Barbara Corcoran: Power Broker to Powerful Motivator
Want more articles like this?
Create an account today to get BiggerPocket's best blog articles delivered to your inboxSign up for free
The $5 billion company is still in operation today, and one of the biggest power players in New York real estate.
Since then, Barbara has found many ways to keep herself busy. A wife and mother of two, she’s a real-estate commentator on NBC’s Today Show, and a regular part of the hit ABC series Shark Tank; she wrote a bestselling business book called If You Don’t Have Big Breasts, Put Ribbons on Your Pigtails as well as Nextville: Amazing Places To Live The Rest of Your Life.
She also travels the country as a speaker, sharing the stories of her unique life and motivating hundreds of thousands of people with her inspiration. Her honesty and smarts have never been more needed and appreciated.
In this exclusive (and very candid) interview with BiggerPockets, Corcoran talks about her wild ride, from her days of search and struggle to one fateful day on the job as a waitress. She also talks about her real estate success – and her regrets.
Can you give us some positive news about the state of real estate these days?
The most positive thing I can say about it is that people underestimate the fact that half the towns across America actually have home prices that are rising. And half have home prices that are selling.
I am a dogged watcher of stats – stats that I believe in most of the time, not all the time. But only about a year ago, or even nine months ago, the great majority of homes were losing value.
So there are the bright spots across America, and it doesn’t have anything to do with the state. There are even bright spots in Florida. I don’t think things are as bad as people really say they are, as far as prices falling.
How is the future looking for us, real estate wise?
I don’t expect a marked difference in the next year. I mean, who the heck knows beyond that, and who even knows next year? That’s because I don’t see any of the large components changing.
One thing that I’m very worried about is the tremendously high foreclosure rate. I know in the last month, foreclosures have actually dropped down, and I was pretty excited to read that. But then I realized that it was nothing more than the result of the banks holding back foreclosures. They say that the foreclosure rate was down because they had ushered forth at the end of the previous month all these foreclosures, all in one week. So that was like a false reading.
This idea that banks are going to modify loans for people who are in need has been a giant hoax. I think it’s almost shameful that it was filled with such promise, that everybody applied for it and so few people were granted modification. And even if they did, it’s was only for six months or a year. I think that’s a joke. And there are many deserving people who need breaks who aren’t getting them.
I really see the banks as the bad guy. Until they are mandated that they must help, I don’t think they really are going to. I think they are going through the motions, without their heart in it, and it’s not resulting in anything much.
How can a homeowner or investor increase the value of their homes/properties in the current market?
Investors and homeowners are very similar in that they both have the same problem. They have a piece of real estate that isn’t worth as much as they’d like, and that can’t be refinanced as readily as they had hoped. And so what can someone do? Only a couple of things, and this is assuming that they are not selling, that they just want to increase their value.
They can be very careful about the home improvements they make, whether it be the investor renovating a common lobby, or an individual homeowner who is thinking of doing a gut renovation of the kitchen because they know they can’t sell their home right now and they have to stay put.
I think what’s key here is that you make the surface renovation rather than the deep-pocket renovation, because you are not going to get your money back out of this market to support it. And so you have to think of your home or your investment as a beauty contest that is competing with every other competitor out there. And try to make it look good for less money, and enjoy the process in the meantime.
You openly admit that your life was off to a shaky start (straight D’s in high school and 20 jobs by age 23). How did you turn your life around?
Well, there is no turning point in life. I think what you do is you work yourself through a problem. And I don’t think of all of that as bad news at all. Straight D’s? I mean, honest to God, I deserved straight F’s. They were charity D’s and I was grateful for every one of them.
In terms of the jobs I had before I found my career at 23, hey, that’s not so bad, finding your own career at 23 after trying on 20 things that didn’t quite fit. I was thankful to try those on to know that they weren’t for me. So I don’t think there was any point.
I was waitressing one night and I was lucky enough to have Ramon Simone walk in and order his cup of tea at my counter instead of the other waitress’ counter. That was a lucky break, but he became my boyfriend and investor. He gave me the thousand dollars to start a business.
That was a lucky break, but I was also hustling, working eighteen-hour days as a waitress to get extra money, so I kind of deserved that break. What I think it amounts to always is perseverance, and always being around to catch the lucky breaks.
There is no point that turns you around. I think that there are a million points along the way, of opportunities that are either viewed by you as a bad happening or maybe viewed instead as something that went awry and can be fixed. And I think it’s the dedication to the fixing it that gets you to the next plateau.
You started the Corcoran group with a thousand-dollar loan. What were those first days like?
It was half sheer excitement and half disbelief that someone would actually give me a thousand dollars and become my business partner. I’m still pinching myself about how good that was. Who else was going to give me a thousand dollars? Certainly not Nick the diner manager, who would have liked to keep me as his waitress forever. It was thrilling: the possibilities, and sheer unadulterated fear of not knowing how the heck we were going to build a business. We have the money, but the problem now is, what do you do with it?
So I think I felt a lot better once I realized that the money could keep me in business for six months. I would just buy an ad in The New York Times advertising one property and pay for my princess phone line. And that should last me six weeks. So once I was able to label what the thousand dollars would buy, I knew I had six weeks to run the race, to try to make a deal. I got very lucky. I rented an apartment and made a $340 commission in the first week on my job. So now I had only lost $150 of the thousand, but I had made $340, so I was already ahead of the game.
What attracted you to real estate? Why real estate?
I wasn’t attracted to it. I was attracted to every other job I had: a hotdog salesman, a newspaper dispatcher, a house mother for six orphans in an orphanage, a bookseller in a little local bookstore. I was attracted to anything where they say, ‘you’re hired.’ I wasn’t any more attracted to real estate, except for that my boyfriend said, ‘you’d be great at real estate.’ And I said, ‘why would you think that?’ And he said, ‘because you’re good with people.’ And he gave me the thousand dollars. If he said, ‘you’d be great at plumbing,’ and I asked why, and he said, ‘because I love the way you handle that tea cup,’ I would listen to anything. Anybody who is going to hand you a thousand dollars, you are going to agree with. And that’s how I got started.
What excites you about motivating large groups of people during your speaking engagements?
I’m not trying to motivate people at all. I feel like my job there is to maybe say something that they could use to better whatever they are looking to better: their personal life, their business life, their family life. So when I’m speaking, it’s really just a hodgepodge of stories I tell, of things that made a difference to me along the way.
Certainly, the majority of them are business stories, because that’s where I spent the majority of my time, but many of them are parenting stories. I was very lucky to have a mom who, on the birth of each of her ten children, decided what the child’s gift was and named them, labeled the kid. And labeling has gotten a bad rap, but her labels were all positive. So she chose to see the light in this child, and slammed that label on and son of a gun, we all became what she saw in us.
My whole goal is that I hope to move people to action for themselves, whatever that is, something that they can grab for themselves and make useful. From the responses I always get, I feel like I do that very, very well, so it always feels worthwhile going back and doing more of it.
What seems to be the number-one concern among investors you meet, and how do you advise them?
Well, I’m one of them. I own twelve small apartment buildings in the New York area. I’m doing terribly with them, so I keep my mouth shut, because obviously I don’t know that the heck I am doing! Because two things went awry: the values of those properties have plummeted. And interest rates went down tremendously.
I have many buildings I have financed at twelve or fourteen per cent, and yet interest rates are now 4 Â½ %. I would love to give myself the retroactive advice of not signing up for those mortgages then, when, if I wanted to renegotiate, the interest rate would be considered pre-paying the mortgage. I didn't realize that. I thought that if mortgage rates come down, I'll just refinance it. When you pay off the old loan, it's considered ârepayment of loan.' And you get a pre-payment penalty of many, many points.
So here I am, being a savvy real estate investor, with properties being worth a third of what I paid and mortgages that are double and triple what they should be in interest rates. And yet I can’t do a darn thing about it with tenants who are losing jobs and not paying their rent. I would be the last person you should come to for advice.
So you wouldn’t have any advice for a first-time real-estate investor?
That’s different! Now is the time to strike. There is such a thing in life as timing. You can get cheap money. You can get properties at steep discounts. You can negotiate like crazy and get a great price. Why wouldn’t you buy now? These are the good old days that every investor in the universe has been talking about. Now that they are here, most are too frightened to buy. These are the times to be buying real estate. No doubt about it.
That’s a little different from talking to someone who was buying real estate five, ten or twenty years ago. They have their money tied up and they’re stuck, but if you have cash and you can buy now, you would be crazy not to buy real estate.
How was your experience on Shark Tank? What did you come away with as being a part of that series?
I just came back from LA, shooting the second season of Shark Tank on ABC, which will start airing in March. I don’t think I’ve ever had more fun. I love an audience, but more importantly, I love the idea that I’m in the luckiest seat in the world, getting to see maybe 60 businesses, in a week’s time, pitch me their business. And I get to pick the ones I like the best.
I put my own money into them. That’s a coveted seat that every business investor in America would like to have, and I’ve got it. So I can’t imagine a more fun thing to do. And I get to go home and the show’s not over. It just begins. I actually have to make a deal with these people, sign contracts, do due diligence, and the best part of all, help them get to where they want to go and make their dream come true. I’m really good at that. I’m not so good at money, but I’m really good at business. And I’ve never worked so hard in my life, just to put a reality dose on top of that.
What makes you personally most happy?
Anything I say would sound like a cliché, but I would have to say my kids. I’ve got a five-year-old and sixteen-year-old, and no problems so far, thank God. Also, my husband, who drives me absolutely nuts and I’m surprised I’m not an alcoholic. I’m not sure why you marry your opposite, what goes on there chemically. Those are the things that keep me most interesting.
The most satisfying thing on the work front is accomplishing something, as it is for anybody in any business or job across America. Who wants to have a job where you feel like you don’t accomplish anything worthwhile? I feel like I have a job where what I am working on makes an enormous difference. For that, I am eternally happy and grateful.