37: Affirmative Development with Don Peebles

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Welcome. This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and 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.

Welcome to show number 37 of real estate Investing Live from New York. This is your host, James Nelson. And we thought last week we were going to announce breaking 50,000 downloads for this show, which we did. We actually have far surpassed it and we will shortly be announcing 60,000 downloads. So thank you so much everyone for continuing to spread the word and all your support and your comments and ratings on Spotify, itunes, wherever you get your podcasts. For today's show, we have with us Don Peebles from the Peebles Corporation. Don has an incredible, incredible story that he's going to share and talking about how he got into the business at an early age, really working his way from the ground up. And he has done so much for the industry to promote diversity and inclusion. And this is something that he has been really at the forefront for years. And he's going to talk about his fund that he announced actually last year before even the social protesting to promote affirmative development. So we're going to have a great conversation with him. And then afterwards we have back with us for their final installment, Lisa Flicker and Nada Levy from Rhodes Associates. And this one, the first two additions they did were really geared more towards those starting out on the business, those kind of in mid year their career. But this one, especially for all you veterans out there or those looking to really build a business, they're going to be talking about organizational structures and what you need to do to grow your business and take it to the next level. That was a topic that if you haven't heard the Rick Clark interview from Brookfield, that's a lot what he had to talk about as well. So we're going to take a brief break from our sponsors and we are going to get right into that interview for Don. Thank you so much.

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And now it's time for our investor spotlight and honored to have with us today Don Peebles, who is recognized as one of the most successful entrepreneurs in the nation. Don is founder, chairman and CEO of the Peebles Corporation, one of the country's few privately held national real estate investment and development companies. Mr. Peebles engages in the practices of affirmative development with a multi billion dollar portfolio of projects in New York, Boston, Philadelphia, D.C. charlotte, Miami, San Fran, and LA. He's also the author of two top selling books which I definitely recommend. You got to check these out, the Peebles Principles and the People's Path to Real Estate Wealth. He's also a regular guest on such shows as CNN and fox. He's passionate about mentoring programs and so he's really we're thrilled to have him on the show today to talk to our audience. So Don, thank you so much for joining us.

Thank you. Thanks for having me.

So Don, I want to talk a little bit about your childhood and what I've read is growing up and I believe this was in D.C. and I know you moved to Detroit, but as a kid you even at an early age you working alongside your father, helping him out at the auto body shop. It seems like hard work has been something that's been instilled with you at a very early age.

Yeah. You know, my father grew up in rural Virginia during segregation and his father, my grandfather, was a janitor in a public school system and a farmer. So he ran a farm. And so my father as a young boy worked on the farm. So he learned to work ethic very early. He got drafted in the Korean War and then from there moved to Washington, D.C. when he was discharged. And that's where he met my mother. And but and then for, you know, for all of my childhood he worked one as a civil servant and then as an auto mechanic and he had his own part time business as a auto mechanic. And so I used to work with him on weekends and helping him with different things around the garage and normally kind of organizing tools and so forth. So I mean I learned work ethic. He started very early every Saturday morning and of course, during the work week he started early. So I mean, I learned hard work from him. My maternal grandfather was a doorman at the Boardwind Park Hotel in D.C. for about 40 plus years and he worked around the clock two shifts. So hard work was instilled in me very early on.

Then I saw that you were also a congressional page and this also involved a lot of hard work. I think this is while you were at school. So you would get up at 4:30 in the morning and catch the bus. Is that was the typical day. And what were you doing on the Hill?

Yeah, so my mother thought as a, you know, I began to be a bit of a rambunctious teenager. My mother thought a structured environment in addition to school and sports would be something that would be helpful for me and exposed me into politics would also be helpful. Of course that was, I mean, this was the 1970s, so America was still in transition, dealing with the remnants of the Vietnam War, post segregation and so on. So she was able to help me get a position on the Hill as a page, which was an amazing program for high school students. You went to school, there was a school for pages on the top floor of the Library of Congress. And school started at 6am and then at 10:30 you walked across the street, reported for work at 11 when Congress began to work for its workday. And then that went on until 7pm or later. And then I placed. So I played basketball. So I had basketball practice, et cetera. And so that kept me very busy. And I normally got home about 9:30 or so, did some homework, went to bed around midnight and got up about 4 o' clock in the morning and was out of my house at about 4:30 to 5:00 clock every morning. So I learned time management, which was great. And I learned how to, you know, learn the value of our work. I made some tremendous political contact while I was there and, and learned a lot about how our nation's government works. Wow.

Unbelievable. What a work ethic. And I definitely want to circle back because I know those public private partnerships and working with the government has been a huge part of your success. But I want to talk about what happened next. So you go to college, but my understanding is you only stayed there maybe a year or so. And in your book you said that you already knew that you wanted to be a real estate magnet. So talk a little bit about kind of school. And I think at this point, was it your mother who was, you said she was a sales agent, but also doing some appraisals that's kind of where you got your start.

Yeah, my mother, actually, my parents divorced when I was five. My mother and I moved to Michigan where her sister was living with her family. And she started as a real estate sales agent in 1960. And so by 1970 or 71, she had her own brokerage business. And so I watched her work in the real estate industry. And then when we moved back to Washington, I was a teenager. At 13, she got a job at Fannie Mae and then ultimately went back into her own business and had her own appraisal business. And so I was exposed to real estate from her hard work and also some of the challenges of women confront when they go into the business world. And then on my father, from him, I got this unyielding element of hard work. But I got exposed to real estate very early. So when I went to college, I was going to be a doctor. And then in my high school yearbook, it said that I would be a med. I predicted that I would be a doctor and then invest in real estate to build wealth and then go into politics. So I skipped over the medical thing, and I haven't gotten around to the politics yet.

Well, you certainly gotten around to a fair amount to keep any one person busy for a lifetime. So talk about some of the early years of investing. And I love your book because it really, it talks about kind of getting in at the ground floor. And you said it started with maybe buying a lot or a couple small vacant buildings. I mean, were you kind of dabbling in investing while you were doing the appraisal business on the side?

Well, I mean, it's interesting. What happened is I came back to D.C. and this was 1979 when I finished, when I quit college into my freshman year and interest rates were 20 plus percent. That was a time of great economic crisis in the country. And so I was selling real estate so I could sell, but no one could qualify to get it alone. So it made it challenging. So I started working part time for my mother to learn the appraisal business. And then ultimately I went and worked for someone else because I wanted to have a bit more independence. And then by 23, I started my own appraisal business. And then because of politics, I got the door open for me. So I became a appraiser for HUD and then some other government agencies, and then banks followed and so forth. And then I was very active in politics. And so I became involved in the mayoral election, and the mayor got reelected and then appointed me to the city property tax Appeal board when I was 23, and then at 24 I became chairperson. So, you know, it went from me being kind of lost and trying to figure it out in 1979 as a 19 year old to kind of things beginning to come together. You know, by the time I was 23, 24. At 24, I was chairman of one of the most influential and powerful real estate boards in Washington D.C. i had a growing appraisal business. And then at that point I decided that I needed, I wanted to be a developer because I understood that developers were the creators and I wanted to be one of the creators. So I began to look for real estate development deals and ultimately found one that just kind of walked into my office literally in 1986, I was 26 years old and boom, someone walked into my office, a brokerage who was actually a sub tenant of mine, and presented a real estate deal to me. And that guild changed the trajectory of my career, accelerated it and got me into the development business as a 26 year old.

That was. Yeah, I remember reading about that story. So you said that this was a class A office building on Martin Luther King Boulevard, and if I'm not mistaken, maybe it was a vacant building, but you had the government lease and you were able to kind of put it all together. So maybe just for our audience, because we've got a lot of inspiring investors who are trying to figure out how to do their first deal. It'd be interesting to hear how you pulled that together. And also how did you raise the capital for that?

Well, you know, I'll tell you, one of the big things I'm a believer of for entrepreneurs who want to get into a particular business is to get into the mix of things. So be in the mix of things. And that was key. So I was in the mix of real estate. I was letting people know I wanted to do development deals. So that created some flow of opportunity. And so this particular project, one of my sub tenants in my office space for my appraisal business was a real estate broker, a one man shot real estate broker. So he came into my office and presented me with a deal to buy a piece of land in Anacostia, which was in an economically neglected community, an African, predominantly African American community. And the commercial corridor was destroyed during the 68 riots. And so the city had targeted that area for revitalization. So when he came into my office, I said, why would I want a property in Anacostia? I want to do a deal downtown. And he showed me this letter signed by the mayor of Washington D.C. committing to lease office space in a proposed building on that site by another developer. The only catch was that other developer didn't have site control and he was haggling with the seller of this property. He was an old line real estate speculator in D.C. and he was haggling with him over $150,000. The seller was adamant on $900,000 and this developer only wanted to pay 750. So long and short of it is I figured if the mayor was going to lease space from this developer, he would lease space from me. And so I went and met with the seller of the property and agreed to pay $900,000. Brought in some partners who I had been looking at a downtown deal with who were smaller real estate developers looking to go to the next level, but had done well for themselves, also had some money and some experience. And so we ultimately joined forces and on a 50, 50 basis they put up all the money, they supplemented my inexperience and I put the deal together. So we put the deal together, got the city to do a lease deal with us at less money for a bigger building. So less per square foot on a bigger building. And then I went out and found the financing and then ultimately we co developed that project. The city pre leased it for 20 years. We delivered it early in 1989 and the city released it another 10 years, you know, with another administration. And now recently the current administration extended the lease for 16 more years and we're just finishing a complete renovation of the building which will be done in September. So I mean that deal, I mean I've owned that building for my entire development career. And it just goes to show that opportunities present themselves and we got to capitalize on them when we see them.

Fantastic. And it's amazing how you've been able to bring people together throughout your career and again working with government because you know, I was reading after that then you start investing down in Florida. And I know in the early 90s you picked up Convention center, the Courtyard by Marriott, but I wanted to talk to you about your 96 purchase, the Royal Palm Hotel, because you've had a lot of firsts in your career, but if I'm not mistaken, this was one of the first hotels developed and operated by an African American in Miami. But you know, the value that you were able to create there. I read that you purchased it for five and a half million dollars. And I don't know if this was by virtue of an up zone or just right place, right time, right business. Plan. But if I'm not mistaken, you sold that for $127 million. So that seems like that worked out pretty well.

Yeah, I mean, so we bought again. I was. I mean, I think part of what luck is. An old friend of mine, a banker, told me that his definition of luck was when opportunity and preparation merged together. And this is another example of that. My wife and I, our young son, were in Miami at a vacation apartment we bought back in 1990. I guess it was New Year's Eve, 1995. And I read this article about the city owning the Royal Palm Hotel, and they were looking for an African American developer to redevelop it. And as a result of a tourism boycott by African Americans, they created this opportunity. And it was next door to the Lowe's hotel development project that was just starting. And that was a big box convention hotel. So I read it, thought about how many African American developers are there in the country, how many could do this deal? And hopefully very few of them were reading the Miami Herald. And so that right after New Year's Day, I went out and looked at that property, and I looked at the site next door, bought that one, too, and then bid on the Royal Palm. In June of. And then Of June of 1996, the City of Miami beach selected my team as the developer. And that was billed as the first major hotel in the United States developed and owned by an African American development team. And so again, and then, you know, in that project, we built that project, and after opening, a few years after opening, got an incredible offer to sell it and sold it. And I mean, but again, it was kind of being in the right place and being presented with the opportunity and then acting on it. And I think that's a big thing I would tell entrepreneurs is that if you're in the mix, you're going to see opportunities. There are going to be many opportunities across your pathway. And the key to that is to capitalize on those opportunities when they present themselves. We got to see the opportunities, but then when we see the opportunities, react to them and capitalize on those opportunities, because they don't come by often, but they come by. And if you. It's kind of like being a great basketball player. If you get the ball, you got to know what to do with it. And I think in business, if you get the opportunity, you gotta just do it, take the shot.

It's great advice. And I know you had a lot of success that you parlayed there. The residents at the Bath Club, the Lincoln, but from there and into the 2000s, you start expanding in other cities. You go into San Francisco, you go into Vegas, you go into New York City. One of my favorites. Maybe talk a little bit about expanding, going into markets for the first time. I think in your book you talked about how your government relations were portable. So maybe talk about how you approach investing in a new city.

Yeah, I mean, I think that one of the things that kind of drove me to going into other cities were I was looking for attractive opportunities, but also I wanted to do stuff that was interesting to me and to do the same thing over and over and over again. Probably I would have made more money, you know, quicker if I just kept going building after building after building. But to me, I wanted to do something different and have a different experience and do stuff that's fun. So going to different markets was exciting to me. So I started picking cities that I like going to. And also I realized that after leaving Washington, D.C. to go and do business in Miami, in Miami beach, at that, which is a barrier island, very small, 70,000 person population, very incestuous. And if I were able to break in there and use the skill sets that I learned in D.C. that I could take that skill set and go elsewhere, especially in the public private space, where there was a greater lens focused on it by the public and the media, that there was an expectation of a level and fair playing field, and there was a desire to create opportunities for everybody. And so from that, I figured that, okay, we're scaling up as a minority business. We're scaling up to be one of the more interesting and creative developers in the country, and so why not try this elsewhere? And so we went to San Francisco, went to Las Vegas, and then after. And then the market cycle hit a downturn. We were pretty well positioned for that. And then when we recovered, I said, okay, I've always wanted to do business. Since I was 18 years old, I wanted to do business in New York City. So 2011, at the end of the summer, we had a home in. My wife and I have a home in Long Island, New York. I said, let's take a shot. Let's move the kitchen. Let's go to New York. They'll be better for the experience, and we can do something different. And so moved to New York in the fall of 2011. And then by 2012, we had zeroed in on buying this property, which is now 108 Leonard street in Tribeca, which we were awarded by the city of New York in late 2012. So within a year of going to New York. We had landed the purchase of the largest single building sale in New York City's economic development Corporation's history. So, I mean, very excited about that. But it showed again that the skill set's portable and that there are opportunities out here around the country. And that's kind of what I've looked at over time is seeing, you know, opportunities in other places and not seeing any limitations to what I, what we can accomplish and what I can accomplish as an entrepreneur.

Yeah, it's amazing in that doing one of the largest projects ever in New York with the EDC. And then I read that you're doing 17 or that you did 17 acres with 12 buildings in Charlotte. But I wanted to talk about Angels Landing because this is what is going to become one of the tallest buildings in the Western hemisphere. So you got plans for an 80 story building that I think you were going to. I think the target completion on that is 2024. But a $1.6 billion project, even in certain times, I mean now with everything going on with the pandemic, maybe talk a little bit about perseverance and what it's going to take to get that project done.

Well, I mean, look, Los Angeles is a exciting market, Another market I've always wanted to enter into. And about, I guess it would have been 2015, 2016. I began to start thinking about what's next. And Los Angeles seemed to be an interesting place for us to go and pursue. And so we did. And in late 2017, after a highly competitive process in the city of Los Angeles, we were awarded the development rights in Los Angeles. And there we partnered with a business associate and friend of mine, Victor McFarlane. And Victor has run the largest African American owned real estate private equity fund business for many years. And so he and his firm were just finishing up two buildings down the street from this site. So one, I didn't want to compete with him, and two, I thought collectively we would be a formidable team and be very hard to beat. And so as a result, we joined forces and were successful in getting the award for this project. And the goal has always been to open it before the Olympics come to Los Angeles. And so our goal is still the same, to open it prior to then to build that those in its two towers, one 500ft and one just under 900ft. We were looking at going to a thousand square feet. But the economics, the cost, incremental cost, just made that building a bit more challenging. So we'll have one of the tallest buildings in Los Angeles, especially to roof line without playing the game of putting a spire on the top of it like an antenna and saying that that is the top of the building. But in terms of where concrete stops, will be one of the tallest buildings in the western United States. And I think that it's important also for us to. To show the symbolism that it'll be the largest building, largest development project built by African American developers. It'll be one of the largest development projects in Los Angeles ever, and one of the larger development projects in the country. And at $1.6 billion in project cost, that's a pretty sizable project. And so it gives me an opportunity to be transformative. And that building will finish when I'm about 67 years old. And so that'll be a good kind of feather in my cap. And, you know, then I maybe look to do some other things. Who knows? But, I mean. I mean, I mean, again, it showed that was a public private partnership with the city of Los Angeles and the state Community Redevelopment Agency. And it just goes to show, again, that the business model that we've developed is a portable business model.

Really, really inspiring. And I know you've been such a great champion over the years to help level the playing fields. And you've been really outspoken and proactive about the racial disparity that exists in our business. And I'd love for you to talk a little bit about the fund that you've launched, because this was actually before this year's social protest. This is something that you've really been witness to, but also have seen where the opportunity lies. And one thing that you really underscore is the lack of access to capital for minorities. So maybe talk a little bit about that and what this fund is going to do to help level the playing field.

Great. Well, I appreciate that. I mean, first thing I want to really make clear is America is not a racist country. It's got a racist history, but America is not a racist company. If it were, there would not be. I wouldn't be here. Victor McFarland wouldn't. Robert Smith wouldn't be. Oprah Winfrey, and so many other successful entrepreneurs would not have had a chance to prosper. However, we have had a historic level of racism in this country. And this country was built based on the free labor of slavery. And as a result of that, that racist history perpetuated and created systemic structural deficiencies that preclude African Americans from getting a fair shot at the pursuit of the American dream, especially the version that is rooted in a strong and advanced education, economic Empowerment. And as a result of that, you know, we have, I've seen, for example, and many, every African American entrepreneur that I know of has witnessed a double standard, has witnessed obstacles and a structural sense of unfairness. So the biggest challenge in business, the fuel that advances and propels entrepreneurship and evolution, is capital. And the. And so while talent is distributed equally, opportunity is not educational. Advanced educational opportunity is also not distributed equally. So my view has been, I know I struggle as a company every time I try to grow our business. Raising capital is more difficult for me than some of my friends who are white. And they've got a free flowing faucet of capital. And that's because they've got relationships, deep relationships and historical kinship with the allocators of capital. And so in order to change that, the allocators of capital have to be reflective of the population, demographic. And because the control contributors of that capital, many pension funds from state and local government and union pension funds and corporate pension funds, they reflect the diverse workforce. So the money going into these funds is diverse, but yet when it comes to investment capital, it's not. And so as a result, the way that that money is invested is also inequitable. And so give you an idea. Black women start more than 30% of all new small businesses and yet they get less than 1% of venture capital dollars collectively out of the $74 trillion of venture capital dollars out here in private equity, people of color and women collectively receive less than 1.3% of that capital. I mean, so you look at these unfair, I mean even New York City, whose workforce in the city government is 60% female and about 65% minority, yet only 2% of their asset managers are minority or women entrepreneurs. So I believe that changing how capital is allocated will close this economic divide. Right now we have an economic dividend disparity where black household net worth in this country is $17,000. White household net worth is $171,000. So I in my business, I'm going to do my part and that is why I'm raising a fund and I'm going to change my business through a part of our platform will be allocating capital, raising capital and deploying it to talented minority and more women real estate developers so that we can have more than one or two of me roaming around here. It should be more than Victor McFarlane and me. It should be hundreds, it should be thousands of us. But because there's not access to capital, that's not been the case. And what I want to prove also is that making investments where there are talented people will result in superior returns. I mean, women and minorities know that they get very few opportunities. So when they get these opportunities, they treat them very carefully as opposed to most developers in the development world. They'll give their property back to the lenders. When the projects don't work, they will abandon them and then they'll live to find another day. But we all know that when it comes to people of color and women, there are not many second chances. So you'll see I'm going to prove that the returns are better and hopefully create a new market similar to what Mike Milken did for high yield bonds. He proved that the default rate was offset by the much higher yields of those bonds versus a rated bonds. And so I want to show that you can go with the institutional brand name developers who've had it their way for decades or centuries, or you can go with new generation of entrepreneurs who will pay you a better return and you'll do something transformative. And I think that begins to solve some of the other issues because minorities and women will create a more equitable work environment and higher diversity as well.

I really appreciate you bringing this important topic to light and everything that you're doing in this space and it really, what you're saying makes so much sense and is so greatly needed. So thank you for that. And I know we all need to make incredible strides in this important area. So it's an important conversation to be having. Now I want to talk a little bit about some of the lessons learned because what you've done in your books are very much in line with what this show is, is meant to accomplish. And one of your in the People's Path to Wealth. The subtitle is how to Make Money in Any Market. Right. So clearly this is a very challenging environment right now, but I'm assuming there's some opportunities as well. But the market is cyclical. So how do you make money in any market?

Well, I mean, the cyclical market is frankly the most straightforward market. You know, it's very interesting. Bill Gates has said science is complicated and business is not. And he is totally correct. Because if you want to play a real estate cycle, just look at a clock and look at a 12 hour clock and 12 o' clock being the peak. So ideally you want to be a seller from about 10 minutes to 12 to 10 after 12 and you want to, you know, be almost a spectator from 12:15 on till about 12:25 or so. And then you want to begin to start buying at 1225 and you want to buy all the way up to 1245. That's pretty much it. And so if you play that cyclical market and position your business to be able to do both buy and sell, then you'll do very well. And as a small investor, you can do the same thing as a homeowner or a home buyer and a consumer of homes you want to buy, not when your need arises, as much as when the market presents the opportunity. And so the difference between the home business and the commercial real estate business is we as business people don't have to buy until the market kind of dictates for us. And homeowners make emotional decisions, so they take the emotion out of it, make a decision based on the market cycle, they'll be fine. However, the other elements that happen, those are the storms. Because we don't do business in a bubble. We do business out here in the, you know, the weather here out in the open. And so there will be storms that are unexpected. There'll be seismic shifts. So you'll have a 9, 11, you'll have a global financial crisis like we had in 2008. You'll go back and forth. If we look back in the early 90s, you'll have massive bank closures. And where the faith in our system and the future of the market is uncertain. And that's when there's even greater opportunities. Because as we know, history has shown us that human beings are resilient, Our financial markets are resilient, and America is resilient, and our great cities are resilient and they come back. And so in those circumstances, again, you want to look for those buying opportunities. And then there's a certain product type that there's always a demand for. I mean, we as a company have really focused our energy for the last couple years now on where people place their bodies. I mean, we cannot. Technology has disrupted the office market. I mean, it is just almost destroyed. Destroy brick and mortar retail. But technology can't create a virtual place for us to live and sleep. And so that will not eliminate the need for homes and residential property, nor will it eliminate the need for hospitality. It may reduce the need to travel, for business, it may reduce some forms of travel, but to recreate and where you need your body present, that business is going to endure. And so I look at those as kind of fundamental businesses. And then also there's certain businesses that are kind of urban infill business in terms of real estate that are providing basic necessities. So housing, community based Retail especially, you know, food and other immediately consumed products and then also community servicing offices. We see those as a significant, consistent demand because people have to continue to live and interact and clearly at some point in time we're going to develop immunity for the virus itself or we're going to have a vaccine. Most likely we'll have a vaccine for Covid, at least it's 50% efficient in the fall. And by the end of the year, early next year, we'll get up to something at 70% and then we'll have to figure out how to deal with the remaining 30% inefficiency of that of a vaccine. But we're going to get beyond this. And Americans have a short memory. Human beings have a very short memory. And I can think about 9 11. I would have never imagined being downtown after 9 11. And yet our offices were on the 46th floor at the new World Trade center at 7 World Trade. And I live in the penthouse on the 62nd floor downtown in a new, a new condo tower. So I mean we, you know, so this will be a memory at some point, but it will change structurally how we do certain things. And the people who focus on what that change looks like and meets that demand and meets that challenge, they're going to do very well. So that's what I mean, kind of you can make money in real estate in any market and interest rates are so low right now the money's almost free.

That's right. You bring up some incredible points there. And this market definitely needs optimism. So really great to hear your perspective there. And I know in the book you talked about how some of your best investments, investments did happen in challenging market conditions. So that, that really is hopeful news for our listeners. So we only have a couple minutes left and again I got to urge everyone to read your books, but maybe talk about what advice would you give to someone listening right now who's trying to start off trying to get into the business. What would you tell them?

I would tell them to get themselves in the mix. Now's a good time. Don't be discouraged by the pandemic, the volatility in the stock market and the news that's constantly going. I mean this is really the first time in this country where we've had a global pandemic, where we have been in a 24 hour news cycle. We're. Cable television did when it entered the scene in the 1970s, it created this demand for content. And so you went from a handful of channels to almost a thousand channels. And so A lot of them are news channels. And so there's a demand to be on the air for 24 hours and there's not enough breaking news to be on the air for 24 hours. So it's creative. And again, on issues like our pandemic, they constantly, constantly recycle and so ignore them. I mean, the reality is that we as a society are going to survive this. And by the way, if we didn't survive it, the money will be worthless anyway. So don't be discouraged by that. But to look where there are opportunities, look in your own communities where there are opportunities. And when you have that instinct that there's an opportunity, quickly vet it. And if that betting demonstrates that there's an opportunity, act upon it. Don't sit on the sidelines and say, oh wow, this is a good opportunity. Talk about it to your friends and family and don't do anything about it. Seize the moment, because this moment won't come back for quite a while. And the people who buy will be rewarded. I mean, you know, I bought Tesla and I'm not even in the stock market that much, but I bought Tesla at its within dollars of its worst moment. In March, I made and I sold. I shouldn't have, but I sold when it was just under $800 and now it's about almost a thousand, but I sold and made over 100% of my money. So it's. But in theory, no one's buying many cars, so you have to react and be contrary and stick to where you think things will level off. And so act on the opportunities and get familiar with an industry and aggressively pursue it. I mean there is in these times of uncertainty, that's when great wealth is created. And you normally in real estate, for example, you create real estate on the buy side, you buy it well and then when the market stabilizes, scarier passes, you get rewarded for taking that risk. Risk and the reward is exponential.

And so just really appreciate your being here and everything that you do for the industry and also to promote diversity and inclusion in our industry. So thank you so much for joining us today.

Thank you very much for having me. It was a pleasure talking to you and talking about these topics.

Perfect.

Thanks again.

When it comes to business, you'll find the experts here. Voice America Business Network.

Welcome back. This is James Nelson, your host of Real Estate Investing, live from New York. And back with us again from Rhodes Associates, we have Lisa Flicker who is a senior principal, and Nada Levy who is a partner. They are organizational consultants and specialize also in executive search just for the real estate industry. So welcome back. Thank you so much for joining us. We've had two really great shows with you both. First, talking about advice for those new to the industry, whether in college or making a transition. Last show we covered what if you're a couple of years into your career and you're looking to make that shift into becoming a principal. And so for our third interview and discussion here, want to talk about the organizational piece to what you all do. So this is for someone who is looking to build their business. And so Lisa, why don't you start and tell us what is organizational consulting, let's say for our listeners who maybe have a small investment arm, maybe it's a half a dozen people and they want to grow. Is that your kind of typical client and what would you say to them and what does your specialty involve?

Great question. So a lot of what we do is we will work with principals that to help them look great. Principals are going to be successful and make a lot of money, but with a strong organization, they're going to make more money and be more successful. And the founder of our part of our firm, Steven Lippman, always says that. And I think it's I've kind of grown up with him. And so it just rings true in my mind, which is when you're building out an organization and a lot of times people will come to us kind of in that interim phase. It's they don't feel like they want to spend the money at the initial like we have two partners and an analyst. But now they're in the middle. They have 10 employees and they're looking to, to some extent institutionalize. They realize that they're smart people, that they could be successful, but they're to run an organization is a lot more than senior level people with networks kind of running around and doing deals. There's a lot of operational stuff that needs to be put into place. And so from the organizational consulting perspective, the worst thing that I see is when a company comes to me with an org chart and they've hired a friend from the country club and they've made them their senior most person. And so what ultimately winds up happening is now we have to hire around that box on the org chart. And so if you've done this two or three times, you come into a place where it's like, okay, well, we really need to hire a cfo. But our cfo, who might be more operational and doesn't have the capital markets experience to grow a business is not capable of being that cfo. And so now we need to hire someone but we can't really hire above that person. So then it becomes okay, well why don't we will make them the chief investment officer. Okay, but now when you hire a senior acquisitions person, maybe they're more senior than the or more having more experience than the chief investment officer. And so I think one of the key things that we could help a growing organization with is to look at some best practices of growing organizational charts so that they can slot in to each box the appropriate person from the onset. It makes it a lot easier as they're growing to not have to work around talent that isn't properly pegged. And I think the, you know the last piece of this is titles come cheap, right. So if you're a startup and you don't have the money to give to somebody, the thought is well I'll give them a high level title and it'll be fine. But I just tell people to really be careful when they're doing that because it will cause problems down the road when you're trying to expands your organization.

What you just said makes so much sense and I can really identify that and speak to that. You know, certainly with mistakes, some mistakes in the past. But you know, my current position when I and I'm a big fan of coaching, I work with a business coach had an org chart. There weren't any names on the org chart. It was what are the positions? How is this going to work and then how we're going to build this out. And people ask me, James, how did you get three dozen people in your group in a year? And it wasn't just we just packed people on. It was very well thought through and coordinated. So nada. I don't know if you're a fan of Jim Collins. Good to great. But a lot of that is about getting the right people in the right seats on the bus. So maybe if you agree with that, maybe talk a little bit more about that.

Yes, actually I am a big fan of his and I read his subsequent books as well. So yes, you know, at the end of the day, similar to what Lisa just said is I don't piggybacking on it. It's not even similar. It's the same line of thought. Is a successful organization, we have to talk about roles and function each. As you grow bigger, you have to have the infrastructure that helps support the business to propel itself forward and and be successful. That comes down to what are the roles, what are the functions and how do they interrelate? And then you go looking for those individuals. It's not. You don't back, you don't put the individual in and say, okay, what can they do? And then how do we massage that? So being thoughtful, if you're starting out as a startup, being thoughtful about who is going to be on your team and what skills they bring to the table and how that fits the current needs and how that will fit the future needs is going to be a thoughtful way of, you know, building an organization. So, and then, you know, one of the things that we do as organizational consultants, we also take stock of what the business objective is. We've been doing this for so long. Our organization, Rhodes Associates, has been doing this, you know, for 40 years. So between all the staff and senior level staff and partners, we've seen a lot. So taking the business objective together with the talent that is there and where the gaps are is going to be critical to this. And sometimes when you're in it, it's hard to see, right, because you know, your own vision might be a little bit clouded with the personal things. You like the person, you love them. However, they don't have a particular SK set representing a client right now. They have an amazing, I'm not going to get into the role, but they have an amazing C suite executive who is good at one thing, but they don't have the strategic part of it. And that is something that this position and this role requires for where this organization is right now. And they're rapidly growing. You need the strategic capability together with the doing of the doing. So that's something that I would say really be thoughtful about where the business is going, what is the business strategy and what are the leadership skill sets that can add to that. It should be 2 plus 2 equals 100, not 2 plus 2 equals negative 1.

Well said. Well said. So we've had Rick Clark on the show before and he talked. And Brookfield has a real tradition of promoting within. And not to say that they're not looking at outside talent as well. Then we've had Marianne Gilmartin, who's talked about a meritocracy from my roots, Massey Nackle, we always said we're going to hire, we're going to interview for every single position. So even if someone internally wants to put themselves up for that promotion, we're going to still interview for that seat. So, Lisa, what would you say to that? Because I could see kind of the positive merits in both of those. Certainly opening it up, getting new Talent from outside, bringing in some diverse thoughts. But also, you know, there's something to be said for someone who you've seen and you know you can work well with them.

I'm a big fan of people who understand the corporate culture who are have high intellectual capacity. I mean, I'll bet on a smart person over a person who understands the box they're supposed to be in any day of the week. So I'll tell you, like, for example, Disney, they're not a client of ours. We don't operate in that space. But I've been a big fan of the company and watched them and done some business school case studies on them. And they rotate their executives around. And by getting the perspective of a senior person from team A on team B, they've felt that they've added a lot of strategic value. I think that getting new blood from outside also helps a company to grow. So I think it's a blend, and I think it depends on the size of the organization. I think when you're dealing with these large multinational organizations, that moving people around is a phenomenal way to get pieces of your organization to work together. So I think there's a lot of value there. But I think that bringing in somebody who is fresh and hungry and excited to be a part of your team, who may come with some best practices from other organizations, is also extremely valuable. And I'll tell you just one other little thing, which is we often sit with our clients and we're talking about, well, I can promote this person and I could hire this person or I can hire that person. And we start to look at core competencies and compare that to the price tags. And we often have clients who say, you know what? I don't want to pay that much for that person. And I'll tell you that in my 20, almost five years of organizational consulting and executive search, I can tell you time and time again that when you hire a talented, smart, good person, you will get a much larger return on that investment than the marginal amount of, you know, $100,000 more or less than you're paying that person to sit in that box.

Really fantastic. Great point. So nada. We only have a minute or two, so I guess I'll give you the last word. I don't know if there's anything else to this study that you think we've missed or we should cover, but I'll let you take us out.

I would say that it's okay to work with external people like us, even if it's on a consulting basis to figure out a growing structure even before you're setting up the business. And to that end we do set up companies and teams and putting the right people in the right seats to your Jim Collins example, but also taking a look at the bigger organizations, our institutional clients, when we look at them, we look at their teams from the outside in. So sometimes that kind of perspective is actually refreshing because we have an objective point of view and we've seen the best practices. So as much as you know, sometimes it's like we know what we're doing and it's fair and there's a lot of smart and talented professionals in all of these organizations. It's sometimes refreshing to see that external perspective and have a consultation to understand what else is happening in the marketplace, whether your comp structure is market. You know, we do a lot of comp studies on that level too and just generally gain value of the competitive marketplace as it relates to your business. So going back to networking and relationships, you know, again, and I'm wrapping it up with the other prior so we provide a lot of market intelligence as well to help organizations make best decision and in addition to not only acquiring talent, but also retaining their talent and what that looks like from a competitive marketplace vantage point as well. And also one of the things that we also see is that as organizations, especially closely held ones, progress and advance, there needs to be some succession planning too that comes into play. So we really do see the full gamut and on those levels we add a lot of value to our clients as well as the industry. So I will leave you with that.

Fantastic. Well, Lisa, Anita, thank you so much. You all have been so generous with your time. It's been great to have you back on the show and fortunately that's all the time we have for today. This is your host, James Nelson of Real Estate Investing Live from New York. And please continue to spread the word. Tell your friends about the show. Please leave your comments and your ratings on itunes, Spotify or wherever you get your podcasts. And if you haven't connected with me by social media, please do so at James Nelson NYC and look forward to catching up with you next week. Thank you.

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 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.