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The Rich Somers Report
Why Florida Is Quietly Becoming The New Home For The Rich | Jay Roberts E522
00:43:06
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- [00:00]
A
Hey, guys. We are buying two more boutique hotels along the California coast here with summer's capital. 45 rooms off market in Catalina island and a second deal up in Bodega Bay, which will make a total of eight boutique hotels owned and operated. Our investors get passive income tax benefits. And the best part is, unlike investing on Wall street and a lot of these other asset classes, like multifamily, our investors get to go and stay and experience these boutique hotels firsthand to see how their money's working for them. And so if you want to learn to see if we can help you before this opportunity fills up, you can go to summerscapital.com invest to book a call with my team. Again@summerscapital.com invest to book a free call with my team. Now let's jump into the show.
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B
So one of the advantages of developing in, in Miami and South Florida, Florida is very business friendly. And it's, it's, it's development friendly. So we have a great zoning code. We encourage development, we encourage investing in the community, and we encourage, you know, building, building more homes. On the flip side, that also means that it's easy to build or somewhat
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A
easy, so there's a lower barrier to entry.
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B
Lower barrier to entry. So that means more supply can, can go up. So we're, we're evaluating a lot of economic factors. We're looking at population growth, we're looking at wealth migration. We're looking for the very best sites so that we can have a better program than the next development. And which is one of the reasons at Prosper Group we buy and invest and develop on the water.
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A
All right, guys, today I got someone who's out here from Miami doing big on the East Coast. On the development side, he is the CEO of Prosper Group, where he's got over $3 billion of active developments rocking and rolling. I got my man Jay Roberts in the building. What's up, Jay?
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B
Rich. Great to be here. I'm from Southern California. I got off the plane, the weather was perfect. Oh, man, I know why you guys live here.
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A
You're going to be in the yacht tomorrow for our yacht workshop. It's going to be 84 and sunny, middle of February.
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B
Man, I can't wait. I can't wait to be on your yacht, dude.
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A
I'm glad that we finally connected, dude. It's been a long time coming. I know you're doing big things out on there, out there in Miami. A lot of respect for everything you're doing, man. And I can't wait to dive in this conversation today, the listeners are definitely in for a treat, man. But first things first, dude, we got a lot of money and a lot of high net worth individuals leaving California. They're going out to Miami. A lot of billionaires leaving. Drop some game on that.
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B
So I, I'm from California.
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A
Yeah, you left.
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B
I'm from Orange County. I grew up in Orange County.
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A
Yeah.
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B
Okay, you guys are giving us a gift. You guys just gave us Mark Zuckerberg. Okay? Mark Zuckerberg just left San Francisco and he moved to Miami. Larry Page, Sergey Brin, the owners of Google, these guys created social media and the Internet search as we know it, and California politicians. Thank you. You just gave us a trillion dollars in net worth.
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A
Okay?
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B
These guys pay huge taxes and these policies that, that have been proposed. This billionaire tax chased all the billionaires out. And you, Steven Spielberg just left. He just moved to New York. Peter Thiel, Founders Fund, early investor in Facebook, just left. So these policies, it's important taxes come to Miami. I see you in Miami.
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A
Grant Cardone used to be out here in La Jolla. Yeah. For many years. People, people think Grant was always in Miami. I'm like, no, no. Grant's first apartment deal that he ever bought was actually out here in San Diego. And the dude was in La Jolla until probably like 12 or 13 years ago. Went out to Miami as well. You left. Why did you leave?
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B
I, I left LA and I moved to New York City in 2013.
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A
Okay. Okay.
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B
I got a scholarship to go to business school. I had a, had a, had a dream to live and work in New York City. So I went to nyu, got my mba and that changed my life. So it wasn't to go straight to Miami, but it was, it was to live and work in New York City.
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A
Yeah, absolutely. So Mark Zuckerberg just bought a house out there in, in Miami. $200 million he dropped. Break that house down.
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B
So he has, he bought an Indian Creek. Okay. Indian Creek in Miami is called billionaire Bunker. Okay. Jeff Bezos bought three houses there.
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A
Damn.
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B
He dropped over 200 million.
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A
Damn.
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B
Tom Brady lives there. Okay. There's other, other billionaires living on Indian Creek. The Kushners live there. Indian Creek has its own gated community. It has its own country club. There's just over 20 homes on the island. It's a private island in Miami.
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A
We have only 20 homes.
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B
Yeah, I think it's like 28 homes, but it's super, super exclusive security to get on and off the island. So this is why he bought there. The exclusivity. To live on the water and be to be close to his other tech billionaire friends.
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A
Damn, that's crazy, man. So in Miami right now, you guys are in the middle of your good season, weather wise, and I know you're developing real estate out there in Miami. Give us high level what you do in the real estate game.
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B
I'm a real estate developer, luxury real estate developer. We're building high end condos, usually on the water. So we focus on waterfront properties.
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A
We.
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B
Last year I bought a site in North Bay Village, which is on the water. It's one of the last undeveloped islands in Miami. Okay. Our site actually looks at Indian Creek, so you can see Jeff Bezos house from your condo unit. So I bought the site for $30 million. Okay. When you're developing land and you're developing luxury condos, you have to underwrite the project. You need to know what you can build. So here's the price of the land. What can I build? How many square feet? How many units? What's the height? What are the setbacks? So bought this site, underwrote it. We can go through the numbers, we can do the math.
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A
I'm curious. So, so you, you buy a waterfront site in Miami for $30 million. How do you make money on that? Break that down. Okay.
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B
So the first step is, is seeing how much I can sell and what I can build and what my costs are and what my revenues are. So buy the site for $30 million. We can build 150 units on the site. Okay. There's no square footage cap, so we could build as large units as we want. Average size, 2,000 square feet. So 150 units times 2,000 square feet is 300,000 of sellable square footage that we can build on this $30 million site.
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A
How high can you go up vertically?
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B
So here, as of right, we can go 340ft. Okay. So about 30 stories.
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A
That's an FAA thing.
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B
That's a zoning regulation in North Bay Village.
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A
Okay, Got it in ballpark. How many floors is that?
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B
Just about. It's about 30 floors. We're so $30 million, 300,000 square feet. That's about $100 per sellable square foot on my land basis. So we like that. Okay, then what I'm going to do is I'm going to call my general contractor. We're going to and we talk to them regularly. We're getting quotes on what the costs are to build. So what are my hard costs going to be? My land cost was 30 million. My hard cost when we bid this out was about $600 per sellable square foot. So $600 times 300,000 is going to be 180 million is my hard cost. So I'm at 30 million land basis. 180 million hard cost, that's 210 million dollars. Okay. Okay. I'm gonna have soft costs of about 90 million. Okay. 300 million. I'm gonna have financing costs of 45 million. So my all in cost is 345 million dollars. Okay. So those are my costs. Now we as a developer, we want to know what we can sell for. So we're going to call brokers, we're going to call the brokerages, realtors who are selling in that area and we're going to look at the sales comps, you know, as a real estate investor. Comps, you're, you're buying and investing in hotels. So sales comps in this market, we're assuming 1500 dollars per square foot sellable. So 1500 dollars per square foot sellable on 2000 square feet is, is going to be about $3 million. Is $3 million per unit.
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A
Per unit. Okay, and you're pre selling these units, right?
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B
So we pre sell. Yes. So in, in Miami, and before you
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A
even start construction, you're pre selling exactly how pre development. Okay, and so what is the deposit to put down if you want to hold one of these units?
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B
So usually 40%.
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A
Okay.
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B
Okay. So you 20% at signing, 10% at groundbreaking and 10% at top off.
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A
Got it. So on a $3 million condo, they're
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putting out 1.2, 1.2 million.
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A
Got it. Okay. And most of these buyers at that price point, are they paying cash for the entire thing or are they getting financing once it's done?
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B
We have high cash buyer percentage in, in Miami. There's a lot of cash buyers. Some people are getting loans.
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A
Okay, okay, got it, Got it. And then, so you're pre selling these units and then is it true that you can take a portion of these, the pre sale money to put into the development?
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B
That's right.
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A
So break that down.
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B
Yeah. So we take 40% of deposits, 1.2 million. 10% is required to stay in escrow. Okay. And then the balance we can use for hard costs, hard development costs. In Florida, you can bond the 10% so you pay a fee and then you can use the, the, the 10%. So we can use up to 40% of the deposits towards our construction costs. So it's like free equity.
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A
Damn. That's pretty crazy. That's pretty crazy. And so you said the all in, all in basis with capital, cost of capital, hard cost, soft cost, land and all that was what again?
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B
345.
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A
345. And conservatively, once you exit, you sell all the condos. What are you looking at?
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B
So we're, we're exiting at $1,500 a square foot. That's in our model. That's in our base case. Okay, so times 150 units, times 2,000 square feet, that's $3 million per unit. Times 150 units, $450 million. Sellout of $450 million in revenue, minus 345 million in cost, it's 105 million in profit. It's a turns out to be over a 30% profit margin. The deal pencils. So we like it. So we'll move forward.
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A
What is the biggest risk to this model?
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B
The biggest risk is time, is location. There's macroeconomic factors, there's interest rates. We have a lot of international buyers. So there can be things that happen in Latin America, There can be things that happen in Europe. There could be tariffs. So there's many factors. And what we have to do is we have to pick the right sites, the right locations, and, and ultimately put together a program that is going to sell in the market.
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A
Yeah, yeah. And then tell me about. Because I know, I know here in San Diego, for example, there's a bunch of cranes in the air here in downtown San Diego. And some of these, some of these guys are all kind of competing with each other as far as, you know, being the first to enter the market with all the new supply that they have with your stuff in Miami. How much are you looking at different projects that are going on and factoring that into your ability to sell these condos.
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B
So one of the advantages of developing in, in Miami and South Florida. Florida is very business friendly. And it's, it's, it's development friendly. So we have a great zoning code. We encourage development, we encourage investing in the community, and we encourage, you know, building. Building more homes. On the flip side, that also means that it's easy to build or somewhat easy.
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A
So there's lower, a lower barrier to entry.
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B
Lower barrier to entry. So that means more supply can, can go up. So we're, we're evaluating a lot of economic factors. We're looking at population growth, we're looking at wealth migration. We're looking for the very best sites so that we can have a better program than the next development. And which is one of the reasons that Prosper Group. We buy and invest and develop on the water.
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A
Yeah, they, they're not building more waterfront real estate, that's for sure. And you can never replace the repl. The. The location. So go ahead.
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B
A quick story about waterfront.
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A
Yeah, yeah, tell me more.
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B
So in 2019, I was, I was at a. At a friend's house. He just bought a house on the Venetian Islands for $7 million. Okay. This is 2019. A. A wealthy Canadian had just sold his company for, you know, $300 million. Comes in, says we'll call him Steve. Steve, love your house. I need to have it. He's like, look, I just, I just bought it. I just renovated it, just remodeled it. Like, I'm not, It's not for sale. It's like, all right, like, I'll offer you 13 million. He's like, okay, I bought it for seven, sold it for 13. This on the water in Miami on the Venetian island. So sells it for $13 million. Okay. Covid happens. So many wealthy people moved to Miami. They moved to South Florida. Okay, fast forward three years later, I see the same house for sale for $29 million.
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A
Damn.
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He bought it for 7, flipped it for 13 million, and now it was for sale for 29 million.
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A
And did it trade it. It.
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B
It sold. It sold.
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A
What it trade for?
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B
I don't remember exactly what it traded for probably 25 to 30 million dollars.
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A
And this is all from 17 to now?
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B
Yeah. This is from 2019 to. To 24.
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A
Yeah. That's. That's huge, man. And that's, that's why for us, like, when we invest into boutique hotels, I love the stuff that's waterfront, you know, because, because like you said, if you look at the history of waterfront real estate, whether it's in California or out there in Miami, you know, if you go back the last 50, 60, 70 years, the appreciation rate for waterfront real estate, it doubles a lot quicker than it does in anywhere else in the country. That's number one. But number two, it's like the cap rates, right? We do, we do hotels. And so in commercial real estate, you know, Novi divided by cap rate is going to be the value of the asset. And so these cap rates out here in these higher growth areas are going to have a smaller cap rate. And so for every dollar of Y growth, we're forcing a lot more appreciation, which, which we love. So in, in Miami, what's the, you know, when you go buy a piece of land, are you paying cash for the land? Typically, we.
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B
So we, we buy with. With cash. Plus usually an acquisition loan or a pre development loan. So that's typically about 50% loan to cost.
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A
Okay, got it. And when you go in and acquire this land piece, how much due diligence are you guys doing on the front end before you actually pull the trigger on the land?
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B
We're doing a lot of due diligence.
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A
Okay. So we're break down to the due diligence and the DD for us.
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B
Yes. So you identify a site, okay. A broker is going to send you something, you see an off market site, okay. There's going to be a price, there's going to be, over time you get to know the zoning. So you have an idea as a real estate developer, as a real estate investor, you need to have your land use attorney on call, you need to have your architect on call, you need to have your third party consultants, your engineers, your geotechs, all of these people, you're going to do these reports for you. So zoning, you're going to call them, you're going to ask them, what's the zoning? What can I build here? What's the height? What's the number of units, what's the square footage that gives you your, your program? Okay, you, then you're going to need an architect to look at the zoning, design a building for you that's buildable. And then once you have your architect, your design, your plans, your square footage, the height and everything, the size of the building, okay, now you start applying numbers, costs, revenues, okay? And the deal starts coming together, you underwrite it. How much equity, how much investment do I have to put in? What's the timeline of our investment? What's the, what are the costs, what are the risks? And then what's my ultimate return as a developer and as an investor?
- [15:57]
A
And as far as timelines to get entitlement permits, we know here in California, San Diego, for example, it can be three, three and a half years before you get permits, entitlement and all that sort of stuff. And you're shovel ready out in Miami. What does that timeline kind of look like?
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B
So that's a good point, Rich. And it's one of the reasons that, you know, a lot of people have, have stopped investing in, in la, in San Francisco. I heard in San Diego that a big developer recently pulled out because the regulations and permits and timeline to build is so challenging in California that we would never wait three and a half years to entitle a project. So in Florida, in Miami, thankfully, we have great government officials, we have a great zoning code and it takes about 12 months to get your site entitled.
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A
Yes. It's funny because. So Mikey Taylor. Do you know Mikey?
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B
I don't know.
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A
So Mikey Taylor is a ex pro skateboarder. He. He built. What was the name of the brewing company? I can't think of it off the top, but he had this $72 million exit kind of like at the tail end of his skateboarding career with his brewing company. And now he's a real estate developer, and he's also the mayor of Thousand Oaks. He's got a lot going on. But anyways, so they develop multifamily here in, like, Los Angeles and San Diego. And for him, he. He says he likes the barrier to entry here, where, you know, yes, it does take three years to get entitlement and all that sort of stuff. But he says he likes that because it protects his investment. And I see the pros and cons of both. It's a good point to me. I don't like the bureaucracy in the red tape here in California, personally. But on the hotel side, the bureaucracy and red tape here in California actually works to our favor because, number one, there's. There's heavy Airbnb regulations here in California, which protects our investment. But also it's very hard to build new hotels here. Right. And so that works in our favor. Now, also, on the flip side, for, like, what you're doing, like, if I was a developer, I would hate to get these projects and have to wait three years, four years. And. And I'm sure, like, the entitlement's never a done deal until it's a done deal. Right. And so having to play that long game and wait and wait and wait, I would hate that as a real estate investor. So I see the pros and cons of both, but, but also, you know, the money's flowing out there to Miami. There's a reason why all these big players are going out there.
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B
The money is flowing. So after Covid. Covid, people left, left states that were locked down and they moved to free states. And we know what those states were. So people left California, people left New York, and they moved to Florida and they moved to Texas. Because these states are operated with common sense. They're free. We're not trying to over regulate people. We welcome their investment. We welcome these, their businesses. They have the right to operate their businesses.
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A
No state income tax.
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B
No state income tax.
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A
That's 13% here in California. So, I mean, that's a big savings out there, especially if you don't have depreciation.
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B
And in Florida last week, the House just voted to eliminate property taxes.
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A
Really?
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B
Yes.
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A
So no state income tax, no property tax. Now does that start to get passed to the Senate?
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B
That has to get passed in the Senate. And that, that has to be passed with a super majority of 6.
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A
So how is the state of Florida going to make any, any money if they have no state income tax and no property tax?
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B
Rich? Good, Good question. So we have sales tax, we have ad valorem taxes, we have hospitality taxes. Florida, Florida has one of the smallest government budgets per capita in the entire country. Okay. So we have one of the best lifestyles. We have 23 million people. Okay. Our budget is about $112 billion. Okay. The whole state of Florida, New York City's budget is $122 billion with 8 million people. So we have three times as many people and a lower budget than New York City. Yeah, approximations. I don't know.
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A
California's budget. What's that?
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B
California's budget. So you guys, you have high property taxes. You guys announced this billionaire tax. Okay. Which is, which we talked about before the show. 5% on unrealized gains. Net worth, Net worth. And if you have a super majority voting in your company like the tech guys do, it's an even more outsized tax on, on your, on your money. So that's why the Google guys left. Mark Zuckerberg left a lot and more people.
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A
Yeah, Was, was Bezos up here too?
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B
Bezos was in Seattle.
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A
Seattle. Okay. Okay. But still west coast. Okay. So, so anyways, everyone's going out there to, to Florida.
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B
Yeah.
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A
You mentioned a couple taxes, obviously the occupancy tax. But there was another one you mentioned that I never heard of before. What was that?
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B
Advalorum.
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A
What is that?
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B
Ad form tax is going to be taxes that, that the state collects to pay for schools, pay for firefighters, pay
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A
for roads and police department.
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B
Yes.
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A
Yeah, yeah, yeah. Okay. Okay.
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B
So we're not getting rid of those taxes.
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A
Sure.
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B
Those are obviously important.
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A
And, and I'm curious, like with the net migration there in, in Florida, Miami specifically, what does that kind of look like? A lot more people come in than going.
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B
The University of Virginia. Just, I have stats for, for every University of Virginia. Just, just put out their projections population growth by state from 2025 to 2050. Okay. Florida's population is expected to grow by over 5 million people over the next 25 years. It's number two highest growth. By contrast, New York City's population growth is, is 816,000. So we have over six times the amount of population growth over the next 25 years. And you know, as a real estate investor, developer, well you're not a developer, but real estate investor may, maybe you will be developing one day. You want more people coming to your
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A
population growth, employment growth, that stuff's all very important with market selection and it's,
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B
that's all super, super important. So U Haul also puts out a
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A
survey where people are moving.
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B
Do you know who has the number one one way U Hauls out of their state?
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California. Yes, but I'll say this, but, I'll say this, but hold on, hold on, hold on. Let me ask you a question.
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B
And I'm not here.
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A
Let me ask you a question though. I love Gulf and I, I know this because a recent podcast interview I did with a guest, we talked about the net migration in California and I was like, we were like, well, I wonder what it is. And he was like, oh, I bet you, like, I bet you it's, it's a, it's a negative every single year. And so we looked it up and actually California has a positive net migration, meaning more people coming, the more people leaving last year, at least in 2025 and 2024. But, but I'd imagine this is the big, the big caveat. I'd imagine the people leaving are maybe some of the higher net worth folks, right? The ones that are, you know, creating jobs and all that sort of stuff. Those are probably some of the people leaving and then the people coming in. You know, look, I live in San Diego now. Let's say out of the four major markets, you know, San Francisco, Louisiana. You're from la, where are you from? North Orange County. And then you got OC and you got San Diego. Out of those four major markets, San Diego, probably the least liberal out of all of them. The best beaches, the best climate, the cheapest cost of living. And a lot of people that I meet in San Diego, they come from cold weather cities. So they grew up in Chicago, Cleveland, Cincinnati, Boston and they move out here or they're maybe they're, they're, they, they come out here at a vacation, they're like, oh my gosh, it's amazing. They end up moving out here and they never end up going back. And so I think a lot of the people that are coming out here, at least for San Diego, I don't know what it is up north, are people that grew up in these, these midwest cold weather cities and like, dude, I just want to be around some warm weather. Miami is one place, but a lot of Them are coming here as well. But it was interesting for me to see the net migration is actually positive in California.
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B
San Diego has some of the best weather in the world. And I got off the plane today and I hadn't been back to Southern California in a number of years. And I called my wife and I said, now I remember why people pay high taxes. I said, the weather is perfect. Yeah, it was, it was warm. It was a little breeze. Yeah, that little California, Southern California breeze. It wasn't hot, it wasn't cold. And everyone, no humidity. Everyone is chill. Everyone's laid back, enjoying life. You have the water, you have the beach. So yeah, San Diego is, is a great place to be.
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A
But yeah, like I would have thought with all this news and headlines, I would have thought that, that the net migration in California would be negative. But it was actually, to my surprise, it was, it was actually positive last couple years. But anyways, that said a lot of people going out to Florida right now and I'd be curious to see what the median home prices are doing out there. Have you looked at that? I could pull it up right now.
- [24:50]
B
Let's, let's, let's take a look at it. I know on the high, high end, the top, top of the market, it's just going up and up for, for waterfront land in Miami. I just had the number one female broker in, in the country, Dina, on my podcast. Okay, it's 100 million to buy a home on North Bay Road just for the land.
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A
Damn.
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B
An interesting stat for your listeners.
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A
So let's hear it. Let's hear it.
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B
This is Miami Realtors Association. Okay. Okay. The last 14 years in a row, condo prices have gone up in Miami every single year. Every single year, condo prices have gone up every single year 14 years in a row. So population growth combined by wealth migration, the market is good, taking a long time.
- [25:39]
A
This is why my, my man is building condos. So, dude, check this out, man. Since 2010, this is the median home price in Miami. Okay, 2010 it was 190K. That was the bottom. And then 205 in 2011. 225 in 2012-245201-32017, 320. 2019, 350, 2021, 500 and the peak, the peak 2022, 579. And I'm sorry, 2023 was the, the peak 610. And it's been kind of flat since then. Now today it's, it's in 2026, it's 570 okay, okay. That's amazing though. That's amazing. It's a lot of growth there. And it makes sense. People are moving there. You guys got good weather, no state income tax. And then the condos. Why do you think the condos are going up? Even more than the single family, there's
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B
a bifurcation in the market. So you have new product which, which is continuing to be built, and then you have old condos. And people, people don't want the older condos. They also have. We had a tragic event in Miami where a condo building felt collapsed and people passed away.
- [26:55]
A
So wait, what happened?
- [26:56]
B
A condo building collapsed in Miami.
- [26:59]
A
It just like fell down three or four years ago. Yes, the whole building just collapsed.
- [27:03]
B
The Champlain Towers.
- [27:05]
A
How many floors are we talking?
- [27:06]
B
I don't know how many floors it was, but a lot of people died.
- [27:10]
A
And this is an older asset.
- [27:11]
B
It's very sad. Yeah, older asset. And so Florida, you guys don't have
- [27:16]
A
earthquakes out there, right?
- [27:17]
B
Made stricter. I haven't felt any since I've been out there for five years.
- [27:22]
A
We got hurricanes out here.
- [27:23]
B
We have hurricane.
- [27:24]
A
And so like I live in a high rise. I'm on the 35th floor.
- [27:27]
B
Okay.
- [27:27]
A
We had an earthquake. Like it wasn't that long ago. A couple months ago it was, it was far away, but I could feel it being on the top floor. But do they, do they have stricter building codes out here for high rises because of the earthquakes and you guys don't have them necessarily as much? In, in Florida we have stricter weather
- [27:44]
B
and hurricane proof requirements.
- [27:46]
A
So because you have 70 mile an hour winds that rip through there, 100
- [27:50]
B
mile an hour through Miami.
- [27:51]
A
Yeah, yeah, yeah.
- [27:53]
B
You have a 2x4 has to be able to hit the glass and not break.
- [27:56]
A
So you get, you get like how, how many times a year does a hurricane come close enough to Miami to where you guys are getting 60 mile
- [28:05]
B
an hour plus, thankfully, we haven't had a major hurricane in a while. Tampa, in the last couple years, they had two kind of big storms back to back.
- [28:14]
A
You get the flooding.
- [28:15]
B
Right. Which is pretty tough. Miami does have some flooding. We do. We, we do have some flooding. And, and that, that is an issue
- [28:22]
A
because I've seen the, I've seen the insurance quotes for like small boutiques out there in, in South Florida that are like in flood zones. And I'm like, dude, it, like, it kind of kills the deal.
- [28:34]
B
It does, it kills the deal.
- [28:35]
A
I mean like insane premiums. I'm like, dude, it, it doesn't justify the number of doors multifamily. So a lot of these, a lot of these owners out there, they're rolling with no insurance.
- [28:44]
B
Yeah. Wow. They're self insuring. They're taking a big risk.
- [28:46]
A
Well, these are like, these are like smaller boutiques that I've seen out there that, that some of these brokers are trying, you know, maybe are offering to sell. And then you, you look at the insurance premium like, holy. Because insurance is like, it's gone through the roof over the last, you know, three to four years. Right. And you know, every part of the country is going to have natural disaster. Right. So it's like in the Midwest you got a lot of snow, you got ice, you got tornado that can, that can tear up houses. Right. In real estate. And then on the west coast we got, we got fires and we got earthquakes right out there. You guys got flooding and you got hurricanes. And so everywhere you go you're going to have something. Arizona actually is probably like Phoenix area. Scottsdale is actually some of the cheapest insurance costs for real estate.
- [29:31]
B
Yeah.
- [29:32]
A
Out there because there's not a lot of natural disasters out there. You just have heat, but there's, they
- [29:35]
B
don't have all this really hot. Yeah.
- [29:38]
A
But anyways. Yeah. Like the commerce and commercial insurance is different than residential. But anyways. Yeah. I'm like again, some of these premiums out there and for boutiques out there in, in like in South Florida, it doesn't. It does, it kills the deal. And so then you ask the broker, it's like, hey, like how. How is the. This guy operating? Oh, like mom and pop, they don't roll with insurance.
- [30:00]
B
You know, Cowboys.
- [30:01]
A
Yeah. Yeah. So anyways, we digressed there for a second.
- [30:05]
B
No, no. On insurance, Rich, it's a good point. Like, insurance costs in Florida have gone through the roof. So housing insurance is, is really high. It makes it sometimes cost prohibitive or it's a big added cost in Florida. So it's not all, you know, it's, it's not.
- [30:22]
A
When you're, when you own a condo though, the, the insurance cost is very low.
- [30:25]
B
It's lower.
- [30:26]
A
You're just paying a little slice.
- [30:27]
B
It is lower.
- [30:28]
A
You know, you're, you're sharing all the exterior coverage with the, the building.
- [30:32]
B
The HOA insurance costs made multif Family development plus increased higher interest rates. Not pencil. Over the last three years.
- [30:41]
A
So. Dude, break this down, man. So all your buildings, you guys have an HOA that you guys set up?
- [30:48]
B
Yes.
- [30:48]
A
Okay, and, and what's the typical hoa? Kind of like Structure. What do you, what are some of the amenities that come with these buildings?
- [30:54]
B
Yes. So we are highly focused on wellness. Okay. So incredible fitness facilities. Miami, like San Diego health into health, wellness, good looking people like to, like to work out what is good.
- [31:09]
A
You got to look good, bro.
- [31:10]
B
Exactly. Yeah, exactly. So, and, and I know you like to work out and you know, stay fit. And, and so the amenities we have, of course, we have gyms, we have pools, we have spas, we have paddle, we have tennis courts, we have pickleball. Pickleball.
- [31:27]
A
I love that. Yeah, yeah, that's dope.
- [31:29]
B
People are loving pickleball.
- [31:30]
A
Yeah.
- [31:31]
B
And paddle.
- [31:31]
A
I put a pickleball court in my, I have like a luxury Airbnb villa out in Scottsdale. Put a pickleball court there. We just put like pickleball court and like the listing title and like the revenue went up 30 overnight and we put one in at the, one of our hotels up in the lodge up in Lake Chelan. And yes, and it's a nice, it's, it's a trendy thing. And you know, you know, the people that play pickleball, these families, they have money. They do, they have money.
- [31:56]
B
They do have money.
- [31:57]
A
Yeah.
- [31:58]
B
And, and it's, it's. They're maybe a little bit older people that are playing. Yeah.
- [32:04]
A
But broke people aren't playing pickleball.
- [32:06]
B
No, no, I don't. They're.
- [32:08]
A
Same. Same thing with golf sitting in the parks.
- [32:10]
B
Yeah, they're not playing golf. No.
- [32:12]
A
Anyway, so, so back to the amenities. Break it down.
- [32:15]
B
Yeah. So the HOA cost is going to be anywhere, depending on your building from a dollar to $2.50 a square foot in an ultra luxury building. You're in like the Mandarin Oriental. You're in a Rosewood, you're in Ritz Carlton. It's going to be about $2 a square foot. So it's an added cost. It's a monthly cost that you have to, you have to pay. You're paying $2 a square foot. You have a 2,000 square foot condo. It's an extra 4,000amonth that is added to your, to the cost and then
- [32:42]
A
anything else that kind of comes with this. I know you guys got some of the amenities. Talk about maybe some of the concierge services and some of those kind of things.
- [32:51]
B
So I'm working on a building right now in Miami on the river and we have a butler service.
- [32:57]
A
Damn.
- [32:58]
B
So white glove butler service. We're working with a asset management company out of London. Okay. So the butler, you know, the British Accent you think about, you know, really White glove, butler service. This is high end. Anything you want when you live in the building, they're going to take care of.
- [33:17]
A
What's the name of this building?
- [33:18]
B
So this building is, is on the Miami River. I can't say. Okay, we're going to talk about it, you know.
- [33:23]
A
Yeah, you might have leaked it to me earlier, but we're going to, we're going to hold off on announcing that one. When, when is that one going to be rolled out in, in a, in something that you can talk about publicly?
- [33:32]
B
This summer.
- [33:33]
A
This summer.
- [33:33]
B
This summer. Yeah.
- [33:34]
A
I'm gonna stay tuned, man. That's gonna be a big project and excited for that one. So what's the average cost of HOA is. You just broke it down. There's a building here called Pacific Gate. So you know the company bosa, they do a lot of high rise development.
- [33:46]
B
Okay.
- [33:47]
A
They've developed a lot of this real estate here in San Diego, Dallas, downtown, but they got a building called Pacific Gate here in San Diego. And with the hoa, they actually have a private yacht charter.
- [33:58]
B
Okay.
- [33:59]
A
That's dedicated just to the building.
- [34:00]
B
Yeah.
- [34:00]
A
So you as a residence, as an HOA member, you can actually have access to like go take this yacht charter out. They got a captain and everything, which is pretty cool. I thought that was unique.
- [34:10]
B
Yeah. The boating life is, you know, if you live in San Diego or you live in, in Miami, South Florida, people love being on the water. It's a huge asset to have the water.
- [34:20]
A
The yacht charter game out there is insane.
- [34:22]
B
Yeah, it's, it's pretty, pretty wild.
- [34:24]
A
So. So speaking of the yacht charter game, you, you. I saw a video on your Instagram you recently doing a walk through of a $35 million yacht. Break that yacht down. Who's, whose boat is that?
- [34:36]
B
So that is a. So it's a woman. Her, her husband, her and her husband own the yacht. 205 foot yacht.
- [34:46]
A
Damn.
- [34:46]
B
Yeah.
- [34:47]
A
Uh, what year?
- [34:48]
B
In 2018.
- [34:49]
A
Okay.
- [34:50]
B
But renovated in 2022. Six Rolls Royce engines in jet propulsion. Incredible. One of one. It's the most expensive yacht that's for sale in Miami right now. And so there's a lot of big boys in Miami. 35 million. This is a toy for, for a big boy. For a tech, tech billionaire.
- [35:09]
A
Most 200 foot yachts are, are just made to kind of cruise at like 10, 12, 14 knots. But this, this thing with the six Rolls Royce jet engines I imagine goes pretty quick, huh?
- [35:19]
B
Yeah. She, she, she, she's fast and you got.
- [35:22]
A
And you, you got on it and actually took it up a little bit.
- [35:24]
B
We, we, we, we didn't go as fast. I would have liked to go. So we, you know, we, we, we went on the channel. We have this cruise port. We were in the cruise port. So that was, that was, that was fun. I think someone will, will pick it up. One of these new tech guys moving out to, to Miami.
- [35:40]
A
Yeah, yeah.
- [35:41]
B
So 35 mil, $6 million a year maintenance.
- [35:45]
A
Mark Zuckerberg had his boat out here in San Diego maybe like a year ago. Every time you see this big mega yacht out here in San Diego, they'll pull them in pretty frequently and, and you could just google the name of the, the yacht. And I was Google. It's always, it's always some billionaire. And anyway, so Mark had his boat out here, but his is like a 300 something million dollar yacht. And it's like close to 400ft. It's massive. I drove, I drove by it on my boat. I was like, damn it. My boat looks like a little toy.
- [36:16]
B
There's levels, there's levels. There's levels that to every game you reach a new level and there's always someone bigger.
- [36:24]
A
There's always levels, man. My buddy, I gotta get him on the pod here soon, but Zeb Evans, my buddy, Zeb Evans, he's San Diego cat, he's the founder of ClickUp. He. Anyways, so he's, he's got a 105. He was out in Catalina last summer and we're hanging out on his boat watching the fireworks and he's got jacuzzi and all that. I'm like, I'm like, yeah. You realize there's levels, you know, people working. You come on the boat, they're like, hey, they give you a hot hand towel, whatever you want cooked up. Private chef, like, they'll make it for you. And you realize that there's levels to the game. But then you're talking about this $35 million yacht. You said 220 and then marks. Yeah, and there's all these different levels. But you know, it's a great lifestyle.
- [37:07]
B
We're very lucky.
- [37:08]
A
Yeah, yeah, yeah, you're lucky. And the 100 bonus depreciation game applies to some of these boats.
- [37:14]
B
It does, yeah.
- [37:15]
A
Yeah.
- [37:16]
B
The big beautiful bill. So the current administration, they voted the big beautiful bill 100 bonus depreciation. This applies to heavy machinery. This applies to private jets. If you rent them out, you charter them. Applies to private yachts. If you charter. It applies to car washes. And how this Works is you take the asset value, you can depreciate 100% of the purchase price in year one. I'm not an accountant, but the rough Math, on a $35 million yacht, you can take a $35 million write off and a 40% tax bracket is a $14 million cash savings. So if you're making a lot of cash flow, you have a big income. Okay, you say $14 million on your taxes, you're not going to pay that to Uncle Sam. Keep that in your pocket. Your basis in a $35 million yacht is really 21 million.
- [38:08]
A
Yeah. And people are playing that game with the jet game. There's a lot of different assets out there that they're doing it. But. But, yeah, crazy stuff, dude. What's, what's the game plan for you? What's the vision for you as you kind of look out the next few years? I know you got a bunch of projects in the pipeline. Have you gone full cycle on, on any of these?
- [38:28]
B
No, not yet.
- [38:28]
A
Okay, so we're. Which one's the closest?
- [38:31]
B
Tampa. We've sold 200 million in the last year. Okay. And we'll break ground in the next six months. Okay. Probably sooner. We'll close our construction loan, we'll hit 50% sales. So for me, before I was an investment banker, then I started putting my own deals together. All my deals, I bring in development partners. So in each of my deals, development partners, they built in Tampa, four condo hotels before we met. My partners in, on the river in Miami, they've been developing for 116 years in Belgium. So they have 100 years of development experience. So we team up. We're also teaming up in North Bay Village. My partners that we're working on a deal right now in Brickell, they've been building for 45 years. They've built six towers. So I put the deal together. And then together we each add value in our own ways, and then we will be building and launching these projects.
- [39:24]
A
Yeah. Okay. Okay. I like it, man. I like it. And, and you're out there in Brickell. Is that where your office is?
- [39:31]
B
Our office is in Brickell. You asked earlier kind of what the vision is the next five, 10 years. We're really in it for the long game and for the, the long haul. So these projects are five, six year developments. We're looking to add one, maybe two new developments a year. But these are, these are, these are meaty projects. 500 million, 600, 700 million dollar project. You want to keep your eye on the ball. Yeah, you don't want to do too much.
- [40:03]
A
Yeah.
- [40:03]
B
So make sure that it gets capitalized, gets executed properly and we launch sales and we get out of the ground.
- [40:11]
A
Yeah, that's big, dude. That's big. And you just launched a new podcast along the Long Game Podcast.
- [40:16]
B
Yes.
- [40:17]
A
Talk about that.
- [40:17]
B
Yeah. So launch the Long Game podcast. Social media has been amazing growth Instagram over the last year.
- [40:25]
A
And by the way, I suggest all the listeners go, go, go follow J. Roberts at. J. Roberts puts out a lot of good content. Go check them out. But you were saying.
- [40:34]
B
Yeah, so, so the Long game. So I'm 40, you're 40. We know we've been in the business, we've been through ups and downs. And a lot of people on social media, it appears because everyone's posting their highlights, that success is just a straight line. Two years instant millionaire. You have the best life. You're on a yacht, you're in, in a beachfront house. But that's not how, that's not success. Success is compounded its consistency over long periods of time. So I'm bringing on experts, I'm bringing on people who've been successful, they've been through the ups and the downs and they know that in business, to have success, long term success, excuse me, is a long game.
- [41:19]
A
100%, man. And the one, the one thing that I've learned is, is you have to overpay for excellence. Anything excellent in life, you have to overpay for it. Not just money, but time, resources, energy. Like you have to be obsessed with the craft and you have to put in the reps, you have to put in the at bats and you got to be willing to die for it, man. Like you literally to build something crazy big, you have to be willing to die for it. And, but it's, it's, it's a, it's a rewarding thing when you can, you know, continue to grow, continue to progress. I mean, you're, you're taking down massive deals and I'm, I'm inspired just talking to you about some of these projects and the capital sacks and I'm like, damn, you know, you start talking to people like yourself with these bigger numbers and it's all, it's all perspective. It's all perspective. And that's why I say that this game is all about being in the right rooms. And you talked about around the right
- [42:09]
B
people overpaying for value. I agree 100%. I met your team here. I see what you're doing. I see you're a grinder you're going the extra step. You're doing more. You're studying. We were going through some of your stats before, before the pod. I haven't seen people going through stats like that. You're tracking your growth. There's a reason that you're successful. There's a reason that your numbers are, are where they are. Rich, you're growing. You're one of those guys. You're on your way to success. You're continuing to have that success. So overpaying for value 100%, getting mentors, getting people who are going to uplevel you. Power of proximity. Super, super important. Investing in yourself and investing in your team is, is, is critical.
- [42:54]
A
I always say proximity is power. Jay Roberts, I appreciate you coming on, my man. I know we're going to be on the yacht workshop tomorrow, man, but where can the folks get in touch with you if they want to learn more, if they want to invest with your group, prosper, all that good stuff.
- [43:06]
B
Yeah. At J. Roberts on Instagram, at J. Roberts on, on YouTube, they can email me jprospergroup.com There it is.
- [43:13]
A
He is. Jay Roberts with the fresh blazer. I'm Rich Summers. Listeners, thanks for tuning in. We'll see you guys on the next.