BY COURTENAY EDELHART, Californian staff writer
Cousins Keith Wasserman and Damian Langere aren't exactly real estate moguls, but although not yet 30, the pair has created a real estate investment company that is growing fast.
Wasserman, 25, and Langere, 29, founded Tarzana-based Gelt Inc. in 2004, and in just five years have amassed five multi-family properties in Bakersfield with a total of 22,200 square feet, plus a 36,000-square-foot retail property in Santa Barbara County and a 15,000-square-foot shopping plaza in southern Los Angeles County.
They're also in escrow for a 78-unit apartment complex in northeast Bakersfield.
"A few years ago I didn't even know what escrow stood for," Langere admitted while in town last week to check on the company's latest rehab project. "I had to look it up online."
Before Gelt (which means "money" in Yiddish), Langere was a photographer, and Wasserman ran a retail store on eBay that had 13 employees. But Wasserman was looking for a change as he watched overhead eating too much of his profits, and was intrigued by his cousin's purchase of a little fourplex in Bakersfield.
"Prices have come down so low in Bakersfield and I thought, 'There's some real opportunity here,'" Wasserman said.
Under the tutelage of their fathers, who both have real estate experience, the cousins started borrowing money to acquire, rehab and rent out additional properties, most of them lender-owned. They also recruited friends and relatives as investors, some of them from as far away as Israel. Gelt has five outside investors who have put in a combined $800,000 so far, but the company is hunting for more capital, staging seminars for potential shareholders.
There's nothing unique about buying and leasing property for profit, especially in the Central Valley. Lots of investors have moved into the area to take advantage of the lowest interest rates and prices in years.
What's unusual about Gelt is all its officers are so young. In addition to Gelt's president, Wasserman, and vice president, Langere, there is 24-year-old vice president Evan Rock, a former commercial broker who does most of Gelt's due diligence.
"A down market doesn't help lease rates, but at the same time, the one segment that has held up the best in this downturn is multi-family. People always need a place to live, and that's been tested through many economic cycles," Rock said.
Philip Jordan of Coldwell Banker is Gelt's Bakersfield real estate agent. He said he is amazed at what the 20-somethings have accomplished in such a short time.
"I work with a lot of investors, and I don't think I've anybody even close to the level these guys are operating at," Jordan said.
Real estate investing is very risky, and novices should be careful, said Paul Habibi, professor of real estate at University of California Los Angeles.
"Just as people were jumping on the homeownership bandwagon during the real estate boom, people are jumping on the (bank-owned) property bandwagon," he said.
"You may get something that on the surface appears to have good bones, but on closer inspection it can turn into a money pit really fast.
"Also, even in a traditional market, you have to limit your debt exposure because it can be really dangerous if prices decline. But with the credit crunch, it's hard to get loans right now so in some ways people are protected from their own ignorance."
Privately owned Gelt insists it is turning a profit, but wouldn't offer specifics.
The company keeps far-away stakeholders apprised of its work through e-mail, blogs and videos posted on You Tube and their Web site: www.geltinc.com.
That was one of the elements that enticed investor Adrian Goldstein, 52, of Calabasas.
"They're quite young, it's true, but they have a lot of energy and determination and guts and personality, and I just find that very attractive," Goldstein said.
"They're working hard and investing very carefully, and they've also brought modern day communication techniques to the old world discipline of real estate."
Goldstein said he goes online to see videos of the rehab work they're doing and the properties they might buy.
All together, Gelt has about 20 tenants in Bakersfield, all in low-income areas.
Their units fill quickly, said Willie Ware of Distinctive Properties, Gelt's local property manager. One project had three tenants begging to move in before construction was even complete.
"There aren't a lot of people putting money into these neighborhoods, so the quality is good and they're making a lot of families happy," Ware said. "We're lucky to have them here."
It's easy to compete with people who don't maintain their properties, Wasserman said.
"We come in and if there isn't a washer-dryer hookup, we put one in. If the linoleum floor is all messed up, we put in tile. If there's mold, we deal with it," he said. "We want to create a safe, attractive living environment."
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