August 1, 2011
By Ward B. Ozaeta

In February 2008 I was flying back to San Diego, California from South Carolina, after viewing a 200-acre residential parcel that the principals wanted to sell. I was also working with the principals of a high-end residential development in Palm Springs to restructure and recapitalize their project; so I was focused on identifying exist strategies that would provide the best solutions for the principals, investors, and lenders; that also created the possibility for the successful completion and sale of the project. 
If you can think back to the 1st quarter of 2008,(I know, it seems like a feint memory), everyone would agree that investors, and lenders were running away as fast as possible, from residential or land development projects—especially in California; one banking professional  referred to them with a ‘four letter word’. So what was I doing? Why was I wasting my time? The answer—I believe that there is always a solution. So at time when the real estate market was falling apart, I was not only looking for ways to put it back together; but also working through some ideas to ensure the prevention of another cycle like the one we were experiencing.

You may recall that in an April 2008 press release, Realty Trac stated that the US foreclosure activity had increased 23% in the first quarter—this represented approximately 649,917 properties, which was 112% increase from the first quarter of 2007. Nevada and California were the two states leading the way in foreclosure filings. While Nevada had the highest foreclosure rate per household, California has the largest total number of forecloses. According to Realty Trac, in Q1 of 2008 1/78 households were in California were in foreclosure—a 32% increase from the previous quarter and 213% increase from 2007. In Q1 of 2008 California foreclosed properties represented approximately 25% of the total US foreclosed properties; but now we can see that this was only the beginning of the end. In January 2008 Realty Trac reported in its U.S. Foreclosure Market Report™, that a total of 3,157,806 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 2,330,483 U.S. properties during the year, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. The report also showed that 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during that year, up from 1.03 percent in 2007.

However, the continuing collapse of the real estate market would not discourage me. In the midst of foreclosure mess, I was searching for an opportunity. As I settled in for the flight back to San Diego, I kept wondering if all this foreclosure mess could have been prevented. I recall wondering, how could an industry, which at its core was all about people and forging relationships based on trust, be so calamitous and devastating for some of those would be relationships; and so profitable for others on the other side of the relationship. Yes, we can argue that some people took on more real estate debt than they could afford (as tends to be the case when credit is readily available); or others did not read their purchase/financing documents thoroughly so that they understood exactly what they were getting themselves into; but on the other side of the relationship are those that have a fiduciary responsibility and obligation to disclose (inform/educate) and ensure that these buyers/borrowers understood exactly what they were getting themselves into. Was there a break down in the relationship? My thoughts were there had to have been a ‘breakdown’. Then my thinking progressed to finding a solution that would in a sense ‘stop the bleeding’, treat for shock, and stabilize the market. It was at this moment that initial strategy and concept for 6 Degrees Realty Capital was conceived.

As a society, we are all inextricably linked—we have experienced through online social media, the phenomena of 6 degrees of separation between us our friends, and their friends of friends—so we get that we are connected both in our personal and business relationships; and consequently—especially in business, we rise and fall together. This couldn’t be more evident than it has been during this recession. We have seen how increased default on loans, and other financial products led to the eventual collapse and obliteration of some of our most prominent financial investment banks and lending institutions; which almost led to a total meltdown in our financial markets.

So, at 6 Degrees Realty Capital we focus on the three components of every real estate transaction—people, capital, and real estate. We first create solutions that benefit  everyone involved with the endeavor; we are careful to implement strategies that manage business and financial risks so as protect and preserve investor and lender capital; and finally we are thorough in our analysis to ensure that we can maximize the real estate value, from acquisition, management, development,  and eventually disposition.  This approach assures success for everyone, at every stage of any real estate project/transaction that we are involved with.

I founded 6 Degrees Realty Capital in February 2008, Incorporated in August 2008, and completed the first acquisition (3 rental condos) in December 2008—three months after the collapse of Lehman Brothers.  This all happened five years after my decision to pursue a career in commercial real estate acquisition and development; and five years after a series of failure and setbacks.Today the company owns and operates several multifamily/condominium properties in San Diego and is on track to exceed 100 multifamily units.

Invest with us, and be a part of our success today. Give us a call at (858) 964-2502. I look forward to hearing from you.

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6 Degrees Realty Capital, Inc.
10251 Vista Sorrento Parkway
San Diego, CA 92121
(858) 964-2502