Goldrich and Kest Industries LLCBorn:
Israel TechnionCareer Turning Point:
When he started building apartmentsHobby:
TennisMost Admired Person:
Married, two daughters, two grandchildrenHolocaust survivor Jona Goldrich built a window cleaning firm into a real estate empire that ranges from public housing projects to Marina del Rey developments
In the summer of 1942, Jona Goldrich and his younger brother ran away from their home in Poland, spending five nights in a forest hiding from the Nazis. The only members of their family to survive the Holocaust, they fled to Hungary. Eventually making it to the United States in 1951, Goldrich had his heart set on studying at Massachusetts Institute of Technology, but was turned away because his English was so poor.
Rather than go to prep school, as MIT officials encouraged, Goldrich hopped on a Greyhound bus and headed for California. Starting off as a mechanic, Goldrich later worked for a company that installed window screens. While there, he decided to go into the window cleaning business and then added trash removal when Los Angeles passed an ordinance prohibiting the burning of trash. Within two years, the company, Active Cleanup, grew from three employees to 120.
Always the entrepreneur, Goldrich ultimately started building apartments and has constructed a real estate empire worth nearly $1 billion much of its based on government-subsidized housing. Listed as one of the Business Journal's richest Angelenos, Goldrich lives in Beverly Hills but maintains his offices in Culver City.Question:
Goldrich and Kest as a business is worth $950 million, but you say that's not all yours and dispute your financial worth as reported in the Business Journal's list of richest Angelenos. What are your figures?
Answer: I own 22 to 25 percent (of Goldrich and Kest), with my children's percentage, so my net worth, my value, is between $180 (million) and $200 million, not $950 million.
Q: What is the business relationship with your children?
A: They are partners in the deal. They invested money that they got from me years ago.
Q: How does your refugee experience mold you as a businessman?
A: I never wanted favors from anybody and never had anybody to help me. I had an obsession as a kid to make sure that people don't feel sorry for me.
Q: How did you get from Active Cleanup to real estate?
A: I learned the business from cleanup. I started building apartments. In 1957 I built my first apartment building in North Hollywood. And then I took in Sol Kest as a partner. I took him in to run the cleaning business so I'd have time to build apartments. He also became a partner.
Q: When did you move into the public housing realm?
A: I got involved in 1965 when Johnson was president. It was to make money. There was no risk in it. I got satisfaction out of providing poor people with housing, but I made money at it. They limited how much money you could make, but there was zero risk. I became the biggest in that business.
Q: How many of the units that you built as public housing still are subsidized units?
A: Some of them are not subsidized anymore because the contract with the government was for 20 years. I got out of the government contracts and got into market rate rents. If you're in a real good location you get good rent, such as the Silicon Valley and San Fernando Valley. But you don't do good if you build low-income housing in Watts, because there's still poor people there and you can't get market rents. So, if we had a bad location, we stayed with the HUD contract.
Q: In some markets, you have watched as rent rates doubled around your government subsidized housing. What do you do with the money you make when a HUD contract expires and you can raise rents to market levels?
A: You refinance the building and that gives you more money to build more buildings. I reinvest and my company grows.
Q: The shingle says Goldrich and Kest. What's Mr. Kest doing these days?
A: Kest is retired now. He's older than me. Four years ago we made a deal where he retires and I get a salary for running his business. He's still a partner, but I run the business. He's making money because he's a partner in the buildings.
Q: There's a lot of residential conversion going on Downtown. Would you be interested in being part of that?
A: We were pioneers in developing residential housing in Downtown L.A. We were the first ones to build housing in Bunker Hill. No one wanted to live Downtown. The first building we built was in 1978.
Q: As in Downtown L.A. you were something of a pioneer with housing in Marina del Rey. Is it tough to develop near the beach with so many people fighting over density of development?
A: They should let you build because that's the best place to live. Otherwise you're chasing people out to Lancaster. It's an even climate all year-round. You don't need heating. You don't need air conditioning. You enjoy the beach.
Q: Not everyone can live at the beach, though. What's wrong with moving a little inland where it's more affordable and people can own some land?
A: That's why you got traffic problems in California. They push the people who can't afford to live in Santa Monica or good areas like Malibu to Lancaster where it's 115 degrees in the summer and 30 degrees in the winter. You use three times as much electricity. I have people who work for me who spend three hours a day in their car.
Q: What's your take on the real estate industry?
A: It has slowed down a little bit. California is the least affordable state in the nation for the working man to buy a house. About 20 percent of the cost of a house in California is red tape and the customer gets nothing for it. You buy, let's say, a $300,000 house. About $50,000-$60,000 of that is because of delays, special permits, traffic mitigation, all types of things.
Q: How do you fix that?
A: By easing the red tape, taking away the red tape. By not listening to the Sierra Club and all kinds of environmentalists.
Q: Is it possible that there are enough people in California and reasonable restrictions could prevent further congestion in urban areas?
A: Why should you take away the right of other people to come to California? That's like saying, "Let's move out of here and give all the land to the Indians because it belonged to them 100 years ago."
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