Vital stats
Name: John Petras
Company: RockFarmer Capital
Title: Co-Founder and Managing Principal
Age: 49
Hometown: Flushing, Queens
Currently living in: Manhasset, Long Island
How many buildings does RockFarmer own?
We own and manage more than 30 buildings with a total of 2,000 units. Most of them are prewar rentals, condos and co-ops in Manhattan and Queens. The majority of the rentals are market-rate. About two-thirds of our portfolio is in Queens. A quarter [overall] is in Astoria.
You started your career in the luxury garment business, right?
In 1986, when I was a junior in college, I spent Saturdays helping my father, who worked in fur and shearling manufacturing. In 1987, we took over an abandoned factory in Westbury, New York, and turned it into one of the first true fur-and-shearling outlets.
So how did you get involved in real estate?
Someone in the fashion industry told me, “The day you wake up and dread dealing with customers is the day you better get out of the business.” Well, I did. We were operating wholesale, distribution and retail operations. The fashion business was very challenging. I knew by the early 2000s that I wanted to be in real estate. I loved deal-making. On Valentine’s Day of 2006, I decided to sell my wholesale and retail business. I immediately transitioned into real estate. I went back to school for my master’s degree from NYU.
What did you do from there?
My brother-in-law [George Michelis] and father-in-law [Gregory Michelis] were in real estate. Gregory started Douglaston Realty Management — RockFarmer’s property-management arm now — [in 1977]. In 2006, George and I launched RockFarmer Capital. We decided to acquire properties and invest in non-performing debt and development. My father-in-law is vital to us because he’s been through different market cycles for over 40 years.
What advice has he given you?
When the market was booming, we hardly made any acquisitions. He felt that the market was overheated. We passed on hundreds of deals. That advice allowed us to hit the downturn. It gave us the confidence [and capital] to acquire maybe 40 properties by 2010.
Where did the name RockFarmer come from?
In Greek, my last name, Petras, means “rock.” The long translation of George’s first name from Greek to English is “farmer.” It also describes our business: taking a solid, ordinary product and finding a way to create something special.
Why is RockFarmer drawn to old buildings?
There’s an unlimited supply of bland, prewar buildings in New York that were once nice. There’s a tremendous opportunity to redevelop or rebrand — or brand, if they have no brand — those properties. If we don’t think we can add value, we won’t invest.
How extensively do you renovate them?
Each deal is different. We’re currently working on Astoria Lights, a 167-unit co-op we acquired about 18 months ago. We’re in the midst of adding all sorts of amenities: sky decks, a fitness center, bike storage and common courtyards.
Do you deal with tenants firsthand?
Not really. The first few years of the business, I wanted to understand the management side, so I dealt with tenants to get a feel for things.
Do you have any tenant horror stories from that time?
The first tenant encounter I had was when I bought my first building, in Astoria, in the mid-1990s. I was so excited, I wanted to walk through the building and introduce myself to every tenant. I started at 7 p.m., and by 9:30 p.m., I was on only the second apartment. The first two doors I knocked on were the homes of rent-controlled tenants. The prior owner didn’t invest much money, so the apartments needed work. ‘The plumbing makes noise, it’s leaking, the super doesn’t pay attention to me.” I was young and naïve, and I learned my lesson. I never made it to the other 22 tenants in the building.
Have you considered buying in other boroughs?
We don’t know the Brooklyn market that well. It’s hard to get comfortable there because the whole market is just so hot. We broke into the Bronx by accident in 2011. We bought some non-performing notes and ended up owning some of those properties.… We took over a 61-unit building with 748 violations. Within 12 months, we cleared all but 20 violations. We’re now in the process of selling that building. We sold a building for $18 million last year on the Pelham Parkway. After we sell this one, we’re out of the Bronx.
What appeals to you about making deals?
I love poker — and the negotiating aspect of acquiring properties. A lot of what we buy has complicated ownership structures, usually estate or bankruptcy issues.
Do you play poker with others in the industry?
I play poker once a month with friends. I do jump into the Massey Knakal poker game once in a while. Peter Von Der Ahe of Marcus and Millichap also has his real estate poker game. Those are a lot of fun. But I generally stay away from playing with the real estate guys.