Keith Wasserman – Real Estate Investing

**Patrick O'Shaughnessy** (0:04)
Hello, and welcome everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_2** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:49)
My guest this week is Keith Wasserman, co-founder of the real estate investment firm Gelt. This was my first fully dedicated conversation on direct real estate investing. So we cover many different topics, including the pros and cons of different types of real estate, current valuations, risk versus reward, tax protection, and the most interesting emerging areas.
You can tell Keith is an entrepreneur at heart, so I enjoyed his energy and all that he has learned. Please enjoy. Maybe we could begin with a sort of taxonomy of this world. So I know that Gelt specializes in apartments and mobile homes. We'll talk a lot about that in some detail.
But maybe you could begin by describing why those two were attractive and kind of where those sit in an overall grouping or lineup of potential types of real estate investment.

**Keith Wasserman** (1:34)
That's a great first question. And definitely we started with apartments due to the size. And when you're leasing an apartment, if it stays vacant for too long, essentially, you just lower the rent a little bit and you'll have someone that moves in. My family's been involved in office buildings and shopping centers. And when there's vacancy, it could sit vacant for a long time.
And once you get find a tenant, you have to pay a broker's fee, which could be very sizable. You have TIs, tenant improvements, dollars that have to be spent. A lot of free rent upfront has to be given. So the cash flows are more lumpy on those kind of asset classes, whereas apartments, it's more stable and pretty recession proof if you buy it without over leveraging it and be very conservative.
It's more of a guaranteed way to build wealth over time, whereas commercial, you know, office, retail, if you have any one large tenant that has a lot of space, it's just a lot more risks. And we like low risk. So that's why we're into apartments and mobile home parks primarily.

**Patrick O'Shaughnessy** (2:31)
Is there some sort of compensation for, let's call that a risk, like sitting in an empty space in an office building or a commercial building or something. Do you then tend to get higher returns out of those places due to that higher risk? Like talk me through the return spectrum offered by these different subclasses within real estate.

**Keith Wasserman** (2:48)
I'd say when the market's good, you could potentially have higher returns in office and those more riskier asset classes, hotel, especially hotel, where you have, when there's a recession that occurs, hotel changes the rates daily, essentially. So it's the first one to really get hit. But when the market turns, it's the first one to really come back strong. And I'd say there's potentially higher returns in that, but it's offset by the heavy capital expenditures that are needed.
Hotels, you have a lot of FF&E that constantly needs to be updated every few years. It's really running a business per se.
And I'd say for the risk adjusted return, I really like the multifamily space. And the best, in my opinion, which we just started getting into is the manufactured housing space. Essentially, I'll explain to the listeners, you're renting a piece of a space, a pad, they call it, and you don't own any of the actual structures, the homes. The resident has to take care of all the buildings themselves, anything that goes on within the four walls. So you're just literally renting them the space. And it's affordable housing at its core. The lot rent is $300 to $500 a month. And when you're having rising home prices, rising rent prices, this is really marketing to people that will own their own homes and have affordable living at its core.

**Patrick O'Shaughnessy** (4:04)
Maybe you can walk me through the specific history of Gelt, how it was founded, what the reason you founded it at the time you did, and then a little bit of the history of what you've done.