How One Investor’s Journey Shaped a Better Approach to Property Management

Speaker 1 (00:05):

Hello.

Speaker 2 (00:06):

Hi. How are we doing?

Speaker 1 (00:07):

Great. Welcome to Real Estate Rewind.

Speaker 2 (00:11):

Thank you.

Speaker 1 (00:11):

The podcast featuring Tyson Schitzi. Yes.

Speaker 2 (00:15):

And

Speaker 1 (00:15):

Tyson Schitzi is in the guest seat today.

Speaker 2 (00:19):

Yes.

Speaker 1 (00:19):

Yeah, because we’re going to do a little foundation and background on why we’re here and a little bit about why Real Estate Rewind exists.

Speaker 2 (00:29):

Yes.

Speaker 1 (00:30):

[00:00:30] So I think we should start there because we’ve been in the podcast studio a couple of times now, right?

Speaker 2 (00:37):

Yep.

Speaker 1 (00:38):

Talking about real estate investing, Aubin, and a few other things, but we want to get to kind of the beginning.

Speaker 2 (00:48):

Yes.

Speaker 1 (00:49):

Why have we come to the podcast studio? Sure. Why does this show exist when a million other, maybe a million other podcast

Speaker 2 (00:58):

Shows – Does the world really need another podcast?

Speaker 1 (01:00):

[00:01:00] Yeah. Does the world really need another real estate podcast? So what was missing and why do you think Real Estate Rewind came to be?

Speaker 2 (01:10):

Yeah. So thank you, Erin. And for those folks who don’t know, Erin Isley has provided marketing support direction strategy for Auburn for a while now and has really been a big champion of us spreading our vision and mission and thought it would be good to kind of work [00:01:30] directly with her to give a little foundation here. So my name is Tyson Schutze. I founded Auburn in 2009 with co-founder Natalie Walls, who was our original broker in Augusta, Georgia. But I think what we wanted to do here was maybe give a little bit of background even on my personal history, how I got into real estate.

Speaker 1 (01:56):

Absolutely.

Speaker 2 (01:56):

How we think about real estate maybe a little bit differently from some other operators [00:02:00] and owners, investors out there. So I agreed to jump in the hot seat here. Hop seat. Hopefully I’m not hopping out of it, but the hot seat to really answer any questions that Aaron wants to ask me just about why we believe that the world needs another real estate podcast.

Speaker 1 (02:22):

So yeah, why don’t you take us to the very beginning, which was your path into real estate investing, where [00:02:30] you got started and how you ended up in Augusta, Georgia.

Speaker 2 (02:33):

Sure. Yeah. It was an interesting road to Augusta. I grew up in Louisville, Kentucky. Growing up in Kentucky, my parents owned bookstores and really came from a background where it was very focused on teaching, literature, surrounded by the bookstore. I think growing up, like most kids, you don’t realize how fortunate sometimes your environment [00:03:00] is to future interest, future focus. But after a period of rebelling against the concept of pursuing books and literature, and I went to school at University of Denver. And at Denver, I pursued majors in communication, English, though I wanted to write the next great American novel or become a journalist. And so really pursued [00:03:30] training and education that was pursuing those items. So

Speaker 1 (03:37):

I hear you had a stint at Rolling Stone Magazine. Is this

Speaker 2 (03:42):

True? I did. It was very glamorous. I was an intern in 2000 and in those days – In New York City, right?

(03:50):

In New York City, yep. I moved to, after finishing college at the University of Denver, actually moved to Mississippi first. I did an internship at a Southern Literary magazine [00:04:00] called The Oxford American. Very cool. Which was a really interesting experience living in Oxford, Mississippi. And then had pretty much a polar opposite experience in New York City working for or interning at Rolling Stone. So interning at Rolling Stone in those days meant bringing coffee and bagels to the editors. And I always joke that one of our tasks, and this was probably, we had to be one of the last groups to really [00:04:30] do this activity, was going through newspapers and clipping out articles of interest and compiling them for the editors to consider. It was a great experience. I think that what I learned was what a sort of machine Rolling Stone was at that time and place.

(04:53):

It was a huge operation at that point. My timing wasn’t great. I always tell people it’s like [00:05:00] trying to get into journalism right when websites and online media and print was just sort of coming into. I say print, that shows my age a little bit, but right when a lot of the print journalism was moving online, it was interesting. I also always have had a huge love and passion for music. And so the only other thing that was maybe worse to get in at the [00:05:30] time than journalism was the music business. And I was pursuing that simultaneously. So had a stint at Rolling Stone interning. I was disillusioned with I think maybe how sort of corporate Rolling Stone was at that point in time. I think I had this version or vision of Rolling Stone in the late ’60s and it was a different operation and different business at that point.

(05:59):

So [00:06:00] after that, I kicked around a couple other jobs in New York. Like most English majors, they don’t know what they are going to do. I considered going back to law school or going to law school. Worked as an intellectual property paralegal, worked for Red Bull, driving a Red Bull car around. This

Speaker 1 (06:20):

Is something I did not know. Are you serious?

Speaker 2 (06:23):

Yeah. I drove the little Red Bull vehicle with the can on the top around.

Speaker 1 (06:30):

[00:06:30] Okay.

Speaker 2 (06:30):

That’s amazing. Yeah. Did that. Worked for the US Census Bureau. As a want to be journalist in New York, you’ve got to take on a lot of odd jobs to fuel your passion.

Speaker 1 (06:42):

Any service jobs?

Speaker 2 (06:45):

My service was the job that I always sort of defaulted to was a valet parking cars. So I worked in a parking garage there. I don’t know. I didn’t have the pull that a lot of friends or other people [00:07:00] did to hospitality and restaurants. But I’d had some experience in Denver working as a valet and did the same. Valeting in New York was very different than some other places I did it. You had very tight spaces and garages to work with. Okay. So

Speaker 1 (07:18):

How did all of these experiences in New York City lead you to real estate?

Speaker 2 (07:25):

Yeah. So good question. I was [00:07:30] truthfully a little bit lost. And I think New York City can be both an incredible place to be a little bit lost and challenging because you can see a lot of people on very definitive paths, career paths. And so after sort of thinking that I wanted to pivot from journalism, I had an experience running a record label that I loved. And it was really my first sort of business endeavor where I was responsible [00:08:00] for a lot of decisions on a lot of different functions of this record label. It was a very small operation. The guy who was running the record label moved on to a different position. And so by default, I sort of ended up from a pseudo marketing intern kind of position into making a lot of decisions. And I enjoyed it. It was my first taste of business.

(08:23):

But as I alluded to earlier, I was at least [00:08:30] aware that pursuing a career in the music business was not going to be a good decision. Around that time, I was getting to where I was considering just looking at what the future of sort of journalism or the music business could be for me from stability standpoint, from a health standpoint, lifestyle standpoint. Running around this city is a lot [00:09:00] of fun when you’re early 20s and maybe even later. But around that time, my father who’d owned bookstores in Louisville, Kentucky with my mother, another couple, essentially they had been really forced to sell by the market. This is a time when in the early 2000s, the chain bookstores were thriving and Amazon was really coming in to [00:09:30] be. And so it was a really hard time for them. For independent bookstores. For independent bookstores. So they had sold at a point that really positioned my parents and the couple they were with to still be in a position where they wanted to pursue something professionally.

(09:47):

And my dad gravitated to real estate. It’s interesting. Growing up, there hadn’t been sort of much discussion about real estate. It wasn’t something that [00:10:00] been exposed much to, but he had decided that he was interested in pursuing that as a second career. And so it was really through my dad’s pursuit of it that I began to take an interest in it.

Speaker 1 (10:14):

In those early days, did you guys do anything, pursue that path together? Was there anything that you guys did?

Speaker 2 (10:20):

Yeah. So I think that the thing that I would say was very beneficial about how we pursued real estate is coming from sort of [00:10:30] a background of learning, of literature, books is we both sort of set off to kind of educate ourselves in every way that we could. At that time in place, that meant one, reading a lot of books. There also, in most communities, there are pretty strong real estate investor groups. My dad had connected with some people in Kentucky. He was still living in Louisville, Kentucky. There was a pretty strong real estate investors association [00:11:00] there that he connected with. And through that, had been aware of some conferences that were available in different markets. And then also some similar groups in the areas where I was living. At the time I was living in Queens, New York, so just outside of Manhattan, more specifically Astoria.

(11:23):

And I got connected with a investment group based out of there. My father got [00:11:30] connected with an investor group in Kentucky. And really where it began to come together is we attended a conference actually in Massachusetts. I like to joke, it was one of those sort of get rich, quick overnight conferences where there was a very rosy picture painted of what real estate ownership meant, what it was like. But attending it, it was also the first time that I began to understand all the benefits [00:12:00] of owning real estate. The fact that you could just very simply own an appreciating asset that has all these tax advantages. The concept that real estate done correctly could allow you to have these passive investments that were very tangible. It really resonated. And so although I think I could understand that the picture of real estate that was being painted at this conference maybe was missing some of the details [00:12:30] or all of the sort of pieces, I was interested.

(12:35):

And I was interested enough that I got my license, my real estate sales license in New York.

(12:43):

And actually signed up for, at the time in New York, there was a company called City Habitats that had a very interesting model of essentially they were working with tenants, residents, potential residents coming to New York to help them navigate [00:13:00] the real estate market. And they were charging commissions not to owners or landlords of buildings, but to the prospective tenants. And City Habitats, I think, had a very smart business model that they understood, especially pre-internet, pre-sort of consolidated websites of information. The information on what was available for rent in New York was incredibly fragmented. [00:13:30] And they were one of the first out there to really take advantage of that. So that was my first gig. I worked alongside of a lot of struggling artists that were actors, musicians, maybe even a fellow writer or two that were trying to pursue this. And so I worked as essentially a, it was a,

(13:55):

I say it’s a leasing agent, but it’s very different from what most people would [00:14:00] say as a leasing agent because you’re working directly with the resident and not the owner of the buildings and you’re helping them navigate. It’s really more similar to a buyer’s agent for buying a home. And so did that in the East Village of New York while attending any conference that I could attend, any meeting that I could attend to sort of learn about real estate. When I decide that I’m going to pursue something, I’m generally kind of all in. And so [00:14:30] started learning and going to different conferences, groups and seminars.

Speaker 1 (14:37):

And if I recall correctly, didn’t you meet someone up there that had real estate in Augusta or how

Speaker 2 (14:48):

Did

Speaker 1 (14:48):

You – Yeah. Okay.

Speaker 2 (14:49):

Yeah. Yeah. So at the conference, one of the things that was interesting at these conferences is at this time in early 2000, there was a lot of information [00:15:00] out there that the next big population migration, the next big real estate boom was going to be in Southeastern markets for a number of reasons, affordability, quality of life, business friendly markets. And so at the first real estate conference that I ever attended, which was in the fall of 2004, was fortunate to meet a individual who ended up becoming one of my first mentors who was based out of Augusta, Georgia and doing multifamily [00:15:30] housing.

(15:34):

I think one of the things I realized is living in New York, trying to invest in real estate in New York was going to be really difficult. Even selling it or renting it, the barriers to entry, the competition, the risk if something went wrong. Actually, the first real estate investments that I was looking at in the sort of greater New York or Northeastern area was in Syracuse, [00:16:00] New York. Because the cost, the risk associated was so much lower than anything could sort of pursue in the city. And so my first exercises really in real estate investing were looking at deals in a number of different markets. Syracuse, Philadelphia, some different markets in Connecticut, and ultimately Augusta, Georgia.

Speaker 1 (16:26):

Let me ask, how were you analyzing deals back then? Because that was before [00:16:30] a lot of the resources that we have now.

Speaker 2 (16:34):

Yeah. It’s funny to sort of go back and look at it. I’ve kept some of the things, which is not surprising to people that know me. But I kept information on some of these deals and it was like pen and paper sort of deal analysis worksheets. And that was one of the things that I think really helped my career was [00:17:00] I would be very disciplined in trying to look at any deal and figure out how could this deal work. So even if the deal on the surface, if I knew, okay, these numbers don’t seem like they make sense, I would go through the exercise of kind of running different scenarios under what sort of rent or what purchase price or what occupancy. The conference that I had attended was very focused on multifamily. And so a lot [00:17:30] of the deals that I was initially looking at were frankly, way beyond anything that I should have been looking at in my experience and knowledge.

(17:38):

But it was great for the education understanding. Through looking at 20 unit apartments, 50 unit apartments, 100 unit apartments. The process is the same if you’re looking at a duplex or a triplex. And so what I was learning was applicable to also being able to analyze deals that were more appropriate for where I should have been starting. [00:18:00] But a lot of it was looking at deals online. Deals were starting to be listed online more frequently or that were being emailed around doing exercises. And then it was really cool to also be able to go into market and see these deals.

(18:19):

I would come to learn that there’s some layers of sort of what that was looking like and how that worked, but I would go to Syracuse and actually look at [00:18:30] these properties along with other groups of potential investors. And so there was this concept of, and I think always has been this concept of these emerging markets. At the time, Syracuse had this, and it never came to fruition, but they had this project that was going to be called Project Destiny, where essentially they were going to put this bubble over a large portion of the city that was going to attract all these businesses to it. [00:19:00] They were going to sort of offset the- The weather? The

Speaker 1 (19:04):

Weather. Oh, wow.

Speaker 2 (19:05):

Yeah. And if you look it up, it’s pretty fascinating, but that was a big driver of what was going to. It didn’t happen, but that was going to be what was a big reason as to why Syracuse was going to be this destination.

Speaker 1 (19:19):

Remind me to tell you offline about the museum I worked at and the bubble pavilion

Speaker 2 (19:25):

That was

Speaker 1 (19:26):

Proposed.

Speaker 2 (19:27):

It was

Speaker 1 (19:27):

Probably around the same time. That’s [00:19:30] so funny.

Speaker 2 (19:31):

Yeah. I’d love to hear that story. There’s interesting examples of this that I’ve heard about. I think the city of Newark did something at one point because it was so unsafe that they had elevated walkways that both were appropriate for the weather, but also elevating people off the street. But Syracuse had this project destiny that was going to supposedly transform the market. While that didn’t happen, what Syracuse did have similar to [00:20:00] Augusta, Georgia and some of the other markets it looked at, it was an incredibly affordable market. The cost of entry there compared to New York, it was one 10th of what a property or less of what a property would cost. And so again, being a newbie investor, I think I was pretty aware that I was going to make some mistakes. And so pursuing deals where the mistakes wouldn’t put me out of business was something that I was very tuned into.

(20:29):

And so [00:20:30] that was a similarity between Syracuse and Augusta.

Speaker 1 (20:33):

Okay. So you found yourself in Augusta working under the mentor.

Speaker 2 (20:39):

Yeah. So what happened was I was leasing properties in New York and that really started at the end of 2004 into 2005. I think I clearly realized that I was much more interested in being a real estate investor than I was an agent. And I knew that was going to be very difficult to do in New York. [00:21:00] Through that process, essentially through connecting with my mentor who lived in Augusta, he basically said, “Hey, if you want to move down here, I’ll point you in the right direction. I think there’s tons of opportunity.” And so at the beginning of 2006, moved down to Augusta, Georgia, knowing three or four people probably there, my mentor included. And having a really hard time [00:21:30] probably being able to even identify where Augusta, Georgia was on a map. I just knew it was going to be a lot different than New York City, but moved down there and essentially partnered with a friend of my mentors who was part of the.

(21:46):

He was a franchise owner of the We Buy Ugly Houses. For those who don’t know, they were some of the first real estate wholesalers. And they had this, it was based out of Texas, I think originally, but they had this franchise model where [00:22:00] they would buy distressed assets. They had this sort of caveman character.

Speaker 1 (22:06):

I remember the signs.

Speaker 2 (22:07):

Yeah. They were very popular for a while, but essentially we were going to partner up and I was going to run the sort of home flipping version of whatever product that my partner deemed was appropriate for it. My partner at that time had us working on projects [00:22:30] in multiple cities. To say it was Augusto would be very loose in a geographic. We had properties in Greenwood, South Carolina, in Orangeburg, South Carolina, in Irmo, South Carolina, which is outside of Columbia. So my day could be spent really just covering a multiple city radius, checking on rentals. Or excuse me, checking on our projects, renovations for properties that we were going to renovate that were former rentals to [00:23:00] be for sale product. We were going to flip them.

Speaker 1 (23:01):

So you went from just analyzing deals, educating yourself through networks and groups to learning the project management side.

Speaker 2 (23:12):

Yeah. And I’d had a little bit of sort of exposure to project management prior to moving to Augusta. After looking at, I don’t know, hundreds of deals for a year plus and not finding anything that could work. My dad and I found our first investment [00:23:30] property in Syracuse, New York, which was a triplex that essentially, I think we paid like $35,000 for a three unit property. And we realized even if we mess up everything on this asset, which we tried really hard to do, that it still would be a good asset to potentially perform well. And so long story short on that, we hired our realtor to be [00:24:00] both our property manager and our project manager. And it was a really good lesson for me. After months of no progress being made on the property and knowing nothing about renovation, I went up to Syracuse and basically communicated to our contractor that I was going to be living in an extended stay motel property in the greater Syracuse area until the renovation was done.

(24:23):

And so it was remarkable how when even just showing up on site and knowing nothing.

Speaker 1 (24:28):

Exactly.

Speaker 2 (24:29):

Yeah. [00:24:30] The progress that had not occurred in months was occurring in days and weeks. And so that was my first project management experience. And I think I was young and naive enough to believe that that would translate to projects in Augusta and the other areas in South Carolina. But I think what I really just sort of came to understand about project management is the consistency of presence, of communication, [00:25:00] of showing up is as important as anything.

Speaker 1 (25:04):

And that it can be yourself if you’re an active investor, but if you’re a passive investor, if you’re with a group that you trust, you know that they’re doing that on

Speaker 2 (25:15):

Your

Speaker 1 (25:15):

Behalf,

Speaker 2 (25:17):

Right? Yeah. Yeah. I think it was a really good. A lot of these lessons were very formative to the philosophy that sort of became the foundation for Auburn. And a lot of it was working through [00:25:30] how active an investor should truly be. In those days –

Speaker 1 (25:35):

You were literally eating and sleeping and. Yeah.

Speaker 2 (25:38):

Yeah. The concept of sort of passivity that I had been sold at these conferences of kicking your feet up on a lounge chair at the beach couldn’t have been further from the truth. But I am very fortunate that I had those experiences [00:26:00] because having to sort of roll up the sleeves and learn these things really became instrumental to how Auburn was designed. And I know we’re wanting to go into that more in our second episode, but I think that what really sort of came about from all my personal experiences is [00:26:30] a belief and understanding that investment could be and can be more passive with the right team. And that hiring true market professional experts that live, breathe and operate in markets could allow investors who aren’t local to have real estate investments in a market that they would like to [00:27:00] invest in. And we’ll go more into that in the next episode, but I think that Augusta could not have been a better market to sort of learn about real estate investing.

(27:13):

It was vibrant enough that it was benefiting from some of the growth in the Southeast in general, but also off the radar enough that there was a lot less competition [00:27:30] for investments compared to other neighboring markets of Atlanta, Charlotte, even smaller markets like Greenville and Charleston. And so it also became very important to my investment philosophy, not just on the operations and the management side, but the benefit of having conservative investments in value-based [00:28:00] markets that will perform regardless of what’s going on at the overall market cycle.

(28:09):

In June of this year, I’m going to have a sort of full circle moment where my original real estate mentor invited me to speak at a NARPAM conference in Knoxville, Tennessee on market cycles. Oh,

Speaker 1 (28:21):

Cool.

Speaker 2 (28:23):

And that’s been a topic that he’s always been very passionate about. But the cool thing about market [00:28:30] cycles is if you’re investing in a value-based market like Augusta, you can really be less concerned with some of these macro market conditions and movements. And so as we further unpack Auburn and what Auburn does, I’m excited to tell people on why we initially focused on some of these secondary and tertiary markets in the Southeast and how we feel [00:29:00] that some of that same philosophy is ingrained in the expansion that we’re pursuing today of finding value for investors.

Speaker 1 (29:10):

So let’s take that full circle moment and make it even further full circle. Sure. Just give me an idea of some of the topics we can look forward to hearing more about from you and special guests on Real Estate Rewind.

Speaker 2 (29:27):

Yeah, sure. So [00:29:30] coming from a background in literature and writing, I’ve always been interested in stories. What we’re going to attempt to do here is really have a number of different professionals in the markets where we operate, some of our team members, special guests that maybe are not in the markets that we’re in, really telling the personal side of real estate, as well as why certain things [00:30:00] Things that can be going on from a macro market perspective may not be relevant to some of the markets that we’re in. So as we discussed what we should call this podcast, we really wanted it to be focused on the personal component, the stories, but we also wanted to be able to tell stories about how real estate is hyper-local. And that is very important [00:30:30] to Auburn. We’re in 10 different markets at this point, managing a couple thousand homes.

(30:37):

But the concept of personalization for our investors, understanding their investment strategies, the concept of personalization for our residents who live in the homes, the concept of having personal experiences with our employees who none of this would be possible [00:31:00] without of, we really want to tie all that together. And so the attempt on this show is really going to be to focus on different areas, markets, and people to let them tell the stories. And so I think we’ve discussed in multiple future episodes, I’ll be sitting in your chair.

Speaker 1 (31:19):

This is

Speaker 2 (31:19):

A one-time

Speaker 1 (31:20):

Thing.

Speaker 2 (31:21):

We’re just going to do a couple of these to sort of set the foundation and in the future it’ll be more talking about other people that are doing really cool things [00:31:30] in the markets that we’re in. I mean, I think that’s the exciting thing about real estate is there’s so many interesting things going on right now, particularly in the real estate that Auburn focuses on, which is residential rentals. Residential rentals are at a really pivotal time here for society, for future generations, because living is being sort of reconsidered, right? How people [00:32:00] live, where they live, why they live in certain places, what they want in these places where they’re living. All of that is being evaluated, considered against this backdrop of what I think most people would say is a under supply of what’s called alternatively attainable housing, workforce housing, affordable housing. No matter what you want to [00:32:30] sort of call it, the concept of housing that fits for a wide portion of the population is being reconsidered.

(32:40): And we want to be a leading voice of that. And so more than anything, that’s what this podcast is going to intend to do. So really looking forward to telling a little bit more about Auburn on the next episode, and very fortunate for all the people that have sort of helped [00:33:00] me and the team members get to this point to even be able to have this show