If You Want To Be Rich, Act Poor

Looking affluent is a great idea at a cocktail party – but not when you’re trying to buy or operate a commercial property. In this Commercial Real Estate Mastery podcast we’re going to review the reasons why you have a better shot of getting what you want if you don’t look like you’re made of money.

What is Commercial Real Estate Mastery Podcast?

Welcome to the Commercial Real Estate Mastery podcast, where you'll learn the correct way to identify, negotiate, perform due diligence on, renegotiate, finance, turn around and operate real estate in today's market -- a market in which volatility creates opportunity, and sound principles defeat fads and bubbles. And your host is a 25-year commercial real estate veteran and co-owner of over $1 billion in real estate assets, Frank Rolfe.

I buy most of my clothes at Goodwill or on eBay or on Etsy. Almost all of it used. Is that because I cannot afford to buy brand new fancy clothing? Nope. The issue is that I learned early on in my real estate career that if I wanted to get ahead, there's one thing I should never do, and that would be to look affluent. This is Frank Rolfe with the Commercial Real Estate Mastery Podcast. We're gonna talk about if you want to be rich, you kinda need to look poor.

So what's that all about? What do I mean by that? All of us in America tend to want to follow the trappings of success. We want to drive a fancy sports car, wear a fancy watch, maybe a Rolex, dress in fine Italian suits with the most expensive Gucci shoes. But that sends bad imagery and messaging to many of the people who it's so important that you need to have on your team. Let's break it down into categories.

On the seller side, most sellers of commercial property, not all but most, based on the sector that you're buying into, they don't live high on the hog. They don't spend lots of money. They're fairly conservative. So as a result, if you want them to bond with you, if you want them to identify with you, you can't dress overly fancy. You can't drive an overly fancy car because they'll initially think you don't have anything in common. And as a result, you're not gonna get as good a deal. They're not gonna bond with you. Also, they're gonna think they should get more money for the property. If you pull up in a fancy car looking all kinds of affluent, they'll think, "Well, the price just went up 10%, 20%. This guy must have the ability to pay more for it, so I'm gonna go ahead and jack the price up on the thing." The only thing, in fact, with a seller that benefits you from looking like you got money is it does increase the odds of seller financing. So if you're trying to get seller financing, you will, in fact, have a better shot of getting seller financing if you look like you're successful than otherwise, because most sellers, when they have to act as the bank, they want to believe that they'll get paid back.

Then you have your vendors. These are people you may be looking to for guidance on electrical systems or plumbing, and then later, if you buy the property, be using them. They are always looking for opportunities to gouge. So if you look like you're made of money, they're gonna say, "Well, I know the sewer system's in pretty good shape, but I'm gonna tell him it's failing 'cause maybe then he'll hire me to replace the entire sewer system." It also ruins your ability to renegotiate on prices because they'll say, "Why are you trying to nickel and dime me? You got tons of money." Also, it ruins your chance to get a payment plan. If you're buying a mobile home park and let's say you have to replace the sewer lines and there's three streets, you might want to get them where you pay them so much on this street and then later the next street, and all that's out the window because they'll say they need the money more than you do. And most of the time, people who work in the trades, they just hate people who dress fancy 'cause they assume that they are white-collar by nature and they don't identify with them.

And then you have your tenants. If you're buying a property that has tenants, I don't care if it's retail or housing or whatever the case may be, you're going to trigger a perception that you're gouging them simply because they're going to think, "Well, if the person is this affluent, then they must be charging me too much rent." It's not hard to hate your landlord today. America is filled with the sentiment that landlords are evil, and you're gonna create extra, extra, extra shtick for that media narrative. Also, throughout America today, we have these red and blue political issues going on, and you don't want to get on the wrong side of that. And if you look like you are high on the hog, what's it gonna do? It's gonna trigger people to dislike you, and this is not the time for that. There's an ancient Chinese saying, when you want to wish ill will on someone, which is, "May you be extremely..." What is the term? "May you be extremely visible at times of economic... " or no, "political uncertainty." So what's it mean? It means that when things are weird out there politically, you don't want to be the poster child to any of that.

And then with city officials, because most of the times in the world of real estate, we're working with somebody, an inspector or a zoning official. And again, they don't like wealthy people because they don't get paid a lot with what they do, and they all have lots of bad experiences by very pushy, kind of "Do you know who I am?" individuals that go into city hall from time to time. And there's a good old boy network that runs through most cities, but you can't be in it if you don't look like the other people in the city. So that's kind of out the window. And you probably can't go in and negotiate with them and say things like, "Wow, you know, I don't have the money to go in and do that now. Can I go ahead and make that improvement five years from now or something?" All that's out the window because they don't think that'll happen. The only good thing that comes of looking affluent with a city is, if you have a problem with them, they may not jack with you as much because they know you can probably afford to litigate, to hire an attorney to sue them.

But once again, if you look at all those different items of the benefits and the disadvantages of looking affluent, you will see that the benefits are few and far between, but the disadvantages are many. So then how do you not look super affluent? I am not saying you need to be like someone off the Beverly Hillbillies with a piece of rope for a belt, with holes in your jeans, wearing shoes with holes in the bottom. I'm not advocating for that. I'm just saying you need to show a little more moderation. I don't mean in your personal life. In your personal life, you can be driving the red Ferrari and wearing the Ferragamo shoes, and no one's going to have any problem with that. That makes total sense. But when you go to meetings, when you're meeting with sellers, when you're meeting with city officials, when you're meeting with vendors, when you're meeting with tenants, don't do that.

I have a standard outfit I like to wear which looks like a worn-out Sunday school teacher. I like to wear suit pants, black leather lace-up shoes, a white shirt, a tie if I feel that's appropriate, and a jacket if I feel that's appropriate. Stuff that I've bought over the years, most of it Brooks Brothers that I bought at Goodwill stores from people who died or got divorced and ends up in the store. And I keep these various outfits around just for those cases. I don't wear them ever on any personal endeavor. I would never wear any of my business attire to a party or going out somewhere. No, never do that. But I gotta have that around because I need that kind of a look when I go to a meeting.

You want to go into a meeting with a look that basically makes you neutral. You don't want the seller to think good or bad of you. You don't want the city official to take offense, but nor do you need to have them think accolades on your great outfit. So you've gotta figure out what it is that you feel comfortable in and adopt that as your formal course of attire. To me, I find that when I see someone in a suit with black lace-up shoes, I can't really tell who they are. And a white shirt, I don't know if they're important, not important, a city official or a bank president or just someone working as a teller. So you've gotta try and endeavor to find that uniform which does not act against you.

Also the small accoutrements that go with that, obviously your watch. Wear a plain watch if you can. It's okay to own a fancy Rolex, just don't wear it to meetings. And the vehicle, I've always had several vehicles because I've never tried to intermix business vehicle with non-business vehicle. So just look in a way that you think to yourself that meeting with a wide range of individuals that no one will take notice of how you are and it will not be counted against you.

This is Frank Rolfe with the Commercial Real Estate Mastery Podcast. Hope you enjoyed this. Talk to you again soon.