CEO Money with Michael Yorba Podcast | with guest Scott Choppin
"My guest in this episode is Scott K. Choppin. Scott is the Founder of the Urban Pacific Group of Companies." -Michael Yorba Podcast
"We’re a real estate development firm that I founded in the year 2000 specifically to pursue what we call urban infill development. So, urban infill is in the city but infilling in existing locations, existing neighborhoods. Particularly we’re a real estate development company focused presently in the several years on workforce housing, rental, communities that we develop and hold for the long term." -Scott Choppin
Click here to listen to my interview with WIN Multifamily Show to learn more about urban infill development.
Researching zoning, infrastructure, and the environment takes years. It takes great expertise to research urban infill development. It is not as simple as building a new complex on the outskirts.
To learn more about the concept of urban infill development, click here.
M.C.Laubscher: Welcome to the Cashflow Ninja! The podcast sharing how to create and grow income streams, and manage, multiply and protect your wealth in a new economy. Are you tired of trading your time for money? Do you desire freedom today instead of retirement in 10, 20, or 30 years? I’m M.C. Laubscher and this is the Cashflow Ninja. This is Cashflow Ninja, I’m M.C. Laubscher and thank you so much for joining me in another episode of Cashflow Ninja. I have a fantastic guest for us today. I’m joined by Scott Choppin from Urban Pacific. Scott, welcome to the show.
Scott Choppin: Great M.C. Great to be here. Thanks for the invite.
M.C.Laubscher: For our listeners not familiar with you and what you do, could you please share a little bit about your background and journey with them?
Scott Choppin: Absolutely. So, Scott Choppin. I’m the founder and CEO of the Urban Pacific Group companies. We’re based in Southern California and we’re a real estate development firm that I founded in the year 2000 specifically to pursue what we call urban infill apartment development. So, urban infill is in the city but infilling in existing locations, existing neighborhoods. Particularly we’re a real estate development company focused presently in the several years on workforce housing, rental, communities that we develop and hold for the long term.
M.C.Laubscher: Fantastic! Now you’re also a big fan of trends and love to study trends and look at trends and we covered that quite a bit on our show. And as business owners and investors, it’s something we have to stay on top of because “The trend is your friend”, just to steal one of the sayings from it. And there are many others but let’s talk a little bit about a couple of trends here. So, obviously, we’ve had the pandemic this year. What were some of the trends that you saw in motion already in regard to trends that would impact business owners and real estate, investors? And then we could get into some of the things that happened during the pandemic and what will come from that?
Scott Choppin: Absolutely. Now that’s a great question. So, you’re exactly right. We’re a follower of trends and I think in the real estate development business you absolutely have to. So, a little bit of back story. Founded the company in 2000 and that had us right at a really great upcycle through 2003 to around 2007. Then 2008 came and I think everybody’s familiar with the great financial crisis and what happened there. And it was interesting several years after 2008 we got really attuned to watching economic trends related to real estate development. And I also had now the historical story narrative about what we saw as far as signals ahead of 2008, and then what happened in 2008, and be able to sort of now have tools to be able to use in order to track trends. So, I really think of trends in two primary categories. You could mix them up and more if you want a bit. I think short term trends and long-term trends. Before the pandemic some of the long-term trends that we were tracking, triggered in the markets, were active, were based in Southern California so obviously, this is where we were doing most of our work. But larger, longer-term trends would be people moving to cities. Moving from the rural and suburban into the urban would be one long term trend. People seeking out to live in urban environments, particularly along demographic trends, say Gen Z and Millennials. Even Gen X to some degree had been moving towards the city and really away from suburban environments. Other long-term trends that we’re tracking were things like multigenerational living.
So, historically in the United States, the nuclear family was sort of the representative family structure that people thought of, right? Mom and dad, two and a half kids, a dog and three cars, that kind of trend. But really long before that, we lived multigenerational, historically even back in the medieval times and probably ultimately back in the caveman days. And then now since really the mid-70s on afore base set to today, we’re a really huge upcycle in growth and multigenerational households living. Like kids living in a home with grandparents and parents as an example. So, those are some of the long-term trends that we track.
I think the other long-term trend that I really pay attention to is the overlay of housing prices on a long-term trend with incomes. So, the space that we’re in, we developed workforce housing, a privately financed workforce housing model, and that was really intended to serve a population of middle-class families. Think working-class families that make too much money to afford affordable housing in the government-subsidized sense, but not necessarily for the brand-new product. There’s this middle market of families that really have stagnant incomes overrated with ongoing housing inflation, rise in housing cost, environment, and that’s come as extreme as its ever been. In fact, the pandemic on a short-term basis is only exacerbating that. And then short term, I think we’re all familiar with what’s happening now. There are very quick movements and trends in the short term related to the pandemic. So, this work from home trend is really accelerated. Obviously, the use of technology like we're on today using Zoom as that was headed that way. But in the span of six or eight weeks, we probably gained three to five years of, you know, how quickly people were adopting and adapting the technology to use. So those are some of the trends that we've been observing.
M.C.Laubscher: Those are great. And the multigenerational trend, that's a big one because in designing houses and designing just housing as a general rule for moving forward, it's going to impact real estate investors, to put that together too. So definitely very interesting stuff there. The other thing about the trends during COVID, and the pandemic. Yes, absolutely. The work remote one was a very big one with Twitter announcing that employees are now going to stay remote. They're not even coming in. Why do you see — how does that play out? Cause now all of a sudden you don't have to work for a company and live in the same town where the company is at. So, it impacts not just for investment housing as all as a whole, right? Communities, because people would use to live close to where they work, they would buy. And that's kind of a trend that's changed a little bit because people need more mobility. You don't stay at the same job for 30 to 40 years and get your pension from the corporation. So, that's already started to change a little bit, but this is now very much a space that's ripe for disruption.
Scott Choppin: In fact, the way we're looking at, M.C., is where it's sort of the reversal. So, before I spoke about suburban moving to urban, this is, in some ways, a reversal of that. Now the question will be, now that people can work remotely, work from home, how many of them will choose to actually do that? And then what forms will it take? Like I think the media and some government officials and some reports that we study everybody RA, you know, RCL Co., Yardi has some great multifamily trends analysis that they put forward. People are saying, “Oh, you know, people can be released from their obligation to live in the Bay area if they work for Facebook or Twitter or Instagram” right? And that would normally have been the maca for tech workers, and the housing costs and the barrier reflected that they were, probably, some of the most extreme in the United States and California is in itself extreme from a housing price. Like how high housing price marketplace.
So, some of the speculations that have been put forward with this, people will move to small towns. Here's where I land with it. I sort of put it in buckets. So, if you think of the choices that people will make as to where they will live now that they can work remotely, I think there's 20%, and these are my numbers. So, you got 20% of the people they're going to live in extreme environments, right? They can go to a small town on the Midwest, very affordable housing, small-town atmosphere, probably great to raise kids. So, I think families might do this, right? And then you got the other end of the spectrum. People who go “Look, I really need to continue to be face to face with the networks that I've built”, say in the Bay area, right? And they're going to stick around. Maybe these are probably going to be high-income earners, top echelon managers and executives at companies that, housing prices, are sort of indifferent to it. That's maybe a harsh way to say it, but that's the reality of it. And they're going to have the vast middle that will again, be along the spectrum.
And I really think you're going to get people that will move a couple of cities away, or they'll move a few towns away, that they're still going to keep a connection to their local environment. So, if you're living in the Bay area, you might have family there, or you might have something else that connects you to that location that you wouldn't necessarily want to completely disrupt. Like if you moved from the Bay area to Kansas, you're going to be really far away, it's going to be hard to travel, right? You don't have major airports, those kinds of things. And so you're going to get these people that move into secondary and tertiary markets that are more affordable, but yet keep them close enough that if they need to drive into the office on the odd day or their extended family is a few towns over, I think that's really where the vast majority — and again, this is my speculation. But the other thing is to think about now is the housing type that they would choose. Now, there's going to be a demand for — in fact, one of the things I read is that there's going to be a demand for larger units, that people will have more space to work, maybe an extra bedroom to be able to have as a home office. And there's some description that people would if we have to go down into a pandemic lockdown again, that people want to have more space to be in a lockdown, although I'm certainly hoping we don't ever do that again for economic reasons.
So, I think that there's going to be changes in the general environment related to everything housing, places that people choose to live, the way that the economics, businesses that serve the people that move into these different places. I know in reading from the 1918 pandemic, things changed historically. So, the idea like, I'll give you an example. So, bathrooms, in most countries, at least the United States have a lot of porcelain cleanable surfaces. Well before the 1918 pandemic, most bathrooms that people that had them, this is early, late 1800s, were grandly decorated and lots of drapes and carpets and stuff like that. And when people were ill, you needed surfaces to clean. So, there's sort of these interesting historical results that we live with, like why our bathrooms have tile and porcelain and porcelain bathtubs. Like I never had thought of that, but people describe these changes. So, you can anticipate that we will have some long-term effects from this pandemic that we may be able to anticipate to some degree now, but we won't know those that will stick around for the long term.
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M.C.Laubscher: That's interesting. So, even in rental unit’s design, there might be certain materials that they would bring in. Because it's easier to clean out, with that being in mind. What are some of the things that you're seeing with traveling and migration and so forth? Because that's an interesting thing too that's going to impact many different factors of real estate. What does that look like? I remember coming to the United States. The year that I came was actually in 2001, so 9/11 happened that year. So, I kind of remember traveling and air travel before that, things changed drastically after that, it was a different world and what do you see happening post the pandemic?
Scott Choppin: So, I think, the first thing I think of is this sort of work from home trend to move outwards from cities so that's a high-level one. I think that of course, like you were observing that the hospitality and restaurant businesses are really getting, usually punished. The idea of traveling in an airplane will be a long time to return to normalcy, right? I mean, how we all traveled pre-coronavirus, where you got on a plane and didn't worry about it too much. I mean, you don't want to sit next to the guy who was clearly really sick. You wouldn't prefer that, but I think it will be slow to respond. In fact, there's a guy that I follow. He's a macroeconomist, macro ambassador called Ralph Paul, real visionist. This is his platform.
And he was talking about just the fact that we're going to return to economic activity, but we'll be down, 10% give or take, right? We're just going to return to a level of activity, but that there will be just lower levels of activity and things like hotel stays, plane travel. For us, in the real estate business, we really think about jobs, job growth, job loss, and population growth and loss. So, I think trends like movement out of high-cost areas like California, New York into other places like Texas. We were out in Texas a few months back and the stats for people that move to Austin or Houston or Dallas Fort Worth was high and a growing population from other places. And that was predominantly middle-income in fact, our demographic and our UTH model, our middle-income families. And guess who's moving to places like Texas from California, these middle-income families. So, here's where I land on it for our product type. We're so undersupplied in the long run, M.C., in California, that we were so bad at housing production for decades now that we are deeply undersupplied. And that will take several decades to resolve itself, even with some of the recent changes in housing law that we're starting to put into place in California.
And when you overlay that with the fact that we're still going to be an immigrant gateway, right? We're still the place that people think of when they're going to immigrate to the United States, California is on top of the list. And I don't say that will last forever. I think people are impacted when they move here, they go, “Holy cow, it's really expensive to live here.” Housing cost is really expensive and a fact, we work to solve or provide product into those marketplace gaps where there is a middle-income family that would like to live in Southern California, but they can't find a housing type, that's either affordable or coherent with their lifestyle. If you have a big family, you need a big house to live in, generally, at least to live comfortably. So, these are some of the trends that we've been tracking, and I think those will continue. And it sorts of references back to your early question about long term or short-term trends. These are now the ones that we have to track and have them be usable in a way that has a speed strategic, effective, and competitive in urban development projects. Like we don't want to be sort of blind or deaf to move market cycles and “Holy cow, we missed it.” Right.
And that we had some of that 2008 to be really honest with you. This is one of the reasons we're much better at it, is that there were some signals in the background noise of the economy. And there's always lots and lots of background noise. So, it becomes our job, yours and mine, and everybody who's running their own business to figure out methodologies and practices to pay attention to the right things and listen to the right people who have greater expertise. You know, I've probably doubled the people that I think are realistic, capable economic prognosticators, and not having some agenda that I can listen to and have good advice and analysis that doesn't lead us down some path because they're trying to sell us a book. That's actually expanded in the last several weeks for me dramatically and then powerfully. So, one of the reasons why you track that as well as just to be able to be effective in the marketplace.
M.C.Laubscher: Yes. To your point. I remember back in 2008, 2009, and that was my first go-around because I was just basically straight out of university and into the workforce when the Dotcom Bubble went, and the events of 9/11, and what happened to the economy after that. So, I didn't really count that as being a part of that, because I wasn't physically actively involved in the marketplace as an investor or as a business owner. So, my first go-around was 2008, 2009. And there were a lot of lessons learned from that. And to your point, this time you start to see a lot of similarities and you've learned some of the things, some of the mistakes that you made. Like for me, the phrase “Catching a falling knife,” comes to mind. So, I've learned to be more patient as I'm older this time, instead of just blindly rushing in at that point. But yes, no, absolutely. And to see and listen, find some folks that are seeing some different things out there that the majority of folks are missing. That's the other thing I've learned from very successful people, is they're always looking at the marketplace and, and saying, and asking themselves a question, “What are the lies that everyone is believing?” You know, what's the big lie, what is the market telling us that's completely wrong, and betting against that has served them really well.
Scott Choppin: And let me just add to that. I love that by the way. I'm going to write that down. Because I really think that's something I'm doing much differently. I mean, I read newspapers and, we didn't have the internet. I mean, we had the internet 2008, but it's certainly not social media-centric like it is now with a lot of people having a lot of different opinions, but you're exactly right. And, the thing is to listen to people that you vetted for yourself to have them be capable by some accomplishment. Were they able to call successfully, like, as an example, there's a web site, a blog that I follow called Calculated Risk. Came out of the 2008 recession, written predominately by a guy named Bill McBride. And I always appreciated his writing because he was a retired executive. Yes, he's trying to build this platform and is blogging.
And, I don't think he intended that to necessarily be a money-making venture, probably is for him now. He's been very successful, but I always appreciated that he had a very pragmatic view of the world. He didn't seem to have anything that he was trying to sell, no books, he wasn't trying to be the talking head on Fox business or CNBC. It was just a real view of the world and take it or leave it, right? He said, “Hey, maybe I'm wrong. Maybe I'm right. But here's like from a statistical likelihood standpoint, will this happen or not, will this economic event change.” And in fact, he called both the 2008 recession. And then he called the 2011, 2012 bottom of the market. And then he continued to say, even up to like, now that housing — he's a housing centric guy, one of the reasons I call him. But he was saying, “Hey, we're still doing fine in housing.” Now he did say even two or three years ago, a Black Swan event is the likely thing to disrupt us. Of course, none of us could have anticipated a pandemic coronavirus. But he said, “Hey, housing solid. We're not overbuilt.
Some markets, we might be edging into overbuilding. We haven't recovered enough in housing prices to be particularly overpriced.” You know, these are the issues that we have and in housing and apartments and real estate development. And in fact, he turned out to be true. So, I use it as an example and, people can certainly look that up, but I think its people like that you want to track and listen to that don't have an agenda that skews theirs. They're not a gold guy who wants to sell gold to you and sell that stocks are ever going to be the worst place in the world to invest, or bonds are awful, or the world is ending, to be extreme on the statements they make by goal, right? And I really am very, very paranoid, almost like, you know, what lies are people telling me that I need to figure that out? So, it's good to be sort of paranoid, maybe isn't the right mood, but vigilant fact, that's the term I use. Just watchful, cautious, prudent, still got to do business, still got to produce new investments, new real estate deals, we got to operate, but to be vigilant in our outlook in the near and long-term future.
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M.C.Laubscher: Absolutely. Now let's dive into your workforce housing model. Because this is very, very interesting if you don't mind sharing that a little bit with my listeners and viewers.
Scott Choppin: Yes. So, about three years ago, we basically removed ourselves entirely from the typical development product that's being built in most urban metros, which would be what we call a podium building, which would be four or five levels of apartments or condos over an underground parking structure. So, the cars parked underneath and units above that, right? That's a podium building, not high rise, sort of mid-rise. And we had done a bunch of those projects successfully. We delivered a 453-unit project in Westminster, Colorado. We did a JV with Lennar Corp., a very successful deal. Finished some podium projects in Southern California where we're based, but got to 2016, four years ago now, late 2016 and we just started to see signs of not overbuilding, but just the ingredients for overbuilding. So that was, everybody was piling into that one space of podium projects, downtown urban locations with studio on one-bedroom units. And a coherent model, by the way, but when you get Trammell Crow and Holland Partners coming into marketplaces, like where we were seeing in Southern California, that's a signal to me that there's a lot of capacity coming into the marketplace. Good developers, very, very strong balance sheets, great access to capital, good teams, right? And plus, a lot of projects that we could track, as we track what is development? And what's in the pipeline at a particular marketplace. And we just saw, for us, a writing in the wall, which is everybody is going to pile into that studio and one-bedroom space, serving Gen Z and Millennial demographic, which is a right place to be. Gen Z and Millennials are the largest single demographic cohort in U.S. history, particularly Gen Z is 86 million. I think I saw a stat recently.
So, they're in their part of their life cycle where they're going to start moving out of the house and occupying apartments. First job, “Hey, I'm going to move to a new city and I'm going to rent an apartment or maybe an apartment with roommates,” right? So, we looked at that space and, and sold off our last handful of deals that were that kind of product. And it gave us the chance to look around and say, what else could we be doing that's contrarian? That's different than what everybody else is doing. I call it an uncommon offer, call it contrarian, call it niche. However, you want to describe it. We just wanted to be where everybody else was not, one. And two, we wanted to be serving units into a marketplace that was generally undersupplied. Like the opposite of oversupply. So, in my background, I worked for some early companies that worked in the affordable housing space, building affordable housing apartments. I worked for other companies that did just straight ahead and luxury multifamily. So, we started to think about the idea of a middle-market product, or middle-income housing, workforce housing. You can describe it in different ways. And in fact, about three years ago, we basically had sold off all of our assets and we went full-tilt into the production of what we now call urban townhouse or UTH for short. UTH is a privately financed or privately capitalized workforce housing rental model. So, what does that mean? So, we use private capital. We're not subject to government subsidy, which truly affordable housing normally would utilize or does utilize even to today.
But that's always a finite source, never enough government money to supply enough units to satisfy the demand for low-income families. In fact, in Southern California harborage joint center for housing studies came up with a statistic of a million-unit shortfall in that marketplace and the five counties that make up Soquel, million units, M.C. Like it will never happen. Like realistically, it would take a long, long time to do that. So that's a constraint, right? And a lot of good developers in that space. But, just for us, that was in the model that we were necessarily going to look for in this new offer. On the other end of this side, you got your luxury, these podium buildings, lots of capital to be put into the marketplace, assuming there's good demand for the units, and it can supply yield to capital. Virtually unlimited amount of capital, not literally unlimited but as long as you have good viably underwritten deals and demand characteristics then there usually will be capital available.
So, our idea was can we pair those two together? Could we come up with a model that uses the access to the private capital markets, but yet serve a portion of the population that has a need for housing that's being underserved? And so basically, we arrived at serving urban working-class families. So, medium to large families, let's say four to eight people in a family group. And as we started to develop the UTH product to serve these families, we sort of arrived at a really interesting dynamic in these families that really has given us now the confidence to really go fully into this model. Like we're only doing this product type and now we're holding all of the projects that we raise capital for and develop. We're holding them forever long term 10 years, minimally really in perpetuity, if we can arrange the capital structures, over the near and long terms to do that. And so really these families are already here and they're in most major urban Metro markets. They're just not having anybody in the development park marketplace serve a housing type that's coherent with their lifestyle.
So, typically a family would rent a house, if they're renters and we only do rental product, by the way, just to specify. If you're a renter family, you really either looking at renting a house, if you have a large family, but typically in the markets that we operate in, house rentals are much too expensive for them to afford, right? Like if you needed four or five bedrooms, which is the type of product that we developed, then you’re usually limited to houses. So, our product is delivering a five-bedroom, four-bath, three-story townhouse rental unit. It's in an attached format, so it's not single-family.
Although single-family rental today is a very viable model. Ours is really thinking about like an attached single-family rental, but it's not single-family, it's multi-housing. And we do this in a three-story townhome format, garage on the ground floor, bedroom, bathroom on the ground floor to make it multigenerational. Because these families always live multi-generationally as a natural way of living for them. And then, we have five bedrooms, four bathrooms, and in the rest of the unit, so it lives like a house. In fact, we sort of say, it's a rental product that's purposely built and designed to rent but lives like a home.
If you had a preference as a family, you would always live in a unit that made it feel as much as possible that they'll live in a house. I think any family would prefer to have a backyard and a front yard and a white picket fence and a house like the American dream, although, in a rental format, we're serving as much of those dynamics and characteristics as we can, but balancing out what the economic reality of land costs, bill costs, financing soft costs that we need to pay for in the development model.
And we're now basically several projects into that model in the last three years. Finished our demonstration phase, which was an early set of projects to prove the model was viable, which we've done that. Most projects in that demonstration phase sold. Now we've converted into, what I call, the production phase. And we're now expanding in volume and number of projects throughout Southern California to now look, to develop somewhere around 500 units a year in the California marketplace. And then beyond that in the next couple of years, look to expand to markets like San Diego and the Bay area. And then I think there's a long-term future story for this and almost any high cost major urban metro market. So, I think anything West coast or East coast. And we did that purposely just to build the model. I think that sometimes the development community is known for being really aggressive and you have to be an aggressive personality as an entrepreneur to be in this business, not for the faint of heart. But after you do it for a really long time, as we have, you just figured out ways to build models, and be disciplined, and building the systems, and the practices, and the staff, and team so that you start to get better and better at it. Big projects get bigger. You sort of practice on the small projects like, “Hey, we could make that mistake” and it's not going to take the company out. Some lessons learned from 2008, by the way. So, we're being very purposeful in our growth cycle, but we're really at the point now where we're going to, I think, turn a very significant inflection point over the next several months. We're going to pair up with some capital providers that will give us the capability to now get into this larger expansion story.
M.C.Laubscher: Will there eventually be opportunities for other investors to partner in something like this with you? What is that model? You said raising capital from different sources.
Scott Choppin: Yes. Great question. Thank you for that. So, we actually raise capital from high net worth families, high net worth individuals, family offices. So, there's certainly the availability of opportunities now. In fact, one of the strategies that we've taken very recently, given the sort of abrupt change of the coronavirus pandemic as we've actually sort of tightened up our geographic operations in the near term. Let's say over the next year or two, we were looking at farther out markets geographically, but we actually tightened that up, brought it closer to home, and then we're going to execute now on several sorts of small and midsize projects. We know the model works, in fact, it's accelerating in this environment. It's sort of like what you and I talked about a little bit. Our product because we're housing families that live multi-generationally, we are actually the beneficiary of those people that are in single or households who, unfortunately, lose their job or become underemployed. Well, what do they do? They move home or they get roommates. And so, our housing type of five-bedroom, four-bath actually is the receiving beneficiary from a housing model of those changes, right? Some, boomerang kid moves home. Parents need a bigger house. They start to look at our units as a place for them to do what we call economic sharing, which is sharing incomes and expenses now across a larger set of earners in a household, what we call them multi-household.
So, to answer your question, we’re raising capital regularly. So, in the end, we'll give our contact information, but we're releasing deals almost now monthly. And in fact, we'll have probably three or four projects over the next several months that we'd be looking to raise capital from individual investors. I think very much in fitting with what the market sees now. Obviously, it's a new construction model that we do raise capital on a 10-year hold with any investors that we talked to now. But the platform really is for us to expand into other markets and, and raise our profile here in Southern California. But we'll always continue to offer our projects to high net worth families, individuals, and family offices. That's because we're firm believers in having the broadest networks of capital. And I think our offers are a great offer for production of yield, M.C., but also, it's got a really great social benefit story, right? I mean, providing capital to middle-income families to help them reduce their housing costs is a phenomenal story. We’re so enthusiastic about it, just from that social standpoint that we'll continue to offer to anybody who's interested in it. And to give them the chance to invest in this great product
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M.C.Laubscher: Fantastic. One habit I've observed from wealthy and successful people is they're always studying and learning new things. What are you studying right now?
Scott Choppin: So, yes. Great question, I read a ton. I have newsreaders where I have search terms that feed into my inbox and some are regular, just trackers of the media. One of the ways that I track the economy is to track industry, magazines, and articles like that. I read a ton, but the main learning I've been doing actually, the last several years, since 2012, is I actually studied with the group called the Aji network. They're based in the Bay area. And they are a group of people that get together led by a guy named Toby Hecht, who was the founder of Aji network to really drill down deeply into learning how to be better business people. I call it strategic knowledge working from fundamentals, right? Like fundamental economic principles, laws of mechanics, like we've talked about today, about tracking economic trends, about social trends, but all sort of wrapped up in this idea of technology as a driver of change. And even we talk about in the Aji network about the fourth industrial revolution that we're in now, which is the use of computers and the internet, and how to operate from fundamental strategic knowledge and principles that allow us to be flexible and dynamic and competitive and strategic in an environment that's changing very, very rapidly, right?
So, I referenced it earlier today, just the adoption of the use of technology like Zoom, has moved forward with exceptional speed, much faster than I think any of us anticipated. So, when those kinds of very rapid act changes take place when you're learning from a fundamental set of principles about business, about economics, about social interaction, about technology, that makes you much more competitive and able to adjust and make new offers when things have changed very rapidly. So, even the idea of UTH, of creating innovation of housing to serve an under-supplied market. That fundamentally, the idea of innovating into a space that's not competed for, to producing great value, that's uncommon. That comes from my learning with Aji. And so, it informs my capability to act differently. I mean, at the end of the day, M.C., we have to be of great value to our investors and great value to the renters and our product. And we need to move in ways that produce what we call margin utility in others. What is that thing that you do that makes your product extra valuable or unique in the marketplace or scarce relative to everything else that investors can look at? And so, the idea of pairing workforce housing with private capital came from my thinking that, really, I learned with Toby and it's probably 200 people that work actively every day, growing all the time. And so, we work together in this group and with Toby and the people who run the Aji network. So, for me, that's one specific example and there are many different examples out in the marketplace of people to study and follow, but this one has been probably the most powerful learning that I've ever produced in my career.
M.C.Laubscher: Great. And I've heard actually of that and was looking into that online too. There's some fascinating stuff there. So, appreciate you sharing that. Now a core message on our show is to leave our families, communities, and the world better than we found it by passing down a mindset, values, and principles to future generations, not just money. So, if you cannot pass on any money to future generations, and we’re only allowed to pass on three principles to them to build wealth and achieve happiness and success what would they be?
Scott Choppin: So, one of them is, continuous, competitive learning. Like back to this rapidly changing environment, you really have to always come from the standpoint that there's never a completion in your learning. Now, I think probably most of the listeners of your podcast probably naturally gravitate that way from our discussions today. I know you're that way also, but I think in our culture, there's a certain thought that school, when you finish it, whether it be high school or college, you're sort of done and really, you're never done. And I'm sure you're going to agree with this. So, continuous learning, but also competitive learning. And what I mean by that is basically, if you think about the global environment we live in today, the internet and computers, I mean, you can learn anything at all that you really want. If you go on YouTube or you go on Khan Academy or whatever source you might have, there is almost nothing today that you can't get on your computer, type in a search term, and have almost the best of the best in the entire world serving up learning. And so those are the people that we compete with, right? If we're going to be effective entrepreneurs and business people, then we have to be learning the best from the best all the time. So continuous competitive learning practices.
I would say the other one would be to operate around a philosophy of what I call, care, and competitiveness. And this is actually an Aji thing. So, a philosophy of care is that in business and our personal lives, how do we take care of people in a way that makes us valuable in the marketplace and vice versa. Like how do we have people around us that take care of us in a way that helps us, and in that business really is that the interrelation and trade of that help or care. I think fundamentally as I've gotten better at being a business person, entrepreneur, and real estate developer, I would point predominantly to improving networks of capability. In other words, the people around me, people I learn with, the people that I transact with, people that are professional colleagues, the people that I learned with, networks of discursive help. The better I am at attracting those high performers to my network, the better I'm able to be helped. But I have to be good help to them. Maybe that is, I pay them a lot of money to provide knowledge and information help in return. But as I've looked at ever-improving that network of capability, it only allows me to now be better and better and better at it, which means I can be more productive and profitable, which means I have more capital to get more good help. But also, a philosophy of competitiveness is we're always competing, right? We're competing on a global scale now.
The most rapidly changing global marketplace in human history based on the availability of social media, and the internet, and the use of computers to coordinate and cooperate that you really have to be good at competing now on a global scale. It's not just the person in your neighborhood or your city that you compete with. It's now the person who's in China or India, or anywhere overseas that can make that offer to the marketplace. You are now competing with that person. So, you really have to hold both, like how to take great care and get good care and return and how to compete really effectively and strategically in this new and rapidly changing environment. And then the last one, I would think about a philosophy of taking care of your family. And that's going to be different for everybody, not everybody's going to have that classic family, but really to orient for the meaning of why we do things. Like why are we in business? Why do I work every day? You know, why do you do this podcast? Really, for me, ultimately it comes back to taking care of my family. I have to take care of myself too, but, from an existential standpoint, like why do I exist? What am I here to do? Having my family's given the deepest meaning that I've ever had in my life. In fact, I say all the time, M.C., that my family, my wife, and my kids, -- I have three kids, -- are the greatest thing that I've ever accomplished. So, when I hold that, why do I do this? It transcends making money. Now, I need to make money too, mind you, because guess what, the best way to take care of my family is to produce profitable projects and a profitable business, right? But it really gives the deepest meaning. So, I would just encourage people to reflect in their life. What is it for them that gives them that meaning that's beyond just making profits? Because at the end of the day, the purpose for which we work existentially, it gives us the most energy, the most passion, the most drive, the deepest meaning for which we do this every day. Because it's not easy. Being an entrepreneur, you got to love what you do, but you got to have a deeper meaning. So, I would say, taking care of my family and having that be for other people, how they take care of whoever is important to them, be a real focus.
M.C.Laubscher: Absolutely. Thank you so much for sharing that. Scott, where can folks learn more about you? Where can they follow you? And where can they stay informed of all of the projects that you're involved with?
Scott Choppin: Thank you. So, I would encourage people to go to our website. It's www.urbanpacific.com. First thing you should do. There's a red sign up button on every page, sign up for our email list. Every Saturday we put out an e-blast and it's predominantly revolving around these trends that we talked about today, M.C. So, observations in the marketplace, articles that we found, our own observation, and thinking about market trends. Every once in a while, we'll plug one of our projects and one of our capital raises in there. So that's mixed in, but we'll really focus on delivering a lot of knowledge and value in these Saturday emails. People can get ahold of me if they go to the contact page of the website, my personal email, and my cell number on there, people are welcome to reach out. I prefer via text. People can text me; email is going to be best. I have a whole team around me that helped me facilitate these calls, setting up calls and meetings. People can inquire about capital raise, new opportunities that we're making. And then the other thing I would encourage people to do, go find me on LinkedIn. I'm under Scott Choppin and we've got a great YouTube channel. Also, on our website, we have an investor education section, which I'd encourage people to go into there. Tons of content, video, we put our podcasts that we’re on, there. A lot of articles, a lot of educational articles about multifamily investing, how to assess sponsors, how to underwrite deals, new market trends. Really trying to be just a huge offer of help and value to the investment communities. Just as part of what we do daily, we do this for ourselves. So, why not share out to folks that are looking to accomplish the same things.
M.C.Laubscher: Awesome. Well, thank you so much for coming on the show and sharing your journey and your knowledge and providing so much value for all of my listeners and my viewers
Scott Choppin: M.C., so glad to be here. Appreciate the invite.
M.C.Laubscher: That is another episode of the Cashflow Ninja. You can get all of our resources and access all of our power shows at cashflowninja.com. Again, that's cashflowninja.com. I've interviewed over 600 amazing cashflow ninjas, such as Scott. You can check out all of the episodes at cashflowninja.com. I thank you so much for spending your most valuable resource, again with me, your time. And I look forward to our next episode and everyone joining us until then, live infinitely.
Music: [46:35]
Disclaimer: This presentation is for educational and informational purposes only. The information being presented and considered does not consider your particular financial objectives or situation. And it does not make personalized recommendations. This material is not intended to replace the advice of a qualified tax and legal advisor or other qualified professionals. And you should not use the information in place of a customized consultation with a licensed professional regarding your specific personal financial objectives, situation, and needs. We believe the information provided is reliable, but we do not guarantee its accuracy, timeliness, or completeness.
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