Taylor Avakian
How many buildings and how many what's the asset center management right now?
November 19, 2025 · 1 hr 16 min
His Family Built 10,000 Units Over 70 Years — Here’s Their Playbook | Daniel Nagel
With Daniel Nagel — CIO & CFO, Decron Properties
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In this episode, we sit down with Daniel Nagel — CIO & CFO of Decron Properties — to unpack how a multigenerational real estate family built a 10,000-unit empire over 70+ years and why they’re now…
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Episode show notes
In this episode, we sit down with Daniel Nagel — CIO & CFO of Decron Properties — to unpack how a multigenerational real estate family built a 10,000-unit empire over 70+ years and why they’re now pivoting billions OUT of California into growth markets like Phoenix & Austin. Daniel shares his grandfather’s Holocaust-to-developer story, the philosophy behind surviving every market cycle since 1956, what institutional investors really look for, and how to build an investment platform that lasts generations. If you're serious about multifamily investing, family offices, long-term real estate strategy, and institutional-grade deal thinking — this episode is a masterclass. 🎯 Key Takeaways - Immigrant perseverance → building a $B real estate legacy - Why Decron shifted from homebuilding to multifamily - Surviving recessions & maintaining lender relationships - California exit strategy: regulation, taxes, and rent control impact - Why core & core-plus outperform value-add in today’s market - The pivot to institutional capital & what IRR really means - How to scale across markets without losing your edge - Tech, AI, and modern CRE skill-sets for the next 10 years 🔗 Links Sponsor: AI for CRE Collective – transforming real-estate workflows with AI https://www.aiforcrecollective.com Connect With Daniel: LinkedIn: https://www.linkedin.com/in/nageldaniel/ (Decron Properties) Connect With Taylor 📩 Newsletter: https://www.thegroupcre.com 📱 Instagram: https://www.instagram.com/tayloravakian 🐦 Twitter: https://twitter.com/tayloravakian 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 #RealEstateInvesting #MultifamilyInvesting #InstitutionalRealEstate #FamilyOffice #CaliforniaRealEstate #SunbeltInvesting #CommercialRealEstate #RealEstateStrategy #HousingMarket #Development #WealthBuilding #AIinRealEstate
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Episode transcript
This 13,692-word transcript is matched to English (Original) automatic captions. Timestamps seek the episode player to the matching passage.
0:00–10:00
Daniel Nagel
Uh we are currently 50 buildings ownership and management. It's 10,000 units or just under 10,000 units.
Taylor Avakian
We own and operate across four states. Your grandfather was a Holocaust survivor and built this company from nothing. And so now you're moving $500 million away from California, right? Which he built everything in California.
Daniel Nagel
The bank is calling and saying, "Jack, you have to pay back your loan." And my grandfather who's basically goes to the loan officer and says I can sell these lots. I'm going to sell these lots. I'm going to do this that he's going to sell these lots. Works on it for another year or two. Basically sells it at cost to just pay back the lender. We lost the most money in our company's history the day that ULA
Taylor Avakian
passed. 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 Keller 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.
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 AI forcollective.com. So, appreciate you guys. Now, back to the episode. Welcome to the podcast. My name is Taylor Avakian, and I am here with my esteemed guest, Daniel Nagel. Daniel, great to be here this morning. Thank you for being here. You are the CIO and CFO of uh Decron
Daniel Nagel
Properties.
Taylor Avakian
Uh which how many buildings and how many what's the asset center management right now?
Daniel Nagel
Uh we are currently 50 buildings under management. Okay. Uh ownership and management. It's uh 10,000 units or just under 10,000 units. Uh we own and operate across four states, California, Washington, Arizona, and Texas. And uh 90% of our portfolio is multif family. We have approximately 10% in retail and office. We have one office building and uh we have a few shopping centers. That's our current makeup. Got it. But we've been around for seven decades and have had many pivots. Yeah.
Taylor Avakian
It's pretty incredible. Which uh your grandfather started it. And so your grandfather was a Holocaust survivor and built this company from nothing. And so now you're moving $500 million away from California, right? which he built everything in California. Can you tell me the story of
Daniel Nagel
Yeah. Um my grandfather Holocaust survivor um his most of his family was murdered by the Nazis during uh World War II. He's a survivor of the camps and uh he came to the states in 1947 um with basically the shirt on his back and a younger sister who he felt uh he had to take care of. Um and his story goes is a it's an immigrant story.
Taylor Avakian
Um he worked hard.
Daniel Nagel
He had to learn English. He started as a uh import uh watch kind of buying wholesale, selling retail for watches. For watches and he would go and he would make sales and he would you know learn English and learn how to negotiate. Um as he you know built up his business um he started to feel more established and um he was looking to get married. He had he was in New York at that time. Had cousins here in California who said, "I want to set you up with a girl." So he comes out, meets uh meets my grandmother or to be grandmother. Um decides right away that she's the one. Basically proposes to her after after three dates. Um and this is 1955 and they get married and his business is watches. Yeah. And so he says to my grandmother, "You got to come back to New York.
Daniel Nagel
Uh that's where my business is." So they go back to New York. Uh my grandmother's a California girl at this point. Um and she she hates it. She seems so unhappy. So my grandfather calls his cousins and he goes, "You set me up with this girl, but she's miserable. She wants to move back to California. What should I do?" So they said, "Move to California." He's like, "But what am I going to do in California?" They're like, "Well, can you sell your business?" He's like, "Yeah, I can sell my business." So you're coming to do what we do. Well, what do you do? we do real estate. And so he sells his business, comes out here 1956, buys a piece of land in Anaheim, California because he's excited that there's this small company called Walt Disney that's moving a lot of dirt. Um and um he starts building track
Daniel Nagel
homes under the guidance of his cousins and um delivers those tracked homes into a recession and cannot sell the homes.
Taylor Avakian
Oh my gosh.
Daniel Nagel
And the bank is calling and saying, "Jack, you have to pay back your loan, otherwise we're going to take the property back." And my grandfather, who's been through hell on this earth um basically goes to the loan officer and says, "I can sell these lots. I don't have anything else. You got to let me sell these lots. I'm going to sell these lots. Please give me an extension. Please give me an extension." And they're saying no. And they're saying no. And they're saying no. And he's not taking it. I'm gonna sell these lots. I'm gonna do this. I'm gonna do this for you. And somehow convinces the loan officer that he's going to sell these lots. Works on it for another year or two. Basically sells it at cost to just pay back the lender. Makes not a dollar on the investment, but has his integrity intact because
Daniel Nagel
he paid back his lender. The loan officer comes to him and says, "Jack, we don't have a lot of borrowers like you. you have integrity and for your next deal you can rely on us to be your lender. Wow. And then his next development was in Silar and at that point in time the economy started to turn and then that was his break. His break was working hard doing the right thing and uh that lender said we will now we believe in you. We believe in the way that you do business right and then at that point in time people had heard or Jack had sold out of his deal in Anaheim. you know how it is like they don't necessarily know all the details and uh and they're like hey Jack we'll partner up with you in this Somar investment um so he raised capital
Daniel Nagel
so yeah at that point in time and then he went on to build you a home builder for about two and a half decades and he built about 2,000 homes um in the
Taylor Avakian
San Frernando Valley.
Daniel Nagel
Wow.
Taylor Avakian
Okay. So he was he was doing he started out as homes and um I assume these were like speck homes. So he he'd buy them to
Daniel Nagel
these were these were he would buy land and he would build like track homes, right? So it started out like he would build, you know, four, six, eight, 10 and pretty soon, you know, building larger developments. Um and it was always groundup
Taylor Avakian
construction. Got it.
Daniel Nagel
So he started from dirt and it was and it was risky because you know you it's like development today. You make the decision to build in one market and you deliver in another market. Um and you know that you know uh for sale model was something we eventually moved away from but it was the start of his career and uh it it it was the you know the basis for him getting his construction knowledge um and uh and and and learning
Taylor Avakian
the business. It's so funny because when I started out in uh when I was in high school like people were asking me what do you want to do? What do you want to do? And I'm like I want to be a professional athlete.
Daniel Nagel
Like awesome. Cool.
Taylor Avakian
You got the height. Yeah, I know. I appreciate it. And what sport? Baseball.
Daniel Nagel
Oh, love that.
Taylor Avakian
What? Yeah. Yeah.
Daniel Nagel
Yeah.
Taylor Avakian
I was outfield. Outfield. Outfield. So, again, wanted to do that. Didn't end up working out. But I I loved competition. I was always a competitive person. And so, when I realized that that wasn't going to be my path, I was looking at all the people in my sphere, my my friends dads basically, and what they did. And there was a couple of um people who I looked up to because they had very nice cars, they had really nice houses, they had vacation homes, and I said, I want to do what they do. They happen to be developers. And so I thought that, okay, I'm going to be a developer. Like, that's the that's what I want to do. And they gave me some pretty prudent advice. They said, hey, that's awesome. Like, hell yes. Like, we we love that you're motivated and want to go do that.
Taylor Avakian
It is very hard to have your first thing be development, right? Because there's so much knowledge in there. There's so many things like it's just a very complicated, very risky business. The fact that he was like, I'm going to do development for my first real estate stuff. That that to me is a sign of who he was as a person of just like I'm going to go 100% or all or nothing, right?
Daniel Nagel
you think about what he had gone through and and a lot of Holocaust survivors that were successful in business. Um you can see where the mindset came from like they they faced like the worst and for them taking risk in business like it was compared to what they had to go through. Um my grandfather was risk. Yeah. um you know and he was comfortable taking that kind of risk um comfortable betting on himself um and um you
Taylor Avakian
know and he saw a lot of success as a result of that. Do you know if there were any times because I I've heard a stat here I think it's like two out of three developers go bankrupt at some point. Was there a time when he had crossed the threshold of where if a project went bad he was going to be okay? Because I know a
10:00–20:00
Taylor Avakian
lot of times it's just you're stacking every next one is a risk because you're betting everything that you've made on the previous ones. And so at a certain point you get over that threshold. Do you know if there was a point in his career where like he had bet two decades worth of, you know, profits on one?
Daniel Nagel
Yeah, it's a great question. I don't know, you know, I know a lot about my grandfather and his career in store. No one's ever asked me or thought I've thought about that question. Um certainly on his first deal he had bet everything and he almost lost everything. Um he came out with his integrity which ultimately was the greatest investment or gift that he got out of that. Uh you know talk about um how we don't look at our failures as you know failures but our just stepping stones for us lessons learned like you can you can take every um you know dip down and turn it into something that that can work out for you for the better. And that's a great example of it. Um my grandfather, you know, over time like he, you know, he he he he created for himself some principles around taking risk.
Daniel Nagel
Um and so he wouldn't necessarily be having multiple projects going on at the same time. Um he'd buy a piece of land, develop it, sell it out, buy the next piece of land. Um and kind of go on from there. And then I think as he got more established, he was taking on more risk. I mean as the story goes he started getting into multif family development um in the late60s um early '7s uh was one of uh you know uh the big builders in West Hollywood and Hollywood we have um we have legacy assets legacy buildings in our portfolio in West Hollywood that are we built in the early '7s are still in our portfolio today um you know so ownership for over 50 years um in many of these assets um you know we wouldn't be buying 60 70 80 unit buildings
Daniel Nagel
today get in our current, you know, uh, uh, form, but we have them in our portfolio because, um, they were built by my grandfather and we've owned them for a really long time and they're kind of like, uh, they make up, um, the core part of our, uh, legacy
Taylor Avakian
portfolio. What are some things? So, I read and, um, I want you to walk me through this because I want to know the truth about it again. So, you guys had a Korea Town property, right? And I do. You do. Was there a property that you lost $7 million on? Did that happen?
Daniel Nagel
Uh or is was there a loser in Ktown that happened? No. No, we have a K we only have one Ktown asset.
Taylor Avakian
Okay.
Daniel Nagel
Um currently?
Taylor Avakian
Yeah. And you still have it?
Daniel Nagel
And we still have it. Okay. We actually are closing the refi
Taylor Avakian
today. Oh, congratulations.
Daniel Nagel
Okay.
Taylor Avakian
So, we we didn't arrive.
Daniel Nagel
We didn't. No. What have you guys had losers before? Um, so we've been buying throughout every single cycle, right? Call it since 1956. Yes. Right. So, uh, business is cyclical. Real estate cyclical. We're in a real estate recession right now, right? Um, and so we were buying in, you know, uh, call it 05, 06, 07. um you know our our our ability to kind of figure out on how to like save deals. Yeah. Um through being properly levered and having the capital. Um so we bought an office building. This is like uh you know not really a loser but like not a winner but you know you'll hear the story. We bought an office building um in Orange County in 2008.
Daniel Nagel
Okay. All right. Uh it was a secondary Orange County office market that at the time was 95% occupied and 250 a foot in rents. Um half the building was subprime tenants. Comes a great recession, subprime blows up, occupancy drops to 50%. Um building rents drop from 250 a foot to a buck 65. Um and we have to retenant the building and we've put in major TIS, right? And um we had a CNBS loan on the property. Um thankfully it was fairly lowly levered at the time. Um but we spent the next 10 years building the NOI back up. We re we renovated the whole building. Um it was one of the reasons that one of our big pivots out of the great recession was from a portfolio that was diversified against product types.
Daniel Nagel
So we were retail, office and multi. Actually 60% of our portfolio was retail and office only 40% multi heading into 2009. Geez. And we saw our office buildings and some of our retail centers just implode. You have to fill your buildings because you have big vacancies, right? One of the benefits of multif family is you have a diversified income stream. You have a 100 units. You have a hundred different tenants that have a hundred different jobs, right? You have a diversified tenant base, right? you have, you know, a 30 tenant office building, right? And you have one tenant that has, you know, a third of the building. They're a major. They go under. You have a tremendous amount of exposure. Now, you combine that with a recession. You have to No tenant comes in for one year. Mhm. It's a 10-year lease. And you're signing a 10-year lease with three
Daniel Nagel
five-year options at rental rates that are at all-time lows. You're basically mortgaging the future of the building away.
Taylor Avakian
Yeah.
Daniel Nagel
Jeez. Right. And so that experience is what opened our eyes to retail and office is not the business model that we want to focus on. We saw it ourselves. We saw multi drop 10% in rents and rebound within two years. And we saw office and retail, you know, between occupancy and uh and and and rental rates dropping 30 40% and a long way back to build back the NOI. Um to just get it back to par. Um and so this office building we basically we ended up selling it in 2019. Um we um we made a you know a modest a modest profit. Um but it took 10 years. Um it was a lot of effort and a lot of work. Uh took a lot of capital. Um a lot of time, a lot of energy and resources to kind of save that deal.
Daniel Nagel
Um and then we sold it and we bought uh a massive multif family project in Washington uh in
Taylor Avakian
both. Was that your first out ofate transaction or when did you guys start buying out of state?
Daniel Nagel
Uh that was Hey, good call. 2018 was our first out ofstate uh multif family purchase and it was that deal. Um, we bought that in 2018.
Taylor Avakian
Um, okay. Walk me through the internal conversation, right? You guys are California company. Yep. And at a certain point there's internal conversations that, hey, California may not be the place where we want to invest. Walk me through what it's like in that room. What are those conversations look like? What was the thesis? Like, why?
Daniel Nagel
Okay. So it started with a basic investment principle of too many eggs in one basket. Um you know the conversations uh we first started buying in the Bay Area. Okay. Right. In 2015. Okay. That was our first Bay Area acquisition. Um which is you know a couple hundred miles away harder to manage and own and operate. Uh we had been watching the success of the Bay Area through the tech revolution. We wanted to play in it. Um and then it was like but we still have 95% of our assets in California. That's just too much for us for our investment for our investors and uh we want to geographically diversify. And it started as a conversation of less about, you know,
Daniel Nagel
we don't believe in the future of California and more we want to diversify, right? And so we went to Washington, um, which is another blue state. Oh, by the way, right? Because at that point in time, we were very focused, our investment thesis was around what we called JSS, jobs, schools, and supply. And it was we wanted to be in major job centers. We were very focused on kind of first ring suburban markets um where you weren't in the urban core because but you had awesome jobs in your urban core but people wanted to live in a first ring city because of the better schools and they were okay with the commute and you had a more affordable rent. We started that strategy in 2012 when we when we bought uh a bunch of buildings in Ventura County. Got it. Right. So we bought two deal three deals in
Daniel Nagel
Semi Valley. We bought in um we bought in Mo Park and we bought in Thousand Oaks, right? We we were playing, right? We were playing in that back in 2012 and 13 and 14. Um and uh and also the last thing was supply. We were very focused on barriers to entry. That was what we had grown up with a barriers to entry market. Um and uh we like the you know the dynamics that come as a result of a barriers to entry market. Um, and so we were we went to Washington, we went to the Bay Area because of jobs and we went to Washington, Seattle, MSA because of of jobs and then we were buying in kind of those first ring first ring districts. And so it kind of started out really around, hey, we should be uh geographically diversifying and everybody was on board on that.
Daniel Nagel
Um, and then as it got harder to do business in California and it
Taylor Avakian
was getting harder, right?
Daniel Nagel
We had rent control, but we knew how to operate within rent control. Rent control has been around in LA since 1979. Yeah. Right. And uh so it had been around for a long time and we we we we had kind of figured it out. Um but um the regulatory environment started getting harder and harder and what we came to appreciate at after you know we dealt with COVID, right? So, just so you know, we
20:00–30:00
Daniel Nagel
have 24 buildings and 3,300 units in LA County. Mhm. Right. So, we have a we have a big portfolio here. CO was really challenging, right? the way that the city just reached into your pocket, gave you no rent increases for four years, you know, uh didn't cap insurance, didn't cap property taxes, didn't cap like kept on, you know, payroll from, you know, um um minimum wage increases that had a trickle down effect or trickle up effect uh at your properties. Um it was it became really really challenging really clear um that the barriers to entry story or the benefits of it in a highly reg regulated environment just encourages more regulation. So, as we saw rents grow and the politicians couldn't figure out how to fix it and the fix is more housing,
Daniel Nagel
but who wants to take that position and deal with nimbies and deal with traffic and really be thoughtful and multi-year planning. Yeah. Right. When you know politicians lifespans are really, really short. Um and so the incentives are in place and so rent growth turned into a problem. The barriers to entry story then made people say hey there should be a ULA tax to we lost the most money in our company's history the day that ULA passed. Wow. I mean 5 a.5% on gross. Yeah. It's it's wild. It's insane. It's insane. So, so we've kind of um so then the out of state conversation turned more about investing in higher growth markets.
Daniel Nagel
Okay. Red states where affordability
Taylor Avakian
was really important, right?
Daniel Nagel
The cost of uh the the lack of affordability is becoming a problem for renters. It's become a problem for employers and employers are leaving highcost states and they're opening up shop in other major MSAs where their where their residents where their employees can find affordable affordable apartments. And so we kind of adjusted our investment thesis and we looked at a supply a little bit differently, right? Schools then now became not about great schools to send your kids to, but schools as an economic engine. So, we're invested in Phoenix. ASU is a tremendous economic engine. It's delivering tens of thousands of graduates every single year for the employers there, right? Um, we wanted, so we still wanted, you know, good schools. Um, needed to be a major MSA, so good jobs. Um, and we wanted an affordable
Daniel Nagel
rent. Uh, as opposed to, you know, where people are paying so much in California as a portion of their of their income. um markets that were had population growth. And it was kind of like we rode this golden years of California and like California made our company. It made our wealth. It made our family's wealth. Uh we're still here. We live here. I mean, there's not a better place in the world literally to live during all seasons of the year. Um but everything peaks. Um, and California feels like it's peaked. The growth is happening. If I would look at, if I would try to project or think through is there going to be more growth in California from today and 10 years from now or in some of these other markets, I think the growth rate that's capable in California versus
Daniel Nagel
the other markets, California pales in comparison what we're going to see there. Um, and so that's really kind of, you know, how we're thinking about it. Look, we still have 65% of our portfolio in California. As I said, like we live here. We're not rushing. We've never rushed to do anything, right? We've been around for seven decades. Um, I could lay out for you seven pivots that we've made over the company's history, right? Not every investment thesis is right for every market and for every time. Um, and so we're nimble and we're willing to pivot and not say, "Hey, we're stuck making this widget at, you know, in this place at all times." Um, and um, and so this is, you know, the pivot that we're in right now, um, around, hey, you know, um, California is has a lot of structural challenges in it right now.
Daniel Nagel
Um, and, um, we're making that bet anyways because of our existing portfolio. Uh, and so as we think about growth, we're finding um, you know, we're we we've invested in Phoenix and Austin. Okay. Um, we're looking at Nashville and Salt Lake City. Um, and, um, we have kind of Dallas on the back burner, really big market, um, to kind of try and learn. Um, but, um, we've had a, you know, we've had success breaking into new markets. Um, and so we kind of built a playbook around it.
Taylor Avakian
Um, let me ask you, was there any part of you that saw the success of some of these other companies in 17, 18, 19 who made a ton of money in those high growth markets that was like, "Hey, what are they doing? I want a part of that." Was there any piece of you that was like, "Hey, I want to like did were you looking at what other people were doing at a certain point?
Daniel Nagel
Was that part of it?" Um you know it was it was more of an internal thought process of where should our growth be? Um because everybody everybody has everyone has a different formula and a different metric, right? So, I remember we were competing on a deal in Phoenix and we lost to one of these companies that Tides uh maybe Uhhuh. Um um and um I remember getting um the deal book um kind of sent around and I was looking at, you know, the numbers and I'm like, "Oh, like I I get how they got that IRRa, right? like if I couldn't figure out how to get to 16 or 17, but it was taking a level of risk that I wasn't comfortable doing. Um, this group found a capital partner uh that was willing to take that
Daniel Nagel
risk alongside of them.
Taylor Avakian
What were those projections? What was what were some of the things that you couldn't wrap your arms around? Was it rent?
Daniel Nagel
Um, it was the leverage point at 75%. Okay. It was uh a three-year hold um a very aggressive turnaround um around turning units. um and um you know looking at post- renovated rents that uh that's on the margin right but like those two things of like timing it so perfectly that you hit like this you know 15 plus irra the leverage to get you there I mean you talk about a model that has to be perfect you have to hit on every point and no model should be um blessed no under a a scenario of perfection because nothing ever works out the way that the model goes, right? So, you need you need you need room in different areas. It's it's just kind of like necessary in order to play for
Daniel Nagel
long periods of time. Yeah. You know, like it's um
Taylor Avakian
Have you ever looked back at deals you've done and seen how close or how far you were from the actual model?
Daniel Nagel
And Yeah. Yeah. Um we've done that before. like you know our uh our early value ad deals in 2012 and 2013 and 2014. You know it's fun to see how we you know beat the projections. Um and then as value ad kind of got priced out in 2019 and 2020 um and our we actually started to pivot in we did our last value ad acquisition um in 2020 and then we actually switched over to buying more core oh and core plus. Tell me about that.
Taylor Avakian
Why?
Daniel Nagel
because we were seeing how you weren't getting rewarded for buying vintage and taking on the risk of renovating and you were and and so when we went into Phoenix, right? Right. We went to Phoenix, we weren't doing the 60s and 70s and 80s value ad. We were buying deals at a leaseup. Um buying quality product in good locations. Um and those were peak purchases, right? And they'll they'll they'll take time to season. Um, but we have great product in good parts of town. Um, and there's a supply story that's getting absorbed. We're probably still 12 months out from seeing the bottom of it. But if you were buying 60s and 70s or even 80s vintage assets in Phoenix at 2021 prices, I mean, you're really really hurting, right? And then you have product that's just
Daniel Nagel
really challenging and you have no pricing power right now.
Taylor Avakian
Uh, what is your current uh model? like what is the what is the business uh return metrics? How do you guys look at deals? Are you are you trying to hit a specific return threshold? Do you have a 10-year hold timeline, right? Or refinance 10-year cycle. What what is your actual investment thesis?
Daniel Nagel
Right. So, we've just seen the last two to three years a real asset value reset, right? And it took like you've seen it, right? Transaction volume has completely dropped. There's been a very wide bid ask spread between buyers and sellers. Um rents in many markets, particularly we'll call it outside California markets, some belt markets where there's been a lot of supply have seen rents come down in class A and it's put a lot of pressure on class B and C as a result of that and there's also a concession game going on. So the value ad game is really tough to pencil right now because you don't really have that that rent premium. And if you're asking like what we're looking at today and what's kind of the investment thesis today, we're looking at newer buildings
30:00–40:00
Daniel Nagel
either brand new coming out of lease up or within the last 10 years. Um typically it's we're trying to identify capital stack distress. Okay. Right. So where you might have a developer that's got seven deals going in a market. They're trying to figure out, you know, which ones to keep, how to hold on to some. they need to create liquidity. Um there's a lot of conversations going on and what we're finding as we're, you know, pricing things, pricing deals and opportunities is that, um, if you can get a deal across the finish line, and you know how hard that is. If you can get you're like dragging a seller kicking and screaming across a finish line because if you don't have to sell today, um, you don't want to sell today. You want to hold on for longer. um you know you we're finding core and core
Daniel Nagel
plus deals that are at returns that are punching above their weight right so let's say a core deal is getting to 12 to 13 and a core plus deal call it a 2015 to 2020 deal you know is you know 13 to 15 um and that's like an interesting story right um and there's a lot of conversations um there's marketed processes that get broken and then you hang around the hood group and you keep talking with the group and they're like, "Hey, we didn't like that pricing, but now it's a couple months later and things aren't better and maybe we're going to run a mini process and you've been staying in touch, right?" So there's a lot of like ear to the ground um you know you know walking the streets staying in touch um leaning into relationships um and investing the time upfront um without really knowing if the
Daniel Nagel
deal can be made so you can be in that spot um as a deal can come together.
Taylor Avakian
Why do you think in institutional investors lean so heavy into IR? Why do you think that's the golden metric that everyone cares about?
Daniel Nagel
It's because institutional investors are capital allocators. And as capital allocators, real estate is just one sleeve. And so they need to benchmark their capital allocations across all of their different investments. And they need a metric that is comparable across all of their capital allocations. M and so as a result irr is something that can be weighted for time because no two investments are ever at the exact same time. And if they have a 10% allocation to real estate and they're expecting it to deliver a certain return and they have a separate hedge fund strategy and a private equity strategy um they need to be comparing apples to apples all of their allocations and that's how they determine like how much are we going to allocate to real estate. So from an institutional mindset, it's they're capital allocators and that's why
Daniel Nagel
they lean so heavily into it and it's had a significant impact um on the business like like um I grew up in the business where we were always looking at irr and kind of like that point but our you know uh old school you know investors are cash on cash. They couldn't care about irr at all. Totally. Um the appreciation will come. It's all about the current yield. Um it's just a it's just a different different mindset. Um and often times you can like irrit time sensitive for when the money comes in and you can you can play around with that, right? And and and some investors are getting astute to that. Like if you buy a deal and you like hit on a cash out refine year two that like delivers a lot back and you've structured the deal kind of like in that way you kind of
Daniel Nagel
juice your IR cuz more money came back in earlier. Um and old school investment is like well what was my annualized return like just tell me my return like if I got it earlier on or if I got it from appreciation and you know it's not time weighted. Um, and they're just like, we're trying to make good bets and let's not like beat the system and really kind of time it. Yeah. Um, so it's like a different, you know, philosophy and I have exposure to
Taylor Avakian
both. What are some of the the tricks or t things that people do to manipulate some of those metrics because I've heard the Blackstones of the world and and these are the big dogs, right? Like they're a very fee driven business. They're aum driven. and they get a certain amount of fees and like I've I've heard people break down the actual returns and they're they're promoting 15 17 22 in this specific fund, right? But I think a lot of it is manipulation like you said. What are some of the actual manipulation techniques that these companies do?
Daniel Nagel
Well, I don't I don't manipulate manipulation, but but there are um there are ways to um kind of juice IRRa or juice returns. um you know leverage being being uh you know an important component like I remember um you know our our philosophy was uh you don't make capital calls right so if you have a renovation plan um if you have a renovation plan um we're going to pre-capize all of our renovation capital all upfront that is a huge drag on IRR right you start like because now you have this capital it takes you if it's a big asset take you two to three years to renovate Um but our investors like they didn't care in the sense that they weren't looking at irr. They like they believed in the business plan. they they thought that the return on cost for the renovation would work and
Daniel Nagel
the appreciation would come right but then as we started getting more into IRRa and benchmarking marking ourselves against peers and really irring from a valuation standpoint because I need to understand how my if I'm competing against you know an institutional um type of investor I want to know how they're thinking about it too um you know and we haven't talked yet about our you know our our our our vision now on on um diversifying our capital sources and you know now we're starting to talk to institutional capital um about investing with us um alongside us in our investment thesis um but I those first deals on the value ad side we capitalized all of the renovation capital upfront and um and then like it dawned on me like well what if I can get my lender to fund a
Daniel Nagel
portion of this capital right and so um we
Taylor Avakian
would go parry pursue, right?
Daniel Nagel
So, let's say they give me 65% leverage. Instead of me taking 65% leverage up front and then I have 35% of equity and now I'm investing if it's a big value ad, like it could be another five to 6% of the cap stack. What if I split that 6535 with my with my lender, right? And I get a renovation future funding. Um, you know, and then I'm still saying leverage is like one of our big principles on in investing is watch your leverage, right? And that's uh you know came from my grandfather. Um you know I haven't had a chance to talk a lot about my uncle and his mentorship of me. Um and we've worked together now for 16 years. Um but you know how we lever our portfolio is the secret sauce to being around for seven decades. Um it's critical to
Daniel Nagel
not try and chase that higher yield because you got a little bit more leverage. Um and um you know and balance your risk. A risk adjusted return is a great thing and it's a real thing and you're really seeing it in today's market. Um the difference between being able to hold on to a building now and not is
Taylor Avakian
how are you levering your deals?
Daniel Nagel
If you were levering your deals between 55 and 60%, you might have some equity impairment and you might you'll definitely be able to kind of work your way through with your lender. But if you were at 70% in some of these markets, yeah, you're good luck. Like it's tough.
Taylor Avakian
Like you're really feeling it. Um so why did you guys Let's talk about that transition from going to more private capital to institutional. Why that change? Why are you looking in that direction?
Daniel Nagel
Yeah. So um you know after having done this now for seven decades and um our platform has really we've really kind of institutionalized um that shift from 2009 to today. I talked about our portfolio allocation. We were 60% retail and office. We also were 2500 units and today we're 10,000. Oh wow. Right. So talk about how the platform has been able to grow and invest in people uh and build out a team, right? And our ability to transact and execute on business plans uh with the team that we've built um is now fantastic and stellar, right? And so now it used to be about, hey, we're the Nagel family. We're a real estate family office. Come invest alongside of us, right? And now it's like, hey, we have a skill and expertise and a talent, right?
Daniel Nagel
And I want to leverage my skill and expertise and talent um to buy more to buy more deals. And I'm still investing alongside it, but I'm not taking 30, 40, and 50% of the deal because I'm doing more, right? I'm coming in truly as a GP. Um, and look, we're we're operating in California, Washington, and Arizona. Imagine this, right? We have um and we have a let's say we have a track record not let's say we do we have a track record on buying vintage deals and renovating them um and um we we've now established a flagship in each one of these markets um and we're running you know uh management teams there right and using Arizona as a portfolio there a lot of kind of newer builds when value ad comes back I know exactly where rents are, right?
Daniel Nagel
And if you know where class A rents are and you're operating it, I can start picking off buildings, right? And my market
40:00–50:00
Daniel Nagel
knowledge allows me to be like, "Hey, I I know where the class A rents are. I'm operating here. This 80s deal next door, right? I know exactly what the delta is. I can capture that 200, right? And there's a real story there on how we can execute given our expertise and um be able to kind of run through a business plan and kind of
Taylor Avakian
sell. Do you feel like um that ability is allowed you to go and look at different markets too or is that how you're looking at where new opportunities are going to be is you want to go and build this kind of like hub and spoke. So you want to get the newer product, right? And then have that ability to then understand with the data where you can go and pick and choose like you said. Is that is that the new thesis for that?
Daniel Nagel
Yeah. Well, uh absolutely the the the investment opportunity today is in is in class A. Okay. Right. It that that's where it is, right? But the follow on, right? I'm already thinking like what's like where does this go? Right. We need a thousand units in a market in order to operate there. Otherwise, it's not efficient for us from a management standpoint, right? And it's a great story around being vertically integrated, right? doesn't have to be, right? We have a great asset management team as well, right? But when you're operating it, it gives you even more eyes and ears uh on the ground and um and so building up this portfolio in a market that I think is going to, you know, be a growth engine. Like Austin's rents have fallen. Now is the time to buy, we're calling it buy the dip, right?
Daniel Nagel
Austin rents have fallen because not because people make less money. Mhm. It's because there's more supply than demand. Well, that imbalance is not forever. Mhm. It's going to get absorbed. There are much fewer deals that are being being started right now. I'm sure you know, you've read and heard, right? It's a real thing like this across the country. The supply cliff um um new starts are down tremendously. Um, and so the opportunity is in buying the dip on these class A deals and then as there's you're riding a rent recovery, but not a rent growth story. It's really recovering to where things have been and deals are kind of penciling that if all you're getting is kind of that and maybe a smidge more, you're still putting together really interesting returns, right? And then value ad's going to come back.
Daniel Nagel
We need the delta between A and B and you know A minus and B minus to kind of grow and then the value ad will come back and we'll be in position
Taylor Avakian
to do do you because a lot of uh a lot of the people and investors I've talked to there's pros and cons with going institutional right because at a certain point the institutions start to run a lot of the decisions and it can be a loss of control from what people have told me is it feels like I'm not really in charge like Hey, we can get through this tough time. I understand the plan. Like, we need to hold on for a little bit, but the capital partner says, "We need our money back. We need it now. Like, you got to get us get us our money. You we can't afford to have another 12 to 16 months for you to stabilize this deal and make it work." Um, at least that's what I've seen Tai and some of other people, too.
Taylor Avakian
Does that fear ever cross your mind or have you weighed that?
Daniel Nagel
Oh, absolutely. Um, and um, at its core, this is a relationship business. Yeah. Um, and we've always been about our relationships, our lender relationships, our investor relationships, uh, our broker relationships. We value tremendously. We invest in our relationships because they matter. And the worst kind of problem that you can have, quote, my uncle, is a a partner problem. So, pick your partner wisely. There are a there's a lot of capital out there, but just because you have money doesn't mean that we're interested in taking it. And so I think that that philosophy follows into the institutional space. Who you're taking money for. People have reputations. Institutions have reputations. Um and so that gets weighed and that gets factored, right? Who do you want to do businesses?
Taylor Avakian
What is that? What what are the values?
Daniel Nagel
What are the are our values aligned? Um and um you know, we've been very when you talk about control Yeah. Look, if someone's giving you 90% of the money, Yeah. they're going to have not just a seat at the table, right? Yeah. But you want that relationship to be there. It's really, really critical. Um, and for us, like, you know, we're fortunate like we've built um this private capital, you know, investment profile. We have this portfolio already. Currently, right now, we have, you know, a good engine. like we're like we're from where I'm standing I'm like standing on Mount Everest and looking to grow more. Like I'm super blessed and so fortunate um you know to be where I am um to now look at the next growth and like this is like you know Decron 3.0 right? We've done we we we've had a bunch of iterations constantly
Daniel Nagel
pivoting um you know the family's been set up for success. We've done well with our investors. We've built you know this great portfolio. um it is going to be different. We are if we do go down this path or when we do go back down this path, we will be giving control because they're giving 90% of the money. But that's that's the deal, right? Like that's that's kind of the you know the the partnership and we're we're we're placing you know we're making more investments across you know uh different you know uh either partners or uh or or or properties or business plans. Um, so it's being accelerated, um, and allows our reach to kind of grow and it's all based on the fact that we've, you know, built a team that
Taylor Avakian
can execute. What do those markets have that LA doesn't?
Daniel Nagel
So, the challenge with LA and my concern about LA, um, and, uh, I hope you ask me the question like, what would it take for you to buy back in LA? Um but but the challenge is is that expense growth is exceeding rent growth. Um and that's just a hard nut to crack. Between insurance, between payroll, the only thing that's steady is property taxes. Uh yeah. Um utility costs. Um repair and maintenance. The way that AQMD forces us to deal with repair items in older buildings in LA today versus just five or six years ago, a small plumbing leak used to be really easy and quick to patch and the regulation is very challenging around that and
Daniel Nagel
it's just driving up cost in every single line item. And so, um, and rents have not grown that much. It's been pretty pretty anemic. I mean, you see it kind of all over the place. Been flat last two years. So, it's challenging when your expenses are going up and rents are not going up. Now, here's the kicker, right? Or this is really like where the concern comes in. In a barriers to entry market like LA, you would think that, well, rents are going to go up because there's just not enough supply for demand. Well, there's two concerns around that. Number one is population growth.
Taylor Avakian
Are we growing?
Daniel Nagel
No, we're not. Yeah, we're losing people, right? And so that's a challenge. The markets that we're going to have people moving in by tons. People want to be living there, right? When we when we saw our success in California, it was when California was the golden state that led the country in population growth every single year. That's not the case anymore. Um, the second thing is, let's say you do get that rent growth. California, I'm worried, is going to follow in the ways of New York and how the New York is handling rent control. Um, and it just eviscerated values there. Um, and the success of of owners and and developers is seen as a problem, right? If developers and and and owners can be successful, they'll be incentivized
Daniel Nagel
and interested to build more units. And if you build more units, you will bring rents down. and then you will once again be a growing state with a growing population. Um it's being proven out across the country that the biggest solution to high rents is supply. Supply. Um and I I mentioned this a little bit earlier, but I'm just if the barriers to entry and the supply constraint is putting enormous pressure on politicians to do things that are that are that they aren't band-aids, they're actually making the wound worse. Yeah. And so that's kind of the concern. Now the flip side is is like we're in California, we're in LA, like like we've been investing here for decades. Like we look at all the deals that are here. That makes sense for our for our buy box. Um you know, certain size, etc.
Daniel Nagel
Um and um basis is a real thing. Um but I can get basis in other markets. For for LA, I want basis and yield. That's the key. basis and yield. Um, newer product.
Taylor Avakian
Um, so is that what it's going to take to get you back in LA? Yeah. And so where how far off are you guys on the deals that you've seen in the last, you know, 12 months, right? Like how far off have you been?
Daniel Nagel
Well, some of these cap rates that that deals are trading at are they're they're great basis. like you can't, you know, replicate, you know, that deal. But, um, between concessions and and and vacancy, um, they're not good cap rates. They're not good going in cap rates. Um, and, um, that's not enough to counteract the concerns on the risk side
50:00–1:00:00
Daniel Nagel
that I've kind of shared. If I can buy a deal that has at today's financing can deliver a good yield, and I'm I'm a believer that that's going to come down over time. This is not a permanent shift. It's taking much longer than we anticipated. Um but if you can make money at today's interest rates um and get a good current yield, then as I'm waiting for appreciation, I'm good. Got it. Right. And if appreciation doesn't miraculously come, but interest rates come down, then I'm even at a better yield. Right. That's also good. So it's risk mitigation. the yield and basis requirement. Um
Taylor Avakian
and um give me an example of a yield that would get you like okay let's let's do this in LA specifically
Daniel Nagel
5%. 5%. Yeah. So a real a real you know um a real cap rate that's north of five and a quarter.
Taylor Avakian
And what does a real cap rate mean?
Daniel Nagel
real year one year one like give me give me your rent roll today and tell me what concessions you're offering when people walk into the leasing office and I want actual expenses and I'll roll that forward for a year am I at a five and
Taylor Avakian
a quarter do you think brokers in do you think do because uh broker math is a real thing all right obviously why do you think brokers price the deals the way that we
Daniel Nagel
do am I talking to a broker. Yeah.
Taylor Avakian
No, no. Talk talk you can talk this is open community like you know be open kimono. I want to I want I want to understand why do you think that's the case? It's blanket really across the industry, right? If someone's going to do it and and we the thing is you get rewarded for what you do, right? And you've seen enough I've seen enough transactions where you're like what the who the hell bought that, right? And and the numbers were baked out of a a million things and you're like that's not really the numbers it is but it sold.
Daniel Nagel
So, I bought it. Yeah. Right. Look, the uh at the end of the day, you only need one buyer. Yeah. Right. Um and we've been, you know, we've been sellers, right?
Taylor Avakian
And you see this all the time. You see bid sheets, right?
Daniel Nagel
For sure. You sell it to the outlier if the outlier is good enough. Yeah. And then supposedly that sets the market. But is that really the market or is that the outlier? The outlier. Right. So, I think that's why brokers do it because sometimes you can actually get an outlier. Um, and um, but the business has really kind of changed. Um, and I've seen it become even more democratized. Like I came into business in 2009. Um, like Google Maps was barely being used in 2009. Like like you you to see a deal, you actually have to go and drive it. Yeah. Right.
Taylor Avakian
You couldn't do desktop.
Daniel Nagel
Tom, you have one of those. I love that top, right? Um, and so there's so much like knowledge and um information that's out there. There used to be a real big imbalance between buyers and sellers about how to run a deal. And like that's kind of like the old school way, right? Now it's like, you know, there's so much more sophistication that goes into winning a deal around well, what's the business plan?
Taylor Avakian
How are you structuring this? What's your financing?
Daniel Nagel
Um, you know, uh, how do you really understand like the nitty-g gritties of this market that you can, you know, identify a little bit of a niche? Because otherwise, you know, everybody, you can go to any third party manager and they'll give you a PN, they'll give you a proform, tell you exactly what's going to cost to run the deal. They expect you to hire them and you expect them to deliver on that on those expenses on day one. and otherwise they're out and that's a bad business model, right? So there's just so much more information out there. The ability to like hoodwink a buyer in today's market certainly on larger size deal where we kind of play it's it's much harder, right? But outlier buyers exist. Buyers motivations um vary um around their needs. Seller motivations uh vary, right?
Daniel Nagel
And so that's like that's kind of like the art of the game, right? understanding, you know, buyers motivations or sellers
Taylor Avakian
motivations. So, the how do you create the edge, right? If everyone kind of has the same information, how do you get an actual deal that has alpha? That that's my favorite word, alpha. Um, how do you find a deal that actually has that opportunity when everyone else is is seeing it? And like if you're a good broker, right, and the owner doesn't want to sell off market, everyone's going to see the deal pretty much, right? So, how do you win?
Daniel Nagel
Yeah. um a number of ways, right? And so um harder on fully marketed deals. Um but it's it's a combination of structure and execution, right? So you can create alpha thinking through like how are you structuring this deal?
Taylor Avakian
How are you capitalizing it? How are you financing it?
Daniel Nagel
Um execution side it matters like what's your you know what's your cost structure on construction? um you know, how how how knowledgeable are are you on on where this building sits within a market? Um we um as we've broken into new markets, um we've we've created like proprietary maps that we use that every single time we go to that market, we're logging parts of town, green, red, yellow, light blue, you know, kind of like green street, you know, type of colors, right? I can tell you how many deals we've underwrote in Phoenix. every single deal we've underwritten, it's on my map. I can tell you every single deal that we did a RENC comp survey on, right? And so I can say like, oh, we've looked at 155 deals in Phoenix right now. We've underwritten it, right?
Daniel Nagel
And I know the location of all and now new deal pops up, right? I look, oh, I looked at this deal and this deal right around the corner. I didn't like that side of the street. That side of the street is the wrong side of the street, right? And so you press this building is special location. I saw this bill being built, right? you start building like kind of street by street block byblock knowledge. Um and and what's empowering you know and what you know now coming back to building a team right is you create this process and then you and then your team is doing it right and that's how you're able to leverage um that's how you leverage being in more than one market at a time because you've created a process you invested in your team you empower them um and um and then you know good
Daniel Nagel
things happen.
Taylor Avakian
Let's talk about technology because it we we talked about this beforehand and I'm big into it. We uh we recently started this like AI CRA community which has been awesome to be a part of because so many people realize that technology is really going to change not just real estate and investments but like
Daniel Nagel
the whole world.
Taylor Avakian
So how are you looking at technology? How are you guys implementing it right now? Do you feel like you're doing a good job um as as a CIO, right? You got to think about how you can get the best edge. Like how are you guys using technology and and looking at the future for it?
Daniel Nagel
Okay, great question.
Taylor Avakian
Can I tell my story now?
Daniel Nagel
Please. Okay. I'm parked in the parking lot out here and I'm on a call with um a freshy guy's 30 days in the industry. Okay. Um he's working at a debt shop. Good for him. And um he pestered me and I and he apologized and I said, "You know what? I appreciate your persist your persistence." Um, we had a great conversation. Um, and um, you know, I took the approach of trying to like mentor him, right? And so I said to him, um, things like, "Money doesn't matter right now. Find the person that's going to train you and spend time with you. I don't don't care about title. Be in the room where it happens. Be a fly on the wall." I like the biggest benefit that I had in my career when I started in 2009 was
Daniel Nagel
my uncle just let me sit in the room with him and my grandfather. By the way, I got to work with my grandfather for nine years. Yeah. Wow. Which was incredible. But I got to be a fly on the wall. I got to just observe and learn and absorb. And that's what I told him. The second thing that I told him was, you're young. You get technology. You should be using AI to make yourself more efficient. Because I promise you, your boss who's 15, 20 years your senior, he's not sure how to use it. And when you tell him that you took a process that used to take 10 hours and now takes two and then you go and write it up as an SOP and then you say, "Hey, I can actually teach this to the other three people on my team, you're making yourself invaluable."
Daniel Nagel
Mhm. So go spend time and figure out how you can use AI to make yourself more efficient. Mhm. And at that point he says, "Oh, do you know Taylor Avakian?" No way. Talk about synchronicity. I was parked in your parking lot talking to this guy. Let's and he said, "Do you know Taylorian?" And at that point in time, this was at like 10:07. Yeah. You parked your Tesla right in front of me and you were walking out of your car and I was like this is insane. I am looking at Taylor Ivakian right now. You just mentioned his name and um you know I was going to ask you like who your audience is but people are listening and they love what you're doing. Um, and so the reason why he mentioned your name was because
Daniel Nagel
he's like, "Well, you know, what you're saying, no one said that to me, but I've been hearing this and you know, Taylor's really into this." Okay. Um, you know, and he'd heard you, he's listened to a few of your podcasts. Okay. Um, so he sees what's happening.
1:00:00–1:10:00
Daniel Nagel
He sees what's happening. And so I was saying to him like, spend time, right? You're you're you can figure this out. Things should be taking much much shorter. And so, um, you ask me like what we're doing or what I'm doing and we're we're still dabbling and figuring it out, but it is super powerful. I mean, we have, you know, like people have different skill sets, right? And so, let's say, you know, um um you know, you're you're you're you're good at math and you're good at modeling, right? Um, but your English isn't great or your writing skills aren't great, right? You have to put together a memo, an investment memo. I don't want you spending your time figuring out the English language and how to put this together. It's a waste of your time. Please use AI to help write that memo.
Daniel Nagel
It will get you 95% probably 100, right? Please check your work. Yeah, please read it over. Um I don't want my name misspelled in there, you know. Um so that's always the risk, right? Like totally like you put it in the hands and all of a sudden it's like, you know, a copout. But if people understand that this is something that can make me more efficient, but it is not my final product, super powerful and I'm just like accelerating what I can do. I mean um I don't write emails, right? Memos like I dictate them into AI and review it. Yeah. And like I just get to things faster. I'm able to distribute things faster. Um and so uh I played around uh for a while um with read.ai AI as like a notetaker on calls like you know with follow-up lists and so it's
Daniel Nagel
it's experimenting right now but my eyes are open. Um it is really interesting. I'm encouraging my team um you know to to use it to make it make themselves more efficient. Look we we have to become more efficient um and do more with with less. Um real estate's in it in a lean time right now, right? And so, you know, you got to figure out ways on how to become more efficient and AI absolutely um is going to get us
Taylor Avakian
there. Where do you see it helping from the actual investment and business side of like are there things where you're like, "Okay, if it could do this or when it can do this, I see it really changing the way that this industry is is going or how it works."
Daniel Nagel
Mhm. Um, are you talking like big structural things or you're talking like how we do what we do?
Taylor Avakian
How do you get an edge? Huh? Like how because the reason I'm saying what came to mind for me at a glance, you can take this whatever direction you think, but you're looking in these different markets, right? You need to do research. You need to understand block by block, street by street.
Daniel Nagel
It's all data.
Taylor Avakian
And so if you can take data and basically structure and crunch the research or whatever it takes for you to do that instead of you having to go to the place seven times and drive every street, right? Which maybe you do once you drive every street and you you have a video camera and it records everything, but then you have the actual data of the market where the rent growth is. You have places so you can see where people go, right? you're taking the data and figuring out for your investment thesis what market or what street or what pocket of a city makes sense for you and that's going to change potentially where you invest in like are there are there things like that from an actual tactical
Daniel Nagel
perspective well I I said to you like Dallas is on the list but that's a monster right so there's a maximum it feels like right now there's like a maximum capacity of markets that I can play with given my current you know investment structure Right. And so the ability to um have access to and process data quicker and more efficiently could I can imagine I can see it allowing us to participate and and and and become knowledgeable in more markets with less, right? So we could be more dangerous and more knowledgeable and not have to um you know grow the team and really expend a lot of you know human resources um in order to do what I previously had to do. Now it's not going to take like I mean real estate is brick and mortar like it just is right
Daniel Nagel
and location matters and feel matters. Um and nothing is going to take the place of uh of of showing up and walking the streets. That still has to happen. Um, but there's a lot that can be done in utilizing data and like where are we going to kind of like direct uh our energies and our resources. Um, when you have, you know, the data in front of you, you can make quicker decisions.
Taylor Avakian
I have a couple rapid fire questions before we wrap up. You ready? Go for it. Someone gives you $100 million to deploy in 12 months. Where does it go and why?
Daniel Nagel
100 million in 12 months. Uh I would be buying core deals in growth markets um betting on that have strong employment stories um at 30 to 40% below replacement costs. I believe in these employment nodes, these secondary coming into primary um and you can buy at such a discount to replacement cost. Um you will not have a good return. You will not have yield for one to two years. But I believe in that rent recovery and rent rebound. Those are the markets that are growing. Give me three cities. Uh, we're going to do Austin, Salt Lake City, I still believe in Phoenix. Okay. All right. Buy the dip. You heard it first.
Daniel Nagel
You heard it first.
Taylor Avakian
Buy the dip. What hot market is everyone chasing that you're avoiding?
Taylor Avakian
What market is hot?
Daniel Nagel
Well, I mean, I just
Taylor Avakian
from the internal conversations from the people you're you're speaking to, right? Where's Where's somewhere where you're like, I don't want to I don't want to touch touch
Daniel Nagel
that. Yeah. Um Denver. Denver. I'm not saying that it's hot, but um Denver is not growing and it's becoming bluer. Um it was a darling for uh a good amount of time. Um but it doesn't it has it it was attracting employment, but it's petering down.
Taylor Avakian
M interesting. Yeah, it's going to be interesting to watch Denver. I know a lot of people who who went there and I had some friends who moved there and then moved away. So, um I'm interested to see what happens in Denver, too. What is one metric to track across an entire portfolio? Like what and then
Daniel Nagel
why in today's market, in today's environment? Yeah. Debt yield. Debt yield. NOI divided by loan amount. Uhhuh. Given the high interest rate environment that we're in, right? If you're a long-term holder of assets, right, and you're roll your debt is rolling off, the metrics around coming off of 3 and a half% debt and going into 5 to 5 1.5% in in markets where you haven't seen a lot of NOI growth, right? And and it's really like it's kind of like if you were in the Sunb Belt markets, right, you saw rents really grow and now rents are down, right? And if you're in the highly regulatory environments, you had COVID that basically put a freeze on rents, right? So there just hasn't been like a ton of NOI growth in a lot of different parts of the country. Um and so um be looking at your debt yields
Daniel Nagel
and make sure that you understand what your refi risk is. Um and um and be able to manage through
Taylor Avakian
that. Tell me about uh leadership and your new
Daniel Nagel
roles. Yeah. Um, you know, I kind of grew up uh in a very different company than we're in right now. Um, so we were much smaller. We had 2500 units um on the multi-side and we had over three and a half million square feet of retail and office. But retail and office is not a big employee count, right? Because you really kind of manage it. Yeah. you know from the corporate office it's a lot of leasing activity which is just like we now are a company of 310 employees um and you know the size of operation has really kind of grown and what's been really so rewarding is being able to be part of a company building a culture amongst you know the employees making it rewarding for them to work and thinking through like how
Taylor Avakian
do I grow them? How do I get them to their next spot?
Daniel Nagel
Um, Decron's had an internship program for the longest time. Started in the year 2000. Wow. Um, um, it actually started, there was a my uncle likes to say it started in the 90s. He had an intern. Uh, but in 2000, from 2000 to 2025, we've had 48 interns. Wow. Summer interns. Uh, it started out as high school. Um, and then it turned into now we really do college. Um, and we actually had our first uh graduate student, business school student intern this past summer. Epic. And um, when we started this internship program, we weren't ever big enough to offer an intern, a full-time position. Yeah. And so, we've grown to the point where we have entry level positions. So, that's really fun. We hired for the first time an intern who had been um, a summer intern for us into a full-time position. really really exciting.
Daniel Nagel
And then you get to start thinking through like how do you grow people?
Taylor Avakian
How do you take someone from an analyst to an associate? How do you take them from an associate to a manager? How do you coach them up? How do you think about their career?
Daniel Nagel
Um and um and how do you manage people to get the best out of them? Because as
1:10:00–1:20:00
Daniel Nagel
you scale and you get big, you can't do everything. You just physically can't. You're not doing right by your investors and you're not doing right by yourself. You're not doing right by your team. Um, and so it's been a really, you know, rewarding and fun part to, you know, be a mentor, um, think through leadership, think through how to grow, um, our employees to take them to the next step in their career. And if I can't grow an employee anymore and they can find the next position out of this company, I'm their champion. Yeah. I am their champion. And that feels awesome that I was able to grow them that they could then identify another company that thought they had a skill set that would work for them. They learn from you. Awesome. Just awesome. And it's like like I'm a deal guy.
Daniel Nagel
I love the art of the deal, right? But I'm also a relationship guy, right? So deals get done on relationships. And this is a part of relationships which I never really thought I would enjoy and like. And over the last couple of years as um our team has grown and become more a leader in our company and becoming an executive um it's been a really fun part of it and mentorship um is really rewarding um and um and I I would encourage anybody that's in a position to be a mentor to really take it
Taylor Avakian
on. How do you become a better leader? Like what are you doing? Are you reading a bunch of books? Are you going to you got a coach? Like how do you how do you improve leadership skills?
Daniel Nagel
Yeah. I think it's a combination of uh books, but really it's identifying, right? If you're someone that's junior in the business. Yeah. Right. Yeah. You can look around and see how you're being treated and who is being your champion and who's figuring out how to grow you. I uh I was in Sun Valley at a mortgage banking conference um in the summer and I heard from Steve Kerr. Steve Kerr talked about his basketball career and talked about his coaching and he told the story that when he got into the league, he um he played for the Magic and he was there for five seasons and it wasn't working out. They weren't appreciating his skill set and he thought he was actually out. He went around and he said, "You know what? Who has my skill set around this league and is being successful in that team values that skill set?"
Daniel Nagel
And he identified the Chicago Bulls. John Paxton is the guy. He's being successful for the Bulls. I have his skill set. I can do that. Calls up the Bulls and says, "I want to work out for you." He went and made the call to the Bulls. I want to work out for you. He works out for them. They like him, joins the team, Jordan retires. Now there's 43 more minutes available for him to play on. And suddenly he gets playing time in Jordan's absence. He's actually starts to make a mark. And then the rest is historyow in that he then helped facilitate the next three championships. Join them. And he tells all of his younger players that join the team and says, "Find the person in the league that has your skill set and go copy them. Go study them. Study their moves."
Daniel Nagel
So when you're in the business and junior and someone's out there making you feel good, supporting you, leading you, has your back, that can be your leadership mentor. You know it for yourself. Yeah. Find your person. Yeah. Right. And talk to him because you can't just read it in a book. You have to see it practice. You don't know how to have those conversations until someone's had them with you and you're like, "Oh, that's how it feels to be mentored. That's how you support somebody." And um you have to go. So everybody has that. Hopefully everybody kind of has that. Um and um when that kind of person touches you, they're thinking about you. You you you know it and they'll be open and willing to kind of share and be there for
Taylor Avakian
you. There's this there's this uh feeling of giving back. And someone there's a a bigger broker who's kind of we we have some conversations now and again and we do some walking talks and he to me feels more like a mentor figure to me. He's like, "Hey," I asked him one day. I'm like, "Why are you doing this?" He's like, "Someone did this for me." Right? And I I expect you when you get to where I'm at for you to do the same, right? It's like this passing down of the guard. And it honestly, it feels good. Feels really good when you can share and help someone move forward and whatever goals they have. Y I think it's uh it's really fulfilling to be a part of that. And I agree with you, but it does one point you made about Steve Curr, he reached out and
Taylor Avakian
he actually did something with it. You have to be willing to not wait for things to come to you. You have to go and grab it. You have to be that person who is like persistently annoying, but not annoying to a fault where it negates you, but also you you understand the EQ of what it takes and what that person wants, gives them value. Because it is very hard in this world, and you've you've known it. There's not a lot of A players. Like there's a lot of good players. They're good with their job, but an A player is very rare. And so if you have the ability to go and help someone who is that A player because they have so many things that are going on, that is a rare quality for them to make their life easier. How can you make that person's life easier?
Taylor Avakian
Um, so I encourage everyone and anyone to go and try to find and search that out. And it's not it's not easy. Like you can't just go on one day and find your person. This is a time. It's you got to put in the effort. You got to put in the time. Just as much as you're putting effort into learning your skill at a job, you have to do the same
Daniel Nagel
thing for every other avenue of the business. Thousand%. You got to manifest your destiny. You got to put forth the effort. You have to have the EQ. Right? If you don't have the initial relationship and you're just being persistent, I'm bordering on annoying, it's not going to work.
Taylor Avakian
No.
Daniel Nagel
Right. And that's why I kind of said like find that person that's kind of like already kind of doing it for you, right? and then and then you know get closer to
Taylor Avakian
him. Daniel, this was awesome. Thank you very much, man. This was enjoy the conversation. This was so cool. I hope there was a lot of institutional knowledge and I love getting in rooms with people who are smarter than me and who look at uh look at opportunities differently and I think I've seen throughputs and lines of what really makes a successful company successful and the fact that you guys have been around for 70 years like that is something to be studied. So, I really appreciate you coming here and sharing that and uh I hope I hope people where can they come and check you guys out or is there any place for for you guys brokers if they want to sell you sell you deals with?
Daniel Nagel
Yeah, absolutely. I mean uh email is the best way to reach me daniel.ageldeck.com. Check out our website duckron.com and uh it was a pleasure. Thank you for inviting me.
Taylor Avakian
It was worth the trip to the valley. I love it. I know.
Daniel Nagel
Thanks for coming out here.
Taylor Avakian
Thanks for coming out. Appreciate it.
Daniel Nagel
Good stuff.