[00:03:04] Bobby Fijan: But the analytical approach started with measuring new things, which was a lot of painstaking work. And then data analysis could happen after that. That is the exact same approach that I have taken to apartment floor plans where there’s a tremendous amount of data out there, mainly that is trapped within the image of the two-dimensional floor plan.

[00:03:24] Bobby Fijan: So what that has taken is a whole lot of work, a little bit of software tools, but most hard work of taking those units and saying, I’m going to measure a whole bunch of different things and describe space with, right now it’s about 140 different variables. So instead of a one bedroom being described as a unit being described as a one bedroom that’s 635 square feet, in the same way you know that a basketball player wouldn’t say, I had this many points, this many rebounds and this many assists.

[00:03:49] Bobby Fijan: It’s crew A has dimensions X and Y, it has a closet of linear hanging lengths, this, and it either has windows or it doesn’t, the living room width is that. And once you measure all those different things, which is annoying, And like I said, it took the better part of two and a half years. Then you could do some really interesting analysis and say which things do people actually care about?

[00:04:08] Bobby Fijan: And so like again, like you’ve seen different units being built that have kitchens that are equivalent size to like a single family home or a small single family home. And without any data to challenge that assumption. People will build what they have done before in a way that’s efficient in construction.

[00:04:24] Bobby Fijan: Or they’ll take unit plans they did before and just repeat them because there’s no data to tell them that’s wrong or right. I’d say the other reason why I, I view Bill James as something that I model that I strive for is I appreciate that he was doing this 25 years before anything happened. Like took really caught mainstream.

[00:04:42] Bobby Fijan: And I would say I think the real estate data floor plan data specifically, but real estate data is in its very early infancy. It’s difficult to come up with like very precise. I’m very good metrics. I’m still frankly like inventing them by combining different things or measuring stuff. And I fully anticipate that with the kind of data that I am generating as I can give that to more people or integrate that with other kind of analysis and other people’s other people’s data, that that’s when we can really unlock how to make things significant better.

[00:05:12] Bobby Fijan: Again, right now people do things based on precedent and based on the way they think they were done before and sometimes people don’t exactly realize the incentives that are pushing units in different directions. Houses are getting larger, different features and, and there isn’t really good feedback on do people want that or not.

[00:05:29] Bobby Fijan: Does that actually drive revenue or not? That’s why I consider myself the Bill James of Floor Planted is meant to be humorous and it does touch like a very specific spot in my analytical method and it also touches something that’s aspirational for me too.

[00:05:44] Patrick Donley: Was Bill James able to profit from his methods and analysis or was he a little, I mean, was he too early to the game?

[00:05:52] Bobby Fijan: Mostly the latter. I mean, he was brought on as a consultant with the Boston Red Sox, but he didn’t profit in the way that kind of like the new class of data people have, which is now it’s just considered standard. Like everyone has analytics teams very well compensated people, and Bill James was not a part of that.

[00:06:09] Bobby Fijan: And I’d say based on different things that he writes and other things, he’s not particularly concerned. By that, I mean, I don’t know how he feels on the inside. Maybe that’s different, but he was not, he never became like a gm. He never like built a team or anything like that, but he did. He changed the game of baseball.

[00:06:24] Bobby Fijan: That’s undeniable. And that I think is very cool.

[00:06:28] Patrick Donley: He had to have faced a lot of headwinds introducing basically incredibly new ideas to the game. Are you experiencing the same kind of headwinds doing something similar within development and apartments and construction?

[00:06:41] Bobby Fijan: Absolutely. Absolutely. I don’t mind it.

[00:06:44] Bobby Fijan: And I’d say based on my experience as a developer, like I understand where it comes from. Real estate data and real estate pricing, which is what floor plan data gets towards in the same way that baseball is getting towards like value has a lot of these very complicated data. Things like economic data, seasonal things, and then when something goes right, it’s not always exactly clear why.

[00:07:05] Bobby Fijan: So there are plenty of people who say, I’ve been doing this right for a long time. I’ve made plenty of money in the last like few years. It almost doesn’t really matter what you do. We have such like a disparity between supply and demand that you can kind of build whatever you want and things will go well.

[00:07:18] Bobby Fijan: There is that pushback, which I understand and I think that that makes sense. But there are definitely people who, and many of them who understand that they are building without any guardrails and they want to do better sim. Similar to Bill James, there are people who are early believers and those are the people that I enjoy getting to work.

[00:07:39] Bobby Fijan: My company is still early on, that does require some degree of understanding and leniency like on their behalf. But I have found Twitter to be particularly helpful and it’s one of the reasons why I talk in public about it because the people who beach out and the people who are interested are, for lack of a better word, like already believers.

[00:07:56] Bobby Fijan: This also has to do with like kind of the nature of data analysis. It’s very rare that you’ll find data analysis that just takes a perfectly open mind and finds some new solution. Usually it’s, I have this hypothesis, I want to prove that I’m right, or I have this conclusion that I’ve already come to. I need data to justify, like is it out there?

[00:08:16] Bobby Fijan: It does in fact solve that purpose. Long-winded way of saying, yes, there are headwinds, but there are plenty of people who are believers and within a few years I’m confident that it will be demonstrated in returns and then it isn’t a matter of believing it or not. It’s just a matter of, you can see that it works in the same way that sports analytics have taken over.

[00:08:37] Bobby Fijan: You would be as an owner, as a gm, you would be a derelict. Right? Like if you did not like look at different stuff.

[00:08:43] Patrick Donley: Makes sense. We’re going to get more into form analytics a little bit into the interview, but I wanted to ask like if you’re sitting on an airplane sitting next to a guy that maybe isn’t involved in real estate at all, how do you explain to him what you do that makes sense to him that he can easily understand?

[00:08:59] Bobby Fijan: I don’t get into that kind of detail. I’ll always say something like, I have a real estate data technology company, or I’m a real estate investor, or I’m a real estate developer. All of those things are true and it kind of depends like how, how detailed the conversation is. I mean, I could talk about data and floor plans for a cross country flight, but if it’s going to be something short, I’ll say I have a real estate data technology.

[00:09:25] Patrick Donley: And are there follow up questions after that usually or is it like, huh, okay.

[00:09:29] Bobby Fijan: Well if it’s something that’s that vague, then not really. But if I end up going in a direction of saying, then they might say like, where do you do this? Or what kind of data you, or what, what projects have you built? Then I’ll end up getting into floor plants and once I get into floor plan, everyone’s like, what?

[00:09:43] Bobby Fijan: Like one which is always fun, is ever has an opinion on floor plans, which make it like a really good it. It’s why it makes really good discussion like on Twitter. But I’ve never encountered that kind of conversation where someone didn’t say, oh, I lived in a really great unit, or I’m really, this thing worked really well, or I hated how this flowed.

[00:09:57] Bobby Fijan: So there’s a lot of opinions and that to me is one of the reasons why I like apartment floor plan data is good because when units are all built in the same way and there’s a disparity of opinions about it, the only way to really sift through those is to measure a lot of different things and see what you know is you can’t just build the same thing, which is more or less what’s being done right now.

[00:10:17] Patrick Donley: I wanted to ask you as a kid, which did you excel more at, or which word did you gravitate more towards? Monopoly or Legos? I read that kids are more in touch with like their true passions and their true gifts between like the ages of seven to 14. And then through the process of education it kinda makes us lose our way A bit your background was in, is in math and econ, and you started your career at Cross as a developer and now you’re, I believe, more involved with design as a kid.

[00:10:45] Patrick Donley: Did Young Bobby gravitate more towards Monopoly and the wheeling and dealing of Monopoly or more towards the design aspects of Legos?

[00:10:53] Bobby Fijan: Well, I had a very unusual upbringing. I was homeschooled K through 12, which, you know, being in my late thirties is more unusual. So my educational background was driven very much by, what was I interested?

[00:11:05] Bobby Fijan: So I would say on that specific question, definitely like Legos or I think connects like where you have little engines and you’re building things together and you’re using your creative mind to figure that stuff out. That definitely was more than monopoly. I’ve never been into strategy games personally, just never kind of caught on.

[00:11:21] Bobby Fijan: But Legos connects. But mostly I’d say I spend a whole lot of time reading. I read a ton of children’s literature, which I don’t even know how I use it today, but there was almost nothing that gave me more pleasure than just reading by myself and being homeschooled. I had plenty of time by myself. I did play sports pretty competitively.

[00:11:40] Bobby Fijan: I played piano as well, but my experience again for kind of like my generation is a little more unusual, but grateful for it.

[00:11:47] Patrick Donley: Who handled your education than your mother did? Was that outsourced?

[00:11:52] Bobby Fijan: 50 50. My father was a mechanical engineering professor for little one to this day, has the highest horsepower grain I’ve ever met in my life.

[00:12:00] Bobby Fijan: He got his PhD at m i t and is just, like I said, smart on a different, on like a different level. If anyone ever met, like I was grateful to grow up with someone like him and that I could see that I knew from an early age like what it was like for someone’s brain to be able to solve problems and remember things at just an extraordinary level.

[00:12:19] Bobby Fijan: And I knew that wasn’t me, although I certainly learned a lot from him to the answer. My dad handed math and science and my mom handled everything else. He did not work at home when I was eight. He left academia and went into consulting and so he’s still had plenty of time at home. Both of my parents were very involved, but that was kind of the division of responsibilities.

[00:12:40] Bobby Fijan: And you grew up in Philly? No, no. I grew up all over the country. My dad was at M I T, so I grew up in a dorm at M I T for my first four years, and then when I was four, moved to Ann Arbor and then after my dad left academia, we moved every two to four years, one to four years actually. In northern California, south Jersey, Phoenix, suburbs of Philadelphia on the Pennsylvania side.

[00:13:04] Bobby Fijan: And then I went to school in LA initially moved around a lot and I’d say Philadelphia became my home just by virtue of living there for 15 years.

[00:13:13] Patrick Donley: Did they place any high expectations on you? Like, we want you to go to m i t, we want you to get a PhD. We want higher education. For sure. Was that an expectation that was set for you?

[00:13:24] Bobby Fijan: I don’t want this to turn like a therapy session too fast. No, no, no. For sure not, but No, no, no. But I, no, but I, I, I appreciate No, it’s, it’s, it’s an interesting question, frankly, something I’m still working through a little bit as my kids are getting older, you know, so my son is, my oldest is eight, my daughter is turned six on Saturday, and my youngest is four.

[00:13:39] Bobby Fijan: So education is something that’s top of mind, and I think about that a. I would say explicitly, I don’t, they set the opposite that like that I could do things and that they did not put high expectations on me. And yet, I also know that by the age of 12, I was very motivated by that. I was like reading college rankings, like things like that.

[00:14:00] Bobby Fijan: By the time I was 12 and 13, there’s a degree in which like that idea didn’t naturally occur. Like that’s an unusual thing for someone to do. I don’t think that I’ve got that on my own. So I was overly concerned with like academic status and things like that when I was young, and I don’t blame them for that per se.

[00:14:16] Bobby Fijan: I, there were high expectations in terms of like hard work part of being homeschooled. I mean I did school six days a week throughout the year, so I did about 280 days at school and I think when public schools, private school was about 180, so I was quite advanced, particularly in math. I finished calculus by the time I was 14.

[00:14:35] Bobby Fijan: And just by not ever having to relearn something or take time at the beginning of the year to like, that was just from the age of seven or 14. It was just, you go straight through math. So I wouldn’t, I’m not trying to be overly modest, but I wouldn’t consider myself to be like a mathematical mind. I would more say that it was just consistent hard work and learning constantly.

[00:14:58] Patrick Donley: Was it math, the, was the subject that you gravitated mostly towards or you mentioned reading too?

[00:15:05] Bobby Fijan: I’d say math was always the thing that I was best at. I mean, it’s hard to judge like how someone was good at reading. I enjoyed reading. I read probably 10 hours of fiction a week, like even outside of school.

[00:15:16] Bobby Fijan: I just enjoyed that. I was never a terrifically good writer, which is frankly one thing that I’ve enjoyed about Twitter. It’s like it has made me a much, much better writer, much better communicator. So I would say math. I always knew I was good comparatively. It’s, it’s a much easier thing to say I have done more than you.

[00:15:32] Bobby Fijan: I’ve done more than you have done. More than you. I did learn to think about things in that way. I did a lot of decent number of like statistical projects by dad. I remember kind of on the sports analytics, sports statistics side, like my junior year of high school. My team was pretty good and I was just trying to figure out, well, how good are we in the state?

[00:15:50] Bobby Fijan: And so I imported a large data set of all the different high school scores and then you do, you know, like Monte Carlo simulation stuff to like see how people would do against each other. And it just kind, kind of built that with my dad. I always thought about those things. I always enjoyed them and it was certainly the subject in which I was objectively the most advanced.

[00:16:09] Patrick Donley: And so you went to Penn, got your undergrad in math and Math and econ Started a master’s program in mathematics. Applied math. Met an undergrad classmate who had bought a seminary.

[00:16:22] Bobby Fijan: Some of those things are, I say I was in school and I did run into a friend from undergrad and he was with a few other guys and together they were under contract by a seminary.

[00:16:34] Bobby Fijan: It was a strange time in the real estate market. You could put deals under contract for soft deposits.

[00:16:39] Patrick Donley: That was what year? 2011?

[00:16:42] Bobby Fijan: 10. This was 2000 end. 2010. Beginning of 2011. Yeah. And I definitely wasn’t drawn to real estate, particularly, like I’d never taken a class and it was, I was definitely on track to a go to New York and the reason I want to study math is cause I wanted to work for quite heavy hedge fund or something like that.

[00:17:00] Bobby Fijan: But what I really enjoyed over the first like few months of just kind of trying it out or helping them out was I enjoyed the idea of entrepreneurship. I was just very inspired by some of the ideas one of my other partners talked about of the ideas of bringing buildings back to life, of trying to do something that is tangible.

[00:17:16] Bobby Fijan: And then I just really enjoyed working with them. So I, I, I became an entrepreneur and I think that’s what I ended up falling in love with. And then there were some things that made it easier. Even I was married and my wife was soon to be graduating as a nurse, so I knew that she’d be able to pay the bills, although I didn’t anticipate how long she was going to need to have to do that.

[00:17:34] Bobby Fijan: But there was that flexibility at my parents had also generously paid for my school, so I didn’t have any student debt. So it was, it was a good time to be an entrepreneur and I realized that, that that is what I wanted to do, was to be an entrepreneur within real estate. And I, I fell in love with the real estate later, I’d say.

[00:17:52] Patrick Donley: I’ve got two questions. One, did you do entrepreneurial projects as a kid? Was that part of your homeschooling, was that something that was part of you as a young guy or was it this kind of just developed in your.

[00:18:05] Bobby Fijan: No, definitely not. I don’t think I was entrepreneurial at all. Like again, I was, you know, light kids who were driven by getting into top schools and things like that.

[00:18:14] Bobby Fijan: I was very driven by, by that. I, I think I was on track. I wanted to be a lawyer or investment banker doctor or something like that, you know, high status, high education. I also spent so much time setting. There weren’t many, there wasn’t frankly time for entrepreneurial stuff and my parents encouraged that.

[00:18:29] Bobby Fijan: They encouraged study and reading and sports too. But also, I mean, my dad started his own business when I was a sophomore in high school, so I did see what that was like for better and for worse. There were, you know, some things that I observed that I wanted to copy and other things that I saw that were, I think the main, one important lesson that I did learn in high school, it’s entrepreneurship, was that you’re an entrepreneur first and you’re a practitioner second.

[00:18:52] Bobby Fijan: I did learn that rather than, you can’t just be brilliant and have like business or you can’t just be brilliant and succeed in sales or, or, or business in general or things like that. You need to focus on your business. While also being good, while also doing good work. So it’s, it is both, for sure.

[00:19:09] Patrick Donley: So the second question was how did they take it?

[00:19:12] Patrick Donley: How did your wife take it when you informed them that you were drop out of the master’s program to pursue this real estate dream? And that developed over time, right?

[00:19:21] Bobby Fijan: The real estate, the love for real estate developed over time. I’d say the desire to do it happened like pretty rapidly. How did my wife take it?

[00:19:30] Bobby Fijan: Well, she’s an amazing woman, even, you know, a young age. She was 21 at the time. And I’d say, she said, follow your dreams. Do it as you want, but not in that flippant way. Like it’s easy to say that. And then, you know what she did by proving that was working and paying our family’s bills and her family’s rent for the next like three years.

[00:19:47] Bobby Fijan: So I’d say by virtue of her actions after that proof, like that, she did mean that that’s how it happened. I didn’t, you know, ask permission my parents or anything like that. It. Just her, I’d also say that there was quite a bit of naivety and I thought we were going to be successful a lot faster than we were.

[00:20:02] Bobby Fijan: I mean, we ended up being successful relative and quickly for real estate. You know, we rolled the market up, but I saw big numbers like earlier that I thought, so I would say I didn’t lie. Oh. Anyway, I definitely fooled myself in thinking that the success was going to come a lot faster than, than it did. The pitch that I was giving was not, Hey honey, I need you to keep food on the table for three years.

[00:20:25] Bobby Fijan: It was, this is a terrific opportunity. I love working with these guys. You know, I think we, I think we can do incredibly well and this is the time to start entrepreneurial sh company. And, and if I’m wrong and I lose all our money in two years, well I’ll go get my MBA and I’ll have like terrific stories.

[00:20:40] Bobby Fijan: That was my general pitch and that’s a, a pretty good pitch and jump into entrepreneurship. We did have, kids weren’t going to have them anytime soon, and so it was kind of the time to take a risk. I think I understood that risk and reward pretty clearly.

[00:20:53] Patrick Donley: That’s awesome to have that support though. My dad was a, my dad is a developer and was in a similar spot, started a, his business when he was young.

[00:21:00] Patrick Donley: My mom was a nurse. They lived on her salary. He had two kids, myself and my, my middle brother at the time, and I think the first year in business he made like $272 was a family. You know, you can’t do that if you don’t have a supportive spouse behind you to, so he gives incredible, you know, props to my mom for allowing his success.

[00:21:21] Bobby Fijan: Like a huge part of the success is because of her. I mean, it’s one reason why, I mean, I get asked on Twitter and elsewhere, different people, like, how do I get started? And there’s some individual things. I’m, I’m usually loaf say, you know, follow my path because it isn’t one that I would recommend, like, again, that there was a lot of things that were just flat out bad decisions that did work out well because the market was good.

[00:21:40] Bobby Fijan: And then there’s also just the realities of having, objectively having sort kinds of privilege, right? I mean, being an entrepreneur is extremely lonely, very emotionally taxing. You don’t really have time for friends and although you might feel like you want to be friends with different people who are in your business like that, that is limiting or you just can’t do it because you’re also the boss and you also have like tough decisions to make.

[00:22:02] Bobby Fijan: So I’d say I became very close with my partners. There was that comradery of going through hard things together and going through the difficult money decisions together. But my wife is indispensable for that. She’s my, my friend, my meal ticket. That’s awesome.

[00:22:19] Patrick Donley: You entered at a great time, really 2000, you know, like that time period was, you’re probably picking up good deals.

[00:22:25] Patrick Donley: I heard you mentioned that you guys gravitated towards complex projects where you, there was some sweat liquidity that you could put in. I want to hear about that. Cause that’s an unusual strategy when you’re just getting started.

[00:22:37] Bobby Fijan: Well, that strategy happened to us as much as it was by design. So I’d say we, alright, so there are a few different things that are about that market and I’ll sort of describe how they’re different than this one.

[00:22:46] Bobby Fijan: The market was certainly depressed in asset values for real estate, but there was very little capital and there was also equity. There also wasn’t that much equity for markets that were considered tertiary. Philadelphia was basically like written off. We had deals under agreement. And then also go back and say, when we started our company, it was like with a very little money, as in we struggled to come up with the money for soft deposits.

[00:23:07] Bobby Fijan: Not even hard deposits, soft deposits, because there was very little capital once you couldn’t get deals under agreement for soft or low deposits. And so there were a number of like value add deals that I’d say that we tried to buy, but because we had little capital, it wasn’t going to be something we’re going to close with ourself.

[00:23:21] Bobby Fijan: So we needed rely on institutional partners to do that. And you know, we were just through, you know, being young and so my partners were older than me and, and did know what they were doing in real estate. Like I kind of provided some of like the quant panache and, you know, I went to a, a fancy school and so like the people could point to me and say like, all right, we’ve got smart people who run the company and things like that too.

[00:23:40] Bobby Fijan: But it didn’t close the deal with institutional folks. So I’d say we tried to go in that direction of buying existing and that just didn’t pan out. Where we did find a niche within complex projects was we sort of, it’s the two that kind of hit and one of the advantages of complex projects that other people don’t want to do them and there is more sweat equity to be earned because there is more work to be done.

[00:24:04] Bobby Fijan: And they also require, particularly full gut conversions, which is the first like two major projects that we did. They require you to look at real estate in not the down the fairway. Despite the fact that especially over the first year, we didn’t make nearly as much money as someone who was just buying units.

[00:24:21] Bobby Fijan: And you know, I have some friends who bought in the Dallas area and around Florida for, you know, 30, $40,000 a door apartments and they absolutely crushed it. I try not to have jealousy around that too much, but I’d say despite the fact that I made less money, and I don’t think this is just post hoc, rationalizing.

[00:24:37] Bobby Fijan: I learned quite a bit. It’s what made me good as a developer of one, having to do everything myself. Leasing, reading, zoning codes, you know, we just didn’t have the money to hire outside folks or as few as possible. We were doing it. You just had to wear 27 hats and just figure things out. And then also on the complex project, which you learn was, I cannot look at it the ways everyone else, because I will not be able to pay as much as them.

[00:25:00] Bobby Fijan: I cannot execute in the way they can. So you had to look for deals that were outside of what other people wanted to do. And I think that’s just a really good investment training background.

[00:25:09] Patrick Donley: You guys ended up doing what, roughly 1200 units, give or take?

[00:25:14] Bobby Fijan: Depends. Say you count, like there were, there were, there were some student housing bends, so like whether those are units or whether those are beds happen.

[00:25:19] Bobby Fijan: So I’d say roughly in like the 800 to 1200 unit range. Yeah. Yeah. That’s what we

[00:25:23] Patrick Donley: did. I wanted to jump off and discuss, you mentioned that there’s a lack of developers, there’s a lack of housing, certainly. I want to hear your thoughts on how we remedy that, how we go about training great developers. You had a kind of hands-on, very hands-on experience in learning.

[00:25:43] Patrick Donley: Talk to us a little bit more about how you see just more developers coming online.

[00:25:48] Bobby Fijan: It’s very challenging. It’s very challenging. I have thought about this question for years. It’s something that I care a lot about. When I was at Cross, I ran, it’s like the most comprehensive internship program that I’ve, that I’ve heard of for a, a developer our size.

[00:26:04] Bobby Fijan: And partly because I had connections with the school there. So I, I learned to train a lot of people. Most of them ended up going onto the investing side and private equity rather than being a developer. Although some it, I’ve been thinking about that for, since about like eight or eight years ago, maybe nine, nine years ago.

[00:26:19] Bobby Fijan: The difficulty with trading developers is that developers don’t do anything. They’re the conductor of the orchestra. You need to know how everything works. But certainly when you’re getting to be good, like you’re not, you might focus on one point, but like to be really good at one piece is not enough.

[00:26:35] Bobby Fijan: And so where I think it’s really difficult is that by the time someone advances in their career to the point where they might like feel ready, they’re proficient in one piece mainly. And being a developer requires you to know enough about like architecture, enough about construction, enough about leasing and how the entire thing took, and also have the stature to go to capital and say, trust me, ground up development is, there is certainly a track record aspect too, investing, but a lot of it come down to, you know, you talking to invest, you being that room and you saying, come hell or high water, I will get this done.

[00:27:08] Bobby Fijan: And that is a difficult thing to have enough experience to. How do we solve that? I’d say it is my belief, it’s that it’s done through just sheer guts at the early stage. People just have like that entrepreneurship, frankly, beyond what I had. There are many examples of that, of people doing that on Twitter whom just like jumping into it and there’s no real training for those kinds of people.

[00:27:29] Bobby Fijan: They’re crazy enough. Just like do it on regardless. I don’t really don’t have any thing to say to them because they just will become developers. Where I think about it and focus on a little bit more is how to help people who understand a part of real estate very well, particularly on the design and construction side.

[00:27:45] Bobby Fijan: They’ve seen those projects be done. They believe, and I trust them to execute it, but what they need is some bits of education. The hard part is like the experience and the other hard part is that real estate development projects have such a long feedback loop and you don’t do very many of them. So you might do like two or three a.

[00:28:04] Bobby Fijan: You need to kind of do it for a little while to really understand it. I don’t have an exact answer other than I know that it needs to be done. I am part of different working groups and there are piece that we solve better. I mean, one thing we can talk a little bit later is I am working on things to help professionals identify sites better because the initial underwriting of real estate is not that complicated, right?

[00:28:26] Bobby Fijan: It’s here’s what revenue is, here’s what the final cost of construction are. Does that deal generally work? Where does that fit with Mark? And I would say that many people or professionals don’t understand those basic levers. So that initial part of the education can be done through courses, or I’m building some models that people can use.

[00:28:43] Bobby Fijan: To at least find a site that pencils and then how you execute it is either going to be bringing that to a developer, working on it with some, or maybe it’s if you have the right connections to capital and you have the right confidence, then maybe try and executing that yourself. But that is the path that I’m currently taking.

[00:29:00] Bobby Fijan: There are tremendous number of challenges that need to happen and I also think there’s a degree of in our industry bias that needs to go away. At the moment, the main path to become a developer is to come out through capital markets or to come out through acquisitions. And that happens because those people are a little closer to money and can raise the money and then they try and figure out later by partnering with people in construction or by partnering or hiring people in the other phases.

[00:29:23] Bobby Fijan: But I would really like to see people in the other disciplines of real estate management, construction design be able to make that jump as well.

[00:29:31] Patrick Donley: I interviewed Sean Sweeney a couple weeks ago and he started, as you know, probably as a receptionist that I maybe Trammel Crow or a division of offshoot of Trammel Crow.

[00:29:42] Patrick Donley: He said, if you’re a younger guy to probably pursue that, kind of just get your foot in the door. He said, if you’re an older guy, try to find sites, try to find deals and bring them to partners and ask to sit in on the process. Is that something you’d agree with? If you’re a younger guy, just get started, get your foot in the door, do whatever it takes, and if you’re an older guy, try to find some deals that people would be interested in.

[00:30:04] Bobby Fijan: Yes, but I still would say that like I think it does require, again, other than for those people who are just insanely entrepreneurial, but for the person who is trying to sequentially get into it, I do think that it’s important early in your career realistically, to go be an expert in something. I mean, I do have the kind of bias that I think that numbers do drive the project, right?

[00:30:25] Bobby Fijan: I mean, at the end of the day, real estate is, it’s an investment and so you have to understand that piece when you’re young is the right time to learn how things underwrite. So I’d say that is probably still the best, like initial way you jump in. You underwrite a whole lot of different projects. You understand that when people put in money and how important those things are.

[00:30:44] Bobby Fijan: And then I think, and then it’s like kind of do whatever you can to like get your foot in the door, but it also kind of, you have to be, have your foot in the, in the right place. Even Sean’s story, which is an incredible one. The reason that he got good was because he got his foot in a door of a place that, as he even tells it, got overwhelmed and had to give him things to.

[00:31:04] Bobby Fijan: If you go to work for like a very large firm and no disrespect to the Hein, to the Tremble Crows or whoever the world like people who have been doing this well for a very long time. The larger firm you go to, the more you are going to be siloed within your different space. You will see people who do their jobs really well down the hall, but you’re not going to get to do that as much.

[00:31:23] Bobby Fijan: Sean and I got to do those things. Just out of is your necessity. I would tell someone that when they are going to get the foot in the door, be as close to the heat as you possibly can. And by that I mean doing the things that are going to be unpleasant. The difficulty of that is, that’s almost always going to mean for someone who is, who’s been relatively good at their job for two to three years, that’s going to mean taking an enormous pay cut, like enormous.

[00:31:48] Bobby Fijan: There’s an incredible amount of like humble pie and, and willingness to see the long term of like, well Shawn is get willing to be a receptionist, right? Like, I wasn’t paid, like, did not make any money for a very long time, but what we both of us learned in was experience. That is going to be something that for someone really wants to be a developer, that is something you’re going to have to do itself.

[00:32:07] Bobby Fijan: You will have to pay the piper on exchanging money for adding tools or experience to your tool belt.

[00:32:14] Patrick Donley: I wanted to ask you who some of your favorite developers are that we mentioned Eric Weather holds. You had mentioned Marsh Collective, I believe in an interview that I watched earlier that you did. I wanted to hear more about some developers that you admire and why particularly that you admire them.

[00:32:31] Patrick Donley: What are they doing that’s different than average developers?

[00:32:35] Bobby Fijan: This is probably bias in being a smaller local developer myself and also in studying a lot of different projects I would say I particularly admire. Oh, and, and also the money out Moneyball aspect too. I’d say I particularly admire people who do really well with very limited in very complicated projects.

[00:32:51] Bobby Fijan: Again, like I don’t think that I need to give props to generational companies. Like their success demonstrates that they are in fact the best I. Admire most developers who have made projects amazing despite enormous challenges or who have the vision to see something just like different than anyone else, marsh Collective, John and John Marsh in Oppa Lake, Alabama is someone who I think exemplifies that as much as anyone I’ve met in the country.

[00:33:16] Bobby Fijan: He just, he, he invests in things because it is right, and also knows that he can make money doing that. He’s a developer. I admire a tremendous amount. I’d say someone like Sean too, someone who just says, I believe that design is right and that it is going to make more money. I mean, you can’t demonstrate that that isn’t even show like on a spreadsheet yet.

[00:33:35] Bobby Fijan: I, I would hope that eventually does. But I mean, you look at his buildings on absolutely beautiful and why, because he just thinks that it ought to be. I also do admire, like the discipline, which I have not had as much, but the discipline of people who say, I’m going to do this one thing really well, build an organization, routed, clearly referencing some other different people who I’ve become friends with in the tutor committee.

[00:33:55] Bobby Fijan: Clearly, Chris Powers and Moses Ka have done that very well. But on the other execution side, and also to give a little shout out to Philadelphia, there are two different developers there, who I am, who I admire quite a bit. One is a woman named Lindsay Scanco. She’s my age. So she’s an incredible developer of, mainly, of someone who could take a school and have the vision of just saying like, I’m going to make this cool.

[00:34:17] Bobby Fijan: I’m going to make this nice. And, and it’s an incredible help solve business in Philadelphia. Tell me about that.

[00:34:22] Patrick Donley: That, so she took an old dilapidated school. I looked at a school recently that’s totally dilapidated in a really bad part of Columbus, and it’s just hard to get your mind wrapped around what it could be, although there’s tons of potential.

[00:34:34] Patrick Donley: Tell me more about her project.

[00:34:37] Bobby Fijan: I School was called the Edward Bach Technical School, and it was a, it was a school where people learned technical trades, machinery, sewing, bread making, things like that. And then unfortunately closed. And so there was a kind of an RFP put out on like what kind of developers wanted to do.

[00:34:55] Bobby Fijan: A lot of people wanted to turn to apartments and I think her vision for it was always that it could be creative office. The difficulty with any school or conversion project with school in particular is they’re incredibly deep, right? Like they just don’t have that many windows. The floor plate is difficult, the hallways are incredibly wide.

[00:35:12] Bobby Fijan: The HVAC system is like to the hallways, maybe not always to the classrooms because they rely on, you know, fresh air ventilation, enormously challenging projects. And I’d say the thing that I appreciate most about her, so I think she started doing that project by putting the coolest feature by the building, is it is the tallest building in South Philadelphia.

[00:35:29] Bobby Fijan: So it has an unimpeded view of the skylight. I’d highly recommend any who visits Philadelphia to go to the restaurant. That’s on the top of the roof there is incredible. And you can see the entire city in the South Orange. It’s a like an eight or nine story building in a two-story residential neighborhood.

[00:35:43] Bobby Fijan: But the thing that that I admire most about that project is it’s very easy to say we’re not going to do renovations and we’re going to keep like the feel of a high school and make it cool. Most people when they do it, it’s just going to come off cheap. She and her team did it in a way that it is just dripping with cool.

[00:35:59] Bobby Fijan: And it is dripping with attracting that right kind of entrepreneurial like small business person by leaving the classrooms in place. Mostly like there were systems that needed upgraded, but it was not a significant investment and it is still an incredibly neat project. So I tremendous respect for that and tremendous respect for her as a developer, despite her success not being as large as all those other firms.

[00:36:24] Patrick Donley: So I want to jump into what you’re up to now. Form analytics. Talk to us. You left cross in around 2018.

[00:36:33] Bobby Fijan: It was about like a 12 month sort of like exit process to make sure that like my team was staffed up, right? And I did want to do right by my partner. It was at the end of 2017 that I had an epiphany that.

[00:36:42] Bobby Fijan: That I wanted to move on and do something else. I’d say the idea that Crystallize was, I was incredibly proud of what I’ve done. I loved my team, I loved my partners. I knew that I had become very good in the development entitlement space, and yet I still wanted to do something more, something else. And I think what I missed was I saw what was going on in, in technology and in Silicon Valley, and I also saw like what was lacking within my industry.

[00:37:09] Bobby Fijan: I mainly think that’s around a, a lack of good data. And so that, that’s what I wanted to do. So I’d say I spent 12 months, like making sure that I was hiring and training the right people. And also during that time, I took like a sabbatical in San Francisco for a few months, moved our family out there, partly because I loved my job so much and it was important that I took the training, moves off different people, so they were going to be able to do that.

[00:37:31] Bobby Fijan: The sabbatical and kind of departure cross occurred like over the year of 2018 here in San Francisco, I think for the entire summer. How was that? It was amazing. I mean, I, I, I, I, I continue to believe like despite the political challenges, like I still think the San Francisco is like, might be the most beautiful city in the country.

[00:37:49] Bobby Fijan: Its access to nature is unparalleled. We were in a great neighborhood that was right between Gold Gate Park and the Presidio. Where was that? What?

[00:37:56] Patrick Donley: I lived there about three years off and on 19th and Mabo.

[00:38:00] Bobby Fijan: So in enrichment, a few more families. And we had two kids at the time. It was just a great place down the street from the playground.

[00:38:07] Bobby Fijan: We could walk to Golden Gate Park. My wife’s parents came out to visit us for like a week, and they’re from East Texas in the middle of the woods. And they came out. We went and visited and walked around like the middle of Golden Gate Park and there was nothing. Right? And my mother-in-law was like, feels like we’re not even the city.

[00:38:23] Bobby Fijan: This is nature. And I was like, it is. And Mira Woods is right across, like right across the bridge. So San Francisco was incredible. And it was also great to be able to do that kind of a sabbatical where I didn’t have any particular work. If there were a whole lot of coffees and lunches. I think it was good that I did not have the next thing lined up.

[00:38:41] Bobby Fijan: So it was just meeting people, it was just hearing ideas, it was just meeting other entrepreneurs and seeing what the spirit was like. It’s a very different split between the east and west coast. And the west coast. People are much more open to getting lunches and coffees and also I’d say to like, open Roland X and help.

[00:38:57] Bobby Fijan: The downside of that is you end up having, this can be a good thing, but you end up having a lot more meetings that aren’t productive or that they can waste your time. Whereas on the East Coast, I’d say things are much more transactional, which I don’t mind, it’s clearer, but if you want to get to someone through someone else, there’s a toll.

[00:39:13] Bobby Fijan: Not like an explicit one today, but you’re going to owe someone a favor in San Francisco. That’s just not the culture that I experienced. That was a, a great place for me to be. Great place to get ideas and also just to relax and, you know, be with my family.

[00:39:26] Patrick Donley: And then how did Form Analytics develop out of that, that time?

[00:39:30] Patrick Donley: And tell us what form does fir you know, first of all, tell us what you guys are up to.

[00:39:34] Bobby Fijan: Form is a floor plan data analytics company that is building software to enable developers to build units that are going to generate the highest red per square foot for new development projects. That’s what it does.

[00:39:47] Bobby Fijan: And there’s going to be more things that does in the future on site selection, on forecasting better where a unit is going to be within projects that are coming online and things like that. But at its core, it is a company that is built around proprietary data, set of compartment floor plans, and then with that data set, there are a lot of applications that come after that.

[00:40:08] Bobby Fijan: The genesis of form was around quantifying space better, and that kind of goes back to the initial projects that I worked. We did in historic redevelopment projects. Since the building is not built for apartments, you end up with a lot of weird spaces in an efficient apartment building. You’re going to have, you can design it so that you have this many ones, this many twos, and they, and they all sort of stack and they’re very efficient.

[00:40:36] Bobby Fijan: That just doesn’t happen in those other conversion projects objectively. One thing that I got to see at the very beginning, and part of it I led and part of it I was able to just have like ride shotgun on, was seeing many more floor plans per overall unit count. So I think, you know, the first project was like 200 and there were over 30 and the next one there were also over 30, like in 110 units.

[00:40:59] Bobby Fijan: So you just get a level of reps of unit types and you also have things that have features that are similar, but they aren’t exactly the same. Very early on. In fact for the historic, the seminary project, I tried building a model in order to price things well and what I ended up doing was, and this is standard what everyone else does, You give each one of their features and you just try to assign dollar amounts to them.

[00:41:20] Bobby Fijan: Fourth floor, this over the third floor, $10, this view over that one $50 or some, some things like that. What happens in a messy data set is like you just add more and more and more, you know what’s called dummy variables, right? In order to just try and make that work. But the core rent comes down to unit type and you multiply it by like a base rep, persh per foot, and then you have all these different pluses and minuses.

[00:41:44] Bobby Fijan: And so I knew from my background, like that was some formal, some just kind of informal in sports statistics. That was just like a really bad way of doing things. But the only good way of doing things is to say, where am my units timbered to everything else? And that’s kind of where the limitation, where I ran into very early is like, we subscribe to CoStar, we subscribe to some of those other things, but they would just tell you averages and prices and that just wasn’t good enough to make decisions.

[00:42:11] Bobby Fijan: And then the next set of projects that we got into were building in some high beared entry markets. Also is incredibly good background because you could not build what was already there because unfortunately they hadn’t built enough housing. So you knew that you couldn’t survey individual cups. You had to come up with different ways or methods to say what could the rent be?

[00:42:31] Bobby Fijan: What could the mix be? So I remember one of the earlier projects that we did on, that we did for that was I ended up like doing some data analytics and pushing us to do a unit mix that I would say is very atypical. It was ended up being like 75% twos and threes, which just like isn’t done. It’s very difficult to underwrite because the basis per unit gets really high.

[00:42:52] Bobby Fijan: It’s a fight with the bank, not fisticuffs, but a lot of justification in the bank for here’s why the basis works with your appraiser, et cetera. And those, I’d say projects ended up form. No pun intended, forming the basis for like what I felt was wrong. So on those next projects, I started asking an architect to tell me what was actually in insider units.

[00:43:12] Bobby Fijan: Like how long were the kitchen cabinets, like how large is the bedroom, how large was the closet? And then I just started manually looking at other comps in the area and saying, well, how large are my units compared to theirs? Which have these features? Do we really need an island or not? Which units have a sink in the island?

[00:43:26] Bobby Fijan: I think I realized, again, this was still allows across that this needed to be better just to even make myself better as a developer. I went through that process manually of doing that for most of the units in the Philadelphia area of just observation, looking down or visiting them and measuring different things.

[00:43:42] Bobby Fijan: I’d say the process that I wanted to do and started learning a little bit of, a little bit of Python, a little bit of JavaScript, a little bit of sequel was how can I solve this particular problem? There’s a lot of units out there. I want a catalog. And then the other observation that came from that, which is why I focused on floor plans, is it is always bothering me that the floor plans were readily available online, and yet were almost useless to a tenant.

[00:44:06] Patrick Donley: Didn’t you say like floor plans are almost like an afterthought in many cases in development?

[00:44:11] Bobby Fijan: Absolutely. You just have to look at them and think about them a little bit better, and especially look at some of the things that are supposed to be substantive. Like look at the dimensions, right? Like it’s not measuring like the length of a wall, it’s measuring like a room with like vacant space, so you don’t know where the line starts, where it ends.

[00:44:25] Bobby Fijan: And I’m, to me, that one exemplifies like why they’re such like an afterthought. People do strange things and or try to punch ’em up. It’s always, to me, laughable when they change their name of a room, right? Like bedroom becomes like sleep and bedroom is a perfectly good definition, like ever knows what it means, but like sleep or attire or bathe or soak, it’s like, what is that?

[00:44:46] Bobby Fijan: It’s markets fee for no purpose. No one is going to be inclined to rent that because of a, of a cool name. And so I’d say I recognize this, this very large data set of things that could be useful because I was making use of it as a professional and also it needed to communicate things better to tenants.

[00:45:04] Bobby Fijan: Also in the way that like search worked, like you only have to go through Zillow enough times to say like, is this three bedroom? Is a four bedroom is the fourth bedroom underground? The problem with IT homes is significantly hard on a day sat than his apartments, but it still exists with their apartments.

[00:45:16] Bobby Fijan: Again, as I end up getting it in various spats online about, it’s like does a bedroom size room that has a closet but does not have a window, like, is that a bedroom? Yes or no? Is it a bedroom? Because people are going to live in that way. Like in fact you can look at it and tell people are, or is it what conforms to the code if that is even part of the.

[00:45:33] Bobby Fijan: All those things were bouncing around and such that I knew the direction that I wanted to go and I knew that I wanted to work on the problem enough on my own to understand it. Generally, I’m never going to be like an engineer. I’m never going to be like a real data scientist, but from what I knew in development, what I don’t want to do is ever someone to BS me.

[00:45:51] Bobby Fijan: Like that’s always when you feel the most vulnerable. It’s like someone tells you something, either in terms of time or cost or just their method, and if you’re completely blind, that’s when you’re at risk of needing to trust experts too much. That’s always getting their domain of expertise, and you do need to let them go, but you have to be able to have some guardrails on for yourself.

[00:46:11] Bobby Fijan: That was the way that I went, and I think it helped me learn by having a very clear problem that I wanted to solve. So everything that I was learning was to do this particular thing. I would certainly not say that I’m proficient in any one of those different languages or uses it. My knowledge of that is limited to what it enabled me to do.

[00:46:28] Patrick Donley: Can you talk to us about within apartments, what are some design aspects that do maximize revenue and then some design aspects that you see that are common that are, that don’t make sense.

[00:46:39] Bobby Fijan: Well, I need to start by saying that it all depends on individual market, and it all depends on units that are currently within the market.

[00:46:46] Bobby Fijan: I think the main, one of the main problems with development in general, which flows down to unit mix and floor plan design, is that people build and invest looking at their project and looking at how it fits into the market today. So you’ll survey the market and say, aha studios get this. And so then you say, well, I’m going to build studios at the same time, six other developers look the same data and making the same decisions.

[00:47:10] Bobby Fijan: There was a coordination problem, and again, there’s also like a different market. Like you wouldn’t build the same kinds of parts in a three story walkup apartment in the suburbs as you would in, you know, a high rise in the city. So there’s, I’d say, with those kinds of things away, the general things that I would say, two of which are supported both by data and I’d say anecdotally.

[00:47:28] Bobby Fijan: One is that certainly in the city, in the suburbs too, there is way too much square footage allocated to closets. And I know that’s hard for some people to accept in terms of they, they have a lot of stuff they want to put in there. There is a cause and effect, or there is a chicken and egg too that people have more stuff because more space to put it in, you know.

[00:47:45] Bobby Fijan: But if you look at other western wealthy nations, like in Europe, very few of their bedrooms have closets. And when they do, they’re quite small. In the US we have a disproportionate percentage of the unit dedicated to closets, particularly departments. That is the number one one that I would say is a problem.

[00:48:03] Bobby Fijan: And that is, I would say in nearly all circumstances, walk-in closets should be converted to reaching clusters. There’s two things that that enables to happen. Either if you have the flexibility, you can then use that space or you can make units smaller and smaller units just to like the law of diminishing marginal returns.

[00:48:23] Bobby Fijan: Can be cheaper on a face rent, but generate higher room per square foot. So that’s just better. Now, that only makes sense if you can take that same square footage and and use it somewhere else. If you don’t have that circumstance and you have like say a fixed unit and you can say it’s going to be 725 square foot, one bedroom, what is the maximum way to, to increase like the value?

[00:48:44] Bobby Fijan: What I would say under those circumstances, I’ve done this now on almost every project that I’ve worked on in the last 16 months. You take that space and you allocate that towards a small windowless office. Which someone could use for storage if they wanted to. But the general designer of the way how apartments work in ground up construction is you have a bedroom suite on one side and a living room, kitchen suite on the other, which is nearly every apartment you walk in directly into the kitchen and then you have the bedroom on, you know, either the left or the right side.

[00:49:11] Bobby Fijan: So what I would generally say is take the square footage that is in the walk-in closet and convert it into a home office, which I don’t even think you need to be a believer in work from home, like full work from home in order to know that there is everyone like us who is going to do zoom at home occasionally, particularly with a demographic of like new apartments, which is frankly fairly tailored or fairly narrow, I think, I don’t know anyone who doesn’t, who wouldn’t make some use of that as a kid’s room, as a nursery, as a home office of some degree.

[00:49:42] Bobby Fijan: So like those, that 50 square feet is a perfectly good small room and that is what I would say. Generates higher rent per square foot for the given space by five to 7% at least. And that’s even in the circumstance where the bedroom’s relatively small. If you can take a one bedroom and turn it function to two bedroom, one bath, then you can really increase the rents and frankly, make rent cheaper for people are trying to live in that area does in fact build widows bedrooms.

[00:50:08] Bobby Fijan: But it, in my opinion, just like helps, helps the market overall. So that’s the main one. And the other general relationship, again, it kind of depends and intensity in each market is that is red per square foot is positively correlated with living room width. And that kind of just means more windows.

[00:50:24] Bobby Fijan: Bigger living rooms are better. I mean, I think of that because bedrooms are primarily for sleep. Sometimes they’re used as home offices. But if you follow the first principle, wouldn’t smush bedrooms are too wide and that space should be given to the living room instead. Those are the two things that are definitely true.

[00:50:42] Bobby Fijan: And then there’s other ones that are more or less true and that is that kitchens are far too large in the United States.

[00:50:48] Patrick Donley: I was going to mention that I heard you say that kitchens are often too big, far too big, far too

[00:50:53] Bobby Fijan: big. I mean, it kind of comes to the problem of they’re designed by people who live in homes because they’re older, they have more money, and they just kind of looking at that saying like, I like this.

[00:51:01] Bobby Fijan: And I’d say that’s one of the key things that having a lack of data drives without data. People rely on their own personal preference or they survey the people who they know, maybe people in their team, maybe their, maybe their sparse spouse partner, but that’s just a really bad way of doing it. And, and I think developers even recognize it.

[00:51:21] Bobby Fijan: But the lack of data, just you end up going towards that because you say, if I don’t know that, at least I can trust that I like it or that my son or daughter likes it, or that the people in my office like it, or that it’s done well somewhere else in another market. So I’ll just copy and paste that to here.

[00:51:36] Bobby Fijan: And that’s just a, a bad decision making approach or, or an incomplete one would be better done with data on different decisions on how much do people value having a second a to their bathroom, right? Like everyone always says, I would hate to walk through someone’s bedroom to get to like the bathroom.

[00:51:49] Bobby Fijan: How often does that happen? Is that your preference? Is that someone else’s? I do a lot of Twitter polls on this particular topic, on these types of topics, not always to drive a specific result. I certainly don’t use, I certainly don’t need to use it to inform my own data, but Morse kind of proved to the audience that is out there that people have very different opinion.

[00:52:10] Bobby Fijan: If things are all built towards one set of preferences, which they generally are, it means you are not building for the 25 to 30% of people who don’t mind walking through bedrooms to get to the public bathroom,

[00:52:22] Intro: because they don’t plan to have people over that much anyway.

[00:52:24] Bobby Fijan: Right. So, you know, there’s just different different human preferences are much larger than, than you would believe by looking at apartment designers that currently exists.

[00:52:33] Patrick Donley: I wanted to talk to you about two guiding beliefs that I heard that you have. The first is that apartments are products and that the second is apartments should be designed furnished. Talk to us what you mean about by the first belief and why you feel strongly about the second apartments as a product.

[00:52:50] Bobby Fijan: I would say apartments should be a product, but primarily they’re not. So this is, you know, something that I’ve picked up in reading more books around, you know, being in San Francisco and thinking people more on the tech side of about the idea of product and the good definition of product or the good guiding principle product is, has a customer in mind very clearly.

[00:53:08] Bobby Fijan: Who are they? How to make decisions, what’s the customer journey like? How can you delight that person? And one of the important things about that, especially at the beginning end, is to say, who are my customers? Not, who am I not trying to build for that idea is antithetical to the way that most real estate developers approaches.

[00:53:27] Bobby Fijan: I would say the guiding functional product velocity for most apartment buildings is, how do I offend as few people as possible? Right? And they say like, I want, I want Evan to live here. And what I often end up pushing back on is like you say that, you might even say to you desire that, but like that isn’t realistic.

[00:53:43] Bobby Fijan: One, you’re going to be deciding for people who can afford this kind of rent. Two, you’re going to be deciding for people who want to live, or other rock people could afford this one and three, you know, like based on unit sizes, you are already pretty restricted in who this is. So it’s, most buildings are generally built for people without children.

[00:53:59] Bobby Fijan: Either one end of the age spectrum or the other more within, you know, twenties to early thirties. The idea that is apartments product is that more buildings should be built that way. That is done within conducts firm. It just isn’t done within apartments. Apartments, all the walls are white. The cabinets are three different color pallets.

[00:54:16] Bobby Fijan: And to me, when I see saneness, that proves to me that it isn’t, right. I’m not saying that cabinets should be green and wall Walsh purple, but there should be more variety than there is. And the product philosophy of someone saying, who am I trying to please, is something that every developer opt to do and is probably a large portion of the value that I provide when I’m giving someone like data on their apartments.

[00:54:40] Bobby Fijan: Because the first question that somebody always asks me is, Bobby, how I’ll make can design this building to maximize, we’re a per square foot, right? How are we going to change, move walls, et cetera. And I’ll always respond, well, it depends like, who’s your. I can show you units or, or, or dimensional things that will get the maximum per square foot based their market because it’s targeting downsizer, like very explicit and they’re crushing it.

[00:55:02] Bobby Fijan: By doing that, the building that’s going to target, you know, 23 year olds is going to have very different trees. That’s what I mean by apartment as a product. And I also think that that’s going to unlock apartment as a brand which does not exist in real estate today. Some people argue that some of the large firms are brands.

[00:55:19] Bobby Fijan: I wholehearted project that mainly because a brand to me by definition is something that someone else would pay more for, or given the choice who could. A and B would always choose A based on the brand, not based on its attributes. Apple being the obvious example, like the technical specs don’t really matter because the brand is strong enough that someone is just going to choose for what it means for the simplicity because they’ve chosen it before.

[00:55:43] Bobby Fijan: But that’s what a real brand is. Apartments. I have never met someone, no disrespect to them, but I have never met someone who moved to a city and said, where’s the grace star ability? I want to live in that. Like I just isn’t something that they say, they say, I want to live near work, I want to pay this price, I want this particular kind of unit.

[00:55:59] Bobby Fijan: Maybe they had a good experience with Greystar and after they’ve already like filtered on everything, if the price is more or less the same. And if the commute is basically the same, maybe they will choose the same property managed company they have before, but those aren’t brands. And then also there’s turnover generally like within management companies as as building sell or not.

[00:56:17] Bobby Fijan: So that does make it a little harder. But once you can define a product like really well, then someone, it would make sense for someone to move into the city, say, I like that product. I want to live in that kind of community. I want to live with those kinds of features. The things that have done that well I would say are things like co-living, which is a very clear product, knows exactly who it’s for.

[00:56:37] Bobby Fijan: Again, it, it does make sense for someone to choose that. That’s apartments. It’s a product.

[00:56:43] Patrick Donley: Apartments furnished. Is that what you’re talking about as a brand when you’re almost like a hotel, like we’re, talk to us about how you feel apartments should be furnished with high quality furniture or your thoughts behind that I thought were interesting.

[00:56:57] Bobby Fijan: I do too. I would first say, I believe that apartments, okay, so there’s two different beliefs that one is in the United States almost no apartments are furnished. It’s just not something that a consumer believes. People. I don’t exactly understand why want to move their furniture between apartments, which is one of the most stressful things.

[00:57:15] Bobby Fijan: But for some reason they say that they want that. I say that, I don’t believe that’s true, like that’s really true. But they will say that. I guess a few things. Why I find that’s a nonsensical, it’s an apartment is $25,000, $2,000 a month, so it’s a $25,000. Good. To me, it doesn’t make sense to choose between $25,000 goods on where your furniture fits, which one it goes well when I don’t know, the aftermarket valley of your stock, particularly for like people who are in these kinds of apartments is worth like, I don’t know, maybe two grand.

[00:57:43] Bobby Fijan: It shouldn’t be the case. But the main reason why, like I believe that apartments ought to be designed to be furnished is one, it kind of fits with the product thing of like, how is someone going to live, how is the space? How can we do this best for their lives? But it’s also kind of around the design and efficiency.

[00:57:59] Bobby Fijan: When you design, when you decide that things are going to be one way, you don’t need to provide the options for other ways. And so you can drive sizes down without someone losing any of the features that are actually going to be like part of their day-to-day life. So I think the departments are just too large or kind of in the United States are just in that weird spot where they are large enough to give the semblance of some optionality, but not really while not like really driving to.

[00:58:27] Bobby Fijan: They’re just caught in that word. Things like they pretend to give someone like the ability to make the space their own, and yet no one does that because people like half the people, 40 to 40 to 50% of people do turn over every unit apartment. So you’re not going to spend the time Like me, I’ve walked into maybe 20 units, maybe 20 apartments after the thousand of my life where I’ve walked in and said like, this is beautiful.

[00:58:48] Bobby Fijan: Like this is just really nice. Like it just doesn’t happen because no one has the time and investments do that. Well, they never look like the model. Right.

[00:58:56] Patrick Donley: Like Chris Power said, I just threw a futon down and I wanted it to look like the model, but it never does.

[00:59:03] Bobby Fijan: Exactly. They never do. I think that it would be better if that happened.

[00:59:06] Bobby Fijan: And I also just think like as a business and investment, if you look at Europe where the large pieces of furniture are just standard in, I don’t know the exact numbers, but it is common, like you would expect it to come with like certain pieces and type and types of furniture to make this space work well.

[00:59:21] Bobby Fijan: So at a minimum, what I think of the United States is that the percentage should go from less than half of the percent to like a meaningful percentage. So there’s, I think there should be a large increase in that product type. I think that it’s a good investment. I know that it would change the design of units quite a bit.

[00:59:38] Bobby Fijan: I mean, you can look at some of the technology companies like Bubbly Space, which I think is a tremendous company, right? Like with the Bens that are built into the structure of the buildings, they can come down and give different, uses the same space. I think it’s there, it just becomes like obvious that like that is better now for everyone, right?

[00:59:53] Bobby Fijan: Someone needs to want that exact size bed or they need to be okay with that style, that credential. But for the people who are okay with that, your life within the unit is significantly better. If I was to recommend when I would say like, I think Bumblebee Space is certainly the leader in that right now, I would hope that there are more options for it.

[01:00:10] Bobby Fijan: And the other, I guess the last reason why I believe the department should be furnished is because there are furniture companies that are out there, but that still kind of enters the logistics problem is still there. And that kind of adds a level of cost that doesn’t actually drive the price down. If you design a unit first, you can make it smaller and if you design a unit first and build in things that do in fact last, then the additional cost of the rent should be marginal.

[01:00:36] Bobby Fijan: Right. You know, the basis of an apartment is new. Construction department is, you know, a minimum, like in the city, $300,000. The cost of getting nice furniture is going to be what, like a 15 grand, 20 grand. So adding on that extra basis, even though the furniture will depreciate faster than the apartment should only add maybe 10% to the rent, 7% to the rent, something like that.

[01:00:56] Bobby Fijan: And I think there’s plenty people who would pay for, just not have to go through that. That’s why I believe they should be furnished or designed around that.

[01:01:04] Patrick Donley: So my last question here, Bobby, before we wrap up is before we got started recording you back to apartments as a product, you had mentioned an area that you’re really excited about, which is family-oriented apartments.

[01:01:16] Patrick Donley: You had mentioned that a lot of apartments are just designed mostly for singles at the moment. Talk to us about this product niche and why you think it’s a nice trend that you’re going to be focusing on as an investor.

[01:01:26] Bobby Fijan: It, it’s something that I’m, I’d say it’s the product that I want to invest in exclusively as a real estate investor.

[01:01:32] Bobby Fijan: And that’s because on one can, it just isn’t being built. So I just believe that there are outsized returns in building something that does not exist. The demand is clearly there for people who live in the city, right? There was even a lot of, as I say, like talk of someone who says like, I love the city. I love living here, but I can’t find your place anywhere to stay.

[01:01:49] Bobby Fijan: And we lived at Rittenhouse Square in Philadelphia for a while and we were like, we had one, a few, three bedroom apartments that existed in the entire neighborhood. And it was teaming with people who moved from different life stage of, you know, single to couple and thinking about having kids. But if you cannot stay, then it has this cascading effect of, because you only going to be somewhere for a few years.

[01:02:09] Bobby Fijan: You don’t put down the same kind of roots. If you just know you can stay a little bit longer, then I think you put down my opinion like exponentially longer roots. The difference between two years and four years or five years, or having your first kit just makes an enormous difference. Helps people, I think, like advocate more for better cities or safety.

[01:02:25] Bobby Fijan: Good. I think that it’s a product that ought to exist. And I have partly through floor plan stuff, partly through site selection stuff. There’s a number of reasons why it makes sense to build that no one else is building it. You’re not going to compete with the other larger developers. It fits on a lot of infill sites that are kind of orphan sites that a traditional developer is like, won’t get out of bed for unless the projects like 250 units make sense for these to be smaller.

[01:02:48] Bobby Fijan: And it also, I say, I think makes sense within this product type to be smaller, 250 units with, you know, for built for family oriented housing.

[01:02:56] Patrick Donley: What kind of square footage? The, the one you lived in was what about 1200 square feet within you had your wife and kids with three kids and a dog.

[01:03:04] Bobby Fijan: I’d say it will require customer cultural, like education on people being okay with living in spaces that they’re unaccustomed to.

[01:03:12] Bobby Fijan: So I, I’d say the things that I’m looking at would be two bedroom, two baths getting below 1200 square feet, like maybe close to a thousand. Much smaller bedrooms, space allocated to living room as much as possible. And the reason why that has to be the case. Is because it is just a reality. Since real estate is an investment, it is a reality that you have to maximize revenue square foot just to do the best for your investors, and you cannot do that at these larger space.

[01:03:36] Bobby Fijan: I talked to plenty of people, said, oh great, like I love a family unit. And they describe what they want. It’s like 1800 square feet and it’s like, well, that’s going to need to be a condo, or that’s going to need to be apartment that is not downtown. This, these units on a per square foot basis have to generally compete with the 450 square foot one bedroom studio, you know, which that’s going to get in a city, three $54 square foot.

[01:03:54] Bobby Fijan: You know, the family unit doesn’t need to get quite to that level because they should have lower turnover at a better N O I as a result of those kinds of factors. But it needs to be dang close. That’s why you have to drive the the size down. There’s two different types that I look at. That one is within that 700, 750 square foot range building units through like one bedroom dens, which function as like a one bedroom work from home office.

[01:04:18] Bobby Fijan: And also something that you could put a child in this nursery ceiling up to the agent. Two, I’d say not having windows is a feature, not a bug. And, and being able to stay in place and not move. I mean, the number of young calls and friends we have, they have an apartment, get pregnant, they’re immediately looking for an apartment, right?

[01:04:32] Bobby Fijan: Because it just doesn’t work. There’s no space for their, for their kid. And so I think those kinds of units are the kinds of things that gives people flexibility to stay in the city, to stay car free or car light, to continue to invest in those candidate growth. That is the focus of the, of the investment that I have that, that I’m going to make within real estate apart from what I do day-to-day, which is build real estate technology.

[01:04:52] Patrick Donley: And your vision of it is infill development downtown. You’re not talking about suburban stuff at all. Right?

[01:04:59] Bobby Fijan: Yeah, I’d say suburban stuff is done like quite well by other people. When you have like an open site you can build at low cost and they are building like units that are, that are slightly more family friendly, where I’d say there was the biggest gap is in these urban or very close to urban areas where they’re currently built.

[01:05:15] Bobby Fijan: I would say it’s any area where they’re currently building very small one bedrooms because they’re building only. The other thing that’s like doing is just like riding the coattails of a wave that someone else is creating. You know, if you have four different incredible developers who are all going to build, you know, high rises that are targeted at 26 year olds, well in four years, 26 year olds become 30 year olds.

[01:05:34] Bobby Fijan: And 30 year olds like, have more couples than 32 year olds like are going to have a kid. So I just feel like, great, like I know I don’t have to compete with them, and in fact, I can take all of your tenants willingly, right? Like, I’m not, I’m not competing with you anymore. So that’s another reason why I, I kind of like those, those generators.

[01:05:50] Bobby Fijan: So I’d say if anywhere where those kinds of factors exist, where other people are building the same exact product, that they can create a neighborhood where someone wants to stay and then they can stay by, you know, moving across the street too, project that makes more sense for their new lifestyle or their new circumstances.

[01:06:06] Patrick Donley: Yeah, I think it was Sam Zel that said, Zig, when others are zagging, it seems like everyone zigging down to the 450 square foot apartments.

[01:06:15] Bobby Fijan: Oh, of course they do. I’d like to talk a little bit as I mentioned the note, like a little bit about the things that I’m doing on the software side. Maybe I should have done it.

[01:06:22] Bobby Fijan: Maybe I should have used that as a jump in, put on other questions earlier.

[01:06:25] Patrick Donley: Now let’s get into that. Do you want about the test fit? Is it test, am I saying that right?

[01:06:30] Bobby Fijan: Test fit. That is right. So I’d say the vision that I’ve always had with the four plan work that I’m doing is for to inform design on the front.

[01:06:39] Bobby Fijan: What I get to do now and what I’ve done over the last 16 months is to help developers who already have a building laid out, who are looking to maximize the retro square foot of that belt. To get kind of technical, it’s usually between, for developers who are in between the SD and DD projects, that means they got an initial set of floor plans for the architect and they say, are these good?

[01:06:57] Bobby Fijan: How can I make them better? Who do I try to target? Everything has kind of been set and you can’t make large differences. I do use data to show like how someone increased rent by like two to 4%, or I’d say one to 4%, and that makes a big difference, but I can’t make, I’ve done that now on nearly 14,000 units for developers across the country not to work with some of the top class folks to try to help make their projects better and more profitable, and that’s.

[01:07:21] Bobby Fijan: And it’s been successful, but where I think it really makes sense to go is to go further on on the project. I’ve become quite good friends with, with ceo, founder of test that Clifton, and we’ve bonded over floor plans and design for like a while now. But I think it always made sense for us to do something together to test fit.

[01:07:37] Bobby Fijan: Does automated drawings or automates and speeds of the process of designing sites like very quickly.

[01:07:43] Patrick Donley: So it is not like it’s an, it’s an AI design firm, is that?

[01:07:47] Bobby Fijan: It is, it is an AI design firm for the, for what’s called like feasibility analysis. So someone looks at a site and they say, well, can I build here or will it financially make sense?

[01:07:56] Bobby Fijan: And one of the problems that I end up trying to correct in four plans is I’ll say like, yes, you can build it here, but like the contours of your building are so poor that you’re limited in what you can do. Or had you done this other way, you could have made it significantly better. Instead of feasibility analysis, what people are currently doing is they’re saying, I have my underwriting, the zoning says I can build this many square feet.

[01:08:16] Bobby Fijan: Great, let’s build that and then we’ll figure out the plans later. Getting early, and especially using the data that I have and the process I have in conjunction with someone like Tess, that who is best in class on that particular side of it means you can really unlock building units, maximizing returns, but also building, locating the building in the right space.

[01:08:36] Bobby Fijan: Having the exact right building shape to maximize returns and to make units the best for their individual market rather than doing it after the facts. And there there’s a lot of other jumping employees off of What I think that does too is making sites early on better also allows more people, especially architects and GCs who can use software, understand those things better.

[01:08:55] Bobby Fijan: Does this deal work? What we’re building together is a tool so that someone can, at the very front end, very quickly, like within, you know, 24, 40 hours or even instantaneous, if they move walls around, they can say, I want to move this, I want to change the design. I’m within the built, I’m within the zoning code that is allowed to do, and these de metrics such that this deal works.

[01:09:15] Bobby Fijan: Maybe they can do that deal themselves as a developer or maybe they can pass that on to someone else. But it solves a lot of the problem of someone saying a broker or architect or gc. I mean, I get inundated with quests of some younger people who say like, Hey, is this a good deal? And I can look at it in 10 seconds and say like, this just doesn’t work.

[01:09:31] Bobby Fijan: And what this can solve is at minimum that problem. And what I’m hoping is eventually, and what our vision for that together would be is to make that, I mean, in those weird things like make the world a better place, right? Like to, to make the world a better place from the, from, from the beginning. In the same way that like Sean does not think about design and footprint and lay up all those things differently.

[01:09:51] Bobby Fijan: They are all the same to him. Maybe he can describe that or pull that apart. Maybe he kept, clearly you can tell like that the way that it is designed in all of its factors, like go to how it’s going to look, how it’s going to feel, like, how the experience of people. Data with ai, I think is the future for a lot of applications that has not been the case in real estate.

[01:10:11] Bobby Fijan: And so yeah, over the next two to six months, hopeful to launch a few new products. Some that’ll be basically like upgrades to test fit and some will be things that forms releasing, but extremely excited about that. And as we talked a little about the beginning in Navy, ID say it is a way in which like, I think it just brings order out of chaos into the world.

[01:10:30] Patrick Donley: Is that how you’re spending the bulk of your time right now is on test fit?

[01:10:34] Bobby Fijan: Yeah, yeah. Is on test fit and sort of the partnership with how that integrates Well with data, that is what I am intensely focused on. And it also provides like a jumping point for other things too. It, once I can solve for that within like product that I have, well then it’s frankly like a tool that I will use or I can use to evaluate other sites to make better investments to project by saying early on which sites won’t work well for family units and which ones don’t.

[01:10:56] Bobby Fijan: And as of right now, that’s a very ponderous process and I want that to be instant.

[01:11:02] Patrick Donley: Can we look forward on Twitter on hearing your announcements of new developments on this?

[01:11:07] Bobby Fijan: Oh, absolutely. It, those, some of them are going to be pretty early on, are going to be pretty soon. I think the soonest one is going to be underwriting platform so that people who are early into real estate can know if their deal is good with the designs allocated.

[01:11:20] Bobby Fijan: And the other product that’s going to be released pretty soon as sort of like a instant with the building and the floor plan analysis, the Brett roll and all of those kinds of things very early on. So developer can see that, or someone in acquisitions can see that before they even get a deal under agreement.

[01:11:33] Bobby Fijan: So they can have like a robust thing to go through their investment committee pre-offer to say, here’s the makeup of the building and here’s like why we think they can actually generate threats rather than saying, we’ll figure that out later.

[01:11:46] Patrick Donley: Bobby, I’ve got, I don’t think I got ha to half of my questions.

[01:11:49] Patrick Donley: This has been fun. It’s flown by here for me, so really appreciate your time taking the time to, to speak with us today. For people that want to reach out to you and learn more about you or maybe get in contact with you, what’s the best way for them to do that?

[01:12:02] Bobby Fijan: Honestly on Twitter, despite like the challenges, it is still a terrific product for that.

[01:12:05] Bobby Fijan: So I’d say I keep my dms open and I would be happy to reach out, respond to anyone there. I also don’t mind like people reaching out directly via email, so I can either say that or you can I guess drop it in the show notes or something like that, but I’m, no, you can say it. Please say it. My email is my first initial, then my last name, bfijan@formdevelopers.com.

[01:12:26] Patrick Donley: Bobby, thanks so much.

[01:12:27] Bobby Fijan: Of course.

[01:12:29] Patrick Donley: Okay folks, that’s all I had for today’s episode. I hope you enjoyed the show, and I’ll see you back here real soon.

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