SEASON 1, EPISODE 3

Co-founder of Standard Companies: Scott Alter on Attention to Detail, Sticking to What You Know, and Paying People What They’re Worth

Release Date: July 13, 2022

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Scott Alter is the Principal and Co-founder of Standard Companies, a full-service investment and asset management firm focused on multi-family housing opportunities. Mr. Alter manages all aspects of investments, asset management, construction, financial structuring, and corporate strategy for Standard Communities, the affordable housing division of Standard Companies.

With more than 12,000 apartment units – of which more than 8,600 are affordable, Standard is one of the 50 largest affordable housing owners in the nation, according to Affordable Housing Finance. Since 2008, Standard has completed more than $1.7 billion of affordable/workforce housing acquisitions and rehabilitations, including 28 separate LIHTC transactions covering more than 5,000 units.

In this episode of the Closing Table, Scott shares how they have built a solid foundation at Standard to set them up for success at the closing table.

What’s discussed:

2:45 - Lessons learned in the beginning of his career

4:15 - The importance of attention to detail

6:15 - The effect of the pandemic on Scott

11:00 - Payment structures

12:00 - The importance of sticking with what you know

13:45 - Scott’s first closing

15:00 - What separates Scott’s deal teams from the rest

17:00 - What helps Scott’s productivity

19:00 - What Scott does for fun

19:50 - Networking within the industry

22:20 - Books that made an impact on Scott’s career

This podcast is brought to you by Pro Deal, the data room for deal teams. We work with some of the largest and best lenders, sponsors and law firms who use our platform to organize and track due diligence.

Transcription:

Intro:

You are listening to the Closing Table by ProDeal, the Commercial Real Estate Industry Insiders podcast. Closing deals is what separates the good from the great in this business. That's why we pick the brains of the world's best lawyers, lenders, developers and brokers who have a reputation for getting the deal closed. Stay tuned for insider tips on how to succeed at the closing table and bring your business to the top. Now let's start closing some deals. 

Ian Group:

Well, just to kind of jump into it. I'm a lawyer by trade, and I remember having a conversation early on in my career with one of the senior partners who really sat me down and told me to pay attention to details. And he walked me through and I was a little intense talk, but it really stuck with me. And you've had a lot of success in your career. And I'm wondering, you know, in the beginning of your career, were there any lessons or anything that really stuck with you? 

Scott Alter:

I was an investment banker when I came out of college, and so I have the same experience in terms of getting sat down probably by multiple people and being told that I had to be really, really good about details. In fact, one of the first tasks that you had to do back when I started was to put together a call list for each of the people in a particular deal group. So that would include lawyers and bankers and the buyer and the seller of a particular portfolio or a particular company. And so we had to put together a working group list. And so it was all in like a Microsoft Word, which probably is a program that shouldn't exist any more. PowerPoint, Excel are way more powerful. And so, you know, I had to have the lines all very clear and had to have every single number and email address and mailing address because we still mailed things a lot. So everything, fax numbers, everything had to be very clear, very easy, very concise. That seemed like an easy task to me when I first did it, but there were 27 people on a waiting list and 40 on another, and I would get it wrong. I would have to go in and like an associate would review and I call my working group list. And so absolutely attention to detail was important then. And it is it's important now especially, you know, I think as we get more senior, I think the attention to detail isn't quite where we expect the people below us to do the attention to detail a little bit more. And when I dig into the details and I do sort of a fly by, dig into the details just to see and do a check over and say, hey, is this all taken care of? And and yes, details are are very much important because the people who you work for or the time worked for relied on my attention to detail to make sure that they could focus on the big picture and make sure that they were, you know, producing revenue and producing deals. So it's definitely a key component of the real estate business.

Ian Group:

Yeah, I agree with you. I think if I had to give anybody advice that starting out in their career, it's it's absolutely attention to detail. And I think it will get you really far because people start to your superiors start to depend on you and they see their ability to rely on you. And that's how you get more responsibility, right?

Scott Alter:

Yes. I couldn't agree more. I think I think learning that, you know, and I think all bosses, or at least I know that I teach my managers to do this is I want you to get into the details occasionally. Think about it as like a battlefield. And the generals, they're not going to be in the detail. They won't be in the front lines every day. And they shouldn't be if they're going to win a battle. But if they're really good generals, they know what it's like on the frontlines and they're able to get to the frontlines occasionally and say, hey, does this look right? Then they're going to step back ten steps or maybe their step back 100 steps, and they're going to say, okay, what's it like now that I'm not on the front lines and am I directing the pieces? Right. And then I'm going to step back a thousand steps and I'm going to really make sure that all the pieces are in place so that it's, you know, the project or a situation is working well. So it's absolutely an important concept as one is growing up in either finance or real estate, which is we we consider some real estate finance companies. So in some level. So definitely. 

Ian Group:

Do you think the last two years with the pandemic has brought you back to the front lines at all? 

Scott Alter:

Certainly when there's, you know, sort of a breaking in the front or a no or major potential cracks in a system which clearly the pandemic brought us to that place. I definitely was digging deep into the details way more than I previously had. And having that experience of having, you know, have dug into details for many years allowed me to go and really check to make sure that the cracks weren't there or if they were there, how to fix them. So it's absolutely that that definitely happened during COVID. And I would say as we're we've broken out of COVID now, which I think we're in the rearview mirror, if not pretty far down past the rearview mirror. We're we're spending a lot of time on the front lines to figure out how the front lines work again, because that all changed. It all changed. And I think it'll revert back. But it may not revert back to the previous norm, the pre-COVID norm. It will revert back to new normal. That wasn't the last two years and it wasn't the last 30 years before that or whatever the time being was. I think there's adjustments being made. And, you know, I think as leaders we do get on to the front lines occasionally to check out that. 

Ian Group:

Any specific adjustments, I'm just curious what you might be focused on as far as the new normal goes. 

Scott Alter:

I mean, you know, training, training and growing of new leaders is a huge, huge component of how are we how are we possibly going to be doing that in a world that is remote? And, you know, we started our company pre-COVID, was in five offices. We had 60 people or actually probably more like 50 people across five offices. We're now at a close to 80 people. And, you know, we're in like seven different offices. So it has in some level is always going to be remote. And the question is, is how are leaders getting, you know, getting trained and how are they really gleaning the most information? Because, yes, you can go from Zoom call to conference call and you can get your work done and you can learn at the same time, the in between those calls and those Zoom video chats we believe is huge for the development of our talent. And I'm seeing it. I mean, when people are in the office, they're getting more from me than they do if they're not. Because the in-between of getting glass of water or just taking, you know, standing up, I believe in taking breaks when they're appropriate. I don't think you need to sit at your desk and work straight through. And so, you know, those in-between times are really valuable and, you know, and they become bigger and bigger as you get to know people better and better. And as you're around your managers or your colleagues, that's that training is so important. So, yeah, we're struggling to figure out the right balance. Certainly in each market it's different. And and so I am on the frontlines a lot with that to to, you know, that's one of the big jobs that I take on in the company is developing talent. 

Ian Group:

I think everyone's struggling with it. I think nobody knows quite yet how to navigate all this, and we're all just trying to figure it out. You hold up the standard mug, so I'll talk about standard for a second. I read online. So you're one of the 50 largest affordable housing owners in the country. If someone comes up to you and says, you know, Scott, I want to be where you are and however long it takes, five, ten, 15 years, what's the first thing you tell them to do?

Scott Alter:

Right. Yes. So we actually we ranked number 26, up from number 46 last year. And as far as 2021, we were number five in the country and in 2021. So, yes, it's been an incredible run of growth in the last since we started 14 years ago. And obviously and I think it really accelerates really compounds on top of each other. And our growth has been exponential. And we'll see here in the next you know, we have set a goal and you may not know this, but we've set a goal. It's standard to be at 50,000 units by 2030 and we're just at 14,000 units now. So that averages about just over 4000 units of acquisitions or development. And we are right on track for that. We closed and started developing close to 4000 units last year and this year we should get close to 5000. So it's definitely been a really great run and we love what we do. And you know, it really starts with the belief we have that housing is a pathway to human prosperity. And so it starts with the idea that everyone should have a home. We believe that the more housing that is created, the the better off our communities will be and the better off the country will be. So that's, you know, having a core belief in that has really driven the way that we've grown as a company. You know, early on it was just, you know, scramble and get a deal done, get another deal done and, you know, and do it. But do it with purpose, do it intention. Do it with that belief that that housing really creates prosperity. And so that was that was where we started is just one, one after the other. You know, some of the key things that I've taken away that I don't think are completely intuitive is, one, hire great people and probably pay them a little bit more than you're comfortable. Maybe it's a little bit more than you realize you do. And we've and the hires that we made that have that that we've done that with have consistently outperformed and help us to achieve our goals too is set up the compensation structures that that's a huge thing. I spend a lot of time on that because we really want people to feel empowered within the company, you know, and then and then you have to stick to what, you know, don't, don't go in because some deal looks good and it seems like it'll be a good deal. And it's like some office development in Kansas. And that might be a great place for someone who knows office development in Kansas. But we as affordable housing owners, we know affordable housing and we stick to that. And so we've we've got three divisions. We've got development of affordable housing, we've got preservation of existing affordable housing. We're actually creation of market rate housing in terms of affordable housing into market rate has from market into affordable. And then we have the Reese indication, the Logitech low income housing tax credit, we use indication of existing housing. So we really stick to what we know and there's so many things to do within what we know. And I would argue even within each industry, within each sector, within real estate, there's so many different ways to be successful and it's just stick to what you know, otherwise you can get bogged down. Or we have in the past on. Bogged down on. In situations where it all looked like it was the right move. And ultimately it it didn't it took up way more of our time than it did it, you know, another deal. 

Ian Group:

So how did you figure out what it is? You know, how did you kind of come to this? 

Scott Alter:

You know, I think that starts early on and having done exposure to a few different types of real estate and then, you know, and then honing in on one, which in our situation was multifamily housing. And so we we knew something about multifamily housing. Did we know a lot about affordable housing? Know did we know a bunch of that financing? Yes. And so my my business partner, he comes from where the multifamily housing side and I come from more the finance side. And and so I knew a little bit about finance and he knew a little bit of affordable housing. And we put together and now we both know a little bit about affordable housing and a little bit about finance and finance. And so we're learning new things every day, but starting small and then being able to grow from there. And like I said, within affordable housing, there's, there's so many different dimensions of it. And so, yeah, you know, that's that just in itself. You know, you start with knowing a little bit and you know, and you keep with what you know. And then within any situation, there's always ancillary pieces that go. And then you can take that answer piece that you learned and it can become the next deal. 

Ian Group:

Do you remember your first closing well. 

Scott Alter:

At Standard? 

Ian Group:

Yeah.

Scott Alter:

Sure. Yeah. I could tell you the first time we closed the deal was an ARIA situation and two single family homes in Venice Beach, California. There's a little to nothing situation that, you know, that ended up being a really fun deal. And we still own one of the two homes. So, yes, I remember I remember the closing in California. It can be easier than in other places, but in the affordable housing space, that was a cheating answer because a closing an affordable housing deal historically and it's changed in the pandemic was a huge conference room with ten lawyers for bankers, multiple people from whoever we had at our company at the time, which is only a few people. And then at title and Escrow and you know, more. So yes, I remember that one very clearly. And I remember having, you know, huge reams of paper sitting sitting in the conference room desks and and struggling to get through it late, late nights to to negotiate the final parts of the document. And still having to luckily, knowing the the owner of the property, seller of the property, well enough to extend the closing multiple days in a row. 

Ian Group:

So I guess the closing process has evolved a little bit since then.

Scott Alter:

It definitely has.

Ian Group:

What do you think separates your deal team now from the rest of what's out there? I mean, how do you would you say your deal, your teams are more more effective at closing? If so, why? 

Scott Alter:

Yeah. I mean, look, it's it's very clear that it's a different world with reams of paper and multiple people sitting in the in a in an office together. And the idea of in-person closing to me is, is so antiquated, you know, having systems in place like ProDeal 360 is, is a perfect situation for us to be be organized, have, you know, like I said, a huge work. I going back to your original question around and working groups you know 40 people on a in a working team or more and all of that's right there at your fingertips using ProDeal 360. So it's a it's a perfect situation for us. And you know, and as you know, we have multiple people that in the company that are coordinating the acquisition or, you know, sort of getting an acquisition started in due diligence all the way through closing. And they're using ProDeal 360 every day to be able to execute on those transactions. And it's it's been a hugely positive. I mean, it just takes away so much time that we were spending in previous situations sitting around. And, you know, a lot of the time you're sitting in the commission meeting when there's only like three or four people actually working and there's, you know, 20 other people sitting there with bated breath waiting to hear what they have to say. So then they can go through their tasks. And now I can see on video 360 or someone on my team can see that, hey, that task is done, let me get started and their questions or whatever that might be. So no, it's it's a whole new world. And and I continue to, you know, and I hope it definitely accelerated that for the better. I mean, the idea of, you know, a notary having to be in person with the technology that exists in the world now, it just doesn't make any sense. So, yeah, that's good thing that's moving to the right direction. 

Ian Group:

Any specific tools for putting aside the platforms you just mentioned, anything that you just you can't be caught without? I mean, for me, it's my phone. Like I I'm attached to my phone. But I'm curious if there's, like, one thing that's helped your productivity or work related or not. 

Scott Alter:

You know, just being in the position that I am in prior pre-COVID or post COVID, I think my amount of time in the office is no different than it was. I always was in the office three or four, maybe five days a week, and I'm able to very easily work from home. That is because of the phone. I mean, the. So it is just a huge time able to, you know, execute and I don't mean literally signed, but I mean, I'm able to complete a task, you know, on a phone in a way. I never was able to do that, you know, in previous years. And, you know, I have actually found that the ability to have the wireless headset has helped me a lot is a great example that guy had with his headset in all the time. But the idea of now talking on the phone while working while I was sort of working on my phone is is hugely productive. It also can be counterproductive because you can be multitasking when you shouldn't be right then. But at the same time that the idea and doesn't even have to be wireless truly you can just be a headphone the the idea of the but the wireless phone feels so much easier. So yeah that has been that has been super helpful and I don't know I don't know what else that what else I can say. I mean, you know, obviously I don't even use the screen on my desk. I actually just use a laptop which people find to be totally crazy. But for me, I'm able to do everything I need to do on a laptop without plugging into a screen so that I my laptop doesn't pretty much goes everywhere with me. 

Ian Group:

You must be very organized. I probably have about 100 tabs open on my browser right now on my second screen.

Scott Alter:

That's I would say I do minimize them. 

Ian Group:

Curious when you're not closing deals and and growing your company, what what do you do for fun? 

Scott Alter:

I'm a big skier, so I love to ski. And I have a lot of friends in in the real estate industry, a skier. So I'm always out skiing with them. Not always, but I try as much as I can to get at the skiing at West with with friends. So that's a big thing for me, you know, and then also with my with my kids, I'm teaching them whatever. I'm teaching them in this in case some cases it's teaching them skis. I just got my eight year old up on water skis a couple of weeks ago, so I like to be in the water a lot too. So swimming, whether it's in the ocean or the pool. And so that's a big thing for me too. And so yeah, three children, so they keep me very busy and they're definitely the great journey of life. 

Ian Group:

I agree with that. I've got two little ones and it's definitely busy around here. You mentioned skiing with people in the industry. How impactful has that been on networking and getting other opportunities? 

Scott Alter:

It's been hugely it the ability for me to make the time and I credit my wife with being able to give me the time to do it because that means she's taking on a greater burden at home and and with the children. But, you know, being able to get out of the office and and meet people who are doing either similar things or compatible deals or is has been a huge benefit. And, you know, just even this morning, a person I met on the ski slopes is someone who helped. I spent 45 minutes today getting knowledge about the particular find that I was interested in learning more about. And he had he had been able to done it ten different times. And so I was able to get information that I previously I wouldn't have been able to get if it weren't for having met him. And now I know him for ten years and he's a good friend and works at a large company. And so yeah, I could give you example, every, every trip there's something that comes of it in a in a real, you know, real way. So definitely been a, a real impact. And it doesn't have to, you know, for me, it's skiing, but there's always there's always some I tell people all the time, I don't even think it's just for it's not just for business, but whether you're trying to make new friends or if you're just trying to build a community, business community, personal community, family, community, find the things that you like to do, do them and people around and the people who also like to do those things will be around and likely will have other things in common. And so for me, that is skiing and and then for others, it could be could be golf or maybe it's, you know, or maybe it's something completely different that I that I don't even know. So there's so there's definitely yeah. Think about you eight. I mean, I think it's, it's important to, you know, find the things that you like to do. It could be it could be needling, you know, I mean, I'm not needle threading or not even anything, right? Let's say knitting. Right. Knitting. Crochet, right. Thank you. That's what I was trying to say. You know, it could be something like that. And there's, you know, you know, like I think there's a really the part of the part of the good part of social media is finding finding groups of think people, hey, we're in the real estate business and we like to crochet. You know, that exact group probably is out there. You know, it probably is. 

Ian Group:

So I thought you were going to say you're starting that group and if anyone's listening, they should reach out to you on LinkedIn.

Scott Alter:

Yeah, absolutely. That would b my grandmother. She is really into the crocheting. I would say that. 

Ian Group:

Last question. I'm curious if there are any books that have made a really big impact on your career. 

Scott Alter:

Yes, that's a that's a great question. You know, there's there's a book I loved reading and it was really it was helpful for negotiation, but I wouldn't say it was it's not something that I've. You have to go read it's just a really fun one's called The Man in Full. It's a Tom Wolfe book going back a long time now and and you know it talked about the rise and it was a total fiction book, but it had some a lot of similarities back to, you know, nonfiction of the rise and fall of the developer. And and, you know, the lessons learned and the leverage points and learning about that. There's there's all sorts of great nonfiction books that I've read that have really helped me in business and in life. But I but that's one that just I like to say it as something that it's fun to read it to read. And, you know, they're they're easy real estate lessons in there.

Ian Group:

I'm going to add that to the list. That's great. Cool. Scott, really appreciate your time. Thank you so much. It's been a pleasure. 

Scott Alter:

Well, thank you, Ian. Really appreciate it. I've enjoyed the conversation, too.

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