Aaron Gorin was born and raised in New York and attended Cornell University for both Bachelors and Masters degrees, focusing on Economics and Health Economics. Following graduate school, he pursued several roles on Wall Street, starting in management consulting and venture capital and then working at major banks as an equity research analyst focusing on healthcare.
Following this training and after serving as a consultant in a few different fields, Aaron Gorin started a real estate investment firm called Cedar Grove Partners, LLC in 2015, where he serves as the chief investment officer, overseeing all deal sourcing, underwriting, and operations. Cedar Grove Partners, LLC, located in Woodmere, New York, has developed into a full fledged vertically operating entity with affiliates in property management, construction management, and asset management. Cedar Grove Partners, LLC currently owns and operates a diversified portfolio of multi-family assets throughout the Southeast and Midwest.
How did you get started in this business? What inspired you to start this business?
We started out with the simple idea that real estate, as an asset class, has outperformed most other asset classes over a long period of time and offers tax benefits for its investors, owners, and partners. We then narrowed this “big idea” down to the practical dynamics. We like multifamily (apartment buildings) as an investment because people always need a place to live, and in the digital age, maybe people don’t always need a store to shop at. From there, we focused down on geography (we like stable cities and suburbs with economic prospects), type of buildings (we like buildings that offer cash flow and some type of upside with low risk), and investment size (not too small and not too big). All of the partners either have been around real estate for a while from their families, friends, or prior professional experience, so we intuitively understood these elements and wanted to form a business for ourselves. So, we started Cedar Grove Partners, LLC.
How do you make money?
We make money by owning, operating, and maintaining quality apartment buildings and delivering returns for our partners: banks, equity investors, and communities. In a simplistic sense, we make sure that the income we derive from rental income exceeds the direct operating expenses of owning the property and the capital expenses associated with servicing a mortgage and economic returns for our investor partners.
How long did it take for you to become profitable?
We set out to make our business model profitable from day one. Within real estate, as opposed to construction and development, which can take months or years to yield actual cash flow, we focus on existing properties that are already generating cash flow for the current owner and we seek to make operational tweaks that we think can already enhance the returns of those well-located, stable properties.
When you were starting out, was there ever a time you doubted it would work? If so, how did you handle that?
Throughout the business cycle of the economy and the real estate world, there have been lots of boom and bust. In our earlier iterations, we were investing in more frontier markets with higher return prospects, but much higher risk profiles. We learned along the way that the risk-reward profile was far better within safer geographies, economic regions, and types of properties, and have calibrated our model to fit that mold, which is more durable for the long term.
How did you get your first customer?
Our first customer was hard to win, insofar as we had no track record and an idea that on the surface did not appear to be differentiated — “investing in real estate”. However, we won over the customer with our vision and strategy that was beyond just a simple deal structure, but that encompassed a bigger picture that overlaid both economic and operational elements into a viable long-term investment.
What is one marketing strategy (other than referrals) that you’re using that works really well to generate new business?
We let our track record speak for itself and let all of our partners do the talking for us. Meaning, you put the word out there and you let your actions speak for themselves.
What is the toughest decision you’ve had to make in the last few months?
It is always difficult to let go of something you have had to work on, or for, for a sustained period of time. We always struggle internally with decisions to let people go or sell properties that we feel have run their course for the resources and direction that we want to pursue. At times, we also hold on for longer than perhaps we should or we cut from an investment that if we had held on to for longer, we would have ended up in a better spot. Making those decisions with incomplete information is the hardest task for any manager. Recently, we had to let an employee go due to some circumstances that made it impossible for us to keep him, even though he had never made a mistake before, and according to all, he was a good, solid worker who did his job well and was well-liked.
What do you think it is that makes you successful?
Success is only apparent due to a belief and trust in a Higher Power that guides all the puzzle pieces of the world and assembles them into place. Once you put your trust in this idea, let it permeate your thinking, and you relinquish control and outcomes to a higher reason, it is easier to accept defeat and ascribe victories not to your own skill, but to a master plan that has the best intentions for you.
What has been your most satisfying moment in business?
Whenever we are able to make a difference in a tenant’s life, that is what we are here for. Many times, we acquire properties that had previously suffered neglect or mismanagement for a variety of reasons. We have actually had tenants or even community officials write us letters or thank us in person for improving the living conditions — and by extension, lives — of their constituents, family members, or friends.
What does the future hold for your business? What are you most excited about?
I believe that at this point in the business cycle, and at this point in the economy, there will be a lot of opportunities that will present themselves in the next few years for acquisitions and dispositions of property and embracing technological change to enhance returns for years to come. I’m excited that we have built our business to the point where we are in a position to really capitalize on what I expect to be a multitude of transactions.
What business books have inspired you?
“Margin of Safety” by Seth Klarman, renowned value investor. It teaches you how to think about risk and return, how to prepare for the uncertain, and how to emerge unscathed (hopefully).
What is a recent purchase you have made that’s helped with your business?
I recently purchased a great keyboard that has actually allowed me to accelerate my already prodigious typing skills to a new level. Given the volume of emails that I send (as my preferred method of communication), this has been a game changer!
What’s one thing that people don’t know about you that would surprise them?
I am a tournament level chess player and am one of the top ranked players in the world at an obscure chess variant called “Crazyhouse”.