As a broker it’s nice to come across an investor who follows through on everything they say they will do. That has been my experience working with Dan Feder. Dan has vision, drive, and is dependable, which is why he’s been able to grow his portfolio to over four hundred units in a short period of time. Born in Denmark to a Danish mother and an Israeli Special Forces father, Dan has a diverse background. He also inherited an entrepreneurial spirit from his parents, who owned a small brass bed factory in Denmark. Though he was raised in Orange County, he has lived in many world-class cities around the world such as Tel Aviv, Miami, Los Angeles, and Copenhagen. We sat down at his North Park office recently to discuss his amazing growth. This is ROI with Doug Taber.
Rental Owner: Dan Feder
Company: F & F Property Management, Inc.
Started in Business: 2012
Unit Count (Owned): 400 (approximate)
Office Location: North Park
Company Motto: Do the right thing, plus one.
Doug: You’ve had quite a trajectory, what’s your background?
Dan: I was in the entrepreneur program at USC. I started an equipment leasing business helping small-business owners get money to grow their companies. We became — in our little niche — the largest in the country. It wasn’t fun, so I figured, sell it and get into the real estate business. I like real estate. It’s one of the oldest businesses; it’s not going anywhere. You can put your own stamp on it and do something creative. The market will either reward you or tell you they don’t like it. Then you have to adjust.
Doug: What prompted you to get into apartment buildings?
Dan: I was looking at buying thirty Burger Kings. I thought, “Do I really want to have 1,000 employees again?” The answer was “no.” I looked at the San Diego market; industrial buildings, retail, and office. None made sense to me. I went to Alan Nevin, a good friend and mentor. At breakfast I asked, “Who in the community is most generous in terms of charity on a consistent basis, what asset category are they in?” He said, “It’s easy — apartments.” I said, “Okay. I’m getting in the apartment business.” I figured if you can afford to be generous on a consistent basis, you must have a good business. And I’ve fallen in love with it.
Doug: That’s interesting; I would have asked about the numbers, not “Who is the most generous?”
Dan: It actually is numbers because it’s not just the most generous, but the most generous consistently. If somebody can afford to give $1 million a year or $2 million or $5 million a year, they have a very good business. Apartments is one of the few businesses that allows you to do something meaningful for the community long-term.
Doug: Where was your first office?
Dan: Solana Beach. Great location, great view. But I believe to be successful in this business, you have to be in the market. So we bought an office in Sherman Heights. We outgrew that, which got us into North Park. From here we can synthesize the environment, start to understand what’s important to residents, what works, what doesn’t, what’s a better street, what’s a better block. The reality is that if you want to be successful, you have to do everything you can to understand who your customer is and what they want.
Doug: Do you manage your properties?
Dan: We manage our own stuff. We don’t use third parties. If you own the assets, it’s worth it. The team I have is a great team. Very good team. And I’m always looking to add great people.
Doug: What do you look for in an investment?
Dan: We’ll buy anywhere in San Diego. I look for reasonable sellers, reasonable terms, and someone who’ll close. Most of the stuff we do is existing and renovation, value-add, long-term holds.
Doug: What’s your vision when you buy the property?
Dan: We try to brand the property. Your property is free advertising. The minimum we invest is $20,000 per unit. We’ve invested as high as $115,000 per unit. I would say right now it’s very reasonable that we’ll be at $35,000 to $50,000 per unit. It usually takes us about two years to turn a property around.
Doug: What is the biggest problem you see in the business today?
Dan: Rent control is a major threat, not just from the property owner’s standpoint, but also for the state of California. Nothing works unless there are incentives. What they should be doing is figuring out how more can get built. The San Diego Business Journal had an article about the toughest places to build. Number two is New York. San Diego was number one. Think about that. New York easier than San Diego? We should be embarrassed.
Doug: What is F&F doing to approach the problem?
Dan: Generally speaking, we’re not doing a lot of ground-up because it doesn’t make sense. I built a 12-unit townhome project in North Park. It took me over three years. It’s like getting hit in the head with a sledgehammer daily. The Empire State Building, built 70-plus years ago, took thirteen-and-a-half months. It’s just not worth it.
Doug: What’s next for F&F?
Dan: Long-term the goal is thousands of units here in San Diego and have select retail/commercial property as part of the portfolio. We want to grow our team, grow our company culture, have a positive impact in the communities and the lives of our residents, and frankly be able to create a really beautiful project when it’s all said and done. I try really hard to create amenities and provide value where it didn’t exist.
With his focus on understanding his customers and providing quality housing to San Diego residents, it should be no surprise that Dan Feder of F&F Property Management, Inc. is one of the rising stars of the local rental housing industry. You can find more information about Dan’s company at www.fandfinc.com. Doug Taber specializes in the sale of rental properties in San Diego County. Visit www.YourApartmentBroker.com for more about Doug.