Deal With It Stephen Siegel at his company’s newest property in Las Vegas. You wouldn’t want to see the before picture.
As told to Nadine Heintz
Industry: Real Estate
2007 Inc. 500 Ranking: 281
Three-Year Growth: 883.3%
Stephen Siegel has a knack for fixing things, be they cars, companies, or buildings. He bought his first apartment house in 2001 so employees at his North Hollywood auto body shop, McAlister's Collision Centers, would have an affordable place to live nearby. With that he was off and running with the Siegel Group, which has now acquired more than 40 struggling properties, including shopping centers, apartment buildings, and extended-stay residences, in California, Nevada, Arizona, and Texas. Last year, the company booked $78.1 million in revenue.
My first job was at McDonald's. I started working there when I was 15. I moved out of my mom's house the next year and started living with friends. When they were in class I was out working or getting into trouble because I couldn't keep focused on school. It just didn't interest me.
Every Friday morning, I bought a newspaper called the Recycler, which was basically a print version of eBay. You had to buy it very early to get the best deals. I would comb the listings, make phone calls, and go to sellers' houses. The first car I bought was a 1984 Volkswagen GTI. I put new wheels on it and made it sportier. Six months later I sold it for $6,000, about $2,000 more than I had paid. I fixed and sold about 20 cars by the time I was 19.
In 2001, I began to apply the same strategy to apartment buildings and commercial properties. I have a two-part approach: First, make money in the buy by hunting down deals and negotiating a good price. Second, make sure you're proud of what you've done. Even today, if I see a building I don't like, I'll repaint it before I sell it.
When people tell me something is a bad idea, that makes me think it's a good idea. In 2003, the real estate market in California heated up and it was harder to get good deals. One day, I found a 132-unit building in Las Vegas on the Internet. It was in a real rough neighborhood, but the location was great because it was attached to the Las Vegas Convention Center.
I parked across the street from the building and stared at it, visualizing what I could do to improve it. The building was full of drug dealers and prostitutes. I went inside to do an inspection and some police officers were there. They said I would never be able to clean it up. Everyone said I was crazy. That was my trigger. If someone tells me I can't do it, I'm doing it. I bought the building for $6 million.
I started with the neighborhood. I made friends with the people who hung out on the streets. I met a family living in the bushes across from the building. I gave them a free apartment and put the husband to work. I paid other people to keep an eye on the building. We removed pay phones to discourage drug dealing. That's how I secured the neighborhood.
People who are doing the wrong thing like to hide with the lights off. When you turn on the lights and make a building look good, they take off. It took about a year to rehab the building and get rid of the bad people. At that point, I sold it to the convention center for $10.2 million.
When I was younger I was arrested a few times and did community service at homeless shelters in Santa Monica. Now I want to create a shelter for runaways and homeless people in Las Vegas. The homeless couple I helped out had a son who saw me as a big brother/father figure. His parents wanted me to adopt him and I began looking into the process, which was very difficult. He was killed last year on the streets, and I often think how his life would have changed had I adopted him.
I stopped reading the Recycler about three years ago. I'm looking for much bigger deals now. But I'm as aggressive as ever. I don't sleep until I get the job done.