Though most young entrepreneurs today will experiment with many different careers before settling into their preferred industry, it seems as though homebuilding was Bob Kettler’s destiny. His father’s claim to fame, Kettler Brothers, was founded in 1952 and was the largest private homebuilding company in Maryland through the 1960s. This giant was among the first to build large planned communities in Maryland and Northern Virginia and brought Montgomery Village into existence.
“You don’t respect it as much when you’re younger,” says Bob, Chairman and CEO of Kettler. “Still, I had this knowledge that they were onto something new.” Bob heard his father discussing the innovative planned communities and how some viewed them as close to utopian. Kettler Brothers was creating towns, and Bob overheard conversations about the entities that ran these new communities, which seemed to resemble governments. Some of these foundations and homeowner associations even oversaw land use and involved themselves in aspects of development.
Bob may have been young at the time, but even these snippets helped to form ideas and understandings that would lay the groundwork for what would quickly become his accelerating career in homebuilding and real estate development. In fact, his father started talking to him about financing when he was still young. “This is what would qualify as conversation on fishing trips,” Bob recalls with a laugh. But before he would ever apply the higher concepts of development, Bob would apply himself—and with gusto—to the grit of construction work. By sixteen years of age, he was pounding nails as a laborer or carpenter’s helper. He knew that understanding the process literally from the ground up would be necessary if he wanted to go further in the future.
And what would this “future” look like? Today, Kettler has developed over 25 planned communities and more than 46,000 homes, including the 6,050 home community Cascades in Loudoun County, VA; the 2,434 home community Piedmont in Prince William County, VA; and the 2,600 home community Lorton Station in Fairfax County, VA. The company has developed more than 5 million square feet of mixed-used commercial space, including the 1.2 million-square-foot Trinity Centre mixed-use office park in Fairfax County, VA and the 1.3 million-square-foot Villages at Leesburg Town Center in Loudon County, VA. In 1987, Bob established Kettler Management, the property management division of his company. The wholly owned subsidiary manages more than 19,000 apartment units in 85 communities from North Carolina to New York and over 1.7 million square feet of office and retail space.
Furthermore, since its inception in 1977, Kettler has developed some of the DC Metropolitan area’s most successful multifamily communities, including the nationally renowned The Metropolitan at Pentagon City, The Metropolitan at Reston Town Center, Midtown Reston Town Center, and The Millennium at Metropolitan Park. The company has developed more than 15,400 apartments and condominiums within 65 communities. Over the last five years, Kettler’s condominium communities were the area’s top selling projects, with gross sales in excess of $700 million. Additionally, Kettler is the largest developer of affordable housing in the Washington, DC Metropolitan area. The company has a portfolio of 33 properties with over 6,500 bond-financed apartments that it owns and operates, and the company was ranked one of the top 30 private companies in the DC Metropolitan area by the Washington Post. Though young Bob couldn’t have pegged exactly how the company’s legacy would unfold all those years ago, he knew he wanted to be part of it.
By 19 years old, Bob had no doubt that he wanted to be in the family business of homebuilding, but Kettler Brothers had a strict no-nepotism rule. Considering the company’s six partners with as many as eight kids each, the policy was a necessity. Bob’s generation would have to find their own jobs, yet this didn’t deter the young man in the slightest. “I’ve always been very competitive, so that was fine with me,” Bob remembers.
After returning from a trip to the Caribbean in 1973, Bob bought his first building at 21 years old, a small apartment building in Adams Morgan that cost him about twenty-nine thousand dollars. He renovated it with his cousin, sold it, and used the money from that sale to buy 13 lots off of 16th Street from the Catholic Church. This commenced a series of bold and escalating ventures that would take Bob to great heights. At the same time, he was taking night classes at George Washington University in real estate and business.
“Finance is a vocational education,” Bob explains today. “Some of my classes covered the documentation of real estate transactions, and I found those truly essential to my education.” One of his teachers, Maury Seldin, had published Real Estate Investment Strategies in 1970, and Bob wore it to pieces. “It taught me how to model things and how to evaluate assets,” Bob says. “It was simplistic, really, but it taught me an excellent framework for organizing and evaluating data.” His next jobs were building retail stores and renovating basements as a contractor. Bob did about ten stores and restaurants in Georgetown and suburban malls until 1976, at which time his business started to grow at a new clip after building brick houses on a new street put in by the city at 16th Street and Military Road.
While running through so many projects of his own, Bob also began working as a researcher and project manager for his dad and uncle at Kettler Brothers. One project Bob worked on was meant to be a modest investment partnering with Gladstone Associates to build apartments and townhouses, but a sudden turn of events gave Kettler Brothers the whole project instead, giving Bob an excellent opportunity to work on something big.
“To make a long story short,” Bob explains, “Gladstone lost his apartment partner, and Kettler Brothers ended up with the whole site. Kettler went from being a purchaser of lots to being something much more.” At age 23, Bob was suddenly a manager on a major project. Seizing the solid opportunity, he went deep into planning and architecture for the 150-unit urban project, which was ahead of its time for DC. Specifically, he focused on the modeling and analyzing of a large land asset, which he then developed. “That type of planned community work is still a part of the work that I do for a living today,” he points out. To encounter this opportunity so early in his career set him on a path to grow into the business of development that would then take him to his highest point yet. Before making the leap into developing big land, though, Bob would reach back into family.
“My sister was the oldest,” Bob says. “She’s a brilliant woman—brilliant and talented.” After completing her undergraduate studies at the University of Michigan and then earning her law degree from George Washington University, she was hired to be the first General Counsel for the National Trust for Historic Preservation and wrote tax legislation for them. She then got married, and her husband, Scott Paseltiner, became Bob’s partner. Together, they founded Kettler and Scott when Bob was 25, completing a number of small projects leading up to the early 80s.
Ultimately, Bob credits his success to this early start, but he also says he can’t deny that he found himself in a good market. He began land development in the early 80s and was mentored by several established and talented individuals at the time, such as Frank Saul, Ted Lerner, and Til Hazel. By making connections and seizing opportunities, Bob was able to operate in the same space as his mentors, and in a few short years he went from being a small homebuilder to one of the largest developers in the DC metropolitan area.
The first big development that spurred this surge was a planned community venture with a savings and loan that was a DC-area fixture at the time—a project that spanned from 1982 to 1988. In this endeavor, Bob took a large amount of back-acreage that was difficult to access and connected it to the area’s main road with a new road by amending the county master plan. He put in a mixed-use office park, two big shopping centers, and about 2,800 lots. He completed the development at age 34, and flush with capital, he turned around and began purchasing all the land he could find. By the time he was 40 years old, he was worth approximately $150 million.
But then would come a career-defining moment when the real estate climate as a whole would experience a paradigm shift as the savings and loan crisis wreaked havoc across the nation. Bob had partnered with Chevy Chase Bank, who had brought in partners from China, Europe and the Middle East. He had been flying back and forth between Hong Kong and D.C. to meet with investors, but those days were suddenly over.
The deals were backed by structured debt and were written off, but as they failed, Bob suddenly found himself with millions in phantom income and overleveraged assets. He was able to maneuver through the crisis, but emerging on the other side, he found himself in a drastically altered era of real estate development.
“In that considerably different climate, I knew I had only one option,” he recalls. “From that point, I proceeded to purposefully diversify as a survival technique.” He had been through a wild ride, developing land during the Savings and Loan-backed 80s, but he finally decided that he no longer wanted all of his eggs in one basket. With that, Kettler continued to develop land, but the company also entered into the arena of apartment development and mixed-use development, eventually developed its expertise in management as well.
“If you’re in the real estate business,” Bob affirms now, “you’re not in this or that; you’re in real estate. In an economic climate like the recession that followed the Savings and Loan crisis, or even the one today, it makes a great deal of sense to be skilled and adept in all forms of real estate.”
Beyond diversification, Kettler has also relied on a more structured process for working through investment strategies. For example, project approvals go through an investment committee, and once launched, they undergo a redundant production process with checks and balances. Beyond that, it’s management by exception. “I don’t hear anything unless it goes wrong,” Bob comments. “However, if something does go wrong, I want to hear about it even if it’s midnight.”
Today, free from the gritty details of the daily grind, Bob concerns himself mostly with strategic and new business meetings and considers his family’s historical no-nepotism rule. He has four children, and thinks deeply about the course of their lives, as any parent would. “I don’t want them to be burdened by my dreams,” he says firmly. He remembers that the many small deals he worked through at such a fast pace in those early years were exciting and fun for him, concerned that his current projects are ponderous and may take years to complete. “That’s not exactly what a young person needs,” Bob points out.
In considering his own childhood and how he came to find himself where is today, he says that young people entering the business world today need to tap into their true passions and follow their hearts. “There’s nothing like following your heart,” Bob says. “There are people that can wrap their heads around what they do, and they’re savants about what they do. It may be hard to find what that one thing is,” he continues, “but I think everyone has the capacity to do so.” By taking the time and the energy to find out what that one passion is, Bob’s example demonstrates that the road to its realization can be that much more direct, and that much more gratifying.
%201.svg){kind=small}
