Twenty years ago is exactly when Elliott, my grandson, was born and he is now in his first year at Duke. That puts a perspective on it. Twenty years ago, my company, Orsid Realty, was kind of old-fashioned. I am still kind of old-fashioned.
When Carol Ott started Habitat, we had lunch at the Fisk Building at a cafeteria downstairs and I encouraged her to do it. At the same time, Mary Ann Rothman had already started her organization, the Council of New York Cooperatives. I was very, very excited about her organization, and I was very, very excited about Carol starting her magazine.
Our business was much smaller then. We owned a number of our own buildings, mostly older, rent-controlled ones. We were sort of buried under the rules and regulations of the rent control, which were very difficult and very oppressive. Converting the properties to cooperatives was one way of getting out from under those rules and regulations.
Many people in the buildings we co-oped later moved and they knew that we did a good job as manager, and when they became members of their boards, they eventually brought us to their buildings. That's how our management business really developed.
It's strange because I never planned to do this. Basically, by profession I am an electrical engineer, so when I came to New York, I was working as an electrical engineer. My father was in real estate. He had a couple of heart attacks and my mother pleaded with me to come in to the office to help him out for two weeks while he recovered. So, I promised them that I'd come in for two weeks and the two weeks stretched out to a long time.
Some things never change. As a manager, you're never paid enough. It's one drawback: somehow, the management of the co-ops is not compensated at the same level as the management of other financial assets. That's because 20 years ago, a lot of people jumped into the management business, and they felt that the only thing that they needed in the business was a telephone, a smile, and good public relations. So boards could pick from a lot of different firms.
But it takes more to manage, and if you look at it over a period of 20 years, there are a number of people who were in this business, who are not in it anymore. In fact, if you set your cornerstone, say, 20 years ago and you say, who was in this business 20 years ago and who's in this business today, there are very few of us. Twenty years is a long time.
It is difficult because you really cannot do an excellent job for what the people want to pay. At the interview, you give them a decent price and they will say to you, "There are five people who'll take it at 30 percent less than you want to take it." At that point you have to ask yourself, "Do I want to take that building at 30 percent less?" Because, you know that you cannot really do an adequate job, and this is a big dilemma. If people take on to manage a co-op, and then they start skimping on the service, actually they are doing a tremendous disfavor to the co-op and to themselves because, sooner or later, the co-op will find out they are not getting good service, and the reputation of the managing agent will go down.
Do the shareholders see that it makes a difference? Is their apartment losing value? The apartment may not be losing in value but if you take some buildings and you find out that their maintenance is much less than it is for an equivalent apartment across the street, it probably has a lot to do with who is managing the building. The maintenance is directly responsible for the prices that you get when you want to sell your apartment.
And that's attributable to how smart the manager is, and what the manager is doing. I was very much involved in the building where I live. Our maintenance is probably 30 or 35 percent below the market value. Why? Because when it came to buying the windows, I was involved. When it came to rewiring the building, I was involved. When it was time to refinance the mortgage two or three times, I was involved. So our maintenance is probably 20 or 25 percent below the maintenance at a similar building.
The individual living in the apartment doesn't see that; maybe the board doesn't see that. A problem has been that the board members think that they are experts on real estate. They are not. And, if you do things that are not 100 percent right, you pay for it eventually. Basically, a lot of board members think that the whole world revolves around them. Maybe there is a little bit more sophistication now because there is more knowledge available.
I have to talk about technology. Because I was so vehement about not needing computers. I was at the age level that computers sort of intimidated me. Someplace along the line, I said, "You know, you live in a different world, you have to accept it." We accepted it here in the office way before that, but I personally started to learn a little bit about it about two or three years ago, and it's a completely different world.
My father was a very hard worker. The people today don't put in the time that the old-timers did. The old-timers had their noses to the grindstone like 15, 16 hours a day. My father definitely would be happy that the company he founded is still in existence. I suppose he would be surprised. He would be surprised with a computer on every desk, with the cell phones, with the changes because, once in a while, I am surprised! I still cannot accept the idea that you can phone from one cell phone, being in the car, going to New Jersey, calling somebody in his cell phone who is going to Connecticut. It still baffles me.