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Show Summary
In this conversation, Aaron Yassin, an architectural designer and builder, shares his journey in real estate development, emphasizing the importance of design in creating better living spaces. He discusses the challenges of new construction in New York City, the role of artists in driving real estate trends, and the significance of understanding the end user experience. Aaron also highlights the complexities of acquisition strategies and the need for a balance between design and financial viability in development projects.
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Investor Fuel Show Transcript:
Aaron Yassin (00:00)
artists often are drivers of where real estate investment occurs, right? If you follow where artists are moving, they’re often then creating an environment that is one that really improves the quality of life in the area where they’ve moved to. ⁓ And then other businesses will open as a result of artists already having moved there.Dylan Silver (00:07)
Yeah.Aaron Yassin (00:28)
And you can almost chart the path of real estate development by looking at where artists were moving and what they were doing.Dylan Silver (02:09)
Hey folks, welcome back to the show. Today’s guest, Aaron Yassin is a builder in New York City and the Catskills in New York. He’s an award winning architectural designer and on a mission to design and build better homes. You can find him and his team at hivedevelopers.nyc. Aaron, thanks for taking the time today.Aaron Yassin (02:30)
Thanks so much for having me on, I really appreciate it I’m excited to talk to you, Dylan.Dylan Silver (02:35)
I always like to start off at the top of the show really by asking folks how they got started in real estate. But here I want to take things in a different direction. I know that you’re passionate about design specifically. Has design always been at the forefront for you as a developer and a builder? And if not, when did that become pertinent for you?Aaron Yassin (03:00)
a great question. ⁓ And actually one I haven’t gotten in that ⁓ specifically in that way before, so I really appreciate it. So my background and ⁓ something that’s still very pertinent for me today is that I’m an artist. I actively make artwork and I’ve always actively made artwork and I’ve also done a lot of design work and there’s a strong connection ⁓ with my own artwork and architecture.in space and architectural thinking. and I think that this actually is and again, when you asked the question, I thought, you know, that’s actually something I haven’t I haven’t thought about precisely in that way. And and it sheds light on my thinking really that I got into real estate. So I’ll answer that question as well, because it’s connected ⁓ because I was always looking for space as a lot of artists are to have a studio in someplace that you can really
control, right, rather than, you know, renting or leasing or in a position where you might have to move out. So I, one of the first assets that I purchased was a building that I did have my, my artist studio in. But the, the third ⁓ asset that I purchased was one that offered a development opportunity. And because of my background and my focus on, on thinking about design and on making things ⁓ that really appealed to me.
idea that I could create something ⁓ that wasn’t there before. I was very young and I think that that can be ⁓ good and bad, right? You don’t know what you don’t know and you may barrel forward and then hope for the best. Fortunately, it generally worked out. Sometimes it doesn’t. But I was thinking about those ideas that were really connected to how I think, which is really about making things.
Dylan Silver (04:56)
You hit on something that I have not heard before from an investor, which is, you’re an artist and an artist always needs a studio.When I’m thinking about artwork, I’m thinking about like hand to paper canvas, that type of artwork. What was the artwork that you were involved in at the time?
Aaron Yassin (06:01)
at the time I was doing a variety of different work. Definitely, you know, there was some work on canvas, but I worked with photography and installation and some new media as well. So you definitely need a space ⁓ to set things up and create things ⁓ in that context. Even if you’re just working on paper or canvas, you know, still having a permanent space is really valuable.Dylan Silver (06:25)
People think a lot about this idea of the starving artists, but I’ve seen now all over the country ⁓ beautiful, what looks like very much, I would call it like industrial chic ⁓ art studios, right? And sometimes they’ll be available to the public, sometimes it’ll be privatized. Are these typically ⁓ owned by artists themselves or is that a separate?facet of the business, meaning it might be an investor who owns the place, but the artists themselves do not own the studio.
Aaron Yassin (06:57)
Yeah, generally,there’s very few artists that are able to think through how to organize and purchase real estate. ⁓ Although there are others that have purchased ⁓ buildings and spaces that I know as well. it’s not completely uncommon, but it is definitely more rare as a subset. The one other related, definitely to your question, related component of this is that
artists often
are drivers of where real estate investment occurs, right? If you follow where artists are moving, they’re often then creating an environment that is one that really improves the quality of life in the area where they’ve moved to. ⁓ And then other businesses will open as a result of artists already having moved there. And maybe they, you
Dylan Silver (07:33)
Yeah.Aaron Yassin (07:56)
They move because they have studio space there and then they move because they’re living there. And this drives, definitely drives real estate trends. I mean, I’m in New York City and this has been a key driver. If you look at some of the ⁓ most valuable markets in the city, those markets were really driven by artists who might’ve been called pioneers at the time, moving to places like SoHo and Tribeca and then the East Village and then out to Williamsburg. And you can almost chartthe path of real estate development by looking at where artists were moving and what they were doing.
this is something similar in other markets as well.
Dylan Silver (08:36)
think now more than ever, ⁓ you’re seeing this idea of, we’re going to revitalize this space. I’ve seen it, I’m licensed as a realtor in Texas, I spent a lot of time in Florida. You have this idea of, hey, we’re not gonna remove the history here, but we’re going to modernize it or adapt it in a way to reimagine it, right? And that’s not something that a… ⁓strictly real estate mind can do, you need to have a design mind. But then as well, and aside from this, you’re also seeing that when people are making their purchasing decisions, even for a single family home, that they are tending to favor homes that were built through a lens of design versus a cookie cutter mold.
Aaron Yassin (09:26)
Absolutely, absolutely. mean, design gives us so much in so many different ways. ⁓ when you have anything, anything that you have, you can start from small objects that you might hold in your hand to buildings that you live in or that you work in. ⁓ And even beyond that, to ⁓ cultural projects and infrastructure projects that when things are designed well, ⁓Even if you don’t look at it and name it, you feel it and you know it intrinsically. And when it is done well, really does improve the quality of your life
on many levels.
Dylan Silver (10:37)
Now when we talk about design and new construction in New York City, was mentioning to you before hopping on here, the idea of new construction in New York City seems like an impossible thing to do. almost seems like where is the new construction in New York City? Where’s the available land? Right. ⁓ Walk me through how you got into new construction in New York City. And then also to what’s what’s the timeline when we’re talking about this? Because when I and other folks listening to this areHearing this, you’re probably thinking that’s gotta be a long process.
Aaron Yassin (11:10)
Well, it can potentially be a long process, but it depends on what the project is. again, just going back to my answer earlier with the third project that I got into did include an opportunity for ⁓ development. It wasn’t a ground up development. There was an existing building and that building remained. So in technical terms, ⁓ the plans were filed as an Alt-1, which is an alteration application.to the Department of Buildings. was long enough ago now that the plan set, which is kind of the number of sheets of drawings, was far fewer than what you have today. ⁓ Although it was some time ago, it wasn’t so long ago that now the amount of sheets that you have ⁓ seems like it makes sense by comparison, because it could be three or more times the number of sheets, which is significant. It’s gotten much more difficult.
to build in New York. ⁓ And certainly all the costs, the talk about affordability, and it’s not just in New York, but all over the country, which definitely relates to ⁓ building and to housing, ⁓ is partly driven by regulation in markets, again, all across the country. Some are more highly regulated, but there’s regulation everywhere. ⁓ And particularly in most… ⁓
most sub markets that need the most housing, ⁓ you’re dealing with, you know, urban areas, even urban suburban areas. And in those markets, there’s always going to be some type of regulation. So there’s regulation in New York. So that’s certainly a factor. ⁓ So I went from that project ⁓ in there were enough successes completing that project, even with all of the difficulty. I wanted to focus the work that I was doing.
through a transition from some other work that I was doing into a focus on development and controlling the design and the thinking behind the building and the end product. And to do that really developing ground up is what made the most sense. Understanding that it’s very challenging. ⁓
was something that I was aware of kind of getting into it. So, but it was really a desire that I had to take that on and to just believe that it was possible. And also perhaps, ⁓ you know, I like to do things that are probably more difficult than what a lot of people like to do. So I thought, sure, you know, I can do it. Why not? Why not? So ⁓ maybe some.
days I regret it, but I think the value of what you can get when you’re doing new development definitely still speaks for itself when you finish.
Dylan Silver (14:00)
Now, when we talk about development in New York City for folks who are not familiar with New York, you’ve got so many different parts of New York. Of course, you’ve got the five boroughs, but you’ve also got neighborhoods within those boroughs. ⁓ Where are the areas that you have experience ⁓ developing or even looking at deals in in New York?Aaron Yassin (14:23)
Well, I’m mostly familiar with certain sub markets. I live in Brooklyn. I’m very familiar with Brooklyn. The majority of the borrower of Brooklyn I have pretty good familiarity with Manhattan, south of 125th Street. Pretty good sub market knowledge there as well. And then several sub markets in Queens as well. My focus is on originating condominium development.You know, in any market, there’s different asset classes and there’s different reasons why you might approach different asset classes. that asset class has been my focus. So in terms of looking for development sites,
I’m focused on looking for sites where it would make sense to develop a for sale product. So it’s not going to be in every every sub market or in every location within a sub market that may work. I try to stay away from.
very busy streets or ⁓ corners that feel problematic. You just try to think about from the end point, right? Where do people want to live? Particularly people that are going to be buying something, right? Who are you serving with what you’re doing? And this is something that pertains to all real estate because ultimately, even if you’re in very investor focused and you’re focused on ensuring returns for your investors, you also need to think about
who it is that the real estate is serving because that’s, and if you focus on that, that is what is going to ensure your returns for your investors, whether it’s a triple net lease type of ⁓ asset or single family home or a condominium. If you create the best ⁓ environment for who that end user is, that’s going to be the best approach you can take ⁓ to the asset.
that you’re focused on. So I’m thinking about that when I’m looking at development sites. What could be done on this site and how could that appeal to someone who would end up looking at this location?
not the product itself, there’s more to the product, but to the location. Is this a location that someone coming to a building that I would put my time and energy into would be excited about and would have the right metrics that would drive more value? Location is obviously always critical.
Dylan Silver (17:28)
Now, when we talk about acquisition, I’m thinking this has got to be an interesting case because again, it’s not like there’s vacant land. And I’m also imagining that these aren’t infill lots either. What comes to mind immediately, and I’m probably off base here, is some level of distress. So properties where there’s an opportunity to do some type of value add or where it might make sense to build up from the ground and tear it down. What is your ⁓acquisition strategy and how are you finding deals?
Aaron Yassin (18:03)
⁓ most deals I would say are coming through a variety of different brokers. ⁓ you know, there’s not, even if they tell you it’s, off market, you know, anyone that sends you a deal, that means a deals on the market, right? Whether it’s publicly listed or not. You know, I think that there’s always some question around that. ⁓ if someone’s sending you a deal that’s not publicly listed, they can arguably say it’s off market, but still.If they’re sending it around, obviously it’s being listed and it’s on a market of some sort. you know, it’s New York. If you’re trying to sell something, you’re going to talk to people that, you know, it’s going to get around. And I get people to contact me regularly that are from major brokerage firms all the way down to people that might come across a listing that they might think would appeal to something that I would be looking for. And yes, you’re 100 % correct that that.
Nearly every property has been built on in the city not a hundred percent So there are occasions where you can find a vacant piece of land that might have been used as a parking lot or maybe there’s just a partial single-story building on it That’s a rare possibility, but it does exist Typically what you’re looking at are a couple of things from a development standpoint sites that have much older properties on them that where
over the years, that location has been rezoned. So what can be built is significantly larger. And then you’re, so you’re always talking about the total buildable square feet for an existing ⁓ property. So for the development site, how much can you actually build on it? And then value is determined based on the number of square feet that you can build and your working calculations based on that. And there’s always
various complexities for purchase. I’m looking at a property, several properties that would be in assemblage right now where there are three older wood frame buildings and they’re all a hundred plus years old. And not honestly, not in great condition and based on the location that they’re at, ⁓ one, there’s not any specific historical value to these properties and two, ⁓
there’s a lot more that can be built on the properties themselves. And since there’s so much need for housing in New York, this is a kind of site where demolishing the existing buildings really makes sense. Although there’s lots of examples in New York City of buildings that have been demolished that possibly shouldn’t have been demolished. And you can get into the classic ⁓ story of ⁓
the old Penn Station that was an amazing building and should not have been demolished. ⁓ this… it happened quite a while ago when ⁓ the garden was built, right? Madison Square Garden replaced Penn Station. And there’s a lot of controversy still surrounding that. And even with some interest of people rebuilding the old Penn Station. So there’s continuous discussion about that. ⁓
Dylan Silver (20:49)
When did that happen?Aaron Yassin (21:11)
And then that set off a whole wave of historic preservation and actually led to Grand Central Station being saved because there was discussion of demolishing that as well. So, you know, some pluses and minuses, and there’s always lots of discussions and in different ways. And these really play into how development can occur. And in any market, any urban market, these discussions are going to come up ⁓ and there will be public private involvement.in determining what can be built and then that determines the value of properties.
Dylan Silver (21:44)
Now, when you’re looking at these projects through the design lens, walk me through where the biggest value-add you see are versus when people are not looking at things through the design lens and they’re just looking at it through bottom line and location, but not thinking about design and how that translates to demand.Aaron Yassin (22:11)
Well, it’s very important to have a vision for what it is that you’re building. And as I was discussing earlier, really thinking about the end user experience, ⁓ that’s a focus of how I think. What is the experience of someone who’s actually living in the building? And even on the architecture side, there are a lot of architects that start designing buildings from the outside in.because they’re concerned about how it’s going to look like, the facade looks like or what the envelope looks like. Because really more people will see that than the number of people that are going to live in the property. So that’s a strong concern from a designer standpoint. Obviously, that’s of critical importance, what the outside of the building looks like. But the experience of the building on the inside really needs to be the focus. And you need to think about the building from the inside out.
What’s the experience of the person living in the building, in the apartment? And how can you design apartments that make sense and that take that experience to a better place? ⁓ And that’s really the focus that I have when I’m thinking about design and looking at a project site. And so you want to have certain metrics ⁓ that are possible.
with the development site that you’re looking at, you need to achieve it, be able to it. this is, it’s the balancing act, kind of the juggling that you’re doing, right? Because with all real estate, you need a spreadsheet. There’s just no way to get around it. I mean, you can kind of cowboy it, but at some point, you know, that’s only, it’s only going to get you so far, right?
and you’re going to run into problems. And the more detailed your underwriting model and your spreadsheet is, the better off you’re going to be. So I will say and confirm that ⁓ any development project does start and end with a spreadsheet, but it shouldn’t only exist as a spreadsheet, because then you have ⁓ something that is designed
in a spreadsheet. And that’s not really design. That’s just approaching the numbers themselves and trying to get the numbers to work. And that doesn’t mean that what you’ve built or what you’ve renovated or what you’re offering for an end user is going to give them what they really, really need. And that’s where it will drive your numbers. So if you can focus on that end user, really try to think through who they are.
Dylan Silver (24:46)
Right.Aaron Yassin (24:51)
And again, New York City, there’s different sub markets and there’s different potential end users that will ⁓ move to different neighborhoods. You want to think about.you that is, who is the building serving, you know, what is it about? And can you design the kinds of layouts that are going to appeal to the people that the neighborhood, this neighborhood would appeal to and also factor in the right kind of amenities within a building that would appeal to those people ⁓ that, you know, in my case that I’ll be selling to. And there are sites that I’ve looked at where it’s just not possible to, you know, achieve the type of building that I would want to design and build in those, you
you have to pass on. Maybe the numbers work reasonably well, ⁓ that doesn’t mean that you’re going to have the opportunity to really ⁓ take it to the next level, right? I want sites where you can take something to the next level. So you need the base numbers to work and then you need a vision on top of it of what it is that you’re building.
Dylan Silver (25:52)
Now are all of these for sale or are some of them for rent as well?Aaron Yassin (25:57)
My focus is really on for sale product. So there’s a lot of rentals being built in New York City and the city government is very focused on building rentals. ⁓ It’s not my focus. And I wish they would consider how they could provide ⁓ more ⁓ opportunity for people ⁓ to.Dylan Silver (26:01)
Now…Aaron Yassin (26:19)
buy their homes. think really valuable when people ⁓ own their homes and they really feel like they can stay in the neighborhood permanently.Dylan Silver (26:28)
Yeah, I mean, that’s something that I’ve talked about with a lot of younger people, but also folks who are trying to get into the on ramp of homeownership and feeling like, gosh, you know, not only do I need to be able to come up with the down payment, but I’ve also got to have a, in many cases, like in New York City and where I grew up in Northern New Jersey, you’ve got to have really a stellar income in order to justify the mortgage, even if you’ve got a large down payment.So then it becomes an issue of, how am I going to get into the on-ramp of homeownership?
Aaron Yassin (27:01)
I mean,that’s the case as well if you’re renting, you the metric in New York City is that your income is 40 times your monthly rent.
Dylan Silver (27:09)
Yeah.Aaron Yassin (27:11)
So, and you know,if you’re looking at kind of average pricing for let’s say a two bedroom apartment, ⁓ you know, really between like six and 8,000 bucks, you you got to have a pretty decent income ⁓ at that level. And that is, I do think part of one of the issues that we’re having now, some people think they should leave the city because, you know, if they can’t find something to buy, then it can be hard to justify paying seven, 8,000 bucks a month ⁓
when you feel like you would like to put some roots down and actually own something, even if it costs you a little bit more.
Dylan Silver (27:46)
Now, when people talk about design for sale specifically, I’ve seen this working, of course, not in New York in a different market where I’m licensed in Texas, but I’ve seen this where there are, I don’t know about currently, because I’m not there right now, but about six months ago, there was high days on market for new ⁓ homes or even ⁓ flip homes, right? And so homes that by all standards would have beenyou know, flying off the shelves four or five years ago, we’re sitting for sometimes three months, right? But almost like clockwork, like you would see a home that you could tell, hey, that’s a well designed home. And this is from someone I don’t have a design. I just can say, hey, that’s clearly someone put in effort to either hire a designer or they themselves are a designer, or they’ve done this before, because there’s clearly a theme there.
and you can see that it sticks out from the rest. It looks custom, right? Those homes fly off the shelves. They won’t even be on the MLS for like a week until they’re under contract. Do you see this as a trend that more ⁓ builders and developers will start to look at things through a design first lend or maybe design second? Because of course you’ve got to have the spreadsheet. Or is that still something that’s not fully caught on yet?
Aaron Yassin (29:10)
Well, I’ve got a couple of points there to answer that question with. ⁓ with the proliferation of lot of media that’s happened ⁓ in the last 15, 20 years, more people think they’re designers. So people think that, well, I can do this too. can get on Pinterest and put a Pinterest board together and think that this is going to give you enough understanding of how to design something.Well, I think that it helps and I appreciate that people are thinking that way and looking at things, ⁓ but that’s not necessarily going to translate to success. There’s a lot more involved with achieving a good design ⁓ than people that haven’t really gone through the process at the level of involvement that it requires can understand. And it gets very detailed and very involved.
small differences can have a huge impact. I mean, you could design a palette of a group of materials and then find out, well, this whatever, this tile or this wood floor isn’t available. I’ll just swap it out for something else. But that may not work. And it may clash with the other materials that you’ve chosen in ways that don’t work, that really work works very poorly. And you’re not thinking through what
the feeling of the whole space looks like and taking the time to understand it and ensuring that it will work. And there are ways in which this can be done ⁓ from a design standpoint that are required to achieve good results. So I think that, yes, there are a lot of people that are involved in real estate and real estate investing that get it conceptually, but
have a harder time really implementing it and often don’t want to pay someone else to do it. So there’s a lot of challenges ⁓ involved in being successful on the development side. This is not an easy thing to do. And there’s also even, there’s lots of cases where ⁓ architects that have great reputations have been hired and then this friction from ⁓
commercial clients, developer clients, because there’s different demands. And those can create problems as well. So there’s fewer, I would say the best projects are fewer in further between. ⁓ In the best projects that also are successful as development projects, there are even fewer of those. And when I say that, I mean projects where the design
serves the end user in the best way possible, but it also serves the investors in the project by understanding what the budgets are and what’s required to ensure that those budgets are met in a timely manner while keeping that end user in mind. It’s a complicated process.
Dylan Silver (32:20)
Are there, of course, without people getting advanced degrees, are there ways where people can get certified in design or ⁓ contracting and design? What would be the pathway forward for someone to understand things from a design perspective?Aaron Yassin (32:40)
I think the first thing that you need to do is really to start looking, you know, and looking at and then evaluating what it is that you’re looking at. And sometimes really talking about it, like speaking out loud about it. Why do I like a certain thing? What is it that appeals to me? I mean, we can go to examples of works of architecture that many people will agree are great works of architecture.You know, you have to think through intellectually what makes it better. How do you then, how do you evaluate it? And then how are you, how can you employ that level of evaluation into something that you might be doing yourself? So, and there are ways that you can learn these things or, know, there’s obviously books, there’s lots of videos of people talking about design. There are, you know, simple ways to do it. But what I would advise people to do as well is to.
particularly that are involved in real estate and even doing value add projects, understand the mechanics of how to implement that kind of design thinking to your project. And that’s going to incorporate ⁓ some actual deliverable documents like ⁓ what’s often called an FF &E schedule. That’s Furniture, Fixture, and Equipment schedule, ⁓ where you’re then going to put the specifications for
different.
⁓ materials and finishes that are in your building onto a sheet. And then you’re going to also have columns in that that will have the cost for them, the lead time, where you’re ordering them from. And then you can start to look at everything together. They should also be laid out and organized so you can look at materials and make material swatches. ⁓ And then, you know, doing mockups is extraordinarily valuable. We have great opportunity to do visualization these days and putting materials together.
⁓ even now this augmented reality, you can scan your phone around a space you might be renovating and you could potentially add some materials ⁓ into your augmented reality and look and try to see what it looks like in the space, right? So that gives you a better sense of the effective scale on the material selections that you’re looking at and considering. So there are some clear steps that can be taken. ⁓
And it’s easy to get information on what those steps are. And then trial and error is terrific as well. And perhaps just hiring ⁓ someone to assist with that component of a project if someone hasn’t done it before.
Dylan Silver (35:19)
We are coming up on time here. was gonna ask you some questions specifically about design and the single family space, which we touched a little bit on, but we are coming up on time here. ⁓ Where can folks in our audience go to reach out to you or your team? How can folks get in contact?Aaron Yassin (35:36)
Great, thanks. I appreciate that question. So as we’ve been talking about design, I’ve got a very easy place for someone to go to connect with me. You can go to the website designdrivesvalue.com. Again, that’s designdrivesvalue.com. And when you go to that link, there’s a short ebook that you can download that talks about some of the things that I’ve been further talks about some of the things I’ve been talking about today. And then you’ll get to a location on the website where you can easily connect with me.You can also find me very easily on LinkedIn. ⁓ It’s Aaron Yassin, Y-A-S-S-I-N. I’m sure it’s going to be in the show notes. ⁓ And you can connect with me on LinkedIn. And I’m always happy to talk to people that have questions about ⁓ anything that they’re doing that relates to my areas of expertise. So anyone that wants to reach out, please do so. And I’d be happy to talk to you.
Dylan Silver (36:30)
Aaron, thanks for coming on the show. Thanks for taking the time today.Aaron Yassin (36:34)
That was great. Thank you very much, Dylan. I really appreciate it.
