Scaling Success with Alex Rabin

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis & 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.

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Welcome everyone. I'm James Nelson, your host principal in head of Tri State Investment Sales at Avis and Young and today we have back on the show, Alex Raven. By popular demand, we've started to have some of our earlier guests coming back. We've stepped up our game since then. So if you're listening to this on Apple Spotify or wherever you get your podcast, or we also have the video format that you can find on Instagram, LinkedIn, YouTube. We're definitely stepping up our game as is Alex Rabin. He's got an incredible story. He's principal and co founder and head of investments and acquisitions at Peak. Before he was a VP for seven years at RWN where we had a chance to do a lot of business with him. Prior to joining rwn, Alex spent time at TIACRAF and also at Stellar Management. What I love about Alex's story, how they've really built this vertically integrated company. We talked a lot about how he finds opportunities, how he cultivates relationships. There's a lot in here that I know you're going to get out of this episode. So as always, go to james nelson.com this site is not about me. I built this site for you to help you gain the insider's edge to real estate investing. That's where you can find the show notes for this episode. You can find out how to follow what Alex and Peak are doing as well as some helpful articles we Contribute weekly to Forbes.com if you haven't seen those articles, you should definitely take a look as well. Have a brief word from our sponsor and we'll get right into that interview with Alex Rabin.

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.

Foreign.

Welcome everyone. We have back with us today Alex Rabin who is principal and co founder and head of investments at Peak. Alex, great to see you.

Thanks for having me.

So Alex, I'm really excited for this conversation because I think it's been about say two years or so since you came on my podcast along with Alex Cascal. And I remember I was late for the podcast so I actually called in on my cell phone. I was in a restaurant. It was, you know, all kinds of no going on. So we, we've, you know, we've stepped up our game. I'm now appearing from the studio. But look when we were speaking and maybe it was a little longer than two years ago, but you really just getting Peak rolling, you know, obviously had deals under your belt. I love what you were and continue to love what you're doing, getting the word out there, not just your investments but also really created a brand. And that was really, I know we got a lot of positive feedback from our audience on that. So since we, we had that conversation, you've been very busy. In fact, I know we were trying to schedule this, maybe this is the second or time we've tried to schedule this because the last few times you said, james, love to come speak but I've got a closing. So closings always come first of course, but want to welcome you back and thank you for taking the time.

Thanks for having me.

For your audience, why don't you just give us a little overview on what Peak has become today. So maybe give a little sense about the company and what your current holdings are.

Look, Peak is a value add multifamily shop. Really. We're focused on creating high end walk up housing for the most part. We have a few elevator buildings, but really looking to appeal to the young professional demographic, 25 to 35 years old, you know, really, you know, people that want to be in New York City, want to benefit from the, you know, amenities of New York, whether that's, you know, restaurants, nightlife, you know, shows, you know, have access to all that at a price point that is relatively Affordable. So really, you know, what we try to do is create really high quality product at a discount to doorman elevator buildings. Generally. We tried to be about a 15 to 20% discount to kind of, you know, the highly amenitized, you know, doorman elevator buildings. And you know, we really take pride in creating really high quality rental product. And you know, in our buildings we fully reposition everything from, you know, new intercom system, beautifying the facade, renovating hallways. We really don't want to leave, you know, any stone unturned. So, you know, everything from new lighting, incorporating modern artwork, new moldings, renovating stair treads, railings, really upgrading the building completely, upgrading electric, upgrading plumbing, you know, all base building systems, fully renovating apartments, you know, high end finishes in the kitchens and bathrooms, really reconfiguring unit layouts to maximize efficiencies. Whether that's, you know, adding bedroom density to create share units or just creating more efficient layouts. You know, we really want to, you know, create, you know, that high quality product that is almost a condo level, you know, finish, which really drags the, the renter in. They, you know, from the moment they walk in a peak building, you know, they see a different quality of product. And, and you know, we take great pride in that. People, you know, live in our buildings and for us, we want it to be something that they're proud of, that we're proud of, and that's something that we take, you know, real pride in. So we, we've built the business now to 75 buildings. It's roughly about a thousand units under management. We're fully vertically integrated. We do everything from, you know, obviously the acquisition, asset management to construction management, leasing, and now actually effectively, you know, we're involved in the property management as well. So, you know, under the peak kind of umbrella, you know, we're fully vertically integrated.

That was a great overview. And first of all, 75 acquisitions. A thousand units. I mean, I, I see how busy you all are. I mean, we've certainly transacted successfully with you multiple times, but I mean, that's a staggering number. How many years has peak been in existence for now?

So we bought our first building in 2018. You know, it's kind of funny because at the time it really just started as more of like, I don't want to say a hobby, but it was just kind of a side investment. You know, I was at RW and at the time, you know, working for Ari Shalom, doing more on the private equity side of the business. You know, very similar arena, but in the private equity side of the world. And, you know, we bought one deal in Queens. David at the time was an investment sales broker. He actually bought a building right before that on Spring Street, 39 Spring street and he repositioned the building, you know, did a great job. And actually I wanted to buy it at rwn. We didn't. It ended up being a home run for him. So when I found this deal in Sunnyside, Queens and came to him, you know, with a thesis really that, you know, Queens was kind of, you know, especially Sunnyside was kind of the next frontier of Long Island City and, you know, the natural need for more quality, you know, value oriented housing. You know, we did that deal and then, you know, really didn't do many deals for about a year or two. But then in 2020, when I went full time, that's really when Covid happened. And we really just saw that as an opportunity to invest in, you know, New York City housing. Everybody was doubting New York. You know, it was very challenging to invest here. And you know, both David and I are born and raised New Yorkers, native to New York City. And it just seemed crazy to me, you know, that people were down on New York and not investing long term here. And we saw that as an opportunity. You know, pricing was obviously highly attractive if you can find the right equity and debt sources. And we use that as an opportunity to build our business. It was a lot of hard work. You know, there were times where we were shut down during construction. There was times where, you know, equity and debt was almost impossible to find. But we kind of scrapped it together and, and worked hard and, and, you know, built the platform that we have today.

Amazing. I mean, even it was so difficult to transact in 2020 for obvious reasons. And so even if you kind of leave that in the equation, I mean, you're still acquiring almost a building a month, right? And these aren't. And, and I, I know we have some people who listen to this across the country and you know, this. Doing serious investments, building a platform like you all have. But, you know, I think even the fix it and flippers out there, you know, if we said, hey, you're doing a deal a month, I mean, doesn't matter what you're buying and selling, that's a lot of deal flow. So really curious about how you built your platform to accommodate that volume, because again, to have that type of deal flow, right. I mean, first of all, I gotta imagine that the top of the funnel, as far as sourcing opportunities, right? To actually sign a deal every single month. I mean, how many deals do you think you have to look at and how many. How do you source those? How do you, you know, what's the team that has to analyze that to figure out and negotiate?

Well, look, I think it's multiple things. I mean, you know, one I think is it's about having the right team and. And the right, you know, split of responsibilities from, you know, the day we started. You know, we. We didn't start with one or two partners. We started with four. You know, we had both. You know, myself more on the acquisition side. We had Alex Gaskell on the asset management side, David, you know, an omni really running the construction and operations. And, you know, everybody had a good amount of institutional experience and relationships. And by having that division of responsibilities, it really allowed us to, you know, set up a program. And that's kind of what really allowed us to scale. It was about creating a formula that worked and everybody kind of knowing their roles and responsibilities and the scope of work that was needed to be done so that we can just not do one, but do multiple deals and not really trying to change the wheel a lot. You know, if you look at any one of, you know, we change something. Sometimes the lobby or the facade is a little bit different, depending on the character of the building. But for the most part, you know, our renovations are all the same scope. You know, it's almost a processing factory of, like, you know, from the moment we. We buy a building and are renovating it, you know, whether it's our, you know, construction team, our leasing team, our marketing team, you know, anybody that is working as a part of our global process knows exactly what is being done, and it's very scalable that way. If it's kind of rinse and repeat and. And. And it happens a lot. When investors come, you know, to tour our properties, you know, after they see three or four buildings, they. They totally get the kind of theme that we're working on, because it's all very, you know, common and similar. And as far as sourcing deals, you know, it's really based on, you know, I would say, a lot of hard work and. And building relationships in the business. I mean, a lot of it is, you know, from my background and, you know, it's from 13 years of networking and going to events and, you know, going to breakfast, lunch, and dinner with, you know, different people, whether it's, you know, partners, operators, brokers, lenders, you know, you name it, and just building, you know, the right relationships. With people where, you know, you're one of their first two sources, you know, that they come to and it's about knowing that you're actually going to transact and be a quality, you know, party to work with.

So how many people do you have at peak now?

We're so we're 14 people. It's seven people on the principal investment side and then seven on the management side. So we have four partners, we have two, you know, mid level associates that are working, one in asset management, one in acquisitions and then we have a full time leasing person. So you know, we also try to keep it very lean as, as well, you know, we want to have the right staff but at the time, at the same time you don't want to get distracted by, by having too many people.

I know this episode is going to be so helpful for listeners. Whether they're thinking about leaving you may their current role, starting their own investment platform like you did, or whether it's someone who's already scaled and delivered and developed a business. And you know, the question I want to ask you is you're obviously one of the founders, you're overseeing the whole vertical as you said. But you're still to me, a deal guy, right? So you're still, if I send you something, you're going to get back to me very quickly. You don't hesitate to kind of jump in. So I guess for those out there who are looking to scale their business. So I mean what you've done done again is remarkable. The volume that you do. I mean there's a lot of successful investors out there that maybe do one or two deals a year so maybe they can get in the weeds and do that. But how do you do both? How do you scale this and how do you do volume? How do you oversee and grow your company, but also, you know, get in the weeds, so to speak, and actually analyze deals. Or are you just kind of more kind of the point on it? You've got the relationships and then you have the analyst run with it. How do you manage that process?

Yeah, well, look, I think first, first and foremost, you know, this is, you know, where I find exciting about the business and what I enjoy every day is, is looking at deals and analyzing deals and you know, the whole art of finding a good deal and closing it. And that's what really excites me. So you know, it's my passion and kind of what drives a lot of the business, you know, and it's important for me to be involved in it because you know, for the best types of deals that we're going to get. Especially if it' an off market deal or relationship, you know, the broker wants to know I'm involved and they want to, you know, know that I'm focused on it and that we're actually going to take it seriously and close on it. And a lot of the, you know, the reason why we get good deals is because we're very responsive and I'm, you know, very involved and respond very quickly. But it's also, you know, about having the right team and trusting your partners. You know, I have a great team around me. Whether it's, you know, on the analytical side. You know, we have, you know, great analysts working for us that run the numbers and are very adept at that part of the business. But it's also, you know, having, you know, my other, you know, principal partners that are really, you know, getting the construction and asset management done. Well, I can really focus, you know, on the investment side. Yes, I'm obviously involved in any important issues that come on, you know, on the asset management and operational side. But you know, at some point you really have to, you know, find a division of responsibilities and trust your partners if you're going to want to grow.

I really, and hope you don't mind digging deep on this whole scaling of the business because I think that's, you know, again, so exciting, you know, for our audience. And think about, you know, for those who maybe have invested, done a deal or two, but they really want to ramp it up. I would imagine it. And you've got a great institutional background. You spent time at TIA cref. You were at Stellar as well, I would imagine when you and I saw some of your early deals that you were raising for and even though it was, you know, maybe it was a million, $2 million deal, you know, there was a 30 page, like very professional looking book that you treated that small deal as if it was $100 million deal. Was that just kind of the way you operated or were you thinking, okay, I'm going to build this right from the ground up so when we scale this thing, we're doing things in the right way?

Yeah, I mean, look, I think it's a few things. I mean, obviously, you know, doing it the right way from the beginning was very important to us. You know, I came from an institutional background, you know, both at rwn, Stellar TI Creft, where I saw, you know, the right ways people did things and I know that, you know, that's very important to investors and building, you know, the foundation from the beginning is really important to do it in an institutional way and create quality product. And that's also why we renovate to such a high level and don't just, you know, there's a lot of operators in the business that just kind of do cosmetic renovations. They don't do the hallways, they don't do the base building systems and don't really do a full renovation of the property. And you know, that really, you know, speaks to the character of the firm and to, you know, really the platform. And especially as you build scale, you know, it really doesn't show well. And for us, we really wanted to do it a quality way from the beginning. And you know, you know, based on our backgrounds, we were really, you know, self made. So we, we had to start with kind of smaller deals, you know, whether it was a 1, 2 million dollar raise, even though, you know, we had this institutional background. But we did it organically. We kind of, you know, started with these kind of smaller deals in Queens. We kind of came up with this thesis that, you know, Queens was this frontier, especially Astoria, Long Island City and Sunnyside areas that basically, you know, had really high quality tenancy and within 25 minutes of Midtown Manhattan, but we could buy at a much cheaper price point and there was just a lot less competition. So that's what we started. And we've really evolved the firm from there to being very active in the prime neighborhoods of Brooklyn and now even more so we're focused pretty much exclusively on Manhattan for the most part. You'll obviously do stuff in, you know, the prime neighborhoods of Williamsburg, Park Slope, you know, Brooklyn Heights, etc. But you know, we've continued to just focus on, you know, more institutional assets as we've, you know, evolved our business.

Yeah. What was really interesting about where you began to grow your portfolio, I mean, I think I'd be surprised if you told me at the time when you were buying the deals that you were in Queens. And I'm sure, you know, the goal was always to scale and have those efficiencies, but I'm sure you weren't weren't bumping into a lot of institutional competition. I mean, I guess maybe in Brooklyn and you know, Carlisle was quietly acquiring buildings and now they've got a couple hundred, you know, multi families in their portfolio there. But was it part of that inefficiency that attracted you to that? Because, you know, one of the things we talk about in the insider's edge to real estate investing is where can you gain the advantage where can you? You know, because if you're going into a marketed process and everybody's looking at the deal, I mean, sure, if you have conviction and you can add the right value. But I gotta imagine, you know, a lot of the deals that you were buying and whether you were sourcing them directly or from small brokers, probably was your view at the time that this was kind of just being overlooked and you really was able to go about the investment thesis and kind of see the bigger picture there.

Yeah, there was just a lot of inefficiencies in that market. You know, whether it was on the sourcing side. You know, a lot of brokers were not focused on the Queen's market. You know, you didn't really have as much of the Marcus Avis and Young, you know, Cushman Wakefield, you know, really focused on that market. And you know, what didn't make a lot of sense to me is this was like really quality neighborhoods. I mean, you know, between Sunnyside, Long Island City, Astoria, you had, you know, three neighborhoods all within, you know, 25 minutes of Midtown by public transportation. All good, like middle to upper middle class neighborhoods, you know, good walkability for the most part in, in these pockets with good access to transportation, you know, safe neighborhoods. They were pricing at a discount to Brooklyn. And I saw kind of what was going on in the Brooklyn market and, you know, it just didn't make sense to me. And that's really, you know, what led us to build a, you know, what is now, you know, roughly a 30 building portfolio in, you know, those major Queens markets.

One last question on scaling the business and that is building the team around it. So I think I'd be surprised if you told me that you had 14 people day one. I mean, I mean, clearly you have to have the workflow and I doubt you'd say that you were vertically integrated day one. So I guess you started small. And as you start acquiring more buildings, did the fees on those buildings then kind of throw off enough revenue to support, you know, full time positions? Or were you thinking, okay, well if I went to a third party manager, it would cost me 4 or 5% of the revenue, but I'm going to keep that in house so I can justify just paying that salary instead. Like, how did you kind of manage growing your team? Did you decide to kind of keep everything in house? Which again is tough to do when you have a small portfolio. So what if that question makes sense, like what, how did you build the team to accommodate it and when did you kind of make that Decision that, yeah, we are going to be vertically integrated.

I think, you know, it really came from the benefit of being at a private equity firm first, you know, you know, working as an acquisition person, you know, in a middle market private equity firm that saw, you know, five, six different multifamily operators, you know, and how they operate. You know, I got to see the, you know, the good parts, the bad parts and, and inefficiencies of certain operators and what was important to really grow and scale your business. And one of the most important things, and I know, you know, it was always, you know, really stressed to me from, you know, the, the company that I worked for before was, you know, it's always important to have the right people and really invest in, you know, the people around you. And, and sometimes it's better to be a little, you know, like early in the process of being, you know, overstaffed. As long as you're doing it, you know, mindfully, you know, and really invest in the asset management and, and operations of the business because, you know, show people that you can be a quality operator and really do a great job on the execution. You know, it's going to keep investors happy with you and reinvesting with you. And we knew that was really important. So, you know, it, yes, it's always important to make fees and, and carry your business because otherwise, you know, you'll go out of business. But, you know, it's really important making sure you have the right platform to sustain that growth because otherwise, you know, you're just going to have a lot of unhappy people with you. And it's just fortunate that I was able to have that experience and really, truly understand, like, what the investors want and, you know, mistakes and that other operators might have made, you know, early in the process and trying to be ahead of that. And we've done it all slowly, organically. You know, like, first we started, you know, with the construction management and that was something, you know, that was kind of just nature of doing the value add business. And then, you know, as we continue to evolve, we noticed that, you know, especially in Queens, there was not a lot of, you know, active leasing brokers at the time. You know, I had a lot of experience working with Bold, for example, that was really active in Manhattan and, you know, somewhat Brooklyn, but there was no one really focused in Queens. So, you know, we knew the market better than anybody. We knew obviously the value add that we were doing and the quality of the product, you know, better than anybody. So, you know, we just started doing the Leasing ourselves, we hired a leasing person and started focusing on that and it worked out really well. We, you know, we were consistently achieving above underwriting and you know, that allowed us to start a leasing platform, you know. And then as we've continued to scale, you know, we got to the level where it really made sense for us to invest in a property management business. And you know, effectively in October we just started that platform, you know, or that vertical of our business. And we're, you know, very excited, you know, to be now fully vertically integrated, which really just gives us better control overall and oversight over the business.

That makes a ton of sense and you know, to have that hands on approach and be overseeing the asset every single day. I would imagine though, the decision to keep in house as opposed to outsource. I mean, there are some trade offs, right? So if you're working with a rental broker and that's all they do and that's their full time job and they work for a big firm that has a lot of agents or you know, a third party manager, maybe they have more efficiency, maybe they can negotiate better deals because they, you know, whatever it is dealing with insurance companies or contracts. So like, are there any trade offs with that where sometimes you feel like you're maybe not getting the benefit of leveraging better service or pricing from a bigger platform?

I mean, look, I think there's always trade offs. You know, there's definitely some benefit. You know, when we were, when I was at a, you know, the private equity firm before I used to use third party, you know, rental agents because it was very helpful to get data across the market of, you know, multiple different operators and multiple different things, things that they were working on. And that's obviously some benefit. But on the other side, you know, I think there's a piece of like nobody cares about your business as much as you do. So you know, the, the blood, sweat and tears that we put into what we do, you know, we really pound the pavement and it's important to us, you know, we're only not driven by the, you know, success of the lease or the, you know, delivering, you know, on time and on budget. But you know, this is ultimately where the investor at the end of the day and, and making sure that that is successful is extremely important to us. And you know, we just have faith in ourselves to execute. Well.

I now like to go back to what you were saying earlier about kind of how you started Peak and you said it started almost as a hobby and previously you were at RWN working with Ari Shalom. I actually had lunch with him yesterday. He's been on the show. Incredible investor, incredible mentor. So I would imagine your time spent there was super helpful. And to me, that's kind of a unique opportunity where you were able to kind of pursue some personal investments. And obviously, these were smaller deals that would never conflict or be of interest for the larger firm. But how did you manage that? Because, again, you want to make sure that while you were there, that was your priority. The rest of the investment was a hobby. But. But. So, first of all, how did that go? And then at what point did you say, okay, this is becoming way more than a hobby and I need to make the leap here?

Yeah, I mean, look, it started with, you know, the firm and myself, you know, was always entrepreneurial. And I think in the nature of being an acquisition person, you know, there has to be some entrepreneurial part of you that, you know, it's about the chase of the deal and trying to find, you know, a great opportunity and close the deal. And, you know, you know, by the nature of doing a lot of deals, you know, I eventually kind of had the. The interest of doing something for myself, you know, and. And building wealth for my family. And. And, you know, essentially I found a good deal off market that somebody brought us, and it was a smaller deal. You know, at the time, I think it was like a $2 million transaction. Most of, you know, RWN's, you know, transactions at the time, I think a minimum equity check would have been 5 million to, you know, 25 million. So. And especially they weren't really investing in the boroughs. Every deal that RWN did was in Manhattan. So it wasn't a fit. And, you know, I basically approached Ari at the time and, you know, asked him if I could do this, and, you know, he was very supportive. And I think that's, you know, a huge part of our success is, you know, I was able to have the fortunate part of working at a very small team that, you know, and somebody that, you know, I got exposure to seeing every facet of the business, seeing everything from, you know, the acquisition to closing the deal to asset managing the deals, and. And, you know, really being able to see all parts of the business allowed us to, you know, have the experience to really operate deals on our own. And I think it was important finding the right mentor that was really interested in, you know, in building, you know, myself versus, you know, just having me as an analyst working for him and. And punching models all the time. It was important, you know, to really be a Leader and, and career mentor to, you know, see my career blossom to where it has today.

I know there's someone listening or maybe they're, they're watching this on the live stream right now, who's sitting at a bigger shop right now and they're getting the itch. And you know, a lot of aspiring investors, it makes sense to go work at a bigger shop. Or in this case, you said you're on the private equity side of the equation, but which is, I think in many ways probably better experience because you have the chance to see a lot of different operators, sponsors, see how they are running deals, see what works, what doesn't work. You're seeing how deals are capitalized. I mean, you really had a great seat to understand the whole arc of the transaction. Obviously you had to figure out then, you know, how to actually operate and do all that. I have no doubt there's going to be, people are listening to this right now, are saying, okay, I'm working at a bigger shop, trying to figure out when's the right time, how do I go off and do on my own, you know, to kind of do it the way you did. You kind of had a running start to have a deal or two under your belt. But I think the key thing which is really important that everybody listens to is you went and you had a conversation, you know, and maybe that works at a smaller shop. If you're working at a big institution, they're going to say, hey, timeout, you know, we don't, you know, if you're doing, you know, your personal investments, you know, that could definitely end up taking away your focus, creating conflict, you know, whatever it is. So again, it really kind of depends where you are. But I think the most important thing is to communicate. So the fact that you went to Ari and said, okay, this is something that I'd like to do. Does this work for you? You did it in the right way. And then when it really became the point where it was scaling, you said, okay, this needs my full time attention. So a lot of great helpful information there, Alex, what I'd love to talk to you about next. And this has got to be one of the top things. You know, I, I was speaking last night at nyu. I go and speak to a lot of classes and investors and ask, you know, how many of you are invested in real estate. And usually if I'm in a room, maybe 10 or 15% of the hands go up. And then you ask who else would like to invest in real estate? And basically every other Hand goes up. I mean, if you're in one of these real estate classes and you don't want to invest in real estate, you know, there are some people that just say, look, I'd rather just be an analyst. I'd rather just go run numbers. I don't want to take the risk. So that's, of course, totally fine. But the point is, for those who have not invested yet, my next question is, well, you know, what's, what's stopping you? And, you know, some of the first answers are, well, lack of experience. Right. Okay, that makes sense. Lack of knowledge. Okay, well, they're in the class now. But the really big thing is lack of capital. Right. So unless if, you know, and sure, we might have some listeners who are part of a family business and, you know, they got tens of millions of dollars to deploy, but most people, and I doubt you're going to tell me that you fell into that camp, you're going to probably say, hey, from the start, I had to go out and raise money. And, and that, for most investors, I think, is one of the toughest parts, like the finding the deal. You know, that's the exciting part. Everybody loves the thrill the hunt and the negotiating, raising the capital. You know, I haven't heard many people who say that they're excited about raising capital, but clearly you've, you've been very good at this. So for our audience, talk about how you built your investor base. So you started with that $2 million deal. I don't know if that was the proverbial friends and family that you went out to first. What did that look like? And then from there, how did you grow your investor base?

Yeah, I mean, the first one was syndicated. I think we had about, you know, 15, 20 people in the first deal. It actually happened to be a lot of real estate people because that was, you know, a lot of our network. But, you know, that's really how we started it. I, I think my situation is a little bit unique or peak in general is a little unique, especially given my background coming from, from, you know, the LP private equity side of the world. I knew a lot of, you know, what was important to, you know, a family office or a limited partner investor. And I knew a lot of, you know, the, the hot buttons that would, you know, really be an issue for them and what was really important for them to see and important for us to, you know, present to these investors to show as a, as a quality sponsor. And we really, you know, implemented that from. So I think that benefit was huge. When scaling and really starting to talk to family offices and private equity firms about our business and really allowed us to present very well. But it's not short of hard work. Look, there's no easy way to do it. And it was a lot of pounding the pavement and a lot of interviews and constantly just outreach. It's no different than pounding the pavement for deals. You know, we were trying to meet as many investors as possible and telling us, and I think that's a huge part that's very important is coming up with a thesis that makes sense. You know, I think, a lot of, you know, why we had early success is, you know, we were focused on value add multifamily and at the time we were very focused on Queens specifically, you know, a specific niche where we saw an opportunity, you know, to create a competitive advantage. And I think people like that, we were very hyper focused. We weren't focused on doing, you know, industrial office, you know, working on, you know, Florida, New York, different Southeast markets. You know, from the day that we started, you know, 75 deals ago, we've been focused on value add, New York City, multi mix use deals. And that's what we've continued to focus on. And, and investors really come to us as, as a specialist and in that space they want to know that we have a competitive advantage for sourcing deals and have that network and that we have kind of this machine to operate deals both from the construction, leasing and management side.

This is awesome. And I really hope people are taking notes here because you just said some really great information and I was talking about this last night at nyu and also it's in my book about having that business plan, having specialization and, and really creating that, that value, that opportunity. You know, that this is a, a real estate investment opportunity that someone might not have otherwise. So, you know, the example I threw out to class last night is up in the Bronx, they're about to open up a couple subway stations. And I said, what do you all think is going to happen to real estate values once that happens? Okay, so maybe you become an expert, you learn that area, you learn the trades, you, you get deal flow and then you explain to them, okay, well here, here's another area of the Bronx that has great subway transportation. This is what the retail rents are versus where they are now. And so we're going to go in and buy this and we're going to get a pop, right? So right off the bat there's a story to it, right? Why are you doing, you saw the opportunity, you saw the inefficiencies in Queens that you could capitalize on. So that's super helpful. But Alex, if you don't mind, just because, again, I think it's going to be helpful to our audience. So that first deal, whether it was 15, 20 investors. So I mean, it sounds like, you know, a lot of investors. If you did $2 million deal and let's say you're borrowing, you know, a million two, a million three, you know, so, so most of these investors were probably, you know, $50,000, maybe 2,500K. I mean, what were these conversations like? I mean, it was kind of like, here's the deck. Are you in? Are you out? I mean, was there a lot of back and forth? You know, were people trying to change the terms? Were we having to chase people? Just so, you know, our aspiring sponsors or operators out there kind of understand the process of actually these investors and getting them signed up on the deal?

Yeah, I mean, look, you know, we had a professional deck. We, we kind of sent it to kind of our friends and family network and, you know, it actually was a pretty straightforward process from the beginning, at least from our circumstance. You know, we were fortunate to have, you know, a good reputation in the business and, and had a good institutional network. And, you know, through doing that, you know, we had a lot of confidence in, in us to operate this deal. And, and, you know, people also just generally like the metrics of, of what we were doing, and that allowed us to piece it together. But it, it definitely look, it. Doing it the first time is never easy. It was scary and, and, you know, we were taking a big leap of faith, you know, putting up a few hundred grand, you know, ourselves, which at the time was a lot of money, and, you know, putting this together. And there, there's never an easy time to do it. And people always, always. People ask that question a lot, you know, to, to me as an, an operator, an entrepreneur, especially in the real estate space. And, you know, I think at a certain time, you know, you just have to have some faith in yourself that you're going to get it done and there's never going to be an easy time to do that first deal. So, you know, either you're built this way and, and willing to take the risk and believe in yourself, or, you know, maybe it's just not the right space for you.

Love that. And that was definitely Jordan Vogel's, and I'm sure, you know, Jordan and, and his story. Same thing when he talked about his first deal. And you call it a Leap of faith. But it was really confidence that hey, this is going to work out and I'm willing to take that bet on my, myself. So. So Alex, talk about, you know, now fast forward, you know, I guess this is five years later from your co founding peak. So you know, the larger deals we talked about. How, how did you do that first deal with the friends and family? Let's talk about some of your largest deals. So what, what was some of your most significant acquisitions to, to date?

So we acquired 50 units in Gramercy, which is actually now on the market to sell with JLL. We have another 50 unit asset in Long Island City that we renovated. We just closed on actually with you guys. 40 units in the East Village that we're currently going through a value add business plan. And then we.

What kind of price points are these? Just for the audience, is it, are we talking about, you know, $20 million acquisitions now?

Yeah, I mean, I would say we're really focusing between 10 and 50 million for the most part.

10 and 50. So when, when you see that larger opportunity because clearly then it's not a matter of getting, you know, 15 or 20 investors for, you know, a 25, $50,000 clips. I mean, are you looking for that major anchor investor? I mean, if you were to take down a 50. I shouldn't say if. When you take down a $50 million deal, is it. You already have that equity partner in your back pocket, that anchor, a $10 million investor. What is, what does that look like? And I gotta imagine that discussion with that anchor is going to be different than just that friend and family who is just kind of along for the ride.

Yeah, I mean, look, now it's, you know, instead of, you know, we're no longer syndicating deals anymore and it's a lot more focused on, you know, institutional family offices, private equity firms and asset managers. And I think, you know, the real important part of that today is, is really exemplifying, applying to, you know, whoever our, our partner is that we're an institutional platform and that, you know, the quality of these transactions and you know, there is still some, I wouldn't say leap of faith, but you know, in some of these deals, you know, New York's a very competitive space. So we, you know, we still have to have conviction of these deals and on a few of these, we've had to tie deals up and, and you know, feel confident that we can get it done. But you know, at this point we've done, you know, 75 deals, have built a really robust platform and we have a lot of confidence in our, in our ability to execute and that allows us to really graduate from that, you know, scale that we were doing of, you know, 10 to 20 units to now, you know, 50 to 80 units. And, and you know, our hope is that we continue to keep evolving and doing more institutional deals.

So it's not just that you've acquired 75 properties, you've done it in arguably the most competitive market in the world. So when you say about taking down deals, this is not, hey Alex, here's 60, 90 days of due diligence and put down a 25,000 dollar, you know, soft deposit. I mean you're, in many cases you're putting down 5, 10% hard day one. And you know, maybe you get, you know, 90 days to close. And obviously this is all kind of market dependent but you know, you really have to have everything teed up and ready to go. So I would assume when you have that anchor, that major investor, you know, you know, you're not having that first conversation with them when you present this $50 million deal. You've been showing them, you've been meeting with them, understanding what they want. So to, to find that opportunity. So, and again, you, you saw this all from the other side at rwn, so you understand how this, this works. But I, I think for our, our listeners who have been raising money from friends and family and they want to make that institutional jump, kind of what is the difference? I guess, I mean, or we could say trade offs. I mean, on one hand, you know, pretty obvious if you're looking for a larger deal, a larger equity check, you know, you're going to need to graduate to the institutions unless if you've got an investor base in the hundreds or thousands. But with that, you know, there's obviously more reporting, more requirements, I would imagine more control. Control, right. And then there's the economics consideration as well. I mean I, I know we've had a lot of people on the show say, you know, I'm happy with friends and family, you know, it's easy and you know, the economics are great. So I know I just threw a bunch of stuff out there at you, but kind of the difference of those friends and family deals as opposed to graduating to the institutions.

I mean, look, I, I think part of it is obviously having a good deal and, and solid underwriting and, and, and having something that's, you know, very downside protected and having a good deal is part of it. But I think, you know, more the bigger part of it is really having the right platform and really showing to investors your ability to execute, you know, whether that's, you know, the ability to get projects done, get it done on time, on budget, you know, achieve your underwriting, you know, on rents and, you know, cash flow appropriately and ultimately exit deals is really what investors. Investors want to see and a track record. And, you know, as we've built more and more scale, we've been able to show, you know, that we've been able to do that multiple times over and, you know, that has allowed us to build a good reputation in the market, but also, you know, really exemplify to our, you know, investors, you know, this is, you know, how Peak operates and it gives them, you know, a level of confidence to, you know, work on a larger deal with us.

Well, Alex, I knew having you back on the show was to be tremendous because. And for those of you who did not hear our first conversation, it would be really good if you. In fact, I, I'll say this when we open the, the episode to go back and listen to that first episode, because I'm sure people see that certainly when you were planning for this, it'll be very clear that you were building this thing to grow exponentially. And now clearly you've accomplished that goal in a very challenging market and as we said in the, you know, one of the most competitive markets, if not the most in the world. So, you know, Alex, my final question to you would be, you know, it's almost like a how do you do it all? If we talked about, you know, getting in the weeds on deals, but, I mean, you seem like a person to me that you're just, you know, you're out there front and center, you're running a company, you're talking deals, but you're also out there at events. You all have done a great job of kind of getting the word out there on what Peak is doing. So, like, how do you personally manage your time? How do you prioritize what you're doing and get it all done?

Look, I think it's just learning ways to be efficient and learning ways to allocate your resources appropriately and having good partners that you can kind of divide and conquer, you know, in the right way. And, you know, we figured out, you know, it's really become, you know, kind of known to our, our platform that, you know, I'm very good at finding deals and, and sourc market opportunities, finding capital relationships and really, you know, being the kind of lead generator of the business. And, you know, David, you know, who was, you know, co founded the firm with me was really the operational side of the business and you know, by having that split of responsibilities. And it was actually funny because at first we both, you know, wanted to be the acquisition guy and we realized that that just doesn't work because we're just going to be kind of talking over each other and, and it becomes a conflict. And once we really started finding our lane and focusing on that, it allowed us to really hone in and divide responsibilities and have trust in the other that we're going to get it done well. And you know, having that right partner and now, you know, partners, you know, really allowed us to scale from, you know, one deal to, you know, where we are today.

Awesome. So Alex, this has been tremendous. Thank you again for our listeners who want to find out about more what you're doing. Where should they look for you?

You know, they can email me. We have, you know, an Instagram peak handle, you know, happy to, you know, speak to anybody that's interested in learning more about the business.

That's awesome. Well, thank you again for joining us. You've been super generous with your time. I know you got a lot going on clearly in a good way. So just really appreciate your taking the time and, and sharing what has helped you gain that insider's edge to real estate investing. So thank you again for joining. Thanks for having me and thanks everyone, always, especially those of you on the live stream. It's a great thing that we're doing now to actually put the videos out live on LinkedIn, Instagram, Twitter, YouTube. And so for those of you listening on Apple, Spotify, I know you, you like this episode. If you didn't, I, I don't know what else to to tell you that there's a lot of incredible information that was provided here. So forward the episode to a friend. That's how we get the word out on the show and if you liked it, put a review, put some comments. We love the feedback as well. You can find this as well as all the show notes. Get a hold of alexamesnelson.com so thank you again and look forward to being in touch.

Thanks a lot.

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