Frank Roessler Opens the Gate of Investment Opportunity:
How the Founder & Managing Principal of Ashcroft Capital Paved the way to Real Estate Success
With a business savvy boldness, a sharp eye for investments, and a wealth of institutional experience, Frank Roessler climbs the ladder of financial prosperity, sharing his professional journey and the motivation behind his ongoing success. Having founded Ashcroft Capital in 2015 with the help of his partner Joe Fairless, Frank recalls the struggle he endured in the business world before being able to venture out on his own. It was during the recession he found it increasingly difficult to move forward in a career in which he was passionate, with no window of opportunity. However, despite negative circumstances, Frank “worked twice as hard to move forward” when confronted with resistance, ultimately leading him down the path of success.
Having completed an electrical engineering degree from Bucknell University, Frank went on to receive an MBA from the Anderson School of Management at UCLA. It was during his time in graduate school that Frank developed an aptitude for finance, ultimately changing his professional goals forever. Frank enrolled in a real estate introductory class taught by Professor Eric Sussman which focused on investing in apartment communities. According to Frank, “for whatever reason, I fell in love with this industry and I haven’t lost an ounce of passion and excitement to this day.” Each week students would evaluate case studies on new properties, analyzing both risks and rewards of investment opportunities. It was the practical industry experience and a newfound wealth of knowledge that led Frank to the decision to form his own investment firm. With a strong sense of direction and an appetite for success, Frank began to pave the pathway to becoming a top real estate investor.
What motivated you to form your own business? Was there an instance which inspired you?
I began working in real estate finance at the age of 28. It was 2008 and the great recession hit, making job availability sparse. Each company I worked for was negatively impacted and unfortunately for myself, most ended up closing their doors. Despite negative external factors I kept working and did various internships…whether it was setting up lunches, assisting in coffee meetings, cold calling, or direct emails, I didn’t quit. I pressured enough people that I eventually landed an unpaid position at a real estate investment firm by the name of M&A Real Estate Partners. My eventual pay was minimal, and it was barely enough to cover my rent and living expenses. Yet I wasn’t working for a starting salary, I was a sponge and there to soak up enough information for me to be able to run my own firm.
I learned the fundamentals of real estate investing which proved to be invaluable to my career. The market-place was again crashing, yet fortunately for myself M&A were not only staying afloat but proving to be successful in the downturn. I was on the acquisitions side of the firm for the first 3 ½ years of my career and it was a great company to work for because it was well capitalized to actively acquire large apartment communities but small enough for me to learn all aspects of the investment process. Our average acquisition size was between $20 and $60 million. When you’re buying at that size you’re in the institutional world of investing. There were only 5 or 6 of us at one time in the corporate office. When you are a small company making such an impact, the team is able to learn a tremendous amount. One of the most important things that I learned on the acquisition side was a conservative institutional approach to underwriting and valuing multifamily.
During my time on acquisitions, I oversaw roughly 25 closings, which helped me learn valuation, business plan formation, property type return dynamics and multiple major metro economics. M&A was buying all over the United States: Texas, Florida, West Virginia, Oregon, California, Ohio, etc., so I became well acquainted with the major brokers in the metros. Making connections is invaluable in one’s career and this paid major dividend in mine. I remained at M&A for another 4 years, but moved over to asset management which was a great compliment to my underwriting experience as it showed me the actual implementation of the business plan that we were creating. Overall, I learned what strategies are practical, and what ideas tend to work better than others.
When you were starting out, was there ever a time you doubted your own success? If so, how did you overcome this?
The moment you purchase an apartment you become what this industry calls a ‘principal’. The industry is very ‘Catch 22’ as typically brokers and sellers deter from working with principals. Additionally, factors such as raising equity, convincing major institutional sellers to trust that we have the equity, acquiring loans, as well as hiring property management companies, can all contribute to self-doubt. There were many instances along the way where I felt as though we were not going to make it.
How did you land your first investor?
Our first primary investors were both friends and family that trusted in us and relied on our services. My roommates from college, my landlord, my doctor, individuals such as these invested in us when we didn’t have a track record to speak of and we owe so much to them.
How do you see Profit?
For us to increase profit, our investors must first be successful. It is important that our investors are content before we start seeing a profit as well. We have a comprehensive approach to asset management that is both “assertive” yet “conservative” as we collaborate with our investors. This alignment of interest is how all investment firms should be structured.
What is one marketing strategy that successfully generates new business?
All our business is referral based. We are selective when it comes to investors as we of course do not want just anyone investing for multiple reasons. As a result, we only accept investments from ‘accredited investors’ who must meet the minimum requirements to do so. It’s all word of mouth and it is a strategic move that has worked well for us.
What is the toughest professional decision you have ever made?
A difficult decision was when I had to ask myself “how serious are you about becoming an entrepreneur?” It’s hard to leave an investment firm such as M&A where you are surrounded by good people, are making a steady income, and want to avoid severing ties with colleagues. To risk losing these comforts alongside a tremendous amount of money can be difficult to overcome.
What do you think it is that makes you successful?
Improving the quality of life at these apartment communities. We typically acquire communities that have not had a lot of love so to speak, so therefore renovating the units, improving the clubhouse and amenities, adding touches such as dog parks, playgrounds, and tennis courts makes a significant difference. We also replace roofs, parking lots, broken up mailboxes, etc. We take the community and improve the quality of life, hopefully making their living experience a lot more pleasant for the residents. We treat this like a business and not only an investment.
What has been your most satisfying moment in business?
There have been so many, however, I really like it when our properties perform well. When we return what we projected, if not better. We get to write big checks back to our investors, if they’re happy then they come back to reinvest. That gives me a great satisfaction.
What business books have inspired you?
To be honest, Eric Sussman’s class was my biggest source of inspiration. I would watch him in class and think to myself, “oh my God, that’s it… That’s what I want to do. How can I be that guy for a living?”. Since then my professional goals have all been directed in achieving something similar.
What’s the secret to your success?
The secret to our success is “staying conservative” as you want your company to succeed, yet not from purchasing any apartment you can get your hands on. You need to always ensure that every apartment you buy is going to be a profitable investment. When you grow quickly through buying poor investments that is considered a short-term business plan and you are creating long-term problems for yourself down the road. We want our investor relationships to be long-lasting and the only way to do that is to buy conservatively.
What does the future hold for your business? What are you most excited about?
I’m excited about expansion into new markets. We have just acquired in Texas and created a substantial footprint there which is great. We want to remain in Texas, however we also want to create the same sort of footprint in other markets as well. Locations such as Columbus, Atlanta, Charlotte, Denver, Nashville, etc. Further expansion into other US markets, that’s what the future holds for our company.