Mastering Multifamily & Development Sales with James Nelson

James Nelson (00:00)
the reason why I call it the insider’s edge to real estate investing, is you can gain the insider’s advantage. It’s not like investing in the stock market where everybody has the same information. Here you can, whether you see something in the property that no one else did, whether you bought the property off market for a below market price, ⁓ there’s a lot of ways that you can add value to outperform the market.

Michelle Kesil (01:57)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, James Nelson, who has been in real estate investment sales for 27 years and is also an investor and an author. So excited to have you here today, James.

James Nelson (02:17)
Thanks so much, Michelle. Really appreciate the opportunity.

Michelle Kesil (02:19)
Of course, so let’s dive in. First off, for those not familiar with you and your work yet, can you share what your main focus is?

James Nelson (02:27)
Sure, so I head up US Investment Sales for Avis and Young. ⁓ For those who don’t know, Avis and Young is a global full-service real estate company. handle investment sales focusing in on multifamily, office, retail, and development sales mostly. And again, for the first, say, 25 years or so, my career was focused specifically on New York.

But now I’ve taken on a national role. We have 60 offices here across the country, but I’m really focusing the bulk of my time in the top dozen markets, which is mostly gateway cities and also spending a lot of time in Texas.

Michelle Kesil (03:03)
Awesome. And so when you’re doing this investment sales, how does that work? Is there a specific type of asset class that you’re working on or is it all over?

James Nelson (03:15)
Yeah, so.

We are on the sell side of the equation. So owners are retaining us to go and sell their properties. ⁓ Again, we spend a lot of time working on the multifamily side. So we’re selling a lot of apartment buildings, not just here in New York, but across the country. We’re also involved in ⁓ office sales, not just ⁓ office for investment, but also we end up selling a lot of these office properties to end users. ⁓ And then I would say over the last couple of years, something that’s become very popular is office

to residential conversions. So we’ve been selling some of those. We also sell a lot of retail, which could be shopping centers, but also here in New York, we do a lot of high street retail. So we’re selling retail in SoHo, Madison Avenue, to investors from all over the world. And then lastly, we’ve also been very ⁓ active on the development side. So we sell ⁓ everything ranging from ultra high end condo development sites, you know, here in New York to right

we’re handling a couple hundred acres for sale ⁓ outside of Dallas and Austin.

Michelle Kesil (04:21)
Awesome. And what would you say have been some of the main keys that have allowed your business to grow and run successfully?

James Nelson (04:29)
Sure, so this is definitely a business that’s all about the people and building great teams. So here in New York, just to give you a sense, we have two dozen people who work on the sales team. That’s a combination of salespeople who are actually helping prepare the marketing materials and getting out to market and making those calls and negotiating the deals and

a team of dedicated full-time ⁓ analysts, marketing, et cetera. And this group of two dozen people, last year we

close 49 transactions for close to $700 million. So if it was just me doing all this, I would not even be able to handle a fraction of it. ⁓ I would say ⁓

My skill set is to be the face of this, to be out there doing things like this, to help get the word out on what we’re seeing in the market and how we can be most helpful. But you need a team behind you that can get the work done, but also specialists. So we talked about the different asset classes. Selling multifamilies is very different than, say, retail or office or development. You really need to understand kind of the drivers, not just for the asset classes, but in the specific markets. So ⁓ in the same

way that we work here in New York, I partner with our other professionals across the country to make sure that we have the best boots on the ground who are helping with the local expertise and then we’re helping provide the national ⁓ execution behind it.

Michelle Kesil (06:41)
Yeah, amazing. And what has been the biggest challenge or obstacle that you’ve had to overcome in this role?

James Nelson (06:50)
Well, again, after 25 years focused in New York, ⁓ people know who I am here. We’ve got a really long track record. So we go and pitch for business. People know that we’re one of the, you know, the leading firms. ⁓

Clearly we have to convince them that we’re confident on value and we can deliver on it, but it’s a little different when we’re going into a new market. Maybe where we don’t have as long of a track record and really demonstrating that ⁓ we have the ability. If you’re an owner and you’re looking to choose a broker to sell your property, you want to make sure that you’re choosing a broker who can get it to the widest audience of qualified buyers to maximize price and deliver. And so sometimes when you haven’t done that before in a specific market, it’s natural for an owner to say,

Okay, well, I see you’ve done this across the country, but how do I know that you can deliver on my market? I think what we found is that real estate is becoming more and more of a national if not global business. So we’ve actually found and it’s super helpful that I’m based here in New York because we found in the top dozen markets that New York is the number one out of town buyer in 10 of the top 12 markets. And in fact, in those markets, New York based investors account for more than all the foreign investment combined. So, you know, we really believe

that if you’re looking to sell an asset, ⁓ you’re not going to get the best execution or the best price if you’re only reaching out to the local known buyers in your market. You really have to have a team behind you that can help ⁓ broaden the exposure and get it out to the widest possible audience.

Michelle Kesil (08:19)
Yeah, and what does that look like for you in terms of your team structure and the way that you generate leads and clientele?

James Nelson (08:27)
Well, to take the last part of the question first, because I think it’s really important, ⁓ is that, and it’s the same for any business, I you really want to be top of mind, right? And the way you do that is you don’t just talk about how great you are, think about, put yourself in your client’s shoes, think about the issues, things that are coming up, ⁓ and you really want to be the market expert. So we spend a lot of time with our research reports, talking about sales trends, where we see ⁓ capital,

trends and so we’re out there and we’re very public with our reports ⁓ so it’s not just email campaigns but you speaking on podcasts like these doing webinars very active on social media because the idea is you know Michelle if someone you know wants to sell a property in Dallas Texas

⁓ The goal is, well, you should speak to James Nelson and the team at Avis & Young. Sounds like they’re active, they know the market, and ⁓ that’s what you want. So I think it’s really leading with great research and great content, and ⁓ that’s how I think you can really ⁓ tee up the most opportunities out there.

Michelle Kesil (10:17)
Yeah, definitely. And what are you most focused on solving or scaling to next?

James Nelson (10:24)
Well, we’re really doubling down again in the top dozen markets in the country. So if you look at sales volume for the U.S. on the whole, 40 % of it comes from the top dozen markets. So if we can, we’re very dominant here in New York. We’re very strong in Miami. We’re making great strides in Dallas, D.C. We’re about to bring a multifamily portfolio out in L.A.

If you can really move the needle and grow your business in those top markets, that’s really where you’re going to get, you ⁓ know,

the most exponential growth. I’m not saying that we’re not opportunistically handling opportunities in secondary tertiary markets if they’re of scale, but we’re really focusing spending time in these major markets. And the way to get there is not just what we’re doing to help support those efforts, but also recruiting. So we are actively growing as a company. We’re looking for ⁓ not just investment sale brokers, debt equity brokers, leasing. Again, our company’s full service, so we also do property management. We do project management.

management appraisals, so we’re looking to grow as a company as well.

Michelle Kesil (11:31)
Yeah, amazing. So what are kind of all the ways that you support people through your company? Like I know you just mentioned the property management and appraisal, but is it like fully vertically integrated where someone can come and run the whole process with you guys?

James Nelson (11:46)
Yeah, that’s that’s the goal. If you have a commercial property owner. ⁓

you know, the life cycle of the deal is for us to first find the opportunity for them, help them finance it. So we have our debt equity professionals. Once they close on it, we can manage it for them. We can help them lease the space. Often then after you’ve ⁓ improved the asset, then our debt equity team can come in again and refinance the property. Or if not, maybe that’s when the sales team will step in again and sell it. But it’s really helpful when you can handle everything in house so you have complete coordination

⁓

That being said, ⁓ we’re not always strong in every single service line, in every single market, so I think it’s also important to be upfront with your clients ⁓ and only take on the assignments where you know that you can add ⁓ real value. And sometimes we’re not the best choice, and so I think it’s important also to say, hey look, we’re definitely equipped to handle on the sales front, but if you’re looking to manage or lease out the space, we might not be the best pick in this market. ⁓ And so I think that’s important too.

Michelle Kesil (12:50)
Yeah, absolutely. Can you share a bit about the book that you wrote?

James Nelson (12:55)
Sure, so this was ⁓ in 2020, ⁓ March, April, where we’re all camped out at home wondering if it was the end of the world or…

you know, how long was it gonna be before things return to normal? And I’m a big fan of coaching and my coach said, well, James, when are you ever gonna have an opportunity to do a project, to do something new? And, you know, for years, people had asked me, James, what is the book that teaches you how to invest in real estate? And there’s ⁓ certainly kind of the Rich Dad Poor Dad, which is, you know, a perfect way to start off.

if you want to buy a three, four family and live in one of the units, there’s plenty to do with single family home flipping, hacking and all that. And then on the other end of the scale, you’ve got textbooks like Pour Vue, where if you want to go get a master’s in real estate that you can learn the theory behind it. But I wanted to create a book.

and it’s called the Insider’s Edge to Real Estate Investing where anyone who’s new to real estate investing could read the book and understand what is this all about, how does it work, and ⁓ so it’s filled with a lot of experience, not just as me, having brokered ⁓ hundreds of transactions, but also as an investor. I was a co-founder in two real estate funds that put out JV Equity for Value Add Deals. I’ve also invested

in

countless deals as an LP

well as a general partner, so sharing my insight into it. again, it’s been a great thing. In addition to the book, I have my podcast, which is also the same name, The Insider’s Edge to Real Estate Investing, where now I’ve…

had over close to 250 guests on the show who talk about how they got into the business and how they grew their business and what they look to invest for and, you know, advice to the someone new looking to get into real estate investing.

Michelle Kesil (15:33)
And what advice would you give now to someone that’s just getting started investing or looking to scale up?

James Nelson (15:40)
Yeah, I mean, I think there’s no substitute for doing. ⁓ So, you know, at some point you have to take the leap. I think to do that, yes, you want to try to get some experience, some education first. And the great thing is that, you know,

There is a book now, there’s also a lot of great helpful ⁓ resources, podcasts like these where people can learn what to do. But I think the key thing is to get a mentor. And so whether you’re going to go work for a bigger shop and kind of learn on the job, or let’s say there’s an investor that you admire and what they do. And this book talks about ⁓ one of the key things you can do is find the opportunity. And so bringing that opportunity to a more seasoned real estate investor and say, hey, can we partner on this together and kind of learn on their dime, so to

speak is a great way to get going.

But I think what I love about real estate investing,

the reason why I call it the insider’s edge to real estate investing, is you can gain the insider’s advantage. It’s not like investing in the stock market where everybody has the same information. Here you can, whether you see something in the property that no one else did, whether you bought the property off market for a below market price, ⁓ there’s a lot of ways that you can add value to outperform the market.

Michelle Kesil (16:56)
Yeah, definitely. And what is an example of your own investments where you implemented that process and like found value in a unique way?

James Nelson (17:06)
So one of the first investments I ever made ⁓ was a result of ⁓

teaching at NYU and I was an adjunct professor but I probably wasn’t even qualified to teach the course. I was probably only five, 10 years in the business but one of the students was a gentleman by the name of Matt Blesso and ⁓ he reached out to me. He was also just getting started and he reached out. said, James, I tied up this property in the West Village. ⁓ I bought it ⁓ off market. I think I got a really good price on it. ⁓ Can you go flip the contract?

He was in contract to buy this building, I think it was for a million seven or a million eight, and he said, ⁓ go see if you can go sell it to someone else. And within a couple weeks, and I knew he got a great buy on this, I had offers at 2.5, 2.6 million dollars. So he could have made well over a half a million dollars just on the spot to sell that contract to someone else. And he said, James, I really appreciate. ⁓

what you’ve done, but I think this is such a great deal. I’m just going to do it myself. So I clearly knew that going into it, he got a great buy on it. And that’s the one thing you can’t change on an investment is your basis and where you went in. And so I said, well, hey, are you taking investors? And he said, well, it turns out I am. So I became one of his first investors ever. And that deal has, you know, 25 years later, we’ve rolled it over so many times that it’s the gift that keeps giving. So we bought the building again for, I think it was a million seven, a million eight. He ends up

And it was only a five story building with apartments above and an apartment retail restaurant on the ground floor. He ended up converting the apartments upstairs to condos and selling them out for over $5 million. So obviously he spent some money to convert it, but we ended up making two, three times our money just on the residential above. Then we ended up selling the restaurant years later for $4.3 million. So the restaurant ultimately became more than double that we paid for the entire property.

We took the proceeds on that. We did a 1031 tax free exchange. We rolled it into an apartment building in Brooklyn where we found out that the next door neighbor wanted to buy our air rights. We sold those off for a million dollars, more distributions to the partners, and we still own that apartment building in Brooklyn that just cash flows. So, ⁓ real estate is a great way to invest where you can add value. ⁓ There’s a lot of tax benefits. ⁓

where you can roll those those profits into a future investment. So I think it’s a great example of ⁓ the benefits of real estate investing.

Michelle Kesil (19:40)
Yeah, absolutely. And is there anything that you’re excited about or see as a big opportunity and investments for this year?

James Nelson (19:49)
Well,

I’ve always been, I think it may be focused in New York, certainly the last five years, I would say a little bit of a contrarian. mean, as much as, you everybody knows New York and it’s one of the, you know, the greatest cities out there. Look, our real estate market has had challenges, no doubt. And a lot of that has become as a result of the political environment here in the rent regulation. And so I saw a lot of our clients who back in the day, this was before 2019, were able to, you know, take a regulated apartment.

De-control it, charge a market rent, and then ultimately resell the property for huge gains if they were able to add value. And that changed ⁓ after 2019 where a lot of these regulated rents were just basically frozen in time. lot of investors picked up and left this market as a result of it. A lot of those investors have been buying multifamily down in the Southeast in what you call pro-business type states and environments.

And ⁓ not that there’s anything wrong with that, and there’s certainly opportunities there, but I think sometimes when these markets are challenging, that

Those are sometimes where you find the opportunities, where you look where others are not. I think ⁓ if you look at what’s happened in San Francisco, it’s been a complete 180. That was a market that really had challenges and now there’s a new mayor, a new leadership. All of a sudden you see that the market’s totally turned around. You’ve got over a million square feet of AI leases that have taken place there and along with that you’ve got much greater demand for multi-family, for retail. ⁓

You know, so I think sometimes finding these opportunities in these markets where others, where others are focused elsewhere. I think another big example has been in the Midwest. You know, the Midwest was maybe not as exciting as saying, going and investing in Nashville, Miami or Austin, but the Midwest has put up some of the best ⁓ increases for, for multifamily, just for the simple fact that no one was building new supply. So these markets were still growing, but there just wasn’t, ⁓

you know, increase in housing stock. rents have just continued to increase year over year. So ⁓ yeah, no, I think it’s hard to paint the market with one brush. So I think you need to get very specific on the market, on the asset class, the business plan, but there’s certainly plenty of opportunities out there today.

Michelle Kesil (22:14)
Definitely. Well, before we begin to wrap up here, if someone wants to reach out, connect, learn more, where can people find you?

James Nelson (22:22)
Thank you for that. ⁓ So JamesNelson.com is the site that I created. It’s really not about me. I created it for those who want to learn more about real estate investing. So that’s where you can find out about the book. That’s where you can find my podcast. I write articles weekly in Forbes. ⁓ So you can find a lot of the ⁓ content that I’ve put out. And that’s also where you can find my social media handles, which is JamesNelsonNYC.

Michelle Kesil (22:51)
Perfect, I’ll appreciate your time and your story. Thank you for being here.

James Nelson (22:55)
Yes, thanks for all that you do for the show and it’s great all this incredible content that you put out.

Michelle Kesil (23:00)
Thank you. And for those tuning in, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like James who are building real businesses. We’ll see you on our next episode.