56: Urban Standard with Seth Weissman

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Now here is your host, James Nelson.

And welcome to show number 56 of real estate Investing Live from New York. This is your host, James Nelson. And thank you as always for tuning in, for subscribing for your comments and telling your friends. It really means so much to me and one of the favorite calls and outreach that I get when I hear from you all is about what you've been able to get out of these shows and especially some of the specific episodes. I love how you reference them. And by the way, I love recommending these shows also. I mean, it would be great if you could go through and start from the beginning with Bruce Ratner and give a listen to those 55 prior shows. But I understand you all are busy, you're being successful and you're out there. So I'm always happy to make show recommendations. If there is a certain business strategy, asset class, location, or maybe a certain question for how to grow your business, reach out to me, email me@jamesperiodnelsonvisonyoung.com I am happy to get back to you. You can link in with me at James Nelson nyc. Ask for advice. I want to be a resource for you to make you the most successful investor that you can become. So want to welcome you all again especially for our new listeners. And wow, what a great show last week with Melissa Burch and her story. I called her the Midwest New Yorker. She told me how she grew up in Ohio and she always wanted to be a New Yorker. So I got a real kick out of that. But wow, has she ever become a New Yorker. And in a big way, having just closed on a massive waterfront development site in Greenpoint. So incredible lessons learned there about dedication and hard work and the value of teamwork and the people around you. And that's a consistent theme that we keep hearing over and over again about success. And today's speaker is no exception. Seth Weissman, who is founder of Urban Standard, has built up such a great platform and he's really interesting because there are few investors out there who both invest on the equity side and lend. So Seth has some really interesting perspective on how to approach a deal, what is the right way to do it, how to scale it, and really how to build out a business and do volume. So I know you all are going to get a lot out of this interview and so looking forward to it. We're going to take a brief word from our sponsor and we'll be right back.

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And now it's time for our investors spotlight. And with us today is Seth Weissman who is founder of Urban Standard Capital and serves as president. He he also serves as the Managing partner of Weissman equities and Citi Shares. And together these three New York City focused investment funds take a community place based approach to real estate investment and development. Seth employs a creative and thoughtful approach to building value in often overlooked assets. Seth does this by taking a community oriented approach to real estate investments and making long term and thoughtful investments. He is committed to enhancing the quality of life and in the neighborhoods in which she invests and fundamentally believes neighborhoods are defined by the people who live and work in them. So Seth, wonderful to see you. I know we've probably known each other at least for 10 years, maybe 20 years, but great to see you and thanks for coming on the show.

Well, thank you for having me. It's good to see you and speak to you.

So Seth, tell us where it all started. Where did you grow up?

Sure. So I grew up in Westchester in Armagh, went to school in Rye and then went to college in Philadelphia at the University of Pennsylvania and came right back to New York City. Okay.

And was your family in the business or what were you doing growing up? Any odd jobs or anything during the summers that you'd say are noteworthy?

I was. My family's not in the business. My father is a cardiologist and I'm terrified of bl. He would take me on some of his hospital rounds when I was younger and I would hide in the corner Because I was so scared. So I knew that medicine was not in my future, but I was always drawn to business and entrepreneurship. And real estate, for me was. It is the intersection of a lot of areas of interest, specifically design, urban planning, architecture, finance. And so it sort of brings a lot of that together. I was, you know, sort of spent some nerdy summers. I went to a business camp when I was in middle school and golf camp and stuff like that. So very cool activities. But, yeah, I guess it prepared me. I ended up going to business school at Penn and majored in real estate and finance and was a teaching assistant for a professor there named Peter Lindemann before joining Goldman Sachs in their real estate investment banking program at a college. Wow.

So I can relate a lot to what you just said. My father and brother are doctors, and I always tell them I'm certainly not saving lives here, but I have a lot of respect for what they do. But, yes, we all have our strong points and our skills and.

Wow.

I mean, that is amazing to hear how focused you were at an early age and, you know, already thinking about real estate, I mean, and that part I will say, you know, even my senior year in college, I still had no idea I wanted to do what I wanted to do. But, I mean, being a teacher's aide to Peter, I mean, and it's interesting, we had Matt Pastronk on the show last week, and he was talking about Peter's book on how to raise capital and how to do it, which is still one of the Bibles out there. So, wow, that must have been an incredible experience.

It was great. And actually part of my being a teaching assistant was helping him market his book, because his book just came out, and it is a Bible. And what's really nice about it, and I recommend it to a lot of people today who are coming to me for career advice and want to get started, because it's very easy to understand. It's digestible. I think it covers a lot of the different facets of the industry. And it's a great way, you know, it's a great way to sort of familiarize yourself with the market.

So was it really more theory in school, or did you feel like you were getting real practical experience? I mean, were you doing internships in the summer? Were you already thinking about investing in deals? What were you doing throughout college?

Sure. So, like the Wharton program, It's very pragmatic. I think this University of Pennsylvania, their approach to sort Benjamin Franklin ethos is really driven by pragmatism and practical Applications. And just as an example, one of the classes I took that I loved was called Inner City Housing Markets. And the class would actually buy, and this would be done over a couple semesters via tax auction in West Philly, would buy vacant shells, which at the time, and maybe to a certain extent today, there were a lot of vacant shells. And. And on the weekends, during the week in class, you would study various urban planning theories and concepts, but on the weekends you would actually go. We would spend all day Saturday doing the renovations. Right. And obviously they're bringing in a licensed electrician and a plumber for that stuff, but anything that you could sort of do as just manual labor. And at the end of the semester or at the end of the year, we would sell that house at cost to a local family, teachers or whatever. And so you took it through the whole process. So that's sort of a great example of, you know, during. During the week on an academic basis. You're. You're studying the sort of the math and the finance and the theory, but then you're putting it to work, you know, on the weekends. So, you know, the Penn program, the Wharton program, was very much tangible and driven by practical application.

That is amazing. And I had never heard that before that they do that. And I've had some people on from my alma mater, Colgate, and we've got a Colgate Real Estate club up there. And I try to help mentor, and I've always said, wouldn't it be great if the club could go buy a building and do this? And it's always, oh, well, you know, there's a lot of liability and what happens if something goes wrong? But I think, I mean, the way that you're doing this almost as a community service and then selling it at cost, I mean, that's brilliant. Interesting.

It was an interesting program. And I've actually encouraged because sometimes I'll have people who will come to me, and I'm sure you've been in this position who want to get into real estate. Their families may sort of be in it or have a lot of money. And like, their first thing is, I'm going to go buy this 3, 4 and $5 million building in new York City. And I'm like, well, that's a pretty expensive way to learn the business. And so, you know, even, you know, outside of New York City markets, like a Newberg, where you can, you know, you can go and you can buy a shell for 25, $30,000 and reposition it and lease it up and go through all the motions and do it for sort of a bite size check and get a lot of that same, those sort of fundamentals. So there's no comparison to learning through doing, but there's a nice way to do it where there's not as many zeros involved, I would say.

So yeah, there is no substitute for actually getting that hands on experience. So in the summers, were you doing internships? Were you?

Yeah, I mean, I did a range of things. I mean, I think one summer I worked as an intern at Kenneth Cole in the city. One summer I did an internship or two summers, I think I did internships at Goldman in different groups. So I was really interested in entrepreneurship and business and how people came up with a vision and business plan and executed on it. I was always interested in always reading those, you know, various business books about, with stories about entrepreneurs and their successes and their challenges and, you know, was always really drawn to that. And after, after Penn, when I went to work at Goldman, I still knew I wanted to do something entrepreneurial eventually. But even when I was at Penn and in high school, I had started an entrepreneurs club, you know, to sort of pursue those, those interests. So it was an area I was always interested in pursuing.

Great. And then what, so what did you do? So after graduation you went to Goldman then, or what was the next step?

Yeah, I went to Goldman as an analyst. For whatever reason. I don't know if they still do this, but the industrials group at Goldman covered home builders, which is sort of real estate, sort of manufacturing. And that was, you know what? That was the group that I was in. And analyst work is, I don't know, 15 hour days and you're learning a ton and you get great training. But I was really drawn to more real estate in the traditional sense, real estate, investing, advisory. And so I had stayed in touch with Peter and Peter told me that I think it was a couple former Cerberus guys were starting the real estate private equity group, or had started the real estate private equity group at Perry Capital, which at the time was a $14 or $15 billion hedge fund. And they had a group and they were looking to hire some people out of some training programs. And an analyst program is typically two to three years. In a weird way, you join and you're already looking for your next job. And so via Peter, I ended up interviewing with Richard Perry and the real estate team there and went to work for them. And that was really a great experience because it was a small group. I think the entire book of investments was maybe 500 million. So relative to the $15 billion fund, I mean I think that their position in Sears holdings was bigger than the entire real estate book. But it was great exposure because you sort of, you got a lot of responsibility. I spent a lot of time on our bridge lending platform which was we were basically the capital behind two prominent bridge originators and we did a bunch of rent regulated housing, a little bit of hospitality and that was a great experience as well. And you know the fun thing about bridge lending and we do this now at Urban Standard is a deal comes in on a Monday that has to close in two to three weeks and you've got to make a decision in that first, you know, the first word of 48, 72 hours and whether you want to pursue it. And so you're really off to the races. Underwriting the sponsors business plan, evaluating the risk or the risk, the opportunity, the mitigants. And that was a, it's a great way to get exposure to evaluation and understanding and sort of stress testing business plans. So that was a big part of what I was able to, you know, to learn when I was at Perry. And then we also did some, I think it was like the Sterrett complexes in the Bronx if I remember correctly and some of the Upper west side, you know, some financing of those rent regulated housing complexes and you know, learning about all this, you know, nuance and detail about that. And that was, I don't know, 12, 13 years ago. Obviously it's even gotten more complicated today. And that was how I sort of spent my time is underwriting and evaluating those types of investments. But what I knew is that I always wanted to do something entrepreneurial. And I was really drawn to what our sponsors or borrowers were doing in terms of finding a market they thought was best positioned to outperform the overall market, coming up with a business plan, executing on it. Perry Capital was really a financial capital partner. It wasn't like a Starwood or a Westbrook where they get a little more involved operationally and development wise this was much more passive. You're betting on a, on your sponsor as your quarterback to take it through. So you know, for me the next decision was, all right, I'd love to do something entrepreneurial and started looking at some smaller buildings in a market that I thought would be, that would outperform the broader market. And at the time that was West Chelsea, it was right, you know, it was before the, before the High Line opened or a couple years before it opened. And I remember speaking with Brock Emmettsberger early when that was his market. I think that was originally your market.

I just had lunch with him 30 minutes ago. So it's a small world, but that's probably when we met. What year was that?

I think it was 2008. Maybe 2008, 2009.

Those are some good years. Right after coming back from the financial crisis. There was a ton of opportunity.

Yeah. And you know, one thing I've always loved about real estate is that there's a tremendous opportunity for information asymmetry. Right. So if you're willing to do the work and you can study zoning changes or bigger developments that are coming down the pike, or you know, things like the high line opening and you can figure out, well, what neighborhoods are positioned to outperform. You know, you can select, you know, you can make those investments. And securities trading inside information is illegal in real estate investing. The more information you have puts you at an advantage. And I don't think the markets are efficient enough, particularly in the mid market space, to really reflect the broader trends and changes that are happening. I thought that West Chelsea was a good place to invest. There was an eight unit building that had some rent stabilized apartments, some rent controlled, a lot of free market that were, you know, just Formica countertops, you know, hadn't been touched in some time. Even though they were owned by. The first building ever bought was owned by Margaret Stryker, who was running for Congress I think now. Right.

I've interviewed her, she's on the podcast too. So you continues. So you come in, but do you remember how much you paid for the first deal and how much equity you had to raise?

I think it was like lower mid 2 million total purchase price. Right. Which at the time was probably a real 5 cap right on in place and was able to go. And for me, I was coming from the finance side of things. And so I was very aware that I did not know and frankly still to a certain extent have limited knowledge of. But I didn't know, have the same depth of knowledge of property management and building systems and I wanted to do that. So I was the super ish in property manager for these first couple buildings because I wanted that experience. And I remember one chilly night in the winter after I bought that building, you know, getting a phone call that the boiler went out, right. And nobody could come until the next day. And so I went to that Home Depot on 23rd street and I bought eight space heaters and I schlepped them over to. I was, I was on the east side and I brought them over And I ran into somebody that I used to work with at Goldman and they're like, what are you doing? I'm like, I am, you know, carrying these heaters and bringing them over. And I did not want to have tenants who didn't have heat. And I, you know, but I also didn't know first thing about fixing a boiler and they couldn't come to the next day. So, you know, it was a real like hands on kind of, kind of experience, but a great one. And you know, and I think, you know, in those first, first indications it was an interesting experience because I was very naive about the capital raising process. You know, when I was at Perry, you know, the. And it's funny because I, you know, I'm very close with or friendly with the people who do the capital raising or did the capital raising. If the managing partner would have proven an investment, you'd sort of walk across the floor of the GM building and they would just wire $20 million, $30 million. I never thought about where does that money come from? How does it come? Institutional investors, endowment, like all that back end of it. So when I had to go to the market, and by market I mean friends and family, and every person I thought could write a $50,000 check, it was a really interesting experience. And it's not for everybody. I think a lot of people can either be intimidated by capital raising or uncomfortable with it. But my view of it was twofold. One, I genuinely think this is an interesting opportunity for reasons A, B, C and D. And I don't look at it as asking for money. I look at it as presenting an investment opportunity. And two, if you're going to smart people, perhaps people think about things differently and maybe they identify stuff that you didn't think about. So I always loved that as sort of an ultimate sort of sanity check on your business plan. Right. And you know, but in those early days, and listen, we met, I don't know if we met that way, but you know, via the Fire island project, it was not dissimilar, you know, scraping together millions of dollars and sometimes the checks were bigger, sometimes the checks were smaller. But you're also talking to people about a business opportunity and an investment opportunity and you're learning about how different people think about risk and return and everybody really has a different view on it. Right. It's funny and I see it today. Right. Like as I said earlier, of the hundred conversations I have with investors, you've got 70% of the people who don't want to talk about new York City investing for the next six months. You've got 30% who want to sort of lean in and be contrarian. And some of their expectations are I don't want to touch anything unless I can earn 30% return. And some are, you know, whatever. And it's interesting to get that feedback. And that's something I learned a lot from doing the capital raising process early on.

So after the eight family with the space heaters, where did you that ended up being a successful investment and then did you parlay that into more?

Yeah, I ended up buying another building also in West Chelsea. And what I found was after having a couple wins, it was very challenging in New York. Maybe not at the moment, but certainly pre Covid there is capital interested in the New York City market at every dollar size. Right. So if you're looking at a million dollar investment, a $5 million investment, a $20 million or $100 million, and I was at a serious disadvantage because I didn't have the money. I didn't have the money personally. And so New York's a market where you can't get due diligence periods or couldn't get due diligence periods. So you have to put down 10% and you're then hard and you're sort of off to the races to go make sure you have the equity. So after a couple successes, I went back to some investors, some old, some prospects I've been talking to. One thing I always encourage people to do if they're out in the market looking to do deals is stay in front of people. Even if you don't have a deal. Talk about a general strategy, make sure you're in front of them, checking in, letting know, because something will hit and you don't want a cold conversation. You want to be able to lean into something where you've been in touch with somebody. So I went to those investors and I said at the time this was, I was doing this with my brother Matt, and I was like, listen, we need to raise a small fund. It's very hard for me to have credibility in the marketplace with guys like you and Brock and whatever when you've got offers from other people who really have the money. And so if you're going to sell me a building or you're going to convince your client to sell a building, you want to say, well, Seth can perform, right? And if you think Seth doesn't have the money, that makes it harder. Whereas if I can go to you, and this is now our structure and we have a little over 300 million of AUM we've sort of developed in this sort of small balance market, both on the debt and the equity side, where the certainty bit in the market because there aren't a lot of firms that truly have committed discretionary capital that focus on these small bite sizes. If you want speed and you want certainty of performance, which is always important, but in a volatile market, it's really important. You want to know that that person has the money and the ability to execute all of that. To say that I went to those investors current in perspective and said, this is the business plan. I've got a couple examples of how it's been successful. We want to do a small fund, we've raised a little over $10 million. And I want to go buy these types of class tax 2B buildings. And you know what? I think that markets like northern Manhattan and parts of Brooklyn like Bed Stuy and Crown Heights, I think those will outperform. And part of it was I remember we did an income analysis to say, you know, even in 2010 or 11, we were getting for our 300 square foot walk up studios, 22, 20, 300amonth. So I remember, you know, thinking, okay, well if you've got to make 40 times the monthly rent to qualify for the luxury of walking up four flights into your shoebox, well, that means you've got to make 85, $90,000 a year. Does that go to, does that rent go to 2,800 or 3,000 or does the one bedroom in Harlem or bedside, let's say at the time was 1250, go to 1750 or 1800? Where is there going to be income growth or rent growth as it relates to what the underlying incomes are. My bet, and our bet was that there would be greater rent roll growth in those sort of secondary markets that were well located in terms of transportation. They had cyclical turnover, wasn't the first time into these markets. But there had been starts and stops. And the other benefit is instead of buying those at 3 caps like they'd be priced at Chelsea that you could buy at a five or a five and a half or a six. And so with leverage, you weren't drowning. Day one. You had positive leverage out of the gate. You had opportunities to create value, grow the rent roll both in terms of what was happening in the neighborhood, but also in terms of improvements to the building. And that was the thesis. And went out and bought 10 buildings with that $10 million and had a lot of success.

And were you self, you were still self managing all these. So at this point I got to imagine you've built up an office, a team. So you were kind of soup to nuts.

Yeah, I mean the office in the beginning was a closet in our apartment and the first couple buildings we self managed but then we brought in, we had a couple basically false starts or failed experiences with third party property managers. And the problem, the challenge was that we weren't at a scale where we could really do it in house and bring it have our own supers and quarters and stuff and accounting team. But on the other hand, nobody looks after your own money as you do. Right. So you're sort of doing both. And it's a tricky situation when you're really a startup to do it. But we eventually brought in an outside property management company, again with mixed success. And then probably several years later when we had more buildings, brought it in house.

Okay, so now getting to Urban Standard Capital. So I believe 2015 is when you launched it. So what was the impetus for you to start this new company?

Sure. So you know what I've always sort of believed and found is that there is an opportunity for institutional level diligence and investment discipline to apply that to non institutional assets. And I continue to believe that. I continue to see that in the marketplace. I wanted to grow a platform that could do both debt and equity. One of the things that we started to see in 2014, 2015 or I started to see is that pricing was getting to the point where things were priced for perfection. Which is a credit to you and to the investment sales market is it's one thing to buy a true 6 cap in bed Stuy with upside, it's another thing to buy a fake 4 cap with inflated rents in a market that's largely becoming saturated. That was where I started to say, okay, well let's look at opportunities where we can deploy capital either as senior loans and we're lending on the types of assets that we otherwise have experience owning, managing and developing or making pref investments or mezz or what. Again, Urban Standard, we do both debt and equity. We have some ground up development, but we're able to look at a deal and say, you know what, I like this investment but I prefer to be in the equity here or I like this investment. I have some concerns about execution or the market assumptions and I'm more comfortable being the lender here. Having that flexibility gives us a significant opportunity to take advantage of different deals, but from different perspectives.

I get to really compliment you on seeing this opportunity years back and I think over the last year or two, you've certainly seen developers who've said, okay, now we're going to start lending and maybe they're tapping their credit line. But there's not a lot of shops that do equity and debt. Well, it's usually one or the other. But I've got to think when you do it right, and I know at this point you own and manage over 30 buildings, you know, really understanding what's going on out in the streets and you know, what are collections looking like and looking at the expenses and kind of understanding, you know, what's the capex required especially and you mentioned this earlier, when you're making a bridge loan, it's all about speed. And so the quicker you can get your arms around an asset, I think the better. So clearly that's been a key to your success. So how do you, I guess you already kind of alluded to when you're going to buy versus lend? I mean, I'm sure sometimes it's a close call. I mean, I guess what would be the pros and cons of each of those paths?

Sure. So it's really driven by how the deal is presented to us. Right. If a broker is coming to us with an opportunity to buy, we'll look at it as such. And sometimes we bought, I think five buildings in the last couple months. We continue to look for equity opportunities, but oftentimes we see stuff that's not the right fit for one reason or another. And we'll connect those sales brokers with some of our borrower clients who we know do buy those kind of things. And I sort of believe in karma and want to help out along the way. But if somebody's looking in the market for financing, then we're looking at it from a financing perspective. But sometimes we'll do. We had a call this morning where they need mes and they need senior or they need equity and they need senior loan. We would do if we like, if we go through our diligence process, we'll provide the senior bridge loan, but we'll also do a slice of pref to help them fill the stack. But we would only do that if we really believe in the project, believe in the sponsorship. On the lending side, we really want our borrowers to be successful. We're in the business of getting paid back and recycling capital. Certainly, yes, we have 30 plus buildings under management and we're able to monetize and take over these assets and complete them in a default situation. But that's not our goal. Our goal is to deploy money. We have, I think out right now about $210 million of loans and we're doing 150 to 200 a year. And I want our borrowers to be successful because that's in our long term best interest. And we'll work with those borrowers to help them sort of land the plane if need be. If they run into a little bit of choppiness, they think we have a third or so, maybe a little bit more at this point of our loan portfolio, our repeat clients or referrals. And if we see a deal in the private lending space, there's definitely shops that will make loans where they know that it's going to be hard for the person to pay them back. That's not our approach at all. I'd much rather do 10, 20 deals with the same trusted people and have it be successful. So if we see an issue, we'll flag it immediately. And we've had situations where the business plan is just not viable. It's either. There are assumptions being made. We had somebody present something the other week and they were basing it off of the rent laws pre2018. And I'm like, that sounds like a great plan, but you're about two years too late. And they didn't know that. It doesn't happen that often. But. But if we see something that based on our experience on the equity side is too aggressive an assumption or it's too thin on the margin, we're not going to do that deal. And frankly would discourage the borrower from doing the deal if we thought there were serious concerns.

It all makes a ton of sense. I want to go back to something that you just pointed out and I don't want to gloss over it because the fact that you've got closed on five transactions since March, I mean, that's nothing short of remarkable in a sales market where in New York this year sales will be off at least 50%. And I think back to all my clients talk about, oh, I wish I could go back and have bought everything in 2009. And when you're in the middle of it, I mean, it's scary right now and we don't know if we're going to be in this thing for months or years. So I guess what gave you the conviction to do those five deals and what did they all have in common?

Sure. So it's 5 deals on the equity side. We've probably done another 10 on the lending side. But on the equity side first, I think you have to ask yourself do you believe long term in the viability in the future of New York City? Not what's going to happen in the next 6, 12, 18, 24 months for me, when we look at some of the, you know, some of there has been some good news coming out of the city. I mean you see listen, Disney is building a huge complex headquarters downtown Manhattan, Google's building their headquarters. Amazon continues to increase its physical footprint, both warehouse and office space. You've got TikTok signing a several hundred thousand square foot lease. There has been positive news and these are companies, Facebook as well that are making 10 year, 20 year decisions for new York City. And I think when you think about, you have that listing on Bleecker street, all that stuff on the west side. Yeah, it's a tough time right now, but that's going to be great for the entire western part of lower Manhattan. Big picture is we're making decisions for the next five, ten years. Our capital is foundations, family offices, ultra, ultra high net worth individuals, people who, they're not trying to make money quarter by quarter and not least not with our strategy. So with that said, we then look at the areas we like and we look at the bricks that we like. And so what's been consistent in all the deals though that we've done is they're long term owners who really don't have the either, either patience or bandwidth or whatever for another cycle. So we bought a great eight unit building on 141st in Convent that was basically an in place seven cap with upside. And that owner who separately by the way is giving me chess lessons on the weekends now remotely. And so it's been a great relationship but he inherited the building from his parents who bought the buildings in the 1950s, so really has zero basis. And he's an older gentleman and he's, he wants to retire and he moved out of the state or out of the city. And that dynamic works because from his view he doesn't have the time or the interest in waiting out another cycle. Yes, he's not selling at peak 20, 15, 2016 prices, but there's no guarantee that the prices will get back there certainly in the next five to 10 years. And he wanted to take his shits off the table. So that dynamic works. And to our conversation earlier, he wanted somebody that was going to perform. He didn't want somebody who was contingent on financing, he didn't want somebody who was contingent on some type of diligence. He wanted certainty. And we said to him, and we probably signed the contract Sometime in late April, we closed in May. And that was important to him, not the extra last 20%, which for him again was not relevant given what his basis was. And that's been the dynamic that we've been pursuing and it's been great. And if I can buy a real six cap or six and a half or seven, and I can go get financing in the 3 to 3.5% range, there's a positive spread there. You've got to make sure that the building infrastructure is in good shape or if it's not, that you're taking into account any capex needed boilers, roofs, other systems, because that's when you can really get squeezed. But if you can manage that cash flow, you can get a lot of positive leverage for our investors to be able to deliver a high single digit yield to equity just based on the cash flow, which is just not a dynamic you've seen in the last 10, 15 years. That's an attractive proposition, no question.

You said a lot of great things and we're experiencing the same with the client base. And over the last 60 days we've been brought on 20 new listings, a lot of inventory. Our group usually does about five or six a month. But what's interesting is over half the owners are long term owners. And whether this takes a year or two to get three, a couple years, I mean, it's got to have that long term view. And a lot of these owners are saying, look, I've seen enough, I've seen enough cycles. And so it's an opportunity also because those owners can afford to sell it, sell into the market and at the right basis. The other thing that you said, it's funny, I was doing a call with our associates in the office and teaching them how to do a cash on cash return in New York. We've never really had to talk about cash flow because who cares about what kind of cash flow? I mean, you make your money when you sell the property, so you buy in at a low return, you double, triple the rents and then you sell at the same low return and then you make all your money on the exit. And now this is a window of opportunity. I mean even thinking back like 2006, 2007, where the cap rates were certainly lower, and even looking at the recovery in 2009, sorry, in the dip in 2009, 2010, the cap rates were kind of similar to what we're talking about now, but the money was more expensive to borrow. So this is a window of opportunity that I think we have not seen. In a very long time. So I also want to. By the way, your website, USCNYC.com I really appreciated how transparent it was and I think this is a great message. And I don't think we talk about enough on this, on the show show. And it's just kind of being straightforward with who you are, what you do. So, you know, kind of. Is that the mantra of your company and what you do?

Yeah, absolutely. I mean, first of all, you know, I think that your reputation is everything, right? How people feel about, you know, their interaction with you, your company and their experience, you know, you know, I mean, listen, you're focused on the New York market as well. It's a small enough world. And if you do things that aren't above board or misleading in any way, I think it's beyond not being sort of my character or the personality or character of the company. I think it's bad business. Because we all know plenty of people who do things that frankly undermine their long term business prospects. And when we're having conversations with, whether it's brokers or sellers or borrowers, we want them to have comfort with the company with our approach. And it's very direct. And sometimes the answers aren't the answer somebody wants to hear. But I would always rather, and oftentimes I have this with conversations with offers and term sheets, is to say this is what it is we perform on our word that's critically important. If you want to roll the dice and go with somebody that has a reputation for not performing because maybe they're paying a little bit more or their rate's a little bit cheaper, that's a calculated risk that you have to take. But from my view, knowing that you've got that certainty in terms of performance is worth a lot. And I think we've been fortunate to benefit from it financially because people keep coming back. Listen, some people don't love the fact that if you're a borrower, some people prefer to just borrow from a debt fund or a bank that they know can't take the property back because it changes the leverage. Now, I totally hear that. On the other hand, when you're talking to a bank or you're talking to a debt fund and they're holding back proceeds because of some sidewalk violation from 1984. Like, is that the conversation you want to deal with or do you want to deal with somebody that you are, you know, you know, that speak, speaks the same language that you speak and is in your, you know, shares your perspective. And, you know, when people have Said to me, well, how do we know you're not going to default us and try and come after our asset? I was like, well of course you've got to, you know, pay your interest and do all that stuff. But you know, again, we want to help our borrowers be successful. We want a repeat relationship and reputation is everything. If I did that, and I'm not going to name names of firms that have a reputation for defaulting people for minor technical issues or technical faults, you get a reputation for it and it makes it that much harder to sign up a deal. So that to me is not something I'm interested in being a part of. And I think as a company, Urban Standard has really benefited from that transparent approach.

Absolutely could not agree with you more that reputation is so essential to everything we do. So we only have a couple minutes left, but I was just thinking, and I think we both agree there's going to be tremendous opportunity now and over the next couple of years. But now the shoe's on the other foot. So you talked about breaking into the market before when you were trying to pass the hat and now you've you got what everyone dreams of, which is discretionary capital and you got a war chest. But what advice would you give to the aspiring investor out there who finds a great opportunity but they don't have, whether it's the track record or maybe they don't have the access to capital. What would your advice be to that person now?

Sure, I mean, listen, raising capital in any market is a challenge and in a market like this it's particularly so. You know, my advice would be find a trusted partner with a good reputation because a bad part, there's nothing worse than a bad partnership. The second piece of advice I would have is sometimes you see people try and you know, they believe they have this incredible opportunity and they want to keep as much of the upside for themselves as possible. And sometimes, and in a lot of deals you want your partners to get compensated and feel incentivized and you want to share in the spoils to the extent it's successful. Sometimes I'll see people over negotiate and it can be a turn off to potential capital partners. And so I encourage people this sort of saying is something that during my Goldman training was something they taught you is like be long term greedy, don't try and take 25 cents today. If you can make a nickel for the next 20 years in a long term business relationship per year. So I think that is critical advice. You want to think about things in terms of reputation and long term relationships. And listen, this is a deal business. It's transaction business. It's not just about that one deal, it's about the long term view.

That's a great way to end. And I think throughout your story talking about that repetition and it takes so, so much time and effort to kind of do that first deal and to have that relationship so you know, to form those great relationships, to have that track record so you can do repeat business, it makes a ton of sense. So Seth, thank you so much for joining us today. You got an incredible story and I know our listeners truly benefit from it.

Well, I appreciate your having me and I look forward to seeing you in person at some point in the near future.

Absolutely.

A Different Approach to Putting Our Clients First Avis and Young's Tri State Investment Sales Group sells multifamily office retail, development and specialty sales throughout the New York metro area. As experienced thought leaders in their industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We put our clients first, providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter, LinkedIn and Instagram amesnelsonnyc to learn more.

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