Whenever a developer runs into trouble, someone in the industry will claim: That guy was not a real operator.
It’s an easy allegation. That embattled property owner may have been a wiz with Microsoft Excel or able to raise money overseas, but he or she never grasped the nuances of the business, detractors will say. It’s true that owning real estate requires a memory bank of solutions for when a problem arises. Whom do you call when a pipe breaks? How do you collect rent from delinquent tenants? Who’ll help you restructure when your loans are due?
“It’s just a totally different world,” Alex Argento, head of Southeast operations at the property management firm Akam, said. “You got to talk to tenants. Developers are not going to talk to tenants.”
When the Federal Reserve Board raised interest rates in 2022, some suggested that there was a silver lining — that higher rates would separate the “real” operators from the rest.
So they did. Once buildings weren’t minting money simply by existing, owners had to operate them well to find value. A class of real estate investors who treated their holdings like online bank accounts now had to deal with buildings as corporeal elements. They were not good at it, sources and lawsuits indicate.
A string of criminal cases revealed a group of these investors who are young and have ties to the Lakewood, New Jersey, area. Investigations into their financial dealings have revealed details about their property management, or lack thereof.
It isn’t uncommon for property owners to run afoul of tenants. But the buildings at the heart of the mortgage fraud scandal show the real-life effect of what might have seemed a victimless crime — just some financial transactions. However, buildings are now crumbling, and, at a time when the country needs more housing, negligent landlords reduce the number of viable places to live.
No service
Outside of Pittsburgh, Moshe Silber’s rental properties reportedly had sewage spilling out next to a school bus stop. In Columbus, Ohio, residents at Boruch Drillman’s Latitude Five25 property were forced to evacuate on Christmas Day 2022 when water pipes burst and the heat went out.
In Chicago, dozens of buildings on the South Side were acquired by owners tied to Lakewood, New Jersey, and flipped among themselves, increasing loan amounts along the way. A scan of these properties on Google Maps immediately shows their decrepit conditions.
Silber and Mendel Steiner are two landlords who exemplify what was going on. Each amassed apartment units and then declined to service them.
Silber bought thousands of rental properties across the country until he had a $1 billion portfolio of more than 11,000 units by the time he was in his early 30s. Prosecutors have charged him for his role in a mortgage fraud scandal, and a judge sentenced him to 30 months in prison.
Silber, a wiry and ambitious 36-year-old, lacked experience in running properties, sources say. The locations of his multifamily properties ranged across the country: on the South and West sides of Chicago and in New Orleans; Jackson, Mississippi; East St. Louis, Illinois; and Flint, Michigan.
“You got to talk to tenants. Developers are not going to talk to tenants.”
His properties outside of Pittsburgh fell into disrepair, according to criminal charges filed by the Allegheny County District Attorney’s office in Pennsylvania. The story was similar in Chicago, according to foreclosure lawsuits that Fannie Mae filed in Cook County.
Silber even allegedly took money that could have been used for improvements and diverted it to other bank accounts, according to charges.
The late Mendel Steiner was a 33-year-old investor who controlled a portfolio of thousands of units across the country, but he faced foreclosures and lawsuits prior to his sudden death in January. After Steiner took ownership, his properties fell into disrepair and occupancy dwindled.
Conditions were abysmal. Tenants at Steiner’s Shaker Heights properties outside Cleveland, Ohio, noted issues such as rodent infestations, a lack of heat, and water leaks.
Tenants and community advocates at this property said Steiner’s management style made little sense.
“You would have to be very, very adept to set up an operation housed a thousand miles away from the scene before deploying maintenance people to care for properties,” Jay Westbrook, a community advocate and retired member of the Cleveland City Council, said. “Whether it was naive or intentional the effect was still the same. It was a miserable failure.”
Tenants could call about a problem if they wanted, but no one would come.
“I couldn’t recall a case where a tenant said they called and [property management] came the next day,” he added. “You never heard that.”
But Steiner’s mismanagement of his rental buildings ventured into the bizarre. Under Steiner’s ownership, occupancy at the Ohio properties fell from nearly 100 percent in 2022 to 25 percent in 2024.
“He had some different business model,” said a local resident familiar with the situation.
Shady deals, bad operators
It’s not always clear how that “different business model” connected to the on-the-ground mismanagement, but there are hints.
In recent years, dealmaking has ventured into new markets, with players chasing yield as opposed to analyzing the quality of the buildings. CoStar has made it easy to find a building’s financials without ever setting foot near the property.
There’s a level of abstraction in Steiner’s playbook. His company, Aven Realty, bought apartments at high prices, paying nearly double what Kushner Companies, the seller, had paid a year prior for two Baltimore apartment complexes, the Dutch Village and Pleasantview.
The lofty price tags meant he needed to boost rents or slash expenses in order to meet his debt payments, so it’s possible he intentionally avoided costly maintenance.
“You would have to be very, very adept to set up an operation housed a thousand miles away from the scene before deploying maintenance people to care for properties. Whether it was naive or intentional the effect was still the same. It was a miserable failure.”
Or, he might not have known what to do.
One source familiar with Steiner claimed that the landlord tried to manage his properties from his Brooklyn office. Although he didn’t seek to run them into the ground and strip out all the equity (as in the case of some other sentenced players), he didn’t have the manpower or know-how to oversee the portfolio, according to the source.
Yet despite a pile of evidence to the contrary, Steiner was still viewed as an experienced operator in the mind of banks and lenders. In 2023, the Bank of Montreal sought to securitize three loans backed by Steiner’s properties in Cincinnati and Chicago.
S&P Global’s pre-sale research note about the loan only had positive things to say about the then-31-year-old Steiner.
“The loan benefits from the experienced sponsorship of Mendel Steiner,” said the note.
Operating 101
Mendel Steiner was reportedly the third generation in his family in real estate. Property management is not inherently difficult, but it’s not hereditary. It does not require a master’s degree, but it does require a presence. Sources say that’s where Steiner and others ran into trouble.
It takes years of experience in various submarkets to pick up regional nuances, understand local laws and amass a list of contacts. From Borough Park, Steiner probably couldn’t do those tasks for his buildings across the U.S.
Michael Mintz of New York City-based MD Property Squared manages more than 100 residential and mixed-use properties in New York City and Connecticut alone. He saw these obstacles when he first ventured into Oklahoma in 2020 after purchasing a multifamily property in Tulsa and trying to manage the properties in-house. He began to fly from New York City to Oklahoma once a month, staying for a week while he sought staff and employees.
“In Oklahoma, it was worth overpaying for the best talent,” Mintz said. Lower-paid employees didn’t deliver in this market.
Mintz also discovered an important regional distinction in Oklahoma. Vendors such as HVAC shops wanted “principal-to-principal relationships.” This meant in order for the HVAC technician to come to the property on the same day during peak season, Mintz had to be the one making the call.
But property management isn’t just about understanding regional differences.
Tenant advocacy groups and governments are not afraid to confront landlords, just as they did with Moshe Silber, which ultimately led to criminal charges.
“If you are a professional operator, you go into the market and learn the laws,” Mintz said.
Skip this step at your peril.
“At the end of the day, these are things that can destroy the cash flow of a property,” he said.