Revitalizing Communities with Robert Dunn

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now here's your host.

Welcome to episode number 225 of the Insider's Edge to Real Estate Investing. This is your host, James Nelson. I'm principal and head of US Investment Sales for Avis and Young. And with us today is Rob Dunn. We're gonna be talking about revitalizing communities and you're gonna learn how affordable housing can create meaningful change. In this episode, Rob is Managing Director at Fairstead, an institutional and community partner. The firm oversees a national portfolio with in house expertise in acquisitions development and construction, property management and community impact. And and you're gonna gain insight today on how portfolio managers work with local governments, navigate compliance financing challenges and create improved environments for residents. Rob shares his journey from syndication to acquisitions to asset management and why mastering operations can give you the Insider's edge. As always, you can go to james nelson.com I built this site for you. That's where you can find the show notes. That's where you can find out how to connect with Rob. There's also a newsletter that you can sign up for and a lot of other helpful information also. Stay tuned. I've been doing these. Ask me any webinars with Adventures in Commercial Real Estate. We're going to be announcing a partnership soon that we're super excited for. So keep an eye out. More to come in that space. So we're going to take a brief word from our sponsor and we'll get right into that interview with Rob Dunn. A different approach to putting our clients first.

Davis & Young's US investment sales group.

Oversees multifamily office retail development and specialty.

Sales across the country.

We give you direct access to our.

60 US offices to source the best.

Acquisition opportunities or to advise on dispositions.

Our our principally led teams leverage the.

Best research and data analytics to provide.

You with tailor made strategies to achieve superior results.

Please visit avisonyoung US Capital Markets or follow James Nelson NYC to learn more. All right, good. Wonderful. Thrilled to have with us today my friend Rob Dunn, who's Managing Director of farested. Rob, thank you so much for joining.

Thanks for having me. Good.

So I know you spent time here in New York where we first met, but now you're now based out of Florida, but maybe just for our audience, give a little introduction on Fairstead.

Sure. So far, Said is a national affordable housing developer. We own about 25,000 units in 28 states. So we are national. We follow the smile a little to a certain extent. You know, our main asset presence is in New York and then secondarily Florida and Ohio. And we're, you know, we're, we're increasing our asset counts in Texas, but you know, we're throughout the Southeast in the mid Atlantic and all the way over through California. So we're, we're vertically integrated developer, owner. We have a management company, you know, construction company and we're purchasing Section 8 and low income housing tax credit investments as well as we do own some market rate in New York City. Rent stabilized as well. So, you know, we're opportunistic and, but, but our bread and butter definitely is, you know, as an affordable housing developer.

Great.

Yeah.

It was interesting when I was doing just some research for the show and going to your website, fairstead.com you know, the first thing that pops up is the impact report. It was really interesting to kind of look at. You know, a lot of times when you go to an investor's website, it happens to do with kind of the, you know, Aum, kind of the, you know, the financial metrics, if you will. This had to do a lot more with the impact how many people you are serving. So if I'm not mistaken, you know, 40,000 residents plus that you've served and you know, fairs. It also talks about the impact that you're making. You know, one of the first things that popped up was health and wellness education. So again, it sounds like kind of the, the foundation of what Ferset was founded on is kind of this community impact. Is that a fair statement?

It's definitely a fair statement, yeah. I mean, having a purpose driven, you know, social impact is our main priority. You know, everyone, you know, can read about the, you know, affordable housing crisis across the country really, but it's, it's not even just being an owner, you know, and servicing those, but it's really improving those communities. And you know, we're, we're out, we're at the assets, we're interacting with the residents and the management, you know, the manage the property managers. So we feel the impact and you know, we're out there and so we're trying to take our assets, improve them, improve the quality of life for our residents. And you know, that's, that's what we're out doing so it definitely is at the forefront of our, of our thinking in your role.

So you are a portfolio manager for those of you who don't understand kind of what that job entails, maybe tell the audience kind of what your mandate is.

Yeah, so I mean my team comprises, I think we have about 10 asset managers. So you know, we definitely have the traditional maybe what people are more used to just you know an asset manager manages a property, right. And then you increase their unit, their property counts from 1 to 15 or 20 and I mean you can always call them a portfolio manager at that point. But really it is property level asset management. You know, when you get more into the portfolio management you're starting to think about your investors on the deals and your lenders and really being able to like paint the put the whole picture together. So you know, we have, you know, for Farestead we have different, you know, different pieces of the pie in terms of which, which investors and lenders, you know, hold certain portfolio purchases. And so in that respect we're looking, we're reporting on those as portfolios. Right. The, the blocking and tackling is fairly similar and you know, depending on you know, the ventures of the assets, the location, you know, what you're dealing with it on a day to day basis. But you know, if the lender wants to know, you know, how the trailing twelve financials are, obviously you know that is a dedicated. And then you know we do have some older buildings that are just that have been in the fair said legacy for, for a longer amount of time. And then we just have you know, different vintage invest investments that we've made. You know, Fairstead is you know, 25,000 units. So it didn't happen overnight but there was good scale quickly and you know, through some of the bigger portfolio purchases that did help ramp up the portfolio and really you know, help the firm jump into the front and national investment level.

So when you talk about portfolio management and there's you know, asset management overseeing the overall direction of the investment, you know, many would think kind of property management, that's one component of it obviously making sure that the properties run smoothly. But also I would imagine with not for profit, I mean with affordable housing rather that how you end up financing these. And I would imagine that a lot of these are in partnership either with not for profits or public private partnerships. So are you in, involved in that side of the business as well?

Yeah, definitely from, I mean a lot of our investing is, is public private partnerships. Right. It's like we, we go into the local communities you know, we, we are very focused on, you know, understanding who the local players are meeting with the people who are on the public side because you know, some of, some of these assets are tougher than others and you know, they're on localities radars and saying, you know, you know, 1, 2, 3 Main Street's a problem. Well, we come in and say, let's talk about 1, 2, 3 Main Street. What's your point of view? Where are you seeing issues? You know, we were in there on a day to day basis running the asset, making sure that, you know, the, the residents are the ones that are supposed to be living there and that if, you know, there's non compliance, that we're, we're addressing that and that we're creating a community so that every resident is comfortable in their own home to get there. You know, it's easier said than done, but there could be a lot of nuances. You know, we might have to, you know, occasionally be involved with the local authorities versus the local city and planning. You know, so it definitely takes a little bit of an army to make sure to get some of the tougher properties up and running and then you know, at the ones that we're in where we're established and the properties are stabilized and running, you know, we want to maintain good relationships. You know, we host community events and really try to give back to the community because in our experiences we've just felt that the more successful and community based you can make or sorry, the more community based you can make a property, the more successful it will be in the long run. So you want people to like, look just beyond their day to day living situation. It's really, you know, we want these to be people's homes even though they're, they're renters.

So I don't know if Old Town, the, the Old Town Alexandria project is a good example, but that's, I believe Farested's first ground up, it was $120 million development that you did in partnership with Old Town Alexandria in Virginia. So how did that come about? How was it decided, what was needed and ultimately what did you all build there?

Yeah, so we, I mean we closed on that recently. So we're, we haven't really started, started, started the work yet. But I will give total credit to our development team. You know, this has been I think about five years in the making. So it didn't happen overnight. It's a very complicated structure. It's a blend of, it's like a tax credit hybrid deal ground up there's going to be some retail that, you know, serves the community in terms of like a, like a grocery store that, you know, residents can come and get food as needed. But that's really been like a huge lift, especially for fare. Says first ground up. You know, it didn't happen overnight. So, you know, the, the heavy, the heavy part is still to come, the actual construction part. But, you know, that, I mean, talks about public private partnership. Like, that's a prime example. So we, it took years to tee up and now that we finally closed, you know, we'll, we'll be able to start, start that development and then for.

Existing, you know, repositioning, renovations. Any success stories, any projects where, you know, you said you, you, you took over a property that, you know, whether it was challenged, whether there's tenancy issues or. I would imagine a lot of these buildings that you come into have a tremendous amount of violations. Any success stories that you, you would point to of a project that you took over and have since improved?

Yeah, you know, I think a lot of the improvement comes in with the property improvement. So, you know, again, I would give full credit to our development team, but last year we purchased a property in Florida, you know, outside of Fort Lauderdale. Very rundown, very troubled. You know, had to meet with the local authorities. You know, they, sorry, in like just the public planning let us know how, how much of a. An issue the, the asset was. You know, we went in or a development team went in, you know, did full, full building renovations. Like, you know, this is a part of the job that I really do enjoy is like getting to go see the before and after. So on the before side, you go in, you know, there's, there's shutters that kind of look like that radiate over there, over every window. There's no natural sunlight. Just like the grounds are in disrepair, the facades are all falling off. Like, you know, did not look like a good place to live. Right. Even, even walking through is not the best experience. But you see these, this people are living and, you know, this is why we're here. So our development team, you know, renovated every single building. You know, they're still finishing up, I think the last few apartments. But we came in, you know, on time, on budget, and completely turned around the asset where we have like letters coming in saying, thank you guys for turning this property around like that. That's like a good, a good success, a success story. And that's like an ideal situation. Again, it wasn't easy, but, you know, the development team had a Great execution. And you know, now these folks who live, you know, at the asset have a better environment to live in and you know, better units to live them, you know. So I mean, sometimes you go in to some, you know, section 8 apartments and you know, they're borderline inhabitable. So to be able to make those like upgraded, you know, new appliances, everything, you know, upgraded, you know, it truly is a turnaround for the community.

Yeah, I mean, as you're saying this, I'm wondering how it gets to that point because I know if you take Section 8, for example, federal program, if I'm not mistaken, there's at least annual inspections that need to take place and to qualify and receive payments. So if the landlord is not keeping the property up to proper working order, I would imagine either there's penalties, they could be losing rent, you know, maybe ultimately losing control of the property. So how does some of these situations get, get so bad? And ultimately then how do you get the opportunity to go buy it? Is it the point where in some cases the city's actually taken back the property if it's bad enough, or maybe the operator just hasn't been doing the proper amount of work to keep it up so they're being penalized and so they say, look, it's probably just easier to sell. I mean, I'm sure it's. You've dealt with several different kinds of these situations.

Yeah, I, in terms of how do they get there? I mean, look there, every, every affordable housing owner, you know, is, it's heavy. There's a lot of heavy compliance related, you know, activities that they should be engaging in. And you, yes, you have to, in order to get, you know, the payments from the government, you know, your files need to be updated every year and you need to qualify your, your residents and make sure that they're, they, you know, that they. Qualify is the right word, qualify to live in those units. I mean, in terms of how the physical condition gets there, it's just that, you know, people aren't going into the apartments every year. There's some residents who don't want to let people into their homes. You can get there and then you just have some owners who even if they get in there, they don't want to invest the money. They don't see a return on in their investment. They don't see why they should be spending the money to make, you know, to up to upgrade those units. And I mean, and then in the rare case, you know, sometimes people do invest money into it and then they over time Come back to that original situation that, that it was in the first time that someone chose to invest capital there. So, and I mean, look, in terms of like, you know, localities taking assets back, they don't want you, right? It's the same thing with banks. Like if a bank wants to take back an asset, it's usually there's some value driven motive there, right? Like either they, the debt is still above what the assets value, so there's a spread there, or they can maybe if they take it back, they have to own it. Right. For, for us as a developer, our pitch is we're the experts. Why would you, city of, you know, you know, wherever want to take this back? Because what do you, what are you going to do with it? Do you have the dedicated resources? Do you have the capital? Like, are you going to be able to turn this around? Usually the answer is no, right? You need someone with expertise who' gone in, who's, you know, had their successes, made their mistakes, learned, learn from investment practices with people who are skilled and this is their primary job. It's very difficult for, you know, a locality to turn, turn it around a different way. So that's why the partnership that we're trying to make with the, with the public, with the public domains in various markets is super important because we want them to think of us, you know, and like the story I just gave you about the Florida asset, you know, they even reach out and say, hey, there's another property over down the road. Do you guys want to take a look at that? So like we, we've seen that in multiple markets all across the country where if you do a good job, the, you know, the local presence wants you to try to get more involved in their communities.

So we've had some affordable developers on the show who've talked about, you know, how they finance these developments and you know, many of these end up being tax credit deals as well. But it seems that, you know, the compensation. Why are these developers doing it? Beyond obviously doing good, but, but also how are they compensated? And that business is largely a fee driven business where it's kind of set fees on what, you know, the developer gets paid for actually their time and you know, building the projects just for our audience who have not, you know, invested or thought about affordable housing before. You know, just on a very basic level, how do the, how do you look at the numbers? When you take that project that you're going to take over, it's going to require capital to come in and spend. How are you thinking about first of all, capitalizing that deal. And then how are you ultimately going to make an economic return from doing that?

Yeah, I mean, we, when we go in, we look at what we need to do and we want to do. And I think, you know, one, one of our big initiatives is that we like to put in a, you know, a sizable check per door. You know, it's, it's, you know, when you look at the end unit renovations and then, you know, the roofs and the facades and the grounds and other, you know, maybe common area. The common areas and some amenities you want to put in, you know, that that's how we capitalize the deals. And then you get your qualified basis and you get longer housing tax credits off of that. And then you get your paid developer fee and deferred developer fee. You know, part of what our asset management team is focused on is, you know, you get funds released, you know, equity installments and developer fees once you stabilize the assets or, or it goes through rental achievement where it's like basically once you hit your pro forma, more or less. So on the asset management side, we actually have a dedicated asset manager who works hand in hand with our developers. And then over time, as the developers go through, upgrade the property and then we start the reletting process, you know, that asset manager is looking at the numbers, you know, looking at revenue, looking at the expenses, you know, doing DSCR tests. So because once the property hits, you know, a stabilized basis and meets those DSCR requirements or the rental achievements, you can release funds and that's where the return comes in. So, you know, we are incentivized to do the full development life cycle. You know, I'm not gonna say as fast as possible, but in a timely manner. So, you know, those locked up funds get released back to us as the developer.

So far stead, if I'm not mistaken, is a for profit entity, but you all partner with not for profits sometimes. As your operator, can you kind of explain how that might work? Kind of the relationship between the for profit and not for profit operator?

Yeah, I'm trying to think of a good example.

I was thinking of one. I saw that project find was your senior housing operator on the Upper west side. Project?

Yeah. Yeah. So that project was an old SRO that was converted into senior housing. And I believe it was the first, you know, like senior housing conversion of its kind in New York City. So again, this is, you know, it's on, it's on Central park west in between Columbus and 79th Street. Prime location, you know, was A old hotel at some point. And you know, we, we basically worked on the mission with Project Fine. You know, you know, us, as Farah said, we're, you know, we do operate and we're the property manager and we're very hands on. So I think it was, you know, working with Project Find got us from the start to the finish and so you know, through the development phases and in the funding like we highly relied on our relationship with them and you know, got it, got it to a physician, finally got it, I think fully occupied, you know, within the last six months. So it was a long project and it was, it was a, it was a good lease up project. But yeah, we really rely on those partners, you know, on the upfront in the development and the planning. And then, you know, so once, once the product's delivered, we can take over as the operator.

The idea of kind of affordable housing being owned, operated by a for profit versus a not for profit versus owned by government. Right. So any, you know, kind of thoughts on the different approaches? And I would assume it's probably a good thing to have all different kinds of, you know, parties involved depending on what the project is.

I mean, yeah, obviously I'm going to be biased because I think that we were in the position as a, you know, for profit developer to create the best end product, which I think is what everyone wants. And you know, we're, we're a stabilized organization. We have people with, you know, tens of, you know, I mean it's probably hundreds of years experience, you put it all together. But we have very experienced developers that like, you know, came in, some people come in, come in through the private sector. Some people, you know, we have people on, even on the asset management team who have been in government. And so like we kind of put it all together from my, in my, from my point of view at our for profit organization and also like we're, we, we have the ability, you know, government's very, I guess challenging in terms of being flexible. Whereas you know, we, we understand the rule book and the rule book gets updated every few months or every year and we play by play by that book. So as a for profit developer, we just think we're better positioned to, you know, there's less red tape. We can go through, make changes in development if we have to. If we see obstacles or roadblocks, we can shift more easily. There's less bureaucracy and it just allows us to, I think kind of achieve a better end product than, you know, maybe the other resources would, would have available to Them.

Got it. So you're in 28 different states. Talk about the differences. I mean, some of these are federal programs, but sometimes, you know, it's, you know, driven by the state. I'm sure as you go into some, you know, cities, towns, municipalities, there might be, you know, nuances. So, you know, how do you go about, you know, learning how to. Well, I guess the first part of the question is the decision ultimately to expand into other markets. Right. Because Fairstead, I'm not mistaken, started here in New York and has since expanded. And so kind of what prompted that? And then as you do business in these different states, how do you get up to speed on the requirements and, you know, even, you know, finding opportunities in these new markets?

Yeah, I mean, I think, I mean, New York's, New York's great. And there's a lot, there's a lot to, to do to do here, but it also has, like, its geographical limitations, obviously, and therefore, you know, there, there's. It's, it's tough to grow, you know, just focusing on, on New York. So, you know, we, we had made a decision, you know, years ago that we started jumping into other states and, and continued. And, you know, our, our management company, you know, which now has over 22,000 units under management. They're in all the, they're, they're in all the states, you know, that we're in as, as ownership. And really getting boots on the ground is important to learning the different local markets, you know, because the way we're structured from a property management standpoint is you have your regional managers that go down the property level. So you have people who are getting more and more familiar with, you know, the Mid Atlantic or Florida or Texas, and they all definitely have their own new, new nuances. I think, you know, like anything just experience kind of teaches you and getting into these states and going, getting through issues and solving problems like. So the first time you invest in Texas, you may, you know, you may encounter stuff you didn't expect, but you learn, you learn. And then on the second one, it's a little easier and so on and so on. And I think, you know, we've really syncing up with our management company. We really do have local expertise and local boots on the ground, and I think that's super important in, in managing the different localities. But like, you know, I've traveled, you know, all across the country visiting our assets, and it is different in different states. You know, it's, it's much different in, you know, Alabama versus Nevada. Like, it just Things, people's personalities are different, people's values are different. And you have to. To learn that and kind of, you know, like I said, we've talked about before. Right. Like, it's all about public private partnership. So you, we come down there as kind of an outsider, but we, we get. Get into the, in into the, you know, nitty gritty with them and we become local in our expertise of. For the properties that we own in those different markets. And I mean, that never stops. Right. So, you know, we're, we're continuing to invest in the 28 states that we're in. I. We probably will invest in states that we're not in again. But you know, we do have good knowledge and good and good experience and where in the states that we are in. So we kind of keep on, you know, I will not, not like double down, but we keep on investing where, where, you know, the rules.

Yeah, I mean, I would imagine that when you're doing business in a new state, your track record and kind of leveraging that knowledge that's worked and saying, well, hey, this is how Alabama does it. This is how we, we've been able to be successful in Texas and you can bring that to, to new states. So I'm sure that's helpful. And also, I mean, I, I noticed that nice awards, one from Freddie Mac, one from Nahma, an affordable housing organization. So, you know, clearly you've done right by these projects. So I think maybe let's talk a little bit about finding the opportunities so. And kind of what to look for. So it sounds like a lot of these times you're talking, you know, to the, you know, the city, the municipality, or is it, you know, brokers who bring you these opportunities? Do you get involved yourself in these acquisitions?

Yeah, non. First and foremost, you know, we do have our development team that sources acquisitions. They, I mean, they work with brokers plenty or munis or localities like, like the public, the public players. But the broker brokers are a big part of our business. You know, we've had a lot of success. They know what's out there. And in terms of like the competitive advantage, you know, we, we just know how we can operate in those states. We understand, you know, the, the revenue streams, you know, you know, depending on what types of option contract, the, you know, if there's a, there's a HAP contract, you know, what's on it. Like, we understand our levers and we understand.

Can you just explain for the.

Sure.

What a HAP contract is?

Yeah, I mean, it's So, I mean, these, these assets are regulated, and you're entering to have contracts whereby we're keeping these, the units at an affordability level that's dictated under the HAP contract. And we have to lease units to people at certain AMI for. With certain AMI restrictions. And, you know, so again, when I was talking before about, you know, recertifying tenants, you know, you have to. Every year you have to understand how much is the tenant or the resident making to remain in that units.

And so ami, the annual median income, that changes every year. It's. Is it statewide or is it citywide?

Typically, it depends. But I mean, usually, I mean, like, in New York, it's by zip code, right? So it really depends. So that changes every year. People's jobs change every year. Right. Like, you could have gotten a big promotion, and then maybe you price yourself out of, out of your unit, or maybe you lost your job, so you had half the income you did last year, which means you'll be paying, you know, since you're paying 30% of your rent as a Section 8 tenant, if your income goes down, your. Your monthly rent payment goes down, and if it goes up, you know, your monthly rent payment goes up. So we, that's part of the compliance to make sure that we're housing the proper people that the government intended to be in those units.

I would imagine that would be challenging, though, if someone, you know, if their income is volatile, I mean, that doesn't mean that they're necessarily having to move apartments every year. It's just what kind of subsidy is happening?

Correct? Yeah, exactly. Exactly. And I mean, it is very challenging and, you know, obvious you run into residents who don't want to cooperate and they don't want to recertify. But that's why we have, like, a large compliance present at presence at our company that works, you know, day in, day out with the property management company to make sure that, you know, we are in full compliance so we don't lose our subsidy as the owner of the property.

Okay. So, Rob, this has been super helpful to kind of understand, you know, Fairstead's business and, you know, again, how you're serving these communities. I think it'd be helpful also for audiences to understand a little bit about your story because we met originally your time at Hub nyc, so maybe you could talk a little bit about what you were doing for them. I know you've also been involved in not just asset management, but overseeing the property management, assisting with capital transactions, and then maybe even your time earlier at Long Wharf Capital or Meridian Investments. Maybe just talk about your background and how that helped you in your position you are today.

Yeah, so my first, my first job out of, out of college was with Meridian, as you mentioned, different Meridian than New York, which was focused on raising private equity for affordable housing funds. So that's where I first got into real estate and affordable housing. And that was more on the syndication side. So you have groups that go out and aggregate a portfolio of affordable housing properties and like, just like a fund, they need to raise money for it. So they go to different investors, you know, mainly banks who are, you know, required to invest in their community, which is cra, Community Reinvestment Act. So they, banks need to invest into the, the, the areas where there's lower affordability that they, that they service. Otherwise I believe, I mean, at least it was, you know, 20 years ago. It prevents the expansion of banks and if they don't comply with it. So I, you know, I did that for a couple years and realized I wanted to learn more about the real estate finance component of it, at which point I went back to grad school and got my two year masters at Cornell in the real estate program there. And so I graduated there from 2010 and ended up back in Boston, where I'm originally from, at Long Wharf, which was Fidelity's private real estate arm where I worked in asset management as an asset management associate doing a lot of valuation work, learning how to interact with property management companies. So I happened to work a lot in multifamily when I was there, you know, did a little bit of retail, a little bit of hotels and I worked there for a few years and you know, life brought me to New York where I actually got a job working acquisitions at Hub nyc, which, you know, had a different name at the time and worked in acquisitions for a few years, which I, you know, where I was heavily involved, you know, where we probably met and with Massie Nako guys and you know, we were middle mid market institutional investor, just investing in retail at first and then retail and multifamily in Manhattan and then expanded out into the boroughs. So, you know, Hub also kind of, you know, ramped up quickly and you know, as a value add investor, I think after a few years, you know, it was like, okay, we own a lot of properties, you know, our portfolio jumped. I think it was probably like when I first joined like 30 assets, right, with a lot of value add strategies that had to be executed. So it's whether it's reletting retail vacancy or improving common areas Apartments, all that good stuff was the focus focus for Hub. And then, you know, the, I mean the world got. New York City was really tight back in 2013, 14 in terms of like cap rates. You know, like people are looking at 4 caps and stuff like that. And, and us as a buyer, a long term buyer, you know, kind of, of put the brakes at, okay, let's just take this time and go back and, and do, you know, our real investment into, back into the properties, you know, with a lot, a lot of the construction start, you know, kept going and, and we started to pull on those levers. So at that point I moved from acquisitions back to asset management where, you know, I spent for, you know, five years right after being in acquisitions for three years. So that, I mean, that kind of refocused me on my asset management career. But, you know, getting those few years in the acquisition world was super valuable. Like, I met a ton of people, you know, including yourself and some people you still work with today. And you know, it really expanded my network of, you know, investment sales brokers, retail leasing brokers, and really kind of solidified my New York City network for that time period. And then, you know, like I said, I worked there for about eight years and you know, just New York, again, love investing in New York. It's a good place to park your money, but it is very, very challenging. And at the time, with cap rates so low and just the compliance requirements escalating and taxes were kind of getting out of control, I was like, you know, I think I want to try my hand at work looking for a more national company. And then I connected with Farested and that's where we are today.

Great. So you were a poli sci major at Colgate, where our audience knows that I'm a proud gradu it as well. I think we've now had at least three other guests from Colgate, so Dan Hurwitz, Chad Cooley and Thomas Campbell, for those of you who are interested in the affordable space, definitely go back and listen to that episode with Thomas Campbell as well. But did you know coming out of a liberal arts education, that you wanted to go into real estate? I mean, that position at Meridian, which was on the affordable interfacing with private equity, even something that you had thought about doing or how, how did you even know about that coming out of a liberal arts education?

I, I mean, I, I didn't. I knew I wanted to do something kind of on the finance side, but realized real estate wasn't exactly on my purview. But I Actually found it was through a Colgate, you know, the Colgate Alumni Network, that I found a job, you know, outside of Boston. And I went in, met with them and it seemed like, you know, a good fit at the time and, you know, a good entry point into, into the finance world. So, so yeah, I, I had no idea. You know, I had my, I have a couple family members, you know, my dad, my brother, you know, who my dad had, like, ended up in real estate, like working with, raising capital for a company that invested in REITs. So, like, that was a little bit of exposure there. And then, you know, my brother just happened to like, get in real estate. It's kind of like, yeah, you know what? I, I could, I could do real estate, you know, and, and so it was a little, it wasn't like my dream since I was seven. But, you know, I think it worked out in the long run.

Got it. And you know, for listeners, maybe they're in school now, I mean, so, you know, sometimes the track is starting off as an analyst and then maybe going to the acquisitions role. I mean, since you've done acquisitions and you've done asset management. Asset management, ultimately where you've landed and now even, and as a portfolio manager, kind of advice you would have for someone thinking about where they should land. Because I would imagine, I mean, I'm sure having done both, there's a lot of. You said you learned a lot from both perspectives. But I would also imagine that there's probably a different skill set that's required for that. And how would you help people navigate and think about where they'd want to ultimately end up in real estate?

Yeah. Well, for me, I think the toughest thing to, to like, comprehend as, you know, as a young professional out of college is really when you say, oh, I want to do real estate. How many different real estate jobs there are, right? Like from like, you know, investment sales broker to people who focus on leasing, you know, working for a GP or an LP or you know, which sector you want to work with. Do you like multifamily or hotel or retail? Like, you know, it's, it's all so different, right. I think that my advice would be just to understand, understand the paths and like, you know, like again, like people are some people, you hear some people be like, oh, you know, I've always wanted to be in multi family since I was, you know, 13. Like, I just, I don't operate that way. I don't, I don't know. I mean, maybe, maybe you did always want to Be.

I know real estate was when I graduated and it was again, it was through an alumni connection. Paul Massey, who's also been on this podcast, had founded Massey Nackle and I just had a great feeling about the place. Now, I mean, is that different today? I mean, I see the resumes today. Candidates are so much more qualified. They've specialized, they've taken real estate classes, they've taken, you know, they've got, you know, these great internships. But, no, I mean, but, but, but I, again, I think once you've landed, I mean, I would think, you know, acquisitions would be, you know, many ways it's kind of similar to what a broker does where you're, you're out there, you're trying to find opportunities, of course, then you're, you're, you know, negotiating them. Whereas I would imagine as an asset manager you have to be pretty details oriented, right. To make sure and keep track. I mean, how many projects are you working on at a time and how do you manage your schedule and your team?

Yeah, I mean the thing that I like about asset management, as someone like who's a little bit ADD and a little bit like I like every day that's different, you know, Like, I mean it's, it's even, even when you're just working on a few properties, you don't know what's going to happen, right? Like any day something could happen that's going to change the next six months of the investment. But you don't know. You know, most of the time it's negative, right. And you don't, you don't hope it happens. But like there's, there's different things that, that just keep coming up and keep, keep, keep you on your toes, right? So someone's like, oh, what's your day to day? It's like, well, I can look at my calendars and know that I have like, like one on one check ins with my team on an individual basis every week I know that I need to talk to my investors every week I know that I need to talk to, you know, certain lenders at some period of times. But like then you're also, I'm also dealing, you know, since I'm in asset management with like internal issues with like, you know, issue issues or just things that are happening with, you know, accounting, like if there's some, some legal, you know, whether it's transactional or landlord tenant related, you know, capital projects, you know, looking at local laws in New York and getting prepared for those which are coming down the pipeline and it's just, I mean, the way to, the way that I found, you know, success is just like by trying to stay organized, right? Because you're always going to have a laundry list of things. But like, you know, I once took like a organizational seminar where they kind of broke it down and you have your immediate stuff, your midterm stuff and your long term stuff, and you, you keep your list, right? And you want to get those lists as low down as possible. A lot of the stuff that you keep out there is stuff you don't want to do, right? So they're like, just move that to the immediate. Like, do I want to call someone and tell them they're not getting an assignment? No, I don't. But guess what? I have five minutes right now. I might as well do it. Checked off the list, right? So you just want to keep things going because, you know, you also find by not moving things forward, you know, a lot of the times you'll just end up in a worse position just farther down the road or in the same position further down the road, and you've just wasted time, right? And time is valuable. So, you know, it's trying to just keep moving things along and getting, getting different tasks to a place that you want it to get to the acquisition side, you know, which I, I really did enjoy. It's like, you know, talking on the phone more, reaching out, having coffee, and then like, you know, underwriting deals throughout the day, but then really at night, you know, after working hours. I can't imagine what it's like now, like after Covid. But like you, you need that time to underwrite your deals, right? You don't need to spend five hours looking at if a deal works or not. You can probably do that in 30 minutes if you need to, and you check it off and move to the road. So like the, the thing that's interesting, like acquisitions for me is you look at so many deals and the amount of deals that you buy is just a small, very small fraction of what your, your day to day is, right? So if you're, if you have a negative attitude, you could be like, I just worked for a month straight and didn't accomplish one thing. But that in actuality, you do accomplish things because you're, you're tightening your skill set. You're learning things to look at. You're looking at what works in deals, what doesn't work in deals. But like the actual materiality of getting the investment into your portfolio. It's, it happens very few and far between asset Management, I mean, there's just always stuff going on. Stuff is always popping up. And, you know, there. There is, you know, a goal that you're always going to for certain assets, you know, like, whether it's occupancy or reducing expenses, you know, like, like. And now, like, from a big portfolio, you're starting to look from a portfolio management standpoint, okay, I want to cut all of, you know, this line item across my 180 properties. Okay, well, that's a big project, and you got to start to talk to a lot of different people, get organized, figure out which properties are. Need. Need more help and prioritize. Right. Because we all have limited amount of time. So it's really about, like, kind of following the dollars, making big impacts, and then just doing your housekeeping when you have to. But you're totally right. They're completely different skill sets and experiences. I mean, you can. You can have both skill sets and do both jobs, but they operate very differently.

That makes a ton of sense. So, Rob, as we started to wrap up, I'm thinking about, you know, the idea of playing offense, meaning you've got a business plan and what you want to accomplish, but you're also getting thrown curveballs all the time where you're. You're basically playing defense. So how do you. How do you reconcile that? How do you stay on plan with what you're looking to do when, you know these issues are coming up all the time?

Yeah, I mean, it's. It's. I think it's really just being disciplined to recognizing when you have that downtime and to continue your offensive plans. Like, like from an asset management standpoint, like, the amount of time that goes into, like, just budgets and business plans every year is. Is successful. Right. Or start not. It. It takes a lot of time. So in between, you know, October and January or February, you know that a lot of your time is going to be dedicated to that, right? So it's tough to, you know, get on the offense because you're playing defense and you have these tasks that you need to. To complete. So, like, after you get through that season, it's really saying, okay, listen, if we have a little downtime here, we got it. We got to go and do what we want to do. We need to look at our expenses. We need to start, like, digging into, you know, are. Are we appealing all of our real estate tax assessments or that need to be appealed? Are we looking at different admin expenses, like, which properties are running higher than others? Like, how. How can we do it? And we have to do it now because before you know it, something's going to happen at one of those properties and that's going to take your time. So you can't use the excuse of oh, I just don't have time. You need to like identify when you have that, some of that downtime and really, you know, hit the ground running.

And then lastly, advice that you would have for someone who's looking to get involved in affordable investing, whether it's, you know, as a broker, as an operator, you know, what advice would you tell that person? Is it, is it, you know, how do they, you know, educate themselves to kind of learn the various programs? You know, do you start off working for a big shop, a small shop? What advice would you give somebody?

I mean the one constant thing that like I've kind of run across throughout my career is like I always think getting as close to the operations will make you better in the long run. There's a lot of people who I work with like, who either started in property management or very close to there because like once, once you get down to like the real day to day operations and you learn that stuff, you can start to pull up and pull back and start to like, then you can start to understand, you know, the playbook, the codes, you know, the regulations, all of that good stuff. But really understand it's affordable or market. Right. Learning the operations is very important and that really is property management. So I mean after, after doing that, you know, I think that your asset management skills get better. I mean if you're lucky enough to like get an acquisition job, like that's helpful. It makes you, I mean everyone will always tell you if you've worked in asset management and you're in acquisitions, it makes you a better acquisitions officer. If you've been in acquisitions in your asset management, it's going to make you better asset management. So like I, I really think that like understanding all the, there's so much that goes into running properties, understanding every angle that you can and having like a diverse background I think has served me well and I think it served a lot of people that I work with quite well. You know, in addition, as like, you know, again, at the end of the day you're operating real estate and then what happens after that? You know, you can go in a thousand different directions, but so the core component, you know, that usually makes someone better, better at their, their day job.

Awesome. Rob, this was really great. We really appreciate your sharing all the great work that you're doing at Farested also your story and advice. So thanks again for for joining us.

Yeah, thanks for having me.

And thanks as always for everyone who is listening. And as always, you can go and and forward this episode to a friend or give it a rating. That's what helps spread the word. We're here to help you gain the Insider's edge to real estate investing. You can find the show notes@james nelson.com I built this site for you. That's how you can also find how to Connect with Rob. So until next week, thank you again for joining.

This podcast is for educational purposes only and should not be relied upon for investment decisions. The opinions expressed are those of the guests and not their customers. Companies, listeners, should not act upon the information without first seeking appropriate advice from an accountant, lawyer or other professional. Thank you for listening to the Insider's Edge to Real Estate Investing. We appreciate your subscribing and sharing with your friends. If you haven't already, please connect with James at James Nelson NYC on LinkedIn, Instagram and Twitter. Please also visit James Nelson.com where you can find the show notes and other episodes along with an extension, exclusive video series and other helpful resources so you can gain the Insider's edge to real estate investing. Until next week.