WS1931 Grow Your Real Estate Firm With These Tips | Highlights Bob Knakal

In today's highlight episode of the Real Estate Syndication Show, we feature seasoned real estate veteran, Bob Knakal, who  shared his extensive knowledge and experience in the industry.

Bob started his journey in real estate back in 1984, and he's witnessed firsthand the dramatic changes technology has brought to the field. From the days of no computers and payphones to the current era of AI and advanced data analytics, Bob has seen it all. Despite the technological advancements, he points out that the number of property transactions hasn't increased; instead, technology has enabled a smaller group of people to accomplish more.

Bob also shared his insights on the current market challenges, particularly the impact of rapid interest rate increases on property values. He advises sellers to hold off unless there's a compelling strategic reason to sell and emphasizes the importance of data quality and analysis in making informed decisions.

In the second part of our episode, Bob took us through the incredible journey of growing his firm from just two people and a secretary to over 250 employees and three offices. He attributes this success to a granular understanding of the market, a residential farming approach to commercial real estate, and a strong focus on self-produced, accurate market insights.

Bob also highlighted the importance of servant leadership in building a successful team. By empowering employees and making them feel integral to the company's mission, they were able to foster a positive and supportive culture that led to the firm's success.

Training was another key factor in their growth. Bob detailed their rigorous training process, which ensured that every broker was fully prepared before engaging with clients. This process included creating maps, walking every street, taking pictures, and understanding the value of properties in their territory.

Finally, Bob shared his perspective on the current buying opportunities, comparing them to past market downturns. He believes that those with capital and courage will find this to be one of the best buying opportunities in a lifetime.

Thank you for tuning in to today's episode. Remember to like, subscribe, and share the Real Estate Syndication Show with your friends. Stay informed and empowered in your real estate journey with us.

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Transcript

Whitney Sewell: This is your daily real estate syndication show. I'm your host, Whitney Sewell. Today, we've packed a number of shows together to give you some highlights. I know you're going to enjoy the show. Thank you for being with us today. Welcome to the show. Honored to meet you and have you on what I've read and listened about you. I've just, I'm honored to have you. I know the listeners are going to learn a lot over the next couple of days with you. Welcome again.

Bob Knakal: Well, Whitney, great to be with you. Thanks so much for having me on.

Whitney Sewell: Yeah, I know. It's my pleasure. And I mean, I'm so looking forward to diving in. A lot's changed in the real estate industry since you started in this business, right? And I want to hear your perspective on a number of things and we're going to get into that. So listeners know over a segment of two days here, like I mentioned, just so they know. Thanks again, Bob, for your time and you're being very generous in that. A lot has changed, right? And let's dive into some of the tech that you've seen maybe change since I know you mentioned before you started in 1984 in this industry, some things you've seen that's changed, but ultimately maybe the technology things that you see that's going to change our industry and commercial real estate, you know, moving forward as well.

Bob Knakal: Yeah, there's been a world of change, a world of change, Whitney. I mean, in, in 84, when I started, I didn't have a computer on my desk. There was no fax machine. I didn't have a cell phone. You wanted to send a letter to somebody, you hand wrote it, handed it to a secretary who typed it up. And it was very, very different world. We carried around a roll of quarters in our pocket. If somebody didn't show up for a meeting, you went down to the corner to the pay phone and tried calling them. Very, very inefficient. In those days, if you were in the office, you were working. And if you were out of the office, you were not working. And the world has changed so dramatically over the last 40 years. It's very interesting. Technology has increased the speed with which things can get done. The reach that you have, it's changed so many things. But interestingly, in New York City, there were more properties sold in the 80s than in the 90s, more in the 90s than the noughts, and more in the noughts than last decade. So it hasn't really increased the amount of commerce that's being done. It's just empowered a smaller group of people to accomplish more. And that's the big impact that technology has had on the world so far. I think it has really created tremendous leverage and horsepower for a smaller arena of folks to get a lot done. But there isn't more commerce being done because of that. And as much as technology has changed the real estate brokerage business over the last 40 years, I think the relative change over the next five years is going to be dramatically more than we've seen over the past 40 based upon what's happening with AI and other technological advances. It's really going to change the world.

Whitney Sewell: That's incredible. I think it's so interesting that you say, you know, it's like all the advancements that we've had have not increased the number of sales, right? Or transactions is what you're saying, right?

Bob Knakal: You know, technology doesn't impact a discretionary seller. People have always sold for reasons that were non-discretionary. You know, the old reliable death, divorce, taxes, partnership disputes, things like that, that you have to sell. But then there are also discretionary sellers that will sell based on tax incentives. If you look in New York, four of the top five years in terms of building sales volume were catalyzed by tax law changes, either people selling to beat increases in taxes or selling right after tax rates went down to take advantage of that implied increase in value. So the reasons for selling are not necessarily tied to how easy or advanced technology is to make things happen.

Whitney Sewell: Yeah. Wow. You know, what about, you know, when technology has been improved, we'll say over the last, you know, 40 years, you know, how did you maybe implement that? Maybe give us a couple of tips on how you implemented that effectively across the team. Right. And then we'll move into maybe some new technologies that you see coming or how that's, you know, you're, you're planning there to improve in those ways, but maybe, you know, has there been some systems that you've found to say, you know what, this really helped our team to take in the, this type of technology as it advanced?

Bob Knakal: You know, I think what I've learned over the years is that folks who are early adopters of new technology tend to be the winners. I have to admit that when email came in, I was really slow to get on board. I'm like, a message over your computer? You got to be kidding me. Who the heck is going to do that? And very slow to pick that up. And, you know, I held on to my flip phone for far longer than I should have. But now I've kind of changed my perspective on technology. I'm trying to embrace it. I'm probably the least technologically savvy person that you'll meet. I'm happy my cell phone goes on in the morning, but I'm actually coming out with a New York City land index, which is going to look at land values going all the way back to 1984. We're taking that data set and applying an AI application to it where we're comparing fluctuations in land value to macroeconomic metrics, interest rates, inflation, S&P 500, Dow Jones, price of gold, consumer sentiment. In addition to all the logical things that impact land values in each product sector like rents and occupancies and things like that. You know, I'm trying to utilize AI to come up with some predictive measures based upon data sets that we've created.

Whitney Sewell: What I hear is that, what you're saying is that almost anybody else in this business have, have no excuse for not being up on technology. Oh, and you, you were in real estate almost not, not long after I was born. So, so I should, I should be up on technology, right? I should have no excuse.

Bob Knakal: I think it's important. I think it's important. Again, early adopters, uh, tend to be the winners in these things.

Whitney Sewell: What's some technology right now outside of that, the, what you just talked about that you're creating, which is very impressive. Any other tech that you all are using now that you found to be just crucial, you know, to improving the day-to-day business or operations or buying, selling commercial real estate?

Bob Knakal: No, I think that when it comes to real estate, I think it's important to always remember that it's really not the real estate business. It's the information in relationship business and information is critically important. I think technology is important, but only to the extent that you can put high quality, high integrity data into these different technology platforms. And so we focus really, really significantly on making sure that our data is accurate. We self-produce all of our data sets. We don't rely on third-party aggregators. enthusiastic about the quality of those data sets. So, you know, we like to produce our own, but it's, it's increasing quality of your data, verifying information, making sure that data is analyzed in a consistent way so that, because actually the interesting thing about information is that if I tell you last year, there was 26.3 billion in sales volume in New York City. that doesn't really tell you anything unless you know what it was the year before that and what it was at the peak of the market and what it was at the bottom of the market. So information becomes statistically significant on a relative basis, not an absolute basis. What direction is the market heading in and what's the magnitude of that change in direction? If I tell you that The volume of sales is down 52% from last year. That's very impactful and informative to you. If I tell you that we're X percent below the peak, but we're Y percent above the trough, that's instructional, that's informational, that gives you a sense of what's happening in the market. And so we always try to look at the market very statistically to provide our clients with insights into what's really happening out there.

Whitney Sewell: Love that. That's very helpful. I just to think through, right. As we look for data, I agree completely. It's an information business and a people business. Right. But man, it is so much information driven. And what I often say on the show is, you know, cause everybody says, why don't have a crystal ball with me? I'm like, well, I understand, but what you believe, you know, affects what you do, right. You know, whether, you know, and, and what you believe comes from the information that you get.

Bob Knakal: History often repeats itself. They say it's not exactly a repetition, but it rhymes. And so you need to look at how the market has performed at other times similar to what you're going through now. And it does provide some insight into how the market may move forward.

Whitney Sewell: Yeah, no doubt about it. Bob, any, any, uh, advancements in tech that you see coming? Are there like, maybe you all are trying to adopt right now, or maybe it's AI, or maybe it's something else that I don't, haven't heard of yet that, that you see helping, you know, push this, uh, data collection or analysis, uh, you know, in a faster or more accurate way.

Bob Knakal: Yeah, well, I think what I'd seen so far, unfortunately, I worked with Rod Santamassimo at the Massimo Group for about 12 years. He's my broker coach. Rod is probably the leading authority on AI and how it's going to impact the real estate business. And it seems like many of the applications have to do with making processes much more efficient. It's not really in the data collection. I think the data collection has to be done by, by practitioners, by the producers that are actually doing the transactions. But once you have the data sets, once you've collected the information and the information is accurate, there are a number of things you can do to be more effective with the way you prospect, the way you reach out to people, the way you leave messages, you know, market presence in terms of Making your, your phone calls, your email blasts, your text messages, your hard mailing. All of these processes are very labor intensive and technology can help make those, those initiatives much easier to do, much more impactful and will allow you to leverage your time a lot more.

Whitney Sewell: What are you all using as far as the CRM or I'm sure you're using something like that to help you track what you were just talking about at the calls or the text messages, the followups, things like that.

Bob Knakal: Now we have an internal CRM here at JLL called CapForce, which is used. We also use a RealNix product, which has been fantastic for us. So we're logging all that information from every contact with an owner. We're logging it into the system and trying to utilize that data as effectively as possible.

Whitney Sewell: What changing gears just a little bit, the last few minutes of this segment, Bob, what would you say is a, is a challenge right now in JLL or, or maybe just for in the current market or, and we'll talk about maybe current market, you know, and some things you think about in the next segment, but, but like maybe any challenges right now, or maybe even around technology that you all are experiencing as we speak.

Bob Knakal: I don't speak on behalf of JLL and what's happening company wide. But I can tell you generally in the marketplace, biggest challenge today is the fact that we've had forward pressure exerted on property values based on the very rapid and massive interest rate increases. Whenever you have something that exerts downward pressure on value, it takes a while before the market gets acclimated to the new reality. And you have to go through what we refer to as the capitulation phase, where people realize, hey, yeah, my property value is down X percent, and there's pent up demand to sell, and I'm just going to have to pull the trigger at this new price. And I don't think that we are quite into the capitulation phase yet. If you look at the market as a microcosm, of New York City for transactions over $10 million in Manhattan. We've seen 42 in the first quarter, 43 in the second quarter, 84 in the third quarter. We thought that that doubling of activity in the third quarter might have been an indicator we were hitting that capitulation phase. But I believe the fourth quarter numbers are not going to be good. And I always say, With quarterly data, you really need to see two or three quarters before you call a trend. So the third quarter numbers could just be in aberrations. But we need to get to the capitulation phase. And that's really the biggest challenge for the market, is to unfreeze some of the stuff that's going on. Lenders are trying to figure out what to do. They're being relatively covert with the activities that they're taking because they don't want to be scrutinized too much. So, you know, the market's trying to feel its way, figure out where it's headed. And I think that's really the biggest challenge today is that there are very tangible and profound implications being felt by the real estate market based on how quickly and how massively rates have increased in an unprecedented way. And so dealing with a number of tangential things that have happened because of that is what we're going through now.

Whitney Sewell: Yeah. So it's, it's kind of the, the sellers coming to grips with, man, I missed the prime time to sell. Right.

Bob Knakal: Every meeting that we have with potential sellers, we start out saying two things. One, don't sell today if you don't have to, or don't have a very compelling strategic reason to do so. And number two, we know you had higher bids. years ago or sometime in the past. Unfortunately, we don't have a time machine. If we get one, we'll let you know, but you have to deal with the reality and whatever bids you had in the past or conversations you had in the past are completely irrelevant. Wipe them out of your memory. We're in a new reality. You have to deal with the reality we're in today. We can't go back in time.

Whitney Sewell: Yeah. Great advice. Just to get that out there right away with that seller. Right. But what, what are, you mentioned, unless there's a strategic reason maybe to sell, what are maybe some good reasons that you've seen sellers actually sell today?

Bob Knakal: Well, there, there are portfolio reallocation motivation. So, if someone is too heavily invested in one particular product type sector, maybe they want to diversify into another one. Maybe they want to diversify geographically. Maybe they need to sell to raise capital for the cash-in refi that they have to do on the property they really want to own long-term. So, there are a number of reasons why people may choose to sell today that are forced sellers, they are discretionary, but there are strategic reasons that are compelling today. I think everybody's looking at their portfolio and kind of figuring out which are the, which are the assets I really want to own long-term, which are the ones I could potentially monetize today. But a lot of it is, is being very thoughtful, trying to look at skating to where the puck is going, not where it is. And so, you know, a lot of folks are really. taking a deep breath, taking a look at the portfolio and figuring out what's best for them for the long term.

Whitney Sewell: You know, now that I was thinking about, you know, you started in 84, I mean, you've seen many cycles, right? And you've had to deal with sellers and buyers through so many cycles and many operators, no doubt about it. You know, what would you say are some, you know, some ways or reasons that the ones who have survived consistently, why did they survive? You know, through many downturns or maybe some consistent things where like, man, I've seen this happen so many times. These people didn't make it because of this and these did.

Bob Knakal: Well, I think leverage has a lot to do with that. Leverage is potentially a great thing, but it's also potentially a very risky thing. I always say nobody ever got foreclosed on that didn't have a mortgage on their property. So the folks who have remained relatively lowly leverage have done very well. But we're in really uncharted territory now with the massive fluctuation in interest rates in such a short period of time has created issues for folks. And only 20% of our economy, everybody says, well, the economy seems to be doing pretty well. Well, yeah, the broader economy is doing well. Only 20% of our economy is actually highly correlated to interest rates. You know, if you look at the government and healthcare, that makes up 35% of our economy. And I haven't heard anybody say, well, I I'm supposed to get open heart surgery, but I'm going to wait until interest rates come down before I go into the night. Right. So clearly the broader economy is, is chugging along, but real estate, which is very, very highly correlated to fluctuation in interest rates. is, is dealing with a very profound issue today.

Whitney Sewell: Yeah. No. So it sounds like, I mean, by having too high of leverage, I mean, it has been the common factor that's brought so many people down through different cycles over the years.

Bob Knakal: Yeah, I think so. I think that the folks who have remained very conservatively leveraged have tended to, to do, uh, do the best.

Whitney Sewell: Yeah. Wow. That's it. It's so interesting to think through that. What, any, any thoughts on like buying criteria right now for operators that they should be considering though? I mean, cause we're all trying to buy, right? But man, I think all of us are like, we may, may wait a little bit, but we still want to buy if we can.

Bob Knakal: Yeah. One of, one of the interesting thing, you know, we deal with, with the three main buckets of, of potential buyers, people who are uber wealthy. that have been around for a long time will continue to be around for a long time. Overwhelmingly, those folks are saying, yeah, it sounds like a really good deal, Bob, but it's going to be cheaper in a couple of months. And then you have the folks who are very bullish on the future of New York, but they don't have their own money and can't raise it. And then you have the folks who are just very pessimistic about New York and they're buying all around the country. and are not looking at buying in New York. To the uber wealthy folks, what I've been saying is, look, we have several asset classes where you can buy property for the same price per square foot that those buildings were selling for 20 or 25 years ago. This is the buying opportunity of a lifetime. Buy when nobody wants to buy, sell when everybody wants to buy. And I think if you look at the GFC, for instance, in New York City, value bottomed out in the second half of 2010. But all the people that bought property in 2009 are so happy that they bought at the 2009 price. You can't time the market perfectly. And you'll only know that we're past the bottom, probably six to nine months past the bottom, and then you've lost the opportunity already. I think people are going to be saying four or five years from now, they're going to say, what the heck was I thinking in 2023, 2024? I should have bought everything in sight. And I really think it is a great buying opportunity. That sounds self-serving because I'm an intermediary that makes money when people buy and sell. But I really believe it. You have office buildings trading at $300 a foot. They were trading at $300 a foot 20 years ago. And I think if you look even in some multifamily buildings trading for $200, $250 a foot, that's unheard of. But I think it is a tremendous buying opportunity. You just have to have capital and you have to have courage. If you have capital and courage, I think you can make some outstanding buys today.

Whitney Sewell: Love that. You have to have capital and courage. No doubt in this business, you need both of those things to say the least. Love that. Just talking through the different buyers. And so a listener can think, okay, what are they? Right. As they, they come into this market. And I think it's, it's wise to, to look back through different cycles and especially listeners who have been around a while, you know, or been in the business a while. And they think, yeah, that's right, Bob. I. wish I had bought, you know, during 2009 or 10, right? When everybody was scared.

Bob Knakal: Yeah, Whitney, the best buying opportunity I ever saw was during the S&L crisis in the early nineties. Very few people had capital. Property values were really, really depressed and people were scared and people didn't pull the trigger. But by the mid nineties, everybody's saying, oh gosh, I should have bought everything in sight back then. I think that this buying opportunity rivals that buying an opportunity. And I think you're going to see the folks who are being aggressive, and it's only a very narrow slice of the market today, but there are some people being very aggressive out there. I think you're going to see fortunes made by people who are bullish on investing today.

Whitney Sewell: And I'm excited about this conversation because you shared just a little bit with me, been piqued my attention, and I know it will the listeners as well. You know, you and a partner, you all grew from just you two and a secretary to over 250 people and three offices, and we're doing so many more transactions than anybody else in New York City. And I want to hear. you know, these strategies for growth, right? How you all did that. I know you had to be strategic about that. That does not happen by accident. Right. And so let's dive in to that specific thing and, you know, give us a little bit of that story, some of the growth and what that looked like. And then let's dive into some of those specific things that you all, you all put in place.

Bob Knakal: Sure, Whitney. And it's great to be with you again. And so I'll tell you a little bit about the background. I started in the business in 1984, showed up my first day at CB, which is called Colwell Banker back in those days. I met Paul Massey. We worked there for four years, left in November of 88 to form Massey & Nackel. That was, at that time, just the two of us and a secretary. We sold the business in 2014 to Cushman & Wakefield. At that time, we had over 250 people and three offices in New York. And the way we approached the business was very meticulously and actually adopted a residential farming approach to commercial real estate. You know, having the CB background was great because we saw how folks were selling institutional properties. And we brought that institutional sales approach to the private capital end of the business for smaller properties. But we each started, Paul and I started in small geographic territories, getting to know the neighborhood on a very granular basis. It was block by block, building by building, know every owner, know every transaction, know the zoning changes that were going on, major developments that were happening in the area, who was buying, who was selling, what the prices per square foot were, what the cap rates were. And because we were so deeply entrenched in these markets, we got to know everything that was happening there. That was a competitive advantage for us because it was a way for us to differentiate ourselves from every other broker. And then the first salesman we hired worked in a territory north of bulbs. The next broker we hired worked in a territory south of me. We grew the firm like a jigsaw puzzle and ultimately had the entire city covered with a very, very granular approach to understanding the building sales business here. And, you know, CoStar started tracking the building sales market in New York in 2001. The very first chart they put out, we were at the top of the chart in terms of number of buildings sold. We were shocked by that. But from 2001 to 2014, the number two company in New York had sold about 1,300 properties. We had sold over 4,000. So we lapped the field by more than three times. We were just a local popcorn stand compared to the big national and global firms. But we were so entrenched in these neighborhoods, you know, we had gotten out to the outer boroughs in Queens in 1999, Brooklyn, 2001. So we were out there before it was really cool to be in the outer boroughs of New York City. And we had a very, very significant number when the market started to thrive out there. But it was just a very, very systematized implementation of a blocking and tackling strategy of just knowing the markets, understanding that we're in the information business, the real estate business, trying to have better information than anyone else. And that system really worked well for us.

Whitney Sewell: You're just getting into the granular level like that. You mentioned piecing it out, right? So it's not like we're trying to do all of New York City or New York at one time, right? You build a process in a small area and then you kept repeating, right?

Bob Knakal: Look, there are 165,000 investment properties in New York City. How can you possibly try to cover all that? Right. So, you know, easy to put deals together, but to really be an expert and add value to your clients, to put yourself in a position where you can, because of your local market, you can perform and achieve better results for your clients that leads to more business. And in fact, there was a period of time, 06, 07, When there was an appraisal firm, Miller Cicero, that kept calling us and saying, hey guys, how come all of your comps are so much higher than the rest of the market? And it turned out that they, for a couple of years, produced what was called the Massey-Nicoll premium that showed that our prices were 31% higher than the rest of the market, the prices we were able to get for our clients. And again, our value proposition was very simple back in those days. We only sold properties. only represented sellers, only worked on exclusives, only worked in our territories. And all we wanted to do, we were completely agnostic as to who the buyer was. We just wanted to get as many bids as possible, get the highest prices we could get. And it was reflected in the data. And unfortunately, Miller Cicero stopped producing that messy-knuckled premium study because no other brokers would cooperate with them and give them sales information because they felt they were advocating for us too much. But it really was just a focus on understanding the markets better than anyone. We never pulled third market, third party reports and data from anyone. It was all produced in-house. And that was an easy way for us to differentiate what we were doing. And that differentiation led to a competitive advantage.

Whitney Sewell: never pulled third-party reports. Speak to, you know, how you all did pull the information and how, you know, how you, maybe the process of organizing, gaining and organizing that. So it's helpful.

Bob Knakal: Yeah. I mean, it was, it was a system where we, we could have, we had access to city records. So we saw when deed transfers were done. But each broker in their defined territory would look at the sales within their territory every week and call every buyer and seller and say they didn't do the transaction themselves. And most of our brokers had 15 to 20 percent market share in their local market. in their territory, they would call buyers and sellers and get information. And our research people, we call them the clipboard team. They had clipboards with all the sales on them. They went around sitting in the broker's cubes asking, hey, what about this sale? What about that sale? Was this really a sale? What was the price per foot there? And it was interesting how inaccurate a lot of the publicly available data was, but because our research team was getting information directly from the folks who were in the market that knew the transaction, that did the transactions, the quality and integrity of the data that we produced was very significant.

Whitney Sewell: You know, speak to maybe some of the other strategies for the growth, right? You know, you, you have to be very strategic, obviously with, from hiring to scaling the hiring process to, you know, how you treat your employees to, I mean, own and own, right? So, you know, let's go a little deeper in, you know, just a strategy for that kind of growth and that many people on the team.

Bob Knakal: Well, Whitney, we, we always implemented what is referred to as Robert Greenleaf's servant leadership. And servant leadership is about empowering the people that you work with, building up their self-esteem, showing them that you support them, and you want them to do better than you do. And so everything we did was around building up the people around us, trying to get them to exceed their own expectations for what they could achieve. And the implementation of that approach actually has worked wonderfully. If you look back today, today in New York City, there are 29 investment sale businesses or divisions of businesses that are owned by or run by people who learned the investment sales business at Massey Nackel. And that is something I'm extraordinarily proud of. We produced great professionals. It was very collaborative. The culture was great. We were supporting each other, pulling for each other, and putting folks in a position to achieve the best results they can personally achieve, you know, has led to great success for a lot of them.

Whitney Sewell: Love that. I love the, the servant leadership approach and, and just the thought and really the being purposeful and empowering your people. Right. And all of the things you listed there, there, maybe give us some tactical ways you all did that. You know, what does that look like on a daily basis, you know, with leading, you know, that many people?

Bob Knakal: Well, I think it's important to realize if you, if you look at studies on employment and job satisfaction and job dissatisfaction. The number one thing that comes up in survey after survey about job satisfaction is money. You would think it would be money, but it's not money. It is feeling as if what you do every day is integral to the mission of the company and the success of the people around you. And so whether it was one of our top producers or the receptionist, We let people know all the time how valuable they were to the firm, how what they were doing made an impact on how the firm did and the collective success that we had. You, you let the, the, the receptionist know, Hey, you know what? The way you greet somebody is so great because you always smile, you're warm, you offer them a cup of coffee or a bottle of water. And you're the first impression that people have when they walk into our office. And you know what? The next time somebody walked in, they practically got a hug. And that's the kind of thing when people feel like what they're doing every day is important, they respond and act very, very differently. And so we were very cognizant of that, made sure we told people all the time what a great job they were doing, how appreciative what they were doing was to the success of the broader firm. And it really made a big difference. And also, Encouraging and instilling a high level of self-esteem within people is also something that creates great performance. People want to feel good about themselves. There's a lot of reasons for people to feel good about themselves, but the better you feel about yourself, the more pride you have in what you do, the more pride you have in how you help clients. That is just going to be self-perpetuating. It's what economists refer to as a positive feedback loop. And you get people in that mindset where everything they're doing is positive. They're getting great feedback. They're getting encouragement. They're getting support. You have the leaders of the firm encouraging them. That incentivizes everybody to incentivize everyone to do a better job.

Whitney Sewell: A lot of that, you know, our, our pastor was he, I've heard him say like the, one of the secrets to parenting and really in so many ways is, is focusing on, you know, how you can encourage versus just focusing on what's going wrong. Right. And I think that's almost what you're saying here, you know, in a big way, you know, on the business front and encouraging your employees, but man. you know, encouraging them and what they are doing great in, right. And building them up. And so they, and how important, right, what they're doing is to the mission of the overall business. You know, speak to a training, you know, and, and, you know, maybe, you know, how you all have done that well, just scale that fast. You know, how have you trained your people? Is there certain systems you all use or implemented to do that well? So people, they, you know, a salary or whoever you mentioned there didn't know to smile, you know, when people came in the door and how to greet them or direct them in the right way.

Bob Knakal: Yeah, well, I'll talk about the training of our brokers. When we hired someone to be a producer, they could not get on the phone and talk to somebody until they were quote unquote checked out. In order to check out, you had to create maps of your territory. You had to go walk every street, take pictures of every building, put together catalogs with the tax lot. a photo of the property, ownership information, verify all that information, go through training on how to underwrite a property so you understood the value, went through training relative to being able to articulate what our marketing program consisted of. You had to do a three-year sales study for your territory so you knew how many buildings sold, what percentage of the market that was, what the average price per square foot was. Those metrics going up or down and by what percentage, and you had to sit in front of a panel. of five senior people at the firm and do a presentation and talk about your property, about your territory, do a marketing pitch. And if you didn't pass that, you had to go back and work with our director of training and brush up your skills. And you had to pass that checkout before you could get on the phone and talk to somebody. And then for continuing training, We had a training session every week for the whole company to learn about time management and prospecting and overcoming objections and all those kinds of things that are so integral to the typical blocking and tackling that is such a big part of our business.

Whitney Sewell: Yeah. Wow. No, I appreciate that. It's, it's a process, right? It sounds like, you know, you all had a process for training. You had a process so people knew exactly what was expected and that they were trained and prepared. And I think that goes right in line with empowering people, right? They need to know the expectations. They need to know exactly what's expected. And, and so when they do it, you can encourage them, right?

Bob Knakal: You can't say, man. I will show you, I have happened to have. here wasn't expecting, but this is the old Massey-Nackel partnering for success initial training manual. And this, this thing is 286 pages of just initial training materials. So I just, I don't know why this thing is in my office, but it's sitting here. So I thought I'd share it with you.

Whitney Sewell: Yeah, no, that's awesome. That is, that's incredible. It's, and that takes time, right? And intentionality to make something like that happen. What about early on? What were, you know, maybe when you and your partner and secretary were first just like dreaming of scaling, right. You know, you're trying to think through these things before you had this amazing handbook, right. You know, 200 plus pages of training, you know, any, or maybe some of the strategies then that helped you all to, to scale quickly in the very beginning.

Bob Knakal: Everything was designed around creating market insights that were self-produced, self-verified, and something that would be of value to the clients. And then it was all about prospecting. It was getting on the phone, calling folks. Back in the early days before technology was really big, it was nothing more than phone calls and hard mail. There was no other way to get in touch with people. So you were on the phone all the time. We sent out hard mail like fuckwork. Every month, every owner in our territory got a piece of hard mail from us at the peak before Before email became very popular, we were sending out 3 million pieces of mail every year, including a newsletter that, you know, we started with just a little four pager and ended up, I think it got to 32 or 36 pages at its peak. And, you know, we just stayed in front of people. It's all it's all being top of mind in the brokerage business, because if you look at Morgan again, use Manhattan as a microcosm south of 96th Street, which is prime Manhattan, there's twenty seven thousand six hundred and forty nine buildings over the past thirty nine years. The average turnover of that stock has been two point six percent. If you figure half the stuff that goes on, the market actually sells. This is telling you two things. It's telling you that When someone buys a property in Manhattan, they own it on average for 40 years before they sell it. And number two, it tells you if there's a 5% of the stuff is actually being considered for sale, 19 out of every 20 people you talk to are not going to have anything for you to do. So you look at what the reality is of this. of market turnover and activity that helps guide what you're doing, how you're doing it, how you're approaching the business. And so, you know, sending out that mail regularly to people was a, was a key piece of staying top of mind because that the main reasons for having to sell death, divorce, taxes, partnership disputes, things like that, when that, that happens, that moment happens when somebody realizes, hey, I have to do this. You want to be the first thing that folks think of. And if you're constantly in front of them with good and valuable information, they're going to think of you. And hopefully, they think of you first when they decide that they need to do something.

Whitney Sewell: Thank you for being with us again today. I hope that you have learned a lot from the show. Don't forget to like and subscribe. I hope you're telling your friends about the Real Estate Syndication Show and how they can also build wealth in real estate. You can also go to lifebridgecapital.com and start investing today.