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