Moshe sits in the hot seat once again to answer more of your questions about business, real estate, and what it’s like to have 11 kids! He talks about how being a contrarian in business has helped him thrive, and what you must consider if you’re going to purchase commercial real estate or multi-family housing.
How having 11 kids rubs off on Moshe’s business:
“When it comes to younger employees, I learn a lot from my kids. I learn how to communicate with (the employees). My kids teach me a lot about technology, a lot of ideas, and a lot of what’s popular and what’s going on. A lot of my business partners are older than me, and I work with a lot of people my age, but when it comes to younger employees, I definitely learn a lot from my kids.”
How to handle tough times at work:
“Think of habits and rituals for when the tough times come. What shapes you? It’s only that. I always say, ‘Let the good things take care of themselves. Train yourself to have an easy, flexible way when it comes to the tough times.’ Constantly speak to each other, collaborate, and there are enough brains, and we’ll do the best we can.”
Being a contrarian in business:
“In the nature of systems, if the Wall Street Journal says something, or CNBC says something, and if something is ‘popular,’ … if you’re going to follow that, in the nature of it being popular, there will be more and more competition. And from a business perspective, what’s most important is the result, or the return. So, if you’re going to follow what everybody else is doing, your returns are going to diminish and there’s going to be a lot more competition. So, the only other way is to go the opposite way, and to train yourself to be comfortable when there’s high pressure. Everyone will say that you’re nuts to go that way, but you will see outsized returns if you’re right.”
Two factors to consider when purchasing commercial real estate:
“I think it comes down to two main points. Because in all real estate you can make money; it doesn’t matter where the economy is. I like thinking about location. So, if you have a good location, that means that there are a lot of people there, there’s a lot of transportation, and there isn’t too much crime. And the better those factors are, the better the odds that the property will appreciate. And if the property appreciates, that’s where you make your money. And the other side is, what is the actual price you’re going to pay. The way I look at something is, no matter what it is, if it’s a dollar and I can buy it for 50 cents, then that’s something to really consider. … Most deals I say ‘no’ to. So, you have to be very disciplined to the fundamentals, and ask yourself: how can I bring value to our organization from this thing?”
How to make money from multi-family apartment buildings:
“I’ll buy something that’s 60% occupied, let’s say a multi-family building, and it’s in a different state. And I have in the operating expenses, literally, a line item for mismanagement and another line item for theft. So, you calculate for those things and, even if they happen, if you can come out clean then that’s the only thing that matters.”
His due diligence when buying a multi-family building:
“When I buy, I always go into the area, and I do market studies and I look into the comps. You’ve got to walk the comps, you’ve got to see them, you’ve got to see the tenant base, you’ve got to see the condition of the building, if they have a pool, and what their amenities are, and then determine if it’s really apples-to-apples. And then couple that with your gut instinct. Say to yourself, ‘Okay, they’re getting $1,000 rent, I think we can get $1,100,’ or whatever it happens to be. And, you also have to know who your manager on the ground will be, and what kind of personality they have.”