Spending and Saving

Lemonade Maker: James Young, Digital Prospector

Profiles of people who are seeing opportunity in a pile of economic lemons.

James Young
East Hampton, N.Y.
Before recession: Commercial real estate broker
Now: Co-founder of Rosehip Partners, a Hamptons real estate business

In the Hamptons, one of the most privileged parts of the country, the real estate boom is firmly at an end. The number of sales was down 40 percent in 2008. Prices are being slashed on multi-million-dollar mansions. Lavish spec houses sit empty.

It would seem like the worst possible time to start a real estate company. But last summer, James Young and Joe Kazickas founded Rosehip Partners, an agency that covers the east end of Long Island, from West Hampton to Montauk. In September, as the recession was gathering speed, they unveiled their website, HamptonsRentals.com.

Within just a few months, they’ve had owners list 600 rental properties on their site—about a tenth of the market, Rosehip estimates—exceeding their own expectations. They’re turning to their advantage a situation that is hurting companies with high overhead and traditional business models.

Demand from the deep-pocketed has pushed prices for Hamptons homes into the stratosphere over the last several years. Small, simple houses far from the beach can rent for several thousand dollars a month; coveted estates go for several hundred thousand—for the summer season. Yet Young and Kazickas believed the rental niche was being underserved.

“Agents are focused on the big [sales] listings and getting paid the big commissions,” Young says. Meanwhile, there has been no main online hub for listings, and most properties are listed with several brokers. So a house might be listed on a website (or many sites) multiple times by different brokers, with conflicting or out-of-date information. It’s an information headache for owners, renters, and brokers.

But alleviate everyone else’s pain and it might help you build a business. Young, 41, spent a half-dozen years at Oracle before becoming a real estate broker in the Hamptons, working at large firms and then setting off on his own. Kazickas had co-founded a prominent local real estate firm, Dunemere Associates, which was sold to Brown Harris Stevens in 2004. Both were looking for new opportunities, especially as the market slowed, and last year they ginned up a strategy for competing with the 800-pound real estate firms that have come to dominate the local market.

They built a small, nimble agency and run it lean, with a handful of realtors instead of dozens,  a low-key location rather than pricey storefronts. Then they created a website (with a blockbuster domain name) that allows owners to list their homes for free, then update the rest of the world—including competing real estate brokers—with a click.

“Sharing information has always been anathema to the real estate business,” Young says. “Other people were like, Are you crazy?”

But so far, they feel like it’s working. The down market is working in their favor, since there are more rentals available; owners want their properties to be more visible and are eager to make deals. Owners and renters are flocking to the site, making for tons of business leads.

“A lot of people that have built spec houses are trying to offer them for rent because they can’t sell them,” Young says. “People who may have lost their jobs and bought houses in the last several years—maybe that rental is more important to them now.”

A few years ago it might have seemed déclassé to list your Hamptons home on a website. Now, it’s simply smart business.

“We feel like this short guy who’s made his way up to the bar with all these basketball players,” Young says of the fledgling firm. “And everyone’s like, who’s this guy? But now we’ve got purchase.”

Read about more Lemonade Makers here.

Editor’s note: James Young is not only a Lemonade Maker but also a “slasher” who is living out two careers.

Tags: Lemonade Makers, real estate, Small Business Resources from OPEN, The Working World