Origination
Join us as we delve into the world of multifamily and commercial real estate, engaging in insightful interviews with industry-leading loan originators and salespeople. Discover the secrets that set apart these top performers from the competition as we uncover the strategies and skills that drive their success.
Origination
Episode 33: Joe Averbook, The Professor of FHA Finance
What do you do when interest rates start to move on you? What do you do when they're now up half a point or a point from where you started? How do you keep the client still invested in the outcome? Tune in and learn from the best, the professor himself, Joe Averbook.
TIMESTAMPS:
02:00-05:07 Early Sales Experience
05:07-07:13 Transition into Lending
08:38-11:16 Selling vs Teaching: The Similarities
12:41-15:11 Selling the Long Term
15:11-20:07 Inflation
23:10-29:59 Brokered vs Direct Business
30:04-32:59 Focus on Service Over Product
37:42-40:24 You Can Do Nothing Wrong and Still Lose
44:40-49:07 Accountability
lenders, market, people, loan, client, equity, selling, deals, screen protectors, year, calls, rates, business, borrower, easy, long, sales, chase, interest rates, debt
Good morning, guys, and welcome back to the Origination podcast where we speak to the top originators and salespeople in the multifamily industry to try to understand what separates the top performers from the rest of the pack. On this episode, I'll be speaking with Joe Averbook. The best way I could describe Joe is, as the professor of FHA finance. If you're ever in a meeting with Joe, you'll see that more than selling, he's actually teaching his clients. And I think that's a model that a lot of people could gain from. There's also a challenge when you're selling loans, and that is that you're selling at a particular moment in time and interest rates are at a certain level. But what do you do when interest rates start to move on you? What do you do when they're now up half a point or a point from where you started? How do you keep the client still invested in the outcome? We'll talk about that and a lot of other great topics on this episode. I hope you enjoy it as much as I did. So without further ado, let's speak with Joe. Joe. Recording is in progress. So there's no backing out now. I'm really, really excited to have you on on the podcast I've been looking forward to this conversation, mostly because I miss our conversations. We used to have very long conversations, you know, I never had to worry about sometimes, from interviewing someone, I don't really worry so much about not running out of things to say but like with you. I'm definitely not worried about running out of things to press to talk about. So welcome.
Joe Averbook:Thank you. Thank you. It's a it's a real pleasure to be on, honor to be on. I'm looking forward to this as well.
Mordecai Rosenberg:Awesome. So I'm going to start with the question that I typically ask people, which is, you know, if you were to think about the earliest sales experience, sometimes when you were selling something, anything that comes to mind, it could be grade school, high school, college, post college, but what comes to mind when you think about like, earliest sales experience.
Joe Averbook:Earliest sales experience, I would say, yeah, okay. My earliest sales experience is when I was growing up in Miami Beach, a friend of mine and I used to go around town and pick mangoes off of some of the mango trees that were around, and instead of setting up a lemonade stand, we set up a mango stand on the street, trying to sell these awesome fresh mangoes to people as they were driving by. And we made sales and it wasn't just like our parents friends either. Like these were quality produce, you know. So yeah, that was probably my first, you know, talking to strangers sales experience. And I was probably around eight or nine years old when we used to do that. Definitely well.
Mordecai Rosenberg:Did you cut the mango also, or you just sold it to them as like a raw whole mango?
Joe Averbook:Just no food prep. This was like my dad had one of those like fruit grabber things that you would grab, like pull them off the tree.
Mordecai Rosenberg:Yeah.
Joe Averbook:And they would stay in the basket. And we would go around with.. I don't know if we asked permission from the mango tree owners either we kind of just did it and set up shop.
Mordecai Rosenberg:Yeah, yeah. Cuz if you were an eight year old trying to to cut a mango, I would feel is a little dangerous. So I'm glad to hear you. We're not putting your life at risk.
Joe Averbook:Yeah. No sanitary concerns here.
Mordecai Rosenberg:Yeah.
Joe Averbook:Either. So you like you set up on the street, like on the sidewalk? Yeah, we just kind of put up a folding table, usually in front of my friend's house and on the sidewalk or in the driveway and tried to like, you know, made posters and tried to get people to buy a few mangoes on their way home from work.
Mordecai Rosenberg:Yeah. Yeah. Do you remember? So do you remember, like just conversing with people like getting, you know, just the, was it just kind of a transactional conversation? Or were you kind of gabbing? Yeah.
Joe Averbook:It was definitely more transactional at the time. It's probably a little bit more... Being the father now of kids who set up a lemonade stand themselves right now. It's a little bit more of people saying, Oh, look how cute that is. I will patronize as opposed to me convincing somebody they were in the mood for a mango, you know, but yeah, to put yourself out there, you know, just a little bit.
Mordecai Rosenberg:Put up a shingle, you have to put up a shingle.
Joe Averbook:Yeah, exactly.
Mordecai Rosenberg:So when did you realize that you were that selling was something that you might want to do as a career?
Joe Averbook:I would say this, I don't know if I ever wanted to do selling as a career when I first started, but over time and just kind of being exposed, and the path that I ended up taking, I realized that selling is really the business equivalent of teaching, right? So I come from a family of teachers. I kind of have the teaching gene in me, which I enjoy doing, right? I enjoy explaining things to people in ways that they may not have ever heard it explained before, or to kind of resonate better or understand it a little better. Those kinds of things make me feel good, right? That's a good feeling. And selling is really that, when you have a product that you could be an expert in whether that's an expert in British Literature, like my mother was as a high school teacher, right? Or HUD loans. You could sit in the room with very, very intelligent, successful people that don't know that niche like you do. And you can teach them something. Yeah, that puts you on a very different plane than just another guy who's hustling. So I don't really consider selling this, obviously, the hustle is a super important component of it. But I kind of decided that I wanted to be a teacher. Right, but I didn't want to get paid a teacher salary. Right. So I kind of tried to figure out what gives me the same feelings that teaching does. And then I ended up committing to a life of sales with a niche that I felt like I could be an expert that not everybody was an expert.
Mordecai Rosenberg:Yeah. So that's very interesting, right? Because and I'm not shocked to hear you say that, you know, we've talked a lot about your teaching ability, right? And it's almost like if I said, well, when did you decide to go into sales? Like your reaction is like, well, I'm not I'm not I decided to become a teacher. HUD finance is a place where you could teach and get paid a lot more money for successfully teaching than you could if you were, you know, teaching HUD 101 in high school or college.
Joe Averbook:Right, for sure. And I think it's all origination. And I don't think it's, you know, necessarily real estate related or specific to , you know, any niche, right? Like, the software salesperson, you know, the light bulb salesperson, if you become an expert in that niche, there's people that have a need for it, and you can teach them something and treat it as a teaching type. Not everybody wants to get taught, right? So like, you have to kind of rein that in sometimes also. You can't just be like, unsolicited, let me teach you something. But if it's a mutually beneficial conversation, you could add value to somebody's existing business by teaching them something, and they'll pay you
Mordecai Rosenberg:Yeah. I wonder if all, I mean, I don't for that. think all salespeople take that approach. I think , there's kind of like, let me tell you enough. features to get you to sign. Right. And then it's just about it's really about me. And as the salesperson, I just want, to I want to get a deal signed up, right? So it's just it's a it's about me, and let me tell you just enough to... Oh, and if you like, sign up now, we'll give you, throw in a free toaster oven and, you know, whatever, at a bank for opening up a checking account. Right. But I feel like with you, it's it's you're actually you're teaching, your goal is to teach them how to fish in some ways, rather than giving them you're just trying to get them to buy a fish, you know, so it's, and they're walking away, not just with, I would imagine that they're walking away, not just with a different understanding of HUD finance, but maybe also a different way of looking at their whole business and long term strategy. What do you what do you think?
Joe Averbook:That's right. I think that I would rather do that. Meaning the people that we're dealing with in general, are very successful professionals. Right. So I'm never going to cram certainly to get through to have people have enough time to rethink this decision 1000 times, right? So this, I always say to people, this is a business plan loan, right? It has to fit with the business plan. So you know, you have to present things to these professionals in a way, where they're really making the decision themselves to do this, right, they have bought into the plan. And then you're right, they're going to reevaluate their entire portfolio in our case, or their entire business model, and then decide which one of these work for this and which ones don't? I'm never going to be able to layer my agenda on top of their decision making, even if they've done it the same way for 40 years. They might just think, okay, now I understand this better. This really works well, for this one, this one and this one? Yeah. Let's explore that together. And then you can have them thinking the same way you would want them to think and keep coming back to you because you are their guy for that way.
Mordecai Rosenberg:Yeah, would you sell that? Would you say that, that when you're selling your FHA loan product, that you're almost selling against it, and getting them to make the choice right now, there's like, because you make a good point, also, where, you know, this happens across the board, I see this also with even signing up for like a Fannie Mae or Freddie Mac loan. Where a client will sign up, they think they're signing up for a bank loan, basically, and maybe with a couple other hoops that they have to jump through, then they find out either through the underwriting process, or for better for worse, after they close, when all of a sudden have to be submitting their financial statements. And other all these other other requirements are like, Whoa, this is not what I bargained for. And then it's just kind of like a one and done. situation, right? But with with FHA even more, so because FHA, you know, you can say it's, yeah, it's 60 days to get the underwriting package together, 60 days, at HUD, whatever. But it could also stretch out to a year. And there could be all kinds of unreasonable requests on repairs, and you know, so there's going to be a lot of things, of challenges that come at you, after you sign that deal up. So like, how do you approach that in terms of getting someone to actually be committed enough to stick with you and not such an enjoyable process?
Joe Averbook:It has to be an aspirational business model that you'll sell. You can't sell rate, you can't sell, you know, short term thinking in terms of like, oh, this is the best loan compared to these other loans. Yeah. Right. It has to be coming at the angle of you are setting up your family, you are establishing your business plan. For the next 35 years, you are taking the risks and the power of the market, out of the equation of your ownership. Indefinitely. You still can do whatever you want, right? Like these are still flexible loans like we can predict in exactly what is going to be a HUD loan even better than some of the other easier to close loans, you know, 5, 6, 7 years into the future, right with prepayment penalties and things like that. But at the end of the day, somebody has to buy into the business plan of I'm doing this for my grandkids, or I am not letting my kids screw this up. Right? Or I am going to sleep better at night myself, because I know that I'm not going to be thinking that I have to refi this at any point in the future. And what's the market gonna look like at that point? I want to have some of that peace of mind in my portfolio. I don't care what it takes to get me there. That peace of mind is worth all the hoops. Yeah. If you fall into the trap of comparison, you know, Fannie versus HUD versus bank versus CMBS versus lifeco. The HUD terms might be the best on that sheet. But any small shifts in the market where those other guys can swoop in and say I'll rate lock you tomorrow. They're out. And then you did all that work with nothing to show for it. Right? Because you focused on the one thing that you can't control that they're still nervous about. So if that's really their nerves, right, then don't that's when you sell against it, right? Because it's like, if that's really you, if you're really going to be watching that tenure every single day and be upset over you know, eight BIP swings. Yeah. And we shouldn't do that. Right, but if you care more about, you know, the what its gonna look like nine years from now or 19 years from now? Yeah. Like, who cares about those eight pips?
Mordecai Rosenberg:Yeah. You know, I feel like in that regard, I mean, we're sitting here it's July 2022. Yeah, we've seen rates go up by, I don't know, a point and a half or so over the last, you know, seven months. Inflation is there's a lot a lot of fear about about that. Moments of fear are in some ways they're tough to sell into, but they're also, I think there's a benefit to them also. Because when everything is good, it's human nature to think that whatever your current situation is, it's just going to continue indefinitely. You know, like, last year, you think, you know, everyone thought, oh, rates are fine, like, nothing's gonna happen, everything's gonna be fine. Right? And so, yeah, all right,lock in 35 year financing. Sounds good. But I could always just, you know, keep on refinancing for five years at a time, and everything will be okay. Right, all of a sudden, now, you have the rug has been pulled out from from from under the industry, right? And all of a sudden, you say like, alright, you have a loan maturing in two years from now or three years from now. But how do you feel about that? Where do you think rates could be three years from now? Right. And almost, I think probably for the first time, you and I think started working in relatively similar timeframes, which is almost meaningful for me about almost 20 years ago, you've maybe you're less than that. But for the first time that I can remember, you can look at the at the future and say you think rates could be 10% In two years from now? And the answer is maybe, possibly? I don't know, right? I mean, we have runaway inflation is what is what the Fed is trying to go after, and it seems like they're willing to go after rates as aggressively as they need to, because it's the only tool in their toolbox to affect it. So imagine if your if a year ago, you had started the HUD process, and now you are locking rates for 35 years? And yes, they were half a point, or they're may be a point or whatever, more than they would have been. But doesn't it feel good to know that you're never going to have to have the stress again? If you don't want it?
Joe Averbook:Yeah, definitely. The inflation thing is an interesting, like, all the headlines are saying this is the first time we've seen this in 40 years. Right. But it's, but it's interesting to think of the human components of that, right. That means that nobody we're talking to has ever dealt with this in a decision making. Role. Yeah, in their lives. Right. So everyone is kind of, you know, shooting in the dark as to what is going to be with this, right, because that means the only people that were decision makers 40 something years ago are now 80 plus years old right now, right? If they were 40, at the time, when they were making decisions in runaway inflation, they're 80 something so none of our clients or potential clients has actually lived through and, you know, been in business during runaway inflation. So everybody is just guessing, at this point, can't even draw on experience. So you have a lot of fears in the in the market. And I'll tell you what's interesting, one of the things that's the HUD product for all of its craziness, the a7 IRR conversation is the angle with that right now. Because nobody else has trapdoors to lower your rate during the course of your loan. So if everybody else is running to rate lock, because of the fears of it getting higher, that's fine. That makes sense. Right? I understand that theory. But you're still locking yourself at that, you know, whatever. We are now above market or, you know, a spike in the market for sure. Right? Yeah. You're looking at that spike on a classic agency loan for 10 years, nine and a half years. Right, and you're gonna and if rates do come back down, if recession does if those fears happen, two, three years from now. You're just sitting on the sidelines watching while everybody who has a HUD loan that still rate locked at a point and a half higher than where they thought they might be, at least potentially has an opportunity to reset. Like we have done many times. Together, right? Yeah. Over the years on these loans that you know, have IRR a7 capabilities. That is an angle right now going forward, where somebody who's a HUD borrower at least has an opportunity Ready to take advantage of drops down this elevated position that nobody else has?
Mordecai Rosenberg:Yeah, you know, people are used to thinking about their investment portfolio and understanding that you need some diversification, or you're not going to put it all in one stock or you know, bonds, right. So you realize that you should diversify your holdings, you know. Multifamily owners, maybe they don't feel, they're not necessarily diversifying into commercial and industrial like, that may not be the kind of diversification that they're after. But I don't think that owners are used to thinking about their debt as a portfolio that they should diversify, as well. Yeah, and there's some stuff that's like, why do you want to have like in an inflationary environment? Why do you want to have some gold? Right, gold? You know, it's not going to run your... the returns are? Who knows what, but why do you go for those types of things? Well, because you know, that there's that it may not, you're not going to have like the runaway gains, right, you're not going to have, you know, you're not going to 10x your investment in gold. But you also know, it's probably going to retain its value. Right? And it's going to be, it's that portion of your investment, right, when, when the stock market drops by 30%, you're gonna be very happy that you have, you know, and I wonder if like, one way you can market, you know, the FHA product is almost like the, like debt, gold, you know, that, you know, some portion.
Joe Averbook:I always say I say similar things, I call it the fixed income component of your portfolio, right? Because I look at it like bonds, right. Like, it's government bonds. That's literally what we're talking about here. Right. And look, the whole power and the whole, you know, let's call it different way of thinking with HUD, is the fact that there's no balloon. Yeah. Right. And I ask people all the time, like, what is not having a balloon worth to you? Hmm. And first leverage? No, borrowers, it's worth nothing. And right. So right, like, you don't get any benefit. You don't get any of that. You're not worried you're taking your risk off the table in that way. Right. So that makes sense. And then some people, especially the high leverage, folks, it's worth a ton. And it's worth the process. And it's worth sitting around, and they're not so worried about the rain, because that no balloon is worth everything to them. For future stability. That's the fixed income component. Right? Like it's the same thing. You don't have the ups and downs, right? You can't go back and tap it for a supplemental, you can't, right. Like you can't take advantage of certain things in the market with these HUD loans. But you don't have the downside risk. And a lot of people especially multifamily, call it private capital, middle market type investors, who it's actually their own family's money. downside risk is probably way more of a consideration than
Mordecai Rosenberg:Yeah. Yeah. So, Joe, let's switch directions upside return. a little bit. So I want to talk about, you know, brokered versus direct business, you know, you you've built, you've had a great clientele, that's been direct, but you've also done, maybe almost more than anyone I know, like, you've actually educated brokers also about how to sell for you, it kind of expanded your sales outreach that way. So what are your thoughts? Just, generally, if someone was starting out in the business, and they said, you know, should I kind of go direct or brokered, like any kind of big picture thoughts about direct versus brokered, you know, advantages, disadvantages of both models?
Joe Averbook:I am, first and foremost a direct guy. Right? That I think is more because of my niche specialty in the world. Right? As just really somebody who focuses on HUD loans. So I do believe that you can build a direct clientele when your niche expertise is narrow enough, but I'm a huge fan of brokers, right? Like I started my career at Marcus and Millichap spent a little bit of time at Meridian, like the value of good brokers is tremendous, right to the lender and to the client. So this is not a knock on that at all right? I think from a transactional angle, meaning if I was really focused on Fannie and Freddie, which handles a lot of the transactions of the world acquisitions right. Then good brokerage relationships is probably the angle I would take as my core. You know, focus, right. And I do believe, like you said, educating brokers, the key with educating brokers is really, and this is true to an extent, but really, probably one of the hardest lifts we have in the lending multifamily game is what's the difference between you and any other lender? Right, in a commodity product, that's a very difficult explanation, especially from a broker who's not in the weeds, necessarily. Their job is to present all options, and they have agency as one of the options. To them, they don't really necessarily dig deep enough to know the difference between the processing, you know, relationships, whatever you want to call the differentiators between, you know, the high quality lenders, you know, top tier lenders, how important is that ranking list? You know, at the end of the day-
Mordecai Rosenberg:Not very.
Joe Averbook:Not very, right. So, it's, but it is very important to try to educate a broker on why that's true. It's very easy for a broker to pull up that list, and then go to a client and say, I work with the number one or number two or top five lenders in the country, when maybe the number eight lender in the country would do a tremendously better job for that brokers business, right? If they just understood what working with those companies actually meant and how they differentiate themselves. So there's no way for a broker to know that, right? There is no way and their only is call it when you're a broker, you have to validate the reason why they usually get paid. Right? And it sounds great to say I work with the number one lender in the field. Yeah, we do that all the time. On the HUD side. Right. Now, Greystone is the number one HUD lender for the last handful of years, five years and always been a top tier lender in that space, we certainly leverage that point. But what does it actually mean to the client? What does that actually mean to the broker involved, you got to educate them on what the difference is all quality shots that can get it done, right. So I really like the broker business. If your business is high volume transactionally based, I think that that is an intelligent way to go, if you're starting from scratch right now, good broker relationships, can keep the volume high with quality opportunities. And if you can educate those brokers, if your niche expertise is a little bit more narrow, you know, it doesn't just have to be HUD loans, it could be affordable housing, it could be, you know, for 21 A's or whatever, wherever you are, right, that is focused on certain niches, then the direct business is probably a better angle, because you can talk directly to those owners at a level where the intermediary may not be hurt, and therefore not necessarily going to be enhanced in your conversations at a clip that matters, right, then you've got to get out there, you've got to get in the room with some other expert, the owner expert, and you as the lending expert, that relationship probably goes further and having a broker in between. But on the transactional side, a good mortgage broker is, you know, incredibly important and helpful.
Mordecai Rosenberg:Yeah, yeah. So you you cut out a little bit when you were saying that way, if you're, if you're doing a transactional business, and you said about, well, you have to convince the broker about how do you convince the broker that you are better than the other commodity providers?
Joe Averbook:Yeah. I mean, that depends on what we're talking about. Right. So like I didn't. So for myself, like a lot of this has to do with the people that you're working with the processes, the technology, the influence over third party vendors, not in a shady way, just relationships. Right. Yeah. And things like that. And also just a commitment to advocacy. Right. aggressiveness. You have different lenders are good at different things in this game, and some are more aggressive than others on behalf of clients in different ways, right? That is a real differentiator. There's no way to know that by pulling up the ranking list.So it's important for brokers to be open minded when talking to their lender contacts about which lender to go with for that quote, unquote, agency bucket for whatever that type of transaction is, like the specifics of that transaction. Not everybody falls into the the same bucket just because they're the number one lender in the
Mordecai Rosenberg:Yeah. Yeah. You know, my father, you said country. that you he went to this restaurant the other week, it was 11 Madison, which is a your Michelin star rated restaurant? Yeah. And so he was talking to me about it. He was like, you know, it was just so amazing. It's like just a well oiled machine and just to see how they present the menus and how they serve the food. Right. So and he was just raving about it, and just talking about how great it would be like, we should have like, kind of a Michelin, you know, kind of a service. So I said, byt the way how was the food? He's like, Oh, I guess it was interesting. So you know, the sort of, like, 10 different courses, it's like, Wait, so you don't really remember the food? Like, no, it's like, but you can't stop talking about the experience because of the service. Right? It's like, ah, you know, so my point was that, you know, I think we spend a lot of time talking about like, oh, having like a better debt product, or having this or that or like, what can we kind of like, new whiz bang thing we can provide? Right? Yet, you can distinguish yourself with the service. You know, and I think with a broker also is like, look, sometimes, you know, our industry, we don't do service great. It's not our, like strong suit as a as an industry, right? So lots of times it is, the salesperson admitted, like the originator that has to kind of carry that, right, because they're putting out all kinds of fires on the back end and trying to make it look calm on the front end. But there is there is a real difference, you know, that there's, in particular, I feel like what people are looking for is confidence and clarity. Right? So you want to have clarity on what's like, what's next? What do I expect, right? You never want them to, you know, a client doesn't want to feel or a broker first, doesn't want to get a call from their client saying, what's going on? I have no idea what's going on. You order the appraisal, you know, three weeks ago, what's happening? The broker now turns to the lender and says, what's going on? We've ordered the appraiser three weeks ago. So that, I think it's you don't have to do triple backflips even in terms of service, but if can you provide confidence and clarity at every step? You know, what are you what do you think?
Joe Averbook:That's right. I think that you're, you're right on all fronts. We don't do service that well, as an industry. There is inherent fogginess and unclarity in what we do. Which, which already has everybody kind of on edge to begin with. And then you have a lot of the... Downtime drives people crazy. So waiting on third parties waiting on, you know, certainly in the HUD world, right, waiting on any sort of clarity from HUD Good luck. People can't fathom the idea that you can't pick up the phone and talk to another human and ask a question and get an update. After months of waiting, right? Like, how is that possible that that's not an option like that? They don't answer you. Right? Don't you know, these people? Won't they like? And the answer is no. In the HUD world. That's not the way it works. I'm sorry. We have to wait for them to respond. And that's so crazy, in terms of how business is usually done. That that feeling of black hole allows all kinds of bad thoughts to start creeping in. Right? Yeah. But it's true in every it's true in every, you know, call it niche of this world. It's not just HUD. To keep people calm. That everything that's happening is normal. That no news is good news sometimes that I have had conversations along the way, like a lot of times these things are in material or we handled them ourselves and that never gets filtered back. And weeks go by, and it seems like nothing has happened. Right. Because nothing is ever reported. Well, right. There's no good way to do that. But the service part of this certainly can get better. And honestly, expectations are only going up in every other part of the world. Right? So a lot of that now is expected of lenders, even though they haven't necessarily built systems to do that yet.
Mordecai Rosenberg:Right. But the expectation is is there of -- a higher level of service? Yeah. It's
Joe Averbook:The expectations are there really pretty amazing. Like even the IRS you know, when I send in I mean, the whole thing is pretty wild. That's the truth. my taxes, it only takes a few weeks to get a refund. Like somehow, they're able to do it now. Yes. It's like kind of just processing a number. Like they don't know how much they're like looking at the how much is automated, but it is incredible. Like, I don't know, I'm trying to think of like any other But it's, it's frustrating. That's for sure. So you have to service or government department where like, you just don't know, where you just can't get an answer. I don't know, if you're submitting for a patent or for like FDA approval, like, couldn't they still tell you like, where you are? Where they are in like, reviewing it? Yeah, I don't know. recognize that the client is going to be frustrated. You have to be in front of that. And, you know, try to prepare them for what's going to happen and what the normal process is here, even if it is totally, you know, backwards, are totally you know, unbelievable. For what they would expect. Yeah. You know, reminds me of, you know, in Disney World, when they have these big long lines, you know, on for rides, but then they have like, these TV screens along the way, for like entertainment. Right? It's like, you know, it's gonna be a long time. But we'll show you a little clip here, like dancing Mickey, like, we're there. Like, they know that they have to keep you entertained as you're waiting, you know, and it's almost like, as you're on the you can imagine, like, as you're on the HUD queue like waiting to be seen. You just have little like videos. Yeah, just dancing. It would more be like, here's all the different balloon dates and crazy worlds. Crazy things that have happened to people during maturities of 2010 maturities in 1979 maturities in 2020. Right, right here, it's like stay the path, stay on the line.
Mordecai Rosenberg:That's actually a really good idea. It's like, right, like, here's what people what people said, you know, during in 2010, I wish I would have used HUD. Right. But that's like an interesting marketing thing you have to kind of catch up, how do you keep them motivated without, you know, just saying it outright, but like to keep them? Somehow, you're sending them articles about, I don't know, top 10 companies that were blown up, you know, by loan maturities? Right. Like, you know,. I mean, I remember, it's crazy in 2009. What happened, like people who had, who made a billion dollars in refinancing their stuff pulled cash out, like the CMBS. And then they lost their entire portfolio without any notification from their lender. It was just like, oh, by the way, we're going to auction tomorrow.
Joe Averbook:That's right. No fault of their own. And that's a very, it's a powerful case study, in terms of, you could do nothing wrong, but still lose. Because you're relying on, you know, this highly convoluted industry that you don't really know, you don't really understand, like, you have no control, and you have no real way to fully understand what it means to do a CMBS loan. This is true, certainly in 2008. Right. Of where that loan is going. And what would happen in the case of craziness. Like nobody thought all the way. None of that nobody will most people did not take that level of thinking and due diligence all the way to that level. And those people, unfortunately, good people, right, like that we're doing, you know, just nothing wrong, turned around and there was nobody there to talk to they were alone in the woods. And it was just gone. It was just over. And, you know, that's a very, very scary, not that distant future. Like you were saying, I've been working in the real estate, you know, transactional finance world for 17 years. Right. So, enough, like I started in 2004. So enough to see the run up of that. The crash of that the run up of the last 10 years, right? Yeah, not to say that we are in a crash right now. We're certainly not but to see the writing on the wall of some, let's just call it choppy times right now. When people say that we're in a cyclical business, it's hard to remember that we're in a cyclical business until this cycle, punches you in the mouth. So it's a very interesting, call it perspective. To go into this business, saying, How do I smooth out the cycles? That should be my only goal if that was my only goal? Yeah. Then I think that you're ahead of the game. Right? Don't put yourself in the downside risk potential. Multifamily has been an incredibly resilient, you know, category, but certainly not immune to the cycles. So how do I flatten that, you know, cyclical curve. That should be part of the goal of every multifamily owner. I don't know if they think of it like that.
Mordecai Rosenberg:Right. Like Ray Dalio has a concept of like this All Weather strategy. It's like, how do you have a strategy that works all the time? Right? And it requires like rebalancing and whatever, but how do you how do you smooth out those curves? Right, it's great to ride it when when things are running up, you know, everyone looks like a genius. But by the by the way, you said you started in 2004? That's that's actually 18 years since then. Not 17.
Joe Averbook:I've never been good at math.
Mordecai Rosenberg:Crazy that's it's been that long. So I know that you started in Marcus and Millichap and Marcus and Millichap, my impression was the one thing that they're known for is having very good training on the front end. What was that like? What was your training? How did that work? And also, what did you learn from that in terms of, you know, how you think the best training could be done for new people in the industry?
Joe Averbook:Yeah, I mean, that's really one of the main reasons why I... I took the job because I could not afford to go all commission straight out of college. So I needed a position that would pay something as a salary, and offer some training with kind of the hope of then graduating into a, if I wanted to do investment sales, you know, call it full boat, then they would take you off, and you would graduate into that commission based position. But Marcus, and Millichap had this great junior broker training position where you got teamed up with a senior guy, and you were absolutely everything junior broker, you can imagine, right? But they had a commitment to training, which was incredible. So we had Monday morning meetings every Monday with the junior guys that started in like the same class, basically. And all the junior guys had the main Monday morning meeting, but before that, we would show up and do cold calling exercises. And, you know, it was boiler room in its, you know, core. But volume. I mean, this was a time before costar before, right? Like we got the big blue book, remember that in New York City, right? Just different tax, you know, lot and block numbers, right? That got there, but you had to, it wasn't geography based, like you had to only work these blocks. But everybody basically gravitated towards geographies. I ended up working for a guy who was in the national retail group and single tenant group. So we did not focus on New York City stuff, ours was much more national. And it was great. Because guys named Steve Segal, still there, phenomenal person, who I owe a lot to, and he, I always say Steve Segal 101 was really important to my career. And but I started at the same time as Joe Kosan over there on Peter boundaries team, right, those guys, you know, the marketing standpoint, right now, they've grown that team tremendously, and are just a force to be reckoned with. But we started, you know, with chairs back to back with the old put your fingers up, pretend you're on the phone, roleplaying of you're gonna run into this objection, you're gonna run into that objection, you're gonna run it. How do you overcome this? How do you overcome that? How do you get a listing from somebody? And then we would measure our calls we were measured, right? You got to make it measurable. And you have to report back. Every single Monday, how many calls did you make this week? How many conversations did you have this week? How many proposals did you send out this week? Right. When you break it down, the game is pretty simple in terms of its volume based approach. Yeah, certainly at the beginning, but their training was excellent. In terms of the basics of real estate, real estate finance and that kind of stuff. But it was really accountability more than anything. That separated the people who made it and the people who did it. If you it's not easy work. It is not easy work to make 250 phone calls a week. Wow. And you have to keep the legs right to do that week after week. after week after week. Yeah. And that is not easy. That's the stamina that you need for that the commitment that you need for that. That is not easy work. So Marcus and Millichap has seen, I think a lot of successful people that grew up in their umbrella. Not all of them staying investment sales brokers. Right. But you can track a lot of principles right now that started in some way, shape, or form at Marcus and Millichap that grew their businesses, you know, outside of that. That owe lot of their success to kind of the Marcus and Millichap way.
Mordecai Rosenberg:Yeah. How much do you think that's done today? Like, Yeah, cuz I think accountability is such a mean, like, production management is also not easy, right? I mean, to have someone who's really focused on holding people accountable? You know, but I feel like that's become, you know, as, as the generations have progressed, it's harder to... do you think it's harder to hold people accountable to that?
Joe Averbook:Yeah, I do. And I think that technology has made this worse. Right? Because when I started, email was not the first line of interaction. Yeah, right. You had to get somebody on the phone. And then you had to have the ability to talk to that stranger and get their attention and keep them on the phone and build a connection with them pretty quickly. Right. I think in today's world, everything starts with email. Yeah, or some sort of electronic communication. And when you get a response to that, then the phone call may happen. Well, now it's harder to the accountability. Part of this becomes, I think, harder to do, because you have less expectations. And, you know, it's easy to send 250 emails a week. It's not the same as making 250 phone calls a week. It sounds the same, but it's not the same.
Mordecai Rosenberg:It's not the same, you know, and the 250 different, the calls are less likely to hit today.
Joe Averbook:Correct. Everybody has filters on their life, which are different. Don't get me wrong, it was not easy to get people on the phone in New York City. At any point, right. Cold calling. That being said, people in today's world don't pick up the phone. You know, they don't even have landlines anymore. Right. So like it's, you know, they don't pick up the phone phone number they don't know they don't return voicemails. Nobody, you know, nobody ever returned voicemails, but like, it's just very easy to screen out. People that you don't want to talk to. Yeah. So it's harder to hold people accountable when the world has changed to an extent. But from a training perspective, you also want to weed out who has that stamina, and who doesn't?
Mordecai Rosenberg:Right. Right. I think there's as much effectiveness in that because it's like, Alright, maybe, maybe you're not gonna have as high a hit rate. But show me someone who can make 250 calls a week for six months straight. And, you know, that's something that, they've got some fire.
Joe Averbook:Exactly. But I also think that people are afraid to hold people accountable to some extent. Right. Finding and retaining good talents is hard enough. You know, I'm not sure if it's a generational thing or just a reality of today's world. I think that that's hard to do. It's hard to find those people that have that deep, you know, fire to keep doing that.
Mordecai Rosenberg:Yeah. Are you still making cold calls in terms of your prospect? What are you doing?
Joe Averbook:I do still make cold calls. I don't do it to the volume that I feel like I wish I did. Right? Anymore, that's that's kind of the nature of having a pipeline and dealing with existing and that sort of thing goes up and down. But I still have to you. You have to keep doing that. You can't just rely on your network and your existing, because that's great, but cold calling and honestly it keeps you fresh and it keeps you talking to people outside of your own, you know, echo chamber, right? I want to hear the objections from strangers more than I want to be talking to all the same people in all the same, you know, folks that I always talk to.
Mordecai Rosenberg:Yeah, yeah. That being said, I do think that one thing that does kind of cut through the response rate issue of both calls and emails, I think is a referral. If you're introduced by the guy's friend or attorney or whatever, like someone who's already has a line in, all of a sudden you're cutting to the front front of the line, right? You're like, ahead of those other 250 people who have called,
Joe Averbook:Definitely,there's no question. That comes with time and track record and, you know, success and service, and all those things where you can build a network of warm introductions, because somebody was happy enough with the service you provided to say, this guy who I know would also benefit from knowing you. Yeah, that's the important part of adding value to whoever you're working with. Right? Yeah. But cold calling, lets you learn things, potentially. Not that that doesn't. But cold calling lets you learn things that you probably can't learn anywhere else. Right? If you pick up the phone and call people in a brand new market that you have no connection to, like, there's no way to know that the Bank of Iowa is now being really aggressive on construction financing. Right, until you start calling Iowa developers and you get that response five times in a row. That sort of thing. So keeping yourself in the market, in new places and new ways, talking to people. That is really one of the only good ways to keep your finger on the pulse of new markets in the market in general, that, you know, it's not just the costar headline, right, that everybody reads? Like, I want to know that stuff before, that hits a headline. So on my sixth call into that market unprepared for that answer.
Mordecai Rosenberg:Yeah, you're a teacher. But I think you're also very curious. Yeah, I think you want to learn. It's probably true that teachers, the best teachers are also the best students, you know, because like, why else would you become a teacher other than the fact that like, you enjoyed being a student? Right? And learning. You know, so I feel like probably like your approach, you know, when you're talking to people, like, as you're teaching, you're also learning, right? You're also trying to understand, oh, what's going on in that market? And really listening for that?
Joe Averbook:Yeah, I think that's a very interesting and good observation. But that's right. Like, one of the real, let's call it fringe benefits of this job, is that you get to talk to a lot of really successful, intelligent people, that are builders and creators, and have done really, really well for themselves. And you can always learn like, it's Oh, it's, it's a pleasure to talk to people like that, and see their perspective and see what they did and see how they approach things. Right? Because most of the time, they think a lot like everybody else. But some of the time, you're talking to people that came at it from a totally different angle that you now can incorporate into your own, you know, repertoire that makes you sound even better to the next guy. But also for yourself, it gives you that much deeper knowledge and appreciation for the business. That's a lot of fun.
Mordecai Rosenberg:Yeah. I like it. Well, Joe, we're just about at the end of our our time, but I really appreciate a lot of what we talked about, I think what hopefully listeners can take away at least, one of the things that really sticks out for me is this idea that everyone has to find their own path in sales, right, and find their own thing that the way that they approach it, you know, and the fact that your path has been teaching, right? And the truth is, like, you do things that other people don't, you're a phenomenally successful salesperson, and you do things that other people don't do. You know, if I had a some of the I remember a particular brokerage relationship that that we'd worked on together. And then when it came down, down to Alright, we have to teach these guys about the product. Right? There was only one person who I was going to put in that room to do that. Right. So I think that's really served you well as being that teacher and everyone like needs to find their path on you know, look at what you're very good at. And that becomes like your unique way of doing the business. It's really not a one size fits all. Anything to add to that or detract.
Joe Averbook:No, I think that that's exactly right. I don't think that people should be scared of the word sales because of the sometimes negative connotation that comes across from. Sales just means that you get paid for adding value to somebody else's business. That's what that means. Right? They're not going to do it to be friendly with you. But if you can genuinely find ways to add value over and over to somebody else's business, those business owners will pay for that, because it's a worthwhile investment for themselves. It's not because you couldn't do anything else. It's not because you couldn't be the Head of Acquisitions for some REIT. Right, that, you know, sounds fancier, right, in terms of a job posting than a sales job. But sales inherently is adding value to people's business. That's a very noble profession.
Mordecai Rosenberg:Yeah. and rewarding.
Joe Averbook:Rewarding. That's right.
Mordecai Rosenberg:Yeah. All right, Joe. I've really enjoyed this. So thank you for your time. I appreciate it. We'll talk soon.
Joe Averbook:Yeah. Thanks for having me. This was great. Thanks.
Mordecai Rosenberg:Awesome. All right. Thanks, Joe.
Joe Averbook:Bye.
Mordecai Rosenberg:Bye.