Why do you invest in real estate?

So, I have been investing in stocks, mutual funds, everything else, right, except real estate, and back in 2008 when I moved into another house and I couldn’t sell the property with the crash of real estate. So, I rented it out and I, kind of, like it worked out well for a year or two years, three years and I’ve been renting it now for more than 10 years. 

And I kind of like, got interested into oh, this works. And, you know, to be honest, like that property was not, too much of work. So I started taking more interest and I, kind of, started learning a little bit more about real estate investing. And I thought that is probably the best way to get invested than just focusing on the traditional stock, mutual funds and all this stuff. So since then, actually, I’m a big fan and I was investing more in my own properties. But I also wanted to… I got more interested in the passive investing through CrowdStreet. And okay, this is the way I can scale because I’m not invested in commercial. I don’t have a knowledge of commercial real estate to do it myself or the scale and that’s how I got interested in investing in commercial through, as a passive investment through CrowdStreet or even directly.

Manish Shah

What are your biggest concerns when investing in real estate?

So obviously my biggest concern is, not to lose my principal. Obviously also, I’d like to have a fixed income return. So, when I was maybe in my 30s or 40s, it wouldn’t be quite as important to me to get a fixed income return because I was looking more for growth. And at that point, I didn’t need any money up front. 

I didn’t need any monthly or quarterly dividends because I was willing to roll the dice and let things go and grow and hopefully do fine. And I still want that growth. Don’t get me wrong. But now, I’ve become, as you get into your 60s, you become a little bit more conservative. You start thinking, okay, I need income to eventually replace my salary. And that’s, kind of, the way I’m thinking about things now. I need to find income that’s going to eventually replace my salary. And I can do that with, not so much with bonds, that’s really hard. But maybe with some bond funds, some high income yield bond funds. And I’ve done that. But I don’t want to do that and take this risk of stocks, though I think you have to have a percentage of money in stocks. I do think you have to continue to do that. But, I think the other piece of the puzzle is real estate. And whether you want to do it in REITs, which have had a very bad year or if you want to do it in commercial real estate with somebody you know and trust. I think that, to me, was the point that I really became convinced was the way to go. In the last couple of years, I’ve, you know, had the fortune to meet the folks at Feldman and I’ve done now, four deals with them. And I know from their history, and I’ve done a lot of research on them before I invested, that they have a long track record, 25-30 years, and they have some beautiful trophy buildings in Tampa and St. Pete and now in Sarasota. So, I knew a lot about them and I just like everything they do. And, like I said, I’ve done 4 deals with them so far and, I can count on that dividend coming regularly. I can count on everything they tell me, being completely honest and accurate. And obviously, nobody knows what the future is going to hold and they don’t either. But, I really feel that I’m in good hands and I feel confident with what they tell me and I believe that they’re being as honest as they can possibly be, in these times.

Bob Cohen

How did you first come across Feldman Equities?

When I was, you know, obviously there was a lot of learning for me. So, first few months I was just looking at the deals, attending the calls and I realized, like, you know, given the situation I’m in, I didn’t want to play very aggressive. So I was looking for, OK, core plus, kind of, investments. Something that will give you a dividend plus there’s some potential for equity. 

And, I was looking at more stable properties. So, I came across Morgan Stanley Tower. I think it’s one and a half, two years back, I invested. And things that I was looking for, is, you know, can I trust the sponsors, you know, are they being transparent? Are they in constant communication with their investors? Those are the three important things. The next thing is, OK, are they paying the dividend? And I was so pleased, actually, to get the dividend from Morgan Stanley for 7 consecutive quarters. And I understand if you miss it, because the situation, nobody knows. Now we’re hitting the COVID. As long as they’re very transparent about it, that’s fine. So, I like my experience investing in Morgan Stanley, the first deal. And then I decided to invest the second one, First Central Tower, just few weeks back. And so far, my experience is good. So I’m happy, actually. The whole idea for me to go to CrowdStreet is to come across sponsors, which I can trust and build long term relationship and then continue investing through them.

Manish Shah

How long did it take from discovering real estate as an option to making your first investment?

Oh, it seemed like, when I was reading these deals, I said, this is exactly what I’ve been looking to do and it was almost like, this is too good to be true. I can’t do this on the first deal I see. It’s like the first house you go look for when you’re looking for a house and you see everything you wanted, but you’re afraid to put the, you know, make an offer because you said I can’t buy the first house I see. 

And it was almost like that with me. Like, everything I saw, I said, this is what I’m looking for. This is what I’m looking for. But I had to, kind of, develop my own criteria because I was like a kid in a candy store and I was liking everything I was seeing and that’s not good either. So, I had to develop criteria. So I needed, first of all, I had to educate myself also. So I needed to learn the business in a modest way. I didn’t need to go get an MBA in it, but I needed to learn how to understand what I was reading. I needed to learn the language. So, I spent that time learning the language. And also, I evaluated these deals based on how they seemed to me. But also, I had to develop criteria of what I wanted. For instance, I’ve realized that developers specialize in different areas, just like doctors specialize in different areas. And I didn’t realize that. So, a developer that might do commercial real estate towers doesn’t necessarily buy multi-family apartment units. And so, I realized that different developers are good at different things. And so, that was one thing. And then I decided I wanted to come up with criteria because I just can’t put in fifty thousand or one hundred thousand in every deal I see. I’d go, you know,  use up my money pretty quickly. So, I had to figure out how much money I want to put in, how many deals I wanted to do and what my criteria were. And I came up with several criteria, such as, I didn’t want to go longer than a five year hold period, because of my age. I wanted to try to get a dividend, if I could. Not a deal breaker but, it would be preferable if I could get that. I wanted to be with somebody they called “tenured”, who was somebody who had, you know, like the 20, 25, 30 years experience or more and there’s another category called enterprise, which is even higher. But, I wanted at least tenured. And, I was looking for an IRR of maybe 15, 16 percent or higher if I could get it but those were the factors. I wanted, mostly, somebody who was trustworthy, safe and I also wanted to look at their track record of how they’ve done before, with other previous deals. And I think we, you know, and that’s kind of guided me since then. I’ve been with CrowdStreet now, for a few years. But it’s allowed me to meet developers also. In other words, not just on the CrowdStreet site,  because, not every deal that Feldman or other developers does, goes on CrowdStreet. In fact, there was a deal in Sarasota that did not go on CrowdStreet and I did that deal. So, what happens is, you do one deal or two deals and then you start to get to know the developers a little bit and then they then clue you in, hey, this is coming up. It’s going to be on CrowdStreet or it’s going to be separate from CrowdStreet or  whatever but it doesn’t matter at this point because I know them. I’m, kind of, friends and family, so to speak, and that’s, kind of, really, you know, pushed me forward.

Bob Cohen

Why do you like investing with Feldman Equities?

Like, you know, if I had to buy my own property, which is again, like you know, I do believe in diversification. So, it’s not like okay only investing through one channel. But, if I had to go and invest myself, I have to work with a broker for a couple of weeks, months, could be longer. 

Go to the whole hassle myself, then worry about renting the property and managing it or giving it to somebody else. And, if I give it to somebody else, the kind of returns that I would get versus investing passively and more diversification, obviously, things that I couldn’t invest in my own. I thought this was pretty appealing and I think the new platforms, right? I haven’t invested directly in Feldman. I was going through CrowdStreet. And all these companies actually, CrowdStreet, RealtyMogul. They make investing so easier. So, most of my effort was really going through the deal, understanding, you know, based on my understanding, okay, does it make sense for me to invest in this? Again, the webinar and I think attending the event is also a learning experience for me because there are probably people know a lot more than what I know about real estate. And just listening in to the questions, kind of questions that they ask, was kind of interesting.  That’s why it’s probably two and a half years, you know, I kind of got more and more comfortable with a better understanding. And what is that I should look for in a new deal? Now it’s much easier. I know, when a new deal comes, what should I look for? It’s much easier for me to go through the process than before. It’s a piece of cake, basically, in terms of investing, how easy it is. It’s literally a few minutes click and that’s it, you’re done.

Manish Shah

Why you can't beat Feldman Equities' credibility and professionalism

Sure. I only deal with high caliber guys, but, and gals. But, Larry and group really set themselves apart because they deliver consistently. First of all, they communicate well. We always know what’s going on. There’s never like, hey, I haven’t heard from them. I don’t know what’s happening. We never have that situation. 

We always hear frequently and regularly about what’s going on with the deals. We’re kept totally apprised of all situations, which I love. Communication to me, is key. If you don’t have that, then you’re wondering what’s happening and then, human nature is, that you’ll assume the worst. You know, I haven’t heard from them. There must be a problem. That’s just basic human nature. But, we don’t have that problem because I hear regularly from them. All of my deals, all four of my deals have been on, you know, with dividend plays, which are nice, seven, eight, nine percent dividends. And I mean, where can you get that anywhere else? So, I get those, and they come regularly, to the day, when we know they’re coming. So they’re on a quarterly basis. And that’s been, you know, something you really can count on. And, I haven’t actually had a completed deal yet that we’ll have, you know, because I’ve only been doing it for three years now and my timeframe is usually five years. So, we’ll start seeing those in the next few years. But, I feel totally confident, based on their game plan of recapitalization of existing properties, that it’s not going to be an issue and I’m looking forward to continuing with them for many years. I’ve told Johnny and I’ve told Mack that, you know, I plan on… I’ve done four deals already and I would like to be next in line for every single deal that they come out. So, I hope that that’s going to be the case. I think that, with their current plan of operations, they are going to have a lot of future deals and I plan on being involved with all of them. And getting my kids involved too, like I said, and that, through our corporation. So, that’s the next generation of investors.

Bob Cohen