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Accessing Capital for Real Estate Development · Earn Your Leisure

• 0:00
  Speaker 1: So how are you moving into different markets, Like what
• 0:02
  Speaker 1: are some challenges with that. You started where you're from,
• 0:05
  Speaker 1: but now you're going to Texas and you going to
• 0:07
  Speaker 1: you say they moved to Atlanta and different things like
• 0:09
  Speaker 1: and then you're doing different different product types as well. Yeah,
• 0:13
  Speaker 1: we talk about navigating that.
• 0:15
  Speaker 2: So relationships, man, it's it's it's everything. I think when
• 0:19
  Speaker 2: I was coming up in Milwaukee, one of the things
• 0:22
  Speaker 2: that I did was just build those relationships off network,
• 0:26
  Speaker 2: and I was at every event. You couldn't miss me.
• 0:28
  Speaker 2: I literally you could not miss me. I was everywhere.
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  Speaker 2: Uh So I took that same model, but now I'm
• 0:33
  Speaker 2: doing it on the national scale. Everything in DC real
• 0:36
  Speaker 2: estate based events, I'm there. I'm not there as much
• 0:39
  Speaker 2: now because I've been you know, headed down, but I'm
• 0:41
  Speaker 2: in those Atlanta based events, I'm in that, Houston based events,
• 0:45
  Speaker 2: I'm in those you know, Birmingham based events, I'm in that.
• 0:48
  Speaker 2: So I look for the macro economic trends that I
• 0:52
  Speaker 2: liked population growth. I really like red states and blue
• 0:57
  Speaker 2: cities because it allows for flexibility and getting out tennis
• 1:05
  Speaker 2: that may not pay right. I'm not saying you're vic folks,
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  Speaker 2: that's not what I'm here for but at the same time,
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  Speaker 2: places like Atlanta.
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  Speaker 3: Atlanta is in as bad Atlanta's d C. Let's use DC.
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  Speaker 3: For example.
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  Speaker 1: You said red state and blue city.
• 1:19
  Speaker 3: Yes, those are places like Atlanta.
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  Speaker 1: I likes.
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  Speaker 2: Georgia's Birmingham all blue states, red city. I mean, I
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  Speaker 2: mean traditionally george is not a blue state though it No, no, no,
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  Speaker 2: I mean blue Citi's Red states. I may have said
• 1:33
  Speaker 2: it the wrong.
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  Speaker 1: What Birmingham would be, Yeah, yeah, for sure, New Orleans, Yes,
• 1:39
  Speaker 1: stuff like that.
• 1:40
  Speaker 2: Yeah, I really like blue states, red cities. Sorry, blue cities,
• 1:44
  Speaker 2: red states because the higher level laws allow for more flexibility,
• 1:49
  Speaker 2: like a place like DC, for example, there were people
• 1:51
  Speaker 2: that literally d C prior to the pandemic. You can
• 1:55
  Speaker 2: go rent an apartment, never pay your rent, and you
• 1:59
  Speaker 2: don't have to get out for at least seven months
• 2:01
  Speaker 2: because that's all on the process stakes. Like I know
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  Speaker 2: people that lived in the building that I lived in
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  Speaker 2: that literally leased it and didn't pay rent. They just
• 2:08
  Speaker 2: leased it out every summer so they can enjoy the
• 2:10
  Speaker 2: rooftop and they just burn up different people's things like okay,
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  Speaker 2: your name this year, were all gonna live there.
• 2:15
  Speaker 3: Your name this year? We're all gonna live there.
• 2:17
  Speaker 1: Are there any Are there any major cities that are
• 2:20
  Speaker 1: run by Republicans? I don't think so. Right most every
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  Speaker 1: major city run by Democrats. Think about it.
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  Speaker 3: That's a good Chicago, LA.
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  Speaker 1: Miami's a Democrat, the mayor's a Democrat. I don't think
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  Speaker 1: there's any major city that that's interesting. I just thought
• 2:35
  Speaker 1: about that. No, no major city has demo, has Republican control,
• 2:41
  Speaker 1: even even if it's in the Republican l A. Yeah,
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  Speaker 1: San Francisco, San Francisco saying yeah, Philly, yeah, and you know,
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  Speaker 1: Pennsylvana's back and forth.
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  Speaker 3: But those those cities, those states.
• 2:55
  Speaker 2: That have those very like strings and laws, like a
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  Speaker 2: DC for example, I'm not the most fond of. Right,
• 3:02
  Speaker 2: Like during the pandemic, there are people that literally lived
• 3:05
  Speaker 2: for over a year just because of the system. And
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  Speaker 2: it's like you're not paying any rent. As a landowner
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  Speaker 2: that has thousands of units, I don't want thousands of
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  Speaker 2: units in the place that I can't get people exploiting
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  Speaker 2: this system. Out in Wisconsin, you get somebody thirty days,
• 3:23
  Speaker 2: all right, boom, you go through the process. Atlanta even
• 3:25
  Speaker 2: quicker than that. And I'm not saying we should exploit
• 3:28
  Speaker 2: it either. But from a business perspective, it doesn't make
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  Speaker 2: sense for me to be in a place where X
• 3:33
  Speaker 2: amount of people that pay rent, especially as I'm a
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  Speaker 2: rising Like when I get bigger, of course, maybe I
• 3:38
  Speaker 2: could deal with some of that drop, but right now
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  Speaker 2: now I'm focused on cities where it makes sense financially.
• 3:44
  Speaker 4: So you moved throughout the cities. I know the HUT
• 3:46
  Speaker 4: is involved in the Birmingham situation. There was three hundred
• 3:48
  Speaker 4: and seventy million allocated for the developments. Is it a
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  Speaker 4: situation where you can now again go back to hood
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  Speaker 4: and do the same type of oppose in a different city.
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  Speaker 3: Absolutely.
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  Speaker 2: So, I'm a finalist for three cities right now.
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  Speaker 4: I knew it, man, I knew.
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  Speaker 2: I'm a finalist for three cities right now. I got
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  Speaker 2: a call yesterday about one. We'll talk about the cities offline.
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  Speaker 3: Yeah.
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  Speaker 2: So the strategy and the game plan there is, if
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  Speaker 2: let's say once a year, once every other year, I
• 4:19
  Speaker 2: can pick up one of these. Birmingham will be further
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  Speaker 2: along now I'm starting that and if each one is
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  Speaker 2: kicking out a thousand plus units, you get three four cities.
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  Speaker 3: I mean by the time I'm thirty four.
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  Speaker 2: Now by the time I'm forty two forty three, I
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  Speaker 2: have thousands of units under my belt that I've developed
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  Speaker 2: and really just starting to enter my prime.
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  Speaker 4: On your financial map, does a percentage change with the
• 4:44
  Speaker 4: amount of units? Right when you started at the one forty,
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  Speaker 4: you had your percentage that was put in. Now you're
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  Speaker 4: doing eleven hundred, but you have partners.
• 4:51
  Speaker 3: Yes, great question, Yes it did change.
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  Speaker 2: So each city that you go into their housing authority
• 5:00
  Speaker 2: that you So all of these are public housing redevelopment.
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  Speaker 2: So think to Brittany Greens, think Marcie Projects, et cetera.
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  Speaker 2: We're taking the projects and creating mixed income communities because
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  Speaker 2: if you think about the projects that were low density,
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  Speaker 2: so it's thirty acres of land with three hundred units
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  Speaker 2: on it, that's saying thirty acres could do three thousand
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  Speaker 2: if you really wanted to, right, But you don't want to.
• 5:26
  Speaker 2: You don't want to go that dence. But that's just
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  Speaker 2: an example of what you are going after. So, because
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  Speaker 2: the housing authorities typically own those lands, whoever is at
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  Speaker 2: the housing authority, they kind of dictate the negotiation of
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  Speaker 2: like the housing authority and developer in those terms the
• 5:44
  Speaker 2: housing authority gets x percentage and then the developers gets
• 5:47
  Speaker 2: why percentage, And right now Integrow and I are splitting
• 5:51
  Speaker 2: that percentage. But it's very favorable, like it's pretty close
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  Speaker 2: to where it should be. And the way we work
• 5:58
  Speaker 2: they come. I'm driving, but they're they're every step of
• 6:02
  Speaker 2: away in the passenger seat. So I'm able to learn
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  Speaker 2: from it in their experience. They've developed, built and manage
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  Speaker 2: over ten thousand plus units. They've been doing this, they
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  Speaker 2: created the model. I'm learning from them, but I'm driving
• 6:12
  Speaker 2: the ship at the same time. So yes, I have
• 6:16
  Speaker 2: to share in the economics. But you know, three four
• 6:19
  Speaker 2: hundred million dollar deals a pop. I don't mind sharing.
• 6:23
  Speaker 2: We can figure it out. So talk about access to capital.
• 6:26
  Speaker 2: That's something that you know, don people a lot of
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  Speaker 2: people haven't talked about. What is your thoughts on access
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  Speaker 2: to capital as far as on the real estate development
• 6:36
  Speaker 2: side and what's your personal experience is trying to get
• 6:39
  Speaker 2: access to capital the money on this commercial real estate side.
• 6:43
  Speaker 2: Like I said, the money is gonna be there if
• 6:45
  Speaker 2: you got to deal to work, the money's gonna flow
• 6:47
  Speaker 2: at the end of the day. Now, the terms for
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  Speaker 2: the money talked about before that's where it gets a
• 6:52
  Speaker 2: little tricky. I'll say in a way of George Floyd.
• 6:57
  Speaker 2: There was an eighteen month period maybe even a little I mean,
• 7:02
  Speaker 2: it's still kind of there, but it's scaling back where
• 7:05
  Speaker 2: they were throwing money at black developers.
• 7:07
  Speaker 1: Who moves stolen money like Blackrock.
• 7:10
  Speaker 3: Uh No, that's a great question. So like the paypals
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  Speaker 3: of the world.
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  Speaker 2: When they was giving out all of the like oh,
• 7:16
  Speaker 2: I want to invest in black communities, primarily went to
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  Speaker 2: CDFI's Community Development Financial Institution that we talked about last time.
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  Speaker 2: There's some national cd offis that governed some of those
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  Speaker 2: funds and they've been able to kind.
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  Speaker 3: Of distill those funds to us.
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  Speaker 2: So like Enterprise Community Partners that my equity investors on
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  Speaker 2: the Madison deal, they have a program called Equitable Path Forward.
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  Speaker 2: Their CEO just took over Fanny May. So that's the
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  Speaker 2: scale of like how big these CDFIs are now. They're
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  Speaker 2: one of their presidents, Lrie Chapman. She created this program
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  Speaker 2: based upon all of that money that was coming in
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  Speaker 2: from the corporations that were trying to give to black dollars.
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  Speaker 3: And this program is specifically created to be able to.
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  Speaker 2: They have to credit for us from an operational business perspective,
• 8:03
  Speaker 2: they have pre development loans so you can go out
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  Speaker 2: each one of these deals, you need at least a
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  Speaker 2: half a million, anywhere from a half a million to
• 8:10
  Speaker 2: a million before you close. You get it all back
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  Speaker 2: when you finish, but you need that before you close.
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  Speaker 2: So when you talk about like capacity, that's one of
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  Speaker 2: the things too. If you have five of these deals
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  Speaker 2: going on at one time, you're gonna need too and
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  Speaker 2: a half to five million dollars worth of capital just
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  Speaker 2: to deploy to that, not even talking about your operations
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  Speaker 2: and nothing like that. So they have programs that are
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  Speaker 2: allowing for developers to be able to tap into those
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  Speaker 2: type of money that helps us grow in scale. But
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  Speaker 2: the flip side of it is that's all to you know,
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  Speaker 2: kind of feel good money that's gonna flip. But to
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  Speaker 2: don People's point, black people don't manage big pension funds
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  Speaker 2: at all, right, I've heard him talk about it on
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  Speaker 2: y'all's platform. At the end of the day, we're less
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  Speaker 2: than one percent of all of the management, Black brown women,
• 9:00
  Speaker 2: less than one percent of all assets managed. But if
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  Speaker 2: in New York, for example, with black brown and women.
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  Speaker 2: It is over fifty percent of what's going into that
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  Speaker 2: pension fund. Why is it less than one percent of
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  Speaker 2: us managing or having access to manage those funds. What
• 9:13
  Speaker 2: is the governance around that to say, oh, you are
• 9:16
  Speaker 2: not capable enough to do that. That's still a really
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  Speaker 2: big challenge to be able to even go from someone
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  Speaker 2: like myself that's a developer that's established, to get into
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  Speaker 2: funded management and be able to allocate to either my
• 9:28
  Speaker 2: developments or other developers in the same way as some
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  Speaker 2: of these traditional majority firms are doing with no problem.
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  Speaker 2: So that's really a challenge that I think needs to
• 9:39
  Speaker 2: be addressed, and I'm doing my job to do it.
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  Speaker 2: So Reinvestors a platform that I'm creating now. It's a
• 9:45
  Speaker 2: crowdfunding platform that democratizes commercial real esset investment. My mother
• 9:49
  Speaker 2: can invest, your parents can invest unless they are accredited. Historically,
• 9:53
  Speaker 2: but you've seen crowdfundings start to grow in the real
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  Speaker 2: estate space a little bit. So I'm doing a regulation
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  Speaker 2: a plus we can raise up to seventy five million.
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  Speaker 2: I'm gonna put a portfolio of deals together and have
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  Speaker 2: people invest in that and back by the best of
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  Speaker 2: the best in the country that are doing it so
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  Speaker 2: it's secure by those funds, I mean buy those firms,
• 10:15
  Speaker 2: and we underwrite the deals, we co invest in the deals.
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  Speaker 2: It's a it's not like investing in a company. It's
• 10:21
  Speaker 2: not like investing in a onesie deal. Like we are,
• 10:24
  Speaker 2: you know, putting together sophistication in a way that the
• 10:27
  Speaker 2: marketplace has not seen. So that's one of the ways
• 10:30
  Speaker 2: that I'm addressing that access to capital challenge for emerging
• 10:33
  Speaker 2: developers that are like me and coming up behind me too.