In an exclusive interview with AppWork, Ari Rastegar, a titan of real estate investment, reveals the riveting story behind the success of Rastegar Property Company. From his grandfather's influence to the strategic insights that drive his firm in the heart of Texas, Rastegar's journey exemplifies resilience and vision.
Delve into the pivotal moments that have shaped a legacy and discover the business acumen that sprung from adversity. Join us as we extract the wisdom underpinning his company's philosophy. The lessons here are invaluable, and the insights are profound—continue reading for a glimpse into the mind of a modern-day mogul.
AppWork: Can you tell us about your journey into real estate investment and what inspired you to start Rastegar Property Company?
Rastegar: My grandfather, Dr. Hosein Rastegar, was a renowned medical doctor and psychiatrist in Iran. As a child, I aspired to follow in his footsteps and become a doctor. However, he believed that the American real estate industry held immense opportunities. Those words deeply resonated with me. My grandfather instilled in me the ambition to build substantial wealth and someday use that wealth to help others.
Before founding Rastegar, I worked on Wall Street. I strongly disagreed with how some firms operated, particularly regarding their fee structures. Unsatisfied, I returned to Austin, Texas, and established the Rastegar Property Company. My goal was to offer a more equitable service to investors and clients.
AppWork: With over ten years of institutional real estate investing, which pivotal moments or decisions shaped your career?
Rastegar: In my book (The Gift of Failure), I discuss a past company of mine: Capital A Entertainment. We experienced a significant setback because of a catastrophic ice storm that disrupted two critical events. Unexpectedly, this challenge became a defining moment that greatly impacted my professional journey despite initially seeming like the end of my career.
Unexpectedly, this challenge became a defining moment that greatly impacted my professional journey despite initially seeming like the end of my career.
That entertainment business also involved a real estate component because it rented venues for our events. These rentals required us to navigate and negotiate rental agreements adeptly. Falling flat on my face after the ice storm debacle was a game-changing moment. I learned a lot from that experience.
Securing Rastegar's first institutional investor (The Louisiana District Attorneys Retirement Fund) was another defining moment in my career. They began by investing one million dollars with us. This amount has grown to 38 million. Their investment compelled us to implement institutional risk controls, collaborate with a third-party fund administrator, and maintain audited financials fit for a large-scale institution.
Setting up these rigorous measures was time-consuming, expensive, and challenging, but this early institutional investment gave us the tools and credibility to establish an institutional-grade firm. Such a development is rare for young real estate investment firms, and it laid the foundation for our continued success.
AppWork: How would you summarize your company's investment philosophy in one sentence?
Rastegar: Our investment philosophy emphasizes capitalizing on jobs and population growth by strategically investing in those regions experiencing company-driven migrations and notable demographic trends.
AppWork: You also emphasize recession-resilient assets. Please elaborate on what makes an asset recession-resilient.
Rastegar: Recession-resilient assets comprise necessities. Class B apartment complexes, for instance, represent workforce housing. Regardless of the economic climate, people need a place to live.
Recession-resilient assets comprise necessities. Regardless of the economic climate, people need a place to live.
If you can locate housing options with Class A interiors but perhaps an older, vintage exterior, that building type is a prime example of a sought-after asset during a recession. People may downsize from their upscale downtown high-rise apartments to fully renovated units in a two-story walkup. These complexes are more affordable and highly in demand. It boils down to needs versus wants.
AppWork: You specialize in working with high-net-worth individuals and institutional partners. What unique challenges and opportunities come with that focus?
Rastegar: Immersive, face-to-face engagements constitute a cornerstone of our strategy, whether in casual or business environments. Spending quality time with our high-net-worth and institutional partners, along with their consultants and managers, is of the utmost importance. It is not about presenting a pitch. It is about building genuine relationships. These interactions create unique opportunities to form lasting memories and solidify long-term partnerships.
Immersive, face-to-face engagements constitute a cornerstone of our strategy, whether in casual or business environments.
In the real estate industry, results are not instantaneous. We do not dabble in short-term flips. Although strong relationships take time to form, I invest 100% in my clients. I treat all of them with the same dedication and care that I give my properties. Nurturing these relationships enhances the value of a project or deal.
AppWork: How does your firm align its investment strategy with the financial goals and risk tolerance of insurance companies, public pension funds, and family offices?
Rastegar: Our investment strategy, centered on downside risk protection, positions us firmly in preserving capital. This approach inherently aligns with the objectives of insurance companies and public pension funds.
If you examine our track record, you might notice that, in some cases, our returns are not always the highest. The lower returns result from prioritizing and minimizing downside risks. At Rastegar, it is not about hitting the big home run in one deal; we consistently aim for steady gains, focusing on optimizing company operations.
It is not about hitting the big home run in one deal; we consistently aim for steady gains, focusing on optimizing company operations.
AppWork: Speaking of company operations, how does your team stay ahead in technology and data analytics? Are there any tools or methodologies you have found particularly efficient?
Rastegar: Industry FinTech (IFT) handles our financial administration. They are a third-party fund administrator that focuses on financial technology services. IFT’s CEO, Sandy Fliderman, has an extensive background in technology leadership from working as the Chief Technology Officer at various companies. He also holds multiple patents, reinforcing his firm’s strong tech credentials.
IFT equips Rastegar with enhanced data security measures and superior analytical capabilities. IFT ensures that our financial processes, including accounts payable and overall system infrastructure, are cutting-edge. Their assistance enables us to provide our clients with a more efficient and advanced service experience.
AppWork: We would love to hear your take on industry trends. Which real estate investment trends should we focus on in the next 3-5 years?
Rastegar: I believe the real estate market has peaked this year concerning credit levels. We will likely see a considerable adjustment in the market over the next few years. These adjustments might create opportunities for buying that we have not seen since 2008. We have already prepared to navigate these changes thoughtfully.
AppWork: Regarding leadership, others describe you as resilient, focused, and disciplined. How would you advise entrepreneurs venturing into real estate investment?
Rastegar: You are your most important investment. Before managing or establishing an investment firm, you must turn inward first.
You are your most important investment. Before managing or establishing an investment firm, you must turn inward first.
Examine your habits and how you invest in your growth—whether through health, wellness, education, or other means of contributing to your well-being. Be resilient, focused, and disciplined in the foundational habits integral to your success. Let your business emerge as a natural extension of these inner strengths.
At the top of that list is health and wellness, encompassing everything from exercise and nutrition to vitamins and meditation. Prioritizing health is crucial for setting a positive example and possessing the vitality and stamina required to manage endeavors of this intensity.
AppWork: Can you share an example of a particularly challenging situation you encountered in your career and how you navigated it?
Rastegar: COVID was an unbelievable situation that took me (and the world) by surprise. I had to master remote operations through Zoom for tasks that usually occurred face-to-face. I had to embrace a broader range of technologies.
In hindsight, this shift provided a tremendous learning opportunity. With improved systems and a more sophisticated use of technology, data informs our decisions more than in the past.
With improved systems and a more sophisticated use of technology, data informs our decisions more than in the past.
Leveraging this crisis as a learning opportunity significantly altered our narrative, allowing us to turn it into an advantage. During COVID, we successfully closed 16 significant deals. I also earned the 93rd spot on the Commercial Observer’s Power 100 list of the most influential real estate figures nationwide. I am the youngest inductee to achieve this recognition. Attaining it in such challenging times reinforced the idea that a crisis can be an invaluable learning experience. As the saying goes, "You never let a serious crisis go to waste."
AppWork: As a thought leader, who are your mentors and inspirations in the industry?
Rastegar: Richard B. Handler, the CEO of Jefferies Group, and Ray Dalio, the investment manager, stand out as my foremost inspirations.
Ray Dalio is a titan in the hedge fund industry. His advocacy for the combination of transcendental meditation and a meritocratic organizational structure (as outlined in his book Principles) changed my life.
I have had the privilege of meeting him several times. Those meetings were mind-blowing. Likewise, my interactions with Richard Handler have evolved into a great friendship. Witnessing his growth into a visionary CEO, an exceptional human being, and a father figure was an extraordinary experience.
AppWork: Is there anything else you want our readers to know about—regarding you, Rastegar Property Company, or the real estate investment industry?
I recently published a book, "The Gift of Failure." The book was a passion project of mine. I recounted some of my most personal and humbling experiences in it, all of which played a vital role in my growth.
I truly hope readers can learn from my mistakes. If anyone is curious and wants to hear more about my journey, I delve deeper into the above topics in my book.
Ari Rastegar’s story is a compelling tapestry of durability, curiosity, and strategic innovation. His leadership at Rastegar Property Company navigates the current landscape and shapes the future of real estate investment with a humane and clear vision.