Trading Up With Robert Rivani

Foreign.

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's one of the largest investment opportunities in New York and around the world.

Now here is your host, James Nelson. Welcome to episode number 110 of Real Estate Investing Live from New York. This is your host, James Nelson. I'm principal and head of Tri State Investment Sales at Avis and Young and have a special treat for you today. We have with us Robert Ravani, who is the president and founder of the Black Lion Investment Group. And and I know a lot of you have probably followed Robert for a while. Embarrassingly, I had not. And so I've since taken a look at all that he's done in the social media space and he puts up incredible content. And so I think we had a really good interview here that you're about to hear shortly. And I just love how Robert really focuses on the fundamentals and really that there's no substitute for hard work but also learning the business. And he is really, really an expert at digging in and figuring out values and how to buy properties in volume and really have that gut sense that has allowed him to create such an incredible portfolio. I named this episode Trading up because that is what Robert has done. He started small and worked his way up. So I know this is going to be very inspirational for many of you who might be looking to make your first investment. So if you have not already, please make sure and tell your friends about this show. That's what helps us spread the word is you're subscribing, you're adding comments and reviews. So thank you in advance for those. I really appreciate your taking the time to help spread the word. And also please connect with me amesnelson nyc on Instagram and LinkedIn and love when you have questions as well that you send to me through LinkedIn. And last but not least, please make sure and check out jamesnelson.com I created this site for you to give you the inside edge to real estate investing. That's where you'll find this podcast as well as with the show Notes, an exclusive video series, a glossary where you've got key words and terms, you've got recommended reading podcasts. There's a ton of information there for you to explore. You can also find out how to get investment listings from us so you can go in and register your preferences so I can make sure and send opportunities to you as well. So I'm gonna have a brief word from our sponsor and we'll get right into that interview with Rober Ravani. A Different Approach to Putting Our Clients First Avis and Young's Tri State Investment Sales Group sells multifamily 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. And now it's time for our Investor Spotlight. And with us today, I am thrilled to have Robert Ravani who is President of Black Lion Investment Group. He is an American entrepreneur, retail entertainment innovator and real estate visionary. In 2014, Robert created the Black Lion Investment Group. To date, the company has transacted $500 million in real estate deals across the US year over year, Robert and Black lion have consistently doubled their growth. He's got an incredible story to share. I know he also has big ambitions for the future. He's already looking to invest another hundred million in South Florida this year. So we have a lot to catch up and talk about. So Robert, thank you so much for joining us today.

Thank you, thank you for having me. I'm so excited to be on this podcast. So thanks for taking the time to hear my story.

Perfect. So first of all, reading your bio. So born in 1990 and you were already as a teenager, you clearly had this focus for business. If I'm not mistaken, you sold your first company, a footwear business. So what was your childhood like? Did you always just know that you wanted to get into the business? And how did you end up starting a company at such an early age?

Yeah, so whenever I was in my in my younger teens, didn't come from a very wealthy family where I had the ability to spend, you know, thousands of dollars on clothes and shoes and things that I really wanted that a lot of, you know, people in the society or friends had. So I love Jordan, Michael Jordan growing up. So it was a big, big hobby of mine and some of these shoes were going for no 125, $150 for each one. Or if you weren't able to get them at the. At the stores where they were selling, they were going up for, you know, $300 on eBay or any selling platform at the time. So what, you know, it kind of became second nature to me where I said, okay, well, if I wait at the store for overnight or sleep overnight on, you know, the street there, to be able to line up with everybody else who wants to get a shoe. If I'm able to get the shoe for $150 and then sell it for 300, I can almost buy my. Buy that shoe for free for all intensive purposes. And that led me to thinking that, hey, there's something here. You know, as a. Someone who's like 14 or 15 at the time, if I could, you know, make $500 a week or $600 a week, it was really exciting. So to make a long story short, I kind of created a business out of it, and I offered friends or people some money to stay with me overnight or to go to these different footwear places and buy limited edition Nike dunks or Jordan shoes. And we were making $150 a shoe, and I was paying, you know, $50 to $60 to other people to wait there. And I was making a business out of it where at some point I was making five to six to $8,000 a month off of this business that had gone for a period of a couple years, two, three years. And I collected over 150, 200 pairs of shoes at the time, if not more. And a individual just loved my collection because it was just so vast and so difficult to acquire all those different shoes. At one time. He just stroked a check and said, look, I want to buy the entire thing for around $150,000, which was all my collections of profits. Every time I would make a buck, I wouldn't go out and spend it like the average teenager probably would. I would save it and reinvest it into more and more pairs. And I grew the business from there. And like I mentioned, I sold it for $150,000. And that was the end of my I joined shoe game.

Wow, that is unbelievable. Amazing. In high school, I used to camp out for concert tickets and we'd resell those, but certainly not to the scale of what you were able to accomplish. I mean, the fact that you built out a business out of this and then put together this incredible collection, but it said next in your story. So did you then use those proceeds to Start day trading in the stock market. Was that kind of your, your next move?

Yeah, so it was a little bit between both. My family was in property management, so I was dabbling into property management. And numbers has always been a thing. Is all my, all my friends, colleagues knowing me, I'm a rain man when it comes to, like numbers. I'm just very gifted when it comes to it. I'm like, oh, the stock market looks easy enough. You know, you, stock goes up, you make some money. Stock goes down, you lose some money. So let's buy the brands that I like and day trade. And for a while it was working and I was excited. But as, as most people invest in the stock market, you get greedy and you get excited and the market started turning and shaking and I lost the majority of, of all the money that I made from the shoe business. And looking back, you know, 15 years ago, that was one of the most depressing moments of my life. But it was one of the most valuable moments of my life. And I didn't realize it until later that when you lose that kind of money, that always sticks with you. To never want to make a mistake that drastically again. Because what it took me years and years and years to accomplish and get together would last in a matter of days. So that taught me a very good lesson and to never gamble, to never make unnecessary risks, to try to make a quick buck. And that stuck with me today. And that's why I don't invest in my crypto or some of these other things. I don't want to say gimmicky type of things, but they're not solid, they're not firm. It's like real estate, right? As we both know, it's always going to be there for the most part. And it's solid and it's stable or relatively stable compared to some of these other ways of investing where are more highly volatile.

I mean, it's such an amazing perspective that you were able to gain at an early age. And you know, what you just had to say about the appeal of real estate as an investment class just makes so much sense. I was actually speaking to someone about this yesterday and for me, when I invest in the stock market, I feel like I'm the last person to know. I mean, of course I have a great wealth advisor, but you've got institutions that are putting hundreds of millions of dollars to work. And so as kind of the retail investor, if you will, I'm not going to have the kind of information, you know, to make those informed types of Decisions and with real estate we really believe that you can get the inside edge based on that market intel and understanding the product. So now with school of.

I think a really thing to that really important piece, that point is whenever we as investors are investing into commercial real estate, residential real estate, typically it's, you understand comps, market trends, rental rates in the area, what you can perform a rent. It's a, it's a system that everyone plays a fair game for all intensive purposes. When I started to realize or learn that when you're investing the stock market and there's these computer programs or super algorithms and us as human beings are trying to compete with these supercomputers, it's like best of luck. Like these, they, they are playing, they're playing chess while we're playing checkers. And I didn't like that, the ability of not having control and not playing at the same level as them. So that's why real estate was so appealing to me.

Incredible. I really, I know our audience is going to get a ton out of this and I hope they're taking notes. So tell me, it said that you worked with your family's property management firm during the downturn. Now how old were you at this point? Was school a thing for you? I know you grew up in Beverly Hills. Is that where you went to high school there? Was college a consideration at the time?

So no, I actually grew up in west la. I grew up in West Los Angeles. Through my childhood I went through a bunch of different schools because of moving around a lot. Again, we weren't very wealthy, so that wasn't the focus for my parents of higher education. Just get you somewhere safe. And they're happy with that. They thought that it'd be a great idea to send me to Beverly Hills High School because of the hopes that, you know, being around people that are wealthier, more sophisticated would lead to a better future for myself. And in some parts it definitely did. And it gave me the inspiration of, you know, growing up I lived in a 1800, 2000 square foot home and some of these people in Beverly hills would have 20,000 square foot homes. And I'm like, people's bedrooms were bigger than my entire house. And while at the time it made me feel less than, let's call it, it also gave me the motivation, inspiration that still fuels me today to want to be successful and want to be able to create a future for me. I was not the most gifted student by any means when it came to being book smart and wanting to be in class five days a week. And it just wasn't for me. I love math, I love finance. But a lot of the things that I was being taught in high school and then when I went to Santa Monica College after was not real world applicable. And I was already at a point where I was, I knew I was capable of making five to $8,000 in a shoe business. And like, oh, if you graduate and become an accountant, you can make 100,000 or $120,000. And there's nothing wrong with that. But I had aspirations for significantly higher things and that's where I want my focus to be. Because you would see, you know, people in real estate doing flips and making 100 grand or 200 grand on a deal. And I'm like, okay, why am I not doing that? And that's where I kind of geared my focus to when I was in property management is that hey, you're not going to get rich off making 3% or 2% or 5% management fees and administration fees, that the real money is into redevelopment or buying deals off market and flipping them or contract flips or stuff along those lines. So I actually never got my high school diploma. I got my GED and left school in 11th grade and then tried to go to college for a couple of years and then didn't get my bachelor's either. And I decided just to go in the workforce and just try to work my butt off and make as much money as possible as possible. Wow.

Really appreciate your sharing that. And look, you clearly made the right decision. Look at where you are now. And so you started off by buying, flipping and reselling some of these buildings. I guess it was Georgia, the first market that you started in. And I know then you expanded to Wisconsin, Illinois, Texas. So was there any rhyme or reason or how did you end up in those states? And maybe talk about some of those early deals that you, we're working on and how you raise the capital to, to acquire them.

Great question. So what I realized very early on is if you, if you are trying to find deals that are, let's say 500 grand, 600 grand, 700 grand lower sub million dollar deals, you're not going to find a lot in bigger metro markets, Los Angeles, Beverly Hills, west la, like there's not deals of that size and if they are, they're, they're probably not going to be value add and they're, they're not going to have much upside. So this was probably around the late 2000, 2009, 2010, if memory serves. You Know around the Great Recession when I would go on LoopNet at the time they would have like this filter for foreclosure properties. As I'm sure you know, there was all the rave back then. Banks were giving, were getting properties handed back to them. Developers were going belly up. They, the developers, they bottomed out for all intents and purposes. And the banks over leveraged for the most part got back these projects that were either half developed, three fourths developed, had a bunch of issues and it was degrading their, their bank quality by having these defunct loans on the books. So when I started seeing foreclosure deals, the first couple were in Atlanta. The first deal I ever bought was a $600,000 deal. It was a foreclosure. The bank wanted to get rid of it. Like we don't know what to do with it. The developer didn't even build a water line to the property. So you have to rip up the parking lot to put a water line into it. And I had a bunch of issues with it. But at the same time, a property that was once worth, I think it was like 2.2 million was the praise value, was now selling for $600,000. So I'm like, okay, well if the once was worth that, even if I can get the half of that, there's money in the deal. But the problem came of needing the capital. I had some money saved up from work and from the leftover the stocks and the shoe company and raised the money from friends and family. And I told the bank, look, I don't have a lot of money, I will take the property off your hands, but I need a 75% loan to value. I also need money for good news money, which means ti brokerage commission and an interest reserve to carry me on the property for 12 months. So that way if I went into the deal, if I'm cash strapped because the income's not there, or if I need to bring new tenants, I can use the bank's money for the tenant improvement allowance. So that's what really led me to be able to buy the property and actually take it to stabilization instead of buying a property and still trying to find money to come out for all the capital expenditures that were going to forthcoming in order to lease the property. So once I got that system down, that is where I pretty much tried mirroring, ended up buying three properties in Atlanta. And then I, you know, again I had to follow the deals in terms of trying to find sub million dollar deals. So pretty much wherever the deals were Whether it was Texas or Georgia or Wisconsin or Chicago, I just started buying wherever I could. I could. One very, very important, I think, point for everybody that's listening is that typically in commercial real estate, we're always taught and always told you maximize the property's value, refinance it's tax free, and then go buy another property. That was not my way. I did not have enough capital to continue that process and wait till a property became fully stabilized to refinance and go buy. So as soon as the property hit its peak value, I would sell it, 1031, exchange it, and move on to the next project. And I would have that money continuously grow. So for me, throughout the livelihood of me, buying and selling property. So that was a very important piece of my growth.

Great. And if you could talk a little bit more about raising the capital, especially early on. I know a lot of our listeners and aspiring investors, they found that incredible opportunity, but they might not have enough even for the down payment. And they're thinking, how do I raise the capital? So you mentioned friends and family and to what extent you could expand on that. And it sounds like very quickly you were able to create a network from that and to go on and parlay that into multiple acquisitions. So what would be your advice to those listening on how to create a loyal investor base, especially if you're starting out without a track record?

Yeah. So I would. I would say the following, and it depends. Are you talking about investors that are buying their property for the first time, or you talking about investors that have been in the industry?

Yeah, if you could share. Yeah, if you could share a little bit more about those first few acquisitions, what was it like raising money for that first deal in Georgia? You said you went on to buy a couple more properties. I mean, was this truly your friends and family who knew that you knew what you were doing? From a property management standpoint, did you have to convince people to invest alongside you? What could you share there?

Absolutely. I mean, what I would share is that people need to believe in what it is you're trying to do. Right. If you, if you are coming off and you're. You're in the cell phone business or the cell phone industry or your doctor or somebody that bread and butter is not commercial real estate. I would highly suggest for people not to invest into commercial real estate. That's the first thing I'll tell people, because I get approached all the time on my Instagram or people on the street. Robert, I want to buy my first deal. I'm like, okay, well, have you actually been in commercial real estate before? A lot of people say, no, I haven't. But I see what people do and they try to compare it to residential. And that is the biggest mistake. I tell people from the get go, this is not residential. You're typically not going to get a phase one and a survey and have to worry about all the CC and rs, reciprocal parking access agreements. There's all things that you're not used to when it comes to residential. So the first thing I'd say is make sure you know what you're talking about. Because any investor that's going to talk to you, if they're a pretty smart investor, they're going to want to test your chops and make sure that you know what it is you're talking about. I did a lot of, I had a lot of experience in trying to understand what was important for properties. I'll go to ICSE events, I'll learn what tenants cared about. I would have a game plan. So I think any person, assuming they've already accumulated the knowledge and understand what are the cruxes and important pieces of going into commercial real estate is create a game plan. Because people may not always see your vision. And I still deal with that today. Not that I raise money, but when it comes to leasing properties, I could like spit off ideas, but then people won't understand what the vision is. So I would create a performer for the property, what you're buying it for today. Create a sources and uses. What is the money going to be spent on? How much money is going to be spent, what your projected rents are going to be. Show the vision of what your potential remodel is going to be and then show what your potential exit is going to be. Because if you can show a vision to an investor of hey, I'm buying a property for, let's use an example. My Atlanta property, if I bought it for 600,000, I was planning on spending maximum a couple hundred thousand dollars and my potential exit was 2.2 million. That gives a potential investor confidence that, look, even if you don't hit your mark, even if you don't get to this performance because I think it's too aggressive and you land at 1.5 million, how is my money really that much at risk? Because there's such a spread. But if you bring to your investor that, hey, I'm going to buy it for $600,000, I'm going to get a loan for 75% loan to value, I'm going to spend $200,000, going to be into it for 800,000 and then it's only worth a million. That margin significantly less and could cause concern that, look, if the market dips or changes, this could potentially be worth less than what you bought it for. And there's not much room for error. So I think, you know, creating the sources and uses for where the money's going to be spent, creating the performance to understand rents and what projections are and what the potential sale out is. It's very important because I'm the type of person when it comes to any investment to like to look at facts and understand numbers. Not me just going into meeting a room full of people and try to pitch them a vision and just say, well, I know how to do this and don't worry, just give me your money. I understand. So that's how I pitch things is understanding what people are concerned about, laying out their concerns, addressing their concerns and backing up with facts and dollars and cents versus just potential hopes and dreams. Just saying I'm capable of doing it.

I really, really hope our listeners are taking your words to heart and are taking a lot of notes because what you said over the last minute or two is so vital. Right. Sometimes you see if you're just kind of following real estate in the trades and you see these flips and these huge profits, there's no substitute for understanding the fundamentals and understanding the business and how to properly reposition an asset. So the fact that you started in property management, you understood how buildings worked and then to really go out and seek that knowledge, to really understand.

What.

Is the best way to execute these deals, just makes a ton of sense. So you continue to parlay one exchange into another. So by 2014, you were ready to launch Black Lion Investment Group. So at this point, what did your portfolio look like? Did you have multiple assets now that you were starting to hold, or were you continuing to trade up and what was going to be different moving forward about how you were going to grow this when you, when you launched the company?

Yeah. So by the time Blackline was created, I never held on to a single one of my projects for longer than two to three years if I have the ability to get out of it. I kept thinking as someone being younger in age, cash flow was not of a concern for me in terms of, you know, obviously I need money to live my day to day life. But it's not like I had a family and kids going through school and college where I had said, look, I need to make this much money now. I can't afford to pay my bills. So all I kept thinking to myself was okay, equity, equity, equity, equity. Until you get to a certain point and you can start cash flowing all that over that built up equity. So I don't know exactly which properties I had by the time it was 2014, but I would say that there was not a single property typically held at that same time period that I, when I bought properties in 2010, 11 or whatever the timeframe was. So I think what's very important for people to understand before they get into commercial real estate investing is what are you trying to get out of this? If you are trying to be a cash flow investor and that's what's important to you, Buy single tenants. If you are focused on equity building and your income sources are coming from your day to day job, or you're having an, or you have some property set aside to cover your cash flow, then that's great, have like a 2080 split or a 5050 split. But for me, all I cared about was equity and how I paid for certain things was you pull line of credits that are tax free and then you could pay for your personal life or personal expenses from that. Some people may call that risky. Understood. But that's the way I wanted to operate. The other thing, at that age, what was very important was understanding how important financing was. And again, it was very difficult for me to get loans on projects, so I was sometimes forced to pay for hard money loans. Those projects where I'd be paying 10% interest with 2 points, sometimes 12% interest with 2 points, depending upon the asset. Because I wanted to do a potential cash out to go buy another property or whatever the case was. So finance and lending were extremely crucial to my growth potential. So to answer the earlier question, so what had happened was as you level up in these 1031 exchanges, you always have to buy what you sell or greater value. So naturally, when the progression of, say when I bought the $600,000 deal in Atlanta and it sold for, I would have to go find a $2.2 million property or greater. But if I had not refinanced the property, and this is very, very important, if I, if I did not refinance the property, which in that case I had not, you could take the money which would be the delta from your loan. So let's just say the loan was 400, $500,000, it sold for $2 million net. After all your commissions, I would have $1.5 million that could go out and buy me sure, another 2 million dollar property. Or I could level up same thing, 65% loans of value by a 4 or 5 million dollars property. So for me, I'm a little bit more of a, let's call it, my stocks bled into my gambling of properties and I would leverage more than the average person probably could. If I could leverage 65, 75%, I would do that as long as I could tie in that same strategy of I need my interest reserve taken care of, I need good news money for ti and brokerage commission. And that's how it started growing and then vice versa. Say that property that was I bought for $4 million turned into 6 or 7 and then that 6 or $7 million could be broken down into 4 million a half, 2 million dollar deals. So it's just a constant growth spurt. Get in the property, fill it up, go on to the next, get in, fill it up, go to the next. So that was my game plan and what led to, you know, blockline having the amount of assets it has to.

And is this all still with the same investors or at some point did you start thinking, and I don't know if you know, once you started breaking the 10 million, 12 million, $20 million barrier, did you start thinking, you know, maybe I start bringing on some institutional partners, some larger equity sources. Was that ever a consideration? Or have your investors been loyal to you from the start and they've shared in your success along the way?

I'm proud to say that I do not have any partners and I've not had any partners for six to seven years at this point. So it's all been myself and there's the potential. I'm thinking of creating a fund. As I've been getting into these larger deals, it was just three months ago where I acquired the largest property I've ever have in New Jersey for about $50 million. So yes, as the deals continue to get larger and larger, that is the plan. But Now I did 260 or 265 million last year in acquisitions and dispositions by myself and with Black lion, with no outside money and no outside capital. So that just, that just shows that, look, if you really work at this and you really bust your hump to try to get across the finish line with a plan, it's possible because it's happened in about 10 years, give or take.

Amazing.

Over the past 10 years.

And what kind of team do you have as you built this out and as I would imagine you're doing a lot more volume that there's A lot of work that goes into these transactions. So do you have a team that assists whether analysts acquisition? Yeah. What's the team look like?

Yeah, absolutely. So the current team we have a chief development officer have pretty much run a law firm for all intents and purposes. Because when these transactions, when you're doing so many transactions, there's so much due diligence, underwriting, vetting. So we have three attorneys at this point working in house. Chief development officer, a coo, full time accountant, full time asset management division with property management. And then I also outsource third property. If the properties out of state are not directly in a close neighborhood to myself or the team, we outsource property management to third parties so they can manage the day to day. And then our asset management division manages those third party property managers.

So you really built the scale. And you mentioned the total gross dollar value last year, but how many transactions did that consist of.

For last year?

Yeah.

In terms of how many individual deals, number of deals? Yeah, I want to say it was probably the better part of 10 to 15.

Yeah, yeah.

So that then that's what's very important. A lot of people ask me, you know, like you said, if you're trying to build for growth, think of it as a tech startup, you need the team. Even if the team is ahead of itself, you need it in order to get these transactions done. Because these closings are so meticulous, the underwriting is so meticulous, the beginning loans is so meticulous. The commercial real estate for me is one of the most. It's easy to understand once you've done it for 10 years. But as a new person coming in, especially if you're doing multiple transactions over multiple states, with over multiple different regulations and different lenders and different tenant basis, it's a lot. And if you misstep on something as simple as not making sure a property is not contaminated, that can cost you millions and millions of dollars. So it's definitely super important to have a strong team that surrounds you. And something I pride myself on is I'm not the smartest when it comes to everything. So get the teammates around you that are just as smart, if not smarter and can teach you and watch out for things that you may not know. And that was very important for me as I was growing up to know that. So I had an attorney very early on that could guide me and advise me and make me focus on the things that I'm not typically thinking about. Because I'm the gunslinger, I'm the guy that's the visionary, the remodel. I can get these rents, but I'm not the legalese guy. I'm not the best bookkeeper in the world or accountant. So it was very important for me to surround myself with individuals and professionals that could elevate my game and. And the properties.

Yeah, I couldn't agree more. I mean, even on the. On the brokerage side. So we have a group here of 30 professionals who work together. And if I was doing this on my own, I would not. First of all, I wouldn't be doing this now, but. But again, you would get lost. I mean, there's so many pieces, and I find that, you know, the best team also complements each other and that, you know, different people have different strengths. So it's wonderful to hear that you've assembled an incredible team that has allowed you to grow to such an extent. So, you know, Robert, I'd love to hear about what constitutes a great deal for you, because, look, you know, certainly in those earlier years and now you've got enough deals under your belt that. Not that you ever want to miss, but when you talk about, you know, taking on hard money, 2 and 10, 2 and 12, I mean, you're personally signing on the line. I mean, you have taken a lot of risk. And so I've got to believe that when you buy something, if you're going to take that kind of risk, there's got to be very large upside. So can you talk about what makes a great deal, and then maybe you could also talk about how you go about finding them?

Yeah. So what constitute a great deal for me, without giving too much of the secret sauce, is it just. It needs to have upside. I mean, it needs to have a serious amount of equity upside. So if I'm buying a deal for, let's just say, round numbers, $5 million, and it's potentially going to be worth $6 million, and it's going to take 24 months to 36 months to redevelop. It's like, okay, why would you go through all this headache and hassle to make 20% on your money over two years? So something that was very, very important for me and a lot of people don't pay attention to this, is the time value of money. So if an investor, especially in my younger days, would be like, oh, well, Robert, I bought a deal for $10 million, and after 10 years, it's worth 20, most people would say, well, that's great. Good for you. Versus, I look at that and say, that's it. Like if it take, if you can make 10% per year, go invest in the S and P. Why are you wasting your time with real estate and management and all that kind of stuff? So for me they have to be home run deals. Like if you're not making minimum 40, 50% upside on deals, why, why are you even getting in this business? You have to be able to figure out a way of how you can increase and create value in terms of sourcing the deals. That, that's a, that's a great question. Because once upon a Time LoopNet costar were the easy ways to go about doing it and you didn't have as much competition. I think probably in the last three years, four years, people have gotten a lot more into the real estate game, let's call it, whether it's residential or commercial. So you have a lot more competition. And I would say to, you know, first time investors, especially if you're trying to look in that 500,000 to 2 million, 3 million, you're in the most competitive of the competitive because you have all the people that are the one offers that want to dibble and dabble in real estate and they'll drive up prices. So I found my sweet spot of being more in the. I actually don't even have a sweet spot anymore. It changes every year. But it's, you get, if once you get away from what's called the smaller crowd of the dollar amounts, it's easier to find deals in my eyes. But the last six or seven deals I bought have all been off market or they've been, or they've been quietly off market because typically unfortunate to say a lot of brokers, you know, shop the deals to their, their preferred clients, the people they've transacted with in the past, what they know that they're more of surety to close. And I've built my, you know, my relationships with those brokers and a lot of those deals, they just, they just trust that, you know, I'll get it across the finish line and I don't play games and that's very important to them and their sellers to know. So especially when you're dealing with the big institutional REITs like when I bought my $40 million deal in Tucson, Arizona from Weingarten, which is now Kimco, they're not going to deal with any random person off the street. They need to have a surety of clothes, they need to understand your background. They need to make sure that you're a viable buyer, that you're not just going to waste their time. And that's really important. So for, for, for starting out, any advice I can give when it comes to people buying properties is the number one thing I dealt with was especially for out of state markets is who are you? How do I know you're going to buy? Have you seen the property? Have you been there? So creating a website, creating a background, creating a history and a story, putting non refundable money, you know, day one, these are all little things that can, that can make, you know, buyers, sellers more comfortable and confident that you can get across the finish line versus you know, you have a simple thing that not having a professional email address and not having a website and not having, you know, a put together image of yourself, it goes a long way for a lot of people. As I'm sure you know, when you vet a buyer out, it's very, very important.

Yeah. From a broker's perspective I could certainly emphasize that, that you know, again when we're recommending a buyer to a client, we need to make sure that they're credible and they have the ability to close. And so all those things you mentioned are really important ways that we, that we qualify. So I'd like to, Sorry, I did have one clarifying question on off market, because off market does that mean that there's not a broker involved? Could a broker be bringing you a deal that's not being widely marketed? Or are you actually reaching out directly to owners to try to source deals directly or both?

I'd say it's potentially, it's usually both. Sometimes I'll just. If I own a property in a certain area and it's easy enough for me just to find their information of a property that looks dilapidated, I'll give them a call and say, hey, are you interested in leasing? I mean selling the property? So it's a little bit of that or it's sometimes like I'll give you a great example, a property was once listed for $45 million a year ago, seller couldn't get their number. And then I'm talking to a broker and saying, hey, well I've got this deal. The seller may be interested in selling. Do you want to put in an offer? And sometimes sellers are, have some deal fatigue and like, well maybe I'll sell it for less. And you put an offer in, you see if you can get it below what they were originally willing to take. It's, they just want to get rid of the property and they're sick of it. So there's definitely, and there's other Times where a seller doesn't want their property exposed on the market and they'll tell, you know, a broker or two about the deal. And those brokers will approach me and say, oh, well, Robert, I know this has the potential being a black line asset, do you want to buy it? So I'd say it's a myriad of different, different situations. They're usually never all the same.

Perfect, thank you. So I want to read a quote from you and then I'd love for you to expand on it. So you said I'm not your typical developer and owner and never wanted to be. We have strong ambitions as a company and are not afraid to take risks in this burgeoning new climate for entertainment and lifestyle real estate. As we begin to expand our portfolio, we're going to change the way it's done. I don't follow trends. I want to set them to ensure future success. Tell us what you mean by all that. I love the sound of it. So maybe, and I'm looking at some.

Guy, we should listen to that guy more often. So that, that, that quote has a lot of different meanings. And I'm a traditional retail shopping center developer. That was my fundamental base for investments. And what I realized honestly very recently in the pandemic was that retail was shifting significantly in the early 2000s, late 2000s, Amazon was not as big of a factor as it now is. Online shopping was not as big of a factor as it now is. The metaverse now being another different factor that's affecting, you know, retail potentially. You had before COVID the doom and gloom of retail dying. Big boxes, sailing, malls are failing. And then, you know, Covid just wiped a lot of that out. And the one glimmer of hope that you saw for retail restaurants, any type of ground floor type of product, was food and beverage. People still need to eat, people still need to go out and socialize for the most part, and they enjoy it. So it made me realize that, look, shopping can be done on Amazon or any one of these websites. You don't need to put a big box anymore. And it made me shift my strategy. And what I meant by shift my strategy is markets like California, which I was in, were under heavy Covid restrictions and other states were under heavy coverage restrictions. But there was this glimmer of hope in this market called Miami, which I had a couple properties where restrictions weren't as difficult and businesses were thriving, and I mean thriving, they're doing significantly better than the rest of the country. And people were excited about that. And that became A new travel destination. And then when all these different people from different markets realized how amazing Miami was, slowly. And what, you know, the weather being what it was, and the cost of living and, and, you know, the nightlife and the hospitality, it just clicked with me that I, I love shopping centers. I'm still going to do it, but I also want to create another division of Blackline, which became the food and beverage. And, and I literally sold probably 50 to 60% of my portfolio. And this was probably most of last year and the year before that. I just started investing it all into Miami and South Florida. And I started buying as many of these prestigious ground floor luxury food and beverage buildings as possible. And then when I. There's a project which, if anyone wants to check it out, it's called Wynwood Jungle, which had just a bunch of different artwork. And I spent $500,000 on fake florals. And I put, you know, different, like jungle theme throughout the property with like, artistic paint and things that you like. If you buy a shopping center and you say, I'm going to put $500,000 in fake florals, you'd probably get slapped upside down. It's like, well, how about the parking lot? How about the roof? How about this? And those are still important, but when you have a 20,000 square foot building, it's not as important. And the good thing about, you know, being that creative person is you're able to charge significantly higher rental rate these prime retail properties. So in typical shopping center world, your shop space rents are probably 18 to 30 bucks a square foot versus markets like Wynwood. There's rents pushing north of $100 a square foot and they're successful and the sales are there versus, you know, people in shopping centers. It's a different game. So the exponential growth for me was definitely much more geared and focused on the Miami food and beverage and hospitality scene. I don't know if that answers your question, but.

No, it absolutely does. And I guess if you don't follow trends, how do you. Are you going with your gut feeling or what are you paying attention to that's informing your investment decisions?

So, yeah, I mean, look, for me, when I'm saying trends is like, well, everyone is saying, oh, well, this market's hot. Let's just take Miami's hot. If you typically, as an investor, HEAR the trends 12 months later or you think that's a trend, you probably already lost, you're already probably at the top. So I like to be the person that's like, okay, well, I see this market as potential. Like I invested in my first property in Miami I think six years ago and I loved Miami. I'm like, why isn't this area getting more attention? The water is gorgeous, the cost of living is amazing. All things I mentioned before, there's something here, something doesn't make sense here. And it made me realize, okay, well if you get in early and time goes on, things will probably appreciate. Versus if I go into, you know, Rodeo Drive, the trends already been there that rodeo drives hot now, not so hot anymore. But if things already exciting, sexy, fun, there's probably gonna be little ability to create value in that market. But if you're able to see like a certain market, let's just say Brickell, it's really hot in Miami right now. But if there's like an area just north of it that's underdeveloped, that's not there, step in there, go there. Because the growth will naturally progress in one direction or another. So if you can kind of think ahead of the game and think about what you can do to kind of bring that attention there, that, that's very special. Now look, if you're buying a thousand, two thousand square foot building, you're probably not going to change big investors ideas of making that area hot. But getting in at the later point when everyone's already hyped about an area, it's probably going to leave little meat on the bone for you coming in at that time.

That makes a ton of sense.

Yeah. And another thing to add to that, what I meant by standing out and being different is feel free. At least in certain markets, like let's just say like typical neighborhood shopping centers, there's not much room for creativity. Right. You gotta doing like a wooden facade or an ethis and you're making it pretty and monument sign and a new story in a parking lot, it's pretty boilerplate. But in these other markets, these urban markets like Miami, the more creative you are, the more interesting your development is, the more people are attracted to it and appreciate it. People want different things nowadays at least especially when you have all this competition with, when you're competing with the Metaverse and you're competing with all these other developers, people want things that are different, that that excites them. So one of the most important things for me now when I'm developing these Miami assets or pretty much any of the assets I'm developing, is it Instagrammable? Because the power of social media that learned is extraordinary. Like the amount of money you'd spend in typical PR market, marketing tails in comparison to me designing, you know, my Wynwood Jungle property where I put like this beautiful staircase that had snakes going through and I put the property name and you know, every single person that comes by there stops, takes a photo, tags when would jungle or tags myself. And it's like that becomes mass marketing. And then when one of your friends says oh my God, that's so pretty, I want to go there, then more and more customers come. It benefits not only the property, but also the tenants that are in that property which accumulates the higher sales, which accumulates the higher rents. So there's a method to that madness and why I overspend on some of these projects and make them unique and one of a kind and I'll spend $500,000 on fake florals and artwork. It's because it makes that property a destination and creates great synergy amongst the tenancy that's there.

Powerful. You're definitely giving us an entirely new perspective. It's almost real estate is art. So look, Robert, this has been incredible. I mean if our listeners aren't inspired by your story, I don't know if they can be inspired. So I want to talk about just one last part about your dedication and your focus. So I was interested to hear about your routine. I think you're an early riser, an athlete. Why is that important to your success?

Because if I stress myself out every single day, in 12 to 15 hour work days, I'll probably give myself a stroke. For all intensive purposes, the grind of real estate is a really difficult grind and you have to figure out ways to de stress and decompress. So for me, my avenues, having a pretty strict and healthy diet and the gym is a great way for me to blow off steam and try to get back to homeostasis and not be so stressed out. I mean in my younger days, I will be honest. I am human. My, my way to solve my abundance of stress was alcohol. And not that I was an alcoholic, but that I thought that high stress, work hard, play hard was the solution. And as you get older, you can't do that. The hangovers become longer and longer, you get burned out longer and longer. So it became very important to me. I was like, look, if I'm going to live this life of high stress, high reward, there needs to be balance. If there's not balance, you're going to burn out. You're not going to love what you do anymore. You're not going to take time to be with friends or family or enjoy and Reap the reward. So for me, the balance was extremely important to me. I'm blessed in the fact that my wife's a dietitian and doesn't really let me eat bad if I wanted to. But the fitness, the health and wellness, meditating, all these, these different prongs to keep my, my, my mind right were very, very important to me.

Really appreciate your sharing that and your story. So last question before we close. What advice would you give to the inspiring investor to get started? And maybe it's someone, they're out of college that they, let's say they've been at maybe a bigger shop for a couple years so they've checked the box of having that knowledge that you spoke of that's so critical. So what would your advice be to them next to get their portfolio started?

I would say once they have the knowledge, which is like you mentioned, the most important thing, if they have the knowledge under their belt, depending upon how much money they have, the first thing I would say is find other like minded individuals like yourself because obtaining a loan and today's market is very difficult. So if you're forced to, you know, buy a property in cash, have other like minded investors, there's so many people that want to get into real estate. There's so many people that are excited about this or crowdfunding that they're just handing their money away to some of these larger developers and doing that crowdfunding where they're taking the money and investing for them. But then you're just getting a check in the mail, you're not be able to appreciate equity. So don't get lost into that because I don't think the equity growth is going to be there. I mean I don't know about all the funds but typically the equity growth is not there because someone's doing all the work and they're going to take a piece of the pie. So a fine like mind investors that you can potentially partner up with where you guys can all benefit from the upside equally with one another or if you do have some initial capital from friends or family, or if you saved it from school or a business, create a lender relationship immediately. That is the number one thing that I would say is to if you don't have the whole amount of money, which most people aren't, find a lender. And it's okay if it's a hard money lender, it's okay if it's more of an expensive lender the first time around because you're still going to make money if your sources and uses and your profit, like if the perform was there. So I have a very important saying in my life is that pigs get fat, hogs get slaughtered. So just because you're paying a lender an extra, you know, 5% interest on a $500,000 loan, that's 25 grand. If you're set to make three, $400,000, it's okay, pay the money. You're not always going to be in that situation. So pay it now. Focus on your growth, protect yourself on the interest reserve and all those things that I mentioned earlier and scale that way. Because whenever you get into the three four million dollar deals and you've and you've accumulated that equity, then lenders are going to start looking at you, the typical lenders which never go to the major lenders because those are extremely difficult to get loans to find your community lender that would help you out, that understands your vision and growth and then you'll be able to get the 4% interest only loans for two years. So in the beginning it's okay to deal with the struggles of the higher rate loans with the hopes and the plan that you're going to get ultimately to the situation that I mentioned. So I think that is probably the most important thing other than knowledge to be able to start scaling your business and understanding what the future is going to hold.

Robert, this has been absolutely amazing. So appreciate your sharing your story and really the fundamentals as well. And I love how you broke it down and really distilled your story. It wasn't just that you were an overnight sensation. So really appreciate your walking us through your story and giving so much incredible advice to our listeners. So thank you so much for joining us today.

My pleasure. Thank you. Thank you for having me.

This is your host James Nelson of Real Estate Investing live from New York. Thank you so much as always for joining. If you have not already, please subscribe to the show. Tell your friends I really appreciate the ratings. If you have not already, please connect with me at James Nelson NYC on LinkedIn or Twitter. And finally, last but not least, please check out james nelson.com I built this site for you to give you the inside edge to real estate investing. Until next week, thank you for tuning.

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