A 79-year-old operator showed up with a chainsaw

Hi {{first name | there}},

The founder of one of our operating partners is 79. He looks like he’s in his early 60s. They own and operate about 3,200 multifamily units in Minnesota and North Dakota, with over 100 team members.

This summer, the landscaping at a multifamily property we've invested in with him was in rough shape, and he didn't want to spend more money than necessary to fix it. So he showed up on site with his own chainsaw and worked alongside the high schoolers on their summer crew, teaching them how to trim back trees.

Then he had the high schoolers meet him at his house, divide up hostas from his own yard, and replant them in front of the leasing/community center entrance.

When the president of the company texted the founder and me about it, the founder replied: "I'm tight. Takes a lot of money to be a spendthrift, doesn't take any money to prove you are cheap. My plants were free."

I've met plenty of commercial real estate owners who are charismatic and give an impressive presentation. Far fewer show this level of ownership after the deal closes.

But a good story isn't the point. What matters is how that mindset shows up in daily operations, and how they respond when things don’t go as planned. Spoiler: in commercial real estate, things never go perfectly according to plan. This property just passed the one-year mark, and here's what it has looked like.

In October 2025, we invested $6.25MM of JV Hybrid Equity alongside this operator to acquire a 290-unit apartment community in the Minneapolis metro area (the Twin Cities were #6 in the country for YoY market rent growth). The firm has owned and operated apartments in Minnesota since 1973. They own most properties themselves, with few outside investors, and had no distress in their portfolio when we did our diligence.

Over 20% of the capital stack sits in first-loss position before our investment, providing meaningful downside protection.* In addition, this property has a 10-year Fannie Mae loan at a fixed 5.37%. So there’s no refinancing pressure or interest rate risk until 2035.

Physical occupancy. The property was 90.5% occupied when we bought it. As of September 30, occupancy was 96.6%.

Rents. Recent new leases have averaged about 4% above the prior rents, with renewals averaging 4.6% increases.

Leasing concessions. Concessions fell from approximately $18,000 in June to $825 in September (this is good).

Expenses. Maintenance costs ran higher than expected in Q3, and Q3 net operating income finished 5.7% below budget before the management fee refund (more on that below).

DSCR. In Q3, the property’s debt service coverage ratio was about 1.51x, excluding the fee refund. That means the property generated about $1.51 of net operating income for every $1 of required loan payments.

We take the maintenance overruns seriously. But one year of catch-up costs isn’t what decides how a long-term investment like this turns out. The interest rate is fixed, the property covers its loan payments with room to spare, and occupancy and rents are increasing.

One lesson for us: when improving a mismanaged property is part of the business plan, we need to budget more than we think necessary for both overdue repairs and the extra labor required.

A resident who'd lived there for eight years recently moved out to be closer to her job and her children. On her exit survey, she gave the property, maintenance, and management fives across the board. She wrote that the new management made a huge difference, and that she hoped they never leave.

And a soon-to-be resident told the leasing team that in September 2025, before this operator took over, they'd scheduled a tour. They pulled up to the office and skipped the tour because the property looked so bad. This fall they noticed the change, toured again, and are moving in this month.

A few weeks ago, I got an email from the operator's president. Summer landscaping and HVAC costs ran over budget, so the planned quarterly distribution would fall slightly short of target.

He and the founder decided to refund us $40,000 of their own management fees to cover the gap.

Not a deferral. Not something they'd ask to be paid back later.

Their explanation: they manage like owners and felt responsible for inherited costs. As the founder says, they aim to be "fair and then some."

The same founder who wouldn't pay for hostas gave back $40,000 of fees. Tight with the property's money, generous with investors'.

You could argue it was also smart business, since they’d like to do more deals with us. But I have worked with dozens of operators over the last 11+ years, and I’ve never seen anyone do this before.

The next question is: can the company can keep operating this way when the founder steps back?

A few years ago, he handed day-to-day management to a capable younger partner, ensuring a succession plan while staying involved. He’s no longer responsible for holding the company together.

That's worth looking for in any founder-led company. Not just how good the founder is, but if they've built a team and systems that keep working without them.

What's the best sign you've seen that a business partner, operator, or advisor was the real deal? Hit reply. I'd like to hear it.

All the best,

Ben Kahle

Managing Partner | Wellings Capital

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