WEBVTT

00:21:02.000 --> 00:21:04.000
bring that other tenant.

00:21:04.000 --> 00:21:10.000
that… so you're, let's say, leasing for $7,000, you stop leasing for $9,000, subleasing for $10,000.

00:21:10.000 --> 00:21:12.000
I've done some magical stuff with that stuff.

00:21:12.000 --> 00:21:20.000
I always try to negotiate an option to purchase. And if they say no in the beginning, I say, under what condition will you

00:21:20.000 --> 00:21:24.000
give me an option to buy. I want, I don't know, not now. I say, okay.

00:21:24.000 --> 00:21:31.000
How about if you give me the first right of refusal? If you change your mind later, since I'm leasing, at least give me the courtesy of letting me know.

00:21:31.000 --> 00:21:33.000
And they say, okay, and we'll put it in writing.

00:21:33.000 --> 00:21:36.000
First right of refusal,

00:21:36.000 --> 00:21:39.000
in case you sell… you decide to sell the building.

00:21:39.000 --> 00:21:43.000
So, yes, do it. It's a great one. How does the broker get compensated?

00:21:43.000 --> 00:21:47.000
Just standard commission split on the initial master lease value.

00:21:47.000 --> 00:21:55.000
If you're gonna do a lease. So, you're gonna lease at 7 times so many years, you just have, um…

00:21:55.000 --> 00:21:59.000
you pay them that. I like to do, uh, let's say,

00:21:59.000 --> 00:22:02.000
I'm gonna lease for, let's say,

00:22:02.000 --> 00:22:06.000
3 years or five years with an option to renew for another 5.

00:22:06.000 --> 00:22:10.000
But when I sublease, I tell the tenant, I need you to commit to 10.

00:22:10.000 --> 00:22:14.000
You see my point? So you're paying the commission on the 3 years or 5.

00:22:14.000 --> 00:22:20.000
But when you sublease, you have somebody committed to 10. If they change their mind, they have to pay you a strong penalty.

00:22:20.000 --> 00:22:26.000
I said that too fast. Rewind, that's why we record these calls.

00:22:26.000 --> 00:22:44.000
Very good. All right, Basil's last question. Some tenants want to knock down buildings that are over 20 years old, even if they are renovated. How are you negotiating with sellers to make the numbers work for possible build to suit?

00:22:44.000 --> 00:22:55.000
Well, we literally go back to the seller and say, based on our due diligence, the building needs to be demolished, so we're gonna have to revisit the numbers. Who made you an offer at, I don't know, $750?

00:22:55.000 --> 00:23:08.000
Uh, the cost of demolition alone is going to be $100K, so, uh, and then there is a waste of time, so the best offer is going to have to be $600K. And the reason is, boom, boom, boom, boom, boom, exactly what the tenant told us.

00:23:08.000 --> 00:23:13.000
And sometimes, when you are buying, you have to demoralize the seller.

00:23:13.000 --> 00:23:17.000
I know it sounds bad, but you just have to bring them to reality, and they don't like it.

00:23:17.000 --> 00:23:20.000
So, your style of how you approach them.

00:23:20.000 --> 00:23:31.000
has to be, like, vulnerable, not like, you know what, your product is not gonna pass monster because nobody… you know, it's more of a relationship, like, okay, let's look at this together. Isn't it realistic to do this and that?

00:23:31.000 --> 00:23:35.000
And people come eventually to the reality of what they're… they own.

00:23:35.000 --> 00:23:40.000
Because people that own something they think is various here, people that want to buy something, the value is here, and that's where the

00:23:40.000 --> 00:23:43.000
The idea is to get right in that balance,

00:23:43.000 --> 00:23:50.000
to make it happen. So you bring it to the reality. We did the due diligence, property needs to be demolished,

00:23:50.000 --> 00:23:55.000
Cost of demolishing is 100, and it's going to be a waste of time, another $50.

00:23:55.000 --> 00:24:00.000
750 will have to amend our contract and go to 600. 600 will make it up.

00:24:00.000 --> 00:24:11.000
Now the numbers will work, because now we can work with the tenant on who is gonna do the build-out, is it gonna be a land-lease, or is it gonna be fee-simple, etc.

00:24:11.000 --> 00:24:15.000
Good.

00:24:15.000 --> 00:24:16.000
I shall.

00:24:16.000 --> 00:24:20.000
Very good. All right, moving on to Aishaan's question. Yep, I know he sent in a

00:24:20.000 --> 00:24:46.000
graphic for you to also look at. He said, I am working on a bank deal that is out parceled to Publix that has a bidding process due in August, so nobody has it under contract yet. I reached out to a potential national tenant about it, and they say they are working with a developer to transition this bank into an urgent care. Would it be smart to get it under contract and then go back to the tenant or developer

00:24:46.000 --> 00:24:56.000
The bank's broker believes it will sell for $1.4 to 1.5, and they want 10% deposit in 30 days for due diligence and 30 days to close. What are your thoughts?

00:24:56.000 --> 00:25:04.000
My thought says it's too tight, too tight, 10% deposits and 30 days to close, it's just…

00:25:04.000 --> 00:25:07.000
too aggressive. I mean…

00:25:07.000 --> 00:25:11.000
Make sure you can do some feasibility study, uh…

00:25:11.000 --> 00:25:18.000
Or, if you're gonna do that, you have to have an escape clause. Like, hey, you gotta… I gotta inspect, it's gotta pass muster, and all this.

00:25:18.000 --> 00:25:26.000
It's a little… look, brokers will hype it, yeah, a million, two, a million, four. Yeah, really? Why is it at an auction?

00:25:26.000 --> 00:25:30.000
What's going on with it? Now, Publix, for those who don't know, is like a Vons, a Ralph's,

00:25:30.000 --> 00:25:35.000
They're actually better than Fonz and Ross put together. Publix is a great…

00:25:35.000 --> 00:25:42.000
company, you find them in Florida, and they're just growing. We'd love to have them. It would be amazing to have them in other places in the country, like in…

00:25:42.000 --> 00:25:47.000
I'd love to have him in Puerto Rico, I'd love to have him in California.

00:25:47.000 --> 00:25:52.000
So, it's generally a good idea, but I like the second part of your question.

00:25:52.000 --> 00:25:55.000
that second deal.

00:25:55.000 --> 00:26:11.000
And the second is, would like to discuss this deal and get your thoughts. See the attached photo. It is a Walmart out parcel. The site, and he gives the address, is a small .

00:26:11.000 --> 00:26:12.000
acreage lot with a car dealership

00:26:12.000 --> 00:26:16.000
0.15.

00:26:16.000 --> 00:26:26.000
Paying $2,400 per month and the tenant would sell the business for 100,000. The land behind it is one acre

00:26:26.000 --> 00:26:38.000
And it is for sale for 200,000. Can I purchase the back parcel and have a big national tenant come in and develop and do a lease, then sublease on the front parcel for a big spread

00:26:38.000 --> 00:26:43.000
I love anything next to Walmart. This parcel is owned by Walmart.

00:26:43.000 --> 00:26:46.000
in looking into…

00:26:46.000 --> 00:26:51.000
Into it closer. And if you get that,

00:26:51.000 --> 00:26:53.000
If you get that deal,

00:26:53.000 --> 00:26:55.000
And next to Walmart,

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That should be a home run. And I know you got some money because you did a couple good assignments, you'd done some amazing stuff with the JV program.

00:27:02.000 --> 00:27:06.000
Aishawn, this, just get it under control.

00:27:06.000 --> 00:27:11.000
If you can ease your way into the purchase, meaning you can do an earnest money deposit,

00:27:11.000 --> 00:27:17.000
then an option with non-refundable money to buy 90 days to 6 months. During that time,

00:27:17.000 --> 00:27:19.000
Line up who is gonna come in,

00:27:19.000 --> 00:27:24.000
as a national credit tenant, to do a ground lease, or a bill to suit,

00:27:24.000 --> 00:27:27.000
This could be the home run you've been waiting for.

00:27:27.000 --> 00:27:30.000
This could be big, okay? So…

00:27:30.000 --> 00:27:40.000
Stay in touch with me on this. If you need anything, you let me know. Very, very important one. I tell you, every time we have a JV that puts a property close to Walmart,

00:27:40.000 --> 00:27:43.000
We got so many calls, we get so bombarded with…

00:27:43.000 --> 00:27:50.000
Tenants that want to grow in there, want to come in, they want to work a deal, maybe buy it from you, etc. And you got a lot right next to them?

00:27:50.000 --> 00:27:53.000
That's incredible.

00:27:53.000 --> 00:27:58.000
Hi, Sean, did you have any follow-up with him?

00:27:58.000 --> 00:28:00.000
Yes.

00:28:00.000 --> 00:28:05.000
This,

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Okay?

00:28:09.000 --> 00:28:10.000
Good.

00:28:10.000 --> 00:28:19.000
So, lease sublease would work there. Could well I know I can get a big, big tenant for that. It's just… yeah, it's just annoying, because the the owner of that small car dealership, he doesn't want to sell it at all

00:28:19.000 --> 00:28:27.000
And it's like a small mom and pop joints that just keep coming into that location

00:28:27.000 --> 00:28:30.000
But, yeah, I definitely think it is a home run

00:28:30.000 --> 00:28:32.000
Okay, but I'll tell you. I'll tell you.

00:28:32.000 --> 00:28:40.000
this guy, this small car dealership, he wants $100,000 for the business buyout, right?

00:28:40.000 --> 00:28:48.000
Yeah, the one who owns the dealership, he said, yeah, give me 100K. He just opened it, like, 5 weeks ago. He said, give me $100,000, you know, and I get out.

00:28:48.000 --> 00:28:55.000
Okay, just tell him, look, I'm looking… positioning, positioning, positioning. Tell him, I'm looking at another lot, and look at another deal.

00:28:55.000 --> 00:28:57.000
If you want to, he's the best I can do.

00:28:57.000 --> 00:29:01.000
Make it $70,000, I'll give you $20,000,

00:29:01.000 --> 00:29:04.000
And I'll make payments. If you're interested, we'll make the deal happen.

00:29:04.000 --> 00:29:06.000
But you gotta close.

00:29:06.000 --> 00:29:10.000
Meaning, you close so the deed changes to your name.

00:29:10.000 --> 00:29:18.000
So if you do it… if you can get it at 70, maybe get it at 80, but you get the idea. A structure the deal so you don't have to put 200,000…

00:29:18.000 --> 00:29:21.000
here, and $100,000 there, and then you run out of money.

00:29:21.000 --> 00:29:24.000
If you give him 20, 25,

00:29:24.000 --> 00:29:27.000
as a down payment, and then carry the financing,

00:29:27.000 --> 00:29:33.000
He carries the financing, you'll be able to get into the deal and control the situation.

00:29:33.000 --> 00:29:36.000
And then you can do lease sublease on the other thing, and all that.

00:29:36.000 --> 00:29:38.000
So, so, um…

00:29:38.000 --> 00:29:47.000
And so then you'll buy them out. He's making… he's paying you $2,400, or he would be paying $2,400.

00:29:47.000 --> 00:29:48.000
Yeah.

00:29:48.000 --> 00:29:52.000
He wants $100,000 for the business, that's… that's really, uh, crazy.

00:29:52.000 --> 00:29:59.000
Right, right. And I want to ask about transactional funding. Does that only make sense

00:29:59.000 --> 00:30:08.000
If, like, the seller doesn't want you to assign it, or, like, the broker doesn't want you to assign it, or the tenant doesn't want to pay you assignment fee

00:30:08.000 --> 00:30:18.000
Repeat the question, what do you mean?

00:30:18.000 --> 00:30:19.000
Yeah.

00:30:19.000 --> 00:30:21.000
doing transactional funding, why would you do that? Would you do that if the broker doesn't want you to assign it, or if the tenant doesn't want to pay you an assignment fee?

00:30:21.000 --> 00:30:30.000
Yeah, if the broker says you cannot assign it, I'm not gonna work with that, we don't allow you to assign it, et cetera, we're gonna fight you for that.

00:30:30.000 --> 00:30:40.000
You just close, so you close with what money? Transactional funding. That means somebody gives you the money to close, but they stay in control, and they just charge you, let's say, 3 points, or 2 points.

00:30:40.000 --> 00:30:42.000
And then you turn around and you sell the property.

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And when you sell through escrow, you pay those people that gave you the money. It's literally a bridge loan, if you will.

00:30:49.000 --> 00:30:52.000
It helps you close, called transactional funding. Yes.

00:30:52.000 --> 00:30:55.000
And the thought, you wanted to add something?

00:30:55.000 --> 00:30:58.000
Yes, hi, Hashan, how are you?

00:30:58.000 --> 00:31:00.000
Hey, how you doing, Todd? I'm good

00:31:00.000 --> 00:31:03.000
What size lot is this, by the way

00:31:03.000 --> 00:31:13.000
Well, the dealership is like 0.15 acres, but behind it is the parcel owned by Walmart 1.0

00:31:13.000 --> 00:31:16.000
Is Walmart selling that parcel?

00:31:16.000 --> 00:31:18.000
Yes, yes.

00:31:18.000 --> 00:31:23.000
And so in the… so that's one acre, and the one in front of it's one and a half acres

00:31:23.000 --> 00:31:30.000
Yes, that's still on the… no, the one in front of it is .15 acres. It has access to the main highway

00:31:30.000 --> 00:31:38.000
0.15, 15% of an acre

00:31:38.000 --> 00:31:39.000
Yeah.

00:31:39.000 --> 00:31:43.000
0.1 instead of 1.0, right?

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Right.

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And there's a small car dealership on there

00:31:47.000 --> 00:31:49.000
Yep

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And the guy wants 100 grand to get off the property, and who and another guy wants to sell that property, the .15.

00:31:58.000 --> 00:32:10.000
No, the… they won't sell it, the guy won't sell the .15, but the owner of the car business, he'll sell the business for 100K. Walmart will sell the back parcel for $200,000.

00:32:10.000 --> 00:32:15.000
Okay, so they really… the Walmart

00:32:15.000 --> 00:32:16.000
It's an acre, right? Did you say right?

00:32:16.000 --> 00:32:18.000
Yeah.

00:32:18.000 --> 00:32:19.000
Yes

00:32:19.000 --> 00:32:25.000
is behind the car dealership. And

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The only thing that it has to do with it is that you have more land, and I'm guessing that the car dealership is on a frontage road.

00:32:34.000 --> 00:32:36.000
Right

00:32:36.000 --> 00:32:40.000
I see. And so, but Walmart wants 200,000

00:32:40.000 --> 00:32:47.000
And so what about the guy? Does the guy ever you think the guy would ever sell that one point one

00:32:47.000 --> 00:33:03.000
Well, he's been presented with multiple offers. Will he ever sell? I even talked to the owner of the car dealership. He told me… I said, hey, can I send you an offer, and you can go to the owner, because I'll buy the business only if I can buy the property. And he's like

00:33:03.000 --> 00:33:07.000
I tried, I tried to buy it myself

00:33:07.000 --> 00:33:17.000
Oh yeah, I'm sure you did. So, there's only low buildings there, right? They're not high above where they'd be blocking you, right?

00:33:17.000 --> 00:33:18.000
Right, right.

00:33:18.000 --> 00:33:26.000
And you have, you have easement to to come from the frontage road or is another road behind you?

00:33:26.000 --> 00:33:30.000
No, no, there's easement, they come… yeah.

00:33:30.000 --> 00:33:34.000
How do you get to the property? Can you get it from the frontage road, or you have to go to the road behind it?

00:33:34.000 --> 00:33:39.000
You can get to it from the frontage road. You're talking about the dealership right

00:33:39.000 --> 00:33:51.000
Right, if you have an easement anywhere to come for to go through a property to get onto the Walmart property from the frontage road, which is the frontage road is closer to Walmart, correct?

00:33:51.000 --> 00:34:06.000
No, no, front… yeah, the frontage road, or the back parcel, obviously, is close to the Walmart, but the frontage road is… is the only thing is the… the back parcel is owned by Walmart in the front. The front parcel

00:34:06.000 --> 00:34:10.000
Where the dealership is at is not owned by Walmart

00:34:10.000 --> 00:34:12.000
Which parcel is closer to Walmart?

00:34:12.000 --> 00:34:14.000
the back parcel.

00:34:14.000 --> 00:34:15.000
And is

00:34:15.000 --> 00:34:22.000
Yeah, but question. Who owns the front parcel where the dealership is? Who owns that?

00:34:22.000 --> 00:34:23.000
Some guy that

00:34:23.000 --> 00:34:24.000
older guy, older guy yeah

00:34:24.000 --> 00:34:29.000
Okay, so here's the deal. Send me, send me the lease on that, and I'm gonna find a way for you

00:34:29.000 --> 00:34:32.000
to negotiate the lease, or work something out,

00:34:32.000 --> 00:34:34.000
If there is an out during the lease,

00:34:34.000 --> 00:34:39.000
Like, maybe the lease has an out, but it's still… it's still maybe worth it.

00:34:39.000 --> 00:34:41.000
to… to get

00:34:41.000 --> 00:34:49.000
that guy out, buy the business, get him, and then you're taking over the $2400 payment, because you can do what's called an assembly deal.

00:34:49.000 --> 00:34:52.000
So, you own the lot, the back lot,

00:34:52.000 --> 00:35:02.000
You are leasing the front lot, but that whole thing can work out. All you need to do with that older gentleman that owns the front is get an option to purchase.

00:35:02.000 --> 00:35:03.000
Sharif can

00:35:03.000 --> 00:35:04.000
Tell them, I'll tell you, you know?

00:35:04.000 --> 00:35:10.000
You know, I'm not trying to establish something. Is the lot that Walmart owns

00:35:10.000 --> 00:35:12.000
part of the parking lot

00:35:12.000 --> 00:35:15.000
That Walmart has… that's that goes to Walmart

00:35:15.000 --> 00:35:19.000
Right, yeah. Yep.

00:35:19.000 --> 00:35:20.000
Why do you need the car dealership then?

00:35:20.000 --> 00:35:22.000
No, no. The

00:35:22.000 --> 00:35:39.000
the car dealership is sitting on the main road. You can't get to that back parcel from the main road unless you go through that, or you can go through Sharon Williams on the other side, but… but

00:35:39.000 --> 00:35:46.000
But if you go to Walmart, let me assess this. If you go to Walmart, when you're in their parking lot, can you get to this parcel?

00:35:46.000 --> 00:36:02.000
Yes, yes, but it's not developed to where you can drive in it. Like, there's no drive in. It has to be developed. It's straight grass. And there's a pavement where you can't drive onto the grass. You know what I mean?

00:36:02.000 --> 00:36:05.000
So the Walmart parking lot ends

00:36:05.000 --> 00:36:09.000
You know, some amount of feet from the back that back parcel

00:36:09.000 --> 00:36:19.000
No, it's connected. You said, oh yeah, exactly. There's a road that you that you turn you turn off to a side street

00:36:19.000 --> 00:36:31.000
and you turn on to another street and and on that street is the back parcel on the other side is the parking lot

00:36:31.000 --> 00:36:33.000
Would I be able to see a plot map or

00:36:33.000 --> 00:36:34.000
Yeah. Yeah.

00:36:34.000 --> 00:36:38.000
I'll tell you this. Listen, I'll take this with you later.

00:36:38.000 --> 00:36:43.000
Um, Aishawn, um, because I really think we need to see the lease.

00:36:43.000 --> 00:36:51.000
And you need to talk to the owner of the land to see if you can actually buy that small parcel of land where the dealer is.

00:36:51.000 --> 00:36:59.000
Okay? So let's… let's… let's talk later on this so we can move forward, because it can take a lot of time and due diligence.

00:36:59.000 --> 00:37:01.000
Sean's trying to do an assemblage and then sell the whole thing, is that his goal?

00:37:01.000 --> 00:37:07.000
That's… that's the best… no, not sell it! He can get a big tenant there. This is right next to Walmart.

00:37:07.000 --> 00:37:09.000
It's an amazing location.

00:37:09.000 --> 00:37:12.000
Between the back lot and the front lot

00:37:12.000 --> 00:37:18.000
And Cheryl asked, I could see that she asked, can… is there a way to get, like, a road there, cut, get a road going?

00:37:18.000 --> 00:37:22.000
But no, because it's… the dealer is right in the front, so…

00:37:22.000 --> 00:37:27.000
It's probably a lot that Walmart wanted to use for storage or something, but…

00:37:27.000 --> 00:37:31.000
Iishan, let's just… if you can get that lease,

00:37:31.000 --> 00:37:40.000
And let's review it together. We'll get on a Zoom, I'll get on a Zoom with you, and we can see how it can be done, and then we need to get in touch with the owner of the property.

00:37:40.000 --> 00:37:45.000
And that owner, if it's an older gentleman, doesn't want to sell it because he likes the $2,400 a month.

00:37:45.000 --> 00:37:48.000
You know, when an older gentleman likes 2400?

00:37:48.000 --> 00:37:50.000
He would love $30,000.

00:37:50.000 --> 00:37:58.000
And then you tell them, I'll give you 3,000 with an option to buy or something. Let's just work it out later, you and me. Let's move on, is that okay with you?

00:37:58.000 --> 00:37:59.000
Okay, thank you.

00:37:59.000 --> 00:38:00.000
Yes

00:38:00.000 --> 00:38:19.000
All right, good stuff. Thanks, Aishawn and Todd and Sharif. On the side here, as we I don't want to get in the weeds, Nathan said, I'm hearing and seeing that many QSRs are tearing down the restaurant and building a new one. Does that impact us as we try to place tenants in second generation QSRs

00:38:19.000 --> 00:38:23.000
But they just want to tear it down and build their own thing.

00:38:23.000 --> 00:38:29.000
Sure! I mean, look, in the training, I have a whole section about build to suit, whether we do it,

00:38:29.000 --> 00:38:32.000
They do it, or we do a combination.

00:38:32.000 --> 00:38:39.000
that whole training part is in the joint venture, go to that part. It's on the back house of the training for joint venture.

00:38:39.000 --> 00:38:42.000
And it is very doable. The problem with…

00:38:42.000 --> 00:38:51.000
built to suit is if it's a lot, or if it's something that they have to… that is an erected building that they have to demolish and build, there is a delay.

00:38:51.000 --> 00:38:58.000
Yeah, he's stuck. They got construction, they gotta get permits and approvals and all this, so depending on what part of the country it is…

00:38:58.000 --> 00:39:01.000
there could be delays from 4 months,

00:39:01.000 --> 00:39:04.000
to two years. Try to do something in San Francisco. Two and a half years.

00:39:04.000 --> 00:39:13.000
So, so, I like to put the burden on them. I say, listen, I'll do a land lease, you start paying me, and you can do whatever you want.

00:39:13.000 --> 00:39:15.000
What do you want to do? And then they tell us.

00:39:15.000 --> 00:39:18.000
So when you have something like this, you're a JV.

00:39:18.000 --> 00:39:22.000
Let's get them on the Zoom call, and then we negotiate with them and see what they have in mind.

00:39:22.000 --> 00:39:23.000
Okay. Thank you.

00:39:23.000 --> 00:39:25.000
Yep. Yes, sir.

00:39:25.000 --> 00:39:43.000
Very good. Hi, Nathan. All right. We are moving to Deke. He is in Texas. He has two questions. He said, Sharif, what type of questions should you ask when loaning a partner on a real estate deal or a bridge loan

00:39:43.000 --> 00:39:48.000
Can this type of deal be done without a lawyer?

00:39:48.000 --> 00:39:53.000
Yes, you could do practically everything without a lawyer, but um…

00:39:53.000 --> 00:39:59.000
At the end of the day, I tell you, there is a reason I have an in-house lawyer, attorney.

00:39:59.000 --> 00:40:02.000
Because it makes your life…

00:40:02.000 --> 00:40:04.000
simpler, clearer.

00:40:04.000 --> 00:40:09.000
Uh, and it's a lot less expensive to deal with an attorney before you do something,

00:40:09.000 --> 00:40:12.000
then a mistake happens, then you gotta go to an attorney.

00:40:12.000 --> 00:40:16.000
But you can do it with a loan, because you're going to look for three things.

00:40:16.000 --> 00:40:19.000
What are the three C's when you loan somebody?

00:40:19.000 --> 00:40:21.000
Collateral? What is my collateral?

00:40:21.000 --> 00:40:24.000
If some… if the person doesn't pay me, what will I get?

00:40:24.000 --> 00:40:28.000
And number two, what's the credit of the person that I'm loading?

00:40:28.000 --> 00:40:30.000
I need to run their credit.

00:40:30.000 --> 00:40:36.000
if you're not a regular lender, you may not be able to run their credit, so you tell them, I need you to run your credit,

00:40:36.000 --> 00:40:40.000
That, uh, you can do, um, CreditKarma.com.

00:40:40.000 --> 00:40:45.000
They run the credit, and then they will send it to you. You can see what they owe, etc.

00:40:45.000 --> 00:40:50.000
And, um, and then character. How is this person? What have they done in the past?

00:40:50.000 --> 00:40:52.000
What's their success stories?

00:40:52.000 --> 00:40:58.000
Are they just promising you the moon and they haven't done anything? Is it somebody starting? Is somebody in business trying to expand?

00:40:58.000 --> 00:41:03.000
You see, so collateral, credit, and character is what we look for.

00:41:03.000 --> 00:41:09.000
And the most important one is collateral, because if the person has bad credit and a terrible character, then I'm gonna take their collateral.

00:41:09.000 --> 00:41:12.000
So, I'm gonna always focus on the collateral.

00:41:12.000 --> 00:41:18.000
And then I always ask the person, when I'm loaning you, when are you gonna pay me back, and how are you gonna pay me back?

00:41:18.000 --> 00:41:22.000
So, so, so what's the exit strategy?

00:41:22.000 --> 00:41:25.000
Um, when it comes to collateral,

00:41:25.000 --> 00:41:33.000
It's not just a collateral of a home. It's the exact collateral position. Let's say you're loaning them,

00:41:33.000 --> 00:41:37.000
And, uh, it's a bridge role, right? It's a real estate deal, so it's against a property.

00:41:37.000 --> 00:41:45.000
You want to make sure you're going to be in the first position. If you're not, because this is a construction loan or whatever, then you want to be at least in the second position.

00:41:45.000 --> 00:41:48.000
You want to be first or second. Second,

00:41:48.000 --> 00:41:50.000
It's higher risk, because you have to make the first

00:41:50.000 --> 00:41:58.000
lean good and… and that's when that person's credit and that person's character

00:41:58.000 --> 00:42:04.000
are very important. So, um, I always like to know what their exit strategy is,

00:42:04.000 --> 00:42:12.000
And then you can… what the lawyer can do, he can structure, or she can structure the deal that it'll be a deed in lieu of foreclosure.

00:42:12.000 --> 00:42:14.000
Meaning, if you don't pay me,

00:42:14.000 --> 00:42:18.000
I'll get this and that. I'll take over your loan. I will…

00:42:18.000 --> 00:42:21.000
do this and that. They can pre…

00:42:21.000 --> 00:42:25.000
structure the deal in a way that is

00:42:25.000 --> 00:42:29.000
pre-assignable, uh, especially if you're in the first position.

00:42:29.000 --> 00:42:32.000
So that's what you look for. So, um…

00:42:32.000 --> 00:42:39.000
I mean, I always like to run them by attorneys, although I have done deals where I felt confident enough with the person,

00:42:39.000 --> 00:42:45.000
Because they owned the business, they had more to lose than I do.

00:42:45.000 --> 00:42:46.000
Very good.

00:42:46.000 --> 00:42:50.000
I don't think it's a sign of grief. I think it's just a regular grant deed or warrant deed.

00:42:50.000 --> 00:42:53.000
Yeah, grandid, or untied deed, or is it, uh…

00:42:53.000 --> 00:42:55.000
Trustee…

00:42:55.000 --> 00:42:58.000
Escrow that if they default

00:42:58.000 --> 00:43:10.000
Yeah, a title company will pull the history on the property, will tell you, so you don't… it's not based on what the person says, it's based on what you verify. So the title company,

00:43:10.000 --> 00:43:15.000
You're going to give the money to escrow, a title company will run a title report, there'll be title insurance,

00:43:15.000 --> 00:43:18.000
And if you don't know, you can ask the title company. They'll actually guide you through it.

00:43:18.000 --> 00:43:23.000
And if you're loaning for a higher amount of money, you have to watch for the state law.

00:43:23.000 --> 00:43:26.000
What is the state law? In California?

00:43:26.000 --> 00:43:30.000
Right, Todd, in California, there has to be a broker involved if you're gonna loan, like,

00:43:30.000 --> 00:43:34.000
So you can pay a broker a small fee,

00:43:34.000 --> 00:43:36.000
They do an interest rate higher than 10%.

00:43:36.000 --> 00:43:40.000
Exactly. Anything other than 10, you're gonna have to get a broker involved,

00:43:40.000 --> 00:43:46.000
And that's okay, you just… the broker will… will do the paperwork or sign off on it, and you can pay them 1%.

00:43:46.000 --> 00:43:51.000
The borrower can pay these fees. That's the beauty about the structure. You don't want to use an attorney, but

00:43:51.000 --> 00:43:56.000
The borrower can pay for the closing fees, including attorney, appraisal, etc.

00:43:56.000 --> 00:44:09.000
California also has a limit on how many you can be a dealer for before you become a dealer. I think it's seven. It might have been raised to 12, I think, but the last I knew of was seven.

00:44:09.000 --> 00:44:13.000
Where if you seven is it. After that, you're a dealer

00:44:13.000 --> 00:44:14.000
In California.

00:44:14.000 --> 00:44:18.000
But yeah, you're doing one right now, right? Only one, Deke?

00:44:18.000 --> 00:44:20.000
If you're buying, it's different. But if you're buying and selling

00:44:20.000 --> 00:44:22.000
Yeah.

00:44:22.000 --> 00:44:24.000
Okay, good. What's the follow-up?

00:44:24.000 --> 00:44:26.000
What'd you ask

00:44:26.000 --> 00:44:27.000
The follow-up question, Ashley?

00:44:27.000 --> 00:44:43.000
Yes, his second question, and thank you for covering your three C's loading. His next question, when should an investor, a real estate investor, set up a structure or a fund? What are the signs in your business

00:44:43.000 --> 00:44:47.000
Or the mild markets to aim for.

00:44:47.000 --> 00:44:52.000
So, you really want to structure a real estate fund when you have a strategy,

00:44:52.000 --> 00:44:59.000
That makes you money on a consistent basis. Like, you know, oh, I've done this, I can do it again, I can scale it, I can go big.

00:44:59.000 --> 00:45:03.000
I only have so much money, I have only so much time, so much this, I need to grow.

00:45:03.000 --> 00:45:10.000
So who's gonna give me money? You see, you have the concept that works, but you don't have collaterals to go to the bank, you don't have that whole thing.

00:45:10.000 --> 00:45:15.000
So what do you do? You get a private placement memorandum filed with the SEC,

00:45:15.000 --> 00:45:20.000
You do that fund, what I suggest, and then you go and tell people, look what I have, I have this great strategy.

00:45:20.000 --> 00:45:26.000
And I have this great structure. Because the money is in the structure. You can have a strategy, and you can work yourself to death.

00:45:26.000 --> 00:45:31.000
At the end of the day, you're paying the taxes, you're working your heart out, and you still have a job, or you still have this, this.

00:45:31.000 --> 00:45:36.000
But when you have a structure, all of a sudden, you're able to gain the credibility to raise capital,

00:45:36.000 --> 00:45:45.000
you're able to use this strategy, and now you have a system to continue. And when you have a system, you automate it. You have the team, the training, the tools,

00:45:45.000 --> 00:45:51.000
And now, from strategy to structure, to system, to automation, you can scale.

00:45:51.000 --> 00:45:54.000
You can scale to the critical mass of the market,

00:45:54.000 --> 00:45:59.000
and your capacity. Some people don't have the capacity to scale too much. I don't want to scale too much.

00:45:59.000 --> 00:46:03.000
I like to trap. I'm sitting, by the way, right now in South France.

00:46:03.000 --> 00:46:11.000
I… I'm sitting here in the breakfast area of a hotel, because I had to stop, I'm going to Nice, South France.

00:46:11.000 --> 00:46:15.000
And I had to stop to do this call,

00:46:15.000 --> 00:46:20.000
Because I got the call, the questions earlier, and I reviewed them, and to get ready for you.

00:46:20.000 --> 00:46:27.000
So, look, I don't want to scale to a point where I can't travel, and by the way, I'm sitting here with my daughter, I don't know if you guys can see her.

00:46:27.000 --> 00:46:34.000
So, how to kind of say hello again? Hello!

00:46:34.000 --> 00:46:38.000
So, she's doing some, uh, stuff for her university.

00:46:38.000 --> 00:46:39.000
And, uh, I'm traveling with her.

00:46:39.000 --> 00:46:41.000
You guys must

00:46:41.000 --> 00:46:45.000
So, alright, so it's all good. So…

00:46:45.000 --> 00:46:48.000
Be gone how long, still?

00:46:48.000 --> 00:46:49.000
How long…

00:46:49.000 --> 00:46:53.000
I'm gonna be gone to the end of the month. I'll be back at the end of the month.

00:46:53.000 --> 00:46:54.000
Like, beginning of August

00:46:54.000 --> 00:46:58.000
Uh, no, I'm coming on the 29th.

00:46:58.000 --> 00:46:59.000
Okay.

00:46:59.000 --> 00:47:00.000
Mm-hmm.

00:47:00.000 --> 00:47:02.000
Alright. I got some questions for you. I'm going to give them to Ashley.

00:47:02.000 --> 00:47:08.000
Yes, please, go ahead and we're gonna follow up. I want to follow up with you. We're working on something. I thought…

00:47:08.000 --> 00:47:10.000
I'm going to give you a couple of texts

00:47:10.000 --> 00:47:12.000
Okay, alright, alright.

00:47:12.000 --> 00:47:13.000
Very good. So…

00:47:13.000 --> 00:47:15.000
Don't worry about it

00:47:15.000 --> 00:47:28.000
Thank you, sir. Okay, so I want to repeat this. When you have a strategy and you have the structure, you want to make sure the system works, the system is something that gives you predictable results. Once you have the system that works, you automate it before you scale.

00:47:28.000 --> 00:47:36.000
Automated means you're gonna step back and have your team run things. You just supervise and come in and monitor and push or slow down things.

00:47:36.000 --> 00:47:39.000
And then you scale. You scale as much… as big as you can,

00:47:39.000 --> 00:47:43.000
And then you work on sustainability, on simplicity.

00:47:43.000 --> 00:47:46.000
on how you're gonna pass it on to your loved one.

00:47:46.000 --> 00:47:55.000
And that's the final step. And with the debt fund, it is structured for you to continue forever. There is no expiration date, you can pass it on to your loved ones.

00:47:55.000 --> 00:47:58.000
You can give it to a charity if you want,

00:47:58.000 --> 00:48:03.000
But that's how you would work it. So, when do you start a fund? Do you have a strategy that works?

00:48:03.000 --> 00:48:09.000
then call Ashley and let's start talking, okay? If something makes you money, we can scale it.

00:48:09.000 --> 00:48:11.000
All right, good.

00:48:11.000 --> 00:48:22.000
Very good. All right, moving on to Pablo. Pablo, it's great to see you. Sharif, as you know, he's a commercial deal pro out of Puerto Rico, and he's

00:48:22.000 --> 00:48:37.000
studying to be an accountant. He had sent in a couple questions, and then I also saw that he put in a note here on the left. He said, Cherif, I have this land listed in Ponce. It is my grandfather's

00:48:37.000 --> 00:48:44.000
And the sale includes development of apartment buildings and the permits. You've seen this property in earlier

00:48:44.000 --> 00:48:58.000
commercial DealPRO calls. Is there a way that I could lock in a national tenant or some kind of QSR? It is 5 to 7 acres of land close to a Walmart and a Home Depot. Just opened my eyes to this after hearing Aishawn and Todd and you talk

00:48:58.000 --> 00:49:03.000
Yes, absolutely. I mean, don't underestimate Puerto Rico, it's growing like crazy right now.

00:49:03.000 --> 00:49:06.000
And every time somebody underestimates it, they regret it.

00:49:06.000 --> 00:49:08.000
I'm telling you, it's, uh…

00:49:08.000 --> 00:49:14.000
Puerto Rico had gone through difficult times, and goes through cyclical patterns.

00:49:14.000 --> 00:49:16.000
But show me a place that doesn't.

00:49:16.000 --> 00:49:26.000
San Francisco collapsed. I'm telling you something. Lately, the banks in California are more difficult than the banks in Puerto Rico. How is this happening? Because things are cyclical.

00:49:26.000 --> 00:49:31.000
So, you have a great parcel of land, the market is growing,

00:49:31.000 --> 00:49:37.000
there is still the wealthy are going there because of tax benefits. There's a lot of people going back after COVID and all this.

00:49:37.000 --> 00:49:42.000
So, all you can do is, when you have something of value, offer it.

00:49:42.000 --> 00:49:48.000
offer it. I am surprised one time this guy told me, I'm trying to sell this property and nobody's making offers.

00:49:48.000 --> 00:49:51.000
I said, what does your sign say? He said, no, I don't have a sign.

00:49:51.000 --> 00:49:57.000
So… so how do you want to sell it? Well, I put an ad in this thing for free on craigslist.

00:49:57.000 --> 00:50:03.000
Well, you put an ad on Craigslist, you go on retail.com, you put a sign outside, you talk to every person you see, you send…

00:50:03.000 --> 00:50:10.000
Everything that's free here on the internet, you put it all over. It's distribution channels. This is like having a hotel, and you say,

00:50:10.000 --> 00:50:12.000
Well, you know what, I just, uh…

00:50:12.000 --> 00:50:22.000
have a little website, and it's say hotel rooms, and I can't even sell them at $150 a night. Well, you gotta go on Hotels.com, you gotta go on Expedia, on Booking.com, you gotta open all your channels,

00:50:22.000 --> 00:50:27.000
It's called distribution channels. The more marketing you do, the more money you will make. The more people you see,

00:50:27.000 --> 00:50:31.000
The more you are qualified the right ones, the more you can grow. It's actually…

00:50:31.000 --> 00:50:35.000
Volume hides all your sins. Volume creates the sales,

00:50:35.000 --> 00:50:38.000
But do you have that structure that can handle the volume?

00:50:38.000 --> 00:50:42.000
The bigger the funnel, the better it's gonna be the results at the end.

00:50:42.000 --> 00:50:48.000
So, promote this land, promote it everywhere you can, put signage, talk to people,

00:50:48.000 --> 00:50:59.000
and go to investors clubs in Puerto Rico and talk to them. There is a big investors club. Don't pay them a fee. I understand somebody's charging a fee for it. No, tell them, look, I'm coming, I understand it's free.

00:50:59.000 --> 00:51:05.000
And you go… if not, you can start your own club. You'll be amazed how many people will come and join you. You got me a little excited here. Okay.

00:51:05.000 --> 00:51:08.000
So, and continue.

00:51:08.000 --> 00:51:09.000
Do you know about Fiverr?

00:51:09.000 --> 00:51:10.000
Huh?

00:51:10.000 --> 00:51:12.000
Have you ever used my book.com

00:51:12.000 --> 00:51:13.000
Say again?

00:51:13.000 --> 00:51:14.000
Have you ever

00:51:14.000 --> 00:51:16.000
Fiverr. Yeah

00:51:16.000 --> 00:51:17.000
fiverr.com

00:51:17.000 --> 00:51:21.000
Fiverr, yeah, F-I-V-E-R…

00:51:21.000 --> 00:51:33.000
No, ER, just when you get there, they have all these different categories. One of them is you could hire a guy for 50 bucks and a place to add

00:51:33.000 --> 00:51:36.000
For your

00:51:36.000 --> 00:51:37.000
Great.

00:51:37.000 --> 00:51:39.000
Whatever you're selling, like 100 places.

00:51:39.000 --> 00:51:44.000
I mean, they'll do the 100 places, 50 places, 25. You just… they're in Fiverr. Just go to Fiverr, and they'll help

00:51:44.000 --> 00:51:51.000
Oh my god, what a great idea, Todd. I, uh… I didn't know for 50 bucks you can do that. They put it in 100 places?

00:51:51.000 --> 00:51:53.000
Well, I may not have an exact

00:51:53.000 --> 00:51:55.000
Yeah, I don't know, I hear you, I hear you.

00:51:55.000 --> 00:51:59.000
Something like that, you know, it's really… it's unbelievable health. Fiverr, go ahead

00:51:59.000 --> 00:52:04.000
I love it. Actually, I'm going to check it myself.

00:52:04.000 --> 00:52:05.000
There you go.

00:52:05.000 --> 00:52:12.000
Making things happen on this call. All right, Pablo's next question. He said, when do you

00:52:12.000 --> 00:52:31.000
Funny, we just covered this, but when do you know the perfect time to start a fund? I have been very interested in that model, but the problem on Puerto Rico is mostly deal flow. Wanted to know if there is another way to capitalize on creating a real estate fund here in Puerto Rico and use it to fund other real estate projects from other people.

00:52:31.000 --> 00:52:39.000
Wanted to see your take on the different routes that can be pursued with real estate funds and that business to see if it would be a good fit for me in my position.

00:52:39.000 --> 00:52:48.000
Okay, when you say the problem in Puerto Rico is mostly deal flow. I assure you that our investors clubs that have so many deals,

00:52:48.000 --> 00:52:50.000
they can't even…

00:52:50.000 --> 00:52:56.000
catch them all. And they meet, I believe, every Saturday at 7am or something like this. It's called, um…

00:52:56.000 --> 00:53:03.000
I go and speak there every now and then, they invite me to speak. That's how I know, but I'm gonna give you the name of the group.

00:53:03.000 --> 00:53:06.000
REIA RECO.

00:53:06.000 --> 00:53:09.000
Real estate investment association, I think, RICO.

00:53:09.000 --> 00:53:11.000
And, um, you can…

00:53:11.000 --> 00:53:12.000
Whatever

00:53:12.000 --> 00:53:14.000
Yeah, so check that out.

00:53:14.000 --> 00:53:17.000
And the way you would do your fund…

00:53:17.000 --> 00:53:21.000
The way you do the fund in Puerto Rico, it's very unique.

00:53:21.000 --> 00:53:31.000
Uh, because attorneys in Puerto Rico want to charge, like, $70,000 to do a real estate fund. I mean, it's just crazy, but we can get it done for you for the $25,000 promotion that we have ran.

00:53:31.000 --> 00:53:39.000
And I've set up Eduardo, Joy, and he's doing very well, and we set up a couple other people, and they do very well. Why?

00:53:39.000 --> 00:53:47.000
Because you can raise capital and loan people. And in Puerto Rico, you can even do loans that are with an upside gain.

00:53:47.000 --> 00:53:50.000
So, talk about reducing your risk.

00:53:50.000 --> 00:53:53.000
You can loan and say, I'm gonna…

00:53:53.000 --> 00:53:57.000
I will loan you at, let's say, 10%, and I want 20% of the upside gain.

00:53:57.000 --> 00:54:02.000
This way, and you can even defer payments, and you can do a lot of very good things

00:54:02.000 --> 00:54:10.000
Because it's not easy to do construction loans in Puerto Rico. So you see where the problem is, and you're bringing the solution with the real estate fund.

00:54:10.000 --> 00:54:14.000
So that's definitely an opportunity there.

00:54:14.000 --> 00:54:19.000
Pablo, any follow-up on that?

00:54:19.000 --> 00:54:20.000
No. Alrighty.

00:54:20.000 --> 00:54:21.000
No.

00:54:21.000 --> 00:54:35.000
Okay, perfect. And then he is asking a follow up also would love to see your take on Puerto Rico real estate and where you think it's headed and the opportunity that you see here on the island.

00:54:35.000 --> 00:54:41.000
So, real estate, when it comes to generalization, it's like, what do you think of the stock market?

00:54:41.000 --> 00:54:48.000
Well, which stock? So, what area in Puerto Rico, and all this? Now, you know I focus on Old San Juan.

00:54:48.000 --> 00:54:50.000
why Old San Juan? Because…

00:54:50.000 --> 00:54:52.000
I like to focus on an area,

00:54:52.000 --> 00:54:59.000
Focus on specific type of properties and understand values. This way, when there is a price, I get excited about the value.

00:54:59.000 --> 00:55:06.000
I never get excited about price or no price. The price means nothing. As a matter of fact, a number by itself doesn't mean anything unless you compare it to something else.

00:55:06.000 --> 00:55:09.000
If I tell you this product is very expensive,

00:55:09.000 --> 00:55:11.000
And say, well, how do you know it's expensive?

00:55:11.000 --> 00:55:17.000
it's a million dollars. Well, compared to what? Everything else is selling at $700. Ah, now you understand, there is a comparison.

00:55:17.000 --> 00:55:27.000
So, in Puerto Rico, you have to focus on a specific area and see what the demand is. Some areas want residential, they will be doing great in Airbnb.

00:55:27.000 --> 00:55:29.000
Some areas need the mixed-use commercial,

00:55:29.000 --> 00:55:32.000
But remember, there are a lot of tax incentives.

00:55:32.000 --> 00:55:44.000
In Ponzi, specifically, there are tax benefits just like Old San Juan. Ponce is trying to cater some cruises to bring cruise ships and the cruise business is growing like crazy, so you need to take a look at this.

00:55:44.000 --> 00:55:51.000
For me, I don't want to grow beyond Old San Juan. I'm plenty there. I actually… I'm seldom…

00:55:51.000 --> 00:55:53.000
buying any more properties, uh,

00:55:53.000 --> 00:56:00.000
there. Why? Because I have the best inventory. The rest of the properties are not in the best locations for me to be too interested.

00:56:00.000 --> 00:56:02.000
And guess what? It sold out.

00:56:02.000 --> 00:56:10.000
It sold out. I have a waiting list of tenants. I've never had that. I've been there 23 years. I never had a waiting list of tenants. Big tenants, like,

00:56:10.000 --> 00:56:15.000
Tenants from Colombia with designer clothes and stuff. Why? Because cruise business is growing.

00:56:15.000 --> 00:56:20.000
So, that is what I call an asymmetric opportunity

00:56:20.000 --> 00:56:22.000
Because of the limited supply. That means

00:56:22.000 --> 00:56:24.000
you don't have to risk much, but the upside is big.

00:56:24.000 --> 00:56:30.000
But you just have to hunt for the deals, take the time, look for where the tax incentives are,

00:56:30.000 --> 00:56:35.000
Look at where you can get some mixed-use buildings, some, you know, big need for industrial,

00:56:35.000 --> 00:56:41.000
warehousing. Look at that, and look at classificaros online for Puerto Rico,

00:56:41.000 --> 00:56:46.000
Just looking at it every day for a few minutes is gonna educate you about all… so much of what's going on.

00:56:46.000 --> 00:56:52.000
And for those that are in other areas, you look at Realtor.com, you look at LoopNet.com, you start seeing things,

00:56:52.000 --> 00:56:57.000
train yourself to look at what's on the market, what's coming, what's selling, how long did it sit on the market.

00:56:57.000 --> 00:57:06.000
Did they drop the price? Did they increase the price? What's going on? You'll get to know specifically on a specific area, and it gets you to get really good at the game.

00:57:06.000 --> 00:57:10.000
So, keep us posted, Pablo, I'm very excited for you.

00:57:10.000 --> 00:57:16.000
Very good. Pablo, you have anything else that you want to talk to him about?

00:57:16.000 --> 00:57:29.000
Yeah, I wanted to touch a little bit on the Bonsai land

00:57:29.000 --> 00:57:30.000
Yeah.

00:57:30.000 --> 00:57:33.000
I wanted to know if there's, like… he wants to get out of it, because, yeah, he doesn't want to do the development side, because it's so far off. I mean, it's, like, 2, 3 years

00:57:33.000 --> 00:57:51.000
And also, it doesn't have, like, the capital to do it. So that's why I was talking with my father to see if there was, like, a way that maybe we could get the land and just, like, pay him back with some type of structure, and if we could get, like, a national tenant there

00:57:51.000 --> 00:58:09.000
or a QSR. So, yeah, I wanted to know a little bit more about maybe a creative structure that I could do with him to just pay him what he wants to pay because he has like a debt for that land because he's had it for so much time, and he's about, like, $2 million in debt

00:58:09.000 --> 00:58:10.000
And that project

00:58:10.000 --> 00:58:11.000
Okay,

00:58:11.000 --> 00:58:18.000
So, yeah, he just wants to get out of it, and I wanted to see if there's a way, like, that we could stay with the land

00:58:18.000 --> 00:58:21.000
Well, I suggest, um…

00:58:21.000 --> 00:58:25.000
The debt is… who's that? Your dad?

00:58:25.000 --> 00:58:26.000
No, it's my grandfather's debt

00:58:26.000 --> 00:58:28.000
You're grandfather, okay?

00:58:28.000 --> 00:58:29.000
Yeah

00:58:29.000 --> 00:58:35.000
So, I would say, help him without taking over the debt, like, help him by promoting the property,

00:58:35.000 --> 00:58:41.000
For a developer to come in, you can put the promotion in Puerto Rico, and a lot of developers don't want to buy

00:58:41.000 --> 00:58:48.000
and then get construction loans. You can say, willing to partner with the developer by pledging the land that we currently have.

00:58:48.000 --> 00:58:54.000
Now, what projects are very profitable in the area of Puerto Rico are projects like, um…

00:58:54.000 --> 00:59:02.000
hotels, which is hospitality deals, where they give you 30-40% tax credit.

00:59:02.000 --> 00:59:06.000
So the person will come in, partner with your grandpa,

00:59:06.000 --> 00:59:08.000
And that what they will do is maybe they say, okay,

00:59:08.000 --> 00:59:14.000
We'll take the land from you at $2.5 million, or 3 million, but we're not gonna pay you anything right now, we're just gonna go get

00:59:14.000 --> 00:59:17.000
the construction loan, get the permits,

00:59:17.000 --> 00:59:21.000
break down, get from the tourism office the approval for the tax credits,

00:59:21.000 --> 00:59:24.000
And then they are gonna get the construction loan, build it,

00:59:24.000 --> 00:59:33.000
And then they're gonna pay him the $2.5 million or $3 million from the selling, or actually, they may not even need to sell it, they may just need to go get a loan.

00:59:33.000 --> 00:59:39.000
To pay off the construction loan and pay off your grandpa, and they will own it. And there are many hotel companies in Puerto Rico looking for this,

00:59:39.000 --> 00:59:41.000
That is a shortage of hotel…

00:59:41.000 --> 00:59:47.000
inventory, hotel rooms, inventory in Puerto Rico. That's why they're doing these crazy incentives.

00:59:47.000 --> 00:59:58.000
So, look into promoting it to bring developers to do everything without buying the land, they will just have an option to buy it from him at so much. And it will be a very…

00:59:58.000 --> 01:00:03.000
clean partnership. He's already stuck with the payments. He can be stuck for 3 more years.

01:00:03.000 --> 01:00:07.000
And at least when he cashes out, he cashes out a nice amount of money.

01:00:07.000 --> 01:00:22.000
Cool.

01:00:22.000 --> 01:00:23.000
Yes.

01:00:23.000 --> 01:00:27.000
Yeah, that sounds interesting. I did talk to him to see if he wanted to partner with like a developer. I did mention that, but he's so uninterested in doing that because of his age. So he doesn't like he doesn't want to do it. I mean, he's still working. He does

01:00:27.000 --> 01:00:43.000
He's a CPA, he does work, and he's very healthy, but he doesn't want to work with the hassle of being on a new project, new development, so that's why I was trying to see if there's, like, another structure that could be able

01:00:43.000 --> 01:00:51.000
to maybe us getting the land and just giving him what he wanted, and we just offer that type of structure if the deed is, like, on

01:00:51.000 --> 01:00:54.000
Yes. So…

01:00:54.000 --> 01:00:55.000
Migrant, yeah

01:00:55.000 --> 01:00:57.000
So, you have a big challenge. You know, there is a saying,

01:00:57.000 --> 01:00:59.000
aging…

01:00:59.000 --> 01:01:03.000
is the aggressive pursuit of comfort.

01:01:03.000 --> 01:01:12.000
Okay, because if you don't want to age, you're going to be exercising a lot, you're going to push yourself, you're going to actually not be so comfortable. Actually, the more you push your body, the stronger you're gonna become.

01:01:12.000 --> 01:01:14.000
And I would say also that

01:01:14.000 --> 01:01:18.000
those who don't become wealthy is because of their aggressive pursuit

01:01:18.000 --> 01:01:20.000
to comfort

01:01:20.000 --> 01:01:28.000
zone of, I don't want to take risk, mm, I don't want to do this, I want to stay safe, I have my job, I'm not going to leave it, I'm not gonna do this on the side.

01:01:28.000 --> 01:01:35.000
So, you have to force yourself… well, you're grandpa may not change his mind. I think people after a certain age,

01:01:35.000 --> 01:01:41.000
Don't change their mind. They just… they think, like, okay, this is what I've been, this is what I'm comfortable with, so I'm not gonna do it.

01:01:41.000 --> 01:01:50.000
But you have to tell him, do you expect to live another 5 years? Yeah, if so, let's promote the property, and let's cash you out, because you're going to give us a liability of $2 million.

01:01:50.000 --> 01:01:56.000
If you really truly love us, let me help you get out. Let me help you get out ahead of the game so you can pay off your debt,

01:01:56.000 --> 01:01:58.000
And how the family grow.

01:01:58.000 --> 01:02:04.000
It's a difficult conversation, but all success comes with difficult conversations.

01:02:04.000 --> 01:02:05.000
All right, best of luck.

01:02:05.000 --> 01:02:06.000
Great.

01:02:06.000 --> 01:02:21.000
And by the way, you're doing the right things by getting the training. I mean, I kind of felt when you talked about that deal a little while ago that he was because he had gone through probably all of the permitting work and getting everything done so it could be set up for apartments, he was kind of stuck on that and then it didn't

01:02:21.000 --> 01:02:37.000
go through, but you even having these calls, and if you get into the single tenant with the JV, you're getting knowledge above your dad, your uncle, your grandpa, that's gonna help them, you know? And then it's like a family thing, and how Cherif always talks about the legacy. I mean.

01:02:37.000 --> 01:02:41.000
It's sitting there, it's an expense right now, and you can really make it

01:02:41.000 --> 01:02:46.000
a family dream to get that property developed. I mean, it's by Walmart, that's amazing.

01:02:46.000 --> 01:02:47.000
Yeah.

01:02:47.000 --> 01:02:48.000
Yeah, exactly.

01:02:48.000 --> 01:02:51.000
All right, very good.

01:02:51.000 --> 01:02:52.000
Sure. You're welcome.

01:02:52.000 --> 01:02:53.000
Thank you very much.

01:02:53.000 --> 01:02:57.000
So, I think doing all the right things. Thank you, Cherif, for that feedback. Welcome back, Pablo. It's good to have you.

01:02:57.000 --> 01:02:58.000
Thank you, thank you.

01:02:58.000 --> 01:03:01.000
McDonald's nearby

01:03:01.000 --> 01:03:02.000
What?

01:03:02.000 --> 01:03:05.000
Is McDonald's nearby?

01:03:05.000 --> 01:03:08.000
No, it has a Walmart and

01:03:08.000 --> 01:03:15.000
And the Home Depot. It's closer to like an industrial section of Bonsai

01:03:15.000 --> 01:03:18.000
There's no QSRs around?

01:03:18.000 --> 01:03:22.000
I didn't see any

01:03:22.000 --> 01:03:24.000
around

01:03:24.000 --> 01:03:27.000
That might be a really big opportunity.

01:03:27.000 --> 01:03:28.000
Yep

01:03:28.000 --> 01:03:29.000
Yeah, that's why.

01:03:29.000 --> 01:03:30.000
Okay, let's go to the…

01:03:30.000 --> 01:03:39.000
Pablo, we'll talk about that August 11th training. You're already in Puerto Rico, sounds like it makes sense for you to be there.

01:03:39.000 --> 01:03:40.000
Oh, you're gonna be here on August

01:03:40.000 --> 01:03:44.000
Yes.

01:03:44.000 --> 01:03:45.000
Oh, I don't see it

01:03:45.000 --> 01:03:59.000
Yeah, August 11th, I was telling you on the chat there. So Cherif's next training for JV, which is build to suit, which is, that would be huge information for you, you know how to find the national tenants and put those deals together. So that's August 11th. So we can talk about that a little bit

01:03:59.000 --> 01:04:02.000
On Monday, if that works for your schedule, okay?

01:04:02.000 --> 01:04:04.000
Yeah, for sure.

01:04:04.000 --> 01:04:05.000
Thank you very much.

01:04:05.000 --> 01:04:06.000
All right, thank you. Okay, moving

01:04:06.000 --> 01:04:12.000
have a good weekend. Moving into Gigi, Gigi is in

01:04:12.000 --> 01:04:22.000
Georgia, and has been finishing up the masterclass. So, her question is, discuss the different ways to look at a deal or a contract

01:04:22.000 --> 01:04:25.000
or negotiating. Can you show sample contracts

01:04:25.000 --> 01:04:32.000
Yes. So, I will show you a sample contract right now. It's the contract I have pending by August.

01:04:32.000 --> 01:04:37.000
I made some changes so we don't have the names and the location, etc., but…

01:04:37.000 --> 01:04:39.000
Um, so…

01:04:39.000 --> 01:04:45.000
the way I negotiate it is I always try to understand what the problem is with the seller.

01:04:45.000 --> 01:04:48.000
What is it that they have in mind?

01:04:48.000 --> 01:04:50.000
You know, when you sit with anybody,

01:04:50.000 --> 01:04:54.000
anybody, okay? They have an agenda of some sort in their head.

01:04:54.000 --> 01:05:04.000
And your goal is to dial into their head and understand what they want. Do they want to loan me money? Do they want to borrow from me? Do they want to help me? Do they want to hurt me? Do they want to…

01:05:04.000 --> 01:05:10.000
tell me that they want vacation time. What is it that they want? Okay, an employee of yours, your boss, your colleagues,

01:05:10.000 --> 01:05:14.000
People have agendas, and you just have to understand

01:05:14.000 --> 01:05:21.000
And see if you can create… it's not like you have to get upset based on their agenda, but can I create a win-win?

01:05:21.000 --> 01:05:26.000
Can I… this person wants me to do this for them. What can we exchange? I will do this for you, Joe.

01:05:26.000 --> 01:05:28.000
But I want you to then do that for me.

01:05:28.000 --> 01:05:32.000
And once we agree, I like to put things in writing.

01:05:32.000 --> 01:05:35.000
as best as possible, okay?

01:05:35.000 --> 01:05:38.000
So, so when it comes to negotiating,

01:05:38.000 --> 01:05:41.000
this deal that I'm going to show you the contract,

01:05:41.000 --> 01:05:46.000
And I did mention it, by the way, on the previous call, if you remember. This gentleman came to me, he said,

01:05:46.000 --> 01:05:51.000
You told me 2 years ago, or 3 years ago, that you wanted me to carry a note at 5%.

01:05:51.000 --> 01:05:53.000
I'm willing to carry the note at 5%.

01:05:53.000 --> 01:05:57.000
I'm like, wow, interest is higher than 3 years ago, or whatever it was.

01:05:57.000 --> 01:05:59.000
And I said, well, um…

01:05:59.000 --> 01:06:04.000
Remind me of the deal. Oh, the deal, this property, and I own it, well, my wife owns it,

01:06:04.000 --> 01:06:10.000
But she wants to sell it, he's a wealthy guy, he's an older guy, his health is not the best, and he doesn't want to deal with anything.

01:06:10.000 --> 01:06:12.000
And he tells me,

01:06:12.000 --> 01:06:18.000
I did not increase the… I dropped the rent for the current tenant that had been with me

01:06:18.000 --> 01:06:21.000
When COVID hit, I dropped the rent in half.

01:06:21.000 --> 01:06:24.000
And more. And I've not increased it.

01:06:24.000 --> 01:06:31.000
I don't even have a current agreements with them, it's just all verbal, but they pay me. Of course they pay him. If the rent is $3,500,

01:06:31.000 --> 01:06:34.000
But he's charging them $17.50, that would be crazy not to pay him.

01:06:34.000 --> 01:06:42.000
So he said, I want to set it because I don't want any confrontations with them, and the property needs some repairs and rehab. I know you're an expert, you know the stuff.

01:06:42.000 --> 01:06:46.000
So you just come in and give me a million six.

01:06:46.000 --> 01:06:48.000
I said Million6 is too much.

01:06:48.000 --> 01:06:53.000
I would not be interested. Remember, I talked about negotiation

01:06:53.000 --> 01:06:56.000
Last month. And I said, when you…

01:06:56.000 --> 01:07:00.000
negotiate with somebody. You have to, through the conversation,

01:07:00.000 --> 01:07:12.000
believe in the fact that you don't want the deal, because it will come across. I don't… I don't know, I'm dying now to get the property, but I convinced myself, ah, I can walk away, I don't need the deal, I don't need the hassle, I'm like…

01:07:12.000 --> 01:07:19.000
Why? Because they have to feel the deal is not gonna happen. Otherwise, they won't negotiate much. They will have a positioning, they will hold it.

01:07:19.000 --> 01:07:20.000
-Oh

01:07:20.000 --> 01:07:28.000
And then all of a sudden, he started working with me. He said, okay, well, what do you offer? And he said, why don't you put it in writing, because I'm getting confused. I said, absolutely.

01:07:28.000 --> 01:07:30.000
Therefore, here is the contract.

01:07:30.000 --> 01:07:32.000
that, uh…

01:07:32.000 --> 01:07:36.000
what I sent him. And we talked on the phone,

01:07:36.000 --> 01:07:43.000
And, uh, more or less, he's struggling with one part of it, but let me show you a contract, since you want to see a contract.

01:07:43.000 --> 01:07:49.000
Um, option to purchase agreement. This option, you see, it's an option to purchase.

01:07:49.000 --> 01:07:51.000
This option to purchase agreement,

01:07:51.000 --> 01:07:55.000
an agreement or option is entered as of…

01:07:55.000 --> 01:07:59.000
And the date. Effective date. By?

01:07:59.000 --> 01:08:05.000
SL is his wife, I don't want to put her name, of legal age, married business person, and resident of…

01:08:05.000 --> 01:08:14.000
that you're gonna put any person's address. I'm giving you kind of a template.

01:08:14.000 --> 01:08:32.000
We are LLC, which is my company, a limited liability company organized under the laws of, and then you can put the state, you can put whatever LLC you have or so under your name whatever represented in this act by its manager, Cherif Medawar of legal age, business person and resident of I'm resident of Puerto Rico legally

01:08:32.000 --> 01:08:39.000
Then, of course, I'm option E. The option E is the one who's going to give them money. The option O the one that's going to say, I'll take the money

01:08:39.000 --> 01:08:43.000
And are we and we're going to actually close later

01:08:43.000 --> 01:08:52.000
Option R, which is him, option E, me, jointly referred to as parties and individually as party. Okay

01:08:52.000 --> 01:08:57.000
The parties agreed to the following terms and conditions, the property. You have to describe the property.

01:08:57.000 --> 01:09:12.000
Option Or is the owner of feesimple, a commercial building located at 100 Clare Street. I changed slightly the name with parcel number X, Y, and Z. The property object of this option agreement, it should be subject. But anyway

01:09:12.000 --> 01:09:22.000
is the entire land building as well as fixtures and surface rights thereof. Option right and terms option or which is him

01:09:22.000 --> 01:09:41.000
and his wife hereby confers upon option E the right to purchase the property in its as is where is conditioned. I wanted to make it simple for him. I'm listening to him. He doesn't want hassles, he doesn't want to deal with people, doesn't want to deal with increased rates, he doesn't care about money, he just wants out. He wants it out of their name.

01:09:41.000 --> 01:10:06.000
Which right may be exercised on or before August 30th, 2026, the closing may occur after August 30, 2026, provided that option E me timely exercises the option and closing occurs within

01:10:06.000 --> 01:10:07.000
The capital of the lease option

01:10:07.000 --> 01:10:09.000
After optionee's receipt of the tenant certification required under Section 15. I told him, get me certification that these tenants are actually paying 1750 and I don't know, 1,800 and 3,500 in the back

01:10:09.000 --> 01:10:12.000
During last time

01:10:12.000 --> 01:10:16.000
I need that. I need that

01:10:16.000 --> 01:10:24.000
to be part of the deal. You get me that certification, I will then close right away. See, so it's an option. It's an open option

01:10:24.000 --> 01:10:28.000
But I need it by a certain date, okay?

01:10:28.000 --> 01:10:40.000
So purchase price, the total purchase price of the prop shall be $1,090,000. It could be a million one, but round numbers don't work so well

01:10:40.000 --> 01:10:47.000
They feel like, oh, maybe I can shave 50. But a million 90, they say, can you get it to the million one?

01:10:47.000 --> 01:11:01.000
And vice versa, you see the purchase price. The purchase price shall be paid as follows. The sum of 290,000 representing the non-refundable option consideration paid by option E pursuant to this agreement.

01:11:01.000 --> 01:11:04.000
shall be credited against the purchase price

01:11:04.000 --> 01:11:20.000
So he was talking, he said, well, I don't know how much you want to put down payment because I don't know, but I'm carrying it at 5%. I said, I'll give you $290,000 option non-refundable. The minute you say yes, and you can get me these certificates, if it's tomorrow

01:11:20.000 --> 01:11:24.000
I'll give you tomorrow 290,000 non-refundable. He stopped talking

01:11:24.000 --> 01:11:26.000
He could not believe it.

01:11:26.000 --> 01:11:33.000
Because he's going to have some cash flow with him on some cash flow, and he's going to have some cash upfront.

01:11:33.000 --> 01:11:50.000
Now under consideration paid by option E pursuant to this agreement shall be credited against the purchase price at closing, and the balance of $800,000 shall be evidenced by a promissory note executed by option E, me. I will sign a promissory that I promise to pay him

01:11:50.000 --> 01:12:02.000
in favor of the optional, him and his wife at closing, bearing interest at the rate of 5% per annum. That's what he told me. He wanted five interest only. Why am I paying interest only?

01:12:02.000 --> 01:12:05.000
Because the interest-only payment is all deductible

01:12:05.000 --> 01:12:07.000
And interest only is beautiful.

01:12:07.000 --> 01:12:10.000
Why? It's fully deductible for me.

01:12:10.000 --> 01:12:16.000
Payable in annual installments of $40,000 per year

01:12:16.000 --> 01:12:23.000
See, 5 times 8 is 40,000 interest. Now, I'm willing to pay more

01:12:23.000 --> 01:12:36.000
But he's happy with the 5% because he got a big chunk of cash upfront, and it's an option to buy. That means if I don't actually excise my option, he keeps the 290, he's non-refundable, and maybe one or two years of the cash flow

01:12:36.000 --> 01:12:47.000
Option E may prepay the promissory loan in whole or in part at any time without premium penalty or charge. I'm the optionee. I'm going to give you an option

01:12:47.000 --> 01:12:54.000
to buy, I'm going to give you $290,000, I'll give you $40,000 a year. But at any time, I can do what

01:12:54.000 --> 01:13:08.000
I can retire that note. Option E may prepay, prepay that needs pay at all. You don't have to wait 10 years, five years, 30 years. Why? Because once I fix it, increase the rent, I can flip that property

01:13:08.000 --> 01:13:16.000
If I'm buying at 1,090, I'm gonna fix it a little bit for maybe 100,000. So let's say it's going to be a million to the cost.

01:13:16.000 --> 01:13:25.000
I'm going to increase the rentals or conversation. You pay this, this is the market rent or you leave. It's a very friendly conversation. I don't want to hurt you, but you're paying way less than the market.

01:13:25.000 --> 01:13:29.000
So you pay me when I go up what I want, or do you leave?

01:13:29.000 --> 01:13:34.000
I mean, they're abusing this guy, these tenants. They're playing dumb. It's unbelievable.

01:13:34.000 --> 01:13:42.000
He said to me, oh, I talked to the restaurant guy upstairs, and then he got upset, and he walked away from me. Walked away from you? You're the landlord? You let him walk away

01:13:42.000 --> 01:13:44.000
Are you kidding me?

01:13:44.000 --> 01:13:59.000
But anyway, he's wealthy, he doesn't care. I mean, he's just sitting there, look, I was in the jury business, this is just such a hassle, I don't want to deal with my wife didn't want to sell it. Now she finally said, sell it. So you can listen and hear the agony in his… in what he wants to do. So I'll give him the solution

01:13:59.000 --> 01:14:16.000
I'm your solution guy and I can flip it at maybe 300,000 profit, 400,000 profit, or I can keep it once it performs better, I can go to the bank and I can say, here, I refinance. I even told him, if you want your money at any time, that whole amount

01:14:16.000 --> 01:14:27.000
800,000. You call me. You give me an advance notice, and within 90 days I'll cash you out, because I can get a loan once I fix it and all this. But give me at least first 90 days to get the work done

01:14:27.000 --> 01:14:30.000
He said, no, no, I like the income, just you don't have to worry.

01:14:30.000 --> 01:14:45.000
Option deposit in consideration for the option granted here in, option E agrees to deliver to option or a non-refundable deposit of $290,000. Now, when do you give a non-refundable deposit? When you know you're getting a great deal

01:14:45.000 --> 01:14:56.000
How do you know you're getting great deed? You go in and you see what's the rent versus what the real rent? What's the condition of the property? What's the square footage? What can I do with it that the other person doesn't want to do deal with?

01:14:56.000 --> 01:14:57.000
So

01:14:57.000 --> 01:14:59.000
And that's how it happens.

01:14:59.000 --> 01:15:04.000
And then we say that the deposit shall

01:15:04.000 --> 01:15:08.000
shall not earn interest

01:15:08.000 --> 01:15:11.000
Okay, so I'm going to deposit the 290,000

01:15:11.000 --> 01:15:28.000
It's not going to earn interest until he says, Okay, we're gonna close. Then he gets the money applied to the purchase price. You want to make sure that it goes from the million 90 is going to be reduced to 190,000. So the 800,000 is the balance

01:15:28.000 --> 01:15:41.000
And by the way, I'm going to send everybody, actually, I'm going to send you this so you can send it to everybody. It's in a Word doc, so you guys can look at it, can play with it. It could be a template you can use.

01:15:41.000 --> 01:15:43.000
You know, then we say here

01:15:43.000 --> 01:15:47.000
In paragraph two

01:15:47.000 --> 01:16:01.000
It's retained by option or that is the option, if option E breaches its obligation under this agreement. I have an agreement with him. If I don't go through, if I don't do what I'm supposed to do, he will keep the 290. As I know I'm gonna perform

01:16:01.000 --> 01:16:13.000
Number three, it's refundable to me, the optionee, in the event. If he doesn't do what he supposed to do, he said, no, I'm not going to sign. Okay, well, then I need it back. So we're depositing it

01:16:13.000 --> 01:16:17.000
Okay? And and oops

01:16:17.000 --> 01:16:26.000
And I know he's not going to play games because I will have him with this contract.

01:16:26.000 --> 01:16:40.000
If he fails to deliver marketable title. By the way, the property is marketable title. He owes nothing against it. The guy is free and clear. He owned it for 30 years. He bought it for, I think, 100

01:16:40.000 --> 01:16:50.000
He said 120,000 or something. I mean, it's like, it's a sweet deal for the guy. He's happy, I'm happy, he doesn't want to deal with it. Apparently, he talked to a couple other people, I told him they don't want to deal with any construction work there

01:16:50.000 --> 01:17:05.000
So you got the idea here that I have some stuff to do. He has some stuff, but he will have 290,000 upfront. I acknowledge and agree that the option deposit constitutes consideration to option or for option or agreement.

01:17:05.000 --> 01:17:18.000
to enter into this agreement with option E. He agrees that this is good consideration. By the way, if you write an option with somebody, and you give them $1,000 only, and you have that paragraph

01:17:18.000 --> 01:17:30.000
Option E, which is you giving the option one, acknowledges and agree that the option deposit constitutes consideration to option R. For option O's agreement to enter into this agreement with option E.

01:17:30.000 --> 01:17:43.000
Not to now we're telling him you cannot advertise, market the property for sale or sell and or sell the property to another purchaser while this agreement is in effect. Why? Because I just you just got my money.

01:17:43.000 --> 01:17:54.000
And when we give somebody the money, we record a cloud on title. You understand? It's not like, oh, this is on his. I think he's a good guy, and he looks good, and he seems like a nice guy. You never know.

01:17:54.000 --> 01:17:57.000
I've seen people become monsters when you deal with money.

01:17:57.000 --> 01:18:00.000
I'm dealing with a guy right now

01:18:00.000 --> 01:18:10.000
And why has he become a monster? Because all of a sudden he owes money. He was all very nice and sweet when he was making money. But then we did the deal and he owes money.

01:18:10.000 --> 01:18:16.000
the deal netted that he owes money. All of a sudden it's like, I have problems. You don't understand. I'm going through divorce.

01:18:16.000 --> 01:18:25.000
Okay, so because I have the contract and because I have the liens and because I have everything, I'm able to actually move forward on what I want.

01:18:25.000 --> 01:18:33.000
Provided that option E has exercised the option specified in this agreement. So everything here is saying I'm going to give you money.

01:18:33.000 --> 01:18:39.000
You're gonna give me just some… some proof that they're renting from you, and I'm gonna close, and I'll make you payments monthly

01:18:39.000 --> 01:18:58.000
So you're going to have a seller financing when we close, you're going to carry 800,000 and going to get you 40,000 a year. The condition of the property. I am the optionee. I will purchase the property as is or is. Can I make it any sweeter for this guy? I don't need to do inspections. I don't need to do anything. Why? Because I already got my contractor, my property manager, Mauricio.

01:18:58.000 --> 01:19:02.000
They went through, they looked, and they gave me a list of stuff that we got to do

01:19:02.000 --> 01:19:07.000
And did I call him and bother him with all this? No. I'm waiting for him to

01:19:07.000 --> 01:19:19.000
contact me. He said, listen, I'm busy right now, I'll contact you later. He talks very slowly. He says, I am busy right now. I know you're traveling, so I'll talk to you later.

01:19:19.000 --> 01:19:34.000
So I have to slow myself down. I'm very fast guy. Actually, if there's any problem about me in life is I feel people are walking slowly, entering the plane slowly, exiting the airplane slowly, talking slowly, serving the food slowly, okay? I'm like, I just

01:19:34.000 --> 01:19:39.000
So I have to slow myself

01:19:39.000 --> 01:19:55.000
Especially to match my daughter's speed when we're enjoying Paris and all this. So, this guy had to slow myself down completely as he's talking. I said, oh, no, worry about it, we… take your time, I'm not coming to the end of

01:19:55.000 --> 01:20:03.000
We can meet later, some training with some people around August 11th. We can meet around that time. Is that good for you?

01:20:03.000 --> 01:20:13.000
That silence. And then finally says, oh yeah, I think that will work out. I'm like, oh my God. Anyway, so you got the idea. Match their pace. There is a breaking effect

01:20:13.000 --> 01:20:21.000
If somebody's fast and you're slow, and vice versa, but if you're aware of it, you match their pace

01:20:21.000 --> 01:20:22.000
they would be good with

01:20:22.000 --> 01:20:29.000
Conditions of the propheum bind it as is, use option or continue to use the property

01:20:29.000 --> 01:20:44.000
legally and will maintain it until I exercise my option. I don't want him to go and take some stuff out. We already talked. Don't take anything out, don't destroy anything, don't start fixing anything. I'll take it as is. Maintenance and repair. The property, the optional, we'll continue maintaining it for the tenants.

01:20:44.000 --> 01:20:59.000
Keith, he will have the keys and he will give them to me when I close. I am the optionee. Do I want the right to assign? I say, yeah. Option E may assign, sell or transfer this agreement or its right and obligation here under to an affiliate. I can

01:20:59.000 --> 01:21:09.000
send it… assign it to one of my entities. I can assign it to a nominee. I can assign it to another person that will come in and take my position.

01:21:09.000 --> 01:21:17.000
And I have to decide what's better. Do I assign it now to somebody else that sees the upside? If I assign it now, I'll make 100,000 maybe

01:21:17.000 --> 01:21:22.000
But if I do the work and assign it, I make 300,000. So what's better?

01:21:22.000 --> 01:21:24.000
Okay? Do the work

01:21:24.000 --> 01:21:33.000
If I'm starting and I don't have money to do the work and I don't have this, I would be optioning this deal for as little as possible, like $10,000.

01:21:33.000 --> 01:21:52.000
And I'll get the 10,000 from a cash advance credit card. I didn't start having money. And then I got the deals and I started doing some work by borrowing on credit cards and this and getting these things from like Home Depot six months payments later, etc. And then I would assign it to somebody else, walk away with the 100K, 100K at that time was gold for me

01:21:52.000 --> 01:21:58.000
Today, I don't want less than a quarter of a million, or 300 on a deal like this, because I can do the work, I have the tea

01:21:58.000 --> 01:22:02.000
So insurers, he has to keep the insurance maintain it current

01:22:02.000 --> 01:22:09.000
Taxes. He has to keep paying the taxes, the property taxes, and they're going to be prorated when we close.

01:22:09.000 --> 01:22:12.000
Notice to exercise the option I

01:22:12.000 --> 01:22:19.000
shall have the right to exercise the option at any time during the terms by delivering written notice of intent to purchase

01:22:19.000 --> 01:22:27.000
An exceptional optionee, me also, will not be obligated to close until you see, I can close anytime

01:22:27.000 --> 01:22:30.000
But I'm not obligated to close

01:22:30.000 --> 01:22:34.000
Okay, until the optionor has delivered the tenant certification required

01:22:34.000 --> 01:22:37.000
Can you see where I'm going with this?

01:22:37.000 --> 01:22:47.000
I know he doesn't want to deal with the tenants. So when I get back to Puerto Rico first week of August, I'm gonna tell him, you know what, I don't want to have… I don't want you to hassle with the tenants.

01:22:47.000 --> 01:22:56.000
I'll just go ahead and close. You want my 290? What's he going to say? Oh, cross that off. Let's initial it and I'll sign give me the 290, make me the payment

01:22:56.000 --> 01:23:01.000
But I got to create a little hurdle, a little problem, so I can solve it later

01:23:01.000 --> 01:23:16.000
Because if you're too easygoing in negotiation, they're gonna want more. Oh, give me the washer and dryer. Oh, you're selling the house, you can leave them for me? How about also give me this bed? How about give me this chandelier? How about give me… well, chandelier comes with it, but like, how about give me the car? There is a car in the garage, give it to me?

01:23:16.000 --> 01:23:18.000
They'll keep asking

01:23:18.000 --> 01:23:27.000
So you have to understand that dynamic. I created the problem for him, go get me proof that they're paying this and that and writing since the leases have not been renewed or not.

01:23:27.000 --> 01:23:43.000
Then, last minute I'm going to say, let me remove this so there's no more pressure. Let me just close as is. I'll deal with the tenants, because I'll go to the tenants, I'll say, I'm the new owner, I need to write a lease with you. Here is the lease. I'll give you one month at the old rent, that's from the goodness of my heart, and then your lease is going to be X

01:23:43.000 --> 01:23:48.000
There is no way they're going to argue with me because they know what the market is.

01:23:48.000 --> 01:24:03.000
So that's the notice to exercise the option title that they're going to deliver valid legal good title. Of course, we're going to deal with attorneys. You have some states in the United States with attorneys like Illinois and Louisiana and all these good states

01:24:03.000 --> 01:24:10.000
And you have some other where you're dealing with title and escrow, which is a lot faster, like California and Oregon and state of Washington

01:24:10.000 --> 01:24:16.000
Closing cost, I always like to share it 50-50. There's going to be divided 50-50 between the parties

01:24:16.000 --> 01:24:31.000
Existing leases, existing tenancies option or he he's the option represents that there are no written leases affecting the property except as expressly disclosed in writing to option E, and that the

01:24:31.000 --> 01:24:36.000
existing tenancy are month to month, verbal tendencies

01:24:36.000 --> 01:24:39.000
Can you imagine? He has verbal tendency agreement

01:24:39.000 --> 01:24:56.000
Optionish shall assume only those month-to-month tenancies confirmed by tenant certification delivered pursuant to this agreement. In other words, I'm going to show you something. He has one tenant paying 1,700, another paying tenant paying 1,800, and a third paying 3,600

01:24:56.000 --> 01:25:05.000
These tenants, one was paying 3000 before COVID, one was paying 4,000, and upstairs one was paying 6,500. Do you see the upside?

01:25:05.000 --> 01:25:08.000
Do you see how much upside that is in this?

01:25:08.000 --> 01:25:23.000
And why does he come to me? Because he knows I can perform. He knows I can put the deal together. He said, I don't want to go talk to an attorney, because for an attorney to draft an agreement like this, it's going to cost me $2,000. They're going to take advantage of me. You draft it, you send it to me, and we take it from there.

01:25:23.000 --> 01:25:25.000
I draft it, sent it to him.

01:25:25.000 --> 01:25:30.000
No answer. I called him, he doesn't have voicemail, he doesn't pick up the phone.

01:25:30.000 --> 01:25:38.000
And then finally, two days later, every day I call in the morning and in the afternoon. Morning and afternoon. Like, after breakfast, I call him

01:25:38.000 --> 01:25:40.000
After lunch, I call him.

01:25:40.000 --> 01:25:50.000
Until finally one day he picked up, he said, I know you've been calling me, sorry, I've been sleeping late, and I've been doing some things, and but I have to work with his pace.

01:25:50.000 --> 01:26:02.000
But the upside is here, and I told him, why don't you increase the rents? Is there something I need to know? He said, I just don't want to deal with them. I'm done with this property, we bought it so cheap, it's been in the family for years, we just want to be done with it

01:26:02.000 --> 01:26:04.000
So

01:26:04.000 --> 01:26:22.000
Notices, unless specifically stated otherwise in this agreement, all notices waiver and demands required or permitted here under shall be in writing and delivered to the addresses set below one of the following methods or by one of the following methods electronic email mail, which is email

01:26:22.000 --> 01:26:26.000
And confirmed by email reply or by text between the parties.

01:26:26.000 --> 01:26:28.000
So

01:26:28.000 --> 01:26:35.000
text. He answers, but he answers, like, the next day email. He said, my wife's email. So

01:26:35.000 --> 01:26:40.000
I like to say to people always, it's in writing, but email.

01:26:40.000 --> 01:26:59.000
And that's it. We say that we're going to execute this agreement and it's going to be valid approval and consent. No approval, authorization, consent, or other order or action of or filing with any court administrative agency, other governmental authority is required for the execution delivery of this agreement

01:26:59.000 --> 01:27:14.000
Like there is no bankruptcy, there is no anything that involves a court, there is no probate, nobody died, etc. Absence of litigation. There are no lawsuits regarding this property. There are no broker's commissions, there is no existing mortgage loan

01:27:14.000 --> 01:27:28.000
And this is the agreement constitutes the entire agreement. There is nothing verbal. There are, if any provision here is not correct, the rest stands. Choice of law and venue, you should always have the choice of law

01:27:28.000 --> 01:27:45.000
I like unlike no mediation, no arbitration. I like, if you don't like it, we go to a lawsuit. That's how I like it. Although now with the dispute I have with somebody, we had arbitration in there, so I had attorneys and doing the arbitration. Arbitration may not be so bad

01:27:45.000 --> 01:28:00.000
But anyway, successors, this agreement shall apply to be binding in all respects upon and inure to the benefit of the success. Let's say, God forbid, he dies, or his wife dies. We have an agreement, the successor's got to honor it. Attorney's fe

01:28:00.000 --> 01:28:16.000
We actually, it says if on account of any breach or default by either party of its obligation here under it shall become necessary for the other party to employ an attorney to enforce or defend any such parties right or remedies the prevailing party shall be entitled to recover any

01:28:16.000 --> 01:28:22.000
Reasonable attorneys, fees, costs, and of litigation and expenses actually incur.

01:28:22.000 --> 01:28:39.000
So we put that in so that we're going to sign electronic signatures are fine, so we can send them in DocuSign, pronouns, whenever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural.

01:28:39.000 --> 01:28:41.000
So we're just saying that

01:28:41.000 --> 01:28:57.000
Failure of a party here to complain of any act, omission, course of action, or continued accident, no matter how long such may continue, shall not be deemed a waiver. Like if there was something we didn't notice, either of us, but we complained later about it, it's still valid

01:28:57.000 --> 01:29:15.000
And the parties agreed to execute and deliver any and all other instruments and documents that would not cooperate to finish, and that's it. That we constructed the deal together, that the headings of the sections are for convenience only, effect and prior agreement disagreement supersede all prior conversations

01:29:15.000 --> 01:29:31.000
And it's very important because people say things like, I thought you told me. So quite often I say to people, I'm gonna, if you don't mind, I'm gonna go ahead and record this conversation. I'll send you a copy. Will you be okay with this? And they say, okay, I recorded. I

01:29:31.000 --> 01:29:47.000
I'm sitting with Phil and Stephanie, and we are talking about this, or Stephanie's not here, and he agreed for me to record today on May 1st, 2026, and he will receive a copy of this. This way we talk about things in

01:29:47.000 --> 01:29:55.000
And they're not upset. Actually, I'll send you this to send it to everybody. Gigi, are you happy? Did I cover what you wanted? Is it good enough?

01:29:55.000 --> 01:30:07.000
Yes, she sent me a message. She's on her phone driving, so unfortunately, she didn't get to physically look at this with you, but Gigi, do you have, I don't know if she can like

01:30:07.000 --> 01:30:08.000
No problem.

01:30:08.000 --> 01:30:14.000
do it the way she's on. But anyways, we will get you guys this, and I know she's gonna be extremely

01:30:14.000 --> 01:30:17.000
grateful for you reviewing this. It was amazing.

01:30:17.000 --> 01:30:27.000
Wonderful. I love looking at contracts all the time and learn as I do things constantly. So we have the final question. Please go ahead. Do I have any questions we have not answered on the thing?

01:30:27.000 --> 01:30:44.000
We have Irma. It's going to fit into exactly what you are about to do in the last question, so it'll fit perfectly. Irma, we did not miss you. We will get you. So we have Salvador. He is in Connecticut

01:30:44.000 --> 01:31:01.000
He is a commercial DealPRO, and he has a few questions. He said, I watch most of your videos on the video channel, and I find… of YouTube, and I find your thoughts impactful and impressive. I have a few questions based on my favorite videos.

01:31:01.000 --> 01:31:07.000
Number one, what is success according to you and your life experience?

01:31:07.000 --> 01:31:14.000
It's a very simple formula. Success for me is three things, okay? Number one

01:31:14.000 --> 01:31:16.000
happiness

01:31:16.000 --> 01:31:20.000
Number two, health. And number three, wealth

01:31:20.000 --> 01:31:25.000
And let me break it down. It's a very simple formula. Happiness is

01:31:25.000 --> 01:31:27.000
Being ethical

01:31:27.000 --> 01:31:37.000
Because you're not going to be relaxed or happy if you're not ethical. Ethical meaning you're doing everything right, so when you go to sleep at night, you're feeling, I'm honest, I've dealt with everybody the best way possible, okay?

01:31:37.000 --> 01:31:52.000
If you're not, it'll be like the movie the drug dealers or the thieves or whatever, they're always very stressed and, okay, so, first, for happiness. So you have to be ethical. Number two, you have to have more positive relationships than negative ones. In other words, work on relationships

01:31:52.000 --> 01:31:58.000
To constantly have positive relationships, make big effort in that, makes you happier, and live longer.

01:31:58.000 --> 01:32:14.000
Number three, you have to have goals, goals that are meaningful, goals that give you purpose in life. What's the meaning of life is the meaning you put into it. When you have goals and you love people and you're ethical, then the only last thing is when things don't work well, you have to learn to put joy

01:32:14.000 --> 01:32:32.000
in what you do. What do you enjoy in what you do will change your whole attitude about life. When your attitude is down, if you're walking in the street, you're gonna notice this guy is too big, he's eating too much, or this lady is too loud, I don't like the way she talks, and this guy's driving too fast, this

01:32:32.000 --> 01:32:44.000
All of a sudden, everything negative you will absorb it, and it will feed negative energy and stress you out. Happiness is ethics, positive relationships, loving relationships, right?

01:32:44.000 --> 01:33:02.000
You also have to have the goals, and you have to learn to put joy in things. Sometimes, like, I have a lawsuit that's gonna start, it's gonna be settled through arbitration, but the thing is, I say, okay, this is like a game. We're gonna see what's gonna happen, gonna do my best with it. I talk to the attorney last night, I had to talk to the attorney, it was

01:33:02.000 --> 01:33:19.000
literally like midnight my time in Paris when we're talking to the attorney. But I saw the attorney's trust. I said, take it easy, take it easy. This is fun. This is like a game. You don't have to stress about it. And he just said, okay, well, that's a very unusual approach. I like that. I want to bring a couple things

01:33:19.000 --> 01:33:24.000
We had a good conversation. I relaxed happiness. The next thing is health. Simple.

01:33:24.000 --> 01:33:28.000
Take enough hours of sleep as needed. You gotta sleep well.

01:33:28.000 --> 01:33:40.000
And if you're ethical, you will sleep well, okay? Number two, you gotta have the right nutrition, eat the right food. This is so impactful, we have such bad food in the United States today, it's crazy

01:33:40.000 --> 01:33:53.000
If we're bloated all the time. We have to be careful what to eat. Number three, you have to exercise rigorously. You have to push your body, you have to lift weights, you have to do yoga, you have to work. Sometimes it's hard, but you do it.

01:33:53.000 --> 01:33:55.000
And number four

01:33:55.000 --> 01:33:56.000
Regular

01:33:56.000 --> 01:34:00.000
doctor checkups and follow-ups. You're gonna stay healthy.

01:34:00.000 --> 01:34:03.000
And health is going to give you mobility

01:34:03.000 --> 01:34:13.000
So number three is the actual wealth. How do you have wealth? You must have assets. You cannot become wealthy unless you have assets. What assets?

01:34:13.000 --> 01:34:18.000
Best asset is productive buildings. What's a productive asset? It's an asset that brings you income.

01:34:18.000 --> 01:34:25.000
If you buy art, it's not a productive asset. It's not going to give you income. I don't buy art.

01:34:25.000 --> 01:34:41.000
Land. Land is not productive asset unless you're going to lease it to somebody, or you're going to develop it, or something. I like cash flowing assets. Mortgage notes, tax liens, tax deeds, loans that you provide, apartment buildings, duplexes, single-family homes, etc.

01:34:41.000 --> 01:34:55.000
Those, when you hold them through the years, as the debt gets paid down and the income increases and replacement cost increases because of inflation, you can become wealthy. So have assets. Another type of assets is a business

01:34:55.000 --> 01:34:56.000
Alright?

01:34:56.000 --> 01:35:09.000
when you have a job, you are your own asset, and that's good. Then save. Get into the S&P 500, let it compound. That becomes your asset, and it has some return, a 2% per year, 3% per year, etc. So

01:35:09.000 --> 01:35:22.000
Number one, have productive assets. Number two, have asset protection. Protect your assets, have the insurance, and number 3, build an estate plan. You're building it, you're gonna die

01:35:22.000 --> 01:35:33.000
And if you're married, one of you is going to die before the other. It's a known fact. It's no surprise. So have an estate plan. So when you pass away, or somebody passes away, it's not a major disaster.

01:35:33.000 --> 01:35:41.000
Part of your asset protection is to have insurance. There are good insurance products that you're gonna die. Why not get an insurance

01:35:41.000 --> 01:35:45.000
You shift the risk of what happens when you die to the insurers. They have to pay

01:35:45.000 --> 01:35:56.000
Get the big insurance company, a mutual insurers, not… mutual insurance, that means the insurance is owned by the actual insurers

01:35:56.000 --> 01:36:05.000
So that's really the success formula. And that will give you, I mean, happiness will give you peace of mind.

01:36:05.000 --> 01:36:12.000
And health will give you energy, and wealth will give you freedom. And R&Ds the ultimate goals of success?

01:36:12.000 --> 01:36:14.000
And what's the other question?

01:36:14.000 --> 01:36:20.000
His next question, how do you, Cherif, use AI

01:36:20.000 --> 01:36:25.000
I use AI literally for four things. Number one, calculations

01:36:25.000 --> 01:36:27.000
I

01:36:27.000 --> 01:36:38.000
like to use the AI for the calculation instead of calculator, the scan calculator, etc. I put, for example, I have a tenant leaving in January, paying so much per month

01:36:38.000 --> 01:36:48.000
I can make a deal with them to leave in August, so I can get the space and spend so much rehabbing it and splitting the space into two

01:36:48.000 --> 01:37:03.000
When I split the space, I'll make so much. What's better to wait till the tenant leaves or to actually cut them off right now, knowing that the construction permit is going to take 90 days, which is better. It came back right away within seconds

01:37:03.000 --> 01:37:15.000
and said, you're better off work a deal with them to leave by the end of September. This way you have matched both this, this, this, and you'll come out ahead by $37,000. If it works this way and that way.

01:37:15.000 --> 01:37:23.000
Calculations. Okay, I'm buying a note. The note is going to be this. I'm going to do that. How much is it like offer them now?

01:37:23.000 --> 01:37:44.000
I used to do trainings, you could see them all trainings on videos with the discount calculator. Now I ask AI let AI wreck its brains. Okay, number two is I write an email. I say maybe I'm too harsh, maybe I'm not clear. I put it in AI. Am I clear? It says you repeated yourself right here. This is not clear. We changed it to this and that. That's the better email.

01:37:44.000 --> 01:38:01.000
I cut it, I pasted, maybe change a couple things, because AI does not know the whole context, but calculations, emails, marketing messages. We're doing marketing. I put it into email, into AI say, is this clear? Is this this? Well, you forgot the word this, which is going to be more impactful based on this and that

01:38:01.000 --> 01:38:16.000
We use it for marketing. And number four, which I can attest to it this week and last week, is trips. I am going from Antib, southern France to Cannes. Should I stop also by Saint-Tropez

01:38:16.000 --> 01:38:23.000
And it says no, because central P will be out of your way. You need to be starting in Centropy and then go to Antib, and then go to Nice.

01:38:23.000 --> 01:38:26.000
And be careful because NIS is sold out

01:38:26.000 --> 01:38:35.000
So it's like, oh my God, I love AI when it comes to calculations, emails, marketing messages and trips. What I don't use it for is for

01:38:35.000 --> 01:38:52.000
legal matters, because I can tell you, I tried to use it for some legal things, it was a mess. It created problems, confusions. I tried to use it for tax things, and it gave me the wrong codes and misinformation, which created a problem with my CPA, and he said, no, they're wrong, who put that, okay

01:38:52.000 --> 01:39:07.000
I don't use it for due diligence because I got to do the due diligence myself. I got to look at the building, I got to talk to the people. So you ask so the AI is being used right now for really a lot of

01:39:07.000 --> 01:39:23.000
by attorneys, sometimes to prepare depositions and all this, but that's not the legal thing I'm talking about. I'm not gonna do a private placement on an AI, okay? Because it doesn't know what the SEC needs, doesn't know the new rules, it's just constant confusions with that

01:39:23.000 --> 01:39:39.000
I saw a video from an attorney who said, my life is more difficult now because every time I send something to a client, they tell me, I said this, this, this, and I'd have to explain to them, AI does not understand the local law in this county, does not know the context you have with this other seller

01:39:39.000 --> 01:39:54.000
Does not know the context of what you want to do with your wife regarding the future of this, this, I'm not going to make any changes. If you want to hire another attorney, I will send you the balance of retainer. He was like, oh, like, really complaining on YouTube. So hopefully that answers your question.

01:39:54.000 --> 01:40:04.000
Very good. And then before we hit Salvador's last questions, I just want to come over here and say CJ said, Sharif, outside of corporate guarantee

01:40:04.000 --> 01:40:11.000
for our JV, what other types of credit or guarantee structures are you comfortable with

01:40:11.000 --> 01:40:28.000
Oh, I have to have a corporate guarantee if you can assign it to me from the joint venture. But if you're doing a deal for yourself, you can get a franchisee. They don't give corporate guarantees, but they can give a very powerful personal guarantee. And if they have two or three locations, they can

01:40:28.000 --> 01:40:41.000
a corporate guarantee, but that's like a mini corporation. It's just an LLC guarantee of three locations. And if so, I ask them to show us the financials. So it could be a small, smaller tenant that will give

01:40:41.000 --> 01:40:58.000
The following a personal guarantee. A small corporate guarantee with backup financials. They can get an insurance bond, which is they deposit 10% of the yearly rent and then insurance says, okay, we're going to do a bond

01:40:58.000 --> 01:41:15.000
called the surety bond to guarantee that they're going to pay the lease. And every year they have to post 10% and renew it. And if they default, the insurance will say, we're paying you for 90 days only, but you gotta show us that you're mitigating the loss. That means you are

01:41:15.000 --> 01:41:31.000
Posting the properties for lease, advertising them in the market, maybe hiring a broker. Show us that you're mitigating your loss because we're going to pay for 90 days. If you're not taking any action, just collecting for 90 days, we're not going to pay. Show us that you're doing your part, which is obviously going to do your part.

01:41:31.000 --> 01:41:36.000
So I discovered to you. And the final one is I asked for extra deposit.

01:41:36.000 --> 01:41:52.000
It's okay, like, there was… I remember this tenant, he said, we have this great concept, and we're gonna do this and that, and you have to trust me for this and that. And I said, and we're gonna grow, we're gonna do wonderful. I said, okay, I trust you, but I like to make a lower risk for me, because I don't like to

01:41:52.000 --> 01:42:07.000
have the risk. I'm going to shift the risk to you. You give me 6 months deposit. Longest it will take me to evict them is 90 days. So I said, I want 6 months deposit. And if you default, there will be not just the amount you owe, but penalty and interest that compounds as we continue.

01:42:07.000 --> 01:42:21.000
I said, if you're willing to do that, I'm willing to take the risk with you. And it was a great risk, because on year two, I said, okay, you know what? I don't need to keep holding your six months. Heat is 90 days, I know you're gonna do some work on the space to expand it and improve it.

01:42:21.000 --> 01:42:29.000
So all this is what I would work with. Personal guarantees, many corporate guarantee and insurance bond, extra deposit, all what I covered with you

01:42:29.000 --> 01:42:39.000
Very good. Thank you so much. One more follow-up, Edgar said, Sharif, do you have a company who provides the Surety bond

01:42:39.000 --> 01:42:48.000
No, you'll have to… the person who's gonna do that, you have to call around, call insurance brokers and ask them. It's

01:42:48.000 --> 01:43:02.000
It's usually large brokers like this happened in Puerto Rico and it was a company called Fulcrow, but I don't know in the US, I've not had to deal with that. They either give me larger deposits or they actually have the

01:43:02.000 --> 01:43:07.000
The strong personal guarantees.

01:43:07.000 --> 01:43:12.000
Edgar, did you have any follow-up on that?

01:43:12.000 --> 01:43:13.000
Okay.

01:43:13.000 --> 01:43:14.000
I know, thank you, appreciate it.

01:43:14.000 --> 01:43:15.000
Hey, you're welcome. Good to see you.

01:43:15.000 --> 01:43:16.000
That quartz.

01:43:16.000 --> 01:43:17.000
Alright, thanks to you.

01:43:17.000 --> 01:43:30.000
All right, Cherif, we are going to the last two questions. Salvador said, Cherif, what is risk, and what are 5 ways to avoid it or handle it in your real estate deals?

01:43:30.000 --> 01:43:35.000
Okay, so the formula of risk, the following

01:43:35.000 --> 01:43:40.000
Here are the six principles you have to work with when you do something. Number one is the safety

01:43:40.000 --> 01:43:43.000
So how do I reduce my risk

01:43:43.000 --> 01:43:51.000
and have safety 3 ways I I choose a property in a good location, the right price and the right potential

01:43:51.000 --> 01:43:53.000
Number two, cash flow

01:43:53.000 --> 01:44:00.000
Or cash out. Am I buying the property to cash flow or to cash out? Either way, I want to know what cost is going to be involved.

01:44:00.000 --> 01:44:07.000
How much time is going to take and what the return will be. That's how I assess it. That's how I assess the risk.

01:44:07.000 --> 01:44:12.000
Okay, what's the cost to get it to cash flow? Do I have to rehab the units

01:44:12.000 --> 01:44:16.000
What's the cost to turn around and have it

01:44:16.000 --> 01:44:20.000
sold again. I have to maybe add a floor? What am I doing

01:44:20.000 --> 01:44:24.000
And how much time and what's the return. Number three is the liquidity.

01:44:24.000 --> 01:44:37.000
Can I borrow against the property? Can I sell the property fast? Can I use it for extra collateral? That is very important. So safety, cash flow, liquidity. Number four is the cash reserves.

01:44:37.000 --> 01:44:42.000
Can I get a credit line instead of keeping cash on the side? If not

01:44:42.000 --> 01:44:57.000
Can I keep cash? And the cash serves two purposes. I can jump on new opportunities. Or if a dark day comes, market is bad, we're doing rehab and find out we have to change all the pipes. We didn't know that. I have the extra reserves for that

01:44:57.000 --> 01:45:00.000
which is solving problems.

01:45:00.000 --> 01:45:16.000
Number five is diversification. Am I diversified with the type of assets I own? Do I have only single tenant buildings? Do I have only apartment buildings? Do I have only I like different assets

01:45:16.000 --> 01:45:32.000
types. I like different locations for the assets, and I like different style of investing. Some I'll buy and sell, some I'll buy and hold for cash flow. And then finally, when it comes to risk, I like to have backup plans. If my plan was to just sell it

01:45:32.000 --> 01:45:50.000
Can I sell it conventional sale? Can I sell it creatively? If I can sell conventionally? Can I rent it instead of selling it? Can I sell it as a rent with an option to buy? Can I maybe add revenue by adding maybe antennas on the roof, advertisement on the side services with the apartment buildings or hotel

01:45:50.000 --> 01:46:06.000
Can I reduce expenses? So all these are backup plans. So I'm not going with plan A and that's it. Plan A and B and C and D. So now, reducing risk has to do with managing the safety, the cash flow or cash out, the liquidity, the cash reserves

01:46:06.000 --> 01:46:12.000
The diversification and the backup plans.

01:46:12.000 --> 01:46:13.000
So

01:46:13.000 --> 01:46:14.000
Love it.

01:46:14.000 --> 01:46:16.000
And so, what was the other part of the question?

01:46:16.000 --> 01:46:28.000
The next part of the question that he had is that he has a meeting with his boss next week. Any words of advice?

01:46:28.000 --> 01:46:33.000
Yes. Meeting… meeting for what? Wasn't it dinner or something?

01:46:33.000 --> 01:46:38.000
Yeah, he's having a dinner meeting. I think he's in the process of getting a promotion

01:46:38.000 --> 01:46:41.000
Okay, so I'll tell you something about dinner meetings.

01:46:41.000 --> 01:46:48.000
First of all, when you sit with your boss for dinner, I'm going to cover two things on this business

01:46:48.000 --> 01:46:59.000
dinner meeting and personal dinner meeting for those who are single on this call and are dating or something, or you're married and you want to woo your wife or your husband, okay? First, let's talk about business.

01:46:59.000 --> 01:47:02.000
As soon as you sit down, don't grab the money

01:47:02.000 --> 01:47:08.000
When you sit down, you want to look them in the eye. It's all about them, not about the meals.

01:47:08.000 --> 01:47:15.000
Okay, and you ask your boss, so how are you? How's everything going? If it's something general, if it's something recent, you can ask him question about that

01:47:15.000 --> 01:47:19.000
And then when they grab the money, you grab the money

01:47:19.000 --> 01:47:20.000
And then

01:47:20.000 --> 01:47:26.000
The most important thing is match what they're ordering. If your boss is ordering just

01:47:26.000 --> 01:47:32.000
The waiter comes, and he says, I would like, or she says, I'd like sparkling water

01:47:32.000 --> 01:47:35.000
Don't order beer and don't order wine.

01:47:35.000 --> 01:47:50.000
You order either sparkling water as well, or something less, such as normal water. Okay? If you're… if the boss is ordering the main dish, and there is no soup or salad, don't order soup and salad, order a main dish.

01:47:50.000 --> 01:47:56.000
And order a dish that you can eat without making a mess. You don't have to order crabs, okay? Order salmon

01:47:56.000 --> 01:47:59.000
order a salad. Okay, something simple.

01:47:59.000 --> 01:48:12.000
If the the boss didn't order dessert, don't order dessert. I kid you not. I discover more about people taking them for breakfast, lunch or dinner, and I will never forget I took this person for dinner

01:48:12.000 --> 01:48:20.000
And this guy, or the drink before we get started. I'm just drinking water, tap water.

01:48:20.000 --> 01:48:28.000
Then he ordered an appetite. Then a soup, then a salad, then the dinner. After dinner drink and a dessert

01:48:28.000 --> 01:48:48.000
I almost asked him, do you want something to go? Remember the bill coming and I'm thinking to myself, this guy can't read the room. This guy is not exact person can understand exactly what's going on. So you know so much about a person. For instance, if somebody sits there and orders one beer after the second beer, let's say you're having a beer

01:48:48.000 --> 01:49:00.000
Let's say you are the boss and you're inviting somebody and they order two, three beers while you're sipping on one beer. What does that tell you about the person?

01:49:00.000 --> 01:49:18.000
So when you sit with your boss, try to match the energy of what's going on and you're catering to them. And very importantly, how do you communicate with the waiter in front of your boss? You have to be three things. You have to be clear with the waiter, like this, serve this way. You have to be confident

01:49:18.000 --> 01:49:26.000
You're not, like, scared and you're not like too nasty. You have to be confident. You have to be clear, confident and respectful

01:49:26.000 --> 01:49:44.000
You can tell so much about how somebody also eats. So when you eat, pace yourself. Don't talk with your food in your mouth. Don't chew with your mouth open. Be respectful how you're sitting down and all this, the manners and all this are very important. And that's important in anywhere in the world, even in the

01:49:44.000 --> 01:50:02.000
depth of the Amazon, when they sit and eat, they have a way to eat. In the tents in Saudi Arabia, when they eat, and they're eating in one big plate with their hands, they have a manner and a pattern to eat. It's by culture, and if I'm in Australia, I'm gonna match their style. If I'm in France, I'm gonna match their style, and if I'm some…

01:50:02.000 --> 01:50:10.000
And that's very important, sitting with your boss, you've got to show the good manners, you got to impress them. And when the bill comes, offer to pay.

01:50:10.000 --> 01:50:15.000
Obviously, the boss is going to say, no, no, I'm inviting you, I'm gonna pay. Offer to pay

01:50:15.000 --> 01:50:21.000
even to pay half that goes a long way because then they perceive you different because you're perceiving yourself

01:50:21.000 --> 01:50:34.000
different, and you want to thank them for the thing. So hopefully that helps you when it comes to a date or your your spouse when you sit again, it's all about them. It's about the event. It's not about the food

01:50:34.000 --> 01:50:51.000
And when you ask them, how are you? I'm so glad we came to this place. By the way, this place is this, that, and I need to see the special. Something like this is about them. Then you open the menu, and you discuss something, you're sharing a moment, and you also want to have a story, you want to listen to them, ask them the right questions

01:50:51.000 --> 01:51:10.000
What questions are important? If you ever read one of the… I don't recommend books much, but I can tell you the best book ever. I read it when I was 13, is how to make friends and influence people. I found it in French, that was the first version I read, and I still have it, and I've traveled the world, and I've traveled from city to city. I've always carried it with all my notes

01:51:10.000 --> 01:51:23.000
And of course you get the English version, whatever you want to read. But what does it tell you? That book says, have them talk about themselves. If you're an interested person by nature, they will love you much more than if you're trying to be interesting

01:51:23.000 --> 01:51:42.000
And I'm interested. I'm always interested in people. I always think, how is it to be this person like an engineer, or how is it to be with this person? So when you're in a personal relationship, ask them, get to know information. At one point, they'll feel like they shared so much and they want to know more about you, and then it's becoming a good balance, natural conversation. Who wouldn't want to talk about where they were born

01:51:42.000 --> 01:51:54.000
how they grew up, what school they went to, what university they studied, and what they studied, and why they studied it. And what their goals were and how they achieved the goals, what they didn't achieve, what they want to do next, etc.

01:51:54.000 --> 01:52:12.000
So, it is very important during a meal, you can weed out losers from real winners, from the way they order to the way they eat, to the way they talk, to what they talk about, to how they handle the waiter or waitress, and how they actually participate in either paying or in volunteering to pay

01:52:12.000 --> 01:52:20.000
I can tell you how important that is in my life. Sometimes I'm sitting and say, I can't figure out this person. Their guards are too up. I'm gonna take them to lunch.

01:52:20.000 --> 01:52:28.000
Oh, he's having beer at lunch? Okay, you know what? Forget that job opportunities we have with them. Anyway, that's my opinion, and that's my experience.

01:52:28.000 --> 01:52:30.000
Anything else here we have?

01:52:30.000 --> 01:52:33.000
No, you covered everything. Thank you very much.

01:52:33.000 --> 01:52:43.000
Guys, I hope you enjoyed the rest of the day, and I shall be back in the beautiful United States of America on the 29th. Hope you don't miss me too much.

01:52:43.000 --> 01:52:44.000
Ashley? Ashley

01:52:44.000 --> 01:52:45.000
Yes.

01:52:45.000 --> 01:52:46.000
Yes, yeah?

01:52:46.000 --> 01:52:49.000
Hi, I asked a question and I didn't get the answer.

01:52:49.000 --> 01:52:58.000
I emailed you right under there, and said that I was gonna set up a 20-minute call, just so you and Cherif can discuss it, if you look at the chat right under your question, I emailed you.

01:52:58.000 --> 01:53:01.000
Oh, okay, I didn't see that. Thank you.

01:53:01.000 --> 01:53:02.000
No problem

01:53:02.000 --> 01:53:04.000
Alright, I look forward. Take care, guys.

01:53:04.000 --> 01:53:05.000
All right.

01:53:05.000 --> 01:53:06.000
All right. See ya.

01:53:06.000 --> 01:53:09.000
Bye. Bye.