YOUR DAILY REAL ESTATE INVESTMENT SHOW
July 12, 2022

All Things Self-Storage with Sergio Altomare

All Things Self-Storage with Sergio Altomare

In this episode of Cash Flow Pro, we talk with Sergio Altomare, Co-Founder, and CEO of HearthFire Capital. Sergio began working in real estate full-time in 2012 when he partnered with his wife, Corinn. They started by flipping houses and...


 

In this episode of Cash Flow Pro, we talk with Sergio Altomare, Co-Founder, and CEO of HearthFire Capital. Sergio began working in real estate full-time in 2012 when he partnered with his wife, Corinn. They started by flipping houses and rehabilitating properties and multi-family developments.

 

 

 By 2019, they decided to focus on self-storage because of its rapid growth in the market. Within eight years, Hearthfire Holdings has built a portfolio of more than $50M in assets under management and syndicated over $12M in assets, returning more than $2M in profit and 25 percent IRR to investors.

 

 

In this episode, we discuss:

  • Self-storage
  • The current market and concrete shortage
  • Temperature and climate control in self-storage facilities
  • What to consider for higher profitability in this asset class
  • Self-storage underwriting

 

 

Tune in on this episode to discover everything you want to know about self-storage real estate investments!

 

Find your flow,

Casey Brown

 

Resources mentioned in this podcast:

  1. https://hfirecapital.com/
  2. https://www.linkedin.com/in/sergio-altomare-7823294/
Transcript

Casey Brown  0:06  
Hey there and welcome to today's episode of cash flow pro your daily real estate investing podcast and YouTube channel. I am here today with Sergio helped me out Sergio automotive a See I knew it. I knew it was a stretch star in there but I didn't go with that. So anyway, Sergio is here today with is it Hearthfire holdings I'm sorry Sergio. I got so messed up on that on making sure I got that last name right that it just screwed my whole mind. Oh, my whole mindset up. So welcome today, sir. How are you?

Unknown Speaker  0:48  
I'm doing great, man. I'm doing great. Thanks for having me on Casey.

Casey Brown  0:51  
Absolutely. Sergio, we're so glad you're here. And we're so glad to learn about you and your business, and what you've got going on. And we always try to connect our listeners with a little bit of story. So if you don't mind, tell us a little bit about yourself, where you came from, and how you kind of got rolling along in the real estate business.

Unknown Speaker  1:10  
Ya know, I'd be happy to so you know, my my story is an interesting one as most are. I'm 46. Now, my my journey in real estate really started in 2007. I've, you know, I'm Philadelphia, born and raised. I grew up in the city, went to the public school systems there. I landed a job but the Federal Reserve got into it. So I was in, in tech for 22 years. started when I was 18. So I've been in I've been around a little while. So 1007 2007, I started to look at you know how to diversify and, you know, essentially, at that time was looking to move out of the house. So I bought a duplex from a buddy of mine. It wasn't zoned as a duplex long, hard lesson there. So we bought a prop and bought a property it was 2007 So you know what happened next. So I bought the property. I spent nights weekends renovating the unit I was gonna live in one unit ran out the other unit that went to that project didn't go all that well. But you know what that was, that was an education that I got from that. met my now wife, Corinne in 2012. She also was working at the Fed. We were looking she was looking to just buy a property shield her day job income, looking at multifamily bought she bought a multifamily property while we were just dating spent those nights and weekends renovating the unit that she was going to live in. Fast forward a couple years, bought few more properties then, you know, started to run out of capital for buying properties that we had access to right. I mean, I was in tech so I could figure out, you know, I knew how to I was always good at math, no Excel, no technology. So I was doing my own underwriting, we started doing our own property management with our properties. So got introduced to the concept of syndication from my my father in law, dove into some books, dove into bigger pockets, learn the space. I mean, some of those books are behind me. And from there, we started with just small property small multifamily is our first syndication deal was three other investors and it was a duplex. And you know, we didn't have a name we didn't, you know, we were trying to figure it out, and got that growing, syndicated a handful of other properties over the next few years. Fast forward to 2016, my wife quit her day job 2017 I quit my day job, our property management business was taken off, we started managing other people's properties even before that. My beautiful little girl, Stella was born in 2017, which, you know, anybody who has kids knows that that changes your your world in so many ways, including priorities and purpose. And, you know, we, from my days at the Fed, I know economic cycles, I know how the economy works, I know what to look for and 2017 2018 we knew that there was a market shift, recession coming, which should have happened around that time. But, you know, the Fed wouldn't let it happen. They still won't let it happen. But anyway, long story short, is, you know, we decided to pivot to self storage and we pivoted to self storage bought our first property in 2019. And we're actually looking to exit that first property, huge gains and now where we're sitting we got over $50 million in assets under management 12 facilities across three states. Got a rockstar team and has really taken taking properties down and running it like a true private equity firm.

Casey Brown  5:05  
Man that's awesome. I mean that's that's there's a lot of elements there that and a lot of your your backstory kind of matches mine you're our hair story is pretty close to the same and so we those little girl I was gonna say the little girls will make you lose it but obviously you know i I'm post a little girl your your little girls are still sore, your little girl is still at the age where I'm sure she's sweet and loves that and mine are not. So but having a daughter really changes a lot of perspective. It's one of those things that you just, I don't care, you could read 1000 books a day, for every day leading up to the day your first daughter's born and, and absolutely take everything you learned in those 1000 books a day and throw it away because none of it is ever going to match how that changes you and, and how that how that formulates your priorities. I had a son too. Don't get me wrong. And that was that was that was very that was just as amazing as as the girls being when it's been born. But those little girls have a way of changing everything. So anyway, congratulations. I know. You said she's what five now and so she doesn't know everything yet, but it is coming.

Unknown Speaker  6:27  
So and she she's pretty sharp. Now she she already tells us a lot of what she does know. So it's awesome. I like to say that I learned just as much much from her as I could possibly teach her.

Casey Brown  6:39  
The dang right you dang right? And then they teach you a lot of things. A lot of life lessons too. So things that capital raising won't teach us so anyhow. But sorry. So let's let's dive in a little bit on the Self Storage and what were your where your assets at now, you told me you said across several states? And then are you all doing like unmanned facilities or man facilities? What does that look like?

Unknown Speaker  7:07  
So, so our properties are in Pennsylvania, Indiana, and Illinois. And they're, I would say quasi manned. Meaning that we're we're all about economies of scale. You know, with my tech background, I learned pretty early on that self storage is takes a utilizing technology, you can scale and you can scale properties, utilizing the same back end platform. That's one of the areas that makes Self Storage unique. And so we have same back end operation. Now a property management company, we just had a press release, we just formed a strategic partnership with atomic storage to be our third party manager, we were managing our own properties in Pennsylvania, they were doing ours in Indiana, we turned over the reins through all the properties. So from there, it's really just a matter of having single manager that can span multiple facilities, all of our facilities are 30,000 or greater net rentable square feet. Self Storage, like like anything else is, you know, more lucrative at scale. We're looking to even now go bigger, a lot of our facilities have expansion components to them. So our value add or value add investors or value add plans are to grow and expand these facilities. So between our 12 facilities, if I'm not mistaken, we have three employees that actually are boots on the ground. Everything else happens from central location from an operations management, we're obviously doing the asset management on our side and just checking on the property management piece and really just managing it like a true business. And it's it's all about revenue management. It's all about maximizing occupancy, not the same maximum as in 100% occupancy, but optimizing occupancy as it relates to highest percentage occupancy relative to revenue. So we run our facilities very similar to the way the REITs do. Obviously, we're smaller, nimble, more nimble, you know, target generate generating a lot higher returns, then a lot of other outfits that operate much larger.

Casey Brown  9:30  
Yeah, now, so that takes me to a couple of different questions here. The first question that I have at least I know from my experience in the residential world now part of our fund of funds is investing in self storage oil, we invest with an operator that is purely an operator of self storage. Let me say that so with that being said, one thing that I've always been curious about, about self storage is deal flow, like Where and how, like, is this purely based on like broker relationships? Is this based on? Cuz I know there's some there's also some self storage masterminds out there. And there's, I just got to think that there's probably a lot less Mom, Mom and Pop owners in the Self Storage business than there are in, like, say, the multifamily business. So how does the deal flow happen? And how did you get that started?

Unknown Speaker  10:26  
So, so interesting. When I started in well, I shouldn't say when I started, so it's actually the there are a lot more Mom and Pop owners in self storage than any other asset class. So if you think about, yeah, there, it's about 70. Last I saw it's about 70% of facilities are owned by Mom and Pop operators. So

Casey Brown  10:51  
what's the square footage? Like, what of that? 70%? How many of them are like, and again, you measured on I know, the rentable square footage, but if you had 100%, what would the what would the bottom 1% square footage be with that? Because I don't I gotta assume we're not talking about places that have like 10 or 12 units, you know, because I know there's a bunch of those scattered? Yeah,

Unknown Speaker  11:12  
no, that's that's, that's valid. I mean, obviously, the REITs are looking at facilities that are 60,000 or greater. So like anything else that's going to be concentrated that the net rentable concentration is going to be in the larger operator, so it will shift down. And when you're talking about number of facilities versus net rentable square footage, I don't know what the exact numbers are there. But it is, you know, you're not, you know, in terms of relationships and how we're deal we're sourcing deals, we have a multi pronged approach, right. And the multi prong approach is we do have relationships with brokers, right brokers want to, they want to deal with buyers that are going to close, they want to obviously establish relationships with sellers that are going to want to sell at some point. So we've got some really strong relationships. Now that obviously didn't grow overnight, we've had to be established, it started with just being really aggressive on our first deal, proving that we can close. And now it's even gotten to the point where brokers look for brokers and owners look for referrals from other brokers to make sure that you know, you're a legitimate buyer, where for where we're buying right now, which is essentially east of the Mississippi, we know the top five offices in terms of brokerage, so we have a pretty good reputation from that standpoint. Other areas that we we source deals is off market. And and it's not a big flow of our deals right now. But it's but it is growing. And that can be just from self storage owner that heard me or one of our team members on a podcast. In one case, we actually have a tenant of ours that has a larger unit and one of our properties that has another facility a smaller facility, but it has some potential for expansion that we're in, we're in talks to acquire that. Otherwise, we are taking a an approach to reach out to owners directly. And then the other area that we're penetrating is development, when when you're a player and you're established and growing, a lot of deals will find you so we're we're fielding a lot of calls a lot of people that are either have access to deals or interested in the space. So we do some JV, we are evaluating JV opportunities, ground up development, we're really making headway in that space. We talked to him a year from now there's there's a good chance that that's that's going to be where our primary focus is. Because if you look at where the margins are, we're talking about, you know, replacement cost versus, you know, what you're paying from a broker, you know, markets changing right now, as we slowly head into a recession and that kind of thing. So, so we try to hit it from every angle,

Casey Brown  14:04  
it's got to be kind of balancing itself for you your cost of your cost for replacement. And then because the because the cost of building those things, and actually I'll tell you As of recording right now and and when this airs in a month or six weeks. You know, as of right now, there is a huge concrete shortage. And the concrete shortage is being filled by now at least east of the Mississippi there is now everywhere else. I don't know that I can really speak for that. But they're they're having a hard time getting the cement, which the cement, I guess is the act that it is the active ingredient in concrete, which makes it harden and anyway, that's a different story. But the new development for self storage has really kind of slowed down to creep because the concrete is like that's what does that mean that's like a third of your main element concrete and metal I mean, that's There's your there's your elements, right. And so I know that's at least slowed the development of additional self storage in our area anyway, one thing that I had brought an approach up to a guy one time about self storage and, and where it's headed, and I want to get your opinion on this, um, you know, back during COVID, you know, we had we had the, the, what were they the stimulus payments, the stimulus payments that went out, you had to make a certain amount of money or under a certain amount of money, you got $1,200, whatever it was at times higher meaning then your kids got so much and whatever. And it seems to me that people used that money to go buy stuff. And they had to then take that new stuff and put it where they live. And for some reason, the American way is to never, ever, under any circumstances, get rid of your stuff. So then it essentially becomes Sergio, getting your, we're taxing, for all intents and purposes, these people to keep their stuff like we're storing Barbie doll, like, for instance, and I'm as guilty, my family is as guilty of it as anybody, we've got a storage building right now that we're paying $75. And I tell my wife every month when it comes out, I'm like, we're paying $75 a month to store literally, like $500 worth of goods 500 All the good. It's sitting there. And it's like, and it's like, once people put that stuff in there, it's like they're there. And they're just it's much easier just to pay that $75 than it is to actually stop, take the time, go look up to a trailer and go out there and empty the thing out and bring it do something with it. Well, we

Unknown Speaker  16:53  
call it we call that the sticky factor, right? I mean, the average tendency for somebody rents a unit, even if they say, Hey, I only need it for a month or so. It's just that's just the way it works. Because it's like you said, Who's going to take their weekend and say, I'm going to go empty this stuff, right? You put it in there, because you think, Hey, I'm going to keep this this has got this value, sentimental value or whatever. And it's, it's, it's, it's about, you know, we are a consumption based economy. We are based on stuff. And so, yeah, I mean, there's, there's, there's a reason why we say self storage is recession resistant, it works in good times. And in bad times, and good times people buy more stuff and bad times, they got to downsize. So yeah. So it works. And we're providing a service and like your, your similar to like your Netflix subscription, and these all these apps and stuff, it's a blip on your credit card. And so it's you're not going to make, you're not going to do the math. I mean, we've got tenants at some of our facilities that have a storage unit for 10 years, and in some case, multiple units, and they're just full of junk. And they just have a hard time getting rid of it. And so that's that's, you know, like said, we provide a service. So

Casey Brown  18:15  
what is, what is your thoughts? And maybe you can give us some numbers to back up whatever your answer is to this question on climate controlled versus exposed.

Unknown Speaker  18:28  
So there's, I mean, climate controlled or better temperature control, depending on the market. So climate control really refers to heating, air conditioning and humidity, right, versus temperature control is just, you know, hot or cold.

Casey Brown  18:45  
Where we're at here in Kentucky, you have to have climate control in the Antarctic, because if not, if you had, if you had 80% humidity outside, you'd have like 40 in the US in the coolest temperatures. And you're still Yeah, so yeah. Alright, go ahead.

Unknown Speaker  18:59  
So so it's really going to be

Casey Brown  19:02  
there was a difference. Let me back up. I didn't realize there was a difference, you know, yeah. So

Unknown Speaker  19:07  
there there is. And in some cases they consider they call it temperature, they call it climate control, when it's really temperature controlled out. And if you really do need to control humidity, then those markets, I would expect that now. Again, it really does come down the market. I mean, in every in any given market, Florida versus you know, say in Pennsylvania, the demand is going to be different in any given market. You know, when you use some some a lot of data and analysis and competition analysis to determine what is the demand for climate temperature controlled versus just straight drive up and if you're if you're in an end indoor building, where you got to build it up. That is going to be you're going to need to have climate control. over temperature control, because you're not going in this building and you know, sweating your ass off when you're trying to move stuff in or out. So if it's drive up, if it's a drive up unit, I mean, sometimes it's like, who cares? But to depend and also depends on, you know, who's storing what, if it's a lower income market that is predominantly like, you know, blue collar, you may need less of it. But it really in any given three and five mile radius is really good going to determine whether it's should be whether the demand is going to be on straight drive up versus climate control. Other factors include, what is the population density? You know, if it's if it's a more rural area, it's going to be one way urban another?

Casey Brown  20:50  
Sure. And I'm assuming the profitability of one of the one versus the other is about the same. Just because obviously, your climate control or your temperature control units are used generally higher than or on a per month basis than the than the driver or than the ones Yeah,

Unknown Speaker  21:08  
it's about the price premium is about 25 35%, higher for climate controlled, so So you want more of those, and then obviously, the higher or the smaller the unit, the higher the rent per square footage. So if you get smaller, high demand for smaller units that are also climate controlled, then, you know, then then you're going to have an overall much higher rent rate across your property.

Casey Brown  21:39  
Sure, sure. Now, the ones that are multiple levels, obviously, you said those are, those are most of the time, at least what I've seen almost always climate control or temperature control. Is there, is there a difference in profitability of that versus one that you just pull up to unload?

Unknown Speaker  22:00  
Well, in terms of profitability, you know, that's, that's a they're usually going to be in different markets, maybe maybe not, right. So if you're, if you've got a multi storey property, generally speaking, that's going to be in a more population dense so so you're, when you're looking at a footprint of a property, if you're building up, chances are, there's less available land in the area, higher population density, you're going to have a higher throughput in terms of tenants, if you're if you got more land that you got drive up, then, you know, you're generally speaking, you're gonna find more of that in secondary tertiary markets where you're going to see closer to primary markets, the multi storey. So generally speaking, the the, you know, you're looking at the density of a building, you're going to get higher margins on the multi storey properties. However, overall cost expense ratios. You know, because you're talking about multi storey building, it's going to be, you know, cost you more, you're talking about sprinkler systems, HVAC, the utilities and all that. Yeah, yeah. So, so, the economics of a drive up is going to be smaller. So, I would probably say that your multi storey property is going to require a higher maintenance factor, you know, require an on site manager type of thing, whereas, you know, your drive up self storage, and just the secondary market is not

Casey Brown  23:36  
cool. Good deal, man. That's good information. And, you know, especially because it is such a hot asset class right now, I mean, it just seems like everybody, it's, it's while on the surface, it seems so easy to figure, especially if you have an existing complex, that's right there where you can be like, Okay, this thing brings in X amount of dollars average, so on, so on, so on. But where the challenge, I think lies and of course, you know, the old real estate adage is location, location, location. You know, I've even gone as far as seeing like, like, we were talking about the mom and pop self storage places, but like, like, in the middle of nowhere, like, especially in Kentucky, we're rural Kentucky, where we live, I mean, you might be driving on the road, there might be, you might look over and there's 25 units lined up over there where it's just like really there's like, they just put them in a random as places, but I'm assuming on a on a from an underwriting perspective. Are you able to quantify any of that, like, based on certain economic factors?

Unknown Speaker  24:42  
Yeah, it's it's actually I don't want to say easy, but there it's it's a lot more anchored in data than even in some cases when we're talking about multifamily right, multifamily. A lot of it if you're talking about you know, rent a you're talking about, you know, cops, right? When we're talking about supply and demand in self storage, it's based on population. Right? So the, in the national average for equilibrium between supply and demand is about seven square foot per capita. Right? So what we're talking about is, you know, seven square foot for every, you know, 1000 people in population. And so when we're looking at any given market, and we're looking at generally a one, three and five mile radius, depending on how big a market is, in terms of population, you might go out the 10 miles, or it might just be three miles. So you can use like a tool like radius plus, I mean, there yardie, there's a number of tools out there that give you the total population, and the total square footage of net rentable square footage of self storage in any given area. And then from there, you have to do the due diligence to determine is there anything new in the pipeline? What are the population trends going up, down, sideways, whatever the case may be, so if it's less than seven square foot per capita, you know that there's going to be more demand than there is supply. If it's over, then generally it's the other way around. Now, in some cases, there's there's a it depends piece of that, too, right? There are markets where the supply is at, you know, 22 square feet, per capita, and there's plenty of demand there. So that's, that's going to vary. So there's general rules of thumb. And then from there, you got to dig within the numbers. I mean, we go as far as looking at diversity of employers, you know, population trends, median income, and we evaluate a lot of factors to determine if we're going to go in or buy into a market. And, you know, we'll even go to the municipality look at permits of any new facilities, look at even the zoning and potential for new facilities in any given market. But the the overall way that you look at supply and demand is fairly straightforward.

Casey Brown  27:11  
Sure, sure. Yeah. And and that's just one of the I guess, the different type of underwriting it's um, and that's why that's why expanding into a different asset class isn't isn't for everybody. Which kind of brings us back to why I said, Hey, if I'm going to have self storage, be a portion of any of my investors interest. I'm going to have somebody that specializes in that be laid out there. And I think that's definitely everything you said is just really spot on. And, and I can't Yeah, I mean, it's just it's a totally different asset class, but it's been in the syndications and he's one off syndications have made it work because used to the the bigger facilities were all REIT like they were all institutional stuff. There wasn't. There was there was mom and pop, but I'm talking. I'm literally talking about like 40 feet 3040 5060 70,000 rentable square feet was pretty it had to be pretty much read driven, right? Yeah.

Unknown Speaker  28:16  
Yeah. Well, let me REITs have predominantly been in major metros. Right. And now the returns aren't there. I mean, COVID COVID kind of shifted the landscape in a lot of different ways, you know, with with a lot of people now being able to work remotely moving out to the suburbs. And and now what we're seeing is in secondary, even some cases, some tertiary markets, you're seeing some of those major reach, move in and acquire facilities in there just because the margins the return potentials there.

Casey Brown  28:46  
Yeah. Yeah. Cool. All right. Well, listen, a couple of questions we ask every guest that comes on the show. And the first question is, what is the best book that you have either recently read or are currently reading so that's the whole shelf back there full of them. So

Unknown Speaker  29:05  
yeah, I my my approach is always starting with with mindset and you know, I'm big on meditation and it's to me it's like it's the equivalent of you know, reading a book on real estate and then using your intuition when you're touring a property and whether she buys it so you need to incorporate both things so I'm very much into I'm a self improvement junkie. And you know, for me some transformational books are same as every Rich Dad Poor Dad thinking grow rich I mean, those types of things thinking thinking Grow Rich is probably one that kind of combines that whole spiritual element and intuition right now I'm I'm reading Good to Great some other books that are you know, were huge for me is who not how Oh, that's no traction.

Casey Brown  30:03  
eighth time in two weeks I've had that book on the show. Yeah, yeah. I got the Bible at the top then I get rich dad poor dad. And now I'm getting through not how, like those are the three like, you just Yeah, yeah, I'll

Unknown Speaker  30:16  
throw another one out. I know you asked for one other book but I'm trying to I like to be a little different faster than normal was a book that was was something that made a tremendous difference for me personally, being a, you know, someone who has a mind that literally works faster than normal most entrepreneurs do. And, and, you know, what others might classify as a level of ATD and ADHD, that was transformative to me and understanding how my brain does operate at a at a much faster pace. So it's a matter of the way I look at it as creating a file cabinet for an organizing your mind your thoughts and your ability to organize your day prioritize goals and that kind of thing. And so that was that was huge for me, you know, resulted in a lot of things me working primarily on my health, you know, not drinking, just really doubling down on me personally in my mind, which transcends into business, family and everything else. So I'm a big believer in that, you know, I do a lot of work with coaching. We have another company called pivotal coaching collective, where, you know, that's one of the things that I teach, you're not going to work with me if you're not willing to work on your, your overall self and worth, and not just focus on money and deals and that kind of thing. Yeah,

Casey Brown  31:42  
yeah. Cool deal, man. Well, let's second question is, what is a dream vacation that you have either taken or hoped to take?

Unknown Speaker  31:52  
So interesting enough, I'm going with a bunch of my GoPros to Alaska in a couple of weeks fishing in Sitka, Alaska. And this is, this was a bucket list trip for me in just doing some king salmon fishing and that kind of thing, but my wife and I, we love to travel. You know, some some, we've done some phenomenal trips, we love the Caribbean, you know, St. St. Thomas Curacao. So every every one of them has been unique. We did a Viking river cruise in the Danube River, you know, so a bunch of historical cities, town countries, castles, that kind of thing. And then another one was a narrow boat, spent a week on a narrow boat in the canals in the UK. That was that was pretty phenomenal off the beaten path. So I like off the beaten path type of trips. Another bucket list is African Safari. That's that's one of the trips that I like to do.

Casey Brown  32:54  
Yeah, my one of mine is actually Madagascar. And we were I was talking on a on a show not long ago with a lady who said that that was one of hers too and so yes, I'm I'm anything like Central African that's obviously safe. I would be the Bush would be where I could be found if I was in Africa for sure. Outlook. Yeah, we can use it the big they call it the Big Five is that right? The big or the five big for whatever it is the cats, the elephants, the drag all that stuff. So anyway, well, good deal. Well, Sergio, if the listeners have heard something that resonated with them, and they would like to reach out to you and get in touch and possibly invest or even talk to you more about self storage, what is a good way for that to happen?

Unknown Speaker  33:40  
Easiest gateway to me and my world is invest with sergio.com that's got links to all of our company's podcasts, media and direct access to me and on LinkedIn.

Casey Brown  33:54  
Easy enough, brother Well, Sergio, thank you so much for taking the time to be with us and listeners run out check out Sergios website he just gave it to you and and listen to his podcast. And as always, we ask that if you've enjoyed our content. If you've enjoyed the show with Sergio, please leave us a five star review. And go check out Sergios podcast and leave him a five star review to check it out. Because I can guarantee you it's going to be full of if you're into the Self Storage space or want to be into the self storage space. This is the guy right here. So thank you again for listening and Sergio. Thank you again for being on the show. Appreciate your

Unknown Speaker  34:30  
man. Thanks, Casey.

Transcribed by https://otter.ai