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馃 Crowdsource real estate investment money over social media? - YouTube
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Everyone is in denial. Hello.
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And we are here with our advisor,
Mauricio Raul.
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How's everyone doing? Welcome. Welcome.
Thank you. Looking forward to it.
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So I'm really excited to chat with you
about this, because, as
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you guys know, he's a syndication
attorney, always an attorney.
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So he's more than just
a syndication attorney.
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But that,
I guess, is what you focus on right now.
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That's it. Real estate syndication.
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That's that's what that's the focus.
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So I was like, hey, let's do something on,
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you know, all because there's
a lot of money being raised right now.
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A lot guys there's all kinds of dough
going all over the place.
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And so I know that there's problems
that you see and the way the syndicators
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are setting up their funds And also,
I want to chat with you additionally.
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What should investors look at because you
so you got a lot of solicitation
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on the Internet right
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now. And there's people
of course, saying they're accredited
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and all that kind of stuff.
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So what do you see? Well,
first of all, thanks for having me.
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But I totally agree there's so much money
sloshing around the system
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that we're going through.
What I call a syndication boom like.
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Yeah, everyone and their mother
is raising capital, which has been great.
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But as you said,
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there's a lot of newbies or unexperienced
syndicators are coming into the picture
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so there's been a lot of mistakes that are
that are popping up a lot that I see.
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That's why I know there are.
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I just don't see them
like you see them from a legal standpoint.
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Everything
everything's probably going to be okay
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until things start going
south or things flatten out
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because I think a lot of people
are overpaying
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for so many properties that, you know,
it doesn't have to go
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south for things not to not to not to go
well.
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Usually things don't become an issue
until investors complain. Yes.
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So as long as investors are happy and not
complaining, then it's going to be fine.
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But probably the two biggest mistakes
makes errors.
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You know, things that people
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are even aware about is, number one,
the advertising piece.
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People are on social media,
they're on podcasts,
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they're on, you know, events
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you know, seminars. And they're out there
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promoting their deals
when they're not allowed to write.
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It all depends on you
not to get too technical,
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but depends on the exemption that they're
relying on, may allow them to advertise
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or may not allow them.
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The most people relying on exemption,
that will probably,
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if you're in this business, hear
about this five or six be exempt offering.
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Right.
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And that allows you
not to have to register
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your syndication with the SCC
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and allows you to do this exempt
you want to advertise.
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There's there's there are channels
that allow you to do that.
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You can register it with the FCC.
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There's a couple of exemptions
you rely on.
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That's the kind of the
the litmus test isn't it, that they have
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you have to have a preexisting
relationship in order to avoid advertising
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or being perceived
as advertising or general soliciting.
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You must have what's called
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a preexisting substantive relationship
with the prospective investors.
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So that means you've got to know them,
okay?
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You've got to figure out
whether they're sophisticated or are they
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do they have enough knowledge
and expertize
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to actually understand your deal
and evaluate the risks and the merits?
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You've got to go through that process.
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You can't just take somebody off the web.
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Is this different
if like somebody finds a deal and
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they want a few people to invest in it,
so they're just an average Joe person.
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They don't have a 506 anything.
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They just want to
they just want to raise some money.
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Like are they allowed to post in
like a Facebook group?
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Another great question
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so I will rephrase the question a bit
about which is what about joint ventures?
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Because what you're describing it was
what people want to do is joint venture.
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So they come and say, well,
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I'm not really selling securities I'm just
getting a couple of my buddies together.
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There's four or five or six of them
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and we're just pooling our money
and we're going to go buy some. Yes.
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If everybody's coming together
and contributing money
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and everybody's rolling up their sleeves
and everybody's
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working towards generating the returns
and everybody's contributing, then yes.
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So there's four or five of those people
that's going to be fine.
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But what always happens
is we bring four or five people together,
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maybe one or two are doing the work
and the rest are just writing a check.
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That is actually the reality.
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You hear people, I'll give you the money,
but I don't want any of the phone calls.
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But I think a lot of I mean,
I think there's a lot of people like that.
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You know,
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we have investors
that want to do the sweat equity
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like they don't any money,
but they're going to find a deal
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and get a couple of people
to invest in it.
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Well, they're fine if they're rolling up
the sleeves, doing the sweat equity,
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that's fine.
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But if they're going
to bring some people along
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and those people are passive,
even if you have one passive investor,
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that's going to be a security.
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Oh, the definition, the layman's terms
my definition, because you called me
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an attorney earlier, Kenny and I
and I get a little offended by that.
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I'm the anti lawyer and everybody else,
but I am sometimes a wet blanket.
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But look, any time
you take money from passive investors
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where the returns
are generated by your efforts
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being your active and somebody else's
passive, that's a security somebody.
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Joe Schmo gets to passive investors
to invest in this deal.
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And then it's not producing
the because like you said,
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if it's producing the return they want,
everybody's happy.
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Probably no problem, right?
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What if it's not?
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What if it's falling behind
or there is some big issue?
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What could happen to the person
that is putting together the deal?
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Great question.
And that's that's when things fall apart.
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I mean, the Assessee
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doesn't have the budget or the time
or really the inclination for a small
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you know, syndicators were raising
a couple million bucks.
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They're not going to go actively
look and go on social media and stuff.
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But the minute an investor is not happy
with their return, right.
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That's when they pick up the phone
and they call someone.
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A lot of times it's not even the SCC, it's
the state regulators the state
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where the investor it resides, that's
where they're going to pick up.
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They're going to pick up the Arizona
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and they're going to call
the Arizona Department of Securities
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and call the Securities
Exchange Commission.
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They're going to make a complaint
and once that happens, an audit begins
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and the SEC will start sending out
letters and say, hey, send me
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all the docs that you provided.
You know what?
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You know
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all the information they're looking for
that's going to happen as an investor.
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What should I be looking at?
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You know, as you know
now, looking at it from the other side,
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what should they be asking
questions of of the piece?
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Yeah, I mean, I think
the number one thing, a passive investor
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who's considering investing is going to be
the due diligence on the sponsor.
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Right. What is their level of experiences?
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The first time they've syndicated as
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the experience indicators,
do they have a team behind them?
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I mean, due diligence on the sponsor
is the first thing.
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Can they pull off the fancy pitch
deck that they put together?
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You know,
you always joke about the pitch deck.
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I love you. You tell a story,
but can they actually pull that off?
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It's very easy to put together
a nice glossy business plan,
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but do they have the ability
to actually pull that off?
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That's one thing.
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Just keep in mind
that the pitch deck itself can be easily
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you can come up with numbers,
you can make them up however you want.
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So it's really, really important
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to understand whether the syndicator
has those credentials and that experience
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actually pull that off.
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So that's number one.
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On the due diligence side,
what are some things
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you guys I know they have to do due
diligence to? They go on the Internet.
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Do they check with the SEC Is it
is it filed correctly?
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What are some things that action steps
they can take?
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Yeah, I mean, obviously,
if you can get your hands on a
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on a passive investor
who's invested in the deals before
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without without getting to that person
through the syndicate
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because obviously the syndicate
is going to give you their best investors.
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But if you can find a way of finding
people which these days isn't that hard,
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somebody who's been invested in the deal,
then that obviously
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lends a ton of credibility
you can't go on.
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The SEC does keep track
also of all of the offerings
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that have actually been made
by the specific syndicators,
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you can go back and see if it's been done
properly, how many they've done,
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because again, you can kind of
make anything up that's important.
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I, hey, I've done 100 of these.
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Well, you can actually go check
you can go on the SEC website, the
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thing called Edgar E-D-G-A-R
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and check to
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see every single syndication
that that particular sponsors may.
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That's
why you really want to do your research
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and do your due diligence as an investor.
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You want to make sure that you're
investing with somebody
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that's done
this before and has a track record here.
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And a lot of the stuff
should be buttoned up.
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So before we put an offering out,
we already have a term sheet for the loan.
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We already have all the,
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the construction, all the,
all those things are all bid out.
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We have we know what it's going to cost
to replace the roof.
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We know what it's going to cost
to replace the parking lot.
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Those numbers in our business
plan are real.
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They're actually come with an actual bid.
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So all that stuff done before
we put it out but not everyone does this.
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So sometimes they're like, Oh, you know,
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we think it's going to be a million bucks,
you know?
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Right.
And then it's a million seven right?
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It happens all the time.
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So you have to have all that stuff.
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Guys, these are questions
you can ask. Yeah.
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How do you have a bid here?
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Is this a slush fund
and you're trying to manage to it
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or you know, are these real things?
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And have you done due diligence?
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Have you been on the roofs?
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You know, have you have you checked
all these different things?
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Have you walked all the units and, you
know, do you know of all the appliances,
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all the carpet and all that kind of stuff,
if there's any damage to repair,
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are there any city or county issues
or any fire issues and any plumbing any
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any electrical,
any of those kinds of things or
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even properties that are had high losses?
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You know, properties that have had high
losses come with consequences.
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Yeah.
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We should put together
a little checklist of the top
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100 top 50 questions
to ask a syndicator or something.
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You know, I get a ton of those.
That'd be a fun one to do.
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Let's do that. I'll do it.
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Okay. That's Sounds Carolina on you.
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Well, Michelle, thank you.
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This is great to look at it.
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One from the syndicator side
and from the investor side.
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I appreciate you as always.
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Thanks again for having me, Neal.
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