Reuven Kahane // RKRE Development

I am a 13th-generation rabbi, born and raised in Manhattan. I went to Ramaz through high school and then I learned in Beit Midrash L’Torah (BMT) in Israel for a year and a half. When I came back to the US, I went to Yeshiva University, which is where I earned my semichah and law degree. I learned from many of the roshei yeshivah there, including Rav Ahron Soloveitchik, Rav Dovid Lifshitz and Rav Hershel Schachter.
“My grandfather, Rav Levy Yitzchak Kahane, was the rav of the Kleinman Street Synagogue in Williamsburg. He was considered the preeminent pulpit rabbi in America at that time, and he was the only rav to be a member of both Agudath Israel and Mizrachi. He passed away at a very young age. My father, Baruch David, took over the synagogue after receiving semichah from Yeshiva University at the age of 19. He became one of the most well-known pulpit rabbis in America in the 50 years that he served as rav of his synagogue on the East Side of Manhattan.
“I, too, became a pulpit rabbi at a young age. When my father fell ill after a stroke, I was the full-time rabbi of his synagogue for two years. Sadly, he never fully recovered from his stroke and he passed away when I was 27.
“Before he became ill, my plan had always been to make aliyah and go into business and politics in Israel. I just wasn’t sure which would happen first. Now that I was coming to Israel as a 23-year-old retired pulpit rabbi, I decided Israeli politics could wait—shul politics had been enough.
“So it would be business, or maybe I would use that law degree. Law interested me, but honestly, I got my law degree because my parents wanted me to get a degree in addition to my smichah. No one asked what I wanted to do, not that I can blame them. I was only 19 when I finished college (a combination of lots of summer courses and my having started nursery school when I was two). In the end, my parents were right in wanting me to get both degrees.
“I was a lawyer for a short period of time. On my first day, my boss asked me to write up a memorandum of an agreement. I ended up making mistakes on 30 of the 31 parts of the memorandum. I signed my name correctly; that was the only thing I got right. My boss asked whether, when I wrote ‘would,’ I had meant to write ‘should’ or ‘could.’ It was a moment of clarity for me. I was in the wrong profession. Knowing that law was not for me, I thought back to my early business experiences.
“My first entrepreneurial venture was when I was about 11 years old. Back then, many people had food drives in Manhattan. Passing some homeless people one day, my older brother commented, ‘How are they supposed to take their cans and bottles of food home?’ Immediately, my sister and I started going to the garbage rooms in our apartment building to search for those neatly discarded, large paper shopping bags that were popular at the time. We gathered them and our mother took us to deliver them directly to the homeless.
“My first international venture was when my friend Gary Mandel and I flew to Jamaica and met with top government officials to try to set up a nursing program in conjunction with Touro College (there was a major shortage of nurses at the time). The same month, I bought some old parking-enforcement vehicles at an auction to sell on the private market. I thought they would be the vehicles of the future. Unfortunately, none of these businesses (especially the Jamaican one) would translate to Israeli society, so I needed to think of something new.
“I knew from my years of learning in Israel (and from my summer interning in the Knesset for Likud) that Israelis only love one thing as much as their country, and that is their food. I realized that I needed to find the food that does not exist in Israel but that everyone in Israel wants. After thinking about hot dogs, burritos and doughnuts, I made my choice and Bonkers Bagels was born.
“Just 18 months after I moved to Israel, I started Bonkers Bagels with a partner. We were on the front pages of The New York Times, the New York Daily News and Haaretz. The first Bonkers location was on Kikar Tziyon. It was the most coveted retail spot in Israel but somehow, we were able to convince the landlord to give the lease to a couple of immigrants instead of one of the tens of Israeli franchises clamoring for the location.
“We were the only American bagel shop in the Middle East. The store was open 24 hours a day and the lines were literally around the block. We were so busy that on Erev Yom Kippur and Erev Tishah B’Av, we had to limit the amount each person could buy at a time. We ended up with ten stores across Israel and eventually opened up a bagel factory. We also sold directly to supermarkets and to El Al Airlines.
“The business was wildly successful the first four years. At its peak, it had a revenue of around six million dollars. But we grew too quickly. The factory cost millions to build and you need a lot more than your own stores to support a factory. The Intifada and other factors affected the business, too. Eventually, like so many other retail chains, Bonkers Bagels closed.
“The business closing coincided with my father passing away, so I decided to spend more time in America to be near my mom and family. It was then that I stumbled upon another business idea that was very lucrative: I would find bankrupt restaurants in Manhattan that had a year or two left on the lease, and I would buy out the leases or master lease the entire building. I knew the industry, so I would take it over and have my manager relaunch them as kosher pizza shops called Pizza Cave. Soon after the launch, I would sell the business and/or leases. While the concept had limited risk and was very successful, the food business was not a long-term business I wanted to be in. Additionally, I had started to parlay my profits into buying properties. One of my main deals was a prime Midtown Manhattan piece of land I was able to put under contract. Fortunately, while in contract, I was approached by a buyer who owned the building next door, and he paid me a hefty premium for my contract. It was my first large real estate deal, and 100 percent mazel.
“By this time, I was married. My wife and I moved to Cambridge while she finished her master’s degree at Harvard. I traveled back and forth between Boston and New York, continuing to do small real estate deals as I sold my last master leases and restaurants in order to consolidate everything before moving to the Bay Area, where my wife’s family and my sister were living. We moved to Piedmont, California, and I began working next to—not for—my father-in-law Gerald Friedkin, one of the most successful real estate investors on the West Coast.
“Today, after two decades in real estate, 90 percent of my portfolio (spread over 14 states) consists of multi-family units. Nothing I own is in New York City except my electric scooter, and everything is managed by third-party management. These management companies have become so sophisticated, they allow you to focus on other interests during the time between transactions, which are becoming harder and harder to find as the market keeps contracting.
“Seven years ago, we moved back to the Upper East Side. I daven at Park East Synagogue, where I sometimes deliver the Shabbos drashah next to Rabbi Arthur Schneier, whom I consider a mentor and good friend.”

What do you mean when you say that you work next to, but not for, your father-in-law?
Let’s say 99.9 percent of people who enter a family business end up fighting with each other. Obviously, a major factor is the boss/employee relationship, which is unhealthy in any family unit. Fortunately, when I got married, I had already made my own money (in addition to already having been retired from three professions). I was able to work next to my father-in-law, as it was not an employee or salaried relationship. I could go and come as I pleased, and he could tell me to leave as he pleased—which, thank G-d, he never did. It was the perfect situation. I was able to co-invest with him using the money I had saved, and I found new deals for the company. Additionally, his name and company gave me credibility and access to so many of the largest deals in America that I could not have sourced myself.

Many people who join a family business have a chip on their shoulder, often wanting to prove that they made it on their own. Does the fact that you made it on your own before joining the business change that for you?
I’m not sure who makes what on his own because so much is in the hands of Hashem. In any case, I am very grateful to my father-in-law and I am honest about his role in my success. I did come in with business experience and degrees and some money, but he helped me multiply it to a point that there is almost zero chance I could have done it without him. I’m blessed to have had the ultimate Zevulun and Yissachar as mentors. My father was a preeminent rav in America and my father-in-law is a preeminent real estate investor and supporter of Torah. The thing that binds them together the most is their humility.

Can you share some of the lessons your father-in-law has taught you?
He has said many times, “Numbers don’t lie and liars don’t use numbers.”

I love that line. Basically, it means to be as transparent as possible.
Exactly. When you “overshow,” meaning that you are as forthcoming as possible, the consumer will trust you and that makes it easier for you to make a sale.
As a landlord, my father-in-law always made sure not to squeeze his clients. During bad times, he would always have rachamanus on his tenants. Having loyal tenants helps keep your portfolio stable for the long-term.

How do you manage all of your investments?
I use personal in-house accountants and third-party management. Most of the properties I’m involved with are in areas without rent control or stabilization, and I don’t do any ground-up development. I have far fewer headaches and litigious tenants than some other real estate professionals.

Is flipping real estate crucial to your business model?
Not really. I have done about a dozen of those deals, but I almost never go into contract with the intention to flip. However, at the same time, I have no problem selling while in contract, essentially selling the contract. Most of the time this happened when the final buyer was in a desperate 1031 exchange [investment property swap] and I was not. Once, this happened when I was in contract on eight Walmart stores, and someone who was in an $80-million exchange needed to buy something quickly or he was going to pay around $30 million in taxes, so he bought the contract from me.
Recently, I had a 300-unit multi-family deal in Texas that got tied up. It seemed like a grand slam of a deal. But when I found out how much time I would have to spend in Texas (and not the frum part of Dallas), I sold it to someone else. In the end, he got a grand slam and I suppose I ended up with a triple.

The New York Post wrote in 2013 that you made a $2.25-billion offer on the Empire State Building.
This is the way crazy rumors, real estate myths and urban legends start. The whole story is funny because my brother read that front-page article the day after I asked him to go 50-50 on a $100 birthday present for our sister. The truth is that I did make an offer to the broker, but it was on behalf of a group of Israeli and Ukrainian businessmen I had known for years through my dealings with Likud. They needed someone local to make the offer. If they had won the bid, I suppose I would have owned .00001 percent of it.

What would you say to someone getting into or already in the real estate business?
I always thought real estate was the best business because if you found a good deal, you could always find equity investors, and banks would allow you to leverage up. Eventually, you would have passive income and you could leave it to your children, who would have to work hard to mess it up. That’s why if someone asked me which business he should go into, unless I thought he was headed for Goldman Sachs or Google Labs, I always said real estate—until now.
I just don’t see a place to enter the market now, unless you come in with a skill, something that gives you an advantage. Even if you’re willing to work 24 hours a day like so many successful guys have, the competition is so fierce and the cap rates are so low that it’s almost impossible to find a deal that would make sense for investors. Maybe I’m wrong; I’m just not as enthusiastic as I once was about New York real estate.
I know that you wrote a book. What is it about?
It’s a dystopian novel set in the near future. It brings us back to olden times, not Nazi Germany but the anti-Semitism of Russia and Spain and Poland. Hopefully none of it will come true, but the book has an important message.
The idea for it came to me several years ago when I realized that in a decade or so, the last Holocaust survivors will all be gone. It’s difficult to connect to a tragedy when there are no living survivors. I felt that a book describing something tangible that takes place in American cities, on the streets people walk today, would have an effect on our collective memory of the past as well as what we watch for in the future. I had several offers from publishing companies, but I chose to self-publish because my goal is to make the book as accessible as possible, especially for large groups and organizations. I needed it to be at a price point that self-publishing makes possible. In addition, self-publishing allows for complete editorial freedom.

It sounds like an intense book. Aren’t you afraid it will give anti-Semites some ideas?
I don’t think they need any new ideas. The book is written for the next generation, for our children and grandchildren. I believe that by reading about extreme anti-Semitism in Williamsburg, Woodmere, and Chicago, for example, they can get an inkling of what our grandparents felt and lived through.

You mentioned something about kollel.
I was once sitting in a restaurant in the Five Towns, and I overheard a family debating who would pay for them to go away for Pesach and whether they should go on a certain Pesach program in Florida, given that Zeidy would not go because he was still nervous about COVID.
I thought the world had turned upside down. I have always felt that it was supposed to be like it was when I was younger, where the kids help the grandparents up the stairs, or they work to the bone to put a few dollars in the collection tin for the Jews of the Lower East Side. Here I was seeing the exact opposite: It was the old and infirm holding up the young and healthy. The grandfather should not be paying for the Pesach program for his entire extended family. He should be in kollel. Imagine a room full of 500 well-rested men with real wisdom, learning Torah. Trust me, you would need 500 fewer pacemakers in this world.

How do you deal with stress?
Everyone has stress; it’s just a matter of reducing it as much as you can. So have one credit card instead of five, never go to a restaurant on Pesach, and never fly to Israel a day before Sukkos. These three alone can cut your stress in half.
In terms of my own real estate business, I’ve decided to take the risk-reward approach of “less risk, less reward.” I’ve invested in safer, more conservative properties with maybe a little less pop, but fewer worries. I go in with family or a partner or use my own money; I have not dealt with outside investors for 27 years and I think that removes a lot of stress and anxiety. I also choose my partners very carefully. In the course of two and half decades in real estate, if I partner with a non-relative, 90 percent of the time, it’s the same four or five people. One of them is Shimon Weiner of Oakwood Capital. I’ve done 18 deals with him, including the Walmart deal I mentioned. Finding someone in this business like Shimon is priceless. He has done billions in financing and never misses a day of Daf Yomi—he is on his fourth or fifth round through Shas. I lost count.
In terms of immediate stress release, I walk about ten miles a day, listening to music or talking to myself; every walk is different. You know, I’m walking right now as we speak! ●