WS1885 The Future of Commercial Real Estate | Nic DeAngelo

Welcome to The Real Estate Syndication Show. In this episode , we dive deep into the dynamics of commercial real estate with the impressive Nic DeAngelo, CEO and founder of Saint Investment Group which boasts over $200 million in assets under management. With a rich history in real estate that saw him emerge stronger from the global financial crisis, Nic brings us invaluable insights into the current distress in commercial real estate and where the savvy investor might find good deals.

Join us as we discuss the reshaping of manufacturing in North America, the rising demand for housing in regions like the Midwest, and how multifamily and industrial properties are weathering the storm better than others.

Moreover, Nic sheds light on the profound demographic shifts happening in the workforce, the dwindling labor participation rate of Gen Z, and the ripple effects of the aging baby boomer generation. We'll explore the inevitable wealth transfer to millennials, evolving investment strategies, and potential disruptors like geopolitical tensions and China's demographic decline.

So buckle up for a thought-provoking episode , and don't forget to like and subscribe for more content that could revolutionize your approach to real estate investing. Head over to lifebridgecapital.com to join us on this journey. Let's get started!

Don't miss out on the wealth of knowledge from today's expert, Nic DeAngelo! Head over to saintinvestment.com/resources to access valuable webinars, free resources, and smart investment strategies that Nic has generously offered. It's your opportunity to learn from a seasoned pro how to navigate the complex world of real estate and secure your financial future. Visit now to start elevating your investment game!

VISIT OUR WEBSITE
https://lifebridgecapital.com/

Here are ways you can work with us here at Life Bridge Capital:
⚡️START INVESTING TODAY: If you think that real estate syndication may be right for you, contact us today to learn more about our current investment opportunities: https://lifebridgecapital.com/investwithlbc

⚡️Watch on YouTube: https://www.youtube.com/@TheRealEstateSyndicationShow

📝 JOIN THE DISCUSSION
https://www.facebook.com/groups/realestatesyndication

➡️ FOLLOW US
https://twitter.com/whitney_sewell
https://www.instagram.com/whitneysewell/
https://www.linkedin.com/in/whitney-sewell/

⭐ Be Our Guest!
We are continuously working hard to help our listeners with their journey to real estate syndication. If you think you can add value in any way to our listeners who are in commercial real estate, then we’d love to have you over.
Apply here: https://lifebridgecapital.com/join-our-podcast/

Transcript

Nic DeAngelo [00:00:00]:

I don't see that distress in residential. But, Deana, you, me, us, we all work in many of your listeners. We work in commercial. So there's some significant distress in parts of commercial today where I think there's good deals. I do have friends that are transacting at some pretty ridiculous discounts in certain markets. So I think it's not systemic right now, like people are assuming, but you can definitely target and find really amazing opportunities right now.

Deana Berg [00:00:39]:

Welcome to your daily real estate syndication show. I'm your host, Deana Berg. Have you ever wondered the impact of a generation on U. S. Policy on investment behavior? Did you know that the baby boomers were the healthiest generation? Did you know that the baby boomers are the wealthiest generation to ever have lived in the United States? Well, join me today as my guest discusses some of those trends, some of the policies, and what that means for investment behavior today. My guest is Nic DeAngelo He is the CEO and founder of St. Investment Group.

Deana Berg [00:01:13]:

Nic and his team run a portfolio valued at over $200 million, including over 500 loans and large scale distressed assets. St. Investment group has two foundational beliefs. Number one, Wall street is broken, and real estate is the cure. And secondly, economics tell the future. Before getting into real estate, Nic built several multi million dollar companies and has a foundation as well. He is California based, and we're glad to have him on the show. Nic DeAngelo welcome to the show.

Deana Berg [00:01:43]:

So glad you're here with us today.

Nic DeAngelo [00:01:45]:

Deana. Thank you. I'm really excited. Been looking forward to it.

Deana Berg [00:01:49]:

Well, good. Let's jump in. Give us a brief overview of your background, and let's jump into what you're passionate about right now.

Nic DeAngelo [00:01:55]:

Sure. So I'm on one hand, a lifelong entrepreneur, but I'm also celebrating my 20th year in real estate this year. So I started very young. I was able to tap in very early on with some friends and family that were huge mentors to me that were in real estate. I saw their ability to be very successful in the space, parents, uncles, things that were great. And so I started my career with some family offices and got to be classically trained on the acquisition side. We then expanded into asset management, all of this with the backdrop of the global financial crisis. So we developed some really advanced acquisitions models that we still use today.

Nic DeAngelo [00:02:38]:

We had developed some really amazing asset management models that we still use today. And what we found was our investors were looking for something more consistent. And so we had been buying debt in the background for many years as well. So today, we have found ourselves in an environment where fixed income was the number one request for our investors. So we've been filling that need with our investors by buying over 500 mortgages throughout the US, and are working more in a fixed income model for real estate. So it's been really exciting times with how wild the market's been. And, yeah, that's 20 years summed up into about 90 seconds, but it's been great. We just crossed over 206,000,000 in assets under management, 26 syndications, 500 plus loans, and a lot of happy investors.

Nic DeAngelo [00:03:30]:

So it's been a fun run.

Deana Berg [00:03:32]:

That's great. And where are you based?

Nic DeAngelo [00:03:35]:

We are in Southern California, so we do have a virtual component to our staff, which is the majority, so they're throughout the country, but our hq is in Newport Beach, Southern California.

Deana Berg [00:03:46]:

Gotcha. I have a couple questions. I want to know what classically trained something. My kids all go to classical school, so we actually throw that term around in jest in our house a lot. But I think I know what you're talking about, because I feel like people who come over from either institutional capital or family offices, and they kind of inject themselves into the syndication space, it feels like the Wild west to them. So I'd love to hear what you mean by you are classically trained in family offices and acquisitions.

Nic DeAngelo [00:04:17]:

Oh, my gosh. So it's twofold. It was a really interesting time in the market, where things had such a big run up before the global financial crisis that a lot of people that shouldn't have been. I don't know how to phrase this perfectly. A lot of people were making too much money and they weren't sticking to the fundamentals. So at that time, I wanted to be involved with winners around that, but the sky was falling for a lot of operators, so I basically had to beg my way in, negotiate my way into work for free with a local family office. It was a third generation real estate company, so they had these amazing strategies that were generationally developed. The biggest issue was that they needed some uptick and some updates to the current market conditions.

Nic DeAngelo [00:05:11]:

They hadn't kept in with some newer technologies, et cetera. So that was my inroads was to offer that, and, hey, I know I'm too young, hey, I know I'm too inexperienced, hey, et cetera, et cetera. But between that side and some family members that I was really trying to help on the acquisition side, we went really all in on distress. And again, at that market time, it was kind of perfect timing for that. But there were weeks where we were buying up to $10 million a week in acquisitions from banks, from foreclosures, almost exclusively in the commercial space. So I learned what really high end acquisitions looks like. I learned what really high end due diligence looks like. I learned what really high volume of purchasing looks like with big zeros behind it.

Nic DeAngelo [00:06:01]:

And so what that did was when that level of stress and I was very young at the time, and that high level of expectation all collide at one time, you have to figure out the systems on it. So now, where volume is a little bit lower, we are more snipers than we are machine gun approaches. Now. It's like, we can process deals really well. We do extremely well when the sky is falling, right? So when all kinds of bad things are happening in the market, kind of feels like home, right? So we've had decade long relationships with ceos of banks and trade desks at banks. And so when it came to come full circle, purchasing different assets and at discounts, they know we're good buyers. They know we got cash in hand. So it was on one side, classically trained, on the acquisition side, where we knew the high expectations, we knew the things that these partners needed to see to transact, and the high volume, so we had to put those together with really efficient systems.

Nic DeAngelo [00:07:03]:

And then the relationship side, family offices, high net worth families, they have decade long relationships. So I got to learn and soak in these things from people that I really cared about that I was close to. Some were family. Some I had to negotiate my way into work for them. So that's what I mean by classically trained is people that just, I stand on the shoulders of today, and I'm so thankful for the things that they taught me at that period of time.

Deana Berg [00:07:31]:

I love that. What I like about your story is that you were both classically trained, but there's, like, a scrappy nature to that story. You're like, I will work for free. I want to get my foot in the door. I want to learn from you. You didn't give up the squeaky wheel kind of syndrome, and it clearly paid off for you. So I love also thinking about our listeners, thinking, man, how could I ever even get into this? It's a long road. You said it yourself.

Deana Berg [00:07:54]:

You've been doing this for 20 years in some form or another. But I like the intersection between classically trained and scrappy perseverance. So great job on that.

Nic DeAngelo [00:08:07]:

Yeah, it was a wild time. Again, the global financial, like, 2008 to 2011, is. I don't know if we'll ever see anything like that we'll see other problems. But that was a really wild time where a lot of things happen.

Deana Berg [00:08:19]:

Yeah. So you said in distress. You feel at home. Do you feel at home yet?

Nic DeAngelo [00:08:25]:

Oh, man. Well, certainly things are tighter than they used to be. I'll say that the comparisons to 2008 that we're seeing today, on one hand, it feels dark right now, right. If you look at investor sentiment, consumer sentiment, it is very low. Okay. It's low from judging what our government's doing congressionally, presidentially, there's just low ratings across the board. But when I see direct comparisons to 2008, I'm like, markets are doing a pullback. But 2008, there was no floor, right? Things were falling from the sky.

Nic DeAngelo [00:09:05]:

We were buying assets. Just to give you an idea, we were buying assets for below replacement cost in probably 15 plus markets, right? And we were like, man, if we only had more money, we'd buy buying in every market, right? Today, it's just not the same level of distress back then was mostly a residential falling from the sky. You had an average loan to value at that time in 2008 ish of 97%. Right. So there was no equity. So borrowers were walking away because they had no reason not to walk away. Right. Today, the average equity is around 40% in single family.

Nic DeAngelo [00:09:46]:

The average rate is 3% today, whereas the average purchase rate today is in the sevens, eight. I mean, there's crazy numbers being thrown around. So I don't see that distress in residential. But, Deana, you, me, us, we all work. And many of your listeners, we work in commercial. So there's some significant distress in parts of commercial today where I think there's good deals. I do have friends that are transacting at some pretty ridiculous discounts in certain markets. So I think it's not systemic right now, like people are assuming, but you can definitely target and find really amazing opportunities right now.

Deana Berg [00:10:29]:

Yes. And I'd love to hear one of the things that you are passionate about that we talked about. Preshow was some important demographic shifts that we're starting to see right now that could have a massive impact on investment, on the economy. Talk to us a little bit about that.

Nic DeAngelo [00:10:46]:

Yeah. The economic side to me has been for our business. We were amazing acquirers, amazing purchasers. But we purchased deals at such good, targeted prices, below market prices. We ended up with some deals where we sat there being like, we're working really hard for a deal that already has a 20, 30% below market discount. What is going on? We've never lost money on a deal. Thank God. Trying to keep that forever, that trend up.

Nic DeAngelo [00:11:16]:

Even our returns, on average, of our last seven exits were, I think, 30. Here's what it is. Our last seven exits. Hold on. Our last seven exits averaged a 35.5% IRR. So we've had successful exits. But we saw that the economic tides in some of these markets were so much more drastically affecting of the deal than we gave credit for in the past. So we have focused for the last, let's say, five years or so.

Nic DeAngelo [00:11:51]:

And especially during COVID our research economically in office, has been exponentially growing. So we drill down in every market that we touch, in everything that we do to such a high level. So what we found and what I'm passionate about, what we're talking about, is that there's different market drivers in each situation. Right now, inflation is a huge discussion, right? We have the Federal Reserve going all the way from the COVID era, where we reached a 9% of inflation, all the way down to today, where it's decreased significantly. And it was really easy for everyone to just write that up. Oh, it was just Covid. It was this anomaly, right? It was this crazy thing that happened. But the reality is, Covid, in a lot of ways, was just the beginning of a lot of these trends.

Nic DeAngelo [00:12:39]:

It accelerated many of these trends. It was a one piece of a larger puzzle that we're seeing on going for. If you look at the big names, the Howard Marks, the Bill Ackmans, I mean, many of the biggest names, they're betting on ten to 20 years of inflationary pressures ahead. So we are looking at the same numbers. We are seeing the same again, don't think the sky is falling, but adjusting expectations and strategies is what we're doing with the data that we're seeing.

Deana Berg [00:13:11]:

In alignment with some of what we're seeing with the baby boomers. Let's talk about the impact of. I mean, some of this is the timing. You can't make this stuff up. People are growing older. There's trends among generations. How will the behavior of baby boomers affect where we go for the next, let's say, ten years?

Nic DeAngelo [00:13:34]:

Yeah. So, as we sit today in the US, we have many benefits that the rest of the world does not have demographically. One of them is that after World War II, we have this baby boomer emergence, this baby boomer generation, which is the largest and the most wealthy, the most successful generation that the US has ever had by a long shot. Right? So the baby boomers coming up, coming of age, getting into the workforce, that was actually a deflationary pressure in many ways. Because if there's a huge workforce and if labor inflation is a major driver of us inflation, then having a massive workforce actually drives down the cost of labor in a big way. Not only that, the US in a major way during that period of time, emerged as a major winner in a lot of economic categories where many parts of the world were literally rebuilding from scratch. Their major cities, their major metros, the US kind of came out unscathed for the most part. We had some debt issues, et cetera.

Nic DeAngelo [00:14:42]:

But as the baby boomers have developed, they really stepped into the center stage of the world, and the US has thrived. But that has changed, right? What we've seen in the last ten to 15 years is the largest bull run in market history in the United States. So that's an interesting note on its own, right? We've seen the stock market booming. We've set more records than ever. We've seen companies killing it. But we've also seen, at the same time, if you line these two graphs up, of the largest bull run in history, we've seen the cheapest cost of capital that we've seen at that same time. So those are two interesting charts to overlay. But now things have shifted a little bit, because during that last ten to 15 years, the baby boomers, that huge generation, was entering into their highest earning age period in their lifetime.

Nic DeAngelo [00:15:37]:

Not just because they're at the top of their game, they're killing it in the workforce, right? They have decades of experience. They're in those big seats and the big C suites and the big executive, they're hitting the higher levels of different companies. But cost of capital is cheap. And the baby boomers of that period of time also had something amazing happen. Their expenses lowered exponentially because their freaking kids left the house. So they have the highest income they'll ever see in their entire life. During that decade, they also have their expenses lowered significantly with their kids leaving the house. And all this in the backdrop of cheap money in a time frame where the market's in a huge bull run.

Nic DeAngelo [00:16:18]:

But Covid did something interesting. Not only were we sitting in a position where baby boomers, right around this time, or especially during COVID were starting to tilt towards retiring more. Right? Also taking their money with them when they retire. Right? But Covid sped that up. They said, look, well, I was going to retire in two years. Why am I not retiring now, right? Why am I dealing with this now? Or layoffs or et cetera, or I need to take my money into more safe assets, because the entire world is being upended by this virus and the government responses. So all that has reached a point where today, as it stands today, it's not just that the baby boomers are leaving, it's that under them is Gen X, the next generation, kind of a smaller generation. Right.

Nic DeAngelo [00:17:07]:

Kind of had to deal with a huge baby boomer generation in their way for a lot of their working years, but now they're coming of age and stepping into the highest level roles. But they're just a smaller demographic. Below Gen X are millennials. Millennials are a big generation, but they're not running the show like Gen X is right now, or like the boomers are passing along. Below millennials is Gen Z, tiny generation. And Gen Z is replacing the boomers in the workforce. So you have a huge part of the workforce leaving and behind them a tiny generation replacing them in Gen Z.

Deana Berg [00:17:47]:

Wait, why is Gen Z replacing them and skipping over the other generations in between?

Nic DeAngelo [00:17:52]:

Oh, I'm sorry. So the boomers are aging out, right? They're saying, hey, we're moving into retirement, whereas Gen Z is coming of age. Hey, we're adults.

Deana Berg [00:17:59]:

Oh, I see. It's on the bottom of the stack. Okay, gotcha.

Nic DeAngelo [00:18:02]:

Yes. So it's just that shifting, the generation.

Deana Berg [00:18:05]:

Falling off of the edge, coming up under. Understood. Okay.

Nic DeAngelo [00:18:08]:

Exactly right. And so Gen Z has a lot of different thoughts on what work looks like. They have a lower labor participation rate, which happens in every generation. It keeps ticking down. So it's not just Gen Z, but interestingly, Gen Z is so much smaller by just nature of numbers that we have a discrepancy annually of nearly half a million jobs, 500,000 jobs net lost by boomers leaving, and Gen Z being a smaller generation. So go ahead. Yeah, sorry. I can keep going.

Deana Berg [00:18:43]:

Do you think that that's affecting the labor numbers that we're seeing right now as well, is because of a smaller pool of workers?

Nic DeAngelo [00:18:51]:

Absolutely. And labor is tighter, or, excuse me, hiring is tighter. It's a more difficult time for employers. The pendulum is swinging in favor of the labor workforce, which is a good thing in many ways. Maybe it needed to readjust in a lot of ways, but that also drives up the cost of labor, which is extremely inflationary. So that's what we're seeing a lot as the demographics, as the generations pass the torch and you see other generations, Gen Z, come of age, and there's that half a million per year discrepancy of workforce. We're seeing labor prices go way up for us labor. So that's one thing that's been a huge driver of inflation that no one's really talking about right now.

Deana Berg [00:19:40]:

So I have an interesting twist on this kind of a question. You mentioned baby boomers are the most wealthy generation the world has ever known. They're aging out of the workforce. That means there is going to be, correct me if I'm wrong, the greatest passage of wealth that we've ever seen, at some point in the next, let's call it, I don't know, ten years, 15 years, 20 years, you've done more demographic studies than I have. What will that mean for the coming up generations? The generations that are coming up in the ranks in the labor force?

Nic DeAngelo [00:20:15]:

So that's the big question. I think you hit the nail on the head. We can talk about labor, inflation, et cetera. The big question is, what happens to the freaking dollars, right? If they're huge and they have huge savings and net worth on average as a generation, what happens to all that money? Because here's what happened previously. While they're in the workforce, there were so many dollars, and there was so much need for yield. They wanted return on that money that it drove down returns. So, Deana, you were in multifamily, you were in syndication, we were in the syndication space. In industrial, we saw the cheapest money you could possibly find because so many dollars needed a yield.

Nic DeAngelo [00:20:57]:

Now we're seeing a demographic shift because they're not looking for as much yield as they are for safety, for something consistent. So it's much less interesting to hit the highest returns possible as it is to hit the absolute safest possible investment routes possible for those big dollars of the baby boomer generation. So, again, that's kind of where we tailored a lot of our investment strategies today, is to cater to that huge, massive, wealthy group. Right. But what that means in the future is, as, God forbid, the baby boomers pass. My parents are baby boomers. I have many dear friends in the boomer generation. What happens to that money? Right? Well, the government's smart, so they're trying to get a piece of that, right?

Deana Berg [00:21:44]:

They're saying, hey, inheritance back can't just.

Nic DeAngelo [00:21:48]:

Be shifting around this money without paying the house. Right? So they want to get paid. So you're seeing a lot of interesting discussions going along with what happens to 1031 exchanges, what happens to stepped up basis with taxes, inheritance taxes. So the government's actually trying to get out ahead of this in a big way.

Deana Berg [00:22:08]:

Phenomenal. I mean, maybe it's obvious to everybody else somehow. I never put that together with the baby boomer generation. Thank you for putting these things together for me. With all of those policies coming into place around wealth, tax benefits, keep going. This is just really helpful. I'm just kind of. The light bulb just went off for me as a policy and generation, generation.

Nic DeAngelo [00:22:31]:

So say what you will about the US government, a lot of it's probably accurate. There's probably a lot of conversations to be had about why there's gridlocks and extreme partisanism and both sides, but the government always gets paid, and they're working hard to make sure that's the case. And right now, they're actually getting out ahead of this big shift of wealth with some really tough discussions at the state level, at the federal level. But the real question is, as the money passes along, what happens and who ends up with it? So, generally speaking, in this case, generally speaking, the boomers are the parents of the millennials. So we're seeing that big shift likely going mostly funneled to the millennials, as it looks to a handoff. So again, wealthy generation, huge money passed down. The question is, will the millennials know what to do with it? Will the millennials think different things of it? Clearly, every generation has different ideas than the one previously. If you look at the funniest comparison, is looking at boomer Pew.

Nic DeAngelo [00:23:36]:

Like Pew research, they have really good studies on the most important virtues of each generation. And if you look at Boomer virtues versus Gen Z virtues, you're like, do these people exist on the same planet? Right?

Deana Berg [00:23:49]:

There's some highlights.

Nic DeAngelo [00:23:50]:

Oh, my gosh.

Deana Berg [00:23:52]:

I'm definitely going to look this up afterwards, but if you can think of.

Nic DeAngelo [00:23:54]:

Any highlights, this is super off the cuff. I read these a while ago. It was more curiosity for me than anything. But the big highlights were things like, what place does work have in your life? Right? I grew up with the immigrant mentality, an italian immigrant family where there was no finding yourself. Like, you went to work and you found a job, right? And so I started working at twelve. There wasn't a whole lot of discussion of, like, are you passionate about your construction job that you have? I was like, I build walls for 11 hours a day. Hopefully I can get a better job at some point. It was a really simple, like, you just work forever.

Nic DeAngelo [00:24:34]:

And I still do that to this day. I have three sons that I will be putting to work very early to make sure that they look, do whatever you want, but just make sure you're working hard. That is not the mentality of Gen Z. The thought of where the government steps in and government effect and government control and regulation, and where the workplace fits in a Gen Z life on average. Right. Every generation has huge swings of.

Deana Berg [00:25:00]:

Are you talking about Gen Z or millennials?

Nic DeAngelo [00:25:02]:

Gen Z specific.

Deana Berg [00:25:04]:

Okay, gotcha.

Nic DeAngelo [00:25:05]:

Yeah, Gen Z specific. Just to bookend it with the exiting generation, with the incoming generation. And the Gen Z, work is more of a tool. Right? So work is more of a tool where Gen Z sees it as well. Work bridges the gap with financial backing for the things that I'm passionate about and the things that I want to pursue. Right. So me as a millennial, my generation, I'm an elder millennial, I'll say my generation, the millennials, was much more like the beginning stages of the participation trophies. So you see a two tier system in the millennial system, where there's kind of more like classical millennials, where they're usually on the older end of the spectrum.

Nic DeAngelo [00:25:48]:

They vibe more with kind of like, the boomer mentality. It's more like, you work early. It's more of, like, a conservative view of work. Forget about virtues or morals or whatever. It's a conservative view of work. Right. Socially, extremely liberal. Millennials, extremely liberal.

Nic DeAngelo [00:26:08]:

And then the other half of the millennial generation sides more with Gen Z. And that's more of an idea of, like, because we came of age during the great global financial crisis where you couldn't actually trust the institutions, so you put your money in a 401, and then you lost 50% in a short period of time.

Deana Berg [00:26:31]:

Because the. Not institutional.

Nic DeAngelo [00:26:34]:

Well, no, because it was institutional.

Deana Berg [00:26:37]:

That's what I mean.

Nic DeAngelo [00:26:38]:

Okay. Yeah. Okay. Because at that time, 2008 910, there was discussions about bank of America failing, Wells Fargo failing, like, support system of the global finance industry. Right? So now millennials are a little more distrusting. But Gen Z doesn't even look at the system. They're saying, no, there's a whole different view of, like, I get a job to support my hobbies. I have to be passionate.

Nic DeAngelo [00:27:05]:

It has to give back to. It makes the world a better place. These are things that weren't discussed. Other generations just went to work because they had to feed themselves.

Deana Berg [00:27:12]:

Yeah, you can see the influence of the pendulum swing. You had to put your head down and work generations. Then you have the millennials, which is like, I have to feel great about it, all of the things. And we're kind of swinging back to like, yeah, I can put my head down and work, and I want to feel great about it, which I think is good. It will be interesting to see how that influences investment decisions. Right. So we have the baby boomers right now and they're wanting stable. They don't want to take risks.

Deana Berg [00:27:46]:

They need some cash flow. But I don't think it's indicative. I'd love to hear your thoughts on the upcoming generation, who has time to spare. And they know they're going to be receiving, a lot of them, significant passage of wealth. So you have a couple of different investment desires, if you will, per generation. So I'm curious, as an investment manager yourself, are you offering multiple options or are you catering specifically to the boomers? How are you doing that?

Nic DeAngelo [00:28:20]:

So that's a great question, because we've spent, I can't tell you the amount of hours that we spend on long term strategy at St. We're trying to always think ten years out for things. What we see right now as the biggest opportunity that we can serve the market is through fixed income strategies in real estate. With the backdrop of understanding that transfer of wealth, with that backdrop of understanding the boomers and very wealthy and what they're looking for today, and with the backdrop of understanding that how we buy deals classically, it's still shuffling and finding a balancing point. So where syndications, how we operate, it's not the perfect time to buy how we operate in the industrial space. So all that to be said, we're very seasoned with the residential mortgage market. And so that's where we are leaning into because of a lot of the strengths there. To offer a fixed income product where not only boomers can be investing right now to get something that's more consistent, real estate backed, diversified for them with hundreds of assets, but also for future generations that want an income stream that they can rely on.

Nic DeAngelo [00:29:27]:

So if you look at ex millennial or X Gen Z wants to go to work for a good cause. Yeah, that's great. And all their passion projects are really important and it drives a lot of those generations motivations. But also that money that's being handed down to them needs to be somewhere safe and secure with an income stream that they can rely on. So we're really leaning into that in a huge way to cater, not just right now, it's to the boomer generation, but to offer that product, especially for younger generations, as well as the money changes hands.

Deana Berg [00:30:02]:

Love that. I know that you also sometimes discuss macroeconomics. I'd love to hear some of the potential disruptors that you see intervening in this generational passage of wealth in the labor markets. What do you think about China? I know this is kind of a left hand turn here, but I want to kind of pan back out and then we'll zoom in once again.

Nic DeAngelo [00:30:27]:

Yeah, I think China is a bigger discussion. We saw for years. Geopolitics is at a weird place right now, right? You have the Ukraine Russia war, you have China and the US, and maybe like a semi cold war situation for a last handful of years. And then we see freaking President Xi and then we see President Biden sitting down and Xi leads off with the US. And China can either be best friends or worst enemies. And anyone who knows the demographic or, excuse me, anyone who knows the economics here is like, he's joking. He's got to be joking. Does he know he's joking? I think something like 80 plus percent of exports from China land in the US, right? So if we just shut that relationship down, China folds in on itself immediately.

Deana Berg [00:31:18]:

Overnight.

Nic DeAngelo [00:31:18]:

Yeah, overnight. Overnight. And then demographically, we can talk a lot about the US, but China is losing so much. Their demographics are imploding at a faster rate than we've ever seen in the history of the world for a developed nation. So their labor rate, ours is going, you know, we have boomers passing off to Gen Z and that causes labor inflation. China had too many people. That's their background. They had so many people they couldn't feed them.

Nic DeAngelo [00:31:47]:

And when you're running a dictatorship or a communist party dictatorship at that time, having huge amounts of people that you can't feed is basically the recipe to get your government overthrown and everybody die. Right? So they did two really smart things. They did the one child policy and then they leaned into manufacturing, low cost manufacturing. The first was smart. Hey, at that point in time, if you have less people, it's less mouths to feed. At its face, that was really smart. But the problem is combining the two, because if you take low cost manufacturing and you're paying people pennies a day and you have this gigantic workforce that does feed people and that actually drives the economy really well. But when you have built into your economic structure less people, having less kids, and tightening up your population by such a massive amount, what happens is you end up with an implosion of your backbone of your economy.

Nic DeAngelo [00:32:48]:

So what we're seeing today is China. I think the numbers offhand, I got to double check this, but they are looking to have their population in the next 30 years that the impacts of the one child policy are so ingrained in their demographics, they'll have 50% less people in the next couple of decades. Man, shocking numbers.

Deana Berg [00:33:08]:

What do you think the fallout will that be? I mean, economically, trade wise, I'd love to hear your thoughts on that.

Nic DeAngelo [00:33:14]:

So since the year 2000, roughly China's cost of labor has gone up about 15 x, while their efficiencies increased only three x, two to three x. So there's already an imbalance. Just that we've already seen. So what happens in the future if it only gets worse? Well, the extreme example would be that the government falls and there's a brand new China and they tear down the metaphorical communist wall. I don't know if I see that. But here's what I definitely see is that manufacturing being brought over to North America, I see near shoring in Mexico as a huge bet that we're seeing and making. I see onshoring on us soil for manufacturing. And so on our side, when we do syndications, we have fully leaned into that right, 100% investors in industrial real estate for our syndications, we are seeing.

Deana Berg [00:34:06]:

Trends as well, where the land is cheap, for example, in the midwest, we're seeing a lot of trending for multifamily as well. So I think that they are in alignment where you're going to have the reshoring of industry. People are going to need a place to live. So I think it will make a meaningful difference in the demand for housing as well.

Nic DeAngelo [00:34:25]:

Absolutely. So the two stars of commercial real estate today, we can talk about how bad office is doing, or the big concerns of retail, or even mixed use, but it's multifamily and it's industrial, are still doing better than anything else, even with their own stumbling blocks. We lean into industrial for our reasons, and multifamily has a ton of strengths as well.

Deana Berg [00:34:48]:

Nic, we're going to continue our conversation in another episode. So I think we should launch with the two stars in real estate for this moment in time. But before then, as we wrap up this show, how can folks find you?

Nic DeAngelo [00:35:03]:

The absolute best way to dig in with me and dig in with our team and dig in with economics with us and investment strategies is to check out saintinvestment.com/resources. We have webinars for people, a bunch of free resources, free strategies, free guides that would blow them away. So stinvestment.com slash resources.

Deana Berg [00:35:24]:

So great. Thank you so much for joining us today. I look forward to our next show together.

Nic DeAngelo [00:35:29]:

Deana, thank you so much. Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the real estate syndication show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.