You’re listening to Lender Lounge with Kevin Kim, a podcast dedicated to the private lending industry. I’m Kevin Kim. And my goal is to sit down with key figures in the private lending industry to talk about their business and their personal lives. We’ll get their takes on market conditions, the industry at large, and their personal stories. Overall, I really want to learn more about how they started and grew their businesses. So whether you’re a lender, a borrower, a vendor, an investor, or anyone just interested in learning more about private lending, this podcast is definitely for you. Thanks for tuning in and enjoy this week’s episode of Lender Lounge with Kevin Kim.
Kevin Kim:
Hey guys, Kevin Kim here once again with another great episode of Lender Lounge with myself, yours truly, Kevin Kim. Today our special guest is Peter Steigleder from Fidelity Mortgage Lenders, the gentleman I call the best-dressed man in hard money. As you can see he’s wearing a three-piece suit for us at every event I see you at, Pete. Please introduce yourself to our listeners and our audience and let’s get started.
Peter Steigleder:
Hey Kevin, thanks for having me on. It’s actually my second podcast, so I’m not a professional like you. I figured if I dress well, people will remember how I dress and not what I say. And then I can get away with more, because if I say something stupid, they’ll forget shortly, “Well, I don’t know what he said, but he dressed pretty well,” so it seems to be working.
Kevin Kim:
Well, so Pete, you are currently the COO of Fidelity Mortgage Lenders, but you’ve been in real estate for, I mean, since the ’90s, right?
Peter Steigleder:
I got into real estate in 1999 to 2000 is when I kind of fell into real estate. I used to work for the German Consulate before that and I wanted to get out of there. Government work is nice, if you want to get away without doing much work and you don’t get in trouble for it. Yeah, I was working for the German Consulate, and it wasn’t a bad gig, because I’m a German citizen, so I was employed by German law, which means six weeks vacation a year, 36 hour work week, if I travel to Germany I’ll get four additional travel days, I’ve got German and American holidays off. I mean, on Fridays, we’d close shop at 1:00 pm, it was almost like a long weekend every weekend.
Kevin Kim:
Oh, man.
Peter Steigleder:
But I was getting bored and sitting around not doing anything when my boss left, she was an extremely hard worker, but when she left and I got a new boss and he just didn’t want to work so there’s nothing for us to do. So I said, “I need to leave. I need to find something more challenging.” And I’m a worker, I like to work.
Kevin Kim:
Let’s talk about that. Wait, how did you end up at the German Consulate? I’m guessing you went to college here?
Peter Steigleder:
Yeah, I went to college here, but I was born and raised in Germany, so I’m still a German citizen.
Kevin Kim:
Interesting fact, okay.
Peter Steigleder:
Yeah, German is my first language and when my parents divorced, my mom’s sister, who happened to marry an American who was living in Orange County said, “Well, now you’re divorced, why don’t you come move your family to the US and come live with us?” And her mom immigrated from Germany also to the US, probably 15 years before us, so it was kind of a family reunion. So that was a little bit of a struggle coming to the US.
Peter Steigleder:
My mom came on a work visa, sorry, let me take that back. We came on a tourist visa, were able to stay the year, tried to fly to Canada, tried to come back in to extend our tourist visa so we can get a permanent green card. They wouldn’t let us come across the border, so my mom and my brother and I, and I was 12 at the time, were stuck at the border, couldn’t come back. So we had to be stuck in Canada and by pure coincidence… my last name is a unique name, not too many people have it. Our mom knew that my grandfather had a cousin that lives in Canada, so she went into the phone book, found the last name Steigleder, called him up, turned out that that was my grandfather’s cousin, he picked us up from the hotel.
Peter Steigleder:
We stayed with him in Vancouver for three weeks, finally got a ticket to fly back to Germany after living for a year in the US, all of a sudden we’re back in Germany for a year and a half trying to come back to the United States. And it took us a year and a half to probably get a green card. I think we did it through family reunification with my mom being…her sister and we had relatives here, but it took us a year and a half. We were technically illegal aliens when we were first here, getting paid under the table because we wanted to live here. This is the greatest country in the world and Germany is a nice country, but I would trade the US for Germany any day of the week.
Kevin Kim:
When did all this happen? How old were you when you came over here?
Peter Steigleder:
I was 12 originally, and I wouldn’t trade the US over Germany, want to make sure I got that right. I was 12 when we came the first time. I didn’t speak the language at all, so that was rough. I remember I didn’t even know how to ask where the bathroom was, so I would go to school, sit in class all day in school and didn’t know how to find a bathroom and I would have to wait until I got home to use the bathroom. Until I saw a kid one day opening a door and he was zipping up his fly and I go, “Oh, I found the bathroom.” So I used that same bathroom every day until I picked up the language a little bit and then figured out where the other restrooms were.
Peter Steigleder:
But then we went back to Germany and that was interesting because we didn’t have a place to live. My dad had a girlfriend at the time then, my parents were divorced and so we had another relative who put us up in a tiny house in the mountains that was about a 30 minute drive to the city. We would get…there sometimes and we had just a small kitchen and small dining room table, one black and white TV with two channels and my mom, my brother and I, we shared one small room with two bunk beds and there was only enough room to walk between the bunk beds. And we had a shower that was the size of a sink, you’d pull the little curtain around. So we lived up there for a little over a year until we moved back into town and then luckily we got our green card and we moved back to the US.
Kevin Kim:
So you came back in your teenage years, then?
Peter Steigleder:
Yeah, I came back when I was 14 years old.
Kevin Kim:
Wow, wow. So let me ask you this, though… Did you come to LA or did you live anywhere else?
Peter Steigleder:
Yeah, we came right to LA.
Kevin Kim:
So let me ask you this. One of my good family friends is also an immigrant from Germany and he’s also very well dressed. He worked in the family business and he was the only gentleman that would work for us, we had a retail store, and he would wear a suit and tie every day. Is that coming from your upbringing in Germany, the suit and tie thing? Because you wear a suit and tie to everything. I’ve seen you at conferences where everyone’s wearing a golf shirt and you’re wearing a three piece.
Peter Steigleder:
You know what? The suit and the tie actually came from my stepdad. My stepdad, who was American, was Jewish and was also Black, raised my brother and I. My mom and him met right we came back when I was 14 years old, they met about six months later and within a year and a half or so, we all moved in together. My stepdad was an incredible guy. He passed away a few years back, unfortunately but he was always a sharp dresser and he always said, “You’ve got to be like a peacock. You’ve got to dress sharp, stand out.” He liked the bright colors, but he’s the one who got me into suits, so when my friends and I, 18, 19, would go out to bars, try to get in with our fake IDs, I showed up in a suit and they all came in jeans, so everybody always knows me that I’m always wearing a suit. So he got me into suits at a young age.
Kevin Kim:
Oh, very cool. So you embraced the suit and tie at a very young age and appreciate the value of that. That’s cool, man, because I always joke about I would rather be wearing shorts and a T-shirt, but something about it makes the event seem… you’re there to do business, right, and when we’re at events I kind of…
Peter Steigleder:
[crosstalk 00:07:50].
Kevin Kim:
What was that?
Peter Steigleder:
It’s like my uniform, like a soldier goes off and goes to battle, I guess. I put on my suit and I go to work and even if people don’t see me, I just feel… maybe it’s a mental mind game for myself, I just feel more professional in a suit, so-
Kevin Kim:
It puts you in the right mindset.
Peter Steigleder:
Even when I’m not seeing anybody, I put on a suit.
Kevin Kim:
Right. And the world we live in is being more casual, especially California, but I always appreciated it and, man, you make a three piece look good. I can’t pull off a three piece, so good for you. Wait, you immigrated from Germany in your high school years, you got out of college and you went to work for the consulate. In 2000, you jump into real estate, but was it into finance? Were you always on the debt side?
Peter Steigleder:
No, no, no. I worked at the bank so I could myself through college. I would work during the day and go to school at night, so it took me seven years to get done with school, so I would work and I would go to Cal State, Northridge and I became a real estate major, just because I couldn’t get in all the finance classes. So then they had the real estate classes open, so I had to take real estate classes. And because I was working at the bank, I met all the people working at the German Consulate, they had to bank at City Bank at the time. And then they told me there was a job opening at the German Consulate, so that’s how I got to the German Consulate.
Peter Steigleder:
Getting into real estate kind of came later when I said I needed to do something to get out of something. And there was a lady, Heidi, that I used to work with and her and I said, “Hey, why don’t we get a real estate license? Why don’t we get into real estate, get out of the German Consulate?” And I just really fell into it because one day I was walking on the street and out of the driveway from this high rise, a car pulls out and a guy named Brian Lewis is sitting there and he was a commercial real estate agent and I knew him from the bank. He says, “Peter, what are you doing?” And I said, “Well, I work at the German Consulate, but I want to do something else.” Him and I started talking and then he said, “Hey, I’ve got a friend of mine named Ron Kassan, he’s in the Valley, he’s looking for what they call a runner.”
Peter Steigleder:
So if you want to get into real estate as a junior associate, you basically become a runner for a senior broker. No idea what I was getting into and so he says, “I’m going to put in touch with Ron and talk to him and see if you can get into commercial real estate.” So I set up the interview, met with Ron, found out he liked cigars and I found out he was interviewing four or five different people and because I was working at the German Consulate, we would get the diplomatic pouch, this was 20 years ago. And with the diplomatic pouch, you can put whatever you want. I mean, you could put a dead body in there and the US government couldn’t touch it. So I order from Germany, Cuban cigars…to get them here.
Peter Steigleder:
So then I said “oh”, I took a day off, I ordered this box of Cuban cigars, they had arrived, I took the day off, I walked into Ron Kassan’s office unannounced and I said, “Hey, I’ve got a gift for you.” And I gave him a box of Cuban cigars and he grabbed it, he looked at it, he looked at me and he said, “I think you just closed the position.”
Kevin Kim:
Nice.
Peter Steigleder:
And then he hired me right there to give me the runner position.
Kevin Kim:
So what did you do? That was your first gig in real estate. And I want to get back to that gift concept because that’s a very important thing, but when you started there, what was it like, what were you doing? A runner, what is a runner? What do you do?
Peter Steigleder:
What a runner does is, basically, you kind of start off in doing some of the grunt work for a senior broker. You do cold calling and he teaches you the ropes. So what Ron would have me do when I started, this was industrial real estate, so he just purely focused on industrial real estate because at the time, everybody had a specialty, so you really had to focus on your market area. Would it be the east San Fernando Valley, the west San Fernando Valley, then you focused on the product type. Brokers today focus on multiple product types because it’s a lot easier to get a better handle on the market, but at the time, all you do is industrial, you focus on that and he would send me out and he would give me a folder like this full of flyers with marketing materials for all his properties that are listed.
Peter Steigleder:
And I would go out, I would go out for two, three, sometimes four, five hours a day and I would knock on doors to businesses that are in warehouses and I would just say, “Hey, we’ve got a property for lease down the street. Are you looking to do anything right now? Can I help you find something?” and that’s how he taught me the business, was either cold calling, but mainly it was just knocking doors, good old sales tactics.
Kevin Kim:
Yeah, sort of old school sales tactics, but you’re actually having to interface with people and shake hands and kiss babies and do all that fun stuff at the same time.
Peter Steigleder:
Yeah, and what was perfect is, one, you got to see… I mean, there are so many crazy businesses in warehousing.
Kevin Kim:
Oh, yeah.
Peter Steigleder:
The west San Fernando Valley, when you walk in, maybe you have this old movie being shot or you walk in and they make parts for an Apache helicopter, I mean, the spectrum of items. Everything you see anywhere, my desk here, the frames on the walls, wood, everything comes out of a warehouse or a yard. So it was a really fascinating business and I enjoyed it more than office properties because office, everybody uses an office. You’ve got your accountants, CPAs, insurance companies, but to actually see what people manufacture and how they make a living, it was pretty fascinating.
Kevin Kim:
This is in the 2000s and so when did you make the jump onto the finance side, then, because it sounds like you were doing that for some time?
Peter Steigleder:
Oh, yeah, I did that for 17 years. I left Beitler Commercial, I ended up going to Lee & Associates to do industrial real estate there, became a Principal. Then I left in 2007 and ’08 when the market corrected. Times were really tough during that time and I was struggling and Delphi made me an offer to help me with my finances to get through the next year because my wife was, at the time, going to law school, she was going to UCLA law school, we had two kids, the market crashed with the financial crisis…
Kevin Kim:
Hold on, hold on, I don’t mean to interrupt, wait. So this is during the recession, your wife’s in law school and you’ve got two kids…
Peter Steigleder:
We’ve got two kids.
Kevin Kim:
And then you are transitioning careers. I’m guessing you lost your job during the recession?
Peter Steigleder:
Well, no, actually what happened was, I stayed in commercial real estate. I left Lee & Associates because Delphi Business Properties, which is also an industrial real estate firm, made me an offer to come over because in 2007 and ’08, my wife and I, we burned through our savings. We ended up going on food stamps and government assistance just to survive.
Kevin Kim:
Oh, my goodness.
Peter Steigleder:
So from there…
Kevin Kim:
I mean, got a lot of fortitude, man. Let me ask you this. How did you guys make it through? What was some of the things, to get away from the business side of things, you and your wife, what were some of the things that you guys did to really make it through, I guess you could call it?
Peter Steigleder:
We went on food stamps, my wife was going to UCLA law school, so they provided, for low-income people, they provided care for our son who was two years old at the time.
Kevin Kim:
Oh, my goodness.
Peter Steigleder:
Yeah, he was three years old at the time, 2008, so we got free daycare through UCLA. My stepdad and my mom, I went to my stepdad one time to go get food out of his fridge because I didn’t even have money to buy any food. So we had some hard times, but thank God for government assistance. Somebody gave me a hard time one time saying, “Well, why? You lived off the government,” kind of saying I’m a loser and I said, “You know what? I needed a safety net, the government provided it. I think my wife and I now have made up way more than we’ve ever gotten by giving back, but sometimes you need help and we needed help.”
Kevin Kim:
That’s true and that’s why the system exists and we need it. The ’08 recession was, I mean, if you were industrial, it just decimated the industry. I was in law school during the ’08 recession and I remember what it was like and a lot of our teachers, a lot of our professors were talking about how tough it was. A lot of lost our jobs, we all had these great offers at various law firms. I had an offer at a government agency and it was… we all lost them and we were all just kind of like, “What are we going to do?” I ended up at a PI firm my first year out of law school because no one was hiring. I was ambulance chasing for a solid year, getting paid in pennies. You do what you have to do.
Peter Steigleder:
Yeah, tough times, tough times.
Kevin Kim:
Yeah, but let me ask you this, though. I didn’t have a family, man. That must have been rough. I mean, two kids, jeez.
Peter Steigleder:
One of my relatives, his wife ended up leaving him saying you’re not providing. My wife stuck with me, I mean, I was still working my butt off and there was no complaints, nothing from her end at all, stuck with me through the whole things. I’ve seen other guys who… because when you have money problems, you have family problems at home, but I was lucky. My wife just stuck with me and my wife’s solid.
Kevin Kim:
That’s a blessing in itself right there. Taking that experience, how has that impacted you going forward because there’s so much you guys have done? And you, clearly, have done so much since then, in the past 10 years, has it been 10? No, now more than 10 years since the recession, I mean, you’ve achieved so much. How has that experience influenced your career, not just from a business standpoint, but from a mentality standpoint?
Peter Steigleder:
The thing is that I never get comfortable, even when things were good. I don’t sit back and take it easy and say, “Okay, I can slow down a little,” because I’m not at a point where I can say I have financial freedom where I don’t have to work anymore. The goal is to get towards that, but that’s all [inaudible 00:18:26] other people. People come to me, when I have juniors that work for me and they needed some money, I would lend them money. They would pay me back, I would lend them money. They would pay me back just the same way my senior broker helped me out. Starting, going from a salary to a commission job is not easy. All of a sudden you don’t get your monthly paycheck anymore, now you’re relying on you kill what you eat or you eat what you kill.
Peter Steigleder:
And also giving back. Ron Kassan, who’s my senior broker and I call him my senior broker, I mean, we’re probably equals now, but he brought me in the business. He also told me that, that you’ve got to give back, you’ve got to join a charity, you’ve got to do something and if you don’t have the money, you give them time and later in life when you have more money, you can give more money. But it turned out I give even more time today than I did when I first started.
Kevin Kim:
Oh, yeah. When you’re saying giving back, I mean, I want to talk about this later, but I was shocked. [Mima 00:19:27] and I and Melissa, last year we were invited, I think you invited us, to a charitable event in LA. Little did we know that you’re now the co-president of this charitable organization in LA. Tell us a little about that, how you got involved with that.
Peter Steigleder:
Yeah, so I think [Josiah 00:19:43], my friend Josiah may have invited you.
Kevin Kim:
It was Josiah, it was Josiah, yeah. He was like, “Kevin, you’ve got to come to this thing.”
Peter Steigleder:
Yeah, and I remember seeing you guys and you guys were looking at a magazine, [inaudible 00:19:52] and my picture was on it and you guys took a picture to send them to me. When I was working at the German Consulate, one of the things I did when I first started there and it was beginning job and I started at the lowest level at the German Consulate or what they call a local worker. In about a year I actually moved my way up to the highest level that anybody could go as a local worker, which was from, the basic reception guy to becoming the Director of Economic Development and I had a great boss I was working with.
Peter Steigleder:
But when I was still working at the front desk… see Germany pays the reparations for the war crimes they committed in the Holocaust and the war crimes they’ve committed. And it was during June, July and August that Holocaust survivors or people that suffer because of what Germany did to them, would come into the German Consulate and we would have to certify that they’re still alive because they were getting reparation money. And that money, you had to make sure was still going to the person that’s actually alive. What would happen, somebody would pass away and then the kids kept collecting the money. So they would have to come in, show me their ID and I would just sign off and stamp it and they would send it to Germany and get their money, so I’ve met hundreds of Holocaust survivors or people that had war crimes committed to them and I don’t want to go into the stories I’ve heard, but a couple of interesting ones that are not as gruesome.
Peter Steigleder:
One guy, there was a Czech guy, he was a Czech guy and he used to be forced to drive on a motorcycle and he had a black leather trench coat and he would tell me, he would drive and deliver messages to the front lines on the Eastern Front between the Russians and the Germans. And he tells me whenever he would get off his bike, he would find new bullet holes in his leather jacket. So as he’s riding back and forth, the Russians were shooting at him. Of course, the Germans were forcing him to do it and so he’s lucky to be alive.
Peter Steigleder:
And then there was a lady one day that came in and they have to give me an ID that’s a current ID because if not, I wouldn’t recognize them. People age, they change how they look. And this lady came in and she hands me this little passport and it’s an old German passport, like 1943 and it’s not even a passport, it’s just an identification card and on there is written Judin, which means Jew and a Nazi stamp on top of that. But I couldn’t recognize her from 1943 and this was back in, like 1998 and she didn’t have any other ID with her. I said, “Look, I need an ID to identify you,” and then she said, without being malicious, she didn’t know how to identify herself, she rolled up her sleeve and the numbers were stamped right on her arm from the camp. So, of course, I signed off on it and gave it back.
Peter Steigleder:
The reason I bring that up, I was working at Beitler Commercial Realty, Ron Kassan and this other gentleman named Gordon Mace says, “Peter, join a charity. You’ve always got to give back to the community.” And I was sitting in my office with a guy named Trevor Gale and we get a call from [Scott Lipman 00:23:06] and he’s talking to Trevor on the speaker and he says, and I didn’t know who The Guardians were, “The Guardians are having a party at the Playboy mansion.” And Trevor goes, “Peter, do you want to go to the Playboy mansion?” And I was like, “Great, I’ve never been there.” Now, this wasn’t with Hugh Hefner, this was a charity raising money and I said, “Great, I want to go,” and Scott goes, “Well, Peter’s not Jewish. And Trevor goes, “Well, Peter only hangs out with Jews so, yeah, he is Jewish.” So I said, “Great,” I said, “I want to go.”
Peter Steigleder:
So I go there and The Guardians were formed in 1938, I think it was May, 1938 and their sole purpose was to raise money, which is called the Jewish Home. It used to be called the Jewish Home for the Aging, but the Jewish Home in the San Fernando Valley. And the Jewish Home happens to have, still to this day, I think about 22 Holocaust survivors, back then it was a lot more. And so as I go to this party and we’re on the bus driving up to the Playboy mansion, they play a video and they talk about what the home does. It supports an old age home, which is great because I think society’s judged on how you treat your seniors. I mean, everybody wants to help the kids, of course, nothing wrong with that, but sometimes the seniors get shafted. So they take care of seniors, they take care of their own and the home is about 70% Jewish, 30% non-Jewish, it’s not just Jewish people that are being helped there.
Peter Steigleder:
And then I found out that they have Holocaust survivors there. And then I met so many great guys that are today some of my closest friend and I was like, “Oh, what a great organization.” They help an old age home, there’s Holocaust survivors there who I’ve met, maybe some of those who I’ve met are there now, and I can give back. Now, I didn’t have any money, so I donated my time. So I joined the young men’s division at the time, which is guys 40 and under and it was just a great organization and it was, the guys were great, it was a great cause. And so I moved myself, I guess, kind of up through the ranks until two years ago they asked me to be co-president with Zane Koss.
Peter Steigleder:
And the Jewish Home, I mean, it’s a huge undertaking. You’ve got 1,600 staff, you’ve got currently 1,100 residents that are there. The numbers are down a little bit because of COVID, they couldn’t let anybody new in. They service 2,800 seniors outside of the home and they have a $160 million budget, with about a $20 million shortfall. So The Guardians, the executives and there’s a few other groups in there, just members of the board, we raise and make up that shortfall of the $20 million. The Guardians and people who came through The Guardians who now sit on the board of the home, we raise around $2 million a year for the home.
Kevin Kim:
How long have you been involved with The Guardians, then?
Peter Steigleder:
About 15, 16 years now.
Kevin Kim:
16 years now. So you’ve been there since your time, pre-recession, after through it at the end of the day. Let me ask you this. How has that influenced your perspective in business and leadership? Because a lot of people in your position aren’t involved in charitable organizations. They may give, but I don’t know many people that are as actively involved. How does that inform or influence your leadership or business style, I guess you could call it?
Peter Steigleder:
I’ve actually [inaudible 00:26:39]. So, Uncle Chuck or Chuck Hershson who owns Fidelity and who I met through The Guardians, he’s probably one of the most charitable guys I’ve ever met. I mean, you know the design of the charitable [inaudible 00:26:51] comes from The Guardians. There were some really well-to-do, wealthy individuals who also give a lot of time and not just money to The Guardians. One of the things that’s interesting, when Chuck talks to somebody who calls and says, “Hey, I want to invest with Fidelity and your trust deeds,” and if Chuck hears that they have a lot of money, the first thing Chucks asks them is, “Oh, what charities are you involved in?” If they say none he goes, “Can you believe it? This guy has all this money and he won’t give back.”
Peter Steigleder:
So maybe that’s a little perspective. I mean, you don’t know what goes on in people’s personal life. You don’t know how much time they’ve dedicated. Maybe they’ve done things in the past, but I tell all my guys that you’ve got to donate your time or you’ve got to do something. And if you don’t, I mean, it’s up to you, maybe you’re a little more selfish or maybe you just don’t think about it. But there are so many that need help and if you can help, help and if you don’t have the money, give the time. When I didn’t have the money, not that I have that much now, but I gave a lot of time and now I still give a lot of time and I give more money. I think it’s just… I’m not a very religious person, but I believe in karma and what we give and we get.
Kevin Kim:
Very cool. And I know how charitable Uncle Chuck is. When I was at the event he was there, but through his involvement in CMA, he’s always giving, he’s always donating so much to the [crosstalk 00:28:13] to meaningful causes and that’s interesting. You bring up Uncle Chuck and for our listeners outside the state of California or West Coast, non-West Coast listeners who may not know who Uncle Chuck is, although I would venture a guess they may have heard of him, he currently owns Fidelity and you currently are the COO of Fidelity, so let’s talk about that. How did you end up joining up with Uncle Chuck and Fidelity because you were in industrial real estate. You were a commercial broker and working on that side of the business. How did you transition into real estate finance, let alone hard money?
Peter Steigleder:
Yeah, it was another coincidence. My life’s kind of like the movie Sliding Doors, a little [crosstalk 00:29:02] to where I am today.
Kevin Kim:
And opportunities.
Peter Steigleder:
If Brian Lewis didn’t drive out through this driveway, I’d have never gotten into commercial real estate.
Kevin Kim:
Right, right.
Peter Steigleder:
Somebody had paid a bouncer for me to get in the front of the line to go up in the elevator to a bar I remember, when I met my wife, who happened to walk out, but we happened to be right in front of the elevator. So I was looking at my life kind of like Sliding Doors [inaudible 00:29:17] got me to where I am. And at the time, I had my own commercial real estate company with two partners. We broke away, started our own commercial real estate company, started getting major development deals. I also worked with [inaudible 00:29:32] those deals out.
Peter Steigleder:
So about 15 years ago when I got into Guardians, one of the first volunteer things I did was I volunteered at The Guardians golf tournament and I was sitting at the hole in one with somebody else, because we had to have witnesses. If somebody hit the hole in one you’d win the Mercedes that was on display and here comes a golf cart down with Chuck Hershson and a guy Herb Nunez, who used to work with Chuck, Larry Frank, Chuck’s brother-in-law, I worked with him and Larry Frank’s son. And so Chuck and I were chitchatting a little bit because he’s a friendly guy and he says, “What do you do?” And I said, “I do commercial real estate in the San Fernando Valley.” He goes, “Let’s go have breakfast.”
Peter Steigleder:
A few weeks later, we have breakfast. We meet at the Luxe Hotel, I don’t know if it was the Luxe Hotel still at that time, off Sunset. And he tells me what he does and, honestly, I had no clue what hard money is. Never dealt with it, even though I dealt in commercial real estate, a lot of commercial real estate agents, there’s a lack of familiarity with what hard money can do. Sorry, we’re getting a bit off track with this.
Kevin Kim:
What year was this because this probably wasn’t as prevalent, right, back then?
Peter Steigleder:
Yeah, it wasn’t as prevalent, but even today when I explain to commercial brokers what we can do, they go, “Oh, I’ll just go to a bank,” they never even think about hard money, so it’s still a learning curve for them. So I would start underwriting properties for him and I didn’t really know what he was doing, I knew he was making loans, but didn’t really know what he was doing. He would say, “Peter, there’s an industrial building in Burbank and what can I sell it for? And there’s a billion [inaudible 00:31:02] that facility. What can I sell it for?” So I would give him a broker opinion about it. I would drive by the property and a couple of times I sold properties for him as well.
Peter Steigleder:
And so one day, we actually had to change the name of our commercial real estate company because we were called Brookfield Partners and Brookfield sends us a letter, “Hey, stop using our name,” which we [crosstalk 00:31:26]. We figured that letter would come sooner or later, but we lasted about two years.
Kevin Kim:
It happens a lot. You’d be surprised how often it happens in our industry. It’s okay.
Peter Steigleder:
Yeah, and I was like, “Ah, okay, well they’re a little bigger than we are, so we’ll rename ourselves.” So Chuck then said, “Peter, got that, if you change business names again, bring me some business cards and have lunch.” So we go have lunch on Wilshire at The Wilshire Restaurant in Santa Monica by Wilshire and 26th and in our conversation Chuck says, “Peter, if you know anybody, I’m looking for someone to run my company and buy me out.” I said, “I don’t know anybody.” I mean, real estate, I’ve got my own company, nobody to answer to, no. About a week goes by and then it kind of hits me and I go, “Wait a minute. He’s doing well, maybe there’s something there. Maybe I need to go find out what he does.”
Peter Steigleder:
So I’m sitting there on a Friday afternoon, having sushi, a couple of saki shots with my best friend Kelly and a guy named [Peter Marion 00:32:33] and we were doing deals together and I said, “Let me see how these guys react if I say to them Chuck’s looking for someone to run the company and buy him out.” So I said that and they both looked up and they go, “What the F is wrong with you? Call him, that guy loves you.” He goes, “You should do it. Call him now.” And I go, “No, I’m too many saki shots in, I’m not doing it now.” So I emailed him and he says it’s been quite a few months. My recollections was, like a week [inaudible 00:33:02]. So I email him, “Hey, are you still looking for somebody?” He writes back, “Yes,” and he goes, “Do you have anybody?” and I write back, “What about me?” He calls me up, we have lunch and here I am.
Kevin Kim:
What? So not only is your connection very, seriously, providence, I really don’t know how else to describe it because it’s pure networking, it’s networking at its best. I mean, you’re on a golf course, you’re basically doing business and making friends and somehow he took a shine and then he comes and asks you for a favor, but then you have the not only confidence, but also bravery to say, “Hey, what about me?” After that, I mean, what was that like?
Peter Steigleder:
Since Chuck was nice enough, I said, “Chuck, give me six months. Let me come over there and check it out.” So the first three months, I mean, I was doing real estate deals all the time. I even when to the CMBA conference with Herb Nunez and 90% of the time I was away from our desk or table or booth, I was doing real estate deals. It took me a while to transition out and then I go, “Wait a minute.” At the time, I was selling the corner of Sunset and Fairfax, an ARCO gas station to some developers and that deal fell out of escrow, we had [inaudible 00:34:26], we had to evict, go back into escrow, it was a two year process, it was a nice deal, but on the other hand, I’m doing a hard money loan and I’m opening and closing the deal in two weeks, kind of wild.
Peter Steigleder:
Four to six month transaction on a sale, by the time you pitch the listing or you cold call an owner, the owner maybe wants to sell, you stay on top of him for a few years, you put it on the market, then you’ve got to go through an escrow and you’ve got to sell it, or hard money was a quick fix, a quick high. And I said, “You know what? I like this business.” And I liked the fact, because we’re a direct lender, you come to us for the money, so I liked that side of the business. I do miss and enjoy the complicated commercial real estate transaction or development transaction, I do enjoy and miss that, but I do like the quicker transaction.
Peter Steigleder:
And for us, we’re not like an SBA lender or a financial institution. We don’t sit there and underwrite the business and see if it can afford to buy this building and then appraise the building. We just strictly appraise the building and we’re just an equity-based lender, so that falls perfectly into my commercial real estate work.
Kevin Kim:
Right, pure value-based.
Peter Steigleder:
I mean, that was an easy transition.
Kevin Kim:
Right, right. Well, let me ask you this. Since you’ve joined the company, we’re kind of at that part of the story, when it comes to Fidelity, a lot of folks on the West Coast definitely know the company, we see you guys everywhere, everyone out here knows Uncle Chuck, but we have listeners across the country and some guys in other states that don’t know the company. Give us a little bit of a background on Fidelity, your role for the company and a little bit of a story on Uncle Chuck for those of us who are uninitiated.
Peter Steigleder:
Well, Uncle Chuck, and I’m not sure how the name came about. I mean, Chuck and his wife Hella, who’s great and Hella, actually, by the way, Hella’s dad was a Holocaust survivor who was in Auschwitz and she was born in Germany. So Hella and I, after this conversation, we get along just great. She’s a great woman and Chuck’s so lucky to have her. They don’t have any children, so I’m not sure if that came that he’s everybody’s uncle, because he’s such a nice a guy, he helps everybody out.
Peter Steigleder:
So 1971, Chuck started Fidelity Mortgage Lenders. Five years prior, he had Fidelity Home Loan, so Chuck used to do seconds. His business was doing seconds, he was a one man shop, he had one telephone, one table, one chair, but then he hired a secretary later. He would call up people to see if they needed a second loan. [inaudible 00:37:04] and he was getting 17, 18% on seconds and he would do $2,500 loans, $2,000 loans, a lot of small loans. I mean, he started the company just from absolute scratch.
Peter Steigleder:
When Japanese banks that came in and started doing seconds, they kind of wiped him out. He couldn’t compete with their rates and he couldn’t compete with their loan program, so he decided to get into the commercial real estate hard money business. I know they keep switching names, it’s now private money because hard money sounds like the [crosstalk 00:37:34] money, but it’s hard money or private money. So he started Fidelity Mortgage Lenders back in 1971 and he’s learned over the years to be careful in how he underwrites deals, not to over-leverage. Sometimes the best deal is the deal you don’t write. We’re very conservative, 50, 55% below the value, maybe a few from 60%, but that helps you get through a downturn in the market.
Peter Steigleder:
Right before COVID and, I mean, who would have thought the financial crisis? I was fairly new in the business and I thought there’s no cycles in real estate. I didn’t know any better. But if you have enough equity on the deal, you protect your investors’ money. Chuck also, you learn through mistakes and in 2007 and ’08 he made a bunch of loans on land development sites and when the market turned, people weren’t developing. Zoning changes, entitlements change or they expire. And so he actually made his investors, maybe not 100% whole, but almost whole on his land deals that he did coming out of pocket for close to $4 million of his own money when he could have said, “Hey, it’s an investment. You lost your money.”
Peter Steigleder:
So he learned to be careful on not over-leveraging, especially on land on development deals. And also as this market gets more competitive, he’s learned [inaudible 00:39:03]. Somebody wants to go 75, 80% off the bat because they want the deal that bad, then to try their money alone, your security is really only the real estate, it doesn’t take much to erode that equity. Somebody can’t make their payments, they’re definitely not making the mortgage payments, probably not paying their insurance, they’re probably not taking care of the property and so that 20% or 30% erodes really quickly, so we like to stay very conservative so we don’t risk our investors’ money, that’s all Chuck’s doing.
Peter Steigleder:
And the discipline, which I think is the hardest thing to do, is to stay disciplined and stay in that box and not try to compete where, let’s say 55% is your norm, all of a sudden you go to 60%. Now you get used to 60%, that becomes more and then you go, “Oh, let me push it to 65%.” Before you know it, you could be 70% plus and if we got a big downturn and that 20% goes, I mean, who wants to own a restaurant these days in all this? [crosstalk 00:40:06]. Some of these guys call Uncle Chuck the godfather of hard money lending because he was one of the first guys, especially in commercial hard money lending. He was probably one of the first guys to do that.
Kevin Kim:
Yeah, and that explains a lot because you guys are pretty well known beyond what I would consider the private lending or hard money lending industry. And in the commercial bridge sector and even some of the CMBS guys, you see a lot those folks know you guys and we have mutual connections with those types of folks through you guys and we see you guys at those events as well. So that’s interesting, it was a reaction to the entry of the Japanese banks back in the, I’m guessing the ’80s. But when it comes to the discipline, I mean, I’ve got to tell you, that’s hard. You guys are known to be very conservative, but creative, but let ask you, let me put it like this, how often are you guys saying no? Because this industry, it’s become a race to the bottom. There’s a lot of guys out there doing pretty hefty leverage.
Peter Steigleder:
We say no pretty often. The things we can do, maybe, that other people can’t do is with… a lot of people say they’re really direct lenders or that they have the funds and then they go broker the deal. Once we get paid back, the deal is done. We have brokers that we know extremely well. They know downtown LA, they know San Diego, maybe the San Francisco or Bay Area. We have a guy in Las Vegas who knows us extremely well. A lot of times we will not get an appraisal because they can underwrite it for us within a day or two and then we can go ahead and make the loan very quickly. So if we can’t compete on loan to value, we’ll compete on speed. We’re one of the few hard money lenders that goes 20 years fully amortized.
Kevin Kim:
Oh, I see.
Peter Steigleder:
Yeah, most hard money guys don’t do that. [inaudible 00:42:07] operators like that because they’re not sure when the banks are going to jump into the game.
Kevin Kim:
Yeah, term loans are important in [crosstalk 00:42:14].
Peter Steigleder:
[crosstalk 00:42:14] Like that or you’re not sure what your exit strategy is. If you have a prepayment penalty at least you don’t have to worry about the loan coming due. If you go with some of these other big firms and you’ve got an 18 month loan, you’ve got a one year loan with a six month extender, all of a sudden, call it a suicide loan because what if they don’t extend it and it’s coming due and you haven’t been able to find financing to take you out? So we pride ourselves on speed. People know that if Chuck says yes that it’s a done deal, it’s as good as a signed contract. We’re really good at underwriting our properties in-house and then a lot of the times people tell us, “We know, at least, if you guys say yes it’s a done deal,” and sometimes they’re not that sure, especially with new lenders in the game.
Kevin Kim:
Yeah, that’s seems to be the big difference maker and, I mean, trying to extract what it is, what’s the X factor? It sounds like, to me, it’s definitely that yes, it’s on your website, right? When you guys say yes, you really mean it. And the speed, let’s talk about speed real quick. How fast are we talking here? Because a lot of people in this industry will say speed, but really what they mean by speed is just speed of LOI. They’re not meaning speed-
Peter Steigleder:
[crosstalk 00:43:24] I’ll give you two examples as a sort of story I always tell, because this happened two deals in the same week. So one of my partners, Jay Martinez from Hudson Partners, we were all Principals together with Lee & Associates when we started Hudson. He called me up on the Sunday and goes, “Hey, I got a guy, it’s a mixed-use project,” this was East LA. This was Sunday and we needed to close by Friday. He said, “It’s a two and a half million dollar purchase, he’s probably a million, we need a million for sure. Can you help him?” I called the guy on Monday, I looked at the property on Tuesday, now this was an older property, limited parking, but I looked at the competition in the area, every retail place was limited. It had a church in the back, residential on top, retail on the bottom. Then he showed me some of his other projects he did, so this guy knew this area extremely well.
Peter Steigleder:
Wednesday, we had loan docs ready for him to sign, we fund it through, the thing’s closed on Friday. That week, that was the second fastest deal I did. A guy named [Rocky Sortiski 00:44:24], and he used to be the number one SBA lender [inaudible 00:44:27] in the country, he was a good friend of mine and at this point I’ll give him some props. When I came in the office for the western region, there was the top 10 guys from SBA lending, he was number one and his number one was more than number two through eight combined. So there was no competition for second place. He called me up, he says, “I’ve got a half a million dollar loan. I need a half a million dollars against the property because escrow’s already open on this, but we’re not selling it here, but can you collateralize [inaudible 00:44:58] against a piece of land so you can close it against another piece of property,” that the bank actually fronted the loan, even though the guy didn’t have his down payment in.
Peter Steigleder:
So the bank was going to recall the loan, this was on a Tuesday. Wednesday morning he called me, Tuesday night we agreed to the deal, Wednesday morning we had a loan docs ready because we do it all in-house. So Simone, who lives in Palmdale, comes into the office at 5:00 in the morning, 5:30, she had loan docs ready, by 10 o’clock they were signed, we funded that day and closed the next day.
Kevin Kim:
Wow, that is-
Peter Steigleder:
I wouldn’t promise that on all ours, but we can do fast.
Kevin Kim:
Yeah, no that’s fast. When you guys say fast, that’s faster than most [inaudible 00:45:42] lenders. I mean, that’s amazing.
Peter Steigleder:
[crosstalk 00:45:45] In trouble. We don’t file out the loan docs, we’re dead in trouble. And because all our attorneys and everybody that we work with understands that speed is important to us, if we email our attorneys, and I know, we need to get you guys on there [inaudible 00:46:02]. But Chuck was working with [inaudible 00:46:08] for a while and they know if we send them an email at 10 o’clock at night, you better answer the email at 10:00 at night because this is probably something that we need to do really quickly.
Peter Steigleder:
But now we’re all [inaudible 00:46:17], today we actually funded our first deal of [inaudible 00:46:21], so we are broadening our horizons, looking at how to stay conservative, but this was on Main Street and [Boseman 00:46:31], right before property, I mean, this is a prime, prime building in that area [inaudible 00:46:37].
Kevin Kim:
Let’s talk about your role within the company now and where you plan to take the firm going into the future. What’s the mission? In California, you guys have got a very good foothold here. I know you guys are doing deals out in the western states, but now you’re venturing into Montana. Is the plan to go national?
Peter Steigleder:
No, I think, well, first of all, California’s a country within itself, but, yeah, I do want to expand out. I’m going to bring onboard our first outside sales person, because all the sales guys are inside Fidelity’s office, so we’re bringing on a guy named [Will Ferino 00:47:13] in Santa Barbara. I want to bring up somebody in San Diego, we’ve got a guy lined up in Las Vegas already, ready to go, we want to get somebody up in the Bay Area. So I want to get some outside sales reps in these cities and then I’ll go make my tour, I’ll fly out there, I’ll do presentations.
Peter Steigleder:
Because I was a Principal at Lee & Associates and my connections with the guys there, and I have really good friends at Cushman & Wakefield, [inaudible 00:47:37] Matthews, at CBRE, just got a call here, just because I was doing real estate so long. So if I call up my buddies and say, “Hey, I want to do a sales presentation in the office,” like I did one in Phoenix, the Lee & Associates office. I called Mike Tingus, President of Lee & Associates North and said, “Hey, I’m out there for a conference. Can I do a presentation at the lead office in Phoenix?” He made a call and I was there, it was Tuesday, a Wednesday morning presentation.
Peter Steigleder:
So I’ll go around with these guys and get into these commercial real estate offices and show the commercial guys how we can fit into their world so they understand it. They don’t care about the [inaudible 00:48:16] or referral fee. They want to know, “Hey, how can you help me close or a deal? or, “What can you so I can get a transaction done?” That’s first and foremost. Afterwards, they’re happy about if there’s a referral fee or not, but the main thing is to get the deal closed.
Kevin Kim:
Oh, fantastic. Sounds like the initial expansion plan is out in, I guess, western states, concentration still in commercial. What are your thoughts, because you guys haven’t been in residential for a long time, but what are your thoughts on the current residential market? It’s a lot right now, I mean, there’s a lot going on.
Peter Steigleder:
I mean, we’re not competitive, to be frank. We do the one to four unit, not owner occupied. When COVID started, I thought… Back in 2007 and ’08 when the residential market turned first before commercial, I was like, “Ah, commercial’s going to stay the same.” I mean, you have no idea how related… you have wood workers, you have marble fabricators, plumbers, electricians all coming out of warehouses, all the supply has to do with the residential market customers for construction. Of course, I didn’t know enough then.
Peter Steigleder:
I thought COVID was going to collapse the real estate market and people are going to be out of jobs, people are not going to be working. I think because of technology, especially white collar jobs, higher paying jobs, people and those companies fared well during COVID. And people that had those type of jobs, like my wife’s an attorney, we went into a bigger house so now each of us has an office. I didn’t see that coming. I just realized, “Oh, wow,” people are moving to bigger homes. People want to get out of big apartment buildings. Interest rates are extremely low, that makes the buying power higher. I mean, those are going to go up eventually. I thought the residential market was going to do a lot worse and it did incredibly well.
Kevin Kim:
Yeah, it’s done incredibly well, exactly.
Peter Steigleder:
I was on the wrong side of that conversation.
Kevin Kim:
Commercial suffered more than anything else, but your guys’ underwriting guidelines seem to have insulated you from a lot of damage that a lot of your competition felt.
Peter Steigleder:
We have over 600 loans and we had 110 that called for deferred payments. So we worked out deferred payments for two to three months, we weren’t sure where we were going to go. What we started doing, this was Chuck’s idea, right away, he said any new loans with write, we want 12 to 18 months of prepaid payments taken out. So let’s just do that, that was right off the get-go. The retail markets, that’s going to be a rough one. Industrial held up extremely well and that’s how, delivery, [inaudible 00:50:56], anything you see that comes out of industrial is already a tight market with [inaudible 00:51:01] and vacancy. That’s going to remain tight.
Peter Steigleder:
Retail, we’ll have to see. I know some of my partners were repositioning some of the restaurants with lot of parking as medical space, so you have to see what you can reposition that to. Interesting what type of [inaudible 00:51:15] go into retail. I mean, the government’s financial system has propped up a lot of businesses. I still think a good amount of restaurants will go out of business, but hopefully as things open up here and we give, what, 3 million plus vaccines a day now, people will rush out, want to go out, want to go to restaurants, they want to eat out and hopefully that will bring things back.
Kevin Kim:
No, [crosstalk 00:51:36].
Peter Steigleder:
Maybe they guy that had a restaurant who went under says, “I’m not doing that again.” Maybe the cook in there or chef says, “You know what? My business got shut down, but I’m going to make a run at it now. I want to go start my own restaurant,” so we’ll see what happens.
Kevin Kim:
Yeah, I guess a kind of transition question is, where do you think things are headed? Because right now, you mentioned something that I’ve been harping about for a long time, is that rates artificially low, government’s printing money, right? The government is printing money and propping up a lot of the economy, not going to last forever. I mean, where do you see things going at least in the near future? I don’t want to look five years ahead, but we’ve got 2021 to deal with and we’ve got 2022 to deal with. What do you think?
Peter Steigleder:
Yeah, it’s the million dollar question. I mean, inflation’s got to hit sooner or later. Rates have to go up and the white elephant in the room is all the debt we were creating. I know we’ve got infrastructure bills they’re trying to pass. We need infrastructure. We’ve got roads and bridges that are… some of these bridges, you shouldn’t even drive on.
Kevin Kim:
LA is a mess.
Peter Steigleder:
You know what? People are leaving LA. And you’ve got the homeless issues. The city’s buying up hotels at some outrageous prices, paying twice as much as anybody else would pay for a hotel to house the homeless. I’m not sure what the occupancy is, I mean, there’s homeless people that absolutely need help. Hey, I needed help, thank God I wasn’t homeless, but I needed help. But then you’ve got homeless people that, they don’t want help. They don’t want to live under rules and regulations and you have drug issues as well, so you’ve got a spectrum. But I feel bad when you have a retailer, who nobody comes into his store, like right on Wilshire and Barrington because right in front you have tents of homeless people.
Peter Steigleder:
A close friend of mine showed me a video of a park, it looks like a campground full of tents and you have to worry about sicknesses. People, they leave their mess outside. And I know people that have moved to Orange County, Calabasas, they moved to Valencia, trying to get out of the city. Downtown right now is quiet. You have 7,000 rooms in downtown LA that were built, and these were high-end apartments and those will cater, I think, towards the office employees down there. Are they going to come back because offices… I think offices are going to take a while to come back.
Peter Steigleder:
Yeah, people will come back to work, you want to be synergy, you want to have people working together, but law firms, I mean, even when my wife was in her office with other attorneys, they never went into each other’s office. They’re not coming back to work and so maybe you downsize. You want to have a corporate image office, so now you’ve got to scaled down office. Maybe you were [inaudible 00:54:29] office building. You’ve got a conference room, maybe there’s open desks, first come, first served where you have teams coming in or maybe they come in two, three days a week and they can work at home the other days.
Kevin Kim:
Everything’s changed for white collar for sure. I mean, [crosstalk 00:54:50].
Peter Steigleder:
Yeah, they can live in Calabasas and you don’t have to drive downtown five days a week, maybe just two.
Kevin Kim:
I mean, I live in Brea, I’m not driving to Irvine every day, even though I could, I don’t need to.
Peter Steigleder:
I mean, I’m in my house today, so I’m going to spend probably one day or so at the house. Right now what we’re doing with this, we’re shifting a new person into the… helps at the office this week with the operations of Fidelity, I’m going to start shifting my focus [inaudible 00:55:13] Fidelity and sales, so instead of 90% operations, 10% sales, we’re transitioning now to wanting to be 70% sales, 30% operations.
Kevin Kim:
We’re going to see you at more events?
Peter Steigleder:
Absolutely. Yeah, I can’t wait. Yeah, let me tell you. That was a load of fun, on a conference, on one of those panels, but I think everybody can’t wait to be back in person.
Kevin Kim:
Well, that’s for sure, yeah. And I’m excited to see you in person next week at our event, but I’m glad to see you’re going to be doing more of the sales stuff. You’re very good at it, by the way. You’ve got great stories to tell. What’s interesting is, you have such diverse experience based from working in commercial real estate, on the brokerage side, now on the lender side and you have Uncle Chuck’s wealth of experience and it sounds like he’s given you a lot of good pointers on what to do in a crisis. That call you guys made on the prepayment, that’s beautifully smart. You guys saw it coming, you reacted quickly. A lot of folks were just kind of fumbling around figuring out what to do.
Kevin Kim:
Let’s talk about, let’s talk about the future. Last thing for you, I guess, the question I like to close with always for people who are seasoned professionals in our space, who know our space well and who know real estate well, the market is ever expanding for private lending and there are new market entries every day and we talk to more and more folks setting up shop. Any advice for the new market entries coming into the market and becoming lenders?
Peter Steigleder:
Yeah, don’t come in, the space is full. No, there’s always competition. I like competition. The competition keeps you on top of your game. I always feel and I tell my sales guys too, Tom Brady, the best quarterback and yeah, of course he’s getting older, but he always tries to improve to get better, [crosstalk 00:57:18] to get better. And if we don’t change, we’ll die. I mean, Blockbuster died. Blockbuster, I think with [inaudible 00:57:25] Netflix, they didn’t do it, so we’ve got to change. The new people into the industry, they come in with new ideas, things we haven’t thought of. It’s not like we can even get comfortable, but we need to be around new people.
Peter Steigleder:
I remember I had a junior broker one time tell me, “Peter, how come you don’t take a listing agreement with you on the pitch, even if it’s a first-time meet up?” I never, rarely have somebody sign this right after you shake your hands. You’ve got to find out what’s going on in their world and then come back and do the pitch, but I said, “You may have a good point.” What if the guy says, “I am ready to sign?” I wish I had taken it with us. And so I think new people coming in, they bring in new ideas, but I think new people have also got to learn not to be too cocky, like I was in 2007 and ’08 [inaudible 00:58:07]. The commercial market, I thought was going to hold up fine, it was just the residential that was going be taken down and boy, was I wrong.
Kevin Kim:
Let’s kind of drill down in that. This industry’s not bullet proof, that’s the message, right? That real estate’s not [crosstalk 00:58:21].
Peter Steigleder:
Yeah.
Kevin Kim:
A lot of folks still think it is.
Peter Steigleder:
No, I had a guy call me up right before COVID, younger guy out of Calabasas, I think at the time the company had probably 120 employees. He called me up and I said, I was trying to get him an apartment loan and were not that competitive, but I told him what our rates and LTV is and first, he goes, “Well, that’s ridiculous. Your LTV is low and your rate is high. Why should I do business with you?” And I said, “Well, first of all, you called me. I didn’t call you.” But I said, “Secondly, the reason we keep our LTV the way it is because the market will turn. It always does.” We’re in the longest up cycle ever in the market. I don’t know what’s going to turn it, but the market will turn.
Peter Steigleder:
And he goes, “How long have you been saying that for?” I said, “You haven’t been in the industry that long, have you? He goes, “No,” I said, “Okay.” So you can try to teach people and talk to them, but they have to go through a cycle, they have to go through a downturn. When we were hiring brokers for our real estate company, we said, “Hey, if you survived 2007 and ’08 and stayed in the business, then we’ll hire you. If you got out and came back in, forget it. You didn’t survive and [inaudible 00:59:29].”
Peter Steigleder:
So I think when you’re new in a business, don’t get too cocky. The market doesn’t always go up, the market will turn. Don’t over-leverage because you want to get the deal because nothing worse than staying up at night. Chuck always said you can’t put a price tag on stress, so if you over-leverage and the market turns on you and your investors could lose their investment, I don’t want that stress on anybody.
Kevin Kim:
Right. I mean, I’ve had multiple conversations with Chuck, listening to him about, wow, the recession in the ’80s and when dot com burst in the ’90s and then 2008 and what he’s been through and that seems to be informing the business philosophy as well, along side your experience in the ’07 and ’08 recessions. You’re absolutely right, I agree 100%. I mean, one of the things that I learned doing this podcast, the very first episode we interviewed Steve Pollock and he made this point like, “When everything’s going up, you’ve got to think about why does it keep going up? It shouldn’t keep going up.”
Peter Steigleder:
Yeah, I know. I’m still [inaudible 01:00:46] that.
Kevin Kim:
Yeah, so am I, so am I and it makes me wonder.
Peter Steigleder:
[crosstalk 01:00:47].
Kevin Kim:
He made a good point and so do you and I think a lot of our lenders need to understand that it’s not a race to the bottom, you don’t need to compete with every Tom, Dick and Harry to win every single deal. You’ve got to do what’s right by your investors and make sure you don’t [crosstalk 01:01:07].
Peter Steigleder:
We win enough deals and if we just broaden our spectrum of where we want to do business at, it gives us more deals to look at it and we’ll keep [inaudible 01:01:17] and keep making our deals.
Kevin Kim:
Very good. That’s very true, exactly. Well, listen, I want to thank you for joining us today. We’ve had a really great time and hopefully we’ll be seeing you out there more often than not. Hopefully we’ll get to do something live, in-person, one of these events, one of these podcasts live in-person, too. I’m hoping to do a group interview soon, so hopefully you’ll be able to join us up in LA.
Peter Steigleder:
Awesome.
Kevin Kim:
That’ll be fun and definitely we’re going see you next week, right, in Newport?
Peter Steigleder:
I’ll be there next week and I’m going to dress up, I’m going to out-dress all the other panelists. I won’t be smarter than them, but I’ll be better dressed than them.
Kevin Kim:
Oh, for sure you will be and feel free to heckle all you want because you guys bring a lot to the table.
Peter Steigleder:
[crosstalk 01:02:01].
All right, well, everyone listening in, this has been a great interview. Thank you for listening and make sure to click like, subscribe. This podcast is going to be available on every platform, so listen in for that. And once again, I really want to thank you, Pete, and I look forward to seeing you next week and shaking your hand in person.
Peter Steigleder:
Awesome, Kevin, thank you. I have both my shots, so I’ll be good.
Kevin Kim:
For sure. Take care.
Peter Steigleder:
Awesome, thank you.
