00:00:02:22 - 00:00:30:20 Unknown All right. Very good. Today is Saturday, August 8th, 2026. I'm excited to be here today. It's always refreshing to see these wonderful questions coming in. So Ashley, how are you? I'm doing great. How are you? Good, good. Could you please keep having them come in? Absolutely. And you can start with the first question from Abdul from Detroit, Michigan. 00:00:30:22 - 00:00:59:02 Unknown Oh, right. Let's see. We have Abdul. He's a JV. He has two questions. One. One I've been thinking about is approaching retiring mom and pop business owners who own their real estate. Many are trying to sell the business for a few multiple of earnings, when the real value may actually be in repositioning the property for a national tenant, just as you teach. 00:00:59:03 - 00:01:22:22 Unknown My question is, how do I legally secure a share of the value I create? Ideally, I'd like a strategy that doesn't require putting up nonrefundable money. I'd like to be able to walk into a business, identify the opportunity, sign an agreement giving me 60 to 90 days to reposition the property, and if I create significant additional value for the owner, have my upside protected. 00:01:23:00 - 00:01:55:01 Unknown We can discuss this today, but I'd really appreciate your thoughts on how you would structure something like this. Is it an option agreement, a consulting agreement, a JV venture, a newly formed LLC or C Corp or something else? And what type of attorney would be the right one to help me with this agreement? With so many baby boomers retiring over the next several years, I can't help but think this represents a once in a generation opportunity if it is structured correctly. 00:01:55:02 - 00:02:22:12 Unknown Yes. Very good. So is Abdul on I maybe we're to a lot of people coming in. All right. So yes this is a good idea. A lot of people own their business in a building and they want to retire. This is the baby boomer time. So they want out. They are under the impression that their business is worth something when most people are not interested in the existing business. 00:02:22:14 - 00:02:44:14 Unknown They want the building to put their own business, or their own franchise, or their own national tenant. So the best thing is to negotiate. It's a good idea. You can negotiate an option agreement paired with the consulting agreement. In other words, you're going to give them small money up front and tell them I have the option to buy the building at X price. 00:02:44:18 - 00:03:08:11 Unknown But let me help you sell your items or dispose of your business so you can really have capitalized on what the value is, which is the actual building. And now if you're able to line up a national tenant, you can then exercise your option and make it happen. That could be especially if the couple went out and they just in a liquidation mode. 00:03:08:11 - 00:03:27:15 Unknown But if they truly want to sell the business, just keep in touch with them. Because I've been in situations like this and I remember this lady. She had a business. She had it for years. And when I approached her to buy the building, she said, it's 2.5 million. I said, the building is worth like 2 million. How did you come up with the next half a million? 00:03:27:16 - 00:03:44:14 Unknown She said, because you're going to buy the business. I said, I'm not interested in the business. She said, I want to sell it to the business. I worked on this business for 15 years. This is how I fed my kids. And so I said, okay, try to see if you can sell the business and do a lease with them or something. 00:03:44:14 - 00:04:07:21 Unknown That is for like three years. But I'm interested in the building only. Well, after a couple of years of touching base with her, she called me and said, okay, I'm done with this. I'm liquidating the business. If you're interested in the building, come and take a look. So she really wasted two years of her good life. You know, people age, you know, you age slowly and to a certain age, and then you age very fast. 00:04:07:22 - 00:04:25:06 Unknown So she was, like, totally deteriorated personally. And because she wanted out. So she was mentally gone in terms of like, I don't want to deal with the business. So the building also was worse shape. I ended up not buying the building. Another guy bought the building and now he's trying to sell it to me for a lot more. 00:04:25:08 - 00:04:41:11 Unknown So and the stand, the dynamics of what they're trying to do. You having a consulting agreement is going to be very simple. Here's an option to buy the building at let's say $1 million. It is a consulting agreement that will give me access to show your business, to give me access to work with you, to liquidate the business. 00:04:41:11 - 00:04:58:13 Unknown You will have me get access to show the property. And if that happens with the million, and you get a tenant, that will make it worth 1 million to 50 million. Three that all all the upside is yours. And that's how to do it. So how do you you don't need to set up a limited liability company or anything. 00:04:58:13 - 00:05:19:14 Unknown You can literally write the contract like a business arrangements where parties, the parties are pulling the resources. So it's like a joint venture agreement. You have an option to by in your name and or a sign, because you can maybe assign it to somebody else right away, and you have the right to do some consulting and access to the business. 00:05:19:14 - 00:05:24:17 Unknown Now, you asked what type of attorney. 00:05:24:19 - 00:05:46:23 Unknown Yeah. So the attorney type, you need to hire a commercial real estate transaction attorney when you when you Google in your zip code or in the property zip code, look for commercial real estate transaction attorney. You can go to AI ChatGPT and say I'm looking for a commercial real estate transaction. Attorney with experience in option commercial real estate. 00:05:46:23 - 00:06:09:08 Unknown In optioning commercial real estate license, you need somebody that knows how to do option contracts. Not not a general corporate lawyer. General corporate lawyer will charge you more, will take longer because they have to look into it. Because lawyers quite often that are they think they're going to figure it out. They would take the business. So you need somebody in real estate. 00:06:09:08 - 00:06:29:03 Unknown So it will be an option. And you give them some money for that option. That money is usually nonrefundable. If you can tell them refundable it's fine. The option money will be 1 to 3% of the purchase price. So 10,000 to 30,000. If it's $1 million and you want enough time, so you want let's say four months, six months, something like this. 00:06:29:03 - 00:06:50:00 Unknown And and don't put a lot of money on the option, but try to go with 10,000. If you can go with 5000, that's good because you're gonna come in as like, let me help you out and let's give it six months. They're going to say, no, that's too long, okay. 90 days. So so that hopefully answers your question and you can do something with it. 00:06:50:01 - 00:07:15:19 Unknown You're on the right track. Very good trip. And I don't know he had like a follow up on the business model. Did you see that side too. He said instead of negotiating a retiring owner down on price, my thought is to offer more than the asking price in exchange for exclusion. Exclusivity option period of 9 to 12 months to reposition the property for a national credit tenant. 00:07:15:20 - 00:07:44:04 Unknown Once the lease is secured, I'd exercise the option finance acquisition, complete any re-acquired tenant improvements, and close. My biggest concern is protecting myself and creating the value. I'm looking at an option agreement, a recorded memorandum of option in survival non circumvention provision. Am I reinventing the wheel or is there already a standard structure? I'd love your thoughts. You're not reinventing the wheel. 00:07:44:04 - 00:08:10:10 Unknown This is this is a classic option to purchase and site control. Like like property control. The key thing here is think of a transaction of real estate as two parts the price and the terms. Mr. Seller, Mrs. seller, you would like the million dollars. I would like these terms. I'd like to have an option to buy. I'd like to come in and have access to the building. 00:08:10:11 - 00:08:35:17 Unknown I have to do this, this, this. So the terms will be. Maybe I'll give you 1,000,050, but I need to put 10,000 nonrefundable for three months. Now the person says, well, I got nothing to lose for three months. I'll make $10,000, give them access to the building. But what it's going to do for you is now you turn somebody who was not so sure they want to deal with you. 00:08:35:17 - 00:08:58:04 Unknown We're not so sure they want to listed they were. And you're able to actually get an offer at a higher price. So the seller psychologically have the comfort with the timeline they're giving you. So you're buying time and option buys you time. And but it's usually an option. It's nonrefundable. The option consideration is money that you put that should clear escrow. 00:08:58:04 - 00:09:24:19 Unknown And they get the money for holding the property. Now how to protect yourself when you do options is you must have a recorded lean. It puts cloud on the title. So you go to the county clerk's office. So you're creating the document. You go to the county clerk's office and you create a public cloud on the title. So the owner, if they try to sell it from under you, which I happen to me one time the guy died. 00:09:24:20 - 00:09:40:07 Unknown So his kids didn't know we had the deed. I don't know how. They didn't know they played dumb. They had half a million of my money option to buy this big building. Next thing I see a sign on the building for lease or for sale. And I called the broker. I said, how come I gave an option three years ago? 00:09:40:08 - 00:09:58:14 Unknown Half $1 million? Who are you? What are you selling it to? And he said, oh, I don't know. The daughter called me. She's 67. She's no idiot. She's a jeweler. I said, yeah, but I look at the chain of title, look at the title report. He said, okay, I'll run it and call you back, then I call. He called me back. 00:09:58:15 - 00:10:16:10 Unknown He said, yeah, I see your company name and you have lean on the in option to buy, etc. so you have to protect yourself. Imagine they would have sold it and now I have to go to court, unravel that deal and go after them for my half a million plus interest or whatever and the potential loss and gain a mess. 00:10:16:10 - 00:10:40:00 Unknown So always, always protect yourself by recording a lean and option lean. These people that actually took classes that are subject to buying a property, subject to financing and stuff. The most important two things you do is when you go to negotiate, you run title to make sure what leans they have already, not what they're telling you, what they actually have recorded their against the property. 00:10:40:00 - 00:11:00:11 Unknown And number two, that when you write the deal subject to you go and record the lean that you have an actual better than a subject. Do you have an option to buy because you can record that lean this way, nobody can sell like an owner of a property cannot sell it from under you. So you will have legal interest in the property. 00:11:00:15 - 00:11:29:06 Unknown So, so and then you, you would actually to make sure this is has a survival clause. You say that there is a non circumvention provision. So the agreement will be legally binding for the owners who gave you the right to look at the property. And instead of, you know negotiating down your negotiating up. But you have to have non circumvention agreement that the people will not go around you and circumvent you in the sale. 00:11:29:06 - 00:11:50:05 Unknown And actually, if you can give everybody on this call a copy of one of our non-disclosure non circumvention agreement, maybe send it to them. Even a word doc. This is kind of a guide. I'm not an attorney but I have attorneys. And this is how we write them. So you can to see it. And then you can tweak it the way you want and always run it by an attorney. 00:11:50:05 - 00:12:09:05 Unknown How about that for a disclaimer. Very good. All right. I will get them that document by the end of this call okay. All right. Next question I would like to add there are many ways to make the deals and especially on single tenant building like one other way, instead of negotiating with the owners to do this is this. 00:12:09:06 - 00:12:29:17 Unknown You can actually come in and lease the property with an option to buy, and you can then sublease it, or then you can turn around and exercise the option to buy and assign the property. But the ideal way to do it, it's an advanced strategy, is if you come in and you're a franchisee. So let's say you got a subway 150,000. 00:12:29:17 - 00:12:51:06 Unknown You have to pay them. You have to go get trained in Kansas or whatever. They do the training to make sandwiches and all this and then open the business. So you you lease the place and you're leasing it as a subway franchisee with an option to buy. And then when you get the deal, you then package it as a business and a building for sale as a package. 00:12:51:08 - 00:13:11:06 Unknown And then maybe you pay 250,000 to open that business, but you can sell it for 500. It's worth of the I got to excited. I kicked the computer as part of the package and walk away making money many, many ways. Actually, the more you sit and think about what can be done with the pen at hand. Can I do it this way? 00:13:11:07 - 00:13:33:08 Unknown Can I do it that way? What if I do this? What if I do that? And you talk to people and you ask questions like on here, the more ideas will come to you. First it's an idea, then it's executed, and then there is profit. All right, all right. Thank you for that solid wrap up. Now we have one. 00:13:33:11 - 00:13:56:20 Unknown He's in Texas. He said Sharif, I'm currently working on commercial real estate in Texas. And I'd like your thoughts. I hope you're doing well. I wanted to get your advice on a commercial deal. About three weeks ago, I put a former QSR property in Texas under contract for 1.3 million. My due diligence period expired, so the contract terminated a few days ago. 00:13:56:21 - 00:14:27:17 Unknown I received a lot from a broker representing a bank that is offering 1.2 million for the property. I contacted the listing broker. The property is still available. I told he told me the owner is motivated to sell and may accept my offer around 1 million or 1.1, which would leave a spread below the bank's offer. The challenge is that the owner does not want to put the property under contract again, unless the earnest money is not refundable. 00:14:27:19 - 00:14:49:13 Unknown On the other hand, the bank is requesting a 120 day due diligence period, while the owner wants a much shorter inspection period. My questions are if you were in my position, would you agree to put a nonrefundable, earnest money down? If so, how much would you do and how much comfortable risking? How much certainty does a bank Loi really provide? 00:14:49:16 - 00:15:12:23 Unknown Is it strong enough to justify putting nonrefundable money at risk? I also have the owner's direct email. Would you recommend contacting the owner directly, presenting the bank buyer, and trying to negotiate a finder's fee or referral fee instead of putting the property under contract? Myself? I'd really appreciate your guidance here. Thanks. Unfortunately, I won't be on the call, but I will check out the replay as soon as it's posted. 00:15:13:01 - 00:15:36:00 Unknown Okay, so should you put nonrefundable earnest money deposit? This is a textbook option, and this is also a textbook answer to the previous question. This is where terms could make it happen. You can go in and say output x amount of money nonrefundable. But I need four and a half months. You want a little bit more than than you're giving. 00:15:36:04 - 00:16:01:04 Unknown And if you have what I call an asymmetric relationship in the deal, meaning I'm risking 10,000, let's say. But the upside could be 150,000. If I assign it to the bank, would be great. Now, your goal is to get the bank to have an earnest money deposit refundable for the first 30 days. Then it moves to nonrefundable, earnest money deposit. 00:16:01:07 - 00:16:22:05 Unknown You see, usually the way I do the deals is I put earnest money deposit that's refundable, and I put the least amount of money, and I tell them it's refundable anyway. All right. And then what I do is, when I need extra time, I go ahead and I say, listen, I need time. I'll tell you what, my money will go as nonrefundable and I'll add to it, let's say my 5000. 00:16:22:06 - 00:16:41:16 Unknown I'll add to it 20,000. You will have 25,000. Nonrefundable. But I need an option to buy. Give me an extra two months. So I'm adding money. Just give me an extra two months. Oh, give me only an extra months. Okay, fine. But when you do, that is when you're really, really feeling that these buyers coming, you're assigning or these tenants are pretty solid and the deal is moving forward. 00:16:41:16 - 00:17:07:00 Unknown But I always kind of assess the risk. Am I okay losing the 5000? Am I okay losing the 25? When you do a risk analysis, write it down, do risk reward and you want that asymmetric relation I'm risking 10,000. Reward would be 150 or 100 okay. Probability of success. What's the probability of success in this? The bank seems serious. 00:17:07:00 - 00:17:30:16 Unknown They send somebody they want to send somebody. Okay. And then the last one which is the most important impact risk reward probability of success. Impact of failure. If it if I fail can I live with the loss of 5000 10,025? If I can live with it because there is an asymmetric relationship and the probability of success is high, I do it okay. 00:17:30:17 - 00:17:49:05 Unknown So you cannot have certainty in anything. You can buy you as bond today, guaranteed by the good faith and credit of the United States. They change the interest rate. You're holding something that's going down in value. You can buy a discount note on a property with secure deed that they have to pay you cash flow, but then all of a sudden they stop paying you. 00:17:49:05 - 00:18:05:02 Unknown And now you have to go to an attorney. Now you have to pay for the foreclosure, and you have to go through a long process and then tell you one of the paperwork is not done right, even though the attorney told you it was all done right. There is always some degree of risk. So assess the risk. And and the risk formula is clear on something like this. 00:18:05:03 - 00:18:29:22 Unknown The bank spread is about 150,000 from what I see because he said 1,000,005 versus 1,000,002. So if you can risk 5 to 10,000, that will be good. If you can get it refundable, that will be better. Tell the seller I understand, but he is and he can negotiate straightforward. I have somebody that's ready to work with me. So let's make it happen. 00:18:30:03 - 00:18:47:20 Unknown Now you can tell them, what if I give you the name of somebody that contacted me and I have couple properties, I can go take them to the other property. I can take them to yours. Positioning is key. Would you like their name? And you work with them? Give me 10,000. The guy says no, I don't want to pay 10,000. 00:18:47:21 - 00:19:09:08 Unknown That may be BS. No, this is a big bank. How about this? We write an agreement that if you do the deal with them because I connected you, you'd give me then 15,000 or 20,000. Guess what? What's 15,000 going to do for you? That's beautiful money. That's that's found money. And it helps you get into the deals and get the negotiation going and get started. 00:19:09:08 - 00:19:33:19 Unknown So good luck with that. You're on the right track. And you said would you recommend eye contact the owner? Yes. Contacting the owner directly is a smart move. Why not? If you're not a broker and he's not a broker, she's not a broker. Even if there is a broken vault, you can contact the owner. And if the contract expired, I mean, there is there is no payday for this seller. 00:19:33:19 - 00:19:51:22 Unknown So you tell them, hey, listen, I propose a fee agreement or I propose a consulting agreement. I got somebody interested in this property, but I have another one they're looking at. I can sway them to use, but I need the referral fee. I need a marketing fee I need. You can charge like I paid people 3%. And they're not brokers. 00:19:51:22 - 00:20:10:06 Unknown I paid them a marketing fee. They literally had the people come all the joint venture program people, 60% of them are not licensed, and those that are 40% licensed that do the program with me. They don't get paid commissions, they get paid an assignment fee, the assignment fees, a marketing fee, etc.. So yes, you're on the right track. 00:20:10:06 - 00:20:36:19 Unknown Man, this is very exciting. Hopefully you make it happen. Stay in touch. Very good. Sharif, I just want to stay on top of a couple questions coming in on the chat. We have CJ. He said, hi, I have a quick question. We have a deal in Rock Hill, South Carolina. We and obviously sure, if you know they live in New York, he said, we have a tenant that's very interested and said this is their number one property. 00:20:36:19 - 00:20:58:00 Unknown Their broker is walking in Monday morning and we'll be flying to you in Puerto Rico that day. Would you recommend sending someone local to walk it with them or letting them tour on their own? It's a lock box. I would send them on their own and have them follow up. 00:20:58:01 - 00:21:18:20 Unknown Perfect. When you send somebody to represent you, you see the control and power to that person. When do you see it? Control and power, which I do constantly. By delegating, I accept that I'm losing some control. I accept that I'll lose some power. But I don't like people to represent me. I don't like partners. I don't like third party people doing this and that. 00:21:18:20 - 00:21:39:16 Unknown That's why I only use brokers as needed. And the attorneys, I keep them within the range that I want. Just say this. Do not say that. He's my suggestion. Even when I go into big lawsuits and there is a deposition, I tell the attorney, ask this question first in the sequence of questions. If they say yes, you go ask this. 00:21:39:21 - 00:21:56:21 Unknown If they say no, you ask this, this, and I meet with them in advance. So I suggest do not have anybody go with them. They're going to want to look at what they want to look for, and they will either sell themselves or they will talk themselves out of it. Have them go with the lock box, their brokers that licensed and are going to play games. 00:21:56:21 - 00:22:02:03 Unknown And if they're coming to Puerto Rico, that's very interesting. 00:22:02:05 - 00:22:25:02 Unknown And while we're on the JV and talking about Puerto Rico, obviously everybody coming for the first time next week, welcome. We're excited that you're coming. But Jorge asked, what would your advice be to a new JV partner? Do a new GV Proctor work the formula. The formula works as a matter of fact. Use it verbatim. Look at the JV checklist. 00:22:25:02 - 00:22:39:13 Unknown I walk you through it. Broker asks this what are you going to do to the property? You say this, this and that. They want proof of fun. Boom! They challenge the proof of fun. Put them in touch with me. The whole thing is not new. I made millions doing this, I made millions and I continue to make millions with it. 00:22:39:13 - 00:23:02:00 Unknown So understand exactly the steps and follow the steps. The problem usually that people have is twofold. Number one, if it's too simple, they're like, no, no, no, it must be more complicated. Maybe I can do this and this and that. The other thing is people underestimate effort. There is a big effort in making the calls and following up. 00:23:02:00 - 00:23:19:21 Unknown I never downplay that. And one of the things you will see is do not send me a prop and say, what do you think? Does this fit your criteria? You know what fits my criteria? A single tenant building. I cannot tell you anything about it other than if we put it under contract. That starts smiling and dialing. And you know the 15 criteria. 00:23:19:21 - 00:23:40:23 Unknown We look for the ideal property. You will know as people respond to you as like tenants respond. And all this, a hot location will start getting responses right away. A low traffic, smaller building, no drive through will have less traffic. But you can do deals through the whole gamut from small deals to big deals. But don't go over a million. 00:23:41:00 - 00:24:04:11 Unknown Your chances diminish as it goes over a million under contract. Tenants don't want to pay that much right now, especially national tenants. So the lower the price, the better off you're going to be. And we've done some amazing deals around half a million. All right. That's my suggestion for new JVs. All right. Very good. And now we're going on to some seasoned Jaymes. 00:24:04:12 - 00:24:35:14 Unknown Jenna and her husband John are in Florida. She said, Sheriff, I'd like to get your guidance on a lease negotiation strategy. The deal. John and I have executed an asset purchase agreement to buy Naked Taco, an operating restaurant and rooftop bar in South Florida. All cash closing September 21st. Due diligence is underway. The building. The restaurant occupies the floor of a hotel. 00:24:35:16 - 00:25:07:00 Unknown Two resorted Art Deco buildings. Sorry, I'm just reading through this because I don't want to give away all of the details on the property. Here's what makes it interesting. The property was converted to a condominium in the 1990s, so it's 66 separately deeded units, 59 one second. So. So you heard what what Jenna wrote, which Janna wrote, which is that their individual units, when they take a property and you condominiums it instead of one deed for the whole property, you're creating separate deeds. 00:25:07:01 - 00:25:39:04 Unknown Each unit is separate. Deed could be sold separately and there is an association, they pay maintenance together, etc. continue. All right, three commercial units. The restaurant sits on those commercial deeds, which means they can be sold separately from the hotel without the owner having to sell the whole property. The owner owned 66 units, a New York family, through a certain corporation who bought the property in 2014 for $70 million. 00:25:39:05 - 00:26:05:08 Unknown Hyatt manages the flag. Their recent corporate filings suggest estate on succession planning. Notably, the seller told us that the hotel is converting and will have a full renovation. The lease this is the asset rent is approximately 5% of gross sales, roughly $88,000 a year on the current volume. For a space that would rent conventionally for 600,000 to 1 million. 00:26:05:09 - 00:26:36:06 Unknown On Miami Beach, the landlord covers most repairs, and the restaurant holds food and beverage exclusively for the entire hotel. But it expires July 1st, 2030 with option language. I haven't yet verified an assignment required landlord consent. Here's my situation I have to meet the landlord anyway to get consent for the lease assignment. So I have one conversation where I am asking for something and I want to use it to ask for more where I'm what I'm trying to accomplish in the meeting. 00:26:36:06 - 00:27:00:15 Unknown Number one, a new ten year lease to my entity, preserving the 5% of gross revenue structure. And number two, a fixed price purchase option on the three commercial units priced at today's income roughly 2 million at 6%. Cap on the current rent, with an escalator exercisable within 5 to 7 years and assignable to a real estate holding entity. 00:27:00:16 - 00:27:41:20 Unknown My questions for you. Is a fixed price option realistic for me, or should I be pursuing a right of first refusal instead? I understand the offer makes me bid against improvements later, which is why I'd rather lock a price. Now. That's the first question. Wait, wait, let me answer them one. Yeah, because that's a long question. Okay, so the question Yana has is should I make an offer to have an option to buy the property and negotiate the price now, or should I negotiate the right of first refusal or offer? 00:27:41:21 - 00:28:05:23 Unknown Sometimes you see it. And. Right. Right of first we obviously you want to pursue a fixed price purchase option now because if you're going to fix the space and have a right of first refusal, the space value is going to go up. You're going to pay for the fixing twice, fixing it, and then exercising an option to buy or a right of first refusal to buy later on. 00:28:05:23 - 00:28:37:14 Unknown So you tell them based on the condition it's in. I'd like to have an option to buy and let's say $1 million. I'm running the numbers. I don't know how much they want. Then you come in and you fix it. Once it's fixed and it's up and running, it's worth 1 million to 50 or 1,000,003. Who knows? Then if you can exercise the option I think just came in, then if you exercise the option, you're able to make a killer profit on it. 00:28:37:17 - 00:29:06:11 Unknown So that's how it would work. So negotiate the right now to purchase. All right Ashley what's the next next question. What do I offer to make this attractive for them? I've considered a nonrefundable option fee credited to the purchase price and possibly a modest base rent floor under the percentage rent. Yeah, that's a that's a great strategy. And upside is used. 00:29:06:12 - 00:29:34:14 Unknown Actually it's a great way to do it. Offering nonrefundable option money credited to the closing combined with the guaranteed base rent floor will give that family estate protection passive yield. And while you securing the upside for yourself, that's a great one. Good thinking. Very good. Next question. How do I approach a family office on succession planning without overstepping in a first meeting? 00:29:34:15 - 00:30:16:07 Unknown Okay. A family office with a small family. Older people. You want to frame the conversation around continuity, tax efficiency, estate simplification. So again continuing like look you're going to get the income. There will be tax benefits for you this way that way state simplification. There is no moving parts I acknowledge their long term hold. Since you said 2014 and present your your proposal in a clean turnkey solution that that eliminates for them any future management or headaches for them and for their heirs, for their kids, whoever's going to inherit the property because these people get scared. 00:30:16:08 - 00:30:43:13 Unknown Will my kids be able to manage it? Will it continue? Will. Are there too many moving parts you want to come in? And it's very important when you meet somebody, how you greet them and how you look at them. I repeat how you greet them and how you look at them. This morning I woke up very early because I was doing a call with a group that want to buy properties from me, and when they came in on zoom and I had them in, they came in. 00:30:43:13 - 00:31:04:07 Unknown Everybody's like this very serious. And I smiled and I said, hi, how was how's everybody doing? You could you could see they were startled. They weren't expecting me to be a friendly guy with a large portfolio that can do this. And and it sets the tone for a positive conversation. And I talked very briefly about myself. They say, well, tell us about yourself, how you acquired this. 00:31:04:08 - 00:31:25:19 Unknown I said, oh, I just did this and that through the years. So tell me about yourself. The top guy went off in a monologue of 22 minutes, told me his life story, how he deals with Walmart, how they're very big in the media and how they're doing this and that. Phenomenal. Very interesting. I'm recording the call. It was a zoom call, and then it set the tone for, let me tell you how simple we're going to do this. 00:31:25:20 - 00:31:41:17 Unknown If you want to do it, I can give you access to this and that. And he loved it. He said, good because we have a lot going on. We'll have the bank do the due diligence with you through that branch for the client services. Thank you. Goodbye. So he spoke. He felt he was listened to because I kept repeating some of the words. 00:31:41:18 - 00:32:07:18 Unknown Do the same with this family office, cater to their ego, cater to their concerns and show them again continuity, tax efficiency, estate simplification. Acknowledge their presence and the practice. In 2014, their ability to get the Hyatt downstairs and the property and how your solution is a turnkey solution, eliminating any future management or headaches for them and for their heirs. 00:32:07:19 - 00:32:35:03 Unknown Good job. This is good stuff. What else? Yana. Well, I just wanted to know if she had follow up so far. But her last question, I believe, is, oh, there's two more. Any structure that you would recommend for holding the option? So it's SBA 504 financial when I exercise. Yes, it is my suggestion. I don't know if you are not talking or what happened. 00:32:35:05 - 00:33:03:03 Unknown Okay. Here is my my my high. Okay. So listen to get it done for the SBA 500 for financing when you exercise your option structure the deal as two parts. The option company which is going to be the holding company okay. That structure the real estate holding entity okay. So that's the holding company. It should be owned by you. 00:33:03:05 - 00:33:31:03 Unknown But the restaurant operating company, which is an operating company, now leases the space. You see this way you have two entities. One that's real estate holding company like an LLC that can exercise an option because that's the one that's going to qualify for the SBA and at least entity that leases the space. This will help you get the loan with a fixed asset acquisition under the holding company. 00:33:31:03 - 00:33:58:13 Unknown And and then will help you continue operating the space under the lease that you have. Very good. And her last question what are the traps you've seen in purchase options inside commercial leases? Okay, okay. Look, you have to talk to an attorney to see if your option to purchase have to have a certain time frame in that county in that area. 00:33:58:13 - 00:34:22:07 Unknown I think it's Miami. You said. So make sure that it complies with the time frame, because some options in some places I ran into that in other places where the lease was coming in 20 years, five plus five plus five plus plus. And they said no in in in they cannot take that long of options. So the options could be only two more options cannot exceed 30 years. 00:34:22:09 - 00:34:45:17 Unknown In Puerto Rico, for instance, if a lease if a lease is over five years, it can be recorded as a lean against the prop. So you have to know in different places how it works. The other thing you got to work pay attention to is when you have the option do not fail recording the lean and create a cloud on the title. 00:34:45:17 - 00:35:10:18 Unknown So when you draft the option, it has to say that that the option E and option all agree that this will be recorded in public land records. A good attorney will do it for you, and you want the exercise of the option to be clearly drafted by an attorney. So you don't have any dispute regarding how it's done. 00:35:10:18 - 00:35:32:00 Unknown Because when I came to exercise an option on a property one time, I had optioned it at 2.5 million, but it was many years later. It was eight years later when the guy said, okay, now you can exercise the option because we kept him as the one to to tell me when. But I wanted the property and I didn't care if it's me or my descendants. 00:35:32:05 - 00:35:51:19 Unknown And he's like, no, no, but it's worth a lot more right now. But we had a clear notification window, a clear avoidance of dispute, and if there is a dispute, how we get the appraisal and it does not affect the purchase price that we agree. So so it does not have to do with anything that is valuation triggered or whatever. 00:35:51:19 - 00:36:14:17 Unknown So three things I repeat the validity of the limits on your option. Make sure it's recorded. The option is recorded. And number three how you will exercise the option that it will not be disputed. It will be like you give them a notification of 30 days that is going to be at their office or your office. And it does not have to do with appraisal or anything to be on this price, or it has to do with the appraisal. 00:36:14:19 - 00:36:34:20 Unknown Good luck Yana. This is very exciting and I'm glad to see that you're constantly looking for amazing deals and great structures. Any follow up, bianna? No follow up. Thank you so much, as always. This was full of wisdom and value. Thank you. Thank you. 00:36:34:22 - 00:37:04:15 Unknown Righty. We are moving into Jerry's questions. He is in Georgia. He's new to commercial. Deal pro. He has five questions. First, what are your thoughts on medical buildings? How would you know? A building that has ten suites. I have a connection with a franchise, with a franchise dental office and a few private practice doctors. Because I used to work in the medical field, how would you generically structure these type of leases? 00:37:04:17 - 00:37:34:21 Unknown I love medical buildings because they're exceptionally stable. The doctors invest heavily in these buildings. They don't leave. They stay forever. They're build out plumbing, imaging, dental chairs. Since you said right here, ten suites, dental office. So they invest so much. I did one time we took a building and made it made it all medical and the the people that did the dentistry, they invested so much money, they don't want to relocate. 00:37:34:23 - 00:38:02:19 Unknown You structure these as triple net leases. Triple net is the tenant pays for the the base rent plus the building tax the insurance and the maintenance. Okay. Net of tax, net of insurance, net of maintenance. Okay. So what other question he has on this. The next question that he has, what type of guarantee would I request. They don't have corporate guarantee. 00:38:02:22 - 00:38:29:17 Unknown Perfect. No problem. Secure a personal guarantee okay. It's called the PG personal guarantee. But do it from the lead doctor the lead practitioner or partners. If they're a group it's got to be backed by I would do a personal guarantee backed by the equipment like that. If they do not pay, we have right to the equipment. The machinery is called cross collateral guarantee. 00:38:29:22 - 00:38:50:00 Unknown The corporate guarantees for small practices don't have the balance sheet. They don't have the power. But the doctor's person guarantee is very good because usually they have good credit and they actually perform for years. My sister is a doctor and she stayed in the same building forever. Many years ago I told her just get an option to buy it. 00:38:50:00 - 00:39:08:13 Unknown She said, well, it's a big building and there are so many. Well, you know, it just. And every ten years or so I have to help her negotiate. And the list goes up and they are they realize they're, well, they can't go anywhere, they don't want to go anywhere. So they keep extending. They could have bought two buildings for what they have paid through the years. 00:39:08:13 - 00:39:44:01 Unknown But it's okay. Their business okay. As a follow up, he said, what are their usually shared expenses. Split amount split among the tenants. Yes it's common area maintenance. So whatever is expenses you manage them through the common area maintenance reconciliations. So it's done by square foot. So if the building has many tenants and you have a section, you're going to say you guys pay for proportionately for the 5000ft². 00:39:44:01 - 00:40:12:00 Unknown You have proportionate share of property tax, insurance and maintenance, he said. Does the medical entity cover the insurance or am I responsible for that? Okay, so triple net lee structure, the medical tenant will reimburse you for the share of the building property insurance. But they have to carry their own what's called commercial general liability. And they also probably carry what's called professional malpractice policies. 00:40:12:01 - 00:40:41:08 Unknown You know. So yeah, they will cover your portion of the general liability. Very good. And his last question, what terms in the lease should I be concerned with. The terms of the lease is obviously are there any exclusivity. Like if there is a big building and they want to be the exclusive dental office, will that be okay? Does it overlap with somebody else in the building? 00:40:41:10 - 00:41:04:22 Unknown The most important thing when it's something like this in any business now that's leasing in my buildings, I put I restrict their ability to sublease or sell the business without my consent, so I can maintain the tenant quality that are coming in. Also, you have to put in the least that whatever signage they're going to put must comply with the city requirements. 00:41:04:22 - 00:41:30:13 Unknown Because you have some buildings in historic areas, you have some buildings are more flexible with neon signs you want, so the signage they cannot sell or a sign without your approval, which shall not be reasonably unreasonably withheld or delayed, that an attorney will write that for you and that that that they are permitted to operate exclusively or not exclusively, that dental practice. 00:41:30:14 - 00:41:46:16 Unknown Any change of what they're going to do with the space must be approved by you. This, by the way, made me a lot of money. I had I had a guy who was selling souvenirs, realized he can sell more by doing jewelry. And he came to me, said, I want to do jewelry. I said, you know what you're paying 7500 for? 00:41:46:18 - 00:42:07:05 Unknown For the souvenirs. You're doing well. And if it's a jewelry, I will not rent it for less than 10,000. And he said, well, then I'm leaving because his lease was coming for renewal. I said, I completely understand. I will just send you the notice of termination, that the lease will not be renewed. That evening his wife texted me and said, oh, I talked to him. 00:42:07:05 - 00:42:22:02 Unknown I don't know what he's talking about. Of course we'll pay the 10,000 we need to stay. It was a win win. They're doing very well. I always look for a win win. There is no reason to win. Kill. The tenant will lose it. Actually, he's so happy now he's asking me to buy one of my buildings. So he's doing very, very well. 00:42:22:03 - 00:42:42:15 Unknown Very important to understand the value of what you're offering. So to recap this, find out if there is any exclusivity, whatever business you're going to approve for them. They cannot change it without your approval. They cannot assign or sell the building without your approval. Any sign is going to be in compliant with the city. After all, you are the landlord. 00:42:42:18 - 00:42:58:06 Unknown Keyword here is the Lord. I'm sorry to say, but I mean when when a tenant tries to tell me I have a tenant now telling me it's taking me four months to get the permit, you got to give me a break for this and that. This is not right. And I replied, I said, you're talking to me like I'm your partner. 00:42:58:06 - 00:43:14:23 Unknown I'm not your partner, I do leases. It was up to you to get the permit sooner, but you kept telling me you're on vacation. You kept telling me you're busy with your daughter, you're busy with the other business. You open the pizza place. It's not my problem. You owe me. And I'm coming to Puerto Rico, and I'm collecting on the 10th. 00:43:14:23 - 00:43:33:12 Unknown Or you receive a notice of termination. He immediately replies, no, I was just trying to see if we can do something. No, we can't do anything. We signed you delayed. You did not reply to the permit people. I have the evidence because we talked to them. I called them. So you do business? It is very good to own a building. 00:43:33:14 - 00:43:52:17 Unknown It is hard work to own a business. It's hard work to have a job. I'm not saying it's easy to own the building, but it's a lot less hard work and a lot less requirement on my physical presence anywhere on planet Earth. I don't even have to be here alive to collect the rent. It will be collected and given to whatever. 00:43:52:19 - 00:44:23:14 Unknown I got to excited on this one. All right, all right. We have a follow up question from Abdul on the side here I'd like to cover. Okay. He said Sharif, for my initial screening of land next to a Walmart and similar anchors. I'm checking. And he has a list here. Have QSR national tenants evaluated it? If so, why did they pass zoning drive through permitting access, stacking setbacks and easements? 00:44:23:17 - 00:44:56:07 Unknown Utilities available with adequate capacity, signage restrictions, any development entitlement restrictions, any existing survey site plan, civil utility or environmental problems. Am I missing anything critical for land specific filters? Or are any of these that I can admit? Well, you got to go to the city planning and zoning and ask them what they need is different from place to place and from actually in the same place based on that parcel of land. 00:44:56:09 - 00:45:22:01 Unknown But Abdul, I think you're new, and if you're trying to do development from the ground up, maybe some of these quick service restaurants passed on because I don't want to do the ground up development. It's not for every tenant. So move your life in a gradient scale. That word is not used enough in English, but gradient grade I e nt means in a way that you do something small. 00:45:22:07 - 00:45:43:06 Unknown Then you compound on it something more, something more, and then all of a sudden you reach a tipping point where you're able to accomplish big things. Take it like you're lifting weights. If you can lift 100 pounds, don't go. Day one lift 100 pounds. The formula for bodybuilders that won the awards of bodybuilding and lifting weights male or female? 00:45:43:06 - 00:46:01:10 Unknown They say if you're going to lift 100 pounds, start day one with 50 pounds and do it several times whatever exercise you're doing, then next day 75 pounds, and then day three 100 pounds. Start a little bit and then go with the 100 pounds because it's going to pump the blood in your veins, going to get you warmed up. 00:46:01:10 - 00:46:21:13 Unknown The whole physique will be ready for the 100 pound or 200 pound, and you keep increasing it because the stress, the resistance is what makes you build a very strong body. And those who avoided they do seven reps. When the real benefit is on the eight, nine and ten. They don't build muscles, they don't build strength. And same in business. 00:46:21:19 - 00:46:39:12 Unknown You start with getting a simple building, placing a tenant in it. You can assign it or you can go get a loan or buy it, or you can actually set up a real estate fund and get a group and buy it and pay them from the cash flow. And all the upside is yours. It's a gradient scale. I don't tell people come from nowhere and let's set up a real estate fund. 00:46:39:13 - 00:46:55:22 Unknown I say, come out, do the joint venture, assign the first deal you don't want to assign to me, assigned to whoever. Just understand gradient scale. Then next thing you're going to buy, place a tenant in it. If you can buy it, great. If not, get a partner. Number three maybe sell it, roll the money into another one and then keep growing. 00:46:55:23 - 00:47:16:17 Unknown Set up a fund and then this is how you build it. You cannot go because it's next to Walmart and start from scratch. Now if you can do it and you have the money and are able to option the land or by the land and delay and and pay for the holding cost, etc., don't underestimate the effort. Don't underestimate the time. 00:47:16:18 - 00:47:38:05 Unknown It can eat you alive. Some of the biggest funds in the country were just collapsing a few months ago. There is this guy, can McIlroy, who works with the what's his name? Kyosuke. Just look it up online. Just yesterday, some people were sending me. Look, his fund lost millions of dollars. Why? They could not afford the holding cost. 00:47:38:05 - 00:47:59:04 Unknown And this other guy, Brandon. Whatever. From bigger pockets. 15 million loss, 100 million in trouble. Why? They bit more. They could chew. They did not do it. Great. They raise more money than they could do. San Francisco has been a challenge for us. So understand. Walk your way to wealth. You'll be able to run and fly. It takes a little time. 00:47:59:06 - 00:48:08:03 Unknown Don't try to eat the elephant in one by. 00:48:08:05 - 00:48:14:05 Unknown Oh, Todd, I think you have yourself logged in twice. 00:48:14:07 - 00:48:35:09 Unknown Thank you, sir, for the answer about the lions, but I saw one of your videos speaking to the JV partnership and the land being one of the biggest opportunities. If it works so I can include it. Well, since I'm doing the search anyway, I come across a few of these, so I want to take your perspective on it. 00:48:35:11 - 00:48:52:07 Unknown Totally. So if you put it under contract and you start smiling and dialing and tell the tenants, we have a great bill to suit for you next to Walmart, let's get the interested party. And you're absolutely right because we have many ways to do it. We do it as lend lease where we tell them, okay, we're going to do a lend lease. 00:48:52:08 - 00:49:13:02 Unknown You go and build the building. And many tenants love it because they have like a cookie cutter way to build. We're talking to a company, a coffee company from Colombia now coming into the US, very strong. And all they want is a land lease because they come in very strong into doing the the cookie cutter that they actually get the stuff from. 00:49:13:04 - 00:49:35:06 Unknown It could be also that they, we can say they send us what they want and then we will do the build to suit. So then we tell them if we build, if you do a land lease, maybe it's 5000 a month, but if you want us to build, it will be done in about 10 to 12 months. We need the lease with the corporate guarantee sign, because we're going to go to the bank and do construction loans. 00:49:35:07 - 00:49:51:09 Unknown We ask them if they have a developer that they're interested to work with, and we work with their developer or with our team, go get somebody bonded, etc.. And then when we say it's going to be 15,000 a month. So there are many ways to do it. I thought maybe you wanted to do it by yourself, but no, no. 00:49:51:11 - 00:49:55:06 Unknown Totally fine. Abdullah. 00:49:55:08 - 00:50:03:21 Unknown Is it comes up. Thank you. You're welcome. Oh my son, he uses my account sometimes. Okay. 00:50:03:22 - 00:50:31:18 Unknown Just better. Yes. Okay. Sorry about that. I always log in twice because I didn't think the first one ever worked. Okay, Sharif, on the. All those people that were losing money. The part of that article, too. And my take was that they didn't keep the cash flow up. Yes, they let the cash flow become unimportant and didn't increase it in proportion to their risk. 00:50:31:20 - 00:51:04:22 Unknown Well said, well said. Thank you. Okay. All right. Next we have Shirley. She has two questions. She said cash flow or equity. Which on which one really builds your net worth. Okay. Very important. The net worth is the equity itself. The cash flow is what's going to give you a lifestyle. You're going to live off of it. You cannot be rich unless you have both. 00:51:04:22 - 00:51:29:11 Unknown And you cannot be super wealthy unless you have assets, not any assets, productive assets. So just if you're writing down, you can actually write assets and then cash flow. All right. So if you put 20% down on a building of a $1 million, this is just work. The numbers like this, you put 200,000. And let's say you're just making 6% cash on cash. 00:51:29:16 - 00:51:56:12 Unknown Very little cash on cash. So that's 12,000 a year that you're making it on your 200,000 down payment. The rest the building is producing income, but it's going payments to the bank. So what happens over time is the rental income increases. And maybe let's say ten years later, you now the building is worth a million, let's say goes up 3% a year. 00:51:56:12 - 00:52:22:13 Unknown So it's about a million 350 because it compounds on itself. And that's just a meager 3% per million. 350 it's worth your debt decreased on the 800,000. If it was a million, did that decrease to maybe 700,000. So now you have built in 850,000 equity. You started with 200, but now you have more equity, right? Am I right here? 00:52:22:15 - 00:52:56:11 Unknown Yeah. So we have these 650 equity. But the rent maybe maybe have gone to 24,000, if not more a year, maybe 30,000 a year. It depends I like inflation. You will pray for inflation. All what you're afraid of and you're complaining about will work to your advantage. Now imagine if you have two buildings. Three buildings. If every 36 months of your life, you buy a small building and you put a tenant and you work it, you buy assets that you can manage without over leveraging yourself. 00:52:56:11 - 00:53:23:10 Unknown What ends up happening is you build wealth. You build equity. Equity in some years will go up, some other years will go down. It's all almost hypothetical, but what it does is it helps you beat and meet inflation, the rental income, the cash flow is going to help you live a better life. And as you age and you are less productive and you want to enjoy life, the rental income will sustain and will help you. 00:53:23:12 - 00:53:45:12 Unknown The beauty about when you buy is you can call the price. The building is worth a million won, but you're making the offer at a million. The bank wants usually 25%, but you are able to convince them at 200,020% down, you're calling the shots on the purchase. You find the opportunity. Maybe something for an upside. It's at market value, but you have an upside like we do with the single tenant buildings vacant. 00:53:45:12 - 00:54:02:18 Unknown And then we put tenants. Maybe it's got an opportunity that is is a hassle free. You're buying a small hotel operated by Hyatt or Hilton that you're going to hold it and they will manage it. So there is no hassle. It keeps getting paid down. So you are calling the shots when you buy, but when you sell, the market is calling the shots. 00:54:02:19 - 00:54:20:07 Unknown Other buyers come and make you offers, and you're at the mercy of how you can work it out the best way possible. You become wealthy when you buy and hold assets. When do you sell them? When you get the ridiculous offer and when the taxes work for you to roll the money in a 1031 exchange that when you roll it forward, you don't pay taxes on it. 00:54:20:08 - 00:54:38:17 Unknown You have 45 days to identify up to three properties and additional 135 days to close, and you're all the money for it. You keep deferring the gain. This is such a great way in the United States to make money. It's so much easier in the United States to make money. All the people around the world would love to have our system. 00:54:38:17 - 00:54:56:14 Unknown Even Canada gets the government involved in loans and all this. Europe. Do you know how much in France the notary charges the tourney to do the closing 5 to 10%. How ridiculous is that? They tax you extra for being wealthy, their opening their borders and it's a disaster right now in Europe. Go take a trip and see if you took a trip before. 00:54:56:14 - 00:55:16:17 Unknown And right now look at the US. We have the ability to make money. A poor person can come in poor and destitute, find ways to take classes online, find a job, work his or her way up to build credit, then buy something small and build it. So when do you buy non-performing assets? When do you buy art? When do you buy land? 00:55:16:17 - 00:55:34:20 Unknown When do you buy some RBS assets that sit there and you can tell people, look how beautiful this is. When you are trying to preserve wealth, you can go buy buy these arts to enjoy the beautiful stuff from Picasso or from whoever. That's not what it's all about. We're not at this level. If you were at this level, you wouldn't be on this call. 00:55:34:20 - 00:55:54:03 Unknown You will be sitting at the beach in Spain, on France or something. The point I want to make is get the assets, hold on to them. And eventually when you pass, when you die, you're going to pass it on to your kids at a stepped up in basis. So even if you did 10th your own exchange, they pass on to them with no taxes. 00:55:54:05 - 00:56:12:01 Unknown And what's happening is the cash flow will keep increasing. What I'm telling you is what I did. It changed my life. Now, when you're strong with your assets, you could have the cash flow from your job. There is nothing wrong with the job. It gives you better. People like, talk about having a job like, oh, it's still on a W-2. 00:56:12:03 - 00:56:30:07 Unknown Look, I started with a hotel business. I was on a W2 and I worked my way up, but I did the real estate on the side. I worked for a billionaire. I saw how he made the money. I started copying, I started doing, and I built it with credit lines and cash flow. And in the beginning I took more risk and as I made money, I reduced my risk. 00:56:30:07 - 00:56:55:18 Unknown Reduced my risk. So get the cash flow from a job, buy sell assets to build some cash, get some assets that are productive and hold on to them, and then increase your cash flow as you hold on to ask how do you increase your cash flow? You get a bigger job. You do things on the side, pay down the debt, do buy discounted notes that your debt is maybe at six 7%, but you have notes paying you at 1,012%. 00:56:55:23 - 00:57:30:15 Unknown Increase both. You will have a great life and you will not have to worry too much about the future. All you focus on is your happiness and health after that. Cool. Very good. And her Shirley's last question. Sharif, what are hidden costs a real estate investor usually overlooks. Okay. Very good one number one in in multi units or in any type of income producing building that people overlook is vacancy the vacancy you cannot assume 100% occupancy year round. 00:57:30:16 - 00:57:48:13 Unknown You constantly have. So every time I tell you I am completely sold out in Puerto Rico with my assets, I'm completely sold out to my other assets here and there. Guess what? Somebody leaves. We just had two tenants leave. One guy just had an operation. He may be dying. So he called me and said, okay, I am dying. 00:57:48:17 - 00:58:12:16 Unknown You can hold me on to the lease or let me move on to spend a few days in the hospital and see what I can. I said, listen, don't worry. I'll pray for you. We'll get you out of the lease. Look, it's an unexpected vacancy, but you got to have a heart. The other one, the lady just flipped out and said, I want to leave because the neighbors are harassing me and this and that, and we. 00:58:12:16 - 00:58:28:01 Unknown I just told the, hey, no problem. You want to go? Go. And she left and left everything behind. And now we're trying to find her to give her the stuff. She has like two weeks and stuff. So we have two vacancies. We had no vacancies before, so I have to always assume a vacancy factor. What does it do? 00:58:28:03 - 00:58:47:15 Unknown The vacancy. You have to clean the units. You have to actually get it ready. You have to get a tenant in and you may have to pay commission. The other thing is cap X capital expenditures. You got to have reserves for the roof, the HVAC units for the parking lot repairs. Now, I'm lucky in Puerto Rico we have no parking lots. 00:58:47:15 - 00:59:20:17 Unknown There's just no space. It's like San Francisco building next to the other one next. So. But HVAC, it's a very hard place. Roofs, termites you see. So again, capital expenses, vacancy factor number three. What you got to keep on the side is tenant improvement. Tenant improvement, let's just call it unit improvements and leasing commissions. If it's you have an apartment building and it leaves it renter leaves, you're going to have to fix the place. 00:59:20:17 - 00:59:39:10 Unknown So that's an improvement. You have to bring it back up to par. You got to repaint. You got to do this is this. And then you're going to rent it. Usually you're going to pay commission to somebody. So remember that it's very important. So those I would say are the three biggest things. The capital expenses, the vacancy factor and the cost of the turnover. 00:59:39:10 - 01:00:04:14 Unknown When something happens and it in a hotel, in hotel business, when I manage our VP for Hilton Hotels on the West Coast, the formula for hotels under Hilton Hotels, we kept 2% from the gross revenue of the hotel. So it hotel makes 10 million a year. Guess what? We kept a couple hundred thousand. A quarter of a million at all times for capital expenses. 01:00:04:14 - 01:00:21:13 Unknown Oh, and then we would. Right at the beginning of the year, all general managers had to write to us for for the corporate office. Okay, we're going to change the pool chairs. We're going to fix the exercise machine for this and that. We're placing cameras outside. We're changing this. This capital expense are very important and renewing the units. 01:00:21:14 - 01:00:48:17 Unknown ET cetera, etc.. So hopefully that helps you. Hopefully that helps you. So in closing, any other questions? 01:09:50:05 - 01:10:13:08 Unknown Yes, you have an exorbitant amount of energy to come back from vacation. No, what happened is I had a matcha tea today, and apparently the matcha is more interesting than than the coffee. No, you just came back from a long trip in Europe, and I did. Yes, sir. I was in France. Remember? We did last call. My daughter was sitting next to me in France. 01:10:13:08 - 01:10:39:20 Unknown Yes, yes, yes. You're very, very good. Thank you, thank you. So I want to close by saying, I want to give you just one thing that's on my mind this month. So the whole month I'm making deals and I'm meeting with people and stuff. And what's important is three things. One, number one, when you're negotiating the deal, the dynamics, the dynamics, what is the dynamics? 01:10:39:20 - 01:11:02:05 Unknown If I am sitting with you. We're making a deal happen. So it's you and me, but all of a sudden you're my daughter comes in and sits next to us. The dynamics change. The person may try to be funnier because she's a young lady. She's not too involved in the business, but she wants to learn. They may actually start talking to her in the meeting, etc. now that could be positive. 01:11:02:06 - 01:11:22:22 Unknown That could be negative. I went to a meeting, I'm sitting with the guy and my CPA said, I'd like to be in the meeting so I can learn from you. And this, this, I said, okay, it it shifted the momentum I have with the guy selling the building that's presenting the building to me, because he kept talking to my CPA, kept talking to my CPA, trying to get his nodding. 01:11:22:22 - 01:11:44:06 Unknown And my CPA was freezing, you know, so it was just like nodding. But there is a series of things that I do with people, which is I listen to them. I repeat some points, I ask some questions, then I repeat what's important. Then I recap in a way that shows them that I listened. Then I ask another question I lost every time I tried to repeat. 01:11:44:07 - 01:12:06:23 Unknown He just repeats to the guy. And so the dynamics when you're making the deal very important. Number two, who you're doing the deal with, not just that character, but their credit and their solvency. It could be the best person in the world, but they're broke. So they're signing and they're giving you collateral, doesn't have equity or doesn't have this. 01:12:06:23 - 01:12:38:12 Unknown And next thing you know, you're in trouble because he's a good person, but he can pay. He can pay. So what do you do. So it's very important who and their solvency solvency is there. There. They have cash flow okay. They have an asset that's producing him. I can take that as credit. Or if I'm buying from them and I'm asking them to carry the financing, I'm showing them, look, I would like I'll put some money down and I want you to carry and I explain to them this is who I am, and this is my solvency and this is my credit. 01:12:38:12 - 01:12:55:14 Unknown And let me show you this and that. So I build that rapport with them. And if there is dynamic a second person sitting like they are the seller or buyer and there is somebody with them, I focus on them and I can see from the eye contact who is more important, who is the decision making? Maybe it's the wife, maybe it's the husband, the husband. 01:12:55:15 - 01:13:17:20 Unknown I meet so many ladies that are aggressive. They want to do business and their husband is very, very conservative. So I talked to her. She is the decision maker, but I cater to I cater to his conservatives attitude about the deed. So the dynamics who and is there and their solvency. And finally the contract. It's got to be in writing. 01:13:17:22 - 01:13:32:05 Unknown If you have a family member, put it in writing for the love of God. There is no handshake with the brother and sister. They're going to be confused. There's no handshake with your cousin. If you're going to loan your cousin or loan your friend or whatever you put it in writing. If you don't pay by this date, what is the collateral? 01:13:32:06 - 01:13:43:00 Unknown Get the collateral. Is they going to tell you? Of course I'm going to pay you. Yeah, of course. That's why I just want the collateral. Why do you want the collateral? If you know, I'm good for it? Because I talked to the bank. Because I have to show the bank where my money went. Give them an excuse if you have to. 01:13:43:01 - 01:14:05:06 Unknown But don't ever leave yourself open. You want to always be in control. Control? Equal wealth. So if you're making a deal, look at the dynamics. Who do you have with you? Who do they have with them? And send the roll? Who you're dealing with and their solvency and the contract and how powerful and airtight that contract is. 01:14:05:08 - 01:14:07:08 Unknown See you next month. Thank you.