MHN: How did you start your business?
Keith Wasserman, partner, Gelt Inc.
Wasserman: I graduated in 2007 from the Marshall School of Business at University of Southern California. I always had an entrepreneurial bent and wanted to start a company. I grew up in a family of real-estate investors and saw myself pursuing some aspect of the industry. That next year, at the height of the recession, my cousin, Damian Langere, who was working at an environmental consulting firm in Santa Barbara, lost his job and moved to Los Angeles. We decided to jump in with both feet and launched Gelt. We were both in our 20s.
As partners with Gelt, our goal was to buy distressed multifamily properties and add value. We used our credit cards, approached our family and friends and scraped together the little we had to make our first investment of a fourplex in Bakersfield, Calif. Over the course of eight months we bought 16 fourplexes. We began moving beyond our family and friends as equity sources and brought in one investor, then four, then 10. We started growing exponentially as word got out that we were creating favorable profits for our investors. As we were able to add more capital, we kept graduating to bigger and bigger apartment assets. To date, we have acquired 5,600 apartment units valued at more than $800 million and we are on target to reach $1 billion of investment activity by mid-2017.
MHN: What were some of the struggles you had to overcome as you were creating this company in the middle of a recession?
Langere: First of all, we had no experience acquiring property. Because of this, tracking capital was challenging. It was even harder to secure capital because of the recession ? potential investors were put in financial situations with other ventures and were not as willing to take a chance on us. We also had a huge uphill battle to learn the industry quickly as we needed to understand all aspects of identifying opportunistic assets and the acquisition process.
We were motivated and diligently sought to overcome all our challenges. We put in long days and learned how to buy and operate apartment properties while our income was down and no money was going into our pockets. We presented to our family and friends and their friends and were extremely persistent with networking and finding the right people. Most importantly, both of our dads were very helpful every step of the way, and they served as our mentors, guiding us on the little and big details and everything in-between, but ultimately, allowing us to make the final decisions.
MHN: What was your method of growth as a company?
Wasserman: We had a vision of what we wanted Gelt to become, and we were very persistent. As we continued to increase our networking circles, we met with as many successful investors as we could. We met them at their office or for breakfast, lunch, coffee or dinner. We came well-prepared to make sure we asked them the right questions about how they structured deals, secured capital, etc.
MHN: What are some of your greatest accomplishments as a company?
Damian Langere, partner, Gelt Inc.
Langere: What we have put together is for a higher purpose both externally and internally. We typically buy for a long-term hold, and our goal is to improve the communities we acquire and help residents experience a better quality of life. We don?t use any institutional money. Our investors are family offices, friends and those we have gotten to know over the years as they have invested in Gelt. These people believe in us. We have established their trust and they also support our higher purpose. We couldn?t improve our tenants? quality of life without having our investors truly believe in us.
Finally, as a very entrepreneurial firm with young leadership, we are always seeking to explore new technologies that will help us run our company smoother and more effectively. Along the way, we have identified voids in related areas of our business and as a result have launched two sister companies. The first is Domuso.com, the first financing-as-a-service resident portal for the $540 billion rental payment industry. Domuso is the ?PayPal? for the multifamily sector. In a nutshell, merchants are apartment owners, and buyers are renters. Secondly, as a result of our investors wanting to diversify and being a very tech-oriented team, we launched Gelt VC, a seed stage venture capital firm investing in companies that are developing real estate, agricultural and transportation technologies. We are now supporting entrepreneurs in the same spirit that others supported us when we were just starting out.
MHN: What are some goals going into 2017?
Wasserman: We are seeking value-add apartment acquisitions ranging from $4 million to $100 million in key markets throughout the Western states. We believe that 2017 will continue to see strong demand for rental housing as Millennials and others seeking quality apartment communities choose to rent versus own.
MHN: How did you establish your overseas partnerships?
Wasserman: We have a very diverse and growing mix of private investors, family offices and high net worth individuals. Overseas investment comes from Australia and Israel; however, our major emphasis is on Chinese capital as it has been a very significant part of our investor base. Over the past three years alone, Gelt has raised more than $70 million from Chinese investors and we are on target to see about $100 million this year.
My father, Steve Wasserman, who has been our mentor and is a partner with Gelt, travels to China on a regular basis as he has a law office there. As we established ourselves and were able to show proven success with Gelt, he passed the word along to some of his associates in China, and then those people told their friends, etc. As the returns have been strong, our reputation in China now grows through word of mouth. In 2013, we also hired George Wu who is from Shanghai. He has a background in multifamily investment and is our legal council and liaison with Chinese investors. As an attorney, George understands all aspects of international laws ensuring we can be a trusted investment partner.
MHN: What advice would you give to other businesses going through a similar path from the ground up?
Langere: Mentorship, networking and persistence are all very crucial actions to grow a start-up business. With a current Gelt team of 14, our culture is very big on empowering people. It is very important to a company?s growth to allow employees to be able to provide ideas and input and know that they have a seat at the table. By surrounding ourselves with those who share our same corporate vision and values (this goes for our investors as well), we all raise each other up, which ultimately enables Gelt to strengthen and grow.