Property is the Fruit of Labor
“Property is the fruit of labor;
property is desirable;
it is a positive good in the world;
that some should be rich
shows that others may become rich,
and hence it just encouragement to industry and enterprise.
Let not him who is houseless pull down the house of another,
but let him work diligently
and build one for himself,
thus by example assuring that his own
shall be safe from violence when built.”
Abraham Lincoln
March 21, 1864
In 1978, a saleslady named Laurie Roberts tried to sell me the 1st screen word processor to have been installed in any law office in San Antonio.
This price of this non programmable machine was $18,900 and I had negotiated the price down to $15,600 but just could not “get up to the lick log” on what I believed to be an exceptionally high price in those days.
In frustration, I called my Dad to seek counsel on what to do. He asked me what I could do with the machine and I replied that it would allow me to give the fastest service in the production of legal documents in San Antonio, permit me to rely upon the machine to create “practically perfect” documents and do so at what was considered to be “blinding speed” compared to others in my kind of practice.
My Dad said “Just buy it!”
“But,” I replied, ” … it’s so very expensive … it’s $15,600 and that’s a hell of a lot of money for a guy just starting his law practice … and I really don’t have the money and it’s going to be a real strain on me to buy it at a time when I just don’t need anymore strain.
I feel like I ought to buy something cheaper … or not buy anything at all, right now … at least until I can earn some money and have a little more breathing room.”
Dad replied ” Son, you just don’t understand at all …
it’s NOT the PRICE of the Tool that counts …
it’s ‘What it will EARN for you’ that counts …
if the machine will make your work better and faster and please more clients and make you less dependent on your support people and earn you more money …
the price of the tool simply doesn’t matter.”
I followed his advice, … and he was Right.
Robert Jorrie,
1992
Some years ago, an interview of Mr. Dan Oppenheimer of the D. & A. Oppenheimer Bank appeared in the San Antonio newspaper in which the reporter asked Dan Oppenheimer why he had continued to loan money to Mr Gurinsky
when Mr. Gurinsky had gone Bankrupt
and been legally discharged from the obligation to pay Oppenheimer’s Bank 4 times,
to which Mr. Oppenheimer replied:
“Who is a Better Credit Risk, the Man who goes Bankrupt and pays you Anyway,or the Man with a Clean Credit Record?”
WHAT THIS MEANS TO ME:
What really matters to a Lendor is the Perception that he WILL be Paid
… and the Stronger that is,
the more likely you are to get your loan.Now in these current days of “Institutional Lendors,
“this is a little less likely to be as true as it was when banking was done on a more personal level,
but it is still the way enlightened bankers think.
(see also Borrowing and Paying Back)
Robert Jorrie
One of the things that I have always had to “clean up” after my Dad in the Real Estate Business was to go buy the “Out Parcels”
“Out Parcels” are those pieces of land that are in the middle of something you might need “some day” … or a parcel that “unlocks” the usefulness of another parcel you might already own.
My Experience (and Sam’s Rule as he taught it to me, although he never followed it)
was that you only get ONE Opportunity in your entire Life
to buy an “Out Parcel”
so even if you pay a bit too much when that once in a lifetime opportunity comes … or have to pay for it with no return for a long time … it is still generally a good thing to do.
Robert Jorrie
Never Marry your Investment
Don’t be a Pig,
when the Time comes to Sell,
DO IT!
Sam Jorrie
1. THE “TARGET” TENANTS WE SEEK
The kind of tenant we seek is an operator that contributes to the Center’s Intrinsic Value … its Loan Value.
2. WHAT THE APPROPRIATE TENANT DOES AND WANTS
Mom-and-Pop operators offer convenience style goods or services, and What They Want From Us is a Center that Attracts Customers for them.
3. SELECTING THE RIGHT TENANT FOR THE TENANT MIX TO DRAW CUSTOMERS.
These merchants may have everything at stake, often investing their lives and financial worth in the business;
What they lack in size and sophistication, they often make up for in hard work and a drive to see their business succeed.
For Example, pair a bike shop with a children’s clothing store, a nail salon by a hair studio.
4. HOW TO IDENTIFY POTENTIALLY SUCCESSFUL LOCAL TENANTS:
4.1 Evaluating their financial profiles and assessing their future business prospects.
4.1.1. How long are they in business? Watch out for poorly financed “start-up” businesses.
4.1.2. Annual Sales Volume on both a Gross and per-square foot basis? What are rates of Sales Increases?
4.1.3. Who are their Target customers and what is their perceived trade areas?
4.1.4. Pricing strategies for merchandise or services?
4.1.5. What are gross and/or net profit margins?
4.1.6. Markdown policy for slow selling merchandise?
4.1.7. How much is spent on advertising and where … what type of advertising?
4.1.7.1. The Tenant’s response to these questions serves a dual purpose:
4.1.7.1.1. to create an objective assessment of the tenant’s potential value and
4.1.7.1.2. to spark a dialogue that will provide insight into the tenants’ overall sophistication.
4.2 Assess the Soundness of the Business Plan.
4.3 Obtain a Personal Credit History
4.4 Obtain a list of both Personal and Professional References.
5. OUR MINIMUM EXPECTATIONS FOR A POTENTIAL TENANT INCLUDES THAT THE TENANT:
pays rent and other charges “on time”
abides by the lease requirements
maintains an attractive, well stocked store
strives for expanding sales
understands that advertising & marketing result in sales gains
tracks and compares sales and profit performance numbers
6. CULTIVATING A RELATIONSHIP
Structuring the Mom-&-Pop lease, probably will be alone & without a broker. The store owner is the decision maker and On-Site Manager.
Developing ongoing rapport can be critical in maintaining both financial and aesthetic vibrancy of a store.
7. RECOGNIZING THE TENANT IN TROUBLE
Mom-&-Pop operations are marginally capitalized and usually operate on a Thin Safety Net, unexpected or prolonged downturn may lead to failure or insolvency.
8. STRUGGLING TENANT WARNING SIGNS
changes in rental payment pattern
declining sales figures
reduced inventory
poor maintenance and store upkeep
elimination of advertising and marketing
personal observation and rumors
9. OBJECTIVE OF THE WORKOUT IS EITHER:
A Quickly Revived Tenant capable to paying Market Rent in the Near Future, or
a Quick, Accomodating Return of the lease space to “For Rent” status.
Author Unknown, contributed by Sam and refined by Robert Jorrie
1. Learn to Invest Yourself:
1.1 Your investment motives are perfect … there aren’t any conflicting money or priority interests of outsiders in which they serve themselves first instead of attending to your needs, first.
1.2 Requires big effort and time to learn the investment ropes
1.3 You don’t have to share rewards with others (good)
1.4 You don’t share risks (might be expensive if you’re wrong)
2. There Are 2 Ways to Hire Others to Invest for you:
2.1 Super Competent Financial Advisers:
2.1.1 They Are Hard to Find … there are never more than just a few truly competent ones around.
2.1.2 They Are Never around for very long … they will only do it for you for a percentage or fee until they make enough money to be able to afford to quit doing it for you for money … and become able to do it for themselves for 100% of the return …
then they quit and are gone!
2.2 Professional Advisers:
2.2.1 Stock brokers and Certified Financial Analysts and Financial Planners and Tax Shelter salesmen do it for compensation of one kind or another
and can’t ever earn or accumulate enough money for themselves to be able to afford to quit working for you for money.
FOR IF THEY COULD EARN ENOUGH …
WHY WOULD THEY WORK FOR YOU AND SHARE THE RETURNS?
2.2.2 Irrespective of their words to the contrary, they always take care of themselves, first (that is, they attend their own accounts first or try to sell you) to earn compensation
after that, they take care of their biggest clients, second …
and they take care of you, LAST.
3. SUMMARY:
3.1 Best Results accrue if you do it yourself … for yourself.
3.1.1 You may be personally unwilling to divert the necessary time and effort from other parts of your day to learn “the ropes”.
3.2 It is unrealistic to believe you can hire others to invest for you without also facing the reality that you will still take all the market risks other investors take
but you are never as likely to achieve as superior results as those who do it themselves for themselves … because others are never as motivated to do it “as right” for you as you are.
Thus, if you are Unwilling to do it yourself
then you must recognize
that you’re never going to obtain Superior Performance.
Robert Jorrie,
1975
Man … without Tools, he is Nothing.
With Tools, he is All.
Thomas Carlyle
In1963, when I was 23 years old and the Credit and Collections Manager for my family’s business the Jorrie Furniture Company and our best salesman, Taft Riggs, sold a $3500 dollar order.
The merchandise was a red and white flocked velvet sofa with 2 built in end tables and 2 matching red lamps with 2 red and white flocked velvet lampshades.
When the credit application was given to me to approve credit, I saw that she was “self employed, that she would not tell “where” she worked, and that she claimed to have a very large income.
I declined to accept the sale, thinking that the woman was a prostitute.
Taft went to my Dad to complain and Dad called me to his office and asked me:
“Did you turn this sale “down?”
I told him “yes” and he turned the credit application over to read the credit report we had obtained from the local credit bureau and typed on the back of the application, and read it out loud:
“Paid Prompt,”
“Paid Prompt,”
“Paid Prompt,”
“Paid in Advance,”
“Paid Prompt,”
“Paid in Advance.”
“Why did you turn this sale, down?” he said.
I said “Dad, I think she’s a whore and I that is an illegal and immoral business …
and I don’t like doing business with such people, I don’t want them around the store and I don’t think that Jorrie Furniture Company should do business with people in such a dirty business.”
He said to me “Son, is her money, dirty?”
What this Means to me:
I don’t think I have the Right to be Judgmental of the ways others make their livings for I do not know their circumstances and
and unless the Law makes it illegal to do business with these people,
I think they are “people” too,
they have a right to buy things and live their lives out as best they can,
and their values not concurring with my personal values
should not interfere with business.
Robert Jorrie,
1991
1. The Amount of Money Borrower requests to Borrow.
2. What the loan proceeds will be used for.
3. How the money will be Repaid (when the 1st Payment is to be Due, Term of Years required, Interest Rate, renewals required, Releases of Collateral, etc.)
4. Lists of Collateral supplied to secure the note.
5. Provisions that Banks should not Rely upon the Wife’s Credit (prevents the Bank from making the loan Community Property and subjecting wifes assets to debt. This requires a Marital Property Agreement, which must be filed for record. Warning: Never ever let an amateur lawyer do this … nor use only one lawyer for both Husband and Wife)
6. Always ask for more money than you actually NEED … for you can’t “go back to the well.”
7. How the money should be drawn from the Lendor.
8. Always plan for and ask for an additional amount of money to be held in a “HOLDBACK FOR UNSPECIFIED CONTINGENCIES” … This is Vitally Important.
This is a copy of an Old Loan Application I made some years ago, which I believe is a “good example” of how one should look
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TWO YEARS PROJECTED ANNUAL OPERATING STATEMENT
COLISEUM ROAD WAREHOUSETHIS ASSUMES THAT THE OTHER THREE PROJECTS WILL NEVER GO UNDER CONSTRUCTION AND THAT THE COLISEUM ROAD WAREHOUSE WILL BE CALLED ON TO SERVICE THE DEBT ON ALL FOUR TRACTS FOREVER
ANNUAL GROSS RENTAL
167,920 sq. ft. @ 17¢/mo for first two years $342,556
This assumes negotiated a replacement of the approximate $500,000 8% note with Mutual of New York with Permanent Financing funded with the new permanent financing money at market interest rates of 14% and raising the existing 8% rate to 9.75%.
EXPERIENCE OF ROBERT JORRIE
CONSTRUCTION AND LEASING
Leases and manages 32,800 Square Foot Warenouse at 30 Essex Street since 1962 for Mrs. Robert Marx.
Leases and Manages 53,800 Square Foot Warehouse at 1524 W. Poplar since 1962 for Mrs. Robert Marx.
Designed and will build a proposed 25,000 Square Foot warehouse on West Poplar Street for Mrs. Robert Marx.
Leases and Manages 35,000 Square Foot Retail Furniture store building since 1962 for himself.
Helped design and helped construct 45,000 Square Foot Retail Furniture store building which he leases and manages since1963.
Leased and manages 50,150 Square Foot warehouse at 1114 W. Commerce for self for many years. Disposed of by means of three-cornered tax-free exchange.
Helped design and helped construct and leases and manages 167,920 Square Foot Warehouse building at 943 Coliseum Road since 1969 for himself.
Leases and Manages 1006 S. W. Military Drive since 1963 for himself.
Owns, operates and leases 354 Acre Exotic Game Ranch on the Guadalupe River 2 miles West of Comfort since 1968.EDUCATION
Graduate University of Texas, Bachelor’s Degree in AeroSpace Engineering, 1962.
10 years exprience operating and managing Jorrie Furniture Company including 5 large retail stores.
Graduate St. Marys University School of Law with a Juris Doctor, 1974.Graduate New York University School of Law with Master’s Degree in Taxation, 1975.
Practicing Attorney, San Antonio, Texas with heavy emphasis in matters of Real Estate, Taxation and Tax Planning.LOAN REPAYMENT:
As soon as the building leases, Jorrie will obtain permanent financing — but not longer than 24 months.
Funds will come out of Permanent Financing to be acquired upon leasing the Coliseum Road Building.
COLLATERAL SUPPLIED:
1. Mortgage and lien upon the Coliseum Road Building valued at $4,250,000 in the amount of $1,000,000. subordinated to MONY loan 99805-S. Principal balance about $180,000 at 8%, payments $6,200/month.
2. 4 acres in fee simple adjacent to Coliseum Road Building. $304,920 FMV ($l.75/sf) — with no mortgage.
3. Assignment of up to half the rents on Coliseum Road (to the extent they exceed $6,200/month to MONY.)
4. 5 acres of rail-served sprinklered land at 326 Old Seguin Road. FMV $381,150 ($l.75/sf)
5. Personal Guarantee of Robert Jorrie.RELEASES OF COLLATERAL REQUIRED:
1. 8.37 acres of vacant land of the 15 Coliseum Road Acres.
2. Front 4 acres upon repayment of all funds expended from these funds.
3. Coliseum Road warehouse and the acreage it sits on upon repayment of all funds expended from these funds.
4. 5 acres at 326 Old Sequin Road upon repayment of $61,200.SPECIAL CONSIDERATIONS:
In order to have the ability to deduct interest, Jorrie requires a Battelstein-McAdams Provision under which the Bank wlll arrange for Jorrie to annually borrow the interest due from a 3rd party accomodating lender just prior to calendar year end … the accomodating lendor will advance money to Jorrie who will deposit it and then write a check to the bank in order to properly satisfy the meaning of the word “paid” and obtain the interest deduction. A few days after the new calendar year begins, the bank will pay off the accomodating lender out of the Hold Back and consolidate that sum to the loan balance. See Battelstein v. Commissioner, 632 F2d 1182. (CA-5-1980) and McAdams v. Commissioner, 15 TC 231 (1950).
EXHIBITS:
Robert Jorrle’s Balance Sheet
Coliseum Road Brochure including Site Map showing 4 acres & Tom’s Peanut Acre
Plat of Sequin Street tract
Description of Jorrle’s ExperiencePURPOSES:
To afford Interim Financing which will permit Jorrie:1. To fund the purchase of a 1 acre tract from tne Southern Pacific Railroad immediately adjacent to the Seguin Road tract while the Railroad is in desperate need for cash so as to keep acquisition costs down.
and to begin site work on both tracts for the approximate 118,000 square feet multi-tenant, sprinklered and Rail-served warehouse while construction costs are low so as to be prepared to begin pouring concrete and “get a Jump” on the market, when the boom begins again. See attached Sequin Road Plan.
2. To acquire 4 acres adjacent to existing Coliseum Road warehouse.
Current owner wants cash and is anxious to sell …
and to acquire the 1 acre adjacent to the Coliseum Road warehouse and located behind Tom’s Peanuts … which will make the Coliseum site the only 20 acre rail-served and sprinklered high clear stack height NEAR DOWNTOWN building with tremendous expansion capacity in the Sun Belt. See attached Coliseum Road Rental Brochure.
Perfect for a highly desirable near downtown industrial park.
3. To replace the existing high interest note and mortgage in favor of Bexar County Savings with one at a more favorable interest rate.
4. To consolidate some personal notes and fund an addition to Jorrie’s residence.
5. To fund temporary negative cash flow. and up to $20,000 in repairs that will make the building more cosmetically attractive that will help rent the building, property taxes and $6,200/month mortgage payment to MONY and $3,400 a month to Sam Jorrie beginning April 1, 1983 until the Coliseum Road warehouse is rented, along with debt service upon the proposed loan from tbe Hold Back Funds. See attached Coliseum Road Pro Forma.LOAN REQUIRED:
$1,000,000 in funds to Jorrie plus a Hold Back for debt service on this Loan and on the MONY Loan 1-1/4 points over Prime, floating.
Robert Jorrie