Finding Success by Sheltering the Masses
Last year, New York City’s cost of living was 68.8% higher than the national average. From rent to food to transportation, city living is expensive—yet existing salaries don’t always keep pace. Recognizing the discrepancies between its cost of living and annual take-home pay, property managers like Menowitz Management Corp. began utilizing government programs to provide housing for people below the area’s median income. By going down this road less traveled, Menowitz has found great success.
For the city that never sleeps, New York still has a large need for housing where people can rest their weary heads at night—and affordable housing, at that. In 2014, the city had 3,400,093 total housing units, with 64.2% of its tenants renters—making NYC a land of promise in the real-estate world. For Todd Menowitz of Menowitz Management Corp., the real opportunity now lies in the subsidized housing market, where local competition is low.
Founded 70 years ago by Menowitz’s grandfather, Harold, to develop multifamily units, the firm was eventually taken over by his father, Fred, boasting a portfolio of 4,700 properties in Brooklyn and Queens. Today, Menowitz and his brother, Marc, stand at the helm—with properties spanning the country.
Owning and managing 17,500 multifamily units, and more than 4,350,000 square feet of commercial space across 22 states, Menowitz’s company recently addressed the need for affordable housing in the city of 8.4 million—acquiring subsidized multifamily units with contracts on the property or an attached affordability component.
“What makes affordable housing more lucrative for us is we know how to navigate through the many difficulties involved in obtaining approval and getting through sticky issues that you currently incur as you acquire these properties,” Menowitz explains. “There’s usually less competition and more left on the table if you can navigate through those issues. So the upside is it’s much larger than a typical, conventional multifamily deal.”
Typically in such situations, the subsidies from the federal government or local housing authorities are paid directly to the property owner for the management and offering of the affordable unit—also known as contract-based subsidies. Some properties with the affordability component will have subsidies paid to the tenants.
While Menowitz Management Corp. faces some local competition (it is NYC, after all), they’ve proven successful by jumping on great deals.
“The deals can be tough to find, and it’s a lot of work to get through the process of getting approved by local housing authorities. But that makes our competition a little more limited than just acquiring conventional multifamily deals. There’s definitely competition, but certainly less than in the conventional arena,” he says.
As the firm grows, Menowitz sees its concentration shifting outside of the metropolitan area, where they expect to experience less competition. By self-managing all their properties and building the middle-management tier while developing the multifamily market, he sees the firm acquiring more property in additional locations throughout the country.
The firm has been a Sterling National Bank client since his grandfather, Harold, set up an account in the ’60s, and Menowitz has continued to look to Sterling with help with acquisitions. “We’ve built a nice relationship with Sterling, using their help to acquire properties, and they provide either permanent or bridge-loan financing to get the deals done in a timely manner,” he says.
Menowitz is even hoping his son—who just graduated from college and is headed for NYU’s master’s program in real estate—will explore real-estate finance to learn about the property industry from the lender perspective. With this well-rounded view of the business, Menowitz believes his son will be better equipped to begin working for the family firm.
When Growth Takes on a Different Form
In real estate, acquiring properties and enlarging market penetration is a constant and visible sign of growth—a tangible way to see progress. Changes made to technology may not be quite as tangible, but are just as essential for remaining relevant.
For Menowitz Management Corp., technological innovation means always looking for a way to automate. It’s common knowledge that paying a bill online is usually easier than writing a check and mailing it in. Automating internal workflow processes may not instantly come to mind as a way to make businesses run smoother. Yet Menowitz and his brother knew that internal automation was an aspect of their company that needed to be developed.
“We created a special system for automating work orders, where everything is done through the cell phone. And we also have a proprietary clock-in system for employees that’s also linked to their cell phone, where they walk in and the technology lets us know they’re on the clock,” Menowitz explains.
Menowitz's brother, Marc, spearheaded the development and implementation of the cell phone processes. With a background expertise in field, service, and factory automation, Marc utilized that knowledge to improve operational performance.
These advancements have been revolutionary to existing processes at Menowitz Management Corp., and the team continues to look ahead by searching for better ways to automate elements of bill payments and payment processing. Currently, they’re discussing options with software management firms and checking on applicability with their internal IT team.
“I would love to work with Sterling to get our services more automated,” Menowitz says. “The next step for us would be to really work together to try and see how we could automate bill payment and payment receipts, where payments automatically log in to the tenant’s account and update the tenant ledgers.”
From the Mind of a Leader
“Hiring the right people and learning how to delegate...has been a key component to helping me expand at such an accelerated rate,” says Menowitz. In fact, recently, the firm hired an individual who has helped Menowitz Management Corp. take on a large number of acquisitions, which Menowitz says he would never have been able to handle without the help. “I’m still learning not to take on everything myself and to delegate to people within my organization,” he says.
The extra help will prove paramount as the firm focuses on expanding their multifamily portfolio across the nation.