Aileen (00:00):

Okay, welcome everyone to today’s episode of the, How Did They Do It Real Estate podcast. I’m your host, Aileen Prak and today’s guest. We have Alix Kogan. Alix is the president of Ashland capital fund and has 20 years of experience in real estate, construction and development. He started his career in Colorado, founding his own high end construction company and grew it to be the largest and most successful firm in Southwest Colorado. Over the last 15 years, Alix has successfully completed several town home mixed use and single family developments. Additionally, he owns over 1700 apartment units as an LP coach, GP, and KP. We’re so excited to have you on the show today, Alix, how are you doing?

Alix Kogan (00:38):

Doing great, how are you?

Aileen (00:38):

Doing great. Thank you so much. We really appreciate you taking the time for joining us today.

Alix Kogan (00:44):

Yeah, happy to be here.

Aileen (00:46):

So before we get started, can you share a little bit more about your background and just how you got started in real estate?

Alix Kogan (00:52):

Sure. I guess it all starts I grew up in a family that were still are all real estate investors, builders, developers. So it runs in my family. I took a detour and ended up teaching high school for about a year and a half and wanted to save the world and all that. And after about a year and a half, I realized that I wasn’t happy teaching. And you know, of course by default got back into, you know, my family did. And I at the time I was in Arizona teaching and ended up spending a lot of time in Colorado and decided it was a great time and place to open up a construction company and real estate investment company, basically a sister company. And yeah, so that was late 98 and that’s how, that’s how I got into it. And literally just start with a company that grew and grew and grew and had a great ride.

Aileen (01:58):

Awesome. So are you still doing the construction company today?

Alix Kogan (02:02):

No actually December of last year I had a successful exit and we sold the company. So yeah, I had for the last three years, my family and I moved back to Chicago, so we’ve been living here and I had a great team running my company and was able to solve that last year. So for the last few years, personally, my time has been spent on apartments. So it made the transition from construction, single family development into multifamily several years ago.

Aileen (02:38):

And how did you start getting into multifamily? Like what was the turning point for you and how were you introduced to it?

Alix Kogan (02:45):

Yeah. Well, I guess, you know, early on in Durango, Colorado, we did some, some smaller multifamily, but they were not for ramped. They were for sale products. So, you know, it was introduced to it then you know, my family has had some rentals and so you just sort of you know, see it. And I was always interested in having passive cash flow, so got introduced to it early on in terms of smaller multi-families and you know, looked at some larger opportunities throughout the years, but it was just so busy with running a company and managing my own portfolio of single family, duplexes, triplexes. I just didn’t really have the time to pivot in the multifamily. And then about four or five years ago I forget what it was probably a podcast that was a conference. And I can’t even remember the first time the light bulb went off that, you know, I need to scale my business until it’s a multifamily and start divesting of all these single family and smaller wealthiest that I owned.

Aileen (03:59):

So then how many single families did you get up to before you started divesting into multi-family?

Alix Kogan (04:06):

You know, it was probably 30, 40 yeah, maybe closer to, even to 50 units that I owned over the years. You know, I own some commercial, some college rentals you know, duplexes, kind of, town homes, you name it, I’ve owned it. So I still do own a few in Colorado that I’m trying to sell and then I’ll be completely done with all that may have been some larger multi-families.

Aileen (04:37):

Thank you for sharing that. And so, as you’re looking for the multifamily what markets are you looking at currently and which markets do you primarily like to invest in?

Alix Kogan (04:48):

Well, we like the Southeast the lot we are closing a deal in Greenville, South Carolina, closing on a deal in little rock Arkansas. So we like the Southeast a lot. We’re looking there constantly. I’m based out of Chicago. So there’s parts of the Midwest that I like lot as well. So we are looking and that’s obviously closer to home and easier to get to in Texas. So on a couple of assets in San Antonio, we are looking at some deals and Texas, as well, although a Texas is pretty competitive market right now, so it’s harder to find good deals, but yeah, I’d say Midwest Southeast a little bit of Texas.

Aileen (05:33):

And so as you’re looking for the different markets, what are the primary key metrics that are, you’re looking for?

Alix Kogan (05:40):

You know, it’s really the same metrics. I think that a lot of investors look for, it’s a compelling story of job growth, employment, growth and supply. So, you know, I think there’s a smaller markets where you tend to find maybe less growth less employment growth, but you do find the deficit on the supply side. So it’s a tight market and even a little bit of employment or, or population growth just stresses the market. So, you know, those are some of the indicators of course, that we look for, but in general you know, good employment growth, good population growth, and then employment diversity is also important. You know, we’ve looked at some markets where they’re really reliant on one or two industries, and then that has a little bit more risk attached. So not that we won’t look there, but everything that we look at, we look through you know you know, how much risk is there and how much reward. So if there’s enough upside we’ll look at a little bit of risk, but generally we’re pretty conservative investors. We’d rather have less risk, less upside, but know that our investment is safe. And we’ll take a little bit less of a return just for the safety.

Aileen (07:00):

And so has your investment, or has your market analysis strategy change from prior COVID to today?

Alix Kogan (07:12):

It has, but I would say it is sort of a short term pivot. So as we’re looking at opportunities today, we’re looking at the short term, we’re, we’re saying, you know, is this particular demographic affected by COVID? Are they restaurant workers are they in gaming? I mean, you know, what, what is the demographics? So, you know, I would say on a longer term, you know, call it a two year cycle, it’s still the same markets, we’re looking at same analysis, but it really, what it does mostly is change our underwriting. So if we think that a certain demographic, you know, is affected by retail, but then we’re going to have a high delinquency rate written in one of our underwriting, for example. So we are going to have a business plan that is specific to what we see going on. But we’re certainly not, you know, the world hasn’t changed it. The, you just have to, you know, underwrite differently for the next 12 months as we get through this.

Aileen (08:15):

That makes sense. And so I wanted to go back a little bit as you were making the transition from single family to the multifamily what has been the biggest challenge from when you’re making that change?

Alix Kogan (08:28):

Good question. I’d say when I was a single family owner operator investor, most of what I did was in my back door. So, you know, that that obviously is you know, easiest to do while you can you can scale and you can own assets all over the country. You have to have a good property manager obviously, but you don’t have to there. So on the one hand, it’s easier to pivot and scale multi-family from that respect, but you still have to go out to the asset. So in COVID times, really the challenge we’re having is, you know, I can’t just jump on a plane and go visit that asset, meet with the property manager or whatever needs to happen. So that’s certainly been a challenge during COVID. You know, I think when you look at a brand new market and multi-family, I think that’s another challenge where you really have to know some markets, and you really have to know all the dynamics, the employment based. So there’s a learning curve ramping up to specific markets where again, in the single family space, it’s typically in your backyard, you know, it like the back of your hand. So those are probably the two current challenges which obviously you can overcome and at which really is a result of continuing to look in that market and continuing to underwrite, continuing to study it until you’re really comfortable that you’re ready to buy an execute your business plan.

Aileen (10:08):

That makes sense. Can you share a little bit about the first deal that you did? How many units was it and what are some of the challenges you face as you were purchasing that first larger multifamily?

Alix Kogan (10:22):

Yeah, I would say one of the first ones that we bought was in San Antonio, Texas. You know, I had good partners, still have good partners, so there wasn’t really a challenge. In the acquisition, there were some challenges that we’ve experienced as of late as a result of COVID in terms of, you know, some of the collections. But it’s been, we anticipated the worst and it’s actually a lot better than we anticipated. So you know, we didn’t do distributions for the last six months just holding on to cash to make sure that people pay their rent and we have enough cash flow in the business. So in retrospect, there was a, it was a good decision and when we were getting through really well but that’s probably the biggest challenge of the projects to date. I could think of, you know, in the past, we, maybe another interesting challenge where we had an asset under contract that experienced two shootings in one week. Yeah. So that was a challenge because all of a sudden we had a lender that didn’t like the deal all of a sudden, because there was issues. So they ended up coming back and wanting to restructure their entire lending package a lot less leverage. We got nervous, investors got under results, really. We ended up terminating that deal. So that was one of the earlier challenges that we experienced in buying a multis, which candidly, you can’t foresee, you can’t control, but it’s something that could happen.

Aileen (12:07):

One of the things that you mentioned was on one of the earlier deals, was the collections process of it. What were some of the strategies that you implemented in order to increase the collections?

Alix Kogan (12:20):

It’s really good communication with the tenants and not let things just sort of, you know, by default, say it’s COVID and they’re not paying. So working with them to come up with a payment plan, working with them to provide them resources. There’s a number of different agencies that have been providing help to the renters. So just making sure they have the resources available to them and literally holding their hand and navigating that process for them. So that’s, that’s probably the been the most successful and then understanding who is truly affected by COVID and who is now because, you know, as you can imagine, there’s people are taking advantage of this situation and they continued to work or continue to work part-time and had the means necessary to pay, but chose not to. So, you know, you have to really be involved with that kind of granular level and unfortunately evict when you’re able to and but more often than not to work with your tenants and come up with a payment plan and get assistance.

Aileen (13:33):

So then how closely are you working with the property manager versus managing it yourself?

Alix Kogan (13:40):

Sure. So we currently I would say it’s sort of a hybrid, if you will. We hire third-party property managers on some of our assets. And then a couple of my assets. I have a partner who we’re you know, we’re both sponsors cocoa general partners on the deal, and they have a vertically integrated property management company. So their company as a property manager. So on the deals where my partner is actually a property manager, you know, we trust them, and we have full visibility into what’s going on. There’s, you know, there’s less sort of work on our end of it. In the case that it’s truly a third-party property manager, we’re in contact every week, sometimes daily, depending on what’s going on. And it’s much more heavy during a reposition, if we’re doing a value add program for changing the tenant base, it’s very heavy, heavy involvement with them. Once things get stabilized, you know, it is a standing phone call once a week, but it’s less intense and less things aren’t going well,

Aileen (14:53):

What kind of expectations are you looking for from the property managers as you’re touching base with them weekly?

Alix Kogan (15:00):

Well, you know good reporting. We want to know what’s going on, how is pre-leasing how’s collections any kind of you know, CapEx projects how that’s going what’s happening in the markets. You know, those are the basic things that we cover. So

Aileen (15:23):

Great. And so after getting your feet wet with a couple of multi-families, have you been able to build traction to now owning over 1700 apartments in different capacities?

Alix Kogan (15:35):

Well, part of it, it was just probably the biggest thing is just the commitment to do it and to have enough hours in the day to do it. So you know, I have largely been focused full-time for the last several years while still owning another company. I had a great management team that ran that company. So spending the time to develop relationships with brokers, spending the time to develop relationships with other sponsors that we will sponsor and partner on a deal together. We also have an associate of mine that spends all day five days a week making 200 phone calls a day to off market properties. So mom and pop owners. So all those things combined really it’s not one its effort and some strategic initiatives that how you know, allowed Ashlyn capital to scale recently brought on a guy that spent some time with the Chicago private equity real estate firms to join Ashlyn capital. So it’s, you know, bringing on the right team and just being focused to growing a business. That’s really no different than when I started my first company 20 years ago. It’s really the same principles as running a business.

Aileen (17:01):

Thank you. So would you also be able to share a little bit, you mentioned about the off-market deals how have you been able to source those deals and has it been more difficult now to kind of as you’re going through the off-market deals, being able to close on one of those?

Alix Kogan (17:19):

Yeah. so really, you know, really two ways is we, you know, we identify a certain markets, we identify certain Southern markets, we identify a certain assets, so we’ll filter through really and it’s, you know, it’s going to be pretty laser focused to the type of assets that we want to buy. And then it’s literally just getting on the phone and calling these guys, it’s a very difficult job. So we have a guy who was a specific personality. I can do this, but it’s somebody that can take 199 nos a day or even more aggressive than just the note. Its people telling you know, where to go. And you just, you just keep going and it’s that one, you know, it might happen once a week. It might happen 10 times a week that you actually get somebody that’s engaged and wants to have a discussion.

Alix Kogan (18:14):

And those kinds of relationships take time. You know, when you, when you call somebody out of the blue and you say, do you want to sell your apartment? They’re generally not, not prepared. So that’s a conversation you might have for mine. So we’ve got a whole CRM process of tracking those and calling, calling it a week, calling it a month, calling them six months, whatever is appropriate relative to that conversation so that, you know, that’s been good, although it’s, you know, it has its pros and cons. So those types of sellers, generally, as a rule of thumb are less sophisticated their books. Their businesses, not in a sort of nice, pretty package as you would find from a broker. So it takes more work to sift through it, figure out what’s happening with the business, what’s happening with the asset financials, etc.

Alix Kogan (19:07):

But, you know, oftentimes you can uncover a great deal and there’s no competition or very low competition. You know, additionally for off market, it’s really getting a look at a deal when a broker is bringing it to market right away. And you are one of one, two, three groups that gets a look. Those are also, you know, very good opportunities. And the asset that we are getting ready to close on in Greenville, South Carolina, that’s the way that opportunity came to us. They brought it to two groups and we actually were willing to go hard on our hurt us money day one, which of course is nerve wracking. Because you don’t know what you don’t know, but we actually knew the market well. And we were confident that nothing that we would discover would be fatal. You know, we wouldn’t move forward if something, because we moved some, you know, found something fatal. But it worked out, we got the deal and we’re about to close.

Aileen (20:07):

Oh, congratulations on that. And so how do you know, you mentioned the, you were of two groups does that something that the brokers usually provide information or is that something that you find out along the way?

Alix Kogan (20:22):

Yeah. yeah, I mean, it’s something early on that I think, you know, most good brokers will tell you, look, we’re showing this the two groups putting, you know, if you’re interested put in your best and final willing to give you guys a shot before we take it to market. So yeah, generally the reputable brokers will tell you the truth. You know, they’ll give you a price and, and they’ll tell you really there’ll be fairly transparent. Unfortunately there’s another subset of brokers where, you know, you’re going to get all kinds of stuff, Barbies, but I’d say that that’s you know, a smaller population of brokers

Aileen (21:05):

And as you’re underwriting, these deals what types of key metrics are you looking for while doing the underwriting?

Alix Kogan (21:14):

Well, [Inaudible] say we’re looking at the existing expenses we’re seeing. Is there, is there some sort of management play, are they high? Are they low? You know, as the something sort of stand out of the norm on a line by line, by line level basis we’re looking at you know, obviously what kind of occupancy they’ve had, if it’s below normal, again, what, that’s an indicator of what’s going on, you look at the metrics of the market. So are they at market? You know, if the market’s at 95% occupancy and they’re at 85 that tells you there’s something going up we look a lot at a lot of our deals are value add. So we’re looking at, you know, where does the assets sort of fall into the market? Is it below market and rads? Is it below market and finishes, right?

Alix Kogan (22:07):

Where’s the opportunity. So knowing and being honest with yourself, I think is really important. I think we see a lot of syndicators get so excited about the deal they end up selling themselves. I say, well, you know, look at, look at you know, ABC apartments down the street, they’re getting a thousand dollars a month. We certainly can get a thousand dollars a month. You know, I think, you know, you have to be honest with yourself, ABC apartments on the street as a pool, you don’t, you know, or, you know they have in unit washer and dryers, we don’t. So you really have to be honest and granular to that level, because you have to put yourself in the mind-set of a renter. And if you’re out there looking, you have multiple choices, you know, the washer and dryer will make a difference or a walk-in closet, or some units have a balcony, have some outdoor space. So I think that’s where deals, you know, die or actually, you know, make it to kind of attract as all of those granular of little data points that you plug into your modelling and you do it honestly and accurately. So yeah, from a 10,000 foot level, those are some of the things that we look at.

Aileen (23:28):

And have you been, have you had to tweak your underwriting a little bit during COVID?

Alix Kogan (23:35):

Yeah. You know, relative to, to what I mentioned before is, you know, you can’t just imagine that during COVID, you’re going to be able to push you know, rent three to 5% where some markets enjoyed that for the last, however many years. You, I mean, you still may in certain markets due to supply and demand. But I think that’s reckless. So of course we’re going to be much more conservative. Really everything we’re going to be concerned with Avant on red growth, we’re going to be conservative on expenses. So yeah, that definitely takes a different type of underwriting today. But as I say, you know, that’s a that’s something that we’re going to look at heavily in year one or two, we’re going to underwrite for a different outcome in year one. And we’re, we’re all guessing and hopeful of course, and more helpful as of late, but COVID is going to be behind us and the way the vaccine that type of conservatism is necessary for the next 12 months. But after that, you know, we’re, we’re defaulting back to, whereas the markets in terms of rent growth and the rest of the metrics that are fairly predictable.

Aileen (24:52):

Awesome. Thank you so much for sharing. And so right now you own over 1700 apartment units in different capacities. Both as a limited partner co GP and a key principle of those of those areas which areas do you like to participate in the most and why?

Alix Kogan (25:10):

Yeah, good question. So I would say, you know, this is a fairly natural progression. I started as a limited partner investing in deals, but I did a little bit differently. I came in getting to know the sponsors. I also was probably much more involved than a typical limited partner. I also came in with substantial. I was fortunate. I did well in my other life, my business. So I came in with substantial investments. So I think I got much more attention and involvement in those deals, even as an LP. So that’s where I started. And then I started partnering with some of those actual guys that I invested in originally and took a more active role because of my construction background you know, successful real estate development business for 20 years. We partnered on deals together.

Alix Kogan (26:09):

So, you know, I was called a minority role, general partner. And then those relationships and others flourish into much more meaningful where I’d found the deal or they found a deal. We came together, we took down the deal together and own it together. In terms of the KP. You know, when I think about a key principle on some opportunities, I’ve actually helped newer syndicators take down those deals and have let them, my net and liquidity and the liquidity, my balance sheet in essence. So they can qualify for an agency loan. So I’ve done that as a sort of a relationship. And so I’m involved, but really from a backseat. So what is my favourite? I mean, really the two main models today is that we’re the lead sponsor. We find the deal or we’re one of the two other avenues where someone else will find the deal. They’ll bring us in on where children’s show their partners on the deal.

Aileen (27:18):

Awesome. Thank you so much for sharing that. And so currently what’s your next focus for you? Alix?

Alix Kogan (27:24):

Next focus is really to continue to, to grow Ashland capital. We have four or five interesting deals in the pipeline. So you know, we’re always looking to increase our investor pipeline. So we’re out there meeting people that want to join us on these opportunities. So it’s really just organically to grow that to manage our projects well, and to, you know, probably buy three to four assets this, this coming year. And then, you know, increase that slowly the following year. We’re not looking to be huge. So I think, you know, well, I want to be a smaller, successful boutique owner operator.

Aileen (28:16):

Thank you so much for that. And how has real estate investing impacted, impacted your life so far?

Alix Kogan (28:23):

That’s been a game changer. I mean, it’s something that I wish I would have done it at a larger scale, more meaningfully earlier in my life, but, you know, like, like most people you’re busy with your day job and then mine was intense. I had 35 employees and hundreds of subcontractors. So and that was, you know, that’s what was paying the bills. So I was, you know, totally focused, but you know, as I started to have more time and resources and capital to invest, it was life-changing. it allowed me to take advantage of texts efficiencies with real estate that help offset some of my income through the operating business and ultimately got me to a place, you know, along with the success with my other company that I sold to not have to work ever again. But that would, I would, I wouldn’t, I can’t imagine not working. I love to work and I love real estate, so but you know, technically I have a choice not to, and I think that’s what everybody strives is the freedom of choice. And that’s what it’s done for me.

Aileen (29:39):

What is one thing that, you know, now about real that you wish you knew when you first started?

Alix Kogan (29:45):

That larger acquisitions and apartments are not as not as difficult. And I wish I wasn’t as intimidated as when I was just starting out because yeah, as it’s become a more popular asset class, you could see so many people doing it and many are successful at it. So I wish I would’ve started younger and with larger and larger assets rather than single family, I mean, single family is fine, but I would have been further along. Had I not.

Aileen (30:26):

And what is one thing that sets the successful people apart in real estate investing?

Alix Kogan (30:33):

I would say commitment, right? Commitment, focus, and not giving up because it’s a business that can, you know, punch you in the gut on a daily basis, challenges with everywhere you turn. So it’s just, you know, not giving up, continuing to take one step after the other moving forward every day. That probably is the single most important thing that you can do take action, even if it’s small steps, but do it consistently and don’t get discouraged.

Aileen (31:06):

And what tools or techniques have you used to improve the efficiency of your business or your personal life?

Alix Kogan (31:15):

Good people on my team. So Eric on my team is incredible in terms of you know, leveraging other people’s skillsets. There’s certain things, you know, that someone who’s in their mid to late twenties so much better than me, and you know, leverage his technology skills, you know sort of get my, get my hands dirty and, you know, be on the ground with an asset, you know, with my construction background. So hiring the right people and, and, and we utilize all that technology. So that that’s been that’s been great for me to leverage my time.

Aileen (31:59):

Well, thank you so much for sharing Alix. And if our listeners wanted to find out more about you and the different opportunities that you’re offering with Ashland, where can they go to find out more

Alix Kogan (32:09):

Sure it’s Ashland capital fund.com go to my website and contact us. We have a tab on the website with current deals that you can pull those down from the website and see our current offerings. Be happy to schedule a call and chat that anyone was interested.

Aileen (32:29):

Awesome. Thank you so much, Alix. Really appreciate having you on the show today.

Alix Kogan (32:32):

Yeah, that was great. Thanks for having me.

Aileen (32:34):

Thank You.