Being a real estate developer can be a lonely business. But one builder is making it a little less so. This episode’s guest, Sean Sweeney, has built an audience by telling the story of life as a developer, warts and all.
Co-founder of Hall Sweeney Properties, Sweeney built a reputation as a thoughtful multifamily builder in the Minneapolis area. We’ll discuss his development work and story as well as his efforts to build camaraderie–online and offline–in the real estate community. The episode will also touch on how cities could make better housing policy and the secrets to success as an aspiring real estate developer.
Sean Sweeney has a unique way of approaching the real estate development journey, so I’d encourage everyone to check this one out!
As always, you can listen (and watch the video!) here on Substack or on the following platforms:
The Thesis Driven Leader Series is made possible with the support of Neutral.
Neutral is redefining multifamily real estate with a focus on sustainability, resident health and well-being. For example, Neutral is building the tallest mass timber and Passive House residential building in the U.S with a state-of-art wellness club in Milwaukee. Beyond environmental impact, Neutral offers investors access to substantial sustainable tax credits and deductions. Accredited investors can explore available opportunities at invest.neutral.us or connect directly with their team to learn more.
The following transcript is automatically generated. Please forgive us for any errors or misspellings.
Brad Hargreaves: Hello and welcome to the Thesis Driven Leader Series, episode 3 of Season 2. I'm Brad Hargreaves, the founder and Editor in Chief of Thesis Driven. We're really excited today to have Sean Sweeney on the show. Sean is a real estate developer. He's built more than 150 million of multifamily real estate with a focus on the Minneapolis, Minnesota market, so he understands the sticks and bricks of it, but he's also become one of the leading figures of telling the story of what it means to get into real estate development and the struggles and the challenges that come with that. We're gonna talk more about Sean, but first I do really wanna thank our sponsor of Season 2, Neutral.
Neutral, like Hall Sweeney, Sean's firm is a Midwest multifamily developer, and there's great reasons to invest in the Midwest. Coastal and Sunbelt markets grab the headlines, but Midwest multifamily is a quiet powerhouse. Madison and Milwaukee, for instance, consistently rank in the top 10 for rent growth and occupancy on par with markets in New York and California.
As insurers pull back from places like Florida, California, and Sunbelt due to extreme weather regulation, et cetera, the Midwest offers a really climate resistance stable alternative. That's what Sean's seen, and that's what our sponsors at Neutral have seen as well. So with small, strong fundamentals, steady returns, Midwestern multifamily can secure long-term value, both financially and environmentally, and Neutral is at the forefront of that.
Sustainable high performance, multifamily real estate in Madison and Milwaukee. You can visit Neutral.us to learn more or schedule an introductory call with neutral's director of private capital at invest@neutral. us. Thank you Neutral for making season two a possibility. So back to Sean and what he's doing.
I mentioned he's built over the past eight years, more than 150 million in value of multifamily projects in Minneapolis. But frankly that, that's cool, but that's not what makes him exciting. What's interesting about Sean is that he has become this storyteller that bridges not just the tactical sticks and bricks aspect of what makes real estate development work, but the journey as a human of being and becoming a real estate developer.
The challenges, the struggles, the ups and downs of delivering a place where people can live. These kind of stories, the storytelling has become common in the tech world. There's plenty of people who are sharing stories of the hard parts, the challenges, the struggles. I have Ben Horowitzs' The Hard Thing About Hard Things somewhere on my bookshelf back there.
Nobody's really telling that story about real estate developers in quite the same way, and I would argue that real estate developers are taking on more risk and more pain than your typical tech startup founder. In tech startups, if you lose your investors' money and you default, you're not gonna lose your house. You wind up the firm, you lick your wounds, you walk away. In real estate development, people are putting personal guarantees on these construction loans and you don't have the same community in real estate development.
There's no comradery among real estate developers, or has not historically been, the way there is with VCs, the way there is with the tech founders. There's no ecosystem. So I'm very interested in the people. Moses Kagan is one for example on real estate Twitter. John Blatchford running Cohorts, who I profiled last year and on Thesis Driven as another.
But Sean has his own newsletter, Bright Build, encourage all of you to subscribe to it. It's excellent. It's telling that story of what it means to be a real estate developer and succeed in the real estate world. So I'm very excited to have Sean on our show today.
Let's get started.
Brad Hargreaves: Sean, welcome to the Thesis Driven Leader series. Really excited to have you on the show.
Sean Sweeney: Hey, Brad, thank you so much for having me. I'm really excited to be here as well.
Brad Hargreaves: So I wanna start with community and the loneliness epidemic and just get to the root of the matter. You're unique among real estate developers in that you write a lot about community. You write a lot about the loneliness epidemic.
One, what's driving these trends? And two, what can developers do, what can people in the real estate ecosystem do to combat some of these trends?
Sean Sweeney: Sure. So a couple things. I would say, first of all, as a developer, I just feel this huge sense of responsibility. I feel like people who are doing what I'm doing, we have the opportunity for better or worse to shape the communities that all of us live in.
Everything that you do, every place you go, was initially built by a developer, most likely. As a developer, I think there's a huge responsibility to think about that and take that into account when you're doing projects.
So I think there's a couple of things. One is the decline in our social institutions. Less people go to church now, just as an example, right? Less people are in the bowling league Thursdays after work, things to that nature. And that unfortunately, seems to be getting built out more and more in a way that doesn't foster those easy transitions to those social institutions. It's different when the church used to be three blocks from your house and you walked over on Sunday morning or Friday night or whenever you went. Now it's 15 minutes down the highway and it's rush hour.
Brad Hargreaves: These suburban development patterns, car dependence.
Sean Sweeney: Correct. There's been some friction put in between getting to those social institutions. I think the other thing, and I'm not, by any means, a macro economist, I don't necessarily understand where some of this comes from. I think also in past generations, it was a lot easier to have a very solid middle class life with two people with reasonable jobs working, I don't wanna say nine to five, but working a relatively manageable schedule, right? Your kids, if you have kids, your kids played in the local rec sports leagues and did activities through school, and so you had time. You had the opportunity to go to the bowling league on Thursday nights or go to church. Now, I see this in my peer group a lot, and I think it's pretty common is... we're all running a hundred miles an hour in every single direction, feels like almost every day at this point.
Especially if you have kids, they're doing activities and again, they're not all right down the street. A lot of times they're all 15 minutes one way, 15 minutes the other way. By the time you're done with all that, you don't have time to go meet your friend for a beer or a cup of coffee.
You're too exhausted and you retreat into your phone. There was a surgeon general report, I think it was 80, 85 pages last year talking about this very topic. The other thing that has happened in our world is a lot of us are just spending more of our life online. It's a blessing and a curse. There's a lot of amazing things that have happened because of it, but it's partially to blame for this loneliness epidemic where people are gaming, they're spending more time on social media.
Every time you buy something, now, half the time, you just go on your phone and you buy it. You don't need to leave your home some days, because you can do all the things you need to do. That's difficult. You're online with your buddies.
Or you're talking the other piece of it too, I think with that is. Unfortunately, I'm guilty of this, I know a lot of people are... when you're in an environment waiting in line, right? It used to be you'd say hi to the person in front of you or behind you, or you'd stand there and you'd take it in. You'd see what's going on. Now the second you have a moment of downtime, there's this natural reaction to pull out your phone, to break up that boredom. It's part of learning to be a human - to talk and to have relationships, to work through uncomfortable situations sometimes, and uncomfortable conversations and all that.
The combination of the online life and the decline in ability and time to be in these communities is really the two major causes for this epidemic.
Brad Hargreaves: We could talk about that, I'm fascinated by the societal trends. I feel like we could spend the entire show just diving into the role of phones, the role of social media, the decline of institutions. We could talk about travel sports. It's one of my bugaboos right now.
You used to like, okay, great. You had a kid that played baseball. He was pretty good at baseball, she was pretty good at baseball, whatever. You went to the diamond at the high school. Maybe it was a 10 minute walk, maybe it was a 15 minute drive, whatever. And you sat with other parents, you knew, and you played baseball.
Now, every weekend you're getting on a plane. You're going to Chicago, you're going to Des Moines, you're going to SoCal, wherever, so your kid can play baseball. It's insane.
Sean Sweeney: I have two kids, one who's 11 and one who's 8, two daughters, and it's mind boggling what's happened. I played three varsity sports in high school, right? Each season you had your sport. I was like an above average, but not like super great athlete, right? You'd have to be the LeBron James of your high school now to be able to do that.
Because my daughter who is 8.5 years old is a very good soccer player and a very good dancer. Those are the two kind of things where she's gravitated towards. We had to drop soccer recently, otherwise it was seven days a week of something. She's an introverted kid and just needs her downtime. We tried it and my whole thing was at 8 years old, we should not be having to make this type of decision.
Brad Hargreaves: You wanna be in soccer? Great. Go out with your friends, play soccer. You're competing maybe against the people in your school, in your city, in your county.
Sean Sweeney: It's so bizarre. Yeah.
Brad Hargreaves: We could go on like this for a while. Yep. But at the end of the day, we're in the real estate industry. What can a real estate developer realistically do, whether we're trying to combat this or we're trying to take advantage? Both of those paths have their pluses and minuses, but curious, your take on okay, you're in the real estate industry, there is a loneliness epidemic, so what?
Sean Sweeney: The role that we have is to try, in some fashion, to foster those communities, whether they're in our buildings or in the general vicinity of where we work and live. One of the things that we've tried to do a lot is to cultivate these communities in our buildings.
There's a couple of different ways that you can do that. One of the problems is the way the buildings are financed, right? It usually incentivizes people to build a project, sell it as quickly as you can, generate as much return for those investors and move on and keep doing it. Not a lot of incentive to build community in that model.
Brad Hargreaves: I would say it's a lot of incentive to build nice spaces.
Sean Sweeney: Nice spaces, absolutely.
Brad Hargreaves: But not spend any money to operate those spaces and program those spaces. And that has to do with the way buildings are financed, the way they trade. It's a problem we face at Common. That was during the amenities arms race of the late 2010s. But, actually, we need to hire a community manager, who is actually a community manager, not a glorified assistant PM or leasing manager to run these spaces. That's a lot harder.
Sean Sweeney: Absolutely. No one company is going to fix this problem or save the world. But it's one of the reasons I talk about it online and I write about it. I'm trying to inspire and encourage other people to think about it differently. We've come up with a way to structure our projects for more of a longer term ownership, where we're not incentivized to just build it and sell it. We're hopefully incentivized to build it, get a community of people living there, and then own it for a long time and manage it well. We think that through doing that, you can make different decisions. It's not an amenities arms race, in my opinion as much. What's the most useful amenities, right? A lot of people check the box, right? We have a fitness center, we have this, we have that.
Brad Hargreaves: That's the amenities arms race. I refer to the guy down the road has a golf simulator. We need to have a gun stimulator too.
Sean Sweeney: We look at it as, what are the amenities that, if you wanted to live in this building for five years or 10 years, what would you need ? One of the things, just one example is we've started putting co-working spaces in all of our buildings for our tenants. Not a paid amenity, it's free for everyone in the building. We have conference rooms, individual offices with standing, sitting desks, a coffee shop type layout. It is an amenity that's getting a lot of use.
The other thing that we've done is, with our fitness centers, we've gone away from using the national companies. I have a friend who we started doing this: he owns CrossFits Gyms here in Minneapolis, and we had him built out our gym at one of our past projects and we did squat racks and pelotons and assault treadmills. The thought being, if you are a hardcore weightlifter, you can live in this building and use this gym as an amenity, and it saves you a hundred bucks a month or 200 bucks a month from going to your gym.
We're trying every time to build them in walkable locations where within six blocks, you can pretty much meet all your life needs, so that's what we're doing as our part to try to help these communities.
The other piece actually that I'll add is the way we brand the buildings. We're thinking about it, we're not naming 'em the Fred or the Susan or the Bobby and just whatever, we're thinking about who lived here a hundred years ago or 200 years ago? Why is this site here? What's the history of this neighborhood and this street and this block and this plot of land? Who lives in this community? What are the different things we think about? It's part of my development philosophy in general is I think 10% more effort on all facets of development can lead to a much better final result. In this case, that's one of 'em, right?
Normally you hire a branding firm, they give you 10 names, you pick one, and you move on. We're spending months having meetings, talking about the history of the area. And the cool thing is at first I was unsure if it was worth the extra effort. It's really resonated with the people who live in our buildings. We've heard time and time again. I live in this building specifically because of the story, or specifically because of the community you guys have created here.
Brad Hargreaves: Yeah. I love that. I enjoy hearing you talk about amenities and how to think about amenities 'cause it feels like there is a lot of just checking the box out there among developers and how they think about it. Some of the best community moments I had when I was living in multi-family rental buildings for 15 years of my life were in like the laundry room.
Sean Sweeney: A hundred percent.
Brad Hargreaves: Very utilitarian spaces, where even the gyms in these buildings, most people have their headphones in. But the laundry room, there's a certain level of debasement of doing your laundry in a shared laundry room that we're all in this together. We're all doing the laundry together. I think that does make for some of the best interactions and the best conversations in a multi-family setting. WeLive, WeWork's co-living thing, for all the things they did poorly and they did many things poorly, the shared laundry room were actually... they turned them into interactive spaces. I think that was a real win.
Sean Sweeney: Anything you can do to bring people in a building meeting in the same place. Absolutely. Totally agree with that.
Brad Hargreaves: I wanna pivot for a second to a different kind of community. We're talking about multifamily community. One drum I've been beating for the last four or five years is this idea that we need better communities in real estate, among people in the real estate world who are going out on this journey of getting entitlements, getting financing, going through community meetings and dealing with all the crap that comes with that.
I've seen what's been built in tech over the last 20 years with incubator programs, accelerator programs. A ton of people who happy to advise on your startup, all this stuff, communities. I want that for real estate. You've been actually a big voice of this and I've appreciated that on Twitter / X in particular, would love to hear your reasoning and your thinking around why get involved on ReTwit and views on building community and the real estate industry itself.
Sean Sweeney: Sure. I agree with everything you just said and I am trying to put my money where my mouth is, so to speak and build some of this stuff.
Just the X story really quick. I fell into it during COVID late 2020. We're all at home. Our kids are online school, everything that everyone was dealing with. I stumbled on to this real estate community. I had a hundred followers maybe. I had a Twitter account for 10 years. I like to joke, I think my mom and my high school buddies were my followers, and that was it.
I came across a post actually to his credit that Nick Huber put out where he took a self-storage acquisition that he had done. He broke the whole thing down, wide open kimono. Here are the numbers, here's the process, here's what went well, here's what didn't go well. I'd been in real estate for 15, 18 years at that point, and I read that and I said to myself, that guy actually knows what he is talking about. That was a legitimate deal breakdown, and he just put that out here on a free, open forum. I did a double take of whoa. Like just that was really interesting. And that led me to who's commenting, who are the people commenting on this? And Moses Kagan was the first comment, and I went to see who's this Moses guy? And I was like, oh my goodness. And Chris Powers, and there was a whole Keith Waserman, there was a whole group of these guys who had been on there. And I was fortunate. I found this, I would say a matter of months after it really started to get some momentum and I spent a couple of weeks just reading this stuff and I was like, wow, this is really interesting.
I just finished a couple of projects and I remember sitting there one night and I got an email with here's the latest, we just finished all the photographs of the finished building and I was like, oh, you know what? Maybe I'll just post them. I was a little nervous, but I'm like, eh, it looks cool. I'll put it up there and see what happens. I posted something and I just said, Hey, this is a new project I just finished in Minneapolis. My name's Sean by the way, whatever. And I went to bed 'cause I didn't know you have to respond to people. I didn't know anything about it. And I woke up the next day and I don't remember the metrics, but I had a hundred followers. I had, maybe, a hundred people liked it. And I was like, what is... what? And so that, that kind of started I started posting more and reading, and where it really accelerated was about three or four months after that we were actually raising money for a project and you can't come out online and say, "Hey I'm raising money." You could talk about your day-to-day goings on or whatever, and I made some comment about having spoken to an investor and my direct messages blew up. All of a sudden people were DMing me like, "Hey, how do we get in on this?"
I was just like, wait, what? And of course the first guy was from Saudi Arabia. So I was like, okay, it's all a scam. But I just realized, in that moment, and then in subsequent moments, the more content I put out and the more I engaged in these conversations and the more people I connected with... I consider myself friends with Moses and Chris and these guys now, and Nick.
The more I did that, the more good things just kept happening to me. So I was like, wow, this is really unbelievable. So after about a year of doing it for fun, I was like I'm gonna tweet every day. I'm gonna really dive into this and over the last four or so years, it has completely accelerated my real estate business. My investor list is five times as long. The cool thing is, a lot of it was lucky timing, but became, at least for a part of it, the go-to development guy on the ReTwit stuff for a while. And I've had, I don't even know the number at this point, hundreds if not thousands of people who have reached out, not to invest, but to say, you know what, I'm 25 and I would love to be sitting where you are in 15 years. How did you do that?
And the market was going crazy and I didn't have obviously tons of time to to get back to everybody, but when things slowed down, that's when I dove into I'm gonna start a newsletter and I'm gonna see who these people are. It's really turned into this full-blown community of 10,000 people reading the newsletter.
I've done in-person events. I have a masterclass I've created over the past year. I have 50 people in my first cohort trying to learn to be developers. It's just been this really cool thing. Where I've found the most value, where I think the value is for the community is, and I'm trying to I guess just be an example of that, to hopefully inspire other people to want to do it too. I've had so much pushback from other developers and other people saying, you're giving it all away, you're giving away all the secrets you're doing. Don't tell people this. Don't tell people that. And my favorite one is, if you were really a successful developer, why would you be helping anybody else? Which cracks me up 'cause I'm like, you can Google me and look at my projects and I'm real. Don't worry. But I found that there's so much power. I think that's the way that we're gonna solve some of these other challenges that we talked about previously. I can't do it all myself. You can't do it all yourself. None of us can, but if we create these communities and we spread this information and we are open and authentic and honest and transparent, we can inspire other people to start doing development.
I'm using development as an example, but it could be anything. The community aspect of it is just I think that's the secret to really improving some of this stuff. Commercial real estate, there's a lot of communities that do it. Development has the architect, planner, transit developer, kind of architect world has never really... every city has all their commercial real estate events, but it's all brokers and people buying and selling and it is a very transactional type of thing. I'm just trying to be one of those people that... let's go, let's talk about architecture and how do projects happen? What really needs to happen for this stuff to go somewhere?
Not to be a raving populist, but like one of the things I say often is like the housing crisis is not going to be solved with Greystar and Blackstone and all those firms. It's going to be solved by empowering a lot of really small developers that can go and very cost effectively build quads, build duplexes, build eight, eight unit projects like that small, missing middle infill housing. That's how it's gonna get solved. We have fewer developers in the United States than we've had for over a century. It used to be very easy. Not even development, it was just like you had builders who would just go build something. And we've gotten away from that. One is because development is a lot more complicated than it used to be. Sure. Pulling permits used to be a lot simpler.
Brad Hargreaves: Yes. You need that education. You need that bridge to rebuild that bench. Yep. Of development.
Sean Sweeney: That's what I've tried to put out. That's my whole thesis on this is the biggest missing piece for more people not becoming developers is they don't understand the process.
Yeah. I shout that from the rooftops. We spent this time creating this class and I was, look, I was very hesitant to do a class for all the reasons you can imagine. I'm a developer. I'm not a guru. I'm not out here trying to make my money that way, but I saw over and over again, I would have people call me, Brad, all the time and say I've spent a hundred thousand dollars on these plans. What do you think? And I'm like, what? What do you mean? What do I think? You're on step like eight of the process here. What about all this other stuff? They're like deer in headlights what do you mean? And I'm like who are you building it for? Why are you building those unit types? Why is it this location? Why is it that neighborhood? Why is it that city? Why is it that color? All of these things that you have to think about and plan for and educate yourself on before you start spending any money, people were missing. It was huge. My heart went out to him because I would always say, I can look at your plans and try to do something, but there's no vision for this project.
I don't even know what you're trying to accomplish. Everyone thought, you go to an architect, they draw you plans, and then you go from there, and I'm like, that's again, that's step eight or step 10 or step 12 in the whole process. So yeah, a hundred percent agree.
Brad Hargreaves: So I do wanna spend a moment on just the media side and maybe a bit of inside baseball on like the future of Retwit and where it goes. I think I could say this, because Moses has said this publicly at Reconvene and elsewhere that he regrets not shifting to a newsletter earlier. And, I see this with Twitter. Twitter has fundamentally changed. Whether you agree with what Musk has done with it or not, the kind of things that succeeded, the content that succeeded in 2021, 2022 these really nuanced, thoughtful, deep dives into real estate. You have to be very thoughtful about how you curate and use the following tab. On the for you tab I see a Facebook slap and people die. How have you thought about where you are building your audience and getting out there, when Twitter really has shifted pretty fundamentally?
Sean Sweeney: The moment in time in December 2020 that I was describing earlier through basically when Musk bought Twitter, that was the golden age of the real estate Twitter community.
It was a good time to build a following. It was a good time to learn. It was a very cohesive, connected community. And you're right. It's not really an Elon Musk thing as much as all of social media has shifted from a follower model to a content model. Now, it doesn't matter if you have 100,000 followers on Twitter like I do, or 16 followers.
If you put out a really good piece of content, it's gonna get the same amount of traction. It's not just a Twitter thing, it's the same on Instagram and all of the media companies have shifted this model. It obviously will make them more money but it makes it harder to have a cohesive community on there, which is tough. I try to put out as much helpful real estate content as I still can. I'm really lucky at this point. I know how to write pretty decent posts and I have three or four posts go viral a year. I've had two posts go viral already this year.
One was my 8-year-old daughter filming me trying to stand up from a seated position that I almost didn't post, but just for her sake, I did. And the second one was the other night, I spent $92 on two pizzas and a Caesar salad and as a joke, I threw my receipt up and it went viral. That does no good for me. That doesn't build any community for me. You get a handful of new followers, but it's not people who care about your content and it's tough because I used to spend a lot of time thinking about my tweets and really trying to deliver value in exchange for all the value I was receiving.
Some of the best stuff I've put out recently, it gets 10,000 views where it used to get 200 without even thinking about it, so it has fundamentally changed. I think it's a matter now of deciding how to make that work for you. If it's something you want to still do.
My strategy has been twofold. One is I've started to just try to expand to other social networks as well. One honestly that's working really right now is LinkedIn. LinkedIn feels like early days real estate Twitter right now.
Brad Hargreaves: I feel like they are the closest.
Sean Sweeney: Yeah.
Brad Hargreaves: And like I made fun of LinkedIn. No, but now it actually is, it is the closest to the old school, like community building of any of them, which is crazy.
Sean Sweeney: I wrote a post about that a couple weeks ago on Twitter. It's very hard to get new followers on Twitter. People grow slowly. I used to gain hundreds of followers a day typically. I'm lucky if I get a hundred in a week now. It's really changed and it is what it is. But that's the other thing is you can't get romantic about this stuff, right? This stuff changes and it's always been the way of the web. You can sit and complain about it or you can pivot and try to do it.
My strategy has been twofold. One, I'm trying to expand to other places. My LinkedIn following has tripled in the past month, just by spending time there. It's been great. The other I'm trying, I started a video series where I'm doing some videos now that I'm trying to put out just to see. It's a test. If it takes, great, if it doesn't take no big deal, we'll just keep doing other stuff.
And the other one: starting Bright Build, which started as a newsletter. It was in response to Twitter changing. I had someone mention to me, they're like how big is your email list? And I was like, what's an email list? I'm a real estate guy. I've learned a lot in the past few years about how all this works, I've studied a lot of it too, but I started this newsletter and I've realized having your own audience, the term is owning your audience. I hate that. I don't like to think of it in that term. You don't own them, that's weird. But, having a little more control over how they get messages, what messages they see. I can send out an email now to my 10,000 person Bright Build list and actually see exactly how many people opened it and it's been fantastic. We have a 60% open rate on our emails, which I know is pretty good. We're putting out really valuable content and 6,000 people are opening it, which is feels fantastic. I got so much feedback on it saying, thank you for putting this out, et cetera, but I still have 47 more questions.
How do you do this? How do you do? That's where the kind of the impetus for starting this class came and this cohort. And, we're looking now, my partner in Bright Build texted me this morning and he said, you know what we need to do? We just need to go to the bowling alley that we hang out when we do our writing.
We should just invite everybody in the city who reads Bright Build to just come hang out. We're gonna start doing that kind of stuff too. It'll probably never be a hundred thousand people like my Twitter following is, but it's awesome community. I really think based on the people I've met and some of the stuff we're doing, there will be people in this community doing developments. I can almost guarantee you that at this point, so it's super exciting.
Brad Hargreaves: I wanna merge these development and marketing threads for a second and talk about the future of capital raising. Because you spoke about how your Twitter following really accelerated your real estate business and was synergistic with it. You 5x'ed investor list and that's great, but are we entering a world where every real estate developer has to also be a marketer and has to cultivate their own email?
We had Brandon Sedloff Sedloff, who's Chief Real Estate Officer of Juniper Square on a few weeks ago, and we had really fascinating conversation about some of the ways capital raising is headed. What does a real estate developer have to do these days to raise capital? Do they need to be out on Twitter, LinkedIn building their email list in order to just get their projects capitalized?
Sean Sweeney: It's interesting. I think I think the answer is yes and no. It goes a couple different ways, because a lot of real estate is still really old school. It's obviously expanded in the past couple years, but when I started on Twitter in December of 2020, my guess is something like 1% of the real estate industry was online in a business, other than having a LinkedIn page in some sort of business capacity. It's probably grown to 15, 20% now, maybe. Don, Strip Mall Guy, guys like that, that have really shown how this can really take off for a business. I think it's inspired a lot of people.
I think there's a couple things. It definitely can help, but it takes time and effort also. It's best suited for up and coming developers. If you're 60 years old right now and have been doing this for 30 years, you have a built-in network, you already know all the players.
Brad Hargreaves: We're not solving for them. We're solving for people who are at the beginning of their career.
Sean Sweeney: I don't listen to him regularly, but Gary Vaynerchuk, who is a marketing guy, and I joke, I listen to him like every three years for a week to see what the new thing is or what's going on. He did say something that resonated with me a long time, many years ago. He said something to the effect of, going forward, no matter what your job is, it's that job, right? Podcaster, writer, doctor, lawyer, real estate developer, comma or plus media company, right? The more stuff you put out there, the more content you create, the more beneficial it'll be for your business.
I've seen it firsthand, obviously. It's really generated a lot of good stuff for me. I think it's helpful when you're younger. The other thing is, we talked about this earlier, where's everybody get their news now? Social media. Where does everybody spend most of their free time? Unfortunately, social media. So that's where all of the attention is, right? It doesn't matter. I haven't watched the news on TV. I can't even tell you the last time I watched the news on TV, probably 10 years ago. I go to Twitter to get news, I go online, I go wherever.
Having a presence definitely can't hurt you. If you're someone like me starting out, don't come from friends and family money, don't have that initial leg up, have the scratching claw from the beginning and don't have capital to throw at things, creating content is a free way to get your name out there. I do think it helps tremendously.
Brad Hargreaves: It certainly meritocratic in comparison to how the real estate industry has historically worked, which is all about gatekeeping. It's about, okay, you put in your 20 years at a big development firm, which you got through connections, then you spin out on your own and maybe bring some investors with you to seed your first deals. That's the way it historically worked. And the idea that you can go and start doing deals and raise capital from your social following, from your email following. Totally different.
Sean Sweeney: It will give a lot of people who wouldn't have had an opportunity, in my opinion, because most of the the traditional way is you go to the NMHC conference, the National Multi Housing Conference, it's 98% white men in blue suits and khaki pants talking about the same stuff, giving each other money.
That's how you find big equity partners is you go to there, you go to those types of conferences. What do you do if you're a 25-year-old Black woman in New York City who has dreams of being a developer? How do you even get going? One of the ways is to start telling your story online maybe. It's an option.
That's part of what I'm trying to do with Bright Build is be an example of someone who didn't necessarily come up that exact same way and is sitting in a seat now whereany single o ne of those people will take my phone call if I make it. And I have long hair and a beard and I wear jeans and Jordans every day. I'm trying to show, look, you don't have to fit that mold. There's another way to maybe do this.
Brad Hargreaves: I do remember showing up to the NMHC annual, I think in 2019, wearing jeans and a blazer, which is normally, like in every circle I run in like totally fine, but completely outta place.
Like sneakers, jean and blazer at the NMHC annual, it's oh this is a little different. Yeah. I do think there's that flip side. It's the almost paradox of democratization is just as yes, we are breaking down some barriers so anyone can go to social media and raise money is also a lot of grift and a lot of fraud. You know what brought down CrowdStreet, it wasn't a clear-eyed, chipper young dude out there saying, Hey, we're gonna build a duplex. It was someone committing fraud. I think that's the flip side of it.
I dunno if you have any takes on this. How in this more democratic, more social media driven world, we flag fraud but avoid the vigilantism of LP whisperer and some of the nonsense that went down last year?
Sean Sweeney: Yeah. No, a hundred percent. One of the things I should clarify, certainly on my end, I'm not necessarily raising money online. I'm putting out what I'm doing and then when someone contacts me, I have two or three questions, I immediately ask them online. If they say, yes, I'm an accredited investor, yes, I'm, this and that. My next step is great, let's have a phone call or I will put you on our list and next time there is an opportunity... I have never taken a check from someone that I have not met or not spoken to prior.
I want to be super careful about that because it's also really important who your investors are, because they have to buy into your vision. They have to buy into what you're trying to do. And look, now is a good example, right? Real estate goes up and down and it's not smooth sailing for every 10 years.
I joke my job is great six or seven years out of every 10, and the other three or four can be pretty tough. You need to have people that are on board and understand your vision. And I've had a number of calls or investor interviews with folks where I've said, you know what? I don't think you're a good fit for the way we're trying to do things.
And that's no disrespect to you, we're trying to build communities, own them long term, hopefully for decades, and provide cash on cash returns to you as an investor. You're not going to get rich in the next five years investing with me. We're hopefully producing some good cash flow for you, but if you want to be in a situation with developers who are building something and selling it and trying to generate the quickest return on an internal rate of return basis, there are plenty of people out there.
It's a little easier to do now when I have a much, much bigger pool of folks to chat with, but even in the beginning, I had a mentor who said, capital must match the business plan. Even on my first deal, when I went raised outside money, even though it was painful, I had to tell people, no.
And you know that it brings up one other interesting note that I do wanna tell you. One of the other reasons that I dove into the content is when I was helping a group raise money for one of the first projects I was involved in, the first time I had to go out and raise outside equity other than just the partners. We needed to raise two and a half million dollars to get this project going. I had breakfast, lunch, coffee, dinner, three times a day for three months, maybe four, maybe it was four months in hindsight, and we didn't even raise all the money. We eventually got it, but it took that long and that much driving to another restaurant and sitting down.
And now, when we did our last project, the Kin Apartments here in Minneapolis, it's been a few years now, we raised $11 million in three weeks. Part of that is our profile has grown quite a bit, and I had zero coffee meetings with people. I only tell that story because it goes to show the value of, I had a number of people who were first time investors and some with pretty large checks on that deal, and I said, Hey, look let's go through the numbers. What can I answer? And one of them said to me, point blank, I have been reading almost every thought you've had for the past three years. I literally have no concerns and I'm ready to go. It's mind blowing. Chris Power said to me once, it builds trust at scale. I've had people reach out and say, I've read your stuff for three years. I love your other projects. Let's go.
Brad Hargreaves: Love that. Love that. One thing I did want to talk about is your development pipeline and your outlook. Putting on your developer hat, obviously it's a weird time in the market for anything ground up, multifamily right now, which is what you do. Any hopes plans for that to shift and you get back to doing development at scale?
Sean Sweeney: Oh, absolutely, and it will. As I just alluded to, every 10 years, my job is really awesome, six or seven of those years, and it's slow for the other three or four.
We forget when we're in these down cycles that this is a natural part of the business. This happens, right? It's every decade. Granted, the last one ran a little longer than historically, but historically it was every seven to 10 years things turned over. So things will absolutely change.
What's going on a local level here, at least in Minneapolis, for example, is we had the construction cost increases that everyone faced. We had the astronomical short interest rates. They went up faster than ever before and we didn't see the rent grow, because that's the formula, right?
What is your rent? What is the interest rate? What is your construction? It's the basic soup that you need to have. Two of those things move and one of 'em doesn't, all of a sudden you have an issue, right? So what happened? What will happen here locally, development has already slowed.
The pipeline has fallen off a cliff, right? 2024, we had minimal deliveries. We're gonna have next to nothing in 25, next to nothing in 26. Jury's still out on 27. But what will happen is, the costs, all that stuff, tariffs aside. I don't know what that's gonna do, but let's say that didn't happen for a second.
Costs and interest rates will moderate a little, cost normally don't come down, but we'll at least flatline. They'll stop where they are. And eventually, with no new product, assuming more people continue to wanna live in Minneapolis, which has been the case for last a hundred years, rents will start to grow because we'll have more people who want apartments available.
In a year or two or three, the equation will make sense again and people will start doing projects again. That's different in every market, right? In some of the southeast markets, for example, you did see that astronomical rent growth along with the cost and the rates.
But what you have there is you have a severe oversupply issue right now, where you don't need to wait for rents to catch up as much as now rents are gonna drop for a while, while this supply gets absorbed. And once that happens, things will be okay again. That's where we are. It's not the fun place of the development cycle to be in, certainly, but we're just in that place. The market needs to readjust and they'll become a new normal here. Whether it's 12, 24 months, whenever that is. Until everyone in America has a place to live, we got a lot of housing to build. We'll get going again.
Brad Hargreaves: On that thread, I did want to pivot to policy for a second. You got a front row seat to Minneapolis's sister city, St. Paul shoot itself in the foot and kill its own development pipeline through embrace of a pretty strict version of rent control.
I think they had vacancy control in there as well, which is what we have in rent-stabilized assets here in New York City, but generally not the version of rent control that is adopted largely. Vacancy control, for those listeners may not know, means when a unit comes vacant the price cannot reset to market, which is generally considered to be pretty distortion to the market.
I'm curious your take on the YMBY movement writ large and what's going on there? What should they be focused on from an advocacy for perspective to get more housing built?
Sean Sweeney: I think the greatest thing is I have not only a front row seat to what St Paul is doing, but I have a front row seat to the innovation that Minneapolis is doing.
I would almost argue with four miles apart, we have maybe the two most disparate zoning mindsets and policies. St. Paul, nothing but restrictions. Unfortunate because what ended up happening was this rent control came on the ballot and there were some missteps by the leadership.
They maybe didn't think it was quite as serious as it turned out to be. They've absolutely shot themselves in the foot. Most large equity groups who fund these developments have just put an X on St. Paul. They're like we can go anywhere else. There's 9,000 other markets, we're not gonna mess around with that.
There was a huge redevelopment going on the Highland Bridge and a lot of major players involved, and that's all together stopped. It's really unfortunate. It's a great location and it's mostly stopped. A lot of people have pulled out. That's tough. They are working on, it sounds like, some ratifications and some changes.
It's a tough situation because all the advocacy groups, all the developers, all the investors are shouting as loud, were shouting as loud as they can. Guys. Bad idea. Unfortunately, a lot of times everyone thinks that's self-serving. Of course the developers don't want that because then they can't build, but there was a lot of people out there saying here's what's gonna happen and now it happened and people are like, told you.
If you compare that to what's going on in Minneapolis, I think Minneapolis is the zoning success story in the country. Because we passed a Minneapolis 2040 comprehensive plan. It's been three or four years now. The big news was the elimination of the single family zoning, right?
And that's what made all the headlines, but buried underneath that was the key to the whole thing, which was the rezone of the entire city into various zoning designations. You can literally go to Minneapolis2040.com, go to the section of their website, type in the address, and it will tell you the zoning, how many stories you can build and what, if any, ground floor considerations there needs to be.
It is the coolest thing on earth because from a developer standpoint, it does two things. One, anytime you have a site in play or something comes up, you can quickly check and say this it's only zoned for two stories in the 2040 plan, so sorry, I can't do it or, wow, that single family house is actually in what's called a corridor six, where that can be replaced with a six story building, so if I can acquire two or three adjacent houses, I can build a hundred unit project, right? It clears up the confusion or the unknown.
And the other thing for developers, you don't have to worry about fighting with the city. The areas that are zoned for one or two stories. Don't go in there and try to build six stories of apartments. Go to the corridors and go to these stretches where they've said, build baby, build. Yeah. The beauty that's come from that is, and again it's obviously slowed down now, but record number of apartments were built in Minneapolis in 2020, 2021 and 2022, to the point where when the whole rest of the country was going through that craziness rent growth, we stayed flat the entire time.
Now, for a owner of a lot of real estate and a developer, that's a mixed bag. But for the general populace, that is the greatest thing ever. No rent growth in Minneapolis for five years. This is the first year we're starting to see two, three, 4% now. But literally for four and a half years, rents didn't move.
That's because of building. That's because they had this new program. One of my topics that I talk about all the time, we would get rid of the housing crisis in 10 years, if every city did this. It would just eliminate everything. I don't know why it's that hard.
Brad Hargreaves: I love you made the point that it's not just about the zoning code. Obviously the zoning code itself matters, but the transparency into the code and the removal of uncertainty is how you unlock those small, non-institutional developers that are gonna build the kind of affordability that we need.
Sean Sweeney: Yes. Because there are pre-development costs, pursuit costs. That's risk. At risk capital, that if we didn't get that deal closed and built, that million dollars would've gone away.
We had another project after that in a suburb actually, but it was on like the main street of the suburb where we were in it for $200,000 and it went away and we had to eat that money. We're in a position, thankfully, it's painful for us, but if you're just getting going. You got a one shot deal to make a deal work and you're gonna put all 50,000 bucks you have into this thing to try to get it to go. The transparency is unbelievably helpful. Yeah, it's key. Absolutely key.
Brad Hargreaves: So unfortunately we're almost outta time, but I do want to do our lightning round. These are quick questions, quick answers that I ask every single guest here on the show. Okay. You ready?
Sean Sweeney: Yep. Let's fire away. All right. I'll see what I can do.
Brad Hargreaves: Awesome. First question, tell us about one startup, developer or entrepreneur or watching and why?
Sean Sweeney: Okay. I'm gonna give you two if that's okay. One is just as a group, I think the group of Bright Build folks who have started down the road as developers. There's a number of people in this first cohort that I think you're gonna start to hear their names in 2, 3, 4 years as up and coming developers. So it's super exciting.
Another person I've been watching, I've been really fortunate to become friends with is a guy named Isaac French. Not a multi-family developer, but Isaac is doing some really cool stuff in the hospitality space. I joke with him, he's 20 years younger than me, but I learn a lot from Isaac. The way he storytells and puts the content out is really something that everyone should pay attention to. If you wanna see a guy who has at a very young age completely transformed a business based on content, Isaac is your guy.
Brad Hargreaves: Yes. I met Isaac at Reconvene last year.
Sean Sweeney: He's a great guy.
Brad Hargreaves: So when you and I are recording this podcast in the 2030s, what is one real estate tech topic we're talking about and why?
Sean Sweeney: 10 years out from now, I think we're gonna talk about just how hyperconnected all the buildings are. What you're seeing in some of the small businesses right, and other things with AI, I think it's going to actually help real estate owners tremendously and developers. I think it's going to help hopefully lowering operating costs of buildings. I think the more AI and technology come into play, maybe we have one person now who runs a building and has all of their AI assistants, helping them do everything, versus having six different people in a building, which will allow more buildings to be profitable, which will allow more to be built, which will help the housing.
Brad Hargreaves: What is one city or place you'd bet on?
One city or place? I would bet on, I'm gonna say my hometown, Madison, Wisconsin. I should preface it by saying I am all in on Minneapolis. 95% of my net worth is in the city of Minneapolis right now. So I am a hundred percent all in on Minneapolis. Madison, Wisconsin is great. I grew up there. They're doing some really great things with Epic, the tech company that spawned off all these other tech companies. There's a bunch of great things going on there.
I'm a big believer in general. I feel like this makes me a little contrarian. I'm not a climate change expert, so I don't pretend to know that stuff, but I'm really bullish on the Midwest and the upper Midwest. I think that we still have a very relative affordable cost of living compared to a lot of other places.
I've lived in Madison, Chicago, San Francisco for a long time. My quality of life in Minneapolis is higher than every single place I've ever lived. The biggest thing is just people have to get over the weather and it's frankly not half as bad as everyone thinks it is either. It's a phenomenal place to be is the upper Midwest.
Brad Hargreaves: Final question, what's your favorite app on your home screen?
Sean Sweeney: It used to be social media for a long time. It's so silly 'cause it's probably like one of the original apps that were on the phone.
I've gotten into the voice memo app. Everybody does all this texting now, right? Sometimes I want to text people and be like, let's pick up the phone, 'cause this is 30 seconds on the phone and 27 minutes via text and that works with some people and not others.
So I've gotten into, I'll just send you a voice memo then. I'm driving in the car. I'm gonna send you a voice memo. I don't need to write you a four page text. You can articulate tone also and more nuance and really just connect. I've really gotten into that in the last year. It's been great.
Brad Hargreaves: Love it, Sean. Unfortunately, we're out of time. Thank you so much for joining us today. I really enjoyed the conversation.
Sean Sweeney: It was a pleasure, Brad. Thank you. I did as well and I'm really grateful for you having me on. Thank you very much.
Hope you all really enjoyed that conversation with Sean as much as I did.
He's one of my favorites in the real estate world and I'm really glad we got to spend that time together. We'll be back next week. Please tune in for a conversation with Brandon Sedloff, Chief Real Estate Officer of Juniper Square. We're gonna have a wide ranging conversation on the state of the capital markets fundraising, what's going on with the biggest asset managers.
He is an incredibly smart and thoughtful person, so this is a conversation you won't wanna miss.
See you next week.
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