I was $15m in debt...now I own a billion dollar portfolio

I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, let's travel, never look back.

All right, my brother, we're here. Your story is a roller coaster. You have crazy highs, complete lows where you lose it all and then rebuild, build back up 20 times bigger than the first time. So I want to go into that story. So today you are sitting here, you've got a collection of real estate assets that you've built up over the last 10 years. That's now how big, roughly?

$1.5 billion. So $1.5 billion today. And that's really in kind of just a decade. So I want to go through the steps of how you got there. So where did the career start? You know, the name of the podcast, My First Million, right?

Right.

How you made your first million.

Yeah. I, you know, for me it started, I, I went to law school, did an MBA.

Did you plan to be a lawyer? You thought?

I was full on set on being a lawyer. Okay. You know, I went to law school, worked for a very famous lawyer, Mark Geragos out of LA. He, we were working the Scott Peterson case and it was very intriguing, you know, in criminal law. When I met my, my now wife or my wife, she was very much me against me being a lawyer. For some reason she was always programmed that, you know, you're going to, you're going to, you're going to do certain things to win cases. So we'd always talked about, you know, I'm going to work for a lawyer for 5 years and then I'm getting real estate. Okay. She goes, why do you need to— why do you need to work for 5 years? Why don't you just do it? You know, me thinking, I'm like, oh wow, that's a different thought.

I don't have a good answer to that.

Yeah, you know, so I ended up opening a real estate broker's office, went back to my hometown where I grew up, town called Modesto, and opened up this, you know, real estate, just broker's license, you know, small 100-foot office and a phone. Start calling people, trying to understand the market. And really, I think my first high came when I sold my first building. I called someone and actually I needed to grow my office and I called this person. I said, hey, what if I lease your office? Will you let me sell your office? He said, yes, if you lease it, I'll let you sell it.

So if you become a tenant and You could be the broker.

You got it. I never had a—

Was that planned or it just happened to be that way?

No, I don't know if it was planned. It was kind of just like, you know, sometimes you never ask, you never know.

Right? Right.

And so at that moment, I had asked— it was an older couple and I sold the building for them quite fast and I made $60 grand. And from there I started, you know, doing real estate brokerage. I started understanding and I started meeting different tenants in retail. You know, I was working for Jack in the Box, AutoZone, BP Arco, different tenants that I would help get them spaces for.

Now tell me, because today you're a real estate developer, but it's interesting, you started as a broker. I think many brokers want to become developers and rarely gets to the scale that you got to, right? What were you like as a broker? Are you just dialing for dollars? What were you doing?

I mean, yeah, gosh, man, I would, I would be knocking on doors. I'd be calling. You know, I learned early on that if you don't ask, you don't get, right? And so It was no real, like, shame in my game. It was kind of like, you know, it was just like, hey, I'll ask. And so, you know, oftentimes we'd be going to anywhere, whether we go to an Indian party, whether we go anywhere. I was growing up, I'd— what do you do? How do you do it? Oh, you own— you're a doctor. Oh, you own this office building. Would you ever sell it? Right. No, but I'll lease it.

I'll take on the leasing business. Anything to— anything at that point to build up my CV or resume of things that I was able to get done. Right. And so I fell kind of into a deal with a Jack in the Box operator. And, you know, this person was probably the first person in my life that ever, you know, I would call, I thought was a mentor or even like a father figure. Okay. My dad was a little bit different and I kind of drank the Kool-Aid. And so I started doing really well because what would happen is I'd have this relationship with these Jack in the Box guys and I know where they want to go. I didn't have the money to do it myself because I was just starting out. So what I would do is I would basically do development in a box. I would go and I would find the property, I'd get the tenant, and I'd go to another developer and I'd say, hey, give me the buy, sale, lease commission, give me all three. I'll manage the process for you. Then as time went on, I started to manage their construction process. I didn't have the money to do it, but I was doing it. And that went really well for me until the Jack in the Box operator, you know, basically didn't pay their payroll taxes, you know, kind of fell in dire straits. And, you know, a week before, maybe let's say 3 days before we're supposed to close a big deal and I was going to make my first $10 million, not even my first million.

Just on the commissions from the buy, sell, lease side?

So what had happened was we started buying property with these guys buying it. So in essence, we would buy it, we'd do all the work, and then they would buy it later on using their lines of credit. Right. And so what happened was this, this person that we were developing for was the largest Jack in the Box franchisee in Sacramento. And then what ended up happening was they didn't pay their payroll taxes.

But you had bought it on spec thinking this guy's— he's good for it, he'll take it off me.

Yeah. And I still remember, it's funny, I would sit there at night and, you know, there's an old rule that, you know, people said never count your money. But I mean, I would be looking at that sheet every night. Yeah, baby, let's go. No, you know, because you're taking a big risk. Yeah. You know, at that time I didn't understand the risk, but, you know, it was a big risk. I look back now and I say, wow, that was, you know, I think I borrowed like $15 million.

How were you able to borrow $15 million at the time?

I mean, it was all private lending. You know, I went to private lenders. You know, when you, when you come out of school, you get a W-2 or 1099. I was 1099.

I was a broker.

Banks didn't underwrite it. Right. The banks looked at it and said, Oh, you went from this to this? Wow. How? We don't understand.

We can't understand this.

We don't understand it. Right. And so, you know, as they don't understand it, then all of a sudden, you know, you're like, oh, okay, well, where's my options? And so we had, you know, we had everything kind of lined up and, you know, literally 3 days before we're supposed to close, we were getting ready to close and, you know, this person is not on their phone. This person would talk to me daily. They would call me. They were the first person in my life to ever call me son.

Right.

You know, I was, I drank the Kool-Aid harder than anybody. And then, you know, this happened where they, where they ended up getting in trouble and, you know, kaput. The deals kind of got soft.

Right. How many did you have?

It was 10 total.

So you committed to 10, you borrow almost $15 million. You're ready to make your first $10 million. You're looking at the sheet every night. 3 days before, the guy gets popped for whatever he was doing outside of what you guys were doing together.

Yeah.

And now you owe this money and there's no way out because you signed it. You're under contract, basically.

No, we bought the property and we owed the debt. You sent the money. Yeah, we spent the money. It was there. And so I still remember, and this is where the lows start, right? I still remember going home to my wife and 3 days I cry. You know, literally crying. Grown man, just like tears coming out of my eyes. And my wife says, you know, look, you always like to work out, Sanjeev. Like, go to the gym, get out of the house, go to the gym. And so normally I used to go to the gym at like 9, 10 o'clock at night, and there'd be 2, 3 guys in there. You work out, you know, the gym was always an interesting atmosphere because you have no clue who the other guy is, right? He could be, you know, homeless, he could be a billionaire. Nobody asks you, hey, what do you do in the gym? Right? Hey, bro, let me— can I get a spot? Let me help you out. So there was a guy I used to work out with at nighttime, and there'd be very few of us in the gym. And so we would always say, hey, how are you? We talk about life. But we had— I generally had no clue who he was or what he did. And so this random day we walk in, I walk in the gym at 2:00, and this guy's standing behind the front desk. I look at him and I say, what are you doing, Dave, behind the desk? He said, oh, come into my office. You got an office here?

So he was a manager? He owned the place?

He owned the place. He was the owner. And he's actually said, hey, I'm trying to sell this place.

All right. So I've built a few companies that have made a few million dollars a year, and I've built two companies that have made tens of millions of dollars a year. And so I have a little bit of experience launching, building, creating new things. And I actually don't come up with a lot of original ideas. Instead, what I'm really, really good at, what my skill set is, is researching different ideas, different gaps in the market, and reverse engineering companies. And I didn't invent this, by the way. We had this guy, Brad Jacobs. We talked about him on the podcast. He started like 4 or 5 different publicly traded companies worth tens of billions of dollars each. He actually is the one who I learned how to do this from. And so with the team at HubSpot, we put together all of my research tactics, frameworks, techniques on spotting different opportunities in the market, reverse engineering companies, and figuring out exactly where opportunities are versus just coming up with a random silly idea and throwing it against the wall and hoping that it sticks. And so if you wanna see my framework, you can check it out. The link is below in the YouTube description.

I grew up bodybuilding at a young age, and so I was always, you know, very fascinated by the fitness business. I was a trainer when I was in college and, you know, for me it was like, oh my gosh, you know? And I asked him, I said, does it make money? And he says, yeah, nets $30,000 a month. Oh, quickly I'm starting to think, all right, I can do my real estate, I can buy this gym, I can do all this.

So this is still while you're on the hook for the Jack in the Boxes?

I am all the way on the hook.

And how long of a period did you have to like kind of resolve this? Or what was your plan? You're going to start opening up Jack in the Box? What were you going to do?

I couldn't open up Jack in the Boxes because I went to Jack in the Box corporate and I had recorded a deed restriction on these properties. So basically I recorded something before closing. Again, you learn later on in life, right? Never do that. But, you know, and, and so I was kind of stuck with this.

It could only be that.

It could only be that. And that was what that— it was a random deed restriction that we had created. And I couldn't get it off because the guy was still alive. Yeah. So I couldn't quitclaim it. I couldn't do certain things. It was kind of a very unique situation.

Right.

And so, you know, so in essence, I bought the gyms to pay for my real estate. And then, you know, the first month in, you know, I still remember—

wait, so how'd you buy the gym? So the guy says it's netting $30 grand a month.

Okay.

Oh, okay. Pay in installments. Perfect. All right. I went home. I asked my wife, I said, you know, hey, I want to buy the gym we work out at. And she laughed, you know, no way. And then 30 days later, sure enough, We bought the gym, right? And needless to say, she doesn't laugh at anything I tell her we're going to do now. She's, you know, so bought the gym and 30 days in, you know, I go to the bookkeeper and I'm like, hey, where's my check?

Yeah, where's the $30 grand?

Where's the money at? Let's go. And she says, actually, you need to write a check for $22,000. I said, what? $22,000? How? Right. I was going to make $30,000. At least give me $15,000. You know, let's— and so she just She showed me—

did you not diligence the thing at the time?

I didn't understand how to read a profit and loss. There's a difference between cash and accrual and all these things that you show. And he had slimmed it down not to show every manager. He showed it, and not in a bad way. He just showed it the way that he could have been.

Yeah, yeah.

That's what he saw. It wasn't what was actually there.

So how old are you at this time, roughly?

I am 28. This is 2008.

And there was a period of time. So the way my wife tells the story— so we're brother. You're my brother-in-law. The way my wife tells the story is You start dating her sister. Yeah. And you're this guy that comes out of nowhere. You are like this hotshot real estate guy. Young, right?

Like, I think you were pretty— 25, 26.

You're 25, 26, and you were making millions of dollars as a broker, which is not common, correct? Like, you must have been a top, top performer. Is that fair?

I mean, I don't know much about the broker world. Yeah, at that time I was.

I mean, you know, and you're buying her nice gifts and you're living this great life. And when the Jack in the Box thing happened, at some point, I don't know, maybe— I don't know if you've got to this part of the story. At some point you're like, you have to move back into your— to the parents' house. You have to move back into your childhood bedroom. Is that already happened, or am I jumping the gun?

No, this actually— so what happened was, you know, basically, you know, long story short, we're paying for the real estate. I have to go become the general manager of the store, and we didn't have enough money to pay everybody, so my wife ends up becoming the Zumba instructor. And, you know, and, and so she's teaching like, you know, she must have been teaching 30, 40 classes a week, maybe more. And she was great at it, but, you know, we're just at the all day long. And in order to pay for our stuff, you know, we went from a Range Rover to a Ford Fusion, right? And we, we, we got out of our house to pay for— pay again. We're paying the bills. We were always like, let's pay, right? And so we then ended up at my, my childhood high school room. And I still remember this the first night. And my wife was a little bit upset. You know, we went from this standard down to this, you know, naturally, you know, it was, it was a, it was a very big culture shock, right?. And what I didn't tell you was that in order for us to buy the gyms, and not a lot of people know, I had to come up with a little down. My wife pawned her wedding ring for us to buy the gyms. So she's a ride or die. When you talk about a ride or die, like, that girl's been with me through it all.

And so, by the way, are these— because I know her, but I don't know her back then. Her idea, your idea, you're like, hey, you know, If only there was a way we could come up with this. How did that conversation go?

I gotta know. It was definitely not her idea, but, you know, she got on board with it fairly fast and she understood that if we fail, we fail together. And if we, if we feast, we feast together. Right. And so, you know, at that point we were feast or famine, right? We're either going to be able to try to figure out how to eat or we're starving here. And, you know, and in life, you know, it was a, it was a big up and a big down because, you know, you're 27, we're driving a brand new Range Rover, we're living in an $800,000 house. This is amazing. You know, she's got a nice fancy— and everything on the outside looked great. On the inside, we owe all these people money, right?

Who do you go to, by the way, when this stuff's going down? Because you didn't— you're not a big mentor network guy. Like, you've always been a lone wolf as long as I've known you, really. When shit's hitting the fan, obviously you're telling your wife, but how did you try to get out of the pickle? Because that's an unbelievable amount of money to— oh, you owed $15 million.

I mean, and, and, you know, honestly, I was crying in the fetal position at home. My wife just literally said, get out of here, get up. I have this story I tell my kids, the light bulb story, right? Uh, and what it is is I'll plug in a light bulb for my kids, a lamp, and I'll just turn the bulb a hair and the bulb turns off. And I asked my kids, I said, what, what does this mean to you? And my kids look at me, they're young, oh, I don't know, means that success is just this much far away. The difference between a successful light and a broken light is a hair. And so I always had that kind of mentality that, you know, I'm almost there. I might have not always been there, right? But my mentality, oh baby, I was—

let's go.

I mean, you know, that was— and so we, we lay down at night and we turn the light off when we're the first night back, and we look up. And in my age group, I'm a little older than you, we used to do these stars and like stickers on the ceiling, the glow-in-the-dark. You turn it off and the whole world appears. And we turn off the light and we hadn't stayed in this room for forever. We had our own place and we both just start laughing out loud. And I told her, I said, give me 9 months, give me 9 months, I'll figure it out. And the switch kind of clicked for me.

Then you made a promise.

I made a promise. I got to stick to it. You know, it's almost like when people take a weight loss challenge, right? Right. I've got a reason to do it. This is my timeline. Let's do it.

But you have no plan yet, or you have a plan or not?

Well, you know, I said I'm going to grow the gyms, right? I had— I— we started to turn it around, the first one, and then we're like, let's open up a second one. And, you know, we ended up being able to build a second store. It took us a long time. It took us a little bit. It took us about a year. And, you know, we, we just started working harder. And, and honestly, like, I just, you know, I would go to the gym if we needed to pay a bill. I would go to the gym and sell memberships myself. I'd some nights work till midnight till we close, you know. We were 24-hour in the first store. And so I would just, if I needed, if I needed to get it, we had to go get it. And we, we lived very, very, um, you know, uh, within our means, you know. We would, I still remember, we would share food for probably about 5 years. We wouldn't go anywhere and eat, you know, 2 meals, right? There would be 1 meal she would eat, whatever's left I would eat. And, you know, and vice versa. Some nights, you know, don't get me wrong, there was times when, you know, I ate first, but most of the time it was sharing and trying to get there. And so as we started to build the gyms up, that's when we started getting back to like, okay, we're paying everybody. Good things are happening. Let's go.

Could you not just declare bankruptcy with the Jack in the Box situations to at least get to zero again?

I could have, and that may have been the smarter path. You know, I went to law school, so, you know, my law school professor was always like, you know, bankruptcy is immoral. No, it's not. Right. You know, but, but, you know, these thoughts are put in your head in life that, you know, you don't know where it came from.

By the way, spoiler here is you end up creating, I think at one point, the largest gym chain in California, right? In Northern California.

We were one of the largest. We were definitely the largest just private operator. We didn't have partners, so we ended up getting to 82 stores, uh, and we were growing the business and we had done some really smart moves along the way. I would option properties, which we can talk about, and like do certain things in our leases that we just started learning. And we built a great culture. We had almost 2,000 employees and it was a fun run.

Cutting your sales cycle in half sounds pretty impossible, but that's exactly what Sandler Training did with HubSpot. They use Breeze, HubSpot's AI tools, to tailor every customer interaction without losing their personal touch. And the results were incredible. Click-through rates jumped 25%, qualified leads quadrupled, and people spent 3 times longer on their landing pages. Go to hubspot.com to see how Breeze can help your business grow.

So the brick by brick is the first one. The guy basically says, pay me as you go. Give me a little down payment. You pawn the wedding ring. You get the down payment. Yep. You turn that gym— you thought it was profitable. It turns out it really wasn't. The cash flow really wasn't there. You start to squeeze it by working your ass off. Great. A year later, you get the second store. Give me a sense, because I've never owned a gym, a gym like this. You know, what do they— what do they net? Like, if I go to a— if I see a gym around the corner, I think these were Gold's Gyms at the time.

Yeah, we went to 5 with Gold's. And then, and then you created your own concept. Then we created our own concept.

And then give me a typical, like a Gold's Gym. What do these things make revenue profit roughly?

I mean, it depends on the Gold's Gym. If you're in Gold's Gym LA, which was kind of like the mecca, they're making $8 to $10 million a store, you know, and, and the gym revenue or gross revenue. I mean, gym is a fixed cost business. Once you've paid your employees and your rent and your lights, it doesn't really go up, right? I mean, what may vary is if you do personal training, it may vary on certain services., but generally it's a fixed cost business. So you want to get to a certain number of members, and then after that, everything is profit. And so it's a higher margin business. You know, most people, you know, gyms at one point were 40% profit margin. Now I'd probably say they're closer to 20%, 25% because labor has increased and membership prices haven't increased as much as maybe they could or should. But there's also a lot of competition, right? There's only so much pie in every corner. Every other corner, there's gyms being opened up.

So what did you figure out? What did you do differently that let you build this 82-store chain?

Well, we started out as Gold's Gym operators, and, you know, we realized that Gold's Gym was a bodybuilder model. You know, there was people that would come in the gym, they work out for 3 hours a day, heavy protein.

You know, people are farting, sitting there for You know, it might be the worst type of customer to have.

Did you figure out any great insights along the way? Like, you know, my first business was a restaurant business, and restaurant business location really, really matters. One thing we figured out very quickly was Chipotle spends, I don't know, $40 million a year figuring out the best locations to be. You could just go, go to every— go try to get next to every Chipotle is actually just like Now you spend zero, but you get the benefit of all of their location scouting, right? We figured out that you could look at the receipts and if you understood how to read the code, you would know how many customers this Chipotle gets versus this one. So I could even compare within that which location is better than the other, right? So like we started getting a little smarter about how to play the game better. Were there any moments like that for you in the gym business that you started to figure out maybe how to pick up members faster or, you know, how to take the average value of a customer from $10 a month to, upsell them in some interesting way? Any good business insights from that?

Even for a dollar, that worked.

And it was amazing for people, for even for like, you know, because you'd have people that would go down from 40 to 0 and all of a sudden 2 people will quit. So their membership's now $2. Who's the 2 people? You know, you're like, well, okay, they start shaking people down, they start calling people and be like, how did you, how did you get out of the gym? I mean, I watched it happen myself. So we created this referral concept that was really good. And, you know, that kind of escalated us. And then we started to realize, look, we got to— as we grew the gyms, right, we, we learned what we did right and we learned what we did wrong. For example, like You know, we would build pools in some of our gyms. Well, there's nothing wrong with having a pool, but the reality is you're going to have 2 to 3, maybe 4 people in at a time. It's going to take 10,000 square feet, right? 6,000 to 10,000 square feet. That's a lot of footage for 4 people. Right. And so we started just realizing what our model was as we went forward. And then we just decided, okay, we're going to give a great value at a great price, and then we're going to incentivize you to refer people. Right. And it worked.

So how long did it take you to get out of the hole?

I can't do it.

And then we started looking at the benefits. At the time, we were paying everybody. And long story short, we ended up filing Chapter 11. We were able to rebrand. We paid everybody $0.100 on the dollar that was secured. And we started growing the gyms after that. And in the process, we reorganized our life. We paid all the— all the people, all the $15 million we owed, we paid with interest. But that also built me on the next round that we'll talk about. Right. I was, I was very like, some of those lenders are still great friends to today where I can pick up the phone and call and say, hey, we're from the Bay Area, right? Like, so I call them and say, hey, can I get a loan? I just called one and they said, yeah, we'll do it for you in a heartbeat. You don't need anything. No, we know you stood behind. And so, you know, so we started building the gyms and we started building more gyms and then really, we had no real estate at this point. We had sold our house, we had sold our cars. We just had gyms. We were just a gym operator. And I think by 2015, we'd gotten up to about 33 stores and decided to tell my wife, like, I want to get back into real estate. And I didn't have the— I didn't have the seed capital. Real estate was always capital intensive. And so I looked through my portfolio and sure enough, I remembered I optioned that second gym in Oakdale. So I basically used that option to buy the center and then I sold it to someone else based on my new lease.

Sorry, so explain how this works. So what I, if I've never done real estate, I don't understand how this option buy sell, what, what do you mean?

So what you, what in our lease, we put this option, let's say you're Mr.

Seller, right?

And we say, Mr. Seller, we have the right to buy this at, we'll rent it for now.

Correct. But we have the right to buy at a defined price. Correct. Okay.

At, at this defined time. Okay. And in order for us to do that, we just have to tell you we're buying it and we have 60 days, 90 days to close. Right. So we knew there was a buyer who wanted to buy gyms and do other stuff in the market. Broker approached us and said, hey, would you sell this? They didn't know I didn't own it.

Right.

And so you knew risk-free in a way because you have the option to buy at a defined price. You already know there's a buyer lined up, so you're not speculating as much as long as you believe that they would close, that they would actually buy the thing.

Yeah. And there's no such thing as risk-free because if that buyer blows out, I didn't have the money to buy the thing anyway.

So, you know, but you did like a double escrow, basically.

In essence, we did a double escrow and we made, you know, several million dollars and we're like, wow.

Yeah.

And so you did this for the— so that's how you did your first deal.

That's how I got my first seed money to buy real estate. And then I just started buying and flipping for, you know, for years.

And you were doing it the same way, gym options or no?

That was just like— I did a few gym options and I did a few gym sales. Then I got enough money to go buy a property and build a gym. And then I ended up hooking up with this company called Harbor Freight Tools. And so as I started getting into '15, '16, we started getting in the higher number of gyms. We're like 65, 70. We bought this building in San Francisco.

Uh, yeah, I remember on Market Street.

Market Street. Yeah, 1234 Market Street. I think you actually came there.

Yeah, the vanity, uh, the address. I remember just thinking, you got 1234 Market?

I was—

yeah, I know.

And, and there was, you know, every day we go out, pick up the needles that were outside. It was, it was crazy. But, you know, like, at that time we had a store there, and, and a nonprofit, a mosque, you know, approached us and said, we'd like to put our church here. And we negotiated a deal and we said, well, we wouldn't make that money in probably like 10 years running a gym, 15 years of running the gym. So we sold it. And then, you know, like, we're like, oh, well, made some money here. And as I was building my next store, somebody from Harbor Freight Tools randomly called me and said, we'd like to— we'd like to lease that box. So I go home and tell my wife, what do you think? You know, I want to build this gym. I'm used to building all these gyms. She says, well, why don't you just do it?

Right.

And so we did it and we ended up building a very big relationship there. I'm a big relationship guy. A lot of the tenants we work with, we've worked with for years and we ended up doing over 100 for those guys as time went on. But, but yeah, it just kind of, kind of evolved as time went on. And then we got to 17 and, you know, my dad was not really the— I won't say bad things, but he wasn't a loving type. A little bit abusive, a lot abusive at times. But, you know, he was just a different character. So, you know, my thing was, whenever I have kids, you know, we can't change the past, but we can sure as hell change the future, right? Yesterday's gone, but tomorrow has not been written yet. And so I kind of always had that philosophy, but I wanted to be a great dad. But during this time, from 2008 to 2000 and probably '16, I work 7 days a week, probably 80 to 100 hours every week. I mean, I would get up at 5:30 and be in the gyms, and then I'd come home by midnight. I'd come home every night because I want to see my wife and kids. And I'm thinking I'm doing a good job because I'm busting my butt, but I'm still, you know, I'm still trying. But my table was wobbly. You know, we talked about this.

Give the table metaphor.

So I always have this belief that there's 3— your life is like there's 3 legs to a table. Right? Your, your, your family, your job, and your faith. And your faith doesn't have to be God. It could be your faith in fitness. It could be your faith in the way you eat. It could be the faith, the way you treat people.

A code. It's a code you live by.

Right. And the type of real estate you would do, because real estate's a big word, broad word, could mean anything. You do shopping centers mostly. You've done other stuff too, but now you do retail shopping centers.

Yeah.

And as a tech guy in Silicon Valley, that always felt super random. Like, like retail shopping centers, like, okay, oh, you're, you're like an archaeologist. You do dinosaur things. Like, I get it.

Yeah. Like, yeah.

What are you talking about, dude? Like, but it's this incredible— and now I invest, now I invest a ton of money with you because I'm like blown away by this. But so, so just explain kind of like even just the space, the sandbox you play in, why you play in that sandbox and like, you know, what's your model? What do you do?

You know, 2010, all the news was retail's dying. You know, but what it really did was it insulated retail because what happened after 2010, people started building way more multifamily storage, industrial, but they didn't build retail shopping centers. Now they built these pads a lot more post-COVID because what happened in COVID, right? You were closed unless you had a drive-through, right? And so those businesses that had a drive-through, they crushed it. And as time went on, you know, there's been a lot of retailers that have left. It's no doubt. But retail has sustained and it's kind of become a supply and demand thing where it's like, you know, and what we are is we're value-add retailers or developer. So basically what we do is we find things that we feel we can add value to, whether it's new tenants, whether it's breaking it up and selling it in pieces, whether it's construction. We always have a game plan to go in and do something, you know, and I often get asked, why didn't the other guy do it right? Why didn't the guy before you do it? I don't know. You know, sometimes it's just there and Sometimes people just been in a project too long. Yeah, I give you times that I've— times there's some times I've been in a project for 5, 6 years and I'm like, I just want to be done. Right, right. And there's been projects I've been in for 5 minutes and I'm like, let's go. It just happens in that— in this business. And so, you know, we build a lot of good relationships with a lot of tenants. And, you know, the good part is, is that we can email these tenants or their brokers within, you know, we buy— we're looking at a center, we can we can find out generally who wants to be.

Give a sense of what good looks like in real estate. What have you been able to do in your track record?

You know, I typically what we see is we see people trying to compare or, you know, match the S&P or kind of be standard, you know, 7, 8% a year. They get some depreciation, you know, and they're happy.

They're diversified. They, you know, they can do certain things and we're more— we target for our folks now mid-20s to low 30s IRR annually. And in order for us to get there, we actually have to go do something.

You went from having zero, zero real estate assets to over $1 billion in real estate assets in 10 years. How do you do that? Don't we all want to know?

I mean, I think you have to find someone who's already kind of figured out that game and kind of run with them. I would say I'd also say that like it's it's compounding. You know, it's— you buy one deal and you sell it, you made some money. Now it's when you do it again and again and again and again and again. And so in our business, I was able to compound it by doing it again and again and again and again and again for many years. And so I would tell anybody who's young, like, you know, you're going to start with something, right? And then you, you got to figure out how to make that make money and move on to the next. 'Cause if you stick to just one, there's a lot of people out there, they have one building, they enjoy it, but they didn't compound it to really get to where they could have gone.

You, you had also told me, one of the deals we did, you know, I'm learning about this as you go and you were like, oh, we're buying this center. And you were like, there's a so-and-so grocery store. And one of the reasons we're getting this price is that that grocery store, they only have like a year left on their lease, but they have an option to extend it like 12 or 15 years., but they, you know, they're not picking it up because they don't have to yet. They have 1 or 2 years left right now. And I was like, okay, so what's the plan? You're like, I'm gonna get 'em to extend it. And I was like, but why, why would they do that? How do you know? And it was a combination of intelligence. You were like, well, I know it's a high-performing store. I know they should want to extend it, but they won't. They don't have to do it proactively. But I do know the, the person who's like runs their real estate. She used to run real estate for this other company and actually one time she left me holding the bag. She pulled out of a deal last minute and I ate the loss. And I didn't, I didn't hold it against her. I didn't, you know, I treated her well even though we took a big financial loss on that. I believe she's going to treat us well here. And then sure enough, like, you know, we buy this thing and suddenly we got a 15-year lease extension and that property's value, you know, skyrockets from that. So sometimes it's also about taking a loss well, not just when somebody wins. Yeah, it's, you know, it's easy to high-five when things are going great, but how do you— how you act when things don't go your way defines the character and defines the relationship, right?

100%. I mean, you know, how you act on a loss is almost more important than how you act on a win, right?

Well, your kids play sports. Do you teach them this? And, you know, when it comes to their baseball, their pitching, their, you know, what they're doing, they try.

I mean, they're young, they got a lot of emotions. So it's, it's, it's kind of a fine balance because you don't want them to want to lose, right? But you want them to understand how to lose. Because in life, in order for most entrepreneurs out there, most guys have had some sort of failure in their life and then boom, it clicks, right? And they use that as like a catalyst to just skyrocket, right? Not every business person is super successful right out the gate. And most guys who have made it really far have, have had to grind their way through. Right. And so, you know, I'm— for my kids, that's, that's what I want. I want to see them— I wanted to do baseball. Baseball is a sport of failure. Right. You hit 3 out of 10, you're in the MLB, right? You're a Hall of Famer, right? That's 30% of the time you're touching the ball, right, or hitting the ball. So I like the sport because it's mentally— and I also believe, like, you know, sports are a great way for kids to learn to compete, you know, and have healthy competition. But at the same time, you have a lot of people teaching their kids that I've seen, they think they're competing with other kids. I try to teach my kids that you're competing, and I would tell any adult this, not to look at everyone else. Right. Because I can only do what Sanjeev can do. I'm competing with me.

And guys that redline or push the limits, they're going to have some falls. Yeah. Until you get to the edge, it's kind of like one of those things. So, you know, some of those people who have never had a fall, maybe they're playing it— we're not playing the game as hard as they maybe could be.

Right. What are some other, like, core, I don't know, philosophies that you have?

Yeah. I mean, I think core philosophy, I always think of this, what would I advise my son to do?

What's an example where maybe if you had just been thinking from your own perspective, you could kind of talk yourself into something, but when you think about it, like, what would I advise my son to do? The answer is much more clear. Do you— can you think of an example?

Yeah. I mean, like when, when, like when a tenant burns you or when people burn you and you say, man, I want to call that person and tell them I'm not going to do any more business with you. You know, we're going to use the stick.

Right.

And what do you gain with that? Right. What would my son— what would my son Shaden gain from that? Okay, the other person knows you don't like them. They're not going to bring you any deals. They're not going to do anything. Or you could say, hey, you know what? This one didn't work out. Let's find another one to win together on, right? There's— it's a long game. It's not a short game. Life is a long game. You know, that's, that's— it's like things go full circle, right? People say, what does going full circle mean? It means as you're going on longer and longer, different opportunities come up. It comes all the way around. And so for that, it would be an example where I would probably tell him like, hey, look, don't kill the relationship, build the relationship, find another way to win with that person and don't hold on to the— that's the problem is most people hold on to memories that are— the right word, I would say the memories that affected them in a negative way. So they carry these negative ways. Instead, you can forgive. You don't have to forget. Right?

And so there's been times in my life that I've even had to use this for my own. Like, I tell people a lot of times, like, I will sometimes have to make a decision, and I will think as if my sons or my daughters are the ones having to make that decision. And I ask, what would I tell them? And most times it takes me 5 seconds. And this is something that I have a conundrum about in my head for weeks. You know, oftentimes I talk to you and we're outside and you say things so commonsensely, you know, like, oh, well, why have I been thinking about this for 2 weeks? Sean got this to me in like 30 seconds, right?

All right, listen, the 2 most beautiful words in the English language are email subscribers. You need more email subscribers. I guarantee it. I don't care how many you have. You need more of them. I need more of them. You need more of them. We all need more email subscribers. Because email is an amazing way to build your business, to build an audience, and to build a direct relationship that's not dependent on the TikTok algorithm, the Instagram algorithm. It's how you get people to engage directly with you so you can get them to trust you, to like you, click products, uh, check them out, check out your stuff. That's how you build a relationship with people. And so email subscribers are key and they're free. It's an amazing tool. And the tool I use for my email subscriber base is Beehive. It's a tool that was built by the folks who were actually running Morning Brew. So they were running growth at Morning Brew. They grew it to 4 million subscribers, and along the way they had to build out all these special tools in-house that made Morning Brew great. It helped it grow faster, helped it make more money, helped it, uh, nurture the email subscribers. And so they took all those tools that they built internally and they said, could we provide those as a separate startup for anybody to use and not just Morning Brew? And so that's— they made it available to everybody because before Beehive, you were duct taping 5 different apps together. Google Docs, Mailchimp, Stripe, a spreadsheet, and your dream. It was all bundled together. Well, now Beehive is just one tool that does it, and it's a single purpose thing. It's what I use for my newsletter. I send a newsletter out to over 100,000 people, and that's what I use. And so for listeners of My First Million, they're actually doing a special code. So if you're thinking about, hey, I should have a newsletter, I should have subscribers, I kind of want to build an audience that way. Well, check it out. Uh, they'll give you 30% off. Use the code MFM30. Go to beehive.com. That's B-E-E-H-I-V.com and use the code MFM30. I'll put the link in the description to make it easy for you. Start scaling your content today. What have you seen, um, just because you're in retail, like, what have you seen as the trend? What's going on? Like, what, what's changing? Maybe what's dying, what's exploding? Yeah. What can you teach us? Because you see a different part of the world than, than we do. And you see more of the leading indicators. You know who's expanding, you know who's contracting, right? You know which, which locations are thriving and which ones are struggling. What have you seen? I guess what's, what's going on?

So for retail specifically, there's been a lot of new things called experiential retail. It's come out, you know, and fitness centers were been there for a long time, but now there's pickleball, trampoline parks, you know, retail is important for any centers to drive traffic.

So retail used to be like, like, you know, where that now it's, let's say, pickleball or a trampoline park. It would have just been go buy clothes at the store, right? That is basically like that's the shift that's happening is like people buying, you know, maybe more of that stuff is being bought online, but you can't buy the experience online.

Yeah. And there's places that are thriving, like Ross Dress for Less or Burlington Coat or TJ Maxx. My wife loves HomeGoods or TJ Maxx. Your wife loves it. It's like a treasure hunt. There you go. Right. And they're sourcing things that people can go and they're looking for that treasure.

Look at all the junk we bought. But the deal we got, the deal was amazing.

So the experience for that, so that also becomes experiential, but it also becomes where it's not stuff you could easily find online. Right. And so, uh, online has definitely had some form of effect where you've had some brands that are going away. For example, as of recent, Big Lots went away, Joann's went away, you know, Rite Aid is in bankruptcy. And you say, when's the last time I went to a Big Lots? When's the last time I went to a Joann's? They never adapted into today's market to be able to do both because really all, all retailers should have their retail also being their distribution. Right. And so an e-commerce person needs distribution. So now if you can do both, and that's where the smarter retailers have gotten, where they'll ship out of stores.

Yeah.

They'll do certain things to create where now they have a— they don't have to do a 150,000 square foot distribution because they got a Best Buy in this part of Wisconsin. That part can ship everywhere. And I think retail is also changing the fact that you've got more you know, uh, offices uses now going to retail. You know, you have lawyers in shopping centers, you have insurance people, you have doctors. They're going where the foot traffic is, right?

And so, and then food has become a big component, right? And the experience of food is what, you know, and you can DoorDash anything you want, but even, you know, the ghost kitchen concept has been tested. DoorDash did ghost kitchens. They closed majority of them. The reason is because people like the experience. They want to pick what they want. And yeah, you can order it from your house, you can go there, your forte, but you can get it. That kitchen has value. And so I think it's the fundamental is that the location— and when, when we see things, we also see where retail is over 90% leased right now, a very high occupancy. And there's certain parts of retail that are no longer viable. You know, you think about the old town, like where I grew up, there was a small town and there was a JCPenney's on one side, right? And then Lowe's, TJ Maxx, HomeGoods all went to the other side of the freeway. Everybody went on the other side. Target. Everybody's there. Well, that other side of the retail, it's hurting because it's not in the right location. So location's also another key thing that I didn't really understand when people would tell me when I was younger, location, location, location. Now, yeah, location, location, location. And, you know, I think in any real estate, it's important to understand, like, when you're trying to make money in real estate, or I would say any business, you really make money on the buy. If you're thinking you're going to make money on the sale immediately, you're speculating. But if you bought something right, I buy it. I could buy a car and I know the car's worth $30,000 and I buy it for $28,000. 20 times, whatever that is. I did all right. I made money on the buy, whereas people buy things on speculation. And when that speculation doesn't come to fruition, that's when we get hurt.

Exactly. You've also, like, you've done a bunch of these, like, electric car charging stations and stuff like that, like new, new retail uses that are, you know, coming up as well, right?

Electric cars, we do recycle stuff, we're doing fireworks everywhere, anything that we can bring traffic in, you know, and we want you to bring your, you know, your Tesla to the shopping center because you plug in and you're going to go eat for 20 minutes. Yeah, you got time to go do something, right? And so, you know, but the number of retailers has reduced over the years because a lot of those concepts were either You know, the kind of tough part for retail is there's been a lot of private equity that buys them. They put heavy debt. And then when any change in the market happens or they don't adapt to anything, can't survive, can't survive. Right. And that's what happened to like Joann's or, you know, even, you know, Big Lots. Big Lots had $2 billion in debt. And but they also never adapted.

One of the things I always wanted to do was you do— when you own the gyms, you would do these like sales trainings. You do like motivational talks. You do a lot of these things. That, you know, maybe you— I don't know if you like doing them, but like at some point you probably were happy to be done doing it for a little bit. But what would have been the highlights? What were that? What were your best— what were your best bits?

were you big on that, like kind of writing down a vision or writing down whether it's affirmations or a vision or a goal? Like, were you a big kind of like self-motivator in that way? Did you have any habits that served you well?

I never really wrote down affirmations or any of that stuff, but I would always ask myself, why? Why am I doing this? What is my goal here? And for sometimes it was my goal was to make money because I got to pay bills. You know, I'd be at the gym at 10:30 at night calling someone randomly saying, hey, if you come in with your entire family tonight by 11:00 and spend $2,000, we'll give you an extra year for free, right? Whatever it was, right? Because I needed the $2,000. So at that time, it was money motivated. Other times it was because I wanted to actually, like, for my employees or even my kids, I really want to see them succeed. And I wanted them to learn a way. I mean, there was employees that we had come in and never had made more than $8, $10 an hour at that time. And they started making $150, $200 grand a year. And it wasn't just sales. It was also treating people right. It was also understanding, you know, what motivates people. And you know what, I always tell a story, like sometimes I would tell when I was young, my dad used to always do a thing that was pretty— when I say abusive, what does that mean? My dad would take me, he had a few drinks. He was an Indian guy. He'd come, he'd be sitting at the table doodling till I was probably like 12 or 13. He would come and grab you by the neck and he'd take you to the restroom and he put your head near the toilet and he'd say, see that? That's what you are. And I always tell people that could have affected me in two ways. It could have completely demotivated me, or I could have used it as, I never want to be that. And so everybody's experience is different from the others. That's why I always tell people, you're not competing with someone else.

Yeah, I like your kind of the be there wherever you are, be here now is so I think even more underrated now because in a world of distraction on tap. I'm bored. I can solve it right away. I'm half here. I'm tired. I could solve it right away. I'm annoyed. I can do—

I can—

I have this pacifier in my hand. Like, I have a little baby. I have a 1-year-old. So it's like I have a paci right here at any time. I could just suck on this and I'm going to have— I'm going to have my problems soothed for a moment. And so being able to just be wherever you are but be there fully. And like, there's a— my sister had this situation where she was in business school in Indiana. She went to Indiana University for, for business school. So they're in Bloomington, Indiana. Now, Bloomington, Indiana is not the nicest place. Didn't want to be there. And the next semester they were going to go to Italy. So they had this like, next semester we're in Italy. But while they're in Bloomington, they didn't bother going out and making friends. They didn't bother like checking out the area.

They didn't.

They were just kind of going through the motions. And the reason why was they thought, oh, Bloomington's lame. Italy's going to be amazing though. Can't wait. Do you know how we're going to be when we're there? We're going to be— oh, I'm going to be speaking Italian. I'm going to be— gelato and cafes. I'm going to be so— it's going to be so amazing. And I was like, that's great. You're not there yet. And while you're in Bloomington, you wish you were in Italy.

Guess what?

When you're in Italy, you're probably going to wish you were back in the States because you're going to miss certain other things. Be— if you're in Bloomington, be in Bloomington. Make this your Italy, right? You can choose to, to have that Italian experience. You can have whatever experience you want in the place you're at. And I've now seen over time this has become a superpower where, like you said, like, you know, you're at work, you're thinking about home, you're at home, you're thinking about work, you're with your kids, but you're half thinking about work. You know, the half in, half out, the dim light versus being able to go off and then shine bright when it's time to shine bright. But if you're always flickering at this sort of dim level on all things, you're just going to feel unsatisfied in all aspects of your life. Right. And so I think that's a great, simple reminder that's in everybody's control. Doesn't take any talent to really do that. No. Yeah, it just takes a little bit of awareness. And so that's the one I'm going to take with me the most out of this whole thing. I think we hit everything. I think we hit the highs, the lows, and then the build back up. Dude, I appreciate you doing this. I know you're not, you're not a big kind of get out there and go toot your own horn, but I appreciate you doing this.

It's great to be here and, uh, and appreciate it.

All right.

That's a wrap. I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off on the road. Let's travel. Never looking back.

All right, my friends, I have a new podcast for you guys to check out. It's called Content is Profit and it's hosted by Luis and Fonzie Cameo. After years of building content teams and frameworks for companies like Red Bull and Orangetheory Fitness, Louise and Fonzie are on a mission to bridge the gap between content and revenue. In each episode, you're gonna hear from top entrepreneurs and creators, and you're gonna hear 'em share their secrets and strategies to turn their content into profit. So you can check out Content is Profit wherever you get your podcasts.