at least you've done your own due diligence because like I tell you know most people will read what is in front of them but they don't take the next step of verifying what is in front of them they just take it for face value and I think that's a necessary step for anybody who wants to grow and protect their wealth and avoid some of the landmines out there you have to take that next [Music] step welcome to Tech equity and money talk I'm Christopher Nelson I have the privilege today of being joined by Michael episcope Michael is the co-founder and co-ceo of origin Investments origin Investments right now has 1.7 billion under management and Michael though did not start his career in real estate he actually started out as a Trader was a uh pfic uh career Trader I think was that Commodities yeah interest rates to be specific yes oh wow and uh was was named top 100 Trader of the year but there's no one better to give us some insight to what's going on in multif family right now than Michael episcope welcome to the show thanks Christopher uh the privilege is mine I appreciate it so there's one thing I want to I I do want to double click into before we get into this Market overview is you know you and your partner David you know as you were exiting your trading careers you said how are we going to protect and grow our family's wealth and you made a decision to choose real estate and not just real estate but multifamily what was what was some of the criteria and and things that led to that decision yeah it's interesting looking back I think one of the things when you make money at such an early age that your biggest fear is losing it we've all seen people have gone through that that iteration and you make the uh um you can make a lot of mistakes in investing and suddenly go broke and nobody wants to iterate or utter the five worst words is I used to be rich right and so a little bit of this was about paranoia um real estate was something I was introduced to when I was much younger by my grandfather he owned apartment buildings on the west side of Chicago and I always tell people like real estate it's not um it's not rocket science it it's been such a great um builder of wealth protector of wealth generate passive income has amazing benefits um there's a Simplicity to it that I love and so when I got out of trading um I found myself at a very different point in my life when I started I was single I had no money I you know just I had a job that I knew I could replace and then by the end I was married I had two kids I had W on the way I had stacked up um chips in life and I'm like okay how do I take the next stage which was really managing my own wealth and that's what brought David and I together and we were working for many years uh just sharing investment ideas and we were also working on a nonprofit We were kindered spirits and decided just we can do better and we invested as LPS did some stuff learned the business learned what was good about it was bad and we wanted to really create something we didn't have the vision in the beginning but I would say like as I articulated today it was an Institutional platform for investors like us wealthy investors ultra wealthy but you know not billionaires because once you get to a certain level of wealth the billionaires they can create something what we've done but if you have 3 million 5 million 20 50 even $100 million you're not going to go do a whole deal by yourself cuz a deal can cost $25 million so generally you're going to come into a fund or individual deals by themselves and so that's um you know that's what we kind of set out to create in the beginning but I always say in the beginning there was no vision it was two guys buying real estate trying to you know find good deals put their money to work we BR then brought in uh friends and family into it as well um and and it was just about getting the most out of real estate and what I find interesting about real estate is it does cut both ways it's probably generated more wealth than any other sector maybe except Tech you know now that we're talking about it's also been a great destroyer of wealth as well and you look at some of the mistakes that people have made and I've always been a student of the game when I was going through uh when I was getting my masters in real estate this was 0678 it was an incredible time to be learning and I've always been focused on what did people do wrong how did they lose money what is happening how can we do this differently and you hear these stories and I think one thing that we've really adopted over the years is this idea of risk management and I tell people look when the Market's going we're not going to make you the most money but you're going to be really really happy and you're going to understand and learn a lot when the market goes down and this is one of those times that we've seen people who are under capitalized people who are overleveraged people who are you know just doing things that um are are you know made maximize the upside but you're also like you know taking a lot of risk on the downside and I I think that's what I'm most proud of is today we serve 4,000 investors we have I think we're on our eighth fund now of various um products we have 62 team members and and it feels great um and we're 17 years into this now so a long time and thank you um thank you for the question oh my pleasure and so then I think that's a great lead in because you you obviously you've been around since 2007 and I think that's interesting right you you started the company right before 2008 so I'm sure there's a lot of lessons learned but you you've now seen from from 2008 you know to to now here we are in 2024 you know some different cycles and we're at this point right now where where there was this extended cycle coming out of 2020 there was this fervor okay there's more you know we had the quantitive easing and all of a sudden you know we're getting this momentum that's pushing us into you know late Innings and obviously uh uh heated economy people overbought then all of a sudden interest rates started shooting up in 2023 like what what is the state of the market right now what are you seeing out there um in the multif family asset class yeah and I'll actually maybe take you back a little bit further it was interesting I I was in Las Vegas yesterday scouting project out there and and a broker had looked at some old podcasts that I did and he said yeah I saw you in 2021 doing a podcast and you were actually spoton you you gave sort of the crystal ball you know and look I don't have a crystal ball better than anybody else but again it goes back to Common Sense and what we saw in 2021 and one of the reasons we've been able to sort of sidestep um this recession in real estate is coming out of 2020 you saw prices exploding and replacement cost is a big metric we look at and we're not going to buy a property 10 years old that is trading 30 40 50% above where we can build so at that time we decided to really embark on a barbell strategy how do we protect capital and we protect the capital by going a into preferred equity and protecting it through capital structure and and the way we do that is we had Equity above us and we are also going into markets we knew projects we knew very different than a bank when you are are looking at it from the point of the equity perspective and then the other way was that we were getting into groundup development and ground up development to a lot of people well that's risky well I would tell you that that is actually the way that we have protected Capital through this our job is to manage the ground up development risk but very simply if the existing Market is trading for $400,000 per unit and we can build for $300,000 per unit you're way better off building than than buying in that market because nobody knows where world will be in the five years right and if the world changed and it still kept going up and multif family units were worth $500,000 a unit well you're capturing that margin as a builder and we looked at that we're like okay but if you're wrong and the market moves back to 325 a unit 325,000 that's how we look at as price per pound well if you bought at 400,000 and you leveraged up you're probably looking at a 70% loss today whereas if you built even if you had some lost overruns you're just not making as much but you haven't lost principal and that's really what we looked at as that time like we're not going to go in and buy Above replacement cost because that's you know a big metric um fast forward about four years we haven't bought a deal um since March of 2020 I do remember you know when we look back buying that deal that was um that was pretty horrible I I think we closed on a deal on like March 8th or March 10th and then all of a sudden it was like what did we just do and the world shut down down turned out to um to be a good ending um but that was the last time we bought a deal so preferred equity and ground up development and so today though the world is getting much more interesting in terms of deals we're seeing opportunities we're seeing out there we're seeing some distress is very isolated generally um good markets great projects but distress Capital structures um like this deal I saw yesterday and and that's what we're looking for right and always um tell people it's like buying a blue chip stock you you know there could be an event inside the company that happens and the stock goes down but you this is a company you want to own for the next 20 years when we look at the markets we're in they are depressed right now and there's a lot of Supply but this is what creates the buying opportunity to be able to buy high quality real estate in a market that has good long-term growth prospects reset the capital structure and then buy it actually on depressed earnings that that creates a you know good recipe and and some of the things um number one even in the last couple weeks we've seen the tenure come down from 3.7 to about 3.4% I think where we're sitting today maybe even slightly lower than that um that's a good sign that's going on we've seen public resits rally off their lows and then we see Supply uh coming you know slowing down at least the the over Supply um coming to an end as we look out about a year so some of our funds especially our income plus fund the Flagship fund we're going to be rearranging that fund to be less debt and more Equity over the next year because we see you know what I'll say sort of this mess the capital markets issues things like that the supply getting behind us over the next year and when you have a $500 million fund you have to be looking out a year or two when you want to rearrange these things even if it's you know convert you know moving things 10 20% in the fund so we you know we like what we see and we've been able to kind of avoid uh the last couple years and the mishaps I can't say everybody's been able to do that but we feel good about um the relative I'll say that returns that we've been able to generate nobody's looking to make three or 4% returns but when the market has gone down you know 15 to 20% and you can break even in that environment it it does feel good but um we're we're not magicians you know we're still subject to the laws of financial gravity so you know I would love to have bought puts on the um the multif family retell out there and load it up but again that's not our our job or our business and I certainly didn't have the foresight but we did some good things and so when you think about the multif Family Market as as a whole just generally speaking right there was a lot of of building and construction that kicked off in you know 20 2020 I think from 2020 to 2022 where where are you going to see you know in the next few years you know Supply versus demand when it comes to multifamily uh Sunbelt markets are overs supplied right now by far um and I I you know when you look at a market like Austin I believe the supply over the last couple years has been 15% of stock it's massive um historically you know it's interesting there was an article that came out by gentleman Jay Parsons if you want to learn about multif family he's great to follow and for 10 years the oversupplied markets actually outperformed the undersupplied markets when you're looking at them as a percentage of multif family units delivered relative to the existing stock so in places like Charlotte where they were delivering 3 four 5% per year the rents actually went up a lot more significantly than places like Chicago because you have demand Supply is very easy to measure and it's quantifiable now demand though on the other hand is very difficult and it usually shows up after the fact this is a little bit different this there is record demand in these markets but it's not keeping up with Supply and and everything that I've read is that we are going to see softness in these markets for about the next year or two so if you're a multif family developer in these markets delivering doesn't mean you're going to lose money you're just going to be you know you're going to make probably yield um and no appreciation for investors like us um we're certainly not going to build in a market like Austin but we will be looking to buy distress deals good quality deals that have a bad capital structure or weak sponsors who can no longer hold on and buy those below replacement cost because I think those are amazing opportunities and at any one time in the cycle you know you're either you you want to favor lending or you want to favor developing or you want to favor buying and certainly when we go back to the great financial crisis you would never have built in 2009 because existing properties were trading for 40 50 cents on the dollar that would have been the better buy today we're starting to see you know inklings of that this isn't the great financial crisis but it definitely you know has um you know certain elements to it if you will on a very isolated and uh basis but you know to answer your question Christopher the northern markets ironically are actually outperforming the southern markets on a rental performance basis Chicago if you look at this Market we don't invest here anymore we are um expected to outperform on every metric imaginable in terms of rent growth and things like that but you have to be careful about running for the bright and shiny and and do that a lot of institutional investors do if I'm a betting person which we kind of take a thesis maybe I don't want to use bet but you have to have a thesis and I do believe that if we can buy really good quality real estate in Austin at a discount that is that will outperform going into Chicago and buying a stabilized deal today over the next 10 years and I will bet on the Austin the Charlottes the Nashville's um lifestyle cities in states that have no taxes because as the um kind of work from home movement it slowed down but it hasn't ended completely that migration will still continue it sure will and so let's talk a little bit because you know the real opportunity that's coming up has to do with the fact that overpriced assets were traded in you know 2021 20 22 and 2023 I know of some some deals that were closed at the tail end of 2023 that were bought at the height and they were structured with a lot of bridge debt and that you know would have maybe a you know two-year term three-year term and then one in one and it's a lot of those particular Investments that now as as rates have moved and they get to hitting that one they're they're looking at being upside down help help people that are listening in understand how you know you would come in and look at a particular investment like that to understand if that if moving in to take over a distressed deal what what are some of the underlying fundamentals you would want to see debt structure aside yeah well well first of all we have a very defined strategy we focus on about 12 markets Nationwide so we're we're in the Southeast we're in Florida we're in Georgia we're in um North Carolina those areas and the Texas markets Tennessee then Southwest had about four markets over there so that's the first thing and then generally we're looking for um Class A uh properties this can be Class A has a lot of ranges we're not looking at high-rise we're generally um Garden or wrap um we don't do Podium those are very expensive however um if Podium is on sale um we might consider that right and something like that so you know you as the qu like the qualities we look for um we focus on the class A because this is a rener by choice these are you know higher quality properties these are college educated renters who can you know when I say renter by choice what that means is that they can buy but they choose not to maybe they want the flexibility this is a temporary stay for them they don't know what they're going to do they don't want to be bogged down by owning a house and and the new generation is much more um akin to rent than own and let's face it I mean owning is incredibly expensive today um with mortgage rates at like 7% so Ren is the better deal for sure out there so so those are the things um we're looking at and then it depends on the deal is this a deal still in construction is this out of construction um what's the story because you know great real estate doesn't fall off the Apple truck so we don't generally see a deal that has 96% occupancy and great cash flow and good datb and all this stuff so there's usually a story behind it okay it's not leas up yet the rents are expiring something happened there were cost overruns to the deal this this this and this now those are problems of the past and capital structure issues can always be solved you can't change the location you can't change um the quality if you're looking at things that are obsolete or maybe the layout's bad or something construction defects we generally don't touch things like that um and then we don't go into the class B and C because those tend to be especially when you have a recession those will empty out the fastest and I know everybody has a different philosophy about that but when you segment unemployment and you look at it even during the great financial crisis well people who had I think unemployment went up to like 8 n 10% or something like that during that time but if you look at people who had a college education or even an MBA that unemployment was low it was like like 4% but if you start going down and you're like okay people with associates degree well that unemployment was at 7% and then people with only a high school degree that unemployment was at 12% and people like without a high school degree that was at 18% and so you know that's one of the things like when we think about risk you think about it through the entire Continuum of ownership not just the capital structure but what you're buying who your renter is what happens if things go wrong on that side and Class A will still get hit but it's just it's not a matter of all of a sudden you're chasing bad debt and you might be 92% occupied in class B but you have another 10% of people who just aren't paying rent and now you're debt collectors and so we've done that um and and it's been a choice over the years and it's been sort of a migration um to this product but when things come whipping back um you know Class B if you can buy that at dirt cheap you're going to do very very well I just I don't think we've seen the bottom yet though and so what what do you think the bottom looks like I I think we're near the bottom right now it's all going to be interest rate uh dependent I think the FED will get the job done we have inflation that's both um too high and better than it was last year um so if if we look at the trends and what's going on you also have one of the most restrictive policies fed policies in history we've never had an inverted yield curve for this long we I think we just as of two weeks ago passed the previous record so whether that turns into a recession or a soft Landing we don't really know but I do think that we're going to see um interest rates uh coming down and you know hopefully things improving um on the back end for for real estate in general does that answer your question yeah it does it does and I'm curious you know because I mean now we see even today right Central Bank in Europe dropped by 25 points Canada I believe dropped as well like I mean does this are these indicators that our policy could be changing in the near future I I think so yeah I mean that's the FED can only control the short-term rates but when you look at the long-term rates which we watch like a hawk because your borrowing costs are um really relative to where the five and the 10 year are trading so there's generally a spread against those um you know I'd love to see the tenure below 4% and and I just you know there's a saying don't fight the FED right now and operationally real estate is actually doing pretty well and so like there's a lot of noise out there and you have to be careful where you get your information from because all of the you know if you're reading the New York Times or the Wall Street Journal they're only going to publish the bad headlines they're only going to tell you about this wave of supply and this mountain and all that um and if you look at a market you know kind of at the 40,000 foot level like Las Vegas for example um I was out there yesterday we're talking to property managers well you know you can get a feel like when you go to the market and you see and you talk to them and I remember one I haven't been there in you know about a year and a half but I said well how's occupy she like we're 97% well how's rates she's like you know they've been kind of flat we're not giving away any free rent and I said well what have you done over the year and she's like we' pushed rents about $100 over the year and and if you look at that relative to what you've read you'd be like there's no way possible but these things are like you know there's so much misinformation out there meant to scare people that until you're on the ground getting actual information and you see this stuff in real time you just you don't have um true information um that we use and so when we're going to scout properties and look at things we're you know going out and and doing kind of a boots on the ground and talking to property managers and making decisions based on um that kind of granular information it's so important and I think you know this is something happens in Tech too right you have to look beyond the headlines the headlines talk about all the layoffs don't talk about the hiring the fact that you know hiring is up 2% year-over-year right you you would not even know that if I didn't tell you I'm sure I I I didn't know that so I just learned something because all I read is about the layoffs the layoffs right and the in the reality is is while they're laying off in some areas right and they are targeting mid-level managers some Executives they're hiring especially now you know new AI a lot of technology so that I think is the lesson that I just always want people to understand right and I think this is with investing your time in Talent OR investing your dollars in real estate is you have to look beyond the headlines you boots on the ground there's there's nothing like it once you now that you've said that like looking for what's you know what's behind the headlines I do want to start pivoting this conversation because we know that there's distress in the market and I would like to get your Insight because you I think your your shop you know and to be to be transparent with my audience which is so important I'm an investor in your funds uh and I learned a lot by studying your resources and and I also really enjoy the transparency of you and David of ask us any questions like I I feel so comfortable you or your team I can literally ask anything let me talk to another investor let me see financials on deals that I'm not in I mean I can ask anything I think that there's a lot of investors right now that that are in Investments that have sto preferred returns that're maybe doing Capital calls and they may be unsure what are some of the things that they should be asking and I would love to get your perspective on if they're in that scenario what are the top five or ten questions that they should jump on the phone with their their sponsor and be asking right now yeah five or ten questions I mean every situation is so different Christopher as you know and I I mean just what comes to mind is you know there are good projects out there that are just not they're underwater um for a lot of reasons and I would have to know those reasons but really the thing you want to know for sure is am I throwing good money after bad or is this really going to solve the problem and I've talked to some investors and we've helped them look at deals and and you know our Investment Partners were always happy to help and you can underwrite the deal and and there's times where you're like look yeah with the right amount of capital this deal will probably work you know and you want to make sure that your new investment is obviously generating return for the risk and then maybe you're getting some money out of your old return um but there's certain deals that are are just so underwater today um that unless you you resize the deal um you know I'll give you just an example like we're you know looking at a deal out in Las Vegas and and I think the uh the total cost of the deal was around $120 million we have to wipe out about1 1819 million of equity in order for us to make this deal work so we're you know buying it sort of right around a100 million purchase price maybe and it's a high quality deal great um sponsorship but it just wouldn't work unless you're going to take a write down of the old equity in in something like that so you know when I'm looking at these deals and Advising other um investors I always say look have the sponsor present to you what these new dollars the incremental value that these are going to create and justify that and then there's sometimes a little bit of Common Sense and and I think you know if I have to you know put a number out there and tell you you know multif family Class A is worth uh it's probably trading at a you know 5 to 53 cap depending on the quality of the real estate and I was looking at one deal and talking to these investors and they're like well you know if the sponsor takes this money he said you know we need between a 4 and a half and 475 you know cap of the sale of these assets to uh you know to break even and I'm like well the Market's you know above there today so really you're just throwing money kind of into a hole hoping you have growth on the future and you can put that money anywhere today and probably do better than something like that so it's it's a um you asked the right question I I wish I had five to ask um this becomes you know really incumbent upon knowing the sponsor trusting the sponsor and then having even if you don't have the Acumen being able to turn to somebody else and say like help me understand this because you you don't want to just keep you know feeding into a black hole and losing more money there's time to you know cut B um and there's you know other times where dollar cost averaging does make sense we've you know I've done both in my life for sure well and I think you know I think we can tease a couple out here because I think you know one one of the things that that I always you know if somebody reaches out to me and and I've had a couple of these calls as well like hey is this is this good or bad I just always goes quickly to let's look at what's the dscr like are they really under underwater and debt and are they really trying to feed this and there's there's no way that the rent growth is going to get out of it right or I try and understand right is is there really a management issue I think that there's what I've observed here because in Texas right there was a lot of the um you know syndication education shops were pumping out a lot of like firste syndicators coming out in the early 20s and what what I think that they've done is they have a very hands-off approach to their management team and they they don't realize that the management team should be an extension of them being boots on the ground so that's the other thing is you know call the sponsor up and say I want to I want to go walk the property let me see what's actually physically happening because I know some of those um particular Investments that went upside down in Houston I mean it was obvious when you walk the property that you know nobody was there taking care of it on the dayto day oh yeah that I mean that's that's a great point I mean yeah going to kick the tires and doing that I I mean I guess you bring up a good point like I mean there's a few metrics I mean I'm always looking at you know your cap rates your Revenue your sales comparables things like that like anytime we're evaluating a new deal um there's half a dozen variables that you'll really pay attention to and dig in that tell you look we're 90% there and then it becomes down to due diligence but you know comes down to revenues expenses and then your your terminal exit which is defined by your cap rate and and those things will tell you a lot and really you know it's easy to kind of spot check those things too especially with the proliferation of information today there's times that I do this right there's trust but verify and so even if you're looking at a pro fora of somebody and you're like hey these are the rents and these are comps you go to apartments.com and find any one of those cops and say what are the one bedrooms right and you should do that right and and if they're showing one bedrooms that they're comparable properties at 1,700 and you pull this up on your phone and you go to apartments.com and you go to that everybody advertises right there what the price of their unit the available units are and all of a sudden if you're 1,300 bucks you're going to be like hey now I have a question to ask at least hey this is what I'm seeing out there how are you coming up with this there could be a reasonable explanation well in our numbers we're adding on the you know trash B we're adding on the lifestyle fee we're adding on the amenity fee we're adding on the cable the electric the utilities okay I understand that right okay so and be willing to do your own due diligence but also if you're with a sponsor who you've known for a long time I mean this is we've built a lot of trust with our investors over time and some people just don't have the time to do this and they'll ask me I always laugh and they're just like Michael is it a good deal are you investing in it I'm like yeah it's a good deal right like you know it's my name my reputation on it and they have a direct line to me they're like okay I'll do it right so I understand both sides um I've been in that you know I'm with technology managers I don't know the first thing about evaluating technology but if I'm with a manager I know I love and I trust and they've made you know me a lot of money I'll be like okay they're coming out with a side car I'll give them a call what do you think you know they'll be like yeah if we didn't think it was a great deal we wouldn't come out with a side car so you know that's great well and and that's the thing is I think you know and this is why you know as I have gone out to Market and I have you know put dollars with other sponsors is when you when you have a benchmark and you understand what good operators are the questions that they'll answer you know you can start going against that and at the same time I I mean the the point that I cannot emphasize enough that you just stated is there is a point in your career and there is a point in a relationship with an operator where you have to look at all of the assumptions and you have to go out to third-party data and you have to go verify those or you may not you know you you may not be able to look beyond that purpose and understand what's really going on this goes back to I think you know this point we're making earlier like looking beyond the headlines is I do think that people who are in stressed deals right now need to look beyond what they're what they're getting and they need to go gather some of their own data to really understand if they're going to answer a capital call yeah Christopher I want to touch on one thing because this is something my team and I have been um talking about and I think this is a big mistake that investors make and they they believe that because they're going into multiple deals they're Diversified but if you look at real estate especially in the private sector the risk is not always in the deal it's in the manager and this is what institutions learned a long time ago is they want to go very narrow have a few good managers but not have a lot and there is a term called diversification and we have seen that and by the more managers you spread out to the more likely you're going to find the bad ones and I would say that as an investor maybe in the beginning you want to test the few out find the good ones go very deep there um and one of the most important things with managers especially in times like this is what does their balance sheet look like how profitable are they as the company what is going to happen if they have to shut the lights off for two years um and I've I've seen this and heard this well I want to diversify my portfolio Okay you're within you're with 12 managers I I I know you know two or three of them are not going to be good you know when we have a down term so you just done that but if you told people hey Force rank your managers they'd probably pick the best ones at the top good balance sheets great track records team you know alignment everything that you look for in a manager so I do like that's one thing um I don't know who coin that term diversification but I think you know the more you spread out like you can actually do yourself a disservice by spreading across a lot of different um managers not necessarily deals but it's okay to spread you know be in a fond spread across multiple deals with the same manager and it's not quite putting all your eggs in one basket I couldn't agree more I mean this is something that I'm I'm discovering now on my investing Journey as I am you know like you planning out you know my family's portfolio for the next you know two three five years is I'm actually looking at going deeper with fewer sponsors and and really investing because I think the the environment has really come to show me you know who are the the sponsors that are really you know have those strong balance sheets that go and get third parties to drive their assumptions they're not just making them up and are actually uh building very strong teams leverage a lot of strong technology I think it's a it is a key lesson that people need to learn in their investing Journey yeah you know what every single recession the same lesson is learned over and over and over time it's forgotten but if you want to I mean this is a page out of the institutions this is what they learned a long time ago is that they have the correlation between good and bad Investments and it's not the markets it's not anything it's the sponsor they're with and they go an inch wide and a mile deep with sponsors and just make sure I mean they they obviously have big teams and things like that and have different choices but I think the same can be applied to individual investors well this is great no and I I want to thank you for for your time here today I I mean is there anything that you would add right now for people who may be looking for new opportunities in this market of of things that might be aware of one of the things that I've seen recently and I'm I actually think like people need to really really be cautious is I've seen some sponsors that I know you know from talking with a lot of sponsors that they have some some troubled deals and I know that to actually boost their balance sheet they're trying to go and get new deals and new markets and one of the things that I've noticed that's part of this pattern is now they're actually uh buying older vintage too you know what what are some questions and I mean I I you know I know we were talking earlier about some of the things that that you're seeing like challenges in the market because I think as as some of these these these shops are having trouble they are going to go out and try and and talk about how great they are they're going to try and raise a lot of capital and I think we need to ask questions to understand the truth yeah it's a good point I mean that's true of a lot of Industries is strategy drift and and that's what they try to do and to a lot of these shops especially the more transaction oriented ones um the development shops and things like that they have to keep the lights on and in order to do that you have to do more and more and more transactions and you always have to understand the motivations I think of an investment manager and and you know how do they keep the lights on what does the balance sheet look like what does the income statement look like what's their motivation for doing this deal um you know and dig in deep to those things and I think it's okay to approach things as a skeptic cautiously cuz money is it's you know it's easy to lose and hard to make and you know once you make that investment you don't have a choice to unmake the investment and you're just along for the ride whatever that is for the next uh three or four years so um I I think you know like look everybody in this you know what's interesting today is that Capital has completely fled the system which is actually causing some distress in the market which is creating an environment of way better deals than we had three years ago when Capital was flooding the system so I think you know in some ways if you're a contrarian today and you have um patience and you can kind of see through to the other side this is a great um time to be investing um it's it's just you know tread carefully and make sure that you're going into deals and a manager for the right reasons and and the um the true opportunity is there and this is just isn't a way for the sponsor to you know pay their team and and keep the lights on and they're doing and and by the way we see this all the time you know we're on the lending and the investing side and there's just some deals that are so incredibly thin and we're almost like God they're doing this for close to a break even and the answer is well they get a $3 million development fee and they've got 80 people to feed so um you know they're doing it for different reasons yeah and I think I I just want to wrap up and you know on this conversation on that particular point which is and I think this is so important in my eyes to become really open to this is you know how do you how do you actually um incent your your people how do you actually you know fund your actual business because if it is with any type of upfront fee what that means is that then they're going to be incented to do more deals and if they're forced to keep their business alive and maybe do a deal that's 80% of criteria they'll do it yeah but here here's the thing you're never going to completely in a financial institution um get rid of all of the conflicts of interest so it becomes how do you put the piece in place so that you minimize or limit or manage those for people so like in an organization like ours I think you know one thing this goes back to risk management we have a very Diversified product mix so at any one time depending on the market environment um lending is very in Vogue today well we have a lending art right and ground up development is not and guess what we don't have any ground up development maybe have a sidecar here or there if we find a special deal but it's not scalable in today's environment so when you have different product mix and instead of saying hey we only do value ad on 20-year-old product and it's good all the time well it can't be good all the time and so like you you know and I I think this is one thing like as entrepreneurs and people managing our own money we don't ever want to be forced to just go in a direction because that's the only place there's an advantage to that in ways but I love our platform because at any one time we can just stop doing X and start doing Y and we have recurring revenues that more than um pay the bills but we also make transaction fees and you know don't get me wrong our team has goals and incentives and things like that in place but we're not going to force those things and there's certain criteria that are met and we don't talk about eida when we talk about our goals as a company it's client service and returns right the market will tell us and there's certain metrics and and you can set out to have the greatest plan in the world but when suddenly you're faced with the recession guess what people people are going to you know bonuses are going to be skinnier for a couple years and that's what people have to understand in a market environment like this and that's okay but I think for our firm and the advantage of any of our team members is that we're we have a diversified product mix we're doing well um as a company even in this environment because we span the Spectrum from lending to groundup development to Value ad everything in between um to be able to survive times like this and we don't rely on one Revenue stream well I appreciate you joining me today and thank you so much for the conversation I'm definitely going to want to follow up uh and learn a little bit more of that lending uh soon enough great Christopher thank you for having me my pleasure