From Storage Success To Tax-Smart Real Estate Wins | Webinar E36 - The Paradyme Shift

Episode Transcript
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SPEAKER_00 (00:40):
Well, hello everybody.
Ryan Garland here, founder andchairman of Paradigm.
We have Mike Revley, our CEOtoday.
And I'm uh want to thankeverybody because it looks like
we have quite a bit that arealready logged on for joining us
today.
Make sure those arms staysteady.
There we go.
Joe, you got to do your job.
Thanks, buddy.
So uh, but thank you guys forjoining us today.
We have uh, you know, we we'rewe're getting um a lot of

(01:02):
requests to talk about kind ofthe exit strategy for investors
and kind of what seems to becommon, what a lot of people
have questions on.
So we felt that it was necessaryfor us to kind of talk on that.
I think you guys will appreciatekind of where we're taking it
today.
Obviously, Mike, from hisbackground on Wall Street and
kind of really working with uhlarger institutions and how they
uh position themselves forexits, because it's always about

(01:24):
how to not only make money butretain the wealth that you've
created.
So uh Mike has just got a ton ofknowledge on how a lot of guys
are are maneuvering around fortaxes, but really just talk
about our experience with what'shappening with the barn caves,
what's happening right now withLake Avasu, and just kind of
paradigm in general.
So we again we thank you guysfor joining us today.
Mike, thank you, buddy, forjoining us as well.

(01:44):
And uh what would you like totalk about first?
You want to talk a little bitabout all the things we have
going on, uh, just so we cankind of give more of a
background for some of the newuh uh uh participants.

SPEAKER_01 (01:52):
Right, I think that's great because I'm I'm on
the front lines with a lot ofour investor calls.
And I I think the one thing thatthey're surprised, because
they're obviously gettinginformation on our current
project of Barncase, but that'sreally just one of many that we
have going on here in Havasu andand really uh you know in other
parts of the country.
And I think they're surprised bythe sort of the depth and

(02:12):
breadth of what we're doingoverall as paradigm and and
where that vision takes us fromhere, right?
So investors they want to knowwhat you're doing now, of
course, but they also want tobuy into what you're gonna do in
the future.
And I think if you look at theBarncase project, it's very
unique, obviously, and peoplebuy into that sort of unique
nature of that particulardevelopment.
But there's a genesis story tothat, right?

(02:34):
And and that the genesis is herein Lake Havasu, where you really
got your start as paradigmdevelopment right here in
Havasu, and we're wrapping upyou know, a 200,000 square foot
development of man caves here inin in Havasu.
So I think that Genesis story issomething that I think people
need to understand more of thatparadigm.

(02:54):
We just keep we need to hit thata little bit, let people
understand exactly what we'redoing here and how that
translates to where we're gonnabe over the next three to five
years and and how we're gonnaessentially from an investor
standpoint make sure that youknow we're executing on that
vision.

SPEAKER_00 (03:11):
Yeah.

SPEAKER_01 (03:11):
And I think that's so that's fundamental, I think,
to paradigm.
It's fundamental tounderstanding who we are as a
company and then our projects,and and from an investor
standpoint, what the end pointis, right?
Because everything that we'redoing in paradigm, and and I
think this is important, is thatthe time frames that we're
looking at from an investorstandpoint are short, they're
short duration assets, they'reone to four years, right?

(03:35):
So if you're gonna lock money,you know, in what we typically
see is people that are comingonto the platform begin to roll
over to that next project andthat next project.
So giving a people uh I think asense of not only what we're
doing here in Havasu, but thathow that translates to other
markets is important.
So I'd love to start there, man.
I think I think you goingthrough what we're doing here in

(03:57):
Havasu, how you got into Havasu,and why you think it's a market
that quite frankly we couldhover here in the next 10 years
and not satiate the demand thatwe see for what paradigm is
building.
So I'd definitely love to startthere.

SPEAKER_00 (04:11):
All right.
So, you know, I have thephilosophy, which is kind of
nice because one of my mentors,his name is Dan Um uh Stevenson,
he owns uh Europa Village andhas owned a company called
Rancon Group and has been inTemecula for 70 years.
And he uh he was kind of theresince the 70s.
And so he had mentioned, youknow, when he went out there, he
just saw the opportunity tobasically build an empire there

(04:32):
and really build some wealth fornot only himself but his
clients.
And so he just kind of stuckwith inside that geographical
area and really has done amazingjobs, probably the best
reputation in the area fordevelopment.
So I kind of have that same uhphilosophy, and I think really
it stems from just being a kidand coming out here, you know,
and then my father retiring andmoving out here.
And so, what has happened sincethe pandemic?

(04:53):
Because that's really reallystarted to kind of open up our
eyes as far as the migration andreally watching the data of
everyone's spending habits andso forth.
And right now in Lake Aviso, notonly do we have 225,000 square
feet, which is paradigm storage,Barn Caves is roughly 530,000
square feet.
And to give you guys an idea, inthis little location off Retail
Center Drive, which again, thisis on the north side, right next
to the mall and across from theairport, we share a property

(05:16):
line with Paradigm Storage withHome Depot.
Um, the uh the entire retailcenter, as far as Dillard's, the
mall, you know, uh Walmart, uh,Home Depot, was it JR Motors, uh
JCPenney, you know, all of thatuh retail over there is roughly
730,000 square feet.
If you look at the numbers justright here that Paradigm's
building is equal to, it'sanother 750,000 square feet or

(05:38):
so under roof.
And so ultimately, when you lookat it from let's just say from
the city's perspective, or youlook at it as from you know a
vertical perspective, that's alot of square footage under
roof.
And we're ultimately doublingthe amount of development that's
already uh in place here on thenorth side.
So when you have that much goingin, you're more of an
institutional player.
People start looking at youdifferently.

(05:59):
Um, and then and if the you havea proof of concept and things
that you're making money, that'suh that really starts standing
out.
So paradigm storage, guys, isprobably one of the best um
examples to start with.
Uh, but to move forward separateto that, is is you have you know
boat house as well.
Boat house is 49 units.
It's a paradigm storage product,their condo map, but it's a

(06:20):
little bit um, I would say morein uh affordable just because of
the location.
It's out there by the 40 and the95.
Uh paradigm storage is withinthe city limits, so it's a
little bit closer to home.
So people will obviously spend alittle bit more to be closer to
their home.
So uh, and then we have ourheadquarters that we're
building, and we don't talkabout it much just because it's
our uh kind of our like littlesecret weapon or what have you.
But that's a 20,000 square footoffice building.

(06:41):
Ultimately, it's a 20,000 squarefoot house, it's just a big
office, and that's right hereoff Dover and Industrial, so
it's central part of town,closer to the water.
Um, and then we have uh, andthen we have barn caves in the
gym, right?
So you have four differentmodels that are really going on
here, and the demand iscontinuing to show.
Example, today, I think we havean offer coming in for another
five units just in paradigmstorage.

(07:03):
And my broker, which everybodyknows, Eric Adalia, he texted me
and said, with this velocity,given the amount of units that
we're selling, by the time thisproject is completed, meaning
the buildings are up, we havealready sold all of the units.
So to be able to say in thisvolatile market, in this
environment, you're still ableto produce an asset that is
holding and investors arecomfortable with, uh, that's a

(07:24):
big deal.
So it does open up the doors forlarger institutional investors,
and we're gonna talk about JPMorgan here in a minute.
Uh, but that really kind ofgives you an idea on how we're
hanging our hat here, but thedata does support it.
Uh, it's really nice for a grouplike us to be able to have our
resources, whether it'ssubcontractors, the
relationships with the city,architects, engineers, city
engineers, when you know kind ofhow people maneuver, it allows

(07:46):
us to actually have a well-oiledbusiness.
So it's that's where a lot ofthe heavy lift is gone.
So being able to kind of hone inon an area that we see the
demand, the data is supportingit, uh, baby boomer spending
habits is there, healthcare is abig on the forefront, is the
city too.
You know, we can kind of come inand build these assets that we
think are gonna continue to havethe demand.
So that's really important.

(08:06):
But again, really, you know,what's the next step, right?
So, okay, we build these things,now it's about the exit.
The exit's always reallyimportant.
And even today, I was talking toone of my favorite investors,
and she's been with me for uh along time, and she's in every
one of our projects, and she'slike, Ryan, I'm about to make a
bunch of money on paradigmstorage.
What about taxes?
What do I need to do?
Right.
And legally, I can only guide somuch because we're not uh

(08:27):
advisors, but we could say,well, this is what we're doing,
you know, and uh and obviouslywe want everybody to uh cross
their T's and dot their I's.
But right now, you know, if youhaven't uh seen some of the
stuff that we've uh we've had inthe past, we actually brought on
a tax attorney that really doesa lot of deferred sales trust.
So we've already been in thegame of trying to position our
investors to see other optionsto position themselves to not

(08:49):
only retain the wealth thatthey've created on that equity
kicker, but you know, maybereposition it and continue to
earn or even to start uhshifting it and diversifying
what have you.
So uh really that's what'shappened with the barn cage,
really kind of started that too,guys.
Where, for example, with solar,we can pass on the tax credits
to our investors on solar, andtherefore for the next four

(09:10):
years, you're getting taxcredits on your K1s or your
1099s.
It depends on when we startissuing distributions, but
you're starting to get some taxadvantages on maybe some
additional income that you havecoming in on through those K1s,
you can start saving on taxes.
So there's a lot of littlethings like that that developers
like us that need to continue tobe sensitive to, not only for
our own income, but to continueto provide those resources to

(09:30):
our investors.
So, with that said, Mike, let'stalk a little bit about some of
the things and conversationsthat you're having with clients
about taxes and really kind ofwhat you're seeing most people
are are leaning towards.
Now, again, we know about theIRAs and people rolling over,
but what seems to be the commonconversation because we are
getting ready to pay off ourinvestors uh on paradigm
storage, and so we're alreadystarting to start our phone

(09:51):
calls to uh welcome and thankthem now and thank them for
being a part.
But what are you seeing?

SPEAKER_01 (09:56):
I think from an investor standpoint, you know,
the the typical things that Ihear, you know, uh people
looking to do, and and we'veseen this in paradigm storage, I
think, in particular, right, isthe 1031 exchange.
You know, I'd love to say it's a1031 exchange into the a unit in
the barn case, but we're notthere yet, right?
That's a fund.
But we yeah, as a as aninstitution, we are offering

(10:18):
that option for 1031 exchangeright here at Paradigm Storage.
And that that I think is theeasiest transition from an
investor standpoint because alot of people that we have are
real estate heavy.
They love real estate.
That's where they've made theirwhether it's a family office or
it's a high net worth, you know,they're constantly looking for
real estate projects to investin.

(10:39):
And that the the the 1031exchange obviously is a common,
common, common uh discussionthat I have.

SPEAKER_00 (10:45):
We just had 18 units purchased by it through a 1031.

SPEAKER_01 (10:48):
18 and perhaps another 10 or so we had another
nine, a 10, yeah, a seven, afive.

SPEAKER_00 (10:54):
We've had a lot of I think out of all the 208 units,
I think we're gonna have lessthan 100 owners because most
people are buying more than oneunit.

SPEAKER_01 (11:02):
Yeah, exactly.
So obviously that's somethingthat we hear all the time,
right?
In terms of how do I reallyshelter this gain that I have?
And we just had a conversationwith one of our larger
investors, but she's a bitolder, right?
And and there's some thingshappening within the family.
It's it's in a family trust.
So how do we divert those assetsout of the family trust into

(11:23):
paradigm projects and not haveto incur taxes?
That's always a question that weget, right?
So you know, we you know, as afirm, I don't like to give tax
advice, obviously, but there areways to shelter that income and
not have to pay uh the capitalgains on it.
So that you know, we're we'reconstantly looking with the bird
sales trust, another huge ideawhere people are are essentially

(11:45):
you know using that to investand reinvest their uh you know
their real estate gains andshelter it inside that DST
structure.
You know, so there are it forthe sophisticated clients, there
are ways to do this for sure.
And I think one of the thingsthat I'm seeing, you know, from
you know my conversations withthe investors is and and it

(12:07):
maybe this is just a reflectionof where paradigm has come over
the last 18 months.
The conversations that I'mhaving with our investors are no
longer the smaller checkwriters, the$10,000 to$20,000
check writers.
These are people that have$500,000, a million, two
million, four million dollars,right?
So I I think that's that's areflection, I think, of the

(12:29):
product that we're bringing tothe market, the sophistication.
But in a you know, in a realway, it's the track record,
Ryan, in terms of what you'vebeen able to deliver.
And you know, as from aninvestor standpoint, people want
to reinvest in things that havemade their money in the past,
right?
So people are getting morecomfortable with the overall
asset class.
I think they like storage, andthey're seeing this idea of you

(12:53):
know, storage plus residential,true storage, not just you know,
we're saying we're building ayou know a large garage.
You know, these are true boatand RV garages, allowing people
to keep you know their toyswhere their you know where their
home is, whether it's a secondhome, first home, or third home.
So that that product I think iscatching sort of fire across the

(13:16):
U.S.
I mean, we've had people come infrom Alaska, fly in to Havasu,
invest with us.
We have conversations withpeople all over the country that
have seen this, given our reachon Instagram, Facebook, and
social media platforms, thathave been able to see it, but
there there seems to be thisbuy-off, like I just can't get
enough garage space.
And therefore, you know, and youknow, and I think our

(13:39):
demographics tend to be, let'sface it, they tend to be 35 to
60, right?
That's that's our demographic interms of our investor and our
buyers.
And that demographic is the onethat has all the toys.

SPEAKER_00 (13:51):
It's true, and a lot of much of the wealth too, which
ultimately are looking for moreand more write-offs.
I know one of the common thingsfor you know local buyers,
what's happening is they don'thave enough room in their
current RV garage that's tied totheir home.
And so they're coming out andbuying another storage unit.
But a lot of the conversations,as I'm seeing them in passing,
as they're maybe epoxying theirflooring or moving in and
getting their keys, they'll say,Yeah, we had you know some tax

(14:11):
implications, and our advisorit, you know, wanted us to buy
more real estate or pay UncleSam.
Which one is it?
You know, which obviously leadsinto additional uh opportunities
to invest.
If you have the same issueinstead of buying real estate,
you could actually own a pieceof real estate through an
investment structure withparadigm, and then you don't
have to worry about work ormanagement or or what have you
of the asset.
So we do that heavy lift.

(14:32):
Uh, there's another opportunitythat we're actually working on
right now to call the qualifiedopportunity zone.
For a lot of the real estateinvestors, they probably know
what that means, but ultimatelyit's uh it's locations within
certain cities and countieswhere um uh I would say from a
federal level want to try topush more growth.
So what they've done is they'vecreated incentives for investors

(14:53):
to go into a fund that is anasset in a specific location
that has again has beenidentified for for needing
growth.
And we would get, you know, youcan roll your capital gains,
1031 exchange, sales from uhmaybe a business, and you can
actually roll those gains into areal estate uh opportunity zone
where, for example, a lot ofpeople don't know this, but like

(15:15):
let's say uh you have a sale ofa business, you can't just roll
those gains into real estate,getting 100% you know, write-off
on your gains.
You still have to you can deferthem, but only for so long.
The same thing for with 1031,it's like for like, right?
So if you sell real estate,that's what 1031 is for.
You can sell real estate andthen you can roll that capital

(15:35):
gains into uh another realestate investment, right?
You have to own the property,you have to be on title.
So yeah, like for like whatwe're doing is ultimately it is
like for like, it's real estate,but you can also sell businesses
or any other assets and investthat into a real estate fund and
get those tax advantages.
So that's another fund thatwe're actually looking to open

(15:55):
because so many people andinvestors are going, Ryan, not
only do we want the morediversification, we want to stay
in real estate, we're getting alot of profit on your end, but
how do we maneuver for taxes?
So it's either you could rollinto some of the other funds.
So what's happening is we'rejust kind of you know ears to
the ground and maneuvering ourstructure.
And really doesn't matter thethe construction, the product,
all of that, it's has its ownmerits.

(16:17):
The same thing in paradigmstorage.
We know that there's a demandfor it.
The only difference is thelocation and the way we
structure the fund for those taxadvantages for our clients.
So it's really just kind ofmaneuvering and implementing,
you know, basically the thetools that are out there to
provide those um amenities toour clients.

(16:38):
And so uh with that said, youknow, let's say um, you know,
the uh, you know, with not onlyDover, we we want to do a cost
segregation on that.
We're gonna do a cost seg aswell on the gym, which
ultimately means we get to passthose uh those um real estate uh
um what's it called?
Not tax credits, but uhdepreciation back through to our
clients.
So it's really kind of neat, youknow, how we're actually making

(17:02):
this more on the forefrontbecause again, our clients are
making a lot of money and uhthey're they're looking for
those uh again, those taxadvantages.

SPEAKER_01 (17:09):
And I think too, just the way that we're
structuring and and we'refinalizing this with our
attorneys now, our tax attorneysand uh our fund attorneys, but
to be able to basicallyessentially have within the barn
caves structure our investorscoming into the uh coming into
the fund and actually viewingthis as sort of a pass-through,

(17:31):
right?
You're actually purchasing a lotas you're coming in to the fund
and then maneuvering this so wecan roll over the the principal
and profits into that downpayment and have it in a
tax-advantaged way, right?
So this is in a way for us, youknow, we're we're trying to stay
at the forefront of you knowreal estate and tax law and be

(17:51):
able to essentially help ourclients manage that, you know,
because I think it in inparticular the Barn Caves is a
unique product, right?
Because it's it's being seen asa high return investment, and we
have plenty of people that arejust saying, look, I I love
31.5% projective return on it,and I sort of get it, it's 93
units.
It's not you're not building athousand homes somewhere, you're

(18:13):
you're in your home market,you're building, sure, it's a 75
million dollar project, but it'sunderstandable, right?
So there's those people thatjust view it from an outright
return perspective, but there'sa heck of a lot of people that
are have sort of seen this andsaid, No, I want to invest in
it, but I also want to own aunit, right?
And and we've got famili officesthat are coming in for multiple

(18:36):
units, that they're justbasically you know taking the
returns that they get from theunderlying fund and rolling it
into multiple units.
So we want to be able to do thatin a tax efficient and effective
way for you know our investors.
So I think we are, you know, weare trying to stay on the
cutting edge of what we can dowithin the tax law and and
making sure that we understandit, our investors understand it,

(18:58):
and you know, get the advicethat we need.
And and that that I think is,you know, from my perspective, I
think that's that's our job,right?
We're not just developers, buteffectively, you know, the nice
thing about us is we're aplatform.
And on that platform, you know,we have consultants, we have
attorneys, we have taxaccountants, all these people
that uh we can not only you knowuse to our advantage, but also

(19:21):
for our clients' advantage.
And we're so we're becoming muchmore of a quote unquote family
office, right, with adevelopment on it.

SPEAKER_00 (19:29):
Yep, that's exactly.
So let's unpack that a littlebit more.
So that's the fruit here, guys.
I wanted we're gonna kind ofwe're gonna talk about that a
little further so it'sunderstood probably better.
So it's funny because some ofour investors that are actually
in paradigm storage are on thisand want to own units or have
already bought units once theproject was not only did they
invest into it, but they alsoown units here.

(19:50):
Um, it's really kind of the sameconcept.
The majority of our clients dolike real estate.
So, of course, no one's gonnaput all their eggs in one
basket, right?
Everyone, you know, you seeparadigm and you're like, you
know what?
I want to dip my toe in thewater.
I've hey, I've had you knowseveral investments with them,
I'm gonna keep rolling capital,but they still have some of
their liquidity and a lot oftheir net worth is still in
other assets in real estate.

(20:11):
What has happened is we'velearned our lesson with paradigm
storage, where because these arecondos, this is a for sale
product, it's fee simple.
Each unit's a for sale productthat opened up the doors to a
lot more buyers, uh, a lotlarger buyer pool.
And you have real estateinvestors that don't want to do
a step or can't do a step up intheir basis, or you know,
because of interest rates arehigh, they don't want to buy

(20:32):
another residential rental, andthe entry point is so low here
that you can buy one or two.
The management is much less.
The kind of list goes on on thereason why people continue to
buy these.
It really has to do with thereturns are stable, you don't
have a lot of turnover, themaintenance is minimal, and the
entry point is low.
So the the net is a lot fartherout from investors, and people

(20:53):
from across the country arebuying these site unseen because
the asset class is getting moreand more PR from Goldman Sachs
opening up a$500 million debtfund for operators on takeout
loans after construction for uhbuying holds, in essence.
So long-term debt, 30-year,40-year mortgages against these
assets.
So, what's happening isinstitutions are paying

(21:15):
attention because the asset hasbeen so stable.
But to fast forward, what'shappened is with the barn caves,
it really opened up the doorsfor investors to say, hey, Ryan,
we want to invest, but we wantto buy a unit.
And uh, and then we would liketo own one.
And so what happened was again,learning what's happened with
Paradigm Storage, is we went toour securities attorney and our
tax attorney and said, Hey,look, if we have investors that

(21:35):
are invest, and and whateverthat number is, and we could
talk about it if anybody'sinterested that hasn't invested
with us, you know, they can lockin a lot, invest us a minimum
amount, and then what happens isthat 30% projected return, I can
return that profit to them witha gift of equity.
So now they're getting the giftof equity, eliminating the tax
gains on on or the profit and onthe taxable gains on the profit,

(21:58):
and it's rolling into ownership.
And therefore, our investors aregoing, I love that idea, right?
So now let's say you roll intoyou have an IRA.
It's it's fine.
We can roll those gains intoownership, but you take the
principal back to your IRA.
There's so many differentpractices, but here's the
biggest takeaway.
We have, I think, north of ahundred thousand people on a
waiting list to buy these units.

(22:19):
That's how much exposure we'vereally pushed the barn caves for
everyone to see.
But the interest list has gonethrough the roof.
On top of other developers,other landowners, other guys are
trying to get uh a hold of ourfloor plans because they want to
build something similar, becauseit's just taken root.
It's it really has.
It's a it's really kind ofimpressive.
But again, what's happening isinvestors are going, well, look,

(22:41):
I or buyers and investors aregoing, I love what you're
building.
I love the price point as far asthe sales price.
So they're locking in on it on asales price.
So from an investor'sperspective, or even a
developer, we're always focusedon developing and selling to
make a profit.
If my own investors are lookingfor tax strategy, they're buying
them, and then we're gifting theprofit to them for the down

(23:03):
payment or a portion of theirdown payment.
But yet we have a fixed salesprice, and we have right now, I
think it's 43 of our units orlots have already been chosen
out of 93 lots.
We're already halfway sold inessence, right?
Or close to.
So what's what's happening isnow the investors that aren't
necessarily know the location ordon't want to own a home, own

(23:23):
one of them, is looking at itfrom just a straight raw
investment, get my money back,move on, or maybe reinvest.
What's happening is they'regoing, well, hold on, you
already have set purchaseprices.
You already know what your soyour pro forma and your
projected returns are prettylocked down.
The really only thing that weneed to focus on is building
them on time and on budget tostay on that pro forma

(23:43):
projection.
So it really has created a lotof institutional players to
start paying attention to thedemand, because that's that's a
testament to demand, peoplewanting these.
It's a testament to being ableto build them at a cost that is
favorable and affordable andattainable.
It's a testament to the natureof the development and this and
the fact that the majority of itis steel buildings, which lowers

(24:05):
insurance costs, not only from adevelopment side, from a
construction side, but for anend buyer's homeowner's
insurance policy is actuallysignificantly lower to have a
steel building, all the way downto the technology that we're
implementing uh for fireprotection, which is we could
talk about in another anotherwebinar.
Um, but all of these things arechanging the landscape of how uh

(24:27):
planning and approvals are beingdone internally with the city at
a at a private level or publiclevel, down to how architects
and engineers are trying to addvalue to developers by
developing a uh, let's just saythe structural engineering of
these buildings where you candeliver the structural steel on
one truck and it's cheaper forlogistics and transfer and
keeping the cost down.

(24:47):
I mean, the list goes on on whatwe've created.
So when investors, thesophisticated people that want
to know what they're gettingthemselves into, are gonna pay
attention to all of this andthen pay attention to what the
world is talking about as well.
So, with that said, again, thisis what's happening is these
investors are going, Ryan, welove where you're going because
not everybody knows this.
We're working on buying another37 acres right behind just west

(25:08):
of paradigm uh uh barn caves, bythe way, because we the demand
is there.
But we're gonna continue todevelop right here in the area
because again, that demand isthere, it'd be dumb for us not
to.
And by continuing to providethose tax advantages again by
through ownership and giftingthat equity, uh, is really a big
deal.
And I would say the majority,I'd say maybe 50% of the
investors that are in this fundwant to own one.

(25:31):
So by being able to createanother vehicle for opportunity
for clients, it's really kind ofstarting standing out for other,
let's say, operators like usthat are trying to provide uh
and and and successfully raisecapital, but provide more
services to their clients.
So I hope that makes sense.
I know I talk a lot of yourguys, but I hope that I was able
to unpack that again.
Again, the takeaway isinvesting, rolling your gains

(25:52):
into ownership.
Uh, you know, if you have,depending on the vehicle and
what you've invested in, you canget some of that principal back,
plus a pref if you need it, butyou're not getting taxed on
those gains.
Those are that's a big play.
So again, it's like you're gonnabuy a home, you're building the
home on your own.
If you keep the house, you'renot gonna get taxed on unreal
unrecognized or realized gains.
You still own the home.
Until you sell it, you're notgonna, you're not, uh, you're

(26:14):
not gonna have to pay taxes onany of the profit.
Same concept here, becauseultimately you're investing into
the LLC that owns this project.
So it's really just a numbersgame, is really all it is.

SPEAKER_01 (26:23):
We're just simply gonna have two share classes
within the buck.
Share class for investors andshare class for investors that
want a unit, right?
So usually we can do that.
I I think I think fundamentallytoo, if you go through the
numbers with the investors, I'mI'm sensing too, they sort of
see this almost like an IPO,right?
In a way, they're like, oh,well, you know, you get a new a

(26:44):
new stock that comes out in anIPO, it's typically cheap and it
goes up after the you know afterthe stock is released, right?
I think people look at this andgoing, you're delivering this
product at 425 bucks a squarefoot.
Wow.
Okay, there's an upside therefor sure.
And I tell them, look, these areour performers, we're being
tried to be conservative, andand yeah, we could be releasing

(27:04):
these at much higher pricepoints over time, right?
This we're phasing it out.
Anybody that's not locking youknow their their home in through
the that V share, you know,effectively, yeah, I think we're
delivering this below market.
I've always thought that.
It's like, okay, 425, fair.
But I think you know, there's450, 475, even pushing$500 a
square foot, delivering theproduct that we can deliver out

(27:27):
here in Havasu and making it.
I think once you once you driveinto the private drive with the
palm trees and the pavedstreets, and you're gonna get in
there and go and do I get totalk about that on this one?

SPEAKER_00 (27:37):
Do I get to talk about that?

SPEAKER_01 (27:38):
You get to talk about that.

SPEAKER_00 (27:39):
I'm such a nerd.

SPEAKER_01 (27:39):
Absolutely, yeah.
But you're gonna come in thereand you're gonna go, wow, I just
don't want to leave this place.
This is so incredible.
And then having a 32,000 squarefoot gym with a Dubai-inspired
pool and pickleball courts andduck, all that creates the
overall environment where youknow that that price per square
foot seems like a giveaway.
And I think people are sensingthat.
They're like, Yeah, I see theupside in what we're trying to

(28:01):
build here, and also from aconcept perspective, we begin to
brand ourselves in a way thatwhen we come to that next
location, they already knowabout the product, they've
already seen it, they've seenwhat we've built here, and
that's why I think we're gettingthe takeup we get from Alaska or
from Florida or from Missourior, you know, I literally I'm

(28:23):
having conversations with peoplein virtually all 50 states.

SPEAKER_00 (28:26):
Well, let me add it to this.
So, guys, where I learned a lotof this, so my uncle, um, he was
one of the presidents ofStandard Pacific Homes, which
ultimately sold to Lenar.
He ended up going over to uhWestern National that was
building uh, I think 33,000apartment doors for the Irvine
Company.
He left there and went withbecame the president of uh of
Holland Partners, which itbuilds high rises all over the
world.

(28:47):
And in my opinion, that would bemy dream.
He doesn't get much bigger thanbuilding high rises.
Okay.
He always said that you makemoney on your acquisition.
You make money on doing yourhomework and doing your
research.
That's where you make yourmoney.
And the biggest testament thatwe have to the success of where
we believe the market is goingis not only because the data
doesn't lie, but you know, forexample, Paradigm Storage, we

(29:08):
thought we were going to sellthese at$145 a foot.
Our cost to build has actuallystayed the same, which is ironic
because we've been buildingthrough an inflationary period.
But we plan on selling these for$175 or$145 a foot.
Right now, on average, we'reselling them for$175 a foot.
And the rest of Building E, wejust sent out an offer, or
actually I counterside an offerat$180 a foot.

(29:30):
So it's the same concept as homebuilders, right?
If you buy earlier in thephases, your your cost is a
little bit lower.
As you deliver a product, peopleare your the demand goes up, you
can increase that price.
That, yes, the demand has goneup, but it also the market has
slowed.
You mean Q4 last year during theelections was I mean, it was
desolate, it was quiet.
And we kind of expected it, um,but we still were starting to

(29:52):
see we were still seeing tradeswhere other real estate
traditional real estate hadslowed down, and certain price
points have definitely been hit.
But these assets just aren't,and it's simply because of the
tax strategy.
People are looking to continueto retain their wealth and not
pay Uncle Sam so much.
So that's been huge.
So it's allowing us because thedemand for tax strategy is
higher than homeownership rightnow.

(30:13):
People own their homes.
You are maybe you may have a lowinterest rate on your home right
now, and you don't need to sellit because interest rates are
high.
You may want to move to Havasu,but you can't because you're
like, well, I'm gonna go buy a$1.2 million house, but I'll
have an 8% or sorry, that'sright now 6% mortgage where I
have a 2% right now.
So it it's the lot of peoplearen't making those moves just
because the the rates aren'tlow, and but they're looking for

(30:34):
those tax advantages.
So um to move to move over, andthis is actually probably one of
the most important things, and Ithink.
I announced this before.
And if you guys were to GoogleApex, APE A T A P A P X, I
believe they just bought 630acres from the state, just west,
and it's kind of northwest ofthe mall here, which is
ultimately a left-handed rockthrow away from us, um, uh, to

(30:57):
Apex, I think it's like 10.2 or10.3 million, 630 acres, and
then they're splitting that downthe middle to the owner of
Viewpoint South Point, which Ithink there's like you know, 400
homes or 500 homes over there,which is literally, you can see
it when you're standing upparadigm storage.
And then, and then the idea isfor they're gonna build a lot
more homes.
So the demand is going up, butif you're seeing a 630-acre

(31:18):
acquisition where there are twoof the larger home builders in
the area, and including me, I'mgonna actually end up taking 37
acres from one of the guy whoowns uh viewpoint uh North Point
for us to build more in thatarea as well.
The demand is clearly there.
And these are institutionalcapital-backed players.
So, you know, we're really kindof in that same lane as they
are.
We just have a differentproduct.
They're building regularone-story, you know, uh uh RV

(31:42):
garages on the next of theone-story house.
Their product and what we'redoing are two different worlds.
So there's no real competition.
But if you were to Google that,what you're gonna see is that
they actually implementedParadigm's gym and the Barn
Caves in their PR when they weretelling the world what they just
did.
So Paradigm has really createdkind of this momentum for the
North Side to pick up.
And I won't go too far into evena possible partnership with the

(32:04):
owner of the of the mall, butuh, because that still hasn't
solidified yet, but we have alot of landowners that we're
working deals with uh all overthe place.
But um, you know, that thatthat'll kind of give you an idea
of our projections on thegrowth.
And so what's gonna happen isthe barn caves are gonna be
really the first residentialthat's this close to the re the
retail that's gonna be deliveredafter that acquisition.

(32:25):
So I believe we're gonna controlthe market.
Right now, our pro forma isshowing that we're gonna be, you
know, just under$400 a foot.
All the other sales in the areaare north of that.
So if we're already conservativeon what we're selling and
exiting these at, of course,investors are like, yeah, I want
to buy them.
You're gonna be on the lowerpoint already.
But let's say investors we wedecide to shut it down and we

(32:46):
only have, let's just say 43units accounted for.
My investors that invested, andthis is important, my investors
that invested, same thing we didwith paradigm storage, the rest
of the units that are notaccounted for by my investors,
again, which have first riderrefusal, we're gonna start
increasing the cost per squarefoot as we deliver the rest of
those phases.
So the other half of the of theproject, if you will, I'm gonna

(33:07):
increase the sales price.
And I do believe the market'sgetting better.
So, uh, and it's it's projectedto get better by the time we
deliver these units.
I think we're all gonna be in ain a much better position
overall as an economy.
With that said, that's gonnachange even the investors are
walking into additional equity.
Now, from a gift perspective andfrom a documentation, it's not,
it's just you're gonna buy ahouse and I'm obviously for X

(33:30):
price, and then we're gonna endup selling the rest of the
phases for higher.
So you're automatically gettingan equity increase uh as you
have owned that property overtime.
And then again, you have allthat development going up.
So the point is that there'sdemand there, and I think the
investors that are reallydigging their heels in to
understand the barn caves andthe location and what's going on
in the city and where the demandreally is, that's important.

(33:52):
Lastly, and I'll open it up toyou because I like to talk a lot
if you haven't noticed, guys.
They uh in the news herald, theyjust uh mentioned that the now
they've been the the airport hasbeen kind of a nightmare for
years and years, okay?
They have been trying to figureout a way to make this thing
profitable.
It has been a nightmare.
We went over there because wehave helicopters that are
renting units from us becausethey can't find that, which is

(34:13):
cool, right?
Paradigm stores has helicopterslanding at it, but they they can
they those helicopter ownersdon't have a place to park their
their helicopters, they don'twant to leave it in the heat and
they don't have airplanehangers.
So we approached you know thethe airport manager and said,
listen, we yes, we can buildthese things, we're willing to
help you, we'll make some money.
It kind of aligns with ourbrand, but we also know that the

(34:34):
demand that that the city'slooking for, and if we had a
larger airport, more hangers,we're gonna have more buyers
come in.
Okay, so working with thesebrokers out here, that'll that's
where a lot of buyers are arehesitant to even buy out here
because they just don't have aplace to park their their stuff,
their planes, or what have you.
So the idea is that we would tryto help them build.
So they just announced in the inthe news herald that behind

(34:56):
closed doors, they're talkingabout expanding and building out
the airport even further.
So when you now have the city,and now you have like the public
side of things are are reallystarting to bump up, uh, or
private, yeah, but public sideof things are bumping up, and
then the private side's alreadygrowing.
I I would like to think thatthis area is just really now
starting to kick off for growth,and that mall is really starting

(35:17):
to turn up too.
So I don't know, I'm I'm alittle biased if you'd have
mine, and and I'm trying to makeit beautiful.
When you come down retail centerdrive from the 95, I have four
date palms that are like 25 feettall.
And because paradigm storageparallels the land for the barn
caves, I'm gonna just continuethose those uh those date palms
right in front of in uh of thegym and the barn caves and

(35:38):
throughout the development, butthat's gonna be the main
thoroughfare for people to getback there to where all those
houses are gonna be built.
So uh I I personally think thatour location is really uh key
here.

SPEAKER_01 (35:49):
Yeah, I think the location is key, and I think
you've hit it.
It's really North Abbaso wherethe money is going into over the
next 15, 20 years.
It's the migration into thispart of town.
It's gonna be our gym thatyou've said has been sort of
central.
The people that are looking atif they're gonna move into that
area, what's the infrastructurethere, right?
So talking about potentiallyeven uh a new marina on this

(36:11):
side of town.
So I think look, there and andthe city's lining that up for us
as there's talks of it.

SPEAKER_00 (36:16):
We're not sure yet.

SPEAKER_01 (36:17):
Not sure yet.
Okay.

SPEAKER_00 (36:18):
I have a lot of we have a lot of conversations.
Okay, there's a lot of talks ofit.
Yeah, people that know whatthey're doing.
So I just want to let you guysknow.

SPEAKER_01 (36:24):
Fair enough.
Maybe I'll put my own.
But it would be nice to havesomething like that up there
too.
I think it's part of this wholedevelopment.
I I see that as possibly youknow a good possibility.
So yeah, I think when we look atit, we're well positioned, you
know, locally here.
And I think we're wellpositioned with the with the
city.
I think they're you know, everytime you go into the city or
Dennis goes into the city, Ithink we're getting that, okay,

(36:46):
it's paradigm.
Here's the quality to build.
Yeah, we understand what you'retrying to do here.
And I think there's a you know,there's a consistency which
we're bringing to thoseconversations, which are
important, right?
Because you're exactly right.
You've sort of flagged a coupleuh additional developments that
we're gonna do here in uh inHavasu, which is terrific, but

(37:07):
there's no shortage of buildingthe city out.
It's just it's really justbeginning in terms of it's what
I think is gonna be the nextreally important uh phase for
Havasu, right?
Hotels, more infrastructure, andbringing the big supermarkets in
here.
It's it's gonna be an amazing,and especially north side of
Havasu is gonna be an amazingplace to live.
And I think from my perspective,you look at the map, the barn

(37:32):
caves is the gateway to all ofthat activity.
You're gonna go right rightnext, right past the barn caves
into all that development,right?
So I think we're we're we'rereally well positioned for that.
And of course, you know, wedeliver on our performance, just
like we did here at ParadigmStorage.
I mean, initially we'reperforming at what 145 a square
foot.

(37:52):
Or, you know, selling this stuffat 180, 185 a square foot,
right?
So I think if that's that's whatI see for the Barn Case project,
and I think it sets the stagefor paradigm and and what we do
going forward, whether it'sstorage or it's you know storage
plus residential.
And that really brings us intothe topic of how do you finance
all this stuff, right?

(38:13):
Because that's you know, from myperspective.

SPEAKER_00 (38:16):
Hold on before you go too far, because I know
exactly where you're going.
Okay.
Anyone who has questions so far,because Mike's about to tee off
on something that's reallyimportant for you guys to know,
I can see it in his face.
He's just biting at the bit totalk to you about it.
If you guys have questions,please go ahead and start asking
those questions now, and thenwe'll go ahead and answer them
uh right after Mike talks aboutit.
But this is also somethingthat's very important.
And again, it kind of goes inline with kind of the

(38:38):
institutional side of things.

SPEAKER_01 (38:40):
Yeah, I think so.
So, you know, my my background,as everyone knows, I think
that's been on these before orhave chatted with me.
It's a it's an institutionalbackground, Wall Street for 10
years, private equity in Asia,taking companies public, you
know, so dealing with this ideaof how to scale businesses and
how do you bring the rightfinancing mix to those
businesses.

(39:00):
When I was in Wall Street, Ibasically did debt deals for the
largest companies in the U.S.
I brought them, you know,transactions all across the
globe and and swapped them backin the US dollars.
And whether that was G E C orToyota, this is sort of what I
did early on in my career,right?
So when I look at the paradigmmodel, for me it was Ryan's done

(39:20):
an amazing job of building out,you know, his reputation in
social media and thecrowdfunding area, which in a
lot of ways essentially is youknow, you create your own
destiny through that model.
And you do, you know, yourprojects are tend to be um
serial, right?
One, one, one, one.

(39:41):
There could be some overlapbetween those projects, but that
capital raise means theyprobably take up a little bit
longer to do the capital raise,and because of it, you're also
taking a bit longer to do theactual project itself.
So my goal here within Paradigmis to sort of take what we do
really best, the crowdfundingmodel, but then marry it up with

(40:02):
more institutional capital,right?
So, what does that mean?
Ultimately, that means we haveto go get a revolving credit
facility from a majorinstitution, get that in place
and bring some capital to that.
And then therefore, when we goto our next race, effectively
what we're saying is let's go tothe family offices that's gonna

(40:24):
essentially provide the equityto support that line of credit.
We've got JP Morgan right now,knock on wood.
I don't have wood here, but Ithink I'm gonna have a term
sheet from them, if not thisweek, early next week, which is
gonna allow us to do that.
So I met with the head of credituh in JP Morgan, New York.
It's a relationship, it's arelationship I've had for 25
years.

(40:44):
And when I was in their officeexplaining why I'm there now and
why I wasn't there three yearsago, and the differences in
paradigm from a scale, from aninfrastructure, from a vision,
and and from our ability toexecute, you know, they they
took a look at that and and Ijust saw the light bulb go on,

(41:05):
right?
It's like they're like, oh wow,okay, I love your business
model.
We here at JP Morgan want to getbehind it.
We want to basically be thatlending institution that takes
you from where you are today tothat$3 billion company in three
years.
We we want to be lending you asmuch money as you can possibly
take, but let's structure it ina way that makes sense for you

(41:28):
today, but you can scale into abigger facility over time.
And so that that's where we arein this.
So we what you're gonna see fromus uh on a go forward basis is
the ability essentially to moveas quickly as we possibly can
with projects in parallel,right?
So you're not you're you'retalking about three, four, or

(41:49):
five projects at a time acrossthe US with institutional
capital backing it.
But how can we do that?
Well, we've got the developmentteam in place now.
We know our costs, we know wehave the migratory trends across
the US, we know we where we wantto be, we're gonna pick our
locations very carefully, we'regonna partner in the local
markets when we need to, andwe're effectively replicating

(42:11):
something that we've done overand over and over again.
In addition to that, what uh theguys at JP said well, two
things.
One, I don't think anybody elseis doing this, are they?
No, they're not, they're not,not the Barn Case product, we
haven't seen that.
And number two, we really likethe fact that you're not taking

(42:32):
this to Los Angeles, New York,Miami.
You're taking this in the areaswhich are, you know, which they
see as well, migratory areas,where you can get land a little
bit cheaper, where you know thedemand is gonna be there over
the next 10 or 15 years.
And when you get a tailwind, bythe way, with interest rates a
bit lower, which I think they'regonna be lowered here very

(42:53):
shortly, you're gonna get atailwind from a from a uh an
inch an interest perspective,right?
Your your debt costs are gonnabe lower.
So I think you know there, andand I I was, you know, in those
discussions, I was perfectlyhonest with them.
I said, look, the I am lessconcerned with the rate that you
charge me, right?

(43:13):
Because within the paradigmmodel, we have the ability, the
way we build an engineer andstructure, we're billed to go
fast.
We go fast, the faster we go,the more money we s we save,
right?
At the end of the day.
And therefore, I can be moregenerous to my my partners, JP
Morgan, and my and my equitypartners, my LP partners,

(43:34):
because we have uh embeddedwithin our profit margins the
ability to do that, right?
If you're a traditional builderbuilding 500 homes somewhere,
yeah, you may not have thosebusiness margins.
You need to count every penny.
I think from paradigm'sperspective, the partners that
are looking at us right now aregoing, well, the partners that

(43:57):
are looking at for I would callthis like phase two of paradigm,
right?
Phase one, the traditionalcrowdfunding, phase two is gonna
be a little bit moreinstitutional in its nature,
right?
So the people in you know phasetwo are gonna be the larger
family offices, the bigger checkwriters, but they're gonna want
to come in and and essentiallyshare a piece of the pie for

(44:20):
everything that we do, right?
They're gonna buy into that, andand therefore that
sophistication level is gonnabe, you know, it's it's much
higher at the end of the day.
It really is.
So they have to buy into whatyou're doing, where you're gonna
do it, the time frames you'regonna do it in, and then make
sure that you as an institution,as a paradigm, are de-risking

(44:41):
every part of that supply chain,right?
Whether it's the debt, theequity piece, or the underlying
you know, development aspects ofit.
And I think they bought into theour ability to de-risk projects
and our ability to deliver ontime and and on budget.
So that that's the key part ofthis for paradigm.

(45:02):
Now we enter this phase whereyou know it's I would say it's
not turbocharged because I don'twant to use that word, but um
we're gonna go a lot quicker andand bring this sort of product
out.
And I don't know if you want tohave granular on this stuff, but
this can be like an amazingthing where we're putting a barn
cave you know unit on a truck,semi-truck, and delivering it to

(45:23):
a job set and erecting it, youknow, in two days, right, from a
framing uh standpoint.
So we can go that fast, butthat's you know, that's the
advantage of having more of aninstitutional capital.

SPEAKER_00 (45:34):
And I'll I'll kind of open it up here too.
What's what's kind of wild is weI originally went into planning
and designing this in a way thatallowed us to go to the high
dense areas, the downtownNashville's, the LAs, and build
these in a way where you can gointo a high dense area, uh,
you're looking for a high densezoning, uh, they're you know,
they're tall, they're skinny,it's like they're kind of like

(45:55):
those condo townhomes that aremore affordable.
That's how I looked at itoriginally.
It morphed a lot from there andkind of went more into, yeah,
we're we can make them luxury,believe it or not, with the same
price as going more attainable.
And so it's morphed over timeand and we got to a point where
we are happy with it.
But what's happened is a lot ofother builders and developers

(46:18):
started reaching out to us.
So, equal the amount of peoplethat are interested in buying
them, we've had landowners anddevelopers across the country
that are asking to buy our floorplans from us, or can we
manufacture these buildings?
So, what's happening is fromlike a firm perspective, we're
even thinking about setting upour own manufacturing so we can
actually white label theseproducts and start giving them
to other builders anddevelopers.

(46:39):
So, think about it, guys.
They say that the the peoplethat made all the money during
the gold rush are the ones thatprovided the picks and the
shovels, right?
If we're able to, if people canchange the skin and maybe make
some adjustments to walls orwhat have you, and we have that
in place, you know, then thenbuilders can actually buy these,
put their name on it, wemanufacture it and ship it to
them, and we we're handlingeverything from a back office
side.

(46:59):
So when you look at how many wecan actually get out,
institutions are looking atlending us the capital to do all
of these things.
So that's what Rev was going totalk about is once these in
these larger institutions aregetting involved, they want a
piece of all of the cash-flowingperspectives that paradigm has
built into play.
But what that does ultimatelyfor you is create security.
And our investors, regardless ofhow big these check writers, our

(47:22):
current clients stick with usregardless, because there's
other opportunities with insidethe brand and that are inside
the company that we still wantall of our existing clients to
be a part of.
And we still will always open itto new investors.
Um, but what's happened is thatI did not expect, I have to give
credit to where credit's due.
I told Mike, JP is not gonnalook at us, man.
He's like, trust me, it'srelationship based.
I'm like, JP is not gonna lookat the the density's not here.

(47:45):
You know, we just the CensusBureau's data is not accurate.
You know, you're just you can'tget the data unless you do
private and do like some seriousprivate research from a
third-party firm.
And he's like, Trust me on this.
And I'm like, I know we have agood product, but will people
will bigger institutions look atit?
Because again, we're in asecondary market, you know, this
is an area where people arereally moving to to try to bring
down their income or bring downtheir overhead.

(48:06):
You know, it's it's as much thepopulation small, it just
doesn't make sense for whatlarger institutions are looking
at.
Once they've got which I have togive, you know, Mike was able to
pitch it to get them to go, hmm,I'm probably kind of interested.
That's when it started openingup to really the inner workings
and what we have created,because these buildings can be
popped up in any, you know, anygeographic location in the

(48:28):
country and any atmosphere.
You can stack solar on any ofthis stuff, you can print these
things out while you're doingyour horizontal improvements.
The buildings are being cut andprinted, like just like paradigm
storage, right?
Paradigm storage has 56,000pieces, including the screws in
every one of these, and everyone we can get to a point where
we know that number, that muchdetail in these barncaves.

(48:49):
So, what's happening is is theseinstitutions are going like,
man, when you get to a pointwith inflation and with all the
cost of management, and even allthe way down to like we have
less with less labor and lesstrades, we can cut the we can
we're cutting the risk.
That's what they that's whatthey care about is risk.
How are we mitigating the risk?
And so all of these littleattributes is what's creating

(49:11):
that.
So um we feel that we're on theright track, the demand is
there, and ultimately now it'slike how can we print these
things out and build therelationships with our clients
and investors to believe in ourvision and say, Ryan, we want to
be a part of it.
And then implementing theseadditional tax strategies to
open up the door for investorsto be a part of it is huge.
But then you can roll these backover and your your capital back

(49:32):
into either ownership or rotateinto other projects with us, and
that's what's really happeninghere with paradigm storage.
Paradigm storage, for the mostpart, is going to pay all of our
clients, not only the principalback, but their their equity.
And that and all everyone who'salready wants to allocate the
capital and roll them over tobarn caves, which we're gonna
shut down the raids on the barncave.
So we pretty much are done onthe first raise for that

(49:54):
product, and now it's just aboutbuilding as fast as we possibly
can, build awareness for it, andcontinue to try to implement
better practices for ourclients.
So we're on the way.

SPEAKER_01 (50:02):
And that improves we've seen that here at uh
paradigm storage where we'resitting right now, right?
So we're now in the last twophases, two buildings, F and G,
right?
Report on where F and G, we'reputting the you know, we'd be
putting the retaining wall inhere shortly.
So I think from a paradigmstorage perspective, we've
learned a lot from paradigmstorage, right?

(50:23):
In terms of from the phase A toyou know, building G, there's a
lot of information that wegather as a as a builder from
from that process.
And you know, I think one of thethings I talked about when I was
at uh at the bank meeting withJP is like, you know, we can
under the right circumstancesbuild 50,000 square feet of new
storage construction in 90 days,right?

(50:47):
That building gets dropped, wewe build very, very quickly.
And they were impressed withthat.
They're like, okay, well, thatsort of turns that model upside
down because the other model issort of what you'd refer to with
Goldman.
You know, they're they'vecommitted a bunch of money to
go, you know, take these uh C orClass B you know storage units,
storage facilities, and redothem and bring them up to

(51:10):
market, right?
That takes a heck of a lot ofinvestment and a heck of a lot
of uh reinvestment in terms ofbringing those uh everything
within those that product up tomarket.
Whereas we can go and build50,000 square feet in 90 days,
you know.
Once we got the buildingengineered and dropped, we go
very, very fast.
So, in a way, they were like, II think, I think from a JP

(51:33):
Morgan perspective, like, okay,yeah, I sort of see that, guys.
Yeah, you've you're you'vesharpened your blade on the
storage side, you've gotapartments going up in San
Antonio.
You you you know, probably as abuilder perspective, you cut
your teeth, and now you've comeup with a design which is unique
in a lot of different ways, butyou're not looking to put it
necessarily in the hot, youknow, where it's gonna cost you

(51:56):
15 million bucks for 18 acres or20 or whatever it is, right?
You're going into areas that areaffordable but has that
migration, and we want to be inwater.
That's the other part of it too.
We sort of feel like there'ssomething about the boat world,
the RB and boat world that'spart of our DNA.
And I don't think that's uh, youknow, from a development
perspective, certainly from anMFR perspective, that you know,

(52:19):
people haven't focused on thatyet, right?
In addition to that, the way webuild with steel and concrete,
you know, I after the fires inLA, I had I have municipalities
calling me up going, oh wait,okay.
So what can you actually dohere?
If we if we put in restrictionsin terms of what that rebuilding
looks like, you know, what whatdoes this look like?

(52:40):
Can these burn?
Can they not burn?
What's the wood content?
You know, from an insurancecompany, have insurance
companies have they looked atyour product, right?
Because these municipalities arelooking at all that right now
and determining what they needto do on a go forward basis to
rebuild those communities,right?
So I think the tailwind is therefor you know what we're trying

(53:01):
to do, paradigm's trying tobuild in the vision that we
have, which is great.
I like to see that.
It's not that I am I'm not gonnago and and rebuild specific
palisades or anything.
Yeah, it's not on the agendaright now.
But I think you know, whetherit's hurricanes or fire or you
know, other weather, thesestructures are meant really from
our perspective, they could beanywhere.

(53:22):
Right?
Florida has the problem, youknow, with with uh their
structures right now, whetherit's wood or other building
materials, right?
So we have some advantages, youknow, at Paradigm in terms of
what we're doing.
I think we just parlay thoseadvantages into uh markets that
we think we can return the typesof and maintain the types of

(53:43):
returns that we're giving rightnow to our investors.
Because ultimately that's allthat we care about at the end of
the day.
If we're not delivering thetypes of returns for our
investors that we promised, thenokay, then what's the point?

SPEAKER_00 (53:55):
There's no there's no business.

SPEAKER_01 (53:56):
What's the point?
So, you know, it there's and andthis is what you know, really
going back to my experience,like how do you scale?
Scaling's important because youcan scale too quickly or you can
scale too slowly, and you've gotto do it in a way effectively
that you as an institution, asparadigm, feel comfortable with.
And from my perspective, youknow, within paradigm, we're in

(54:20):
a much different situation thanwe were uh three years ago.
We sort of we know our vision,we've we have enough experience
now as an institution to be ableto deliver that and walk into
the most serious, whetherthey're LP investors or banks,
and provide the you know, thebusiness model and the numbers
to support what we're doing.
So I think that goes a long way.

(54:41):
And I think and I think, andgoing back to my comment, is
more and more of my myconversations with investors,
because anybody's on this thatI've spoken with, um, you know,
these are people that are muchmore comfortable with a
million-dollar check or a twomillion dollar check.
And that that's just a function,I think, of where paradigm has

(55:03):
become and where we're we'reessentially heading.
So very happy to see that.
And obviously, for our investorsthat are that are currently with
us, yes, Ryan's absolutelyright.
Regardless of what model we havefrom a uh financing perspective
or a scaling perspective, we arealways gonna have an opening for
our current investors.

(55:23):
And there'll always be acrowdfunding aspect of what we
do because part of our DNA andpart of Ryan's DNA is having,
whether it's a large or smallinvestor, he wants those people
to participate with us, right?
That's why we go to the extralength of setting up a reggae,
right?
For for everything that we'redoing.
So we can have thoseconversations with the investors

(55:46):
that don't have a milliondollars.
Let's face it.

SPEAKER_00 (55:48):
Well, and my philosophy originally, and we'll
sum it up too, because ourphilosophy originally was, you
know, I grew up with a singlefather.
My father didn't do very well,and we didn't, you know, we
didn't, I didn't go without, butI didn't do great.
And so with the amount ofrelationships I built, pretty
much from being boots on theground in the mortgage space,
the people that started trustingme a long time ago were my own

(56:09):
friends and clients that I wasdoing loans for, and they just
kept believing in me and theyjust kept investing.
And so over time, it's just it'sreally just snowballed to where
it is today.
So we've made a lot of gooddecisions over the bad decisions
on to get to where we are.
But with that, let's answer acouple questions and then uh
I'll kind of tee off on that.
And we'll try to stay at red inan hour for you guys so we don't
want to take up too much of yourtime.
Um, again, you guys have morequestions, let us know.
Chevy, uh, so good question inregards to ownership.

(56:32):
Um, so what's happened is the 43clients, and I could be wrong,
Tiffany, our uh relationshipsmanager, will correct me here in
a little bit, but I think it'sabout 43 of our lots are already
accounted for from currentinvestors.
When you look at now, mind you,for those of you that have that
are on this, you know I have forthe most part a personal
relationship with you.
Uh some I talk, I talk to somepeople more than others, and
some people have things thathappen in their lives and they

(56:53):
call me because they justthey're worried about the world
and the market and we justestablish a better relationship.
But um, what has happened is weknew that these properties are
gonna probably be a littlecloser together to get rid of
the riff-raff of like Airbnb isreally important.
We don't want the Airbnb, Idon't like Airbnbs whatsoever.
I've never wanted to own them.
Airbnb in general right now isnot doing so well.

(57:15):
So we don't think even theinvestors that are really uh, or
even buyers investors that arelooking at from an Airbnb side
that had maybe some experiencein Airbnb are starting to
consider not Airbnb, which isgood because since we're gonna
own the HOA company, we're notgonna allow Airbnbs, just so you
know.
And and to go to go back to thatis the 43 clients that I have in

(57:36):
there that I have relationshipswith, I know what their overall
goal is to live here or be outhere a handful of times a year,
whatever it is, they don't wantthat riff raff either.
So, really what's happening isthe nature of the owners that
are inside this this this uhcommunity, I'm gonna know pretty
much every one of them.
Um, and and it's really kind ofnice because it's like my own

(57:57):
little network of like a realestate community of people own.
And so listening to them, theydon't want that riff raff
either.
And in fact, even for parking iskind of a problem for us to get,
you know, if you have a if youwere trying to throw a big
party, you'll be able to be okayto park it.
But if you have five or sixdifferent units are all throwing
big parties at the same time,people are parking on the
street, you know, down like outby the gym street.

(58:18):
So it there's not a lot of extraroom uh for parking so that way
the riff raff isn't gonna bethere.
We're gonna make a requirementthat people have to pull their
stuff in the garages, you know,all that fun stuff, because we
want to make this place lookreally good.
Like, for example, we don't havestreet lights in every single
one of the units that have thelights on the side of their
garages, right?
So, like outdoor lighting, everyone of those lights on every

(58:40):
unit on front and back, becausesome of the garages, some of the
units, as you know, have garageson both sides, they're in
essence drive-throughs.
All of those are all going to belit by the HOAs.
Now, mind you, the whole projectis on solar, so the HOA is not
gonna feel it, but all bothsides of those lights will be on
all the time.
So if you're an owner and youcome down, uh come down the
street, which by the way, we'reputting all the streets in
pavers, but when you come downthe street, every single unit

(59:03):
will be lit up and the unitowner hasn't have to pay for the
electricity, it's all on theHOA.
So it's really pretty neat onjust the nature of what we're
creating inside the community.
And people just don't want thatriffraff.
And to be honest with you, Idon't want it either.
So the fact that we're notallowing short-term rentals is a
big deal to finish that questionand answer it.

(59:23):
Long-term rentals, yes.
Um, so we will allow thelong-term rentals, you know, the
six-month, one year.
Um, you know, we're we are gonnachoose a property management
company that we know that willvet those tenants and do
background checks and collectdeposits and so forth.
That'll be tied to the HOA aswell, because they have to uh
get approved to go through thegate anyway.
So we're gonna kind of sniff alittle bit of that out, maybe

(59:45):
provide those services to thepeople who own them and want to
rent them out.
Um, Tammy, to answer yourquestion too, uh, we're gonna be
anywhere between 850 and 1.2.
Uh the largest units gonna be1.2, and the and the smallest
units uh 850,000, 852,000 iswhat we have right now.
Um, real quick story, and I'llI'll kind of start with one
thing and then back into astory.
Uh, we're even looking at so oneof the things that we learned

(01:00:06):
about paradigm storage is peoplewant you know air conditioning
units, they want all that stuff.
So moving forward after ourphase one, we started delivering
our units completed, where weare will offer you know our unit
owners if they want you knowepoxy floors or certain things
done inside their units.
We're we're helping them withthat.
Um, and that's what people want.
When you kind of get to know theculture of people out here or
what the buyers like, they justwant projects that are done,

(01:00:29):
completed.
They don't want to have to dealwith the work.
It's because they don't want tocome out here, they just want to
come out here and enjoy the timewith their family or get away or
what have you.
They don't really want to work.
Now, what we're doing, and I wasactually uh trying to build an
account in.
Relationship with Ferguson forappliances, what we're going to
do for every one of our unitowners or buyers, we're going to
sit down and you're going tohave a design center, and you
can adjust whatever cabinets andlooks and hardware and

(01:00:50):
countertops and flooring and youcould do all that.
So we actually have a full-blowndesign center for our uh for our
homeowners.
And then ultimately, we're evengoing to allow appliance
packages and what and we'retrying to partner with two or
three really well-known um uhfurniture stores, and not only
here local, but even other onesthat they would ship.
And we'll actually have ourbuyers choose the furniture that

(01:01:10):
they want because obviouslywe'll have the dimensions, we'll
have a couple units you can kindof walk into and feel.
But then, you know, by the timethey close escrow and they're
ready to move in, we'll actuallyhave the whole thing furnished
and taken care of to what theywanted and what they paid for.
So we're trying to go over andbeyond any even builders out
here, they don't do that, right?
You sell down, you sell in thehouse, then you got to go get
your appliances and your andyour washer and dryers, and you

(01:01:31):
got to do all that.
Like we will have that allhandled and picked right in
escrow.
And the people that you know buythese are just kind of getting a
much more hands-on experiencewith a paradigm brand.
That's what we want to provide.
So if we're that right redcarpet feel for our investors,
we want to give that red carpetfeel to the people who are
buying them because that's wherewe're making our money at the
end of the day.
So hopefully that answers thequestion.
And one last thing about astory, and it does it's it's

(01:01:53):
been hard.
Originally, when I starteddesigning these, I was trying to
design these in a way where Ihave a lot of really great
friends.
In fact, someone who's on mycivil engineering side, her name
is Jamie.
She actually oversees all of ourstuff and works for our uh our
civil engineer.
So very close with her.
And she's a single mom.
And, you know, being out here,the income levels out here,
trying to make a living and andand get into homeownership has

(01:02:14):
been very difficult.
So we were trying to designthese in a way where even, you
know, kind of that, you know,single parent can afford, you
know, or a single person canafford, you know, a home
because, you know, let's let'sbe honest, divorce rates and
singles, it's just it's it'ssomething that has to be
considered if you're a gooddeveloper.
So we were trying to implementsome of that.
And I think some people will beable to hit that mark.

(01:02:36):
But to be honest with you, oneof the reasons why the numbers
are as high as they are isbecause, and I know I'm gonna
get my hand slapped for this,but a lot of the utility
companies, they want biggereasements.
So they've pretty much used alot more of our land that we
wanted to build more units,therefore the cost per unit
would go down, but they wantmore easements, they want more
easements in front of the unitsand then back of the units on
the side of the units.

(01:02:56):
They just they've been eating upall of our land.
So it's hard to try to put cutour costs down.
I think a lot of people thinkdevelopers are just making tons
of money, but it's not.
There's with with with rules,regulations, and approvals, you
have to you just kind of getit's just it's a it's a juggling
thing that is really difficultfor developers, but you know,
we're we're still trying tocompress those costs the best we

(01:03:17):
can.
But we I think we landed wherewhere it's uh safe for
everybody.
Um, okay, let's see.
You're welcome, you're welcome.
Yes, it will.
So the the the home itself willhave solar.
If you guys are looking at uhthe the renderings on any of our
websites or social media, whathave you, uh you'll see when you
scroll in, you'll see thatthere's panels on each unit.

(01:03:38):
So uh the idea is to when we'rewe're gonna build these and
deliver the house with solar,and you're in essence buying the
house and the solar.
So it's not like you have tolease the solar or any of that
stuff.
We're actually gonna inherit thecost and then hand over the keys
with solar, so you have theownership of that solar as well.
To go further, uh, we just metwith Unisource and uh Clean

(01:04:02):
Energy department with them.
We had a private meeting aboutit because we're gonna be the
largest development out here notpulling from their grid uh
because we're able to producethat power.
The biggest issue that we haveright now is storage.
So a lot of the power that'sgonna be generated during the
day is gonna be inherited by theunit during the day, but we
don't have the ability to createstorage.
Now, if you are a homeowner, youdecide to create have your own

(01:04:25):
battery backup, that'sdifferent.
But we can't get that in thebeginning in our approvals.
Uh, so therefore, you you'restill gonna have a little bit of
a uh cost on your power, butduring the day, when you're
running your AC and you'repushing all that power through
your unit, uh it'll be cateredby solar.
So, you know, again, that's justkind of part of the approval
process.
In fact, because of the natureof the solar, we actually

(01:04:48):
separated the buildings to10-foot setbacks.
So there's a lot of movingpieces, but yeah, we're trying
to deliver this and it will bedelivered with solar.
So we're we're past that part.
Uh how much of the project isfunded already?
I'd say we're north of half ofthe project.
We we've already the biggestproblem has always been getting
through the approvals.
All of that's for the most partdone.

(01:05:09):
We've already started grading,uh, but we're already halfway
through our raise.
I'd say another half would begood, but we already have maybe
six million or so already uhcommitted from paradigm storage,
and that's not profit, that'sjust principle.
So once the profit comes in,we're we know we're gonna
oversubscribe.
We're not necessarily gonna tryto do that, we're gonna be
looking at other projectsanyway.
So the current clients that havebeen rolling their money with us
over time, going through IRAs,trying to focus on tax strategy,

(01:05:32):
we're gonna continue to try tobe on the forefront of giving
them more options to getinvolved in things that we're
doing, but keep it close, right?
Continue to invest in areas thatwe know, keep all of our
sub-base here.
We know the relationships withyou know our architects and
energy, right?
We're gonna kind of stay in thatrealm.
So we're gonna be uh offering upmore uh um opportunities for
people as well.

(01:05:52):
No, Corby, they won't.
It and is a there's a lot moreto it.
In fact, you know, we were wejust had a conversation about it
this morning.
I don't know if we should saythis on web.
So all you guys hope you loveme.
If I go disappear somewhere, um,just know it's because I get I
went live with this pot thiswebinar.
Um, so we learned that the powercompany is implementing AI now

(01:06:13):
to start tracking how much poweryou're pulling, using, uh, which
is not uncommon.
You know, the marijuana industrycreated that problem a long time
ago, starting in California.
But they're utilizing AI on howthey're identifying units that
are implementing certain batterybackups and and how much power
you're pulling and so on and soforth.
So there's there's there's moreto that.

(01:06:34):
Maybe you and I can jump on acall and I'll tell you maybe
some more inner workings.
There's only so much I'm willingto share here.
But there's a lot of um there,they they don't want you, they
will not buy basically it's amoney game.
They're in the business to makemoney.
So they don't want to buy powerfrom us.
Um, if you think about how muchpower we can produce, and the
reason I'm saying it this way isbecause the majority of our
buyers aren't gonna live herefull time, they're not gonna be

(01:06:54):
pulling power.
So we were looking at it as adeveloper going, hey, there's
some additional sustainabilityand income that we may be able
to produce by selling power,especially when these units
aren't fully occupied, the wholeall of them.
So we're like, okay, how do wecommit?
I wonder if we can make somemore money, not only maybe
income for the company.
Of course, that's how we'regonna look at it for
sustainability, but maybe wecould pass over that cash flow
to our investors even after theymade their money and get get

(01:07:16):
out.
Because again, what we did, justto let you know, is we opened up
our own solar department.
So we actually own the solarcompany that's gonna be produ uh
producing this and bringing inour own legal to kind of do the
negotiations for it.
But yeah, they don't they don'twant to buy power, therefore,
hence the the backup batteries.
Because if you have storage,then they can pull from that
storage when they need, and thenyou're selling that power,

(01:07:36):
right?
So, right now that's that's oneof the reasons why don't we they
really don't want that backup souh or that battery uh as well.
So just to kind of keep you anidea that it's a it's a money
game, man.
These these these this is howthis world works.
We just got to kind of dance andyou know, kind of play and
maneuver around it, and we don'thave a lot of control, but
that's kind of one of it.
So hope that answers thatquestion.
So, all right, guys.
Well, thank you all very much.

(01:07:57):
Mike, is there anything else youwant to add?

unknown (01:07:59):
That's good.

SPEAKER_00 (01:07:59):
Cool, guys.
We're actually not only gonnalet this go live for everybody
that has registered and you canwatch it in our in a data room,
but we're actually gonna putthis on our podcast platform as
well.
So if you guys want to sharethis to anybody, uh please do.
As you guys can hopefully youguys can tell, we put a lot of
energy and effort into thedesign of this product.
Obviously, if we really want totake this serious and go across
the country in differentatmospheres, if you will,

(01:08:19):
different jurisdictions, there'scertain compliance and codes and
building uh practices that needto be implemented to be able to
take it nationwide.
So a lot of that is right here.
It's implemented.
We've gotten a lot of goodpositive PR.
And really, we couldn't do itwithout client without our
clients and our investors.
So, truly, from my family toyours, thank you guys for all
your trust and love.
We see a lot of our currentinvestors in here.
And I hope we can continue to toyou know knock it out of the

(01:08:40):
park for you guys.
So until the next time, wereally appreciate you guys.
Uh, we feel that the world'sokay.
It's not burning like it was afew months ago.
Um, and we're we we see thatthere's uh there's an uptick in
activity.
So again, thank thanks forjoining us, guys.
Appreciate it.
Cool.
All right, guys, have a goodone.
Bye bye.

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From Storage Success To Tax-Smart Real Estate Wins | Webinar E36

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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;}From Storage Success To Tax-Smart Real Estate Wins | Webinar E36