The Timeless Investor Show
The Timeless Investor Show explores how serious thinkers build wealth, resilience, and lasting success across generations.
Hosted by Arie van Gemeren, CFA - The Timeless Investor Show connects history, philosophy, and real-world investing lessons into practical frameworks for today's investors, with a core focus on real estate investing.
We study empires, cycles, currencies, and capital stewardship - and translate timeless principles into real-world action.
Think well. Act wisely. Build something timeless.
The Timeless Investor Show
53 Years. 2,000 Units. 0 Blowups. Ron Danz on Real Estate That Lasts
Ron Danz never set out to be a podcast guest. He just quietly built one of the most resilient real estate portfolios in the Pacific Northwest.
Starting with $500 down on a beat-up house near the University of Washington, Ron spent the next 53 years methodically acquiring 2,000+ apartment units and 400,000 square feet of commercial real estate—without ever blowing up.
In his first-ever podcast interview, he shares the timeless lessons that helped him survive six major real estate cycles, from the Boeing Bust to the Volcker Fed to the Great Recession.
Inside this episode:
- Why Ron never took as much debt as the bank would offer
- His "tortoise strategy" for building generational wealth
- What actually kills most real estate investors (hint: it’s not leverage alone)
- The simple 3-question test he asks before every major deal
- How he built an in-house management company to control outcomes
If you're tired of hype, debt-fueled scaling, and Instagram gurus promising quick riches—this conversation is your antidote.
📚 Mentioned: Timeless Wealth by Arie Van Gemeren, The Slight Edge by Jeff Olson
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Think Well. Act Wisely. Build Something Timeless.
Hello, ladies and gentlemen. Welcome back to another episode of The Timeless Investor Show. I'm your host, Ari Van Gemeren, real estate fund manager and student of history. I'm thrilled to be joined today by an exceptional guest. I may write The Timeless Investor, but our guest today is The Timeless Investor, and we're going to learn a lot from him and his story. We're joined by Ron Dans, a close friend, mentor, and business partner of mine in Seattle, who personally owns and or controls 2,000 plus apartment units. And I just discovered 400,000 square feet of commercial real estate, has 53 plus years of experience in this business, and is here to share with the Timeless Investor Network and everybody who joins our show his decades of wisdom in this business. Ron, did I miss anything on my introduction of you?
SPEAKER_00:No, but you make me sound better than I am.
SPEAKER_01:You are the man. So we're thrilled to have you here. I cannot be more excited. And I also, ladies and gentlemen, this is an exclusive. I just found out Ron has never done a podcast before. So this will be the first time for our network of really exceptional people in this group to hear from Ron and kind of hear what all the amazing things he's accomplished. So, you know, I just... Love to start, Ron. I mean, I think we have a lot of people with varied backgrounds in our audience. I would love to just hear briefly how you got into the business. You know, it's been a long time. You've been in it for a long time, but love to hear your founding story. Like what brought you to it? How'd you get into it?
SPEAKER_00:You know, everybody has their own story, I think, right? Mine is a story of chance. When I was about 21 years old, I was working for a company that did automotive repair. And they specialized in having little garages that were like vacated by a gas station somewhere near a college campus. I was doing administrative work. But one day they said to me, can you help us find a garage near the University of Washington? So I said, sure, I'll do the best I can. I called some realtors. And this lady says to me, oh, I've got a garage you should see. Perfect spot. So we go out to see the garage. What it was was a small two-bedroom house with a car garage. And I laughed and I said, no, no, I'm talking about a garage like in the sense of a commercial repair shop. So that didn't work out, obviously. But a couple of days later, I was having coffee with a friend of mine. He and I had been talking about some business stuff. And I mentioned to him that this lady showed me this house with this garage and told me we could get it for like$500 down on a$15,000 price and a real estate contract. So he and I decided to do that. And we shared the down payment. I had to borrow my credit card, but we shared the down payment and we got this house. Then my friend says, you know, let's live in it. So that way we won't spend two rents. So we just had our own apartment. So I said, sure. So we did a lot of sweat labor to get this thing ready to live in. And then the same friend says, you know, I changed my mind. I don't want the responsibility of living in a house. Let's sell it. Well, this was in what's known as the Boeing crunch, where the billboards in Seattle said, if your last one out, please turn out the lights. So I said, well, that's not going to be very easy. Nobody's buying anything. So let's give it a shot. So he put an ad in the paper himself and asked$4,000 more than we paid for it, including our costs. and got it on the first weekend from a professor from Sweden who calls and says, I'm going to teach at the University of Washington. Can I get this house just for all cash? Is that okay? Yeah, that's okay. We took the money. We paid off our loan to the seller. And my friend says, this is great. Now let's take six months. We made like$2,000 each. Let's take six months and let's get motorcycles. and drive around the country. And I said, well, my problem is that in my situation, I think I'd rather take the money and buy at least one or two new ones, see if we could do this again. So that's kind of the beginning to a longer story, but ultimately very quickly after real estate agents started showing me the property at various choices, I started saying to myself, I really like this process. I really like this idea of doing real estate. So I went and got myself a residential agent's license and started selling houses at a company near the University of Washington. And then, of course, that led to other things. For example, after I sold houses for a while, I decided you need to have your money work for you, not always you work for your money. So I decided to get a job change and I got myself hired on a commercial broker so I could learn about apartments and things like that then i decided since i had no money to spend i should get partners and we should syndicate says i didn't have the money to buy on my own and the other issue was if you had a vacancy in a single tenant building you have no income but if we could get four or five or six or ten units it'd be easier to weather an economic storm so that's what led to eventually just being a buyer, both a syndicator and an individual owner.
SPEAKER_01:Yeah. I mean, it's an incredible story and it's also not all the brokers I know. I think they would look at your path as the one that they really want to take and they'd be really excited about. So I think, I mean, that's awesome. You know, one of the things about this day and age is there's so much research, not research, but, um, resources available for people to want to get into syndication, to want to learn how to be a syndicator. I'm sure that there wasn't a whole syndication coaching guru business when you got started. How did you learn to do syndication in the first place? With no internet, no resources, just figure it out. Did you have a mentor?
SPEAKER_00:That's a great question. I've got to give that a moment's thought. I think I did reading and I talked to One person who syndicated oil well investments, not real estate, just to get a general idea. And then I talked with an attorney and eventually pieced it all together in my mind as to how I could do it. And it does always start with friends and family, right? And now we've got hundreds of investors in our pool. In those days, it was just a handful of friends and family. So they kind of were patient with you.
SPEAKER_01:Yes, of course. Easier to have the right investors in the early days, for sure. And obviously, you chose to invest in King County in Seattle. That was your home market. But you had no idea at the time that Amazon would happen, Microsoft would happen, all of the kind of massive growth factors. What was it about other than being in Seattle that you liked about it at the time?
SPEAKER_00:Well, I realized it was very expensive to go out of property in other locations. You have airplane flights, and if you have a plumbing problem, you can't just fly there. And with the beginning, when you have maybe one small building, there's not much to spread that out over. So I decided I want to stay in the Northwest. And I kind of looked at the city of Seattle, and there's a part of the city which is called Capitol Hill. And those days, it was like the most highly desired in-city neighborhood ever. And it had all the nightclubs and the sports stadiums. But most importantly, in those days, it was all the hospitals. There's like six major hospitals there. Plus, it was on the edge of the financial district. So the tenancy was the Port of Seattle, was the hospitals, was all kinds of things, not Boeing. And there were no other major businesses. So I thought that was a safe play. And that's where I decided I would focus on.
SPEAKER_01:Yeah. And I love your callback to the, may the last person in Seattle turn off the lights. Because imagine if someone had listened to that feedback at the time and followed the hype and the narrative versus the reality, right? And you missed out on 50 years of incredible growth if you kind of listened to the doomsayers, right?
SPEAKER_00:Of course, nobody projected, like you mentioned, nobody knew about high tech. We had no projection for medical science. All the things which are now far surpassed Boeing, right? you know, diversity of industries for the Northwest.
SPEAKER_01:Yeah. Well, I always say, I think Seattle has probably the deepest, I mean, I guess if you counted Vancouver, BC as well, but Seattle has an incredibly deep and robust economic ecosystem today, you know, major tech players, major industrial players, aerospace, obviously. So it's a great market and we're definitely following your lead and, and continuing to invest and acquire in that market. It's, it's fantastic.
UNKNOWN:Um,
SPEAKER_01:So, you know, Ron, one of the things you and I have talked about in person that I really would love for the audience to hear your feedback on is you've been in this business for 53 years, right? 53, I believe, is the right number. So, you know, you've seen, I don't know how many real estate cycles in that time, five, six, right? I mean, the current one, 08, the savings and loan crisis, like every single one over the time. What is the, what do you, like, And you've known people in this business. What do you think is the commonality for the guys like yourself that have survived? What are the timeless principles that underlie your investment philosophy that has allowed you to survive that many cycles? Because as you know, most syndicators and most professional investors don't survive one cycle, right? And so what is the difference?
SPEAKER_00:Well, you know, there's multiple things, I think, that participate or contribute to to be able to last. But I think fundamentally, one is maintaining discipline. So when the cycle's changing, you have to focus on the change and try and think through what it means and be disciplined in your approach. So for example, in the savings and loan crisis, we tried to focus on acquiring properties from the lenders who needed to move them because they were defaulted loans and got discounts on the loan, discounts on the price, and made reasonable deals, which held up well, right? And you came in at a disciplined approach. We came in at a price and terms, which allowed us to be successful for the rest of the downturn, right? So I think discipline is one. Focus is kind of the same thing, I guess. I think you have to be focused on what is it you want to do. Don't get yourself into a whole bunch of deals that you don't know or understand or understand They sound, people say, well, this is great. You gotta decide what is your niche, I think, and then how do you focus on that and create the systems and the plans you need to execute.
SPEAKER_01:It's interesting, because I don't think we usually get to talk to people that have held and managed real estate through the cycles you've been through. One that's pertinent to today, although we're nowhere close to it, is owning and being a real estate investor through the Volcker Fed and massive rate increases at that time. I mean, how did you... And you mentioned the savings and loan. Obviously, every crisis presents purchase opportunities, but it also creates problems for existing assets. How did your portfolio... How did you... What was the principles underlying your investment strategy that allowed you to weather the Volcker Fed, that allowed you to weather the savings and loan crisis, all the different things that have come through? Because I think people today are struggling to weather what's going on, and it's useful, the principles that helped you.
SPEAKER_00:Again, if you have a disciplined approach, so for example, let's take the inflation, stagnation inflation of the early 1980s. We just didn't buy. You didn't buy? We were never willing to jump in at the interest rates required. Relative to today, they were high, and even today they would be high, but they were running up into the 10%, 12%, 15%, 20% interest rate, which is basically the lender saying, we don't really want a loan. But we were quite disciplined and just said, this isn't the right time. Let's just manage what we have as well as we can and be patient. And I think sometimes you just have to be patient, right? Each cycle is a little different, right? And I think one thing that was interesting to me in looking back is that 2008 through 2010 kind of high-tech bust, we had a lot of things coming on the market and you could offer and make lower price offers. In this current period with the tariffs or whatever current issue is last year or two, there's not much real estate even being put on the market, right? Even though you would think a lot of people need to move real estate now. So each one, I think you have to kind of just be disciplined and figure out that approach for that aspect, right? For that particular problem.
SPEAKER_01:Yeah, that makes an enormous amount of sense. I mean, I guess the particular challenge people are facing today is, and I've written a lot about this on the Timeless Investor Newsletter, But the particular challenge is the shadow banking and bridge debt industry really, really took off after the Great Recession or the 2008 Great Recession. And that industry was built for acquiring truly distressed assets and then kind of turning a really distressed 50% vacancy play and resolving it. And by the end of 2019, 2020, 2021, it became the only way to acquire anything. because no deal pencil unless you took on really short-term debt. And to me, with much less experience than you, debt seems to be the thing that either kills you or helps you a lot in this business. Obviously, it's a debt-centric business. So you mentioned you didn't buy in the Volcker Fed period, but how did you manage your current debt obligations on existing buildings? I mean, did you have a philosophy on debt that protected you in those downturns?
SPEAKER_00:Yeah, being that I started with, no funds, I was always really cautious about debt. And I have sort of a, I'm not an immigrant, I was born here, but my family, my parents were first generation here, later in life arrived here around the time that I was born. And so we had a pretty conservative approach about conserving money, using money, trying to get established in the family established, right? So I always had a very cautious approach to debt. And I think that the best thing I can say about debt is if you think about it, good financing can turn a medium deal to a good deal. It can't turn a bad deal to a good deal. I think it can take an okay deal and make it a pretty good deal. Bad financing can take a great deal and destroy it.
SPEAKER_01:So
SPEAKER_00:I was concerned always about trying to get non-recourse loans, which in apartments are easy to get. I was concerned about getting, at those days, we had 10, 20-year, 15 to 30-year payouts. Now it's less common. They're more five, seven, or 10. But we got the longest loan at a fixed rate that we could get. And so we had stability of the payment. And of course, the other thing is, if you over-leverage, which is a whole nother topic, But if you're over leverage and you don't have backup capital, then it's a problem too. Because in those periods, sometimes you need to dip down a little bit, pay a little something to carry something, knowing you've got six months or a year to work out of it, right? Right. So it's kind of being conservative, right? And I used to tell some of my investors and friends, I'd say, you have to think of me as a tortoise. I'm not going to go out and try and do a deal it would put my whole portfolio at risk. If the deal is that big, I'm not going to take that risk. So you said I'm going to go slow but steady. So I did smaller deals, slightly larger deals, slightly larger deals over a progression of many years to where I do much more significant deals now. As opposed to some, maybe as you would call it, the developer mentality, risk everything you have to do the next huge deal. and make your fortune, but then if that doesn't work, you're out of business. So it was always very conservative.
SPEAKER_01:I really liked that approach. I mean, I think the way I've always thought about it, and it's different when you're starting, you take a little more, I mean, in some cases you take more risk, but there's certainly a tendency in the younger generation, myself included in it, to want to scale faster and grow bigger. because we're more impatient. I don't know if it's true that this generation is more impatient or that we just feel more pressure to go big faster. And maybe it's the tech influence or it's the, you see, you know, mid 20 year old selling companies for a hundred million dollars. And you're like, gosh, I need to, I need to go faster. I need to go bigger. You know, that has an influence. But it was interesting. I remember a particular conversation with you asking you about this. And you said to me, I never took as much debt as the bank offered me, which I thought was fascinating because I think in this day and age, we, we try to financially engineer the best possible returns and you have very sophisticated tools and software, but engineering the best returns and competing for equity capital means trying to engineer the top IRR or returns you can get for a deal, which usually means taking as much debt as the lender gives you. And I, I really love that. I've told multiple people that you told me that, and I just thought it was a fascinating approach. Like, I'll just take less than they give me every time.
SPEAKER_00:You know, it's a little bit the outgrowth of something else, too, or in my case. When I started selling and I was the broker, and I started by syndicating a little thing here and there, my basic job was making brokerage fees to pay my bills. At some point, I realized, like I said, I want to have some stability there. from investments, not my personal work when I'm older. But to me, that was when I was 20-ish and I was talking in my mind about where will I be when I'm 60 or 70, right? So I never was focused much on IRR because IRR is a great number and it has its value, but it's so many assumptions, right? I'm going to sell this in five years for a certain amount of money. But that's really an assumption. There's no way to know, right? So I sort of got to a point where I would focus on what's my actual return. And I'd start from a little different place. I'd say, do I love this building? Do I love this location? Do I believe it could be a great piece of real estate over 30, 40 years? And then if I do that, The little bit of a little percent more or less of return in the first few years doesn't matter if it's a good program, especially if you're buying something to remodel a little bit and you know you're going for bigger rents over a couple of years because you just can't predict that accurately what the future is. In case of the Boeing crunch, the future was vastly better unexpectedly when we came out of it than negative, but it could go either way, right?
SPEAKER_01:Right, of course. Yeah. Well, I always say the key is surviving in this business, which you've exemplified and done really well, which leads to my next question, which is you've survived. You've been in this business through I don't know how many cycles now, and you've built a massive portfolio. Without naming names, obviously, and protecting people, what are the commonalities in the people who have blown up that you've witnessed blow up over the years?
SPEAKER_00:Under? capitalized or vice versa, or another way of saying over leveraged, under capitalized, maybe not paying attention to detail. In their due diligence or in their operations. The management of the property is one of these penny makes dimes, dimes make dollar difference. So I think it's really in those kinds of areas. It's being more excited about the potential for this new idea than it is really knowing the ins and outs of this new idea and trying to judge what's wrong. One of the things I used to always, but I still do, and I do it even with people that work for me, is before we make a decision or I make a decision to buy or sell, I usually say to the people in my office with me, what are the three things we forgot to ask ourselves?
SPEAKER_01:Okay, I love
SPEAKER_00:that. What could we have forgotten to even look at or do? And I get all the you don't know the unknowns and whatever, whatever. But we sit down, at least take a minute and say, okay, did we really check everything out? Is there something we forgot to ask? Is there some possibility for good or bad that we've not talked about? And if there isn't, that's very comforting. If there is, we work on it.
SPEAKER_01:Yeah. Do you have an example of something that someone maybe brought up one time and you guys were like, oh, light bulb, we need to work on that?
SPEAKER_00:It's hard to do a specific example, but sometimes it could be in the direction of an industry where we're not sophisticated. We want to do this building, which is by some high-tech companies, but are they going to last or not last? Are they startups, which has a realistic chance of failures? or they long established like a Microsoft or Amazon where they're not going anywhere. Even then, they do change, right? You know, Seattle, even Amazon is changing jobs between some locations, but they're all in the Pacific Northwest. And so it's good for us.
SPEAKER_01:Yeah, absolutely. Yeah, it seems like our philosophies are aligned. in terms of, I've always thought the idea of being a quote unquote path of progress investor was a bridge too far for me from a risk standpoint. Like I always, I never wanted to make the bet. I still don't want to make the bet that so-and-so neighborhood's about to gentrify and change and prices are going to take off. Has that been your philosophy or have you, I mean, have you always been like, we're going to go to the best neighborhoods and just stay there? Or do you take those kinds of bets in your
SPEAKER_00:investment? Yeah, one of my early, people I talked to sort of helped me a little bit was an attorney in town. And he was interested in helping because he wanted to be an investor with me. He said to me once, he said, the trouble with being a pioneer is you get the arrows in your ass. Okay. So, you know. Very fair. You can't get too far. You know, it's the same thing as saying don't get over your skis or something.
SPEAKER_01:Sure,
SPEAKER_00:yeah. This thing was don't get, you know, you can never hit the exact top And the exact bottom was his philosophy. So he'd say, just try and be somewhere near them. And you won't know you hit them or not till you see if they change. So if the sale after you is higher, you bought cheaper. If the sale after you is lower, you overpaid, right? Right. But it really was just be patient again, right? Be patient. Look at fundamentals.
SPEAKER_01:Yeah. You hit on a point I want to double back to, which I think is really important. fascinating which is you know the obvious answer to why do people blow up is debt over leverage they took on too much debt they got greedy but you hit on a second point which is they didn't pay attention to the details which i think is a really fascinating point and you know you've you've in my opinion pioneered kind of the vertical integration approach of you eventually brought management in-house you built your own management group you mentioned before we started this call just in our pre-conversation that you guys managed another four million square feet of commercial real estate for other clients. But I think that's a really important point. And it goes back to this concept of understanding your business from a first principles basis. And it seems to me like the fatal flaw of many people that jump into this and scale quickly and do social media advertising and raise a bunch of capital is they don't like understand the business from a first principles basis. Can you just, for the benefit of the audience, kind of go through how you, because today you manage a massive portfolio, right? Like you cover all of King County. You have hundreds of thousands of square foot. How do you still stay in touch with the details? You know, similar to, I mentioned, that you get to follow on our Andrew Carnegie episode. But Carnegie was well known for, even when he was vacationing in Scotland, to be reviewing the latest reports from his steel mills every single point. I mean, I'm not sure you do that, but how do you stay on top of everything and how did you build that practice when you started your business?
SPEAKER_00:So originally when I was still acting as a broker and I had one or two or three small syndicated buildings, I hired an outside property management company and made a sort of deal was, you guys do my accounting, pay the bills and all that stuff, and help with certain aspects, but I want to be involved in the day-to-day. So we would meet once or twice a week and go over my three or four little things, and I would be on top of it. Then I decided, well, now I'm going to go to the actual property once a week. It wasn't that hard. They're all near each other, and I decided, actually would go on my own and meet the building manager and walk the building, check the cleanliness, discuss his rentals, things like that. And of course, as the portfolio grew, I can't do that. Now there's a layer, we have a manager, a group of managers handling 100 buildings or whatever it is, and we have a regional person sort of managing the managers. We have a marketing department for internet. We have a marketing department for other ways. We have accounting, maintenance. So I can't obviously do that. So what I have done though, besides feel I have really great people, but I think the other thing I've done for me is even now where you wouldn't think I would do this, I go to once a week, for example, we have a meeting in the office where there's a bunch of us on Zoom or in the room, and it's all the department heads and all the on-site managers. There's a large group of people, and we literally take a second and talk about any given vacancy in any project. Should we remodel this more? Should we leave it the way it is? Can we raise the rent? Should we lower the rent? What's the problems in the neighborhood? Why did we get notices? So I'm very hands-on like that. And I spend a lot of my days in the office talking with and being involved in the actual decision-making for problems. Because I think it gives you market knowledge. It makes it much easier when you're looking over a potential deal to decide on your own whether you agree or disagree with the broker projections. The projections are always difficult. So I like to feel like I'm projecting something myself where I'm really aware of
SPEAKER_01:it. Yeah. Well, I love the anecdote about you touring your own buildings. I think in this day and age, what I've observed is a lot of people invest in markets that are not their own. And every time I talk to somebody, and I'm not that far into the business myself, but every time I talk to somebody that's trying to get into it, they're like, oh, I live in Denver and I want to invest in Phoenix. And I always say, just invest in Denver, just invest in your market. Why would you go to Phoenix? And that proximity, especially if you're just getting started, that proximity to your own buildings is so critical. But there's this there's this constant wheel of like, let me do more deals. Let me do more deals. And you end up not being on site. You don't end up meeting the residents. I mean, just the other day, I went to one of our properties and I was just on site and I started talking with a resident. She was saying, maintenance hasn't dealt with the lights downstairs and I'm scared to go into the laundry room. So I immediately was like, okay, we're going to fix that. And she was saying, my husband just had a really bad head injury and I need to get him up the curve on a wheelchair. And I was like, okay, well, let me find a ramp for you to assist you with that. But as an owner, especially when you're third-party managing, sometimes you don't have that day-to-day experience of talking. You start to hear things. On another property, the resident said to me, our utility bills are really high. Have you looked into X, Y, and Z program to help bring the cost down? And I hadn't because the management company I don't want to say they don't care, but they don't really care. You talk to your resident, you talk to your clients, if you will, and they're saying, can you help bring the utility bill down for us? Of course. We'll figure out water efficiency solutions. We'll figure out how to help you. I
SPEAKER_00:still tour around. It takes me a bit of time. Maybe four mornings out of the month, I'll just pick a quarter of the area that we live in here and I'll look at a drive-by or stop-in or combination, a bunch of properties. And a week later, do a bunch more. So I don't probably get around more than once a month to everything that I still do. The other thing is, I think it tells your property manager, owners care. Right. Right. You know, we're aware of and we care about the way we look, the way we present.
SPEAKER_01:Yes. And doing the right thing for the people that are paying our bills. The
SPEAKER_00:residents. Right.
SPEAKER_01:Right. So I know you brought management in-house. What was the catalyst for you? And tell me about that process. Well,
SPEAKER_00:as I grew the portfolio, it became just physically harder and harder to do what I wanted to do, control things, have the information in my fingertips that I wanted. And I realized I just need to get more organized. And at a certain point, I had enough units, but I felt I could amortize the expense. It was really a matter of getting to enough unit count. I don't honestly remember right now, Ari, but I'm going to guess it was maybe 20 buildings because they're all smaller buildings. I said, okay, now I'm not going to be a broker anymore. I'm just going to be a syndicator and I'm going to run my portfolio.
SPEAKER_01:Amazing. And did you feel when you made that change that that better control, better finger on the pulse of the business changed? produced a materially better return for your investors? Was it better or were there pros and cons?
SPEAKER_00:No, I think it was better return, but maybe of more value to me was my market knowledge, rent, expense, what's going on in a neighborhood was so great that I felt really comfortable almost literally saying, you could give me an address, I could drive by it and give you the comp rents already. Okay. I think it was knowledge is power sort of thing, right? And it really helped, I think, me determine, in many cases, do a deal or not do a deal.
SPEAKER_01:Yeah. Yeah, I mean, it kind of goes back to the point on understanding your business from the inside out. And I really feel that the real estate industry today really perpetuates this idea that, oh, if you buy a fourplex, you should immediately give it over to a management company and go try to buy another building because you want to scale. And I ascribe to that. I mean, that's how I started my company. That's how we did it. But I really had a complete conversion on the topic, which is I think people are poorly served. I mean, you did the same thing. You started with third party. But now when people ask me, I say, I think you should manage your own fourplex. I think it's good for you to understand all the different X's and O's of how this actually works. How do you find residents? How do you communicate with residents? So I think it's awesome and it totally makes a ton of sense. Yeah,
SPEAKER_00:I do remember sometimes too, Ari, that if you want to be a real estate person and acquire and focus on it, I think it's hard to do it as a hobby, so to speak. It's one thing to have investments in real estate where you have syndicate partners who handle it or REITs, things like that. But if you really want to own the direct property, I think you have to think of it, I'm in a business, right? I'm not just in a hobby.
SPEAKER_01:Yeah. Yeah. No, for
SPEAKER_00:sure. It just takes time, right? It's a detailed business. And, you know, the property management is particularly detailed, but every detail is important in everything here.
SPEAKER_01:Yeah, absolutely. And, you know, following the flow of funds, understanding money going in, money going out. Like, you know, I think people think that they can pass the accounting on to someone else, but I don't think in the early days. I think in the early days, you have to be the accountant. Like, you
SPEAKER_00:have to really understand. You have to understand your costs too, right?
SPEAKER_01:Yeah, of course. Yeah. The time to turn. I mean, there's so many things about it that are incredible. I mean, yeah. Well, I want to ask you another slightly different question, but in your 53 years of experience, there must have been a downturn or a bad period of the market that tried to kill you. What was the hardest cycle for you and what were the biggest challenges you faced?
SPEAKER_00:Well, this is going to sound like a kind of vain answer. It never happened? It never really happened because, for example, as I mentioned, in the savings and loan crisis, we just didn't buy more. And so we had adequate cash flow from properties we owned, and we had some reserve in case we needed it. And so that was never a pressure. In 2010, and you know the peculiarities of Seattle, Prices went down on acquisition, but rent stayed the same. So there's never a cash flow crunch because we weren't over leveraged in any property. So I think that it was more difficult to find how to buy or sell if that's your goal in those times for us that
SPEAKER_01:operate.
SPEAKER_00:We never took short-term debt.
SPEAKER_01:Right.
SPEAKER_00:We never had any loans being called or any finance issues. We just had to make our monthly payment.
SPEAKER_01:Yeah. Is there a rough loan to value that you kind of cap yourself at? Are you like, it needs to be 60%? Was there a rough number for you that was like around the ballpark?
SPEAKER_00:Well, when I was younger, it was higher, right?
SPEAKER_01:Sure.
SPEAKER_00:Of course, yeah. Because I didn't have capital. So it probably started at 80-20. But it has gone down to more like 60-40 or 50-50.
SPEAKER_01:Yeah. And how do you, you know, one of the things you said to me in another conversation that I found fascinating is you made the comment, because we were talking about some of these cautionary tales that are happening right now. And people of your tenure throughout the country, they're kind of blowing up, right? They got a little too aggressive. They went too big. And you made the comment, some guys just can't stop themselves. What is it psychologically that you think has enabled you to, not get carried away with that, the kind of God complex. It's always worked. I'm just going to go big. I'm going to go huge. What is different about your approach?
SPEAKER_00:I don't know if it's different or not, but I would say fear.
SPEAKER_01:Okay. Sure. You have healthy fear.
SPEAKER_00:Fear of failure, fear of going back to having no capital, whatever that fear is, fear of disappointing my investors if I'm in a syndicate, or fear of disappointing my myself if I'm losing my money, so to speak. So I think I was always motivated by I'd rather just be cautious. And, you know, there's a sort of also thing I told my kids and my son-in-laws as they were getting married and we would talk, have little meetings together about rewards and risk of real estate. I said, you have to also judge not only the risk that you're willing to take financially, so to speak, but also emotionally, right? Sure. If you take a risk, that's going to make you stay up every night all night because you're so sure you might lose too much money. Maybe you shouldn't take that risk.
SPEAKER_01:Right.
SPEAKER_00:Yeah. You should find the level that you can accept. Right. So I think to me it was sort of fear of failure, fear of not having the money, fear of disappointing other people, disappointing myself, harming my, my wife and my kids. If I did something stupid.
SPEAKER_01:Sure. Yeah, absolutely. Do you, Do you, as you're observing the younger generation of real estate people, and you talk to me, you talk to a bunch of other guys, my peers in Seattle that do exactly what I do, do you observe a difference in mentality or kind of emotional makeup for the younger generation? Is there more impatience? Is there more FOMO, fear of missing out, needing to do stuff now? Do you see a difference or is that just in my head?
SPEAKER_00:Well, I think about this sometimes in other ways too, Ari. about how we operate and work now compared to before, I think human personality is pretty fixed. And I think 50 years ago, 30 years ago, 20 years ago today, there were bigger risk takers, smaller risk takers, more detailed people, less detailed people, people that were more interested in what's the prestige of this deal rather than is this a good deal. So I don't think overall It's a big change, but I do understand that I think or what I notice is there's probably a bit more of that now. And like you said earlier, I needed to act faster to make money now. And the other thing I've noticed is I believe strongly this is a people business. And if you don't have a lot of extensive contacts, you can miss a lot of important deals, transactions, opportunities. So I've always been big on phone calls, personal meetings, getting together with people. When I was renting my own units, I wouldn't do anything on the phone with you except set an appointment so I could meet you there and really sell you, right? I've noticed a lot of the younger people in my own office included are more computer-oriented now. They'd like to be able to stay at their screen and at their desk in the office all day and not have to drive to the building, make a deal without meeting the people. So there's some pros and cons, right? But I think that may be a significant change. There's a lot less personal contact. You know, I used to, sometimes in real estate, and this happened to you, I'm sure other people, you'll do a deal and a couple of years later, some of you will say, boy, you were lucky. That was a fantastic deal. But you know, you don't know that till a bit later, right? It looks good to the outside. And I think sometimes to find that once every 10-year deal that really is a great deal going in, I think you have to be everywhere all the time. Yeah. So I think that means talking with people, going places, being involved in people that do the real estate business. So not necessarily a broker conference about a cap rate, but where are the buyers? Where are the brokers who might bring me a deal I want? How do I spend time with them and develop a relationship so we're early on? So in apartments, usually, I know it's not 100%, but frequently we get calls in the office from a local broker saying, I got this deal. I know you guys could buy it if you wanted. We think it's great. Will you take it or not before I go to market?
UNKNOWN:Right?
SPEAKER_00:Because that's because of relationship deals, right?
SPEAKER_01:Yeah. Yeah. That's incredible. Yeah, that's a good point. I mean, I do think there's something to be said to that. You know, technology has brought us closer together, but also made us further apart in many ways. And yeah, we're definitely seeing that. I see it when I go back to my high school for alumni events. A lot of the kids, you know, have struggled to have a human conversation with me. And I, you know, I just, I, obviously there's some substantial changes that technology is bringing to society, not all positive. So- Awesome. Well, I want to I want to wind up with you. You're our second guest, Ron. So thank you for being on the show. We are going to just for the listeners, we're going to I'm going to try to end every episode with one of our distinguished guests like Ron with a question that's near and dear to my heart, which is what is the most impactful book you ever read? And what would you recommend to your your children or your grandchildren say you must read this book?
SPEAKER_00:That's a tough question, but given the nature of the podcast, I would say Timeless Wealth.
SPEAKER_01:Okay. Really?
SPEAKER_00:Okay. Of all the books? All right. It's a bit of a joke, but it's also a serious joke because Timeless Wealth, which I read maybe twice actually, was a really excellent real estate book because so many of the real estate books that we talk about focus on The technical things, what's the cap rate? How do you analyze this? What's probable, what's possible? They don't really talk about the mindset that the investor needs. And you bring up your 10 special points, for example. And if you look at those, those are not technical formulas. Those are not real estate required pieces of information, but they make you focus on risk, reward, what you can and can't do it. So all jokes aside, I think that's an excellent book. And if your listeners haven't read it, they should.
SPEAKER_01:Thank you. I appreciate
SPEAKER_00:it. In terms of other books, I've always been a person who reads extensively. At any one time, I have four or five books open on my Kindle, and frequently they relate to the same topic. And I was a history major with a serious interest tension in philosophy, which has nothing to do with real estate, right? Sure. That's because I thought I was going to be a teacher before I got sucked into the houses. Sure. So I have a little different bent. There's a lot of great real estate books just to learn technical things. But I think sometimes if you reach out beyond the traditional thought of what's a real estate book, for example, one book I found kind of valuable is called... Slight Edge by Jeff Olson. He's got a couple of books, three or four, and maybe a little series. The basic thing he's trying to do is point out if you want to have that slight edge, if you want to have the deal nobody else got, if you want to lose the weight that you want to lose, not smoke when you don't want to, whatever it is, his basic thing, what you talk about is you have to remember that it's in every single little detail. It's easy to say, if I don't work out today, it's not going to make me less healthy. Or if I do work out today, it's not going to make me healthier, right? Or if I eat this one piece of candy on my diet, it's not really going to make me way more. And really his point is, whether it's in business or personal things, whatever, to build those habits, you have to keep executing them even at the smallest detail consistently. And I think that was very helpful because it helped me stay on task.
SPEAKER_01:I love that. I will pick that up right after this call and we'll make sure to link the book in the show notes as well for all the listeners. We'll also link Timeless Wealth, but we usually do that anyway. So I appreciate the shout out for my book, but that's amazing. I also learned something new about you today, Ron, that I didn't know, that you were a history and philosophy major. I also studied history and philosophy. So I always knew we got along for a good reason, but I didn't know that we shared the history and philosophy background, which is amazing.
SPEAKER_00:When people ask me, especially friends in my age group, who now say my kids and my grandkids are thinking about going to real estate, what should they read and stuff? I usually say business degree is important. I'm not ever going to say that a business degree isn't important but it gives you a lot of input on the technical stuff what's this formula what's that formula and i think sometimes in philosophy i found uh it helped me i think do better learning how to how to go through a process of coming to a conclusion Not skipping to the conclusion or falling into my own trap of this is what I wanted to say, but here's how you become logical and you stick to it. In philosophy, I think the importance of setting things to test things against. And then it gets into your own personalities and risks, right? So I think philosophy was really a great, I wouldn't say better or worse, It was a great subject to work on, even going into business.
SPEAKER_01:Yeah. Well, I'll take a harder stance than you. I think that you can learn business by doing business. And for all the younger listeners, I think focus on something you love and that teaches you how to think. And then learn business by doing business. And I still remember interviewing at Goldman Sachs back in the day and They were like, oh, you didn't study business, blah, blah, blah. And I said, well, I actually think it's to my benefit that I didn't study traditional business in college because I was taught how to think and analyze and think through it. And I'm not saying business degrees are not taught that, but you learn all that doing business, right? You learn how to think from the social sciences, from these different things. And so I'll take a stronger position than you and say, I think there's an immense amount of value to philosophy, to history, political science, these different studies that give you respect for what came before. I mean, that's the whole premise of this show, right? And everything we write is what can we take from history? So I really, really appreciate this. This was a fantastic interview. And just, I think to summarize some of the key points, be conservative, start small, be detail-oriented, be in the weeds, understand your properties, and don't get blown up by, as Sam Zell would call it, edifice mania. I must own this building. And then you blow yourself up, which is what we're seeing happening today. And obviously you and Sam Zell both exemplified that trait and didn't take insane risks, right? So thank you again, everyone, for being here for another episode of the Timeless Investor Show, where we match history, stories, and great investors to modern day investing to find an edge and be the best we can possibly be. Think well, act wisely, build something timeless. I'll see you next week.