Iran Risk And Market Volatility

SPEAKER_00 0:20

Hey everybody, welcome to Paradigm Shift. I'm going to kind of get right into it. So I just got off the phone. I want to sit down and give you a quick recording. This is March 31st. Boots are on the ground right now in Iran. This is important because what you're going to do is you're going to track the stock market and start watching where the money is going to be moved. Now, of course, people are scared they're going to pull their capital along with a lot of the trading algorithms. When you have trading software, the AI software that a lot of wealth managers are now leaning on to continue to manage their AUM, they have risk tolerance and there's certain algorithms that once you know certain stocks start dumping, so will that technology and so will that software. And all of a sudden you're going to see a run on stocks. Now, what's happening when I'm talking to investors is people know that it exists. So the average day trader, which by the way, one of my largest backers in family offices is a day trader. She's at a point where she's done with the volatility. She's stressed out. She can make a lot of money, she can lose a lot of money. So people are getting to a point where they just want to see consistency and not as much volatility. So the nine 90% of my conversations recently is how do I get into asset classes that can produce good cash flow, income, and some sort of future equity and outpace the cost of living by giving me enough income to cater to my health or my family members that need money. Cause right now it's that's not that's that's not you know beat around the bush. It's tough for people. And the financial aspect is becoming you know a little more rough. Look at gas prices, uh, credit card costs are uh uh uh debts at an all-time high. You know, interest rates are high. Just things aren't great. And even though the job market data shows that it's doing okay, it's really not. Um, because I'm boots on the ground dealing with business owners that are getting out of their businesses or selling their businesses, which is another data, some data to track too, is how many people are selling their businesses and letting go of employees while they're doing so. And that doesn't help the job market. And as there's more volatility, people, as they are boomers that own companies for 30 years, are just closing up shop and getting out from underneath that and focusing on tax strategy. So right now, there is a huge movement of people coming out of the public markets and into the private markets. Oil and gas investors are liquidating right now, all of the money in which they've made over the last two or three years are completely gone. They're now liquidating that back down to the principal balance from the original investments that they made, or some of them haven't pulled the trigger fast enough and are actually losing money. So, real estate has always been the head been the hedge against inflation. Real estate has always been the most secure strategy for people to park their money and create wealth or for diversification. That's why wealth managers, real wealth managers or RIAs always talk, take 20, 25% of the liquidity and put it in your net worth and put it in real estate at some level. Real estate has always been the most stable, but you need to identify which asset class, where there's a demand, and where the spending habits are of the people where that demand is going. So I'd re- I'd encourage you to look at and continue to watch what it is we're doing so I can give you more data for you to navigate these waters in a very unique time. All right, guys. So I'm gonna touch on some things that people continue to ask on, which is probably some of the most popular. And what we just kind of listed as it says inside the deal, how we actually structure these investments. One of the talking points is why different funds exist and what's the difference between accredited and non-accredited. So every investment, every project has its own merits. It has its own timelines, its hurdles, its problems, its risk. And so every fund is really just set up as a disclosure package. So think of it that way. It's a disclosure package of all the things that you need to consider as an investor that has the risk, like what could happen and how that can impact you. Two, it also protects the investor from other investors going through hardships, right? So we all know divorces are common, unfortunately. So if you have an investor who decided to invest into a project as a partner and you have 15 other investors a part of this entire project, each investor has to sign an agreement stating that if they go through their own hardships, their problems will not pollinate and have a direct impact on the on the project or other investors. So the fund a lot of times is set up for that. And not I think everybody knows that. And really it's it's the fund is also in a way where it just identifies and holds accountable the operator to stay with inside the business plan. So it spells out the overall strategy, what the capital stack looks like, kind of the overall financial aspect of it and what the accomplishment and hurdles are. So it's really kind of an overall circled up uh business plan with all the right disclosures and protection methods in it. Now you have accredited and non-accredited. The accredited side is for people who are a little wealthier, right? It's the$300,000 a year income combined income with spouse, if you have a spouse,$250 if you're single, and or a million dollars in net worth, not including your owner-occupied property equity as part of your net worth. So other real estate assets, stocks, bonds, life insurance, you know, whatever else, cars, whatever else you have that as a value that gets you over that million dollars for net worth will give you uh the accreditation status to invest into more of the uh, let's say riskier asset classes or funds. And the reason is the SEC brought that up was because they feel that if wealthy people are investing, they can afford to lose the money. It's the non-accredited or the people that don't really have a lot of money that are trying to build some wealth and they go and invest into something that's, you know, a little bit more risky. Well, they really weren't as sophisticated as more of the larger investors. So they weren't able to identify where the real risks are. And if they lose their money, they could, you know, literally go into bankruptcy. That's the reason why you want to go with uh an accredited fund or what you call a 506C regulation D for solicitation. The non-accredited is actually a fund that you have to submit the business plan to the SEC. So it's two different strategies. All the business aspect can be the same. Financials, the disclosures, everything can be the same. It's called a parallel fund to be exact. You can have a fund open for high net worth clientele that is the exact parallel business plan with a non-accredited fund. And then the smaller investors that don't necessarily have the financial backing, the$300,000 a year and combined uh income or a million in net worth, but they have$50,000 to invest from an IRA, they can still make the investment. But it's a fund that is uh has comments passed by the SEC that will take a look at who we are, make sure that we have audited financials, and we have to provide those audited financials to our investors, ultimately providing more transparency. Now, that is a big thing right now in the market because there's fraud everywhere, and we all know that. So transparency is very important for investors when they're just now getting involved on a new operator. And because of really the volatility, people really want to get involved in real estate, but they don't know where to start. They may see somebody online or be referred to somebody. They just want to kind of learn how the process works. And by implementing transparency on the strategy and how things operate and how we navigate into development is what creates the transparency. It's not just transparency for safety, it's learning how it's being built and how it's being done or how they're navigating unique times and how that project will ultimately come to fruition and make the returns that you want. So transparency kind of has a larger uh wingspan than just making sure that someone's being held accountable. The other question was let's see, um, why not all deals uh are for why aren't all deals for everybody? To be candid with you, you know, we are in Lake Havasu, right? I'm gonna use this as an example. Not everybody knows Lake Havasu, and we do marketing across the country. So we pick up people, you know, that are interested in the investment uh out of New Jersey, out of New York, I mean, all over the country, and they don't know anything about never heard of Havasu. They can't even pronounce Havasu properly. They do Havasu, right? So they they can't even pronounce it properly. So, you know, a lot of times people want, especially right now, people want to invest into something they know, right? So if people know Lake Abbaso, you're from Southern California, you or you come out here, you know, during uh the uh snowbird season and this is kind of where you want to go to get out of the cold, you know, people know the community, they believe in the community more. And so people will want to invest into something that they know, feel, can touch, and understand and believe in. So if you don't, then a lot of times the investors won't make an investment. So again, not all deals are for everyone, um, including like the terms, right? Maybe it'd be something that's a longer term, a four-year term, or you know, they don't like that term or a seven-year term. Uh, people want shorter term. So that may be one reason too. Another one is they want to be with maybe an outfit that's much larger or maybe much smaller or have a specific asset class or whatever the case may be. So every project won't attract every investor. And every investor will want to use their overall life experience to get the warm and fuzzies to make sure they're going to make the right decision into the right operator and the right project in the right location, and believe that what it is that they're trying to accomplish will actually hit their mark. So again, not every deal is for you know every project or investment offering is for each investor or every investor. How capital is being deployed step by step. Well, that's kind of a moving target to be candid. We'll use one of our projects as an example. As we raise capital and we're building the project, you ultimately are paying, you know, your construction bills. So there, but there are other strategies out there where people raise capital, they put it into a brokerage account, that brokerage generates income, they go and identify land and locations, and then they start putting money to work by acquiring the land, you know, that type of stuff. Where we stand in our projects, we already own the land. We've got a lot of the planning and and all of that already built out and designed. Um, we know our numbers as far as our construction numbers, and then a lot of times we'll actually go out to raise the capital then. So um there's just different strategies. I think right now it's important from investors that are getting to know us for the first time, uh, will uh see that a lot of that heavy lift or work has already been done. A lot of the investment has already kind of taken place. And then you're kind of at the 11th hour and the risk is dropped by plans are approved, ready to break ground, lands already owned. You know, you got the city community support, you have other investors that have written checks, you got uh people in escrow that want to buy units as an example. The Barncades has a lot of investors that chose units as well, which ultimately gives us a fixed price. It makes your your returns more realized when all we have to do is focused on building on time and on budget, right? So uh the step-by-step and deployment process will vary depending on the strategy and the project and location and just kind of overall um the uh project too. But that's kind of how it's you know, certain things are done step by step. Okay, what happens uh to your money after you invest? Well, the 99% of the time the money is gonna get pushed right into the project when it's uh to start development or in the middle of the development, but most of the capital that we're raising is gonna go right into building that project. So uh if you're investing into barn caves or the flats as an example, it's going to go right into construction cost because that's the only thing we have left. So now the capital is gonna get deployed in construction. And the reason for this video is because a lot of investors don't know what happens when they do wire the money and the money's actually deployed. So we just wanted to provide this short video, just to give you an understanding on how the funds are structured, why the funds exist, what it does to protect every party, and how we move that capital through the process and the term. So that way you understand now why it is we do what we do. If any of this segment was of value to you, I encourage you to take a look at some of the other webinars and what it is that we're doing as a firm. I manage a$100 million debt fund now, which is a distressed asset fund. I do a lot of things and private equity from equity opportunities and development and identifying materials all the way down to opening up gyms. We just opened up a gym in Lake Havasu. We'd encourage you to take a look at the Family Office Society website, see what type of product that we're bringing to the town, and look how fast we ramped up with memberships and showed proof of concept of way the world is moving, but we use the data to support our decision making with that investment. We'd love to continue to encourage you to watch what it is we're doing and how we're mitigating risk through these unique times. I really appreciate the opportunity to earn your business. And if there's something that you guys want me to touch on or talk about or topics, feel free to DM right, you know, right on this post. Let me know what it is you'd like for me to touch on so I can go ahead and give you more value and continue to hit some of the things that matter most. So thank you very much for watching. We'll see you soon.