Episode 217: Revolutionizing the Apartment Industry: Mike Kaeding on Disruption, Inclusive Investing and Company Culture

The REI Diamonds Show-Real Estate Investment Podcast

Episode: 217: ""Revolutionizing the Apartment Industry: Mike Kaeding on Disruption, Inclusive Investing and Company Culture"
Guest: Mike Kaeding is the CEO of Norhart, a company designing, building, and renting apartments. Mike and his team are transforming the way apartments are built and managed, incorporating technologies and efficiencies from other industries. After his father's passing, Mike took the reins of the family business and found success by changing the way construction is done, hiring the best talent and solving chronic construction inefficiencies. Through this process, he has been able to provide cost-effective projects to solve America's housing shortage and improve the way we all live.
Big Idea: Mike Kaeding, CEO of Norhart, is revolutionizing the construction industry by creating an attractive company culture, solving chronic construction inefficiencies, and integrating traditionally unaffiliated trades to achieve higher quality, more cost-effective projects. His mission is to solve America’s housing shortage by transforming the way apartments are built and managed, ultimately improving the way we all live. Inclusive RE Investing is one way that Norhart is paving the way for the future of construction disruption.
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Resources mentioned in this episode:
https://www.Norhart.com/invest/
View the Episode Description & Transcript Here:
https://reidiamonds.com/revolutionizing-the-apartment-industry-mike-kaeding-on-disruption-inclusive-investing-and-company-culture/
Dan: Mike, I did the research, the listeners did not, before today’s episode, do you want to kind of give the brief Reader’s Digest version of your business model and maybe how it evolved to that point in some of your story about how you got there?
Mike: Yeah, I would be happy to do so. At a high level, we design, build and rent apartments, but we’re really focused on solving the cost of housing. And we’re doing that by transforming the way construction is done. We’re already achieving about a 20 to 30% reduction in construction costs, and we believe we can achieve a 50% reduction. But imagine what that means. It means someday your rent could be half or your mortgage payment could be half. And that’s the kind of impact that we want to make. We want to solve America’s housing affordability crisis. Now didn’t always start out that way, we were very small. My parents started the business. They built just small eight unit apartment buildings at the time. In fact, I can remember family outings where we drove off to the local hardware store about a half an hour away.
My brother and I, my mom and dad, we each fill up two carts full of supplies, then filled it at my dad’s trailer as we’re driving down the highway to go work on our building a little bit more. So summers, we’re often working on these small buildings with my family, winter season we’d be in school. So it was very much ingrained in my life and then went after college. But I wanted nothing to do with the family business. It was very small, but I wanted nothing to do with it. And the reason is, deep down, I didn’t want people to think it was given to me. So I really wrestled with my own ego on that and eventually realized that really what I wanted to do was try to make some kind of meaningful, positive impact on the world.
And I started to see that I could take this small business and grow it in something larger, but we can have a wider impact in the world. And so I jumped in with my dad and my dad and I doubled the size of the company in the first few years. And then overnight he passed away. And so at this stage it was horrible. It was a horrible experience. And this stage ended up taking over the company entirely. And since then, we’ve just started to make changes. And now looking back, that was sort of the magic because we didn’t know what we were doing and there’s a lot of pain in that. But we also didn’t know the way things were supposed to be done and we can start changing the way things were done as a result. And we started to have some decent impact. And today we’re at about a 200 million valuation and producing about 500 units a year. And we’ve been doubling in size almost every year.
Mike & I Discuss:
1. Company Culture & Construction Disruption: How Norhart’s Unique Culture Revolutionized Construction
2. Housing Shortage: Solving America’s Growing Housing Crisis
3. Overcoming Leadership Challenges
4. Integrating Traditionally Unaffiliated Trades
Relevant Episodes: (There are 217 Content Packed Interviews in Total)
- Dani Beit-or: Leveraging Repetition and Reinforcement in Real Estate Investments
- Passive Real Estate Investing in Real Estate Development-with Mike Brown
- Investing in Hotels with Mike Stohler
- Mike McLean on Section 8 Rentals