Revolutionizing Rentals with Jordan Kavana, Founder and Chairman of ARK Homes for Rent

Jordan Kavana is the Founder and Chairman of ARK Homes for Rent, established in 2021. ARK Homes for Rent is a real estate investment company that owns, operates, and manages a nearly $2 billion portfolio of rental properties located across the Sunbelt of the United States.

For nearly three decades, Jordan has built and led several successful ventures in real estate and private equity, including Transcendent Investment Management (established in 2008) and JL Real Ventures (established in 2004). Prior to that, Jordan founded a successful international consumer electronics company, which he sold in 2003. His career began with roles at Morgan Stanley's Private Wealth Management division and the finance and operations department of one of the continent's largest vacation property developers.

Jordan is also a founding member of AIPAC’s Miami Club and holds key positions within YPO International, including Global Impact Officer for Mosaic and Engagement Officer for the Peace and Action Network. He is a graduate of Florida International University and has completed coursework at both Harvard University and Harvard Business School's President Management Program.

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Transcript

AY Strauss: Hello everybody, and welcome to the Dealmakers’ Edge. Today we're thrilled to be joined by Jordan Kavana, Founder and Chairman of ARK Homes for Rent, founded in 2021. ARK Homes for Rent is a real estate investment company that owns, operates, and manages a nearly two billion dollar portfolio of rental properties located across the sunbelt of the U.S. For nearly three decades, Jordan has built and led several successful ventures in real estate, private equity, including Transcendent Investment Management in 2008 and JL Real Ventures in 2004. Prior to that, Jordan founded and later sold a successful international consumer electronics company. His career began with roles at Morgan Stanley's private wealth division and the finance and operations department for one of the continent's largest vacation property developers. Jordan is also a founding member of AIPAC’s Miami Club, holds key positions within YPO International, including Global Impact Officer for Mosaic and Engagement Officer for the Peace and Action Network. He's a graduate of Florida International University and has completed coursework through both Harvard University and the Harvard Business School's president management program. Jordan, I'm really happy you're on. In this short conversation, I know everyone's going to learn a lot from you and your background, your career. 

Jordan Kavana: Thank you, Aaron, I appreciate you making the time and inviting me to be on. 

AY Strauss: What we always do is we try to go back more to the beginning. You've had a few career paths sort of blended together, obviously real estate, and you've really grown tremendously in the last several years. But knowing your history helps, I find, to understand sort of how you got to where you are. Maybe you can walk us through for a few minutes just sort of where you grew up. Obviously, we know where you went to school, but sort of your early business entry points, and then from there, we'll continue the conversation. 

Jordan Kavana: Yeah, sure. Well, you know, I was born in Uruguay, South America, a small country next to Argentina, about three and a half million people. But I did grow up in the U.S. We moved to the U.S. when I was two years old. I grew up in a pretty typical immigrant household, Latin American parents who were trying to come to the U.S for bigger opportunities and to make some money. I grew up in a very entrepreneurially minded and spirited household. My mother worked as a marriage and family therapist; my father had different entrepreneurial things that he did throughout his life. I always knew that I was going to end up in a business or businesses that would interface with people. I love people. I love understanding what moves them, what drives them. Whether that's from the consumer product standpoint, and of course I had a business in that space. Or, it's having a relationship where I'm providing a service, or real estate and a service. The common thread here is JL Real Venture, that you mentioned, was a multi-family investment company from 2004 to 2008. But since 2008, I've always been in single-family housing. A few different firms and names, but the thesis has always been the same. And the name has changed; quite frankly, as we've grown it's become more of a consumer-facing brand. We've adapted for that and with that. But to bring it all together, essentially, I've always wanted to make people happy. And the different real estate ventures that I've been involved in have always made an effort to do that. Whether it was leasing apartments, doing multi-family, or innovating a preventative health and wellness program in our single-family portfolio, which is called ARK Living. It’s always been the same story, just the assets have looked a little bit different. 

AY Strauss: Well said, and it is all about people in the end, right? Whether it's real estate, consumer electronics, philanthropy, which we'll talk about as well. And this is going to be – we're going to focus on the real estate side of your career for sure, no question. But I think it'd be interesting as a side point to understand your ventures also. I know you built and sold a successful consumer electronics company, maybe you could talk about that for a moment because I think it's really interesting. A lot of people in real estate never touch other businesses.

Jordan Kavana: I had a childhood dream of finding all of these really cool products in big toys stores, and I never found them. So, I would keep a log of all these different ideas. It all started when Back to the Future came out and they had that hoverboard. And I said, "Well, I want one of those". For years, I kept a log of all these different cool product ideas. I had just completed a master's in real estate finance program at Harvard. And I became very friendly with a guy from China whose family was in the contract manufacturing space. And he said, "Look, you have all these great ideas, are you sure you want to do real estate? You should really look at this consumer product space and see if you can make something happen with these ideas. And by the way, I can help you." So long story short, over a period of four years (I was in my early 20s) I basically spent more time in China those years than I did in the U.S. So, I like to say that I was essentially living in China. I built up this consumer products business. What we did was we collaborated with the MIT Media Lab, who was providing guidance and technology development to manufacture these ideas. I was a contract manufacturer in mainland China selling these concepts to U.S. customers via different retailer, like Toys R Us, Best Buy, Target, etc. I did win Toy of the Year in 2003 for a product that I created called the ‘Hand Band’, which was virtual reality musical instruments via gloves that kids would put on their hands. So based on how you would set up your hand, arms, and the movements that you would make, you would play different musical instruments magically in the air. It was a really, really cool product. And again, the common theme there was I knew I was bringing happiness to people, specifically to kids. More specifically tweens, 14-year-olds, which we were targeting. It filled one of my goals. That was the beginning of the consumer product business. We grew it from inception to a little over 60 million dollars in sales in four years and then eventually ended up selling that business.

AY Strauss: Amazing. What a great frame of reference to enter into real estate. You really have to touch the consumer. A lot of people, they lose sight of the fact that real estate really is a people business. You need the bricks, you need to drive IRR, you need to manage these properties. But if you can't keep the people happy in those properties, you're really not going to be successful. I think I heard somebody in New York say the real estate buildings themselves have no value. It's the people inside them doing stuff that gives it. And the fact that you're starting with the person first, I'm sure, has driven a ton of your success. And really, you kind of helped pioneer a market. I mean, single-family rental really only became a term, I think like three to five years ago. It wasn't even an asset class when you got started, although there were some mass buyers. Maybe you could talk about how you decided to sort of help create this specific industry that you're in.

Jordan Kavana: Sure, well said. I mean, it always starts with the people inside. I like to say we have the Intel inside model. You know, if you don't take care of that intelligence and what surrounds them, the real estate doesn't really matter. I was doing multi-family, as I mentioned, prior to starting in a single-family space, and I noticed that we were losing some renters. When that happened in these multi-family properties, I started to talk to them, and they said, “Yeah the bank, (local bank X) is offering homes for rent”, because they had started proposing on homes. And when I would ask further, “So, what about that home is better than this multi-family property?”, because some of them, you know, sometimes they would be in older homes or whatever. They would say, “Well, I have more space, I have more privacy, I have a backyard”. That is what originally prompted me to start looking at the space. You know, this is circa 2008, early 2008. At that point, I decided to put a business plan together with the following thesis. I looked at California, Arizona and the bottom of Florida, which were essentially the ground zero markets or states, I should say, for proposers. And I started traveling to the courthouse steps and understanding how these auctions work. What I noticed at the time was that we could pick up single-family homes that have been foreclosed on or were in the process of being proposed for, you know, in many cases, 40, 50, 60 dollars a foot. And I said, well, if I could buy them for that price, and I could reposition them, and eventually I'd rent or sell them. You could basically turn your capital, in perpetuity at the time, and what a great business, big cash flow and so forth. The genesis of what we've done in housing is defined by three points on a timeline. There's 2008 to 2012, in which we bought, fixed, and flipped close to 6,000 homes throughout the country. There's 2012 to 2015, in which we bought older, vintage homes and rented them for a long-term hold, predominantly throughout the Sun Belt. And then there's 2016 forward, which has essentially been bulk buying and holding for long term rental cash flow and appreciation. But, with the big difference that we, from 2016 forward, only started investing in newly built homes and we started partnering with public home builders to develop build-to-rent or housing communities. And so that is our kind of defacto business model today. We buy, scatter, newly built single-family homes and we build, purpose built rental communities, which you could think of as horizontal multi-family.

AY Strauss: Terrific, and it really is an asset class that has just exploded beyond anybody's comprehension. Who would have thought since COVID through now, the sort of sea of change as people perceive individual houses as investment properties. So, you've been around the world extensively. You've lived in China essentially, you traveled extensively to learn your business and your space, you're operating across the Sunbelt, and you've built a fabulous portfolio and a management style. Maybe we could talk a little bit about philanthropy. I know you're very invested in a lot of community initiatives and helping a lot of people, involved a lot of organizations. And maybe before that, we can talk about the mindset. You know, we call this podcast, The Dealmakers’ Edge. We want to meet people who are doing fantastic things, doing deals, but if real estate starts with the people in the real estate, the decisions being made in real estate start with the mind of the person who has to think and, so to speak, transcend from where they are. So maybe you could talk about your mindset day-to-day, how you manage, and I'll call it stress, but it could mean something to somebody else, but how do you manage sort of the constant barrage of thinking that has to happen in real time when you're juggling all of these factors? Markets, team members, tenants - doesn't matter. How do you power through your day? What's exciting for you? And when you're having a rough patch, which everybody does, what are the types of things you tell yourself to propel yourself through that period?

Jordan Kavana: I would break it down into two different responses. There's what we love and what we gravitate towards because it's what feels natural and what we enjoy. And then there's what you have to do, regardless if you like it or you don't, which of course is a necessary ingredient, or I should say a part of any entrepreneur's journey. In my case, my mindset is as follows. I love the ability to move between one decision and the next. It could be a very strategic decision for the firm. It could be a tenant issue. And it could be something personal or some project that I'm working. That ability to juggle and move around from one thing to the next energizes me, and I thrive on that. My mindset kind of generally encompassing all of that is, you like this so keep doing it, get energized by it, and enjoy it. The other side of it, there's all kinds of things that I do and all of us do that we don't like. I think of everything predominantly with the 80/20 rule. If it falls into that 20 percent bucket, I just kind of plow through it and keep moving. However, if it gets to a point where there's enough things that hit me on a daily, monthly basis – or it starts to become inconsistent with my principles or with what I really enjoy doing, I reassess and make changes. As evidenced by a big change that I decided about six months ago, I stepped out of the CEO role and moved into Founding Chairman role. Because I felt that it was time, after taking the business to a couple of billion dollars – it was time to bring somebody in who thrives on the day-to-day operations, on the day-to-day grind. And I think for an entrepreneur to be successful, you have to do what's right by the business. You can't selfishly say, my ego's going to make me keep doing something that if I don't change, it's going to hurt my pride. I hope that that helps. 

AY Strauss:  That really helps. And I can almost see all those YPO conversations blending through that, forcing you to think about being on as opposed to in your business so you can project manage and solve for greater issues day-to-day and be most impactful. Also, the way you described it is you're protecting yourself from burnout too. A lot of people who have tremendous responsibility can burn through their mental health in an uncomfortable way. The fact that you're thoughtful about what's driving you and energizing you is for the benefit of all your team, end users of property, your investors, etc. Congratulations for thinking through that in a very clear way. Maybe we can also talk about just career advice you'd give the people starting out. We don't have to get so much into markets unless you'd like to, but I'm sure people are pinging you all the time, "Hey Jordan, I want to start being a developer. I want to start buying up single family rentals. I want to build this.", and your time is short. But maybe this is an opportunity for all those people who may want to get on your calendar for coffee, you can sort of address them now as some key points as to your core pillars, how you think about life and business. 

Jordan Kavana: Well, first of all, I'd like to say that I thoroughly enjoy talking to all kinds of people regardless of where they are on their career journey or entrepreneurial journey. I'm always welcome to have those conversations. But look, I think it's easiest for me to answer this based on the mistakes that I've made, or I wish I would have done differently. In my case, I did not spend enough time on education in the early years. I was always doing from the age of 15 or 16. And so I would say that if you really take the time early on to invest in your education, whether that's your excel analytical skills, your market fundamental skills, or if you want to become a CFA, I mean, these things are tremendously helpful later on in your career. So that's number one. Number two, I think that there's a lot more to be learned when you work for a very established company. So if you want to go into development it's more valuable, in my opinion, to take a six-month unpaid internship (if you can do that and figure that out), than spending the next five years doing deals that perhaps work or don't work, or you develop all these blind spots as a result of not having the fundamental education and how to do it upfront. I think those are two very important principles that I've learned and tell entrepreneurs all the time.

AY Strauss: Amazing. I love those sort of pieces of these conversations because they're so impactful. And I know someone will – I've gained from that, but I'm sure other people listening will as well. I can't resist Jordan. It’s probably annoying, people are asking you all the time, but let's talk about the market for just a minute. Sorry, you get the call probably daily. We don't have to predict rates. We don't have to talk about the Fed. We don't have to talk about inflation. But just on a real feel, you're really seeing things in real time. So, the pundits on TV may be talking about whatever they're talking about. How does it feel temperature wise as far as ability to execute? Pricing, people being open-minded to making a deal, sort of the bid-ask closure? How does it feel today versus even six months for you out there as you're trying to make deals?

Jordan Kavana: It's a very exciting time. You mentioned rates and look, if you have some good advice or the crystal ball for me, please let me know because there's a lot of money to be made there. But you're right. I mean, that is the biggest wild card no one really knows. Having said that, it's a very exciting time because fundamentally in our asset class, we know that nationally and more specifically in the Sun Belt (where we invest), there's a tremendous lack of supply of affordable and entry level rental units. We know that we are investing and building into an opportunity set that is just vast and wide. For that reason, we know that the trade, if you will, is not going to go away. Having said that, it's a little bit concerning to see how much institutional capital is plowing into the space and trying to get into the asset class. Think of it this way: when billions of dollars all want to write the same business plan meeting, we're going to invest, we're going to hope for five years, and then we're going to exit because everybody needs to exit at some point. You’re going to end up, at some point, with a bunch of units that are going to be exited into the market all at the very same time. That means that your existing areas and my existing areas are not going to hold true because there may be just too much supply to make to the market at the same time. I feel like in an ideal world, if we could say, look, there's a deficit of let's say half a million units in our markets, do we really want to do as much as we can as an industry, or should we be a little more thoughtful and pragmatic about how we do this so that we actually all can have that value when we realize an exit. That's the one thing, it's unrealistic because not every business is going to collaborate, but I think a version of that is necessary so that we don't all get hurt in the end while we're doing something that's essential. Which is, we are bringing affordable entry level supplies in the market. 

AY Strauss: Really well said, very well-articulated. Thank you so much for that. Now, let's talk about one of your passions beyond real estate, which is giving back. You're involved in a lot of that, which I know about. Maybe we could touch on that briefly, maybe start from a macro perspective. Obviously, we're here for a short time, we all need to earn a living and make money for investors. But clearly, you've given a lot of thought as to broader impact beyond just keeping renters happy and making money for people. You've thought of life in a holistic way where you want to give back and maybe you could try to articulate how you made that shift, when that started, the roots of it, and how people can sort of learn from that process you've gone through.

Jordan Kavana: I divided it into human capital and actual capital. On the human side, I tend to give up my time in three different areas. There is underserved or underprivileged, through organizations like Year Up or even interns, many times I am giving up my time to mentor and help. In some cases, even invest in their ideas when they're ready to launch something. I also give my time through my community, whether it's in business or other, and so that is a very valuable resource and I take that into account when I'm thinking of my total giving. On the capital side, I come from the Jewish faith and in my faith, we have tithing, what many people do. I tend to exceed that by quite a bit every year. And I guess my philosophy around giving up my earnings is, the more you give, the more you get. It's not what drives me. I don't give so that I can make more money, but it has always worked out that way. In terms of specific causes, I'm a very big Zionist and I care very much about the survival and thriving for the state of Israel. So, anything and everything around that, I tend to be very focused. A lot of it has to do with investment, a lot of it has to do with security, a lot of it has to do with innovation. And then finally, through Mosaic, a group that I helped start three and a half years ago with 400 members globally, all business leaders. We (I think you mentioned the interaction) – I head up Global Impact, the battle organization, which basically means that I tend to curate any philanthropic endeavors. As a group, we come together and we make a difference. That difference has come as a result – it has come through supporting bills that have been produced to bring more awareness and education around what it means to deal with security issues here in the U.S. from external bad factors, let's say. It's investing in cybersecurity and investing in general education from different programs at schools or universities and of course we're all seeing in the media today that that's a problem that we all deal with. It doesn't matter what your background is, or your faith, or the color of your skin, it's an issue. You know, we're in the U.S. and we're dealing with a lot of issues. That's where I tend to spend my time. 

AY Strauss: Yeah, and you have a lot going on. All good and a lot of challenges, like we discussed too. Anything you do to just totally relax and chill? Where do you actually get to be calm? You're a go-getter – there's no question, you like the action. But everybody needs a timeout, it's just not healthy. Do you work out? I mean, how do you just manage that high intensity day to day?

Jordan Kavana:  Because of our preventative health and wellness business, which we created for the 99 percent (of which most of our residents fall into), I'm very, very focused on preventative health and wellness. I tend to make it a mission of mine that everything that the one percent have access to or can afford, we will make it affordable, available, and accessible to the 99 percent. Because that's a business now, but it stems from a personal passion, the answer to your question is I do a lot of different things. I do breath work. I do work out regularly. I do watch my diet. I'm a very, very curious person in the field of health and wellness. I go to conferences and I learn about supplementation and blood work. I'm connecting with functional doctors all the time. If some of those practices bring me peace, happiness, and calm (to answer your previous question) some of those feed my eternally curious mind. But frankly, where I get the most happiness, pleasure and peace is from my four kids. Any time that I can spend with them is amazing and very valuable time for me. I also like to spend a lot of time getting vitamin D in the sun whenever I have time for that. I have one very important thing that I’d like to share with anybody who's willing to listen. I heard a doctor recently say (was very, very well done), He said, “If you only take one supplement, if you only do one thing a day, take massive amounts of Vitamin D and get as much Vitamin D from the sun as you can. I've always liked to do conference calls while walking and moving. But recently, I've been spending time doing my calls with my headphones outside while I'm getting sun. And it just makes me feel fantastic. It's such a low hanging fruit, easy thing to do. 

AY Strauss: Well said. That Vitamin D – everybody I know, they go to the doctor and they're always short on it. It helps that you are living in a very sunny area. You enjoy the outdoors and the health – you're very inspirational, Jordan. I got to tell you, I mean, it's very hard to combine all the things you're doing. The way you articulate, very clear headed, about which direction you've always wanted to go in and execute it. How about next? Three, five, seven years: any big goals you're striving for? Is it more of the same, just don't let the rails go off any train? Or every year, you start to look at your goals and say this is what the goal is for the year. Do you look at a longer term? 

Jordan Kavana: Thank you, by the way, because your questions are making this extremely interesting and entertaining for me as well. You know, my goal for the next five years, and it's more personal than business, is to stop chasing money. For as long as I can remember, everything that I did professionally had to have a number associated to it. That's just the nature of what we do in real estate. You're underwriting, you make a certain return or a minimum amount of profits. What I've come to realize, maybe you're getting a little bit older or maybe a little more mature, but I realize that the more you run towards something the faster it runs away from you. Everything that I'm thinking of doing now, of course, has to be entertaining and fulfilling. But, I'm not looking at the money potential or the earning potential first. I'm looking at that as a second position. And I think that as a matter of philosophy, I think that that helps you lead a more fulfilling life. So that's kind of first goal from my mindset sample for the next five years. Specifically, as it relates to business, lines, or ventures, my goal is to help, with my amazing team, is to make ARK Homes for Rent a top five and not a top 15 firm. And we will get there. We will be in the five to 10 billion range in the next three to five years, there’s no doubt in my mind, which will put us up there. So that's number one. Number two, my preventative health and wellness business is something that, now that I'm not in the CEO role, I very much want to grow. Again, not because of the numbers or the potential it has to make money, because it does. But because I want as many people who are renters, both in multi-family and single-family, to have better health equity outcomes for themselves. I want to be the person that does that. And by the way, the first very big step that we took to get there is we could be the Health and Wellness Council of Washington DC, the National Rental Housing Council. So, we are essentially writing the rules of the playbook for how our industry should look at delivering preventative health and wellness to renters.

AY Strauss: No joke, Jordan, as I'm talking to you, I'm kind of wanting to sell my house and just rent from you, seriously. Get rid of the property taxes, get rid of the carry, all that stuff. But last question I've asked, it's sort of a question on a question, is there anything I should have asked that would have been nice to have been talked about during the course of this conversation? And you don't have to – it doesn't have to be anything per se, but it's a good sort of catchall in case we missed some topic that we could have covered that would have been good. 

Jordan Kavana: Yeah, I always like asking people: what are you scared of?

AY Strauss: Good one, good one. 

Jordan Kavana: In my space, I’m scared of the health outcomes that we can't control. Not because I want to be and will forever. But because life is so precious, and we see so many things going on in the world today that are scary that we cannot control. I always try to, well – I should say I lose sleep thinking about it. I'm doing everything right on the health and wellness side, but what am I not thinking about? What am I not doing? What's going to all of a sudden catch up with me? God forbid, there's diseases, there's all kinds of things out there, but yet that is what scares me. 

AY Strauss: Yeah, I heard somebody say recently, hang on the next 10 years as much as you can to health, because big changes are coming. That'll extend life and everything else, which is great. I'm sure you're working on all of them. And just really want to congratulate you on all the wonderful things you're doing. I can't wait to watch the success of your company scale. No doubt you will, because all your principles are great work in order. And I've learned a lot. I want to thank you very much. And I guess with that we'll wrap. But again, Jordan, really, really appreciate you making the time today. It's been great. 

Jordan Kavana: Thank you. It's been a lot of fun for me and I'm happy you enjoyed it. I hope it's useful to the audience. I am more than happy to connect with anybody who wants to connect with me, I'm on LinkedIn and happy to help.