How to Invest in Commercial Real Estate

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From Leisure Suit to Real Estate Mogul: Jerry Rosengarten's Journey into Commercial Investments

by Criterion, Braden Cheek, Brian Duck
April 8th 2024
00:00:00
Description

Discover the transformative journey of Jerry Rosengarten, from inventing the Leisure Suit to becoming a commercial real estate mogul, sharing invaluable insights and strategies for success in the e... More

Alright guys. Welcome back to another episode of How to invest in commercial real estate. And we're excited today because we have got a serial entrepreneur to introduce you to today. Uh And our guests are pretty young. So you may not remember the Leisure Suit, but we have the inventor, uh the designer of the Leisure Suit back from 1970 Jerry uh Rosengarden. And he's on the show today. And in fact, he's not just a designer but he's a serial entrepreneur and he also is a big commercial real estate investor. And so we're gonna hear from him today. Uh Welcome Jerry to the show. Uh Yeah, thanks for coming on. So, um what we try to do on this show is uh give people all the ways that they can get into commercial real estate. And uh Jerry tell us uh we'll get into all the exciting things you've done in your life. But tell us how did you get into commercial real estate? Uh originally really when the uh laser suit ended and it ended pretty abruptly looking for something else to do.

And I noticed loves Manhattan is going under under water and lofts were manufacturing buildings that in fact became empty and artists started to take over oh individual loft. Now, uh to describe what a loft is, it's like 10,000 ft 5000 ft, even 20,000 ft high ceilings, lot of light. Uh they were able artists were able to work in there and make it work. The only problem was they started living there and that was illegal based upon city code. Got you. So I decided to make new office and for and not just for artists, for anybody who wanted to actually live in that type of space. And it became the best space in the city because it was in fact the size, as I just said, and it, it, there was nothing cookie cutter about it.

Every lot was different. So that's how I got into real estate when I was in the textile business. Why I went into real estate was I did a couple of things. I rented a very large space in the MGM building. This is in Manhattan now this is on 55th and Park Avenue uh sixth A and I rented it for $3 a square foot which was uh which you know, it was unheard of today. Obviously, it was even unheard of then. And um I sublet it into two spaces, one for me and one for a tenant and I ended up living there rent free. So that was one thing I did in real estate without intending to be a real estate developer, the next thing and dirt, uh 50,000 square foot factory without really any construction experience or whatever.

And it really wasn't that difficult to do that. But that was the second part of uh being in real a factory to sell or to use yourself for your own things or at the time the factory was for the leisure, leisure. Ok. We manufacturing then, um, and there are a lot of really strange stories about that as well as the MGM building. But then I went into the loss. I realized the only place I made money other than textiles in the, in the leisure Suit was in real estate. And that's when I started to pursue that. Yeah, I think that's a fairly relatable story. I mean, most people are, are scared but interested. Right? And then they get that first deal, maybe. See, ok, this wasn't as hard as I thought. And, and I'm making pretty decent money. If I can continue to do this. I may, I may have something here. I know specifically. I think that was, that was your case? Was just buying, buying, buying to quit your job. Yeah, I mean, I started with single family homes but the first one worked and the second one worked and then I just kept doing it.

Uh, I, I love the story about the lofts because we're, we're getting close to a similar scenario today where office has kind of been decimated, uh post pandemic, people working from home and Manhattan, San Francisco, some of these big cities have all this available office space. And now people are again trying to repurpose it uh for unique residential uses. And that's what you were doing, you know, 34 decades ago, which is, which is cool. Well, I, and I think that's part of what's gonna happen to Manhattan in Manhattan. You got other problems because, because if there's not a demand, these things will tumble. And um you're right, developers are trying to figure out how to deal with it. Well, cool. So you did lofts uh what other areas of commercial real estate did that lead you into or did you just stick with, with that plan? Uh All along. I started getting involved with the city and look at city project, city uh auctions because that was a way of getting in with very little money and so forth and so on and hopefully I would get a good buy.

Um I was not successful with that. Uh However, I did um lease a building for 50 years, thats the cheapest way to own a building, ok. Uh Considering the fact that you lease it, you get all the benefit. If you, depending upon how you lease it, you lease the right number. Uh you get all the benefits and you have any of the overhead except the rent. So you have to really know that the rent is gonna be low compared to what you're gonna do. Ok. Did you actually sign a 50 year lease? What did you actually sign a 50 year lease or you were just leases along the way? No 150 at least that is incredible. I had a concept for a medical billing. Ok. This was um 50,000 square feet um eight stories and I decided to make it a medical bill.

Is this Manhattan again or somewhere else? It was on 12th Street and University Place in the Village. Ok. Tell us about how'd that go? Uh Well, it took a year before I got my first bite. Ok. Which was a doctor obviously and I learned how to deal with doctor. By the way, you don't call a doctor doctor. So and so right away you get their first name and get them on the same level as you and just say John, whatever it is. Um That's how you deal with doctors. I love that one of those doctors. This was my my approach initially when doctors came in, I would say what's your first name? Then we go from there. One would not give me his first name, neither would my old boss. He didn't get, he didn't get a space in the building. Um but the building was occupied for, I don't know, 38 years, it was fully occupied by doctors.

How long did it take you to get it? Fully occupied from the day you bought it, you said it took a year for the first one. How, how many years did it take? I was a little bit involved because it was a little, it was a staging of my lease. In other words, it took a couple and then I had the option to take the next and next and next. And I took one. Ok. But um so the, the staging is different but at different times it was always full other than the first year, which is real difficult because I thought I really blew it. Um, that's what happened and it was wrong. So it, it became, um, which I also mentioned in the book, my drizzle, you know what a drizzle is. Now. What is that? Yeah, tell us. It's my word. It's, um, do you ever hear a company called London Fog? Yeah, I've heard of the Drink a London Fog. It's like a, they make overcoats, they make, they make raincoats and overcoats and stuff like that.

It's got a wealth of knowledge, I guess. So. They may, yeah, that's pretty good because a lot of people don't know about. Oh, yeah. So, um, they made a short little jacket that people wore for golf and they wore it outside and, you know, chilly weather or stuff like that. And that was called, or I call it their drizzle and what it did was sold for years in big numbers and I said basically that was the thing that kept the lights on, right? Because this was a product that they could build their whole uh company on it. It covered the lights. The medical building was my drizzle. I think anyone in real estate, anyone who's doing anything real estate. It's a strange bird. You know, it's cash flow but you never really have cash until you sell the real estate. Yeah. Isn't that a bitch? It, it really is. So what you need is a drizzle.

So you don't have to think about where the money is coming from to support you or the business that you put together and then you can do the projects, then you have the freedom basically to do the projects. Good point. No. Uh It sounds like that. Yeah, you, that, that one project gave you freedom to pursue uh everything that you wanted to do because it paid your, your daily expenses and it came about because I couldn't buy real estate. I left, went on vacation, came back and the prices went through the roof. I couldn't touch it. So I ended up renting. And so I'm just curious. Uh you said you signed a 50 year lease. Uh What kind of rent escalations were in there? Like as a landlord, I wouldn't necessarily want to give someone a 50 year lease because I don't know what inflation's gonna be 10 years, 20 years from now. How do you, how do you tackle that. First of all, people got a lot smarter now. So, um, and they saw this happen, right. I was making all the money on the building and they were making nothing, not nothing but they were making AAA State income.

Um, first of all, there are escalations on everything. So the question is the, is the escalation of 3% escalation or 10% escalation? Uh, are there steps up five years out or whatever I was lucky to get, is it like a 3%? And I was, you know, and I had options to take more space as I kept on going. So it was a sweetheart deal. Uh There's no question about it. 3% escalation. I mean, uh you know, when you hit the late seventies, early eighties, inflation's 18%. You, you, you had to be loving your, your, your, you know, your rent at that point. I love my rent. Yeah, that's awesome. No one likes my rent. But yeah, to have it be already baked in was, was, was crucial. All right. So, so tell us uh what are you doing now? Oh, yeah. Go for it. Yeah, they didn't know what to do with the building.

They had a vacant building. So if you really think about it, I came in and I saved them. Yeah. Yeah, I love it. I mean, it's true. Yeah, they had a 50,000 square foot building. It was empty. It was 80,000 I only took because they wouldn't give me more. Yeah. So, tell us what you're doing now, uh, and then we'll get into your book. Well, I'm building the top of the Bowery Hotel. All right. Which is a, which will be a great, great, great place. It'll be, um, about 5000 ft on two floors and a roof of about 2000 ft. Now, if you've not been to the Bowery Hotel, you don't really know it. Well, um, it's one of those projects that, you know, uh, stand out, primarily location and primarily my partners. I mean, they know had their own hotels. I trust me. I don't know that, but I built the building and if you get to the top of the building you'll see, you have unobstructed views but totally of downtown.

So it's, it's, it's, it's what, what are you putting up there? Uh, a residence or just a, what is it? An apartment? Apartment? Ok. Well, how much is that apartment? Like, how much do you think you're gonna sell that apartment for? Not gonna sell it? But if I did sell it it would be about 20. Gosh, I know we're, next time we go to Manhattan we got to stay at the Bowery Hotel just because I know, I know a guy. Yeah, we know a guy now. Yeah, that's right. You know, a guy. Well, so, uh, our audience is gonna look you up, you're writing, you've written a book. Uh Tell us the name of the book and, and let's just give a few minutes on, on that because I think it sounds super interesting. And after this conversation, I'm gonna get it and read it. Go ahead and tell us about your, your project. All the book is if you can see that, uh it's a little bit blurry. Hold it back towards your face a little bit, put it in front of your face. Try that. Hold on. Yep. There it is. We see it jump on the train, jump on the train. I consider that title because that's what I've always done.

I've jumped on the train and ticket to the end. Um You may know if you've looked at the book that I, I've done restaurants. I've done Solar Fountain, one of the largest here in the northeast. Love that. Yeah, I'm, I'm a big, was one of the first going into green. Um, I don't know what year that was and it must have been the mid eighties probably. And it took a long time to build a soil, but I built greenhouses, which was a whole other concept. Uh What else? And you can find out all about what's in the greenhouse and what does in the book. The book will tell you how to, you know, maneuver around utilities and uh government because they're the biggest obstacles going every time, what, every time it's, it's amazing. You know what nimbys are. Right. No, not in my backyard.

Yeah. Yeah. Nobody wants it in their back. They love the idea. They don't want it in their backyard. Um, I had a couple of instances where I ran into a lot of nimble and it was kind of crazy because they weren't affected by it. As a matter of fact, in one instances they were improved by it. Maybe all the instances they were kind of like, improved by it. Um, but they're the worst. I don't know. I don't know where, I don't know how they wake up every morning. Well, and tell us. So before the show you were telling us about another, uh, invention that you have. What, what's that about? Oh, I've been working II, I, you know, I'm dyslexic. Right. You don't know that we read up on you. We heard, we heard that. Yes. Ok. So, having been dyslexic, one company of all companies helped me through that. All right. That was Apple Computer. I would not have been able to write this book or a lot of stuff in real estate. Had it not been the Apple computer. So I've been trying to produce things for Apple.

Uh, they don't want me, I don't think they want anybody. But, uh, of course they, they're doing pretty good on their own. But, um, the Apple watch as you can see there right now you have to hold it up, uh, because of your filter. You have to hold it in front of your face. Yeah, we can see it there. Yeah. Um, this is a band I developed and patented the Apple watch. There are about 300 million watches out there. So it'll stand up like I'm showing you now so you can see the watch when you put it on the table or whatever and it's just cool looking. So it's a, it's a, it's a wristband and then you take it off and it'll just set on your, so you don't have to pick it up to see the time. I love it. And what do you call it? It's called the slide. And then the byline below that is a slide in stand. That's pretty neat. Well, uh he's got a book, it's called Jump on the Train. He's got uh a band uh that's called the Slide for your watch.

He invented the Leisure Suit guys. You just had a conversation with one of the most interesting men in America. Please check out his book. Is there a website we can send people to? You can do um jump on the train.com Jump on the train.com Jerry. Thank you for joining the show today. We're gonna get your book and find out more about the amazing life that you've lived. Just another reason. Uh why you shouldn't uh look at commercial real estate. Obviously, it gave you freedom to pursue all of these projects. Until next time guys. Thank you very much how to invest in commercial real estate.

From Leisure Suit to Real Estate Mogul: Jerry Rosengarten's Journey into Commercial Investments
From Leisure Suit to Real Estate Mogul: Jerry Rosengarten's Journey into Commercial Investments
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