WEBVTT - Accessing Capital for Real Estate Development

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<v Speaker 1>So how are you moving into different markets, Like what

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<v Speaker 1>are some challenges with that. You started where you're from,

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<v Speaker 1>but now you're going to Texas and you going to

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<v Speaker 1>you say they moved to Atlanta and different things like

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<v Speaker 1>and then you're doing different different product types as well. Yeah,

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<v Speaker 1>we talk about navigating that.

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<v Speaker 2>So relationships, man, it's it's it's everything. I think when

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<v Speaker 2>I was coming up in Milwaukee, one of the things

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<v Speaker 2>that I did was just build those relationships off network,

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<v Speaker 2>and I was at every event. You couldn't miss me.

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<v Speaker 2>I literally you could not miss me. I was everywhere.

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<v Speaker 2>Uh So I took that same model, but now I'm

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<v Speaker 2>doing it on the national scale. Everything in DC real

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<v Speaker 2>estate based events, I'm there. I'm not there as much

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<v Speaker 2>now because I've been you know, headed down, but I'm

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<v Speaker 2>in those Atlanta based events, I'm in that, Houston based events,

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<v Speaker 2>I'm in those you know, Birmingham based events, I'm in that.

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<v Speaker 2>So I look for the macro economic trends that I

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<v Speaker 2>liked population growth. I really like red states and blue

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<v Speaker 2>cities because it allows for flexibility and getting out tennis

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<v Speaker 2>that may not pay right. I'm not saying you're vic folks,

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<v Speaker 2>that's not what I'm here for but at the same time,

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<v Speaker 2>places like Atlanta.

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<v Speaker 3>Atlanta is in as bad Atlanta's d C. Let's use DC.

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<v Speaker 3>For example.

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<v Speaker 1>You said red state and blue city.

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<v Speaker 3>Yes, those are places like Atlanta.

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<v Speaker 1>I likes.

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<v Speaker 2>Georgia's Birmingham all blue states, red city. I mean, I

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<v Speaker 2>mean traditionally george is not a blue state though it No, no, no,

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<v Speaker 2>I mean blue Citi's Red states. I may have said

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<v Speaker 2>it the wrong.

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<v Speaker 1>What Birmingham would be, Yeah, yeah, for sure, New Orleans, Yes,

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<v Speaker 1>stuff like that.

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<v Speaker 2>Yeah, I really like blue states, red cities. Sorry, blue cities,

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<v Speaker 2>red states because the higher level laws allow for more flexibility,

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<v Speaker 2>like a place like DC, for example, there were people

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<v Speaker 2>that literally d C prior to the pandemic. You can

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<v Speaker 2>go rent an apartment, never pay your rent, and you

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<v Speaker 2>don't have to get out for at least seven months

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<v Speaker 2>because that's all on the process stakes. Like I know

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<v Speaker 2>people that lived in the building that I lived in

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<v Speaker 2>that literally leased it and didn't pay rent. They just

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<v Speaker 2>leased it out every summer so they can enjoy the

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<v Speaker 2>rooftop and they just burn up different people's things like okay,

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<v Speaker 2>your name this year, were all gonna live there.

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<v Speaker 3>Your name this year? We're all gonna live there.

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<v Speaker 1>Are there any Are there any major cities that are

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<v Speaker 1>run by Republicans? I don't think so. Right most every

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<v Speaker 1>major city run by Democrats. Think about it.

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<v Speaker 3>That's a good Chicago, LA.

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<v Speaker 1>Miami's a Democrat, the mayor's a Democrat. I don't think

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<v Speaker 1>there's any major city that that's interesting. I just thought

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<v Speaker 1>about that. No, no major city has demo, has Republican control,

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<v Speaker 1>even even if it's in the Republican l A. Yeah,

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<v Speaker 1>San Francisco, San Francisco saying yeah, Philly, yeah, and you know,

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<v Speaker 1>Pennsylvana's back and forth.

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<v Speaker 3>But those those cities, those states.

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<v Speaker 2>That have those very like strings and laws, like a

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<v Speaker 2>DC for example, I'm not the most fond of. Right,

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<v Speaker 2>Like during the pandemic, there are people that literally lived

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<v Speaker 2>for over a year just because of the system. And

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<v Speaker 2>it's like you're not paying any rent. As a landowner

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<v Speaker 2>that has thousands of units, I don't want thousands of

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<v Speaker 2>units in the place that I can't get people exploiting

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<v Speaker 2>this system. Out in Wisconsin, you get somebody thirty days,

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<v Speaker 2>all right, boom, you go through the process. Atlanta even

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<v Speaker 2>quicker than that. And I'm not saying we should exploit

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<v Speaker 2>it either. But from a business perspective, it doesn't make

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<v Speaker 2>sense for me to be in a place where X

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<v Speaker 2>amount of people that pay rent, especially as I'm a

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<v Speaker 2>rising Like when I get bigger, of course, maybe I

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<v Speaker 2>could deal with some of that drop, but right now

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<v Speaker 2>now I'm focused on cities where it makes sense financially.

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<v Speaker 4>So you moved throughout the cities. I know the HUT

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<v Speaker 4>is involved in the Birmingham situation. There was three hundred

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<v Speaker 4>and seventy million allocated for the developments. Is it a

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<v Speaker 4>situation where you can now again go back to hood

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<v Speaker 4>and do the same type of oppose in a different city.

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<v Speaker 3>Absolutely.

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<v Speaker 2>So, I'm a finalist for three cities right now.

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<v Speaker 4>I knew it, man, I knew.

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<v Speaker 2>I'm a finalist for three cities right now. I got

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<v Speaker 2>a call yesterday about one. We'll talk about the cities offline.

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<v Speaker 3>Yeah.

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<v Speaker 2>So the strategy and the game plan there is, if

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<v Speaker 2>let's say once a year, once every other year, I

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<v Speaker 2>can pick up one of these. Birmingham will be further

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<v Speaker 2>along now I'm starting that and if each one is

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<v Speaker 2>kicking out a thousand plus units, you get three four cities.

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<v Speaker 3>I mean by the time I'm thirty four.

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<v Speaker 2>Now by the time I'm forty two forty three, I

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<v Speaker 2>have thousands of units under my belt that I've developed

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<v Speaker 2>and really just starting to enter my prime.

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<v Speaker 4>On your financial map, does a percentage change with the

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<v Speaker 4>amount of units? Right when you started at the one forty,

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<v Speaker 4>you had your percentage that was put in. Now you're

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<v Speaker 4>doing eleven hundred, but you have partners.

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<v Speaker 3>Yes, great question, Yes it did change.

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<v Speaker 2>So each city that you go into their housing authority

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<v Speaker 2>that you So all of these are public housing redevelopment.

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<v Speaker 2>So think to Brittany Greens, think Marcie Projects, et cetera.

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<v Speaker 2>We're taking the projects and creating mixed income communities because

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<v Speaker 2>if you think about the projects that were low density,

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<v Speaker 2>so it's thirty acres of land with three hundred units

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<v Speaker 2>on it, that's saying thirty acres could do three thousand

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<v Speaker 2>if you really wanted to, right, But you don't want to.

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<v Speaker 2>You don't want to go that dence. But that's just

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<v Speaker 2>an example of what you are going after. So, because

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<v Speaker 2>the housing authorities typically own those lands, whoever is at

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<v Speaker 2>the housing authority, they kind of dictate the negotiation of

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<v Speaker 2>like the housing authority and developer in those terms the

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<v Speaker 2>housing authority gets x percentage and then the developers gets

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<v Speaker 2>why percentage, And right now Integrow and I are splitting

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<v Speaker 2>that percentage. But it's very favorable, like it's pretty close

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<v Speaker 2>to where it should be. And the way we work

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<v Speaker 2>they come. I'm driving, but they're they're every step of

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<v Speaker 2>away in the passenger seat. So I'm able to learn

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<v Speaker 2>from it in their experience. They've developed, built and manage

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<v Speaker 2>over ten thousand plus units. They've been doing this, they

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<v Speaker 2>created the model. I'm learning from them, but I'm driving

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<v Speaker 2>the ship at the same time. So yes, I have

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<v Speaker 2>to share in the economics. But you know, three four

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<v Speaker 2>hundred million dollar deals a pop. I don't mind sharing.

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<v Speaker 2>We can figure it out. So talk about access to capital.

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<v Speaker 2>That's something that you know, don people a lot of

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<v Speaker 2>people haven't talked about. What is your thoughts on access

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<v Speaker 2>to capital as far as on the real estate development

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<v Speaker 2>side and what's your personal experience is trying to get

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<v Speaker 2>access to capital the money on this commercial real estate side.

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<v Speaker 2>Like I said, the money is gonna be there if

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<v Speaker 2>you got to deal to work, the money's gonna flow

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<v Speaker 2>at the end of the day. Now, the terms for

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<v Speaker 2>the money talked about before that's where it gets a

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<v Speaker 2>little tricky. I'll say in a way of George Floyd.

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<v Speaker 2>There was an eighteen month period maybe even a little I mean,

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<v Speaker 2>it's still kind of there, but it's scaling back where

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<v Speaker 2>they were throwing money at black developers.

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<v Speaker 1>Who moves stolen money like Blackrock.

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<v Speaker 3>Uh No, that's a great question. So like the paypals

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<v Speaker 3>of the world.

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<v Speaker 2>When they was giving out all of the like oh,

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<v Speaker 2>I want to invest in black communities, primarily went to

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<v Speaker 2>CDFI's Community Development Financial Institution that we talked about last time.

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<v Speaker 2>There's some national cd offis that governed some of those

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<v Speaker 2>funds and they've been able to kind.

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<v Speaker 3>Of distill those funds to us.

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<v Speaker 2>So like Enterprise Community Partners that my equity investors on

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<v Speaker 2>the Madison deal, they have a program called Equitable Path Forward.

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<v Speaker 2>Their CEO just took over Fanny May. So that's the

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<v Speaker 2>scale of like how big these CDFIs are now. They're

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<v Speaker 2>one of their presidents, Lrie Chapman. She created this program

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<v Speaker 2>based upon all of that money that was coming in

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<v Speaker 2>from the corporations that were trying to give to black dollars.

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<v Speaker 3>And this program is specifically created to be able to.

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<v Speaker 2>They have to credit for us from an operational business perspective,

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<v Speaker 2>they have pre development loans so you can go out

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<v Speaker 2>each one of these deals, you need at least a

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<v Speaker 2>half a million, anywhere from a half a million to

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<v Speaker 2>a million before you close. You get it all back

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<v Speaker 2>when you finish, but you need that before you close.

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<v Speaker 2>So when you talk about like capacity, that's one of

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<v Speaker 2>the things too. If you have five of these deals

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<v Speaker 2>going on at one time, you're gonna need too and

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<v Speaker 2>a half to five million dollars worth of capital just

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<v Speaker 2>to deploy to that, not even talking about your operations

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<v Speaker 2>and nothing like that. So they have programs that are

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<v Speaker 2>allowing for developers to be able to tap into those

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<v Speaker 2>type of money that helps us grow in scale. But

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<v Speaker 2>the flip side of it is that's all to you know,

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<v Speaker 2>kind of feel good money that's gonna flip. But to

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<v Speaker 2>don People's point, black people don't manage big pension funds

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<v Speaker 2>at all, right, I've heard him talk about it on

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<v Speaker 2>y'all's platform. At the end of the day, we're less

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<v Speaker 2>than one percent of all of the management, Black brown women,

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<v Speaker 2>less than one percent of all assets managed. But if

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<v Speaker 2>in New York, for example, with black brown and women.

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<v Speaker 2>It is over fifty percent of what's going into that

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<v Speaker 2>pension fund. Why is it less than one percent of

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<v Speaker 2>us managing or having access to manage those funds. What

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<v Speaker 2>is the governance around that to say, oh, you are

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<v Speaker 2>not capable enough to do that. That's still a really

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<v Speaker 2>big challenge to be able to even go from someone

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<v Speaker 2>like myself that's a developer that's established, to get into

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<v Speaker 2>funded management and be able to allocate to either my

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<v Speaker 2>developments or other developers in the same way as some

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<v Speaker 2>of these traditional majority firms are doing with no problem.

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<v Speaker 2>So that's really a challenge that I think needs to

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<v Speaker 2>be addressed, and I'm doing my job to do it.

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<v Speaker 2>So Reinvestors a platform that I'm creating now. It's a

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<v Speaker 2>crowdfunding platform that democratizes commercial real esset investment. My mother

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<v Speaker 2>can invest, your parents can invest unless they are accredited. Historically,

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<v Speaker 2>but you've seen crowdfundings start to grow in the real

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<v Speaker 2>estate space a little bit. So I'm doing a regulation

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<v Speaker 2>a plus we can raise up to seventy five million.

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<v Speaker 2>I'm gonna put a portfolio of deals together and have

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<v Speaker 2>people invest in that and back by the best of

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<v Speaker 2>the best in the country that are doing it so

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<v Speaker 2>it's secure by those funds, I mean buy those firms,

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<v Speaker 2>and we underwrite the deals, we co invest in the deals.

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<v Speaker 2>It's a it's not like investing in a company. It's

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<v Speaker 2>not like investing in a onesie deal. Like we are,

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<v Speaker 2>you know, putting together sophistication in a way that the

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<v Speaker 2>marketplace has not seen. So that's one of the ways

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<v Speaker 2>that I'm addressing that access to capital challenge for emerging

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<v Speaker 2>developers that are like me and coming up behind me too.