[00:03:21] Moses Kagan: It’s good for our country to have educated people. It gives you context and history, and humanity’s made a lot of mistakes over the last, whatever. It’s 5,000 years of civilization and good to have some background so that we don’t keep repeating the same ones over and over and over again. It’s important for, its.

[00:03:40] Moses Kagan: Professionally though real estate’s gotta be the field that, or at least one of the fields that has the highest upside without being particularly dependent on having credentials. The thing about real estate is like, where else can you walk into a bank and be like, Hey, can I have 20 million? And they just give it to you.

[00:04:00] Moses Kagan: That’s like insane. Like if you try to do that to buy a company or a piece of art or I don’t know what else? Like zero chance. But I personally have signed on loans for like, I don’t know, maybe like a hundred million worth loans right now. And like that’s insane. Like I’m just a God. And I didn’t get there on day one, but that’s where we’ve gotten to after, you know, whatever it is, 14 or so years in the business.

[00:04:23] Moses Kagan: And so my point is like, there’s just no other field that’s like that. Maybe investors care a little bit about, you know, where you went to school or something very like really early. But the truth is that it’s not really a gating item. Like people can do really well without having gone to college or having gone to some no-name school.

[00:04:41] Moses Kagan: Like it’s really about hustle and being honest and taking care of your partners and your customers.

[00:04:49] Robert Leonard: For those who are listening, a lot of people are kind of at this important junction in their life where they’re about to start formal, traditional, secondary education. Or maybe they’re at a point where they’re considering going back, maybe they already have a bachelor’s, they might go get a master’s.

[00:05:03] Robert Leonard: Would you have done things a little differently than you did if you knew what you know now?

[00:05:07] Moses Kagan: No. I mean, Let’s see. I have derived an enormous amount of benefit from, I went to Andover and then I went to Princeton, and I have like really good networks, I would say, or decent networks from those places. And those have been valuable to me in terms of, well, just in my life, I mean in all kinds of ways, which we can talk about if you want.

[00:05:24] Moses Kagan: And by the way, like I tell people I have a master’s from LSE and everyone’s like, oh, you must have got a master’s in business administration or, or master’s in finance. And my master’s is in history of international relations and I barely got that master’s because I had already got a job by the time I was like sort of deep into the program.

[00:05:41] Moses Kagan: And I like my appetite for writing long academic papers when I already had like an investment banking job lined up was like approximately zero. So I sort of got that degree by the skin of my. That master’s I think was superfluous and more or less a waste of time. It did lead me to London and that led me into investment banking.

[00:05:59] Moses Kagan: And I mean obviously like one thing leads to another in your life. I would say in real estate though, like certainly get a bachelor’s because it’s a good thing to do in the world. You do not need a postgraduate study to be successful at real estate. I mean just it’s a complete waste of time and.

[00:06:16] Robert Leonard: I do think higher education has some value, like you’ve said, for various different reasons.

[00:06:20] Robert Leonard: Even if it’s not just educational, it could be relationship-based, networking, kind of just non-educational things that you learn, time management, how to show up, how to, you know, just these things that are intangible. So I do think there’s some value there, but I do often joke that I’ve learned more from Buffett and Munger than I have my little library that I have upstairs.

[00:06:35] Robert Leonard: I’ve learned more from that than I have my traditional education. I know you feel similar. I know you recommend that everybody reads Buffett’s partnership letters. What are some of those keys, ideas and principles that you’ve learned from Buffett and Munger, and how have those really helped you in your real estate investing?

[00:06:49] Moses Kagan: Absolutely right. If I were going to recommend someone going into business to read one thing, It would be the Buffett Munger letters, because I think it’s like, it’s basically like getting an MBA and it’s whatever. I think you can get it for free on their website, but I think it’s like $14 on Kindle or something like that.

[00:07:04] Moses Kagan: And just like go read that before you go even think about an mba. The other ones that I wish that I had read, so if you’re going to read two things, I would say the Bezos Letters, which are available in a book called Invent and Wander, also unkind. And the reason I say that is because Buffett’s extremely good on like investing 101 type stuff.

[00:07:26] Moses Kagan: He is admittedly like not an expert in technology and also in retail, and so bezos’s letters kind of fill in some gaps in the Buffett stuff. That’s the second thing you should read. Going back to Buffett though, I mean, look, it really is like a pretty well-rounded business education, so pulling out one or two key ideas is kind of challenging.

[00:07:46] Moses Kagan: But I think for me, well, there’s a couple of things, but one is, and actually this is Munger’s line. The concept of business as a seamless web of deserved trust just totally resonates with me, and I’ve sort of tried to have that concept permeate my entire like business career since coming across the concept.

[00:08:08] Moses Kagan: So again, seamless web of deserve trust. So business is basically all business, real estate. Every other kind of business is just relationships. And those relationships take various forms. It’s borrower and lender business and customers, investors and business like you name it. It’s a web of interlocking relationships.

[00:08:26] Moses Kagan: And almost all those relationships are documented in some form or another, like there’s a contract or there’s an agreement or whatever, but many of those relationships are not documented. Like I have contractors, like general contractors who have done tons and tons of buildings for us. I mean, when they do construction for us, there’s a construction agreement, but our relationship with them is not really about any individual construction agreement.

[00:08:50] Moses Kagan: It’s about the fact that we keep doing business with them and they keep doing right by us, and we do right by. And so the relationship is not documented at any one contract in any way. Even if you’re a relationship with someone is documented in a contract. The truth is that enforcing a contract is extremely painful and expensive for everyone like you.

[00:09:11] Moses Kagan: The last thing that you want to do is have to go to court to like get some judge or whatever to vindicate your particular interpretation of the contract. Let’s fri. You know, years and expense and heartache. It’s like a terrible use of energy. So what does that mean? So it means that what Manga is getting at with that concept, seamless web of deserve trust, is like you want to conduct your affairs in a way that allows you to have all these relationships that allow you to get things done with a minimum of nonsense.

[00:09:42] Moses Kagan: A minimum of transaction costs, a minimum of. And it smooths your past. It allows you to do big things, which require a lot of coordination among a whole bunch of different parties without paying the cost of these tolls that pop up along the way of all the getting involved in these little negotiations every time, and enforcement and all that stuff.

[00:10:04] Moses Kagan: I think that that’s probably the most important concept. We can talk about more concepts if you want. I got a whole bunch of ’em. We can go through ’em, but that’s the most important.

[00:10:13] Robert Leonard: Yeah, I do. I want to ask for one or two more, but before we do, I have to ask, are you a Kindle guy? And I go back and forth on this.

[00:10:18] Robert Leonard: You mentioned Kindle twice, and I always, I debate with myself, do I want the physical book? Do I want the Kindle? And I, I love both, I love holding a physical book, but there’s so many like pros to having a Kindle too.

[00:10:27] Moses Kagan: So I’m curious, how do you read them? I go back and forth too, for many of the reasons that you just described.

[00:10:32] Moses Kagan: I come down on the side of Kindle and the reason is that like I’m a reading addict, right? Like I read quickly with high comprehension and I just absorb books and I regard Kindle’s ability to allow you to basically access like any book instantly, wherever you are as. It’s one of like the absolute marvels of the modern world, particularly when you think about how scarce books used to be for almost all of, I mean, obviously for most of the type of humans have existed, but we’ve only had books for not that long and for a very long time they were limited to absolutely the richest people.

[00:11:07] Moses Kagan: Just a quick story. My family are Jews from Eastern Europe, and you know, that was not a great place to be Jewish for a very long time. And my mother always imparted to me like how precious physical books were. Like the idea of throwing away a physical book is like, it hurts me inside. And it dawned on me at a certain point that it was because she got that from her mother, who got that from her mother, and these people were poor.

[00:11:30] Moses Kagan: Like having one book was like a miracle. And now I’ve got this little $50 device that I can get any book in the history of the world instantly. It’s like it’s just a miracle for someone like me. So anyway, sorry for the digression, but that’s your answer.

[00:11:45] Robert Leonard: Yeah, it’s crazy. I have this little six inch phone that I have right here.

[00:11:47] Robert Leonard: You know, for those who are watching on YouTube, you can see I just held up my phone. You said you access hundreds of thousands, millions of books within the next five minutes. I mean, it’s crazy. And what I also really like about Kindle is you can highlight and leave notes in the book, and then you can search those notes like.

[00:12:02] Robert Leonard: A lot of times I’ll remember a concept, but I don’t remember exactly what book it’s from or et cetera, and I can search those highlighted notes that I have within the Kindle lab, and I think that’s amazing. Then the flip side is I’m like your mother as I just, I love holding those physical books. I have 350 books upstairs in my living room.

[00:12:16] Robert Leonard: I have like my own little personal library. It’s like a thing I collect. I just, I love physical books. I go back and forth on the two.

[00:12:22] Moses Kagan: There’s a politics professor named Maurizio Viroli who was, he was Italian. I’m going to tell you what he said, but you have to imagine it in like a wonderful Italian accent with like a resident voice.

[00:12:32] Moses Kagan: And he used to read this translation of a passage from Machiavelli and Machiavelli when he wrote The Prince. He was in exile from Florence where he lived, and he was writing The Prince as like a gift to try to get back in the good graces of the government. And he wrote about every night putting on his finest clothes to go into his library and commune with the ancients.

[00:12:54] Moses Kagan: And the idea was that like via a book, you can talk to like the greatest minds in human history and that we ought to dress up when we do that because it’s so valuable. That is a sign of respect. I mean, that just always stuck with.

[00:13:07] Robert Leonard: That’s awesome. You mentioned you didn’t really have definitive mentor kind of in your real estate journey.

[00:13:12] Robert Leonard: Do you think part of that is because you read so much? I’ve always kind of been of the belief, you know, I have a lot of newer investors who come to me via the podcast or social media or however it is, and they’ll say, you know, I can’t get started because I don’t have a mentor. I never really saw it that way.

[00:13:25] Robert Leonard: I always saw it as you have these books, you have these podcasts, you have these blogs. I mean, you can access anybody. And I personally think that that is like having a mentor and you know, I read your blog and your tweets and things like that, and I felt like you’re my mentor even though you’re not mentoring me one-on-one, but I have all these pieces of content that you’ve created in books and things like that.

[00:13:41] Robert Leonard: I’ve always felt like that’s a form of mentorship. Do you kind of think of it that same way and have you, has it helped you that way?

[00:13:46] Moses Kagan: Yeah, definitely. I mean, I didn’t have a mentor what I got, which was of incalculable value. Let me back up for a second. For whatever reason, I went to boarding school and I, when I got there, I was 15 years old and I don’t know how I did that, why I did this, but at a point I sort of decided that I was not only okay with, but wanted to be the dumbest person in the room as much as I could be.

[00:14:11] Moses Kagan: So I ended up with a group of friends from that school who are just like enormously accomplished people. Just in many different walks of life. And that group has helped me in all kinds of, they made my life in a lot of ways, and one of the earliest ways that they made my life was we started a company together.

[00:14:29] Moses Kagan: Many of us, when we were 20 during college, it was like the dumbest company in the entire world. I mean, we did knowledge management software, like, which that’s like something that big companies buy, and none of us had ever had a job before. So like it, it was really one of the dumbest things you could possibly do.

[00:14:44] Moses Kagan: Right. We set up a company and we convinced some investors who are not very smart investors, , to be completely honest, to give us like 750 grand to build this knowledge management software. I took a year off from college. It was like a complete disaster in every way except. It was like you can just like weave your fingers around and like say some magic words and now you have a company and you can go out and you can convince people to give that company money and then you can have a business like that right there.

[00:15:15] Moses Kagan: Once you like internalize that, that’s a superpower. Right, and so we’ll talk later I imagine about how I got into the business and all that stuff, but like I didn’t have a mentor. But having those guys show me that that was possible was incredibly important. Then later on I figured out all the real estate stuff, more or less on my own from reading and talking to people and whatever.

[00:15:39] Moses Kagan: But I did have people show me that the fundamental act of creating a legal entity and convincing other people to give you money to do something with it was possible.

[00:15:50] Robert Leonard: Before we get into your first deal, I do want to talk about your first deal and kind of get into some of your real estate stuff, but I have to know what happened with that company and have you stayed in touch at all with those investors?

[00:15:59] Robert Leonard: Have done any of ’em maybe been in your real estate deals? Like what? What happened?

[00:16:04] Moses Kagan: So the company failed. I mean, we arranged an acquisition. This is like, so we started the company probably in like 2000 ish, 2001. Worked on it for a year. Didn’t really go anywhere. And by the way, like I was an enormous drag on the company.

[00:16:19] Moses Kagan: Like I was the vice president of business development and I developed no business. So yeah, I think probably those investors would’ve wanted nothing to do with us ever again. So, yeah, no, it was, what was valuable there was the, as I said before, the showing me what was possible. Nothing really ever came of the company itself.

[00:16:36] Robert Leonard: So let’s dive into your first real estate deal. A lot of people listening to the show are pretty early on in their career, so I think they’ll find it useful. Tell us about that.

[00:16:44] Moses Kagan: And I want to be real. I’m going to be totally transparent. I always, you know, that’s, it’s important that people know this. Our first deal.

[00:16:49] Moses Kagan: My first deal, first of all, I didn’t even find it. My brother found it, and second of all, my parents put up all of the money for it. I think we paid, like, I can’t remember if we paid one six or one eight, but we put down 35%. So whatever, you know, whatever that number is, I didn’t really have any money at all at that point.

[00:17:07] Moses Kagan: They put up the dough. And I like to say that because I, obviously you can get into this business without family money and many people who have done way better than I have got in with no family money. But I just want to be clear that I did have that advantage along with a number of other advantages, which we’ve already talked about.

[00:17:22] Moses Kagan: We’ll talk more about, I just don’t want anyone to get discouraged because I, you know, I had a leg up, so I want people to know that. But yeah, we bought a, this was immediately before the great financial crisis. We bought a 16 unit building. A guy had bought it. There used to be derelict apartment buildings in Los Angeles, which is like an amazing thing to think about.

[00:17:41] Moses Kagan: He had renovated it and then he ran outta money before he could finish, so we were able to buy it from him at a reasonable price. Even though the market was really inflated, then, like he was desperate to sell. This was like if we had waited six months, we could have just bought it from the bank because it would’ve been foreclosed on, but we didn’t, but we got it at a reasonable.

[00:17:59] Moses Kagan: And the bank was willing to loan us the money to buy it, even though we didn’t know anything because we were putting down such a large deposit that they were just like, look like it’s probably going to work out. And that was my introduction to the business. So what happened?

[00:18:13] Robert Leonard: I mean, you said you bought it just right before the great financial crisis, so I’m assuming that didn’t translate you too well.

[00:18:18] Robert Leonard: So tell us a little bit about that experience.

[00:18:21] Moses Kagan: So we bought a vacant. Of course, like you buy something vacant, like you gotta, with a loan, like you gotta tenant end it up like immediately. We, let’s see, two things simultaneously. One, we had to finish some renovations. There were a few things left undone is what I’m trying to say.

[00:18:37] Moses Kagan: And so the first thing was we had to find someone. We had like hired someone from my brother’s soccer team to like start doing some of the work for us. But like it turned out that that was a ripoff. And anyway, we ended up getting someone to help us finish that. The odds and. The bank had forced us to hire a management company, so that management company then said about trying to tenant the building.

[00:18:59] Moses Kagan: And that did not go that well. The second tenant that they put in ended up having a boyfriend who was a pimp. I mean, it was a really, like, I have some crazy stories about that period. We then took over the leasing. I made a deal with this nonprofit and they leased eight of the units. That was also a disaster for reasons we can talk about.

[00:19:16] Moses Kagan: But anyway, we got it. We finally got the building leased up and cash flowing, and then the GFC. And rents went down by 20% and that was a nightmare. But the deal had been good enough and sufficiently conservatively underwritten that even with the difficulties that I just described, the deal cash flowed.

[00:19:36] Moses Kagan: I mean it for a second there. The cash flow basically went away and it got pretty tight for a couple months, but then the rents started to come back and we ended up doing okay. And we still own that building to this day. And so, let’s see, we probably bought it, like I said, for like one six or one eight, I can’t remember the.

[00:19:51] Moses Kagan: The last time I thought about this and I could be getting it wrong, but like, and obviously the values are probably down a bit because interest rates are up so much, but like that building’s probably worth like close to 4 million bucks now and we’ve taken out many multiples of what we put in, both from cash flow, from the rent, but also from refinancing it.

[00:20:10] Moses Kagan: We’ve probably refinanced it like three or four times since then to pull money out.

[00:20:16] Robert Leonard: I have so many questions about that. How did, well, first I want to talk about the rents and then I want to talk about your parents, how they structured that and how they got paid back and if they have equity still. But first, the rents over the last, I don’t know, five years or so that I’ve been in real estate, you hear people very commonly and a little bit optimistically.

[00:20:31] Robert Leonard: I would say that rents never go down. If the market crashes and real estate goes down, then basically people that were homeowners now become renters. And so you always have this influx of renters and so rents are really stable and they’re never going to go down. But clearly you experienced that.

[00:20:44] Robert Leonard: So I’m curious, how has – tell me a little bit how you think about that and how it’s impacted your underwriting.

[00:20:48] Moses Kagan: Just frigging nonsense. I mean, I’ve now lived through two of these episodes, so the first one being that building. And then the second one being in 2020 during Covid with a much larger portfolio. I mean, you know, just to give your listeners some context, We own 200 million worth of buildings now, 50 something apartment buildings in Los Angeles, and we manage another 60 buildings for other people.

[00:21:11] Moses Kagan: So we, we gotta manage like 950 apartments total. But anyway, so in Covid, March, April, may of 2020, both like people breaking leases to move home. So vacancy people not. At least the vacant ones were good because at least you could re-rent those units. The other ones, we had people sitting there not paying us and then, but then to re-rent those vacant units at a time when all the kids were going home to their parents’ house and everyone was doing work from home and like fleeing from the major cities, we had to cut the rents by 20% and probably 25 on a few less desirable units and less desirable neighborhoods.

[00:21:47] Moses Kagan: I mean, it was really bad. So this notion that rents never go down is just, it’s nonsense. But fortunately because we had had that experience in 2008 with that one building where rents went down, like probably 15, 20%, that like scarred me. My entire career has been shaped by that experience. And so what we have done, a couple things.

[00:22:11] Moses Kagan: One is we’ve built a management company and there’s some pluses and minuses to that, which we can talk about if you want, but I have always believed that like when push comes to shove in a bad environment, you really like want to control the assets. Someone’s gotta care about filling up those vacant apartments, right?

[00:22:27] Moses Kagan: So that’s one. And then two, probably even much more importantly and unambiguously correct is we have always been pretty moderate about our use of leverage and we can talk, there’s some other reasons why that’s important, but one of the reasons is being over levered and then having your rents fall and then being unable to make your rent payments is like a classic way to lose a building, which we are trying, you know, which that we’re designed not to do.

[00:22:53] Moses Kagan: The main response is don’t go nuts with.

[00:22:56] Robert Leonard: You didn’t happen to learn any of this, you know, low leverage stuff from Buffett Did.

[00:23:01] Moses Kagan: There’s a thing with Buffett, which is like, I think that there’s a certain kind of person who’s sort of like wired to read Buffett in the same way. Sorry, this is going to be like a deep cut, which you’ll appreciate, I dunno if all your listeners will, but like in the same way that Buffett read all these books about stocks and then he read Graham and was like, this makes sense to me.

[00:23:19] Moses Kagan: And that shaped his entire career. There are, I think there are certain people who are wired such that when they read Buffett, they’re like, okay, I understand that. And so that happened with me. So the reason I say that is a lot of these concepts, like, I guess I probably had read Buffett by that point, but the idea of being moderate with leverage and not losing assets is probably something that was innate in me before I read Buffett.

[00:23:43] Moses Kagan: So it was more like reading Buffett was like kind of confirmation of some things that I was probably naturally inclined towards.

[00:23:50] Robert Leonard: And Buffett does say that, I don’t know if it’s in a book or a talk, I’ve seen him give or maybe a partnership letter or where it was. But he basically says that people either understand value investing or they don’t like it either resonates with them or it doesn’t.

[00:24:01] Robert Leonard: And that’s it. I mean, you, you can explain it to people and you can kind of try to teach it to ’em, but just generally it’s innate in people like you said, and you just either get it or you don’t. And he talks about that a little bit at length.

[00:24:11] Moses Kagan: Totally, and I mean I, the Hollywood investor obviously has some pejorative connotations now, and that’s kind of why at the beginning of the conversation I also emphasize that people should also read Bezos because like there’s some, you don’t want to get trapped into one paradigm, but, but yeah, no, I mean, I totally agree and that’s obviously, that’s the kind of mind I have as well.

[00:24:29] Robert Leonard: So when you say moderate use of leverage, what do you mean by that? Because moderate to me could be entirely different than moderate to you. So when you say moderate leverage, are you talking 50% loan to value? 70%, 30%? Where are you at?

[00:24:42] Moses Kagan: I care much more. The whole loan to value thing is a, a red herring.

[00:24:46] Moses Kagan: And the reason it’s a red herring is who cares? No offense to the appraisers who are listening to this, who cares what some appraiser thinks about value? I’m sure you have. So I give, I can tell you stories all day about appraisers who doing what they’re doing. The last thing that you should be thinking about is what some appraiser thinks of value.

[00:25:02] Moses Kagan: I mean, even if the appraiser’s right, the value six months ago before interest rates went like this is very different from the value of today. So like that’s not helpful. No. We think about debt service coverage ratio, and what we want to feel like is that if rents come down like 20, 25%, that we will not be in danger of losing the building.

[00:25:22] Moses Kagan: So what do you want that DSCR to be? See that’s, this is another thing where I don’t want to give an exact number, and the reason is that this is a little bit like real estate 2 0 2 or maybe 3 0 3. It is a mistake, in my opinion, to people can start using these rules of thumb, like, oh, operating expense is going to be 35% of rent.

[00:25:43] Moses Kagan: And not every building’s different, but every type of building is different and. What is appropriate on like a large building that has lots of amenities, for example, is very different from what’s appropriate on like a fourplex. And also it depends on whether you’re talking about a standalone deal.

[00:26:01] Moses Kagan: Imagine you just, you have a job and separately you own a fourplex, right? Because you might be able to subsidize the fourplex mortgage payments from your job. You should not think about that, the leverage that’s appropriate on that deal. The same way that you should think about the leverage that’s appropriate on a standalone syndication where there’s no other source of subsidies.

[00:26:20] Moses Kagan: So like if you can’t pay the mortgage, you’re going to lose the. Versus when we have a lot of these like pools or like funds that own multiple buildings, where if you have a problem with one building, you can cross subsidize and pay the debt from cash flow from the other buildings. So those are all very different situations.

[00:26:39] Moses Kagan: So I don’t want to give like a rule of thumb, but I want to encourage people listening to this to like look at your p and l and be like, okay, what are my expenses now? What does this look like if collections comes down by 20, 25%? And I’ve got a hint for you. Real estate is largely a fixed cost business, by which I mean your expenses do not change.

[00:27:00] Moses Kagan: Rel like depending on the rents, like your property tax is going to be your property tax, whether you’re 50%. We’re a hundred percent occupied and seem for your insurance and your landscaping and whatever. Okay? The good news about businesses that have largely fixed costs is that when the rents go up, okay, you’re getting operating leverage.

[00:27:19] Moses Kagan: So the net operating income will grow disproportionately, a little bit of additional rent grows, a lot of net operating income, and therefore cash flow, right? But operating leverage also works in reverse. And if collections come down 20. Net operating income doesn’t come down by 20%. It often comes down by a lot more than that.

[00:27:37] Moses Kagan: And obviously your net operating income is what you have available to pay your loan. What I encourage everyone to do is just like sit there with your p and l and maybe a little spreadsheet and be like, what happens? You know, what happens in this scenario? What happens in this scenario? And do so with the understanding that like, look, rents can come down 20% and if your building can survive collections coming down 20%, then you’re probably in good.

[00:28:00] Robert Leonard: I want to go back and talk a little bit more about the management company. You said there were some pluses and minuses. You started to give us a couple examples, but let’s talk about that a little bit more and it’s a little bit close to home for me. I built up a small portfolio, I mean nothing massive, but five, six single family homes with a, a friend of mine and he started to say, oh, we should build a management company.

[00:28:17] Robert Leonard: And started doing what, because we do it remotely from 2000 miles away in a city we’ve never been to. And he is like, you know, we have these really good systems in place and we should start a management company and do this for other people. I’ve always been the one that shot it down and he’s always really for it.

[00:28:29] Robert Leonard: So I’m curious, tell me the pluses and minuses.

[00:28:31] Moses Kagan: You know, this is probably going to be at a bigger scale, but in your situation, you should not start a management company a hundred percent. No question. You should not do it. And why is that? Because proximity is like the most important thing for management.

[00:28:42] Moses Kagan: Like I want to grow my third party management business. But I like, I had an email two days ago from a guy being like, I think he probably had like 20 or 30 units he wanted to give us, but they’re like in East LA County. And I’m like, sorry man. No chance. And the reason is because the way you build a profitable property management company is one way you do it is geographical concentration.

[00:29:01] Moses Kagan: People are going to need to drive around to fix things, to let tenants in. There’s all kinds of reasons why being able to quickly get to the properties is valuable. So I’ll turn down stuff that’s like 15 miles from my office, let alone trying to do it remotely. I just don’t, I don’t think you want to be in that business.

[00:29:17] Moses Kagan: Now with respect to building one more generally. So my parents always owned a few small apartment buildings and I’m talking like, you know, a fourplex here and a triplex there. And this is in Troy, New York where buildings actually used to be more or less free. So this is not a large go operation. And they self-managed.

[00:29:34] Moses Kagan: My mom did the accounting and my dad did the leasing. And like a lot of the repair. And that was a big mistake in my opinion. I mean, they’re, they are not people particularly, like they always had other jobs and like they’re not, they’re not money maximizers, but this was a good side hustle for them. But the way they ran it, in my opinion, was a trap because you just basically, in general, you do not want to create situations where you are doing a job that you could pay someone 15 bucks an hour.

[00:30:00] Moses Kagan: I dunno if your listeners are familiar with like naval racon and like the concept of leverage, like that’s anti leverage. Like do not create minimum wage jobs for yourself and self-management in a lot of ways at a small scale is creating a job for yourself. Now you can get around that by building scale.

[00:30:18] Moses Kagan: Okay. So, and what, what we’ve done is we have enough scale, both in terms of the stuff that we own and the stuff that we manage for other people that I don’t get tenant calls, we have 15 employees, you know, so we’re getting the benefits of self-management of control without it completely taking up all of my time.

[00:30:34] Moses Kagan: Although it does take up a fair amount of my. And that’s where we get to the other argument against doing it, and that is that even if you build scale, your impulse is going to be to continue to buy assets that fit into your management business. And the problem with that is that there are sometimes are often going to be opportunities that you should probably take in other places, in other asset classes, whatever, that do not fit with your management company.

[00:31:09] Moses Kagan: And so on the other hand, like there are good, particularly as you start getting into larger assets, there are good third party management companies that you can hire. And so like even if you build a scaled management business, you are forcing yourself, you’re kind of constraining your opportunity set.

[00:31:26] Moses Kagan: Does that make sense? I think this is a mistake that I’ve made, so I’m trying to help your listeners. This is maybe a 202 or a 303 lesson as well, but trying to help your listeners understand. A mistake that I made was because of my fetish for control of the assets, I narrowed the aperture of the opportunity aperture.

[00:31:44] Moses Kagan: I was like, I only want to. Nice apartment buildings in Los Angeles and that’s like, those are good things to own, but if I had been willing to say, I’m willing to own just nice apartment buildings anywhere that I can get a good deal, and I’ll just find someone to manage them and I’ll watch the manager, then my opportunity set would’ve been much broader and I could have put more capital out more quickly.

[00:32:06] Moses Kagan: And I think having run this experiment now for like, whatever it is, 12 years, 14 years, I am now firmly convinced that I was wrong and that the right thing to do is to have a, is to be somewhat more geographically or asset class agnostic. And that means probably don’t try to build the management business.

[00:32:27] Robert Leonard: Do you feel like you have lack of diversification now? Because, I mean, you told a guy you wouldn’t, you wouldn’t manage his property 15 miles away, right? So that probably limits you to a pretty small circle of where you’re buying assets. So now something in LA or California goes wrong, you know, now you’re, you’re not diversified and you don’t have any other markets to kind of prop up those properties.

[00:32:45] Robert Leonard: So how do you think about diversification?

[00:32:47] Moses Kagan: It’s a very interesting question and there’s a number of different facets to it. So the first thing to say is, I am not diversified. Like 95% of my net worth is in Los Angeles, real estate of one kind or another. Almost all in apartment buildings. Is that because of Buffett?

[00:33:02] Moses Kagan: No, it’s because of my fetish for control. He became experts in buying, renovating, and managing apartment buildings in Los Angeles, and there are some characteristics of the Los Angeles market, which historically made it a very, very good place to own apartment buildings for the long term. Recently, some of those characteristics have maybe reversed or at least moderated.

[00:33:24] Moses Kagan: And so question in my mind whether it remains as good a place to invest in apartments as it was. I’m not saying it’s not, but I’m saying it’s like there’s more questions. So that’s one thing to say, but another thing to say is like, look, diversification is for when you’re already rich. Like you don’t get rich by diversifying, you get rich by specializing and getting really good at one thing and taking a concentrated bet at having that play off and pay off.

[00:33:49] Moses Kagan: And so that has worked for us. Like, yeah, I’m not diversified, but I’m richer than I was when I started this business. Right. And so now, yeah. Do I want to diversify? Like am I interested in owning buildings in other places or other asset classes or whatever? Yeah, of course. But like I can do that in part because I have an asset.

[00:34:06] Moses Kagan: And a business and investors and whatever that I grew by specializing.

[00:34:12] Robert Leonard: That’s exactly how I’ve always felt about diversification, the exact, exact same way. And then part of it is going to a Buffett. He says, diversification is for people who don’t know what they’re doing, you know? And he does say most people should put their money in s p 500, but he says diversification is for people who don’t know what they’re doing.

[00:34:25] Robert Leonard: And so for me, that’s always kind of how I live my life. I also tend to have a very high risk tolerance. I’m willing to risk it for the biscuit, if you will. So that works for me and, and I don’t need a lot of diversification.

[00:34:37] Moses Kagan: Yeah. I think one thing that I have always early in my career, I used to think that my job was to convince people, convince prospective investors that giving me money was the best risk adjusted thing that they could do with their money.

[00:34:54] Moses Kagan: Okay. Total mistake. That’s like an allocator mindset. As a real estate operator, that’s not your job. That’s their job. They need to decide how they want to allocate their net worth. Like, okay, you know, or, or if you’re an endowment, how they want to allocate their portfolio, like that’s on them. As an operator, as a user of capital, my job is the smartest way to invest in Los Angeles Multifamily.

[00:35:19] Moses Kagan: And so I don’t have to, like, I’m not going to engage in a conversation about you do this, or should you buy the s and p or should you like, that’s not my job. I’m not a source of diversification for anyone. I am a source of concentration as a capital allocator. They need to decide what portion of their assets they want to put into Los Angeles multifamily, and then my job is to be the best way to do.

[00:35:41] Robert Leonard: I like that perspective. I haven’t really thought of it that way and, and I haven’t raised a lot of money myself, but when I do, I, I think a lot of people, when they’re starting to raise capital and even people who have some experience, the first thing they want to do is just tell the biggest return number they can.

[00:35:53] Robert Leonard: When they go to their investors, they just want to show that they have the best deal. And I think your way of thinking about it is really interesting.

[00:35:58] Moses Kagan: One of the benefits, we talked about my lack of a mentor before, okay. I made a lot of mistakes. What I just talked to you before about the wide or narrowing the aperture, like, you know, geographical diversification or concentration, like that’s a mistake.

[00:36:11] Moses Kagan: I wish someone had been like, Hey, ding dong, like it’s enough to say you’re going to be in apartment and then like go find the best apartment deals and whatever. Okay. So that was a mistake that I made and I would’ve benefited very much from having a mentor like slap me upside the head and tell me to stop being so.

[00:36:25] Moses Kagan: But the benefit of not having a mentor if you are a bright person who reads and listens and talks to people and really thinks about things, is that you will almost inevitably start to have what I would call a differentiated lens. And what I mean by that is, By differentiated lens, I mean like a way of looking at the world or at assets or at markets.

[00:36:48] Moses Kagan: That’s just like different from other people’s because you’re not inheriting someone el. You’re not just parroting what your mentor told you or your dad told you or whatever. You’re like, okay, I have to move forward. I’m confronted with a bunch of choices. I’m going to make some choices. I’m going to see what works.

[00:37:03] Moses Kagan: I’m going to. Double down on the ones at work, I’m going to stop doing the dumb things I did. And, and what happens if you do that and you pay attention and you’re in the market getting real market feedback is eventually you wind your way. You can eventually find yourself having wound your way to an extremely weird, unusual way of looking at the world.

[00:37:22] Moses Kagan: And it turns out that weird, unusual ways of looking at the world are actually often where like great returns. You’re by definition doing something that’s non-consensus, right? So like you could be non-consensus wrong and then, That’s how to be non-consensus. Right. And so that whole thing that I just described to you about how you talked to an allocator and how you, I didn’t like on the first day be like, this is how I think.

[00:37:46] Moses Kagan: No, I like had to go raise money and I said a lot of conversations with potential capital sources until finally it, like it clicked for me. Like how, what exactly I am a user of. And how to talk to allocators, and that’s just one example of something and and our entire operation, our entire business is all anywhere you look within the business.

[00:38:06] Moses Kagan: There are things like that where we just figured it out and many of the things we figured out are maybe suboptimal, but there’s a bunch of things that we figured out that are genuinely great and add a lot of value and differentiated.

[00:38:18] Robert Leonard: It’s one of the benefits of hosting this podcast or if you’re a listener listening to this podcast, is we didn’t have to go out there and learn those lessons that you just taught us.

[00:38:25] Robert Leonard: We were able to learn it from you. We didn’t have to go out there and make those mistakes ourselves. I get to hear it from you yourself, and the listeners get to hear it as well. Going back to that first deal, you jumped right in with the 16 unit. I’m curious, your parents are doing fourplexes. Triplexes some smaller deals in Troy, like you said.

[00:38:40] Robert Leonard: I actually know Troy, New York. I’m from New Hampshire. I’ve nice raced dirt bikes in Albany, so I, I know Troy, New York actually. But why did you, why’d you go right for a 16 unit? I mean, that’s a, a decent size deal and a lot of people in the audience are accident, accident, accident.

[00:38:51] Moses Kagan: Okay, tell me more. What happened was, my brother and I were looking to buy a duplex, two units to live in, and this was 2000, you know, 2007 and the market had not crashed.

[00:39:05] Moses Kagan: So the prices for duplexes were insane. When I say insane, like now I have, obviously when I look at a apartment building, I have a lot of context. I have very good judge of what represents good value. At that time, I was like totally naive. I didn’t know what I was doing. But even being that naive, it was like, look, here’s what you could rent these apartments for.

[00:39:25] Moses Kagan: Here’s how, what it’s going to cost to buy this thing, and what the mortgage payment’s going to be. And like these things were like obviously, What happened was with the 16 unit, my brother just was on the MLS looking for a duplex or whatever to buy and stumbled across the 16 unit. And the reason that the 16 unit made sense was, as I said before, the guy was basically distressed.

[00:39:46] Moses Kagan: The seller was the owner was over his skis with leverage and like needed to get out. And so it was just an unusual deal from that perspective. I should also note, and this is kind of an, an interesting story and one that has also shaped my view of real estate is that a year or so earlier, my great-grandfather had owned some buildings.

[00:40:04] Moses Kagan: By the time he died, he, they, they were all gone and there was one building left and the family like, so my great-grandfather, he had three kids, so I’m like, there’s Alar Long family tree here below. My family got an offer to buy that building in 2006. Actually, my, my part of the family tree didn’t want to sell because why would you sell a building in Manhattan?

[00:40:26] Moses Kagan: But the rest of the family did want to sell, so, okay. So we sold, and so my grandfather got a chunk of that money, you know, got his third of that money and then he split it in half and gave it to my uncle and my mom. And that money that my mom got, which she didn’t spend, she held onto it. That became the down payment for that first 16 unit building.

[00:40:47] Moses Kagan: So my real estate career began with capital that came from my Greek grandfather’s real estate career.

[00:40:55] Robert Leonard: Do you happen to know, by any chance, to this day, which building it was in New York, and have you looked up how much it is?

[00:41:01] Moses Kagan: I can’t remember off the top of my head the address. It was in the eighties on the east side, and I don’t know if any of your listeners are familiar with Manhattan, but the bar, there was a fa, there was a bar called Moose Caribbean, which may still be there.

[00:41:13] Moses Kagan: I don’t, it was there for a very long time. So anyway, that’s the building, the Moose Caribbean building, and it was before it was Moose, Caribbean. My great-grandfather used to own a very, very small chain, like three or four tiny little grocery store. And he bought the buil, like, so he ended up owning some of the buildings that the grocery stores were in, and that’s, that building was the last one of those.

[00:41:32] Robert Leonard: It’s a pretty neat story. I’ve also heard you mention that if you could, you’d be shorting many of the real estate deals that you’re seeing right now. You wrote on your blog that you view remote single family rentals as a bad business model, and you said that this type of turnkey business is what emerges at the end of a cycle.

[00:41:50] Robert Leonard: Explain this a bit for us and talk to us a bit about it, because this is exactly personally what I own. I own remote single family rentals, so I’m really curious to hear more from you about it and, and this idea of shorting real estate deals. Sorry for offending again, I am not offended. I, I can’t wait to learn.

[00:42:06] Moses Kagan: Well, no, I mean, and you might like you’re doing it so you actually might be right and I might be wrong. I mean, that’s wouldn’t be the first time. Okay. The concept of shorting deals like in a stock market, if you think that the market is wrong about the price of a security of a stock, you can bet against it.

[00:42:20] Moses Kagan: And there’s like some reasons why that might not be a great strategy, but you can, and it’s actually like, It’s pretty cool because there’s like this group of investors who are really smart, who go around looking for companies that are, that are mispriced and betting on the prices going down, and that’s actually a very useful corrective for misbehavior, for misallocation of capital, right?

[00:42:40] Moses Kagan: Like the stock market’s a big machine for allocating capital among different companies. Very often for a variety of reasons, investors are like completely wrong. They give too much capital to the wrong. And it’s very useful to have these like vigilantes who go around and like periodically are like, no, you are wrong about this and here’s why.

[00:42:59] Moses Kagan: And like they bet against it. And often they like release reports saying, here’s why I think that this is wrong. Okay. Real estate doesn’t have that because these are typically, I mean, it does in public markets, but not in the kind of private deals that we’re talking about. There’s no, you can’t bet that a deal is.

[00:43:15] Moses Kagan: The problem is that there’s not, like, the only way that people learn the deal is dumb, is like life happens, and it turns out that the deal was dumb. It was over levered. The guy overpaid, like the tenant turns out to not have been stable and he leaves and you can’t replace him. All the, you know, the, the physical condition of the building turns out to have been much worse than the buyer thought, and therefore the buyer has to put a bunch of money in that he didn’t.

[00:43:38] Moses Kagan: There are a ton of different ways that deals can go wrong and I, I mean, I, I just gave you three or four of them, but you know, particularly in a heavily regulated market like Los Angeles, there’s a million other ones that we haven’t even talked about. So no one can short those. So the only way that we all find out that that capital was misallocated was when it blows up.

[00:43:57] Moses Kagan: So that’s when I say it’s sad that you can’t short deals. It’s like I can see people doing stuff pretty often where I’m like, that’s not going to. Like what? Give us an example. Oh man. I met a guy, I’ll never forget this. I was in the housing department. I ran across a guy who had bought a fourplex in Los Angeles, and what had happened was he had, he kicked out the tenants in order to run the thing as an Airbnb.

[00:44:24] Moses Kagan: That was his business model. Like he paid price for the building that was wildly in excess of what was justified by regular long-term tenants. It was only justified by the Airbnb revenue at a time when the city had already been talking about banning Airbnbs in r s apartment building. And then the city went ahead and banned rso, Airbnb and RSO apartment buildings.

[00:44:50] Moses Kagan: And this guy had paid a price that reflected this revenue, and they’re now, the revenue is. And it was just like I was looking at this guy and I’m just like, how are you that dumb? If I were thinking about doing something like that, I would look into, has the city like said anything about whether they’re going to regulate Airbnbs and apartment buildings, like it’s basic due diligence and that kind of stuff happens repeatedly.

[00:45:13] Moses Kagan: Guys buying stuff that have oil wells underneath. I have a list, a due diligence checklist that we go through before buying a building that’s like three pages of single spaced, like eight point font. It didn’t start out being three pages. It started out being like one and a half pages, but like every time we screwed something up or we saw someone else screw something up.

[00:45:36] Moses Kagan: We added to it, right? So very often I see someone buying something where I can just tell even from the publicly available information that it’s violating one or more of the things that are on that spreadsheet. And one of the things that’s frustrating about real estate is this is like a Howard Mark’s line.

[00:45:53] Moses Kagan: And this is maybe not just about real estate, it’s about investing generally. We live in one of an infinite number of possible worlds. In other words, you can’t know what the outcome is going to be, and very often the outcome is not what you would’ve expected anyway. And so all we can do as investors is just think about like probability weighted outcomes, like what is likely to happen versus what’s not likely to happen here.

[00:46:18] Moses Kagan: When I say that I see people doing stuff that I wish I could short, it doesn’t mean that all of those deals blew up. In fact, many of those deals might have worked out great. I’ll give you an example. People were paying prices for apartment buildings in like, let’s say Phoenix in 2019. That I regarded as just like not smart, didn’t look smart to me.

[00:46:40] Moses Kagan: It it fe 2019 already felt like we were late cycle. The rents had already run up. The prices had already run up. And I’m just like, this is like, you’re just looking at it and going like, this is not going to work out. Pandemic happens. Everyone flees Los Angeles because they close all the bars and nightclubs and everything.

[00:46:58] Moses Kagan: Arizona stays. Great weather, relatively cheap rents, you know, the bars are all open. People flock to Phoenix, rents go through the roof, values run like crazy. So all these people who in 2019 were doing deals that I thought were dumb, actually made out like bandits, like made it way better than I did. But still, the question is you have to make judgements and you can’t, you can’t know in advance how those judgements are going to come out.

[00:47:23] Moses Kagan: So you have to kind of like, you’re just a look and see like what is the, what is the probabilities here? And going back and looking at 2019 all over again with even ignoring what subsequently happened with the pandemic, I would still say, look, it was not right to buy those buildings. Like that was a bad choice.

[00:47:39] Moses Kagan: On a risk adjusted. Yes, it turned out well. But it didn’t have to turn out well. We didn’t have to have the pandemic like we could have just had a normal recession and those people would’ve lost their asses. Does that make sense? So like all you can do is just do your best to make probability weighted judgments about what the world is likely to be, and then go back and sort of check and say, you know, how good were those judgments?

[00:48:02] Moses Kagan: Like, would I have made those choices again? That’s the best we.

[00:48:06] Robert Leonard: Buffett talks about that. Howard Marx talks about it. Like you said, Annie Duke has a book called Thinking in Bets, and she talks about how, you know, you can’t judge a decision whether it was good or bad based on the outcome. It’s what you put into that decision and, and I think, like you said, nine out of 10 times, most people are probably going to be wrong.

[00:48:20] Robert Leonard: I guarantee you, in their underwriting, they didn’t have a line item that says Increase in rinse due to global pandemic.

[00:48:25] Moses Kagan: Totally. Yeah, exactly. And it, you know, and it can be very frustrating because this last cycle, which I think is, which has now ended, was deeply frustrating for someone of my analytical bent because the cycle went on for so much longer than typical cycles do.

[00:48:41] Moses Kagan: So like I tend to default to believing that things mean revert. So you see excess, and then the excess will be, And the problem was that this cycle was so long that you’re just sitting there going, man, you know, stuff looks overpriced in 2017 up. It’s still overpriced 20 18, 29. You’re just like, all these people are making money and you know, and in retrospect I was wrong.

[00:49:02] Moses Kagan: Like I should have been at more risk accepting and whatever. And we can talk about that. And you’d rather be rich than, right? Right. Anyway, this is all I know how to do is to just like, look at what, what are the probabilities in my mind and, and what are the relative values and try to be. I want to say that I have never done remote investing.

[00:49:19] Moses Kagan: I have always like taking after my parents who controlled their assets. I control our assets. So I, you have to understand that I’m coming to it with that bias. Okay. And what you’re doing as a remote single family home investor is saying like, I’m going to widen my aperture. I’m not just going to look at single family homes where I happen to live.

[00:49:38] Moses Kagan: I’m going to expand my aperture and look at opportunity across the country and be able to sharp shoot deals that make sense, where, you know, in, in one or more other geographies, there’s a lot to be said for. The downside though, I think is it’s pretty tough if you’re doing specifically single family home investing with the kind of money that like a normal individual would have.

[00:50:01] Moses Kagan: It’s pretty tough to accumulate a portfolio at any one place that’s going to be of sufficient importance to whomever you have managing it to get their full attention. When things are going well, it’s like, fine, whatever rents are going up, like you don’t rents and value’s going up, like washes out a lot of mistakes, a lot of problems.

[00:50:24] Moses Kagan: Whatever. It took a while to fill that vacancy, but once we got around to showing it, we actually did fill it and the rents are higher, so it all worked out. Or like, yeah, we were vacant for three months, but you know what? Who cares? Like values have been going crazy because it’s 2021 and like, who cares? I’m up.

[00:50:41] Moses Kagan: I’m so far to the good on this that I don’t really care about the operations cause it’s really just like about the, you know, just a levered bet on asset prices. But rents do not always go up and values do not always. And real estate has problems and many of those problems are complicated to fix and expensive.

[00:50:58] Moses Kagan: When you’re doing small things very far from where you live, you’re dependent, like it’s not, it doesn’t make sense for you to fly out there all the time and deal with it yourself. So you’re dependent on local people to fix it. And on the other hand, you’re not going to be of sufficiently large scale probably to interest someone in really focusing on your thing.

[00:51:19] Moses Kagan: They’re going to, you’re going to be a small part of their portfolio from management portfolio and therefore you’ll get the attention that a small part of someone’s portfolio tends to get. So I think that in a world where things are not always going up, I think that that is a, that’s a scary place to.

[00:51:38] Robert Leonard: So I’m curious, what problems do you see with, let’s say you own like, like me?

[00:51:42] Robert Leonard: We’ll, we’ll use my exact situation. So I own four or five, six of these single family houses in Texas. And I started there with just one and have grown a little bit of a portfolio since. But basically I self-manage and anytime there’s a problem I like, let’s just say there’s a plumbing issue. I call the local plumber.

[00:51:57] Robert Leonard: I’ve built a relationship now, I’ve been doing this for four or five years, but originally I just call a plumber and they would go check it out and they’d take care of the problem. And that’s how we’ve done it with everything. Electricians, handyman, et cetera. And, and so far, knock on wood, that’s been a, a really good process for me.

[00:52:09] Robert Leonard: So I’m curious kinda what you see as downsides.

[00:52:12] Moses Kagan: Yeah, there’s a couple things. I mean, one thing to say, I want to be very clear. First of all, I wrote that piece that I think you’re referencing probably like four or five years ago, and I have since seen people do remote management successfully. Like I have a friend Rowan who Dar, who’s actually does single family home Airbnbs, and he is got like one home each in like five different markets.

[00:52:35] Moses Kagan: And Airbnb is a harder business to do than the one you’re in. And he’s not even in one market. He’s in in five or six different, whatever it is, different markets, and he’s doing six. He’s doing it well. One thing to say is, I could be wrong, another thing I could say is like in the whatever it is, like four or five years since I, four years or whatever, since I wrote that piece, technology has improved.

[00:52:52] Moses Kagan: So like you can, someone can like FaceTime you and show you what’s wrong in a way that maybe they couldn’t before.

[00:52:59] Robert Leonard: That’s exactly what I do. FaceTime.

[00:53:01] Moses Kagan: That being said, a lot of the, okay, whatever, fixing a toilet, not a big deal. What happens when you have a plumbing leak that leads to mold, that leads to a mess where you’re like, someone’s gotta go get the tenant, convince the tenant to move to a hotel, find a mold remediation company to come in, demo the walls, pull that stuff out, clean it all up, then get a plumber to come in, fix the leak, then get someone to come build it back, and then put the tenant.

[00:53:29] Moses Kagan: That’s a problem at at scale, like with, we have 950 units, we probably do what I just described, like a couple times a month. Okay? You have not run into it, knock on wood, because maybe you bought good buildings or maybe, and your portfolio is small. So like every month there’s a dice roll, a cosmic dice roll that takes place, right?

[00:53:48] Moses Kagan: The chances are in almost every month, your dinosaur’s going to come up fine, and you’re not going to have these problems. You’re going to collect rent, and it’s all. But it over in months over in properties, then it’s virtually certain that these complicated problems are going to emerge. And then the question is, can you like effectively deal with them?

[00:54:07] Moses Kagan: And the answer is maybe yes. Maybe technology and coordination and whatever are to the point where you can, but color me still a little skeptic.

[00:54:17] Robert Leonard: Yeah, and I don’t blame you if I had to do this for 950 units, it couldn’t be done. But I’ve done this, like I said, five, six units. It’s not too bad. Not, I think two or three at a time is the most that I’ve done and, and I have done some rehabs.

[00:54:28] Robert Leonard: One was pretty comprehensive, but it, it was still one at a time. And it wasn’t like this, you know, I wasn’t doing 50, I wasn’t doing a hundreds. It was, it was manageable. And I think technology is very thankful. And, and like you said, I have a small sample size, so we’ll see what, what happens in the next, I dunno, five years.

[00:54:43] Moses Kagan: Yeah, but I mean I don’t, depending on when you bought them, it’s likely that you’re very far, even with the prices haven’t gone down now, like it’s likely you’re very far to the good asset price wise. So like, maybe it’s fine. Maybe you’re just like, look, I don’t give a shit like every once in a while I’m going to have a problem.

[00:54:57] Moses Kagan: But like, I made a lot of money here and, and that’s fine. There’s nothing wrong with that. I would say that I personally am extremely averse to strategies that rely on asset price appreciation to drive the value creation. So I want things that I think that are, I want to be pretty confident that I’m going to be happy about how things work out, just on the basis of the cash flow and like periodic refinancings.

[00:55:23] Moses Kagan: So the asset price thing bailing you, not bailing you out, but bailing one out is like, when I do underwriting, I want to think about that as a bonus, not as the thing I’m relying on, if that makes sense. So I’m very focused on operations and therefore I’m thinking about large sample sizes and therefore I want to be able to.

[00:55:42] Robert Leonard: Makes a lot of sense. You’ve given me a lot to think about and I really appreciate you taking time outta your day. I know I could keep talking to you for hours and hours. I just, I want to be respectful of your time. I really appreciate you joining me. I know everybody in the audience is going to love this episode, so I want to give you a chance to tell them where they can find you, maybe your blog, Twitter anywhere you wanted to kind of direct people to follow with you after the show.

[00:56:02] Moses Kagan: I want to say thank you for a great discussion. You know, I’ve done a fair number of podcasts and like struggling off the top of my head to think of one recently that I, where I thought the discussion was of higher quality than this one. So kudos to you for that. I did a great job here if people want to find me and frankly to learn about real estate more generally.

[00:56:21] Moses Kagan: I think Twitter right now is like particularly real estate. Twitter is just absolutely on fire. It is the, I would’ve killed to have this resource when I was starting out, and so I just cannot emphasize enough that you all should be on real estate Twitter. And what I mean by that is go find me on Twitter through my account.

[00:56:38] Moses Kagan: You’ll find, because I interact with all these people, you’ll find. Chris Powers and Nick Huber and Bar Linberg and Sean Sweeney, and the list goes on and on and on, and you’ll just, it’s like an MBA every day. It’s really amazing. So start out by finding me at Moses Kagan and all one word @moseskagan on Twitter.

[00:56:56] Moses Kagan: And then, like I said, go from there and just like follow a bunch of people and you’ll be sucked in immediately and it will make a material difference to your career.

[00:57:05] Robert Leonard: I have to say, we’re kind of completing the full circle here on all those people you just mentioned. The only person out of those people that I haven’t had on the show is, is Sean.

[00:57:12] Robert Leonard: Everybody else, Chris, Nick, everybody has been on the show, so everybody go, go follow Moses. Like you have all the previous guests that we’ve had. I, I, like Moses said, you guys will learn a ton. Moses, thanks so much for joining me. I really appreciate it. My pleasure. All right, guys. That’s all I had for this week’s episode of Real Estate Investing.

[00:57:29] Robert Leonard: I’ll see you again next week.

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