Tilden Moschetti: Asset
Management is kind of a funny

thing, in that it's kind of hard
to figure out exactly what we

mean by asset management. I
mean, what does an asset manager

do? I mean, it's obvious what a
property manager is, does,

right? They manage the property,
but what is it what's different

by managing an asset? So in this
module, we're gonna go through

asset management, and two
different lenses on the role of

an asset manager. So one is the
role of sort of the rules that

you need to follow, and the
duties and then other lands is

kind of some approaches in order
to really be a successful asset

manager.

Alright, so what does it take to
be a good asset manager? Well,

first and foremost, to be a
syndicator and asset manager,

you are a fiduciary. And I
cannot emphasize enough how

incredibly important that role
is. This is where you earn the

trust of your investors because
you are trustworthy. You are a

fiduciary. And you act that way.
I've seen situations where there

have been syndicators, not
projects of mine, but other

syndicators that I've either
been an attorney on or I've

coached people through
situations where a team member,

not my clients, and not anybody
else, but was acting in less

than a fiduciary manner. That's
inappropriate, that is not

acceptable at all, you will
never have a long career in this

business if you do not act as a
fiduciary. So that's all well

and good. But what do I mean
about acting like fiduciary?

Well, first off, the number one
rule is you always act with

loyalty, prudence, and care. So
that means that to everything

that you're doing with this
investment, you view this asset

as someone else's, and you take
care of it accordingly, that you

take such care for this for this
asset. That is you're mindful,

you're diligent, you really,
really take good care of it, you

are a steward for the asset
itself. So while you may take

care of your things very well,
if you're like me, you actually

take care of other people's
things even better, because it's

just the right thing to do.
That's what we're talking about

here is applying that loyalty,
Prudence and care to everything

you do. You favor the investor
when you have an opportunity to

over yourself, except to the
things that you already

disclosed, like the fees and
things like that were already

disclosed. So there is the
conflict of interest, and you

still get paid. I don't mean
that favoring the investor

always means you stop taking
those things. That's not what

you do. But it's following the
rules of what you set out, you

said that you're going to take
good care of this asset for

them. Now it's time to do that.
The second thing is fair

dealing, you treat your
investors equally. And I don't

mean that you've treat them
literally equally, that you

can't do anything where it's
just like on everything's on

conference call and everything
has to be completely equal.

That's not what I'm talking
about. What I'm talking about is

if there is an opportunity, or
to be for a vote or something

like that, you give every single
investor their proper wait and

listen to add them and just
treat them well. The you treat

your investor who may have come
in for $5,000. And you let an

investor in for that. And the
investor came in for a million

dollars, you treat them both,
like the most important investor

in your deal. Does that mean you
have to call the $5,000 Investor

first when something comes up?
No, absolutely not. You can

certainly call people in the
order that you find appropriate

if you think it's by how much
money they put in, or it's just

by based on the person you like
the most. That's okay. But you

always give everybody the same
amount of information. He gives

everybody the same ability to
have input into whatever you're

talking about. And if there's a
vote, you count their votes,

according to however, you're
supposed to count the votes.

That's really all it means.

You've disclosed conflicts and
so conflicts is a very important

part of it. If a conflict arises
later i I think it's important

to disclose that conflict, as
soon as it's identified, if you

haven't identified the conflict
before, disclose it. And then

really think about whether it's
a conflict that you want to

keep, whether that is a conflict
that you shouldn't just give up,

because it creates this, where
you're not favoring the

investor, right? You should have
disclosed it from the very

beginning before they get into
the investment. Maybe it's

something that you can give up.
Now, I'm not saying you have to,

but it's something to at least
consider. To me the most? Well,

to me, the second most important
duty of a fiduciary after

loyalty, Prudence and care. The
second most important is

confidentiality. Now, this kind
of goes all over the place. I am

probably in the minority that I
am militant on the

confidentiality of my investors,
I believe that they should never

have anything about them known
to anyone outside of me knowing

it. So I'll give you an example.
In one of the properties that I

syndicated, there was a lawsuit
that happened and we were

brought into a lawsuit. As part
of that lawsuit. We actually

hired an outside firm to
represent because I don't want

the conflict of that was
inherent of me representing the

syndication as an attorney,
which I could have done. But me

representing as the attorney in
exchange for fees where there

was a you know, it wasn't there
was a conflict there that I

could overcharge on fees. So I
decided not to take that we

hired an excellent attorney who
managed the case, I worked with

them to manage the case to some
extent, just in terms of making

sure that we had, that it was
moving forward as properly as

possible. And it was and they
did a terrific job. Now. During

that lawsuit, the opposing side
had propounded discovery against

us about trying to seek all of
our investors, they just wanted

the names and and contacts and
how much they had invested. And

everything that we told them and
everything that their

conversations was, and this is
normal for a lawsuit. Now

normally, this would not be an
issue for many syndicators, they

would have provided that
information, not me. I don't

think that's appropriate. I
spent a lot of our own money,

not investor money, I made sure
that we spent a lot of art I

spent a lot of my time gratis
because I do not want my

investors getting out. If
somebody gave me their trust and

is investing $200,000 with me,
it's not my it's not for me to

start saying so and so invested
with us. I think it's extremely

important duty. Again, I'm in
the minority, most are very free

about saying who's invested with
them. I think it's

inappropriate. That's my two
cents. And I'm I would encourage

you to be the saint have the
same belief on confidentiality.

It's just not appropriate. That
said, I also am you know, Curt

presently, in the Los Angeles, I
live in a very, very

Hollywood part of the city,
where we My office is in

Calabasas. There's a lot of very
famous people nearby. And a lot

of my investors are names of
people that you've heard of. So

they have trusted me with their
money, and they've trusted me

with their identity. And they
would drop me in a heartbeat. If

I revealed who those investors
were to the public. That it is,

they are very concerned that it
is not anybody else's business.

And I agree with them 100% I
don't disclose who those people

are, you'll never get it out of
me. I could be tortured. I'm not

giving them up. So that's how
much I believe in

confidentiality. So
confidentiality, extremely

important. But being a fiduciary
is one of the lenses that you

really need to look at your role
of being a syndicator or an

asset manager through. The
second piece that is important

to look at it through is the
piece of of adding value. What

you're trying to do is you're
trying to maximize every penny

that you can now you put
together a good business plan

for these people and you're
saying, I think we're gonna hit

a 17% IRR. Are are over the five
years? Wouldn't it be nice if

you had promised them? 17% and
you delivered them? 23%?

Wouldn't that be nice? Do you
think they're going to invest

with you again? You bet they
are. So it's always striving to

see how much you can just get
that property as to produce as

much income for your investors
as possible. So let me give you

a few ideas on how that can
work. So obviously, it is. This

is a discussion of value add.
Value Add add, it's very hard.

We're talking about two things
we're talking about either.

We're talking about cash. Well,
actually, let's start with what

we mean by value, as you know,
value equals noi over cap rate,

oops, why Rocard noi over cap
rate, that's the equation for

value, right? So I'm trying to
add value, I'm trying to get

this as big as possible. I want
massive, massive, massive,

massive value. Right? So how do
I do that? Well, let's look at

the equation and a y. And here
we're talking not really about

noi, I mean, that's the value
for coming up with the value of

a property. But actually, I'm
talking here on value add about

cash flow. I want that to be as
big as possible. I want to get

lots and lots and lots of cash.
And when we're talking about cap

rate, what we're really talking
about is where your property

sits for like properties,
remember, that's how we come up

with the cap rate that we apply
in determining our value. Well,

this is really kinda like
appreciation. And positioning.

Right. So the, the higher I make
my noi, for this part, the

bigger my value is going to be.
And the lower my cap rate,

right, I'm trying to drive it
down, so that my cap rate is

very, very small. If I took a
apartment building that was, you

know, realistically, it was kind
of rundown. And so it was

probably like a six and a half
cap, but I pumped in value and

pumped in value and made it like
the hottest place in town, I'm

getting below a four cap right
now for that building. And man,

you'd be getting massive,
massive value as well. All to

which would affect your bottom
line that you're gonna get give

to your investors. So let's talk
first about this first part

about how we pump up the the
cash flow. Let's let's clear

this off a little bit. It's a
little clearer and easier out a

little clearer. It just won't be
easy to read. Alright, so how do

we do that? So this cache this
noi part?

What we want to do is we want to
drive up income. And we want to

drive down expenses. Right? The
more income the more cash flow,

the less expenses, the more cash
flow. So how can we deal with

more income? Well, here's just a
few ideas for you is, is when we

look at square footage of the
building, I mean, that's the

basis for how you're getting
rents. A lot of times that is

part of your income as well,
right? So the income is based on

so many dollars per square foot.
So what if you have more square

feet? Now you can either do that
by just adding on which is an

obvious way but one way that
I've been very successful at in

the past, is by re measuring the
building. So the standard

measurements for a building for
real real estate and this

generally isn't for apartments,
but it could be but for office

buildings or for retail
buildings, or industrial

buildings, the main body that
kind of comes up with advice on

how to measure a building is
called BOMA. So that's the

Building Owners and Managers
Association. Now BOMA over time

because it's run by owners and
managers has come up with ways

to increase the volume of of
floor space on just generally on

how we measure the building. So
what started out for me once

with a 10,000 square foot
building ended up being over a

12,000 square foot building that
added a huge amount of value,

right? That's 20% More money
right there. 20% is a lot of

cash. And it was all cash, all
income and not expenses, because

it was all just on that side.
And it didn't change the expense

side at all right? It just added
complete value. The other way is

to add tenants. Now how do you
add tenants to an existing

building? Well think about cell
towers? Can you get a cell tower

on that building? Can you get a
billboard? What about vending is

vending a possibility there?
Those are all just different

ways for you to make other
income as well. Then there's

services are there services that
you can add like one of the big

ones I see a lot of office
buildings do is by providing

phone service or data service to
their, to their tenants. By

making that available to them,
they can sell it at they can buy

it at a decreased rate, sell it
back to their customers at full

rate. And now suddenly, they're
making a lot of money off of

just the the that part or as car
charging, you know, they could

make charge make car charging
part of it as well. Or what

about signage. Signage is
another way that you can do

that. The signs that you see the
monument signs on retail

centers, oftentimes there's not
there's no charge for it. But

there could be and your tenants
may be willing to pay for

special placement in that
signage. If it's not in their

lease, it could become part of
their lease and that it's up to

them whether or not they want to
appear on that monument side.

charging for parking is also
another way that can play take

place. Now it all has to be done
under the guise of the lease,

right? So you don't you can't
just charge for parking. If it

says in the lease that they get
free parking. So just make sure

that your are complying with the
lease itself, the leases the

lease. And then lastly, just
looking at what that rental

value is. So can I make it so
the space is more desirable so I

can charge more rents for it.
This is what happens when you

flip a unit in, in an apartment
building right by redoing the

kitchens in the bathrooms you're
making it more desirable so you

can get more rent. on the
expensive side, there are things

you can do to one thing I've
seen worked very well is solar

power. So solar is a great way
that that a lot of syndicators

are leveraging not only lowering
the operating costs, but because

a lot of times there are tax
credits associated with that.

I've seen syndicators including
the syndicator the building I'm

in right now, what he does is he
syndicates the solar portion of

the building, and then applies
those tax credits and makes them

available for the investors in
those syndications. It's

brilliant, he makes extra money
that way. And that works

everybody wins. Security

are there ways to lower your
security cost if you have

somebody appearing coming on on
site or somebody who is on site

all the time, what would happen
if you just had a security

system with with cameras that
was monitored remotely is that

going to bring the cost down
submetering. If you are paying,

if you are getting all the
meters for your, for your

tenants, you're have a lot of
extra work to go through in

order to make sure to try and
get all of your tenants to pay

their proper amount of
utilities, and you probably are

eating some of these costs.
Submetering can take care of

that problem for you. So that so
that the expense is now

completely on the tenant and
it's not your problem. There are

as also the issue of property
tax appeals. So if you think

that you can save money on the
property taxes, then so much the

better. So you may be looking at
this list and thinking to

yourself until then I do do
retail and we have all triple

net leases. None of this
matters. Well that's not true.

The More you lower your expenses
for your tenants in that case,

the more money that they have
available to pay your rent,

tenants look at the, at the
numbers that they're writing on

the check as the money that
they're spending, they're not

looking at it as this is my rent
amount, and this is my camera,

but I'm out if they just don't
look at it that way, they

weren't looking at it as I'm
writing a $15,000 a month check.

So the more you drive down those
expenses, the more that that

$15,000 is going to you rather
than toward those expenses. So

that is how we affect the NOI
portion of it. But the huge

leverage is also this capital.
Expenses, right? So how on earth

do we drive down cap rates? Cap
rates is really the look of you

know, the where that how the
property itself is positioned in

the market rate in the market.
So I would look at things like

tenant mix. Architecture, is
there something I can do to make

this more appealing to to a new
tenant? How is ingress and

egress going? Can we make it
easier for people to get into a

center, there's a center near my
home that is horrible. It has, I

mean, literally the worst
parking in the world. It has not

only it staggered parking, but
subtle, weird diagonals, and all

the diagonals run into each
other. I mean, it was designed

by a child scribbling and I
think they mistook and decided

to apply that to their, how
their parking plan is, but also

the ingress and egress. How does
that organize, you may even find

extra parking spaces. As you
redesign the ingress egress and

the parking lot, you may find
extra parking spaces, which you

can also charge for. And then
marketing. Now, you're probably

not going to mark it a strip
center. But you probably could

mark it a fairly good sized
office building or something

like that. If you make your
office building, prominent

office building, give it a name
that's cool and make it

something that wow, this is
really like the cool place to

be, you're going to start
drawing more professionals that

want to put their office there
and are willing to pay more

rent, but also, it adjusts how
it's positioned in the market.

So it becomes more of a pride of
ownership and people are willing

to pay a lower cap rate for that
building when it's time to sell.

That is an overview of two
different lenses for which to

look through the asset
management role. Now, you must

look at it through the lens of
as a fiduciary. But you all as a

fiduciary you're applying your
loyalty prudence and care as we

talked about. So part of that
loyalty prudence and care is

maximizing that value and adding
as much value constantly to the

property for the benefit of your
investors. Now in the next

module, we're going to go
through some of the high level

stuff about property management.
We're not going to dive too

deeply into exactly how to
manage a property, but we're

going to give an overview about
the things you need to know as

an asset manager when it relates
to property

management.