How To Dominate Real Estate Investing

Aviva Sonenreich (00:01.262)
Okay. This week's listener of the week is SellingSunset42. SellingSunset, thank you for leaving us a five-star review. And for those of you listening, if you leave us a five-star review below, you might be next week's listener of the week, week, week. Our guest today almost needs no introduction, but...

We're here so I might as well introduce him. This is my dad. You can call him Dad or in the streets here in Denver, they know him as Izzy the shark, Sonenreich. My dad has taught me everything I know about real estate, commercial real estate, warehouses, and the business. And today he gets to be your dad and teach you.

things about the business. Do I get a cut? No, we've already discussed this off-camera. You do not get a cut, Dad. Oh, okay. Don't worry. There's not a lot to cut up here. So, Dad, thank you for... My pleasure.

I appreciate the opportunity to talk to folks and share what we've learned in real estate because there's a lot to share. And I think it's the type of business where it's not a zero-sum game, but it's a big pie and everybody can get a good piece of the pie. So, yeah. And I find the most successful people are the ones who look at it that way. Yeah, I think you've got to look at it that way.

that where it's share and share alike, because I, I think first of all, you're happier in the end, number one, and number two, people respect you more and are more open to you. And in the end, I think you end up doing more deals that way when you do share the wealth. So, speaking of being happy.

Aviva Sonenreich (02:20.758)
sharing the wealth, what is currently making you happy in real estate? Probably something that may be counterproductive to some of your folks' thoughts. I'm happier about the interest rates the way they are. The slightly well, they're certainly higher than they were two years ago. But I think it's

creating a situation where there's a better equilibrium in the marketplace. The low interest rates were really an aberration and it's nothing that I've seen in my career of Jeepers. It's already 45 years where rates were that low. I can remember my dad telling me, buying his first duplex here in Denver and in the early...

1950s and he paid 4 % interest for that property. Now, you know, the past few years when we've had these extremely low interest rates, it just pushed down cap rates or returns on your properties. And I thought those were not sustainable that we could have.

that low returns on real estate. To work on a margin of four, five, or six percent with real estate is, to me, ridiculous because anything happens. If there's a recession, if rates go down, if you have a problem at the real estate itself, you've got extended vacancies, your 5 %

drops down to 2 or 3 % really quickly. And for me at least, that's extremely painful to be just working for a couple of 2%, 3%, even 5%. It takes too much time and too much energy for people to be working for that type of low return. So I'm happy.

Aviva Sonenreich (04:40.686)
I think it will create a better marketplace ultimately here in the real estate market. Here in Denver, I'm just happy about being in Denver. I know there are a number of other cities like Denver, but it's nice where you're in a vibrant city where business can thrive and...

when business thrives, when construction thrives, real estate thrives. So I feel really lucky. We're in a happy space here and we've been here for quite a few years. So it's been a real nice run. You said something interesting before I go on to the next question. You said, albeit your listeners might feel the opposite.

you feel good about the interest rates. I think in my studying of economic cycles and investing and investors, I see an overwhelming trend that essentially during times of change or economic struggle, the tendency to do the exact opposite of what the general public does,

happens to come out in the favor of the investor. I was reading the, I was reading the, what's his name? Tony Robbins book. And he said, essentially when you, a human are being hunted in the wild by a saber-toothed tiger, the innate human reaction is to run away from the saber-tooth tiger.

Right, so when the stock market drops, the innate reaction for humans is to. Run away. Correct, exit the stock market. Interest rates go up. What has happened? Buyers have, you know, all these pro syndicators who have never done a deal in their life. There's this big thing right now where people are talking about all these people who syndicated, you know, these like frat bros who syndicated multifamily deals for 5 % in 2021 are now all losing their heads. Yes, yes.

Aviva Sonenreich (07:00.878)
So when you said it's not what the general public wants to hear in terms of interest rates, because yes, 2 % is more attractive than 7%. Oh, oh, yeah, when you're on the borrowing side, yes. When you're on the borrowing side, yeah, when it comes to interest rates. Yes. It's just an interesting trend I've learned that during economic shifts,

You may feel like you want to run away from the saber tooth tiger, but sometimes 10% of people who go towards the saber tooth tiger sometimes come out ahead. A different way to say it. I think the saying is you make money when there's blood in the streets. So you got a yin when you yin when they yang is some of my philosophy in life. Be it in.

whether it's investing or other parts of my life. Well, that's a good segue to my next question. What advice would you give your younger self about commercial real estate? So how old were you when you really started your commercial real estate career? I was right around 28, or 29 years old.

when I started into brokerage in the commercial area. I felt like I had to start with a brokerage. I always knew I wanted to be an investor. Brokerage was a conduit to get there. It was an end to a mean. It was a means to an end. There are some folks that love brokerage and more power to them, but.

My preference has always been to own and manage real estate. I like it to work for me rather than me to work for it. That's the way I kind of look at it. So I started right around 28, 29. That's when I started. So what would Izzy in 2024 tell 28-year-old Izzy about commercial real estate today?

Aviva Sonenreich (09:23.438)
What I would say is, and it took me a little bit of time, but once you find a process in purchasing real estate or acquiring real estate and you feel like you've really perfected it and you've done it once or twice and you've done it successfully, be aggressive with it. Don't, don't, don't hold back.

Because if you've got a good solid process and you've experimented with it, it works. I feel some of my weaknesses have been that I was not as aggressive as I should have been. People ask me if I want to sell real estate or if there are properties I want to sell, particularly buildings. And I tell them, no, my

My biggest problem is I wish I had bought more. I know early on I did build a very good process. It worked very well. I've never really sold any buildings that I've acquired. And I wish I had been more aggressive because I had the process down. Something I love about your portfolio that I talk about.

So my dad syndicated a portfolio of warehouses between 1999 to currently. Correct. And what's crazy about this syndication and processes is that these properties are literally all the same. They're boxes. They look the same. They're fundamentally the exact replica of themselves, which is a rectangular property.

most of the time a couple of units, some drive-in access, and some dock high. As I've always told you and I'll, you know, real estate, particularly when you're talking about commercial real estate, particularly industrial, you don't want unique. You want boring, simple, run-of-the-mill.

Aviva Sonenreich (11:46.446)
If it becomes unique, you have a problem probably. So yeah, I always want real estate that looks very much the same. Aviva's very, she's really accurate in her assessment of that.

It's all pretty much boring and bread and butter, but we like bread and butter. Bread and butter make bread and butter for us. Keeps us fed. Oh, yeah. Well, okay, love it. Be more aggressive with your systems. I'm even processing this with my own current systems that are working, but, and I'm sure the viewers will too. Yeah, you've got a...

You've got to create a base in real estate. You've got to understand what you're doing. You got to find your niche, find your market, learn it, learn it better than anybody else. Make the appropriate contacts, find the mentors, and whatnot. And when you've really solidified it, hopefully, you've got that self-confidence where you can move out and aggressively attack.

and execute your game plan. Yeah. It's cool. I saw this podcast recently, correlating intuition with self-confidence. Say if you're not confident in yourself, you can't be intuitive. Yeah. But if you're confident in yourself, then you can trust your intuition. Yeah. A lot of my business has been gut-level. People sit there and say, why did you pick that? And it was like, well, I've seen so much product, and I

reviewed so much product, have immersed myself so deeply. There have been times when I've pulled up in front of a building without knowing all the information and I knew instantly I was going to buy that building. It did become a gut instinct, but that's because it had become a part of me. I had internalized the market and

Aviva Sonenreich (14:04.11)
Like you say, I guess that's a good way of saying it. If you've got the self-confidence, you've got the intuition. I've always said I'm a gut player, but I know I'm a gut player because I did my homework upfront. How many office buildings have you bought in your life? None. But that goes back to me. And you know it.

For me personally, simple is, I like simple. Simple is better. I like straightforward. I don't wanna get too complicated. A lot of my deals, the bulk of my deals, especially when I was syndicating, I just raised enough cash to pay the properties off immediately.

rather than dealing with banks and dealing with those issues. And it can become a whole other set of issues with dealing with banks. But there are other reasons why I like free and clear real estate.