Why NOBODY Should Invest in California Real Estate | Ben Mallah — Transcript

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1. 0:00What would it take for you to invest in
2. 0:01California?
3. 0:02>> Nothing.
4. 0:03I mean
5. 0:04>> any opportunities?
6. 0:05>> if you offered it to me for free.
7. 0:08For free.
8. 0:09I mean, it's like somebody said, "Well,
9. 0:11would you ever move back to New York?" I
10. 0:12said, "I don't care if I was a
11. 0:14billionaire.
12. 0:16To have to definitely forcibly stay in
13. 0:18New York would never happen.
14. 0:20It's just not worth
15. 0:21>> But what if it's just your money? You
16. 0:23don't have to live there, but there's a
17. 0:24good opportunity somewhere in
18. 0:26California.
19. 0:27>> Who's going to run it?
20. 0:29If it's a good opportunity, it's going
21. 0:30to require some sort of management. It's
22. 0:32going to require some sort of something
23. 0:34applied to add value to it, I would
24. 0:37assume. I mean, I turned down an Amazon
25. 0:40warehouse the other day.
26. 0:42>> [sighs]
27. 0:43>> I could have bought something like that
28. 0:44in California, but the problem with
29. 0:45California is
30. 0:46number one, my basis is low,
31. 0:49so I don't get any depreciation barely.
32. 0:51So, that means I have to pay 37% tax
33. 0:54on any money I make there. And then, if
34. 0:55I think about making any money in
35. 0:56California, I pay another what? 10?
36. 0:58>> Yeah. Give or take a little.
37. 1:00>> Yeah, I'm not giving Why am I going to
38. 1:01work
39. 1:02making half the money there when I can
40. 1:05go somewhere else and not have to, you
41. 1:06know,
42. 1:07>> Yeah.
43. 1:07>> I don't know.
44. 1:08>> Are there any downsides to these deals?
45. 1:09>> 20 years, almost 18, 17, 18 years in
46. 1:12California. I did my time. I served my
47. 1:15time. And now I got paroled to Florida.
48. 1:19>> Are there any downsides to posting the
49. 1:21deals and the things you're looking at
50. 1:23on social media?
51. 1:24>> I mean, if I don't want to give it to
52. 1:26people I could be competing with,
53. 1:29you know, if I find deals, I'm not going
54. 1:31to share them with other competitors,
55. 1:34you know.
56. 1:35I was thinking about starting a
57. 1:36commercial listing service, but I'm too
58. 1:39old now.
59. 1:40Like, you know, LoopNet sucks, okay?
60. 1:41It's a real piece of crap in the world,
61. 1:43LoopNet. I want to come out with a
62. 1:44serious one.
63. 1:45>> Mhm.
64. 1:46>> BenNet.
65. 1:47Um you know, where it was for serious
66. 1:49people would, you know, looking for
67. 1:50serious deals that made some sort of
68. 1:52sense. Not all the crap all of the
69. 1:55destroyed online for sale it stupid
70. 1:57prices.
71. 1:57>> Where do you get the best deals?
72. 1:59>> Brokers.
73. 2:00>> And they just email to you off-market?
74. 2:02>> reach out and say, "Listen, you know,
75. 2:03this looks like a deal for you." We know
76. 2:04they know how I operate. They know I
77. 2:06come in quick,
78. 2:07don't waste no time, but won't pay top
79. 2:10dollar. So, they know they have a seller
80. 2:12that kind of matches with me, they're
81. 2:13going to call me up and and and make the
82. 2:16marriage.
83. 2:16>> Yeah.
84. 2:17>> Like we we just closed on 88 units in
85. 2:19Fort Myers.
86. 2:21You know, I was trying to buy a 300
87. 2:23units in Fort Myers, but the guy we just
88. 2:25can't come to terms.
89. 2:27They're not realistic on their price.
90. 2:29>> How often does a subscriber come to you
91. 2:31with a deal?
92. 2:32>> Subscribers? I don't really take deals
93. 2:34from subscribers. You know, I mean, I
94. 2:36have people that may do a consult and
95. 2:38throw a deal my way, but I don't you
96. 2:40know, I I try to tell them right up
97. 2:42front I'm not looking to invest in
98. 2:43anybody. I don't like to invest in
99. 2:45anybody.
100. 2:46All right? I don't like mixing my money
101. 2:48with other people's money.
102. 2:50That's a game you got to be very careful
103. 2:51playing. Like, why do I need anybody? If
104. 2:53they find me a deal, I'll give them a
105. 2:54referral.
106. 2:55>> Right.
107. 2:55>> I'll pay them a commission,
108. 2:57you know,
109. 2:59the deal was that great and I felt like
110. 3:01the person was
111. 3:02genuine and maybe, I don't know, my kids
112. 3:04could deal with it.
113. 3:05>> Yeah.
114. 3:06>> I just push it to my kids.
115. 3:07>> Have you had any unique calls lately?
116. 3:10Any consulting that stood out?
117. 3:12>> a lot of my calls are pretty unique.
118. 3:14Um
119. 3:16I get them all over the board. I get the
120. 3:17people that have absolutely nothing
121. 3:19to the people that have, you know, a
122. 3:21couple hundred million dollars.
123. 3:23You know, most people just need to learn
124. 3:25The The biggest calls I get is people
125. 3:27have real estate and they need to know
126. 3:29what's my next step. What do I do?
127. 3:31Here's my portfolio.
128. 3:33Okay, what do I do now?
129. 3:35Okay, do I borrow against it? How much
130. 3:37money do I have in the bank? I got to
131. 3:38find out what what do they got? What do
132. 3:40they want to do? And how can they get
133. 3:42there? You know, that's what people just
134. 3:44need a push. People know what to do.
135. 3:46They all know what to do.
136. 3:48They just need a push. You know, you
137. 3:50need You want to do a deal, you need
138. 3:51money. How much money you got? How much
139. 3:53money were you you willing to risk right
140. 3:54now to do a real estate deal? We got to
141. 3:56establish that. If it's a hundred grand,
142. 3:58fine. Let's look for a five hundred
143. 4:00thousand dollar deals.
144. 4:01And then you have to look in your area
145. 4:04what makes sense of five hundred
146. 4:05thousand dollars with some upside. Or I
147. 4:07get a guy with you know a couple hundred
148. 4:08million and say you know what? I really
149. 4:11want to get rid of some of this. I want
150. 4:13to keep some of this. We have to
151. 4:14determine which assets you want to keep,
152. 4:16which assets are worth keeping, which
153. 4:18assets I see that you already exhausted
154. 4:20most of the value in. It's time to let
155. 4:22it go before it could become a problem.
156. 4:25You know when you own these big
157. 4:26department stores, if there's only a
158. 4:28couple of years left on a ten year lease
159. 4:31and you don't know for sure if that
160. 4:32tenant is going to renew that lease,
161. 4:33you're in bad shape. You're in a
162. 4:37purgatory.
163. 4:38>> The boat. You just got a new yacht.
164. 4:41>> We got a new yacht.
165. 4:42>> How is it? I haven't seen it.
166. 4:43>> it's great. You need to come take a
167. 4:45tour.
168. 4:45>> to see.
169. 4:46>> I mean it's just the yacht that has the
170. 4:47things that I wanted on it. The last
171. 4:49yacht that you went on didn't have any
172. 4:50bow seating.
173. 4:52You know what I mean? Bow seating.
174. 4:53>> Yeah, sure. I'm familiar.
175. 4:54>> The last seat in the front with the
176. 4:55table and you relax and you're cruising
177. 4:57and you see all the water coming in
178. 4:59you're parting the seas like Moses.
179. 5:02You ever see a boat like this go down
180. 5:04the ocean? It's parting the sea. It's
181. 5:06like a bee. The bee and the sheet of
182. 5:08water just going away.
183. 5:11>> What did you pay for the yacht?
184. 5:13>> Out the door and then of course we paid
185. 5:154.8 million.
186. 5:16>> And how much is it worth?
187. 5:17>> I'd say that boat is about six plus
188. 5:19million owned bro.
189. 5:20>> What does it cost per month to operate a
190. 5:22boat like that?
191. 5:23>> I mean I don't have any payments on it
192. 5:25but you know, you got to have a captain.
193. 5:26A boat like that you need a full time
194. 5:28captain.
195. 5:29You know, so a full time captain is
196. 5:30going to charge you
197. 5:32a good captain is going to charge you
198. 5:33about a thousand bucks a foot a year.
199. 5:36>> Thousand bucks a foot?
200. 5:37>> Yeah.
201. 5:38>> So how many feet is that?
202. 5:39>> 92.
203. 5:40>> So it's 92 grand.
204. 5:41>> a break.
205. 5:42Test them out.
206. 5:43>> That's interesting. People say though
207. 5:44that boats are What do they say? it's
208. 5:47like oh if it flies
209. 5:50>> or floats you just have to rent it.
210. 5:52>> Yeah.
211. 5:53>> I did rent boats for a long time but you
212. 5:55know once you get to a certain income
213. 5:56level
214. 5:58it's not [clears throat] going to hurt
215. 5:58you to own a yacht. You want your
216. 6:00privacy. It's just like a house. You buy
217. 6:02a house you rent a house. Some people
218. 6:04rent some people buy. Some people say I
219. 6:06have to buy.
220. 6:07You know I want my own place. I don't
221. 6:08want to I want to own this thing you
222. 6:09know. Plus with my own boat I go
223. 6:11wherever I want I don't have to schedule
224. 6:12nothing with some other bodies boat. Uh
225. 6:15you know I like owning a boat. It's one
226. 6:17of the things that you know the quality
227. 6:19of my life.
228. 6:20>> And what's the purpose of this house
229. 6:21that we're in right now?
230. 6:22>> It's a boat house. You got to park the
231. 6:24boat somewhere.
232. 6:25So I parked the boat in the house. Why?
233. 6:26Cuz it makes sense. So it's cheaper for
234. 6:28me to keep the boat here in this house
235. 6:30than just take that boat to a marina and
236. 6:31pay.
237. 6:32>> It's cheaper to keep it here than at a
238. 6:33marina. How? Because if you sold the
239. 6:35house you put this in a muni bond
240. 6:37wouldn't that just pay for the
241. 6:39>> A place that I'd have to keep that boat
242. 6:41would cost me a couple hundred thousand
243. 6:42a year.
244. 6:42>> Really?
245. 6:44So you bought a house for it?
246. 6:46>> Well yeah I have a house that serves its
247. 6:48purpose. So you know I save a couple
248. 6:50hundred thousand dollars a year docking
249. 6:52and I'd rather just have the house.
250. 6:54>> Why don't you Airbnb
251. 6:55>> Plus with that if I go to a dock I ain't
252. 6:57got the pool. I ain't got the privacy.
253. 6:59You ain't got a place a house you can
254. 7:00use. I could Airbnb this sucker for
255. 7:03probably a grand a night.
256. 7:04>> Why don't you?
257. 7:04>> I'll let you stay here for 9.99.
258. 7:08>> That's a good deal.
259. 7:08>> I mean cuz I ain't got time you know for
260. 7:10that. I mean you know I don't live near
261. 7:11here. You know some things just not
262. 7:13worth my time or aggravation.
263. 7:15Maybe my cabin gets good but then with
264. 7:17the boat here I don't think I want
265. 7:19Airbnb cuz if my boat's sitting here
266. 7:21while they're partying or whatever I
267. 7:23don't I don't feel good about that. I
268. 7:24don't like strangers. I don't trust
269. 7:26strangers.
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