$10B CRE Lawyer: The #1 Mistake Investors Make | Alain R’bibo
With Alain R'bibo — Partner, Allen Matkins
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Alain R'bibo, top commercial real estate transaction attorney, strategic advisor, and Partner at Allen Matkins with over 20 years of experience, joins Taylor Avakian on the No Vacancy Podcast.
Alain R'bibo, top commercial real estate transaction attorney, strategic advisor, and Partner at Allen Matkins with over 20 years of experience, joins Taylor Avakian on the No Vacancy Podcast. With billions in deals across acquisitions, dispositions, leasing, joint ventures, and development, Alain shares insider perspectives on navigating complex CRE transactions in Los Angeles, California, and nationwide.
From why many multifamily deals skip attorneys to the real differences between market-standard documents in New York vs. LA vs. Nashville, Alain breaks down when lawyers add massive value, common pitfalls in high-stakes deals, and how institutional players and tech giants approach risk and speed differently. He discusses current market conditions in LA and SF office, multifamily opportunities, the impact of AI on office demand, why waiting for the "perfect" bottom often costs decades of appreciation, and lessons from working with family offices, private equity, public companies, and leading tech firms.
Topics include: broker-attorney dynamics, diligence red flags, pressure points and leverage in negotiations, why processes and organization separate top performers, data centers and emerging sectors, and timeless advice for getting off the sidelines in any market cycle.
Perfect for commercial real estate brokers, multifamily investors, apartment owners, developers, and anyone active in Southern California or national CRE.
Chapters:
00:00 - Intro & Sponsor
00:49 - Welcome Alain R'bibo
01:44 - What a Real Estate Transaction Attorney Actually Does
03:07 - Why Many Multifamily Deals Skip Lawyers (and When You Shouldn't)
07:07 - Credits, Estoppels & Where Negotiations Really Happen
09:04 - Why People Hate Attorneys (and How Good Ones Avoid It)
11:23 - Alain's Journey: From Bankruptcy Law to CRE Transactions
14:45 - How Much Money Top Transactional Lawyers Really Make
16:22 - Biggest Mistakes in Real Estate & Why Waiting on the Sidelines Kills Returns
21:16 - Patterns of Highly Successful Real Estate Investors & Billionaires
24:06 - When Deals Look Too Good (or Too Aggressive)
26:53 - Regional Differences: New York vs LA vs Other Markets
28:19 - Sponsor
28:58 - AI's Impact on Office, Phoenix Hot Spots & California Comeback
33:04 - Tech Billionaires Leaving California & Government Tax Risks
34:33 - Is Now the Best Time to Buy LA Real Estate?
36:15 - Behind Closed Doors with Clients & Long-Term Relationships
38:21 - Real Estate Lifestyle vs Investment Banking
39:05 - Inside Tech Companies' Real Estate Strategy: Speed, Risk & Scaling
42:18 - The Next Big Real Estate Sectors & Opportunities
45:03 - Who Alain Admires Most & The Value of Being in the Room
46:19 - The Power of Experience, Pattern Recognition & Putting in the Work
48:36 - Creating Massive Value in Tough Transactions
50:17 - Psychology, Leverage & Knowing Your Counterparty
52:22 - Craziest Deal: Selling Ocean Wide Plaza in Downtown LA
53:44 - Current Buyers in the LA Market & Emerging Operators
54:41 - What Alain Really Thinks of Brokers
56:06 - Advice for Brokers on Getting Agreements Signed
57:43 - Alain's Next 5-10 Years & Why He Still Loves Deal-Making
59:36 - Final Advice: Get Off the Sidelines & Focus on What Matters
01:00:34 - Closing Thoughts
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It's not luck. And I know every real player in the market and what they're transacting on, what they walked away from, what they couldn't raise capital for, who's real, who's not, and all of that goes into executing deals. Allen Rabiebo is a top real estate lawyer with over 20 years of experience serving as strategic advisor on billions of dollars in commercial real estate transactions. If I think of where I've seen people get it wrong, it's waiting on the sidelines for market conditions to improve. We have so much transaction volume out of our office that if I want to know what's happening in the real estate world, I go to the printer. You want to hate California, you can hate it. The reality is is that you can never replace Silicon Valley. These tech guys focus on what matters and nothing else.
What do you think of brokers? I today This episode is supported by Citizens Private Bank. Citizens believes your attention is a force. It's built your world, your vision, your legacy. But wealth brings financial complexity that can consume the most valuable asset, your focus. That is why Citizens Private Bank, now in Los Angeles, gives you a dedicated team with one point of contact who understands your full financial picture including specialized real estate financing. I'm a client myself and I have been impressed by how seamlessly they bring everything together with thoughtful, tailored support. Let Citizens focus on your wealth so you can focus on your world. Connect with a banker at citizensbank.com/novacancy. Member FDIC, equal housing lender. Welcome to the podcast. My name is Taylor Vekian and I'm here with
Thanks for having me. This is exciting. 10 billion in real estate deals. You've done a lot of real estate transactions. You're one of the high-powered real estate attorneys in Southern California in Los Angeles. You work on some of the biggest real estate transactions, which to be frank, I've never worked with a real estate attorney because when I do multi-family in California specifically, we have these things called CAR forms, which we'll probably get into, but rarely do we get an attorney involved. And so, it was interesting to me to understand that there were other people involved in the transaction besides just myself and the broker going back and forth. So, walk me through like this started what, 25 years ago?
In you know, in my 20th year at Allen Matkins doing my real estate transactions and it's been unbelievable ride, you know, spending my day doing purchase and sale and leasing and joint venture all across the country for the you know, institutional firms, family offices, public, private. Sometimes we're on the owner side like a landlord, sometimes you're on the user side like a high-tech user or a developer that has a need all across the country. So, we get to work with everyone and just have a lot of fun every day,
100%. So, think about usually in a deal there'll be like an LOI, letter of intent or a term sheet. That's when deal makers like yourself have been knocking on doors, pounding the pavement for months or years until two parties finally come together. That will generally materialize in a two-page, three-page LOI. On a simple deal, on a complicated joint venture, on development, that could be a 20, 30, 40 page LOI where you're just hitting on the business points, the high-level points. Who's going to do what, by when, and what happens if you don't, right? Now, extrapolating that into an entire deal structure with all of the detail, all the conditions, all the reps, all the performance obligations, the deadlines, the milestones, the protections, the securitizations, collaterals.
You can think about just all of the nuance that flows out of the deal, the more complex it is, we're we're doing that. So, we'll take the LOI, the term sheet, the deal that's been made by either the principals or the brokers that are involved, um and we'll document and structure and negotiate that deal. There's a lot that doesn't go into the LOI. Sometimes it's on purpose. We want to just get everybody in the room and start the deal and get everybody going with the momentum. That there's psychology to deal making, right? If I spend six months negotiating the LOI, people get deal fatigue, they go in different direction, and they say, "I'm going to work with somebody else." Um but like, "Dude, we have a deal. Price, I'm going to be closing in 60 days. You know, I don't need it So, all cash deal, I don't need any
financing." People get excited, let's go. And then we've got things to talk about. "Hey, what you know, as-is condition, you know, you're giving me tenant estoppels or you know, any environmental conditions?" There's all kinds of things that don't get raised when guys like you are making the deal. And that's really helpful because we want parties to come together and transact. But then we need to look under the hood and be like, "How do we protect, you know, multi-million dollar investments?" You know, when you say that you've never worked with a real estate attorney before, [Laughter] think about it. People are making seven, eight, nine figure investments. Uh-huh. Who's diligencing that? If it's not you, and if it's not the client, it's not you.
Involve one if you need one. There's a tremendous amount of multi-family transactions that go on without an attorney. And 95% of the time, it all goes great and there's no issue there. You've got very experienced, sophisticated investors, they've been doing it forever. They feel like they're really confident, and if something comes up, they'll deal with it. They don't want to spend the time, they don't want the attorney to slow down the deal, but at a certain point when you are doing two things. First of all, when your deal size gets significant enough, you're like, okay, this I'm being a little bit silly to not um invest in some proper diligence. And then when you take investor capital, okay? Mhm. A lot of guys take investor capital, right? So, now what are you going to do? You took your uncle's investment, your cousin's investment, your
neighbor's investment, and when an issue shows up, how you justify to those guys you're like, oh, I I didn't review title or I didn't get a survey or I didn't do a phase one environmental or I didn't pull a PCR to make sure there weren't any city or code violations. No. At a certain point, you almost become a fiduciary. I don't want to drop that word easily. You're taking other people's money, you got to be very careful about making decisions, you know, where you're kind of shortchanging the process a little bit. So, um but there's a lot of transacting going on there without lawyers and I don't think every deal needs a lawyer. I just don't. Realistically. Yeah. But again, if if it's a sizable deal and if you're taking somebody else's money, if it's a joint venture, two parties coming together to
do something, to develop something, you don't want to do that on a napkin. You don't want to do it on a handshake. You don't want to do it on an email or a text message.
Or a car form? Or a car [Laughter] form? There's no I don't know of a car form for a joint venture, but [snorts] um that's what So then who actually negotiates? Because when it comes to credits and going back and forth, like I'm the one who is the middleman either with another broker or buyer and seller when we're making it happen. Are you negotiating with the other attorney? Are you you and in the broker like scheming to what's going on? You go to their broker and attorney? Where does the actual negotiation occur? So, credits is usually where the rubber hits the road, right?
You're like, I did inspection, you know, I got I need this repair, I got a bad roof or I got bad plumbing system, whatever else and I need 50 grand. That is relatively straightforward. You're going to review the results of the reports. Your client is going to reach out to you and say, "I got a problem." And you're going to go back and you're going to ask for a credit. That's pretty straightforward. You can do that with an escrow amendment. That happens all the time. Um what's a little bit more difficult is let's say you're buying a retail center and you need estoppel certificates, right? From your tenants. I need to know that there isn't a default. You don't think I owe you any money. You don't think I'm improving your space. You those things matter, right? So let's say you get a dirty estoppel back.
It's a closing condition that I'm going to get all these estoppels back and it's going to be like, "I'm good." Well, turns out one of the tenants doesn't think they're good. He promised me a new HVAC system. Okay. So that's a dirty estoppel. It reveals or discloses something that wasn't part of the deal. So we're going to look at the lease. So now there's a question.
Okay, we're going to get into that. And we'll be like, "You don't need another estoppel. You're good." Cuz you're going to look at the lease and that's actually a tenant obligation. It's a dirty estoppel, but it's your problem. So now we need to interpret whether or not it's not just trading dollars, it's actually trading risk. And someone's going to try to persuade me that I don't need a clean estoppel because once I come in as an owner, I I can actually enforce the terms of the lease and tell them back off. But that's time and money and risk and maybe legal dollars for me or for my client. And there's definitely So that's when it gets into the weeds. This is one of literally countless examples.
Cuz the perception is that they don't know how to focus on what matters, that they slow down deals, that they make themselves the main event. Lawyers should not be the main event of any transaction. We should be executing on the vision of the parties, right? So the idea is that they don't want to pay for it. They don't want to slow down. They don't want any disruption of the flow. Lawyers get a bad rap for all of those reasons.
We try to do things differently. From a broker's perspective, right? And we talked about this, too, is attorneys slow down the deal. They're the ones who cause the issues. They come back with this language and that language and this and you're like, "Dude, like what Why are you Why are you complicating this more, right?" 100%. Do you think that that's the sign of a bad attorney? Do you think that's the sign of bad expectations management? Do you think it's relative?
should be raised based on the scope, the size, the complexity of the deal. Okay? If you are raising the same level comments on a $10 million deal as you are on a $100 million deal, I think it's a bad attorney. Okay? Cuz you got to gauge the appetite of the parties to even navigate those issues, to deal with those issues. On a smaller deal, the deal just falls apart if you just loaded it up. You know, you got to pick your five main items and go. And by the way, brokers are a major referral source for us. If you start pissing off your brokers and brokers feel like they're never closing deals and they're never getting paid, that's not good for business. So, you need to be very comfortable making judgment calls as a lawyer and many lawyers are not. They're just not like, "Oh, that's a business decision."
Yeah, I know. Show up and make a decision. You've been doing this for 20 years. You know what matters. You know what doesn't matter. Stop punting everything cuz you're going to exhaust your client. My goal is to show up and to tell my client, "Dude, I got you on these 30 items. I didn't even call you cuz I know First of all, we've done 50 deals together and I've done so many more without you. Um I need you on these three things." I was like, "Thank God." Cuz he's on vacation. Okay? And the broker says, "Thank God." Because they want to just close. And being able to distinguish on what matters, what doesn't matter is all the
difference. Walk me back through it when you started. Like, was there a reason you wanted to be an attorney? Um was there a reason you wanted to go into real estate transactions? Because this is me being uh a gentile. Like I had no idea that there were different kinds of attorneys. Yeah. I thought it was just like you're an attorney? by the way, right?
Literally I came out of law school. I'm first generation American, right? First in my family in many respects. First to go to college, first to graduate from college, first to go to law school, professional school. For me, you know, growing up in my home, I'm French Moroccan. My parents are from Marrakech, Morocco. It's just like be a lawyer was some level of success in the American dream. Didn't literally did not understand the difference between transactional and, you know, litigators, right? You just see A Few Good Men and you're like, that's awesome and 50 other
Getting court and like just argue. Exactly. Um that's what you see and you just follow this path because that's what success looks like. Um plus if you have a mouth and you like to argue and people like, oh you should be an attorney. And if you hear that since you're 8 years old, you know, that path is kind of set for you. Um but I went to law school and literally did not know what kind of attorney I was going to be. And believe it or not, I didn't start out as a real estate lawyer. I started out as a bankruptcy restructuring lawyer. And the way that that happened was the economy was really bad when I was looking for a job and getting ready to graduate. At the same time, I happened to take a bankruptcy course by Professor Dan Schechter.
Just really vibed out with this professor and really got into bankruptcy and we're not talking about like personal bankruptcy. We're talking about when companies fail and how do you restructure them and reorganize them and manage priorities of creditors and organize that, right? It's really quite sophisticated and complex. So I really got into that. I told him that I was looking for a job and he said, there's a really prestigious bankruptcy boutique firm here in LA that's hiring. I think you should submit and I will write you a letter of recommendation. That's amazing because I didn't have a job at the time and he wrote the letter and like within no time interview boom I'm a bankruptcy lawyer didn't plan on it didn't really know what I was getting into but it was it was great great
experience cuz it gets you thinking about business and kind of what works and what went wrong and how did things fail and fall apart. So I did that for two or three years and bankruptcy is really a combination of deal making and litigation right? You're in court we're definitely arguing in front of judges there's case work and proceedings and you know adversary proceedings is what we call them and pleadings all of that I enjoy the writing. But then I decided you know I started to think it was like okay well you know something else I didn't think about where do I find clients? Granted I'm a bankruptcy lawyer now but I got to start building up my practice and it occurred to me I was like wow you know everybody around me that has books of business
was like 70 years old they'd been there for a while a lot of the business has been spoken for already and it didn't seem to me like I was going to in the next few years develop a really big book of business. I'd always been interested in investing in real estate and so the business of real estate just again if you're first generation everybody just owns something.
Yeah. It seems to me that I'd have some success in developing a book of business I'd be surrounded by real estate people so I made the move. Is is real estate transaction or transaction attorney is that similar to how some attorneys like the one where you make a lot of money? So like PI attorneys right? Everyone's like if you're a really good PI attorney you just make bank. Um.
Like was that is that lawyers make a ton of money. I mean I think the most successful attorneys just like in a general group PI lawyers just kill it and it's just a completely different business model there's a ton of focus on marketing and Google AdWords I mean it's really like business focused Um, not saying they're not doing great legal work. Um, it's definitely a specific and different model, right? Interesting. Um, there are transactional lawyers that do very well, but they're generally, you know, at the top. And the difference is that as a transactional lawyer, so much of your work is being done on an hourly basis. Mhm. Most PI work is like on a contingency basis. Yeah. You get the right case, you refer it out to the right firm, or God forbid something bad happens to somebody that you know, and there's a catastrophic injury.
You know, uh, I've seen the successes there sometimes, it makes me think about it, but, uh, I literally love what I do every day. They're the ones who are buying all my real estate, so I have a fond a fond feeling for those PI guys. And I I represent those guys also, when they're all coming together and and writing checks, they're doing great.
You're probably more, um, educated and understanding what a deal is than than they are. Yeah, they're the ones cuz they're writing the checks. Exactly. Exactly. Yeah. So, uh, walk me through a little bit about what people get wrong. Like, you see all the good, all the bad, you see the biggest transactions, like, where's the hair? What's what what actually happens in those boardrooms in these hundred million, billion-dollar transactions? Cuz I think we talked about you've been involved in some mo- billion-dollar transactions.
transactions, yeah. Yeah, what what actually happens there? I don't see the mistakes happening at that level, because you've got an army of really smart people that are thinking about it. If anything, you've overstaffed that deal, and you've made too much analysis, which kind of slows you down. You see some scrappy individuals doing smaller deals, kind of being quick and nimble and moving very quickly. They do very well. But, most of the, you know, hundreds of millions of dollars or billion dollars, those deals are just not accessible to most individuals. We've seen we've worked on so many deals where there's like 10 potential buyers for this deal in the whole country. Yeah. And it exchanges hands and we represent all of them, right? Very common for us to represent a certain asset. Asset trades, we stay on the asset as counsel for the
asset because we've been doing it for a decade or two. And so we know that but ownership has changed and it it doesn't matter because it's all it's all transactional, right? We're not fighting. Um they want the lawyers that have been associated with the asset who are most knowledgeable with the ground lease or the title issues or the diligence or whatever else. So we have been representing and working on certain assets literally for decades. We're not quite the counsel of record but we've almost established that de facto because of our historical knowledge. Very hard to replace that. But if I think of where I've seen people get it wrong, it's this notion. It's waiting on the sidelines for market conditions to improve. I've literally observed, you know, case A and case B. Those who said, "Let's get in the game.
I'm buying great real estate and I've got a runway ahead of me where I can wait this out." That could be market conditions, could be interest rates, could be whatever it is. Um and others have said, "I'm waiting for the bottom." "I'm waiting for the bottom." I've watched them just squander Yeah. a decade of value and appreciation. So I've always observed that and said, um "Don't wait." That doesn't mean you should be reckless. If you have a great asset or great opportunity, you should 100% jump into it if you're a long-term player as many of them are in SoCal, right? This is for the family. This is for the college fund. This is for the kids. Buy buy it if the opportunity presents itself. If you're waiting for another 50 basis points on interest rates, um you're probably going to miss out on a lot of great
opportunities. Yeah. Honestly, that's very timely for for today's market because it feels like LA is in a place where it's the lowest it's been in a long time. The sentiment around Los Angeles is not great. Uh I hear it every day. I just got off the phone with with an owner and he was like, I was working on a refi and we were at 585 and then the rates changed and now we're at 6 6.08. I'm like, dude. Yeah. 25 basis points if you're going to own this thing for 10 years. Like, what are we talking about?
Surrounding error. It's like it's It's emotional. It's psychological. Especially when when guys feel like they've been re-traded by a lender right before closing, it's deeply emotional. They feel wronged. Um and then you can kind of make a bad decision.
you know, institutional real estate is the way that um some people try to save money when it comes to improving their real estate. So, I've literally seen um some really aggressive um groups come out and write sizable checks. We're going to get the best architect. We're going to get the best landscape. We're going to put these art fixtures in our plazas. We're going to build fountains. We're going to make this like double class A. And yeah, they're doing that in a challenging market when the world wants to hide under their bed, but the reality is is that when the market comes back, they're charging double rents. I've seen it consistently and everybody else who wants to be reasonable and rational and follow their pro forma and say, we've only budgeted $30 for paint and carpet. Well, guess what? Your building looks like every other building up and down this street.
Good luck renting out your space and distinguishing yourself from everything else, you know, you you just went into class B. And once you're class B, that's it. Some people have made a lot of money on class B, but um those that I've seen just completely command the market are those who made bets. You've got to make bets in this game. You can't be so conservative that you just want to be totally safe because you're going to get, you know, very safe margins.
You've been around a lot of probably really smart people. Probably some billionaires, probably probably people in the room where maybe you didn't even feel like you were supposed to be there, but you were and you got a chance to to listen and understand kind of what I'm doing with having people in here. What are the patterns? What are the things that those highly successful real estate people, what do they have in common? What makes them as good at what they do as just as anyone?
Unbelievable call this morning and this guy was just so polished and so organized and so singularly minded. These guys have processes. Processes, right? There's so much content online right now and there's books and, you know, I geek out on Alex Hermosi. I love this guy. I think we've talked about him. Tony Robbins, I did a big Tony Robbins guy for a long time. This is all about optimizing performance, right? Organizing your thinking, organizing your processes to just maximize your effectiveness. People who approach the business with structure and organization are going to do way better than, you know, scrolling through CoStar late at night waiting to find something that a thousand people missed, right? That's not really going to be great. If you say, "Here's the market where I want to be. Here's my deal size. Here's my source of capital.
I've lined everything up and you're approaching the business from a very structured organized way." You can do very well. That to me is the distinction between what I call, you know, day-to-day real estate and institutional real estate. I geek out on institutional real estate. It's a beautiful thing to watch the way that organizations come together and do deals. Mhm. Um you've got different people doing different things. Everybody has their defined role, right? It's like an organizational study, but that way you can execute on your deal. The opposite is like, wait, are you executing on this deal or you raising capital?
Are you handling that lawsuit from that tenant? It's a mess. And the reason why that doesn't work is because when you walk into an endowment fund or a pension fund and you say I'm forming a fund, write me a check for 10 million bucks. This is what they're looking at. They're looking at your org chart. They're looking at your C-suite. They're looking at how you operate and what your track record is. And if you don't have it together, Mhm. that spells risk. Mhm. And something that institutional capital hates is risk. I'll say uncompensated risk, right? They'll take risk. They want to be paid for it. Okay? But I'm not going to like get the same return as I would with another, you know, apartment owner or apartment operator. Um, you're chaotic, you're structured, and I'm getting the same return here. If you want to walk in on anywhere on
has to be prepared to receive that check. Have you ever been involved in a transaction where you felt like it was a bad deal? I don't know how they're getting these numbers or like this, they're pushing some stuff here or And again, your job isn't to make the investment decisions for them, right? You're the attorney making sure they you execute on their behalf. You're You're in the service business just like I am. But has there been moments where you're like, I don't understand this one
bit. I'll tell you what comes to mind. I've seen deals presented to me or have been, you know, landed on my desk, you know, asset here locally. I remember it being offered to a group of investors that I was representing for $60 million. And they weren't the right investor group. They couldn't appreciate the opportunity. I like to say that we have so much transaction volume out of our office that if I want to know what's happening in the real estate world, I go to the printer.
I can see purchase and sale agreements just rolling off like, oh, this is trading, this is trading. I had no idea. That's kind of like the the ecosystem and the epicenter that we've created around commercial real estate, which is an awesome, I think, irreplaceable thing. But I remember that $60 million deal and 9 months later, it was crazy and I saw this PSA roll off the printer, 72 million. Somebody closed on it at 60 or a little bit under that, did whatever they needed to do to it, repositioned it, and 72 million. So, again, the right deal for the right buyer at the right time, uh you see these opportunities. I I mostly see people passing on things, um when I'm like, yeah, you're being a little bit conservative, um more so than like, oh, this guy's really overpaying.
The other thing that I see where like, you know, my eyebrows go up a little bit is when in a client will get really aggressive to win a deal. I'm going non-refundable on signing. I got to win the deal. Maybe you've seen that on some of your Yeah. No diligence. Yeah. No diligence?
I walked the building. Yeah. [Laughter] You're terrifying me, bro. This is your money? Cool. The minute you're raising JV capital, I got legitimate concerns. Yeah. Or sometimes you want to win a deal or you need more time for diligence. If guys are watching this right now, they're going to know the deals that we're talking about. Release the deposit. Like, you're never seeing that deposit again. No, we got this language, uh you know, if there's a breach, if there's a default. I hear you. I hear you. There's something psychological that happens once that wire leaves escrow. I don't know that I've ever seen it come back. Yeah. Not that I've really run into a lot of problems that way, but you better be sure that you've got your loan, you've got your equity, that you're satisfied 100% before you want to be really bold and start releasing money that way.
Um but it's bold for sure. Are there different parts of the country where investors do different things and have a different culture? Like I've heard in New York City the standard is non-contingent. Like that is what you do, right? Those those about to say that. They don't mess around. They don't play games, right? And I'm like that would be so nice as a broker. [Laughter] Like all the offers have to be non-contingent. I'm like
And by the way, we have New York clients who own LA real estate. And they want to do LA deals the way they do in New York. And so the buyer will show up and say, "Yeah, I need 30 days." Like 30 days? You're not getting 30 days. We got to do due diligence. Uh do your due diligence. You've got the action. No, I don't want to do it. I don't want to spend the money if I don't control the property. You're not controlling the property. When you're ready to buy, I'm ready to sell. Then we'll sign the contract. Why do you need a contract before then?
Different styles for different markets for sure. Interesting. have a sponsor for today's episode and that is AI for CRE Collective. 25 listings at the moment. We're closing four or five deals a month. It's been incredible. So if you want to learn, if you're in commercial real estate, how to use AI in your business, whether you're a property manager, a broker, an investor, really anyone, we have a huge group. We're 400 people in this community and the website if you want to go check that out is AIforcrecollective.com. So appreciate you guys and now back to the episode.
The other thing that I will note is having done deals all across the country, documents differ in different markets, right? [snorts] So New York docs are like this. LA docs are like this. Tennessee docs are like this. Texas, somewhere in between. Colorado, different markets. And I attribute that to um not level of sophistication, but maturity of the market. So for example, in New York, which I would say is the most sophisticated market in the country, they've been doing big sophisticated deals for 100 years. Massive, you know, multi-hundred million. Okay. Well, there are there's enough trauma that happens over the course of 100 years of deal-making where let's layer on provision, provision, protection, provision, provision, and then your docs turn into this. And that becomes market.
You flip through the doc and you're like, "Where did all Where did all this come from?" Oh, yeah, we had a bad experience here and this guy ripped me off and this guy stole money from me. And so you end up with these docs. Time will increase the complexity of your transaction. LA, sophisticated market not to the extent as New York, your docs are a little bit thinner, but still those are some thick docs. And then literally I've done deals in, you know, Nashville or kind of, you know, middle markets and you know, I've seen an eight-page purchase and sale agreement. I'm going to have to do a lot to this document to get this to do what we need it to do from an LA standard. So when we're doing those deals, we can't walk in and blow up the deal.
You know, those those Nashville sellers, they don't care who you are. They don't care where you came from. They don't care what your reason is. I'm not hiring a lawyer to read these documents. So give me something in normal language that I can understand and we'll do the deal. If not, take it or leave it.
Speaking of what you're seeing in today's market, like we talked a little bit about LA, SF. What are you seeing in the landscape? Like what's actually happening right now in the commercial real estate landscape?
Yeah. It's not old news, but I think very mature news at this point is that AI has really turned around the story for office users. Bay Area office, I was walking around there a year ago. I was already starting to see demand for office and that was really refreshing because San Francisco was really suffering. Work from home decimated a lot of office products. Two things have happened. First of all, more companies have gotten comfortable saying, "We're not as productive or effective when our entire team works remotely." We heard the narrative, we get it, we've also lived it and we now have data that supports that we are less productive when we are not in the same room. I'm a big believer of that. I'm in the office five or six days, not on Saturday. And I I love being in the office.
Anybody who works on a deal with me has to be in the office. That's a requirement for me. So, there's been a big comeback into the office, which has been great news. So, San Francisco has come back in a really nice way. But then you see markets like Phoenix, which I have seen personally kind of ebb and flow over the years. Like we just people can't decide how they feel about Phoenix, but the reality is Phoenix is super hot right now, not just geographically, temperature-wise. There's a lot of investment going in there. A lot of that has to do with technology as well.
[snorts] So, we're you know, there's multi-family deals, there's industrial deals that we're doing out there. Some markets that people are really hot about, we've seen some softening, right? Like Austin, Texas. Super hot during COVID. We want to live in a you know, a better, cleaner community. A lot of those companies are now coming back to California saying, "There is no there is no other place like California." Say what you will. You want to you want to hate California because of crime or homeless or whatever else. You can hate it. The reality is is that you can never replace Silicon Valley. You cannot. There is such a concentration of talent and experience and knowledge and just it's this ecosystem, this bubble where just walking down the street to get a sandwich, you will meet a founder and strike up a deal or conversation.
That is what you cannot create really anywhere else in the world. Um, we've done a great job of that here in SoCal. We played a big role in um what is now become Silicon Beach, that's Playa Vista. You know, leading tech firms there, you know, have locations. Um, but you can't easily recreate that in other parts of the country just because you'd rather live there cuz there's a better tax basis.
I mean, everyone on Twitter, all these uh tech billionaires, Ser- Sergey and uh and the Google guys are like, we're out of here. I mean, is California just putting their foot in their mouth? Like, what is happening from that landscape? Why why are why is this happening?
Billionaires are really smart. Th- Th- This comes They are, right? I just really count on them to figure out a way to um avoid the tax or find a better way. Whether that means relocating, Yeah. um you're not going to take people's money like that. Right? It's been uh percolating and cultivating and growing for decades or a generation. They're not going to stand idly by while somebody randomly shows up and says, you know, we think your fair share is, you know, a hundred million dollars or whatever. It's like, it's just outrageous. And so, you know, there will always be a response and a reaction when government comes in and tries to do something like that. We saw the flight out of New York down into Florida. Um, I can tell you, I've spoken to a lot of Floridians now who came from New York. They don't like Florida
as much as New York. But it the cost is just too much to bear for them to be in New York. Florida's wonderful, um, but it New York is a very special place. That's another thing that you just can't easily recreate that. And so, people who have moved to, you know, Palm Beach or whatever, they're like, oh, I I miss, you know, the arts, I miss the culture, I miss this, I miss that, but I'm not willing to pay eight figures for it. So, um I think government needs to be really thoughtful about, you know, the
sources of income. It's very interesting when when we have those conversations, too. And I think from from a capital allocation perspective, too, because for a time period there during COVID, a little bit before, there was some LA investors who were only ever being investing in LA. And then they decided to move capital outside. Some of them have continued that, and then some of them have brought their money back. And I think there's still this question mark of what's what's the best course of action. I'm of the belief that right now Los Angeles is the best time to invest or buy LA real estate in the last surprised to hear you say that. I know. And then not that I'm biased in any way possible, but genuinely like some of the values that I'm seeing Yeah. it's very hard for me to believe that
cash return, that like So, call me for that, okay? Because I haven't seen an 8% to 12% It's amazing. Um but we are for the first time in a long time buying at a seven cap going in with, you know, value to be created. Um 10. Yeah. I'm talking about multi-family. I mean multi- for sure. Office, there are some steals out there. And you if you see the pricing that office towers are trading in downtown, if you have the stomach to hold on to that for a decade, you're going to do extraordinarily well. The same thing with San Francisco office. I was saying it two years ago. I was calling my clients. My clients are my closest friends, right? Um we we do everything together and, you know, raise capital and whatever else. I was like, you really need to be in San Francisco right now. Do Don't wait.
Don't wait to for somebody else to go in first. I know that's a very safe bet. I'm telling you that the city has turned for the better. Um and you're going to do very well. And so, we've seen that come through.
What are some of the conversations like behind doors behind closed doors you and your clients? Like what are you guys actually talking about? Are you talking about deals? Are you talking about hey, we got to restructure this? Like what is what is friends being friends, you know, you're on the transaction side, they're the owner. What do you guys actually discussing?
Yeah. I mean, this truly is my hobby, right? Like, I've got a beautiful family, I've got kids, I've got a community, I've got my synagogue, I've got everything, thank God. Um when it comes to the things that fascinate me and interest me, how I'm going to spend time, I spend a ton of time on real estate. I spend a ton of time on the business of my law firm. I I love my firm. I love the people that I work with. I love what we do and kind of going out and putting out new initiatives together. Um I spend a lot of time on that, not because I'm addicted to work, it's because I literally just think it's fascinating to optimize businesses and you know, help the firm grow, help my clients grow. I just think it's just really, really satisfying.
So, behind closed doors, we're talking about Oh, like, where do we raise our next fund? I keep saying we, right? Like, these are my partners because we do everything together. Right? And they view me as an extension of their team, um which means that I'm in on all the conversations, I'm in on all the opportunities. Whatever comes up, we've been doing deals together since they first started. And now these guys have, you know, AUM of multiple billions and there's nothing more satisfying to me um than being with them at every step of that journey. So, um it's been awesome. But behind closed doors, we're talking about deal making. We're talking about what's ready to trade. Um you know, has this tenant renewed yet? They're about to sign another 10-year lease, which is going to create a bunch more value and then we're going to go to market.
We travel together, we pitch together, we go out and raise capital together, we go out and we fly out and look at sites. Um it's been awesome. [Laughter] There's a There's a good amount of that, for sure. Part of Part of the course, right? Well, if you close a deal, you got to celebrate.
[Laughter] I think that's why most real estate guys didn't go to investment banking uh because investment banking goes really hard in the paint. Like you're 100 hours a week and then you party really hard. I think real estate we're like we'd prefer like 60 to 70, 40 maybe if I get get there, right? And then we go in and enjoy our little leisurely and that may be a little California vibe, but we we know how to like uh I would say real estate's a little more balanced. going to say balance it out.
I'm not comfortable with that level of risk. I don't need to do that right now. For sure. You work with some of the biggest technology companies in the world and have been involved in a lot of their transactions. What do those guys do that is just something people would not anticipate, understand? Like what is the scale of these multi-trillion-dollar companies? What are they doing?
Yeah. Um I love the contrast between those companies that I've been on the inside with versus traditional real estate firms. Traditional real estate is actually a really old business in many respects. It hasn't changed or evolved. You might have some prop tech and oh, we have a better way to search uh people's phone numbers so that we can call them or a better way to list uh notes that are in default or whatever else. But the business of real estate in many respects has not changed. When you work with the leading technology companies in the world, they go fast.
Mhm. It's awesome. It's awesome to say, "Allen, we're going to need 500 locations by the end of the year." Uh okay. Um how are we going to do that because, you know, if we're going to buy, sell, lease, license, whatever else, we got to negotiate. Like, "Nope. Um, here's a two-page form. We don't care about anything other than these 10 things. Everything else, give it away. Give it to the landlord, and let's go. LFG, okay? Cuz we need to scale. What that means is it's a level of comfort around risk. You rarely see that in the real estate realm. They're bringing the same drive that it takes to bring leading technology from idea to fruition. Bring that and apply it to scaling real estate, and it's awesome. Just plug it in, and they're like, "Let's go. We're going to scale it. Here's our team.
Here's what we need to document. Here's what we're concerned with. Don't care about anything else. Don't call me to negotiate unless there's these five nuclear things, and let's go." And that for me has really gotten me to appreciate how you need to balance risk. If you want to do deals, you cannot, talking about what we're saying before, um, you know, lawyers who see risk in everything. I keep saying this, you have to know what matters. Focus on what matters. These tech guys focus on what matters, and nothing else. Like, to the exclusion, they're so focused on achieving their objectives at the lightning speed, they literally don't have the luxury to have a conversation about anything that isn't critical. And so, I've adopted that to real estate deal making, and just allows you to block out the noise. It's so much awesome thing, and you
world. Do you think that there's a new model or someone who is doing real estate in a way that takes some of that tech stuff where you can bring that mentality? And I I I think when you think about it from a broad spectrum, right? They have different risk, right? But they have such a huge engine from a revenue perspective that then fuels the real estate where the real estate isn't the main business, right? So, it's kind of this really good point.
Yeah. Yeah, so I think when you're thinking about the yield that you're getting from real estate as the business, um it's a different calculus. When you're thinking about I don't care about these things because my business is charging. Yeah. Okay. And charging is not just charging revenue, it's data revenue. It's how it feeds into this larger ecosystem that you can't even value. It's not about the pro forma or the model. The model is top secret. It's locked away in a vault. We don't even fully understand how this plugs into the overall vision of the organization. Um so, that's what allows them to say I'm not saying cost isn't a function. We're going to be smart. We have our guardrails. Go out and do deals. Um but let's not lose sight of the insane value that this is creating for
the overall organization. What do you think the next big real estate sector is going to be? I mean, obviously we talked about AI. Data centers are obviously becoming massive, right? Is there any other vertical, any other opportunity, any other thing that if someone's young and wants to start and trailblaze and be the leader of that, where would you point them in the direction or say, "Hey, do some research on
this." Yeah. If you're really trailblazing, um it's got to be something that's tech related, right? By By definition, you know, apartments are there, co-working is there, office is there, hospitality, you know, storage has had second life as, you know, multi-family units get smaller, people need more storage. That's an interesting business model. Um I would say that thing data centers for sure. We're doing a ton of data center work representing the biggest players in the world on, you know, leasing and developing and those, you know, bringing those out of the ground. That's not available to everyone, right? There's again 10 groups in the country who can buy or build or develop a data center. So, that's not really available to everyone. Um what I'm saying is that um thinking about optimizing the way that you do real estate deals, right?
So, if you're going to be a multi-family guy, how do I turn these units faster? How do I add value or add this experience so that I can raise rents um quicker? So, it's really about optimizing old types of real estate as opposed to coming up with this totally new product. We also work on deals like totally new things, surf parks,
Yeah. Um, so that's cool. That's new. Um, people don't think about that as a real estate play, but they're developing surf parks into real estate communities just like golf courses. So, you've got resi and you've got the club and you've got retail and you've got hospitality. So, do that around a surf park. Do that around um lots of different types of recreational activities. Um, so there's a lot of Wall Street thinking, really, really smart people that are coming into real estate and applying, I think, you know, best-in-class thinking to what's an old
"Damn, I I'd rather not say because someone's going to feel like they got left out. Um, but I will I will say that given the group that I get to work with, I mean, they're the best in the world. Literally the best in the world. I feel like there's not a lot of people who can say every day I work with the people that are best-in-class in their field and I get to just soak up like a sponge and see the way that they operate.
Um, so That is nice. really, really Yeah, you get to be you get to be in the room, right? With those people. That's That's what I think um is so cool about what I do, too, is I get an opportunity to to meet with these people because one I have value for them, which is how you provide value to them, and and you get the opportunity to like soak that up.
But you're underselling yourself. You're in the room because you belong in the room, right? It's not like you're flattered for being there. They brought you there. There's a reason why we're in that room. It's not for fun or because anyone, you know, or is doing us a favor, it's because we've done the work. Yeah. If you do the work and you're showing up and you're bringing value, you're going to get in front of the right people in the right room in the right environment. And that's just about putting your head down for like decades. [Laughter]
Yeah. I remember very, very early on in my career, um, senior partner at our firm, Tony Natsis, I was working like a complete animal. I was like, "Tony, I don't I don't know how sustainable this is." He goes, "Alan, don't worry." He goes, "You're going to do 10 years worth of deals in 5 years." Uh-huh. He was right. He was right. I just put my head down for as long as I could remember. And I'd go home and I was telling my wife, I was like, "God, this is brutal." But then like a decade later, I was working on the most sophisticated deals that were happening in the country. And my wife's like, "You remember sitting at the dining room table when you're like, this is brutal? You couldn't be doing what you're doing right now if you didn't do that." Yeah.
Which was her way of saying get back to work. [Laughter] Stop worrying about it, though. Super supportive, but it's true. There's no substitute for just showing up even when it's crappy. And um, you just get really good at what you do.
The experience, man. You start to recognize patterns. That's That's what I've noticed. And I'm a big Tony Robbins guy, too. And he talks about pattern recognition and and the the best at what they do, they're just so good at analyzing situations because they've seen so many different things. And there's a lot of trust that comes and especially when someone's hiring you, where you've seen every which way a deal could go wrong, every which way a deal could go right. Right. Certain lines that maybe, you know, [bleep] the client over if previously, like you've learned from mistakes that have had happened and made. That's the value. And you can't replicate that unless you've actually experienced and felt it or in the right room with other people who can Yeah. come together and and be better you know, as a
team. 100%. When people ask like, "Oh, you know, like what do you charge? Or what's this bill? Or what's it going to cost me? Or what's the hourly rate?" I was like, "I don't know. Okay, let's look at the deal. And then, you know, when you when you save the deal or when you literally create that value, um it's hard to quantify that. Yeah. You're like, "That's 20 years of experience right there. Mhm. Mhm. Mhm. Mhm. In your case, it's years of talking to owners, figuring out what works, figuring out what doesn't work, saving people time, coming to them only with real deals.
transaction. Seems like all the time, right? But but Like give me an give me an example of where had I've had clients in tough situations. Tough situations means uh they've gone non-refundable on their deposit, they've released money to the other side, um and they just need the time. They need time. We will close the deal. Very rare. Very rare to go non-refundable and not close. I mean, less than less than a handful in my entire career. Um but sometimes parties don't cooperate at the same speed. And just understanding pressure points and leverage in any situation to achieve the client's outcome. Okay? That might mean I need 30 days. We're going to find a way. Mhm. You're not going to [bleep] sue my client. Yeah.
Cuz it's going to be really, really difficult and really expensive. So, let's find a way. Those situations come up and the deals, you know, multiple hundreds of millions of dollars, um that's really
valuable. Totally. 100%. What do you do to prepare? So, like there's certain things that I can do, right? Before a deal, before certain stages of a deal, to prepare myself or my client or expectations, there's a lot that I can do to make sure that this deal goes
in the right direction, right? What is the level of Is it research? Is it, you know, knowing whose pressure points as you as you decided? Like, what are you thinking as a strategist when you're advising these clients on these deals? Like, what does that look like for you?
I had a situation a couple weeks ago where um new client reached out to me and said, "Hey, will you handle this sale for us?" This is value add, right? This is what a a lawyer just doesn't do for you. And they're like, "Well, you know, this buyer is asking for this or for that or for this or for that." And I said And they were They're like, "What do you think about the redline?
What do you I was like, "Let's take a step back for a second. I know that this client, this buyer, has been in this market for the last 12 months. I know that they've done three deals in the last six. I know that they have capital allocated to this market that they need to deploy. All of those factors I also know that they really need to do this deal because they're coming off of three really lean years where they haven't collected fees. They haven't paid their rent. When they close this deal they're going to make an acquisition fee. They're going to get asset management. They're going to get property management. All of that speaks to the level of seriousness with which they come to the table when they make these asks. So, when they say they're going to walk away I don't think so. And so, having that experience
walking into the deal I would say very, very little to do with the contract or the redlining. When someone's like, "Oh, you're a lawyer, you do contracts." I'm like, "Yeah, that's part of what we do. Um but we do all that, too." The psychology behind it. That's a game changer. And we did that. And we took that back and just fold, fold, fold, fold,
not luck. It's cuz you're in the market every day. I'm in the market every day. And I know every real player in the market and what they're transacting on, what they walked away from, what they couldn't raise capital for, who's real, who's not, and all of that goes into executing deals.
wow. Yeah. So, I actually sold Oceanwide Plaza to Oceanwide. The It was just in the news. Actually, I got an email from the reporter um that there's a potential deal happening for the tower. Do you know what I'm referring to in downtown LA?
Yes. Oh. That's Oceanwide Plaza, right. So, it's been an eyesore for years and now we're close to getting a deal done where they're That's actually going to move, which is a huge deal. City really wants to get it out of the way in advance of the Olympics. Um that was a crazy deal. I was representing the seller. The buyer was Oceanwide. They were out of China at the time and in in those days, there was still a lot of money coming out of China doing deals, buying real estate here in the US. That that transaction, you know, dealing with that part of the world and some of the dynamics around there. Wish I could say more, but it got it got pretty
crazy. Man, that's so incredible. I'm sure you deal with every kind of culture, right? Is there the next frontier of buyers or someone who you think is going to be the person leading the pack in terms of who are the buyers right now in the market? Who are the people that are doing deals, bringing money to LA, bringing money to California? Who are the believers in this market?
I think kind of smaller operators from the last decade have emerged. If they survived for the last 3 years, they've come back and they're emboldened in the multi-family space, right? Guys that I've seen do a 10 million, 15 million dollar deals, 75 million, 100 million, 150 million dollars right now. Those that were doing smaller mid-rise office over the last cycle are coming back like, we know how to operate office and we have, you know, a decade of experience. Maybe we've got a little bit more gray on our head. We can go in and ask for that bigger check. We're going to take down this tower. Just that generation coming back, all the players that we saw before. If they've survived the last two to three years, they're coming back with a vengeance because dry powder has been on the sidelines waiting to come into the game.
You match that with operators who now have a decade of decade of experience. They've been bloodied, they've been bruised and they're still here. Those are going to be your operators.
I today love brokers, but I used to hate brokers because as a young lawyer, the only people that call you are brokers. Where's my document? When are we closing? When are we going to do this? When are you going to turn this around? And you're just drinking out of a fire hose and just I'm like, I don't even work for you. Like what who are you?
There was a lot of that in my, you know, first early years as a lawyer. There's a very, very famous tenant rep office broker. He literally would walk our halls of our law firm poking his head into different people's offices like, hey, when's that lease going to be done?
But brokers nowadays make the market move. It just doesn't move. You need the squeak, you need the knock, you need the call, you need to Joe, well, let's just let's just give it a shot and see what happens." That's how deal making happens and you 100% need brokers in the
market. Yeah. Well, I I appreciate that sentiment. I do. Because sometimes it feels like we're the we're always a fee away from getting a deal done, right? And and it's it can be frustrating sometimes where you're just like, "Guys, really? Like this this is what we're going to have to do?" And then they start coming and poking and poking and like, "Hey, you're going to give a little here, give a little there."
And it's just like, Let's talk about that, brother. Brokers should be getting their agreement signed up front. And I know that, you know, it's hard to go out and get business and clients don't want to sign or whatever else. If you've been doing this for more than a minute, you are bringing value to the table and if they want to transact, they should sign your agreement. I've seen what you're describing right now. I won't tolerate it. Yeah. I will not tolerate the grinding of a broker. I don't like it. Um I don't think it's fair. I certainly have never done it. But I think brokers leave themselves exposed by being like, "Oh, we're bros. Handshake. Holiday party. I brought you this deal." You know what? I've seen everything and it's just I love you. I need you to sign this. Yeah. I just do. Yeah.
It's like my engagement letter, you know? By the way, like I do so much like non-billable, [clears throat] pro bono. I'll do like make a phone call, do this, review this email. Like I don't care. Yeah. But if I'm legitimately working on something, just sign it because it's business. And by the way, when the roles are reversed, Mhm. the same guy who won't sign your listing agreement, ask him to do something for someone else where he won't demand to get his agreement signed. Doesn't happen. These guys are super sharp when it comes to their end. You got to respect yourself and the value you're bringing.
They should not sign leases with their tenants. Yeah, right. Right? Would you would you not sign a lease with your tenant? that. Right? Yeah. I know. You You Totally right. to play the game and it's uh
But it's a delicate act. You don't want to come on so hard that they are turned off by it. But you're like, this is my livelihood, brother. This is fun. I really enjoy it, but I got to I got to pay the
bills. 100%. Um before we wrap up, I want to talk to you about full circle, right? Where do you see yourself in 5, 10 years? Like, is this the career where you go to the grave when you're doing real estate transactions? Do you love it that much or is it Do you build where a lot of brokers will eventually buy a bunch of real estate, right? They have investments and then they can retire and live off the income. Like, How do you see your career in the next decade?
I love regularly deploying money into different investments. I can do that myself. I can do that with my friends, colleagues, invest you know, clients, but I love what I do. I love coming in every day. I love the firm. Um I love creating value in that way. If I were to step aside from that, I think I'd be incredibly bored. I mean, could I make more money by exclusively focusing on investing? Believe it or not, what I do is very different than what my clients do. You think that, you know, you've negotiated all these deals and you've got all these deals under your belt. It's a different skill set. It is. It is. To be in the room, to be dealing with your investors, to be going out and scrounging your LP dollars. Like, not all things in real estate are the same and I am very clear and even
more recently in in recent years, I'm like, I know exactly what I do. This is my, you know, it's not 10,000 hours. It's probably like 50,000 hours. Yeah. And um you know, just hitting that sweet spot, hitting that stride, it feels really good where you know, you're firing on 12 cylinders. And um you know, I have no compulsion or desire to step away from that at all. Um always looking at deals, always investing and building up the portfolio. That's for the family. Um but love what I do day-to-day doing deals for my clients and with my
clients. What would uh you leave the listeners with with a piece of advice from from your experience from you know everything that you've done from the current market environment like what's what's one piece of advice you'd leave them with?
I'd say get off the sidelines, transact for sure, just get started. This is um you know part of the the thinking that comes out of those technology firms. They don't need it to be perfect, but they go and they build off of that and they go off of that again. Same thing applies with real estate investing, right? So write that check. Maybe you're an LP. Maybe you want to be an owner one day, but you got to get in, you got to kick the tires
and then maybe you graduate to a co-GP. Um and then you're doing your own deals, but get in there and then you graduate and you grow. Everybody that I've seen started out really really small. And the the more you you sit on the sidelines and wait for the perfect market, you are absolutely passing up on opportunity. And then the other thing is you're not going to eliminate all risk. Get comfortable with that. If you want to eliminate all risk, hide under your bed, but even that's risky, right? There's risk associated with that. um get comfortable and focus on