The US Real Estate Market Has a Hidden Crisis. Here's Where Smart Capital Is Going.

[00:00:00]There's no $1 billion fund that's totally debtree. It does not exist. A real estate fund has not reached 1 billion without leverage till this day.

[00:00:07]So we want to be the first one.

[00:00:08]Everybody is taking Sharia debt. So this is a space. It's like a blue ocean right now. 2013 I presented him a deal. It was about 121 million. He signed the deal in 5 minutes. Who can do that? He said, "So I see something in you. I'm going to give you a chance but you'll be among sharks. If you survive for 3 months, you get the job. You cannot buy 17 years in Dubai with Claude or Chad GPT. You just can't. Every time there's a conflict, there's capital movement. Right?

[00:00:32]>> The way I look at it, it's like the reverse of 2008. The asset is fine. You have your tenant, but it's reverse. It's the banking system. It's the debt.

[00:00:41]>> This is not a main street problem. It's a Wall Street problem. Correct? It's a big boy problem. The banks are in trouble.

[00:00:46]>> A restaurant, >> it's not about the chairs or or the people or the employees. It's about that one founder who started the brain, right? These brains are moving because when one brain moves it comes with a certain ecosystem because this is so powerful. We're at ADGM today for a meeting. He was casually mentioning oh Ray Dalia is on the 10th floor. I see him in the elevator up and down. You know >> what my reaction was the same but that's the biggest indicator. If an operator is moving that itself is a pattern first the operator moves then the passive money moves. Yes, >> once a Sam moves 2 to 3 years later, normal guys are going to figure it out.

[00:01:24]As Sam has to take the first step.

[00:01:25]>> For the last 28 years, you get to take advantage of an emerging market with a delet market currency. I don't think there's anywhere else in the world you can do that.

[00:01:34]>> This is and we can end the podcast on this. This should this is so powerful if people actually reflect. So they want to move from capital allocators to >> operators who can actually come in and revive this property. If you just reflect on this one statement.

[00:01:49]>> Uh, welcome everyone to the first episode of 1971 Capital. I'm your host Muhammadu. I am the COO and I am joined by my partner and the founder Samin and our guest of honor, Mr. Muhammad Zu.

[00:02:03]Today we have a really interesting uh episode lined up for you. We're going to talk a lot about the US real estate, what's happening right now and the case for Dubai. Why is the money still flowing here and what's happening on the ground? The capital shift, where does smart money go? And we ended it with some quick and fire rapid uh questions for our host. Stay tuned. You don't want to miss this.

[00:02:28]>> How are you guys?

[00:02:29]>> Good, brother. Good.

[00:02:30]>> Good. Good.

[00:02:30]>> Should I do your introduction or do you want to I think it's better if you do your own introduction.

[00:02:34]>> Uh uh hi, I'm I'm I'm Mohammed Zahib. Um I'm the founder and CEO of a company called 3x Capital registered in Dubai.

[00:02:46]Uh I've been doing this I've been doing real estate for the last 17 years. Um I run a YouTube channel.

[00:02:53]>> Nice.

[00:02:53]>> Anything else?

[00:02:54]>> Very more about that's good. Yeah. Yeah. Yes.

[00:02:59]Yes.

[00:03:00]>> 17 years. Long time. But also the entire 17 years in Dubai.

[00:03:03]>> Entire seven. So I was born and raised in Dubai.

[00:03:06]>> Oh >> yeah. Yeah. My my my dad worked 22 years in HSBC.

[00:03:11]>> Okay. So you come from a banking family.

[00:03:13]>> A banking family. And then he retired in 200.

[00:03:16]>> You must be the disappointment child for not following >> I am 100% disappointment till date. My dad doesn't clearly know what I do.

[00:03:23]>> My sister is the proud. She's the doctor in Australia. You know I am the disappointment. Yeah. Yeah. 100%. It was so hard. Childhood was tough >> in an Indian family doing real estate.

[00:03:34]Oh god. You don't even want to know what broker means in India.

[00:03:36]>> You have to be an engineer.

[00:03:38]>> I know what broker means in India.

[00:03:40]Bangladesh, bro. It's the most direct route.

[00:03:42]>> It is the most direct.

[00:03:43]>> It's like us Arabs. You have to be an engineer or a lawyer or a doctor or the fourth option. You're a disappointment.

[00:03:49]>> So, I wrote the all India medical examination. Okay. I came rank 30,000 something in the whole of India. Okay.

[00:03:57]>> But with that rank, you could get only dentistry. You couldn't get MBBS. And he said you have to repeat the entire year.

[00:04:02]I ran him from home. Wow.

[00:04:04]>> So that's my story on I was from home.

[00:04:06]>> I was like I can't do this. So I run to my school. I asked my teacher send me to any university with my with my uh score that will teach me for free.

[00:04:18]>> Okay.

[00:04:19]>> Any university. And he sent me to some another state.

[00:04:23]I literally studied amongst cows and buffaloos man. And I was studying I studied business management.

[00:04:29]It's a funny story. Wow.

[00:04:31]>> 17 years. That means pretty much all the cycles >> 2000 Yeah. Yeah. Yeah. Everything I came in 2009 the roads were empty. Yeah.

[00:04:39]Yeah. I said and I I was blessed to be I was hired by a wonderful person. I don't know if you come across him. Omar Farukq the owner of OBG.

[00:04:49]>> Omar Farukq is our I don't know he's not >> wonderful person. OBG is a big big real estate group. Okay.

[00:04:54]>> Wonderful person. So he was the sales manager of Hampton's EMAR then.

[00:04:59]>> Okay. And so he he was kind enough to hire me. He said, "So hib, I see something in you. I'm going to give you a chance, but you'll be among sharks. If you survive for 3 months, you get the job."

[00:05:09]>> Yeah. So that's the start.

[00:05:11]>> Yeah.

[00:05:12]>> That was a start here.

[00:05:13]>> Now I'm here.

[00:05:14]>> But honestly, uh, Brother Muhammad, like me and Sam really love your content.

[00:05:20]>> Thank you, man.

[00:05:20]>> We always say it behind your back, so we're not just being nice. always say that you're one of the few people that we can actually tolerate and listen to because you know there's a lot of fluff in the market. So it's very uh uh very rare for people to uh stand.

[00:05:37]>> Thank you.

[00:05:38]>> I've done a bit of research on you guys.

[00:05:41]Okay. And I was quite intimidated to come to this podcast because you know see in my domain like see it's easy to be the smart guy amongst those guys you know but to be to be amongst you I mean what you guys have achieved is phenomenal you know it's amazing you know >> thank you brother and I'm very happy that this is happening alhamdulillah alhamdulillah >> hopefully we'll make a series out of it if you don't mind >> we will 100% let's do this 100% we'll keep switching offices >> the the knowledge You know, I think value is something the market really needs and if we can work together to give knowledge and value, why not, you know?

[00:06:18]>> Exactly.

[00:06:19]>> 100%.

[00:06:20]>> Well, since we're on that topic, a lot of interesting things are happening in the market right now.

[00:06:27]>> Let's first start with the US real estate >> and we've got no other than this guy to help us out. and also you have your contacts and your relationships with people that are also >> you know cross investing between here and the US. My question to both of you and maybe Sam you'll start first. What is actually happening in the US commercial real estate market right?

[00:06:50]>> So something very interesting it's happening US commercial real estate market. So when covid hit of course like most of the first world countries US printed the most amount of money.

[00:07:00]>> Mhm.

[00:07:01]>> It went from uh debt being 100% of GDP to now 130% of GDP. Right? So they printed a lot of money.

[00:07:09]>> Once they printed a lot of money they reduced the interest rate to less than 3%. So it was like 2.5 2.7% at one point. So during that time a lot of people who are not real estate operators were just capital allocators. So they have good speech, good communication, they have no business with real estate.

[00:07:27]They're like you know what money is so cheap. Why don't we raise capital and invest in multif family real estate. So they syndicated the funds. They put it in a in a vehicle and they invested in multif family property. So so far so good. They're buying 160 unit property for let's say 40 million USD. Nothing wrong with the property. the valuation, the appraisal, everything came at uh 40 million USD, okay? But their rate was at 2.7%.

[00:07:54]Locked in for a 5year uh adjustable rate mortgage, okay? So for 5 years, your rate stays the same. After 5 years, you have to refinance the mortgage.

[00:08:04]>> Mhm.

[00:08:04]>> And their expectation is forever things are going to be at 3%.

[00:08:09]>> Right?

[00:08:10]So 5 years expires and started expiring from 2025 and now 2026. Now the interest rate is 8%. So the guy who owed one and this is a life story who owed $1.6 million in mortgage payment a year now owes $2.4 million in mortgage payment.

[00:08:29]So expense increased by $800,000 USD.

[00:08:33]But of course income the rent did not increase. Right? So now there is no way he can refinance and still make sense of the deal. Now he's going to have a negative cash flow. So what's happening is the asset is not distressed. It's still a newer built property built in 2020. It still has all the five-star luxury amenities, but the debt is distressed because there's no developer payment plans there. You have to go to the bank and you get debt and these commercial debts people got at a 5-year adjustable mortgage. So now we have a limited window until the rate comes back down and some people that's another discussion. I feel like it won't come down for a long time with all the geopolitics and everything that's happening but they're expecting it will come down in 2027 2028. If that's the case we have limited window to pick up this distressed notes the distressed debts. So, for example, I got a call recently, recently it's been a month now, and we're on and off talking to them from a lender in Midwest, uh, from Michigan, Illinois, and Ohio region. So, property is $40 million USD. That's what they bought for, but the loan is $25 million USD. They had put a down payment of $15 million. Now, the lender is willing to let it go for only $25 million. They're like, "We're going to give you the key. Just pay the loan off cuz this operator had no clue what they're doing for last 5 years. Now, they cannot refinance. And if they cannot refinance and get a new loan, they won't upkeep the property anymore.

[00:09:56]So the property is Aclass, but it's not going to stay A+ for a long time. So please >> come and they're not asking that, oh, you know, do you have the cash? Cuz they know you'll have the cash, but are you an operator?

[00:10:08]>> So they want to move from capital allocators to operators who can actually come in and revive this property. So this is very interesting what's happening in the US. Last point I'll mention, you don't really hear it on the news.

[00:10:22]>> Yeah.

[00:10:22]>> Because this is not a Main Street problem. It's a Wall Street problem.

[00:10:26]Correct. It's a big boy problem. The banks are in trouble. It's not like 2008 when the barber was in trouble, the hairdresser was in trouble, the cab driver was in trouble. They're not in trouble. They don't own this uh $40 million property. Correct. Right. Who's in trouble? Are the rich guys, the Wall Street guys, and the banks. So, it's a Wall Street problem. That's why it's it's hidden under in the news. But that's a big issue happening in the US right now.

[00:10:46]>> I know. Um actually so of course Sam knows a lot better of the US market. I I have a little bit of knowledge but um from my the way I look at it it's like the reverse of 2008.

[00:10:58]>> See in 2008 the consumer was hit first you know consumer was hit first then the asset and then eventually the banks right but over here you're right the asset is fine.

[00:11:11]>> You have your tenant >> but it's reverse. It's the banking system. the debt.

[00:11:16]>> Yes.

[00:11:17]>> So, it's a reverse exact reverse of the 2008 situation because in a situation like this, you will get you will 100% get a lot of distress distress sellers 100% because there'll be a lot of people who can't handle that kind of.

[00:11:29]>> So, that's where I found your model so interesting because uh it's against the cycle.

[00:11:35]>> Yes.

[00:11:36]>> Because the typical US cycle is is mortgage. It's debt, right?

[00:11:40]>> I have to borrow all the time >> and you have a debt-free fund.

[00:11:44]>> Yes. And that's that's anti against the cycle >> anti- thesis. Yeah.

[00:11:49]>> Yeah. Right. Right. And and and but then that's the difference between I don't think the American market has completely understood the importance of the the non-leveraged buyer. Everyone thinks understands a leverage buyer. The non-leveraged buyer you get the best deals. You know people have Yeah.

[00:12:03]>> The only people who are going to get the calls now bank knows that they have the reputation of carrying a lot of dry powder.

[00:12:10]>> Yeah.

[00:12:10]>> Dry powder. Good word. Yes. Yes. They have the dry powder is cash. Just so that you guys are okay.

[00:12:16]>> I'm just a lot of people don't understand that. Okay, because they might confuse dry powder, you know. Good man.

[00:12:22]>> Just just clarifying, you know, just clarifying. Okay, >> you know what's fascinating that >> we've seen this movie over and over and over again and it seems like people just never learn. Like >> you can only take leverage so much.

[00:12:38]People don't people don't >> you can you can only use leverage so much especially in the US like it's every cycle it's the same thing over and over again that you start wondering like it's it's just a dysfunctional >> bro people are financing their tacos with soda with financing now >> no buy now pay later >> but this is not just us this is US this is Australia this is Europe this is their mindset that they get cheap financing let's go to >> even cheap by the way but that's the thing if init but this This is this is what's so fascinating. It appears as if it's cheap.

[00:13:12]>> Yeah.

[00:13:13]>> But over time it costs you more to maintain and it will cost you even more to like get out of it. You because you get >> more and more and more >> and I think that's a very important point to do a real comparison with Dubai brother. So I'll throw in some numbers if you allow me bro too and do a comparison with Dubai. Right.

[00:13:32]>> So okay. So, that's uh commercial real estate. And people watching probably say, "But residential, we're locked in for 30-year mortgage. It doesn't change.

[00:13:40]The rates don't change." Okay. The issue that happens is, let's say you're locked in at a 5% interest rate, 30-year fixed.

[00:13:46]So, you think that's in your control.

[00:13:48]5-year fixed. I have the payment. But you have some other external payments.

[00:13:52]So, let's go through those. First is property taxes.

[00:13:55]>> Okay? And property taxes is on an record rise since 20 23 2024 because all the cities have ran out of money. They need to raise capital. So how are they going to raise capital? Increase taxes.

[00:14:08]They're doing same thing with income tax, capital gains tax. They're doing with property tax as well. Completely out of Mr. Zu's control, Sam's control, Mr. Muhammad's control. You own a property in the US, you have no control what the So you're an investor, you don't know what next year's taxes will be. It will keep increasing. So that it's your cash flow. Then you got homeowners association like the service charge you have a ridiculous amount like a ridiculous amount. I'll tell you an example my brother my property in the US the property taxes were 37,000 USD a year.

[00:14:37]>> Wow.

[00:14:38]>> Okay. And with that what I got so okay I have to be fair. I got a 2minut drive radius of safety you know literally 2 minute bro. Clean streets nice manicured pedicure trees uh good treeine parks.

[00:14:53]Literally two minutes. You drive outside two minutes. Potholes everywhere.

[00:14:57]>> Homelessness everywhere. It's the ghetto. So $37,000 I'm getting two two minutes of safety.

[00:15:03]>> Okay. So property taxes, homeowners association that you have no control of.

[00:15:07]Then the insurance that's also unbelievably going up with all the natural disasters that are happening.

[00:15:14]Insurance companies going bankrupt. So they having to increase the premium the policies in other states that are not even having the natural disaster, right?

[00:15:21]and the maintenance so forth and so on because most of the properties are older. It's not like here you get new properties 10 year old 15 year old maximum over there like 50 year old is an average property right so compare that to Dubai so how does that look in Dubai see one of the major differences between uh Dubai and US and no offense to Americans okay but see in US you've got three layers of government right there's the federal there the state and the local you know >> very commercial you know a lot man >> right so you got three layers of government first of Second, one of the biggest differences.

[00:15:57]Okay, differences. So in comparison to that, Dubai is one, right? This is RARA, Dubai's real estate regulatory authority.

[00:16:03]>> You can own an apartment in JVC, you can own an apartment in the palm, there's no or emirates hills >> rules, the law applies the same.

[00:16:10]>> I think second one of the biggest challenges I think that investors would face is that US is probably has the highest litigation in the world, right?

[00:16:18]Most number of su 3% of GDP is from litigation. 3% of US >> You could sue >> 3%.

[00:16:26]>> You could sue for anything, man. If your tenant falls from the stairs, you're sued.

[00:16:31]>> We're going through two lawsuits right now.

[00:16:32]>> Here we go.

[00:16:33]>> Tenant fell due to snow last winter, sued us for $100,000 each, bro. I'm going through it right now.

[00:16:40]>> Here we go. I I I've known so many people, you know, because he at one stage of my career, I was in a corporate relocation, you know, and so one of my clients was a CFO of Microsoft and he had to fly back constantly because of some weird I mean I I don't even explain the case, but you know, I was like what, >> you know, and so so so in Dubai that problem does not exist, you know, it's a very pretty straightforward, right? It's pretty black and white, right? I mean the law the the litigation sometimes cost even more than the whatever income that unit is going to bring if you fall into dispute with a tenant.

[00:17:14]>> I'll give you a live example quickly brother. So the eviction takes uh somewhere between 6 months to 15 months.

[00:17:21]>> So while you're waiting for eviction tenant is not paying. So one of the case examples like literal example it's like 9th month tenant is not paying. We're waiting for court hearing date. So poor miskin owner man he's like I want to go and see if my house is fine you know cuz these guys are not responding not paying so he goes to the house peaks into the backyard tries to go into the backyard tenants call the police on him police issues him a fine the owner you're trespassing and then after 15 months there's a dispute judge said no tenants can go escort free because the house was not maintained >> so so this is something people don't understand right this three layers of government and this sewer culture, you know. I like saying that word. You would get it.

[00:18:05]>> Yeah, I got it, man.

[00:18:06]>> Yeah, you got it right.

[00:18:07]>> See, I'll explain later.

[00:18:10]>> As in I think this is a big challenge, you know. This is a really big challenge.

[00:18:15]>> Uh and and see in comparison, see one advantage of Dubai, I'm just >> is that see >> I think one of the biggest advantage not many people appreciate enough is that the fact that the Durham is pegged to the dollar. Okay. for the last 28 years.

[00:18:31]>> 3.67.

[00:18:33]>> So you get to invest, take advantage of an emerging market >> with a developed market currency.

[00:18:40]>> Exactly.

[00:18:40]>> I don't think there's anywhere else in the world you can do that.

[00:18:42]>> This is and we can end the podcast on this. Literally, this is so powerful. If people actually reflect, >> if you just reflect on this one statement, you know, >> seriously, >> emerging, you can invest into an emerging market with developed market currency. There's nowhere else in the world you could do this.

[00:18:59]>> Exactly.

[00:19:00]>> Today and you don't have to worry about the fluctuation all the time.

[00:19:03]>> Nothing. 28 years we have gone through it all and the the Arab Spring co >> 911 everything. We've gone through everything even this crisis.

[00:19:13]>> Yes.

[00:19:13]>> You know, but u it's never changed, you know.

[00:19:16]>> So today um I didn't fill you in on it.

[00:19:18]Today I was sitting with >> We're not ending the podcast.

[00:19:22]>> Dr. Ryan Lemon I was sitting with. So he's basically the person >> okay >> who introduced fund regulation in UAE back in 2008. So he's from Europe that's what he was specializing in Europe.

[00:19:34]>> So after the 2008 crisis happened Dubai and Abu Dhabi needed to tighten the regulations because there were no regulations up until 2008 fund like registered fund governance and stuff like that. So so they brought him in and he was working with uh prime minister's office in Dubai and DED and all those partners to put it together. Right. So he mentioned something very important uh and he worked with the government for seven years. He said look to add to your point that and he said now you get to do it with the correct guard rails here.

[00:20:03]>> Yeah.

[00:20:03]>> With the right governance here. Correct.

[00:20:05]So you're getting the security of USD pegged to the to AD and then why invest in US because the guardrails are not there but the guardrails are here. Your money is actually protected. Correct.

[00:20:16]Right. either through a fund vehicle or through real estate because of the jurisdictions, because of the governance. So this point alone is very powerful, man. Very powerful.

[00:20:24]>> But Sam going back to the US market, you ran 400 plus properties under management and you then sold it to a business.

[00:20:33]>> What did you learn operating at that scale which you cannot learn from screen? Yeah. So basically what I think and this is where we were just talking before the podcast with brothers hey I think three things is very important when investing in any foreign market like where you're not familiar with the market understanding the micro right really understanding the data of what's happening so the data has to be transparent either DLD or wherever you're like you have to have access to micro data understanding the macro of what's happening in the region third and the most important and that's what you don't learn is on ground reality Okay. So, you can analyze all the papers, run all the spreadsheet, run all the assumptions and think you're a genius, but if you or you're not banking or betting on someone who is an operator with on ground reality, 17 years in Dubai, you cannot buy 17 years in Dubai with Claude or Chad GPT. You just can't.

[00:21:31]>> You know, it will miss the 17 years of lived experience, right? So, this is I think the most important thing. So we were on the ground, >> right? We on the ground organically took it to actually close to 450 units under management. Wow.

[00:21:45]>> Then we sold the company.

[00:21:47]>> So now if and most of our uh clients were from California from where your uh the other business partner is >> from California from Texas. So all from out of state and the the reason they went with us because we had the on reality. So I think this is very important. So even if I'm if we're trying to go to Lumbok, let's say, >> we can't just like cuz you know we're having convers I have a call tomorrow for investment in Bali.

[00:22:16]>> Yeah. Here you go.

[00:22:16]>> So brother Samir is there. That's on ground reality.

[00:22:19]>> He's my mentor just so you know. He's many people's mentor.

[00:22:22]>> He's my mentor. Everything most of the things I know today everything my trading mentality is because of look at that.

[00:22:28]>> He's a genius. He's a genius. We're not going to name the developers. Few other developers said the same thing, right?

[00:22:33]But most a lot of developers over here today are the backbone is Samir >> 1,000%.

[00:22:39]>> Yes. His knowledge is unbeliev but to to be able to tap his knowledge is another thing.

[00:22:44]>> You have to be knowledgeable.

[00:22:46]>> Yeah, it's tough.

[00:22:47]>> But he also has an element which I notic in him that is fearlessness that you I've never seen intense.

[00:22:56]Very he's too intense. I don't think anyone came back.

[00:22:59]>> I'll tell you something.

[00:23:00]>> Intensity.

[00:23:01]>> 2013. Okay. I presented a deal. 2013.

[00:23:05]How old am I? I don't even know. I was young. Okay. So, 2013, I presented him a deal. It was about 121 million.

[00:23:13]>> He uh signed the deal in 5 minutes. Who can do that?

[00:23:17]>> Wow.

[00:23:18]>> Only brother Samir, man. But I want to add something on on what Sam said. Okay.

[00:23:24]managing 450 properties. Now for me again about on ground reality even if you manage five properties okay it's it's it's tough managing the rental the management properly ethically ethically five properties is hard so when I saw Sam's portfolio that he managed 400 properties and the way he structured his entire company again you know I've been dabbling a bit into corporate structuring you've you've had such a foolproof structure the FA AB the SACE uh the way you structured Eida into the uh thing and the audit company uh I forgot the name Grand Tharton >> Grand Thartin is after the big four >> it's like ranked six in the whole world you know so >> it's number one in tier two >> it's number one in tier two so I think the way you structured it is so foolproof that's amazing >> and one more thing I wanted to so so he he mentioned about operator I like this word a lot operator people don't again Another thing that people really underestimate the word operator because operator has something called operating IP.

[00:24:34]>> Okay. The brain the intelligence. Now this is what's leaking from your developed countries.

[00:24:43]>> Mhm.

[00:24:44]>> See because see when an operator comes like for example uh a restaurant okay it's not about the chairs or or the people or the employees. It's about that one founder who started the brain, right? If the brain is migrating, okay, >> a person like Sam, okay, who's been an operator managing 400 properties or 1.8 billion worth of properties, >> 1.5 billion, >> 1.5 billion worth of properties, if that brain has decided to migrate to Dubai and see over the last few years, I've been observing these these brains are moving.

[00:25:19]>> Mhm. Because when one brain moves, it comes with a certain ecosystem.

[00:25:24]>> This is so powerful. Actually, today me and were laughing. We're at ADGM today.

[00:25:29]>> Yeah.

[00:25:30]>> Uh for a meeting.

[00:25:31]>> So, he was casually mentioning, "Oh, Ray Dalia is on the 10th floor. I see him in the elevator up and down." You know >> what? My reaction was the same, bro.

[00:25:39]>> Ray Dalia was there.

[00:25:40]>> What?

[00:25:40]>> D Ray Dalia, bro. And it's like, you know, you're meeting like you're hearing about your hero. Oh, so I'm on the sixth floor and he's on the 10th floor.

[00:25:47]>> Damn goosebumps.

[00:25:48]>> Yes. So he was mentioning yeah like you know he we meet in the elevator. So ADGM is attracting they call it the capital of capitals because it's attracting these institutional >> operators.

[00:26:00]That is the trend that you should be studying.

[00:26:03]>> See this is a complaint again it goes in the in the bottom line of newspapers and stuff. This is the problem that Canada is facing that US is facing that India is facing that the best doctors the scientists and everything is going to newer places. now which newer places that if you if you sort of track where they are going it's a great indicator you know >> I actually wanna want to touch on that point because Dubai has been >> a lot you know in the news for good and bad unfortunately well we've seen nothing but good but some people have other agendas but when it comes to the the case of UAE real estate and especially after what happened what Do you think Muhammad is the real story behind the capital influence despite of everything? Because even before we started the podcast, you said that you had one of your best >> uh uh the months.

[00:27:00]>> Yeah.

[00:27:00]>> Was right in the middle of the crisis.

[00:27:02]>> Correct.

[00:27:02]>> So it just goes against what >> you know the general they say.

[00:27:06]>> Yes.

[00:27:07]>> What you think, >> what you see on the news.

[00:27:10]>> Yes. Exactly. So uh and because we know that you're very honest and transparent about what you do, we actually want you to tell us what is the real reason behind that.

[00:27:20]>> See, I I would place Dubai, everyone should do this, okay? Study this precoid and postcoid that's where this entire thing started. Okay.

[00:27:32]>> So during COVID, okay, so there's a there's a sandwich class. Okay. Sandwich class is the person who gets hit the hardest in every scenario. The middle class, the employers, the people who work, salaried employees, okay? So sandwich class is helpless. Okay.

[00:27:50]>> But people who earn wealth above a certain line, okay, they cannot be caged. So what happened due to bad governance since co okay when people were caged the people above that certain wealth line in UK in Europe >> they fly out >> not even longer you know not anymore >> they can't because they're too rich to tolerate >> they're too rich to tolerate it so you'd be surprised so during co I was again I was into corporate relocation so I I was out because I was handing Rathon was one of my clients, you know.

[00:28:27]>> Wow, bro.

[00:28:28]>> It's crazy. Yeah. Yeah. Crazy.

[00:28:29]>> So, I was out there, you know, during co I had special exemptions and all of that.

[00:28:34]>> So, I I've been to Dafra. I've been everywhere, you know. I've been every So, I'm I'm one of the first people who >> So, I'm I was the person who convinced Raan to move here.

[00:28:46]>> Seriously? Who? Sorryan.

[00:28:48]>> So, uh so it was funny. It was like on a big tour bus, 20 American families. I was taking him to Abu Dhabi to Dubai.

[00:28:54]Yeah. Yeah. It's convincing them and it was funny. It was crazy.

[00:28:57]>> Wow. That's a phenomenal story.

[00:28:58]>> That's a cool story. It's a really cool story book.

[00:29:00]>> It really goes to my book. And so um so so co if you remember Atlantis was full >> and full with premium like from from UK from from Europe because people wouldn't be caged. Okay.

[00:29:12]>> That was the first sort of movement.

[00:29:15]Okay.

[00:29:16]>> Then you had the Russia Ukraine war. Now the Russia Ukraine war every time there's a conflict there's capital movement. Right. So Russia was sanctioned by the entire world, right?

[00:29:25]Only places that money was allowed to be flown to was India or or or UAE and people clearly chose >> somehow. I don't know why.

[00:29:36]>> Um I'm from India. Okay.

[00:29:39]>> No offense but um okay then after the Russia Ukraine war um that's when we got started getting serious funds.

[00:29:46]>> Yes. Then um after that in 2025 you had the non-dom regime from the UK that was a big big move again >> I don't know why UK did that but >> that lost so much money s because see >> people underestimate the power of India Pakistan you there's so much money out here the there was a lot of money flowing out from here to towards London of course you know to the hub >> but then that money started flowing out again and where does it Oh, you know, I mean, some people choose, of course, Singapore, but then Singapore is not as flexible as as UAE.

[00:30:22]>> 60% stand duty. 60% >> 65 it's 65% standing every time.

[00:30:27]>> They keep raising you know >> that in Australia again in 2025 they banned foreign buyers from buying existing properties. Stopped.

[00:30:39]>> Canada also there were some. So all these things people started the the the wealthy line. Okay. and the wealthy people started thinking where do we go you know where do we start moving in they look at Malaysia they look at Dubai they look at Turkey they look at Singapore >> but one of the most functional see because again one of course the dollar pegged you know it makes it a very strong point zero tax great lifestyle you know so so security was a big aspect until until a few months ago >> yes >> but I but even then Uh what really changed for security from personal your personal life >> because you said it only dropped for like 8 days.

[00:31:20]>> True. Pretty much >> true. But perspective changed, right?

[00:31:24]That's a big that's a big issue. And then see all this money that flew out of all these countries, right?

[00:31:29]>> They clearly had a problem with Dubai because Dubai really it became too too successful too fast.

[00:31:37]>> Yeah.

[00:31:37]>> You know, and so um I think see again the sandwich class, right? the sandwich class the problem is they are sold this concept right the concept of hey you know we'll give you a passport free education free medical >> you know I mean it is a concept right >> at some stage they'll realize that it's a trap >> at some stage see maybe 10 years ago 15 years ago years ago it was fantastic you know but now things have changed a little bit you know so uh so so I think this is how you know things have been flowing you People have been getting more educated. Yep. You know, people want a better place to do business, more convenient. Now, okay. Again, you you you have this is something achieved.

[00:32:22]You've achieved something phenomenal. 33 states you have licenses. Normally, that would take decades.

[00:32:28]>> Yeah. Each state is like a country, man.

[00:32:30]>> It's it is >> jurisdiction is like a different country, >> right? So, normally it would take decades for people. So, that itself shows how strong you are. I mean, the company alhamdulillah. But how much time did it take you to get licensing in 33 states?

[00:32:44]>> Yes. So our operations started from 2013.

[00:32:48]>> Okay.

[00:32:48]>> We actively started taking license in other states co and by 2023 it was done.

[00:32:57]>> Okay.

[00:32:57]>> Okay.

[00:32:58]>> But that's not common for everyone. Like that's not how it happens for everyone.

[00:33:02]It's not a common phenomenon. Even an average uh owner of an escro company in the US is a 58-year-old white male.

[00:33:12]>> Okay. So I I don't look nothing like a 58.

[00:33:14]>> You don't white male.

[00:33:17]>> And that too then going into 33 states it was kind of disrupted. Industry was disrupted. Uh we can do a whole podcast on that how we did that. But it was not something common. It was not something normal.

[00:33:27]>> Now to get 33 licenses in Dubai. How much time is >> Oh man. We open brother before the the conflict we're opening licenses every week right >> we need the property management open license we need this open like this like shopping this the convenience right convenience tax rate income and genuine numbers you know you can make >> quite easily a clean 8% I'm not talking about bigger numbers you can achieve bigger numbers but just clean 8% so people started getting educated you know started >> being more aware I think that really helped him >> I want to add one point brother and um on getting more educated bro. So if you think about it, you mentioned on the taxes, federal tax is 37%.

[00:34:07]>> Yeah.

[00:34:07]>> Okay. In the US, right? Uh for the highest tax bracket I'm saying and then you got state tax. Some states are, you know, 10 13%. Let's average to 50%. Then states like California have local county tax. There's another 10%. So 60% it's worse than Robin Hood, you know. So 60 cents of your dollar is taken by the government. But think about it. So even after 60 cents taken, let's say you're netting $100,000 a year. Think about it.

[00:34:35]Then with that $100,000, you have entrepreneurial vision and you're like, you know what, Muhammad said, "Hey, I'm going to open a business." So with that that taxed money that's already taxed, you open a business. Now that $100,000 becomes $1 million for you. Okay? Like the business network, whatever group, now you want to sell that business for $1 million. You have capital gains taxes of 25%. on your tax money. Yeah.

[00:35:00]>> Think about what kind of scam that is.

[00:35:02]No, no. Your 100,000 is already taxed.

[00:35:04]Now it's mine. I should be able to do whatever I want with it. But no, now you have to pay capital gains for any raise you get from that with your hard work.

[00:35:11]>> No. In see, in US people are working really hard, man. And they work for 13, 14, 15, 16 hours >> and they have to choose between rent and food. It's a reality, you know, because see on that taxed money when you go to buy a loaf of bread, you're taxed on that as well.

[00:35:27]>> Tax again. Yep. Right.

[00:35:30]>> Again, >> so it's it's a never ending cycle and and that's hard. And and >> you buy property your property tax again.

[00:35:37]>> But the difference between So it's funny the other day I saw this real saying Jeff Bezos pays less tax than than an a middle class employee. Of course, >> because so this is just the difference between knowledge.

[00:35:48]>> Pays less tax than the receptionist in his office. Warren Buffett pays less tax than the receptionist in the office.

[00:35:55]>> I I so it's knowledge. It's just knowledge, you know, that's it.

[00:35:58]>> But to uh bring the conversation back to the UAE, so what do you think I mean both of you guys can uh feel free to answer. What do you think are the asset types right now that institutional grade capital is target targeting specifically in the UAE right now?

[00:36:17]>> I your uh my domain that's your playground man.

[00:36:20]>> I'll give you I'll give I'll >> interview with them daily.

[00:36:23]>> I I'll give you a story.

[00:36:24]>> Yeah.

[00:36:25]>> Okay. Very interesting.

[00:36:28]often investor live case study. Okay. So there's this uh Indian guy from the UK.

[00:36:33]He's in the ed tech business, educational tech business.

[00:36:37]This guy put in almost 900 million durms to the market. Okay. After this is non-dom tax regime situation since 2023.

[00:36:45]>> Yeah.

[00:36:46]>> Wow.

[00:36:46]>> So, so I'll I'll tell you what he bought just to set up because see when an institutional grade investor comes in they set up an operational ecosystem.

[00:36:58]It's not just him settling in. He needs I'll tell so I'll tell you what all he needed >> bring his entire >> to just set up. Okay.

[00:37:05]So first to live himself you know he he first bought a villa on the palm.

[00:37:09]>> Mhm.

[00:37:10]>> Okay to start off with of course you know >> then he got to know then then he got went to Talal Gaf. He knew the most expensive villa over there was Lanai Island which was 92 million or a nice house.

[00:37:22]>> Yes.

[00:37:22]>> Then he met Amamira Sajuani.

[00:37:24]>> So Amamira Sajani sold her her villa on the palm as well >> you know. So just to have options, you know, and of course you there's friends, family, you need options. Everyone everyone moves in. Come on.

[00:37:36]>> Then they bought about he bought about I think three floors in Motor City >> for offices. Of course he was he has to move his office. So then he bought in Motor City. He he didn't necessarily want grade A depending on the investor as well. Some people need grade A, some people need lease certified.

[00:37:49]>> Yes. Yeah. Now because he bought offices in in Motor City, he bought about six villas in Damac Lagoons because right opposite motor city for his employees.

[00:37:58]So some of those high-end employees you know so when they come in it's easy for them to move in as well.

[00:38:02]>> So this is an example of an ecosystem an institutional grade investor comes up with this is the kind of mix they need.

[00:38:10]They need offices they need maybe some of them pick up land. recently, you know, so he he >> he he we're having a conversation and he was like, "Zoy, you're on ground, you know. I want on ground tactical advantage, you know, let me know some deals that, you know, I can make serious because he's got, you know, he's has to deploy." Yeah, >> of course.

[00:38:29]>> Yeah. So, so dry.

[00:38:31]>> So, dry powder.

[00:38:32]>> He's got dry powder, you know. So, that's what they look for. land, >> hotels, schools, >> commercial real estate. It's a mix of it's always a mix of >> if I put it across, it'll be 40 20 10 10.

[00:38:47]>> So 40% would be in this market just just as of now. Okay.

[00:38:51]>> Post conflict.

[00:38:52]>> Post conflict. Okay. 40% I might pick up something that's almost going to get ready, you know, >> a nice house, you know, >> you know, like a like a valley or something, you know, a nice big house I would pick up, you know, at a really good price at OP.

[00:39:06]>> Uh 20% I might put up in something in um I can get a nice uh return on equity on maybe 20% 25% return equity. If I can get something, I'll put 20% over there.

[00:39:17]>> 20% I'll put something commercial. It could be something in US, you know, it could be something like in a fund like yours. A regulated fund because the biggest problem in US is regulation.

[00:39:28]>> It's in a regulated fund >> or or lack of it.

[00:39:30]>> A lack of it. Yeah. So I would put a 20.

[00:39:32]>> Regulation is there on the paper but it's not there when you need.

[00:39:34]>> You can't enforce anything.

[00:39:36]>> Regulated fund 10% maybe I'll do either gold or uh or maybe bitcoin 10% cash.

[00:39:43]Fantastic. I like that wealth allocation. Yeah. So if I if I do that so then you're you're sort of taking care of your micro macro hedging you know you've kind of it's a nice nice portfolio >> a very good allocation man allocation and stays for our audience most of them are shar observer shy compliant so it stays uh it fulfills that requirement >> you know I'm sure you're compliant yeah >> by the way but we should I we me and son discussed this before we should also clarify to people because people that don't understand what complaint means they automatically get this >> yeah yeah what's your definition of Sharia complian I think we all three have different definition but let's put it to test maybe you'll say something I'll say something you'll say something else >> no for me Sharia compliant is is if I okay you know what let me define it >> in in a non-Islamic perspective in an international let's say >> recogniz yeah for >> it's basically uh doing business with uh without over leverage or without basically you you can still borrow but let's say ethical borrowing at arms length.

[00:40:51]>> Okay, that's good.

[00:40:52]>> Yeah, very technical definition but >> because you can't say that we don't borrow in we do but at ar at arms length and it's ethical so it has to be fair.

[00:41:02]>> Yeah. What's your definition?

[00:41:04]>> I stick with him. The point is that my definition was till I heard him was um uh ribba you know like u you can't uh live you can't take oppress interest you know interest is haram >> let me let me let me can I I'll say wait you can't make money with money >> basically >> no you can't okay that doesn't make sense you got to make money with money >> you can't make money you can't make money with so basically you can't lose money.

[00:41:36]>> Okay.

[00:41:36]>> To make more money, >> you have like it has to be there has to be some transaction. There has to be a unit.

[00:41:42]>> Ah, there has to be Got it. Got it. Got it. Got it. Got it. Do business, you know.

[00:41:46]>> You're not.

[00:41:47]>> So, let me get I I think >> Yeah. Like both of you shut up.

[00:41:54]>> I think this you both cuz you both are correct. I know where you're trying to get cuz I know both of you. But I think the example audience will understand.

[00:42:00]Let's say we have a pizza.

[00:42:02]>> Okay.

[00:42:03]>> Same size pizza. I cut it into eight slices. Give everyone a slice.

[00:42:07]>> Yeah.

[00:42:08]>> Okay, that's good. Right. Now, same slice pizza. I cut it into 16 slice.

[00:42:15]>> Okay.

[00:42:16]>> Okay. I give it to them. Did the pizza size increase? Did I produce more pizza?

[00:42:21]No.

[00:42:22]But I'm distributing more. Right. Now, let's do it the other way. Same size pizza. I I do only four slices.

[00:42:30]>> Okay.

[00:42:31]>> So, still the pizza is the same. There's no production happening. There's no increase of pizza. I'm just playing with how I slice it. Do you understand, bro?

[00:42:39]>> I think we're all stuck at pizza, right?

[00:42:40]Are you stuck at pizza?

[00:42:42]>> It's I think so.

[00:42:44]>> I'm I'm like on pepperoni and and and cheese.

[00:42:48]>> So, we're stuffed crust.

[00:42:50]>> So, we all still the economy, let's say I'm the economy. I still have one sized pizza, but I'm just slicing it in different sizes.

[00:42:59]>> Okay.

[00:42:59]>> Actual pizza is not increasing. It's still the same size but it's the large pizza. Now I can slice it in four pieces, six pieces, eight, 15, 16, doesn't matter because I'm controlling.

[00:43:10]So that's what's happening with modern economy with inflation.

[00:43:14]>> Ah, got it.

[00:43:14]>> Okay. So with inflation, what's happening is now if I cut it in 16 slices and if I give Zohab two >> and if Zohed is not smart, he thinks, man, I have two slices of pizza now.

[00:43:25]Actually, you have the same >> cuz the pizza did not increase. You understand?

[00:43:29]>> Got it. Got it. If I cut it in four slices now and give it to you right is now very happy.

[00:43:34]>> But it's >> I used to have one back in the days. Now the government gives me four.

[00:43:38]>> But the government is like which is me.

[00:43:40]I'm like yo these guys are very dumb because the pizza is still the same.

[00:43:45]>> I'm not actually doing any outputs.

[00:43:48]We're not getting more pizza.

[00:43:49]>> Yes. That's why Islam take to diminish.

[00:43:51]>> So everything any more slice that we get has to be attached to more production. M you cannot do engineering to increase.

[00:44:00]>> Got it.

[00:44:01]>> So what happens when you are lending and getting an increase just from lending?

[00:44:06]There's no production happening.

[00:44:08]>> Yeah.

[00:44:08]>> Okay. It's just pure.

[00:44:10]>> That's what I meant. Money with making money with money because money Yeah. I got I got I got that. I guess thereity type.

[00:44:16]>> There has to be some economic activity.

[00:44:18]>> Ethical. You got to be ethical. That's all. Be be nice. That's all. You know, we're nice people, you know.

[00:44:23]>> Yeah. You have to be ethical.

[00:44:24]>> Yeah. We're not kaboom, you know. very nice. You know, >> there has to be actual production like you actually have to put effort produce it and there has to be exchange from that production and that >> but on that thought and on that point that's probably one of the main things Sam that drove you to really set up a regulated fund that is very much in compliance with uh uh and I want you to really explain to us how and like you went through that whole journey and the just the whole process until you made that decision.

[00:45:02]>> So I'll do a quick like inshallah in 2 minutes just to explain like the summary of what's happening here and where's the gap and what gap we're trying to fill.

[00:45:10]>> So in the industry there are many regulated funds. Okay. Okay. There are many regulated funds. We're not the only one. So now let's start filtering them.

[00:45:19]Out of those regulated funds most of them are leveraged. So they have uh 30% of their own money and rest 70% is low.

[00:45:28]So for example, Blackstone, one of the largest real estate funds has 1.2 trillion. Out of that 800 billion is in real estate. Out of that 800 billion, roughly 240 billion is cash. The rest is paper. It's just based on loans, right?

[00:45:43]>> So we're not competing with Blackstone, okay? Because it's leverage. This is not even our arena. Okay? So that's cut out.

[00:45:50]Then come to the next arena. The next arena the players are okay we're going to be Sharia compliant. Okay. In the Sharia compliant arena there are two types of players. One is capital allocators and one is operators. Okay.

[00:46:05]So the capital allocators are saying they're just great fundraisers >> but they have no business to do with real estate. Either they have a platform online to raise funds or they just have the network connections to the family offices to raise funds. So they raise funds and they put in other vehicles, other regulated funds. So they're regulated fund but they just raise and put in other vehicles. The problem with them is the consumer is getting two layers of fees.

[00:46:32]>> Mhm.

[00:46:32]>> If the consumer goes with them, they're charging a fees just for raising capital and then they're putting in another fund which is also charging fees. So there's two layers of fees. That's the capital.

[00:46:40]>> Essentially they're not the decision maker.

[00:46:42]>> They're not nothing, bro. They're just capital allocators. Okay. Then you got actual operators. But again the problem with operators, nobody that I know of is totally debtree. Okay, everybody is taking Sharia debt. So there's of course scholarly discussion on that. Is it Sharia? Is it not Sharia? We're not scholars. I don't want to get into that discussion. But what we believe is to stay totally debtree. Okay. So this is a space. It's like a blue ocean right now.

[00:47:09]There is no debt-free regulated fund that's led by an operator.

[00:47:15]>> Mhm. So debtfree, regulated, operatorled. There's not one of those things are missing. Either they have debt or they're not operator led.

[00:47:23]They're just capital allocators.

[00:47:25]Somebody with a big name and face online. They just raise funds and put in other vehicles. So we see that gap. We see the gap. Okay. The operators need to jump in like us and put it right put the right team, the right governance together, the right, you know, regulatory body together and deploy without debt. And our vision is to take it to 1 billion USD asset under management. Okay. So 1 billion is actually a small amount in the large scale of things. We just said Blackstone is 800 billion.

[00:47:52]>> So 1 billion. But you'll be surprised, brothers, hey, there's no $1 billion fund that's totally debtree. None. In the Muslim space, in the non-Muslim space, it does not exist. A real estate fund has not achieved or reached 1 billion without leverage till this date.

[00:48:06]So we want to be the first one in >> No, I I've I've done a bit of study.

[00:48:11]Yeah. What you've built because see I love studying structures you know corporate structures the way of the architecture of a of a corporate structure you know so so the SACE regulation so that's equivalent to like the SEC in in in the UK or SEBI in in um India.

[00:48:29]>> Yeah.

[00:48:31]>> Then he's got FAB as the custodian.

[00:48:34]>> Then you have Gran Thornton as the auditor.

[00:48:36]>> Yes.

[00:48:37]>> Then the EIA as the Sharia adviser.

[00:48:39]adviser and then see you're just the operator, the manager. So the way you structure it is so foolproof that I I really enjoyed. I really like your structure is just phenomenal you know.

[00:48:50]>> Thank you brother and uh our primary asset class and I really like what you have put as your allocation. So our primary asset class with fund one that we're targeting is essential commercial real estate.

[00:49:01]>> Got it.

[00:49:01]>> So basically uh the UAE mandate postconlict I always forget the third one. The first two is food. First one is food security. food security, >> water security, and I forget the third one, probably AI, right? Something to do with AI. But when it comes to food security and water security, it's directly tied to real estate.

[00:49:17]>> Correct. Correct.

[00:49:18]>> And you're getting all these sovereign structural tailwind cuz the sovereign funds are investing in the infrastructure around it. Correct.

[00:49:25]>> And these are very high ticket items for anyone just to get into without the knowows, without the connections to operate, to build and whatnot. But we're we're going to do that as operators and we're giving access to people who might not be able to do that on their own. So this is our asset type target for fund one essential commercial real estate.

[00:49:43]>> So like warehouses >> warehouses, logistics, temperature control, stoages >> in in the US.

[00:49:49]>> In the UAE.

[00:49:50]>> In the UAE. In the UAE.

[00:49:51]>> Oh, very cool. So which in Jabali area?

[00:49:54]>> Yes. Yes. Also we're looking at Kizad.

[00:49:56]Uh >> we're looking at Kizad as well.

[00:49:59]>> We're also looking at Alus.

[00:50:01]>> Yes. Alus. Mashallah. This something we're going to talk offline. We have something like phenomenal cooking in Aluz as well.

[00:50:07]>> Oh, you love huge investors for this you know especially um Indians but Indians from Africa etc. you know they big big funds because I think I I had an investor was particularly looking for >> large warehousing spaces >> in Java especially but he was so particular because we gave him a huge space is not interested he wanted in Java >> and we need help in finding the deals brother so this is what we we're actively looking for deals to deport >> see I you know today I I met somebody linked to the very very very senior and your family over here and um I mean the kind of deals that they came up with, you know, I mean petrol stations, >> malls, >> now is now is the time to >> landsc because they told me I cannot speak on YouTube and I'm like how am I supposed to not how do how do I how do I not talk how do I get investors for it you know you got to help me out here you know >> for below replacement cost man you cannot build the same shopping center right now for whatever he's selling for.

[00:51:15]I guarantee you if you were to build it, buy the land and build it now, you'll be able to do it.

[00:51:19]>> And on the flip side, people I know people are looking to buy hospitals, buy schools, you know, so so no, this this is and this is what I was trying to tell you that the kind of deals and the kind of networking that I've done in April and May is unreal.

[00:51:34]>> Like this is right.

[00:51:36]Man, >> I think I have been exposed in the last two months, me and Sam, to things equivalent to years. Seriously, the last 90 days.

[00:51:46]>> And the last the people that we met, the deals that came across our table, the things that we finalized, the the bullets that we dodged, >> it was pretty well. It was a movie.

[00:51:58]>> Yeah, in the it was honestly a movie. It was a for the like I was born into a construction family, right? So, okay.

[00:52:08]>> I I'm I'm very thick skinned from a very young age cuz you when you work in the construction site, you're very hard, >> super high risk. The riskiest business you can go in, >> everything that can go wrong will go wrong. So, you you always have a very high risk and pain tolerance from. He's not going to mention it, but his father mah is part of a group of companies, construction company, and that's the company he grew up and learned everything from. It IPOed as a group for 946 billion real kapa.

[00:52:42]>> Yeah.

[00:52:44]>> through through and through construction guy basically. Wow. So, alhamdulillah it was. So the reason I mentioned this is that with all of that history, I was never on edge as much as I was in the last 60 or 90 days. Like really in the last 60 or 90 days, I was really on edge because if you have made it through, if you really So because a lot of changes, right? a lot of like >> very everything changed and you're like >> trying to like >> you know >> navigate and hold on to the threads but honestly like if you're really able to keep it keep it together for 60 or 90 days it's equivalent to a year though >> 100% well I think that's where um you know if you look at Maslo's hierarchy of needs right the first needs is food shelter and so forth and so on then comes the he calls it self fulfillment or thing. So if we look at real estate lens the same way geopolitical turmoil will help these type of asset classes when it's tied to food security when it's tied to water cuz now all and Dr. Iran was saying the same thing today that now not only UAE actually but more so UAE and and this region but every country is now thinking they were they started thinking post 2016 Trump's first term but more so now how we can really be independent with our supply chain with our food security self-sufficiency cuz all because you can be landlocked any time now this is the world we live in okay >> this government alhamdulillah we're like blessed to be in a place where they are they make they Do you have trouble today? Cabinet meeting probably tomorrow. Day after tomorrow we see the announcement. So they probably don't sleep, bro. And then that's 48 hours cuz within 48 hours you see changes happening and deployment happening.

[00:54:31]There's a lot of push coming into these essential real estate.

[00:54:35]>> Absolutely.

[00:54:36]>> Literal essential for the economy and the country.

[00:54:39]>> Is it like uh ready warehouses or what's the how?

[00:54:43]>> So for fund one it's uh the mandate that we got approved. It has to be ready for fund one.

[00:54:48]>> Okay.

[00:54:49]>> Okay. has to be a ready asset. A ready to be something that is still under development. Well, it can be if it's in the final stages.

[00:54:56]>> So when you say fund, what does that mean? Like see so it to be a little more like so so means okay I'm an investor.

[00:55:03]>> Yes.

[00:55:03]>> Okay. I like the idea. What do I do?

[00:55:05]What are my next steps?

[00:55:06]>> Okay. So currently very good question.

[00:55:09]So currently we have ankor investors 50 to 100 million USD. Okay.

[00:55:13]>> It's fluctuating because of March 1st.

[00:55:14]So you have to >> 50 to 100 million USD. Yes. That's the initial investment.

[00:55:19]>> That's the initial investment. We were very confident with 100 >> pre- March 1st. But now you have to do a lot of narrative renarrative and you know bring people back to >> cut. Got it.

[00:55:29]>> Cut off BBC headlines and all that. A lot of work now, right? Let's go with the lower number 50 million USD. Okay.

[00:55:35]So that's our anchor. Okay. And now of course we're looking for more capital so we can get better and bigger and higher grade assets. So, we have that dry powder in stock, 50 million USD. We're actively talking in the market, looking at deals, and at the same time, we're raising more capital because the deals we're looking at are very interesting.

[00:55:55]>> Yeah.

[00:55:55]>> I'll get you deals.

[00:55:56]>> Yes.

[00:55:57]>> Here we go.

[00:55:58]>> You get us both, man.

[00:55:59]>> Yeah. Both. Both. Because see, if I if I can because I can get you some serious land parcels in in in Abu Dhabi and in Dubai.

[00:56:10]>> So, okay, going back to your first question, brother. So fund one it has to be ready.

[00:56:15]>> It has the asset has to be completely constructed and like almost on hand over.

[00:56:20]>> Yeah. For for uh fund one for fund one.

[00:56:23]It's an income fund. Fund two is going to be a growth fund.

[00:56:26]>> Okay.

[00:56:26]>> Okay.

[00:56:27]>> And depending on the success of fund one, how quickly we're ready to deploy, we can do fund two like almost within 6 months. So your plan is that okay you take a $100 million and you build like this huge coal storage facility in Java or in Kizad.

[00:56:42]>> Yeah.

[00:56:44]>> And then what?

[00:56:45]>> Okay. So this fund very good question.

[00:56:48]This fund is a 5year close-ended fund.

[00:56:50]>> Okay.

[00:56:51]>> Okay. So our goal we have to come in at a very good cap rate right now.

[00:56:55]>> Okay.

[00:56:56]>> Okay. And then in that five years we exit by giving a lower cap rate. So yield compression and that's how we get our exit return. So investors our hard rate to the investors is 8%. So we don't make any money until the investors make 8% a year.

[00:57:10]>> Okay.

[00:57:10]>> Okay. Our management fee is very aggressive only 1%. So anything over 8% we will do 8020 split.

[00:57:17]>> Okay.

[00:57:17]>> Okay. So that's for the 5 years. And our goal is to combine all these assets and then exit to a bigger institutional player like Blackstone cuz they're not looking at 50 million USD tickets. If you bring them, okay, it's 700 million, 800 million, >> you have access to those guys.

[00:57:33]>> Yes.

[00:57:33]>> So you can pitch this product to them.

[00:57:35]Exactly. That's brilliant.

[00:57:37]>> Exactly. So it's like a private equity rollup but real estate roll up. Put the smaller assets.

[00:57:42]>> Smaller assets together cuz that's what we used to do in the US brother and this is what we have been planning. It just took a longer time to >> Yeah. This is actually my question to you. when when you see us doing something like this and and and doing and seeing an operator like Sam that has closed what 1.4 4 billion in in transaction and now focusing all of his energy and all of his ecosystem on GCC income generating assets. What does that signal to you? See I I told you uh the key word over here is operating IP. the fact that Sam apart from Sam I've been studying this some of the top hedge funds family offices of the world >> Howard Bane Capital >> Bane Capital State Street >> yes >> man Group yes >> all of them >> I have investors from Amazon Nvidia Black Rockck they're all putting they're all coming in over here some reason right see the difference between this is because somebody else was asking so I was yesterday sitting with an Indian investor from Congo okay >> from Congo >> from Congo >> it's like our brother uh from you know I'm talking >> so so so this guy this guy's family owns like 75 petrol stations restaurant chain in Goa hotels in Mumbai you know that kind of Gujarati family like he he was a khani wow right okay so so >> a very rich man >> yeah exactly so hardcore guy Right. He also right he also is is coming now to to a person like that you know he's coming to Dubai and he's like he you know what that's the thing operating IP that's all I can say that you know if all these people uh he was telling me Zoho I'm scared after all these things see we loved Dubai okay Dubai is a perfect landing pad between India and Congo my dad loves Dubai we were going to buy a beautiful place at the grand near address we love creases location, but boom, this thing happened and now we're scared. Now we don't know what to do.

[00:59:52]And I'm like, okay, where else? What else? What other option you have? He's like, I don't like people saying that there's no other place. China is beautiful. You know, you go to China, it's a different world. China is a different world. Because this guy was into exports, right? Things like China's it's out of this world.

[01:00:08]>> Singapore. I'm okay. Can you live in China?

[01:00:10]>> Yes. That's a different question than beautiful.

[01:00:13]>> Would you live in China? Would your father live in China?

[01:00:16]>> He's like, maybe not. Singapore again taxes it's too expensive it's not it's not practical to live in Singapore where do you go you know because I I asked myself this question you know it was scary okay when this thing happened it was scary no doubt 2 weeks I couldn't sleep okay >> my I had calls from all over the world my wife's family >> uh everyone started all of us went through right >> that's why I was telling you it in the last 16 days I was so on edge >> there was a debris that fell in front of my my garden you know >> in front of my garden you know brother.

[01:00:47]He was in Kuwait for something.

[01:00:48]>> Okay.

[01:00:50]>> He literally left Kuwait airport.

[01:00:52]>> Yeah.

[01:00:52]>> And the same part, you know, the whole Kuwait airport was like first or second day, he was in Kuwait. Literally like an hour after that exact part where he exited out of was gone.

[01:01:02]>> So So I still remember it was like 2:00 a.m. in the morning. Boom. We heard a noise. Me and my wife open the curtain.

[01:01:07]Of course, you care for the kids, right?

[01:01:09]>> The thing and this is the place where you know my I play my kids, you know?

[01:01:13]>> Yeah. And and I get calls from everyone.

[01:01:17]They're like, "When are you going to move out of Dubai?" Like, and I've got my business partner calling, "Go now to Georgia." Another guy is like, "Go to Bali. We'll start a 3x capital in Bali."

[01:01:26]And I'm like, "It's not practical, man."

[01:01:28]You know, what are you guys talking about? You know, go to India. So, my wife is from Pakistan. Okay.

[01:01:33]>> So, she's like, "Go to P. Let's go to Pakistan." I'm like, "No, >> you know, I don't want to." I took them all to Ajan for two days.

[01:01:42]>> Just relax. Everyone go to the beach a nice resort in Ajan for 2 days right >> beautiful resort you nice beach just two days calm down eat >> go to the salon you know let's come back because I've built my entire life here man you know I love and it's not about that my sister's a doctor in Australia I've got family in US I've got family in Canada it's not like I love this place man you know where else I so this guy in Congo I told him where where do you go >> you know and then he's like no I think I'm going to come over here itself you know I'll start with 10 million >> and then if it's nice you know I I might but hey you know I want to start a restaurant chain as well you know it's so again it's it's operating IP if if one person if if if Sam has moved here >> I'm telling you there are thousands and thousands of s and you know what >> first the operator moves then the passive money moves >> yes >> once a Sam moves two to three years later the normal guys are going to figure it out. It's always first a Sam Sam has to take the first step.

[01:02:47]>> It's always the case you know.

[01:02:49]>> Yeah. The first step is taken by people like Sam >> and then two to three years later the other guys begin to learn and then that's the trail you know but that's the biggest indicator that when if an operator is moving that itself is a pattern.

[01:03:02]>> Yeah.

[01:03:03]>> Very well put. Uh it is very well put and honestly uh you really touched on it and you'll see it in in all of our uh uh profiles and all of our articles will always start with operator le because we believe that this is what differentiates the company from anything else.

[01:03:25]>> So he's not talking construction from reading a book. Yeah, of course. Mah, bro, not everybody and it's not wise to always praise in front, but I just have to mention so that we have the full context. Not everybody has the trifecta in construction. What is the trifecta?

[01:03:38]Then you can lay the bricks down yourself. Then you can manage 100 people laying the bricks and then you can come to the boardroom, put a jacket on and present to the investors and explain. So that's a trifecta in construction. It's very hard to get >> 100%.

[01:03:51]>> Yeah. So mah, he has that. Thank you, bro.

[01:03:53]>> Because nobody wants to put in the work.

[01:03:55]So that's why see people see now this guy okay again classic example guy from Congo he said said I want to open up a chain of restaurants okay I have this beautiful chain of restaurants in Goa but I need someone to run it >> I'll give you a stake in the business >> I said everyone wants you know even me I was scared to go and start a business on my own >> but this guy from US >> was like I couldn't seed capital you run the people want the brain >> yes yes >> because you you cannot replicate 17 years of experience.

[01:04:27]>> Nope, you can't.

[01:04:27]>> You know, you have to go through a lot of >> Cycles of >> Up, down, up, down, up, down. You know, not everyone's willing to go through that, you know.

[01:04:38]>> It's not It's not made for everyone either.

[01:04:40]>> No, it's not.

[01:04:41]>> So, it's not.

[01:04:42]>> But I'm I want to wrap it up because we can go on for hours.

[01:04:45]>> I realize that, right? I'm I'm Yeah, >> I want to leave a lot of topics for the other >> the next session. Sorry. Sorry. I'll do some uh rapid fire questions and and then you guys can both give me your answers. So, we'll just do a few.

[01:05:00]>> Best asset class for GCC investor with $500,000 to deploy right now. UAE or US?

[01:05:07]>> UAE 100%.

[01:05:10]>> Guaranteed guaranteed cash flow.

[01:05:12]Guaranteed >> I mean the US market is very attractive right now with the >> only benefit that US has over UA and I'll be honest. Sure. Feel free to disagree with me. Only benefit US has over U8. It's a deep market. If you go with 100 billion USD, you can blow it up in the US in >> you can blow it up in Dubai.

[01:05:32]>> So that's where it's it's a bigger market. It's a bigger market. 50 states.

[01:05:38]It can blow your money.

[01:05:40]>> I I can give you a negative of Dubai if you want, you know.

[01:05:43]>> Yes, please.

[01:05:44]>> See, a negative of Dubai is is the supply velocity. You know, I think there's so so you could make some really stupid decisions very I' I've seen I I can give classic examples of stupid decisions by US investors.

[01:05:56]>> Yeah.

[01:05:57]>> La last month again, April. Okay.

[01:05:59]>> Okay.

[01:06:00]>> I had a surgeon based in US. Okay. Who?

[01:06:04]>> So, so he's talking to me and he's talking to some newbie dude maybe three or four years but was was working in Shoa.

[01:06:14]>> Yeah.

[01:06:14]>> He danced his problem.

[01:06:15]>> No, he didn't dance. He did something worse. some dancing was okay. He promised him that he so first of all I don't know this is again stupidity okay he he told him it's an underwriting deal just pay 24%. I'm like, "How would you pay 4% deal then and call it an underwriting deal?" You know, >> he said, "It's just an underwriting deal. Only pay 24%."

[01:06:36]And within 6 months, I'll flip it and make you 100% money.

[01:06:39]>> And he made him buy almost stock with 42 million rooms, man.

[01:06:43]>> Wow.

[01:06:44]>> The guy I told the guy, you don't know who you're talking to.

[01:06:48]>> Yes.

[01:06:50]>> I am I teach these people real estate.

[01:06:53]Okay. I I I teach maybe 70% of the agents over here real estate. Okay. take data and >> they they learned from me. You know, I will change my name. I will quit my job if you sell it in 6 months. He didn't take my advice seriously. And he went ahead.

[01:07:07]>> He went ahead.

[01:07:07]>> He went ahead.

[01:07:08]>> He went ahead.

[01:07:09]>> So, we have to wait 6 months now to see if you're right.

[01:07:10]>> No. No. The guy is already back to me.

[01:07:13]>> And and he's like because the because the other guy said, now this is the this is the this is the sad part of the market where you got people like these who promise because at 24% they get paid.

[01:07:22]>> Yeah.

[01:07:23]>> They get paid, >> of course.

[01:07:24]>> And he said, I have buyers ready. How how I I I didn't realize people could buy such things.

[01:07:32]>> I can't believe I'm surprised that someone with that much net worth can be so gullible and stupid >> sometimes, man. Greed, bro. Greed.

[01:07:37]>> So, he he went ahead. The guy said, "I'll flip it easily. I've got buyers ready. Just pick it up at this price.

[01:07:45]I'll give you this much discount. I'll give you kickbacks." And >> I went for it, man. And now but the problem is that that that guy killed a person who could have invested 100 million. He killed it at 40 million.

[01:08:00]>> The the experience was over >> and and and this guy was sitting in a room filled with billionaires.

[01:08:06]>> Yes.

[01:08:07]>> So So this one idiot >> ruined the market >> with 40 million dirhams. He ruined potentially a billion a billion rooms.

[01:08:14]But that's why RA is also very strict on people that make these fake promises and they could get pro they could get uh prosecuted and go to jail because if you make a fake >> what do they call it the legal term for it uh misrepresentation it's it's actually >> but these guys are smart how do you prove it these guys are really smart you know it's really smart the guy sitting in US how is he going to >> one thing to give a push back to your brothers have that's where I think you are like let me tell you how I think content has to increase.

[01:08:45]>> Ah, yeah.

[01:08:45]>> Do you understand what I'm saying? But how did this guy go to that guy? It's your fault.

[01:08:49]>> It is my fault.

[01:08:50]>> Seriously, you didn't dance enough.

[01:08:51]>> Yeah.

[01:08:56]>> Whatever it is, >> I'm I'm practicing. I'm practicing.

[01:08:59]>> No, no. In all honesty, brother, you know, honest and people with the on ground reality, it has to be showcased more.

[01:09:07]>> And that's why we wanted to do this collab. One of the reasons is literally because we have a lot of audience as well that are probably investing that we don't know because we're not really targeting the retail investors. Right.

[01:09:15]>> Correct. Correct.

[01:09:16]>> Allah knows where they're going and investing. Come to someone who actually knows what they're doing.

[01:09:21]>> No. I love what you guys are doing as well. No, we'll definitely work together, man. Because I've got a lot of people who want to get into this, but I don't have that. You know, I because you need to be specific in real estate, right?

[01:09:31]>> You can't do everything of all trades.

[01:09:33]You can't you can't you can't.

[01:09:35]>> Next question.

[01:09:37]That's a long asset to a rapid buyer, brother.

[01:09:39]>> One mistake you see investors making in the UAE market right now.

[01:09:42]>> I think I answered that.

[01:09:43]>> I think that was a good one answer.

[01:09:46]>> I would say the same thing, bro. Uh I would say uh I almost made that mistake is basically coming with uh >> falling for the what do you call it?

[01:09:55]Shin shiny object syndrome syndrome >> and all that glitters is not gold. I almost also fell for it. Also to the defense of that brother in America.

[01:10:03]Sometimes you just don't know. It's too much noise. You >> could be the smartest person in the room, bro. We all make mistakes.

[01:10:09]Sometimes you fall for the noise.

[01:10:11]>> And that's why we have to as practitioners, we have to rise above the noise and make sure the truth.

[01:10:17]>> Yes, brother. We take it as a mission like honestly like if he didn't know >> that it's my fault. Like we have to take like accountability like how come he made such a horrible mistake.

[01:10:25]>> Yes.

[01:10:26]>> So I think it's the same.

[01:10:27]>> Okay. One mistake you see uh investors making in the US. Um so the US the primary mistake is uh brothers put it very beautifully people don't understand the three layers of jurisdiction right federal state and local um so they would claw ch and find things and invest and then all these other things will come the layers and layers on top so you need an operator with on ground reality of at least a decade who they have lost money they have won money they have done everything for their investors >> basically you have to find another brother Zuhave in the US if you want to be led by someone honestly bro otherwise >> that's so Thank you, man. That means a lot.

[01:11:03]>> If you had to put $10 million to work today with a 5year horizon, walk us through the allocation.

[01:11:09]>> I told that 40 20 10 I told you. I told >> I'll say um I pretty much also agree to it.

[01:11:17]>> Yeah. So, wait, let's repeat it again for the ones that didn't that missed the first part.

[01:11:20]>> See, 40% again this this market 40% I would pick up uh stock that I could pick up at OP. There's no distress in Dubai.

[01:11:29]Okay. OP. good deals like close to OP.

[01:11:32]>> What is OP, bro? For our audience real quick, >> opening price, you know, at the opening price. So, somebody has bought maybe 3 years ago, a beautiful villa and a nice solid governmentbacked developer, you know, a solid solid developer, solid developer, okay, who's audited, you know, the finances, you know, good floor plan, nice location. I put 40% in that something that's ready or just close to be ready where you have the completion certificate, you know, it's easy to finance, maybe I'll pick up something like that. 20% I'll I'll put into um an emerging area where I I I think there's potential to make around 15 to 20% return on equity. Um 20% I'll put in a fund like a commercial fund. I'll definitely get into commercial because commercial is extremely limited supply in the market and there's a huge huge rising demand.

[01:12:15]>> 3% like 3% of the entire supply of your real estate is commercial real estate.

[01:12:20]Of the 3% only 20% is lead certified and so so that's also I'll put 20% commercial.

[01:12:25]>> Great data. Yeah. 10% I I might put into gold or bitcoin depending on what your what your is and 10% I'll keep cash.

[01:12:33]>> Okay, fantastic. I think the only thing I would change is I'll put cash to only 5%. I love being broke like >> that's Samir's principle.

[01:12:43]>> I know that's why Oh, just from that principle, bro, we got along like the way bro you don't know how like the 31st of every month is for me.

[01:12:52]>> My wife is like so used to it and so tired of it right now. like literally but I have to figure things out on the 31st >> you know again Samir the first time I met him 2013 >> he told me he took 100 million dhams on 20% uh return from a South African investor and and so he took it as a challenge for himself >> the South African investor mean >> yeah so so he took it as a challenge and he made 50%. Yeah. Because And so I was like, "How do you deal with that kind of stress?"

[01:13:26]>> Yeah.

[01:13:26]>> And he's like, "Stress is what grows you."

[01:13:28]>> Yes.

[01:13:29]>> You know, you should love stress. People look at stress the wrong way.

[01:13:31]>> Yeah. Yes. Bro, he's his he's worried.

[01:13:33]>> Oh, this guy and and this guy at 2013, I'm telling you, man, he was into Forex, stocks, uh, real estate. Man, I don't know how that guy's brain works, you know. So, alhamdulillah, I got to say, what I love about real estate is being amongst people like you, >> of course, >> because I get to I get to learn. I get to be with the same energy as you guys, you know. So, so for me, money is energy, man. You know, >> it'll flow. It will flow, you know. So, make space. That's it. It's coming.

[01:14:03]>> Bisk is written.

[01:14:04]>> Last one for both of you guys.

[01:14:07]>> The most underappreciated market signal that most people are missing.

[01:14:12]>> Underappreciated market signal.

[01:14:14]>> Yeah.

[01:14:16]>> Can I go first?

[01:14:16]>> Yeah, please do.

[01:14:17]>> Okay, bro. So I think you know in the US we say FTM follow the money >> and here follow the government FTG >> you know for me is bro I'm just looking for signals from the government now by the time the government announcements come sometimes it's too late right so that's why relationship network and those things have to come in I want to know where Abu Dhabi's head is >> where the sovereign wealth fund is going >> and I need to know it for everyone else >> and the way to do that of course not every time you're going to know before everyone else is to try to be in those circles where these conversations are happening cuz especially in a non-democratic country absolute monarchy decisions are made fast and it's efficient so it's not like somebody's going to make a decision today yeah in two yeah bro like it's not even two years you know I was going to say every midterm it changes but with Trump it changes every day right so it's not like that so I would I would really focus on that and remove >> the overappreciated uh signal is the BBC headlines, the Wall Street Journal headlines, I'll completely stop reading those and actually talk to people who are unbiased and who actually have the private data.

[01:15:27]>> What about you?

[01:15:28]>> For me, the most under appreciated signal is our operators like these follow them because you cannot replicate their experience, their knowledge. So this word that I said operator IP the brain follow the brain you know and that's the biggest signal the fact that these guys are coming because they migrate first they're cap so it's this is capital reallocation that's happening you know so you need to study that and follow them >> regalia regalia wearing kandura and walking in the summer in Abu Dhabi man >> that's it who thought it would happen >> so you follow them because they always move fast it's >> crazy Yeah, they move first and then the the passive money moves. You follow them >> and you're okay.

[01:16:13]>> Beautiful, man.

[01:16:13]>> Beautiful.

[01:16:14]>> Guys, thank you so much for >> I'm still stuck on the pizza though, you know.

[01:16:20]>> Next time we'll have >> Maybe we should do this with pizza. So, coffee next.

[01:16:27]>> We'll see you on next episode, guys.

[01:16:28]>> See you in the next episode.

[01:16:29]>> By the way, drop comments. Whatever you want, brother to answer. Drop comments and we'll get answers. We we me and Sam read all the comments all the time.

[01:16:37]>> Yeah, we we'll read it and and we'll reply next time. Tell us what you want to talk about.