Taking The Leap: How 3 D.C. Women Left Big Firms To Launch Their Own CRE Companies During Covid
Kelly Nagel, who has worked for publicly traded REITs and other big firms during her career, decided at the end of last year to leave her job and pursue a lifelong dream of starting her own company.
A single mother of three, Nagel said the experience of staying at home with her family during the pandemic led her to rethink her priorities. She no longer wanted to travel for work as much as she did before the coronavirus, and she wanted the freedom to set her own schedule.
"It forced me to re-evaluate what was going on in my life," she said. "I can take the parts of my job that I love and turn it into something that’s mine and have the flexibility I need and want and be able to be around for my kids, but also be able to build something."
Nagel, who launched Bethesda-based multifamily investment firm Residy in January, is one of three D.C.-area women who spoke to Bisnow about their decisions to leave big firms and found their own companies during the pandemic. Madi Ford left her family's local development firm, MidCity, to co-found Arlington-based Audeo Partners last April, and Byrdy Kelley left JLL to start Bethesda-based Melan Property Management in October 2020.
These three women are part of a trend of thousands of entrepreneurs who decided to start their own companies during the pandemic. Monthly new business applications had hovered between 200,000 and 300,000 between 2011 and 2019, according to U.S. Census Bureau data, but in 2020, that figure shot up to more than 500,000, and it still remained above 400,000 as of last month.
In addition to the pandemic, Kelley said the 2020 killings of George Floyd and other unarmed Black people and the worldwide protest movement also sparked her desire to do something new.
"It woke me up, and as I heard from a lot of other colleagues, we had time to think," Kelley said. "It hit home for me, and I was dealing with a personal crisis myself, thinking about what’s important in life and what’s going to make me really happy. Do you keep chasing a dream, or do you actually get out there and do it?"
'I Think I Can Do This Myself'
The decision to leave the financial stability of a job at a big firm in exchange for the risk of starting your own company can be a difficult one to make.
Prior to launching Residy, Nagel had worked as a senior vice president at Philadelphia-based Stoltz Real Estate Partners. Before that, she worked for apartment REIT AIMCO, global developer Skanska and apartment REIT AvalonBay Communities.
She said she has thought about starting her own business since she was a child, and she specialized in real estate and entrepreneurship at the University of North Carolina's Kenan Flagler Business School, where she received her MBA in 2008. A dozen years into her professional career, she said she had enough confidence in her abilities to start her own firm.
"About a year ago, I was like, 'I think I can do this myself,'" Nagel said. "I’ve created a lot of value for a lot of companies over the years and figured I could do it on my own."
Residy received investment from Northpoint Realty Partners, an industrial-focused firm based in Bethesda that Nagel said was looking to diversify with a multifamily play. She said the Northpoint team has served as mentors and has helped her with many aspects of getting her company off the ground.
The ability to spend more time with her children was not only one of her chief reasons for launching the firm, but Nagel said it has made the early days of running her company even more rewarding.
"It's been fun going through the branding process and hanging everything in the home office," she said. "They’re invested in it too. They know I've started my own company. It's been fun to watch it through their eyes."
Kelley, who served as a general manager at JLL prior to launching Melan, previously worked in property management for Lincoln Harris CSG and Kettler. She said she has been thinking about starting her own firm for more than a decade.
"I felt there was a difference I could make," Kelley said. "Not only in the way customer service is provided within property management ... but also, I didn’t see leadership at the top that looked like me, so I never really knew if I had a career or not or if that dream would ever come to fruition."
After the pandemic and the Black Lives Matter movement in 2020 gave her the motivation to take the leap, Kelley said the risk of starting a new company still made her nervous. She said she didn't take any outside investment to start the company, instead using her personal savings from the prior 11 years to get Melan off the ground.
"It's a scary feeling," she said. "I put my trust in God and said, 'I’m going to do it,' because it's in front of all my colleagues and friends and people who were like, 'Oh my God, what are you doing?' You have to lose that fear and be fearless and move forward."
Ford said the idea of being fearless and taking a risk is something that is deeply ingrained in her and her company's founding. Audeo means "I dare" in Latin, and she had the word tattooed on her arm before using it as her company's name.
"It’s about trying and believing in yourself," Ford said. "I’m going to dare to believe in myself. I’m going to dare to try hard things because I'm smart and I know I can be successful."
Previously, Ford had served as senior vice president and general counsel for MidCity, a company founded in 1965 by her grandfather, Eugene Ford Sr., and still owned by her family.
She had made the decision to leave MidCity before choosing to start her own company, Ford said. She participated in multiple interviews with local and national firms before deciding to launch her own venture focused on developing and acquiring multifamily properties.
"I felt like I was at this moment in my personal career where I wanted to really bet on myself and create opportunities for myself that were meaningful and have something to show for all the work I do," Ford said. "I’ve always worked incredibly hard, and I was ready to capitalize on the effort I put in."
Ford left MidCity along with Michael Meers, who joined her in launching Audeo and serves as partner. She said the two used their savings and didn't take any outside money to start the firm, but they plan to bring on equity partners for specific deals. Ford said her grandfather's founding of MidCity served as an inspiration for her to chart her own course.
"I really do feel very connected to my grandfather who founded MidCity and was incredibly entrepreneurial," Ford said. "People forget about the journey when they talk about founders. They forget how hard it is and just glamorize end result. A lot of struggle goes into it."
Scrapping, Struggling, Surviving
Every startup faces different challenges based on the sector they are looking to break into. For these three D.C.-area founders, the main difficulty in the multifamily investment, development and property management sector has been competing with larger firms for deals.
"The acquisition market is extremely tight," Ford said. "We thought we'd be focused in Northern Virginia, but we participated in marketed processes and were immediately outbid. ... We definitely got a few black eyes this year."
This has led Audeo to expand its sights down to the Richmond area, where she said it has deals in the works. The company has yet to close its first deal since launching in April, but Ford said it has earned income from consulting work, and she is being patient in finding the right deal.
"There can be ego in saying, 'This is my new company, I want to have five deals the first year,' but the deals have to be good deals," she said. "That's what makes a lasting business. We're focused on discipline rather than ego."
She said using the connections that she has built through her career has been helpful as she works to source deals, but the process of breaking into the multifamily investment and development space hasn't been easy.
"It can be really demoralizing," Ford said. "I keep saying you might outspend me, but you're not going to outwork me. You've got to keep hustling and leveraging your network to find opportunities that are scrappier. You've got to put in the work. It’s hard."
Nagel is only a few months into launching Residy, but she said she has also seen the difficulties in finding multifamily acquisitions. She had initially sought to buy 200-plus-unit buildings that would help achieve scale quickly, but those types of deals proved too competitive. She is now looking for smaller properties, and she is looking away from D.C., at markets like Richmond and Virginia Beach, plus she is considering looking down in Nashville and the Carolinas.
"It’s very competitive with multifamily right now," she said. "What I want to do is look for smaller deals where it’s a little too small for the big guys to spend their time on but good for me to get a track record, get stuff under my belt. The whole idea of the company is I’ve got institutional knowledge but am applying that with an entrepreneurial focus."
Launching her own company has required her to work harder than ever before, Nagel said, but she said it feels satisfying to be building something on her own.
"There's something to be said about having agency, having autonomy, having control," she said. "I’m working hard, but I have got a business plan, a vision. It's not going to go exactly the way I want to, and being willing to accept that and embrace it has been really rewarding so far. I've learned more in the past few months than I had for a long time before that."
Kelley, who is focused on finding clients to manage properties for rather than sourcing acquisitions, said that has also been a competitive and difficult space for a new company.
She said she is managing three small office properties, one in Georgia, one in Virginia and one in Maryland. She said she has another three or four properties in the pipeline, including two multifamily buildings in D.C. Leveraging her relationships from past jobs has helped source clients, but she said it has still been an uphill battle.
"One thing I realized is it would take is patience and time, because although relationships were there, I still have to prove myself," she said. "I still have to prove I can exist in this market."
Initially, Kelley had planned to source her first management deals through local governments, but she said that route has been more difficult than she expected. She said it took a full six months from May until November for her to get certified as a minority-owned business, and she still hasn't successfully landed any deals with the public sector.
"Getting opportunities with the government as a minority- and- women-owned business, that’s proven difficult," she said. "I feel like it’s been more of a challenge than it has in the private sector, which I thought would be vice versa because government is supposed to be for people."
She said she has sought deals with the local government in her home jurisdiction of Montgomery County, and she has looked for public sector opportunities in Florida, Georgia, Texas and California.
"What I’m finding is at the local and state level, the opportunities for property management are nonexistent," Kelley said. "The government is managing those opportunities in-house and choosing what they want to contract out here or there. It’s not consistent work."
While it has been challenging to get the business off the ground, Kelley still has confidence in her ability to meet her goals. Over the next 10 years, she hopes Melan will manage 2M to 5M SF of office space and 3,500 multifamily units.
The main lesson Kelley has learned that she would pass on to other would-be entrepreneurs is to be financially prepared for a slow ramp-up period.
"I wouldn't expect anyone to make income right when they open a business, so making sure that you're financially able to start your business and you have a year or two’s worth of income to sustain you," she said. "And two, making sure you build an ecosystem of relationships before you get out there."
Ford said she hopes that the disruption the pandemic has caused to the economy and the nature of work will lead more women to start their own companies.
"It's a great opportunity for women to re-envision their own agency and their place in the workforce in a way that makes sense for them," Ford said. "I want to see more of my peers doing what we're doing and making it work."