J Darrin Gross

So if you're willing, I'd like to ask you. Mark Shuler, what is the BIGGEST RISK?

Mark Shuler

I have a pat answer for that. The biggest risk to real estate is government.

That's what I was alluding to. And beginning of this conversation, the West Coast Seattle is as Uber blue as it gets. You have a lot of well meaning city councils and county councils trying to address significant housing crisis that exists throughout the entire country right now. And they, rather than letting the markets Mark operate efficiently. They get in there and they they throw roadblocks in it, and we can't produce enough housing as a consequence, then we have a supply problem, and they enact rent control and other pieces of legislation that make the operation of real estate even more difficult. I That's why I left Seattle. I can't do it here anymore, specifically because of that. So that's one thing you know. You've got to look at the the risk posed by your local government, and see if that you know, if you can develop hedges against that risk. I when I first got into the business, I could do that in western Washington, but they it just became apparent after a while, there was so much legislation being layered on that the hedges were disappearing left and right, and so I made the choice that I couldn't do it here anymore. I had to find marketplaces that were more fair. And also, I will say this is a political side. I mean most politicians, politicize housing as if it's a fight between corporate interests and you know, you know tenants who don't have any control over their lives. You know, that's the nature of renting. Most operators I know are very hard working people and are doing the best they can in a pretty oppressive regulatory environment. There's no cabal of operators out there colluding and setting rents. And Berkeley just learned a big ass lesson about this where they. They tried to sue. Who was it? You know, that online platform, real page, claiming that real page was setting rent prices in the marketplace, and they were like taking them down real page. Those are, those are some tough guys, and they did not back down from a fight. Sued the shit out of Berkeley. Berkeley tucked tail and back down because they knew they were going to lose and lose big. So this issue is very emotional. It gets very politicized. It plays well on an election cycle, and so I just get tired of it. I just want to do my job. I really want to do my job and not have this white noise distraction that I have to deal with. But unfortunately, that's what that's the biggest risk I see in real estate right now. Then you you layer on top of that, this the politics in general, what I what really concerns me. Now, in addition to that, the other big risk is, this is just our political environment. It's so but, you know, bifurcated, and it's so politicized and the conversations are so extreme, there's no more middle ground, and there are only two or three things that control our entire economy, oil and bonds. And you know, if it seems like every time Trump opens his mouth about tariffs, the bond market Spike 25 basis points, I was in the middle of a refi three weeks ago, and he, he kind of went on his tariff tantrum again, cost me $250,000 that's, that's the impact bond rates have on, you know, the cost of doing business. I was in the middle of refi. I had to do nothing but suck it up and, you know, sign that loan in one day, I lost $250,000 on a refund. So government is a, you know, housing is one of the most nuanced and market driven things I can think of. It responds to supply and demand. The players are in it, who are in it, who are really good their market, they're they're watching this all the time. And contrary to popular belief, the margins in real estate are thin. They're not that great. So if the market swings wildly like that, how do you how do you do business? You can't make you can't plan for 612, 18 months down the road, which is that's the long, the length of time we think about. We're thinking in terms of multiple years cycles. And when you have this volatility in marketplace, how do you make business plans? That is in large part why we have such a housing crisis in this country that and the cost of labor, the cost of materials, has spiked dramatically. It's just more expensive to put up housing. But then you layer on all this government nonsense, this is really hard to build housing, and that's and as a consequence, supply, demand being what it is, price of housing goes up, rents go up. I don't know a developer out there that would not love to build affordable housing, but they can't afford to do so. That's my soapbox.

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