Commercial Real Estate Today: Rod Khleif On 5 Things You Need to Create a Highly Successful Career

The commercial real estate industry is a dynamic and challenging landscape that offers enormous potential for success. However, it requires a unique blend of skills, knowledge, and aptitude to truly excel. How does one establish themselves in such a competitive field? What does it take to consistently rise to the top in commercial real estate? How does one rise above the headwinds that are challenging the commercial real estate industry today?

In this interview series, we’re seeking to learn from the experiences of those who’ve successfully navigated these challenges. We’re interested in interviewing commercial real estate professionals, brokers, investors, leaders of Real Estate Firms and Real Estate Investment Trusts (REITs), as well as anyone who’s found significant success in this industry.

As part of this series, we had the pleasure of interviewing Rod Khleif.

Rod Khleif is a multiple business owner and philanthropist passionate about business, high performance, real estate, and giving back. He has seen what success, failures, and tough times are all about, remarkably recovering from losing $50M in the 2008 cash. Rod brings incredible authenticity and insight to his approach to real estate, business, success, and life.

Thank you so much for joining us in this interview series! Before we dive in, our readers would like to learn a bit about your origin story. Can you share with us a bit about your childhood and how you grew up?

Thank you for having me. I immigrated from Holland to Denver with my mother and brother at six. We faced language barriers and financial struggles, but my mother’s determination led her to buy a house with her babysitting earnings, inspiring my passion for real estate.

Growing up, I endured bullying due to my Dutch heritage, but my mother’s support and resilience taught me to overcome adversity.

I’m dedicated to helping others through real estate, coaching, and philanthropy, primarily through The Tiny Hands Foundation. My journey has taught me the value of determination and giving back.

Can you share with us the ‘backstory’ of how you got into the real estate business?

It all started with my mother, a single parent, and an incredibly resourceful and determined woman. She dreamed of providing a better life for me and my siblings. One pivotal moment that shaped my path was when my mother used her hard-earned babysitting money to purchase a house right across the street from where we lived. It was a significant financial risk for her at the time, but she believed in the potential of real estate as a means to secure our family’s future.

After three years of owning that property, my mother turned a $20,000 profit on the investment. This achievement was remarkable and served as a profound lesson for me. It highlighted the power of real estate as a wealth-building tool and the importance of taking calculated risks.

Witnessing her success and its impact on our family’s financial stability left an indelible mark on me. It instilled a deep fascination with real estate and a burning desire to explore this field further.

At the tender age of 18, I embarked on my real estate journey, believing that real estate could be a path to financial independence and success. I started with small residential properties and gradually expanded my portfolio.

Can you tell us about your company and what makes it stand out?

My company isn’t just about financial gains — it’s about creating a meaningful impact on the lives of our clients and communities. We’re here to help you take bold action, realize your potential, and attain genuine wealth and success. Our driving force is the desire to witness your growth, equipped with the resources, team, and motivation to make it a reality. We eagerly anticipate supporting your journey to financial freedom and a lifetime of prosperity, surrounded by steadfast friends.

We offer a unique blend of practical experience and knowledge. With ownership and management of over 2,000 properties, we bring real-world expertise to our educational programs. Our focus is on delivering actionable insights, not just theories.

Can you tell our readers about the most exciting new projects you are working on now?

An incredible opportunity is coming in the commercial real estate space. There is 1.6 trillion in commercial debt due by the end of next year, and the only options for those operators are to sell or refinance. Regretfully, sales are down 75% year over year as of the first quarter of this year, so selling is challenging. Refinancing is even more difficult because of the lenders’ debt service coverage requirements for loans.

Most operators need to put money into a deal to get the loan down to a point where a lender will even sniff at it. Then, they have to buy what’s called a rate cap. That caps the interest rate for some time. Those fees have exponentially grown larger. For example, if you wanted a $100 million rate cap for three years at 3% in 2020, it cost $23,000. That same rate cap for one year today is $2.3 million. What we are excited about is the opportunities that are going to present themselves with distressed assets. We have created an opportunity fund to acquire assets through this period. There will be opportunities for exponential returns, acquiring these assets over the next 2 to 3 years.

As with any career path, the commercial real estate industry comes with its own set of challenges. Could you elaborate on some of the significant challenges you faced in your career and how you managed to overcome them?

The most significant challenge I faced was losing $50 million in 2008–2009. I had thought I was set for life when that major crash happened. My entire property portfolio collapsed. I recovered by utilizing some basic success principles. My first re-associated with my goals, I decided to pick myself back up. I surround myself with people who were thriving through that downturn. I ensured I was focused on what I wanted. Not what I’d lost. I took massive action and built a large litigation support company that helped thousands of families save their homes.

It was a painful time but a massive growth time for me. And life is about meaning. As human beings, we can determine the meaning we place on different events. The meaning that I placed on that major setback was that I never would’ve met my wife if it hadn’t happened, and I would give it all up again for her.

Okay, let’s now move to the main part of our interview about commercial real estate. What are the 3 things that most excite you about the industry now? Why?

First of all, the real estate industry is experiencing a technological revolution. Data analytics, artificial intelligence, and property management software advancements are transforming how we invest and manage properties. These innovations empower investors to make more informed decisions, optimize property performance, and enhance the overall efficiency of real estate operations. It’s an exciting time to witness how technology is reshaping the industry.

There’s also a growing awareness and commitment to sustainability within the real estate sector. Environmental, Social, and Governance considerations are becoming integral to investment strategies. Seeing how real estate professionals increasingly embrace sustainable building practices, energy-efficient technologies, and social responsibility initiatives is inspiring. This shift benefits the environment and aligns with the values of socially conscious investors.

Finally, the real estate market has shown remarkable resilience and adaptability, especially in response to unforeseen challenges like the recent global pandemic. Investors have displayed remarkable agility in adjusting their strategies to meet changing market conditions. This adaptability highlights the industry’s ability to evolve and thrive despite adversity, which is a testament to the resilience of real estate as an asset class.

What are the 3 things that concern you about it? Why? What should be done to address and alleviate those concerns?

One of my primary concerns revolves around risk management. Real estate is inherently dynamic, and economic conditions can change rapidly. Ensuring that investments are sound and protected against unforeseen challenges is paramount. To address this concern, thorough due diligence is indispensable. This includes in-depth market analysis, rigorous property inspections, and robust financial modeling. Additionally, having a well-diversified portfolio across different property types and geographic areas can help mitigate risk. Staying informed about market trends and maintaining a financial cushion for unexpected expenses is also crucial.

Another one is related to regulatory changes. Real estate is subject to various local, state, and federal regulations. Shifts in legislation or zoning laws can significantly impact the profitability of an investment. It’s, therefore, essential to stay vigilant and engage with local government and industry associations to monitor any potential regulatory changes. Working with legal professionals specializing in real estate can also help navigate complex regulatory environments. Diversifying investments across regions with varying regulatory climates can also protect against adverse changes in one area.

As society becomes increasingly conscious of environmental issues, there is a growing demand for sustainable and eco-friendly properties. It is essential to address this concern to avoid diminishing property values and limited market appeal. That’s why it’s crucial to incorporate sustainability practices into property management and development. This includes energy-efficient upgrades, recycling programs, and green building certifications. Embracing sustainable practices benefits the environment and can enhance the long-term value of real estate investments.

If you had the power to put in place 3 changes to improve or reform the industry, what would you suggest? Please share stories or examples, if possible.

One of the most significant changes we need in the real estate industry is increased transparency and education for all parties involved. This means providing clear and easily accessible information about properties, market trends, and investment strategies. I’ve seen firsthand how a lack of transparency can lead to confusion and mistrust among investors and the public. I once mentored a group of aspiring real estate investors excited to enter the market. However, they needed access to reliable information and were overwhelmed by complex jargon and hidden fees. By providing them with educational resources and guidance, they gained confidence and made informed decisions, ultimately achieving success in their investments.

Affordable housing is a critical issue in many communities, and the real estate industry can significantly address it. I suggest implementing policies and incentives that encourage the development of affordable housing projects. This benefits those needing affordable homes and creates opportunities for socially responsible investors. In my real estate ventures, I’ve seen how affordable housing projects can be profitable and impactful. By partnering with organizations and government agencies committed to affordable housing, I’ve provided quality housing options for lower-income families while generating solid investment returns.

The real estate industry must adapt as the world becomes more environmentally conscious. Implementing eco-friendly practices and technologies can reduce the environmental footprint of real estate developments. This includes energy-efficient buildings, green spaces, and sustainable construction materials. In one of my recent projects, I embraced sustainable construction methods and integrated renewable energy sources like solar panels. This reduced long-term operating costs for the property and attracted environmentally conscious tenants willing to pay a premium for sustainable living.

How has technology changed the commercial real estate industry, and how do you foresee it shaping the future of the sector?

Advanced data analytics, artificial intelligence, and machine learning have revolutionized the industry’s data-driven decision-making process. These tools enable professionals to evaluate property values, market trends, and investment opportunities with unprecedented depth and accuracy, ultimately reducing risks and bolstering returns.

The rise of online platforms and marketplaces has streamlined property acquisition and leasing, fostering more efficient interactions among investors, tenants, and property managers. Virtual tours and 3D modeling technologies have become indispensable in marketing properties, enhancing their appeal to prospective buyers and tenants. Furthermore, blockchain technology holds the potential to completely transform property transactions and ownership records, offering a transparent, secure, and tamper-proof ledger for deeds and contracts, thus reducing fraud and simplifying ownership transfers.

On the operational front, the Internet of Things has given rise to intelligent building technologies. This boosts efficiency, tenant satisfaction, and energy savings. Looking ahead, techs like AR, VR, and advanced analytics will shape real estate, offering immersive experiences and real-time market insights. Additionally, technology will drive green building practices, making energy-efficient designs, renewable energy, and smart building solutions industry norms, meeting the demand for eco-friendly real estate investments.

I am hearing the phrase “Stay alive until 2025” a lot.

What is your plan to survive in the current market?

My approach is grounded in adaptability, continuous education, and risk management to ensure my success and resilience in the current market. The ever-evolving business landscape requires an ability to pivot and embrace change, and I’m committed to remaining flexible and open to new strategies and opportunities.

Education is paramount in staying ahead of the curve. I prioritize continuous learning, regularly seeking insights into market trends, emerging technologies, and innovative business practices. This knowledge empowers me to make informed decisions and effectively adapt to shifting market conditions. Additionally, prudent risk management is at the core of my strategy. While entrepreneurship entails calculated risks, I conduct thorough risk assessments, diversify investments, and maintain financial reserves to navigate unforeseen challenges. This comprehensive approach forms the foundation of my plan to survive and thrive until 2025 and beyond in this dynamic market.

For a young person who would like to eventually make a career in commercial real estate, which skills and subjects do they need to learn?

At its core, success in this field hinges on a deep understanding of real estate fundamentals. This encompasses grasping the various property types, from office buildings to multifamily units, and comprehending the intricacies of property valuation methods. Moreover, a solid grasp of financial concepts, including cash flow analysis and return on investment, is vital for effective decision-making in commercial real estate investments.

Market intelligence is another critical facet. Prospective professionals should be adept at researching and analyzing local real estate markets staying abreast of demographic trends, economic indicators, and supply-demand dynamics. Alongside these technical competencies, soft skills are equally essential. Skilled negotiation, strong interpersonal abilities, and the art of building a robust professional network are crucial to thrive in this industry. It’s a profession where continual learning is paramount due to the ever-evolving landscape of real estate trends and regulations. Thus, individuals should remain open to mentorship educational opportunities, and staying informed about market shifts. Ultimately, a successful career in commercial real estate blends technical know-how with business acumen and an unwavering commitment to growth and adaptation.

When evaluating deals or opportunities in real estate, what are the most important factors you look for and why? Can you provide some examples?

Indeed, evaluating real estate deals is a nuanced process that requires a holistic assessment. Location is paramount, as it directly influences a property’s potential for appreciation and rental income. For instance, I once encountered a multifamily property in an up-and-coming neighborhood. Despite needing renovation, I recognized its potential due to its proximity to schools, public transportation, and job centers. Today, that investment has appreciated significantly, and the rental income stream is robust.

Additionally, market trends and economic indicators play a vital role. Staying informed about job growth, population trends, and local economic factors is crucial. A few years ago, I was eyeing a deal in a city with a thriving tech sector. The influx of high-paying tech jobs indicated rental solid demand and potential appreciation. This investment has paid off handsomely as the tech boom in that city continued. These factors, along with property condition, financing terms, exit strategy, market saturation, and risk mitigation, collectively shape my approach to evaluating real estate opportunities, ensuring that each investment aligns with my goals and maximizes its potential.

Can you share a story with us about the hardest deal you made that ended successfully for you?

The most challenging deal I’ve had in the multifamily space was with a 101-unit asset in Beavercreek, Ohio, a wealthy suburb of Dayton. Three months after we closed on it, a tornado destroyed it. All 101 families had to move. Thankfully, no children were hurt. Two adults had to have surgery, but they’re OK now. I visited the property the day after it happened, and a woman was moving her belongings and clothes out because all the power was off, and nobody could stay. I asked her if she was there when it happened, and she said yes. She said her son, thankfully, had a cell phone, and the early warning system went off on his phone. By the time he got downstairs to wake her up, she was sleeping on the couch. His bedroom was gone. He wouldn’t have survived if he didn’t have that early warning system.

It was devastating, but thankfully, no loss of life. We had to fight with the insurance company to rebuild it. Still, the beautiful thing about commercial multifamily real estate is that it’s valued on a multiple of the net income, and we were able to get $600 rent Increases Per unit. This resulted in a $10 million increase in value.

OK, here is the main question of our interview. Based on your personal experience and success, can you please share “Five Things You Need To Create A Highly Successful Career In The Commercial Real Estate Industry”?

Creating a highly successful career in the commercial real estate industry requires expertise. These principles, learned through my personal experiences, have been instrumental in my success and can serve as valuable guidance for aspiring professionals in this field.

1. Knowledge

In the commercial real estate industry, knowledge is your greatest asset. To illustrate this point, let me share a personal story. Early in my career, I decided to invest in a commercial property that seemed like a fantastic deal. However, I needed to do my due diligence properly. I should have thoroughly investigated the area’s economic trends and overlooked critical details about the property’s condition.

This lack of knowledge returned to haunt me when I faced unexpected repairs and declining rental income. It was a costly lesson, but it taught me the importance of in-depth research and understanding the market inside out. From then on, I prioritized staying updated on market trends, zoning regulations, and property valuations. The lesson here is clear: your success in commercial real estate hinges on your commitment to continuous learning.

2. Relationships

Real estate is as much about people as it is about properties. Building strong relationships within the industry is paramount. Allow me to share an example. Early in my career, I had the opportunity to partner with an experienced commercial real estate investor with a wealth of knowledge and an extensive network. Our collaboration accelerated my learning curve and opened doors to new opportunities.

This experience taught me that success in the commercial real estate industry often depends on the relationships you cultivate. Attend industry events, join local real estate associations and network. Your ability to connect with professionals, from real estate agents to investors, can significantly impact your career.

3. Resilience

The path to success in commercial real estate could be smoother. There will be setbacks, and it’s essential to embrace resilience. A particular incident comes to mind: I had several underwater properties during the 2008 financial crisis, and the market was in turmoil.

Instead of succumbing to despair, I adapted and pivoted my strategy. I refinanced where possible, negotiated with lenders, and explored creative financing options. It wasn’t easy, but my determination to weather the storm eventually paid off as the market rebounded. This taught me that resilience and adaptability can make all the difference in facing adversity.

4. Time Management

The commercial real estate industry demands excellent time management skills. One vivid example from my journey involves a time when I was juggling multiple deals simultaneously. I was overwhelmed, and it affected my ability to make well-informed decisions.

To address this, I implemented a systematic approach to time management. I prioritized tasks, delegated responsibilities where appropriate, and created a structured daily schedule. This reduced stress and allowed me to focus on high-impact activities, ultimately leading to more successful deals.

5. Patience

Lastly, I emphasize the importance of tenacity and patience. Commercial real estate deals can take time to materialize. I once pursued a significant acquisition for over a year, facing numerous challenges and setbacks. Many would have given up, but I persisted.

My determination paid off when I finally closed the deal, and it turned out to be one of the most profitable investments of my career. This experience reinforced the idea that patience and unwavering determination are often the keys to unlocking significant opportunities in the commercial real estate industry.

Do you have three things you would advise a new real estate professional to avoid?

One of the most common mistakes newcomers make in real estate is overleveraging their investments. It’s tempting to take on as much debt as possible to acquire properties, but this can be a recipe for disaster if the market takes a downturn. My advice is to be conservative with your financing. Stay strong, and always have a solid plan for how you’ll cover your mortgage payments, even in a worst-case scenario. Remember, real estate is a long-term game, and you want to ensure your financial stability over the long haul.

In the excitement of a potential deal, rushing through due diligence is easy. However, skipping this crucial step can lead to costly mistakes. Always thoroughly investigate a property before buying it. Look into the neighborhood, property history, and potential structural problems or legal disputes. Additionally, consider getting professional inspections and appraisals to uncover hidden issues that might not be apparent to you as a newcomer. Due diligence is your safety net in real estate investing.

What advice would you give to another real estate professional about improving the work culture, building team morale, and helping each employee thrive?

Real estate can be lonely, but it doesn’t have to be. Many new professionals need to try to do everything themselves. Building a network of experienced mentors, advisors, and fellow investors who can provide guidance and support is essential. Join local real estate associations, attend networking events, and seek out online communities to connect with others in the field. Learning from those who have been through the ups and downs of real estate can save you from costly errors and accelerate your learning curve.

What is your favorite “Life Lesson Quote”? Can you share a story of how that had relevance to your own life?

One of the most profound life lessons that has resonated deeply with me over the years is the idea that life is about meaning. This invaluable nugget of wisdom was imparted to me through the teachings of the renowned motivational speaker and life coach Anthony Robbins, whose insights have touched the lives of countless individuals seeking personal growth and transformation.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

If I could start a movement that would bring the most good to the most people, it would undoubtedly revolve around the values I hold dear, which are encapsulated in the acronym F-A-M-I-L-Y, which stands for Family & Fun; Authentic, Massive; Integrity; Love and Yes to evolution.

This movement would emphasize the importance of fostering strong, supportive, and connected communities that feel like extended families. We’d encourage people to unite not just for work but to genuinely connect and have fun, uplifting individuals and their communities.

Authenticity is key in our modern world. Our movement would champion authenticity as a source of strength, urging people to be genuine, seek help, and embrace constructive criticism. Authenticity fosters deeper connections and a more empathetic society.

To maximize positive impact, we’d inspire individuals to take massive action in pursuing their goals and dreams, whether in personal growth, entrepreneurship, or community initiatives.

Integrity would remain paramount. Doing what’s right, even when challenging or unseen, is fundamental. We’d encourage people to act with integrity in all aspects of life, nurturing trust and accountability.

Love would be a driving force. Our movement would motivate individuals to approach their passions with love and enthusiasm. This love can ripple outward, positively influencing those around us.

Lastly, we’d promote a culture of continuous improvement and adaptation. Saying “yes” to evolution would be central to staying at the forefront of positive change and making a lasting impact on society.

How can our readers further follow your work online?

I genuinely appreciate your interest in staying connected with my work online. There are several ways to do so. First and foremost, my official website at https://rodkhleif.com/ is a hub for all things related to my work. It provides a comprehensive overview of my journey, resources, and regular updates. You can also find me on LinkedIn, Instagram, or YouTube.

One of the main highlights of my online presence is the “Lifetime Cash Flow Through Real Estate Investing Podcast.” This podcast has been downloaded over 13,000,000 times and is available on iTunes and other major podcast platforms. It features in-depth discussions on real estate investing, financial success, and personal development.

If you’re an avid reader, you can explore my bestselling book, “How to Create Lifetime Cash Flow Through Multifamily Properties.” This book is an essential “textbook” for aspiring multifamily property investors.

This was very inspiring. Thank you so much for joining us!