

      <h2 id="chapter_35336660">The Real Estate Underground Introduction</h2>


        <cite>Ed Mathews</cite>
      <time>0:56</time>
      <p>
          Greetings   and   salutations ,   Real   Estate   Undergrounders .   It   is   Ed   Mathews   with   the   Real   Estate   Underground .   Thank   you   again   for   joining   us   and   making   us   a   part   of   your   day .  
      </p>

      <h2 id="chapter_35336661">Chris Lento&#39;s Background and Strategy</h2>


        <cite>Ed Mathews</cite>
      <time>1:01</time>
      <p>
          With   me   today   is   Chris   Lento   from   EM   Capital ,   based   up   in   my   old   stomping   grounds   in   Boston .   Chris ,   welcome   to   the   show .   I&#39;m   excited   to   have   this   conversation .   

      </p>

        <cite>Chris Lento</cite>
      <time>1:10</time>
      <p>
          I&#39;m   happy   to   be   here . 

      </p>

        <cite>Ed Mathews</cite>
      <time>1:11</time>
      <p>
          Yeah ,   great .   

      </p>

        <cite>Ed Mathews</cite>
      <time>1:12</time>
      <p>
          My   history   is   I   spent   a   bazillion   years   in   the   tech   world ,   and   so   I   was   bouncing   between   mostly   Silicon   Valley ,   but   also   my   wife   and   I   actually   had   our   two   daughters   in   Boston   and   lived   up   there   for   about   10 ,   12   years .   I&#39;m   green   with   envy   because   I   love   that   place .   So ,   Chris ,   for   those   folks   who   haven&#39;t   come   across   EM   Capital   yet ,   I   want   you   to   tell   us   about   yourself   and   your   company . 

      </p>

        <cite>Chris Lento</cite>
      <time>1:34</time>
      <p>
          Yeah   sure ,   I   was   in   aerospace   engineering   for   17   years ,   so   tech   adjacent ,   I   would   say .    

      </p>

        <cite>Ed Mathews</cite>
      <time>1:41</time>
      <p>
          It&#39;s   pretty   technical . 

      </p>

        <cite>Chris Lento</cite>
      <time>1:42</time>
      <p>
          I&#39;m   at   a   cutting   edge   tech   defense   industry   stuff .   In   parallel   I   was   doing   small   multifamily   investing   in   the   Boston   area   the   entire   time   so   three   families ,   five   families ,   always   was   trying   to   figure   out   how   to   get   that   to   be   my   full-time   career   but   didn&#39;t   really   see   a   path   and   didn&#39;t   think   about   it   too   seriously   probably   the   first   10   years   of   my   career .   And   then ,   as   I   figured   out   what   the   entire   career   world   was   in   the   defense   industry ,   started   plotting   a   course   to   transition .   So   that   happened   in   2017 .   We&#39;re   focused   exclusively   in   the   Southeastern   US .   So   I   got   out   of   all   my   Boston   area   properties ,   rolled   them   1031 ,   exchanged   them ,   sold   them   into   the   properties   in   North   Carolina   downtown ,   northern   Florida   and   we   focus   on   now   100   plus   multifamily   $10   million   to   $50   million   acquisition   price   in   the   major   markets   of   the   Southeast .   

      </p>

        <cite>Ed Mathews</cite>
      <time>2:32</time>
      <p>
          Okay ,   how   many   markets   are   you   in   right   now ?   

      </p>

        <cite>Chris Lento</cite>
      <time>2:35</time>
      <p>
          We&#39;re   in   four   markets ,   so   we&#39;re   in   Charlotte ,   Raleigh ,   Columbia ,   South   Carolina   and   Atlanta .   

      </p>

        <cite>Ed Mathews</cite>
      <time>2:42</time>
      <p>
          And   I&#39;m   curious   about   what   drew   you   to   those   markets ,   like   what   in   particular   kind   of   piqued   your   interest .   

      </p>

        <cite>Chris Lento</cite>
      <time>2:48</time>
      <p>
          Yeah ,   we&#39;re   really   looking   for   population   growth ,   job   diversity   and   volume .   If   there   is   one   city   that   you   could   just   focus   on   and   get   the   deal   volume   to   be   able   to   grow ,   that   would   be   great ,   and   Atlanta   is   almost   that   Right .   It&#39;s   a   big   market   but   there   are   limitations   and   the   downturns   and   people   aren&#39;t   selling   here .   So   we   want   a   number   of   markets   to   have   enough   deal   flow ,   but   we   want   a   small   enough   number   that   we   can   really   understand   those   markets   and   develop   relationships   in   the   markets   and   have   property   managers   and   vendors   and   really   know   the   neighborhoods .   So   we&#39;re   looking   for   population   growth   and   economic   diversity .   And   then   size   right ,   we   don&#39;t   want   anything   below ,   say ,   250,000   people .   

      </p>

        <cite>Ed Mathews</cite>
      <time>3:28</time>
      <p>
          Target   rich   environment   for   new   residents .   Exactly   Okay .   And   then   in   terms   of   I   think   when   I   looked   at   your   website ,   you   had   just   over   800   units   under   management ,   right ?   Does   that   sound   right ? 

      </p>

        <cite>Chris Lento</cite>
      <time>3:40</time>
      <p>
          Yep ,   that&#39;s   right .   

      </p>

        <cite>Ed Mathews</cite>
      <time>3:41</time>
      <p>
          So   is   it   semi-equally   dispersed   among   those   four   markets ,   or   is   there   one   market   you&#39;re   a   little   heavier   in ? 

      </p>

        <cite>Chris Lento</cite>
      <time>3:47</time>
      <p>
          Yeah ,   we&#39;re   heavier   in   Atlanta .   Right   now   we   have   300   units   actually   420   units   in   Atlanta   and   we&#39;re   under   contract   for   another   property   in   Atlanta .   Yeah ,   the   Atlanta   market   has   a   lot   of   assets ,   a   huge   population   growth   and   a   lot   going   on   there . 

      </p>

        <cite>Ed Mathews</cite>
      <time>4:00</time>
      <p>
          Yeah ,   it&#39;s   a   huge   growth   opportunity .   I&#39;m   curious   about   the   one   thing   that ,   when   I   talk   with   operators   and   investors   who   target   the   Southeast ,   the   insurance   risk   has   been   a   pretty   significant   challenge   for   a   lot   of   us ,   myself   included   and   I&#39;m   in   the   Northeast   with   my   portfolios   here   in   Connecticut .   I&#39;m   curious   how   you   are   navigating
      </p>

      <h2 id="chapter_35336662">Target Markets and Insurance Challenges</h2>


        <cite>Ed Mathews</cite>
      <time>4:20</time>
      <p>
            that .   

      </p>

        <cite>Chris Lento</cite>
      <time>4:20</time>
      <p>
          Yeah ,   so   anything   coastal   is   very   difficult   due   to   hurricane   risks   that   have   really   gone   up   Atlanta .   It&#39;s   interesting   you   raise   that   because   it   has   its   own   kind   of   issues .   One   problem   the   Atlanta   market   has   is   that   it   has   a   very   high   cap   on   liability   for   the   property   owner .   So   if   someone   gets   injured   on   your   property ,   one   resident   hit   the   other   resident   with   their   car   on   your   property ,   you   have   a   lot   of   liability .   So   because   of   that   the   insurance   is   higher   than   you   would   expect   and   really   get   good   insurance   brokers   that   really   know   that   Manage   the   things   that   you   can .   Meaning   what   are   the   insurance   companies   looking   for   in   those   policies   to   bring   your   premiums   down   and   then   underwrite   it   correctly ?   If   that&#39;s   the   cost   of   the   market ,   then   you   have   to   make   sure   that   you&#39;re   aware   of   it   and   the   risks   as   far   as   increasing   and   put   that   in   your   underwriting   up   front .   

      </p>

        <cite>Ed Mathews</cite>
      <time>5:09</time>
      <p>
          Yeah ,   so   I&#39;ve   been   a   limited   partner   in   Atlanta ,   but   I&#39;ve   never   operated   down   there . 

      </p>

        <cite>Chris Lento</cite>
      <time>5:13</time>
      <p>
          I   think   it&#39;s   Georgia . 

      </p>

        <cite>Chris Lento</cite>
      <time>5:14</time>
      <p>
          So   I   think   Florida   had   a   somewhat   similar   law   with   not   as   high   of   a   exposure ,   and   they&#39;ve   recently   changed   it ,   and   my   understanding   is   that   Georgia   is   talking   about   it .   I   don&#39;t   know   when   that   will   happen   which   will   happen ,   but   there&#39;s   a   big   demand   right .   The   people   that   are   lobbying   are   the   owners   and   they   don&#39;t   want   to   be   liable   for   non-related   incidents   on   their   property .   If   you&#39;re   at   fault ,   if   you   have   a   sinkhole   or   something ,   that   makes   sense .   

      </p>

        <cite>Ed Mathews</cite>
      <time>5:40</time>
      <p>
          If   some   dude   drives   over   somebody   a   foot   in   the   parking   lot .   

      </p>

        <cite>Chris Lento</cite>
      <time>5:43</time>
      <p>
          You   have   $3   million   exposure   to   that .   I   really   know   your   insurance   market .   It&#39;s   crazy   how   much   it   changes   state   to   state .   

      </p>

        <cite>Ed Mathews</cite>
      <time>5:49</time>
      <p>
          Yeah ,   indeed ,   here   in   Connecticut   we   got   walloped   with   significant   increases ,   but   they   were   all   storm   related   and   the   thing   is   that   we&#39;ve   had   one   hurricane   make   landfall   here   in   the   last   30   years ,   Exactly   In   91   or   92, .   We   get   the   residuals   right .   

      </p>

        <cite>Chris Lento</cite>
      <time>6:05</time>
      <p>
          And   actually ,   if   you   think   about   it ,   a   lot   of   the   Southeastern   population   is   not   near   the   coast .   And   because   all   the   Northeast   population   is   near   the   coast ,   correct ,   Charlotte   and   Raleigh   are   two   and   a   half   and   three   hours   away   from   the   coast ,   Columbia   is   at   least   an   hour ,   Atlanta&#39;s   probably   two   hours ,   so   they&#39;re   all   inland ,   right ,   I   guess   Charleston ,   south   Carolina   is   the   only   kind   of   major   population   center   Think   of .   So   they&#39;re   all   inland ,   I   guess   Charleston .   

      </p>

        <cite>Chris Lento</cite>
      <time>6:26</time>
      <p>
          South   Carolina   is   the   only   kind   of   major   population   center .   Yeah ,   Myrtle   Beach ,   maybe   something   like   that .   

      </p>

        <cite>Ed Mathews</cite>
      <time>6:28</time>
      <p>
          So ,   as   far   as   your   buy   box   goes ,   what   does   that   look   like ,   or   what   class   are   you   looking   at   and   what   are   some   of   the   attributes   that   you&#39;re   keyed   in   on   when   you   find   a   potential   deal ?   

      </p>

      <h2 id="chapter_35336663">Property Management and Resident Selection</h2>


        <cite>Chris Lento</cite>
      <time>6:36</time>
      <p>
          Yeah ,   we&#39;re   looking   for   1985   or   newer ,   $10   million   to   $50   million   acquisition   price ,   like   I   said ,   in   250,000   person   population   area   or   greater   with   significant   above   average   job   and   population   growth .   And   then   on   those   older   units ,   if   it   was   right ,   on   the   line   85 ,   if   it   has   two   bedrooms ,   I&#39;m   looking   for   two   bedroom ,   two   baths ,   okay ,   two   bedrooms .   I&#39;m   looking   for   a   two   bedroom ,   two   baths .   You   could   renovate   a   two   bedroom ,   two   bath   and   give   it   one   upgrade   and   give   it   a   new   feel .   But   a   two   bedroom ,   one   bath ,   no   matter   what   you   do ,   it&#39;s   a   two   bedroom ,   one   bath   and   I   think   that&#39;s   also   an   indication   of   the   quality   of   the   property   when   it   was   built .   So   if   in   1985   or   six   someone   was   building   a   two   one ,   they   were   going   cheap . 

      </p>

        <cite>Ed Mathews</cite>
      <time>7:16</time>
      <p>
          And   so   when   you   say   cheaper ,   you   mean   the   mechanicals   are   the   shortcuts   or   something . 

      </p>

        <cite>Chris Lento</cite>
      <time>7:22</time>
      <p>
          I   mean   targeting   a   lower   price   point   on   the   rents   and   what   else   is   inexpensive   Plumbing   wiring   Inside   the   wall .   

      </p>

        <cite>Chris Lento</cite>
      <time>7:30</time>
      <p>
          Clients   have   probably   already   been   changed ,   but   roofing   structural .   If   you   find   a   two   bedroom ,   one   bath   property   from   the   mid   80s ,   it   also   has   a   non-interesting   aesthetic .   It&#39;s   basic   Right ,   Doesn&#39;t   have   any   gables   or   any   architectural   distinction . 

      </p>

        <cite>Ed Mathews</cite>
      <time>7:44</time>
      <p>
          So   architectural   distinction   are   you   looking   for   unique   properties   that   are   curb   appeal ?   Or   is   it   something   else ?   

      </p>

        <cite>Chris Lento</cite>
      <time>7:51</time>
      <p>
          I   wouldn&#39;t   say   we&#39;re   looking   for   trophy   properties   by   any   means .   We&#39;re   looking   for   properties   that   have   a   value-add   component ,   that   the   numbers   make   sense   and   we   can   underwrite   realistically .   Yeah ,   you   have   to   underwrite   realistically ,   in   my   opinion ,   with   a   realistic   underwriting   list .   Hey ,   this   is   what   we   really   think   is   going   to   happen ,   what   we   really   think   the   exit   price   is   the   market&#39;s   going   to   do ,   and   then   add   in   a   little   factor   of   safety ,   sure ,   to   make   it   a   little   more   conservative ,   and   that&#39;s   where   we   like   to   sit .   It&#39;s   a   property   that   shits   that   box ,   2022 ,   under   contract   right   now   in   Atlanta ,   class   A .   Yeah ,   I   don&#39;t   know   the   line   I   would   say   but   it&#39;s   new .   

      </p>

        <cite>Ed Mathews</cite>
      <time>8:26</time>
      <p>
          So   it&#39;s   almost   by   definition ,   a   class   A ,   but   it&#39;s   not   like   what   does   that   look   like ?   Is   it   a   lot   of   class   A ?   

      </p>

        <cite>Chris Lento</cite>
      <time>8:28</time>
      <p>
          The   portfolio   is   A&#39;s   and   B&#39;s ,   and   on   the   A   side   we   like   to   think   of   it   as   A   minuses .   We&#39;re   not   pushing   the   market   in   rents ,   we&#39;re   not   the   brand   new   thing   with   a   rooftop   pool   or   anything   like   that .   But   the   A&#39;s   have   they&#39;re   relatively   new   or   they&#39;re   refurbed   older   buildings   that   are   newly   renovated ,   so   we   can   keep   our   prices   $200   below   the   local   class   A&#39;s   but   have   a   very   similar   experience . 

      </p>

        <cite>Ed Mathews</cite>
      <time>8:52</time>
      <p>
          Smart ,   and   when   you&#39;re   doing   it   that   way ,   from   a   strategy   perspective ,   obviously   you&#39;re   looking   to   push   occupancy .   So   I&#39;m   curious   what   are   those   numbers   typically   look   like   in   the   markets   that   you&#39;re   in ?   

      </p>

        <cite>Chris Lento</cite>
      <time>9:02</time>
      <p>
          We&#39;d   love   to   be   95   plus   in   all   the   markets .   Atlanta   right   now   is   hovering   around   92 .   I   can   see   market   91 ,   92 .   Yeah ,   that&#39;s   not   bad .   We   do   a   property   in   Baltimore   that   had   struggled   when   we   bought   it   and   a   lot   of   bad   debt   and   a   lot   of   tenants   that   didn&#39;t   meet   the   credit   requirements   and   the   prior   owner   just   filled   it .   So   we   struggled   there   and   now   we&#39;re   at   98 ,   which   is   crazy .   We&#39;re   in   the   process   of   increasing   the   rents   To   some   degree .   You   want   to   be ,   in   my   opinion ,   at   the   95 ,   96   max   level ,   Otherwise   you&#39;re   not   getting   enough   charm   and   you&#39;re   not   keeping   up   with   the   market .   

      </p>

        <cite>Ed Mathews</cite>
      <time>9:35</time>
      <p>
          And   then   you   stagnate ,   and   that&#39;s   a   problem   too . 

      </p>

        <cite>Chris Lento</cite>
      <time>9:37</time>
      <p>
          Exactly   

      </p>

        <cite>Ed Mathews</cite>
      <time>9:38</time>
      <p>
          so   I&#39;m   curious   about   the   Baltimore   property .   It   probably   applies   to   a   lot   of   your   properties   when   you&#39;re   inheriting   residents   who   don&#39;t   fit   your   resident   profile   what&#39;s   your   strategy   there ? 

      </p>

        <cite>Ed Mathews</cite>
      <time>9:50</time>
      <p>
          How   do   you   handle   that ?   

      </p>

        <cite>Chris Lento</cite>
      <time>9:51</time>
      <p>
          Well ,   you   need   a   strong   property   management   team .   So   we   do   third-party   management ,   meaning   that   we   hire   local   property   management   to   run   the   property .   We   try   where   we   can   to   use   the   same   property   management   company .   So   we   have   a   good   relationship   with   a   reasonably   large   Southeastern   company   that   does   a   number   of   markets ,   but   not   all   of   them .   And   then   we&#39;re   very   hands-on   and   we   focus   on   bad   debt .   Every   week   we   have   a   meeting   with   our   property   management   team   and   one   of   the   tabs   of   our   spreadsheet   is   just   a   cut   and   paste   of   their   paid   receivables   30 ,   60 ,   90 .   And   we   have   notes   next   to   each   one   Like   where   are   we   with   this   person ?   Who&#39;s   talking   to   who ?   And   that&#39;s   a   big   focus   of   the   property   management   team   and   they&#39;re   incentivized   to   drive   the   bad   luck   down .   

      </p>

        <cite>Chris Lento</cite>
      <time>10:27</time>
      <p>
          It&#39;s   a   process .   It&#39;s   not   going   to   be   fixed   in   two   months .   It&#39;s   going   to   take .   What   are   the   local   eviction   laws ?   How   much   you   want   to   work   with   people ?   What   are   programs   that   are   out   there   for   people   that   are   behind   on   rent ?   And   it&#39;s   a   constant   kind   of   weekly .   All   right ,   what&#39;s   next ?   

      </p>

        <cite>Ed Mathews</cite>
      <time>10:43</time>
      <p>
          yeah ,   honestly ,   I   usually   find   that   it&#39;s   best   case   12   months ,   sometimes   18   months ,   to   stabilize   building   

      </p>

        <cite>Chris Lento</cite>
      <time>10:51</time>
      <p>
          oh ,   yeah ,   I   agree ,   12   months   is   you&#39;re   doing   great .   

      </p>

        <cite>Chris Lento</cite>
      <time>10:53</time>
      <p>
          I   think 

      </p>

        <cite>Ed Mathews</cite>
      <time>10:53</time>
      <p>
          that&#39;s   home   run   

      </p>

        <cite>Chris Lento</cite>
      <time>10:55</time>
      <p>
          because   at   the   beginning ,   behind   the   tenant   basis ,   but   for   those   first   maybe   months ,   it&#39;s   hard   to   get   high   quality   new   tenants   because   the   property   has   this   certain   feel   and   it   can   be   a   culture   too .   Hey ,   you   don&#39;t   need   to   pay   for   three   months   here   and   then   they   start   sharing   the   information   and   you&#39;re   like ,   oh ,   how   do   I   change   dynamics ?   So   yeah ,   12   months ,   I   agree   with   you ,   is   on   the   positive   side .   

      </p>

        <cite>Ed Mathews</cite>
      <time>11:15</time>
      <p>
          Yeah ,   that&#39;s   great .   So   tell   me ,   where   are   you
      </p>

      <h2 id="chapter_35336664">Growth Strategy and Financing Approach</h2>


        <cite>Ed Mathews</cite>
      <time>11:17</time>
      <p>
            taking   the   business   now ?   So   you&#39;re   at   800 ,   you&#39;ve   got   a   complex   under   contract .   What&#39;s   next ? 

      </p>

        <cite>Chris Lento</cite>
      <time>11:24</time>
      <p>
          We&#39;re   looking   to   continue   to   grow .   2023   and   2024   were   just   slow   years ,   I   think ,   for   everybody ,   and   so   we   didn&#39;t   grow .   I   think   one   deal   in   those   two   years ,   so   it   was   just   really   tune   up   the   deals .   You   have   handle   some   refis   in   turbulent   markets ,   keep   swimming ,   check   the   10-year   treasury   more   often   than   you   think   you   should   have   to .   

      </p>

        <cite>Chris Lento</cite>
      <time>11:43</time>
      <p>
          Like   multiple   times   a   day .   

      </p>

        <cite>Chris Lento</cite>
      <time>11:44</time>
      <p>
          Exactly .   Which   is   crazy ,   it&#39;s   a   10-year   treasury   number .   So ,   yeah ,   we&#39;re   back   in   acquisition   mode ,   like   we&#39;re   seeing   a   lot   more   deals   come   on   the   market   where   our   investors   have   a   more   positive   feel .   There&#39;s   just   definitely   a   change .   There&#39;s   still   some   wait   and   see   going   on ,   but   I   think   to   some   degree ,   the   lenders ,   a   lot   of   these   bridge   loans   are   finally   coming   due   for   real .   The   lender&#39;s   like ,   all   right ,   yeah ,   this   time   we   meet   it .   Interest   rates   are   coming   down .   I   feel   like   the   sentiment   at   the   end   of   24   was   oh ,   25 ,   the   interest   rates   are   just   going   to   come   down .   

      </p>

        <cite>Ed Mathews</cite>
      <time>12:11</time>
      <p>
          I&#39;m   curious   where   you   think   rates   are .   

      </p>

        <cite>Chris Lento</cite>
      <time>12:13</time>
      <p>
          So   I   think   they&#39;re   going   to   stick   around   where   they   are   now   for   a   while .   I   don&#39;t   see   anything   pushing   them .   The   Fed   can   lower   the   short-term   rates   if   inflation   doesn&#39;t   go   up   and   that   would   be ,   I   think ,   good   for   construction   loans   and   for   adjustable   rate   loans ,   but   that&#39;s   not   really   tied   to   the   long-term   loans   which   most   of   the   loans   I   like   to   get   are   based   on ,   and   really   the   short   terms   are   too   high   relative   to   the   long   terms .   Anyway ,   I   think   they&#39;re   going   to   stick   around   and   that   prices   are   going   to   have   to   adjust   and   I   think   you&#39;re   going   to   inflate   the   rents   out   of   this .   

      </p>

        <cite>Chris Lento</cite>
      <time>12:43</time>
      <p>
          It&#39;ll   be   a   little   time   for   everyone&#39;s   income   to   go   up   and   then   okay ,   now   the   deals   start   making   sense   a   little   bit   more .   

      </p>

        <cite>Ed Mathews</cite>
      <time>12:48</time>
      <p>
          Right   on .   So   you&#39;re   probably   raising   a   little   more   capital ,   right ?   Oh   yeah ,   you   put   it   under   a   30 ,   40   year .   You   put   it   under   a   30 ,   40   year .   

      </p>

        <cite>Chris Lento</cite>
      <time>12:55</time>
      <p>
          We   used   bridge   debt   on   some   heavy   CapEx   properties   in   2022 .   When ,   frankly ,   if   you   weren&#39;t   using   bridge   debt ,   I   don&#39;t   know   how   you   made   a   deal   pencil .   We   got   out   of   one   of   those   last   December   and   it   worked   out .   We&#39;re   working   on   one   right   now ,   rolling   into   some   permanent   financing ,   but   right   now ,   no ,   we&#39;re   not   looking   at   bridge   debt   at   all .   The   rates   are   so   high ,   interest   rate   caps   are   so   high ,   but   we&#39;re   raising .   No ,   we&#39;re   not   looking   at   Bridget   at   all .   The   rates   are   so   high ,   the   interest   rate   caps   are   so   high ,   but   we&#39;re   raising .   Yeah ,   we&#39;re   at   like   loan   to   value   maybe   65 ,   62%   on   some   deals .   

      </p>

        <cite>Chris Lento</cite>
      <time>13:23</time>
      <p>
          Yeah   so   we&#39;re   raising   a   lot   of   equity   and   we&#39;re   doing   more   preferred   equity   right ,   which   either   institutional   partners   or   family   offices .   That&#39;ll   get   us   up   to   85%   LTV ,   and   then   we   raise   limited   partner   equity .   

      </p>

        <cite>Chris Lento</cite>
      <time>13:35</time>
      <p>
          for   the   rest ,   

      </p>

        <cite>Ed Mathews</cite>
      <time>13:37</time>
      <p>
          yeah ,   nice ,   that&#39;s   a   smart   way   to   do   it . 

      </p>

        <cite>Ed Mathews</cite>
      <time>13:38</time>
      <p>
          It&#39;s   so   easy   to   get   over   leveraged   in   a   market   like   this .   The   fact   I   agree   with   you   on   the   interest   rates .   Everybody   was   like   survived   to   25   and   then   everything   will   be   okay   and   we&#39;ll   get   back   into   the   force .   And   it&#39;s   just   historically ,   where   the   interest   rates   are   these   right   like   right   now .   Today ,   historically   is   right   down   the   middle   of   where   it   has   been   50   years   back .   

      </p>

        <cite>Chris Lento</cite>
      <time>13:58</time>
      <p>
          And   it&#39;s   not   that   bad .   

      </p>

        <cite>Chris Lento</cite>
      <time>13:59</time>
      <p>
          It   just   feels   so   painful   compared   to   three   years   ago   yeah ,   

      </p>

        <cite>Ed Mathews</cite>
      <time>14:02</time>
      <p>
          Three   years   ago ,   4%   interest   rates   made   all   of   us   look   like   geniuses .   But   I   think   it&#39;s   time   to   actually   play   where   the   normal ,   historically ,   the   big   boys   play .   And   I   have   a   mentor   who   told   me   look ,   if   you   can&#39;t   make   a   deal ,   pencil   at   six   and   a   half   7% ,   that   might   be   a   you   problem ,   not   a   building   problem   or   a   market   problem .   And   if   it   was   easy ,   everybody   would   do   it .   But   the   fact   is   that   there&#39;s   other   levers   you   can   pull   to   get   creative ,   to   be   able   to   make   a   deal   pencil   and   do   it   responsibly   and   conservatively .   

      </p>

        <cite>Chris Lento</cite>
      <time>14:30</time>
      <p>
          Yeah ,   no ,   I   agree ,   and   it&#39;s   right   now .   It&#39;s   been   changing   so   much   right   In   the   last   five   years .   It&#39;s   constant ,   like   the   financing   and   the   debt   structures .   It&#39;s   a   constant   churn .   You   have   to   stay   on   top   of   it   with   your   lender .   

      </p>

        <cite>Chris Lento</cite>
      <time>14:41</time>
      <p>
          We   have   standing   lunches ,   like   at   least   once   a   month ,   where   I&#39;m   there   to   buy   him   a   turkey   sandwich   and ,   all   right ,   spill   it .   Tell   me   what&#39;s   going   on   in   the   world .   Okay ,   hey ,   why   don&#39;t   we   get   into   the   final   five ,   our   lightning   round ?   

      </p>

        <cite>Ed Mathews</cite>
      <time>14:51</time>
      <p>
          I   love   to   learn   how   leaders   like   you   think   and   how   they   approach   their   day   and   also   their   businesses .   First   and   foremost ,   purpose   right .   I   think   that   at   a   certain   point ,   when   you   reach   and   I   think   you&#39;re   probably   beyond   it ,   I&#39;m   guessing   but   where   your   personal   mortgages   are   paid ,   the   kids&#39;   colleges   are   either   on   track   or   locked   away   and   ready   for   them ,   the   cars   are   paid ,   you&#39;ve   done   all   the   responsible   stuff ,   stuff ,   and   now   you&#39;re   doing   some   of   the   fun   stuff ,   and   nevertheless ,   you   get   out   of   bed   on   Monday   morning   like   a   shot   and   you&#39;re   fired   up   to   go   to   work .   Right ,   for   me ,   that&#39;s   purpose .   Coming   out   of   the   tech   world ,   I   met   so   many   multi-multi-millionaires   and   a   few   billionaires ,   and   for   them   there   was   a   certain   point   where   it   just   stopped   being   about   money .   It   was   something   else ,   and   so   that&#39;s   what   I&#39;m   curious   about   is ,   from   your   perspective ,   what   gets
      </p>

      <h2 id="chapter_35336665">Final Five: Purpose and Mentorship</h2>


        <cite>Ed Mathews</cite>
      <time>15:40</time>
      <p>
            you   out   of   bed   on   Monday   morning ?   

      </p>

        <cite>Chris Lento</cite>
      <time>15:41</time>
      <p>
          I   think   at   that   level ,   thinking   about   it ,   it&#39;s   constantly   learning .   I   like   to   constantly   learn   new   things ,   dig   into   the   details ,   whereas   real   estate   is   constantly   changing ,   the   economy   is   changing ,   the   markets   are   changing .   It&#39;s   just   always   exciting   to   meet   new   people ,   learn   new   things ,   and   I   learn   by   doing   as   are   changing .   It&#39;s   just   always   exciting   to   meet   new   people ,   learn   new   things ,   and   I   learned   by   doing   as   we   get   into   a   deal .   We&#39;re   going   to   1031 ,   our   syndication   is   deal .   Okay ,   how   do   we   do   that ?   What   do   we   need   to   meet   to   figure   that   out ?   Okay ,   who   are   the   right   people ?   How   do   we   learn   this ?   What&#39;s   the   best   practices ?   How   can   we   be   better   than   the   next   guy   on   this ?   How   can   we   make   us   smoother ?   How   can   we   improve   the   relationship ?   And   everyone   wins .   

      </p>

        <cite>Chris Lento</cite>
      <time>16:15</time>
      <p>
          So   I   think ,   for   me ,   really   constant   learning   environment   is   what   I   

      </p>

        <cite>Ed Mathews</cite>
      <time>16:17</time>
      <p>
          Okay   cool   and   we   don&#39;t   get   to   where   you   are ,   I   don&#39;t   get   to   where   I   am ,   and   the   folks   that   are   listening   probably   didn&#39;t   get   where   they   are   without   mentorship   and   really   good   coaches   and   people   who   you   know   early   on   and   even   to   this   day ,   take   an   interest   in   our   success .   And   so   I&#39;m   curious   about   the   mentors   and   coaches   you&#39;ve   had   in   your   life   and   teachers   for   that   matter ,   and   what&#39;s   the   best   advice   you   ever   got   and   who   gave   it   to   you ? 

      </p>

        <cite>Chris Lento</cite>
      <time>16:39</time>
      <p>
          So   I&#39;ve   had   a   number   of   mentors ,   but   I&#39;ve   also   done   this   coaching   program   that   was   really   valuable ,   called   strategic   coach ,   and   two   things   came   out   of   it   that   really   stuck   with   me ,   and   one   is   this   top   of   the   who ,   not   how .   I&#39;m   like   somebody   who   wants   to   know   everything   and   do   everything .   You&#39;re   an   engineer ,   so   let   me   figure   it   out   and   just   the   idea   that   everyone   has   a   unique   ability   and   that ,   if   you   hate   doing   something ,   one   thing   I   just   can&#39;t   stand   doing   is   anything   related   to   lender   re-imbursements .   Just   find   the   whole   process   annoying ,   tedious   and   no   one   knows   what   they&#39;re   doing ,   right ?   Some   people   don&#39;t   mind   that .   They&#39;ll   kind   of   like   that .   So   find   that   person   and   have   them   do   it .   I   have   them   do   it .   I&#39;ll   focus   on   the   stuff   I   want   to   do   and   that   whole   idea .   You   don&#39;t   need   to   know   it   and   train   someone .   What   you   need   to   do   is   find   someone   who   knows   it   or   it   lines   up   with   what   they   like   to   learn ,   and   then   partner   with   them ,   work   with   them ,   hire   them .   

      </p>

        <cite>Ed Mathews</cite>
      <time>17:27</time>
      <p>
          Yeah ,   I&#39;m   a   numbers   guy ,   but   I   don&#39;t   like   doing   books .   We   hired   a   Cracker   Jack   controller   and   accounting   person   and   they   are   awesome .   

      </p>

        <cite>Chris Lento</cite>
      <time>17:35</time>
      <p>
          It&#39;s   great   seeing   someone   who   loves   it .   

      </p>

        <cite>Chris Lento</cite>
      <time>17:36</time>
      <p>
          Right ,   you&#39;re   like   oh   this   person   loves   this   

      </p>

        <cite>Ed Mathews</cite>
      <time>17:37</time>
      <p>
          An   accountant   so   I   know   the   personality   types .   It   comes   in   handy .   I&#39;m   also   interested   in   lessons   learned .   I   fundamentally   believe   that   we   learn   more   from   our   mistakes   than   we   do   our   successes ,   and   I&#39;m   curious   about   a   professional   decision   you&#39;d   love   to   have   back ,   and   what   did   you   do   to   navigate   it   and   figure   it   out   and   even   recover ,   if   that   was   something   that   you   had   to   do ? 

      </p>

        <cite>Chris Lento</cite>
      <time>17:57</time>
      <p>
          Yeah ,   we   had   a   deal   where   we   had   to   go   hard   in   order   to   win   the   deal   and   we   had   confidence   that   we   could   raise   the   capital ,   but   it   wasn&#39;t   by   any   means   in   the   bank ,   and   that&#39;s   part   of   this   game ,   right ,   I   want   us   to   pull   all   the   different   pieces   together ,   and   they&#39;re   not   all   there   yet .   You   have   to   be   confident   that   this   will   come   in   and   convey   that   confidence   to   the   other   group .   And   so   I   would   say   we   got   a   little   bit   over   our   head   with   the   amount   of   capital   raise .   Luckily ,   it   was   last   fall   where   capital   was   scarce .   We
      </p>

      <h2 id="chapter_35336666">Learning From Mistakes and Success</h2>


        <cite>Chris Lento</cite>
      <time>18:24</time>
      <p>
            had   the   election .   

      </p>

        <cite>Chris Lento</cite>
      <time>18:25</time>
      <p>
          That&#39;s   when   the   10   years   started   going   up ,   to   people&#39;s   kind   of   surprise .   We   weren&#39;t   the   only   ones   that   were   having   this   problem .   We   were   able   to   work   with   a   seller   to   negotiate   some   extensions ,   and   then   we   were   able   to   pull   in   some   press   equity   to   fill   the   gap .   But   I   would   say   the   lesson   was   have   an   A ,   b   and   C   plan   and   actually   think   through   it   with   you   and   your   partners   ahead   of   time .   Okay ,   if   not   this ,   then   what&#39;s   next ?   Because   that   scramble   feeling   when   you   have   money   on   the   line .   

      </p>

        <cite>Ed Mathews</cite>
      <time>18:51</time>
      <p>
          I&#39;m   also   interested   in   how   leaders   like   you   take   in   information   and   how   you   grow .   One   of   the   things   you   said   earlier   is   that   you&#39;re   always   looking   to   learn .   So   are   you   a   physical   book   person ?   Are   you   an   audible   or   something   else ,   and   who   are   you   paying   attention   to   these   days ?   

      </p>

        <cite>Chris Lento</cite>
      <time>19:06</time>
      <p>
          I   listen   to   a   fair   amount   of   podcasts ,   often   depending   on   which   podcast   on   1.5x ,   because   fair   amount   of   flow .   I   do   read   a   fair   amount   of   real   estate   and   business   books ,   but   the   same   thing .   I   feel   like   maybe   one   out   of   10 ,   you   will   want   to   read   it .   It   could   be   a   10   page   pamphlet ,   Right ?   So   I   just   fly   through   them   Like   where&#39;s   the   yeah ,   where&#39;s   the   thing ?   

      </p>

        <cite>Chris Lento</cite>
      <time>19:26</time>
      <p>
          Yeah .   

      </p>

        <cite>Chris Lento</cite>
      <time>19:26</time>
      <p>
          This   person   has   one   thing   or   two   things   that   they&#39;re   probably   have   a   great   idea ,   and   there&#39;s   why   I   should   believe   them .   

      </p>

        <cite>Ed Mathews</cite>
      <time>19:32</time>
      <p>
          I   always   skip   the   first   three   chapters .   

      </p>

        <cite>Ed Mathews</cite>
      <time>19:34</time>
      <p>
          It&#39;s   a   story   and   something   else ,   but   where&#39;s   the   nugget ?   

      </p>

        <cite>Chris Lento</cite>
      <time>19:37</time>
      <p>
          I   do   read   a   fair   amount   of   books ,   I   listen   to   podcasts ,   I   read   the   Wall   Street   Journal   real   estate   section   every   day ,   if   not   every   other   day ,   and   then   just   talk   to   people .   A   lot   of   it&#39;s   talking   to   people .   It&#39;s   like   we   said   earlier   lenders   see   a   lot   of   different   variety   of   people .   Your   lawyers   often   have   good   ideas   see   different   structures .   

      </p>

        <cite>Ed Mathews</cite>
      <time>19:55</time>
      <p>
          It&#39;s   amazing   what   they   see   because   they   have   such   a   broad   view   into   the   market ,   because   their   client   base   is   diverse ,   so   they&#39;re   seeing   a   whole   bunch   of   stuff   that   never   hits   your   radar   unless   you   ask   Yep ,   all   right .   Last   one ,   how   do   you   define   success   in   your   world ?   

      </p>

        <cite>Chris Lento</cite>
      <time>20:10</time>
      <p>
          I   think   adding   value   and   not   just   like   from   a   real   estate   perspective ,   helping   people   learn ,   improving   these   apartments   that   I&#39;m   buying ,   it&#39;s   nice .   When   you   buy   a   heavy   value   ad   and   it   just   looks   terrible   and   you&#39;re   like ,   oh ,   I   can ,   this   is   not   that   hard   Like   landscaping ,   paint   roofs ,   like   we   can   make   this   place   look   pretty   nice .   Just   adding   value   across   the   board   is   my   answer   to   that .   

      </p>

        <cite>Ed Mathews</cite>
      <time>20:30</time>
      <p>
          Chris ,   congratulations   on   all   your   success .   I&#39;m   really   excited   for   you   and   I   can&#39;t   wait   to   see   you   continue   to   grow   and   maybe   you&#39;ll   let   me   become   one   of   your   investors   someday .   But   how   do   you   spend   your   time ?   

      </p>

        <cite>Chris Lento</cite>
      <time>20:41</time>
      <p>
          I   have   an   eight-year-old   daughter .   She&#39;s   pretty   active ,   so   the   winter   we   do   a   lot   of   skiing ,   we   do   a   lot   of   bike   riding .   We   just   got   a   dog   that&#39;s   a   holding   thing .   A   lot   of   family   stuff .   We   go   to   the   beach   in   the   summers ,   yeah .   

      </p>

        <cite>Ed Mathews</cite>
      <time>20:53</time>
      <p>
          He&#39;s   married   to   an   amazing   woman   and   they   decided   not   to   have   kids .   When   he&#39;s   exciting ,   he&#39;s   got   a   boat   and   he   restores   cars ,   all   the   cool   stuff .   He&#39;s   literally   that   cool   uncle   that   everybody   wants .   But   he   asked   me   once   what   do   you   do   for   hobbies ?   And   I&#39;m   like   you   see   that   little   girl   over   there   and   the   taller   one   over   there .   Those   are   my   hobbies   Right   Swimming .   I   do   dance ,   I   do   softball ,   I   do   soccer ,   I   do   beach   and   whatever   else   they   want   to   do .   

      </p>

        <cite>Chris Lento</cite>
      <time>21:17</time>
      <p>
          And   we   do   a   fair   amount   of   traveling   too .   

      </p>

        <cite>Chris Lento</cite>
      <time>21:19</time>
      <p>
          Yeah ,   

      </p>

        <cite>Ed Mathews</cite>
      <time>21:20</time>
      <p>
          best   thing   ever . 

      </p>

        <cite>Chris Lento</cite>
      <time>21:20</time>
      <p>
          We   like   that .   

      </p>

        <cite>Ed Mathews</cite>
      <time>21:25</time>
      <p>
          I   just   have   a   child ,   that   is ,   and   especially   daughters .   I&#39;m   partial .   I&#39;m   a   girl   dad ,   so   I&#39;m   like   you ,   hey   Chris .   So   if   folks   want   to   learn   more   about   EM   Capital   or   want   to   get   to   know   you ,   what&#39;s   the   best   way   to   get   in   touch ? 

      </p>

        <cite>Chris Lento</cite>
      <time>21:32</time>
      <p>
          You   can   check   me   out   on   my   website   at   emcapitalgroup . com ,   and   then   I&#39;m   very   active   on   LinkedIn .   I&#39;ll   reach   out   to   you   on   LinkedIn   and   we   can   set   up   a   call .   

      </p>

        <cite>Ed Mathews</cite>
      <time>21:40</time>
      <p>
          Awesome .   Chris   Lento ,   thank   you   so   much   for   your   time   today .   It&#39;s   really   good   to   see   you   and   continue .   Good   fortune . 

      </p>

        <cite>Chris Lento</cite>
      <time>21:45</time>
      <p>
          Great   questions ,   good   conversation .   Thanks 

      </p>