Boosting Multifamily Retention with Alex Rodriguez

Alex Rodriguez made $480 Million over a storied 22 year baseball career. It’s a staggering number that doesn’t even include his endorsement and advertising deals. What most fans don’t realize about A Rod, is that early in his career, after assuring that his single mother wouldn’t have to ever work again, he quietly began investing in real estate. What started as a young A Rod’s humble investment in a duplex has now grown to several thousands of multifamily units across the country.

At SXSW Interactive last week in Austin, TX, A Rod opened up on a range of topics in a session entitled “Alex Rodriguez: Baseball, Business & Redemption with CNBC”. Among them, he had a lot of wisdom to share on multifamily investing, business building principles, and managing your finances.

Real estate strategy

A Rod points out that there are only two ways to increase your earnings on Multifamily investments: raise rents, or increase tenant retention. Retention is the harder of the two to understand and drive, so many investors settle for raising rents. But A Rod sees retention as an opportunity to drive value through creativity, and sees it as the right thing to do for the communities he has responsibility over. Here’s how he achieves superior retention across his portfolio.

In a large apartment community, A Rod says to think about using some of your units as unique amenities:

• A Rod gives free rent to one nurse in the community, in exchange for that nurse giving their phone number to all the other residents. If another community member has a medical emergency, they know and can contact that nurse who lives nearby.
• Then he gives away free rent to two police officers in exchange for their agreement to park their police car right in the middle of the community, and being on call to walk residents back to their apartment as needed if they return at night.
• Finally he gives away free rent to a teacher in exchange for a certain amount of free tutoring hours for other residents’ children each week.

By giving away free rent to these individuals who then provide value for the entire community, A Rod’s team is both instilling a greater sense of shared community, and adding unique amenities, and he says that it’s paid off with “the best retention rates” in the industry.

General business principles

Whether it comes to real estate, tech entrepreneurship, or sports teams, A Rod also offered a set of principles that he aims to instill in every leader and management team.

The first principle is accountability. Own your mistakes by recognizing them and learning from them. The lowest point is A Rod’s life was a full year suspension from baseball in 2014 tied to PED use. Instead of dodging the problem, A Rod reflected deeply on the decisions he had made, the people his decisions affected, and the person he wanted to be. He says that owning his decisions and the consequences let a huge weight off his shoulders, and helped him become a better leader. He can’t change his decisions in the past, but he can define the future of who he will be. That’s the beginning of character.

Next A Rod advised on building a great team with two principles. The first is to hire “PHDs”, but not the kind you would expect. A Rod’s “PHD” stands for Poor, Hungry, and Driven.

A Rod also advises hiring a diverse team across gender, age, and experience. Gaining different perspectives from talented people is the best way to grow, and execute on a plan. A Rod Corp. features female leaders from the CFO, the Chief of Staff, and all the way through the organization, and A Rod hasn’t only surrounded himself with people that share all of his interests. A Rod’s COO is a techie who knew so little about sports, that he mispronounced the “Celtics” on a trip to Boston – but from A Rod’s perspective, he’s the best person for the job due to his intelligence and technical talent.

Spreading his principles

While A Rod has shifted his daily routine from baseball to business and media, many professional athletes have struggled to adjust to their life beyond sports, particularly financially. Allen Iverson famously squandered his fortune shortly after retiring from an NBA career that saw him make $154 Million in salary plus endorsement deals, and the overall trends for retired athletes don't paint a pretty picture.

A Rod now wants to combat the trend of well-known athletes struggling to make ends meet after their playing careers. His new show “Back in the Game” aired last week on CNBC, with the first episode chronicling the predicament of former NBA star Joe Smith, and A Rod’s team helping him chart a new course out of financial trouble.