Podcast Summary
Identifying and solving big problems in real estate: Entrepreneurs can address the affordable housing crisis through public-private partnerships, and a problem-solving mindset can inspire various real estate investing endeavors.
There are significant challenges in the real estate market, such as a shortage of competent agents and a housing inventory crisis leading to high home prices. However, these problems also present opportunities for entrepreneurs to innovate and make a positive impact. Today's guest, Evan Holliday, is doing just that by implementing public-private partnerships to address the affordable housing crisis. While this specific strategy may not apply to everyone, the mindset of identifying and solving big problems can inspire and inform various real estate investing endeavors. As Brandon Turner emphasizes, "follow the fire" – keep learning, growing, and pursuing solutions to make a difference in the world of real estate.
Engaging conversations through unique t-shirts and investing in private funds or turnkey rentals: Unique t-shirts can start conversations about real estate investing. Private funds, turnkey rentals, and rent to own homes offer passive income and simplified investing options for young investors.
Wearing a unique BiggerPockets t-shirt can lead to engaging conversations about real estate investing. Meanwhile, investing in private real estate funds, like PPR Capital Management, offers passive income without the hassle of property ownership. Additionally, some companies, such as Rent to Retirement, allow for no money down investment in turnkey rental properties. Lastly, Integra Development Group simplifies the process of investing with their rent to own homes and tenants in place. Evan Holliday's story showcases how young investors can succeed in real estate through innovative strategies and hard work.
Discovering a passion for real estate through unexpected opportunities: Staying true to your interests and taking action can lead to unexpected opportunities and fulfilling experiences in real estate. Persistence and initiative are key to landing a job in the industry.
Following your passion and interests can lead to unexpected opportunities and fulfilling experiences. The speaker's introduction to real estate came from a chance encounter with a developer and a shared excitement for a large-scale development project. This experience ignited a passion for creating affordable housing and led the speaker to pursue a career in real estate development. Another key takeaway is the importance of persistence and taking initiative. The speaker impressed the developer by bringing people to his groundbreaking event and ultimately landed a job in the industry. This story highlights the importance of staying true to your interests and taking action to pursue your goals. Additionally, the speaker's experience in creative financing and public-private partnerships demonstrates the value of learning and mastering complex aspects of real estate development to make a positive impact in communities.
Persistence and connections lead to success in professional world: Being persistent and passionate about your goals, even in the face of obstacles, and leveraging your network can help you succeed in the professional world. Gaining hands-on experience through apprenticeships is also an effective way to learn new skills.
Making connections and following through are crucial in achieving your goals, especially in the professional world. The speaker shared his experience of getting an opportunity to work in real estate development through a well-connected alumnus. However, even after impressing the developer, he had to persistently follow up with him for six months before getting hired. The speaker emphasized that having a passion for what you do and being persistent can help you overcome obstacles and eventually lead to success. Additionally, the speaker mentioned his experience as a mentee in an apprenticeship model and highlighted its benefits in learning a new skill or trade effectively. Despite the challenges and time investment, the rewards of gaining hands-on experience and expertise are invaluable.
Starting with an apprenticeship or internship can lead to valuable experience and long-term success: Choosing an apprenticeship or internship over a lucrative opportunity can lead to valuable experience, support from peers, and long-term career success. Form a mastermind group for encouragement and growth.
Starting your career with an apprenticeship or internship, even if it means starting at a lower wage, can provide invaluable experience and knowledge that can help you find your passion and set you up for success in the long run. The speaker shared his personal experience of turning down a lucrative opportunity to paint houses and instead choosing to work as an intern for a developer, which ultimately led him to a successful career in real estate development. He emphasized the importance of having supportive people around you and encouraged forming a mastermind group with like-minded individuals to help encourage and push each other towards achieving their goals. Despite the initial sacrifice, the speaker believes that the apprentice model is underutilized and can be a more effective and cost-efficient alternative to traditional college education.
From college project to real business: Transforming a college project into a business involves securing rights, finding investors, and forming a board of directors. This approach can lead to the creation of affordable housing, providing jobs and energy-efficient solutions.
Starting a business requires action beyond just listening to podcasts or having ideas. It's essential to get hands-on experience and work with people in the real world. This can lead to unique and impactful opportunities, like the creation of energy-efficient and quick-to-market housing developments. Development refers to the process of creating or improving real estate projects, such as buildings or land. In the case of the speaker, they took a college project to develop energy-efficient housing and turned it into a business by securing rights to the plans, finding investors, and forming a board of directors. The experience was a crash course in learning the ropes of multifamily affordable housing development. The passion and energy from the team were contagious, leading to success and growth. Affordable housing, also known as attainable housing, refers to housing that is reasonably priced for individuals or families with lower incomes. The goal is to provide housing that is accessible and sustainable for people who might not otherwise be able to afford it. In the context of the speaker's story, they recognized the potential to create jobs and provide energy-efficient housing for skilled workers in Southern Kentucky. This approach not only benefited the community but also contributed to the speaker's personal and professional growth.
Creating Affordable Housing for Working Individuals and Families: Developing attainable housing helps provide a stable, quality living situation for working individuals and families in growing metro areas, filling a gap in the housing market and improving overall community stability.
Development is the creation of new housing, particularly new construction. Attainable housing, also known as workforce housing, is a type of development that provides quality, brand new housing at an affordable price point for working individuals and families. The need for attainable housing is significant in growing metro areas where the cost of living is increasing, leaving many people priced out of the market. The lack of development in this price range creates a huge gap in the housing market and forces renters to live in cheaper, often less desirable areas, leading to a downward cycle of instability. Providing attainable housing can make a significant difference in people's lives by giving them a stable, quality place to call home and helping them thrive in their communities.
Leveraging public-private partnerships for profitable affordable housing development: Public-private partnerships offer tax credits, grants, loans, and tax abatements, acting as 'free equity' for affordable housing developers, allowing them to cover costs and generate profits.
Affordable housing development, such as mobile home parks or workforce housing, can be profitable despite lower rents due to the use of public-private partnerships and creative financing. These partnerships provide tax credits, grants, loans, and tax abatements that cover a significant portion of project costs, acting as "free equity" for developers. This equity is then sold to investors for a cash infusion into the project. By combining these financial resources, developers can cover the project's costs and still generate a profit. This innovative approach allows for the creation of affordable housing solutions in areas with high demand and significant housing shortages.
Partnering with governments for affordable housing financing: Developers can access various financing options for affordable housing projects through public-private partnerships, involving tax-exempt bonds and income caps for tenants.
Through public-private partnerships with state, local, and federal governments, developers can access various forms of financing, such as tax-exempt bonds, to build affordable housing. In return, developers agree to cap rents based on the area median income and ensure that families don't pay more than 30% of their monthly income for housing expenses. This approach is particularly beneficial in markets where investing in real estate is perceived as too expensive, as it provides an opportunity to create affordable housing solutions. To get started in this field, one should first educate themselves about affordable housing and the specific steps involved in the process, as it can be complex but rewarding. This niche in real estate development is a "blue ocean" with significant demand for affordable housing units and limited supply of developers, making it an attractive opportunity for those willing to put in the effort.
Mentorship, Target Market, and City Leaders: Acquire foundational knowledge, identify target market, and build relationships with city leaders for success in affordable housing development. Utilize resources like DealMachine and Redfin to streamline the process.
Having a mentor and gaining foundational knowledge in affordable housing development is crucial. Once you've acquired this knowledge, finding your target market and building relationships with city and civic leaders is essential for success. These relationships can help you navigate the complex process of rezoning, obtaining tax abatements, and securing tax credits and bonds. By focusing on mentorship, target market identification, and relationship building with city leaders, you'll be well-positioned to make a significant impact in the affordable housing sector. Additionally, utilizing resources like DealMachine for lead generation and Redfin for market research can streamline your process and provide valuable insights.
Maximize Lead Generation and Deal-Making for Experienced Investors or Passive Investing with Steady Income for New Investors: DealMachine offers experienced investors unlimited access to off-market leads and advanced filters, while Connect Invest provides new investors with passive income opportunities and low entry requirements.
DealMachine and Connect Invest offer unique solutions for real estate investors at different stages of their careers. DealMachine provides unlimited access to high-quality contact information and phone numbers for off-market deals, simplifying lead management with advanced filters and features. Connect Invest, on the other hand, offers passive real estate investing opportunities with fixed monthly income and low entry requirements, eliminating the hassle of property ownership and management. Both platforms cater to different investor needs and can significantly enhance one's real estate investing strategies. For experienced investors, DealMachine can help streamline the deal-making process and expand their network. DealMachine's comprehensive data points and user-friendly interface make it easier to identify potential leads and manage them efficiently. For new or passive investors, Connect Invest offers a low-risk alternative to traditional real estate investing. With a minimum investment of $500, investors can participate in a diversified portfolio of commercial and residential real estate projects and earn a steady monthly income without the responsibilities of property ownership or management. In summary, DealMachine empowers experienced investors to maximize their lead generation and deal-making efforts, while Connect Invest enables passive investors to enjoy the benefits of real estate investing without the associated risks and hassles.
Building Strong Real Estate Partnerships: Successful real estate development requires collaboration with trusted partners, carefully selected for their expertise and contributions. Clear communication and well-defined agreements are crucial for success.
Successful real estate development projects often require collaboration with various partners. These partnerships can come in different forms, such as landowners contributing land as equity or specialized partners bringing unique skills to the table. It's essential to have a core group of trusted partners for deal finding, analysis, and operations, but also to bring in additional partners for their specific expertise on individual projects. Building strong partnerships involves careful consideration, due diligence, and clear communication from the beginning. The importance of having a solid partnership cannot be overstated, as it involves sharing finances, decision-making, and resources. Learning from past experiences, it's crucial to ensure that partnership agreements are clearly defined and documented to avoid potential misunderstandings and conflicts.
Thoroughly research and vet real estate partners: Protect your interests and reputation by carefully selecting partners, build relationships, and employ strategies like using options for less financial risk.
When entering into real estate partnerships, it's crucial to thoroughly research and vet your partners. This not only protects your own interests but also reflects on your reputation since their actions will be associated with your own. Evan's experience of securing a two-year option on a 18.88-acre land for a workforce affordable multifamily development by building relationships, educating potential partners, and demonstrating expertise is a testament to this principle. The use of options instead of outright purchase allows for more control and less financial risk, making it a valuable strategy in real estate acquisitions.
Investing in real estate for long-term gains through rezoning and entitlements: Investors can secure loans, tax abatements, and tax credit equity to fund long-term real estate projects, allowing them to receive significant tax incentives and potentially higher profits through rezoning and entitlements.
Real estate investors sometimes agree to hold onto properties for extended periods, even if they can't sell them right away, due to the potential for higher profits through rezoning and entitlements. This trade-off often comes down to a choice between time and money. In this particular deal, the investors secured a large loan, tax abatement, and tax credit equity to fund their $49 million development project. Tax credit equity is essentially a certificate for a percentage of the eligible tax credits, which can be sold to investors for cash. The investors' capital stack typically consists of 30-40% tax credits, allowing them to receive a significant portion of their tax liability back as an incentive for taking on the project.
Tax credits offer investors valuable losses for tax benefits: Investors seek tax credits and losses to offset earnings, differing from traditional real estate investments, and patience is crucial as incentives change after tax credits expire
Tax credit programs provide an opportunity for investors to buy losses, which can be more valuable to them than cash flow due to tax benefits. The Community Reinvestment Act of 1986 requires banks to invest in tax credits to keep liquidity in the market and encourage investment in low-income neighborhoods. The investors in these deals typically have a different motivation, seeking tax credits and losses to offset their earnings. Patience is crucial as the investors' incentives change after 10 years when the tax credits expire. The deal discussed is currently wrapping up construction with 240 units, and the plan is to refinance after 15 years, buy out the equity partner, and hold the property for a long term. The concept of depreciation and the importance of understanding investors' motivations differently from traditional real estate investments are key lessons from this deal.
Navigating the Long Real Estate Development Process: Identify council members supportive of development, endure lengthy entitlements process, aim for 100,000 affordable workforce housing units within 20 years.
Real estate development is a long-term process that requires persistence and consistency. From predevelopment to stabilization, it can take up to 6 years to complete a project. Entitlements and rezoning are key ways to increase the value of land, but the process is arduous and time-consuming, involving community and political coordination. The speaker's advice is to identify council members who understand the need for development and are willing to work with you. The ultimate goal for the speaker's company is to create or preserve 100,000 affordable, workforce housing units across the country within the next 20 years. For those interested in providing value, the speaker encourages reaching out with potential deals or connections in the industry.
Creating Impactful and Sustainable Communities through Affordable Housing and Education: Evan Metcalfe, a real estate developer, is dedicated to creating impactful and sustainable communities by providing affordable housing and empowering residents through education and mentorship programs. He aims to help people move up from affordable housing to ownership and investment, and is seeking impact-driven investors to replicate his model.
Evan Metcalfe, the founder of a real estate development company, is dedicated to creating impactful and sustainable communities by providing affordable housing and empowering residents through education and mentorship programs. He aims to help people move up from affordable housing to ownership and investment. To achieve this goal, he is seeking impact-driven investors and is starting to mentor others to replicate his model. Evan's favorite books include those by influential developers James Rouse, Gerald Hines, and George Perez, which inspire him with their personal stories and insights. Outside of work, Evan enjoys spending time outdoors with friends and being physically active.
Gaining clarity on goals and passions in real estate investing: Disconnect from distractions, find a supportive community, visualize and plan, and stay focused on your 'why' for successful real estate investing.
Finding clarity on your goals and passions is crucial for successful real estate investing. Evan Holiday shared his personal experience of gaining clarity during a trip to Costa Rica, where he disconnected from distractions and fully committed to his vision. He emphasized the importance of having a "why" and staying focused on it. Additionally, he suggested setting aside dedicated time to visualize and plan your real estate investing journey. Evan also mentioned the importance of finding a supportive community, like Holiday Ventures, to help keep you accountable and focused on your goals. Overall, Evan's perspective emphasizes the importance of mental clarity and focus in achieving success in real estate investing.
