The Hustle

Keith Wasserman runs a $1.6B real estate portfolio at Gelt Inc. He tells us what he’s bullish on post-COVID.

Plus: What cities he’s targeting for expansion, his real estate investing heroes and whether he would ever buy a mall.

February 13, 2021

Before running a $1.6B real estate portfolio, 36-year old Keith Wasserman tried his hand at a number of other entrepreneurial ventures:

Wasserman graduated in 2007 just as the eBay business was slowing down and the real estate bubble was reaching its climax. In 2008, he and his cousin spotted an opportunity and purchased a single 4-unit building in Bakersfield, California. 

Since then, the business known as Gelt Inc. — which focuses primarily on apartment buildings — has grown significantly:

Gelt also has a seed-stage investing arm (Gelt VC) and a multi-family rent payment tech platform (Domuso). The Hustle spoke with Wasserman to find out how COVID has affected Gelt, the cities that he is targeting for expansion and his real estate investing heroes: 


How has Gelt’s real estate portfolio performed during the pandemic?

Fortunately, Gelt doesn’t own the hardest hit assets like retail and malls. Our apartment properties have collected 93% of rents across the portfolio. 

We’re seeing a flight-to-quality in real estate (to certain home and apartment markets), which is raising values. It’s a bit head scratching if you look at what’s happening with the broader economy but low rates and stimulus are definitely boosting prices. 

The geographic spread of Gelt’s portfolio

Would Gelt consider putting malls into the portfolio moving forward? 

Gelt isn’t currently set up for mall ownership. But, we’d consider it if the mall is: 

By reposition, I mean if we can turn it into other use cases. 

As an example, one fund purchased old K-Marts and transformed them into self-storage units while [delivery startup] GoPuff recently acquired a chain of liquor stores — Bevmo.

Then you see [game maker] Epic purchasing a mall and turning it into a corporate campus. I’d potentially be interested in turning a mall into a distribution centre to meet rising ecommerce demand. 

What about retail?

The only retail we’d really consider are locations in walking areas around restaurants and high-end stores. The experience part is really important and — post-COVID — I don’t think that’s going away. We actually have someone on the ground in New York looking for these exact types of locations. 

The Atlantic’s Derek Thompson recently wrote an article about the Death of Superstar Cities — like New York. You’re obviously looking at these cities but do you think there’s merit to the idea that these coastal cities are “done”? 

There’s definitely concern with people leaving, but I think it’s overblown. At the end of the day, single people want to live in proximity to dating and near big cities. 

It might take a while, but things will come back for cities like New York and San Francisco. Especially with rent drops attracting a different set of people who may otherwise have been priced out. 

We invested heavily in Phoenix in 2009 right after the Financial Crisis. It’s the 5th largest city in America and we knew it would take a few years to stabilize. It actually bounced back in less than 5 years, which is relatively quick in real estate terms where the cycles are very long. 

For the next 5 years, what are cities that Gelt is looking at investing in?

Here are some cities we’re looking at:

A Gelt apartment property (164 units) in Oregon

Gelt has ventured a bit out of its apartment focus. How is that going? 

We were in manufactured homes (and RV) parks for a few years. It’s a good real estate investment for mom and pop type of investors because: 

There was one big downside, though. Managing the properties takes a lot of work. Unlike apartments — which have good 3rd party management companies — manufactured home parks have no standard 3rd party solutions. 

We sold these properties to various buyers — with the RV park selling to [one of the biggest REITs] Equity Lifestyle Properties — and entered into another “recession-proof” market, self-storage. 

Where is the self-storage property? 

Gelt has 8 facilities in Memphis, which has a low supply of self-storage right now. We also have 1 in Los Angeles and all the properties total 600k square feet. 

We outsource management and it’s much less time-consuming than manufactured homes. 

Who would you say your real estate heroes are? 

There are a few:

Gelt’s apartment rent payment platform, Domuso

In other interviews, you’ve mentioned your father as an influence. But, he’s not traditionally from real estate? 

He’s a lawyer by training and his practice had 80 lawyers at its peak. The law firm is smaller now and does legal work for Gelt. 

My dad’s actually been active in real estate for decades. He realized long ago that you can only make so much money from billing. 

You need to make the money work for you and he’s been an active real estate investor for a long time. 

Outside of real estate, what industries do you draw lessons from? 

I’m a big fan of successful long-term market investors. It’s similar in that the ones I’ve studied — Warren Buffett, Howard Marks — are big into buy and hold. 

In real estate, if you find a good property, hold on to it. Same with stocks. If you find a good company, buy and hold. I’ve made mistakes in the past by selling way too early.

I bought Netflix in the early 2000s and was a huge believer in it but since sold my position years ago. It would be worth millions now, but I didn’t have the buy and hold discipline. 

The Gelt team 

Basically, all roads come back to buy and hold.

I honestly think real estate is the best way to buy and hold.

Your money is put into a physical asset and you can’t check price fluctuations every day, which might make you want to “trade” (like you do with stocks).

And — in the US — you have the option of a 1031 exchange, which allows you to not pay capital gains when you sell an investment property. You can roll that money over into a new property and avoid the tax man. 95% of my clients take that option. 

Do you regret selling some properties in the past? 

We’ve sold $506m of property over the years and all of it has since gone up in value.

We did it to establish a track record and gain some liquidity, but now we are very selective about selling. We want to hold for as long as we can. 

What’s the best advice you’ve ever been given?

I’ll go back to what Jonah Goldrich said: “time and inflation are your friends in real estate.”

The thing I love about real estate vs. other industries is that it’s not “winner takes all”. There are millions — if not tens of millions — of millionaires in real estate. There’s enough out there for a lot of people to get involved. 

Another piece of advice is more of a lesson from my father. It’s about giving back to the community, which we do a lot of at Gelt.

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