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We welcome Josh Sasouness, Co-CEO of Dwight Capital, to this episode of Offshoot. Dwight is NYC-based mortgage banking platform that is the number one multi family FHA/HUD lender in that Nation. Josh and his brother, Adam, came to that position after only six and a half years advancing the business they started in 2014. And as if that HUD business weren’t enough, Dwight also originates FNMA, Freddie, and CMBS mortgages. The “top brass” at Dwight also holds positions in other businesses, including Dwight City Group (a direct investor in multi family assets around Philadelphia) Dwight Mortgage (a direct bridge lender)and Dwight Funding(a provider of early-stage growth capital to smaller firms). Yes, they are busy.
Josh is thoughtful, driven, competitive (in a good way), and charismatic leader who can almost certainly lay claim to being the most prolific originator of multifamily mortgages in the USA, ever. He is a pleasure to be around and speak with, a quality that has undoubtedly been foundational to Dwight’s sales success and team building.
I hope you enjoy the exchange on some of the nuts and bolts of HUD lending/borrowing, as well as a broader conversation about daily habits and mindsets around entrepreneurship.
Key takeaways in the episode:
- The money. It stopped being about the money a long time ago. Josh likes to win, and that is one of his most powerful drivers.
- Forgiveness, not permission. Sometimes it is best to just get in motion, and deal with the consequences later.
- Corporate priorities change. Josh and Adam had incredible support at their old gig, until they didn’t; that was the catalyst to going it alone.
- Active management, open doors. Not only are Josh and Adam involved in all that they company does, but they’ve also got offices right in the middle of the floor.
- Workspace. Get externalities out of the way and give people a place where they can come in, just work, and thrive. Remove impediments.
- HUD misperceptions. Get a good tour guide (an expert in the space) and let yourself learn the power and quirks of the lowest cost, longest term, non-recourse, fixed-rate, mortgage product.
- High-leverage construction take-outs. As of March 2020, the 223(f) loan now allows for cash-out refinance after only 30 days at 90% occupancy.
- Relationships. We all have something to learn from each other, and people are the joy of business.
- Bet on America. Every time.
- Keep walking. No matter what business throws at you, keep going.
Transcript
Kevin Choquette:
Hello, everyone. Thank you for joining me on episode two of Offshoot. I’m very pleased to welcome Josh Sasouness to the platform today. We had a great exchange regarding Josh’s experience coming out of Greystone, and then starting Dwight Capital six and a half years ago, pretty funny stories about being fired before he was ever hired. Basically, Greystone failed to give them the resources they deemed necessary, and they went out on their own and hired a bunch of smart, talented and energetic people, and are managing through that in the center of operations, no corner offices for these two.
We also get into some of the nuances around HUD financing, where their expertise lies, the conflict out there between the best mortgage terms in the world and the difficulty or longevity of the process required to secure HUD financing. We also get further into it, talking about all the other things that Josh has done Dwight Capital, Dwight City Group, Dwight Mortgage Chest and Dwight Funding, and the leap of faith that’s required to start any venture. We break into a little bit about hard work, and that being a given, but sacrifice being the difference maker and what people are willing to give up to do better.
We also got into relationships, motivation, the desire to be at the top and a whole array of other items. Josh is clearly a very talented young man. Congratulations to both he and Adam for the accomplishments they’ve made in six and a half short years to be the number one HUD financing shop in the country. I hope you enjoy the episode. Thanks.
Josh Sasouness:
All right, let’s do it.
Kevin Choquette:
Hello, everyone. Thank you for tuning into the conversation with me and my guest today, Josh Sasouness. Josh is a young powerhouse entrepreneur whose focus is Dwight Capital, a company he co founded with this brother six and a half years ago, and which they’ve driven to become the number one HUD originated in the country. At Dwight, he leads the mortgage banking team on primarily HUD originations but also Fannie and Freddie and CMBS. In addition to Dwight Capital, Josh is also a partner in Dwight Funding, which provides early stage growth capital of the company’s Dwight City Group, a director and investor in and around New York City, led a capital markets brokerage firm leveraging off of AI.
I met Josh through Rica, a strategic alliance of 21 firms like mine and McBride Capital, one of the Alliance Partners. We’ve worked together for only a couple years, but he is without a doubt one of the nation’s leading experts on HUD financing. He also knows what it means to start and build companies, something he does with a pleasant disposition and a strong conviction to get stuff done. Without further ado, Josh, welcome to the podcast.
Josh Sasouness:
Thank you, Kevin. Thank you.
Kevin Choquette:
Thanks for taking the time. As I had mentioned to you before, let’s just follow our curiosity, and have a conversation, see where things go. To start, could you just tell me a bit about yourself and the company Dwight Capital?
Josh Sasouness:
I’ll start from the beginning.
Kevin Choquette:
Perfect.
Josh Sasouness:
I grew up in suburban New York City in a town called Alpine, New Jersey. It’s about 30 minutes north of the city, went to elementary school, high school in New Jersey, again, just 30 minutes outside the city, ended up going to college at George Washington University in DC. That’s when I got into mortgage banking, got into mortgage banking immediately after school at a company called Greystone. Now, question, do you want to hear a funny story now that we’re on a podcast?
Kevin Choquette:
Absolutely.
Josh Sasouness:
My brother has been working at Greystone when I started for nine months. I had no interest in working with him. I left. He’s just a year older than me. We’ve gone to the same schools throughout our lives. He was always one grade older. There was that older brother syndrome. I finally made it out of New York Metro. He went to NYU. I went to GW, so we were in completely different places for four years for the most part, obviously came back and forth a little bit. I had no intention working with him. I created my own path, my own personality without my older brother lingering over my head. Every younger brother knows what I’m talking about.
Kevin Choquette:
I have a younger brother, so I know.
Josh Sasouness:
I wanted to work in a real estate firm in New York. That was really focused on New York City properties. I really just wasn’t aware of multifamily, garden style multifamily. It’s just isn’t a thing where I grew up, a lot of single family homes. When you told me apartment building, all I really thought of was the 10 plus storey apartment buildings in New York, 50 storey sometimes. I didn’t know garden style multifamily was. I didn’t know about the majority of the country. I didn’t know anything about really outside my little bubble that I grew up in.
I’d wanted to work in a New York City based real estate firm, and my brother really wanted me to work with him at Greystone, which is where he started nine months prior. I was just like, “No, I’m not working with you.” He’s like, “Oh, can be great. There’s so much potential. There’s so much money to be made in our business.” I was like, “No, no, I’m not interested, man. I’m good.” Then he’s like, “Okay, why don’t you come here and let me show you how we make money.”
He broke down a deal for me on how profits are generated in mortgage banking. Before his pen came off the paper, I was like, “Okay, I’m in. Let’s do this.”
Kevin Choquette:
Very good. From Greystone, you guys, how long did you stay there before choosing to set off on your own?
Josh Sasouness:
Well, there’s another funny story. No, that’s just the intro.
Kevin Choquette:
That’s just the intro.
Josh Sasouness:
That’s the intro. We get to Greystone. I was never officially hired by Greystone. My brother had been working in… Greystone is headquartered out of New York City, out of Manhattan, and one of the top producers over there lives about 40 miles north of the city in a town called Wesley Hills. He had a satellite officer, this top producer at Greystone, because he just wasn’t interested in driving to the city for an hour and a half every day. That’s where my brother worked. I said, “Okay, what do I do?” He said, “Just come to the office.” I came into the office.
I started working, no contract, nothing. Three weeks later, the head of our division got wind that Adam’s brother was working in a Greystone office. She confronted my brother about it, and he denied it. He said, “Nope, Josh isn’t here,” but apparently, we had a tattletale in the office. She knew as a matter of fact, so she suspended Adam for a week, and fired me without hiring me.
Kevin Choquette:
Perfect.
Josh Sasouness:
It was like that Seinfeld episode with Kramer, where he gets fired without being hired. I’m making it seem like a joke, but it was a very dramatic experience, especially for a young kid out of school.
Kevin Choquette:
I’m sure.
Josh Sasouness:
I ended up starting back there again two months later, and stayed there for about three and a half, four years.
Kevin Choquette:
Cool. What led you guys to make the jump? I mean, it’s one thing to be a producer or a well-played employee of a large firm, but it’s quite another to go out on your own. What was the inception?
Josh Sasouness:
The impetus was Greystone was a lovely place to work, and it still is. It’s a great company, but what happened was after the recession, Greystone is a pretty large conglomerate, and all of their divisions were bleeding. Their non-real estate related divisions were bleeding. They’re Fannie Freddie lenders. They weren’t lending there. HUD was really the only moneymaker for the firm at that time, the only serious moneymaker, and was the only way for the company to dig itself out of the hole created by the recession, all the debt and margin calls and issues that came about for every lender at that time, nothing special for them.
As a result of being the main profit driver of the firm, we had senior management in our corner. They were helping us out on everything. They were expediting approvals. They were getting involved. In many of our transactions, personally, they were making sure that the division was running as smoothly as possible, which is great, because when you are in a specialized originator of HUD loans, the key to being an effective originator on such a bureaucratic type of loan that takes six to 12 months to close, whereas, typical commercial financing takes 30 to 60 days to close, is you cannot add bottlenecks internally to a process that already has enough of them.
That’s the key to being successful in this industry. About two and a half years later, Greystone started making money again. Their division started making money. Senior management, their other division started making money. What the senior management do very naturally is they elevated themselves back to their typical senior management positions, and put in middle management between us and them. That’s when things started going sideways, because we were reporting to people that I don’t think had ever heard of a HUD loan in their life before they walked into the door. We dealt with it for three months, six months, very frustrating, a lot of arguments to senior management on who they put in place between us, and how they just weren’t effective managers at all, and it came to a boiling point.
About a year after, they inserted middle management. We had a lot of clients complaining to us about our lack of control on deals that we no longer had. We left. We said, “Hey, we can do it better. We can create that same environment that we had the first couple years, where we were in Greystone where the business environment internally was just way more fluid, and we can originate HUD loans effectively again. That’s what we did. We picked up and left.
Kevin Choquette:
Was that just the two of you at that time, or did you bring a team with you? What was the day one? Is it Josh and Adam? Here’s, Dwight Capital, or what did it look like?
Josh Sasouness:
At that time when we left, we had a team of about 10 people total, including us two. We brought three people with us. We bought three people with us, and we hired an assistant. It was six of us to start.
Kevin Choquette:
From that start, as I mentioned at the intro, you guys are… Officially or unofficially, I’m not entirely sure, but it definitely seems like you are within or at the number one position in the country in terms of HUD originations. Today, what does your day to day look like? What are you tasked with within Dwight Capital?
Josh Sasouness:
Day to day is chaotic. My brother Adam and I really split our roles and responsibilities well. We both focus at what we’re better at. Adam acts as more of our overarching CEO. I act as our main revenue driver, and managing the revenue driving people within the firm. I manage the loan origination team, who’s naturally the top revenue drivers of a mortgage banking firm. That’s 75% of my day. The other 25 is getting involved in more of the corporate issues and strategy and things of that nature. I would say my brother Adam is the flip. He’s 75% corporate, 25% origination.
Kevin Choquette:
Well, look, you just mentioned it in talking about Greystone that one of the things you think is required to be amongst the best in the arena is alleviating internal bottlenecks. I wonder what else. What else is in there? As you and I have discussed in the past, huddles have a pretty interesting reputation in the marketplace. I think a lot of borrowers and brokers think they’re just too much work, and they take maybe too long to get done, but you guys are getting billions of dollars of production. There’s obviously something that compels people to make these transactions.
I guess, maybe there’s a two-part question there, but I’ll just start with what else needs to happen in order for you guys to thrive the way that you have. Then I guess we can move on later to entrenched perceptions and how that might conflict with your view.
Josh Sasouness:
I think it’s the key to any business, any successful business, which is create a work environment where no one is thinking about external variables. Everyone is comfortable in the environment. Everyone is happy in the environment. We do not allow for bureaucracy. We do not allow for drama or politics. We eliminate it before it starts. We also set that tone to begin with so that the amount of drama, politics and bureaucracy just is limited even to begin with before we can even eliminate it, because of the culture that we set in the beginning.
I think that that is the key, just bringing together a lot of smart, talented, creative, energetic people, and removing all of those variables. I think when you do that in any business, magic happens. I think that’s been the key for Dwight.
Kevin Choquette:
I can’t recall reading a book on pre-collapse of Lehman. It was either Lehman or Bear Stearns that had the mantra of smart hungry people. It sounds like you’re on the same vein there.
Josh Sasouness:
Right. To give a prime example, we have a 20-yard headquarters. We have four offices across the country. Our headquarters is in New York. We have 20,000 square feet of space, which is a big space all on one floor. Our office is three quarters full, so there’s about 25% of our desks empty. When we ended up at this office two years ago, we knew that we want to leave room for growth, so when we started two years ago, we were probably 40% full. Now, we’re 75% full. There’s still 25% of the office empty, and there’s tons of conference rooms and phone rooms and plenty of space. Even with that, both my brother Adam and I sit directly in the center of everyone in the same cube.
Kevin Choquette:
No corner office. No Untouchables.
Josh Sasouness:
Exactly. Exactly.
Kevin Choquette:
The perceptions, let’s go back to perceptions. I mean, I’m amazed by you guys. To a certain extent, I think I’m several of the capital market’s advisers or brokers in the marketplace, where I’ve heard of HUD, but it’s always been this amorphous, quirky product that I couldn’t ever really wrap my hands around. There is a bit of a misperception out there. I’d love to just hear your thoughts on how you see the marketplace view HUD and how that might conflict with your experience, because to go from zero to number one in six and a half years, I mean, it’s pretty remarkable. I think you’ve got some insights that the audience here would be happy to learn from.
Josh Sasouness:
Sure. Sure. I think, again, it’s a matter of business principle, which is universal for any business. When you look at the HUD financing programs from a high level, you’re both incredibly intrigued and incredibly turned off at the same time, intrigued as a result of the terms being offered, the low interest rate, the term, the amortization, the high leverage. I mean, the best terms for a mortgage for any type of asset in the country, it’s not maybe the world. I’ve never heard of such a competitive program before in my life. That’s the super intriguing part. On the flip side, you hear these stories have of six to 12 month process depending on the type of loan that you do, six months for refinance, 12 months for a construction loan.
That as a result of problems can even get elongated to 12 to 18 months or sometimes even 24 months. When people hear that, they say, a, “Wow, incredible terms, not worth the effort, now worth the headache. I’ll just pass and go with Plan B.” I think that’s even more the case today than any other time as people are increasingly looking for more user friendly, effortless type of programs, because they have so much going on in their life as is.
Kevin Choquette:
I mean, so there’s got to be another side of that coin, right? You can’t be doing billions of dollars a year without there being an audience who has figured out the frustration. The notion of not worth it is I’ll just say incorrect, or the net assessment of intriguing terms and difficulty shakes out positively, and they choose to move forward. What’s your experience? I mean, you’ve done it now probably thousands of times. To all those on the fence who’ve never done it, don’t understand it, is the grass greener on the other side of the fence or not, I guess, my peers always say?
Josh Sasouness:
Indeed it is. Just as you and I spoke about the other day, if you’re going to the Amazon jungle, you need an effective tour guide. If you have an effective tour guide, you’re going to walk through the jungle effortless. You won’t even know which direction you’re going. You’re going to trust your tour guide. You’re going to have a great time, and if someone were to ask you to draw on a map where you were in the jungle, you would have no clue, because you’re behind this tour guide who’s been in that jungle every day for years, and knows every inch of it by heart.
The key is to be an absolute expert of these programs, to align yourself with an absolute expert of these programs that knows every angle, every inch just like the tour guide does of the jungle. You’ll escape the process unscathed, happy and ready to do another loan.
Kevin Choquette:
You’ve shared with me you have clients who are HUD only, right? I mean, they didn’t even bother with the rest of the capital market’s ecosystem.
Josh Sasouness:
That’s right. That’s right. I would say overwhelmingly, majority of the time, probably 75%, 80% of the time, if someone does a HUD loan, they get through it. If they have the opportunity to do it again, they do it again while working with us. I think the issue with other mortgage banks or loan originators are they’re not experts. They either suggest to their client they’re more experts in Fannie Mae or Freddie Mac loans, and they either, for a particular deal where it makes sense, to say, “Hey, why don’t we try out this HUD loan,” or it’s the reverse. The client will tell the banker, “Hey, I’ve heard about this HUD loan. Let’s try it on this deal.”
They’re working with a bank who they’ve worked with for three, four, five 10 years who they trust, and the banker’s like, “Okay, how hard could it be?” They go through the process, and it’s miserable. They have a miserable process. In those type of deals, half the time, they close. The other half, midway through the process, at some point, they just pivot and go back to the plan B type of financing that they were used to. They said, “Hey, it’s not worth it.” I think that is where the negative stigma on HUD. That’s how the misconception of HUD, I should say, has become so popular because of those type of examples, because when you have a…
Just anything in life, I think when you have a good experience with something, you don’t really talk about that much. When you have a bad experience, you talk about it. That owner, he’s going to tell his friends. He’s going to tell every banker he works with in the future. He’s going to tell his management company who’s connected with many other owners about his horrible experience and the snowball effect, and that’s where the negative stigma derives from.
Kevin Choquette:
Fair enough. Well, look, with this audience, I think your expertise is broad enough and deep enough that we shouldn’t even attempt to get into all of it, but I do think one of the changes that’s happened as March 2nd, 2020 was the conditions precedent required for the 223F. All HUD loans, they have these obscure monikers, but that’s the acquisition refinance in a conventional HUD product. Prior to March 2nd, it was requiring a three-year seasoning, and now that’s gone. Maybe if you could, just talk to that change and the implications that you see for your business and for the marketplace as a whole.
I mean, to me, it seems like a tectonic shift, but I’d be curious what your viewpoint is on that. Maybe if I’ve missed spoken to it, and you want to correct me, feel free.
Josh Sasouness:
No, that’s one of the two biggest milestone changes in the HUD program over the last 10 years, the other one being green MIP. Those two have completely changed the landscape for HUD. The idea of the rule in the first place was HUD has a construction loan program called the (d)4 Program. It’s a great loan. The problem is that the loan requires Davis-Bacon Wages. You have to pay prevailing wage.
Kevin Choquette:
Prevailing wage.
Josh Sasouness:
You have to pay all your subcontractor’s prevailing wage, which increases total development costs, just overall total, total development costs by anywhere in the range of five to 15%, which a lot of times is it’s just a significant portion of people’s profit margin, of developer’s profit margin. HUD did not want developers to develop their properties conventionally, and then refinancing with HUD immediately upon stabilization, thus skirting the Davis-Bacon requirement. That was the-
Kevin Choquette:
They wanted to preserve the Davis-Bacon and the 221 (d)4.
Josh Sasouness:
It wasn’t necessarily preserving the (d)4 program. It was moreso preserving the Davis-Bacon aspect. They didn’t want developers to get away with getting around that requirement. That’s why it was there in the first place. We’ve had, I mean, hundreds of deals we’ve looked at over the past decade, where developers were showing us their new projects, and they couldn’t wait to get to civilization and refinance with HUD. There was a three-year rule place where you just cannot refinance a property that was developed conventionally into HUD until three years after the final seal.
They just couldn’t. There was a roadblock there, and non waivable. Nobody can get around it. Kevin, as you said, March of 2020 this year, just a few months ago, HUD released that memo, waived the three-year rule, and now, HUD financing is available for developers who are just hitting stabilization, which has resulted in a windfall of new business.
Kevin Choquette:
Only probably accentuated by their current COVID ecosystem, where there’s probably a bid ask spread for recently stabilized property, given that there’s some uncertainty around structural occupancy, rent growth or rent collections, and so the fallback position of getting really attractive term debt, probably pretty good as a plan B.
Josh Sasouness:
Yeah. I think HUD over the past three, four months has been, I mean, the busiest. I’m the busiest I’ve ever been.
Kevin Choquette:
There you go.
Josh Sasouness:
I’m the busiest I’ve ever been. Maybe I’ve reached this point a couple other times in my career, but I certainly have not surpassed this point in terms of being busy. It’s a result of two things. One is the three-rule waiver, and second is COVID mitigation. The COVID mitigation for HUD loans is relatively speaking very reasonable. I mean, we can underwrite properties, just like we did a year ago, just like we did six months ago. Terms have not changed an inch. The only requirement is a nine-month debt service reserve, which assuming operations remain relatively constant, will be released six months after closing.
Kevin Choquette:
It’s fantastic. A slight variation on the theme here, one of the dynamics that I’m seeing in the marketplaces as a whole, but really, the far pendulum here is this 223, just because, as you said before, rate, leverage and amortization are super attractive. We’ve seen from you guys in the last few weeks rates as low as 2.45%, and for your middle market developer or your middle market value add renovation team, who would tell you whether it’s true or not probably a case by case basis that they can build to a six yield on cost and on value add, maybe even north of a six yield on cost.
That, historically, represented a fairly narrow spread the six down to what the then prevailing interest rates were. Now, rates have dropped, what, 120 basis points from not too far ago. That strikes me as a really unique moment in time, but what are your thoughts around that dynamic? What’s taking place for multi?
Josh Sasouness:
I mean, the bottom line is that 80% financing with no change and underwriting as a result of COVID, full 80% financing with a 2.7% interest rate all in including MIP, locked in for 35 years fixed rate for the entire term with a 35-year amortization is it’s extremely compelling. I mean, most multifamily owners have been around long enough to see inflation way higher than 2.7%, right? Many those owners and developers who are in their 40s and 50s and 60s, many of them look at it as free money from their past experience in life.
Kevin Choquette:
Just another aspect of you guys being somewhat overwhelmed with business.
Josh Sasouness:
We’ve hired about a dozen people to our underwriting staff. No, underwriting staff now is about 50 people. We’ve added a dozen people over the last three months, and our underwriters are still 50% over capacity in more normal times.
Kevin Choquette:
Well, let’s zoom out. You and I haven’t had a lot of conversations like this, but crystal ball kind of conversations where we’ve got unprecedented fiscal stimulus from the Congress. We’ve got all kinds of unique monetary policies. The Fed is buying ETFs. They’re buying recently downgraded corporate bonds that fell to junk, and they brought them back. They’ve resuscitated, I believe, it’s [inaudible 00:35:04], not tarp. They’re buying the credit strips of legacy CMBS, and they’ve bumped up their balance sheet by mere $3 trillion explicitly. I think there’s probably leverage effects on that as well.
Probably most importantly, it appears we’re entering in a time period where the fed’s going to nationalize the bond market or start to have really explicit yield curve control. All of which are against the backdrop of reshoring, nationalization, protectionism. To say it’s a unique time is somewhat of an understatement. Again, I know this is not our normal name. We’re usually just talking, blocking tackle on transactions, but buff up your crystal ball. What’s the viewpoint from the perspective of Dwight? Where do you guys see we’re going in the near long term?
Josh Sasouness:
In terms of interest rates?
Kevin Choquette:
Just in terms of the economy? Sure, rates is a part of it. Inflation is a part of it. Jobs, job recovery, the whole shooting match, what’s your vantage point from all that has happened in the last three months?
Josh Sasouness:
I’ve come to some bottom line conclusions. I think rates will continue to go down. I think that there’s a good chance the 10-year treasury can ultimately go negative. The dozen countries may be more where their tenure instrument has gone negative. I don’t see why it shouldn’t happen in the U.S., where credit ratings is stronger than those other countries. I think there’s going to be… I think there’s tremendous amount of top of the government, the Fed buying bonds. I think there’s tremendous amount of demand for U.S. back bonds worldwide. I see the Treasury getting way lower than where they are now, which is about .7, .75%.
I mean, I think Powell came out today and said [inaudible 00:37:32] anticipate rates. The Fed raising rates until 2022, that couldn’t be more explicit the way he said it. In terms of employment, I see 50% of the jobs lost as a result of COVID will be backed by year end. I think the other 50% will take 18 months to get back most, if not all of it. This is something we’re going to be dealing with for a little while, but it’s certainly not a normal type of recession. It’s incredibly unique. It’s unprecedented. You can only predict so much. I think with something like this, which is just…
I mean, the great recession was infinitely more textbook than what’s going on right now. I think a lot of people should stop looking into the future in this type of situation. I think, obviously, you have to, but I think people should focus on putting one foot in front of the other, and just working and progressing and moving along with the information they have on hand.
Kevin Choquette:
I tend to agree with that. All of the pendants, I think there’s one aspect that is uniformly missed, and that Americans as a collective are hard working, and we like to work. I think you’re going to see people go back to work with some vigor and some passion. I think we forget that. I mean, we are the country that probably drinks more coffee than anybody in the world, and there’s a reason for that. We get up in the morning, and we go to work, and so I do think you’ll see an organic… I sometimes think that word is overused, but recreation and manifestation of our former self just because it’s who we are.
The economists all look at the numbers and the… I won’t even go into it because we’ve all watched probably too many webinars and the like.
Josh Sasouness:
The bottom line is, I think, you should bet on America. 10 times, you bet on America period.
Kevin Choquette:
That’s right.
Josh Sasouness:
I’m a huge believer in that. I think if there’s any turmoil or any issues going on with this country, always bet on America. It’s just a matter of not if but when things are back to normal, things are in a better place.
Kevin Choquette:
Agreed. I’m going to go back to the beginning of the conversation. You were talking about Adam being the 25-75, 25 revenue, 75 corporate and strategy, you being 75 revenue and 25 corporate and strategy. This is a bridge into a little bit more conversation with you on what makes you tick, how you think, the entrepreneur inside of… We’re talking a lot of facts and figures right now, but if we drop into strategy as a starting point, for me, strategy is… Well, I’ll start with tactics, near field application of skills, where strategy is the objective.
I’m going to get across this body of water strategies. I’m going to swim. I’m going to rent a plane. I’m going to build a boat, built a bridge, and then the tactics are all the things that I need to employ once I make those choices at Dwight and within your role and Adam’s role. How do you guys think about strategy, and where do you find that being expressed either in the business or personally?
Josh Sasouness:
In terms of ongoing day to day strategy or future vision?
Kevin Choquette:
I was thinking more on the future vision or the execution of a strategy you’ve already decided to pursue. I mean, you articulated it in notions of culture and a commitment to be comfortable and streamlined. You made a decision, and then you employed the tactics. I’m sure if I were to look at the physical floor plate of your office, that there’s reflections of what you’ve decided as a strategy. I wouldn’t confine you one way or the other, but I guess I was leaning more towards your future strategy, but it’s clear that you’re being very strategic in what you’ve done.
Josh Sasouness:
Right. I think you can look at all of our other businesses as an example. We have Dwight Capital, which is our HUD lending operation. The biggest revenue driver of the firm is to Dwight Capital. We have a servicing portfolio, which naturally came along with being an originator. Now, it’s north of $6 billion, another division that we have to worry about. Now, that’s more of a natural extension of what our day to day is. Taking it further, we have Dwight City Group, which is an acquisitions company. I know you’d mentioned greater New York area, but really, we focus in the greater Philadelphia area.
We’ve made about-
Kevin Choquette:
Oh, okay. My bad.
Josh Sasouness:
It’s all right. We’ve made about the 20, 25 acquisitions, generally smaller, over the last two and a half, three years. The third is Dwight Funding. Dwight Funding is an ABL group. It’s lending to high growth companies in need of capital who are just not able to qualify for bank financing. You have very notable companies like Thursday Boots, Peeled, the dry food company, Snow accessories company that our Coils, sneaker, footwear company, just very well known brands, where they’re just not bankable yet. I think with each and every one of them, this will continue to be the case in the future, and also DMT. DMT is Dwight Mortgage Trust. It’s a private read that we started, which is our bridge loan lending arm which is for both multifamily and healthcare.
There, we’ve closed about a billion dollars over the past couple of years, and it’s only growing. I think what people don’t get about business completely is even if everything… Whatever business you want to start, whether it’s another division or another business completely, it’s not just about a plan that makes sense. Every business one starts requires a leap of faith, which I think a lot of people miss. “Oh, this guy does that business. That’s not so hard. That guy does the other business. That’s not so hard,” but it is, because that initial leap of faith is always going to be there, regardless of the business you start.
I think that with all the things that you said, yes, there is strategy. There are tactics. It’s the leap of faith. We’ve done that with our other four other businesses, core businesses. As right now, because I think we’re spread a little thinner than we’d like we are… Those businesses are really way past their infancy, and are in high growth mode. I think at this point, probably three year in, we’re not looking at taking on any other new initiatives, particularly during COVID with all the uncertainty and all the liquidity that we need as a lender in case our clients need it.
Between those two factors, we’re likely going to keep our structure and our strategy on course, and not add anything new.
Kevin Choquette:
There you go. Look, to the leap. I agree with you. It’s the difference maker. I think amongst a crowd or audience of entrepreneurs, that can be a given, but I think the reality is there are many, many people who when given the opportunity might not sing those lines, might not take that jump. I commend you guys for doing it and for all the people who do it.
Josh Sasouness:
To that point, I think-
Kevin Choquette:
I’m reminded.
Josh Sasouness:
To that point, I think-
Kevin Choquette:
Go ahead.
Josh Sasouness:
I head every marginal year we get older, we have more information in our head.
Kevin Choquette:
Yes.
Josh Sasouness:
We know more. When we want to start something new, I think, as human beings, every year we get older, it becomes increasingly difficult to do so, because you know too much. You can map out-
Kevin Choquette:
You can manufacture reasons to say no.
Josh Sasouness:
Exactly. That’s why, often, startup serves are founded by people in their 20s or people after college, because they’re not thinking about those things. I think it’s very important that every marginal year we get older, and we evolve and we grow and we get wiser, I think you have to actively try to maintain that mindset.
Kevin Choquette:
Well, let’s go into the… I agree with you, but let’s go into the other side of that. You’ve taken the leap. You’ve just outlined four significant companies that you guys are running. The phrase that’s coming up to me is vision without execution is hallucination. You guys are executing at a very high level with teams of significant scale. For me… John Doerr has got the book Measure What Matters. Vern Harnish has Scaling Up. Gino Wickman has a book called traction, all systems to make the trains run on time, right?
I don’t know what you guys are doing, but how do you guys run from daily, weekly, monthly, quarterly? What’s the fabric that keeps everybody aligned, because-
Josh Sasouness:
Active management.
Kevin Choquette:
It’s one thing to be a producer at Greystone. It’s a whole nother thing to build a team and build multiple companies and keep everybody focused on the same goals.
Josh Sasouness:
It boils down to two things. It’s two things. I think a lot of people speak about hard work. I don’t think that should be spoken about, because that’s a given of what’s required to be successful. It’s sacrifice. What other parts of your life are you willing to cut out to give yourself more time to hone your craft, to grow your business, to do better, to be better? It’s about sacrifice. I don’t think enough business people, I don’t think enough business schools preach that. They don’t talk about what sacrifice entails. You don’t see your friends. You don’t see your family.
You aren’t going on as many vacations. I think sacrifice is a major part of it, which starts at the top. My brother Adam and I both live that way. We both made major sacrifices in our life to make Dwight Capital reality. I think that that’s been ingrained in the culture. Not everyone, but many people internally have also started living that way. It’s contagious from what comes from the top. I think that is a major factor, just dedication to work and sacrifice. Second is active management. As I mentioned to you before, we’re sitting in the middle of the office, and we’re always accessible.
We’re talking to dozens of people internally every single day. It’s just constant commentary and feedback and conversation. As a result of that, we don’t have meetings. We rarely have meetings, because we all know where everything is, because we’re in the middle of everything. That part is not necessarily the best way. It’s what works for us. I think, from that perspective, there’s no real right way. It’s what works for the individual, and that active management is the method that works for us best, so that’s what we do.
Kevin Choquette:
Well, then that also says something to your scale and process that you guys can be that intimately engaged in the process, and all the moving pieces and parts is probably… I’m somewhat putting a hypothesis out there. Why your borrowers have a pleasant experience, it’s a SWAT team of people who are committed to the same thing day in and day out, and the dialogues are ongoing.
Josh Sasouness:
Right. It’s as simple as, “Josh, can you get on this call? Josh, can you get on that call? Can you look over this email? Can you look over this proposal?” You have our competitors. They can’t go to the CEO and owner, and do that. It doesn’t exist. It doesn’t exist, but when we’re in there, not only can we help on generating new business, which is obviously very important, but it’s keeping it too, making sure that originators are kept on their toes in terms of what they’re telling their clients, making sure everything is completely truthful, transparent, that they’re communicating with their clients with integrity, and that their clients’ deals are moving at a good pace, and there aren’t any unnecessary bottlenecks.
There could be a… For example, we had a situation the other day. This borrower has a impending maturity, which doesn’t line up too well with HUD financing. The loan matures in eight months, and HUD loans, you have to budget eight months to close. It’s cutting a little close, and we couldn’t get third party bid. This was another [inaudible 00:53:14] our office was working on this deal. Third party bids were coming in later, because all the vendors are backed up with all the HUD work that they’re getting. I picked up the phone. I called the vendor, and I said, “Hey, we need a favor. You got to get us in two weeks.”
With all the business we do, he granted the request, and he’s going to get it in two weeks, which comforted the client, and the client ultimately moved forward with us. Hopefully, we’re going to do a great job for him, and he’s going to pay off his loan on time, and he’s going to be thrilled with his 35-year mortgage, but again, a 2.7%. Again, that’s not happening anywhere else. There isn’t that type of rapid response. In that type of situation in another company, it would take a day, maybe two days to get resolved. That was resolved in real time.
Kevin Choquette:
On the personal side, look, my view of life, in particular the day, is if I can win the day I’ve got a pretty good chance of winning it all. My natural wiring is almost certainly adult ADD. I’ve heard it explained as a Ferrari engine with bicycle brakes. It’s really important for me to be focused on what I’m up to, and it’s easy for that to drift away from me, so I’ve got a whole series of things that I do in the morning to try to re-orientate myself to the goals at hand. I’m curious if you, on the personal side, have any daily routines or rituals that you think support your success.
Josh Sasouness:
Workout and pray every morning.
Kevin Choquette:
What do those look like for you? I mean, to the degree you’re comfortable sharing, of course.
Josh Sasouness:
No, it’s probably fine. Workout is one of two things. It’s either strength training or playing basketball. When I say play basketball, I mean, 5:30 in the morning at a gym in the upper west side of Manhattan with a bunch of bankers, private equity folks, attorneys, horologists come into play to let it out.
Kevin Choquette:
That’s great. That’s great.
Josh Sasouness:
I call it therapy. There’s that, and there’s strength training. That’s virtually every weekday. I usually skip one day just because it’s a little much during the week. Then when I get to the office, I pray for about 15 minutes before I start my day.
Kevin Choquette:
Very nice. I appreciate the people who make the time to have a spiritual side of their lives. I think a lot of folks give lip service to it. I’m not sure how many people give it space. You’re talking before about compromises, choosing what to focus on and what to remove. I think for many people, that plays a distant second, third or fourth in their lives.
Josh Sasouness:
When it comes to belief systems, whatever religion you believe in, there’s a difference between believing in the religion and then actively doing things, the practice part.
Kevin Choquette:
Practicing.
Josh Sasouness:
I think that’s what gets left out a lot.
Kevin Choquette:
On the relationship side, and knowing our exchanges, you have been really clear. Well, in fact, let me not go that direction, just because I’d like the listeners to hear it from you, but the longer I’ve been in business, the clearer it becomes that relationships are essential, especially in the real estate business. To me, they’re the conduit through which all good things travel. I’m curious your view of relationships and their impact on your business.
Josh Sasouness:
Deep. I believe in deep relationships. Work is a mechanism to develop deep relationships. I think that’s the most rewarding part of my job is I get to speak with dozens of super successful owners and developers from all 50 states, even Alaska. I’ve done deals in Alaska. I get to speak with them, spend time with them, learn about them, and vice versa. It’s incredibly rewarding. When you do that, at such a young age, you learn fast. You get wise quickly. I do… I’m talking deeper relationships. We’re not saying, “Let’s talk about your appraisal.” It’s, “Let’s talk about life. Let’s talk about each other, and learning from each other and growing with each other and evolving with each other.”
It’s such an incredible benefit. I expressed this explicitly to some clients, not to all them, but very often, we close a big deal. We close a profitable deal. The money was completely secondary to the relationship that I have with the owner, and what I’ve learned from the owner or the developer personally. There are some that it’s just incredibly rewarding. For example, I’m engaged. I’m getting married in a couple of months. Thank you. Thank you.
Kevin Choquette:
Congrats.
Josh Sasouness:
It’s a small wedding. Relatively speaking, Jewish weddings are typically 350 to 600 people. Ours is going to be 175 people, and I’ll be inviting a dozen clients who will be there, because these are people 20, 30 years older than me from all over the country. They’re going to be there because of our relationship. I think that’s special.
Kevin Choquette:
Do you put any of those relationships in the category of mentor? If so, what are the standouts? If they aren’t your mentors, do you have other people who have been your mentors, and what have been the passing of the torch that may have happened through those kinds of relationships?
Josh Sasouness:
I don’t believe in mentors. I just don’t believe in that idea, because I think that in every relationship, regardless of who the two people are, there’s so much to learn from each side. I think people are incredibly unique. I think every person in the world has a unique competitive advantage over everyone else in the world. I’m not a big believer in it. I think that people have so much to learn from each other. Mentor, I think, generally speaking, has [inaudible 01:00:49] older, wiser person and the younger, more energetic person in the relationship. I think both of those parties have plenty to learn from each other.
You may disagree. Other people may disagree, but I just don’t believe in the idea of a mentor.
Kevin Choquette:
I like your idea. Look, a couple more and then we can let you carry on with your evening. I know it’s late on the east coast. You and I probably haven’t discussed this, but I am a recent father of two girls, one of our girls, Piper, eight weeks old. Audrey is 23 months old.
Josh Sasouness:
Oh wow. Congratulations. You kept that quiet from me.
Kevin Choquette:
Thank you. It’s been simple as… Here we are just on lockdown with little kids bouncing all around. It has been probably the simplest and yet profound purpose that’s come to my life. I would articulate that simply as giving them a better shot than I was given. I’m curious for you. You alluded to it there just in the way you speak about and towards people and relationship and the opportunity to get to know people, but do you have purpose that for you drives and overlays your relationship to the world of finance, which in many ways people could view as a somewhat sterile construct?
Josh Sasouness:
I mean, I don’t look at… It may sound crazy, but money stopped mattering to me a long time ago, and I’m relatively a young person, but money was only a driver maybe in my first three, four years in business. What has driven me is winning. I learned that early on. I think it’s because we had early success monetarily, where just money became an afterthought quickly, which was such a blessing. I realized there’s a way bigger picture. Obviously, there’s the personal aspect of believing in God, believing in charity, believing in family, and having kids and all those great things, which I think are super important.
But within the business, its in terms of day to day thought process. It’s all about winning. It’s all about seeing our name at the top of the HUD lender rankings at the end of the year. That is my primary goal and objective in what’s front and center of my mind all day long.
Kevin Choquette:
That’s great. Look, you’ve left a few kernels, I think, on Tim Ferriss podcast. He’ll throw it out as like, “If I could pay for a billboard for you to put in the city for the entrepreneurs,” anything you want to say that you think those who are deep in the midst of it, maybe in the dark days of some tumultuous time or those who are thinking of launching out on their own? It may be something that you wish you would have learned sooner, but any, if you will, words of wisdom for the entrepreneurs out there?
Josh Sasouness:
Sure. My favorite, which is a billboard that already exists, is for Johnnie Walker, which is keep walking. I love seeing billboards in the city. There’s a couple of them. It’s carry on. God forbid, unfortunately, you lose a deal. You lose a client, for whatever reason, your fault, their fault. Any issue you deal with in life, carry on. Don’t think about it. Turn the page. Keep walking. My billboard already exists, the keep walking, but if you wanted to change it up, it would be turn the page or carry on. One of those three works, because that’s something that people struggled with-
Kevin Choquette:
Fantastic.
Josh Sasouness:
When I was younger, I couldn’t let go of things. Thankfully, I’ve learned to do that.
Kevin Choquette:
Thank you, Josh, for taking the time to speak with me. I appreciate it. If people want to get a hold of you, the best probably website is, well, Google. You can do any of them, Dwight Capital, Dwight City Group, Dwight Funding. You’ll find all of them. Well, if you want to share the Dwight Capital domain, whatever you’re comfortable with the name… Sorry, name is already out there, email, phone number, or just whatever you like, but if you want to leave some contact to everybody, feel free.
Josh Sasouness:
Yes. My cell, which is where I take all my calls from, is 347-886-6700. My email address, primary email address, is JS as in Sam @dwightcap.com, D-W-I-G-H-T-C-A-P.com.
Kevin Choquette:
Perfect. Again, Josh, thank you. I really appreciate you taking the time, super insightful. Congrats. I mean, for you guys to be where you are doing what you’re doing, the drive to win is alive and well. You are kicking ass and taking names, so congrats to you guys. I look forward to continuing to work with you.
Josh Sasouness:
Thank you, Kevin. I appreciate your time. I appreciate you putting this together, and looking forward to working with you for a very long time. [inaudible 01:06:32].
Kevin Choquette:
Sounds good. Take care, Josh.
