From House Flipping to Commercial Real Estate: David Friedman’s Journey in San Bernardino

David Friedman (00:00)
I don’t know why they trusted this 18 year old kid, but thank God they did. ⁓ And that was our first house flip. And yeah, we did great on it. I was like, my God, we got to do this every day times 10, let’s go. And it was just because someone else didn’t see the vision there.

⁓ And so I think a good ⁓ investor not only sees a property for what it is, but also what it could be.

Dylan Silver (01:56)
Hey folks, welcome back to the show. Today’s guest is based in the greater San Bernardino, California area and has transitioned his business over the years from flipping houses with multiple construction crews to over the last five years flipping commercial spaces in the community. Please welcome David Friedman. David, welcome to the show.

David Friedman (02:18)
Hi everyone, hi Dylan, thanks for having me. I appreciate it.

Dylan Silver (02:21)
It’s great to have you on here, David. You may be one of the first guests that I’ve had from the greater San Bernardino area. I always like to start off at the top of the show by asking folks how they got into the real estate space.

David Friedman (02:35)
Great question. I got my real estate license when I was 18. I ⁓ was helping my dad fix up homes that he had bought. so he was making me like trench lines for sprinklers and all that. So I have experience from like doing work on the property ⁓ up to like helping people sell their properties, representing clients and whatnot. And so that kind of got me the start in the, in the real estate world.

Dylan Silver (03:04)
I think a lot of people tend to fall into one of two categories when it comes to real estate. People who like me were working for W2 job and were kind of maybe a little disillusioned and thinking, what do I do? How do I build wealth for myself? These homes are so expensive. How am gonna qualify for these homes? It almost felt like as an outsider looking in, in order to buy a house, I had to think like an investor and that’s how I ended up getting into the space. But then you also have a lot of people who come from a family of real estate

profession or family who’s involved in the space in some way. Did you get a lot of kind of the real estate by osmosis growing up around it or did you have to do a lot of figuring out on your own?

David Friedman (03:45)
That’s a good question. like my dad, he’s an accountant. I definitely ⁓ have maybe some more privilege than the average person as far as like he already started his own accounting firm. So he knew what it was like to run a business or to like be an entrepreneur, which I feel like he, you know, yeah, passed down to me through teachings through just, you know, ⁓ euphemisms and just the way he brought us up. ⁓ And then just

Having that space and that ability to make mistakes and have like that kind of like backboard as a child, like to be able to learn and like ⁓ take risk was huge for me. And you’re so right to think like an investor, Dylan, because honestly, otherwise the house is just, it’s less of an asset and it’s more of like a liability, right? If you’re just buying this like beautiful mansion to host parties in.

it’s a liability, you’re spending money. But if you’re buying it because you can make money off it, then it makes more sense to buy real estate, like whether it’s for you to live in or for you to house hack or whatever. So I think having my dad introduce us early to real estate definitely helped like light bulb moment, hey, this is, you know, there’s this asset that someone places value on it and that can be adjusted.

⁓ it’s not like going to the store and buying a soda for two bucks like there’s so much margin in here you can make a lot of money if you know what you’re doing so that kinda i was i was hooked

Dylan Silver (05:15)
Yeah.

I love real. I tell people this story quite often is that I might be doing real estate if there was no money in it at all, because some of the things that I get to participate in and be involved with as a wholesaler specifically prior to me getting my license as a realtor in Texas, I mean, just walking into some of these situations that other people would be like, this is insane. Like you’re walking into super distressed property, people going through financial, emotional distress, all different types. I mean, some, some,

David Friedman (06:12)
Yeah. ⁓

Dylan Silver (06:35)
really unfortunate situations, but then on the flip side, you’re able to help some people who might be losing their house, who might be going through unfortunately a death in the family or a divorce. you’re not just, like I tell this to people as a wholesaler, as a professional wholesaler, you’re not like just assigning it to an investor and wiping your hands with it. Usually you’re solving some significant issue in their life, whether it’s helping them relocate, helping them avoid imminent foreclosure.

David Friedman (06:39)
Totally.

Dylan Silver (07:04)
helping multiple parties. I’ve done this before. Like you’re an unofficial mediator between, you know, people going through airship issues and you’re trying to get everybody together. And then they’re like, they haven’t been in the room together for, since like six years ago. And you, they are trying to talk, talk it out and you’re facilitating this, but

David Friedman (07:17)
Yeah.

You’re

an agent and a therapist. That’s true. Yep.

Dylan Silver (07:23)
Yeah,

I mean, I’m curious to get your progression in the real estate space. I know you went from flipping homes and then the market shift into the commercial space. What was the first year or two like in the home flipping space?

David Friedman (07:37)
I’ll tell you a quick story. The first house we ever flipped, I was showing clients homes. I had a buyer. We were checking out homes in San Bernardino and I walked my clients into the house and the carpet was destroyed. It really wasn’t that bad paint. Carpet was destroyed and they wanted to walk out. This was around 2010, 2011. was like, guys, they’re listing, it’s a short sale. It’s $100,000 under what the next door house would sell for. Figure it out.

we’ll find someone, I have a guy, we can replace the carpet.” And they didn’t want to do it. I called my dad after that, I said, we got to buy this house. And so we talked to like friends, family, we pulled the money together.

I don’t know why they trusted this 18 year old kid, but thank God they did. ⁓ And that was our first house flip. And yeah, we did great on it. I was like, my God, we got to do this every day times 10, let’s go. And it was just because someone else didn’t see the vision there.

⁓ And so I think a good ⁓ investor not only sees a property for what it is, but also what it could be.

And so that’s how we got started. And then from there, at one point where you’re doing like 10 flips a month, ⁓ we were probably one of the biggest flippers in the Inland Empire or San Bernardino County, ⁓ however you want to describe it. And at that point, it just started getting crazy. I had ⁓ several employees. I had like five different construction teams.

It started to get out of control and then on top of that the margins were getting compressed. HGTV made it cool to flip and so we decided to start slowly transitioning into commercial real estate. Just where we can invest into 10 units all in one location instead of 10 units spread out all over the San Bernardino area.

Dylan Silver (09:10)
Yeah.

have a phrase, HGTV level flip. Like when people are talking about what kind of flip grade, people will be like, there’s this tier to flip grade. I’m like, well, what do you, hold on. Is it everyone on the same A, B, C tier? Like is it an HGTV level flip? Are we talking about like rental grade? Like someone can live in it. And then people start to understand, yeah, well it’s not HGTV level. I mean, that’s a different thing. So I’m like, okay, I got you, I got you. This is what we’re talking.

David Friedman (09:33)
Ha

Right.

That’s for the

camera. They’re doing that for the camera. Yeah.

Dylan Silver (09:58)
Yeah, yeah.

So, so ⁓ I think it’s really a hallmark of a effective real estate operator to be able to pivot. ⁓ And you had to do that going from flipping multiple crews to then the commercial space and community spaces. What was that process like? I think there’s a number of things that go into this. First, no one talks about this. It takes humility and kind of ability to set back and be like, well, this may not work forever.

David Friedman (11:01)
Yeah, I’ve made a lot of mistakes. I’ve learned a lot. ⁓ The first commercial property I bought was in downtown San Bernardino. ⁓ The guy lived in San Diego, the owner did. And when I called him, he forgot he owned it. I called him, said, hey, ⁓ there’s a homeless guy. broke into your building. He’s just chilling in there. What are you doing with it?

And he said, I forgot I owned it. And at one point he showed me plans. He used to own the whole that whole block. was like I was I was inspired. And so ⁓ we ended up buying that and not too different than fixing up a residential house, ripped out all the bad stuff started. You you start to learn about different materials, like different roofing materials, different AC, stuff like that. Of course, that’s all different. But no, we definitely made our share of mistakes. ⁓

you know, in trying to spend thousands of dollars fixing an existing roof that just was never going to work out. And so, you know, now you’re in the hole, plus you need a new roof. Bringing in tenants and not knowing how to screen a commercial tenant was a, we learned a lot from, know, we’d bring in a tenant, all of sudden they open an illegal dispensary and then the police and code enforcement are on us. And, you know, instead of making 10,000, we’re losing 10,000 on, uh,

Dylan Silver (12:12)
Yeah.

David Friedman (12:24)
code enforcement fines and cleaning that mess up. And so there’s definitely a lot of humility involved, especially if you’re going to go about it and just give it a shot. Thankfully, we had enough connections from like residential construction and whatnot to kind of translate that into commercial. even to this day, I’m still learning. I’ve been, let’s see, the last commercial property you bought, or the first one was about 11 years ago.

And so even to this day, I’m still figuring it out, learning new techniques, learning better ways to bring better tenants. There’s just, there’s still so much to learn. So.

Dylan Silver (12:59)
That’s

what you mentioned, the dispensary business. So I am a Texas licensed realtor. lived in San Antonio, moved to Dallas. When I was leaving San Antonio, I don’t know exactly where it is now because I no longer live in Texas, but there was all these, not dispensaries, but places that I guess were selling like THCA. I’m not super well versed this, but then this thing came down the pipe and I don’t know if it’s still the same where they couldn’t do this. So I was thinking like, there are so many places. Like it was nuts. They would be like,

David Friedman (13:16)
Mmm, yeah.

Dylan Silver (13:28)
a yoga studio place I was selling THCA and I’m like, this is basically the same thing. Like how is it everywhere in Texas, which is a very strict, I think in a lot of ways when it comes to that. And so you’re right. Like the whole thing and I don’t know what they did with all these, with all these vacancies. What is it like screening tenants? And I mean, are you having to go over like business models and this type of thing, or is it really just, can you make the payment? Can you do the first, last and security and that type of thing?

David Friedman (13:56)
That’s a good question. like for us, ⁓ I was telling you earlier that we consider ourselves community developers. And so ⁓ we look at the tenant from maybe like a more holistic point of view, not just financials. Like if someone comes in and the first word out of their mouth is they’re trashing the city of San Bernardino, which like San Bernardino has a bad reputation, let’s be honest, and it’s fixing it. And we’re a big ⁓ component trying to fix it. ⁓

But if someone comes in and they just immediately start to bash the city of San Antonio, I know it’s not gonna work because immediately they’re gonna get in there, complain that they can’t make their business work and it’s not their fault, it’s the city’s fault. And that’s just not true. Like if you’re a good business person and this location makes sense, you can make your business work. And so that’s our first filter.

⁓ The second filter is, yeah, financials. No evictions. Do you know what you’re doing? Do you even have a business plan? Like if you don’t have a business plan,

We will let you create one and bring it to us. But like, if you’re not willing to put in the time to at least come up with like a three to five year strategy, then there’s no point. Like we’re, not going to last past a year because you haven’t even thought your finances through that far. so I, I think then finances and, and of course then does the business make sense for the area? Like, am I putting two barbershops next to each other or, know, what is it a barbershop? And then we have like this tenant, they sell like hype beast shoes.

And believe it or not, the overlap of those customers are the same. The same guys who pay like 50, 60, 80 dollars for a haircut are the same guys that spend 300 dollars on nice shoes. So you find, it’s true, right? So you find these ways to make two businesses work even better next to each other. so, yeah, do you love the city that you’re about to open your business in or the area? Do you have the finances and the wherewithal, the business sense to pull it off? And then number three, like,

Dylan Silver (16:15)
That’s true!

David Friedman (16:36)
Are you a good fit for the neighborhood? So that’s what we look through.

Dylan Silver (16:39)
I wanna ask

you about tenants specifically, maybe not given names, I don’t know if you can do that, but maybe what they’re involved with. You mentioned a barbershop and then an apparel. I haven’t actually spoken to someone in the commercial space who has this kind of retail facing. Can you give us an idea of kind of the breakdown of some of the tenants?

David Friedman (16:57)
Yeah, so we have ⁓ a barbershop. It’s pretty unique. We look for stuff that’ll add value to the community. So, a barbershop, have ⁓ a shoe store. There’s a guy that he sells rollerblades that started to become really popular out of COVID. But what he does is every Thursday, they meet up at his spot, like a bunch of rollerbladers, skateboarders, bikers.

and they all go around downtown and they ride their bikes and take up the streets and all that. And so it’s created this really cool community and culture. ⁓ We rent to three or four different art galleries. Some of them are teachers, college professors, and they’re just using their additional funds to try and give ⁓ their students an opportunity to showcase their artwork, their first chance to set up an art show, their first chance to curate, their first chance to…

Dylan Silver (17:28)
Yeah.

David Friedman (17:49)
So it’s really cool. So we work with a lot of art galleries. ⁓ have, so my girlfriend and I, run a Boba ⁓ coffee shop, Viva La Boba. It’s so good. Yeah. It’s, it’s unique. And we wanted to be a little different. We wanted to create a third space in downtown San Bernardino. That was the first business that had opened in downtown for like 13 years. And we were like, okay, we’ll open this. Yeah, it’s crazy. We’ll open this. ⁓

Dylan Silver (17:58)
⁓ I love boba.

Yeah.

What?

David Friedman (18:16)
this Boba place created a third space and show others that it can be done. And so it’s been there since and ⁓ other businesses have opened up because they got coffee there, they got tea there, and then they were like, hey, you know what, there’s a vacant spot next door. So they’d call me and we were using it almost to showcase and advertise down our other spaces. so yeah, there’s a lot of cool businesses we have in downtown.

Dylan Silver (18:38)
Okay.

don’t want to gloss over the first business in however many 13 years. I can’t imagine, that’s blowing my mind right now. So what was it like when you got there? Was it very distressed? I have never been to San Bernardino. So what was it like?

David Friedman (18:53)
It’s

like extremely distressed. The city and the county were really like the only ones doing anything there. They had offices there. ⁓ There’s a courthouse. Two blocks ⁓ were taken up and just dead by this like defunct school, like the sports university that was BS. And so you just had this really dead and dilapidated downtown.

The reason why we started investing at Coler Reasons, one, we’re familiar with the area. My dad had his accounting firm in there for like 35 years. So I was used to helping him run errands, walk around back and forth to the court. like the situation with like the crime and the homeless didn’t really deter me. The other thing is, is downtown San Bernardino has all the infrastructure of a big city. 1,000 plus parking spots in parking structures. have

the Santa Fe train station that takes you to LA, to Orange County, to the beach. We have an airport and they just started offering consumer flights like three or four years ago. We have a passenger train from Redlands to San Bernardino. then, so, so we have all the infrastructure of a big city because we used to be an air force city. Like there used to be 20,000 military people moving in and out to Norton Air Force Base.

Dylan Silver (20:14)
Hmm.

David Friedman (20:19)
And then when Norton got shut down, we still have all that infrastructure, but now we’re trying to rebrand ourselves. Like who are we as a city? So it went through a really tough period for like two decades. ⁓ And so I think we’re, I imagine, and we’re pushing to get it out of that rut and we’re trying to help decide, Hey, what is the city now? What are we now? And without.

Dylan Silver (20:30)
Wow.

Well, I can say you’re leading the charge. I mean, that’s evidence. I’m talking to someone who has

significant impact and not just has but had had an but still right. I mean, you talk about the first business 13 years Boba you talk about the multiple different spaces, the tenants art gallery. I think this is in stark contrast to what you’re painting the picture as for me. I want to pivot a bit here David and ask you about

scaling within the commercial space and also building ties to the community and officials. don’t exactly know how this process works, but I know it’s fairly complicated at times.

David Friedman (21:16)
There’s so much we could go over. Once my dad and I got to the point where we had about 70 commercial units of our own that we were buying, holding, fixed up, rented, all that stuff, ⁓ we realized that there’s two paths to go. We hire a property management company. We start our own property management company. As fun as fixing toilets sounds, ⁓

we decided that having a good property management company would be the backbone of our business. We could directly influence the type of tenants we brought in. We could directly influence the level of quality of, ⁓ you know, and timeliness of repairs if a tenant needed a repair. And we can just basically have better hold of our finances. And so we started a property management company.

And now we manage around like 220 units. ⁓ City of Riverside, we’re now going to manage a tower for the city of Riverside. there’s like, there’s so, that business itself has grown and it’s given us the capacity to better manage our property and to also expand. Like the cashflow from that business, we dump into more real estate and fixing up ours. But yeah, as far as working with city officials, it’s not easy. ⁓

Dylan Silver (22:28)
Yeah.

David Friedman (22:40)
I started a recall on a city council member with a group of people this year. ⁓ We are trying to promote young progressive leaders. ⁓ The city, I think, has been in this free fall for so long that there’s just a lot of grift and corruption. so cleaning that up is a constant presence and pressure. I was at a city council meeting on Wednesday.

talking about how they’re trying to get rid of a Route 66 car event that’s been going in San Bernardino for 50 years, and it brings so much money to downtown and they’re trying to get rid of it. so it’s just about ⁓ basically letting them know that, we have our eyes on, the community has our eyes on you and we’re watching you and you need to make decisions that positively impact the community and not your pocket. so we’ve made prog…

there’s progress, but there’s still so much progress to be made in the city.

Dylan Silver (23:37)
I think, based on everything that you’re doing, I’m a fan. I am now probably gonna search on TikTok and look up niche things to do in San Bernardino. Look for a boba. I don’t know if you’re familiar with this, David. You can find the best boba shops. You can find the best niche restaurants on TikTok. That’s where I’ve gone to find so many great things. And it’s specific because you got the maps too. So it’ll show you the map, where it is, the video.

David Friedman (23:47)
Come on, yeah.

Yeah.

Dylan Silver (24:04)
I found more, I’m a big boba guy, big boba guy. I found more great places on TikTok. Also being in Texas, big Vietnamese population. This is an aside, but like if you find a pho place, which is Vietnamese food, that is like pho number sign 77. Pho number sign 77. That place is gonna be amazing, guaranteed. You know?

David Friedman (24:07)
Hahaha.

Yeah.

I’m gonna look out for it.

You know, that’s all like family. Those are all family run extensions. Yeah, absolutely.

Dylan Silver (24:31)
Yes.

because they put limited effort into the naming convention of this restaurant. They put the food, a number sign on it, which one it is, but guaranteed it’s gonna be great. And it’s so true, it’s so true. But then if you go to the ones that are like, they’re trying to be new age or modern with it, faux show. I don’t know if I trust that place as much as faux number sign seven, you know what I mean?

David Friedman (24:38)
Yeah.

Yeah.

No,

you gotta go to the OG places, yeah.

Dylan Silver (25:03)
That’s right, that’s right. But I digress here, David. But we are coming up on time here though. Where can folks go if maybe they’d like to reach out to you or maybe they have a commercial deal in California that they’d like to get some feedback on?

David Friedman (25:15)
Yeah, so Instagram is a great place. You’ll see a lot more of our community work on Instagram. like us volunteering, picking up trash, us showcasing artists locally. For more of like our services, like if you actually want property management or you need to sell a property or whatever, our website, realacor.com, it’s on my hat. I guess it’s backwards. So realacor.com and just come visit us.

And I’m actually in my second Boba shop right now. ⁓ We don’t open till 11, so I thought it’d be the perfect spot to do this. So come visit our Boba shop, Viva La Boba. We have one in Redlands, that’s our new one, and then one in San Bernardino. That was our first one ever, and that’s kind of what started this all.

Dylan Silver (25:54)
David, thank you so much for coming on the show here today.

David Friedman (25:56)
Thank you, Dylan. I appreciate you, man. Thank you so much.