what's actually happened in general, Florida, a thousand people moving to Florida every day, net migration, and very business friendly, but also number one, back to office. So, just math-wise, if you're buying 50, 60, 70 cents in the dollar compared to what the peak was, eventually, as people, more and more people go back to the office and the business trends are trending positive. And I'm seeing that in the leasing velocity. You're listening to Carrie Lutz's Financial Survival Network, where you get valuable information you just can't find anywhere else. To thrive in today's trying times, you need the Financial Survival Network, now more than ever. Go to financialsurvivalnetwork.com and get your free newsletter and gift, Financial Survival Network, now more than ever. And welcome. You are listening to and watching the Financial Survival Network. I'm your host, Carrie Lutz. Got a really interesting guest for you right now. Like me, he's a recovering attorney, former New Yorker, now a Floridian, and a real interesting, all-around interesting person. His name is Moshe Papak, and company YMP, Real Estate Management. And, well, Moshe, let's talk about you. You came to Florida at the height of the foreclosure epidemic, and you saw value when everyone else was fleeing the space. And fast-forward now, what is it, 15 years? Tell us what's happened. So just in general, to that point, I think anyone who wants to have outsized returns or make a difference, they're going to have to take decisions, leadership decisions, if they want to be an entrepreneur that are beyond the regular bell curve, the logic of what everyone's telling you. So if I were to apply the first real estate deal that I did, everyone thought I was nuts during the time, so we fast-forward now. We have three divisions in seven states. We have multifamily apartments that we own and manage. We have office buildings, and we have assisted living. And over about over a billion dollars of assets, we manage and over long term. So commercial real estate is in the dumps right now. You think you're going to be able to do the same thing with commercial real estate that you did with the residential way back 15 years ago? So I'm hoping we're still in the, I guess, second inning, third inning like that. We don't have it fully played out, but I have taken financial bet this past eight months. You're seeing the front page of the Wall Street Journal, to your point, right? Office buildings, everything looks terrible. But what was the reason it was something abstract, COVID? Everyone's working remote, but what's actually happening? And I've taken the bet here in South Florida, what's actually happened in general Florida, 1,000 people moving to Florida every day, net migration, and very business-friendly, but also number one, back to office. So just math-wise, if you're buying 50, 60, 70 cents in the dollar, compared to what the peak was, right? Eventually, as people, more and more people go back to the office and the business trends are trending positive, and I'm seeing that in the leasing velocity on the commercial real estate. I'm seeing that in reality on the ground, we're able to buy deals at 11% yield, right? Cap rates, 12, and you're in a good market. Our corporate office is in, and we have over a million square feet just in that county. Interesting, interesting. So you see the return back to the office, but maybe hybrid, maybe not as much as many people working in a space as was before the pandemic. Well, I think real estate in general is very localized. So I think that you take San Francisco in New York City, maybe less, maybe the employees are pushing back. In reality, there's more leasing that I've done in the past 12 months of companies moving down and expansions here in South Florida. So you have to take each market and study where are we? Because it's moving fast. The transition from COVID and that remote work, hybrid work, coming back to office, what are we seeing? We're seeing that major Fortune 500 companies are demanding that the employees come back five days a week. So there is, I guess I think the actual number in South Florida is about 91% compared to 2019 are back in office. So what percent was that? I'm sorry. With 91%? 91, huh? In South Florida, which is ours, which is interesting. And like I said, you have to have a contrarian view if you want to reap the upsides. Right. You can't expect if you don't take calculated risk, you can't expect to get outsized returns. It just goes on along. Okay. So what about the malls? I know they're doing well here in South Florida. For the most part of the, there's a few that are ready to close their doors. But around the country, it looks like the time of the ball has passed. Can you repurpose them? What would be your vision for them? So what, what have I seen? It's interesting. State of Florida. Last year, they passed something called the Live Local Act, which is basically able to take commercial zoning and circumvent local city zoning and build more residential. So if I would have a big swath of land in kind of a city, maybe I'd cut off a big chunk of it, knock down, let's say there's a Sears or something that's, you know, that's out of business, maybe knock it down. Maybe it's always maybe some need for supermarkets, food, right? Or food, Dunkin Donuts, things like that, out parcels. And then, and then maybe some experience like trampoline parks I've seen. So I'm not so much in the mall space, but I've seen success in that where you're really buying the mall at $0.10, $0.20 in the dollar really, but the costable end. And I've seen them turn it around. And then you can go to regional banks, local banks, to get that vision finance. I've seen that done. Interesting. Interesting. Yeah, well, there's just somebody goes malls and you see the pictures of them deteriorating. They have trees growing through the middle of them. The roofs are collapsing and something should be done that can all be Amazon, you know, distribution centers or illegal alien processing centers, right? No, for sure. Some of them are doing that. But also, I saw that Amazon, compared to, let's say, 2021, they are not expanding as fast as they were either slowing down. So, in general, again, in business, the most important thing is you have to be level-headed to be able to pivot and your strategy has to be plan A, B, C, D, E, F, G, right? You have to, you can't just have one thing and you have to diversify because nobody expected that. Yeah, well, you got to be flexible. And I just remember, you know, the Chrysler building in Manhattan during the Great Depression, Massachusetts Mutual insurance company had the mortgage on it. They took it back. And then, yeah, everyone thought it was doomed. And, you know, the next time they sold it, it was for hundreds of millions of dollars. But I don't know what you think New York City is a good play, a counter-cyclical play, or is it doomed? Well, I'll tell you, I have a lot of family, and most of my family live in New York. I still, there's this core dynamic and I go back and forth in my mind about New York. I don't like a homelessness issue. A lot of friends that I have in the real estate business are using their hotels for migrants. That's happening in primaries, because they're getting top dollar from government. That's top. And they're also just locals are complaining, heavy, heavy stench on every block of marijuana. It's uncomfortable. It's become uncomfortable, but it'll always be that poor. It'll always be New York, but we just said our major import, Ken Griffin, a huge hedge fund, he said that South Florida is becoming the Wall Street of the South. Oh, yeah. More and more and more. And I think that, but you'll still have, because the money, the money is in Manhattan, the money's in New York, right? So you got to go there in hotels and flights and stuff, right? But taxes, quality of life issues, everything you described, really Miami has become the financial capital of the country. It shifted. And population numbers, 23 million here, and the population state static in New York at around 19 and a half million. And really, you could just see Goldman Sachs sent their most profitable division down to Palm Beach County. I think that's Palm Beach County. So it's interesting, because I mentioned on my podcast Common Denominator, the other day, it was interesting that from Manhattan to the Hampton, it's 118 miles, right? And from Homestead, the Jupiter is also 118 miles with ocean on one side, and Everglade than the other, and six and a half million people in South Florida, and eight million from the Hamptons to Manhattan in New York. So I'm very bullish on the economy in here in South Florida for the next 10 years. But we have several headwinds here. Well, once upon a time, Florida was substantially cheaper than New York, not so much anymore. And we've got the condo crisis due to the surfside condo collapse that happened, I guess, three, almost 40 years ago. And that led to an overreaction by the state government mandating all these reserve funds. And all of a sudden, there's a rush by every single condo in the in certainly in South Florida to remedy decades of deferred maintenance. And then you got the insurance crisis taking place where, you know, basically the state has become the insurer of last resort. They've made some steps to try to get the market back on its equilibrium, but we'll see how successful. But, you know, condos, people can't sell them now. Yeah, I see all right, right? Well, we're at the condos. I do believe interesting about government in general. It's only when it's an issue that government generally you know, react their their react. I could I saw that right? Insurance was an issue. So different laws were passed over the past two years in the state of Florida to help remedy free up some capacity and try to and try to do things. These two hurricanes, what we just had, it's probably not going to help not a large insurance market, which is, which is a shame. But I believe that it's still going to be contained to be worked on. And I also believe between now and there's just a gut a gut call. But I don't think because there's so many condos in South Florida, this spend over this per condo unit of reserve that under the state law, I don't believe that it's going to stay in law for so long. I think it's going to have to be mitigated and changed. It should have been phased. It should have been phased. You should have laughed by the buildings is, you know, A through S, F immediate. Most of them are C and B. They could have been phased in over five years rather than in people getting hit over the head, you know, $100,000 bills in these condos. They are not. Motion are not unusual, right? Now, by the way, I see the sophisticated developers, because some of these condo buildings are old. What are they doing? They know there's this pressure point with its reserves for millions of dollars. They're going making proposals to the boards of these condos. I'll buy out all the condos for X and they were behind. I see that land, right? You've seen that right on the ocean to develop. I've seen related and other companies down there do that successfully. So we'll see where this goes. But, you know, there's many, many, many condo owners, many condos and condo owners. And I think that there is a lot of frustration there. And when you have a large scale frustration, again, we saw we saw with the insurance issue. And I think they're going to have a lot of lobbying as well to mitigate this issue. So one of the things I know is one of your pet causes is also one of mine, which is better health, especially through nutrition and not to get political. But the RFK junior being elevated by Trump in his campaign and you have the Make America healthy again campaign. You know, this is a national disaster here. We have the worst health of any developed country in the world, although pretty much the rest of the world is racing to catch up with us here. You know, B city, all these things. And it all comes down to what you put in your mouth. I'm going to say, so you have what I see. I show us five major companies control the food. So what do we see? Let's just take a step back. 80% of just feeling good. All of us just want to kind of feel good. But like you said, it's the food we eat, the water we drink and the air we breathe. Those three, if those can be, why should we put chemicals in our body, right? Like, they shouldn't have chemicals. They should be good for us and not cause us to feel obese or, and then, and then basic, you can do it's free. Exercise, you go for walks every day, right? And then, and then sleep. So much of health care, the trillions that we spend in health care, it would be wiped away, you know, Medicaid, Medicare, all of those issues, you know, what they are not for profit neighborhood farms, USA. So we're slow and steady in our workforce, housing communities, where in the green areas, instead of having non edible, we're having kind of raised gardens, teaching, teaching the kids, instead of them going on and making trouble after school, teaching them, you'd be surprised. They really don't know about what healthy eating is. So it's an education program to teach, you know, workforce, housing community, what about healthy eating? And it's crazy because of fruit and vegetable, which, basically, you compliant in the ground is actually more expensive than processed food. Oh, yeah, well, it's all economics. And look, the worst chemical of all the, we don't even consider a chemical, that's sugar. And there's something like 240 different names for the sugar that goes into food, dextrose. I mean, you look at it, you can't understand what it is. It's probably sugar. And if we just cut out 90% of the sugar and a substantial portion of grains, that alone would have a dramatic effect on global health. And I think that why should it be that there's certain foods, think about this, but why should it be that there's certain foods that we're addicted to? They say the hardest thing to talk about sugar. That's the hardest thing to to wean off to really be sure. I know for me, just my coffee, something simple, just to not have sugar in my coffee, it was like struggle. And right. And and then what I got there, but it's, it's, it's a process, for sure. Yeah, you know, that experiment they did where they put, they gave rats a heroin, cocaine and sugar. And the rats skipped the heroin and cocaine, and they went right for the sugar. And then they got addicted to it. It's the most addictive thing. And you got to eat. You don't necessarily have to inject stuff in your body that becomes a need, but you have to eat. And that's the problem. That's where they got us. And is it a conspiracy? Or did it just happen over time? We're not even getting into seed oils. And all the other stuff that's out there that, you know, is awful. So I applaud you for that. Hey, we want to connect with you. Want to find out what you're doing? How do you do that? So, I mean, we have our podcast, I'm a denominator. We've got also about 200 episodes, range of about mindset, about business. That's on Apple, Spotify, YouTube, wherever you can get your podcasts. But and then my handle, Instagram, Facebook, LinkedIn, and Popak, Moshe Popak. And you can find me there. All right. Welcome to any questions and ideas. Great. Well, we'll have a link in the show notes, this interview on financial survival network.com. And while you're there, please sign up for your free newsletter. If you've got a question for Moshe, myself, shoot me an email kl@carrylutz.com. Moshe, we'll talk to you again soon. Thanks so much. Thank you, Carrie. Thank you so much. Thanks for listening to Carrie Lutz's financial survival network, your solution to today's trying times. For the latest, go to financialsurvivalnetwork.com, financial survival network, now more than ever.
