Growing up in Detroit’s Core City neighborhood in the 1960s, Daryl Carter didn’t get away with much. Like his parents, about half of the adults in the community had migrated from the South. His father and uncles all worked in the car factories. Everyone knew everyone; they went to the same store, the same church.
“I could be 10 blocks away, doing something I shouldn’t be doing, and my parents would get a call,” Carter says. “When I got home, it wasn’t very pleasant.”
Carter describes his formative years as “blessed.” His family lived in just two houses (the first lost to eminent domain), but he went to several brand-new schools, built as the neighborhood prospered. His parents, denied good formal education in rural Mississippi, instilled in him the value of learning and hard work. Every Thursday, Carter’s mother, a housekeeper, walked him and his two older siblings to the public library, where they each checked out a book that had to be read by the following Thursday. His father, who went 15 years without missing a day at the automobile plant, read two or three newspapers daily—a practice Carter now emulates, albeit online.
“Everybody in my company knows I’m generally up early, reading newspapers, drinking coffee, and sending emails with articles I read,” says Carter, the founder, chairman, and CEO of Avanath Capital Management, a California-based investment firm that acquires, renovates, and operates apartment properties. With a focus on affordable and workforce communities, Avanath oversees $3 billion of properties comprising 13,415 units in 14 states.
In July, he sent around an article he found particularly relevant—a New York Times breakdown of what went wrong when a fire at an apartment building in the Bronx killed 17 people in January—not to scare his associates, but to remind them how crucial it is to get things right.
“In our business, the housing business, it’s where people live,” he says. “What I tell everybody is that we have to have very, very high standards. We don’t always get it right, but with things like safety and cleanliness, mold and water intrusion—anything that affects the health, safety, and welfare of people—we’ve got to get it as perfect as we can.”
Carter hopes to create the same stable, tightknit community he grew up in, a mission that’s both personal and good business. “We’re all motivated by making money,” he says. “But ultimately, what I tell everybody in our company is, ‘Look, if we take good care of our residents, everything else will happen. We’ll make a nice return on our money and have great careers, but we have to take care of our residents first.’”
Carter’s preference for people over profit is one of many things National Multi-family Housing Council president Doug Bibby admires about him. “He has a special eye for the type of community he wants to own and manage and the way he wants to treat people,” Bibby says, “and it has worked very, very well.”
“The properties, to him, are not really the asset,” adds Real Estate Executive Council CEO Ken McIntyre, a longtime friend. “The asset is the people.”
Carter readily admits that building safe, solid communities when the majority of residents are paying below-market rent is not always easy. But in this, as in most things, he’s relentless—and resourceful.
For his commitment, Carter has been named Multifamily Executive’s 2022 Hall of Fame inductee.
His goal is to help residents thrive—mentally, physically, financially, and socially. Avanath has converted underutilized spaces in some of its senior communities into wellness centers and is the first affordable housing firm to achieve the WELL Building Institute’s WELL Health-Safety Rating across its portfolio. It works with nonprofits to offer after-school programs and financial literacy courses.
Through a partnership with Florida Housing Finance Corp., Avanath escrows 5% of its Florida residents’ rent to use as down payments on homes, a program Carter hopes to bring to more states.
The initiative benefits investors as well as residents because it reduces turnover, he says. “The 5% we provide renters at the end of their period is always less than we would have paid if that unit had turned over two or three times,” he says.
Investing for Change
In the 1980s, after Carter had earned an architecture degree from the University of Michigan, where he played basketball, and an MBA from the Massachusetts Institute of Technology, he naturally wanted to return to the community he loved. But the auto industry was crumbling—and so was Detroit. There were no jobs there for him.
Carter moved to Chicago and worked in the real estate division at Continental Illinois National Bank & Trust alongside several others who would become key players in the multifamily industry, including Albert Berriz, CEO of McKinley Cos.; Peter Donovan, a former executive managing director of CBRE; and Mary Ann King, head of Berkadia Institutional Solutions. All of them would later admit they wondered how they’d landed in a group of people who were clearly smarter than they were—which had everything to do with their boss and one of Carter’s mentors, Jim Harper.
“Jim was the kind of person who would come into a loan committee meeting and ask every conceivable question. You could never have all the answers,” Carter says. “It was just enough hazing to keep you humble. I learned a lot in that process.”
In turn, Carter—an active member and former chair of NMHC—is a fierce advocate for multifamily’s next generation, says Gables Residential CEO Sue Ansel. “He loves to mentor. He loves to guide. It’s fun to watch him work with people; he develops very personal relationships very quickly. I’ve never seen him not connect with people. He leans in and is always his genuine self,” she says, adding, “I love a big bear hug from Daryl.”
Carter left Continental in 1992 to co-found Capri Capital, which grew into a diversified real estate investment firm with $8 billion under management. In 2005, a big chunk of Capri was acquired by Centerline Capital Group, where Carter became executive managing director and met another important mentor, billionaire real estate developer, philanthropist, and Miami Dolphins owner Stephen Ross, who stoked Carter’s interest in affordable housing.
Carter launched Avanath (named for his daughter, Ava, and his son, Nathan) in 2008, just as the debt and equity markets dried up, making it impossible to pay off the bridge loan for his first acquisition of 26,000 low-income housing tax credit units. He lost $20 million in cash equity.
“The timing was just horrible. The tide just went against him,” McIntyre says. “But he stood up and delivered on everything he said he was going to deliver on to the extent possible. It was a rough time for him and rough, maybe, for some of his investors, but they were all willing to do business with him because he was clear and honest with them.”
Carter survived—and kept fighting the good fight. After 14 years of investing in affordable housing, he’s come to understand the societal obstacles—“issues of race and that sort of thing, people not wanting certain people in their neighborhood”—all too well. He laughs about an investor who once asked whether he would get shot when visiting an affordable property in Loudoun County, Virginia, where the median income is $130,000 and residents make an average of $70,000. Carter told him, “I don’t know your personal danger situation—whether you owe people money or have ex-wife issues or someone is stalking you—so I can’t comment.”
For the past four years, Carter and fellow Detroit native Ron McDonald, managing principal of RMC Development, have been dealing with local pushback against North End Landing, a 180-unit market-rate, affordable, and senior housing community they hope to develop in their hometown. Carter responds to the NIMBYs by painting a picture of North End Landing’s key demographic, “kids who are coming out of school with a four-year degree and $100,000 of debt and work at Starbucks making $45,000 a year.”
“I tell them we’re looking to make an investment in the city that may, in fact, keep some of their kids from leaving and create some opportunities here,” Carter says. “Communities decline because people quit investing in them. By the same token, if you start investing in communities, you can change them in a positive way. We’ve experienced that over and over in what we’ve done.”