Early Years – Video Transcript
Female Narrator (00:01):
The HALL Group was founded by Craig Hall in 1968. The story of the company begins with the idealistic vision of a teenager who wanted to make a difference.
Craig Hall (00:16):
I was born in 1950, grew up in the 1960s, which were a very exciting time to be in Ann Arbor.
Scott Hall (00:23):
World War II was over and this big industrial machine that had been built to win the war was being converted to private enterprise. It was a very vibrant, anything can be done, very exciting time.
Female Narrator (00:37):
Craig’s parents met in the Navy during World War II. After the war, his mom became an art teacher and his dad worked for a camera company.
Scott Hall (00:49):
Life was, Leave It To Beaver, I hate to say it, but I was the classic older one, and Craig was the beef. Growing up with Craig, I suppose, was like growing up with any other brother. He was a pain in the neck. But in Craig’s case, it was really an expanded, exacerbated pain in the neck.
Craig Hall (01:12):
Pain in the neck to everybody around me.
Scott Hall (01:16):
By the way, we were dressed the same a lot, my God, little sailor suits alike. No, no, no.
Craig Hall (01:25):
When I was very young, I was diagnosed with a form of childhood epilepsy. I remember going into a seizure and waking up in a hospital.
Scott Hall (01:33):
Phenobarbital was the only means of dealing with it. It’s a drug that just dulls your senses. You become lethargic and non-functional.
Craig Hall (01:46):
For that reason, I tended to either be the class clown or I chose a lot of days to just not show up.
Scott Hall (01:53):
School was always a much more difficult situation because it required somebody else other than Craig to be in charge, and Craig was never really good at taking direction. He’s a terrific pathfinder, but a lousy gun bearer. He was very much somebody who marched to a different drummer.
Craig Hall (02:19):
In hindsight, I was always pretty entrepreneurial and perhaps because I didn’t excel at normal life, if you will, I coped by among other things, starting little businesses. When I was growing up in Ann Arbor, there was a corner drug store that my brother and I used to go to, gosh, almost every day. It was owned by a guy named Mr. Schurz. One day we saw a sign that said, “Going out of business,” and I thought, “Wow, this is terrible.” I used to go in there to buy Green River drinks.
I went to talk to Mr. Schurz and I said, “What are you going to do with all the Green River syrup?” I negotiated with Mr. Schurz. He wanted a dollar. I got him down to 50 cents and that was my first real entrepreneurial business. It was a good business and I was free labor. My only problem was I realized when I ran out of that syrup, I was out of business. That was it. I kept doing small business things to make a little money. I had my lawn mowing business, a few paper routes. I had a coffee and soup business, and I went door to door selling Cutco knives.
Scott Hall (03:41):
The thing that’s interesting is to take a look at not only who Craig is, but also the times he grew up in. Craig was deeply moved by causes of purpose.
Craig Hall (03:55):
I had a deep-seated fire in my belly that said I have to prove myself someday that I’m not the loser that I was in school, that I wanted to make a difference in a positive way for other people. From a standpoint of an actual occupation, I thought being a social worker, or believe it or not a politician. The city had a program where all the high schools would vote on a Mayor For A Day who would be elected from the high schools. Despite all my problems in school, actually with my father’s help, I ran for Mayor For A Day of Ann Arbor. When I was senior, the student tenants at the University of Michigan were actually having rent strikes, and they were very upset over the conditions and the prices of student housing. I thought that’s a great issue to run for mayor on. I thought, “Wow, no problem. I’ll solve that.”
The actual mayor was with me the whole time. He started with a cup of coffee. I think I probably had hot chocolate. I was presiding over the city council and I brought up the issues. How are we going to solve the tenant problems in housing? I must say I was pretty disappointed because they didn’t have any real good answers. I mean, we had a whole day to work on it and we just didn’t solve it.
Female Narrator (05:23):
Craig often says that being Ann Arbor’s mayor for a day changed his life. His desire to solve student housing issues led him to his first real estate purchase.
Craig Hall (05:33):
I decided after that that I would take all the money I had saved, which was a little bit less than $4,000 and go buy a rooming house and prove that you could be a good guy, landlord. You could give people places at a really fair rent and take good care of them and that everybody could win. I set about to do that when I was 17. I drove every real estate broker in Ann Arbor nuts, and there was only one Bernice Schneider who would talk to me. I think it’s because she had no other clients and she was desperate to try to do a deal. Ultimately, after about a year of looking at over 100 places, we finally locked in and bought 427 Hamilton Place.
Scott Hall (06:29):
Of course, he had no bank credit, so he negotiated a land contract where we buy it directly from the owner. This is where entrepreneurs do business. Two people together say, “Yeah, I’ll trust you kid. I will trust you. I’m going to give you a shot. Give me that four grand and you got a deal.” It was a big first step and he was still a kid.
Craig Hall (06:54):
I was enrolled at the University of Michigan and working as a full-time dishwasher. At the same time, I was setting up and selling limited partnership interests to other students and using the money to buy rooming houses on campus. I said, “For $200 you can become a partner with me in this building and all the money we’ll get 80% and I’ll get 20% and I’ll get a management fee and we’re all going to get rich.”
Eventually I got up to 20 some properties and then I started managing properties for other people. My accounting department was a shoebox and it had bills in it. As the money came in, I paid whoever had called most recently. Great system. There was a great article about me in the Michigan Daily newspaper. Front thing. It said, “Craig Hall. Youngest landlord.” Now that led to a huge problem. The tenant union was still going strong and they wanted to break some landlord. Shortly after that nice article, the tenant union voted to rent strike my buildings, and they went around and they picketed me. There was no real dealing with the organizers.
Day and night, I would go out until very late trying to find residents that were willing to talk to me. I’d try to find out what their issues were and I would try to solve them Those days and many times since I’ve had situations that have just seemed like I got hit in the gut. You just figure out solutions and you work it and you work it and you work it and you don’t stop until you get through it.
I heard about the availability of this very rundown property. My whole business in those days was based on taking distressed real estate because that’s all I could afford to buy and turn it around. I went to Detroit. I met with this partner in this big law firm. He said to me, “I understand you’re interested in buying our apartment building in Ypsilanti.” “Yes sir, I am.” “Tell me a little bit about yourself.” And I explained to him I had no money and I was in pretty heavy debt and owned a bunch of old crummy buildings that might fall down any time. He said, “Well, it sounds to me like you’re a suitable buyer.” I thought, “Wow.” I mean, I was honest with the guy. I was 20 years old and I bought a property that had three mortgages on it, all of which were in default. But the cool thing is I was the proud owner. I met Mark Depker in 1970 at Eastern Highlands. Pretty good-looking guy, always sort of a ladies man. Mark was living there and working there as a maintenance man.
Mark Depker (10:15):
I remember he had an Ford Thunderbird. Backseat was full of empty McDonald’s bags, and I thought, he’s my kind of guy. My balcony is a perfect place to put big speakers and have garbage parties.
Craig Hall (10:31):
I would later find out that I was paying him to be a maintenance man.
Mark Depker (10:35):
We’d have the parties all night.
Craig Hall (10:37):
Then he and his roommates were drinking so much beer on weekends that they were kicking the holes in the hallway.
Mark Depker (10:44):
The next morning I would get up early and go around, fix the windows that were broken and try to get the property in shape.
Craig Hall (11:00):
When I was buying a lot of apartments, I had various things that were quantum leaps. At that point, I had had enough of all the student headaches and the unique problems, so I basically just decided I’m going to phase out of that business and phase into real people housing. Honeytree was a much bigger property and it was an all adult not student property. It was $10 million. It was the first quantum leap.
Mark Depker (11:25):
Honeytree, it was a big purchase. It was 766 units I recall, and had a huge amount of physical challenges. That’s what Craig got his mojo on was buying a property and seeing the future of what we could turn it into.
Female Narrator (11:49):
Craig’s first quantum leap made him a millionaire at age 21, but real estate wasn’t the only thing Craig was investing in. He was open to other interesting opportunities.
Craig Hall (12:00):
I was approached by some people with an idea that racquetball was a new hot craze.
Larry Levey (12:05):
Sort of like squash, like tennis, but indoor.
Craig Hall (12:11):
We built a couple of racquetball clubs and they were doing very well. One day I was talking with my best friend at the time, a guy named Marty Rom. I said, “Well, let’s make a list of companies that have names that would be good for the racquetball business and maybe we could license their name.” The number one on the list was Time Incorporated. They owned Sports Illustrated Magazine, Life Magazine, huge company. Marty called the switchboard at Time Incorporated in New York and said, “Who runs your venture capital area?” They said, “Henry Luce III.” Marty, believe it or not, gets him on the phone. Marty starts saying, “Do you go by Henry or Hank?” He said, “Well, I go by Hank.” He said, “Well, Hank, I want to tell you about Craig Hall.” I’m sitting there laughing. Next thing I know he gets an appointment to see the head of venture capital for Time Incorporated. When he gets off the phone, I said, “Marty, I can’t afford a ticket to New York.” He said, “Not only that.” He said, “You’re going to have to pay for mine too.”
We got to New York. We met with Hank Luce and Jen Wong. We noticed Hank had three martinis at lunch and he wasn’t done. Marty Rom is telling Hank how great Craig Hall is and how great racquetball is. Jen Wong is there taking notes and Hank is having martinis. Next thing you know, by the end of the lunch, Hank says, “Okay, we’ll do it.” The lawyer for Time Incorporated couldn’t believe that Mr. Luce agreed to this, and as a humorous thing, he hand wrote on a yellow pad of paper, he said, “Here’s the deal. You get to pretend you’re us and use our name and we give you $1 million.” How many lunches do you go to where you’re done with lunch, you’re $1 million richer and you get to use their name for your letterhead and everything else.
Suzie Ebbing (14:28):
The court club was racquetball, aerobics and entertainment. Men came in during that seventies time in short shorts and a t-shirt and all the women had leotards, tights, shorts.
Craig Hall (14:42):
I got to hang out with all these athletes.
Suzie Ebbing (14:44):
The baseball players, couple basketball players, and we had some celebrities.
Craig Hall (14:50):
It would be a huge company today except for one thing, the racquetball business was a fad.
Larry Levey (14:56):
The industry went south. Everybody that had a racquetball club was closing them up all over the place.
Craig Hall (15:03):
We had 17 of these clubs and we were losing money and ultimately Time Incorporated paid us to take their name back and it was a multi-year, interesting experience and I don’t regret any of it. My wife and I in 1974 were driving from Ann Arbor to the airport and we drove by a property called Knob on the Lake, huge property. At the time by far the biggest in Michigan, but it was obvious it was in trouble because the parking lots were pretty empty.
Mark Blocher (15:45):
They were just having all kinds of problems getting anybody to live out there because it was way out in the excerpts, way outside of the Detroit metropolitan area.
Craig Hall (15:53):
This was at a time when there was an Arab embargo of oil and gasoline. Prices were very high and any property that was that far away from employment was destined to fail. I called some of the guys at the office and I said, “I just drove by a property, find out who owns it so that we can figure out how to buy it.”
Ron Berlin (16:17):
Knob on the Lake was developed by Frank Vogue. My wife was the granddaughter of Frank Vogue.
Craig Hall (16:24):
He was 79. I was 24. So we had a lot in common. Not really. He didn’t want to sell it. But he was behind on a number of mortgages. After being thrown out of his office, literally three or four times-
Ron Berlin (16:39):
I only heard the Frank side of it, telling us a little bit about this little pip squeak, coming in wanting to buy his property.
Craig Hall (16:47):
I finally convinced him that I was the only chance he had of not ending up in bankruptcy. I gave him a $300,000 note. I had no money, and I told him I would work to keep all of his creditors off his back.
Ron Berlin (17:01):
Craig won him over as Craig does. He has a sensitivity to understanding his seller.
Craig Hall (17:07):
We were told by everybody, after we bought it, that you just bought a lemon. I was changing things to tree anyway, so I changed it to Lemontree.
Mark Depker (17:15):
Let’s make lemonade and call it Lemontree.
Mark Blocher (17:22):
The biggest thing about Lemontree was the way that we were focused on marketing.
Mark Depker (17:26):
We had Lemontree bowls. We even had a parade that came down the street and threw lemon drops.
Larry Levey (17:33):
If you had a problem that needed to be fixed by a maintenance guy, you could call it lemonade.
Suzie Ebbing (17:38):
We had a lot of social events. We had ice cream socials. Lemontree was aggressively marketed on the radio, TV. I know we had newspaper ads.
Mark Blocher (17:48):
But more than that, the biggest thing was that we focused on explaining why you wanted to live out there. Craig was the one that thought, “Well, you have to change people’s mindsets.” He advertised, “You go out to the lake on the weekends, why not live where you’ve got a golf course and a lake,” and all that kind of stuff. And people started thinking, “Hey, that’s not such a bad idea, mate. It’s worth paying a little bit for gas to live in that kind of a place.”
Craig Hall (18:21):
Ultimately, we not only turned the Lemontree year round, but we raised $3,300,000 of equity and we did that through a tax shelter syndication. I made a lot of money because I met a guy, his name was Arthur Klarstein, tax lawyer, and he said, “You can’t do these things for free.” And he said, “You got to charge a fee.” I never thought of that, but it was a good idea. I showed him the syndication that I had in mind and he said, “Well put a $600,000 fee in there for yourself.” I thought, “Wow, really?” Anyway, I did and I got paid $600,000. So that was a pretty cool thing. After that, I continued with that kind of program. It was a good idea.
Ron Berlin (19:06):
That was the nucleus of building the portfolio, being able to bring together a securities division that would raise money for the properties that we would find, and that’s the growth that occurred between 1974 and let’s say 1984. That tremendous growth was filled by more of the tax incentives than anything else.