Interview: Meet the All Cash Buyer of 14 Wall Street
Having grown up in Soviet Carpathia in what is now Ukraine, Rovt fled to the United States in 1985 because of the communist suppression of capitalism.
Based in New York, he immersed himself in the American spirit of capitalism and made a fortune, always sticking to his own conservative principles.
Q: How did you transition from fertilizer in Eastern Europe to real estate in New York?
A: After I sold my assets in Europe or my fertilizer production business, I am still active on fertilizer but much less, I am just doing consulting.
Real estate I was doing the last 15 years but not so active. My biggest purchase was 14 Wall Street and everybody was asking why did I buy and why I paid fully in cash?
First of all, my character is: I am not doing everything like everybody is doing. I try to do some things differently. If it’s good or bad it’s not for me to judge, it will be judged by results and judged by my family or friends.
Let me give you an example. Why should I take a mortgage for 3.5–4 percent when I have cash money? This is the first reason. And I am receiving 0.25 or 0.5 percent. If I don’t have money maybe I will get a mortgage. And I will try to explain why maybe.
I always was thinking about the protection of my family. Because I know several business people who were very, very successful. They went ahead, ahead, ahead and then they collapsed, they were nowhere. And who suffered first? Their family.
Q: Like the Brazilian Eike Batista for example?
A: Yes, that’s one. Even when I bought my first apartment and I didn’t have money, my dream was to pay off the whole mortgage. Everybody was laughing at me. I feel that this will be my security. If I don’t have a mortgage and I lose my job tomorrow—this was 25 years ago—I didn’t want to risk my family.
I have several friends unfortunately who were kicked out from their houses because they couldn’t pay the mortgage.
This is one reason, but the main reason is: It’s a business decision.
If I need money, I can always take a loan against my assets later and invest it better. Number 2; I am a very conservative person. Conservative in everything. Family values, in business especially. I don’t take risk.
Do you believe that I, in my position, never bought a single stock in my life? It’s true; I never bought a single stock.
I will explain to you why. I always was in the business, any kind of business, where at least something depends on me.
If I go to the casino, and I maybe go once a year and I play for $500–$1,000 no more, I don’t play roulette because nothing depends on you. I play Black Jack because at least something depends on me. I am taking a card or not. Then I go over or I win. At least something depends on me.
If I invest in the stock market and I am giving my money to professionals who under the best of their knowledge can do business; if they lose, I lose. But if they win, I win and they win. So this is a set up I never was able to accept.
I didn’t believe in it and I didn’t want to take the risk. I am not saying it’s bad.
I never had the opportunity to focus 100 percent on the stock exchange. Maybe if I didn’t have other businesses and would have focused 100 percent on the stock exchange, maybe I would have done it.
But because I never wanted to do this I always was busy with other businesses.
Q: So you rather drive than take the plane?
A: Correct. At the same time, you cannot drive a car to Europe you have to take a plane. But if you go to Boston, sometimes I am driving and not flying. And not because you are afraid to fly. Because it’s much more convenient, with the car you can stop anywhere you want; if you want to have a sandwich you can stop at a restaurant.
Q: Many people and companies in the United States like debt. Is your approach less greedy?
A: In the United States especially people think: I will borrow money, I will not risk my money.
My approach is different. I don’t want to be in the position where I will use my name. My name is very valuable to me, to my family, and to my friends. A lot of people don’t have a problem. If he fails in the business and he goes bankrupt, he starts somewhere else again.
I don’t do this. I always all my life covered myself until I felt comfortable. And this was my philosophy, very simple. If you then say the whole world is using credit cards. Yes, everybody uses them.
I never pay my credit cards by installments. Not because I have money. Even when I didn’t have money I always paid by credit card just this amount what I knew I would be able to pay it as soon as the statement would come. This way I don’t have to pay interest.
I hate to owe money. Whenever I owe somebody money, I run to pay. When I made my first money and I had a mortgage on my first house—it was $100,000—I paid it back.
Somebody said: “You know how it’s working here? You at first pay the interest and then you pay the principal.” I said it doesn’t matter. Even if it costs more, I still don’t have a mortgage. And if I need money, I can borrow against my house, which was then worth $250,000–$300,000. I am still going by the same concept.
Q: And you wanted to own the property?
A: Absolutely. Take for example 14 Wall Street. If I make $1 million or $10 million, I don’t have anything hanging over my head to clop me. I am working to rent better to have a full house and I make more. And if I make more, I can invest the money.
Let’s take a different scenario: I have a mortgage and I must have income of $10 million in order to pay my mortgage. What if I don’t make $10 million and just have $8 million? And $2 million I am falling short. And if I can’t get the $2 million from somewhere else, what will happen? You are starting to shovel here and there.
In the end, if you are not able to make this money you can lose the house and you will lose everything what you worked on. There are a lot of examples of people who were doing this and also a lot of people who this is happening to now.
So this is my way to work. If I buy an apartment building—let’s say in Brooklyn, I own several houses there. I buy the building with the tenants. I know how much the income is. I don’t take the mortgage and I pay the house in full. What I can do:
I can refinance if the income covers the mortgage what I have. But I already have the extra money in my pocket from the refinance. Less risk.
I am not doing what a lot of other people are doing. Refinance and immediately buy another house with another mortgage. What is something happens? Then it is going like a chain reaction and you can lose everything.
Just the way to do the business conservatively. No. 2. I don’t want to be the richest man in the world. I want to be healthy. You cannot eat with two spoons, you can eat with just one spoon, it’s as simple as that.
Alexander Rovt is the president of IBE Trade Corp., a consulting company, and the owner of 14 Wall Street. According to him, his fortune is currently larger than the $1.3 billion estimated by Forbes in 2012.
The interview has been edited for brevity and clarity.