00:01.31

wongga

Good afternoon. My name is Garret Wong I am the host of the investing to win podcast today I have the pleasure of welcoming Cal Resh he's a real estate investor multifamily residential focusing on co-ownerships and that is actually the subject today. Cal welcome.

00:01.57

Cal

Um, good afternoon. My name is Garret Wong I am the host of the investing to win podcast today I have the pleasure of welcoming calre. He's a really st investor multifamily residential focusing on co-ownerships and that is actually the subject to the cal welcome. Thank you very much Garrett nice to be here all right? So um, for those of you probably our community may or may not have heard you so I like to let you start with a little bit background. Why don't you tell us a little bit about yourself. sure sure so I'm I'm forty eight years old and um, until recently i.

00:20.43

wongga

Behavior all right? So um, for those of you probably our community may or may not have heard of you So I like to always start with a little bit of background. Why don't you tell us a little bit about yourself sure. So I'm years old and until recently I I ran.

00:37.77

Cal

I ran a ah property management company a local property management company here in Winnipeg ah that managed 90 buildings but 90 buildings over 2000 ah apartment units. Um and a few other smaller asset classes.

00:39.35

wongga

Property ned company local propertyed here in one bay I managed ninety buildings or 90 buildings with were 2000 armon and and 2 other smaller askpo. Um.

00:57.22

Cal

Ah, some ah small amount of commercial some industrial but but predominantly apartment buildings. It was a it is a ah, a family owned business. Um, and it and and it was started by my mom and dad.

00:59.31

wongga

Small enough commercial and industrial. But but predominly it knows it was a it is a ah, a family old witness. Um and and and it was started by my Monday Pat. Ah.

01:16.32

Cal

Ah, many many years ago about fifty years ago and I worked alongside them for many many years and ah I've been I was running the company for almost fourteen years and the.

01:17.94

wongga

many many fifty years but and I've worked alongside them many many years and I've been I was running the company for almost fourteen years and the managed management.

01:34.80

Cal

The management the management kind. There's the management company and then there's the whole. There's our our family holding companies and and also other holding companies and I was instrumental and I was um, it was.

01:37.28

wongga

There's a man talking and then there's the whole. There's our our familyly holding companies and also other holding companies. Um, and I was instrumental and I was it was my my position was not just managing.

01:51.74

Cal

My my position was not just managing the the property management aspect of it but also managing the investment side with respect to the family holding companies as well. Prior to that I had spent 3 years working actually in Southern Ontario

01:56.29

wongga

And property management but also managing investments stepss the family holding cup prior to that had spent as 3 years work actually in Southern Ontario as a commercial real estate appra now crazy.

02:10.95

Cal

As a commercial real estate appraisal that appraiser throughout Southern Ontario and believe it or not in in in my twenty s my dad set me up with a line of credit and I actually ah flipped homes as well for a few years I flipped about 8 homes.

02:15.39

wongga

Throughout Southerntarian and believe it or not and in my twenty s my dad sent me up with a line of credit and actually flipped homes as well for a few years fli about 8 homes and I would buy and.

02:29.71

Cal

And I I would buy and sell buy and sell them and and offer secondary financing as well and then my my educational background is a degree in Urban Studies a property management designation and then I've completed the the majority of courses in the commercial.

02:34.60

wongga

So happened and offer a secondary my and in my educational background degree and Urban but a property management designation and I coneded them Authority of course marial real estate appraisal designation Academy Wow that's.

02:47.82

Cal

Real estate appraisal designation in Canada wow but that's that's quite the resume I almost feel like we're in a quarter of lock and I've now established credibility with like fly flight witness but all jumps aside I mean and so.

02:53.90

wongga

That's quite the resume I almost feel like we're in a court of law and I've now established credibility with my with I'm witness. Um, but all jokes aside I mean it's ah it's very interesting. You know you've got a family background but then you were seeing you know.

03:04.70

Cal

Very interesting. You know you've got a family background but then you were seeing you know parents doing this and then obviously going and getting your own education commercial real estate. What made you leave Ontario yeah, it's a good question ultimately at a certain point. My dad.

03:10.97

wongga

Parents doing this and then obviously going and getting your own education commercial real estate. What made you leave Ontario yeah, it's a good question. Ultimately I assume point my dad had had enough you reached a certain age where you recognize mortality.

03:23.78

Cal

Ah, had had enough. He he reached a certain age where he he recognized his mortality and that's actually a difficult thing to do for a certain generation and he asked me if I wanted to come back and run the business and I was married at the time.

03:30.70

wongga

And that's actually a difficult thing to do with certain generations. Of course he asked me I wanted to come back run the business and I was married at time and um and you if I didn't but if my wife and didn't agree.

03:42.50

Cal

And I knew I I knew if I didn't get the ah ah if if my my wife at the time didn't agree then I I was not interested. In fact I was a little bit lukewarm because I know the issues with family businesses. But she encouraged me to do.

03:49.77

wongga

Then I was sorry fact that was a little bit because they know the issues with family businesses. But she encouraged me to do this being kind interrupter to and of course I had already a number of years family business. So.

03:59.94

Cal

To do this. It would be and a new opportunity and of course I had already spent a number of years working the family business. So I I decided to to pursue it. Okay, very very interesting. So let's start a little bit deeper like obviously property management company. But I mean this is.

04:09.58

wongga

I Decided to to pursue. Okay, very very interesting. So let's dive a little bit deeper like obviously property management company. But I mean this is a large operation I mean my little company ah pale seems to pale in comparison. But.

04:19.82

Cal

Large operation I mean my little company tail seems to fail in comparison. But from what I understand you said how many buildings about Ninety ninety was what I call smaller walkups you know between 20 and 40 units.

04:26.39

wongga

From what I understand you said how many buildings under management about 9 ninety buildings. Okay, ah, but this what I call alder to walk you know between 28 40 twenty and 40 units. Okay, um, and.

04:39.90

Cal

Okay, um, and you don't own all the things obviously because you said you have the holding company. You've got. Okay so a lot of this is third party management for people who are owning them right? So that's what I call third party. Yeah I'd say about half of it is third party and then the half and the other half.

04:42.20

wongga

You don't own all of these obviously because you said you had the holding company and you've got okay so a lot of this is third party management. Ah for people who are owning them right? So that's what I call third party. Yeah example, half of it third party and then they have yeah we have are properties where our family holding companies.

04:58.24

Cal

Are properties where our family holding companies have an interest in those properties as well. Which makes a huge difference in terms of in terms of um, ah how you approach these these properties of course and I imagine the ownership group likes.

05:02.29

wongga

Interest in those properties as well. Okay makes different ah in terms of how you approach these property of course and I imagine the ownership group likes the property management company to have a little bit of so-called skin in the game.

05:15.62

Cal

Property management company to have a little bit of so-called skin in the game for yes, exactly Yeah this for sure and and all of these all of the properties where there where we had an interest ownership or we we we do have an interest ownership. Um, ah those were co-ownerships that um.

05:20.42

wongga

Great I've heard this all heard that. Yeah for sure and with all of these all of the properties there there where we had engaged words with. We do have an um those were Co- ownerships that initially were set up and negotiated.

05:35.87

Cal

Initially were set up by a negotiated and sit up by my dad and then I continue to do those? Okay, all right? Well that that's a fantastic headway because part of what we're talking about today and why I want to bring you on is the concept of co ownernerships can you sort of.

05:41.70

wongga

My dad I continue those? Okay all right? Well that that's a fantastic segue because um, part of what we're talking about today and why I wanted to bring you on is the concept of co ownernerships can you sort of.

05:54.28

Cal

I Mean last week I had a real estate lawyer talk about joint venture agreements and that this is kind of along the same theme but in terms of what you kind of specialized and can you define for the audience. What a typical co-ownership would look like right.

05:54.82

wongga

I Mean last week I had a real estate lawyer talking about joint venture agreements and that this is kind of along the same theme but in terms of what you kind of specialized in. Can you define for the audience. What a typical co-ownership would look like right? So ownership is it's amazing.

06:11.84

Cal

So ownership is it's It's a it's a group of individuals. Ah that own the property either individual through individually or ah by way of their holding.

06:15.70

wongga

Of individual. Um that own property either individual individual or ah, by way they're holding corporate reach and.

06:30.65

Cal

Corporation and the the entity that's registered on title is what's called a bear trust corporation and the the co-owners um, are not registered entitled and the bear trusty.

06:34.76

wongga

The the entity that's registered a title is what's called a bear truck corporation and the the co ownerners um are not their spell title and the bear trustee is registered on title on behalf of the coalition and.

06:49.50

Cal

Is registered on title on Behalf of the co-ownership and what's very important is the co-ownership agreement. It's like the the holy bible of of how the co-owners co-owners behave amongst each other.

06:54.54

wongga

But the variable is a codeish. It's like the the holy vial of of how the co-owner owners behave amongst each other. Okay, so that would be.

07:07.91

Cal

Okay, so that would be I imagine I mean it could literally be podcast episode with my room estate or but released this morning but I mean he he was speaking about joint venture agreements regardless of what the.

07:10.44

wongga

I Imagine I mean it literally the podcast episode with my real estate lawyer um got released this morning but I mean he he was speaking about joint venture agreements regardless of what the.

07:22.25

Cal

Structure is of the ownership entity whether it be a core for partnership or wherever's untiled with that. That's what you're talking about here a co ownernership agreement is sort of like a shirtholder' sort of like venture agreement. It's very so it's very similar. There may be differences in terms of taxes. Um.

07:22.64

wongga

Structure is of the ownership entity whether it be a Corp or a partnership or whoever is on title but that's what you're talking about here. A co-ownership agreement is sort of like a shareholder sort of like a joint venture agreement. It's very it's very similar there may be differences in terms of taxes. Ultimately the bear trust was called a bear trees.

07:39.49

Cal

Ultimately, the bear trustee is called a bear trees trustee because it's bare. It doesn't report income any tax advantages whether it's a capital cost allowance. For example that gets passed down to the individual owner so that is that would be ah that is unique.

07:42.39

wongga

Because it's there. It doesn't report income any tax advantage with whether it's cut capital cost amounts. For example that gets classal into the individual board so that is how be that is meet. That's certainly unique with the coalian.

07:58.82

Cal

That's certainly unique with the co-ownership structure as opposed to a company as opposed to property being owned just simply by a corporation with people owning shares of the corporation. Yeah because I yeah I I've been doing this for a bit I people I heard a lot a network.

08:02.35

wongga

Structure Um, as opposed to account as opposed to property mean or just simply by a corporation people own shares of the corporation. Yeah, because I I mean I've I've been doing this for a bit I've interviewed people I'm part of a lot of networking groups and it seems like when people get together.

08:18.70

Cal

And seems like when people get together on again. Let's say a three four million dollars three story walkup very typical here in winnipeke a lot of them just put the company. Sorry the title of the asset in a typical corporation and everybody gets shares vi it thirty three and a third fifty fifty

08:22.26

wongga

Again, let's say a three four million dollars three story walkup very typical here in Winnipeg a lot of them just put the company. Sorry the title of the asset in a typical corporation and everybody gets shares be it thirty three and a third or fifty fifty and then they have this.

08:37.83

Cal

And then they have this joint venture agreement where you're describing this completely different here. Trust people. Yeah, it's really it doesn't report any income. Um and is its sole purpose is just to be registered on title. Um and and depending on the individual owners. Um.

08:39.62

wongga

Joint Venture agreement what you're describing as completely different this bear trustee corp. Yeah really, it doesn't report any income um and is it sole purpose just to be registered on title. Um and and depending on the individual orders.

08:57.29

Cal

Personal income tax or corporate income tax will dictate how much they want to declare as with respect to their capital cost allowance. Okay so let me give an example, let's say we have 3 groups ownership that owns an asset that's registered as a be trustee corps all three of those.

08:57.91

wongga

Personal increase tax or corporate impacts will dictate how much they want to declare expect to tackle cost. Okay, so let me give an example, let's say we have 3 groups in a co-ownership that owns an asset that's registered as a beer trustee corp. All 3 of those groups could be corporations. They could be individuals. They all pay whatever tax they pay whatever flows down through dividends or cash floor or whatnot. Yes, yes, okay, yeah, obviously no, no, no yeah.

09:17.24

Cal

Groups could be corporations. They could be individuals correctly. Whatever tax they pay whatever flows down through dividends or cash flow or whatnot. Yes, yes, okay, now I obviously listen I'm not a I'm not an accountant I'm not a lawyer. So. And and as I get older. My memory is starting to get more rusty and I rely on those experts to remind me of the benefits but generally speaking. Yes, um, that's generally how it works. Yes, yeah I know it's funny I just came back from real estate conference in Toronto last night actually and one of the best quotes I've heard.

09:36.20

wongga

And asn't get older better get moles rely on the remind of the best but general speaking? Yes, um, that's general. Yeah, no, it's funny I just came back from a real estate conference in Toronto ah last night actually and one of the best quotes I've heard. Um.

09:54.26

Cal

Um, they said make sure you have an account like every single speaker was you know, talk to your accountants I'm not an expert but the best cool was I hope I don't screw it up. Be chiefest, the countant costs you the most amount of money I agree with that Amazing Yes I agree with that? yeah.

09:55.78

wongga

They said make sure you have an account like every single speaker was you know, talk to your accountants I'm not an expert but the best quote was and I hope I don't screw it up the cheapest accountant costs you the most amount of money I agree isn't that amazing. Yeah I agree yeah make sure when you get.

10:12.15

Cal

Make sure when you're getting professionals part of your your team. Absolutely most importantly, is is getting getting good good people that not only that you can trust. But they also trust you it goes both ways. Yeah, no trust is a huge thing.

10:15.11

wongga

Part of your team. Absolutely most important is is getting getting good good people that not only that you can trust. They also trust you it goes both ways. Yeah, no trust is a huge thing we covered we covered that last week and trust doesn't.

10:30.68

Cal

We covered we covered that last week trust doesn't really Trump what's in an agreement right? It has to be trust first. Okay, so now we've got a group of owners. So let's let's ah, move on a little bit. Um can you walk us through the initial steps.

10:34.97

wongga

Really Trump what's in an agreement right? It has to be trust first. Okay, so now we've got a group of owners. So let's let's move on a little bit. Um can you walk us through the initial steps that you would take in identifying. Let's say an apartment block and then bringing together your groups of investors.

10:46.27

Cal

You would take in identifying. Let's say an apartment block and then bringing together you groups of investors right? Yeah, the initial steps it's interesting. It's not. It's not necessarily so ah, methodical generally speaking.

10:53.84

wongga

Right? Yeah, the initial that's interesting. It's not. It's not necessarily so method thoughttic generally speaking. You're always under power for real estate and you use different avenues to to.

11:05.24

Cal

You're always on the prowl for real estate and you use different avenues to to find them whether it's just getting flyers emailed to you of of properties speaking with agents periodically.

11:12.71

wongga

Find whether it's getting of flyers killed duke of of properties speaking with agents periodically and getting it no agent and then with.

11:24.81

Cal

And getting in the in the know with the agents and then speaking with ah property owners property owners. Perhaps you manage third party in your own in your own company and that actually that last point is actually a very very good. Ah.

11:31.19

wongga

Property owners property owners. Perhaps you manage third har you know heroin company and that actually that last one is actually a very current. It's a it's a very effective way you have to be speech strategic ticket account as a as a.

11:43.79

Cal

It's ah it's ah a very effective way you have to be strategic now as a as a ah you know Property Manager Slash real estate inventor investor you have to be. You're almost when you're when you're managing property.

11:50.97

wongga

Property managers were slash real estate that you yes you have to be your you're almost when you're you're managing property I mean you you have to smooth a piece of strategic as well. In terms of the entitling properties that you're entitled.

12:01.75

Cal

I Mean you you have to sort of be strategic as well. In terms of the type of properties that you're managing and um to think long-term that you're managing investment-grade real estate that at some point.

12:09.93

wongga

And um to think long term that you're managing investment create real estate that at some point there may be an opportunity to acquire that that real estate not that you're trying to do anything nefarate.

12:19.32

Cal

There may be an opportunity to acquire that that real estate not that you're trying to do anything nefarious to your your clients but you certainly have the ability to select the type of asset class that you are managing.

12:28.95

wongga

To your your client but you certainly have the building to select the massive class that you are managed and so and so there were reasons why for example I took on more investment grade real estate as opposed to.

12:38.17

Cal

And so and so there were reasons why for example I took on more investment grade real estate as opposed to managing condominiums. For example, again, you know my dad used to say you can only dance at so many weddings at so at so many weddings and so.

12:47.83

wongga

Man The condomins For example, again, yo graduate know dance Anyway, it's only way and so if you spread yourself then focusing on um, many many all different types things that.

12:57.55

Cal

If you spread yourself too thin focusing on ah on many many all different types of things that again and you're spreading yourself too thin you you necessarily don't Um, you're not really actualizing your your strategy the strategies that you that you may have.

13:06.21

wongga

Again is spreading yourself and you you necessarily don't Um, you're not really actizing. You're trapped this gratitude that that can may have so it's important to you for that. So as I simply be happy. You're you're you're on a path for these.

13:17.33

Cal

Ah, so it's important to think about that. So as I said there's different avenues you're you're you're on the prowl for these asset for the type of asset class that you're just that you're interested. Um, and um, what's what's important with these.

13:26.58

wongga

Asshole What really the typeacic passageages that you're interested. Um, and um, what's what's important with these co-ownership is that you need to have a ah um.

13:36.39

Cal

Co-ownerships is that you need to have a ah um, how can I describe it. It's sort of a a group of potential investors that you're going to invest with but the trick is and this is the trick is that it's important to have them.

13:45.90

wongga

I describe and this with a ah group of potential vest that you're going to invest but the trick it is and this is the trick that it it's important to have them so to speak your back pocket. But it's also not. It's most important to for them John just bearing that this thing.

13:55.39

Cal

So to speak in your back pocket. But it's also not. It's also important ah for them to understand that this is a ah that this is requires a lot of patience that you may not find anything immediate. Um, but to always keep in touch with them because there may be a time where.

14:04.68

wongga

That this is requires a lot of patience that you may not find any immediate. Um, but to always touch with you because there may be a park where something is nothing something is rewarding that you gonna April call them up. Okay.

14:14.30

Cal

Ah, something is good something something is rewarding and then you gonna you're gonna call them up. Okay, so let me let me interject there. So there's an asset I mean lead generation coming from something very own company.

14:22.54

wongga

Okay, so let me let me and interject there. So there's an asset I mean lead generation wherever these things are coming from sometimes or from your own company. Um, that's fine. But in terms of the investors. The owners um I mean are they.

14:32.74

Cal

Um, that's fine, but it turns up the investors the owners I mean are they I know in the brief show. We had spoken about sometimes you're doing this for a group of owners and sometimes you're doing it with your family started taking us all interest or even yourself with your own old code. Are you.

14:41.20

wongga

I'm know in the pre-show. We had spoken about sometimes you're doing this for a group of owners and sometimes you're doing it with your family sort of taking a small interest or even yourself with your own hold co are you are you sort of trying to look for properties where you know that you would personally have an interest or would you say that there's literally a group of 4

14:52.37

Cal

Are you sort of trying to look for properties where you know that you would personally have an interest or would you say that there's literally a group before really good friends and they're like cal if anything comes up the 4 of us want to buy a building and you wouldn't really have anything to do it that except maybe that right.

15:00.60

wongga

Really good friends and they're like cal if anything comes up the 4 of us want to buy a building and you wouldn't really have anything to do with it except maybe the management right? general speaking? Um I'm always interested in. Um.

15:10.84

Cal

Generally speaking. Um I'm always interested in um, one of our holding companies to take a piece and as you pointed out the skin in the game. It's very important. Um, but additionally ah.

15:19.18

wongga

1 of our core is to see a piece and as you know in and again it's very important that um, but additionally um, additionally as you know where investible in real estate is is a very profitable type of.

15:29.66

Cal

Additionally, as you know Garrett investing in real estate is is ah is a very profitable type of strategy. So you're doing a tremendous amount of work these opportunities don't come ah out often, especially good opportunities. So this is a time.

15:39.10

wongga

So you're doing a term that is the honor role. These opportunities don't come out often, especially with opportunities. So this is a time for you to invest for as well manage partnering and and in terms of.

15:48.59

Cal

For you to be an investor or as well a managing partner. Um and and in terms of finding these investors again. It's through years and years of networking. But.

15:58.55

wongga

Finding again its through years and years of network. It's the it's a perfect marriage between the investment side. The matchitude time as you manage more and more properties whether they're investment use.

16:06.30

Cal

It's the it's the perfect marriage between the investment side and the managing side as you manage more and more properties whether they're of investment. You've you've you've strategized that you're going un focus on investment grade real estate and you're managing properties. Third party.

16:18.31

wongga

you've you've stratized let's focus on investment real estate and your management properties. Third party Third party properties. Um, you start to get ah you start to develop a network of of invest and through reputation again built on. Trust.

16:24.70

Cal

Third party properties. Um, you start to get ah you start to develop a network of ah of investors and through reputation again built on trust these investors that have their own property start asking you.

16:38.80

wongga

D and V that have their own value start asking you. You know when keep you find something else. Can I let me know I and more and more start asking those things and so then you start building for your your black folk.

16:42.48

Cal

You know when if you find something else can I let me know I'm interested and more and more people start asking you those things and so then you start building your your um your blackbook of potential investors. You've managed their buildings for a number of years they have trust in you.

16:56.88

wongga

Potential You've managed their holding number of Yearss they have trust. So it's very quickly to access that account you call them up I've I Hope there's something very interesting and which you you interested you know and I mean in restored yes is now.

17:01.95

Cal

So it's very quickly to access that type of capital you call them up. You know I had there's something very interesting and would you are you interested? you know and I mean in in in short. Yes yes I am and that's how you build your network. It's through it's through the development of.

17:16.90

wongga

That's where you go through its business developments of doing work for those investors as well. Okay, no I again quoting this real estate conference that was one of the key things is they always say your network is your net worth and I know that sounds that sounds corny but it really is who you know.

17:19.64

Cal

Doing work for those investors as well. Okay, no I and putting this really conference that was one of the 2 things is they always see your network with your networks and I know that sounds that sounds corny but it really is you know who trusts you and because you're doing this a lot in the context of.

17:35.55

wongga

Who trusts you and because you're doing this a lot in the context of managing some of these investors assets already. There's an automatic level of trust there versus just again a guy on Youtube right? exactly because really have to trust you to contribute a substantial number.

17:39.81

Cal

Managing some of these investor's assets already. There's an automatic level of trust exactly? Yes, exactly by guy on Youtube exactly because really they have to trust you to to to to contribute a substantial amount of equity. Okay, so for the decision making process. You.

17:55.40

wongga

Okay, so for the decision making process I guess the building comes first. There is either an opportunity from within your own portfolio that you're managing or you hear of something and somebody says cal I'm getting out if you know anybody you know, maybe you can put something together to buy my building.

17:59.00

Cal

I guess the building comes first. There is either an opportunity from within your own portfolio that you're managing or you hear of something and somebody says cal I'm getting out if you know anybody you know, maybe you can put something together to buy my building then you're just making phone calls at that point. Yeah I mean obviously the first the first.

18:13.64

wongga

Then you're just making phone calls at that point. Yeah I mean the office first for visits to analyze the investment because ultimately you go to be whether it's from earlier or whether you'll use travel with an you know I know what value selling is.

18:18.92

Cal

Order of businesses to analyze the investment because ultimately the whether it's from in internally or whether you know you, you're chatting with an agent and an agent says you know I know a guy who's interested in selling his his apartment building. Um, you're ultimately ultimately you're youre your first or.

18:32.72

wongga

Apartment building. Um, you're ultimately all you're your first. So your first or it start add because ultimately call and you call your that you the 1 they want. They're gonna want the very even with the full call. They're gonna want us be some.

18:38.61

Cal

Your first order of business is is start analyzing the investment because ultimately when you call when you call your investors. They're going to want to know information they're going. They're going to want at the very like even with the phone call. They're going to want to know some some very basic information so you've got to do your homework in terms of.

18:52.58

wongga

Very basic so you got to do the in terms of analyzing it um to the current value Future value current Cash flows future cashs all those types of things. Sure sure. So um, when you're looking for a building. What would you say is a ripe target.

18:57.48

Cal

Analyzing it the the current value the future value the current cash flows future Cash flows all those types of things sure. So when you're looking for a building. What would you say is a right target for something that would be very desirable.

19:12.80

wongga

For something that would be very desirable and I don't I don't say that meaning hey you know what we want to buy something in this area that area I'm saying you know 3 story walkup are we looking for something with lower rent higher rent is there significant upside on. Um.

19:16.73

Cal

And I don't I don't say that meaning hey you know we'll want to buy something to missy or mad. Yeah, saying you know threet story walk up. Are we looking for something with lower rent higher rentches we'remiing it outside on on venundation right.

19:30.58

wongga

A renovation right? You know it's yeah Buts Easy Yeah, it's got to be low debt Rail reposition It refinance lot of money but sometimes with good invest properties that kind are simply stable and maybe there's just little bit of a tweaking.

19:32.63

Cal

You know I'd love to just give you an easy answer that. Yeah, it's got to be low rent good area where you can just reposition it and you know and refinance and pull out money. But sometimes you invest in properties that the rents are fairly stable and maybe there's just a little bit of ah tweaking. But it's a good area.

19:50.10

wongga

But it's a good insight you know. Ultimately we looking at for I always look at long-term I'm always looking for long-term value Really, you're a winner in the long term because the nature of real is is you're you're using in.

19:51.67

Cal

You know? Ultimately, you're looking at or I always look at long-term I'm always looking at long-term value really, you're a winner in the long term because the nature of real estate as you know Garrett is you're. You're using the the the income of the real estate to pay down the mortgage and provide you some cash flow but ultimately in the long run it increases your net worth so there could be situations where you have properties.

20:09.63

wongga

Increase the income of their real estate to pay down the mortgage and provides cameras flow but results in the long run increases remote works so it could be situations where you have properties in good areas that need to be completely repositioned and.

20:22.40

Cal

In good areas that need to be completely repositioned and you know rents lifted capital expenditures. There's also instances where where the property actually has a reasonable cap rate and.

20:29.31

wongga

Rants liftfted actual expenditures. There's also instances where the property actually has a reasonable capting and maybe it needs a little bit in terms of the ranch. There's also examples in.

20:39.56

Cal

Maybe it needs a little bit of a lift in terms of the in terms of the rent. There's also examples of properties in smaller towns where the cap rates are even better, but but there's some, but there's some potential there the small town stable and you know that there's certain investors.

20:46.91

wongga

Properties in smaller towns where the cap rates are mut better, but but there's some, but there's some potential and small towns stable and you know that there's certain investors that you that can call that kind of leather kind of town. Yeah, no I think.

20:59.40

Cal

That you that you can call that kind of like the higher cap rates. Yeah no I think I've always thought because just my bathroom coming from getting a lot of burs and flips that ever opened my eyes like you just said they really resonated with me because you've got.

21:06.62

wongga

I've always thought because just like my background coming from doing a lot of birds and flips that that really opened my eyes What you just said there really resonated with me because you've got you. But basically what you're saying. There's nothing wrong with buying an apartment block that's at Max rent. It's in a good area.

21:17.10

Cal

But basically what you're saying is there's nothing wrong with buying an apartment block that's max Grant It's in a good area. The cash flow is what it is. It's for a decent cap rate and they're for a decent retail price and you just buy it because it's a good investment. It doesn't have to have all this crazy help sell work people.

21:25.14

wongga

Ah, Cash flow is what it is. It's for a decent cap rate and there for a decent retail price and you just buy it because it's a good investment. It doesn't have to have all this crazy upside and work involved exactly exactly especially you as they.

21:34.90

Cal

Exactly exactly, especially you know as they say in real estate location Location location I'm sure you that if you're your interviewing central. Yeah, we're going to go through all the cliches because there's a lot of cliches that real estate professionals use but exactly now listen it's certainly it's more equity.

21:44.25

wongga

Let's go through all the cliches. Yeah, we're going to go through all these a lot of that real estate Questionss use but exactly now this really, it's more equity you need equity but maybe need increase the partnership but there's nothing wrong at its core real estate is not that is cool.

21:54.47

Cal

You need equity. But maybe you need to increase the partnership but there's nothing wrong at its core real estate is an investment tool at its core I mean we can you know talk talk about the ah talk about the ah the you know the the discourse that is real estate The the topic.

22:03.70

wongga

Can you know talk talk about the talk about the the Socc know the the discourse that is realistic the topic but it's it's definitely that you do have to something. Okay, you know in terms of ultimate terms of alternative towards investment.

22:13.38

Cal

But it's It's just an investment tools. You do have to sort of think Okay, you know in terms of alternate in terms of alternative forms of investment. How does this one. How does this one rate And yeah, absolutely I mean like I can give you um I mean I didn't invest with it but I did get a call from um, a client.

22:22.78

wongga

Does this one has this one and yeah, absolutely I can do I mean I didn't do them on but I did get a call um clientd who I also do business with that say know there's an office p in that all our county Emp and the cap rates pretty good.

22:33.30

Cal

Ah, who I also do business with that said, you know there's an opportunity in in a smaller town in Brandon and the cap rate's pretty good. Doesn't need ah doesn't need much needs a maybe just a little bit of tweaking but it's a good cap rate. So there's so absolutely. That's not off the table. Okay, well let's um, let's pretend.

22:42.28

wongga

Doesn't needle doesn't much be so you know that it'sweaking but it's a good Ca So so absolutely, that's not off. Okay, well let's so let's pretend that we're talking about assets that need a liftft um need a little bit of repositioning because I'd like to dive into sort of financing and that refinancing can you.

22:52.40

Cal

We're talking about assets that leave a lift need a little bit of refpositioning because I'd like to dive into sort of financing and that refinancing can you sort of explain the finance structure that you would use for some of these projects I mean how does that refinance and process work. What are the benefits for your invest right? yeah.

23:01.88

wongga

Sort of explain the financing structure that you would use for some of these projects I mean how does that refinancing process work. What are the benefits for your investors right? Yeah so when you're doing a major predictive So the assumptions are basically ament because it's simply.

23:11.96

Cal

So when you're doing a major repositioning and so the assumption is is that you're basically emptying the building because it's simply there's simply too much renovation required to to have the tenants even if it's a staged termination. Um, the goal is.

23:21.36

wongga

Simply too much renovation required to to have attempts even if it's a distinguished termination. Um, the goal is during the inter period is to have the least amount of debt pains. So I'm you're always doing this knowledge.

23:31.56

Cal

During the interim period is to have the least amount of debt payments. Ah so you're always doing an interest only short-term financing usually with a credit Union they tend to be very very flexible, very limited requirements in terms of advancing the funds.

23:40.12

wongga

Ah, short term financing usually with the credit they tend to be very very flexible, very limited requirements and to advancuncing the funds. There are credit that are not so flexible and I see away from.

23:51.48

Cal

There are credit unions that are not so flexible and I I stay away from them. Ah, the goal here is to ah get the job done pretty quickly have money advanced in stages as you fix up the building.

23:59.40

wongga

The goal here get the job Um, pretty quickly have money in that ages as you fix up the building and get that on clients and and usually in the in the commitment plan with the with the with. For example.

24:09.14

Cal

And get that interterm financing and usually in the in the in the commitment ladder with the with the ah with. For example, the the lender the credit Union they will they will stipulate when they're going to be advancing the funds. How long the interterm finance is going to be.

24:18.79

wongga

Land of the correct they will stipulate when they're going to pass from the funds. How long your finance to be and then at that point as you option they're lock. Okay, but obviously lot of holding costs if you're emptying the building here. There's holding a cost.

24:26.65

Cal

And then at that point at your option you can then lock it in with principle and interest. Okay, but obviously a lot of holding costs if you're acting the building Sure there's holding costs so you have to take when you're when you're determining the the budget I mean and you learn you know as you do this I've certainly made my share of mistakes.

24:37.71

wongga

So you have to take link material the budget and and you learn that you do this I Certainly make my share of this case but you do learn in terms of that little line I bought and so it's very important. You can see cost I mean I I.

24:46.00

Cal

But you do learn in terms of you know that little line item that you forgot right? Ah, ah and so it's very important vacancy cost I mean I I've certainly forgotten the cost that it the costs of of of ah paying paying out tenants for moving.

24:57.48

wongga

For document costs that it's the cost of of of paying paying over tenants moving. Yes, $500 up to $500 yeah so you want to try and want try and with as many hard cost costs to think of.

25:05.98

Cal

You know, $500 up to $500 so you you want to try and you want to try and include as many hard and soft costs that you can think of as the lenders don't necessarily cover it all. So there's going to be some.

25:17.30

wongga

The lenders don't necessarily cover at all. Um, so there's going to be some. There's going to be some animation that have be required and unless you're able to to secure other life credit right? But the idea hopefully like let's say.

25:22.82

Cal

There's going to be some equity that you're going to be required unless you're able to secure another line of credit somewhere right? but the idea hopefully like let's say the credit Union won't cover some of those holding costs. Yeah, the investor really see out for investors. Well there would be a cash call there with the hope.

25:33.46

wongga

Credit Union won't cover some of those holding costs. Yeah, um, the investors let's see have four investors. Well there would be a cash call there with the hope that when you reposition and you refinance that they can even get some of that back. Yeah, it's a very good point. So what's very important is we certainly when you're dealing with.

25:42.28

Cal

When you reposition and you refinance that they can even get some of that back. Yeah, it's like very good point Garrett. So what's very important is when you're certainly when you're dealing with co-owners you know because again if you make a mistake if you forget something and it's just yourself you just sort of think oh you know I forgot about this cal we'll I'll just contribute equity right.

25:52.54

wongga

You know because again you make a mistake you get something and yourself you just sort of think oh you know I forgot about we'll all just exactly right right? But when you're dealing with 4 or 5 of people the more you can up front tell a listen and and say okay if there's going to be pair.

26:01.63

Cal

But when you're dealing with 4 or 5 other people the more you can think upfront and tell them listen and and say okay, there's going to be the the lender is not going to contribute equity for certain soft costs. So I'm calculating all those soft costs right? upfront and so.

26:12.72

wongga

There's not distribute equity from soft costs. So I'm calculating all those sub content. So as you like you tell when you tell the yeah, the owners that I need a certain amount you want all the those.

26:20.48

Cal

At a certain point you tell when you when you tell the the the co ownerners that I need a certain amount you want to include all those expected costs that the lender is not going to cover and they should They should front those costs they contribute those costs right? upfront.

26:32.48

wongga

Cost that the lender is not going to come and they should They should front those costs they contribute those costs read from and this way you've got your you've got your your kid and your reserve so that you can deal with that right? because the more that you can show your.

26:40.39

Cal

And this way you've got your you've got your your kitty your reserve so that you can deal with that right? because the more that you can show your investors that there isn't anything later. Yeah, exactly exactly if you can I know maybe a little bit.

26:51.56

wongga

Investors that there isn't anything later the better you look as wos. Yeah, exactly if you can I know maybe a little it hard to swallow a new screening time says. Okay, you know this is the price. This is how much equity cost means continue this amount such and such. Um.

26:59.44

Cal

Hard to swallow initially in terms of okay you know this is the price. This is this is how much equity plus you need to contribute this amount because of such and such. Um, ultimately it's um, it's much better to get that right done right? off right? off the back. So let's talk about renovations I mean sure.

27:10.84

wongga

Ultimately, it's much better than figure it out right enough of that. Okay, so let's talk about renovations I mean I know any renovation We can't really go into specifics. But what's sort of the strategy when you look at an asset that needs to be repositioned right? Yeah and as a good question.

27:18.48

Cal

I Know any renovation We can't really go into specifics. But what's sort of a strategy when you look at an nowset that needs to be redpositioned right? Yeah I mean that's a good question. Ultimately I'm goingnna use another Cliche bring it on.

27:30.81

wongga

Ultimately, you're gonna use another all right, bring it on your first first aciation I going okay with these existing stock apartment buildings. You can't You're notbuilding it. You're not if you were to spend.

27:35.83

Cal

First of firstliia is you're not building a grand piano um with these existing stock ah apartment buildings. You can't you're not rebuilding it. You're not if you were to spend. Ah if you were to rebuild the entire the and the apartment block.

27:49.75

wongga

If you were to build the entire apartment block existing apartment like you see any of the repbut seventy s it. It may not be delivered the return angle go down to start Um, considering every single to birth I deferred maintenance.

27:53.32

Cal

The existing apartment black usually many of them are built in the 60 s and seventy s it may not be feasible. The the the return may go down if you start um, considering every single deferred deferred maintenance inside them. So when you're going into these buildings. You're balancing between.

28:09.69

wongga

So when you're going into buildings. You're balancing between what can I What can I do that will reduce the deferred maintenance for a number of years but also what can I do to it ask aesthetic value aesthetic appeal to this point and improve the Am amendment and it.

28:13.30

Cal

What can I What can I do that will ah reduce the deferred maintenance for a number of years but also what can I do to enhance the aesthetic value the aesthetic appeal to this building and improve the amenities to the tenants all the while thinking about the. Ah.

28:29.55

wongga

All the while thinking about the Tennessee Act legislation to ensure that you're maximized your increased Bu levels which is a avenue that I leave by the times to these refinance. Well it's it's quite a balancing act I mean by balan.

28:33.19

Cal

Ah, the ah tenancy act legislation to ensure that you're ah maximizing your your increase above the allowable Guideline which is the Avenue that I use all the time for these refinance for these repositioning. It's quite a balancing. It is quite a balancing act it is and you do get.

28:49.19

wongga

Is and you do get this is where there's a big divide between yourself as the managing partner if you with equity if you're investing and the other columnist is that they don't understand you many you under think that you're reition and then you knock out every single dered maintenancey for the next ten years

28:50.62

Cal

And this is where there's a big divide between yourself as the managing partner if you're in equity if you're investing and the other co-owners is that they don't understand many of them think that you're repositioning and then you've knocked out every single deferred maintenance item for the next ten years and they question with you. You know several years later. Well how come we're spending money on this. Well I'm not I didn't build a grand piano right? right? Yeah no I you can't I mean even if you know that something's going to be eventually need to be done. You spend the money on it now and it's not a cosmetic item.

29:08.96

wongga

Question with several years later we'll talk about spending money on on. Not I didn't build a grant can right right? Yeah, no, ah you can't I mean even if you know that something is going to be eventually need to be done if you spend the money on it now and it's not a cosmetic item.

29:27.80

Cal

You can't even justify it in the market right? because it's yeah in amenity that's for it's not in a many and the cost of doing it is such. It's it's It's so expensive. It's yeah, exactly you can't tackle everything the goal the objective is to ah is to enhance the.

29:27.62

wongga

You can't even justify it in the market rent because it's not an amenity that's going to attract the right type of tenants and the cost of dealing It is such. It's so expensive. It's yeah exact and tackle or the goal objective is to is to enhance the.

29:45.97

Cal

The is to enhance the cash flow. That's ultimately the goal to enhance the cash flow such that you can cover your costs as much as possible with debt. Okay, you know you said something there about owners co-owners have watched certain things.

29:46.94

wongga

Is to it enhance the child quality. That's ultimately the goal It has the cash process that youcur your costs as much as possible with debt. Okay, you know you said something there about owners co-owners that want certain things.

30:04.49

Cal

Next question I was going to ask you. It's great Segway How do you manage that collaboration between these owners I mean you need a system or a structure. He's a jits phone calls. But I mean there has to be some kind of structure. Um I mean so I do have a with respect to repositioning I do have a project management agreement.

30:05.50

wongga

Next question I was going to ask you. It's great Segue How do you manage that collaboration between these owners I Mean do you need a system or a structure is it just phone calls. But I mean there has to be some kind of structure. Um I mean so I do have training with spectrum you as you have a project as behind those.

30:23.43

Cal

So everyone's got to sign this project management agreement and it provides provides me the authority to spend money on their behalf and and do all the things that I need to do including ah applying for an increase above the allowable Guideline if any to any type of legal work.

30:24.32

wongga

Everyone's going to find this project management agreement and it provides okay provides me with gorgeon to spend money on their behalf and and do all the things that I need be including applying for any Buffy Loan guideline um if any to any type of people work to do on their behalf.

30:41.66

Cal

To do on their behalf in order in order to to get the job done. So once they sign that agreement. There's an understanding. They're not going to be Um, they're not going to be necessarily insisting that a certain ah a certain tap be used for example or a certain color countertop.

30:43.64

wongga

In words to get the job done. So once they find our agreement losing our understanding. We're not going to be Um, they're not going to be necessarily insisting that certain a certain tap being used for example with certain color counter and talk having said that.

31:01.24

Cal

Having said that it is a fine balance be it's It's a fine balance between it with respect to um you know getting some information from in terms of an owner an owner so sort of so some of their interests some of their wants. But ultimately.

31:02.93

wongga

A fine balance is is a fine balance between with respect to um the E of getting for me issues of an owner house. So so it's some of very interest their wants but ultimately ensuring that they we run the offering.

31:19.83

Cal

Ah, ensuring that you can run the operation efficiently. But most importantly is the transparency and the communication periodic transparency periodic communication and being very transparent is the name of the game. So um, ah periodic. Ah.

31:22.87

wongga

But most importantly is the transparency communication periodic parents periodic very transparent is the name of so um, periodic sending to the owners of of how the project.

31:37.30

Cal

Ah, sending ah to the owners of of how the project is doing how the actual costs versus budgeted costs and then and anticipated costs. That's very important if there's issues and we can certainly talk about though you know all sorts of issues.

31:42.76

wongga

How the asle costs with budgeting cost and then Anticipat anticipated cost. That's very important. There's issues and we certainly talk about they huge all sorts of issues I mean you're dealing with construction again opening a wall also like.

31:56.63

Cal

I Mean you're dealing with construction Again, you know opening a wall is like opening a can of worms right? especially when it's an old building. So the the quicker your transparency you know, just suck it up. Take a deep breath and send out an email I've gone over budget on certain items and therefore X yeah.

32:02.31

wongga

Worms especially when it's an old building so them will picture in your chest and you know just suck it up. They could deep breath and other name I've gone over budget prison itemsgar four. Yeah no I think what you touched on there I mean.

32:15.48

Cal

I think what you touched on there I mean maybe you can just give me typical examples of percentages because I kind of want to use that in my example here. But I mean what a 20% or ten or twenty percent sort of be a typical percent of equity that a managing partner might ask.

32:20.78

wongga

Maybe you can just give me typical examples of percentages because I kind of want to use that in my example here. But I mean would 20% or ten or twenty percent sort of be a typical um percent of equity that a managing partner might ask for for finding the deal and doing all this stuff and the project management with that. So yeah, you're talking about.

32:35.24

Cal

For finding the deal and doing all this stuff. So yeah, you're talking about the cost. So yeah, of course I charge I charge for my services. Um I tend to be pretty I tend to be pretty low in terms of the charge. But but I I'll I tend to charge. Um.

32:40.70

wongga

So yeah, of course extra hearts charge the right purchases. Um I tend to be pretty tend to be pretty well in terms of the charge. but but I I'll I tend to charge on a percent of the groll cost of capital expenditures. So it'd be like 5% total cost of capitalenditures.

32:52.52

Cal

Ah, percent of the total cost of capital expenditures. So it'd be like 5% of total cost of capital expenditures and that would include and that's those that's my fee but are you taking that informative equity. no no I just cash because um, ah because.

32:59.87

wongga

And that would include and that's that's why but are you taking that in form of equity at the end of the day. Okay, just because um I because and and ah because I I the equity partner that I'm affiliated.

33:10.57

Cal

And and ah because my I the equity partner that I'm affiliated is a family holding company and it has it has equity. It doesn't I don't need to to take that in a form and in even my own holding company I'm.

33:18.90

wongga

A family holdinged company and it has it has equity. It doesn't I don't need to to take that in form and even my own whole I'm I wouldn't I don't need to I have my holding What hasn't to play with um but.

33:30.53

Cal

I wouldn't I don't need to to do I have my own holding company has equity to to play with. But it's certainly so I've never I've never done it. We're taking equity in lieu of of cash I've never done that and also a lot of it has to do with this the management structure. The.

33:38.12

wongga

Certainly for I've never or taken technical in lieu of of cash I've never done that and also a lot of it institute the management structure the structure of management company where where that money the the fees would go into that actually.

33:48.80

Cal

Ah, the the structure of the management company where where that money the the fees would go into actually the property management business and then um and then ah you know in this specific example. My.

33:57.16

wongga

Management business and then um, yeah, and then i' think you know this specific example my I would take my holding company with people per fashion satisfaction. But that again that's very specific My across imagine kind me but I you point.

34:06.79

Cal

I would take my holding company would take a little percentage of that fee. But that again that that's very specific to my property management company. But as you pointing Garrett lots lots of there's nothing wrong with picking in equity in lieu of a cash payment. Yeah I think we're yeah.

34:18.40

wongga

Loss this block was taken equity in cash. Yeah I think where I'm coming from that is again at this conference I would say I mean it's all over the place. But I I heard the number 20% thrown um around a lot and that is again, you've got your.

34:25.50

Cal

I would say it's all little bit of place but I heard the number 20% from the ground around a lot and that yeah again, you've got your passive partners who are you know getting the investment partner. Yeah, you've got the active partner who is finding the deal journey.

34:35.89

wongga

Passive Partners who are you know getting the the investment part of it the money and then you've got the active partner who is finding the deal determining what's going to be happening. Maybe they're taking an extra project management fee and that is always happening there but I guess my point is if they.

34:45.17

Cal

Maybe they're taking an expert project and that is always happening there but I guess my point is they have this 80% equity but you've got 80% coming from the people who are actually putting up money I can imagine.

34:53.49

wongga

Have this 20% equity but you've got 80% coming from the people who are actually putting up the money I can imagine that there could be some micromanaging wanting to go on there I want the gold taps not the silver taps. Um, why did you put this wall there and yet these are people who are not.

35:00.46

Cal

But there could be some micromanaging wanting to go on there I Want the gold taps not the silver tap. Yep, why did you put this wall there and yet these are people who are not in the game. They don't know this stuff. How do you manage those? why I mean you said Trans candidate. Yeah I mean ultimately I mean.

35:10.58

wongga

In the game. They don't know this stuff. How do you manage those? why I mean you said transparency and communication. But I mean you you, you're entitled to your van error of your intent to your parents share and doing the work. Don't you don't be too free.

35:19.36

Cal

You you? it's you you, you're entitled to your fair share of ah your entitled to your fair share for doing the work. Don't don't be too greedy. That's important I've certainly heard situations where where entities are individuals that are that.

35:29.68

wongga

That's important I Really here in situations where where entities are individuals that are that do these syndicates with these scholarships. They're very greeny. They're taking feet on all sorts of things and you start hearing the upon in the.

35:38.34

Cal

Do these syndications and do these co ownerships. They're very greenedy. They're taking fees on all sorts of things and you start hearing about it in the in the community. So you have to be careful. You have to be careful about that. Um.

35:48.10

wongga

The community so you have to be careful. You have to be careful about them. Um, again, you know we need to get new property and you Google ownership. You're also and you to and you take an equity position you then ultimately manage the property.

35:54.56

Cal

Again, you know when you do when if it's a new property and you do a co-ownership. You're also and you and you take an equity position you then ultimately manage the property and by owning an equityity. You manage it for an eternity essentially so that's ah, that's just income stream as well.

36:07.28

wongga

And by owning that you manage eternity right? of course so that's ah, that's same as well. You should be taken. Okay, so 3 4 owners the project is done. Everybody's happy somebody decides that they want to exit for whatever reason.

36:13.72

Cal

Need shouldn't be taken lightly. Okay, so 3 4 owners the project is done. Everybody's happy somebody decides if they want to exit. Whatever right? How do you probably deal with that. It's a very tricky way of doing it. 1 of my.

36:25.94

wongga

How do you? How do you deal with that. It's a very trickcky doing it. 1 of my flights actually was with need like adling the thread. Oh okay, it's um, the tricky part. There's just several.

36:33.37

Cal

Clients actually referred to as Needling Needling the thread. It's um, the tricky part. There's there's several tricky parts part of it is um, you know in your in this business. You're likely managing property as well as owning it So you're wearing different hats.

36:43.88

wongga

Part of it is um, you know in your your likely and property head So you're wearing different. You're wearing your property that has hat wearing your you're where if you're having equity interest in the property that you're wearing your.

36:53.90

Cal

You're wearing your property management hat you're wearing wearing your your where if you have an equity interest in the property then you're wearing your real estate investor hat and by wearing your real estate investor hat then you have there's a bit there you it could be misconstrued as a conflict of interest. Um.

37:02.85

wongga

Real estate investor hat by wearing your real estate and you have There's a you think when we can Misconttued as a content. Um, ultimatelyn the a good coalce creek. Very very important and thatate how that first on and I've had experience.

37:11.76

Cal

Ultimately though, a good co-ownership agreement is very very important and that dictates how that person can sell and I've had experiences where we've managed properties for many many years where my dad.

37:22.42

wongga

Mean package properties hang many years where my dad back in the old days were pull and still hands. There was no agreement then when it came talk where the Le force response What one of the corners wanted to tell it was very very difficult. Ultimately.

37:26.64

Cal

We back in the olden days where people ah shook hands and there was no agreement then when it came time where the one of the cornerships wanted to 1 of the corners wanted to sell. It was very very difficult. Ultimately, your you're negotiating.

37:41.77

wongga

Your you're negotiating a price with that. Um minority coal. Ah and and the understanding that that might be cold does not you have market option.

37:44.85

Cal

Ah, price with that. Um, minority co-owner ah and and the understanding that that minority coowner does not really have much of an option outside the coownership to sell its.

38:01.73

wongga

Outside home cell its equity Its interest is underlyed. There's essentially no market period limited and that speaks the concept of the fractional bodies reflective of a fractctional hat. Okay.

38:04.72

Cal

Equity its interest. It's undivided interest. There's essentially no market or very limited market and that speaks to the concept of a fractional values of of reflective of a fractional interest. So it's it's.

38:20.99

wongga

So it's it's trying to work with that. It's trying to work with that minority co or or fractional colon to come up with a value that they feel comfortable with.

38:23.65

Cal

Trying to work with that. It's trying to work with that minority co-owner or or fractionally co-owner to come up with a ah value that they feel comfortable with and that you feel comfortable with and then based on the co-ownership agreement.

38:39.51

wongga

That you feel comfortable and then based on what owners you you take them up some coinship agreements became where all the corners had an and an ability to take to take ah their portions here on no ownership agreements. Don't speak about any of that.

38:43.17

Cal

You You take them out some co ownership agreements indicate where all the coowners have an have an ability to take to take ah their proportionate share some some coinership agreements. Don't speak about any of that. What's interesting. You know you have.

38:58.87

wongga

It's interesting. You know you have what's written and then you have the optics and you if the colon to review the distance speak to the fact that oh well, if somebody's interested in offer their share. They first have they have to have to offer it to every single.

39:01.55

Cal

What's written and then you have the optics and even if the coin should be given doesn't speak to the fact that oh well, if someone is interested in offering their share. They first have to interest it to they have to they have to offer it to every single co ownerner. You're not going to.

39:19.67

wongga

You're not going to and I have experienced I've experienced the worst of the worst you you have you not going to to stk by his home that you've created this trust for years and years in order to just.

39:20.70

Cal

And I have experienced I have experienced the the worst of the worst you you have you're not going to sort of sneak by these co-owners that you've created this trust for years and years in order to just pick up this fractional interest for yourself. They would be.

39:36.64

wongga

Fractional interests for yourself. They would be they would be disappointed. They not telling them that this individual is selling and buying work. Oh absolutely I mean I would assume that um that that change of ownership is covered in most agreements. But.

39:39.82

Cal

They would be disappointed. They would be upset for not telling them that this individual is interested in selling and inviting them to participate. Oh absolutely I mean I would assume that those that change of ownership be covered in most agreements, but it is but sorry to interrupt but there. But.

39:56.28

wongga

I Think that Authority dropp but there sometimes um this sometimes the the provision sometimes here this specific provision is missing certainly Ma state people ask. But I I really I guess.

39:58.81

Cal

Sometimes um, ah sometimes the the specific provision sometimes there this this specific provision is missing certainly modern day coalship agreements. Yes, but I've I've been dealing with a legacy of of.

40:16.23

wongga

Of properties with O courses simple core and I I have an experience to give a personal experience where I did I was either um, purchase a fractional interest with my own folding company and it.

40:17.20

Cal

Properties with no cornership or games with simple cornership agreements and I had an experience just to give a personal experience where I did I tried to um ah purchase a fractional interest with my own holding company. And it. It. It turned out really poorly not with necessarily the other coowners all they they probably were a little bit disappointed but in terms of the the conflict of interest between being ah and the management side on the ownership side. So Let's say that you have.

40:35.85

wongga

Turned up really poorly, not necessarily other totally about I'll be were a little bit disappointed but in terms of the the conflicted being a managementning small of issues. So let's say that you have.

40:53.73

Cal

Ah, use it number 3 or 4 coowners of which you are one and somebody wants to sell I mean how do you and you put it up to mini book right? Don Ja is yeah you know trying to get out of the game is interest of 33% is up for grabs correct. How did.

40:54.00

wongga

Again I use the you know number 3 or 4 co-owners of which you are are 1 and somebody wants to sell I mean how do you and you put it up to everybody right? Hey John is ah you know he's trying to get out of the game his interest of 33% is up for grabs. How do? How do you guys decide? How who's taking it right? So in most cases, you are the manager you're the one with the expertise you come up with a time. It could be done through an appraisal or or not.

41:13.14

Cal

I How write So in most cases, you are the managing Partner. You're the one with the expertise you come up with the value and it could be done through an appraisal or or not., But someone's going to come up with a value. Um at and then ah, then ultimately um, a meeting amongst those coonners that are interested in remaining needs to be had whether it's a formal meeting or whether it's calling up each individual owner.

41:31.73

wongga

This thumb is going to come with the value. Um, and and ultimately um, a meeting amongst those Co- owners that are interested in remaining needs to be had whether it's a phone meeting or whether it's calling up to each individual owner.

41:49.00

Cal

And getting their feeling of what they want to do ah some may say I'm not interested and that certainly affects the ah your ability to ah purchase it because if 1 person opts out if 1 entity opts out then you don't necessarily have the ability to leverage the property.

41:49.75

wongga

Getting their feeling of what they want to do some may get an artist and that certainly affects the of your ability to ah purchase it because if 1 person wants out if 1 entity up out then you don't necessarily have the ability to leverage the property and that's going to affect.

42:07.40

Cal

And that's going to affect value. You know value is built up by the cost of the costs and ability to place debt on it and equity that's actually what builds up the cap rate debt and equity and if 1 entity opts out and you can't leverage the building to purchase out this minority interest.

42:09.13

wongga

You know value is built up by the cost of the cost and a ability to place debt on it and equity that's actually what builds up to capright debt and equity and if 1 entity ops so you can't leverage building some minority interest and everyone needs to provide cash contribution.

42:25.91

Cal

Then everyone needs to provide cash contributions. Well that changes the entire valuation of that fractional interest. But yes exactly that once you have a discussion with them and with the remaining owners then you can ah by way of a lawyer. For example.

42:28.91

wongga

That changes the entire evalluation of that fraction right? right? But yes exactly that once you have a discussion with with the remaining owners then you can ah by way ah of a lawyer for model then start negotiating with the.

42:43.46

Cal

Then start negotiating with the coer that wants to exit. Okay, um, I'd like to transition and seway a little bit to when we've been speaking about those budgets trust and I mean you if you put together 3 or 4 owners are you choosing.

42:47.20

wongga

That wants to okay, um, I'd like to transition and segue a little bit to we've been speaking about those Budsw words trust and I mean you if you put together 3 or 4 owners. Are you choosing personalities you're like I think Eric can work with John and John can work with Sam I mean who's are you just trying to sort of do matchmaking like yeah or it's trying to be natural. You can if you've got if you've got your your bulk of investors.

43:02.92

Cal

Personalities you're like I think Eric can work with John and John with Sam I mean who's are you just trying to do matchmaking. Yes, you're sort of trying to do matchmaking if you can I mean if you've got the if you've got your your book of investors. Um, you are doing some matchmaking because some some investors ah have big big balance sheets some have smaller balance sheets some are ah, don't mind ah a b area. Some only want a so you are doing a bit of matchmaking.

43:20.76

wongga

You are doing some a because some some investments that are have bigly doubtuched some have smaller balancements. Some are ah um, don't mind the a be area. Some only want to pay so you are just perhaps mentioned.

43:39.52

Cal

And ultimately ah, you're looking at the the vision, the investment vision or the the investment horizon of an individual investor. What's very important is choosing your investors.

43:40.13

wongga

And ultimately and you're looking at the division investment vision of the the investment Horizon Individual invest. What's very important is choosing the story that.

43:58.31

Cal

Such that they're going to be good partners. That's very very important generally speaking. You may come across someone who has a tremendous amount of money and is willing and able to invest that money.

43:59.90

wongga

Such that they're going to equal proud. That's very very generally. You may come across who has a tremendous money and is willing able to invest that money. But if you don't get do the best feeling about them.

44:16.90

Cal

But if you don't get a good gut feeling about them as to be partners. You should stay away and it's hard because they may say listen or you you may meet a have a client and say I know a guy he's got millions and he wants to invest you may.

44:19.74

wongga

As to partnerers you should stay away and it's hard. They may say it list with you or you you meet a a client say I know that he' god million and he wants desk you may have this point you may have a bad feeling with that client.

44:34.76

Cal

Have this client you may have a bad feeling about that client and because of that you may need to turn away. Um, so it is it is matchmaking. It's also being selective on your investors as well. Okay, you know I can you believe we're almost at a time here. We're gonna have to have a part two because I kind of want.

44:39.19

wongga

And because of that you may need to turn. Um, so it is it is tax making It's also being surrounded on investors as well. Okay, you know I can't even believe we're almost at a time here. We're going to have to have a part two because I kind of wanted to go over renovations and actual project management. Um, but.

44:54.38

Cal

Over renovations and actual project management. Um, but I I always end off the podcast asking same question that you' asked. Um, and so hopefully you you listened to some previous episode here prepared but here we go.

44:59.18

wongga

I I always end off the podcast asking the same question to each guest. Um, and so hopefully you you listen to some previous episode and you're prepared but here we go So this is the investing to win podcast. How do you Define success.

45:11.96

Cal

So this it best You thought how do you part success and what's beginning right for you right? and we've taught we broached that topic near the near the beginning part and it's about the trust winning is.

45:17.22

wongga

And what does winning look like for you right? and we've probably wo that topic near the in the beginning part. It's a about class winning is is earning the trust not just your opponents but all state. It's.

45:30.10

Cal

Is earning the trust of not just your co owners but all stakeholders. It's winning the trust of your lenders your coowners your lawyers your trades the praisers, the consultants and and your staff and your company. It's not. It's not.

45:36.41

wongga

Winning the trust your lenders your colons lawyers your fee raises consult and your staff. It's not. It's not you they need to prosecute as much you trust them because when a trust then you can get the job done.

45:46.72

Cal

They need to trust you as much you trust them because when they trust you then you can get the job done a lot easier and and by at the end of the day at the end of the day after doing this for many many years

45:55.96

wongga

A lot east and and by at the end of the day at the end of the day after doing this for many years when you see the difference stakeholders and you meet them on the street and you know that they trust you and then you've been good steward if they could um.

46:06.20

Cal

When you see the different stakeholders when you meet them on the street and you know that they trust you and yet you've been a good Steward you've been a good um, a good role model. Well I mean that's ultimately what feels good about this? Yeah okay, great place to end Cal I'd like to thank you for coming on the show.

46:15.76

wongga

Good role model I mean that's how feels good on this? Yeah Okay, great place to end Cal I'd I'd like to thank you for coming on the show. Um, lots to unpack in future episodes. Um I know our audience really enjoyed this. Thank you very much. No problem.

46:24.40

Cal

Lots to unpack and future episodes I know our audience really enjoyed this. Thank you very much no problem garant.