JF1010: NFL Legend, Emmitt Smith, Shares His Developmental Real Estate Secrets

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He built a legacy on the gridiron. Now he’s building properties! Hear Emmitt’s challenges and triumphs in his real estate career and his specific advice about finding opportunities. This is one episode you will want to play on repeat!

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Emmitt Smith Real Estate Background:

-Owner of E Smith Legacy, a real estate investment and development company Along with his other two enterprise companies, E Smith Realty Partners & E Smith Construction
-Co-owner of The Gents Place; the ultimate men’s grooming and lifestyle club
-Author of, Game On, book that outlines the principles that helped Smith succeed both on and off the field
-NFL Hall of Famer, 3x Super Bowl Champion and 15 year NFL Career Dallas Cowboys
-Based in Dallas, Texas
-Say hi to him at http://www.emmittsmith.com

 

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Emmitt Smith. How are you doing, Emmitt?

Emmitt Smith: I’m good, Joe. How are you?

Joe Fairless: I’m doing well, nice to have you on the show. Obviously, Best Ever listeners, you know who Emmitt Smith is, but in case you didn’t know, some things about him… Let me quickly mention a couple things. One, he is the owner of ESmith Legacy, which is a real estate investment and development company. He also has a couple enterprise companies – ESmith Realty Partners and ESmith Construction. He is the co-owner of The Gents Place, which is the ultimate men’s grooming and lifestyle club; we’re gonna be talking about that.

Emmitt Smith: [unintelligible [00:03:05].21] I need to get over there soon. [laughter]

Joe Fairless: I do too, I’m getting a  little rough in the beard area. I need to look smooth.

Emmitt Smith: You just need to shape it up a little bit, that’s all.

Joe Fairless: That’s right. And, well, he’s played a little football along the way, so… Emmitt, what are you up to? What’s your focus right night?

Emmitt Smith: My focus is obviously on a lot of things that you just mentioned; all of them are real estate companies, as well as my construction company. We have a couple things that we’re working on that are pretty significant in the infrastructure space, and so we’re just busy. We just concluded up our Emmitt Smith Invitational Golf Tournament just about three weeks ago, and now we’re planning and getting everything geared up for the Emmitt Smith Gran Fondo, which is happening on 30th September, here in Dallas-Fort Worth. So there’s a lot of other things that are going on from a business as well as from a charitable perspective. Very busy.

I’ve got NFL people around me right now, doing some things, a day in the life of myself… So there’s a lot going on.

Joe Fairless: How do you determine how to prioritize your time?

Emmitt Smith: Well, the way I see it, I have only so many hours in the course of a day to get as much work as possible done, and I try to prioritize how these things absolutely work in terms of either 1) helping every company that I own prosper and grow; 2) assist the brand in terms of more brand awareness for not only myself individually, but also for all my companies that are under my leadership, including our charitable component. I try to prioritize these things; do they all work together, or is it something so far out of the box that it’s gonna take up too much amount of time, and do I really wanna do it?

The only things that I’m doing thus far, I’m extremely, extremely passionate about. Everything I’m doing, I don’t have any pullbacks, because it just flows. It flows within the course of my daily schedule, and I take time for every last piece of it.

Joe Fairless: With the different ventures — I mean, you mentioned the golf tournament, you mentioned real estate, you’re the co-owner of the Gents Place, you’re helping with that… What’s right now taking up the majority of your focus when you look at all the stuff that you’re working on?

Emmitt Smith: Well, the beautiful thing about it is I don’t have to do it all myself, let’s make that very, very clear. The one thing I learned a long time ago, you surround yourself with great teammates. Emmitt Smith did not become the all-time leading rusher because he was out there blocking for himself, handing the football to himself and throwing the football to himself, let alone calling him to plays.

I had a supporting cast, and that supporting cast afforded me the opportunity to do what I do best, and that’s the same thing that I have here within my corporations. I have great leadership executives that push the ball, if you will, down the [unintelligible [00:05:48].15] and we communicate constantly. That part is very helpful.

The one thing I have learned and one of the challenges that we all face in business is not necessarily whether or not the concept or the idea is the right one, it’s whether or not we have the right people to help us make that concept and that dream or that idea become successful. So far I feel like I have surrounded myself with a great group of men and women to help fulfill that dream.

Joe Fairless: I imagine that’s a unique challenge that you face starting out, because a lot of people knew who you were, and with that comes a lot of people who wanna get your money, and not necessarily look out for your best interest.

Emmitt Smith: That is true. Go ahead.

Joe Fairless: Starting out, how did you identify the right people to surround yourself with and how has that evolved, if it has evolved at all?

Emmitt Smith: That has been one of the hardest tasks to try and – I ain’t gonna say “master”, but to get as good as you possibly can with it. Outside of my own intuitions and my own questions that I’m gonna ask every person that I interview with, I use a filtering system that I go through in terms of having the HR department spend time with people, doing background research, interviewing folks before they actually sit in front of me, and then I come with a whole other set of questions that are maybe sports oriented but also give me some insight in terms of who the individual might be, what type of work ethic they actually have. But the most important thing I try to find within people is are people really credible? Can you really do what you say that you can do?

The only way you can really figure that out is through trial and error, therefore I don’t mind giving a 60-day window here to try and figure out whether or not you have the capabilities of picking up something fairly quick, and executing against something. Most of the times it’s just a matter of conversation. Your thought process also is a big indicator of how you think about certain things – do you think about things in a silo? Are you able to be a broad thinker and think outside of a silo and bring it back into context [unintelligible [00:07:58].27] to the situation or the cause at hand? There’s a lot of different techniques that you have to learn.

Joe Fairless: Do you have a favorite interview question, when they finally go through the entire process and finally get to you and have the conversation?

Emmitt Smith: Well, it depends on the resume that’s in front of me, the person that’s sitting in front of, the conversation that we’re actually having, and obviously I like to know what people see themselves. I like to understand “Where do you see yourself in the next five years? Are you just coming here to get a job, or do you have a mission? Do you have a goal, do you have a vision for how you see yourself within this corporation? Do you see that the landscape is open, that we have enough opportunity for you to become what you aspire to be?” If you cannot see yourself being successful in here, then you’re not the right person.

It’s nice to know how people envision themselves working within our platform.

Joe Fairless: We talked earlier about the different types of ventures that you’re involved in, and you said that you’re passionate about each of those ventures. I imagine that you’re presented opportunities that you could be passionate about… You could be like “You know what? That sounds really interesting…”, but perhaps you don’t enter into a partnership or invest or create a company around it. What is the difference between the ventures that you have decided to move forward with that you’re passionate about and the ones that perhaps you could be, but you don’t move forward with?

Emmitt Smith: That’s a great question. When you think about our platform, which you stated at the top of this show, ESmith Legacy, which is a real estate development company, so we build things, we have [unintelligible [00:09:34].04] shopping centers, mixed-use projects in terms of retail office, hospitality, multifamily – all of those things are part of the mixed-use umbrella that we actually have from a development standpoint, and we’re currently venturing off into the MOB space (medical office space).

When we put all of those things together, it creates a nice little dynamic mix there. That’s the development arm. Then we [unintelligible [00:09:58].11] brokerage services arm. We represent clients that wanna be in those types of mixed-uses, whether it’s industrial office, or retail or medical – whatever it may be, from a brokerage tenant rep standpoint, we represent a number of clients that actually want to fill some of that space up. These kind of work hand in hand that way.

Then we [unintelligible [00:10:19].09] construction. Whether it’s any form of development, it’s gonna require some type of construction work, and so our construction company is not only building roads and bridges, parking garages, but is also doing site work, infrastructure work and everything else which is required for any development that ESmith Legacy does. So it all kind of work together in this nice way. Construction may take a lead here one day, development may take the lead another day, brokerage services might take the lead on another day. Everything that we do tests some form of real estate or some form of development that somebody is probably gonna either own or develop themselves.

Joe Fairless: I read an article – I think it was a recent article – where you implied that the construction part of your business is the part — I don’t know if it was that it keeps you up at night, or something, but it was the challenging part because you’re spending dollars and you don’t have a return for 12-24 months. Can you elaborate on that?

Emmitt Smith: Yeah, construction is one of the most — [laughs] when I first got into the business, my CEO said “Are you sure you wanna do this? Because you could probably make more money going and signing autographs than doing this…”, [laughter] which he was absolutely probably correct in terms of the stress level. But construction is an outpouring of cash early, outlay early on; it’s on an accrual basis, so we can be on a job site for almost 90 days, in some cases 120 days, before we actually get our payout. So probably we have outlayed somewhere between 200k to 500k before we get our first paid application. In some cases you spend a lot of time debating and arguing with the person about the work that you’ve done. The work is then placed, you moved on to the next phase, you’ve been cleared to go, and yet you still wanna argue and they’re trying to beat you down some more from a financial standpoint, which is absolutely ludicrous in my opinion, because I come from a world where if you perform your job, you get compensated for it.

It’s kind of a rigged system, because we find ourselves financing the project – which is not cool – to get a small amount of return. But my reasoning for doing it was I got sick and tired of hearing that they cannot find qualified minority (African-American) companies that can do the word. I got sick and tired of hearing it, because it’s a big old myth. The reason why you can’t find it is because some of the general contractors, some of the big boys are constantly doing things to run smaller minority companies out of business, by accelerating the schedule.

Well, if you’re a small minority contractor and they accelerate a 14 million dollar project, they accelerate the schedule on you, you just went from maybe doing $50,000/week to $100,000/week and you’ve gotta wait 90-120 days to take it back. So it’s kind of hard to do. That’s why I say it’s one of those very difficult things, difficult businesses to be in, and it’s one of those things that will keep you up at night.

Joe Fairless: And how do you mitigate the risk as much as possible or navigate that so that it doesn’t keep you up as many nights in a row as perhaps it could?

Emmitt Smith: Well, the first thing we try to do is to find very good relationships with general contractors and owners who have better pay terms, if you will. [unintelligible [00:13:37].03] that’s impossible; establishing that type of relationship in a marketplace is absolutely critical to the success of any small minority business. So that’s one thing.

Risk mitigation comes in the context of “How do we estimate a project and how do we find the woodpile, even in the construction space?” So we try to eliminate problems before we actually get on the job site. Then most importantly, safety [unintelligible [00:14:08].03] Safety is a huge part of everything that we do. I’m making sure that every person that’s on our job site come home the same way they went to work that morning.

Joe Fairless: Yeah, right… Perhaps with a little bit more dirt on their clothing, but otherwise [unintelligible [00:14:22].27]

Emmitt Smith: I could do with dirt on the clothing, that could be washed off, but we want fingers and toes [unintelligible [00:14:27].09] and stuff like that.

Joe Fairless: So the primary audience for my show is real estate investors, so what is your best real estate investing advice ever for them?

Emmitt Smith: One of the simplest forms of investing advices I’ve ever received came from Jerry Jones himself. He told me years ago, he said “Emmitt, have a big front door and a small back door.” A big front door and a small back door. Now, how does that play in the context of real estate? Well, obviously, from a development standpoint, I obviously wanna do big projects. And the more projects that you do that are of quality and size and the more that you are capable of getting done, then you have a big front door. [unintelligible [00:15:09].16] at the back door. In other words, take in as much as you can, and let out little on the back side.

Joe Fairless: How have you applied that in either one business or your overall approach?

Emmitt Smith: Overall approach – I would say… We touched on it a little bit ago when we were talking about the construction business, risk mitigation. How can we set up our contracts where there’s brokerage service or development contracts to the point where we can alleviate as much of the risk as possible and try to be as fair as possible with our contractors as well. So that’s important… Whether we utilize an architecture firm that has VM technology to find collision in the drawings that we may have and mitigate those things before we’re on the job site, which is absolutely huge, because it saves us money on changing orders and everything else. All of that is important.

Those are some of the things that we try to do – contracts for language and risk mitigation in terms of design criteria.

Joe Fairless: We do a lightning round of questions… Usually, they’re the same questions, but prior to our conversation I asked the audience to submit questions, so we’ve got some personalized questions for you. Are you ready for the Lightning Round?

Emmitt Smith: Yeah.

Joe Fairless: Alright, let’s do it.

Emmitt Smith: If I don’t have an answer, I can say “Pass…”

Joe Fairless: We’ll see… Elton from Detroit asks “How do you identify which opportunities to pursue?”, which we kind of touched on, so if you don’t wanna elaborate, you don’t have to. But just from a high level…

Emmitt Smith: Number one, from a real estate development standpoint it’s about an eye for a piece of property… What does this property want to be? No matter if it’s an old redevelopment play, or if it’s a piece of land that’s vacant, but it wants to be something. Then figuring out how to make it happen. Some people see challenges and don’t wanna touch it. Other folks see challenges and they wanna run right to it because it’s those creative minds that pull off something that someone else doesn’t wanna do, which is a lot more riskier, but yields a much larger return. And I’ve gotta be passionate about what it is that I’m trying to get accomplished. But then I extrapolate that from the site standpoint to the demographics and the trade area around it. What’s in that trade area and what’s not in that trade area? And I try to [unintelligible [00:17:24].10] that are in the trade area off the table, and figure out who really needs to be here and how does the demographic stack up with that tenant profile.

Joe Fairless: Theo from Cincinnati asks “What separates the NFL players who leave the NFL and lose all their money with the NFL players who leave the NFL and make more money?”

Emmitt Smith: Well, I think we all run the risk of doing things that we’re not aware of. One thing I’ve learned is it’s better for me to invest in myself than to invest in others, because I’m not gonna cheat myself. What happens when you invest in others, others sometimes (again) claim that they can do XYZ, until  the rubber  meets the road and you find out that they can’t, so you’ve made a significant investment in the person just for them to let you down. Not only that, but then the actual management, who you’re investing in and how you’re investing in these people, also their credibility becomes critical, too.

I just think that often times we are excited about being in business and not really taking the time to understand the business. Everything that I’ve done, I’ve tried to immerse myself in it to understand the business and how the business actually works itself, and asking questions, versus being an absentee owner, being an involved owner from start to finish. So you learn that lesson one time, versus having to learn that lesson three or four times.

Joe Fairless: Makes sense. Bradley from New York City asks “What are you most proud of?”

Emmitt Smith: What I’m most proud of? That’s hard to say, outside of just my kids. I’ve got two kids now that are going off to college; one’s already in college, one just graduated from high-school, and she’s off to college [unintelligible [00:19:12].12] And I’ve got three other kids coming from behind them, and they all are good kids. I think I’m most proud of my children in terms of how they’ve been able to handle not only the success of their parents and who we are, but just how they carry themselves as young men and women.

Joe Fairless: And the last question from the listeners that was selected is from Eric in Cincinnati – “What’s a trait you learned in the NFL that has been applied in business?”

Emmitt Smith: I would say teamwork. [unintelligible [00:19:42].16] ego at the door, and understanding that you do not become successful by yourself. It involves a lot of people in terms of helping you become successful. Like I said before, I did not hand the football to myself, I did not block for myself, I did not call the plays, and the same thing applies in business. I’ve got people that help keep me on time for my schedules, I’ve got folks that are in the marketing side, I’ve got folks on the executive director side, I’ve got CEO’s and everybody else that has a job and a responsibility. Doing your job and doing your responsibility protects everybody else, and in some cases I’ve got people that have the ability to do more, a lot more bandwidth than others, and that’s a beautiful thing. To me that’s a first, second and third running back. Not only is he there to run the ball, but on third down he can go out and catch the ball and he can also block, which is also extremely important for key people and key personnel in any organization. If you’ve got somebody that has the ability to not only be a broker, but also has a law degree too, so that expedites certain things too, that covers your back.

Having engineers that have the capability of not only being a CEO, but also seeing your estimator too, so when it comes down to creating processes and procedures for your organization to run off of and run in the most efficient way, all of that is great knowledge to have. Then you have folks that just handle one piece, but they do that one piece very, very good, and that’s a wonderful thing to have.

Teamwork becomes such an important thing in every aspect of what we do. In my household it’s the same way – teamwork. My wife and I have got to be on the same page in order to raise all five of our kids and keep them all humble, hungry and knowledgeable in terms of their growth. That is an important aspect of who we are as people, to not only have the ability to share knowledge with one another, but to establish that team environment.

Joe Fairless: I’ve read that on your bucket list is to be an NFL owner. Let’s fast-forward, and I’d like to congratulate you – you have your pick of the litter; you can pick whichever NFL team you’d like to be an owner of… Which one is last on your list, and why?

Emmitt Smith: Last on my list… That could be a number of cities, but obviously I would like to work in cities that I love to visit, where the weather is perfect or good in some kind of way.

Joe Fairless: Sorry, Detroit… [laughter]

Emmitt Smith: No offence to Detroit, because it has tremendous opportunities, but I’m not a cold weather person, so I would rather be on the South Side. West Coast – I could deal with the West Coast; Arizona – I could deal with Arizona… Obviously, anything in Texas I’m good with, Louisiana, Georgia, Carolina, Florida – all of those are great areas, but if I could pick one team that I could be the owner of, I would wanna be a part owner of the Dallas Cowboys.

Joe Fairless: Absolutely. And has anyone ever interviewed you while wearing an Emmitt Smith jersey, like I just did?

Emmitt Smith: I can’t think of [unintelligible [00:22:53].25] in recent times. [laughter]

Joe Fairless: Well, Emmitt, thanks for spending some time with us. Thanks for talking about your teamwork approach and how actively involved you are in learning aspects of the process, and the challenge. A lot of people who haven’t walked a mile in your shoes or other people’s shoes, they have a tough time thinking that perhaps everyone has a challenge. Everyone has challenges, and really, one of the things that you mentioned is do you have the right people and how you focus on “Are they credible?” and how you qualify that credibility, whether it’s  a 60-day timeframe for testing them out, or any number of other filters that you use… So thanks for being on the show.

Where should the Best Ever listeners go to perhaps get more involved in what you’re focused on, whether it’s the Gents Place or something else?

Emmitt Smith: Go to EmmittSmith.com.

Joe Fairless: Cool. Emmitt, thanks for being on the show. I hope you have a best ever day, my friend, and we’ll talk to you soon.

 

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