Transcript
Slava (00:00)
In this episode of Smart Humans, we talk with Ben Reinberg, who's the CEO and founder of Alliance. Alliance is an awesome commercial real estate investor. They've invested into thousands of properties for over 30 years. He gives us his take on what is happening in the economy and what is the future for America. What are the hotspots in commercial real estate in terms of verticals and where to watch out? What are the hot geos and where to watch out? And last, he gives us his predictions.
as to what are a couple of great investments to make for the next few years.
Slava (01:00)
Hello and welcome to the latest episode of Smart Humans. Super excited as always for today's guest. We have somebody who's an expert in all things commercial real estate and more. Hello and welcome Ben Rheinberg, founder and CEO of Alliance.
Ben Reinberg- Benreinberg.com (01:15)
Slava, thank you for having me on. really appreciate it. It's good spending time with you today.
Slava (01:21)
Absolutely, so let's just dive in how we always do, which is how did you get into alternative investments and into this world? Where did it all begin?
Ben Reinberg- Benreinberg.com (01:30)
When I was younger, I was always trying to build wealth. And for me, it was looking at what could produce wealth. And coming from Chicago, Slava is commercial real estate to me was the number one asset class to produce wealth, build cash flow, produce wealth, let properties appreciate, get tax benefits. And there was a proven concept with all the billionaires in Chicago.
that owned commercial real estate, it was real apparent of how to produce wealth. And so when I saw that, said, I want to be in that position. I want to be the guy that can produce wealth, cash flow. I wasn't looking to get rich. I was looking to build wealth. And that's always been my number one goal. So commercial real estate became the outlet. And I taught myself the business and started doing deals. And here we sit today.
We have staff all over the United States. We've built millions of square feet of office and industrial. We own office, industrial, and retail. And we have a large niche in the medical office space. And then, which is really exciting, this month in July, we launched our brand new multifamily division, which we could discuss as well why we did that. But that's really exciting. So we're getting into that space. And then we're big into the technology space now as well.
Slava (02:56)
So you say when I was younger and that's a pretty open phrase. Are we talking about when you were eight or when you were 28? Did you start thinking about building wealth?
Ben Reinberg- Benreinberg.com (03:05)
Well, well, when I was eight years old, and I say this publicly, I was selling cigarettes at a bar. I used to break up cartons of Marlboro Reds at eight years old and go into the bars in the Chicago area where I lived. Because where I lived, I had the most bars per square capita per mile in the United States when I was a kid growing up. so, no, that's north. And
Slava (03:16)
At eight.
Where is that, is that south side or north side?
Ben Reinberg- Benreinberg.com (03:35)
What happened was we had an army base down the street as well. And so you a lot of people drinking and smoking in the bars and the bars used to have open doors where as kids you could walk into a bar. There's no it wasn't regulated like there was no guy at the front carding people. It's your kid you walked in maybe you went to go see a parent or a friend or whatever. It was very very loose like there was no real regulation about going into a bar as a kid. So I would be able to go in and I saw the cigarette machine. I saw there was a niche.
And at time I was learning about math and I realized you could buy a carton of cigarettes for, you know, let's just say it was like $8 and the amount of packs. I figured out the cost per pack. And then I had a tip a guy to get me the cigarettes because I was too young. So I had to add that to my capital stack, as we say in my business. And I figured out, okay, well, if my total cost is a dollar and I get sell it for a dollar 25.
or let's say it was 80 cents, I sold it for $1 .25, I made 40, 50 cents a pack. Back in 1978, when I was eight years old, that was a lot of money. Well, you add it up and once you were able to get into a certain bar and sell it, you'd go through a carton pretty quickly. So there was times I was going back to the mom and pop drug store and trying to buy cigarettes on a frequent basis. And so I learned how to leverage into people that were older than me.
to buy me cigarettes and to sell it. And I made some money and last about six months. And so I did that when I was younger. But when I got into my twenties, I said, okay, well, how do I make real money? I want to start my own business. mean, my goal when I was in my twenties was I want to have my own business. I don't want to have to, I was a rebel. I don't have to listen to anyone. I want to pave my own way and create my own future. And that's a typical entrepreneur spirit.
Now, back then, they didn't really use the word entrepreneur. It was more of a business owner. And so to me, that's what I was looking for. And commercial real estate was the outlet for me to be able to create a business and start building wealth. And that's what I used this hard asset for.
Slava (05:49)
Nice. So if you're from the North side, does that mean you're a Cubs fan?
Ben Reinberg- Benreinberg.com (05:52)
I am a Cubs fan.
Slava (05:54)
All right.
Ben Reinberg- Benreinberg.com (05:54)
I'm a Cubs, Bulls, Blackhawks, Bears. It's hard to be from Chicago and not be a sports fan. It really, and so what's interesting is, you know, people ask me like, why the Cubs and not the Sox? My grandfather was a huge White Sox fan. And, and, know, people say, well, is there like the Yankees and the Mets where there's like a hatred between the two? I mean, there is a rivalry, but if the White Sox go the World Series and they win it all, it's great for the city.
Slava (06:00)
Trick.
Ben Reinberg- Benreinberg.com (06:22)
I think you're foolish not to root for both to see them be successful because it only helps the economy of the city.
Slava (06:28)
So when you, did you go to college?
Ben Reinberg- Benreinberg.com (06:30)
Yes, I went to Indiana University.
Slava (06:32)
Okay, so you're a Hoosier. So when you graduated from there, did you right away know you wanted to get into real estate or how did you go from there to, because you're the founder of Alliance. What year did you start Alliance?
Ben Reinberg- Benreinberg.com (06:42)
Right. It was back in the early 90s. I started. So I graduated from Indiana and I went into accounting for about a year and I hated it. I hated it. was no, it was actually a boutique firm that was big into the entertainment business and accounting for a lot of entertainers and movie production companies and cable companies.
Slava (06:47)
wow, that's a long time ago.
Like one of the big firms.
Ben Reinberg- Benreinberg.com (07:09)
And I went on some great audits and did a lot of high profile tax returns. And I just looked at my life and I looked at like what the partners were making and it was a good honest living and they had good lives in this firm. But I just realized I said, I don't want that life. I don't want that life. And so we had some clients in commercial real estate. I saw what was going on in the Chicago market with some great icons.
And I just jumped and after I left the accounting firm and said, okay, now's my time. I got to get into business and I figured it out. And I did a lot of reading and a lot of research and talking to people. And the research was I want to buy assets that produce well in cash.
Slava (07:51)
So what was that first purchase or where did you get that confidence to make that jump to go from I'm working for the man to now I have to become the man and now I'm dependent on myself. Can you give us a little bit of that background of that first jump?
Ben Reinberg- Benreinberg.com (08:06)
You know, compared to most people, I didn't really come from money. So I didn't, I wasn't poor, but I didn't come from money like that I was looking to build. And so I had to figure out, well, okay, I can't lean in on family. Okay, I'm not going to get a loan from family, but I could use my knowledge, my education and resources and figure it out. And so for me, I had nothing to lose, And I mean, for me, it was, okay, so what happens if I fail?
So everyone out there listening is this is a good lesson. I'm just back to where I started. so, right, I had no shame, I had no guilt. I said, I am so hungry to start my own business and get it done. I didn't think of the word I won't, I can't, I shouldn't, that it's not gonna work. Failure was never like an option for me. was never like, I wasn't gonna stop at whatever was the business or my knowledge to be or the destiny.
Slava (08:39)
Alright, you get to learn. You get to learn from failure.
Ben Reinberg- Benreinberg.com (09:03)
of letting something tell me I can't do something. I knew that I had to work for myself, I knew I had to create my own wealth and my own destiny. I knew that my behavior and actions were going to guide me to where I need to go. And I had to leverage all my hard work and skill up to that point to get to that point. So for me, it was just about grit and determination, persistence and believing in myself. And even when times were tough, you know, just to have
ability to have my mindset say, I'm going to get through this, this shall pass, and we'll keep moving on. And that's been the story of my career is like, whenever I face a challenge, and there are different challenges now, it's this shall pass and we'll get through it. And we always do, because we always look back and we say, you know what, that was a good growing experience. And so every challenge I look at now is growth. You throw a challenge in front of me, I'm like, okay, where's the growth now into this?
We see that every single day in our business. I see that with my staff, my leadership team. And I teach that too. said, look, when you see a challenge, look and say, okay, I'm going to grow. This is a benefit. This is a sign and a warning to me that I'm here to grow and learn from this. And so, and we all do, we all learn from experiences that happen within my company Alliance and externally as well. And so for me, when I was that age in my twenties, what did I have to lose? Nothing.
Slava (09:56)
I love.
Amazing, So you've now been running Alliance for around 30 or over 30 years. You obviously learned a ton. What is it that you would want to tell your younger self?
that you know today, even though you've accomplished incredible things, so there's no regrets. But what is it that you would tell your younger self? Because there are some younger selves that are listening to this podcast. So what would you tell yourself 30 years later that you know that you wish you knew when you first started? And don't get me wrong, naivety is great, so you don't want to know too much. But what would you want to
Ben Reinberg- Benreinberg.com (10:53)
Yeah, no, and it's a great question because when I look back, I would have said can really learn how to manage your emotions when you're younger. Learn how to work on yourself. Learn how to master yourself, your emotions, your communication. I would have, you know, if I could go back in
I would have worked on communication 24 -7 and mastered it. Body language, communication, writing, speaking, whatever it was at that point in time, that to me, because communication equals wealth. And if communication equals wealth when I'm a young person, that would be something I would double down on. That I think would be a big help in anyone's career, no matter what industry you're
Slava (11:38)
Sweet, that's super helpful. So you're obviously now quite accomplished. You've built wealth. We love to ask our guests about what they think about the various alternative investment sectors and how they invest their wealth. So we break down the world into, know, the old way of thinking about it is, you know, 60, 40 equities and bonds, right? And obviously that's evolving and you need to have your private sleeve, whether it's...
Ben Reinberg- Benreinberg.com (11:57)
Mm
Slava (12:03)
crypto, whether it's pre IPO venture, whether it's private credit, whether it's real estate, there's so many options are collectibles. So what do you think about these various categories? So we'll first start like in a pre IPO venture or crypto. Let's start with those two. What do think of those
Ben Reinberg- Benreinberg.com (12:20)
Yeah, I I love crypto. Yeah, I mean, my oldest son is in the blockchain business. So I know that he is 24. So I know blockchain is going to be very material when it comes to commercial real estate in the future, whether it's dealing with title, whether it's liquidating assets, blockchain is going to have some sort of fingerprints. So for me, I'm learning the business and I have a portfolio
Slava (12:23)
you do?
Nice. How old is he?
Ben Reinberg- Benreinberg.com (12:50)
cryptocurrency and I think it's great. I believe in it. I it's diversified. mean, my son helps me build a portfolio. I have coins that I have no idea what they are, but I trust him and I'm up, I don't know, 30 something percent on the portfolio. So how can I complain? It's great. And so he's very good at picking them, but crypto is great. I invest in, you
Slava (12:54)
Is it mostly Bitcoin and ETH or do you go beyond
Ben Reinberg- Benreinberg.com (13:17)
pre -IPO stuff, I'm looking at something right now. I'm a risk taker and I'm a capitalist and I like making money. I believe, Slava, very heartedly to diversify your capital. It's why when people invest in our funds and our syndications, we diversify them as much as possible because diversification to me is tremendous to mitigate risk and protect your downside.
When I look at investments, I I look at cryptocurrency and I say, okay, well, if I allocate a portion, what does that look like? Am I diversifying in that space? And I'm learning about it. Once I start understanding an asset class, I'll invest more and more into it. It's for me, I go slow and then I start escalating the investment cycle. And so I invest in private equity as well. I invest in tech companies and I invest a lot in
with what Alliance is doing too. mean, Alliance has different asset classes. We have some incredible technology that's coming out that I can't discuss yet because proprietary and working on it, but it's going to change the way commercial real estate is done. Alliance is eventually going to be a tech company that is an expert in hard assets because the whole world is going towards technology.
And so we see that. So we're like, OK, well, we got to get involved in AI heavily. We got to get involved eventually in the blockchain and start learning that. And so we're being proactive. And all this takes capital to be able to invest. So to answer your question is, I like looking at all different asset classes and trying to get my arms around. And I look at, and I take a foundation because that's what people do for us, is I look at who's the sponsor behind it all? How do they?
deal with challenges, Slava. I want to know, how are they going to deal with a tough time and a tough environment? So for example, right now, in 2025, and they're projecting over $30 trillion of commercial real estate loans are coming due. So what's that going to do is people are going to be filing Chapter 11 to protect their assets with lenders. People are going to be selling assets, which means the Alliance Medical Fund and the different
asset classes we work on, we'll get some great buying opportunities for investors, but also have an opportunity to buy debt and do some other things. And so when I look at all these things that are out there that you can invest in, is I look at who are the people standing behind it? What's their experience? What's their track record? How do they deal with issues and challenges that come up? What does the leadership team look like? What are their resources look like? Who does their accounting? Who does their legal?
How do they deal with insurance? And I look at the questions, the platform we built, and I say, well, there's other people that do other platforms and different asset classes around the world. How do I leverage into those great, talented people, just like people leverage into what we're doing? So yeah, I think it's great. To answer your question is diversification to me is important. I think learn, keep your eyes open. Someone shows an investment, you don't have to invest, but you know what, learn from
Because you know why? And say to that person, you know what? I'm trying to get my arms around this and get comfortable, but I'm interested. Be genuine and upfront. Don't waste someone's time. And say, can you hit me up on the next opportunity? So for example, I have people that send me oil and gas deals all the time. OK? And I've invested in some. I don't really get it. I hear about, if you keep investing, the averages work out with a dry hole and blah, blah, blah. And so it's good.
I have to feel comfortable. And so I always tell people is get educated on an asset class that you like, whatever your expertise is, become an expert in that field. So for me, I doubled out on commercial real estate, invest a lot in what I know because that's my expertise. That's my comfort level. But I also, when I make money from my expertise, I can say, okay, now how do we diversify that capital into other things? And how do I learn and grow from that?
Slava (17:17)
Absolutely.
Ben Reinberg- Benreinberg.com (17:27)
And so diversification is always going to be a platform I adhere to.
Slava (17:31)
If you had to guess, what would you say your mix is like of public equities, bonds, and then all these alternative assets and take out your equity wealth as it relates to Alliance because that's obviously like unfairly weighted there. So what would you say those percentages high level
Ben Reinberg- Benreinberg.com (17:50)
I would say alternate investments. probably more like 60 to 65 % in alternate investments. Yeah, because that's what I do for a living. So for me, I understand it really well. So, yeah, I mean, I put stuff in the S &P and it's great. I think what bothers me, Slava, about that is I don't control the decisions.
Slava (17:57)
really?
And you feel more comfortable there than putting it into let's call it the SMP and just.
Ben Reinberg- Benreinberg.com (18:17)
in some of my investments. So for example, why I like, why I'm biased towards what we do is because I can go kick the bricks and mortar of every property. So for example, let's say you were an investor in our Alliance Medical Fund or another syndication or another fund. You can go and fly to Arlington, Texas and go see the property that you're investing in or the fund that has the different asset classes. That's transparency.
So transparency to me is everything. And so when I invest in a stock or an S &P or a mutual or something, it's great. I'm diversified. It's public knowledge. They have certain regulatory requirements. That's all well and good. But I can't control the decisions the board makes. I can't control the decisions the CEO makes. And so to answer your question, I really like hard assets. I like hard assets that spin off tax benefits.
That's attractive to me. So I have a lot of capital in real estate, obviously. I have capital in alternative investments. I have capital in the cryptocurrency world. And then I have safe money, like money in treasuries, which is doing fairly well compared to used to. But that will change probably next year. And so what I do is I look at different asset classes. I look at what's going on. I look at interest rates.
I look at future interest rates and I start hedging. Where do I want to put my capital? I'm not a commodities guy. Even though I'm from Chicago, there's a lot of guys that invest in the Mercantile Exchange stuff and whether it's hogs to metals to you name it, and they trade that. Some people trade options and everyone's got their own niche. And so what I do is I invest a tremendous amount of time in commercial real estate.
because that's where I feel the most comfortable and where a lot of my capital goes.
Slava (20:13)
and you have over 30 years of proving that you're good at
Ben Reinberg- Benreinberg.com (20:16)
Yeah, so for me, it's like I don't have to reinvent the wheel. And now with that, I make a tremendous amount of for high net worth credit investors and family offices that invest with us. So they're relying on me to constantly grow, mature, and evolve in the business with technology and new knowledge. And so I have that fiduciary responsibility to them in the public, and I honor that. And so that's important to me that I keep learning.
Slava (20:42)
Awesome, last question in this area. So how about a hard assets such as art or collectibles like a Michael Jordan rookie card or a Monet? Is that interesting at all or more just as expected?
Ben Reinberg- Benreinberg.com (20:53)
It's very interesting. Yeah, I want to get into art and it's something, you know, I was just in Spain and Europe. It was my third time being there. And I just love it. And what I love about going to Europe is just the art and learning about it. And so I collect wine and so I enjoy art and it's something I want to do more and more and get involved in. There's also, I'm looking at
investing in educational stuff, like stuff you could donate to the Smithsonian and stuff like that and get good tax breaks. And so I love that type of stuff and looking at the appreciation. investing in wine is great. I've invested in certain bottles and they've appreciated drastically. could sell them, you could auction them off. And so I love, I've done it a few times. I do, I have sold some of my wine and done very well with
Slava (21:34)
Do you actually do that or are you mostly just, do you actually sell any of your wine?
Ben Reinberg- Benreinberg.com (21:43)
But because I only have a certain amount of time, Slava, like you do, and you know this, it's like, where do you have to pay attention in your time? And so I'm being pulled in thousand directions. But I enjoy it. mean, when an opportunity is in front of me, I can analyze it quickly and say, OK, is this something I want to do? And so it comes back to really the topic for everyone that's listening to this is your time. Your time is your most valuable asset.
Slava (21:47)
Totally.
Ben Reinberg- Benreinberg.com (22:08)
And so where you choose to spend it, especially if you're going to learn how to invest or you're going to make it a career like I did with my company Alliance is where are you going to spend your time? And so for me, I love wine. I'm a wine connoisseur. I like spending time there. Yes, I could definitely double down and make some more money and do that, but I love learning and growing and other things. So just another tool in my, in my toolbox that I could do to make money, enjoy it.
And make it a little side business if I wanted to but art is definitely something important to me. It's something I'm growing into And then I love you know the other stuff too I love the fact that you can get in and buy like artifacts which are out there you can do so there's so many different alternative investments you could do to make money and the other thing slava thing that's really important is leveraging into talent because
Let's just say, for example, you're an expert in art, right? And if I could pick up the phone and say, OK, I'm looking at this piece. Here's the negotiation, whatever. I was wondering if I could ask you a question. So being vulnerable and leveraging into talent is something I am outstanding at and I'm very resource rich about. And I believe in that. So when you have someone that has a great structure, could be in commercial real estate, it could be an art or whatever, be vulnerable and leverage into people.
and knowledge and also give too. You gotta give. So whenever someone has a real estate question, they always call me and I give my time because I know they're an expert or they're gonna teach me, could be anything. They could be experts in investing in orange juice or they could be an expert in picking great restaurants or whatever it is or Ben, let me show you the best way to travel or here are the best hotels to stay in when you're traveling, whatever it is.
There's something that someone knows that they're going to teach me. And so when I give my time to help in business and real estate and commercial real estate, I get a lot of calls from investors saying, hey, I'm buying a house, lava. I was wondering, I'm in the negotiation. Take me out of my box. Am I being foolish? Am I asking for too large of a credit? Am I being a pig? What's going on? Pull me out of my box. And I do that. I hold up the mirror and I'm like, OK, well, how important is this to
How important is this compared to this? And where are the trade -offs? And they start looking at it they make a decision. Well, that knowledge and advice I could give someone to me is huge. And in turn, it always comes back to you.
Slava (24:40)
That's great advice. Paying it forward is huge. So moving on to the next topic, which is what do you think of the current market? What do you think of the current economy? What do you think of the stock market? These are all massive questions, totally open -ended, on purpose. You know, have an incredible view across your many years and all the properties and all the analysis. So we'd love to just to hear your take on
Ben Reinberg- Benreinberg.com (24:49)
Yeah.
Well, it's a great question. The timing couldn't be better Slava because they just announced that they're projecting the experts. The economists are going to, they're going to lower interest rates twice coming up. Now that's going to be interesting because commercial real estate is really in a low right now. There's a gap between the bid and the ask. Uh, in 2023, we had 65 % down in transaction volume and investment sales. were holding up 65 % down in transaction value and volume.
Slava (25:25)
Sorry, what was that number?
Ben Reinberg- Benreinberg.com (25:30)
That's how bad it was. so to maybe lower interest rates, maybe some properties will start moving. Maybe people will be able to refinance. Liquidity will help. So I support that by Jerome Powell. If he does that, hopefully he does. And I look at the market, the stock market's doing OK. I I saw it touch over $40 ,000, the S &P. And yeah, and companies are crushing it.
Slava (25:51)
It's doing great. I mean, it's led by a few huge companies, but they're really crushing
Ben Reinberg- Benreinberg.com (25:58)
and we could talk about some of those. And so it's challenging because it's hard to know where this economy is going with this election coming up. And it could go sideways or it could just start flourishing. And so the election is key.
And this election,
it's gonna be really interesting because it's gonna determine where does this economy go and and I
Slava (26:21)
Is your prediction that it is your prediction that you said it either goes flat for a while or it flourishes. Is your prediction that for the end of 25, it's going to be in the flat phase or it's going to be in the flourishing phase?
Ben Reinberg- Benreinberg.com (26:34)
I think we're going to flourish. think what's going to happen 2025 is we're going to open up the pipeline. We're going to start producing energy in this country, which is going to be a spark and a catalyst not only for jobs, but also help reduce interest rate. We're going to start producing revenue in this country and start exporting oil and becoming the lead producer of energy in the entire world again.
Slava (26:57)
What's your prediction on interest rates for the end of 25? After the two...
Ben Reinberg- Benreinberg.com (27:01)
I well, I think interest rates, they'll drop it. Yeah, let's say they drop it twice. They're going see, they're going to kind of let things settle. And then I think probably in the third and fourth quarter, they'll drop them again if the economy is really doing well. And that's 25. And so you just have to see, because the interesting thing right now, Slava, is that the banks don't have liquidity.
Slava (27:06)
in 24.
of 25.
Ben Reinberg- Benreinberg.com (27:30)
Okay, there's a lot of private equity that are investing in regional and small banks right now to bail them out. And because these banks are so top heavy in commercial real estate, they know what's going on. A lot of banks are trying to get rid of their portfolios of commercial real estate. So there's not a lot of financing going on in commercial real estate. So the bridge lenders have really become prevalent in our business. So when you look at these things, you say, wait a minute, if they could lower interest rates, generate more liquidity,
More people will buy homes, more people, there will be more jobs here. The economy will snap back and be a lot stronger. And I believe that will happen in 25 and 26. I think it will take a while. It might be third, fourth quarter, it begins, but I believe you'll see it. I think when we start generating revenue for this country and people feel more confident in the economy, people will start spending more money.
Slava (28:27)
Great. Let's transition to Alliance because you were talking about commercial real estate, which is, you've been around doing incredible work for a long time. Not everybody knows you. So what is Alliance and can you give us some of the metrics, the numbers in terms of the scale and the accomplishments?
Ben Reinberg- Benreinberg.com (28:28)
And so that's what I see.
Yeah, I mean, we've we are experts, Slava, office industrial and retail. And we've built millions of square feet of office industrial in our career. And we've done thousands of transactions. We've strictly been principals where we own and manage our entire portfolio. We raise equity from high net worth of credit investors as well as family offices around the world.
Recently, like I said previously, we just launched a multifamily division. The reason why we did that is because we see a tremendous amount buying opportunities forthcoming in the multifamily housing sector. And so we want to take advantage of that for us and our investors. And so for us, we have 200 plus years of leadership team experience at Alliance offices around the country. And we own and manage properties all throughout the United States.
We have a large concentration, which we started years ago. Slava was, if you look at the smile stage, you start in Virginia and draw a smiley face down throughout the United States. That's where we own. We'll go through, you know, the South Texas, New Mexico, Arizona, up to Utah, Idaho, and Colorado. And so we're very meticulous. Now we want pro growth states. want states with population growth, pro business.
and states if you're looking at the Alliance Medical Fund, because we have large presence in medical office, one of the leaders in that industry is we look for great medical office markets, which is great residential growth, pro growth. We see where the great hospital systems sit, and that allows us to flourish with our properties in those communities around the United States.
Slava (30:26)
Super basic question for my audience. What makes something commercial real estate versus in not being commercial real estate?
Ben Reinberg- Benreinberg.com (30:33)
Sure. So let's just take a step because everyone knows residential in the housing market. So we'll get started with that. It's five units or more is a piece of commercial real estate when it comes to a multifamily property, apartment complex. Commercial real estate consists of, it could be a retail strip center, shopping center. It's zone commercial, these properties. It could be industrial property, industrialized distribution, manufacturing, incubator space, you name it.
It could be an office building, could be a skyscraper to general office, single story, multi story building you see in the suburbs or any of your communities that your folks live in that's listening to show. And then it could be medical office, which is one of our niches, which is a sector of office. It could be research and development. It could be cold storage, could be self storage, self storage facilities you see in your communities. That's commercial real estate.
And so commercial real estate has different zoning laws around the United States, but zone commercial and commercial to us is multifamily over five units, office, industrial, retail, hotels are commercial real estate, mobile homes is commercial real estate. So there's a lot of sectors Slava in the commercial real estate space, and we have a large expertise in a lot of these asset classes.
Slava (31:54)
That's awesome. And with so many years of experience and so many transactions, you obviously have a ton of experience. What would you say is the difference, like very high level, the one or two pieces of differences between high level commercial real estate versus high level investing into residential real estate? What's the just one or two pieces of differences?
Ben Reinberg- Benreinberg.com (32:13)
Yeah, mean, residential has a different analysis. So to take commercial slava is you're looking at the real estate fundamentals. You're looking at cash flows, the predictability of cash flows. You're at vacancy rates. You're looking at the absorption rates for space. You're looking at what market am I in? You're looking at population growth. You're looking at what sector am I in and where's my location? You're looking
the ability to hold, do I have enough reserves? What's the construction of the property? We also look at barriers to entry. Are there vacant pieces of land and what's the zoning that can compete with our portfolio, our existing commercial real estate that we're looking at acquiring or we own? Now you take the flip side residential, it's a different business. They're comparing comps from one house to another. I have three bedrooms to four bedrooms. This is my bath, what are the finishes?
But the number one driver in residential real estate that no one talks about, I never hear it online, is schools. Schools drive the values and the demand for commercial real estate. So I've seen that in my hometown for residential real estate. Excuse me. So for residential real estate, I've seen that in my old hometown in the suburbs Chicago, where I raised my kids. And you could be in different sectors of the same city or the same town.
Slava (33:22)
You mean for residential, for residential.
Ben Reinberg- Benreinberg.com (33:38)
Some are more demand and profitable for residential than others because of the schools. You got better schools or you got better demographics. So demographics, construction, square footage, amount of land, taxes, insurance. You're going to look at mortgage rates for residential. It's a complete different analysis. It's not as sophisticated as commercial real estate, but it's a different analysis. It's more
I'm comparing one to another, and that's my basis for value. Instead of commercial real estate, you're more looking at income. You're looking at price per square foot. You're looking at the location. You're looking at the credit of your tenant's impact value. So the valuation equation is so much different comparing the two asset classes. So residential is a little bit easier for people. That's why you see all these people say fix and flips, and they...
go in and you see all the shows on HDTV. I work out with a few of these people here in California where they're going in and they buy and they rehab and then they have a show. And there's a lot of people out there that are doing it or they're what they're calling wholesaling. They're putting a house under contract and then they're flipping the contract too. So the residential investors use all these different terms. But at the end of the day, the valuation is all based
a comp analysis. It's not based on income approach. It's not placed on replacement costs that we look at in commercial real estate. It's more about what do I have, Slava, and what am I comparing it to? And what are the variables I'm comparing?
Slava (35:15)
Got it.
That's awesome. Super interesting. You mentioned so many different slices of commercial real estate, probably like you might've done 20 or more. What would you say, and I'm sure there's many others, what would you say are for the next three years, the three verticals that you're bullish on? If you just got to name
Ben Reinberg- Benreinberg.com (35:35)
Yeah, well, medical office, obviously, I mean, I tout medical office, and veterinary office, one of my favorite asset classes, the human body is never going out of style. I think industrial is a great asset class coming up, especially over the next three to four years. And I believe also multifamily is going to great opportunities in the next 12 to 24 months. So those three asset classes, I'm very bullish on and very excited to really expand our portfolio.
Slava (36:03)
So medical and veterinary is obviously like where doctors and veterinarians are, you know, putting their offices and such or the hospitals and then what exactly is industrial?
Ben Reinberg- Benreinberg.com (36:12)
Industrial is take a facility like a distribution facility. Let's say a lot of people know Amazon out there. So Amazon might have a million square foot distribution facility where they house their goods and they bring in the trucks and they distribute. So that's an industrial type property. It could be, you might be manufacturing something in a industrial building. That's industrial as well.
Slava (36:26)
That's industrial.
Okay, and obviously with the trying to bring everything back to America, there's gonna be more of that industrial type of build, is that right?
Ben Reinberg- Benreinberg.com (36:41)
Well, it's not necessarily build. It's going to be more absorbing vacant space. so, yeah, so if there's vacancy and industrial and we have more distribution going on in this country, they'll backfill those vacant spaces. And so there's real opportunities to buy some vacant buildings really add value.
Slava (36:45)
I see, like malls or other big spaces.
Hey.
And what are the parameters for a multifamily?
Ben Reinberg- Benreinberg.com (37:01)
A multifamily is, well, what's going on in that space? Let's talk about that. The multifamily space, a lot of investors have bought at really aggressive pricing. And because of rising interest rates, it's been very challenging for them to get liquidity to refinance. So they're going to be selling their assets in order to pay off their loans and get out of these properties. so multifamily is over five units. And
Slava (37:27)
Got
Ben Reinberg- Benreinberg.com (37:29)
We're looking at buildings 200 plus units per investment.
Slava (37:33)
so there's no max, it could go up to many, many, units. It's still called a multifamily.
Ben Reinberg- Benreinberg.com (37:36)
Oh, yeah. mean, you look at, yeah, I don't know where you reside, but like you drive around anywhere in the country, you'll see multifamily developments where it's a complex and they have a clubhouse, they might have a pool, depending on where you live, maybe tennis courts, basketball court. And so they have a medis, maybe a workout fitness facility. And you'll see around there might be two to 500 units, or you might be in a CBD area where you have
Slava (38:00)
Got it.
Ben Reinberg- Benreinberg.com (38:04)
multifamily high -rise that has four or five hundred units
Slava (38:08)
On the flip side, what's two verticals that you kinda wanna stay away from for the next three years?
Ben Reinberg- Benreinberg.com (38:11)
Well, we've been feeling this way for a while, but general office is something that bothers me. I mean, I was in Chicago recently and I was with a friend and he was saying 40, 50, 60 % vacancy and skyscrapers. It's that asset class is just doesn't have absorption slava because big companies are downsizing.
Slava (38:22)
Yep.
Ben Reinberg- Benreinberg.com (38:31)
A lot of people like working hybrid. You go to a coffee shop, okay? Just go outside and go drive to a coffee shop. How many people are you seeing working on a laptop and by the way, the younger generation is moving towards that and gravitates towards that So I don't know how that's ever going out of style. And so because of that,
general office is going to be tough.
The other asset class that is tough right now that's gonna change is multifamily. If I was investing and had a portfolio from the past, I'd be very cognizant and aware of what's going on in that portfolio. That's a tough asset class. The reason why we're getting into it is because when it's tough, there's great buying opportunities. And so we're gonna turn that around. And then I would say, generally speaking,
Slava (39:12)
Interesting.
Ben Reinberg- Benreinberg.com (39:17)
other asset class in real estate that concern me is residential. I mean, this younger generation wants rent. No one wants to own a house. So I don't know what that business is like if you're there and you're rehabbing homes or you're in certain areas and maybe the schools are struggling. More more parents our homeschooling their kids. And so there's a lot of shifts going on. Those shifts are going to impact someone buying a home.
Slava (39:44)
You did such a great job of giving us the breakdown for verticals. What's like two geos that you're bullish on? Two specific, let's call it cities or areas, MSAs.
Ben Reinberg- Benreinberg.com (39:52)
well, I I love the state of florida and I love orlando and tampa. Those are great markets Yeah, and in between are great markets that I love i'm very bullish especially commercial real estate I also love dallas fort worth is a great market That's an organ market. I'll give you a bonus the
Slava (39:59)
So specifically Orlando and Tampa, that's your.
Ben Reinberg- Benreinberg.com (40:15)
I would say anywhere in South Carolina that's a mid -size or big city is good and North Carolina are really good as well. I'm big. I love the Sun Belt for certain asset class. For medical, what we do, it's great. Now for multifamily, if you're in a stable economy and maybe a state where people aren't investing because multifamily is very competitive, it's a sector, it's an area of the country where I look. So depending on your asset class, Lava, it's really going to depend on
geographic location you really want to explore. when I look at like medical office, which is a large sector of our portfolio, I'm looking at population growth, I'm looking at pro growth, I'm looking at where the hospital systems thrive, and it's in the South, Southeast and Southwest. And so we look at those pockets too. There are sectors in Phoenix that are on fire. Las Vegas is doing very well, tax -free state.
People are moving to Idaho and Utah. And so there's a lot of great locations.
Slava (41:15)
What are two GOs that you're bearish on?
Ben Reinberg- Benreinberg.com (41:19)
God, that's tough. That's a tough one because for a long time. Yeah, I mean, for a while I was really down on Illinois where I'm from. I really was. It was a hard pill for me to swallow. It's saying we're not putting our capital and we still own properties in the Chicago area. And so, but I think it's bouncing back. I think things are getting better. So I was very bearish on it and now I'm kind of getting more bullish.
Slava (41:22)
I finally asked you a hard question, good.
Ben Reinberg- Benreinberg.com (41:43)
I would say some of the Rust Belt areas. mean, now Detroit's coming back, it's doing a lot better than it's ever have. I'm not, there's certain sectors like Pennsylvania, I don't think are great. I mean, I'm not very bullish on Philadelphia. Not that it's a bad city. I just haven't seen a lot of growth. I think because of some of the politics and the laws in New York and Los Angeles, I'm not bearish on.
Slava (42:08)
And if I understand correctly, for Alliance, you guys are always the managers, is that correct? Of the property, you're the ones that, right? So for the listener, sometimes they get pitched by various managers, different offerings. How is it that you recommend, and obviously you're gonna be biased and you're gonna say, just go with Alliance, but how is it that they should, on their own, diligence the managers? What should they be looking for between 10 different pitches or 10 different managers?
Ben Reinberg- Benreinberg.com (42:33)
Yeah, I would look at not only their track record, I would look at their leadership team and most importantly, how do they solve challenges or problems or issues? Because when I'm looking at sponsor, I've invested in other sponsors and colleagues in commercial real estate and other asset classes. I want to know like when the chips are down, how you deal with it, how transparent, how, how communicate about you with your investors.
One thing we pride ourselves on in Alliance and that I've installed in this company is we are extremely transparent. We'll tell you the good, the bad, the positive, the ugly. You might not like it, you might love it, but you're going to hear it because you know what? It's a marathon business what we do and integrity is one of the foundations. it's transparency, integrity, consistency and expertise is what you get with Alliance. And that provides that seven star experience that we all want as an investor.
Slava (43:08)
That's great.
let's say one of the listeners is looking to invest, so I'm gonna act on their behalf. So what is my minimum? Do I have to be accredited? What is the timeline that I can expect money back, et cetera? So can you give me some of the high level details there?
Ben Reinberg- Benreinberg.com (43:45)
Yeah, sure. So let's just take the Alliance Medical Fund as an example, because we can get other asset classes. That fund is going to have anywhere from 18 to 23 assets, say, of medical and veterinary properties. So the minimum is $100 ,000. Our average investor invests about $300 ,000. And we have folks that invest millions into the fund. The reason why, OK.
the minimums are set at certain level is one, we only take a credit investors, okay? And for everyone out there, if you don't know what a credit investor is, you could Google it, but you either have a million dollar net worth or for the last couple of years, you've netted at least 200 ,000 in income. I think for you and your spouse, it's maybe now 300 ,000. They recently tweaked it a little bit. You could look it up.
And the reason why we take that is, one, now per the SEC rules and regulations, but also we want people that understand the risk and what we do. We're going to tell you the risk. We're going show you the risk. We're going explain it to you. But we find the more sophisticated investor really gets what we do. And also, we're looking for repeat business and long -term relationships lava. And that's really important to us because we want to produce wealth for you and your family. And the accredited investors is who we go after.
It's $100 ,000 to come into that fund. We've had other syndications where we've had minimums of $50 ,000. We think we'll end up raising that $200 And so it really depends on what you want to do and what vehicle you want to invest in, how diversified you want your capital. I like the funds because there's four benefits to funds. One is diversification. Two is cost to capital. get cheaper capital.
Three is purchasing power. When we go out in the market, especially this market, we could buy great assets at discounted prices. And lastly, is scalability. I could buy an asset in the fund. I could do a 1031 exchange and take equity that's free for our investors from a sale and take one asset and create three assets. And now I just diversify the more, increase the equity and the profitability of the fund. And so that's why people invest in Alliance and love what we do.
And so those are the opportunities if you want to invest with the Alliance.
Slava (45:56)
Great. So many of the listeners and I want to be as smart as you and as knowledgeable as you. So what is it that you're watching? What is it that you're listening to? What is it that you're reading? Can you give us some of those examples?
Ben Reinberg- Benreinberg.com (46:07)
Yeah, well reading I read a lot of personal development books. I work on myself and that's I'm reading one right now. Let me give you the name. It's hold
Slava (46:11)
Like one example that you like.
Ben Reinberg- Benreinberg.com (46:18)
how to be the love you seek. And it's a personal, and a mentor of mine gave it to me and said, do you need to read this? And when I become the best version of myself, it allows me to, comes out of me to help other people. And so that's a great way to help enhance your ability to produce wealth, communication, balance your emotions. So that's one thing. And then from a business standpoint,
Slava (46:20)
All
Ben Reinberg- Benreinberg.com (46:43)
I read a lot. read on the internet, different websites and business websites and looking at what's going on in the stock market. I'll look at what's going on with interest rates. I'll watch the news. I'll watch like what's going on in our political environment because that's going to impact interest rates and production of revenue and oil and gas. I look at, and then also I ask a lot of questions. I'll listen to other people's podcasts that talk about money. I
Slava (47:06)
Like what's an example of a podcast you like?
Ben Reinberg- Benreinberg.com (47:11)
Nicole Lapin, and believe eventually I'm going be going on her show, she has a really good show about money. So she talks about money, that's good. I like listening to different shows where friends of mine that are guests, that are experts in sales or mergers and acquisitions that go on shows and then I end up listening to that show. I like all different shows.
Slava (47:30)
And our final question, we ask this as everybody, we put everybody on the spot, which is we're looking for one investment that three years out you think will be doing exceptionally well. So one public markets investment, which has a ticker symbol and one private markets investment, which obviously can be in any vertical in any space. You probably will pick in real estate, but it could be in any space and the more specific, the better. So Ben, what are your two picks?
Ben Reinberg- Benreinberg.com (47:56)
I like right now from private sector. I would put money in energy because I think it's down now. I think you can really I Would look at investing in oil and gas. That's what I would look
Slava (48:02)
How would you do
And any more specificity on how you would put money into oil and the gas?
Ben Reinberg- Benreinberg.com (48:12)
Well, there's less sponsors out there that are soliciting alternative investments in oil and gas. I think that would be a really good vehicle from private. From a public sector, I look at things that I consume. So I'm going to look at, OK, well, I'm going to look at a stock and say, OK, well, maybe the oil companies are down. But if we start producing in this country, maybe it's a good time to double down on it.
Slava (48:16)
Okay, great, great.
Ben Reinberg- Benreinberg.com (48:40)
I am a huge Tesla fan. I have five of them in my family and I drive a Plaid and I'm in love with it and I love
Slava (48:48)
It's funny, it's funny, you're pro oil and gas and pro Tesla.
Ben Reinberg- Benreinberg.com (48:51)
But I'm pro Elon because this technology is brilliant, and there's no car off the line that can beat a Tesla Plaid. It's so fast, but so nimble. And the nice thing about Tesla, what I like, that people ignore is the safety of it. You can get t -boned, and you're going to walk out of that car. And that's very important.
Slava (49:10)
To be specific though, you were mentioning oil and gas as part of public as well. Is your pick Tesla or do you have another pick?
Ben Reinberg- Benreinberg.com (49:15)
Yeah. Well, I think Tesla is a great automobile to invest in. I think the one thing I like is I look at and go back to my point of who's running the show, who's making decisions, who saw its challenges. Well, you have a guy at the top Elon that is leading that charge and everything he does is he works harder than anyone. He makes great decisions and it's a good solid bet to bet on that company. And when people count him out,
Slava (49:21)
And
Ben Reinberg- Benreinberg.com (49:44)
He just accelerates and I think it's a great company. There's so many great companies and there's small ones you can buy that are public companies, you can get pre -IPOs, but Tesla is a real solid company. And there's some oil gas companies too that are public that if you could buy now at a discount and wait a few years, you might do extremely well.
Slava (50:04)
Any particular one you would say?
Ben Reinberg- Benreinberg.com (50:06)
I would say like, you know, the folks at Shell and looking at the larger guys, know, the ones that owe, you know, BP, Amaco, British Petroleum, you know, major, major players, Chevron, looking at people that have the capacity to not only grow and you look at what companies have they bought recently. Those are the companies I think that will do really well in the next few years.
Slava (50:32)
All right, well, we covered a lot of content, Ben. So thank you very much for taking me on the roller coaster of your life and your investing. We started in Chicago and you always knew that you wanted to create wealth, whether you were eight years old breaking up cartons and arbing that at bars, all the way now to running an amazing company at Alliance for over 30 years. So it's incredible to hear the background. It's all about the managers. You love the hard assets. You love being able to get the tax advantages.
There's your risk taker, even with your own network, 65 % in alternative investments, which is incredible. You love leveraging into talent, pay it forward, people help you, you help them. It always works out that way. We had a down in the market in consumer real estate, 65 % down in transactions in 2023. So there's really an opportunity to pop back up. You also think that there's an opportunity
there's gonna be potentially a shift in the political landscape. There can be an opportunity for a better use of energy, potentially more production of growth in the economy. So there's potential for better consumer real estate opportunities. You mentioned to us about, I had no idea there were so many different verticals in commercial real estate, which is incredible. Obviously Alliance has so much leadership over 200 years of experience and your background personally.
And you really gave us specificity. You love medical and veterinary, you love industrial, and now you have this whole new product you're in love with multifamily as well. You're not as interested or a little bearish on office and residential. And there's going be some challenges in multifamily you plan on taking advantage of. You're a huge fan of Florida and specifically Orlando to Tampa, Dallas and Fort Worth. And you gave us a bunch of other stuff. Illinois, Rustbell, Pennsylvania, New York are a little bit challenged. We'll see what happens there and make sure you check out the track record. See what people are saying.
And you had a great line, which is the shepherd of my capital will solve problems. I like that. I like that. And if we're interested in alliance, you have to have a 100K minimum. And you gave us a great book, How to Be in Love with the Love You Seek, How to Be the Love You Seek. And finally, you gave us two great picks, Oil and Gas on the private side, and then Tesla on the public side, and many more. Thank you, Ben.
Ben Reinberg- Benreinberg.com (52:25)
Yes, yeah, absolutely.
All right. Thank you, Slava. I appreciate you having me. It was great seeing you.
