Don’t Trust the OM: Joseph Gozlan Reveals How Real Estate Investors Avoid Bad Deals

Joseph Gozlan (00:00)
Don’t believe the OM, right? Don’t believe the information package. The broker that is selling the property, their job is to do the best job they can do for the seller. They don’t owe you anything, they owe everything to the seller. They’re going to put, sometimes I call it, they’re going to put a lot of rainbows and lollipops smeared all over that information package.

Scott Bursey (01:54)
You know what time it is. It’s time to ignite your mindset and stack your capital on the real estate pros podcast powered by investor fuel. I’m your host Scott Bursey. And today we have a guest who is absolutely bringing the fuel. He’s a Titan in business scaling.

the mind behind the wildly successful Eureka Business Group and a sought after public speaker, a true integrator of high level systems and high impact leadership. Get ready for some serious heat because we’re diving deep with Joseph Gozlan. Joseph, welcome to the show.

Joseph Gozlan (02:32)
Hey, thanks for having me Scott. really appreciate it.

Scott Bursey (02:35)
It is awesome having you here Joseph, and for those of our listeners who may not be familiar with your journey. How did your career begin and what is your focus now?

Joseph Gozlan (02:48)
Yeah, absolutely. I started as a software engineer for anything else and I read Rich Dad Poor Dad like everybody else. Got into the whole real estate investing thing. Then I got licensed as a broker but kept my IT career for many years until I got to the point where I was ready to move on and we started doing bigger deals. We started dealing with multifamily and we syndicated. So was time to leave the IT world in the back.

On the real estate side of things, when we started investing, we started with single-family duplexes like everybody else, then we graduated to multi-family. And then we owned and managed hundreds of apartments and then COVID came in and we worked through that. But at the end of 2022, we kind of saw the writing on the wall and then we decided to move on from multi-family. And that’s when we also shifted our brokerage from multi-family

into retail because I had an ethical challenge telling people, come on, let’s buy multifamily for you when I don’t believe the asset class anymore. So ⁓ as we shifted and our investors shifted, we shifted the practice as well.

Scott Bursey (04:02)
Now that we’ve set the stage, let’s talk about the sharp edges of the market. The high level factors driving success right now. What’s the single biggest strength Joseph that is leveraging today’s rapidly changing real estate market in your opinion?

Joseph Gozlan (04:19)
Yeah, so for us, we are a fully vertically integrated organization. We have our brokerage, we’re investors ourselves, and we have our commercial property management company. So we get to see all different angles of the commercial real estate market. We also have deep relationships with lenders, with insurance agents, with 1031 qualified intermediaries.

So we really understand the market. We also publish once a month the Eureka retail velocity index, which is looking at all the leasing, the retail leasing that is happening in the market. So we keep our hands very close to the polls. And with that, we’re able to kind of recognize where the opportunities are, where the risks are.

There’s a lot of landmines laying around in commercial real estate. So you really want to have a local expert

that has more than just a sales experience, but they also have operator experience.

Scott Bursey (06:03)
That’s the foundation of scalable wealth right there, Joseph.

Joseph Gozlan (06:10)
Yeah, picking the right team is super important. You can be the quarterback or the head coach, but without a good team, you’re not winning the game.

Scott Bursey (06:21)
Absolutely, and Joseph if you could walk us through this. In your work with business leaders, what common mistake do you see high achieving pros overlook when transitioning from being an operator to a visionary leader?

Joseph Gozlan (06:35)
So the main challenge for that transition, right, from an operator to a leader is trying to move too fast out of the details. Every single time where we see something goes sideways is because they delegated everything and then they forget that whoever they delegated might not have the same vision, the same ideas, the same experience they had as an operator and then things can fall apart.

We also see that same mistake when a investor owns a property and they have a property management company and they just leave them on their own and that doesn’t work. You got to stay in the game. You got to keep your eyes on what happens and until you’re absolutely sure that the person taking over operations is strong enough, you shouldn’t disconnect completely and just worry about the vision.

Scott Bursey (07:29)
That is so true. And Joseph, let’s talk about opportunity. With so much focus on automation and tech integration, where is the overlooked opportunity for relationship building and closing massive complex deals now in your view?

Joseph Gozlan (07:48)
Yeah, so AI, everybody’s talking about AI, right? AI is a great tool. It’s ⁓ a power multiplier, but it’s not a replacement of relationship. I can’t go to the AI and negotiate something. AI can give me tips on how to negotiate, but it will not be able to do the work I need to do. And sometimes we get through deals just because we have a relationship. So I’ll give an example.

in our world when I train my agents, I tell them, we need to do CPR and keep the deal alive until we get to the closing table. Because a commercial real estate transaction, if it doesn’t die three, four times along the way, it’s not a real commercial real estate transaction. So I had a transaction recently a couple of months ago that was brutal. We had a combination of buyer, seller, lender that just a lot of things went sideways.

And the only thing that really kept this thing alive is me and the other broker leveraging our relationship in order to get this thing to the closing table. And this deal actually died the day of closing and we still were able to resuscitate it and bring it back and close the next day. So it’s 100 % relationship based and without that relationship, that AI tool was not going to make you close that deal.

Scott Bursey (09:12)
I couldn’t agree anymore. And from now on through this conversation, we’re going to call you Dr. Joseph. Joseph, if someone’s listening to this and they’re thinking, Hey, this is someone that I like to partner with or learn from. What do you want them to know first about your business?

Joseph Gozlan (09:18)
different.

Well, like I said, I’m an operator first. I’m an investor first. Everything we do is from the perspective of an investor. Would I put my own money into the deal or not? If I am going to put my money into the deal, what is the risk? What is the second order consequences? What do I not see? And I can give another example from the world of retail. We’ve seen a property here in the DFW market, brand new, leased to a

Local slash regional burger joint

brand new building brand new 15 year lease absolute net lease which means zero landlord responsibility at a seven and a quarter cap rate on paper sounds fantastic if I’m a California buyer with a 25 year old young broker from California We’re going for it But what we do know is that it’s a landmine because when you look at the actual numbers when you dig into the details

It’s $93 per square foot. That might be great in LA. It’s not reasonable in Texas. So that meant that this burger joint, I don’t care how good the burger is, they were not going to survive with that lease for a long time. So you have to have someone with eye for details and someone that understands the market and understand what is realistic and what’s not and knows how to uncover the dirt.

Scott Bursey (11:22)
Great example.

I that knowledge is unparalleled and using it correctly is everything.

Joseph Gozlan (11:44)
Absolutely. We actually offer that service to shopping center owners. We have a proprietary system called the Lease Navigator and it’s 41 points check for all the leases to find where they’re bleeding because you’d be surprised how many landlords are just bleeding money everywhere not realizing it.

Scott Bursey (12:04)
and Dr. Joseph as a public speaker, what is a specific strength you leverage on stage that translates directly to winning over investors or closing complex real estate transactions?

Joseph Gozlan (12:06)
it

So everything we do at Eureka Business Group is from the perspective of how can I add value? I’m not going on these podcasts in order to secure new contracts or new properties or new investors. I’m looking to add value. If I can get on this show and give your audience a tip, an idea, a suggestion, and they got value out of it, that’s all I’m looking for. So when we do public speaking, it’s the same thing. We used to be on the I am in and the quit and then

panels and moderations and ⁓ next month we’re going to be in Mesquite helping small business owners talking about how to lease their first space. So every time we have an opportunity to go out and bring value, we’re going to do that.

Scott Bursey (13:01)
Absolutely and what sort of advice or takeaway would you like to to give to our listeners today?

Joseph Gozlan (13:14)
Don’t believe the OM, right? Don’t believe the information package. The broker that is selling the property, their job is to do the best job they can do for the seller. They don’t owe you anything, they owe everything to the seller. They’re going to put, sometimes I call it, they’re going to put a lot of rainbows and lollipops smeared all over that information package.

And while this might be a case, best case,

Scott Bursey (13:37)
Ahem.

Joseph Gozlan (13:41)
But you also have to be realistic, pragmatic, and consider what can go wrong. So make sure you do your underwriting correctly. Make sure that if you don’t know you hire someone to help you with that, or you have the right team behind you to leverage their experience and their relationship in order to safeguard yourself.

Scott Bursey (14:03)
Joseph, if you would take us back to the very beginning and give us a story, a story that you would tell on stage about your beginnings and a unique experience that you had with maybe one of your first transactions.

Joseph Gozlan (14:19)
Yeah, so instead of one of our first transactions I’ll tell you a little bit story of ⁓ When we owned and syndicated we had a third party property management that was not great. Let’s just say that and When we fired them the properties had a little bit of struggle in the cash flow and so on

So we decided to go ahead and open our own property management that was when we started and take over the property management. So we come in over 500 units dumpster fires everywhere. And that was February of 2020. So three weeks later, the world exploded on

So the couple of years after that, were not pretty, they were brutal, but we were…

in the trenches, I was in the trenches with my team, with my people, getting the property stabilized, talking to the people, the tenants, the residents, ⁓ answering their questions, dealing with everything. So I tell people lot of our SOPs, our procedures, our systems in the management side of things, they came from blood, sweat and tears. That’s where they came from.

Scott Bursey (16:14)
You were literally in the weeds on that one. And we must know what’s some strategy that you plan on employing the next 18 to 24 months.

Joseph Gozlan (16:20)
yeah.

So right now what we’re doing and what we’re recommending our investors is to look at assets that have triple net leases. Whether it’s retail, industrial, some of the medical, not all of it. And the reason for that is we believe that the biggest risk right now lays with office and with multifamily. We think that both assets are going to at least

that next two years are going to be painful for both assets. So we’re looking at the assets that are going to give us long-term leases, that are going to give us built-in rent increases in the contract, that are going to be backed by stronger tenants, right? So would you prefer to have a multifamily where your tenant is the person that lives paycheck to paycheck and don’t have any savings? Or would you like your tenant to be a business owner that is working hard to keep their business alive?

the American dream or if you’re in the better higher end assets then it’s a national brand or a franchise. So obviously I would pick these, right? If you’re in the, we’ve seen a lot of 2026 trend of what we call med tail, a lot of medical practices that are going into retail environment, I would bet on that doctor any day over any other tenant, right?

So that’s where we see the opportunities. We actually see those trade for really good cap rates these days, seven plus sometimes. So I think that’s where the opportunity is for the next two years is those assets.

Scott Bursey (18:04)
breakdown and on that same note along those lines what’s your vision for maybe five years out five to ten years out the long term vision

Joseph Gozlan (18:16)
Yeah, so we have to look at every asset on its own. I don’t believe in all retail. There’s some retail that is great and some retail that is not great. Not all industrial is great. Not all office is great. And like I said, not all medical. So we got to look at every asset and specifically do the underwriting and understand everything. ⁓ I think multifamily will recover, but

not in the next two years. I think they’re in the four to five year range. They’re going to be recovered. I think office still got at least a five year to a decade before we’re going to see either a adaptive reuse. Somebody will find a different way to use those buildings or ⁓ they’re just going to work versus going to eventually use that space. And then I think retail is very, very strong right now.

Despite the fact that we’re sub 5 % vacancy across the country, we’re below, in new construction, we’re still below the 10-year average. So we’re still growing, we’re still pushing, but there’s not enough construction to catch up with demand. So I think retail is still going to be strong for the next 10 years. Industrial, some parts of it have been overbuilt.

⁓ So they’re going to slow down a little bit. I don’t think we’re going to see massive vacancies, but I think we’ve got to the point where we saturated the market with meeting the demand. So it’s going to slow down a little bit, but I still think that core urban areas where you’re going to build a flex kind of industrial, I think those still have room to go because there’s still demand for that.

Scott Bursey (20:01)
Awesome breakdown on that as well and Joseph for all of our public speakers out there. What sort of preparation goes into the efforts mindset that sort of thing before you take the stage

Joseph Gozlan (20:17)
So I don’t have that problem. I don’t have fear of audience or anything like this. What I try to do is make sure that I have the facts, I have knowledge, I know what I’m going to talk about. If it’s a panel, I’ll prepare the questions. If it’s a keynote, then I’ll have my slides and I’ll have exactly what I’m going to say. But I don’t get stage fear or anything like that. So I don’t have advice on this.

Scott Bursey (20:44)
Okay, no problem and that was advice in its own right really you kind of go with the flow and you prepare and you’re able to to meet ⁓ the Challenge if you will it might not be a challenge for you, but you’re able to deliver and how long have you been public speaking?

Joseph Gozlan (21:05)
we’ve been doing those ⁓ panels and everything since 2018, think, something like that.

Scott Bursey (21:16)
That is awesome. Joseph, this has been an absolute master class in scaling. And if our listeners want to reach out and collaborate with you, follow your journey. What’s the best way for them to reach you?

Joseph Gozlan (21:31)
Yeah, so they can find me by my name on LinkedIn or go to our website where they can get all of our ⁓ social media challenge. Our website is ebgtx.com. So Eureka Business Group for Texas. So ebgtx.com.

Scott Bursey (21:47)
Awesome. Joseph, thank you so much for joining us today.

Joseph Gozlan (21:52)
Thank you for having me.

Scott Bursey (21:53)
And for our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We’ve got more operators just like Joseph coming up who are making a huge impact in the market. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.