The Real Market With Chris Rising – Ep. 50 Gelena Skya-Wasserman
The Real Market With Chris Rising – Ep. 50 Gelena Skya-Wasserman
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Chris Rising (00:02): Welcome to The Real Market, with Chris Rising. The only podcast that brings the real estate conference panel to your headphones. You’ll hear from superstars from every realm of commercial real estate. The biggest brokers, the most well-known architects, the largest investors, and the most visionary developers. Learn what they do, how they do it, and what drives their success. We’ll discuss the latest trends across regional markets, capital flows, both national and global. And we’ll explore technology’s role in shaping all of it. We’ll take a clear eyed look at where we’ve been, where we are now, and what’s to come. Real conversations, real experts, real insights. This is The Real Market.
Chris Rising (00:49): Welcome to The Real Market with Chris Rising. I’m pleased to have Gelena Skya-Wasserman on the podcast today. Gelena is the founder of Skya Ventures. It’s a multi-family developer based here in Southern California. We have just this great conversation about how did she find her first deal? What was it that gave her the inspiration? How she flipped a few houses and then that led her to being a developer? And we talk a lot about what the challenges are for being a woman in real estate and how you go to the bank and get a loan. And how you build a business. It’s a really interesting conversation and I’m really grateful that she came on the podcast because you may not know, but her husband, Keith Wasserman, who is a multi-family investor was on the podcast early at the beginning.
Chris Rising (01:35): So, it was nice to have Gelena come on and tell about her experiences and what she has done on her own separate and apart from her husband. I think you’re really going to enjoy this podcast. It’s great to have you with us. And you know what’s even amazing is that you should have been first, but you’re the second person in your household on my podcast.
Gelena Skya-Wasserman (01:54): I am. And thank you for having me.
Chris Rising (01:56): Well, I think it’s great. And Skya Ventures, it’s an amazing story behind it. But what’s really interesting to me is while you have a husband who is active in the multi-family space, you are almost in a competitive business in the sense that you’re also in the multi-family space. But you’re the development side, which as we all know is the real risk taker side, the real political side of things. And the months and years of what it takes to get something developed. So, how did you guys go on slightly different paths?
Gelena Skya-Wasserman (02:29): Well, it’s actually ironic because I would say of the two of us, I’m not as big of a risk taker as Keith is. And although it may appear that we compete, since we are both in multi-family, we do very different sectors within the multi-family industry. So, for example, Keith does acquisitions primarily Denver West. And they focus on workforce housing where it’s very … I don’t want to use the word vanilla. But it’s very traditional way of delivering apartments. It’s $3,000 maybe a unit for every turn that they do.
Gelena Skya-Wasserman (03:10): I look at the products very differently in terms of walk scores, restaurants people can go to, technology. The unit is design-centric. The building is design-centric. So, it needs to reflect my renter in terms of where they live, what they wear, where they shop, what their preference is in terms of how they want to live their life. And my turns are about $50,000 to $60,000 a door. Very different. And I do mainly Los Angeles only.
Chris Rising (03:50): Are you from Los Angeles? Or where are you from originally?
Gelena Skya-Wasserman (03:52): I was born in Ukraine, Russia, Odessa. And I immigrated to America when I was about four and a half years old.
Chris Rising (04:01): Wow. And what was that trip like for your family? And you settled here in the United States in Los Angeles?
Gelena Skya-Wasserman (04:07): We did. So, for most people who haven’t immigrated, they may not know. Back then, we left Russia in 1990. And you didn’t hop on a plane and go from one destination to the next. So, it was a year and a half long process. We lived in Italy for a bit, we lived in Austria. And it was a difficult, difficult transition. I remember we had to stay in a certain apartment building that was prearranged for us. But the owner of that building did not want us to stay there. And she cited that we were Jewish. So, I think we slept on the streets that night or on the bus. I remember seeing food that I’d never seen ever in my life, strawberries. Our grocery stores didn’t have those things. So, it was eye opening for sure.
Chris Rising (05:02): Wow, you remember that at such a very young age. These must have been very impactful experiences.
Gelena Skya-Wasserman (05:07): Yeah, I vividly remember a gentleman. We were at a [inaudible 00:05:09] market and he had bananas. And I so badly wanted one, but my parents didn’t have the money to get it. And he gave them to us. And they were as green as green gets. And my mom put them in the cupboard. And I would open them every day to see if they were ready yet to eat. But I will never forget the kindness of that gentleman.
Chris Rising (05:31): Wow. And was there any reason behind Southern California as a place to ultimately settle as a family? Did you have family here?
Gelena Skya-Wasserman (05:39): My grandpa was out here already. And that was how we were able to come here.
Chris Rising (05:45): Amazing. And did you go to public schools? Or what was your experience like?
Gelena Skya-Wasserman (05:50): I went to Gardner Elementary when we first got here. I was promptly kicked out of my kindergarten class because I didn’t understand a word of English. And during circle time, I convinced the rest of my classmates to go outside and play. And the teacher did not like that at all. And I went to Brentwood Science Magnet Elementary, the public school here in West LA. And then [inaudible 00:06:15] I went to schools in the Valley.
Chris Rising (06:18): In the Valley?
Gelena Skya-Wasserman (06:20): So, I did Cleveland High School in the Valley for high school. And I finished my middle school at Portola.
Chris Rising (06:27): Terrific. And where did you go to college? Did you go to collage locally?
Gelena Skya-Wasserman (06:30): Up to San Diego.
Chris Rising (06:32): Which San Diego? UC? Or US?
Gelena Skya-Wasserman (06:34): UC San Diego. University of California San Diego.
Chris Rising (06:38): Yeah, that’s a great school. That must have been … your parents must be beyond proud accomplished before you got into your professional career.
Gelena Skya-Wasserman (06:48): You know, my parents are definitely proud. They’ll tell you they’re very proud. But Russian parents or immigrant parents as you might come to learn, they don’t … There’s not a lot of patting on the back or, “Hey, great job.” I remember I brought home a report card that had all As and two Bs. And my mom was like, “Why didn’t you get As in these two classes that you got Bs in?” And that’s just the mentality of parents who are immigrants. They’re not going to clap for you or, “Good job.” It’s just, you do what you’re supposed to do and that’s that.
Chris Rising (07:24): And then, how did you get into real estate? So, you came out of UCSD. How did you make that transition to real estate?
Gelena Skya-Wasserman (07:30): That’s a good question. I took on a second major, which was urban planning because I was not ready to graduate college early. And you had to take on an interneship. And so, I went and I interned for Colliers International for Roger Beck who was one of the VPs of the office sector. He did office sales and leasing. And after I left that internship, I remember thinking, “I will never be a …” And I had offers to do pharmaceutical sales with Eli Lilly and Pfizer and Johnson and Johnson. And my senior year of college, those companies had flown me out to corporate … And they, I think flew me business class and they had a car come pick me up. And lots of care packages throughout midterms and finals. And for a young kid, that was like, “Wow.”
Gelena Skya-Wasserman (08:35): I left corporate headquarters and I would still keep in touch with Roger who basically said, “You don’t want those jobs. Come partner with me.” And I said, “Well, make me an offer and I’ll think about it.” And he did. And I ended up … I was at the post office. I had both offers signed. It was Pfizer and his were both sighed. I remember asking the postman, “What do you think I should do? And this is my life story.” And the guy was like, “I could care less.” And the last minute, I didn’t really want to move out to Jacksonville, Florida, which is where I would have to live if I went forward with Pfizer. And I chose to come to LA and do real estate, which was ultimately what my goal was if I were to do pharmaceutical sales. My plan was, make as much money as you possibly can and invest that into real estate.
Chris Rising (09:34): Well, was it off putting at all for you? I’ve been in the real estate business myself since the 90s. But obviously my father’s been in the business. I’m still struck. I went to an event, it seems like years ago given COVID, but a few months ago. And I remember I showed up and it was 300 white men in navy blue blazers. I even pulled the broker’s group that [inaudible 00:09:59] be who your clients are? What is going on here? How did it feel to a young early 20-year-old woman with roots from Ukraine showing up in the real estate business which was so male? Wasn’t that off putting? What do you think?
Gelena Skya-Wasserman (10:14): It was not off putting. I always had close relationships with men just as friends. As a kid in elementary school, I would play basketball with all the boys. You know, I get asked this question a lot. And truthfully, I didn’t really notice because I was so busy keeping my head down and doing what I was supposed to do and building my clientele and my business that it never … I was aware of it, but it never bothered me … something about this now. It just was what it was, and that was the reality. And there were definitely times where I would be events and I would look around the room. And it would dawn on me, “Oh, I’m one of three women here.” But then you kind of just move on. So, it’s the reality of the business. And I have some thoughts as to why that is. And it’s unfortunate, because I think as a woman developer who actually started out in single family spec homes, women have such a different perspective. And the decision makers when it comes to the apartment you rent and the house that you actually buy are women.
Chris Rising (11:32): Yes. Very good point. Well, I mean, I’ve heard a lot of different explanations. Some of them I find a little bit sexist when they come from men. But I’ve heard everything from a commission structure doesn’t work well if someone wants to have a family. That for whatever reason this business doesn’t like … They’re all BS, but I’ve heard, for whatever reason, the real estate, the principal side, the brokerage side never has dealt well with people who needed time off. To me, it’s all ridiculous. I mean, I have some views on why it is. I think it’s mainly because brokerage firms have not made diversity, whether it’s with women or with people who aren’t white, a real priority.
Chris Rising (12:18): And therefore, the internships goes to my buddy’s son who goes to SC or goes to CAL or goes to wherever. And it hasn’t really been open to it. I think that’s changing radically right now, especially when I start to see more and more of what some of the big brokerage firms are doing. But you can’t get away from the fact that it is much more white male than even what the banking industry is, than what the legal industry is. I mean, you go to these meetings … I go to meetings and I look [inaudible 00:12:51]. But yet, if I go to a brokerage shop, it’s basically white males who are out there.
Gelena Skya-Wasserman (12:55): They’re like that today. But let’s talk about that for a minute because I think in my case, there was a lot of thought of, “Well, she won’t be around for long. She’ll get married,” you know? And so, I wasn’t viewed as a threat, which helped me. And it’s still very much like that today. [inaudible 00:13:18] companies are male. And there’s very few Black people in the industry, if at all. I think I was actually more surprised to see another Black person at an event or on the opposite side of the negotiating table than I would be to see another woman, which was also very rare.
Gelena Skya-Wasserman (13:40): I used that towards my advantage. And I thrive off of difficult situations. So, the harder you make something for me, the more likely I am to succeed. If it’s too easy, I don’t know how to process that or how to work through that. So, I don’t get the same results. And it was definitely harder. I mean, the jokes and everything else that you would put up with, you know?
Chris Rising (14:03): Yeah. Well, what were you specializing in in brokerage when you first got into it?
Gelena Skya-Wasserman (14:08): I was specializing in tenant rep. I did tenent rep, office sales and leasing, with a focus on entertainment and tech clients.
Chris Rising (14:22): And you did that for … How long did you do that for?
Gelena Skya-Wasserman (14:22): Eight years.
Chris Rising (14:24): Eight years? Wow, I didn’t realize that you had been a tenant rep broker for that long. So, look, I got to ask you questions. Do you really believe in the Chinese wall? Do you really believe that a tenant rep specialist does something different for their client than someone who does both the landlord side and the tenant rep side?
Gelena Skya-Wasserman (14:43): I do, actually. I knew the landlord’s position really well. We would be negotiating with a lot of the same landlords over and over again. And on the tenant rep side, a lot of the tenants didn’t know, where do you even look to find office space available for lease? They didn’t know what a load factor was or modified gross versus triple net. Or they didn’t understand that you don’t get AC on the weekends, it just doesn’t work that way. You pay based on a per rata share that’s done for the entire floor.
Gelena Skya-Wasserman (15:18): Small world, right? Roger and I represented Adly, which was a company that Sean Rad had started before he did Tinder. And then we represented Tinder. So, it goes full circle.
Chris Rising (15:33): Well, let me ask you this. Every tech company out there from VTS to CoStar is ultimately trying to get rid of the brokerage industry and saying ,”Why are you paying a tenant rep broker? Why is the landlord paying a tenant rep broker? Shouldn’t that rightly be paid by the tenant more in a consulting business like Europe has done?” Given your eight years of experience and your success in being a tenant rep broker, do you think the technology’s going to wipe out the real estate services industry as it relates to leasing brokerage?
Gelena Skya-Wasserman (16:11): Eventually, yes. Now, there’s going to be a lot of my answer. But I am waiting for the day that there’s another company that goes and basically disrupts the monopoly that CoStar and LoopNet have. And I personally find the way that their model is done and the tightness of the information that the power that they try to hold is absurd to me. I think there’s so much room for technological disruption there. And if anyone who’s listening to this is having a VC arm, I would be very interested in hearing what that may be. But that entire business model needs to change. The reason that I hesitated on my answer is because I think real estate, our business in general has been very slow to adapt to technology. I think there’s a few reasons for that. There is a lot of money and lobbying behind groups like Costar and LoopNet and how they do things. And regulations with any new companies trying to come in. But we’re so behind.
Chris Rising (17:20): Yeah. Well, before we move over to Skya Ventures and all, let’s talk a little bit on office, because the biggest debate we have right now, or at least I see out there in the Twitter-sphere is whether any of us are ever going to go back to an office again. If I see one more person … It does remind me a little bit of the, how we were going to have fractionalized Bitcoin ownership of all buildings. And that has never quite materialized. But there is a vocal group, a lot of them are people who are writers who work at home anyway, but who are saying that if you look at what Quora did or even though Twitter didn’t really get rid of all their office space or anything, there’s this little chorus right now saying that work from home is going to kill the office. What do you think about that?
Gelena Skya-Wasserman (18:08): Well, work from home is not a new concept. It’s been done. I think a lot of companies prior to COVID have done hybrid models of work from home. I don’t think office will be entirely dead. You will still want … A group of people will still want to come into the office, get away from whatever it is that’s at home, whether that’s dogs, kids, spouse, whatever and come to setting. People are routine by nature, they like structure. And the office provides that for them.
Gelena Skya-Wasserman (18:38): However, having said that, I do think that … Look, when I was doing office sales and leasing and doing brokerage, I would joke with Keith and say, “You couldn’t get an office building again,” because I saw these patterns starting to happen back then. And I think that in order for office to be completely dead, we’re going to have to start redoing the multi-family model. And it’s going to have to be all-encompassing. We’re going to have to have childcare there. We’re going to have to have coworking spaces there. We’re going to have to have basically pod offices in the apartment buildings that we create that people live in.
Gelena Skya-Wasserman (19:22): And then I think another option too that is great is back houses. With the new ADU regulations that came out, you can now place an ADU in your yard, essentially, and that could be your office.
Chris Rising (19:35): The granny flat stuff.
Gelena Skya-Wasserman (19:37): Basically, yes. But office won’t be entirely dead until all of these pieces come together.
Chris Rising (19:43): But even then, don’t you think people need to come together to work and be inspired? I mean, are we all going to only know each other through Zoom?
Gelena Skya-Wasserman (19:55): And I think there will be instances where you’re going to see offices … And the reason I think they won’t entirely be dead is because I think a lot of companies are going to shrink their footprint. And so, for instance, they will have an office location where you could come in, it will be optional. But there will be mandatory meetings that will occur on such and such dates, where everybody gets together or you’ll have groups and teams come in for a certain period of time. I don’t think that working from … I think that working from home poses a lot of opportunities if we could get this right. But I also see there being a sector that would be missing too, which is that human connection. We need that, and I think you could obtain both.
Chris Rising (20:42): And how have you fared? Because you have young children, one very young one. But how old is your oldest?
Gelena Skya-Wasserman (20:49): Four and a half.
Chris Rising (20:51): And how did home schooling during this time … She was probably in pre-K, right?
Gelena Skya-Wasserman (20:56): She’s in preschool. She was going to be doing her TK year. So, this is the beauty about having entrepreneur parents. I formed a micro-school in my guest house. And I hired a child development specialist that put the entire room together based on how they play and interact and so forth. And we hired who would have been my daughter’s senior class teacher, she’s credentialed. And we got four others to come join. And so, I am literally doing a micro school in my house with my daughter and four other kids. And it’s been going great. They’re on week three.
Chris Rising (21:35): Wow, you are the millennial entrepreneur defined, absolutely defined. Well, let me ask you this. So, you were doing your 18 tours a week, running around town for all your clients. And then at some point, you said … When did the light bulb go off? And when did you start thinking about doing something other than tenants and their office leases?
Gelena Skya-Wasserman (22:04): Probably the entire time. It was a short-term career for me, even though I dedicated eight years of my life. And the reason I say that is because recreating your book of clientele every single year. So, you’re restarting. And that’s very difficult. I wanted to be in real estate. In real estate, the beauty is that you buy a building this year. And then, next year it appreciates in value and the year after. And you’re not working any harder. I had always wanted to own my own real estate. And so, where I was able to make the switch and the transition is, I was putting together an industrial complex property for a client of mine that found the building. They bought it so cheap, I wish I would have bought it. And we converted it to create an office. And they gave me a lot of leeway to kind of run with it.
Gelena Skya-Wasserman (23:05): And through that process, I met a general contractor. And he connected me to someone that owned eight houses in one neighborhood, which was West Toluca Lake, an elderly gentleman who was widowed. And him and I met, and we got along really well. And he sold me my first single family home for 400K. And he actually carried 100K back. We got a loan for the balance, we put in some money. And that was the first property I did. I renovated that property. Made it into the LA Times Business Woman of the Week. I bought the lot nextdoor. Then I bought another and another and parlayed that multi-family. And it just got to the-
Chris Rising (23:43): While you were working full-time? Or was this while you were-
Gelena Skya-Wasserman (23:45): While I was working full-time. And it got to the point where Keith actually was really the one that pushed me and really hammered home of, “Look, you got this. You can do this.” You know? When Keith and I were a young couple, we relied entirely on my income. Keith wasn’t making any money. And I remember the largest transaction deal I did. I sold the building 11859 Wilshire. And it was a very sizeable six figure check. And that check never hit my account. I handed it over to Keith to pay off his line of credit. So, I was scared to make that transition because as an entrepreneur, when you’re doing things, you never know when your next source of income is going to come from. But we were able to do that. We were not yet married or engaged. But Keith was very supportive. And he had finally started to turn the corner where he was slowly starting to make some money. And so, that’s why I was able to leverage, start doing my own development company. And it’s worked.
Chris Rising (24:48): And so, what year did Skya Ventures start?
Gelena Skya-Wasserman (24:54): Skya Ventures started in 2014.
Chris Rising (24:56):
And since you started, was it just yourself and a laptop? Or did you start with some people on the team?
Gelena Skya-Wasserman (25:01): No, there was me, my laptop, and my folder with all my checks that I had for each of the properties. And I would sign them myself. And we had a bookkeeper that would come in periodically to sort through the books. But no, it was-
Chris Rising (25:17): And at this point, it was single family homes. You hadn’t gone into-
Gelena Skya-Wasserman (25:20): It was single family homes.
Chris Rising (25:22): So, then what on earth made you decide that you wanted to sign personal guarantees and get construction loans and things like that?
Gelena Skya-Wasserman (25:28): Well, we actually cosigned personal guarantees. But it was a lot of work to do just one home. And the profit margins were, I think maybe 30%. And then I had to pay taxes on that money, right? So, I was like, “I’m doing something wrong here. This model isn’t working or maybe I’m doing it wrong.” And ironically, I was searching for my next single family home project to do. And I came across a listing that was a church. And it was a church that was being marketed literally in the wrong city, first of all. It was Las Feliz, which borders on Silver Lake, but being marketed as East Hollywood. T
Gelena Skya-Wasserman (26:08): he broker was an elderly gentleman who was a residential agent and marketed or sold, I think commercial property. And there were two parcels and they were across the street from one another. They wanted 1.3. We were able to tie it up for 950. I knew I couldn’t do anything more than four units on the lot nextdoor due to zoning. And so, while in contract, I signed that to a smaller scale developer. They bought that lot for 500. So, my basis into the deal was nothing. And we build nine units on that site. It’s doing well. It’s throwing off good cashflow for our one investor and us. And he’s really happy. And that was 2015.
Chris Rising (26:57): Terrific. What were the biggest lessons you’ve learned in doing that kind of first major deal that you’ve done?
Gelena Skya-Wasserman (27:07): So many. I think … And Keith and I have said this many times, but I think you make your money on the buy. It’s the dollar amount that you pay for the property is going to determine your success with that deal. And clearly, here our basis into the deal’s 400K on nine units. It’s amazing. The other thing too is, I would say we outsource construction. So, I hire a third party GC. And the particular GC that I hired for this project was just over budget and timing, they didn’t meet the timeline. And so that time cost money. Your timing is extremely critical. You could be stuck in a scenario like I have on one of my other projects where we came to market in December and COVID hit in March when we were doing a lease up. So, that hurt.
Gelena Skya-Wasserman (28:02): I think also conservative. I think in those projects, I really understand who my renter is. And I always peg my rents to be slightly lower than what I think I could truly get. And if the deal still pencils that way, and yes maybe you do less deals a year. But you’re going to be very thankful when you have market conditions like now and you’re not over-leveraged.
Chris Rising (28:28): What are some of the challenges that you face that might have been unique to being young and then also being a woman in the business?
Gelena Skya-Wasserman (28:35): So, I’ll tell you a story. And the lender shall remain nameless. But we still do deals with them today and I’m still good friends with them. But when I was doing the nine unit apartment building, I was pregnant with my first child. And I was looking to do a loan. And no one would call me back, I mean no one. I just needed a land loan for 250K. It was a very small amount. And this one lender called me back. And he ultimately ended up doing the loan. And I had kept the fact that I was pregnant, not secretive, but it wasn’t disclosed. And knowing that-
Chris Rising (29:17): I think by law you have to.
Gelena Skya-Wasserman (29:17): Right. The loan was about to come though. The lender called and he said, “Hey, can we talk about the elephant in the room?” And I said, “Yeah, what do you mean?” He goes, “Well, who’s going to watch your kid when you have them?” And I was floored, because it’s not a question my husband has ever been asked until this day. But understandably so, he was worried. Like, “Hey, if I’m going to lend you this money, are you still going to complete the project?” And of course, the answer is yes.
Gelena Skya-Wasserman (29:45): And so, I said, “Listen, you’re either going to do the loan or you’re not. I don’t think there should be any concern as to whether or not, who’s going to take care of my child. It’s certainly not going to be raised by wolves. We’re going to have …” He did the loan. And then he did several more thereafter. But that is something that I’m very conscientious of. Are my investors worried if they see that I’m … I’m by the way, pregnant right now with my third and last due in August. And it is something that I think about. Are they worried if I’m having another child or I’m birthing the kid, is that going to take away from the projects? And it doesn’t. I don’t take maternity leave. If you ask anyone in the office, I don’t miss a beat. Life just continues on. And my kids are very integrated into what we do. They come to all the job sites, they come to some meetings, they come in hand. It works.
Chris Rising (30:43): That’s terrific. So, how much of what you’re looking to do as you have a vision for going forward, are you only going to buy stuff that’s entitled? Do you vision going through entitlement process? And how much bigger do you want your projects to be? What’s your vision going forward?
Gelena Skya-Wasserman (30:59): Well, there’s my vision and there’s Keith’s vision. But my vision … By the way, lots that I buy are not entitled for the most part. I prefer it to be that way because when you buy a project with entitlements or semi-entitlements, you’re married to what those [crosstalk 00:31:17].
Chris Rising (31:17): Yep.
Gelena Skya-Wasserman (31:19): Developers don’t check to see, does 1,500 square feet units make sense in this market? They just put it together and build it and they will come. And I don’t think it’s going to work like that moving forward. My goal is to do at least three deals a year. And for every development project that I acquire, I like to balance that with an existing project that we could renovate or add value or reposition. I’m going to be making a pivot here shortly, which hopefully you’ll see soon. But my goal is to buy a multi-family project that I could either renovate or build ground up that is catered towards families with young kids.
Gelena Skya-Wasserman (32:04): So, the concept that we’ve discussed earlier, there will be a coworking space. There will be a daycare. There will be programming for the families on a weekly or biweekly basis. I’d like there to be a pediatrician on staff or urgent care on the ground floor. All the units will be baby proofed. There will be stroller parking, storage. And then what I’d also like to do is the dents that we have, I’d like those to be able to convert to additional rooms that you could put modular walls that are insulated so that you don’t have to move. You like the space that you already have. And we have partnerships with operators like Ken. Another operator who specialized in the modular walls that we would do this concept with.
Gelena Skya-Wasserman (32:55): And then, in addition to that, I’m shifting over to exploring partnerships with companies like [Crete 00:33:01] who do modular builds. So, in other words, the building is designed in space. And you bring them the property size, the set survey. And they design it per the lot dimensions. It’s built offsite and then it comes to you in pieces. So, you essentially assemble it like Lego pieces. And I could build something like that in three to six months.
Gelena Skya-Wasserman (33:29): Another thing I’ve been focusing on during COVID is I’ve had numerous discussions with various cities. I’m particularly curious as to how they’re going to address the deficits that they have, especially since a lot of people are actually now moving. So, talent is not tied to any particular city or location any longer, because if I could work remote, I’m going to go live somewhere else where the taxes are lower, the cost of living is lower. And it’s a better quality of life. And that sure isn’t California right now, unfortunately.
Chris Rising (34:03): So, are you saying you think there will be a mass exodus out of California? Because I’ve only heard that my whole life. Do you think it’s … Do you think everyone’s going to be moving to Boise and think they can work from Boise or Salt Lake and make-
Gelena Skya-Wasserman (34:16): I don’t think there’ll be a mass exodus. But what I do think you’ll see is people who live two months out of the year in Montana and then another month in Utah or whatever that may be. I don’t think that they’re going to be tied down in the same way that they are now to any particular location. And I am seeing more and more people moving out of state. I just don’t think it’s the mass exodus that [crosstalk 00:34:42] think it is. I still think we’re going to be short on housing. I’m curious to know if we’re going to have an increase in population due to COVID and people staying home in the coming December, January. And I think that’s still yet to be determined. But whether we have a mass exodus or not, we’re still short on housing.
Chris Rising (35:05): Yeah, well I was going to say actually, I mean, the project you just described sounds amazing. It also sounds like with all those services, it’s also going to be a very expensive H08 cost. I assume there aren’t because I think you’re probably designed it in such a way where you think you can keep the costs in line. But how do you deliver a project the way you just described in California or any of the major cities?
Gelena Skya-Wasserman (35:31): So, the housing for our tenants and the modular or prefab builds go hand in hand. So, the [inaudible 00:35:41] get the project to be affordable, and I use that term lightly because it’s still going to be about $3,500 a month is probably what you’re looking at depending on where it is, possibly more. Land prices aren’t adjusting. We haven’t seen any price adjustments as of yet, although we suspect that there will be. But the only factor I can manipulate is the cost of my construction. And the only way for me to do that is to build it offsite. And that’s how I’m going to control the costs.
Chris Rising (36:10): You know, we’ve seen in the hotel, the office, and in the multi-family, a lot of experimentation into modular housing and into the timber, the new forms of timber out there. I’ve seen a couple things. One, I’ve seen municipalities be very difficult to deal with, especially when it comes to registration numbers. And then I’ve also seen the NIMBY-ism that is so difficult, no matter where you really go in the United States today. It’s not just … How do you deal with both of those things? The inexperience of a municipality, and then also the fear of NIMBY-ism not wanting more density?
Gelena Skya-Wasserman (36:54): The municipality question is easy to answer. And the modular prefab construction is designated by a different jurisdiction. So, the plans are already stamped by an entity known as HCD. And LADBS does not check those plans and do not pay a plan check fee. And basically, they have no say, really. Once it’s stamped by HCD, it’s approved, it’s done. Now, the projects I do are by right, they will remain to be by right most likely. Once you enter into projects that are no longer by right, that’s when you deal with the NIMBY-ism and the lawsuits and so forth. Although SB330 hopefully will help put a pin in that. But yeah, it would be done through HCD. So, you buy-
Chris Rising (37:46): Let’s say, SB330, I’ve been much more focused on another SB939, which is now dead. But I actually believe contracts should be enforced if you make them, so that’s why I was against SB939. But what’s SB330?
Gelena Skya-Wasserman (38:01): So, SB330 didn’t just die. It got passed January of this year. Learning the ropes of SB330. But basically, what it means is that once you submit your plans, it’s an expedited ‘plan check’. It’s not really expedited, it’s taking longer. But the beauty of it is, is that they can only give you one pass of comments and that’s it. And then, after that, if I’m 75% of the way through plan check, they can’t come back and say, “Well, sorry, we missed this set back requirement. We forgot that instead of eight feet, it needs to be three feet.” And that kills your entire project.
Gelena Skya-Wasserman (38:44): And then, in addition to that, if you go through the Planning Hearing Committee and you’re approved, you can’t be sued after the fact. Whereas, now you can. So, it only gives you, I think, just one appeal. So, it’s a start.
Chris Rising (39:06): Have you gotten involved in any of the lobbying around some of these multi-family laws that are being proposed, especially the one that caused so much furor about building density in single family neighborhoods and things like that. Have you gotten involved politically in any of these things?
Gelena Skya-Wasserman (39:22): I’ve not. I’m too busy running the business and focusing on projects that I have and getting them stabilized. I would like to at some point work with the council members that are drafting this because I think there really is no understanding of real estate on their part and how it all works, and the side effects that each of these SB laws or whatever laws will have. But right now, I have not. No. Chris Rising (39:54): Well, tell us a little bit about Skya Ventures. How big is it today? And what would you like it to be?
Gelena Skya-Wasserman (40:00): We have 500 units to date that are in various stages of construction. Some of them are still in entitlement, some of them are stabilized and on the market. And some of them are at the early stages of completion for coming online here shortly, almost done. I think I would like to continue Skya buying three deals a year. Our sweet spot is, I would say 100 units and up. We would, depending on the location and the story behind the building, take something as 60 units, for example. I really would like to focus on niche sectors housing for families that I mentioned to you.
Gelena Skya-Wasserman (40:44): I’ve been in talks with a hotel operator where we’re trying to do a hotel that utilizes no staff and it’s all done online. And I think I’d like to continue down the path of exploring real estate that has flexibility, can be affordable. I think it’s ridiculous that we have to pay 50%, 70% of our [inaudible 00:41:07] right now. I mean, model’s broken. I think I’d love to bring housing to market, where you could purchase a home and there’s two other homes right there with either family or friends, so that you’re not raising kids by yourself, which is essentially what we’re doing, which is unfortunate because it’s not realistic. And I’d like to be able to provide housing where, as I mentioned, you could finance your security deposit through Obligo, so you don’t have to pay all this money. Everything you do will be done online. So, that’s the new startup fintech company.
Gelena Skya-Wasserman (41:45): I think also keyless. Everything needs to be keyless. I hate keys. So outdated. We don’t need them. That’s a big expense because you’re constantly rekeying. And then, in addition to that, the other items that I mentioned is the place where you live is going to have to be more than just four walls. And that’s really what I want to focus on in the next five years for Skya to market. Chris Rising (42:11): Is there anything we’ve all learned or you’ve learned through COVID-19 about health and wellness or anything on that line that you’ve thought about as it relates to your projects?
Gelena Skya-Wasserman (42:25): Putting in new HVC systems or air filters that clean the air. I’m still researching that. I don’t know how much of that is accurate and factual and how much of that is capitalizing on what we’re going through right now. But I think if there’s anything that I’ve learned throughout this COVID process is Domuso has been a life saver in the fact that you don’t need to turn in a check and there doesn’t need to be an exchange or a face to face meeting. It can all be done online. And if the rest of the apartment industry doesn’t jump onboard with that, I think they’re going to be left in the dust here as more and more companies, property management companies and owners are shifting to that model. That is hands down something that I think will remain.
Gelena Skya-Wasserman (43:13): As far as the air filters and clean air and all that goes, who knows? But I think keyless will be critical. And we’re doing more cleaning at our properties that have gyms or common area amenities. And I think that for the most part is it. There’s a financing component to that though too that we could talk about if you want.
Chris Rising (43:38): Yeah, I think I see it in the office side. And especially on the office side, but also on the multi-family side where a lot of the deal with what we’re dealing with today, a lot of it is just more cleaning, which is more expense. And you know, hopefully we can have technology step in. But at the end of the day, when you have people who are strangers interacting right now, cleaning services is a very important thing and distancing and such. Well, let me ask you this as we get near the end here, Gelena.
Chris Rising (44:07): What do you see, you’re about to have your third child. I’ve got three. Mine are a little bit older, two 15 year olds and a 10 year old. But as a family of, going to be five, with two working parents who are both driven millennials as I’ve ever seen, what do you think some of the challenges you all are going to face? What Skya’s going to face and with the kids, what do you see as like, hey, I’ve got to be careful, what do I think? You know? What’s your [inaudible 00:44:37] two or three years about how your business is going to grow, along with your husband’s business, along with your kids growing?
Gelena Skya-Wasserman (44:41): Well, I think our businesses have seen a tremendous growth from when we had our first child to even now. And the way that we’ve addressed it is Keith and I are both very hands on parents. I would say, especially Keith. And if you haven’t read the book Fair Play, you should all read it. And we have a lot of help. I think building your team, your core team is critical. And I think we’ll just continue to build on that as we have our third. I think our challenges actually will not necessarily be with the business. We’ll be able to continue to grow our company and still spend time with our kids. But the thing I’m more concerned about is the kind of people that we’re raising.
Chris Rising (45:34): I think that’s a … What we’re going through today between COVID and Black Lives Matter and all the other things that are going on, the kind of people we raise, I talk about a lot with my children. What’s really important when it’s all said and done? And I think that really comes from parents. So, I applaud you that you both feel that way. Let me ask you this, if you had one thing that you could say to a younger woman out there who’s kind of in her 20s about the opportunities you think there are in real estate for women to be successful, what would you suggest to someone seeking advice from you today about getting into the real estate business? A woman who’s trying to get into real estate.
Gelena Skya-Wasserman (46:11): That’s a good question. You know, I’ve been getting a lot of emails and people reaching out who are women who say something along the lines of, “I became a real estate attorney,” or, “I became an interior designer. But I really wanted to do real estate development. And when I had A, B, C, and D in place,” whether that’s money or education or support or whatever, “That will do X.” And my advice would be don’t wait. If you’re going to do it, you’re going to do it now. And if you’re not going to do it, you’re just not. You will never know everything there is to know. When I did my first single family home, I didn’t know very much. And you will learn as you grow. And I think there is a beauty and an advantage that you actually have by being naive and knowing less than what I now know today because you could do more with that.
Gelena Skya-Wasserman (47:09): You don’t know that this is a big concept and it’s going to take a lot to get through this and it’s going to be really difficult. And that’s great. You’re in it. You’re going to make it happen if you were able to just get it started. So, I would say, don’t wait. The time is now. Don’t worry about what you do not know. And never hesitate to connect with to get help. They may not respond, but I would still reach out to build the support network around you. You’re going to want someone to go to to bounce ideas off of.
Chris Rising (47:49): That’s terrific. Thank you, Gelena. That was just a really great conversation. And I really appreciate your honesty and being so forthright about all the things that you are doing. You can follow Gelena on Twitter at Gelena, G-E-L-E-N-A underscore S-K-Y-A. So, please follow her on Twitter. And don’t forget to subscribe to the podcast, The Real Market with Chris Rising. You can do it on Apple or on Spotify or any of the other platforms. And please follow me on Twitter @ChrisRising or follow our company, Rising Realty Partners, @ChrisRising or follow our Rising Realty Partners @RisingRP. Thanks so much.