Mastering the Risky Business of Real Estate
Jeremy Hudson knows that sometimes a career doesn’t end on the same path where it started. He is the CEO and partner of Specialized Real Estate Group, which is a development and property management company in Northwest Arkansas. As a student, Hudson knew that he wanted to work in building design or construction, in some capacity. He even considered architecture, but ultimately decided to study construction management at John Brown University. After school, and learning more about career options, he decided that a traditional role in commercial construction didn’t hold his interest. Instead, he gravitated toward real estate brokerage. “I don’t know how strategic it was, it was just following what interested me,” he explains.
With a degree in construction management, Hudson thought that his career path likely led in two different directions as a new college graduate: working for a commercial contractor or starting his own contracting business. Since neither of these options appealed to Hudson, he decided that real estate was more suited to his personality and taste. Hudson says that his relationship with his friend, and now business partner, Seth Mims helped lead him into the real estate field. “I’m sure a lot of it had to do with the timing of it. It was the end of 2002 or early 2003; it was fast and fun,” he says of the booming real estate market in Northwest Arkansas at that time.
While it didn’t seem like working in real estate was a direct application of his college studies, Hudson soon realized that there was a common link. He figured out that the same skills he utilized in helping people buy and sell properties translated into property management as well. He also discovered that he enjoys the operational side of property management like building a team and strategic planning.
As the market faced an economic downturn, the brokerage business began to decline. In contrast, Hudson found that the opportunities increased to help investors, local banks and individuals with troubled assets. In 2006, Specialized Real Estate Group turned its focus more on property management and less on sales. “We began, very quickly, learning how to help banks and investors deal with those types of transactions. That really kind of catapulted our property management business,” he says.
Moving into the property management role allowed Hudson to be more involved in the operation side of the company, working closely with the finance and marketing aspects of the business. The company took on multi-family properties that each operated like individual stand-alone businesses, and needed to be managed as such. In addition, many of those properties were in poor physical and economic condition. “It was a big challenge to learn a lot in a pretty short amount of time,” says Hudson.
As property management became the central focus for Specialized Real Estate Group, Hudson says the company built a solid relationship with a group of investors in Portland. His company worked with the investors on projects in Northwest Arkansas to help them make capital improvements, reposition properties and resell assets. He recalls that while the population in Northwest Arkansas continued to grow during the recession, the rental market here remained lackluster. According to Hudson, there weren’t enough “rent by choice” options for local residents who wanted to rent because it fit their lifestyle. “We felt like, while we were still relatively new at it, we were in a good position in Northwest Arkansas to understand what the market was wanting,” he explains.
Hudson and his company knew that the downtown Fayetteville area had a real need for additional multi-family housing, but realized that most properties were either dilapidated or financially out of reach for the average renter. In 2010, Specialized Real Estate Group approached the investors in Portland to partner on a deal to purchase a multi-family luxury real estate development then known as Glendale Apartments, listed at over $1.1 million. Although the property was in a rundown neighborhood, it was close to the U of A, downtown Fayetteville and the public library, which made it more appealing. “If we could turn it around, it might make sense,” Hudson says about the purchase.
This bold move in an uncertain economy turned out to be the first step in a total property transformation, and a transformation in the way Specialized Real Estate Group would view their entire design and building process for the future.
This is a two-part interview with Jeremy Hudson; check back soon for the conclusion of his story here.