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Speaker 1: An illegal alien from Guatemala charged with raping a child

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Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador

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Speaker 1: accused of murdering a Texas man of Venezuelan charged with

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Speaker 1: filming and selling child pornography in Michigan. These are just

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Speaker 1: some of the heinous migrant criminals caught because of President

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Speaker 1: Donald J. Trump's leadership. I'm Christy nom the United States

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Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border

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Speaker 1: crossings are at the lowest levels ever recorded, and over

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Speaker 1: one hundred thousand illegal aliens have been arrested. If you

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Speaker 1: are here illegally, your next you will be fined nearly

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Speaker 1: one thousand dollars a day, imprisoned, and deported. You will

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Speaker 1: never return. But if you register using our CBP home

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Speaker 1: app and leave now, you could be allowed to return legally.

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Speaker 1: Do what's right. Leave now. Under President Trump, America's laws,

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Speaker 1: border and families will be protected.

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Speaker 2: Sponsored by the United States Department of Homeland Security.

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Speaker 3: Yeah, there's a lot to unpack, but I want to

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Speaker 3: go back just to beginning for a set. Because you

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Speaker 3: made a very wise decision that most Americans don't make,

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Speaker 3: and you bought multi family right away, because you know,

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Speaker 3: most times, you know, in our communities, it's like we

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Speaker 3: save enough money to buy the home that we can

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Speaker 3: afford or the dream home that we think we can afford,

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Speaker 3: and rerealize later that we can't. But you started with

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Speaker 3: multi family right away. Was that the strategy all along,

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Speaker 3: as you had been seeing people do that and as

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Speaker 3: that as a way of having passive income.

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Speaker 4: Yeah, that was definitely my objective in that we wanted

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Speaker 4: to you know, when you think about it, right, the

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Speaker 4: fundamental equation is this, most people buy into that American

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Speaker 4: dream right where you know, if you take a person,

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Speaker 4: they go out and buy home, they save all their money,

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Speaker 4: they buy single family home, they move into it for

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Speaker 4: the next thirty years. Mostly the disposable income is going

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Speaker 4: to pay that mortgage.

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Speaker 2: That's it.

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Speaker 4: But if they just did something a little bit differently,

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Speaker 4: buy a couple of income generating assets first. Right in

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Speaker 4: the case I was talking about when I bought my

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Speaker 4: first multi family, I mean that was making me between

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Speaker 4: eight hundred and thousand dollars a month.

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Speaker 2: So they'll called one thousand dollars a month.

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Speaker 4: If you're making sixty grand and you buy a multifamily

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Speaker 4: house and you can make yourself an extra thousand dollars

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Speaker 4: a month. You've given yourself a twenty percent raise, right,

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Speaker 4: and you can do that repeatedly. And the more assets

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Speaker 4: you have that are generating income for you, the easier

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Speaker 4: it is to buy your next one and your next one. Right,

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Speaker 4: it's like getting off of that point of inertia. But

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Speaker 4: if you choose to buy a single family home and

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Speaker 4: move into it, I think you know, it's not as

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Speaker 4: lucrative and it's not the wealth generating instrument that investment

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Speaker 4: properties are.

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Speaker 5: So let's let's get into this real estate development conversation.

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Speaker 5: But somebody that's looking to become a real estate developer

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Speaker 5: right now, right, what advice would you give them in

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Speaker 5: order to because I understand that it's not necessarily easy

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Speaker 5: to get into the game and it's all about relationships

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Speaker 5: a lot of times. So what advice would you get

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Speaker 5: to somebody as looking to become a real estate developer?

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Speaker 4: So the first thing is just learn the equation, right,

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Speaker 4: because you could do the equation on a multi family,

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Speaker 4: three family, which most people can have a level of

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Speaker 4: access to.

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Speaker 2: But it's that.

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Speaker 4: Same equation that's saying the same mechanics that go through

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Speaker 4: in a development deal. Granted, the variables change a little

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Speaker 4: bit because if you get into development you have to

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Speaker 4: take on some different risks, but you're basically buying an asset,

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Speaker 4: you're investing money in it. You're starting with a multi family,

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Speaker 4: like a three family. You're going to learn things like

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Speaker 4: how to do maintenance right when that toilet gets backed up.

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Speaker 4: You're going to learn something about plumbing, You're going to

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Speaker 4: learn something about electrical and folks should not be scared to,

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Speaker 4: you know, take on the challenge because everything you learn

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Speaker 4: increases your knowledge base, and the more knowledge you have,

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Speaker 4: the more you're able to monetize your situation. So, you know,

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Speaker 4: I would encourage folks to start small.

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Speaker 2: So start with.

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Speaker 4: An operating property first, right, a multifamily, learn the mechanics.

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Speaker 4: Down the road, you may want to say, you know,

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Speaker 4: I'm going to buy a Brownstone or some other home

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Speaker 4: that you can actually renovate and reposition. I mean, everyone

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Speaker 4: watches HGTV and those kind of things. You see people

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Speaker 4: doing flips. That's another aspect of you know, in real

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Speaker 4: estate investing, in real estate development that.

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Speaker 2: Is achievable and accessible for most people.

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Speaker 4: But if you do that, you learn how to you know,

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Speaker 4: contract with an electrician, how to get the plumbing redone

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Speaker 4: in the house, how to you know, put get a

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Speaker 4: new roof, put on all the things that you basically

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Speaker 4: do when you develop, but you're learning it in a

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Speaker 4: little bit of a safer scenario. And once you you know,

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Speaker 4: you go from crawling to walking, you can run, so.

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Speaker 2: That that crawling process.

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Speaker 3: I imagine now as your intern well Internet for free right,

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Speaker 3: You're you're saying, can I help this firm take us

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Speaker 3: through that process of what you're learning? What do you

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Speaker 3: see the negatives and positives of this space that you're

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Speaker 3: now in, and to that moment where you now see

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Speaker 3: your name at the bottom of the bet and you're like, wait,

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Speaker 3: my name needs to be next to be needs to

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Speaker 3: be next to the bigger figures on this what's that

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Speaker 3: process like for you?

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Speaker 4: You mean, going from just like starting to learn, well,

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Speaker 4: it's really just desire man, like, you know, really wanting

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Speaker 4: to learn it. You think about what this opportunity represented

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Speaker 4: for me was, you know, to actualize a dream and

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Speaker 4: being an entrepreneur, and so I was intent on learning everything. So, uh,

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Speaker 4: you know why I stayed with that developer for free

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Speaker 4: for two years because I wanted to learn and I

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Speaker 4: wanted to soak up everything like a sponge. So my

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Speaker 4: background is in finance. I have two degrees in finance,

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Speaker 4: Bachelors and the Masters, and I worked as an investment banker,

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Speaker 4: so I came to the table with really strong financial acumen.

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Speaker 2: So the.

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Speaker 4: You know, the math in real estate is simple math,

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Speaker 4: and you don't have to be an investment banker and

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Speaker 4: you don't have to have an MBA to do it.

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Speaker 4: It's simple math because the income is generated from people

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Speaker 4: paying rent, you have operating expenses, and you have cash flow.

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Speaker 4: It's really a simple equation. Development goes a little bit

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Speaker 4: deeper because you have to take something that's not generating

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Speaker 4: any income and put it through a process where you're

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Speaker 4: going to borrow some capital, both debt and equity. You're

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Speaker 4: going to hire an architect, maybe through some entitlement work

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Speaker 4: so that you can have the right zoning or whatever.

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Speaker 2: You need to build.

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Speaker 4: Then you're going to go through the process of actually

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Speaker 4: constructing something a little bit more risky. But once you

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Speaker 4: get your wheels under you, you can do this. And

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Speaker 4: so learning all of those different aspects, you know, the

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Speaker 4: financing component being very focused on project management, so making

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Speaker 4: sure the our plans were getting done on time, and

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Speaker 4: you know, the legal documents that we needed around developments

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Speaker 4: were also moving along and are structured properly.

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Speaker 2: There's a lot of engagement in what I.

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Speaker 4: Do now with municipalities because when we're developed affordable housing,

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Speaker 4: it can't be done without the participation and the support

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Speaker 4: of government. And so there's a lot of what I

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Speaker 4: think is undue bureaucracy in some markets that you have

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Speaker 4: to contend with. But then there are other markets that

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Speaker 4: are easy to function and that is why as a company,

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Speaker 4: we chose to expand out of New York City into

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Speaker 4: several other markets where there really is tremendous demand for housing,

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Speaker 4: both you know market rate, moderate income and you know

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Speaker 4: affordable housing as well.

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Speaker 5: So can you walk us through the development of a building.

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Speaker 5: It could be in New York or out of New York.

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Speaker 5: I know this is RFPs right, and then you have

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Speaker 5: to get the financing right and like you said, you

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Speaker 5: have to get the architect, you got to go through

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Speaker 5: the permit process.

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Speaker 2: So yeah, can you kind of walk us through stuff?

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Speaker 2: So let's start with earners. What's up.

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Speaker 3: You ever walk into a small business and everything just

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Speaker 3: This episode is brought to you by P and C Bank.

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Speaker 1: An illegal alien from Guatemala charged with raping a child

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Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador

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Speaker 1: accused of murdering a Texas man of Venezuelan charged with

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Speaker 1: filming and selling child pornography in Michigan. These are just

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Speaker 1: some of the heinous migrant criminals caught because of President

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Speaker 1: Donald J. Trump's lee I'm Christy Noman, the United States

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Speaker 1: Secretary of Homeland Security under President Trump, attempted illegal border

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Speaker 1: crossings are at the lowest levels ever recorded, and over

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Speaker 1: one hundred thousand illegal aliens have been arrested. If you

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Speaker 1: are here illegally your next you will be fine nearly

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Speaker 1: one thousand dollars a day, imprisoned and deported, you will

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Speaker 1: never return. But if you register using our CBP home

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Speaker 1: app and leave now, you could be allowed to return legally.

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Speaker 1: Do what's right. Leave now. Under President Trump America's laws,

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Speaker 1: border and families will be protected.

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Speaker 4: Sponsored by the United States Department of Homeland Security. A

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Speaker 4: blank piece of dirt, okay. So you have a piece

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Speaker 4: of dirt, let's call it in Brooklyn, Okay. And it's

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Speaker 4: in a neighborhood that's turning over and is improving. And

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Speaker 4: as an investor, believe you know what, I can put

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Speaker 4: a building on that piece of dirt, call it fifty

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Speaker 4: units and make money. Right, So the processes. First of all,

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Speaker 4: I see that piece of dirt. The first thing I

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Speaker 4: want to do is what's called a zoning analysis. I

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Speaker 4: want to understand what's the size of a building I

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Speaker 4: could put on there? Can I actually put fifty units?

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Speaker 4: Is it fifty five units? Is it sixties and forty five?

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Speaker 2: I don't know.

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Speaker 4: So an architect would be engaged. They'd conduct a zoning analysis.

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Speaker 4: And what it does is reads the zoning code and

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Speaker 4: every municipality in the country has a zoning code, and

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Speaker 4: it interprets the zoning code and it gives you, right

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Speaker 4: there in a two three four page report, exactly what

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Speaker 4: could be built, how high it could be, where the

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Speaker 4: setbacks have to be. You know, how many dwelling units

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Speaker 4: can be in that building, the size of every dwelling unit.

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Speaker 4: So all these very technical features are codified in a document.

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Speaker 4: So you can take that zoning analysis now and now

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Speaker 4: go build a financial model, right and that financial model

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Speaker 4: is going to say, look, I have these fifty units.

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Speaker 4: Some are studios, some are one bedrooms, some are two bedrooms,

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Speaker 4: and they generate x amount of income. Right that the

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Speaker 4: amount of income they generate has to also be further

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Speaker 4: reduced by the operating expense. So the superintendent has to

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Speaker 4: clean the building or you know, service the residents. The

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Speaker 4: porters have to take the garbage out and shovel the

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Speaker 4: snow off the off the front steps. You have to

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Speaker 4: pay for electricity in the common areas, you have to

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Speaker 4: pay your real estate taxes, whatever it is. So you

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Speaker 4: do a financial model and you see, you know, the

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Speaker 4: revenue can generate the expenses associated against that project, and

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Speaker 4: then what kicks out of that is what we called

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Speaker 4: net operating income. That net operating income is what is

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Speaker 4: used to service the debt, the mortgage on the building. Right,

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Speaker 4: so you can see just from a pro forma what

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Speaker 4: NY the building produces, and that NY will tell you

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Speaker 4: how much debt you can raise. So and you also

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Speaker 4: want to have a project that of course can support

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Speaker 4: the debt, so you know how much debt it can support.

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Speaker 4: Look at, well, how much debt do I need to

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Speaker 4: build it? And you're going to say, you know, at

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Speaker 4: fifty unit building. When you become a little bit more seasoned,

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Speaker 4: you kind of know what construction costs are. But for

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Speaker 4: folks who aren't, you can literally take your plans, talk

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Speaker 4: to a builder, say hey, I'm building this building. It's

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Speaker 4: going to be block and plank, or it's going to

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Speaker 4: be poored in place, concrete, steel frame, whatever construction methodology

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Speaker 4: your structural engineer recommends, and you get a cost, right,

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Speaker 4: a cost projection for.

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Speaker 2: Building the building.

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Speaker 4: So that building, we'll just use some numbers, right that

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Speaker 4: let's say to acquire the land and to build everything's

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Speaker 4: in be ten million dollars and let's say at ten

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Speaker 4: million dollars is at six percent interest rate, so you know,

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Speaker 4: every month, that's how much your mortgage payment has to

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Speaker 4: be on that asset, So that NI has to be

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Speaker 4: an excess of that debt coverage that that debt number.

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Speaker 4: We call that a debt service coverage ratio, So that

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Speaker 4: DSCR probably needs to be minimum about one point twenty five,

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Speaker 4: so meaning you want to have one hundred and twenty

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Speaker 4: five percent of that mortgage number in your NI so

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Speaker 4: you can comfortably cover the debt service and then when

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Speaker 4: you pay the debt service, the rest of it in

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Speaker 4: yours to cash flow.

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Speaker 3: So when you're looking for let's say that plot of dirt,

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Speaker 3: what let's are you doing a market analysis to see like,

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Speaker 3: all right, we're actually looking for a place to invest

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Speaker 3: in this borough in this city prior to it, or

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Speaker 3: are we you know, looking at past investments that are

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Speaker 3: going up in the neighborhood to say, all right, this

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Speaker 3: is an opportunity for us and now create.

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Speaker 2: Now that's asked you a great question.

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Speaker 4: So what you're really doing is you you know, when

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Speaker 4: you're looking at that particular opportunity, you're doing it. So

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Speaker 4: you're looking at it because there's probably something else ready

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Speaker 4: going on in that neighborhood, right, And what we do

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Speaker 4: is what's called a comp study. So I can call

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Speaker 4: a real estate broker and say, give me a comp

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Speaker 4: study for this zip code. So they're going to say, Craig,

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Speaker 4: I'll email you this report and it'll have you know,

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Speaker 4: five buildings, ten buildings that are rending up in and

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Speaker 4: around the neighborhood, and it'll show me what the rents

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Speaker 4: are in those buildings, so I can have a reasonable

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Speaker 4: expectation as to what types of income are generated off

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Speaker 4: off that asset. Now, in some markets that we call

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Speaker 4: transitional markets, you know it's not so clear, but you're

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Speaker 4: taking a bet because let's say something fantastic is going

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Speaker 4: on in that market, like they're bringing in a new

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Speaker 4: trains train station, or uh, they're building a new stadium,

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Speaker 4: and there's a reason why I believe there's going to

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Speaker 4: be a lot of demand for real estate in that area.

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Speaker 4: So we will, you know, make an analysis and do

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Speaker 4: an investment based on that. But in my business, since

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Speaker 4: we do affordable housing, here's the thing. Affordable housing is

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Speaker 4: real estate. It's it's actually it's real estate, but it's

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Speaker 4: really a hybrid. It's really structured finance, right, because we

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Speaker 4: are offering you is to rent at below market rate.

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Speaker 4: So it almost doesn't matter what the market is, because

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Speaker 4: the two bedrooms, say three thousand, in that market, I

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Speaker 4: could bring it to I could bring it to market

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Speaker 4: for like say, sixteen hundred eighteen hundred, tremendous discount to

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Speaker 4: make it much more affordable. And the demand for affordable

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Speaker 4: housing is insatiable. We cannot build enough of it. I

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Speaker 4: have to tell y'all right now, in twenty twenty two,

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Speaker 4: almost twenty twenty three, we have a seven million unit

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Speaker 4: housing deficit in this country. Seven million units. That means

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Speaker 4: we could build for the next ten years. We'd have

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Speaker 4: to build for the next ten years across the country

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Speaker 4: just to satisfy that demand. And guess what, in ten

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Speaker 4: years we're going to find out there's even more demand

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Speaker 4: that occurred. And just to quantify that, seven million units

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Speaker 4: of housing is about two and a half three trillion

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Speaker 4: dollars of an economic opportunity. That's why our community has

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Speaker 4: got to get on real estate because you can get

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Speaker 4: your feet in. Not all of it's going to be

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Speaker 4: you know, thousand unit portfolios that are built in public

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Speaker 4: private partnerships. A lot of it will be people who

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Speaker 4: choose to buy a plot of land in the city,

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Speaker 4: or take a vacant land that the city is rfping,

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Speaker 4: and you know, build a three family or four family

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Speaker 4: home on it.

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Speaker 2: There's a lot of opportunity there.

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Speaker 1: An illegal alien from Guatemala charged with raping a child

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Speaker 1: in Massachusetts. An MS thirteen gang member from El Salvador

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Speaker 1: accused of murdering a Texas man of Venezuelan charged with

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Speaker 1: filming and selling child pornography in Michigan. These are just

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Speaker 1: some of the heinous migrant criminals caught because of President

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Speaker 1: Donald J. Trump's leadership. I'm Christy Noman, the United States

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Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border

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Speaker 1: crossings are at the lowest levels ever recorded, and over

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Speaker 1: one hundred thousand illegal aliens have been arrested. If you

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Speaker 1: are here illegally, your next you will be fine nearly

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Speaker 1: one thousand dollars a day, imprisoned, and deported. You will

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Speaker 1: never return. But if you register using our CBP home

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Speaker 1: app and leave now, you could be allowed to return legally.

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Speaker 1: Do what's right. Leave now. Under President Trump, America's laws,

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Speaker 1: border and families will be protected.

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Speaker 2: Sponsored by the United States Department of Homeland Security,