4. Building Passive Income. An Interview with Doug Marshall.

Welcome. This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program you'll learn about the world of commercial real estate and find out why it is one of the largest investment opportunities in New York and around the world. Now here is your host, James Nelson.

Welcome to the fourth show ever of Real Estate Investing Live from New York. This is your host, James Nelson.

Welcome back everyone.

Last week, wow, what an amazing interview we had with Avis and Young CEO Mark Rose with the live studio audience. And today you all are in for another treat.

We are doing an interview with Doug.

Marshall who is author of Mastering the Art of Commercial Real Estate Investing. Doug is going to be a special guest on our show for the next future shows and so you're going to be hearing an introductory segment with him.

And then we've got a panel about.

Getting an education in commercial real estate. But before we get to that, let's give you what happened this past week in commercial real estate. Powered by the daily Beats. So stories that are driving the day. According to the New York Post, Facebook has signed a lease for more than 1.5 million square square feet of office space at Hudson Yards. The social media giant plans to keep its existing spaces at 770 Broadway, 225 Park Avenue south and 335 Madison Avenue. They're moving into the 78 story 50 Hudson Yards which is already 75% pre leased two and a half years before its completion. BlackRock will anchor the building. 50 and 55 Hudson Yards were developed by Related and Mitsui Futasan America as well as Oxford property groups while 30 Hudson Yards was developed by Related and Oxford. This is according to the New York Post. In other deals, Arik Lifchitz DSA Property Group has acquired 2928 41st Avenue in Long Island City from Jack Gutman for $47 million. The deal sold at a 5.1 cap. Also, Jeff Sutton's Wharton Properties has acquired 166 Berry street in Williamsburg for $20 million. The corner site for the development of 16,740 buildable square feet will be suitable.

For a new retail development.

Normandy Real Estate has also signed a contract to acquire the leasehold interest in 320 W. 31st St. From GMF Capital and Onyx equities for $88 million. The four story building spans 116,000 square feet and and is currently occupied by Turo College with only two years remaining on its lease. The Property also allows for a total development of 233,000ft. Finally, Bental Green Oak has acquired 685 Third Avenue from Unizo holdings for around $450 million. The office tower spans 651,000ft and stretches from East 43rd and East 44th street one block east of Grand Central Terminal. Unizo had paid 460 million. So taking a loss on this 31 story property which they inquired in 2017, Uniza has been liquidating its portfolio as it deals with a hostile takeover in Japan. They also sold 449th Avenue to Taconic and Teach Real Estate for 269 million. They sold 321 West 44th street to Related for $152 million. That was after paying 140, so it looks like they made a little money there. Sold 370 Lexington to Broad street for 190 million DOL and then 24 to 28 West 25th street to Savannah for $107 million. So now in financing news, Halpern Real Estate Ventures and Busy partners have secured $166 million condo inventory loan from bank of China for 565 Broome street in Soho. The 750 million dollar project comprises of 115 residences spread across two 25 story towers that stand parallel to one another. In real estate meets tech office space startup WeWork lost $1.25 billion in the third quarter. Ouch alone as expenses far outpaced $934 million in revenue. WeWork's bonds now yield a record 15% and its spread widened to a record 13.4%. That was according to the Wall Street Journal. And then finally, so we can leave on some good news here, Travis Kalanick's Cloud has raised $400 million from Saudi Arabia's public investment fund in a deal that reportedly values the startup at $5 billion. The controversial founder of Uber has started this venture under the radar. What the company does is buys cheap or rundown real estate, often near city centers, where it builds commissary kitchens, AKA Ghost kitchens. I'm not quite sure what that is that it rents to restaurants wanting to prepare food exclusively for delivery, like Door Fash, Uber Eats, Seamless, Postmates and grubhub. So for all of you listeners out there, maybe the advice here is to buy some vacant retail with restaurants that you can turn around and sell to that venture, as it would seem that they are in good financial shape at this point. So we're going to take a quick break from our sponsors and Then we'll be right back for our interview with Doug Marshall. So please stay tuned.

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Putting Our Clients First Avis and Young's Tri State Investment Sales Group sells multifamily office retail, development and specialty sales throughout the New York metro area. As experienced thought leaders in our industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter LinkedIn and Instagram amesnelsonnyc to learn more.

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I am now here with special guest Doug Marshall, CCIM and recent author of Mastering the Art of Commercial Real Estate Investing, how to successfully build wealth and grow Passive Income from your rental properties. Doug, welcome. Thank you so much for coming on the show.

Well James, it's a pleasure. Thank you for giving me this opportunity.

We're really lucky to have you. I know that you recently received a book award from the national association of Real Estate Editors. I know that after debuting your book on Amazon at the end of last year, you quickly rose as a top five book in real estate. So great to be speaking with the expert here.

Well, thank you very much.

Good. Doug, one of the first questions I wanted to ask you is why you wrote this book. Because after you give your answer and I've shared with my audience why we've launched this radio show here on Voice America. But what led you to write this book?

Well, it really started rather innocently about 12 plus years ago I started blogging and I blogged every other week and a half ever since for the past two 12 plus years. And it got to the point where I really enjoyed putting my opinion to paper and letting people respond to it. And a couple years ago, somebody came to me and said, you know, you really should be writing a book on this. And I thought about it for six months. That. That's that statement. And I decided that, yeah, that would make sense. And so what I did is, James, I just asked my wife, when would you like to go visit your sister for a week? And she said, she gave me a date, and I took her to the airport and I came back to my house. And for the next week, I went ahead and assembled all the blog posts that were evergreen, those that were timeless, and I arranged them and put them in a particular order. And then I decided that there were certain holes in the outline, and I filled in those holes with additional blogs that I was writing for in the next 60 days. And in a relatively short period of time, I had a manuscript ready to present to an editor. And so that's how it got started.

I've got to say, I've been doing this for over 20 years. And I'm constantly asked, James, I'm looking to learn more about investing. James, my son wants or daughter wants to get into the business. What's the book? Where do I get the book? And, you know, there's a lot of get rich quick books. There's a lot of, you know, advice out there or shows on if you want to flip homes. But if you really want to understand the principles of real estate investing, it's pretty shocking. But there's not much out there. And I don't know if you had found the same thing as you were thinking about writing the book. There's only probably a handful of them out there. So I think certainly there's a great need here.

I couldn't agree with you more. After I wrote my book and was at the editor's, I decided, you know, it would be kind of interesting to see what my competition is in this field. And There are over 6,000 books on Amazon under real estate investing. And so I started reading the top books that were on Amazon, and I was really kind of surprised and disappointed in the quality of. I really was. They were much too much geared towards the get rich quick schemes, or they were more like a kind of a checklist of how to buy a property. And I think there's a lot more to real estate investing than a checklist. I believe that there are real estate principles that you should be. Should be trying to learn and to make as your own. And one of the things that I found over the years is that I, you know, I was my, my background is in primarily in financing. So I've had almost, almost 40 years, not quite years of experience and of that I've been able to see my clients that are highly successful real estate investors and I've observed what they do to be successful and that is what the book is all about. It's not really so much about things that I've learned or at least that I've learned through my own experience. It's been more of what I've learned from observing my highly successful real estate clients over the years.

It's a great comment and I certainly feel the same way as being an investment sales broker. I've been fortunate to be involved in hundreds of real estate transactions, different types of asset classes, working with different clients, seeing all different profile of investors, different ways to put together real estate deals. So certainly do have a unique perspective. But beyond that I know, and you've also built over the years, you practice what you preach and you've built an impressive real estate portfolio and we're going to get to that a little later in the show. But you also, I know you did a stint as a managing agent so you know what it's like to be on site. And finally, you also have that very valuable CCIM designation and maybe just for the audience as well, because our listeners are learning how do they become more astute investors. What is that CCIM designation about and what has it done for you?

CCIM Institute is out of Chicago, Illinois and it is a professional designation that only 6 to 7% of all real estate professionals in the country have. And it's really considered by many to be the PhD of Commercial Real estate. It is excellent, just absolutely excellent education that you receive from them. And then you're also to be, you have a test, a three hour exam at the end after you've taken these four or five classes over the years. And it really splits the men from the boys, so to speak. They also require a portfolio of qualifications that shows that you've actually used the principles that they teach. They want to see exactly how you done that and how many transactions that you have been involved in. So it's a very extensive training and education that you get through the CCIM Institute and I could not recommend it more highly. It is an excellent way to learn the nuances of commercial real estate.

Well, when I saw the designation next to your name prompted me immediately to pick up a copy of the book because I knew it wasn't going to be a get rich quick scheme. Well, this is great. I'd love to dive into the book. I learned a lot reading through it. Let's just from the start talk about what are the advantages of investing in real estate. You mention four differences in your book from the stock market.

Actually, James, there's really. There are seven different reasons and I'll see if I can go quickly through them because I don't want to get bogged down on this. But the number one is cash flow. You know, the nice thing about owning commercial real estate, whether it's apartments, office, retail, whatever, is that it generates a positive cash flow. As you know, most stocks, stocks and bonds have very little generate any type of income for you on a regular basis. They have a little bit, but not really enough to speak about. Secondly, you can defer your capital gains through a 1031 exchange and that's an extreme advantage. So with a stock, you sell your stock and you're going to pay a capital gains tax on that particular sale that year. Well, we can defer our capital gains tax by buying another property, a like kind exchange, and defer that capital gains tax to sometime in the future. And if you live long enough, it might, you might not ever have to pay your capital gains taxes. And then depreciation is a significant advantage. The depreciation from the property shelters your income. And there are situations where, and it's happened to me before, where you actually generate a tax loss that year on your properties, but they also generate a positive cash flow. So it's kind of like a win win situation. You get a tax loss and you get cash flow. And that's something that you can't get with any other type of investment. And then you get to use debt to purchase your property. So instead of paying a million dollars for a property, let's say you put a loan on the property for 700,000 and you put a down payment of 300,000. So you can have debt to be able to buy a larger property than you would normally be able to do where on stocks you just have to put your money up and that's whatever it is. And by having that debt on the property, you can improve your cash on cash return significantly. And then one of the things that I find that's really interesting is that the concept between efficient and inefficient markets, an efficient market is a market like the stock market where there is one price for that stock and you, you can't buy it at a bargain price. All you can do is buy it at whatever the price is at that particular point in time. An inefficient market is real estate, because there's no governing mechanism to determine what the value of that property is. It's whatever the buyer and seller determine is the price. And if you're a savvy investor, you can buy a property at a below market price. And that's really one of the exciting parts about being a real estate investor. And then the sixth thing is that real estate owners have considerable influence over the outcome of their properties. They can make improvements to the property, they can change the management, they can re tenant the building. So they have considerable influence over their investment, where if you own a stock or bond, you have absolutely no influence whatsoever. And then finally, in my opinion, owning real estate is by far the best way to achieve financial freedom through cash flow and generating passive income. So those are the seven reasons why I am gung ho on investing in real estate over any other type of investment.

That is a great overview and really looking forward during our time today to go and dive deeper into some of these topics. But you bring up so many great points and I'd like to probably add an eighth, and that is appreciation. And you know, it's funny that this show entitled Live from New York, Excuse me, Real Estate Investing, Live from New York. And for my first guest, I'm interviewing someone from the Pacific Northwest. But throughout my career and watching successful clients purchase properties, add value, turn around and sell, clearly there is value creation. Clearly. And the hope is to get to some positive cash flow. But I was taught very early on that how you make the big multiple is on the sell. You get in at a good basis, you add that value. But certainly if you catch the right time in the market, if you are successful in picking the right areas, that you make your money when you sell it. And it was refreshing to hear some of the basic fundamentals in your book. We're in an interesting time in New York real estate where we might actually be going back to some of the fundamentals where you do buy property for its cash flow. And I know you mentioned debt as well, which we're going to get into, and how that can help create some positive leverage there. But would you say appreciation is also something that's on your list and that you consider when buying.

Oh, absolutely. Appreciation is the name of the game. I mean, and you think about it, James, over the last, well, since the Great Recession, what have we seen? We've seen the cap rates of properties slowly compress over time, right? And with that compression in the cap rates, the values have crept up just that much more. And really crept up is not really the right word. It's almost zoomed up in some places. And you can, as a result of what is taking place in the market these days, can see substantial increases in your net worth just from owning one or two rental properties that do extremely well. So yes, I'm all in favor of appreciation. The reason why I didn't included in that list is that over the years, as you know, the stock market has done well and property or stock prices have appreciated over time as well. So I didn't consider that as necessarily a difference. But I would agree with your concept that appreciation is one of the reasons why you're buying that property to begin with. Because you know that in future years, years when you sell that property, that you're going to receive a substantial increase in the equity that you have in the property.

Absolutely. And that's really the multiplier effect as well. For those of our listeners who are new to investing and we do get, we're expecting a lot of seasoned and veteran investors to be tuning in as well. But for those of you who are learning some of the terminology, when Doug refers to a cap rate, he's referring to a capitalization rate. That's a rate of return before debt service is factored in. So really think about it at the property level. And the simple example would be if you bought a property for a million dollars and it has $100,000 of what we call net operating income or NOI. So that's looking at the gross income that you collect minus the expenses, the operating expenses at the property level. If you subtract that, you get to a net operating income. So in that example that I just gave, if there's $100,000 of NOI on a million dollar purchase price, you have a 10% cap rate, which would be pretty unheard of here in New York City. Maybe you're seeing it elsewhere. But just for the simplicity of the example, the subtitle of your book is how to successfully build wealth and grow passive income from your rental property. Talk a little bit about building wealth and this passive income as one of the biggest draws to investing.

Let me begin by defining, I want to focus in on achieving financial freedom, which is the draw that I really like about real estate. And the way I define financial freedom is it's achieved when your passive sources of monthly income consistently and significantly exceed your monthly personal expenses. When that day happens, you no longer have to compared work for a living. You know, congratulations, you can retire. But notice I said passive income and passive income is cash flow that's received that requires little or no effort to maintain it. And in my opinion, real estate is by far the best source of passive income that you can invest in. Unfortunately, James, most people today, they've been incentivized and brainwashed into investing in assets in their retirement accounts that generate little or no passive incomes, either stocks, bonds, or precious metals, things of that sort. And without passive income, you're really highly unlikely to ever achieve financial freedom. It just won't happen. So, you know, there are a lot of people that will push back on me and say, well, why is it so important to generate passive income? I mean, I'm highly successful, I'm very satisfied with the return I'm getting on my retirement accounts. But if you fast forward to the day that person retires, how is he going to live off his retirement accounts? He lives off them by slowly liquidating them over time. Right. And what happens if he lives longer than his assets do? Well, if he does that, he's toast. He ends up like most Americans that are dependent on Social Security, family, friends, or charity. That's not the way it is with real estate. You do not live off of liquidating your rental properties slowly over time. You live off the passive income that's generated from your rental properties. And so when your passive income from your rental properties coupled with your future Social Security checks consistently and significantly exceed your monthly personal expenses, you've achieved financial freedom. Reality is you can live to be 120 years old and you'll never have to run out of money. That is why owning real estate is far superior to owning any other type of asset.

Great point, but I do want to make the one distinction because for those out there who hear passive and say, oh, okay, well I can sit back on the beach and just get my rent checks. And, and there are some types of investment properties that would afford that, and we call them triple net. That's your cvss, your Walgreens. And those type of properties usually have, whether it's 10, 15, 20 year leases where the tenant is responsible for literally everything in the sense that they have to pay all the expenses. If there are repairs that need to be done with the property, the hope is you just get that check on the first of the month. Even with those, and I'm sure you'd probably agree that things can come up. But going to the other end of the spectrum, multifamily, which we can talk a little bit about later, depending on if you have third party management or if you manage it yourself, passive doesn't necessarily mean hands off. Would you agree with that?

Absolutely I would. I couldn't agree with you more. There's really, James, I think how I would say it is that if you're going to be an investor you need to be hands on in to some extent on anything that you do. But personally, for example, I don't manage my properties. I have property management companies that do the work for me and they have on site people. Most of my properties have on site managers. All I do is I manage my property management companies and that's the way I do it. And so I look at the financial statements every month and I make sure that there's, if there are any blips in there to be able to ask questions and things of that sort. And I, from time to time I go out and inspect my property so that the managers, the manager, on site manager knows that there's somebody that's actually interested and, and will maintain that property is at a much higher or better level than somebody that never goes out and visits the property. So yes, you're correct. There's no such thing as totally passive income. But it is from the standpoint that I'm not involved with the day to day affairs of any of my properties and I receive these checks in the mail and James, it's kind of fun. You know, I go, I, I go home and oh, here's a new check, here's another check from this is from this property. And right now I have seven properties that, that I, that I have an investment in. And in all of these properties I'm just one of several investors in a property. Generally there's somewhere between six and maybe 10 people that are, I'm investing with on any given time. But I'm not, I'm not involved with the day to day affairs. I get to see that those, those checks come in and I, you know, get to have the enjoyment of having that come in. And it's. And they come in automatically. Yes, I need to, I need to make sure that my on site managers are doing a good job. But that's the, that's really the only role I have at this particular point in time.

I'm sure you're getting a lot of people's attention right now. The idea of checks in the mail, I'm sure now they're auto credited but really nice to have that income stream. We'll talk about the financing aspect a little bit later. But also being able to pay down a mortgage over time and that principle of building equity within a Property as you pay down the loan as well. So one of the things we talked about before was how you're in mortgage brokerage. I do investment sales. There's a lot of service providers in this business, whether you're an architect, whether you do title, whether you're an attorney, accountant, a lot of professionals who help a real estate transaction along. And yet many of them do not own real estate. So why do you think that is?

Well, I talk to people on a regular basis and give me a call and they're asking for, you know, they asked, you know, 20 questions and you can tell that you finally get to asking them some questions. You find out that they're looking at purchasing a property for the very first time. And so they have, they're very much willing to buy one, but they just, they just have this, you know, they want to get all their questions answered. And reality is that person will call me again a year later and they haven't bought a property yet. I really think that it all boils down to fear. And I understand that. I very much can relate to that. There's two different types of fear that people have. One is fear of failure, and the other is the fear of the unknown. Now, fear of the failure is all about looking foolish in the eyes of family and friends and of things go wrong. But I think it's based on a mindset of you win or you lose. And instead we need to adopt a different mindset, you know, one of either you win or you learn. And everything we do either win. You know, James, we either we make the right decision, we can do the happy dance or whatever, or we learn an important lesson so next time we have a better outcome. And I've learned that highly successful real estate investors, they understand and practice this truth.

I was just going to add on that in New York, for example, the time it takes to transact. It's a very tight time frame in this market. When you buy properties, you don't have an exclusivity period, you don't have a due diligence period. You need to come in and you're competing for that property. Property. During that process, you might even be negotiating a contract. There might be other contracts that are out there. So you're specking all that time and money when you don't even have control of the asset. And then when you finally sign on the dotted line, that's a non refundable deposit, a hard deposit, you put in, in many cases, a 10% non refundable deposit. And if for whatever reason I mean, the seller's responsibility at that point is to deliver free and clear title, meaning they have to be able to demonstrate that there's no liens against the property, that it's not encumbered. But I mean, as far as representations, are there issues with the property, whether it's environmental, whether it's structural, what do the leases look like? Of course there's going to be some representation and an attorney will help guide you through this. A seller will typically represent that leases are true and accurate and there's no side deals. But you know, you're taking a big risk. You mentioned fear to be able to sign on that dotted line. And I think that, you know, over the years people say, well, look, what if I can't raise the capital? What if the financing doesn't come through? Now I do realize that being said, and after we're going to have to take a short break to hear from our sponsors, but I do realize in other markets you do get that diligence, period. You do have some time where you don't necessarily have hard money down and that can certainly minimize the risk. So with that, Doug, we're going to take a quick break from our sponsors and we'll be right back.

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Welcome back to Real Estate Investing live from New York. This is your host, James Nelson. And now we are going to jump into our panel discussion and for the duration of the show, we are going to be talking about higher learning today. And is it just for aspiring real estate investors or for veterans in the industry? So for our panel, thrilled to have a recent grad from a master's program, someone who actually started a master's program and someone who is an instructor right now for ccim. So I to want we'll each give them their credit and individual intros as we dive in. But Carly Weinreb, let's start with you in full disclosure, had the pleasure of working together for several years. So Carly, you do have a background in the real estate brokerage world, but you made the decision to become an investor. Like a lot of listeners to our show, they are listening. They want to know how do I learn about the business? How do I become a better investor? So for you that meant taking a year off going and getting your master's degree from Columbia University. And now you're looking forward to beginning your investment career. So I guess the first question to get us started, Carly, is why did you decide to go for the master's.

Program when you did so hello everybody, everyone. I'm glad to have everyone listening. So honestly, it was a tough decision for me. I had four amazing years working in brokerage on the investment sales side here in New York once again with James, which was a great way to start my career. I think brokerage is a really great intro into the business because you get to see a lot of different aspects. You also get to see a lot of different asset classes and potentially depending on where you're working, you can see different markets and kind of get a feel for what interests you. So I learned through selling buildings that I really wanted to be on that ownership side or that investor side. And I thought to myself, okay, I could go start now and just go directly into a career switching, you know, from brokerage into investment. But I really thought that I'd want to build up my confidence level before doing that. And for me, I learned about this program at Columbia, which was an amazing experience. It was full time one year but three semesters. And I had taken some courses at NYU which were also great. But those were a little bit of a different environment in my opinion because there are a lot of the time after work, it's also people coming in and out. It's not so much a dedicated one year program. So for Me, the decision came just that I really wanted to focus and shift gears and do so in an efficient and effective way.

Perfect. Well, that's a great way to kick things off. And I think next we'll hear from Dr. Hugh Kelly, who's former chairman of the Counselors of Real Estate and now the special advisor to Fordham University. And you actually helped create the Masters of Real Estate program. So, Hugh, why did you start this program? Why did Fordham start this program? And who are your typical students?

Okay, thank you for having us all on. James, this is a rare privilege. So it's rare that you get a chance to be president at the creation of anything. And Having taught at NYU for 32 years, I had amassed a lot of information about the program and also had a chance to observe graduate programs in real estate all around the country. So this is a chance to try to select the best of what I had seen and then add in some other elements that were not typical in programs. All of with the idea that students need to learn a few things. One is what is it that they need to know? And that's a knowledge thing. Then what do they need to know how to do, which is a technical thing. And beyond that, if you're going to be an effective executive in real estate, you have to know how to make good judgments. How do you implement what you're learning? Then, as you know, real estate affects so much in the society. So how do you make good decisions that have the ripple effect that's beneficial not only to you as an investor or you as an operator, but to the society that you're part of?

And who would you say your typical students are in the school? Do they have experience in real estate? They're looking to hone their craft. Are they interested in getting into investment?

It runs such a huge gamut, and I think that's one of the advantages, that real estate is a very, very broad field and it has many possible entry points. So we occasionally get someone who's coming right out of an undergraduate business school and wants to focus now on real estate. And we've had folks who were military veterans, some retiring as commercial airline pilots, who had a body of savings that they wanted to invest in real estate. And like Carly, they wanted to know how you could do that intelligently and effectively.

Perfect. Last but not least, Blaine Strickland, who is founder of HBS Resources. I'm a long term friend and client of yours, so thank you so much for joining us and coming up from Florida for this. Blaine, you received your Ms. In real Estate from University of Florida. Then you went on to get your CCIM designation and now you are an instructor for ccim. So I want to hear about kind of that trajectory. But before we do for the audience, can you tell us what CCIM is?

Sure. Ccim, four letters. CCIM is an acronym that means Certified Commercial Investment Member of the CI Commercial Investment Institute. It's headquartered in Chicago. It's a designation that about 15,000 people on the planet hold. There's a process to go through to.

Get that designation and talk about why you originally went for that CCIM designation after having received your master's degree.

So I transferred to the University of Florida because it was one of the few schools back in those days that had a real estate program. There were actually six professors of real estate back in those days, some well known names and. And I had an internship with an appraiser. He suggested that it's a graduate degree world. So I stayed another year and a half, wrote a thesis, got a master's degree, and then was the first guy hired by CBRE in Tampa in the early 1980s. By 1987, I had my CCIM designation, which meant that over those first five years at CBRE, I began to take these classes. There were many benefits. One was that the CCIM program really focuses you on transactional value of this information. In other words, I had learned it from an academic standpoint, but it really began to help me see how to interact with players and make the information actionable. There's also a network element to it so that there are many designees around the planet. You have an opportunity to interface with those people. There's a big focus on continuing education. So it was really a decision that I have benefited from greatly over the last 32 years.

So this is a great way to set the stage and kind of see the different points through an investor's potential journey in higher education. So I want to come back to Carly now. Carly again, taking a year off, full immersion. There's the cost, clearly, there is the time element. I think you talked a little bit why you made that decision. But for the listeners out there, why would they want to do what you did, take that year off? Can you talk a little bit about your experience? What were you doing in the. The classrooms? How applicable would you say it is to beginning a career as an investor?

Okay, so first off, I was definitely a little bit stubborn about going full time. I don't know if you remember, James, but I insisted that I would work and go to school.

We tried, we tried I didn't want.

To lose you, even though they said it was full time. And for me it was a hard decision. So I totally understand everyone out there that's having a tough time kind of going through that battle and weighing their options. That being said, I felt like I got the most out of my time studying because I was solely focusing on studying. And when I decided to make that change, I felt that my brain and the way that I thought about things shifted a little bit because I just had more room to kind of think about things in a different way and I wasn't sidetracked with obligations. That being said, it is a big sacrifice. But real estate as a business, I would say you have to be a long term thinker if you want to be on the investment side at all. Because even if you were to work and start investing in deals, a lot of the time, you know, deals, money from deals is not realized until you sell the asset. Unless you're buying an income producing asset that is off the chart returns for any value add people or development people, you're not going to see that money till later anyway. So you have to be able to think about the big picture. And if you can do that and if you are in it for the long haul, my opinion is it is a great opportunity if you find a program that fits your needs and fits your desires and you get accepted to take that time in the classroom. We did a little bit of everything. It was a really unique experience. I, to be honest, was not exactly sure how much would be finance focused, how much would be design focused. And what I found was it was a really great mix and it all culminated into our big capstone project at the end of the year, which was basically a company or a few different companies gave us options of deals that they are actually working on that are live and us as students got divided up and we each had to run through that deal as if it was our own from the start. So I actually worked on a deal, 550 Washington street that Oxford Properties is currently developing and they're actually putting Google in. So I had to reimagine that I was the developer going in on there.

Did you secure Google when you were developing?

No, I did not. And the reason being, because I hope.

You didn't pick Amazon.

I got blocked out of my head. I did not pick Amazon either. I went for a little bit of a different strategy similar to the one Vanderbilt model, which was a lot of shared office space and amenities for the tenants. But, but the important thing about that was that it made us really think about everything from top to bottom as far as a deal goes. And I think that's what's most important to think about when you're learning anything about the business. And if you want to take that next step is think about the big picture. Don't focus too much on one thing, because you really have to be able to do it all. And another thing they really drilled into us was the importance of market knowledge. And that's another reason why I love that I started out in brokerage, because almost anyone can learn how to run the numbers, and almost anyone can learn how to do some of these kind of routine things. But if you don't get the numbers right and you don't understand the market, that's when the deal's going to fall through. That's when the deal is going to fail.

Couldn't agree more. So, Hugh, you had the chance to help build out the course load. Talk about the various courses that a master's student would. Would take. What are the different areas that they would study?

Well, we set it up with some core courses, and they're in sequence. And you certainly want to do market study early on. You want to know where value comes from. If you know what makes for value, you can basically do anything in this business. You can lend, you can build, you can operate, but it's all about value creation. You want to learn some serious technical skills. So doing analytics, learning cash flows, learning the layers and the structures of financing are courses that you want to take. We have a track for people who are less interested in finance per se, but are interested in construction and in development. And so obviously, you want courses there in design, in process management. So people have to make some choices in that. Then there are things we believe that students need to think about to help make good business decisions. Decisions generally, I think unique among real estate advanced programs in the country, Fordham offers a course in ethics. And we require it because when you think of the last several times that real estate got into major trouble, it didn't get into trouble because people didn't know how to run numbers. It got into trouble because people used numbers in ways that didn't think through the consequences of those actions. So we want that to happen. And then lastly, and I know this is also a feature of Columbia's program as of most, you want to have some kind of a capstone experience. You want to have a place where you bring together all of the elements of your learning into a case and.

Have.

Instructors and industry professionals looking over your work and saying this works, this doesn't.

Perfect. And one quick question before we go to a break. Your instructors and same question for Carly. How do you keep it current and relevant? How would you respond to that?

Well, we use people from the industry here in New York primarily as our instructors, people who are working on real estate problems and issues in law and accounting and development on a day to day basis. And so one of my jobs in the program is to chair the curriculum committee and to make sure that not only are those courses relevant, but they're also rigorous enough to withstand what a graduate program should have in terms of demanding intellectual content.

Perfect.

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Thank you for tuning in this week to Real Estate Investing live from New York. Please join your host, James Nelson for another program next Tuesday at 7pm in New York, 4pm Pacific Time on the Voice America America Business Channel. All shows are rebroadcast Wednesday mornings at 7:00am Eastern Time, 4:00pm Pacific Time, as well as always on demand. We'll talk again next week.