EP 343 – Commercial Note Investing with Sal Buscemi

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NCS 343 | Commercial Market

NCS 343 | Commercial Market

 

The commercial market is where you most want to be at the moment and we’ve got the break down of all the important insights and information about it. Scott talks with commercial note investor and co-founder of Dandrew Partners, LLC, CEO of TheCommercialInvestor.com, and co-founder of ACPARE, Sal Buscemi, about the commercial market and where opportunities lie. He discusses the usual mistakes investors and buyers tend to make in investing in commercial loans and offers some tips on how to do better, from investing in single-family units to multi-family and more. He also gives inputs on how to raise a capital by highlighting the importance of gaining confidence in talking to investors and other experienced people while giving out his pitch book.

Listen to the podcast here:

Commercial Note Investing with Sal Buscemi

It’s the first time to guest on The Note Closers Show but it goes back over about ten years. I’m honored to have the one, the only, the man, the myth, the note-buying legend when it comes to commercial paper, raising big amounts for big deals. He’s the one, the only, Salvatore Buscemi joining us. How’s it going, Sal?

You and I have been talking about this for a while. We’re coming to the perfect storm as it relates to commercial and people haven’t seen that yet. The coming issues in commercial are going to make 2008 look like a speed bump. I know this is the anniversary of Lehman blowing up, but we’ll talk about that more. You can read about that on the papers. People want to get tactical and learn how to buy commercial notes.

I want you to share with our audience a little about your background, a little about your history, then we’ll dive into the nuts and bolts.

It might surprise you, Scott, to know that I didn’t learn this business by taking a pill one night, going to bed broke and waking up the next morning rich. I started out at Goldman Sachs in their investment banking division and their real estate principal investment arena. I learned the business there. After that, I worked for a smaller Chinese family office. For a few years, I was a hired gun. After that, I raised $30 million from a $2 billion hedge fund in New York in 2008 at the age of 29. We didn’t know at the time the kitchen sink for Bear Stearns when everything blew up. Moving forward, we found ourselves in Las Vegas because we bought a special servicer. If you know anything about hard money loans, in 2007, 2006, 2005, you basically had these glorified mortgage brokers pooling money together and lending it on assets. Most of it was land, lizard and snake territory in Gilbert.

We bought a special servicer for a dollar and recapitalized it with $15 million. The capital or lead, what we call limited partner LP, basically said, “If you want the money, you have to move to Las Vegas,” and there are also tax incentives for being here too as well. I’ve been out here for a while. I sold my condo in New York in 2013. If you know how to raise capital well, we’ve done some venture capital deals. We’ve done a lot of venture capital deals. We had an exit, an IPO. One of the companies went public in 2017 and invested into Airbnb. We’ve invested in some other companies that you might know of. We’re leveraging the economy the way it is. It’s strong. It’s almost as good as it can get. That’s the time when you want to start moving into things. Not only is that but my ex-boss at Goldman, Steven Mnuchin, is a Treasury Secretary.

I see things going on through New York circles where I’m from, born and raised, that a lot of people don’t see. We started making other bets in other industries, but it all comes down to how to raise capital and that’s the most important part. That’s about it, Scott. I have two dogs. I have a wife still, ten years. She hasn’t left yet. I have blogs and stuff like that, but what I am passionately talking about now is the time for people to get in and start understanding how to do this. These cycles only occur every ten to twelve years. Ten to twelve years from now I’ll probably still be doing the business, but will you be able to do it? The real wealth is going to be created right now because, in the commercial real estate, there’s no HOEPA, RESPA or anyone to protect the poor and stupid. It’s more or less the grownup man and woman at the table and you’ve got to know what you’re doing, but that also allows you to get kinky and creative deal structuring too as well.

NCS 343 | Commercial Market

Commercial Market: A lot of people do not know how to value.

 

Let’s talk about the commercial market. Where do you see it at right now? What is your crystal ball telling you?

There are a lot of people, I’ve seen it on Facebook and Twitter, novice investors, we affectionately call them doctors and dentists. What they did was in the smaller balance part of the market between three and 30 is where they’re most competitive. They were buying stuff that was a four-cap Savannah apartment complex. Borrowing at a four-cap. I don’t know how you make money off of that. A lot of people did not know how to value. They didn’t know what the hell they were doing. Now that interest rates have increased, that’s bad for those types of inexperienced operators. You’re going to see a lot of foreclosures and a lot of pain and that’s been what we’re doing.

Not only that, now it’s like an interest rate only loan that you had back in 2005, 2006 and 2007. All of a sudden, they have to pay principal down on a commercial building and the rents haven’t gone up. I don’t care who you’re listening to, you can’t increase the rents 10% on a multifamily each year. You’ll spook out your tenants and they will leave. They’ll go somewhere else. For a workforce housing unit, B, C-type of multifamily, that’s a lot of money. Move across the street and get something, maybe some better amenities, then so be it for them. That’s one of the myths out there.

Most of your stuff is in the multifamily doing all sorts.

I don’t like multifamily. A lot of the investors we have are family offices. A family office is someone who has an operating company that throws off a lot of revenue or they sold the company and had an exit. If you think about it, a poor example of this would be Paris Hilton. Paris Hilton has a lawyer for when she’s in trouble. She has a helicopter to airlift her out. That’s a legitimate family office. The minimum to be considered a family office is $100 million in assets under management. That’s not a rich doctor down the street who’s driving a new Jaguar. These are real, generationally-focused wealthy people who are looking to make sure that their kids and grandkids are taken care of.

The problem with multifamily for these guys, and I’m not saying I don’t like it per se, is it’s a lot more management, and you have what we call poor credit tenants. These are flakes who can’t afford a home on their own, even with the government dropping money from a helicopter. They’re living in an apartment complex. You don’t know if they’re going to have a job tomorrow or not. That’s the problem. What our investors like are things like an office where there’s a triple net lease, where there are strong credit tenants. A lot of people have a hard time getting their head around it because they’re all greedy.

I remember talking to someone once and he said that he was buying homes in impoverished areas making 12% off of these junker homes. Why would you want to get only a seven-cap by investing in a triple net lease office building in Coral Gables? I said, “You have to understand you’re getting compensated for the risk but if you die tomorrow, is that something you want to leave your wife and newborn twins?” Then all of a sudden, there was some cognitive dissonance. He came around and said, “You’re right. It makes sense now.” The money always has a voice and we follow the voice. If you’re looking for longer-term generational wealth where there are 2% escalation clauses and the leases are fifteen years, then this is a whole different game that I invite you to play in.

For multifamily, you’re going to see a tremendous amount of distress because that’s the gateway drug to commercial. Everybody overpays for it. Everybody understands many homes in a box in one roof, but what they don’t understand is poor management. For your audience, the death knell for this stuff that happens is usually one of two things. First, what they do is they fire the management company. That’s the first thing that happens because they can’t afford to pay it. If you didn’t put that into your pro forma when you bought it or your numbers, 5% is a peace of mind. You can’t manage that yourself today with SEO and everything. If they’re looking for Austin apartments, you’ve got to make sure that it’s first in the Googles for all that stuff come up.

The other thing is that when people manage it themselves, I don’t think that they love their wife and children. You’re not in the customer service business. That’s the whole issue is that a lot of people are like, “I want customer service. I’m going to give them my cell phone number. They can text me.” There’s no reason to have 49 units texting you at all hours of the night. It does, so don’t manage your own properties. Nancy Reagan used to say, “Just say no.” You’re going to see that happen a lot. They’re firing the management company. They’re usually about two time zones and two layovers away from where the property is. They’re almost always Californian investors who invest in Texas or Oklahoma, they don’t understand the market. You’re going to see a lot of opportunities. What I would do is I would start talking to your local banks about what they’re seeing.

The commercial is a little different than residential because you can be in default but still making the payments and we call that a technical default or maturity defaults. There are going to be a lot of ways. What people understand in the commercial loan is that you are basically in default day one. It’s a matter of what provision do they want to call them. That could be reserves, which could be anything as it relates to debt service coverage ratios, all sorts of things. These are things that to the inexperienced, people are not going to understand because of the fact that they don’t know how the docs read. They think it’s the same as residential when in fact it’s not.

What are your thoughts about the guys in apartment? They’re of going out there. They’re trying to regentrify the property, putting new management in place, up the rents or start adding add-ons to this thing just driving more revenue with a whole focus that in three years they’re going to go get a traditional bank loan and get refinanced out of their investment. I see a lot of that happening with the way that the lending rules are going.

NCS 343 | Commercial Market

Commercial Market: You never want to look at a deal with comps and you never want to look at a deal passionately with so much emotion because that’s how people get fleeced.

 

That’s a good point because we’ve already had interest rates go up. How many points? Let’s say 75. They’re going to go up another 100 points before the next presidential election. It’s not because it’s a bad thing, it’s because the economy is about as good as it’s going to get. Everybody’s working. Wages are going up. They got to cool it down. However, the point is that the last thing you want to do in the commercial is dig a hole in the ground or bet that you’re going to be able to refinance out of something when rates are rising. That’s always been a fool’s paradise. Not too long ago, somebody came up to me and they said in three years they want to get out of this multifamily development at a 5.25. I said, “There’s no way that’s going to happen. You’re not going to be able to sell this with your scalp still intact. You’re not going to be able to sell it at a five-cap if interest rates are at a five-cap, either 5% or 4% for that matter.”

Buyers, beware. When you’re buying these things, if you’re buying them at such a low basis, it works. The other problem is that you’ve got to look into the future and say, “If interest rates are going up, what does that mean to me be able to invest in this?” Developers are the worst. There’s the developers’ prayer. It is, “God, please give me one more cycle and I promise not to screw it up.” The problem with developers is that they’re more focused on the availability of money. I would not be digging a hole today because by the time that product comes online, you don’t know where the interest rates are going to be. A lot of sophisticated investors we work with, they’re not looking at development but you’re always going to have that one person who’s going to be like, “It seems like a good idea.” They do wishful thinking and they don’t worry about the numbers and hopes they’re going to be able to refinance.

Remember, commercials are always based off of the income, even a development deal. You have to make sure that you’re paying attention to that. This isn’t based on comps. You never want to look at a deal with comps and you never want to look at a deal passionately with so much emotion because that’s how people get fleeced.

Look at the cap rates, see what’s going on, and see where the opportunities are. Look at a variety of different factors versus just comps. We all know comps can be changed or completely skewed to the left or the right depending on the person looking at it.

When people look into a commercial real estate that they only look at what the broker tells them. It’s always the pro forma and pro forma is Latin for a lie. If you remember that, then you know you’re not going to get screwed. You have to ask for what the real current NOI, current net operating income is. That’s how everything’s going to be driven off that. As far as gentrification and everything like that, it’s all about the interest rates at this point. You could be regentrifying an area. I don’t care where it is in the country. If the interest rates are up, you’re going to be caught swimming naked when the tide goes out on the capital markets and a lot of banks aren’t going to be lending anymore.

Where are you seeing the opportunities at right now?

The opportunities are smaller balance, commercial real estate, between three and 30. The distress we’re starting to are self-storage deals and multifamily. These deals are out-of-town owners in place. They’ve had the property for nine years or eight years, and instead of a straight line 27-and-a-half years, they’ve depreciated it to zero in ten years. Now, they’re going to have nasty depreciation recapture. The IRS is going to be doing a lot of heavy lifting for you. Rents aren’t going to be increasing. In smaller areas in secondary markets, tertiary markets, and maybe next door to where you live, there’s going to be a lot of opportunities in multifamily and self-storage. Those are the assets that the mass has overpaid for because they could get the leverage for it quite easily and then they would raise money from people.

In the commercial real estate, distress. You have to think about it as a match. If I’m holding this and this part here, the blue part is what lights first. This is the equity, and then it burns down and then there might be Mezz or something there. After that, it goes to the debt. Once it hits this point, the bank is like, “We’re out. We want to get rid of this property.” They’d always start from the equity down. The equity investors are stressed. They haven’t received a coupon lately because they overpaid. They try firing the management company, but there are no chiefs and the Indians are in charge of the reservation and that’s never a good deal. That’s where I’m seeing the opportunities right now.

In some areas like Vegas, multifamily is still hot. It used to be a transient market, now it’s become much more of a cosmopolitan market. We have the Golden Knights. I don’t watch sports, but I have become a hockey fan because of that. I grew up being forced to go to Rangers Games. It’s a big difference. They have the theatrics. They have the gorgeous showgirls. In a Ranger stadium, they put on a show. They’d be throwing the beers on the ice. It’s a culture. They’re also bringing the Raiders out here too. There are a lot of jobs that are coming as a result of that. As far as any town in the USA, there are still people who are overpaid and you’re going to want to go in there and ask the banker, “Do you have anything on your balance sheet you want to clear, perhaps appending technical default you might want to talk about?” If you use that language then people are going to be like, “This guy knows what he’s talking about. I do want to talk to you.” We can get into how to raise the money on that.

Especially you get a lot of people that are buying smaller portfolios of residential loans and things like that. They want to go that next step to buying some more commercial property. That wave is coming, if not already starting to shoot. The tide’s starting to come on that. Three to 39, there are different ways of raising the capital you’re an expert at. What insights can you give people about that?

What I’m going to suggest you do is simple. Everybody does this and you have to start raising the capital and talking to investors first. You need to wear the right clothes to the party. I don’t mean wearing a suit and tie. What I mean is that you have to have something that is grammatically correct with no misspellings, just a simple pitch deck, a pitchbook. I can offer that for free to your audience if you want. They can go to TheCommercialPitchBook.com. You’ve got to start talking to them and being evangelical about what you’re seeing in the markets. Even if you copy everything that I’m talking about, “Scott is on this podcast,” just plagiarize it and talk to people. You’re going to come into an area with people who you know through social circles, through the church, and through golf.

The structure of it is you’re going to basically set up a special purpose vehicle, an LLC in this case, once you have the opportunity and you’re going to raise money around that. That LLC is going to have its own checking account. That’s going to be for buying one commercial note, that’s it. If you’re buying a $2 million commercial note, face value for $500,000, you’re going to raise probably about $520,000 to cover legal expenses and some other stuff. Always have the professionals do the closing. Make sure you find a good transactional lawyer to do this. You want to start raising capital before you find the deal. What people do, and this is how people get desperate, flaky and nobody wants to take them seriously, is they find the deal first and then they run around like a chicken with its head cut off, trying to find the capital.

That’s always a very bad thing because it puts a lot of pressure on you. You want to make sure that you’re taken seriously. It puts a lot of pressure on your investors. All of a sudden, “Why are you in such a rush? Why are you in a cold sweat? Why now? Why haven’t I heard about this before?” You’ve got to make sure that you’re easing into your investors so that you’re comfortable with it. You don’t want to ask for sex on the first date, so to speak. It’s a similar level of creepiness, and then you’re running around trying to pitch a deal. Always be talking to investors. Even if you spend 30 minutes a day talking to investors, just random investors on LinkedIn or someone else, talking about what they want, that is time well spent and that’s what I advise everybody to do when they’re starting out is talk to the investors first. Get confident talking to them. The deals will come, but if you don’t have the investors lined up, you’re getting wet from nothing.

NCS 343 | Commercial Market

Commercial Market: Nobody wants to take a person seriously if they find the deal first and then run around like a chicken with its head cut off trying to find that the capital.

 

It’s a different mentality than a single-family home. Go out. Find a deal, it’s pretty easy to find an investor for a single-family home. It’s the bigger leagues. You’ve got a bigger project. You’ve got to be more experienced. You’ve got to have your pitchbook. Show the experience. Show your background on what you’ve done with the deals so that your investors are ready when you get that deal.

Even if you don’t, and a lot of people are not experienced, what you want to do is raise the capital but team up with an experienced operator in that town. If it was Austin and I saw a note, I’m not going to move to Austin. I’d call you, Scott, and be like, “You have the track record. I’m raising the money. You’d be the operator, I’d be the sponsor and we’d start dancing,” and that’s the way you want to do it. This way you don’t have to worry about breaking your back and everything doing all this stuff. That’s what the smart people do. They outsource it out to experienced operators, not brothers-in-law who are sleeping on the couch, which are looking for something to do.

That’s the one that came in off of a seminar or something, and you can find them on LinkedIn. There’s no excuse today with LinkedIn not to get to the professionals that you need. You’ve got to tell them, “Look at this.” You’re starting to see things happen in the market. Be evangelical. Keep talking about it, but when you do find it, make sure that you talk to a bank. Even the bank, I’ll ask the bank, “Who’s a good operator that you have over here if we fund this?” He’s like, “You’re going to want to call Scott Carson in Austin. He’s got a lot of multifamilies and he’s got a lot of self-storage and that stuff.” That’s the best way for you to get a track record right off the bat is to partner up with people who you trust. Always ask the hard questions, “What other deals have you done? Let me see the portfolio. Let me see your deal sheet or transactional resume,” and it shouldn’t have any residential on it if you’re doing a commercial.

We’ve got a question, “In a single-family, we look for investors and self-directed IRA owner accounts. Where do you look for investors for larger commercial deals?”

First of all, I have a great, filthy, dirty strategy. This is something I came up with. The reason why we did it for our venture capital portfolio when we started raising for that, I did have a track record but I didn’t have a track record. I was basically clubbing in friends and family money. We put about $2 million out on the street. You want to talk to these investors and you help them transfer their traditional IRA or Roth IRA to a self-directed traditional or Roth IRA, or a 401(k) over to a traditional self-directed IRA. Here’s why. Once that money moves in from fidelity over to a self-directed IRA custodian, it’s like the Roach Motel, it never leaves. All of a sudden, everybody’s calling you and saying, “What do I do? You told me to do this. Don’t you have a deal?” It’s a high-class problem to have. Multiply that by twenty and you have your own private bank. I would go out so much as to if it was you or your daughter. If you don’t trust your family, do it yourself and say, “I had a great conversation with you. What I’m going to do is send to you by priority mail the documents you need to transfer your IRA to a self-directed IRA custodian. We happen to like Sprout. We like Vantage.”

We don’t own them. We don’t want to own them. They’re third-party stand-alone, but send it with the little flags like the realtors do when you sign here and everything, make it easy. This way it gives you an excuse to reach out to them again and say, “Did you do it?” It also shows that if you have the conviction in it, you’re spending money and resources to make sure that you’re serious about this. You take your business seriously and it demands them to take your business.

With the whole contracts, everything is going electronic these days of transfers. Taking the priority letter or the priority mail, everything with flags, it adds, “I’m serious about it.”

“I’m motivated. This is how I make a living, this is it.” Make sure that you tell people, “When these deals come, we have to move quickly on this. Do you understand that?” Make sure you set up the expectations of your investor. Then now you’re starting to do what I do when you call the capital, and you’re calling all the people and say, “I need $100,000 from you for this one.” I don’t know where it went, but we’re working on a deal, it’s in North Carolina. It’s triple net lease, 6.75 years left with ten years on the renew. This is long-term stuff. People in their IRAs want this stuff in there. That’s probably the unique selling proposition that your audience can get from this is saying, “We work exclusively with people in tax-advantaged accounts. Let us help you set it up.” The easier that you make it for them and the more grease you put on that shoot, the more money that you’re going to get put into these things going forward.

You’re out barnstorming a little bit though, looking at a lot of different assets in different seas though, aren’t you?

We’re working on deals. The money has a voice. The money’s told us what they want and that’s what we’re going out and finding. The money for us right now, they don’t like the multifamily space but warehouse, industrial, they like an office. A lot of people are going into retail because there are some opportunities with that as well. The distress stuff that you’re going to see is going to be coming from multifamily and self-storage. There’s no reason why somebody in Dallas would pay a five-cap for a self-storage facility. It doesn’t make sense, and their loan is at 4.25 and the only people that get loans like that, unfortunately, are the doctors, the dentists, and the chiropractors who don’t know any better. It’s like, “I want long-term money and I lost everything in Bitcoin.” What I’m going to do is I’m going to go out, carpe diem and go into self-storage. That’s what it is. When you get into commercial, it’s much more of a bankable asset when you start talking about long-term leases, especially people who are older, who are scared about outliving their savings.

I like single-family for flipping. Everybody likes to flip those. I don’t believe in keeping long-term rentals. Nobody I know ever got truly wealthy with a bunch of single-family homes without dying of a heart attack while trying to get there. You’ve got to think about it. There’s a tremendous amount of money out there. There’s about $20 trillion now because of the stock market and 401(k) IRA money. IFI just round out about $1 million, which to many people sounds like a lot but it’s not. You could probably get your arms around some self-storage facilities and get started. Make sure it’s managed by somebody else and you put it in there. Don’t ever fire the management company, especially for self-storage because people buy self-storage differently. They go on Google, whereas people go to multifamily. They will drive around and want to be in a particular part of the city.

Self-storage is, “Who’s the cheapest, who’s going to give me the best? That requires a property manager that it doesn’t always collect the money, but also make sure that they market your property correctly.” A good example of that would be Extra Space Self-Storage. They’re based in Salt Lake City, Utah. They’re a manager, but they’re a great manager. They’re the best manager in class.

NCS 343 | Commercial Market

Commercial Market: The easier that you make it for them and the more grease you put on that shoot, the more money that you’re going to get put into these things going forward.

 

We have a question, “What lead time are you seeing in getting funds from an IRA to be able to fund a purchase?”

I would say 30 days in the best-case scenario. That’s if your person knows what they’re doing and they have to stay on top of it. These big firms don’t want to give up money and it’s hard for them. They have a lot of capital controls. What usually happens is that there’s going to be a rub. They’re going to say, “You can’t move your money into a self-directed IRA. That’s illegal.” It’s illegal for them to say that and you can poach their license if they tell you that. I’m not saying you should record these conversations, but some of these guys are making money whether the market goes up, down or sideways. They have been padding their pockets for many years off of performance fees on no performance in my view.

Trump has added a lot of performance to the market, your mutual fund salesman hasn’t. I’ll defend that any given day and it’s a three-hour conversation. The other thing is that you have to make sure that the paperwork’s filled out. If I were you, I wouldn’t even be looking a deal until you had a significant amount of money to get started with, with people who have already moved money into an IRA from a traditional investment house.

What are some of the biggest mistakes you’ve seen people making? You were out at a family office and you joked that some people are getting laughed out of the room when it comes to their pitches.

It’s because they don’t know their deal. This is what pains me. They’ll send over a deal. They’ll hit the forward button on a twenty-megabyte PDF and say, “All the information is in there.” Know your deal. Know the narrative. Know a little bit about it. That’s what you need to do. You need to know your deal. If you want to be a steward of other people’s capital, you have to know the deal. You can’t be a mortgage broker and slam things home. This is a whole different thing and you need to be able to communicate your deal as to why you have conviction in it, why you like it and how you think that the investor’s going to benefit from it.

When you’re raising money, you’re guilty until proven innocent. It’s not the judicial system. It’s the other way around. Please make sure everything doesn’t have any grammatical or misspellings. That’s why we’re giving away the Pitchbook at TheCommercialPitchBook.com. It’s because every time I see a misspelling, the person that emailed it to me has two front missing teeth. As much as I’m stereotyping people, don’t do that because people are going to look for a way to say no to you. You’ve got to continue to make sure that everything’s put together.

Here are the mistakes people make when buying commercial loans. This is something that I’m going to give to you to send out to your audience. Commercial is much different than residential. I want to make sure people understand this. There are always going to be prior promises. The thing that affects people the most, especially in the commercial real estate, everybody’s afraid of bankruptcy. Everything’s underwritten around bankruptcy in the worst-case scenario. A lot of times, the bank doesn’t want to foreclose on a commercial loan because they don’t want the borrower to file bankruptcy. That could cause all sorts of financial headaches for the bank from a regulatory standpoint. There’s a little pillow talk that goes on, “If you don’t file bankruptcy until after we sell the note, then I will pursue a personal guarantee deficiency on you,” or something like that. Bankruptcy’s an American right, it can’t be negotiated away. America’s a great country for that. There’s a little bit of pillow talk that goes on sometimes and you don’t know what that is.

NCS 343 | Commercial Market

Commercial Market: The capital needs change as the investor gets older.

 

The other thing too is that it’s easy to finance the note. You can get that through any bridge lender that you find. You can put Madison Capital, Madison Realty Capital in New York. There’s Emerald Capital in New York. Make sure you do a Google search on them first because some of them will take up fees and not close the deal. I don’t want to mention those names for liability reasons, but there are plenty of ways to do it as long as you’re getting it at a good discount or basis. The other thing too is that you need to understand the default provisions on a note. The new note buyer will seek to enact the default rate and fees that the loan is in default. What does that look like? These terms are set up by the existing note holder. You’ve got to make sure you get all the existing documents too. That’s the most important part. You’ve got to make sure that you understand that you’re going to inherit the good, bad and the ugly. Maybe there aren’t default provisions. Maybe there are some missing documents or document deficiencies, but you’re going to want to make sure you understand that.

You’re also going to want to understand if your borrower is going to be playing nice or not. Are you going to be the good guy or the bad guy? All of this can be done when you’re raising money. You always want to raise a little extra for legal fees to let the lawyer throw the hammer down. You sit just there like Mr. Burns tell Smithers what to do. People do these themselves and think, “I’m going to do this and we’re going to close on a desktop.” Let the lawyer deal with it. Use his docks. You’re going to do probably a collateral or an absolute assignment. That’s it. There’s a lot there. Talk to your investors first. That’s the only thing is to let your investors tell you what they want, but they’re not going to tell you what they want. They don’t know the difference between multifamily and retail other than they see Amazon’s taking over the world and there’s not going to be a Bed Bath & Beyond anymore.

The key is, what are your needs? The person who’s older with gray hair usually will want perpetual income. They want passive income. They’re not going to be interested in fix and flipping. The younger person who has some money, he’s younger. He can do a little risk. He’s the one that’s going to be doing hard money loans for you, but you have to understand, needs change. The capital needs change as the investor gets older. If you’re talking to investors or something like that who are professional, they almost always want to go in on a longer-term deal because they have duration. They have people they need to feed when they die. That’s what it is.

I appreciate taking time and sharing some nuggets there. You can check it out, TheCommercialPitchBook.com. Get that download straight from the website. How can people get ahold of you if they’re interested in investing or finding out more information?

They can go to TheCommercialInvestor.com. That’s what they can do. They can read all my stuff. We have a podcast there. We’re launching our second season. We interview a lot of these people from New York, these family offices and some friends who have helped me build that podcast. You want to rub elbows and drink martinis with the right people. You’re going to want to listen to that podcast. Scott, it’s been great. It’s a pleasure and a privilege.

Check out TheCommercialInvestor.com. Check out Sal’s podcast there. You can go to TheCommercialPitchBook.com and download his Pitchbook for you to take a look at so you don’t have to reinvent the wheel yourself. Other than that, go out and make something happen. We’ll see you at the top.

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About Salvatore Buscemi

NCS 343 | Commercial Market

Salvatore M. Buscemi is the co-founder of Dandrew Partners, LLC a boutique real estate investment bank and founder and CEO of TheCommercialInvestor.com, and co-founder of ACPARE, the Association of Capital Placement Agents for Real Estate, the industry’s leading accreditation agency for buy-side real estate professions. Mr. Buscemi started his career at Goldman Sachs & Co. in NYC and launched his first $30 million non-performing loan hedge fund at the age of 29. Dandrew Partners’ venture capital arm, Dandrew Partners Encore Ventures, has stakes in Airbnb, Decision Sciences, Tocagen (NASD IPO April 2017), Immunicom, Geneius Biotechnology, Rejuvenan and others.

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