How real estate investment can be a form of activism

 

How real estate investment can be a form of activism

I’m a real estate investor specializing in middle-income multifamily properties. In other words, I buy apartment complexes where people who aren’t rich live — places that aren’t luxury units, that don’t have first-class amenities or a doorman. Places where you need quarters to do the laundry.

A lot of times, when I tell people what I do, they can be a little suspicious. There is a stereotype I run into — a sad storyline about predatory landlords demanding rent in exchange for poor services, bad plumbing, and peeling lead paint. So it surprises people when I tell them that I got into this sector not as a way to milk profit from decaying infrastructure and under-served communities, but as a form of activism.

Let me back up and give you a little context, because I know this kind of a claim raises some eyebrows and some hackles. I started out in New York City as a struggling actor. My total income for an entire year was $7,891. I made my first real estate investment because I was about to get tossed out of my relative’s Chelsea apartment — a space I never could have afforded to rent at market price. Somehow, I managed to buy a run-down place in Washington Heights and fixed it up, and the rest is history.

I wrestled with myself a lot over that first purchase because a big motivator for me in those days was my passion for the musical Rent, where the archvillain is a landlord who is squeezing out the heroes by demanding rent for a dump in the East Village. I wondered, do landlords have to be the bad guys? Can’t landlords make investments that are good for everyone?

Can’t property owners put investment dollars to work in order to become the change they want to see in the world? Can’t landlords decide to be heroes? Shouldn’t property investment be a win-win for everybody involved?

Here are four ways that I’ve developed to help us all reimagine real estate investment as activism. These are ways to put our money to work building our vision of a better world.

1. REIMAGINE SUCCESS

While deals should be underwritten to make a substantial profit, the bottom line can be about more than money. By structuring deals as win-wins, underwriting responsibly, and managing properties in a way that makes them proactive, positive, and productive for everybody, you can put your dollars to work while charting a different course for the industry.

2. ADOPT A VALUE-ADD STRATEGY

With this strategy, you purchase an asset that is not at its best and highest use and then improve it. Maybe it’s a property that was built 30 to 40 years ago and hasn’t been updated since. Often, value can be added by doing upgrades to the interiors like putting in new appliance packages, new paint, or new flooring. Perhaps you can add some amenities like a dog park or new pool furniture. These types of improvements really add up in terms of increased value while substantially improving the quality of life for the folks who live there.

3. GREEN IS ABOUT MORE THAN MONEY

You can often get lower interest rates on loans by agreeing to make environmental improvements that are good for everyone. Electric and water conservations can make a significant impact on your property. Consider replacing existing fixtures with LED lighting or water-saving toilets, showerheads, and sink aerators. Not only will you do your part to conserve water, but your residents will also be thrilled to save money through reductions to their utility bills.

4. UNLEASH THE POWER OF THE PEOPLE

A syndicate is when a group of people pool their resources to invest in a project together. Many, if not most apartment complexes, are bought through syndicates. So are many other things — even Broadway shows. Through syndication, you can come together with like-minded people who share your values and philosophy about the changes you’d like to see in the world. Together you can exercise far more purposeful power than you have on your own.

Today, investment is about more than just the bottom line. I believe that purposeful investment — making a difference with your investment dollars — is one of the ways we as real estate professionals can help rewrite the narrative. I think it’s incumbent on all of us in the industry to change the stereotype of the evil landlord and turn real estate investment into something that makes life better for everyone.

Real Estate Investor, Syndicator, Operator, and Author Matt Picheny is the Founder of Picheny – Your Backstage Guide to Passive Investing.