 Welcome to finding your piece of the rock on Think Tech Hawaii. I'm your host, Abe Lee. I have been a licensed real estate agent since 1973. I'm the owner of Century 21 iProperies Hawaii and work with close to 100 wonderful agents in real estate sales. I started Abe Lee seminars in 1980. I have taught over 10,000 students to get their real estate licenses and have taught continuing education classes or licensees to renew their licenses every two years. Our show is dedicated to helping buyers and sellers understand a process involved in a real estate transaction. Our special guests will talk about legal issues, escrow, title, getting a loan, surveys, home inspection, insurance, contracts, rules and trust, and much, much more. But today we have a super duper guest, a friend of mine that I've known for over 40 years, I think, and his name is Peter Savio. If you haven't heard of Peter, you have been in outer space. He said, Peter, thank you so much for being with us today. Oh, thank you for having me, Abe. Great. So I'm going to be, you're going to be telling us a little bit about your background. So tell us how, where you grew up, your family, your business, et cetera. Okay. Well, I'm a local boy. I was born in Hilo, raised on Oahu. Went to St. Louis High School, University of Hawaii, got into real estate at a very young age, helping my mom who was in real estate. So I kind of picked it up through osmosis. And then I decided to go into real estate as a profession. Failed miserably my first year. Had open houses every Sunday, couldn't sell a house, couldn't do anything. I worked every day. I worked 10 hours a day. Did everything you're supposed to do and sold nothing. And so at the end of the year, I went to my mom who was my broker and I said, Mary, I'm just not a good salesman, not for me. I'm going to go back and try something else. And my mom and her brilliant said, you always wanted to be a teacher. And what you're trying to do is be a salesman. Don't be a salesman, be a teacher. Teach people about real estate. And I thought, okay, I can do that. And she says, the problem is if you're a salesman, you don't believe in salesmen. You don't want to be forced to something. So you don't do good at it. Well, I tried it. My first open house I sold. Second open house I sold. Third open house I sold. Fourth open house I sold. Then at the sales meeting, one of the agents said it's never been done before. And I said, really? You're not supposed to sell them at the open house? Never sold another house at open house. But, and of course the rest is history. I did really well after that. But it was all my image of what a salesman was. And when I was teaching people about real estate, why they should buy, the importance of buy, I was able to convince them because I was educating them. I felt better about what I did. And I think they picked up. So then I went into real estate. And I have come from a family of five kids. And I'm the only one in real estate. My other brothers and sisters all own their own companies. They're all considered leaders in whatever field they're in. We all live in Hawaii. None of us had to leave. And it just shows you there's a lot of opportunity if you understand business and you're willing to work at it. You can actually thrive, even though our economy is expensive and everything else, but you can keep up with it. So Peter, I understand that you were a real estate investor at a really young age. How old were you? I bought my first property at 15 years old. And it was money I saved from all of my odd jobs. As a kid, I had a newspaper route. I used to clean yards, paint houses, do anything to earn extra money. And again, I was a saver, so I saved it. So my mother was selling the second or third condo in Honolulu. And I had a chance to buy a one bedroom unit for $15,000. So you needed 3,000 down payment. So I put up a thousand five and my older sister put up a thousand five. She had just graduated from college and was student teaching. So we had a job at income. I didn't count because I was too young. So we went ahead and bought the unit and did very well with it. But it's interesting because by the time I was 20, I probably had bought an interest in three or four units with my brothers and sisters. And every time one of us got to 18 or 19 and we had a job or we were earning money, it made it easier to qualify. And then once, I don't know when we were in, I'm probably around 23, 24, we got together one night and we said, okay, let's take 100% ownership of units. So I'd say I give up my one third of this unit if you give me your 25% of that unit and we horse trade it. So we all owned each units. And then we kind of went forward from there selling and reinvesting. So all of us started as teenagers. Terrific. So now Peter, how did you get into real estate development? That's a totally different field. Yeah, out of desperation. In 1980, I decided to start my own real estate company. So again, I released the space, got some agents and of course that's when interest rates, the economy collapsed. Interest rates went up to 15, 18%. You couldn't sell anything. And I'm sitting in my office thinking, this is crazy. How am I gonna pay the rent? My wife's pregnant with our first child. Why did I start my own company now? It's the worst possible time. And I said, well, I gotta figure out how to be able to sell in this market. And I thought, you know, look at the apartment buildings dropped in value because they're all tied to income. So a building that was maybe 2 million might be on the market for 1 million and nobody was buying it because nobody could finance it. And I thought, wow, I could buy that building, convert it to a condo and sell it for let's say 40,000 a unit and the market was 60. So it was under market. And I thought, wow, that makes up for the higher interest. So that's what I tried. Of course I didn't have the money so I had to find a buyer that would take no money down or a seller that would take no money down or a seller who was really desperate because he was gonna lose it to foreclosure. And I found a 40 unit building in Waipahu. Really used to be officer's quarter. So it was a really nice building but needed a little bit of tender loving care. And I put it on the market for 42,000. Abe was a complete disaster. Couldn't sell a single unit. I couldn't sell a single unit. And I called up people and I said, hey, look it, it's a really good deal. You know, you should go out and look it. Nobody would look at it. And they said, Peter, Waipahu, 42,000. Too cheap, gotta be junk. Says right now should be 60,000 in Waipahu. And even those are not good units. I said, no, mine are better and they're only 42. Couldn't sell them. Raised the price to 54,000. Sold out in a week. Then after- Yeah, crazy. White people do that. It was too cheap, was too low. Then after they bought it, I told them, okay, you bought it for 54. I'm only gonna charge you 42. What? I held true. My concept is one of a discounter to sell at the lowest possible price. And so I held true to that. And because of that, I ended up doing, you know, like one project after another. But even those I considered a failure because the majority of my buyers were investors. And I was after the owner-occupant, the guy getting started. So again, I had to decide, do I continue? Do I quit? Do I change what I'm doing? And I'm sitting there thinking, okay, why isn't the tenant buying? And I realized they don't have a clue about real estate. They don't understand it. They don't think they can buy. They don't understand the purposes. So I said, okay, but take my mom's advice. I'm gonna educate them. So on my projects, I started holding a class about real estate, why you wanna buy, why it's important, how wealth's created, the tax advantages. So I had a class, I called it the seven or eight wealth creators in real estate, which is sort of a summary of how you make money in real estate, in a good market, a bad market. So the next project, when I went out, almost every tenant bought. It was really interesting. And that was the fifth project I did, which was Keikoa Gardens in Kalihi. But again, the price was pretty much below market. They liked that, but they understood the importance of owning, and so they bought. So we ended up selling almost all to owner-occupants. And since then, I've probably sold six, 7,000 units to owner-occupants. I've given away probably $300 million in profit for first-time buyers. This year, I'm gonna probably give away another 200 million in profit in the form of lower prices. I'm doing a whole bunch of projects right now, but it's not about money with me. It's about helping local guys get into ownership. Cause if you don't own, you cannot live in Hawaii. You cannot thrive in Hawaii. You will not survive in Hawaii. We have to own real estate. So now, Peter, I've known you since we both have black hair or maybe brown hair and me, black hair. And so I followed your career cause you're the big-time developer and I'm the small-time developer. It'd be nice about my weight now, just cause you're a skittier than me. Don't call me big. So I remember one of the projects you did. You gave several financing or a second mortgage so the buyers could come up with almost no doubt. How did that work? That was part of the problem when I first started. Tenants did not have a down payment. Now I want you to realize this is not rocket science. We talk about Hawaiians homes. We talk about affordable housing today. And to do those items or to do those projects and things, you have to have a buyer with 60, 70, 80, $100,000. Nobody has that kind of down payment. So back then it was maybe 8,000 for my projects cause they were priced at 40, 60, but the people did not have the 10 or 12,000. So I thought, well, okay, if you don't have the money, I'll finance you. So I loan them the down payment. They go to the bank and buy, right? They get a loan from the buyer. And at first the lenders were a little troubled with it, but my point was the unit's worth 60. I'm selling it for 40. They really have 20,000 equity, right? And I'm gonna give these 10,000 behind. So it's a relatively safe investment for you cause you're only loaning about 50%. The banks gave in because of what I was doing. The interesting thing is American saving was my first lender and they did it, the project closed and they ended up winning an award from the Federal Reserve because it was the first project in Hawaii that actually qualified as affordable housing. And so they ended up getting a $2 million grant from the federal government on a loan to me, I think for three or four million. So they were thrilled to death. Then the Federal Reserve started sending out teams every time I did a project. The Federal Reserve sent the team out cause they're scratching their head. How are you guys selling at these low prices? How are you selling with no money down? How are people able to do this? And for the first, maybe 10 years, never had a default on the second mortgages. The people were so appreciative. And I had told them, if you run into trouble, pay the mortgage, pay the maintenance fee, don't pay me. So that worked fine. But in the nineties, we had a slump. And of course, everyone who had mortgages with me couldn't pay. And it actually forced me to go into bankruptcy. Oh no. So I lost everything. But I said, well, hey, easy come, easy go. And I was back doing projects a year later and just continued. A little smarter, I don't do as much financing as I used to. It really, Abe, we have a housing crisis. Absolutely can be solved. It's a 10-year solution. We can create affordable housing. The trouble is our government doesn't have the commitment. They don't understand real estate. They've been solving the problem for 60 years and they failed. And it's because they're doing the same old, same old. At some point, they gotta sit there and say, well, it didn't work 60 years ago. It didn't work 30 years ago. Why is it gonna work today, right? Change what you're doing. Understand the market, but it can be solved. So Peter, that's a great entree to our next show that we're gonna do, because you have the secrets of how to make money in real estate by investing for your own home first. So we're gonna ask you to hold those secrets till the next show, okay? But... Absolutely. Tell us some of the projects you've done. I know you did Waipahu. Yeah. And then you did other projects. Well, I've done, I don't know, 40 or 50 condo conversions, somewhere around 6,000 units. And they went from a small 18-unit building in Kalihi, which is the smallest I did, to I think Queen Emma Gardens or Century Park Plaza, which were 590, 600 units in one building. So I've done actually, when I say 18 is actually the smallest I did it, it's true, I only did one, because you were there, I didn't want to take your business away. But I did it for a friend. No one wanted to do it, because it was a tough area of Kalihi. But I thought, nah, I'll do it, I like Kalihi. So that was the smallest one. But so my projects have pretty much all been from Waipahu to Kaimuki, mostly this side of the island. I've done a couple on Maui. It's really finding the building that will work. I love the bigger projects, but there's not a lot of those left. So my projects now tend to be in the 40 to 100 unit, if I can find the building harder and harder to find. So I'm shifting gears and starting to do ag condos now, just because finding residential ones already built is really hard. So Peter, you've been in the news recently about these agricultural condominiums in Wailua. Tell us the background and how you got that one and how you're structuring the deal. It's actually again kind of funny, I stumble into these things, proof that the Lord guides you and you just got to open up your eyes to see it. But Andy Albano was selling the land for Dole. He was their broker and he called me one day, I said, Peter, I got a parcel that we put the sugarcane workers on when they closed the mill and they've been farming this land for like 30, 40 years. Dole wants to sell the land and they don't know how to buy it. They don't think they can afford to buy it. And he hates to see these guys lose the farm. He says, for a lot of them, he felt that's what kept them going because they were in their 70s and 80s. And some of them had brought their kids into help. So I said, okay, I'll go talk to them. So I went out and talked to them and I said, okay, guys, you can buy the land and it's a reasonable number. Okay, because they were gonna sell, they were selling the land for let's say, 100,000 an acre, but they could buy it for 50, 60,000. So I thought, okay, it's a doable number. I explained how to do it. And they go, well, but you cannot finance ag land. Nobody will finance it unless you can do a house. You gotta build a house. No, you cannot build a house in this situation. So I said, well, if we can't do a house, let's do a plantation camp. Okay, so we started off when we were gonna do like a fee conversion from a leasehold co-op farm to a fee simple co-op. And then because a co-op's not acceptable in Hawaii, I said, let's go make it a condo. And then from the condo, we said, let's add a plantation camp. So we kind of went through all these steps. We did it, went to market, sold out. Then we had trouble, or I was concerned about the financing because Doe wanted to close right away. 90% of the people paid cash. It's interesting because I always thought farmers didn't make money. And they said, oh, no, no, Peter, you can make money farming one, two acres, right? And I said, well, I thought you had to be five, 10 acres to farm. And they're going, no, no. If you five, 10 acres, you're not a farmer. You're a businessman who farms because you got to have employees, accountants, attorneys. You got to do payroll. You got all these other issues. He says, we're farmers. We do the work ourselves. One or two acres is perfect size. They can make $200,000 farming on a small property like that because they don't have all the other cost. Open my eyes up completely because this state has always taken the opinion that to do farming, you had to have 10, 20 acres or more. So all the state programs for guys who want to farm big time, and yet the demand isn't the other end. The two, the one, the three, the four acre, guys who want to farm. And they're hard workers. They're the nicest people you'll ever meet. I mean, it's been such a pleasure working with them. And so we went to market. We sold out in one day. And we're on our fourth project now. And the big problem is financing. Okay, so how did you get the homes? Do they have a home on those lots or just farmland? It's only farmland and we're only selling farmland. We're talking to them saying, we're going to set aside like 20 acres and we're going to go into the city and the state and say, will you allow a plantation camp? So every farmer will have a house lot. Now the beauty of this is the house lot will end up costing about $150,000 or a 5,000 square foot lot. That lot is probably worth $400,000, $500,000. So again, we're selling it at cost. So they get a house lot for $150,000, puts them in a better position. They have their one or two acres of farmland and then they can build a house for $200,000 or $300,000. And so they got a house for $300,000, $400,000 because the land was so cheap. So it's actually one of the solutions to help solve our farming crisis where we can actually grow our own crops so we can be self-reliant on our own farmers. And at the same time solve the housing issue because it's so easy to add a plantation camp and you don't have all of the sidewalks and gutters and things because it's country. So you can do the berms and just the grass sidewalks and stuff. So it actually works out really well for the buyers. So do you have any ag land with homes on it or are you still doing the model of no home and then you're gonna try and do a plantation camp? I won't do ag land that has homes on it. To me, that's not ag land, that's an estate. So my projects are all plantation camp because it tends to discourage the mainland buyer. It discourages the foreign buyer. It really appeals to the local guy because he's there to farm. He's happy with a 5,000 square foot lot. He's happy to own a lot in the house. And a lot of our farmers already own the house. So they're gonna end up with a rental unit. They can rent to their kids or to other people. So if our projects continue to go the way they're going we'll probably end up building if the city approves three to 4,000 affordable unit that will go into both owner as well as some of them owners will rent those out. But just by solving our ag crisis we're helping to solve the housing crisis. And the best part is we're building the homes out in that Waipahu, Wailua, from Waipahu to Wailua, that area of the island. Now, we don't have much time left but you have this photovoltaic agricultural condo business. Tell us a little bit about that in the remaining minutes we have. Okay, basically photovoltaic in Hawaii is a program for the wealthy. You have to own a house to put it on your roof. And I always thought that was unfair because 60, 70% of our people rent or if they own they live in a condo and you don't have enough roof to do photovoltaic. So the very people who need photovoltaic can't get it. Our state made a big mistake in allowing all these photovoltaic farms to be owned by mainland investors. So all the benefits of photovoltaic leave the state. All that money leaves the state. So when they offered community solar, I thought, oh, this is the solution. Community solar allows us to sell it to local renters, to people who live in condos and I'm gonna make it a condominium so you actually buy your five panels, 10 panels, 20 panels and it doesn't matter where you live, the electric company will give you a credit on your bill based on how much electricity the panels generate. If you move your tenant and move, the credit goes with you. If you're an owner and sell, you can take it with to your next house or you can sell it to the guy who bought your apartment because you're going to the mainland. So it solves a huge cost of living issue. It allows every business leasehold, every tenant who's renting, everyone in a condo, people who live in areas you cannot do photovoltaic or people who don't wanna put it on their roof, a chance to buy. And it also, like I say, I hope in the future, they will only allow photovoltaic farms that are community solar because then all of the financial benefits stay in the state. Right now we're shipping all the financial benefits to the mainland owners and a lot of them are REITs so they don't even pay taxes. So to me, it was a big mistake. We created a great program but our state gave the financial benefits to the mainland guys and we suffer. We pay the higher electricity, we don't get all the benefits. I'm sure that we're shipping out $500 million in credits or in money to mainland every year that could have stayed in this state, could have been invested in this state, could have reduced our cost of living. So again, we made a mistake in a great program and it had a great purpose but we gave away the financial benefits. Amazing. Peter, do you have a sleep at night? I dream of these things. Okay. I know that I've been to a lot where you planted hundreds of thousands of plants. So we're gonna talk about that the next time we meet. Okay. Yeah. So folks, stay tuned because you're gonna find out that Peter has many, many interesting ideas and some of these condominiums are really crazy like the bunkers in Lake LA and made a condominium. Okay? Right. He's the first one that did that. So I'm really excited about doing show two and three and maybe even four because this guy is a wealth of knowledge and he's very creative and as you can tell, he's very giving because he gave the second mortgage to people and they didn't pay him and he declared bankruptcy because the people he helped couldn't pay him back. And I remember that time when I met Peter but hey, he's bounced back and he's doing great. So Peter, I cannot tell you. Thank you so much for being with us. And as I mentioned before, Peter's a big time developer. I'm the little bitty guy. I do the two units, four units, six units and Peter's doing the Queen Emma stuff like four, 500 units and whatever but I have great respect for Peter on what he's done over the years. So folks, these shows are archived at Think Tech, Hawaii. So please tell your friends to watch the show and look for future shows with Peter Savio because it's gonna be really interesting. So if you are interested about real estate school, go to ableyseminars.com and you'll see our school schedule and how we teach for pre-licensing. And by the way, Peter's one of my students because he takes continuing education and it's been fun to have him in class because he adds spice to the classes. So Peter, thank you so much, really appreciate you. No, thank you for everything you do. Okay, well folks, we'll see you in the next show. Okay, Think Tech, Hawaii, please watch these shows and look for Peter on Think Tech, Hawaii. Okay, aloha. Thank you so much for watching Think Tech, Hawaii. If you like what we do, please click the like and subscribe button on YouTube. You can also follow us on Facebook, Instagram, and LinkedIn. Check out our website, thinktechawaii.com. Mahalo.