How Asset Managers Like Derek Sobieraj Win in Real Estate (Even When Deals Fail)

Derek (00:00)
I think a lot of people, ⁓ get themselves hung up on education. Not to say that that education is a bad thing. It always is. but at some point you suffer from analysis paralysis and you spend all this money on real, on education, which could have actually gotten into your first deal. So you need the right balance and you should always be learning.

but nothing’s going to teach you better than operations. So getting in the game ⁓ faster is probably one of those big things that get people like misconceived. They think it’s all about these risks and things and there are, but no individual person is going to know all of them. So you have to know how to coordinate between all of these various trades and people and consultants and bring that puzzle piece together, but you can’t be so afraid.

that you don’t know something, that you don’t pull the trigger over. You have to get into the game in order to play the game.

Erika (02:26)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and today I’m thrilled to be joined by Derek from Team Sobiko, a licensed real estate brokerage in Illinois making waves. Derek, it’s great to have you here.

Derek (02:41)
It’s an absolute pleasure. Happy Friday and I’m looking forward to our discussion here and it’s ⁓ a great time to meet everybody here that’s listening on the show.

Erika (02:50)
Awesome, I can’t agree more. Derek, for those who may not know you yet, give us the rundown. How did you get started in the real estate world?

Derek (02:58)
Well, Erika, much like everybody else in this business, it’s a nonlinear progression. But what took me into the business was my mom, of all people. So growing up, was a somebody who, guess, had a ⁓ certain proficiency for sales. I guess my mom picked up on that. But when I went to school, I went to school for marketing, ⁓ graduated with an advertising degree and thought that’s what I was going to be doing out of college. A year into it, my mom was like, hey,

looking to getting your license. I did. That was in 2016. I started showing for digital brokerage back then, but quickly within about six months, the real estate bug had taken hold of me. And I started working for a home developer here in Chicago. We went all around the counties, the North Berbs, South Berbs, West Berbs, and here in the inner city and flipped a ton of properties. It was mostly done single family redevelopments. And during that time,

ingrained more and more into the ⁓ passion for real estate. Went back to school, got a master’s degree in the business. At the same time, I was then leasing offices, then moved to the commercial side in terms of investment sales. ⁓ Eventually upgraded myself to a managing broker license. At that time, we were hunkered down in the middle of the pandemic.

Illinois released one of the first ever virtual ⁓ brokerage licenses that you can get in the state. And I was one of the first people to hop on that train and just self-incorporate as a brokerage in Illinois, fully digitized to ⁓ operate as a digital brokerage. And it’s been rocking and rolling ever since. Got myself dual licensed as an appraiser, did commercial appraisals all across the country before settling into my current role as a app set manager running about

17 commercial properties amongst others and growing my personal business in terms of brokerage and other advisory and asset management services, mostly here in the Chicago market.

Erika (05:43)
That’s exciting, Derek. Excuse me. Tell us more about your business and how do you set yourself apart from other businesses in the industry?

Derek (05:53)
Yeah, great question. So ⁓ personally, I am more commercially minded and there are plenty of like commercial brokers out there. ⁓ I operate more as an asset manager. So I help people run their assets to a business plan and actually achieve success with those assets. And as a licensed broker, as a licensed appraiser, I use those skills and tools in the toolbox in order to help facilitate that.

Mostly in terms of brokerage ⁓ acquisitions and whatnot, but with every single property comes a valuation. Now, that being said, you can’t appraise your own deals, and I never do. ⁓ But the skills of valuation are very helpful because as you’re underwriting these deals, you have a sense of what the appraiser is going to be saying ⁓ and knowing all the ways that they have to be compliant with federal law and all this and that. So it’s a great tool to have to understand what mess you’re yourself into.

And then once you’re in it, you have to farm out all the right operations to the right people to ensure good due diligence throughout the entire process. So from A to Z, I help people do pretty much anything that they need to get their business plan working for their real estate and facilitating some of the services along the way, ⁓ if not most of them.

Erika (07:10)
Yeah, Derek, with your wide range of experiences in the industry, what do you think is the biggest misconception about breaking into real estate?

Derek (07:19)
⁓ that’s a fantastic question. Hmm.

I think a lot of people, ⁓ get themselves hung up on education. Not to say that that education is a bad thing. It always is. but at some point you suffer from analysis paralysis and you spend all this money on real, on education, which could have actually gotten into your first deal. So you need the right balance and you should always be learning.

but nothing’s going to teach you better than operations. So getting in the game ⁓ faster is probably one of those big things that get people like misconceived. They think it’s all about these risks and things and there are, but no individual person is going to know all of them. So you have to know how to coordinate between all of these various trades and people and consultants and bring that puzzle piece together, but you can’t be so afraid.

that you don’t know something, that you don’t pull the trigger over. You have to get into the game in order to play the game.

Erika (08:19)
Yeah, totally. Derek, I know you’re active in some real estate groups. How have those networks shaped your approach to finding or structuring deals?

Derek (08:29)
gosh. ⁓ Every single person has their own approach to this business and most of them are right. ⁓ I say most because some of them have business plans that utterly fail. ⁓ the failures, if you know how to fail forward, ⁓ you can still make things work ⁓ as long as you’re not really losing money. some of the, unfortunately, ⁓

you know, knock on wood because I’m generally conservative and all my underwriting. ⁓ The worst deals that I’ve ever actually gotten myself into have been very broken even. So we got all the capital back and we basically lost a little bit of time. ⁓ But those lessons have developed you forward. And when you fail together, especially like if you fail with a mentor, ⁓ you two are going to learn and grow together in a way that by yourself, you probably would suffer tremendous losses. So

failing with another person has been probably the most influential way that I’ve developed the skill set and known what to look out for. And then getting myself involved with people who are way more sophisticated than myself, who are doing things that I don’t know about. And when you don’t know something, especially when there is ⁓ money on the line, you want to get yourself up to speed so that you know that you’re not making a bad decision. ⁓ So getting ingrained with people who know what they’re doing.

failing together and also listening to people that are way more sophisticated than you and figuring out what they’re doing are all of the ways that these trade groups and people have influenced me to become a better operator over the better part of a decade at this point.

Erika (10:44)
Yeah, awesome. Well with that decade of experience, I’m sure you’ve seen some things. Have you ever had a deal where you completely had to change what you were doing? You had to pivot? Do you mind sharing one of those moments if you got it?

Derek (10:50)
Holy cow.

Let me run through the Rolex real quick. ⁓ So I wouldn’t say that we’ve had any deal that we had to particularly pivot from. ⁓ The reason why is because for most deals we have two or three different exit strategies. But I’m trying to think, was there like like, ⁓ like effectively the ones that we had to pivot out of were ones that we ⁓

realized sooner rather than later, meaning that we, we might’ve bought the asset and in most cases we did. ⁓ but we realized that the underwriting was basically poor. So at that point, we just try to get that thing listed and just sold to immediately break even and spend it instead of spending all this time and money, redeveloping something in order to then, ⁓ sell it and basically lose or break even as well. But, but like I said, like fortunately my influences, my

mentors have been generally conservative and they taught me a conservative approach. So when we did get into these situations, we did break even. But the ones that we got out of the quickest were ones that we just said, ⁓ that one, you we bought and most commonly we bought these as part of a portfolio. said, hey, here are like seven that we like, but these three we got to go. So those were plucked right out, sold and just recaptured as much of the capital upfront as we could.

Erika (12:18)
That makes a lot of sense. Do you have any advice for people who are new to real estate how to vet those deals and manage that risk?

Derek (12:26)
Hmm. Well, if you’re new, you’re probably going to miss a whole ton of stuff. Like when you’re new, the biggest problem that you suffer is that you don’t know what you don’t know. It’s kind of the Dunning-Kruger effect. ⁓ At year 10 in my career progression, I’m nowhere near the know-it-all. But I know that there are plenty of things that I don’t know. I know the resources that I can leverage in order to figure out the right answer.

And if I don’t know the resource, I didn’t usually know the person that knows the resource. ⁓ so not, ⁓ knowing that you don’t know everything and then being conscious of that is probably the biggest advantage you can have as a newcomer saying, Hey, I think this is a good deal, but are there some like obvious red flags that someone who has done this already sees that I’m personally missing? And usually that plays out in an asset by asset level. So you have to just be vigilant.

And almost imagine you’re a newcomer with every single deal and saying, hey, I know that I’ve done this before, but really I haven’t because it’s a unique parcel and it’s not exactly the copy that I did before. Like who knows what’s going to be behind the walls.

Erika (13:36)
Yeah, totally. So Derek, what is your next big mold move? Or I said mold. I was trying to say big move and the words just combined. What’s your next big big move in the industry? Is there a goal that you have in mind? Are you looking to scale something?

Derek (13:44)
Big mouth. Yeah.

Yeah, well, I would say that the biggest thing that I’m working on is scaling my individual business. And that’s to take on additional clients on the asset management, asset advisory side. ⁓ If like I’m not a typical broker, like when you stick me into that particular situation, we’re looking at how do we build a portfolio? How do we actually ⁓ put together a program that provides diversity, how it’s strategic to what you’re actually trying to do?

and not just saying, you should buy that deal because it’s like some killer property. So I’m interested at this more like meta level, and I’m interested in working with people who are ⁓ working on building something that’s a little bit bigger than, hey, asset by asset. The other piece that I think would be interesting is ⁓ partnering with some folks on the prop tech side, because right now with where AI is moving, there is this entire opportunity to basically develop

good AI enabled software that helps you do a lot of these real estate processes and allowing people to get into the field more because all the magic happens in the field.

Like never buy a property you don’t see, but the AI tools, software tools, and all of these things that are, believe around the corner are going to help a single person do a whole lot more. Like I’m thinking back to my like heavy sales days and if I had an AI agent who could help me prospect.

who can help me vet deals initially, who could help me ⁓ go through the process of like drafting LOIs and all of these administrative things. ⁓ It only makes me much more ⁓ available to have the one-on-one conversations with people and actually make decisions, move forward instead of spending all this busy work doing busy work.

Erika (16:24)
Yeah, totally. Speaking of AI, what do you see as being like a must have? I know you touched on it a little bit, but with AI coming in and changing everything, what do you think people should be using that they are missing out if they’re not utilizing AI in this way?

Derek (16:42)
Yeah. ⁓ many. ⁓ I am. ⁓ So the first thing that I’ll say is that number one, all of this stuff with AI tech, we’re in the early innings. So I’m only speaking to what currently exists and I can’t speak to what’s going to be around the corner, especially with the automations that I think are going to be happening. Like it’s going to just let one person be like.

a whole team by themselves of a whole bunch of different titles. That being said, the current AI and its LLM structure for me has basically creeped into every single part of the business, whether it’s drafting an email, whether it’s drafting a pitch, whether it’s drafting a marketing copy, whether it’s performing background research on participants or properties or ⁓ various elements of due diligence, various elements of ⁓ expedited research like.

before AI, and this was even a couple years ago, in order to find out what particular zoning things are or where particular municipal codes are lying or particular tax things are happening, you had to go research all that individually. You had to go find the county website. You had to go find the ordinances. You had to go through all these various different resources in order to get to the answer. And now it’s basically as simple as doing a Google search where you’re able to hyper ⁓ long form tail keyword specifically what you’re looking for.

⁓ in particular county, in particular tax code, and it’s pretty good at finding it. Like, you still have to make sure it found the right thing and that it’s interpreting correctly, but the time of research has been drastically reduced, and I’m able to bust these things out in like seconds where it took me minutes before.

Erika (18:19)
Yeah, that’s super exciting. It’s crazy how much AI is changing things. All right, Derek, before we wrap up, if someone wants to reach out, connect, or learn more about what you’re doing at Teams, so Biko, what’s the best way to get in touch?

Derek (18:34)
teamsobico.com, teamsobico.com. And all the contact information’s there. You can easily email, call, text, all of this right there.

Erika (18:44)
Perfect. Derek, thank you so much for your time today. I love how you’re balancing all this technology, but ⁓ it’s also all about the people too.

Derek (18:53)
Fundamentally, it’s people. ⁓ I’ve never argued with a building. I’ve always argued with people. That being said, I try to be as cooperative as possible. When I say arguments, it’s usually with tenants about some lease disagreement. But that being said, buildings are ⁓ there, they are present, but it’s always a person making the decision whether it’s good or bad. And that’s who you got to work with.

Erika (19:16)
Totally. For those of you tuning in, if you got value from this episode, make sure you’re subscribed. We’ve got more conversations coming up with operators like Derek who are building incredible real estate empires. We’ll see you on the next episode. Bye.