Value Added: Banking On Brookland

Here's Tom Heath's latest column on greater Washington's entrepreneur set:


I was reading Inc. magazine in an airport concourse a few months back when I saw Bo Menkiti's name as one of the nation's up-and-coming "under 30" entrepreneurs. I saved the magazine and last week phoned Menkiti to ask how a guy from Greater Boston became an emerging real estate player in Washington.

Menkiti, 31, has been buying, selling and developing properties since 2004, mostly in the Brookland section of Northeast D.C., home to Catholic University, Trinity College, Washington Hospital Center and Providence Hospital. Brookland is nestled in a triangle bordered by North Capital Street on the west, South Dakota Avenue to the east and New York Avenue to the South.


Bo Menkiti, founder and chief executive of The Menkiti Group. Photo courtesy of Menkiti Group.

Menkiti isn't rich - yet. The Menkiti Group will gross around $1.5 million this year, which includes commissions on real estate sales, income from developments and rentals. He wouldn't discuss profits, but he and his wife take a salary and roll what is left into the company.

His business strategy makes sense: Buy property in marginal neighborhoods with good housing stock, then ride the curve upward as those neighborhoods improve. His big bet is on Brookland, where he calls Menkiti Group the "go to" real estate company.

He is targeting the middle market neighborhoods that house teachers, firemen and government workers.

His three businesses include a residential brokerage franchise he operates named Keller Williams Capital Properties, which trains real estate salespeople in the D.C. area. He also has a conventional real estate sales and marketing group of five people that serves first-time homebuyers and a development company with a portfolio of commercial, residential and mixed-use properties along "emerging corridors" in places like Georgia Avenue, H Street and 12th Street.

"You buy and hold commercial real estate on these corridors, and then you sell residential properties in the neighborhoods around it. People get excited, they move in and they get angry because they can't get services. But if you buy and hold the commercial properties, you can rent them out so people can buy goods and services."

The hardest part, aside from persuading banks to lend him money, has been inducing people to get comfortable with the idea of living in places such as Brookland.

"I saw it happen in Columbia Heights, and I saw this other neighborhood called Brookland, that had great assets, was on the Red Line, had character and a commercial strip nearby. It even had leafy streets that look like Chevy Chase and is only seven minutes from downtown."

"Changing people's perceptions is a lot about helping people look differently at places," he said. "We do it buy partnering with local businesses, so when people come to an open house they get a receipt for free coffee from the Cafe Sureia coffee shop. ..... We gave gift certificates to local restaurants or a spa package at Total Relaxation. We are betting people will be comfortable once people put their feet on the ground in the neighborhood."

It helps that Brookland has a couple of Metro stops and good bus service, homes with "good bones" and backyards. It's a short ride to Capitol Hill for the young couple looking to find more space for their growing family.

Menkiti has spearheaded some pioneering in Brookland. He got tired of looking at a burned out former liquor store across the street from a residential property he had purchased in the neighborhood and decided to buy it. A commercial bank wouldn't give his business the $360,000 loan, so he borrowed $100,000 from his father and asked him to co-sign some loans. Menkiti also borrowed against a house he owned in Columbia Heights. Once he bought the old liquor store, he persuaded a bank to give him a line of credit and he refurbished the place. It currently houses the offices of The Menkiti Group.

Menkiti eventually persuaded banks to lend him money by building a track record and creating relationships with lenders like BB&T and City First Bank.

Menkiti said the current housing downturn has been a two-edged sword. The credit crisis has slowed the pace of bank loans needed to fund multi-unit housing projects, forcing Menkiti to work on smaller projects until money loosens up. But the market for first-time homebuyers has remained good because those customers are often driven by family issues such as a first baby, which makes the purchase of a new house less discretionary. His sales staff is doing more work on deals involving rental units and senior housing to shore up the business until the housing market picks up.

"This hasn't been without challenges," Menkiti said, adding that reduced prices for houses that need rehabilitation is also helping draw customers.

Menkiti may have gotten the real estate bug from his father, a native of Nigeria who teaches philosophy at Wellesley College and invests in real estate on the side.

Menkiti grew up in Somerville, Mass., and after graduating from Harvard University with a degree in sociology, he followed a business consultant to Bethesda, where the colleague was starting a consulting firm to corporations and the booming Washington technology industry.

Menkiti bounced around and wound up at D.C.-based College Summit, which helps low-income high school kids navigate the college application process. He helped grow revenues and customers at College Summit as its chief operating officer. In the meantime, he got his real estate license.

"I sold a couple of houses to friends and said to myself, 'I could do this.' I got very interested in how business and community development play off one another."

Menkiti's first investment was a six-bedroom home with a two-bedroom apartment in the basement on Irving Street in Columbia Heights. He had saved money by sharing an apartment with friends and sweeping any bonus money from his corporate jobs into the bank. He put down $40,000 on the $300,000 home in 2001. He estimates he could sell it now for three times that, but why would he? He earns $6,000 a month by renting it out to young professionals. He personally owns four residential properties that generate income.

The empire has grown: Menkiti Group has helped more than 150 first-time homebuyers and has rehabbed over 60,000 square feet of residential and commercial properties. The company has 320 housing units under development, including with partners. It also owns 12 homes and seven commercial/mixed-use properties.

"Real estate is cool because you can do these things to help neighborhoods and better the community, and you can make money from it. You can create value and people will pay you for it right away."

By Dan Beyers  |  September 9, 2008; 5:20 PM ET  | Category:  Value Added
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Cool Stuff

Combining Real Estate and social change quite the new age Social Entrepreneur.

FYI: This guy was also named one of the rising stars in real estate by Realtor Magazine in their “30 under 30” issue in 2006

Posted by: DC Entrepreneur | September 9, 2008 7:00 PM

Very interesting post -- and good follow-on to your story about the McLean real estate titans.
Real estate seems to be one of those businesses that anyone can get into, and this was a good roadmap to getting there.
Would have liked some information on his vendors/subcontractors and how he manages those folks. I suspect the real barrier to entry for people dabbling in real estate (beyond the money) is having competent and reliable contractors to re-hab these old properties.

Posted by: Joe Baga | September 9, 2008 7:42 PM

I DO NOT UNDERSTSTAND THE WORKINGS OF REAL ESTATE DEALINGS, BUT MR. MENKITI SEEMS TO HAVE A GOOD FIX.

QUESTION: DOES HE ENCOUNTER FORECLOSURES IN HIS RESIDENTIAL ACTIVITIES? HE DOESN'T MENTION THE TOPIC.

Posted by: B.S. | September 9, 2008 9:05 PM

very interesting topic as more people would like to know more about real estate , Thanks as usual Tom

Posted by: Farhat/Subway | September 10, 2008 9:13 AM

I wish i had the foresight and guts to do what he is doing... he will be a big success here betting on DC.

Posted by: wishful thinking | September 10, 2008 9:41 AM

Great post and interesting comments! I work for the Menkiti Group and am very excited to see Bo's accomplishments and the company's social mission highlighted in this piece. If you want to learn more about the company or the real estate services we offer, you can visit our website at www.menkitigroup.com, or email us: info@menkitigroup.com.

To answer the question about foreclosures, our sales team does some work with foreclosures but the majority of the properties that the company has renovated have not been foreclosures.

Joe, you are certainly correct in pointing out the challenge of finding good vendors and contractors. Feel free to contact us directly if you are interested in learning more about how we manage the process and how we help our investor clients do the same.

Posted by: Mary Hodges | September 10, 2008 11:15 AM

Great to see someone who is successful who has a social mission. helping to improve communities obviously helps raise property values too. Great work. Tom, once again, an interesting profile.

Posted by: Jill Davidson | September 10, 2008 6:25 PM

Why is this guy not running for office yet?

Posted by: Yaniv | September 12, 2008 1:48 AM

Congratulations to the Menkiti Group and to Bo. It's wonderful to see a CBE (Certified Business Enterprise) in the District having success.

Posted by: Guy Brami | September 15, 2008 2:37 PM

On a personal note... Bo was our agent when my husband and I bought our first home 2 years ago. He was unlike any agent we had previously met with.... We felt like we were working with a family member. Happy to hear of his success!

Posted by: Sarah Robertson | September 15, 2008 2:52 PM

Bo's story is indeed intriguing. For someone to have the foresight to develop in an untapped market and truly care about his clients is remarkable. I live in Brookland and am very proud to have a development and real estate team so committed to our community. Keep up the good work Bo and The Menkiti Group.

Posted by: Ria N. | September 15, 2008 10:32 PM

Hi All
Iam based in United Kingdom and currently struggling with debt. Tried everything. Looking for help.
Currently I have debt of 10000 will an IVA be suitable for me.

Posted by: tremblerfromuk | September 17, 2008 9:48 AM

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