Atif Z. Qadir 00:03
Welcome to American Building. I'm your host Atif Qadir. Join me as we explore the skylines and strip malls, the crosswalks and rail crossings, the balconies, the buildings and the burrows shaping the next generation of real estate. Let's build common ground today.
Atif Z. Qadir 00:25
Today, our guest is Danny Fishman, founder of GAIA Real Estate. GAIA is an opportunistic operator that buys underperforming and distressed assets and repositions them through hands-on management, targeted capital investments, and neighborhood-driven programming. Today, we will focus on the Carillon. It is a multifamily asset in Nashville that GAIA acquired as a distressed property. It was not built by GAIA. Since the acquisition, GAIA stabilized operations, executed priority capital work, reset leasing and programming, and repositioned the property to better serve the renter market. The episode is a case study in operator-led value creation: physical upgrades, operational turnaround, and tenant/amenity reprogramming. Essentially, it is a playbook for identifying and capitalizing on distress in Sun Belt markets. Thank you so much for being here, Danny.
Danny Fishman 01:22
Thank you very much, it's a pleasure.
Atif Z. Qadir 01:24
So, Danny, how did you get into real estate at first?
Danny Fishman 01:28
So actually, my first job after school was in Israel, and at that time, Israel led the was emerging from more like socialist or semi socialist country to capitalist and the government had a lot of government companies owned companies, and they wanted to privatize them. So my first job after business school was I joined this team, and my job was to float companies, sell them, and my sector was real estate. So I did this for few years. After that, I moved to investment banking, private equity, but then when the crisis happened in the US, with the meltdown of the financial market in '08, I thought it's a great opportunity. And I co founded GAIA, and we started in '09, when there was a lot of distress. So that's the natural story, great.
Atif Z. Qadir 02:21
And diving into that a little bit in more detail, you had mentioned in the move from socialism to capitalism, the type of work that you did for the government in Israel is to sell off government companies. Is that the basically the idea, right?
Danny Fishman 02:37
So the idea was, I was with a team of people who were sitting on the board of those companies. And so first stage is to prepare them so because so to prepare their book, to prepare their asset list, and you know, to see the real estate, the values. And then in each company, we decided this, to sell it in a private sale, or do a bid, or take it public and so forth. But the idea was that after we finished this process, everything will be transformed into the private sector, and the government will be out of the real estate market.
Atif Z. Qadir 03:07
I see. And that was primarily within the construction industry, within real estate, and then you moved from there?
Danny Fishman 03:13
Yeah, it was actually in everything the government back then was involved. So we're, I was on board and dealing with rental companies, infrastructure companies, construction, development companies. So the government was involved in everything, and then when the process ended, it ended the years after I left, because other people continue to do that. But of course, the government is now, long ago, not involved in in the business side.
Atif Z. Qadir 03:39
And what were some of the skills that you learned and doing that as your first job out of grad school?
Danny Fishman 03:44
I think that the first thing that I learned is that the government cannot do things and is totally not efficient, totally it always ends with corruption, because then the politician said, who is going to be the board and who is going to be the CEO, and then the politician asked for favors from the people on the company. And so that was the first, like, fresh memory after school. It was a little bit of a shock to see it. So I think that from that point I said, you know, the government should be involved in the minimum minimum in every sector. So that was the first thing. And the second was a good school, because I was like, you know, young analyst after school, and I was then sitting with teams and, you know, analyzing companies, preparing them for flotation, working with investment banks from the US and Israel. So it was a great experience, and I learned a lot in this period of time.
Atif Z. Qadir 04:39
So the financial crisis comes around in 2008 and you started GAIA. So tell me about that move from Israel to the United States, and what the first projects that you were pursuing, and how those went.
Danny Fishman 04:53
Sure. So by then, I added, like my own investment bank that I started in Israel that was focusing on capital markets fund. Raised in money management and so forth. And then I met my partner in Israel, Ken Woolley. Ken is the founder, and he's still the chairman of Extra Space Storage. It's the largest self storage, and separately, is involved in developing and so forth. So we met, and we said that the market looks like a bubble, and there will be an opportunity when basically everything will blow up. And then the crisis happened, you know, various Sterns, Lehman Brothers, and then we said, Okay, that's a great time to start. Basically in 2009 I left my investment bank, and they stayed only on the board and moved to the US, and we started the operation, hiring people. We started there in New York, and in New York at that time, there was a big opportunities on the condos market, because the development of condos in in New York versus like Miami, where I'm now getting this interview, is that when you're buying a condo, you're basically putting a 10% deposit, and then you're coming to the closing with 90% of the money.
Danny Fishman 06:03
So the developer is actually not using your money. And if you're late or something like this, you can take the deposit. But also it's like an option, because if the market is down more than 10% Oh, nine came, and basically most of the buyers threw the deposit. So you had the brand new condos all over the city. They saw that there were 100% sold, and few months ago now there are 0% sales because everyone left. So what we did is we went to the developers and we bought box of condos, but all cash. There was no lenders back then. So we bought condos, all cash. So that was the first transactions we did. And then we started to buy multifamily in the Sun Belt that was also distressed. And then at the peak, a year later, there was a big portfolio that Lehman Brothers was involved in the mezzanine, and it was like almost 10,000 units. So we competed on that, on the market. It was a almost one year process in bankruptcy court, and we competed against, you know, the big players, the big private equity, real estate sharks of the US, and we won, and we got the portfolio. And that was a game changer for us, for GAIA because we had now to build very fast almost all the teams and everything. And since then, we continue to grow. Until per today, we did almost $4 billion of assets.
Atif Z. Qadir 07:31
That's $4 billion of acquisitions?
Danny Fishman 07:33
Right.
Atif Z. Qadir 07:33
Okay, and you mentioned that from that first step in New York, you moved into the Sun Belt, what were some of the metrics or the things that attracted you to that part of the country?
Danny Fishman 07:47
So we started to buy in Houston, which is a market that we saw the first opportunities. It was growing very fast, and they had some distress, because Houston doesn't have the volatility that back then Miami had. That today doesn't, but it still had the volatility because there was no zoning, so every time was oversupply. So we saw an opportunity there, and we started acquiring and it went very well. And then we established our own office. And at the peak, we had like, 6000 units in Houston, and I think we had an office with 350 people over there, including the management. And through the acquisition of the Lehman Brothers portfolio, we basically entered other markets, because in the bankruptcy court you cannot choose and pick, you know, it was like one portfolio of 10,000 units. You have to buy it all. So everything, with everything, whatever, each class, ABC, every location, everything. So it was one portfolio, you win, and that's it. So with this, we got portfolios in other places like Dallas and Florida and Atlanta and Nashville, in Phoenix, Arizona. And so with this, we expanded, and we started to work and then basically around properties that we have so we started to see different other, different opportunities and expanded. But definitely Houston was big for us, and then we continue to buy there directly, other portfolios after that. The bottom line is around '21 we saw that the market is very expensive. The interest rates was low, co-op rates were ridiculously low, and we just sold everything and exited the market.
Atif Z. Qadir 09:30
So what were some of the lessons that you learned from that first growth phase of GAIA real estate?
Danny Fishman 09:36
I think that at the end of the day, real estate is a product. It's not a consumer product, but it's almost a consumer product.
Atif Z. Qadir 09:42
When you say consumer product to mean like a commodity?
Danny Fishman 09:45
No, it means that there is a user that wants to buy it and to needs it, right? So our basically customers are the renters, right? The people that rent apartment. So you can do all day long, the models and the excels and underwriting, but the end of the day, I think the first thing you need to see is, who is your rental pool, and what can they afford, and what they're looking for, because that's the basic. And then, you know, when we, for instance, when we bought, and after that we sold, a lot of the decision, besides the regular things, the model, the capital markets, you know, the interest rates, everything was that we basically understood that the tenants, that our customers, cannot pay more rent. So basically, we're saying, if they cannot pay more rent because they're priced out, then there's no more really added value, because you can continue, you can plate the houses with gold, but they don't have they don't have money to pay more rent, so it doesn't matter. And people were still underwriting rent growth and added value and things like that. And you said, Okay, at this point, we better sell everything if other people believe in it, we don't. And then we exited
Atif Z. Qadir 10:55
So then after 2021 you waited for new opportunities and new markets, and one of those was Nashville. So tell me about how you had come to find Nashville as potential market, and where that learning process went.
Danny Fishman 11:10
So the first property in Nashville we actually bought with a portfolio of Lehman. So that's how we started our experience in Nashville. And for me, you know, coming from Israel, Nashville, it was a lot of country music, you know, things...
Atif Z. Qadir 11:25
Barbecue.
Danny Fishman 11:26
Exactly. Barbecue and good music. But, and then, when we started to come there, more and more, we saw a very nice city with universities and health care and growing and young people like to go there. So then we started to explore more the market. And then we saw a neighborhood that was called Germantown, which reminded me a lot of like Williamsburg in New York, but more center, more central. So basically, we said, that's a great place because it's very close to everything it is the vibe and the help of, you know, young people want, and it's, and it still is mixed. So it's not like, you know, usually go to a Sun Belt and there's like, brand new area that it's all look boring, cookie cutter, you know, multi family after multi family. There, you know, the old warehouses and small bars. And people are doing creative things.
Danny Fishman 12:20
And among them, they're they're building a multifamily so we thought, okay, that's a great opportunity to come to a place. And of course, we did a lot of macro and micro, and we understood that there are about to build there the National Library and the museum, and they're expanding the park, and it's only half a mile walking to the downtown, and more and more things going there. So we focused on that, and we bought this property. And actually, when we sold everything in '21, in '22 we kept this one because we thought that even if it's traded today, we could probably sell it with lower cap rate. We believed a lot in Nashville as a city and this area. So we, we kept the portfolio, and a year ago, we even bought more in Asheville with the with the oversupply and a little bit distress and the weakness of the rental market, we we bought another property there.
Atif Z. Qadir 13:15
Tell us about the Carillon in terms of how you found it. What was the initial opportunity identified?
Danny Fishman 13:22
So as I said, we came to the neighborhood, and the neighborhood was very, like cool and hype and very interesting. And was, it was funny, because we are very much hands on. So when we are buying a property or the due diligence, we're coming with large team, and we are spending a lot of time there. And, you know, going in the evening to see how it looks, and staying for the weekend to see what's going on, and early in the morning. So we are and and usually for us, especially, that's coming from New York, and this it was like was work. You know, you go to Houston, you know, you finish work, then there's nothing else to do. You just want to go back to the to the airplane and fly back home. And so when we're doing due diligence there, it was the first time that, you know, people started to say, Can I stay after that? The weekend there, and the teams in New York were like, we're starting to fight who is going to do the due diligence? Who's going to fly? Usually, the opposite. No one wants to. So, you know, you find a place that it's very nice, you know, it's like, maybe the only place where I invested, besides New York or Miami, that it's a place that I said, Okay, you know what? I would stay here weekend. I would I see myself if I'm after college, I would live here. And, as we said before, when you buy at the end of the day, it's a product. It's a consumer product. And I'm saying, you know, it's me and the team, feel likes this, and everyone wants to be there and go there and say, and then it means that it's a place that also tenants will want to come and go. And that's was part of the decision.
Atif Z. Qadir 14:57
And then the Carillon itself, what was the like, the source of the acquisition? Was there distress on the financing? Was it partly complete?
Danny Fishman 15:06
No, it was just a period of time that it was completed and was stabilized, and there was more oversupply coming, and Nashville was still not so much institutional like it is today. It was like, more like Treasury market. So institution today, it's like prime market, but it wasn't like this. It's very new. So we could buy it at good prices versus, you know, cost and cup rates, and everything looks good, and everything look to us, also not taking into consideration all the growth and the changes that are coming around this property. So just like across the street, you know, places like the National Library, museum, park, and it was like, for us, it was okay, that's a great opportunity to get a in a good price, an asset that is also not just the asset, per se is we are buying well, but it's like, in an area that is improving a lot with a significant change. Of course, now, if you walk there, you see all these things around you, but it was like they were not existing seven or 10 years ago.
Atif Z. Qadir 16:10
So it was one where you found a particular opportunity that you saw had high upside, purchased the property, and were there any renovations or changes or improvements or adjustments that you focus on in the early years?
Danny Fishman 16:26
Yeah, so we utilize few things there, they had alot of parking and the parking podium ended like in like a rooftop that was more parking and it was empty. You know, people prefer to park on the covered one, and the top floor was always empty. No one was using it. And then we saw that, you know, I don't know, 70% of the tenant has pets, dogs, but we said, why not? So we did like a dog park on the roof. So things like that, that we improved it, or we improved and we built like a co-working because a lot of those people were working from home. So what we try to do is, basically, instead of usually multifamily developers, build in trends. If the trend is now to do game room, they do game room. If it is to do X, they do X. So what we did is we took the property and took the tenants and the neighborhood and said, Okay, what they what they really need their dogs. They worked from home, so this is their main two needs. And the gaming room was empty all the time. And say, you know, it's, maybe it was the fashion back then to build gaming room, but there's no, no one uses it. It's like, what's the point? And then the people are fighting on the conference room, who is going to be there? So that's what I'm saying. We're always trying to see what, what our clients were not what we think that in, you know, the tower on the 50th floor in Manhattan and the Excel say that they need.
Atif Z. Qadir 17:47
So in this case, how many, how many units are on the property? How many floors like, what's like the massing of it?
Danny Fishman 17:54
It's around 300 day units. It's spread around like a swimming pool and a very nice court to like two courts like this, and there's all the full amenities and but it's a because it's a urban and that's one of the things that we like. Usually, when you go to a Sun Belt property, then basically there's nothing much around it. You need a car to go every place.
Atif Z. Qadir 18:18
Sure, Atlanta is a perfect example.
Danny Fishman 18:21
Exactly in Houston and in Dallas and Phoenix, Arizona and all the same here, it's reminded us a lot of Manhattan, because you walk out, you walk to restaurants and bars and the baseball stadium across the street, and so for us, it was not just the amenities of Manhattan. In Manhattan and you say, Okay, what's the neighborhood? All the neighborhood is amenities for the tenant, not just the building. So it was the same for us over there.
Atif Z. Qadir 18:49
So basically, it's this idea of selling Nashville, that's it, and all the amazing aspects of it.
Danny Fishman 18:55
Nashville and this specific neighborhood, because this specific neighborhood, there's things that worked for us in the past and still work for us in the future, in things that we did after that was that if an area is more walkable and has the combination of work, play, leave, then it attracts a lot of young professional and good people, because you have everything around your walking distance. At the end of the day, people definitely young professionals in this generation is like that. So it's like, it's less that they want to be in a remote place and, you know, go to drive the car to, you know, to buy groceries or to a bar. All these things were, you know, falling exactly as how we saw this place.
Atif Z. Qadir 19:38
So from the team comes to see the property. You're making these targeted improvements. You had certain expectations of how the rent would increase in response. In the first couple of years, have you seen your expectations realized or exceeded, or how they compared?
Danny Fishman 19:54
Yeah, the property always performed better than we thought. And I think. Think everything was basically, I think that we're good managers, but with all the honesty, it's not just us, because
Atif Z. Qadir 20:06
If it could also be conservative underwriters, too.
Danny Fishman 20:08
Yes, exactly true, but the area was performing well, and specific property in the location that was close to the stadium, and close to this and close to that was performing. So it always performed well. Now the value, of course, go up and down with the capital markets and with interest rates and cap rates, like everything. But even in you know, when you know there was more distress in the general market, this property performed well. And always, you know, even by value, not that we sold was was got a good valuation, not that we sold it or anything, but it's definitely proved itself as a good property.
Atif Z. Qadir 20:47
Did you buy this one all cash as well?
Danny Fishman 20:48
No. We bought it with a loan, and then after that, we refiled. And then when we sold everything, we thought that this one we were not selling, because we can get a very good price, and it was a huge demand, and you can already see all the parks and everything around it, the museum, but we knew that it's becoming like one of the top hubs for healthcare because of Vanderbilt and other things. And then we understood that there is a plan for Oracle to move the headquarters just across the street from us.
Atif Z. Qadir 21:21
That's a game changer.
Danny Fishman 21:22
Exactly. So that's, that's one we're gonna keep, keep, you know, keeping, not selling.
Atif Z. Qadir 21:27
When is that headquarters are going to be realized?
Danny Fishman 21:30
It's already happening there?
Atif Z. Qadir 21:32
Oh, it's there. Okay, it's in process.
Danny Fishman 21:35
It's not there, but it's in the process and, but now, of course, it's, it's really, and It's like, 6000 jobs, or it's, like, very significant.
Atif Z. Qadir 22:30
Do you anticipate a change in the renter profile, increase in potential rents?
Danny Fishman 22:35
I think rents will increase definitely, because it's all improving and Nashville is improving, and also now there is oversupply that we knew, not in this area, but the general in Nashville, there is oversupply. That's one of the markets that were overbuilt because of all the growth. And we expect everything to be absorbed, you know, '26 and we think that end of '26 will start to see back rent growth for sure in this sub market as well.
Atif Z. Qadir 23:02
So now, as you look into next phase of investment, there's another interest rate drop this week and likely going into the first quarter of next year. What markets in the Sun Belt are you interested in or beyond the Sun Belt?
Danny Fishman 23:16
So we are very, very focused on South Florida, and we're doing some different strategy. We're basically locating neighborhoods in South Florida that are center, like urban, not suburbia, that basically still didn't emerge or gentrified so many single homes or others. And basically what we're doing is we're buying, focusing on specific neighborhoods, buying a lot of volume in this specific neighborhood, and helping the change happen with new product and adding more cool retail and cleaning the neighborhood and so forth and so forth. So that's our focus now. We believe a lot in South Florida, I think that it's a you take all the area from Miami to West Palm, we think that would be a lot of growth there. We think that would be definitely one of the winning metros in the US from all the changes.
Atif Z. Qadir 24:16
Population growth?
Danny Fishman 24:19
But it's not just population, because, you know me, see, Houston is growing and Dallas is growing, but it's also there's a lot of wealth going there. So and a lot of you know hedge fund and tech and finance and so forth. So it's population growth, but also wealth, and they're run very well as a state in trying to cut red tape and working with business and landlord friendly and also very business friendly. And of course, there's no tax, which attracts a lot of business and high net worth. And on top of it, we continue to see all the issues that are in the northeast and other cities, basically crossing businesses and the wealthy people and move out. And this is before next week elections in New York. So, so we believe or not in this matter.
Danny Fishman 25:16
And also, you know, Miami used to be like La La Land, like playground you're coming for a vacation. And since Covid starting to get a volume of other things slow, like, you know, culture and business and finance and, you know, art, and so it's becoming a city over that people can end. West Palm is the same, and Fort Lauderdale the same. In Boca, like a place that you can live around year or long and have all everything that you need, from entertainment, art, culture, things like that. There's still, of course, a lot of things that they still need to do and build, but it's going in the right direction.
Atif Z. Qadir 25:55
What would you say are the main reasons that you would have concern on investing in the Northeast? So it's high property tax, high income tax.
Danny Fishman 26:03
In New York, you mean?
Atif Z. Qadir 26:05
New York specifically, but I'd say Philadelphia, Boston, other northeast cities.
Danny Fishman 26:09
Well first, I think that the city in general is not business friendly. So to some degree, they take because of the political environment, they look at business owners and landlords generally are the enemy. Instead of red carpet, they will do everything that they can to slow you down, tons of red tape, like ridiculous things that hundreds and hundreds of regulations and laws and inspections that doesn't contribute to anyone.
Atif Z. Qadir 26:40
Give me one of your favorites that you that are your point of consternation for New York investment.
Danny Fishman 26:46
Right, I'll give you two. There is a shortage of apartments in New York, right? Okay, big shortage, and the grant is growing, not because there's so much demand, because no one wants to build. So you finish renovation of new apartments. Everything good. Everything is new. Ready for a tenant, takes the inspector one month to come. So, okay, so all the units said once it one months on, the apartment on the empty. Inspector comes. Everything is fine. Everything is great. The painter that painted the door from the outside forgot to put back the unit number 123, inspector says, sorry you failed the inspection. Call me. I'll come again in a month.
Atif Z. Qadir 27:27
Next month?
Danny Fishman 27:28
No in one month. So another one month, everything is vacant, just waiting for us to put the number on. Another example, they just passed a law that if you need to install a new washer-dryer, you need, like a super, super plumber. I don't know what's the definition. There's maybe 2000 of them, like in the city or like to install a washer that costs, I don't know, $300 $400 it costs you $500 and you have to wait for this expert for and for nothing. There's no reason. And then they say why the cost of living is so high. So it's like, there's, that's examples, but the day-to-day is like this. So it pushes investors out. It pushes developers out. On top of it, there is high taxes, and, you know, a lot of issues on the streets and crime up and down and things like that. So, so you say, okay, you know, there are other places that I can work calmly, and people understand the value and work with me. And the city improves things. And to be a landlord, you know, they change the law of eviction in the in New York. So, you know, people that know to work the system. We had a tenant that was totally white color in a free market apartment. We could not evict him for two years. So the guy, you know, sit basically, and we have a lot of landlords that they are in the same situation. So basically they are, it's very hard to operate, and that pushes the people out of the city.
Atif Z. Qadir 28:59
And did you have, or have you had investments in northern New Jersey, Philadelphia, Boston, other DC markets like that.
Atif Z. Qadir 29:06
The other markets that you mentioned in Northeast, do they have similar those properties have similar kind of issues that you described as to the New York opportunities that you have, or those are a little easier?
Danny Fishman 29:06
They're harder than to operate in the Sun Belt, but it's not even close to the nightmare of New York
Atif Z. Qadir 29:06
I'm guessing. Then, as you were describing, you are waiting with anticipation for for next week. Election Results, which will be out by the time this this is recorded.
Danny Fishman 29:06
We had the properties in Jersey, and we sold everything. And in the northeast, we still have in New York, of course, in Manhattan, we have in Stanford, Connecticut, a few high rises which are doing very well and it's a nice market. And we have another big property that we have and also performing well in East Providence in Rhode Island. So that's our footprint today in the Northeast. All the rest is in Sun Belt and South Florida. The
Danny Fishman 29:19
Yeah, yeah, yeah. I hope he will not be elected. This guy, Mamdani, but as I said to people, if he is going to be elected, the question how bad it will be, not if it will be good, if it will be a total disaster or half a disaster.
Atif Z. Qadir 30:18
Have you had a chance to meet Zoran Mamdani?
Danny Fishman 30:21
No, but I was I think it was an online Sunday, and I heard him speaking. I heard him speaking many, many times. And it's like, it's unbelievable that you know the, you know capital of capitalism in the world and city with a very big Jewish community, someone like this can be the mayor.
Atif Z. Qadir 30:42
I had a chance to meet him at when he first ran for city council position from Queens at a watch party for Super Tuesday. So Super Tuesday is the day in March where I think 17 states have their primaries. He was working at a nonprofit in community organizing, and that was his very first role that he was running for, and I found it to be very, very personable, very charming, very thoughtful, very good listener. So hopefully some of those skills will help him navigate the waters of actually running a hard city like New York.
Danny Fishman 31:14
Yeah, hopefully he will not be elected, but if he will be elected, hopefully he will be more moderate than he says.
Atif Z. Qadir 31:21
Exactly. So now looking back into the Sun Belt, which is your area of focus, as we know, what are some of the potential upsides that you're looking for going into 2026 and beyond, particular events areas or things that you're looking forward to?
Danny Fishman 31:38
So I think there is, generally speaking, oversupply that across the Sun Belt, there are some pockets with much more and some pockets with less, but generally speaking, and I think that that causes the market to be soft. So basically, rents are going down, and developers that are leasing up, offering one to two months concessions. But on the other hand, if you look at the pipeline, it went down a lot because the interest rate. First of all, if you, if you take an underwrite lend today, it almost doesn't pencil out anywhere to build because of the high interest rate and high construction cost. And also, developers have hard time to get loans, and they're expensive, so the pipeline went down a lot, so, but the growth continues.
Danny Fishman 32:28
So our expectation is that, you know, it's an opportunity to buy properties that developers or investors need to sell because they have hard time with the loan with a high interest rate, they cannot refi or whatever. And then basically we think that, you know, second half of 26 we believe that things will be stabilizing and rent will start to grow again. So I think that's generally, of course, each pocket is different, and each pocket need to be underwriting, what's the pipeline, what's construction and everything. But generally speaking, this is our assumption. And also the interest rates, they went down. It's not just the cuts. Because we borrowed today. We're just now doing a transaction, which probably the interest rate will be a little bit over five, at around 5% this was six and a half a year ago. So it's not just the Fed cut. It's also the spread went down and there's more competition. So basically, it's totally different environment to finance a property 5% versus six and a half or 7%
Atif Z. Qadir 33:27
Especially if you believe in the long term thesis that you described about distress in US multifamily markets, it's usually local and it's temporal. So if you can take advantage of that, particularly as new entrants come to the market for debt, so it's not just community and regional banks that can provide financing for local properties like the ones you're describing. Then it's downward pressure on the interest rates. So it makes sense to take advantage of that.
Danny Fishman 33:54
Right. You know, two years ago, when we looked up things, you could get 50% loan at seven. Today you can get 70% loan at five. Huge difference.
Atif Z. Qadir 34:03
And in the markets in the southeast, the Sun Belt, people talk about Atlanta, Houston, Charlotte, Miami, what about places like Birmingham, Chattanooga, Savannah, or any of the secondary areas? Have you had exposure to that in the past?
Danny Fishman 34:19
We used to have a little bit, but we don't invest there. We look mainly on the big metros, big cities and, you know, around them, but we don't go out of those places.
Atif Z. Qadir 34:29
I'm guessing it's easier to fly in and fly out, because you prefer not spending too much time there's those are a little easier.
Danny Fishman 34:35
Yeah, easier to fly in flight, and also easier for someone that is like, I mean, we are local in Miami, and we're local in New York, so sure, every place in South Florida or there, we will know to tell you. But you know, when you go to Atlanta, you know Morris, Atlanta, you go to some very remote area, you need to really know very, very well the specific area to understand. And it's very hard for a company that is based in Miami and New York to really to get into all the small details on small things. So we prefer to be in places that, you know we it's easier for us to check unless we are really locals, and then we can check everything.
Atif Z. Qadir 35:12
I think, in particular, as I had a chance to visit Fayetteville, Arkansas, which is buoyed by University of Arkansas and the Walton family and Walmart in general are the biggest drivers. I would say, I would imagine some of the danger in smaller markets is that your growth is tied to one or two things, as opposed to several dozen things.
Danny Fishman 35:33
100% that's another thing that you know when you're in centers Houston or in Orlando then, is you have a lot of job drivers, a lot of this, and we don't want to be in a place like tomorrow morning AI and robots replace 75% of the people in Walmart. So what do you do with this town?
Atif Z. Qadir 35:51
Totally and just go, go watch some football. I guess that's that's really all you can do, and eat some barbecue. So for folks that are looking to grow their portfolio with a lot of fraud and volatility continuing to next year, what would you say are some of the best learned lessons that you've learned so far that you're going to be utilizing the next couple of years?
Danny Fishman 36:11
So what is one that I said that basically you have to understand your tenant profile and what they are looking and also what they can afford to pay. When you're underwriting, you think that's the first thing to see, to see if the rents that you're underwriting is realistic or not realistic. So that's one thing, and the thing, the second thing, is to see that the specific micro location fix the demographic. So basically, you know, if you have a properties with large units and expecting, you know, to have families, and there's no good schools around it, or, then what are you doing? Or if you have small apartments, like in there, in cool area, but you know, you have to drive 15 minutes to a bar, then it's also not a fit. So I think that it's the combination of what the tenant can pay and want to pay and can afford, and also what they're expecting to have in the property and around it. So I think that's very focused on the client itself. So I think that's the one lesson that we learned, and I guess that's the main one.
Danny Fishman 37:16
And second one is like on the financial modeling and underwriting to be more realistic. I would say so basically, to say, okay, you know, to lower the expectations, and you know, not to get into things that are very easy to you know, because Excel, you can put whatever you want. You know, when we when, when we sold the properties in '21 and '22 at the beginning, you know, we sold more than 20,000 units. So, and we're, everyone was buying. So, you know, after we sold the first, the second, the third, you know, I started to say, okay, you know, maybe I'm wrong. Like, what's going on here? Like, you know? So we had 100 buyers, 150 buyers coming, and we're selling then, saying, you know, what? Maybe where something is wrong. Maybe we don't, you don't read the map, where maybe there's something else that they don't see.
Danny Fishman 38:07
So we started to basically build the underwriting models like we're buying, just to understand, like, you know, okay, I would tell the acquisition. So tell me, okay, convince me why to buy it at this price, you know, going with your imagination on the Excel, yeah, think that that was a point that we understood that we're probably right and we should sell everything, because we could not find any something that is reasonable or conservative that can justify that.
Atif Z. Qadir 38:35
It was hocus pocus math.
Danny Fishman 38:37
It was hocus pocus and very unrealistic expectation on how much you really can add value and how much you can really increase the rent by renovation. And I don't know, because interest rates were low, and also it was after a lot of years of rent growth. And I guess people assume that it will continue, and did not understand that, you know, blue collar, you know, worker that works in the Houston airport and makes $65,000 a year.
Atif Z. Qadir 39:05
He's not making $100,000 next year. That's not how the math works, right?
Danny Fishman 39:10
Exactly. And if you put new kitchen and new everything, it doesn't matter. He can't pay he needs also to eat. So it's like something that's the best lessons.
Atif Z. Qadir 39:21
So at the end of interviews, you like to ask, what are you looking for? More of any particular types of deals that you're looking for?
Danny Fishman 39:30
So I think we're looking more in South Florida for areas that we can change, that still didn't go through the growth and gentrification, and also land that because it doesn't make sense to build today, but we just make for us sense to buy land and sit on it for the next cycle. So I think that's main two focuses.
Atif Z. Qadir 39:53
And for folks that may have either what would be the best way for them to get in touch with you?
Danny Fishman 39:58
Best, you know, email me. We return everyone the same day.
Atif Z. Qadir 40:02
Excellent. I love it. So thank you so much for your time today. Danny, I appreciate you talking about your path in real estate, your strategy that Carillon, and your thoughts on the market in the next year or so.
Danny Fishman 40:16
Great. Thank you very much. Was a pleasure. Was fun,
Atif Z. Qadir 40:19
Of course. Thank you.
Atif Z. Qadir 40:20
I'm Atif Qadir, and thanks for joining me on American Building. If you enjoyed this episode, be sure to subscribe on your favorite listing app and leave a rating and review. America's housing crisis is one of our greatest challenges. But what are the real solutions? Hear from the developers and other industry experts driving meaningful change, get our exclusive guide housing in America, eight ways we can solve our way out of a crisis at americanbuildingpodcast.com.