April 4, 2017

JF946: Learn the Secrets that took CNBC TV Star Sean Conlon From Assistant Janitor to Real Estate Mogul


Fear and focus were two paramount tools for Sean Conlon, star of all brand new reality series, The Deed Chicago.  In this episode, Conlon shares details of journey from an assistant janitor to the fame and fortune he has amassed and now helps others achieve.  With a passion for real estate, Conlon began making evening cold calls for a brokerage after his long day job shift. He learned the streets of Chicago like the back of his hand and grew his empire by selling and eventually developing real estate.  Turn up the volume and learn how fear and focus can change your life, too.

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Sean Conlon Background:

– Star of New CNBC Television Reality Show The Deed: Chicago – a show on rescuing real estate projects.
– Owner of Conlon & Co: A Real Estate Merchant Bank. Conlon spent his nights making hundreds of cold calls until he began to make a name for himself. Today, he presides over one of the most extensive real estate businesses in the country and is a leading visionary in the field.
– Chicago real estate mogul who went from being a janitor in 1990 with to running successful real estate business The Deed on CNBC will follow him rescuing real estate projects in Chicago
– Based in Chicago, Illinois
– Best Ever book: City of Thieves

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Joe Fairless: Best Ever listeners, 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 fluff.

We’ve interviewed Barbara Corcoran from Shark Tank, Robert Kiyosaki, the author of Rich Dad, Poor Dad and a whole bunch of others. We’ve got a treat for you today, we’ve got the star of the new reality show The Deed: Chicago, Sean Conlon. How are you doing, my friend?

Sean Conlon: Hey, nice to meet you, and your listeners, too.

Joe Fairless: Yeah, you pumped me up right before we started recording, like “I can’t wait to talk to the Best Ever listeners.” I know they like hearing that.

A little bit about Sean – he is the owner of Conlon & Co, a real estate merchant bank. He’s also a Chicago real estate mogul who went from being a janitor in 1990 when he came to the United States, to running a successful real estate business. As I mentioned earlier, the is the star of a new reality show called The Deed on CNBC, which will follow him rescuing real estate projects in Chicago.

There’s a link in the show notes page to the trailer, go check that out, and then go to CNBC and watch the show, as well. It’s based in, obviously, Chicago, Illinois. With that being said, Sean, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Sean Conlon: Yeah, I came to America in 1990. I actually worked as an assistant to the janitor, but I pumped my resume a little bit, as you do… I started selling real estate in 1993; it was suggested that I should give up, because I was awful, and I stuck with it, and by the end of the ’90s I’ve sold probably around 200 million dollars a year, with an average price of 350k, which was long before the million-dollar listings. [unintelligible [00:03:59].08] and then I founded a company called Sussex & Reilly, which at the time was quite cool, which sounds like I was good at Rubik’s cubes, but we were the second largest users of Blackberry’s in North America in 2000, when they were cool.  I sold that company, and bought it back and sold it again. That’s kind of the gist of it.

Joe Fairless: I wanna dig into – from 1993 (when you started) to 1999… I’ve read a couple articles where you were interviewed around that time, and you attribute it to hard work. I wanna dig in there… So if we drill down a little bit, what would you attribute the rise in your success as a real estate agent to?

Sean Conlon: Look… Obviously, there are lots of incredibly smart people out there; they’re definitely a lot more smart people than me, a lot more connected, and I think it’s somewhat inspiring, but my story is I’m an ordinary person who did some fairly extraordinary things. What would I attribute it to? It really was hard work, because I had nothing else. I had to work my day job, finish up at six at night as the assistant janitor, and then come and cold call in the brokerage office. But I ate sleep and drank real estate in a particular area, and I was so knowledgeable…

It was like learning to juggle, which seemed like a useless talent. I knew every zoning, every lot size… And then one day, when all those nights fell on top of me, I was able to juggle my way through it. I was positioned they started to build the first three condo units in the neighborhood, and I rode that wave. But I was only in the right place at the right time, because I was in that place all the time.

Joe Fairless: So you were working as an assistant janitor, and you were also painting some houses… But there were people in your brokerage – just for some comparison purposes – who were working full-time. When I hear that, it’s not about necessarily doing hard work, it’s about being effective with the work you do. Because if you’re working only nights, then you’re basically working about the same hours as the people who are working full-time, therefore you are more effective with your time. So what were you doing that was more effective with your time?

Sean Conlon: Bingo! I see why your podcast is so successful – you focus right in on the difference. I was incredibly efficient with my time, and I picked something and focused on it. America’s such a huge, huge country, economy-wise. If you pick a small part — Sussex & Reilly when I started it, two years in we were doing a billion dollars in sales a year, in a couple of neighborhoods. I focused in on understanding the teardown and the zoning in this neighborhood, [unintelligible [00:06:43].06]. That was my talent that I taught myself that was useless, until it became incredibly relevant.

So that’s exactly right, I was focused on working a lot. There were a lot of people who worked who did busy work; I would come in at night and I would need so many hours to be focused… And I would cold call, which is a horribly difficult thing to do, but it taught me rejection really isn’t rejection if you pick yourself up and go again.

Joe Fairless: How did you go into focusing on teardowns and zoning, compared to other stuff you could be focused on?

Sean Conlon: That would be some serendipity. Of course, that comes along if you’re out in the mix. I would walk the neighborhood in the evening, and I saw a guy building a three-flat, three apartments, and I asked him what if he’d sell them as condos, and he said, “Well, they don’t buy condos up in this neighborhood.” I said I’d do all the research-research, and I sold them in a week from like some really bad photocopied plans, and like “This is the future”, and I rode that wave.

Joe Fairless: So you came to the U.S. in 1990. How old were you?

Sean Conlon: I was 21. I grew up in a small village in Ireland, seven of us in a pretty small house. My dad was the most incredibly charismatic man ever, but the worst businessman ever, and my mother was hardcore, raised the five kids and she worked two jobs, so I got a little bit of both. But my dad was a dreamer, and he always believed that American was the place where you could go make it, and when I look at him – he’s dead now, and he was my inspiration – I think he’s a great example of “In the end you only regret the chances you didn’t take.”

He wanted to come to America, but he was scared to, so he put all of his faith that I was going to do it. I was 21 when I came.

Joe Fairless: What’s the reason, why are you such a hard worker, but so focused?

Sean Conlon: As lots of Best Ever listeners will probably attest to, we see all these wonderfully dramatic things, and I think one of the reasons The Deed: Chicago will appeal to people – I’m so very real; what I mean by that is I have always been driven by fear. While lots of people are driven by the things they want, a lot more of us are driven by fear: fear of being poor, fear of not being able to pay your kid’s school bills, or the car payment. That does drive a lot of us.

Ultimately, it drives you to real success, but I would be lying if I said I was driven by some great vision to be in the White House, or something like that. I was driven because I was scared, and I wanted to take care of my family, my parents and stuff, which is the greatest thing I’ve ever done.

Joe Fairless: I would think at this point you are financially stable, but you’re still achieving high-level things. Is fear still driving you, and if so, what are you fearful of?

Sean Conlon: Fear’s still in me, because in 2008 I was on top of the world, and I was not paying attention, and I was probably in a hammock when that bomb hit the beach… I was like, “Oh my god, where is everything?” At that point I had a hundred-million-dollar fund on the street; we were funding 1.2 billion dollars of developments across North America… So there’s still some fear, but I’m an ambitious fella at the same time.

Joe Fairless: Got it. So are you still doing developments right now?

Sean Conlon: I own a lot of stuff I’ve taken back in the downturn; you’d asked me about some of my funds, and it’s interesting because when I describe my mezzanine fund as a success, it was the return of investment, not return ON investment.

A lot of that real estate – like hundreds of acres in North Carolina – I still have, but I’m not out there balls to the wall developing, because that’s not a part-time gig, as I tell people on the show.

Joe Fairless: Right. Outside of the show, what are you focused on from a real estate standpoint? What are your main responsibilities right now?

Sean Conlon: I’m the chairman of Conlon & Co. We have a residential brokerage that probably [unintelligible [00:10:51].25] that will do about a billion dollars in sales this year. We have a commercial division which I really like to dip in and out of, where we do commercial deals around the country, and that’s probably a three, four hundred million dollar business, and then the really cool one is the capital markets aspect of my merchant bank. That’s where we structure about three-quarters of a billion dollars of loans a year for developers, guys refinancing storage facilities, senior housing, apartment buildings… They’re my main business. I’m kind of the rainmaker.

Joe Fairless: You’ve got agents for both residential/commercial, and you’re also making loans to people who want to buy real estate – primarily commercial, I imagine.

Sean Conlon: Yeah, and they’re bigger loans, CMBS loans. I do buy my own opportunistic things; I bought a high-rise site last year, a hotel in downtown Chicago. So I’m not afraid to be in that, I just find that market is quite heated right now.

Joe Fairless: Can we talk about that high-rise in Chicago for a second? Can you tell us the numbers on it and what appealed to you and how you found it?

Sean Conlon: Absolutely. Firstly, sometimes some of the best deals are hiding in plain sight. I say that just to state the acid obvious… There is a giant frog on it – it’s the Rainforest Cafe in downtown Chicago; the ugliest building ever, and there was a giant gorilla outside. I’d driven by it every day, all of my real estate life. I hear there was a play, there’s seven owners, they’re all in their 80s, they won’t talk to each other. That in itself is something [unintelligible [00:12:24].20] but I got involved talking to them all; a lot of people passed on it because they were like “There’s only a five year on the lease, and it’s $830,000 in income, and then what happens when it ends?” Well, nobody stopped to think it’s the land play where you get $800,000+ of income, because you can put 20 storeys on top.

So I bought it for just under 14 million dollars, with the air rights from which you can build above it. In five years — of course there will be dips in the market, but if you average it out, in 5-7 years, that’s a 40-50 million dollar site. It was sitting in front of everybody in the business who was much smarter than I am… But I drive around and I look at everything, and I look at it twice.

Joe Fairless: I wanna make sure I understand that, and sometimes I ask people to speak very slowly to me, so I can make sure… You explained it perfectly, but I wanna make sure I’m understanding this right. You bought it for 14 million, and included the air rights so that you can build above it and develop above. After developing that, you’ll have an asset that’s worth a lot more than what you’ve bought it for, right?

Sean Conlon: I will elaborate and be a little more specific. Right now, the Rainforest Cafe is in the bottom.

Joe Fairless: Okay…

Sean Conlon: When I redevelop it, I will have two storeys of retail, and then probably 15-20 storeys of apartment buildings or a hotel. I’m saying the land is worth 40-50 million in 5-7 years.

Joe Fairless: Oh, the land will be worth it just because of appreciation, or…?

Sean Conlon: You can build the building on top of the reason right now; the value wasn’t there, nobody was willing to buy it and sit on it. They wanted it to be shovel-ready. One piece of advice I would give to your listeners is nobody thinks long-term on anything, because we’re so used to instant gratification. If you can take a long view, as I believe you do in your investments in real estate, time is always your friend in real estate if you finance it properly.

Joe Fairless: Right, that’s they key, too – financing it properly. Does the property for you cash flow in those years leading up to…?

Sean Conlon: We had to put 50% down; I bought it with one other partner. We put 50% down, so it was a real cash commitment; we put seven million dollars down. But it covers everything, cash flows, it’s a real nice hold, and then in four years time it’s an incredible location. It’s the corner of [unintelligible [00:14:54].08], opposite the Rock ‘n Roll McDonald’s, for those of you who’ve been through Chicago. It’s fantastic real estate.

Joe Fairless: So you’re saying you bought it for 14, you put seven into it, you’re cash flowing, and then in five years you are going to develop it?

Sean Conlon: Well, I will probably have somebody who’s much more competent than me develop it. I will [unintelligible [00:15:16].01] it and roll it in at its new value.

Joe Fairless: And you’re projecting it will appreciate from 14 to – just the land – 50 million because of… Why?

Sean Conlon: Well, because once a tenant is out of there and it’s unencumbered, you have a high-rise site in downtown Chicago. I’ve already received offers of 25-30 million. It’s amazing how short-term people are; two years ago they wouldn’t buy it, because the tenant was in there for six years. Now they’re like “Oh my god, we should have bought that.”

Joe Fairless: I’m with you, I completely understand now. Thank you for walking me through it. So because the tenant lease will be gone in five years, then you’ll have a high-rise — it’s like a blank canvas, and it does cash flow along the way. That, from my experience, is where people get into trouble with development – and fix and flips in particular – when the music stops on the landing and the home values and you don’t have something that cash flows and you can’t cover your expenses… That’s where you can get into trouble.

Sean Conlon: I’ve gotten burnt like that. When you’ll see The Deed: Chicago on CNBC — I made those mistakes in the past, so when I’m teaching people now, it’s not that I’m that smart, I’ve made all those mistakes. I’ve had lots of land, I had thousands of acres of land that was great, until it wasn’t; no cash flow, and when the banks wanted it paid off, I had to.

Joe Fairless: Would you still buy land, knowing that’s the case, knowing it’s open to risk like that?

Sean Conlon: When I bought the land I had no focus; I was focused on 20 different things, which is advice I would give to your listeners also… Because I suspect if they’re the Best Ever listeners, they’ll hear these things. I would never rule land out. If you’re thinking long-term, and it’s agricultural land or it really is development land, properly financed, and you can manage a couple of ups and downs on it, you’ll still be okay… But having cash flowing assets is such a safe way to go.

Joe Fairless: You’ve mentioned “properly financed” a couple of times… I wanna make sure I understand – what does that mean?

Sean Conlon: It generally means – and I’m gonna make it very basic; I’m not going into all sorts of complicated stuff, because I’m not that complicated. You can’t have the thing levered like where you take out a 90% loan on it. Most of my real estate always had about 50% equity in it anyway. Now, in the world [unintelligible [00:17:37].10] that nearly wasn’t enough. So don’t pull a load of money out, don’t have it levered up to 90% of the value. Leave the equity in there, because you’ll come to a point otherwise where you’re going to be writing checks, which will freak you out.

Joe Fairless: Do you have your own rule of thumb for a property or some land that if you were to buy it, the type of leverage that you would do now?

Sean Conlon: Listen, I still think 50% is really safe. That was always my rule of thumb. I think what we didn’t expect in 2008 was that the banks would fail in front of us and you would have predatory hedge funds buying the loans and coming after you. Nobody accounted for that.

Joe Fairless: Yeah, that makes sense. One thing that I personally have so much respect for are immigrants who come to the country, and… You knew English, but sometimes they don’t know English and yet they excel to a much higher level than those around them born in the United States, who have seemingly so many opportunities right in front of them and have a competitive advantage over people who don’t even know the language, or in your case, don’t have the network established within a community, whereas you had to create it. Do you believe there’s any excuse for not reaching as high of a level as you’ve reached for others?

Sean Conlon: None. I grew up in a world that everybody wanted to come to America. Heads up, it hasn’t changed. The most talented and ambitious people in the world want to come here. It wouldn’t be a bad thing… It would keep some of us locals — because obviously our kids will be Americans, it will keep them on their toes a little bit, sharpen the competition.

I would go to the library in our village — obviously, had your podcast been around at the time, I would have been one of your Best Ever listeners also… But we didn’t have a phone when I was 14. I would go to the library and I read about Carnegie, Vanderbilt, Rockefeller. This was the America I wanted to come to, so I came with an outside attitude to a place that I felt comfortable with in my head, because we all grew up in it: John Wayne, Clint Eastwood… The world grew up in Americanism; it shouldn’t be turned into a negative thing.

There’s still no greater place than America to be what you want to be. It is unbelievable, and people need to shake themselves off. There’s nothing like it in the world for business opportunity, nothing. It hasn’t changed.

Joe Fairless: You mentioned earlier something about instant gratification and how really we should take the long view with our investments. Is there a way that you teach people so that it resonates, maybe showing them what you do, or just giving them examples of your past investments?

Sean Conlon: It’s so hard. You can’t teach experience, you really can’t. I wish I knew 20 years ago what I know today. I know you have a lot of apartment buildings. I sold some incredible real estate, because I wanted to take the hit now… It’s hard to teach that, but if people would take a breath — I’m an overnight success in 25 years. Seriously. I slog along, I got knocked down… I tell people, you only fail when you stop trying. You should see how many times I went “Oh my god, I didn’t just do that…” But I only do it once.

I tell people, “There’s very little to be learned from the second kick from a mule.” [laughter] So I’ve been kicked a lot, but once. I preach patience, but it’s something people have to learn.

Joe Fairless: What do you do consistently, ideally every day, but if not every day then every week or on a regular basis, that gets you to where you wanna be professionally?

Sean Conlon: So what has, because my life now is a little bit like a pinball ball, I bounce from place to place and thing to thing. But when I was focused on the acquisition of real estate, every day I would walk the neighborhood, drive around the neighborhood, get a feel for what’s going, if something new is going on… I would talk to everybody. There’s a reason during wars spies got in talks with the local population. It’s amazing the information you can gather on the street. I would talk to everybody in the neighborhood you wanna work in.

Joe Fairless: When you have those conversations, what information are you looking for and what type of questions do you ask?

Sean Conlon: Well, first you have to be kind of polite and subtle about it; it should be conversational. “What’s going on down the street with Mr. Jones’ house? Oh, I see they’re doing some work in there… What’s going on?” and people invariably tell you. I bought a 260-room hotel, which subsequently became my worst deal ever, because the doorman mentioned that there was a grouping from New York running valuations on it… Because I used to chat with him every day to see what was going on in the neighborhood. That’s a bit of information I didn’t need, in hindsight. [laughter]

Joe Fairless: Let’s talk about that hotel for a second, and then I want to talk about some fix and flip stuff, that this show revolves around. That hotel – can you elaborate on the deal?

Sean Conlon: Yeah, it’s a perfect example of — I had an incredible trajectory upwards. I went from being assistant janitor to probably being the top broker in North America in like a six-year period. So I’m running around, I get the heads up on this deal, buy a 260-room hotel in downtown Chicago. Now, they say in Latin “Nihil admirari” – be surprised by nothing; don’t get too confident, there’s always something that might come out of the blue and sucker-punch you.

Well, 11th September happened a couple of weeks before we closed, so we were hard on the money. We turned down a flip on it; we bought it for 17 million and we turned down a flip on it. Now in hindsight, I had gotten out of my lane. I used to run cross country high school, and the guy who used to coach me always said “You run your own race.” I was like, “That’s a stupid statement. Of course I run my own race. Who else is running it?” But what he meant was I looked at the finish line; I didn’t look behind me, I didn’t look left of right… If you compare yourself to other people, and if you look back – which there are no lookbacks in life – you will perpetually be unhappy. There’s always somebody with a bigger boat, a bigger jet.

So I stopped running my own race and I was looking around at all these guys who were in hotels and funds, not realizing I was incredibly successful in my own arena. I decided I was going to be a financier/hotel guy, and I knew nothing about hotels. It was a nightmare, and it nearly strangled me. But I got up every day and went back at it until I got out of it.

Joe Fairless: You bought it for 17 million… What did you turn down the flip for? How much did they want to pay?

Sean Conlon: Well, we probably would have made three or four million on a quick flip, which is an amazing amount of money, but I’m only telling you a little part of it… I was also on the hook at that stage because had started a construction for a 70-million-dollar loan.

Joe Fairless: Yeah, that’s a big number.

Sean Conlon: That’ll do it. And my partners had decided they didn’t like being on that loan, so they would not go with me; I mean, “Yikes!” You’ll see it on my show, it’s something like “No, you cannot be on the loan… You are!”

Joe Fairless: What ended up happening with the hotel? What did you sell it for?

Sean Conlon: I ended up – it’s quite interesting… Two years of hell, and there was a partner who really wanted the deal, so he bought me out from my equity. He was an incredibly wealthy person… I think he subsequently lost tens of millions on it, but he could afford it, and he wanted it.

Joe Fairless: It helps with taxes.

Sean Conlon: Yeah, so I escaped, but the lesson for your listeners is stick to what you know, and be the best at what you do. Don’t try and be good at lots of things, that was my big father.

Joe Fairless: What aspect of real estate do you know the best, and within that what are you best in class doing?

Sean Conlon: Here’s what I would tell you I do: I connect the dots on a deal like nobody, so opportunistic acquisition, commercial or residential, I do. But my real skill is people. I can read people, I know who to connect to who, and that’s what a real merchant bank does. I get paid for putting together funding, I get paid for putting together deals, and I take a piece of them.

So what am I best in class at? I can connect people from one end of the globe to the other; with a couple of thoughts, I can connect all the dots. That’s what I do. Actually, to go back to when I was a broker, what set me apart from everybody, by ’96 let’s say you were coming home from your accountancy job, and you’re like “I wanna be a developer.” People say, “Go see Sean Conlon”, so you would come in the door, I would have a set of plans for you, I would have a piece of land that I tied up, because [unintelligible [00:26:35].24] I would have a GC for you, I would have the bank that would fund it, and obviously the brokerage that would sell it. I was one-stop shopping.

So you’re walking home, coming home to your wife, “Hey honey, I got a puppy.” “Hi honey, I dropped in to see Sean Conlon and I’m a developer.” Hundreds of people I made developers in Chicago. You can come in the door and leave with everything.

Joe Fairless: For better or worse… [laughter]

Sean Conlon: Well, listen, the great thing about it is there was an incredible upsurge at the time, so anyone who did business with me from ’96 – and I retired from selling in 2000 – everybody who did this with me (except the complete idiots) made it.

Joe Fairless: [laughs] I wanna ask one more question about the hotel thing, and then I wanna talk about fix and flips. You said that the lesson there is stick to what you know…

Sean Conlon: Yes.

Joe Fairless: That leads me to believe that you weren’t an expert in hotels at that time. The purchase price was 17 million dollars – was that all your money, or did you bring in partners?

Sean Conlon: We financed that, myself and one other partner.

Joe Fairless: Okay, so you financed it, that’s what I thought; you financed it yourself and one other partner. And I’m not asking this question for Best Ever listeners to go out and convince people to invest in things they don’t have experience in, I’m gonna ask this question because it’s going to be interesting to hear how you were able to basically sell in a project where you weren’t an expert in that category. So how did you sell in the project to your other partner, even though you didn’t have an expertise in hotels?

Sean Conlon: My other partner had done some deals. Secondly, the real estate was incredible real estate. Thirdly, the plan was actually not to be a hotel, we were going to convert it to condos, and I was best in class there.

Joe Fairless: Got it.

Sean Conlon: Being the genius 30-year-olds that we were, we were like “Let’s run it as a hotel for a year, what could go wrong?” We were losing 800-900k/month. Does that explain it?

Joe Fairless: Yeah, I’m hyperventilating a little bit by you saying that, but… [laughs]

Sean Conlon: Look, I got rid of all that hair up there.

Joe Fairless: Yeah, that’s good. Alright, so now let’s talk about fix and flips… That’s what the show is focused on, right? Fix and flips.

Sean Conlon: The show is basically The Deed: Chicago, and it’s on this Wednesday on CNBC, so I’d love your listeners to check in and see it. It’s basically people who go out and think they can do flips, and get over their ski tips and pitch me to borrow money off me… But not just money, my expertise to get them out of the bind. That’s what we do.

It’s a lot of fun, this show. People really enjoyed the first episode last week. It’s quite lively.

Joe Fairless: And it’s Wednesdays at what time?

Sean Conlon: 9 CET.

Joe Fairless: 9 PM CET, so 10 PM Eastern on CNBC, Wednesday night. We will tune in for that, we’ll even have a little watching party. What’s the most ignorant thing – it doesn’t have to be on the show, but just in general – that you’ve seen a fix and flipper do, that you’re like “What the heck are you talking about?”

Sean Conlon: Oh my god… They’re too numerous to list. People never cease to amaze me with how stupid they are. If you look at YouTube and you’re thinking “That’s the most stupidest thing ever”, then you get into property flipping and you’re like “You’ve got to be kidding me!”

This week – to give an example, and it’s an interesting story… I actually turned out to really like the guys, but they bought a property at auction — this is not the most ignorant, but it’s fascinating… They bought a property at auction, and they were driving by admiring the property, and then eventually a woman appeared and said, “Get off my lawn, this is not the house you bought!” They bought the wrong house, it was the one across the street. [laughter] It’s hilarious, and I love the guys… You should see me on the show, I’m like “Are you joking me?” I was gobsmacked. They bought the wrong house.

Joe Fairless: They were fixing up her house, even though…

Sean Conlon: No, they were staying in front of it, admiring it, getting ready for the closing and everything, and it was only too late they realized that that was not the house… It was the ugly coffin across the street. [laughter]

Joe Fairless: That’s great. So I watched Shark Tank…

Sean Conlon: It’s great you can watch Shark Tank on Wednesday, and it leads right into me.

Joe Fairless: Yeah, I’ve seen your ads where I guess it was advertising this one particular thing; you would tell the back-story on that, so I’m glad that you did.

Sean Conlon: Yeah, but I’ve seen just so much stuff… Listen, I still think flipping is the greatest path for your average American to build an empire, there’s no question about it. I say this all the time, so I don’t need to be repetitive – the odds of you or I becoming Zuckerberg or Michael Dell… We have a better chance of getting hit by a meteorite right now, than Giselle coming and picking me up and bringing me home. It just doesn’t happen. That’s a 0,0001%. We could go out and make it flipping, but we will make mistakes.

Joe Fairless: What do we have to have as a skill set to make it in flipping? Because I personally think I would be disastrous at flipping homes… Just disastrous. What do we have to have as a skill set to be excellent at flipping?

Sean Conlon: I suspect you’re being modest. First things first, as Johnny Cash used to say, you need some growl in your belly, because flipping is a scary rollercoaster of an experience. But it helps — let’s say you have a partner, or you have some construction skill (maybe you’re a carpenter). But don’t be a designer! Nobody cares about your Versace wallpaper. You’re not an interior designer.
This is what I tell people all the time – you’re fixing a home as generic and beautiful as possible to flip it. It’s good to have an understanding of maybe a construction trade, and if not, a fantastic GC. The GC is so important, and I talk about that all the time, because that’s where most people fail. They get ripped off by the GC.

I would also say you have to have a real attention to time management, as you touched on earlier about my work ethic. Don’t do busy work; you’re gonna give schedules. Remember, a flip will kill you because it’s time-sensitive. Investment time is your friend, a long-term investment. They’re very different.

Joe Fairless: You mentioned earlier “Think long-term” and you just mentioned it again, have a long view with your investments, but a flip is not a long-term investment…

Sean Conlon: No, a flip is how somebody like me got my initial equity to do these deals. I would love to have rocked into the marketplace and bought apartment buildings with a long-term view; that’s the dream, retails rentals. But I needed the equity initially, so I did some flips because I understood the arbitrage; I was between the land and people who needed it. That’s where I got the initial equity. I did fix up houses; that was how I got my equity.

Then when I had enough, I would buy some apartment buildings and some retail, because that is what you will retire on.

Joe Fairless: Sean, I’ve got a page of notes already… What’s your best real estate investing advice ever?

Sean Conlon: Think long-term. Take your time, stop looking at what everybody else is doing, run your own race.

Joe Fairless: I’m gonna use that quote from your cross country coach many times, I like that. Are you ready for the Best Ever Lightning Round?

Sean Conlon: Yeah, I think I am.

Joe Fairless: Alright, I think we’ll do it then. First, a quick word from our Best Ever partners.

Break: [00:34:01].03] to [00:34:43].08]

Joe Fairless: What’s the best ever book you’ve read?

Sean Conlon: I love City of Thieves, because it’s ironic, it’s fabulous and it’s short, but one other I have to mention – The Wright Brothers, because it’s America. These two guys in Ohio said “Hey, we’re going at the field tonight to learn to fly.” [unintelligible [00:34:56].07] said “These guys are complete lunatics.” They learn to fly. Love it! So American!

Joe Fairless: What’s the best ever personal growth experience and what did you learn from it?

Sean Conlon: It’s my saddest and it’s also the best ever… My father dying at 56 in 2000. He was the reason I did everything I did, and it taught me that we’re here for a nanosecond, so try and enjoy your life also.

Joe Fairless: What’s the best ever deal you’ve done?

Sean Conlon: The best ever deal I’ve done are the two deals I didn’t do in 2007. I was going to build two high-rises. I had everything lined up, the hundred million dollars in financing, and for some reason I didn’t do them. I’m not going to say I saw it coming, because I got dinged in a way, but those two – I’m like “This is too much. It scares me. I’m not smart enough to do it.” They were the best deal I ever didn’t do.

Joe Fairless: Have you done a project of that size since?

Sean Conlon: I’ve taken back projects of that size. I know you’re from Texas… We took back a 22-storey tower in Austin, which ended up being a great deal for us. I took back 350 units in the hills in Austin, Texas, which turned out to be great. So yes, I’ve not built them, I’ve taken them back.

Joe Fairless: And taking them back you’re referring to you’re the lender, they didn’t pay their debt service so you get the property. Got it. When you take it back, what’s your business plan with it?

Sean Conlon: Pray. [laughs] We took these back after the crisis. We had no plan on them. Like I said earlier, our business plan was like a pinball ball, we bounce from crisis to crisis, but we took back assets we believe in, and subsequently then had to start over, roll our sleeves up and get them finished, and they all worked out really well. But time… It was a six-year process.

Joe Fairless: What’s the best ever way you like to give back?

Sean Conlon: A couple of things. I obviously was very good to my father; the first cool thing I ever did was buy him a Mercedes for Christmas, because when we were young he used to bring us up and look in the dealership window and point out that that was for some rich guy… So on Christmas when I was about 25, 26 we went up there and I bought it from the one that was sitting in the window.

I have a Wildlife Foundation, and while this might sound slightly self-promoty, I think The Deeds: Chicago – I give back knowledge I’ve learned to people all over the country, which is great… But my Wildlife Foundation is my passion, animals.

Joe Fairless: What would you say – and we’ve talked about some – is a mistake you’ve made on a particular deal?

Sean Conlon: A mistake I made on a particular deal is — there’s an expression I use quite regularly, “Trust, but verify.” I was told the zoning was such, and the guy told me it with such a sense of belief, I forgot the fact might have been a sociopath, so I bought something that was not zoned appropriately. Yikes! I thought I could put 25 units on it, and they could put four or five.

Joe Fairless: That’s a big difference.

Sean Conlon: That’s quite a big difference. Even someone with my positive nature… I’m like, “Houston, we have a problem.” [laughter]

Joe Fairless: Lastly before we wrap up, is there anything else that we haven’t talked about that you wanted to mention to the Best Ever listeners?

Sean Conlon: I would just say to the Best Ever listeners, first thing in real estate is invest long-term. Listen you to your podcast, because I can tell you have figured a lot of this stuff out. You’re obviously quite modest about it. B) Don’t panic, because when you panic, you lose complete control. Take a breath and step back. In the First World War there was a great expression – “Stay alive till the morning, because some day maybe the war will end and you’ll be fine.”

Don’t panic. If you’re having a terrible day, go home to bed and get up; it won’t seem as bad, and you’ll work through the bits and pieces… Put it into little chunks. Don’t panic. Real estate in America is still the greatest way to become a multi-millionaire, no question.

Joe Fairless: Where can the Best Ever listeners get in touch with you and learn more about your show?

Sean Conlon: I have a website, seanconlon.com, and I have an e-mail there and phone number and stuff…

Joe Fairless: Outstanding.

Sean Conlon: And I’d love them to watch the show on Wednesday night, The Deed: Chicago on CNBC.

Joe Fairless: When we watch the show and we’re enjoying it, is there anything you’d like for us to do? Should we tweet CNBC, should we…?

Sean Conlon: Absolutely. I’m understanding anything like tweeting, I was very flattered that the Rancics tweeted on this show, and all sorts of people like that. I met Bill in ’96, before he began the apprentice, when he warming to real estate and he came to sit with me, and he became my tenant. So that was exciting… He understands this show, and lots of other people, so tweeting CNBC, getting the vibe, and share it with other people. Say “Hey, check this out!”

I spoke on CNBC in the morning, on the morning/breakfast show there, about glass hammers, which is a joke… We used to send people out to buy glass hammers. Well, you obviously don’t get glass hammers, so it was a fun interview that you will be able to dig out, too.

Joe Fairless: Sean, I thoroughly enjoyed our conversation. This was a conversation about being focused and being effective with our time. You talked about how you were the not janitor, but assistant janitor, and you were also at night doing the real estate agent stuff, and ultimately you were able to get some deals done, being focused on teardown and zoning as your area of expertise… Having conversations in the neighborhood, talking to them about what’s going on in the neighborhood, every day walking/driving in the neighborhood, and then evolving from there, becoming right around 1999-2000 200 million dollars in sales, and then going from these large projects – most recently buying the high-rise site in downtown Chicago…

I love the story of how you approached it with the seven different owners that wouldn’t talk to each other, and the tenant that’s got this five-year lease, and your approach to be conservative too, putting down 50% of the 14 million. Seven million – that’s a large chunk and great leverage for you that cash flows while you wait and do your long-term play with it.

And then the cautionary tales too, of the 260-room hotel in Chicago, along with some of the other things we talked about. I’m really grateful… As I mentioned earlier, I don’t think anything inspires any more than immigrants who come to the U.S. and just do phenomenal things, and you certainly are at the top of the class.

Thanks for being on the show, thank you for having this conversation!

Sean Conlon: Thank you for having me on this show. Obviously, this show is fantastic, I read all about it now. I’m now a new follower. And thank you for appreciating immigrants. I love America, I’m an American citizen now, and I’m talking to you today from my beach house in Malibu that I bought with commissions I saved 15 years ago, and that was as an immigrant. I had an account with my commissions saved in it. That’s America

Joe Fairless: That’s America, baby. Thank you so much! I hope you have a best ever day. We’ll talk to you soon.

Sean Conlon: Bye, Best Ever listeners!

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