29-year-old entrepreneur and a group of young pros convert apartments for fun and profit
Clark Gassen and his spry young associates who make up the 10-month-old Financial Freedom Enterprises (FFE), are following a real estate trend: acquiring rental property in Southwest and converting it to condominiums.
Gassen said with interest rates so low, the market is ideal.
Gassen’s group currently has numerous projects in the works, including a 15-unit building on Lake Harriet at 4136 Queen Ave. S., a 68-unit building in Lowry Hill at 1770 Bryant Ave. S. and two Whittier projects: a fourplex in at 2309 Garfield Ave. and a 10-unit building at 522 Ridgewood Ave.
On the drawing board are another building conversion in Linden Hills, a 10-unit building at 4415 Chowen Ave. S. and what Gassen terms a "big development deal in Uptown."
Gassen’s goal is two-fold: to encourage young people to buy and to establish his company in a field dominated by older people. "I want to be the new wave in Uptown," he said energetically. "I believe Uptown is missing out on young professionals."
The 29-year-old said he hopes to start a Southwest business association for young professionals later this year.
For Gassen, the world of real estate was nothing new. He grew up in the real estate management industry; his family own Gassen Management Company, which has managed Twin Cities condominiums and townhomes for 35 years.
Despite his family ties, Gassen acknowledges breaking into the established market has been tough for a young guy. "Right now, all the buildings around the city are owned by people who’ve owned them for 50 years," he said.
Gassen said he started working with his father as a property manager but decided that he wanted to break into development. In January 2003, Gassen began acquiring small property. He said he’d work for his dad during the day, then spend time fixing up his investments at night.
He said his investments allowed him to build equity. During that time, he recruited a small group of young professionals with varying expertise, including real estate, mortgages, management and development, to form FFE in August 2003.
The group recently moved to their new office in a newly acquired building at 1406 W. Lake St., above the retail shop Gabriella’s.
So far, Gassen’s dream has involved FFE members "working their tails off."
Armatage resident Jake Schaffer, 28, is a Realtor with the company and has worked with Gassen for nearly two years. Although he’s a former minor league baseball player drafted twice by the Twins, Schaffer said real estate is something he’s always wanted to do. "It’s a challenge," he said. "We put in long days, but it doesn’t feel like it. It’s a lot of fun."
Gassen said although each project varies, converting apartments to condos is straightforward. He said FFE purchases the buildings (using his equity or sometimes with investors’ help) but only makes small changes to the physical structures.
Their building at 1770 Bryant Ave. S. — still being renovated — looks like an average apartment building, but FFE is working to make it look more upscale.
The group has added fresh interior paint, new carpet and hardwood floors, adding more polish to the 1960s building. They also plan to redo the entrance and landscaping. Gassen even brought in an interior designer to develop a clean, updated style that he thought would appeal to young first-time buyers.
Schaffer said while FFE gears its units towards young buyers, older folks also flock to condo conversions so they can downgrade from the responsibilities of owning a home.
Schaffer said the unit prices depend a lot on location and size, but Southwest conversions usually sell for between $100,000 and $300,000.
The popularity of projects varies, too. Schaffer said FFE still has a few vacancies in their Lake Harriet building, but its Lowry Hill building was nearly sold out in just over a week. "I’d say it’s a home run," he said with resolve.
A renter turned owner
Linden Hills resident Jon Petersen, 31, has lived in the building at 4136 Queen Ave. S. for seven years. He said when Gassen approached him about the condo conversion idea he wasn’t surprised because the trend has been so noticeable locally.
Petersen said he pays less than $100 more per month for his 800-square-foot unit than when it was an apartment, although there are additional fees, such as those for a condo association. "It’s a small price to pay when I’m basically paying myself," he said.
Petersen, who wouldn’t disclose the price he paid for his condo, said he’s glad Gassen gears his sales towards younger people who maybe can’t afford a home yet. "It’s nice that he’s making the opportunity for younger people to own in Linden Hills, when most of the houses go for $400,000," he said.