The Broker: Deals, Steals, and Moving Forward

By D. Sidney Potter

The Broker, in two sentences, recordates the authors' true-life career as a commercial real estate broker working in downtown Los Angeles in the mid-nineties. It makes The Flip (2010), Potter's first book look like a walk in the park; given its graphic details of broker deals gone bad, TRO's (temporary restraining orders), race

• Language: English
• Publisher: Palmetto Publishing
• Release date: Dec 18, 2020
• ISBN: 9781641116763

D. Sidney Potter

D. Sidney Potter, once a prolific real estate investor in the early to late part of the real estate boom that lead to the bust, puts a spotlight on the real estate finance mortgage industry as a former lucrative insider, to now as an erstwhile benefactor. A former commercial real estate broker in the 1990’s, Mr. Potter now spends his time writing about all things real estate related. His first book, entitled The Flip, received critical acclaim from New York Times Best sellers, PhD’s to HGTV hosts. In addition to being a contributing writer for several online periodicals, Mr. Potter believes someone should start an organization called Real Estate without Borders.

Book preview

WHY COMMERCIAL REAL ESTATE?

WHY YOU BOUGHT THIS BOOK

I

f you like real estate, you bought the right book. Keep in mind however, that the absolute objective of this book is to humbly educate, lightly entertain and somberly enlighten. In fact, if ever there was the 80/20 rule, it's in full effect with this book. For those who bought the book as a career tool, take special note: 80% of this mini-manifesto is pure inside baseball in terms of giving one a perspective on commercial real estate brokerage; the personalities, the cut throats you’ll work with, the drama, the excitement – and lastly, the enormous amount of money you can make (my first check was $40,000 – before I had to split it with an assigned co-broker), and also, if in fact your personality, your emotional/anger tolerance level, and your moxie measure up to the rigors of commercial real estate. Furthermore – and for sales and non-sales folk alike who bought this book, this is not a Les Brown, Tom Hopkins or Tony Robbins you can be the greatest broker in the world bullshit book. But rather, it's a straight talking, this is the commercial real estate brokerage world – love it, or leave it kinda book.

The 20% of the book is focused on the methodology, mechanics and academics of commercial real estate brokerage – since keep in mind, there's only so far your swagger and hard selling disposition can carry you. Some of this commercial real estate brokerage stuff you know, is actually predicated upon brain power. Sorry to disappointment you! In fact, it's that part of this book that gives me the right to call this a commercial real estate book. And quite frankly, it's the core of this book. Hence, in this part of the book, you’ll be able to understand how real estate product is valued, what makes a deal a deal, the different pathways of success in establishing financial prosperity in this industry, the upside in getting along with others, and the marketing and closing of commercial real estate. It is this information that will let you understand the following: 1) If you’re cut out for this business and 2) If this is a profession that you’ll love waking up in the morning to go to work. If you can’t say yes to either of the two after reading this book, then commercial brokerage may not be for you.

This is not your father's Oldsmobile. Notwithstanding the 80/20 rule as it relates to the latter, the 100% backstory of the commercial brokerage experience is how I encountered it from toddler to trader, where the world was black and white (literally), and the sociological takeaway was numbing to edifying. In short, it warped my psyche – but in a good way, not a bad way.

My five years in commercial real estate brokerage was marked with trials and tribulations that gave me the building blocks to establish my own start up, a small LLC known as Potter Equities. Setting up an office in downtown Los Angeles, that one-man shop entailed buying and selling new track housing product in California, Nevada and Arizona. More specifically, I bought 50 plus properties worth over $17,000,000 in five short years. The building blocks gleaned from commercial brokerage, where I earned in the high fives, positioned me to go even higher, where my earnings were at the $250K+ a year level for half a decade.

In terms of commercial brokerage, I’d like to think that if I bleed my brains out on everything I knew about the industry, this would be an 800-page treatise. So instead, part of this book is a scaled-down, stripped-down schematic on how to get started in commercial brokerage as a real estate broker and the expectant day-to-day scenarios you will come to love, respect and fear – along with personal anecdotes from the author, that's me – who lived to tell-the-tale. With that in mind, in the Index section of this book, entitled Commercial Real Estate Suggested Reading Titles, you will find preferred book titles that I highly recommend so as to give you a microscopic view of commercial real estate brokerage, vs. the macroscopic view of brokerage, which is what some signed up for when they bought this book. And just to make sure you really get your monies worth, there is a section entitled Commercial Real Estate Definitions. After researching and perusing through half a dozen well respected sources for industry definitions, I culled it down to approximately 300 words, wherein I then re-wrote the definitions in easy to understand language. In short, it's an extra add-on to the book that any commercial real estate broker would admit that it passes mustard in the credibility department.

If truth be told, and if pursued and approached properly, commercial brokerage will put you in the quarter million dollar per annum earnings range – much like I achieved in a post de facto way, but that you can achieve more directly by focusing on the fundamentals of commercial brokerage. Ergo, the successful application of those fundamentals, such as establishing a business plan that actual works, maintaining a proper cold calling regime, learning to view rejection as an opportunity and overcoming objections, not to mention mastering proper selling techniques, will all translate into large commission checks. And if anything, and at the very least, if you top off at only the $75K a year mark, I can assure you – based upon my personal experience and other commercial real estate practitioners I’ve worked around, you’ll have a helluva alot of fun chasing those big dollar dreams. And despite the love/hate relationship I still have for the business, there's still nothing quite like it. Bon voyage, good riddance and see you at the finish line.

The most terrifying thing is to accept oneself completely. – Carl Jung

WHY I GOT INTO COMMERCIAL REAL ESTATE

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he short answer to that question is to make a lot of money. Simplicity at its best. What's so hard about that one. There were a lot of other reasons as well. For example, to avenge my Father's – for lack of any other way to say it, lack of success in the commercial real estate business. Which to a certain extent is not entirely true, given that he actually had some outstanding years that were occasionally punctuated, and periodically way too often sprinkled with years of not so outstanding years. Period. To give you a sense of the times, when things were great, they were great! When things were bad, they were really fuckin bad. By fuckin bad, I mean one minute we were living in Lake Arrowhead, CA in a 3-story Château in a resort town, two cars, and a de facto wine cellar – and instead of just a regular domesticated house dog, we had an exotic long haired Afghan dog. If you’ve ever been lucky to see one of these dogs, they date back to the Genghis Khan and Alexander the Great conquests. They were and are magnificent animals that stand about waist high, have marbled colored coats and even seem majestic. Notwithstanding that, since our previous dog committed suicide in 1967, when we lived in Los Angeles, having our new Afghan dog was a pure joy. My Dad even had fancy high rolling friends who came up to visit and enjoy the snow in Lake Arrowhead, a resort community about 90 miles outside of Los Angeles. And to top it off, my Dad had his 15 minutes of fame as a major game show winner on The Hollywood Squares. Not only did he win a new car, he won a year's worth of premium wine for his wine cellar. As a kid, when you see your Dad on television, you begin to think that he's invincible and that the world is yours.

Anyway, you get the picture. We had four good years up there – and then puff! It was all gone. My three siblings and I were on government cheese – literally. In case you’ve never had government cheese, don’t knock it til’ you try it. My favorite (at the time at least), was the macaroni and cheese. The government macaroni and cheese was soo tasty, that it was even better then the expensive store bought Kraft macaroni and cheese. With the other government food, my mother was able to cook up this suicide tuna casserole that was absolutely repugnant. Its taste and small was soo dastardly awful, that it likely permanently seared the innards of my nostrils. It's the one remembrance of childhood that I would soon prefer to forget. And the double whammy, if me and my three siblings didn’t eat every last spoonful, my mother would seem to take it personally. As an example, and I forgot who it was, either me or my brother Sean, who after we didn’t eat the tuna casserole in a timely manner at the dinner table, was sent to the bathroom to finish it. But suffice it to say, I flushed the suicide tuna casserole concoction down the toilet. How my mom later that evening figured it out, I’m not sure. And since by this time, we were living in a small rental cottage, since we had lost our picturesque 3-story A-frame mountain Chateau, I can understand how the frustration of it all didn’t help the situation. Bottomline, to this day, and maybe you can call it post traumatic aversion reality, but I cannot stand macaroni and cheese – including the expensive store bought Kraft brand.

In retrospect, I was too happy, naive and pre-occupied with the joys of childhood to know how bad things had really gotten. My brothers and I, and even though I was the middle boy, seem to have been the Lake Arrowhead version of the Little Rascals on steroids. In another words, we did things to other inanimate objects and people that would clearly have landed us in juvenile hall. Our favorite misdeed, and I have to give my brother Sean credit for this one, was the ole’ lets sneak in the back of the liquor store over the fence and steal some refundable bottles and take them back and around to the front of the store and return the bottles for money. Very simple – but very effective. Worked like a charm, until one of the clerks caught on and ran us out of the store screaming something in very bad english. Or how about the ole’ let's check for unlocked mobile RV trailers – since we hate to see anyone break into a tourists’ vehicle while on vacation in beautiful Lake Arrowhead – and make off like bandits with any loose change, stray dollars or any other artifacts we could hawk.

Despite the statute of limitations having long expired for those acts of malfeasance and deviance – these adventures were conducted at all hours of the day. The most daring were acts of thievery conducted in broad daylight. As for most 7 to 8-year-old boys, and especially so for a wild child of the 60's, my sense of wonderment overrode my sense of fear. A recent article I read in the New Yorker, that had one professional colleague describe what he thought of another colleague in terms of facing challenges, was that He projects an absence of fear. I think I may have been the 7-year-old version of that prototype. This is a trait that for better or worse has followed me from childhood through adulthood – and ironically has strongly contributed to my success, and sadly, not so good outcomes as well.

Another clandestine operation my brother's and I would conduct, and this would prove to be beneficial to me during my time in ROTC throughout college, was that we would pre-plan our deployment from our new second-hand rental home, which meant that we would sneak out at night from our second story cottage home (since our lake home had been foreclosed upon – although at the time I had no idea of the concept of foreclosure as a vandalizing bottle stealing 7 year old). This new home is where I was introduced to gourmet cheese – compliments of Uncle Sam – which I stated before, I had no problem with this new home. The ones’ who had a problem I believe, where just my mother and visiting black Grandmother, Martha Potter, who would somehow look at us kids and expect some kind of depressed reaction from us. We of course, only being 70 to 98 months old at the time, had no concept on how bad things had gotten. My brothers and I were separated by only one year, and my sister Kelly was 5 to 6 years younger than us. We were basically rambunctious 7 to 9-year-old wild boys running around enjoying Hippie America 1970 style. In some respects – we were to be a new strand of Americana. I do not mean that in a complimentary or denigrating way. Especially so when you consider our petty criminal mannerisms. But in an ethnocentric type of way. You couldn’t exactly peg us as to our origin, although today some 30 to 40 years later, it's not such a novelty. For example, others that come to mind that represent that new strand of Americana, in that they fit into that never ever land of ethnic ambiguity, include people like Prince, Mariah Carey, Vanessa Williams, Lisa Bonet, Derek Jeter and Van Diesel and CNN reporter Suzanne Malveaux. These are people that are of a slightly different ethnic mutation than that of being labeled high-tone or high-yellow" – a disparaging term whose origin can be traced back to the days of slavery in this country. The ethnic identity of the latter individuals consist of such an ambiguity, that sometimes it is difficult to pinpoint the origin of their ancestry.

In terms of the new Little Rascals, we were certainly some derivative product of America's new melting pot. Not the Barack Obama strand – but a more exotic alien mix of blue eyes, caramel skin, curly brown locks with slightly flared nostrils. Although that was not always the end result. Looking at my younger brother Michael, who is noticeably more black then me, Sean and my sister Kelly, then you knew we were some by-product of a hippie-beatnik/love connection. Or perhaps some summer of love consummation – before there was even the summer of love amalgamation that started to represent some of the new faces of America. For better, then worse – since it could never be for worse.

I will say this much however. And that is after I ascended from the single digit years of my young life, and entered into the double digits as a pre-teen, my brothers and I – where we were now living in Culver City, CA, a southern California beach/inland city, and probably better known as the step child of Hollywood given that it was and is home to several major film studios, such as Colombia Pictures, Sony, MGM and DreamWorks. As kids, we would ride our BMX bikes in our Converse All-Star basketball shoes, OP (Ocean Pacific) shorts and Hang Ten t-shirts, out to Hollywood (about a 12-mile ride one way) and harass the prostitutes – and sometimes their Johns’ if we felt the courage. On other occasions, we’d ride out to Venice Beach, and being equal opportunity harassers, harass the freaks, geeks, drug users and anybody else we felt comfortable brothering. Keep in mind, when you see a wild pack of a dozen boys, aged 10 to 14 years old, in ethnic hues of black, brown, white, yellow (as in Asian, not Creole/Mulatto), and every hue in between – who collective had a thoughtless sense of abandonment, then you can see how we really didn’t care about our external actions and behaviors. For the Southern California area in particular, this was a period of wilder adolescents’ behavior that was indicative of other forms of abandonment exercised throughout the mid 70's. In comparison, it was actually acceptable behavior – albeit mischievous in nature, since it wasn’t really one of violent, criminal behavior.

During this time in the 70's, across town in Inglewood, violent criminal behavior was becoming more common amongst teens, which little did I know at the time, that this would be my future home in ways that I could not faintly anticipate. In comparison, and although we were no angels, we were like a bunch of milk n’cookie boys compared to our peers in Inglewood, who were now settling disputes with guns, not with fists. Our irresponsible and roguish behavior was like child play compared to these real Real McCoy juveniles in Inglewood. Hence, you can see the fine line of being petty little punks vs. 13 to 14-year-old kids with guns who weren’t afraid to pull the trigger. Inglewood High it would turn out – which is located in South Central Los Angeles, would soon essentially become the regional headquarters – and almost the birthplace of the Bloods and Crips. For better or worse, and at a distance, I got the chance to witness first hand its incubation.

In short, I would say the distinction was analogous between the Westside Story play soundtrack vs. NWA (Niggers With Attitude) hit album Straight Outta Compton soundtrack. Although the Jets and the Sharks; the gang members fanciful portrayed in Westside Story, were a joke in comparison considering that they danced with knives towards each other in mock anger vs. getting shot at and/or having a gun brandished your way, which is no fucking joke either – all of which have happened to me. Nor is getting beat up in a 7-Eleven convenience store because of one's apparent skin color, which also happened to me, several years later in an episode of "black on white" crime in South Central Los Angeles.

Don’t know what I want, But I know how to get it, I wanna destroy….

– Sid Vicious and the Sex Pistols, 1976

My choice early in life was either to be a piano-player in a whorehouse or a politician. And to tell the truth, there's hardly any difference. – Harry Truman

MY FATHER THE COMMERCIAL REAL ESTATE BROKER

M

y perception and memories of commercial real estate as a kid were generally positive. Hanging up real estate signs with my Dad on commercial buildings, which included industrial, store front retail, small office buildings and shopping centers was a blast. My Dad would even keep us in tow as he went to properties to collect the rent. This was true for retail tenants and multi-family tenants alike, some of the visits meant visiting the apartment complexes. However, one of the more sinister memories I have was my Dad carrying a gun with him to collect the rent from residential tenants in South Central Los Angeles – at night no less. Why this had to happen in the evening I really never knew, but it's something I’d like to ask him someday. Fortunately, there was never an incident. I do remember however, that there were a few shootings that took place down the street from his office on Vermont Avenue. My Dad's office in South Central, where he built his career in the 60's, 70's and 80's, was several blocks away from what would be one of the flash points of the 1992 Rodney King riots – which was at the intersection of Western and Florence. Precedent to that time, he worked with Everage Commercial Brokerage, located on Crenshaw Blvd, which was and still is the hub of the black community in Los Angeles. It's home of the Wave and Sentential newspapers, the two major black owned community papers written by blacks, for blacks, and about blacks. My grandma, Martha Potter, use to read the Wave almost religiously. I remember as a kid seeing the likes of Muhammad Ali or Ken Norton driving their long fancy Cadillac's down Crenshaw Blvd. It was also the main place to get some of the greatest barbeque ribs in town. For those moving up a little too fast in the Man's world in downtown white-town, they’d come to stop on by for ribs in order to feel a little more black. It works actually. It's one of the main reasons I still stop on by today. My aunts went to Crenshaw High School in the 60's and 70's – a nearby well known public high school. And through the 90's on Crenshaw Blvd is where I went to see my tax preparer, which was caddy corner from the U.S. post office, with the Magic Johnson Theatres now just located two blocks away. And the Angelus Funereal Home is right across the street, which sadly however, it's where we recently held the service for my Uncle Gary, who died in 2008.

One of the more positive memories I have in seeing my Dad work in his profession as a commercial real estate broker, was one of his retail tenants he would visit periodically to collect the rent. I can’t remember the woman's name, I just remember that she was big and black, and had a few kids of her own that we were encouraged to play with whenever we went there to collect the rent. It seems that when she was late with the rent – since even at that young age, I know late rent was a bad thing, my Dad would have to make a personal visit. Although one thing I could never understand as a child was the concept of escrow and equity. As an 8 or 9-year-old, those were concepts that were hard to grasp. Maybe it was because you can’t see escrow or equity! But all I knew is that not paying rent on time was a bad thing – and that when my brothers and sister made a visit over to her home or retail shop – it was a pretty serious thing.

Anyway, Big Black is what I’ll call her; since I can’t remember her name – was really nice when we came and would see if we wanted anything to eat. The food was simple, but tasty – be it either the barbeque ribs she’d prepare herself, or hot dogs and beans, along with some grape or strawberry Kool-Aid. Like I said, it was simple, but good. On a more casual note, other memorable moments included me and my brothers cutting weeds at one of my Dad's properties, but nonetheless accidentally trimming the weeds too close to a shiny new Mercedes Benz parked a few inches from the curb. The problem is that the weeds and small pebbles flying upward ruined the paint job along the entire side of the car. Upon the owner's arrival, he was raging mad and started to scream hysterically. My brothers and I just kinda shrug and said sorry! I can also remember on numerous occasions stripping the wax off floors with an electric stripper and then re-waxing the floor. Those were always hard jobs – but we loved them, and I knew the tenants would really be happy knowing that they had their offices fresh and clean come Monday morning.

I also remember as a child my Dad working in the early 70's for a small three man shop called Everage Commercial Brokerage. It was located on Crenshaw Blvd. And that meant being located in the heart of South Central Los Angeles, where my Dad had some good years at that brokerage. I think it was there that he may have even had his first $100K year in commercial real estate as a broker. When my Dad started his own brokerage several years later, after a falling out with owner of the brokerage, Mr. Everage – over a commission dispute they couldn’t resolve, my brothers and sister and I were pretty excited, since that meant our Dad would have his own office and we could hang out there and play more often.

Having started his own commercial real estate brokerage in the mid 70's, that was when my Dad commissioned me for my first paid job (I think), and that was to design a logo for his business card and For Sale/Lease signs. The brokerage would be named Quik Realty. With this knowledge, I christened it with a big orange Q. I’m not certain where that impetus came from to name it Quik Realty, with no c, but that's what he named it, and that's that. In terms of naming rights, when my Dad owned investment property, he held it under the name SDMK, Inc. Which contained the first name initials of me, my two brothers and sister. We gotta kick out of that homage. To us, it meant that Dad must have really loved us a lot to name a property after us. I think we were all pretty impressed and over whelmed at the same time. As for the use of the color orange in his logo, maybe it was from the Orange Crush Defense, since in the mid 70's that was when the Denver Broncos were feared champions, and their colors of orange and blue were fairly popular. Whether or not that was its origin – I can’t recall, but it's something I’ve been meaning to ask my Dad. As a kid, I was quite the artist back then, and had even designed the logo for my elementary school I attended in Culver City, the Linda Vista Matadors.

As homage to my Dad, who is now retired from real estate brokerage, when my sister Kelly started her own temporary staffing shop – she adeptly named it Quick Staffing! How's that for love and respect for your Dad. Although she didn’t go as far of leaving the letter c out of quick, it was still quite the gesture. And a couple of years back, I came upon one of my Dad's original Quik Realty business cards in some stored files of mine. Even with just of the age of the card alone – not to mention the similarity of career paths of both my Dad and I, I was taken aback. To protect the card, I had it encased in a 2 x 3 inch plastic display embedment, along with several other past business cards of me and my Dad's.

Half of life is just showing up. – Hunter S. Thompson

MY PRE-COMMERCIAL BROKERAGE DAYS (SELLING CANDY FROM A TRASH BIN)

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s a pre-adolescent teenager growing up in Southern California in the mid to late 70's, I accidentally came upon an entrepreneurial idea – before I even know what the word meant, when I started to notice that my older brother Sean would came home in the afternoons with a lot of candy. I mean just a lot of candy, and it wasn’t even Halloween. One afternoon, I asked Sean where he got the candy from – and he said in a matter of fact way, that he got it from the trash dumpsters in the back of the candy factories just about three quarters of a mile from where we lived, and from the See's Candy manufacturing plant about a mile and a half away. Having matured since my RV mobile home coin stealing days as a pre-teen (youthful indiscretions I tell you), I put 2 and 2 together and actually developed a plan on how quite possible to make an honest dollar. Imagine that!

Now just for complete disclosure, these candy factories didn’t give the candy away per se. The candy was already wrapped, at least in most cases – and on a case by case basis as unpaid and unofficial inspectors, I and the other kids that went through the trash bins would make an on the spot decision as to its edibility. Usually, we were quite lenient in our inspection standards. Hence, even opened candy, without wrapper in tack; either it be boxes of chocolates or lollipops, would pass inspection so long as it wasn’t covered with