In 1999, Miguel Poyastro completed what he thought was a one-time project converting apartments into condominiums in Miami Lakes.
Little did he know the venture would turn into a $365 million enterprise in just seven years.
When Poyastro finished that initial project, he and his partners decided that similar conversion opportunities were too good to turn away, so they created GREC Conversions Ltd., with Poyastro serving as managing partner. Their biggest challenge wasn’t converting South Florida apartment buildings into condominiums it was building a business from scratch.
With a fledgling business, Poyastro kept things manageable in the first three years, limiting the company to one project each year. By 2002, GREC Conversions was working on two projects simultaneously, and the company was on its way to rapid growth.
But along with that growth, Poyastro has had to deal with a number of challenges, including finding the right people, developing an infrastructure and fighting for space in an increasingly competitive market.
With three conversions completed in the first three years of operation, Poyastro had a better understanding of what his people could do and what skills were required to successfully complete a project.
Poyastro limited the company’s growth because it takes a special skill to manage a condo conversion project. When GREC began operations, there were few companies in the conversion field, which meant that experienced project managers who could handle more than one project at a time were hard to come by.
“It is very hard to hire a manager from the outside,” Poyastro says. “Somebody that can hit the ground running is very hard to find. That may not be so in the future; the environment has become very competitive. For us, and it continues to be, the only way is to hire from within.”
That is a slow process, and it has limited the company’s growth. But as GREC continues to grow, its talent pool grows with it.
“In the early days, when I was a de facto project manager for everything, (project managers) worked with me closely and knew what I wanted,” Poyastro says. “They have a lot of experience, and now it is they who are passing on this knowledge from their experience working with me to our onsite managers. Only through experience and trial and error are they going to develop into having the potential to be regional managers and move to other markets. It’s been hands-on training.”
Because he’s handed off the mentor role, Poyastro looks to his replacements to find future leaders.
“I depend on them to tell me who has talent and which people have the potential to be given more responsibility,” he says. “I always tell them, ‘The better the people you have around you, the easier your job is going to be, the better you’re going to look.’”
The business at all levels is about finding the right people and keeping them.
“Growth means that you’re doing great and people feel safe in their jobs,” Poyastro says. “There’s security. There’s also something to be said for being part of a winner, being part of an operation that everybody knows.”
Developing a foundation
With experienced individuals in place, Poyastro turned his attention to other areas of running and growing the business. As the company grew from 10 employees to 140, he recognized it needed more formal policies and procedures, things he wasn’t able to provide. He addressed those problems by hiring a chief financial officer and a human resources manager.
“It simply got too big for me, financially, to properly manage the company,” Poyastro says.
With a CFO, he can now focus on acting on financial data rather than on gathering it.
“It’s just not the best use of my time,” he says. “We’re just too big. We needed her two years ago.”
Poyastro also realized the need for a formal human resources department.
“Business is definitely all about people,” Poyastro says. “In order to attract the right people, you have to create a certain atmosphere of job security and continuity. We found that, over time, just paying people more wasn’t sufficient. People like a certain compensation package that includes certain benefits.
“We needed the human resources department, which is very important, and a CFO, who is still going through our operations and procedures and setting more formal procedures and deadlines so that we can manage the business a little more formally due to our geographical distance between sites.”
These new positions are key to keeping the company stable as it continues to grow.
“Retention of employees and keeping the right people become important,” Poyastro says. “We started paying attention to those issues. That’s how we decided we needed a human resources department. It tends to be underemphasized, but when you have as many employees as we do, there is something going on every day. There are questions. There are concerns. They need to have somebody to talk to. People don’t understand how important human resources really are in managing employees’ questions and expectations.
“The clearer everything is for all our employees, the happier they are. Uncertainty brings a little distrust and unhappiness.”
Dealing with the competition
The industry’s rapid growth has not gone unnoticed. A number of new players have forced Poyastro to look at GREC’s position in the marketplace and reassess the way the company does business. It has also meant getting back to the basics as competition increases.
“There are many situations in which not just us but a lot of people sold half the project in the first day,” says Poyastro. “Now they have to go back to doing their proper presentations and their follow-up real sales, real marketing.”
Poyastro makes sure that his sales staff focuses on those fundamentals by discussing them during individual sales meetings, and he attends some sales presentations to make sure he knows the issues and concerns of consumers.
For example, financing has become a concern for buyers as interest rates increase, and Poyastro works with lenders to make sure consumers can get the financing they need to buy.
The increased competition also means putting more emphasis on marketing initiatives.
“We look at the advertising budget that has been (neglected),” he says. “We hadn’t had to advertise or market as much as other times. We’re going to have to spend those monies and get creative again and court the broker community.”
Competition gives consumers more options, so Poyastro has searched for ways to differentiate his company.
“We like to be the low-cost provider,” he says. “We focus on that end of the market. Since 2003, we’ve focused on garden-style apartments.”
Instead of offering a 1,100-square-foot apartment that must be sold for about $250,000, Poyastro converts a building down the street with 975-square-foot units with similar amenities that can be sold at $195,000.
“There are more buyers at that level, and as we move into a market that is more difficult, the absolute lower selling price is going to be critical,” he says. “Affordability is the question right now. We like to be the low-price leader. We know how to market. We know how to get people financed. We do very well there.”
Competition is also forcing Poyastro to look to other areas of the country to pursue condo conversions.
“Our profit margins have been squeezed,” Poyastro says. “There’s no doubt about it. We’re looking for markets where the competition for the buildings to be converted is not as aggress
ive as it is in Florida.”
In addition to exploring other areas, Poyastro says the company must work very quickly to continue growing but has to be cautious to ensure continued success.
“We never (evaluate a project) pro forma for more than the current pricing in the marketplace,” says Poyastro. “The deal has to make sense today. We have to be able to compete today.”
HOW TO REACH: GREC Conversions Ltd., (305) 225-7522