Commercial Real Estate Pro Network

J. Darrin Gross

I'd like to ask you, Rod Khleif. What is the biggest risk?

Rod Khleif  

I will tell you to, Today is June 8. And I have to say that because who knows what will happen to things are changing daily right now. But and I know this alehrer in a week or two, but But right now, the biggest risk that I have alerted my students to on several occasions is the debt markets. Okay, that I mean, it is crazy out there right now. And and I'm going to tell you that it when you're performing a multifamily right now, you need to do some worst case scenarios, like if you're planning on getting in, right now, the most common debt is bridge debt. And that is very, can be very honest debt. And, and because you have a business, you have a business plan, you got to adhere to that business plan. Otherwise, you know, what's could be non recourse can become full recourse. So it's very, very important that you do what you say you're going to do. And some of those have short fuses like three year timelines, and we could be in the midst of this recession in three years. So I would encourage you to do absolute worst case scenarios as it relates to interest rate, you know, take out interest rate, when you refinance, we just did, we just put 138 unit under contract, by the way, if if, if you were accredited, we it's a phenomenal deal. 54,000 A unit which is unheard of in an emerging market in Arkansas, so so if you're interested text partner to 72345, and get on our portal, because we'll be presenting that probably about the time this goes live. And it'll be a very short, it's not a big raise. So it'll it'll subscribe very, very quickly. But that that's a really good deal. But the point is, you know, we did worst case scenarios, what happens if the interest rates 8%? And can we still be okay? And yes, we could and so, you know, most people aren't doing that. Most people aren't, aren't stress testing these deal strongly enough? You know, and, and I think we're gonna see some upset when I'm, we're going to snap up some deals where they didn't do it right. You know, and I hate to say it, but that's likely going to happen, people are still overpaying, and they're not paying attention to that risk. And so I think that's the biggest risk right now. That's the first thing I thought of when you when you prepared me for that question earlier, Darrin, because I really, that jumped right into my head. So