CFO Seth Zimmerman faced a triple blow of tests in his decades-long real estate career. Firstly, he witnessed the Lehman collapse first-hand from within a real estate division of the famed bank (“We just got a call from our New York office, a guy in New York. He’s like, well, it’s done. We’re bankrupt.”). Secondly, being forced to blow the whistle when his CEO boss pocketed $1m into his bank account–the day after a $10m raise (the startup is now defunct). Finally, being the finance person when a developer absconded with $12m. “One of the things that I’ve learned is that when it comes to money, you never know what somebody’s going to do”.
In this episode, Seth Zimmerman, CFO at Invest with Roots, explains the core metrics in finance real estate and why things are never cookie cutter (“Every deal is, is different and you have to look at them individually”)
Zimmerman talks:
- Life as CFO at Invest with Roots, one of the hottest companies in Atlanta,the only real estate portfolio that creates wealth for renters.
- The role of finance at a REIT (Real Estate Investment Trust) – a security that trades like a stock on the major exchanges and reports to the SEC.
- Blowing the whistle in finance when a former CFO pocketed $1m
- Creating $700,000 for residents at Invest with Roots
- Becoming CFO and bringing in budgeting and FP&A processes
- Love of modeling and how I am using modeling skills to get into the multifamily space
- How to find great finance staff +the accountant recruitment challenge
- Favorite Excel function
- My motorbike crash
Follow Seth on LinkedIn https://www.linkedin.com/in/sethazimmerman/
Glenn Hopper:
Welcome to FP&AToday, I’m your host, Glenn Hopper. Our guest today is Seth Zimmerman. Seth is maybe a little outside of the mold of many of our guests on this podcast. He started his career in public accounting and quickly moved into finance and accounting leadership roles in the real estate industry. In the interim, he became a really good financial modeler and is someone who I personally went to when I had Excel questions over the years, he is an experienced finance and accounting executive with a 25 year track record of building high performance finance organizations, implementing new technologies and advising on strategic transactions. Seth is currently the CFO at Invest with Roots and has held leadership positions at multiple real estate and property firms. He is a CPA whose expertise spans financial data analysis organization, restructuring and initial public offerings. Seth, welcome to the show.
Seth Zimmerman:
Thanks. Really glad to be here.
Glenn Hopper:
Yeah, so I’m gonna go ahead and just get this out at the beginning of the show. Seth and I have known each other since about 1944. I think we met in, in the war, I think <laugh>. That’s right. Actually it was eighth grade, right? It was <laugh>.
Seth Zimmerman:
It was actually, it was ninth grade. Yeah,
Glenn Hopper:
Ninth grade. Okay. Yeah. Yeah. So which was not much later than 1944. I don’t think. <laugh>,
Seth Zimmerman:
It feels that way now, doesn’t it?
Glenn Hopper:
Yeah. <laugh>, I’m excited to have you on ‘because I, I love, you know, you’re, you’re someone I’ve talked to over the years when I, whenever I had a tough Excel question, you were one of the people that was in my Rolodex that I would call on. And, um, so I, I know, you know, as a great modeler, uh, you’ve got a lot to add here. But also, I don’t know that we’ve had a guest from the real estate industry before. And I’m, I’m looking, I’m looking forward to diving into talking about real estate in more detail, but I also, um, you were telling me a little bit about the company that you just joined, Invest with Roots, and it’s a very novel concept. So I wonder if you wouldn’t just take a minute and tell us about, uh, Invest with Roots and, and what you’re doing there and, and what you guys do. Yeah,
Seth Zimmerman:
So we are a startup REIT. Uh, it’s been around for a couple of years. We have raised so far a total of about $32 million and growing every day. Uh, we’re a Reg A REIT, so we are an SEC filer, but only twice a year. And the, I guess sort of the, the concept of our business is, you know, obviously we’re a for-profit business, but we, um, the, the founders really wanted to try and find a way to have an impact on the lives of the residents who live in our apartments and our single family houses. And so what we do is when somebody moves into one of our houses, we have a program called Live In It, Like You Own It. And basically at the end of every quarter, we ask the residents to take a, a, a directed video. So we tell ’em exactly what to do of their house, and we could look at it and see, you know, if there’s anything that needs to be fixed or, you know, cleaned up, anything like that.
And then, uh, they also have to be current on their rent at the end of the quarter. Uh, if they do those two things, then we will give them $50 per month in a rebate on their rent, and they can, they have two options. One is either to invest it into our REIT, and the second is a high yield savings option. And people have been really happy, residents have been really happy investing in the REIT. They’ve had nice returns, I should back up. They, they can also, uh, we, we treat security deposits as a fee. And so those are allowed to be invested in our REIT also, which is, you know, obviously the big chunk that they can put in at one time. So, um, people love it. Uh, people, you know, residents are sticky because they get this opportunity. Um, so we think, uh, that our retention is a lot better than, you know, your typical, uh, landlord. And, um, you know, it’s good for everybody. And the, the city we’re, we’re only in Atlanta right now. The city of Atlanta loves it. Um, and is, you know, wants to work with us on, um, low income housing, uh, grants and things. So it’s, it’s been great.
Glenn Hopper:
What a, what a great concept. And so are, are all the REIT investors, is it exclusively the residents, or are others also investing?
Seth Zimmerman:
Others are also residents. We, we have accredited investors who have put in, you know, a couple of million dollars into the REIT and all the, you only have to put in a million dollars to start, or sorry, a hundred dollars to start. Um,
Glenn Hopper:
A big difference there, right? <laugh>? Yes.
Seth Zimmerman:
Yeah, A little bit. Well, maybe for you
Glenn Hopper:
<laugh>.
Seth Zimmerman:
Um, but yeah, you only have to put in a hundred dollars to start the transaction fees are very low, low. And so, you know, it’s a great way for somebody to sort of get into real estate investing without having the risk of just buying one house or, you know, one small apartment complex or something. So the, the vast majority of the investments are from, you know, your regular investors or accredited investors. But I think it’s about, we have a total of about seven, $800,000 of value that’s been created for the residents. So it’s, you know, it’s significant. I mean, we, we only have 150 units right now, so, um, you know, considering and, and probably, you know, 80% of those residents participate in the program. So it’s, you know It’s just, we’ve really, you know, we feel we’ve done right by them and, um, they, they like living with us. So it’s good.
Glenn Hopper:
Super cool concept. Um, and it’s, uh, it’s, so it’s, this is, I know you’ve been in real estate forever, but this is a, a different approach to that. So let’s go back in your career. Walk me through, ’cause I know you started out in as a CPA in, in public accounting. Walk me through your early career and some of the milestones that got you into real estate and, and brought you to where you are
Seth Zimmerman:
Now. So, like you said, I, I worked for Ernst and Young for six years, uh, in their corporate tax group. Um, started out preparing tax returns, uh, ended, uh, that period working on research and development tax credits, which was fun, but it was a little bit too much of a niche for me. And, um, I wanted to get out and be able to kind of be, you know, the big picture guy at, at the company rather than coming in and doing some really detailed thing that doesn’t involve looking at kind of the, the whole company. So when I left Ernst and Young, I went to work for Singular Wireless in their accounting group, briefly, kind of wanted, you know, I was transitioned out of the tax side and transitioned into accounting. And then after I was with Singular for a couple of years, an opportunity came along with an affiliate of Lehman Brothers, um, private equity real estate, uh, that was based here in Atlanta.
And we, they, Lehman outsourced the asset management for all their private equity real estate funds to the group that I was working for. Um, so I worked, I started there in 2004 and worked through 2012. So the bankruptcy was right in the middle of, uh, the time I was there. And that was, uh, interesting to go through, to say the least <laugh>. Uh, we had just raised a, a big fund and, you know, we couldn’t, uh, deploy the money anymore and just kind of went to winding things down. But yeah, so then in 2012, I left there and went to work for a, uh, pretty large apartment developer here in Atlanta. And, uh, have worked for, you know, a few apartment developers, uh, since then, and just really enjoy it, uh, love real estate and, uh, you know, it’s been 20 years or something, so,
Glenn Hopper:
Yeah. And I, uh, I definitely want to talk about the Lehman Brothers. It was actually on my list of questions earlier, but since, since you mentioned it, maybe let’s go ahead and, and dive into Lehman Brothers, because I think, I mean, you were one of the most directly impacted, and the fact that you guys, that you were able to hang on until 2012 with, with the collapse there, walk me through as it was all happening and when you knew you were in trouble and, and what kind of, walk us through that, that time period. Sure. Because it’s also fun that we, you know, we love hearing about financial collapse on FP&Atoday. <laugh>,
Seth Zimmerman:
I wish I could work with Enron also, but yeah, <laugh>, uh, we actually, I don’t <laugh> I remember just like everybody else knowing, you know, that there’s all these, the government had started creating all these programs to try and save, um, some of the banks. And it’s hard to remember back, but, you know, banks were going under left and right. I will never forget that I was out doing a lemonade stand with my kids in my neighborhood. One, I think it was a Saturday afternoon. And, uh, my boss calls, he’s like, he’s calling the whole group, like, get into the office right now. Still didn’t really know what was going on. We knew, um, once we got to the office that there was a possibility that something big was gonna happen. Um, and we were spent two days just going through every document that was associated with any of our deals, um, to see what the, you know, bankruptcy provisions were.
And fortunately, uh, we were less affected. The private equity side was less affected because the investment is mostly third parties, uh, coming. It wasn’t, it wasn’t Lehman’s money, so Lehman was the general partner, and they obviously weren’t investing any more money, but they were still running things. Anyway, on that night, I don’t remember the exact date, but that night we just get a call from our New York office, a guy in New York. He’s like, well, it’s done. We’re bankrupt. And, uh, <laugh>, everybody in the office was like, what? No, what’s going on here? What’s are we, should we come to work tomorrow? Should, you know, uh, it was, it was terrifying. And, um, you know, fortunately, uh, for my group, we did get to hang on for, you know, four or five more years. And after that, Lehman spun out the, uh, management of the funds to a group that’s still around today and, and actually still managing, uh, those funds have a few assets left in them, and, um, they’re still managing those, trying to sell ’em and close down the funds. Uh, and in fact, I went back to work there for a couple of years, uh, right at the beginning of the pandemic to try and help sell off one of the, well, the biggest asset they still had in the fund, which was a trophy office building in New York,
Glenn Hopper:
Being directly impacted by Lehman Brothers was, that had to be a, a very tough time in your career. But you’ve, you’ve had some other, we were joking about Enron, but you, you’ve had some other situations in your career that had to be, you know, when you came into the profession, weren’t exactly the kind of things you were planning for. I know, and maybe in a couple of them were, we can’t say names here, but as I <laugh>, uh, tell me, uh, tell me a little bit about, and, and, uh, we’ve talked about ’em before, but tell me about some other, um, experiences you’ve had in, in financial leadership positions in tough times.
Seth Zimmerman:
Yeah, sure. So I, I’ve learned a lot about people, I’d say in my career, <laugh>. And, uh, one of the things that I’ve learned is that, uh, when it comes to money, you never know what somebody’s gonna do. I, a few years ago, uh, went to work for a startup, uh, it was a real estate business that had significant financing to buy, uh, multifamily properties. And also we did a series A round into our management company for $10 million, uh, was from a large real estate like investor. And unfortunately, the CEO the day after the series A round, uh, transferred a million dollars into his personal bank account. And, um, obviously as the CFO of the company that was, uh, oh, I almost had a stroke and, uh, <laugh>, right? You know, it was, it was really uncomfortable and eventually had to force him to, uh, out himself to the investor. And, uh, the company does not exist anymore. So it was, you know, really sad. I mean, that we had a, a large staff and things were looking like they were gonna, you know, be successful. And then you gotta have somebody that just can’t help themselves. So, um,
Glenn Hopper:
Yeah. What a tough, what a tough spot as the CFO. I mean, I wonder, it, it takes, I don’t know, maybe I’m underestimating what most people would do, but you’re in this role, you know, you are the steward of, of that company’s finances and this, and, you know, we’re there to maximize return for investors. And when you see something like that happen, if you see something like that happen, even if it’s just mismanagement, I mean, I wonder, I, it sounds like there was no part of you that was just like, well, we’ll figure out how to call this a bonus or whatever. I mean, you immediately,
Seth Zimmerman:
I mean, it was as simple, it was as simple as reading the LLC agreement, truly. Like that was the first thing I did was go dig up the LLC agreement. And it was very clear that, you know, if any money goes outta the company for any type of investment or whatever, somebody would take money out for that. Um, the investor was to know about it, and the, uh, person who took the money didn’t seem to have any intent to let them know about it. So it was, that kind of put me in a, in a really tough spot.
Glenn Hopper:
Yeah, I could imagine. And it’s, um, and
Seth Zimmerman:
Then I didn’t want my reputation tarnished by something that he did, so, um, you know, I wasn’t gonna go along to get along. Yeah,
Glenn Hopper:
Yeah. And I think about, I mean, you know, that’s a, a private company, but I think, you know, all the Sarbanes Oxley and all the Post Enron stuff, I mean, and it’s like, it, you know, you are the CFO, you’re the, uh, the gatekeeper on the finances there. So there’s, you’re, there’s really nothing else you could have could have done in that situation, or, or without getting dragged into it yourself, I guess. Right, right. Um, and was there another story about another situation you went through? Yeah,
Seth Zimmerman:
I, I’m probably very unusual in that I’ve, I’ve encountered this a couple times in my career, <laugh>. So there was one when I was working for the Lehman Brothers affiliate, uh, where we were building a condo in a city that’s not to be named. Um, and the, we had a local, you know, developer partner. We were just the, the LP cache and the local developer partner, uh, just like the guy, uh, the other company just absconded with a bunch of cash. He, the funny thing is he actually booked it correctly. I mean, he, he was booking credit to cash a from an affiliate, um, eventually it just, that just built up to be millions of dollars, you know, and, and you start looking at it, you know, where did that money go? And, um, so fortunately that was a very large amount of money. That was much, that was, I think, $12 million. That was a lot larger than the, the other one. Um, and he did end up going to prison for a year and, uh, came back out and got back into the real estate game. And <laugh>
Glenn Hopper:
Of course. Yeah.
Seth Zimmerman:
I mean, yeah, as far as I know, he’s still at it, so, wow.
Glenn Hopper:
Yeah.
Seth Zimmerman:
<laugh> crazy times
Glenn Hopper:
I think about why people go into finance and accounting, thinking of a job where it’s just, it should just be so black and white. And like I said, I, I’ve known Seth for years, and he, Seth, tell me if you remember this years ago, <laugh>, you told me nothing. I don’t, we’ll see if you remember this. I, I do. ’cause it was one of the nerdiest things I’ve ever heard. You said, nothing made you happier than when your tea accounts balanced.
Seth Zimmerman:
I love, I love my tea accounts, man. <laugh> the best.
Glenn Hopper:
So I think about what you’re drawn to and how you wanna spend your time, and you’re being embroiled in all this, uh, uh, you know, just drama and, and, uh, fraud and <laugh>. Yeah. Everything else.
Seth Zimmerman:
That’s kind of how I refer to it, you know, <laugh>,
Glenn Hopper:
Uh, I feel like you’d much rather just be staring at your spreadsheet, you know, <laugh> very much models
Seth Zimmerman:
And much like writing a big long formula and making that, you know, that’ll make my day or something. Yeah. Yeah. I don’t wanna be a police officer or psychologist or anything like that, <laugh>, but sometimes you get stuck, so, yeah.
Glenn Hopper:
So I mean, um, and I know you were, you were a Spanish major in undergrad. I was. So, I, I’m wondering what, what led you to accounting to begin with, and everything that you’ve been through in, in your accounting career, the first reason you came to it, and maybe, and, and, and I’m gonna use this word, and I think literally, or, or accurately at least, your passion for the, for the profession. How has it evolved over 25 years? And the only reason I say passion works there is because you’re still excited about the, uh, tea accounts. So <laugh>,
Seth Zimmerman:
I do love what I do. What led me to go into, it’s actually kind of random. When I was an undergrad, I had two roommates and they were both accounting majors, and I was a, uh, an aimless youth. And, but my roommates had, you know, gotten great jobs with their accounting degrees, and they were doing well. And after, so after I graduated, I kind of thought, okay, well, um, I need to do something besides, uh, Spanish. Speaking Spanish doesn’t make you a lot of money, so <laugh>. Uh, so I, you know, they had been successful. So I decided, okay, well check out accounting, and decided to go back. And it was almost like, fortunately I loved it because I, you know, I didn’t really have a fallback plan. So, yeah. Uh, but it was, it was a great move. And, um, you know, I’m really happy that I did it.
And then, you know, as far as the, you know, the career, it’s just the, the thing that I’ve loved about it is probably true in other places. All what I know is real estate is that, you know, every deal that we do is different. Um, you know, ev everything, everything that we do from a finance standpoint, you know, it just depends on the deal and the types of investors that you’re gonna have in it. And, um, so I, I find that really interesting. You know, I’m, I don’t think that I would like making widgets or being, you know, um, doing finances for somebody who, or a company, manufacturing company. I, I just love, um, being able to touch the assets, being able to, you know, know that they’re, they’re real things that are being used by people for their shelter and, you know, so that’s kind of essential to, to people’s lives. And, um, so yeah, so I’ve, I’ve loved that and just continue to learn, you know, coming to work here. Uh, we’re a reit and I’ve never worked on REITs before, so I’ve had a lot to learn, taking a lot of classes. Um, and just will continue to do that as we grow, you know, just try to make myself a, into a expert, which is always fun.
Glenn Hopper:
Thinking about you as you answered that, you know, you mentioned when you were at E&Y that you’ve gotten into this really specialized mm-hmm. <affirmative> niche division of doing the r and d tax credits. And then now as you’ve taken on leadership roles and being a CFO, that’s a, sounds like it’s much more in your wheelhouse of like not wanting to just be so laser focused and, and having this broad experience, but you do the CPA and the accounting side coming up is, um, you know, that’s more of the traditional background for coming into A-A-C-F-O position, um, you know, coming up a lot of times, you know, through, uh, CPA and, and audit and all that. But so I’m thinking as you moved into leadership with that tight accounting background, uh, tell me about the transition to, ’cause I know you’ve always, you’re a, a big modeler and you’ve had to, uh, in the nature of the work that you do Mm-Hmm, <affirmative>. But how was that transition from accounting into sort of bringing in also the finance, the budgeting, the FP&A and, and that side of it?
Seth Zimmerman:
Uh, it was new. I mean, that’s for sure. It definitely took a while working for doing asset management for the Lehman funds. You learn what the LP, you know, the large investor in, in a deal wants and what they’re looking for. Um, but you go to work for a local guy that you know, that the Lehman’s of the world invest in, and it’s a whole different set of incentives. You know, they’re in a lot of ways, you know, dependent on fees for their income and, you know, whereas at the fund level, you know, we had, we did, we did have fees, but the idea was, you know, the investing was gonna, you know, save or not save us, but that’s your, that’s your bread and butter. That’s all you really care about is the returns, returns on the investment become a lot more sensitive to fees going to work for a developer.
I mean, they have to keep the lights on, they gotta keep the people, you know, out at the site. Um, so it’s, it’s just a whole separate kind of group of challenges. Like I, there’s things that I had no idea even, you know, I couldn’t have told you what a superintendent was and a job trailer or anything like that. When I, you know, before I went to work with a, a local developer, it was really fun sort of getting to go to job sites where the development was underway. And it was just very motivating to, to be able to do that sort of thing and, and know that you’re part of, you know, putting a deal together to, you know, eventually you’ll see new apartment community or, you know, a high rise or something. It’s, it’s very rewarding.
Glenn Hopper:
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Coming up in the development side, now being at a REIT and thinking about, um, the kinds of reporting that you’ve had to do. So how does the real estate industry, how does their financial reporting differ from other sectors you’ve worked in? I guess, you know, maybe encompass in that what kind of metrics are important, what are you tracking? And also part of that, who are the primary beneficiaries? And maybe I should break this into three questions, but it’s, uh, you know, how it’s different, what you’re tracking and who you’re reporting to in, in all of these projects. Sure.
Seth Zimmerman:
How it’s different, I would say is that every investment is discreet is different. You know, there, there’s never a time when it’s just cookie cutter. Um, you know, whereas that’s kind of picking on manufacturing earlier. But, um, you know, if you’re cranking out the same product 24 hours a day, I think, you know, your reporting can be, uh, sort of probably better standardized. Whereas the, the reporting for real estate, you know, it just differs based on the product type. And there, there’s a lot of common things that people look for in terms of returns. The big three would be, uh, IRR multiple of capital and profit. Like that’s at the end of the day what everybody cares about, and that’s what the point of doing all the models is to figure out. Um, so I think in that way, you know, it’s the fact that every deal is, is different and you have to look at them individually rather than, you know, just a group of things that are being, where the same thing is being produced over and over again. I think hopefully that answers the first part of the question.
Glenn Hopper:
Yep, yep.
Seth Zimmerman:
And the, tell me this, I, I’m terrible with the this stuff so <laugh>,
Glenn Hopper:
So yeah, I threw 11 questions at you all wrapped into one <laugh>. Um, so the next part is what are the key metrics? But I think you kind of hit on those too with IRR.
Seth Zimmerman:
There’s different ones actually for, um, for REITs, and that’s one of the things that I’m working on here is to, as I said, we’re very small, but we need to be able to kind of benchmark ourselves against the public REITs and, um, you know, just know kind of what direction, you know, the overall market is going in, and to help us report. I think as we grow and get more sophisticated investors, they’ll definitely be asking for the more, you know, robust type of reporting. So that’s, we’re switching accounting systems, and that’s real focus is the reporting piece of it.
Glenn Hopper:
Gotcha. And right now, are you dealing with like, a lot of Excel data? What are you, where is, uh, where’s your data living these days?
Seth Zimmerman:
It lives in QuickBooks, unfortunately. <laugh>,
Glenn Hopper:
Yeah,
Seth Zimmerman:
<laugh>. So, and the, you know, for real estate is, there’s always tons of entities involved. So, you know, to buy one apartment community, there might be, you know, five or six different LLCs involved. So, and QuickBooks is horrible at that, so that’s why we’re switching to a new accounting system and we’ll be able to do the type of, uh, you know, reporting that we need. We’ll have, we don’t, it’s hard to do like earnings per share and the accounting system now and all that sort of stuff. So, we’ll, we’ll have the capability to do a kind of the traditional metrics and, uh, for the public company.
Glenn Hopper:
Yeah. You know, outside of property management, so much of what you do in real estate, it’s the real metrics are when there’s a transaction. And so ongoing, like tracking monthly, quarterly metrics, I mean, are there things you’re tracking monthly in cor
Seth Zimmerman:
There are, I mean, you, you know, you’re tracking performance, you, you know, you’ve underwritten, um, the deal, so you know what, not necessarily always on a monthly underwriting, um, basis, sometimes annual. But, um, you know, you do wanna make sure that, you know, your me your metrics, you know, I think typically, um, your NOI should be 65% of your, uh, gross revenue and that, so you, you know, you just always wanna kind of be checking those things and making sure that, you know, also, you know, if you’ve got a budget, obviously, so making sure that nothing is, is really going wrong at the end of the day, those are relatively, you know, small parts of the lifecycle of the deal. And, um, so it’s really, you know, the acquisition, any capital event, like a refinancing, uh, and ultimately, you know, a sale of the property are, are what takes the most time or the most, most brainpower to, you know, to get ’em right
Glenn Hopper:
In real estate. How much is the industry on the whole leaning into like data-driven decision making? Is it, I’m, I’m thinking about, you know, where you’re selecting the, the location and, uh, you know, how much of that is, is data backed versus I’m a developer, I’ve been doing this for x number of decades, and I know this is a good, I mean, how, like, or determining pricing and all that, are you using data a lot?
Seth Zimmerman:
Probably not as much as other industries, um, because you do have a lot of developers who’ve been around forever and you know, they, they know, you know, where they want to be. They wanna be, you know, suburban garden style apartments and the path of growth and, and that sort of thing. Um, but, uh, there are some great services, uh, that have been around for a while, but, but just becoming much more sophisticated with, with AI, AI that you can, you know, we use to, uh, to find sites to compare, look at sales comps, kind of discover demographics, you know, just all that sort of stuff. And it’s just becoming, you know, more sophisticated all the time. Some people use it, some firms, you know, the owner wants to use their own intuition and, you know, many times they’re great at that. And other times, you know, <laugh>, you can’t win ’em all. So, um, but there’s a lot of people who are really good at that out there. So, and, and you know, when you trust yourself that much, it’s, you know, why should I bring in this million dollar technology? So, uh, kind of, you know, it’s, it’s both, I’d say.
Glenn Hopper:
I guess the other thing thing, you know, and you, you mentioned earlier, um, that how many different investors there are when you’re, just because of the cost of building out these properties. Um, and, and the limited exposure I’ve had with working with real estate developers, it seemed like IR investor relations is a big part of what you do because there’s, you know, you’ve gotta do your quarterly reporting to the investors on this. Is that, um, have you done a lot of IR work? Is that a big part of, um, being CFO in a real estate company? Um,
Seth Zimmerman:
More with, uh, my last stint with the Lehman team, um, I was very involved in like quarterly valuations and putting together the investor report for the end of each quarter. And so there were always tons of questions about that stuff. You know, making sure your website’s updated the, uh, stats that you’re showing there, uh, or correct, you know, your overall returns, your track record, um, all that sort of stuff. But then there’s, you know, there’s the real deep investor relations that is you, I, I find it very interesting and, you know, understanding what different investors motivations are for the investment and you know, that they can be different. And you kind of have to take that into con consideration when you’re talking to you just, you have pension funds, you have individual, you know, they just all have their own, you know, unique sets of, of challenges, things they want, uh, reports that you gotta create for ’em, that sort of thing.
Glenn Hopper:
In the startup world, and this is, as someone who spent, uh, the bulk of my career in the startup world startup, are you, uh, just thinking about all these, you know, whether it’s an IR report or the management reporting and tracking all the metrics, how, um, I mean, you gotta be in like roll up your sleeve mode. Are you really deep into, are you still doing a lot of modeling and a lot of work in Excel and, and just down there in the weeds?
Seth Zimmerman:
Yeah, uh, especially at this company, it started out as single family residential. And so we have a couple of guys that are great at that, and they’re great at finding houses, but to scale as a REIT is difficult when you’re out buying one house or five houses, you know, and that sort of thing. So we’re starting to get into the multifamily space, and I’m doing quite a bit of the modeling for that, uh, just because no one here has the experience, but I’m trying real hard to <laugh> transfer that knowledge, uh, to somebody else. So, uh, it’s fun, but like, it takes away from my, from other stuff that I need to do that’s, you know, more important. Well, not the modeling, not, not the modeling’s not important, but, uh, other stuff that aCFO would typically do.
Glenn Hopper:
Yeah. And it’s, and that was, that’s always the problem, the balance of it. It’s hard to make the battle plan from inside the foxhole, right? Yeah. Like, you’re <laugh> you, you know, you’re, you’re really seeing everything up close upfront, and then to be able to, then the switching cost of just pulling out of that and, and focusing on, on making a strategic decision is, is tough. So, yeah. But you gotta, I mean, that’s, that’s part of the thing with startup. You set it up, you build your team, and, and you’ve had, I think we talked about this just for a minute before the show, you’ve built teams before in your leadership roles, and it’s, and now in the startup, especially as you guys are, are looking to scale up, do you have some kind of golden rules or, or your approach to putting the right people in the right seats and just knowing that you’re, you know, in startup world, you’re, you’re building the airplane while you’re flying. Mm-Hmm, <affirmative>. So do you, as you’re thinking about the team that you’re gonna build there and, and leaning on some of what you’ve done historically, what can you tell me about that?
Seth Zimmerman:
One of the things that I really like about the startup world is that good people are highly attracted to it. And so you can really, you know, it’s, it’s if you can find people, ’cause it’s hard for anybody to find people these days because you’re able to offer, you know, stock incentives, hopefully set people up for an exit. It’s easier to find good people. And so what I would, what I usually look for is just somebody who could teach me to do their job. You know, I don’t wanna be always the one telling people, you know, okay, we need this, we need that, you know, I want somebody to come to me. I’m looking for proactive people and you know, people who are smart and have the background. You know what, I feel like once you find somebody kind of with those traits, then, you know, if they’re self-motivated, I just let ’em go to town and kind of keep me up updated on what they’re doing, and I can kind of give ’em guidance and make sure that, you know, they don’t go off on some wild tangent, but yeah. But that part’s great. But I love to learn and you always learn the new kids coming outta school, or I love calling ’em kids, uh, you know, yeah.
Glenn Hopper:
<laugh>, I think I referred to someone who was like 42 the other day as a kid, <laugh>, I don’t, I’m just, I’m just <laugh>. I’m instantly my granddad, I have no idea what’s going on, but I <laugh> when,
Seth Zimmerman:
Glenn
Glenn Hopper:
<laugh>
Seth Zimmerman:
Yes, that’s, yeah, we’re getting old man. <laugh>
Glenn Hopper:
<laugh>. That brings up something else. You and I were talking about, mentioning the kids coming straight outta school and into a startup right now. There is, uh, I’m sure you’ve seen the news. I mean, there’s a real shortage of people coming into accounting right now. And so I’m big tech guy, so I’m, I’m just, I’m convinced that AI is gonna fix all this. And, uh, all the seats that we’re not filling with actual accountants, we’re gonna put a we robo accountants. Mm-Hmm. <affirmative> in there. But, uh, as someone who didn’t start out your, your education, but then switched at the master’s level to go in into accounting and, and just in some of the people you’re talking to and hiring now, what do you think is causing the, um, drying up of the well of people coming into accounting? I
Seth Zimmerman:
Suspect it’s a combination of the fact that nobody likes accounting and, uh, <laugh>, <laugh>. Uh,
Glenn Hopper:
And
Seth Zimmerman:
You know, there’s just so many more opportunities, uh, these days than there were when we were coming up to be in the finance world. And that are, you know, higher starting pay outta school significantly higher. So that’s attractive to people. Uh, and you, I think it’s really unfortunate that accounting has sort of be, it’s become very difficult to find people. But you know, I was saying earlier, like, it’s gonna have to turn, I mean, we have to have accountants, so at some point the industry’s gonna have to catch up in terms of compensation and incentives for people to, to start going back in. So it’ll happen. Everybody is gonna have to be miserable for a couple of years. So yeah.
Glenn Hopper:
<laugh> as miserable as an auditor who’s fresh outta school and working.
Seth Zimmerman:
Yes, exactly. <laugh>.
Glenn Hopper:
Exactly. This has all been great stuff. It’s been fascinating to hear about the real estate industry and since we’ve known each other a while, I, I have some answers to this question, but I’m gonna move to the, uh, our personal segment of the show where we learn a little bit about you. I won’t go back and tell high school stories about you, but, um, what’s something that most people don’t know about you that they couldn’t find on your LinkedIn profile or whatever?
Seth Zimmerman:
Um, I love to ride motorcycles. Uh, I’ve had a motorcycle. I, my first one was right after I got married. Shockingly, my wife was okay with, uh, me buying a motorcycle. <laugh> had life insurance, so, uh, it was all good. So I pretty much had one consistently for 25 years. I do have one sitting in my garage right now that I haven’t ridden in a couple of years ’cause I crashed it. And that was a horrible experience. <laugh>.
Glenn Hopper:
Oh, um,
Seth Zimmerman:
Yeah, it was not a
Glenn Hopper:
Lot of fun. Yeah. I’m laughing you, you’re talking about a motorcycle wreck and I’m just laughing. I don’t know what <laugh> Yeah. Uh, quick story on, on on the wreck or
Seth Zimmerman:
Yeah, sure. So I was, uh, riding up in the North Georgia Mountains, uh, one Saturday afternoon and it was, I was behind a motorcycle, which was then behind a car, and the motorcycle in front of me decided to pass the car. We were on a straightaway in the mountains and I thought, okay, well he passed them. There must be plenty of room for me to pass them. And I, so I sped up, uh, and then ran out of straightaway. It just the road curved and, uh, I was going way too fast to make the turn and laid it down. And, uh, I, I’ll never forget here, my, my head hit the ground. I was just like, oh my God, thank God I have this helmet on. And, uh, yeah, I mean, I had all the gear on, thankfully, or I just would’ve been the road rash like crazy.
Glenn Hopper:
Yeah. So how did you break anything? Did you, what, how did you walk away from that?
Seth Zimmerman:
Uh, barely. It was tough to walk <laugh>, so walking away was a challenge. But I was in pain for a couple of weeks, really bad, and I’m still carrying like a small tear in my rotator cuff, too small for surgery. And um, you know, it’s kind of one of those things you can live with. So,
Glenn Hopper:
Yeah. So now you still have the motorcycle. Are they just, they’re just decorative items at this point?
Seth Zimmerman:
Uh, have been for a while. I gotta, um, I gotta get a new battery for it and I’ll get it out there at some point. No, just gotta
Glenn Hopper:
So isn’t it, the story about motorcycle riders is, there’s two kinds. There’s the people who’ve crashed and the people who haven’t crashed yet. Yes. So now you’re on the other side of that, so
Seth Zimmerman:
You Well, yeah, I figure I’ll cut the odds. I don’t, I’m not gonna crash again, so I can act, I can act like a crazy person out there, <laugh>.
Glenn Hopper:
It’s not gonna happen. The crazy accountant on a motorcycle. I don’t know. That sounds like a premise for a movie. Maybe I don’t <laugh>
Seth Zimmerman:
Movie. Yeah, it’s a, it’s a fantasy movie for sure. Yeah. <laugh>, no crazy accountants on motorcycles, so
Glenn Hopper:
<laugh>. Alright. And it one, we have to ask everyone as well, and I say I’m always interested. I, I think I already know what you’re gonna say. Mm-Hmm. But, um, what is your favorite Excel function and why?
Seth Zimmerman:
So it’s not really a function, uh, I don’t know what you call it, but I learned Power Query last year. And first of all, it was fascinating to learn. You know, I never even really thought about cleaning up data and that sort of stuff before and where I was working at the time, we had a need for, uh, doing that. The GL information we could get out of our accounting system was just not easy to work with unless you really manipulated it. And so I discovered the fact that you could go in and you can manipulate at one time and that would, you never have to mess with it again. Um, you just can keep saving a file in the same folder and it keeps doing the same thing for you. Cleaning it up, save me so much time and really helpful with reporting. You can do power or, uh, pivot, pivot tables off of multiple, um, you know, different tables and sort of a database function and there’s just so many positive things about it that help with reporting and, and that sort of thing. So I love that.
Glenn Hopper:
So, very cool. And I guess my first question is, why do you hate Index Match <laugh>? You’re supposed to say Index Match or Excellent Match or something. Index.
Seth Zimmerman:
Yeah. I, uh,
Glenn Hopper:
<laugh>,
Seth Zimmerman:
You know, it’s good. It’s a good, it’s a good, it’s a good function for those who like it.
Glenn Hopper:
Yeah, no, I think and yeah, <laugh> don’t
Seth Zimmerman:
Power. So
Glenn Hopper:
Yeah, <laugh> and Power Query is great. I think, uh, and honestly I’m pretty excited we’re not there yet. It’s, it’s, it’s kind of a dud right now, but seeing where Microsoft goes with copilot built into Excel mm-hmm. <affirmative>, I think we’re gonna start seeing a lot of that kind of functionality that is just something that you’re speaking to it in natural language and, and saying what you want to do and all these, you know, page long formulas that you’re using are gonna go away. Um, and it’s just gonna be completely different way to interact with your, with your data. So I’m, I don’t know, we’re not, we’re far from it Now. I don’t know if you’ve even messed with Copilot yet, but Power Query is, is awesome.
Seth Zimmerman:
I’ve tried to mess with it once or twice, but it, you know, it wasn’t at the point where I could really gimme answers about what I was looking for. Yeah. So, but I think it’s gonna be really cool and when they get it kind of mature.
Glenn Hopper:
Yeah. And it’s, uh, I guess this week is the big Microsoft Build conference, so they’re probably, while we’re recording this, they’re probably announcing the next cool Excel thing that we’ll have to find out about later. So <laugh>.
Seth Zimmerman:
Right.
Glenn Hopper:
Well Seth, I really appreciate you coming on the show. How can, uh, if listeners want to learn more about motorcycles in real estate, how can, how can they connect with you?
Seth Zimmerman:
I’m on LinkedIn, um, SEP a Zimmerman. You can go to invest with roots.com, find out all about us and can invest for as little as a hundred dollars. So we’re always interested in getting new people. And so if that’s your thing, please come in and invest with us. Alright.
Glenn Hopper:
Thanks for being on the show.
Seth Zimmerman:
Cool. Well yeah, I appreciate you having me. It’s been great.
