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Hey, welcome to this new episode of Commercial Real Estate Talk with Steven Arne, where we hope to have compelling and interesting conversations with iconic leaders in the commercial real estate industry. And I'm very excited about today's guest 'cause we have known him a while. Uh, he's been lending on commercial real estate properties throughout the region for decades. Arnie's a good friend of his, uh, it's Chuck Shon, founder of Fidelity Mortgage Lenders. Uh, but before we get into, uh, bringing in Chuck, uh, let me first, uh, introduce myself and my co-host, Arnie Garfinkel. I'm Steve Bloom, founder and CEO of Rent tv, the news and media company now in its 25th year, uh, with our news website, rent tv.com, our email blasts, our conferences, our, uh, website, sublease.com, and the video platform where you're watching this video. Now, the review. But with that said, let me bring in my co-host, Arnie Garfinkel. Hey, Arnie, good morning. How you doing today? Hey, Steve, how you doing? Arnie Garfinkel with the All-Star Group. Uh, we do commercial real estate lending. We also do a number of conferences that I produce, uh, the Commercial Real Estate Lending Conference, the Lawmakers Forum, and we also produce the Click Conference as well as we produce the Rent TV conferences for you as well, Steve. So, that's what we do, And I know we're both, uh, you know, hard at work on our upcoming events this week in San Diego. Uh, so hopefully those will, uh, uh, go well and as planned, I know we've got great programs lined up for our audiences there. Perfect enough about us. Let's talk about our clo, our, uh, sponsors. Yes, uh, we got a great set of sponsors. Uh, the first one is Paramount Property Tax Appeal with inflation causing cap rates to increase and profit margins to decrease. One way you can fight back is by appealing the property taxes. Even if you have great income, you can still qualify to have your property taxes lowered. The deadline to file is November 30th coming up, call 8 5 8 2 2 5 1200. Ask for West Nichols with Paramount Property Tax Appeal. The information is on the screen. Uh, what's up next, Arnie? Well, next we have Fidelity Mortgage Lenders. Fidelity Mortgage Lenders Incorporated is a private lending company specializing in commercial real estate, founded in 1971 by Chuck Shon. It is known for its unique terms, fast funding, no prepayment penalties, and long-term fixed rates. Call Uncle Chuck or John McClain at 807 5 2 9 5 3 3. Who's next? Well, the last, uh, sponsor of the show is commercial real estate inspectors in Southern California. Their skilled inspectors provide critically needed inspection information in easily understood terms, as well as inexpensive, simple solutions. Whenever possible, let commercial real estate inspectors help you protect your deal. Again, the information is on the screen. It's Tiffany Simington. And call for your next inspection Today at 8 1 8 9 5 7 4 6 5 4. Again, Tiffany at 8 1 8 9 5 7 4 6 5 4 commercial real estate inspectors. Now that we hear who our sponsors are, let's bring in our really good friend and quite an icon in the commercial real estate lending industry. He is known as Uncle Chuck. Please welcome Chuck Shan from Fidelity Mortgage Lenders. Welcome, Chuck. How you doing today? We're doing, we're doing, thank you, Arnie. And my Stevie Pleasure to be here. Hey, Chuck, let's get where we, we've known you for years. You're, you're a legend in the industry. Let's, let's start with giving us an overview of what Fidelity Mortgage Lenders is, the size of loans, uh, what you do as an investor and a borrower, and the portfolio size and the lending area. Just give us a little overview of Fidelity, what you guys do. Okay. Uh, fidelity Mortgage Lenders was, uh, formed in, uh, 1971. It was under Fidelity Home Loan. And then, uh, it morphed into, uh, fidelity Mortgage Lenders. Uh, we started, uh, when I graduated, uh, USC in February, uh, 63 during the Jurassic period. Uh, I graduated, uh, with a degree in real estate and finance because I thought that was probably the only major, uh, you know, I might be good at. But I really didn't know what the heck I wanted to do. So Chuck Hershaw graduates, uh, in, uh, 63. And, uh, I got into the, uh, business in, I started in, um, 65, 66. So since that time, my very first company was guaranteed home loans. So, uh, it's been a good, uh, uh, go. We, uh, service approximately 515 loans. Size of our company portfolio is about 300 million. And, uh, we have 23 employees. We're a direct lender. We lend on all sorts of commercial loans, and we used to do a lot on single family, but, uh, we're no longer in the consumer loan department as far as homes go, just in the, uh, if it's for business purposes. Uh, what else, uh, what other question did you have on that? Well, I'll, I'll, I'll, I'll take it from there. Uh, in incredible story, you know, I didn't realize it was right outta college that you got into it. I mean, with all the different options at that time in your life, what was it that attracted you to real estate? I know you said, you know, you didn't know what you wanted to do. I think a lot of us get into real estate for that reason. But what was it about the industry that, uh, got you interested? Well, to be perfectly candid, Steve, Please, It was probably the only major, you know, I certainly wasn't going into an accounting, and I wasn't going into engineering, and I wasn't gonna go into the School of Cinema. I said, well, that, that real estate and finance might be akay for the Chuckie. And, uh, that's, that's how I got into it. So, it, it's been a, that, it's been a very interesting journey. Sure. Has. So, you're, you're, well, we know, we know, you know, dirt. Um, and, um, so you conceive Fidelity Mortgage Lenders, when you start now, did you start as, as you get your real estate license, did you start selling or you figured, I just wanna start doing, uh, lending? Well, that's a very interesting story because when I graduated in, uh, February 63, as soon as I graduated, my mother knew, uh, a good friend and he was an independent developer. Mm-Hmm. Now you have to remember, I had six jobs in 20 months. Wow. After I graduated. Uh, that might be a clue for people that wanna start in the industry. You're not a success, but a binging better bang that quick. Yes. Uh, and I'm a perfect example. So let's go through that and I'll make it very quick. Sure. First job, independent, uh, builder of apartment buildings. That one lasted a whopping one month. The next job I worked for a wonderful development company called Cow Prop Investments. They built, and the hot ticket at that time was furnished singles. And that I catered to the young demographics, you know, with the rec rooms and everything. It was a, it was a pretty smooth operation that lasted four months. Mm-Hmm. I got laid off there. Then I went to work for an infamous person. I'm not gonna mention the name, uh, who built, uh, four plexes in Las Vegas. I worked in Vegas for four months. That was a lot of fun. Let me tell you. I'm sure. 21, 22 year old guy. Yes. It was a few laughs and, but, uh, this guy was crazy. And I was afraid of losing my broker's license. So I quit that job. Next job I got hired by a company, and I started in a boiler room operation. Now, I gotta remember, this is before mailers and, uh, and our, uh, telephones or cell phones and all that stuff. You, you were Around before telephones. I didn't know. That's Right. I go back to the Gettysburg, uh, uh, you know, attack there. I, I worked for, uh, I was a soldier under a, uh, uh, general Grant. So I can tell you all about that fight. It was a wonderful time. So anyway, I go to work for this, this fellow, and I started in a boiler room operation. And what my job was, was to set up appointments for the salespeople. Well, I was doing pretty good. He says, Chuck, you can get your ass out in the field and you sell. So I did that, and, uh, I was doing pretty good, uh, and making some fairly a fairly good money. What was interesting about that job was I go to the office one day. I see it's locked. And what happened? It seems like the boss went home one day in the afternoon and found his wife in bed with a, a person there. Oh. Anyway, he took a shotgun and blew 'em both away. He went to jail. Then I had to go on to my next job. Oh, Jesus. So the next job, you could write a book about this job. Oh, this is, I could spend the day on this stuff. Yeah. And then the next job, I went to work for a company called RJ Beaumont. And the developer was Ponty Fem Moore. Ponty Fem Moore developed land loans. You remember the picture? Glen Garry Glen Ross. Yes. That was Chucky great movie. I was selling land in Tehachapi, golden Hills. I would pick up people, slap 'em out, show 'em the property, take 'em back home, try to sell the property. Well, the first month I didn't make a sale. And by the way, this is strictly commissioned. Right. If I didn't make a sale and second month, I made one sale. The third month I made 15 sales. I made 40 grand. I couldn't believe it. I said, this is for me. 'cause I saw the, the, the pros, and I'd listened to 'em on the phone. They were incredible. These were the probably the best phone men that ever a salesman I ever seen. Anyway, these guys were making four, 500,000 a year, you know, with their big fats of guards and driving their Cadillac convertibles. So, as luck would have it, my, uh, the sales, uh, team, RJ Beaumont got a p*****g match with Ty for Ty f the developer shut it down onto the next job. And that the last one I went to work for Ames Home Loan. Mm-Hmm. That one lasted a whopping three and a half weeks. Wow. But I learned something. The moral of this story is taking all those six jobs, the millage of those six jobs, gaining experience. I learned one thing. I was not an organization man. And if I wanted to make a living, I better start my own company. And my company started on a dining room table in my apartment with a phone and a bunch of leads in front of me, and just dialing and dialing and dialing. And it's a long story. But here we are, 500 or 15 loans in the portfolio, 300 million servicing. And, uh, I think we have a very nice and a very good reputation. Yes. Yes. It's a perfect lead into My next question is, what, can you look back and remember that first major deal that you feel like took you to, you know, smaller time, Chuck to Uncle Chuck? Do you remember that deal that you to David? I can remember this deal. I'll never forget. All right, good. Let's go back to 1972. Ooh, Uhhuh. It was a very good year. Yes. I get a call now, you gotta remember the hard money business. The, the loan Val, uh, the loan amounts were 3000, 5,000. A big one was seven $8,000. I get a call for 1,000,200 $50,000. So I go out to the property, he's a famous band leader, and he is married to a, a famous, a singer. And this was during the MGM musicals and stuff in the, uh, you know, late forties, early fifties. Had this beautiful home on Roxbury Drive north of Sunset. I didn't know what the value of that property was, to be honest with you. I was so naive in the business, especially about a huge property like this. But I called up one of my rich, uh, uh, friends that I knew, and, uh, an older gentleman. And, uh, I said to him, Ray, I said, I've got a property guy's looking for a million and a quarter, and it's a block and a half from you. He lived on Rexford Drive. So he said, let's drive by and we drive by. We went through the property, met met with the borrowers. He said, we'll do it. I said, holy cow. Yeah. This was the days. 10 points. 10%. Wow. I made $125,000 commission at that time. I don't know what, $125,000 in today's dollars, but it was a nice commission. Oh, yeah. Yeah. So what did I do? I'm glad you asked. I always, as a young boy, promised my dad someday, dad, I'm gonna buy you a Cadillac. Nice. So I went to Hillcrest Motors, Uhhuh Wilshire Boulevard in Beverly Hill. Sure. I know. Coup Deville in 1972. Silver coup Deville with a burgundy interior. I told the guy, I'll take that. He looked at me sort of strange. Yeah. I wrote a check. It was 5,600 bucks. Broke the check, drove the car to my parents' house. They said, pop, I promised you one day I'll buy you a Cadillac. My mother comes out there, she's felling, she's happy as that. She's going nuts. And, uh, that was an incredible day for me. I also bought this silver, this gold medal. Wow. I just went Baz Zoox that day. Yes, yes. Why Not? It was a, it was a day of elation. Yes. Day of elation. So it's like when an NFL player gets his first contract, you know, so, right. So that's A great story, Chuck. That is a great story, Chuck. When you get transactions, now, I'm, I'm a loan broker by trade, and I've sent you a lot of business. I know you get it from brokers. Right. But when somebody comes to you with a transaction, how do you decide to approve it? Is it the equity only? Is it your gut? Is it location? Is it a combination? When I send something to you, what goes on in Chuck Shan's mind when he decides, I think I'm gonna make a loan on that? Well, I have a very simple mind. There's only three things that mean a damn thing. In the private lending business. People can make it sound very complex. With dcr, this, that ratios, as far as I'm concerned, forget it. Three things. Equity, equity and equity. Mm-Hmm. Every property has a value. If you make a loan on that property and go somewhere between 40 and 55% legitimate, 40 to 55% loan to value, if, god forbid, it starts going south, there's a million exit strategy, especially in this market where you've got some lunatics out there going anywhere. 65, 65 was pretty norm. Right. But this guy's going 70, 80% loan to value. My God, thank God for these people. 'cause if I get a loan starts going south, I call 'em up. Here's a deal. I'm into it for 50%. Do your story. So we, that's, that's been my model for a long, long time. Equity, equity, equity. And we get AFIO score. Right. Because that's gonna determine how I'm gonna get my payments. If the guy's a real, let's say he's got a 500 and change or low six hundreds, I'll just give 'em a lower loan to value, uh, loan. And I buy those. 'cause I know it's gonna be brain damage in the collection. Right. So, which I enjoy. And, uh, I don't care if the person's gonna be laid or whatever. 'cause I know I've got enough meat on a bone, they get the heck outta it. So with that high equity, you don't have to get that much into the weeds with the business, the cash flow a a as much the Yeah. Coverage, like you said, the dcr Yeah. People don't realize, Steve, that if you're even into it for 65% and you have a foreclosure, yeah. You've got, you've got a foreclosure cost, you've got bankruptcy. Nine out 10, they file bankruptcy. Then if it's an empty building, you gotta worry about ripping the plumbing out, ripping the air conditioning out of the building. All sorts of problems can happen. They don't figure that out. And by the, and then if you sell the property, you gotta pay a commission. And then you got property taxes that haven't been paid. You have insurance that hasn't been paid. So when you add all these things up, uh, you might be, uh, underwater. You know? And, and that brings up my my next question on, on your exit strategy, because you touched on that a little bit. Um, when you, when do you think that you gotta step in right now, now and unwind this thing? What is your, you know, what is that exit strategy, especially when it's obvious this thing's gonna go bad? Right. Well, what I do arne is if I know I've got a lot of meat on the bone, sometimes I'll wait three months. Mm-Hmm. And then put it in default. Uh, especially if the person answers the phone. You know, your replies what's going on, you call 'em. But if they start avoiding me and don't communicate with me, I'll put it on the second month bango, I'll put it in default, or I'll call up these lenders that, that will take me out. Right. We've been very fortunate. And the few that have gone to the foreclosure sale, you know, the market of the 40 thieves out in Pomona, uh, I've always been taken out. And I even go there just to see the action. And they look at me really strange, who are you? We haven't seen you around. Right. I said, well, I represent this property. And then they try to handle with me. But I let it go. And, and sure enough, we get paid off. Yeah. Well, I guess since we're on this top topic of Tru Troubled Loans, um, I, I was gonna ask, uh, you know, if you, if, if you could think of any in your career, we've talked about some of the standout on the, on the positive side, but are there any couple that you wish you didn't make? You know, any standout ones there? Yes. Sarnie. Yeah. I mean, uh, Steve, uh, I've, I've, uh, experienced, I thought I was a real smart guy. So in 2004 and there, I have already been in business 40 some odd years at that time. So I thought I was a real smart ass. So I made some land loans. I made a total of 41 land loans between 2004 and 2006 and a half, 2007, even the beginning. Southern California. Southern California. And did I learn a lesson? The market, the biggest real estate depression we've ever had, basically that I can think of. In 2008, there was no developers buying land at that time. It was a horrendous time. You couldn't get arrested then to exacerbate matters. The cities, when I made the loan, you had a certain density, you know, you could build X amount of properties, whatever. They changed the density on me. So it, it, they took the wind out of the sails, basically. So we took back 34 Lambo. Wow. Wow. 34. I paid off all my investors, or I had some of them work with me. I said, we'll work it through. And thank God they were all first deeds of trust. So the only thing we had to advance was insurance. You know, liability insurance and kept case somebody tripped on the land and sue you. Yeah. And pay the property taxes. Well, believe it or not, this year, I sold the last two. So they've been on my book for 14, 15 years. And we came out whole, my investors are happy, but most of those loans, I was the sole owner because I bought out my investment. And then you end up selling the loan Land loans was, uh, at one time I owned, uh, half the land in California. It was terrible. But interesting that you started in the land business and you know, that's what killed you. So you end up selling the loans. Is that how, how that works? Say that again? You end up selling the loans. Yes. Se we sold the loans and, uh, because that's the only way you could get out of it. Right. I couldn't refinance myself out of the loans. Yeah, yeah. And no, no, uh, uh, lending company would, they, they didn't want my headache. Right. So, uh, now On, but on the, on the, um, on the ones that are working, uh, you know, the ones that are paying off, do you end up, do you package those and sell those? Or do you hold Those? Well, just, uh, I had the last two, there were two independent land. Uh, one was in, uh, Fillmore, the other one was in Ramona. Mm-Hmm. Which was a, uh, uh, what is that? An urban area of, uh, San Diego. Right. Or San Diego. San Diego County. And, uh, I got out, thank God. And they were both cash deals. Well, How about on performing loans? Do you package those and, and sell those to groups of investors? Or do you carry those until fruition? Generally? Uh, I'm performing Loans. You're talking about foreclosures now? No, No. Performing loans. Loans that are doing well. I do not. I keep everything on my list. Ah, the secret in this business, uh, you know, most of the people write one to three year loans. They, they love the short term. I'm the complete antithesis. And that's what makes Fidelity unique. Servicing income is the key to get you through the bad times when you're servicing, I'll let you figure the math. Yeah. 300 loans at 1.5% servicing. That ain't chopped liver. No. Yeah. Especially So if the market starts going south on you, one, you're not desperate to meet payroll because you've got this income coming in and you can pick and choose, you know, if you're gonna write a loan or whatever. And it just works for me. Yeah. Well that's what's interesting. Yeah. Even If you write a, and this is a secret, but, uh, I'll let you guys know. Even if you write a 20 year loan, which we do 20 years fixed, right? No prepayment, fixed rates, or 30 due and 15, 30 year amortization due. 15. Now we've gone as high as 10 years. Uninterest only. Hmm. What's interesting about these loans, the long term term, the mean average loan lasts on my books 42 months. Wow. Why is that? The secret is in the sauce. And that is, when you write a 20 year fully amortized loan at 50 or even 55%, after five years or so, it pays down about 12% in principle Uhhuh, now you're down in the 40% range. As soon as the banks come to life and the market normalizes, either the banks are gonna take you out. Hmm. Or you're gonna need a call from that borrower. I need more money. Or a a, a lender will take me out. You know, they go with somebody else that'll give them more money. Right. So that's, that's usually a better way, my my way of doing business. Yeah. So, Chuck, tell us about where you get your money, the investment side. Where do you find those investors to, to come with Chuck to get the money for the loans? This all started in 1966 when I first started, when I wrote my first second mortgage at a, a whopping loan of about $2,500. And I'll never forget, uh, that was Lawrence and Ida Kramer, I'll never forget them. Made the rest in peace. And I made my first, they were my first client. And then as I got more into the business, and I get a list of these investors, and I kept on keeping my figure in the telephone dialing, uh, they didn't have push button phones in my day. And, uh, we developed a cadre of investors. And then we developed even a second generation. And I'm on some of 'em, a third generation. And believe it or not, you know, we're not a huge company. We only fund about 110 to 125 million a year. That's mostly with less than 50 investors. Mm-Hmm. So, and we're very fortunate. We get calls all the time. New investors, or they were referred by our old time investors. I've got investors going back 45 years. That's me calling you right now. Yeah. There you go. We'll take care of you. Nine and quarter percent that, to you, the Fund. So, so the investors will stay in for like 20 years, uh, or Yeah, but you remember the only last 42 months. Exactly. I mean, they're prepared. Some loans, a very small percentage. And I got news for you. What's interesting about money, if they keep on getting the checks every month in the mail, they don't think much about a, it was a lower interest rate at that time. They just love seeing that check come in. They love that income. Yeah. So it, they don't think about it. Geez, I've had that loan for 10 years. Yeah. It's got another 10 years to go. Right. Yeah. No, you're right. They don't ask. But an interesting part of that story, when I first, uh, started and, and, and, uh, remember the, the recession in 81, 83, when a primary went up to, what was it, 20, 21%. I was one of the first companies to go 15 years fully amortized. Yeah. Wow. And I call up the investors talking about investors, and I say, gee, Mr. Garfinkel, uh, I just wrote a, a great loan. It's a 15 year fully amortized loan. 15 years. I'm 65 years of age. I'm not gonna be alive in 15 years. I'm could be dead. And I'd say to 'em, if you're lucky and you go to heaven, they don't use us currency. Have you been a bad person? And you go down to hell, you're in deep s**t. I know. It's a terrible thing to leave your wife and family a 10% interest loan. Terrible, terrible thing that took, got over it. And, uh, once they got used to the system, and now we're up to 20 years, uh, or 32 and 15. Yeah. The rest is history. Well, let's take a hardship. But you were, you were just talking about those historical interest rates and, you know, it makes today's interest rates, you know, seem like, uh, you know, nothing, uh, comparatively correct. Um, but given comparatively what they were a year ago, it has had a dramatic effect. So how are you dealing with the, the change that we've seen over the last year in the business climate, interest rates, the economy, economy, you know, the challenges that some sectors are having? How are you dealing with that strategically? We love it at Fidelity. I knew you were gonna say that. This is a perfect, this is a perfect store platform. High interest rates. Banks are not lending. Somebody's gotta fill the vacuum. Along comes Uncle Chucky, my deli mortgage lenders. We, if any loan fits our parameters, we are in. So we've been very busy. Thank God I have no complaints. So it's been a terrific market for us. How long it's gonna last is anyone's guess, but it looks like it's gonna be around for at least a year or so. Yeah. I thought that we were gonna lower the interest rates before the election coming up next November, but that doesn't look, uh, uh, so positive. Yeah. Have you done anything different? Have you introduced any new products or done done anything different marketing wise? Branding wise? Or is it really just taking advantage of the situation? That same Old, same old Steve Uhhuh. Yeah. It's, uh, my, my model has not changed one iota. We just look for a certain type of loan that fits within our loan to value parameters. And I don't care if this FO score is 500 or 800. And what's interesting is we're finding, excuse me, a lot of people over 700 FO scores that we're doing. 'cause they're just taking two damn long for the banks to close. And so, and that's exactly, we we're closing loans in five to 10 working days. Yeah. And that's exactly the, the, the a great point that you bring up because the way the industry is going right now in the commercial lending industry is your rates are not that much higher than conventional. And your loan to value is not that much lower than what they're gonna underwrite it for. So there's definitely a, a more, uh, homogeneous way to use a loan with, with a private money lender like yourself. Uh, and you are giving them the speed factor and the no prepayment penalty, which is why the, the private money industry is actually, uh, doing extremely well in, in today's times, you know? Yeah. One little, uh, ingredient. Yeah. I've done loans at one point, one and a half points, especially, let's say it's a 10 million loan. Yeah. I've done one pointers, one and a half. And getting back to servicing Steve, I don't care about the up upfront point that we make. I like getting at least I, on the big loans, getting 1% servicing fee, recurring revenue, percent servicing fee. Right. And a $10 million is a hundred thousand. That's 8,000 a month. Yeah. That's a, that's a special. Right, right. Well, let me ask you this. Uh, you know, given the, the changes we've seen in the economy, are you seeing any changes and the fact that you haven't changed? Are you seeing changes in the industry in terms of financing, you know, anything dramatically that you see in terms of new ways of getting deals done? Or? I mean, the answer may be no. Yes. Uh, and one of the things I brought up earlier, I see a lot of people desperate, a lot of companies desperate to make loans. 'cause it's so competitive out there. And that's for the first time I've seen 70 and 80% loan to value. Yeah. And I just don't get it. Yeah. Uh, because if any of those loans become, gets go down, that gets, go south, they got problems in River City. And you know, it's interesting, most of those loans are one to two year loans. What happens? That loan comes due in two years. Right. What we're seeing with some of the banks, they're not gonna be able to get the No. So what is happening right now with a lot of the banks, they're doing what's called cash in refi where, or they've gotta just write, you know, they just gotta rewrite the loan and gulp and, and say they're gonna be at a higher loan to value because the guy's paying. Uh, you know, so Yeah. That, that's what's happening. Now. Going to the next question I have for you is write now with the state of the office, a multifamily market that's changing. And what is your opinion as far as what you see happening in that industry? I mean, again, you're going based purely on equity, but some of those equities are not what they used to be. How do you look at office and multifamily right now? Yeah. Actually, Chuck, before you answer that, are you active in all like, indu, indu, industrial, retail, office, multifamily? Are you active in all? We're We're all in the whole wheelhouse. Alright. Of, of loans. Yeah. Uh, Nothing passes us by other than rural land. Right. You don't do land. We know that. But, uh, Not crazy about, I'll do a le I'll do an infill. Yeah. But, uh, no, in, in the rural, rural areas, like Right. I'll give you an example. What is it called? Acton. Yeah. Uh, Up by Lancaster. It's hot springs. Yeah. Rum. Um, we get, we get loan requests there. You know, uh, that's outta my purview. Right. Well, you know, but go back to Arnie Yeah. About the different sectors. Back to back to the question on office of multifamily. Yeah. Let, let's, well, Steven interrupted it so I know. I'm sorry. He does that all the time. I got, I gotta, Uh, office buildings. We are getting tremendous amount of requests for office buildings. Why? Because the banks aren't touching 'em. Right. And 90% of the landers aren't touching 'em and Fidelity is not touching them. Ah, but what's interesting, if you get a smaller office building 10 to 15 unit office building and it's in a local downtown area, we will make a loan on them because there is a demand for people that want a small office and a small office building. You're talking about high rises because of Covid. What happened that changed the whole dynamics of that market. So we've, we've had a lot of loan requests because say people know I can make a big, a large loan on some big buildings and, uh, thank you very much, but no. And, and the Forecast now getting multifamily. Yeah. Talking about That. Alright. That's a very interesting, uh, market. Look what happened the last prior, uh, to the last 18 months. Say they were getting loans at 2, 8, 5 to 3, 3 5, 3 and a half percent. Right. Uh, 30 to in 10 30 doing in five 20, doing whatever. What's gonna happen when those loans come due? Mm-Hmm. Their income was predicated on the service debt of 2, 8, 5 or three and a half percent. Now they're looking at 8% approximately. They don't pencil out anymore. And, you know, you can't, uh, the economy, although it's good, uh, people can't afford to have their rents increase proportionately to the increase in the interest rate. Right. So they, they've got an issue, they've got a problem. So I would say in the next two, three years, we're gonna see a lot of, uh, defaults on multifamily. And, and the only thing I can think of, if these banks wanna just roll 'em and, and, and, and not, not put 'em in foreclosure. Right. Or they'll sell that portfolio take a tremendous discount and, uh, that's gonna be another scenario. So that's a multifamily market as far as I see. Yeah. Well, you know, a combination, obviously a hot topic today is the, you know, transformation of, you know, uh, office product that isn't working into multifamily. Right. Do you do construction loans? Do none. None. None. Well, I did years ago, but there's a lot of brain damage with that. Right. I said, I'm a simple-minded guy, I just wanna write a loan. We're good at that. It's an existing building showing done. Yeah. And you like the recurring revenue, but what do you think about that topic? Uh, do you think that's going to, uh, be something that's gonna take place the office to other uses? We made adaptive reuse. Is that what you're You're well tear down, you know, depending, Listen, costs a lot of money. Right. I take New York City, I just got back, I was there from, uh, from, uh, the fifth to the 15th. They got huge vacancies there. You know, I'm a New York City Native on beautiful buildings. Yeah. I mean, I don't know how many square feet that they've got that vacant. So the, they're gonna either have to discount the hell out of the value of those buildings and then figure in how much it's gonna cost to put up the dumpty back together and put in residential or condos. But that takes boku dollars and that's way out of my venue. Right. So, but it's an interesting scenario that we're gonna see play out. S bricks and mortar. Gotta make use of it somehow. Right. Go ahead. Well, you know, shifting from sectors to geography, when you look at the landscape, are there places around Southern California, other parts, you know, the state or country where is really attractive, you're more inclined to lend? And are there others that you just say brain damage? Yeah. Stay away. Um, fidelity, we land obviously all of California, northern southern, all of California, that market, we know, we recently in the last four years went into all the trust deeded states. That's all the western states. Texas, Oregon, Washington, Montana, Idaho, um, Utah. So we will write loans and the trust states, we know trustees are much easier to deal with than mortgages, but that's a whole different animal. Completely. And, uh, we've developed a cadre of appraisers or people we know within those specific areas that we can get determine a value. And that's another secret in this business. The secret in this business is knowing the brokers who are active in the area in which you are going to make a loan. Because who do the appraisers go to? Brokers. The brokers who negotiate the deals You're talking about the real estate brokers, estate broker, The real estate brokers. Right. And since we've been in business over 50 years, we've developed a cadre of brokers that I can call 'em up and say, Michael, this is Chuck. I'm doing a building, blah, blah, blah, blah, blah. Well, Chuck, it's $300 a foot. The fidelity value is two 50. You're going 50%. We can, uh, definitely sell it at that and get you out real quick. So that's our model. Yeah. Now let me, within California, which is kind of its own country, are there places that where you say, you know, where you hear about a location, it kind of just has a dark cloud over it that's ah, that's gonna be more challenging. And others that are like, oh, I'd love to be there. I I, uh, we made, we just completed a beautiful loan in Colorado. Uh, I, you know what, to be honest with you, I don't know if it was a trustee or a mortgage, but the deal was so good, uh, be true. I couldn't refuse it. Uh, and we've done some loans in New York, which is a mortgage state. Interesting. But we only went into it 40% on prime, prime, prime property. So you better make sure that the borrower is pretty strong, because to do a foreclosure on a mortgage could take two, three years because it's a judicial foreclosure. You gotta go through the courts. So you gotta watch yourself. One, one of the things, one of the things that you do, what, one of the things that I wanna ask you, Chuck, is what sets Fidelity apart from your competition? What, why would, if we have a private money loan, or what used to be known as hard money, uh, lent loan, why would they call Uncle Chuck? Or why would they call Fidelity? What, what sets you apart? What makes Fidelity unique is long-term financing at fixed rates, as we mentioned before, 20 years fully amortized, 30 due and 15, we've gone up to 10 years, interest only, no prepayment penalties. If we don't need an appraisal, we'll close that loan in five working days. Money is not an issue. We have a large credit line. So if I call up my investor and he says, Chuck, I won't have the money in two weeks. Not an issue. I'll fund the loan even with their name on the note and deeded of trust, and then they'll send me a check later. So the uniqueness is long term, no prepay, very competitive interest rates. I will not lose a deal because of my interest rates for my model. Right. And as I say, and, and very fair in the point situation, the upfront cost. Right, right. Plus we go out personally and I'll meet with the owners. There's nothing better than meeting that borrower face-to-face, go out there with a smile, shake hands with him. He is expecting some banker kind of guy and a suit, or a sport jacket or whatever. I come out like, I'm dressed now with a pair of jeans and everything with a friendly face. Make crack a few jokes. And, uh, the people feel comfortable and shine. You've written the deal. Yeah. That, That's great answer. And it's a perfect lead in for, for this, which is, you know, if, uh, it's kind of a two part question. So if you had someone coming to you today, young, young person starting in the business, what advice would you give them? And if you were starting in the business today, what would you, where would you start? What Would you do different, if anything? Yeah. So let's start on someone young coming to you and asking you for advice. What would you, what would you do? Well, the first thing, the first thing they better get a real estate license. Yeah. And then you've gotta find a company that's willing to take a neophyte and train him. And they're going to, uh, you know, start at a very low position, whatever, even answering phones, whatever. Uh, they're gonna have to do that. But I'm gonna tell you something. In college, they don't teach you, uh, what's the right word that I would say, uh, business sense, business instincts. They do not teach you that in college. If you do not have business instincts, I don't care how smart you are, you're gonna have a rough time. If you are not passionate and intense about a certain area, when you find there's a certain area of real estate that you like, whether it's leasing. I know you've had some podcasts. A guy specializes in leasing and he only represents the tenant who's very clever. You watch that one. I love that podcast. That was very interesting to me. Thank you. The leasing end Very say yes. Yeah. And, and or, uh, they could be at the financing end of the, you know, they could be a broker. Um, there's a myriad of different arenas for them to learn, but you better be passionate about it and really be, have a lot of fortitude. Yeah. And stick with it. Because if you don't and you get discouraged real quick, you're out. So look what happened to me. Six jobs in 20 months. Yeah. I had no choice. I had to make a living and I wasn't gonna be at home at my parents' house. I'll tell you that. I want that out. So, uh, that's what I would say. And Now, now if, now if you, knowing what you know, were starting in the business today, what route would you do differently? Nothing. All right. Anything. Yeah. I, I, I've been so fortunate and in those days I had the energy. Arnie knows, I used to go, I used to be on the panels. Uh, I used to do, uh, networking groups. I would go on five different networking groups every day. Sometimes for breakfast, sometimes for lunch. There was never a year I made less than $250,000 in commissions, uh, working that hard. And I worked 24 7. I didn't care, but never had the Drug to be an architect or developer. Yeah. You know, when you're young, you got energy to burn. You know what, Yeah. Those six jobs is what formulated what he is now. I mean, that's obvious. Exactly. Yeah. So now let's get to know, I mean, I know you Chuck, but let everybody else know, Chuck. Um, some of your passions, your personal interests, your charity. We know you're AUSC grad, you love sc, um, how you think they're gonna do this year with what's happening in their football team? Well, with their defense, with this guy Grinch, uh, I think they're gonna lose the rest of their games. Yeah. Yeah. So they gotta play Oregon UCLA, uh, Now you're also a, a Dodger fan. Yes. I'm not much into baseball. Not baseball. Used to, I used to be a major Yankee fan coming from the Bronx. Right. Uh, but when they went free agency, you know, I used to memorize all the players on a team. Now one year, you know, they all over the place. Same thing for pro football. So, but I love college, uh, collegiate football, and I love Match Mar, what is it? March Madness. March Madness in basketball. Good. Good. That I look, And I know you're very big with the, uh, Jewish Federation and the Jewish Home. Uh, tell us a little bit more about the charities and, and some of your other hobbies that, that Chuck, uncle Chuck likes to do. Right. Well, I was very fortunate. You know, I've been married now 38 years, and the best thing I ever did, I just, you know, sometimes you luck out and you get a fabulous wife. And when we were dating, I'll never forget this. We were walking on Wilshire Boulevard towards the, uh, what is it, the Third Street Mall down there in Santa Monica. Right. And they're now remembered, this is 19, uh, about 83. And there was a homeless fellow on the sidewalk. And I walk right past him. My wife looks at me or my girlfriend at that time. She says, aren't you gonna give him some money? I looked at her, I said, okay. So I start, started handling him hand, handing him a dollar. She said, what's wrong with you, you two? Right. I gave him $5. Well, that was the start of almost bankrupting me. But What happened, I got involved and I hired a, a, a, uh, a professional, uh, public relations. And I think you might have remember Carl Tury? Mm-Hmm, sure. Carl Jersey. And I hired Carl. And when I hired him, he says, Chuck, you have to get it to Charity. You know, there's two sides of the business card, your personal side and your charitable side. And I said, okay. And he says, I'm gonna put you on the board of, at that time, it called the Wellness Community. That was a cancer support community. And it was a wonderful organization. So I joined the board Sure. As not, uh, as heck would have it. My wife's best girlfriend, uh, got, uh, breast cancer. Eventually she passed. Mm-Hmm. But since that time, I've been involved with the, now it's not called the Wellness, it's called the Cancer Support Community. Okay. I've been involved with the Jewish Federation. I'm on the board of Hebrew University and Jerusalem. I'm on a, uh, governor's board of Cedar-Sinai. I, I'm very heavily involved with the Harmony Project at Howard Cheks. And there's another one, I'm on the board, I can't even think of it. But I've gotten into a lot of charity work. And what's really interesting about it, although it's a lot of bucks, you know, 'cause the people, there's so many wonderful charities that people need money that are less fortunate than you. And there's a lot of sad things going on, especially in today's world, which is crazy. Um, it has definitely, there was at that old saying, what you give, you'll get back. And, and for me, it's really enriched my life because through charity I have met some incredible people that are now lifelong friends. And, uh, it, it, it's worked for me and I recommend it for anybody. Uh, you don't have to start off big. I mean, uh, like The Guardians a couple of hundred dollars a year. Yeah. And it's a wonderful group to get started with or whatever. There's, there's just so many wonderful shareable, uh, organizations. Excellent, excellent. Well, I, I, you know, My hobby, and I'm glad you asked my hobby. Yes. Hobby, yes. Bobby, I like to drive fast. Yes. I know. I grew up in the, uh, late six, uh, late fifties. And, uh, those are the days of the bus cars. Mm-Hmm. And I used to race cars at the drag strip. Mm-Hmm. And I represented by high school in the, uh, Plymouth troubleshooting contest. And we took second place. Uh, so I've always been, that was A high school in New York City. No, a Hamilton High School here. They came here when I was, uh, eight years of age. Hamilton On Robertson. You Got it. Two of my kids went there. Yeah. So, so, uh, uh, now I've been very fortunate. I have a wonderful sports car. I don't wanna mention a name. Every Sunday morning at seven 30. Hmm. Uncle Chucky goes on the amp on ramp floors. That sucker, ah, get it up. I hope there's no highway patrol watching this. Mm-Hmm. Don't an hour. Wow. And shut it down, which takes in this car seconds. And, uh, I don't know, it just gives me a rush. Uh, at my age, it's my Viagra. Do you, uh, raffle off opportunities in the passenger seat? I can. Uh, I wanna go, come on. That sounds like Fun. Every time you wanna come with me, be my pleasure Every time. I mean, I won't scare you. I'm very, I'm very cautious. Well, You know, I'm a fellow New Yorker, so I Don't go in and outta lanes and go crazy. No. There was a time he was, he was running late for a meeting and I says, where are you? He is like, you know, he is like 50 miles away. He goes, I'll be there in a half hour. I'm going, how the heck's he gonna do that? Well, All the cars that I have are all, uh, you know, my Mercedes is AMG version. They're all the hottest of the hottest version. I just love fast car. What can I Do? That's great. Nice. That's Great. You know. Well, you know, we, we did promise you, you know, a a time, time limit on the interview. We're bumping up against it. So I do want to close with y you know, what are your, it kind of dovetails with this last question, but what are your personal goals for the future and also business goals with Fidelity. Um, you know, is it to, you know, hand it over to the next generation? Uh, you know, what, what's your plans on on both those fronts? Well, being someone that, uh, has no children, and thanks to my Arnie, uh, I had a, uh, a fabulous guy working for me. And he left me, uh, on June 2nd. And thanks to Arne, uh, we now have, uh, John McClain. Uh, John McClain is just a wonderful person. And I said, John, you've been in the institutional market for a gazillion years. It's time you came over to the light side. Well, these institutions, I don't care who the hell they are, Lehman Brothers an iconic company, caput Merrill Lynch, when Ka put, they, you know, now they're back. Uh, beer Stearns caput, you can go on and on and on. Fidelity spill around. Yes. So We're very happy to have the John and we're working some sort of a transition that I don't have to work as hard. And he's just wonderful. And we'll just see how it goes. Yeah, right. You know the best. That's, that's the future. Chuck, one last, one last thing before we, we end this. You're known as Uncle Chuck. How did Uncle Chuck come about? That's a funny story. Uh, here I'm in the networking group, pro visors. Mm-Hmm. I was in that group a long time, and I was then eventually became the oldest person in the group. And they used to joke, uh, uh, make jokes about me. He says, uh, Chuck, he says, uh, what happened to the Revolutionary War this day? You know, stuff like that, the Civil War, what happened during that day? And then I'd, Jim, its, I'd make a come up with some crazy story. We had a lot of fun. And then they eventually just, and, and now, so when it was your turn to do your elevator speech, and they say, now Uncle Chuck, and that's how Uncle Chuck started. And that, that moniker has stuck with me. That really has, you know, I didn't advertise it or anything, but everybody, it, it stuck. And, you know, my, uh, you especially Arnie Yes. Who used to do those panels. Yes. I used to know those crazy, uh, bullet points and the, and the, and the photos and stuff. Uh, I don't know. It is just been, it just stuck with me. And, uh, we have a lot of fun with it. Well, we have fun and we had a lot of, we had a lot of fun here, so, and it works, Chuck Great. It's great marketing too, you know. Yes. It just works all around. So. And Uncle Chuck, we wanna really thank you for your time and being part of this. And I think everybody's gonna enjoy listening to hear about I, uncle Chuck started and Fidelity. And we really appreciate you for spending the time with us. Yeah. Thanks for Sharing. See you guys. To you, Arnie, and to you Steven. I know both of you well. You guys do terrific jobs and, uh, you're very important to the real estate industry and I'm lucky to have friends like you. So it works both ways. And I thank you for this opportunity. If this does anything for any new starters or anybody, or gave them some of my secrets, We'll cut that out. Well, thank you. I have a Feeling people will watch this for a while. I think there's a lot of information that people will come back to and, and watch over and over. So thank you very much and our audience. Thanks. You. Thank You. Okay guys, be well. Legendary. Uncle Chuck. Thank you. Thank you. You've been watching Commercial Real Estate Talk with Stephen Arne, sponsored by commercial real estate inspectors, Fidelity Mortgage Lenders, And Paramount Property Tax Appeal.