Real estate brokerage founded by Clark Gassen changes hands
Southwest real estate mogul Clark Gassen, who received national attention and a good dose of notoriety converting apartments to condos and quickly building brokerage Financial Freedom Realty from the ground up, sold the company in October to three entrepreneurs.
One of the fastest growing real estate companies in the state a couple years ago, Financial Freedom has shrunk from about 70 agents to roughly 30 in the face of a languishing housing market.
But Gassen said that wasn’t the reason for the sale.
“My passion is development,” he said. “I want to start getting more involved in buying buildings and developing. And in fairness to what I created at my company, I wasn’t giving it enough time.”
Gassen runs his own development company, CAG Development, and has been involved in the creation of new Uptown condominium buildings, including the Edgewater at East Lake Calhoun Boulevard and Lake Street and Lumen on Lagoon at Lagoon and Emerson Avenues. He’s also a co-developer of Mozaic, a mixed-use project planned for Lagoon and Fremont avenues.
He said letting go of the brokerage, which he started a few years ago before he was 30, wasn’t easy.
“It was emotional,” said Gassen, who is staying with the company as an independent agent. “But what I learned at my age is that if you want to make something successful you’ve got to give it 100 percent.”
Stu Ackerberg, owner of Southwest development company The Ackerberg Group, which has partnered with CAG Development on area projects, said Gassen’s move to sell was a good one.
Ackerberg said Gassen is more of a visionary who had a great idea with Financial Freedom Realty, but it took off beyond his control.
“As things grow, they need management and structure and that’s not Clark’s strength,” Ackerberg said.
He said Gassen’s eye for development is his strongpoint.
“He has a really strong sense of what can be and with that he has the tenacity and skill set to make that happen,” Ackerberg said.
Gassen said he was “very selective” in choosing the new owners of Financial Freedom, local entrepreneurs with real estate backgrounds.
Rocky Osborn, a 40-year-old former commercial real estate agent who also developed and sold his own graphic design and printing business, was one of them and is now president of Financial Freedom. The other investors, both residential real estate agents, weren’t ready to disclose their names.
Osborn said the trio wasn’t afraid of the market slump and saw Financial Freedom as an opportunity. They plan to officially go public with the purchase and roll out a new marketing campaign in January, he said.
The company will continue to focus primarily on residential property in Southwest, Osborn said, and the owners plan to take on a slice of the commercial real estate market as well. Condo conversions will no longer be part of the strategy, he said.
“That market is not there anymore and that’s not the market we’re pursuing,” said Osborn, noting that the company would still sell existing condos at Lumen and elsewhere.
He said the brokerage would maintain its “young, hip” image, but the owners want to distance the company from the seedy side of its reputation gained during the conversion of hundreds of condo units.
Financial Freedom and Gassen became the lightning rod for complaints about kicking out renters, shoddy building quality and poor management during the condo boom. Gassen has refuted those attacks, claiming other developers’ practices shed bad light on condo conversions in general.
Either way, Gassen has been a polarizing figure throughout his career and his name is synonymous with Financial Freedom to many in Southwest and beyond.
“We are making an effort moving forward, and I don’t want to use the word disassociate, but we are trying to make people aware that Clark is no longer a principal of financial freedom,” Osborn said. “But he’s also a part of it from an agent standpoint and we’re lucky to have him because Clark still makes deals happen.”
Osborn said the past couple months have been spent improving the brokerage’s infrastructure and day-to-day operations. Some of those things needed a little “TLC,” he said. He used agent payment as an example.
“If you turn in a [purchase agreement] or a closed deal, you’re going to get a check now,” Osborn said. “In the past that might not have happened so quickly.”
Improving the company’s website is also underway, he said.
Once the “groundwork” is laid, Osborn said he and his co-owners want to start expanding. They hope to grow the company to 50 or 60 agents by the end of 2008, offering them incentives such as low overhead fees, he said.
“As a brokerage, the agents are our customers and we need to have infrastructure, we need to have systems in place to make sure we take care of those people and give them the tools to be successful first,” Osborn said.
He said Financial Freedom still has a strong business base that can grow despite market challenges.
Osborn wouldn’t comment on the purchase price of the brokerage, nor would Gassen.
Alex Stenback, a mortgage banker who runs the real estate blog www.behindthemortgage.com, said he doubts Financial Freedom has much value.
“Financial Freedom Realty existed to serve the projects that Gassen was converting,” Stenback said. “They hung some nice numbers on the market for a few years but once the condo conversion train ground to a halt, there’s just not a whole lot left.”
Stenback said he couldn’t begin to guess how much might have been paid for the company, but he didn’t think it was much.
“You’d be hard pressed for me to write a check for fifty grand for that thing,” he said.
Stenback said making Financial Freedom work in today’s struggling market would be challenging, but easier than starting from nothing.
“The bottom line is the real estate brokerage,” he said. “Attracting those people and retaining those people. It’s hard when there are a lot of other established places in town.”
Marshall Saunders, a principal of brokerage Remax Results, said now is a good time to invest in a real estate company because the cost is much less than when the market was hot. The new owners of Financial Freedom shouldn’t be worried about the market, he said.
“There might not be too much to look at right now, but it will be a good investment 10 years down the road,” he said.
Gassen said he thinks it’s a great time to build a real estate company and he’s sure Osborn and his fellow investors are up to the task.
“They’re going to take it to levels that I once wanted to take it,” Gassen said.
Reach Jake Weyer at 436-4367 or [email protected]