#584 The Best Real Estate Opportunity in a Decade — Featuring Chris Loeffler from Caliber - Main Street Business

Episode Transcript
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Speaker 1 (00:09):
Welcome everyone to the Main Street Business Podcast
.
This is Matt Sorensen.
I'm joined in studio by ChrisLoeffler, ceo of Caliber, the
wealth development company.
The wealth development company.
Thank you.

Speaker 2 (00:19):
Matt, good to see you .
I know the marketing, I knowthe slogan.

Speaker 1 (00:22):
Chris has been on the podcast before.
We've done webinars with them.
He spoke at our Self-DirectedIRA Summit, our Alt Asset Summit
.
He's going to be speaking atour next Alt Asset Summit, but I
wanted to have Chris in thestudio here to talk about why is
now the time to invest in realestate.
And then, specifically, is whatto do when you're investing in
real estate, like what type ofasset classes should you be

(00:43):
looking at?
What type of markets Caliberdoes how much in real estate
have you guys done?

Speaker 2 (00:49):
So we manage about 2.9 billion in combined assets
under management and assetsunder development, which
basically means that we'rebuilding stuff and we own stuff
and a lot of stuff, and rightnow we're invested in hotels,
industrial and multifamily.
Those are the three assetclasses that we think have the
best opportunity across thecountry and we have the best
access to um focused on Arizona,colorado and Texas.

(01:11):
Good markets yeah and uh.
You got to invest where youknow, so that's what we do.

Speaker 1 (01:15):
Yeah and you guys got started like doing residential
like way back in the day beforeyou got into commercial and you
became all big I mean Caliber's,like on the NASDAQ, you know.
But like, yeah, you got started, just like a lot of people who
might be listening.
They're like I was buyingsingle family rentals.

Speaker 2 (01:31):
I guarantee you there's people listening to this
podcast right now that arethinking about buying their
first rental property in theirIRA.
They're just kind of gettingtheir toes in the water.
That's the same thing that wedid.
We bought our first asset in2008 at the time, and it wasn't
a hotel, it was a single familyhome.
We bought 50,000 bucks and wesold it in a week for a hundred
thousand bucks and we were like,okay, we've got something here,

(01:53):
so actually kind of relevant toour story today.
You know, we were born in the2008 financial crisis.
We were born in a time when youcould buy, you know, a single
family home for $25 a squarefoot, something that would cost
$300, $350 a foot to build today, and so the first five years of
our business was all distressedassets, all buying things at a

(02:13):
deep discount, all buying thingsthe non-traditional way, and
I've got news for you we're backin one of those markets.

Speaker 1 (02:20):
Yeah, that's the good news, and I think a lot of real
estate investors have been likeman, it's just not a good time
to buy real estate right now.
Right, I mean, the one conceptmost people know in investing is
buy low, sell high.
And I think a lot of peoplefeel like they're buying high
right now.
Why do you think this is such agood time?
I know you mentioned back whereyou got started, way back.
I mean, man, it's been 15 yearsnow, almost.

(02:42):
But I mean, why is now theright time?
And then let's dig into like,but what is what you're buying?
Because real estate is like asuper broad category.

Speaker 2 (02:52):
Yeah, so now is the right time.
So why?
Anytime there's a majordisruption in real estate, a
couple things happen all at once, and think of it as like we're
going to start a race andthere's going to be 10 players
in the race and they're allgoing to be at the same starting
line.
They're all going to startrunning the race at the same
time, and the reason why thesethings are complicated to
explain is because the banks aremoving at their own speed, the

(03:15):
investors themselves are movingat their speed, the owners are
moving at their speed, thegovernment's moving at their
speed.
Everyone's running at differentspeeds, but at some point in
time the race is going to cometo a conclusion and we're right
at that moment in time wherewe're hitting that.
So let me give you some hardfacts and some real details on
why I've got a visual for you.
For those of you on YouTube,you'll be able to see this, but

(03:35):
for those of you who can't, I'llsit here and explain it to you.
In 2008, at the height of themarket, right before the pricing
came down, we saw that themarket hit all-time highs in
commercial real estate and inapproximately 12 months, maybe
even a little less than that, byMay of 2009, commercial real

(03:56):
estate values had dropped morethan 20% around 25% on average,
hitting their all-time lows onaverage, hitting their all-time
lows.
But if you look back to May of2009 and think about those days,
if you were around during thattime, it was sort of scary, but
there weren't very manyheadlines yet, it wasn't in the
news yet and in fact, it wasn'treally in the news until the end

(04:18):
of 2009 and then into 2010.
So you would think, by 2010,2011,.
Geez man, every other day therewas another news article about
a bankruptcy or a foreclosure orassets going down or whatever.
And you think, well, that wouldhave been when the bottom of
the market was.
The bottom of the market inpricing was May of 2009.
After May of 2009, you couldnever see a piece of commercial

(04:41):
real estate sell for a lowernumber.
So what's the lesson?
The lesson is, in commercialreal estate, values drop quickly
.
The market's perception of whata good deal and not a good deal
is changes really fast, but theaccess to buy those deals takes
time.
So what happened recently?
Well, in May of 2022, roughlyright before interest rates

(05:06):
started going up we saw anall-time high in commercial real
estate values.
That was the last peak.
From May of 2022 till roughlySeptember of 2024, we saw a
similar decline, the same sizeas the 2008 financial crisis.
So if you look at this chart,you look at the speed of the
decline and the size of thedecline.

(05:28):
We just went through 2008 incommercial real estate
nationwide.
By commercial real estate, Imean everything from office to
multifamily, to industrial tohotel.
All of this is blended together.
So where we stand today is wejust saw the same bottom happen
in September of 2024.
We start to see the recoveryhere on this chart coming back

(05:49):
up again, just like we saw therecovery at the bottom in May of
2009.
This is what creates the buyingwindow.
So now, if I own a multifamilyasset that I overpaid for, or if
I own an industrial assetbecause I got invested in the
craze and I overpaid for that, Iknow it's not worth what it
used to be worth.
The bank knows, everybody knowsmy cash reserves are running

(06:12):
out.
It's time for me to make adecision Do I sell or do I
refinance?
If I'm going to refinance, I'vegot to write a huge check into
the asset.
A lot of investors would rathertake the tax loss and sell.
A lot of the banks don't haveany more time.
The regulators are starting totighten, so now is the time when
these assets must be sold andthat's where you create this
buying opportunity.

(06:32):
So that's why today, and goingforward for the next I think 12
months or so is going to be thebest buying opportunity in
commercial real estate.

Speaker 1 (06:39):
Yeah, and I think this graph you can kind of see
the big dip there and the timesyou're talking about and what's
just happened recently incommercial real estate, you know
, and that this, this thing goesback almost 30 years.
I mean it's like 26 years of ofhistory on pricing.
So let's talk about what you'redoing in commercial Cause you
know I've been familiar withcaliber and what you guys have

(07:01):
been doing and you know this hasmeant being any endorsement or
anything like that.
I just know chris has a lot ofexpertise in this.
I've been seeing what you guyshave been doing is like, but you
guys haven't been out buyingrecently, like in the last.
I mean you haven't been superaggressive about raising capital
or buying necessarily.
I mean I think you've beendoing deals here and there, but
not like in a significantfashion, like so when you saw

(07:22):
these prices go up.
I'm just curious, like what'sbeen going on the last few years
for you guys versus like, howare you guys shifting today
versus what you were doing thelast three years?

Speaker 2 (07:33):
Well, in my business model it does not benefit us at
all not to raise money and buystuff, because we make fees from
raising money and buying stuff,and so when you don't do that
you're not making the kind ofrevenues that you typically make
.
But it also makes even worsesense for us to raise money and
buy stuff at the wrong time.
Because, ultimately the longterm consequences of overpaying

(07:57):
for an asset.
And then you know the investorslosing capital, us losing
capital and us going through youknow kind of the pain and
suffering of that is reallydifficult.
So, for better, for worse, inroughly you know, 2021 and 2022,
caliber was a net seller.
We were selling anything wecould that wasn't bolted down
and we did own a bunch of hotels.

(08:18):
So we went through the pain andsuffering of COVID and our
hotels certainly lost moneyduring that period of time.
But, unlike a lot of hotelowners, we actually paid all the
bills, kept all the debtcurrent and found our way
through COVID and now the hotelsare starting to really recover.
By doing that, we also stoppedraising capital on some of our

(08:42):
funds.
We actually didn't launch acouple of funds that we were
planning to launch and we waitedand we thought the window was
going to be 2024 early and wewaited and we finally found our
window.
So we've relaunched the funds.
We just opened a distressedasset fund.
We've opened our secondopportunity zone fund to back up
for capital because we'rebuying distressed assets.

(09:03):
In that we opened a fund that'sbuying income property but it's
also trying to buy those at adiscount.
So again, that fund was justsitting on the sidelines and
we're just out just ringing thebell telling as many people as
we possibly can Even if you're aprior investor with us,
invested in a hotel we didn'tget the result we were looking
for.
Look, we went through a globalpandemic.

(09:24):
We're sorry, that was reallydifficult.
We managed our way through it.
But now is the time and our jobis to stand in front of that,
see around corners and helpinvestors get invested at this
moment in time.
And what I will tell you that'sdifferent about this time versus
2008 was in 2008, everythingcrashed at once.
All the residential crashed,bigger crash than the commercial

(09:46):
.
All the commercial crashed, allthe values came down and then
all the values kind of recoveredslowly over time.
What's different about thistime is the commercial real
estate values crashed andcrashed quickly because there
was mechanisms in place to dealwith that.
The residential valuesbasically just hit their peak
and kind of have modulatedaround their peak.
Values haven't really come down.

(10:07):
So one of two things is goingto happen.
One is gravity is going tooccur and those residential
values are going to come down.
Or two is they're going torapidly reduce interest rates
and maybe you won't see thevalues come down.
Either way, if you own singlefamily rentals, now is the
perfect time to sell thoserentals.
Own single family rentals?
Now is the perfect time to sellthose rentals, capture your

(10:28):
gains and invest in commercialreal estate at a discount.
Um, that's kind of what I think.
That's what I'm doing.
That's what I expect, and I haveno nothing against residential.
We love residential assets,yeah, and if there is that crash
, we'll be buying those too.

Speaker 1 (10:39):
Yeah, you'll, shift back there.

Speaker 2 (10:40):
Yeah, you're right back there buying those assets,
but we want to buy stuff at adiscount.

Speaker 1 (10:43):
Yeah, I mean you're, you're, you don't care what the
asset is, as long as it's goingto appreciate and create a
greater return, and so this is ahuge insight.
Even as Chris and I were likecoming up the elevator here to
the studio, I was like, ooh,that's a really critical insight
.
Is you know I just know fromtalking to real estate investors
, even myself being invested insome residential real estate is

(11:04):
you know, you've, if you held itin the last you know five years
, you've been like great, I madesome good money, I've had some
appreciation and you might thinkabout selling.
Maybe you're doing a 1031exchange, maybe it's in your IRA
, but you're like, ah, it's justnot growing anymore.
Maybe you've got an interestrate that could be changing in
the future.
It's shifted on you recently,depending on how you finance
that.
But still, pricing is prettygood for residential, versus if

(11:28):
you're someone that ownscommercial already, you're on
the backside of this.
Where pricing is down, you wantto be a buyer right now, yeah,
and so, whereas on residential,you might want to be a seller.
So it's a good opportunity tolook at your portfolio and think
, well, should I be selling thisresidential that's priced
pretty good right now you know,just because of where the

(11:49):
residential market is versus thebuying opportunity and the
discounts where I can buy oncommercial right now.

Speaker 2 (11:56):
Well, and take it one step further.
We're talking main streetbusiness.
We're talking to people who owntheir own businesses who
probably have.
You know, small businesses,medium sized, large businesses,
etc.
Valuations for businesses arestill decent.
Yeah, now's the time, like Imean a lot of wealth.
Everyone talks about how youknow the wealthiest people in

(12:16):
the world have real estateinvestment.
A lot of them made their wealthin an operating business but
then kept their wealth byinvesting in real estate, and so
talk about a good time to cycle.
It's like okay, maybe you dotake that private equity check,
sell and then redeploy, butredeploy into assets that are
priced well and be diversified.

Speaker 1 (12:36):
Yeah, well, let's talk about commercial real
estate, cause that can mean alot of different asset classes
and there's different markets,of course, and opportunities
where people can invest ofdifferent asset classes and
there's different markets, ofcourse, and opportunities where
people can invest.
Why have you picked the certainasset classes?
I know you're doing ground updevelopment, even on hotels
specifically, and then you'rebuying some existing distressed
assets and I want to talk aboutwhat you guys are seeing out

(12:58):
there and why you guys arefocused in those two areas.

Speaker 2 (13:01):
Yeah.
So I'll talk big picture andthen I'll show you an example.
So big picture, the mostdistressed asset class in the
country office.
I think everybody knows why.
That's pretty simple, right.
But if you're a regional bankand you've got your loan book,
maybe you've got 6% exposure tooffice.
So even though it's a highlydistressed asset class, it's not

(13:21):
affecting your bank book nearlyas much as you would think.
Office is down around 40% peakto trough in terms of valuation.
Just think about that in termsof a real estate typical deal.
I've got $100 million officebuilding.
I've got 65% leverage on it.
So I've got a $65 million loanon $100 million office building.

(13:42):
If my office building is nowworth 60 million, it's worth 5
million less than my loanbalance and my equity is worth
zero.
So that's kind of a problem,yeah.
That's happening across thecountry.

Speaker 1 (13:55):
Well, and I talked to a bank CEO recently actually in
the Arizona market here, andthey basically said them and
some other banks have kind ofgot.
There's been this extend andpretend type thing with their
commercial loan portfolio wherethey were just hoping that rates
were going to fall and that alot of their borrowers would be

(14:18):
able to recover.
For their sake and for thebank's sake and for the
borrower's sake, I mean, anyways, they're rooting for them.
They don't want to take theseassets back, no.
But eventually their regulatorsstart clamping down and they're
like dude, you've got toresolve this portfolio and this
is in default and so you'restarting to see some action and

(14:38):
like and so you're starting tosee some action.
We've seen that here just inthe local market with pretty
significant commercialproperties going to auction and
selling it massive discounts.

Speaker 2 (14:45):
Yeah, and you see that, if you see that once,
you're about to see it a hundredtimes and if you see it a
hundred times.
You're about to see it athousand times.
It happens quickly and then itresolves and then it's gone.
So either you're positionedwell to take advantage of it or
not.
So the second most distressedasset class in the country,
anyone know?
I don't know.
After office, multifamilyInteresting Okay.

(15:08):
Third most distressed assetclass industrial Okay, and then
hotel.

Speaker 1 (15:13):
Okay.

Speaker 2 (15:13):
So caliber is basically doing a couple of
things.
One is we're buying officebuildings and I'll show you an
example of an office buildingthat we're actually doing, just
so you can kind of get a casestudy on this Buying office at a
deep discount to what it'sworth, what it would cost to
build, and then findingconversion opportunities.
So if you just buy it as is andin this case we're buying this

(15:33):
thing for about 20% of what itwould cost to build you can
release it as office to build.
You can release it as office,but, as the last guy might've
had to release it, you know,lease it at 28 or 35 bucks a
foot to make it work.
We can lease it for 15 bucks afoot to a call center and it
still works for us.
The second option you have isto convert it, and so you know
this.

(15:53):
This building I'll give you kindof the stats here we bought at
80% discount to replacement cost65 bucks a foot, if you don't
include the value of the parkinggarages, the two parking
garages and the land.
So it's a total of two officebuildings, two parking garages
and six and a half acres ofadditional land.
Um, that's about, like I said,15, 20% of what it would cost to

(16:16):
build um, which is what youwant to do in a distressed asset
.
You want to buy it at a deepdiscount to build costs.
And then we're going to convertall of it into multifamily
because they're still in ahousing crisis.
So we're still in an area wherewe need a lot of housing and
it's hard to build new housingand you can't make the numbers
work to build ground upconstruction.
And when we get done with thisconversion, we'll own it for

(16:38):
about 60% to 65% of what itwould cost to build new
multifamily.
So that's kind of the story ofdistressed assets is you want to
buy them at a deep discount.
You want to have a goodturnaround strategy for them For
multifamily.
It's just math.
The assets are performingreally well at the multifamily

(17:01):
level in terms of theirprofitability and their rate and
their occupancy, but peopleoverpaid for them and they used
debt at 3% and now debt's at 6%.
There's just nowhere to go.

Speaker 1 (17:09):
Yeah, and I think that's a difference between the
office dynamic and themultifamily, whereas even as
you're buying office, you're notrepositioning in the office, at
least in this scenario here.
I mean, you talked about goingto a call center or something
like that, but you'rerepositioning to multifamily
because, I mean, office isnumber one and it's got two
problems right.
It's got a vacancy problem anddemand problem and it's got the

(17:42):
same interest rate shifts thatmight have happened to certain
buyers that didn't have fixedrate debt, that have penciled
out their deal at a 3% rateenvironment and now they're on a
9% or 8% or 10%.
But multifamily might have thatdebt issue and we've just seen
this in some opportunities.
We've seen people investing inhere.
But the one thing withmultifamily is the demand's
still there.

Speaker 2 (17:55):
Yes, yeah.
So vintage is a big thing.
In investing and whether you'reinvesting in a private equity
fund or a venture capital fundor a real estate fund, the
concept of vintage is one of themost important concepts for
anyone to understand.
You can look at top tier venturecapital investors across the
country and, as long as you'reworking with somebody who's
reasonably good, the onlydifferentiator typically between

(18:16):
the fund returns fromAndreessen Horowitz versus
another one would be what timing, what vintage, did you invest
in the fund?
And then, once you invested,what did the next 24 months look
like in terms of the buyingopportunities they had to deploy
your money?
And where were we at all timehighs in company valuations?
Are we at all time lows incompany valuations?

(18:36):
So kind of similar to the samething in real estate funds and
real estate investing.
Your vintage matters and withmultifamily, or industrial, it's
just vintage.
Did you come in before the highsand build into the craze or are
you coming in now buying at apotential discount Office?
Like you said, fundamentalproblem people aren't using

(18:58):
offices as much.
That's going to be a differentkind of problem.
And then hotel is kind of likea combination of all those
things.
The capital stacks are messedup so you can buy them at a
discount, but people are usingthem at higher and higher
volumes.
So just to give you the hotelstory in a short little clip, in

(19:21):
2020, january 2020, we had thesame amount of hotel rooms we do
today, five years later.
Prior to 2020, there was goingto be a hotel building craze.
That never occurred becauseCOVID happened and all those
projects got canceled.
Demand today is well above what2020 demand was.

(19:41):
So you've got a supply anddemand issue.
If I owned a hotel in 2020,before COVID, I had a bunch of
cash reserves sitting aroundwaiting to do my next renovation
.
Those cash reserves are gone.
Had to use that to get throughthe COVID thing and pay my dad
and that kind of stuff.
But now the brands are sayinglook guys, it's been five years
since COVID.
We need you to renovate yourhotel immediately, and if

(20:04):
Marriott or Hilton is going totake their name off the side of
your hotel, you're going to losehalf your value overnight.
So you've got to renovate thehotel.
What you typically do if youdon't have cash reserves sitting
around is you go borrow moremoney against the asset.
But you can't because interestrates are doubled.
So hotel owners are facing asituation where their demand for
their hotel is beyond any priorrecord, but they can't renovate

(20:26):
the asset.
They're facing a loss of thebrand and they have to sell
their assets just to create cash.
So same kind of scenario allthis disruption in real estate.
What it creates for you is thebest buying opportunity we've
seen in at least a decade.

Speaker 1 (20:42):
Okay, let's, let's focus in on hotel for a second
Cause you're doing like groundup building.
I know we talked about some ofthe distress stuff, um, and I
actually want to come back tothat too.
Well, let's say, let's stay ondistress actually, and then I
want to talk about the ground upstuff.
So, okay, so you went over anexample there.
You're buying office.
That's a distress, a significantdiscount to what you could

(21:03):
build now, which is interestingbecause we went through like
building a new office buildingin Utah and the bank was like,
when we got all the bids, thebank was like wait a second, you
know, replacement costs on thisis like 40% of what you're
trying to build this out.
Right, they're like why don'tyou just go buy something?
And we're like, cause it's inthis dinky little town, cedar

(21:24):
city, where there's just wherewe have an office and an amazing
team, but there's just like notcommercial office.
You know there's houses andstuff and you can, there's bills
and other stuff, but like, justnot like office, and so,
anyways, this has been aninteresting of where like well,
that's a perfect placement cost.

Speaker 2 (21:41):
That's a perfect corollary to the hotel thing,
because where do people live andwhere do they travel now,
different than what they used tobefore COVID?
So even though in certain casesyou could buy a hotel for less
than build costs, you can't in aplay in a market like
Georgetown, which is outside ofAustin, where we're building one
yeah, it's the third.
It like Georgetown, which isoutside of Austin, where we're

(22:02):
building one.
It's the fastest growing cityin the country of its size for
the last three years.
There's nothing there.
And so you're capturing theseweird movements of well, people
are living in different placesnow, they're traveling to
different places now and it'sidentifying these pockets where,
gee, there was already an issuewith hotel supply and now
there's a massive issue withhotel supply.

Speaker 1 (22:20):
I mean, there's the overriding trends, of course,
going on in the market here thatwe're talking about and you're
like there's distressopportunities there's, but then
there's this ground updevelopment type stuff that
you're doing in hotels and youhave like a deal with Hyatt
right, is that the one?

Speaker 2 (22:37):
Yeah, we're building a Hyatt studio there, which is
an extended state hotel that wasdesigned by Hyatt specifically
after COVID, to kind of takeadvantage of the fact that
travelers want different thingsnow.
They don't need their roomcleaned every day, so we save a
huge amount on room cleaningexpense.
They want an extended stayhotel, so they have a little
kitchen.
Because they may have traveledfor business in the past for

(22:59):
like two days and then rushedback home and now they're like,
why don't I stay for a week?
Yeah, and I'll turn this into asort of a work, remote and
vacation time, and I want to beable to cook in my hotel room
because I don't want to go outto eat every night.
So things have just changedfundamentally and we just
announced about three weeks well, I guess maybe a month ago that

(23:19):
we're doing a $400 million dealwith Hyatt.
We have the best contract in thecountry to build Hyatt Studios
hotels and we're only buildingthem.
That's the only thing we'rereally focused on building in a
programmatic way, and we're onlybuilding them in markets that
are highly underserved by ahotel.

Speaker 1 (23:37):
Yeah, and markets that are highly underserved by
hotel, yeah.
And so the second piece of thatis then like overall trends
here, just sticking with this.
But then you're looking at thespecific market, because real
estate is still local and like Idon't know the hotel situation
in Phoenix here, is it good orbad?
I don't know.
But you're like, no, we'regoing to this specific town,

(23:58):
georgetown.
It's had great growth, it'sunderserved in terms of this, of
hotel, and so that's where itmakes sense to actually go build
.
You got to, of course,recognize brand or whatever you
have a agreement with.
That's pretty significant.
And so so you're like all right, let's go focus on that.
We know we can make money there.

(24:20):
So like, let's say I'm, I'm aninvestor, though Like I'm not
going to go get the Hyattcontract, you know.
But like I mean and again, thisis not meant to be promotional
or you know, do your own duediligence and everything but
like, but like you're raisingcapital in that right now.
Cause I know you were like wetalked before too and you're
like, you're like Matt dude, thelast few years we were just
like shelter in place because wedidn't think the market was a
great buying opportunity, andnow we're seeing a couple of

(24:42):
opportunities where we're reallyexcited.
So we're like we're going backout at hard to go raise, get
deals done.
So this is one.
How does that look forinvestors?
Is it specific to that type ofstrategy that you're raising for
the fund?
What is that?
Is that accredited investors?

Speaker 2 (25:06):
Talk to me about that .
Yeah, so I want to present toinvestors the opportunity to
invest however you like toinvest.
So we give you options in thisHyatt deal as an example.
You can invest directly intothe deal.
You can invest with your IRA orwith your non-IRA funds.
It's a $50,000 minimumaccredited investor only pretty
typical structure for what we do.
But if you say you know what, Ilike that, but I don't want to

(25:26):
pick and choose which deal isgoing to work, because Caliber
is doing one in Georgetown andAustin and maybe I like that
market, but they're also doingone in Steamboat Colorado and I
don't know anything aboutSteamboat Colorado, so maybe I
want to just be in a fund and soin that case we have funds and
what we do with the funds isthey lead the investment into
these individual assets.
They typically take the biggestchunk of the deal.

(25:47):
We don't charge extra fees.
You actually pay probably thesame or less fees in a fund
format than you pay in a directinvestment format and you get
diversified.
So we offer both options forinvestors.
And then, for the first time inCalibra's history, for a
hopefully very short window oftime, we're raising capital
under a Reg A Plus offering forpreferred stock.
So if you are a non-accreditedinvestor, you can invest with us

(26:10):
in our preferred.
It's a $5,000 minimuminvestment and it's available to
any investor.
So that's pretty rare for us.
That's the second time in 16years we've done something like
that and if it works which wethink it will we expect to kind
of consistently do this style ofinvestment to allow the
non-accredited investor to getsome exposure to real estate.

Speaker 1 (26:33):
Yeah, and I think that's been a trend is everybody
wants access to quote, unquote,alternative assets or
non-publicly traded assets.
You've talked about real estateand why this is a time to focus
on real estate, particularly inthese areas where you guys are
heading in the commercial spaceand distress in this kind of
targeted hotel ground updevelopment.

(26:54):
And you know most people, a lotof our listeners, are
accredited investors and you'refamiliar with that.
You have to have amillion-dollar net worth or
200,000 annual income single,300,000 annual income married.
But a lot more Americans arequalifying as accredited
investors, just as, like, thosenumbers don't adjust for
inflation and then people makemore money or, with inflation,

(27:14):
more and more people qualify andthey think.

Speaker 2 (27:16):
I don't know if this is fully done yet, but we think
at some point in time there'sjust going to be a test.
You'll take a test and you'llsay look, I understand that if
Caliber says this is an illiquidinvestment, that means I can't
sell it whenever I want, andonce you pass the test, you can
be accredited, which probablymakes more sense than tying it
to your net worth, because someinvestors have a very high net

(27:37):
worth and not a lot ofexperience with investing, and
some have a lower net worth andhave a ton of experience with
investing.
So it just depends on that andhopefully at some point in time
the SEC and the regulators willcome up with that test and make
it easier.

Speaker 1 (27:49):
Yeah, proposals have been floating around, but the
nice thing is, for now you havethe Reg A, so it doesn't matter.

Speaker 2 (28:00):
I mean it can be a minimum of $5,000, but you can
also go more than that if that'swhat you want.
Yeah for your self-directed IRAguys that have $13,000 sitting
in their IRA that they got outof distributions after a couple
of deals.
They're like where am I goingto put this $13,000?
Come into our regular plusoffering.

Speaker 1 (28:11):
Yeah, yeah, yeah, ok.
So that was interesting though.
So you have kind of and this isis your investing, you know,
and you're looking at privateinvestment alternatives you can
so you allow them to go on on aspecific deal, like, let's say,
someone was like no, I like thatGeorgetown market and that
opportunity there.
I want to just be specific intothat kind of like buying a

(28:32):
specific stock.
You know where you're like, Ijust want to buy Apple.
You know that's the one I thinkis going to be the winner,
rather than the whole S&P 500.

Speaker 2 (28:41):
Yeah, or they can custom build their own sort of
caliber portfolio by saying,okay, I'm going to put 50 grand
into this Georgetown deal, Ilike that distressed office deal
, I'll put 50 grand into thatand I'll build my caliber
portfolio the way I want itbuilt, not necessarily the way
that Calibre's a fund managerwants to build it.

Speaker 1 (28:56):
So if you want to do that, you can do that too, all
right, but you kind of havealready like solutions of all
right.
Well, if you just want to put,let's say, 50 K in but you want
to spread across, you know, thehotel, let's just take this as
the example opportunity.
There's a fund for that?
Yeah, absolutely, and there'sgoing to be more than a handful
of deals going through there.

Speaker 2 (29:17):
And everybody's got their own flavor, Like some
people want to time out alltheir positions and when they
think they're going to getliquidity and that's easier on a
single asset investmentstructure, and some people just
want the the the comfy cozyblanket of diversification,
which I think is the right wayto go, but everybody's got their
own point of view and you know,here in America you get to
invest how you want, right yeah?

Speaker 1 (29:38):
I love that, ok.
Well, let's flip over back todistressed for a second.
So I know you talked about theoffice conversion to multifamily
.
What else are you seeing comingas distressed, and are you
doing a lot of repositioning ofwhat you're buying into
something different, or is therestill opportunity to just buy

(30:00):
stuff as it is?
And there's financing issues onthe seller, what's?

Speaker 2 (30:04):
Yeah, most of the multifamily is just buy it as it
is and just you come in at acheaper basis, you have a good
property manager and you justrun it Well.
Um, there's not a lot of hugerepositioning opportunities.
It's really just takingadvantage of the capital stack
on office.

Speaker 1 (30:21):
Yeah, you're going to reposition.

Speaker 2 (30:22):
you know most of the time you're, you're, you're
changing the use, and industrialI mean.
It's just.
You know, at one point in timethe last couple of years, if you
said I've got an industrialdeal in Phoenix, people were
going to buy it, no matter whatthe price was.
And, um, I think we're allcoming back to reality that you,
no matter what the price was,and I think we're all coming
back to reality that you knowyou got to buy stuff at a good
price.
That's always been the way thatinvesting works and I think

(30:45):
that's what's out there rightnow.
Having said that, you can buythe wrong office building in San
Francisco at a phenomenal priceand still be buried by that
thing between taxes, inabilityto convert it, inability to get
through local governmentalissues Like there's.
You do not want to be in thisbusiness unless you know what

(31:06):
you're doing.

Speaker 1 (31:06):
Yeah.

Speaker 2 (31:07):
You know, I talked to a guy about a year ago and I
might've told this story on thepodcast before, so if I did, I'm
sorry, but um, he called usbecause he had gotten a
multifamily entitlement approvedin downtown San Jose.
Okay, heck, yeah, like, let'sbuild multifamily in Silicon
Valley in downtown San Jose.

(31:27):
He's like you know, he musthave been in his mid-80s and he
said I've been working ongetting this approval for 40
years.
And we said 40 years.
He's like all right, do youwant to buy it?
And I said no, it's going totake us 20 years to get design
approval.
No, there's no chance we'regoing to come in after 40 years
of trying to get an entitlementapproved.

(31:48):
So you got to invest in marketsthat want you to be there as a
developer, and we try to takeadvantage of that.
And then there's all theselittle micro things.
So we bought an office buildingin Phoenix.
Okay, that office building is15 minutes away from Taiwan.
Semiconductors $160 billioninvestment in semiconductor

(32:10):
manufacturing.

Speaker 1 (32:12):
We saw president Trump talk about that.

Speaker 2 (32:14):
Yeah, that was a big deal and um, and we we bought it
because we saw a partner ofours convert another office,
building a block away tomultifamily.
We saw their rents, we sawtheir returns.
The banks are national.
They're getting affected by theoffice performance they have in
San Francisco and in Portlandand places where they're getting

(32:34):
really crushed.
So office to them is a categoryand for them it's just like
office equals bad.
Office in Phoenix is likeoffice equals bad.
Yeah, office in Phoenix is notnecessarily that bad, yeah.
So we get to take advantage ofthat, because this macro trend
that the banks are dealing withand the distress they have from
their regulators and hey, you'vegot to get office off the books
, I don't care what kind it isThen turns into a micro

(33:00):
opportunity where it's like well, office in this specific
location, in this specific areais actually a pretty good deal.
So that's kind of the role thatany investor needs to play is,
you know you follow the macrotrends, but then you get
hyperlocal on the asset.

Speaker 1 (33:11):
Yeah, and the distressed area, because when
you're let's again, I want to goback to like how you raise
capital and just like investmentopportunity is, do you have
specific distressed funds?
Then that's separate.
If I'm more interested in likehotel development and I know you
guys have done even specific,you've raised capital for
opportunity zone type investorstoo.

(33:33):
Maybe let's talk about that fora second, but because that
might be coming back in the newtax bill, I saw that's in there,
but yeah.
So on the distressed side, likewhat are?
If someone is like I believe inthat thesis on distressed and
this is a nice thing aboutinvesting and kind of taking
control of your own financialfuture, your retirement is,

(33:53):
think of the thesis of wheresense to you, like, what do you
believe in and what do you haveconviction for?
Get to understand the.
You know whoever you'reinvesting with.
What's their capability, what'stheir track record?
Do I feel comfortable with them?
Of course, what's theirinvestment offering?

(34:15):
You know and look into thedetails, of course, but if I'm
thinking of the thesis here andI'm like I believe in the
distress thesis right now, I seethat coming.
I, you know, maybe I'm inresidential right now and I want
to reposition some of myportfolio.
Or maybe I'm in the stockmarket and I have a and I
believe that the stock market'sover.

(34:36):
You know it's at an all timehigh too and it's just not going
to get the type of returns inthe future.
There's a lot of people in thatline of thought, but I see the
upside in distress.
So how are you raising capitalfor distressed?

Speaker 2 (34:52):
How would I invest in that?
I think you got to start with.
How do you get in?

Speaker 1 (34:54):
Because I'm not going to go find those deals myself.

Speaker 2 (34:58):
You could try.
Yeah, I'm not, I'm not.
But first it's how do you get?

Speaker 1 (35:02):
in I might be able to get the single family distress
deal and I think a lot ofinvestors even that might be
listening may have done that andhave experience with that.
Getting a distress commercialdeal is a little different.

Speaker 2 (35:14):
Every deal has a story.
So the Canyon deal, the one Ijust showed you guys, we found
that a year and a half ago wenegotiated for a year to get
that done.
We started with the seller,then we ended up negotiating
with their lender, whoeventually took control of the
property, and then we went backand forth and then they had
buyers at higher prices, so wesaid God bless.
And then they came back to usand so you have to work the deal

(35:38):
and every deal has a story.
You're going to see that somedeals will be extracted like
over protracted over a longperiod of time, with that where
you're dealing with differentparties and you think you've got
something done and then it endsup in bankruptcy.
And now you're trying to be thestocking horse bidder in the
bankruptcy and there's a lot ofcomplexity around that and some
deals will trade in a week withno fanfare and nobody knows
about it.
And so what we saw in 2008 wasthere was a mass volume of need

(36:03):
for foreclosure acrossresidential and commercial
assets at the exact same time.
What's different from then tilltoday is that, because 2008 was
such a big crash in real estateand was so deep, most of the
financial institutions acrossthe country created pretty
sophisticated ways to deal withtheir distressed assets now.
So there was no systems inplace, no job titles, no

(36:26):
software systems to manage theseforeclosures.
None of that existed back then.
All of that exists today.
So what that means is, ifyou're trying to get access to
these types of assets, eventhough there's a big pool of
them coming, they're likelygoing to trade much more
efficiently.
They're likely going to tradebehind the scenes.

(36:49):
You're not likely going to seequite the same amount of like oh
, anybody can just get into thisand leave their job and start
buying auction propertiesdowntown and that kind of stuff,
which is how we got in.
So you know, thank God we got in.
But I think what's going tohappen is everything's going to
benefit the incumbents and youshould be looking at as an
investor.
You should say let's look atthe track record of who I want
to work with.
What are you looking for?
Well, a lot of investors in thelast couple of years got burned

(37:13):
by the fact that they're like,hey, this is a hot new company.
They've never missed adistribution, they've never had
any problems in their career.
I'm going to invest a lot ofmoney with these guys because
they obviously know how to do itright.
And what they didn't understandis they're investing a lot of
money with people who've neverbeen through a cycle, and those
companies are getting hurt rightnow because they've never been

(37:34):
through a cycle.
They didn't know what moves tomake.
They didn't know how the bankswere going to react to them.
They didn't.
They're starting to lose assetsand those were on the other
side of that buying opportunity.
So what you have to look for inthe sponsors you pick or the
people you're going to work withis show me your warts, show me
your worst deals, show me theproblems, show me how you dealt
with it.
And if you look through thatand actually understand how they

(37:55):
dealt with their problems andsay, ah, they're making good
decisions on my behalf, thenyou've probably found a winner.
Because you're going to have topick somebody who's an
incumbent, who has real accessto these opportunities, because
most of them will come to me viaa phone call.
Bob the receiver, who knowscaliber, will buy these things
quick, knows that we'll move up,move this asset off the balance

(38:16):
sheet, and they care aboutgetting the assets sold to
fulfill their mandate.
They don't care as much aboutthe price.

Speaker 1 (38:25):
Yeah, and they want certainty of execution.

Speaker 2 (38:27):
Certainty of execution.
You know not somebody raisingtheir first fund to try to take
this asset down, or show me adocumented track record that you
can actually convert this300,000 square foot office
building to residentialsuccessfully, because if you
can't, we know you're not goingto be able to get a loan to
close, and so they want to beable to see all that.

Speaker 1 (38:46):
All right.
On Distress, though, you have aDistressed Fund.
Is that accredited?

Speaker 2 (38:51):
investor Accredited investor.
It's a brand new fund, newvintage.
It's raised 500,000 bucks.
We were going to open a yearago to go build new stuff and we
said it's not a good time tobuild, let's make it our
distressed asset fund and let'sjust sit on this fund for a year
.
And now it's open.
We just launched it.
We've just put in a new set offees in there so that the first

(39:16):
20 million that come in get sortof like founders fee treatments
.
They get special treatment andwhat we're going to do with that
fund is we're going tosurgically buy dist, okay.
And then our second opportunityzone fund is also buying
distressed assets inside ofopportunity zones.
So if you have that capitalgain event where you sold your
business or you sold, you know,stock portfolio yeah.

(39:38):
Hey, if you know, if your Teslajust hit an all time high, sell
it.
Take the capital gain, rebuyTesla with, set a new basis and
take your capital gain and putit into real estate.
Not a recommendation, just anidea.

Speaker 1 (39:50):
Yeah yeah, that's kind of the tax play opportunity
zones.
If you're not familiar withthat, we have other content on
that where we've dug intoopportunity zones and it's.
It's a way you can sellappreciated assets, pay no tax
on it, roll that gain.
You don't have to roll thewhole proceeds, just the gain
part, which is unique, it's notlike a 1031, just roll the gain
into a new investment.

(40:12):
That's opportunity zonequalifying.

Speaker 2 (40:14):
Yeah.
So at the end of the day,you're selling something at a
high and you're taking the gainthat you get and putting it into
a fund that's going to buy oneor more pieces of real estate,
hopefully at a low.
So that's the play Sell thestuff at a high, buy real estate
at a low and then create somemore wealth and protect yourself
from taxes.
The big news can we break somebig news?

Speaker 1 (40:34):
Yeah, yeah, let's do it.

Speaker 2 (40:36):
The House passed a bill about a month ago.
The Senate, the FinanceCommittee, just put out their
version of the bill and in theSenate's version of the bill,
opportunity zones become apermanent part of the tax code.
You get all kinds of additionalbenefits that are coming in and
I think I project this is aforecast that when they

(40:56):
reconcile these two bills, theSenate bill will win and we'll
even get a better version thatcomes out of this.
So if you're a tax professional, a financial advisor, and you
were looking for like the allclear signal to include
opportunity zones into yourpractice, now's the time.
We help guys like you all thetime um understand opportunities
on investing.

(41:16):
We'll teach you how it works.
We'll teach you how to bring itto your clients.
We do that kind of stuffbecause we're we were one of the
first companies in the countryto launch an Opportunity Zone
fund.
We've raised $250 million inOpportunity Zone capital, yeah,
and we've done a bunch ofprojects so we can actually give
you concrete examples of how tomake these successful.

Speaker 1 (41:35):
Yeah, it's a pretty cool tax strategy.
I mean, we advise a lot ofclients on it.
When the first round ofOpportunity Zone passed what was
that?

Speaker 2 (41:43):
2017 or so.
Yeah, kind of like Jan 2018 waswhen it was made up.

Speaker 1 (41:51):
Yeah, and it was a cool tax strategy as we dug into
it, because it was like thissupercharged 1031, where you
didn't have to buy asset ofgreater or equal amount.
It was just the gain you neededto roll.
But it wasn't just for realestate.
You could be, like you said,selling your business, selling
stocks, selling real estate, itwas any type of capital gain and
you could roll it into a newqualifying opportunity zone.
And it's interesting becauseopportunity zones the whole

(42:12):
purpose of it is.
They were trying to identifythese areas and there's these
tracks, of course, right acrossthe country that need
development and that aredistressed, right when they're
trying to encourage investment,and so that's where you could go
deploy that.
But it's got to be a qualifyingopportunity zone.
And I've been tracking that taxbill too.

(42:33):
I've done a lot of content onit, I geek out on it and I saw
the opportunity zone in thereand it's actually you're the
first person I thought of when Isaw that, because you've spoke
a lot on it and I've actuallylearned quite a bit.

Speaker 2 (42:42):
Well, all of us in the industry were sort of
praying because it was like thishas been the most successful
economic development in thehistory of the United States of
America and it kind of it.
Has some bipartisan support too.
It does.
It's across both sides of theaisle, and the reason why they
want to make it permanent is itworked.
They used, they deferred sometaxes, the government didn't

(43:10):
collect as much, but then thatmoney was reinvested.
Instead of into a stockportfolio or an offshore account
, it was reinvested into MainStreet, into downtown Mesa,
where Caliber is redevelopingthe downtown and rebuilding a
downtown that had been leftbehind by the freeways 40 years
ago.
Those types of investmentscreate a lot of local taxes, a
lot of state taxes, a lot ofemployment taxes, and even
though the federal governmentgave up some of their tax, what
they are getting on the otherside is a great trade and an

(43:32):
increase in the tax base and anincrease in the wealth of the
country.

Speaker 1 (43:35):
Yeah, so well, you guys can look up on Opportunity
Zones.
Of course we're going to betracking that with the tax bill.
So you know, make sure you'resubscribed here.
Of course we'll be givingupdates on the tax bill.
So, um, you know, make sureyou're subscribed here.
Of course we'll be givingupdates on the tax bill.
I've got a lot of content on it, but we'll do something
specific on opportunity zones,cause it is a really good
strategy.
We had hundreds of clients wewere talking about that.
Um, it's kind of died down alittle bit.
The opportunity zone is stillthere, but it's set to expire.

(43:57):
Um, again, this bill, hoping itpasses.
We'll, we'll bring that back tolife.
All right, what other piece ofadvice do you have for anyone
out there looking at real estateright now?
I mean, what's your bigtakeaway, as someone who likes
to invest in real estate, islooking for opportunity right
now, is thinking aboutinvestment assets they already
have or where to deploy somecapital right now.

(44:19):
And you can talk your book,that's OK.
Again, this is just educationalnature today.
But, like, what's your numberone takeaway here?
I'm thinking just myself aboutinvesting in real estate right
now.
What should I be thinking?

Speaker 2 (44:32):
Yeah, so I'm going to treat you like I'm talking to
my mom.

Speaker 1 (44:34):
Okay.

Speaker 2 (44:35):
So, mom, here's the deal.

Speaker 1 (44:37):
It's a little weird, but okay.

Speaker 2 (44:48):
Everything, but you got to advise people based on
how you would do it or how youwould do it for your family.
And so, at the end of the day,what do you want to buy?
You want to buy the cheapestasset you can buy at the best
possible price that has the mostlikelihood to create cashflow
and appreciate.
How do we do that?
Well, we look at what has hadthe greatest price declines and
then we compare that to what itcosts to build.
And if you do that math, you donot need to just give your
money to Caliber and trust us,that's going to be okay.

(45:10):
You can do this math on yourown and you can say gee, if it
would cost $400 a square foot tobuild this building, and they
bought it for $60 a square footand when they're done converting
it, they're going to own it for$200 a square foot, they're
still in at 50% of what it wouldcost to build and they're in an
asset class that can cashflow.
Yeah, that is your analysis.
It doesn't need it to be anymore complicated than that, and

(45:32):
anyone who over complicates realestate investing is probably
doing it wrong.

Speaker 1 (45:35):
Yeah.

Speaker 2 (45:36):
So there's a very rare moment in time when you can
do that, because in a normalreal estate market, I can't buy
stuff for less than what itcosts to build.
I have to build, and so I thinkthat's what you should be doing
as an investor, and you shouldfind places to invest where,
whatever amount of capital youhave, you can deploy it into a
strategy that actually works.

(45:56):
All real estate is not good.
Don't go buy overpriced singlefamily homes in a hot market
right now.
If all you can afford to buy isone single family rental
property, think about takingthat and splitting it into a
fund or a strategy that wouldallow you to buy two pieces of a
commercial real estate asset.
That's what I would be doing,because values have come down,

(46:18):
and if values were at all timehighs, I would be selling you on
.
Let's go build more stuff andsell it to the guys who are
willing to pay us all time highprices All right.

Speaker 1 (46:27):
Great piece of advice .
And I like one other thing youthrew in there that we didn't
talk about, which was that cashflows, and I think you know your
example, of course, of theoffice to multifamily is a great
example of that demands therethere's definitely demand for
multifamily again, depending onthe markets.
You're in, of course, but youwant to make sure we have that
ability to cash flow.
You're gonna be able to carrythe property because the

(46:48):
appreciation and the pricingchange is going to happen over
time.
Yeah, like there's a that's notlike next year.
You're not going to be like,well, let's, let's sell.
I mean, you want to get thebenefit of it rebounding and
coming back over a window.
And what type of time windowshould people be thinking about
in in these types of investments?

Speaker 2 (47:05):
Unlike um.
You know a hotel in time squareor um, you know a beautiful
home in that perfect location inyou know, um I was going to say
the Palisades, and sadly thatthat's a tough story for
everybody but um, you know, in abeautiful location on the beach
in California somewhere.
Um, commercial real estate'svalue basically comes from its
ability to produce cash, and ifit's not producing cash, there's

(47:27):
no value.
You can buy assets that aren'tproducing cash, but as long as
your end state is at the end ofthis, I'm going to produce a
nice, healthy cash flow, which Iwould be looking for an 8% to
10% return on cost or better.
So when I lever that, I'm intomy double-digit cash flow.
Don't buy it, don't do the deal, because commercial real estate

(47:48):
doesn't just go up in valuebecause it's a nice building.
It goes up in value because thecash flows increase, and so
that's the way that I would lookat the types of timeframes I'm
looking for.
In distress is typically, youknow, on a complicated
commercial real estate deal,it's going to take you three
years to turn it around.
You're going to buy it.
You're going to spend six to 18months in development.

(48:09):
You're going to spend another12 months roughly in lease up
and getting it back to cashflowand then you'd expect around two
years to wind down because youdon't know when it's going to
sell.
It could sell the day youcomplete it in year three, or it
could sell two years from nowbecause we're in a market
disruption.
So kind of that three to fiveyear window is what we all
target in the distressed andcommercial and opportunistic

(48:30):
style investing.
And again, just historicallyspeaking, I'm you know, I'm
quoting you historical returnsopportunistic real estate
investing, which basically fallsinto two categories One is
ground-up development and two isdistressed or adaptive.
Reuse turnaround has producedabout a 12% annualized return

(48:51):
unlevered over the last 20, 30years.
What that means is if you putsome debt on there, you're
making around 20% annualized interms of your internal rate of
return.
If you're not making that,you're taking too much risk for
the return that you're lookingfor.
What happens in a distressedmarket is you can get typically

(49:11):
another turn or better of thatreturn by buying that asset
pursuing an opportunisticstrategy but buying at a deep
discount to its replacement cost.
So in a distressed market, I'mlooking instead of to double the
value of the equity in fiveyears.
I'm looking to get three tofour times our money in five
years because I bought it right,and that's where your
protection is.
Even in the worst case scenario, there's somebody else who will

(49:33):
buy it for you for something.
That's the goal.

Speaker 1 (49:35):
Okay, I have one more question.

Speaker 2 (49:36):
Sorry, I'm like.

Speaker 1 (49:37):
I just have one more question because I know you were
just earlier this week.
You were in Oregon speaking toa group of financial advisors
talking about real estate.
Most financial advisors arevery familiar with the public
equities.
I'm just curious what theconversation is like when you're
there with financial advisors.
What are the questions they'rethrowing your way and what's the

(49:58):
conversation with someone who'sa financial advisor and a
professional obviously lookingfor you know how do I allocate?
They want to get good returnsfor their clients.
They maybe want somediversification for their
clients.
People know real estate but,like, what's the conversation
there?
Are you talking about somethingdifferently?
Or like, do you get differentquestions with the financial
advisors?

Speaker 2 (50:18):
You know they um, they're a hundred percent
focused on their client successand they're sometimes frustrated
by if they're not fullyindependent.
They can't access the types ofinvestments that you can access
as an investor directly.
They can't just come to caliber.
So what they're looking for ishow do I get the opportunity is

(50:39):
obvious to them, so we spendsome time talking about that.
Once they get it supply, demand, market pricing they ask all
those questions, but we getthrough that really quickly.
The next thing they want to getinto is okay, how do I get
access to this for my clientsand how do I build around this
as an anchor?
It used to be, they used tocall it the 60-40 portfolio 60%

(50:59):
stocks, 40% bonds.
Everyone says the 60-40 is deadand now it's a 40, 30, 30, 40
percent stocks, 30 percent bonds, 30 percent alternatives and
real estate being the bestalternative investment that
those guys can typically access.
So we spend a lot of time onfund structure.
How much is being charged infees?
How much leverage are we using,because that creates risk.

(51:22):
What happens if thedistribution stop?
How does my client getliquidity?
That's where I get a lot ofthose financial advisory
questions and that's whatCaliber has, you know sort of.
To give you my final pitch istry to present to the market is
a public sponsor, so a publicgeneral partner of private
equity real estate investments.

(51:42):
So the company that runs thefund is the public company.
But the company that owns theassets that the investors are
exposed to is a private fund.
So the investors are makingdecisions on the assets on a
fund by fund or a deal by dealbasis, but they have the comfy
cozy blanket that the companythat's running that is not a fly
by night company.
They're a NASDAQ company.

(52:02):
The financials are transparentand I guess I'm not really
tooting our own horn.
Well enough, any investor cango in and buy our stock, so you
don't have to be an accreditedinvestor.
You can get a little exposureto alternative investing through
buying Caliber stock.

Speaker 1 (52:17):
Yeah, okay, awesome, one other, okay.
Sorry, I'm just going to dig inon this because you actually
wrote an article in Forbes.
I remember this article.
It's even in one of my deckswhere you talked about that
traditional advisor 60-40, 60percent of their investors or
their client money is in publicequities.
The other 40 percent is in likefixed income bonds.

(52:38):
Essentially, jpmorgan did astudy and basically came up with
actually the 40-30-30 that youtalked about 40% equities, 30%
fixed income, 30% alternativesis where they're going and
JPMorgan is like the most WallStreet of Wall Street and their
conclusion and again I read thisout of your article was that

(53:00):
their clients actually gotgreater returns and had less
volatility in that 40-30-30portfolio.
That's right, and so, asadvisors are going to that and
we're seeing that too in ourbusiness more and more advisors
wanting their clients to investin alternatives and they're
dealing with a lot of clientswho are the mass affluent right
and that mass affluent investor.
Where do they have money?

(53:20):
It's in their IRAs and 401ks andhow do they access these
alternative assets and so ifyou're someone that has like an
IRA, just keep in mind your IRAcan invest in private deals and
like stuff that Chris is talkingabout here, these private funds
, whether it's a Reg D fund, theReg A fund, like if you're not
familiar with this topic, wetalk about it all the time.
But when your IRA is like TDAmeritrade or Fidelity, you

(53:43):
typically got a menu of what youcan invest in and most people
are investing in public stocksthere.
But when you're like, no, Iwant to do a real estate deal, I
want to buy the duplex down thestreet or invest in a
distressed fund, for example,well, you can do that with a
self-directed IRA and you wouldmove those funds from your IRA
at Fidelity or TD Ameritradeover to directed IRA.
That's our company that we have, where you can use your IRA to

(54:07):
invest in quote, unquotealternative assets, but
definitely a growing area and anarea where people can invest in
these types of opportunities.
You can do it, of course, inyour personal funds, but I just
wanted to highlight that herefor a second before we closed
out.

Speaker 2 (54:18):
Yeah, you know I get to toot your horn now.
You know Caliber is a uniquecompany.
We're one of the only providersof boutique small.
You know.
A $200 million fund in my worldis a small fund.
Most of my competitors do a $5billion fund and they buy $200
million assets.
And we're doing a $200 millionfund buying $20 million assets,
but out of the people I competewith that do that, the amount of

(54:42):
them that have their fundsavailable on Schwab or TD
Ameritrade is almost zero.
So, as an investor, if youradvisor is only looking at
what's available through thoseplatforms, they may be missing
an entire ecosystem of realestate investing.
Obviously, we're trying tosolve that problem at Caliber,
but what I do with advisors allthe time is I direct them to you

(55:04):
, because you guys have theyou're the time is I direct them
to you because you guys havethe you're the you're the easy
button.
They come to you and you willhook into their financial
advisory software so that myfund will show up on their
software, so their client canget a single statement.
This is very important.
Clients don't want to manage ahundred different positions in a
hundred different places.
You guys will run a really lowfee model.

(55:27):
I won't mention fees but, you'llrun a low fee model so that
they're not being charged andnickeled and dimed on every
single position they take.
They get a reasonable cost tocustody their assets and your
financial advisor must have acustodian to custody those
assets.
And so you, if you're anadvisor, should talk to directed
.
But if you're a client of anadvisor and the advisor is like,

(55:49):
well, we don't really haveCaliber or something like them
on the platform, say, well, Ifound this company that I really
like, bring directed to thetable.
The advisor can easily justmove the account there and it'll
show up on your statement.
I'm making a lot of promises,your statement.

Speaker 1 (56:04):
Yeah.

Speaker 2 (56:05):
You know I'm making a lot of promises for you.

Speaker 1 (56:06):
Yeah, yeah, no, we've .
We've integrated with OrionMorningstall by all accounts,
and so we've definitely helpedadvisors when we have a
relationship where we can sharethat data from our systems.
And it's important right,Especially if you're an advisor,
that this is a focus of yourpractice and you have a lot of
clients you want to get intoalternative assets using their
IRAs.
We also custody non-retirementaccounts.

(56:27):
So well, Chris, thanks so muchfor stopping by and for sharing
all of your knowledge.
We'll see you at the Alt AssetSummit.
By the way, that'saltassetsummitcom.
Chris will be one of ourincredible speakers there.
That's going to be here October16th 17th in Scottsdale,
Arizona, at the Hilton here.
We'd love to see all of youthere and Chris appreciate you

(56:48):
being here again and we'll seeall of you next week.
Thanks for having me.

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#584 The Best Real Estate Opportunity in a Decade — Featuring Chris Loeffler from Caliber

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}#584 The Best Real Estate Opportunity in a Decade — Featuring Chris Loeffler from Caliber