KGCI: Real Estate on Air - Navigating 2026 Real Estate: AI Risks, Secondary Markets, and Fraud Prevention

Episode Date: September 30, 2026

Summary:Host James Brown and a panel of experts—David S. Rose, Matt Meredith, and Reza Murtalapour—analyze the shifting landscape of 2026 real estate. The episode covers the rise of private social clubs in commercial spaces, the "subprime" risks of urban multifamily lending, and the impact of AI on office demand. Agents and investors will gain tactical insights into secondary market liquidity, the legalities of accredited investor status, and critical protections against increasing deed and wire fraud.

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That's United States Real Estate Investor.com slash advertising. Get ready to increase your brand awareness and your bottom line. Attract clients with content. Network. All right, welcome to this month in real estate investing, where we help you navigate the news. I'm your host, James Brown. In this episode, we're going to be breaking down a variety of real estate investing news items, including foreign capital fuels U.S. housing, AI fears sync property stocks, and CMBS defaults

accelerate. Don't forget, if you're watching on YouTube, you can share your thoughts and questions during the show. Let's start the show. Our guests today are Matt Meredith, David S. Rose. And don't let me butcher it. Just jump in. Reza.

How did you say your last name? Motelapur. Okay. Don't worry about the last name. Yeah, yeah. All right. Awesome, guys. Let's start with Matt.

Just let us know, you know, your background in real estate. And what kinds of investing you're doing? Definitely. So my real estate background mostly has evolved around the legal sides, the protection of assets, the tax of it, the financial planning that revolves around it. Personally, I've done some projects. My wife and I got into it a little bit,

fixing flips and things like that. But it's newer to me. And so I'm very cautious with it jumping into it. But on the business side, I learned early that a lot of it, what people do and how they're doing it, and the correct structure of building it out to protect the people, protect the assets. And then how do you not pay all these taxes in it?

And so that's mostly what my involvement with it has been. I'm still waiting to get into that multi-million dollar deal, but I haven't reached it yet. Nice. Cool, David. So I was the other end of the spectrum. I was born into real estate. My family has been doing real estate for over a century.

This literally is our 100th anniversary of the firm founded by my grandfather and great uncle. And with everything from an MBA real estate finance to decades in building and developing, Donald Trump and I were actually honored at the same real estate development banquet back in 1989. So I helped pioneer the field of PropTech real estate technology in the early 1980s, and I've had multiple careers since then, including Angel Investing, Early Stage Startup Technology and so on. And today I've brought it all back together, and I'm the chairman and CEO of US REM, the US real estate market, which is the first major definitive platform. It's almost like a stock exchange, but not exactly, for investing in existing private real estate. So Leonard partners in real estate syndicates and funds can buy and sell their holdings would be full approval of the GP.

So we've got about $3 billion in properties listed. We've been seed funded by many of the major real estate players across the country, and hopefully this will usher in a new era of real estate investing. And I'm working on my third book. I had two New York Times bestsellers on investing in technology startups. My third book coming out next year is the Real Estate Investing Bible about all the different ways in which one can invest in real estate to be published by Wiley. Wow. All right. Great to have you. Reza.

Yeah, James, like a lot of people who are watching this, I started as an individual investor. I was more involved in the global landscape, so I've invested in real estate in Cyprus, Dubai, Europe, Panama, several jurisdictions in Canada have resided in done business in over 10 different countries in jurisdictions. So that's how I started. And now I basically help individual clients and families, you know, go beyond that, you know, get out of that box mindset and tap into the global real estate market. So that's my expertise.

interesting that's that's good a lot of times we have just local expertise so this is going to be good and I think we have one news item on international investors investing here so this is going to be cool well let's jump in from CNBC as American retail stores store anchors fade private clubs are taking over more commercial real estate a little short summary So traditional retail anchors are struggling, as a lot of people know, that are in commercial. And these private membership clubs are moving into these malls and shopping centers. So landlords like steady traffic and long leases. But this model depends heavily on affluent spenders, right?

So what do you guys think about this model? And have you even heard of this kind of shift? Yeah, I'm in New York. So I actually belong to seven clubs, believe it or not, which makes me a bit of a club junkie. So there are probably more private social clubs in New York than any other city in the country, if not the world. And so on the one hand, there is a serious trend about clubs, private clubs, socialists. But in this, you know, we're in the K economy where you have a lot of stuff happening at the upper end for the affluent and stuff that is not in any way touching the bottom of the universe.

And this is very much an affluent upper end kind of component. And so while you are seeing an significant increase in private social clubs, I don't think this is a real estate story. This is not a major play. This is not replacing anchor department stores and shopping malls and so and so forth. It's stuff that is very dependent on there being an affluent economy where people will, on a recurring basis, pay big bucks for these social clubs. And in any event, part of their whole thing is they're a whole thing.

exclusivity, which is small, which is the opposite of the scale. So I think this is interesting. There definitely isn't an increase in uptick in social clubs as a societal thing, but I don't think this is anything anybody should be worried about in terms of real estate. I'm curious. So why are you going to these? And why seven different ones? A, because I'm a nut, but other than that, different clubs tend to have different purposes and different reasons why people come together, right? So I happen to be a book collector, and I belong to the Growler Club, which is a book collecting club. You know, 700 people, all of whom

collect books. If you're not a book collector, it will be a pretty damn boring club for you to go to. But for those of us who are nuts about book collecting, it's amazing, right? You know, similarly, there are clubs for artists and clubs for conversationalists and business focus clubs and, you know,

social focus clubs and, you know, so on and so forth. So, and, you know, university focus clubs, my university has one. So seven is ridiculous, and nobody should do that. But, you know, So if you happen to live in an environment where there are multiple options, there are, you know, maybe one or two or three or four that might actually feel a real need for you in terms of a third space or a social grouping. Cool.

I've been seeing it here as well, James, here in Texas. You're seeing what used to be the malls that were all going out of business, and then suddenly, you know, a gym showed up. And then with the gym, you would have a coffee shop. in the protein shake type place, then the restaurant would come in. And so it's definitely repurposing what was originally there with, I think, a need. But again, you have to look at the areas that they're coming in. You had a failed mall. Was the mall failing due to, hey, nobody was interested in shopping at a mall,

or was it due to economic circumstances in that area? I think the idea is fantastic. as it's fantastic for the fluent because now it's like what David's saying. It's a social aspect to it. You're getting out, you're being with other people of interest. There's a few around here that they're gyms, but they cater to pickle to pickle.

And you just have all these different aspects to it, but what happens when the bonuses stop for the affluent? Is this a short-term play that, hey, let's grab, you know, initiation fees, do, things that we weren't getting and they can be reoccurring. And then all of a sudden, what are we going to do with the market and the economy completely tanks? That I think is a long-term question, but they're popular now.

They're coming up all over and they're really kind of cool to hang out at. Yeah. Well, you know, everybody's craving connection, like real human connection. So I could see why it's becoming a thing. pick a ball also specifically that was going crazy yeah i refused to join the gym because i was like where's the tennis courts they said oh no pickle ball's bigger now and i'm like okay thank you yeah converting everything to pickleball right pretty much yeah yeah isa do you have any no i mean i'm not a member of any specific clubs like David and Matt but I'm more of a wanderer so

there you know I get invited to different social events of these clubs and I'm in based in Toronto so we don't have that massive boom that potentially in the major US markets in Houston and New York and also I agree with Matt on terms of the sustainability in the long term you know if these things are propping up you know, what is the underlying fundamentals now and going forward. But I haven't seen it in our side, and it's something that potentially could be, I don't think it's a major international trend, but in the U.S., and I think every country has its own little trends, like sub-trends.

But I guess in the U.S. it's quite dominant. I haven't personally experienced as much. And I could see like, you know, like David, you were saying there's all these kind of different niches. Some may or may not work, you know, in a mall or long term. It's a question of how people identify, right? I mean, and so if you identify as a book collector, you're going to go to a book collecting club. If you identify as a pickleball player, you'll go to a pickleball club, right? And so people like to hang around in their own tribes with people like them.

And that's the whole purpose of social clubs. If you have the cash and you can afford to do it, It provides both a built-in universe of friends or fellow travelers and some exclusivity and places to go and so and so forth. And as I said, I think it's without question increasing, but I don't think this is a major real estate factor. Yeah, I see the advantages of it is because you're now getting these people to come in for working out or something like that. And then the restaurant pops up. So now you have the social aspect. And it's bringing what was empty and vacant.

People are coming in at least for a little while to do something. And so at least the owner of the property is bringing something in. Will it sustain again? If we have a strong economy and everybody's making money, it might become the new trend. Hey, I hang out at the old mall and I'm there all day. I go to the pool. I do all these wonderful things. But again, it's not going to be these type of memberships there.

I don't believe they're cheap. David, I'm sure that there's an advantage to go into them that's up there. So again, you're going after a different target audience. And the great saying, location, location, location is key here as well because you're not going to get it in the less affluent areas. And so what's going to happen to those buildouts if they go that way? They're going to have to adjust and change and do different types of things. But for now, if it works, keep doing it.

Yep. I love the creativity. We'll see. Cool, let's keep things moving. We'll go on to the next article from W.S.B. TV, Atlanta. City of College Park looking to get back $600,000 from real estate brokers. I read into this. I had to use ChachyPT to try to parse it out and figure out what the issue was.

Because I was like, did the brokers do something wrong? or was it an oversight thing where somebody was saying yes to certain commissions? Yeah, go for it, David. No, this is a governance story. This, again, isn't a real estate story, but there is an interesting, larger issue here. This was a question where in, you know, College Park, Georgia, the local planning group, the city's development authority, the BIDA, signed an exclusive agreement with a broken, without having the authorization to do that.

And whether or not there was malfeasions or non-feasins or whether people where money was going, there were criminal investigations, whatever, ultimately the DA declined to prosecute, but there's a lot of politics going around here. So this, again, had to do with people doing bad things without oversight or the very, very least, mistaken things without any kind of oversight and governance.

And so this is a, if anything, this points up the fact that development authority, and planning and permitting authorities and locations have a lot of power. I mean, I know certainly here in New York, what you can build is very strictly controlled by regulation and governmental oversight. And if there are problems with government or authorization or who does what, things can go south pretty quickly. But again, not real estate. This is a question of making sure, you know, who can sign what, who approves, what, what the whole process is. It kind of seems like it's one of those examples of the right hand doing something that the left hand doesn't even know about and maybe doesn't even care about. And we're seeing this a lot right now.

We're seeing the lack of government oversight where there's no real checks and balances. Somebody who didn't have authority went out and created agreement with somebody to do business. And nobody on the internal side really checked into it. And there's a whole lot of those going on right now, it seems. It really kind of comes down to, it's reminding me of the daycare centers and these type of setups where somebody has authority to do something, but nobody's really checking into it to make sure that, hey, everything that's being done is proper, and the taxpayers are not splitting the bill for it. Yeah. Rezia, got any comments?

No, I mean, the city of College Park is definitely outside of my sense. sphere of expertise but I agree obviously with everyone here Matt and Dave that this is not an isolated incident and I'm pretty sure if you dig deep enough in different municipalities and jurisdictions anywhere in the US or anywhere in the world you will find things that happen due to compliance regulatory lack of regulatory oversight or just mischievous activities So I don't think this is isolated, and I don't think it just happens in one. And I don't think this is something that is a trend of it's happening more now, and it'll never happen again, or it was never happening in the first place.

But definitely outside of my expertise to comment further on that. All right, let's go to the next article from National Mortgage News. Lone think urban multifamily looks like the new subprime. Regulators are warning about rising losses and fraud risks in urban multifamily lending, especially in rent-controlled markets. Some are comparing parts of the sector to early signs of subprime style stress. Are any of you guys specifically in multifamily? Yeah.

I am. That's all you're doing, right? No, not all, but very much in multifamily and sort of my history is in multifamily. And more than that, I live in New York, which is ground. zero for the whole question of governmental rent control and you know intervention here so this is a real estate story but there are actually several intertwined stories that are going on here right one of which so let's take them one at a time one of which is the question of what is happening multifamily properties

that were packaged up into you know CNBS are all of a sudden having real problems and something looked like a surefire investment is going underwater are leaving government-backed programs in the lurch. And so there are a couple of different reasons, one of which that was, and the article I think conflated two things, one of which is the change brought by government regulations. So here in New York, for example, a couple of years ago, the state passed a ridiculously extensive change to controlling how multi-family apartments in places like New York could get rent increases, could be sold, converted, so on and so forth, which had the effect.

almost overnight of decreasing the value of the multifamily rent regulated portfolios in New York City by 10, 15, 20%, I mean, literally overnight because of government action. And so if all of your financing is based on future projections for cash flow and sales and so and so forth, clearly that's a problem. But the other problem, the story mentioned, is mortgage fraud. And there have been several big cases. There's one going on in Baltimore right now, which is a big honking case. And A, it defrauds the lenders for that particular thing. But one of the things that we've seen is there's even a bigger challenge, which is because what was happening is people were inflating the valuation of properties to get these loans. And so the fact that they got the loan,

they inflated the value, they got the loans, these became a standard now for underwriting other properties completely unrelated. So I've seen a situation here where you have a bunch of funds that were invested in properties in the same area that all of a sudden are in deep trouble because the valuations that they had gotten for their properties were based on what turns out to be fraudulent bogus valuations for other things that was not in their portfolio, but that changed the whole market. So you've got to, you've have a change there. What this comes down to ultimately is that historically multifamily was a no-lose thing. It's a big building. It's got a long-term tenants. It'll always, you will never lose money on multifamily. Yeah, but what this is showing is there

are a number of cases, whether it's fraud or government, you know, action and stuff that can actually significantly affect this. And especially when you have government-backed securities, it's a challenge. I see this as one of those things where we could talk about rent control because it is a big topic. And what's happening, I feel, in a situation like this is you have the rent control policies coming in, but you're not really able to compare it correctly with the insurance, expenses, taxes, labor, capital cost, supplies and things like that. And so there's a valuation issue that happens from the get-go because the loans are usually going to be based off of, hey, what's the, what's the revenue coming in from the rent? And I think that's what we're starting

to see with rent control problems is, hey, the value of it, because based off of of what we're getting from the tenants and rent is only this, so you can only get this much, but then the city keeps going up in expenses, taxes keep going up, and now you're left with a problem that sits there saying, well, I'm under now. How am I gonna turn this into a profitable ordeal? The only traditional way is, well, I raise rents,

and I can cover my costs, but we can't do that now. And so this is what I expect to see quite a bit more in the future. We talk briefly, David said in New York, that's where you have a lot of stuff going on. And I think that's becoming a bigger part of the conversation because we've seen what happens when this type of policy comes in and it affects the whole investment community. Because if I know there's going to be rent control issues as an investor,

and what I tell my investors is, well, hang on, we need to look much deeper into this. It's no longer that surefire, oh, multifamily, huge ordeal, we'll make money off of it. Now let's see what the laws are going to be. and let's wait. As someone who was effectively born into multifamily controlled real estate, I can speak about this for the next several episodes of this podcast.

But it's a real, I mean, rent control historically has never worked. The challenge is it is such a lopsided situation. There are more tenants than there are property owners. And so therefore, if you're a politician and you want to cater to the biggest number of voters, you say, oh, your rents are too high. That's not good. We woke cap rents so you can't raise any rents for. making housing affordable. Well, that's great for the person who's in it temporarily,

but what it means is ultimately there is no business since real estate is a free market business and you can't raise your rent. And nobody's going to build new buildings if they think they're going to be regulator or they can't do it. So ultimately, in urban study after study after study that shows that putting in rent control has the ultimate effect of decreasing affordability, decreasing the housing supply, and it's just bad, it's absolutely bad economic policy proven, except that it's politically expedient. And so New York City is currently under a rent emergency for the numbers. That rent emergency has been in place since 1945. So just to put things in perspective, you're talking about an 80-year emergency. Well, yes, there is, but you don't solve

this by taking one side of the equation and capping it. And then what do you do now, especially in New York, you're seeing the eviction issues and things like that? that. Texas is pretty lenient with eviction. I've worked with clients. Go ahead, David. I'm saying in New York that the only guarantee way to live forever is to become a rent-controlled tenant because rent-controlled tenants never die. The average age of the tenants in our rent-control property, I think is 85, you know, so. Well, and that begs the question. So there's a process here in Texas, not paying rent we're going to go through the process and get you removed well New York and some of these other states going into the thing oh no we're

gonna protect it where you know it's for the tenant that's great but now we're getting into all kind of constitutional issues of the fact that I own this property I am renting it out this is contractual based now you're telling me you're speaking like a free market Texan I'm with it we just elected a mayor of a progressive mayor who regard yourself as a Democratic Socialist who campaign on the basis of 100% rent freeze. I mean, his primary signature policy was we will freeze all rents in New York City. And he was elected.

You know, now, that being said, whether he can do it, whether he should do it, whether he will do it, a whole lot of other stories in there. But just as an indication of the sign of the Times, you know, rent freezes are very politically expedient and economically disastrous. And even more so, if you happen to be the property owners, they're particularly disastrous to you. 100% and I think the issue from the investor standpoint is now, does New York, the great exodus from New York we're hearing about, I think that yes, you will have that because as an investor, I don't want to invest in something where the government is going to come in and prevent my incomes. But I don't think it's the end of the world. I think it's just a shift in who invests there.

Does that bring in more foreign money because, hey, you know, we're still making money in this aspect. compared to where we are now where hey there is no rent we're now going to build we'll invest yes there are a lot of crazy rules so we're still making money will that who is owning i feel so that's a very interesting question which actually leads nicely into the next uh article you mentioned james about foreign investment in the u.s and and where that money is going i mean resa that's your your wheelhouse what do you know what do you see the money going into uh well well I think international real estate investment into the U.S. is a drop in the bucket compared to the local market, to be honest with you. In the last, let's say, you know, one or two years, I feel like the U.S. is aligning itself on specific, let's say, in the international sphere of geopolitics.

So the political risk has increased for a lot of people. So we have the Latam market, the Latin American market. We have the Far East market. We have, and then the Middle East Mina market, Middle Eastern and North Africa market. Plus, then you've got the UK and Europe, right? We obviously see a strong demand from European UK. But I think the U.S. has sort of created a political polarization of the Far East market and also the Latin American market,

just because of various other political factors that come in, where international investors, how secure they feel about holding assets, holding bank accounts, holding money in the U.S. Obviously, there's still a strong demand, but it looks like the U.S. market locally is significantly bigger, and the ratio of international investments, I feel, is still a drop in the bucket in terms of the big picture. We do see individual investors and families preferring Houston due to its very, you know,

tax-friendly and less regulated sort of investment environment versus places like California or even Florida. But interesting enough, Houston, like Texas and Florida, do have – nationality restrictions on who can actually buy assets in those states. So that's also a whole other podcast on its own. But I feel like the international investment coming into U.S. is in terms of individual investors and families has dropped further as there's a lot more political polarization and alignments geopolitically globally. And I feel like the local market itself is the main driver.

It's not like other markets, let's say, in Mexico or Panama, Dubai, or Singapore, where the international money is the driver. I feel like that's not the ultimate driver in the U.S. market. Interesting. I look at some of the investment routes and the DSCR, I find interesting. I didn't know much about a DSCR until a couple of years ago when I started doing asset protection. And it wasn't really the locals who were utilizing it. It was mostly foreign investors coming in and purchasing up more rental properties. And since then, I've learned quite a lot.

And while I don't feel they're as well known as the conventional paying cash, things like that, they're fantastic because it allows people to go out by multiple properties that are supported based off of the rental income. And it's still, I feel more foreign. investor type knowledgeable. I don't see mom and pops and, you know, the cousin going out using the DSCR to buy multiple properties. Why is that? Maybe it's a tactic like, hey, look over here. You can come in and buy the property and bring in more outside money than keep it centralized. But it's these type of things that I think continue to push the real estate market when interest rates go up and things become harder for the locals to start adding more property. Is it disadvantageous?

It depends on which side of the table you're looking at. But if you can learn to utilize these type of advantages and then get foreign money as well to help you purchase out, the sky's the limit. Well, part of the challenge is that, as you've pointed out, a lot of foreign investors are using DSCR because it's not necessarily income back, right? So a traditional loan is you're looking at income back and they're underwriting the the borrower as well as the property. And so there are a lot of foreign investors who can't qualify under the income world.

But with the DSER, you're looking at the property itself, which is fine, so it brings in more capital. The challenge is if there's something that happens to that income stream, all of a sudden, those are the first properties that go underwater and there's a real problem. And we're seeing banks doing some interesting things. One of the major developers we're working with who has had a great record as a sponsor in terms of refinancing and, you know, upgrading properties has got a bunch of banks who are delighted when they have to take back a DSER property.

They turn around effectively and sell it to him at their book value. So you have a written down from the original underwritten value to their value of their note, and they sell it to him at 95% financing for that. So the bottom line, because that lets them not take the write off on their books, which is good for them. He gets to buy with 5%, you know, 5%, an enormous portfolio. And they're all betting on the fact that he's a good enough guy in Spartan so he can actually take this turnaround, you know, improve the property, raise the rents, and hope everybody keeping your fingers crossed comes out the other end, right? So you're seeing interesting stuff like that happen when you have a DSCR loan.

Yeah. and I've never seen a bank unhappy about taking anything back. So that's the advantage of it. So where does these type of loans go? Well, of course, the way I look at it is if foreign investors are able to do it, they're able to come up with the ways we as local investors, local mom and pop type of things take advantage of it and start using it. Because once the door opens, it opens for everybody.

And that's the type of thing that is advantageous about it. Now, of course, you can't complain, hey, we don't want other nations coming in owning up all the land. That's a whole argument on another level. But I think utilizing some foreign investments, it is continuing the economy to grow. Where it goes long term, that's something. I throw that one back to you, David. AI is a fascinating question. Want to talk about AI now, James?

Or do you want to? I'll just jump in real quick. Yeah, if you guys don't mind about the international investment side as well. So one thing is the DSCR in terms of individuals, families, or even institutions trying to get in. But there's also another factor on the international investment side coming to the US. It's actually low interest capital coming in to support developers, developing real estate projects in targeted employment areas and rural areas.

So the US, if you know, viewers don't know, the US has had a program called the employment-based immigration program EB-5 since 1990, so for the last 35 years. And what it basically does is it provides cheap and patient capital for developers locally across the US in return for investors to obtain the green card. In between 2016 to 19, there was about $20 billion was injection. into EB-5 projects, which indirectly also had an effect of up to $70 billion an economic effect. Over the last 10 years, there could have been, you know, the estimates are anywhere from like $40 to $50 billion of direct investment just on EB-5, which supports the development.

So you've got developers in Nevada, you know, Atlanta, Florida, all over. developing and even California, developing a major hospitality, condos, residences, master developments based on cheap money coming from overseas investors in return for not owning the property, but basically in return of getting a green card from the USCIS. And right now, even though there is an anti-immigration field globally, not just the U.S., the U.S., the U.S., the U.S., the U. The U.S. is still rolling out the red carpet for anyone who has money. Money talks. So that cheap money is a driver for a lot of these development projects in specific air,

which in normal circumstances would not be able to make it a feasible project in terms of regular collateralized loans dealing with the local lenders and banks. Reza, what asset classes are you seeing foreign investors into the U.S. market getting into, like, single families, new development, syndications? So diverse, it's difficult to say because, A, you've got institutional investors. Then you've got families, right, that are doing that could be more severe. And then you've got individual investors. So that's the fragmented market where individual investors are looking for. you know, safe havens or diversification or potentially their families are planning to go to

U.S. and they prefer to own real estate. So it's across the board, whether it's multi-family, but for the individual investors, it's always plain vanilla, something more simpler to manage and understand, right, and to get into the barriers of entry. Obviously, institutional investors or family offices who have more, let's say, resources available to them, analysts, lawyers, they can source more, let's say, lucrative deals, whether it's strip malls or multifamily or some kind of mezzanine loans to get into the commercial space. So it's very fragmented, to be honest with.

You can't just put your hand, you know, finger on one area and say that's where all the money is going. because you've got an inflow of different sources in terms of the type of investors that are sending money over and looking to invest in the U.S. That makes sense. Yeah. Same as here. All sorts of different levels, right? Yeah. Yeah.

Interesting. Anything to add to that before we take our break? All right. Cool. That was interesting. All right. Let's take a break to learn from one of our sponsors. If you are serious about real estate and tired of guessing, you need to know about real expert talks.

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$5 million payout in scale about a wine country prop. A $5 million civil settlement against a dispute between these partners, a federal case tied to alleged misuse of investment. Investor funds continues. Investors remain uncertain about recovery. This is a scam, right? I mean, just like the part of the problem with the other thing was governance and who signs what checks. This is, you know, outright. When you're dealing with private real estate, one of the reasons that returns are, you know, are high and they is they are exclusive. Not everybody can access them. If you want to access things with total diligence, invest in a publicly traded reed, which has, you know, all the full on disclosures. But there's a reason you've got to.

$2 trillion in privately held professionally managed real estate in the U.S., and that's because it's definitionally exempt from the kinds of disclosure stuff that you need to do if you were doing it publicly. So that's why it's exempt only because in theory it's being sold to sophisticated investors, people who are accredited investors or qualified purchase, qualified investment buyers who in theory are responsible for their own diligence. But as cases like this have shown, you know, not everybody is capable of doing the kind of intense diligence with the kind of transparency that you might expect in other kinds of investments in other markets. That's one of the reasons of what we're doing in US REM is creating this effectively a marketplace for people to invest in professionally managed real estate.

So instead of buying properties, you're investing as an LP. And we are, given who's involved with this operation, are so completely focused on, making sure we're dealing with the right kind of people that we are looking to make sure that everything is clean. And as an investor, if you're investing in this space, you have to do your diligence because otherwise, as this one example shows, there can be a whole lot under the covers that you don't know what's going on. Yeah. I've been involved in a couple syndications and one of them was non-accredited, one was accredited. Either way, we were providing a layer of due diligence for them,

which was pretty valuable because even accredited investors don't necessarily know how to run the due diligence on these deals. So it was important. I was going to mention, I thought I'd heard that they were going to change the definition of accredited investors. Have you guys heard that? Yeah, this has been an issue for years and years and years. Just to set the groundwork here, in the United States,

anybody can raise funds to sell equity, sell shares, ownership shares in an enterprise or a fund or whatever to anybody you want, dot, dot, dot, if you file extraordinary disclosures and everything is totally transparent. And that's a public offering. The SEC requires that you have comprehensive hundreds of pages of all the risk disclosures and everything else. So if you want to sell shares in your company or your fund, no problem, just do that. The problem is doing that is ridiculously expensive, extraordinarily time-consuming.

The markets aren't there. It costs millions of dollars. And so that obviously doesn't work if you have got a small fund or you're one building or you're starting up a startup company. And so therefore, the SEC has provided for many years an exemption to the, you know, that public registration and transparency stuff, which says that, okay, you can sell, you can take money in and sell to people without going through that whole giant public offering process if they are a certain type of player. And the historical definitions there have been if they are a person who has over a million dollars in net investable assets, not including the value of

their primary residence, their home. So you have to have either a lot of money you can afford to lose or you have to have at least 200,000 a year in personal income or 300,000 if you filed jointly with your spouse for on a steady basis. So that says, okay, you've got enough cash. Even if you lose cash, you have poor cash coming in. And the third one that they recently added that was added in the Jobs Act, actually two years ago, says that if you are sophisticated, which is a proxy they're saying if you have an SEC registration as an RIA or a broker dealer and you pass the the SEC tests, then you're considered sophisticated. So those three groups of people, plus institutional investors,

people who are managing over 5 million assets and so and so forth, banks and the like, those people are allowed to invest in these private funds and private companies without a public registration. And so the question has always been, well, why should the big people be allowed to invest in these highly lucrative things? Why can't the little person invest in that? And so on the one hand, there has been a lot of pressure for a number of years saying,

little, you know, this is not fair. Regular people should be allowed to invest in these high growth, you know, venture capital and startup and private real estate funds and stuff. But the challenge is that there is a reason those requirements exist. There's a reason you have the Securities and Exchange Act and you have public registration to exactly avoid this whole thing about, you know, stuff happening under the covers that you can't see. And so having a publicly listed vehicle doesn't guarantee that it's clean, but what it guarantees is you got transparency and if something is going on, it is as likely to be picked up as not, right?

Whereas in the private world, there's a dark pool happening in the corner with no disclosure. And so I am not a great believer, by the way, in case you have to figure that out, in extending the definition of accredited investors and reducing those things. if anything it should profit hasn't those numbers of a million and not 200,000 have not actually changed that decade and they probably should be raised up a little bit not down I'm curious oh go ahead well I was gonna add that that's something that I see a lot is the transparency my my background I actually got into the financial world doing private equity deals I got license we started doing private equity deals and and you you had the rules under reg D and things like that

for accredited investors. And then I got into the financial advising side after Lehman kind of went down in my equity trading industry ended. And what we're seeing now is investors want more when they're sitting with their financial advisor, investment manager. They want more than, hey, just stocks, bonds, mutual funds. They're wanting to get into private equity.

And I like the fact that the industry is finally coming out with syndication. private equity options for for people who are not in the family kind of the family offices so now the the guy who has never really done it before can do it and so we do a lot of syndications and things like that for tax strategy we'll we'll find things for depreciation stuff like that and even today it's more along the lines is hey we're just we're just pointing you in the direction we're not going to do it and the problem i see so many times is the due diligence issue They want the investments, they want the advantage for the tax, they want to invest in something that's not just a stock, a bond, a mutual fund.

But a lot of them don't want to do the work and the research that comes with it. They don't want to sit there and evaluate who is actually doing the deal. What is the realistic returns off of this? And so it becomes a problem because if something goes wrong, it's a lot easier for them to lose the money and a lot more money in that fact, because it's more steps and more. steps and more work to it. And so I also agree, I think they're the number for a credit investor, I don't know if that matters if it changes. I think the educational aspects has to be brought out further because a lot of people

who have never done these type of investments are now doing it and they don't know where to begin. And you're having issues like this where, hey, there's a big ordeal that happened. There's a $5 million civil lawsuit coming in. Well, that's not the investors aspects of it. They have to now come in and sue after that. So is there going to be anything left after that? You don't know.

And now this little deal, hey, I'm putting in $2 million into a non-common, we'll call it, investment scenario. I've lost that money and now I have to spend even more money to try to get a portion of it back. To me, it's not about the amount of money. Of course, you have to have the money. Like, if this deal goes bad, will you survive? But it's more, how do you go and verify this is legitimate?

What have you done? What are the steps you've taken so that you know what the real risk is? I know with syndications, like the biggest challenge is it's just education. That's why most syndicators have these boot camps and people come in and learn kind of from the ground up like. But ultimately we're going to see more and more clarity. We're going to see more and more standardization. And as things get standardized and as there's more AI involved, and as there are more platforms, you will get more transparency, you'll get more normalized ability to compare A and B. You'll have more metrics that are publicly available.

So I think that the trend here is a positive one, just the way the market is moving. I just want to agree with Matt and David on this, is that it does sound super lucrative when you get into all these private equity or venture and syndication deals and an accredited investor. as David outlined the regulations is across the board in North America. That's the definition. But my two cents on this matter is, A, an accredited investor. So if somebody wins the lottery, they're an accredited investor.

Why? Just because they have money. Does that mean they're actually like an investor or have any knowledge? Or two, if somebody gets a divorce or an inheritance and they have all that money, is that an accredited investor again? So it's a very interesting definition.

And then going back to that specific article, James, in terms of the wine country fraud, you know, I always say there's well, everyone knows. There's two industries that can turn out a billionaire into a millionaire. One is wineries and one is airlines. So any syndication or any investment deal that has the word wine in it in there. I mean, some people have to be well aware and read the fine print, to be honest with you. So I'm not so surprised. that something like that has happened. And to add to that, as the boomers are retiring, passing away, that big amount of money is flowing down to their children or their grandchildren, and it's big sums of money. And I find the trend is they're not as interested in the traditional ways we've done business of having advisors. They want to do it on their own with a little bit of help from the side. And that's what I see heavily coming to the market is somebody young with no experience saying, I want to save all this money on taxes and I want to do private equity and I want to do things that aren't traditional because that's the way I want to do it.

And that's what's popular right now. Yet they have absolutely no understanding of simple finance. And the question they always ask is, what will you go find it for me? No, no, you have to find it. I'm not finding it. I can point you in a direction, but you have to make this decision on it. And the decision making sometimes is horrible because it's lazy and it's, it's, oh, the market's hot. Oh, it's big right now.

Everybody's buying real estate. I'm going to put all my money in this real estate. That I think will. That's actually an area where hopefully we can make some kind of inroads. With US REM, what we're doing is creating a marketplace for private investment in real estate. You've got to be an accredited minimums of credit investor, but we're really aiming at quibs, qualified institutional buyers, qualified purchasers. So that's, you know, five million. It's an even a higher bar than the standard of credit investor.

But there you'll be, you know, right now we have, you know, four or five dozen, you know, types of properties there. And with hopefully some types of standardization, people will be able to compare A, B, and C, and make their own decisions with appropriate support tools and the like. So, you know, in order to do these kinds of things intelligently, you need to do. to know what the market is you need to have a bunch of things to choose from you need to be able to know how to analyze a against b and then then you make an informed decision for yourself and again i think the trends are all heading in the right direction for that correct and more stories like this what it's going to do is it's going to bring more government involvement because they're going to try to prevent these type of situations happening to a whole new generation of people and require stricter

demands and more transparency i feel on on the equity side selling these type of deals to people. All right, guys. Anything else on that? Let's go to next one from CNBC. Hampton's real estate prices hit record with 2026 summer rentals going fast. Nah, that's not, this is actually really, it's a slightly mislabeled. Technically is it accurate, yes, but the problem here is that's a, it's a mix change.

And what's happening is people are buying more of the upscale stuff than the lower scale stuff. So yes, there is a change, but this is not a big real estate story. It's local to the Hentham market, which is a weird market all by itself, and it has to do with Mix. I would say this is even worth talking about. Let's go on to the next subject so you can wrap it up, which is a really cool one that we want to talk about. All right.

Let's do it. From Bloomberg via Yahoo Finance, real estate stocks sink as worries about AI risks spread. Commercial real estate stocks dropped as investors worried. AI could influence office demand. Some analysts call it an overreaction. Others say it's early repricing. Take it away. I can talk about this for hours,

so let's hear from either matter. They want to chime in before I monopolize the conversation. Yeah, I mean, I'll give my two cents on the matter. So did we see office and commercial real estate like vaporized in the dot-com boom? I mean, you know, with the internet and everything. No. So this is basically from our point of view, it's a investor sentiment and it's obviously a big hype and basically investors are punishing these types of, let's say, this category investment

in the capital markets just because it's not AI. I've spoken with several wealth managers of these larger banks. here up in the north and they've been flooded with investors coming and investing in AI and shunning the real estate market because in certain markets up here, I think they're quite bloody in terms of the real estate market. So a lot of money is going to AI. There's positive sentiment. It's taking over all the news headlines, as we see,

even this conversation, half of it's all about AI. But the matter is it's just a general investor sentiment. sentiment. It's a it's a it's a public you know, it's a massive trend right now, but it doesn't mean that people are not going to need commercial real estate or offices. It's never happened like that. We've seen that with the internet boom and the dot com. But yes, certain stocks in that industry are going to be punished just because they're not in AI. And they're going to come out with, the analysts are going to come up with multiple reasons of why to downgrade it or to reassess or pricing. But at the end of the day, really,

estate will remain real estate. No matter if we have like super AIs or Star Wars going on, real estate is tangible and it will remain. That's my, that's my little input on there. But, you know, David and Matt can come in. Matt. I think there's more to it than just AI. And this article forgets about the big thing that happened in 2020, which was COVID. And everybody went to work from home. And it became normal for an investment manager, for an attorney, for tax people, for everybody to sit at home in their boxers, you know, with a nice shirt on top and do business. The clients got used to doing that. The clients don't want to get up, drive through traffic. I'm here in Houston area. They're like, no way. Nobody wants to meet in an office anymore. So what's that done? It's shifted

it to, okay, let's go online. Let's start doing things where we're able to not. have to drive anymore that has become popular I can't get clients to come into the office now do I have an office of course I have an office but I no longer am going to go for that big overhead office type I think what's becoming more and more popular are the Regis type offices and and the rental offices where you have an office you can pay for it but you're not buying the whole building and using it anymore the other issue is that with AI and this is where I feel AI is really affecting it is before AI, you would hire assistance.

You would hire other people to help do that work. AI is now coming out doing a lot of these type of work. So we're not bringing in as many employees to help service. So that means I don't have to put these people somewhere anymore. And the ones that I do bring in, it's also the type of ordeal. Well, you can work from home. I don't mind. Just get the work done, be client facing when you need to be.

And so there's a lot of situations that are taking place. I don't completely blame it on AI. I think it's just the shift on the market is a lot of people no longer have to go out and get these commercial properties anymore to be storefronts. Now, if I'm selling products, yes, it's probably good to have it. But for services and things like that, I think that the trend has started with COVID and it's just continuing that line. and maybe they're blaming AI for a much bigger shift that took place much earlier. Good point. All right.

So both of them are absolutely right. And there's a third piece here. So this is a great way to sort of wrap up this discussion. So first of all, Ress is right that the immediate big drop and so and so forth, this is totally an investor sentiment question, right? It wasn't that, you know, people are not going to be using offices, would draw this investor, drop in demand for these real estate stocks was that, oh, AI is going to take all the jobs and not the people are going to be working home. People aren't going to be working. Oh, if there's nobody's working in a white-collar job, nobody's going to need offices. And so the sky has fallen and the sky is

falling. So the right church, wrong pew. Yes, AI will take over all of these jobs, but those are, the jobs that are being remaining, that will remain are effectively white-collar jobs. There'll be a question to what extent of what blue collar jobs are left. But these white collar jobs will be different white collar jobs. People will be using AI to do things. And so the question is, as Matt pointed out, where are they going to be doing it from? And what will an office designed for this new world look like?

Will it be a WeWork or a Regis or a, you know, a drop-in space? Well, a third kind of space. Will this impact things like the social clubs we talked about earlier? How will people be moving farther to the suburbs as you have autonomous vehicles that can take you from a city center to home in the suburbs? What will that do to real estate values? So AIA is big. It's really, really, really fundamentally big and game-changing for society to an extent where I'm not going to get into a whole bunch of prognostication, but you were going to have significant double-digit total job laws within the next time.

single-digit years and that's going to basically rebuild society in some way. Another story. So it's big. It's happening now. It's really fast. Just in the last four weeks with the introduction of the latest models from Anthropic and Open AI, game has changed, order of magnitude more powerful, and we're seeing this across the board in every area. So therefore, this change in society will affect real estate, but it will affect what is built,

where it's built, how much it's built. Like Resolike, you will always need, as long as we have physical corporeal beings, as long as there are 8 billion people who exist on the planet, those people have to live somewhere, and they have to physically work somewhere. It may be the same thing,

it may be an expanded home thing, it may be, you know, who knows what. Maybe it's an office with hoteling where everybody in the company works a week a month and there's a hotel attached to the thing. Who knows, right? So there's going to be a big change, and we really have to be cognizant and think about where that is going.

But the current thing about, oh, quick, let's up all of our real estate service stocks because of AI. That's a sentiment thing, and we will hopefully get over that. There's a lot of articles that just appear to justify why a whole sector is going down. And I think this is one of those articles that maybe valuation's got too high. let's bring it down a little bit and let's justify it through a news article and a storyline res is absolutely right and david too in that manner real estate's not going anywhere it will still be there now how it will change that will be interesting to see i think the the main concern most people think about when talking about a i is where am i going to be in the next five years

what what is my job going to look like as when we came in and we were talking i was discussing with you guys, I better get into litigation because the whole AI can do it. It can do it better on a lot of factors. And I think it doesn't completely remove jobs and industries. It just shapes them and it makes them more efficient. And you have to stay ahead of it or you will end up without the job and you will have to figure out what am I going to do to make money. There's a joking episode of South Park that talks about how the plumbers and the electricians and all those people are now in the multimillionaires because nobody knows how to do that and that's the demand in the future of what the money will be. And so it's pick a hobby now that you start liking and learn electricity along the way because it may be your future role.

So true. I think maybe they even use AI to polish those articles that they're publishing. So there's a bias. We use it to grab them and form these questions and stuff. Yeah. Well, let's go to our next article from Fox 26. How do you say this, Matt Houston? Friendswood, which is located kind of in the Houston area.

Yeah, the title on it was wrong, so I didn't catch it at first. but yeah, that's a typical Houston situation. Yeah, but with all fairness, that's happening in New York as well. There have been several cases in New York and people doing this kind of stuff, right? And this is basically malfeasance and bad intention and bad actors. Part of the challenge is not that we don't know how to solve this problem. It's a question of the political will to do it, right?

I mean, A title searches, for those who didn't read the article, there have been several cases where people are doing deed fraud and stealing other people's homes by going in and filing that, you know, they own this house and they do a fraudulent transfer, and the real owner wakes up one day and finds that there's no house there. And they're doing it when people die, they check the obituaries and go in and forge a deed and so on and so forth. So that's just this illegal bad stuff. But, you know, what it points up is the title insurance has to up its game when you do a transfer. And you need to have, you know, we have the

technical ability now to do appropriately searchable, you know, blockchain verification, verified title things and you're going to see this. There's a lot of stuff happening under the hood. It hasn't taken hold yet in the real world, but it will. And I think within, you know, five to ten years, we're going to see, you know, all kinds of title on chain. We're going to see all kinds of more, better safeguards and, you know, tech-driven solutions in place. So I think we have to have the political will and will as an industry to actually implement what the technology currently allows. Yeah. Yeah, like every month we have some deed fraud thing, you know, I mean on this residential side, even within our brokers, we're like training people to like coach their

clients to, to specifically for wire fraud, you know, like take these steps because this is happening over and over and over. And then you have things like this article where they're trying to steal dead people's homes out from under them is it's crazy but yeah we we have to yeah I think the blockchain's going to really help and you know in one of these other articles I was talking about double pledging how is this even happening I mean obviously there's forgery going on but you know we've got to get solid title searches so that kind of stuff doesn't happen you know So one of the things, so I've seen this happen to several people. And what I like about the Senate bill 1734 is that it's going to make the process easier.

Because right now, if this happens, this is a major issue where you can't sell your house that they show up and evict you from your own house. If the circumstances arise. So it's a major ordeal. I've got quite a few clients who have reached out to me about these type of things over the last several years. the making it easier what was it 30 to 45 day court process is definitely a step in the right direction but it's also an awareness issue i now have several clients who have gone and gotten the you can go into the county usually and you can sign up for alerts involved on that property and so one client in montgomery county he gets alerts and so we did a d transfer into a trust

and that was the first thing they actually saw an alert and he was all excited because now he knows, hey, if somebody tries to do something with this property, I'm going to be alerted. And so it's a nice security type step in the right direction, but I think more and more counties need to implement this. You do see programs. I think LifeLock may even cover something like this where they'll alert you if something like this is happening. And so it's something that as more more people become aware of it i think it becomes less of a issue because the the right steps are put in place but i've seen it happen it is a nightmare to to battle with and it's an expensive expensive cost to because now you're having to go into a whole process a lot of people have to get the

attorney involved and so you went from everything's fine i love this house i'm living here gratefully to oh well i no longer own it on paper i'm worried i could be evicted from in my own house, somebody else could sell it, completely screw up chain of title, and now I have to pay for all this. So I'm glad it's finally coming to light more and more. Reza, are foreign investors investing in the US? How are they looking at this?

Because I mean, we all live here in the US and we're trying to get our heads wrapped around, like how do we protect ourselves and our clients coming from outside the country, like what? Yeah, I mean, I think this is very localized. You know, obviously it happens in little pockets everywhere. I can't comment to this specific incident that's been reported. For U.S., for international investors who are investing, they just have trust in the U.S. system.

You know, they're at the same disposal, you know, at the mercy of whatever, you know, security and safety is for the investor to hold, property. So they're not in any way at an advantage. If anything, they're at a disadvantage. And probably if they read more of this type of news, they'll probably be scared off. But what I can say is here up in northern of the U.S., the 52nd state, we have a pretty streamlined system in terms of title transfer. And I always say, make sure you owe the bank even a dollar on a mortgage, because that's going to be your security. if they do something wrong, you sued the living hell out of them. Because you've got a third party that's liable and always having a bank on title,

even if you owe them $1,000, is the ultimate security for such fraud. I'm not saying it's foolproof, but that's what I always say and advise my clients as well. And to add to this real quick, a lot of these homes are being discovered during the probate process where, okay, you're memorializing with the county as public record, where the decedent live, what all their assets were. So now there's an easy list for thieves and people doing nefarious act. Okay, this was somebody living by themselves. This house is now all just sitting there. And so I think a lot of the protection can come with the typical estate planning aspects of build your estate

so that you're avoiding the disclosure of this information by using trust and things like that. So now you're not having to file all this information that's public. And I talk to people all the time. Remember what you're doing when you do the will is you're making everything public now. So don't talk about, you know, I'm giving my son who's 17 years old, $5 million, because the next thing you know, he's going to have 20 new friends who he's never met before hanging out with him. So use the estate planning aspects of it to protect your assets going forward and keep it out of the public knowledge. Gotcha.

My mouse stopped working. Ah, I can't get around. Anything else to add before we take a break? All right, let's do it. Are you looking to elevate your business through exceptional content? Universe Media Publishing is your gateway to success. We understand that in the world of business, content is king. But not just any content, your business deserves content that captivates, convinces, and converts

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Connect with us at Universe Media Publishing and let's turn your vision into reality. Visit Universemediapublishing.com today. Your story, our expertise. Together will create magic. Ok dokey. From Fox 11, Los Angeles, Burbank Man's $1.5 million home sold without his knowledge an elaborate deed snatch scheme. Stick it with the theme here. I think we're just covered that one. Yeah. Let's keep going.

All right, here we go. We're getting into David's World Secondaries Investor. Real Estate Secondaries volume reached a record 20 billion in 2025. This is a big story and it's a real story and it's exactly what we're doing and why we're here. So for those who haven't been focusing, if you're thinking of if you just know real estate in terms of either flipping or, you know, buying a property and holding it, a real estate, a secondary transaction is one in which somebody bought the real estate or bought in real estate interest and then resells that. That's the secondary sale. The first guy was the primary. The second guy is the secondary.

And so typically in case of real estate, that means if you've invested in a real estate syndicate, a club group, or a real estate fund, typically the deal there is it's a long-term investment, long-term capital. The pro forma you look at it says showing five, seven, ten, twelve years holding and LPs are not allowed to resell their interests. So you're stuck effectively in there. But so in the real world, even though everybody goes in knowing that it's going to be a long-term, home and they're comfortable with that. That's why they invested in the first place for the higher returns. In the real world, life happens. In America, typically that means you're getting divorced, or you're dying and your estate has to deal with it, right? Or you know, somehow have a capital call from someplace else that came out of the blue and you've got to get liquid. Or if you're

in a smaller institution, you want to do portfolio rebalancing. So in any of these cases, you take a look you have this big real estate chunk sitting there and you say oh well that's a great piece and you go to the gp and you say hey you know i know it was a long-term investment and i said we were in it for the full time but you know i really need the cash now so can you please buy my piece out to which the gpc typically will respond you know i empathize but no that's not the way this works it's long-term capital you cannot sell so you know good luck holding it right and if the lp makes enough of a stink eventually the GP might say, okay, listen, don't make a sting. But although I don't have to approve it, if you can find somebody to step into your shoes

and buy your piece, I will okay it even though I don't have to. And so then you have effectively, you know, a random person with a random piece of a random syndicate trying to find somebody to step in and buy their piece of something that can't be further resold, which is a problem. But the LP can't sell until the maturity day. But interestingly, the fact that there is a maturity date means that at that point, at the end of those 5, 7, 10, whatever year period is, the GP is required to sell the property so they can return the cash back to their LPs. So what happens if you come into a market like right after COVID or something where there is no market where you cannot possibly sell this building for anything approaching its value? In that case, the GP has got a problem.

They have to sell it, but they can't. So in that case, what a GP does is a GP-led secondary, also known as an LP replacement, where they either will come up with a new fund with new investors that will buy out the old ones, or they'll try and arrange a sale of pieces from LPs who want to get out to new LPs. But that's a very complicated process because it's a non-trivolous, it's not a natural process, right? They're doing something that they weren't expecting to do. Cause hundreds of thousands of bucks takes a year to do. And the bottom line is nobody ever wants to sell a real estate secondary.

Neither the LPs, because in theory were in it for the long haul, nor the GPs who, you know, are faced with, you know, having a problem because they can't sell the property. And so, therefore, in terms of real estate, secondaries have always been a slightly, it's a distressed, a bit of a distressed asset, right? because somebody has to sell. But what's fascinating is that what the has to sell piece comes from the buyer side, the holder side, not necessarily the property side. In other words, you've got a perfectly good property, but if the LP has a liquidity need for some completely separate reason, like they're getting divorced, you know, that's something wrong with a property.

It's from a challenge for the seller. There is another secondaries market where a very different feel goes into play. If you go and buy a share of Apple or Microsoft, think about that. you're actually buying a secondary. Somebody before you had bought a share of this public stock and is now selling that. So when you're looking to buy a share of a Tesla or something, you don't say, ho, I can get a good deal in this because Matt's got to sell it, right? You say, what's it worth to me?

And that's when they offer I'll make. And so there doesn't exist that in the real estate secondaries market, and it's really tough and challenging with no marketplace or anything. Despite that, what this article is saying is that in the last year, $20 billion of this completely unsellable real estate secondaries changed hands. About 70% of that coming from GPs coming to the end of their rope and having to do

effectively a refinance LP replacement and the other 30% coming from LPs who needed liquidity. And right now, the average discount off of NAV net asset value on these things is about 70%. It turns out that if you have a really big portfolio you know you have a five hundred million dollar portfolio there are a large multi-billion dollar secondary funds from Blackstone and Ares and so on that will buy

those out typically at about a 25% discount on the other hand if you were an individual person with a you know five hundred thousand dollar investment in a local syndicate that owns one you know you know apartment house and wherever you know good luck you're trying to find a buyer for that at even 40% off of an AV right so so there's there's a challenge and that's the problem we're actually solving at US REM by creating the first marketplace for these properties. And so therefore, we work with GPs who have a property and the GP effectively lists the property with us, doesn't cost them anything.

But now all of the LPs in that property have the ability at any point to say, here's what I want to get for my piece, and then anybody can come in and effectively make an offer against that property to buy a piece. So you basically have a marketplace where a broker-dealer with running an ATS, alternative trading system, where you can actually buy into these secondary pieces and make it much easier to sell and to buy. And if you think about how much space there is in this universe, the public stock markets trade of the market cap of value of everything traded in the marketplace.

That actually trades about 150% of the value every year. But that $20 billion in real estate. of a $2 trillion privately owned, professionally managed real estate is 1%. So think about that headroom there is here in terms of what actually could happen because this is a way to get liquidity for people who are in real estate now. So hopefully we're going to, you know, we're just coming out of the woodwork now. People normally know we exist. We're just really spinning up.

And hopefully this will be the beginning of a very new, interesting market. Thank you for explaining that. And now I have a better understanding of what you're doing there. cool. So we have, I mean, so we literally we're just launching now. We've got about three billion in total of properties and they range from affordable housing funds to portfolios of market rate, you know, class B properties to new construction where a new season developer is effectively syndicating a major, you know, trophy property in Midtown Manhattan, to triple that least retail, where people can invest in a effect of loans, a bond-like cash flow.

So there are a wide variety of things. It's all real estate, only real estate, no private equity or venture stuff. So it's only real estate. And this is designed for the very high end of the market for qualified purchasers and above. And so the typical transaction size is about a million bucks kind of thing where you're making an investment. But it provides a way for people who are in these existing properties working with their GP to get liquidity and people who are looking to invest in this for the first time to actually have a place where they, can go to, compare things, you know, get the education that in resume that we're talking about

before. So hopefully it'll be a very interesting play. Well, your timing is good because I know a lot of syndicators got upside down with rates. You know, as an indication just before the holiday, we sent out a few thousand emails to real estate investors saying, hey, we have this thing here if you're interested in buying, you know, said secondary is you know let us know to my astonishment 100% of the emails we got back the next day were from sponsors saying oh wow can I put my property you know I'd love to get liquidity either I have a GP you know problem at the end and I'd like to turn my thing into an evergreen fund or I have LPs who want out you know how do I list and since it doesn't cost the sponsor

anything to list it with us I think this will be a pretty fast growing thing so there's definitely a trend into it I'm seeing that more and more the again kind of as I've mentioned you've got a lot of new people coming in and that's what kind of the secondary market is alluding to is this isn't something you're going to buy and three months from now to say you know what I should have bought Apple stock and said you're going to be separate exactly and so for the right investor it's a fantastic opportunity because you're getting something different usually they come with high returns a lot of the syndications that I see have tax depreciation strategies and things like that.

One of the things I always talk with people on this side is the misconception of the GPLP. And this is more of that educational aspect is the limited partnership. And oh, I'm a limited partner. I'm protected in it. Well, you're protected to your investment. But that's not what really happens. And so when I first really started seeing these type of deals on the secondary market and just in general being sold, it was because we were building out structures to protect

the asset itself from personal liability. And so I got to see quite a lot and a lot of people would come in and say, oh, there's no risk to it's limited partner. And the conversation wasn't, no, that's not what limited partner is. Yes, that money to that extent is all you're risking, but what if you get sued? What if somebody comes after you? This is an asset just like all these other things and you need to protect it. And so I learned more about the whole set up, the syndication aspect because I had to build out LLCs and other protection type of strategies to put this into it so that if you are sued, you're not having this property taken out. And it's funny how we learn about things because it's usually something that has nothing to do with it that leads you to

with this whole new market of amazing strategies and ordeals. But this is the future. I think a lot more people are going to start doing this. A lot more people are interested in this type of deal because the returns are better or there's depreciation models and allocations and things like that. But again, there has to be the conversation that this is more than just buying a stock. You need to do the due diligence. You need to understand what you're doing it. And you better check out who is running this whole ordeal because you're going to end up like two articles ago where everybody put their money into a deal and it went south because nobody did the transparency and looked into it.

Absolutely. This is very much, remember all of this, all of these secondaries and everything we're doing is working under these exemptions for people who are sophisticated players. This is not available to retail investors, right? In our case, we're really focusing, as I said, of the Q qualified purchaser layer, which is even above accredited investors. You really, you're talking about people with big checks and big money. money and relatively few guardrails.

I mean, obviously a platform like ours is going to do what we can in terms of trying to be rational indulgence and so and so forth, but it is very much caveat enter, buyer beware. You have to, as a, because you are exempt from these regulations, you or your personal advisors have to be very sure about what you're getting. Deal with reputable sponsors, make sure the numbers all work. That's why it's exempt. So. So you don't have any 506B.

deals on that platform is no these are all 506b or 506 you know there's five not 506 so so that there's there's there's there are all five in other words they are 506 B are all for accredited investors right you can't you they're not for for retail investors I mean they're asterisk there are you can put in 20 or whatever 30 real-tale retail investors in a 506 B if you do the equivalent of a public offering but people aren't doing that so effectively no so yes this is this is designed for but the Those are exempt offerings. So these are not for retail investors.

I guess I'm unclear. Five OCP is an exempt offering, which means the region it's exempt is because the person who is investing is classified as an accredited investor or a qualified purchaser. So retail investors, you can't just say, I'm going to, hey, I'm setting up a fund. Anybody on the street want to come and invest in here. If you want to do that, then you've got to be a public offering, right? anybody and their brother can invest on the public stock market. You can buy a share of Apple regardless of how much money, who you are or anything else, right? Because they have all the guardrails in place.

But if you want to invest in a private real estate syndicate or a private startup company, right, or a hedge fund or whatever is, the only way you can do that is because it isn't listed is if you and it, if that transaction is exempt from regulations, and the exemption is 506B says that, okay, if you, if you, you and it, if you're not listed, if you, if you're If you are an accredited investor, then you are exempt. So that's what it's doing. It's not five or six fees are not for retail investors. They're exemptions. Correct.

Very similar to 504's offerings and things like that. And the exemption is really kind of when we first got back into it 20 years ago. We were doing 504 offerings and things like that where all the investors had to be accredited. But the advantage of it was you didn't have the nightmare of the filing and the regulations that came from having to put deal together. I think David alluded to it earlier. And so it makes getting deals off much, much easier, but there are certain rules that, hey, because you're not having to do all these regulations, here's a list of things that the investors have to qualify for. You have to at least do these type of things. All kind of, you know, it's a few steps shorter, a lot easier to get

deals out, but you got to follow the rules. And that is one of the things, of course, is you can't show it to unincredited investors. But can't sell it. I'm sure you can show it. Under 506B, you can't even show it. 506C. You can't sell it. But you can't sell it. 516B is even more restrictive. Yeah. Yeah. Yep. For sure. Well, should we go to the next article? All right. From El Paso Times, El Paso accountant gets prison in $600,000 real estate business fraud. He was peeling off. It's just real estate porn. It's a standard embezzlement story. So, oh, 600,000 bucks from from because nobody was watching what checks she was writing.

You know, again, this is an internal oversight question. And one thing, the light motif that keeps coming back into all these stories about fraud, misuse, I think we've discussed four or five stories, right? Either a government official is doing something screwy or a thief is doing deal fraud or somebody is embezzling, you know, from here or somebody is screwing their GPs, you know, all of these go to show that A, people are not perfect saints. There are people who have problems and who do bad things. And in private real estate, there is a lot of money sloshing around with, because it is

private and not registered public investment, you know, a lot looser, looser controls, transparency and everything else. And so all this basically shows you just, when a lot of money is at stake, make sure you have transparencies, make sure you have controls and auditing and so on and so forth. the fact that this, you know, woman in this particular article ran, you know, four years across six companies writing checks to pay her credit cards and, you know, whatever. That's basically somebody wasn't looking who should have been looking. Dale, she's in a position of trust as the CPA and was not trustworthy.

That becomes one of the questions here is what should happen to license professionals when they do this type of stuff. And I think having that fiduciary responsibility in that role where I'm not assuming my CPA is going to embezzle $600,000 from a deal, what happens when they do? Well, if she's going to prison, I'm pretty sure she's going to lose her licensing. You're going to lose it all. And I think the key here is that I'm learning that I better be very careful with doing real estate in Texas because we keep popping up on this news article list. You guys are shady down there. I'm telling you.

Let's go to the next one from the Wall Street Journal via MSN. Lenders to commercial real estate owners pay up now. Office loan delinquency hit record levels as refinancing challenges persist. Billions in C.MBS loans are past maturity, increasing pressure on lenders and regional banks. Yeah, this is the same story we discussed a couple articles back. from a slightly different perspective, right, with the right-offs in there. And it's a serious one. If there's one sort of overarching thing about this episode,

I think the combination of AI and market changes and government back, you know, securities, CNBS and so on, is the interesting one. And this one deals more directly with the question of what is real estate going to look like, real estate office and stuff in the future. And I would throw in from a different direction in the same way, that AI is changing jobs and changing the way people work commercially, the advent of autonomous vehicles, you know, robotaxies and cars and stuff, is going to mean that you don't have to live in the city center

if you even wanted to go into the office, right? You could live an hour or two hours out of town and have, you know, get your cup of coffee and get in your pod, and your pot just drops you off right in your office, you know, if you want it to. So I think that's going to change residential stuff as well. But this particular one, our story is talking about office stuff, and it's partially the scare sentiment factor that Reza mentioned before about, oh, the AI is coming quick, nobody's going to work, and there don't be any new for offices. I think it's much more nuanced than that, and I think it's a question of what will the offices in the future look like? What all that have to do with newer construction stock design for that?

I mean, J.P. Morgan Chase just built a mega skyscraper in the middle of Midtown Manhattan that's like an entire city where they're going to and they have everybody mandatory in the office, you know, but 10,000 people in this one building working there, you know, you look at apples and Google's campuses, they are plying billions and billions of dollars into their campuses, not just in Silicon Valley, but in New York and in other places and Musk and Texas. So there are people are going to be working. The question is in what kinds of environments and structures are they going to be doing?

How does that work with a conversion question? So I think this is a very real and interesting one, And I think it's almost bigger than the story makes out, right? It's not just a temporary thing about a couple of properties failing now. It's a really existential question that we don't really have time to go into with the rest of the podcast about, you know, where is real estate going in the future? And the first answer is that nobody knows. I mean, I'm, you know, the Real Estate Board of New York, which I'm the Venture the Venture Capital Committee, you know, you sit around the table and look, people will say, you know, you don't know. It could go in any one of six different ways.

So there is no one answer. and this will play out increasingly I think over the next five years we're not talking about a 50 year player we're talking about having a pretty good visibility in this within five years maybe 10 but at that by that point whatever is going to happen I think

the path will be a lot clearer either nobody would be working we'll all be working in our pajamas in our bed or a pod drinking big gulps or something or we will be going someplace else and doing something it'll be a very very interesting world but we don't have a clue as to how that's going to play out I also see this as kind of that scare, scare story like you're saying.

Here's what I like to think about is the building will still be there. It may not be office space at that point in time and the future, but it will be something else. I go back to thinking about COVID, the movie theaters. Movie theaters, suddenly COVID comes out. All your individual apps start selling movies and the whole movie industry changed. And so the movies, there was a movie, a regal being built right down the street when 2020 happened. And I just sat there saying, wow, I'm glad I didn't invest in this one.

But what are the movie theaters now? The movie theaters are not as many, but they've changed what they're doing. You go there, you eat an ice meal, those type of things. Whether or not that business survives, the building will still be there. The owners of the building will change it into. something else that will bring in money. Maybe later down the road, do we all leave our houses? I think so.

I think you'll still have buildings out there that we're always going to. Offices will still exist. Again, I think it's too early to determine what happens in the future. It will adjust, it will change, but they're not knocking buildings down in Texas, surely, because they, you know, we built this hugely beautiful building.

Nobody goes to it, and now we've run out of money and we're knocking it down going back land. No, it just changes. Like the malls, it changes into something else. Yeah, I very much agree with that. As I said, I think as long as you have 8 billion physical bodies in the world, they're going somewhere. And unless you think they're all going to stay in their box at home living totally virtually, you know, in that case, you don't need, right now we have, everybody has a home and a workplace, right? Those are two different things. So you've got 2x, the number of, you know, space per person, right?

And if you say, oh, everything goes virtual and technologically facilitated. And so now I stay in one little place, my little coffin cubicle thing, and I live in an expansive virtual world. Well, that would mean half the real estate, even if the population is growing. But like Matt, I don't think that's the way it plays out. Most people, people are social. And I think there is a thing about rubbing shoulders with people. One of the reasons people go to malls is not just for the shopping when you can do it on Amazon is to be with people around people. And I think there is going to be a need for people to get out.

I know people who have, whether they're totally separate offices, they can work at home. They are now being required to come back to the office, and they want to go back to the office. For things like mentorship and the casual conversations that you get, that even if you have the most incredible simulated reality, you can't do it online. So I tend to agree with mine.

I'm not sure movies theaters are a great example, because they are going down and literally about it. And shopping malls, What the hell? You know, the challenge is if you purpose build something really big, you know, that really can't be used for something else. I mean, so we had a very interesting case where we had invested in a data center. You know, they came out of the dot-com crash.

It had been built like Global Crossing just at the top of the dot-end and the dot-com crash. It was the most amazing data center you've ever seen. It was just like, you know, redundant everything. The only problem was after dot-com crash, hello. Oh, there nobody was, you know, we were overbuilt in terms of infrastructure. And what the hell do you do with a data center where nobody wants to put anything in it? So for a while, there were serious consideration of it saying, well, maybe this would be like a giant warehouse like back-end storage, like Iron Mountain. And you know, here you had this thing that they spent hundreds of million dollars building this incredible thing and you're going to use it for storage.

Well, you know, so eventually the world comes back in. You need data centers again. So we ended up selling it. Ah, now had we only held onto it now if you need a data center for AI, it would have been, you know, 2X where you're going, right? But I'm not sure that shopping malls are going to come back at shopping malls, or private clubs for that matter. But if you have this giant thing designed as a shopping mall, it's a little hard to retrofit them, right? And the interesting question is, you know, theaters may be slightly easier. Okay, maybe you retrofit it as an experiential kind of a place, which needs things.

There's a very interesting place here in New York where it's a virtual reality, virtual reality entertainment space. You literally come in, it's a whole empty giant, you know, retail. floor, the size of us in supermarket, where you put on a headset and you effectively are walking around in this experiencing a 3D environment, which is absolutely mind-blowing. If you have a chance to try one of these things, you've got to try it. But ultimately, where I come down to is I agree with Matt, that as long as you have 8 billion people, you're going to have somewhere between, you know, one and a half and two or two and a half physical places or structures, and that's real estate, and that's what we come

to. So it'll be a question of then, you know, when, you know, when. you rebuild when you demolish it and be built something new how do you convert who owns it where is it located and those are really interesting real estate issues which is what we're all here talking speaking of movies and one of the reasons is fresh is because my wife and i went to a movie last week which is david has so much of what you just said built into it the the movie is i think good luck have fun don't die and the basis of the the premises is AI has taken over and and in reality people are are so hooked on being in virtual reality that that's the future is that they sit there all day.

And so now, instead of sitting there all day and having to stop and go eat, we're going to put you in a pod and we'll manage you medically. And so you can be in this virtual world. We'll never leave and we'll have people change out your good tan and everything else. And so... It's like the Matrix. Yeah. Well, the problem with the matrix is the other way around it was using, you know, you know,

humans as the fuel for this computer done world. I hope we don't get to that, but there is a, you know, and again, really nobody knows. My friend Ray Kurzweil who wrote a book called The Singularity is Near believes that has projected that by 2045, that's, you know, 18 years from now, computers and humans will merge. And he means that really quite literally, that we will have one sort of techno-human centric, whatever thing.

You know, so maybe we are all living in the cloud or something. something. And that is so beyond the event horizon that nobody can figure out what that will look like. All we can say, I'm not even sure we can project at this point honestly 10 years out. We're looking now at the next year, 2, 5 max is the way I want to project anything given what's going on. But I agree with everybody that we will still need spaces. And for at least the next five or 10 years, the real estate industry is safe, I think, because it's a question of what to do with it and who has it and how do we all maximize value for us and for our investors? As they say, adapt or die.

What else are you going to do, right? Yeah. And just to add to the statistics, David was saying about, you know, obviously there's more human body. So we have a net gain of 73 million humans on the planet Earth every year. So that's a net gain addition. Every 14 years, that's an additional one. billion people. So just to look at it statistically, that real estate is got to be used somehow. It can't be like, where are we going to, where are we going to put all these bodies?

So like Matt and David said, it's got to change. And I think the article is a little bit oversimplified that there's other factors in play here. Well, hey, let's jump into our final fun news item from interesting engineering, China's water battery breakthrough can last 120,000 plus cycles, outlasting lithium-ion batteries by decades. Well, so the answer is that's an important. That fact by itself is important, right? Battery technology has lagged quite a bit behind everything else that's going on, right? The AI, if you think about the AI, on the one hand, which we've discussed is going, has passed this exponential,

takeoff kind of thing and you look at robotics I don't know if any of you saw the Chinese New Year spectacle a couple of weeks ago where the Chinese government did a whole big thing showing robots breakdancing and doing parkour and stuff you would never imagine doing you now have robots that can walk in your kitchen and unload your dishwasher and put away the dishes kind of thing so you have incredible stuff there microbiology and nanotechnology genetic and you know all that stuff is happening battery technology has been the one area which has lagged in some of this stuff, even though even if you have photovoltaic and other

kinds of solar power is increasing. But if this is actually translated to the real world, it is a big game changer because it means you can now have, you're not replacing batteries, it means you have giant data centers that can have a giant store of things and the way you build your infrastructure changes over time. So I think on some meta level, this is a really important big thing, but it's very much in the labs now. This is not a here and now. Got to change anybody's anything brought up to real estate in the next five years, I think, from here. But it's an interesting thing to keep note of. I just go ahead.

I was going to say the advancement, the batteries, what I see and what I hope for is as they come out better, you'll be able to ultimately store more energy for longer time. and in theory, okay, everyday use goes down in valuation because there's more stored up. Does that really happen? I don't know. It seems to be, hey, they'd be saving money, so we don't normally go in that trend in the U.S. We want everybody to pay more. But there could be advantages.

And then just the cycle being longer, better, rechargeable. It's fantastic because it helps make this transition into more renewable. more realistic. If I'm only going to have something that after 10,000 recharges, I pretty much have to replace the whole system, I'm not ready to make that move yet. And so I think we're getting step by step closer to being able to go in that route. And this is the start of it. But for me, I'd like to see more realistic use of energy preservation and use for, you know, use these batteries at peak hours so that the residents in these towns aren't paying these ridiculous electricity and power fees because you got these AI data centers sitting over there sucking up all the power at the

same time that's how when I read this article that was my first thought like maybe this can lower lower it down but you're still going to have to charge these batteries up you're still going to have to keep them charged so we're probably not there yet but as I said one step closer yeah just to add Another comment is this is definitely like David said this is more of like the horizon. This is very macro level and this specific article or technology may not change how we use EVs or portable devices But it's it's the start of more innovation that's needed for this industry as we're getting more into the whole virtual EV world right now flow batteries and are one-tenth of the capacity of lithium ion.

So we do see flow batteries being used in battery stations, but they're like 10 to 20 watt hours per kilogram. Lithium ion is 200 watt hours per kilogram. So this is just the tip of the iceberg in terms of innovation. I think this specific technology for flow technology batteries isn't going to be like the major game changer, but it's going to create, obviously, maybe it's the start of innovation to see what technology will actually prevail,

whether it's three years, five years, or seven years that will change the landscape in terms of storage, data centers, EVs, mobile devices. But I think this is just the tip of the iceberg, but not necessarily this technology, but just the innovation that's needed or that's lagging, like David mentioned as well, that has to be caught up to what is needed with all these days. devices and networks and centers that we're building or trying to build around the world. For me, I've been just waiting for these battery capacities to increase because I dirt bike, trail ride, and they've got all these crazy cool bikes out, but their capacity when you're really

getting after it is maybe 25, 30 miles. And most of our rides are there or beyond. And you don't want to get stuck out on the side of the trail with a dead battery, you can't just easily go get a gas can and fill it up. So we're like, come on, let's go. Let's get that capacity up. We don't care about 120,000 cycles. We care about the capacity. But anyway, just they're working on it. So it's, it's great to see they're making some advances and trying to figure it out. Well, hey, guys, that covers the news portion of our show. I'd like to thank our sponsors, United States Real Estate Investor Advertising, Real Expert Talks, and Universe Media Publishing. Of course, thanks to our guests, Matt Meredith, David Rose, Reza Montalabitport.

Don't want to love that. It's marbles in my mouth. Guys, why don't you let people know how they can connect with you? Let's start with David. Sure. David S. Rose at David at U.S.Remholdings.com. U.S.R.E.M. H-L-D-I-N-G-S.com. You can actually check out the marketplace itself at U.S.R.M. Securities.com. Remember, this is for accredited investors and qualified purchasers. So it's sort of the high end of the universe. In general, you can check out my website for more of my pontifications on whatever subject you feel like hearing a pontification about at David S. rose.com, D-A-V-I-D-S-R-O-S-E.com, which has a lot of other ways to reach me as well. Fantastic. Matt.

Definitely. Matt Meredith, Meridian Legal Advisors, you can find us at MeridianL-G.com. On the website, email addresses, contact, phone numbers, links to YouTube, Facebook, Instagram. I'm all over the place trying to make that social media appearance. What we do mostly is we are one-stop shop for asset. estate planning, tax strategy, and financial planning, all comes together to make sure that you have alignment and advice isn't given in silos. We work heavy with real estate investors building out the right structures to protect you and your assets from creditors. If you have

any questions, we're always there for you, give this call. Great. Reza. Yeah, so Reza, you can search Reza, R-E-Z-A, Inwe, that's our company name, I-N-G-W-E, another language that means leopard. But if you search for that, you'll find us, whether it's YouTube, LinkedIn, or even our website. Our website is I-N-G-W-E-D-C-A. You can reach out to us, and basically what we do is we take the investor out of that local mindset and allow international investment for international diversification in your real estate portfolio or arbitrage.

And that's what our expertise is. Fantastic. Well, thanks, guys. You're awesome. Again, I'm your host, James Brown. Feel free to connect with me by going to Linktree forward slash partner with James Brown. And if you want help on your investing journey, book time with me to see how we can work together by going to James Brown real estate.com forward slash coaching. Also, a huge thanks to our founder and producer Antonio Holman with United States Real Estate Investor. follow and subscribe to this month in real estate investing at this month in real estate investing.com or your favorite podcast app. If you run across any interesting news events or have suggestions for expert guests like today, feel free to email Antonio at Antonio at United States Real Estateinvestor.com.

And remember, when one door closes, another door opens to financial freedom. See you next month.