A historic seven-year surge has lavished focus on multifamily’s big, scaled enterprises as they’ve resculpted the for-rent landscape. That’s as it should be; they’re the ones with access to capital, land positions, talent pools, and tech infrastructure. That’s where most of the drama’s been, as these multiregional public and private companies jockey for dominance across America’s fastest-growing local economies.
Still, as market momentum starts to shift, we’re curious about whether smaller operators—the ones full of the entrepreneurial fire that prompted them to start up against some stiff odds—have what it takes to scale up. Common among these firms, we note the critical importance of a range of skill sets that enable even less well-resourced players to spring opportunistically on cue.
Yet, apart from the business and technical proficiencies we came across as we looked under the hoods of three small to medium-sized firms—Pensam Capital, Avesta, and Trion Properties—we also struck upon something else in their DNA. Each—a classic entrepreneurial outfit composed of two parts bootstraps determination and agility and one part financial shrewdness—operates with nimbleness as an essential strategic ingredient, enabling each to outmaneuver larger, more powerful competitors.
What sets them apart from their peers, perhaps, is neither a business model, nor a vision, nor a strategy. Rather, it’s an embedded purpose that supplies energy, urgency, and the drive to win. Here’s how.
Max Sharkansky and Mitch Paskover first met when they were 10 years old, growing up as close family friends in the Los Angeles environs. As they grew older, the two decided to attend college at Loyola Marymount University and the University of Southern California (USC), respectively. After graduating in 2001 and 2000, they both chose to pursue careers in multifamily real estate. Sharkansky went into the brokerage side of the business at Marcus & Millichap, and Paskover tackled loan origination and structuring joint-venture equity at HFF.
In 2005, the duo decided to start their own business together as principals, doing smaller deals in the greater San Fernando Valley area. The name they picked for the firm—Trion—stood for the thread of friendship and parity in their plan, as it literally blends the school nicknames of the USC Trojans and the Loyola Marymount Lions. By 2006, the venture had grown large enough that the two men left their jobs to start pursuing deals.
“For us, it was a great time,” Paskover says. “We saw the opportunities the principal side of the industry had to offer, so we made the decision to leave brokerage and work together in syndicating our own deals.”
So Sharkansky and Paskover sold off properties quickly. Given what happened in 2008 and 2009, that was great timing. “We got lucky,” says Paskover. “We didn’t take big hits.” When the market turned, they tapped their banking contacts and began buying notes on apartments. “It gave us an edge when the whole market turned and [we were] buying notes,” Paskover says. Trion bought approximately 20 notes in California by 2010.
Ultimately, Trion didn’t end up taking over any properties. “Most of those notes worked out,” Paskover says. “We were buying at a discount because borrowers had issues paying their loans, but almost all of our notes paid off. We tried to work with the owners and didn’t force foreclosure.”
Trion turned to conventional acquisitions in 2012 and since has bought 1,488 apartment units and 217,142 square feet of retail. Its niche is as a value-add multifamily investor focused on Los Angeles, the Bay Area, San Diego, and Portland, Ore. The firm recently closed on a 146-unit, $36.6 million deal in San Leandro in the East Bay area. Trion’s sweet spot is ’60s, ’70s, and ’80s vintage deals, priced north of $8 million.
The core values underlying that business model, whose aim is to one day compete on the level of a Carmel Partners or TruAmerica Multifamily, are about trust and transparency, says Paskover. “We want to run an operation where people not only come to work prepared, but come prepared to have fun. If we enjoy and trust one another, we’ll work more successfully.”