Evan Rosenfeld
@evanmr
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Texas Industrial & Multifamily | 7-fig app business destroyed by Apple | Lives on a tropical fruit farm | YC
Los Angeles
Joined August 2009
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Apple destroyed my 7-figure business, unjustly, and threatened to report me to the feds.
To clear my name, I had to reach deeper into Silicon Valley than ever before.
Here's the story, AKA how I learned about platform risk.
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Can't make this stuff up.
Was on a SaaS sales call, rep quoted me $250K/yr.
In the middle of my question, the Zoom cut out.
"This free call has ended"
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This experience taught me a valuable lesson about platform risk.
When you depend on someone else's platform, you are at risk of being de-platformed.
It's true for social media, marketplaces, and banking.
Protect yourself by diversifying and owning the customer relationship.
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Commercial Real Estate Money Reveal
Few people know just how much money flows through our ecosystem. Time to change that.
Follow me behind the scenes of a $10M apartment sale.
You won’t believe the number of parties involved or how much they earn.
Take the red pill 👇👇👇
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🧵 How I made my first million in real estate
I bought a money losing fourplex and made every mistake in the book.
With a lot of luck and hustle, I sold it a few years later, netting $2M.
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🧵 Commercial Real Estate Money Reveal
Few people know just how much money flows through our ecosystem. Time to change that.
Follow me behind the scenes of a $10M apartment sale.
You won’t believe the number of parties involved or how much they earn.
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Post Mortem: My Worst Deal
128 units in Daytona Beach, FL
Someone took a loss, but it wasn't my investors
👇
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It’s an evil genius, black hat tactic to buy a competitor’s apps using stolen credit cards in order to make them a target and get them banned.
I couldn't believe someone would do that to my tiny company, but that’s my best guess at what happened.
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Exactly three years ago, a private equity firm acquired Wehner Multifamily, a DFW-based property management firm with 25,000+ units.
A few weeks ago, they went out of business.
I was a customer for much of this time, watching them burn down the company they spent eight figs on.
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🧵 Here's a tip worth $100K minimum to CRE buyers in Texas, Utah, and 10 other states
Make sure the recorded documents don't specify your loan amount
Your attorney WILL NOT do this for you!
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🧵 How to start your own real estate private equity firm. Four key roles:
• Acquisitions
• Transaction coordination
• Asset management
• Investor relations
It's a lot for one person, but help is available 👇
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When a $10M property is sold, 20+ parties split $1M in fees.
Want to get involved or reshape real estate? Watch the money flows.
Here's the lowdown on who gets paid and how much 👇👇
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A week later, my developer account was restored. The angel investor really was my angel.
Unfortunately, after a prolonged absence, my apps had lost all of their App Store SEO rankings.
The damage was done and they never regained their former glory.
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All toggle switches should be replaced with decorators.
Very easy upgrade that has a dramatic visual effect.
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Speaking of being de-platformed, if you enjoyed this story, please consider liking or retweeting the first tweet so I know that I'm not shadow banned.
Apple destroyed my 7-figure business, unjustly, and threatened to report me to the feds.
To clear my name, I had to reach deeper into Silicon Valley than ever before.
Here's the story, AKA how I learned about platform risk.
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🧵 Reverse 1031 Exchange
Compounding gains, tax-deferred, via an endless chain of 1031 exchanges can seem romantic.
The problem is each successive 1031 ups the ante. If an exchange fails, the tax burden could be game ending. Talk about pressure!
Enter the reverse 1031
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How I made my first million in real estate
I bought a money losing fourplex and made every mistake in the book.
With a lot of luck and hustle, I sold it a few years later, netting $2M.
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I was distraught when the business died, but I also recognized that the apps had been a crutch for me in many ways.
This was an opportunity to move on with my life.
Around this time, I closed on my first investment property. The rest is history.
🧵 How I made my first million in real estate
I bought a money losing fourplex and made every mistake in the book.
With a lot of luck and hustle, I sold it a few years later, netting $2M.
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Closed on this beauty late November!
It's 330 units, 2021 built, in a $130K median income area with no competing product under construction within 10 miles.
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In the meantime, I tried to piece together what happened.
I noticed that my marquee app received a torrent of 1-star reviews the month before my suspension.
Bombing a competitor app with fake 1-star reviews was a known, anticompetitive tactic.
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To save my business and clear my name, I started by asking all of my friends for help.
But I had no idea how difficult it would be.
Apple is notoriously secretive, rivaling the NSA. Two coworkers can't even tell each other what they’re working on.
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One of the bad reviews promoted another app by name.
I discovered that the company behind this app had cloned all of mine.
I still didn’t know what had happened, but I figured this company must be behind it. I hired a private investigator to gather supportive evidence.
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At the end of my rope, I used my social capital to ask the most connected person I knew in Silicon Valley for help.
He brought in the most connected angel investor.
Like magic, an hour later, I got a call from the senior manager of the App Store.
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Friends pinged their contacts in Apple’s legal department.
I crashed a 10-year-old’s birthday party in Atherton to speak to her father, who was a VP.
I tapped alumni networks.
Not a single current or former employee I spoke to could find out anything about my case.
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They was on vacation with their kids and could only speak off-record.
The angel had seeded this person's before it was acquired by Apple. The angel was such an influential figure that nobody turned down a request from him.
So this person had to help me.
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Finally, they believed that I was telling the truth and had no idea what this was all about.
They revealed that stolen credit cards had been used to buy my apps, but wouldn’t tell me anything more.
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SMB story 🧵: Last year, I nearly bought a $20M electrical subcontractor in the Southwest.
Here's what I liked about the deal, how I structured it for downside protection, why it fell apart, and a surprising coda.
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I sold my first fourplex for a record setting $4.3M, turning $250K into $2M. Here's how I
• bought a money losing property
• made every mistake in the book
• hustled my way to becoming a RE millionaire
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In Israel, nobody is a civilian, yet in Gaza, nobody is a combatant.
Black/Palestinian Lives Matter, yet when Jews are massacred, All Lives Matter
Intimidation, censorship, and calling people out for hateful beliefs is legit, except when faced by those who support Jew killing
It’s been amazing this week to watch the left invert every rhetorical device they’ve used since 2020, all to avoid having to criticize terrorists dedicated to Jewish genocide. It would be hilarious, if it weren’t so reprehensible.
2020: Silence is violence.
2023: People can’t
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The most asymmetric real estate investment I've ever seen is a dirt pit
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Say you bought a 4.25 cap with a 5-year, 30y am, 70 LTV loan at 3.5%.
You need to grow NOI by 42% in order to refi in year 6 at 6% without putting in more cash.
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The gravity of the situation had sunk in. My money train had stopped. I had been completely excommunicated by Apple. What if I was under investigation by authorities?
Could I really have done so something terribly wrong without knowing?
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I explained the situation to the developer support rep, who placed me on a brief hold.
A few minutes later, they said they would have to transfer me to their manager. To my shock, the manager said that they were not allowed to speak to me and ended the call!
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Founders: not all money on your cap table is equal.
The right connections can literally make all the difference in the world.
Guess who is getting first look at all future projects?
This is what a true value-add investor looks like 👇
At the end of my rope, I used my social capital to ask the most connected person I knew in Silicon Valley for help.
He brought in the most connected angel investor.
Like magic, an hour later, I got a call from the senior manager of the App Store.
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Unfortunately, it was a dead end. The owners of the company had no footprint and the office address was fake.
The investigator came up with nothing I could use.
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I'm embarrassed to admit this, but I geek out over tax efficiencies and strategy.
Anyone else out there? 🙋
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During the early days of the iOS App Store, I built a thriving business.
Our apps had millions of downloads, were pushing 7-figures in revenue, and had been featured by Apple multiple times.
I was playing on easy mode.
Want to get started in commercial real estate? You need money!
Here's how I earned the seed capital that got me off to the races:
The iPhone App Store gold rush
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They grilled me about all of my promotional activities.
What type of marketing had I done?
Had I ever broken the rules?
Who had I paid to help me?
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I checked to make sure the email really came from Apple, which it did. Sure enough, all of my apps had been removed from the App Store.
It had to be a mistake. I called into Apple developer support.
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Closed on my first storage portfolio!
It may not be pretty today, but all I see is incredible profit potential.
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How did you earn your initial capital to get started in real estate?
Mine came from the iOS App Store. This week I’ll tell the story of the epic rise and even more epic fall.
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🧵 Case Study: 106-unit multifamily in Dallas
See how the deal was structured, our results, and the opportunity for the next owner.
PS: Want it to be yours? It's currently for sale!
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Mentor of mine built his landscaping business off of a synagogue.
Attending his first Bar Mitzvah (he’s not Jewish), he noticed the donor board and started marketing to those names.
He offered the Rabbi free landscaping in exchange for intros.
Had 250 contracts at age 19.
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🧵 The good, the bad, and the ugly of self storage
What makes it so attractive and profitable for investors?
And why do some consider it the outcast of real estate?
👇
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On August 2, 2013, I received an email that changed my life.
“Your iTunes provider account is suspended due to documented indications of fraudulent behavior … Apple’s investigation may include the involvement of local or federal enforcement authorities”
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Any interest in a short series on protesting property taxes?
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A real estate horror story
• Sell Dec '21. Lock huge gain, prepayment penalty
• 1031 into PHX apartments. 80 LTV bridge, 2 year cap.
• Cap expires Dec '23. 10Y at 5%.
• Equity gone, tax man cometh
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Syndication best practice:
Separate active, liability generating activities from passive, asset holding activities for greater protection.
The setup pictured is very common, even among experienced groups. The GP entity manages the project and owns the B shares.
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I turned down Facebook three times
2007 offer: $1M in stock at a $15B valuation
My interviewers implored me: "stay for a few years, take the money, then live life on easy mode"
I'm stubborn, I didn't listen
Met a guy who spent his career buying struggling car dealerships.
He would turn them around and sell them. He did 4 of them in a 3 yr span at his peak.
Met him when he had flown in on his private jet for his sons graduation.
Why are tech startups so sexy again?
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How I made my first $1M in real estate
I bought a money losing fourplex and made a ton of mistakes.
With a lot of hustle and luck, I sold it a few years later, netting $2M.
This is the deal that sent me off to the races.
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Last year my wife and I built a process around making large, personal investment decisions.
We write an investment memo and talk it over with a "committee" of knowledgeable friends.
It has been a great way to solidify thinking, check blind spots, and get her more involved.
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🏠 The case for Class A multifamily
Class A multifamily has traditionally been reserved for institutional investors.
Here's why it will outperform older Class B and C multifamily in the years ahead and why you should add it to your portfolio.
👇
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Quick aside: he said something at that lunch that I've never forgotten.
Everyone was asking him what type of real estate venture he was going to do next. He would tell them, "I'm not a real estate guy. I'm a business guy."
Always reminded me of Sam Zell
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🏡 It's my last week as a California resident
Check out our crazy, new life on a Miami-area farm
PS: Bonus for real estate folks
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Corollary: don't be afraid if you see a PE firm acquire one of your competitors. They may blow it up.
Corollary: be mindful if you see a PE firm acquire one of your key vendors. They may blow it up.
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Called a locksmith and a young guy showed up. He started at Marcus & Millichap doing industrial investment sales but couldn't break through.
He bought this company, which is nearly paid off. Having learned the game, he'll deploy cash into real estate.
Not a bad path at all.
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Commercial lenders use a trick to make their loans even more profitable.
Most borrowers are clueless that they are paying more interest and paying down less principal.
The trick? Compute interest based on a 360-day year.
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@NdamukongSuh
I agree with you.
Another aspect is government policy of subsidizing college loans and encouraging people to go to college.
Too many end up with wasted degrees and would have been far better off, with less debt and higher earning potential, going to work in the trades
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Takeaways
@REconveneLA
2023:
Transaction volume is way down. The sharpest buyers are lucky to have found 1-3 deals this year.
Adjacent businesses depending on transaction volume are hurting. Brokerages are laying off staff, and the smaller ones risk going out of business.
The
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Want to get started in commercial real estate? You need money!
Here's how I earned the seed capital that got me off to the races:
The iPhone App Store gold rush
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Industry that needs reinvention: claims based insurance
It's a total scam. You are required to have it. The price goes up every year.
Then when you file a claim, they make every effort to deny and pay as little as possible.
They would rather force you to sue them than pay up.
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Lesson: Location is the most important factor in real estate.
It's the only thing about a property that you absolutely cannot change.
Buy good locations!
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TLDR, the take aways. The PE firm:
• Was too quick to install their lieutenants without transferring or building relationship good will
• Made huge operational changes at a bad time without employee buy-in
• Made decisions to alienate their customers
• Lacked accountability
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Picked up 75 baby mango trees.
These are rare, Thai varieties that few have in South FL.
When mature, the fruit should wholesale at $5/lb.
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Regular people worry about how much of their savings they can draw each year during retirement.
Real estate folks, with cashflow producing assets, don't.
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Pick your poison: multifamily edition
California
• Rent control
• Lengthy evictions
• Flexes police power
• Easily modeled property taxes
Texas
• Strong rent growth
• Business and landlord friendly
• Property taxes eat all the cashflow
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Visited with one of my mentors, who controls a multibillion dollar portfolio of apartments and retail on the west coast.
Want to hear a few interesting stories?
At that scale, they are constantly getting sued. Lately, it's ADA cases.
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Update: I was completely wrong about this deal.
I never found a tenant. It sat vacant for 20 months.
Emotionally, it was one of my most difficult holds ever.
Financially, it turned out to be a grand slam, 30%+ IRR.
Here's the story:
We picked a leasing team at a top
Case Study: Vacant Lease Up
20k SF industrial warehouse in a desirable Houston submarket
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@shaunmmaguire
@Stanford
It’s not fake, I know someone who brought the incident to light. Multiple witnesses.
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I had dinner with one of the biggest real estate guys in my circle. His family office owns several hundred million in property.
His total portfolio leverage is 20%
And he's buying all cash right now
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If you want to know what happened next, I'll be posting the rest of the story this week.
So consider following me if you want the notification, or subscribe to my Revue for longer form content.
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Case Study: Vacant Lease Up
20k SF industrial warehouse in a desirable Houston submarket
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Confession: I've regretted every deal I've purchased.
Not one was smooth sailing, all according to plan.
Each brought degrees of complication, discomfort, and fear.
Emotions that lasted days, months, and even years.
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As the largest expense line item, the GP's fiduciary duty is to manage property taxes.
Without knowing exactly what you paid, the assessor will rely on methods that tend to underestimate. If they overassess, you can always reveal the actual, lower, purchase price. Optionality!
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What do the best investors in the world have in common?
Patience.
They sit on their hands and do nothing, waiting for their thesis to play out.
If you were twice as patient, could you be 10x wealthier?
Today I’m retiring from the corporate world at age 39.
Not selling any shares for the foreseeable future. $TSLA
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Announcing my latest listing: Cypress Hill Apartments
DM for details
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Misunderstanding margin math is a key reason small businesses fail, and the lie behind this QT
Great time for a quick review
J.M. Smucker, the maker of Jif peanut butter, revealed that it will increase prices by $1.2 billion, while input costs are rising by less than $900 million.
Corporate greed is driving inflation, not wage increases for workers or government spending.
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Hello! Here’s a bit about me while I build out my profile:
I’m a real estate and technology investor in Los Angeles.
- Spent 10 years in Silicon Valley in the startup world
- Founded a YC company
- Design acclaimed iOS apps with 10M+ downloads
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If you buy a home and haven’t budgeted at minimum 2% of purchase price for unforeseen repairs, you’re fooling yourself
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@RobertMSterling
A few weeks ago we got a second bill for 150% of what we paid in the office.
Wife called to get more info. They asked for some time to look into it.
Turns out it was a "mistake"
No other industry gets a free pass to steamroll consumers the way healthcare does
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Alaska, Idaho, Kansas, Louisiana, Mississippi, Missouri (some counties), Montana, New Mexico, North Dakota, Texas, Utah and Wyoming are non-disclosure states.
If you're in that target market, I hope you'll remember this advice.
If your GP is, please share this with them.
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The greatest thing I did for myself in 2023 was the Hoffman Process.
It was the most bizarre and profound week of my life.
My headline? Finding inner peace for the first time. As a new physical sensation.
Upon arrival, you surrender all of your electronics. So part of my
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Speaking again of being de-platformed, you should also check out my newsletter in case Twitter goes down or you like long form content.
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I’m going to post a real estate case study each day until I reach 10K.
Here’s the first one
How I made my first million in real estate
I bought a money losing fourplex and made every mistake in the book.
With a lot of luck and hustle, I sold it a few years later, netting $2M.
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Happy New Year! 2022 Highlights:
• Sold Class C multifamily at peak
• Bought 3 value-add industrial props
• First reverse 1031 exchange
• Surpassed cashflow milestone
• Bought a farm, moved to FL
• Exciting new biz opp
• New friendships
• 10K+ followers
• Learned a ton
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Life hack for young people:
Some people are on such a rocket ship that you can build a career simply by being in their orbit. Once there, you can't really fail, and if you do, it will be upward.
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@ArtemTepler
Amortization is an insurance policy for the lender that’s sold as an insurance policy for the borrower.
For a responsible borrower, IO is always superior.
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A home mortgage is NOT a loan on your home
It is a loan on on your income, secured by your home
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Longtime commercial landlords in California have the best deal in real estate
• Property taxes frozen 45 years ago
• Geographically and politically constrained supply
• Strong rent growth with no rent control
• Multiple windows to refinance at low interest rates
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How was
@REconveneLA
?
Imagine a gathering of your smartest friends' smartest friends, sharing wisdom, playbooks, and inspiration.
Grateful to everyone and feel certain to have formed some lifelong friendships and partnerships.
Look forward to meeting more of you next year.
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Just heard about a multifamily deal with 55 co-GPs.
Talk about a red flag for SEC action.
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Want to know why banks are less interested in lending?
A bank can move their deposits to the Fed and earn the IORB rate, currently 3.9%. This will probably go up to 4.4% later this week when the Fed meets.
That's an incredible, risk free, interest margin. Why take on your loan?
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Just discovered the incredible press tool.
It allows the user to join pipe without sweating.
Not only is it a huge timesaver, but the ability to make a repair without turning off water to the whole building is a game changer. My mind is blown.
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FED'S DALY : US HAS A SHORTAGE OF HOUSING
Too bad rates will be so high that none can be built
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