Comments
Transcript
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MBGood grief, I almost didn't watch this interview. What a great interview of an amazing person.
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scListened to a few of these... easily my favorite personality. thx for sharing Jeff.
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ABFabulous. Eloquent but so so so simple in many ways.
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JYSounds like he completely dis intermediated John Paulson on the subprime mortgage trade...I like him ;)
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MCInspiring and insightful interview. Thank you Michael and Raoul for this candid conversation.
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PGMaybe the Dems found their best person for the candidacy
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TEGreat appreciation for a guy who went from selling circus tickets to becoming a real estate mogul. I hope I can a fraction of his success.
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HHWe will figure out how to deal with wealth divide, just don’t take my money. I raise rents on people cuz I got in at just the right time, but it’s not my fault they can’t afford housing. Riding the asset inflation wave of real estate in California was a great trade, well done.
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VSOverall I felt this interview, whilst enjoyable due to Greene's charismatic nature, lacked depth and detail. Raoul had a difficult job trying to draw specific information out of someone who clearly loves the sound of their own voice (not necessarily meant in a negative way), though I do miss Grant's thought provoking questions and deep dive interview style. Also, interesting insight into the contemptuous thought process in an Investment Banker's mind; "I just had lunch with someone today from Merrill Lynch, he was telling me how he thinks all the smart people, they were just going to be fine because rates are low." Presumably, by 'smart people' he/she meant those with assets (lol).
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SBSuch a great interview! Thanks Raoul for bringing us these awesome guests!
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RMVery well done. Highlights the importance of understanding the cycle and the corresponding effects on wealth creation. Buffett handled the early 1970s in stocks well, Zell timed early 90s real estate vol well etc..Also Raoul- you mentioned Noam G quickly during interview. When is he in the interview seat?
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ABI loved the interview. Please have him back again!
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TTGreat story on how developing personal talents, decades of work, seizing opportunity, persistence, attention to risk and cultivating mutally beneficial personal relationships can pay big. Well done!
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MTWhat a fantastic interview. I enjoyed every minute. Jeff is a fascinating guest and I hope you have him back.
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TMGreat interview RV! As a FL resident and a RE investor, I know of Jeff Greene. That said, I didn't know his background. He is a true American success story. I was impressed that he is invested in bank preferred stocks. He and Chris Whalen seem to be the only RV peeps in this space. These prefs are very safe 5% payers.
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RNEnjoyed this interview very much! Thank you :)
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GGGreat!
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JSOutstanding interview!!!!
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RSGreat interview...interesting perspectives and seemed like a nice guy - esp. like his comments on education. Wonder how he was back in his 30's and 40's across the deal table though!
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HCRaoul - well done! I enjoyed this interview!! It was one the best; I am a self funded real estate investor myself. We share many many of the same traits - my father was kicked to curb and died too soon, worked 2 jobs while earning my degrees, and also found myself on top of the world in 2006 only to end up upside down in short order in 2009 (by no fault of my own). However, with a lot of hard work and perseverance I am back with a good amount of dry powder. I aspire to do what Jeff has done in his life with wealth building and philanthropy. Thanks again for another inspirational interview. All the BEST!
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RMTo reiterate everyone else, great interview, great guy to listen. Some lessons here: 1. Cash is king, i.e. cash flow properties vs capital appreciation properties. 2. Bad luck with a bad market can cause you to lose everything, i.e. risk management. 3. Luck plays a big role in fortune building, i.e. Getty buying his building to give him investment capital again. 4. To become a billionaire, taking calculated risks is critical (that and a little luck with the direction of the market).
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FBFantastic interview! Particularly liked the part about rising expectations over generations and competing now with other hungry nations.
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PGGreat stuff. Love these interviews of interesting and unique people sprinkled here and there on RV!
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AYGreat interview, refreshingly different and “real”. Learned a fair bit more about an asset class I usually gloss over.
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MCA must watch for anybody whom owns R/E in Toronto. Tons of nuggets to parallel with what can tip an overheated market!!
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TSGreat interview. Seems like a humble guy, who stays aggressive, and has a well-balanced view of the world. Education, combined with the ability to utilize the learning, is a killer combo. Thanks guys!
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FRYou want to fix schools? You want to fix illiteracy? You want to fix the wealth gap so everyone has the same opportunity to become wealthy? You want to fix the divisiveness? Then you need to replace the broken foundation of our system. You're not going to fix our complicated social problems by putting a new layer of paint on the walls (philanthropy). Easy money creates a shaky foundation, anything that is built eventually comes crashing down or is of poor value. If you want a stable, production society, where everyone can prosper, you need hard money as the foundation. Bitcoin fixes this.
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UJI think this proves gold is undervalued, could cash be overvalued like Germany 1920s......... cash has been king many times but what about store cash in banks can it be like Cyprus. StockMarket could go up but a Black swan could also be tired and land somewhere. Thanks, Raul great interview
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IOGrabbing your luck by the tail and riding it relentlessly. Well done Sir.
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JEI’m just so jealous of those 70s triplex deals. My spreadsheet would blow a gasket if I put those numbers in. These deals are long gone. I only hope I can someday see something that good.
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LL"I've just flown over from the Cayman islands" ha ha
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MFWhat a great interview, thanks Jeff and Raoul! Jeff’s story is inspiring and he oozes charm with a common sense appeal. No ego bombing, just a smart, charming hustler with heart.
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JHLove the last 10 min or so especially. What a fantastic guy and an interesting interview. Thanks, Jeff & Raoul!
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TRExcellent interview. The consumer is in good shape. Debt service is the most important statistic. https://fred.stlouisfed.org/series/CDSP This doesnt take into account rising rents and falling home ownership.
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GFReally enjoyed the show, thanks !
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AHwonderfull interview!
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RSWow, absolutely phenomenal interview. Very informative and inspiring. As a 27 y/o and new investor, I took quite a few insights from this. Looking forward to a crash so I can start buying up real estate myself. Thanks again for the work you do.
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PGThese interviews are the best.
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RAmaybe best interview yet
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PUgreat interview
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BDphenomenal interview. always great to see that at the end of the day there is an implicit assurance that in the end. everything will work out so long as we are willing to look out for one another and work together in this American experiment.
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JCRefreshingly candid discussions with an independent minded and street smart investor. It’s interesting Jeff mentioned with wage increases coming through, we may be in a mid cycle rather than late cycle. And with Fed now having explicitly stated they are willing to tolerate above 2% inflation to catch up on prior years, the party may just go on...
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