Dave is a previous guest on the show who specializes in triple net leases. Today he comes back on the show to talk about how he and his team try to predict certain things that will happen and be proactive in solving problems before they even come up. Dave gets a lot of people asking him how he “does so much”. He attributes being on top of everything all the time to his time spent working at The White House. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Dave Sobelman Background:
- Founder & CEO of Generation Income Properties (a public net lease REIT)
- Founder of net lease brokerage firm 3 Properties.
- Managed more than 1,000 single-tenant net lease transactions and has been involved in about $10 billion in transactions
- Began his tenure in commercial real estate as a Research Analyst and Associate for Grubb & Ellis Company
- Was responsible for maintaining market data for over 134 million square feet of area properties and accurately forecasting regional trends for client assessments
- Based in Tampa, Florida
- Say hi to him at www.gipreit.com
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Dave Sobelman. How are you doing, Dave?
Dave Sobelman: I’m doing great, so fun to be with you again. Thank you.
Joe Fairless: Yeah, nice to have you back on the show. Best Ever listeners, first and foremost, I hope you’re having a best ever Sunday, and because today is Sunday, we’ve got a special segment for you called Skillset Sunday. You’re gonna walk away from this episode with a particular skill that you can hone if you already have it, or you can acquire if you don’t have it already.
The skill we’re gonna be talking about today is how to be a productive, proactive person who’s got a vision for what’s about to happen. And we’re not talking some mystical stuff, we’re talking about practical things you can do in your life to make that happen.
We’re gonna be talking to a previous Best Ever guest. Dave was on episode 1168, titled “How to Have Your Tenants Pay Taxes, Insurance and…”, what’s the rest of that title?
Dave Sobelman: Maintenance.
Joe Fairless: Maintenance, thank you, sir. A little bit about Dave – he is the founder and CEO of Generation Income Properties, which is a public net lease REIT. He’s managed more than 1,000 single-tenant net lease transactions and has been involved in about ten billion dollars worth of transactions. Based in Florida.
Before we dive into it, Dave, do you wanna give the Best Ever listeners just a refresher of your background?
Dave Sobelman: Absolutely. So I am the founder and CEO of a public real estate investment trust called Generation Income Properties, as you mentioned. We focus on net lease properties throughout the country, typically in the top 20 highest density cities in the United States. I also founded a brokerage firm that helps people buy and sell triple net lease investments throughout the country. That’s where my background started, in this very niche product type.
Lastly, I am one of the founders of an algorithm that focuses on triple net lease valuation, using actual metrics and data, and really trying to quantify subjectivity as it comes to the valuation of net lease properties. That company is called Vero, which is Latin for “truth.” That’s my immediate background and where I spend the majority of my time.
Joe Fairless: So with these things, clearly you’ve accomplished a lot and are continuing to accomplish things and performing at a high level… So walk us through the background for today’s conversation, because with this show I do do returning guests, but I always do a special segment with them, and that is either Skillset Sunday or Situation Saturday. I know when you and I were talking prior to this recording, you talked about the background for the focus of today’s episode and where it was coming from. Can you talk about that?
Dave Sobelman: A lot of people ask me, they say “You do so much, you’re so productive. How do you manage running three companies? How do you manage the staff that comes along with that? How do you manage the people and the tasks at hand, and writing books, and being published, and speaking around the country? How do you get all of this done?” And in my mind, it’s become very simple, but I understand from an outsider’s perspective it seems pretty unique.
The basis of my background or the skillset that I think that I’ve developed over the years comes from my time before real estate, which is when I worked at the White House. At the White it’s a very fast-paced environment. You have to think quickly, you have to think accurately for the most time, and you just have to be on top of everything all the time.
Politics aside – we won’t get into a political discussion, or which president I worked for – but every staffer (which is what I was) who works at the White House either has or has developed the skillset where they can accomplish a lot in a very short amount of time.
I was on the president’s advanced staff, which is a position at the White House that most people don’t know about, and it’s where you travel before the president, anywhere in the world, up to a week or two weeks ahead of where they go, and you establish the political logistics of their trip. In essence, who they’re gonna meet with, where they’re gonna meet, who will be in the room, what it will look like on TV, and sometimes the content of their meeting. And you prepare all of this for the president before he arrives.
So when the president does arrive at any place in the world, you typically meet them at the Airforce One; he walks down the stairs and you start briefing them on exactly what they’ll be doing on that trip and who will be with them. You’ve had all of this preparation for a week or two beforehand to educate yourself, which in turn allows you to very quickly and accurately brief the president on what he’ll be doing on that trip.
So you have to develop the skillset to be ahead of yourself and anyone else, and always think of every contingency that could happen in any scenario, and on top of that being prepared for it.
Joe Fairless: What type of training is involved to have that skillset?
Dave Sobelman: There’s no formal training. It’s not like you study this in school. I didn’t study political science, I didn’t study law… I learned this skillset by being around people who demand this sort of level of service within their lives. So you typically start at a very low position when you’re at the White House, where they don’t put you anywhere near the president, but you’re just working for the people who are near the president. You develop that skillset by watching what they’re doing over a period of time.
So it’s just helpful to completely think of any task at hand as not at what’s immediately in front of you, but what you’re ultimately trying to accomplish and who are the different players involved and what their roles are in each aspect of that plan.
Joe Fairless: When you were watching people over a period of time when you were starting out, what were some of the things that you picked up on?
Dave Sobelman: That’s a great question. A lot of times we’re putting a lot of effort and emphasis into aspects of our lives or aspects of our work that isn’t important to the big scheme of things. An example of that – one of my first assignments as working at the White House was working with the media. A lot of people don’t know that literally wherever the president goes at any point in his day, there is always media involved, because it’s deemed that the president is creating history from any aspect of their life… So from a state dinner, to visiting a foreign country, to doing a speech on a specific policy event, to going to play golf, or going for a run. That’s all considered history, so there’s media with him all the time. Even while the president is sleeping, there’s someone at the White House to report on any events that may occur at the White House that directly affect the president.
So one of the first jobs that I was assigned to was to work with the media and to see how they go about reporting what’s happening, both from a video perspective, and then — they call him pencils, people who are writers, where they don’t have a camera in hand; they’re just writing down what’s happening.
It was my job to coordinate the movements of the press, because everything is very coordinated. So being in a room with some of the well-known media outlets throughout the world and with people who you’d recognize by TV appearances all the time forced me to be in a position to be ahead of them all the time… So what are they trying to accomplish by being in this room with the president right now? What is the story that is coming across with the words that the president is using? What is the angle of the photograph that that photographer is trying to make, and what the background of that photograph and who else is in that picture with the president, and what message are you trying to convey with this particular presidential appearance.
My job was to think about all of those things, so as the media moved with the president, that they were capturing the story in which they were trying to accomplish.
Joe Fairless: When you internalized that and then you apply it, what are some things that you do to influence it one direction or the other?
Dave Sobelman: You know, I still use all of those skills in my real estate practices today. So let’s take a net lease transaction, for instance. I figured out at one point that there could be as many as 23 different people involved in any one transaction, everyone having a different role within that transaction. So whether you’re the buyer, the seller, the attorney, the engineer, the surveyor, the title person – whoever you are within that transaction, that you have a role… And from a brokerage perspective, it’s the broker’s job to coordinate that entire transaction, that entire effort.
So transferring those skills of being ahead, of coordinating people, truly being a leader within that and making sure everyone’s accomplishing their job, with the end goal in mind to complete that transaction. It’s something that I’ve transferred very easily to the real estate market. So over my time, as I developed my skills at the White House, I was promoted to different positions where I ultimately became what they called a lead advance person, meaning that I would not only just be part of the media, but I would control the entire trip, and having conversations directly with the White House beforehand, and reporting back to make sure that our efforts on the day of the president’s arrival are extremely coordinated and well-documented. So not only would I have to work with the president’s White House political staff, but I’d also have to work with the president’s security, which is the Secret Service, and also with the United States military, which came with different roles, a lot of it being communication with the United States army, with air transportation, with the Airforce or the marines, and as the lead advance person, it’s your job to make sure that everyone is completing their task at hand.
So the organizational effort that goes into any movement that the president has is extremely time-consuming, but at the same time extremely detailed. So it really looks effortless when the president’s doing what he’s doing, but in the background there’s dozens and dozens of people who are involved in every effort he’s doing. As the lead advance person, it’s my job to control each one of those efforts and to make sure that the president is doing exactly what we have planned for him to do at that point.
Joe Fairless: Bringing it back to real estate like you did, and the 23 different people in a transaction, one thing you mentioned is you want to recognize there are lots of people in a transaction (23) in the case that you were looking at, and then understand the role that each person is trying to accomplish… What if there is a person, one of those 23, that you know the role they’re trying to accomplish – you could just look that up on Google, or something (what is this person’s role?), but the way they’re going about it is perceived to you as they are sabotaging the process, or they’re just incompetent… Then you know what they’re looking to accomplish ideally, but they’re just not going in the direction you want it to go.
Dave Sobelman: I found in my career that it’s better – and I would just be very frank about this – to call those people out directly. I choose to handle things privately in the first instance, and have a very reasonable, professional conversation, pin-pointing that person and letting them know that I understand what they’re doing is not accretive to this process, and I hope that we change things and maybe give them suggestions on how to change them. If that doesn’t work, then essentially we bring it out to the collective good of those 23 people or so, or I should say up to 23 people, and letting them know where the weak link is in this process, just so everyone’s aware that I have identified it, I’m trying to work on it, and that’s it’s not (using your words) “sabotaging” the entire process. Everyone else typically can be a professional about it and realize that there is a weak link, but we’re working around it. I’ve had to do that many times in my career. Not everyone has the best of intentions, although we go into it hoping that they do.
I’ve been in positions where I’ve learned this trait by traveling throughout the world. In every country that I would attend there’s a negotiation point and there’s different styles of negotiation. For instance, when we were negotiating with the Chinese government on the president’s trip to China, the Chinese nationals are extremely shrewd negotiators; they’re excellent and expert negotiators on the different aspects of what we were trying to accomplish within that trip. We have to be able to communicate well, not only with our own team, because now we’re dealing with a whole other set of circumstances, which is an entire national government. So being able to fluidly get through this process and being ahead of what we are perceiving to be issues was always very helpful, so when the president does arrive and/or when a transaction does happen, these issues have already been dealt with.
Joe Fairless: How did you and the team come to a satisfactory conclusion or agreement in that scenario with the Chinese nationals, knowing that (to use your words) they’re excellent negotiators?
Dave Sobelman: Well, understanding who you’re working with beforehand is probably step number one. Assessing your situation, knowing what environment you’re going into is extremely important, because real-estate specifically – and we’ll get back to negotiating with the Chinese government – it’s a very dynamic industry. Properties right next door to each other each have their own dynamics, their own circumstances – different owners, different values, different surveys… There’s differences even in properties right next to each other. So assessing not only the real estate aspects of a specific transaction, but the people involved in those transactions and how they want to accomplish this process (whatever process you’re getting into) is step number one.
Relating that to my work with (in this case) the national government is we knew upfront that they’re shrewd negotiators, and now here we as Americans in a foreign country, and therefore you have typically lower leverage in which to negotiate, because you’re not in your homeland, you don’t have your own people surrounding you… And I’m not saying that from a very polarizing perspective, it’s just there’s a reason that there’s different countries – everyone has their own cultures, and their way that they go about doing business… We weren’t in the United States anymore.
I had the ability to prepare for my time in China by learning their cultures and the way that they do business, and how someone in the Chinese government may respond to a request that we have, and being prepared for that up-front just goes back to the thesis of doing your advance work – being prepared and knowing what you’re getting into before you start.
Joe Fairless: So the key is to learn the culture, learn who you’re gonna be working with and then approach accordingly?
Dave Sobelman: Absolutely. And that’s something that I think has allowed me to run my business currently – knowing the different people and the different scenarios that we’ll be involved with in any stage of our development and growth.
Joe Fairless: Now we’ll bring it back to real estate… When you’re doing research on who you’re gonna be working with or negotiating with, what questions should you be asking yourself and what type of research should you be compiling?
Dave Sobelman: Almost like an attorney… Not quite like an attorney, but almost like an attorney, you wanna be prepared for everything. So if you’re going into a transaction, you wanna know exactly what your end result should be, what you want it to be, before you start that transaction, before you start at negotiating, before you start your first offer on that property… Because usually there’s a negotiation with any real estate transaction, and everyone’s trying to get a good deal; both sides are always trying to get the best deal for themselves, but what is your walk away point? Where can you say “This just doesn’t make sense anymore?” Having that up-front in your brain, in a spreadsheet, however you’re structuring your own underwriting is paramount to the process.
Joe Fairless: To know what your walk away point is, and then be prepared for everything — but “everything” is pretty broad by definition… I’m gonna use some stupid example so you can rein me in a little bit. Do they like Fruity Pebbles or do they eat oatmeal for breakfast? What exactly should we look at, what are the most important things we look at? Because we’ll go insane if we try to be prepared for everything [unintelligible [00:20:46].20]
Dave Sobelman: Yeah, that’s fair… So you’re ultimately ending up at a price, so you should come starting with what’s your walk away price. I’ve made several mistakes early in my career where I was not prepared to understand what the value of a specific property would be, and purchasing that property at the wrong price, so when it came time to exit that property for whatever the reason, you can lose money, or not make money. So price is first.
The people involved – everyone says that real estate is a very people-centered business, or a relationship business, and developing those relationships over a period of time is important to the growth of yourself and your connections, but knowing the people involved… And let’s get specific about that – some people, like I mentioned, are shrewd negotiators and you just know that everything that you’re gonna do with this one particular person may be a negotiation. Other people may see the bigger picture and they’ll say “Listen, I’m willing to leave a few dollars on the table in order to get this transaction done quickly, because in that case I can get my money back and invest in the next project, and I’ll make a few dollars there, and over time, in aggregate, I’ve made a lot of money.” So there’s different types of people – some who are looking for the last penny, and others who are cycling through deals pretty regularly.
In my case, we work with attorneys on every single transaction. There’s always an attorney involved, and having an attorney who’s a deal maker, while also protecting your interest, is also really important. Sometimes the attorneys I work with are not licensed in different states in which I work, so we need to find other counsel in different markets, and that forces us to start that vetting process all over again, and finding that deal-maker who’s also protecting us.
These are just several examples of how to assess the everything that I mentioned, but getting granular about the different aspects of the transaction is something that you just learn over time by having to be prepared for each one of those.
Joe Fairless: Anything else you want to mention as it relates to — you’ve talked about two skillsets; you gave us a bonus one, thank you for that. One is being a productive, proactive person, and two is negotiating tips.
Dave Sobelman: Yeah, just to go back to the original topic we started discussing, which was being ahead of yourself all the time… I really can’t stress this enough of how important it is and how productive you can be by giving yourself the chance and the ability to not just be productive, but being overly productive, to a point where people are not only shocked by how much you’re able to accomplish, but impressed. And that leads people to be attracted to the work that you’re doing and how you’re approaching these different situations.
People use phrases like time management or organizational skills, or all of these catch-phrases that we try to adopt in our lives at different points, but in my opinion the real way to handle multiple tasks at one time is just to think way ahead. Be a slave to your calendar, and think about the different people that are involved in each aspect, communicate what you’re trying to accomplish with each one of these goals that you set, and implementing those goals through that work. So multi-faceted, for sure; not something that’s easily adopted or easily learned, but something that over the years — I won’t say I’ll ever be an expert in this, but I’ll say that I’m able to educate others on how I go about accomplishing a lot, with little time in my life.
Joe Fairless: Great advice, and I will attempt to summarize here in a second, but first, how can the Best Ever listeners get in touch with you?
Dave Sobelman: You can reach me by e-mail, and you can get that through my website, which is gipreit.com (Generation Income Properties REIT). I’m happy to discuss any of these topics with anyone at any point.
Joe Fairless: Outstanding. So gipreit.com, correct?
Dave Sobelman: That’s it, thank you.
Joe Fairless: Perfect. Well, thank you for being on the show and giving us insight into how you’ve gotten some skills that you’ve used to get to where you’re at, and how we can apply those skills in our own lives as real estate entrepreneurs. One, the first skill we talked about is being ahead of yourself, as you call it – and everyone else, quite frankly, most likely… And by how we can apply that in our life moving forward. One is think way ahead. When we think way ahead, we need to have a vision for what we ultimately are trying to accomplish. Then we need to think of the people who are involved in that process, put together a plan and communicate the plan of what we’re trying to accomplish, while being calendar-centric to make sure we’re staying on point.
Dave Sobelman: Well summarized.
Joe Fairless: Well, thank you, sir. With negotiating, the most important thing we’ve got to identify before entering into any negotiation is what is our walk away price… Because without that, we might get caught up in a whirlwind of stuff that might seem relevant at the time, but ultimately it’s not if we’re not getting our walk away price – or, I imagine terms, too; you’d probably throw in price and terms in case they give us crazy good terms and the price might be able to be compensated for that… Is that accurate?
Dave Sobelman: Very fair, yes.
Joe Fairless: Cool. Well, thank you for being on the show. I hope you have a best ever weekend, and we’ll talk to soon.
Dave Sobelman: Thank you very much.
