Josh Schuster’s phone was blowing up.
Six of his development projects were sidelined by the pandemic. Work at a Second Avenue development stopped due to Covid closures, leaving a gaping hole in the ground. Schuster applied for a special permit to lay the foundation, then was shut down again by the Department of Buildings.
Defaults were mounting. Schuster faced several lawsuits, and his company, Silverback, was falling apart. Missed phone calls and voicemails buzzed in from investors, lenders, lawyers, contractors and other people looking to get paid. Schuster had to get a second phone to handle personal calls.
Young and blinded by ambition, Schuster maintained an image of success long after the reality had crumbled. As calls went to voicemail and his texts went unanswered, he kept his fancy Upper East Side apartment and shelled out money for private schools, country club memberships and a driver to shuttle him to nightclubs and networking events.
“I was not letting anybody see behind the facade as to how I was breaking down internally and how not only the foundations of my projects but also my personality were faltering,” Schuster said.
Aspiring dealmakers go into real estate for the large fortunes or chances to make their mark on the Manhattan skyline. But every development is built on a series of gambles and promises — to investors, lenders and contractors — that can’t always be kept. Some stories have happy endings.
But a bad bet or unpredictable shift in the market can cause a project to spiral, as some of the city’s biggest real estate players can confirm. A deal turns sour, condos take too long to sell and the keys go back to the lender or the project ends up shelved. The next deal always promises to fix the current crisis, and sometimes it does. Bruce Eichner secured the $167.5 million inventory loan that let him keep his 83-unit Madison Park condo development from approaching lenders at the very moment when sales began to pick up.
Some developers bluff and borrow their way through the low points; others collapse, disappear.
When Silverback shut down and Schuster moved to Florida, he had days when he didn’t want to get out of bed.
“When you’re losing investors’ money, that’s a very heavy burden to bear,” Schuster said. “And when a lot of those investors are also your friends and sometimes your family, that strain of disappointment is just another layer of emotional weight.”
Many — from Schuster to Eichner to Harry Macklowe, famous for his second act — come back, perhaps replacing their old hubris with hard-won mental fortitude and a deeper respect for the stakes of the game. They might make amends with family and friends or win back the trust of partners or lenders.
Others don’t. Last November, Los Angeles multifamily developer Artem Tepler died by suicide after a string of bad deals that he personally guaranteed. New York City developer Brandon Miller took his own life in July as his debts mounted and several development projects faltered. Both were reminders of the sometimes debilitating stress of the job.
Theory of the real estate personality
When times were good, Schuster felt invincible. After starting in real estate at 24, he had a streak of early success. He raised capital and built a network of investors — high-net-worth players and family offices who were willing to bet on him.
One of them was the $21 billion asset manager Silverpeak, which invested in a few of Schuster’s initial deals and invited his company to use some of its office space. By 2018, Schuster had 18 employees and more than $2 billion in real estate holdings across six different states. As his projects grew larger, so did his ego.
“Our average project size was $100 million, and so when you’re dealing with such large sums, it almost is sort of Monopoly money at that point,” Schuster said. “I thought I was untouchable.”
Success in any industry requires confidence and a certain level of comfort with taking risks. In real estate, those risks are magnified, with developers’ personal assets sometimes on the line.
“Well, I must be doing something wrong because I have condos that aren’t selling, tenants that aren’t paying rent, I have defaulting loans and two cell phones with people trying to reach me. And so that’s what’s going on with me.”
Real estate attracts people who not only can tolerate stress, but may be drawn to it, said Dr. Prudence Gourguechon, a psychiatrist and past president of the American Psychoanalytic Association. On the “Sensation Seeking Scale,” which measures risk tolerance, entrepreneurs and large-scale real estate investors typically score as “high stimulus seekers,” she said.
“You can’t be in real estate at a risky high level without getting a charge from it,” she said.
Risk takers also tend to be overly optimistic, said Dr. Michael Freeman, a psychiatrist who studies the relationship between mental health and entrepreneurship.
That could explain how they justify taking on enormous amounts of debt.
“They can fail to appreciate the extent to which luck is a factor in business outcomes,” he said.
Brooklyn developer Remy Raisner established a $25,000 credit card line to finance his first real estate deal, a rundown multifamily property in Bushwick. Although he was just out of business school, he didn’t worry too much. As a former professional basketball player in northern France, he was accustomed to pressure.
“I used to play basketball in the arenas with a couple thousand people watching me on the free throw line. You’ve got a lot of eyes on you,” Raisner said. “So I, to some degree, was prepared for this.”
But confidence wasn’t enough. Though Raisner stuck to a formula — buying non-performing debt and bank-owned properties, avoiding short-term financing and holding for the long term — at one point during the pandemic, his portfolio had a 30 percent vacancy rate and 30 percent of his tenants weren’t paying rent but were protected by the state’s eviction moratorium.
“I don’t think anybody is in this business who’s looking for security or stability,” Raisner said. “I embrace instability. I think it creates opportunities to do things better, to progress, for us to just play the real estate game.”
Still, beneath the Ascot Chang suits and swagger, even developers have a vulnerable side, said Eric Brody, who found that out the hard way when he had to hand back the keys to an Upper East Side condo project during the Covid-19 years.
“On the personal, emotional and spiritual level, how are you going to deal with waking up every morning knowing that you have this mountain of debt that you could never pay back?” he said.
Self-help
Brody was riding high as a partner at Wonder Works, which completed $105 million in gross revenue in the years leading up to the pandemic, including a condo project on East 95th Street. But during Covid, sales stalled. The lender took back the keys to the property and came after Brody and his partner for a $13 million joint guarantee.
A three-year court battle followed. (Brody eventually settled.)
“The biggest thing that I learned when I was in the MMA fight of my life getting the shit kicked out of me is that it’s really a personal experience, right?” Brody said. “You can create those around you that you can communicate with about it. But at the end of the day, it’s really, you know, self-exploration of learning, kind of who and what you are and what you’re made out of.”
Healing came from an unlikely place.
A friend invited Brody to go hunting with a group of Army special forces operators in California. As the group sat around the campfire, Brody spoke about his anxiety and depression.
“I’m like, ‘Look, it’s not like I went on a mission and lost my people, but it feels that way,'” he recalled.
They had advice for him: “You have to look at what went right and what went wrong and create an action plan,” he recalled. “Start to look within yourself and start to explore your own shadow.”
He did.
“You start to look at the icky parts of yourself and understand why you made those decisions.”
Brody developed a daily protocol to get himself moving in the mornings, starting with a daily affirmation, working out, meditation and journaling. He learned to “sit within his discomfort” and feel grateful for the food on the table and roof over his head, he said.
“It allowed me to understand that your consciousness and your happiness is really your responsibility,” he said. “Your ability to slow down your nervous system is your responsibility. You don’t need external validation.”
“You can’t be in real estate at a risky high level without getting a charge from it.”
Schuster, too, made changes to his life.
As his business crumbled during Covid, he was in denial at first. He ignored the default notices, hid from investors and lenders and refused to ask for help. Working remotely from Florida, he struggled to manage his projects. His employees quit.
Eventually, he came to terms with his failure. He handed over some keys to lenders and completed other projects with drastically diminished returns.
“I think the first step, in my case, was that I had to start taking responsibility for the things that were going sideways,” he said. “I unfortunately did that too late and at the moment I finally realized ‘this is my fault and I need to find a way to make things better,’ at that point it was just too late.”
Still, he started to own up to his bad decisions, he said.
Lean on me
In 2021, Schuster went to a networking breakfast in a Midtown appliance showroom. He listened as a group of real estate players from midsize and large companies boasted to the table about their latest development projects.
“My jaw dropped as we’re going around the table, probably like 10 people before me explaining how great life is,” he recalled.
“It gets to my turn and I’m just like, ‘Well, I must be doing something wrong because I have condos that aren’t selling, tenants that aren’t paying rent, I have defaulting loans and two cell phones with people trying to reach me. And so that’s what’s going on with me.’”
Everyone at the table was silent.
Later, back at his office, Schuster received several emails and phone calls from colleagues who wanted to discuss problems at their own projects. One of them — Eric Brody — showed up in person to talk.
“I remember it clearly,” Brody said. “To find a kindred spirit, a brotherhood of people who understand the situation is really important to your success. I knew he was someone who was looking at reality and I could have that conversation with him.”
Too often, high-level entrepreneurs possess a “cowboy mentality,” according to Freeman, as though they have to face their professional and personal struggles alone.
But, he said, “The ecosystem has to normalize seeking help.”
Schuster said his biggest regret is not asking for help sooner.
“People need to know that it’s OK to ask for help,” he said, “especially when dark thoughts enter your head.”
Brandon Miller appears to have gone to great lengths to keep his companions in the dark about his struggles. His wife, Candice, told the New York Times she knew little about his business dealings. When three friends guessed that Brandon was struggling with debt and confronted him, they discovered that he had not been straight with them, allegedly raising money for a project owned by another developer.
Trust and esteem
From the outside, a comeback may look similar to earlier, more naive successes. In 2008, just a year after Harry Macklowe bought a portfolio of office buildings for $7 billion, he lost the properties, yet by 2011, he appeared fully confident in his second act.
He had partnered with CIM Group on the site that became 432 Park Avenue — at the time, he called it his “capstone” — and secured more than $300 million in financing to buy two Upper East Side rental buildings and convert them to condos.
From the inside, building back after disaster feels anything but secure.
Schuster worked on himself mentally and physically for months. He regained his confidence but also learned to keep his ego in check, he said. He leaned on friends and family. He exercised and meditated.
After a year, he was ready to venture out.
He started a new real estate venture, SolarBack, which leases commercial rooftops and installs solar farms.
To build trust among new partners, Schuster — in less awkward scenes than the one at the Midtown networking table — held honest conversations with investors and potential partners and clients. They went over legal memos together and talked about his missteps.
“The last thing I would want to happen is for them to learn about my past trials and failures and for that to leave a bad taste in their mouth,” Schuster said. “People appreciated that. Seasoned business owners or folks in real estate who have lived through several cycles know there are ups and downs. There’s a certain skill set that one develops by going through that roller coaster, to keep it together and maintain your gratitude, and that’s what keeps you positive.”
If you are having thoughts of suicide, call or text 988 to reach the 988 Suicide and Crisis Lifeline in the United States, or go to SpeakingOfSuicide.com/resources for a list of additional resources.