February 13, 2025 • 34 mins
In this episode of the Generations of Wealth Show, host Derek Dombek sits down with Zihao Wang, a 21-year-old real estate investor running his family’s second-generation real estate division. Despite his young age, Zihao has already played a key role in 37+ real estate projects, focusing on multifamily investments, value-add strategies, and ground-up development.
From growing up with real estate-focused parents to leaving MIT to scale his family’s real estate empire, Zihao shares key insights on building generational wealth, navigating market cycles, and balancing business with personal life.
🎧 Tune in to hear:
✅ How Zihao transitioned from property management to acquisitions
✅ The power of patient capital in long-term wealth building
✅ Challenges of operating in California’s restrictive real estate market
✅ How to start early and scale a real estate portfolio
✅ The mindset shifts needed to succeed in real estate investing
🚀 Whether you're a young investor, an experienced real estate professional, or someone looking to build generational wealth, this episode is packed with insights you don't want to miss!
⏳ Time Stamps:
00:00 - Welcome to Generations of Wealth Show
02:10 - Zihao Wang’s journey: Growing up in a real estate family
05:45 - Starting in property management & learning real estate from the ground up
08:30 - Leaving MIT to focus on scaling his family’s portfolio
12:00 - Understanding patient capital & long-term wealth-building strategies
15:50 - The challenges & benefits of investing in California real estate
20:15 - How to build an investment strategy for multifamily & value-add deals
25:40 - Navigating real estate market cycles & risk management
30:10 - The pressures & mindset shifts of managing a large portfolio at 21
35:50 - Balancing business growth with personal life goals
40:20 - Final thoughts: Zihao’s vision for the future & key takeaways
📌 Key Takeaways:
✔️ Start early – learning the fundamentals of real estate
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
Welcome to the Generations of Wealth Show. Iam your host, Derek Dombak, and the word of
the day is patient capital. Today, it's very,very important in this show because we are
talking about how to build long-term wealththrough different asset classes, but for the
most part, multifamily, residential. And ZihaoWang is an incredible young man, 21 years old,
(00:28):
born and raised in California with... clearlyparents that wanted him to have the generational
mindset of wealth. And before we get to bringinghim on, I really wanna thank you all for following
the show, being here, if you're one of our regulars.Please, anything you can do to spread the knowledge,
(00:50):
spread the Generations of Wealth message, andhelp us with reviews. We really, really appreciate
it. And without any further ado, let's bringon our guest. Well, I am super Jack now I get
to bring on Zihao Wang. Thank you so much forjoining us. Tell the audience a little bit
(01:11):
about yourself and let's just dive right intowhat you're an expert at. Yeah, thank you so
much for having me, Derek. So I run my family'sreal estate division. We're a second generation
family office based in LA. For the real estateside of the business we do a lot of multifamily
investing nationwide primarily kind of in SouthernCalifornia, but really have assets across the
(01:35):
country. We do a lot of value add investingas well as ground up development. In total,
I think we've done around 37 projects have beenaround since the early 2000s when my parents
originally started and currently just tryingto grow our portfolio and trying to bring our
AUM up. Okay, so because this is the Generationsof Wealth show, We got to talk about the generational
(02:02):
side of this, as you just mentioned, you know,this was something that your parents had started
years ago and brought you in. But I mean, you,you've got a really hell of a background yourself.
It's not like they just handed you this, thisthing to take care of. I mean, you've, you've
got some MIT education in your background. Liketell us, start at the beginning a little bit,
(02:24):
you know, you were, you're coming up, you'vegot this influence of real estate around you.
How do you, and this is important to me by theway, because my kids right now are at that
age where they're starting to decide, do theywanna be involved in real estate? Do they not
wanna be involved in real estate? So what didthat look like for you as you were growing
(02:46):
up? Yeah, so my parents got started in realestate back in the early 2000s. And then around
the time of like 2013, 2012-ish, when I wasaround... of 13, 14 years old. They brought
me into the real estate world with the hopesthat one day, I'll be able to take over kind
(03:06):
of the assets that they've accumulated for avery long time. And so I started off on the
property management side. They believe thatin order to be a good real estate fund manager,
you needed to know how to operate first. Um,so followed my property manager around, um,
learned everything there is about like revenuecollection, um, you know, tenant delinquencies,
(03:30):
repairs and maintenance and capex and stufflike that. Um, so, so really started more on
the boots on the ground side of things. Um,after about two years, um, they then kind of
pulled me back and started teaching me how todo like acquisitions and Excel modeling and
stuff like that. You know, kind of growing up,I did a lot of kind of mathy stuff, did like
(03:51):
math competitions, did like science competitions.So I always had a good grasp of numbers. So
was able to catch that pretty quickly and startedbuilding relationships with brokers and then
other investors as well kind of during my timein high school and then also in a college.
Like you said, went to MIT for computer science.It was kind of the path that everybody took
(04:13):
at the school. think 70% of people at MIT studycomputer science, either as a major or as a
minor. So it just felt like it was followingthe herd, following the pack. The kind of back
of the mind knowing that maybe, real estateis really the path of least resistance when
it comes to building a career. And it turnedout, after my freshman year, I met a, I reconnected
(04:39):
with a Japanese fund to fund investor who wantedto partner with our family more real estate
investing. And so that gave me the convictionto take some time off from MIT and do real
estate full time and kind of go back to whatI was doing pre-college. And that was when
I started doing things more seriously at a full-timelevel and then really, when the company took
(05:02):
off. So have you felt a lot of pressure to performgiven that I actually don't even know how old
are you right now? So I turned 21 at the endof the month. Okay. So you turned 21 and you
are currently helping manage a very, very sizableportfolio, much of which is in Southern California.
(05:27):
And at what point is the pressure to performIs it, is it motivating or is it scary or does
it make you want to, you know, push harder?I don't know how that feels. And my oldest
daughter is 18. So this is very near and dearto me, to be honest with you, because I don't
(05:51):
want to push her in a way that pushes her away,but I want to push her so that she wants to
be successful. Right. I think in terms of likewhat's driving me, it's, it's that, like, there
is a motivation to grow the firm, right? Thereis a motivation to try to. build wealth in
the family. My parents obviously gave me a verygood foundation, but I have the aspirations
(06:14):
to grow on top of that foundation into an empire.So there's definitely a motivation in terms
of growth. But at the same time, I think thereis obvious, like sprinkled within that, there's
definitely times of fear, right? It's like thingsdon't always go as planned. Like things never
go as planned. Right. And so during the, yeah.So during those times, there's always kind
(06:36):
of the hesitancy is like, okay, maybe the opportunitycosts of, you know, taking time off from a
prestigious school isn't worth it. But thenI think over time, it's like, well, the things
that go wrong always tend to work out if youlike think hard enough and work hard enough
at it. And so eventually kind of that fear kindof resolves and maybe comes back a little bit
(06:59):
again. a few days later and then you resolveit again. And then, so it's always like that
kind of like back and forth. Absolutely. I guessthis wasn't a direction I was going to go,
but now I really want to. Um, at your age, doyou think about the vision that you want for
your life? For, and I don't mean your businesslife. I mean your personal life. Um, cause
(07:25):
this was something I never discovered in thefirst. two thirds of my career. And the reason
that I'm passionate about it is because so manypeople I've seen have built this really large
financial business that takes up their entirelife, right? It eats up their personal time,
their family time. They end up being maybe wealthyon paper, but extremely miserable in their
(07:53):
life. Have you spent much time even thinkingabout what you really want your- ultimate life
to look like? You know, I think people's wantsand desires change as they grow and as they
have different, you know, experiences for meright now, it's been very like career and work
(08:14):
focused. You know, I haven't really thoughtabout like how much time I want to spend with
my kids, given, you know, my age and stuff likethat. So it's been really much like... Okay,
like drill down, focus on what you're supposedto be doing and making sure that what you're
doing is scalable is, and it's growing at afast pace. Right. So I think as of right now,
it's very career oriented. But I don't believethat's going to be the case. Like if you talk
(08:38):
to me 20 years later from now, right. I think,you know, if I have, if I, if I have kids and
then, you know, it's, they're, they're veryvaluable to me, obviously. Right. So I want
to spend as much time as I can with them. Sothen that conversation becomes like, okay,
is it right to be working as hard and spendingas much time doing real estate? Maybe not so
(09:01):
much, right? So I think the lucky thing forme though is I started early. And so by the
time I get to like 40, 50 years old, I'll probablyhave a better wealth foundation than others
who started a little bit later. And so, youknow, from that perspective, I would say I'm
very fortunate to have the flexibility. Well,if you get to 40, 50 years old and you start
(09:27):
at 21 as a second generation, I would expectyou to have a very, very incredible foundation.
But that's also an expectation that shouldn't,I shouldn't have even said that. It's not fair
to you to say you should have that by then.You may not. Yeah. Because I've seen at least
(09:51):
two different, two to three different marketcycles in my career now, and as have your parents.
Um, but a lot of people, especially at yourage and in through their 20s and thirties,
um, that are just getting started, they don'tnecessarily understand them, the Mike market
cycles. Cause they haven't seen them. You arealso in California. So I'd love to know, you
(10:12):
know, some of your experiences. and you're operatingin a state that has a lot of restrictions compared
to a lot of other states, I mean, that can affectit as well. So yeah, actually, we probably
should go there. And I will mention that whilewe're recording this, the fires that are devastating
California right now, you and I spoke a littlebit before we start recording, that's not affecting
(10:37):
you directly so far, and it seems like you'resafe. So that's a that's a good thing. Oh yeah,
thank you. Yeah. I'm, you know, I live in Pasadena,but more on the like South 210 side of things.
So, um, you know, a little bit away from themountains and the forests. Um, but I definitely
have kind of seen the distress that it causedother people. Um, so yeah, I feel really sad,
(11:02):
honestly, for, for them, especially, especiallylike kind of the, the renters who, you know,
renting in California is difficult. Um, andthen you add onto this kind of like distress,
I just feel very sorry for them. Well, so let'stalk about California specifically. You've
got all these restrictions. I'm seeing thingsand I don't know how much is true or false.
(11:23):
It's all posts and social media, things wherethere's fire trucks that they're not allowing
to come in and help because they have to pass,pass emissions tests. And, and, you know, again,
don't know if this is fact or fiction, but you'renow looking at an entire area of your state
that is going to be in a housing crisis. fora very, very long time. And as devastating
(11:49):
as that is to many, many people, that's alsoopportunity to entrepreneurs, right? And it's
going to hit this supply and demand chain veryquickly, because all these people are displaced.
They have to have somewhere to live. How doyou see that knowing the restrictions and your
(12:12):
government in the state of California? How doyou see that playing out? I think in terms
of like new development, the state's gonna geta little bit more flexible with developers
simply because they have to, right? If we thinkabout the trajectory of where we're headed,
right, it's like supply and demand issue hasalways existed in California, even before this
(12:35):
fire, right? It's just gotten worse with thisfire, given the amount of buildings that were
burnt down. But even with that, it's like, Ithink the 2026 or 2028 Olympics is also held
in Los Angeles. Right. And so I think 2028 Olympicsheld in Los Angeles. And so from that perspective,
right, the streets have to be clean, you know,a lot of like a lot of infrastructure has to
(12:59):
come up. There has to be a lot of changes interms of traffic, in terms of like airport
expansion, maybe even. And so from that perspective,I think the state will get more flexible with
developers the need that we're seeing. On myside, I think the FHIRES effects is a little
(13:19):
too early to be felt or to be evidenced. I amseeing like pickup in leasing velocity because
of the amount of people that were displaced,but they're typically on shorter term leases.
So for example, like instead of a 12 month lease,they just want like a six month lease so that
they can just stay and check things out beforemaking a longer term commitment. So it's less
(13:42):
certain of what kind of that, the impact ofthe fire has been on kind of the multifamily
side of things for now. Right. I'm pretty, I'msure we'll, as we head more into 2025, we'll
see more evidence of this. But in terms of development,I think the housing shortage isn't news to
California. Right. So it's definitely somethingthat the state has to be more flexible with
(14:06):
developers. But also at a macro level, somethingthat maybe we need to get more creative with
how we're building houses. You know, there'sa lot of talks about modular construction now
to try to lower construction costs. I thinkVantum is one of the leading companies in doing
that. They are already starting to build likethree-story, four-story multifamily housing
(14:28):
using modular methods, and it's proven to befaster and also lower costs. Um, so I think
there are many things that have to play rightin order to, in order for like the housing
crisis to really solve in this state and, andin this country, actually. Yeah, for sure.
And, and well, even though I met with somebody,um, a couple of days ago, who, who runs a business,
(14:52):
uh, building panelized walls and trusses andfloor trust systems, all of these things in
an effort to lower costs, but make buildingfaster. And, and there's certainly plenty of
companies out there that do that, but it's,it's not, it's not the main way of building
yet. I think that is the way of the future.Um, I don't know how that works with California
(15:17):
and earthquakes and, you know, all of thosedifferent types of codes. If, if that's feasible
or not. Um, I guess that's not really the scopeof our conversation, but it's, it's the curiosity,
right? Like you guys deal with. a lot of differentcodes that the rest of the country don't have
to deal with just because of earthquakes. Yeah.I mean, there's like geographically where we're
(15:43):
located, right? There's definitely challengesthere. But I think where I was more getting
at is like, there are multiple methods thathave to kind of fit right in order for like
the situation, like the housing crisis to getresolved. Like one is definitely the state
cooperating more with developers. but then alsolike developers figuring out creative strategies
(16:04):
to minimize their own costs. For sure. Absolutely.And that's where the modular side comes in.
Now with what you guys have across your portfolio,and I know you're in multiple different areas
and States, but you do have a fair amount inCalifornia. Um, are you seeing, uh, across
the board, are you seeing a leveling off ofrents? Are you seeing increases in vacancy?
(16:30):
or just the opposite? I think it depends onthe area. I think Orange County, like our properties
in Orange County and along the I-605 corridorhas been doing very, very well. I think our
entire portfolio leverages at around like 99%occupancy, typically year round. There might
(16:51):
be certain properties that just, smaller oneslike a 10 unit maybe that just the vacancy
in... one vacancy, like 10%, right? So theremight be some of those, but I think across
the portfolio in our LA County, Orange County,has been doing very, very well. I would say
kind of like the issue isn't really renting,it's more finding the right renters because
(17:17):
obviously there's rent control and then there'simpossible to evict a tenant. And so most of
our focus is in that tenant screening portionof the process and in figuring out Um, you
know, whether this tenant is actually a reliabletenant with, you know, a trustworthy background
and a stable job that can pay rent on time.Right. So we typically have higher standards
(17:38):
when it comes to taking renters, typically like2.5 to 3 X, um, of rent, uh, for their income
and then closer to like. Okay. You know, atleast I think 700 plus in credit. Um, and so
for it obviously depends on the location ofthe building and the demographics in that area.
Um, but that's kind of average across our portfolioand that's helped us a lot in terms of, um,
(18:02):
you know, tenant laws and, and in terms of actuallygenerating profit for the, for the property.
Yeah. Well, what is your, your family's, uh,I guess, strategic vision for, for growing
things in the future? Is it straight up multifamily?This is your niche. This is what you want to
grow or what is, what is the overall vision?You know, we definitely want to try to tap
(18:26):
into all the asset classes. We actually do havesome triple net retail. We also have mobile
home parks. We also have commercial buildingsand stuff like that. But multifamily has been
where the main focus is given that it's, it'sthe most easy to understand, right? It's like
everybody need a place to live. It's like selfstorage might be harder to understand and harder
(18:47):
to envision. But so that's why we kind of landedwith multifamily first and has grown that side
of the business the fastest. We definitely feelthat, you know, there is a need as our wealth
grows, there is a need to diversify into otherasset classes. But right now, I think our diversification
is more focused on geographical location ratherthan asset class. Two thirds of our portfolio
(19:10):
is in Southern California, the rest is in Floridaand North Carolina. For 2025, one of our biggest
goals is to expand into Texas. Um, and so we,we definitely see the concentration of, you
know, SoCal properties and are aware of thatand, and trying to diversify into other geographical
locations. Okay. What, I guess, what has ledyour family to North Carolina and Florida?
(19:36):
Is it strictly, you know, financial or is itregional because of weather? And, and also
the same question with Texas. I mean, Texasdoes have better laws. They've got. better
weather, what would prevent you all from wantingto go into the Midwest or I was going to say
the Northeast, but nobody wants to go into theNortheast. You can't cash flow to Northeast.
(20:00):
I would say it's mainly based on our connectionsthere. So when we were thinking about geographical
expansion, we were thinking like, okay, we haveto find a place where, you know, we have people
that we trust, local boots on the ground operatorsthat we trust that we can, you know, somewhat
rely on, right? And so we're basically the assetmanagers for those. We're our own property
(20:22):
managers for our stuff in SoCal because we'relocal, but for the other state ones, we're
asset managers, one level up. And so, I mean,we obviously wanted to pick states with high
growth and stuff like that. We wouldn't go intoa New York, right, for example. So we definitely
had our select. number of states that we wantedto go into and then kind of from that, we wrote
(20:46):
even further based on like kind of our connections.Specifically in Texas, you know, been building
connections in the Dallas area, in the Houstonarea, and so know a lot of local operators
there and then also started to see a lot ofDO since the past like six to eight months.
You know, to be honest, most of them weren'tpenciling. Oh yeah. But actually we got to
(21:10):
see a lot of deals at least, you know, we underwrotea lot of deals and so got more used to the
markets there. And so that's kind of the, theideology for going to Texas. What do you think
the metrics are? And you don't have to knowexactly, but off the top of your head, how
many deals do you think you have to underwriteto get one? I think it depends on the time
(21:32):
of the market as well. You know, if it was likein 2023, we bought like nothing and we under
rolled a lot. So that ratio is like, is undefined,right? Yeah. If in 2024, we bought five, we
probably under rolled closer to like, closerto a hundred deals. I think we ultimately in
(21:53):
a year, we typically underwrite between a hundredor 300 deals depending on just the velocity.
I think California is actually easier to underwriteduring this specific time, just because it's
less, I would say, market driven. You'll findmore properties with higher upside and more
value add than a Texas, because it's more marketdriven over there. So as the 10 year starts
(22:18):
shooting, which it did two days ago, and it'sstill pretty elevated, I think that really
slows down velocity. I think California, becauseof like... how many long-term owners there
are. I think there's a higher chance of gettingdeals right now at our current economic situation.
Yeah. What do you look for within the familyoffice for, you know, you got value add, but
(22:44):
is there a certain cap rate that you're buyingat? Or, and by the way, I hate cap rates. I
just, I think it's a terrible metric, but it'sone that's, everybody understands. But when
you underwrite a deal, what are you really lookingfor? Are you trying to be able to value add
it to a certain percentage or take it to a certaincap rate? Yeah. Um, so for, for California
(23:08):
deals, for example, um, I actually like thecap rate, but I also coupled the cap rate with
a vacancy factor and expense ratio, right? Soif, if I can lock in those and then say a cap
rate, then I'm pretty comfortable with thatcap rate. Um, so for California deals typically
under a 5% vacancy, 40% expenses. And then,um, at, if I can get something at around like
(23:29):
a five and a half cap, um, that deal would pencilto around maybe, uh, 16 to an 18 hour over
five years. Um, and, and usually that's like,that actually goes to like a two X equity multiple,
it's just like the time of five years, a littlebit longer, which is why the IR isn't to the
20 mark. Um, but it's typically like two X.you basically make double your money in five
(23:53):
years. So that's typically the metrics thatI underwrite too. Now I do stay away from the
really strict rent control areas, for example,city of LA, city of Santa Monica. I stay away
from those. I go more towards like what I wouldcall secondary markets for California, right?
They're probably like primary markets for otherstates, but like... a place like Glendale,
(24:18):
a place like Downey, a place like Whittier,you know, into Orange County side. Those areas
typically can help me get to that higher caprate and also have enough rental upside where
I can be like going in at a five and a halfpushing to like a seven, seven point low sevens,
something like that. And then I can exit backdown at a five and a half. And you know, the
(24:39):
rent rental upside still gets me into a verycomfortable, you know, projections. And so
from that perspective, you know, it makes me,it makes me more comfortable in getting that
like 16 to 18% IRR. Yeah. Well, I don't understanda lot about California real estate because
(25:00):
it's, it's not the market I've ever dabbledin, nor do I have a desire to, um, but it's
like anything when, when you know your numbersand it's your backyard, you can find deals.
And you guys have clearly proven that over theyears. And, and I always say, I don't want
everybody coming to the upper Midwest becausewe're kind of an untold secret, right? I mean,
(25:22):
I can go and buy cashflow here. I can buy propertiesthat, honestly, I've got one under contract
right now with really good seller financingterms and we can still cashflow and they're
getting what they want. And most of what I dois residential. I don't have a lot of commercial
yet and it is something that we're working towards,We don't have a lot of the peaks and valleys
(25:49):
in the upper Midwest, which makes us boring,but boring is good. And boring is consistent.
And I like that because the peaks and valleysare fun to talk about. And especially people
just want to talk about when they made a wholebunch of money, because everything was going
up and up and up and boy, when they lose itall, they kind of quiet down pretty quick.
(26:12):
So I like the even keel. No, I think you guysare the spotlight of 2024, maybe even 2023,
because the Sunbelt used to be the spotlightwhen I was 2021 and 2022. And then when they
started feeling supply pressures and also ratepressures, you guys became kind of like the
(26:33):
place where the, like you said, the untold secret,right? It's like all of a sudden, like rent
growth in your places seems to make a lot ofsense and Dio seems to be penciling there.
Um, and it's, you know, you guys have been thespotlight for the past few years. Um, I was
actually a while ago, I was talking to, I don'tknow if you know, but like slow come read,
(26:55):
um, he, he does a lot of podcasts and also probablymanagement, he likes the Midwest a lot. Um,
and we were kind of, um, in a sense, like discussingthe differences between like some belt and
then also Midwest. And then from that, we weretalking about also how like the Midwest is
seen as boring. but during a time when interestrates are elevated and there's high market
(27:16):
risk, boring becomes king, right? So that'salso kind of your standout in the Midwest.
Well, and what we don't have is a lot of thenatural disasters. We have tornadoes, but limited
number of tornadoes and they do take out a smallerpath of devastation. But when you start talking
(27:38):
about, you know, like you're in the marketsof North Carolina and Florida, your insurance
costs are just astronomically high. Now you'vegot hurricanes that can shut you down for weeks.
I mean, there's a lot of those things. We don'tget that. Um, now on the downside, we have
harsh winters, higher heating costs, snow removal,you know, those types of expenses that have
(28:01):
to be accounted for. But, um, yeah, it's, it's.It's boring, but it's still, uh, it's still
a great place to, to make a good return. So,well, I'm going to actually kind of lead us
just down a little bit different path as wekind of wind down here. Um, you know, you're
(28:22):
21, you said you've, you've had this upbringingin a, an incredible, what I'm assuming is an
incredible family atmosphere with a lot of pressureto perform. Um, just the fact that you've,
you've been through some of the things thatyou have with, with MIT and everything else.
Um, what do you do for fun? I play tennis. Tennis.Okay. Yeah. I, I've been playing tennis since
(28:50):
I was six years old. Played a very competitivelygrowing up. I was like 90 in the country in
my junior year of high school, um, 20 in thestate of California. Um, most of my friends
have been playing tennis as well. Kind of mygroup of friends outside of work is kind of
tennis. You know, so we always like to hangout on the weekends playing tennis. We've recently
(29:12):
picked up pickleball as well. It's much easierand you know, it, but for us, it's a little
bit less fun, but it's like something new totry. Because we knew how, we know how to play
tennis, right? So like pickleball becomes lessfun for us. But Definitely addicting, definitely
a lot more people knowing how to play and canmake a lot more connections with it. Yeah,
(29:33):
so most of my kind of, you know, person I guessfor fun is playing tennis and playing pickleball
and trying to stay active outside. Okay, okay.And not married, no kids coming, nothing like
that yet? Not yet. Well, that's when it getsreally fun, depending on what you. your motivation
(29:57):
is. So, well, what's one question I should haveasked you that I didn't, and it can pertain
to anything.
I think you should have asked me like kind ofwhat I like, how my acquisition box has changed
in the past few years, because it's changeddrastically. The numbers on my model has changed
(30:19):
drastically, especially that interest rate.And to be honest, like I would say the answer
is that the financing issues has definitelychanged. We've put in more equity onto a lot
of our deals. We know long, we try to limitthe amount of leverage. simply because we have
the liquidity on the financing side and we don'twant to take excessive risk. To be honest,
(30:44):
there were two deals in California that we boughtactually on floating debt but at super low
rates before the rate hikes. And it just startedhiking and hiking and hiking to a scale that
we just decided to pay the debt off, right?So for us as a family, you know, we're very
well focused on kind of... wealth preservationand growing wealth in a steady pace. So, you
(31:09):
know, we're right now kind of more trying totake control of a lot of our properties and
making sure that we don't over lever and don'tget exposed to a lot of risks. So that has
definitely changed on the acquisition box side.We're looking for stuff that, you know, will
pencil to a lower leverage. And obviously it'sharder to find. Leverage definitely helps the
(31:29):
returns. Um, but that's why we haven't boughta lot of like a crazy amount of deals either.
Right. So, so definitely trying to lower theamount of risk while still trying to hit our,
um, our returns. And I would say, cause I havea very close relationship with a family office
here in the Midwest and we have these conversationsoffline. If you're in a position where you
(31:54):
don't need to buy anything. for all of 2023and you really don't need to buy anything if
you don't want to for 2025, if you can justmaintain.
what more could you possibly dream of, right?Like be able to cherry pick the best deals
when they come along and to be able to fundthem with minimal debt, if that's your choice.
(32:18):
I think that's where most people probably wantto get to. However, most of us over lever and,
you know, play that peaks and valleys game.And a lot of people I've known in this business
in 21 years have gone belly up and never cameback. And so I love the fact that you guys
(32:40):
have that mindset. I really do. Yeah, we focusa lot on the concept of like patient capital.
And that goes for both the acquisition as wellas the disposition. You know, so on the acquisition
side, we kind of touched upon, we don't haveto buy if we don't want to, and we don't feel
comfortable with it. And it goes same for thesale, right? If we feel like, you know, the
(33:03):
market's not that good, it's not like we'rea fund that has to close in, you know, seven
years. And so, you know, maybe we hold it outfor another three years and wait for a better
market. So, definitely I think patient capitalis definitely like the family offices leverage
against the institutional guys. Well, that'sawesome. Man, I can't tell you how much I enjoy
(33:25):
interviewing you and this isn't gonna soundreally, politically correct, but I don't get
to talk to a lot of people your age that I canrelate to. I don't. And with your upbringing
and your clearly your experience, it's beena pleasure. So thank you for that. Thank you
(33:47):
so much for having me on the show. Absolutely.If anybody wants to try and reach out to you
or follow you. Is there any social media? Isthere anything out there, anything we can do
to help you? Yeah, I'm pretty active on LinkedIn.So definitely reach out. If there's a way to
(34:07):
partner up and have any synergies, please feelfree to reach out on LinkedIn. Also, check
out my website, www. And you can definitelyreach out there as well. Okay, awesome. Well,
we appreciate. your time as always and for everyoneelse. We'll catch you on next show, but until
(34:29):
then, go out there, find some deals, live yourvision, love your life. See ya.
Welcome to the Generations of Wealth Show. Iam your host, Derek Dombak, and the word of
the day is patient capital. Today, it's very,very important in this show because we are
talking about how to build long-term wealththrough different asset classes, but for the
most part, multifamily, residential. And ZihaoWang is an incredible young man, 21 years old,
(00:28):
born and raised in California with... clearlyparents that wanted him to have the generational
mindset of wealth. And before we get to bringinghim on, I really wanna thank you all for following
the show, being here, if you're one of our regulars.Please, anything you can do to spread the knowledge,
(00:50):
spread the Generations of Wealth message, andhelp us with reviews. We really, really appreciate
it. And without any further ado, let's bringon our guest. Well, I am super Jack now I get
to bring on Zihao Wang. Thank you so much forjoining us. Tell the audience a little bit
(01:11):
about yourself and let's just dive right intowhat you're an expert at. Yeah, thank you so
much for having me, Derek. So I run my family'sreal estate division. We're a second generation
family office based in LA. For the real estateside of the business we do a lot of multifamily
investing nationwide primarily kind of in SouthernCalifornia, but really have assets across the
(01:35):
country. We do a lot of value add investingas well as ground up development. In total,
I think we've done around 37 projects have beenaround since the early 2000s when my parents
originally started and currently just tryingto grow our portfolio and trying to bring our
AUM up. Okay, so because this is the Generationsof Wealth show, We got to talk about the generational
(02:02):
side of this, as you just mentioned, you know,this was something that your parents had started
years ago and brought you in. But I mean, you,you've got a really hell of a background yourself.
It's not like they just handed you this, thisthing to take care of. I mean, you've, you've
got some MIT education in your background. Liketell us, start at the beginning a little bit,
(02:24):
you know, you were, you're coming up, you'vegot this influence of real estate around you.
How do you, and this is important to me by theway, because my kids right now are at that
age where they're starting to decide, do theywanna be involved in real estate? Do they not
wanna be involved in real estate? So what didthat look like for you as you were growing
(02:46):
up? Yeah, so my parents got started in realestate back in the early 2000s. And then around
the time of like 2013, 2012-ish, when I wasaround... of 13, 14 years old. They brought
me into the real estate world with the hopesthat one day, I'll be able to take over kind
(03:06):
of the assets that they've accumulated for avery long time. And so I started off on the
property management side. They believe thatin order to be a good real estate fund manager,
you needed to know how to operate first. Um,so followed my property manager around, um,
learned everything there is about like revenuecollection, um, you know, tenant delinquencies,
(03:30):
repairs and maintenance and capex and stufflike that. Um, so, so really started more on
the boots on the ground side of things. Um,after about two years, um, they then kind of
pulled me back and started teaching me how todo like acquisitions and Excel modeling and
stuff like that. You know, kind of growing up,I did a lot of kind of mathy stuff, did like
(03:51):
math competitions, did like science competitions.So I always had a good grasp of numbers. So
was able to catch that pretty quickly and startedbuilding relationships with brokers and then
other investors as well kind of during my timein high school and then also in a college.
Like you said, went to MIT for computer science.It was kind of the path that everybody took
(04:13):
at the school. think 70% of people at MIT studycomputer science, either as a major or as a
minor. So it just felt like it was followingthe herd, following the pack. The kind of back
of the mind knowing that maybe, real estateis really the path of least resistance when
it comes to building a career. And it turnedout, after my freshman year, I met a, I reconnected
(04:39):
with a Japanese fund to fund investor who wantedto partner with our family more real estate
investing. And so that gave me the convictionto take some time off from MIT and do real
estate full time and kind of go back to whatI was doing pre-college. And that was when
I started doing things more seriously at a full-timelevel and then really, when the company took
(05:02):
off. So have you felt a lot of pressure to performgiven that I actually don't even know how old
are you right now? So I turned 21 at the endof the month. Okay. So you turned 21 and you
are currently helping manage a very, very sizableportfolio, much of which is in Southern California.
(05:27):
And at what point is the pressure to performIs it, is it motivating or is it scary or does
it make you want to, you know, push harder?I don't know how that feels. And my oldest
daughter is 18. So this is very near and dearto me, to be honest with you, because I don't
(05:51):
want to push her in a way that pushes her away,but I want to push her so that she wants to
be successful. Right. I think in terms of likewhat's driving me, it's, it's that, like, there
is a motivation to grow the firm, right? Thereis a motivation to try to. build wealth in
the family. My parents obviously gave me a verygood foundation, but I have the aspirations
(06:14):
to grow on top of that foundation into an empire.So there's definitely a motivation in terms
of growth. But at the same time, I think thereis obvious, like sprinkled within that, there's
definitely times of fear, right? It's like thingsdon't always go as planned. Like things never
go as planned. Right. And so during the, yeah.So during those times, there's always kind
(06:36):
of the hesitancy is like, okay, maybe the opportunitycosts of, you know, taking time off from a
prestigious school isn't worth it. But thenI think over time, it's like, well, the things
that go wrong always tend to work out if youlike think hard enough and work hard enough
at it. And so eventually kind of that fear kindof resolves and maybe comes back a little bit
(06:59):
again. a few days later and then you resolveit again. And then, so it's always like that
kind of like back and forth. Absolutely. I guessthis wasn't a direction I was going to go,
but now I really want to. Um, at your age, doyou think about the vision that you want for
your life? For, and I don't mean your businesslife. I mean your personal life. Um, cause
(07:25):
this was something I never discovered in thefirst. two thirds of my career. And the reason
that I'm passionate about it is because so manypeople I've seen have built this really large
financial business that takes up their entirelife, right? It eats up their personal time,
their family time. They end up being maybe wealthyon paper, but extremely miserable in their
(07:53):
life. Have you spent much time even thinkingabout what you really want your- ultimate life
to look like? You know, I think people's wantsand desires change as they grow and as they
have different, you know, experiences for meright now, it's been very like career and work
(08:14):
focused. You know, I haven't really thoughtabout like how much time I want to spend with
my kids, given, you know, my age and stuff likethat. So it's been really much like... Okay,
like drill down, focus on what you're supposedto be doing and making sure that what you're
doing is scalable is, and it's growing at afast pace. Right. So I think as of right now,
it's very career oriented. But I don't believethat's going to be the case. Like if you talk
(08:38):
to me 20 years later from now, right. I think,you know, if I have, if I, if I have kids and
then, you know, it's, they're, they're veryvaluable to me, obviously. Right. So I want
to spend as much time as I can with them. Sothen that conversation becomes like, okay,
is it right to be working as hard and spendingas much time doing real estate? Maybe not so
(09:01):
much, right? So I think the lucky thing forme though is I started early. And so by the
time I get to like 40, 50 years old, I'll probablyhave a better wealth foundation than others
who started a little bit later. And so, youknow, from that perspective, I would say I'm
very fortunate to have the flexibility. Well,if you get to 40, 50 years old and you start
(09:27):
at 21 as a second generation, I would expectyou to have a very, very incredible foundation.
But that's also an expectation that shouldn't,I shouldn't have even said that. It's not fair
to you to say you should have that by then.You may not. Yeah. Because I've seen at least
(09:51):
two different, two to three different marketcycles in my career now, and as have your parents.
Um, but a lot of people, especially at yourage and in through their 20s and thirties,
um, that are just getting started, they don'tnecessarily understand them, the Mike market
cycles. Cause they haven't seen them. You arealso in California. So I'd love to know, you
(10:12):
know, some of your experiences. and you're operatingin a state that has a lot of restrictions compared
to a lot of other states, I mean, that can affectit as well. So yeah, actually, we probably
should go there. And I will mention that whilewe're recording this, the fires that are devastating
California right now, you and I spoke a littlebit before we start recording, that's not affecting
(10:37):
you directly so far, and it seems like you'resafe. So that's a that's a good thing. Oh yeah,
thank you. Yeah. I'm, you know, I live in Pasadena,but more on the like South 210 side of things.
So, um, you know, a little bit away from themountains and the forests. Um, but I definitely
have kind of seen the distress that it causedother people. Um, so yeah, I feel really sad,
(11:02):
honestly, for, for them, especially, especiallylike kind of the, the renters who, you know,
renting in California is difficult. Um, andthen you add onto this kind of like distress,
I just feel very sorry for them. Well, so let'stalk about California specifically. You've
got all these restrictions. I'm seeing thingsand I don't know how much is true or false.
(11:23):
It's all posts and social media, things wherethere's fire trucks that they're not allowing
to come in and help because they have to pass,pass emissions tests. And, and, you know, again,
don't know if this is fact or fiction, but you'renow looking at an entire area of your state
that is going to be in a housing crisis. fora very, very long time. And as devastating
(11:49):
as that is to many, many people, that's alsoopportunity to entrepreneurs, right? And it's
going to hit this supply and demand chain veryquickly, because all these people are displaced.
They have to have somewhere to live. How doyou see that knowing the restrictions and your
(12:12):
government in the state of California? How doyou see that playing out? I think in terms
of like new development, the state's gonna geta little bit more flexible with developers
simply because they have to, right? If we thinkabout the trajectory of where we're headed,
right, it's like supply and demand issue hasalways existed in California, even before this
(12:35):
fire, right? It's just gotten worse with thisfire, given the amount of buildings that were
burnt down. But even with that, it's like, Ithink the 2026 or 2028 Olympics is also held
in Los Angeles. Right. And so I think 2028 Olympicsheld in Los Angeles. And so from that perspective,
right, the streets have to be clean, you know,a lot of like a lot of infrastructure has to
(12:59):
come up. There has to be a lot of changes interms of traffic, in terms of like airport
expansion, maybe even. And so from that perspective,I think the state will get more flexible with
developers the need that we're seeing. On myside, I think the FHIRES effects is a little
(13:19):
too early to be felt or to be evidenced. I amseeing like pickup in leasing velocity because
of the amount of people that were displaced,but they're typically on shorter term leases.
So for example, like instead of a 12 month lease,they just want like a six month lease so that
they can just stay and check things out beforemaking a longer term commitment. So it's less
(13:42):
certain of what kind of that, the impact ofthe fire has been on kind of the multifamily
side of things for now. Right. I'm pretty, I'msure we'll, as we head more into 2025, we'll
see more evidence of this. But in terms of development,I think the housing shortage isn't news to
California. Right. So it's definitely somethingthat the state has to be more flexible with
(14:06):
developers. But also at a macro level, somethingthat maybe we need to get more creative with
how we're building houses. You know, there'sa lot of talks about modular construction now
to try to lower construction costs. I thinkVantum is one of the leading companies in doing
that. They are already starting to build likethree-story, four-story multifamily housing
(14:28):
using modular methods, and it's proven to befaster and also lower costs. Um, so I think
there are many things that have to play rightin order to, in order for like the housing
crisis to really solve in this state and, andin this country, actually. Yeah, for sure.
And, and well, even though I met with somebody,um, a couple of days ago, who, who runs a business,
(14:52):
uh, building panelized walls and trusses andfloor trust systems, all of these things in
an effort to lower costs, but make buildingfaster. And, and there's certainly plenty of
companies out there that do that, but it's,it's not, it's not the main way of building
yet. I think that is the way of the future.Um, I don't know how that works with California
(15:17):
and earthquakes and, you know, all of thosedifferent types of codes. If, if that's feasible
or not. Um, I guess that's not really the scopeof our conversation, but it's, it's the curiosity,
right? Like you guys deal with. a lot of differentcodes that the rest of the country don't have
to deal with just because of earthquakes. Yeah.I mean, there's like geographically where we're
(15:43):
located, right? There's definitely challengesthere. But I think where I was more getting
at is like, there are multiple methods thathave to kind of fit right in order for like
the situation, like the housing crisis to getresolved. Like one is definitely the state
cooperating more with developers. but then alsolike developers figuring out creative strategies
(16:04):
to minimize their own costs. For sure. Absolutely.And that's where the modular side comes in.
Now with what you guys have across your portfolio,and I know you're in multiple different areas
and States, but you do have a fair amount inCalifornia. Um, are you seeing, uh, across
the board, are you seeing a leveling off ofrents? Are you seeing increases in vacancy?
(16:30):
or just the opposite? I think it depends onthe area. I think Orange County, like our properties
in Orange County and along the I-605 corridorhas been doing very, very well. I think our
entire portfolio leverages at around like 99%occupancy, typically year round. There might
(16:51):
be certain properties that just, smaller oneslike a 10 unit maybe that just the vacancy
in... one vacancy, like 10%, right? So theremight be some of those, but I think across
the portfolio in our LA County, Orange County,has been doing very, very well. I would say
kind of like the issue isn't really renting,it's more finding the right renters because
(17:17):
obviously there's rent control and then there'simpossible to evict a tenant. And so most of
our focus is in that tenant screening portionof the process and in figuring out Um, you
know, whether this tenant is actually a reliabletenant with, you know, a trustworthy background
and a stable job that can pay rent on time.Right. So we typically have higher standards
(17:38):
when it comes to taking renters, typically like2.5 to 3 X, um, of rent, uh, for their income
and then closer to like. Okay. You know, atleast I think 700 plus in credit. Um, and so
for it obviously depends on the location ofthe building and the demographics in that area.
Um, but that's kind of average across our portfolioand that's helped us a lot in terms of, um,
(18:02):
you know, tenant laws and, and in terms of actuallygenerating profit for the, for the property.
Yeah. Well, what is your, your family's, uh,I guess, strategic vision for, for growing
things in the future? Is it straight up multifamily?This is your niche. This is what you want to
grow or what is, what is the overall vision?You know, we definitely want to try to tap
(18:26):
into all the asset classes. We actually do havesome triple net retail. We also have mobile
home parks. We also have commercial buildingsand stuff like that. But multifamily has been
where the main focus is given that it's, it'sthe most easy to understand, right? It's like
everybody need a place to live. It's like selfstorage might be harder to understand and harder
(18:47):
to envision. But so that's why we kind of landedwith multifamily first and has grown that side
of the business the fastest. We definitely feelthat, you know, there is a need as our wealth
grows, there is a need to diversify into otherasset classes. But right now, I think our diversification
is more focused on geographical location ratherthan asset class. Two thirds of our portfolio
(19:10):
is in Southern California, the rest is in Floridaand North Carolina. For 2025, one of our biggest
goals is to expand into Texas. Um, and so we,we definitely see the concentration of, you
know, SoCal properties and are aware of thatand, and trying to diversify into other geographical
locations. Okay. What, I guess, what has ledyour family to North Carolina and Florida?
(19:36):
Is it strictly, you know, financial or is itregional because of weather? And, and also
the same question with Texas. I mean, Texasdoes have better laws. They've got. better
weather, what would prevent you all from wantingto go into the Midwest or I was going to say
the Northeast, but nobody wants to go into theNortheast. You can't cash flow to Northeast.
(20:00):
I would say it's mainly based on our connectionsthere. So when we were thinking about geographical
expansion, we were thinking like, okay, we haveto find a place where, you know, we have people
that we trust, local boots on the ground operatorsthat we trust that we can, you know, somewhat
rely on, right? And so we're basically the assetmanagers for those. We're our own property
(20:22):
managers for our stuff in SoCal because we'relocal, but for the other state ones, we're
asset managers, one level up. And so, I mean,we obviously wanted to pick states with high
growth and stuff like that. We wouldn't go intoa New York, right, for example. So we definitely
had our select. number of states that we wantedto go into and then kind of from that, we wrote
(20:46):
even further based on like kind of our connections.Specifically in Texas, you know, been building
connections in the Dallas area, in the Houstonarea, and so know a lot of local operators
there and then also started to see a lot ofDO since the past like six to eight months.
You know, to be honest, most of them weren'tpenciling. Oh yeah. But actually we got to
(21:10):
see a lot of deals at least, you know, we underwrotea lot of deals and so got more used to the
markets there. And so that's kind of the, theideology for going to Texas. What do you think
the metrics are? And you don't have to knowexactly, but off the top of your head, how
many deals do you think you have to underwriteto get one? I think it depends on the time
(21:32):
of the market as well. You know, if it was likein 2023, we bought like nothing and we under
rolled a lot. So that ratio is like, is undefined,right? Yeah. If in 2024, we bought five, we
probably under rolled closer to like, closerto a hundred deals. I think we ultimately in
(21:53):
a year, we typically underwrite between a hundredor 300 deals depending on just the velocity.
I think California is actually easier to underwriteduring this specific time, just because it's
less, I would say, market driven. You'll findmore properties with higher upside and more
value add than a Texas, because it's more marketdriven over there. So as the 10 year starts
(22:18):
shooting, which it did two days ago, and it'sstill pretty elevated, I think that really
slows down velocity. I think California, becauseof like... how many long-term owners there
are. I think there's a higher chance of gettingdeals right now at our current economic situation.
Yeah. What do you look for within the familyoffice for, you know, you got value add, but
(22:44):
is there a certain cap rate that you're buyingat? Or, and by the way, I hate cap rates. I
just, I think it's a terrible metric, but it'sone that's, everybody understands. But when
you underwrite a deal, what are you really lookingfor? Are you trying to be able to value add
it to a certain percentage or take it to a certaincap rate? Yeah. Um, so for, for California
(23:08):
deals, for example, um, I actually like thecap rate, but I also coupled the cap rate with
a vacancy factor and expense ratio, right? Soif, if I can lock in those and then say a cap
rate, then I'm pretty comfortable with thatcap rate. Um, so for California deals typically
under a 5% vacancy, 40% expenses. And then,um, at, if I can get something at around like
(23:29):
a five and a half cap, um, that deal would pencilto around maybe, uh, 16 to an 18 hour over
five years. Um, and, and usually that's like,that actually goes to like a two X equity multiple,
it's just like the time of five years, a littlebit longer, which is why the IR isn't to the
20 mark. Um, but it's typically like two X.you basically make double your money in five
(23:53):
years. So that's typically the metrics thatI underwrite too. Now I do stay away from the
really strict rent control areas, for example,city of LA, city of Santa Monica. I stay away
from those. I go more towards like what I wouldcall secondary markets for California, right?
They're probably like primary markets for otherstates, but like... a place like Glendale,
(24:18):
a place like Downey, a place like Whittier,you know, into Orange County side. Those areas
typically can help me get to that higher caprate and also have enough rental upside where
I can be like going in at a five and a halfpushing to like a seven, seven point low sevens,
something like that. And then I can exit backdown at a five and a half. And you know, the
(24:39):
rent rental upside still gets me into a verycomfortable, you know, projections. And so
from that perspective, you know, it makes me,it makes me more comfortable in getting that
like 16 to 18% IRR. Yeah. Well, I don't understanda lot about California real estate because
(25:00):
it's, it's not the market I've ever dabbledin, nor do I have a desire to, um, but it's
like anything when, when you know your numbersand it's your backyard, you can find deals.
And you guys have clearly proven that over theyears. And, and I always say, I don't want
everybody coming to the upper Midwest becausewe're kind of an untold secret, right? I mean,
(25:22):
I can go and buy cashflow here. I can buy propertiesthat, honestly, I've got one under contract
right now with really good seller financingterms and we can still cashflow and they're
getting what they want. And most of what I dois residential. I don't have a lot of commercial
yet and it is something that we're working towards,We don't have a lot of the peaks and valleys
(25:49):
in the upper Midwest, which makes us boring,but boring is good. And boring is consistent.
And I like that because the peaks and valleysare fun to talk about. And especially people
just want to talk about when they made a wholebunch of money, because everything was going
up and up and up and boy, when they lose itall, they kind of quiet down pretty quick.
(26:12):
So I like the even keel. No, I think you guysare the spotlight of 2024, maybe even 2023,
because the Sunbelt used to be the spotlightwhen I was 2021 and 2022. And then when they
started feeling supply pressures and also ratepressures, you guys became kind of like the
(26:33):
place where the, like you said, the untold secret,right? It's like all of a sudden, like rent
growth in your places seems to make a lot ofsense and Dio seems to be penciling there.
Um, and it's, you know, you guys have been thespotlight for the past few years. Um, I was
actually a while ago, I was talking to, I don'tknow if you know, but like slow come read,
(26:55):
um, he, he does a lot of podcasts and also probablymanagement, he likes the Midwest a lot. Um,
and we were kind of, um, in a sense, like discussingthe differences between like some belt and
then also Midwest. And then from that, we weretalking about also how like the Midwest is
seen as boring. but during a time when interestrates are elevated and there's high market
(27:16):
risk, boring becomes king, right? So that'salso kind of your standout in the Midwest.
Well, and what we don't have is a lot of thenatural disasters. We have tornadoes, but limited
number of tornadoes and they do take out a smallerpath of devastation. But when you start talking
(27:38):
about, you know, like you're in the marketsof North Carolina and Florida, your insurance
costs are just astronomically high. Now you'vegot hurricanes that can shut you down for weeks.
I mean, there's a lot of those things. We don'tget that. Um, now on the downside, we have
harsh winters, higher heating costs, snow removal,you know, those types of expenses that have
(28:01):
to be accounted for. But, um, yeah, it's, it's.It's boring, but it's still, uh, it's still
a great place to, to make a good return. So,well, I'm going to actually kind of lead us
just down a little bit different path as wekind of wind down here. Um, you know, you're
(28:22):
21, you said you've, you've had this upbringingin a, an incredible, what I'm assuming is an
incredible family atmosphere with a lot of pressureto perform. Um, just the fact that you've,
you've been through some of the things thatyou have with, with MIT and everything else.
Um, what do you do for fun? I play tennis. Tennis.Okay. Yeah. I, I've been playing tennis since
(28:50):
I was six years old. Played a very competitivelygrowing up. I was like 90 in the country in
my junior year of high school, um, 20 in thestate of California. Um, most of my friends
have been playing tennis as well. Kind of mygroup of friends outside of work is kind of
tennis. You know, so we always like to hangout on the weekends playing tennis. We've recently
(29:12):
picked up pickleball as well. It's much easierand you know, it, but for us, it's a little
bit less fun, but it's like something new totry. Because we knew how, we know how to play
tennis, right? So like pickleball becomes lessfun for us. But Definitely addicting, definitely
a lot more people knowing how to play and canmake a lot more connections with it. Yeah,
(29:33):
so most of my kind of, you know, person I guessfor fun is playing tennis and playing pickleball
and trying to stay active outside. Okay, okay.And not married, no kids coming, nothing like
that yet? Not yet. Well, that's when it getsreally fun, depending on what you. your motivation
(29:57):
is. So, well, what's one question I should haveasked you that I didn't, and it can pertain
to anything.
I think you should have asked me like kind ofwhat I like, how my acquisition box has changed
in the past few years, because it's changeddrastically. The numbers on my model has changed
(30:19):
drastically, especially that interest rate.And to be honest, like I would say the answer
is that the financing issues has definitelychanged. We've put in more equity onto a lot
of our deals. We know long, we try to limitthe amount of leverage. simply because we have
the liquidity on the financing side and we don'twant to take excessive risk. To be honest,
(30:44):
there were two deals in California that we boughtactually on floating debt but at super low
rates before the rate hikes. And it just startedhiking and hiking and hiking to a scale that
we just decided to pay the debt off, right?So for us as a family, you know, we're very
well focused on kind of... wealth preservationand growing wealth in a steady pace. So, you
(31:09):
know, we're right now kind of more trying totake control of a lot of our properties and
making sure that we don't over lever and don'tget exposed to a lot of risks. So that has
definitely changed on the acquisition box side.We're looking for stuff that, you know, will
pencil to a lower leverage. And obviously it'sharder to find. Leverage definitely helps the
(31:29):
returns. Um, but that's why we haven't boughta lot of like a crazy amount of deals either.
Right. So, so definitely trying to lower theamount of risk while still trying to hit our,
um, our returns. And I would say, cause I havea very close relationship with a family office
here in the Midwest and we have these conversationsoffline. If you're in a position where you
(31:54):
don't need to buy anything. for all of 2023and you really don't need to buy anything if
you don't want to for 2025, if you can justmaintain.
what more could you possibly dream of, right?Like be able to cherry pick the best deals
when they come along and to be able to fundthem with minimal debt, if that's your choice.
(32:18):
I think that's where most people probably wantto get to. However, most of us over lever and,
you know, play that peaks and valleys game.And a lot of people I've known in this business
in 21 years have gone belly up and never cameback. And so I love the fact that you guys
(32:40):
have that mindset. I really do. Yeah, we focusa lot on the concept of like patient capital.
And that goes for both the acquisition as wellas the disposition. You know, so on the acquisition
side, we kind of touched upon, we don't haveto buy if we don't want to, and we don't feel
comfortable with it. And it goes same for thesale, right? If we feel like, you know, the
(33:03):
market's not that good, it's not like we'rea fund that has to close in, you know, seven
years. And so, you know, maybe we hold it outfor another three years and wait for a better
market. So, definitely I think patient capitalis definitely like the family offices leverage
against the institutional guys. Well, that'sawesome. Man, I can't tell you how much I enjoy
(33:25):
interviewing you and this isn't gonna soundreally, politically correct, but I don't get
to talk to a lot of people your age that I canrelate to. I don't. And with your upbringing
and your clearly your experience, it's beena pleasure. So thank you for that. Thank you
(33:47):
so much for having me on the show. Absolutely.If anybody wants to try and reach out to you
or follow you. Is there any social media? Isthere anything out there, anything we can do
to help you? Yeah, I'm pretty active on LinkedIn.So definitely reach out. If there's a way to
(34:07):
partner up and have any synergies, please feelfree to reach out on LinkedIn. Also, check
out my website, www. And you can definitelyreach out there as well. Okay, awesome. Well,
we appreciate. your time as always and for everyoneelse. We'll catch you on next show, but until
(34:29):
then, go out there, find some deals, live yourvision, love your life. See ya.
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