MEET the Landlord
Vital Stats Name: Alan Dixon Age: 40 Currently lives in: Jersey City, N.J. Grew up in: Canberra, Australia
How many buildings does Dixon Advisory own? We own 535 one- to four-family houses in the New York metro area, all purchased since we started the fund in June 2011. There is a large smattering in Hudson County and in brownstone Brooklyn. In Queens or Brooklyn, they’re all houses that were originally singlefamily houses, but they’ve often been broken up into multiple apartments. We continue to look for opportunities in Manhattan. We’ve got 12 homes under contract or owned in Harlem. Would we like that someday to be 50? Absolutely.
How did you get involved with real estate? I worked in property investment banking in Australia for six years before joining my father’s firm [which he founded in 1986].
As an Australian firm, why did you start investing in the New York area? If you’re investing from a small country like Australia, you have to be very conscious of what the U.S. is doing. In 2008, we saw housing prices had been dropping for two years. In 2009 and 2010, they were still dropping. By 2011, we just thought the value opportunities in individual housing in this region were far too attractive. At our first fundraising, we raised $70 million. Fast-forward to today: the total fund is about $450 million.
When you broke into the New York area, why did you start with Hudson County? It was really because it felt so underresearched and people were so uninterested in it. The housing crisis was really harsh here. Blue-collar stock houses had fallen from $500,000 or $600,000 to $150,000 or $250,000. Just huge inventory available. We thought there’d be very good yields. As we did more research, we found that there was still a lot of shadow inventory. In Manhattan or Brooklyn, we didn’t find that they were good value. The reason our strategy is to keep these houses and rent them for at least five years – if not longer – is we think New York’s gentrification story has still got a really long way to run. We think there’s still a long appreciation period that’s going to happen in these types of properties in New York.
Do the rental rates or yields the firm makes cover the carrying costs of the properties? Yes, the renovated portfolio has a yield at the property level on average of about 5.7 percent. We see capital gain as a key factor in the final total return we expect to make.
78 April 2014 www.TheRealDeal.com
australia
Title: CEO, Dixon Advisory USA
Canberra
What are some things you’ve learned from the Australian real estate market that have applied here? The thing that’s interesting there is we never really had the crime epidemic in the inner city that you had here in New York City. So it’s always desirable in Australia to be close to what we call the central business district. We felt really confident that if the amazing public safety effort over the last 20 years stays, that more senior executives and young professionals and empty-nesters are going to want to live much closer to their workplace. … As long as that remains the case, you’re going to get people looking to live a lot closer in, so we focus on quick commutes. Sure, the PATH train is not the greatest train in the world, but you’re in Midtown or Downtown from Jersey City pretty darn quickly.
Do you enjoy being a landlord to hundreds of tenants? The thing you have to tell yourself is that you work for the 95 percent of really lovely people who come and rent your houses. The fact is you spend 80 percent of your day with the 5 percent of tenants who cause problems. You have to remember that’s part of any business.
Late last year, Dixon bought a single- family brownstone in Prospect Lefferts Gardens for $1.85 million – a record for that neighborhood. It was a double lot with two-car parking. We were quite happy to pay a big price there, because it’s got parking, so we think that house has got huge potential.
Why have you stayed away from buying properties in South Florida, Arizona or other Southern markets where foreclosures are abundant? We expected there would be far more competition, and that has turned out to be the case. We also prefer the longterm capital growth potential of the New York region.
In terms of acquisitions, what direction are you heading in? We want to get Forest Hills and Ridgewood in Queens up to a decent size. We want to get a lot more in Bedford-Stuyvesant, Bushwick and surrounding areas. We are feeling very strong demand for a higherend market – in New Jersey, Brooklyn, Queens and maybe a bit of Harlem. By Mark Maurer
PHOTOGRAPH FOR THE REAL DEAL BY CHRISTIAN FERNANDEZ