30: Rod Santomassimo On Working With Brokers

Welcome. This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis & Young's Tri State investment Sales Group. In this program you'll learn about the world of commercial real estate and find out why it is one of the largest investment opportunities in New York and around the world. Now here is your host, James Nelson.

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Welcome everyone to show number 30. This is James Nelson, your host of Real Estate Investing Live from New York. And if you did not catch last week's show, we had a very informative conversation with Davison Young's Head of Global Research, Nick Axford and New York's Head of Project Management, Kirsten Beck on the new normal and talking about the workplace of the future. So if you have not listened to that, please check it out at itunes or Spotify or wherever you download your podcasts. For this week we have my good friend Rod Santomssimo who is founder of the Massimo Group and author of Brokers who Dominate and Teams who Dominate. He's been an incredible mentor to me over the years and he's going to be talking to us about what you should be thinking about when you retain a broker. And then we'll have a lively panel with David Schekman from Meridian, Marion Jones from Ackman, Zif, and last but not least, Brandon Paul Polakoff from Avison Young. But before we get to that, gonna do a quick week in review powered by the Daily Beat. In the story that's driving the day, another 2.98 million Americans filed for unemployment last week, the Labor Department said on Thursday. In two months alone, more than 36 million people have filed jobless claims. Goldman Sachs estimates the unemployment rate will hit 25%, matching the peak levels of joblessness during the Great Depression. In Real Estate Meets Politics House Democrats released their Phase four coronavirus relief proposal that would provide billions of additional aid to state and local governments and hospitals. Tucked away in the bill is a measure that would reinstate the Salt deduction for 2020 and 2021. This reiterates the Democrats intention to repeal this unpopular element of the tax overhaul. The SALT cap is supposed to remain in place until the end of 2025. This was based on CNBC in Real Estate Meets Tech Twitter CEO Jack Dorsey emailed employees on Tuesday telling them that they'd be allowed to work from home permanently even after the coronavirus pandemic lockdown passes. Some jobs that require physical presence, such as maintaining service, will still require employees to come in. Elsewhere, the CoStar Group is buying the commercial real estate division of 10X for $190 million and a deal designed to increase the data company's role in the transaction process. Costar is looking to seize on the volume of distressed properties due to hit the market. 10x was struggling and laid off half of its workforce in November of 2019. The firm was sold to a private equity firm, Thomas Lee Partners, which purchased a controlling interest in the company in 2017, back when the business was valued at 1.6 billion, according to the Wall Street Journal. Elsewhere in New York, officials have released details on what kind of retailers can start reopenings for limited services on Friday. According to the guidelines, the businesses that can resume deliveries and curbside pickups include clothing, electronics, furniture, jewelry, sporting goods, book and office supply stores. Such retailers are required to provide productive equipment to their employees and occupancy of areas where customers pick up goods or must not exceed 50%. Lastly, in other news, a special purpose acquisition company co founded by Barry Sternlike has expanded its IPO raise again to 600 million. JAWS, as it is called, will target companies in growth oriented industries and won't compete with Sterling Starwood Capital Group. Blank check companies, also known as SPACs, are popular in this environment. In total, they have raised 6.48 billion in 2021 listings this year in the US compared with 4.9 billion for the same number of listings during the same period in 2019, according to the Bloomberg article. So that's it for the week in review. Stick around. We'll be right back when we get a word from our sponsors.

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Welcome back to Real Estate Investing live from New York. This is your host, James Nelson, and thrilled to have with us in the studio today my good friend Rod Santomssimo, who is a best selling author, speaker and consultant. He's also the founder of the Massimo Group. The mission of the Massimo Group is to assist independent contractors, solopreneurs and small business owners in transforming their business and ultimately their lives. Powerful why statement there. In addition, mention best selling author of brokers who dominate as well as teams built to dominate. And up next, knowing isn't build the business and life you desire, which I know Rod will be telling us about shortly. But last, not least, also a podcaster. So whenever I have a fellow podcaster on the show, I know that I have to up my game. So Rod, welcome.

Well, James, always a pleasure seeing you and thank you so much for having me.

I can say you knew me when I was this tall and I know you all are listening, but yes, our connection goes far back and I really consider you a true friend and mentor. So thank you for everything that you've done for myself, for the team and for the business. So thank you.

Well, James, multifigurously and literally, I've always looked up to you. So there you go.

Well, and I appreciate your making the trip up to New York up from Raleigh, North Carolina.

Cary, North Carolina.

That's right.

Love it.

And it's just saying, you Blue Devils, you always find a way to end up on top. That last game with the unc, I guess the lesson learned is practice your free throws of hitting the rim at the right angle. But I guess practice makes perfect, right?

Free means a lot of different things.

Well, perfect. So, Rod, I want to get into the book and your story, but before we get there, tell us a little bit. Did you grow up in North Carolina?

No, I'm a New Yorker, actually. Born here in New York City and I grew up in Stony Brook and I moved there when I was 2 years old, born and raised. So I spent all my time on the island, but left there for played college lacrosse. I played with lacrosse. Lacrosse player. Like all good New Yorkers, I was a lacrosse player. So I left.

Did you have the hair? Did you have the flow in the hair?

I had the flow. You know, I think more of it was called the bowl and it was a fright.

Okay, what position did you play?

I was an attackman. Okay. I'm a small, little quick guy.

I could see that.

Yeah, that's Me, the small, little quick guy. So I had the opportunity to play Division 1 ball, and I did. I went down to a small school called Washington Lee.

Great school.

We loved it. It was a great program. Good four years. And then, you know, then I had to go realize I played too much lacrosse in college probably.

Okay.

So when the door came knocking for Duke grad school opportunities back then, I said, yeah, maybe I should go take Duke really harder look at learning something besides lacrosse. So I went straight to grad school, which I know in retrospect probably the best move, but for me, it was the right move. And it's all turned out pretty well.

Since then, I would say so. And were you a Dukey fan at the time or how. Because I've seen the pictures of you and Coach K, so I don't know how far back this goes.

Well, I was a Duke fan even though I was playing ball. In fact, Duke recruited me to play ball, but they were going to drop their program and that was my number one choice. So when they were gonna drop their program, I made a decision. I just wanna play lacrosse. So I went to W and L when I had a chance to go to Duke. Actually, just. It was pure coincidence. My best games in college happened to be against Duke. So I walked into the lacrosse coach's office when I got on campus at Duke and said, look, I know you don't know who I am, but my parents are never at the games. Can I get the tape? And he looked at me and goes, oh, I know who you are. You can only get the tapes if you coach here your two years here. So then I got really entrenched in university and I still am.

It's a phenomenal experience talking about team sports and the parallel to what it takes to be successful in business today. Maybe talk a little bit about that, because I've heard especially employers today, they love team athletes. They know how to work with others, make quick decisions.

Well, a couple things. First of all, our clients, I'll tell you right now, the clients that tend to be these are tendencies, tend to be top producers, produce more. They all have an athletic background. They just do. They're more dedicated, more disciplined, more committed, more goal oriented. Those natural behaviors from a team sport too, from a team aspect, I'm finding more and more of our clients, this is part of our program. You have to delegate. You have to find the right people, put them in the right seat, in the right bus, from good to great. Of course, that all is paramount to any success you may have as an Individual, no question.

And I know that the work ethic and what I learned about facing challenge has certainly stuck with me as well. So right out of grad school, then, was it right into real estate or what was next?

No. When I left for Duke, I looked at my dad, who was an advisor for building owners in my consultant role. I looked at him and said, dad, I will never be in real estate. Just know that when I leave school. So when I graduated, I actually came back to New York and I worked in a consulting agency for technology. And I was actually in the old Pan Am building when the market crashed way back. I remember that way back in 87, October, and I realized I didn't enjoy working for a corporation, right? I didn't enjoy not having a say or doing what I wish or having a cap on my income. So I found a boutique little real estate firm and that was my next job. And on and off, between that and some obscure jobs back and forth, I've been in real estate pretty much the last 30 years.

And what were you, a broker at one point or what was.

I was a broker. Oh, yeah, I definitely started as a broker. And at one time I was traveling in the Southeast with an old firm called the Travelers Insurance, which has gone through some changes and sold some buildings for Prudential with some mentors. And so I got a kick of everything. I knew the numbers from my MBA days, so that was easy. And I knew how to negotiate a lease because my father had me reading leases when I was 12, so I knew that too.

So, yeah, I brokered reading leases when you were 12. So for.

Abstracting leases, if you want to learn what business is all about. And again, my dad was an entrepreneur, so I didn't really think about having a job, what that meant versus being an entrepreneur working for yourself. And so he'd say, if you really want to know what business is about, read a lease. You'll get the flow of what business means and the issues they deal with. And I didn't know what that meant at 12 years old, but today I certainly know what it means, right? I knew when I started my work as a broker, I knew how to read a lease, which helped, no question.

So from there, what point did you come up with the idea for the Massimo Group? So you see, it worked amongst brokers and you say, wait a second, I've got some wisdom to depart here. Or was it kind of the consulting.

Hat that you were wearing over the years? With the ebb and flow of the economy over my term, at one Time, I was a CFO for a law firm at one time. I was a COO for a. For a telecom firm. We took public at one time. I was sitting in the headquarters of Timex pitching this watch that I just invented and have a patent on. And so I went through all the iterations of different flows and seeing different operations. And then in 2008, something happened. In 2008, James, I don't know if you're aware of that. We had this little. I can remember that, like in the economy, I was downsized from a corporate job, a real estate job, working in California, traveling back and forth with my family in North Carolina. And I just said, you know, I'm never going to work, never going to work for anyone else again. I just. I knew that was what I had to say. And then it was. I don't know how to put it in divine state. I went to bed one night and I had a dream that I was going to start a coaching company. Of course, I didn't think about. The economy was in the toilet and no one had any money to pay for coaching. But that didn't stop me. So I said, you know, I'm going to help people get out of this. This rut of economies and help brokers. Initially it was brokers help them find a better way to position themselves to maximize their commissions. And that was 12 years ago, almost.

Wow.

Yeah.

So you were a solopreneur.

I was.

What was the difference between a solopreneur and an entrepreneur?

That's a great question. Well, we call ourselves the Massimo Group.

Okay.

And truth be told, the Massimo Group was myself and my wife when we started the company. Now it's almost 40 folks and 30 coaches across North America. But, so, yeah, I was a solopreneur working easily 16 hours a day. Easily. Just trying to figure out what the heck we're going to do to find a client. That's how I started out. Wow.

Wow. Sounds like you were on the transaction treadmill. I know a lot of the advice that you've given me over the years is to take a step back and work on your business as opposed to in your business. I think a lot of us feel like we're putting out fires all day. And this kind of goes back to the Stephen Covey, the four quadrants. And is it urgent and important, or is it important but not urgent? And that quadrant, too. It's really tough to kind of take a step back and be strategic. But I know that's a big part about your success.

Absolutely. And that on in business obviously comes from Michael Gerber and the E. Myth. Fantastic book. And if no one's ever read who's an entrepreneur or solopreneur, that is the bible of entrepreneurship, I believe, called the E. Myth, revisit it. But yeah, and that transaction treadmill is where you just put your head down and you do everything possible to build your business without picking your head up. If you don't pick your head up, you're missing out on so many opportunities and you're really not growing anywhere. The treadmill never goes anywhere. You're stationary. So that term transaction treadmill, for those of you in your audience, are you just doing deals? And that's great, doing deals, don't get me wrong. But you have to grow beyond that to truly have the life that you're looking to secure.

So I want to transition because typically for the spotlight we have investors come on, talk about how they built out their portfolio. I thought would be really interesting for our listeners who are aspiring real estate investors to hear how your principles can also apply to their business. Taking what skills that you advise brokers and applying that to how someone might want to build out their own investment company. What would be the advice there? Are there parallels to what you teach?

Parallels to any business growth, whether it be you're a syndicator, investor, broker, architect, engineer, whatever you're going to be. Number one is, and this is, I know this is so obvious, is okay, what's the vision? Where do you want to be? Someone asked me that yesterday, actually. Someone said, okay, Rod, when will the company double its revenue? What's the term for you believe? And I thought it would be two years based on some things we're doing. But everyone else, what is the goal? Once you tell me the goal, let's create a path to get there. You have to define what that goal is going to be. So if you're a syndicator looking for mom and pops, and that's your portfolio, how we define those folks really, what are their issues, their challenges? How do you get those folks to sell? Right? How do you identify the properties with the variables that you're saying will meet your criteria to ultimately get the goal and portfolio you're trying to build? So setting the goal, identifying the specific variables to achieve that goal, and then going about it in certain ways, it's all the same.

For some of our listeners. And sure, they might have aspirations to really start something from scratch, or maybe they start with a bigger shop and then they go out on their own. But talk about for Some of our listeners who maybe are part already of an existing organization and maybe it's the second generation and they have been operating as a mom and pop, but they want to take it to the next level and do something institutional. So what would the business plan look like for that?

First you got to show me what the stressors are. What's holding you back from scaling? What is it? Is it capital? When that capital, of course could be human capital, could be funds, investment funds. What's holding you back from scaling your operation? There are stressors in every operation. There are just bottlenecks. No one wants to admit it, no one wants to identify it, but you have to sit down and we just did this last week looking at our growth. What are the key stressors in certain processes that you have? Figure those out. Once you figure that out, okay, how do we alleviate those stresses? And quite frankly, people process platform is the answer. Those three legs of the stool, people process platform, you get those in order, you can really get scaled pretty quickly.

And I would think also really investigating what is the size of the opportunity, where is the opportunity? Because it shouldn't be presumptuous just to think that if someone's been investing in small to mid sized properties that all of a sudden they should want to scale up into investing in the skyscrapers. I mean that gets a lot more competitive, There's a lot more competition. I mean, maybe they're in the right space right now. It's just doing more of it, doing it better or maybe looking at new geographies. I know here in New York we've got a lot of clients right now who are scratching their heads. They're saying that this is a pretty challenging environment for business. Some of these investors, they're 20, 30, 40 year old veterans who are now thinking about new markets. Where should they start?

Well, number one, you mentioned you got to get out of your comfort zone. I'm really comfortable. I know New York, I invest in New York, I feel safe here. I trust New York. As crazy as some of the regulations are, people who say I trust New York, I will tell you as someone who runs a company who has clients across the United States and Canada and now New Zealand and everywhere else. But there are so many opportunities because most of our clients are commercial brokers. There's so many opportunities for great returns and low management, third party management, absentee management, to go out and find there just are in different sectors and doesn't have to be a major market. Right. I'm not suggesting it's lubbock Texas, nothing against Lubbock, Texas, at all. But there are other markets that are providing really attractive returns, certainly compared to New York, that will have the appreciation of growth. Actually, most of my investment dollars in commercial real estate happen to be in two cities, New York and Arizona. Right.

I thought you're going to say North Carolina, but.

Okay, but the next one is going to be North Carolina because North Carolina continues to explode. But I just had. We had great opportunities with some folks that, you know, right. In New York, and we have some great opportunities with. Certainly senior housing opportunities, for example, are blowing up. Returns are phenomenal right now in places like Scottsdale. So you just look, look outside the picture. Where else can you get the returns if that's your goal to get the returns? No doubt some of the investors you deal with are legacy investors. You said it yourself, right? Mom did it, Grandpa did it, whatever. Now it's my turn. I don't want to ruin the legacy. I don't. But how do I build upon what we already have? What's the foundation?

How do you pick a new city? How do you pick a new asset class? Because you just threw out two examples. And I don't know if you had familiarity before with Arizona or senior housing, but how, again, if our investors right now are thinking, where else should I be looking and what should I be thinking of doing? How do you just really. To kind of dig in a little bit more. What would be a good way to go about that?

Well, I assume you're. Because they're investors, right? They're also talented, educated investors. They're reading what's going on, looking at trends, listening to you, listening to your show, seeing what's going on. So there's some things you may don't want to invest in, other things you might want to invest in. Was it Simon that just bought all the Mamals? That was announced yesterday. Whoever thought that was going to happen? Malls are dead. Everyone thought malls are dead. Retail is dead. No, retail is not dead. Right. For every Macy's store that closed was the cosmetic store. Was it Sophia, Sephora, whatever my daughter.

Gets, I think so, right?

They opened 82 stores. So you had to know the trends. You had to educate yourself. And if you don't want to educate yourself, the best thing you could do, and this is why I invested in Arizona. I found someone that knew what was going on, identified an opportunity. Folks like you, James, you're an expert. You are. You are an expert and a resource for your listeners in New York to say, you know what? I don't know what to do, but I better call James and he'll tell me the ropes. He'll give me the best advice, make an educated decision. So I think those are the two things you gotta look at. You gotta do the reading, the research and then look at the trends where they're going. But then more importantly, ask the people that know. And those are the brokers. They know what's going on.

No, it's great advice. You do bring something up that might also be of interest to our investors, which is that you also invest personally as a limited investor. I assume you're not the one building senior housing in Arizona. I know you've got a very busy day job. Maybe talk a little bit about when you consider investing as a limited partner. What do you consider in a deal?

Well, as far as the deal itself.

Yes. Or the sponsor. Yeah.

Two issues. Who am I investing with?

Right.

Borrowed. That is number one. Right. So I invested certainly with a fund that you're familiar with, very comfortable with you and people that were associated with that fund. So it was more investing in them and their talents and knowledge of a market than I ever could have. Same in Arizona, having an individual I knew knew. Well, he invited me in. In fact, now I think about it, I'm about to invest. I just want, you know, we're investing in different areas. James, just right. We're just. Now we're investing in Bethesda, Maryland now.

Wow. I spent about 20 years there.

So now we're investing in Bethesda. And that was an old. Actually an old college roommate of mine who has done significantly well in the real estate side. And he invited me in as well. And they. And of course, that's number one, the trust of the people you work with. Number two is what's the return? What's the projected return? Can I get that return somewhere else? I'm always looking at return and let's face it, looking at the stock market right now, you're not going to get the returns you want to get in the long term. So I don't worry about the risk too much because if I trust the people and it makes sense, I'm pretty comfortable. But then again, I don't mind risking a lot because I've learned that you've got to risk a lot to get the return.

I'm so glad that you brought up the importance of who you do business with. And it's so crucial to our business, especially you come in as a limited investor. You're giving someone a lot of authority to really act on your behalf and the project's behalf. So, so important that you have that trust to know that they're going to do right by a situation.

Yes, but trust is also expressed in different ways. Right. Do I trust these folks? Sure. Do they send me reports every quarter? Yes. Do I read them up and down? No. Right. Do I call them and ask them how we're doing? I never do. I knew going in with the parameters were the risk I had and what the timeline was. So for any investor that wants to really manage a day to day process, that's a different way to do it.

That's great point. Spot on. So let's now transition because we're in. A little later we're going to get to a panel where our mutual friend Bob Nackle, he's going to be on the panel. I started my career with Bob. He's going to be talking about what it's like to work with brokers. But since your whole business is advising brokers, working with them, you've probably seen it all for our listeners out there. First of all, would you say it's a fair statement that if you are looking to make an investment in a neighborhood, is the broker kind of the first point of contact or where does it all start?

It should start. It should start with the broker. Okay, okay.

But more importantly, and that wasn't a slow pitch softball for me, any brokers.

Of course, start with me. Right. And yeah, most of our clients are commercial real estate brokers, mortgage brokers and bankers and the like. But you have to make sure you just like everything else, I vet my investments, vet the broker. Right. It's not their first rodeo. They know what they're doing, they have a track record, they have success stories, they have client testimonials. Make sure that your goals and any broker. I know, James, you could do this if I said, you know, show me where you achieve the results for one of your other clients. You could quickly show me scores of examples where you've done that, if not hundreds of examples. Right. Easily vet the broker. Brokers. You know, there's by the Last estimate there's 80, 85,000 brokers in the United States. A lot of those.

So you're saying I'm not special?

No, what I'm saying is most, most of those brokers, in fact, you're different. Most of those brokers are commodities. They are. And they just simply are based on a transaction. Now folks like you and yes, Bob and others you mentioned, those are resources. You gotta find the right one. It's not hard. Look in the periodicals, look at the transaction records. You can find out who's doing the deals.

Brokers have different roles and there's different approaches to this business. I happen to sit on the sell side, as does Bob. There's very talented brokers who represent buyers or they do off market. In my mind, it's just different approaches to the, the business. So any thoughts on that?

No, I believe in specialty. Of course, we specialize initially just in, for example, in commercial real estate brokerage. And the next thing we knew, we got some mortgage brokers. The next thing you got some architects and engineers. So we expanded, but then we got experts in those fields to help. From a broker standpoint. Yeah, if I want someone to represent my property, I'm going to look at someone just represents the sellers. I just, I will by nature, no conflict of interest. Right now someone does sales and leasing and buyer rep and tenant rep. No, I want the expert.

So for our investors, though, who are listening, because commercial is different certainly from residential. Residential, you clearly have a seller rep, you have a buyer rep. I mean, I, I guess occasionally you have a sole brokered transaction, but for the most part, and I'd be curious because again, you work with brokers across the country, but would you say that most of the transactions that you see out there are brokered just from one side where it is a seller rep and they end up bringing the buyer as well? How do these.

No, across the country, I would say it's probably 60, 40, dual agency. There is a buyer broker relationship from that standpoint, but yeah, 40%, 35 to 40%. It's one sided. They represent both sides of the transaction. They find you, the investor, they're representing you, but they find the investor. They receive the higher commission, obviously, because that sometimes, not always, but no doubt we're seeing more cooperation. Why is that? So, James, what's the one thing that's changed in the last 30 years versus when you and I started out?

Well, just being online and the access to information, I mean, it's not, you know, it used to be kind of the Glengarry leads, locked desk drawer and shh, don't tell anyone. And now it's out there for the whole world to see. So when everyone has access to a lot of the same information, I believe, then it really becomes how do you read the tea leaves? And how do you be the best advisor? In fact, there's so much information out there, it can be difficult to make heads or tails of it.

Yeah. And unless you're an expert in there. And even if you were an expert, I would rely on someone like yourself to tell me what does this really mean.

For our listeners who are looking to go and buy in a market? Is the advice should they try to sign up to work with the buyer's broker? Should they be going out approaching multiple sellers brokers, what's the advice to them?

Depends on what their goals are and what free time they have. They want to be hands on. Sure. Go out and look at properties, go to the various portals. I won't mention them. That you find properties and see what's available. You won't be not, you won't get the best deal if you do that. Just understand that straight out you will not get the best deal or the best return on your dollars if you go that route. It's a great way to see what's out there and see what the trends are in comparables. But ultimately you have to have professional representation. You just do because it's not as simple as I'm going to pay X for this Y property. Look, price is just one of the many things when it comes down to investing in a property.

For our listeners who are first time investors, the idea of signing on with a buyer's broker, they might say hey, take a number, come back to me after you got a couple under your belt. But I would imagine a lot of our listeners are out there probably talking to a lot of brokers in a marketplace.

Is that, well, look, brokers at one time certainly I don't think is as appropriate today. At one time is a stigma of a broker. Right. They were chasing the commission, they didn't have any value. Those days are gone just because of the competition and the consolidation in the marketplace. They're gone. So yeah, find a broker, trust the broker and if it doesn't work out, guess what, you're signing a 90 day, 120 day, 6 month. Whatever term you define, what term you're going to to be exclusive to that person is ultimately your decision whether you're invested or not.

Think about the future of brokerage. I know our friend Blaine Strickland. He also has a book coming out called Adapt and he talks about what is the brokerage world going to look like in the Future. He references 10x and the listing platform and yet they also collaborate with the brokers. And so what do you make of that? And for our investors buying off auction platforms online, do you think they might have some luck there as well?

I have a family member, I want to embarrass him. I have A family member who retired a very early age, in his 40s, and he spent the last 15 years in his house trading stocks, making millions. Right. And that's what he does. He trades every day and looks at the market every day. I have a financial advisor. I realize, in fact, I have two different accounts. I don't have the patience or the time or the capacity to figure out I can do this on my own. I just don't. And it depends on the investor. Will it get to the point where the information is out there and the platforms are out there with the 10x and others that will say you don't need a broker if you know what you're doing and you're willing to take the risk? Absolutely. Will the 80,000 brokers turn out to be really only 50 or 40,000 because technology has replaced them. Potentially. But with that said, I see as many stockbrokers today than I saw in the 80s. I just do. And financial advisors, they just adapted. Talk about Blaine Strickland. Exactly. Adapt it to the marketplace. If you're using a financial advisor, you're probably going to use a broker. You just are.

I see it the same way and look at technology as a real partner. And so I find it makes my job that much easier to better advise clients. I mean, certainly leveraging the data that's out there and available. So I want to talk a little bit about this. Your new book, Knowing isn't Doing. So talk to us about it. It says, don't kid yourself. So it took me a while to figure out the acronym kid Knowing isn't doing. You got to speak slowly with me. Use small words, but build the business and life you desire. So what are the takeaways here? Don't tell us the ending, because that way they got to still buy the book.

Gotta buy the book. So here's what happened now. So what we found is when we start working with folks, they would tell us they knew something already. Yeah, I know that. I know that. Right. And so we'd ask them, that's great. It's great. You know it. Are you doing it? And then they just, of course, be embarrassed and blush and say, well, not exactly. Right. So we don't care really what our clients know. Of course, we hope they have the aptitude to do what they need to do, but unless they're doing the action, it just doesn't matter. So what we did in the book was when my sales team was really cautious, in fact, they were very. Concerned is the right word, because I said, let's just Share everything we do, for the most part in the book. Share how we work with clients, how we get them to exponentially grow their income. Let's just share all our methods. We call them the Mossimo methods. So, James, why do you think I'm going to share most of the Massimo methods with the public versus those that pay us tens of thousands of dollars to help them out? Why would I do that?

I think it just increases your sphere of influence. I mean, it's when you're of service to all. I think it would drive more business.

I agree, but why it would drive business? Because knowing isn't doing right. That's why someone will say, oh, I get it, I get it. Yeah. Are you going to do it? No. No.

So why do you think it is that people, I mean, in New Year's resolutions, forget the stat of how many people drop their resolutions entirely by February? I'm a big fan of Tony Robbins podcast also. He talked about this very thing and taking massive action. And he's got his massive action plan. So why do you think people don't take action? And what is the recipe to.

Well, there's a New York comedian, I don't know if you know, John Mulaney, used to write for Saturday Night Live. Fantastic comic, by the way. But he wants to joke, says doing nothing is so easy. It's so easy you can get out of the house, get out of bed, do something that's hard, that takes effort. And not to say people are lazy. That's not the point at all. But the doing is the. It's difficult and it takes effort, it takes discipline, it takes commitment. And yes, it's uncomfortable. Right.

And that's the eat the. What is it? The big ugly frog, where you know, what are the three things that you have to do today? What's going to be the toughest thing? And then get it out of the way first. What do you think of that advice?

That'd be Brian Tracy, Eat the Frog. Absolutely. From the book, the same name. But yeah, do the hardest thing first. Get it out of the way. It's difficult. Right. But beyond that, in our methodology we share, there's an actual cadence to what your day should look like. There's a cadence of priorities. There's a way you go out and find business, that you win the business. There's a way you. So it really boils down to this. Everyone, I don't care what their role is, if they're an entrepreneur, solopreneur, independent contractor, whatever they might be doing, listening to the show they're the CEO of themselves. So therefore they have five divisions. We break this down in the book. What's your sales division? What does a sales plan actually supposed to look like? We just share it in the book. This is what the salesman. This is how you create your ideal client. This is how you define. This is how you articulate your value proposition, build your value prop. So that's your sales plan. Then of course, your marketing plan. James, this is part of your marketing plan, this radio show. It's your presence. What is your individual marketing plan? Because Keith Ferrazi wrote the book Never Eat Alone. He writes in that book, invisibility is a fate worse than failure. And it is if you're invisible, especially today. And then, of course, you have your operations plan, you have your finance plan. For most people, that's their pipeline. And then you have, last but not least, your human resource plan, which in fact is recruiting, hiring, training. And most of that, by the way, is into yourself. Will you train yourself? Invest in yourself? Read the books? So it all comes down to we give a plan in the book to how to break down these divisions, how to do certain things and little. Because, look, you can't tell someone to do 20 things and expect them to do one. It won't work. Give them one or two things, they're going to do those two things. They just will. So build winning streaks, go to the next step. That's what we're trying to do in the book is say if you want to build the business and ultimately the life that you really desire. And this is not a. You and I both. I know your life. I know the way. I know what time you get up. I know what time you get to work and what time you get home. You and I have very blessed lives. We do. We weren't granted these blessed lives. And I'm sorry, I'm not, again, trying to be pompous. We worked our butts off. This is what it was. But you worked your butt off to a point where. Now, James, you know, when I first met you, I don't know how big, when we first met six or seven years ago, how big was your team? Do you know?

Well, again, I think we met probably even further than that, but I mean, probably a half a dozen people. And today, three dozen.

Three dozen.

That's a huge part of it also is building that team. But there's clearly no substitute for hard work, whether it's brokerage or investing. As you were saying this. I'm thinking of all these lessons and how they can also be applied towards growing a real estate portfolio. Even the marketing piece to it, you could say, well, okay, brokers are famous for putting materials and getting their presence out there. Well, investors could be very well served by doing the same. And I remember I've got clients where I walked into their office and they had 20 people interns on the floor writing handwritten notes saying, Dear Mrs. So and so. I walked by your property the other day. It's an incredible building. I would love to talk to you about buying it without a broker, save a fee. And I'm thinking, wow, how many owners, how many investors are really thinking about those marketing steps? I know a big part in what you really got me on was a schedule, that drip campaign and continually being out there. That's not just for a broker. As an investor being top of mind, I'll share one other quick story that I want to get the mic back to you, but when Michael Schvo, who was one of the top residential brokers in the city, he ended up going overseas, took several years off, and then he came back into the market with a bang. And we sold him the old gas station over in West Chelsea. And at the time, he paid a record price. And we were about to close, and I said, michael, let's talk about press. What do you want to do? He says, don't worry, I've got this. I'll name you. Don't worry, I've got this. The next day, right there in the Wall Street Journal, Michael Scho pays highest price of all time for a development site in Manhattan. And I'm thinking, why would anyone want to brag about, I just paid the highest price ever? I said, michael, why did you do this? He said, do you have any idea how many phone calls that I've received from brokers who say, hey, Michael, you just bought this. Will you look at this? Look at that. And he's a master marketer with getting his name out there. So, I mean, what other principles from this book and the lessons that you talk about can be applied for investing?

Well, let me share with you someone that listeners may not be aware. I'm not sure if you're, you know, Gary Vaynerchuk is.

Oh, sure, huge fan of Gary v. Gary at Facebook.

Yep. I spent a day with Gary and his team, and it was a significant investment. And so. And they said, my team said, why invest that much money for eight hours with this guru? And I said, because he's a guru and he's going to share with us what. So it was myself and 12 folks around the world sat in a room with him and his team. And I left there with this, this one lesson more than anything else. I know our mutual friend Bob Nackel. I remember when I sat with Bob the first time I met him. Bob said, rod, don't forget in commercial real estate. We're not in the real estate business. Do you know what Bob Business. Business, Bob, vote.

We were in people business. Information business. Yeah.

And I think that made sense eight years ago. It did. So I had an occasion to see Bob. We were in Dallas in November and I, we were together for some something and in front of the whole audience said, bob, I have to tell you but you're wrong. We're no longer in the information business. He's like, what are you talking about? Like, look, we're in the marketing business. If we don't market, this is true, your investors, if you don't market yourself and what you're trying to achieve and your goals and maybe the fund you're creating or the dollars you have to spend, there are a lot of other investors out there that are getting attention of the buyers, the sellers, the brokers. Right. They just are. And if you're invisible, so what? I don't care how much money you have, if I don't know about it, I'm not gonna bring you an opportunity. So today we are all in the marketing business and I'm sure your investors saying wait a minute, you want me to tweet or put a LinkedIn post or a Facebook post about something I'm doing? Yeah. Let the world know what you're doing and more opportunities are going to come to you.

Love it. Rod, thank you so much. Always a pleasure to see you and really appreciate your stopping by today.

James, you're the best. Thanks a lot buddy.

Stick around and we'll be right back.

A different approach to putting our clients first. Avis and Young's Tri State Investment Sales group sells multi family office, retail development and specialty sales throughout the New York metro area. As experienced thought leaders in their industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter, LinkedIn and Instagram amesnelsonnyc to learn more.

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Welcome back. This is James Nelson, your host of Real Estate Investing live from New York. And now it is time for our brokers panel. And with us today we have David Schectman, who is senior managing director at Meridian Capital Group. Previously he was an attorney at DLA Piper, so might be able to get a little legal perspective from as well. He's also received numerous awards, including being one of the commercial observers power brokers. We also have with us Marion Jones, who is managing director at Ackman Ziff Real Estate previously and she overlapped with David when they were both at Eastern Consolidated. She spent time at CBRE also having attended Wharton, having a master's in architecture and leadership roles at WX and uli. And last but not least, Brandon Polakoff, our senior director of our Tri State investment sales group at Avis and Young. We were previously at Cushman and Massey nacal. Brandon's already been recognized by the company Commercial observer as a 30 under 30 and a real estate weekly rising star and has a little bit of landlord perspective, having worked at Silverstein and Brandon, I believe Boston Properties as well. Am I getting that right?

Beacon Capital.

Beacon Capital. Okay, great.

All right.

Well, perfect. Well, let's jump right into it. And I think for this segment what would be helpful because our listeners, a lot of them are aspiring real estate investors and they're looking to get into the game. And so I guess to start with and Miriam, maybe ladies first. I'll let you kick this off. If someone is looking to invest in real estate, would you say working with a broker is a good place to start? And how do those conversations typically go?

Absolutely. I think that, you know, when you're first entering a new market, whether you're an experienced person investor or you are relatively new to real estate investing, it's important to start with your network. So you're working with brokers to really understand the markets, to build up a network, to understand how opportunities they're coming across, how they're sourcing them, what are sort of the motivations of sellers, what are the sort of conditions of our marketplace that are a little bit different than others. And any New York City broker will tell you that we will invest in New York, look at certain deal terms differently than a lot of other major markets in the US including the way we typically look at diligence or closing periods. So we do have a lot of characteristics that are completely unique to New York. I think you want to start by developing a great broker network and really get to know these people, make them your friends, because you want to be one of their first calls and you also want to them to give up their time a little bit to help educate you about different sub markets, different sellers, and the sort of conditions that we find ourselves in New York, which is a really dynamic, complicated place and certainly increasingly so today. I would also add to that that I think you want to, you know, choose your counsel very wisely. Working with. There are a lot of great attorneys in New York, and I think you want to start building up those legal relationships as well, because you're going to need. In New York, typically you're going to need counsel to do the transaction, but in a lot of cases you'll need other types of legal expertise, whether it's environmental review of environmental procedures that you have to do, whether it's zoning or other types of. Of expertise that you're going to need to bring in. I think council is also a great. It's really important and really pivotal to have those people in your network.

Perfect. That's a great way to start. And I know a broker can be someone who can help make those introductions and help build the team. David, you probably get calls from investors all the time who are new to the market. You're busy, you've got your listings out there, you've got existing clients you've worked with. I mean, I guess the question is, as a buyer, how can you be taken seriously if someone's coming to you for the first time, you know, how do you qualify them? What do they need to impress upon you to be taken seriously and to be shown opportunities.

Sure. And thanks for having me. And Marion is, as always, spot on. You know, let me give you. I think the best way to explain to your audience is to use actual reality examples. So today I had a little blurb in the Wall Street Journal in an article that was done by our mutual friend Conrad, great reporter. And it was talking about the market. And inevitably I received some calls from really exotic places in the country like Georgia, Chicago, Minnesota, and even some calls from Toronto. And some of these folks, their names were new to me. And the Internet's a great place. So the first, first thing that my team and I do is we Google them. And some of these folks, you can see very quickly that they're accredited, capable investors. But when you get on the phone with them, we as brokers don't mind saying to them, pleasure meeting you. Tell me a little bit about yourself. And you know, real professionals don't mind doing that because we want to maximize our time and find, you know, a sharp pencil point where we can act. So I spoke to a new group today. I see who the folks are. And it turns out that there were some Legacy folks from CapSource, which has a New York office. And I actually spoke with some of their colleagues. But like Marion said, usually after I hear a little bit about what their focus are, focuses, what their capabilities are, potentially different pockets of money that they have to act, my next question is always, who are you using for legal? A lot of times folks from outside of New York mention very well regarded local or national or international firms. And this outfit in fact mentioned that they were using a major multinational law firm. And I actually smiled and there was a pause and they said, what's wrong with that? I said, let me tell you, you're dealing with some of the heaviest hitters in the world. I'm just wondering for deals in the middle market, which is where I occupy my time, that 10 to $150 million range, I don't know that you want a thousand dollar an hour lawyer working on a $20 million deal. For two reasons. One is things are a little bit more nuanced in New York. And two, New York loan sales and mortgage sales, which are going to be the product du jour, especially in this downturn. Nine out of 10 people who are buying these things in New York, their downside is the default interest and their upside is to get to the bricks. And what we mean by that for some of your listeners is if there's a $20 million apartment building with a $15 million mortgage, we now think that that building is worth 14 or $15 million and the bank wants to sell you the mortgage for 12, you can't get caught up in a language process. Notwithstanding the downturn in the market, New York is still a 10% down, 30 to 60 day close type market. There are no soft periods. And to kind of, you know, wrap up the introductory comment. Years ago I was speaking at the Adolphus Hotel in Dallas about distressed investing. And I probably for the first time in my life, shut my mouth and listened to everybody who was there. And what I found out was New York is really one of the most provincial places ever when you buy an asset in Dallas, very often other than the local nuances, but the process is very often no different than buying an asset in Chicago. When you come to a place like New York and you have brokers like us telling you I understand that you have 100 million in the bank, I understand you have an excellent lawyer. Here are the terms. We still don't need to deviate from that. We haven't seen any soft periods, we're not seeing large diligence reviews and it's still a fly by the seat of your pants type environment. Now I think it'll be interesting. We don't have any empirical data but James, as long as you and I have been in this business and you and I are gray haired folks, we really don't see soft periods in New York. Whether it's $100 million deal or a 20 million dollar deal may be limited to environmental. But when you talk about the Tri State other than New Jersey, you're really looking at 10% deposits and 60 day closes. So it is a dirty little secret for all of your listeners. You can be a neophyte investor and buy in New York without a broker if you know that the price is perfected and you have good counsel. But what's happening in this market is there are no data points. We have professional owners in New York who are coming to brokers like us saying please tell me with no puffery what is my asset worth today? And for the first time probably since 2010, I'm saying here's what I think it's worth and here's the reasons why. But I can't give you empirical data to support this because everything that happened that I'm calling it AC and bc which is a little rift on AD and bc, the before Corona metrics have gone out the window. So yes, you must have a broker, you must have a broker who deals in goods of the kind. Another phenomenon that you're going to see in short order and then I'll wrap it up is you have a lot of brokers who've been expert in multifamily or particular niches. They're all going to try to be lonely salesmen. They're all going to move to different product types and they may not be expert in what they do. You really need somebody like James and you're a humble guy, somebody who deals in all five of the major asset classes in good markets and bad. So now more than ever you need a broker. In an ascending market. You're buying and you're appreciating quarter over quarter. Not today.

Well said. I think you brought up a lot of great points and very helpful perspectives. Brandon. I know everyone on the line here agrees the importance whether you're on the sell side or on the buy side when working with buyers. You want to be an advisor, you want to share with them the good, the bad, the ugly, for lack of a better phrase. So maybe talk a little bit about how you educate buyers so they know exactly what they're getting into to really facilitate the process.

Yeah, fair question. I think to start out, I think it's interesting to kind of look back almost five years ago, you know, when we were at quote unquote, the peak, things just moved faster, less diligence was done. Obviously there was, you know, there wasn't any rent laws. The world was just, you know, different in that regard. Condo sales were flying. So people move right quickly. I think what we found over, you know, the last couple of years is diligence is longer than ever. I think, you know, it depends. It's a deal by deal basis, you know, in terms of the competition and what people will let slide if they have a 1031 and really just want to act on something. But the general deal that we look at or marketing found it extremely helpful to try and go in again. We're speaking across different asset classes, but the more that you can look into the leases and DHGRs for multifamily, if it's retail, what the reimbursements look like, how things were deregulated. Again, if it's a multifamily property, I think it's extremely helpful. At the end of the day, you know, you hear we speak to hundreds of people a week. I mean, the general feedback over the last few years has particularly been, you know, if you speak to an attorney, I send out for every X contract I send out, you know, maybe half of them, maybe a third of them actually are signed contracts. And what ultimately you find is buyers come back and say, hey, look, you know, we dug up selling during diligence that wasn't presented to us at the face. And I think ultimately it gets sellers expectations higher in terms of pricing. You know, they're always going to hold on to, oh, you know, six months ago I had an offer of two or three million dollars higher than what's being now. What I'm seeing now after people are going through the paperwork and really understanding everything. So I think that's helpful. It's really just being open. And I think you also get buyers trust so that when you do tell them something, they trust you. As a broker, if you're always the person that's just talking really fast and not really going through the nuances of something that you're working on, I think there's a trust issue that you lose and then you lose a relationship. And I guess speaking to the data, you know, we were, you know, David was referring to earlier, I think as brokers, one thing that we really can help with is we know, you know, we obviously put out, you know, our quarterly reports. I'm sure most firms do. What I often find is that they don't really dive into each particular sale. What was the buyer's motivation? What was the seller's motivation? You know, what the real, the real details in the deal that don't really show in the cap rate or a price per foot. And I think being able to offer that, that's something that brokers offer because we see so many of these transactions before they're even in the market or before they're sold off market. And I think being able to relay that data to everyone, something that we can really add value to. And yeah, I hope that answers the question.

James, can I just. Of course, you know, great points by, by Brandon and Marion. One thing that I'd advise people, and this is in good markets and bad, but it's particularly so now, make sure that your Sherpa, that the brokerage, the broker that you're using to navigate this market, especially if you're a neo fight, and I think all of the folks on this phone have this capability. Make sure you're choosing a firm that is equally adept at debt and equity markets. So it's one thing for a broker to present you and present it well in a comprehensive manner, whatever asset it is you're purchasing, whether it's a fee simple or a mortgage, I think 50% of the value is for that broker to make sure that this investment investor or new entrant to the market is dialoguing with the debt side. So, James, you certainly, and Marion, you know, and Brandon as well, and Meridian, I think we did 40 billion last year. It's, I'd say 50% of the value that a broker adds is telling you, okay, here's the asset we've analyzed that we've arrived at a price at which you're going to make a bid. Let's make sure you're armed with debt quotes. Let's make sure that we could perform, and let's make sure that you're not only speaking with, especially for entrants who are new to New York, not just your existing relationships, but really provincial local portfolio lenders and hard money lenders and even CMBS and agency. Let's make sure you're speaking with a debt broker locally who's equally adept at getting you to that purchase price.

Well said. Well, unfortunately, that's all the time we have for today, but I know you all have agreed to come back on the show, so I want to thank David, Marion and Brandon for taking time today. This is James Nelson, your host of Real Estate Investing Live from New York. Please remember to follow me on social media handles James Nelson, NYC and tune in next week. Thank you again.

Thank you for tuning in this week to Real Estate Investing Live from New York. Please join your host, James Nelson for another program next Tuesday at 7pm in New York, 4pm Pacific Time on the Voice America Business Channel. All shows are rebroadcast Wednesday mornings at 7:00am Eastern Time, 4:00pm Pacific Time, as well as always on Demand. We'll talk again next week.

Sam.