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October 9, 2025 · 1 hr 18 min

6,000 Units, $1B in Assets, and the Mindset Behind It | Steve Ludwig

With Steve Ludwig — Multifamily Investor

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How does someone go from fixing copy machines to owning and operating over 6,000 multifamily units? In this episode of The Group CRE, Taylor Avakian sits down with Steve Ludwig, a multifamily…

MultifamilyDevelopmentLos AngelesCapital markets
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Episode show notes

How does someone go from fixing copy machines to owning and operating over 6,000 multifamily units? In this episode of The Group CRE, Taylor Avakian sits down with Steve Ludwig, a multifamily investor who turned humble beginnings into a billion-dollar portfolio. Steve shares his path from blue-collar work into real estate, breaking down the strategies, discipline, and mindset that helped him scale in one of the toughest industries. Sponsor: www.aiforcrecollective.com You’ll learn: - How Steve transitioned from fixing copiers into real estate - The mindset shifts that fueled his long-term growth - Lessons from managing and scaling 6,000 multifamily units - How to balance risk, debt, and investor relationships - Why patience and discipline matter more than timing Whether you’re starting small or aiming to scale big, Steve’s story is a masterclass in persistence, resilience, and wealth building. Subscribe and Stay Ahead! Stay informed and empowered in the multifamily real estate market. Subscribe to the channel for exclusive insights, rental updates, and expert analyses on the Los Angeles market. 🔔 Don’t miss out on the latest trends and tips to maximize your property's potential: https://www.youtube.com/c/TaylorAvakian 📈 Connect with me: Website: https://www.thegroupcre.com/ Email: taylor@thegroupcre.com X: https://x.com/TAYVAY_ LinkedIn: https://www.linkedin.com/in/tayloravakian/ #TheGroupCRE #SteveLudwig #MultifamilyInvesting #RealEstatePodcast #TaylorAvakian #ApartmentInvesting #WealthBuilding #PropertyManagement #CRE #RealEstateInvesting

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Episode transcript

This 14,450-word transcript is matched to English (Original) automatic captions. Timestamps seek the episode player to the matching passage.

0:00–10:00

0:00

Steve Ludwig

you guys fired me. Like, we didn't fire you. You left. We would never fire a guy like you. Felt like slapping somebody else's baby. But I look at our bank accounts and there's no money there. Like dear in the headlights, you never know until you get hit in the face. There's really nothing more motivating than being unemployed with no money. That was my first like that was like just a punch in the face. You can find deals. You can underwrite deals. But as you know, the Tyson saying that was really the impetus of how things got going. But then your net worth is your net worth. So start building that now you buy 7,000 units in a very short period of

0:34

Taylor Avakian

time. Real quick before we hop into today's episode, I am so excited to share that we have a sponsor for today's episode and that is AI for Siri Collective. This is actually a community that Jake and myself started because we were tired of getting left behind with AI. We're nerds about it. We love to dive into it. Jake is a master at crafting these prompts and I'm very heavily invested in trying to be a better broker and use all of the tech and tools that I can to make myself just that much better. And I will tell you this since starting this community and exploring the workflows and the things how to use AI effectively in my business. 25 listings at the moment. We're closing four or five deals a month. It's been incredible.

1:16

Taylor Avakian

So, if you want to learn if you're in commercial real estate, how to use AI in your business, whether you're a property manager, a broker, an investor, really anyone, we have a huge group, over 400 people in this community. And the website, if you want to go check it out, is a forcollective.com. So, appreciate you guys. Now, back to the episode. Welcome to the podcast. My name is Taylor Vian. I'm here with my esteemed guest, Steve Lewig. Steve, just to give people a little bit of color, can you please explain a little bit about what you do, your background, properties you guys own, just give give people a little bit of color?

1:52

Steve Ludwig

Sure, absolutely. So, uh, about 22 years ago, I broke away from the world of private equity in my mid20s and as a young, hungry, motivated entrepreneur with, you know, no cash in the pocket, I started a real estate, well, multif family syndication business. And so for the last 22 years we've been heavily focused on that. And over the years out of necessity uh and really problems that led to us seeing opportunity we started to vertically integrate. So we have in-house property management. Uh we have in-house wholly owned but separate uh cons general contracting company. We have a building materials company and we have a real estate finance lending business as well. And then along the way, I'd say the last iteration was we built out a a development vertical as well. I did not know that. Yeah, we've been heavily focused on land entitlement for multif family and

2:45

Steve Ludwig

either for rent or for sale town homes in the South Bay of

2:49

Taylor Avakian

LA. So, let me talk to you about vertical integration because that's something that I'm super fascinated by and I'm I've seen the pros and cons of each and I understand that. Why did you specifically choose to do vertical integration? Because when I thought about if I wanted to be a principal, I thought, okay, how do I get the best margins? You kind of have to be vertically integrated, especially when you start to see the GCs, how much the markups are on construction and how much the markups are when you're renovating the the units and turnaround solutions, which is your company that does these renovations. Was there a moment that made you want to do vertical integration? Was it always something you wanted to do? Can you explain that to me?

3:29

Steve Ludwig

uh growing up in Boston, everyone, you know, has their own view on Bostononians are like, you know, we're we're were we're uh pugilistic, shall we shall some people say and it's true. I mean, it's kind of a bluecollar, you know, town. And I, you know, I grew up with that kind of attitude and fire in the belly. And I would say the impetus for starting the vertical integration was out of like frustration and anger. So, we were originally just buying properties, asset managing them, and that was up until, call it 200, you know, 7ish. And as things were starting to get harder and the market was starting to show signs of falling apart, you know, pre GFC, we felt, we coined the phrase that asset managing a third party property management firm felt like slapping somebody else's baby

4:20

Steve Ludwig

because you were just working so hard to get a non-employee to do something. Yeah. and you we would be on site more than the regional supervisors would be on site and then the regional supervisor would complain to the owner of the company who then would call me and yell at me and say you can't be talking directly to the on-site property managers and we're like well why not your regional supervisor isn't job's got to get done here so I'd say born out of frustration and anger we went originally into the property management business immediately post GFC because we were watching our rents fall dramatically and we just didn't feel like the effort by the third party property management companies was going to be uh uh quality enough to try to sustain the operations to like survive. Mhm.

5:12

Steve Ludwig

And so we basically said, "Hey, let's, you know, we talked to a bunch of people, a lot of big players in Southern California." And they all had their different takes on third party property management. All of them which were, "Don't do it." But then one of them, actually two of them who were very wellknown said, "Don't do it, but we'll do it for you." And by the time the second person said it, it was like, "Then we're 100% going into this business." And candidly, at that time, we needed to. We needed like the fee income to stay afloat to sustain the asset management and ownership operations, but we had institutional capital partners. So, it wasn't like we could just be some mom and pop property management company. It was we needed a, you know, best-in-class property management software.

5:59

Steve Ludwig

And so, we were looking at Real Page, we were looking at Yardi and any other, you know, technologically advanced systems. Mhm. Uh and then it was, you know, you've got the the the digital side, but then you also have to have the accounting side. So, we had to build up an accounting platform. And the institutional capital partners were like, hey, if you're going to take over the management, your accounting has to be every bit as good good if not better than a large property management firm. So it was hard to dive in because we didn't have the opportunity to say, "Hey, we've got, you know, it's our own building, no investors, or we've got a private syndication." We had big institutional funds as a first partners. Which made the leap huge.

6:45

Taylor Avakian

Did were were your first partners institutional because you came from that private equity background? Like how did this so you said you left private equity to start this syndication like what was that moment? Did you have someone who was going to say they would want to invest with you?

7:01

Steve Ludwig

Like Steve, go do your own thing. I was sitting at a private equity firm that didn't do any multif family, but I had a grandfather who passed away when I was rather young who was in the multif family space in Boston, Massachusetts. And over the years I whenever there was an opportunity on some multif family deal whether it was an internship in college with a GE asset management department or at Colony any time the word multif family came up I raised my hand and jumped into a meeting. So, there was a meeting with a potential sponsor at Colony Capital where I was and some guy rolls in and he's talking a million miles an hour about multif family in Las Vegas. And from the the meeting ends and on the colony side, we walk out and everyone's like, gosh, that guy was a fast talker, like not

7:53

Steve Ludwig

doing business with him. And that was it. The next day, that sponsor calls me uh and I'm an associate at Colony. I'm low on the totem pole. And he says, "Hey, are you guys going to invest in my deal?" And the response was, "You were so discombobulated. There's a 0% chance Colony is going to invest with you." Yeah. And he being an entrepreneur uh who owned a a you know develop small development company uh doing condo conversions in Herosa Beach and a little mortgage brokerage company. He had the heads up to say, "Hey, is there a way that you can help institutionalize me so that I could get investment from a Colony Capital or another private equity firm?" Smart. Incredibly smart that, you know, entrepreneurship 101. And so, you know, my response not being an entrepreneur was like, um, you know, there's consultants out there.

8:42

Steve Ludwig

And he's like, I want you to be my consultant. You seem like a smart young kid. And so we basically came up with this agreement that I would uh moonlight for him and build a complex financial model and put together an offering memorandum to give him that, you know, back support. Totally. And uh

9:03

Taylor Avakian

were you getting equity?

9:05

Steve Ludwig

I wasn't talking. He was I was he was utilizing the materials that I was putting together for his search for equity. Got it. At some point, probably a month or two into that relationship, the people at Colony, um, came to me and they're like, "Steve, we don't feel like you're heavily focused on our business, so we're letting you go." Oh [bleep] Now, the funny thing is 20 years later when uh I was meeting with some of the principles at Colony, they're like, "We're so sad you left." You know, right? I'm like, "No, you guys fired me." Like, "We didn't fire you. You left.

9:41

Taylor Avakian

we would never fire a guy like you.

9:42

Steve Ludwig

You're like, "No, I remember it very well." Exactly. So anyway, uh I really had no other option at that point. I was like, you know, to this guy, his name was Steve as well. I said, you know, I'm no longer working at Colony, and he says, "I'll pay you $3,000 a month for three months to put this opportunity together

10:00–20:00

10:00

Steve Ludwig

with me, and then I'll make you a partner with me." Well, uh, that deal fell apart. And there's really nothing more motivating than being unemployed with no money, right? But having a skill set that could lead to you finding your first opportunity. So, I just basically was up 24/7 for 3 months, found a deal, which we eventually bought together, but it had, you know, in contract, out of contract, you know, three or four times. And he was like an experienced deal guy. He's in his late 40s. I'm in my, you know, late 20s, mid20s. And every time he would try to negotiate and the deal would fall apart. You know, I'd be silently in the background on the phone and I'd be like, "What are you doing?" He's looking at me like, "Calm down, whippers snapper.

10:43

Taylor Avakian

I got this.

10:44

Steve Ludwig

I've done this before." And you know, the phone would hang up on both ends and I'd be like, "You just killed the deal." He'd be like, "Watch. This guy will call back." And it was like out of a movie. He's like, "One, two, three, ring ring." putting me back on the phone and so you know starting to learn but uh yeah that was really the impetus of how things got going but then uh the real life lesson so we closed on our first deal I think I was 27 and about 6 months after that he sadly died in a car crash oh man and that's when life got real because he had a widow he had four children 10 years and under the widow's protecting her family which is understandable I'm just this young hard charging guy who's trying to essentially use their balance sheet and capital to like

11:32

Steve Ludwig

put deals together. Yeah, we had a handful of deals in escrow. You know, she now has a million dollars in escrow accounts that she has no idea about. She hires an attorney who's her neighbor who thinks he knows everything about real estate and he's on me 247. And so really that's when in my mind, right, you can find deals, you can underwrite deals, but as you know the Tyson saying, right, you never know until you get hit in the

11:58

Taylor Avakian

face. Yeah.

11:59

Steve Ludwig

So you get punched in the face. That was my first like that was like just a punch in the face. That was like, you know, double jab right past the to the to the

12:07

Taylor Avakian

So how'd you how'd you overcome it? What happened?

12:10

Steve Ludwig

You know, I'd say the the greatest piece of advice I got was from uh a gentleman named Gary Freriedman from Irvin Con and Jessup. Okay. I call him immediately after I get the news on a Monday morning that my partner's passed. Uh he calls me into his office and he says, "Steve, I want you to pull out a piece of paper and a pen." and he said, "I'm going to I want you to write down everything I tell you and you're going to follow these steps." And number one was you're going to call every one of your investors and you're going to tell them what happened. Number two, you're going to tell them that you are firmly captaining the ship and that their investments are safe. Number three, you know, we get to some number and he goes, um, you're going to feel emotional when talking about this, but you're

13:03

Steve Ludwig

never going to let people see your emotions. So, if you feel the need to cry, uh, you're going to say, "Excuse me." You're going to go to the bathroom, cry your brains out, do whatever you need to do, slam the wall, right? slam your head against the countertop, clean yourself up, and go back into that meeting demonstrating that you are in firm control of the situation despite the tragedy. Mhm. And without that advice, I mean, without that simple guideline from not only a dear friend and a great guy, uh, but just an experienced attorney who understood business, who had a real ability to understand me and the situation I was in and relate to me. I I mean, you know, number one and two, critical. Call your investors, tell them you're, you know, everything's okay. But that one about my

13:57

Steve Ludwig

emotions was so critical. And just hearing somebody relate to me like that, I didn't actually in the meeting ever have the need to get emotional because I felt like we flushed it out. Yeah. Right there. Yeah. Right. Just understanding and getting me.

14:12

Taylor Avakian

I get my job. I get what I have to do. I have to be the one in charge. Like they're trusting me with their investments. They want to know that I can be composed in in tough situations 100%. And trust that. So at that point in time, you're 27. You have these deals under contract. I assume you close a few of them. So you have a portfolio. Then you start to continue. You still have these investor relationships. Like how does that then grow into what it is today?

14:37

Steve Ludwig

I mean the story the it really all springs from the very beginning truly. So there I think we had you know two or three four deals in these are all in LA, right? This is all in LA. Okay. And one of the deals, um, old contact and he says, "Hey, I want you to meet this guy, and I'm going to say a name that you and many people who will listen to this podcast will know and and dearly remember, but a friend of mine says, "You got to meet a guy named John Walsh, who works at Marcus and Milichap." Y. So, I bump into John uh at some conference and I tell him about the deals that I have going on. And John says, "You know, Steve, I I want you to meet me at the Starbucks on Will, like Wilshire and uh uh Bundy or something like that,

15:24

Steve Ludwig

whatever it is. Sel." Okay. And so I go out there and we're sitting on the side of the road and we're talking and he literally pulls out a napkin from Starbucks and he writes some numbers on. He goes, "Look, if you do everything right with this deal, in three years, you'll probably make a promote of $800,000." And I'm thinking to myself, I've got a 37page financial model, and that's the exact answer that I came to. And he just did it in like four numbers.

15:50

Taylor Avakian

How is that possible?

15:51

Steve Ludwig

Yeah. And so he says to me, if you assign me the contract, I will pay you, you know, $400,000. And um I look at John and I go, "Yeah, that's that's not enough. I'm sorry." But at the same time as I'm saying that, I know that I literally had negative $100 in my Wells Fargo checking accounts. So that's some balls to say that. Joan looks at me and uh John says, "Well, you know, I appreciate you taking the time. I just there's not a deal to be made." So we literally get up and we start walking opposite directions and I hear Steve. And I'm like, "Yeah." you know, and we turn and we come back together and uh he goes, "You sure you don't want the deal?" And I said, "John, at $500,000 I I would make the deal, but I just can't do 400

16:41

Steve Ludwig

right now today if some like what's the difference between four and five?" Like, you do that deal wouldn't think twice about it. But then, you know, uh thinking that this deal was going to be the greatest deal ever and having no experience, you know, under my belt, uh I tell him, you know, 500 is the number and he goes, "Nah, I can't do And he goes, "Well, give me a second." And he, I think, makes a fake phone call and he comes back and he goes, "You got a deal." And I remember getting in my car and I call my real estate attorney and I said, "You're not going to believe what just happened." And he says to me like, "Steve, I've been in this business for 40 years. These things just don't happen. Someone doesn't tell you they're going to like you assign the contract to them,

17:20

Steve Ludwig

they'll give you your deposit back and $500,000 in the next 10 days." Like, it doesn't happen. So, don't get your hopes up. Keep doing what you do. And uh 10 days later, after some you know back and forth, my real estate attorney calls me and he says, "Hey, there's $700,000 sitting in a trust account." Oh my gosh. And so um I get that money and I call a guy who was friends of my original partner and I who had driven me to my first partner's funeral. And at that time he said to me, "Is there anything you need?" And I said, "Well, I need a $200,000 check to put a deal in escrow." Uh-huh. And he basically said, "Well, Steve talked highly of you. Here's $200,000. Do what you got to do." So, I, you know, called uh this guy Jerry up, Jerry Baker, and I said, "Hey, Jerry.

18:07

Steve Ludwig

Um, would you and your wife meet me for dinner tomorrow?" And so, we go down and we're sitting in uh uh Rodondo uh Rodondo Beach, and I pull out three checks, cashier's checks. I said, "Jerry, here's your $200,000 back in a cashier's check." and he looks at the table and there's two $250,000 checks. And I said, um, you know, I really need a partner and if you will be my partner, one of these checks is for you and one of these checks is for me. And Jerry is an incredibly smart, successful, just humble, great guy. And he shakes, you know, reaches out and shakes my hand and says, uh, you know, let's go, partner. Wow. And 22 years later, he is a, you know, best friend, always been a like father figure to me

18:59

Taylor Avakian

and is still my partner. Wow, man.

19:02

Steve Ludwig

That's crazy. And so that's like the like that's Yeah. You just don't know what's coming for you. And I'm sure you know, you probably had plenty of pe anyone who sat on this couch talking to you. There's there's crazy stories. Yeah. And you just you don't you just have to be confident in yourself that you're going to fight through whatever obstacles in front of you and generate a high quality

19:26

Taylor Avakian

outcome. I just listen on the way up here I was listening to a podcast and there there's a line in there that talked about luck. And the guy said he said luck's like a bus stop. They keep coming right if you're doing the right things. And if you don't get on one you just have to be able to get on to the next one, right? They're gonna luck keeps coming. There's keeps opportunities like this, right? And you just have to be vigilant enough to know, okay, I need to step on this bus at this time. And like that so cool the story of how that happened. And then obviously now

20:00–30:00

20:00

Taylor Avakian

what is the current portfolio for just just the real estate um side of it? What is how many what's asset center management right now?

20:07

Steve Ludwig

Um, you know, we're probably a I mean, our portfolio is heavily doiciled in the South Bay of LA. Yeah. And we've got some things sprinkled all over, but you know, I think we're uh around 3,000 apartment units. Okay. Uh we've got another 700 apartment uh apartment units and town homes in our development pipeline. Okay. We've got a couple really cool and exciting opportunities uh you know in our pipeline right now beyond the development and the existing portfolio as we're starting to get uh active again on the acquisition side. Uh uh so that's kind of what we look

20:42

Taylor Avakian

like. Do you feel like right now is a good time to be active? Do you feel like LA because every conversation I'm having with investors right now is I think this is the best time to buy in Los Angeles I've seen in my career.

20:54

Steve Ludwig

Again, it's started in 2018, but it's nuanced and I'll tell you why, please. And people, how do you quantify what market you're buying in, right? In migration, uh, job formation, uh, you know, it might be average household income, what's the supply pipeline look like? So, California is very nuanced because if you look at it high level, what's the median home price in

21:25

Taylor Avakian

California? I mean, 700 grand.

21:29

Steve Ludwig

900,000. 900,000.

21:30

Taylor Avakian

What's the median rent? What's the average rent in California?

21:34

Steve Ludwig

22. Um, possible. Okay. Um, so just in preparation, I went to my perplexity. Oh, yeah. Okay. And I said, "What's the median? What's the median?" And it had like, you know, 27 something. Okay.

21:49

Taylor Avakian

And it had 900,000.

21:51

Steve Ludwig

Yeah. The mortgage to the rent difference is So when you talk about, you know, so now at 6% call, you get a 6% 10-year intereston loan plus taxes plus insurance, you're $5,000 a month. Mhm. And if the average rent is 2,800 bucks, I mean, you're at a 45% discount, rent versus zone. Mhm. So every I mean the science for California are like invest invest invest because beyond that so to to uh uh the government says uh you should spend no more than 30% of your income on housing. Mh. So to be able to afford that $900,000 house, you have to make $200,000 a year. How many people in California of 39 a.5 million residents we have, how many people in California make over $200,000 a year? The answer is 2.6 million.

22:41

Steve Ludwig

Which represents 19.5% of our households. Wow. So when you start looking at those facts, assuming we're relatively close on that, yeah, give or take. Give or take, people are going to be net renters by a large margin in California for a long time. Because beyond all that, on a $900,000 purchase, you also have to have like, you know, a couple hundred thousand save that you can spend and still live your life. Yeah. Right. And at what age do you hit that in California? Right. It's it's tough. 30s, 40s. That's right. That's right. And so, uh, the the multif family game is here to stay in California. But on the other hand, right, with all those signs flashing invest here, you still have the political risk in California, right? I mean, as an owner, operator,

23:35

Steve Ludwig

contractor, California beats up on its landlords. I just wrote or read a uh investor memo on one of our deals and it was for a building in Culver City and we were talking about how we just got a sheriff lockout on unit number 303 or whatever it is and the delinquency for that one tenant was $40,000. then tack on legal fees, it's probably over $50,000. Jeez, that's a that's a that's a beatdown. It's huge. And when you look at that across a portfolio because of the length, I mean, of of time it takes to to evict somebody and moratoriums and everything we've been through here in the last 5 years. You know, those are all the signs saying don't invest here right now. So, um, you know, I like I said, it's very nuanced as to whether it's a great time or

24:29

Steve Ludwig

not in California. Uh, you know, I am a California resident of 25 plus years. I love California. We only today invest in California. I've been out of state before, but I keep coming back to California because uh this is my home base and this is what I know really, really, really well. Got it. Right. Can I parachute out of an airplane and learn any market in a week? Absolutely I can. Right. But operationally speaking, as hard as it is here, it's also that barrier to entry that gives us an advantage over so many other people, whether they're here or not here. Our vertical integration, our local knowledge, our relationships, our experience and history and connections uh both private and call it politically. Um all those things are big drivers for us staying here.

25:20

Steve Ludwig

But it's not a simple answer. Yeah. And now that I in the last four years, I've also been through the entitlement process. And as hard as you may think it is as an operator, you know, go put your, you know, uh, developers hat on and try to get through the entitlement process. I mean, I've got war stories, uh, from that side of

25:41

Taylor Avakian

the What are some of the things you've learned from entitling buildings?

25:46

Steve Ludwig

Um boy uh if uh first and foremost you have to have the community on your side. Interesting. If the community is not on your side, it's going to be an uphill battle. And um in California, do you know of a community that is pro-development? No. Right.

26:09

Taylor Avakian

So that's rule number one, right?

26:11

Steve Ludwig

Yeah. It's a lot of a lot of nimbies is what they call them. It's it's a lot of nimbies. Yeah. Right. Um, number two, uh, I had never really dove into the political side, you know, of real estate. Uh, and it's, as someone said to me, the entitlement game is two parts, okay? Uh, or the development game is two parts, sorry. The first part is political. That's when you're getting your entitlements. And then when you start building is bureaucratic. and then go through the political side, the bureaucratic side, then you get to the operational side. Right.

26:50

Taylor Avakian

So, it's and then tack on the market with that as well. Right. Right. With all these developers will last two years. That's right.

26:58

Steve Ludwig

I'm working on some right now and it's after we just went through a entitlement process on a 5 and a/4 acre site in the city of Gardina. Mhm. Um, we went through a full EIR and we had to revise the EIR multiple times as the project changed. So, it was a four-year process. You know, we uh we lost two stories on an apartment building during the process. We went from a sevenstory building to a five-story building. We pushed one story of parking below grade. Oh, no. You know, we we went from 328 apartments to 258 apartments. Uh there's a townhouse component to it as well. So net net like we're excited with the outcome. Yeah. But it was it was bruising and damaging and I mean you know then if you have the community and you know you feel comfortable with the political side well then there's the labor side.

27:51

Steve Ludwig

Mhm. Right. So you know I did the I did the tango with the labor unions and that's a whole another you know can of

28:00

Taylor Avakian

worms.

28:00

Taylor Avakian

So, it's just brain damage on top of brain damage on top of brain damage. Which begs the question because I talked to a lot of owners and operators and some of them are on the development side. Some of them are just let me buy existing apartments because it's a lot less headache and I can still make money. And you've did the the value ad stuff. Was there was it just such a good opportunity where you had to jump or wanted to explore the development side? Was it you were getting bored with the value ad? You didn't see as much opportunity? like why would you subject yourself to wanting to go through the development process?

28:33

Steve Ludwig

That's a great question. I'm a glutton for punishment. That's it. You know, as we were walking in, you know, to the podcast room, you know, you said to me, "Are you doing any more Iron Man or marathons lately?" And it's like, you know, you only do that if you're a glutton for punishment. So, I think it's a combination of all the above, right? I I always admire a professional athlete, you know, a pitcher, they throw the baseball for 20 years, right? It's an amazing amazing ability to stay so focused on doing one thing for 20 years. Yeah. I don't know that I would be a major league pitcher, you know? I would be the pitcher that would be like, "Hey, you know, I've done pitching for five years." Like, I think that's rightfield. That's right. That's right. Um, uh, yeah, we've done a lot of value ad

29:22

Steve Ludwig

and I'd say part of it was maybe some fatigue on that front. Um, the but I think looking at the political climate in California, uh, California doesn't necessarily just need, you know, more lipstick on the apartment building. It needs more apartment buildings. It needs more housing. And so that's the opportunity that I see, which is if you can get through if you can withstand the punishment. You know, everyone looked at Jake Paul and they said, "You're going to get in the ring with Mike Tyson." Yeah.

29:54

Taylor Avakian

Are you out of your mind?

29:56

Steve Ludwig

Right. But the guy, you know, whether it was rigged or not, who knows?

30:00–40:00

30:00

Steve Ludwig

But he stood in front of Mike Tyson for sure. And standing in front of Mike Tyson, you don't know what's going to happen. 100%, right? Maybe they were, you know, it was like the WWE and it was all choreographed. But maybe Mike Tyson has a flashback and throws a haymaker that like knocked his head

30:14

Steve Ludwig

Mike Tyson, you have no idea. No idea what's going to happen, right? I already get in the ring with him and I so um yeah I mean I found it to be an incredibly exciting process as hard as it is was on that particular project. I mean, like for example, you host a community meeting and you've got 30 people in the room and you've got a a a presentation showing that you're going to take this beat up, vacant, dilapidated, you know, uh uh graffitied uh uh uh out of service industrial property. And you're going to build this vibrant community where existing and new residents can live in a safe secure environment where mo you know 90 plus% of the housing in the South Bay was built before 1990.

31:06

Steve Ludwig

It's going to be at a attractive price point. Uh it's going to provide jobs. It's going to provide a ton of income to the community that's going to go and get spent in the local restaurants and businesses. Like you talk about, you know, the tax revenue blah blah blah blah blah. And someone who, you know, has a house within a quarter mile that looks like a shack, you know, looks at you and says, you know, get the [bleep] out of our neighborhood. We don't want you. We love this neighborhood. It's beautiful just the way it is. And, you know, they just are throwing insults and derogatory comments. Gez. And you just sit there and you, you know, bite your lip and you smile and you just say, uh, you know, I appreciate your input.

31:49

Taylor Avakian

Thank you very much.

31:50

Steve Ludwig

Yeah. You know, but in your mind, you're like, look, you know, [bleep] Yeah. I'm going to follow you to your car, right? Insult me like that to my face in front of a hundred people. Yeah. Absolutely not. Yeah. But I actually I had a I had a great conversation. So, someone uh a very dear friend of mine that I grew up with in Boston, her father uh Arthur Wyn is a very large developer.

32:13

Taylor Avakian

Is that the casinos?

32:14

Steve Ludwig

No. Arthur Win Communities on the East Coast. Uh one of the if not the biggest affordable housing developer and manager in the country. Um you know, I fortunately got to know him as a kid. Uh, and uh, and uh, over when I first started real estate, I would call Arthur and I would just ask him advice and he would give me like two or three words. Yeah. You know, like in 2007, I bumped into him in Nucket. I was like, Arthur, it's so great to see you. I was like, what do you think of the market? And he goes, "Cash is king." And I was like, "Huh, that's interesting. I'm going to go have another cocktail." You know, I didn't think about it, but I mean, he was dead on. And so, literally earlier this year, I bumped into him in San Diego.

32:54

Steve Ludwig

he was there uh with his family and my my friend and uh I had a chance I'm talking to him and I think uh Arthur's in his mid 80s now and you know he's had a wonderful career and uh I said uh you know Arthur I said I I just in the last few years I kind of focused more on land entitlement and development. Um I wish I had come to you for advice before I got into the business. And he kind of slowly turns his head to me and he looks at me and he goes, "Stephen." And he puts his hand on my cheek and he says, "You got to eat a lot of shit." And I was like, "Gosh, the two times I've asked you for advice in the last like 17 years, you are so spot on." Yeah. Yeah.

33:40

Taylor Avakian

There's something about the wisdom of someone who's been through it. Yeah. Who's seen it, who's experienced it firsthand. And um I think some of the things that those people have to say, it doesn't take a lot of words, right? Because when you've the way that you can internalize that is because you've you know what he means. You understand and experience what he means by cash is king and you got to eat [bleep] because you've had to do both of those things and it tells the whole story in one sentence, right? So, it's super that's why I love studying history because when you pick up these nuggets from super successful people and how they approach business, how they approach problems, how they negotiated on certain things, you start to see these through lines of very much similarities in what they are and you can almost reverse engineer if

34:28

Taylor Avakian

you're vigilant enough to be like, okay, I see what they did there, right? Oh, and this guy over here, Benjamin Franklin did that, you know, 150 years earlier, and then Carnegie did it here, and then Stew Wyn, did it here, and then Steve Lewig did it here. And I'm like, okay, there's there is kind of this like path if you are vigilant enough to actually see it and look and be aware of what's

34:52

Steve Ludwig

going on. I just started I think I'm a 100 pages into the book, Undaunted Courage. Okay. It's basically it's the Louiswis and Clark Oh, expedition. Yeah. Yeah. I mean, in simple things like it's been a long time since I covered that. Yeah. And I asked people, I'm like, in Louiswis and Clark, what was Lewis's first name? And people are like, wasn't his first name Lewis? I'm like, no, it was Merry Merryweather Lewis. Yeah. And people are like, I never knew that. You know, and so it's just like you I'd spent a lot of time like reading about World War II. Yeah. is I just think that to me the the the courage and the heroism of that generation is to me like it should be the starting point for every upand cominging generation, right? And we're just we've diverted so far away from that. Yeah.

35:42

Steve Ludwig

You know, as opposed to the let's put, you know, country first and our man first, it's the me me generation. Totally. And then it was entirely the opposite. Uh but now I'm pivoting a little bit. uh a friend recommended uh this uh

35:58

Taylor Avakian

Okay, I'm gonna have to read it. I'm gonna have to read it. I like it. Um so then what because the first time I met you I think it maybe it was at an event and then we went to Waste Management Open which was fantastic and fun and I learned there that you had started to suror you had turnaround solutions uh the property management company which I knew I didn't know you did third party but what um can you talk about a little bit because as a broker I don't really need to know how much things cost in dollars sense when it comes to turns. I can have an estimate. Okay, it's going to cost 20, 25, 30, 35. In this neighborhood, maybe 40 if you need the right finishes, but I don't know what flooring costs. I mean, I don't need to know what the the faucets cost or

36:43

Taylor Avakian

how many you need to do. Um, recently, the longer I'm in my career, the more I've I've had to learn this stuff, but when you're selling stuff in the beginning, it's just you're putting a buyer and seller together, and hopefully your senior there figures it out. So, why to sorro? Um, what is kind of the benefit for you guys in doing that business in particular and how has that been from growing as like an entrepreneur business?

37:09

Steve Ludwig

To me, the real estate broker is like the person that marries you. Okay. Right. Uhhuh. You say a little something. Yeah. I do. I do. Good luck to you. Yes. I hope you live a great life together. May it last forever. Right. Yep. And we all know that nothing, you know, that that 50% of marriages work and 50% don't. Yeah. Well, that's kind of like real estate too from our side. Yeah. Right. As soon as you sell it,

37:36

Taylor Avakian

you're out.

37:37

Steve Ludwig

I'm out. Right. And then us as the operator, we have to live with it. Mhm. Right. Some people obviously different strategies. Some people buy with the intention of flipping and moving on and, you know, they're really chasing, you know, the best look at the best price. Yeah. Um, but a lot of people, uh, you know, it's an it's a portfolio asset. They're going to live with it for years. Um, whether it's a value ad or it's a groundup development. Um, or they want to sell something of high quality. They have, you know, pride of execution and reputation and what they remodel or they build. Uh, and so for us, I mean, we're kind of a little bit of all that. And again, starting with probably angry, frustrated. Yeah. You know, I go back to the days when where we started Tasorro. And what Tasorro is, it's a

38:26

Steve Ludwig

basically one-stop shop for all of your interior finish building materials. Um, we have, you know, one side of the business which is stock on hand and then we have another side which is all made to order. So, we will make it, you know, anything you want. Uh, we'll store it in our warehouses and we'll deliver to you when you need it. Wow. and we basically cut out all the middle people. And so we can make a much higher quality product at a way more attractive price. And then we because of the one-stop shop nature, we're eliminating all the headache from calling multiple vendors. You the coordination, hoping everything shows up on time. You know, what we do absolutely best is that custom made to order. You know, whether it's a value ad or groundup, everything you need is in our warehouse.

39:13

Steve Ludwig

It's like your own, you know, we're your own warehouse

39:15

Taylor Avakian

and you can get it when you need it.

39:16

Steve Ludwig

You're like the Amy Hardware of uh renovation. It's really a cool business, but where did it start? Yeah. So, um, you know, probably 20 years ago, the Shaw or whoever carpet sales rep comes in, she's flirtatious. Here's the next, you know, I'm single. I'm in my, you know, late 20s. And she's like, "This is our new stainproof, pet proof, bongwaterproof carpet. You're going to love it." And uh I was, you know, for years I was like, "Uh-huh. Uh-huh. Oh, yeah. I'll buy whatever you're telling me." Right. And then one day as we were uh I called our third party property management company and I said, "You know, I don't I don't really get it. You know, we're I'm looking at the profit and loss statement

40:00–50:00

40:00

Steve Ludwig

and there's all this like cash there at the end on the net income, but I look at our bank accounts and there's there's no money there." And he's like, "Well, Steve, you know, uh there's two other parts of the financial statement. there's the cash flow statement and the balance sheet. And I was like, uhhuh. You know, like dear in the headlights, Mark. He's like, if you look at the cash flow statement, you see that, you know, through your portfolio or asset over the last year, we've spent, you know, a million dollars on carpet and we capitalize that on the asset side of your balance sheet. And I was like, can you say that again?

40:36

Taylor Avakian

Can you walk me through that again, please?

40:38

Steve Ludwig

Yeah. And so, you know, then it was like, gosh, like, why am I spending so much money on carpet? Like, this stuff is just getting churned over. It can't be stain proof, smellproof, waterproof. Like,

40:52

Taylor Avakian

is the flirtation from carpet sales lady just getting me every single time? What an idiot am I? So, we said, what, you know, I said, what's the alternative?

41:01

Steve Ludwig

And we started putting sheet vinyl down. And I had a friend whose family had like the original sheet manual sheet vinyl manufacturer in the country. Oh wow. And uh so we were doing sheet vinyl but sheet vinyl wasn't like a a good solution because uh one there was no sound uh resistance floor to floor. So on the ground floor it was goodish. Yeah. But on non-ground floor units it was terrible. Got it. Right. And then if you tore it, you'd cut out a square piece. You try to find the same sheet vinyl, which you never could because the dialot was different, the pattern was different. So now you had this weird square patch. And then after a couple months, the corners start peeling up and someone trips and falls and sues you. And I was like, this is terrible, too.

41:44

Steve Ludwig

And then sheet v or vinyl plank came along and we're like, oh my god, this is like the best ever. Yeah. And you could like take one piece in and out. And it was but like carpet was like a $150 a square foot installed and vinyl plank was eight bucks a square foot installed. Oh damn. So you know we basically were like hey how do we make this cheaper? We shoulder tapped on an installer and said hey would you do some like you know moonlighting for us and we went to the wholesaler and we bought some vinyl plank off the shelf. And again being an entrepreneur frustrated a little bit

42:14

Taylor Avakian

angry.

42:15

Steve Ludwig

You're paying you scratching the edge. We're figuring it out. You know we got it down from like eight bucks a foot to six bucks a foot. We're like, you know, a little bit better. And then we started figuring out how to manufacture it and where to go. And um, you know, we had like a hundred sample books from China, all in Chinese. Yeah. And my best bud from Boston comes in and he like pulls one of the books out and says the name of the company, which I couldn't even tell you what it was because it was in Chinese, but he knew it cuz his family had been manufacturing there for 30 years. And he's like, "These guys in China, they make it for us. You know, all the big brand names. Uh, why do you have these sample books?" And I'm like, "Can you make us an introduction?"

43:00

Steve Ludwig

And so we pack our bags and we fly to China and we walk into this like 4 million square foot factory that I would eat an egg off the floor of. I mean, it is that clean and, you know, high tech. Yeah. And we're like, "Hey, you know, we want to be a client." And of course, they're like, you know, no, we don't know you. Oh wow. Nobody. You can't do a 100 containers a year. Yeah. Anyway, we, you know,

43:25

Taylor Avakian

figured out a way. You negotiated it. We figured out a way.

43:27

Steve Ludwig

You entrepreneured it. We entrepreneured it. You know, I lied.

43:30

Taylor Avakian

And uh we'll do 100 100 uh ship cargo containers.

43:35

Steve Ludwig

100%. Yeah, we got it. I mean, you can't say, you know, they're expecting 100.

43:39

Taylor Avakian

You got to tell them 500.

43:40

Taylor Avakian

The MLQs. You're like, are you kidding me?

43:42

Steve Ludwig

Look at Los Angeles, you know. Exactly. So, uh, anyway, so we got into the flooring business and it was really for us at first because what we had found was when we were buying the vinyl plank, it was such a new thing, you know, we'd have a 100 unit apartment building, we'd tell the flooring installer like, "Hey, we're going to do 10 units a month, you know, for the next 10 months." And you'd get through five units and they'd be like, "Oh, we ran out of that color." Like, what do you mean you ran out of that color? Well, we didn't actually think you were going to do 10 units. I told you I was going to do 10 units. Yeah, but I'm not going to go and buy inventory just because you told me. So, we would have these like early buildings with like a kaleidoscope of colors.

44:19

Steve Ludwig

Oh, man. And we're like, "This sucks. We got to be like making our own product." Yeah. And we got like our first 40ft container. We had 50,000 ft of flooring and we didn't have a warehouse. So, you know, it was like, you know, I'm sleeping on a bed of vinyl flooring, you know. Uh, so, you know, it was exciting. But we built out a flooring installation company and then we started wholesaling it. Um, you know, I think actually the first wholesale order we made was to Wind management. Wow. Back in Boston. So, you know, connections coming through and um, you know, our price point was exponentially better than what the wholesale market was because we're cutting out all the middle people. Got it. And so over the years it was like, well, what else can we make? Mhm. Fast forward, you know, we have three warehouses, 100,000 ft, you

45:09

Steve Ludwig

know, millions of dollars of stock, millions of dollars of clientowned products that we're sitting on and babysitting until we ship them out to them. Got it. And it's become this amazing business that we're shipping nationally from, you know, we two of our uh clients are uh top 10 size, you know, REITs. Yeah. uh down to the local contractor who's coming up and picking up uh tubs, toilets, and faucets from our warehouse direct. Uh it's exciting. It's different than real estate, but it's it's I was solving my own problems, right? One, that I didn't like the products that were available. Two, that when I would call a big box retailer and I would order a kit of supplies for a unit, it would come 70% complete. And it's like, where's the balance of the 30%. It's out of stock. Well, when's it going to be in stock?

46:01

Steve Ludwig

Well, it's on back order. Well, when does it back order end? Well, we don't know. And it's like, that's not I can't live with that because now my my my uh contractors, my labor on site is like running out to Home Depot and time's money. Totally. But I'm paying them to go to Home Depot to overpay for, you know, materials. And so, again, we were solving our own problem. And then, you know, just like we were on the flooring side, I'd call you, Taylor, and I'd say, um, you know, are you using vinyl plank? You know, yes, no. If if no, why not? And if yes, if I could sell you and install for you a higher quality vinyl plank for half the cost, would you give me a shot? Of course. And it's like, yeah, come on, Steve. Let's go. Yeah.

46:45

Steve Ludwig

So, you know, then and we were for a long time, we were pushing kind of white label products through our construction flooring company. Uh-huh. And uh uh five six years ago, a dear friend of mine joined our company, attorney by trade. Tall Zemer uh was with his family's jewelry business. Uh uh he wouldn't call it jewelry business, but yeah. You know, luxury goods business, uh for a long time. And you know, he comes into our warehouse the first time and he sees all this material and he sees no packaging and you know, like the light bulb goes off and he's like, "Look, I'm coming on board, right? you're making me a partner here and we're going to like, you know, brand it, trademark it, and sell the heck out of this stuff. And that's exactly what he's done and we've done. Wow. And it's been super exciting because then,

47:35

Steve Ludwig

you know, like I know that on our value ad projects, we are putting in better looking, higher quality materials, we're saving, you know, 20 to 30% on the material time. They're lasting longer, right? So, last longer, look better. And then what's the third part? Like install faster, cheaper. So, we make unique products. Like one of the things I was trying to solve forever was um you you we would always respray tub and tile, right? And that was like the chintziest, cheapest, lowquality thing you could do because that would cost you like $400, you know, years ago. And the alternative was tear out the tub, retile, that's like3 or $4,000. So you're too, you know, and if you had a window on the wall for ventilation, you couldn't do a fiberglass enclosure.

48:27

Steve Ludwig

Well, a lot of the value add apartments windows, right? So the option was $400 or $4,000 and rarely did you want to spend $4,000. Yeah. So we came up with some solutions that like, you know, three-piece panelized solutions. Some are fiberglass, some are cultured marble. You can, you know, cut the cultured marble. It looks great. It installs like incredibly quickly. You slap it on the wall, you silicone the seam, and it's like the same cost installed as a fiberglass enclosure, but it

49:01

Taylor Avakian

stone.

49:01

Steve Ludwig

Yeah. It looks way better. It looks way better. So, like all these little things that we've done to improve our own apartments are very sellable in the marketplace because 99% of apartment owners like what are we really focused on? We're focused on finding the property. We're focused on the capitalization of the property. You're focused on your team taking it over.

49:21

Taylor Avakian

What's the design plan? Operations.

49:23

Taylor Avakian

You're not all that other stuff.

49:24

Steve Ludwig

all the other stuff, you know. But I used to joke like my friend who had the flooring business uh uh when we were in college, we would go out and we'd like walk into a McDonald's and he'd like squat down and like scratch his fingernails on the McDonald's floor and he'd be like, "That's one of our flooring." And I'd be like, "You're disgusting." You know, then for years like I'd walk into an apartment building where growing the flooring business, I'd like scratch the floor and I'd be like, "I think this is our flooring." That's the soro.

49:51

Taylor Avakian

That's right. What?

49:52

Taylor Avakian

So, I'm curious. What's the better business then? What's the better business model that you like? Because you're in a bunch of them. You're in the retail, distribution, wholesale,

50:00–1:00:00

50:00

Taylor Avakian

apartment investment. Like what what business do you like the best?

50:03

Steve Ludwig

Uh boy. Um so I would say uh because I'm a you know co-founder of them all. I love them all. Of course. Uh where do I find myself gravitating the most?

50:18

Taylor Avakian

I'm a deal guy.

50:20

Steve Ludwig

Yeah. Right. So, I love finding great deals. I love the entitlement side, uh, the politicking, the community outreach, you know, do I love reading volumes of zoning code? I don't. I don't. But we built a team that does. Yeah. Uh, so, you know, I play to my strengths and weaknesses, you know, on the toorro side. Uh it's just so different than real estate, which is great because, you know, just the financials of it all are so different. Totally. You know, real estate capitalize it up front, revenues, expenses, cash flow, building materials, like there's just so many moving pieces. Um and so it's just a it's a whole another challenge. And I do love like the marketing of it, you know? I love it's like the David versus Goliath. Yeah. Right. Who's out there? You got Home Depot and Lowe's and Ferguson's and they are

51:14

Steve Ludwig

just hammering the world with, you know, marketing. And you know, at the end of the day, if I look at our materials versus theirs, like, you know, we're exponentially higher quality. Yeah. And better looking. Yeah. But like, you know, they're spending $10 million on Super Bowl ads and that's what everybody else is seeing. And so we're we're, you know, competing against that. We're competing against, you know, who are we competing against? You know, every major building material brand world. Yeah. Right. And so it's an uphill battle, but client by client we are winning, right? When people come and get know who we are, it feels good. And and people, you know, everyone's like, "Oh my gosh, you know, tariffs, your your world's going to implode. COVID, your world's going to implode." No, our business is like dynamically growing during these like events.

52:08

Steve Ludwig

Yeah. Because during COVID, people were building like crazy, but they were terrified and couldn't get building materials. We're like the factories haven't shut down one bit. Yeah. Right. What's happened is is that like the cost of shipping a container's gone from two grand to 22 grand. Right. And big box retailers like you can only put so many bathtubs in a container. they can't pass that shipping cost along to the client. So, they're just basically utilizing their inventory that they have in their millions and millions and millions of square feet of warehouse, but they're limiting people. Got it. Whereas, if you want materials from us, call us, put in the order, we'll make you 10,000 bathtubs, right? Yeah. Wow. Give us 90 days, it'll be here. And then with tariffs, the same thing. People have been terrified of tariffs. They're like, "Look, we want to lock in our pricing with you."

52:56

Steve Ludwig

And the reality is is like you know what you're paying for that luxury faucet, right?

53:03

Taylor Avakian

What do you if you're going to go buy a faucet for $600?

53:07

Steve Ludwig

Yeah. Right. Or a sweater. Yeah. $600. What do you think those widgets cost to

53:12

Taylor Avakian

make? I mean pennies compared to

53:16

Steve Ludwig

pennies. Yeah, that's right. I say the widgets like 10% of like Yeah.

53:20

Taylor Avakian

The retail price, right? Because retailers have to do is it 100% or 50% markup or something like that

53:25

Steve Ludwig

typically, right? So now think of the way most people get their building materials, right? They they they go to let's just say uh retailer wholesaling, right? They're not selling their own brands necessarily, right? So they've got, you know, again, let's just take a, you know, big box. Yeah. They have their corporate overhead, right? They have their profit margin. They're buying those materials from another building material brand that

53:52

Taylor Avakian

has their corporate overhead and their profit margin, right?

53:56

Steve Ludwig

And that's what you're paying for. Yeah. And with us, it's like, hey, I can tell you right now, the Toro overhead is a tiny fraction of Coler's overhead. Yeah.

54:06

Taylor Avakian

Right.

54:06

Steve Ludwig

Yeah. And then Coler plus, you know, major big box retailer profit and overhead. So, at the end of the day, like you pass the savings on. We pass the savings on. Yeah. What we found is on a on a new development, just total hard cost in a new development, if you bought out all the interior fixtures from Toro, you're going to save roughly 3% on total hard costs. So, put that in the context of a $100 million multif family property. Crap, right? You're saving a lot of money. That's like your entire contingency handed back to you. Like, hey, how about I just hand you your contingency, right? and I'll get you better higher, you know, better looking, higher quality

54:45

Taylor Avakian

materials on Yeah, yield on cost is everything. So, you're just I mean, it makes so much sense um that you're doing that and the fact that you get to leverage that too, which I'm sure probably helps when you're underwriting deals because the cost of renovation and cost for things for you, you can make a deal work much better or have either maybe even a a bigger profit margin because your costs are down.

55:07

Steve Ludwig

Correct. Right. And we also have control of the entire uh process for time. You know, let's just talk value. We buy the asset, property management company goes in, right? Works with our construction. Our general contracting team, they're getting the materials from Toro. And so we're saving our investors a lot of money and time. Uhhuh. And so we're getting that unit renovated online quicker, looks better, rents for more, costs less.

55:36

Taylor Avakian

How do you know where to spend your time? Because you're a co-founder for all of them. Like where you can't you can't be doing everything all the time. Where do you find yourself spending the most time? Or do you delegate to other people who run that stuff? Like how do you how do you run five businesses? My uh partners, you know, if they're listening to this podcast,

55:56

Steve Ludwig

which they will, which they will. Yeah. They're going to be like, "F that guy." Because the reality is is, you know, they're really good at what they do, right? Um, you know, we have uh divided our ownership of our businesses equally. So that way, no one's looking over anybody's shoulder and saying, "Hey, you know, Steve or so and so, they're golfing, fishing, on vacation with their family, right? We're all tugging on the same rope trying to get to the same you know place and I think that's been like the most critical part is that I am the luckiest co-founder in the world of a variety of businesses to have unbelievable partners of talent and character.

56:49

Steve Ludwig

Mhm. And at the end of the day, um, you know, that's probably to me the most critical part, right? Because, uh, they do things that I can't do day in and day out. And they, you know, give me the ability to be, uh, you know, entrepreneurial and creative and kind of bounce around. You know, I I don't really, you know, do the daily operational control of anything. I don't think anybody would trust me with that. Um, and so that allows me to kind of, you know, just let my mind kind of run wild and come up with new ideas.

57:25

Taylor Avakian

You're a big idea guy, right?

57:27

Steve Ludwig

I'm the big idea guy. We're also, you know, the time, you know, uh, the, you know, networking. Yeah. Which is so critical, which leads to deals, which leads to capital, which leads to, you know, entitlement. Um, and so, yeah, that's that's really

57:41

Taylor Avakian

it. You're clearly good at relationships. um how okay I've thought about this a lot and I think I know the answer to this but I'm I'm curious to know your thoughts there's two sides to the entrepreneurial journey um in terms of opinions I think on this this front partnerships or solo employees you own 100% of the company right or maybe give 10% to your employees whatever and you bootstrap it whatever whatever it is versus hey we have three partners or two partners we're splitting 5050 the equity or 33%. And you know, for me to make a huge exit, I got to build the company's got to be worth $100 million versus you can scoop in $5 million of equity or of cash flow when you're building your company's $20 million, but you're the 100% sle owner. So, is there a reason that you think partnerships are

58:36

Taylor Avakian

better or would you do everything the same way? Would you do something 100% yourself? How do you think the partnership versus sole ownership?

58:44

Steve Ludwig

Yeah, I think that is a very uh I think it's a I think it's specific to each

58:52

Taylor Avakian

person.

58:53

Steve Ludwig

Okay. Right. For me, I don't think that I could have ever been a sole owner. That would have screwed too many things up. I need a great team around me. Whereas there are a lot of people who don't, right? like they or you know they just they don't work necessarily well in a partnership. They want to be the sole decision maker and you know uh that's their cup of tea. So I don't think there is a right way. I think it's um I think it's unique to each person and how they want to run their business. Uh you know I think there are certain other decisions like do you want to take private capital versus institutional capital right like those are big decisions.

59:35

Taylor Avakian

Well, let's dive into that, right? You have much more institutional capital at this point in time or

59:41

Steve Ludwig

you've decided to do more institutional capital. Yeah, I I would say, you know, if we looked at the total amount of money we raised, it's heavier

59:47

Taylor Avakian

institutional because those are chunkier checks. And so, explain to me why you decided to go that route instead of the more mom and pop country club

59:54

Steve Ludwig

money. Yeah. Um, you know, they're very different

1:00:00–1:10:00

1:00:00

Steve Ludwig

uh types of businesses. Okay. Right. the institutional uh route when you need uh a big check. It's a it's a single source, right? You don't have to have that network of a thousand investors, right? Now, there's a lot that comes with that. They have a, you know, hordes of analysts that want you to, you know, run analysis paralysis all day long, but they're all very smart, right? And so it's timeconuming and it's taxing but it's with very capable experienced uh uh professionals on the other hand right with the uh with the call it you know country club high net worth crowd whatever you want to call it uh the private investor uh it requires you know a large network uh depending upon how much capital you want um it's

1:00:55

Steve Ludwig

a process Uh that's very different because you're reaching out to lots of people. You're having dozens and dozens of phone calls and um you know everybody wants to talk to the person that they know. Mhm. Right. So if you've got a a group of 200 investors, right? Just here comes Ka, you know, tax return season. Yeah. And hey, we've got a a web-based digital platform. Like everything's online, right? There's 57 people that are calling and emailing and texting and saying, "Oh, my K1, I forgot my password. I can't remember.

1:01:26

Taylor Avakian

Can you call my CPA?

1:01:27

Steve Ludwig

Can you do this?" You know? Yeah. And so it's like it's just a very different type of business. We have both. Got it. Right. We have both. And you know, I would say, you know, some days I wake up and I'm like, you know, I'm never doing another institutional deal again. And some days I wake up and I'm like, I'm never, you know, doing another, you know, private partnership again. Yeah. Right. Got Um, but I think at the end of the day, look, there's pros and cons to everything and you just have to know like what's your own constitution and you know, people gravitate

1:01:56

Taylor Avakian

towards different things. You've uh built some pretty impressive relationships in the business, I would say, just with knowing some of the institutional partners that you partner with on and uh how did you grow that network? How did you build that big name? Like, and you can decide if you want to say them or not, but I know those are some bigname partners. How did you break into that or form relationships with those kind of people?

1:02:23

Steve Ludwig

Uh boy, you know, I would say deal number one, I got I got very lucky. Okay. Um and uh it's unlikely he you know, I Jason Hart from uh Carile Group. I hope you're out there listening because this is my uh tipping of the cap to you. But uh my first job out of college, I was uh a real estate investment banking analyst. And in 1999, Credential Securities says, "Hey, does a real estate investment banking analyst want to volunteer to move to our Santa Monica office?" And I like raised my hand. I'm like, "This guy, you know, I'd gone to like a bachelor party wedding, the first friend that got married in Beverly Hills. I was like, "Who doesn't want to try, you know, California for a year, right?" So, I like on a whim, my lease ended in New York.

1:03:10

Steve Ludwig

I pick up I like just, you know, overnight get on a flight and I, you know, like I called my mom. I was like, "Yo, mom, I'm going to California." She's like, "What for?" I'm like, "To live." And she's like, "You know what? What?" So, uh, and I I was a mama's boy. Yeah. And so, uh, you know, I move out. Anyway, the investment bank is like, "Hey, we're doing our state of the bank, all employees back to New York." And like one night like I meet the guy that the position that I left, new guy came in to take that seat. We go out and get shitfaced at the bar. We have a great time. And uh yeah, I didn't think twice about it. Go back to New York. Move on. Go or sorry, go back to California, leave Credential, go to Colony, get fired

1:03:52

Steve Ludwig

by Colony, started my own business. You know, the guy says, "You got three months to like make it happen." And um I was I had a list, you know, talk about, you know, going animalistic and just trying to find I'm just searching out every institutional real estate investment company out there because that's the language I speak. I don't know any high net worth people. Got it. Right. I just I knew nobody. Yeah. And um uh I'd sent out 300 books and I had 299 nos. I even remember and I'm not going to say the name of the company, but one guy calls me from a well-known real estate company and says, "You know what, Steve? After you [bleep] this up and fall out of escrow, I actually like the deal and I'm gonna buy it." Holy.

1:04:40

Steve Ludwig

And I was just like, "Wow, I'm gonna [bleep] this up and he's gonna buy it. This sucks." So anyway, I get a call from Jason Hart. And it's like, Steve Lewig, Jason Hart, remember the State of the Bank dinner several years ago? We were at the bar having a great time, knocking back drinks. And I'm like, yeah. He's like, I'm now at the Padium Group in New York. I saw your offering memorandum come across my desk. It says Steve Lewig. And I'm like, is that the same, you know, fun guy that I went got shitfaced with one night? So we start talking about the deal. He's like, "Look, I think this thing's got legs. I'm going to run it up the flag pole." Oh. And that was deal number one with Carile with the Pium Group. With the Pium Group.

1:05:22

Steve Ludwig

Jason now is, you know, I believe he's, you know, one of the heads of Carile Real Estate, done incredibly well. And

1:05:28

Taylor Avakian

uh so you built it up, right? And that's Oh, I love that story because you I tell young um brokers who come in all the time. I'm like, look, those people who are the analysts for those companies, right, that you're talking to, become friends with everyone because they're all at the same page and they're all starting out. They're all start figuring it out. Some people you never know. You never know where in 10 years that relationship is going to come to

1:05:54

Steve Ludwig

blossom. That probably is one of the most important things you can tell anybody. again, you know, it's been tw I'm turning 50 in of, you know, early next year, which is crazy to me cuz in my mind, it's like I'm still 27. Yeah, you're still running Iron Man's, man. Still like just like it's all deal number one in my mind. But 22 years has passed by. So the person who was the 22, 24 year old analyst is now senior managing director, head of something. And you know, those relationships are very real and meaningful right now. And it was like, you know, when you were, you know, in your early 20s and you're looking up, you're like, "These guys all grew up together. They all know each other. I'm never going to get there.

1:06:44

Taylor Avakian

How do they have these relationships?

1:06:45

Steve Ludwig

I'll never get my foot in the door." It starts now. Yeah. You know, it starts with the little things of you see a real estate networking event, go. Doesn't matter if you're tired. Go have a cup of coffee, right? Y you don't need to sleep when you're really young. You don't you're not married. You don't have kids. You're not like coming home from work and coaching lacrosse basketball soccer, going to 16 water polo games, sitting in the heat and you know just rotting out there like you got nothing but time and energy. Go for it. Yeah. And so and so like every possible uh you know my father-in-law says to me years ago, he goes, you know, Steve, you're and it's a common saying now, but uh to me it was like revelation. Yeah. It was like your net worth is your net worth. Mhm. So start building that now,

1:07:29

Steve Ludwig

right? Everybody, you know, you see somebody who's working at a company, what are you telling them? Put your money in the 401k. It's going to compound. Relationships compound. Yeah. So if your goal is to be an entrepreneur, take networking seriously. It is a job unto itself. And I don't think people when they're getting going pay enough attention to that. M you know it was like you know my buddies were going out and just partying partying partying and I'm not going to say I didn't have fun but I was not afraid to miss a weekend getaway to you know do something workrelated. I wasn't afraid to you know miss uh some you know something with your friends

1:08:14

Taylor Avakian

you you built that 401k network bank. Um, and realize I think long-term, right? This is a very long-term business. There's short sprints, but you got to have a long-term mindset because anyone who's can last the longest, especially in real estate, you just have to survive. Just like keep getting through, survive, and you look at anyone who's owned real estate for 30 years, more 99% of them have come out

1:08:42

Steve Ludwig

on top. And so if you just have that long-term mindset, but start early and start quick and that compounding that eighth wonder of the world starts happening. I think of other things that people have said to me, uh, uh, friend of mine, Ben

1:08:56

Steve Ludwig

Mhm. Years ago, he said to me something. He goes, you know, Steve, uh, when you sell, you lose. And I was like buying things and flipping and making little promotes. Yeah. And I was like, God, what do you what

1:09:11

Steve Ludwig

you know, 20 years later, I'm like, "Boy, that was probably one of the smartest pieces of advice everybody anybody ever gave me. I really wish I had listened better early on."

1:09:19

Taylor Avakian

So, then let's let's talk about that. Let's um let's wind the clock back. Let's say you're 25 years old, brand new, fresh, you want to start buying deals, whatever it is. You're in SoCal, right? What would you do today or what would the the path that you would see knowing what you know, but starting from a blank slate? How would you how would you build a portfolio? How would you build wealth?

1:09:44

Steve Ludwig

Boy, I you know, if I had to do it all over again because I came from a place with like just no capital, so I had to give so much away for so long, right? I always wonder like

1:10:00–1:20:00

1:10:00

Steve Ludwig

had I gone into brokerage early on, right? I think I would have been a heck of a broker.

1:10:08

Taylor Avakian

I would agree.

1:10:09

Steve Ludwig

but I didn't and so you know uh uh I didn't have a capital base to start with. So it took a lot longer it felt like for me knowing that like hey I'm never just going to like you know I don't want to be one of those uh one hit wonders. Yeah. Right. Where you either buy one big deal and you either go boom or bust or you buy 7,000 units in a very short period of time. you're the, you know, wonder child for a number of years and then everything explodes and you're, you know, out into the world. Um, but I, you know, part of me thinks that just, um, having some more of my own capital before I got going would have been great. Um,

1:10:58

Steve Ludwig

It's funny. Uh, I just got off the phone with somebody and he was a getting going in the broker world and he'd come to me and he'd say, "Steve, I just got my first deal done." And I was like, you know, you need to save your first $100,000. Yeah. And you know, a couple years later, he comes back to me, he's like, I got a h 100red grand in the bank. Like, I want to invest with you now. And I was like, no, you need to get to 200 grand. And he's like, you told me 100 grand. I was like, yes, because if I told you 200 grand, it was too big of a bite to take. Yeah. Right. It would have been overwhelming. Now you're at 200 grand. So now let's go work $50,000 into a deal. Yeah. And you know, he's gone on to do phenomenally well.

1:11:33

Steve Ludwig

Has his own brokerage business.

1:11:35

Steve Ludwig

he's making a lot of money investing back with us. You know, he'll start, I'm sure, um, you know, in the in the asset class that he's in, you know, that money that he's sitting on continues to accumulate. He's going to be buying assets. Yeah. You know, so I think, you know, part of me says, boy, if I had just, you know, would I have been better to have no partners and go that route or, you know, go bigger? Again, I think it's one of those things that's personal to you. Yeah, you can do them both. It's like me asking you, how much money do you need to

1:12:07

Taylor Avakian

retire? Yeah, it's hard to wow. If I had $20 million, I'd feel pretty good about

1:12:13

Steve Ludwig

it. So, for me, I look at it and I go, it has nothing to do with the money. No, it has to do with the enjoyment.

1:12:21

Taylor Avakian

Oh, got it. Got it.

1:12:21

Steve Ludwig

Got it. No, but I'm saying but like the typical answer, right? Like I'm like 20 million, I'll be super happy. Right. Right. Look, look, certainly money can make things but it's the work.

1:12:30

Taylor Avakian

I wouldn't stop working. Like I'd want to I couldn't sit on a beach and do nothing.

1:12:34

Steve Ludwig

I I genuinely couldn't do that. Right. So like you might not enjoy having partners. Yeah. Right. You might take more enjoyment buying a a duplex and turning that into a forplex. Forplex to an aplex and just that that's your journey and you have nobody to answer to and you're very happy. And I have friends that have done that and like yeah it took them some time to get going but you know again 10 20 years later you know yeah you continue to climb that mountain and you know your peak can be different than my peak and so on and so forth. So I think you really just have to understand yourself. I think that's the key to it all. Understand what makes you tick. Yeah, because I I think of it and when I was an analyst, an associate at, you know, investment banking and and and

1:13:17

Steve Ludwig

private equity, there were years where I I was starting to question. I was like, you know what, I don't think I'm I don't think real estate's for me. I'm in California. I should go into entertainment. That seems like more fun. Maybe that's my style. But then as soon as it was like uh being on my own, broker than broke, right? But I was happy. I was engaged and motivated. And I think that's truly Yeah. You got to find that. You got to find that. You got to find what makes you happy. And so I think you know again you could be right industry, wrong place, wrong position. Some people they don't do well like being you know uh entrepreneurial. They're great at structure and they work well within a structure and they climb that

1:14:10

Steve Ludwig

ladder super high and make a ton of money, right? But on their own independently, yeah,

1:14:17

Taylor Avakian

it's not their cup of tea. You got to have self-awareness and uh and what fills your cup up? What could agree more?

1:14:24

Taylor Avakian

What makes you excited to get up? Because at the end of the day, if you're not excited for what you're doing, you're doing the wrong thing.

1:14:30

Steve Ludwig

And that's where I think, you know, even beyond, you know, like there's the work life balance when you're young and you're, you know, not married, no kids, like work, work, work, work, work. If if you really want to get somewhere, Yeah. you know, 9 to5 doesn't cut it. I don't know. I mean, California, I just feel like there's a lot of 9 to5. Right. You go back to New York, it's like 9 to 3 a.m. Yeah. You know, people are grinding. Mhm. Um I I think I took the East Coast mentality with me out west. Um and then in my mid30s I married an unbelievable person. You know, she's been my rock and uh allowed me to, you know, expand upon all the things that I do. Uh so uh uh I give her tremendous credit. But uh within that like you know we're now you know we've been

1:15:25

Steve Ludwig

building this family for the last you know 15 years. We've got three kids and as someone who grew up in a divorced household where I was with my mom, my dad was never around. You know to me it's so important to like be there for my kids and like I'm lucky like I love sports. My kids all love and play sports and we've probably taken it to like an extreme level, but like I sit back often times like as you know as you uh I think the older you get mortality you know is is is more of a thought uh in a good way right like you know what what do you want your life to look like when you know if you're so if you're lucky enough to know that it's your last day right when that's happening or

1:16:12

Steve Ludwig

sorry when if you if you do know what your last day is and you're lucky enough to have like that final thought like what do you what do you want that final thought to be when your eyes close is it like boy I did it right you know I I left no stone unturned with friends with family you know with work I did it all and so for me I would just say like the endgame isn't how much money I can put in the bank it's do I you know it starts with family and I want to have the right amount of time to be there for my family and we do a lot together. And then, you know, we've got five different businesses and then you've got to, you know, try to make time for your friends, you know, to

1:16:59

Steve Ludwig

have a balanced life, you've got to make time for yourself to stay healthy and balanced and centered. And so, I think, you know, again, everybody has their own goals. for me. Um, here's one, right? California. Everyone's beating on California right now. Capital doesn't want to be in California. It's the worst place. It's political, you know, disaster. Don't be there. You know, for year, for the last five, six years, so many people have spread out all over the country and I see people doing incredibly well in so many states and I'm so happy for them. And there, you know, was always that urge like, oh, should we go to Arizona? Hey, should we go to Nevada? Should we go to Texas? Should we go to Florida? And I take a step back and I go, do I want to be the person that's constantly on the airplane traveling and

1:17:48

Steve Ludwig

missing those moments of like my family during the best age? Cuz like as soon as they get their driver's license, like boys with a driver's license. Yeah. You know, girls with the driver's license. Adios. Mhm. You're you're old news. Yeah. And so I'm just packing in as much time with them as I can now. That's my choice and see where it goes. Yeah. And at the same time still trying to be, you know, as much of an animal as I can be in business because I love

1:18:12

Taylor Avakian

it and chase deals constantly. You are 100% animal, Steve. This was incredible. Thank you very much for coming on here. This was a pleasure. An hour and 20. That went by so fast.

1:18:22

Steve Ludwig

Like 10 minutes. Crazy. Just getting started. We never got to the good stuff.

1:18:25

Taylor Avakian

We'll do round two.

1:18:26

Steve Ludwig

Round two. All right. I love it. Thanks, Taylor. Thank you, brother.