Bernie Carter of 50 South Virginia On Five Things You Need To Know To Succeed In The Real Estate Industry

An Interview With Jason Hartman

Learn basic personal finance. It’s not taught in schools. Understanding of personal finance can create opportunities and lack of it can restrict opportunities. I recommend the book “The Richest Man in Babylon.

As a part of my series about the ‘Five Things You Need To Know To Succeed In The Real Estate Industry’, I had the pleasure of interviewing Bernie Carter.

Bernie Carter is a commercial real estate developer and investor in Reno, Nevada.

Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?

The first real estate transaction I ever worked on was the development of Flying Circle Ranch Estates outside of Reno, Nevada. The piece of land was owned by a rancher, 150 acres, and two friends and I bought it and subdivided the property into 5 acre parcels and sold them. We made enough sales the first day to pay for the land and the improvements. In other words, our project was profitable from day one. That really piqued my interest in real estate development. I then moved to Colorado Springs and went to work as the CFO at the largest commercial developer in the city. There I developed a real estate investment philosophy of not investing in anything people sleep in.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or takeaway you took out of that story?

When my two brothers, Rick and Tim, and an investment partner, T.J. Day, and I started redeveloping MidTown in Reno (which we have since sold), we were committed to developing the area in such a way we could welcome a variety of tenants. For example, one of our first tenants was a woman who had always wanted to open a dress shop.

We worked with her to make her dream come true and her story turned out to have some unexpected twists. Two months after her shop opened, her husband was hit by a car and was no longer able to work. We were so glad we had helped Cynthia keep “Dressed Like That” open because she was able to support her whole family with revenue from her store.

My takeaway is when you encourage a variety of businesses to open up in a specific part of town, the business owners next door and down the street all support each other. MidTown is now one of the most vibrant parts of our city. Ten years ago you never would have seen parents pushing strollers and a wide range of people out and about day and night.

Do you have a favorite “life lesson quote”? Can you share a story or example of how that was relevant to you in your life?

Yes! I have a framed version of this quote from Theodore Roosevelt hanging in my office:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Bottom line: It is better to be the person who tried something than to be the one who just sat back and was afraid to take a chance. When it comes to tackling any big project there will be so many people who believe it can’t be done or complain, but I’d always rather be the person who tried to accomplish something.

This mindset is what led me to my current project. My brothers, T.J. Day and I purchased the former U.S. Post Office in downtown Reno, from the U.S. Government. It’s a building that sits on the National Register of Historic Places. We purchased it in 2012 and spent several years remodeling it and making it fit for occupancy using “adaptive reuse” protocols. In the lower level, called The Basement, we have ten small businesses — a women’s clothing store, a children’s boutique, a barber shop, a “refillery,” a deli, nail salon, eyelash studio and a couple of others. The first floor has several gorgeous sunny spaces we are working to fill with a national retailer and the second and third floor are office spaces, one of which is equipped with all the modern fixtures — perfect for a technology company.

Are you working on any exciting new projects now? How do you think that will help people?

I have learned the projects my partners and I work on take 7–8 years to complete. I’m 74 and I have one more big project in me — but I can’t talk about it yet.

What do you think makes your company stand out? Can you share a story?

We’re a small local group — we don’t have outside investors. We stay true to the concept we start with, every time. I have seen so many developers promise one thing and then go in a totally different direction once things get underway. If you are committed to working with small business owners, don’t abandon that commitment. We work with mostly owner-operated businesses (save for the national retailer we’d like for the big space on our first floor!) and have built a community of merchants who represent diverse populations. I grew up in Nevada, this is my city, my state, and I want to make it a more vibrant community — I’m not coming in from out of town and trying to change things.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

The number one person is my wife, Susie. We’ve been married 52 years — we married very young, while we were still in college. Her sense of purpose, of family, of adventure, and her empathy after I’ve had a difficult day, along with her belief in us makes her the perfect partner for me. She has had to move a lot for my work and some of the projects were definitely risky.

One of my early projects involved a residential lot development in Spring Creek, Nevada. I was not building homes, just developing the lots. When we bought the land, the previous owner had sold 14 lots in two years. There were 637 more to sell so we planned to be there for a long time. One day a couple came in, she was pregnant with their first child, and they had been approved for a certain amount but it was not quite what we had listed the lots for. I knew how much this meant to them so I lowered the price to less than what they were approved for. The next day we had eight people in line to buy lots and ended up selling all 637 in 18 months because people knew we were fair. For my wife, the success only meant we had to move again.

Ok. Thank you for all that. Let’s now jump to the main core of our interview. Can you share 3 things that most excite you about the Real Estate industry? If you can please share a story or example.

The first is the actual work. REAL ESTATE. It very rarely goes down in value. I love the way it allows me to be in a position to help other people. I also like it because of the risk you can control as an individual. It’s like the U.S. Post Office/50 South Virginia project. There is always a risk/reward calculation but so far all of our projects have worked. I grew up in a very small Nevada town and so for me real estate development is always about community.

Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest? Please share stories or examples if possible.

Since I work in commercial, I’ll focus on that side of the business. The lack of local ownership in commercial real estate is concerning. If more communities had more local ownership we’d have different scenarios in small towns across the country. Too many developers set short term goals — I think it’s bad. The goal is to increase the rent and then sell it to someone else — it doesn’t help the community! Turnover is a problem and so is use of leverage.We have had a philosophy we pay down debt asap before we make distributions. As a result we are not controlled by a bank. With a bank you have covenants. You want to eliminate or reduce debt asap so you reduce the covenant and increase the ability to work with your tenants.

Our projects are not $50–100 million projects. They are in the single digit millions which means we can put together groups of local investors and put down 50% on a property and then borrow the other half. It makes it possible to have more control and to create economic vitality, even in small towns.

I believe more communities should pass ordinances stating if a building has been vacant for six months, the community should buy it through eminent domain (I know, it’s controversial). The threat of this will cause some owners to sell and some to lease to a merchant who will actually open a business. Absentee owners are a huge problem in commercial real estate, especially in small cities and rural communities. They don’t care. But if you can get local merchants and artisans you create vibrant districts, it can change the face of small towns.

What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture? Three things have worked for me:

1. Be a participant not just a manager.

2. Hire energetic people.

3. Hire people who are smarter than you are.

Ok, here is the main question of our interview. You are a “Real Estate Insider”. If you had to advise someone about 5 non-intuitive things one should know to succeed in the Real Estate industry, what would you say? Can you please give a story or an example for each?

1. Learn basic personal finance. It’s not taught in schools. Understanding of personal finance can create opportunities and lack of it can restrict opportunities. I recommend the book “The Richest Man in Babylon.”
2. Don’t be afraid to share the knowledge you have. I’ve always been more interested in the character in a person’s heart than the clothes on their back.
3. Don’t have the ego to think you know everything. Hire people who are smarter than you are.
4. Tell me your story — I want to know why I should be in business with you, I’m not interested in your pedigree.
5. Real estate is a long game. I’ve seen it a million times — flipping is rarely a sustainable business plan and I believe real estate should be a (mostly) cash game.

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

Fill the empty buildings! Any city can do it. In so many towns there are too many empty buildings owned by people who don’t live in the area. It’s a recipe for blight.

How can our readers further follow your work online?

Come see what we have going on at 50 South Virginia in The Biggest Little City! I’m proud of what we’ve built (make sure you check out the wonderful video showing where we started and where we are now!).

Thank you for your time, and your excellent insights! We wish you continued success.