Modernizing HUD Communities

The Aspen Company, based in Teaneck-N.J., invests in HUD properties across the country. MHN talks to John VanMetre, the new director of operations at The Aspen Company, about his new role, and how he plans to modernize the affordable communities his company acquires.

Teaneck, N.J.—The Aspen Company, based in Teaneck-N.J., invests in HUD properties across the country. MHN talks to John VanMetre, the new director of operations at The Aspen Company, about his new role, and how he plans to modernize the affordable communities his company acquires.

MHN: What are your priorities in your new position? How will you distinguish yourself from your predecessors?

VanMetre: As far as the predecessors, it’s kind of a unique situation. This is a subsidiary of Treetop Development, and so Aspen Companies is just being formed. This is somewhat of a start up in terms of the affordable housing part of development, and they have a great portfolio of market-rate properties in New York and New Jersey, but this is their venture into the affordable-housing arena. We do a few properties in New Jersey currently, but we’re making an expansion nationally. So this is like a start up, but the good thing is it’s not a start-up from a financial standpoint—it’s a well-established company. I get to, for the most part, come up with the procedures and the policies of the management division and how we’re going to run this on a national basis. This is an extremely exciting role for me. It’s something I did once before about 20 years ago in Michigan—I started a management company for a developer and owner of properties. So this is kind of like the circle of life. Our two partners at Treetop understand that they’re going to keep finding the deals, and once we find them, let’s get them under control and continue building the management company and the investment part of Aspen.

MHN: What’s your favorite part of the job?

VanMetre: I’ve been doing this for 30 years, it’s part of me and it’s all I’ve ever done. I’m a type-A personality, so in general I like the fact that I’ve never had a boring day in 30 years. I’ve had days where I wanted to pull my hair out, but I like the fact that yesterday’s solutions might not work for today. I like that kind of environment. We’re dealing with people, and people take individual type of answers.

People use policy and procedure as the same phrase, but they’re two totally different things. I am a bear about procedures—there’s only one way I want to do a bank deposit and there’s only one way to do a lease. There are certain things that we have to do standardly about procedure in our company. Policy deals with the human element—whether it be the residents, vendors, government agencies—and that takes a lot of flexibility, it takes a lot of creativity and it takes a lot of understanding that person’s individual wants and needs and how can you fulfill those. I follow the Golden Rule—I treat others how I would want to be treated. It takes a little more time and a little more effort, but that’s how you become a “1 Percent Company.” I want to be in the top 1 percent of what we do.

MHN: What are some of the challenges you face?

VanMetre: In the first 15 years [of my career] I focused on conventional property management, and the last 15 has been more the government sector. Some of the frustrations usually come from the fact that we have to run a business. It’s still properties, it’s still investment and it’s still daily operations. But the government compliance part of it sometimes gets a little frustrating, given that the regulations could choke a hippopotamus! So you’re trying to do the right thing and do decent, safe affordable housing, and sometimes the regulations and the paperwork get in the way of that. But, once again, that’s what we signed up for. That’s the challenging part—how can you still run the property, take care of the residents, take care of investment and do the government paperwork, compliance and expectations. It’s pretty challenging! And that’s where the hair pulling comes in. The policies literally change daily. But on the other side of it, that’s the fun part—how can you run a property, investment-wise or operationally, with this elephant sitting on top of you called the U.S. government? It’s fun! I can’t think of anything else I’d rather do.

MHN: Aspen invests in HUD properties. What are the steps taken to improve and monetize these properties?

VanMetre: Each portfolio or each property we look at might have a different philosophy, but for the most part, what our standard procedure is that once we buy the property, we typically refinance the property and add a certain number of improvements put in to the new mortgage. For some of the portfolios it might just be assuming the mortgage or refinancing, or depending on the condition of the property, working on the reserve funds that we inherit on that. But for the most part we’re looking for sites that are in need of modernization, in need of interior improvements, maybe external things, whether it be roofs, painting, etc., and bringing it up to a better market standard. That’s what HUD wants to see. They’re definitely trying to take some of the product that might be 20-25 years old and trying to come up with methodologies to make it in better conditions for the residents, and at the same time make it a worthwhile investment for owners and developers.

MHN: What trends do you see for affordable housing?

VanMetre: The only thing to me that’s still an unknown factor is Washington, D.C., and funding. I mean, people have got to live somewhere! The housing program is a long-term program that’s been in our country forever. There’s still going to be affordable portfolios. Now it’s a question of what kind of rents will HUD allow you to have, how can you operate the property based upon those rents and how much money are they going to put aside. That gets in to politics, that gets in to Congress, and if you have an answer for that, go for it! It does help for mortgages and interest rates and that type of thing. That has been helpful here in the last year or so. I just wonder with our budget deficit what’s going to happen. But we’re just going to have to deal with it when we get there. You have to evaluate things based on today, and take care of the residents and do your job. You can’t worry about stuff you can’t control, and we can’t control Washington, D.C. So we’ll just wait and see what happens.

MHN: Is there anything you’d like to add?

VanMetre: I’m extremely excited about this opportunity. I just think Adam [Mermelstein] and Azi [Mandel], our two partners, have a vision of what they want to do. The investors know Treetop from a market side has huge credibility—the success there has been fantastic—so the track record is there. It’s sort of a start up because Aspen is a new company, but it’s not a start up. I’m pleased that Adam and Azi have faith that I can run the management company and set this up the way we need to and go national and watch us grow!