One the great things about the authoring this blog is that it gives me an excuse to reach out to and connect with smart guys who are doing interesting things. One such group is MM Partners. Based in my hometown of Philly, MMP is revitalizing underused spaces in the historic Brewerytown neighborhood. MMP isn’t just doing cool deals, they’re creating a vibrant neighborhood by emphasizing good design, sustainability, and giving back to the community. I asked principal, David Waxman, to share MMP’s story, unique social media strategy, and what he’s most excited about today.
Tells us a bit about the MM Partners story and brand.
MMP is comprised of myself, Jacob Roller and Aaron Smith and a great support team (property management, operations, controller, project management, interns, etc). I have known Jacob literally since he was in kindergarten (I am two years older), we both grew up in Center City Philadelphia together, went to the same school from K-12th and the same college. Aaron was the third guy in at MMP a few months after we formally started the company; Aaron had just graduated college and entered pretty much the worst economy anyone had seen since the Great Depression. Aaron had been my intern when he was a sophomore in college and I was working at a large development firm. We really hit it off and stayed in touch so when he graduated college we convinced him to join Jake and I when MMP was really just an idea. We like to joke it was law school, work at Starbucks or join us as option three – I think he made the right choice. We purposely formed MMP at the height of the economic downturn to bring a comprehensive plan to the redevelopment of what we believed was already fantastic neighborhood, however like many other urban areas, btown had suffered through a long period of disinvestment. We wrote a business plan, opened an office in a storefront in a building I owned on W Girard Avenue in Brewerytown and we put our heads down and set out to execute our business plan, fast forward 6 years and it’s really working.
“Brewerytown is booming” – What fundamentals of the Brewerytown neighborhood attracted you to focus your effort there?
Before forming MMP, I started buying property in Brewerytown in 2001. I was living in NYC and working for a loft developer in SOHO and was looking to start doing my own projects and going on my own in NYC was simply not a viable option. So I made the decision to take all my savings, find some shells in an emerging neighborhood in Philadelphia, buy them, renovate them and then repeat this over and over. I started going back to Philadelphia on weekends and scoping out Northern Liberties, Graduate Hospital and Brewerytown – fact is I would have done fine if I bought in any of those areas in 2001. For whatever reason I was most attracted to Btown because I felt it had a number of very good things going for it:
- Location – directly north of Art Museum, Kelly Drive, near CBD, great access to transportation
- In Path of development – Btown was in the path of development, just south is the solid Art Museum area which had no where to go but north couple that with Fairmount Park to the West and Girard College to the East, it was like a funnel that couldn’t go anywhere but into Btown
- Fairmount Park – is Btown’s backyard, that is an irreplaceable neighborhood amenity, period!
- Transportation – btown has amazing access to transportation, route 15 trolley, buses, 76 entrance is just blocks away, easy bike access to Schuylkill River Park, etc.
- Arbitrage/mis-priced risk – I felt there was an arb play in Btown back then (and still do), raw land, shells, buildings, etc are mispriced relative to other emerging neighborhoods – it’s cheaper yet the end rents, sales prices, values are within approximately 10% of these other areas, so the spread is much better here. We have been taking advantage of this spread for a long time now and will continue to do so until the market wakes up
- Great building stock – btown had/has a great stock of old buildings in great shape, particularly along W Girard Avenue that were ideal renovation candidates
- People – Btown is a great neighborhood filled with great people who have lived here for a long time and take pride in their neighborhood and were welcoming to development
So back in 2001, I found 8 shells and a vacant lot on the 2900 block of W Girard, which was otherwise a very solid block but these properties were taking the whole block down. I figured if I bought these shells and renovated them, the block would turn and this would become a model to follow. So I took all the money I had at that time and bought them, it was a nerve-racking experience. Low and behold it worked and I still own these buildings and they have been 100% occupied for the whole period and the 2900 block of Girard is an amazing block!
We love social media and it is our primary means of marketing our company, the neighborhood, units, homes for sale, public art we underwrite, etc. We originally started doing social media as marketing because it was 2008/09 and spending money on marketing wasn’t an option for MMP as we were bootstrapping the company, so we had to find creative ways to market. We found people really responded to the marketing we were doing probably because it was authentic, it is literally us doing the majority of the posting – we don’t outsource this and won’t outsource this and I think people see and appreciate that. So as we got feedback we doubled down and scaled up our SMM and continue to look for ways to leverage it to build out brand, the neighborhood,etc. It is also where our target demographic lives – namely millenial’s, so we have to be in the social sphere. I am shocked how behind the curve 99% of real estate companies are as it relates to social media. We take a lot of pride in our social media strategy and the creative ways in which we leverage it.
Your raising capital for two value-add deals on Fundrise. How has your experience been with crowdfunding? What do you see as crowdfunding’s role in real estate finance in 10 years?
We read about Fundrise early on and were very intrigued by concept and got in touch with the team. It intuitively made sense to us as the founders of Fundrise were doing development very similar to us in DC and we really hit it off. We put one deal up and it went very smoothly. So we decided to put two more up and so far it’s going great too! I am really impressed with the Fundrise team and see them as a great source of capital today and into the future. I think we are seeing a huge disintermediation in finance at all levels – whether it’s sites like Kabbage for short term business financing or Fundrise, the internet is enabling a much larger and more efficient movement of capital. At the same time it is removing the barriers of the past, which are gatekeepers such as banks and institutional investors who may not fundamentally understand your business and hence not offer financing. I think crowd funding across all types of financing will only grow.
What innovation in real estate has you most excited today?
My degree is in Urban Studies and I was always interested in the history of cities growth and downfall. We are witnessing the rebirth of cities now and a massive re-urbanization, which is the inverse of decades of disinvestment following the passage of the highway act post WW2. This has me really excited and I think we are in the very early innings of this trend. I am looking forward to seeing cities re-invent themselves and being a part of it.
What’s one piece of advice you’d give to someone just starting their real estate career?
I have two pieces of advice and they are interconnected:
First, if you want to get into real estate development find a mentor, someone who has the experience and is willing to train you. You can’t learn this stuff in school; it’s best to find someone with grey hair who has seen it, done it, understands the business and can impart their wisdom and instincts to you. I have been very fortunate to have a number of mentors at various stages in my career and it was an invaluable education and I am truly grateful to have had the chance to learn from some really smart people.
Then after you have done that for a few years and you are ready to take the next logical step and do your own projects, start small, buy a shell, renovate it, flip or rent it – get a feel for all the moving parts that go into a deal, because there are tons of moving parts. By starting small you can learn without risking losing everything and you will also actually be able to get the project done because it’s small in nature. Then once you have successfully done one project, move on to your next project, then your next… Before you know it you will be doing bigger projects, have developed a track record and are well positioned to do bigger deals and have hopefully made a few bucks along the way so you are in a better position to get financing. At the end of the day, it’s all blocking and tackling just on a larger scale but starting out small removes the mental barrier of fear, which will be much greater the bigger the deal and will paralyze you if you have never done it before.
I see too many people try to do huge projects out of the gate and they spin their wheels and 9 times out of 10 don’t get the project done because they haven’t done it before, can’t finance it, don’t know the sequence of events in predevelopment or simply can’t get it done for any number of reasons but by starting small and then moving up the ladder you will organically get to the place where you can do the big projects.
What do you think?
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