Daryl Carter Details All-American Journey in MHN Excellence Awards Keynote

Daryl Carter. Image by Jordana Rothberg

Daryl Carter, winner of Multi-Housing News’ 2023 Lifetime Achievement Award, has decades of well-known achievements: founder of Avanath Capital Management, past chair of the National Multifamily Housing Council, and leading affordable housing innovator, among other accomplishments. Yet as his keynote address at last week’s MHN Excellence Awards revealed, his personal journey and only-in-America success story are equally compelling.

A Detroit native, Carter is the son of parents who moved north from Mississippi. “My parents were both from big families,” Carter recalled. “My mom was one of 13, my dad was one of eight, and they followed siblings to Detroit to get jobs in the auto industry.” Watching his father and uncles work side jobs doing repairs or hanging drywall or painting was an early lesson in entrepreneurship. “Hard work was the number one value in the Carter family,” he said. “The second value was education.”

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Carter, along with his sister and several cousins, represented the first generation of his family to graduate from college. He earned a bachelor’s degree from the University of Michigan and two post-graduate degrees from the Massachusetts Institute of Technology. Yet his roots in real estate were planted in Detroit, where his Aunt Jessie, his father’s sister, owned a collection of small rental properties. Carter’s Uncle Howard, his father’s sister, served as the principal contractor.

On a visit home, the newly degreed Carter, appalled to learn that his aunt’s tenants did not sign leases, asked her how she screened her tenants. “When I have a vacant unit,” she told him, “I put a notice on the church bulletin board. If they are in God’s house, that’s good enough for me.” He pressed her further. “Now I ask the follow-up question and I’m really concerned: ‘What happens if they don’t pay rent?’”

“Easy,” his aunt replied. “I put a notice on the church bulletin board that they haven’t paid rent. And they pay,” Carter recalled to audience laughter. Despite his reservations about the approach, he can’t recall his aunt ever having an eviction.

A sense of community can continue to play a role in residential dynamics today. Increased focus on resident stability over promoting turnover by means of excessive rent increases can do a lot for a property, Carter noted. While resident turnover is typically 40 to 60 percent, he noted that Avanath’s is 15 percent. “Less turnover means safer communities. People know their neighbors, which is a good thing, and when people know their neighbors it’s much safer.”

Around the turn of the century, Carter’s aunt passed away, leaving him her portfolio of 150 houses and small apartments on Detroit’s West Side with the instruction that he sell the properties to help finance family members’ education. His Uncle Howard helped him with the renovations, showing him how to make cost-effective decisions—something that has an ultimate impact on affordability for residents.

“It is unfortunate that my Aunt Jessie and Uncle Howard did not have the same access to capital or education that I’ve had,” said Carter. “They would have created an incredible portfolio. Nevertheless, I’ve been blessed by their wisdom. My aunt treated every one of her tenants like a family member. My uncle realized that every dollar saved in renovation will help make the rent more affordable.”

Creating opportunity for renters

When Carter started out in the sector, large institutional investors did not invest in apartments. Fast-forward to today, and 25 to 30 percent of institutional capital flows into the sector. Despite this, apartment operators are not always viewed favorably. “We sometimes rank below used car dealers and personal injury attorneys in terms of honorable professions,” Carter noted.

Some of this damage can be undone while providing real improvements for residents, said Carter, stressing the importance of investing in properties to minimize maintenance issues and rewarding renters for on-time payments. “At a minimum, we should facilities reporting to credit authorities. There are a lot of emerging proptech companies that help us report this data. Many times, our renters do not get the same political and economic advantages as homeowners because they don’t have a credit standing with the agencies.”

Carter also prodded owners who are able to accept more Section 8 vouchers. “About 50 percent of our households receive Section 8 payment assistance,” he noted, noting that Avanath’s default rate on Section 8 payments is negligible. “It’s less than 10 basis points. Unfortunately, Section 8 residents have a bad reputation—although it is my strong contention that there are very few poor Section 8 tenants, there are bad Section 8 owners and managers, and that is why the program has a bad reputation.”

Meanwhile, there could be ways to allow residents to co-invest alongside fund investors as a wealth-creation opportunity in the future, said Carter, who thanked his colleagues at Avanath and paid tribute to past MHN Lifetime Achievement winners Doug Bibby, Tom Bozzuto and Ron Terwilliger. The award, first given three years ago, recognizes those who have, over a career, made significant contributions to, and reshaped, the multifamily space.

If one thing is sure, it is that Carter will keep contributing to the exchange of ideas in multifamily. “The last few years, I have been somewhat outspoken on a few industry issues,” said Carter. “I make few apologies for being outspoken. It’s my contention that I’m too old to worry about what people think of me and, generally, at 6’7″ I’m too big for them to do anything about it.”