COVER STORY
SAMUEL K. FRESHMAN
“He’s a legend in the real estate business. He’s been enormously successful. He’s completed a ton of transactions, and he’s mentored a lot of people.” - Brian Shirken, co-founder of Columbus Pacific, excerpt from the 2016 Stanford Real Estate Hall of Fame Tribute Video to Sam Freshman (’54, JD ’56)
WHERE (ANDWHAT) SAM FRESHMAN IS BUYING IN 2018 S tandard Management Company has investments all over the country, but Samuel Freshman definitely has a favorite market for 2018.
STANDARD MANAGEMENT COMPANY’S EDUCATIONAL OFFERINGS
S am Freshman and his Standard Management Company (SMC) offer a wide array of educational materials, including publishing news- letters, whitepapers, audio seminars, and a number of books including Principles of Real Estate Syndication. SMC also hosts two annual conferences in Los Angeles and San
be worth less than we’re paying for it now, and I’m going to tell my investors that. We’re due for another recession. I’ve been through six recessions in 60 years, and property always drops way down.” Freshman doesn’t stop with that bleak assessment, however. He believes six decades in the business has given him the perspective his investors need to circumvent drops in property values and, if the deal is structured correctly, outwait the market’s downswings. “If you borrow too much to do a deal, then you lose the property. You lose everything,” he explained. “However, as I tell my investors, I don’t borrow too much. I make my money with a pencil, and I am always looking at every way possible to squeeze as much money as possible out of every opportunity. If you stay with me in this investment for 10 years and have patience, we expect you to at least double your money and make six percent of your cash flow in the meantime. “If you’ve got the time, you will always make money, assuming you bought right in the first place.” “I hate risk. Real estate is the only business I know of where you can’t lose if you have patience and don’t take on too much debt.” Francisco each year. The Commercial Real Estate Update, Trends, & Net- working Symposium, CRE 2018 “helps real estate investors learn how to make money in the new economy,” explained a company spokeswoman. This year’s CRE 2018 will take place on March 22, 2018, in Los Angeles, and on March 26, 2018, in San Francisco.
ipants in the process. “I feel like there is not enough support behind bitcoin right now,” he said, noting that for him, the presence of risk is a deal-breaker. “Of course,” he al- lowed, “it could be that everyone in the world but me ends up making millions of dollars on it.”
Learn more about the conference at CRE2018.com . Learn more about SMC at standardmanagement.com .
“We’re doing the best in Reno, Neva- da, right now,” he said, adding he likes “Nevada in general” for this year. “We have probably half of our portfolio in Las Vegas and Reno. “20 years ago, we didn’t have any property in Nevada at all, but things change in real estate all the time. You have to change with them. There are a lot of good things about Nevada, in- cluding no state income tax and, unlike Florida (which also has no state income tax), Nevada has no hurricanes. There is stable, pleasant weather, and no person- al income tax." Freshman explained that he origi- nally began investing in the Reno area “because of Amazon and Apple” and the many high-tech Silicon Valley companies opening branches in the area. Regarding Tesla, which many analysts cite as one of the main reasons to invest in Reno, Freshman has an unusual perspective not usually voiced in the industry. He considers Tesla “a bonus” for his Reno investments, but emphasized, “There is still risk with Tesla. With all this talk, the company still does not make a profit. That will always concern me.” Freshman added that he feels similar- ly about the cannabis industry and the ever-popular bitcoin. His concerns with cannabis mirror those of many inves- tors: simply that it is still illegal on a federal level. Freshman’s concerns with bitcoin are a little more complex. He compared bitcoin to the Dutch tulpen- manie, or “tulip mania,” that occurred in the 1630s when the market for tulip bulbs shot sky high, then dramatically collapsed, ruining most market partic-
book, Never Old Enough to Know Better , Freshman details what he learned from his various investments and career pursuits over the years. You can see an excerpt from that book on p. 29.
BUYING RIGHT, AND BUYING BIG
Freshman’s dedication to the concept of “buying to keep” really big pieces of real estate may seem inaccessible to newer investors or investors not already established in the hot real estate markets where Freshman and his company do many of their deals. However, he insisted that real estate syndication is not nearly as intimidating or complicated as many believe. “When I’m teaching, I often meet new investors just starting out. They don’t have the capital to do big deals, and they think they need a couple million dollars if they want to invest in big deals like we do at Standard Management Company,” Freshman said. “I always tell them to go get themselves a partner. There are plenty of guys like me with all the money we need looking for property, and we’re far more interested in finding that property than working with somebody who will give us a couple million dollars. If your deal is good, then you will find someone to put the money in.” Because the suggestion often intimidates new investors, Freshman told a story to illustrate the importance of finding that first partner. “I did not
ALWAYS LOOKING FOR OPPORTUNITY
As Freshman continued to pursue bigger and more exciting deals, he began to develop a philosophy on life and business that hinged on two principles. “There are two things you must avoid in any type of real estate, but particularly if you want to effectively raise money to do really big deals,” he said. “First, never skip your due diligence. Second, don’t get too greedy. Those two mistakes will ruin you, and they will also ruin your reputation.” Freshman places an extremely high value on reputation, citing his rigorous honesty with investors for much of his success at garnering funding for real estate deals over the years. The key, he said, is to never sugarcoat anything. “Something I hear a lot these days at the height of an economic boom is the question, ‘Where will we be with this investment in three years?’” he noted. “Well, frankly, three years from now the property will probably
Standard Management Company employees enjoy a view of the airport out several of the wide office windows. "It's an efficient location since we operate all around the country," said Freshman.
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