Tony Stern the co-founder of PropertyOnion.com sits down to discuss his years of successful real estate investing. Tony Stern is an expert County Foreclosure & Tax Deed Auction bidder with many big wins under his belt. Hear harrowing stories of bad deals, and some great wins too!
Transcript of the interview:
Elliott Stern: Welcome to the first annual father and son chat.
Tony Stern: (LOL) I hope it’s going to be more than annual.
Elliott Stern: Why is it everything so much weirder when you’re being recorded on camera?
Tony Stern: I don’t know
Elliott Stern: Okay, so, my name is Elliott. I’m going to be interviewing my father, business extraordinaire, Mr. Tony Stern. So, yeah, let’s just let’s just fire away. So tell me a little bit about yourself. Mr. Stern, and why you do what you do?
Tony Stern: I do what I do because I love it. First put the first and foremost for me. The property business is like that, the most phenomenal business that you can be in, it gives you everything you ever wanted, if you’re good at it and it’s one of these businesses, where you get out what you put in it’s very…
Elliott Stern: It’s a difficult business to navigate, right?
Tony Stern: Well, if you got the right tools, and you’ve got the right education, and you get the right advice no, I don’t think it is really, I mean, look, every business is hard, you know.
Elliott Stern: So what would you say to somebody who’s scared to enter the property industry?
Tony Stern: Well, there’s no reason to be scared, if you become educated, and that’s not you know, if anyone asked me any advice about this business to be quite honest with you, I’d say that the most important thing is to get educated, you know.
Elliott Stern: Like knowledge is power.
Tony Stern: Knowledge is always power. You know, I’ve been doing this now, what this is 40 years in this industry. So it’s you know, but yeah, but that’s you know, that’s you know, I’ve acquired my knowledge. I’ve acquired my knowledge, oh go on.
Elliott Stern: You’ve been in the industry for 40 years can you tell me a few of your biggest accomplishments in the property industry?
Tony Stern: I’m actually not going to tell you my biggest accomplishment. What I’m going to tell you is, my biggest lesson, which actually cost me a lot of money and it was my first big lesson. I was younger than you I was around about 24/25 in London and through various other businesses that I’ve been involved I’d managed to accumulate some money, and what I did was I bought an office building in Reigate Surrey, which is a suburb of London. I managed to get some money together, and also borrow some money from the bank, and I bought this office building. It was the first big project that I done. I done some little tiny projects, you know buying some small houses splitting them up into apartments, or flats as we call them in London and that was the extent of my knowledge really, and I decided now that I, you know, grown some Kahuna’s so to speak, I’m going to get involved in building an office block. But what I didn’t do, my lesson to this day and I learned, is I didn’t do enough research. So I tell you how this deal went down. I managed to buy with the bank’s help this building. I think from memory, it was a 6,000 square foot Office building that was in dire need of renovation. I started work on it and part of this building was that it was on a bigger piece of land, and we could build some extra square footage on this land and that’s what actually made the deal click. It was a good deal just renovating the office, but it was a really great deal if we built some extra office space on what was the courtyard there. What happened was that when our Architects were on site, they discovered that there was a sewer running right through the middle of our site. So let me just tell you, let me just say it, so the sewage pipe, or the sewage system ran from the top of Reigate and (inaudible…….) Ran straight from the top of Reigate Hill because Reigate gate is built on a hill and it comes back down into a valley.
Tony Stern: And so this pipe ran all the way down the hill, all the way through the town, and smack bang through the center of my project.
Elliott Stern: That just sounds really unlucky.
Tony Stern: Well, it’s not just unlucky but what happened was, it didn’t come up. In England you know, you have to really do some digging to find out where all the systems are underground. It’s not like you have to really…
Elliott Stern: You have to prepare before you start digging you have to make sure that you know what’s below you there’s like a phone number there.
Tony Stern: Yeah, but well, yeah, but we’re getting off task here. You asked me a question, so I’m going to answer it. So what happened was, that we were told that the sewage pipe went through the center of our property and it blighted it basically, it was just too cost, it was just cost prohibitive to dig down move it change it wherever. What I was going to say to you was, that if we would’ve carried on researching our, that site as we should have done, if we’ve done better due diligence, we would have found this old, very old map, showing where the sewage system ran and went under. The problem for me was it was a very costly lesson, because, the interest rates in London went from 8 percent to 16 percent in a matter of three months. The existing tenant and the prospective tenant I had lined up in signed up, because of the way the economy was going in the UK back in the late 80s early 90s pulled out. I was left with a mess, and I actually lost some serious money in that deal. That is really what addressed my mind going forward. I mean it took me possibly three, maybe four years to recover from that. It was a horrendous horrendous time personally, and that was kind of like the biggest lesson.
Elliott Stern: So would you say that is a pretty big thing that shape your career in property. Is that a pretty big life lesson that you learned?
Tony Stern: Everything is a life lesson as you go along you learn every single day as I said to you I’ve been in this 40 plus years, and every day I learn something new, yeah. If you don’t learn from lessons like that, if you know, there’s an old saying, you know, once bitten twice shy and three times a fool. It’s stupid to even consider doing a property transaction without doing the proper research. I know it kind of brings us full cycle because obviously I’m a co-founder of PropertyOnion, and one of the reasons why I founded that was not only just because of the research, because also, sorry, that because I made a research on each property and finding it, but also because I got the ability to use our own abstractors and our title reports and over and they’re very thorough. If it would have been now when I did that property deal I wouldn’t have lost any money because I have found and, of course if we’d have transplanted it back to London and over in the U.S. now, but we would have found that problem, you know in the title report, but you know.
Elliott Stern: No I get it, I get that I so you have to make sure that you know what you’re getting into before you even start.
Tony Stern: Yeah, it’s a major problem. You know, I meet young guys all the time and you know, I jokingly call them the dreamers, but I was a dreamer once as well, so, you know, I had all these dreams and aspirations. But, you’ve got to marry that and merge that to common sense, and you know, you have to research, research, research, but you know.
Elliott Stern: So tell me what’s the most exciting project you have going on right now?
Tony Stern: The most exciting project I have going on right now is, I bought in auction, in the Palm Beach Auction about a year and a half ago this massive condominium in Palm Beach Island. It’s six and a half thousand square feet 5 bedroom 4 beds. It wasn’t…
Elliott Stern: Is it large enough for Mr. Donald Trump to land on?
Tony Stern: No.. or unfortunately for my helicopter to land on because I slightly out of my pay grade. It’s right on the beach like this is here, and I tell you about this property in a minute as well. As I said, I bought it in auction. It was a very competitively fought auction, but I knew all along it was a great great deal. It had a position and it was in a building that was just being renovated. So the common parts, which were originally put together in the 70s 80s, were now putting a seven and a half million dollar renovation together. Now, I know from experience that, as soon as you do a condominium (renovation) in a building like that, it organically puts 25% on the value of your apartment. But this was a particularly marquee building in Palm Beach, and it now looks magnificent it’s like equivalent to the Ritz hotel. You’ve seen it of course. This is a very big renovation now, you know, it’s one point was a 1.7 million dollar renovation. With holding cost is about 2.2. But I mean these all sound like Fancy Fancy Fancy Dan numbers, you know, it’s been a long road to get to be able to do a deal like this, but the figures are very simple. We paid two and a half for it. We’re going to put two and a half in, I’m just rounding this all up, and we’re going to set it for seven and a half million. So that’s a good day’s work. So that’s a deal that’s really exciting me at the moment. But where we’re sitting now here was a great deal as well. I bought this in auction as well 5 years ago. I paid $400,000, no $425,000 for it. I put a $120,000 into it. When I finish took me about because of the restrictions here for doing work during the off during the season where you’re not allowed to put contractors into a into a condominium and do work. I think it’s between know there was season end yeah November through to April. So end of November the beginning of April you can’t put any contractors in here. So I had to wait a year to finish the finish the renovation. I had an offer for 800,000 and I turned it down. This is one of the very few times I’ve ever done anything like this. I actually fell in love with a building. I’m usually very unemotional about buildings. I like them and I enjoy buying them in a crappy condition, doing them up, and then selling them. Obviously the check afterwards is very pleasing, but I kept on coming here to overlook the renovations. I mean look at it. I mean, we’re right on the beach.
Elliott Stern: This was originally your vacation home.
Tony Stern: Well I was but no no, no. No, I actually was buying this to flip. And then I turned it into I said I’m going to keep this for a while. I turned it into a vacation home and then, I decided to you know, I’m going to stay here. I must tell you this building today that I paid $425,000 for, okay, so I’m into it for $550,000 probably I put it on the market day, I would get $1,500,000 for it. So that’s one of my better deals, but I’m not selling this anytime soon.
Elliott Stern: No definitely not, this is in the Family Trust.
Tony Stern: Well we don’t know about that. You’ve got to share it with two of your other siblings
Elliott Stern: When the time comes we’ll all figure it out. Okay, so let me see. What do you enjoy doing in your free time? Mr. Stern, other than doing property? What would you like to do the most other than researching properties to buy at auction?
Tony Stern: Well, the funny thing is, is that you know, what is my hobby and the truth of the matter is, that this business is my hobby. Okay
Elliott Stern: As successful as you are, you live in you breathe it, right?
Tony Stern: Yeah, but you know, listen, I love the ocean, you know, we’re very fortunate and blessed to have a boat and jet skis and things like that and we play on the ocean as you know, as a family. We go out on the boat and we play on the ocean. So that’s really where my main hobbies was, I used to, I used to love riding a motorbike, but it’s very flat here in Florida. As you know, we came from California had lots of mountains to ride your bike around so, so I don’t do that. And so what I did was I swept the motorbike as you know for the jet skis and that’s it. But I must tell you that my hobby is really in my spare time, much to your mother’s chagrin, is the fact that I just love doing property and every minute I go want to look at a property, I want to research it, I want to do some comps, well we got your sister to do that for us because your sister, ….. your sister is in the business as well. You know now my, you know, my real passion that we started we started a project two years ago is PropertyOnion. I want to explain for you and the people at home here, the reason why I started PropertyOnion. I’ve probably done over 75, in the last five six years here, I’ve probably about 70. I don’t know exactly what the number is about 70 properties I’ve bought and sold or rather I bought, this one I kept, bought at auction. What used to kill me and you know, you remember because I wasn’t a very pleasant person to be around is the research is just like an enormous on each property. You know, I’d find a property and I would spend 35 40 minutes just going through all the records and everything else. Then I would go for a drive by have a look at it see it, and it was just killing me. In conversation with, who now turns out to be Damon whose my co-founder, who is, who understood in my anguish and pain, and he was an architect of, well I call him an architect because I’m still old school. He’s an architect of websites and I said look, there’s got to be a better way of making this research easier, you know. I’d like to go down from say 40 minutes down to like eight or nine minutes. What takes your time up, you know, all the properties whether you like them or fancy them or not. You know, you’ve got to look at all of them. So I wanted the ability to be able to discount very quickly the ones I didn’t like, and then focus on the properties that I really did like.
Elliott Stern: But you made this site for other investors as well
Tony Stern: Actually, I started off as actually selfish. I started off trying to see if I could get a website made just for me, and my need but we actually decided that we could actually create a community around this and sure, you know, there’s you know, a financial side to it as well. We’re more pushing the community side, and so that’s why that now without sounding like I’m giving everybody a pitch here the prices are very reasonable. They’re not, you know, we’re not going to get rich overnight on these and now what has happened is that this is developed into, there’s Mr. Donald Trump flying by in his helicopter. I’m joking. That’s why we you know this kind of evolved and developed, out of my own selfish need and wants, and it’s grown today. We’ve got 50,000 properties that are off Market on a website now and 5,000 are being added monthly. I mean, it’s a colossal site. I mean what started off again as a small, you know, help for me website, has now got three million lines of code in it and is expanding now. We’re in 20 counties and we can you know for me now I sit down, although I’m not actually doing that many foreclosures at the moment because I’m concentrating on running PropertyOnion, which is kind of a sort of an oxymoron really. But anyway what did I say I lost my train of thought here.
Elliott Stern: So PropertyOnion came out like a very organic process just you know, you were helping out yourself, and then from there, you know, it just like you figured out you can build a community around this website where you could essentially help other investors make their life a lot easier. I think that’s I think that’s the best part about PropertyOnion is that the fact that it just started off with a need for yourself, but it wasn’t just really a need for yourself. It was a need that a lot of these other investors were looking for. They didn’t even know that they have those resources and tools available until PropertyOnion.
Tony Stern: But you know I go as far to say now that anybody that is going to deal at the foreclosure auctions or tax deed (auctions) if you don’t use PropertyOnion and again, I know this is sounds like a worn-out old pitch, but it’s the truth! You’d be mad not to use this tool. I mean it just you know. The people out there and I know that you know, if you haven’t Switched off already. Go to PropertyOnion.com take a free tour and see what I’m talking about. It’s a magnificent crazy site and I use I mean I use it if I’m going to go if I get the urge to go and buy a property at auction, which is probably once every couple of weeks. I will sit down at that PropertyOnion site and I will not stop until I’ve found two or three properties that I really want to go. Then I still do the old-fashioned way. It’s crazy. I go on the drive-bys. Everyone says what you’re going to drive by for, but it just satisfies me.
Elliott Stern: But so I mean being that you created this first for yourself, what would you say is that you’re the most what is the best aspect? What is your favorite aspect about using PropertyOnion, just for yourself as for an investor? What is your favorite aspect?
Tony Stern: Well, everybody’s different and you know for me, I love the fact that I can send everything to a spreadsheet. I’m a spreadsheet guy. You know, that’s how I started off doing all these searches. I was finding these properties and was cutting and pasting them from everywhere, put them into a spreadsheet. On PropertyOnion website, you know, obviously the Premium Edition does it for you. So you get all these properties it puts them into a spreadsheet, you can choose which fields you want I mean it’s just crazy easy. I mean, it’s you know, I’m a Salesman as you know, and as you well know and I can’t sell anything that I don’t believe in and this is just….. and I get excited talking about it I think I talked the donkeys ears off of the people. I meet people at these real estate investment meetings, and they ask me what I’m doing and they probably regret asking me that question, but hey ho.
Elliott Stern: I mean it’s a great way to save you time when I’m looking at it. It’s a very user friendly interface and I think this day and age like people they kind of need to be led through the process and I think that’s what the website does it lays everything out in a very nice way. It doesn’t seem like an overload of information. It is very crisp and clean. So, I mean that’s a credit to you and your partner for developing such an incredible website.
Tony Stern: I’ve given him a tremendous headache. But every time I go there every time I come up with an idea, he’s going I’m still working on your idea from two weeks ago. But you know the thing about it is is that you know, this business is such a fabulous business and there’s just so much that you can this so many different angles
Elliott Stern: Yeah. Well, you know, there’s a lot of layers to it.
Tony Stern: Well, you know now that we’re going to start doing seminars very shortly. We’re going to put people into a room and we’re going to share some of our experiences. We got two Industry experts I’ve been talking to for the last two weeks and they very kindly said that they are prepared to come down and educate some of the people at the seminar. Here is something that’s really interesting. I came up with the idea that not everybody has the time and effort to put in to researching and then bidding on these properties at auction. So I came up with an idea. Why don’t we bid for them? So that’s another thing that we’re working on slowly now. If one of your questions are going to be where am I, what am I doing now? Every time I get out of bed in the morning, is I’m thinking another idea that we can that we can put on the site that can help some of our Brethren to make some money.
Elliott Stern: I get that so. I guess that was my next question is like what makes you excited about Monday but you just, you’re just excited every single day of the week just to keep adding on to PropertyOnion.
Tony Stern: Well actually I get what I kind of get, you know, I get kind of get pissed off on a Friday because there’s no auctions on a Friday in Palm Beach, which is my favorite, which is my favorite place to do business. And then I love Mondays because there’s always an auction and Sundays are pretty cool is because I can then go and do some research. I sneaked off I say that I’m going to go for a cigar somewhere and I’m like really I just go out down to the lounge & do some research. Well, I’ll take my laptop. I mean, that’s it. I mean again, you know, it sounds it sounds like another pitch, but I can take my laptop with PropertyOnion, and open it up and just do some research because it’s you know, that’s the way it is. Yeah,
Elliott Stern: So tell me where in South Florida do you like to buy? What would you like to buy the majority of your properties?
Tony Stern: Well this rule doesn’t apply to everybody for sure but for me I enjoy buying in an area that I know. So where have we’ve been on our travels, you know, whether it was London or Los Angeles or, Kansas. Florida. I’m a great believer in buying where you know, where you understand the area. Now I’ve been coming here for like 19,20 years, but I didn’t stop to get to know the area intimately until the last five years when I lived here. And so I really concentrate now on the areas between West Palm Beach and Deerfield and I Go West as (far as) probably Boca West, which is about 15 miles west here because that’s where I understand. That’s where I know, that’s where I’m comfortable, and I think my advice to anyone in the business is don’t scatter gun. Don’t try and buy everywhere just concentrate on an area because when a property comes up for auction, you immediately know that area and where it is whether it’s good whether it’s bad, you know, that’s just my philosophy. It’s I just feel comfortable buying in area I know. So to answer your question, West Palm Beach to Deerfield West 15 – 20 miles Palm Beach County South Florida. That’s my baby.
Elliott Stern: So you got to essentially feel comfortable, you’re going to have to feel confident in where you buying.
Tony Stern: I mean, you know the fact of the matter is, that if you tell me there’s a condominium in Highland Beach. I know Highland Beach intimately. I’ve bought properties there, looked at properties there. So I immediately know what’s going on. So if I look at auction and there’s a condominium coming up in a particular building in Highland Beach, I know that building, I know roughly what it should sell for, and I know these things to be the state of the building. It’s just the knowledge of the area and it’s the just like if you show me a single family home, at say Lighthouse Point which is sort of going past Deerfield Beach. to a certain extent. I know that area as well. It’s just I just kind of do what I’m comfortable with. That’s just me.
Elliott Stern: So I know you’re not an economy expert, but where do you see the housing market in the next few years in Florida or the US & Europe in general
Tony Stern: I’m not an economist I don’t know. Florida itself is a micro economy, and especially South Florida. I’ve been dealing, you know, I’ve been concentrating on, you know, buying Condominiums in original condition, adding value and flipping them. That’s great when the economy is really strong because you know people have second homes down here, even third homes. When the economy generally in the country is tight the first market the suckers is the luxury market, the holiday market, you know. That’s why the jewelry market is always the first into recession, and the last out, and that’s the same in South Florida. It’s the first into recession, it’s the last out, because people can do without their secondary Holiday Homes. They let them go people aren’t interested in buying them, it’s the last thing on their mind, they won’t batten down the hatches. Now you asked me, where do I see the economy going? I’m not an economist. Wherever I’ve been in the country and wherever I’ve been operating my property businesses, I just concentrate on that micro economy and how’s that doing. Yes, you have to have a peripheral vision to see what is going on outside of your bubble. I think that right now, you know, we’re the only economy that is doing well. It seems in the Western World. We simply seem to be okay. One of my friends asked me the other day, whether I’m going to continue to buy condominiums in this this market, because it’s right at the very very top and I say, yeah, I think this economy is good for another 8 months to a year. I wouldn’t get into any long-term deals down here. But you know the thing about it is that what crushes you is you can buy at the top of the market and you don’t get out quick enough.
Elliott Stern: So tell me Mr. Stern how do you want to be remembered?
Tony Stern: Well, first of all, I don’t want to disappoint you, but I don’t plan on going anywhere just yet. So you and your sister and brother will have to wait a few years and I want to be remembered. I want to be remembered as someone that played it fair, someone that was passionate, someone that was happy to share information. Just an all-around good guy.
Elliott Stern: Yeah, so you want to leave this world a better place then…
Tony Stern: I don’t want to leave this world! What is it you are going on about me leaving this world for God sake I’m going to be around, there’s a thousand more deals out there I want to buy! Oh My God!
Elliott Stern: Got it, so Mr. Stern how DO you want to be remembered?
Tony Stern: No that’s fine. You know that’s fine, it’s fine. I know that it’s one of the questions that you’ve always asked me, you know, you’ll in…
Elliott Stern: Your Legacy what’s your legacy
Tony Stern: My legacy? My legacy you’re going to enjoy LOL, this is your legacy right here you know, I told you I you know, every day’s is an adventure.
Elliott Stern: I mean the way I see it you’ve created something that’s going to help hopefully millions of people. And I think that’s a fantastic legacy to leave behind.
Tony Stern: Well, I think Millions is a bit of an exaggeration, but certainly tens of thousands would be nice. But yeah, anyway, can we go to work now and earn some money?
Elliott Stern: Yeah Let’s go.