Livin' La Vida Luna y Luca
What a week. Cape May feels like a month ago.
Risk Game @ Reconvene
Last year, I attended my first real estate conference since before the kids were born. It's called Reconvene, and it's hosted by a wonderful couple - Moses & Simran Kagan.
I had such a good time last year and walked away with so much clarity on how to move forward in my business that I had to go back again.
I'm so glad I did.
A few months ago, Moses promoted Risk Game by Francis Greenburger as one of the best real estate investor autobiographies ever written. Francis also happened to be the final speaker at Reconvene.
I read the book a month or so before the event, and it was an instant hit for me.
What I loved most wasn't the deals he did to become a billionaire multiple times over. It was the family stuff. Specifically, the relationship with his father. The family business. Going out on his own. Then, ultimately, coming back to run the family publishing business after his father passed.
That hit home.
Start of Day One:
Francis sat right in front of me during the first breakout session, which lasted about 45 minutes.
I spent most of that time rereading my Kindle highlights on my phone. Like cramming for a test 😅.
When the talk ended, I tapped Francis on the shoulder and introduced myself with slightly sweaty palms.
I told him I read the book because I knew he was coming and that I appreciated the personal stories he shared, especially the one about his father and the family business.
He seemed pleased, and we got to chatting about my personal situation and what might look like the right path for me.
It was a cool moment, albeit short-lived, because there was a line forming to speak with him, and I didn't want to monopolize his time.
I figured that was that.
End of Day One:
It's dinner time, and I'm about to enter the buffet line. I turn around, and Francis is standing right behind me.
I handed him a plate and sparked up a conversation. "So can an old dog learn new tricks at an event like this, or do you think we're all just drinking the kool-aid?"
Side note: Francis stuck around for the entire event despite being the very last person to speak on Day 2. He's in his late 70s & has done every type of investment under the sun, yet he's still sitting in the audience taking notes. Still learning.
And that was essentially his response: "I'll never be too old to learn new ways to buy dollars for 50 cents."
As we reached the end of the buffet, he offered, "Why don't you come have dinner with me?"
Ummm. Okay! All my shit was at my table, but like hell if I was even going back for it and risk losing my seat.
It was Francis, me, and two or three others at a small table. He told us stories for ~90 minutes & we hung on every word.
I was the only person at the table who read his book, so I became the default prompt engineer ready to spend all of my tokens.
We talked about:
- $35K to $100M. How he started with $35K in unsecured lines of credit across 7 different banks, which ultimately consolidated to a single $100M line of credit from one bank.
- The original WeWork. At 15 or 16 years old, he was renting large office space in NYC, cutting it into smaller pieces and subleasing to other sole proprietors.
- Chicago and 50 West. Contrarian stories on developing luxury residential buildings in Chicago and NYC (started right before GFC, held on, serviced debt, and completed after the dust settled).
- Co-op conversions. In 1978, it was Francis and an assistant. By 1983, it was 300+ people in the office, 25 of whom were lawyers. They converted 100 buildings (10,000 units).
- His best deal ever? A wind farm. Not multi-family. Not office. A wind farm. In 2021, his firm signed a 15-year deal to buy power from a 240MW wind farm in Texas: ~925,000 MWh a year at a fixed price. Then they'd sell every MWh at the spot price. Between the time they signed the fixed contract and made their first sale, the margin ~quadrupled. 🤯
- His biggest loss? The investment directly after the windfarm: A chemical plant, betting on soybean oil as the cheaper input. Soybean oil prices surpassed vegetable oil, and the plant didn't perform nearly as well as expected. An almost 9-figure write-down.
- The Importance of Cashflow. Have enough of it that the boom-bust cycle can't sink you. You don't want to be in a position where you're only as good as your next trick. This one struck a chord because that's exactly the position I'm in right now.
- Pay attention to the market and scratch your own itch. He needed a small office space, but couldn't find it. So he rented a bigger office and subleased half to cover his rental payment. Subleasing office space is how he built his monthly cashflow requirement, which then allowed him to move over to condo-conversions, which had a much longer cash conversion cycle.
- Naivete can be an advantage. Sometimes not knowing what's "impossible" is exactly why you do it.
Francis talked about wins and losses with the same energy. He talked about the importance of building solid personal and business relationships that can endure the eventual ups and downs of deals and life. He talked about spotting value and "riding it as hard as you can for as long as you can until the cost of leather is more than the price of shoes".
Surprisingly, he talked about luck and the massive role it played in his career.
He did it all with real humility. Decades in the game. He's probably forgotten more than most of us know, and he's still attending all the talks & meals to chop it up with the next generation.
The takeaway (for my kids if they read this one day):
Do the work. Be prepared. Tap the shoulder. Hand the plate. Say yes to dinner. Have a 90-minute conversation that's worth far more than the price of admission.
Til next time...
✌🏽&❤️