How Investors Are Maximizing Returns While Minimizing Tax Liabilities | Webinar E22 - The Paradyme Shift

Episode Transcript
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Speaker 1 (00:00):
Well, hello everybody .
Ryan Garland here, founder andchairman of Paradigm.
We have Mike Reveley, our CEOtoday, and I want to thank
everybody because it looks likewe have quite a bit that are
already logged on for joining ustoday.
Make sure those arms staysteady.
There we go, joe, you got to doyour job, thanks, buddy.
So, but thank you guys forjoining us today.
We have, you know, we're gettinga lot of requests to talk about

(00:23):
kind of the exit strategy forinvestors and kind of what seems
to be common, what a lot ofpeople have questions on.
So we felt that it wasnecessary for us to kind of talk
on that.
I think you guys willappreciate kind of where we're
taking it today.
Obviously, mike from hisbackground on Wall Street and
kind of really working withlarger institutions and how they
position themselves for exits,because it's always about how to

(00:43):
not only make money but retainthe wealth that you've created.
So Mike has just got a ton ofknowledge on how a lot of guys
are maneuvering around for taxes.
But really just talk about ourexperience with what's happening
with the barn caves, what'shappening right now with Lake
Havasu and just kind of paradigmin general.
So we again, we thank you guysfor joining us today.
Mike, thank you, buddy, forjoining us as well.
And what would you like to talkabout first?

(01:05):
You want to talk a little bitabout all the things we have
going on, just so we can kind ofgive more of a background for
some of the new participants.

Speaker 2 (01:11):
Right.
I think that's great because I'mon the front lines with a lot
of our investor calls and Ithink the one thing that they're
surprised because they'reobviously getting information on
our current project, theBarncase but that's really just
one of many that we have goingon here in Havasu and really,
you know, in other parts of thecountry and I think they're
surprised by the sort of thedepth and breadth of what we're

(01:32):
doing overall as Paradigm andwhere that vision takes us from
here, right.
So investors, they want to knowwhat you're doing now, of
course, but they also want tobuy into what you're going to do
in the future.
And I think if you look at thebarn case 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 and that the genesis

(01:55):
is here in Lake Havasu, whereyou really got your start as
paradigm development right herein Havasu and we're wrapping up,
you know 200,000 square footdevelopment of, you know, man
caves here in Havasu.
So I think that genesis storyis something that I think people
need to understand more aboutparadigm.
We just keep, we need to hitthat a little bit let people

(02:17):
understand exactly what we'redoing here and how that
translates to where we're goingto be over the next three to
five years and how we're goingto, essentially, from an
investor standpoint, make surethat we're executing on that
vision.
And I think that's fundamental.
I think the paradigm it'sfundamental to understanding who
we are as a company and thenour projects and, from an

(02:38):
investor standpoint, what theendpoint is right.
Because everything that we'redoing in paradigm and I think
this is important is that thetimeframes that we're looking at
from an investor standpoint areshort.
They're short duration assets.
They're one to four years right.
So if you're going to lockmoney, what we typically see is
people that are coming onto theplatform begin to roll over to

(03:01):
that next project and that nextproject.
So giving people, I think, asense of not only what we're
doing here in Havasu but howthat translates to other markets
is important.
So I'd love to start there.
Man, I think you going throughwhat we're doing here in Havasu,
how you got into Havasu and whyyou think it's a market that,

(03:21):
quite frankly, we could hoverhere in the next 10 years and
not satiate the demand that wesee for for what paradigm is
building.
So I I definitely love to startthere.

Speaker 1 (03:30):
All right.
So you know, I have thephilosophy, which is kind of
nice because one of my mentors,his name is Dan Stevenson, he
owns a Europa village and hasowned a company called Rancon
group and has been in Temeculafor 70 years and he was kind of
there since the 70s and so hehad mentioned, you know, when he
went out there he just saw theopportunity to basically build
an empire there and really buildsome wealth for not only

(03:53):
himself but his clients, and sohe just kind of stuck with
inside that geographical areaand really has done amazing jobs
by the best reputation in thearea for development.
So I kind of have that samephilosophy and I think really it
stems from just being a kid andcoming out here, you know, and
then my father retiring andmoving out here and so what has
happened since the pandemic?
That's really really started tokind of open up our eyes as far

(04:14):
as the migration and reallywatching the data of everyone's
spending habits and so forth.
And right now in Lake Havasu,not only we have 225,000 square
feet, which is Paradigm StorageBarn Caves is roughly 530,000
square feet.
And to give you guys an idea,in this little location off
Retail Center Drive which, again, this is on the north side,
right next to the mall andacross from the airport.
We share our property line withParadigm Storage, with Home

(04:36):
Depot, the entire retail centeras far as Dillard's the mall.
Walmart Home Depot was it JRMotors?
Millard's the mall, you know.
Walmart Home Depot was it JRMotors?
Jcpenney, you know all of thatretail over there is roughly
730,000 square feet.
If you look at the numbers justright here, that Paradise

(04:59):
building is equal to.
It's another 750,000 squarefeet or so under roof.
And so ultimately, when youlook at it from, let's just say,
from the city's perspective, oryou look at it from, you know,
a vertical perspective, that's alot of square footage under
roof and we're ultimatelydoubling the amount of
development that's already inplace here on the north side.
So when you have that muchgoing in, you're more of an
institutional player.
People start looking at youdifferently and if you have a

(05:20):
proof of concept and things thatyou're making money, that
really starts standing out.
So paradigm storage, guys, isprobably one of the best
examples to start with, but tomove forward.
Separate to that is you haveBoathouse as well.
Boathouse is 49 units.
It's a paradigm storage product, their condo map.
But it's a little bit, I wouldsay, more affordable just

(05:42):
because of the location.
It's out there by the 40 andthe 95.
Paradigm Storage is within thecity limit, so it's a little bit
closer to home.
So people will obviously spenda little bit more to be closer
to their home.
And then we have ourheadquarters that we're building
and we don't talk about it muchjust because it's kind of our
little secret weapon or whathave you.
That's a 20,000-square-footoffice building.

(06:02):
Ultimately it's a 20,000 squarefoot house.
It's just a big office andthat's right here off Dover and
industrial.
So it's central part of town,closer to the water.
And then we have barn caves inthe gym, right.
So you have four differentmodels that are really going on
here and the demand iscontinuing to show Example.
Today I think we have an offercoming in for another five units
just in paradigm storage, andmy broker, which everybody knows

(06:23):
, eric Adalia, he texted me andsaid, with this velocity, given
the amount of units that we'reselling, by the time this
project is completed meaning thebuildings are up we have
already 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.
That's a big deal.

(06:44):
So it does open up the doorsfor larger institutional
investors and we're going totalk about JP Morgan here in a
minute, but that really kind ofgives you an idea on how we're
hanging our hat here.
But the data does support it.
It's really nice for a grouplike us to be able to have our
resources, whether it'ssubcontractors, the
relationships with the cityarchitects, engineers, city
engineers when you know kind ofhow people maneuver, it allows

(07:05):
us to actually have a well-oiledbusiness.
So that's where a lot of theheavy lift is gone.
So being able to kind of honein on an area that we see the
demand, the data supporting itbaby boomer spending habits is
there.
Healthcare is a big on theforefront.
As the city, too, we can kindof come in and build these
assets that we think are goingto continue to have the demand.
So that's really important.

(07:25):
But again, really you knowwhat'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 to one of my favoriteinvestors and she's been with me
for a long time and she's inevery one of our projects and
she's like Ryan, I'm about tomake a bunch of money on
paradigm storage.
What about taxes?
What do I need to do?
Right and legally I can onlyguide so much because we're not

(07:46):
advisors.
But we can say well, this iswhat we're doing, you know, and
obviously we want everybody tocross their T's and dot their
I's.
But right now, you know, if youhaven't seen some of the stuff
that we've had in the past, weactually brought on a tax
attorney that really does a lotof deferred sales trust.
So we've already been in thegame of trying to position our
investors to see other options,to position themselves to not

(08:08):
only retain the wealth thatthey've created on that equity
kicker but maybe reposition itand continue to earn, or even to
start shifting it anddiversifying.
What have you so really, that'swhat's happened with the barn
caves really kind of startedthat too, guys.

(08:29):
For example, with solar, we canpass on the tax credits to our
investors on solar and thereforefor the next four years you're
getting tax credits on your Kones or your 1099s it depends on
when we start issuingdistributions but you're
starting to get some taxadvantages on maybe some
additional income that you havecoming in on through those K
ones, you can start saving ontaxes.
So there's a lot of littlethings like that, the developers
like us that need to continueto be sensitive to, not only for
our own income but to continueto provide those resources to

(08:49):
our investors.
So, with that said, mike, let'stalk a little bit about some of
the things in conversationsthat you're having with clients
about taxes and really kind ofwhat you're seeing most people
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 topay off our investors on
paradigm storage and so we'realready starting to start our

(09:10):
phone calls to welcome and thankthem now and thank them for
being a part.
But what are you seeing?

Speaker 2 (09:15):
I think from an investor standpoint, you know
the typical things that I hear.
You know people looking to doand we've seen this in paradigm
storage.
I think in particular is the1031 exchange.
You know I'd love to say it's1031 exchange into a unit.
In the barn case we're notthere yet, right, that's a fun.
But we as an institution we areoffering that option for 1031

(09:38):
exchange right here at paradigmstorage and that, I think, is
the easiest transition from aninvestor standpoint, because a
lot of people that we have arereal estate heavy, they love
real estate.
That's where they've made their, whether it's a family office
or it's a high net worth.
They're constantly looking forreal estate projects to invest
in and that the 1031 exchangeobviously is a common, common,

(10:02):
common discussion that I have.

Speaker 1 (10:04):
We just had 18 units purchased by it through 1031.

Speaker 2 (10:07):
18 and perhaps another 10.

Speaker 1 (10:09):
We had another 9, a 10, a 7, a 5.
We've had a lot, I think.
Out of all the 208 units, Ithink we're going to have less
than 100 owners, because mostpeople are buying more than one
unit.

Speaker 2 (10:21):
Yeah, exactly.
So obviously that's somethingthat we hear all the time, right
, in terms of how do I reallyshelter this game that I have?
And we just had a conversationwith one of our larger investors
but she's a bit older, right,and there's some things
happening within the family.
It's in a family trust.
So how do we divert thoseassets out of the family trust

(10:41):
in the paradigm projects and nothave to incur taxes?
That's always a question thatwe get 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 the capitalgains on it.
So, you know, we're constantlylooking with deferred sales
trust another huge idea wherepeople are essentially, you know

(11:04):
, using that to invest andreinvest their, you know, their
real estate gains and shelter itinside that DST structure.
So, for the sophisticatedclients and maybe this is just a
reflection of where Paradigmhas come over the last 18 months

(11:31):
, 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, $1 million, $2 million
, $4 million, right?
So I think that's a reflection,I think, of the product that
we're bringing to the market,the sophistication, but in a

(11:52):
real way it's the track record,ryan, in terms of what you've
been able to deliver and as,from an investor standpoint,
people want to reinvest inthings that have made them money
in the past.
Right, so people are gettingmore comfortable with the
overall asset class.
I think they like storage andthey're seeing this idea of you
know storage plus residential.

(12:13):
You meant true storage, notjust you know, we're saying
we're building a, you know alarge garage.
These are true boat and RVgarages allowing people to keep
you know their toys where theirhome is, whether it's a second
home, first home or third home.
So that product, I think, iscatching sort of fire across the

(12:35):
US and 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 that havebeen able to see it.
But there seems to be thisbuy-off, like I just can't get
enough garage space and I thinkour demographics tend to be

(13:00):
let's face it, they tend to be35 to 60, right, that's our
demographic in terms of ourinvestor and our buyers, and
that demographic is the one thathas all the toys.

Speaker 1 (13:10):
It's true in most of the wealth too, which ultimately
are looking for more and morewrite-offs.
I know one of the common thingsfor local buyers what's
happening is they don't haveenough room in their current RV
garage it's tied to their homeand so they're coming out and
buying another storage unit.
But garage it's tied to theirhome and so they're coming out
and buying another storage unit.
But a lot of the conversationsas I'm seeing them in passing,
as they're maybe epoxy in theirflooring or moving in and
getting their keys they'll say,yeah, we had, you know, some tax

(13:30):
implications and our advisor,you know, wanted us to buy more
real estate or pay Uncle Samwhich one is it, you know?
Which obviously leads intoadditional opportunities to
invest.
If you have the same issue,instead 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 what have you of
the asset.
So we do that heavy lift.
There's another opportunitythat we're actually working on

(13:53):
right now.
It's called the QualifiedOpportunity Zone.
For a lot of real estateinvestors, they probably know
what that means, but ultimatelyit's locations within certain
cities and counties where Iwould say, from a federal level,
want to try to push more growth, and so what they've done is
they've created incentives forinvestors to go into a fund that

(14:13):
is an asset in a specificlocation that has, again, has
been identified for needinggrowth.
And we would get you know.
You can roll your capital gains1031 exchange sales from, maybe
, a business and you canactually roll those gains into a

(14:34):
real estate opportunity zonewhere, for example, a lot of
people don't know this but, like, let's say, you have a sale of
a business, you can't just rollthose gains into real estate
getting 100 percent, you know,right off on on your gains.
You still have to.
You can defer them, but onlyfor so long.
The same thing with 1031, it'slike for like.
So if you sell real estatethat's what 1031 is for you can
sell real estate and then youcan roll that capital gains into

(14:55):
another real estate investment.
You have to own the property,you have to be on title.
So, yeah, like for like.
What we're doing is ultimatelyit is like for like it's real
estate, but you can also sellbusinesses or any other assets
and invest that into a realestate fund and get those tax
advantages.
So that's another fund thatwe're actually looking to open
because so many people andinvestors are going.

(15:17):
Ryan, not only do we want themore diversification, we want to
stay in real estate.
We're getting a lot of profiton 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 is we'rejust kind of, you know, ears to
the ground and maneuvering ourstructure.
It really doesn't matter the,the, the construction, the
product, all of that.
It has its own merits.
The same thing with paradigmstorage.

(15:37):
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 toolsthat are out there to provide
those amenities to our clients.

(15:57):
And so, with that said, youknow let's say you know with not
only Dover we want to do a costsegregation on that.
We're going to do a cost seg aswell on the gym, which
ultimately means we get to passthose real estate what's it
called, not tax credits butdepreciation back through to our
clients.
So it's really kind of neat.

Speaker 2 (16:19):
You know how we're actually making this more on the
forefront, because again, ourclients are making a lot of
money and they're're they'relooking for those, uh, again
those tax advantages 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

(16:41):
barn caves structure, ourinvestors coming into the uh,
coming into the fund andactually viewing this as sort of
a pass-through right, you'reactually purchasing a lot as
you're coming in to the fund andthen maneuvering this so we can
roll over the principal andprofits into that down payment
and have it in a tax-advantagedway, right?

(17:02):
So this is, in a way, for us,you know, we're trying to stay
at the forefront of, you know,real estate and tax law and be
able to essentially help ourclients manage that.
You know, because I think, inparticular, barn Caves is a
unique product, right, becauseit's being seen as a high-return
investment and we have plentyof people that are just saying,

(17:24):
look, I love 31 and a halfpercent projected return on it
and I sort of get it.
It's 93 units, it's not.
You're not building a thousandhomes somewhere, you're in your
home market, you're building.
Sure, it's a $75 millionproject, but it's understandable
, right?
So there's those people thatjust view it from an outright
return perspective, but there'sa heck of a lot of people that

(17:45):
have sort of seen this and said,no, I want to invest in it, but
I also want to own the unitright.
And we've got the AMI officesthat are coming in for multiple
units, that they're justbasically taking their returns
that they get from theend-of-life fund and rolling it
into multiple units.
So we want to be able to dothat in a tax efficient and

(18:05):
effective way for our investors.
So I think we are trying tostay on the cutting edge of what
we can do within the tax lawand making sure that we
understand it, our investorsunderstand it and get the advice
that we need and that, I think,is, from my perspective, I
think that's our job.
Right, we're not justdevelopers but effectively, you

(18:31):
know, the nice thing about us iswe're a platform and on that
platform, you know, we haveconsultants, we have attorneys,
we have tax accountants allthese people that we can not
only, you know, use to ouradvantage but also for our
clients' advantage, and so we'rebecoming much more of a
quote-unquote family office,right with the development.

Speaker 1 (18:47):
On, yep, that's exactly so.
Let's unpack that a little bitmore.
So that's the fruit here.
Guys, I wanted we're going tokind of, we're going to talk
about that a little further soit's understood probably a
better.
So that'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.

(19:08):
It's really kind of the sameconcept.
The majority of our clients dolike real estate, so of course,
no one's going to put all theireggs in one basket, right?
You see, paradigm.
You're like you know what?
I want to dip my toe in thewater.
Hey, I've had severalinvestments with them.
I'm going to keep rollingcapital, but they still have
some of their liquidity and alot of their net worth is still
in other assets in real estate.

(19:30):
What has happened is we learnedour lesson with paradigm storage
, where, because these arecondos, this is a for sale
product.
It's fee simple, each unit's afor sale product.
That opened up the doors to alot more buyers, a lot larger
buyer pool, and you have realestate investors that don't want
to do a step or can't do a stepup in their basis, or because
of interest rates are high, theydon't want to buy another

(19:51):
residential rental and the entrypoint is so low here that you
can buy one or two.
The management is much less.
The kind of list goes on on.
The reason why people continueto buy these.
It really has to do with thereturns are stable.
You don't have a lot ofturnover.
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 net is a lot farther outfrom.

(20:11):
Investors and people fromacross the country are buying
these site unseen, because theasset class is getting more and
more PR, from Goldman Sachopening up a $500 million debt
fund for operators on takeoutloans after construction for
buying holds, in essence, solong-term debt, 30-year, 40-year
mortgages against these assets.
So what's happening isinstitutions are paying

(20:33):
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 like to own one.
And so what happened was againlearning.
What's happened with paradigmstorage is we went to our
securities attorney and our taxattorney and said hey look, if

(20:54):
we have investors that whoinvest and whatever that number
is, and we can talk about it,and if anybody's interested that
hasn't invested with us, youknow, they can lock in a lot,
invest a minimum amount, andthen what happens is that 30%
projected return.
I can return that profit tothem with a gift of equity.
So now they're getting the giftof equity, eliminating the tax

(21:14):
gains on on or the profit and onthe taxable gains on the profit
, and it's rolling intoownership and therefore our
investors are going.
I love that idea, right.
So now let's say you roll into,you have an IRA, 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, Ithink, north of 100,000 people

(21:37):
on a waiting list to buy theseunits.
That's how much exposure.
We've really pushed the barncaves 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 a hold of ourfloor plans because they want to
build something similar,because it's just taken root.
It really has.
It's really kind of impressive.

(21:57):
But again, what's happening isinvestors are going well, look,
or buyers and investors aregoing I love what you're
building, I love the price pointas far as the sales price, so
they're locking in on a salesprice.
So, from an investor'sperspective, or even a developer
, we're always focused ondeveloping and selling to make a
profit.
If my own investors are lookingfor tax strategy, they're

(22:19):
buying them and then we'regifting the profit to them for
the down payment or a portion oftheir down 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 alreadyhalfway sold, in essence right
or close to.
So what's happening is is nowthe investors that aren't
necessarily know the location ordon't want to own a home own?

(22:42):
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 it, so
your pro forma and yourprojected returns are pretty
locked down.
The really only thing that weneed to focus on is building
them on time and on budget tostay on that pro forma

(23:02):
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 be able to build them at acost that is favorable and
affordable and attainable.
It's a testament to the natureof the development and the and
the fact that the majority of itis steel buildings, which

(23:23):
lowers insurance costs, not onlyfrom a development 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 for fire protection, which we could talk about on
another webinar.
But all of these things arechanging the landscape of how

(23:46):
Planning and approvals are beingdone internally with the city,
at a private level or publiclevel, down to how architects
and engineers are trying to addvalue to developers by
developing a let's just say thestructural engineering of these
buildings, where you can deliverthe structural steel on one
truck and it's cheaper forlogistics and transfer and
keeping the costs down.

(24:06):
I mean, the list goes on onwhat we've created.
So when investors thesophisticated people that want
to know what they're gettingthemselves into are going to 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, is
these investors are going?
Ryan, we love where you'regoing because not everybody
knows this we're working onbuying another 37 acres right

(24:27):
behind just west of Parad uh,barn caves, by the way because
we the demand is there.
But we're going to 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 themajority I'd say maybe 50 of the
investors that are in this fundwant to own one.

(24:49):
So by being able to createanother vehicle for opportunity
for clients, it's really kind ofstarted standing out for other,
let's say, operators like usthat are trying to provide and
successfully raise capital butprovide more services to their
clients.
So I hope that makes sense.
I know I talk a lot here, guys,but I hope that I was able to
unpack that again.
Again, the takeaway isinvesting, rolling your gains

(25:11):
into ownership If you have,depending on the vehicle in
which you've invested in, youcan get some of that principal
back, plus a prep if you need it, but you're not getting taxed
on those gains.
That's a big play.
So again, it's like you'regoing to buy a home.
You're building a home on yourown.
If you keep the house, you'renot going to get taxed on unreal
, unrecognized or realized gains.
You still own the home untilyou sell it.

(25:31):
You're not going to, you're not, you're not going to have to
pay taxes on any of the profits.
Same concept here, becauseultimately you're investing into
the LLC that owns this project.
So it's really just just anumbers game, is really all it
is.

Speaker 2 (25:42):
We're just simply going to have two share classes
with them a share class forinvestors and a share class for
investors that want a unit,right, so usually we can do that
, I think fundamentally too.
If you go through the numberswith the investors, I'm sensing
too they sort of see this almostlike an IPO, right.
In a way they're like, oh well,you get a new stock that comes

(26:04):
out of an IPO.
It's typically cheap and itgoes up after the stock is
released, right, I think peoplelook at this and going you're
delivering this product at 425bucks a square foot.
Wow, okay, there's upside there, for sure.
And I tell them look, these areour performers.
We're being tried to beconservative and, yeah, we could
be releasing these at muchhigher price points over time.

(26:25):
Right, we're phasing it out.
Anybody that's not lockingtheir home in through that
V-share effectively.
Yeah, I think we're deliveringthis below market.
I've always thought that it'slike, okay, $425, fair, but I
think there's $450, $475, evenpushing $500 a square foot,
delivering the product that wecan deliver out here at Havasu

(26:47):
and making it.
I think once you drive into theprivate drive with the palm
trees and the favorite streetsand you're going to get in there
and going do I get to talkabout that?

Speaker 1 (26:56):
on this one, do I get to talk about that?
I'm such a nerd.

Speaker 2 (26:58):
Absolutely.
But you're going to come inthere and you're going to go wow
, I'm just going to leave thisplace.
This is so incredible.
And then having a 32,000 squarefoot gym with a Dubai inspired
pool and pickleball courts andall that creates the overall
environment where you know thatthat price per square foot seems
like a giveaway, and I thinkpeople are sensing that.
They're like yeah, I see theupside in what you're trying to

(27:20):
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 getting thetake-up we get from Alaska or
from Florida or from MissouriI'm having conversations with

(27:43):
people in virtually all 50states.

Speaker 1 (27:46):
Let me add to this.
So, guys, where I learned a lotof this?
So my uncle.
He was one of the presidents ofStandard Pacific Homes, which
ultimately sold to Lenar.
He ended up going over toWestern National that was
building, I think, 33,000apartment doors for the Irvine
Company.
He left there and became thepresident of Holland Partners,
which builds high rises all overthe world, and in my opinion,

(28:06):
that would be my dream.
He doesn't get much bigger thanbuilding high rises.
Okay, he always said that youmake money on your acquisition.
You make money on doing yourhomework and doing your research
.
That's where you make yourmoney, and the biggest testament
that we have to the success ofwhere we believe the market is
going is not only because thedata doesn't lie, but you know,
for example, paradigm storage.

(28:27):
We thought we were going tosell these 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$145 a foot.
Right now, on average, we'reselling them for $175 a foot and
the rest of Building E.
We just sent out an offeractually, I countersigned an
offer at $180 a foot, so it'sthe same concept as home

(28:51):
builders.
Right, if you buy earlier, inthe phases, your cost is a
little bit lower.
As you deliver a product Peopleare, you know, the demand goes
up.
You can increase that price.
That yes, the demand has goneup, but it also the market has
slowed.
I mean Q4 last year, during theelections was.
I mean it was desolate, it wasquiet and we kind of expected it

(29:12):
.
But we still were starting tosee, we were still seeing trades
where other real estate,traditional real estate, had
slowed down and certain pricepoints 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, becausethe demand for tax strategy is
higher than homeownership rightnow.
People own their homes.

(29:34):
You may have a low interestrate on your home right now and
you don't need to sell itbecause interest rates are high.
You may want to move, to have asuit, but you can't because
you're like well, I'm going togo buy a $1.2 million house but
I'll have an 8% or sorry, rightnow, 6% mortgage where I have a
2% right now.
So it's the.
A lot of people aren't makingthose moves just because the
rates aren't low and but they'relooking for those tax
advantages.

(29:54):
So, um, to move, to move over,and this is actually probably
one of the most important things, and I think I announced this
before, and if you guys were toGoogle apex, ap, ap, ap, apx, 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 apex, I think it'slike 10.2 or 10.3 million 630

(30:19):
acres, and then they'resplitting that down the middle
to the owner of viewpoint southpoint, which I think there's,
like you know, 400 homes or 500homes over there, which is
literally you can see it whenyou're standing at paradigm
storage and then, and then theidea is for they're going to
build a lot more homes.
So the demand is going up.
But if you're seeing a 630 acreacquisition where there are two
of the larger home builders inthe area and including me, I'm

(30:41):
going to actually end up taking37 acres from the guy who owns a
viewpoint North point for us tobuild more in that area as well
, the demand is clearly there,and these are institutional
capital-backed players.
So we're really kind of in thatsame lane as they are.
We just have a differentproduct.
They're building regularone-story RV garages on the next

(31:01):
to the one-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 going to 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 Iwon't go too far into even a

(31:22):
possible partnership with theowner of the mall because that
still hasn't solidified yet.
But we have a lot of landownersthat we're working deals with
all over the place.
But you know that'll kind ofgive you an idea of our
projections on the growth.
And so what's going to happenis the barn caves are going to
be really the first residentialthat's this close to the retail
that's going to be deliveredafter that acquisition.

(31:44):
So I believe we're going tocontrol the market.
Right now our pro forma isshowing that we're going to be
just under $400 a foot.
All the other sales in the areaare north of that.
So if we're alreadyconservative on what we're
selling and exiting these at, ofcourse investors are like, yeah
, I want to buy them.
You're going to be on the lowerpoint already.
But let's say, investors, wedecide to shut it down and we

(32:05):
only have, let's just say, 43units accounted for my investors
that invested and this isimportant, my investors that
invested.
Same thing we did with paradigmstorage the rest of the units
that are not accounted for by myinvestors again, which have
first right of refusal, we'regoing to start increasing the
cost per square foot as wedeliver the rest of those phases
, so the other half of the ofthe project, if you will.
I'm going to increase the salesprice and I do believe the

(32:28):
market's getting better.
So and it's it's projected toget better by the time we
deliver these units, I thinkwe're all going to be in a much
better position overall as aneconomy.
With that said, that's going tochange.
Even the investors are walkinginto additional equity now from
a gift perspective and from adocumentation.
It's not, it's just you'regoing to buy a house, and I'm
obviously for X price, and thenwe're going to end up selling

(32:50):
the rest of the phases forhigher, so you're automatically
getting an equity increase asyou have owned that property
over time, and then again youhave all that development going
up.
So the point is 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 thedemand really is, that's

(33:10):
important.
Lastly and I'll open it up toyou because I like to talk a lot
, if you haven't noticed, guys,in the News Herald they just
mentioned that the airport hasbeen kind of a nightmare for
years and years.
Okay, they have been trying tofigure out 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

(33:32):
cool, right, paradigm stores hashelicopters landing at it, but
they, they, they, thosehelicopter owners don't have a
place to park their, theirhelicopters, they don't want to
leave it in the heat and theydon't have airplane hangers.
So we approached, you know, the,the airport manager and said
listen, we, yes, we can buildthese things, we're willing to
help you, we'll make some money,kind of aligned with our brand.
But we also know that the manthat that the city's looking for

(33:55):
, and if we had a larger airport, more hangers, we're going to
have more buyers come in.
Okay, so, working with thesebrokers out here, that that's
where a lot of buyers 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 wouldtry to help them build.
So they just announced in thenews herald that behind closed

(34:16):
doors, they're talking aboutexpanding and building out the
airport even further.
So when you now have the cityand now you have, like, the
public side of things are reallystarting to bump up, or public
side of things are bumping upand then the private side is
already growing, or private yeah, public side of things are
bumping up and then the privateside's already growing I would
like to think that this area isjust really now starting to kick
off for growth and that mall isreally starting to turn up too.

(34:37):
So I don't know, I'm a littlebiased.
If you have mine and I'm tryingto make it beautiful, when you
come down Retail Center Drivefrom the 95, I have four date
palms that are like 25 feet tall.
And because Paradigm storageparallels the land for the barn
caves, I'm going to justcontinue those date palms right
in front of the gym and the barncaves and throughout the

(34:58):
development, but that's going tobe the main thoroughfare for
people to get back there towhere all those houses are going
to be built.
So I personally think that ourlocation is really key here.

Speaker 2 (35:08):
Yeah, the location is key and I think you hit it.
It's really North Havasu wherethe money is going into over the
next 15, 20 years.
It's the migration into thispart of town.
It's going to be our gym thatyou've said has been sort of
central to the people that arelooking at if they're going to
move into that area.
What's the infrastructure there, right?
So talking about potentiallyeven a new marina on this side

(35:30):
of town.
So I think look there and thecity's lining that up for us
there's talks of it, we're notsure, yet not sure yet okay, I
have a lot of.

Speaker 1 (35:37):
We have a lot of conversations.
Okay, there's a lot of talks ofit.
Yeah, people don't know whatthey're doing.

Speaker 2 (35:41):
So I just want to let you guys know fair enough, but
it would be nice to havesomething like that up there too
I think it's part of this wholedevelopment.
I see that as possibly a goodpossibility.
So, yeah, when we look at it,we're well positioned locally
here and I think we're wellpositioned with the city.
I think every time you go intothe city or Dennis goes into the

(36:03):
city, I think we're gettingthat okay.
It's paradigm here's thequality to build.
Yeah, we understand what you'retrying to do here.
And paradigm here's the qualityto build.
Yeah, we understand what you'retrying to do here and I think
there's a, you know, there's aconsistency which we're bringing
to those conversations whichare important.
Right, because you're exactlyright, you've sort of flagged a
couple additional developmentsthat we're going to do here in
uh, in havasu, which is terrific, but there's no shortage of

(36:27):
building the city out.
It's just, it's really justbeginning in terms of it's what
I think is going to be the nextreally important phase for
Havasu right, hotels, moreinfrastructure, bringing the big
supermarkets in here.
It's going to be an amazing.
Especially north side of Havasuis going to be amazing place to
live.
And I think, from my perspectiveyou look at the map the barn

(36:51):
caves is the gateway to all ofthat activity.
You're going to go right, rightnext, right past the barn caves
into all that development,right?
So I think we're really wellpositioned for that and, of
course, you know we deliver onour performance, just like we
did here at Paradigm Storage.
I mean, initially, we'reperforming at what?
145 a square foot.
We're, you know, selling thisstuff at 180, 185 a square foot,

(37:14):
right?
So I think, if they could,that's what I see for the barn
case project and I think it setsthe stage for Paradigm and what
we do going forward, whetherit's storage or it's, you know,
storage plus residential.
And that really brings us intothe topic of how do you finance
all this stuff?
Right?
Because that's from myperspective-.

Speaker 1 (37:35):
Hold on Before you go too far, because I know exactly
where you're going.
Okay, anybody who has questionsso far?
Because Mike's about to tee offon something that's really
important for you guys to know.
I can see it in his face he'sjust biting at the bit to talk
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

(37:55):
right after Mike talks about it.
But this is also somethingthat's very important and, again
, it kind of goes in line withkind of the institutional side
of things?

Speaker 2 (37:59):
Yeah, I think so.
So you know my background, aseveryone knows I think that's
been on these before or havechatted with me.
It's an institutionalbackground Wall Street for 10
years, private equity in Asia,taking companies public, you
know.
So, dealing with this idea ofhow to scale businesses and how
do you bring the right financingmix to those businesses.
When I was in Wall Street, Ibasically did debt deals for the

(38:22):
largest companies in the US.
I brought them transactions allacross the globe and swapped
them back into US dollars andwhether that was GECC or Toyota,
this is sort of what I didearly on in my career.
Ryan's done an amazing job ofbuilding out his reputation in

(38:43):
social media and thecrowdfunding area, which, in a
lot of ways, essentially is youcreate your own destiny through
that model, and you do.
You know your projects tend tobe serial, right, one, one, one
one.
There could be some overlapbetween those projects, but that
capital raise means theyprobably take a little bit

(39:05):
longer to do the capital raiseand because of it, you're also
taking a bit longer to do theactual project itself.
So my goal here within Paradigm, is to sort of take what we do
really best the crowdfundingmodel, but then marry it up with
more institutional capital,right?
So what does that mean?
Ultimately, that means we haveto go get a revolving credit

(39:28):
facility from a majorinstitution, get that in place
and bring some capital to thatand then, therefore, when we go
to our next race, effectivelywhat we're saying is, let's go
to the family offices.
That's going to essentiallyprovide the equity to 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 going to have a term

(39:50):
sheet from them, if not thisweek, early next week, which is
going to allow us to do that.
So I met with the head of creditin JP Morgan New York.
It's a relationship I've hadfor 25 years, and when I was in
their office explaining why I'mthere now and why I wasn't there
three years ago and thedifferences in paradigm from a

(40:13):
scale, from an infrastructure,from a vision and from our
ability to execute, you knowthey took a look at that and I
just saw the light bulb go onRight.
It's like they're like oh, wow,ok, I love your business model.
We here at JP Morgan want toget behind it.
We want to basically be thatlending institution that takes

(40:35):
you from where you are today tothat three billion dollar
company in three years.
We want to be lending you asmuch money as you can possibly
take.
Million dollar company in threeyears.
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
today, but you can scale into abigger facility over time, and
so that's where we are.
So what you're going to seefrom us on a go forward basis is

(40:57):
the ability essentially to moveas quickly as we possibly can
with projects in parallel.
Right, so you're talking aboutthree, four, five projects at a
time across the US, withinstitutional 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

(41:20):
the US.
We know where we want to be.
We're going to pick ourlocations very carefully, we're
going to partner in the localmarkets when we need to, and
we're effectively replicatingsomething that we've done over
and over and over again.
In addition to that, what theguys at JP said?
Well, two things.
One I don't think anybody elseis doing this, are they?

(41:41):
No, they're not, not the BarnCaves product.
We haven't seen that.
And number two, we really likethe fact that you're not taking
this to Los Angeles, new York,miami.
You're taking this in the areaswhich they see as well
migratory areas, where you canget land a little bit cheaper,
where you know the demand isgoing to be there over the next

(42:03):
10 or 15 years.
And when you get a tailwind, bythe way, with interest rates a
bit lower, which I think they'regoing to be lowered here very
shortly you're going to get atailwind from an interest
perspective right, your debtcosts are going to be lower.
So I think you know there and Iwas, you know, in those

(42:24):
discussions I was perfectlyhonest with them.
I said look, the I am lessconcerned with the rate that you
charge me Right, because withinthe paradigm model we have the
ability the way we build andengineer and structure we're
built to go fast.
We go fast.
The faster we go, the moremoney we save right at the end

(42:45):
of the day.
And therefore I can be moregenerous to my, my partners, jp
Morgan, and my and my equitypartners, my LP partners,
because we have embedded withinour profit margins the ability
to do that Right.
If you're a traditional builderbuilding 500 homes somewhere,
yeah, you may not have thosebusiness projects.
You need to count every penny.

(43:06):
I think, from Paradigm'sperspective, the partners that
are looking at us right now are,well, the partners that are
looking for.
I would call this like phasetwo of Paradigm, right?
Phase one the traditionalcrowdfunding Phase two is going
to be a little bit moreinstitutional in its nature,
right.
Phase one the traditionalcrowdfunding phase two is going
to be a little bit moreinstitutional in its nature,
right.

(43:26):
So the people in, you know,phase two are going to be the
larger family offices, thebigger check writers, but
they're going to want to come inand essentially share a piece
of the pie for everything thatwe do.
Right, they're going to buyinto that and therefore, that
sophistication level is going tobe you know it's much higher at

(43:49):
the end of the day it really is.
So they have to buy into whatyou're doing, where you're going
to do it, the timeframes you'regoing to do it in, and then
make sure that you as aninstitution, as paradigm, are
de-risking every part of thatsupply chain right, whether it's
the debt, the equity piece orthe underlying you know
development aspects of it and Ithink they bought into the our

(44:11):
ability to de-risk projects andour ability to deliver on time
and on budget.
So that that's the key part ofthis for paradigm.
Now we enter phase where youknow it's I would say it's not
turbocharged, because I don'twant to use that word but, um,
we're going to go a lot quickerand and bring this sort of

(44:32):
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 a job site and erecting it intwo days from a framing
standpoint.
So we can go that fast.
But that's the advantage ofhaving more of an institutional
capital.

Speaker 1 (44:54):
And I'll kind of open it up here too what's kind of
wild is?
I originally went into planningand designing this in a way
that allowed us to go to thehigh dense areas the downtown
Nashvilles, the LAs and buildthese in a way where you can go
into a high dense area.
You're looking for a high densezoning.
They're tall, they're skinny,they're kind of like those condo

(45:15):
townhomes that are moreaffordable.
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 we got to a point where we
are happy with it.
But what's happened is a lot ofother builders and developers

(45:36):
started reaching out to us.
So equal the amount of peoplethat are interested in buying
them.
We've had landowners anddevelopers across the country.
They're 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

(45:56):
to other builders and developers.
So think about it, guys.
They say that the people thatmade all the money during the
gold rush are the ones thatprovided the picks and the
shovels.
Right, if we're able to, ifpeople can change the skin,
maybe make some adjustments towalls or what have you, and we
have that in place, you know,then then builders can actually
buy these, put their name on it,we manufacture it and ship it
to them, and we were handlingeverything from a back office

(46:18):
side.
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
larger institutions are gettinginvolved, 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

(46:38):
our investors, regardless of howbig these check writers are,
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 stillalways open it to new investors.
But what's happened is is that Idid not expect I have to give
credit where credit's due.
I told Mike, jp is not going tolook at us.

(46:58):
Man.
He's like, trust me, it'srelationship based.
I'm like jp is not gonna lookat the, the density is not here,
you know we just the censusbureau's data is not accurate.
You know you're, you can't getthe data unless you do private.
I do like some serious privateresearch 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, will bigger institutionslook at it?
Because again, we're in asecondary market.

(47:20):
You know this is an area wherepeople are really moving to to
try to bring down their incomeor bring down their overhead.
You know it's it's as muchpopulation small it just doesn't
make sense for what largerinstitutions are looking at.
Once they got which I have togive you know, mike was able to
pitch it to get them to go I'mprobably kind of interested.
That's when it started openingup to really the inner workings

(47:41):
and what we have created,because these buildings can be
popped up in any you know, anygeographic location in the
country and any atmosphere.
You can stack solar on any ofthis stuff.
You can print these things outwhile you're doing your
horizontal improvements.
The buildings are being cut andprinted by, just like paradigm
storage.
Right, paradigm storage has56,000 pieces, including the
screws and every one of theseand everyone.

(48:02):
We can get to a point where weknow that number, that much
detail in these barn caves.
So what's happening is is theseinstitutions are going like man.
When you get to a point withinflation and with all the cost
of management and and even allthe way down to like we have
less, less labor and less trades, we can cut that, we can.
We're cutting the risk.

(48:23):
That's what they care about isrisk.
How are we mitigating the risk?
And so all of these littleattributes is what's creating
that.
So we feel that we're on theright track.
The demand is there andultimately now it's like how can
we print these things out andbuild the relationships with our
clients and investors tobelieve in our vision and say,
ryan, we want to be a part of it?
And then implementing theseadditional tax strategies to

(48:45):
open up the door for investorsto be a part of it is huge.
But then you can roll theseback over and your capital back
into either ownership or rotateinto other projects with us.
And that's what's reallyhappening here with Paradigm
Storage.
Paradigm Storage, for the mostpart, is going to pay all of our
clients not only the principalback but their equity and
everyone who already wants toallocate the capital and roll

(49:07):
them over to barn caves.
We're going to shut down theraise on the barn caves.
So we pretty much are done onthe first raise for that product
and now it's just aboutbuilding it as fast as we
possibly can, build awarenessfor it and continue to try to
implement better practices forour clients.

Speaker 2 (49:20):
So we're on the way and that improves.
We've seen that here atParadigm Storage, where we're
sitting right now.
Right, so we're now in the lasttwo phases, two buildings F and
G.
Right, we're forward on where Fand G we're putting the.
You know we'll be putting theretaining wall in shortly.
So I think, from a ParadigmStorage perspective, we've
learned a lot from ParadigmStorage right In terms of from

(49:43):
the phase A to, you know,building G.
There's a lot of informationthat we gather as a builder from
that process.
And, you know, I think one ofthe things I talked about when I
was at the bank meeting with JPit was, like, you know, we can,
under the right circumstances,build 50,000 square feet of new
storage construction in 90 days.

(50:04):
Right, that building getsdropped.
We 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.
They've committed a bunch ofmoney to go take these C or
class B storage units, storagefacilities, and redo them and

(50:28):
bring them up to market.
Right, that takes a heck of alot of investment and a heck of
a lot of reinvestment in termsof bringing everything within
that product up to market,whereas we can go and build
50,000 square feet in 90 daysOnce we got the building
engineered and dropped.
We go very, very fast.
So in a way, they were like, Ithink from a JP Morgan

(50:52):
perspective, like, okay, yeah, Isort of see that guys, yeah,
you've sharpened your blade onthe storage side, you've got
apartments going up in SanAntonio.
You, as a builder perspective,you cut your teeth.
You've got apartments going upin San Antonio.
You know, as a builderperspective, you cut your teeth
and now you've come up with adesign which is unique in a lot
of different ways, but you'renot looking to put it
necessarily in the hot.

(51:13):
You know where.
It's going to cost you 15million bucks for 18 acres or 20
or whatever.
It is right.
You're going into areas thatare affordable, 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,

(51:33):
the RV and boat world.
That's part of our DNA and Idon't think that's, you know,
from a development perspective,certainly from an MFR
perspective, that you knowpeople haven't focused on that
yet, right?
In addition to that, the way webuild with steel and concrete.
You know, after the fires in LA, I have municipalities calling
me up going oh wait, okay.

(51:56):
So what can you actually dohere If we put in restrictions
in terms of what that rebuildinglooks like?
You know what does this looklike?
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 thesemunicipalities are looking at
all that right now anddetermining what they need to do
on a go-forward basis torebuild those communities, right
.
So I think the tailwind is there, for you know what we're trying

(52:20):
to do, paradigms trying tobuild and the vision that we
have, which is great.
I like to see that.
I'm not going to go and rebuildPacific Palisades or anything.
It's not on the agenda rightnow.
But I think, whether it'shurricanes or fire or other
weather, these structures aremeant.
Really, from our perspective,they could be anywhere.

(52:40):
Florida has the problem withtheir structures right now,
whether it's wood or otherbuilding materials, right.
So we have some advantages, youknow, at Paradigm in terms of
what we're doing, I think wejust parlay those advantages
into markets that we think wecan return and maintain the

(53:02):
types of returns that we'regiving right now to our
investors, because ultimately,that's all that we care about at
the end of the day.
If we're not delivering thetypes of returns for investors
that we promise, then okay.
Then what's the point?

Speaker 1 (53:14):
there's, no, there's no business.
What's?

Speaker 2 (53:15):
the point.
So you know, if there's andthis is what you know, really
going back to my experience likehow do you scale, scaling is
important, you know, really,going back to my experience,
like how do you scale, scalingis important because you can
scale too quickly or you canscale too slowly and you've got
to do in a way, effectively,that you as an institution, as
Paradigm, feel comfortable with.
And from my perspective, youknow, within Paradigm we're in a

(53:39):
much different situation thanwe were three years ago.
We know our vision.
We have enough experience nowas an institution to be able to
deliver that and walk into themost serious whether they're LP
investors or banks and providethe business model and the
numbers to support what we'redoing.
So I think that goes a long way.

(54:02):
And I to my comment more andmore of my conversations with
investors because if anybody'son this that I've spoken with,
these are people that are muchmore comfortable with a
million-dollar check or a $2million check.
That's just a function, I think,of where Paradigm has come and

(54:22):
where we're essentially heading.
So very happy to see that andobviously, for our investors
that are currently with us.
Yes, ryan's absolutely right,regardless of what model we have
from a financing perspective ora scaling perspective.
We are always going to have anopening for our current
investors, always going to havean opening for our current

(54:47):
investors, and there'll alwaysbe a crowdfunding aspect to what
we do, because part of our DNAand part 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 reg, a
right for everything that we'redoing, so we can have those
conversations with the investorsthat don't have a million
dollars, let's face it well, andmy philosophy originally and

(55:09):
we'll sum it up too, because ourphilosophy originally was, you
know, I grew up with a singlefather.

Speaker 1 (55:13):
My father didn't do very well and we didn't, you
know we didn't, I didn't gowithout, but I 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
friends and clients that I wasdoing loans for, and they just
kept believing in me and theyjust kept investing this over
time.
It's just.
It's really just snowballed towhere it is today.

(55:34):
So we've made a lot of gooddecisions over the bad decisions
to get to where we are.
But with that, let's answer acouple of questions and then
I'll kind of tee off on that andwe'll try to stay at Reddit an
hour for you guys, so we don'twant to take up too much of your
time.
Again, you guys have morequestions?
Let us know, chevy.
So good question in regards toownership.
So what's happened is the 43clients and I could be wrong.

(55:55):
Tiffany, our 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 thatare on this, you know I have,
for the most part, a personalrelationship with you.
Some I talk.
I talk to some people more thanothers, and some people have
things that happen in theirlives and they call me because
they just they're worried aboutthe world and the market and we
just establish a betterrelationship.

(56:16):
But what has happened is is weknew that these properties are
going to probably be a littlecloser together.
To get rid of the riffraff oflike Airbnb is really important.
I don't like Airbnbs whatsoever.
I've never wanted to own them.
Airbnb in general right now isnot doing so well, so we don't
think even the investors thatare really, or even buyers,

(56:39):
investors that are looking at itfrom an Airbnb side, that had
maybe some experience in Airbnb,are starting to consider not
Airbnb-ing them, which is goodbecause, since we're going to
own the HOA company, we're notgoing to allow Airbnbs.
Just so you know.
And to go back to that is the43 clients that I have in there,
that I have relationships with.
I know what their overall goalis to live here or be out here a

(57:01):
handful of times a year,whatever it is, they don't want
that riff raff either.
So, really, what's happening isthe nature of the owners that
are inside this, this, this, uh,community.
I'm going to know pretty muchevery one of them, um and, and
it's really kind of nice Causeit's like my own little network
of like a real estate communityof people own, and so, listening
to them, they don't want thatriffraff either.

(57:21):
In fact, even for parking iskind of a problem for us.
To get you know, if you have a,if you were trying to throw a
big party, you'll be able to beokay to park it, but if you have
five or six different units areall throwing big parties at the
same time.
People are parking on thestreet, you know, down, like out
by the gym street, so there'snot a lot of extra room for
parking.
So that way the riffraff isn'tgoing to be there.

(57:45):
We're going to make arequirement that people have to
pull their stuff in the garagesyou know all that fun stuff,
because we want to make thisplace look really good, like,
for example, we don't havestreet lights and every single
one of the units that have thelights on the side of the
garages, right?
So, like outdoor lighting,every one of those lights, every
unit, on front and back of someof the garages Some of the
units, as you know, have garageson both sides, in essence,
drive-thrus All of those are allgoing to be lit by the HOAs.

(58:07):
Now, mind you, the wholeproject is on solar, so the HOA
is not going to feel it, butboth sides of those lights will
be on all the time.
So if you're an owner and youcome down the street which, by
the way, we're putting all thestreets in pavers but when you
come down the street, everysingle unit will be lit up and
the unit owner doesn't have topay for the electricity.

(58:28):
It's all on the HOA.
So it's really pretty neat onon just the nature of what we're
creating inside the community.
And people just don't want thatriffraff and, to be honest with
you, I don't want it either.
So the fact that we're notallowing short-term rentals is a
big deal.
To finish the question andanswer it long--term rentals,
yes.
So we will allow the long-termrentals, the six-month one-years
.
We are going to choose aproperty management company that

(58:52):
we know that will vet thosetenants and do background checks
and collect deposits and soforth.
That'll be tied to the HOA aswell because they have to get
approved to go through the gateanyway.
So we're going to kind of sniffa little bit of that out and
maybe provide those services tothe people who own them and want
to rent them out.
Tammy, to answer your questiontoo, we're going to be anywhere
between 850 and 1.2.
The largest unit is going to be1.2 and the smallest unit's

(59:15):
852,000 is what we have rightnow.
Real quick story, and I'll kindof start with one thing and then
back into a story we're evenlooking at.
So one of the things that welearned about paradigm storage
is people want, you know, airconditioning, if they want all
that stuff.
So, moving forward, after ourphase one, we started delivering
our units completed where weare, we'll offer, you know, our
unit owners if they want youknow, epoxy floors or certain

(59:38):
things done inside their units.
We're we're helping them withthat, um, and it's where we're
helping them with that andthat's what people want.
When you kind of get to knowthe culture of people out here
or what the buyers like, theyjust want projects that are done
, 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 hereand enjoy the time with their
family or get away or what haveyou.
They don't really want to work.

(01:00:01):
Now what we're going to do forevery one of our unit owners or
buyers, we're going to sit downand you're going to have a
design center and you can adjustwhatever cabinets and looks and
hardware and countertops andflooring and you could do all
that.
So we actually have a fullblown design center for our, for
our homeowners, and thenultimately we're even going to
allow appliance packages andwhat.
And we're trying to partnerwith two or three really

(01:00:21):
well-known furniture stores, notonly here, local, but even
other ones that they would ship.
And we'll actually have ourbuyers choose the furniture that
they want, because obviouslywe'll have the dimensions.
We'll have a couple of unitsyou can kind of walk into and
feel, but then by the time theyclose escrow and they're ready
to move in, we'll actually havethe 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

(01:00:44):
here.
They don't do that right.
You sell them the house, thenyou got to go get your
appliances and your washer anddryers and you got to do all
that.
We will have that all handledand picked right in escrow and
the people that buy these arejust kind of getting a much more
hands-on experience with aparadigm brand.
That's what we want to provide.
So if we're that red carpetfeel for our investors, we want
to give that red carpet feel tothe people who are buying them,

(01:01:06):
because that's where we'remaking our money at the end of
the day.
So hopefully that answers thequestion.
And one last thing about a story.
And it's 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'son my civil engineering side,
her name is Jamie.
She actually oversees all ofour stuff and works for our
civil engineer, so very closewith her.

(01:01:26):
And she's a single mom and youknow, being out here, the income
levels out here, trying to makea living and get into
homeownership, has been verydifficult.
So we were trying to designthese in a way where even you
know kind of that, you knowsingle parent can afford, you
know, or a single person canafford, you know a home because
you know let's let's be honestdivorce rates and singles, it's

(01:01:47):
just it's.
It's something that has to beconsidered if you're a good
developer.
So we were trying to implementsome of that and I think some
people will be able to hit thatmark.
But, to be honest with you, oneof the reasons why the numbers
are as high as they are isbecause and I know I may get my
hand slapped for this but a lotof the utility companies, they
want bigger easements.
So they've pretty much used alot more of our land that we
wanted to build more units,therefore the cost per unit

(01:02:09):
would go down, but they wantmore easements.
They want more easements infront of the units and the back
of the units, on the side of theunits.
They just they've been eatingup all of our land.
So it's hard to try to cut ourcosts down.
I think a lot of people thinkdevelopers are just making tons

(01:02:31):
of money.
But it's not.
With rules, regulations andapprovals you just kind of get.
It's a juggling thing that isreally difficult for developers.
But we're still trying tocompress those costs the best we
can.
But I think we landed whereit's safe for everybody.
Okay, let's see.
You're welcome.
You're welcome, yes, it will.
So the home itself will havesolar.
If you guys are looking at therenderings on any of our

(01:02:51):
websites, social media, whathave you you'll see.
When you scroll in, you'll seethat there's panels on each unit
.
So the idea is to when we'regoing to build these and deliver
the house with solar and you're, in essence, buying the house
and the solar, so it's not likeyou have to lease the solar or
any of that stuff.
We're actually going to inheritthe cost and then hand over the

(01:03:13):
keys with solar, so you havethe ownership of that solar as
well.
To go further, we just met withUnisource and Clean Energy
department.
With them, we had a privatemeeting about it, because we're
going to be the largestdevelopment out here, not
pulling from their grid, becausewe're able to produce that
power.
The biggest issue that we haveright now is storage.
So a lot of the power that'sgoing to be generated during the

(01:03:35):
day is going to be inherited bythe unit during the day, but we
don't have the ability tocreate storage.
Now, if you are a homeowner,you decide to create, have your
own battery backup.
That's different, but we can'tget that in the beginning in our
approvals.
So therefore you're still goingto have a little bit of a cost
on your power, but during theday when you're running your AC

(01:03:57):
and you're pushing all that, youknow all that power through
your unit it'll be catered bysolar.
So you know again, that's justkind of part of the approval
process.
In fact, because of the natureof the solar, we actually
separated the buildings to 10foot setback.
So there's a lot of movingpieces but we are, we're trying
to deliver this and it will bedelivered with solar.
So we're, we're past that partwhich of the project is funded

(01:04:20):
already.
I'd say we're North of half ofthe project We've already.
The biggest problem has alwaysbeen getting through the
approvals.
All of that's for the most partdone.
We've already started gradingbut we're already halfway
through our raise.
I'd say another half would begood, but we already have maybe
6 million or so alreadycommitted from paradigm storage
and that's not profit, that'sjust principle.
So once the profit comes in, weknow we're going to

(01:04:41):
oversubscribe.
We're not necessarily going totry to do that, we're going to
be looking at other projectsanyway.
So the current clients thathave been rolling their money
with us over time, going throughIRAs, trying to focus on tax
strategy.
We're going to continue to tryto be 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 areasthat we know.
Keep all of our sub base here.
We know the relationships withour architects and energy right.

(01:05:02):
We're going to kind of stay inthat realm.
So we're going to be offeringup more opportunities for people
as well.
No, corby, they won't, andthere's a lot more to it.
In fact, you know we were.
We just had a conversationabout 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.

(01:05:25):
I went live with this pot, thiswebinar, um, so we learned that
the power company isimplementing AI now to start
tracking how much power you'repulling 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
how they're identifying unitsthat are implementing certain

(01:05:46):
battery backups and and how muchpower you're pulling, and so on
and so forth.
So there's there's there's moreto that.
Maybe you and I can jump on acall and I'll tell you, maybe
some more inner workings.
There's only so much I'mwilling to share here, but
there's a lot of.
They don't want you, they willnot buy.
Basically, it's a money game.
They're in the business to makemoney, so they don't want to
buy power from us.
If you think about how muchpower we can produce and the

(01:06:08):
reason I'm saying it this way isbecause the majority of our
buyers aren't going to live herefull time, they're not going to
be pulling power so we werelooking at it as a developer,
going, hey, the whole, all ofthem.
So we're like, okay, how do we,how do we commit?
I wonder if we can make somemore money, not only, maybe,
income for the company, ofcourse, that's how we're going

(01:06:29):
to look at it for sustainabilitybut maybe we can pass over that
cashflow to our investors, evenafter they made their money,
and get, get out.
Because, again, what we did,just to let you be producing
this and bringing in our ownlegal to kind of do the
negotiations for it.
But yeah, they don't.
They don't want to buy power.
Therefore, hence the backupbatteries, because if you have

(01:06:51):
storage, then they can pull fromthat storage when they need and
then you're selling that powerRight.
So, right now, that's that'sone of the reasons why they
really don't want that backup,so, or that battery as well.
So, just to kind of keep anidea that it's a, it's a money
game, man, these, these, thesehow this world works.
We just got to kind of danceand, you know, kind of play and
maneuver around it and we don'thave a lot of control, but

(01:07:11):
that's kind of one of it.
So hope that answers thatquestion.
So, all right, guys.
Well, thank you all very much,mike.
Is there anything else you wantto add?
Cool guys, we're actually notonly going to let this go live
for everybody that hasregistered and you can watch it
in our in a data room, but we'reactually going to put this on
our podcast platform as well.
So if you guys want to sharethis to anybody, uh, please do
as you guys can.
Hopefully you guys can tell weput a lot of energy and effort
into the design of this product.

(01:07:33):
Obviously, if we really want totake this serious and go across
the country in differentatmospheres, if you will,
different jurisdictions, there'scertain compliance and codes
and building uh practices thatneed to be implemented to be
able to take it nationwide.
So a lot of that is right here.
It's implemented.
We've got a lot of good,positive PR and really we
couldn't do it without ourclients and our investors.
So truly, from my family toyours, thank you guys for all

(01:07:53):
your trust and love.
We see a lot of our currentinvestors in here and I hope we
can continue to knock it out ofthe park for you guys.
So until the next time.
We really appreciate you guys.
Uh, we feel that the world'sokay, it's not burning like it
was a few months ago.
Um, and we're we?
We see that there's, uh,there's an uptick in activity.
So again, thanks for joining us, guys.

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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;}How Investors Are Maximizing Returns While Minimizing Tax Liabilities | Webinar E22