April 20, 2025 • 13 mins
We tackle crucial aspects of real estate investment that often get overlooked - risk management strategies and exit plans that protect your investments in changing markets and regulations.
• Different stakeholders in real estate face unique risks requiring tailored management approaches
• Real estate agents and brokers primarily battle legal/ethical risks and market fluctuations
• Property managers deal with financial fallout, litigation risks, and operational challenges
• Investors navigate complex financial, legal, and liquidity risks while managing lender requirements
• The Baldwin Group recommends a three-step risk assessment process: identify risks, pinpoint specific hazards, evaluate probability and impact
• Five essential strategies include comprehensive safety plans, contract reviews, transparent communication, market awareness, and employee protection
• Exit strategies should be planned from day one with multiple options considered
• Midterm rentals (1-6 months) offer stability against short-term rental regulation changes
• Room-by-room rentals and co-living platforms like PadSplit represent emerging exit alternatives
• The most successful investors think about "what-ifs" and remain adaptable to market shifts
What unexpected market shift or regulatory change could most impact your real estate plans? What small step could you take today to build a more resilient investment strategy?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to this deep dive designed specifically for
you, the learner.
If you're looking to get asolid handle on important topics
quickly without getting toooverwhelmed, you're in the right
place.
Speaker 2 (00:11):
That's right, and today we're tackling something
really crucial in the realestate world risk management and
, just as importantly, exitstrategies.
Speaker 1 (00:20):
We've got some great material to draw from An article
from the Baldwin Group RealEstate Risk Management
Strategies to Protect Investment, and also a really insightful
YouTube video from Jesse Vasquezcalled Top Real Estate Exit
Strategies you Need to Know.
Speaker 2 (00:34):
Yeah, both excellent sources.
Our mission here is basicallyto pull out the most important
nuggets from these, giving you akind of shortcut to
understanding how to navigatereal estate risks and why
planning your exit is socritical.
Speaker 1 (00:45):
We'll look at risk mitigation from different angles
you know, owners, managers,investors and then we'll pivot
to those practical exitstrategies, hopefully providing
some real actionable insights.
Maybe a few of those ahamoments.
Speaker 2 (00:57):
Definitely aiming for those.
Speaker 1 (00:58):
But before we dive in , we really want to give a shout
out to our sponsors.
They understand the diverseneeds within our community.
First Flowers and Associates.
To our sponsors they understandthe diverse needs within our
community.
First Flowers AssociatesProperty Rentals.
They specialize in specialneeds housing, which is just
fantastic work.
Speaker 2 (01:12):
Absolutely.
You can reach them at901-445-8148 or check out their
websiteflowersandassociatesbookingcom.
Speaker 1 (01:20):
And many of you might remember, we spoke with Robert
Flowers, the founder, in aprevious discussion.
We got such wonderful feedbackabout that conversation.
Speaker 2 (01:27):
He's doing great things.
We also want to mentionGraceful Journeys Transportation
, Founded by Angela Craft.
They're dedicated totransporting seniors and
individuals with special needsReally vital services.
Speaker 1 (01:37):
Truly vital.
Okay, so let's get into it.
Real estate risk management.
The Baldwin Group articlereally emphasizes how well
competitive the market is.
Speaker 2 (01:50):
It really is, yeah, and because of that, being
proactive about risk isn't justlike a nice to have, it's
essential.
Doesn't matter if you're anowner, a manager, investor,
lender Everyone needs a plan.
Speaker 1 (01:58):
And the risks aren't static, are they?
They shift depending on themarket regulations.
Speaker 2 (02:02):
Exactly.
What's interesting is how thearticle breaks it down by role.
Let's start with real estateagents and brokers.
People often use those termsinterchangeably.
Speaker 1 (02:11):
Right, but brokers usually have more oversight,
more liability.
Speaker 2 (02:15):
Correct and their key risks often legal and ethical
stuff.
Misrepresentation is a big oneFraud, breach of contract
confidentiality.
Speaker 1 (02:24):
Things that can lead to serious trouble.
And then there are clientdisputes right over commissions.
Maybe the property conditionwasn't what was expected?
Speaker 2 (02:31):
Yeah, all that Plus.
They're exposed to marketfluctuations just like everyone
else Economic downturns,interest rate hikes.
It's important too todistinguish them from insurance
agents or brokers.
Different focus, entirely Goodpoint.
Speaker 1 (02:44):
Okay, what about property managers and owners?
Their world looks a bitdifferent.
Speaker 2 (02:49):
It does.
They're often thinking aboutwell, financial fallout,
property damage, maybe tenantsdefaulting on rent, market
shifts hitting their income.
Speaker 1 (02:57):
And litigation risks must be huge Landlord-tenant
disputes, maybe labor law issuesif they have employees not
keeping up with regulations.
Speaker 2 (03:05):
For sure.
And just the operational sidekeeping the place maintained,
dealing with major issues like afire or flood and, increasingly
, cybersecurity.
If their portfolio changes,their whole risk picture shifts.
They need the right insurancelimits, for instance.
Speaker 1 (03:21):
So due diligence is key for them.
Now, investors, they seem tojuggle even more complex risks.
Speaker 2 (03:29):
I think so.
They're looking at financialrisks, obviously property values
going up or down, rental income, changing broader economic
trends.
Then there's the legal sidecontract issues, tax liabilities
, changing, new regulationspopping up.
The Baldwin Group also pointsout how lenders' insurance
requirements are a big factor.
Speaker 1 (03:46):
Oh interesting.
So the lender might dictatecertain insurance needs.
Speaker 2 (03:54):
Absolutely, and insurance providers themselves
are getting stricter, demandingproof of risk mitigation before
they'll even offer coverage,like specific flood defenses and
flood zones.
Speaker 1 (04:00):
Right.
Ok, that makes sense.
Speaker 2 (04:01):
And don't forget liquidity for investors.
Selling real estate isn't likeselling stock.
It takes time, thorough duediligence.
Even the insurance market'smood can affect a deal.
Investors need to know theirproperty's true replacement cost
and its loss history cold.
Speaker 1 (04:19):
That leads nicely into property-specific risks.
Natural disasters are theobvious one.
Speaker 2 (04:24):
Yeah, and very location-dependent, of course.
Speaker 1 (04:26):
Yeah.
Speaker 2 (04:26):
The article mentions something important catastrophe
aggregations.
That's how insurers track theirtotal potential payout if one
big event hits an area wherethey have lots of policies.
Speaker 1 (04:37):
Ah, okay, so they don't want too much exposure in
one place.
Speaker 2 (04:40):
Exactly, lenders worry about this too.
Having prevention plans forfloods, windstorms, whatever is
relevant, is crucial.
Speaker 1 (04:47):
But it's not just the huge events, is it?
The article talks about basicmaintenance and upkeep.
Speaker 2 (04:51):
So important.
It protects the investment longterm and, like we said, can
actually make insurers happiermaybe lower premiums, and then
there's aging infrastructure.
Speaker 1 (05:00):
Oh yeah, old plumbing , dodgy wiring yeah, big
potential costs and safetyissues there.
Speaker 2 (05:05):
Definitely, and these property issues often tie into
the wider Like interest rates,affecting affordability and
values.
Precisely.
Or shifts in tenant demand,changing occupancy levels,
difficult to getting financing,even just keeping up with
competitors and what tenantsexpect nowadays.
Speaker 1 (05:21):
It's a lot to track.
And then the article mentionsoperational and regulatory risks
.
Speaker 2 (05:26):
Right.
Good property management is keyto keeping tenants happy,
reducing liability throughproper maintenance and
compliance.
Wow, Zoning laws, tenantprotection laws, habitability
standards, local, state, federalit's complex.
Speaker 1 (05:42):
And safety and liability on the property itself
, preventing accidents, havinggood security, it all ties back
to minimizing risk.
Speaker 2 (05:49):
It really does.
So the big question for ourlearner is okay, there are all
these risks.
How do you actually startmanaging them?
Speaker 1 (05:55):
Good question.
The Baldwin group suggests athree-step process, right?
Speaker 2 (05:58):
Yes, Step one, conduct a thorough risk
assessment, and this isn't justone person's job.
You need everyone involvedowners, lenders, managers,
investors, tenants, even IT,because of cyber risks.
Speaker 1 (06:09):
So looking at everything physical risks
liability, financial, cyber,regulatory risks.
Speaker 2 (06:14):
So looking at everything physical risks
liability, financial, cyber,regulatory Exactly Climate risks
, structural issues, maintenancebacklog, cyber hygiene,
financial health.
Get it all on the table.
Okay, then step two Identifythe specific potential hazards
that could trigger those risks.
Again, collaboration is key.
What are the specific climatethreats, structural weak points,
maintenance gaps, cybersecurityvulnerabilities, financial
(06:37):
instabilities, on-site safetyissues.
Get granular.
Got it Assess the broad risks,then identify the specific
hazards and step three Evaluateprobability and impact how
likely is each hazard to happenand how bad would it be if it
did.
Speaker 1 (06:52):
Okay, so how do you figure that out?
Speaker 2 (06:54):
You look at historical data, you talk to
experts, you understand yourobligations to third parties and
you consider your own company'srisk appetite.
How much risk are you willingto take?
Speaker 1 (07:03):
And the goal is to link these risks to actual
outcomes financial losses, legalproblems, reputation damage.
Speaker 2 (07:09):
Precisely that helps you prioritize.
You can't fix everything atonce, so you focus on the
biggest threats, first damage.
Precisely that helps youprioritize.
Speaker 1 (07:14):
You can't fix everything at once, so you focus
on the biggest threats firstMakes sense.
So once you've done theassessment, identified hazards,
evaluated them.
What practical strategies canyou use?
Baldwin Group lists fiveessentials.
Speaker 2 (07:24):
Right Number one comprehensive safety plans for
all sorts of scenarios, weather,other crises, and the key is
these plans need to be readybefore something happens, not
figured out during the event.
Speaker 1 (07:37):
Proactive, not reactive.
Okay, number two.
Speaker 2 (07:40):
Review your contracts meticulously Purchase
agreements, leases, managementcontracts.
Get your legal and risk teamsinvolved.
Speaker 1 (07:46):
Looking for what specifically?
Speaker 2 (07:48):
Legal soundness, making sure your rights are
protected and that the contractaddresses potential risks,
disputes, liabilities, financialobligations, strong insurance
clauses.
And that the contract addressespotential risks, disputes,
liabilities, financialobligations, strong insurance
clauses and clear risk transferlanguage are vital here.
Speaker 1 (08:00):
Gotcha Strategy three .
Speaker 2 (08:02):
Transparency and communication.
Be honest and accurate withclients.
Respond promptly and keep yourinsurance folks, risk managers,
property managers in the loopabout property conditions, loss
history, any hazards you knowabout.
Speaker 1 (08:12):
Open lines of communication.
Build trust Makes sense.
Speaker 2 (08:15):
Number four Stay updated on market conditions and
trends.
Keep an eye on interest rates,economic news, what's happening
locally.
This helps you anticipate risksand adjust your strategies.
Speaker 1 (08:26):
Staying informed to stay ahead.
Speaker 2 (08:28):
Yeah, and the fifth one Protect your employees.
Workers' compensation insurance.
It's a legal requirement inmost places.
It's the ethical thing to doand it reduces your financial
risk if someone gets hurt orsick on the job.
Speaker 1 (08:40):
So safety plans, contract reviews, communication,
market awareness and employeeprotection Seems like a solid
foundation.
Speaker 2 (08:47):
It is.
But remember risk managementisn't a one-time thing, it's
ongoing.
You have to keep adapting.
Speaker 1 (08:54):
Absolutely Okay.
Let's shift gears now and bringin Jesse Vazquez's insights on
exit strategies.
He really kicks things off bystressing how important these
are, especially now.
Speaker 2 (09:03):
Yeah, he points to all the regulatory changes
happening, particularly withshort-term rentals Dallas, new
York, california, you name it.
His point is you need an exitplan from day one or you could
face serious financial trouble.
Down he does.
Smart investors always thinkabout the what-ifs, the
potential downsides, likeplanning for something
(09:26):
unexpected, like COVID wasIntuitive.
Investors do this.
Speaker 1 (09:30):
And for Vasquez, it's not just about avoiding loss,
it's also about maximizingprofit by being adaptable right.
Speaker 2 (09:37):
Exactly.
He shares his own story aboutpivoting to midterm rentals when
the short-term market took ahit in 2020.
It shows the power of havingalternatives ready to go.
Speaker 1 (09:47):
That really speaks to not putting all your eggs in
one basket.
So what are some common exitstrategies he discusses?
Speaker 2 (09:53):
Well, short-term rentals are one obviously High
income potential, sure, but veryvulnerable to those regulations
and market swings we talkedabout.
You need a plan B.
Speaker 1 (10:02):
Which leads him to midterm rentals.
Speaker 2 (10:04):
Yes, he's a big advocate Rentals from, say, one
to six months, often forcorporate clients, traveling
nurses, people like that.
He sees it as a great hedgeagainst short-term rental rules.
He used it successfully himselfin Modesto, California.
What are the advantages?
He sees More stable income,potentially Less tenant turnover
than short-term lets, whichmeans less wear and tear, fewer
cleaning fees, less hasslegenerally.
Speaker 1 (10:26):
But it's not passive, is it?
Speaker 2 (10:28):
No, definitely not.
He stresses.
You have to actively marketthese, reach out to companies,
relocation agencies, health carestaffing agencies.
Speaker 1 (10:39):
You can't just list it on Airbnb and expect the
right clients to find it OK.
What else does he suggest?
Renting by the room?
Speaker 2 (10:43):
Yeah, that's another option.
If short-term gets restrictedyou could rent individual rooms,
maybe to travel nurses again.
But he warns it's managementintensive, lots of turnover,
finding individual tenants.
It's work.
Speaker 1 (10:55):
Right, then he talks about something called PadSplit.
Speaker 2 (10:58):
Yes, this is interesting.
It's a co-living platform.
They help convert single-familyhomes into shared living spaces
, aiming for affordability.
Speaker 1 (11:07):
Co-living, so multiple people sharing a house,
essentially.
Speaker 2 (11:10):
Exactly.
He thinks it has huge potential, maybe even doubling income in
some areas, while also helpingwith the affordable housing
crunch, and PadSplit handlesfinding tenants and some
management tasks.
He mentioned a 97% rentcollection rate, which is
impressive.
Speaker 1 (11:25):
Wow, and he mentioned Mark Cuban invested.
Speaker 2 (11:28):
He did, sees it as a sign of the model's viability.
The main takeaway from Vasquezreally is think about your exit
before you buy.
Have multiple options in mind.
Don't just focus on one type ofrental or one strategy.
Diversify your thinking,essentially, Precisely, and he
encourages listeners to sharetheir own experiences too, which
is great learning from eachother.
Speaker 1 (11:49):
Absolutely Well.
Hopefully this deep dive hasgiven you, the learner, some
really valuable insights intoboth real estate risk management
and the absolute necessity ofhaving solid Allett strategies.
Speaker 2 (12:01):
Yeah, from understanding those unique risks
faced by different peopleowners, agents, investors to
looking at practical ways tolessen those risks and planning
ahead with things like midtermrentals or co-living.
The goal was really to boildown this complex stuff into
usable knowledge.
Speaker 1 (12:16):
Remember those five key strategies from the Baldwin
Group Safety plans, contractreviews, transparency, market
awareness and protectingemployees.
Speaker 2 (12:25):
And think about those exit strategies from Jesse
Vasquez, especially how relevantmidterm rentals are becoming
and these newer models likePadSplit.
Speaker 1 (12:32):
It really highlights that in real estate, being
proactive, planning ahead andhaving a multifaceted approach,
that's how you protect yourinvestments and find new
opportunities.
Speaker 2 (12:42):
Couldn't agree more.
It's a dynamic field.
Speaker 1 (12:44):
So, as you continue your learning journey, here's
something to think about.
What unexpected market shift,or maybe a regulatory change,
could most impact your own realestate plans, whether current or
future?
And thinking about that, what'sone small step you could take
today to start building a moreresilient strategy?
Speaker 2 (13:02):
That's a great question to mull over, something
to keep exploring in thisfascinating field.
Welcome to this deep dive designed specifically for
you, the learner.
If you're looking to get asolid handle on important topics
quickly without getting toooverwhelmed, you're in the right
place.
Speaker 2 (00:11):
That's right, and today we're tackling something
really crucial in the realestate world risk management and
, just as importantly, exitstrategies.
Speaker 1 (00:20):
We've got some great material to draw from An article
from the Baldwin Group RealEstate Risk Management
Strategies to Protect Investment, and also a really insightful
YouTube video from Jesse Vasquezcalled Top Real Estate Exit
Strategies you Need to Know.
Speaker 2 (00:34):
Yeah, both excellent sources.
Our mission here is basicallyto pull out the most important
nuggets from these, giving you akind of shortcut to
understanding how to navigatereal estate risks and why
planning your exit is socritical.
Speaker 1 (00:45):
We'll look at risk mitigation from different angles
you know, owners, managers,investors and then we'll pivot
to those practical exitstrategies, hopefully providing
some real actionable insights.
Maybe a few of those ahamoments.
Speaker 2 (00:57):
Definitely aiming for those.
Speaker 1 (00:58):
But before we dive in , we really want to give a shout
out to our sponsors.
They understand the diverseneeds within our community.
First Flowers and Associates.
To our sponsors they understandthe diverse needs within our
community.
First Flowers AssociatesProperty Rentals.
They specialize in specialneeds housing, which is just
fantastic work.
Speaker 2 (01:12):
Absolutely.
You can reach them at901-445-8148 or check out their
websiteflowersandassociatesbookingcom.
Speaker 1 (01:20):
And many of you might remember, we spoke with Robert
Flowers, the founder, in aprevious discussion.
We got such wonderful feedbackabout that conversation.
Speaker 2 (01:27):
He's doing great things.
We also want to mentionGraceful Journeys Transportation
, Founded by Angela Craft.
They're dedicated totransporting seniors and
individuals with special needsReally vital services.
Speaker 1 (01:37):
Truly vital.
Okay, so let's get into it.
Real estate risk management.
The Baldwin Group articlereally emphasizes how well
competitive the market is.
Speaker 2 (01:50):
It really is, yeah, and because of that, being
proactive about risk isn't justlike a nice to have, it's
essential.
Doesn't matter if you're anowner, a manager, investor,
lender Everyone needs a plan.
Speaker 1 (01:58):
And the risks aren't static, are they?
They shift depending on themarket regulations.
Speaker 2 (02:02):
Exactly.
What's interesting is how thearticle breaks it down by role.
Let's start with real estateagents and brokers.
People often use those termsinterchangeably.
Speaker 1 (02:11):
Right, but brokers usually have more oversight,
more liability.
Speaker 2 (02:15):
Correct and their key risks often legal and ethical
stuff.
Misrepresentation is a big oneFraud, breach of contract
confidentiality.
Speaker 1 (02:24):
Things that can lead to serious trouble.
And then there are clientdisputes right over commissions.
Maybe the property conditionwasn't what was expected?
Speaker 2 (02:31):
Yeah, all that Plus.
They're exposed to marketfluctuations just like everyone
else Economic downturns,interest rate hikes.
It's important too todistinguish them from insurance
agents or brokers.
Different focus, entirely Goodpoint.
Speaker 1 (02:44):
Okay, what about property managers and owners?
Their world looks a bitdifferent.
Speaker 2 (02:49):
It does.
They're often thinking aboutwell, financial fallout,
property damage, maybe tenantsdefaulting on rent, market
shifts hitting their income.
Speaker 1 (02:57):
And litigation risks must be huge Landlord-tenant
disputes, maybe labor law issuesif they have employees not
keeping up with regulations.
Speaker 2 (03:05):
For sure.
And just the operational sidekeeping the place maintained,
dealing with major issues like afire or flood and, increasingly
, cybersecurity.
If their portfolio changes,their whole risk picture shifts.
They need the right insurancelimits, for instance.
Speaker 1 (03:21):
So due diligence is key for them.
Now, investors, they seem tojuggle even more complex risks.
Speaker 2 (03:29):
I think so.
They're looking at financialrisks, obviously property values
going up or down, rental income, changing broader economic
trends.
Then there's the legal sidecontract issues, tax liabilities
, changing, new regulationspopping up.
The Baldwin Group also pointsout how lenders' insurance
requirements are a big factor.
Speaker 1 (03:46):
Oh interesting.
So the lender might dictatecertain insurance needs.
Speaker 2 (03:54):
Absolutely, and insurance providers themselves
are getting stricter, demandingproof of risk mitigation before
they'll even offer coverage,like specific flood defenses and
flood zones.
Speaker 1 (04:00):
Right.
Ok, that makes sense.
Speaker 2 (04:01):
And don't forget liquidity for investors.
Selling real estate isn't likeselling stock.
It takes time, thorough duediligence.
Even the insurance market'smood can affect a deal.
Investors need to know theirproperty's true replacement cost
and its loss history cold.
Speaker 1 (04:19):
That leads nicely into property-specific risks.
Natural disasters are theobvious one.
Speaker 2 (04:24):
Yeah, and very location-dependent, of course.
Speaker 1 (04:26):
Yeah.
Speaker 2 (04:26):
The article mentions something important catastrophe
aggregations.
That's how insurers track theirtotal potential payout if one
big event hits an area wherethey have lots of policies.
Speaker 1 (04:37):
Ah, okay, so they don't want too much exposure in
one place.
Speaker 2 (04:40):
Exactly, lenders worry about this too.
Having prevention plans forfloods, windstorms, whatever is
relevant, is crucial.
Speaker 1 (04:47):
But it's not just the huge events, is it?
The article talks about basicmaintenance and upkeep.
Speaker 2 (04:51):
So important.
It protects the investment longterm and, like we said, can
actually make insurers happiermaybe lower premiums, and then
there's aging infrastructure.
Speaker 1 (05:00):
Oh yeah, old plumbing , dodgy wiring yeah, big
potential costs and safetyissues there.
Speaker 2 (05:05):
Definitely, and these property issues often tie into
the wider Like interest rates,affecting affordability and
values.
Precisely.
Or shifts in tenant demand,changing occupancy levels,
difficult to getting financing,even just keeping up with
competitors and what tenantsexpect nowadays.
Speaker 1 (05:21):
It's a lot to track.
And then the article mentionsoperational and regulatory risks
.
Speaker 2 (05:26):
Right.
Good property management is keyto keeping tenants happy,
reducing liability throughproper maintenance and
compliance.
Wow, Zoning laws, tenantprotection laws, habitability
standards, local, state, federalit's complex.
Speaker 1 (05:42):
And safety and liability on the property itself
, preventing accidents, havinggood security, it all ties back
to minimizing risk.
Speaker 2 (05:49):
It really does.
So the big question for ourlearner is okay, there are all
these risks.
How do you actually startmanaging them?
Speaker 1 (05:55):
Good question.
The Baldwin group suggests athree-step process, right?
Speaker 2 (05:58):
Yes, Step one, conduct a thorough risk
assessment, and this isn't justone person's job.
You need everyone involvedowners, lenders, managers,
investors, tenants, even IT,because of cyber risks.
Speaker 1 (06:09):
So looking at everything physical risks
liability, financial, cyber,regulatory risks.
Speaker 2 (06:14):
So looking at everything physical risks
liability, financial, cyber,regulatory Exactly Climate risks
, structural issues, maintenancebacklog, cyber hygiene,
financial health.
Get it all on the table.
Okay, then step two Identifythe specific potential hazards
that could trigger those risks.
Again, collaboration is key.
What are the specific climatethreats, structural weak points,
maintenance gaps, cybersecurityvulnerabilities, financial
(06:37):
instabilities, on-site safetyissues.
Get granular.
Got it Assess the broad risks,then identify the specific
hazards and step three Evaluateprobability and impact how
likely is each hazard to happenand how bad would it be if it
did.
Speaker 1 (06:52):
Okay, so how do you figure that out?
Speaker 2 (06:54):
You look at historical data, you talk to
experts, you understand yourobligations to third parties and
you consider your own company'srisk appetite.
How much risk are you willingto take?
Speaker 1 (07:03):
And the goal is to link these risks to actual
outcomes financial losses, legalproblems, reputation damage.
Speaker 2 (07:09):
Precisely that helps you prioritize.
You can't fix everything atonce, so you focus on the
biggest threats, first damage.
Precisely that helps youprioritize.
Speaker 1 (07:14):
You can't fix everything at once, so you focus
on the biggest threats firstMakes sense.
So once you've done theassessment, identified hazards,
evaluated them.
What practical strategies canyou use?
Baldwin Group lists fiveessentials.
Speaker 2 (07:24):
Right Number one comprehensive safety plans for
all sorts of scenarios, weather,other crises, and the key is
these plans need to be readybefore something happens, not
figured out during the event.
Speaker 1 (07:37):
Proactive, not reactive.
Okay, number two.
Speaker 2 (07:40):
Review your contracts meticulously Purchase
agreements, leases, managementcontracts.
Get your legal and risk teamsinvolved.
Speaker 1 (07:46):
Looking for what specifically?
Speaker 2 (07:48):
Legal soundness, making sure your rights are
protected and that the contractaddresses potential risks,
disputes, liabilities, financialobligations, strong insurance
clauses.
And that the contract addressespotential risks, disputes,
liabilities, financialobligations, strong insurance
clauses and clear risk transferlanguage are vital here.
Speaker 1 (08:00):
Gotcha Strategy three .
Speaker 2 (08:02):
Transparency and communication.
Be honest and accurate withclients.
Respond promptly and keep yourinsurance folks, risk managers,
property managers in the loopabout property conditions, loss
history, any hazards you knowabout.
Speaker 1 (08:12):
Open lines of communication.
Build trust Makes sense.
Speaker 2 (08:15):
Number four Stay updated on market conditions and
trends.
Keep an eye on interest rates,economic news, what's happening
locally.
This helps you anticipate risksand adjust your strategies.
Speaker 1 (08:26):
Staying informed to stay ahead.
Speaker 2 (08:28):
Yeah, and the fifth one Protect your employees.
Workers' compensation insurance.
It's a legal requirement inmost places.
It's the ethical thing to doand it reduces your financial
risk if someone gets hurt orsick on the job.
Speaker 1 (08:40):
So safety plans, contract reviews, communication,
market awareness and employeeprotection Seems like a solid
foundation.
Speaker 2 (08:47):
It is.
But remember risk managementisn't a one-time thing, it's
ongoing.
You have to keep adapting.
Speaker 1 (08:54):
Absolutely Okay.
Let's shift gears now and bringin Jesse Vazquez's insights on
exit strategies.
He really kicks things off bystressing how important these
are, especially now.
Speaker 2 (09:03):
Yeah, he points to all the regulatory changes
happening, particularly withshort-term rentals Dallas, new
York, california, you name it.
His point is you need an exitplan from day one or you could
face serious financial trouble.
Down he does.
Smart investors always thinkabout the what-ifs, the
potential downsides, likeplanning for something
(09:26):
unexpected, like COVID wasIntuitive.
Investors do this.
Speaker 1 (09:30):
And for Vasquez, it's not just about avoiding loss,
it's also about maximizingprofit by being adaptable right.
Speaker 2 (09:37):
Exactly.
He shares his own story aboutpivoting to midterm rentals when
the short-term market took ahit in 2020.
It shows the power of havingalternatives ready to go.
Speaker 1 (09:47):
That really speaks to not putting all your eggs in
one basket.
So what are some common exitstrategies he discusses?
Speaker 2 (09:53):
Well, short-term rentals are one obviously High
income potential, sure, but veryvulnerable to those regulations
and market swings we talkedabout.
You need a plan B.
Speaker 1 (10:02):
Which leads him to midterm rentals.
Speaker 2 (10:04):
Yes, he's a big advocate Rentals from, say, one
to six months, often forcorporate clients, traveling
nurses, people like that.
He sees it as a great hedgeagainst short-term rental rules.
He used it successfully himselfin Modesto, California.
What are the advantages?
He sees More stable income,potentially Less tenant turnover
than short-term lets, whichmeans less wear and tear, fewer
cleaning fees, less hasslegenerally.
Speaker 1 (10:26):
But it's not passive, is it?
Speaker 2 (10:28):
No, definitely not.
He stresses.
You have to actively marketthese, reach out to companies,
relocation agencies, health carestaffing agencies.
Speaker 1 (10:39):
You can't just list it on Airbnb and expect the
right clients to find it OK.
What else does he suggest?
Renting by the room?
Speaker 2 (10:43):
Yeah, that's another option.
If short-term gets restrictedyou could rent individual rooms,
maybe to travel nurses again.
But he warns it's managementintensive, lots of turnover,
finding individual tenants.
It's work.
Speaker 1 (10:55):
Right, then he talks about something called PadSplit.
Speaker 2 (10:58):
Yes, this is interesting.
It's a co-living platform.
They help convert single-familyhomes into shared living spaces
, aiming for affordability.
Speaker 1 (11:07):
Co-living, so multiple people sharing a house,
essentially.
Speaker 2 (11:10):
Exactly.
He thinks it has huge potential, maybe even doubling income in
some areas, while also helpingwith the affordable housing
crunch, and PadSplit handlesfinding tenants and some
management tasks.
He mentioned a 97% rentcollection rate, which is
impressive.
Speaker 1 (11:25):
Wow, and he mentioned Mark Cuban invested.
Speaker 2 (11:28):
He did, sees it as a sign of the model's viability.
The main takeaway from Vasquezreally is think about your exit
before you buy.
Have multiple options in mind.
Don't just focus on one type ofrental or one strategy.
Diversify your thinking,essentially, Precisely, and he
encourages listeners to sharetheir own experiences too, which
is great learning from eachother.
Speaker 1 (11:49):
Absolutely Well.
Hopefully this deep dive hasgiven you, the learner, some
really valuable insights intoboth real estate risk management
and the absolute necessity ofhaving solid Allett strategies.
Speaker 2 (12:01):
Yeah, from understanding those unique risks
faced by different peopleowners, agents, investors to
looking at practical ways tolessen those risks and planning
ahead with things like midtermrentals or co-living.
The goal was really to boildown this complex stuff into
usable knowledge.
Speaker 1 (12:16):
Remember those five key strategies from the Baldwin
Group Safety plans, contractreviews, transparency, market
awareness and protectingemployees.
Speaker 2 (12:25):
And think about those exit strategies from Jesse
Vasquez, especially how relevantmidterm rentals are becoming
and these newer models likePadSplit.
Speaker 1 (12:32):
It really highlights that in real estate, being
proactive, planning ahead andhaving a multifaceted approach,
that's how you protect yourinvestments and find new
opportunities.
Speaker 2 (12:42):
Couldn't agree more.
It's a dynamic field.
Speaker 1 (12:44):
So, as you continue your learning journey, here's
something to think about.
What unexpected market shift,or maybe a regulatory change,
could most impact your own realestate plans, whether current or
future?
And thinking about that, what'sone small step you could take
today to start building a moreresilient strategy?
Speaker 2 (13:02):
That's a great question to mull over, something
to keep exploring in thisfascinating field.
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