The Hidden Opportunity in Uncertainty
Updated: Nov 30, 2020
We’re all aware of the natural progression of life in the United States. After graduating from high school, you go on to a four-year university to study your interests, and hopefully find a job at a stable company upon graduation which is both meaningful and engaging. With tenacity and talent, this can be a path toward financial security and an impactful career. However, a select subset of America’s youth elect to break the mold and venture out on their own, forgoing stability for spontaneity, and the chance of championing profound change in their respective industries. Dallas Basha, 25, graduated from Lehigh University in 2017. After turning down a job offer in financial services, he moved to Miami, Florida to start a technology company from the ground up. He admittedly didn’t know much about technology, or a single person in the city outside of his start-up, but that didn’t deter him. Basha strived to build a network by pushing himself to attend two social events in the city every day for his first 45 days. He comments, “Even if I met one like-minded person, one person that I could help, one connection, it was a successful day”.
But like an unfortunate number of businesses, Basha’s tech start-up eventually failed. Unsure of where to go next, he turned to the support of his alma mater. After several conversations with Lehigh faculty, he ultimately pivoted to forming a partnership with one of his former professors. In his new venture, Basha raised capital among his close network and began investing in real estate in eastern Pennsylvania. In only a few years, Basha has built this company to manage nearly $6 million in assets. After learning about his real estate company, I was curious to see how Dallas had navigated the post-COVID environment. Real estate was in a particularly unique position due to the closing of brick and mortar economies, and the rise of the work-from-home lifestyle. Fortunately, most of Basha’s assets are tied to residential developments. He told me of his most recent deal where he closed a small apartment building in South Bethlehem. The property was originally listed for $700,000, but due to a lack of demand, Basha was able to acquire the property for only $575,000. Upon the acquisition, the property was over 50% vacant, and of those who still occupied the building, most were not paying rent. Within 30 days, Dallas was able to lease the vacant apartments, and work with some of the existing tenants to ultimately collect rent. He recently had the property appraised from a cash-flow perspective at $850,000, creating a $275,000 appreciation in less than a month. He was remarkably able to create this value without doing any physical renovations. Dallas and I went on to talk about some of the unexpected silver linings in the climate of the pandemic. From a value creation perspective, he was able to utilize the lack of demand to find a below-market deal which suited his needs. Dallas was significantly developing his soft skills as well. He managed to find a mentor in Washington D.C. who founded a large real estate company and meets with him periodically on Zoom while he chases deals in Pennsylvania. As he describes it, “I’ve taken the gold nuggets from my conversations with him and applied it to my own company. His advice has been invaluable”. I was struck by Dallas’s acknowledgement of humanity in light of the circumstances of COVID-19. Landlords like him are in an inherently tight space. On one hand they have a financial obligation to their creditors as they are legally required to pay a monthly mortgage. However, with unemployment still in the double-digits, many are struggling to make ends meet. “I think the most important thing to understand right now is that we are all people, and some of us are getting hit much harder than others. If I can pay kindness forward by offering forgiveness (on rent), I’d hope it can create a better world”. Perhaps the biggest lesson that I took away from my conversation with Dallas was that some of the greatest opportunities arise in the face of adversity. Many of today’s most influential companies were built out of recessions. AirBnB, one of the largest real estate focused tech companies in the world, was founded in 2008 on the coattails of a real estate driven financial crisis. As the Great Recession escalated, so too did the need for short-term, low commitment living quarters. Today AirBnb is a unicorn company that has heavily disrupted the lodging and housing industry. If Dallas Basha can continue to capitalize on market opportunities driven by this pandemic, I’m sure his company will come out stronger on the other side.
The Astral Consulting Group approaches every business case with a clean slate, and applies our unique framework to build a workflow to suit each client's individual needs. Our founding partners come from engineering backgrounds, and understand the importance of reasoning from the ground up. As such, we combine this "first-principles" style of thinking with a holistic growth mindset to evaluate each case from both the top-down and bottom-up. This creates a comprehensive process unique to each solution we develop, and gives our clients insight into both the granular details of their business and the high-level strategy and vision to propel them forward.