Philip Michael Is a Real Estate Entrepreneur on a Mission
The young developer is building an app, an empire, and a following
By Chava Gourarie December 15, 2020 6:27 amreprints
It was a panel like thousands of others held across New York City, back before COVID put an end to all of it. On a December night, in the neon-lit event space of a Bushwick hotel, with a row of blinking arcade games along one wall, three panelists sat under a large screen. They were discussing entrepreneurship. The audience — a diverse and young mix of would-be entrepreneurs, sat on red bistro chairs amid strewn winter gear — listening closely.
The panelists included Nooklyn CEO Moiz Malik and real estate entrepreneur Philip Michael, in his trademark beanie and dreads, who had helped organize the event. “After the panel, we’re all there answering questions from the people in the audience,” Malik said. “Philip was there alongside, teaching people for two to three hours.”
Born and raised in Denmark, the 30-something Michael arrived in New York in 2014 with $79 to his name. Within six years, he has parlayed that into a real estate portfolio worth $250 million, a substantial social media following, and a mission to make real estate investing accessible to communities of color.
As a self-described “crazy Danish kid with dreadlocks,” Michael is aware that he doesn’t look or behave like the typical real estate mogul. “There’s this illusory misconception in people’s minds that wealth and money is only for those that don’t look like me. Which is nonsense.” Michael said. “But, if you feel it, then it becomes a reality.”
To counter that, he’s anointed himself educator and sage. He runs a media site called WealthLAB, with content to “empower creators, hustlers and doers.” He also dispenses real estate wisdom on Instagram and hosts regular Zoom lectures and weekly Facebook Live Q&A sessions — all of it branded in Silicon Valley turquoise and bold black font.
But spreading the word is not enough; Michael wants to spread the wealth. More specifically, he wants to mint 100,000 millionaires of color by 2030. To reach that goal, he’s developing a crowdfunding platform called REIFY, where investors can invest in commercial real estate. He has already completed two crowdfunding campaigns on existing platforms, one for his company NYCE Companies (pronounced “nice”), and one for a ground-up development, a student housing project near Temple University in Philadelphia.
Investors needed just $79 to invest in the Temple property — “the price point of curiosity,” Michael called it — and a callback to his early New York days.
And, he quickly confesses, a gimmick designed to draw investor interest.
His origin story and mission require a little more explanation than a one-line sales pitch.
Michael was born to a Danish father and a South African mother in Denmark, and was raised by his maternal grandmother for most of his childhood. His grandmother, who had been cast out of South Africa because of the family’s involvement with Nelson Mandela’s political party during apartheid, tried to impart her worldview to Michael. “[My grandmother] would say to me, ‘You have to work extra hard because you’re Black.’ She said, ‘This is your box, you got to maximize your box.’”
But, as a teenager, Michael lived with his father, a successful interior designer, and the contrast between the two worlds helped shape his own worldview. “Once I got with my father, there was no such box.”
Michael moved to the United States when he was 16, and cycled through several colleges and programs while figuring out his next move. After arriving in New York in 2014—with the aforementioned $79—Michael began the years-long process of securing a green card, and as a foreigner without authorization to work, scraped together a living from a variety of gigs, including writing, hosting a radio show, and later, a stint in marketing at the real estate publication Bisnow.
In 2016, Michael bought his first piece of real estate: a newly renovated, three-unit property in Jersey City for $750,000, financed primarily through a Federal Housing Administration loan and with the help of a partner. By the time the deal closed, the property value had risen to $800,000, and Michael later sold it for more than $1 million.
At this point, Michael reached out to his family. He and his father, Frede Christensen, had not been on good terms since Michael left home, and, in fact, were no longer speaking. But the budding real estate entrepreneur needed money to close on a deal in Baltimore. At first, his father said no, though he did offer to allow Michael to sell his shares in a property that the family owned in Denmark. However, once the two reconnected and Christensen learned more about his son’s work, he agreed to invest.
In 2017, Michael, his father and his nephew, Martin Braithwaite, a professional soccer player who now plays for the Barcelona club (yes, alongside Lionel Messi) but was unknown at the time, joined forces with $850,000 in seed money. Michael did all the groundwork, and the financial boost gave him some runway to keep investing while building up his skills and network.
And that is definitely something that Michael excels at. Eager to learn, eager to teach, and overflowing with energy, Michael tends to expect others to be as generous with their expertise as he is with his own.
“Philip’s more of a visionary and innovative thinker, but more than anything, he’s a connector,” said Matt Shapson, president of design and building studio PB+DC, and Michael’s construction partner on the Temple development. “He does have these big visions, but he does really well at connecting the right people.”
Michael met Shapson on an online forum about real estate investing, and went out to Philadelphia to meet him and his partner Michael Hallett shortly after. The two Philly residents, both Temple graduates, were just growing their own fledgling development firm, and gave Michael a tour of their properties and of the Temple University neighborhood where Michael was interested in investing. Before the day ended, they got a round of beers that cemented their friendship.
After their meetup in Philadelphia, Michael and Shapson stayed in touch, and eventually, they teamed to acquire land near Temple and develop housing for students. Michael was responsible for the acquisition and financing, and PB+DC took on the construction and development, including the permitting process, since they knew the Philadelphia market.
In March 2018, the partnership acquired a vacant lot at 2200 North 11th Street for $112,000, and, in January of this year, broke ground on a four-story, student-housing complex set to open this coming spring.
The project, a 17-room dorm, has a total capitalization cost of $1.5 million, according to the term sheet on the offering for the deal. The project will have coliving-like shared amenities, as well as all of the technological bells and whistles, and Michael brought in Malik’s Nooklyn to manage the leasing.
Not Like the Others
The common denominator between Malik, Shapson, Michael, and many others in Michael’s circle is that they’re not part of the established real estate industry.
The Pakistani-born Malik lived in poverty in Queens throughout his childhood, and said it’s rare to find people in the industry who didn’t enter by way of nepotism. “Both for myself and for Philip, the idea is that we don’t have that, so bringing something new to the table is the only way in,” Malik said.
And he’s in it because of passion, and not just profit. Malik helped build up Nooklyn because he saw that the real estate establishment essentially ignored lower-income renters, including roommate renters, because there isn’t enough money in it. He only got the job to begin with because Nooklyn’s founders lived in the Bushwick building where he shared a studio with four roommates when he moved back to New York after college— and still couldn’t make rent.
Michael’s approach, with its focus on outreach and inclusivity in addition to the bottom line, is refreshing, Malik said. “It’s rare to find a developer or someone thinking about [real estate] like him.”
For Shapson, too, the work is important for its own sake. “We take a lot of pride in what we do,” he said. “Working with Philip, most of our conversations are, ‘How do we get this deal done? How do we get from point A to point B?’ Not, ‘How much money are we going to make when we do this?’”
Everyone Into the Pool
Michael launched NYCE in January of this year, as the umbrella entity for the variety of projects he had underway.
That included an expansion of the Temple project, which had grown to include a plot of land just across the street from the first student-housing site The land, consisting of several vacant residential lots and an abandoned church, became Temple II, a second student-housing project with 80 bedrooms, that is set to start construction in 2021. Michael is also working with the City of Philadelphia to upgrade a nearby basketball court and park, and potentially integrate his development with youth programs offered through the park’s recreation center.
And that’s just one of several development projects underway or under contract, including another in Philadelphia and one in Jersey City as well.
But a deal with multifamily owner and developer LYND could bring Michael closer to his goal of closing the wealth gap. In October, NYCE partnered with San Antonio-based LYND, with plans to join forces on deals worth roughly $475 million, so that a portion of the equity is open to retail investment.
“We made room in every deal that we are currently active on to allow his group of investors to participate,” said LYND CEO David Lynd.
Michael cold-called Lynd after seeing one of the firm’s offerings on CrowdStreet, which is only available to accredited investors. “They only target high-net-worth investors,” Michael said. “So, I said, ‘Let’s bring this to people of color.’”
“We hit it off immediately,” said Lynd, noting that he loved Michael’s initiative of helping people of color become first-time investors. “Philip and I, our common ground, what he and I gravitate around, if you can teach [people] to save money to invest money, that’s really changing people’s lives.”
Lynd was impressed by Michael’s real estate knowledge and instincts. “He’s got a very good nose,” Lynd said.
So far, the deals include a 327-unit apartment complex in Margate, Fla., acquired for $56.8 million, and a 280-unit housing development in San Antonio at 7106 Culebra Commons, among several others.
They’re structured so that the retail investors come in at the general partnership level, though it wasn’t clear how much of each deal would be offered through the crowdfunded offering. While restructuring the deals took some work, that was the simple part, said Lynd. “The real work was making sure Philip and I had the same mindset,” Lynd said. “The minute that we got on the same page, the structuring was secondary.”
Part of the reason they clicked is because Lynd has already been involved with helping minority children. He has financially adopted several children in the community, paying for their schooling, mentoring them through the college application process, and watching them flourish into successful adults, he said. “Every year, I reload with six or seven kids,” Lynd said. “The way I see it, every kid that you can produce that turns into someone who has a job and pays taxes, and is not a drain on society, it’s a win for the whole world.”
While the investment opportunities will be open to everyone, and available either through Michael’s REIFY platform or other third-party platforms, the venture will tap into Michael’s existing network of new retail investors and his social media following. “[David] brings the institutional-level projects, and we bring the movement,” Michael said.
In October, NYCE closed its crowdfunding offering for the Temple property, which was available through crowdfunding site Republic, having raised $360,000, the maximum possible. More than 1,300 people invested, many of them first-time investors.
“I always wanted to invest in real estate but was never able to because I’m not rich like that,” said first-time investor Bobby Cole, who contributed $79. “I invested in Philip’s project because of his vision on where he’s trying to take Temple, a high-tech apartment building! The place is practically computerized!” Another investor, who invested $500, heard about Michael through a video series he did with Tiffany Aliche, a financial guru known as “The Budgetnista,” whose content focuses on women of color and who endorsed Michael’s efforts.
Like the Temple offering, all of the crowdfunded deals are already financed, and the retail investors essentially replace Michael’s equity in the deal. “I don’t want to roll the dice with people’s money, because at the end of the day, the fact that I’m even in a position to work hard like this … you have a responsibility, is all I’m saying,” Michael said.
NYCE has also raised over $1 million on Wefunder and Republic for the company itself, and for REIFY, where users will be able to track their existing investments and participate in future deals.
Michael is never not teaching, and he created WealthLAB back in 2018, but it was over the past year that the social media side grew more intensive.
“When we got to the point where we were breaking ground, I thought to myself, ‘Wow, wait a minute, I have done this practically — obviously, you know, I asked a lot of questions — but practically by myself.’ That lets me know that, OK, if I can somehow get over that hump and do that, literally anybody can.”
Much of the content serves to push back against the narrative that real estate investing is a secret science that only business school graduates can understand.
In an Instagram video titled “Credit card or nah?,” American amateur boxer Cam F. Awesome talked about the perils of credit cards. “Like 95 percent of Americans are in debt, ” he said. “If 95 percent of people are failing at it, it’s not easy as people are advertising.” Other videos explain the benefits of investing in real estate investment trusts (REITs), what a cap rate is, how to snag an FHA loan, and a range of other topics.
“I’m very jealous of his ability to explain financial concepts in a very accessible way,” said Drew Sterrett, co-founder and CEO of crowdfunding platform LEX.
“There’s really basic stuff that I talk about that is easily Googleable,” Michael said. “Once I speak it, because I speak about it simplistically, and they understand it, there’s a shift that takes place. They go, ‘Wow, it really is for me,’ and it’s very powerful. That’s really what I do. I am just hitting people on that level.”
Michael plans to launch a NYCE app in 2021 and bring 10,000 new investors aboard; and he’s targeting big investors abroad, including his nephew’s Barcelona teammates. Michael also wants to test an “accelerator meets co-living” model at Temple, and is in the process of launching a TV show.
And he still has to create 100,000 millionaires.
“People can call me idealistic, and even if I fail to create 100,000 millionaires, or whatever the case is, even if it’s one, we’ve made a positive contribution.”