David Hrizak: Principles of Purposeful Leadership

Welcome to Light Bulb Moments. Join us as we explore transformative experiences and insights in business and life. Here's your host, a maximizer and problem solver who through his extensive skill set and network, builds long lasting and meaningful relationships and continuously learns and applies new knowledge.

Bill Fornaro. All right, hello, everyone. This is Phil Fornaro and this is Light Bulb Moments. It's all about the energy. And for some reason, I've got huge energy, but I think I know why. I get to talk to my dear friend David Rezak today and we'll talk about him in a couple seconds. If you're new to the podcast, well, welcome. And we're so excited for everybody to hear what we're doing here. Our episodes are accelerating. We're getting more and more people that are asking to be on the podcast. I am ecstatic about it. It's made my life even better. The energy for me is even better. And for all the people out there, we're calling you the bright community, as you may know if you have listened, but if you haven't, it's worthwhile to hear these impactful guests. And it's sort of becoming this interesting phenomena where the LBMs or the light Bulb Moments that we're talking about here are sort of universal. And although we talk a lot about business, we talk a lot about life as well. And the commonality between LBMs. And if you listen to different speakers and different people that come onto this podcast, our guests, they all sort of align with some of the similar common LBMs. However, they say it in a different way. So maybe one of the guests isn't going to connect mentally with you. But then if you listen to a different guest, they will. And the format is becoming such that we're going across the country. When we talked to David, he's in Arizona, he's a recovering Illinois, and. And now we get to the point where we're going international. I've been chasing one of our guests for a while. He's a whiskey guy. We'll get him on soon, too. But a small investment of your time on Tuesday to listen to me solo cast and then Wednesday to hear us talk with our great guests will create great impact to you. So consider this an investment of your time and sometimes we have a little fun as well. So, you know, you can hear that as we go along and look out for some Wednesday bonus episodes. All right, well, enough about the podcast. More about David Rezak. So David and I go way, way back. I've invested with him. He's been My client we've been to through a bunch of wars, you know, during the downturn. Most honest guy I've ever met and truly one of the most industrious. And we're going to talk a little bit about the good and bad times that he's had and I had as well. But I think you're going to really enjoy this. I love talking to Dave because we talk about real estate all the time. He's a great business investor. He goes around the world to reach out to people, and he's growing his own fund now, but very active in the real estate arena. So you're going to enjoy this one. Pay attention. A lot of LBMs coming your way. David, how's it going today, man?

Bill, it's going great. Thank you very much for that introduction. I hope I can live up to part of what you're displaying there.

No, no, no. I under. Under did it. I didn't want to get the people too excited. So. So I see you got our boy Frank Thomas on your wall there, and our brain community can't see it, but you know, why Frank Thomas?

Well, I moved away from Illinois 13 years ago now and grew up on the south side of Chicago, raised by a tremendous grandmother who gave me all of the discipline and motivation I ever needed for my entire life. My mother was always in the picture, but she worked long hours in downtown Chicago. I was basically an only child by, say only because my youngest sibling is 10 years older than me. So they were out of the house by the time I was really starting to live my life. But it was my grandmother that was always there. Taught me how to ride the city bus at the age of 5, how to buy a transfer, how to get to Comiskey park on the bus from our house. So as I moved away from Chicago, I just wanted some memorabilia of my great times in Chicago. I've got Frank Thomas behind me. On my other wall, I've got a signed jersey from Mike Ditka and one from Bobby Hall. And God willing, I have a Michael jersey in auction that I'm bidding on right now that will have that one to solidify the collection.

You said Michael Jordan?

Yes.

Oh, got it, got it, got it.

Michael Jordan's the last one I'm missing. I'm not a Cubs fan. Sorry, LB community, but I'll have a full collection for my memorabilia, my time in Chicago here in my office to look at every day.

Well, good luck on the auction. Yeah, all those people are huge, huge Chicago icons here. Maybe we can get a couple of them on the podcast at some point. So tell me more about your grandmother. So did some of the things that she did, did that help inspire you for later years or did that reflect into anything that you did later in business life?

100%. That's the basis of who I am. She taught me discipline and loyalty. And it's those two qualities that have shaped my life. From day one in Southside Chicago, all the way out here to Arizona, doing work internationally down in Mexico, it's all about how you treat people. You mentioned that I was one of the most honest people you've ever met. If it's not true, I'm not going to say it because I come from the heart and everything I do. And we'll talk a little bit more about this later. But I retired at one point and I came back because I missed helping others. But everything in the basis of my morality was founded by my grandmother's principles.

Got it. So it took me down a couple different paths. So first off, when you retired and came back to work. So most people retire and then they go on to pathways to help through charities and other things. You came back to work to help people. Can you, can you expand on that? Yeah.

Well, on my 49th birthday, I ended up in the hospital in Puerto Vallarta for three days with a collapsed lung. I got thrown off a horse immediately, couldn't breathe, had to go to a Mexican hospital for three days. And it forced me to have a light bulb moment saying, hey, what am I doing here? I've been working so hard. I'm on a nice vacation to celebrate my birthday and here I am sitting in the hospital. I need to get out there and enjoy my life more. And that's what prompted the retirement. I had gone through everything I needed to business wise, I had no debt, I had great passive income. I was living the dream. Retired for 10 months. My wife and I traveled throughout the world and by about October I was extremely bored. And what I realized, I didn't miss the deals, I missed the passion and the people. And I took a big look at my life and said, hey, many people have helped me, many people have wronged me. Learn more from that. But the people that have helped me in my life, I want to repay others and pay it forward. So I, I refounded the principles of what I've been doing over a successful 23 year career at that point in single asset syndications. And I launched a vertical integrated company called Streamline Capital Group. Streamline development and streamlined asset management, all under the umbrella of the streamline companies. So I brought all of my experience up to that point to help others invest passively in real estate and grow long term wealth, all while getting some great tax advantages to it.

Got it. So I guess Bright Community, sometimes our light bulb moments are very painful. Getting thrown from a horse in Mexico to a Mexican hospital. Yeah, that's gonna wake you up. That is definitely a light bulb moment. So what at the time when that happened, did you. Were you trying to figure out a way to get back to the US or you know, this is crazy, you know that I didn't even know this. So what did do?

Yeah, so the, the doctor released me and he said, I recommend you don't fly for 10 days because you have the chance of your lung collapsing again. I said, there's not a chance. I'm staying in Mexico for 10 more days. This was the middle of December. Christmas was not too far away. I had to get back. And for the first time in my life, I was truly scared. I got on that plane not knowing if I was going to have an incident or not. And I held my wife's hand the whole flight home. And when we finally touched down, that's when I knew I was going to start living my life a different way.

So that's interesting. So that gave me a light bulb moment. And the light bulb moment is this, is that I got to start planning. If I go ahead and go overseas, you got to plan for a potential incident. What are you going to do? Are you ready? Do you know where the hospitals are? Do you know where? Do you have connections to the United States that you can call and give guidance? These are all things that you need to start thinking about Bright community. And I didn't think about it till today. So now I'm freaked out. Now I got to call Health Network foundation who I work with that are sort of a concierge type system and figure out if there's an option there. So, Dave Rezak, you've already added value to my life and my bright community here. So thank you for that, Phil.

One other point to that is international travel insurance. So typically your medical insurance in the States is not going to cover any of your expenses in a hospital out of the country. So there's separate travel health insurance that you can acquire if you're going to be overseas for a long, long period of time. Just as it's an insurance policy, you got to protect yourself. I had to pay everything up front in the Mexican hospital in cash or a credit card. And fortunately I had that travel insurance and I ultimately did get reimbursed from it.

Got it. So you see, break me. This was definitely not on our radar, but these are the surprises and things that could add value to your life and add value to my life. So I'm going to add to that. Dave Rezak and hopefully we'll get to talk about real estate today. But maybe not. Maybe we'll just talk about this stuff. So the idea was the. I just read. I'm one of those crazy people that reads pitch decks and private placement memorandums and offering memos and stuff like that. One day I was looking around for one and realized I didn't have one. And I saw that the credit card pamphlet came in. It's that 40 page pamphlet. It's got the staples on the left side. And I started paging through it and I'm reading this stuff and it's pretty amazing what's covered. So if something bad like that happens, if you're using the credit card for the trip, you know, on a variety of things, or you pay for things out there, the coverages are pretty significant. So, you know, check to see, you know, spend the time. Now we got chatgpt. Maybe you throw it in there and say, you know, break this down into like 10 things that I need to know are beneficial for my trip to, I don't know, Alaska, so. Or that's probably the bad idea to Switzerland. Let's make it a little bit more exciting. So that's a pretty cool thing to check. Read that or figure it out. And you know, maybe there's someone that actually does that. I remember Lou Wallach had someone that did something similar to that. And he was, he's actually my. As of this recording, he's number two. Lou Wallach was a great one. And I think he's close to a thousand downloads already. I can't remember what episode he was in. Oh yeah, episode 39. So that'll be something to look at. All right, all right, enough of this crazy stuff. But let's talk about the idea though that you said that your first trigger reaction was, hey, I'm gonna retire, I need to enjoy my life. And you did. You spent time with your wife, you traveled overseas. But what I think our bright community and what I always thought was that my goal was to get to the point where I could just travel and do nothing. But that isn't always what you want to do. And I think searching for these things and doing things and trying things makes you flip back to go, nah, this is not Giving me the satisfaction or fulfillment that I need, I need something else. And I love the fact that it did turn back to business. And it wasn't necessarily the deals, it was the people that you dealt with. So how did that shift your mindset for the next half of your life?

Well, at that point in my life, I was in my career over around 25 years and never picked my head up to enjoy a moment. Just constantly work. I've got a motto that I don't look at the clock. If the job's not done, I'm not done. I'm going to keep going. One time in my first job, I worked 36 hours straight with never going home just to get a project done. I was a model employee at that point. But when I retired, I figured out it wasn't retirement, it was a sabbatical. And you talk about sabbaticals often, how you go to New York. The 10 months that I took, it was just an extended sabbatical to refresh my mind, refocus my mind, and then truly came out of the gate running, just wanting to help people accomplish some of the things that I've done.

That's awesome. I love the sabbatical. Yeah, that's a great sabbatical. I want a 10 month sabbatical. I don't know, people may kill me if I go away for 10 months. But that's good. You had the opportunity, you worked hard to get to that point. And I like your quote, your office.

May be better off with you gone for 10 months.

You know, sometimes I think, I don't know if you're saying that positively about my team or negatively about me, but I'll take it about the positive side. But. But for sure, maybe sometimes when I go away, the team gets better and they get a chance to align with each other and figure things out and learn and grow. So that's a great light bulb moment, too. All right, well, let's talk. And I do want to talk about it. I like when my guests open up my mind when I talked about what your grandmother said. Discipline and loyalty. I don't know if I've ever told you this before, but the kindest thing and the most, you didn't have to do it. We did an investment together in that storage facility in Willowbrook, which is a great thing. That thing sold out was great. And we had high aspirations as to what the exit was going to be. And it exited and we had a very good exit. But it was like a point below what you told us we were going to get as an investment. And I was good with it. Everybody was good with it. But you reduced your general contracting fee to get that extra point on our return. And I never ever would expect for anybody to do that. It wasn't expected. We were big boy investors. We could have lost all of our money in the deal. But you said no. I said, this is what it's going to be, and you did it. So I want to thank you for that. And I don't know if I ever thanked you for it.

You're welcome again. That just goes to the testament of my morality, my discipline and my loyalty.

And as a result of that, a lot of people remember that and people will invest with you in going forward basis. So I love that.

Yeah. Through the majority of my career, all of my investors have repeat invested with me multiple times.

Yeah. And that's it. So let's talk about how did. Do you remember how we met?

I do. Yeah. So I came to your office in Hillside in 2009. My business partner had just passed away.

Yeah.

I was trying to help his widow, his wife, figure out what they're going to do with the house. Obviously that was a terrible time in the economy. Everybody was underwater. You and I met there. You gave me some ideas on how I can help her help herself move forward with that house. And then we didn't see each other for a number of years after that until you joined Lagrange Rotary. And I was a member there as well.

Got it. Yeah. That was the reconnect. I forgot. And that's, of course, I always talk about our Eastern European community. She was Eastern European, her and her husband. That was a sad story. And you created a great asset together in Lagrange. The office building right by the village hall there, which is a great asset. And that one's grown. And your investors have been very happy there.

Yeah. I've owned that property since 2009 and it's been fully leased since 2010 after we finished remodeling it.

Yeah. So. And at some point I got to get Mark Benjamin. He's one of your. Your, Your tenants there. Mark Benjamin, ophthalmologist, Wonderful guy. Helped me personally. I owe that guy so much. And, you know, I was just with him the other day and. Great guy. It just a plug that took it. Old Mark Benjamin. Anyway, so let's talk a little bit about, you know, real estate. And you've sort of shifted your model, but let's give a little bit of a. A historical pattern of what you did in real estate since you started typically.

Like any investor in real estate, we started small. Right. I don't come from a background with money. I come from a background with discipline, hard work ethic and loyalty. So after I started, I started my career first as a broker and property manager and I grew that business and then ultimately met my business partner and two other business partners to start buying rehab houses. This was in 2001 and we bought a couple rehabs, flipped them, made some money. We reinvested that money into some apartment buildings. They were value add situations. We did the same thing there. We increased the rents, made the property management more efficient by reducing expenses, made some money, sold them, moved on to some development deals. We built one out of the ground home, then we built two, then we built five. And then ultimately we got into commercial real estate as well. With the medical office building I still own today in downtown lagrange. It's been a great opportunity for us. So it's a classic entrepreneur story where we started small, we put some money in up front and then we just kept rolling it forward. And ultimately when we could not do a deal on our own, that's when we started bringing in friends and family into deals as LP investors and US as the GPs. And because I've always been vertically integrated with the knowledge of how to underwrite a deal, buy a deal, finance a deal, then from the general contracting experience that we had and then with the property management experience, by keeping all of that in house, we're able to reduce costs straight across the board and ultimately give our clients better returns because of it.

So. So it's quite an evolution. So when you first started, did you know what you were doing?

Was anybody.

I don't know. You figure most people. This is the mind of the entrepreneur, right.

Is that every new opportunity I go into, I always say, I don't know what I don't know. It's going to be a learning process and you learn every day of your life. If you're not learning, you're doing something wrong. And I like to walk into the room being the dumbest person in the room. So I can learn the most from people that have better experience, better knowledge than me.

Yeah. So that's sort of counterintuitive. Most people that I talk to want to be the smartest person in the room. How do you. Have you always been like that or did you have to develop that over time?

I had to develop it over time. I've been involved with some networking groups where I wasn't getting any benefit because of my experience. Was more than most people in the room. It took me a while to realize, hey, in order to learn more, I need to challenge myself more. I need to get out of my safety zone, get into some networking groups, get into some one on one meetings with people that I look up to from a business point of view, from a lifestyle point of view. And that's how you learn, that's how you grow.

Yeah. So. And along the way, there must have been a couple tumbles in terms of while you were in the learning curve or was everything rosy?

No, nothing's ever rosy in anybody's life. And a lot of people won't admit it. That's the problem. I've had some great mentors, I've had some terrible mentors, some terrible partners that I've been set back in time because of those relationships. They hindered my success and hindered my growth. And I look back and realize, man, I wish I could have gotten out of that relationship quicker. But you learn, you grow every day and you take the positives out of that and you learn from your mistakes and go forward.

Got it. And I wasn't one of those terrible partners, was I?

Never. No, you've been great. I love our conversations at 10 o' clock at night as you're reviewing my PPMS.

Oh my God. That was my favorite one of all time. When I said your pricing went up because you were always very generous. And the text back was, when was the last time I challenged your bill, Phil? I said, good point.

Right, right. I get what I pay for. I get great value out of four hour law. I'm not going to dispute the bill.

Yeah, yeah, yeah. I just like to read and understand and it's good. I hope you make a gazillion dollars on that project, which is a good one. I like that one. The office building. You want to talk a little bit about the Arizona office space?

Yeah.

So actually, let me set this up differently. So most of the people are running away from class B and regular office space. I know what's happening in, in Illinois and Chicago. Chicago is a disaster. There's no cranes, you know, in the air. You know, New York's different. You know, there's a lot of cranes, a lot of residential building going up. Offices are transforming into different things. We're going to eventually talk about office space and repurposing. We're going to do that with Russ Steinberg from Farm Zero at some point and how they're repurposing it. But Dave had a different idea. He shifted out to Arizona, which is a growing market. And I want him to tell you a little bit about. About that, Dave, and then talk about your. Your projects.

Yeah. So, Phil, I traded in the salt trucks on the road for salt on my margarita glasses 1212 years ago.

Smart.

And, yeah, I've always subscribed to Warren Buffett's philosophy of be fearful when others are greedy, and greedy when others are fearful. There's a lot of people investing in the multifamily market. I didn't want to get involved with that. I am looking at an opportunity where people are skipping over right now. Class A office buildings are obviously getting destroyed in the media. Destroyed in actuality, with the return to office mandate. But when we look at class B office buildings, we're looking at the small businesses of America. And the small businesses of America are 99% of all businesses in the country. They're the people that didn't have the ability to send their employees home for three or four years during the COVID mess and figure out how to get everybody back. They were the ones that persevered and stuck with it. So we love our class B tenants because of who they are, and we love our medical office buildings because medical office buildings are resistant to the economy. Everybody needs a doctor whether times are good, times are bad. So everyone has gone to a doctor's office. And primarily those are in class B office buildings. You don't see a doctor's office in a high rise in downtown Chicago. Typically, you see them in the suburban markets where all of our clients live. And we love what we're doing right now. We're very bullish on it.

So what type of. And those are the type of tenants in the hospital. And I think that's smart. Right? The medical people are getting older nowadays, and I think that getting into health and office, it seems like it makes too much sense. I mean, what do you think?

Well, here in Arizona, our population is growing every day. And the last time Arizona experienced a market like this, it was because of the second home market. And that's what ultimately crashed Arizona in.09 in 2010. Right now we have a population that's growing because of the amount of businesses that are moving to Arizona and the people that are coming to work at those businesses. So our market right now is stronger than it ever has been. You say there's no cranes in Chicago. The last time I went through downtown Phoenix earlier this week, I counted nine cranes in part of downtown Phoenix.

Nice.

Yeah. We've got the Taiwan semiconductor putting in billions of dollars. Here we've got intel who's been here forever, investing a few more billion dollars to its span. Mayo Clinic is out here. Just announced an additional 4,000 jobs that are coming to their campus here in Phoenix. Our medical schools that are in town. ASU just announced they're building a medical school here. Creighton University is already here at still Midwestern University from Downers Grove. Has a campus out here.

Leave a couple over here. I still got to live here. Dave, what the heck's going on? And now you're getting all the influx from California too. Lot of people too. Is that. That's right.

That is right. Yeah, that's good and bad, let's put it that way. We'll leave the politics side out of it.

Come on, you guys are wafflers out there. Sometimes you're, oh, you're purple, I think. Sometimes you're red, sometimes you're blue.

Yeah, well, it all depends. There's a lot of bumper stickers out here that say don't California my Arizona.

All right, that's okay. We could talk about that. As the quintessential moderate. I like watching from the middle the torture that is the right and the left.

Absolutely.

Anyway, let's talk about also. So you got into this office space, but it's sort of tailored out to Mexico and that was an interesting one. How did that all come about?

Yeah. So Mexico, Rocky Point, Mexico. Puerto Penasco is considered Arizona's beach. It's a four hour drive from Phoenix and you can be on the Sea of Cortez in four hours. After you leave your house, it's three hour drive to the border, one hour over the border. And I'd never been there when I went to college at ASU back 30 some years ago. Never traveled down there until we moved to Arizona, discovered it and I was amazed. The amount of condominiums, golf courses, single family homes, downtown, nightlife was incredible. So I had a partner. Still do. Say, let's go down, take a look at this. This is a new development, a reinvigorated development, I should say. It stalled during 09 and new buyers came in. I fell in love with it from the minute I drove through the front gates. Within minutes from the front gate, you passed the golf clubhouse. You're looking at the ocean, the Sea of Cortez. And we had an opportunity to buy a number of vacant lots for single family development. Well, I built many homes back in the Chicago markets, but never built in Mexico. So it required me to learn a whole new process from a becoming a permanent resident of Mexico so that I can open up a corporation within Mexico. I had meetings with the Mexican embassy here in Phoenix. I had to prove my net worth so that I wouldn't be a drain on their economy. Go figure. And then ultimately met an attorney, an accountant, and built the infrastructure of my team down in Mexico. And we've been successful with building and selling eight custom homes down there. I've got two vacant lots right now. So it's been a fun project, but it's also been one of my most challenging because of the change in the dollar to peso ratio on a daily basis. When you build something here in the United States, you got a pretty solid dollar to work with. Well, we were in the middle of a project, and all of a sudden the peso changed significantly and caused our cost to be much higher than we anticipated when we got into one of the homes. So it's been a learning process, having to deal with international currency on a daily basis.

I mean, you're a learner. Was it worth the learn here?

Would I do that deal again?

Yes. So you learned at least one thing and an interesting dynamic. But you learned something. I bet you something came out of it other than the light bulb moment that you won't do it again. I mean, is there something else that came out of it?

Yeah, it makes it easier for me to fly into Mexico now that I'm a resident. I don't have to wait now the long lines that the tourists do.

Ah, good point. Good point. That's good. Maybe you get better treatment if you ever have an incident again. And two questions. You know, now that you're a permanent resident, are you worried about getting deported.

At all or no? And interestingly enough, all of our buyers are from Arizona, a couple from California, and they traveled down there to escape the United States. And we had extreme success after Covid. We started right as Covid began, and then we got stuck because the border shut down during the first few months of the pandemic. Arizona was quick to recover from the pandemic and quickly say, all right, we're going to live our lives. And then the border opened. And as soon as the border opened, we had an influx of buyers that wanted that second home, knowing that they could now some of them work remotely or wanted to retire early. They had the opportunity with fiber, Internet, underground utilities, a golf course, and the Sea of Cortez in their backyard.

Now that sounds awesome. I know if I travel four hours to the west, I think end up in Iowa or something. So to travel for four hours, I Get to get. Or in the middle of Ohio or some. Someplace and, and you get to go to the Sierra Cortez. That, that's, that, that's fantastic. I mean, I love it. I'd like to get down there and see that at some point in time. So how is Walter? Have you gone out to lunch? Walter Veselinovich, my. One of my first clients. Still client after 29 years. 20, almost 30 years. I mean, have you got to talk to him at all?

I spoke to him a couple months ago. He's battling his own health issues and I haven't heard from him recently. So I hope and pray that everything's okay with him.

Well, yeah, I saw him on LinkedIn. He was shaking hands. I liked it. I got to call him, see how he's doing. So Walter Vessel image. You know, I would say similar things about Walter that I said about Dave. And you know, Walter is a builder extraordinary. He's one of the few people that ever saw that would. People would come to closings, you know, he was their builder and they wouldn't want another. It wouldn't want an attorney because they trusted him so much. But wonderful human, wonderful guy. He's out there in Arizona. He's been there for a while as well.

Yeah, he splits his time still with Illinois a little bit, but he is out here a lot. And yeah, the picture you saw, he was with Mark Bruninovich who became the US Ambassador to Serbia.

Got it, got it. Oh, that's kind of cool. So, all right, well, let's shift gears for a second because I think my bright community here, I think they believe that I'm this positive and very even person and I only talk in positivity and I don't lose my shit, so to speak. But I think you experienced one of my more volatile discussions with a banker. And I wonder if you want to just portray. I don't want people to think that I'm just always a nice guy. So you want to talk a little bit about that experience or not?

Yeah, absolutely. So you and I were in a number of meetings with a local bank there, and the local banker, we won't name who it is or what bank it was, but this guy came in and trying to take over the bank and came in with an iron fist. I was paying my loan on a townhome development in Brookfield that suffered losses during the 09 and 10 era. But we had put it onto a long term loan for me to start paying down principal and interest and ultimately we rented everything out. We were breaking even. But this guy wanted this loan off his books, and he was going to do whatever he could to piss you off and piss me off in order to pay him faster just so he can clear it off his books. And I had flown in a number of times from Arizona for those meetings with you, and this guy was screaming over the table and you stood up, threw your shit on the desk and said, we're not doing this, bottom line. And it was probably the first time anybody ever stood up to him. But I was like, man, this is what I'm paying those for now, law bills for.

Yeah, it's like, I think people that are bullies, you know, and if you're a bully in our bright community, you're probably a taker and not a giver. Like the people who try to give get on here. And what was interesting is that you need to know, and this is advice I always give. You need to know who your opponent is. And my volatile Italian years learning how to be crazy, it sort of elevates and you got to pull it out of me. But if you do, it's kind of like you're not going to be happy for the rest of the month. So we elevated that to a high level and it was a shouting match and slowly but surely, and it worked itself out. We introduced you to Joe Kroc, who stepped up to the plate and gave you a nice loan. And Joe's been on the podcast before. He's a great man. And it created a relationship. The volatility created a relationship.

Yeah, I, I love the introduction you gave me to Joe Croc. We just finished our first five year note with him. We just renewed it a few months ago. Heard Joe on the podcast a few weeks ago, and Joe has been a tremendous help to me and also to some friends that I've referred over to Joe in the LaGrange community.

But that's the, that's the, that's the interesting thing is like I always look back, those properties you're talking about everybody. I was a foreclosure defense. I was a lone workout guy during the downturn. I went, as I tell our bright community all the time, go where the competition is not going. And you sort of mentioned it with your move into the class B office space, but we got involved in that and then we did all those workouts, but people were taking advantage of it. And I always, I always use you as an example and, you know, hopefully you don't mind me saying it, but you kept the properties. You didn't Give the properties back. You made them performing, you rented them out, you paid all your bills. You know, throughout the process, not many people did that. And that was a big struggle. And I think that Joe Crock and that bank, FNBC bank of Trust, the one that you ended up going with at the, at the end, they recognize that and they, and they, they were more than happy to give the loan and they're more than happy with receiving conforming loans for a period of time. I mean, is that, is that a good rendition of that?

Absolutely. Having been in this business 29 years, I know what lenders look for, especially as it comes to the, was it four or five Cs of lending credit character is the biggest thing. And I am who I say I am and I'm not going to apologize for. But people recognize that and it makes the deals go a lot smoother.

So let's talk about. I've talked in on this podcast a little bit about the downturn. And you know, that was to say that was not. That was my most stressful time of my life. And you know, all the things that we did, I didn't have. As you know, I had a tough lender at the time too. And even though I was stabilized, you know, banks had their mandate and so forth. They had to get rid of loans, et cetera. And they didn't treat you very well or me very well. And I learned from that. I ended up becoming a commercial real estate workout attorney as a result of it, made a lot of money and used those losses to offset gains in years to come. How did you deal with that troubled time in 2008 when I thought it would never end through maybe 2014 and 15, when we finally started coming out.

Of was extremely tough for me because I was in the middle of a $4 million townhome development that we couldn't sell. My business partner dies who handled all of the on site activities. I let go of my staff because there was no income coming in and there was no partner there to bounce ideas off of anymore. So I had to quickly understand his role within the organization of dealing with our tradesmen while also dealing with the inner workings of the operations of the company as well as. So that was an extremely challenging time for me. And as I look back at it, I probably suffered through a couple years of depression without even realizing it. I just kept my head down. It just kept working.

Yeah, yeah.

I never took a chance to lift my head up and catch a breath until I can work out that deal and finally got another Loan, I believe it was in 2012, was my first loan after that crashable night.

Yeah, it was. It was tough. I mean, and. And the fact, and this is what I want our bright community to understand is, is that, you know, whatever successes Dave is having now, what I'm having now, you know, a lot of the people in our community that time period, and we all went through it, you know, some of the younger people have not. And it was sort of this point in time that it was the worst thing in the world. But then, guess what? It got better. And we'd learned from all the things, and we used tools that we got from that downturn. The way to work things out, the way to figure things out, the ways to pivot, the ways to earn money, the ways to help people during that downturn. It was extraordinary. And I don't usually talk this much, but it was impactful. It's like a scar on my soul that we had to build on after. So you're the guest. You tell, you say something.

Yeah. I love and respect our military. And what we went through is the closest thing that a civilian can go through equal to a war, because that's what that period was. We had a battle every day to figure out how we were going to make a dollar, how are we going to move forward, how are we going to pay our bills. But those that did it with integrity are striving and succeeding today.

Yeah. And I still look to those people, you know, as core people that have helped me through those tough times. So that's wonderful. All right, well, let's switch a little bit. Let's talk about your fund to the extent that you can and what your goals are and how. I think you started working on the fund a couple years ago. Right.

It was the middle of last year that we launched it. And you have a lot of discussions on the podcast about alternative investments. And real estate is probably the most popular alternative investment out there. There. And after a successful career, of all the single syndications that I've done, I decided to kick off a multi property pulled fund.

Before you go into that, can you explain what a single syndication is? I don't know if people know what that is in the break community. Some do.

Absolutely. So single asset syndication is where we find a property, a building, an asset we want to buy. We go and raise money for that specific deal. That's a single asset syndication. We bring in limited partners, we act as a general partners, typically take on the debt, all of the day to day operations of it. So it's one deal at a time where a fund has the ability to do multi deals within the same pooled resource of funds. So streamlined investment Group fund number three is raising $15 million from accredited investors. And you've had that discussion on your podcast before. Accredited investors single making 200,000 or more, a couple $300,000 or more, $1 million in net worth or you hold one of the series licenses. Now if you're a credit investor by SEC rules, which I disagree with their definition, what's the difference between an attorney that makes $190,000 and doesn't qualify versus an 18 year old kid that just inherited $1 million who's really more accredited? Yeah, that attorney is, he's more sophisticated. But we all have to play by the SEC rules, right? So what I decided to do was raise this fund to build $15 million in a war chest to go out and buy four to five properties here in the the Phoenix Market. Medical office being our first choice and class B being our second. Value add is one of the big topics that we always look for. How can we go in there, reposition the asset by doing some capital improvements or some better property management, take the gross leases, get them out of triple net leases and start passing expenses back through ultimately getting our clients a K1 that can be both tax beneficial to them. Meaning we offer losses in the first few years because of the bonus depreciation that we're allowed to take and that helps offset their passive income that they may have now or from the gains that we're going to have later on.

Yeah, I love that. And we've talked about accelerated depreciation, bonus depreciation on past podcasts and it's interesting. People go oh well I want to take a loss. I go, yeah, because you got gains, you got to tax it. And this is, you got to get, you got to offset your taxes and then grow your income as it goes along and you'll get your income later on as the, as the properties stabilize and they get recapitalized. Can you actually that's a good thing. Can you talk about recapitalization so that you know after you stabilize a property and you put all the money in because it's not easy. It's like you investing into something. It's, you're going to take your time money so that it can grow later. And that's sort of what this podcast is about. So can you talk about recapping?

Sure. So we love to buy the value add buildings where they're discounted in value because of their current condition, whether it be the lack of capital improvements that have been invested, the poor property management, or the vacancy in a building. There's a lot of buildings with vacancies out there right now that have great opportunities if the asset was managed better. So when we buy a building for, let's use round numbers, $1 million, and we invest half a million dollars into it to make it into a better building. And we start increasing the rents, increasing the cash flow, and in year two or three, we have enough cash flow and equity built into the property where we can refinance the property, pull everybody's initial investment back, give that to them. Then they're into our investments with zero risk because you've already made your money back. What the fund is designed to do to help those investors is to make an 8% annual preferred return. That means you're getting the 8% right away for being our investors, giving us the capital. Now, if there's not cash flow each year, that will accrue. So if you invest $100,000 with us next year, it's 108. If we didn't pay your 8% prep. But you're not losing that money, you're just deferring it. And ultimately our goal is to get investors monies back in their hand as soon as possible so that they're into a deal with no more risk long term.

Yeah. Play with house. House money, so to speak.

Play with house money. Continue to receive the tax advantages that go along with. And guess what? Once I've done that for you, once or twice, you're going to reinvest again with us because that's what a number of my investors have done throughout my entire career.

Yeah. And you know, if anything people should be thinking about now, you know, I think we're taping this on April 9th of 2025. Think about your 401k account now. And hopefully by the time this airs, it got better. But you get a poke in the eye and the value of your accounts drop drastically. But if you've diversified into real estate and other alternative investments like we talk about, and I'm not giving financial advice, but I'm feeling a little bit better than a lot of people here because I've invested in people with like, people like David investing into real estate and stabilized assets that have tax advantages. So it's a perfect idea to think about this now, right when the pain is the.

Is the most everybody has money in the market. Everybody has lost 10 to 20% over the past couple of weeks. We consider real estate the hedge against the market. We are indirectly correlated to what's going on in the market.

Yeah, so real estate's always been my favorite hedge until, you know, until Brian Rosen and Bucky Buckman, both on the podcast earlier, talked to him about the bourbon hedge. I like that one now, but it's new and fresh. Dave, I'll come back to real estate. Don't worry.

I enjoyed those conversations that you had with Bucky and Rosen as well.

Yeah, yeah. They both like talking about each other too, so don't miss those episodes. So, any good books at all? Before I forget, Joe Crock was episode 48. Yeah, you gotta listen to that one as well. So we talked about it. Talk to me about some books that sort of inspired you. You already talked about Buffett, and I like your quote about don't look at the clock. I love that one. People should rewind this and listen to that. Tell me what books you liked.

It's interesting story because I hear a lot of people talk about, oh, the greatest CEO reads, I don't know, 300 books a year, or 50, I forget what is one a week? 50 books a year, Phil. I don't read books.

Really.

I don't have the attention span for it. But what I do is I immerse myself within current articles, within the business community, the local community, and I listen to podcasts. I get more out of learning from people that are currently going through things or current events than I do out of past events.

Got it. Well, I heard you're an LBM podcast freak. You listen to all our episodes.

Yeah, it's great on my drive time, when I'm going to different meetings and even if I have to pause, it picks right back up in the car when I'm there. See, I've listened to every one of your podcasts. I've learned a lot. I've taken some great ideas from your community, and I'm proud to be part of it now.

Thanks. It's going to be great. And you're going to meet on the 21st when you fly in. You're going to meet a lot of the people that were on that on the podcast. So it's going to be a great event at postal 31.

Yeah. Your annual networking event is something I never like to miss. And I'm happy to be flying in that day and meet everybody and jump on a plane, come right back home. It's just like an Uber in the sky.

Yeah. Like it. And that's the coolest thing is you wouldn't expect people to fly in, but now we've got you coming in and we got Nikola Navakovic and Vladi Sausage. Sausage will be on the. Vakovic was already on. They're going to fly in from Florida because a lot of their clients are our clients. So it's going to be kind of fun. You're going to be those guys. Those guys are superstars as well, so you're going to like that. So tell me, did I miss anything about anything you want to talk about or any other, you know, pearls of wisdoms or aha moments for our bright community?

Well, I just wanted to mention one of the other things that I do besides coming back after retirement to help investors grow their wealth. I'm also the board chairman for a non profit here in Mesa. It's called Oakwood Creative Care, and it's an organization near and dear to my heart because we serve Alzheimer's and dementia sufferers. So we have a series of day clubs around the valley that if you're taking care of somebody that's suffering with the disease, you bring them to our day club so that you can go on with your daily life. While they're being engaged, we engaged their mind. Our CEO has a great no bingo policy. You're not going to sit there and play bingo. It's Zumba class, Zumba classes, dance classes, exercise, arts and crafts, history. We engage their minds to help help go through that disease and the suffering that they're going through. And I do that in honor of my grandmother. My grandmother who raised me ultimately died from dementia. Didn't know who I was, and it hurt me. So anytime I have a chance to help this organization, whether it be through my money, through my cheerleading, through my post, I do so in honor of Lillian Sokol.

All right? So that's becoming even more relevant in our bright community. As we get older, as we sort of develop, you know, old age with our families, our parents, our aunts and uncles, even ourselves is becoming more relevant as we go through that. It's really crushing, you know, to a family. It's not just. It's not just, you know, someone getting ill. This is someone transforming the way that they communicate with you. And for you to give back to that type of organization, David, it just really, really shows, you know, how huge of an impact you can make in your environment in Phoenix. But then, you know, sort of inspiring all our bright community to do similar things in the future. So I know it's very important to you because clearly you were inspired by your grandmother. So this is an impact on our bright community because things in our life end up impacting us later to make us do great things.

Yeah, Phil. And the organization has been truly rewarding to me. I don't give to get anything back, but I have been fulfilled by volunteering with this organization. The board of directors that I work with are phenomenal. I've become very good friends with many of them and one of them even became my business partner. You've met Scott Roney in the past. You've spoken with him. Scott is the chief legal officer at my company. And that relationship started because of our volunteerism on this board of directors.

Yeah, you know, he was such a good attorney to deal with. I don't really ever get to deal with attorneys that impact me. But he does such a good job. He's very organized. But we can see that, you know, as you go through your life, little interactions on little things end up helping you. Like you said, not because you're asking for, just because it does. I think it's because it grabs more like minded people. Maybe that's part of it.

Definitely. I agree 100% there. Yeah.

You know, we did with Chris Lonsway. She has a big organization that's similar to yours. That was episode 62 here on Light Bulb Moments. And I think maybe I should connect you right after this call. And actually I'm going to make myself a note. So I'm going to do that because I think that person will impact. Maybe you guys can help each other in some way.

Yeah, I heard that episode and she was phenomenal. I know she's dealing a lot with the Alzheimer's association in Chicago. I'd love the connection between us and see what we can do to collaborate.

Got it. Yeah, so we'll do that right away. Chris is very responsive. She's been our community. I'm surprised you have. Did you ever meet Chris?

I don't believe so, no.

Yeah, that's weird because she was, she was very active around the same time that I was sort of active in Rotary and some of the other things. So anything else you want to talk about today, Phil?

I think we covered pretty much everything there there is to cover. I really appreciate you allowing me on your show today. Everything that we're doing out here in Arizona is just on an impact basis. We came back from retirement just to help people, just to educate people and to assist in their long term plans. And my team here at the Streamlined companies is doing a great job and we're very excited about the future that's awesome.

Yeah. And I love how the growth of your company and how you're trying to grow it. It's really, really nice to see your vision come to reality. So before we wrap up here, David, how do people reach out to you?

Well, I'm a big proponent of LinkedIn. It's a great business community. I am on LinkedIn. David J. Rezak. That's H, R I Z A K. It's a good Eastern European name. So it's sometimes difficult to pronounce and spell. Also email djhestreamline companies.com.

Yeah, so it's funny, Eastern European. I didn't know. I sort of knew that. I should have known that. And, you know, as we've talked about ag nauseum in, in this podcast is, you know, I love the Eastern European community. I'm sort of aligned with them. So I just, I just did. I, my, my mom gave me a packet in 2013 with Ancestry.com and, you know, I've been blowing it off since 2013. Now I'm back. I did it. And no surprise, a lot of Sicilian, a lot of Italian, and, you know, some Eastern Europeans. So a little check in there, too.

We pretty much all come from the same place originally.

Yeah, I think that's right. I think that's right. All right, well, so we've got to know Dave at a very high level. You know, as you can see, he's a, you know, very loyal person. He's a very people person. We're great. Greatly appreciative that we can have him on this podcast and in our life, of course. And I love the fact that he followed his grand grandma's steps so well, you know, always paying it forward. You know, he talked about that early on in this podcast. And then as a result of this, as we've said, it came back to support him supporting his community. Always giving, you know, he's a giver and we're so happy to have him on. And now it's really cool to be able to work with him on his real estate ventures as well. And I think we go back to the very beginning. It's hilarious. Is that my light bulb moment? Even though we're plentiful, but my light bulb moment is to go ahead and get travel insurance. It's just so relevant. And if our podcast community, our bright community, doesn't get travel insurance after the story we heard today, then I don't know what to say. Maybe you got to give me a call.

I highly recommend it ending up in a hospital in a Foreign country can cost us all dearly. So a little insurance policy goes a long way.

Yeah. So, yeah, don't get the travel insurance so you can enjoy your sabbaticals like we've talked about. Ag nauseum. You know, go back to my podcast solo episode 23 and episode 26 to hear about it. And another shout out to Olivia Sue Friedman, because, you know, these ideas of sort of cultivating ideas and getting away and absorbing into into the world, you know, that's really important to us. And as a wrap here, you know, Dave went ahead and he said during this podcast, if you remember, that he's gonna decide to do small office in Arizona, and nobody's looking to do small offices in Arizona to improve their real estate. But what he did is he found a gap in the market. We've talked about that so many times. Successfully building a portfolio of small office has resulted in the growth of his business. Cause if you're always following the crowd, that's when you're gonna sort of fail at a high level. You know, think about this as in our bright community for your own community, in your own business. Don't always take money out, as much money out as possible out of your business. Invest it back into your business. Add value into your business for satisfaction later. Don't be that in the instant gratification person, boss, business owner, etc. Invest in your family. Invest in things that will grow and make you happy later. What a wonderful episode this was. And we'll see everyone next week for another positive day of illuminating thoughts and light bulb moments. Hey, Dave, thanks so much, man. This was a blast.

Phil, thank you very much for your time, your friendship, your loyalty, and always your great business advice throughout my career. I really appreciate our friendship.

All right, man. What a great time and we'll see you soon. I got to get out to Arizona for sure.

Come on out before it gets too hot.

Yeah, that's right. See you, man.

Thanks for tuning in to lightbulb Moments. If you enjoyed the show, please take a moment to rate and review us on Apple podcasts. It really helps us out. Don't forget to check the show notes for important links and contact information or visit lbmpodcast.com until next time. Keep embracing those light bulb moments.