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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: February, 2020
Feb 27, 2020

What is the Real State of Retail Real Estate?

Chris Ressa cut his teeth in commercial real estate as a real estate representative for Sherwin Williams Paint Company.  Historically, Sherwin Williams dominates the contractor market. The growth opportunity with higher margins is in the DIY market.

As a real estate representative, Chris was charged with finding new locations for stores in markets that Sherwin Williams wanted to expand market share.  He worked with local brokers, negotiated leases, and gained critical insight how national tenants view retail space. 

Here he was exposed to the thinking and strategy that national retailers invest in Identifying markets, time lines, and the value placed on space and lease negotiations. 

When he moved to the real estate brokerage side of the business, he found that his experience was helpful, but, real estate is still real estate.  You have to execute.  

Real State of Retail Real Estate

What is the real state of retail real estate?  For context, it has to be stated that the consumers demand drives retail real estate.  Second, the consumer’s behavior has led to the creation of multiple significant asset classes.  

The different types of Retail Real Estate include:

  • Enclosed Malls
  • Outlet Centers
  • Power Centers
  • Grocery Anchored Centers
  • Neighborhood Centers
  • Free standing buildings
  • Lifestyle Centers
  • Mixed Use Developments

For this reason, you have to get granular to understand the nuances of each when underwriting a property, because they all operate differently.  You have to consider what type of retail will create the best opportunity for a tenant.  

Retail Disruption

Disruption in retail is nothing new.  But, not that long ago, the tenant list of an enclosed mall was about 70% leased to fashion and apparel.  Then the outlet center created a direct to consumer opportunity for brands.  

Next was the category killers, the power centers that provided all of the brands and categories under one roof; think Dick’s Sporting Goods and Office Depot/ Office Max.  

Then the multi tenant buildings with the front and center impulse buy, ie Starbucks. 

Lifestyle centers include high end fashion, plus mixed use, are walkable and may include dog parks. 

Online Effect

Now, online sales are changing how the retail consumer buys.  It’s easy to point to Amazon and the volume of sales generated, but there are no known cases where a retailer went out of business because of an online competitor.

Online sales has made most retailers better.  Now the consumer can order online, and pickup at the store.

It’s often reported that Toys R Us, a fortune 300 company, went out of business due to online.  Their annual revenue was $11 Billion. The truth is they were over leveraged and they could not service their debt.  

Online versus Brick and Mortar

Retailers are finding that when they open a physical location in a market, that their online sales increase and the reverse holds true when a location closes.  Good retailers are figuring out how to add to their bottom line and make the consumer experience frictionless.  

A recent study shows that approximately 85% of consumers who order online and pickup in the store will make an additional purchase at pickup.

Right now, in order to get consumers in the habit of ordering online, retailers are providing free shipping and returns.  Will free shipping continue to be offered as retailers build more brick and mortar locations for consumers to return the unwanted purchase?

Retail Growth

The cost to start an online business is nothing compared to a brick and mortar business. But, to grow beyond $10Million in sales, retailers are finding that a physical presence is needed.  At this level, the customer acquisition cost is actually less for brick & mortar versus online.    

Multiple online brands are opening multiple physical locations to lower their cost.  Product distribution necessitates it. Warehousing, retail and online are all working together.

Other brands are working to limit the number of outlets for consumers to buy in order to keep the value of the brand high, ie Nike. 

Brick and Mortar Long Term

Brick and mortar has a convenience edge for the consumer who needs something right now.  Combine this with evolving experience and physical locations for retail real estate is not going anywhere.  For the customer who needs service, a chat bot is no comparison to a live meeting with a person in a physical location.

The store prototype is changing.  Brands are trying to determine the ideal square footage, product mix and layout to meet the consumer needs.  

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK:  

So I think both from a real estate end and a retail end. The BIGGEST RISK is human capital. 

When you have an industry. That's been hammered by Headline News, both the retail and the real estate. When someone is really bright, and smart graduates college, is that the industry they want to get into? And to solve the problems and the challenges that we were just talking about, you need really sharp, talented people. From an industry perspective, I always want those at DLC, but from an industry perspective, retailers, real estate, everybody needs really smart, sharp, talented people. 

Getting the bright, sharp people into retail store management training programs. I don't know the last time you talked to a millennial, but when was the last time they said, when I graduate college, and I want to be the store manager of Wal-Mart. I don't hear a lot of people doing that. And I think it's a great job. And there's a great career path. 

But the biggest risk is human capital, both on the retail side and the real estate side. In the Great Recession and the real estate side is not limited to my world, but in the Great Recession, you know, in all commercial real estate, very few people were hiring in 2008 to 2012. So you have this labor shortage. 

And I think the greatest risk is in commercial real estate and retail. If all the most talented people in the world move over to the tech world and no one comes into real estate, I think that's the greatest risk the industry has.

For more go to:

Website: https://www.dlcmgmt.com/

Podcast: Retail Retold

Linkedin: https://www.linkedin.com/in/ressaonrealestate/

Feb 25, 2020

Darrin: Chris, Ressa, what is the BIGGEST RISK? 

Chris:  So I think both from a real estate end and a retail end. The BIGGEST RISK is human capital. 

And you know, when you have an industry. That's been hammered by Headline News, both the retail and the real estate. When someone really bright and smart graduates college, is that the industry they want to get into? And to solve the problems and the challenges that we were just talking about, you need really sharp, talented people. From an industry perspective, you know, I always want those at DLC, but from an industry perspective, retailers, real estate, everybody needs really smart, sharp, talented people. 

 Getting retail, you know, getting the bright, sharp people into retail store management training programs, you know, I don't know, one last time talked to a millennial, but the last time they said, when I graduate college, you know, I want to work at you know, I want to be the store manager of Wal-Mart that, you know, I don't hear a lot of people doing that. And I think it's a great job. And there's a great career path. 

But the biggest risk is human capital, both on the retail side and the real estate side. You know, in the Great Recession and the real estate side is not limited to my world, but in the Great Recession, you know, in all commercial real estate, very few people were hiring in 2008 to 2012. So you have this labor shortage. And I think the greatest risk is if call it commercial real estate and retail. If all the all the most talented people in the world move over to the tech world and no one comes into real estate, I think that's the greatest risk the industry has.

Feb 20, 2020

Hidden investing? What do the top 1% know that you do not? 

The 99% Plan

Holly Williams is a successful advertising professional who worked hard, and climbed the corporate ladder.  All during the climb, she did what she was taught to do; get a JOB, work hard, live below her means and save for her retirement.  

As her parents aged, she experienced first hand the sad ending waiting for most Americans who follow the investment plan her parents taught her.  What she learned while watching her parents age, was that the plan is designed so that you die broke. Nobody ever talked about how the plan includes that you die broke.  Why is that?

No one ever talks about how you get your money out of the 401k.  Most people know that when you sell, you have to pay taxes. But, nobody talks about what happens when your account goes down and you still need to sell your shares to get the cash you need to live.  How it is extremely unlikely you will ever make that money back. And as you get older, the government forces you to take the money out so that they can collect their tax. 

Her parents aging combined with her increasing tax bill made her hyper aware of the government’s goal for the masses; die broke.  Her plan was broken.

Hidden Investing

Then she met fellow Texas Tech alumni & NYC advertising executive, Joe Fairless, who shared with her an opportunity to invest in commercial real estate.  She liked Joe, and wanted to help him, but did not expect anything to come of it. Wow, was she wrong!

In the months that followed, she received income.  At the end of the year, she received a K-1 with depreciation which reduced her taxes.  She learned first hand how the tax code favored real estate. Then she found out what an accredited investor was, and that she was one.  She also learned about the private investment management advice resources available to the top 1% of Americans and family offices that are not available to the masses.  

1% of Americans

Eyes wide open!  Holly was making good money.  She thought she had an idea of how much the wealthy Americans made for an annual income.  Maybe a couple of million dollars per year and they probably paid 50% in taxes.  

Then she learned the truth about how much the Wall Street fund managers make; $20million and more!.  The advisors who were advising her made no more money than she did, and only knew to tell her to stay invested in the market.  Investing in real estate is risky!

Since she was an accredited investor, if she had a prior relationship, she was qualified to invest in sophisticated alternative investments like real estate syndications.  This is typical of the level of investment the 1% invest in. They get close to the source of the opportunity compared to the diluted returns available to the masses.   

Real Estate Investing

Real Estate investing is specifically encouraged by the tax code.   For accredited investors, when you invest directly, bypass all the middlemen, you are able to  lower your taxable income due to depreciation, and you have the ability to shield your gains from tax.  This is unlike investing in a REIT where you are a shareholder in a fund that most likely made a loan and receives interest payments.  When you invest as a limited partner in a syndication, you are an owner and entitled to owner benefits. 

In addition to the tax benefits, you can benefit from a value add strategy.  This can be accomplished through improved management or actually improving the property.  The key is to find an experienced investor who can assess the situation and identify the opportunity others cannot see.  

Income Versus Wealth

Most Americans are focused on creating more income.  A bigger paycheck equals more taxes and a bigger lifestyle for most.  Earn more so they can spend more.  

Real estate provides the opportunity to invest and create wealth.  You purchase a cash flowing asset with leverage. It grows in value, and allows you to shield both your income and gains from taxes.  

Even though the IRS tax code favors real estate, most Americans are unable to break from the heard.  They welcome the opportunity to invest in a stock or start up, but real estate still seems risky. Buying from a name brand mutual fund seems less risky than investing directly with an experienced key principal who knows how to improve the property, create cash flow and reduce their taxable income. 

Keep More

Holly has learned a great deal about Hidden Investing and how the 1% is able to invest in more secure opportunities.  To share her new found knowledge with others, she has created a learning and investment platform, KeepMore.com where her motto is: Get more, Earn more and Keep more.  

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK:  Oh, I know that's an easy answer. Because I had some real estate, but the majority of my net worth was in the stock market. The stock market is all about hope. It really is. If Trump tweets, it goes up. Tweets again, it goes down. You know, we can have a company with the best earnings ever and their stock goes down.

It makes no sense. Unless you're really good at picking these stocks. I just think that that that hope is not a strategy. 

With every investment that I make, I can tell you exactly what we're doing to mitigate that risk. How fast the area is growing. What's around the investment.  I can tell you all of that. 

So I just feel more comfortable. Because I absolutely don't know in the stock market. And the people we give our money to don’t either. No idea. Not a clue. They just say, “stay in and don't panic”. Right?

For more go to:

Website: www.Keepmore.com

Book: www.hiddeninvesting.com

Feb 18, 2020

Oh, I know that's an easy answer, though, because almost I had some real estate, but the majority of my net worth was in the stock market. And I know and you're it's it's all about hope. It really is. I need Trump tweets. It goes up. Tweets again. It goes down. You know, we can have a company can have the best earnings ever and their stock goes down.

 It makes no sense. And a lot unless you're really good at picking these stocks or whatever, which anyway. 

You know, I just think that that that hope is not a strategy. And with every investment that I make, I can tell you exactly what we're doing to mitigate that risk. Exactly what happened in 2008 or whatever in the last recession. Exactly. Who's how fast the area is growing how fast. that's what's around there. What? I can tell you all of that. So I just feel more comfortable. Because I absolutely don't know. 

And the people we give our money to either. This guy's get to come see me. I guarantee he doesn't know. No idea. Not a clue. Just stay in and don't panic. Right?

Feb 13, 2020

PACE (Property Assessed Clean Energy) Financing is a finance tool every real estate investor needs to know about to help acquire or renovate your property.

Scott Krone, principal at CODA Management Group, a real estate design & design firm.  CODA as designed & built single family, multifamily, commercial property convert to mixed use, and churches. Most recently, CODA has focused on re-adaptive use, converting empty warehouses into self storage facilities.  

PACE Financing 

Property Assessed Clean Energy (PACE) is accessed through the US Department of Energy, but not widely available throughout the country.  To access PACE Financing, the state where the property for which the funds will be utilized must be located in a state that has adopted the PACE program.  

The purpose of PACE is to encourage and improve the energy performance of a structure or building.  The money provides financing of these improvements through real estate taxes instead of traditional debt.  This structure changes the picture of debt for lending, as lenders look at the obligation as equity versus a liened debt position against the property.  Your payments are now operational, property taxes. Banks love it!

There are two forms of PACE financing; public and private.  Public is run through the Port Authority. Private 

PACE Structure

The structure of Pace financing is similar to traditional debt financing in that the principal & interest which is spread out over the life of the improvement.  For instance if the HVAC system has a life expectancy of 20 years, they will amortize the payments over 19 years.  

Like any construction project with financing, the monthly draws are submitted to the bank after the work has been completed.  For those elements that are recognized as energy related and included under the PACE financing, a separate draw is requested.  

Your PACE payments are an additional tax assessment usually split into two annual payments.

Tax Structure with PACE

The tax structure for PACE provides multiple benefits.  

  • Funding for your qualifying project needs is provided as a loan through PACE.  
  • Repayment is spread out over the life expectancy of the improvements.
  • PACE financing is considered equity, not debt.
  • Lower capital raise from investors.
  • Property taxes are frozen for the duration of the repayment schedule.
  • PACE financing and property tax lock is transferable.

PACE Eligible Components

The list of qualifying building components look to three areas for improvement; water, energy and renewal energy.  Structural components are generally excluded, however a new roof with additional energy saving insulation is included.  An easy way to think of what is qualified, is to think of LEED certified buildings and the components.

Capital Stack with PACE

In a typical property purchase with debt, the borrower brings the down payment, equity and borrows the balance from a lender.  For PACE qualified projects, your down payment can be lowered because the PACE financing is recognized as equity in the project.  For instance:

Project Total $1,000,000

Down Payment: $   150,000

PACE Financing: $   150,000

Debt Financing: $   700,000 

Typically PACE can provide up to 20% of the appraised value of the property after construction.  

While you have 30% equity in the project, your investors only had to raise 15% of the equity, which dramatically increases the return on the project to your investors.

PACE Lender

To qualify for PACE, you first have to establish a baseline for the existing building systems in place.  Once the baseline is established, the systems to be replaced are evaluated for the estimated savings. CODA has worked with Petros PACE Financing, a lender that specializes in PACE.  

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

 

BIGGEST RISK:

Well, you know, people ask me about this in terms of real estate, what's going to happen with the economy, as you know, with political elections, what is it going to go up or down a recession or continue in this? You know, We're in one of the longest expansion periods in a long time. And for me, on a national level, I don't see that there's going to be a lot of risk within real estate as a whole. 

Based upon the interest rates, I think if the market does begin to slow, you know, the Fed is going to lower the prime. We wait. We may get down to two or even zero interest rates just to keep the economy going. So from that perspective, I think that real estate is still a solid play. 

But if I'm looking for us. What we have determined internally is that there's too much political instability here where we are in Illinois. And so what you were saying in terms of like, can we can we avoid it? You know. 

Illinois is having a decrease in population of 6 percent over the past 10 years, which is putting a greater burden on the people that are remaining. And we have the pension problems. And, you know, historically, you know, people say, well, you know, they just did a bunch of things to approve legislation which are basically sin taxes. 

But my concern is the money is not actually going to pay off those pensions. It's just going to be used to spend in other areas, which is historically have happened in Illinois for the past 20, 30 years. So why is it going to be different? 

What we have done is we've stopped buying in Illinois. And for us, that's how we are mitigating or perhaps even transferring because we're looking at states that are more tax progressive and where we're seeing growth. 

And so that is what we're trying to do is and that's why we've expanded throughout the Midwest. That's why we have the properties in Ohio. We're looking in Louisville or we're looking in Kentucky. We're looking in North Carolina. We're looking at Michigan. 

We're looking at places that are trying to encourage economic development. So either through PACE the Opportunity Zones or the tax benefits for it so that we have greater stability and less risk.

For more go to:

Website: www.codamg.com

Feb 11, 2020

Well, you know, people ask me about this in terms of real estate, what's going to happen with the economy, as you know, with political elections, what is it going to go up or down a recession or continue in this? You know, We're in one of the longest expansion periods in a long time. And for me, on a national level, I don't see that there's going to be a lot of risk within real estate as a whole. 

Based upon the interest rates, I think if the market does begin to slow, you know, the Fed is going to lower the prime. We wait. We may get down to two or even zero interest rates just to keep the economy going. So from that perspective, I think that real estate is still a solid play. 

But if I'm looking for us. What we have determined internally is that there's too much political instability here where we are in Illinois. And so what you were saying in terms of like, can we can we avoid it? You know. 

Illinois is having a decrease in population of 6 percent over the past 10 years, which is putting a greater burden on the people that are remaining. And we have the pension problems. And, you know, historically, you know, people say, well, you know, they just did a bunch of things to approve legislation which are basically sin taxes. 

But my concern is the money is not actually going to pay off those pensions. It's just going to be used to spend in other areas, which is historically have happened in Illinois for the past 20, 30 years. 

So why is it going to be different? So what we have done is we've stopped buying in Illinois. And for us, that's how we are mitigating or perhaps even transferring because we're looking at states that are more tax progressive and where we're seeing growth. 

And so that is what we're trying to do is and that's why we've expanded throughout the Midwest. That's why we have the properties in Ohio. We're looking in Louisville or we're looking in Kentucky. We're looking in North Carolina. We're looking at Michigan. 

We're looking at places that are trying to encourage economic development. So either through PACE the Opportunity Zones or the tax benefits for it so that we have greater stability and less risk.

Feb 6, 2020

Multifamily Syndication 2020 Outlook, Vinney Chopra provides his thoughts for the coming year, 2020 and beyond.  

Vinney Chopra purchased his first multifamily property, a 14 unit property for $180,000 in 2008.  Today he has grown his portfolio through syndication to 4,100 units worth over $300 million.

Before 2020

It took eleven months for Vinney to raise the money he needed to purchase his first 14 units in 2008.  At the time, the financial world was in complete melt down. Banks were not lending, and investors were fearful that losses would continue.  Don’t forget, Vinney had never done a multifamily syndication before. But that did not stop him from talking daily with investors and real estate brokers. 

Vinney’s concentrated efforts during the 11 months created momentum.  Immediately following his 14 unit purchase, he closed on a second property with 109 units.  He was constantly talking with investors and brokers. Instead of getting discouraged, he kept in touch and underwrote the properties and made numerous offers.  Eventually, sellers and investors were ready to make deals, and because Vinney stayed with it he and his investors benefited.  

Mindset

Scarcity versus abundance.  Looking backwards is helpful for where we have been, but not so useful for drawing a clear picture of where we are going.  Ask any economist or investor, “what does the future hold for multifamily?” Most will reflect on the incredible period of recent growth and encourage you to sell or accumulate cash and wait for the crash that is overdue. 

If you believe in scarcity, and you are expecting a crash, it’s hard to instill confidence in your potential investors that now is a good time to invest.  Scarcity yells, WAIT! We should wait until prices cool and deals are more like they were in 2008.  

If you believe in abundance like Vinney, you remain active in the market looking to land deals.  

From 2008 to 2014, Vinney and his partner did 14 syndications valued at $100 million.  Since November 2014, Vinney and his wife have done $230 million, more than double what he did at the beginning of the recovery.  

The key to his success is that he stayed in the market.  Even when he did not buy a deal in 2018, he stayed in touch with brokers and investors.  He studied different markets looking for growth indicators and emerging markets.  

Emerging Markets

To make a sound investment, you need an emerging market.  A healthy market for multifamily includes job growth, and inflow of residents that need housing. When demand for housing exceeds supply, you have found a market worth pursuing.  The growth of potential renters is made up of three distinct groups, millennials, baby boomers, and immigrants. 

Combine this growing demand with the lack of affordable single family homes compared to wages and the demand for rental housing looks strong for the next 20 to 30 years. 

Vinney has successfully invested and exited from multiple deals in markets like Texas and Georgia where the demand is super strong.  In one case, he invested in 2017 and sold in 2019 for a 50% gain!

Calculated Risk

There are no guarantees, but if you do your homework, and understand the market dynamics, you can hedge your bet, minimize your downside and take a calculated risk.  Housing is a primary need, and apartments are more affordable than single family homes.

The market is dynamic.  In 2018, the surge of new investors flooded the market, so much so that Vinney did not buy one property.  He believes that the demand was so great, that investors were overpaying for properties. In 2019, he found the over paying buyers were not as numerous, interest rates were lower, which increased cash flow.  The combination of these circumstances provided better investment options and he purchased two large newer properties.

Life is full of risk.  If you put your money under your pillow, or in the bank, you will make next to nothing.  When you leverage into real estate, the bank provides up to 80 percent of the capital needed to buy your property which is in high demand.

Year over year, rents increase, net operating income increases, values in crease, and so too does your equity.

Value Add 

Value add is the best way for a buyer to create equity in his new purchase.  An experienced buyer can recognize opportunities the seller is blind to. Value add opportunities range from minimal efforts from raising the rent to market to a heavy lift investing millions into capital improvements.  

The key to a successful value add strategy is to recognize the opportunity, and properly underwrite for the cost to implement the changes quickly.  You want to hit the ground running as soon as you acquire so that you can benefit from the improved cash flow and increased valuation.  

When approaching potential investors, it is important to have a sound strong business plan that assures the investor there is a plan to take care of and return their investment.  

Underwriting is key in any market.  A good deal is always a good deal.

Multifamily Syndication in 2020

Multifamily Syndication is full of opportunity in 2020.  Investors are looking for greater returns than what they are getting in the stock market.  For syndicators who recognize this, and understand how investors can invest their retirement funds, 2020 can be a great opportunity for both syndicators and investors.

The national commercial real estate brokers, CBRE, Berkadia, Marcus Millichap have published their market forecast and in all cases, the next 20 years look bright.  

Relationships

Relationships are key to be successful in multifamily syndication.  If you have not yet syndicated a deal, Vinney suggest you work with seasoned syndicator to learn how to do it properly.  Once you have some experience, you have multiple options available to you. You can raise money or be the key principal leading your own syndication.

Today is Your Time

Life is full of risk.  If you put your money under your pillow, or in the bank, you will make next to nothing.  When you leverage into real estate, the bank provides up to 80 percent of the capital needed to buy your property which is in high demand.

Rents increase, net operating income increases, values in crease, and your equity does too.

BIGGEST RISK 

Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”  

BIGGEST RISK:  

Wow, I'm so glad you shared that because I settled three lawsuits. You know, just in the last quarter of 2019. So it's very fresh in my mind. And actually, one lawsuit was going on for about two and a half years. Nothing major, but it was major in the sense that something happened with one of my contractors on one of my property. And I'm so glad that I have had full coverage, you know. And they said you settle the issue for almost like seven hundred some thousand dollars. And I didn't have to pay a penny. 

Another thing, you know, Darrin, my fire happened, you know. Right there in Atlanta property and that was a fire. I had a twenty thousand dollar deductible only, and that settled for two point three million dollars just to let you all know. But it was only possible because of people like Darrin, you know, who were able to sit down with me and make sure that we get the proper insurance. 

I got hacked also in 2017 lost $250,000. And guess what? I did not have the Cyber Insurance. And that got me hurt. And, you know, I never looked back. I always look forward and say, what can I do today to make myself better? And that's OK. But now I'm fully taken care of by my I.T., Cyber Security and Insurance and everything. So the key thing is I think insurance plays a very important role. 

I had another lawsuit with the, you know, firing somebody and they said it's racial discrimination firing. So these are very important issues. You've got to make sure you've got great attorneys, first of all, who are with you, dealing with you, looking at your contracts and everything. I'm very happy to say I didn't have to pay much again. You know, it could have been millions of dollars of lawsuit. But by hiring the right people and having the right insurance companies and all that, it helps a lot.

For more go to:

Website: www.vinneychopra.com

Book: Apartment Syndication Made Easy

Text: Learn to 474747

Email: jon@vinneychopra.com

Feb 4, 2020

Wow, I'm so glad you shared that because I settled three lawsuits. You know, just in the last quarter of 2019. So it's very fresh in my mind. And actually, one lawsuit was going on for about two and a half years. Nothing major, but it was major in the sense that something happened with one of my contractors on one of my property. And I'm so glad that I have had full coverage, you know. And they said you settle the issue for almost like seven hundred some thousand dollars. And I didn't have to pay a penny. 

Another thing, you know, Darrin, my fire happened, you know. Right there in Atlanta property and that was a fire. I had a twenty thousand dollar deductible only, and that settled for two point three million dollars just to let you all know. But it was only possible because of people like Darrin, you know, who were able to sit down with me and make sure that we get the proper insurance. 

I got hacked also in 2017 lost $250,000. And guess what? I did not have the Cyber Insurance. And that got me hurt. And, you know, I never looked back. I always look forward and say, what can I do today to make myself better? And that's OK. But now I'm fully taken care of by my I.T., Cyber Security and Insurance and everything. So the key thing is I think insurance plays a very important role. 

I had another lawsuit with the, you know, firing somebody and they said it's racial discrimination firing. So these are very important issues. You've got to make sure you've got great attorneys, first of all, who are with you, dealing with you, looking at your contracts and everything. I'm very happy to say I didn't have to pay much again. You know, it could have been millions of dollars of lawsuit. But by hiring the right people and having the right insurance companies and all that, it helps a lot.

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