The Signet Podcast – Jose Sigal Transcript

In this episode, Eduardo Signet speaks with Denver commercial real estate broker, landlord, and investor Stuart Zall, founder of The Zall Company.

The conversation explores how relationships, tenant selection, networking, mentorship, long-term ownership, and neighborhood-building shape success in commercial real estate. Stuart shares lessons from his career in retail leasing, property ownership, Denver development, international projects, and the practical realities of working with landlords, tenants, brokers, contractors, and emerging brands.

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Podcast transcript

SIGNET: Stuart, thank you for coming. I have so much to ask you. I want to introduce you as the broker and landlord in the Denver market, although you do brokerage and properties everywhere, including a deal in China. You have quite a lot of experience. Do you want to say a little bit about yourself or introduce yourself?

STUART ZALL:

I am Stuart Zall, founder of The Zall Company, which I founded in 2000.
I did not grow up expecting to go into real estate, and I did not come from a multigenerational real estate family.
I studied accounting at the University of Denver, got my CPA, and started at Arthur Andersen, but I lasted only about a year.
I moved into real estate almost by accident after helping Steve Gettleman with accounting on a strip center, then being asked to help lease it by calling people from the phone book.
I learned by u201cdialing for dollars,u201d got results, and eventually moved through Lakeside Mall, Taubman, and outlet-mall projects around the country.
Taubman taught me the art of leasing, merchandising, and building tenant relationships across multiple markets.
In 2000, when my firm was bought, I chose to start my own business instead of moving, and the business grew from hired-gun leasing work into a brokerage company.
Along the way, I started buying properties when opportunities came up, often through partnerships, because I believe successful brokers should have some investment exposure to commercial real estate.
I eventually bought the Larimer building where we are now, partly because I needed space for my own company and could lease the rest to another tenant.
Having a storefront and a sign on the street has changed the business because people now drive by, see the company, and call.

SIGNET: It is so interesting. I love this area. I have been here a few times and have been to the restaurants. I did not realize everything was right on this block, like Barcelona, Federales, and other places. It is a cool part of town. How did you know this was going to become that?

STUART ZALL:

Sometimes you get lucky.
A friend from New York, Stephanie Rubenstein, was representing a concept connected to the founder of Lululemon, and they wanted a gritty part of town for a millennial worker-focused concept.
At that time, Larimer Street was very rough; Denver Central Market was not open, and there was very little there besides Ratio Brewery.
My friend saw something in the area that reminded her of Brooklyn, and I trusted her perspective even though I did not fully see it myself at first.
I made it a quest to find a building in that area, and we got what I believe is one of the best blocks on Larimer Street in RiNo.
When I bought the building, I was nervous enough that I did not tell my wife exactly where it was at first.
The area still has city challenges, but the building has worked out extremely well.
My advice is not to overanalyze real estate; sometimes you have to find it, take the risk, and let time work for you.
Real estate is scary because you are putting a lot at risk, but time can become your best friend if you take the chance.

SIGNET: You hit on so many points I want to talk about. Mentorship is one. First, can you talk about your mentors and the values you learned in your training with Taubman? You have also been a mentor for me in Denver, and I have met many people you have mentored who became incredibly successful. What qualities do you look for in people that lead them to success?

STUART ZALL:

I think it starts with heart.
If you have passion for what you do, then it does not feel like work.
You need drive, passion, and the ability to dream.
I think younger people are missing face-to-face communication because so much is done through texting, Instagram, and efficient digital communication.
When I started, even sending someone a picture of a space took days, and that slower process created dialogue and relationship-building.
Today, information can be sent instantly, but the relationship process can be lost.
Networking begins with meeting people and building relationships.
I try to create platforms, such as breakfasts, where people can meet others who may help advance their careers.
If you want to make deals, you need to put yourself where decision-makers are, such as shopping-center conventions and industry events.
You should not only spend time with people you already know; you should try to meet as many people as possible and then follow through.
Many deals begin with a cup of coffee, a handshake, or simply bumping into someone.

SIGNET: I love the idea of networking outside your own category. Developers often network with developers, and brokers often network with brokers. I have looked at finance events and capital groups because you get exposure to different people and make different links. One thing I have heard you say is that you never know where a deal is going to come from, and it is about being there. Is that one of the ideas?

STUART ZALL:

I learned something from doing business in China: if you are in a room where everyone speaks English, you are less valuable, but if you are the one person who speaks a language no one else speaks, you become extremely valuable.
I apply that metaphor to real estate networking.
If I am in a room full of brokers, everyone already understands leasing, so I am less differentiated.
If I am in a room where no one understands what I do, then I may be able to provide something valuable.
I like working with contractors, architects, finance people, and others connected to real estate but not doing the exact same thing.
I see networking as collaboration, where different people can benefit from different parts of the same opportunity.
I try to pay it forward by connecting general contractors or other professionals with people who may help them, without keeping a strict scorecard.
Those relationships often come back in useful ways, even if not immediately.
Mentoring people is not just telling them what to do; it is encouraging them to go out, network, socialize, talk to people, and learn from events.
As an example, I paid to meet Danny Meyer at an event, got a signed book, introduced myself, and created a connection that later became useful.
You cannot build those kinds of connections if you only sit in the audience; sometimes you need to go to the front and introduce yourself.

SIGNET: You talked about win-win situations. One thing you have said before, and I have seen you do, is that you want your tenants, your clients, and the people you represent to win. You have said that after the lease is signed and the commission is done, that is when you start to work by helping promote them, because if they expand, they are going to call you. What do you do after the lease is signed, since they still have so much to do?

STUART ZALL:

You can go too far and become your clientu2019s outsourced administrative staff, so you should not go looking for trouble.
It is still important to check in and help when there are problems.
I try to guide clients toward good people, such as reliable liquor-license attorneys, contractors, or other professionals.
I prefer to give clients two or three strong referrals rather than just one, so they can do their own homework and choose.
My role is to point them toward people who are tried and true, not to make every decision for them.
Most of the help is needed between signing the lease and opening the store.
After opening, I cannot solve every operational problem, such as labor or marketing, but I can pick up the phone and be available.
Signing a lease can be a multimillion-dollar commitment, so I want the tenant to succeed.
I once helped a restaurant franchisee renegotiate terms and work through problems even though I technically represented the landlord.
A lot of salespeople disappear after they get paid, but we want continuity, repeat business, and clients who know we tried to help.
At the core, I see our work as solving problems.

SIGNET: I love the way your brain thinks. You are very creative. Taking a wider-angle point of view, why commercial versus residential? I love commercial, but I am curious why you chose that path.

STUART ZALL:

Triple-net leases are a major reason.
I had experience with residential early on, including buying condos during a period when banks wanted properties off their books.
At one point, I had about 50 condos with a partner.
Residential was more management-intensive, especially before todayu2019s technology made banking and administration easier.
I do not have the patience for residential.
Commercial is more interesting to me because I am fascinated by businesses, retail, and how those businesses operate.
I moved most of my residential holdings into commercial projects over time.
In commercial, if a store does not work out for an operator with many stores, it is usually not as emotionally catastrophic as something going wrong with someoneu2019s home.
Residential deals involve peopleu2019s shelter and can be more personal and stressful.

SIGNET: In commercial real estate, what trends are you looking out for? We have tariffs, the internet has been affecting retail for a while, and there are other forces in the market.

STUART ZALL:

People have probably been worrying about the future of retail and commerce since ancient times.
Humans will always need commerce in one form or another.
There will be AI, headwinds, and other changes, and the key is to keep pivoting.
If you sit back and do nothing, you are going to be dead.
COVID was a major test for restaurants, and the smart operators quickly moved into patio seating, takeout, and alcohol-to-go where allowed.
Apparel is changing because so much can be bought online, but people still shop when traveling or looking for experiences.
Food still has to be made somewhere, even if DoorDash or another service delivers it.
I think ghost kitchens have mostly been a bust because people still need to see, experience, and trust a restaurant.
Food, entertainment, and apparel will remain, but models may change, stores may get smaller, and department stores need to reinvent themselves.

SIGNET: I am loving these public markets you see everywhere. I drove up and down the coast, and places like San Luis Obispo and Santa Barbara have public markets. Here there is The Hangar and Edgewater. I love those developments because they have synergy together if they are done well. Colorado Mills may have been an example of that 15 or 20 years ago.

STUART ZALL:

Denver is often a poster child for jumping on trends harder than other cities.
We probably overdid the public market and food hall concept.
Some public markets and food halls are winners, but others do not work.
It is not enough to build a food hall and assume people will show up.
You still have to put real thought into the concept, location, tenant mix, and execution.
Denver Central Market and Edgewater are strong examples.
Some others have gone out of business, which shows the model is not automatically successful.
If the concept is done right, it can work very well.

SIGNET: Your company has come such a long way. I think it is incredible that you started as an accountant, which uses a certain type of brain, and then went into such a relationship-heavy business. What qualities did you bring from accounting into your current work?

STUART ZALL:

I can understand financial statements, accounts receivable, and the basic mechanics of a business.
That is valuable because many brokers do not really understand the business side.
I understand operating properties and mortgages.
At the same time, I outsource almost everything that is not one of my strengths.
I use an outsourced bookkeeper and outsourced graphic arts help.
I know I need to work within my strengths.
Running numbers and detailed accounting work are not where I perform best now, even though the background helps.

SIGNET: I have a personal question that I think applies well to the podcast. Hiring people and managing people is really a talent. There is a reason CEOs sometimes manage managers, and managers manage individuals. How do you develop the skills needed to manage people? If you do not do that right, your business suffers and you reach dead ends.

STUART ZALL:

Managing people is a real challenge.
I believe there may be some force or timing that helps you find what you need when you need it.
About a year ago, I hit a wall because sales were down and I was struggling to motivate the team.
Our leasing meetings were not productive, and people, including me, were distracted.
I realized I needed a coach.
I met Steve Benoit from Crafted Consultants through my son and later sat down with him for coffee.
Steve explained a structured process for working with people, and I decided to try it even though it was not cheap.
He has become a meaningful part of the team.
We now have mandatory Monday meetings, with no cell phones, where each agent reviews what they said they would do and whether they got it done.
We also have one-on-one status updates and KPIs.
One KPI is getting one positive Google review per month from each person, which helps the company cast a wider net.
We now track deals by quarter instead of just doing deals without tracking them.
The coaching and structure have been important to our growth.

SIGNET: I asked that because I am managing a construction project in Pebble Beach right now, and you manage subs and contractors. Many people I have interviewed say their success is due to the people they hire. A lot of it is finding the right people with drive, quality, and pride in workmanship. It is hard to find those people because everyone wants to present themselves that way, but not everyone is that person.

STUART ZALL:

A lot of hiring is trial and error.
We now have an onboarding sheet and an interview sheet that lists what we are looking for.
You can also overanalyze hiring.
Right now, we are at capacity and do not have room for more people unless we build up or expand.
I am willing to take a chance on a lot of people.
Many people in the industry probably got their start with me.
In the past, I may not have had the tools to mentor and coach people properly, so I probably lost some talented people.
If you love what you do, it is not work.
I work in some form seven days a week because I am always available and always thinking about how brokers can be more productive.
I do not only think about their productivity in terms of my own income; I want them to succeed.
People are giving me their time and part of their lives, especially when they are young.
Even if someone only stays with me for a year, two years, or three years, I want them to leave with skills that help them succeed elsewhere.
At Arthur Andersen, many good accountants eventually went to work for clients, and the firm saw that as creating a friend at that company.
I see former employees similarly: if they leave and succeed, the relationship may help both of us later.
I do not expect anyone to give me their entire life, but I want their time with us to be productive.

SIGNET: You said you are at capacity. Where do you want to go from here? What is really good now, and what do you want your legacy to be? That is a two-for-one question, but they are different intentions.

STUART ZALL:

I am having a lot of fun and enjoying what is happening.
We are working on projects with the Orlando Magic, which has been very cool.
I have partners outside my company, including Dan Nelson and Neil Berkowitz, who help expand our bandwidth.
I like the arena and sports district space and see it as an area for future growth.
Many arenas are moving back into central business districts, which creates opportunities around live music, sports, restaurants, retail, and event traffic.
Time is precious for people, so projects that combine sports, entertainment, food, and retail can create strong commercial environments.
We do a lot of leasing downtown, in RiNo, and in Cherry Creek, and I want us to continue being a leader in those markets.
Downtown Denver still has a lot of opportunity, despite lingering perceptions from COVID, crime, and 16th Street Mall disruption.
When you lease space and bring in a store or restaurant, you can change a neighborhood for better or worse.
A lease such as Mendocino Farms in Cherry Creek changes the everyday experience of a neighborhood by adding a useful commerce point.
My legacy is not about ego; it is about improving the city or the commercial playground I work in.
Early in my career, I was focused on getting paid, but over time I came to care more about the type of tenant and whether they improve the neighborhood.
A street full of banks may pay rent, but it does not create the same neighborhood energy as coffee shops, restaurants, and places to shop.
The goal is to help create neighborhoods where people feel commerce, culture, and activity.

SIGNET: The tenants really give a neighborhood its feel u2014 the restaurants, bars, and different spots.

STUART ZALL:

The right tenant mix creates a good environment.
When neighborhoods improve through thoughtful retail and restaurant leasing, everyone benefits.

SIGNET: I was listening to another interview you did, and you said 2010 was a hard year after the Great Recession. How did you survive that, and what advice would you give to other people in future recessions?

STUART ZALL:

Praying is real.
If you have your health, you should not let your stock account or money account consume you.
Do not listen to all the background noise.
I do not watch much news because it can become distracting and negative.
In our business, the recession showed up late because commissions often take six months to a year to come in.
2009 was still fine, but in 2010 nothing was coming in.
I tried to get exposure by writing articles and appearing in trade magazines.
A partner and I wrote an article about repositioning malls, and someone from China called asking whether we could do that work there.
Our default answer was yes, even when we had to figure out how to execute afterward.
We needed demographic and psychographic data in China, which was difficult to get, but a colleague connected us with someone who did data work in Asia and had gone to the University of Denver.
We partnered with him, created a merchandising plan, and the client then asked whether we could lease the project.
The project was in Xiu2019an, which was connected to the Terracotta Warriors and the Silk Road.
I used my U.S. relationships with brands to find the right international contacts and started leasing the project.
I worked between China and Denver, using a Wi-Fi phone line with a Denver number so clients did not know I was overseas.
The project was ultimately scrapped because housing became more lucrative for the developer, but we had been paid in advance.
By the time that project ended, the U.S. economy had improved.
That experience helped us survive and led to work in places such as Puerto Rico and Hawaii.

SIGNET: I do residential in Europe, but it is interesting because that is another market. Even here, RiNo and Cherry Creek feel like different markets because the tenants are different. You deal with a lot of high-end, popular, and trendy tenants.

STUART ZALL:

I would not call most of our work true luxury, like Gucci or Hermu00e8s, because Denver is not a very luxury-heavy market.
We work more with upper-moderate and emerging brands.
That includes brands like Lululemon, North Face, Birkenstock, and other better brands.
I also love working with immigrants because many of them are fearless.
Some people create businesses because they may not have the same access to conventional jobs, and they are willing to take chances.
Those chances sometimes turn into great businesses.
I have worked with clients from one store to very large store counts, and it is rewarding to watch a brand grow.
It is interesting and fun to see a person or brand evolve from one location into something much larger.

SIGNET: That is part of their story. I think you did that with H&M, where you had the first one in Colorado.

STUART ZALL:

We did the first H&M in Colorado.
H&M has withstood the stress of downtown.
We also brought Uniqlo to downtown Denver, although it unfortunately closed during COVID.
Forever 21 was another example.
No brand lasts forever, but if you can get 15 years or more out of a brand, that can still be meaningful.

SIGNET: Thinking about the 16th Street Mall, coming from Los Angeles, what is the secret? In LA, it is very hard to turn around cities, maybe because of bureaucracy or something else. Here, you have the Downtown Denver Partnership and developers working with political bodies. What is the secret to turning around a place like that?

STUART ZALL:

Comparing Los Angeles and Denver is difficult because Los Angeles County is massive and harder to move.
Denver is smaller and more nimble.
Denver has a lot of downtown history.
Union Station was critical to Denveru2019s growth and connects directly to the 16th Street Mall.
The redevelopment of Union Station was a beautiful project.
Historically, the railroad helped Denver grow because the rail route came through Denver instead of elsewhere.
Larimer Street and downtown Denver developed around rail traffic, travelers, and the commerce they needed.
Denver has historic assets, including Larimer Square and older buildings, that give it a character beyond steel, brick, and glass.
The city has serious struggles, including high minimum wages and permitting timelines, but there are good people who believe in downtown.
With the 16th Street Mall work completed or nearing completion, I expect to see more positive activity in the next couple of years.

SIGNET: It is a great area. I lived near Union Station and would jog through 16th Street. That area has completely changed, with Whole Foods, the train, and a safer environment.

STUART ZALL:

During COVID, Denver dropped its guard and got hit on multiple levels.
The trend is now improving.
Some older office buildings may be converted to residential if conversion is feasible.
There is still a need for housing, even if apartment rents are currently soft.
I expect the need for apartments to continue as the city grows.

SIGNET: Prices have come up a lot since then too.

STUART ZALL:

Prices have come up, and interest rates are another obstacle.
Every generation has something that gets in the way.
I often hear people say something is too expensive and that they will wait for prices to come down.
In the long run, saving a relatively small amount on price may matter less when amortized over decades.

SIGNET: I once heard that it is not timing the market, it is time in the market. It is the same principle.

STUART ZALL:

Jordan Perlmutter once told me that some real estate projects succeed because of timing.
Even if you do not time it perfectly, real estate is a long game.
It is like golf: people focus on individual shots, but real estate has waves.
There are periods when you can make a lot of money quickly, but overall you need a long-term view.
If you take the long view, you have a better chance of being successful.

SIGNET: It seems like that is also what you do with your investments. Originally, the name of this podcast was u201cThe Long-Term Real Estate Investor,u201d because thinking long term removes some of the pressure around things like IRR calculations. If you have a 100-year business plan, it changes the mentality. I feel that in your investing and leasing, it is always long term, and there are also a lot of transaction costs in trying to flip.

STUART ZALL:

In commercial real estate, long-term thinking is important.
Because I did not come from a real estate family, I had to start by planting seeds myself.
It would have been nice to walk into an existing forest, but I had to begin building it over time.

SIGNET: It is tricky too, because when you are starting out, how are you going to buy something without financing? A lot of times the long-term plan is to get rid of financing so you have more stability and the bumps in the road are not as dramatic. Let me ask you the wrap-up questions. What was the number-one deal that changed your career, taught you the most, or had the most impact on you?

STUART ZALL:

The most important turning point was not really a deal; it was going to work for the Taubman Company.
That job was transformational because it taught me how to lease not just to fill space, but to create neighborhoods.
When I was about 27, I met a friend at a restaurant called Fresh Choice, saw a huge line, and asked about the owner.
I had just taken a job involving two malls, and within about 30 days I made two deals with that restaurant operator.
That happened because I asked a question when the opportunity was right in front of me.
Sometimes you are on the one-yard line and only need to ask the question.
Over my career, I did several deals with that operator, so that became an important relationship and an important early lesson.

SIGNET: What are your three key daily habits that have made you successful? I am always curious what time people wake up, whether they meditate, read a certain newspaper, or spend family time.

STUART ZALL:

I do not read a newspaper.
I get up early, usually around five.
My most productive time is between about five and eight in the morning.
I try to filter out negative noise because there is always a lot of it.
I would tell people not to listen to all the noise that is designed to stop them.
I try to stay positive.
I meditate for about ten minutes almost every day.
I use paper and pencil to write things down, even with all the CRMs and technology available.
I try to be thankful.
I remind myself that there are many opportunities available and that people do not need to stay stuck.
I try to wake up with a smile and a mindset of taking on the world, even if some days are harder by the end.

SIGNET: Final question: what would you say to a young individual who wanted to start in the real estate business? They might not know whether they want to be a broker, investor, or what segment to focus on. How would they find their path?

STUART ZALL:

I would tell them not to be afraid.
If they need to live at their parentsu2019 house or drive Uber while getting started, they should do what they need to do.
They should absorb as much information as possible.
There is so much information available now that they do not even have to subscribe to everything to learn.
They should become an expert at something and become the go-to person in that area.
They should not try to do everything.
They should find one area and try to be the best at it.
They need passion for the business.
If they think of it only as a job, they are in the wrong business.
It is always a good time to get into real estate, and bad times can actually be the best times to start.

SIGNET: Stuart, thank you so much. We could do round two another time. Thank you for joining the podcast, and hopefully we will grab dinner soon.

STUART ZALL:

I hope so.

INTERVIEWER u2014 SPEAKER UNCERTAIN: Bonus question: what are your thoughts about the new Burnham Yard deal and what it is going to do for downtown?

STUART ZALL:

I do not know exactly how it will affect downtown, but I think it will be very positive for Burnham Yard.
Burnham Yard feels like one of the last major pieces of Denver that has not really been developed.
A key question is what happens to the area where the stadium is now if activity shifts.
I think the project will not hurt downtown because people will still come downtown, and the distance may not be dramatically different.
Large investments, such as a multibillion-dollar stadium, create a multiplier effect that benefits many people.
I do worry about displacement, especially for people who currently live nearby and may have cheaper rent.
Growth can be positive, but people still need places to live.
Denver has done some work around affordable housing, but development can still affect neighborhoods.
I think developers and stakeholders need to think carefully about who is affected.
Overall, I think the project is good, but I hope there is thoughtful attention to housing and displacement.

00:00 in today’s episode i have an exciting
00:03

00:03 and informative conversation
00:05

00:05 with someone very close to me besides
00:07

00:07 being my father
00:08

00:08 his real estate investment strategies
00:11

00:11 and business savviness
00:13

00:13 provide a lot to learn from jose is the
00:16

00:16 founder
00:17

00:17 of js signet a boutique real estate
00:19

00:19 investment company
00:20

00:20 where he has been investing in real
00:22

00:22 estate since the 80s when he immigrated
00:24

00:24 from mexico
00:25

00:25 with very limited resources it was with
00:28

00:28 those resources
00:29

00:29 and the right strategies where he
00:31

00:31 created a nice base for a family
00:33

00:33 portfolio
00:34

00:34 he now manages out of his office in
00:36

00:36 santa monica california
00:38

00:38 his specialty is identifying little
00:41

00:41 jewels of properties in great locations
00:43

00:43 it is because of that
00:45

00:45 tenants he has leased property to
00:47

00:47 include
00:48

00:48 fidelity investments heirloom markets
00:51

00:51 tommy bahama
00:52

00:52 best buy gap and others he has developed
00:55

00:55 and owned several apartment buildings
00:57

00:57 and entitled land
00:58

00:58 although mostly focused in los angeles
01:01

01:01 he has had success in other states
01:03

01:03 proving that his strategy with the right
01:05

01:05 ingredients can work all over
01:07

01:07 today jose discusses strategy how to
01:10

01:10 think in business
01:11

01:11 and why often it’s not about the numbers
01:14

01:14 his conservative approach
01:15

01:15 alongside value-add strategies are key
01:18

01:18 components
01:19

01:19 in how he has created his growth welcome
01:21

01:21 to the long-term real estate investor
01:25

01:25 podcast
01:32

01:32 [Music]
01:38

01:38 all right dad hello well i i wanted to
01:41

01:41 uh
01:42

01:42 i’m glad we’re talking this is kind of
01:43

01:43 exciting because
01:45

01:45 first off it’s always fun talking to you
01:47

01:47 about business but you’re my father
01:49

01:49 you’ve been my mentor my whole life
01:51

01:51 you’re a full-time comedian and you uh
01:55

01:55 you just you have a lot to give and
01:56

01:56 that’s sort of your nature
01:58

01:58 so and there’s a lot of wisdom in your
01:60

01:60 success and the way you’ve
02:01

02:01 paved the road um to teach me
02:05

02:05 and to help other people invest their
02:07

02:07 their
02:08

02:08 their money in real estate or just how
02:10

02:10 to plan for their finances in the future
02:13

02:13 but before we get into strategies what
02:16

02:16 uh
02:17

02:17 how did you get your entrepreneurial
02:20

02:20 spirit where did that come from what was
02:22

02:22 your
02:22

02:22 first business venture i had the spirit
02:26

02:26 probably since i was born son it’s
02:28

02:28 something that i was born with
02:31

02:31 i didn’t know much about it when i was a
02:33

02:33 teenager i used to
02:35

02:35 enjoy very much music and
02:39

02:39 so i would and i
02:42

02:42 liked the electronics as well so i got
02:45

02:45 into
02:46

02:46 buying and selling music systems in in
02:50

02:50 those days
02:51

02:51 amplifiers speakers turntables
02:55

02:55 so i would buy them and sell them and
02:58

02:58 get other ones and sell them again
03:00

03:00 and yeah that’s how i started my second
03:03

03:03 passion
03:04

03:04 at that time was cars so i started
03:07

03:07 working for
03:08

03:08 a dealership where i i wasn’t in the
03:11

03:11 dealership
03:12

03:12 but if i could bring a customer i would
03:14

03:14 get a commission
03:15

03:15 and i also had a couple of places were
03:17

03:17 to sell their used cars
03:19

03:19 so i would also sell a commission wow so
03:22

03:22 i
03:22

03:22 was doing that when i was 15 16 years
03:26

03:26 old
03:27

03:27 but was it the money or was it the hobby
03:29

03:29 or was it it was both
03:31

03:31 okay the money was very important
03:32

03:32 because it’s how
03:34

03:34 i paid to take out your mother
03:37

03:37 so yeah yeah the money was very
03:40

03:40 important but
03:40

03:40 i it was my passion as well and it was
03:43

03:43 my passion of being in business
03:45

03:45 yeah well it’s interesting that you say
03:47

03:47 it’s how you would take mom out because
03:50

03:50 i think that the need for income
03:53

03:53 it creates a lot of that drive to
03:57

03:57 that path to do to create something and
03:60

03:60 to
04:00

04:00 you know generate
04:03

04:03 generate cash flow absolutely so that’s
04:06

04:06 that
04:07

04:07 uh so how would you say you got to
04:11

04:11 where you are today from that because
04:12

04:12 that’s kind of a long stretch
04:15

04:15 life experience son i’ve been through a
04:18

04:18 lot of things in my life
04:20

04:20 you know i was born in mexico raised
04:23

04:23 there
04:24

04:24 my father was in the banking business
04:26

04:26 and also
04:28

04:28 he had a small textile mill together
04:30

04:30 with some partners
04:31

04:31 some family members and
04:35

04:35 i loved the bank it was great
04:38

04:38 but then all banks were nationalized
04:41

04:41 um they paid us very very little money
04:44

04:44 for
04:44

04:44 the percentage that the family had and
04:48

04:48 that’s the day
04:48

04:48 that basically i decided to move to the
04:51

04:51 states
04:52

04:52 i had to come to the states without
04:55

04:55 knowing how things worked here because
04:57

04:57 of the visa that i came with
05:00

05:00 i could not be employed i had to start
05:03

05:03 on my own
05:04

05:04 and so i started
05:08

05:08 searching and looking for for things
05:12

05:12 i have a very dear friend of mexico who
05:15

05:15 helped me a little bit with that because
05:16

05:16 i was importing
05:19

05:19 labels from mexico and then i
05:22

05:22 together with a couple of other very
05:24

05:24 dear friends i
05:25

05:25 opened a very small car dealership in
05:28

05:28 dallas
05:30

05:30 dallas went through a very very bad
05:33

05:33 recession
05:34

05:34 i thought that business that we were in
05:37

05:37 was finite i did not see the future in
05:40

05:40 it especially in those years
05:42

05:42 and so after shutting it down
05:46

05:46 which again its experience failures are
05:49

05:49 experience and that’s how i look at it
05:53

05:53 so after that experience then i went
05:56

05:56 into real estate
05:58

05:58 okay unfortunately i had
06:01

06:01 two partners i had one that was
06:03

06:03 absolutely wonderful he passed away
06:06

06:06 wonderful gentleman and he’s the one who
06:08

06:08 really brought me in
06:09

06:09 and then we got together with on
06:14

06:14 a con artist unfortunately
06:17

06:17 and again another bad experience but
06:20

06:20 that
06:21

06:21 really taught me it really taught me in
06:24

06:24 those
06:24

06:24 years i saw in dallas dallas was really
06:27

06:27 in the depression
06:28

06:28 in the mid to late 80s okay
06:32

06:32 real estate the buildings were empty
06:35

06:35 people were going
06:36

06:36 under left and right businesses were
06:38

06:38 closing
06:40

06:40 in those years the banking was just
06:43

06:43 state banking
06:44

06:44 in texas we didn’t have the national
06:46

06:46 banks that you have
06:48

06:48 so most of the banking industry also
06:51

06:51 folded so
06:54

06:54 it was very hard on everybody it was
06:56

06:56 hard to keep
06:59

06:59 doing business it was the real estate
07:01

07:01 that i got involved did not do very well
07:05

07:05 we kept it i’ve never given a property
07:07

07:07 back in my life
07:09

07:09 we got rid of the bad guy i stayed at
07:12

07:12 the end alone
07:13

07:13 with it and then i moved to los angeles
07:17

07:17 where i started a business with my
07:18

07:18 cousin
07:20

07:20 uh david which he really taught me a lot
07:22

07:22 at the beginning
07:23

07:23 i have learned a lot in in dallas
07:27

07:27 but my cousin also taught me a lot of a
07:30

07:30 different
07:30

07:30 way of doing it a lot of people want to
07:34

07:34 learn
07:34

07:34 but what is it that you learned exactly
07:37

07:37 in dallas and in dallas we were
07:40

07:40 investing to get cash flow
07:42

07:42 we did not care for the appreciation
07:45

07:45 okay
07:46

07:46 and when i came to los angeles my cousin
07:48

07:48 taught me
07:50

07:50 about uh appreciation instead of
07:53

07:53 cashflow
07:54

07:54 wow okay and uh i really like that
07:58

07:58 idea because it’s a very very safe
08:01

08:01 way to invest when you are
08:05

08:05 when you invest like that with not a lot
08:07

08:07 of leverage
08:08

08:08 you’re gonna be safe no matter
08:10

08:10 recessions
08:12

08:12 or whatever happens so after my
08:14

08:14 experience in mexico about
08:17

08:17 the bank being taken by the government
08:20

08:20 or the banks because it was not only
08:22

08:22 ours it was everybody else’s bank
08:24

08:24 and the experience in dallas with the
08:26

08:26 depression i just wanted to do
08:28

08:28 things that were very very safe right
08:31

08:31 and
08:32

08:32 so fortunately my cousin taught me about
08:36

08:36 this i learned
08:37

08:37 and i started doing
08:41

08:41 exactly that and uh fortunately
08:44

08:44 also we’ve been very successful doing it
08:47

08:47 that way
08:48

08:48 because we we bought very good
08:50

08:50 properties very low leverage
08:52

08:52 they have gone up in value throughout
08:55

08:55 the years
08:56

08:56 and when we lose a tenant because of the
08:58

08:58 kind of properties that we buy
09:00

09:00 it’s easy to get another tenant yeah i
09:03

09:03 think what your experience in dallas you
09:05

09:05 went through that really
09:06

09:06 shaped your your strategy i didn’t know
09:09

09:09 that you were about cash flow initially
09:11

09:11 and then you went
09:12

09:12 more for appreciation that you st that
09:14

09:14 was your starting point
09:16

09:16 yeah so that’s kind of interesting what
09:17

09:17 other
09:19

09:19 things have you implemented in your
09:21

09:21 strategies to
09:23

09:23 weather the storm during a downturn or
09:25

09:25 something
09:26

09:26 you know catastrophic like what happened
09:28

09:28 in mexico or dallas
09:30

09:30 well as you say you know i’m kind of a
09:32

09:32 jokester at times so i call myself
09:34

09:34 a professional chicken so i’m a chicken
09:38

09:38 to invest i want to invest where
09:42

09:42 i know that the chances of failure
09:45

09:45 are very small and that
09:48

09:48 has been my you know my business plan
09:52

09:52 all along
09:53

09:53 and to keep the properties transform
09:55

09:55 them i always try to look for something
09:57

09:57 that i can transform
09:59

09:59 i buy great locations and
10:02

10:02 i i’m patient and it’s not about the
10:05

10:05 cash flow it’s about the appreciation
10:07

10:07 it’s a different kind of business but it
10:10

10:10 is much safer
10:13

10:13 how do you utilize leverage when you do
10:15

10:15 that because
10:16

10:16 you also talked about being low leverage
10:20

10:20 low leverage what gives you is safety if
10:23

10:23 you want to grow
10:24

10:24 and to grow bigger leverage is a good
10:27

10:27 thing
10:27

10:27 but leverage it’s a matter of timing
10:30

10:30 sometimes
10:31

10:31 leverage can also kill you because if
10:34

10:34 you’re
10:34

10:34 over leveraged in a property and there’s
10:37

10:37 a downturn and you lose your tenant
10:39

10:39 and you have to pay the mortgage it can
10:42

10:42 make you give the property back whereas
10:45

10:45 if you have low leverage
10:48

10:48 and you have some reserves and you do it
10:50

10:50 properly
10:51

10:51 if you have a downturn then you can you
10:54

10:54 you don’t have a problem
10:56

10:56 you’re strong and you can you can
10:58

10:58 weather the bat storm
10:60

11:00 and as you’ve seen you know with weather
11:02

11:02 here bad times in
11:04

11:04 los angeles in some of the properties
11:07

11:07 and we’ve never lost one and the
11:09

11:09 properties are doing very well
11:11

11:11 and so again it’s being
11:14

11:14 a chicken yeah no i think one more thing
11:17

11:17 too
11:18

11:18 and you might have touched on it but was
11:20

11:20 the negotiation
11:21

11:21 standpoint that you have with tenants
11:23

11:23 during the leases if you’re low
11:26

11:26 leveraged if they move out
11:27

11:27 you don’t you don’t they can’t use it
11:30

11:30 against you if you have a huge mortgage
11:32

11:32 payment that you have to
11:33

11:33 pay up while it’s vacant well you
11:35

11:35 touched in a very important
11:37

11:37 point also in recessions
11:40

11:40 or when things slow down usually you
11:43

11:43 know we have
11:44

11:44 we’ve had a few large tenants in our
11:46

11:46 portfolio we still do
11:48

11:48 okay these companies sometimes when
11:50

11:50 there’s a downturn they want to
11:53

11:53 use it as an excuse to renegotiate the
11:55

11:55 lease or do something like that
11:57

11:57 or you might lose a tenant what happens
12:01

12:01 when you’re not leveraged and you have
12:02

12:02 good stuff good properties well located
12:05

12:05 is that you’re in control of your rent
12:08

12:08 and not
12:08

12:08 your tenant and uh as you know because
12:12

12:12 we’ve lived it together
12:13

12:13 i’ve offered tenants who came with with
12:16

12:16 uh
12:18

12:18 requests like that that you know if they
12:20

12:20 wanted to break the lease i would be
12:21

12:21 willing to do it
12:22

12:22 yeah because i’m not afraid of what we
12:25

12:25 have
12:26

12:26 and the locations of the property
12:28

12:28 marketability
12:30

12:30 we’re talking about commercial real
12:32

12:32 estate retail
12:34

12:34 high high traffic or
12:37

12:37 stores like that not residential or
12:39

12:39 multi-family or anything
12:41

12:41 i i like residential very much um
12:44

12:44 in fact you and me did a couple of
12:46

12:46 things with residential
12:48

12:48 and uh also i love it because it’s very
12:52

12:52 safe
12:53

12:53 residential is very safe especially if
12:55

12:55 it’s well located
12:56

12:56 like the properties that we were that we
12:59

12:59 bought
12:60

12:60 at one point the problem is california
13:03

13:03 went to rent control
13:05

13:05 and when you have rent control it can
13:07

13:07 kill your appreciation
13:09

13:09 and again that’s what i like right i
13:12

13:12 like appreciation
13:13

13:13 with time uh we probably would have the
13:16

13:16 safety of a
13:17

13:17 tenant leasing because of the locations
13:21

13:21 but our appreciation would be
13:24

13:24 yeah would be killed with rent control
13:27

13:27 and the control of the building
13:28

13:28 yes because you can’t take it over and
13:31

13:31 really
13:31

13:31 make improvements that you might want to
13:33

13:33 make or that
13:35

13:35 that you that you can’t really make a
13:37

13:37 property
13:39

13:39 shine and if you want if your goal is to
13:41

13:41 add value
13:42

13:42 it’s hard to do that when you know you
13:45

13:45 have to abide by a lot of these uh
13:47

13:47 the restrictions on on who you can have
13:51

13:51 in your
13:52

13:52 property and that sort of thing well
13:54

13:54 it’s difficult to get rid of a bad
13:55

13:55 tenant
13:56

13:56 you can’t and then if it’s a small
13:59

13:59 property like the ones that we were
14:00

14:00 buying
14:01

14:01 i mean they were expensive properties
14:03

14:03 before where they were
14:04

14:04 but you get only one tenant who decides
14:07

14:07 to stay for life
14:08

14:08 he just killed your appreciation right
14:11

14:11 so
14:12

14:12 yeah that’s not part of our business
14:14

14:14 plan so that’s when we decided to sell
14:16

14:16 those
14:16

14:16 and we sold them at the very nice profit
14:19

14:19 as well
14:20

14:20 and we traded for commercial right
14:23

14:23 okay here’s a question that i heard that
14:26

14:26 i
14:28

14:28 i mean you could probably go on for a
14:30

14:30 while about this
14:31

14:31 how does intuition and your gut play
14:34

14:34 into your investment decisions and into
14:38

14:38 uh just into your plans
14:43

14:43 to me it’s probably 95 of it
14:47

14:47 it’s a combination between knowledge of
14:49

14:49 the market and intuition
14:51

14:51 you have to know your market as well and
14:54

14:54 you have to understand the market
14:55

14:55 where you’re at but intuition is very
14:58

14:58 important because in a spreadsheet song
15:00

15:00 you can put there whatever you want i
15:03

15:03 can make a spreadsheet that
15:04

15:04 can look absolutely wonderful
15:08

15:08 but it’s not real i think it’s your
15:11

15:11 intuition
15:13

15:13 the way you’re gonna buy how you’re
15:15

15:15 gonna buy and how you’re gonna transform
15:17

15:17 the property
15:18

15:18 that’s how you think
15:21

15:21 you really can make it and i i think
15:24

15:24 that’s one of my biggest
15:26

15:26 assets that i have very very good
15:28

15:28 intuition
15:29

15:29 so is your intuition supported by fax or
15:32

15:32 is it
15:32

15:32 absolutely okay yes it is by fax because
15:36

15:36 i
15:36

15:36 know the market i know what rents are i
15:39

15:39 know what’s good
15:40

15:40 the property what’s bad i know how can i
15:43

15:43 transform it
15:44

15:44 i know how much it’s going to cost to
15:47

15:47 transform it
15:48

15:48 i know what rents we’re going to get in
15:50

15:50 the
15:51

15:51 but not uh imaginary rents
15:56

15:56 that a lot of people put in their
15:57

15:57 spreadsheets i’m talking about market
15:60

15:60 current rents of the moment okay
16:03

16:03 okay yeah that’s what i’ve seen you do
16:05

16:05 okay
16:06

16:06 um so when it comes to sort of back to
16:09

16:09 quality buying quality assets because
16:11

16:11 they’re a little safer
16:13

16:13 how do you justify paying the price
16:15

16:15 points that
16:16

16:16 the market demands sometimes because in
16:19

16:19 any market downturn or upturn
16:21

16:21 quality assets are always going to be a
16:24

16:24 lot more expensive than b
16:25

16:25 locations or c locations
16:29

16:29 how do you justify the the lower yield
16:33

16:33 on those kinds of investments
16:35

16:35 to buy is it just safety or
16:38

16:38 no it’s a lot more than safety you’ve
16:40

16:40 lived with me to
16:41

16:41 two properties i’m gonna mention them if
16:44

16:44 it’s okay with you
16:45

16:45 but we did an apartment building in uh
16:48

16:48 beverly hills uh it was a triplex
16:52

16:52 if i say the numbers people that hear
16:54

16:54 this are going to get
16:55

16:55 shocked probably yeah but we bought it
16:58

16:58 at market
16:58

16:58 at the time but it needed a full rehab
17:02

17:02 uh we bought it at uh a million nine
17:06

17:06 then we did a very extensive rehab
17:09

17:09 and uh our cost became around 3.6 after
17:13

17:13 the
17:13

17:13 after the rehab and i knew
17:17

17:17 we were going to get much higher rents
17:20

17:20 and as you know i won a bet with one of
17:22

17:22 our dear friends and brokers
17:24

17:24 knowledgeable broker yes and i won the
17:27

17:27 bet on him
17:28

17:28 that we were gonna rent for more and we
17:30

17:30 did because i do understand
17:32

17:32 quality and i like quality um
17:35

17:35 so when rent control came
17:38

17:38 we decided to get out of residential
17:42

17:42 and we sold it for 5 million yeah so
17:45

17:45 even though we never
17:46

17:46 we could never really do our plan
17:50

17:50 because we were planning to keep it
17:52

17:52 forever for the next generation
17:54

17:54 that was the plan we still did very well
17:57

17:57 with it
17:57

17:57 right uh so that’s what i call safety
18:02

18:02 um you take our mail which we traded
18:05

18:05 that for
18:06

18:06 carmel we knew the value because we
18:09

18:09 even though we were gonna get a low
18:11

18:11 return at the beginning
18:13

18:13 uh and we knew that but we are
18:15

18:15 transforming the building as it is
18:18

18:18 uh it’s gonna take us three to four
18:20

18:20 years to finish the
18:21

18:21 the the project um
18:24

18:24 we still are in the black i mean we are
18:27

18:27 cash flowing
18:28

18:28 um but the building in four years it’s
18:32

18:32 probably going to be worth
18:33

18:33 probably 60 to 70 percent more than what
18:36

18:36 we paid yeah
18:37

18:37 no that’s incredible we knew that from
18:39

18:39 the beginning
18:40

18:40 yeah i had no doubt that that was gonna
18:43

18:43 happen
18:43

18:43 so to me to me and this is very personal
18:47

18:47 it’s the patience to buy and to find the
18:50

18:50 right asset
18:52

18:52 that’s where the profit is right and
18:55

18:55 that’s where the appreciation is gonna
18:57

18:57 be
18:58

18:58 i imagine what we’re gonna do with the
18:60

18:60 asset
19:01

19:01 and i that’s the the gut feeling that
19:04

19:04 you’re talking about right
19:06

19:06 but i know my numbers as well i know
19:08

19:08 what the market rates
19:09

19:09 yeah i understand all of that so
19:12

19:12 for me it’s not difficult and i’m not
19:15

19:15 afraid of pulling the trigger and buying
19:17

19:17 something like that
19:18

19:18 because i know we’re gonna do well
19:20

19:20 that’s actually i think one of your
19:22

19:22 unique talents
19:23

19:23 a lot of people are scared to pay for a
19:25

19:25 little bit more for a quality location
19:28

19:28 and to be able to see the value that you
19:30

19:30 could add so what you’re saying in a way
19:33

19:33 is that with the let’s say risk adjusted
19:36

19:36 basis or like if you compare
19:38

19:38 even quality locations there’s still a
19:41

19:41 lot of
19:41

19:41 value that you could create and
19:43

19:43 appreciation that you could find
19:45

19:45 in those assets they’re not you have to
19:47

19:47 be patient to find them
19:49

19:49 but the yield could be good
19:52

19:52 it’s not necessarily a low yield um
19:55

19:55 unless it’s
19:56

19:56 fully rented for the long well you also
19:59

19:59 get
19:59

19:59 you know my point of view i’ll give you
20:03

20:03 another example
20:04

20:04 where air one is here our our property
20:07

20:07 that property has transformed four times
20:11

20:11 yeah but it’s always cash flow it always
20:15

20:15 yielded money every time we rehab we
20:18

20:18 might have a moment
20:19

20:19 in time where it didn’t cash flow for
20:21

20:21 whatever reason
20:22

20:22 but the cash flow has increased
20:24

20:24 exponentially right
20:26

20:26 while we owned it and today it’s a
20:27

20:27 completely different property than the
20:29

20:29 day
20:30

20:30 i bought it yeah and it’s worth
20:34

20:34 probably five times more
20:37

20:37 yeah no that property it’s incredible
20:40

20:40 how the transformation when it was
20:42

20:42 a super crown and then uh
20:45

20:45 magnolia and what air one did to it they
20:48

20:48 just
20:49

20:49 they made the the building super
20:53

20:53 i mean that’s what good locations do you
20:55

20:55 want tenants come they want to improve
20:57

20:57 it they want to make it their flagship
20:58

20:58 stores
20:59

20:59 or you know they’re willing to invest in
21:01

21:01 those neighborhoods so that’s it’s a
21:03

21:03 win-win for everybody
21:04

21:04 yeah also when we develop some take the
21:07

21:07 example of
21:08

21:08 of fidelity right i
21:11

21:11 probably spend i’d say
21:15

21:15 15 more of the cost of the building or
21:18

21:18 20
21:19

21:19 more to make a much
21:22

21:22 nicer building and much more functional
21:26

21:26 uh that could be very diverse inside
21:29

21:29 because it could be split
21:30

21:30 inside very easily i mean i planned all
21:33

21:33 that
21:34

21:34 and because of what we did we landed a
21:36

21:36 tenant like fidelity yeah
21:38

21:38 and uh they’ve been our tenants since
21:41

21:41 they opened and they’re gonna stay with
21:43

21:43 us for a long time
21:44

21:44 they’ve used the building in some of
21:46

21:46 their commercials
21:48

21:48 yeah you know that’s what i’m looking
21:50

21:50 for yeah and we love them
21:51

21:51 as tenants and they love us as landlords
21:54

21:54 right so
21:55

21:55 that was created by the combination of
21:58

21:58 the location
21:59

21:59 and the quality of the building how do
22:02

22:02 you utilize
22:04

22:04 you know you see a lot of these uh
22:07

22:07 these syndication deals online and they
22:10

22:10 have these really high irrs
22:12

22:12 do you like using irr how do you utilize
22:15

22:15 the that metric in
22:19

22:19 in your business i don’t use irr
22:22

22:22 because to use irr
22:26

22:26 i have to plug in things that’s going to
22:28

22:28 happen in the future
22:30

22:30 that i don’t know that they’re going to
22:31

22:31 happen i like to be
22:33

22:33 incredibly transparent you know we have
22:35

22:35 a few partners
22:36

22:36 in our deals and i like to be super
22:39

22:39 transparent
22:41

22:41 and i don’t think you can be transparent
22:43

22:43 enough
22:44

22:44 when you’re doing a long-term project
22:46

22:46 for appreciation because it’s very hard
22:48

22:48 to plug in
22:50

22:50 your spreadsheet what our future rents
22:54

22:54 gonna be
22:54

22:54 you can go through a recession you can
22:56

22:56 go through different
22:58

22:58 situations so it’s very hard to for me
23:01

23:01 to plug in
23:02

23:02 an irr and i’ve never done it
23:05

23:05 and i say that i’ve been successful
23:08

23:08 almost in all the properties with
23:10

23:10 johnson
23:12

23:12 so yeah irr is not something
23:15

23:15 that i do it i might do it for my own
23:18

23:18 self
23:20

23:20 because i might plug some inflation or
23:24

23:24 something to look at it
23:25

23:25 but that is not also the way
23:28

23:28 the kind of property that i buy because
23:31

23:31 i want to transform it
23:33

23:33 now you could do an irr for instance
23:37

23:37 in our property in carmel right why
23:39

23:39 because we knew the rents
23:41

23:41 and if you plug in those rents the way
23:43

23:43 we bought the building
23:45

23:45 then you could do an irr for five years
23:48

23:48 but after five years i i i don’t know
23:52

23:52 what the market is gonna do
23:53

23:53 yeah and i want to be absolutely
23:55

23:55 transparent
23:56

23:56 with my partners yeah i don’t want to
23:59

23:59 promise things that i cannot deliver
24:01

24:01 i don’t know right and also in a way you
24:03

24:03 have to have an
24:04

24:04 end date in order to do an irr
24:06

24:06 calculation
24:07

24:07 um and that kind of is like so
24:11

24:11 one thing that i thought about for the
24:13

24:13 long-term investment strategy you could
24:15

24:15 have one property for
24:17

24:17 a long period of time whatever long term
24:19

24:19 means to you or you can have a lot of
24:21

24:21 different deals and you could still be a
24:22

24:22 long term investor
24:24

24:24 what’s the problem with doing a lot of
24:26

24:26 little deals if that’s how you want to
24:28

24:28 create value
24:29

24:29 it doesn’t matter as long as the deals
24:30

24:30 are good it doesn’t matter you can make
24:33

24:33 a lot of small deals you can make one
24:35

24:35 big
24:36

24:36 do a one big deal it doesn’t matter son
24:39

24:39 it’s just to be profitable see
24:42

24:42 i am the people that have invested money
24:46

24:46 with me
24:47

24:47 are long-term investors and i’m very
24:50

24:50 open with them
24:51

24:51 i tell them we’re not going for cash
24:53

24:53 flow we’re going for appreciation
24:55

24:55 this is gonna take time and that’s the
24:59

24:59 kind
24:59

24:59 of person that will invest with me
25:03

25:03 all of them are very happy some of my
25:05

25:05 partners have been partners
25:07

25:07 with me in different ventures for 40
25:09

25:09 years or 45 years
25:10

25:10 wow and that’s what i want i want
25:13

25:13 exactly that
25:14

25:14 and uh so uh
25:19

25:19 it’s all long term sometimes
25:22

25:22 for different reasons i want to sell
25:24

25:24 carmel is one of them
25:26

25:26 yeah you know i had we had a partner in
25:29

25:29 in the beverly hills building yeah
25:32

25:32 and when rent control came we decided to
25:34

25:34 sell the plan was not to sell right
25:37

25:37 and probably the internal rate of return
25:39

25:39 which i never made was pretty good
25:41

25:41 right because it was very short-term but
25:44

25:44 it’s not the
25:45

25:45 purpose of what i do for me it’s
25:48

25:48 long-term investment
25:50

25:50 with safety and appreciation okay that’s
25:52

25:52 what i look for
25:54

25:54 how would you give that advice for let’s
25:57

25:57 say
25:58

25:58 um a dentist or you know somebody who’s
26:01

26:01 not a real estate savvy person
26:03

26:03 how would they start to invest if they
26:06

26:06 have you know a hundred thousand dollars
26:07

26:07 or a million dollars
26:09

26:09 because that’s a it becomes very
26:11

26:11 difficult to find something at those
26:13

26:13 prices
26:13

26:13 safety that’s what it is it is safety
26:17

26:17 it’s diversification of your portfolio
26:20

26:20 okay you mentioned dentist you know that
26:22

26:22 i have two brother in-laws which for me
26:24

26:24 are like my brothers
26:25

26:25 because i one of them was seven years
26:28

26:28 old when i started to date your mom
26:30

26:30 and the other one was nine so so one
26:33

26:33 of them doesn’t remember almost life
26:35

26:35 without me being there
26:36

26:36 so they’re my brothers yeah and as you
26:38

26:38 know i’m pushing them
26:40

26:40 to buy some of this kind of real estate
26:43

26:43 it’s for safety for their retirement for
26:47

26:47 their heirs as well right
26:50

26:50 like in the case of alex it’s for their
26:52

26:52 heirs
26:53

26:53 and it’s basically safety how would they
26:56

26:56 be able to
26:57

26:57 would you recommend that they partner
26:59

26:59 with people or
27:00

27:00 how would you feel about that
27:02

27:02 partnerships and
27:04

27:04 going into group crowdfunding or
27:06

27:06 anything like that with people you don’t
27:07

27:07 know or
27:09

27:09 if you know there’s so many deals out
27:11

27:11 there that maybe they can’t
27:13

27:13 take down a 15 million dollar deal
27:17

27:17 where like that would be hard for a lot
27:19

27:19 of people
27:20

27:20 what how do they get started if they
27:23

27:23 can’t get to that level
27:24

27:24 to me it’s very important who do you
27:27

27:27 invest with
27:29

27:29 very important i would never invest
27:32

27:32 in one of those funds because
27:36

27:36 a lot of people are going for the again
27:38

27:38 the internal rate of return the cash
27:40

27:40 flow
27:41

27:41 the more cash flow you’re looking for
27:42

27:42 the riskier the deal is
27:44

27:44 so i don’t like to invest with that
27:47

27:47 unless it’s somebody that i really
27:49

27:49 really really know and you know who
27:53

27:53 those people are uh because there’s a
27:55

27:55 lot of scams
27:56

27:56 out there so i’d like to see somebody
27:59

27:59 who’s got the experience
28:01

28:01 somebody that really knows what they’re
28:03

28:03 doing and that they have the same
28:04

28:04 philosophy as i do
28:07

28:07 right you know i so that i
28:10

28:10 would invest with somebody like that but
28:12

28:12 you have to be incredibly careful
28:14

28:14 right there are a lot of uh bad people
28:18

28:18 out there or not knowledgeable people
28:20

28:20 out there
28:21

28:21 and i would not put my money to risk
28:24

28:24 with them
28:26

28:26 yeah you actually talk a lot about being
28:28

28:28 transparent being
28:29

28:29 honest uh even good news or bad news
28:33

28:33 whatever it is is that because i mean
28:36

28:36 are we on
28:37

28:37 are we on oh sorry no it’s fine i
28:40

28:40 uh that’s not actually something that’s
28:43

28:43 really that common
28:44

28:44 i mean people are very easily would want
28:47

28:47 to give you good news
28:48

28:48 but giving bad news and giving the bumps
28:50

28:50 in the road you’re very quick at
28:52

28:52 reporting that with your investors or
28:54

28:54 your partners or anything that happens
28:56

28:56 where did that come from that my father
28:60

28:60 taught me that song
29:03

29:03 that simple my father was super
29:05

29:05 honorable
29:06

29:06 yeah super straight yeah always the
29:09

29:09 truth
29:09

29:09 people adored him and so i learned it
29:13

29:13 from him
29:14

29:14 and as you know most of my friends are
29:16

29:16 like that
29:17

29:17 so it’s not unique to me yeah as the
29:20

29:20 saying goes
29:21

29:21 birds of a feather flock together yeah
29:24

29:24 so
29:25

29:25 that’s why i flock with yeah and
29:28

29:28 so yeah that’s something that uh
29:31

29:31 for me my name my reputation
29:35

29:35 is incredibly important not a little bit
29:38

29:38 incredibly important reputation and
29:42

29:42 that goes into how do you view
29:44

29:44 relationships because this business a
29:46

29:46 lot of it
29:46

29:46 is relationship space is reputation
29:48

29:48 based
29:49

29:49 um how do you view relationships and
29:53

29:53 keep those relationships
29:55

29:55 i mean you have a big heart so everybody
29:57

29:57 that you’ve done business with you care
29:59

29:59 about
29:60

29:60 to a certain degree on a personal level
30:03

30:03 but how important are relationships to
30:06

30:06 you
30:07

30:07 and why and to me
30:10

30:10 and i think you’ve heard me say this
30:12

30:12 before the relationship is more
30:14

30:14 important than
30:15

30:15 the deal yeah the relationship is a lot
30:19

30:19 more important
30:20

30:20 and that’s why i have to be not only
30:23

30:23 because of me
30:24

30:24 because i’m the one who has to be happy
30:26

30:26 with me i’m the one who has to look at
30:28

30:28 me in the mirror every day
30:30

30:30 and i have to be happy with that person
30:32

30:32 so it’s very important to be transparent
30:35

30:35 with my friends with my investors with
30:38

30:38 my
30:39

30:39 with everybody because if not i’m not
30:42

30:42 gonna be able to live with myself
30:44

30:44 right and i love people
30:47

30:47 as you know and uh so
30:51

30:51 it’s not hard for me to do
30:55

30:55 okay uh here’s a more technical question
30:60

30:60 and i wasn’t sure how you were gonna
31:01

31:01 answer this i don’t know if you consider
31:03

31:03 yourself
31:04

31:04 i mean there’s a word family office but
31:06

31:06 where do how do you get from being a
31:08

31:08 mom-and-pop
31:09

31:09 investor to being institutional or being
31:11

31:11 what’s the difference
31:13

31:13 in terms of sophistication in terms of i
31:16

31:16 mean the capital requirements
31:18

31:18 are going to be different but why is a
31:19

31:19 mom and pop or family office
31:22

31:22 different than institutional or private
31:24

31:24 equity
31:25

31:25 i don’t think it’s different it depends
31:27

31:27 on your philosophy right
31:29

31:29 i don’t consider myself institutional
31:32

31:32 because it’s really a family business so
31:35

31:35 i don’t consider myself institutional
31:37

31:37 but it is to me it’s the same like if i
31:40

31:40 had ever
31:41

31:41 wanted to go and raise more money to do
31:44

31:44 the deals and get bigger and all that
31:46

31:46 it probably would have achieved that
31:49

31:49 because of
31:50

31:50 reputation because of track record so i
31:53

31:53 probably would have done it
31:54

31:54 i didn’t have an interest in that myself
31:57

31:57 because of
31:58

31:58 i enjoyed the relationships very much
32:01

32:01 right
32:02

32:02 and maybe that’s the one of the reasons
32:04

32:04 why
32:05

32:05 it’s not only the almighty dollar right
32:08

32:08 so that’s why you didn’t want to grow
32:10

32:10 into a bigger real estate company
32:13

32:13 risk as well so yeah because to grow
32:15

32:15 either i needed to go out and look for
32:18

32:18 more people to invest with me or i had
32:20

32:20 to leverage
32:21

32:21 right and i wanted safety and that’s why
32:24

32:24 i kept it this way
32:26

32:26 i think actually that’s one of the main
32:27

32:27 topics that i want to address with a lot
32:29

32:29 of these conversations
32:31

32:31 it’s the stability the dependability of
32:34

32:34 cash flow that when if you get
32:37

32:37 overzealous
32:38

32:38 a lot of people put their name on the
32:39

32:39 line they they
32:41

32:41 can lose everything if something happens
32:44

32:44 or that goes wrong
32:45

32:45 and that’s not the purpose of investing
32:47

32:47 as a family office i mean it could be
32:49

32:49 the strategy for a lot of people if they
32:51

32:51 want to
32:52

32:52 you know but it’s a different animal and
32:57

32:57 that might not be the goal of a lot of
33:00

33:00 long-term investors that plan on passing
33:03

33:03 wealth to the next generation and
33:05

33:05 building something in a slow stable
33:07

33:07 dependable kind of way yeah i mean as
33:11

33:11 as you’ve also heard me say this before
33:13

33:13 son
33:14

33:14 you know i first i don’t want to be the
33:16

33:16 wealthiest guy in the graveyard
33:19

33:19 uh but i want to be one of the most like
33:22

33:22 guys in the graveyard
33:23

33:23 graveyard that i do want to be yeah
33:26

33:26 so yes it that’s why it’s so
33:29

33:29 important to me to do these things and i
33:32

33:32 will sometimes discourage
33:34

33:34 an investor to invest with us
33:37

33:37 you know about one of them i don’t want
33:39

33:39 to mention their names who was going to
33:41

33:41 come into carmel
33:42

33:42 yeah and i told him not to because i
33:44

33:44 didn’t think it fit
33:45

33:45 his investing parameters
33:49

33:49 right and i was wrong
33:52

33:52 because it did yeah but i i discourage
33:55

33:55 him
33:56

33:56 of doing it yeah and you know he’s done
33:59

33:59 with me
33:59

33:59 several deals and we are very close and
34:02

34:02 he would do a deal with me in a second
34:04

34:04 for that reason
34:05

34:05 you said actually that you should
34:07

34:07 partner with people that have similar
34:09

34:09 strategies and
34:10

34:10 means and that could sort of be as
34:13

34:13 flexible as you
34:14

34:14 why is that something that people should
34:17

34:17 care about
34:18

34:18 well because of the philosophy of
34:20

34:20 investments on
34:22

34:22 if you are a person that’s gonna go for
34:24

34:24 cash flow
34:26

34:26 because you want a bigger return because
34:28

34:28 you need that money to leave off every
34:30

34:30 month
34:31

34:31 then i wouldn’t be your guy
34:34

34:34 but if you want to put a dollar that’s
34:36

34:36 going to be worth three or four
34:38

34:38 in in years to come and you’re going to
34:40

34:40 get cash flow
34:41

34:41 also even smaller cash flow then i would
34:45

34:45 be your guy
34:46

34:46 so it all boils down to philosophy
34:50

34:50 okay what was the hardest lesson you’ve
34:52

34:52 learned in
34:53

34:53 your growth what made you nervous in
34:56

34:56 your development
34:56

34:56 as a real estate investor
34:60

34:60 i can name you several i don’t mind oh
35:03

35:03 that was a question then i don’t mind no
35:06

35:06 again when you’re transparent you don’t
35:08

35:08 care about questions and
35:10

35:10 now i had several that were very tough
35:13

35:13 when i was involved with the con
35:15

35:15 artist the con guy in dallas yeah
35:18

35:18 i it was horrible experience horrible
35:21

35:21 what did you learn from that i first of
35:24

35:24 all i learned to be assertive
35:26

35:26 right which i was not before
35:29

35:29 that and i came also with um
35:32

35:32 the way we used to do business in mexico
35:34

35:34 which was completely different than here
35:36

35:36 where a handshake was worth more than 20
35:39

35:39 contracts
35:40

35:40 right here when you have a guy like that
35:43

35:43 that does not work if you’re with
35:44

35:44 somebody good like we
35:46

35:46 have some good partners it doesn’t
35:47

35:47 matter but when you’re
35:49

35:49 with a bad guy yeah that definitely
35:51

35:51 doesn’t work yeah
35:52

35:52 so i i learned a lot with him
35:56

35:56 i learned a lot uh uh i
35:60

35:60 forgot to mention you know when i was
36:02

36:02 together with marin dallas i learned a
36:04

36:04 lot with him
36:05

36:05 um bad experiences
36:08

36:08 i’ve had them big time song when we lost
36:11

36:11 the bank in mexico it was
36:13

36:13 almost like losing a family member
36:16

36:16 the recession in dallas when i had to
36:19

36:19 close
36:19

36:19 the dealership in dallas i mean i can
36:22

36:22 tell you
36:23

36:23 many many times where it was hard
36:28

36:28 but you learn what i’ve always thought
36:30

36:30 is
36:31

36:31 every time you go through hard times or
36:34

36:34 hard things happen to you
36:36

36:36 you can either grow or you can collapse
36:41

36:41 i’m a fighter so i’m the mentality that
36:45

36:45 the bad experience will teach me and i
36:47

36:47 will grow
36:49

36:49 yeah well you did teach me that
36:53

36:53 good uh
36:57

36:57 what are your three key daily habits
36:59

36:59 that
36:60

36:60 you do that keep you sort of uh that you
37:03

37:03 feel have
37:04

37:04 contributed to your success love your
37:07

37:07 mom
37:08

37:08 truly i am very blessed with
37:12

37:12 my marriage we met she was 14 and i was
37:15

37:15 16.
37:16

37:16 [Music]
37:18

37:18 and i try just again to be sincere
37:22

37:22 to be transparent to be up front
37:25

37:25 with everybody and try to do the best
37:28

37:28 that i can and
37:29

37:29 and be careful i’m very very much into
37:32

37:32 safety some
37:33

37:33 yeah because of the experiences that i
37:35

37:35 went through
37:36

37:36 very much into safety and it’s more
37:39

37:39 important for me to be safe and not to
37:41

37:41 lose the principle
37:42

37:42 than again to be the wealthiest guy in
37:44

37:44 the graveyard right
37:46

37:46 okay okay is there any last
37:49

37:49 sort of advice that you would give
37:51

37:51 people who are trying to invest
37:53

37:53 in looking for real estate opportunities
37:57

37:57 be careful who you invest with
38:00

38:00 and try to invest with the people that
38:03

38:03 have the same
38:04

38:04 philosophy as you have like we’ve
38:07

38:07 had partners who have invested with us
38:10

38:10 that have exactly the same philosophy as
38:12

38:12 we do
38:13

38:13 and uh that’s about it be careful
38:16

38:16 because there’s a lot of bad stuff out
38:18

38:18 there okay so be very very careful
38:21

38:21 and i just want to say that i’m very
38:22

38:22 proud of you son thank you
38:25

38:25 i’m very proud of you dad and that
38:27

38:27 fighting
38:28

38:28 stuff you taught me to like it too so
38:31

38:31 it’s always a fun journey
38:33

38:33 to grow and to just navigate navigate
38:36

38:36 those choices
38:38

38:38 so okay well thank you that’s a wrap
38:43

38:43 if you like this video please hit the
38:44

38:44 like button and if you want to get
38:46

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38:51

38:51 if you want more solutions or if you
38:52

38:52 want more information go to our website
38:54

38:54 at long term rei
38:56

38:56 dot com there we have articles other
38:59

38:59 podcasts and we have other
38:60

39:00 information thank you for watching
39:18

39:18 [Music]
39:22

39:22 you

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