Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:05] Speaker B: Thanks for tuning in to the Real Estate Chicago style podcast. I'm your host, Joe Smazel. I'm a multifamily broker with Antero Realty. I'm also an owner operator of some small apartment buildings on the north side of the city with my wife Kate. That business is called Smaz Apartments.
Excited to have Mike Barrett with me today. Thanks.
[00:00:24] Speaker A: Yeah, man, no problem.
[00:00:25] Speaker B: Barrett Holmes.
Barrett's a like before I even knew you. And this is not saying it to start off by gassing you up. Company I've admired for a long time because when you drive around the city, as a guy who appreciates Chicago real estate, I could always feel like I could tell your projects before I saw the sign outside because it was clearly like somebody who cared about the product more than the typical builder in Chicago where, you know, not to disparage anybody, but it's expensive to build right now.
There's kind of probably borderline frenzied demand from the customer, whether it's a renter or home buyer. And so I think that puts pressure on the product. You know, there's pressure to build it inexpensively or there's, you know, you don't have to be as creative for projects because maybe there's a lower standard given how competitive it is. So I guess that's all to say thanks for caring about what you're doing.
[00:01:26] Speaker A: Yeah, thanks for noticing that.
[00:01:28] Speaker B: So you guys have.
I say you guys, you and your brother John founded barrett homes over 20 years ago.
Done over 40 single family homes, I believe. I don't know if that's a real time number, probably more today.
Over 115 multifamily homes, you call them, which I appreciate the way that you refer to them, not just units or apartments, condos for total value of 200/million dollars. So you've got a lot under your belt right now.
[00:01:57] Speaker A: Yeah, we've come a long way.
Started out pretty young and pretty green and it was also a recession time kind of leading into a recession time when we started.
And so just being as young as we were was actually perfect because we didn't really realize what we were getting into as much.
Took a few risks that. That worked out early.
[00:02:18] Speaker B: Yeah.
[00:02:19] Speaker A: And allowed it to kind of snowball, you know, for all these years. And it's been really fortunate so far to be able to do it for this long.
[00:02:25] Speaker B: Well, we're going to talk about the origin story in a little bit more detail, but I'm not, I've got a lifelong Chicago and so I'm not Going to let you off the hook without doing some rapid fire, you know, kind of half fluff, half substantive questions.
[00:02:37] Speaker A: Okay. All right.
[00:02:38] Speaker B: What's your favorite place to stop for lunch a work day?
[00:02:41] Speaker A: Ooh, I go to.
I'll go to Crosby's in Southport quite a bit.
[00:02:49] Speaker B: Yeah.
[00:02:50] Speaker A: Or if I'm down here, I really love this Red Armitage. And Cedric, this little event right over here that's the bomb is got the most amazing Schwarma Bowl. I just found it, and it is awesome.
[00:03:05] Speaker B: Couple good recommendations. My only beef with Crosby's, and I'm usually on the other side of this problem, so I'm not one to gripe about this, but if you go in there and you get a phone call, there's just, like always, so many kids in the middle of the day. Like, you know, kids bouncing off the wall in there. It's cute. It's nice. Like I said, I bring my kids out to eat all the time, so I'm not one to bitch about that. But anyway, what's a small detail in your homes that you think maybe the. You know, maybe some people don't notice, but you feel it kind of sets you apart from your competitors? Something that you're incorporated. That's a detail.
[00:03:41] Speaker A: Yeah, I mean, when you say detail, this would be more like a technical detail. But the system that we use for sound mitigation between the floors in our multifamily is something that we kind of consulted with a soundproofing company and helped, you know, kind of come up with something that wasn't being done at all in Chicago before. And now it's our standard process. And a lot of other people are starting to pick up on it, too. It used to just be like a lightweight. Concrete was the norm.
[00:04:10] Speaker B: That's what I'm familiar with.
[00:04:11] Speaker A: We didn't get good results with that. Don't feel like it really works that well. So we went looking for something else and came up with this system. We've had really good success with it.
[00:04:18] Speaker B: Well, let's break away from the rapid fire. What is it? What do you do?
[00:04:23] Speaker A: It's a combination of a lot of factors. Like on the underside of the ceilings, we have a couple of steps that we do. There's layers of drywall, there's channels.
There's something called green glue, which is a noise mitigating product that's on the bottom side. On the top side, we do additional layers of subfloor with rubber, more green glue, and make sure everything is decoupled so it's not all working as one system. It's all working as independent pieces to really. I mean, what you're trying to mitigate mostly is the footfall noise in between the units. The talking noise is easy to figure out. It's the footfall one that the lightweight concrete really falls down on.
So this system that we have, we really feel like does both really well.
[00:05:03] Speaker B: And do you, like, bring your kit when you're testing this? You, like, bring your kids over and let them fuck around on the floor?
[00:05:09] Speaker A: We haven't done that yet, but maybe we should.
[00:05:12] Speaker B: The floors are too immaculate in here. I know that. It wasn't done in here.
[00:05:15] Speaker A: I mean, the funny thing is, like, no system is 100% perfect on that front, but this one is far better than what was the standard.
[00:05:24] Speaker B: You answered it perfectly. Because I was looking for something you couldn't see. But that changes the experience for the customer.
All right, who is an up and coming Chicago real estate person that you feel like deserves some recognition?
[00:05:36] Speaker A: Interesting.
Up and coming.
[00:05:40] Speaker B: Yeah. Somebody that's younger than us, which is a low.
[00:05:44] Speaker A: Hard for me because I still feel like I'm. I'm young, but I go through days
[00:05:48] Speaker B: of feeling like I'm really old. And then sometimes I feel like I still should be able to hang a little bit more.
[00:05:53] Speaker A: But yes, there's some guys called North Center Construction. He's a guy. One of the guys is a friend of mine from growing up. He's a little bit younger than me. They do a lot of renovation type work. Some really creative stuff, though, that they're doing. I feel like his name's Ryan o'. Boyle. Give him a little shout.
[00:06:11] Speaker B: Cool.
So you have a friend coming from Chicago or coming to Chicago that's not as familiar with the city, plan their meals. Where would you tell them to go to breakfast, lunch, and dinner?
I've asked you two food questions so you can tell where my head was.
[00:06:26] Speaker A: This is more intense than your previous episodes.
[00:06:28] Speaker B: I think the last one is. You're gonna have to think pretty.
[00:06:32] Speaker A: All right, well, breakfast house is solid for breakfast. I like to go there.
[00:06:37] Speaker B: Agreed.
[00:06:39] Speaker A: Like I said, some lunch places already.
Dinner.
I've started to kind of get into the west loop a little bit more. I think it's called Lira. Greek place. Yeah, we went to recently. I really love that. It's great. I don't sit down for a steak very often anymore. It's more. We're looking for something a little bit different.
[00:06:59] Speaker B: So that really lyrics vibe inside too.
[00:07:02] Speaker A: Yeah, yeah, yeah.
[00:07:03] Speaker B: Last, last rapid fire. And you might just Tell me you don't want to answer this, but I'm stealing it. I started listening to this podcast recently called the Promote that a buddy of mine recommended to me. And it's a little bit, like.
It's a little bit like real estate gossipy, but it's also like, they really go into depth on.
On, like, the hottest topics nationally. So big stuff in New York. Big stuff. Anyway, they asked us who would be your.
If you were casting Million Dollar Listing Chicago, it would be three or four people that you'd have on as the agents, as the. Yeah, like the people that they follow around. Like the Ryan Sirhant type.
[00:07:43] Speaker A: I don't know.
I don't know if we have those personalities like, that I've worked with locally.
I mean, the people that we work with a lot. You know, Jeff Lowe does a lot of our listings. Mario Greco does a lot of our listings. Danny Glick.
Can I see any of those guys on Millionaire Listing? I don't think so.
No.
[00:08:04] Speaker B: But when it started, you answered it, so we'll let you off. You don't have. Because I was thinking of what I would say. Like, I don't even know who I would pick when I was writing this down. But when that show started, it was much more about the real estate, which is fun. So those guys sell plenty of cool, great real estate that would be engaging for people to watch. So.
[00:08:20] Speaker A: Yeah, they do. They do the actual job. Well, yeah, I don't know. They're just not flashy enough for that.
[00:08:25] Speaker B: No, I know that business.
So Jeff and Mario, you got to get a little bit flashier, I guess. Huh. Then I suppose Netflix show. And then nobody'll like to work with them anymore because that's not how we do business in Chicago anyway. All right. No more rapid fire. And sorry that a couple of those were stupid. So you started to talk about it. But I want you to go into a little bit more.
Go back to when you started, you and your brothers in 2005.
[00:08:50] Speaker A: Yeah.
[00:08:50] Speaker B: Okay. Well, yes, you referenced that you had this youthful, like, energy and also this, like, you don't know what you don't know. Which can be confidence inspiring for young people, too, when they're starting.
It's also intimidating. So what was the, like, what was the impetus for going out on your own? What were the first maybe couple of projects where you referenced that you took some risks. That worked out.
[00:09:14] Speaker A: So after college, I went to Purdue for construction management.
I went to work for Pulte Homes, which large production builder. There's actually Pulte Homes alumni scattered throughout Chicago. Real estate, if you go looking, a lot of my Bobby was one of the ones that said, like, you should VM Development. Those guys are from there, too. There's a lot of real estate agents, lenders, et cetera. You'll see them everywhere.
Anyway, I did. I did a couple of years there. Economy started to get really ominous. They started letting people go. I kind of jumped ship. Maybe. I don't know if I would have lasted or not there. But then I went back for my MBA right away.
My brother at the time was working as a cpa, and after I left there and started to go back to school, we decided to, like, try our hand on a single family home in Roscoe Village. Okay, 2000. This was. This was 2007. We had done a couple of spec homes in the suburbs prior to that, but this was the first one where we really tried to do it ourselves and ran into, like, every possible issue you could think of. Like, the ground was soft.
Had to do a, you know, a different foundation to accommodate for that. The city sewer, when we tried to tap in, was completely in shambles. The street was closed for, like, over a month because of that. And the neighbors were calling. Yeah, you know, I was 23 years old.
The economy, you know, the news every day was. Was. Was worse and worse.
And somehow we ended up finishing the house and sold it really quickly for, like, full list.
And it was. I mean, I was. I remember I took a bunch of my buddies out for dinner because, like, I was so shocked that that, like, actually went and happened.
The next property I found a lot on Damon, and we bought. The lead came from Craigslist. The guy was listening on Craigslist, and I think he was just flipping it, but we bought that lot, same thing. The ground was bad.
I had to accommodate for that. So we got a lot of challenges, like, right out of the gate. That taught us a lot of things right away, which was awesome.
[00:11:19] Speaker B: So was it. I assume, though, that it was confidence inspiring, that it wasn't, that everything was rosy through the project. And it's still. You still, like, willed it to success. Right? So why do you think it worked when all these, like, you guys were young, you're pretty green. Like, you didn't have the, you know, your sign on a. On a home or, you know, condo development or multifamily means something now. It didn't really mean anything then. No offense, but, like, so why did it work? Did you build a better house? Was there not as many homes being built at that Time was a location,
[00:11:54] Speaker A: like, yeah, there wasn't a lot of homes being built because of the way. The economy.
[00:11:59] Speaker B: What year is this now?
[00:12:00] Speaker A: 2000. Going into, like, 2008.
[00:12:03] Speaker B: Okay. So people started to kind of see the signs.
[00:12:05] Speaker A: Yeah, yeah, yeah.
But it's funny you say that like you didn't have a reputation, right? Like, we didn't have our reputation then. But in Chicago residential, a lot of times, the buyers don't really care, you know, really, they see the sign.
[00:12:22] Speaker B: Do I just take that for granted? Do I just care?
[00:12:24] Speaker A: Because, yeah, maybe I think people are starting to care more. But for a lot of years, it was like, the sign that you see outside is the realtor's name, and no mention of who built the home.
[00:12:33] Speaker B: True.
[00:12:33] Speaker A: You know, so that was something like, from the go, I was like, we're going to build a brand that's recognizable so that, like, people know who built their home and not hide. Not. I shouldn't say hi, but, like, you know, if you see a realtor's name on our sign, you're also going to see our name, too, because, yeah, you know, people go online to research a toaster for five hours. You know, who made their toaster but not their home sometimes. So, yeah, that was just something from the get go. I'm like, we need to build our name, reputation, and just stand behind it.
[00:13:03] Speaker B: It was something that stood out to me last time we got together and we were catching up. Is like, you. You made a comment a couple times in the meeting. You referenced a couple projects, and you had them, you know, in, you know, framed on your wall in the conference room. And you made a comment like, well, we want to be proud of what we're building and what we're putting in our, you know, the portfolio page of our website.
You said it more eloquently than that, but that was the gist of it. And that stuck with me because a lot of people in a building or in a business where you're building and selling don't have that same, like, pride in their work, I guess.
[00:13:37] Speaker A: Yeah. Yeah. I struggle with the idea of not having that. I mean, if you're going to continue to develop in the city and drive by the projects that you've done in the past, like, don't you want to be.
Don't you want to be proud of that?
[00:13:49] Speaker B: But it's not the norm. The norm is the opposite. The norm is, as I see, is somebody putting up that same, like, white Hardy board that looks exactly the same as every other house, which I'm sure when they were initially done, they looked really nice, and now it's like, so played out.
[00:14:03] Speaker A: Yeah, I think that's just something early. We did do a couple of the cookie cutter type things early on, and then we just realized, like, look, you know, we're going to be doing this for a long time. When we drive by these places, you want to be proud of it.
[00:14:15] Speaker B: Yeah.
[00:14:16] Speaker A: You know, where we're sitting, this building. This used to be a cvs, this one. I spent a lot of time on
[00:14:21] Speaker B: the shitty cvs, but yeah.
[00:14:23] Speaker A: Yeah.
Knowing how prominently this would show on this corner, we knew we had to do something special here, you know?
[00:14:31] Speaker B: Well, tell us about the deals or I'm going to jump around a little bit because I don't. I don't do this for a living. So you just brought it up. So tell us about where we're sitting. I mean, I'm a Lincoln park resident, too. Drove by this corner a thousand times before you redeveloped it, and it was a tired cvs.
So give the kind of the details of the deal story. How did it, you know, how did it come up on your radar? How did you conceive this project?
How did you execute it to selling, like, multimillion dollar condos? Which was definitely not what this corner was kind of known for before this.
[00:15:04] Speaker A: Sure.
The CVS had gone dark for a little while, and a guy named Dan Slifka, who is on Danny Glick's real estate team, tracked down the guy who owned this property. He was just a guy in New York that owned it, and he was leasing it to cvs, and we were able to put together a deal without going to the market, thankfully, for a fair price, I think, on both ends.
But, you know, it was funny because, like, there was a little bit of due diligence in there, and I know that there was a lot of calls coming into the sky trying to get to this property. So, like, I am thankful that it stuck together because, like, I felt like we would do something really special here and I would. I was not wanting to see something kind of bland go up here.
So I'm really glad we ended up getting to develop this property. It's one of the ones that, like, it's like a prize, you know what I mean?
[00:15:59] Speaker B: It's like, it's something that can be like a real cornerstone of what you've done. I mean, it's a prominent corner. You did like this beautiful, like, greystone facade on the Sedgwick side of the building, and it wraps around Armitage Too. So did you know from the jump that you were going to do high end condos like this? I mean, I think when you started it, I don't know the residential market as well as you do, but I think when you started it it was kind of early in the.
I think the single family home market was really, really strong. The condo market wasn't as proven at this level of condo. Right. Or is that not the case?
[00:16:33] Speaker A: Yeah, there were some examples. It was getting to that point.
[00:16:35] Speaker B: Okay.
[00:16:36] Speaker A: We felt we did look into doing some apartments here, but not that seriously. We just thought that like large condos on this site would sell really well.
And the reason being is that there's a lot of folks that are trying to downsized a little bit honestly from larger homes and whether it's in the suburbs or in the city.
[00:16:55] Speaker B: Yeah.
[00:16:56] Speaker A: And they might not live in town all the time. And this is a nice option to not have to worry about a whole lot of maintenance and stuff like that. And that's exactly basically how it played out with. Those are the types of people that we ended up seeing here.
[00:17:07] Speaker B: So how many condos did you do? What was the price range for them? I think you have street level retail too. So you know. Yeah, it's the high level of the project.
[00:17:14] Speaker A: Yeah, I mean the, the lot is 72ft wide. You know, for six units that's a lot of space usually. And there are just six.
You'd be on a 50 foot lot doing six units. So that's why these are so spacious and wide.
[00:17:27] Speaker B: You have this massive. I mean you can't see it from the angle we're at, but we'll do a little walk around afterwards. We have this massive great room off the kitchen.
[00:17:34] Speaker A: Yeah, yeah. It's awesome being on the corner. There's light coming in from every direction, which is awesome.
So we just thought this, there was an appetite for this here.
Retail on the ground floor is going to be cafe ish type concept too. So it's, it's just a building that the market wanted. I guess. We, you know, we thought that there was little need to fill and it's worked out that well.
[00:17:59] Speaker B: And so the range they sold.
[00:18:01] Speaker A: Oh, sorry.
[00:18:02] Speaker B: Yeah.
[00:18:02] Speaker A: So about 2.2 and a quarter to like high twos. Yeah, yeah.
[00:18:08] Speaker B: Sweet. I mean it's like I was walking around for a minute before you started doing it. It's gorgeous pictures but it turned out great.
[00:18:14] Speaker A: Yeah, I mean, and it's an A plus location.
[00:18:17] Speaker B: I mean I think everybody that listens to this knows a little bit about Chicago real estate, but we're on the corner of Armitage and Sedgwick.
[00:18:23] Speaker A: Right.
[00:18:23] Speaker B: So good luck dropping a pin somewhere that's objectively better than this. There's preferences, of course, but, like, about as good as it gets.
[00:18:30] Speaker A: Yeah. I mean, I've taken my daughter walking around here. You can get to the, you can get to the zoo in like five minutes walking from here. It's pretty nice, you know.
[00:18:38] Speaker B: Bless you. People know that we're being real here.
All right, cool. So let's.
We're jumping around. Go back, you know, to. I think some people that listen like the kind of the early days story, because a lot of content, I feel like, is like focused around, you know, here you are 20 years later, and, you know, people like to hit fast forward and just say, all right, well, you know, you know, we're successful, we got all these projects going, everything's great. But.
[00:19:07] Speaker A: Right.
[00:19:08] Speaker B: You know, I remember when I started, and I think back at that time so fondly, but what was something that, when you were either at the beginning or when you were thinking about, like, the growth of your business that you wish you would have done sooner, whether it's something that you did better or something that you feel like knowing what you know now, you would have told your younger self to do?
I think that other than invest in Nvidia or whatever everybody's doing.
[00:19:37] Speaker A: We've. We've always had a goal of building an apartment portfolio along with the for sale stuff that we do.
[00:19:43] Speaker B: Yeah.
[00:19:44] Speaker A: And I've had a goal of, you know, a certain amount of units for a long time. I would have tried to start that earlier in my career. Now, that would have been difficult, though, because the TOD transit serve location ordinance that came in in like 2021 kind of changed that landscape quite a bit. That would have been hard to do a lot of those projects prior to that anyway.
So not exactly kicking myself because we couldn't really have accomplished it based on the situation.
[00:20:13] Speaker B: Yeah, but you, I mean, the.
You've had a lot of success. I, I like the way that you balance kind of the different buckets of your business. And I think it's rare because most people will either do the first sale, you know, either single family homes or condos, or they'll do the apartment rental stuff that you guys generally hold longer term. Right. But I imagine the two kind of work for you is like complementary because you have kind of a cash flow, building, equity side of the business. And then you have, you know, maybe this is more of like a fee Type, you know, type business where you have a return in a shorter period of time.
[00:20:47] Speaker A: Right.
[00:20:47] Speaker B: So how do you, how do you think about, is there a certain cadence you try to do within the different buckets or you try to have like one of each going? Or how do you think about balancing it? Or just maybe the answer is it's just about the sites. I don't know.
[00:21:00] Speaker A: It is kind of about when the sites come along. You know, you can't really predict when, when that's going to happen. But we have a little bit of a constraint in terms of how many of the rental things we can do because we don't like to syndicate very much or do a lot of big investment investor type of deals. So like we try to keep that pretty small, the group that invests. So there's a limit to how much we can do on that end of it.
From the for sale side, we generally will look at any deal that comes our way that makes sense to do. Because it's a tight land market in Chicago. You can't just like go find something like so if someone brings something your way that's pretty good, like we will generally find a way to make it happen.
[00:21:43] Speaker B: So why are people bringing you?
Why do you get the calls and how, or, or, and, or how are you winning in a super competitive for land sites right now? So I mean, how are you, why do people come to you and what do you do to differentiate
[00:22:03] Speaker A: if, if a lot is brought to us by a residential broker, say yeah, I feel like we get those calls because we make it easy on them from a process point of view, from a post closing point of view.
You know, we take care of our clients really well, I think, and some people don't, which makes that job a lot harder for that broker. So I think we get a lot of leads just because they know they're going to have to deal with a lot less nonsense.
[00:22:32] Speaker B: It's a good answer. I mean, because as a broker, you know, you're, you're a reflection of the people that you're representing. You know, you're a conduit for the information. You know, you have your own identity, you have your own reputation.
But you know, at the end of the day you're like, you know, you're a reflection of who you're representing. And people will give you the benefit of the doubt if you have somebody that's difficult or you know, irrational about something, but if that's a pattern, then that's. It ends up being my brand too, or it ends up Being your broker when, you know, Jeff Lowe or Danny Glick or Mario Greco, like, if they just represent these assholes all the time, then it's a reflection of their brand. Yeah.
[00:23:12] Speaker A: I mean, I've talked to them, some of them about that, and they struggle with that. Yeah, they struggle with turning away some business because, like, that is, again, a reflection on them, you know, the product that's delivered. And so sometimes they have to say, like, no, thanks, I don't want to, you know, represent that, develop.
[00:23:27] Speaker B: It's a hard thing.
[00:23:27] Speaker A: You're right.
[00:23:28] Speaker B: It's a hard thing to do, you know, but it's powerful thing to do, too, when you get to that point.
[00:23:31] Speaker A: Right.
[00:23:33] Speaker B: What's your. What's your favorite thing about each of the different. You know, call them verticals or buckets. You do, like the condos, homes and apartments. And what's your least favorite of each?
[00:23:45] Speaker A: I guess single families is the ability to, like, fully customize and, like, worry less about the budget. Obviously, you're still worried about the budget, but I have more freedom to really, you know, bring in some elements that, like, I. I want to see.
[00:24:02] Speaker B: Yeah.
[00:24:04] Speaker A: On the rental side of it, the best part is that, like, we can design one unit and replicate it for the entire building so it keeps things just streamlined and straightforward. There's not a client in that scenario. So, like, that aspect's taken out of it. So everything is just a little bit simpler if you do that.
[00:24:22] Speaker B: Yeah.
[00:24:24] Speaker A: The multifamily condo, stuff, like, as you can see, like, it's almost becoming that level of single family anymore. So, I mean, it's. It's very, you know, especially with this price point. It's very similar to kind of what we would do on single families.
[00:24:37] Speaker B: Yeah.
[00:24:38] Speaker A: Yeah.
[00:24:38] Speaker B: How about the other side of the spectrum? What's your least favorite of each?
[00:24:46] Speaker A: There's always. For the apartments, it always feels like there's a constrained in terms of, you know, like when we can deliver a project, say, you know, like, you know, we have to be on time for the spring market, say, and if we're not, then you miss a lot of rental opportunities there. So that's.
That's not great on the for sale side, sometimes just like the delays that could happen based on, like, decision fatigue or stuff like that, that comes along with having to select everything that people sometimes struggle with, and that kind of creeps our schedule and that becomes difficult. So that's probably my least favorite.
[00:25:26] Speaker B: How do you manage the. So say you're doing a home and somebody comes in before it's Complete and they have some discretion on the end finishes.
How do you kind of, like, bracket what they can decide on enough where, you know that you can get it done on budget and on schedule?
And then also, like, what about if somebody is just. I don't say wrong, but, like, how often do you have to talk them out of something that they thought that they want to do?
[00:25:58] Speaker A: A lot of times there's a layer there. If we're doing a home, there's a designer in between us and the client a lot of times, you know, as a decision maker, but also just like to rationalize between both parties sometimes.
So generally, you know, it's almost like a mediator. So with that person involved, like, you can generally get to a consensus on things.
[00:26:22] Speaker B: Yeah.
[00:26:23] Speaker A: But no, there are times where, like, you know, based on experiences that I've had, I have to be like, look, you just do not want to do. Just, you know, you don't want to do that.
[00:26:31] Speaker B: Is there an example you could think of of something like that? That came up
[00:26:37] Speaker A: a lot of times it centers around, like, countertops, you know. Yeah.
[00:26:41] Speaker B: And why would anybody want to do something other than this?
This is sweet.
[00:26:46] Speaker A: Countertops can get spaced out.
[00:26:48] Speaker B: In the middle of talking a second ago, looking at whatever you call this little double bullnose.
[00:26:52] Speaker A: Yeah.
[00:26:53] Speaker B: Yeah.
[00:26:55] Speaker A: The countertop industries is very fragmented the way it is. Like, you go look at slab somewhere, they won't tell you what things cost. You got to then send it to the fabricator. They figure out what it costs and stuff.
And it's just always like a. It's always just a pain point. Like between the pricing of it and what's available, the finishes on it, you know, is it honed, is it, et cetera. You go on all day about it, and it's just always something that people struggle with.
[00:27:20] Speaker B: My wife really likes to do, like renovation stuff. And I just don't have the patience for it, I guess maybe is what it is. Or the. You know, I'm not good at it either.
But the countertops are always one thing that I just think are. It's like a cool thing to pick out. So maybe that's part of it. It's like when you go to those. Whatever you call them, the.
[00:27:39] Speaker A: The warehouses, and they almost word for
[00:27:42] Speaker B: warehouse, but I thought there was a different word for it.
[00:27:43] Speaker A: They almost run you over it with their.
[00:27:44] Speaker B: Yeah, it's like part of the experience. You got. Put the hard hat on or whatever. And the slabs, like, they're gorgeous. I mean, it's cool. It's kind of cool even to hear about, like, where it came from or how they cut it or whatever. So that's the one thing that I will.
I. I won't ever make the decision on because I know my place in that.
But they're cool. Maybe that's part of it.
[00:28:04] Speaker A: Specifically on countertops. One time people wanted to use soapstone, and we had. And we had done a house with soapstone previously, and it was a nightmare.
[00:28:13] Speaker B: Yeah.
[00:28:14] Speaker A: I don't know if you know what. Yeah. You set anything on it, there's a mark. It bleach it. Like, you know, it just doesn't hold up well at all. And you have to just be willing to live with that. Well.
So I was just like, look, do not do this. Like, just use anything else. There are other stones that look like it. Just please don't do it. They still did it.
It's a nightmare. They hated it. You know, you can only, you know,
[00:28:34] Speaker B: you can only lead a horse to water.
[00:28:35] Speaker A: Right? Yeah.
[00:28:38] Speaker B: I thought it might be interesting to. For you to kind of walk through the timeline, because timing is a huge part of what you're doing.
And I think people, like. It's a little bit like seeing your friends. Kids grow up, where, if you know my friends from out of town, they see their kids once or twice a year and I'm like, oh, my God, you're a foot taller. And I think, like, real estate projects kind of have a similar Dynam dynamic where it's like, if you only see the beginning in the end, you don't realize how long it took to get to where it is.
So I understand there's different timelines, so why don't you kind of walk through the timeline or as much or as little details you care to for doing a single family home by. Right. Maybe. And then the timeline for an apartment project that you need to entitle and rezone and go through that process.
[00:29:25] Speaker A: Yeah, I mean, we just went through the, you know, entitlement process with several properties this year. And that. That just. That bit. Just the rezoning of the properties took almost a year on a couple of them.
[00:29:38] Speaker B: So this is before you acquire the site.
[00:29:40] Speaker A: Yeah.
[00:29:41] Speaker B: So you have a zoning contingency or a feasibility contingency.
[00:29:44] Speaker A: Right.
[00:29:45] Speaker B: Okay.
[00:29:45] Speaker A: And that varies depending on where in the city you are. That could go quicker.
Engage your zoning attorney.
You gotta get some kind of a rough idea of what your plans are gonna look like. What you're asking for.
That gets taken to the alderman who usually takes it, then to the community group.
There are several rounds of meetings with them.
Meetings with the alderman, might be some revisions to the plans.
And it's just kind of a slow moving process because like these community meetings might only happen once a month or once every other month. So if you don't get on this agenda, you're waiting another month or two for that one, and then you go to that one. And they might want more changes made.
So you just gotta be in it for the long haul. You just gotta know that it's gonna take.
[00:30:27] Speaker B: You're also being very diplomatic about how that process goes because you hear from the folks who are like the loudest, who, you know, generally probably opposition. I assume if they're gonna take the time to show up to one of those not necessarily opposed to your project, but they have time to be there.
[00:30:42] Speaker A: Yeah, yeah.
[00:30:42] Speaker B: You know, and they have a lot of ideas which maybe are based on some experience and maybe they're, you know, not at all. And then there's also like this, I think, like friction between needing more housing in Chicago and, you know, not in my backyard. And, you know, what's it going to do? The traffic pattern, what's it going to do to the parking on the street? And so that's, you know, not to glance over those. But what is it usually vers from what you go in and propose? You know, you have a good tact for going in the community meeting and you're direct and honest and have a good name for your family business. But what, like, how much did you have to change what you had proposed to what got approved?
That was the very rambly question.
[00:31:30] Speaker A: A lot of times the, like, unit count doesn't have to change a whole lot.
One specifically lately though, we did have to reduce significantly like 40% of the units we had.
[00:31:43] Speaker B: Did it still work? Like, how did you re engineer the project to lose that many units?
[00:31:48] Speaker A: Yeah, it certainly doesn't work nearly as well as it would have.
It's.
It's going to be fine. You know what I mean? But it's one that could have been fantastic.
You know, you have to factor in if you're asking for a zoning change, as, you know, like there are affordable requirements for every site. So it's a little bit tough to make that work now. There is some like, tax breaks that they're offering now so that once we factor that kind of thing in, like, it still did work. Yeah, but it would have been fantastic if they had allowed us to do
[00:32:20] Speaker B: the original proposal 40 reduction in unit count.
[00:32:24] Speaker A: Yeah.
[00:32:24] Speaker B: Dang.
[00:32:25] Speaker A: Yeah. Now, I mean, obviously Then the building gets a lot less expensive to build.
So.
[00:32:30] Speaker B: Oh, so you now you can just do like frame over podium or whatever.
[00:32:34] Speaker A: Would it change the holes that also like one less floor on the building, you know, so you're just building a lot less square footage. So that equation still.
[00:32:44] Speaker B: Can you pay the same for the
[00:32:45] Speaker A: dirt on that one? We had already bought the dirt because we, we were comfortable enough with the zoning that it had underlying. So we were, we were going to go with condos if this didn't pan out.
[00:32:55] Speaker B: Got it. Is it common where you have like a backstop? No, usually that it was usually.
[00:33:01] Speaker A: Yeah. We're not going into it. Trying to rezone after we close. Yeah, yeah.
[00:33:06] Speaker B: I'll. I'll preface this question by saying that this is a pro Chicago podcast. I know you're a pro Chicago guy. What's. What's one thing? If you could pick one thing that the city would change about the process to build here that you would. That you would change.
One you don't get. It's not like you're, you know, fantasy land.
[00:33:25] Speaker A: Okay.
[00:33:25] Speaker B: This is one change that we can distill down to one thing.
[00:33:30] Speaker A: So I like some of the recent things that have happened in terms of expanding the TSL's transit serve locations that makes it easier for us to build because it used to be one to one parking and on most sites you can't make one to one parking work for many units. So that was great.
The way they kind of like looked at certain corridors recently and just rezoned them proactively.
Western and is it Edgewater?
[00:33:56] Speaker B: Yeah.
[00:33:57] Speaker A: Like that makes a lot of sense to me.
[00:33:59] Speaker B: Yeah.
[00:33:59] Speaker A: And I think that they should keep going with that and look at some other corridors too.
[00:34:03] Speaker B: Yeah. You know, and you can see what I mean. Look at Western Avenue now. You know, Western Avenue used to. When I first moved to Chicago, my. The first office I worked in was like right off of Western avenue. It was 2300 block or whatever. And on the other side it was tough. It was really tough. And.
And now I feel like with how much is filled in on Western, it's really, I mean it's really like made that not.
Oh, I wouldn't live on the other side of Western. I wouldn't live west to Western now. It's like there's so much parity between the two sides in some ways in some areas of it. I really like. West of Western right over.
You know, you have a project going in Smith park right now. Right. Which is a pocket that I think people have slept on cool little, like, coffee shops and restaurants.
And it's quiet, but you're still close enough to everything, you know. Like, you look at East Humboldt park over there, you look at Logan Square. Like, Western filling in has really been kind of the catalyst for, I think, it going west.
[00:35:00] Speaker A: Yeah.
[00:35:02] Speaker B: And most of those sites were not, like, displacing any of them. Most of them, you know, some of these were, like, old, you know, tire shops.
[00:35:10] Speaker A: Yeah.
[00:35:10] Speaker B: Car dealer, shoes, Single story retail. And now you have 40 units there, and you have people, you know, know, you add housing and so anyway, I
[00:35:17] Speaker A: mean, I think you could. You. You could honestly make the argument that anything that has a Dash 2 designation right now could be made a Dash 3, and that would simplify a lot of things and add a ton of density.
[00:35:30] Speaker B: You're doing a project in Smith park right now, which I just referenced when we were talking a second ago. Historically, you've done a lot in, like, kind of the more established neighborhoods. I understand that, you know, maybe Bucktown 20 years ago is not what Bucktown is today, but Bucktown, Lincoln Park, Lakeview, Ravenswood, North Center, Rascoba, like, these are where I've seen a lot of the.
What was it about Smith park that made that a neighborhood you guys were interested in? Are there any other neighborhoods that you think are going to be, you know, in the next five or ten years? Like, increasingly popular for folks.
[00:36:03] Speaker A: That location specifically is kind of funny. Like, I drive past it to go home every day from work.
And it was an auto parts store, and it just said, we're going out of business.
So I made a couple of calls and had someone kind of figure out who owned that property. And it was a REIT in Florida.
[00:36:20] Speaker B: Oh, dang.
[00:36:21] Speaker A: And we got it again. We just got a deal together off market on that.
Definitely not in the kind of the core areas where we typically would be. But, like, as I go that way all the time, I see that there's development starting to go up around it. And you drive around a little bit over there, there is a lot of, like, nice activity going on.
[00:36:42] Speaker B: Yeah.
[00:36:42] Speaker A: And I thought there's just not many apartment buildings over here at all. Like, it's kind of, you know, very, very low density.
[00:36:49] Speaker B: Yeah. Yeah.
[00:36:50] Speaker A: But they could. It feels, like, ripe for that. I mean, main corridor, corner lot, you know, auto parts stores. You're not displacing any housing. Like, I thought, like, that's the one where I was like, all right, we should try to get, you know, we should put a lot of units here. Like, this would this would help the Chicago corridor, restaurants and all that stuff.
And, you know, we got some opposition there on that. We ended up compromising. But, like, I still think locationally, like, it's a good place for some more density to go.
[00:37:19] Speaker B: Is that on Chicago Avenue or. Yeah, yeah. I mean, that. That's a good. There's some, like, there's restaurants over there. There's bars over there, like Dark Matter Coffee. There's a couple of them over there, which is great.
[00:37:28] Speaker A: Right.
[00:37:29] Speaker B: And then also, when you look at what it's ne, like, you're still pretty accessible to West Loop. You know, if you work in West Loop or Fulton Market or something, it's more neighborhood than that feel.
[00:37:39] Speaker A: Yep.
[00:37:40] Speaker B: Close to Logan Square, close to Ukrainian Village, Bucktown. Like, it just feels like it's kind of in between, but it is. It's probably one of the lowest density from a rental standpoint, pockets of the city.
[00:37:51] Speaker A: Yeah. I almost feel like it was a little bit overlooked. You know what I mean? Over there, they were focusing on more, like, you know, the far north side neighborhoods where they rezone things. But over there, I mean, there, you know, I think people want to live over there, and there needs to be more options, you know?
[00:38:06] Speaker B: So is it neighborhood group opposition or the alderman wasn't.
[00:38:09] Speaker A: It was. I think, just residents. Yeah, some residents that have been there a long time.
[00:38:14] Speaker B: Yeah.
What about, like, characteristics of the properties you're developing? At the beginning of our chat, you had talked about soundproofing, which I think. I mean, I.
You know, I lived in a loft at one time which was like the opposite. It was on the other end of the spectrum in terms of soundproof. But what other, like, trends in finishes or characteristics of a unit or home that you're building are important today that weren't as important, call it, five years ago.
[00:38:46] Speaker A: The material selections are constantly evolving.
You know, when I first started building, I was like, all right, every bathroom's got to be marble tile.
And I haven't put mar. I mean, we will occasionally put some marble into a bathroom, but it's so rare now. Yeah, everything has gone kind of. It used to be, like, these floors would be a super dark stain on them. Now everything's kind of blonde and neutral.
[00:39:10] Speaker B: I'm kind of glad we're over, like, the gray and then the. Everything, like, white. Like the white shaker everywhere. Yeah, like the gray.
[00:39:18] Speaker A: Like, I feel aged, like, cold. I feel like you bring in some wood tones, the different colors together, like, that's gonna age better.
Obviously, you could just make a white kitchen Everyone can make a white kitchen, but, like, putting a little bit more effort into the design I think is gonna be pretty timeless.
Yeah.
[00:39:34] Speaker B: When we bought our house, there were cream cabinets and my wife wanted to redo the kitchen. And I was like, oh, God. You know, and she's like, no, the cream is back in style. It's like 20 years ago. It was like what they were doing then. It's like, I heard it was in style too. I was reading, you know, like, of course, didn't know.
[00:39:51] Speaker A: Is this recent, like a couple years ago.
[00:39:53] Speaker B: It's just such a bullet dodge because I thought we were doing all the cabinets and it was just. I was glad that we had.
We. Enough time had passed where it came back in style.
[00:40:02] Speaker A: We did one, we did a house about six years ago, and Jean Stouffer is the designer of the kitchen. I don't know if she's. She has like a TV show and stuff.
[00:40:14] Speaker B: She's.
[00:40:14] Speaker A: It's pretty legit. But she gave us this like, clay colored kitchen, you know, which we agreed to do ahead of time. But when it went in, I called her. I was like, I don't know about this. Yeah, like, this looks way too taupey. I don't know if this is going to work. Like.
[00:40:29] Speaker B: Yeah.
[00:40:29] Speaker A: And then we proceeded to pretty much use that color for like the next five years. So, like, it's.
Yeah.
You see something a little out of the ordinary and you get a little nervous.
[00:40:39] Speaker B: You can really appreciate, though, the people that have an eye for doing that, like, and can see what's coming next. Yeah, I know I don't have that. And so I have a deep appreciation for it because it's like abstract to me. Like, I can't. I don't see things that way. I can appreciate it being cool today.
[00:40:55] Speaker A: Right.
[00:40:55] Speaker B: But I can't be like, all right, what are people going to want to buy?
[00:40:58] Speaker A: I have a little bit of that. I think my strength is, like, finding it, though. Like, if people are doing it somewhere, I'll probably see it because I'm like, I'm like on every social media, you know, every algorithm is throwing me, every design aspect that people are doing. So even if it's not in Chicago yet, like, I'll have seen it.
[00:41:15] Speaker B: Yeah.
[00:41:15] Speaker A: So then it might look brand new somewhere else. You know what I mean?
[00:41:19] Speaker B: Yeah, I like that.
Well, your, your background, you kind of came up. This is like a totally, like, tangent to the conversation, but something that I, you know, your brother was thinking was maybe going to join us, but I was. When I was researching you guys. I didn't know your background as much and I read that you kind of came up through the trades a little bit more and your brother was cpa, probably more of financial side. Is that kind of how you guys split, like roles and responsibilities?
[00:41:47] Speaker A: It is now, yeah.
[00:41:48] Speaker B: Yeah.
[00:41:49] Speaker A: I wouldn't say I came up in the trades. I like that.
[00:41:53] Speaker B: Not fair.
[00:41:54] Speaker A: I kind of interned with a rough carpentry.
[00:41:58] Speaker B: Thank. Your bio. You were in the trade so.
[00:42:01] Speaker A: Well, technically I was briefly.
I did work summers with carpenters and bricklayers and stuff like that.
So I like, I got an idea for how hard those guys work, but I never like, you know, was a full on carpenter.
[00:42:19] Speaker B: But it helps you be able to speak the language and stuff. And I think in the world of building today, when you think about like, you know, you look at a vintage building that was built 100 years ago and like the masonry for instance, like you look at the level of detail and like craftsmanship and pride in what they're doing versus, you know, not your projects. Because you can look at the facility out of this and there's nothing to object to but like a lot of what's built today, it's just like, gosh, is that really as good as we can do? And I know I, I said it at the beginning. Like I know that that can be in conflict with like getting the project built and so everything can't be spectacular. But I just think it's, it's great that you guys have that like additional care towards. And it probably helps that you, you know, you can at least speak the language of the trades. Even though.
[00:43:04] Speaker A: Yeah.
[00:43:05] Speaker B: Of where you grew up.
[00:43:05] Speaker A: Yeah. I mean we've, we have definitely spent far more money on making our buildings look good than we needed to.
[00:43:12] Speaker B: Yeah.
[00:43:13] Speaker A: Given like what the competitors do and what's kind of the norm is there's no oversight on what the building should look like. You know, and so we've just consciously made the decision like, no, like we're going to be driving by this building all the time. It's going to be in photos, there's going to be resales in the building. When we see those, you know, if you see a resell of ours, they usually do mention that it was built by us, which I love. You know.
[00:43:36] Speaker B: Awesome. You know, also like you mentioned when we were chatting a week or two ago, it's like you had sold a condo to somebody and it resold for a lot more and it's the thing like, well, I guess, you know, we sold it too Cheap. But your customer then has this experience where they made money. And, you know, they're probably telling their friends about their experience. And, like, you know, they bought this from a great builder and, like, look how it aged. Even when it was not brand new anymore.
[00:44:02] Speaker A: Right.
[00:44:02] Speaker B: Was still worth more.
[00:44:03] Speaker A: Yeah.
[00:44:05] Speaker B: Yeah. So let's. I want to kind of walk around the unit briefly. But before we do, there's two questions that I ask most of the guests.
What's a piece of advice that you'd give somebody getting started in real estate or that's, you know, maybe been doing it for a couple years, but is kind of looking to propel their. Their career to the next level?
[00:44:26] Speaker A: I think I. I've always prided myself on, like, just knowing this market better than most.
[00:44:33] Speaker B: Yeah.
[00:44:33] Speaker A: Like, even when I was in college, I was studying, like, sales trends and stuff like that in the north side neighborhoods even before I got here. Like, that is something that I'm always keeping track of. So I just have that knowledge base to know. Like, all right, well, that lot sold for this. That house sold for that. Like, I know. I know pretty much what everybody else is doing. And so, like, if you want to succeed, like, you should be willing to put that kind of time and work into knowing your market. Like, we've never gone to other markets because I just couldn't have that kind of knowledge. I've lived here my whole life. I know exactly what's what here. So just knowing the market better than most people, I love that.
[00:45:10] Speaker B: You know, it's also like, that's your competition, too. So if you're going to ask a premium to this relative to that, why did that sell for that, you know? Or why is this location better than a block south, block east, block west, whatever it is? Like, unless you're totally immersed in what you're doing, you can't pick up on those things. And it takes that in. Whatever. The application is not just a builder, a broker.
You have to know it better than most. Otherwise, you don't know where you can push, where you have to pull back.
[00:45:39] Speaker A: There's tons of nuance, lot to lot in Chicago, as you know. There's things about lots that are not obvious. There's areas of the city that I know have bad soil.
You know what I mean? And so there's just, like, situations that you got to figure out.
[00:45:55] Speaker B: You know, is there anything in a lot that will make it just a total no go for you?
[00:46:01] Speaker A: Usually proximity to the train is like, forget about it.
[00:46:05] Speaker B: You mean, if it's, like, directly adjacent to on the tracks or next to the train.
[00:46:09] Speaker A: Yeah, we won't look at that very much.
It used to be anything with a coach house next to it I would try to avoid, especially for a single family. If it was, if we were building a multi family, I would not care as much about that. But if you picture that situation, there's a coach house, those people are, and you're on your roof deck, those folks are like in their living room just kind of looking at you. So that was typically a no go. Now they're allowing those again. So I'm less concerned about that, I guess. But those two situations are interesting.
[00:46:42] Speaker B: You said you've never strayed from Chicago, so why, why do you love the city as a place to live and do business, invest?
[00:46:49] Speaker A: And I think, I think honestly doing business wise, it's a place where someone like me can like leave a mark.
Like really feel like I left my mark here. I feel like if I was, if I was a guy in, in like New York trying to do this, you know, I don't know New York well enough to say this, but like it feels like a harder place to like really get your name out there and stuff. You know, this is, everybody says this is a huge city with like a small community. You know what I mean? And so like your reputation precedes you and people know who's who here.
[00:47:20] Speaker B: Yeah, it's fun that way because it's a big enough city to be ambitious and there be enough going on to support that ambition that you have and you have in your business.
But it's also like. Yeah, I agree, you can make a name for yourself. Like you can drive around the neighborhoods and I guarantee on a typical day of work for you, you drive by 20 projects that you did.
[00:47:45] Speaker A: Yeah.
[00:47:45] Speaker B: You know, and whether you every second appreciate that when you're driving by, you probably don't because you're too busy. You got other shit on your mind. But like when you have a chance to kind of breathe and like soak it in, it's cool.
[00:47:59] Speaker A: Yeah. I mean, not to get too corny, but like when I'm driving my grandkids around someday and it can point to all these buildings that we built, I just think there's not much, there's not much thing. Many things cooler than that, you know, so. Yeah.
