- Willing to be gruff in order to be direct. Has a sense of urgency and doesn’t understand why others don’t
- Willing to sacrifice conformity for effectiveness. Listens to everyone but is willing to do what makes sense to him. No assumptions and willing to act
- Sam lives and breathes risk. Always be deeply respectful of risk
- In any business, it is all about long term relationships, trust, transparency, always leaving something on the table, sharing the risks,
- Reputation is your most important asset
- Always keep learning, thinking for yourself and making your own decisions
- Sam and his parents escaped Poland just before the Nazi’s took over to settle down in Chicago
- Where there’s scarcity, price is no issue
- You learn so much from seeing people in their own environments - spend the time and money to travel to meet people on their turf
- Being comfortable with rejection is fundamental for entrepreneurs or anyone pushing the limits. However, can only push the limits and go against convention if you know the rules
- Started off developing housing in Ann Arbor and after some initial success he expanded to other second tier cities where he had pricing power and limited competition
- Jay Pritzker became a mentor and good friend who taught him how to evaluate and think through deals and how to understand risk
- Use simplicity as a strategy. Organize your thinking, break each step and decision down to its core and determine what the key is
- Bet on people over project
- In deal making, speed and certainty are superpowers. Often more even than price paid.
- Never underestimate the power of optionality
- The essence of an entrepreneur is someone who recognizes a problem and provides a solution
- Saw there was a huge oversupply if real estate in the 1970s so began accumulating capital in order to buy properties once the timing was right. In an inflationary environment he got a fixed rate return through his non recourse debt
- You can be a genius but if you’re in too competitive a market it won’t matter that much. Spend your time in areas with weak competition
- Don’t rely on people unless you understand their motivation and your interests align with theirs
- Leaders have to find ways to delegate and find ways to keep level headed. Especially during difficult times
- Liquidity = Value
- Sam describes himself as a professional opportunist and doesn’t care about external opinions. This was clear when he took over manufactured home corporation which made trailer homes and RVs. People called him names and wouldn’t invest because of the stigma of the industry but he goes to where the opportunities are. MHC, later renamed ELS, has been one of the most consistently profitable companies in the space
- Sam has been known as “the grave dancer” after an article he penned with the same title. This refereed more to him giving valuable but rundown assets new life rather than dancing on the graves of dying companies or industries
- Didn’t found but helped establish and build up the REIT industry - making it a central holding of most large portfolios and making brick and mortar buildings liquid assets
- In real estate, replacement costs are the most important metric because this determines the price of future competition
- Mitigating risk comes from understanding all angles and knowing which factors will make or break you
- 2-3 years before a country becomes investment grade is when they’re the most disciplined and is the best time to invest in them
- Hire people based on whether they’d fit the culture and not on a job description or resume. Once they have the basic skills, you can teach them the rest
- Keep your eyes and mind open. Read voraciously, meet with a broad range of people, experience different things, travel and try new things
- Do the right thing. When you’re in it for the long haul, there is no other way to act. Deals with a winner and loser rarely are truly successful and likely won’t lead to another deal between the parties in the future
- Prize loyalty above all else in self and others
- Be able to laugh at yourself and maintain perspective and humility
- Search for and make people owners as this makes them go all in and always search for better ways to do something, new opportunities
What I got out of it
- Working hard, following your gut, not worrying about what others think about you and having the courage to act on your convictions is key in any pursuit. Always be deeply respectful of risk