Insights From A New York Attorney And Investor

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Today s Guest is Jonharold Cicero Jonharold is a Real Estate Attorney Partner at DL Partners law firm in World and real estate operator and investor in four States Join Sam and Jonharold in today s show ————————————————————– John Harold s Background 00 01 03 John Harold s Work as a Real Estate Attorney 00 04 00 Risks in Real Estate Investing 00 08 01 Air Rights and Complex Transactions 00 09 21 Joint Venture Deals and Subdividing Buildings 00 11 59 Compromises in Transactions 00 15 28 Collaboration with other attorneys 00 17 39 Personal real estate investments 00 19 58 Experience and expertise in real estate law 00 21 44 ————————————————————– Connect with Jonharold Linkedin https www linkedin com in jonharoldcicero Web https dlpartnerslaw com attorneys-section jonharold-a-cicero Connect with Sam I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns Facebook https www facebook com HowtoscaleCRE LinkedIn https www linkedin com in samwilsonhowtoscalecre Email me sam brickeninvestmentgroup com SUBSCRIBE and LEAVE A RATING Listen to How To Scale Commercial Real Estate Investing with Sam Wilson Apple Podcasts https podcasts apple com us podcast how-to-scale-commercial-real-estate id1539979234 Spotify https open spotify com show 4m0NWYzSvznEIjRBFtCgEL si e10d8e039b99475f ————————————————————– Want to read the full show notes of the episode Check it out below Jonharold Cicero 00 00 00 – Picture there s a building and then the first four or five stories of the building we built is right up against it And then after the fifth floor it extends over the roof of the other building and then goes up another 15 floors Wow They end up looking like uh Tetris pieces that you know didn t quite land Right Wow It s somewhat common in the city Uh there s even a building downtown in I believe uh around Tribeca that they call I think they refer to it as the Jenga building cause it had some candel and the architect went with it and staggered the floors So it s you know when you see it you know it s that building Welcome Intro 00 00 38 – To the How to Scale commercial real Estate Show Whether you are an active or passive investor we ll teach you how to scale your real estate investing business into something big Sam Wilson 00 00 50 – John Harold Cicero is a real estate attorney and partner at DL Partners Law firm in World He s also a real estate operator and an investor in four states John Harold welcome to the show Jonharold Cicero 00 01 01 – Thank you Happy to be here Sam Wilson 00 01 03 – Absolutely The pleasure is mine John Harold there are three questions I ask every guest who comes in the show in 90 seconds or less Can you tell me where did you start Where are you now and how did you get there Jonharold Cicero 00 01 13 – Uh I started as a person a child who grew up in World and saw the effects of gentrification firsthand Uh I had a single mother and she bought a small apartment in an area that wasn t so great And over 20 years it became a phenomenal area because everything around us got built up and she was able to cash out and it helped her get into retirement And that s where I got the real estate bug wanted to become that person that had the capability of gentrifying neighborhoods and being involved in that process Uh I was originally gonna go get a uh MBA and learn about real estate that way and somebody gave me very very sound advice and said unless you re getting an MBA from a top 20 school you re not gonna be working on Wall Street in private equity for real estate Become a lawyer so you have a fallback And that s what I did I went to law school uh focused on real estate which was brutal because I was in law school during the great recession so there wasn t too many real estate jobs around Um but I stuck with it and a lot of my colleagues went into bankruptcy work and restructuring but I stuck with real estate cause they knew that s where my passion was and 15 years later here I am So it worked out Sam Wilson 00 02 23 – It worked out No this is cool It s gonna make for a fun conversation because I think rarely do we get the combination of both investor I mean you own your own real estate you re an investor in other people s deals but also you are an active attorney that practices uh some some you know really nuanced parts I think probably of real estate law One thing I do wanna comment back on and this is this is a a beef I have had I think with people that are opposed to gentrification that gets a it s a it s kind of a dirty word for a lot of people where they re like oh man you know these terrible humans that come in and buy neighborhoods and take em from dirty dumpy little neighborhoods and actually make the place decent You were the recipient or your mother was rather the recipient of the benefit of that Right right Jonharold Cicero 00 03 07 – Right Uh I think from the perspective of most people especially if their renters uh gentrification is a horrible term because it means renters gonna go up You know if you if you own you re gonna you re gonna reap the benefits of the price increases Sam Wilson 00 03 25 – Right Yeah The b the the price increases And and and yeah again I ve never I ve never quite understood the mentality of improving an area being a bad thing Like oh we re gonna make this a decent place for people to live Again Imagine imagine how horrible her person you must be So I love I love the ti that s how you caught the bug was just watching it firsthand and said man this is this is something I want to do Tell me on I guess you know what are you working on on the law side of things right now What are what are some really some some cool projects or some stuff you re seeing happening in the marketplace Jonharold Cicero 00 04 00 – Uh I represent a lot of uh wealthy family offices and private equity funds Um anyone from you investors traded development companies Um so I do a lot of new construction condominiums If you ever see the show A million dollar listing on Bravo with all those brokers and they do a new construction condo I would say for every three that you see on the show new construction condos I m the attorney for one of every three of them Uh it it s constantly my clients on the show I know all those brokers on a first name basis Um so I do a lot of that work but I also do a lot of buying and selling commercial real estate whether it be apartment complexes uh office buildings apartment buildings shopping centers sometimes hotels uh and then also in buying and selling representing the borrowers and negotiating their loan documents um and doing corporate structuring for the terms of their investors and how they re entering into the deal Jonharold Cicero 00 05 01 – 10 31 exchanges sometimes reverse 10 31 exchanges into more complex deals That just did a deal uh last at the end of last year where we bought a property My client was selling a property they were buying an apartment complex in the 40 million range and they had a joint venture between a family office and a private equity fund that was run by the children of the family office The private equity fund sold something and did a 10 31 into it as a tenant in common And the family office was still trying to sell something and wasn t gonna close in time So we had to do a reverse 10 31 for that tenant in common so that they could come together and then they could subsequently sell their property and get the cash uh you know the tax deferred exchange value out of the reverse 10 31 So complex stuff that keeps it interesting Um but you know and then a lot of straightforward stuff too Sam Wilson 00 05 51 – Wow Yeah that I bet I bet that is like you said that s the stuff that keeps it keeps it interesting is probably also the stuff where you probably you you you get to uh really put your creative uh problem solving hat on Is that part of part of what keeps it interesting for you Jonharold Cicero 00 06 05 – Absolutely Uh you know and and it it really you run into so so many varieties of deals and over time with more experience you know I ve been doing this for like 15 years now Um hundreds and hundreds and hundreds of deals of all different asset classes in different areas different sizes different structures and being able to tap into those experiences as resources the structure new deals and especially with some of my less experienced clients being able to come in you know clients who are not private equity funds and don t have in-house council and separate financing got being able to to share with them some of the opportunities and options that are available for them to better structure their deals I mean that s where they get the most bang for their buck with me You know you you get what you pay for when it comes to attorney Jonharold Cicero 00 06 53 – Um and and having a firm that s real estate centric that s primarily all we do is real estate here Having so many colleagues that I can refer you know and and bounce ideas off of Um it it s beneficial especially in World where you re doing a lot of you know development and you need your na you re up against your neighbors you need access to their property in order to build your property Like it it gets sometimes outta control So uh it keeps it interesting and I enjoy being able to help my clients grow because I see it over the course of years where they go from 2 million projects and now 10 years later we re doing 20 million project Sam Wilson 00 07 32 – Right right No that s really really cool When you look at all I mean cuz you re an investor as well and so you get to see probably and like you ve mentioned the gamut of transaction types Are there risks you see people taking right now that you personally aren t comfortable with Obviously you know your clients can do what your clients can do but what do you see in the I guess the question is what do you see in the marketplace What are people doing right now that you re like wow man that that that that doesn t fit my investing criteria Jonharold Cicero 00 08 01 – Uh I think it as an attorney um naturally risk averse I don t think I was as risk averse before it became an attorney and then it became more risk averse Right Um and and it s a constant internal struggle for me as an investor to battle some of that risk aversion Um but I I do have uh clients who do some crazy structures um with regard to buy you know buying up lots and trying to secure air rights We have that in World where you can buy if you have an a building next to you say you bought a corner lot and you have a building next to you that s only four stories but as of right has the ability to be six stories You can buy their air rights and transfer em over into your zoning lot so that you can build an even taller building on your lot then you would legally be allowed to Jonharold Cicero 00 08 46 – Um so some of those deals that get very complex I do the zoning lot development development agreements for those transactions But for me personally I mean that that s way too big for what I would invest in um or or would take on as the main investor Uh I like more of uh I m not so much into the class a high end luxury properties I like more recession resistant investments class B properties and Class B neighborhoods instructions that get complex with air rights and and other things Uh my clients I ll help them do it but that that s too much for me at this point Sam Wilson 00 09 21 – Yeah no I I completely understand that And we ve never actually covered on this show We re pushing 800 episodes at this point I m thinking we ve ever actually gone in depth on air rights and kind of how those are structured I mean that just seems like the wild West I mean maybe it s not cuz you re in World and you guys see it all the time But I guess briefly can you just tell us is that is it just like I mean how do you even establish what those air rights are worth Jonharold Cicero 00 09 47 – I I just did Yeah Yeah I know that s a that s a constant debate based on where the neighborhood is and what the air rights that are available are Um and and without diving down the rabbit hole you know you you have to buy air rights of a neighboring building before you can approach the building on the opposite side of that building so that you can buy their rights Um you know you have to have the the continuity of one building into the next building You can t just go from uh you know leak your neighbor into a a subsequent building So it it gets crazy Um it determining what the value is based on comparables no different than comps uh that you would have when you re buying a property What are the comps for people who are buying rights Um so it it s a it s a tricky transaction but I I mean it gets very interesting I mean I I just did a building where they can t deliver over a neighboring building So the first four if you could picture it there s a a building and then the first four or five stories of the building we built is right up against it And then after the fifth floor it extends over the roof of the other building and then goes up another 15 floors Wow They end up looking like uh Tetris pieces that you know didn t quite land Right Sam Wilson 00 10 59 – Wow Jonharold Cicero 00 11 00 – It s somewhat common in the city Uh there s even a building downtown in I believe uh around Tribeca that they call I think they refer to it as the Jenga building Cause it had some candel levering and the architect went with it and staggered the floors So it s you know when you see it you know it s that building Um but fancy Sam Wilson 00 11 21 – I m gonna have to look that up The Jenga building I m sure that I m sure that that s well documented Uh I think it s Jonharold Cicero 00 11 26 – 56 Leonard Street I think is the address Sam Wilson 00 11 29 – Ok there you go I m gonna look that up I m gonna look that up That s it That s really fascinating And again I think I think I hear the the the the um you really enjoy kind of that more complex nuance part of of what it is that you re working on What are some opportunities you re seeing right now I guess in in the broader either in your market or just you know across the across all the deals that that you see coming across your desk and opportunities you re working on What are some stuff you see right now that you re like man this is this is a really really cool space and I see people doing really well with it Jonharold Cicero 00 11 59 – Uh I think you know multifamily is always strong I love multifamily from an investing perspective use as well Um but really space you gotta have service uh tenants You can t have you know retail tenants who are just selling products right They gotta be a service like a you know a salon or something like that Um or selling food or something But uh interesting things that I see um you know in here in World and this market you know prices keep going up and up and up and uh outer markets in parts of northern New Jersey and other parts of the five boroughs of World that when I was a kid you would never wanna go to are now starting to trend and and uh become more valuable Um I look at this in particular diaper Heights section of Brooklyn was a very much um um my family s from Italy and a lot of Italian Americans had settled there when when I was a kid my great aunts and uncles had houses they bought for 40 000 over there Jonharold Cicero 00 13 00 – The same house with no improvements is now 1 5 million Um so you know the the the values have gone up What I do think is interesting that I see a lot of in World is people cause it s a higher point of entry a higher price to enter the market I see people doing a lot of joint venture deals and then coming to me to subdivide a building into separate condominium units So you can have I just did one um maybe about two years ago here in Midtown where we had two bigger players enter into a transaction where they bought a existing office building They went through the uh variance to get the building re-designated for zoning purposes And then we split the building into two condominium units One was the first floor through the 10th floor or 12th floor and the other was 12th floor or 13th floor all the way up to I think it was the 30th floor Jonharold Cicero 00 13 54 – And the lower portion became a hotel And then the upper portion became individual resident condominium that was above a hotel in the same building with a hotel entry and all the amenities of five star hotel four star hotel Um so you know they can add value to that Um but it was two different partners that entered into the deal for the joint venture to acquire the building And one is a hotel operator and owns the hotel condo and the other is a condo developer and owns the residential portion that they then further subdivided So I see a lot of those kinds of opportunities where people and even subdividing a a larger lot that people buy uh at a client who just did that in uh the Bronx and on the edge of Yonkers where we bought a huge lot and one was an older school building and they subdivided that into a separate tax lot of its own so that they could rent it back to the city to use as a school and they re gonna add the improvements And then this huge vacant part of the lot was further subdivided and uh now a film studio is being built there Sam Wilson 00 15 00 – So that s really cool Yeah and I guess that s the way that when you get into those creative structures and especially do dealing with the dollar amounts that you re dealing with there in World it makes sense you know to have the condo uh the residential condo uh developer and operator partner up with the hotel operator I can only imagine the amount of you know we always say good fences make good neighbors And so the amount of just working through on the front end the nuances of how to structure those deals Jonharold Cicero 00 15 28 – The the easement that I had to write with regard to mechanicals and shaft waves and whatnot was quite lengthy but Sam Wilson 00 15 36 – Yeah Yeah And and and when you got done with that did you ever hear back from those uh from those from those owners and those operators Did you ever hear back from them saying Hey if we had done this or I would ve added this provision in there or structure it differently next time Jonharold Cicero 00 15 52 – Yeah I mean there s always things you want in those agreements but you know the other side you know is also represented by council and that transaction I represented the hotel portion So the council who represented the residential portion had their own comments because they wanted things to be a little bit easier for their client So it s a give and take You gotta reach a compromise and you know down the road people start to stop They they forget what was written or they don t refer back to it and they try to get away with things and then there s a a dispute But if it s written well enough um you know then you can go back and point to certain provisions and say mm-hmm can t do that We already accounted for that in the provisions here But on a to to your point on a smaller scale um I think uh a lot of investors maybe overlook it and finding value even in buying a smaller building that s an excuse or a lot that has a building on it that s in good condition that they maybe wanna do you know alterations to Jonharold Cicero 00 16 49 – But there s uh you know additional room in the back maybe they can get variance I did something in northern jersey where we had a building that had a huge backyard and it was on a corner of an intersection and we were able to keep that building and you know put uh commercial tenant in and there were some apartments above it but that huge backyard on the building uh was along the side street not the main avenue And we were able to get a variance and do a curb cut and take that yard and separate it from the building Cause the building didn t really need it The retail tenant on the first floor wasn t using it Uh and then make that into additional parking uh with a curb cut and now the upstairs tenants can rent out parking spaces and you know in an area where there was a a a hard time finding parking we had a tremendous value by doing this Sam Wilson 00 17 39 – Right No that s that s really really cool And you know there s so many different parts of this How I mean I would assume that you oftentimes correct me if I m wrong have to collaborate with other members at your firm there Cause it s like hey this is your specialty in getting whatever the variances are for curb cuts and all those things I mean is that is it part of uh just kind of a more of a collaborative law firm you re working inside of Jonharold Cicero 00 18 04 – Yeah definitely And and obviously as the years go on you meet a lot of attorneys at other firms and we you know reach out to each other and say have you ever seen this You have this kinda agreement that I can use as a base form for what I m trying to do And we help each other out Um you know some attorneys are at adversarial but many are are decent people contrary to popular belief Um and you know we work with each other but certainly here uh our firm is a real estate firm The only thing we don t do is land use and zoning But we have a I m in the commercial department I m in the condo development department Um we have a residential department a leasing department a construction department Uh so you know there s a variety of people here that I can bounce ideas off of and and that s a great aspect to it Jonharold Cicero 00 18 49 – Um you know for me personally I I m I I think there are some brilliant solo practitioners and small firms out there twice as it s happened to my clients where they have a health issue and everything comes to a standstill on your project because the attorney had a health issue and there s nobody else to rely upon Or they re doing things based on their experience but maybe they re not so experienced in construction aspects Uh you know access agreements and construction issues And they might be great at representing you in the acquisition of the property but the construction side it costs you some money that if you re going somewhere else you know like I say I say to my clients you get fat good and cheap you get to pick two of the three Right One fast and cheap not gonna be good I Sam Wilson 00 19 33 – Gonna be good I love that I love that that that I ve heard that before and I think I think that s a brilliant brilliant statement there How are you scaling your own personal real estate investments I know you ve kind of told us a lot about the law landscape that you re working inside of how you guys handle and scale the you know the the the opportunities for your clients What are you doing on a personal front for scaling your real estate holdings Jonharold Cicero 00 19 58 – So right now uh I had some smaller properties that eventually I will do 10 31 exchanges on I ve I ve had some value add opportunities in those smaller properties I got into them at good prices with great interest rates Um so I m looking at long term just raising rent and continuing to add value or like I have another one I m looking to do uh variance for parking to add more parking to it Um and eventually I ll 10 31 those into something bigger along with uh additional accrued equity that I ve put aside for those investments Um but I ve also started investing with clients and friends who invest and develop much larger projects that I could personally take on on my own Um and I I put equity into those deals timing it so that three years out five years out I have different money coming back to me that can then be reinvested because you know I wanna get to the point where I ve got uh you know 50 unit buildings instead of five and 10 year building Sam Wilson 00 21 07 – That s really really cool I love that I love what you do here Uh John Herald this has been a blast having you come on this show today I mean uh I feel like I ve just scratched the surface of what it is that you know and understand about your local market there on how to work inside of it the nuance to what it is that you do I mean you you guys have to compete with I mean I look at I look at you know some of the zoning I got some report back from from uh somebody today on some zoning issue And it was you know I thought it was complicated I m like this is a mess But then here in Utah I m like we got nothing This is this is really easy compared to what John Harold s working on Jonharold Cicero 00 21 44 – But it s like anything else the more you do it and the more complex it gets the easier you know things that seem like monumentally difficult five years ago now I m like I ve seen that five times I got it Sam Wilson 00 21 55 – I got that Jonharold Cicero 00 21 56 – Like anything else in life Right right The more you do it the better you get Sam Wilson 00 21 58 – Absolutely I love it John Harold if our listeners want to get in touch with you learn more about you uh and or work with your firm what is the best way to do that Jonharold Cicero 00 22 07 – Uh you can reach me by email Uh I don t know if you ll be able to put that at the bottom of the screen or something Uh Sam Wilson 00 22 15 – Show notes Jonharold Cicero 00 22 16 – Sure sure And then uh always the by phone Um two easiest ways to reach me and LinkedIn Uh I am frequently on LinkedIn Sam Wilson 00 22 26 – Fantastic And can you say it just for the people who are only listening to this show and maybe don t have access to their uh computers or otherwise to find those what is your email address Jonharold Cicero 00 22 35 – Sure It s j Ciro j c i c e r o DL partners dog larry partners law com So j ciro dl partners law com Sam Wilson 00 22 49 – Fantastic John Harold thank you for coming on the show today I do appreciate it This was awesome Jonharold Cicero 00 22 53 – I appreciate it This was a lot of fun Thank you for having me Sam Wilson 00 22 56 – Hey thanks for listening Sam Wilson 00 22 57 – To the How to Scale Commercial Real Estate Podcast If you can do me a favor and subscribe and leave us a review on Apple Podcast Spotify Google Podcast whatever platform it is you use to listen If you can do that for us that would be a fantastic help to the show It helps us both attract new listeners as well as rank higher on those directories So appreciate you listening Thanks so much and hope to catch you on the next episode Click here to visit this podcast episode