We were lucky to catch up with David Halabu recently and have shared our conversation below.
David, thanks for joining us, excited to have you contributing your stories and insights. Can you share a story with us from back when you were an intern or apprentice? Maybe it’s a story that illustrates an important lesson you learned or maybe it’s a just a story that makes you laugh (or cry)?
I had two meaningful college internernships that shaped my career path more so than any class I took in four years of college. The summer between my Freshman and Sophmore year in college I worked as an unpaid intern for a stock broker at Prudential Securities in Detroit, Michigan. This was a friend of the family, so it was more a 2 day a week observational internship where I would help the stock broker with anything he needed from getting lunch, to reviewing soon to be earnings of companies, to preparing any literature for a client meeting. I always knew I wanted to work in finance and thought I wante to be a stockbroker, but that summer I realized that being a stockbroker was more like being a psychiatrist, accountant, salesperson, and less of a actual stock picker. Holding the clients hands through tough times, trying to solicit and attract more funds under managment, trying to talk clients away from buying risky penny stocks. This was definatly NOT what i envisioned for myself as a career. The summer between my Junior and Senior year, i was accepted to intern at a hedgefund in New York City. This I thought was going to set me up for a career on Wall Street. It was a small hedge fund, where the fund manager worked out of the trading desk of a middle sized brokerage firm in mid town. It was a distressed debt fund, of which I knew nothing about, but I was just excited to be moving to New York for the summer and working for a fund. What I learned through that summer was that to be a good distressed fund manager, you needed to be able to read and read and read through legal, bankruptcy, financial filings. The devils were in the details and you needed to search long and hard to find that edge. While I was on the desk, reading through assigments the manager had me do, I was seated near the trading desk. There were a number of traders discussing ideas, trades, macro events, etc. This was the “aha” moment in my life, as I was always good at spotting trends, recongnizing patterns, etc and during my lunch breaks or after work, I would pick their brains about what they do, why they certain trades, etc. It was at that moment when I knew I wanted to forge a path , not as a stock broker, or a distressed debt analyst, but as a stock trader.
During my senior year of college, I interviewed and recieved a number of offers on Wall St , to work as an analyst, consultant, investment banker, but I ended up chosing the lowest starting salary position as a propietary trader at a small firm , and that decision changed the course of my life forever.
As always, we appreciate you sharing your insights and we’ve got a few more questions for you, but before we get to all of that can you take a minute to introduce yourself and give our readers some of your back background and context?
My name is David Halabu and I am born and raised in Michigan as a first generation son of immigrants. My parents are both from Iraq, and we are Chaldean Christians, which is a minority Christian Catholics originally from Iraq. As a son of immigrants of middle eastern decent, growing up in a very blue collar , hard working Midwestern state of Michigan, I was always proud to view myself as an underdog, who never had things come easy and always had to work harder then others to stand apart. I attended Tulane University on a full academic scholarship, and after graduation went to work on Wall St as a propietary equity trader in Jan of 1998. I always kept that underdog chip on my shoulder, and used it as motivation to out work and out hustle those around me. I started as a trading clerk , worked my way up to trader, and within 2.5 years, I was given an offer to move to a firm, Assent LLC, to run a trading desk. I ran a trading group in NYC for Assent from mid 2001, moved to Miami in Oct of 2001 and subsequently continued to trade and run a desk until 2011.
On the business front, during my trading career , I was always actively investing in different businesses and ventures, but never as a principal. I used the systems and methods I used as a trader , gauging risk vs reward , in all investments and even life decisions. In late 2011, I decided to leave the trading world , as I believe there was a once in a generation opportunity to purchase real estate after the Great Financial Crisis and it needed my full attention. I linked up with my soon to be brother in law and we started what eventually became Group 10 Capital Management, our holding company. We started by purchasing defaulted mortgage notes and running those notes to foreclosure , REO, or sale. From note buying, we then started lending to home investors, buying distressed homes , distressed small apartment buidings, commercial deals, pretty much anything we thought we could purchase for a discount and add value to . We used all of our own money, borrowed money , started credit lines, etc. It was a very targeted risk reward play, and thankfully it worked out very well for us.
What we are proud of at Group 10 is that we have formed many partnerships when it come to the real estate space, and we are happy to say that we are still working with the vast majority of those whom we have grown to work with over the years. We currently have developement projects with a number of groups that we have done deals with for a couple years now. While we are not lending as much as we used to, our former loan originator is still a good friend and we exchange deals with him and his group on a continuous basis . We constantly try to stretch our muscles, so in 2022 we sold our 1st group up commercial development, a JV we competed in Wynwood, and are in the final stages of a full Opportunity Zone Warehouse to Office conversion as well as the final planning stages of 195 unit apartment development that we are leading near Hialeah FL.
Since the growth of Group 10 and the strategic decision to diversify away from only Florida real estate in 2018, we are now active with JV industrial, retail, and single family rentals in Michigan , working with a real estate private equity fund concentrated in South and North Carolina focused on Single Family Developement, as well as owning a running 3 Servpro franchises in South Florida. We pride ourselves on not thinking we know everyrhing, always asking, meeting with others, and trying to learn, as well as not being afraid to work with others as our standing motto is 1+1= 3 when working in synergy
Can you tell us about a time you’ve had to pivot?
My business partner and I were starting a Crowdfunding site after the Jobs Act was enacted in 2012 called Yield Crowd. The thesis of the site was to connect high net worth iaccredited nvestors looking for Yield , with syndicators who had deals that had high yield such as Bridge Loans or Structured Settlements. We were not tech guys, but finance guys, so as we started forging deals with high yielding originators (Lenders in different markets, etc). We had a lot of trouble building out the tech portion, and we started to see some larger players get into the game , but in a more national , direct lending way. This threatened the business model as we relying on investors to fund deals, but larger players with cheap bank financing were able to “undercut” traditional syndication rates. This led us to abondon our plans to create a national platform and instead get a Florida lending license and focus by partnering with some of these bank funded non traditional lenders, on funding Florida based bridge loans, which we successfully have done since about 2014 with our company Refresh Funding. This pivot lead us to be involved not only as lenders , but eventually also as principals in over $200 milllion worth of loans , rentals, fix and flips, and developements in Florida real estate.
Let’s talk M&A – we’d love to hear your about your experience with buying businesses.
In 2018, My partner and I had a portfolio of rental homes, apartments, homes we were fixing to flip, as well as a book of bridge loans with others we lent money to in the South Florida market. A hurricane category 5 was moving toward south florida and everyone was forced to evacuate. Luckily , the Hurricane Irma weakened a bit and moved to the west so South Florida was spared from any major damage. That made us think about our concentration of business in Florida, and we thought that if a major hurrican hit, we would immediately lose most of our income and be battling insurance companies for the foreseeable future. I decided we needed to purchase a business that incorporates our experience in South Florida with construction and rehabs, along with cash flow that would help during a real estate shock event or slowdown. We ended up deciding to find and purchase a restoration company , and in 2019 closed on purchasing 2 Servpro franchises that were for sale near where we lived. The acquisition process was pretty smooth. The seller was joy to work with and because it was a franchise we had a lot of support from corporate regarding training and questions. We bought a business we didn’t know much about, but the previous owner had been in it for almost 30 years, so he was not current with technology and didnt have the appetite to do add on work, which we as hungry and aggressive business people were more than willing to take on. Since the purcahse we invested heavily in technology, online marketing, insurance program work,, storm travel and construction services, all of which have added and grown the business almost 2.5x since we purchased it 3 years ago.
Contact Info:
- Website: www.10llc.com
- Instagram: https://www.instagram.com/servpro_northmiami/?hl=en
- Facebook: https://www.facebook.com/servproNorthMiami/
- Linkedin: https://www.linkedin.com/in/david-halabu-265183/?trk=public_profile_browsemap
- Twitter: https://mobile.twitter.com/servpro10927
- Yelp: https://www.yelp.com/biz/servpro-of-north-miami-hollywood