October 1, 2022

JF2949: Getting the Best Rents Out of Small Spaces ft. Jason Brenner

Jason Brenner was working 60–70 hours per week at a car dealership full-time before he found commercial real estate. Once the pandemic hit in 2020, his dealership was closed for three months — that’s when he decided to make the jump. He started out with two warehouse deals with friends, which quickly led to bigger deals. 


Today, Jason is the managing member at Brenner Realty Group, LLC, which performs ground-up developments as well as redevelopment deals. He is a GP of 274 micro apartments, 165 units in development, one warehouse, and one flex-space property.


In this episode, Jason tells us how he accommodates the need for versatility in small apartment spaces, how he is able to increase rents by providing convenience to tenants, and why he prefers to capitalize deals in-house. 


Jason Brenner | Real Estate Background

  • Managing member at Brenner Realty Group LLC, which performs ground-up developments as well as redevelopment deals.
  • Portfolio:
    • GP of:
      • 274 micro apartments
      • 165 units in development
      • One warehouse 
      • One flex-space property
    • LP of nine deals
  • Based in: Mechanicsburg, PA
  • Say hi to him at:
  • Best Ever Book: Rich Dad Poor Dad by Robert T. Kiyosaki
  • Greatest Lesson: When I was first starting out in real estate about 12 years ago, a friend/business partner said to me, “It’s no fun to be rich alone.” It took a few years for it to fully sink in, but that simple statement has given me a paradigm shift from a world of scarcity into a world of abundance.



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Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Jason Brenner. Jason is joining us from Mechanicsburg, Pennsylvania. His company is Brenner Realty Group, which does ground-up development and redevelopment deals. His portfolio currently consists of over 200 micro apartments, over 150 units in development, a warehouse, and a flex space property. He's also an LP in nine deals. Jason, can you start us off a little bit about your background and what you're currently focused on?

Jason Brenner: Sure. So I'm accidentally in real estate. I kind of wanted to get into real estate; I asked some mutual friends when I wanted to get in, and made some connections. I was working full-time in a family car dealership about 60-70 hours a week, and quickly learned that I didn't have the time to do both. I was able to get into one deal actively with some friends, but didn't really pull my weight, so when we exited out of that, I didn't think it was fair. I always had the itch for real estate, so I started just doing syndication deals, which I think are great for a busy professional. And then COVID hit, Pennsylvania laws were pretty strict, my car business was shut down for three months, and I decided to pivot. I wanted to continue with the friends that I had done deals with before, and just wanted to see how I can fit back in.

So we decided to do two warehouses in Fort Lauderdale area, that were vacant at the time. We converted them to flex and leased them up, and one we should be selling here any day, and the other one shouldn't be too far behind that. We realized that things ran a lot smoother now that I was able to devote a lot more time to it, and we decided to go ground-up on 274 units. The building just went vertical the end of last month.

Slocomb Reed: Nice.

Jason Brenner: Yeah. Yeah, it's pretty exciting. Pretty incredible to go down there and see a building that you helped build. You drive past construction all the time, and you don't pay any attention to it. But if you look at a building and -- I don't know, you just have a moment looking at it and being like, "Wow, I was involved in this one. It was just a parking lot --"

Slocomb Reed: Jason -- yeah, I can't tell you how many people have told me that. I'm an apartments guy in Cincinnati, Ohio. I haven't done any new construction yet, but I keep hearing that. And there's a part of me that is still willing to engage and appreciate the sentimental quality of real estate, as well as the financial... So I know, eventually, that's gonna happen. I'm gonna have to get that feeling for myself the way that I've heard other people talk about it. Is all of your investing in Fort Lauderdale?

Jason Brenner: No, we have some stuff locally. We're in the process -- we just got 12 acres approved for a 165,000-foot warehouse. We have people who want to build it, so we're actually just going to close on it here in a couple of weeks, sell it approved in a couple months, and just move on. We're looking at some other deals like that; we're looking at some potential hotel development deals locally... But my partners on the first deal that I did in State College, Pennsylvania, we converted some low-income housing into student housing. One of the partners moved to Fort Lauderdale to retire; he's a few years older than us, and just saw the opportunity and started buying up stuff, and then when we decided to get the band back together - the two other partners had been buying stuff together for a while, but when we decided to get the band back together, they decided "Let's start doing high-rise apartment buildings." It's like "Okay." We're in the right market, and... We started this stuff pre-COVID, but things have really taken off with COVID and valuations, and we have an approval to do another 165 units... And then my partners just had some 1031 money, so they got five other properties where we're hopefully going to build the next four high-rise apartment buildings as well.

Slocomb Reed: And that's all in Fort Lauderdale.

Jason Brenner: Oakland Park, this small town outside of Fort Lauderdale. But yeah, might as well call it a Fort Lauderdale suburb.

Slocomb Reed: Gotcha. What about Oakland Park attracted you? I'm not familiar with the metro area.

Jason Brenner: Just an opportunity. My partner down there had the vision for these buildings before we got involved. He found some land that he could buy; one of them happened to have the only operating strip club in the area on it. There was a law that they were grandfathered in, so they were allowed to be there, but there was an ordinance that had changed to no longer allow the strip clubs there. So once he bought it and shut it down, he kind of got the keys to the city... So by doing that, it certainly made it easier to get things approved. So it's an up and coming area. Like I said, it's a tiny little suburb of Fort Lauderdale... But by doing that, he's gotten a lot of support from the local community.

Slocomb Reed: So I just want to make sure I'm hearing this clearly... The local community, or at least the local governance - there was one strip club left that they did not want, but that they could not litigate out of existence, because it was grandfathered... So when your buddy bought the property and kicked them out, that made them much more agreeable to his future projects out of gratitude. Is that what you're saying?

Jason Brenner: Yes. 100%.

Slocomb Reed: That's excellent. I love that story. Awesome. Hey, I want to ask you about your micro apartments as well; you were telling me about them... They're in Fort Lauderdale. Tell me more about that.

Jason Brenner: So we're building Class A right now. Same property. It's 274 units. The average unit size is about 705 square feet. Now, obviously they vary. There's loft, there's one-bedroom, and two-bedroom. But that's going to be the average size of the apartments. There's some that are smaller. I guess coming from suburban Pennsylvania, 700 square feet is probably the size of my office. So imagine having your bedroom, living room kitchen, all in that little area; it's just a different way of thinking for me.

Slocomb Reed: I get that. I'm an apartment owner-operator in Cincinnati, Ohio, and a lot of our apartment inventory is post-World War Two into the '70s, the early '70s... And you have a lot of those 600-700 square foot one-bedroom apartments. I have some one-bedroom apartments that actually rate in the four hundreds on square footage, but they're already fairly open concepts. They're very simple apartments, but the floor plan still works really well.

I've learned a couple of things... One thing that I've learned is that I have a younger tenant base, and those apartments, again, most of them are one-bedrooms, which also lends itself to this. But one of the things that I was seeing on TED talks years ago about real estate is that the way that we entertain ourselves as a society takes up less space now. Almost everything is on a screen, and everyone has two or three screens; one of them fits in your pocket, the other one fits in your bag, and the third is mounted on the wall. That's just not a lot of space to be taken up to entertain yourself within your home, especially if it's a small apartment. So I've heard that new construction apartments are trending smaller as well... What can you tell us about the floor plan, the layout of your smaller apartments?

Jason Brenner: So they're similar to what you're saying. They're smaller, open concept; you walk in, and depending on which apartment you walk in, pretty much to the kitchen... And then the living room is right behind it, and there's a bedroom with a bathroom right around the corner. Some of those units we've put half a bath into on top of that, just because you don't want somebody coming over to your place and have to send them through your bedroom to get to the bathroom.

Slocomb Reed: Totally.

Jason Brenner: So we've put closet-size bathrooms in some of the units. They're small. And I don't know, I guess growing up in a suburban area -- and I understand [unintelligible 00:09:06.21] concept, but I always had a room that's designated for work, even working in the car business. It's a family business, so I still worked at home. But I had my office space. I have my kitchen for eating, my living room for entertaining, my bedroom for sleeping... And I don't like to cross mingle that. I don't want to eat in my bedroom, because when I lay down and go to sleep, I don't want to think about the meal I had. I want to be able to sleep. But that's how some people live. I like to separate it. It makes it easier for my brain to slow down or speed up when I need it to.

Slocomb Reed: Yeah, one of the things -- I started as a house-hacker back... Oh man, nine years ago now. I started as a house-hacker, and one of the things -- I promise, Best Ever listeners, this becomes relevant... One of the things that we were looking at when we wanted to owner-occupy a multifamily is that we wanted to know that we could have tenants who were similar to us in ways that would allow us to understand their thinking. I have to recognize about myself several years later that I am not my tenant base. So the people who are moving into my apartments just have a very different mindset than I do about a lot of things... One of them being how much space that they need, and how much space that I need.

I'm standing right now in an office hack where I'm a five-minute walk from home. My personal home is fairly urban. I don't have an office. But I have one I can walk to that's five minutes away. [unintelligible 00:10:31.03] work at the dining room table. Now, where this gets relevant is that, Jason, what I'm experiencing right now with my tenant base - in C, B, A neighborhoods, frankly, with my smaller apartments, is they're the opposite of what you are discussing right now, having a separate room for each thing, and they're the opposite of some of the ways that I live as well. They like open concepts. And really, if you think about it, if you take a different perspective, like you're stuck with 600 square feet, or you know that your budget for housing is gonna put you in a 600, maybe 700 square foot apartment that is not fully amenitized and wasn't built in the last few years, then really, my experience has been those people want more open concept apartments where the kitchen, living and dining is one large space, and it gives them some versatility; it lets them move their furniture around every couple of months and redesign what that space is for them.

Let me put some numbers behind this, because one of the things that I'm doing right now actually is in those 1970s apartments we're taking those old galley-style kitchens and removing the wall that separates them from the living area, and going L-shaped and creating a much larger open concept feel, where you have one rectangular room that is kitchen, dining and living. And of course, when we do that, we're upgrading; you need new floors, new cabinets, counters, appliances, and everything... But what we're seeing is that we are able to command rents that are 15% to 20% above market, because all of our competition in that size and in that space still has those galley kitchens. Again, I'm not talking about the fully amenitized, brand new, has a pool and a fitness center apartment buildings, because their rents are significantly larger than ours, and that's a different tenant base within the same neighborhood... But we're seeing that when we go open concept, we can push rents pretty significantly.

So with the stuff that you guys are building now - did you say you're building studios, one beds and two beds?

Jason Brenner: Yes.

Slocomb Reed: You did say lofts, which makes me think open concept. Is that the approach that you're taking with your new construction type stuff?

Jason Brenner: It has to be with the size, like what you were saying; you know, just based solely on the size, it has to be open concept. Now we're going for a different tenant base; we are going for that super class A; there's going to be a fitness center, there's a rooftop pool on this building, there's going to be a rooftop pool on the next building, you'll be able to see the ocean from the pool, and both of them are about two miles away from the ocean. So we're going with that open concept, but we're going after that higher-end renter as well.

Slocomb Reed: That makes a lot of sense. How important is lobby space in your new developments?

Jason Brenner: We're balancing that. We want to have a lobby, we want the tenants to have a space where they can come in and feel welcome, and there's some shared office space, so if you need to use a conference room or something, you can book a time and use one of the smaller conference rooms... Or you can just do some work there if you need to. But we also want a communal feel in it, so in this particular building that we're building right now, there's going to be 19,000 feet of retail, and a split. So there'll be little over 8,000 on one side, and a little over 11,000 on the other side. The next building that we're building, we have 32,000 feet all together. And our hope is to get a grocery store in there, right? If we could get a national grocer in there, it raises rents on both sides. So the grocery store will have in that building -- it's 165 tenants. So obviously, anybody can come and shop there. But if you have 165 building customers on the 10 floors above you, you're gonna pay a premium, because you have that customer base built in. And then the way that we think about it, the people that live there are also willing to pay a little bit extra for the convenience, because "I'm making whatever for dinner. Oh shoot, I forgot this ingredient. Well, I can run downstairs and grab it. I don't have to run out and get it, or I don't have to wait for somebody to deliver it. It's literally a couple floors down the elevator, and I got it and I'm back up to finish cooking."

So we're hoping that that works, and we can land a grocer, and then the hope is obviously to continue that in the other buildings. So other buildings we haven't started yet; we haven't even started floor plans or anything. Like I said, my partners literally just bought the land in June. So there's operating businesses on top of the land, those leases aren't up yet, so they're going keep to those businesses running until those leases run out... But we're going to work on development while those leases are still in place.

Break: [00:15:15.17] to [00:17:14.10]

Slocomb Reed: Did you just buy a warehouse? Or are you building one right now?

Jason Brenner: We bought two warehouses. One was about 11,000 feet, one was just shy of 23,000 feet; they're next door to each other, and we converted them into flex. And then we have approved a 165,000-foot warehouse, but we're not actually going to build it. We have somebody who is an end user that wants it, and doesn't want us involved in the build, which we're fine with. We would make more money if we built it, but it would take 2-3 years probably to build it, where this is going to, from development, from when we started putting our money into the development, until the time that we sell, it will be six months. So just based on the velocity of money, even though we'll have to pay taxes on it, we'll make so much more and be able to move that money into the next deal, and the next deal, and the next deal. We'll roll that money so many more times that we'll make more money on that initial investment than we would if we build it.

Slocomb Reed: That makes a lot of sense. There are a lot of differences between new construction Class A apartments with rooftop pools that overlook the ocean, and 10,000 to 25,000 square foot warehouses. What is it that attracted to you to that opportunity to buy those warehouses?

Jason Brenner: The warehouses - they're a redevelopment play, right? So it was "Can we all work together fit in and do a small deal?" So in our minds, a purchase of two warehouses in the $6 to $7 million range is a smaller deal. So it's one of those things that it's a little bit out of our wheelhouse to do that deal, but it was a lot less risk before you try to build a $100 million deal, to make sure that everything works right. It's a lot less risky to put a couple of million dollars on the line than to put $20, $30 million on the line.

Slocomb Reed: Yeah. Are you saying that these two warehouses were kind of like proof of concept for something like the 165,000 square foot space?

Jason Brenner: No, the 165,000 foot space is with different partners, and those guys have a lot more experience in warehouse. But the warehouse is in Florida, where a test run for the large multis, the high-rises that we [unintelligible 00:19:16.05]

Slocomb Reed: Gotcha.

Jason Brenner: We just wanted to make sure that everybody pulled their weight, everybody did everything... If those warehouses were a fail and somebody wasn't pulling their weight, if somebody wasn't doing what they needed to do, we can sell those and exit and move on... Where it was a lot easier to do that, as opposed to an 11-storey building with 274 units, and retail, and a parking garage, and a rooftop pool... At the end of the day, it's surprisingly not a lot more work when you're doing a development or redevelopment. It doesn't matter the size. But just the numbers and the risk... There was a lot more risk involved in a larger deal, so it was like "Hey, we haven't done a deal together in 10 years. Let's do a small deal, see how we do, and if we do that, nine months from now, as long as everything goes okay, we're gonna start building high-rises."

Slocomb Reed: Gotcha. And did you raise capital for either the warehouses or the high rises?

Jason Brenner: No, we talked about syndicating. We were just in a situation where we didn't need the outside money. And it scared us to raise the amount of money that we needed in $50,000 chunks or $100,000 chunks; like, it would take us forever to do...

Slocomb Reed: How much money did you need to get this off the ground?

2:We put about 18 million in cash into this to build it. But then, what do you do with investors when it's like, "Okay, thank you for your money. It's going to take us 18 to 24 months to build this; you're not going to see any returns, and there's no reports to give you, because there's not much happening. We can send you a picture every couple of weeks..." It was too much risk in our minds to involve that many people in the deal.

Slocomb Reed: Gotcha. Speaking to that risk, do you feel like capitalizing the deal in-house allows you to take greater risks? I assume the answer is yes, so let me ask a follow up. How does it change your ability to execute on this deal that you are not raising capital for it?

Jason Brenner: So if I'm responsible for your money, it changes my mindset. If I have investors that are relying on me for their retirement plan, or to help pay their mortgage, or put food on their table, I feel that I have to do things a lot safer. If some friends and I are putting in money into a deal, where if everything goes right we're getting life changing money, if everything goes wrong - it's going to hurt, it's gonna hurt a lot, but we'll all still sleep at night, we'll all still pay our mortgages, we'll all still be able to put food on our table, we'll all still be friends at the end of the day... It's a lot different situation to me.

An accredited investor should be able to lose 50 grand or 100 grand if the deal goes bad. But I'm not comfortable taking that money from somebody and risk them. If I was buying a 200-unit that already existed and trying to convert them from B to B plus - sure, that makes a little more sense. But until we need outside money, and until there's a deal like that, that makes sense for us to do, with enough upside potential where we can bring investors in, then we'll do it. But we look at big hit deals. We're not looking for 15%, 18% IRR is on deals that a lot of syndicators are looking for... Which again, for a busy professional, it's a great way to get a taste of real estate, to get your money outside of the stock market or a typical investment. But for somebody who has the time to do it full-time, and has the team of partners that knows how to do it, to me it's not as big a risk as a lot of people look at it. But I realize that that money could go away if the market changes. A lot of bad stuff could happen in 24 months when it takes to build a building. Interest rates could change, you could have a global pandemic... Who knows, we're experiencing all of it firsthand.

Slocomb Reed: Russia could invade one of their neighbors, trade war with China...

Jason Brenner: China could start doing operations outside of Taiwan, because -- we won't get political, but...

Slocomb Reed: If you can't already tell, we're recording early August, 2022... And there's plenty to talk about right now.

Jason Brenner: Yeah.

Slocomb Reed: Well, Jason, are you ready for the best ever lightning round?

Jason Brenner: Sure.

Slocomb Reed: Awesome. What is the best ever book you've recently read?

Jason Brenner: That's an interesting question, the best ever book that you've recently read... The best ever book I think you've probably heard a million times before is Rich Dad, Poor Dad.

Slocomb Reed: Of course. Yeah.

Jason Brenner: It changes everybody's mindset. And not only that, I re-read it a couple years ago, and it really gave me a way -- my daughter at the time was three and a half years old, and it really gave me a way to explain what I do to a toddler. And she understands now that we buy buildings, so we have money to be able to buy mommy flowers, and to buy clothes, and to buy food... So she has a basic understanding of that since she was three and a half. And by re-reading that book, it gave me a way to rethink that.

As I've grown in my career, I've honestly gotten further and further away from real estate books... I think Atomic Habits is probably one of the best books out there for anybody; it will teach you how a 1% change every day becomes an exponential change in your life, and how you can stack different habits. It's great. And then I just started reading -- I have it sitting next to me actually, because this is where I usually sit to read... It's called Peak Mind, which is a phenomenal book. I never thought I would want to meditate, but I hear more and more successful people that do it, and this book not only teaches you how to do it, but it explains what it does to the brain and how it affects your attention. So it's a really good book, I would highly recommend that, too.

Slocomb Reed: Nice. What is your best ever way to get back?

Jason Brenner: I love kids. For years I was on the board of Police Athletically when I lived in Harrisburg, which is about 20 minutes away... When we moved to where we currently live, I started seeking out other nonprofits. There's a nonprofit called Kickin' For Kids, which is a local grassroots; it helps three school districts in the local area. And it's really cool to me, because it's kids that my kids are gonna go to school with, that fell on hard times... And it could be anything with school supplies, to a kid got hurt in football practice and his parents don't have insurance and we'll pay for doctor's appointment, to... There was just a bad car accident this past winter, and there's a family with two young kids, both their parents died in the car accident, the kid just turned 18... He got a job offer from somewhere, a local car dealership gave him a free car, and it was like $2,600 a year is car insurance... And he didn't have the $2,600 bucks for car insurance, so we said, "Okay, we'll pay for your car insurance." So we try to help those, and I really like doing that.

And then I'm also involved, I'm on the board of B'nai Brith, which is a local nonprofit elderly home. One of my attorneys is on the board, and he asked me and I agreed. He's running a building for a nonprofit, so it's something that I have a lot of experience with... It also gives me a lot of free face time with my attorney; those are not billable hours, so that's always good.

Slocomb Reed: Nice. That's awesome. Jason, within your development and redevelopment career specific to commercial real estate, what's the biggest mistake you've made, and the best ever lesson that resulted from it?

Jason Brenner: It's tough. I've been very fortunate partnering with the right people, so I've learned a lot along the way from people a lot smarter than me. Honestly, I think the biggest mistake that I made was the fear of not taking the leap. If it wasn't for COVID shutting everything down, I don't know that we would be talking today. It kind of forced me to pivot; I realized working 70 hours a week how much I was missing at home, with again, like I said, a three and a half year old at the time at home; I would get up in the morning, I would take her to school, and my hope was to be home every night before she went to bed.

I'm fourth generation in the car business, so that's how I grew up, that's what I expected from my father, and it was... Everything shutting down showed me that "Damn, I should have done this three years ago, five years ago, ten years ago, because I would be so much further ahead." And I have so much more time. So it's probably a lame answer to that question, but that's the best answer I've got.

Slocomb Reed: What is your best ever advice?

Jason Brenner: It's no fun to be rich alone. The first deal that I got into, I put in a small amount of money compared to the deal. I was a 5% owner in the deal. And I asked the two guys that I was partnering with, who are still partners with me today, "Why do you need my money in this deal? You obviously don't. Why am I doing this?" and one of them looked at me and said "It's no fun to be rich alone." And it really didn't mean anything to me until a couple years later, and it really sunk in that it's that shift from a scarcity mindset to an abundance mindset, and there's so much opportunity out there. There's so much to do that if we can do it with our friends, it makes it so much more fun. It's a difficult one-liner when you hear it, but when it sinks in and you fully understand what it means... It gave me a paradigm shift, for sure.

Slocomb Reed: That's awesome. Jason, where can people get in touch with you?

Jason Brenner: The easiest place is LinkedIn. I'm sure you have my profile information that you can put in the show notes.

Slocomb Reed: It'll be there.

Jason Brenner: That's the easiest place to reach out to me, and I'm happy to talk to anybody about real estate. If you have questions, I'm happy to jump on a call with somebody from there as well. I had some really good people that taught me and helped me along the way, and I'd like to pass that along to anybody who wants to help.

Jason Brenner: Great. Well, Jason, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show, leave us a five star review, and share this with a friend you know we can add value to through this conversation about all things Fort Lauderdale and micro apartments with redevelopment of class A, and with renovating class C for above market rents. Thank you, and have a best ever day.

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