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Appetite for risk

Rochester Business Journal
June 21, 2013

Real estate developer Lyjha Wilton has been hailed as a savior of the South Wedge and rebuked as the worst landlord a tenant could ever have.
 
Wilton, 36, accepts both with aplomb, admitting to shortcomings and acknowledging the rapid growth of his businesses, Wilton Enterprises Inc. and Boulder Coffee Co. Inc. Reflective but also speaking with assertive candor, Wilton rethreads a conversation if a thought is broken.
 
"Honestly, I think there's been situations where I was probably a bad landlord," he said. "It's not like there's a class to take, although there are some, I guess, but you learn in real-world situations."
 
Like most entrepreneurs, Wilton, a 2007 Rochester Business Journal Forty Under 40 honoree, has had to learn to manage growth. His relentless appetite for risk has brought him opportunities and pushed him to face tough realities. Though real estate has been his sweet spot, managing Boulder Coffee has been a challenge.
 
"If I could do it again, I would have made steps before the growth to anticipate the growth, rather than make the growth steps and then try and hurry to get my (act) together," Wilton said. "It's stressful; you're always playing catch-up."
 
Wilton, who started in real estate roughly a decade ago with a single property, now owns 50 and has some 300 tenants. He estimates the total value of his real estate assets at $8.5 million; his coffee locations, which do not do as well as Wilton would like, are expected to generate $1 million in gross sales this year. Total employment at his businesses is roughly 50.
 
Wilton recently launched La Casa, an authentic Mexican eatery on Alexander Street. While he said he is taking a breather this summer, he has his eye on a couple of undisclosed commercial properties in the city that he hopes to buy.

Getting started
Wilton did not start in real estate. He tried the corporate world after earning his bachelor's degree at SUNY College at Oswego, but he was sacked from his first job with Budget Rent A Car System Inc. and later lost his job at a Residence Inn by Marriott. It was during his time at Marriott, around 2003, that he spotted a residential property at 79 Bond St. Priced at $29,000, the four-apartment unit seemed like a good investment.
 
"It had three out of the four apartments rented for a little under $400 a piece; it would have made between $500 to $1,000 a month," Wilton said. "(I thought) this has to make sense, not knowing anything about the cost to renovate, the cost to maintain and stuff like that. It still was a great buy. I'd do it again in a heartbeat."
 
Wilton purchased the property with financial assistance from the person who had hired him at Marriott, then fixed it up with help from friends and family. That got the ball rolling, and Wilton decided not to work for anyone but himself.
 
"Before I'd gotten fired (from Marriott), I already had a few deals on the table that I was working out," Wilton said. "Actually, it was like three more properties that I was looking at-one of which I was almost closing on and I almost lost it because the day before (it closed) they called my work to verify my employment and I wasn't there anymore, so they backed out.
 
"I had to find different financing. I thought I was going to lose the deal. I'm glad I didn't."
 
Two of the property deals Wilton was working on, this time on Alexander Street, were privately financed. The seller's suggestion of extending the mortgage arrangement with the investor was an event critical to Wilton's growth in real estate. Wilton, then in his 20s, brought along his wife, Jillian, and newborn son Cooper when he met the private investor at the closing.
 
"We met in the attorney's office, and they looked so young to me, and I was like 'Wow, do you know what you're getting yourself in for?'" said the private investor, who spoke on the condition of anonymity and called Wilton a small-scale, Rochester version of Donald Trump. "But you could tell from the beginning that Lyjha had a dream and he was going to follow that and he was going to make something happen."
 
Fairly soon after that, Wilton went back to the financer, who since has worked with him on 25 deals.
 
Wilton said he recognized "the angel that I had found."
 
"I saw the opportunity that I had with her, and I went on a shopping spree," he said. "I was closing on multiple houses a month within a year. I grew so quickly in my mid- to late 20s that there was a time when I was 10 projects deep, because I was also swinging the hammer at the time, fixing them up, renting them out-I was doing everything."
 
He bought properties in the Maplewood neighborhood, which he eventually sold, and then stumbled upon the South Wedge.
 
"I had no previous knowledge of what it was," Wilton said, adding it was the South Wedge Planning Committee that drew him to that area. "I realized that there is really a strong force with passionate people that are driving this, and I said that is a major benefit to a neighborhood.
 
"If there's a group, a formed group that has history, that has funding, that has structure and their sole purpose is to improve this neighborhood, that's a driving force."

South Wedge fever
The committee's work to build a sense of community among neighborhood residents has worked in its favor. The neighborhood association, with help from residents and business owners such as Wilton, has developed the area into a destination for new businesses and residents alike.
 
Robert Boyd, former executive director of the committee, said the group collaborated with Wilton on several projects.
 
"He actually stepped up and took leadership of being the board chair. ... I worked with him on many projects, helped him develop a strategy, helped him think through strategies," said Boyd, lecturer and director of the business school's internship program at SUNY College at Geneseo. "He's got the energy, the risk-taking ability; he really is an energetic person who tries to do everything."
 
"I-probably being older, from a more banking background, a more methodical background-I probably said, 'Let's think about this a little,'" Boyd added. "Between the two of us it was sort of a nice balance, a very nice balance. I can say that I learned immensely from Lyjha. ... I just wish, when I was his age when he started out, I had that same conviction, belief, drive, risk-taking ability."
 
Wilton started in the South Wedge by buying a half-dozen properties on Alexander Street.
 
"He took risk when others wouldn't take risk, and by him taking the risk and believing in other businesses that can be successful, the community ... thrived," Boyd said.
 
Wilton collaborated with others, improved properties and found entrepreneurs to become tenants and establish a presence in that neighborhood, taking a broad, community-minded view, Boyd said. For instance, Wilton and John Roth of John's Tex-Mex Eatery, one of Wilton's tenants, have bounced ideas off each other. Wilton's vision to create a wood-fired pizzeria attracted the owners of Napa Wood Fired Pizzeria. Other businesses drawn to the South Wedge include Harry G's New York Deli and Cafe and sushi restaurant Banzai.
 
"He has transformed that area between Clinton and South and Alexander. It's all Lyjha Wilton, and that's all his imagination and foresight," said Joe Taddeo, Wilton's attorney.

Coffee connection
As Wilton beefed up his real estate holdings on and around Alexander Street, a property at No. 100 came up for sale, one he had always admired. He jumped at the chance to own it. But Wilton struggled to find an appropriate tenant.
 
"I showed that place so many times, but it was always ... to nothing I wanted to rent to," he said.
 
An espresso machine called "Big Red," which he had bought at an auction, spawned his next venture, Boulder Coffee, in 2006.
 
"It all kind of flooded me right at that moment: 'The coffee shop is the best scenario for me if I can get someone to do it. ...' Then I started to talk myself into doing it," Wilton said. "I was like it will probably not make any money, it will probably be really dead, but if I got someone at the counter, maybe my tenants can drop off rent, they can leave messages. ... Hybrid secretary-barista was my vision."
 
Used furniture and works by local artists became part of the shabby chic decor. While Wilton has added more locations-on Park Avenue, at Brooks Landing, at the Rochester Public Market and in space at the Crossroads Building-he grudgingly admits that coffee has diluted his focus on real estate. He dived in without knowing much about the retail business.
 
When he bought the Java Joe brand and the wholesale coffee-roasting business that came with it at the Rochester Public Market, he expected it to be a perfect match. But the business was in disarray, with some key wholesale accounts going away, Wilton said; getting that Boulder location to work was a huge project that took years to get right. Coffee roaster Java Joe Palozzi's plans to start up again made things even more challenging.
 
"When I bought it, I had such visions of grandeur for the market," Wilton said. "Think about it: every time you go to the market on Saturday, what's the market like?"
 
That vision collided with reality when Wilton realized he had a very limited window for sales, given that most people go to the market on weekends. He tried staying open during the week, but it proved futile, as did his express coffee service idea.
 
To offset overhead costs, he began to look for tenants again. He brought in businesses, including Cosmano e Ferrari Olive Oil Co. and Mexican food counter La Placita En Downtown. Now, Wilton said, shoppers stop by for a cup of coffee while they shop at these vendors.
 
"That was the best idea I had," Wilton said of recruiting tenants.
 
Still, Boulder Coffee has not been an easy venture for Wilton. His Brooks Landing location struggles to find a balance between food and coffee, and the coffee shop at the Crossroads Building on State Street, called Java Joe's by Boulder Coffee Co., could do with a lot more business.
 
"The Crossroads (business) seemed like a no-brainer at the time, because the price I was able to get it for was low and I figured I'd be able to pay that back in a short amount of time," Wilton said. "But all at once, when the anchor tenant moves out (of the building) and a Tim Horton's opens up across the street ..., we definitely saw a dip in sales."
 
The winter is a rough time for his coffee shops, and Wilton is learning how to make up for declines in sales. Wife Jillian has taken over managing the business in the last year. Boulder Coffee's flagship location on Alexander Street remains the most popular and most profitable. The Park Avenue site also has a sizable amount of traffic.
 
"This is the first year we've actually done it ourselves without paying a manager to do a bad job. ... It's going to be a learning year for us; it has been a learning time for us," Wilton said. "It's possible to make money on it. We just have to learn how to do it still, after seven years."
 
Said Jillian Wilton: "We say it all the time: It would make money if that was our only business and he didn't aspire ... to take bigger projects."
 
What Boulder Coffee has given Wilton, his wife said, is visibility.
 
"There's tons of real estate professionals in Rochester that you wouldn't even know who own a ton of things just like him and manage just like him," Jillian Wilton said. "When they see us, (people) say, 'Oh, they own Boulder Coffee.' They don't say, 'Oh, that guy has a ton of real estate.'"

In the limelight
Whether Wilton planned it or not, his success and his business decisions have placed him in the spotlight. Some opinions, such as those of tenants, are not so favorable.
 
Adrienne Wiswell, who rented from Wilton in 2008 and 2009, said she found Wilton rather neglectful, though she did not deal with him directly.
 
"Shortly after we moved in, a raccoon punched a hole in my bedroom ceiling and poked its head in to look at me," said Wiswell, a former Rochester Business Journal employee who now works as a graphic designer, marketing assistant and special events coordinator at St. Elizabeth Medical Center in Utica. "When I called Boulder Realty, it took him/his employee four whole days to even come look at it."
 
Wilton says he feels remorse over situations like that.
 
"A lot of times, and I'm not saying this as an excuse, even in 2008 I had well over 100 units. I had a maintenance person in place, someone that's supposed to take those calls and handle those things," he said. "But the last thing that guy is going to say is that 'I made this girl wait four days' to me, because if I would have found that out, I would have been livid. That's not acceptable to me; that's not how I want my company represented as."
 
The system for handling maintenance is better now, Wilton said, with a property manager and a tech-savvy maintenance person who help to cut response times. It has been a challenge to find an individual for that position who treats tenants like customers.
 
Despite unsigned comments on online message boards that include statements such as "Lyjha is the worst landlord I have ever encountered," units are being rented and tenants are staying.
 
"It's changed so much," said Jessica Stroud, property manager at Boulder Realty, the property management arm of Wilton Enterprises. "People who are our tenants now in the last two years aren't moving. So I don't have a lot of inventory. When I do have an apartment available, I show it one or two times and it's snapped up in a second."
 
Wilton's work was bound to attract attention, say those who know him well.
 
"If you're not getting any attention, positive or negative, then are you really moving forward?" Boyd said. "If you're not getting up to bat, you can't get a hit-and sometimes you strike out, and sometimes you hit home run after home run. But just like baseball, nobody has a perfect average. It's just the consistency by which one does it.
 
"He's not a showman; he does not seek attention," he added. "Actually he avoids attention as much as he can."
 
Though Wilton is quick to say he is not in the business of flipping properties for quick profit, his knack for spotting houses in disrepair and renovating them has earned him a reputation for targeting dumps.
 
"When I was first starting, I targeted the dumps. I targeted crack houses. ... I own a couple of dumps, still. But in my mind, eventually I was going to do something about them. It wasn't a matter of if; it was a matter of when," he said.
 
Attorney Taddeo said the public perception of Wilton has changed somewhat.
 
"I warned him right off the get-go, once he started to become successful," he said. "I said, 'You wait and see; there's going to be a lot of jealousy. Not everybody is going to love you.' I think he found that out the hard way. That goes with being aggressive and wanting to succeed, and certainly I think that's just part of the game, that's all."

Keeping the momentum
Feedback is important to Wilton, Jillian Wilton said. He thrives on it. But she noted that her husband has hardened over the years.
 
"He used to have wide (eyes). ... He was just glowing because he was the underdog and everybody was rooting for him and nobody wanted anything from him; if anything, people wanted to help him," she said. "Over the years he's had experience with people lying or cheating or just taking, and now he's very, very, very hesitant to let people into his private life. That's a huge change for him. His anxiety level has gone up; his expectation of himself is much higher."
 
Wilton is not likely to stop taking on projects and improving buildings. The high of a project is too tempting for him to ignore. But he says he is aware that he needs to keep his "low fear of consequence" in check. He attributes his acceptance of risk to having survived childhood cancer, which made him a hero in his hometown, Lowville in Lewis County, and instilled bravado.
 
"I got a lot of people that made me feel special because I had overcome this, and I really think that did a lot for my confidence in how I viewed life and how I viewed being able to conquer things," Wilton said. "On a negative side, it also gave me a warped sense of consequence, like I could face something horrible and come out smelling like roses. I had very little fear of consequence."
 
Life's lessons and a young family-the Wiltons have five children-have injected some conservatism into business decisions. Eventually, Wilton said, he would like to be a private investor.
 
"I have become much more conservative now because there's more to lose," he said. "When you don't have anything to lose, then it's very easy not to be scared, because what are you going to lose? For so long I didn't take any time to even absorb any of that; I was just on a mission."
 
And he is open to selling what he owns, be it Boulder Coffee or prized real estate holdings.
 
"Everything that I own I would sell for the right price," Wilton said.

Lyjha Wilton
Wilton, an honoree in the Rochester Business Journal's Forty Under 40 class of 2007, has rapidly grown his real estate and coffee businesses.
Title: Owner, Wilton Enterprises Inc., Boulder Coffee Co. Inc., La Casa
Age: 36
Education: B.A., SUNY College at Oswego
Value of real estate assets: $8.5 million
Key properties: 100 Alexander St. and adjacent buildings
Family: Wife Jillian; sons Cooper, 9, Van, 8, Indi, 4, Grey, 3; daughter Lennon, 6
Hometown: Lowville, Lewis County
Residence: Rochester
Off-hours activities: Acquiring and restoring vintage items including motorcycles and cars

6/21/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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