The FORT Podcast: Evan Kasper
Evan Kasper, Founder/CEO of ELK Development, is an established leader in the furnished rental sector. Before starting ELK Development, Evan was the co-founder of the Medici Group, the largest co-living company globally with thousands of units under management. In 2016, he launched Medici Group’s US division and grew it to a $100MM operating business.
On this episode, Chris and Evan dive into the world of co-living real estate. Evan describes the three pillars of co-living: affordability, flexibility, and convenience. Evan also touches on how co-living has been affected by the pandemic, and then Evan breaks down the pros and cons of the three structural practices in this space: master leasing, management partnerships & owner-operators. Enjoy!
(01:18) – Evan’s Background
(03:47) – Evan’s First Experience in Co-Living Spaces
(06:33) – How did you cut a billion dollars of the GSA from the government? Was it easy?
(08:19) – How long were you at Medici and when did you leave to start ELK?
(09:48) – At Medici, would you master lease a developed building, or would you go into apartments and convert them into co-living spaces?
(10:41) – How many buildings were empty and simply ready to be occupied?
(12:00) – In general, how do you define co-living? How does that relate to what you’re doing at ELK?
(15:04) – Three Pillars of Co-Living: Affordability, Flexibility, Convenience
(17:03) – How big is a micro-unit or co-living unit?
(18:14) – What are the advantages of owning this kind of real estate as an operator? How would each party make money if they’re separate (owners and operators)?
(20:38) – As the operator/owner, are you signing a master lease to yourself to provide this flexibility, or is it done lease by lease?
(20:57) – Are you designing these units to be able to furnish them with the demand in each lease?
(21:56) – The Difference Between Micro-Units and Co-Living Spaces
(22:56) – What’s the percentage of people requesting furnished vs not furnished? Has that changed at all through COVID?
(24:08) – Are you renting the furniture provided in units or purchasing it?
(24:18) – What amenities do you see in co-living that you don’t see in a traditional multifamily community?
(27:08) – Is the sharing economy still an amenity in 2020?
(29:01) – How are these assets financed? How did the lenders look at it?
(32:07) – Why would you be getting less in rent if you’re converting these into bigger units?
(33:04) – When you’re going to the banks, are there nuances in things you underwrite co-living spaces?
(34:30) – Is micro-unit rent inclusive of utilities?
(36:32) – The Strengths, Weaknesses, and Responsibilities of Each Model (Master Lease, Management, Owner-Operator)
(46:48) – Can you get a Fanny or Freddy Loan in each of these 3 scenarios?
(47:21) – Depending on each model, do you get more value on the exit cap from a seller perspective?
(49:13) – Have there been a lot of sales transactions in co-living properties?
(51:04) – Has COVID had an impact on strangers not wanting to live with strangers?
(52:28) – How often do tenants require a room switch?
(54:17) – How is cleaning implemented in common areas vs individual bedrooms?
(54:50) – How do you think about the potential for discrimination lawsuits or fair housing issues as it relates to curating a unit mix?
(56:42) – Is there any personality profiling to help see who would be good fits together? (Similar to dorm room housing in college)
(57:42) – What are your thoughts on the DC co-living project that doesn’t have locks on bedroom doors to create more trust?
(58:37) – What questions should an owner or developer be asking when deciding between a master lease or management agreement? How do you detect their financial strength?
(1:00:35) – Are there best practices for converting existing units into co-living?
(1:02:15) – Are there any zoning challenges that come up within these conversions?
(1:03:32) – Why did you choose the LA market?
(1:07:39) – What’s the best advice you’ve ever received?
(1:08:24) – Is there a book you would recommend?
(1:08:54) – If you owned a billboard, what would you put on it?
(1:09:56) – How to Contact Evan
Kasper, renowned for navigating through the complexities of the real estate sector with a meticulous and strategic approach, unveils a plethora of insights and perspectives, offering listeners a detailed panorama of the contemporary real estate milieu.
In the dialogue, a pivotal focus is placed on the complexities and strategies pertinent to securing leases, particularly during the nascent stages of property development projects. Kasper articulates the imperative of offering tangible guarantees to assuage potential apprehensions from property owners and to facilitate a conducive environment for project realization and success. He underscores the criticality of substantiating concepts and offerings to mitigate risk perceptions and to foster an environment of trust and collaboration among investors, developers, and property owners.
The discourse also ventures into the realm of tenant relationships and property leasing, with Kasper elucidating the multifaceted dynamics of securing and maintaining leases. He highlights the strategic implications of offering long-term occupancy assurances to developers and underscores the importance of nurturing symbiotic relationships with tenants to ensure operational sustainability and success. Kasper brings to the forefront the criticality of establishing and maintaining harmonious and mutually beneficial relationships with tenants, emphasizing how these dynamics can significantly influence project success and longevity.
As the dialogue unfolds, Kasper and Powers navigate through the intricacies of partnership and collaboration within the real estate sector. The conversation provides a detailed exploration into the multifaceted dynamics of partnerships, highlighting their pivotal role in facilitating project success and sustainability. Kasper emphasizes the significance of strategic partnerships and collaborations in enhancing operational efficiencies, fostering innovation, and facilitating adaptive problem-solving within the complex landscapes of the real estate sector.
In the ensuing segments, the discussion pivots towards exploring the operational and financial dimensions of property management and investment. Kasper provides insights into the financial management strategies and structures that are paramount in the real estate sector, exploring their implications on operational sustainability and investment returns. He highlights the importance of strategic financial planning and management, emphasizing how meticulous financial oversight and management can mitigate risks and enhance the financial health and sustainability of property investments.
Technological integrations and innovations also surface as a focal point of the dialogue, with the discussion providing a panoramic view into the implications and applications of technology within the real estate sector. Kasper elucidates the transformative role of technology in reshaping operational and investment paradigms within the industry, emphasizing its pivotal role in enhancing operational efficiencies, fostering innovation, and driving adaptive and strategic problem-solving within the sector.
Data analytics and its application within the real estate sector are also brought to the forefront, with Kasper exploring the myriad ways through which data can inform and drive strategic decision-making within the industry. He underscores the criticality of data analytics in enhancing strategic planning and decision-making, emphasizing its pivotal role in navigating through the complexities and dynamism of the real estate market.
In the concluding segments, Kasper and Powers explore the future trajectories of the real estate sector, providing a forward-looking perspective into the emerging trends and evolving paradigms that are poised to shape the future landscape of the industry. From technological advancements to shifting investment paradigms, the dialogue traverses a multitude of topics, providing a comprehensive and future-oriented perspective of the sector.