by | 14, Feb 2023

Development Is Out & Conversions Are In

Development is out and conversions are the new black. At least according to the recent numbers.

We’re coming into this episode lukewarm with another series of tepid-takes. But a big topic in this episode revolves around the month to month decline in new multifamily developments…

But there’s an ever growing trend of office space conversion into multifamily units. People have to live somewhere… and if you aren’t going to build new buildings, might as well convert an old one.

It’s important to remember to look at the bigger picture. There are so many sensational articles being put out everyday on the current state of the market. But a month to month decline in developments is not going to be the best indication of a market’s status. So this news could be nothing…

We also cover the recent real estate drama surrounding Elon Musk and Twitter. What do you do if a billion dollar company doesn’t pay their rent…

Find out on this week’s episode of Multifamily Investing Made Simple!

Tweetable Quotes:

“Here’s a secret, guys… The check’s never in the mail.”– Anthony Vicino

“There are a bunch of projects that have been going on while interest rates have been rising. But as new projects are about to start, a lot of developers are saying, hey, no, this doesn’t pencil.” – Dan Krueger

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five rules of investing

The Five Rules of Investing


Tepid Take 2-14

[00:00:00] Anthony: Hello and welcome to the podcast. My name is Anthony. This is Daniel, and we’re excited to have you here. Dan, do you know what today is?

[00:00:06] Dan: Uh, I believe it’s a

[00:00:07] Anthony: Friday. Accurate. Do you know what else it is?

[00:00:10] Dan: Um, I know it’s not

[00:00:11] Anthony: your birthday. It’s not my birthday. Almost as good though.

[00:00:15] Dan: It’s kind of a tepid day in general.

I don’t know. , if you’ve been outside

[00:00:19] Anthony: the day, it’s like negative 18. Yeah, no, that’s a, that’s a tepid day

[00:00:22] Dan: for. Yeah, it’s, it’s not fun outside. If you are not in the Midwest, just stay out for the next couple weeks, maybe

[00:00:28] Anthony: month. Just stay away. Yeah. I’m leaving for Antarctica in less than a week. You’re, and it’s gonna be like The Bahamas.

[00:00:33] Dan: Yeah. I mean, it’s summer there, right? Everything’s the opposite.

[00:00:36] Anthony: I looked at the weather today. The South Pole is negative 30, but where we’re gonna be is like 40 degrees, so that’s pretty cool. Wow. That’s way warmer than what I’m dealing with here. But no, that’s not today. Today is 2 3 23. Do you know what that makes?

This. It makes it Michael Jordan Day. Oh,

[00:00:55] Dan: 23. 23, okay. I was, I was starting to think about that Jim Carey movie with number 23 if [00:01:00] there’s some reference, but I don’t know that one. No, I’m not into sports, so I didn’t, my brain didn’t go anywhere near that. Yeah,

[00:01:05] Anthony: I just happened to be in the gym this morning.

Looked up at the TV and they’re doing some special on ESPN because it’s Michael Jordan Day and I was like, oh 2 3 23. That’s kind of cool cuz his number was 23. We should tag

[00:01:15] Dan: him in this episode. I’m assuming he was hashtag him, MJ.

[00:01:18] Anthony: So Michael, um, given your resources and you know, your network, you probably don’t need to be going out there and buying real estate, um, actively yourself.

So if you’re looking to deploy some capital in the Midwest, we got you. Which, where, where you like to be. Um, I’m here for you. Got you. Also, if you just wanna hang out, I would love it. Uh, so if anybody has a connection to mj, you know, you know how we, like, we’re all six degrees of separation from Kevin. I like to think that I’m closer to mj.

Like, why Kevin Bacon? Well, that’s the, that’s the, that’s the internet meme. Oh, is it? It like, yeah, back like 20 years ago, somebody, like, somebody did some math on it and how, and was like, Hey, we’re all, like, [00:02:00] everybody on the planet’s, like six degrees of separation from Kevin Bacon and

[00:02:03] Dan: Well, I think you’re six degrees from any other person.

Pretty much. So you can, six

[00:02:06] Anthony: degrees is a lot. Yeah. That’s a lot of people. But, uh, okay, so that has nothing to do with the, the podcast or anything, but, uh, if you are an MJ fan, , you know, woo. And let’s talk real estate. Let’s do it. Okay. Before we get into our tepid takes, which are not hot takes, they’re not cold takes, they’re just, you know, they’re lukewarm.

Dan and I have no clue what these, what these headlines say, Reid has generated these. Maybe they’re not even real. They could just be AI generated. He might have just gone to chat G P T and said like, make me a bunch of false headlines. Is this all fake news, Reid? I wouldn’t know. This could be fake or like most of it.

This could be fake. This could literally be fake news. You

[00:02:49] Dan: couldn’t hear Reid. But he had a good, he had a good zinger there. He said all news is fake. And that is, that is accurate.

[00:02:54] Anthony: That is, that is cynical. . Nailed it. Very cynical. , you two all [00:03:00] I’ll be the, I’ll be the rainbow, uh, and sunshine guy over here.

What you got? All right. Uh, before we do this, should we do our bad investing advice? Sure. Okay.

[00:03:10] Dan: uh, cash is trash. Uh, don’t have cash. Um, you know, I’m going with this already, right? I feel like you phone this one

[00:03:16] Anthony: in a little bit. . A little bit. A little bit.

[00:03:19] Dan: Cash is trash. I was, I was looking at all like the high yield savings accounts right before I came in, actually. And it got me thinking. Um, this might be a good thing because we’ve been poo-pooing cash for so long.

It’s like, oh, if your money’s in the bag, you’re

[00:03:30] Anthony: so stupid. I’m getting 3.7% on a savings account right now.

[00:03:33] Dan: You could do 4.1 if you wanna try a little bit harder. , um, .

[00:03:38] Anthony: I don’t know if it’s worth trying much harder . No,

[00:03:40] Dan: but I guess the point is like, um, with everything that’s going on right now, like. cash isn’t that bad and you can actually earn a yield on it.

There’s a few ways you can do it. High yield savings account switch, you know, a few years back, um, they were good. And then for like the last three years, they were bad nonexistent. They were, they heard nothing . Um, but yeah, now they’re, uh, ranging anywhere from like high [00:04:00] two s to even low four s. Um, , various banks have different, uh, rules and little nuances about ’em, so shop around, but there’s, there’s, you know, five or 10, uh, halfway decent options out there.

And then treasuries, bonds, all that stuff starting to make sense again. So if you got some cash, you know, don’t need to deploy it into, you know, a risk asset per se, and just get some interest while you wait. Yeah.

[00:04:21] Anthony: You can get interest and still maintain a fairly high level of liquidity,

[00:04:25] Dan: right? Yeah.

Especially with the savings. You know, if you don’t wanna lock.

[00:04:28] Anthony: And I think that’s really important right now. This is funny cuz we did a, a video recently on YouTube where we’re talking about what we’re doing going into like this next part of the cycle, given like maybe recessionary, you know, worries and whatnot.

And the, the takeaway is, hey, we’re stacking cash for liquidity. So we have dry powder to go after opportunities. And then two, we’re also stacking cash, uh, for reserves. Just, you know, because you never know how operations. Fair. When people are outta jobs, maybe they can’t pay their rent, all that stuff, right?

And so we made those two points. Stack cash for [00:05:00] liquidity, stack cash for reserves, and a guy goes, isn’t that pretty much just the same thing? , like, well, yeah, it’s cash in a bank. Yeah. That’s what you use

[00:05:06] Dan: it for. It’s not actually two different things. It’s, it’s just two ways of describing the same practice.

Yeah. It’s just cash in a bank. Yeah. I don’t know if you know this, but the, um, payroll numbers came out, uh, today and they were like, blowout. Good. So all that concern about all the, the layoffs and stuff, it hasn’t come to fruition yet. Mm-hmm. . Things still look really good from an employment perspective. So,

[00:05:29] Anthony: well, employment’s just been so high for so long.

I mean, here in Minnesota, Minneapolis in particular, it’s sub 3% like Yeah, you could or kinda always like that though. Totally, totally. But you could lay off, that means that you could lay off a lot of people before, like really meaningfully moves that number into an area. We’re even back to like historical averages.

So yeah, just saying don’t be in tech. Maybe get into real estate. Um, look at these. Let’s, let’s take a look at what we’re dealing with here in these tepid takes. I am seeing these for the first time, [00:06:00] Twitter sued by landlord for allegedly failing to pay rent. This says a commercial landlord is suing Twitter for breach of contract after the company allegedly failed to pay rent for one of its offices in San Francisco.

What do you think about that? Whoop. Oops. Check’s the mail. .

[00:06:18] Dan: Yeah. How do you know we’re landlords?

[00:06:20] Anthony: Cause we’ve heard that, we’ve heard that one before. It. Here. Here’s a secret, guys. The check’s never in the mail. . Here’s,

[00:06:27] Dan: here’s my initial reaction to this. When you’re dealing with this type of tenant, uh, like Twitter, um, like why even bother suing them?

Like, if they’re not gonna pay you, they’re not gonna pay you. It doesn’t matter what the lease says, and they’re probably gonna pay you, but. , you know, a little disorganized. There is a little bit of a shake up there recently. So if a payment was missed, but like, don’t, I mean, yeah, I mean, if you like own like a building that has a target in it, like it doesn’t matter what the lease says, I’d be curious if they wanted

[00:06:57] Anthony: to not pay you your screwed, they’re not gonna pay you [00:07:00] and it’s gonna take you a long time to get that money back.

But I’m curious, I, I wouldn’t be surprised if Elon is the type of guy who’s. , you know what? We need to crunch the cash flow numbers and we’re, we’d rather, you know, pay the the legal fines and everything and kick this can six months down the road. Like, oh, he’s scrappy. Like he’s super scrappy. So that’s the type of move where you’re like, all right, you gimme net 30.

I could push that to net 90 before you start coming after me. A hundred percent, right? Yeah. And so Elon’s,

[00:07:27] Dan: that type of dude, but that point, they’re probably gonna be casual, positive, I don’t know. But they’re not now. So, .

[00:07:32] Anthony: So I don’t know what the situation is here. I would not be surprised if this was actually a calculated maneuver on Elon’s part to, yeah, somehow, like this wasn’t

[00:07:40] Dan: a mistake.

This, this was not like clerical error. This guy this month and then next month we’ll skip in. We’ll pay this other guy’s. It’s, it’s everyone who’s been

[00:07:47] Anthony: broke knows this game. The, it’s paying one credit card at the other credit card, right? Like you’re, you’re just shuffling. It’s funny when like the richest man or like one of the richest men in the world is, is pretty much doing, he’s what we all in college leverage to the tits.

Like he’s totally, [00:08:00] he’s

[00:08:00] Dan: totally wealthy, but always completely strapped for cash because he is always leveraging everything 150% and putting it into

[00:08:06] Anthony: whatever. Totally. Well, the, the money has never had like any utility to him. Like if you look at his lifestyle generally, like he lives very austere. And so for him, of course he’s gonna leverage to the tits because he believes like very highly in what he’s.

and he’s the type of guy who’s totally okay going to zero. As we’ve seen like countless bets at Tesla, SpaceX, like so many times this man’s

[00:08:30] Dan: because he can make it back somewhere else so fast. Totally. It’s

[00:08:33] Anthony: like, all right, this going, he, this is actually a really interesting thing with him where it’s like the, the modern manifestation of the fact that there’s infinite upside and only so much.

He’s playing this game where he is like, listen, I can go to zero, but I can’t go. You can technically go lower, but like, but like, he’s like, you know, it’s, it’s a cap. Downside. I’m not, nobody’s gonna come after me and put me in jail and like kill me. and he is like, let’s roll the dice and see if we can get to the Mars.

I’m into it. [00:09:00] All right, number two, another Elon Musk. Okay. Headline number two, Elon Musk’s Twitter ordered by officials to properly label bedrooms in San Francisco HQ as sleeping areas or convert them back to offices within 15 days. So the, the note here says it was observed that some of the conference rooms were being used as employees sleeping or rest areas according to the notice.

Beds were present. . Again, not surprised. This is scrappy startup territory. Like nobody’s ever gone to a, to a startup and been like, Hey, Mr. Founder and Mr. Cto, like, you can’t, you can’t sleep under your desk. That tells us the stories that we love about Jeff Bezos and like these old, these old guard wires, like they just lived in the office and Yeah, and I’m

[00:09:46] Dan: trying, trying to figure out who the officials are.

Like it doesn’t say city cuz that’s usually when someone comes into a building and starts telling you to do things. It’s usually a. person, but it says like, building officials. Like

[00:09:58] Anthony: is this the same commercial [00:10:00] landlord that’s suing them for failing to pay rent? Yeah, this guy just sounds like a dick. Oh, so this is probably what it is, is Elon’s like, okay, fine.

You saying I can’t have my bedroom conference rooms. I’m not gonna pay rent. I would not be surprised. There’s, there’s something going on here. Yeah.

[00:10:14] Dan: The no one can, I mean, unless you’re trying to like, lease out a, a, a conference room as a, a living quarters and the city’s pissed. I can see that being an issue.

He sleeps on the floor at Tesla. Like everyone’s always sleeping at the office at his places.

[00:10:28] Anthony: The fact that they put up a bed to make it at least more comfortable, we, we use this office and we use this podcast room. Yeah. To sleep sometimes like.

[00:10:37] Dan: You know what? I bet this is, I bet like when he took over, there were like a whole bunch of like Twitter people, like, uh, employees that like hated it.

Sure. I wouldn’t be surprised if the these guys are just like throwing out these stupid stories to try to make ’em look bad. I could, I could see that because this one’s, this one’s

[00:10:50] Anthony: dumb. This one doesn’t make sense to me. Yeah, it doesn’t seem to be anything here. All right. Number three, multi-family starts drop 19%.

Okay. That’s a bad [00:11:00] sentence. Multi-family starts drop. 19% construction starts. Did you have extra words here? No, I’m just saying like there’s multi-family construction starts, drop starts. Oh, projects. Oh, okay. Multi-family projects.

[00:11:14] Dan: No, there’s no other word there. It’s just starts like when a project starts, like it’s like how many things, uh, like how many things broke ground?

Those are called starts. Oh. Starts.

[00:11:25] Anthony: I’ve never

[00:11:26] Dan: heard that there were 19 less projects started than there were 90%. We gotta

[00:11:30] Anthony: read the rest of once of a month. Okay, let’s month, let’s get into, read this out to me cuz I’m, I’m feeling like an idiot reading this, this, okay. Uh, so my comprehension’s

[00:11:38] Dan: low Anthony, okay.

Starts for this month dropped by 19%

[00:11:42] Anthony: with two or more housing units, but now single families.

[00:11:48] Dan: I haven’t read anything else, Adam. I’m still going here. Oh, , that was, that was in the first sentence. Our listeners are like, what is

[00:11:55] Anthony: happening here on this one? All right. This is the most tepid

[00:11:58] Dan: of all takes. All right, here we go.

[00:12:00] Uh, start your properties with two or more housing units. Dropped in 19% month over month in December to a seasonally adjusted rate of 473,000 units according to us Census. and the Department of Housing and Urban Development. So basically, um, a lot less projects, uh, uh, broke ground, but no, no, no, no, no.

Because the

[00:12:19] Anthony: rest of this, this is a stupid story. This is an example of a story that I hate where they’re like, uh, multi-family starts drop 19% year over year, but then if you keep reading, it says Construction star, uh, is up 25% increase over the last year. And for the first time since the Great Recession, we saw, um, over half a million units.

Um, break ground. So like if you look at it from a, a year over year or even a decade perspective, it’s still a ton of growth, but it dropped 19% month over month. So I

[00:12:52] Dan: will say why that’s noteworthy is because since the, um, new development space is a much [00:13:00] longer timeline mm-hmm. , there’s a bunch of projects that have been going on while interest rates have been rising.

But as new projects are about to start, a lot of developers are saying, Hey, no, this doesn’t pencil. Mm-hmm. at 6%, 7%. So the fact that the starts are dropping, I think is matters a lot more than the fact that the last year’s been great because they were still operating at 3%. for the last year. Totally. So it’s not until now that the new high rates are actually impacting developers and this is probably something that’s gonna continue for

[00:13:31] Anthony: the rest of the year.

I, I, that’s my next question is, I’d be real, because this is only for December. I’d be really interested to see does this trend continue at what, yes. At what rate will it continue into January?

[00:13:43] Dan: Yeah. My guess is it will until rates start to drop because things that make sense at 3% usually don’t make sense at seven.

[00:13:49] Anthony: So I wonder, Hey, Reid, as we’re talking through these next type of takes, Google and find out, see if we can find January’s starts and see, see what kind of numbers we’re dealing with here. Cause I’m, [00:14:00] I’m like actually kind of curious now, Google, uh,

[00:14:03] Dan: Fred, throw the word Fred in there when you Google it and you’ll get the, uh, um, census data from.

The, the government, I think it’s St. Louis Fed. There’s a guy named Fred that’s, it’s called, it’s called the FRI database. That’s, that’s where you get all the really good data like that, the juicy

[00:14:16] Anthony: data. All right, let’s move to Tepi. Take number four. Office conversions will soar this year, so very different.

Uh, Very different take than the previous. It says apartments have constituted one third of office con conversion activity since 2016, making them the most common reuse option according to C B R E in that time. Practically that doesn’t matter. Okay, so this is, this is, we actually saw this, um, in an article here locally in the Twin Cities recently where they bought this, uh, this.

Building downtown St. Paul, and they’re converting it. And I was fascinated by this because we had done a previous episode. We don’t play in these waters of like office conversions. So we were curious like, how much is the all in cost to like buy one of these, you know, tall towers in a downtown area and then [00:15:00] convert it to multi-family.

and crunching the numbers. On this one, they’re opening like 220, 30 units and or like converting this office into 230 ish multi-family units in like the per door price. After you factor in buying the preexisting building, doing all the renovations in the reposition, it was like 25 or 30 million. It was way less than I would’ve ever expected, which in this market, what was.

It, it worked out to being like 200 or something. Yeah.

[00:15:27] Dan: Yeah. And it was, it was crazy. The reason this makes sense, but the development stuff per the take right before this doesn’t, is because you’re able to steal office buildings. Like if you Totally, and that’s what happened on that one. Yeah. They bought that thing for dirt cheap.

That’s why it works. Like you can make it work at seven, 8% interest if you get the asset at a. Basement discount price, which I think you can do in, in office right now because it’s, it’s struggling. And even in the markets where it’s actually coming back, like New York, I just heard, uh, earlier today that, um, average occupancy in in Manhattan for office [00:16:00] buildings is up to, uh, 56% now.

Whohoo. Yeah. And that was, everyone was like, excited about that. That’s a good number. That’s basically like, where these guys are at. So when they’re selling, they’re selling for cheap.

[00:16:11] Anthony: New York is kind of a crazy city to me. Yeah. If you think about like how massive of a city it is and how important it is for so many reasons and how much money is there.

But then you look at the underlying fundamentals of like the, the legislation there. The, yeah. The landlord tenant rules, the office situation. It’s, it’s remarkable that New York is even like around at this point.

[00:16:36] Dan: Well, it’s really, really small and everybody wants to be there, so supply and demand. Right. I don’t want to be there.

There’s only so much Manhattan, and even though it’s, it makes no sense from, you know, all those, for those reasons you just mentioned, people still pay still more buyers than sellers.

[00:16:51] Anthony: It’s crazy. It’s crazy to me.

[00:16:53] Dan: No office tenants though.

[00:16:55] Anthony: No. No, because if you’re, if you’re an office person, you, you make that [00:17:00] decision less off of.

the gravitas of living in New York City. Like a personal decision where you’re like, okay, we’re I can’t afford to be here. Yeah. Like we need to, we need to cash flow cuz we’re a business. Mm-hmm. , let’s go somewhere else like Minneapolis is, which is why we have more Fortune 500 companies, bi capita than any other city.

So two, two, take that. We might be 18 below today. We got jobs, but uh, we got. Yes. All right. Let’s take a look at number number five and, and Reid, did you find anything? Um, Fred does not have it up yet. Damn it. Fred, come on. This was written at the end of January something. Yeah, there’s usually like a or two leg on this kind of data at least.

Yeah, I was hoping that maybe they just had the data that you could inter interate. Yeah, we got shot. They probably didn’t re write an article yet. Reid shut us down. Damnit Reid. Okay, number five. He tried his best People. You know, it’s Fred’s fault, not Reid. Uh, St. Louis, I think. Is it? It’s usually St. Louis.

Fred’s St. Louis. Yeah. St. Louis,

[00:17:55] Dan: f r e D stands for something in the St. Louis Fed. Well, [00:18:00] no, I don’t know what Fred stands for, but it’s the St. Louis Fed for whatever reason that has that database. Gotcha.

[00:18:06] Anthony: Yeah. I don’t know

[00:18:06] Dan: why it’s from like 1890 that. Resulted in Fred being there. Anyways, let’s go. Let’s

[00:18:13] Anthony: keep going.

All right. Number number five, white House looks into tenant screening practices and rent increases. It says the FTC and the C F P B will contact in, collect information on topics such as tenant background checks, the use of algorithms and tenant screening, the provision of adverse action notices by land.

Okay, so this is just there. The White House is looking into making sure that, um, probably people aren’t being discriminated. , there’s fair rules around what we can look at and what we can’t look at from a, a screening perspective. The, this always worries me because typically when, um, legislators get involved with tenant screening stuff, they’re always trying to protect the, the resident and, and make it a little bit more le um, restricted in terms of what we can look.

[00:19:00] and it’s well-meaning because it’s all about the, the resident first and saying like, Hey, we want to give people an equal opportunity, get them into into buildings that maybe they otherwise wouldn’t qualify for. But the problem is if they don’t qualify for the building, they can be a risk to the other residents.

They can be an economic risk to the landlord. And so, um, I’m not generally a fan of intervention too

[00:19:21] Dan: much of it here. This also didn’t seem like something that the federal government. worrying about this should be like a no state, city, county level thing. Uh, it’s, it’s strange that the White House, quote unquote, is looking into this, but, um, it’s, it’s probably just a political PR thing to say, Hey, we care about you.

Uh, low income people. We’re looking into this. I’m doing air quotes, looking, I’m looking hard that they just wanna try to appease their demographic. They wanna focus on, I.

[00:19:49] Anthony: All right, next one is 448 million. Loan backing 62 San Francisco properties goes into default. I, I got really excited about this one the other day cuz for those [00:20:00] that don’t know the story, when Dan and I first, uh, announced to the world that, uh, we were forming what is now Invictus at the time we, we announced we are Veritas Capital.

That was our. Name for like 24 hours. 24. Literally 24 hours later I got a letter in the mail, like it’s super fast saying Get with a cease and desist from Veritas Capital at New York, which I guess was a billion dollar company. Didn’t think it would, didn’t think it through. Um, they were a billion dollar company.

I say all this. That’s exactly, well this actually is not the same. Veritas. Oh, I looked into it. This is like Veritas investment. So we don’t get that URL yet. We don’t get that u url, but uh, but this one, when I saw this, I got really excited cause I thought it was that group out out of New York. And the thing was, their lawyer was a dick.

He was, he was like, you need to give us your url. And I’m like, you can. Buy it from me. And he was like, you’re giving it to me. I was like, I paid 20 bucks for it. . I never ended up giving it to him. I, I ran the risk of them [00:21:00] escalating.

[00:21:00] Dan: We should, we should circle back and be like, yeah, it’s 25 bucks now to guess to one he has gone up.

Yeah. Inflation, bro. I,

[00:21:06] Anthony: I, I eventually, I didn’t and didn’t renew the url like, Yeah, it had no value or use for it. But anyway, so this group out of, uh, California, this is, I believe they’re the largest landowner or the landlord in the Bay Area. Is that right? Yeah. Reed’s nodding. So, 448 million loan backing 62 San Francisco properties goes into default.

[00:21:27] Dan: Yeah, it’s, I, from what I hear, I haven’t been to San Francisco since I was a child, but from what I hear from a, uh, economic and, and, and real estate perspective, it’s an absolute shit show out there. Um, oh,

[00:21:38] Anthony: bay Area.

[00:21:38] Dan: So, yeah, a hundred percent. It’s just, yeah, everything’s going off the rails and everything’s vacant, and their office is, that’s

[00:21:45] Anthony: what happens.

It’s a, it’s a ghost town. Everybody’s going to Austin. You look at this, it it, what’s interesting about this is it said Veritas indicated they’re not gonna exercise their one year extension option, so they have the. or, and they, they have the ability to extend it, [00:22:00] but they’re also, they’re not doing that, and they’re also not gonna pay off the loan.

They’re like, nah, ,

[00:22:05] Dan: nah, we’re good. I mean, why would you want to keep bleeding? I mean, just, they just know. They’re

[00:22:09] Anthony: like, we’re not, we’re not turning this around in the year. No. Like it’s done. No, but it says they’re interested in finding a partner to help recapitalize the properties according to the rating agency.

I don’t even know what any of that would look like. This is the type of number that’s so, , uh, that I have a hard time conceptualizing what all is involved,

[00:22:26] Dan: honestly. Yeah, it’s a half a billion. So, um, I guess you could, you know, find somebody with some deep pockets and do a whole bunch of office to multi-family conversions.

Not a bad

[00:22:36] Anthony: play, especially in San

[00:22:38] Dan: Francisco, assuming somebody who actually wants to live there right now. But it sounds like it’s, it’s basically just overrun with homeless people and

[00:22:43] Anthony: crime. Well, the plus side of San Francisco is that even though there’s a lot of homeless people, a lot of crime, there are, there’s a lot of desirability, A lot of people wanna live there.

The reason I left Bay Area is cuz there’s too many people. Have you been there

[00:22:56] Dan: like in the last. .

[00:22:58] Anthony: No, but the, but the [00:23:00] thing is, and San Francisco’s always got kind of like a, a pretty heavy homeless in kind.

[00:23:04] Dan: Yeah, it was like that when I was there. Yeah. But it was kind of like part of the character when I was there, it was just kind of part of the thing.

Yeah, it’s Gotham City, but I’ve heard like, it’s like, yeah, like a million times worse. So, I mean, we’ll see. I mean, if people wanna live there, that’s one thing. But from my, from what I hear about the, the rental market, that’s

[00:23:22] Anthony: not too high. That’s a big loan. That’s a big loan. That’s a. Dunno what’s gonna happen with that.

And somebody’s gonna pick up some buildings at a good, good discount,

[00:23:30] Dan: whatever bank that is. Yeah, this,

[00:23:32] Anthony: it’s really the itch, but I dunno who Fitch is. Uh, is that a man? Is that like an organization?

[00:23:38] Dan: that

[00:23:39] Anthony: spokesperson for the company. Ah, okay. He’s a spokesperson. Well, those are my tepi takes. So how about you?

You got anything else to add?

[00:23:46] Dan: No, I mean, location, right?

[00:23:49] Anthony: Uh, so on this one though, with, um, the, the defaults, the one thing I’ll say here, . Um, sometimes it’s better just to rip the bandaid off if you’re bleeding. Like it sounds like that’s [00:24:00] what they did. They’re just like, this isn’t the situation. Yeah. Like not trying to keep kicking the can down the road, but damn, that’s a lot people

[00:24:09] Dan: are gonna be losing.

Yeah, but I, I will say on this one too, um, the, I if. On the very little I know about this, it was like, you know, two sentences. We talked about it briefly before. It’s got nothing to do with the operations there. It’s just like, oh, a shitty situation where that area just got kicked in the nuts and continues to kick kicked in.

[00:24:27] Anthony: Yeah, it would. What’s funny about San Francisco, and if you’re from the Bay Area, you’ll, you’ll kind of get this too, is it’s like the city officials all just line up and kick each other in the nuts and they’re like, let’s just see how bad, how badly we can hurt each. and like, it’s, it’s, so much of it is self-inflicted.

Yeah. That’s the fascinating thing about San Francisco is like, it is a fantastic city and it’s almost as though they’re like, let’s see, let’s see how badly we can mess this up. . That’s,

[00:24:53] Dan: that’s what I hear from people who know about that. So. All right,

[00:24:56] Anthony: so those are our typee takes. Don’t take any of it seriously, [00:25:00] cuz we don’t know what we’re talking about.

Like, I didn’t see any, any stories in there about Minneapolis and that’s really all I know.

[00:25:07] Dan: Nothing. Invictus. Nothing about Invictus. Well, those wouldn’t be taped. Those would be hot takes. Those would

[00:25:13] Anthony: be toasty takes. Okay. That’s gonna do it for us. Uh, you got a book recommendation? I just threw you on the spot there.

I know you, um,

[00:25:22] Dan: there was something I was, um, if you got one, I feel like there was something I was gonna be, I

[00:25:27] Anthony: don’t got one. No, I have no books. . I’m, I’m empty, but, okay. So if you want a book recommendation, go to invictus multifamily.com/notes. Oh. And that’s gonna take you to the sophisticated investor notes when, here, there, Dan and I used to do a series, there’s like 30 in there.

Yeah. We used to do deep dives into about 30 of our favorite books, and then we created like 10, uh, a little, little one sheeter infographic with take. . So I think it’s back slash notes. It might be back slash investor notes. No notes. Just notes. Okay. So go check those out. You can download ’em, [00:26:00] they’re totally free.

Uh, and that’s your book recommendation. Don’t actually read any books. Go read our notes on the books and then thank me later or right now by going and leaving a review. Thank you. Okay, that’s gonna do it for us guys. Dan pardoning words of wisdom.

[00:26:15] Dan: Send us your book recommendations we need. There you go.

All right. I need a good reco. Send us your books.

[00:26:22] Anthony: See guys for the next.

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