Three Brothers: From Basketball to Business
Brothers bond over basketball and carry teamwork into business.
“That’s a foul! That’s an offensive foul!”
“Take a charge then.”
“I’m not taking a charge on gravel!”
“You calling a foul or not?”
“… It’s just, if I cut you off, you can’t go right through me.”
“All right, check.”
These are my two older brothers, Paul and Joel. We’re at the “Bean Courts” on the University of Oregon campus, a slowly dilapidating set of six full basketball courts four blocks from our house. We pretty much live here. I watch my brothers day in and day out as they practice various moves hundreds of times in repetition. We prepare for, even obsess over, every move, every game-time scenario until the movements become instinctual. This level of obsession would define us more and more as we grew older.
At the time, I didn’t fully comprehend the value or significance of money. We’re lower middle-class. Our father is a pastor; our mother, a third-grade school teacher. Our parents drive station wagons, we shop at goodwill and we rent rooms in our house to college students to help get by. We learn work ethic at a young age: working summers at a local flower nursery and doing endless projects around the house for our father. He has us learning Greek and Hebrew as well. Our father is a brilliant theologian and teacher, though his expertise does not extend to business or finances.
We often overhear our parents voicing their fears and anxieties about the prospect of running out of money. I believe this fueled much of our ambition to create a different financial reality for our own families and children. What we lack in material goods, our parents more than make up for with love, wisdom and parental devotion. My brothers and I go to school, have friends and, of course, get into plenty of trouble. But, for the most part, our upbringing consists of three main disciplines: theology, chores and basketball.
We would go on to have considerable success in basketball, including earning all-league and all-state honors and winning a state championship at Churchill High School in 2001 at the highest level of prep competition in Oregon. We each earned scholarships to play small-college ball. But, the most important things we learned were the value of hard work, the importance of teamwork and how to persevere through challenges and difficult times. They are all lessons we carry with us to this day.
A Bounce to Business
After college, it quickly became clear we would go into business together in some way. We had become quite entrepreneurial at this point, and as best friends and often teammates throughout the years, we knew we worked well together. In fact, it’s more accurate to say we had always been, and continue to be to this day, virtually inseparable. It was a no-brainer. The big question was, “What type of business do we go into?”
During this period, we read many influential books. One especially stood out to us: “Rich Dad Poor Dad.” It laid the foundation for our desire to build passive income and focus on ongoing cash-flow over one-time profits.
We were also influenced by the wisdom of Warren Buffett. To this day, we feel he and his mentor Benjamin Graham have coined the single greatest answer to the question “What is investing?” As quoted in the book “The Intelligent Investor,” it is something that “through careful analysis promises safety of principal and an adequate return.”
As a result of these influences, we determined that real estate, and specifically multifamily real estate, was the industry that made the most sense for us. There was just one small problem: We had no money.
About this time, our father made a bold and daring financial decision—something very uncharacteristic of him—that would forever influence our course. He took out a second mortgage on the home we grew up in and invested his entire life savings of $200,000 to help us start our real estate investment firm: Worcester Investments.
In hindsight, it was a much riskier investment than I realized at the time. The important thing is our father believed in us, and we believed in each other. What we didn’t know is how soon that belief and commitment to each other would be tested.
Full-Court Pressure
After realizing our home state of Oregon, at the time, offered little in terms of cash flowing real estate, we moved our young families to Kansas City, an ideal market for the type of real estate opportunities we were seeking.
Some of the most difficult, but valuable, few years in the history of our company ensued. Our first office was 120 square feet. The building sewer line was exposed and ran down the back wall; there were no windows. We paid $100 per month for that office, and it was overpriced.
I personally lived at the office for three months before my wife and our first child moved out to join me in Kansas City. Paul and his pregnant wife, Kiran, were rained on in the middle of the night the first day they moved to Kansas City. We were paying ourselves less than $2 an hour at this point, so we couldn’t afford much.
We bought small residential rentals: single-family homes, duplexes and fourplexes, and we ran everything ourselves. We leased the apartments, collected the rent (often late at night and mostly in cash at first) and learned the ins and outs of rental real estate one deal and one mistake at a time. We learned the hard lessons of partnering with the wrong person, making a bad purchase, hiring the wrong person, being seemingly perpetually low on money and, most importantly, how to grow from those lessons. It was grueling, thankless work. In terms of honing our skills, we were drinking from the firehose. Instead of practicing the correct footwork and form for our spin-move, we were obsessing over underwriting templates, management best practices, acquisitions negotiations, hiring and leadership and how to not repeat our mistakes.
A Winning Streak
In 2009, we had a breakthrough. We simultaneously bought our first larger-unit apartment community (60 units) and hired our first seasoned veteran in property management. Both had a profound impact on us. We experienced the benefits of economies of scale with an apartment community. All the units were in one place instead of spread all over town. We also learned that by finding and hiring the right people, we could scale our company and empower professionals who were better at property management than we were. Later that year, we bought a 96-unit property and then a 107-unit property. From there, we never looked back.
Today, we own an equity stake in and operate more than 3,000 apartment units in the greater Kansas City area, employ over 130 exceptional team members and oversee over $250,000,000 in real estate assets. In December 2018, we closed on 909 Walnut, a 34-story tower one block off the streetcar in downtown Kansas City. It has 152 luxury apartments along with almost 90,000 square feet of commercial space. It is the tallest residential tower in the Midwest outside of Chicago. Two blocks away, we’re getting ready to break ground on the redevelopment of the Flashcube building, bringing on 184 luxury apartment units with state-of-the-art amenities. One of only five dual stops on the streetcar is at its front door.
Just a Warmup
We’re grateful and humbled by the relative success we’ve had so far. As we see it, we’re only getting started. We love what we do. We plan to pursue our passion and grow our company for the rest of our lives.
Just as we did with sports, we’re taking something we love, seeking to be the best in the world at it and doing it together. Growing up, we had shared passions, aligned goals, deep friendship and a teammate/partnership interpersonal dynamic. Today, the only difference is the emphasis has shifted from basketball to business.
Jesse Worcester
Jesse Worcester is the co-founder and partner at Worcester Investments in Kansas City, Missouri. He can be reached at (816) 399-4190 or jesse@worcesterinvestments.com.
