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 42: Unleashing the Sales Warrior Within: An Interview with Eric Rosenstock
In this podcast episode, Mordecai Rosenberg hosts Eric Rosenstock, a seasoned loan originator, to discuss various aspects of the multifamily mortgage industry. They start by discussing Eric's career journey, noting the importance of persistence, self-belief, and willingness to learn in achieving success. Eric's multifaceted role at Greystone involves building relationships, analyzing deal structures, and coordinating with various teams to ensure successful transactions.
Discussing the multifamily loan origination process, they highlight how originators must understand the needs of multifamily owners and recommend suitable loan products. The conversation underlines the importance of trust in these relationships, emphasizing that originators must truly understand their clients' needs and communicate effectively to foster this trust.
The conversation wraps up with a discussion on market challenges, the importance of execution, and the value of knowledge and experience. They delve into the complexity of the current market, noting the challenges presented by rising interest rates and the ongoing impact of the pandemic. The pair suggest that in the face of these obstacles, more sophisticated producers with a deep understanding of their product and the market stand a better chance of success.
What separates the top salespeople from the rest of the industry. (0:15)
What’s the sales process like when you’re starting out? (1:43)
Perseverance in the face of competition. (6:44)
What’s an originator? -. (14:54)
Selling on knowledge vs. selling on sales. (17:00)
Balancing origination with family. (25:24)
How to avoid big mistakes in business and life. (30:41)
The importance of having a relationship with your clients -. (36:24)
The importance of having a mentor in the industry. (42:07)
What are you doing if you’re starting out? (49:05)
What’s the return on equity? -. (54:05)
lenders, market, people, loan, client, equity, selling, deals, screen protectors, year, calls, rates, business, borrower, easy, long, sales, chase, interest rates, debt
Welcome back to the Origination podcast where we speak to the top 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 Eric Rosenstock, Managing Director at Greystone. We talk a lot about what it takes to be successful in origination. But the first thing you need to do is you need to get that opportunity you need to get hired as an originator. How do you do that? In some ways, the sales process starts then; it starts with putting yourself in a position where you can be successful. As you'll hear in our discussion, that also takes persistence, as well as this unflinching confidence that you can be successful. How do you grow that quality of confidence? I'm still not sure if it's something that's just factory installed, and either you have to do, or you don't, or if it can be developed. But I know and I've seen firsthand how Eric has persisted, you know, through the tough times, to be able to bring in billions of dollars of business. There's a lot to be learned from this conversation. I hope you enjoy it. Without further ado, let's talk to Eric. Eric Rosenstock. I'm glad to finally have you on the podcast.
Eric Rosenstock:Yeah. Thank you Mordecai, for having me. I appreciate it.
Mordecai Rosenberg:Now, Eric, normally, I start by talking about, you know, early sales jobs. But what I don't talk about as much is the sales that is required to even get a sales job. And you worked very, very hard to get your first origination position. Yeah, you were kind of relentless. I mean, I interviewed with you. I don't think I hired hired you you like you kept at it. You kept on and kept on going. Right. And finally, you found the position. But, you know, that's pretty courageous. I mean, origination itself is a is a hard job. Right? But how do you think about, you know, just selling yourself in order to even put yourself in that position? Like what was going through your mind as you were going through that process?
Eric Rosenstock:So yeah, I mean, thank you for bringing that up. And just for reference to give background to the story. So someone introduced me to Greystone when I was coming out of high school, I interviewed with two guys that worked here at Greystone ultimately got turned down for the job. And a couple of years later applied for another job got turned down and didn't take no for an answer and eventually pushed in until I got hired.
Mordecai Rosenberg:In Arizona, That's just me just to set the stage for everybody. Let's let's talk about just like where your production is today. Like just over the last, whatever period of time you want to use last three years, you know, or whatever you want to like, what's your annual production or total production mean, you become one of the top producers in that company? You know, what's, that just to give everyone? Perspective?
Eric Rosenstock:Yeah, sure. So the funny thing is, I mean, I honestly don't count. And often I get interviewed, but different publications in they often asked me, Eric, what is your total production volume? And I never like to count, I hate counted. What I could tell you is just one interesting factor. You know, I was browsing on the internet the other day, and I was on commercial observer and I figured let me type in my name, I'm just curious, like, what pops up and I did that. And there was a whole page dedicated to any article of which they have a deal that they covered me on. And they covered over a billion and a half dollars that I did, if however many billion I've done, it's never enough to be honest with you, it's never enough. So I don't know and I don't count.
Mordecai Rosenberg:Yeah, but a billion dollars, just the press releases. You know, it's prettyy, it's, you know, it's got to be, you know, multiple that, you know, so it's, it's my point in bringing that up, you know, and I don't usually talk to people about their actual production numbers, but I think to go from you having to fight for a position to your level of production is, I mean, it's remarkable. So yeah, so what was going to see so you you get introduced to Greystone and you don't take no for an answer. How does that go? How do you keep on coming coming back when most people that you they interview, they get turned down and that's it like, have you kind of keep on going on and what's the drive to keep on doing that?
Eric Rosenstock:Yeah. So I think one of the biggest attributes that I have is perseverance. When I set a goal I'm going to figure it out on and I'm going to do it. My Word is something that is worth everything to me. So if I tell myself something, or if I tell my friends something, I'm never going to tell you something unless I know for certain that I could carry through on it. You know, during that time, I knew that there was a great likelihood that I would end up at Greystone. What was the motivating factor? Frankly, when I was coming out of high school, I met these two gentlemen that were Greystone relatively successful at the time. And I remember looking at them, I must have been 18, or 19. And I said to myself, I don't think these guys are any smarter than I am, any better of a Salesman, I think they're kind of like in line with my capabilities and they're being successful and I want that, too. So whatever they're doing. I you know, I firmly believe that I can do that, too. So I kind of set that goal in my head. And that's why I went after it wasn't so much like how do I sell myself to Greystone in order to get this job, but it was more or less, just, I know that they're going to need me, they're gonna want me, I know that I could be an advocate for them. And I know that I could be successful as well. It will be a mutually beneficial, right role for both of them and I.
Mordecai Rosenberg:You use the word perseverance in the two other words that come to mind our confidence, and in competition, right, because to say, like, oh, they, I could do what they're doing right, there is an element of competition in there, which is like, there's no reason why they should be successful, more successful than I could be. But then there's the confidence, which is, you know, a little bit of a dream, right? It's like, because there's nothing to you can't fake your, your claim on. You know, it's one thing if you've, if you've been a multibillion dollar originator at another firm and say, like, 'Look, I know, I already know I can do it.' Here, you're starting with very little experience. And still they have my confidence. Well, do you think that's something that's just factory installed or can that be learned or taught to someone?
Eric Rosenstock:So I firmly believe that perseverance, tenacity, hunger, drive, call it willing to succeed at all costs, I think is instilled in a person. I find it very hard to teach that to certain people. Okay. And I find it hard to believe that you could teach that to someone. I think that that's something that either certain people are just more hungry than others. And that's okay. Right. Everyone has a certain level of drive. And to some people, they'd rather have less of a drive and more of a peaceful life, so to speak outside of the workplace, which is fine as well, right. But I think that tenacity, the level of tenacity that I have, again, I think it was instilled in me, since I was a little kid. I think that, you know, playing a lot of basketball as I was growing up, that competitive nature was instilled in me. But I like being the best that I could be. And I like success. And I chase success. Yeah, and that's how I that's how I was built.
Mordecai Rosenberg:Yeah. I mean, I think it's really instilled from a young age, but to me that that's probably just, it can be just inborn. You know, it's just what you have, right, and I don't know. I mean, what do you think about when you have originators that are that are starting out? I mean, it's a pretty humbling experience to start in origination. I mean, you're gonna get a lot of nose, you're gonna get maybe you'll get your first like, shot at something. You get your first deal, find out and then it falls out. Something happens along the way. It's like, I'll get another one. So how do you encourage someone I mean, you can't necessarily coach this idea of, I mean, it's really just believing in your own fantasy and then it becomes a reality because for you, it's, it's already there. You know, it's almost that you call it manifesting or something like that, but what how do you if you're, if you're talking to a fairly bringing salesperson and they and you're giving them advice, what do you what do you say?
Eric Rosenstock:So it's funny back in the day, I've had I've had an interesting evolution in this industry. But I remember having a meeting with HR. They asked me, Eric, you know, how do you want to go about hiring people? And I remember thinking, do I want a Harvard graduate? Do I want someone that went to MIT, Wharton, and then I thought about it. And I said, I could care less what the resume says. I think that to be a successful originator in this industry, there's three things you need. This is it's something that also I think it's in this level of this order of importance. So the first category that I always put out there is, again, tenacity, perseverance, drive hunger, because I firmly believe that's just instilled in a person. And if someone has the willingness and the drive to succeed, that's the first key ingredient that you need, you know, the foundation of a successful originator. The second box, second most important thing that I would put is honesty and integrity. Because I think that honesty will always prevail. I think in this business, there's a lot of gray area. And I think the people that will succeed, the most long term are going to be the people that everything's black and white. So I admire second, most importantly, honesty and integrity. I think honesty is everything. Third, and lastly is smarts. You have to be smart, you have to apply yourself. You don't have to be a rocket scientist to be successful in this industry, right. And I think back to my days in elementary school, I was at the top of my class in honestly, any subject other than math, math was always a strong point of mine. But other than that I was not the top of my class in any subject. So I think that those are three key ingredients that you need to be a successful originator, apply yourself 100% of the time. Always be honest. And and think. Be smart. Think like a mortgage banker, don't think like a salesman.
Mordecai Rosenberg:Explain that if like a mortgage banker that like salesman.
Eric Rosenstock:Oftentimes, I walk in to a client's you know, office for potential meeting, right, we're having a meeting on a potential deal. And I go into that meeting, having done a ton of research both on the sponsor, as well as that specific asset. I understand their occupancy delinquency, as I understand the maturity of that loan, I understand the economic, local economic drivers that are both going to drive in a why or a negative, right organic rate growth, and I'll have all these different things mapped out. And almost 100% of the time, when I walk out of that meeting,I come to a resolution that I believe is the best suited product for them, that has nothing to do with a product that I thought was going to suit them from the onset of that meeting. Which means that don't always put your product that you want to sell first. Right, because oftentimes, that's not the right product. If you want to be a seasoned mortgage banker, you have to understand the intricacies between all proper different product types that could possibly finance that deal in the most complex and sophisticated manner that would suit their business needs most. Right? So I always say every deal, its its own story. It's got a bio, it's great, you got to understand the bio, no deal is going to be the same. Right? You can't just look at a deal and say, hey, it's in Nashville, Tennessee, and it's a Class A it was just built in 2022. And it's 98% occupied, and we're, you know, no concessions and things great. Like, that's awesome. But you don't know if there's competition directly across the street, it's about to open, that has much better amenities, and now all of a sudden, delinquencies are gonna start piling up. So when I say apply yourself and be smart and think like a mortgage banker, don't just sell a product for knowing the high level selling points of that product. But sell the industry as a whole, that you represent many different product types. You understand the intricacies within the underwriting of every single product type, and then you're going to move to formally different possible solutions for them to identify the best optimization on their business plan with all this resources that you as a mortgage banker have.
Mordecai Rosenberg:The analogy that comes to mind is I feel like I'm a medical doctor. Because as we know no mortgage bankers do save more lives than doctors do. It's true. Yeah. Obviously, there's lots of originators, that you kind of learn your products. Right. And then that's what you that's what you know, right. That's, you know, it's Fannie, Freddie, FHA. But then when there are other products, either that your firm starts to offer, right that maybe they don't want to learn about those, but certainly products, outside of what your firm offers, you know, what banks are offering what life companies are offering right there, they're not necessarily looking to get educated. But if you thought about a salesperson is there where they have a product to sell, right, and whatever their product is, that's what they're trying to sell. A medical doctor is trying to see what their patient needs and whatever procedures are available, whatever the new science is, that has shown that something could help their patient, they want to offer that to their patient, and maybe it's offering a threat directly because they learn it, or maybe it is, you know, aligning themselves with specialists who can do that surgery or procedure, but you want to, it's about the patient. What the way you're talking about, you know, becoming really just understanding what the needs are in that meeting. And then not really, you're not going in with this conception of, I want to sell this Fannie Mae product, but going in and just wanting to listen. And then offering the best thing suggesting the best thing which maybe maybe you have to offer, maybe you don't, but you can give, you're giving them the best advice. Right, that takes, I think part of that is really concerning yourself with the interests of the customer. And not just the interest, and not just your personal interests of what you want to sell.
Eric Rosenstock:That's right. And I'll tell you further, when I think about the sale in this industry. So some people say, Eric, you're the best salesman, and again, everyone's best salesmen. Everyone has a different technique, right?
Mordecai Rosenberg:Oh, really? Who wouldn't say you're the best?
Eric Rosenstock:Exactly, exactly.
Mordecai Rosenberg:Pretty much what everyone knows already.
Eric Rosenstock:Exactly. But I often think that I'm actually the worst salesman. What do I mean by that? I don't often sell too hard. My way of selling. So I mean, I started out at Greystone as an analyst, which I think was one of the best things that happened to me, because you can't just pick up the phone and start calling someone in selling the product, but you don't understand what's under the hood. So the way that I sell honestly, is I just load my client up on as much underwriting knowledge as possible. Explaining to them all the different metrics that go into all the different, you know, variables within each product, and letting letting them conclude to the right product type. So I often find that selling on knowledge is a lot more, it is a lot easier, frankly, than selling on a sale. So I mean, I like to take any specific product, whichever it is, and one that we're discussing, and I'll say okay, here are the pros here the cons. Here's the pros here the cons of this product. And here's the pros and the cons of this product. And often my client will say well, okay, which one am I going with? My response is, that's your call, you decide, I mean, you're driving the bus here, you tell me what to execute, and I'll do it for you. But, I laid out all your options, right. So like, I like selling just from walking through the intricacies of every single product type, the underwriting the pros and cons of which one is going to achieve what and leaving the decision up to them.
Mordecai Rosenberg:Yeah. And I would imagine that you also can help them frame the decision, which is, which is you could say, I mean, are you Fannie Mae, seven year tenure or five year? Yeah, FHA 35 year? Well, what should you know, CMBS? What should I do? as well? You know, the first question is, well, how long are you planning on holding the asset? You know, what's your business plan is, are you planning on holding this for your kids? Are you hitting? Do you have a are you a GP with a promote structure where you need to sell or refinance and a couple of years in order to make your money like, you can help them, you can get them? Probably one of the greatest gifts or sales tactics is giving them a framework through which to make a decision. That's a way to create clarity where in a situation where they may be feeling confused.
Eric Rosenstock:That's right.
Mordecai Rosenberg:Yeah, one of the things I mean, you come into the firm, you know, we can We give you a phone, we convinced like some senior salesperson to let you sit next to them. And, you know, and help help you out. But and then you start hammering, right there's, what starts to happen in not such a long amount of time is that there are clients who senior originators myself included, because I rejected for a lot of years, people who I had, who we worked on for years and years and years, you know, I remember, you know, meeting you and I had in Florida that you brought me to, it's someone who, you know, 10 years you've pursued them and just had not been able to get them on the on the hook. And then you're able to not only get a meeting, but then convert them into like, you know, one of the firm's largest clients. How do you do that? How do your is your skill? First of all, is that mostly calling at the beginning? And what are you saying in order to get them to not hang up on you? You know, those first five seconds?
Eric Rosenstock:So I think that, first of all, they weren't they were hanging up on me it was okay.
Mordecai Rosenberg:Well, that's a good point, right? Because that's it. A lot of people, if you see a list of 100 calls to make, right, you call someone if they slam slam the phone down on you, then a lot of people say, okay, great. cross them off twice, you know, so but you did.
Eric Rosenstock:Yeah, I mean, I think the recipe again, there's two recipes, there's one recipe for catching the client. And then it's a lot more impressive keeping the client. Okay, so catching a client, I think is you know, it's three things, three key ingredients. It's perseverance, walk, and a lot of prayer. Right. So and I would have traded in more luck and more prayer for that perseverance any day, but I'm what everyone's going after the same client. So there's no secret sauce there. There's no secret sauce. Definitely not when I was starting out. I find it a lot easier now. Even though I don't do much origination like pure prospecting origination right now, just because I have such a Rolodex where I'm servicing. But I will tell you that now catching a new client is way easier your because lots of the big sponsors in the country I've heard of me know of me read me. So it's a lot easier now for sure. But I say it was just it was perseverance, walk, and a lot of prayer, catching that first client, because just like I was at their door, so was 35 other people.
Mordecai Rosenberg:Yeah. Well, but there are 35 other people also there. Right. And I don't think it's just that they're less lucky.
Eric Rosenstock:So maybe I'll perform them from, you know, respectable, just just tenacity, right? I remember that client, you're bringing up in Miami was a huge catch in the FHA world, right. And a lot of people have flown down to Miami to try to wine and dine this client. And I will tell you, interestingly enough, the short story that you don't know about that client. We flew down to meet him, I flew down to meet him two weeks after that, okay. And then about two weeks after that, again, I flew down again. So I went down in the course of six weeks, I went down three times. And I figured that if I just stay in front of him, maybe I have a chance. And I remember the last time I flew down and flew down to him with a$46 million hot application, right and gave him a letter. And I asked him to sign it on the spot, and you refused. And he said, leave it on my desk. I'll get back to you. So I flew back to New York. That was in March. And a few days later, there was a brand new restaurant that was opening up on the Upper West Side of Manhattan. And my wife set dinner up for my birthday, it was us and one other couple going out to this new restaurant. And we ordered our food. And we were even the bread was even before the appetizers came out. And that client called me, I've never received an incoming call from him ever before. I turned to the table and I said, Guys, I'm so sorry. I have to excuse myself and I ran outside. Okay, Upper West Side of Manhattan. It was snowing, didn't have a coat and I stood there for two hours on the phone with him. Ditch my birthday breakfast and my my birthday dinner. And I said I'm going to like if this guy's wants to talk to me. It's fine. I don't need that dinner. And I stood there in the snow, talking to him for two hours at a time. That was when a lot of sponsors would join this really equity bond raises. So he wants to talk to me about that. Did a ton of research in it knew nothing about it did a ton of research, spoke to the firm that syndicated the bonds, and got back to him with some really good intel. But at least that opened up a channel for us to talk. And that was the best dinner ever.
Mordecai Rosenberg:What did your wife think of the dinner?
Eric Rosenstock:Well, I think now she thanks me for it.
Mordecai Rosenberg:Right. But she could have been so happy back, then.
Eric Rosenstock:That's probably true. But looking back, it was all worth it.
Mordecai Rosenberg:Yeah, it's a really tough balance. You know, the balancing origination with family. You know, I remember, it's very hard to go on vacation. And when I would go on vacation and be like, you know, my, when my kids were little, you know, we'd come back in the middle of the day, or, you know, to get the kids to take a nap, this is going back quite a ways, because my kids are now 17, 16, 15, 14 and 10. But it's, you know, and then I'd spend so while they were down at bed, three hours just hammering out, you know, I'd have 100 emails. Yeah, that just from that morning that had come in and had to be dealt with. And there were calls, right? It's, you know, it does take, you can't, it's hard to do everything, you know, something has to something has to suffer. In over time, I think you kind of figure out the balance. But that is, you know, maybe that's why people can hit this hard in their during their 20s When they're just, you know, starting, you know, maybe before they're married or first married to get but it's like, but it is, that is a tough, tough balance. I mean, it's, I can just imagine how disappointed Your wife must have been after she arranged this whole dinner, you know, and how, and I'm probably like, a little embarrassed with your in front of your friends that you were that she made made all these plans, and you were there sitting outside?
Eric Rosenstock:Yeah, I mean, I often think that origination is not just a, you know, nine to five job, right? It's a lifestyle. And it really, really is. I'm thankful that I had the opportunity to enter their business when I was much younger, right? And that now, you know, getting getting a little bit into it as I hit my mid 30s that all of a sudden now I'm like, Okay, I've got a really, really deep bench of clients that are continuing to buy, sell, refinance, and and I'm growing with my clients, right, both in business, but as well as friends, right? We're, we're really growing as people. Right? And, you know, I often think about what it takes to be successful. And then I bifurcate, that question to twofold business being successful in the short run is easy, being successful in this business over a 2030 year period, and doing 10 plus billion dollars, right? That's a lot more impressive than that longevity is something that I have respect for, right? Which is why I mean, going back to the initial question, how many billion have I done? There have been times where I'm like, Let me count how many billion I've done. And now I'm like, I don't I don't really care. Like, it could be 10, it could be 12. It could be 13. Like, I just want to keep on going and I don't want to put a benchmark to it. What I do want to do is make sure that I am growing professionally. Right, but as well as the individual. And I often tell clients, let's go out, let's chill. But do me a favor, let's not even talk business. And we joke basically impossible to do. But I've really become like close personal friends with a lot of my clients. And it's such a different dynamic, where it's not me selling them. And it's not it's it's interesting, right? We'll fight for the check after dinner because it's genuine friendship. Yeah, who we are. I think that something like that is achieved, though, over a long period of time. So I'll give you an example. Last week, we're in San Antonio, I was invited to the Fannie Mae DUS conference, where you know, very select spot and very select producers from the industry are selected to go and, you know, I'm sitting there by the bar, we're having drinks and you're looking at the top 3540 producers around the country, right that have been doing it for 2030 plus years. And you have people from every single shop, right new mark wells and then T potential you name it. And there was no sense of competition. We're all friends. Though.
Mordecai Rosenberg:There's this like, club so to speak,
Eric Rosenstock:that I feel fortunate to have entered, where it's like there's the top producers and we all just click will have respect for each other. We all communicate. We all like one equally for all of us. To succeed, and it's kind of nice, where it's like, I know if I'm competing against this guy, but again, we're all in that club of the top two, three producers. And every firm and two little clique will look out for each other. And we'll never speak evil about one another. Never. I mean, I think that I hate. And that I think is an actual amateur move in this industry, is when people speak evil about another, I think that it shows that you've been around for a very short period of time, there's always going to be those that try to put down others. I think the best attribute is saying, he's amazing at what he does. He's fantastic. And leaving it there. You don't even have to sell yourself. If that guy wants to do business with you don't come back.
Mordecai Rosenberg:I was reading. You know, we're here towards the beginning of May 2023. I was reading some articles, I guess the Berkshire Hathaway shareholder meeting was this past weekend. And so there are lots of articles about Warren Buffett and Q&A, and he was dispensing some wisdom on on life. And they said, I think the question was like, how do you avoid big mistakes in life? And in business? He waited a moment he thought about it, and they said, Well, it's actually not that complicated to write your obituary and then live to that. So it's talking about the about, like, no one wants to say, you know, in their obituary, right, no one wants to write well, you know, he was successful, but the way he did it was by like, talking crap about all of his competitors, and dragged everyone through the mud like you want it you honestly, you want to read that? Even when he was in competition, he still tried to bring, you know, pull everyone out. You still spoke, you know, always spoke kindly about people, you know, so I thought that was a really interesting perspective, just, you know, write your eulogy, or your obituary, and just live up to that.
Eric Rosenstock:I'm afraid that if I tried to write my obituary, I'm going to be speechless in the first sentence, but all good.
Mordecai Rosenberg:Yeah. Well, I will talk about how much you could bench you know, because that's quite impressive as well. What are you up to? Now? You're gonna max?,
Eric Rosenstock:I actually had to start like, I couldn't keep up with the eating. And if you don't eat, you can't bench. But I stopped at 130lb dumbbells in each hand.
Mordecai Rosenberg:130 lb dumbbells in each hand, so 260lbs Yeah. Yeah. How much protein do you try to consume?
Eric Rosenstock:Not enough. I don't consume enough. I mean, you're supposed to do on average, at least if you're bodybuilding two grams, for every pound you weigh, again, very hard to be an originator. And then also, hit the gym. So hand it off and I figured let me do another billion dollars this year. And, you know, the bench will see me later.
Mordecai Rosenberg:Yeah, yeah. And also, I think trying to, to grant two grams of weight for every pound of weight is probably your cholestrol is probably not looking that great. After? That's right. We keep into that. Yeah. The story that you mentioned about lamb you mean, the fact that you went there? Two more times, are you in the next, you know, in the next three weeks, or whatever the period of time with. I think there is still a lot people also feel that, you know, once you see someone in person, you've checked the box right now, like I saw them in person, now we can we can respond by email or phone or text. I feel like now more than ever, that in person connection is really critical. Because there's so much more that's pulling up people's attention. And I think even it gets more on the phone. I mean, I, myself, you know, I won't pick up a phone number that I don't recognize, because it's probably you know, it's spam. And if not to leave a voicemail, but to get someone on the phone is harder to get some people are getting pulled by text and WhatsApp and Teams and and emails. Right. So I do think that in person, connection really is important. And I feel like the fact that you did it so rapidly, right? It's not like okay, I'll come back in two months. Like, no, I'm coming back next week or two weeks, and I'm going to come back in another two weeks. I think that really helps to stand out.
Eric Rosenstock:Yeah, and I think by the way, you're 100% spot on, right, where prior to COVID you ever wanted to even get a pair of financials that have a client that I was prospecting right? And in person meetings was typically needed. Okay. And then I felt what was interesting is that during COVID, while I didn't do as much outreach, probably as I should have, but I had a lot of junior originators that were calling on my behalf using my name, right saying, Hey, do you want to speak with Eric Rosenstock? And at that point already, my name had sold me
Mordecai Rosenberg:the, Do they want to stick with the Eric
Eric Rosenstock:Exactly, and I can tell you that COVID actually Rosentock? made dynamic a little weird, where so many people do your transaction with you never met, right? But it was like, here's a term sheet, I'm gonna cash out$35 million, I'll give you another $90 million in this senior loan. And the response was, right, where do I sign, the price appreciation was too good to be true. Everyone was like, I'll take it, I'll take it, I'll take it. And all of a sudden now, when there's more complexity, I think, than we've ever seen before, there's such a disconnect between specific markets to others, where you have certain markets that are literally flattened, rent, growth, expenses are going way up, insurance line, items are blowing up, taxes are getting reassessed, etc. And then you could go to certain markets, where organic rent growth still today is above 20 plus percent, right? So all of a sudden, now, everyone's like, whoa, wait, I want a mortgage banker that I trust that I know that is sitting by my side. And what that's doing now is forcing producers in the industry to get back on planes sit down, properly, make an introduction with that person understand where they are, so they could get to know you as well. Or eat some type of friendship. That's a bond, a trusting bond. Right? And I like it this way, much better than, you know, just transacting over an email, right? Granted, we all made money. Sure. We made too much money, I would argue way too much money. But I think that now it's we're back to the proper way of doing business.
Mordecai Rosenberg:Yeah. Yeah. One other thing, I just want to draw attention to, as far as what you talked about that meeting in Miami was the fact that you brought a, an engagement letter printed out for them to sign. And even though they even though we didn't sign it right there, I could tell you from that meeting, that I attend to with you that this, this is a guy who has ADD, right, and as soon as you're out the door, he's on to the next thing, right. And so you have to also know your clients, right, some of them will be very analytical and need to give it to their attorney. And, you know, it's like there's a process, but some of them, you need to get them to act while you have their attention. Right. And so even though you didn't get them to sign that engagement letter, you probably do have stories where you came with it and came with the engagement letter to a client and didn't get them to sign right. And so you have to really, probably, I mean, a lot of entrepreneurs in general, and developers and owners of real estate, are entrepreneurs, like a high percentage of them are ADD, it's a, I think, kind of working with that pushing to the sale when you have their attention, you know, how do you think that is that valuable?
Eric Rosenstock:So I think it's very valuable. And I'll tell you, honestly, I mean, I think myself as someone who has ADD, right, I don't have a lot of patience. And that's where I go back and sell, I don't sell to sell, but I sell based upon knowledge in the underwriting because I think that all of my clients are smart people, they're smart individuals, these are people that have made a ton of money, understanding how to properly leverage real estate, and drive cash flow from that. So these people, I think that they might be ADD, if you're talking to them about the news, if you're talking to them about politics, but if you're talking to them about structuring their deal, we all are completely zoned in and focused on that. And that's where I think that we connect. And that's where I think that now as I seasoned now, as a mortgage banker, and can get way more granular, and again, I think I know the products, frankly, better than most people in the industry I do, and therefore I get very, very granular sometimes more than underwriters, where I'm just like, I mean, I'll personally underwrite the deal if I need to, and I will, often that times, right, and therefore I could get on the phone with a client and say, Here's how I did this. Here's how I set it up. You're running x wide relative to market. I need you to be here and I think that you're probably here. Can we please dig through if there are any add backs or whatever, right? Whatever, it is that both on the expense side as well as the on the revenue side if there's something that they're not dipping into that they could write to take advantage of. But I think that you'll have these people's attention if you're giving them something that is, number one honest and number two of sophistication.
Mordecai Rosenberg:Yeah, and digging into the numbers, it also shows that you're that you want to help them. You know, it's like you apply for a mortgage for your house, and you kind of give them the information, and then they spit back. Okay, here's what you can qualify for, you know, here's an appraisal. But you don't often have a bank coming back and saying, hey, the appraisers coming back with these comps, it feels like that's low for your house, like, what else? Can you show me that would help me increase the value. Its the fact that you are looking at their numbers and saying, Well, your payroll looks very high compared to what I'm used to seeing, is there anything there that I don't know, a corporate expense that really, we could pull out because it's not actually property related? That I think also shows them that you're trying to achieve what's best for, you know, for them. Eric, another unique thing that I've seen from you, is your willing ness to partner with others, you know, in the firm, you know, and there's a lot of, I think there's a tendency for originators to just take on a lone wolf style, or you call it like a rugged individualists where they feel like they need to do everything they need to, you know, not only sign up the loan, but process it and manage it all the way through and be the one to like, you know, run the numbers. But that's not scalable. You know, and I've seen you partner with others, like within the firm, when you thought that there was a capability that you could leverage in a skill that someone else was, you know, just more adept at then than you were Can you talk about about that, a little?
Eric Rosenstock:Yeah, sure. I love that you brought that up. I think that's an important point. So when I started as a producer, right. After I was an analyst, right, I was given the role to be a junior originator, I was going out, right, I think that was my first meeting ever, the one that you cited in Miami. And I remember the first day that I ever signed an engagement letter that same day, I signed two other loans. And I remember the total loan amount that I signed up that day was $101 million. My first day ever that assigned any engagement or assigned three, one in Atalana, Georgia, on in Dallas, Texas, that deal Miami, Florida. So it's a good day, it was a good day, I signed up $101 million, the first day ever. I mean, that was
Mordecai Rosenberg:After how long? Hitting the phones?
Eric Rosenstock:Probably about two years.
Mordecai Rosenberg:Yeah. Wow. Well, that's, I mean, that's incredible. Right? We that mean, that's hitting the phones hard. You know, two years is I mean, that's, I think, important for people that to hear that this is not like an overnight thing.
Eric Rosenstock:It was more than just two years. And I mean, I used to get to the office at about 430 to 530 in the morning, on average. And then I used to leave at about 11pm /11:30pm, depending upon the day. And I often used to think like, why am I even leaving, I should just put a cot under my desk. Like, I'm here to succeed. I have one mission right now. And that's it. But what I will tell you is I think that greed is a terrible thing and will always bring someone down. And I think that I'm a very logical thinker, where I like to play odds. So you're 100% right. When I first came in, I remember partnering with certain people. Well, at the time I was exceedingly green didn't know much. I recognize that I'd rather increase my odds and share all the cake. Right, rather than take it all for myself, and play with single digit odds. Okay, I firmly believe that it is impossible to be successful as a producer in this industry without a mentor. I think you need a mentor. I think it's really important. And I think unfortunately, a lot of the young guys are getting in the industry now. Don't see value in a mentor. But I see value in the mentor. And with that as well, I think that you have to pair yourself up with people that are going to give you the knowledge, but also the execution experience because there's so much within that, where all of a sudden now where are currently sit, I've seen every hiccup possible in real time execution of deals. And thankfully, I'm far enough down the road in my career where I have real deep relationships with people and Fannie and Freddie and HUD and, and I'm able to reach out to them and discuss it and it's something frankly, all these issues, I've seen every single issue that's possibly come up. It's not like this is an issue that I've never seen before, right? So, you know, I remember the first hiccup I ever had on one of my closings, I got really, really, really nervous thinking my past five months of work is down the drain. And I often think back to how nervous I was in the first execution, when the first hiccup came up, where now it's like, I've seen everything. I'm, you know, I'm calm and collected, I understand, you know, this is an issue, we'll get through it. But frankly, I'm only able to understand the intricacies and the different maneuvers, so to speak, within the execution because when I started out of the industry, I said, I want knowledge more than money. So I was willing to give up all of the commission, I didn't care for the commission at all, all I want to do is know every product better than my competition.
Mordecai Rosenberg:And then there's the knowledge, but I think also the execution, right? Because if you are when you're selling, you have two things going against you when you start to originate. First, it's how do I get this person to want to transact with me? Right? And then how do I get them to trust me like with their baby? Because if I don't know how to actually execute, that I'm going to spend all this time selling and trying to tell them that oh, yeah, trust me, but then I don't know how to get a Fannie Mae loan done or an FHA loan done. It's gonna be, you know, that's not a recipe for success. So I think also, probably at the beginning, and even going forward, right, the fact that you can have confidence in your execution, right, finding the people who are the best executors within the firm and aligning yourself with them gives you more confidence in selling.
Eric Rosenstock:Yeah, and by the way, on that point, Mordecai, so I think often certain producers think I'll just read the guides, and I'll know the product better than anyone. And often at times, I think to myself, it's not about understanding that specific, you know, when I'm going for a specific Fannie waiver, or something, how I work that it's not even that. I think about, sometimes I get on the phone with the team, right? The sponsor, his attorney, and everybody until the attorney knew you have to do XYZ. This is how you formulate it legally. And he goes, Well, Eric, how do you? Well, I, I know, because I've done this 30, 40, 50 times, righ, on many, many transactions. You know, I remember a year and a half ago, thinking to myself, Eric, this is pretty cool, where I was on the phone with, you know, pretty high, powerful attorneys. And I was walking them through the intricacies of setting up an inter creditor agreement, on a cash, collateralized surplus cash, loan, the intricacies associated with that, you don't read about that in a guide, you'll learn about that from leaning on people that are smarter than you that have been along around longer than you have given them the credit. In every which way. I don't just mean money, right? Until you understand and you're confident enough to go and execute. And I think that again, people that are greedy, they're going to be short lived. Essentially, you want to be in the field for a long period of time. And you're eyeing that $10, $20 billion of production volume, historical production volume, right, it's a lot tougher said, right, a lot tougher done than said, right, for sure. So again, I think that you got to keep your eye on the long term focus. And if you're thinking short term, you might make a couple of bucks, but ultimately, the people that are far more sophisticated than you are, are going to outperform you.
Mordecai Rosenberg:Yeah, I think that makes that makes a lot of sense. You know, we're the market today. It's no secret that it's a challenging market. You know, and, man, if you have are starting to originate today, you know, or even if you search originated over the last couple of years, I guess, you know, it's been challenging. What are you? If you're starting today, theoretically, what do you do? I mean, interest rates, you know, I mean, I've been in the industries for about 20 years. And the truth is that they basically, interest rates have basically been going down for the last 20 years. Yeah. And we, you know, when I started, we were refinancing 8% loans down to six. Then it was six down to four and then four down to three and three down to two, right, but now people have been refunded, you know, have been put 2% financing on their deals over the last few years, anyone who could, right and now you have interest rates that are up in the sixes, sevens, eights, like depending on the product. What do you do? If you're if you're starting out? Where do you where do you think you would I mean, even as even as a seasoned originator? How do you think about opportunities to just kind of go on vacation for 12 months, and just hope that things come back by the time you return? Or like, I mean, how do you think about even finding opportunities?
Eric Rosenstock:So believe it or not, I would say that I'm a lot busier now than I historically have been? I think that many more people want to see different possible, you know, analysis that I could draw up for their properties and just outcomes, different outcomes. A lot of is performed underwriting because they're currently sitting on a bridge, or they have some time or whatever it is. But part of the reason why I think that we're actually in a pretty busy time right now is because you have to remember, especially with the banks drying up, Fannie Mae, Freddie Mac and HUD serve as long term liquidity to the marketplace. And therefore, times like this, they're the continuous liquidity source and not the banks. And honestly, a lot of people now all of a sudden are going back to Fannie Mae and Freddie Mac, and FHA, for financing. Right. Now, I agree with you that it's definitely tough to sell in a higher interest rate environment. On the other hand, what do you have 30% year over year price appreciation on specific assets, you know, MSA dependent, I think that all of a sudden, then, right, the calculus of that justification, so to speak of the refinance, becomes totally different than than the historical conversation, where all of a sudden, it's like, you might be sitting at a 2 handle. But at the end of the day, if I could refinance, you would have five and a half interest rate. And you could pull out $40 million. And with that 40 million bucks, you could redeploy that equity for a call it 12% cash on cash yield. Right? Well, that's a no brainer, right. So I think the bigger question really is right now, like, what does the next short term look like? Right, for the multifamily marketplace, where I think we're coming off of a historical high from a transaction volume perspective, right. We've also achieved ridiculous organic rent growth, the price appreciation and the rent growth. To an extent there's a little bit of a disconnect. Right? So in short, though, if you put all this pen and paper together, I think that this creates a more complex prospecting situation than ever before, which again, why I believe the more sophisticated producers are going to be the ones that are coming out winning, because sophistication, you can't fake that you have to really, really understand your product. And you have to understand really mean, forget about just product market by market, like I was saying before, where if I go to Mobile, Alabama, and then if I'm underwriting a deal in Dallas, Texas, you know, totally different markets where things are going to be drastically different. You can't just think, let me take this historical teach woven rent rule and put it into a model and figure out what proceeds we could get. Right? The real question is like, what's my execution time? By the time I rate lock? Could I get a t now waiver? Where's my rental I'm trying to project where my rental was going to be by that time. Because every day in market like Dallas every day, I sit on a rental that rental is worth more and more and more.
Mordecai Rosenberg:Yeah. I think the the other thing is, where, people tend to look at a situation just in the here and now. Right? So you're like, Okay, well, look, I'm got two and a half percent financing, 2% financing. And so I'm not going to refinance to, you know, five or 6%. But to your point about the equity, right there, the fact that they haven't cashed out does not mean that they don't have equity, now that's earning a return. Right. So like, so basically, they're choosing to maintain their equity in this asset and earn whatever return that is, you know, $40 million. Right. So now, you have $40 million additional equity, that's now making that same return. Well, if you had $10 million of equity, and that was a 5% cash on cash return, and now there's$40 million of equity. Well, now your return on equity is now one and a half percent or whatever the other math equals out to. So so you think your return is actually less than what you think? Get this right. And now, let's kind of project this out over the next five years or 10 years. Okay, so you make this return over the next, you know, over the next three years, four years, right? And then you're going to have to repeat and then you'll you'll have to refinance or sell. Right? So where do we think the market is going to be at that time? Do you think you're gonna get $40 million of equity? Or do you think it's possible, you might have $20 million in equity at that time. We're in such a weird period of time where, like, we're all feeling this pressure, because interest rates are up and, you know, multifamily owners are feeling pressure, and yet there's no blood in the streets, right cap rates, like cap rates have been hit. But in a way they haven't been because nothing's transacted. It's and no one really knows where Cap rates are. But if you've been in the industry for, you know, for I guess, you know, I mean, you saw it in in, 2008-9 I mean, I guess probably in around COVID, for a period you saw it, but like, you know, there are times where there's just no buyer. Yeah, that's and there could be ready, even Fannie Mae and Freddie Mac and FHA, right, those are all well and good, as long as there's a buyer, but I remember times where there was no buyer for an FHA loan or Ginnie Mae at any at any trust. They were just frozen out. Right. So I think probably giving people the reframing what their actual return on equity is now, if they have additional, and also thinking about, you know, let's look at two alternatives, right, one, five years where you stay the course. And who knows where Cap rates are at that time, we have, you know, we all think there's a recession coming. But it's not here yet. And the cost of the recession is not going to be for any of the reasons we think it is, you know, it's not you never see recessions don't usually come because of this straight, narrow path that you projected out. It's usually something that you never expected. Yeah. And all of a sudden, all the liquidity is yanked from the capital markets. Right, that starts it. So I think kind of getting a more long term perspective, maybe that's one approach to conversations. What do you think?
Eric Rosenstock:Yeah, I mean, I completely agree, I, again, I think that's an important, you know, sale pitch, if you will, from, you know, selling financing from Fannie Mae, Freddie Mac, and HUD, which is, you could structure in a way that you have flexibility as well as that downside protection from long term perspective, right. And I think it actually gives you an advantage right now, with the banks, again, with the banks not playing ball. It's the banks being in the headlines. But frankly, it's, you know, it's the market to market losses and Treasury positions that these banks have, which those losses are huge. So again, that's serving as an advantage to being able to do and what we do well, right. And I agree with you. I mean, the short synopsis of what's soon to come, is a little bit of confusion, just because, again, two years ago, no one would have ever seen insurance premiums going in specific markets where they've gone tax assessments going where they've gone. So there's so much more question marks on a performa than we've ever had before, where historically, we knew plus or minus where rent is going to go where insurance is going to go over taxes, we're going to go we understood what jobs are coming into the marketplace in that area, like we understood it plus or minus, we always left some room for error. But now we think that plus or minus has gotten so wide, that it's going to be interesting, it will be interesting. I think that there's a lot of floating rate, you know, debt out there, that's going to get interesting how that's going to be treated. I think rate caps are expiring pretty soon. You know, the premiums on those are exceedingly expensive. What this is, this is a Lifetime movie. It's good. It keeps me entertained day in day out.
Mordecai Rosenberg:I like it. Well, Eric, thank you so much for for your time. It's it's you know, I like to joke with with you and give you a tough time. But you know, occasionally but I really I'm very proud of, I'm incredibly impressed with what you've achieved. And and I'm proud to have to have seen it. Keep it keep it up. You're doing an awesome job.
Eric Rosenstock:Thank you. Mordecai. Keep up the good work on the podcast. All right. Howard Stern has a little bit of competition over here.
Mordecai Rosenberg:Well there if I if I manifested it, then it'll come.
Eric Rosenstock:There you go. All right, so much for having me.
Mordecai Rosenberg:Take care. Thanks.