“We can overcome the challenges for a variety of reasons, the main one is having a really deep connections with your partners”

 -Mataan Lis

Mataan Lis is the investor relations manager at GSH. He includes the ongoing reporting for active GSH contributors and fundraising and communication for new acquisitions. But Mataan also oversees GSH, his corporate marketing strategy, and additionally, Asset Management primarily as it relates to property management, and renovation project oversight. But Mataan earned a BA in international relations and Media Studies at the University of Michigan. Prior to GSH, he worked at a security consulting firm managing corporate and private clients and traveled extensively throughout Africa, Europe and Asia.

In this episode, Trevor and Mataan discuss:

-What is workforce housing and what asset class has the highest demand.

-Workforce housing strategies and market to look at in the US.

-The process of getting investors into deals.

-The challenges of an investor during COVID.

-The challenges in finding the deals  during COVID and how to overcome them.

Listen to all our episodes and leave a review: HERE

Subscribe: Apple | Google Podcasts | Spotify

CONNECT WITH MATAAN:

Website

RECOMMENDATION:

Bigger Pockets

CONNECT WITH TREVOR:

Links:

Website | Instagram | LinkedIn | Facebook

Email us: Trevor@podcastingyou.com

Full Transcription Of Today’s Episode

Trevor Oldham  00:45

Hey, everybody, welcome back to the real estate investing exposure podcast and today on the show, we have Mataan Lis. He is the investor relations manager at GSH. And he includes the ongoing reporting for active GSH contributors and fundraising and communication for new acquisitions. But Mataan also oversees GSH, his corporate marketing strategy, and additionally, Asset Management primarily as it relates to property management, and renovation project oversight. But Mataan earned a BA in international relations and Media Studies at the University of Michigan. Prior to GSH, he worked at a security consulting firm managing corporate and private clients and traveled extensively throughout Africa, Europe and Asia. Mataan, super excited to have you on the show today.

 

Mataan Lis  01:33

Thanks, Trevor. Thanks for having me.

 

Trevor Oldham  01:33

Mataan, for our audience out there that’s listening to this interview. And they’re learning about yourself for the first time, I love for you just to hop into your background and what you do at GSH. And then even the company as a whole and we’re able to do it for investors.

 

Mataan Lis  01:48

Sure. Thanks, Trevor, I’d say we got into a very specific asset class, which we’ll like to call workforce housing. I don’t know if your audience is familiar. But there’s A, B and C asset class when it comes to multifamily real estate, we really saw an opportunity in the B asset class for a few reasons. The first being very high demand. So the renter population in America, statistically, is just highly in this asset class. So the workforce housing asset class are heavily renters. These are people who work in factories, work in hospitals, work in schools, this is a population that is large in America, heavily renters, and it’s growing. These are median income individuals or families, and they live in the sector, the multifamily communities, and there’s a lack of product. At the end of the day. These are communities that were built between 1960 and the 90s, and very few in the early 2000s. And they’re outdated. They’re outdated, and there’s not many of them. So on one hand, we have, you know, a very high demand of tenants in what we’ll call workforce, housing, tenants, and a lack of product. So we feel it’s a very good opportunity to get in and purchase these communities, purchase these communities and upgrade them. And I’m not talking about very extensive construction, we’re going in there. We’re upgrading the interior units, we’re adding some capital expenditures, we’re fixing the pavement, we’re adding some amenities, we’re adding amenities that a property today that was built in 2010, would have a dog park. Some of these properties had tennis courts that people don’t use anymore, so we’ll repurpose that space. So the workforce housing market, or the workforce housing population, rather, is plentiful, and they’re actually looking for these communities to live in. And they’re willing to pay a little bit more money for a little bit of an upgrade. So we’ll benefit from the rental bumps with these upgrades, because the demand is there. And that’s kind of in a nutshell, why we got into this space from the gecko. And, you know, we didn’t create the wheel. We didn’t we didn’t invent this idea. Many operators are out there doing it. They believe in the theory behind workforce housing, that it’s a resilient asset class. And in fact, following COVID our theory of the workforce housing asset class was really validated because we saw throughout COVID, high occupancy, very minor dips and collection. So it really validated the theory that we believed in for many years now and the original theory that drip drove us to purchase these communities.

 

Trevor Oldham  04:50

I think it’s an excellent overview per audience on you know, why workforce housing and then also you know, why, you know, B as an asset class within the workforce housing, but I’d love for you to hop into are you investing in a specific market within the US? Are you going in different, I guess areas within the US, I’d love for you just to go into that strategy and what you’re looking at in a market within the US,

 

Mataan Lis  05:10

Definitely. So we originally started in Michigan, the three partners, one of whom is my father, another is Israeli named shmulik. My dad’s name is Connor, and the third is Gideon. That’s where the jsh comes from, into a little canal. So my father spent a lot. He’s also Israeli recent stone in the last 35 years of his life in Michigan, which is where I grew up. Gideon also splits his time between Michigan and Florida. And shmulik had a prior real estate venture that was focused heavily in Detroit. So Michigan was kind of our backyard. And that’s where we started. That’s where we started to purchase properties. That’s where the majority of our portfolio exists. So the original focus really was Michigan only because it was where we had been comfortable with and where we lived. But you know, workforce housing, and in the asset class that we specialize in exists all across America, the long term goal really was to expand. And that’s what we’ve been doing the past couple of years, we have properties in Florida, we have properties in Maryland, we are under contract now for another property in Maryland, heavily looking at Texas. So the theory, which we wanted to validate kind of in our backyard, and that’s, you know, what we did do in the first three years of purchasing and operating, managing these communities. You know, that theory was validated. And then we expanded and we expanded to areas that we have operational experience. And so we didn’t go to Florida and Maryland because we thought it was, you know, an exciting market, not just because we thought it was an exciting market, but because we have operational experience there through the partners, previous ventures and businesses, as well as the team that’s been built around the GSH. Partners, they have operational experience far beyond the Midwest, where, which is where we began, I would say our majority of our portfolio, as it stands today, is in the Midwest, Michigan, Indiana, Ohio. But we are expanding, we do have properties in Florida, we do properties, and there seem to be two properties in Maryland. And yeah, so that’s kind of the way we see it, we’re going in very, we’re going in new Jr. geographical directions. But this is not something that wasn’t planned. We’re going where there’s good deals, and we’re where it makes sense to bring our investors to and at the end of the day, our investors our most important component of this, of this business, so we need to do what’s right for them responsibly and scaling was.

 

Trevor Oldham  07:45

As you’re going out, and you know, starting off in Michigan finding properties, then, you know, going through Maryland, Florida, and even potentially Texas and you’re adding new properties to your portfolio, you’re obviously there’s, you know, additional capital that you’re required. And, and you mentioned, you know, the investors that you’ve worked with, and when working with those investors, how have you been able to, I guess, get them to invest in the deals? How have you been able to grow the investor base, I’d love for you to walk our audience through what that process and sort of what that looks like.

 

Mataan Lis  08:12

Sure. So originally, our investor base was really family and friends. That’s kind of how we expanded. We went to family and friends first, of course, the partners, but they’re their own capital, as well, and all these deals. And, you know, as we grew, family and friends were telling their doctors and their lawyers and their accountants who then told their friends, so really word of mouth, I would say is how we get our deals across to our audience. And, you know, we went from, you know, two deals, the beginning of 2017. Now we’re, we’re at your manager operating and managing over, I think 16 properties today. So, you know, we obviously built that infrastructure with a large group of investors, but it did start just family and friends kind of rolled into family and friends told their family and friends and their their business acquaintances and Associates weren’t obviously out on the internet, and people hear about us and see us but we’re not really heavily marketing ourselves. And in terms of like, dollar amount on marketing is not very high. I think, you know, the asset class itself is very hot today and investors are seeking to deploy capital in the multifamily market. So when they come across our website and kind of start digging into our track record, they realize that, you know, we’re a very legitimate and transparent organization. That’s another thing we like to pride ourselves on is transparency. We feel that the investor is not just an investor, it’s more of a partner. You know, he’s a limited partner. And we want to treat them like that. So we really feel that being transparent from day one from, you know, what our intentions are for a certain property with a business plan is on that property to, you know, capital events, such a, such as a refinance or a sale, we’re very transparent, our investors like that, we’ve also had it easy, because we’ve operated so well and delivered on, you know, all of our projections. So investors are happy on that front. So it has, it has been easy to be transparent, but you know, even if there’s tougher calls to be made, you know, during COVID, where, you know, you want to withhold distributions for you know, the, you know, the first quarter of one COVID hit, which is what most most operators did, you know, our investors were appreciative that we were doing that, because, you know, no one knew what direction this was gonna go in. And, you know, we were transparent, and it was the right move, just, I think, communication with our investors on what we’re doing is super important for the investor for us, and, you know, for the, for the whole industry. So, yeah, in terms of marketing, or deals, I think, like I said, word of mouth, family friends that turned into, you know, a much bigger monster. And I in a positive way, of course,

 

Trevor Oldham  11:20

As you’ve been, you know, and addressed, I know, you mentioned, you know, COVID happening, and no one really knew what was going to be going down, and what was going to be going on, you know, sort of everything is sort of frozen brother, any other challenges that you’ve experienced as an investor, that you would like to walk our audience through, uh, you know, for a newer investor that’s out there to be hesitant upon looking at?

 

Mataan Lis  11:41

Yeah, sure. So I will speak about COVID for one second, COVID was definitely a challenging time for the industry for everybody, you know, for the world. But, you know, no one knew where this would go. And I think it was challenging to navigate the murky waters of, of where, where this will lead by, and also performing for the properties and for the investors. I think we did that very well. I think, you know, at the end of the day, you look back at our collections and the way our business plans were affected by the pandemic, you know, we did a really good job, keeping everything as close as possible to plan. So we were able to, you know, meet our projections and distribute cash, you know, I’ll circle back to that withheld quarter, right, when COVID hit, you know, we’ve continued to disperse, you know, pieces of that withheld quarter, because, you know, we could and it was the right decision to do. And, you know, the multifamily industry as a whole came out very strong after, I mean, we’re still in the pandemic, but after the original shake up, the multifamily industry came out very strong, especially the workforce, housing sector, sector B, of multifamily. And I think it encouraged investors. So yeah, it was a challenge. But I think our performance, as well as just the overall performance of the asset class really stood strong, and that encouraged a lot of players and space. And today, I would say challenges that we’re experiencing would be deal flow. You know, it’s tough. You know, especially in light of what I just mentioned, how, after realizing how stable this asset class is, now that you’re having institutional money flow in, that’s willing to take a lower return than our investors are expecting deal flow becomes much more difficult, we’re finding properties that we could have bought a year ago, just not pencil out anymore, because of all the money coming into the space. But I think we’re really able to overcome that challenge for a variety of reasons. The main one being the really deep connections, the three partners and the rest of the Jessie GSH team has with brokers and you know, sellers and finance players were really able to still be exposed to good deals, a lot of the deals were getting most of the deals in 2021. Were off market deals or deals that we bought from sellers that we purchased from, you know, prior to 2021. So, I think, you know, as challenging as it is, to find deals today and to find good deals that make sense to our investors as they would have made sense, you know, last year and the year before, we’re able to overcome that. We will overcome that, really through just the experience and the connections of who’s part of the GSH team.

 

Trevor Oldham  14:59

So I definitely, I could definitely see some of those challenges coming up. But my time, I just want to say, I really enjoyed this interview, I just want to ask you a couple of quick questions on the show today. And the first question is, I love to just get your thoughts on, where do you think the real estate market is going in 2021 and beyond? 

 

Mataan Lis  15:19

Yeah, as I just mentioned, you know, deals are becoming more and more expensive. I mean, the asset class itself is becoming more and more expensive as more and more money, you know, floods in cap rates are completely compressed. And I think, in the interim deals are Can you know, these properties are going to continue to be very expensive, I think it’s right now a seller’s market, we’ve had people reach out to us wanting to buy our properties for for prices, we would have never imagined that they’d go for today, you know, so, I think for for right now, in the next few years, it’s going to be a tough market, it’s going to be tough to find deals that make sense, especially according to our criteria, I think, you know, it’s, it’s really going to be hard. And unless you’re an operator and very experienced, and savvy operator, and acquire, you’re going to struggle, you’re gonna struggle, if you’re trying to scale you’re gonna struggle, you’re trying to find deals and deploy and deploy capital. I think I think it’ll kind of bounce back, I don’t want to say correctly. And, you know, if there is some sort of correction in the market, I don’t think it will be a drastic one, like we saw in 2008, I think it’ll be minor. And I think we’ll be well positioned to capitalize on it. I think, you know, with our existing infrastructure, and our connections to deals and to equity, if and when an aggression exists, we’ll definitely be scaling even more than we are today. And we’ll be able to manage our current portfolio just fine, you know, through any sort of correction.

 

Trevor Oldham  17:07

Yeah, thank you. Definitely. Thank you for that. Answer. Another question I want to ask you for audiences. You don’t have a favorite real estate investing or business book they recommend for them to check out.

 

Mataan Lis  17:20

I can’t put my finger on a single book. I do listen to bigger pockets, podcasts and kind of check out that website. I read a book from one of the guys who started bigger pockets. I can’t remember which one it was. But for people who are looking to invest in real estate and get involved, I would definitely recommend biggerpockets.com. I think that’s pretty standard one, but one that does educate and provide some good context to what we’re talking about today.

 

Trevor Oldham  17:49

Yeah, most certainly. And Mataan last question of the day is, where can our audience find you.

 

Mataan Lis  17:55

You can find us at GSH realestate.com.

 

Trevor Oldham  17:57

Awesome, I’ll make sure you include that in the show notes in return, I just want to say thank you coming to the show today. I enjoyed speaking with you.

 

Mataan Lis  18:05

Thanks so much Trevor, I appreciate you for having me.