Four experienced affordable housing professionals shared their successes — and challenges — starting and growing their businesses at Baker Tilly’s 2022 DevelUP affordable housing workshop in Milwaukee. The session, moderated by Baker Tilly’s Matt Paschall, was opened by explaining that while there’s no playbook for new developers, the experiences of these professionals demonstrate how to be intentional and thoughtful about scaling your business, while overcoming failure and struggle along the way.
Michele Jarrell, partner, Boyd A. Jarrell & Co., Inc., began her career as a corporate banker and while she admits she “hated” having to wear a suit to work every day, she feels “blessed” to have had the opportunity to learn the lending business. “I really got to see how banks looked at buildings, how banks underwrote buildings and how banks determined what was a good risk,” she said.
She took her training with her when she left corporate life and joined the family business, a full-service property management and brokerage company based in Chicago. She learned on the job how to pitch potential clients.
“You have to be willing to have someone say ‘no’ to your face and you have to take it, then still send them the thank-you card for their time. Then you have to go back to them in three or six months and take the ass-kicking again. It took me probably five years to get the right deal at the right time, then put the right team together.”
Once she won her first bid through a request for qualifications (RFQ) process, Jarrell said, winning new business became easier.
Working in a family business, she faces the challenge of dealing with co-workers who are also relatives. She shared she was able to convince one of her siblings to contribute equity, but his heart wasn’t into running the company. She said he told her, “Michelle, if you’re willing to do all the work, of course I’ll sign up for 25% ownership.” She concluded: “That’s the price I paid for the equity I got.” Then, she added with a laugh, “not forever, though.”
Kevin Newell, president and CEO, Royal Capital Group, also began his career in a corporate setting, which he enjoyed. With no children of his own or substantial financial obligations, he realized it was a perfect time to re-activate his long-held dreams of becoming an entrepreneur. He signed up for a graduate program in business, learning the fundamentals of accounting, balance sheets, supply chain and marketing. He began to think of himself as a “businessperson who has some skill sets in real estate.”
He spent time envisioning the kind of company he wanted to build and came up with a plan to build a business where employees enjoy coming to work, a place they can “do good by doing well.”
Royal Capital is now celebrating its first decade building equity and prosperity for its clients. His advice to others: “Don't just write down the deals you want to do, write down the company you want to build.” Then, you have to hold yourself accountable to making that dream a reality, whether it’s adding new employees or expanding the business’s infrastructure by growing a new vertical or adding construction or asset management into the mix.
When Nicole Chavas, president and COO of Greenprint Partners, enrolled at the University of Wisconsin, she had “no idea what I wanted to do,” so she got a degree in accounting, then spent 10 years working in investment management. “Real estate was always my favorite,” she said. “I got to do all sorts of real estate funds, private equity and venture capital. I learned a lot about the investment space, but I realized how disconnected I was from anything real.”
She began to ask herself, “How can I actually make a positive impact and feel good about the work that I do and live my values?” Her answer: She enrolled in business school. Although she was fascinated with the “built environment,” she deliberately sought out new relationships with people in industries outside real estate.
“I realized my personal passion is sustainable urban development. I want to bring green solutions to communities, particularly those communities that have not benefitted from investment in infrastructure. That’s what led to Greenprint and our mission to create healthier, greener, more sustainable places to live, work and play.”
Today, the company has a team of urban planners, engineers and others “who bring the expertise to actually do that work,” Chavas said. “My role is to support those people and help them be successful.”
AJ Patton, managing partner and CEO, 548 Capital, was working at an investment firm in 2014, when he had a vision of the future. He pitched his two partners on the idea of a large net-zero, solar-powered housing development for residents of mixed-income levels. Their answer was simple: “No.”
Back then, Patton recalled, “No one was doing developments like that.” But also his two managing partners, both men in their 40s, “wouldn’t listen to my good ideas.” So, the next time they gave Patton a bonus, he left the company to strike out on his own. He planned to “raise institutional money, put it in deals and show that my business plan worked. But the marketplace told me I was an idiot. I raised zero money.”
“Raising money is the hardest thing you’ll ever do in your life, especially if you’re black or female,” he said. “The market has been clear that if you go to raise money, they will find every reason to tell you no, starting with your lack of track record. And then, they’ll become more sophisticated with their reasons for ‘no.’”
Patton kept trying and finally found success after approaching a small, family office for funding. He eventually raised $2 million, which he used to seed his first set of deals. That allowed Patton to build a track record, and in 2016, he launched 548 Capital to follow his passion of helping transform communities and their impact on the planet. He said, “the one thing about real estate that is true is that once you start to create momentum, you start to get this process down.”
Each panelist reflected on what they would tell their younger selves about starting an affordable housing development business.
Baker Tilly’s DevelUP: affordable housing workshop is an event designed to help underrepresented developers conquer affordable housing, scale their business and build diversity. Through comprehensive consulting services, Baker Tilly assists emerging developers of affordable housing by helping them navigate the many steps necessary to bring a project to successful completion — from funding to project management.
For more information on this topic or to learn about services for underrepresented developers, contact our team.