When it comes to housing, 2022 was the year of the Black Swan in Rochester
Dr. Elaine and Nick Stageberg's Black Swan Living housing firm has been growing dramatically in the last few years. In 2022, they more than doubled their rental units in Rochester and Byron with the expectation of ending the year with 970 local units under their ownership and management.
ROCHESTER — The origin of one of the Med City’s fastest growing housing companies, which more than doubled its apartment and townhome holdings in 2022, started with three German Shepherds and evolved into a black swan.
The story starts in a pretty familiar way … familiar in Rochester, at least.
Elaine and Nick Stageberg were living in Oklahoma City. He was working in technology with degrees in computer science and religion. Then Elaine matched with Mayo Clinic for her medical residency on her journey to become a doctor. Since Nick grew up here, they knew that meant moving to Rochester.
They were part of the annual Rochester housing rush in the wake of the residency matching. While finding an apartment across the country in a short time period is always challenging, the Stagebergs had a 9-month-old baby and three beloved German Shepherds — Kaiser, Gretchen, and Norris.
“We had great credit. At one point, I think we were offering to pay the entire year of rent ahead and no one would rent to a family with three German Shepherds. Ultimately, we decided to buy a home sight unseen, which was incredibly scary,” recalled Dr. Elaine Stageberg.
While that house worked out well and they lived there for six years, the experience planted a seed.
“We had done a small amount of real estate investing in Oklahoma City and we knew we wanted to continue being real estate investors. … I think one of the opportunities as a business person is that you get to solve problems. Whatever that thing that someone has pain in their life, as a business person, they get to say, ‘How can I help others from having this pain or this struggle?,’” said Elaine. “We really felt this calling to provide great housing for people with pets. We built our whole business plan around that.”
Their real estate company eventually evolved beyond just a focus on pets to address Rochester’s unique housing situation. They ended up leaving their jobs and focusing on a second career in real estate investing under the name of Black Swan Living.
While the firm has quickly gained traction locally, 2022 proved to be a big year for Black Swan.
On Dec. 31, 2021, Black Swan owned and operated 390 housing units in Rochester and Byron.
“Today, we have 842,” said Nick Stageberg earlier this month. “And we should have another 130 by the end of the year. So we should have 970 units before 2022 ends.”
Following the same game plan that they used with properties like the Furlow Apartments, the Raymond Apartments and t he Zick Apartment Building , they plan to follow up the purchases with what they call the “fun part” of their business. That means renovations and upgrades to the properties that they drive by almost daily.
Black Swan Living now includes a private equity fund with local and national investors, but no institutional capital, to provide the financial backing. They also have a charitable foundation, a management company, a cleaning staff and a maintenance team. The Stagebergs hope to add an appliance company to the mix soon. The goal is to be a one-stop shop for rental housing.
“We do a lot of vertical integration. It's hard. It's not easy to start a cleaning company or a maintenance company or an appliance company, but that's how we get the level of service that we demand for our tenants,” said Nick Stageberg. “I think our staff quadrupled this year. We probably only had five or six employees at this time last year. We have 27 full-time employees today. And there's probably about 100 people under contract doing something somewhere for us, right this second.”
Elaine Stageberg added that another important element of their success is their customer service team.
“We really think that the rental industry should be a customer service industry. That's not always been the case over the last several decades, in many markets including Rochester. So we staff our team with folks who come from customer service backgrounds… head servers at some of the best restaurants in town and people who manage other small businesses,” she said.
Overall, the Stagebergs are forging their own path in the private equity/real estate landscape. Their unique approach spurred the creation of another feather on Black Swan’s back — teaching others about their methods. That includes things like creating a charitable foundation to support the communities where your business is based and providing profit-sharing to employees.
“The demand for that teaching is very high, but there's only so many hours in the day. We're really focused on building our portfolio, building our company and growing our team here,” said Elaine Stageberg. “I think we have a skill set that can really change people's lives in terms of financial freedom and people clearly want it, so we created a real estate investing course.”
Giving back to the community is a big part of the Black Swan approach. They have helped build a playground for the Rochester Arts & Sciences Academy, renovated and upgraded the kitchen at the Dorothy Day House and made Nick’s long-time dream of a dog parade come true by sponsoring the Rochester Downtown Alliance’s Dogs Downtown event.
“There's just so much goodness to be created. That's what led Nick to leave his career in IT and myself to leave my career in medicine, to really build this company and to make it our life's mission,” she added.
After such a big year, what does 2023 look like for Black Swan?
“We'll see how it goes, but right now all of the signs point towards a similar trajectory of growth for the future,” said Nick Stageberg. “We've always been very growth-oriented. That's just kind of who we are as people. The question always becomes, ‘Why wouldn't we keep growing?’”