Avanath Capital Management CEO Daryl Carter Sets The Record Straight On Affordable Housing
Dispelling myths about affordable housing is part of Avanath Capital Management's mission — and a key to its success.
The nearly decade-old company focuses on renovating affordable housing properties as part of its nationwide portfolio that consists of just under 8,000 units, spanning from LA to Washington, D.C., and points in between, including Chicago, New York City and Gainesville, Florida.
"We certainly have a major affordability crisis in this country," Avanath Capital Management founder and CEO Daryl Carter said.
The deficit of rental units that are affordable and available to low-income households is more than 500,000 in New York and LA, according to the National Low Income Housing Coalition, as quoted in a Harvard University study.
Carter said many people have misconceptions about those who live in affordable housing.
"The No. 1 myth is these are people that don’t work and don’t have ambition," Carter said. "There are all these stereotypes of people who live in subsidized housing. The reality of it is if you look at who lives in subsidized housing today, everybody works."
Affordable housing residents who do not work — a population he puts at possibly 8% to 9% of residents — are generally elderly or disabled, according to Carter.
He has made it his goal to help change perceptions while making a difference in the communities where his company owns properties.
Carter, who has two master's degrees from MIT, always had a penchant for CRE. His curiosity was piqued as a child when he walked by buildings and construction sites while growing up in Detroit.
Before moving to LA 30 years ago, he worked in Chicago as a real estate banker, beginning his career at Continental Bank in the 1980s.
The firm purchased the Baldwin Hills Crenshaw Plaza.
Capri was among the first to buy urban apartments right after the LA riots, according to Carter.
"Many institutional investors didn’t do apartments in places like Central Los Angeles,” he said.
After amicably splitting from Primo and Capri Capital Partners in 2006, Carter started his own company two years later with a goal of creating a new paradigm for affordable housing. That segment of the market has traditionally been ignored by institutional investors, he said.
"All of the new stuff being built is built to very high-end renters, and the supply at the lower end keeps dwindling," Carter said. "So our strategy is one of preservation of existing housing stock. We don’t develop ground-up. We acquire and renovate."
The strategy has paid off. Avanath's properties have full occupancies, and about one-third of them have waiting lists, according to Carter.
“We try to bring innovation to that sector," he said.
This includes allowing residents to pay their rents and make maintenance requests using an app, something that is often only available on higher-end properties.
Many of the properties also provide after-school programs for children.
“We not only invest in brick-and-mortar, but we invest in the community,” Carter said. “We invest in things that enrich our residents.”
Carter describes it as one of his company’s best examples of a turnaround.
“There were lots of things happening in that community from a crime standpoint when we bought it,” Carter said.
Working with residents and garnering the support of the Long Beach City Council, mayor and police, Carter said cameras were installed, and the area greatly improved.
“We worked as a team,” Carter said. “Today, that neighborhood has changed.”
Avanath Capital has since purchased the property next door, which has about 350 units.
Carter, a former chairman of the National Multifamily Housing Council, said keeping operating costs low by doing things like installing LED lighting and being value-conscious when it comes to reno projects, such as using synthetic countertops instead of marble, is also part of the key to his success.
Carter will be one of the featured speakers at the Bisnow Big West Coast Multifamily Event on July 20 at the Millennium Biltmore Hotel LA.