To further lev.co’s mission of democratizing knowledge about commercial real estate, we started an interview series with all kinds of CREF pros: everyone from multifamily and medical to cannabis and construction.
This time we connected with 6th Ave Founder Jamey Ice. During its first iteration as 6th Ave Homes, the company helped people in the Dallas-Fort Worth area buy, sell, design and renovate residential properties. Now Ice and his team are expanding into commercial real estate.
Here’s the transcript from our conversation:
Joseph Rauch: How did you get into commercial real estate investment?
Jamey Ice: That’s a good question. I mean I would say it started kind of as a side hustle, and we started primarily in residential. I just had redone a few houses myself. My wife and I bought a house, redid it, bought a house, redid it, every couple of years, and kept upgrading. Through that, me and my partner, Jimmy — best friend since high school, across the street neighbors — we’d both kind of done that, and there was a house down the street from us that was a foreclosure, and it was a really really good deal, and I was like, “Man, we should buy this now.” It’s a good deal, but we don’t really have any money, and we went and visited, and I was like man, this is a good deal, and we were like we should try to buy this.
We wrote up an offer, put a contract on it and the agent called us back and was like, you know, this has to be a cash deal because it’s a foreclosure. ‘Could you have the cash?’ We said yes even though we didn’t, and we put down $5,000 hard, which is like literally all the money we had at the time, and got it under contract and then called a bunch of banks. I was playing music then. I played music professionally for like 15 years. And he was a cop, so we called a bunch of banks, and they were like, we’re not lending a musician and a cop money to buy a foreclosure.
So we called a bunch of people — just started calling, got connected with an investor and borrowed money at like 14% interest to buy this house, and we renovated it, and we sold it in 90 days. And we’re like, ‘This is awesome, we made a bunch of money, and a great family moved in.’ We were like, ‘This is amazing. You can buy houses, and you can buy real estate without having any money.’
So that summer, like two months later, we bought six houses, and that kind of snowballed into this bigger thing. We ended up buying I think probably like 150 properties over the course of like three years in our neighborhood.
So we do houses, lots, quadplexes, multifamily, and realized how to use the power of leverage to do that, and it grew really really quickly. At the same time, we started documenting a lot of it, and people kept calling us. I made the Instagram account, “I love marketing,” and had started a few other businesses as well, but people kept calling saying, “We love what you do. Can you help us do that?” And so we launched a one-stop shop real estate company called Sixth Avenue Homes that helps people buy, sell, design and invest, and so we have a brokerage. We have like 25 agents. We have a construction team. We have like 5, 6, 7 crews. We have interior designers. We have architects. We have a residential finance component of it as well. And so that was probably our intro into investing was doing it in a kind of a residential and multifamily level.
A few years back, as we were doing that, there was this giant warehouse kind of down the street on this street that has long been neglected, and Jimmy and I went into it one day, and we were like, we need to buy this thing, and it was like this 20,000 square foot warehouse, and so we had a similar situation — had no idea how we were going to do it, how we were going to pay for it, but we were like we’re going to buy it.
We went to the owner, like we want to buy it. He’s like, it’s not for sale. We’re like, we want to buy it, and convinced him to write up a contract. And so we bought this big, historic warehouse, and we converted it into an event space, and we put in four retail spaces and a restaurant space in there. It was kind of like the first retail on the street, and it really helped activate that street and bring it to life. So that was our first big development project and kind of first truly big commercial. We’d done a lot of multifamily. But that was our first bigger, large scale project — re-doing this historic warehouse.
JR: That’s great. And what did you notice in terms of the pros and cons and challenges between residential and commercial?
JI: I think some of the cons of commercial is it’s just a lot slower. And then all the environmental stuff — there’s a lot of different things with dealing with the city, which is very different. It just takes a lot longer. And we were used to kind of blowing and going, and that was a different beast.
And the lending side of it was also a lot more complex and kind of arduous, but the construction aspect wasn’t drastically different. But I think what I have loved in commercial was, one of the reasons we did that project was, I also opened up a restaurant and coffee shop in Fort Worth, and I took that. We had a location in Fort Worth, we had a location in Dallas, we had a location at DFW Airport.
One of the things, I realized — one of my biggest regrets, as an investor, someone who now does real estate, was I had an opportunity to buy that building. When we originally negotiated a lease, I could have bought that building. But we were like, that sounds scary. It’s a big commercial building. And so we leased it, and then we put in our concept that was a great concept, especially like a restaurant type of thing or coffee shop. It really changed that whole block, it changed the street. And so we made it a safe area for other businesses to go in, and we created our own value.
So inadvertently, the value of the building — by putting in something that activates the space and marketing it well and branding it well, and creating an environment where people want to come — raises the value of everything else. And so I really regret not buying that way back then. But one of the things we learned was that you can create your own value in real estate, in the way that you program it and the way that you activate it and what you do to it. You know, you’re almost creating what it can be by taking that risk and putting it in there. And so that was kind of a big lesson. That’s a little bit different from residential. You can do that on a small level, but you can’t do it the same way you can with commercial, and I love creating spaces where people want to gather.
JR: Right, No, of course. Just because such a big focus of lev.co is going to be on lenders, can you tell me a little bit more about what the challenge is like for commercial lending?
JI: Yeah, I mean, I think the challenge with all lending is that banks really, really love giving money to people that have money. No one would ever give us money, just because of what we did. And so we had to really use hard money and pay a lot of interest until we had built up a big name and built up a big reputation and built up to where we now have access to different lines of credit and things.
But I think that’s probably the biggest — even in commercial — when you’re talking about large loans and big deals, it’s like, generally, it’s still looking at income. And also, if you play in the real estate space, you do real estate properties. Real estate is like, “I don’t like paying taxes.” I’m not against taxes. You know, I like building assets. You’re always leveraging, you always have things coming in and coming out. That’s always a challenge. It’s a challenge on lending and doing projects to figure out how to finance it. You know, when you’re not a doctor or a lawyer, when you’re self-employed and do real estate, it’s much trickier.
JR: Yeah. No, I know what you mean. And I think maybe just because we keep these pieces not too long, I think the last question I’ll ask you is just for anyone who’s an aspiring or current commercial real estate investor, who’s interested in the Fort Worth market, are there any kind of trends or changes you’ve seen maybe in certain property types that they should know about.
JI: Specifically in Fort Worth?
JI: Yeah, good question. Yeah, I think Fort Worth a couple things — is one, it’s growing rapidly. It’s like the, I think it’s like the 10th fastest growing — maybe the fourth or fifth. It’s like the 11th biggest city in the country. And it’s like the fourth fastest growing city. There’s a lot of movement here. And there’s a lot of movement back into the city.
Texas especially has a lot of suburbs. Fort Worth, Dallas, has a lot of suburbs, where people moved out of in the ‘80s and ‘90s because of the big movement back into the heart of the city. And so real estate is still relatively cheap here, in comparison to the rest of the country. So there’s a lot of opportunity here. There’s a lot of people moving in who are looking for fun and interesting things.
I think part of it is just like, Fort Worth will always be behind New York and behind San Francisco, behind Austin in terms of trends, and what people are doing. And so you have these kind of cultural hubs, tastemaker spots, like New York and LA defining what restaurant retail we’re in, what bar nightlife looks like. And so I think there’s still a ton, ton, ton of opportunity to kind of rein those things into the market.