\n<\/p>\n
Barbara Corcoran<\/strong><\/a> understands real estate arguably better than anyone else. And while most of us know her from Shark Tank<\/em><\/strong>, Barbara swims in a league of her own as one of the most successful real estate investors and brokers in New York City<\/strong>. She knows the up-and-coming areas, the overpriced hipster neighborhoods, the streets to stray away from, and which will make you rich when owning real estate. And while Barbara has made a killing, she\u2019s done it in a way foreign to almost any other real estate investor.<\/p>\n If you want to know the \u201cformula\u201d for making a fortune<\/strong>, this is the episode to tune into. In it, Barbara uncovers the exact way she finds the hottest <\/strong>rental markets<\/strong><\/a> before anyone else<\/strong>, why she consistently overpays for properties<\/strong>, the reason you should partner on almost EVERY deal you do, and why small-time investors are MUCH more likely to succeed<\/strong> than the big players.<\/p>\n Not only that, but Barbara also shares her past failures<\/strong> and why falling flat on her face was what she needed to see great success. She talks about her infamous word-of-mouth campaign <\/strong>that sold out an eighty-unit apartment complex in hours, the \u201cCorcoran Report\u201d that landed her on the front page of The New York Times<\/em><\/strong>, and why you MUST talk to waiters whenever investing in a new area.<\/p>\n David: Barbara: David: Barbara: David: Barbara: Rob: David: Rob: Barbara: David: Barbara: David: Barbara: David: Rob: Barbara: David: Barbara: David: Rob: Barbara: David: Barbara: Rob: Barbara: Rob: Barbara: Rob: David: Barbara: Rob: David: Rob: David: Barbara: David: Barbara: Rob: Barbara: David: Barbara: David: Barbara: David: Barbara: David: Barbara: David: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: David: Barbara: Rob: Barbara: Rob: David: Barbara: David: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: David: Barbara: David: Barbara: David: Barbara: David: Barbara: David: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: Rob: Barbara: David: Barbara: David: Barbara: Rob: Barbara: David: Barbara: David: Rob: Barbara: David: Barbara: David: Rob: David: Barbara: Rob: Barbara: Rob: Barbara: David: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is the BiggerPockets Podcast show 763. What\u2019s going on everyone? It\u2019s David Greene, your host of the BiggerPockets Real Estate podcast. Here today with Rob Abasolo. Not only are we the biggest, the baddest, and the best real estate podcast in the world, we also have another bee Barbara Corcoran.<\/p>\n
I try to be honest when I\u2019m not [inaudible 00:00:19] but a lot of people like to be right. They like to be accurate, does it make sense? They ask opinions. They really sharpen their sword and they never get out there.<\/p>\n
For those that are listening too and they feel the call in their soul, \u201cI need to be more like Barbara,\u201d but they\u2019re just risk-averse. What advice do you have for those poor, timid souls?<\/p>\n
Get out of the game, you\u2019ll never going to do well. I hate to be that coarse, but get out of the game. If you\u2019re afraid of risk, you have no business being in real estate.<\/p>\n
Today\u2019s guest is none other than Barbara Corcoran. She is a straight D student, held 20 jobs before the age of 23, is an avid TikTok user. Hosts her own podcast Business Unusual. She\u2019s as resilient as she is brilliant. Please, help me welcome Barbara Corcoran. Barbara, good morning to you.<\/p>\n
Thank you, David. Nice to see you, Rob.<\/p>\n
Nice to see you.<\/p>\n
In case you\u2019ve been living under a rock, Barbara is a host of Shark Tank and the Queen of New York City real estate. We are thrilled to have you on today. I know that there\u2019s a lot of information that our listeners are going to love. Barbara, we are going to start with a game, we call this game two truths and a lie, and it should be fun. In this case, I am going to read a statement.
Rob and I are both going to try to guess if it is honest or not, and then you are going to tell us after we guess. Statement number one: Barbara\u2019s landlord once tried to evict her because he thought she was running a prostitution ring. Rob?<\/p>\n
Okay, that is very specific and I don\u2019t think that that\u2019s a scenario that our producers would\u2019ve just written to be read on this show, so I\u2019m going to go that is true.<\/p>\n
True, wow.<\/p>\n
I\u2019m going to say that it is exactly what someone would come up trying to not look like they were throwing the wool over their eyes. I think this is a double agent of a question and I\u2019m going to go with lie.<\/p>\n
Of course, it was true. I came home one night, eviction notice on my door from being a prostitute. The reason for that, he had a reason to do it. I guess my landlord, John [inaudible 00:02:17] was his name. He saw men in and out of my apartment all day long, but what he didn\u2019t know was that I had started their business in the apartment with my two roommates and I met all my customers there.
They would come in, we\u2019d spend an hour and then I\u2019d go out with them. We come in again, we go out with new guys. He thought I was a prostitute, but what was great was when I confronted him, I went to his office and told him he got it all wrong, I was just a working girl. He gave me an exclusive on his entire building of 14 units. I came out smelling like roses.<\/p>\n
I think I missed what the business was. What were you guys doing when you would go out with the gentleman?<\/p>\n
We were renting apartments. I started my first brokerage firm and we were renting apartments up and down the streets of the city.<\/p>\n
You were going to show apartments to these people. They would just meet you at your place.<\/p>\n
Now, technically, could he have evicted you for creating an unwarranted business like a commercial business in the apartment? Was that against the lease or anything?<\/p>\n
I\u2019m sure it was against the lease, but most importantly if his sentiment was that he\u2019d wanted me out of the building for whatever reason he could have certainly asked me to move out because I had too much traffic.<\/p>\n
You turned that into a business opportunity in the sense that you were able to lease his units, right?<\/p>\n
Yes, but you have to realize one of his arch competitors was three blocks south on 83rd Street, and I was renting his apartments for 10% more than the building I lived in because I was building part walls and making one bedrooms into one bedrooms and a half. I got more rent for him and he got jealous that\u2019s really why I got his listings.<\/p>\n
Next question, Barbara once invested over $100,000 in videotapes for property walkthroughs. Rob?<\/p>\n
Here\u2019s why I think this is true, I think it\u2019s true because Barbara foresaw that comfy would sell $85 million when other people didn\u2019t see it coming. I imagine that at this time, videotapes for property walkthroughs is probably kind of like a new revolutionary thing. Barbara\u2019s revolutionary, so this is true.<\/p>\n
Well, Rob, you\u2019re obviously smarter than David is. What are you going to say?<\/p>\n
You threw me off a little bit with that comment there. I\u2019m trying to wrap my head around how these videotapes would be used to generate business. You can\u2019t put them on the internet. There wouldn\u2019t be any reason to mail them, so you\u2019re a smart marketer. I feel like they might have been trying to throw us off by using a marketing tool, but I\u2019m going to go with lie just because I can\u2019t see the benefit of this. Who\u2019s right?<\/p>\n
You\u2019re going to get jealous of David once again. It\u2019s true, except the number was wrong. I don\u2019t know how you read that one, but it was $77,000 my first profit I blew on homes on tape. Put all my apartments on tape and asked my salespeople, please give them out to your customers. It\u2019s going to make the shopping easier. Remember, this was before the internet. It was a disaster.
However, I heard that my husband was a Navy captain, had played war games in Korea on this new thing called the internet. When he told me how it worked, I slammed my apartments on there and had two sales with him the week. I was the first firm on the internet with elite time of two years because I just happened to listen to my husband and moved on it quickly.<\/p>\n
Wow, I would liken this to maybe back in the day in Walmart, you would walk in and they were giving out thousands of AOL CDs and you\u2019re like, \u201cI guess I\u2019ll take it.\u201d This is what you were telling your agents. You\u2019re like, \u201cI\u2019ve got these VHS copies of the third floor walkup here on 8th Street. Give those out to your friends and family, see who wants to buy it. Then, it didn\u2019t actually pan out at that time.<\/p>\n
Do you know what\u2019s wrong with that? I had my agent\u2019s name face professional makeup and phone number with every apartment and they refused to give them out because they didn\u2019t want to lose their customer to the next agent. I never thought of that one, that\u2019s why I wasted the $77,000.<\/p>\n
Had you not done that, do you think that that business strategy would\u2019ve taken off?<\/p>\n
Probably not, but what I do know by doing it and failing so miserably I had to save face and come up with a cover, I came up with the internet, and it wasn\u2019t a cover. It was the best thing for me to step in.<\/p>\n
Very, very cool. Last one, Dave, cue it up.<\/p>\n
Last statement, Barbara was asked to speak to Citigroup but then choked on stage.<\/p>\n
Easy one, come on guys.<\/p>\n
I\u2019m going to assume choked like, \u201cI blew it.\u201d Not choked like she eating a piece of steak and you\u2019re like choking. I\u2019m going to go no, impossible.<\/p>\n
I think this is choked like Eminem, 8 Mile mama\u2019s spaghetti on the sweater style.<\/p>\n
Then, I\u2019m going to go not true, I can\u2019t see it. Obviously a very charismatic speaker, so false on this.<\/p>\n
I\u2019m going to go much more logically because we already found the lie since this is two truths on the lion, I\u2019m pretty sure this has to be a truth. We probably shouldn\u2019t have named it that, so I\u2019m going to go with truth.<\/p>\n
Looks to me, David that you just had a IQ implant somewhere because [inaudible 00:07:21]<\/p>\n
Well, I think I still won.<\/p>\n
With that deal, it wound up as a good thing because they asked me to sit down. I was mortified. I actually got paranoid and thought everybody had passed on the street had been in the audience that night for a week. Then, I realized I had to get over myself. I was going to have to public speak sometime in my life so I volunteered to teach at NYU at night and I found my star salesperson the first night I was teaching, Carrie Chiang.
She made for me in that year $400,000 when my best agent was making $42,000. For me, I learned the great lesson much more important than speaking. I learned the great lesson, get back up. Get back up, you never know what\u2019s around the corner.<\/p>\n
Well, this is your opportunity Barbara, if you\u2019d like to redo the speech little redemption, what we\u2019ve blocked off in an hour. You can go ahead and start from the top.<\/p>\n
I\u2019m not going to do that to you guys. It wasn\u2019t a very good speech anyway.<\/p>\n
Thank you for playing that game with us. It\u2019s always fun to get to learn these little tidbits and personal stories of what someone\u2019s been through.<\/p>\n
David, you don\u2019t look like having fun. You don\u2019t look like you\u2019re having fun at all.<\/p>\n
I have what\u2019s called resting cop face. They called RCF.<\/p>\n
Oh my god.<\/p>\n
Don\u2019t let that fool you, Barbara. This is what I look like when I\u2019m-<\/p>\n
It\u2019s intimidating.<\/p>\n
Yes, as a cop, that wasn\u2019t the worst thing in the world, but I suppose as a podcast host that\u2019s not the same thing. Would you say that most of your successes in real estate investing have been built off of failures?<\/p>\n
Yeah, because I don\u2019t know, there\u2019s something about the universe when you fall on your face, it\u2019s like bouncing a ball, the harder you hit, the more you could bounce up. There\u2019s always another flip side to it, always another flip side. I learned that building my business very much so. In terms of investing in real estate outside of my firm where I bought properties and nurtured the properties and tried to increase the rent roles, I don\u2019t think that really holds true that I learned from failure I just became very careful.
I did have a wacky formula for buying real estate and I always did well by repeating the same little dance step again and again. Do you want to know what that is?<\/p>\n
Please.<\/p>\n
I shortened your question as you know. Number one, I always bought an up and coming areas. I was in Brooklyn long before anybody was buying Brooklyn from Manhattan. I was in there early and I always looked for a 10% partner. I found a local person who knew their neighborhood, loved their neighborhood, wasn\u2019t in the business, I made them the 10% partner, I put in the cash, and they found me the best property, the absolute best property. I hedged my bet right away.
I paid them the 10% and I told them they could overpay for the property, I didn\u2019t care. Almost every property I overpaid for, I overpaid again and again and again. I\u2019ve just repeated that again. I also located the up-and-coming areas by talking to waiters, creative people and said, \u201cWhere are you living now?\u201d They were poor. They couldn\u2019t pay their rent. They had five guys living together or four girls living together. I would say, \u201cWhere are you living?\u201d
They\u2019d tell me where they were living. I would go at that, we can look at the area and that\u2019s always where I bought my real estate. That\u2019s where the biggest gain is in up-and-coming areas. They\u2019re risky, don\u2019t know what you\u2019re doing and I had a partner who knew what they were doing.<\/p>\n
You said that you found a 10% partner. Can you explain this construct a little bit? When you say 10% partner, did you say, \u201cHey, go find me a cool building. If you find me a lead, I\u2019ll give you 10% of the purchase price?\u201d Were they actually equity partners in that property?<\/p>\n
They were equity partners and they stayed with me until I sold. I hold onto properties a long time because I say you make a lot of money slowly in real estate, but when I sell, they get their 10% share and it\u2019s substantial. Sometimes I paid off my partners with 10% that represented 50% of what we paid for the building 10 years ago because they really appreciated. Their interest was there. Their heart and soul wasn\u2019t like a broker want to sell me something.
Their interest was I\u2019m going to buy you the best place, the right side of the street away from that problem because they were changing areas, choppy areas. You can always make a lot of mistakes there. I never made a mistake. They always found me the best stuff.<\/p>\n
That\u2019s really cool. If you\u2019re giving someone 10% stake in the property, were they like property managers? Did you actually empower them to actually run and maintain the property as well? Was that a separate job function?<\/p>\n
No, I really didn\u2019t because I knew how to run property. I had the organization set up and that\u2019s not really what turned them on. They didn\u2019t want to collect rent and stuff, but why it worked so well is I had the money, I didn\u2019t have the time. They had the time, they didn\u2019t have the money. We were perfect partners together.<\/p>\n
Did you ever make any millionaires out of these partners?<\/p>\n
Well, I had a different one in every locale I went into. No, probably not millionaires but close to millionaires.<\/p>\n
Probably pretty close if it\u2019s 50% what you paid for the property. I\u2019ve always said this, sorry, if you can\u2019t afford it\u2019s probably too late for you to buy it. You never really can afford the thing that you want. You should be buying things that scare you a little bit, things that are a little bit more up-and-coming. You said that you would go into these neighborhoods and overpay, why overpay for a property at this time?<\/p>\n
There\u2019s something weird that happens when you\u2019re a dealer in properties. The minute I was interested in something, gosh, somebody else was interested. I would just say right away, \u201cI\u2019ll pay 10% more than the next guy.\u201d Close the deal, get your hands on it, take it off the table. It shouldn\u2019t be that way, but for me, maybe I had bad luck it always was that way. I just decided I didn\u2019t care about overpaying.
You go into a new up-and-coming area it appreciates so quickly that 10% is absorbed less than a year later. You\u2019ve already made up that loss and it\u2019s not even a loss, it\u2019s a perceived loss, but you more than make it up so why worry about it? It\u2019s history.<\/p>\n
It\u2019s a very narrow perspective when the only way that you look at making money in real estate is from one element, such as you only look at the cash flow. You only look at the price you paid versus what they\u2019re asking for. I\u2019ve broken down to 10 different ways that you make money in real estate. You mentioned one of them is what I call a market appreciation, which is this area will appreciate faster than the market as a whole like you referred to as up-and-coming area.
Well, if you have a really big chunk on that end, you can afford to buy less equity, which is what I call when you pay less than a property\u2019s worth. You don\u2019t have to win as much on that side if you\u2019re getting a huge win on another side. You\u2019re a great example because so many people in our community would say, \u201cYou should never overpay. Just go write another 7,500 offers instead and eventually, you\u2019ll strike gold.\u201d You may end up buying a property that nobody else wants and there\u2019s a reason why that would be.<\/p>\n
I share a story I heard as a very young broker that never left me. I was going to listen to Harry Helmsley, of course that name. The biggest commercial owner in New York at the time. I heard him lecture and I raised my hand. I said, \u201cListen, how do you get a great deal on a property?\u201d He said, \u201cI always overpay.\u201d What? You overpaid?<\/p>\n
You get a good deal by getting a bad deal?<\/p>\n
Right, because it makes up for it in the long run or even in the short run, it makes up for it.<\/p>\n
I would say, and David, I don\u2019t know if this is true for you too, but on my end of things, when I calculate all of the cash flow that I\u2019ve ever made from real estate, it really pales in comparison to the appreciation I\u2019ve had on the portfolio itself.<\/p>\n
Barbara, that\u2019s one of the things about your story that I wanted to ask you is it seems like when you got your start, you\u2019ve talked about the snowball that first property went up in value, created the next, created the next. Now, equity from previous properties is paying for future properties. You never have to put your own money into real estate again theoretically. This is in direct opposition to the cash flow gurus that tell everybody only look at properties for the ROI, the cash flows are going to provide. Nothing else matters.
As someone who\u2019s been very successful with real estate, who has admitted that you\u2019re playing an appreciation game, you\u2019re thinking at it like an entrepreneur, \u201cIf I buy this company, how much can I increase the value of the company?\u201d Not just what are the cash flows of this company right now? What can you share about that perspective?<\/p>\n
I probably shouldn\u2019t admit this, but I don\u2019t pay attention to it. How I look at it is I look at the property and think, \u201cHow much of a mortgage could I slam on this property with the tenants, pay the rent, and I have a little extra to pay the expenses that always come up?\u201d A new roof or what have you. I just see how highly leverage I can get. Then, the minute the property becomes worth more and the rents go up, I go back and slam a new mortgage on it and take the money out.
Remember tax-free, take the money out, I buy another property. I believe in a high leverage, I\u2019m not afraid of that at all. As long as I could pay my expenses, I never leveraged beyond the point where I\u2019m not going to sleep at night that\u2019s how I multiplied my portfolio again and again. Do you know, and this is a true story, I bought a studio apartment in Greenwich Village when I was 29. I scraped together 10%, I think it was $88,000 of thereabouts as my recollection.
I scraped together, I chickened out, and I didn\u2019t close. They kept my deposit. I didn\u2019t sue for it because I just purposely failed the board. It was the board. It took me three years before I could get my hands on another property because Manhattan ran away from me. There was no way I could buy something. When I finally bought a studio, I traded for a one bedroom, then I traded here for a two bedroom and I could always afford it because I appreciate a lot, then a three bedroom.
I can\u2019t say I bought the penthouse I live in today, which is worth so much money from that property. I would\u2019ve never been in the game if I hadn\u2019t gotten in the game. It was such a shame I didn\u2019t get into it three years earlier. I could\u2019ve done so much, not that I regret that because I guess you get cold feet once in a while, but I got cold feet again very often at a closing table I\u2019ll start second guessing myself like, \u201cWell, how good is that area?\u201d I just look at my partner and I think, \u201cWhat do you think?\u201d They\u2019re such a believer in the neighborhood. I go, \u201cNo problem, let\u2019s close.\u201d<\/p>\n
It\u2019s so interesting, it sounds like you\u2019re investing in an area not as much in a specific unit.<\/p>\n
I don\u2019t care so much about the unit. I care about the area, but realize too I care about the partner. If I\u2019ve got the wrong partner, I\u2019ve got the wrong building. If I got the wrong building, I\u2019ve got the wrong numbers. Another [inaudible 00:17:37] here with you, which illustrates this beautifully, is I bought a townhouse on 10th Street in Greenwich Village and I still own West 10th Street. I bought that building for $120,000, which sounds ridiculous, a five-story, eight unit building.
I remortgaged that building to date probably 9 times, maybe 10, I don\u2019t know if I\u2019m exaggerating. Every time I took a chunk load of hundreds of thousands of dollars out of it and I had a great standard of living. I always took that money out for one purpose to buy myself a more beautiful home or a second home. It\u2019s been a cash cow, I would never sell that business. I said business, it\u2019s really like a business, a separate business. I would never sell that building.<\/p>\n
This reminded me of a story that I\u2019ve heard, something that I heard on your social channels actually, I think on TikTok. A story about the penthouse that I believe you own now and the origin story of how back in the day you willed it in, you manifested it, \u201cThis is going to be my property one day.\u201d Do you think you could share that story for the listeners at home?<\/p>\n
Of course, I could. I was in a bad stretch of real estate and I took a job as a messenger because I could work different hours. I had the Corcoran Group at the time, as shocking as I might sound, I probably had about maybe 85 agents, 90 agents working for me, but I couldn\u2019t meet my overhead so I decided I needed another job. I went out and worked as a messenger. They paid very well for messenger that you delivered. I delivered some package to a lady up on 97th and 5th.
I walked into a house, an older lady, and I looked and she had a stunning terrace view of Central Park. I was blown away, I didn\u2019t know people lived like that even though I was in the real estate because I had never seen a place like that. I said to her as she signed for the message, I said, \u201cDo me a favor, ma\u2019am. Call me if you ever decide to sell.\u201d Did I believe myself? Probably not but I thought, \u201cWhat the heck? I\u2019ll put in my hat.\u201d
What did she say? I think she said something like they\u2019ll take me out in a box or I\u2019ll die at this place something like that. I left, do you know she called me like 14 years later and I bought her apartment for $10 million. How do you like that? I don\u2019t say I manifested it. I don\u2019t think I\u2019m manifest, I had a lot of good luck making money after that and I came out of whatever trough I was in. I was able to quit that job and concentrate on my business again. I couldn\u2019t believe it when she called me, I remembered the view and it was no different when I went back to see it.<\/p>\n
When she called you, by the way, this is one of the most amazing stories I\u2019ve ever heard, but when she called you, did she happen to remember Barbara Corcoran the messenger, or at this point had your business exploded and maybe she remembers your face and she saw you on billboards? How did she get in contact with you?<\/p>\n
When she saw me as a messenger, I wasn\u2019t doing billboard advertising. I didn\u2019t do full pages in the New York Times and the Wall Street Journal. I became prominent in my field after that. I don\u2019t think she even registered my face, but she must have. Then, she saw that I might have the money for that thing because I looked like a big cheese even though most times I didn\u2019t have the money. She called me on the basis of what she was seeing in the public eye.
I\u2019m just the messenger, she remembered me. Funny enough, two days ago I got a handwritten note from her. I can\u2019t even remember her first name. Anyway, she said, \u201cThank you for answering my call. I\u2019m so happy I called you to sell you my apartment.\u201d I kept it as proof because a lot of people say that can\u2019t possibly happen. I have it.<\/p>\n
That\u2019s amazing. Well, I\u2019m going to put it out there right now for all of the hundreds of thousands of listeners at home. Barbara, when you want to sell your penthouse, please call me. I\u2019m going to give myself a 14-year clock to be able to afford a penthouse at New York City. Deal?<\/p>\n
It\u2019s a deal, but you better shorten your clock to maybe 10 years. I\u2019m not sure I have that much time left.<\/p>\n
I\u2019ll start putting the feelers out around nine, nine and a half.<\/p>\n
Good enough, I won\u2019t answer your call. I\u2019m sure Mike wants my house.<\/p>\n
That house at the time that you bought it obviously is very expensive $10 million. Was that also in appreciation play? Did you know, \u201cIf I buy this, it\u2019s going to be worth more one day? Or was it just more of, \u201cI want this because I wanted it.\u201d I want to realize this goal of owning this home and the financials are the afterthought?<\/p>\n
Nothing\u2019s more luscious and having a dream come true. That\u2019s what drove me, I wanted my dream to come true. I dreamt about that place over and over again, that was the driver. I also knew as a real estate person, you buy on Fifth Avenue with the full park view, nobody\u2019s going to build in front of it, what\u2019s going to go wrong with that investment? Nothing, it\u2019s golden. I had no hesitation to get a good investment as well.<\/p>\n
You\u2019ve said before, Barbara, that one of your greatest assets as a business leader is your imagination. Coming up with ideas and being willing to test them. What are some of the ideas that have worked for you with real estate investing?<\/p>\n
Well, let me tell you, always my imagination, because you know what? The little guy, when you scrap it and trying to come up from the bottom really has the corner on imagination new ideas and getting ideas into the street fast. My big competitors, I noticed they moved slow, they had committees, attorneys, accountants, they have an idea that Monday, it might come out six months later. I had an idea, Monday was on the street by Wednesday.
I very much relied on my imagination. Probably my biggest idea that made the biggest change in my business for the very first time I did it was writing the Corcoran Report. I had 11 sales for the year, it was terrible time. Something wrong with the market, I don\u2019t know what it was. I had a complaining salesperson accusing me of not supporting them not advertising. Well, of course I had no money, I didn\u2019t want to tell them that.
I said, \u201cI have a great idea.\u201d Then, after they left I thought, \u201cNow, what kind of big idea do I have?\u201d I thought of the Corcoran for it. I took the 11 sales average amount and it came out to $58,400 some odd change for an average apartment that I sold, my firm sold. I published a report with one line, the Corcoran Report, sorry, conditions and trends in the greater New York City marketplace is sent to the New York Times every writer wrote that day. Two Sundays later, I was on the front page of the real estate section.
According to Barbara Corcoran, prices have reached all time while using my figure, my figure based on 11 sales. That day was a bellwether change for me in my career because people would call and I could hear my agents on the phone saying, \u201cYou\u2019ve heard of us?\u201d Usually, they were on the phone saying, COR, COR, that kind of a thing. We were found. Suddenly, people thought I was smart. Was I smart? No, I was clever.
A lot of people like to be right. They like to be accurate, does it make sense? They ask opinions, they really sharpen their sword and they never get out there. I got the idea, slammed it, whatever it was, and threw it out to the marketplace and only a percentage worked. Believe me, the things that worked for me and my company worked at least five times more than anybody else because I was always out there trying stuff and I ran lean, mean, and fast.<\/p>\n
That is such a good point. I can\u2019t let us pass this over. I\u2019ve noticed this as a real estate broker, real estate investor, real estate, everything, people that come into our business from other professions, architects, engineers, anyone that was somewhat analytical.<\/p>\n
[inaudible 00:24:48]<\/p>\n
Yes, you\u2019re making the same face that we all make when we get those people, they want to make a spreadsheet of the 18 properties that they don\u2019t want to buy and go over all the reasons they don\u2019t want to buy it with you.<\/p>\n
Isn\u2019t that true? Yes, the spreadsheet bankers, finance guy, oh my God.<\/p>\n
Anyone that has an analytical mind is also trained to not make mistakes. They\u2019ve got this emotional relationship with numbers where they believe making a mistake will lose you money or cause you pain in some way. The way you win at life is to never make a mistake. It is a very difficult gateway that you\u2019ve got to go through to make money in real estate where you learn making mistakes does not lose you money.
Like you just said, throw as much out there as you can, the more things that stick are what are going to make you money. You can do nothing wrong in a day, make zero mistakes and make no money. You can do 20 things in a day, 17 of them were wrong, but your three wins we\u2019re still more than the zero wins that the analytical mind had. I know people that are listening to this are having a hard time gaining traction, they\u2019re having a hard time getting going.
Listen to what Barbara\u2019s saying here, stop thinking that avoiding mistakes is the way that you win in the space with real estate. Any advice on that topic, Barbara?<\/p>\n
I would say that I tried, you have some very brilliant people in the game, people well-educated. I always lose my money with Harvard MBAs. I\u2019m sorry, I shouldn\u2019t say that, but I always do. If they\u2019re in the game, I\u2019m like, \u201cI\u2019m not going in there anymore.\u201d You get a left brain type of person, terrible for investing in real estate because they lack one thing in their DNA, they\u2019re risk-aversive. If you are risk-aversive, you can\u2019t win at real estate.
You got to have blind faith a lot of the time. I think, \u201cWhat am I crazy? I\u2019ll do it anyway because I\u2019ve come this far, I\u2019ll do it anyway.\u201d It\u2019s different. Maybe they run funds and then punch numbers, but they never make a lot of money. I\u2019m telling you, the scrappy first generation immigrant that doesn\u2019t know any better is much more apt to make money than the Harvard educated kid that just came out of schools we\u2019re working for 10 years.<\/p>\n
It\u2019s not to say that numbers don\u2019t matter, it\u2019s that being in love with the numbers is the problem, it\u2019s having the vision, it\u2019s seeing the opportunities. That\u2019s such a good point. It made me think about when someone wants to date someone, nobody wants to be courted by a guy who just overanalyzes everything and never makes a mistake. They want a person who\u2019s going to put themselves out there, be passionate about what they\u2019re doing.
Try different things, show the love that they have for someone that matters so much more than the person who\u2019s like, \u201cI made sure we had reservations at every single restaurant at the exact same time. I scanned the menu before we even went, so I knew what I was going to order.\u201d That is what makes anyone fall in love and real estate won\u2019t fall in love with you if that\u2019s the approach you\u2019re taking.<\/p>\n
It\u2019s so true what you just said.<\/p>\n
Barbara, out of curiosity on this, the Barbara Corcoran Report that you mathed out, \u201cThe real estate is at an all time low in New York City.\u201d I know that you mathed it out based on yours, but was there actually any truth to that number on a broader scale? Was that pretty close to what was actually happening? Did anybody ever call you and say, \u201cThat\u2019s not true. How did you know?\u201d I was kind of curious how that your data actually ended up comparing to the actual data of New York. Did you ever look into that?<\/p>\n
No, I didn\u2019t. It was already out, it was printed, I was getting the notoriety. Who knows if it was accurate? Who cares if it was accurate? The main thing was nobody else had a number out there. Nobody was producing numbers. After that, over the next 10, 20 years, people started mimicking my competitors because they realized all the reporters called me. Why? Not that I had better opinions than them or was more experienced, I was certainly less experienced but I had a number to give them.
What do reporters need more than anything else? They don\u2019t need your opinion. They already have an opinion when they call, they want a good sound bite. More importantly, they want numbers to back up their own opinion and I gave it to them. If I had a reporter call me and say, \u201cI\u2019m working on a Russian oil well story and I wonder if you have any rich Russians that I could talk to?\u201d I found them a Russian to talk to, or two or three. They came to me like a source.
I feel like a media joint. \u201cWhat do you need? Got it. What do you need? Got it.\u201d It\u2019s not important whether your number is right or not, you do the best you can, was that an accurate number? Based on my sales, was it in line with the field? Probably but I didn\u2019t care. I already had the number, it got the notoriety, it was onto the next [inaudible 00:29:13] report? The next [inaudible 00:29:16] report. I just kept churning the things out.
The Richard Gere report, the Madonna report, the Hillary Clinton report, the Guggenheim Museum report. I would grab any number average out, pop it out there. I didn\u2019t have the decency enough to wonder if my numbers were right.<\/p>\n
I love it. You said you were clever, obviously what was happening here is you\u2019re a genius marketer and that comes into play with something that I heard about, a word of mouth campaign that you had when you were trying to sell out a unit or sell out a building. Could you tell us that story too?<\/p>\n
You\u2019re probably referencing the one-day one price sale. By the way, exaggerated, I\u2019m not marketing genius I just take risk. I\u2019m good at that. I swear to God, that\u2019s the baseline of the whole thing. No, I had 88 apartments that an insurance company and developer came to me for, two. Came to every bill, every broker in town, we need to sell these interest rates, we\u2019re 18%. Can you imagine that? That\u2019s why when everybody\u2019s excited about the high interest rates now, I\u2019m like, \u201cWhat are you talking about?\u201d
Interest rates are 18%, no one was buying anything. They said, \u201cWe have to sell these 88 units that we don\u2019t want to auction. We don\u2019t want a public sale because we don\u2019t want to be embarrassed.\u201d I looked at the units, they didn\u2019t have kitchens, they high floors, low floors back, apartments, creepy lobbies, they had everything wrong. I went back and said, \u201cNo, there\u2019s no way to sell it. I\u2019d like to tell you differently, no way to sell it. I met with the developer in the insurance company.
Interesting about motivation. The developer, Bernie Mendik, who has since deceased, he said to me, \u201cYou\u2019re a smart girl, you\u2019ll figure it out.\u201d I had arise to his occasion. I went home that night and thought of a puppy sale my mother brought me to where all the puppies were given away and there were too many buyers for the puppies, so I did an exact knockoff on that. I went back and I said, \u201cWe\u2019re pricing all the units alike, back apartments, high floors, low floors, all alike.\u201d
You give them the mortgage so they don\u2019t have to worry about the mortgage at 2% down from the 18%. We\u2019ll have a one-day sale first come, first serve. I opened that office on the Upper East Side in the morning around, it was due to open at I think eight o\u2019clock, but I was there at 6:30. I had over 150 people in line waiting for those 88 unit apartments. I said go, I gave them the sheets, the addresses. They ran, husbands, wives, single people ran to see the apartments they wanted the best one. It was sold out. I would say with less than two hours I made $1 million.
Who would ever see that thing coming? You know what the key to it was? It wasn\u2019t enough to go around. Even the guy who got the loser, the really disgusting apartment with the same price as everybody else, he was happy because he saw how many people were waiting behind him and couldn\u2019t get anything. That was just a marketing way, a secret sale with no advertising to support it but it worked like a dream.<\/p>\n
Many units did you say that you sold?<\/p>\n
88 Units. And the average sale price, well right now won\u2019t sound like anything, the average sales price I think was $64,000.<\/p>\n
Wow, that\u2019s 88 units. I\u2019m sure that\u2019s got to be a record in New York for the fastest building ever sold out. If listeners want to hear more about this story, you tell this a little bit more as well on TikTok in your Get Ready With Me video, right?<\/p>\n
Yes.<\/p>\n
Looking at that one, I believe it had over a million views.<\/p>\n
Yes, I think it may have. I think it\u2019s because I look so good without makeup.<\/p>\n
It\u2019s a very fun series. I think your social platform and in all of the stories that you tell really, really are a very fun thing to watch. I find myself on your reels all the time. Something that you mentioned a little bit earlier about the 18% interest rates. I say this all the time, I say that interest rates used to be 16% to 18% back in the \u201980s, \u201990s. Then, a lot of people say, \u201cYeah, well the cost of living back then wasn\u2019t all that high, so it\u2019s not the same.\u201d
Well, and that\u2019s what I was going to ask, it\u2019s all relative. When you sort of look at it, having seen your career play out, do you feel that like a 7.50%, 8% interest rate is really detrimental to the success of people in today\u2019s market?<\/p>\n
Well, it is in this one regard. It keeps people out of the market because of their expectations. Remember we got until last year, we were accustomed to 3%. I think that\u2019s what the mortgage rate [inaudible 00:33:32] We got accustomed to that. Everything is relative like, \u201cI wish I had gotten it then I missed the boat.\u201d No, it\u2019s not that way at all. It was just as expensive to live in New York, I\u2019m telling you but people still borrowed at all along the way 14, 15, 16, once it got beyond 16, people started pulling back.
Today people are pulling back at what, 5%? Where is it now? I don\u2019t even keep track of it, honestly. It seems so cheap to me. I don\u2019t think that\u2019s true the premise that people are giving you at all. No, I still feel like there\u2019s deals to be done because of the low interest rates. I\u2019m going to labeled it as high. All of my buildings in the last year at a higher rate, I probably should have done it a year early, but it\u2019s still a cheap rate, my god.<\/p>\n
Well, you did mention, you know, would buy this property and then you would slam a new mortgage on it once the rents went up. That concept I believe you\u2019re talking about is a cash-out refi. Basically, the value of the building would go up and if the rents went up and you could do a cash-out refi, you\u2019d have a little bit of a higher mortgage, as long as you could cover your bills, you would take that money out and reinvest it somewhere else, right?<\/p>\n
I\u2019m talking about a lot of money back out. I\u2019m not saying I had a mortgage of $200,000, I put 250 on it. I would wait five years. For the $200,000 I would then put an $850,000 mortgage on put in my pocket. Listen, refinancing is the way you really get rich in holding real estate that\u2019s what I never like to sell. It\u2019s just a bank that\u2019s going to keep on giving. That\u2019s how I look, I feel like I\u2019m in the banking business, but I have real estate to back it up.<\/p>\n
On that topic, you, you\u2019ve mentioned several strategies that are somewhat, what\u2019s the word I\u2019m looking for here? They\u2019re not common, when you hear this overpaying and when you say overpaying, what I\u2019m assuming you mean it\u2019s just paying more than the list price. It doesn\u2019t necessarily mean you overpaid because real estate is worth whatever someone\u2019s willing to pay for it.
Focusing on the location over the actual unit, putting an emphasis on solid fundamentals of an area and an asset class over over-reliance on the analytics of a specific unit and getting, not looking at the numbers with a microscope looking at them with a big picture plan, picking the right partner to invest in. This is very different than the gurus that sell real estate investing courses that say, \u201cI will teach you how to analyze a property and you can just look at every single property individually.\u201d
The question I wanted to ask you is, do you believe this works primarily in markets where you\u2019re likely to see appreciation where money is flowing? Something like New York City, Manhattan, maybe South Florida right now, some of the California markets. Do you think that\u2019s part of where your strategy came from, was the area that you were in and the business that you were involved in?<\/p>\n
Not really. I think it would apply anywhere. There\u2019s always primary estate that\u2019s golden that everybody\u2019s clamoring for that you don\u2019t have enough to go around. Then, there\u2019s always the next area, next store. The people say, \u201cI don\u2019t really like it so much, I don\u2019t want to have my kids go to school there.\u201d All the reasons why, those are the areas that are the sweet spot, and that\u2019s everywhere not just New York.
It happened to me because I was in New York doing Brooklyn. I thank God picked Brooklyn versus New Jersey. I don\u2019t know why, I really didn\u2019t know New Jersey, but you could always find an area. It works. I just don\u2019t think it\u2019s about a particular area. There\u2019s always something up and coming. Do you know what is a great way to find out if you\u2019re right in your premise? You travel there at night. I never went into any area of Brooklyn and even found a partner or starting investing, I used to get a car at night, rent a big driver because I didn\u2019t know what I was headed for.
I would cruise the streets. What do you think I would find at night? A lively evening community of creative, generally gay communities, having a ball. The gays always moving first is how I found. Then, after that I would go and I would see the baby carriages and hallways stuffed in collapsible cheap carriage. The yuppies are starting to come in. You see a lot at night when people aren\u2019t at work. You see what\u2019s happening, who\u2019s living there.
I remember I bought one building on the very Upper West Side because I saw old ladies all sitting on the bench with pigeons and they weren\u2019t getting mugged. I thought I would never sit on that bench, but it was safe enough for the old ladies, so I realized something\u2019s changing here. I think you have to just be personally involved and have your mind open. I have even chosen particular blocks based on the trees.
I know it sounds weird, but it\u2019s so darn pretty. I\u2019m thinking everybody\u2019s going to love this block, look at flowering trees. More important to me than the numbers, because when I look at the numbers, I\u2019m just seeing today\u2019s numbers, but I\u2019m projecting what tomorrow\u2019s numbers might be and I\u2019m buying on that basis.<\/p>\n
That is such a good point. Not getting wrapped up in, I call it the year one result. When we analyze the property we\u2019re looking at right now in this snapshot of time, what can I expect it to do? You\u2019re not buying it for a year, you\u2019re buying it forever if you\u2019re Barbara and you keep refinancing them. You can\u2019t analyze for what it\u2019s going to be like in 30 years. There\u2019s some intangibles that go into this and you\u2019re sharing a lot of that.
I have one last question, but before I ask it. I know you have a technique involving waiters in restaurants and getting valuable information from them. Can you share that with our audience?<\/p>\n
The best, you go to a restaurant there\u2019s always good-looking young waiters. They want to be dancers, they want to be writers, they came to New York. New York is such a wonderful place to draw people in. They all come to New York, but they\u2019re making their rent. They\u2019re working at night. I always make a habit saying, \u201cWhere are you living? Where are you living?\u201d Then, I make a mental note. Now, on my phone, I used to have a little pad with me make a mental note.
Then I\u2019m out there within a week looking at it. That\u2019s what I do, it\u2019s a little routine. A lot doesn\u2019t pan out, some areas are too darn early for me. They scare me because I\u2019m like, \u201cI\u2019m so happy I had that big driver with me. That\u2019s not a good area.\u201d Most of them pan out, so I always think you have to tap into youthfulness and people who are short on cash to identify up and coming. I think it\u2019s your best guide.<\/p>\n
It\u2019s effectively asking locals what the secret spots are. \u201cHey, where are you at? What\u2019s the cool bar? What\u2019s the cool club in town?\u201d Basically, just following the scent to finding these little pockets that no one really knows about.<\/p>\n
Yes, and they\u2019re choosing the right property within that pocket and that\u2019s where the partner comes in.<\/p>\n
Last question from me, Barbara. For those that are listening to you and they feel the call in their soul, I need to be more like Barbara, but they\u2019re just risk-averse. They don\u2019t have experience accepting that risk is a part of life. What advice do you have for those poor, timid souls?<\/p>\n
Get out of the game, you\u2019ll never going to do well. I hate to be that coarse, but get out of the game. If you\u2019re afraid of risk, you have no business being a real estate. If you want to make money, you have to take a risk, it\u2019s just that way. If you\u2019re measuring what you\u2019re about to go into based on what you could have bought it for last year, your memory is your greatest deficit. We\u2019ll hold you back, if your mind is wired that way, get out of the game.<\/p>\n
Well, that is fantastic, Barbara. Thank you very much for sharing that advice.<\/p>\n
Perhaps the most honest advice and honest answer we\u2019ve ever gotten on the show, by the way. I love it.<\/p>\n
Thank you so much. I try to be honest when I\u2019m not bullsh*tting.<\/p>\n
As you know from two truths and a lie, there\u2019s often a lie mixed in with truths and sometimes you have to be able to figure it out, but it can still be fun when you do so. Barbara, for people that want to find out more about you, where\u2019s the best place for them to go?<\/p>\n
It\u2019s @BarbaraCorcoran on all the social media platforms. If you just have want to have fun just follow me on Instagram at TikTok. I have a blast, but I also give great advice. I try to do both.<\/p>\n
Rob, how about you?<\/p>\n
You can find me @Robuilt on YouTube. You can find me @Robuilt on Instagram. Be sure to follow the raw belt with the newly added blue check mark, which is a beautiful day for me. You no longer have to get asked if I\u2019m going to invest in Forex or anything like that. Make sure it\u2019s the blue check mark. Be sure to also find me on the Apple podcast platform where you can leave the BiggerPockets Podcast, a five star review because this is one of the best episodes we have ever done. David, what about you?<\/p>\n
Yes, thank you for that mention about the blue check mark. This is my cup that I keep full of the tears of internet scammers as they are crying themselves to sleep every night, unable to scam people pretending to be us. You can find me at my website, davidgreene24.com or any social media that you like. DavidGreene24. Please do go give me a follow. Barbara, you\u2019re such a pleasure to talk to you. Thank you so much for being here and for calling me out.<\/p>\n
[inaudible 00:42:12] I don\u2019t call you yet, I\u2019m doing it today. Thank you so much, really. Thanks for the platform.<\/p>\n
I want to say Barbara such a big fan. You are a hero of mine and I think honestly, I held it together pretty good on this podcast considering how dang excited I was to interview you. Thank you so much for joining today.<\/p>\n
Let me remind you that you were the winner of the contest, you got two out of three, your partner and only got one out of three.<\/p>\n
I\u2019m going to be the winner in nine years when I buy the penthouse. That\u2019s really what I\u2019m holding out for.<\/p>\n
I\u2019m waiting for you call. Is this you?<\/p>\n
It is. This is David Greene for Rob [inaudible 00:42:46] Abasolo, signing out.<\/p>\n