87. Medical Offices – Inflation Resistant Investing With Ben Reinberg

PILF 87 | Inflation Resistant

 

When investing in real estate in uncertain times such as these, it is important to look for inflation and recession resistant asset classes that can still produce acceptable returns during difficult economic conditions. Medical offices could be just such an asset class. If you are looking for a recession resistant asset class to generate passive income in any market, this is the podcast for you! In this episode, Jim Pfeifer shares an insightful conversation with Chief Executive Officer of Alliance Consolidated Group of Companies, LLC, Ben Reinberg as he talks about medical offices. Ben shares the four pillars of his company’s success and how serving people can serve you well. Tune in and get tips from the authority on medical office real estate acquisition and learn how you can be a successful passive investor even in difficult times.

 

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Medical Offices – Inflation Resistant Investing With Ben Reinberg

I’m excited to have Ben Reinberg with us. He is the CEO of Alliance Consolidated Group, an operator focused on the medical office space, which is a brand new asset class for me. Welcome to the show.

Thanks. I appreciate you having me on. I’m excited to add a lot of value to your readers about passive investing in commercial real estate.

I’m here to soak it up. I’m glad you are here. The first question I always ask is if you can tell us about your journey. How did you get into real estate? How did you get into the commercial real estate medical office? If you could just give us the scoop on how you got here.

We’re going to roll it back. I’m a 52-year-old man now in 2022. I started my company when I was 24. I’m a CPA by trade. I worked in accounting for a year. One of my clients, who was from the West Coast, inspired me to get into real estate. I realized I had been an entrepreneur since I was born. I had jobs that were very entrepreneurial.

I used to sell cigarettes when I was eight years old at local bars in highway Illinois for cash. I figured out how to break up a carton of cigarettes and sell it at bars individually and undercut the machines when you used to pull the handle. That was my first job, and I was eight years old. I have continued ever since. I was originally born and raised in the Chicago area. That’s my hometown, and that’s where I sit now. I live out on the West Coast.

My West Coast office is in Newport Beach, and our headquarters are in Chicago. We have a Tampa office as well. When I got started when I was 24, I was encouraged by one of the guys I was on audit with. He said, “You are more of an entrepreneur.” I took that to heart, and he was a billionaire. I figured it out, and I talked to one of my clients. The client said, “Commercial real estate is where it’s at. It’s wealth building. It’s the way to wealth. It’s where a majority of our wealth comes from.” This was before technology was prevalent.

I bought my first deal. It was an industrial deal. It was a two-tenant deal. After the first week, I lost 45% of my income. I had a tenant move out in the middle of the night. It was a Midwest distributor. I backed filled it. I made a three-tenant building. I bought it for over $2 million. I decided to sell it myself instead of hiring a broker. I sold it for $6.4 million, and that launched me.

That was syndication. That was my first indication. I have built over 9.5 million square feet of office industrial. We have done hundreds of syndications throughout the country. Several years ago, I decided to get into medical properties. We went through a recession. There was another recession coming. We said to our investors, “What do we want to do?”

A lot of our investors said, “Let’s look at cashflow with upside.” I did some homework and realized that the human body is never going on a style. We got into medical properties. We are good listeners of our investors. I take time to engage my investors and get to know them. It’s a marathon business, and it’s lifetime relationships you have with our investors.

PILF 87 | Inflation Resistant
Inflation Resistant: Take time to engage your investors, and get to know them. It’s a marathon business, and it’s a lifetime relationship.

 

What is great about our investors is that once they start investing in Alliance, our funds, and syndications, they don’t want to leave. They keep coming back. The reason behind that is that I’m a big advocate of transparency and integrity. That’s how we run our company. You don’t work for my company if you don’t establish our core values, transparency, integrity, consistency, and expertise. That’s what we offer our investors.

When I got started, that launched me, and we were doing industrial and office and retail. Several years ago, we got into medical. We have been running ever since. I was investing in tenants that maybe the government was scrutinizing, but I knew that kidney disease wasn’t going away and dialysis would grow. We are right, and we did well for our investors.

We averaged mid-twenties IRR on our medical properties. Several years ago, a friend of mine approached me and said, “Ben, you need to look at veterinarian properties.” I said, “Why?” He was like, “It’s similar to medical. It’s just with animals. Animals are growing. You have two dogs of your own. All your colleagues in front have pets, cats, dogs, parrots, reptiles, and snakes. Someone has something in the family.” We got into that business, and it has been wildly successful. We bought incredible properties. We own a horse and cattle surgery center. It’s the gold standard in Texas.

We invest in the Southeast, South, Southwest, Mountainwest, and parts of the West Coast. We still have a little bit in the Midwest. The reason why we invest in those areas is that we look for good healthcare policies, population growth, and good residential areas. All that culminates in strong medical property and veterinarian property environments. Tax-free states for taxes.

Everything we do is about the investors. The investors come first. What I mean by that, which is important to me in my company, is that I have a rule. I said, “Every single penny that every investor has ever made, you have to value and cherish it.” Let me explain what’s behind that. I grew up in Chicago. Some of your folks reading might be from the Midwest. I know what it’s like to wake up at the crack of dawn, and it’s dark, cold, gray, and you got to get up and go to work. You have families and other issues going on in your life.

How hard did it take that investor of ours to earn every penny that they invested with us? I don’t care if they came for money. I don’t care if they grind it. Whatever they did, you have to value it. That’s the foundation of our company. We created a new fund called the Alliance Medical Property Fund. I wanted to create something that had a lot of benefits. Our investors said, “We should start doing funds.” We started looking at it and said, “They’re right.” There are four benefits to our fund. It’s important because it offers your audience a lot of value, why people do funds, and what they mean. Here are the benefits, everyone. I want you to read this. It is important as you look at real estate funds.

For our fund specifically is the cost of capital. We have been doing this for many years. My leadership team has 200-plus years of experience. We have a great track record. We understand how lenders work. I could pretty much sit on the board of any bank. I understand how they underwrite and how they approve loans. That is important to learn in our business, and we offer a lot of value.

The cost of the capital is cheaper for us with the fund. It allows us to get subscription lines of credit. It allows us to go shop for loans and have a competitive atmosphere. It provides a lot of benefits to the investors because we get flexibility and we understand how to deal with debt in the process. That is extremely important when you are a sponsor of our business.

The second point is our purchasing power because we have $50 million in equity that we are raising. We have already raised some of it, and we have already loaded assets into the fund. It’s exciting. Everybody is excited about it. With the fund, when we go in front of a brokerage community, a sales community, or a group of physicians, whoever, they know we have the capital close. We provide certainty. Certainty in our business is important. That’s what we provide. By providing certainty, you get better pricing. It trickles down to our investors. It is always about our investors at the end of the day.

The third pillar is diversification. I will give you an example. If you were an investor, you invested in five syndications we bought in a year, and you put $100,000, I could take your $500,000 that you invest in over five investment properties, and we’re going to put over 25 to 30. That is diversification. It mitigates your risk but also provides the fourth pillar, which is most important, scalability.

Here in the fund, I could sell a property, do a 1031 exchange, take 1 and make it 3. Let’s say I bought a property for $8 million and sold it for $14 million. I took that $6 million gain plus the $8 million, and we exchanged it into three properties. Within the fund, our investors, without investing any more money, get a $6 million benefit plus the equity we create from the three. That is scalability.

There is the cost of debt, capital, and purchasing power, and then you have diversification and scalability. That’s what makes our fund powerful. We have the number one fund in the market. People love medical property. Human buy is not going out of style with what’s going on in the stock, even what we saw now and over the past handful of weeks. People want to be in hard assets.

Not only that, we have tax benefits, depreciation, and interest expense that hit at the property level and flow down to the investors. I personally invest side by side with my investors because, to be honest with you, I haven’t found a better investment out in the marketplace. I know the assets. You can go kick all bricks and mortar of every property. That’s important.

Transparency is important to me because I want to be treated the way our investors are treated. When I feel that, I say, “How do I want our investors to be treated?” I want transparency. I want reporting. I’m going to over-communicate with you. I’m going to tell you the good and the bad, but you’re going to know exactly what’s going on. That is important because it makes the environment good. It makes your relationships with investors.

Transparency is very important. You’d want to be treated the way your investors are treated. Click To Tweet

They know everything is not perfect and life’s not perfect. People always ask me, “Ben, who do you invest with if you’re going to invest with a hedge fund or whatever?” I look at the people because I always ask. There are problems and issues that come up in any investment. If someone tells you any differently, they are lying to you. It’s a fact. Because of that, what is important to me is solution-oriented folks and companies.

At Alliance Consolidated, my company is outstanding at solving challenges and problems. We understand solutions. That is due to a lot of experience. We have been there and done that on a lot of things. We know how to deal with tenants. We know how to negotiate leases and loans. We know that. We have been through different cycles and environments. We know how to capture the value and take advantage of it.

We are excited about this upcoming recession. There are going to be a lot of great opportunities. Our investors are going to make a tremendous amount of money in this new fund from us. The reason why is because of who we are and those four pillars I explained in the fund. It allows us to take advantage of it. If you’re a passive investor, the question I would have is, “Why not invest in the Alliance Medical Property Fund? I do it, and I haven’t found anything better.” That’s the real benefit. When you have strong sponsorship with experience, you can navigate through the waters.

PILF 87 | Inflation Resistant
Inflation Resistant: You can navigate through waters when you have a strong sponsorship with experience.

 

I have a saying, and this is important if you’re in commercial real estate or you want to get involved in commercial real estate. Someone said to me this is how the business works. You are going to spend the first third of your career on your back, the second third on your feet, and the last third on your stomach. I’m on my stomach. I have been doing this for many years. I have grinded and paid my dues. We are resource-rich. I am in the prime of my career.

By saying that I’m on my stomach, it means you are swimming. I can navigate all the variables. I can move quicker. I can get through things quicker. I see things. I could see challenges forthcoming down the road that we needed to tackle ahead of time. Our investors don’t see all these variables that I and my staff and a lot of people at Alliance are dealing with this on a day-to-day basis. That is not their job. They are passive. They need to enjoy the fruits of our labor, which they do.

That’s what I do. I’m proud of it. I have incredibly talented people. My personal brand is taking off, and my podcast is going through the roof. I’m at the point in my career where I have realized how I made money. I made money because I like to serve and help people. When you invest with Alliance, it pretty much serves as part of my mission. I also mentor and teach a lot of people in the business. I’m also going to be starting a university shortly, where we’re going to be teaching anyone throughout the world to be able to get involved in commercial real estate and learn A to Z.

I felt that it was important. It was never taught when I was younger by the older generation of Baby Boomers in my area. I felt that I needed to do something different. How I approach the business is serving people, helping them, making them a lot of money, and providing tax benefits. It puts a lot of money in mind in my company’s pocket by serving people.

That’s how we operate. That’s who we are as a foundation. I’m proud. We’re growing rapidly, and we’re scaling, even in this environment. We’re looking to hire more people. I’m blessed because I have wonderful, talented people that give their own autonomy and are the fabric of Alliance, my company. Because of that, it’s allowed me to help and serve even more people.

That’s who we are. That’s who I am. If you go to AllianceCGC.com, you can see what we do. If you go to BenReinberg.com, you can see exactly who I am. I like people to know who I am. If you’re going to put a lot of money with me, you should know everything about me. I’m not going anywhere. Even though I’m 52, I got another 30 years out of me in this business. With regenerative medicine coming out and this BioMed stuff, I might work until I’m 110. I could live to 150. I might work until 110 or 120. Eventually, I’m going to have to retire because I get a little tired, and I want to do other things. On that day, I will always look at serving people. It’s something I’m passionate about.

There is a lot of good stuff in there, and I like to dig in a little bit on the medical office asset class. For the typical Left Field Investor, we will probably start with multifamily. You might get a little bit of self-storage, a mobile home here or there, but a medical office is something different. Can you talk a little bit about the differences between medical and what most of us are used to? Why are the results in medical so much better?

The first thing is that medical office is pandemic and recession-resilient type real estate. Multifamily can’t say that. They can’t make that claim. Multifamily saw in the pandemic with some of the governmental regulations and ordinances about evictions and everything else. It became a challenge. What multifamily and other asset classes have that we don’t is they are susceptible to outside forces, third parties, governments, you name it. The human body’s never going out of style.

I will give you an example. We had a tenant that was in the dialysis business. The government was scrutinizing their public company. We bet on them because we knew. We said, “Dialysis kidney disease is rampant, especially in the South and Southeast. It’s never going away.” We were big believers, we were buying them at great prices, and we sold them for great prices.

The difference is that the foundation of our business is the human body. Multifamily is not a bad investment. Don’t get me wrong. It’s susceptible to a lot of things. You’re dealing with personal lives when you deal with apartments and multifamily. Being from Chicago, we have some of the kings in the business in multifamily who are icons. However, I know them all, and we talk about it. Medical offices and veterinary offices that we invest in with the human body that’s the foundation are important because when you have tenants that build deep roots in the property and serve the community, they don’t want to leave.

The other thing is that our renewal rate is in the high 80s now on a percentage basis. With multifamily, it depends on where you’re investing, what the rules are, what the environment is, and a lot of rules. You usually have government financing with Fannie and Freddie or HUD. You’re susceptible to that. Multifamily is a nice investment. Medical is the cream of the crop. Ours is like a Rolls-Royce, and multifamily is like a Cadillac. That’s how I look at it.

We have a premier top-level type, and it’s sophisticated what I do. It’s more than analyzing rents and coverage. Do I have a community center and a pool? Where are the amenities? Whom do I compete with? What are the rents in the area? We look at rents and everything else, but you have to know also how your tenant run their business. When you’re an orthopedic practice, a surgery center, dermatology, a neurologist, or gastro, you name it. They all have different metrics, ways they operate, reimbursements, niches, and investments in the property.

When you understand the different niches, you separate yourself. It’s difficult to compete with us and go buy medical. You can go try it, but you’re probably going to lose you’re a** because you don’t have the experience or the pedigree we have developed over the years and have been through our lumps and bruises to be experts in the medical property industry.

Multifamily is a little bit looser on the barriers to entry. A lot of people invest in it. It’s competitive, and because it’s competitive, a lot of people want to get in. It’s an easy entry. Pricing gets increased, and cap rates are low. Eventually, financing, especially in a recession with liquidity, it’s not as easy as it sounds to get financing.

I see a lot of risk with multifamily investing. There are some people that do it that are phenomenal at it. They make a lot of money and are good at it. I’m not negating and saying it’s a bad investment. I’m saying the differences are that I like investing in what we do. I have been through the internet. We have owned retail, and I stayed away from that. We owned industrial. We love industrial. With medical properties, you can’t beat the stability behind it. That’s the difference between a lot of asset classes. What I do is conservative investing with upside. That’s what we offer investors. That’s the difference.

Are we investing in real estate, or are you also buying into the medical office operations?

It’s something we are considering now. We are real estate owners. We own the land and the building. However, we have had a lot of demand for tenants that want to sell us their businesses. We’re considering opening up a division where we would acquire a certain niche in our industries. For example, we said, “We’re going to go after dermatology, and we’re going to roll up and buy all these different practices.” That’s something we’re going to do in the future because we understand their businesses, and I have a lot of CPAs that work inside the company.

I’m also a CPA. We know how to analyze financial statements and risks. We know how to do financing. We could be a one-stop shop for these people. That’s something that’s forthcoming down the pike for us. As we sit, we are landlords. We acquire, own, and manage our portfolio. We’re in multiple states around the United States, and that’s the focus of what we do.

Are these triple-net leases? If so, can you explain what that means?

What we buy are net leases. A lot of our medical tenants are in the net lease business. I will get deeper into what that means. People use a double net, triple net, or single net. They are all different gradations of the lease. The tenant is going to be responsible for the operating expenses, taxes, and insurance when you have a triple-net lease. They might pay it to you directly on a monthly basis. We escrow it, pay bills, do the accounting and establish a budget. That’s one way.

Another way is where they pay it directly. In a lot of our leases, especially in sale-leaseback, we do what’s called an absolute net lease. That means intense, responsible for everything, repairs, maintenance, and capital improvements. Usually, the difference in the leases has to do with the different responsibilities between the landlord and the tenant.

You can use any terminology you want, but that lease is like the Bible in our business. The lease is going to guide you on who is responsible for what. You have different gradations of different types of leases, gross net, and modified gross. Generally speaking, our business is a net lease. What’s good about a net lease, and I’m a big proponent of, is when operating expenses rise in inflation, the tenants are still responsible.

What’s great about right now, what’s going on with inflation, is that we are getting an upward pressure on rents. A lot of my rents, especially over the next year or two, are below market, and some of our leases have CPI indexes. I want your audience to read this. CPI is important because years ago, I might get a quarter of point increase if I’m lucky in great areas around the country. We looked at one of our leases in Florida. The CPI index increased by 8%. In 2022, it is going to be 9% or 10%. Instead of a 2% or 3% annual escalation rent, we’re going to see an 8% or 9% with inflation.

Inflation is our friend in commercial real estate, especially medical properties. It creates this upward pressure on rents, which creates this upward pressure on value. When you have to go renew your tenants, and your rents are below market, that upper 8% I was talking about becomes upper 90% or a solid 100%, if you can.

PILF 87 | Inflation Resistant
Inflation Resistant: Inflation is our friend in commercial real estate, especially medical properties. It creates this upward pressure on rents, which creates this upward pressure on value.

 

That’s what we do, and that’s the differences in leases. To understand leases, you got to read one and see. Everyone uses fancy jargon terminology. What it means is what’s the landlord and tenant responsible for. It doesn’t matter what terminology is used. You got to read the lease and see. That’s what we do. We’re great at abstracting leases.

When you buy these, who are you buying them from? When you sell them, who are you selling them to? Are you packaging them up? If you do package them up, do they all have to be dermatologists or orthos? Can you mix and match?

We like diversification. We don’t invest in one niche. I’m big into diversification, different areas of the country, different types of leases, tenants, credits, length of leases, terms, or construction. That’s what you leverage when you invest in Alliance. You leverage diversification and expertise. We are critical on where we invest throughout the country. We want to invest in high-growth areas and good healthcare markets.

When you invest in Alliance, you leverage into diversification and expertise. Click To Tweet

All those things have meaning when it comes to investing. When you invest in the Alliance Medical Property Fund that we have on the market right now, what that does is diversification, different types of medical tenants, credits, and risk, and it’s well blended. When we were doing syndications, it would just be want, asset, or portfolio. We are heavy into real estate fundamentals. We’re going to look at the rent per market. We look at how we protect our downside in an investment.

That’s what we do, and that’s why it makes it special investing in medical because it’s diversified. It’s different niches. Everyone on this show, all of us, use medical services, us and our families. Anything that you and your family out there. If you’re reading, that is what we invest in. That is why it’s powerful stuff because you can gravitate and know they are buying a gastroenterology building practice with the surgery center in it. People know that. Especially 45 to 55-year-old men, we’re getting colonoscopies all the time now. People can relate to what we buy, and that’s what I love.

Are you buying it from the doctors? Are you selling it to a REIT? How does the disposition go?

We buy from all walks of life. We can buy from investors, doctors, or physicians. We buy existing assets with leases in place. We do sale leasebacks with physician groups all day long. We buy from hospital systems. We buy from family trusts where maybe they inherit some. Maybe it’s a divorce situation. The guy needs to sell. We buy where maybe 2 doctors of a group of 10 own the property. They were the founders. There’s a conflict of interest. They are selling it to us with an existing lease. We have done a lot of those.

We have all different situations from all people and walks of life that sell to us. When we end up selling our portfolio or our properties, we sell to 1031 exchange buyers and other investors. We create value, stability, and an income stream. With the fund, our opportunities to sell to an institution. There are a lot of institutions that have reached out to Alliance and said, “We love for you guys to build a big portfolio of medical properties for us, sell it to us, and we will pay you a premium.”

Our investments are $3 million to $25 million per investment per property or portfolio. That creates diversification. We can sell a few hundred million worth of real estate to an institution, they can get serious dollars on the street. They don’t want to spend $5 million or $10 million. That’s not productive for them. They have hundreds of thousands of pension fund folks or clients that are investing in their insurance companies, funds, or public REITs. You name it. That’s whom we sell to. That’s our audience.

When you roll up a good portfolio, like we do, of the best quality stuff on the market, people get in into a bidding war. The exit in these properties is fruitful. It’s gratifying. If you look at yourself and your staff, you say, “What created this value?” Not only our expertise, but it’s showing up every day. It’s paying attention to your portfolio. It’s managing it. We are outstanding at property management and asset management, which creates that value.

We buy from anyone in the sun that owns a buy property and that there’s a large breadth of people that own them. On the flip side, when we sell, we have a crack staff of investment sales brokers that have worked for us for years, and I’ve grown in the business. I’ve taught them the business, and they’re the best in the business now. We have a great platform and resources that the exit has allowed us to have this mid-twenties IRR on a track record.

It’s amazing. I look back and I’m tingling when I think about what we have been able to accomplish because it’s a complicated business. It’s not as sexy as everyone thinks. It’s not easy. When I start teaching it, I will make it as easy as possible, but there is a risk. If you know that going in, you can understand the investment. That’s why I like our deal because I love the transparency. I don’t get that in other things that I invest in.

You mentioned property management, and we look at everything from the lens of multifamily in that. Do you handle that in-house? I would imagine that it’s not as intensive of property management as you have with a multifamily property. Maybe it’s like self-storage. Can you talk a bit about that?

We have our own property management department. I have outstanding people that run that department. We meet on a frequent basis. We decided years ago to manage our own portfolio. Control is extremely important to me. When you control your portfolio, you can mitigate challenges and problems easily, which we do.

PILF 87 | Inflation Resistant
Inflation Resistant: When you control your portfolio, you can mitigate challenges and problems easily.

 

Not all our properties are collecting rent checks. There is work that goes into it. We have to deal with operating expenses, capital improvements, additions, and insurance. You have to be an expert in insurance. When you property manage, you got to get dirty. You got to get into the weeds and rope up your sleeves. Multifamily is management intensive. Ours is different. We’re dealing with either public companies or high-net-worth private entities. We don’t have to chase for rent. It’s a zero-sum game. Either they’re paying rent, or they’re not.

With property management, the focus is on building that relationship with these tenants and their departments within their companies. That is what helps create values. When you have happy tenants, you have higher renewal probabilities, and you can add a lot of value to that process. Property management is critical. Asset management is important too when you’re managing an asset, figuring out what you have to do to add value, and how to deal with all the variables about the particular asset.

Property management is something we pride ourselves on. I invest a tremendous amount of money into our property management staff, software, and solutions. The reason behind that is that I know how to make our investors money. Property management is critical, and the people running it is critical. They are on the front lines talking to your tenants who are paying you rent and expenses. It’s important.

I compare everything to multifamily because that’s what most of us start out and a lot of us have branched out into other things. If you are interested in this asset class, can you talk a little bit about how we vet a sponsor like yourself? What questions should we be asking, and how do we find out you are the right one to invest with? That’s the most important thing typically that we think of as the sponsor. Secondarily, we want to analyze the deal. I know how to analyze a multifamily deal. I’m not sure what to look for in a medical office. Can you talk about both of those components? Those are the active part of passive investing, vetting the sponsor and analyzing the deal.

I love this question. I will tell you why, because I teach people a lot about whom you are going to invest with. If you invest with a multifamily investment company, they can pay you a preferred return. What I like to know is how you solve challenges. All investments are not created equal, and they’re not perfect. If anyone tells you differently, you better run because that’s the truth. I have been doing this for a few decades. I have done thousands of transactions.

You have to understand whom you are dealing with, the quality, and the character of the people. We are second to none at solving challenges. That’s what we pride ourselves in. The reason why is because I know the business well. If we’re great and we spend 99% of our time focusing on solutions and 1% on problems, we’re always going to win.

I understand the key to real estate. The key to real estate is the ability to hold. That’s not the location. It’s the ability to hold the ride through cycles and sell at the right time and buy at the right time. That is what is important. When you talk to a sponsor, the key is to be a good listener. Hear what they say, hear their experience, look at their track record, and ask them to give me a challenge and how did you solve it. Get to know them. You want to deal with authentic people that have high integrity. That’s what we do at Alliance. It’s important to me because I’m in a marathon business.

Deal with people with high integrity, people who are grateful, and value every penny you ever made that you invest with them. Click To Tweet

This isn’t getting rich quick, buying a property, flipping it in two days, going home, and telling your investors, “It was nice seeing you. Thanks for investing with us.” You want repeat investors. Integrity is everything. Transparency is critical and back to the core values of our company. The foundation is all based on the investment capital investors with us.

Be a good listener and hear what they say. Are they grateful for you? Do they treat a $100,000 investor the same as a $2 million investor? That is important. I look at all these things, and I have been doing this for so long that I have understood what is important because people always say, “Ben, who do you invest in?” I invest in people that can solve problems and challenges because that’s what differentiates people. We’re outstanding at solving problems. You go through life. All of us, everyone that’s reading, have challenges, persona,l and business-wise.

The question is, how do you rise up and get through those challenges? That’s what we do at Alliance. That’s why I’m proud of myself and my staff. I’m grateful for everyone involved in our process and all our third parties. That is the key. You want to deal with people with high integrity, people that are grateful, and people who value every penny you ever made that you invest with them. Whether you invest $1 or $500 million with someone, you have to be grateful for that journey and that privilege.

We know our investments are a privilege at Alliance. We know they are exclusive and rare, but on the flip side, the fair exchange we go into is knowing how hard the investor worked to invest in our fund or property. We don’t take that for granted. When you have that type of gratitude, attitude, and integrity, it oozes out of you.

That’s why we have an easy time raising money because we’re doing syndication. Our deals are selling out between 10 minutes and 3 hours these raises and that’s unheard of. The reason why is exactly why I said our foundation. Look for a good foundation. Look for someone that has a well-established leadership team like Alliance.

Model what we do, look at and say, “How’s that company fair with their structure and modeling? What are their core values? Who is on their leadership team? Do they manage properties in-house or outsource? Where are your risk factors with that sponsor? How well capitalized are they?” We’re extremely well capitalized. How much experience do they have? That’s what they want to know.

I always like to ask questions. The answers will always lead to the conclusion and the facts that you need to invest in. Your gut will tell you. You talk to me, Mr. Investor, I could assure you, you’re going to be comfortable with what we do. If you like safe, secure, and profitable investments, you will end up investing in our fund, and that’s what we end up doing.

It’s important that your folks ask questions. How do you solve challenges? Give them some examples. Ask them, do you have an investor portal? How do you communicate with us? How do you pay us our returns? Understand their process. What I like is simplicity. I make it easy for our investors. I was one of the first companies in the world to create an investor portal. I was doing that because, for years, I grew up as a CPA on a green ledger, paper stamps, checks, envelopes, you name it.

We send out checks for our investors. Some of them would be saying, “I’m not cashing.” I said, “There’s got to be a better way.” We created a portal with a friend of mine, the beta test, and it has been wildly successful. It’s going on for several years, we had this thing, and it’s great. It’s 24/7. You log on username, password, all your K-1s, and all your quarterly narratives that we write on all our properties. We do a quarterly fun report.

Transparency is huge. It’s everything and that’s whom you invest in. If you find someone with similar core values to my company, transparency, integrity, consistency, and expertise, that is whom you invest with. It’s those core values. I don’t care what piece of paper you have in writing. You invest with people. When people have high integrity and they care, that’s what you want out of your sponsorship.

PILF 87 | Inflation Resistant
Inflation Resistant: Invest with people who care and have high integrity. That’s what you want out of your sponsorship.

 

That’s what we provide at Alliance. I have certain standards in place. I don’t stand for mediocrity, especially when it comes to our core values. Everyone that works at Alliance displays those core values, or else they never make it within my company. That has been the history. That is whom you invest with. Those are the things you look for.

For us, the key is the sponsor, which is exactly what you said. What about the deal? Some metrics that we should look at or some parameters of a specific deal. I know you’re talking about a fund, but I assume that when you send out the information for the fund, there are a few deals in there that we can look at and analyze. How do we go about doing that? If you can, throw out a couple of quick metrics that we can look at.

Our criteria have been developed over decades, and it’s a fine box. We have certain criteria that our standards don’t go into the fund. We have five assets loaded into the fund. We give people a pitch deck. We do teasers on all our deals that we invest in the fund. Our investors can see what we’re doing, the benefits, and what those metrics are. We look for a certain population within a five-mile radius. We look for rank growth and initial lease term. We look at the financial statements of our tenants. We have high standards when it comes to underwriting. If it fits in our box, there’s an opportunity we’re going to write an offer and buy that deal if it makes sense.

We want to make sure we can hit our returns. We want to make sure we protect our downside. Our acquisition criteria are so refined and processed that we know what makes sense and what works. That’s why we have a great track record because we have been doing this for so long. This is a marathon game. Its experience person is business. The box that we play in provides us with the metrics we need to be successful. That’s the difference.

That is one of the things why I say, “I’m in the prime of my career.” I’m in the prime of my career because I had to get to this point and be able to create a box to buy properties into that provide success, great returns, and tax benefits. Every asset class has different metrics, but if I would ask someone when you have us with them Tuesday, what are your criteria? What do you buy? Where do you buy it?

We buy in the South, Southeast, Southwest, Mountainwest, and everything because it’s exactly part of the criteria, population growth, rank growth, good healthcare policies, and good state income tax policies. All those things matter. The devil is in the details. If someone doesn’t have defined acquisition criteria, that would be something I would be concerned about.

You ask, “Whom do you have in sponsorship?” You should see what’s their processes. How do they deal with challenges? What are their metrics? What are their criteria? Where do they invest, and why? Why do you do what you do? That’s important. To answer your question, we have a defined box that we play in and invest in. We have learned several years that it creates success.

This question has nothing to do with the medical office, but I read a blog that you wrote about the Power of Compounding. I liked how you wrote it. It’s not just interest that you’re compounding, but you talked about compounding habits. I like to end the show with a little bit of mindset talk. Can you talk about that blog and what you meant about compounding habits, and what’s the benefit?

The way I live my life is I am the same person I was when I was in my twenties and I have developed habits. Let’s go through a typical day. I wake up at about 5:00 AM. I get up, and I go work out. I train with a trainer five days a week. Exercising and working outs are extremely important to me. I take care of my health. My habits are important. I eat right. I exercise daily. I don’t intake caffeine. I stopped taking caffeine a while ago. My health is critical to those habits. I block out time in the morning to get the most important stuff done in the morning.

When I say compounding is when all these habits I’ve learned create success. When you do it day after day and year after year, it creates success, happiness, and peace of mind. One of the things I do is work out myself all the time for personal development. One of the things I learned a handful of years ago is that if I can be the best version of myself and create those habits and routines, my investors benefit from it.

When Ben Reinberg is the best person he could be, he is serving, helping others, and healthy, people love it. That’s why I’m going to be in this business for a long period of time. Compounding habits is figuring out what helps you create success. For me, Ben Reinberg, what creates success is every day I wake up, work out, and train. I intermittent fast. I have been doing that for almost a decade. My first meal is lunch. I do that on purpose. I have a short window.

Figure out what helps you create success. Click To Tweet

My health has become a routine for me. Because of that, I have a lot of energy. I’m always looking to do new things. I did a podcast on my show with a doctor in Deerfield. It was cool. We did it from Chicago while I was here, visiting for work and looking at my Chicago headquarters. What I love is learning about stem cells. I’m going to get a procedure done with stem cells because I want to heal all my cells that are damaged. I want to solve issues with my health. All these things that I do over time and the constant learning, improvement, personal development, and mindset all culminate in having success and being healthy.

It sets the tone as the main leader who founded this company. It sets the tone of, “This is the guy who started this thing, who knows every department and has done every task within the company years ago. He walks the talk. His actions speak louder than his words. If my employees don’t want to be healthy, that’s their problem. Ben Reinberg is going to do the best he can to be the best version of himself and work on himself constantly. Because of that, my mindset and everything else oozes out of me, and everyone at Alliance flows down the river with me, and it inspires people. It’s important. It’s showing up to work, having that habit.

Your readers might freak out by this statement, but I work Saturdays. It’s not in vogue. You’re probably questioning, like, “Why does he do that?” I learned that a while ago because I always want to separate myself. I always had the best days raising equity on Saturdays because everyone’s home and they’re calm. They’re out there, and they want to talk to me. I would sit in my office. I keep the light off on a Saturday. I would sit on my couch, look at my list, and start doing away. I had great success doing it.

I do things a little bit differently. I like to work on a Saturday, some people don’t, and I understand it. I’m a high performer, and all these things are my habits that create success. If you have anyone out there that’s young in your audience, I can give some advice. Work on yourself when you’re in your twenties. I didn’t know that. I’m jealous if you’re in your twenties and you’re out there reading to this because someone should have told me that a while ago. If you could do that and develop habits and compound them over time, that’s exactly what that article meant.

The last thing I always ask on the show is what’s a great podcast you listen to, and I’d also like you to include the name of your podcast.

I like the podcast Serial. It’s cool. It’s like a listen on crime and different stuff. That’s pretty interesting. I like friends of mine, guys that come on the show like Steve Rosenberg. He’s got a great podcast. There are a lot of great podcasts. I like my podcast because my podcast is on health, wealth, relationships, and business. We cover a lot of spectrums. I have amazing guests. The name of my podcast is Ben Reinberg: I OWN IT. The reason why we came up with the name is that you own every aspect of your life. You own all your decisions. You own, whether you’re successful or not, whether you believe it or not, it’s on you. How obsessed are you? How bad do you want it?

PILF 87 | Inflation Resistant
Inflation Resistant: You own every aspect of your life. You own all your decisions, whether you’re successful or not. Whether you believe it or not, it’s on you.

 

You own your behavior. You own what you consume. You own how you spend your life. You own how you treat your significant other and your kids, your family. You own that. That’s your behavior. People react based on your actions. That’s why we bring in experts that own it. We talk about how they own it. What do they do? What creates success? How do they deal with their mindset? How do they deal with their body? All the things that trigger success.

I want to give back, and we provide great value on my podcast. That’s why it’s successful. It’s not about me. My name is on the podcast. It’s about you as the listener. Every time we create a podcast, and we’re coming up with questions for the guests, we’re all thinking about what the audience wants to know. I’m part of the audience. I’m as curious as the guy or woman who’s tuning in to your show. I want to know stuff. We put our shoes into our audience, and we ask great questions. It becomes great knowledge that they share. I’m proud of it. It’s a great podcast. There are a lot of good podcasts out there, along with ours. I encourage everyone, whatever you’re passionate about, to listen to that podcast.

One thing about the Ben Reinberg: I OWN IT podcast is that if you like business and you like to learn about relationships, health, wealth, building wealth, and learn how other people did it, listen in, and you could watch me on YouTube. If you like, if you’re a visual person like I am, or you can go on any podcast platform, Apple, Spotify, Stitcher, you name it, and put in Ben Reinberg: I OWN IT, you will get value. We had some amazing guests, and we are fully booked through the first quarter of 2023. It’s growing, and we have a movement going on. I’m proud of it.

Ben, this has been a fantastic episode. We are learning so much about the medical office and we appreciate you being on the show. Thank you very much.

Thank you, everyone. Go out there. Spending money by investing in Alliance Medical Property Fund or with another sponsor is good for you, them, and the economy. When we get money out there, it benefits everyone. Go out there, invest, and be mindful of whom you’re investing with. I can assure you. You will make a lot of money. It’s a great market to begin investing in. Go out there and do it.

If people want to connect with you, what’s the best way they can do that?

If you go to BenReinberg.com, you will be able to follow me and see what’s going on. If you want to invest in Alliance Medical Property Fund, go to AllianceCGC.com. Follow me on Instagram, Facebook, or whatever you want. If you’re interested in investing in the Alliance Medical Property Fund, direct message me. Leave your number on your direct message. I will personally call you. I touch people all the time. I get people to call me, “I can’t believe Ben picks up the phone and calls me.” I’m appreciative of these people. They are reaching out to me. They are serious about investing. It goes back to that point that you value every penny.

Everyone out there, don’t be afraid to direct message me, call me, connect with me, or email me. I will respond, and I’m happy to spend as much time as you want to get you comfortable investing with us. That’s the best way to follow me. The podcast is Ben Reinberg: I OWN IT. Feel free to listen to it, go onto YouTube and do anything else we could do. Let me know how I can help you. Let me know what I can do to better your life, whether it’s investing in our fund or if you need advice.

Thank you very much. We appreciate your time, and we will be listening to the podcast and checking out Alliance Consolidated. Thank you very much.

Have a wonderful rest of your week. I’m grateful for you having me on and I wish all your readers the best.

Thank you.

It was an interesting episode with Ben, the new asset class. I always like to hear about new asset classes. I chased this shiny object, and when a shiny object is something that can make us money like this appears to be, it’s not bad chasing it. A couple of things that stood out to me is the number of times that he talked about valuing his client’s money. Every sponsor will say that, but when you keep repeating it, and that’s core to the mission of your company, that can make you feel more comfortable that he is investing in it and he wants to take care of everybody’s money.

He talked about the benefits of a fund, and we got back and forth in Left Field Investors. A single asset is better. The fund is better. He had four good points for why a fund is maybe better than a single asset, at least for medical. One is that the cost of capital is cheaper. He can get better debt if he’s getting larger amounts of its purchasing power. She has certainty for the brokers that he’s dealing with. They know that he can close deals, and that helps.

We have talked about diversification a bunch of times, and the most interesting one that he said is scalability. By that, he means he can buy assets in the fund, sell them, refinance and buy more. It allows him to scale and grow. He might sell an asset and buy three new ones, as he mentioned. All of a sudden, the equity increases by a whole lot inside the fund. If you have a single asset, you’re buying and selling, and those are individual assets. Scalability was pretty big. I thought that was interesting.

Medical offices, as he was talking about, were recession-resistant and pandemic-resistant. That’s something that’s important right now. No matter what the economy’s doing, no matter what’s happening around the world, people are always going to need medical care. If you’re picking the right types of practices, as he talked about kidney dialysis, those are the kinds of things that keep going, and maybe he does fewer elective surgeries and things like that because that might be less recession-resistant. He was looking at recession-resistant assets, which right now is key.

Absolute net leases. This is important because all of the expenses of the property are taken care of by the tenant. You don’t have to worry about inflation because inflation is going to be just a benefit to you because inflation is eating away the debt and the rent increases. It is tied to the CPI, which is related to inflation. It seems like a medical office would be a great place to benefit from inflation. That could offset some of the other asset classes where inflation might be a push or even a loss for you. That’s a great aspect if this is inflation protection.

The key to real estate is to buy and sell at the right time. Click To Tweet

Something he said is that the key to real estate everyone says is location. Ben, however, said the key is to buy and sell at the right time. That is true. It’s hard to time the market, but if you specialize in an asset class like medical, you’re not timing the market, but you know when it’s good to buy, and you know when it’s good to sell. Overall, I was happy to learn about this new asset class from Ben. I’m going to look into his fund and see what I think about it. Thank you for reading. That’s all we have for this time. We’ll see you next time.

 

Important Links

 

About Ben Reinberg

PILF 87 | Inflation ResistantBen Reinberg is Chief Executive Officer of Alliance Consolidated Group of Companies, LLC and as such, provides overall strategic and investment direction and leadership to the firm.

Ben is a respected authority on commercial real estate acquisition and investment as well as the development and structuring of transactions. He is well-versed in 1031 Exchanges and assessing the needs of investment capital.

Ben brings value to the deal process through his ability to build trust quickly, raise equity efficiently, solve problems, and bridge the gap between Buyers and Sellers. Ben has authored and published numerous articles pertaining to the trade.

Ben’s judicious management of key resources and glass half-full approach to the assessment of market conditions differentiate him in a market in which the perception of opportunity has diminished. Ben caters to the knowledgeable commercial real estate investor and broker by adding value and creating goodwill at every touchpoint. An avid marketer, Ben has positioned Alliance as a stalwart in the commercial real estate industry. Through strategic use of the Internet, he has solidified existing business relationships and extended his reach to potential investors and sellers.

Prior to establishing Alliance, Ben founded Hillcrest Trading, Ltd., a national acquisition and management firm. He began acquiring commercial real estate assets in the 1990s.

Ben received a B.S. from Indiana University’s Kelley School of Business and is also a Certified Public Accountant. His professional affiliations include the American Institute of Certified Public Accountants (AICPA), the Illinois Society of Certified Public Accountants (ICPA), The Urban Land Institute (ULI), and the International Council of Shopping Centers (ICSC). He is also a Charter Member of the International Association of Commercial Real Estate Professionals.

 


 

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