David H Steinwedell of Affordable Central Texas: How We Are Helping To Make Housing More Affordable
Start now — don’t wait to get all the preparations done. Action creates momentum which leads to progress.
In many large cities in the US, there is a crisis caused by a shortage of affordable housing options. This has led to a host of social challenges. In this series called “How We Are Helping To Make Housing More Affordable” we are talking to successful business leaders, real estate leaders, and builders, who share the initiatives they are undertaking to create more affordable housing options in the US.
David H. Steinwedell is a 35+ year veteran of the commercial real estate industry and has worked in a variety of disciplines including public and private investment management, acquisitions, debt, capital markets, investment banking and asset management. David is Founder and Chairman of Affordable Central Texas, the sponsor and investment manager of the $400 million, Austin Housing Conservancy Fund in Austin, TX. Over his career, David has completed over $15 billion in transactions across all property types and as part of private equity funds, REITs and other investment vehicles. A graduate of Hamilton College, David currently serves as past chair of the Austin Economic Development Corporation board and has served on the boards of National Association of Real Estate Investment Managers (NAREIM), ULI Austin and Atlanta, The Trust for Public Land and the Tritt Elementary School Foundation.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
I have spent most of my career in commercial real estate working for a broad variety of organizations, capital structures and property types. I am very curious by nature, and when the opportunity arose to become involved in affordable housing, despite having zero experience in the field, I jumped at the challenge. Many times, people think a career is an endless upward trend to greater and greater success. My career hasn’t followed that path — I have had a variety of terrific successes intermingled with some significant failures. I have received awards and been fired. Each success and failure allowed me to learn and grow as a leader and real estate investor.
When former Austin Mayor Steve Adler convened a working group to look at the housing challenges facing Austin’s workforce, I was fortunate to be included. Our nonprofit and Fund emerged from more than a half year of work. I volunteered to be CEO and as I like to joke, we are now a 9-year overnight success story.
Can you share the most interesting story that happened to you since you began your career?
When we were living in Atlanta, the team I was leading purchased the highest number of office properties in the country in one year. I shared that news with my family, and they were understandably proud. Not soon after, we were driving around Atlanta and I pointed out one of our acquisitions. My three, grade school aged children then started pointing at buildings and asking me if I had bought them too. After saying no about 25 times, they proclaimed “We thought you were the most successful buyer in the country, and you have only bought one building!” It takes the wisdom of youth to keep you grounded.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
Things really began to change when I stopped thinking about me and started thinking about we. We can be your team, organization, partners even competitors. Broaden your horizon, hold back your ego and great things can happen.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful who helped get you to where you are? Can you share a story about that?
Some people show you a path that you should follow, others show you paths to avoid. I don’t believe you can measure success solely by the amount of money you make and awards you receive. I have worked for several people whose focus was on making more money than others. They were driven by it to compete and, for the most part, were miserable. I thank them for showing me what I didn’t want to be.
Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?
Strategic Selling by Miller and Heiman — I used to think that sales was an inferior skill to investing and leadership. I have now come to realize that sales is ingrained in everything that you do. You need to influence people, meet their needs and inspire them to invest or buy or follow. The book identifies how selling is accomplished in a variety of ways with people who play different roles in organizations. The lessons can be applied to all aspects of your life.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“If you can be anything, be kind.” Please understand that being kind doesn’t mean being a pushover, or not being aggressive or competitive. Sometimes being kind means being brutally honest, having to fire someone, provide frank feedback and make tough decisions. But these tough things can always be handled in a way that respects the other person. My sons are in the real estate business now and they tell me stories of how they have met people that know me. It is a constant reminder for me to keep living up to this motto. I also love Billie Jean King’s quote — Pressure is a Privilege.
Ok super. Let’s now shift to the main part of our discussion about the shortage of affordable housing. Lack of affordable housing has been a problem for a long time in the United States. But it seems that it has gotten a lot worse over the past five years, particularly in the large cities. I know this is a huge topic, but for the benefit of our readers can you briefly explain to our readers what brought us to this place? Where did this crisis come from?
The affordability crisis is due to the success of our economy combined with the pandemic and mixed with regulatory good intentions without thinking about the unintended consequences. Housing affordability isn’t a new issue, and local and federal governments have been attempting to address affordability at low-income levels for decades. What is new is that affordability issues in both rental housing and in home ownership have expanded recently to encompass those income levels that used to have affordable choices to rent or buy. When the economic strength of the last decade was combined with the effects of the federal tax reductions and the cultural and work impacts that evolved from the pandemic, demand for all levels of housing skyrocketed fueled by low interest rates, leading to massive rates of increase in rents and home prices. Regulations in place at the local and state level didn’t allow for the market to respond quickly to add housing supply further exacerbating the problem.
Can you describe to our readers how your work is making an impact to address this crisis? Can you share some of the initiatives you are leading to help correct this issue?
My father was a teacher and he was able to afford to purchase a modest home at his salary level. Today, it is rare for teachers to be able to buy a home and it is increasingly rare for teachers to afford to pay rent on apartments that are close to their schools. This story is repeated across many professions considered to be moderate income or our essential workforce including medical workers, baristas, bank tellers, first responders and others. Our work with the Austin Housing Conservancy Fund has been to preserve for decades multifamily rental properties that meet the stable housing needs of this group. We have over 2,000 units in our portfolio with a goal to own 10,000 units by the end of the decade. Meeting this goal will provide a stable base of rental housing that will raise rents in line with regional income growth and not be subject to the spikes in rental rates that happen in a high growth market like Austin.
Can you share something about your work that makes you most proud? Is there a particular story or incident that you found most uplifting?
I love challenges and the dynamic environment of startups. To have done something no one has done before is very inspiring. When you combine that with building
a fantastic team and board of directors that together allowed us to accomplish award winning work is incredibly gratifying. However, seeing our residents thrive in stable housing has to be the most uplifting aspect. We get to witness their growth through community and impact events that we hold at our properties.
In your opinion, what should other home builders do to further address these problems?
Developers build to meet market demand and attempt to do so in a way that maximizes their profit. This is not an issue as their profit is usually tied to the amount of risk they have taken. I view real estate development and investment as a fairly simple algebraic equation. If you can reduce some of the risk variables that impact investment returns, you can then provide for greater affordability. Our model does not make anyone rich, we do however, provide competitive risk adjusted returns to our investors while maintaining affordability for our residents. This model can be copied and adapted to meet the needs of markets across the country.
Can you share three things that the community and society can do to help you address the root of this crisis? Can you give some examples?
- Support public and private solutions — there is no silver bullet to this crisis, it takes a variety of efforts all moving in the same direction.
- Don’t let perfect get in the way of good enough — things can always be fixed or course corrected in the future.
- Keep going — perseverance in the face of obstacles is the greatest predictor of success.
If you had the power to influence legislation, are there laws which you would like to see introduced that might help you in your work?
Traditionally, regulatory work has focused on the areas of homelessness and very low income members of our society. Affordability challenges have now expanded nationwide to include those who are considered moderate income or missing middle earners. Modifications to vouchers and LIHTC rules to increase their application at the current levels but also to expand to moderate income levels would be an important step. In addition, further empowering nonprofits to work in the area of moderate income housing would allow for greater participation in meeting the housing affordability needs among that demographic.
What are your “5 things I wish someone told me when I first started leading my company” and why?
- Start now — don’t wait to get all the preparations done. Action creates momentum which leads to progress.
- Trust your gut — there are times when things don’t feel right, you can’t put your finger on it, but don’t ignore the feeling.
- Mistakes happen — the critical thing is how you handle them afterward.
- Your team and organization are more important than you.
- The only thing certain about budgets and strategic plans is that they are wrong — they are tools not rules.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
Don’t ever believe it if someone tells you that you are a person of enormous influence.
Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might just see this, especially if we tag them. :-)
Wynton Marsalis — ever since I watched the Ken Burns series “Jazz” I have been impressed by his talent and wisdom. Plus my wife went to the same high school as him.
How can our readers further follow your work online?
LinkedIn — www.linkedin.com/in/davidsteinwedell
Website — www.austinhousingconservancy.com
This was very inspiring. Thank you so much for joining us!
