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Designing Vibrant Urban Infill Multifamily Development in the Twin Cities with Sean Sweeney – Ep. 58
About the Guest
Hello and welcome to Episode #58 of the Placemaking Podcast!
Can’t wait to share this next conversation with all of you. Today on the show I have Sean Sweeney, co-founder of Hall Sweeney Properties, an apartment developer that focuses on urban infill development. Sean focuses his efforts currently in Minneapolis, Minnesota. Sean has an eye towards details and design in his projects and focuses on bringing great housing options for those in the Twin Cities. His projects have won several awards for design and thoughtfulness in and around the Twin-Cities area. Sean is very active on Twitter and has been seen as an authority on the subject of urban infill multifamily development. He’s well worth a follow if you’re interested in the topic.
In this episode, we look at how Sean started in real estate development, his definition of Placemaking and how it can be created great design and the keys to success that he’s found in urban infill multifamily development. There is tons of great information in this episode and I greatly appreciated Sean for taking the time out of his extremely busy schedule to discuss this topic of Creating Memorable Urban Infill Multifamily with me.
As always, if you have enjoyed the show, please subscribe to the show and share with your friends in the industry. There will be more exciting conversations on the shows to come.
Show Notes
Matt (00:00:00):
Hey, welcome to the show, Sean.
Sean (00:00:02):
Hey, thanks for having me really appreciate it.
Matt (00:00:04):
Yeah. Glad to have you on here. You know, I follow you on Twitter as, as many of your followers do and enjoy all the discussions that you bring up. And you’ve got quite the following over the last couple of years. So I’m really excited for this conversation because you’re doing something that I envy and it’s, something that I’m hoping to try to reproduce myself in you know, initially a smaller scale, but worked my way up. SoI can’t wait to get into this conversation first off. Let’s just get a little bit more about your background where you started out and basically the Genesis of Sean Sweeney.
Sean (00:00:52):
Oh, no problem. So my, my career started in the early two thousands. I graduated from college in 2000, had a brief, but a unsuccessful stint as an actor in Chicago for a couple of years. I always tell people, I, I have some great stories and I met some really famous, interesting people during that time, but it wasn’t a good long-term plan. I didn’t want to be poor when I was 50 and live on people’s couches and all that. Just wait, waiting for my big break. So made a transition ended up being my girlfriend at the time. Who’s now my wife had gotten into grad school in California. I actually applied to law school as a kind of, you know, typical liberal arts major didn’t know what the heck I wanted to do. It was like, oh, I’ll go to law school.
Sean (00:01:39):
That’s probably a smart move. Spent a few months in Chicago, working at a law firm, and quickly realized that would probably not be a good fit for me. But my girlfriend had already planned to move and I wanted to come along. So I went for the ride. We ended up in the San Francisco bay area and I just, I took some time I was working a sales job, but I, that was just kind of a placeholder while I tried to figure out, excuse me, what, you know, what I really want to do. And I have an uncle who I talked to a bunch of different people in a bunch of different industries. Cause I didn’t, I didn’t grow up in a business house. So they, and grow up with, you know, that kind of talk around the dinner table. But what I, what I learned quickly was, you know, business is a, is a pretty great way to make a living.
Sean (00:02:23):
You know, you can do all kinds of really interesting things at the end of the day, even though you don’t learn this in college, most people end up in business in one way or another. You know, which in hindsight, I think probably everyone should have to take a business course or two and whatever level they end up in probable sales also because most of it, most of your career is, is business and sales, no matter what you do. I think so. But you know, as I was talking to people, I had an uncle who was, it was actually a developer at that time and was, was, had converted an old prison into condos and apartments. And it just was listening to him talk and hearing his passion for it and whatever. And it just, it kind of, it kind of hooked me right away over the phone.
Sean (00:03:05):
I was like, man, that’s awesome. And I, I, you know, he described himself as the quarterback of the team, you know, or the, or the coach is like, look, I’m not all, I’m not even the bass player. I’m just, I’m the guy kind of moving everybody around compared it to like what a movie producers on this, right? Like you, you know, you have the idea, you have the vision, but you have to find a director. You have to go get actors. You gotta, you gotta have money. You know, there’s all these, you know, you need to send a photographer, you need all these players that ultimately work together to determine the success or failure of a, of a movie. And, you know, he would kind of related that to real estate. And it just, it really clicked for me. And I, I thought it was super cool.
Sean (00:03:44):
I was, I’m old, I’m really old. So that was back in the day you had to run, you had to write cover letters and you know, and, and print out resumes and send them on carrier pigeons and hope they ended up in the right place. But, you know, nobody of course wanted to hire me because I had no experience, but I, I ended up long story short, talked my way into a receptionist job at tremble Crow in San Francisco and sat at the front desk and made copies and made coffee and did anything they wanted me to do. While guys, my age came in, who were lenders and analysts and other things, and I made coffee in doubt that what they needed, but those guys gave me a shot to move up quickly. And I worked there for six years and it was a great fit learned a time and had hoped to stay there forever.
Sean (00:04:34):
Like really loved it. We loved living in California, but like many I, the great financial crisis came just as I was hitting 30 and getting married and all of those things. And I tell people now the good news is I wasn’t further in my career where it would have wiped me out if I had much you know, deals, but I wasn’t far enough along that I, you know, that I could wait it out for three or four years in an expensive market like San Francisco, and then hope that it came back at some point. So we made a transition to Minneapolis or looked at some other cities and ended up here. My wife grew up here. I grew up in Madison, Wisconsin, so nearby and just fell in love with it here. The love, the city love the area.
Sean (00:05:15):
I love a lot of things about it and took a job for a couple of years as a tax credit developer. When I first got here to kind of get here and just figure, you know, get, basically get here and get established and start moving after a couple of years and pivoted and took an acquisitions role at a fund here that has since grown into, you know, a $3 billion fund, but we were quite a bit smaller in 2011 when I joined, but I was responsible along with one other guy for basically going out, buy deals all over the country. We bought, you know, 150 to 200 unit class B apartments in the suburbs, kind of all over the country. Gotcha. And garden style. The funny thing is you read about those, I’ll be in four and five caps. And I laugh because I remember thinking, God, this is a seven cap.
Sean (00:06:02):
Are we sure this is too risky, which is funny how time will change things? But I had been itching, you know, I, I miss, I really enjoyed working there. It was a great, great firm. Really helped me get established and get on my feet and, you know, make some, frankly make some money for the first time and give myself some more options. I’d always been really passionate about design and I missed building and I kind of thought, okay, you know, is there a way to do this in this structure? And it, it just, you know, kind of wasn’t the right fit for that long term. I read acquisitions, you’re saying, yeah, the firm was, wasn’t really set up to do development in that time. Ironically, they do it now. But at that point it wasn’t, you know, it wasn’t something they were doing.
Sean (00:06:49):
I rehabbed the house kind of on the side as a project to see, cause I kinda thought, you know, that would be a great fit for what I wanted to do. And, and I’ll tell you the year I spent working on that I was, I remember I realized I’m like, that was as hard as any project I built in San Francisco like that. And it does the light bulb kind of went off on like, okay, you know, you could do this, but you’re going to have to do 50 of them at a time, the whole team. And that, that wasn’t my plan either. So I ended up just deciding through a lot of different things that happened at once. We, it was kind of, one of those doesn’t make any sense on paper moves, but you know, my wife excuse me, we had just had our second kid.
Sean (00:07:32):
My mom, unfortunately, who had been sick for a while passed away and the Cubs won the world series all in like a 45 days stretch the guy I’m a lifelong Cubs fan. So it was a huge, it was a, yeah, it was a very crazy, like 45 to 60 day period in my life. And you know, it hit me. I mean, my mom’s death was tough, but it was also really eyeopening where she, you know, she was only 75. I was 38 at that time. And, you know, I kind of did the math and I’m like, holy, you know, I’m halfway there. I mean, and again, hopefully that, that I, you know, live longer than that, but that it was it was just one of those moments where you realize I gotta do this or I’m gonna wake up tomorrow and be 50 and still be asking myself the same question.
Sean (00:08:21):
Why didn’t I do that? So, yeah. So I plan, you know, I, I planned it out a little bit and just decided to go. And so in, in mid-2017, I lost the company I was at after six, six years, six great years, and started to look for apartment development, deals myself. My goal, my goal was just to literally find a consultant cause I, I had been making decent money at that point. My wife was, was, is a psychologist, but was staying home with our two little kids. And, you know, I realized quickly, any small amount of savings we have is going to get birthed through pretty quick, pretty quick, unless we change our life completely. And I had promised that that wasn’t part of the plan. And so I realized, you know, along with getting some deals going, I better figure out some consulting, or I better do something to keep the lights on.
Sean (00:09:13):
And my goal was just to do, you know, do consult for the first couple of years. And hopefully, within those first couple of years, I would find a one apartment site that smaller midsize deal that maybe I could convince some people to do and see what that, I mean, that was literally the business plan. The good, the good and bad news is, is that business plan failed miserably. I it turns out I’m a much better developer than I am consultants. And what I, what I was able to do is, is I was able to find sites a lot quicker than I was able to find consulting gigs. So I ended up getting, finding one site almost immediately got into it a little and then slipped it to another developer to make some quick cash and then title it, or it was just, it was straight up flip.
Sean (00:10:09):
It was very, it was very well located. This particular developer had built four or five projects up and down the same corridor. I knew it was the right size. I mean, it just, it just was a great fit for him. And I, I kind of realized that pretty quickly, you know, called them and I already knew him had a relationship with them. So it was a, you know, it was a good move. And what kind of dawned on me there that was you know, 30, 40 unit apartment building site. It occurred to me that those sites are all over town and, you know, it’s, I’m not, cause I was never going to be able to compete with guys looking for a hundred unit deals or 200 unit. I mean, there’s just no way. And I knew that, you know, do a duplexes or small, I mean, that was gonna, you know, that’s a whole different thing too.
Sean (00:10:52):
So I found that there was this little niche right in the middle and, you know, I’d love to say it was this grand plan that I had, but it was, it was really, you know, you get out there and you start turning over rocks and that’s where you start to see the opportunity first. Right. It wasn’t sitting at home analyzing it on a spreadsheet. Like what should I do, which I do. It was like, well, I’m just going to go out and start looking for deals and see what happens. But what ended up transferring from that is I got three sites under contract was in the first six months. I started my own company and convinced a couple of people thankfully to back me and, and, and off we went everything was going really well for awhile. Ran into some, some trouble on the first one that was a lawsuit and some other things, the that we were dealing with, which, which was tough, delayed our start by a year also delayed my, my first paycheck for a year which was, which at that point was, was really tough.
Sean (00:11:49):
But you know, after grinding through it for the first couple of years and putting a bunch of sites together, get involved, I was really thankful. I had one partner and I had another couple of guys I was working with who were awesome about like pulling me into a couple of other deals cause they needed some help. So it worked out really, really well for me. But after, yeah, after, you know, three years we had built 4, 5, 4 or five projects and after four years we’ve built six and I’ve got the seventh, 100 construction now and eight, nine and 10 in the pipeline. And so I totally failed on my goals, but I joked that I, yeah, I didn’t, but I, you know, I’m so far, so much further ahead already than where I thought it would be. So it’s weird in my book.
Matt (00:12:36):
Definitely. And we covered a lot right there, there was, there’s a lot that happened. Can we, can we rewind a little bit back to your time at Trammell when you started out as a recession? It’s that’s, that’s just an amazing kind of little story side story because it’s just a way to get in the door. Right. You know, you’re, you’re trying to find a job in real estate development just to understand what it was about and you’re able to get in at, you know, what others might scoff at, but it turned out
Sean (00:13:17):
To be
Matt (00:13:17):
A pretty good, good plan for you. I’m sure you got a lot of, like he said, you got a lot of slack for that. How did you kind of convince yourself to keep with it?
Sean (00:13:29):
Sure. No. So I, the DSO, the couple things that were working in my favor one was this particular branch or this, this outfit of Trammell was it was a small group. There were only four people. So there were two principals, a vice-president, and an office manager. So I wasn’t one of the things working to my advantage. I didn’t have to leapfrog 50 people. You know, I got into a small team, which was great. So that really helped because I got to work with everybody. You know, it wasn’t like I didn’t meet the owner for 10 years. Right. It was like, you know, I was the second day I was helping them with stuff. So we were, we were, you know, they got to know me quick. And I actually lived about an hour and 10 minutes away from the office at that point while my wife was going to school.
Sean (00:14:13):
So I commuted an hour and 10 minutes each way. So they, they, I mean, they, they, they realized really quickly. I was either super dedicated or I was a complete idiot. And I think they kept me around to find out, luckily, luckily I think, luckily I think my passion showed pretty quickly, but I, I was also, you know, I was also vocal about my goals and what I was trying to achieve there by sit by saying, look, I’m not, you know, you guys know I’m not here to be the receptionist. I’m willing to, I’m willing to do this, but my goal is to be sitting where you are and I want to learn from you and I will do anything and everything you want me to. And, you know, for the first year that meant making coffee and making copies. But they did being that it was a small firm.
Sean (00:14:59):
They gave me the opportunity, you know, a couple of, one of the, the VP came to me after about three months and was like, do you know how to, you know, he was just buried. He’s like, do you know how to do Excel? And I said, sure, I had no idea what it was, but yeah, I went home at night and kind of figured out what it was and how to do it started, you know, started quickly doing spreadsheets. And, and I just, I tried to make myself as invaluable as like, you know, I just, I became the it guy. I became the reception and I was doing all these different things. And all of a sudden it was like, they need me, you know what I mean? I mean, as silly as that sounds I was doing a ton of stuff.
Sean (00:15:32):
So it, it was hard. I mean, it was one of those things and it’s kinda like when I started my own company, it didn’t make any sense on paper, but it was one of the times. I mean, it’s interesting. Cause it was one of those where my gut told me to do it. My gut said, if you get in here and this is the, you know, they’re, they’re, you know, they’re who they say they are, you can adhere yourself to them. You’re going to hustle. Like this is gonna, this could work out. Right. And, you know, cause of course all my friends at the time who I told I was considering it, they were like, why would you ever do that? That’s ridiculous. And you know, I did it for very little. I did it for a reception of salary too. So in the bay area making $40,000 a year, I was, I was, you know, it was not as, not like I was crushing it.
Sean (00:16:17):
I was barely paying my rent. And, but the, the great piece of it was, you know, I trusted my gut and it worked out and it was that I got that same feeling when I went, when I was debating, starting my own company. Right. And the beauty is I had tested that theory out three or four times in the past. So I knew, I knew that I could trust that and try something. So I took, you know, it was, it was probably one of this pharmacist or I’ve made in hindsight to take that role because it changed the course of my career. Big time.
Matt (00:16:47):
Absolutely. Let’s, let’s fast forward. Now you talked about having that same gut feeling, you know, when you started your company, what did that discussion look like with your wife?
Sean (00:17:03):
Yeah, no, it’s good. I, I mean, I, I will tell you my wife doesn’t like half-baked plans. My wife doesn’t want it, especially when it comes to something like that. And that, again, that is something we had been married. Let’s see a, I dunno, somewhere between eight and eight, around eight years at that 0.7 or eight years at that point we had been, we dated for seven years before we got married. We we’d known each other for a long time, so I knew better. I knew better than to go to her with any half-baked idea. Here’s what I’m thinking. You know? So when I, when I approached her about it and she knew admittedly, I mean you know, she knew that it wasn’t maybe a great longterm fit where I was so that, you know, that piece wasn’t a surprise. But I came to her when I had all the pieces in place.
Sean (00:17:52):
I didn’t, I didn’t come to her and say, here’s what I’m thinking. Cause she would’ve been like, you’re in a, you’re an idiot. No. But I can’t, honey, I got this gut feel I need to move on. I need to move on that, that wouldn’t have worked in medullary. That would have been irresponsible. Right. I had, they, you know, she relied on me. I had two young daughters, you know, I mean, it wasn’t my place just to go do something foolish. So I planned it out pretty well. I had a couple of consulting gigs lined up. I had my eye on a couple of sites and you know, the other thing was I had done well enough at my last job that we had, you know, eight, it’s funny. I will admit this. She asked me how much money, how long can we go before, before we’d be in trouble.
Sean (00:18:36):
And I told her a year, I told her a year, the reality, it was about eight months. But yeah, that was the one line we, we w w we laugh about it now. But the other thing she told me, it was at first, it was funny when I told her that I was going to do it. I said, honey, I think, I think it’s time. I’ve got a plan in place. I think I’m going to quit. And she laughed and said, okay, that sounds good. And I said, no, no, no, no, no. Like, I’m going to go put my two weeks notice in next week. And she was like, oh, I thought you meant like five years from now. Yeah. So that was funny. But I just said, look here, here’s the plan. Here’s what I’m thinking. You know, I’ve been issued to kind of move, you know, I’m not, I’m not happy here anymore.
Sean (00:19:22):
And I said, and she said that, you know, that’s fine. Let’s, let’s, let’s give it a whirl. But here’s what I need you to do. And I said, sure. And she said, look, in three months, we have to have some, some sort of check-in plan where, you know, I understand she was like, you’ve been doing real estate long enough. I understand. You’re not going to have an empire in three months. Like, you know, that’s not, I get, I get that, that, which is like, you gotta be making progress. And I’m like, that’s, that’s totally fair. So she’s like, you know, after three months, let’s sit down and see where you are. And if you’re nowhere, you know, it’s only been three months, let’s give it three more months and then see where you are. And then after that, let’s give it three, you know, basically.
Sean (00:20:01):
But the point was, let’s not wait until we’re down to our luck. If you’ve got no traction in six months or nine months or a year, let’s not wait until we’re down to our last penny. Before we, before you, you know, we, we think about what the other alternative, sorry. I thought, yeah, I was, I mean, I tell people this all the time, this is, you know, I get my, I get way more, I get an unfair share of credit for things that have gone on in the past few years for me and our family. But it’s, you know, I’m, I’m responsible for maybe 50%. I mean, she’s, you know, I wouldn’t, there’s no chance I’d be doing this without her. That’s awesome. And so, you know, the good news is I had a lot of traction right away. The bad news is it didn’t pay for a long, so I kind of got us into this like pickle of like, We got too much, we got too much going on now that I can’t quit. I can’t let it go, but it’s not going to pay us in the timeframe we thought. So. Yeah. But we just buckled down and we made it. Yeah, it’s been, we’ve been, we’ve been real fortunate. So
Matt (00:21:10):
Yeah, no, that’s not my dog. I don’t talk about as much, but it’s, it’s fun to hear people’s stories, especially, you know, you really need, if you’re starting out after you’ve got a career after you have a wife, you have is, you know, you get, there’s a, that transition point is such a big inflection point to your trajectory. And, you know, if, if your partner’s not on board, it could make for a tough time. So yeah, no, that’s, that’s great that there is that, that discussion, the check-in points it might help somebody else out. That’s trying to figure out how to break it to their special someone. How can I mentally prepare them for this? That’s awesome. So let’s let’s kind of fast forward a little bit more to, you know, your, your first true projects that went vertical and then going forward, what, what is your ideal project look like? What was your, was your typical?
Sean (00:22:14):
Yeah, it’s, you know, it’s funny because I would have given you a different answer every year. We, we, my, my partner, Jeff and I are, is we hired a, an associate a couple of months ago. And we were just telling her this story yesterday, about how, when, when I started, we, we kinda thought we were going to be these niche neighborhoods, like 30 to 40 unit dies. And we were just going to run that we were going to run that for 20 years and that was going to be our, our deal. And we did three or four of those. And that we got a little bit bigger. We did a 91 unit, and now we’re doing 125 units and we’re going to start a 200 unit in the spring. And we, I mean, it’s just what we’ve just kept growing or our, our deal size has grown.
Sean (00:22:58):
So we don’t, I mean, it’s funny, we don’t have a typical or a, we don’t have kind of an ideal deal cause it keeps changing. It seems like it keeps changing every year. But we’ve been really, I mean, we started out, we really wanted to do really well-designed kind of neighborhood infill and we’re still doing really well designed neighborhood infill. But I will tell you the scale of the projects is just growing. And that, that hasn’t been as much. I mean, it’s been somewhat of a, you know, driven by us, but we’ve been really, I mean, we’ve just been beyond fortunate in the sense that our early projects got a lot of press. I’ve just got a lot of notoriety and a lot of eyeballs. What happened quickly is just people, you know, we just had more opportunities we could handle, you know, we, we were just really, really lucky that, you know, people kept coming to us and stuff and it just stuff that people were bringing us got bigger and bigger.
Sean (00:23:54):
And as we were, as we were able to show investors and other people that we’ve, we’ve executed really successfully on the other stuff, you know, people were willing to back us on bigger and bigger stuff. And now, I mean, our last deal, we had to turn investors away. We had, we had more, we had more than we could handle. So, and that was on our largest deal ever. So it, you know, it’s been interesting. But I think big picture for us. And we are, you know, we’re, we’re, you know, we’re ebbing and flowing with the market and the way things change sometimes. But I don’t think we’ll ever be suburban garden style builders. I think we’re always going to be really, well-designed kind of urban infill builders. I do, I will admit that we are likely, you will likely see some suburban projects from us in the coming years.
Sean (00:24:46):
But they’re gonna be urban-suburban if said, you know, I mean, they’re gonna be on main street. They’re gonna be on main street in suburbia. They’re not going to be out in the corner. Does that make sense? You know, there’ll be, there’ll be those where we look at our role. I mean, our, I think our expertise and our specialty as developers is we’re not, you know, we’re not going to do a big master plan community or a large scale, you know, create a new community out in the middle of nowhere. We really look at the existing infrastructure and the existing puzzle that’s already there and we try to fill pieces in, right? Like we try to stick, oh, Hey, what’s missing in this little area or this little puzzle. And we, that’s what we do when, you know, when sites, when, when we get the opportunity with new sites or we get the opportunity to evaluate new sites.
Sean (00:25:33):
We’re not programmatic where we say, okay, this has to be a five over one building with 140 to 142 units in this month. I mean, we really do whole holistically look at each site and think about it for a long day. We drive people nuts who we’re trying to buy from, because they’re like, well, what’s your number? What’s your number. We gotta think about this. It’s gotta feel right. So we’ll, you know, we’ll, we’ll take our time. And you know, and, and honestly I kid about that some of most times we’ll, we’ll, we’ll quickly figure out about what can be built and then we’ll put it under contract and then we’ll do some more of the deep thinking. But, you know, we’ll, we’ll spend a long time really just driving around the neighborhood, walking around the neighborhood, going to have, you know, we spend a lot of time on foot in the neighborhoods and try to understand the vibe and to try to really think about what’s missing here and why, you know, I mean, we’re, you know, we’re housing developers, so we know it’s going to be some form of housing, but, you know, are they missing big luxury units for seniors?
Sean (00:26:34):
Are they missing small micro units for millennia? Like what, what really needs to be here? What are the exterior materials? I mean, there’s all kinds of stuff that we should we really through for a long time before we do anything.
Matt (00:26:46):
Yeah. Is there just curious, is there a certain neighborhoods that you you know, you frequent, is that, is that how that works? You have kind of your areas or is it zip codes or neighborhoods?
Sean (00:27:02):
Yeah, I mean, so far it’s been it’s just been the city of Minneapolis in, in certain neighborhoods. We, I mean, we do know that that’s been, I would say, you know, one of our advantages is, is we just know, I mean, I, you can tell me an address in Minneapolis and I can pretty much tell you what zone what’s missing in that area, but we’ve just really, really studied the city really well. So we know it, you know, we know like the back of our hand we can, you know, we’re, we’re, we’re looking for established neighborhoods typically where again, we’re, we’re, you know, we feel like that’s a really big risk mitigation strategy where there’s already existing infrastructure that can be transit, that can be parks, that can be restaurants and retail. It’s already a desirable place to live to some degree for, you know, for various reasons. And then we’re, we’re putting a piece of a new piece of the puzzle in that existing neighborhoods. So we’ve done, you know, six projects around the city it’s literally meant to in one neighborhood to another neighborhood. So you know, but they all share similar similar characteristics. Right.
Matt (00:28:08):
Gotcha. Yeah. So Minneapolis is your sandbox.
Sean (00:28:15):
Yeah. And we are expanding it a little bit, as I said, we’re, you know, we’re, we’re starting to inch out into some other areas and you know, over the next several years, depending, depending on how things go and you, yeah. You may see us pop it up in more places than you’d expect, but we’ll see. Yeah.
Matt (00:28:31):
Cool. And you, you mentioned, you like to just find what, what fits in a certain area, but obviously you’ve got your, your, your typical, I mean, it’s residential, your size can vary, but, you know, I think a lot of that comes down to, I like to throw around the word placemaking as trying to, to kind of create a, a place that just feels right. And I always like to hear what other people think about the term placemaking, and it’s kind of been kind of a, a buzz word recently over the last few years, but, you know, and it has a bunch of meanings to different people, but in your own words how would you describe placemaking?
Sean (00:29:21):
I am a fan of the term. I like the term, which is that that’s, I think that’s how I think about development. I see it as a big responsibility. I think that and, and this is certainly not a knock on anybody else in any, anyway, shape or form. I think most developers fall into, or two buckets. And one of them was kind of the programmatic. We we’ve got a plan and we’re just going to go put that plan where it makes us, which, you know, is it works really, really well. And it’s usually financially pretty rewarding. And a lot of, a lot of folks do that. I think there’s another bucket of developers who, who think of it probably more like I do where each sites is more unique. You know, we’re not as programmatic with what we’re building.
Sean (00:30:09):
And it’s really about what what’s missing. What, what should be there? How do we, I mean, the thing that always goes through my head when I’m putting a new project together is how is this going to make life better in this area? You know, what is this going to do to improve? I think that’s ultimately for me, what placemaking is about is improvement is, is, is making you know, is, is hopefully making the quality of life for everyone that interacts with the building that lives by the building that, that now has the building there better.
Matt (00:30:43):
Yeah. And there’s not really a good, tangible way to create it, honestly, other than you know, you guys are very, very into design and creating these that are not just not just an apartment building or a residential multi-family side. It is a truly, truly enhances visually aesthetically the area too. I guess we’ll step back here was your initial workflow look like when you’re looking at a piece of property or a walking by a certain piece and, and jumps out of you, what’s the next step?
Sean (00:31:26):
Sure. Well, we’re, we’re in a nice position now. I think given some of the, you know, good solid luck we’ve had over the past few years where most of the new sites I’m evaluating now are somebody bringing it to my attention. You know, I remember as I, as I said, when I quit my job, I was pounding the pavement. Like you’ve never seen before I was backing out doors, I was calling people. I was looking up addresses, you know, I was, I mean, cause I was nobody, I mean to the market. Right. And I had I had a straight, straight scrap and Claude and find deals. You know, not that it’s fair that it’s it’s changed, but now, you know, it’s, it’s really nice to be able to answer the phone and, and evaluate, do I want to spend time looking at this one or don’t die?
Sean (00:32:13):
That may change, you know, the market could change and that may go away and I might go back to knocking on doors. But what, what w what I look for a couple of things we do right away is one, is this just big, you know, again, to, to that puzzle and to that place-making, is this a spot that I want to be? And I look at it as, is this a spot I want to be for the next 30 years? You know, I’m not, I’m also, you know, Jeff and I, my partner and I are long-term holders for the most part, we, you know, we feel like we put our blood, sweat and tears into these projects and, and, you know, we try to place make, and we’re not, we’re not going to do it for short term profits. I mean, we’ll you know, that’s not to say over the course of my career, I’m not going to sell a building.
Sean (00:32:57):
I mean, that’s, you know, we have investors and other folks that, you know, we owe a fiduciary responsibility to, and we’ll certainly take care of them when we need to, in those, in those instances. But that’s just not, you know, I think that’s not just big picture, how we look at it. We look at it as like, you know, what is this somewhere we want to be for the next 30 years? And if it is, I mean, and that’s, that’s a pretty quick, right. You know, your market. Well, you do know that pretty quick that doesn’t take a lot of brain power. And then it’s, it’s, you know, usually a couple of things. I’ll do kind of a quick check on the zoning. I’ll just check a couple, you know, a couple of the low hanging, right. Can I, can I even build apartments here?
Sean (00:33:36):
Can I do some of that? Usually in a few minutes, you can quickly determine if it’s even worth spending more time on hopefully I’ve got at least some sort of price given to me, or some ballpark of like, you know, price and, and I’ve, I’ve done enough projects now that based on the square foot, if it’s in Minneapolis or somewhere nearby, based on the square footage of the site, I can get relatively close in my head on how many units can be there and I can, you know, so I can kind of ballpark a price pretty quick. And you know, if, if, if I think it’s 2 million and they’re asking nine, I’m not going to spend more on other, you know, spending more time on it. But, you know, if they, if they’re either like, look, we don’t know, you tell us what the price is, or they give me some ballpark that per unit or per square foot that seems, you know, at least reasonable I’ll, I’ll take the next step.
Sean (00:34:23):
That’s usually getting in touch with my architect and saying, you know, look confidentially. We’ve got, you know, this site X, Y, and Z is on the table. Can you, can you spend half an hour and just do a quick fit plan and let us know what you think can sit there. And here’s here’s. And I always, his first question to me is always, well, what’s the vision? What do you think goes there? And I have to, you know, so we’ll talk through that a little bit as to who I think would live there and why, and that kind of helps them think through how to structure it, how much parking, you know, how much parking do you need, all that stuff. I’m just curious in Minneapolis, is there parking minimums, or is it there used to be they’ve since gone away? Which is great, although I w which I will tell you, it was amazing from a flexibility standpoint everybody comes in from out of town now and thinks they can build projects without parking.
Sean (00:35:15):
The funny thing is the market hasn’t caught up to that yet, obviously. I mean, we’re not a city. Unfortunately we’re not a city yet. I guess the best way to say it is where you can live here and use transit pretty reliably and efficiently. I mean, it’s great and it’s growing every year and we’re making changes. And I, you know, I, I, I’m hopeful that in the, not too distant, that you could live here with a family without a car. And I’m sure somebody will write in and say, Hey, I lived there without it, but I’m talking in broad generalities. I mean, you know, most people with families have cars even in these apartments, you know, unless you work near right nearby, you either need a light rail or a bus or a car to get somewhere. If you’re, you know, if you have a partner, maybe in one of you works in one suburb and the other works, I mean, so we’re trying to build I guess the way I would say it is, we’re trying to build the least amount of parking hospital that way that we think will still work for the deal and for the, for the tenant.
Sean (00:36:15):
So that’s right now in most of our projects, that’s somewhere around 60 to 65%, I would say. So we’re a lot less than one-to-one, which is great. In most cases, again, it’s very project specific obviously, but you know, in some suburban deals you have to be one-to-one bedroom. So it just, it just kinda depends. Right. But once the architect, you know, their tech will take a couple of day or two can usually get back to me pretty quick with something. I will often call my general contractor then, and just double check, like, Hey, I’m looking at this deal. It’s 150 units in this location. Here’s our parking situation. Here’s this, here’s that? Am I, am I right? Is it right about 150 a door? Or what am I close? The good news is I’ve gotten pretty good now, or, you know, usually he’s just confirming what I assume, but construction costs have also moved a lot in the last seven months.
Sean (00:37:06):
So I feel far less confident now doing it then maybe I did a year ago. But I’ve got a great relationship with my architect and a great relationship with my builder. And they know if, if it goes through, they’re going to get the deal and we’re going to work together. So they helped me quickly put some pieces together. So, you know, that whole process, depending on their availability can take a date or two. So I feel like within a couple of days, I know about how many units I can build there and about how much it’s going to cost me. And then I can make, you know, a much more informed offer to somebody. And then it’s usually, yeah, that it’s, it’s make an offer. And hopefully it goes, we’ll see what happens. And we try to, I talked about this on Twitter a little bit.
Sean (00:37:48):
Some people think I’m nuts and some don’t, but you know, I always, I always try, I don’t want to own land unless I’m going to build on it. Right. so in a lot of instances, I try to buy land or get land under contract with a long enough due diligence period and a long enough closing period in which I can get project approval and at a minimum, hopefully get at least project approvals before I’m closing on the land. And then, I mean, in a perfect world, wait till construction, you know, wait, wait till I’m closing my construction loan and start the next day I did that on my last deal. It doesn’t happen every time, but it’s a nice feeling when you buy a piece of dirt and then literally there’s, you know, there’s, there’s backwards the next day. Yeah. That’s also, yeah, it works. It works sometimes it doesn’t work every time.
Matt (00:38:37):
So I was like, yeah, I was about to ask you, is do you, do you like to buy unentitled land?
Sean (00:38:46):
Yeah, I actually, so in a perfect world, I’m buying land, that’s already zoned for multi-family. But not necessarily, but not entitled. Does that make sense? Like, you know, a title? Yeah. I frankly never want to buy an approved site plan. I want to make my own site. Right. I mean, I don’t, I don’t, and that’s a great question. Cause I think, you know, some of the programmatic builders that’s a perfect deal for them, right? We already got this thing approved. You just got to step in and build it. You get the developer fee, et cetera, et cetera. But for me, I think, and especially as our company is growing and, you know, I would say our brand is growing a little bit as well. We have a certain aesthetic that I think we’ve become, we’ve become known for. And I think we need to create that from day one. I don’t, at least I haven’t seen the plan yet where I would feel comfortable buying it. Maybe, maybe that’ll come, but I want to do the plan myself.
Matt (00:39:45):
Okay. and let’s go back a little bit and you’re having these discussions with your, your architect that early about the field, the unit mix and everything from the start really.
Sean (00:40:00):
I mean, we’re, we’re you know, it’s, it’s obviously refined in great detail as you go and it can change, but I would tell you, we, it’s part of knowing your market really well and knowing where you’re building really well is now that we’ve done six, seven, like we know, I mean, I know that sounds silly, but like we know that soon probably who’s going to live there and it helps us keep that in mind from day one, which I think is, I think helps us design the project in a way that we always have our ideal tenant.
Matt (00:40:36):
Okay. And that ideal tenant just changes with the neighborhood essentially.
Sean (00:40:42):
Yep. I mean, for the most part, we’ve built a lot of what are called micro units. We we’ve built smaller units kind of somebody’s first or second apartment in, in these established neighborhoods. So we, we try to be not the low cost provider in our neighborhood, but we try to come in just slightly under where like a top of the market luxury class, a building comes in as far as rents and stuff like that, we’d like to be the cheaper alternative or the, I should say the less expensive alternative and our, basically our, our, our pitches, this building’s just as nice. It’s probably possibly aesthetically more appealing. The floor plans are just as good. If not better, maybe we don’t have 74 amenities. We have 23, but you know, your, your unit is slightly smaller, but super well-designed and we don’t waste a single inch and your rent is $200 cheaper than their yeah. And you’re in
Matt (00:41:33):
A, in a great place. Right.
Sean (00:41:35):
A great place. So we’ve had a lot of success with that so far.
Matt (00:41:39):
Okay. Let’s, let’s kind of build on this discussion with the architect. Is this journals started picking up what you’re putting down, basically. How did that first discussion maybe with your, with your, your first building, how did you start to formulate that your ideal layout, your design, you said you’ve kind of built almost a brand around the type of design that you did. So like what did that first deal look like and how did you, how did that, I guess those discussions look
Sean (00:42:17):
It’s interesting. And it’s hard for me to say this without probably sounding like a weirdo. I’ve been obsessed with buildings ever since I can remember. And I, my wife always used to tell stories when we lived in San Francisco, we’d have friends come into town and they’d be like, where’s the bar, where’s this. And where’s that. And I’d always, we’d always be walking. You know, we were in our mid to late twenties, we walk it around and I always be like, oh, Hey, let’s go this way real quick. As six blocks away is this sweet house that you have to see because the awnings are just, and people are like, what? And it dawned on me pretty quickly that like, I seem to care about this a lot more.
Sean (00:42:57):
And you know, I, I, it’s funny as my career has evolved, I thought back to even when I was in high school and whatever, and I used to just drive around and look at houses for fun. And I never, like, it never dawned on me that that was like weird. Doesn’t everybody do that. And you know, as I got a little bit older and spent more time, obviously in the industry, I realized, huh, that’s, that’s interesting. That is a little bit different. And I always used to tell my wife that I don’t know if I’m in the right industry because nobody else seems to care about not care. That’s I don’t mean to say that nobody else seems to be as passionate about this piece as me. And, you know, I’m like, maybe I’m missing something here. Maybe I’m, you know, whatever. And she said to me, one day, I hear, hear those credits of her being smarter than me.
Sean (00:43:49):
You know, she said, did you ever stop to think that maybe that’s your advantage? How’s it go? Thank you. And so when I went in, I mean, I’ll tell you this. When I went into my first building, you know, the architect didn’t know me from, I mean, I was, I was literally nobody. I mean, nobody knew me. Nobody knew if I had any ideas of what to do, the architect kind of took a chance on because, you know, they were like, I don’t, I, I seem okay. Like the site’s good. So we’ll, we’ll see what happens. And I showed up to the first design meeting with 10 pictures and they were looking at me like, what? And I said, I want it to look like this you’re here are 10 inspiration that I want you to think about when you designed this book. And I had been collecting those for 20 years and they looked at me like I was nuts.
Sean (00:44:40):
I mean, they were kind of like, this is awesome or this like, again, there you go, it’d be right. Like, this is either going to work out really well, or really this is gonna be the worst client we’ve ever had. And I said, look, I, I just, I have an idea of what it wants us to look like. I think it should be super modern. I think it should have windows like this. And they said, help us, help us think through it a little bit more. So I took out a piece of paper and I literally drew it up and I’m like, here, this is what it should look like. And it, I don’t say this to toot my own horn. It’s basically what it turned out to. I do somewhere, I have to dig it up, but I I have I just have a clear picture in my mind of what I, what I want.
Sean (00:45:28):
I don’t, I don’t know how to explain it outside of that. But I have been really, really fortunate that, you know, that the architects that I worked with on that first deal, really, they just kind of they accepted, they just kind of let me go on with it. They kind of just said, fine, we’re going to just see what happens here with this guy. And now, you know, now that we have done some really great projects together we, you know, we had a meeting yesterday at their office and we’ve literally looked at Brooks for an hour and just thought, oh, we just sat there and talked about bricks for an hour. And that’s a hot topic, which, you know, normally is a waste of everybody’s time. It’s a waste of their time for sure. But it’s now part of our process. Like they, they, they end up, you know, they they’re like, look the longer we spent thinking about this, the better they seem to turn out.
Sean (00:46:20):
So let’s, let’s keep doing it together. But the first one, yeah, it was, I mean, and I’ll tell you Matt, on the first one, I didn’t think anybody would care. I was building it for myself and my wife to say, I tried it once. Just one time, I’m building my own vision just once. Right. And we’re just going to do it once the restaurant I’ll, if this doesn’t go well, fine, I’ll build boxes. I don’t care. Let’s just go. I did one and it just, you know, I mean, it got nominated for project of the year. It was one of the top 50 projects in Minnesota. We won every design award that there wa like, it just was, it just was a goofy, I mean, it was like, not in a million years of you expect any of that. But it was awesome, you know, it was awesome.
Sean (00:47:12):
And it was admittedly like for my first project to do that, I was like, great. And, you know, great to at least up in, if it was full a hundred percent full 40 days after we opened, I mean, in a, in a market where you know, we had the George Floyd tragedy a away and it was COVID and Andy and Dan, I mean, it just, you know, but it, I will tell you it it really convinced, I mean, it was kinda like, okay, the market, like there was some real I’m blanking on the word, but you know, it really validated the market also validated our idea. Right.
Matt (00:47:54):
Yeah. And so humble. I mean, obviously the market will celebrate people that are willing to take a chance and put a little more attention. I mean, that’s why people love older buildings, you know, the, the attention to detail the craftsmanship. And he said, it’s, it’s not guaranteed anymore. So to be able to put that little extra touch you know, when people, people, people notice,
Sean (00:48:30):
I appreciate that. And I said to somebody, I’ve said this a couple of times, one of my goals when I started AA, the first project was okay, this is just for me. I just want to see what happens. But after that I said, okay, you know, I want to create, I want a place make and create projects that somebody will drive by and stop and get out of their car or drive by and say, well, well, what was that? And on the, on this project, this first project I did, I had somebody do that. A guy I knew drove by and pulled over because he was so struck by, it took pictures of it. And after 10 minutes, there’s a guy not, I really well didn’t realize it was my project. And then saw the sign and was like, oh my God, he called me and was like, I
can’t believe I’m about to just tell you is I do remember your goal about having a project that somebody would pull over and look at.
Sean (00:49:29):
She goes, I literally just pulled over. Cause I just saw this amazing project. And I didn’t realize it was yours until just two minutes ago. And he called me and he sent me all these pictures and it was just like, you know, that’s just cool. That’s what I do it for. I mean, I want, you know, I’m, I’m a for-profit developer or companies is built to make money. We have investors, we take very good care of them. You know, we’re really disciplined. We make really solid returns for everybody. But for us too, that, you know, we think design leads to better results on the, on you know, the operating statement also as we stay full, you know, we, we, as soon as we have any turnover as full in a week, you know, we’ve, we’ve been really fortunate on that front.
Matt (00:50:11):
That’s awesome. So moving forward, you know, there’s a lot of myths that get thrown around about real estate, real estate development. Is there a common myth that you’ve heard and I’m sure that happened on Twitter all the time, but about starting out in a real estate development?
Sean (00:50:38):
That’s a good question. You know, I think there’s, I mean, I think there’s a lot of, I, I did say, I remember saying this on Twitter recently. I do think how the housing market is perceived to work versus how it actually works. I’m not sure there’s a larger disconnect in any other, in any other industry, everybody, because they live in an apartment or own a home, pretty much thinks they understand the real estate market and the development market and how things work. I think that’s I think that’s probably one of the biggest ones. I would also say that and I am sure I’m completely biased by this, but, but then a lot of developers actually get a bad rap going in and more times than not. And maybe it’s just been, the people I’ve been exposed to over the last 20 years, I’ve met very few developers who I don’t think are out for the greater good to, to build good projects, to do good work, to help neighborhoods.
Sean (00:51:38):
You know, I, I don’t really, I mean, there’s a few for sure, but they’re those that exists in every industry, right? I mean, there’s a clinician, a couple of snake oil salesman everywhere. But I think the fact that like we go into neighborhood meetings perceived as the enemy before we’ve even introduced ourselves or said, hello you know, is, is tough because that’s, that’s, you know, not certainly not myself, my partner, Jeff, anybody that works for us, it’s not most of the people I know who develop buildings, right. So it’s not in, you know, it’s not that we all print money all day every day either. It’s, you know, it’s a lot of really hard work and you know, this well, a lot of decision-making a lot of risk-taking and sometimes it works out really, really well sometimes through frankly stuff out of your control.
Sean (00:52:28):
Sometimes it, you know, it doesn’t go as well. I mean, thankfully and I I’ve been really fortunate. My, my partner, Jeff, and, and frankly, a lot of people I know have been really fortunate in the sense that like we’ve never had one bust on us, which has been great. We’ve certainly had some that we thought were going to be a home run that maybe we’re a single or a double and vice versa. Right. I mean, you just don’t know. And, you know, to think that developers just show up, throw up some wood and steel and a roof and, you know, at least two weeks, two days later it’s leased out and you get $50 million. I mean, it’s, it’s, you know, nothing could be further from the truth, right?
Matt (00:53:02):
I’d say the lay person doesn’t often realize that, you know, before they ever see you know, a pretty picture at, at the meeting, the planning commission and the city council, you know, there’s been at least a year, that’s put into that six months to a year at least. And it’s tough to to, to relay that message when, you know, all you’re seeing is the pretty picture up there and somebody setting up there given the spiel. So yeah. Well, I, you know, like you said that a lot’s gone, gone well for you, but obviously this is a risky, risky business still. So what keeps you up at night right now? Is there certain things that just,
Sean (00:53:57):
Yeah, a I I’m having a temporary good period of sleep? Well, I said to someone the other day, you know, when I started the business in 2017 through when I broke ground on my first project in mid 2019, you know, I didn’t sleep well for two years. I worked around the clock almost seven days a week for two, you know, I mean, and again, if my wife hadn’t been my wife and hadn’t been accepting and supporting and said, yep, dad’s going to miss dinner tonight, or dad’s gonna, you know, I mean, a lot, I was pretty good about like taking my kids to school or be, and being active and then like working my butt off all day and then being there for dinner and helping with bedtime. And then I would work for four or five more hours after, you know, my kids were younger at that point. They go to bed by 7, 7 30, you know, I’d stay up till midnight or one working and then sleep poorly until five or six.
Sean (00:55:02):
So I joked that I am in a temporary they’re older. We we’ve been able to take a little bit of a deep breath, so I am sleeping a little better. But you know, I, I think what, what does, you know, what I, what I’m always thinking about or worried about is, you know, nothing ever stays static. And I mean, we, I consider myself, honestly, man, one of the luckiest people ever, like, I, I mean, what’s happened to me in the past couple of years. I just, I never could have ever dreamed of it. And I’m, I’m so grateful and so fortunate for it. And I’m trying to, I’m trying to enjoy it also. I’m not, I’m not that good at that. My always reminds me, like, I’m trying to do a better job of enjoying it because, you know, with things not being, something’s going to change.
Sean (00:55:49):
Right. I mean, it doesn’t mean everything’s gonna fall apart, but it means there will be some new obstacle or some new, you know, law change or, you know, you’ve seen some stuff here locally. You know, I mean the world doesn’t stay the same and while I don’t, I don’t feel fearful of the future. It’d be nice to ride out this kind of nice period a little longer, but I’m sure that’s, you know but that’s, that’s what, that’s what I think about, or when I get anxious or when I don’t sleep is what’s, what’s the next left turn comment and how am I going to pivot how I’m gonna make sure you know, we keep, we keep our team paid and we keep everything going and you know, we’ll, we’ll figure it out, but you know, that’s kinda what, we’re where it is now. Probably a very, very different answer. If you had asked me 24, 36 months ago.
Matt (00:56:43):
Yeah. I’m sure it changes
Sean (00:56:45):
All the time. Yeah, it does. It does. That’s you know, the funny thing about being on your own or being an entrepreneur and owning a company, especially in an industry like this is, you know, there, there are days now where I’ve had bigger wins, like I’ve had good things happen that like would have been the best thing that would have been a five-year win for me. You know what I mean? A while back or similarly a loss, like something goes wrong, some seller pushes back, somebody tries to reach it. I mean, it’s just stuff that, you know, you find out there’s a half million dollars in environmental damage on this site that you’ve just spent six months working on, it spent a hundred grand on great, you know, stuff like that, that, that six years ago you would’ve crawled into a hole and say, God, what am I going to do now?
Sean (00:57:27):
It’s like, that stuff happens every single day. Yeah. You know, rarely does a day go by where like something doesn’t whack me over the side of the head, you know, sometimes they’re great and sometimes they’re terrible, but it it’s, it’s interesting that I think that’s been one of the biggest changes is your tolerance changes. And, you know, it’s, you, you learned that you learn to realize that I’m really fortunate. I missed the sprinter. Jeff I in joke has probably the lowest blood pressure of anybody I’ve ever met. So like he is absolutely unrattled and I’ll call like, oh my God, this is it’s fine. We’ll figure it out. Which is, which is a good balance for me some days, but we’ll see.
Matt (00:58:14):
That’s awesome. Well, as looking forward here, my last question here is looking forward, you know, a hundred, 200 years you know, we look on type your name in Google, the old Google search engine. Sure. It’ll be around
Sean (00:58:34):
We’ll be in the metaverse that,
Matt (00:58:41):
You know, whatever it is whatever you know, knowledge base we have at that time. What what would you like it safer for the legacy of you, Sean and your company?
Sean (00:58:59):
You know, I think that I don’t even know if it’ll come up in a hundred years. I mean, I’m building housing, I’m not saving lives here. But you know, I, I would hope that if, if, if we leave any sort of legacy or, you know, I mean, I kind of feel like, been really lucky with some of the you know, I don’t know if attention is the right word we’ve gotten or whatever, but, you know, the, the people kind of look, look up to me a little bit or I I’m I’m, you know, I feel like maybe especially on Twitter, I’ve become somewhat of an example for people to look at. And I, I take that responsibility really seriously, and I’m, I’m really grateful for that. And I think that, I hope that, you know, whether it’s in a hundred years or whether it’s just now as, as we operate in the world, that people look at us as, as people trying to do it.
Sean (00:59:57):
Right. People trying to be conscientious people trying to be kind to people trying to be giving back. And obviously, you know, be cool if peoples on our buildings were cool, but that’s okay. I’m all right with that. I think we, I think we know they’re okay. So we’ll be all right there, but you know, I just, you know, I talk about you know, I try to be somebody that talks about my challenges too, and, you know, I’ve talked on Twitter about therapy and about how that really changed my life and really frankly, saved my life. So I think for me, it would just be, if people ever think about me in a hundred years, that I would, I was somebody that, that, you know, tried to do, do right by the world and try to do good work and hopefully was, was open and, and can’t think of the word open and not transparent, but I was vulnerable enough to talk about all the stuff.
Sean (01:00:54):
And my hope is that by doing that, by being that kind of person, you know, there’s people out there that might say, oh, that guy went to therapy home. Maybe I, you know, maybe I should try it or that guy did that. Huh? Ma
