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It Starts Here Podcast | Ep. 4: Dan Collins on Complex Estates

It Starts Here Podcast Ep. 4 | Dan Collins on Complex EstatesMH: Hello, I'm Mike Hackard. I'm the chair of Hackard Law, a law firm focusing on estate, trust, and elder financial abuse litigation in California's major urban areas. This is Hackard Law's podcast, It Starts Here. This is an August 2017 podcast featuring Dan Collins, a well experienced and unique fiduciary broker. We are going to discuss how trustees can fulfill their fiduciary duties in managing, leasing, financing, and disposition of real estate. Dan is very well qualified to speak to these issues. So, Dan, welcome.

DC: Well, thank you, Mike. And Mike, I would like to take a minute to acknowledge the fact that I received an advance copy of your book today. And before we get started, I wanted to spend a minute just sharing with the audience about what you're doing with this book.

MH: Well, the book has been a lot of fun to put together this year. And elder financial abuse is one of the biggest issues of our times. About 10,000 people are becoming baby boomers or becoming 65 every day. So concurrent with all of that, there is a lot of elder financial abuse. So, I wrote the book, The Wolf at the Door, about elder financial abuse. And it tells stories, it tells the law, it gives advice as to how people might go about as to preventing elder financial abuse, or if they suspect that, how to investigate it and get their family and the authorities involved. So, I look forward to it actually coming out in early autumn, and you'll get one of the original books as it comes out then as well. So thank you.

DC: Well, congratulations and I'm looking forward to it and I think you're gonna knock it out of the park with this. It's a very good topic and it's one that, as you pointed out, is very relevant in today's world about the aging population.

MH: Yeah, well, thank you. I'm excited that you're here, we're friends, we've worked together, and I've seen your work. But let's start with where were you born?

DC: Well, I was actually born in Cambridge, England. My father was a flight surgeon with the Air Force at the time and was stationed over there so that's where I was born and lived the first two and a half years of my life.

MH: So, when you came over did you have a thick English baby accent?

DC: You know what, I actually did very much have an English accent. I used to call everybody "Duck".

MH: So you came over, and where did your family settle?

DC: We settled into the Northwest in Portland, Oregon. And I lived in Portland until the age of 12, and then we moved down to northern California, outside Stanford University. Palo Alto Valley was the name of the community that we lived in. And I went to junior high and high school there, and graduated, and then attended UC Berkeley, where I received my undergraduate degree.

MH: Okay, so what year was that?

DC: That was in 1980, and then after graduating from college, I joined the United States Marine Corps. I attended the Officer Candidate School and was commissioned to 2nd lieutenant.

MH: Excellent, and when you were a marine, where were you based?

DC: I was stationed at Camp Lejeune. I was part of a Marine Expeditionary Force.

MH: Okay, thanks. So, after the Marine Corps, what did you do?

DC: Well, my intent after getting out of the military was to go into real estate. I grew up in real estate; my mother was a managing broker in the San Francisco Bay Area for many years. And I was studying for my real estate broker's license, actually at one of the libraries at UC Berkeley. And I bumped into a former professor of mine that I had taken a real estate development course from while I was an undergrad. His name was Eichler. He was one of the 3 sons of Joe Eichler, who built all of the Eichler homes in the Bay Area.

MH: Wow, of course, Eichler homes are iconic California homes.

DC: Yes.

MH: And they are becoming incredibly valuable over the years.

DC: You know, he was actually a very interesting guy and I actually remember his course probably better than many of the courses I took at Cal, because it was something that was... He just had such interesting stories about how they would do their development and punch the necessary tickets to get their continued funding from the lender. I really learned a lot and it really piqued my interest.

MH: Interesting. So where did you go after that?

DC: So, I actually ended up going to work for this fellow Ned Eichler, and my first job in the real estate was doing loan origination for commercial offices and for apartment complexes. This was in the early 80's when interest rates were really high. And we were doing second and 3rd trust deeds loans in addition to first trust deed loans. And the very first loan that I landed was a 3rd trust deed loan of $8.5 million on an apartment complex in Bryan County. So my first commission cheque in real estate was one of the bigger ones I still ever received.

MH: That would keep you in real estate.

DC: Yeah, that was the hook.

MH: Yeah. So, I know because we talked before, but you went on from there, where did you go?

DC: So after I left Ned Eichler, I actually was in business with a former high school friend of mine and we were actually developing live/work space in the city of Oakland. We would take functionally obsolete warehouses that people couldn't rent and we would take master leases on these buildings and then we would renovate them into live/work for visual artists. And when we started out in this industry we were actually Guerrilla Developers because we would do these improvements without benefit, zoning approval or building permits. But over time as we got about a dozen of these under our belt and started making some real money, we decided that we probably ought to look into joining the world of compliance, and we started actually doing our projects in the proper fashion by getting zoning approval and building approvals. And I actually worked on the citizen's advisory committee for the city of Oakland in developing planning and building guidelines for live/work space.

MH: Wow that's interesting, and I know you did for a fair amount of time and then the economy tanked again, of which it happens somewhat regularly. And that gave you a new incentive to go and do something else.

DC: Yeah in the early 90's when we had the downturn in the economy, at that time I actually took that opportunity to move to central Oregon, the city of Band, where I had always had a desire to live. And went into real estate brokerage there and I specialized in land development. And represented primarily residential developer in titling land for single family home projects. And then I also did a master plan community while I lived in the city of Band which was a lot of fun. And served on the citizen's advisory council for the master plan for the city of Band for their 20-year master plan.

MH: Wow.

DC: Hmm-mm.

MH: That's a lot of experience.

DC: Yeah.

MH: And of course I know it goes on from there. So, let's take the next step.

DC: Well, and then I ended up moving back to San Francisco in the late 90's and I was working for Blickman Turkus, which is a regional commercial real estate brokerage and I actually worked with a group of guys that specialized selling single tenant net lease properties all across the United States. And basically what we would do is we would sell stand-alone buildings like a Wal-Mart, or even a Walgreens, EVS, Fred Meyers, things of that nature. And I did that for about 2 and a half years and after being in land development where I was always in front of people and had interesting projects to work on, these were just kind of cookie cutter deals and I would sit in an office and just talk on the phone all day. so I started missing my land development opportunities and I had a client that I picked up when in San Francisco who had done a build-to-suit for GE Appliances in Upstate New York and he had a 450,000 square foot building up there that he had built for them and they out grew that and he built another building down in Baltimore for them 800,000 square feet and he needed to sell the 450,000 square foot building, so I was marketing that when GE Appliances actually approached this fellow and said they need still another facility at a million two hundred thousand square feet and I actually located the site where that facility was built in Harney County outside of Baltimore and that got hooked with this guy and I ended up moving here to Sacramento in 2002. And since then I've developed a lot of land and had some very interesting experiences in my professional career while being here.

MH: Wow. And I know that you did that for a long time and then we had another economic downturn.

DC: Yes.

MH: That most people remember around 2008. But that opened up some entirely new opportunities for you.

DC: Yeah, I actually had a partner here in Sacramento who had been a court appointed receiver starting in the early 80's and we discussed the receivership business quite a bit over a periods of years. And then when the downturn occurred in 2008, I actually went to work for Grubb and Ellis as a senior advisor for Grubb and Ellis for their distressed asset group. And I got involved with a group guys by the name of Donell down in Los Angeles, they own a family business that's an AMO designated commercial property management company. And the father and the two brothers are active. And one of the brothers, Steve Donell and I became pretty close and we started working together in 2009 and that's where I started cutting my teeth in the receivership world. And since that time I have handled quite a few cases, both with Steve and with other people. And it's a very interesting line of work; actually, it's something that I enjoy immensely.

MH: So, would you say that doing receivership work is really simple and easy?

DC: No actually I wouldn't, Mike. Doing receivership work is something like in the Marine Corps we used to prefer to checking things out with what we referred to as "recon by fire" where if you wanted to find out what was behind that bush you would simply pump a couple of rounds in there. And the receivership worlds is a lot like that, because what you are doing is you are stepping into a situation where a property is involved in litigation, typically it's a rents, profits and equity situation with the lender and there is some sort of level of default that's going on. But you know that because the litigation has been going for a period of time before a receiver is appointed, that the property is going to have a lot of issues. And when you step in to take over a property with a court order, it comes with some pretty draconian allowances if you will. I mean when you are a court appointed receiver you can, if you craft the order correctly, you can actually encumber a property. so, by way of example if you had a first trustee loan on an apartment complex and there was a lot of structural deficiencies or maybe code violations you could actually as a court appointed receiver go out and find a hard money lender that would loan you money to fix up that property and that loan would actually supersede the first trustee loan.

MH: That's fascinating.

DC: Yeah.

MH: Obviously that's a matter of law, I bet as you said you need to have that when you receive the order.

DC: Yes.

MH: Okay, that's interesting. So, I know that's just been an incredible amount of experience and interesting experience. You and I have come to know each other the last few years as the fact that our law firm does a lot of estate trusts and probate litigation as well as elder financial abuse. And often times trustee's executors or administrators are in great need of the help of someone who is widely experienced in real estate and accustomed to handling difficult issues. So I know what you have been doing but tell everybody else what you have been doing.

DC: Well in the world that you operate in which is trust litigation and the work that we do together, my role is to step in and I'm employed by the trustee or the administrator or the executor. And my role is to facilitate the trustee or the administrator processing the estate if you will as quickly as possible and in an orderly fashion. And usually, the cases that I get involved in obviously are gonna involve real property. And about 18% of probate trust and work of that nature involves income property. So the majority of it is single family homes, but there is still quite a bit of income property that's involved in trust and probate work also.

MH: And of course I've seen you do work in the income property area and I've dealt with enough of these trusts over the years that often times trustees are coming in many times to replace the original maker of the trust or the settler. And so they walk into a situation cold, basically, that may have a lot of income property with special lease arrangements or dilapidated properties that need to be fixed up. So, when something like that's handed to you, as it has been, what do you do?

DC: Well, I'm very good at stepping on to a property and being able to assess it when you've been doing for over three decades you tend to develop a sense and it's like what you and I were talking about earlier today; we were chatting about the fact that we have been doing what we have been doing for so long that we are able to just really identify patterns early in the process, and my goal is I need to bring that trustee or that administrator up to speed on the property. Because when you think about it, they are stepping into a situation where they are going to be wrapping up the affairs of somebody's life. And it wasn't their life and it wasn't the property that they managed and they are not familiar with it. So, my duty is to go in and assess that at a deeper level than most real estate brokers would so that I can get the trustee or the administrator up to speed. And give them good advice and they can execute that advice hopefully with good business practices.

MH: And I know that I've seen you do this where you're inspecting the physical premises, you are bringing in experts to take a look at what needs to be done, and you're looking at particular history, the premises' tax issues with regard to the premises' lease issues. It looks like you have a lot of things going on at once.

DC: Well, yeah and how I approach a property is a little different than most brokers typically brokers will go to look at the area, to look at the property and they'll provide an assessment based on those two identifying factors. When I look at a property, I look at it in terms of... I like to go and investigate the building permit history, I like to investigate the zoning history. You would be surprised at how many situations exist with property that really are not in compliance with local ordinances.

MH: That's interesting. Well, I know that we could go on from here and I'll ask you to come back another time because I know what you do is fascinating and is a terrific help to trustees which means ultimately to beneficiaries of trusts. So I thank you today.

DC: Well, thank you for having me.

MH: Yeah, so interesting to hear these things, that you were able to share them. So now I wanna go back and plug the book again. So I did write the book The Wolf at the Door. And anyone that would like a copy of the book can email me at [email protected] when the published version comes out in early autumn I'll send them a copy for free.

DC: Well, great and I understand that you're getting a lot of people to read the book and provide reviews for you. I wish you the best of luck with it, Mike.

MH: Yeah, thanks a lot, I appreciate it.

DC: Okay.

It Starts Here Podcast | Episode 4: Dan Collins on Complex Estates from Hackard Law on Vimeo.

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