This isn't the builder's risk, this is after I build it. So the insurance policy just to maintain that pool and for liability purposes.

Speaker 1: 58:39

That still sounds cheap to me for liability purposes.

Speaker 2: 58:41

That still sounds cheap to me For the entire property $56,000? No that's a lot. And then the owners of these units are paying their own HOA. No, no, no. So their HOA is going to cover that insurance cost.

Speaker 1: 58:52

Right Now they still have their own insurance cost for their particular unit correct For their own unit correct, and so this is only covering basically the amenities, just the HOA.

Speaker 2: 58:59

Yeah, okay, so it only covers the amenities.

Speaker 1: 59:01

Yeah.

Speaker 2: 59:04

So what I did was is I go, man, I can't, like I can't get people to buy a 600,000 or a $280,000 property and pay $300 a month in HMOs. This is not the way to go. So I was like how do I compress this? Well, I don't know if you know this, but are you familiar with like lifetime fitness?

Speaker 1: 59:19

Yeah.

Speaker 2: 59:19

Okay, so lifetime fitness is actually by trade. A multifamily developer.

Speaker 1: 59:23

Really.

Speaker 2: 59:24

Think about it in the back of your mind right now. Whatever Lifetime Fitness that you're kind of thinking of mostly like, maybe go back, it's like Denver, vegas, all of the multifamily around them not all of them, but a lot of them. They build those and if you look at what they built, they got rid of their amenity package and they built those units to maximize as much rentable space as they can, and then they give their tenants a discount to go to Lifetime Fitness across the street.

Speaker 1: 59:46

Interesting.

Speaker 2: 59:47

So it's smart, it's a private equity plan.

Speaker 1: 59:48

I just worked out a Lifetime Fitness like two weekends ago up in Newport Beach, yeah yeah.

Speaker 2: 59:53

So not the Newport location, because it's so dense. There you have a lot more office and retail. I'll buy that one because I know which one you're about like. Like Denver, if you look at the ones in Denver, if you look at the ones in Vegas, they're building a third one there.

Speaker 1: 1:00:03

by the way, Dude I spent like, uh, it was like 50 bucks for a day pass and the dude was like it was like 300 for a monthly membership and they didn't even have a protein shake. I'm like yo what's going on here?

Speaker 2: 1:00:14

Well, you gotta, you gotta go to their like little you know restaurant's real sexy. Because what you do is if you have the developer's hat on now, mind you, some institutions don't want to lend on the debt side because you're like you have no amenity package and these other comps over here have pools and gyms. Well, if you think about it, when you have a pool and a gym, that's just a cost to that project. It's not really, it's just amenity to get tenants in there. Well, if you're like, hey look, you can, you can lease this and we're going to give you a pass to go to lifetime fitness across the street, most of the people are just going to go to lifetime fitness and lifetime fitness man Right. So they were very, very strong in that model.

Speaker 2: 1:00:51

So what I'm doing is I'm actually separating that gym, my amenity package on a different parcel and then I'm going to build the shell with my budget. So, instead of me doing all the TIs for the gym itself and building out everything, I'm bringing in a larger operator to do a lease for me for 20 years. He's going to maintain, he's going to do all the TIs. He's going to lease the building for me. It'll increase the value I get cashflow. It removes the liability and that cost for HOAs and now my unit owners have access to that gym and those amenities and it's a public gym. It's not a small, it's a big public gym.

Speaker 1: 1:01:25

That's so smart.

Speaker 2: 1:01:26

Yeah. So now you have a big public gym. It's going to increase the value because you have more retail right, in essence, right next to your project, right next to the mall, and I have a larger operator that's going to come in with a big name, a big reputation.

Speaker 1: 1:01:39

Yeah, more demand to live there. You'll be able to sell the units for more and then you're lowering the HOA costs.

Speaker 2: 1:01:43

It's a win-win and removing liability.

Speaker 1: 1:01:46

Insurance went from $54,000 to what $23,000.

Speaker 2: 1:01:48

Wow look at that.

Speaker 1: 1:01:49

All these HOA communities need more Ryan Garlands.

Speaker 2: 1:01:52

They just need forward thinking and innovative ways of making it happen, and the idea is to try to think of your exit buyer. I think a lot of people just go I want to make a bunch of money. It's like, yeah, but you got to think about who's going to buy it. What's the affordability side? You got to look at that data. You got to know what you're doing and who's going to be able to afford it.

Speaker 1: 1:02:10

You should start a new company. It could be a consulting business and you go around and consult all these HOA boards on how to save on cost seed round and buy a bunch of.

Speaker 2: 1:02:20

HOA companies yeah.

Speaker 1: 1:02:21

And then you could be like hey, everything we save you, I'll just take a 10% off the top.

Speaker 2: 1:02:25

Yeah, that'd be cool. Actually, that's a good idea, yeah.

Speaker 1: 1:02:27

And then the homeowners will pay for it, because then now their equity appreciation goes up.

Speaker 2: 1:02:30

And my incentive is to save as much money as I can to get that delta. There you go, I like it, I like it.

Speaker 1: 1:02:35

So yeah, I mean, look at the photos and the there man. That's pretty exciting. Could someone put like an airplane in there if they wanted to like an airplane hangar?

Speaker 2: 1:02:45

Well, you could, I mean.

Speaker 1: 1:02:46

You said it's close to the airport, right.

Speaker 2: 1:02:48

Yeah, but you can't get an airplane in there. I mean you could?

Speaker 1: 1:02:50

You'd have to take the wings off and stuff it in there and put the wings back on? Is the driveway big enough to like take off? You think?

Speaker 2: 1:02:58

on a small Okay, done that before. That'd be pretty cool.

Speaker 1: 1:03:01

Yeah, so this is in Havasu, and are you doing projects in other parts of the country as well?

Speaker 2: 1:03:07

I got a 21-unit boutique apartment project being built as we speak. We're pouring concrete next week for a foundation on apartments in San Antonio, right by Riverwalk in the Pearl. I just finished some projects in Denver. We have the winery in Temecula Europa Village.

Speaker 1: 1:03:22

Tell me about the winery.

Speaker 2: 1:03:24

So the winery in California, in Temecula, europa Village. Tell me about the winery. So it's called Europa Village. Okay, so that's like a little close to my heart. So long story to short story was the president of my company, is the former mayor of Marietta, doug McAllister. Doug has a 40-year relationship with the developer, which is Dan Stevenson. He's the godfather. When you meet him, just his energy alone, you just feel honored to be around the man. $3 billion in development, owns pretty much every storage project out there, by the way, and he's developed I don't know 10,000, lots in his career. And his kind of end, I would say, his kind of, I would say what do you want? To call it? Like his last hurrah, if you will, sure village.

Speaker 2: 1:04:00

And so, in essence, what it is is it's three different wineries on one large location 50 acres and it's French, italian and Spanish are basically bringing all the European themes all to one location, so you get to experience all of Europe in one shot.

Speaker 1: 1:04:15

Wow. So this is in Temecula three wineries, one property. What's the experience like for a guest? Let's just say, a lot of folks in San Diego they like to go up to Temecula do wine tasting. They'll rent like a limo bus. They'll put like 12 friends in there. Everyone will go up there, wine taste of the day, come back. So what would that look like from a guest standpoint?

Speaker 2: 1:04:34

So first of all, of course I'm going to be a little biased here, so forgive me Be biased.

Speaker 2: 1:04:38

I would honestly say say that this project has probably got the most class out of any other project out there. Just nature of the build, okay. So like, for example, bolero, the Spanish style winery is done. I've been through Europe, my wife has traveled all through Europe and when, if you go through Spain at all, when you go to this winery, promise you, the very first thing you're going to think of is you're in Spain. Now all of the wines as well. They have 92, 95 point wines.

Speaker 1: 1:05:06

What does that mean?

Speaker 2: 1:05:07

It's the quality of the wine, and then you have which is really hard to get to those numbers. In fact, one of the winemakers is from Napa and then the executive chef opened up 29, four seasons around the world. So the PR for the food is unbelievable. You have people from all over LA and you know pretty much Southern California. Come there just to have dinner or lunch or what have you. So I would say from an experience that if you like food, you kind of can't beat the food, especially kind of in that area.

Speaker 2: 1:05:37

Wine is obviously super classy. It's the thing I like about Temecula compared to Napa, is number one. They have bars there where you can have more liquor. They do allow you to have weddings there, so you have bigger parties. There's areas a little more secluded where you can be a little more quiet or you can have more of a happening spot, which Napa is not like that in any way. So it's definitely more of an up-and-coming area.

Speaker 2: 1:06:04

Guys like us in our age group, I would say that say the Gen X is millennials. You'll see a lot more of them there. Uh, you obviously a lot of boomers too. But you have, if you're, an owner cause we raise capital for that project, right? So every one of our investors, when they invest into that they get a lifetime wine club membership and they have exclusivity to all kinds of different amenities there. And then we do. We do investor appreciation events every year and we show what type of profit that that property makes and we show all the financials. Last year we made $16 million. So that project overall is unbelievably stunning. We have a cave and everything.

Speaker 1: 1:06:33

This project's already been open and operating. Yeah, so this back story is, and this is what got me into it, so I could go up there this weekend.

Speaker 2: 1:06:39

Totally. Okay, and I live literally around the corner. So let me know Totally, and I live literally around the corner, so let me know.

Speaker 2: 1:06:43

So to kind of give you an idea. So, if you remember 2008, alcohol sales went through the roof when I engaged in this. Darren had originally designed this back and he bought the land in like 2006 and 2007. He had planned it all, designed it all, and when 08 happened, he couldn't get debt financing, and rightfully so. So he was smart, he raised a little more capital and he ended up starting the actual winery. So he popped up a little 2,700 square foot wine tasting room, started offering, you know, weddings and started basically making his blends of wine until the market came back around. And then he'd go get debt and he actually is one of the largest clients for a huge bank here in San Diego that constantly gives him debt. So which he was smart. What he did is he took all three of those buildings in essence each winery and separate them on each parcel and instead of it being because it's $185 million capital, stack 40 million in EB-5, just FYI.

Speaker 1: 1:07:34

What's that?

Speaker 2: 1:07:34

EB-5 capital. So think of, like Chinese money that want to come into the US and get a green card. Minimum investment 700, well, it was 700,000. I think it's well. I think it was 550 at one time and it moved up to 790 per couple thousand you can invest in. So EB-5 capital is really cheap. There's a couple of different metrics. Eb-5, for one example, you have to have like X amount of employees or you have to employ a certain amount of people for you to qualify. He has 300 employees. It's a very big operation Then.

Speaker 2: 1:08:07

Then what's nice about from a developer side is it's cheap capital. It's like 5% mesdent. At 5% you get to borrow 20, 30%. You can go after less equity. So now you can not dilute your equity. You can produce better returns. You can fill your capital stack pretty quickly. Right, and a lot of people, especially in certain times this is before Trump took office it was much easier to raise Chinese capital. As soon as Trump took office and a lot of the issues happened with China, a lot of that money pulled back. You started seeing stuff more capital coming in from Singapore and the Philippines, but not as much on the Chinese side. It's all kind of coming back because there's so many questions on the volatility on other markets, which doesn't look nearly as good as ours. So you're seeing an influx for capital.

Speaker 1: 1:08:47

What exactly is MES debt? I've heard of it for a lot of like ground up development projects, but what exactly is MES debt?

Speaker 2: 1:08:53

So there is. So you have the kind of an institutional MES, and then you have private MES.

Speaker 1: 1:08:57

Okay, right, so let's talk about. This is like what.

Speaker 2: 1:08:59

So let's call this, so it's like a guy like me that will do like a second mortgage.

Speaker 1: 1:09:03

OK.

Speaker 2: 1:09:04

So they just call it Mez debt.

Speaker 1: 1:09:05

OK.

Speaker 2: 1:09:06

But a real Mez. Institutional debt is like, think of it, that it's kind of tied to your tax roll, so really it takes a first position. So ultimately, what it is. So the thing that I like, or C-PACE have you heard of C-PACE, so C-PACE.

Speaker 2: 1:09:19

What I like about C CPACE is it's mesdet is what it is. But CPACE basically gives you a loan against your project according to certain building material that's like green building material or good for the environment or solar, or certain underground sewer systems or what have you that's good for the environment or safer for the environment If you use certain. So this is some of the secrets on the way I build my projects and how I get my capital.

Speaker 1: 1:09:45

Tell us all the secrets, man.

Speaker 2: 1:09:46

I can't. It's my private baby, I don't want everybody to do what I do, but yeah, so there's a lot of those things that you can do. I can bring those materials in and go get very cheap institutional capital, right? So Mesdet in essence allows you to go get cheap capital, even from, like, a GP position where let's say I bought the land, I entitled it and plan it, where, let's say, I'm building, so this. I'll tell you an example.

Speaker 2: 1:10:08

We built 45 units of townhomes in Denver. Okay, this is out, actually it's just outside Denver, it's called Lakewood and we actually went out and structured C-PACE and Mez. So C-PACE, mez, that same thing. And what we did was and because of the nature of Denver, we knew we can get this financing much easier right, let's be honest, it's all about playing chess. What we did is we acquired the land, did all the planning and entitlements, got the plans approved and we went and got CPACE. Now CPACE was able to cover all of our horizontal improvements.

Speaker 2: 1:10:35

So most banks, if you go to an institution Wells Fargo, you know First Bank what have you? They typically want all of your horizontal improvements done and signed off and you know, basically, your foundation is ready to pour, right. So once you have that ready, that's when the construction loan will cast their loan. What we did is we came in and said, hey look, this is the type of material that we're going to put underground. This is the way we're going to build our foundation. This is this type of steel and what have you. So we were able to do all of our horizontal improvements and pour our foundation for our building one, and then we went and got cheap debt at like 5.75% from a bank.

Speaker 2: 1:11:09

So, our equity investors actually made more money than what we projected because we went to them like worst case scenario if we couldn't get that type of financing at the time of-.

Speaker 1: 1:11:19

It might be 10%.

Speaker 2: 1:11:20

Yeah, it could be 10% and we may have to do it in phases on a revolver private money, what have you. But we were able to revise that capital stack in the favor of the investors. So by the time we got to them and say, by the way, check this out Now. It was really kind of nice because when we were in the middle of phase three of six phases, that was right when the pandemic hit. Well, at that time construction costs went through the roof. Appreciation wasn't there yet, we didn't see it yet. But then, as construction costs went up, there's two things. You have a. You know most of the so when you deal with larger commercial contracts I don't know if you know this Are you familiar with, like a G-Max contract, a guaranteed maximum price contract?

Speaker 1: 1:12:01

No.

Speaker 2: 1:12:01

So what happens is when you go to a contractor and you say hey look, this is a $50 million project.

Speaker 1: 1:12:07

Oh, I see with the contractor.

Speaker 2: 1:12:08

You need to make sure that if I have no change orders and I don't change materials on you, you need to deliver by this time, this date, what have you yes.

Speaker 2: 1:12:16

And they guarantee it. If they go over time or whatever, then they have to eat the cost, right. So it's kind of the same concept. You got to have like a GMAX contract. Well, what a lot of people don't know. Depending on the size of your loan, you can actually get an insurance policy to guarantee against loss for your LP investors. But you have to have like larger institutional capital. You have to have, like you know, like Martin Harris or Whiting Turner or some of these big, like the guys that are developing, you know, san Diego Airport. They can get an insurance policy because they got a billion dollars in the bank and 750 million in receivables.

Speaker 1: 1:12:51

And so that insurance will cover any change orders that goes over the GMAX. Absolutely, yeah, got it.

Speaker 2: 1:12:56

So it's really that too. Or if there's any losses or the thing burns down or what have you, now you have certain other insurance policy that can cover that. But it's really if you have an issue with the contractor or something, so that contract will come in there and salvage a lot of that right. So there's a lot of really cool things that you can do from an institutional side. But to kind of circle back up, when it came to raising capital for, like the MES debt, those larger companies are going to implement those, uh, capital stack practices because again you can get better incentives, you can get max more material because it's not being ordered in bulk for some of that green building material, um as much. Well, at that time. And then you know, obviously, if you're able to compress your costs, you're mitigating risk.

Speaker 2: 1:13:42

But with the, with the denver project, as the appreciation rose, our, even though our costs went up, we just said, hey, just sell the units and we'll just eat the cost. And as the units, as the values kept climbing, we ended up we thought we were going to sell these units at 400 grand. At the end, the very last unit we sold for 575 grand, and you may know this, but like where a lot of builders make money is in the design and the like, the finished design. So like if you have a buyer and you just put white countertops and you know carpet when they want to do upgrades yeah, you make like 50 margin yeah you make a bunch of money.

Speaker 2: 1:14:16

So we were expecting like an average of like 25 000 upgrades per unit. The average was 75 000 per unit so it was just awesome. You know rates were low and so it was just awesome. And then you know rates were low and so you know it was just killer time. So we made a good a lot of money on that. So that just obviously rotated onto more projects. So same practices, just different areas, different locations. You just have to play the part. Different asset classes all kind of have different way, different contractors.

Speaker 1: 1:14:40

So so back to the winery. Uh, is there a residential component to this? Like if folks want to stay the night, is there any hospitality hotel portion? So how does that look?

Speaker 2: 1:14:49

bolero has 10 casitas.

Speaker 2: 1:14:51

There's a yeah and then the uh vienza, which is the next phase that we just completed. They're actually building. So there's two buildings on the next phase. They're building the next 45 units of of hotel there, and then they have an outdoor pool, like it's almost like an infinity edge, overlooking the valley. It's stunning, and I think they're going to have 25 units and uh, c'est la vie, which is the last unit, the last phase, and then across the street they have a 10 room bed and breakfast. It's all kind of tied together wow, yeah, that's really cool.

Speaker 1: 1:15:22

So, uh, out of the half billion billion with a, b, how much of those are you guys self-operating versus you came in as a capital partner.

Speaker 2: 1:15:31

I would say about half of it. Now we're self-operating. The other one, like really the big slug, is like Europa Village. We're more of a capital partner on that one but capital and our management because, again, this was Dan Stevenson's vision and when the pandemic hit he made a ton of money with alcohol sales, right it went through the roof. So it was nice from us on that side. But yeah, so I would say it's about half half right now.

Speaker 1: 1:15:52

Dude, I can wrap with you forever, man, but we got to go catch this meetup, brother.

Speaker 2: 1:15:57

So I appreciate you coming down. How can listeners get in touch with you? Hit me up on so you can do. Paradigmcompaniescom is probably the best way to reach me, just to kind of look at what we're doing overall. And then I have my Instagram handle, which is just look me up, Ryan J Garland, you'll find me. And then obviously, my LinkedIn. Linkedin's really good.

Speaker 1: 1:16:15

It's funny because, you know, I went out to Miami, we were hanging for a weekend, but we didn't really get a chance to like, really like chop it up. But, dude, just chatting with you, I'm like bro the energy. You're a wealth of knowledge, dude, so looking forward to, uh, getting to know you better thank you, I really appreciate it.

Speaker 2: 1:16:28

Yeah, thank you for coming down yeah, of course he's ryan garland.

Speaker 1: 1:16:31

I'm rich summers listeners. Thanks for tuning in. We'll see you in the next one, peace.