Curious about navigating today’s challenging real estate market? Join us as we sit down with an expert attorney and seasoned investor, Bishoy Habib. In this episode, Bishoy reveals strategies for building a resilient real estate portfolio, including creative financing techniques and practical insights into deal structuring. Learn how to protect your investments and turn market uncertainty into opportunity. Don’t miss out on these essential insights for elevating your real estate game!

Key takeaways to listen for

• [06:15] How Bishoy turned early challenges into valuable lessons that shaped his journey in real estate and law
• [09:59] Best practices for finding reliable property managers who make investing in real estate less of a headache
• [17:00] How rising rates have impacted investments and the inventive strategies experts are using to stay ahead
• [18:24] Smart approaches for adapting to rising interest rates
• [38:16] Legal strategies for protecting investments

About Bishoy M. Habib, Esq., MBA

Bishoy is a seasoned real estate and business attorney with over 11 years of experience in New York and Florida, managing over 1,000 transactions totaling $12 billion. Starting his career in New York City, he specialized in commercial real estate with a major Manhattan hotel developer before returning to Florida, where he expanded his expertise in finance law, representing local governments, banks, and institutional clients.

Now based in Tampa, Mr. Habib focuses exclusively on real estate and business transactions, serving a diverse clientele, including developers, lenders, and brokerages. Known for his investor-friendly approach and skillful deal-making, he combines his deep legal knowledge with a creative flair for structuring complex deals, making him a trusted partner for clients navigating challenging markets.

Connect with Bishoy 

• Website: Levacy Legal
• LinkedIn: Bishoy M. Habib, Esq., MBA
• Instagram: @attorneybishoy
• TikTok: @attorneybishoy
• YouTube: Attorney Bishoy
• Phone Number: (813) 553-2699

Follow Us On Social Media

YouTube: Truly Passive Income

TikTok: @trulypassiveincome

Instagram: @truly_passive_income

Facebook: Truly Passive

Twitter: @trulypassive

Download Our FREE Passive Investor Toolkit

Everything you need to get started in passive investing - Download Here

Takeaways:

• Building trust with your partners is crucial for successful real estate investments.
• It’s essential to analyze and assess the general partner in any investment deal.
• Creative financing options can provide flexibility and opportunities in a challenging market.
• The importance of due diligence cannot be overstated when selecting investment sponsors.
• Navigating the current real estate landscape requires adapting strategies to market conditions.
• Understanding the risks of subject-to transactions is vital for protecting your investments.

Links referenced in this episode:

• levacylegal.com

Mentioned in this episode:

Sponsored by Nomad Capital

Looking to invest in self-storage? Nomad Capital converts vacant big-box retail spaces across the Southeast into climate-controlled storage, with a target of 20% annual returns. Our fund combines low leverage and high depreciation for strong growth and valuable tax benefits. By buying properties at deep discounts, we often achieve break-even at just 40% occupancy. Join a proven model in a resilient asset class that continues to deliver, even in today’s market. Learn more at nomadcapital.us/tpi. Accredited investors only.

Bishoy Habib: 00:00:42

You have to analyze and underwrite and get comfortable with the partner. That's the most important thing.

That's way more important than anything else because if you could trust that person or those people, you can trust pretty much everything else.

Neil Henderson: 00:00:54

Welcome to Truly Passive Income. I'm Neil Henderson.

Clint Harris: 00:00:56

And I'm Clint Harris. And today it's our pleasure to have Bishoy Habib with us. He's the managing partner of Levacy Legal. Third time's the charm. I got that name right.

It's a firm that he built from the ground up. He's got 12 years of experience in law.

He's handled over a thousand transactions bringing legal insight, creative deal structure, structure to the world of real estate and business. So beyond law, he's also an investor and a broker. He's got hands on experience in both US and international markets. So a lot to unpack today.

But Bashoy, thank you for joining us. How are you today?

Bishoy Habib: 00:01:27

I'm great. How are you guys doing?

Clint Harris: 00:01:30

Very well. Thank you for coming on board.

Why don't you tell us a little bit about yourself that we don't know about your background and then we'll take it from there.

Bishoy Habib: 00:01:37

Yeah, so I always tell my kind of real estate journey I grew up in. It started when I was a kid. My parents were the immigrant story, moved from Egypt, didn't even know what real estate was.

And then my dad was completely self taught in the 70s and 80s. He was a pharmacist his whole career. My mom was a dentist.

But he left that and realized that real estate was the path to financial freedom at a very early age, relatively for him. He'd only been in the country 10 years, let's say. So that was happening before I was born. I was born into it.

I would remember my first memory of real estate was driving around to his properties, his residential properties back in the day when I was 4, 5, 6 years old. And I remember negotiating, initiating my first commercial lease at the age of 15. It was my dad's building and it was with the state of Florida.

And I just remember thinking, I like this because you can have the flexibility and freedom to do what you want. You don't have a boss and you could still make money.

And my dad worked very hard, but he was able to have a flexible schedule and move things around and pick us up and drop us off from school and everything like that. So being Egyptian, everybody in my community, everybody in my world went into the medical field. So you're either one of four things.

You're either a doctor, a Dentist, a pharmacist, or a failure. I fell into the fourth category.

For most of my life, I was like literally the black sheep in my family because I have three sisters, they're all dentists. My mom's a dentist, as I said. My dad's a pharmacist turned real estate investor, and one of my sisters is actually married to a dentist.

It was a running joke of my family that I was a failure in the black sheep because I only had a law degree.

All joking aside, though, for me, what I loved about real estate was the passive element of it, potentially, if you do it right, and the ability to control your time and your money does not buy you happiness, it buys you freedom. And I always liked the ability to do what I wanted, when I wanted.

And my wife's in the medical field and she makes good money, but at the same time, she's got to be there from 5 in the morning to 5pm if she has to be there. So anyways, that's what got me into real estate.

I just like the kind of uncapped potential of what you could earn without physically being anywhere if you don't want, and especially in this day and age.

t to law school, graduated in: 2012

I was helping clients and I was able to utilize my knowledge of real estate and my business acumen and then of course, my legal skills to really complement each other very well in a way that a lot of attorneys have not been and we're not doing at that time, where it's more facilitating the transaction and getting it done and structuring it versus just trying to kill the deal, because I don't understand it. And I think that's what I realized was my niche and my calling. And that's what led me to the point I'm at today where I just.

I love putting the deals together, I love structuring them, I like papering them. And you need money, I got money. You need deals, I got deals or clients with deals and money. And so that's where I'm at today. I love that.

Clint Harris: 00:04:51

And it's not that hard to go Find a closing attorney or a real estate attorney for whatever you're dealing with.

The difference is that if you're a deal junkie and you're in it and you're passionate about that kind of thing, you're offering something so much more than that. Right. Legitimate perspective outside of just legal advice.

And I see the same thing with like we have real estate investors in our market that are also real estate agents. My wife is one of those.

And when you offer something more than just the retail services of being an agent or being a broker or being a real estate attorney, you draw people to you that are looking for creative solutions. A lot of times those people are repeat clients. They're the ones finding opportunity even in a down market. You become who you surround yourself with.

And when people are coming to you, it's not just because they need an attorney, it's because maybe that was the first reason they connected with you, but after that, it's really about creative solutions. How are we going to get this done? Help me get it over the finish line. What can you tell me that I haven't thought of before? Yeah.

And then how do we navigate that together? That's a really important way that a lot of people create value.

And I promise you, it's what makes you distinct from a lot of other people that probably offer your same legal services. At what point did you make the transition? Obviously you're an active real estate investor as well. Were you doing that the whole time?

Are you still doing that? You doing less legal now? Are you blurring the lines?

Bishoy Habib: 00:06:11

It's always blurred lines, man. It's just I'm wearing four hats at any given point in time. It's been challenging for sure. So I started my own law firm just a year and a half ago.

So it's still a baby, it's still in its infancy. And I'm really focused on I'm an investor friendly attorney. So really all I want to deal with is investors and lenders. Right.

As far as my investments though, my personal investments, since the time I was in college, I've been making passive investments as a limited partner in different partnerships. That just started naturally with the group that I ended up working within New York.

They were doing hotel deals and my family got involved with them and I just put a little bit of my money and then when I started working, it was a lot of my money and the returns were really good and I didn't have to do anything. And I was learning and I was getting all these documents on offering memorandums and Fund documents. And so for me, it was fun, right?

And I know maybe that sounds weird, but I like the experience of learning. And these are a hundred million dollar deals or $50 million deals. That was really exciting for me.

It progressed to the point where that's what I ended up doing because I still like what I do on this side. And I probably work 60 hours a week in my legal practice between bringing in the business, handling the business, managing my team.

So it's still very active. And so it's not really possible for me at this point in my career to just leave and do real estate full time. So a lot of my stuff is passive.

I created a fund back about four years ago because one of my clients ran out of money during COVID or their line of credit dried up. And so that was another opportunity that was awesome and been wanting to duplicate that since.

And I've just been busy and haven't found the right opportunity. But the long and the short of it is the passive investments have really been my go to. I did1flip 2 years ago. It was an unmitigated disaster.

I was supposed to make, I don't know, close to six figures and I broke even. The contractor left halfway through the job. It was two hours away. I was working a lot.

And I have another flip that I have to do because I just have to do it, you know, not ideal, not what I like doing, but everybody is different. And I think with your audience, the limited stuff and the passive stuff is probably going to make more sense.

If you have a W2 and you're doing well in your W2, it's easy to say, quit your job and do real estate full time.

But if you're making a good amount of money doing your day job, it's probably not a good idea to just leave unless you are, you know, on a trajectory to very soon make more. But I think for the average person that maybe they're just working a starter job or it's not really a.

A great job and there's not like a future in it. Probably a lot less to lose by just jumping and going full speed into real estate.

And so that's why when you're younger, it's a lot easier to just do it. As you establish yourself, it obviously becomes more challenging.

But that's the end goal, is to work myself out of this, have someone, good people in place to run the firm, and then focus more on the deal side.

Neil Henderson: 00:09:02

You know, what you said resonates so much with me, Clinton. All we do is reactive and we enjoy it. It's a lot of fun actually. And in house flipping, I've flipped a house before. I do short term rentals.

It's just an aspect of it that's fun. But it doesn't scale well. And there's days where like Clint's in the teeth of it right now with all the flooded properties he had.

And those are the times it's not fun. And if you're somebody who's already making a good living, what are you doing trying to flip a house? For sure. I get it. It's fun.

Bishoy Habib: 00:09:31

I promise you. I have tried to avoid it for about four months now. I've been kicking the can and it's ah, I just gotta do it.

It's the markets flooded here in Tampa, no pun intended. Trust me, I will do anything but do it. But you take a big haircut or you do it and break even on it. So anyways, I'm with you though.

You're absolutely right.

Neil Henderson: 00:09:51

So I didn't come in here to really focus on your LP experience, but I think it's a great conversation for us to have for our audience and especially with what's happening right now.

our years ago, from let's say: 2017

Bishoy Habib: 00:10:16

Yeah.

Neil Henderson: 00:10:16

What's been your experience with the LP positions that you're in and what have been your lessons learned going forward and how does that shifted your mindset going forward?

Bishoy Habib: 00:10:27

If you want the honest answer, things were going amazing until they weren't.

Because think about it, we were invested in hospitality in Manhattan and we were on pace to basically we had like 10 year strategy and 10 year plan in place that was on the verge of being executed to put a bunch of our assets together, package it to A for 30% above market.

e we'd started investing from: 2014

Because then we were in default and then our 3 and a half or 4% rates jumped to 10 and 11 and 12 and then we had to take them out with private money. And then it jumped to 11 or 12. And then you're talking about a $3 million profit versus a $3 million loss just based on the interest paid.

Those are real numbers on one of the assets. So it became unsustainable. Now, we didn't lose everything, but there were certain ones we lost.

And to our team's credit, they did everything they could. What's the lesson in that? I don't know.

I wouldn't have done it knowing I'd lose my money, but knowing everything I knew then I'd do it over and over again because things were good until they weren't. We're talking about COVID which is the cause of the interest rate spike because they printed too much money.

So again, these are once in a lifetime situations. I rewrite history. I can't say that I did the wrong thing. I still think I did the right thing and the moment. And that's all you could say.

So I don't lose sleep over it. I lost a lot of money in it. But the limited investments and the limited partnerships, here's my two cents on them, is what I tell my clients.

First, you have to analyze and underwrite and get comfortable with the partner, the general partner, or the syndicator or the principal, whatever you want to call him, or the team. That's the most important thing. That's way more important than anything else.

Because if you could trust that person or those people, you can trust pretty much everything else. The deals. You guys probably see 50 deals a day, if you want. Right. There's a billion deals out there.

So finding a good deal if you're a limited partner is not the hard part. It's finding someone you trust.

Not only trust that they would find a good deal, that they would be a good steward of your money, that they're going to do the right thing when things go sideways, that they have a track record of success, all those things that they put your interest first. That, to me, is the most important thing. And that even as a limited partner, that's where I have very difficult time getting over.

Especially because as an attorney, I tend to hear the things that didn't go well. So if you can get comfortable with the sponsor or the general partner, it becomes a lot easier. And then you can analyze the deal.

And on a very superficial level, you can understand them pretty easily if they have a good marketing package. So those are the things that you want to look out for. And then obviously, if you want to be in a certain asset class or market.

But to me, it all starts with the sponsor. That's the most important thing.

Clint Harris: 00:13:23

Yeah, I completely agree.

And I want to reiterate that a little bit is like you probably because of your background, not just from the legal aspect, but from the deal side of things, you're probably better at underwriting these deals than 90% of other LPs that are looking at deals, right? And this is a situation that you fell into with people that you know and trust.

You also have to admit everybody's job is to make all the deals look like good deals, even the ones that aren't really good deals, right? So you gotta find a good deal, you fall in love. An RV park or a car wash or whatever it may be.

We use the analogy of look, bet on the jockey and not the horse, right? You see the deal and it looks like a bright shiny object and you want to jump after it.

But the reality is you want to bet on the operator and someone that you know and trust, you understand their background and you know that they're going to be ethical and transparent with your capital. And unfortunately, the same thing that caught up your group, it has been a bloodbath across the operating space, hospitality and multifamily.

A lot of people made it through Covid. A lot of people. People didn't. But even then we had the fastest and highest interest rate increase in history.

And so that adjustable rate or bridge debt caught a lot of people. And it's not when things are going well that you really need to look at an operator and judge them. It's when things are going bad.

And we unfortunately have seen a lot of operators, their social media shuts off, they go dark, the communication stops, right? That's the time that you really want over communication.

And to me, the fact that you went through that, you just gave your team credit for doing everything that they could, you're willing to sit here and talk about it as a victim of the market and a victim of circumstance. That means to me that they did everything right. Like we say, none of us can change the wind. Our job is to adjust our.

And maybe it makes you look at, maybe I need to diversify across different debt structures or different assets, different geography, different operators, whatever it may be. But the reality is we do self storage. The rate increases and we build out properties.

We bought old big box retail and build them out into self storage. We have tiny little deals. Only takes us one or two million dollars to do an individual project. And we're always using fixed rate debt.

But the interest rates left ripples across the entire world. And even though they didn't affect our deals from an adjustable rate standpoint, what else they did was they froze the residential housing market.

You have people, and I'm transitioning. I want to segue to something else. I know is a unique skill set that you have.

We've got a situation right now where a lot of new home buyers are pushed out of the market because we've got interest rates this week of around 6.85%. Even though we had a price cut or an interest rate drop recently, a lot of that was already priced in. Interest rates are high.

Not historically, but especially over the last few years. And everybody has recency bias of seeing 2.85 to 3% interest. Yeah, exactly.

A ton of people are sitting out because they were looking at $800,000 houses and now they can afford a $550,000 house with the same payment and they're not willing to do that. You also have people that over 75% of homeowners now have an interest rate that's locked in below 5%. So you got tons of people out there.

Even if they wanted to sell their house and downsize to a smaller house, their mortgage payment is still going to go up because it's going to jump. The interest rate's going to jump.

One of the things that has been coming up to me a lot, I have several multifamily properties that we've been in the process of shopping and putting on the market or at least letting people know that we have interest. And I've been getting subject to offers, you know, seller financed offers.

All of a sudden the creative financing options are coming out of the woodwork. We've got an operator that we're close with that we follow.

There was a multifamily property that went completely down the tubes recently with another operator.

The bank pitched to them with fixed rate, 3% interest only payments for seven years with a 1.5% interest that was accumulating every year to be paid at the sale date. So it's an effective 4 1/2% interest rate fixed. But only 3% is fixed for now. The other 1 1/2 is when it sold.

Bishoy Habib: 00:17:32

7 years. 3% interest only is wild.

Clint Harris: 00:17:36

Crazy, right? And they picked it up at 60% LTV, which is what was owed to the bank from the original purchaser.

So I'm seeing that was the first time I've heard of anything like that, especially that extra portion accruing and that in North Carolina. It was not. It was in Texas. But to me, that Screams the bank needs to get this off their books.

The bank is trying to unload this and that's an example of an operator that we're still in tough times but they're able to take advantage of that. So I say all that to say this. I know that you have a background with creative financing, especially from the legal safeguard side of things.

We just went from super low interest rates to super high interest rates effectively, like not historically, but within this market. Are there ways for people to assume other people's interest rates?

And from your background with a creative financing and your legal background, what are you seeing right now?

What are some of the safeguards that you can put in place if people are taking second position mortgages and things like that, or in the current economic cycle? How does your knowledge help you and other investors that work with you?

Bishoy Habib: 00:18:44

It helps quite a bit because I can pretty much give them all the insight of what's going on and all the risks and all the upside and just explain things to them. And I think I'm in a pretty good seat to do that because on the investment side, so all the stuff I mentioned before was me individually.

I also have the partners in my brokerage as well as two partners, so it's three of us. And we also have an investment arm as well.

And so for the past year since we started things, we've been wholesaling, we've been doing novations, we've been doing creative deals, we've been doing short sales subject to seller financing. We have one that we just locked up recently at 2% interest on a seller note here in Tampa Bay area.

I think I have a pretty good advantage in terms of that. Now. What are we seeing in the marketplace assuming rates? Doesn't really happen. It's like a theory, right?

It's not really something in practice very often. Theoretically you could assume a VA loan. And again, I'm just sharing my personal experiences.

I feel like that's not something that I've seen done very often. I don't know why that is. I know on the commercial side it's actually incredibly challenging to assume a loan even if it's an assumable loan.

They make you basically reapply for the loan and basically make you qualify as if you were the original borrower.

I think on the residential side it's a bit easier, but the assumption of loans is definitely the safest way to do it, which basically means that the lender is stamping that you're good and that there's no issues and you'll keep the same two and a half percent interest rate, but again, that's very rare. What you see now, more often than not is the subject to transactions. And for those who aren't familiar, subject to means.

I buy a property from one of you guys, and you have a $200,000 mortgage at 3%. And let's say I pay 300,000 for the property, right?

You have equity of 100,000 at closing, I could pay you that equity and then instead of paying off that mortgage, we leave it on there. But we don't change anything about it. We don't tell the lender, we don't change the name on the mortgage.

We just leave it in place and then I pay the mortgage directly. Now, there are risks with that, right? The due on sale clause is one of the biggest risks, right?

Which means if the lender finds out that we're doing this, Every mortgage has a clause, and every loan has a clause that says if you transfer the property, you have to pay off the loan, right? So it's to prevent this exact thing from happening. They could call it due. Now, historically, lenders don't really care to call the loan due. Why?

Because if it's being paid, they're getting their payment anyway. They don't care who's paying. I don't care if I'm paying, if you guys are paying it. If my uncle's paying it, they don't care.

But when they lent at two and a half percent and now they can lend at 6.8%, more than double their interest rate, don't you think that they have a vested interest in calling that loan due? The answer is absolutely yes. And I'm going to take it a step further. I'm going to tell you something that I found out.

I have a client of mine who's a church. They have several million dollars of loans with a national bank that is not to be named on this podcast.

But everybody knows that one of the guarantors of the loan passed away. It was 90 years old. He passed away. Nothing happened. They didn't default.

Technically, that's a default under the loan if you don't find a guarantor replacement in 10 days. The bank wrote this church a letter who had millions in the bank and millions of loans.

It was like a perfect client and said, if you don't figure this out, we're going to put you in default and jack up your rate from 3%. It was a very aggressive move. And when we got to talking to the lender off the record, they Told us, look, we're not originating loans right now.

So what the bank has directly instructed us to do is go back through the loan documents of each loan that we've made in each borrower, read the covenants, read the requirements, all of that, and try to put them in default so we could jack the rates up. So I know that was my reaction too, is I didn't think it was like that.

But also, if you got all these guys on payroll and you got money out at two and a half, it's a little shiesty. Doesn't surprise me. So the due on sale clause is a real thing, and that's just one way that they could accelerate the note and call it due.

There's other ways as well. So subject to is good. It's risky.

I had other incidents where essentially one of the parties wanted insurance at this rate, and then the buying party didn't want to pay the premium, so they kept the insurance lower and it became a dispute. And the whole thing is, with the subject too is you're married to each other, right? Both of you can screw each other, right?

Because you could ruin the seller's credit and the seller could make you lose the property or have to come up with the cash a different way, which probably ruins your whole analysis of the deal because you're not buying it unless you could buy it subject to. So everybody's got a little leverage, which with all the countries that have nuclear weapons, like, no one really should push the button.

That's the theory. So it's the same thing on a much smaller scale. Let's just figure this out, because if we blow it up, we're all losing here.

There are ways to create that within a land trust that alleviates some of those concerns. And that's what I do for my clients.

Depending if I represent the buyer or seller, we can structure it more favorable to either of them to protect their interest. So that's the subject too. We see a lot of seller financing, which is pretty straightforward. You sell me your property and you become the bank.

So maybe you don't want to take the tax hit on the capital gains from selling that property. So I pay you over time and you just, you're older, you like the cash flow, and I don't have to qualify for a loan then as a borrower, right?

It's very simple. At least if it's a first mortgage. That's something we've been seeing a lot of as well. So those are the big two. I would say that I've been Seeing.

Clint Harris: 00:24:17

All right, selfish question here. I've got a fourplex. Did flood? I've got a. Not in a flood zone, but I've got to go through a couple months of getting it put back together.

And I was in the process of. I just listed it. Did have a couple offers on the property, but we hadn't made an agreement yet.

But this is a property that, like, I had listed for 1.35. I owe 400 on it. I've got a partner on this property and I was approached several times with a subject to offer.

So the idea is they're going to take over my interest rate of around 5% on the 400,000 and then they've got to come up with the rest. Now, obviously they're not coming up with the rest. So there's a question there about seller financing.

Let's say they put down $150,000 or something like that. So there's 800 grand here, effectively that I'm being asked to sell or finance. Yeah, that's in second position to the bank.

Bishoy Habib: 00:25:03

Yeah.

Clint Harris: 00:25:04

So if something happens to this property and they stop paying me or the other mortgage, if that goes into foreclosure, the bank's motivation is to get enough that it covers their note and anything more than that has to go back to the property owner. In this case, it would roll over and pay for the second mortgage. Right.

But if they owe me 800, there's a risk there that the foreclosure may only come up with five or six hundred. Right.

Bishoy Habib: 00:25:28

You're over leveraged. I mean, I would never accept that deal because you're at 92 LTV in that case. Right. You're at 1.2.

What your position is 1.2 million and the property's sold or valued at. And typically if they're doing those terms, they're probably overpaying for the property. So it might actually market value be worth 12 or 1 1.

You know, I was in a meeting last night, an investor meeting, and there was a self storage Property listed for 19 here in Tampa Bay. And the agent was in the room and he's, yeah, he'll do terms. So he'll sell or finance it at 1:9.

But someone else is like, yeah, cash, that thing's probably worth 1 5. But if we get terms, it's worth a lot more.

Because the terms, and by terms I just mean like seller financing or whatever, you would be completely overleveraged in that situation.

And I'm not your attorney, but if I was, I would Advise you that's a terrible deal for you because if anything happens, you're not going to get your money back. You'll get some of it back, you're not going to get all of it back.

Clint Harris: 00:26:21

In that situation, like the idea is somebody's offered me this and I can come to you and be like, hey, is this smarter? Is it not? It never even made it that far. It was a blanket no. Yeah. But also it's a scenario.

If I come to you with this property, look, I've got this much locked up at this low interest rate. This is what we're selling it for. What are the different options I could put together that would make this smart for me?

When we're in a time of economic headwinds, there's not a lot of properties moving right now. So if I can give somebody an effective lower interest rate by part of its 400,000 at this lower interest rate and part of its higher.

That's something where I might be able to ask you like, hey, how could we structure this in a way to put together something that might appeal to an investor base because it's a little bit more creative or something like that.

Bishoy Habib: 00:27:03

Yeah, we would do is. And I'm in Florida. Right. So Florida is a foreclosure state and that works to the detriment of lenders.

It means it's more difficult to take the property back than a state like let's say Georgia, which you could pretty much just take the Property back within 30 days from what I understand. So what we do in that situation, I don't know North Carolina because I don't practice there.

But what we would do in that situation I would do for my clients is we would make it so that we can forego the foreclosure process. Right. And that way we don't even have to alert the first lender if an issue goes wrong.

And I would want to protect you so that you can just take back maybe your beneficial interest in a land trust in exchange for the default or the non payment of the terms. Right. We could structure in a way where you could still do the deal and be protected. Now again, it's more risk. Right.

Because there's just so many different factors. And the other thing that I would point out is that first lender probably is not okay with that second mortgage on there.

That's another possibility of having the loan call due. So I say all this to tell you that you're my client in this scenario. I'm not scaring you away from the deal. I'm telling you that you have leverage.

If you're going to take this deal, you have the leverage to say, look, look, these are big risks for me and therefore I would need these conditions or terms in order to move forward on the deal. But it gives you a leg to stand on so you can aggressively negotiate with the buyer and say, no, these are the terms I need.

I'm doing you a favor, but I need to protect myself and this is what I need. And that's how we would negotiate it. I love that.

Clint Harris: 00:28:34

I didn't even know that it was possible to put it into a trust and lean things in your favor to make it easier to potentially even forego the foreclosure process. This is amazing.

Bishoy Habib: 00:28:43

Yep. Land trusts.

Clint Harris: 00:28:44

All right. I want to switch gears here a little bit. I was reading your biography and the word Costa Rica comes up a couple times.

Talk to me about what you guys are doing in Costa Rica. I think you guys have, you're sourcing your own off market deals.

You guys have a call center down there and I know you're working in US and international markets. What are you guys doing in Costa Rica that's helping you source deals?

Bishoy Habib: 00:29:04

We have a team, 10 or 11 employees in Costa Rica. Basically it's a call center. And so for the past year that's how we have been running our off market. Right.

So we've been running different campaigns, calling phone campaigns and SMS campaigns and they've been pretty effective in finding off market opportunities not just in Florida, but all over the country. So there's a couple markets that we really honed in on. The Midwest was one of them Alabama. And then of course Florida was the big one.

So it's been cool. We went down there and met with the team a couple months ago. And they're all young hustlers and they love what they do.

And we're probably going to slim down here a bit because we're starting to leverage AI, artificial intelligence to do a lot of the kind of the basic stuff. We've created like an AI bot that does a lot of the same work.

at the same level. So it's a: 2080

But that's our ties to Costa Rica. We haven't invested down there yet. We were in Jaco beach, which is like a booming area. A lot of development going on there. It's a really cool place.

We looked at some opportunities. We haven't pulled the trigger yet, but we are. It's in the back of our minds.

Clint Harris: 00:30:22

That's for basically wholesaling residential properties. And is that also for land acquisition?

Bishoy Habib: 00:30:28

We were doing a little bit of land acquisition. We had some commercial stuff as well, some gas stations that we were working on. But predominantly what I would say is the residential side. Yeah.

Clint Harris: 00:30:38

What do you not do?

Bishoy Habib: 00:30:40

I don't do like land entitlement or zoning or anything like that. Like that's the only thing, like land use law. I don't do that. But the investment side, we want to get more in the commercial space.

Right now, to be honest with you, it's tough to break into it because you need an operator, you need somebody who understand each sector. I would love to get into data centers, but that's like a billion dollars. I don't know how I'm going to do that.

But even the self storage stuff, it's not that hard. You just gotta do it. But you also have to know what you're doing regardless of what sector you get into.

So I think that's the thing that makes me hesitate because we could raise some funds and funny enough, we've talked about raising funds and you know, buying commercial assets. It's okay. How do we execute on that? Who do we bring on to manage? Especially if it's a management intensive type of asset.

So that's one of my struggles today. I think.

Clint Harris: 00:31:24

I'm not surprised to hear that because that's.

You actually mentioned it was going to be my next question earlier when you mentioned starting a fund a few years ago for people, that credit was tapped out because in my mind I was like this. You screen like capital raising fund to fund manager. Right?

Like with your ability to underwrite the understanding of the legal background and your acumen as a deal guy, man, this seems like you can not only recognize opportunity, hopefully recognize good operators, but you can underwrite the deal and understand the legal side of it. To me that seems like a natural thing. I agree with you. I think the number one thing about getting into commercial real estate is the operator. Right.

Especially if you have vertical integration, the ability to control your expenses. Like Neil had a. How many years were you air force contractor?

Bishoy Habib: 00:32:04

18.

Clint Harris: 00:32:05

18 years. I spent 16 years implanting pacemakers and defibrillators. We're not operators. Right.

Our partners are a father and son team with over 35 years of commercial construction experience. Been doing storage since 06.

So we raise capital and we do investor relations and I've got 16 years of being surrounded by the white coat community, which I know that basically everyone in your family except for you, apparently, you know that community. Our skill set is networking and raising capital and it works because our partners are the GCs and we have that top to bottom integration.

Neil mentioned a few years ago, everybody looked like a genius. You really couldn't miss in when times are down right now, strong economic headwinds.

Bishoy Habib: 00:32:43

Yes.

Clint Harris: 00:32:44

A lot of people are pulling back and it's maybe not a great time to be investing, but also I would say it's a great time to recognize the people that are good at it and the people that are doing it right now are and that have been doing it over the last two to three years. That's probably who I would want to be placing my money with for the next 10 to 20 years.

Bishoy Habib: 00:33:03

Yeah, that's a good point. Yeah. I tell my partners that they're a little bit younger than me and I'm like, guys, get ready to see all the cockroaches come out right now.

Because you're starting to see it. If you're tracking all the fraudulent fund managers, I don't mean to say they're all fraudulent, even some of the ones that are failing.

They may not have had intentions, but they obviously underwrote poorly and they were not cautious with people's money. But then some of them just out outright fraud or they just took people's money because it was so easy to get. But you're absolutely right.

You're going to see the market weed people out right now. It's a natural process. It's the cycle of real estate that we all know and love and hate. Right? Depends on where we are in the cycle.

You couldn't miss for 10 years in real estate. You couldn't miss.

actually bought something in: 2012

If you had bought back then, you're 5x plus whatever you would have made in that 10 year span on incomes five times what you put in 10 years ago, which is insane. And that's an extreme example. You couldn't miss for so long and now is the first time that really there's buying opportunities.

I want to call them and you get to see who's legitimate, who's not, who's going to stand out in this market.

It's the same thing with agents, not to the same extreme, but everybody and their mother got their sales associate license to sell real estate in Florida last two, three years. And you had hairdressers and teachers and police officers. Everybody got their license. And it's just like this isn't good for the market.

If you're just doing this one time for your mom, that's one thing. But if you're actively representing people. So anyways, all those people are being weeded out.

Just the people that survive this, when we come back in a year or two years, whatever that is, they're going to be the real people that you want to work with. And it goes exactly the same with the operators. Like you guys said, when the tide.

Neil Henderson: 00:34:57

Goes out, you'll see who was skinny dipping.

Bishoy Habib: 00:34:59

That's the phrase. I'm always trying to think of that phrase and I never know how to say it, but I always. That's exactly what I'm thinking.

Neil Henderson: 00:35:05

I think it's originally Warren Buffett. A friend, Paul Moore at Wellings Capital, always says it's one of his favorite things.

Listen, Bashoy Habib, Clint and I have both so enjoyed this conversation. It's gone all over the map, but I've learned a ton. I know he as well.

If any of our listeners want to reach out to you, find out more about what you're about, where would be the best place for them to do that?

Bishoy Habib: 00:35:25

Yeah. So if you're on social media, you can find me on there. I'm at Attorney Bishoy B I S H O Y and that's Instagram, tick tock, YouTube.

-: 2699

Clint Harris: 00:35:52

Appreciate it. Thank you so much for your time and for contributing.

Bishoy Habib: 00:35:55

Absolutely guys, thank you for your time. Appreciate you having me on.

Neil Henderson: 00:35:58

Thank you so much for listening and watching the Truly Passive Income podcast. If you like like to the show. If you think it would be useful for someone else.

The greatest compliment that you could give us would be to share the episode. Leave a comment down below or leave us an honest review. If you have any questions, don't hesitate to let us know down below.

And remember, with Truly passive income comes freedom of time, place and the freedom to pursue your higher purpose.

Bishoy Habib: 00:36:28

RA.