Speaker 1: Hey, everybody, it's Bill Courtney with an army of normal folks.
Speaker 1: And we continue now with part two of our conversation
Speaker 1: with Michael Gosman. Right after these brief messages from our
Speaker 1: general sponsors. So the city agreed to that deal, and
Speaker 1: you guys went out and let the community know what existed.
Speaker 1: He started getting people in homes. So now I can't
Speaker 1: help but think just from the business side of me,
Speaker 1: all right, great, you can buy the home for one
Speaker 1: thousand dollars or a dollar, but code's not going to
Speaker 1: let you move into it to it's right. Sure, so
Speaker 1: you've got to have money to fix it up, which
Speaker 1: means you got to borrow money, which many families in
Speaker 1: these situations can't go to Bank of America and get
Speaker 1: a loan for this. That you guys came up with
Speaker 1: a fix for them.
Speaker 2: That's exactly right.
Speaker 3: So we never had any aspirations of being in the
Speaker 3: mortgage lending business.
Speaker 1: Yeah, this was things kind of roll downhill and get big.
Speaker 2: Yeah, that wasn't.
Speaker 3: That wasn't on the Bengo card when father Dennis and
Speaker 3: John Worm were founding acts and we still partner very
Speaker 3: significantly with banks and credit unions to get provide most
Speaker 3: of the mortgage financing for our families. But what we
Speaker 3: saw in the aftermath of the foreclosure crisis was that
Speaker 3: banks were we're trenching. They weren't lending as freely for
Speaker 3: some good reasons and maybe some not so great reasons,
Speaker 3: And in particular, they weren't lending to families who were
Speaker 3: purchasing distressed homes. It's one thing for a bank to
Speaker 3: lend on a move and ready home, but a distressed home,
Speaker 3: a home that's not livable, the bank looks at that
Speaker 3: as a much bigger risk.
Speaker 1: Right well, and in fairness to the bank, it is
Speaker 1: it is. Yeah, I mean, how are you going to
Speaker 1: land fifty thousand dollars on a place that today is
Speaker 1: worth literally a dollar.
Speaker 2: That's exactly right, And.
Speaker 1: You can't really blame the bank. It doesn't mean they're predatory,
Speaker 1: but they answer to a board of directors, they answer
Speaker 1: to shareholders, they answer to whoever's holding the bag. No
Speaker 1: loan officer can justify that, So I kind of get
Speaker 1: why that's a barrier.
Speaker 2: I think that's right.
Speaker 3: I think they and so we quickly realized and we
Speaker 3: had good relationships a lot of local banks. We pushed
Speaker 3: them to do as much as we could get them
Speaker 3: to do, and we realized they're not going to do this.
Speaker 3: There's no way that they're going to land on these
Speaker 3: homes at the scale we need, and so we piloted.
Speaker 2: Our own loan product.
Speaker 1: Hilarious would get it. You know.
Speaker 3: The idea was sort of a return to common sense underwriting.
Speaker 3: Let's look at their rental history. Let's make that the
Speaker 3: most important thing. Are they paying their rent on time
Speaker 3: every single month? What's their rent okay, what's their new
Speaker 3: mortgage going to be? That's a great indicator of whether
Speaker 3: they're going to pay their mortgage right. Are they paying
Speaker 3: their rent on time?
Speaker 1: And I read you guys are actually trying to get
Speaker 1: them into a mortgage that is actually a little less
Speaker 1: than what they pay for rent, So they're getting ownership
Speaker 1: and paying less.
Speaker 2: That's the case scenario.
Speaker 3: And especially in this period where I'm talking about, where
Speaker 3: we were offering the ax lending product, we had families
Speaker 3: who were spending eight hundred one twelve hundred dollars a
Speaker 3: month in rent who wound up having a new mortgage
Speaker 3: payment including taxes and insurance that was more like five
Speaker 3: or six hundred dollars a month, So just many hundreds
Speaker 3: of dollars of savings for the lowest income families, working
Speaker 3: families in our in our community. But getting those deals
Speaker 3: done we're not easy, you know, setting up your own
Speaker 3: mortgage lending effort. Turns out there's a fair amount of
Speaker 3: compliance requirements that you got to really pay a lot
Speaker 3: of attention to. So we had to be very strategic
Speaker 3: in terms of who our volunteers were, because we didn't
Speaker 3: have the money to hire a bunch of folks who
Speaker 3: were going to spend there all their time on regulations.
Speaker 3: But we had some great lawyers and compliance folks who
Speaker 3: volunteered for us because they believed in this and thought
Speaker 3: it could be successful, and.
Speaker 2: We just started doing We started doing loans.
Speaker 3: I will tell you when I joined, So I didn't
Speaker 3: join the organization. I've been on the team now for
Speaker 3: thirteen years. I was a volunteer for a couple of
Speaker 3: years before that. When I joined the organization, we just
Speaker 3: started this lending work, and we'd gotten pretty good at
Speaker 3: lending the money. So we were doing maybe you know,
Speaker 3: ten fifteen of these loans a year, lending families purchase
Speaker 3: and fix up these homes.
Speaker 2: But we weren't really great at getting paid back.
Speaker 3: And when I was a volunteer, I was like, oh,
Speaker 3: that's that's a little bit troubling, Like it would it
Speaker 3: would be good if we were getting getting monthly payments people.
Speaker 2: People weren't paying their notes.
Speaker 3: And so you know, there's a question of okay, well
Speaker 3: this only works if people are actually paying us back.
Speaker 3: So let's figure out what's going on. And the organization.
Speaker 3: You have to understand we were tiny. You know, I
Speaker 3: was a volunteer for the organization, but there were only
Speaker 3: six full time staff members, and so as a volunteer,
Speaker 3: they let me dig in a little bit to the
Speaker 3: lending work because again, there wasn't someone to do everything.
Speaker 3: So all right, you got this guy who's volunteering to
Speaker 3: help out. Let's give him as much as they'll take.
Speaker 1: And when I.
Speaker 3: Dug in, I realized that we weren't invoicing families. You know,
Speaker 3: they weren't getting any sort of monthly reminder that do.
Speaker 1: So that people get why this might be what would
Speaker 1: what before this world? You would what was your discipline,
Speaker 1: your occupation?
Speaker 2: Yeah, so I was practicing law.
Speaker 3: I was working at a sort of large Milwaukee Milwaukee
Speaker 3: law firm and was completely unsatisfied with the practice of law.
Speaker 2: Where'd you go to law school University of Chicago?
Speaker 1: You're smart? How'd you pay to go to that place?
Speaker 1: It's expensive?
Speaker 2: Oh well, that's that's a whole nother story.
Speaker 3: I actually so I started law school, and I started law.
Speaker 2: School in two thousand and four.
Speaker 3: And I don't know if you're I don't know if
Speaker 3: you're a poker player at all.
Speaker 1: Actually, I love like, that's why you wanted me to ask.
Speaker 1: I'll be in a place out west, in the very
Speaker 1: southern tip of Nevada, playing poker, fearing about ten nice.
Speaker 3: Yeah, well, so I grew up in a card playing face.
Speaker 3: I learned cards from my grandfather, a lottage and rummy,
Speaker 3: a lot of jen rummy, a lot of fun and
Speaker 3: then and then a fair amount of poker. And when
Speaker 3: Texas Hold Them started to get a little popular in
Speaker 3: the early two thousands, I started reading Texas Hold'em books
Speaker 3: because I just I'd always liked poker and I was
Speaker 3: sort of curious about it and the game. You know,
Speaker 3: for anyone who plays pot, it just exploded in popularity.
Speaker 3: It just became it went from being something that most
Speaker 3: people had never heard of to being something that was
Speaker 3: televised on.
Speaker 1: TV and Chris Moneymaker, Chris.
Speaker 2: The money Maker effect exactly.
Speaker 3: And and so I'd read, you know, sort of the
Speaker 3: poker books, the best books of the time.
Speaker 2: I sort of understood them.
Speaker 3: And what I found very quickly was and I was
Speaker 3: playing at fairly low stakes at first, but just having
Speaker 3: done that little bit of work and also then being
Speaker 3: able to take what I learned and apply it, it
Speaker 3: meant in two thousand and four, two thousand and five,
Speaker 3: two thousand and six, you had a massive edge on
Speaker 3: a to any game you'd play in. And so I
Speaker 3: went from playing very low stakes to playing sort of
Speaker 3: incredibly high stakes a poker, cash games. I wasn't a
Speaker 3: tournament player, and that wound up being how I how
Speaker 3: I paid for my law school for my wife's graduate school.
Speaker 1: You paid for school at the University of Chicago being
Speaker 1: an attorney playing poker.
Speaker 2: Yeah it wasn't it was that.
Speaker 1: Yeah, I got your wife's graduate school. Yeah it was.
Speaker 2: It was an interesting period.
Speaker 3: I never thought that I would I would make a
Speaker 3: living playing playing cards.
Speaker 2: I never thought it was going to be a career.
Speaker 3: But there was a moment where there was that you know,
Speaker 3: really significant opportunity. And I didn't have the vision at
Speaker 3: that time to realize the difference that that that that
Speaker 3: income would make on my life's trajectory. But it's the
Speaker 3: very rare, I think, like poker success story, because if
Speaker 3: I had not been able to pay for my graduate school,
Speaker 3: my wife's graduate school with poker, I think I would
Speaker 3: have felt compelled to stay working at the law firm,
Speaker 3: even though I was pretty unsatisfied because I had a
Speaker 3: lot of debt to pay and you know, we were
Speaker 3: starting a family, we had kids. But because I had
Speaker 3: that freedom of not having that debt, when I started
Speaker 3: volunteering for ACTS, and I just I saw that my
Speaker 3: work there was making a difference. That this extra you know,
Speaker 3: the extra effort that they would be able to put
Speaker 3: forth with another member of the team was significant. I
Speaker 3: was able to transition into a job that I thought,
Speaker 3: you know, could be deeply meaningful and not be as
Speaker 3: concerned with the fact that, you know, the pay wasn't
Speaker 3: quite quite what I was making at the law firm.
Speaker 1: Is a credit. Did you you still play?
Speaker 3: I play very recreationally now, but I still love the game,
Speaker 3: and yeah, I try and play, you know, ten fifteen
Speaker 3: times a year.
Speaker 1: Do you know? For me, it's really not about the stakes.
Speaker 1: I want to play, right, h I played a lot
Speaker 1: of chess coming up. Oh okay, so I see the
Speaker 1: game the same way, and so it doesn't matter if
Speaker 1: I'm playing one, three or fifty hundred. I want to
Speaker 1: I just want to play well. I want to play right.
Speaker 1: I don't want to get had and I want to
Speaker 1: you know, I don't want to be a fish. So
Speaker 1: it's it's more about playing the game than it is
Speaker 1: about stakes for me, is it? Is it the same
Speaker 1: for you? By any chance? I'm just curious. Yeah.
Speaker 3: So I love and I love playing with people who
Speaker 3: are trying to win. I think that's really it. If
Speaker 3: I'm playing with people who all are really trying to win,
Speaker 3: that's a fun game.
Speaker 1: That's fun.
Speaker 3: Is a fun that's a fun game to be a
Speaker 3: part of, regardless of regardless of.
Speaker 1: Okay, well I chase like like a squirrel up a tree.
Speaker 1: It has nothing to do with the story except I
Speaker 1: think it's that's hilarious. That's the greatest thing in the world.
Speaker 1: I could talk to you about that for four hours too.
Speaker 1: All right, So back to where we are. So which
Speaker 1: you're so you guys start lending money, right, And because
Speaker 1: you're an attorney and from u Ver Chicago and pretty
Speaker 1: bright and a volunteer, at this point you found out
Speaker 1: that maybe one of the reasons people are paying their pills,
Speaker 1: you guys are sending them a bill. Right.
Speaker 2: And you know this was.
Speaker 3: This wasn't a brilliant observation, right, And they knew it, right,
Speaker 3: they knew they weren't doing it. But the reality was
Speaker 3: tiny operation, lots of things going on. There wasn't anyone
Speaker 3: to set out the invoices. So I became the invoice guy. Right,
Speaker 3: So if I get the invoices out, let's see if
Speaker 3: that makes a difference. And lo and behold, you know
Speaker 3: the portfolio went from like being deeply distressed to performing
Speaker 3: great with the addition of the invoices. Right, we just
Speaker 3: need to remind people how to pay us. We needed
Speaker 3: to remind them that we wanted to get repaid. And
Speaker 3: very quickly the payments started coming in.
Speaker 1: And so it begs the question because if I'm just
Speaker 1: listening to story, this is the first thing it is. Okay,
Speaker 1: so now you're helping people get the houses, did they
Speaker 1: acts thing? You've got this kind of private public partnership
Speaker 1: for access to the house. Is it cheap? You've got
Speaker 1: this this mentorship, and what to do with the house
Speaker 1: is to fix them up to get code I would
Speaker 1: imagine the code enforcement department knows what you guys are
Speaker 1: doing and is somewhat helpful. And now you're lending money.
Speaker 1: What is the what is the default rate?
Speaker 3: Yeah, so when we started this loan program, there was
Speaker 3: a lot of a lot of naysayers. You know, a
Speaker 3: lot of the bankers who saw what we were doing said,
Speaker 3: you know, this will never work.
Speaker 2: It's not done that way.
Speaker 3: You know, you need to focus on credit score, you
Speaker 3: need to focus you know, look at these loans differently.
Speaker 3: And what we found was because of the stability that
Speaker 3: home ownership offers, because of how affordable these homes are,
Speaker 3: families are, they're going to do everything they can to
Speaker 3: keep these homes. And so we now have been We've
Speaker 3: lent more than fifteen million dollars over the last decade
Speaker 3: to families. That's spread out across two hundred plus loans
Speaker 3: that we've made, and we've had total write offs in
Speaker 3: our portfolio of eighty thousand dollars.
Speaker 1: Yes, that's less than time for percent. Yeah, and look
Speaker 1: at me, do, Matt.
Speaker 3: That's very good, And it's even better than that because
Speaker 3: those are the right offs. But typically even on the
Speaker 3: three loans that we've written off, we wind up getting
Speaker 3: some of that money back right because you know, right
Speaker 3: off just means that we decided that the loan isn't
Speaker 3: isn't doesn't have a highlight gohood of prepaying. But typically
Speaker 3: we're still able to work with the families to figure
Speaker 3: out a way either upon transfer or if they need
Speaker 3: to sell the home.
Speaker 2: And so it's been a remarkably sustainable program.
Speaker 1: You know.
Speaker 2: The great thing about there's two things.
Speaker 1: You mean, the poor people, poor people who don't pay
Speaker 1: their bills and bad areas. It turns out that actually,
Speaker 1: if you give them access and a chance, they actually
Speaker 1: will do what they're supposed to do. Is that what
Speaker 1: you're saying to me?
Speaker 3: The strength we see every single day in the community
Speaker 3: is remarkable.
Speaker 1: You know, he's probably going to look this up if
Speaker 1: you don't know the answer, But I'm curious, do you
Speaker 1: have any idea what the default right is for traditional
Speaker 1: banking relationships on home loans?
Speaker 3: Well, so I don't have that answer. That answer is
Speaker 3: actually a shockingly low number. It's even lower than what
Speaker 3: what our families have done.
Speaker 1: I just wonder how compares.
Speaker 3: But we did an analysis over the last thirty years,
Speaker 3: looking at all the families who've bought homes through acts
Speaker 3: and comparing them the foreclosure rate for the four thousand
Speaker 3: alumni we now have. And these aren't all loans we've originated, right,
Speaker 3: most of them are loans that banks and credit unions
Speaker 3: have done.
Speaker 2: But these borrowers, our borrowers, are.
Speaker 3: The lowest income sort of you know, on paper, the
Speaker 3: least prepared for home ownership as compared to the overall market.
Speaker 3: And we've seen that the foreclosure rate that our families
Speaker 3: have experienced is about fifty percent lower than what's been
Speaker 3: experienced overall in the market.
Speaker 4: So for prime borrowers, look it up because you cued
Speaker 4: that for me. So for prime borrowers it's one to
Speaker 4: two percent. For FHA loans it's three to six percent,
Speaker 4: and for some prime mortgages it's ten percent plus.
Speaker 1: What is what foreclosure? What's the way? Look is that
Speaker 1: that's foreclosure saying default rates, default rights.
Speaker 3: So and what I shared was a little bit I
Speaker 3: shore I shared write offs, right, So what I would say, well,
Speaker 3: and that's a different.
Speaker 1: Yeah, that is different.
Speaker 3: What I would say is, and this is maybe important
Speaker 3: for people to understand our portfolio. Performing well does not
Speaker 3: mean that we get paid on time every month from
Speaker 3: every single borrower. In any given month, we might have
Speaker 3: between three to seven percent of our borrowers who are
Speaker 3: going to miss a payment because these are the lowest
Speaker 3: income families who own homes, and if they are in
Speaker 3: a car accident, if they've got a death in the family,
Speaker 3: if they lose a job, sometimes there's not enough savings
Speaker 3: for them to meet all their obligations that month. The
Speaker 3: beauty of us having the relationship we have with these
Speaker 3: families is that they let us know when they're having
Speaker 3: these challenges and we work with them. Right, so, we
Speaker 3: need to get repaid on this loan, but if we
Speaker 3: need to reduce the monthly payment on the loan for
Speaker 3: a few months because we nderstand the challenge they're dealing
Speaker 3: with to help them get to the other side of that,
Speaker 3: and then move those payments to the end of the loan,
Speaker 3: that actually doesn't cost us very much, but it is
Speaker 3: a huge investment in our vision for what these communities
Speaker 3: can be and it can be the difference between a
Speaker 3: family maintaining their home, which are families. Through our program,
Speaker 3: we haven't needed to foreclose on even one family. Who's
Speaker 3: who's who we've lent money to. So the sustainability of
Speaker 3: it's been really significant and it's well worth, you know,
Speaker 3: for our vision. The last thing we want to do
Speaker 3: is foreclosed. So so long as it's a hard working
Speaker 3: family that's trying to make things right, we're going to
Speaker 3: go on that journey with them right and figure out
Speaker 3: how to make sure that they can maintain that home.
Speaker 1: Where do you how do you establish interest rates?
Speaker 3: So our interest rates are actually set based on sort
Speaker 3: of the prime rate. We charge a fifty basis point
Speaker 3: premium over the prime rate a half point a half point,
Speaker 3: so it's it's, you know, depending on who you ask.
Speaker 2: These families can't get credits.
Speaker 3: This is this is you know, you could think of
Speaker 3: it as reduced rate, but we think it's important that
Speaker 3: we charge a fifty fifty basis point premium or or
Speaker 3: a half a percent premium over what the banks offer
Speaker 3: only because if families can access a banking relationship, if
Speaker 3: they can get a mortgage from a bank or credit union,
Speaker 3: that's great. You know, we want them to be full
Speaker 3: participants in the market, and so we're not trying to
Speaker 3: be like we don't want to be we're not competing
Speaker 3: with the banks. But if there's good loans that the
Speaker 3: banks for a myriad of reasons aren't able or aren't
Speaker 3: willing to do, we want to be able to do
Speaker 3: those and we want to be able to do so sustainably.
Speaker 2: And that's also really important.
Speaker 3: You know, long term, our lending program is designed to
Speaker 3: be a self sustaining program. It doesn't require philanthropy in
Speaker 3: order for us to do this work, and we think
Speaker 3: that's really important because there's lots of things that require
Speaker 3: philanthropy and aspects of our program that require philanthropy, and
Speaker 3: we're going to ask for those funds and we're grateful
Speaker 3: when partners in the community support us in that way.
Speaker 3: But it's really important that if we've got an offering
Speaker 3: that doesn't require doesn't need giving, we.
Speaker 2: Why would we not make it self sustaining.
Speaker 3: It's going to be able to do more without needing
Speaker 3: sort of the community to step up in that way.
Speaker 1: That's also a selling point when you go up and
Speaker 1: ask for philanthropy, because if you go to somebody and
Speaker 1: we want these donations. But let me tell you, the
Speaker 1: people that you're helping, they're meeting you halfway. Absolutely, So
Speaker 1: it's not just a giveaway, it's not a handout. That's
Speaker 1: actually it's a legitimate help AUP because the people that
Speaker 1: you're your hard earned dollars you're donating to are meeting
Speaker 1: you halfway because they're in the game with you. That's exactly.
Speaker 1: That feels like an easier sell when you're out trying
Speaker 1: to raise money too.
Speaker 3: Yeah, we have you know, we've got our organizations collectively
Speaker 3: now have around a fifteen million dollar budget on an
Speaker 3: annual basis, and about three and a half million of
Speaker 3: that is philanthropy.
Speaker 1: You know.
Speaker 3: The rest comes from you know, nonfilanthropic sources earned income,
Speaker 3: and we think it's really important to have as sustainable
Speaker 3: an organization.
Speaker 2: As we can.
Speaker 1: Everything about this makes so much freaking.
Speaker 4: Bill I got the right off rates. So for prime
Speaker 4: borrowers it's point oh one percent two point one percent, okay,
Speaker 4: FHA and VA loans zo point five percent to two percent,
Speaker 4: and subprime per two thousand and eight it was ten
Speaker 4: to twenty five percent.
Speaker 1: Actually, yeah, so we're you're right in there.
Speaker 3: Yeah, so we're right in line with the FH FHA
Speaker 3: and VA loans.
Speaker 1: Yeah okay, But the point is you're right in line
Speaker 1: with FHA on default, but you're making loans that the
Speaker 1: FHA would never make correct freaking unbelievable. We'll be right back, okay.
Speaker 1: So you get this partnership with the city so that
Speaker 1: you can find these places and after thirty sixty days
Speaker 1: they're done. Then you've got the mentorship on how to
Speaker 1: fix it up, and now you got the loan to
Speaker 1: fix it up. And we touched on it earlier. But
Speaker 1: you also found out that having an in house real
Speaker 1: estate brokerage helps, So you guys went and did that.
Speaker 2: Yeah, that was a big key to our success.
Speaker 3: Was the reality was when our families, you know, these
Speaker 3: mung families, or over time as we helped more African
Speaker 3: American Hispanic families through the program, they often struggled to
Speaker 3: find the right real estate representation because of their low
Speaker 3: preapproval amount. They might not be able to find an
Speaker 3: agent that really wanted to work with them, or an
Speaker 3: agent that was comfortable doing the work of finding the
Speaker 3: affordable homes. These, you know, often were homes that were
Speaker 3: there were the dollar homes.
Speaker 2: They were twenty five fifty.
Speaker 1: Thousand dollars agent making live in selling a dollar hunt.
Speaker 2: Not a big commission on those, you know.
Speaker 1: Seven so it's not much.
Speaker 3: And so typically the agents who are working in that
Speaker 3: part of the market, they're representing investors, right because the
Speaker 3: investors will buy a ton of properties, and you know,
Speaker 3: they'll have some some rate that they're charging that doesn't
Speaker 3: make sense. And so we gave an opportunity for members
Speaker 3: of the community that were agents that really wanted to
Speaker 3: work with families to become a member of our team,
Speaker 3: be a part of the mission and focus on helping
Speaker 3: families find homes they could truly afford without having that
Speaker 3: mean that the commission was so low that you know,
Speaker 3: you couldn't you couldn't give them good service.
Speaker 2: So that's been a big part of what we've done.
Speaker 3: We've had we typically have a handful of agents that
Speaker 3: are actually under our umbrella or our own real estate brokerage,
Speaker 3: and that's been a key ingredient to helping families be successful.
Speaker 2: And there's also the trust component.
Speaker 3: Once a family starts working with us and they're getting
Speaker 3: prepared to become a homeowner, throughout the journey. They know
Speaker 3: you've got a team here that wants to help you.
Speaker 3: And it's not just that that your home buyer coach
Speaker 3: who you're working with now, but we're going to add
Speaker 3: a real church to your team. We're going to add
Speaker 3: a home rehab coach to your team if you need it.
Speaker 3: We're going to connect you to lenders, whether that's a
Speaker 3: bank or credit union, or maybe it's a lender in house.
Speaker 3: And so it gives them confidence knowing that throughout the
Speaker 3: whole process they've got a partner that wants them to
Speaker 3: be successful and isn't just focused on sort of you know,
Speaker 3: what's the largest profit I can generate from working with
Speaker 3: this one family?
Speaker 1: So you said, was it cha, Bliah?
Speaker 2: Cha?
Speaker 1: Yeah? All right. She retired in twenty seventeen after twenty
Speaker 1: four years, and you said she helped eight hundred families
Speaker 1: by home.
Speaker 3: I think that I think that's right, which is just
Speaker 3: I mean, it's sort of stunning to think that that
Speaker 3: number of families is possible.
Speaker 1: But then I think for the Hispanic group, you found
Speaker 1: Rios or somebody named Rios or another situation, another type agent. Right,
Speaker 1: what's the.
Speaker 3: Story critical to our success that we have agents who
Speaker 3: represent the communities that we serve, and so we've had
Speaker 3: a lot of success over time, whether it's in the
Speaker 3: Hispanic community or the African American community, finding really good
Speaker 3: people who care about their communities and see real estate
Speaker 3: and helping families a chief home ownership is something that
Speaker 3: can be important, and we've been able to have them
Speaker 3: on the team, have them earn a nice living, and
Speaker 3: have them just have this incredible impact that I know.
Speaker 2: I'm just so proud of what they've been able to achieve.
Speaker 1: So Hilaria Rios is the name I was thinking coming
Speaker 1: up with that. The thing is, if I'm remembering all
Speaker 1: this right, is Jah helped in that Washington Park area
Speaker 1: around the church, but then there was on the south
Speaker 1: side of Milwaukee, I have a Hispanic area, and then
Speaker 1: this Hilario Rio started doing for her community what y'all
Speaker 1: did for her community. And now all of a sudden
Speaker 1: access expanding beyond what the priest originally thought for his
Speaker 1: community around as church to the whole city.
Speaker 2: That's exactly right.
Speaker 3: You know that after a decade or so of success,
Speaker 3: there was a moment where the organization sort of took
Speaker 3: stock of itself and said, well, this is great that
Speaker 3: we're doing such a good job serving this refugee population.
Speaker 3: That's that's it's been wonderful for the neighborhood. It's been
Speaker 3: good for families. What about the rest of the families
Speaker 3: who live in our community. What about the Hispanic population,
Speaker 3: mostly on Milwaukee's near south side growing population, They also
Speaker 3: are having trouble accessing homeownership. Milwaukee, you know, the largest
Speaker 3: has a large black population, that that community has not
Speaker 3: had the same opportunities for homeownership that other families have had.
Speaker 3: How do we make sure that there's a pathway that's
Speaker 3: meaningful for them towards home ownership. And through these key
Speaker 3: hires of real estate agents, we began making inroads in
Speaker 3: those communities and.
Speaker 1: Really community real estate agents from the community that knows
Speaker 1: the market, that knows the neighborhoods and can connect the
Speaker 1: neighborhoods to the community. And candidly, if I'm a Hispanic
Speaker 1: person in the South side of was Milwaukee, I'm going
Speaker 1: to connect within trust Hillary Rios a whole lot more
Speaker 1: than I am a white guy named Bill Courtney. So
Speaker 1: the connection to the families is in a grole because
Speaker 1: this agent is this from them. Is them right? I mean,
Speaker 1: is that not?
Speaker 2: It makes It makes a huge difference in terms of
Speaker 2: building trust.
Speaker 3: And that's something that you know, we've taken very seriously
Speaker 3: and a huge part of the recipe is that our
Speaker 3: agents aren't seen as other you know, they're seeing they're
Speaker 3: from and all of the communities that they're serving. And
Speaker 3: they also just then build great networks they have. They
Speaker 3: come to us already having a network in their community,
Speaker 3: and that grows over time. And you have someone like
Speaker 3: Billia who helps eight hundred families purchase homes. You know,
Speaker 3: think about how many how many of those deals, the
Speaker 3: vast majority of them, they wind up being referrals from
Speaker 3: from these past families who've been through the program. People
Speaker 3: look at a new homeowner and they say, how did
Speaker 3: you do this and they say, you know, we hope
Speaker 3: they say, it was really hard work, but I was
Speaker 3: able to do it. You can do it too. By
Speaker 3: the way, there's this group X Housing. They could probably help.
Speaker 3: They can put you in the right direction, they can
Speaker 3: help support you on the journey.
Speaker 1: And let me tell let you talk to someone who
Speaker 1: looks just like you named Chaw exactly.
Speaker 2: Let me make that connection.
Speaker 1: How once again, this really isn't you know, rocket surgery.
Speaker 1: It all just makes so much fundamental sense. Okay, so
Speaker 1: that's the beginning from the end of the Vietnam War
Speaker 1: and refugees coming to Milwaukee and the priest and the
Speaker 1: housing and the community and all these things going up.
Speaker 1: So now let's get to you. All this is set up,
Speaker 1: and so tell me about acts. Once you decided I've
Speaker 1: played enough poker that I don't have to be an
Speaker 1: attorney anymore, and I think I can do something really
Speaker 1: meaningful with my life.
Speaker 3: Yeah, well, I was really just so impressed with what
Speaker 3: the team had done. And so there were seven employees.
Speaker 3: I became I think the eighth employee. They brought me
Speaker 3: on in the assistant director role. So I was sort of,
Speaker 3: you know, a little bit of everything. My job included
Speaker 3: answering the door because I was usually the only one
Speaker 3: in the office. I was doing our fundraising, I was
Speaker 3: doing our marketing, and I was running our loan fund.
Speaker 2: So those were my sort of funds.
Speaker 1: I say, when you said, you know, I've put myself
Speaker 1: through the University of Chicago and got a law of degree.
Speaker 1: I mean a law degree from the Universe Chicago is meaningful.
Speaker 1: I mean, you're humble and everything else, but I'm going
Speaker 1: to say it. I mean, that's top ten boss daddy
Speaker 1: stuff right there. What did you and your wife got
Speaker 1: her degree? Or you said her graduate degree and what
Speaker 1: in NBA?
Speaker 3: I guess no, No, So my wife's a teacher, so
Speaker 3: she has multiple graduate degrees in English and in education.
Speaker 1: I bet your children are really dumb coming from it.
Speaker 1: But anyway, so what does she say? Yeah, when University
Speaker 1: of Chicago guy who's obviously a tactician. So you because
Speaker 1: you're good at poker, so you read the room, well
Speaker 1: says you know, I know you married a lawyer from
Speaker 1: the universe Chicago and all this, but I'm gonna go
Speaker 1: work for this thing called acts and probably take a
Speaker 1: massive pay cut. What was her.
Speaker 3: Reaction, Well, I married exceptionally. Well, so, my wife is
Speaker 3: a teacher. She loves being a teacher. She spent most
Speaker 3: of her career in urban education. And she had found
Speaker 3: before I did, a career that she found great meaning
Speaker 3: in and she saw how how important that was. So
Speaker 3: she was only encouraging of me pursuing this, and you know,
Speaker 3: just speaks to the importance of having shared values with
Speaker 3: the person you're going to spend spent your life with
Speaker 3: in terms of her support for that transition. And I
Speaker 3: should say one of the great things about Malwa is
Speaker 3: you don't need the most massive income ever to make
Speaker 3: it a great place to live. Right, So we lived
Speaker 3: in New York City for the better part of seven years,
Speaker 3: you know, making this sort of transition. If I was
Speaker 3: in that sort of environment, I think would have been
Speaker 3: extremely difficult.
Speaker 2: It would have required massive sacrifice.
Speaker 3: I feel like in a city like Milwaukee, it's sort
Speaker 3: of the best of both worlds where if you are
Speaker 3: in a good income and you've got two people who
Speaker 3: are working, you can do well enough and you can
Speaker 3: and if you love the work you do and you
Speaker 3: find that there's meaning in it, it's really tough to
Speaker 3: imagine doing something else.
Speaker 1: Yeah, we say almost every show the magic happens when
Speaker 1: somebody's passion and abilities intersected opportunity. Sounds like that's exactly
Speaker 1: what happened with you, all right, So you joined as
Speaker 1: session director of two years later become the president CEO
Speaker 1: of this thing. You're clearly passionate about it. On fire Forward,
Speaker 1: tell me some things you've been able to do at
Speaker 1: ACT since you join, give me some success metrics, yeah,
Speaker 1: you know, and any other stories that I know that
Speaker 1: you know, I'm going to want to hear about ACTS now. Well,
Speaker 1: so that since you became the bram poo Bah.
Speaker 3: The thing I'm most proud of is so when I
Speaker 3: took over as as CEO, I replaced this legendary guy,
Speaker 3: Carl Quindel. He'd been the executive director there for six
Speaker 3: or seven years something like that, maybe eight years. Unbelievably smart,
Speaker 3: and he knew everything about every aspect of our business.
Speaker 3: He was this guy who could do anything in the
Speaker 3: world and he chose to devote his energy to ACTS
Speaker 3: for that eight year period. Just remarkable. But he he'd
Speaker 3: sort of shown a vision of leadership that I wasn't
Speaker 3: going to be able to. I was never going to
Speaker 3: be the best person at every single thing ACTS. Did
Speaker 3: you know this is a guy who knew everything about rehab,
Speaker 3: he knew everything about home construction, he knew everything about
Speaker 3: the real estate market. And here I'm coming from you know,
Speaker 3: law school and these different you know, different talents.
Speaker 1: He apparently didn't know anything about invoicing.
Speaker 3: But so when I became the CEO with an understanding
Speaker 3: from the board Hey, we're going to need to build
Speaker 3: a world class team, because the only way that we're
Speaker 3: going to be able to do a lot more is
Speaker 3: if we have someone leading each of these important functions
Speaker 3: who is the expert, because I can't be the expert
Speaker 3: and everything. If if we're trying to make me the
Speaker 3: expert in everything, we're not going to be as successful
Speaker 3: as we need to be. And so I'm just truly
Speaker 3: proud at how we've been able to grow our team
Speaker 3: and bring in people who are better, more knowledgeable, who
Speaker 3: can add value that I couldn't possibly add. And the
Speaker 3: result is sort of magic in terms of how our
Speaker 3: program has evolved, how we've been able to offer better
Speaker 3: and more services, and how we've been able to set
Speaker 3: families up for success at a scale that wasn't imaginable
Speaker 3: when I joined the organization.
Speaker 1: Tell me, so, what does that look like? Give us
Speaker 1: some numbers.
Speaker 3: Well, every single year now we're helping more than three
Speaker 3: hundred families purchase.
Speaker 1: Homes, three hundred a year, three hundred again, three hundred
Speaker 1: families get off the rental rolls oftim beating slum lords.
Speaker 1: And now we're talking monks, Hispanics, African Americans, and I
Speaker 1: assume even white low in white blue cover brogues across
Speaker 1: the space.
Speaker 3: Anyone with challenges to home ownership, who wants to pursue
Speaker 3: home ownership, we want to support. Right now, more than
Speaker 3: half of our graduates, more than half of our purchaser
Speaker 3: are black families. But we serve the whole community, anyone
Speaker 3: who needs who needs the support. So yeah, more than
Speaker 3: three hundred a year. We just celebrated our four thousandth
Speaker 3: homeowner through the program. So we have four thousand families
Speaker 3: who now own homes who you know, previously were renting
Speaker 3: in three.
Speaker 1: Hundred dilapidated properties on the tax rolls, fixing up light
Speaker 1: in communities.
Speaker 4: Well, Michael, did you say, I just want to clarify
Speaker 4: before we keep going down that train. I think four
Speaker 4: thousand total, and one thousand were from the tax rolls.
Speaker 3: Yeah, so four thousand total, one thousand foreclosures, I got it.
Speaker 3: Of the thousand four closures, it's probably fifty to fifty
Speaker 3: between tax foreclosures and bank foreclosures.
Speaker 1: Okay, Still, yeah, twenty five percent are crappy. But even
Speaker 1: if they're even if they're not foreclosures, there's still houses
Speaker 1: probably that need attention and a lot of it.
Speaker 3: Yeah, their houses that typically haven't gotten a lot of
Speaker 3: a lot of love there. We're helping families typically buy
Speaker 3: the most affordable homes in the market. So this is
Speaker 3: the bottom of the market we're operating in. And the
Speaker 3: belief is is that transitioning a home from renting to
Speaker 3: owning benefits that family and benefits the block, whether it's
Speaker 3: a modest amount of work that goes into the home
Speaker 3: or a massive amount of work that goes into the home.
Speaker 3: Homeowners they take care of their properties and the way
Speaker 3: landlords don't. They're more concerned about putting flowers out right,
Speaker 3: they're more concerned about connecting with their neighbors, all those things,
Speaker 3: and the stability of home ownership that we've seen is
Speaker 3: really remarkable. So, you know, I mentioned before foreclosure rates
Speaker 3: for families through our program are about half of what
Speaker 3: otherwise has been experience in the neighborhoods we work in.
Speaker 3: And what I think is really important. It's not talked
Speaker 3: about a lot. You know, when people look at the
Speaker 3: cost of home ownership versus the cost of rent, first
Speaker 3: of all, they often look at that as what is
Speaker 3: it right now? If I bought a home now what's
Speaker 3: the cost going to be, what's my monthly cost going
Speaker 3: to be, and what's the cost of rent? And in
Speaker 3: many cases through our program, immediately there's a cost savings.
Speaker 2: But there's also times, especially.
Speaker 3: As the market is improved, homes are more expensive where
Speaker 3: families are spending somewhat more to own than to rent,
Speaker 3: but the rent keeps going up every single year.
Speaker 1: I was going to say that fixed on a fixed
Speaker 1: rate over fifteen, thirty, twenty years, it says the same
Speaker 1: rent goes up. So it may be a little more now,
Speaker 1: but in five years it's going to be less than
Speaker 1: what you're eventually going to be paying. And that's what
Speaker 1: you're saying.
Speaker 2: That's exactly right.
Speaker 1: That's so true.
Speaker 3: And home ownership offers a couple of things. Being you know,
Speaker 3: it offers some great things for the family in terms
Speaker 3: of the living opportunity, in terms of the structure, but
Speaker 3: financially it offers a couple of things. One that people
Speaker 3: don't talk about anywhere near enough is the force savings
Speaker 3: of home ownership. The fact that every month when you
Speaker 3: pay your mortgage, you're paying some of that payment is principal.
Speaker 3: Right when you make your rent payment, that money's gone.
Speaker 3: But the contributions you're making to your principle, the paid
Speaker 3: down to your principle, that's now equity. And we're working
Speaker 3: in communities that often you know, when they start working
Speaker 3: with us, these families do not have a positive they
Speaker 3: don't have a positive net worth, and every single month
Speaker 3: when they make that mortgage payment, they now all of
Speaker 3: a sudden, are building equity in their home. Now, appreciation
Speaker 3: is also wonderful, right, and so when homes go up
Speaker 3: in value, that's tremendous and that adds to that equity.
Speaker 3: We now are at a point with our alumni homeowners,
Speaker 3: those that still own their homes, that group collectively has
Speaker 3: has achieved and built one hundred and forty three million
Speaker 3: dollars in equity in the homes that they own. Hundred
Speaker 3: and forty three million dollars right, real wealth, real wealth,
Speaker 3: and the difference that that can make in terms of
Speaker 3: their ability to overcome challenges, their ability to invest in themselves,
Speaker 3: their ability to provide for their kids' education. It's really
Speaker 3: significant that those are funds that can be drawn on
Speaker 3: or if you don't need to draw on it, which
Speaker 3: is great. We have a lot of families who are
Speaker 3: passing these homes down, right, I was.
Speaker 1: About to say, and for the first time ever at
Speaker 1: these and this demographic is second generational access and opportunity
Speaker 1: that breaks that proverbial generational decline.
Speaker 2: That's exactly right.
Speaker 3: And we think it's fascinating how clear this is to
Speaker 3: the families in our program when we say, we always
Speaker 3: ask them, as part of our coaching, why are you
Speaker 3: pursuing home ownership? Because then that's something their coach is
Speaker 3: going to remind them of throughout the journey when things
Speaker 3: get hard, we want to remind them of why did
Speaker 3: they say they were pursuing home ownership. One thing they
Speaker 3: always often say say. The first thing they say is freedom.
Speaker 3: The freedom to be able to paint my house the color.
Speaker 3: I want the freedom to be able to do what
Speaker 3: I want to do. No one's gonna tell me so
Speaker 3: long as I'm paying my mortgage and paying my taxes.
Speaker 3: No one's gonna tell me what I can and can't do.
Speaker 3: No one's gonna tell me I need to leave. So
Speaker 3: freedom is a really big one. But the number two
Speaker 3: thing we hear from families purchasing Home Star program is
Speaker 3: I want something to pass down. I want something that's
Speaker 3: mine that my family's going to long term benefit from.
Speaker 3: And so that's something that's really important in something that
Speaker 3: now you know, four thousand families who are graduates of
Speaker 3: our program are able to do for their for their kids.
Speaker 1: We'll be right back. Agency and legacy. This is what
Speaker 1: you just said. And I don't know a human being
Speaker 1: on earth that doesn't want to have it. Agency and
Speaker 1: what they're doing, and a legacy left behind. And you know,
Speaker 1: on Maslov's hierarchy of needs, I mean, you're starting to
Speaker 1: bring these folks up the pyramid, you really are. You're
Speaker 1: giving them self actualization, you're giving them fulfillment, but you're
Speaker 1: not giving it to them. You're helping them.
Speaker 2: That's exactly right.
Speaker 3: We're not giving them anything, but we're helping to make
Speaker 3: the market work for them. We're helping them understand how
Speaker 3: to navigate these complex systems, and then they're doing the
Speaker 3: remarkable work of getting it done and then being not
Speaker 3: only successful homeowners but leaders in their communities.
Speaker 1: So let's discuss a little bit the state of housing
Speaker 1: and America today and your new announcement.
Speaker 3: Great So, one of the big challenges that we faced
Speaker 3: in Milwaukee, and this is a challenge that it's not
Speaker 3: a Milwaukee challenge. It's a lot of a lot of
Speaker 3: communities throughout the country have seen this is that single
Speaker 3: family homes have become an asset class, right, and used
Speaker 3: to say that again, single family homes have become an
Speaker 3: attractive asset class.
Speaker 1: Okay, what do you mean.
Speaker 3: Private equity funds have realized that in a lot of
Speaker 3: these markets, homes are relatively affordable, rents are relatively high,
Speaker 3: and that buying up large swaths of communities and having
Speaker 3: a rental program, you know, is something that they believe
Speaker 3: can be financially viable, can be successful, and they're able
Speaker 3: to attract a lot of equity, a lot of investors
Speaker 3: who want to be a part of that.
Speaker 1: Yeah, that's why forty percent of Memphians rent because so
Speaker 1: many of these homes in these neighborhoods are bought up
Speaker 1: candidly by people out of New York and Boston and Chicago.
Speaker 1: You would be shocked how many homes in Memphis are
Speaker 1: on about people who've never set foot in Memphis. And
Speaker 1: then they've got some kind of management like rental manage
Speaker 1: group that goes around and slaps pain on them, fixes
Speaker 1: them up, and then Clucks Front.
Speaker 2: Yeah, that's exactly right.
Speaker 1: Well, that doesn't build any community.
Speaker 3: Yeah, it's not. Listen, our communities need great landlords. Not
Speaker 3: everyone is going to own or want to own at
Speaker 3: any given time. But it's our firm belief that typically
Speaker 3: great landlords, they typically come from the community, they have
Speaker 3: some relationship to the place. When you talk about these
Speaker 3: outfits that own thousands and thousands of homes throughout the
Speaker 3: country that aren't you know, that are based in other places,
Speaker 3: the likelihood that they care about something other than just
Speaker 3: sort of getting every last dollar out of this home
Speaker 3: is pretty low.
Speaker 2: And so so that's the asset So that's.
Speaker 3: The asset class that's you know, all of a sudden,
Speaker 3: it's not just competing against maybe a local landlord who
Speaker 3: might want to buy another property. It's competing against these
Speaker 3: enormous private equity outfits that want to buy up these homes.
Speaker 3: And so increasingly, what we saw over the last handful
Speaker 3: years was, you know, we're doing this hard work. The
Speaker 3: families are this hard work. We'll have two thousand families
Speaker 3: a year that start our program that say I want
Speaker 3: to be a homeowner? Can I start home by our education?
Speaker 3: And we've got a great way of getting them started.
Speaker 3: They work with a coach and then they do the
Speaker 3: incredibly hard work of getting ready. Sometimes that takes years,
Speaker 3: depending on how much work they have to do and
Speaker 3: when they're ready. We see them losing consistently in the
Speaker 3: market because the best deals are going to these private
Speaker 3: equity and other investors who are making cash no contingency offers.
Speaker 3: So our families are often offering more money. It's not
Speaker 3: that they can't compete on price, but they need an
Speaker 3: inspection contingency because there's no way we're going to let
Speaker 3: them buy a home without knowing what work it might need.
Speaker 3: And they need a financing contingency because they don't have
Speaker 3: enough money to pay cash for these properties. And so
Speaker 3: increasingly all the best deals are getting snapped up by
Speaker 3: the investors, leaving our families, our alumni who've done all
Speaker 3: this hard work sort of with.
Speaker 1: The dregs, actually live in the city. You live in
Speaker 1: the community, and got their kids go there and spend
Speaker 1: their money there.
Speaker 3: It's inverted, it is, and so we felt like we
Speaker 3: were letting our community down. You know what we've always
Speaker 3: told families, the promise is if you do the hard
Speaker 3: work of preparing for home ownership. We're going to help
Speaker 3: you find a good home that you can afford them
Speaker 3: meet your needs. And over the last several years, we
Speaker 3: found at times that we felt like the families were
Speaker 3: doing their part of the equation. And because of this,
Speaker 3: these investors coming in from all over the country, we
Speaker 3: weren't actually holding up our end of the bargain because
Speaker 3: the only homes available to them weren't really the homes
Speaker 3: that were good deals. And so we spent a couple
Speaker 3: of years we worked in partnership with some other local
Speaker 3: groups that cared about this cared about this work. We
Speaker 3: talked to a number of philanthropies and supporters who you
Speaker 3: believed in us, and we were able to launch a
Speaker 3: two and a half years ago a program where we're
Speaker 3: actually now a large buyer of these homes in the city.
Speaker 3: So we're competing with these private equity groups. We're buying
Speaker 3: portfolios of homes. We're buying homes for cash. But unlike
Speaker 3: these investor groups that you know are based wherever they're
Speaker 3: based and are focused just on a financial profit, we're
Speaker 3: focused one hundred percent on converting these homes into owner
Speaker 3: occupancy and making them good affordable home ownership opportunities for
Speaker 3: graduates of home buyer education.
Speaker 1: And you're blocking them out and.
Speaker 3: And we're we're competing, We're we're doing well. So this year,
Speaker 3: our goal from inception was we wanted to be able
Speaker 3: to sell at least one hundred of these homes every
Speaker 3: single year to families who graduate Home by your Education.
Speaker 1: So one hundred times what's the average price of a
Speaker 1: home in your group, Probably.
Speaker 3: The ones that we're selling, the average price right now
Speaker 3: is one hundred and twenty five thousand dollars.
Speaker 1: Well, then that's twelve million dollars.
Speaker 3: Yeah, So it's a big investment, big investment in the
Speaker 3: purchase and the rehabit these homes that you need. We've
Speaker 3: been successful at raising most of the philanthropy we need,
Speaker 3: so we've got a revolving fund that lets us do
Speaker 3: this purchase and rehab activity. We've raised just about ten
Speaker 3: million dollars actually to do that work. And this year,
Speaker 3: two and a half years into launching this initiative, we're
Speaker 3: confident that we're actually going to sell a hundred of
Speaker 3: these homes to families who are graduates of our program.
Speaker 3: And the thing I'm really proud of is that not
Speaker 3: only are we doing it, but it's it's very sustainable.
Speaker 3: And so the way this model works is, you know,
Speaker 3: we're able to buy the home, rehab the home, sell
Speaker 3: the home at an affordable price, but there's enough enough
Speaker 3: profit and I'll put that in quotes that we're able
Speaker 3: to cover all of our staffing costs of doing this wedside.
Speaker 1: There's enough coverage, enough coverage that when you sell it,
Speaker 1: that sale goes to the kitty to buy.
Speaker 2: More home exactly.
Speaker 3: So we're hoping and we believe we can grow this fund,
Speaker 3: this fund beyond ten million dollars just through the operating
Speaker 3: of the fund, not with needing additional philanthropy, but because
Speaker 3: you know, we approach this work in a smart way.
Speaker 3: You know, this is we're nonprofit, but this is a business.
Speaker 3: We're trying to do it in a strategic and thoughtful
Speaker 3: way and the result is a really good product for
Speaker 3: families and a sustainable program that we believe every single
Speaker 3: year now will contribute at least one hundred new owner
Speaker 3: occupants in the communities we operate.
Speaker 2: So we're really we're excited about that.
Speaker 1: I have done two years of shows now and I
Speaker 1: have loved all my guests and everything else. Us is
Speaker 1: one of the most sensible everybody wins ideas except for
Speaker 1: maybe New York slum lords that buy us maybe they
Speaker 1: don't like it, But everybody else I am I'm beside
Speaker 1: myself thinking about what this need want I want. I
Speaker 1: want this in my city so bad, and everybody else
Speaker 1: should do. Where are you expanding to? You got to
Speaker 1: be scaling well.
Speaker 2: I appreciate that, Thank you.
Speaker 3: And what I'll say is it has been really cool
Speaker 3: to see that the work we do it resonates, and
Speaker 3: it resonates across things that normally separate us. And I
Speaker 3: think at a time when there's so much division, it's
Speaker 3: awesome to be working in a space where, you know,
Speaker 3: we have people with different political beliefs, different religious beliefs,
Speaker 3: all different sorts of beliefs you might have. It is
Speaker 3: not controversial that giving families the chance to own the
Speaker 3: homes they live in is a good thing for them,
Speaker 3: a good thing for the community, and so it means
Speaker 3: that we get to have a lot of partners, and
Speaker 3: that's a fun space to be in. We've been really
Speaker 3: cautious about growing beyond our current geographies, so we operate
Speaker 3: in the city of Milwaukee. That's where we've done this
Speaker 3: work for thirty years, and then we haven't starting with
Speaker 3: the exactly wouldn't be here without them? And then seven
Speaker 3: years ago we opened an office in Beloit, Wisconsin, which
Speaker 3: is a small a smaller city on the border with
Speaker 3: the state of Illinois.
Speaker 1: How far is that from the walk about now ur.
Speaker 2: And fifteen minutes?
Speaker 1: Why there?
Speaker 2: We wanted an opportunity.
Speaker 3: To see in a community where we had no name, recognition,
Speaker 3: no awareness, if we could replicate the success of our
Speaker 3: work in Milwaukee. But we wanted it to be drivable,
Speaker 3: and we wanted to have the support of the local community.
Speaker 3: We needed the churches to want us, We needed the
Speaker 3: neighborhood groups to want us, We needed government to want
Speaker 3: to partner with us, and we needed philanthropic partners that
Speaker 3: would support the initiative right and bloy it's an amazing city.
Speaker 3: It was pretty incredible to see how quickly things came
Speaker 3: together there, starting with a philanthropist who was very excited
Speaker 3: about the work, but quickly then spread into government, doing
Speaker 3: a lot of work in community with neighborhood groups to
Speaker 3: make sure that you know, we would be seen not
Speaker 3: as an interloper but as a group that could really
Speaker 3: help address one of the community's big challenges. And it's
Speaker 3: been incredible sort of bringing our work there, it's been exciting.
Speaker 3: It has been a huge challenge. We have learned so
Speaker 3: much trying to you know, it's one thing to do
Speaker 3: something well in one place, and it is a different
Speaker 3: thing to all of a sudden, you know, open up
Speaker 3: an office somewhere where your brand new hire new people,
Speaker 3: trying to track this work, try and do this work
Speaker 3: the same way. And pretty often you realize, well, most
Speaker 3: of what we do works well somewhere else, and there's
Speaker 3: some things that are very different. And so we've learned
Speaker 3: a lot about how we need to approach attracting families
Speaker 3: to the program. It's very different in Beloit than it
Speaker 3: is in Milwaukee.
Speaker 4: Michael's Beloit is that where they had a Forward plant
Speaker 4: closure or a GM plant closure. That region had some challenges,
Speaker 4: right Jamesville, which is a right nearby, right right nearby.
Speaker 3: Yeah, so it's it's a community that you know, has
Speaker 3: a sort of a thriving history. Definitely, you know, with
Speaker 3: sort of de industrialization, fell on very hard times. It
Speaker 3: Beloit is a remarkable place, extremely resilient, there's a philanthropist's
Speaker 3: who's from Beloit, Diane Hendrix, who has made a major
Speaker 3: commitment to the city, and so she's she's part of
Speaker 3: the reason that Beloit right now is a remarkable place,
Speaker 3: great place to visit. You know, They've got a brand
Speaker 3: new minor league baseball stadium, they've got new hotels, they
Speaker 3: have extremely low unemployment, and they have actually a big
Speaker 3: challenge around enough affordable housing because it's become a really attractive,
Speaker 3: you know, attractive place for people to live and work
Speaker 3: and play. But we've learned a lot through that expansion,
Speaker 3: and one of the things we learned was that it
Speaker 3: can be it can be a distraction. And so while
Speaker 3: I am very excited about what we've done in Beloit
Speaker 3: and we are in a really good place in that
Speaker 3: community now and we're going to continue to grow and
Speaker 3: do more in the city of Beloit, there are times
Speaker 3: where we were asking ourselves, you know, is this work
Speaker 3: that we're doing in Beloit detracting from our ability to
Speaker 3: serve what was our primary market, Milwaukee, right And so
Speaker 3: this is how we think about expansion now. We believe
Speaker 3: we owe it to the rest of the country to
Speaker 3: take some of the things we've learned and share them
Speaker 3: and we're committed to that. That doesn't necessarily mean we're
Speaker 3: opening up offices all over the country, you know. It
Speaker 3: might mean that certain of the things we do we
Speaker 3: can provide to other communities that have key partners that
Speaker 3: are already doing maybe other aspects of the work. It
Speaker 3: might mean that we train and develop individuals who are
Speaker 3: excited to sort of start things that look something like
Speaker 3: what we do, but then we let them sort of,
Speaker 3: you know, run with it and flourish and develop new
Speaker 3: ways to build on the strategy. So we're not we
Speaker 3: haven't sort of made that call yet in terms of
Speaker 3: exactly what a larger expansion.
Speaker 1: What scale look like for it.
Speaker 3: And a big part of that reason is, you know,
Speaker 3: I mentioned the effort to buy, rehab and sell one
Speaker 3: hundred homes a year.
Speaker 2: That was a big lift.
Speaker 3: We also are right now in the process of massively
Speaker 3: expanding our lending function. So we had been doing two
Speaker 3: to three dozen loans a year through our affiliate acts lending.
Speaker 3: Our four year plan has us scaling that to two
Speaker 3: hundred loans a year. So we're sort of massively expanding
Speaker 3: the services we can provide to the two communities that
Speaker 3: we have committed to, Milwaukee and Beloite.
Speaker 2: But I have to tell you.
Speaker 3: Now that we are proving that the ax homes model
Speaker 3: works so well, now that we are expanding our lending
Speaker 3: model that has been long term sustainable, it has us
Speaker 3: thinking much more intentionally about, Okay, how do we take
Speaker 3: these key pieces and how do we make sure that
Speaker 3: if there's other cities that could benefit from them, we
Speaker 3: have a compelling way to share them that can set
Speaker 3: them up for success.
Speaker 1: Methis, barbeque, music, cool downtown is right for this, but
Speaker 1: for bringing you back, Michael. If people want to hear
Speaker 1: more about this website, where do they go? It's something
Speaker 1: that people can find out more.
Speaker 3: Absolutely so if you go to our website, which is
Speaker 3: actshousing dot org, all sorts of information about our program,
Speaker 3: report that sort of stuff. I do want to caution
Speaker 3: your listeners. You know, we are providing services now to
Speaker 3: families who live in the communities where we're located. So occasionally,
Speaker 3: when we're fortunate enough to get some national exposure like this,
Speaker 3: you know, we'll start to get you know, someone who's
Speaker 3: an aspiring homeowner in California or in Texas and Unfortunately,
Speaker 3: we don't have the capacity to do that yet, but
Speaker 3: who knows what the future might hope.
Speaker 1: We'll be right back. I dude, I cannot. I just
Speaker 1: this is it's a sweet spot for me again. I
Speaker 1: love all the stories. But ironically enough, a very dear
Speaker 1: friend of mine, who I've known since high school I
Speaker 1: played football against, who coached football with me, who played
Speaker 1: at the University of Alabama, was our Shelby County Assessor
Speaker 1: at one time, which is a publicly that he had
Speaker 1: to run for office and one and through a couple
Speaker 1: of conversations over copy work, more than a couple mini
Speaker 1: conversations over wine and beer and coffee with him, I
Speaker 1: learned from him the drag it is on the county
Speaker 1: and the community to have all of these blighted properties
Speaker 1: hanging around. And I learned what the drag it is
Speaker 1: on city revenue not to have these properties producing property
Speaker 1: tax dollars, and how destructive it is to communities and
Speaker 1: the people that live in them. And it has been
Speaker 1: on my mind for fifteen years, and in this story,
Speaker 1: and you come along, and it's the answer to something
Speaker 1: I've been thinking about for ten or fifteen years and
Speaker 1: bothered by legitimately bothered by. I mean, tell me this,
Speaker 1: I'm just curious to schools improve in the neighborhoods too.
Speaker 1: I mean, I would think that even the school system
Speaker 1: gets better. I can't remember who the guest was, Oh,
Speaker 1: I think it was from Charlotte, but one of the
Speaker 1: one of the things he taught us was one of
Speaker 1: the problems with elementary education was transiency. Because if a
Speaker 1: kid moves in the middle of their school year in first, second,
Speaker 1: third grade constantly because they're being put out or have
Speaker 1: to change rent or whatever, when the kid goes to
Speaker 1: the new school midyear, they're having to go all the
Speaker 1: way back and catch up. And if you do that
Speaker 1: two or three times, by sixth grade, you're just behind.
Speaker 1: And then I have another friend who has a thing
Speaker 1: called coaching for literacy, and his demograph or his metrics
Speaker 1: say that if you're not reading on grade level by
Speaker 1: third grade, that you are three times more likely to
Speaker 1: be unemployed by the age of twenty one than you
Speaker 1: are if you are reading on third grade. So if
Speaker 1: you know that poverty and unemployment in large part can
Speaker 1: be predicated by whether or not you read on grade
Speaker 1: level by third grade, and then you also know that
Speaker 1: transiency among renters almost guarantee that the children involved in
Speaker 1: those transients are not going to lead on grade level
Speaker 1: about third grade. You can, therefore, because if agles be
Speaker 1: in Begal see egle Cee say that unemployment and poverty
Speaker 1: has a lot to do with being transient when you're
Speaker 1: third grade and before as a result of your parents.
Speaker 1: Mean so, given that if instead of renting and moving
Speaker 1: and having transient children who end up being unemployed by
Speaker 1: the age of twenty one because of the school and
Speaker 1: because of the reading things, if those families own a
Speaker 1: house and aren't transient, the children will be better two
Speaker 1: decades from now, and the schools will be better because
Speaker 1: they're not dealing with kids in an out of money time. Now,
Speaker 1: am I.
Speaker 3: Stretching No, I think that's very well said. You know,
Speaker 3: the average tenure of home ownership through our program is
Speaker 3: fourteen years. That's how long the typical family owns the
Speaker 3: home that they buy through us. And that's stability of home.
Speaker 3: I mean, there's myriad research, whether it's the impact that
Speaker 3: has on education, the impact that has on health, the
Speaker 3: impact that has on actually violent reductive violence reduction, all
Speaker 3: these things are related, and I don't mean to suggest
Speaker 3: that if we just solve home ownership, we fix everything,
Speaker 3: but it is one of those key building blocks that
Speaker 3: if you can address it in a significant way, it
Speaker 3: makes the education. It makes educating easier, makes the job
Speaker 3: of the police easier, it makes the jobs of our
Speaker 3: hospital systems easier. And so that's one of the reasons
Speaker 3: I think we've been able to attract a real strong
Speaker 3: coalition around this work.
Speaker 1: Acts. Everybody acts in Milwaukee, Wisconsin and has a lot
Speaker 1: figured out. And I'm raying that you guys remain your
Speaker 1: growth is. You can just see your systematic growth since
Speaker 1: the beginning to now, and I just have to believe
Speaker 1: with a guy with a brain as big as yours
Speaker 1: and a passion as big as yours, that you're going
Speaker 1: to figure out how to scale it. Dude, I just
Speaker 1: I so bad want you to come back to Memphis
Speaker 1: and talk to people here. I absolutely believe in what
Speaker 1: you're doing. And most importantly, I can't thank you enough
Speaker 1: for sharing your story with the stuff.
Speaker 3: Well, thank thank you. It's been a real honor. I
Speaker 3: would I would certainly love to come back. And did
Speaker 3: you have do you have a second for one digression?
Speaker 1: Please?
Speaker 3: One because we had something happen to this week that
Speaker 3: was really special and I think good.
Speaker 1: I wanted I was going to say close us with
Speaker 1: a cool story, so you you you transitioned well for us.
Speaker 2: So we had an event earlier this week.
Speaker 3: It was celebrating our four thousandth alumni homeowner and it
Speaker 3: was a cool event. The mayor came out, he proclaimed
Speaker 3: it x Housing Day, the mayor of the City Milwaukee.
Speaker 3: It was really really fun. But we had a problem,
Speaker 3: which was, you know, we had press there and it
Speaker 3: was sort of a big event for us, and we
Speaker 3: had this amazing charismatic alumnus of the program who bought
Speaker 3: a house about eighteen months previous, who was going to
Speaker 3: be speaking, and forty five minutes before this event event starts,
Speaker 3: she gets called into work. So we're not we're not
Speaker 3: in the business of telling our alumni homeowners that they
Speaker 3: need to put their jobs in jeopardy.
Speaker 2: So, you know, she needs to go to work. Okay,
Speaker 2: we we get that.
Speaker 1: We will have given her a pass, I know, right,
Speaker 1: I know, I know.
Speaker 3: So so we're scrambling a little bit because you know,
Speaker 3: it's not every day we've got events of the mayor,
Speaker 3: and we got pressed there, and we were hosting this
Speaker 3: event in the near west side of Milwaukee in a
Speaker 3: challenge neighborhood, but a neighborhood that's got some some some good,
Speaker 3: some good momentum. And the venue we were hosting the
Speaker 3: event at had this caterer. She runs Fruition, which is
Speaker 3: a cafe and a catering company, and she she was
Speaker 3: putting out the beautiful breakfast spread for us, and she
Speaker 3: hears what's going on, and she tells one of my colleagues,
Speaker 3: do you know I actually I bought my house through
Speaker 3: acts like ten years ago, so I don't know she
Speaker 3: own and she owns, She owns the cafe, she owns
Speaker 3: the catering company. So I don't know if I could
Speaker 3: be helpful, but you know, if if there's something I
Speaker 3: can do to help, I'd like to help, righte. And
Speaker 3: so turns out, and this is the way I bet
Speaker 3: Memphis is the same way. So it turns out once
Speaker 3: once our vice president of programs gets there, they wound up.
Speaker 3: They'd gone to high school together, so they like knew
Speaker 3: each other, right They went to John Marshall High School
Speaker 3: in Milwaukee, and she wound up being like, you know,
Speaker 3: the speaker at our event talking about how she bought
Speaker 3: her home. It was a home that was taken through
Speaker 3: tax foreclosure. She'd been renting it. The home got the
Speaker 3: landlord lost it. She was renting it from the city.
Speaker 3: She got introduced to acts. She never thought that she
Speaker 3: would be a homeowner before. You know, she didn't have
Speaker 3: She thought she'd have a homeowner, she said, when she
Speaker 3: had a husband right now, she didn't.
Speaker 2: She know, she wasn't married, she had a kid. She
Speaker 2: didn't think she could do it.
Speaker 3: But she's clearly an incredible person. She put in the
Speaker 3: hard work, she worked with our teams, she got ready,
Speaker 3: she purchased the home, she fixed it up. The home
Speaker 3: is just a few blocks from the venue where she
Speaker 3: now owns the catering business. Right, and she was able
Speaker 3: to talk so passionately about, you know, the stability that
Speaker 3: home ownership has offered her and her son. And it
Speaker 3: was so cool because I know these things are happening
Speaker 3: sort of academically, and sometimes families will share their testimony,
Speaker 3: but this was like in the wild, right, This wasn't
Speaker 3: a planned thing. This is just this incredible entrepreneur and
Speaker 3: that we are this footnote in her story and hopefully
Speaker 3: you know where the services and the support we could
Speaker 3: offer her could sort of help her take those next steps.
Speaker 3: Who knows where she's going to be, you know where
Speaker 3: her business is going to be, where she's going to be.
Speaker 3: But it's amazing that we get to partner with families
Speaker 3: like that. And as those numbers grow, you know, from
Speaker 3: the early days when it was the dozens of families
Speaker 3: a year and now it's hundreds of families a year.
Speaker 3: How can we create more of that opportunity in Milwaukee
Speaker 3: and Beloite and in communities across the country so that
Speaker 3: more families can experience of the empowerment and the joy
Speaker 3: and the stability they can come.
Speaker 1: From home ownership. Amen, Michael, I love what you do.
Speaker 1: I love what you guys have and thank you so
Speaker 1: much for sharing it and the last time them to
Speaker 1: say it, promise me you're going to come.
Speaker 2: Back well do. Thank you so much. This has been a.
Speaker 1: Joy, it's been a real treat. And thank you for
Speaker 1: joining us this week. If Michael Gosman has inspired you
Speaker 1: in general or better yet, to take action by possibly
Speaker 1: exploring as Housing's model for you, community, donating to them,
Speaker 1: or something else entirely, let me know, I really do
Speaker 1: want to hear about it. You can write me anytime
Speaker 1: at Bill at normal Folks dot us, and I promise
Speaker 1: you I will read it and I will respond. If
Speaker 1: you enjoyed this episode, share old friends and on social
Speaker 1: subscribe to the podcast, rate and review it. Join the
Speaker 1: army at normalfolks dot us. Consider becoming a premium member.
Speaker 1: There any and all of these things that will hold
Speaker 1: us grow an army of normal folks. I'm Bill Courtney.
Speaker 1: Until next time, do what you can