An Interview With Steven M. Bergsman

Marianas Business Journal Editor's Note: Steven M. Bergsman is a financial and real estate writer with more than 25 years experience. He has contributed to the New York Times, the Wall Street Journal Sunday, Institutional Investor, Mortgage Banking, Urban Land, National Real Estate Investor, Investment Dealers' Digest, Reuters News Service, Barron's and many leading real estate industry publications. He lives in Mesa, Ariz., and is the author of "Maverick Real Estate Investing: The Art of Buying and Selling Properties Like Trump, Zell, Simon and the World's Greatest Land Owners" and "Maverick Real Estate Financing: The Art of Raising Capital and Owning Properties Like Ross, Sanders and Carey."

Bergsman received his bachelor's in journalism from the University of Florida in 1971, and his master's in communications from the University of Utah in 1972. In 1976 he completed a master's in education from Antioch College in Ohio.Bergsman is one of the keynote speakers at the 4th Micronesian Real Estate Investment Conference, which will take place on Sept. 28 and 29 at the LeoPalace Resort. W. Nicholas Captain and The Captain Real Estate Group of Companies will host the conference for about 500 attendees.

Q: You are a journalist who has managed to do what every journalist says they will do one day - get published. Is your name on a book as rewarding as one imagines?

A: After 25 years of writing about real estate, I get a phone call one day from someone who wants me to write a book. It came out of the blue. But, here it is three years later and I'm working on a third book. Just shows you how much you can accomplish if you are a workaholic. And, yes, it was an absolute thrill to see that first book, and the second, and, hopefully, the third, which will be called "Passport to Exotic Real Estate: Buying U.S. and Foreign Property in Breath-Taking, Beautiful, Faraway Lands and Enjoying Peace of Mind. "(There will be a chapter on Guam in the new book!)

Q: You research and write for a diverse number of publications, but you have written books related to real estate investment. Why does real estate maintain its charm as an investment vehicle?

A: The unique thing about real estate as an investment is that it touches almost all of us. The moment we sign a mortgage to buy our first family home, we have made a real estate investment. Whether we live in that home for five years or 50 years, I guarantee all of us today understand how much the value of that house has changed over time. Price appreciation may only be one part of a real estate investment, but it is a concept we all understand.

Q: It must be hard not to put what you have learned into practice. Have you personally invested in real estate?

A: People ask me that question all the time. And the truth is, I have in the past without a great deal of success; I was a victim of everything I tell the readers of my first book to avoid, from bad timing to spotty management to coming into the market at the wrong part of the cycle. At the moment, I do own a second rental property in New Hampshire and I really checked the background of the tenant this time - it's my sister. I hope I won't have to evict her.

Q: You have interviewed a number of successful and famous real estate moguls, including Donald Trump, chairman and president of The Trump Organization. He is a high profile personality. Would you say he's the most fascinating of those you have met?

A: I've interviewed Trump a number of times in the past, including for my first book, and the odd thing about him is, he is usually willing to give a journalist time, but he's an extremely difficult subject to interview because there is almost no question about real estate or his business that you can ask him that hasn't been asked of him 100 times before. Very quickly, he'll slip into autopilot on you, and then you have to scramble to get something pithy. One of the hardest real estate moguls to interview is William Sanders, who generally avoids the press. But, Sanders, who built some of the biggest real estate companies and REITs [Real estate investment trusts] in the world today, gave me a personal tour of his investments on the U.S./Mexico border. Even more successful than Donald Trump is Stephen Ross, developer of the Time Warner Center in New York. He was gracious enough to attend my first book signing for "Maverick Real Estate Financing." So, on the whole, I find real estate moguls to be very gracious people.

Q: There is an element of risk in real estate investment. Would you say major real estate investors need nerves of steel?

A: My theory is real estate investors are basically gamblers who never leave the table. Investors in stock and bonds can buy or sell at will. Investors in real estate, especially those that develop, can be involved in that one plot of land or building for decades.

Q: Are there certain truisms for successful real estate investment -such as the top five rules a would-be investor needs to remember?

A: Using "Maverick Real Estate Investing" as a guide, there are 10 overarching rules to be a successful real estate investor: 1) Understand real estate cycles; 2) Don't be afraid to leverage or take in partners; 3) Understand cash flow; 4) Don't just buy, create an overall investment strategy; 5) Good research creates good locations; 6) Opportunities arise when other investors fail; 7) Good property management is essential; 8) Accountants and attorneys are necessary, create a good team for yourself; 9) Don't fall in love with a property and don't be afraid to walk away from a deal; 10) Patience in regard to real estate investing can mean years, not weeks.

Q: One of your most recent articles in Shopping Centers Today focused on malls on Guam. We have a diverse base in Guam, as retail shoppers are both locally based and drawn from the tourist market. Broadly speaking, how does that set us apart from similar malls and centers in the U.S. mainland?

A: Guam is a true captive market in that any competition is too difficult (mostly due to geographical isolation) to bleed away the clientele, which is really three distinct sets of buyers - local residents, the military and tourists. Overbuilding retail within Guam can create problems, but from what I saw when I was on the island, the retail market was fairly balanced. Any introduction of a new, major retailer, such as Home Depot, will mean existing retailers may have to make some adjustment to product type and market to remain effective.

Q: Real estate tax, eminent domain - these are areas where governments have heavy influence through policy on the real estate industry. Would you say governments usually get it right?

A: Local governments usually try to be as accommodating to new development as possible. After all, if people don't build apartments or stores or industrial structures, that city or region is in a great deal of trouble. Where governments go wrong is when they tip the balance: give too much leeway to developers or become too restrictive forcing developers to consider other locations.

Q: Guam's real estate is presently affected by the news of the military buildup that will occur in the coming years. It has entered a cycle of growth that is likely to move further upwards. What should investors be wary of as the cycle continues?

A: As anyone who has ever bought a piece of real estate in Guam should know by now, real estate has always been and always will be a cyclical investment. Without fail, a new generation of investors will enter the cycle on the upswing, find bountiful success for many years and think that the good times will last forever. They never do. And small markets, such as Guam, have much more radical cyclical swings than the larger markets. When things go bad in terms of Guam real estate, they go really bad.