RAOUL PAL: Hi, I'm Raoul Pal. For Real Vision, I've flown up from the Cayman Islands today to Palm Beach in Florida to meet somebody really special. It's somebody I wanted to speak to because he's got an incredible story. It's the story of starting from hardship and creating success through sheer hard work and share bloody mindedness, riding the cycles of the real estate market, and then seeing the opportunity and the risk coming in the subprime crisis, where he is a real estate investor, quickly learned about the derivative markets, managed to hedge himself and managed to get himself on the front foot ready for the next phase of the property cycle.

This guest knows everybody as well. He's in a vaulted position to be at the heart of this Palm Beach society where the hotel we're staying at today is owned by him. He also knows many of the people from the hedge fund industry, the investment industry, the real estate industry and the political business as well. It's my pleasure today to sit down and talk to Jeff Greene.

Jeff, it's great to be here in Palm Beach and to get you onto Real Vision. Just chatting off camera, we've got a lot of friends in common we didn't. You've got a fascinating story and I think people would love to hear the story of how you start your career, how you got into real estate, but even starting before then, you as a student, going to university. Talk us through a bit about that.

JEFF GREENE: Well, I don't know where to begin. I grew up, I was born in Worcester, Massachusetts, which is a city about 40 miles from Boston. My dad was a textile machinery dealer, which meant you sold these giant machines that were longer than this room, they could be 100 feet long, to mills and parts of that also and they did it very well. We're a middle class family in like cute little house with a backyard and my mom was pretty much a stay at home mom. Then in the late '60s, all the textile mills got unionized in New England and they moved to the south.

My dad lost his livelihood because he didn't have mills to call and that's all he'd done. He had all this money in this business. He had a warehouse with parts and materials. My parents picked up and moved to West Palm Beach, actually. My dad bought a small rubber stamp business. He never really got on his feet again. For me, I was just a junior in high school when they moved here, but I was really still in junior high school and when our financial fortunes went the wrong way. I had to work my way through college, and I had some financial struggles, which probably made me hungrier than ever to do well.

RAOUL PAL: How did you pay your way through university? There's a bit of a story about that, because you went to Harvard, didn't you?

JEFF GREENE: Well, I went to college at Johns Hopkins University in Baltimore. It's interesting. I applied for scholarships, and I got scholarships and student loans. That paid some of my costs and then also, I had been an exchange student in Israel in high school. I learned to speak Hebrew fluently. I taught Hebrew school three days a week. I had to ride the bus in Baltimore and I had to change three changes. Two transfers. Three bus rides to go out there to teach Hebrew school on Tuesday and Thursday.

Then I rode out with another Hopkins student on Sunday. Then I had another job where I checked IDs outside the gym, it was called work study. It was a government funded program where you get paid a buck 50 an hour when you're supposed to be able to do your studying while you check the IDs, which you do. Then I also, when I came down here to visit my parents, I worked with the Breakers Hotel here in Palm Beach. I was a busboy, and then a waiter in the main dining room, and I just slogged along and made it through college. I finished Johns Hopkins in two and a half years, not because I was such a genius. I think it was because it was working so hard. It wasn't really a fun college one.

RAOUL PAL: Then after that, where did your career go?

JEFF GREENE: Well, so then what happened is I was down here one summer in West Palm Beach. I was working at the Breakers, not making any money because who's here in the summer? Nobody, so no tips. I signed out of the local papers, had telephone sales and I went to [indiscernible], it was to sell circus tickets for the local Riviera Beach Fraternal Order of Police which is a nonprofit Police Organization and it's at $2.50 an hour or commission. Well, minimum wage was a $1.60 in 1972. $2.50 an hour, you can make 100 bucks a week. Tuition at Johns Hopkins in those days was 2700 a year so if I work for 12 weeks, I'll make 1200 bucks. Not so bad.

High stress on these tickets. I've noticed that I'm selling more than everyone else, if I feel like I'm selling more than everyone else in the room so I said to the guy at the end of the day, how much would I've made on commission? He said $93. I'll take commission. Instead of making $20, I made 93. Anyway, I ended up doing this all through college. Wherever I had a break, I then would go on the road and run a telemarketing office for the circus.

After I finished at Hopkins, I went on the road to run these telemarketing operations for fundraising circus from Sarasota, Florida, and I would roll into little towns all around the country like Bluefield, West Virginia, tangy, you never would have heard of. [Indiscernible] 20,000, 30,000. Then I had a Pontiac Grand Am. I had my clothes on a bar across the backseat, loaded with laundry detergent in the trunk to go to the laundromat.

I would roll into town, check into the Motel 6 or Days-in or whatever it was. I set up an office, sell the circus tickets, hire local people. I did this. It was a lonely life. I finished college before I turned 20 so I was just 20 years old, 21, 22 all by myself like a traveling salesman in these little towns. Forget having a girlfriend, you couldn't even have friends because you're always seeing different people. You're always on the move. I did this and I saved up and I worked so hard. I saved up $100,000 in the mid-70s. It was just from working, I worked nonstop. I lived on nothing. I saved every penny because I was determined after what I'd been through going through working my way through college, never to be broke again.

My dad, actually, it's worse than not losing his livelihood, he actually lost his life. When I finished Harvard Business School in 1979, in May, my dad didn't make it to graduation because he was having heart issues. He died two months later with a massive heart attack at the age of 51. I really believe it was because of the stress of not just losing his life, losing his dignity and his sense of worth. It puts me in touch today very much and that's probably one of the reasons I've gotten involved so much in philanthropically, and politically because I've really saw firsthand how somebody can get broken when there are economic reality changes.

Anyway, so I saved up all this money, go back Harvard Business School, I had $100,000 in the bank. Never had bought any real estate because how could I? I was in a different city every two weeks.

RAOUL PAL: Living out of the car.

JEFF GREENE: Sorry?

RAOUL PAL: Living out of the car.

JEFF GREENE: More or less. I did have stuff stored. I'd never had an apartment. I had stuff stored at my parents' house, my aunt's house. I was living out of my car more. When people say that you think I wasn't sleeping in my car, but that was my base. My Pontiac Grand Am. Now, a lot of people I knew had invested in real estate. It's interesting. I got into Harvard Business School. I didn't get into the good housing complex, so just field apartments because there was a waiting list.

A friend of mine from Hopkins said, who would have started off with those first so I said what do I do? He said, well, what you can do is why don't you go buy one of these three-deckers? What's that? It's like a three family house built in the late 1800s. You can live in one, rent out the other two and at the end of the time, you think you're probably going to sell and get your money back and live rent free and I said that's interesting. I was set by to discuss-- a friend who was broker, also been to the business school and who I still know actually.

I bought a three-decker, and lived in one and the market was so undervalued in 1977 when I bought this, I could see I was saying, I bought it for $37,000, 7000 down, so that would happen as I got approved for the housing. I said, what'll it make me if I rent all three, how does this investment work and by every measure I looked at, I was going to end up after my mortgage payment, making $2200 a year on my separate thousand dollar investment. If that's a 30% return, I said I got to get more of these. While I'm at Harvard Business School, I accumulated 18 properties. I bought them.

RAOUL PAL: You were just buying them out of the cashflow of each property?

JEFF GREENE: No, I had my hundred thousand.

RAOUL PAL: Out of school.

JEFF GREENE: For the first one I wanted when that was perfect, so I'm saying I can't be like dealing with repairs when I'm at Harvard Business School. Who's going to do this work? Then I started getting comfortable doing remodeling and for the time I was done, I was buying junkie buildings, fixing them up and anyway, that became the beginning of my real estate career. As it turns out, the market was so undervalued. That property I bought for 37,000, I sold three years later for 185,000. Another property bought for 38,000, right near the Cambridge line, and somewhat sold it for 3380, 330 to 380.

RAOUL PAL: Is that when interest rates started coming down that suddenly the price of property exploded? Around '81, '82?

JEFF GREENE: I think you're right. That's when Reagan was just--

RAOUL PAL: Yeah, that's right. Reagan just cut in, there's the Reagan-Thatcher years, interest rate just peaked and just started to come by--

JEFF GREENE: The late '70s, so yeah, so before whatever it was, the market just exploded and my 100,000-- by the time I finished Harvard Business School, I had a million dollar net worth. Then I was off to the races. It's interesting because people often--

RAOUL PAL: You didn't use your Harvard education at all?

JEFF GREENE: I always use my Harvard education.

RAOUL PAL: You leave Harvard, you've made a million bucks and I guess you decided real estate's the business you want to be in.

JEFF GREENE: I fell into it. What happened is I decided to move to California. I had a great aunt and some cousins there so I moved to LA after I finished at the business school and thought I'd do real estate but the prices in LA were very different than they were in Boston. Boston was-- it was before the tech booms and the biotech booms and Boston was a little bit sleepy in the early '80s. Slow growth. Even after things had started to appreciate, you could still put down when you buy an apartment building, you put down 20%, 30% you'd make a nice return on your cashflow 5%, 10%.

I go to LA and you buy a building, it's okay, here's what you do. You put 30% down and you'll lose cashflow. Because basically in LA, you are buying the futures because everything was perceived to be going like that, and I just didn't get it. I did some other things. I bought actually 50% of a clothing manufacturing company, did that for 14 months.

RAOUL PAL: Why?

JEFF GREENE: I just finished Harvard Business School, I had to do something for my career. I looked at buildings, they all just seemed outrageously expensive, didn't fit the format. I was used to cashflow real estate. I just couldn't figure it out. I think, to tell you the truth, I'd taken a class, a business school by small businesses. The way you find a small business is you do business brokers, go talk to local accountants.

What my cousin had was a textile salesman. I said, let me go see your accountant. Well, the only companies the accountant knows is textile and garment companies. He said, well, I got this guy who has half of-- he has a company, he's just fired his partner, he's looking for someone like you to come in and help run the business. I bought half of this company, and it was very successful 14 months. I hated every minute of it. It wasn't my cup of tea.

I was thrilled and showing up in my-- at the time, Brooks Brothers suits and buttoned down shirts and ties and these guys who were working there, gold chains around their necks and they were in these spray on printed shirts that just it was aggressive, tough screaming and yelling. It wasn't what I was planning on doing with my newly minted Harvard MBA. Anyway, I got out, made some money and then I started doing real estate deals and started buying. I figured out the LA market, started buying properties and had a nice run up till early '90s when I participated in the crash like most developers and investors.

RAOUL PAL: When you said you figured out LA property markets, does that mean you just went into the momentum trade and realize it was all about price gains and not about--

JEFF GREENE: Yeah, I realized that you're not going to make your cashflow in year one, you'll get your cash flow in year three or four and that's how it was priced and just I started doing things that way and sure enough, you bought one or two so I bought like an eight-unit building, a seven-unit building. Then you're seeing there, as the rents go up and I started saying, now, I get this. By the time I get to a-- that was the starting like in '82-'83 and by '91, '92, '93, I had about 100 million dollar real estate portfolio.

I never had investors or partners, but I had a lot of debt. That's how I built it. I probably had debt on at maybe, I don't know, 65 million, which is 35% equity, had been refinanced and did grow aggressively, and then the market dropped and all the sudden, somebody-- '92, '93, '94. By '94, my $35 million net worth was like minus $15 million.

RAOUL PAL: Did that terrify you? How did you think about debt from then?

JEFF GREENE: It was tough, because basically, from my papers and snow shoveling jobs, my whole life in business had been straight up. The truth is let's finish Harvard Business School at 24. I have a million dollars. I'm thinking I'm a genius. I'm bored, and people call you, you must be-- you're really boy wonder, you think I'm really a smart guy here and basically, I had never been-- had not been married. I had girlfriends, but I had been single, all I really had was my career, to tell you the truth, to hang my hat on.

In 1994, I was just turning 40 years old and basically, everything I had worked for was all of a sudden that and it was traumatic. It was a tough few years. It was a tough few years, because I'm thinking like I could actually very easily be liquidated out back to zero and have nothing at all to show flow for what I've been doing in my whole career. I got good education, but what would it have gotten me?

RAOUL PAL: How did that affect you psychologically at the time?

JEFF GREENE: It's tough. It's interesting, I still--

RAOUL PAL: You can't take risk so easily when you're thinking like that.

JEFF GREENE: It's interesting. I've always been a fundamental-- believe in the fundamentals like the way I invest, where I do everything and I try to focus on long term and not let noise bother me. I knew why that market had happened. I understood it very clearly. It's a longer story, but the government empowered savings and loans and then try to allow them to make crazy loans. Basically, because what happened and if you will remember back, interest rates started going up, SNL is having their books, all these fixed rate loans, and they were all in trouble so the government said, okay, you want to be able to pay 8% for CDs, we'll let you do anything.

People were buying McDonald's franchise with the SNL funds and they will make 100% construction loans. Of course, you're going to have this crazy froth in the market. I didn't really feel I would like that. Then nothing that I had done, it was the government that did it, and it happened and so when it's so good, I plotted through it. I kept renegotiating with lenders. Lucky for me, I had one main lender, called Glendale Federal Savings, they were the sixth largest SNL in the country and believe it or not--

RAOUL PAL: They stayed solvent?

JEFF GREENE: Barely. They had $200 million in capital. I owed them like 69 or 59, give or take.

RAOUL PAL: Okay, so you were too big to fail.

JEFF GREENE: It's crazy because they were like, it's almost a $20 billion SNL, my little thing was enough to push them over the hump so they kept working with me and I was-- look, I was very persistent. I'd give them a building, they would cut loans in other buildings. We just work together and kept restructuring a few times, then eventually by probably '95-'96, my net worth was zero again, like all my loans equaled my values. Then I got lucky and I said, look, I sold one property.

I had a property on Sunset Boulevard, a nice house at a very nice part of LA, 40-unit building. It probably was worth $4 million. The loan was for $4 million, but the Getty Museum needed housing for the new faculty. They were just finishing the new Getty Museum. They had looked at some other land I had, I called them up and I said, how about this building? I sold it for $6 million, so I get 2 million bucks cash.

Now, most people having been through what I was, they would have taken