COVER STORY
SAMUEL K. FRESHMAN
Freshman recalled. “My father hated lawyers, but he wanted one in the family, so he told me to go to law school. I did. “When I graduated, I didn’t know what kind of law to practice, so I asked my dad: court law? tax law? litigation? He said, ‘Go into real estate law. Real estate is where all the money is made in California.’ So, I did. I practiced law and invested every penny I made into real estate, and the rest is history.” Of course, there is a little more to the history than that. In 1956, Freshman started out practicing law with a company that owned a great deal of
real estate in Hollywood, California, at the time. “They actually had developed that land in the 1890s and 1900s, but when I started working for them, they were liquidating the company. I spent about a year learning everything there was to know about the history and development of Southern California, then I went out and opened my own law office,” he said. “Networking is one of my hobbies, you could say, so I joined a lot of organizations, met a lot of people, and the whole time I was practicing law I was putting every penny I could get into real estate.”
"WHY BIGGER IS BETTER" S amuel Freshman is known for buying big, but he insists that hard numbers nearly always back up the decision to go for larger proper- ties over smaller when investing: “If you buy a 50-unit building, you have to have a manager. You are probably going to pay that manager about $50,000 a year to manage that property. Say you buy a 200-unit building. You still only need one manager, and you pay that manager about $15,000 more a year, $65,000, but you are generat- ing four times as much revenue. “Of course, that is a very simpli- fied example, but the math almost always works out. You can make a lot more money by putting a lot of people together and buying something big than you can buying [something smaller] by yourself. “There is great savings in volume. That is why someone who gets rich in real estate usually will have gone after the larger properties. You get successful investors who are very patient and buy a lot of individual properties, but I believe the most success is in large properties.”
Real Estate Syndication: A partnership between two or more investors. In most real estate syndications, the sponsor puts the deal together and the other investor or investors provide most of the financial equity. The result is that all involved parties are able to do deals together that they could not transact alone.
Professionals in Real Estate (SPIRE), professor emeritus of real estate at the University of Southern California (USC) Marshall School of Business, and graduate of Stanford Law School says he “hates risk” so much that he has dedicated himself “to the only business I know of where you can’t lose if you have patience and don’t take on too much debt: real estate.” PICKING THE RIGHT DOOR IS SIMPLE IF YOU’REWILLING TO LISTEN Perhaps the crucial point for Freshman’s success occurred when Freshman decided in his early adulthood to listen to people who knew more than he did. Specifically, he listened to his father. “When I started out at Stanford, I was pre-med. I hated it, so I asked my father, ‘What should I do here? Half my friends are going to business school, and the other half are going to law school,’”
intellectual gift, but that’s just not true,” he said modestly. “My life has been the story of the lady and the tiger, and I’ve been lucky enough to walk through the door where the lady is every time I had to make a choice.” Sixty years into a highly successful real estate investing career during which he has transacted hundreds of deals, taught thousands of investors, and leveraged millions of dollars in successful investments, Freshman seems to have a gift for making the right choices. However, it is inaccurate to say he has left everything up to chance. The author of multiple books, chairman emeritus of the Stanford
SAMUEL K. FRESHMAN, author of Principles of Real Estate Syndication , the industry-acknowledged "bible" on the topic, and founder of private real estate investment firm Standard Management Company, describes his life as “the story of the lady or the tiger.” The narrative, a short story written in the early 1880s by Frank R. Stockton, relates the tale of a fictional kingdom in which men facing punishment must choose between two identical doors, one hiding a lovely woman to be the man’s future wife and the other hiding a ferocious tiger who will eat him alive. “People always think I’ve gotten where I have because of some kind of
Freshman founded Standard Management Company in 1961 while he was still a managing partner at a Beverly Hills law firm. Today, SMC actively seeks acquisition properties in multifamily and retail, as well as land investments in the western U.S.
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