Commercial Narrator 1 (1:58)

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Host 1 (2:28)

you said last time like in order for a developer to really get into the game most time you have to like work under like a JV with an established developer, right?

Guest Expert (Developer) (2:36)

Absolutely.

Host 1 (2:37)

So at what point can you branch out on your own and not have to ride with another person in, in the car.

Guest Expert (Developer) (2:47)

From a tax credit type perspective. So community development, let's break out Community development in commercial real estate. Commercial real estate. If you have money, you can go tomorrow. You know, like a billionaire can literally go and hire development consultants and just put up a development if you wanted to. So you can do that with no problem. Community development tax credit, I wouldn't recommend it because the returns are probably not going to be what you want them to be. And they don't have the same vested interest in them. You don't know what's going on, you're probably gonna lose. But you can do it. From a community development perspective. When you're trying to develop these communities and tax credit deals and affordable housing. A hack is the governing council of all tax credit equity investors. They set a Standard that was $1 million of liquidity and 5 million in net worth. So that's really the start and the finish.

Host 1 (3:38)

Again, if you do what to develop

Guest Expert (Developer) (3:40)

to, to, to be able to get the tax credit equity investor to allow you to be the developer, you have

Host 1 (3:46)

to have a million dollars in liquid and $5 million.

Guest Expert (Developer) (3:49)

That's pretty much the, the standard. But as deals get larger, if you're doing a 50 plus million dollar deal, they're going to want to see a little bit more. And typically they want to see the experience. But like that is. If there was a benchmark, that would be it. And most of the time when we start now, million dollars of cash and or 5 million in net worth is not really there for folks. So you got a JV and partner like we explained in the last episode to be able to get to that point. So now like I'm there. I'm doing like Harbor District. It's on my own. I'm bringing in a good friend of mine who's been doing my development consultant, Michael Mim. And we're just gonna partner on it. I, I stand it on my own and everything, but he's a brother that I really trust and respect. So it's like, no, let's just do this together. So it's not like I needed him at all. And frankly he doesn't need me. But it makes sense for us to like share, divide and conquer. That. To answer your question earlier about like how do you know when it's too much right now? I mean it's only. I just hired my first person a couple months ago. It's been me this whole time, full time. That's why I don't put out this content, I'll just be working. Literally, like, I'm a staff of. I was. I've been a staff of one. I had people assisting, and even the person that I hired, she's been helping for like two. Two years or so. But full time is just me and one other person right now.

Host 2 (5:06)

I didn't know that.

Guest Expert (Developer) (5:07)

Yeah.

Host 2 (5:08)

Wow.

Guest Expert (Developer) (5:08)

I am. I. I am primarily doing the work. It's not like I'm having team members do it. Like, I'm at these community meetings. I'm meeting with the folks. I'm putting together the financial models. I'm looking at the construction plans. Like, I'm doing it. When you.

Host 2 (5:22)

When you broke down the financial model by square foot, the last time we spoke, I was. I mean, that blew me away. And so I'm out looking at you going from 140 unit development to now in Birmingham, where we got 1100 mixed unit.

Guest Expert (Developer) (5:35)

Yeah.

Host 2 (5:36)

Talk about scaling that. What that looks like for you, since you're. I mean, talking about just being the sole person doing it for sure.

Guest Expert (Developer) (5:42)

So partnerships. That's another key one. I knew. I felt the market was changing. I didn't know it would be this stark in terms of the interest rates, but I knew, like, we've been on the wave. Like, oh, a hit boom. Really? From 2010 to like 2122, we. That was a run that real estate hasn't seen. Real estate is cyclical. It goes up and it goes down. It's literally like this all the time. So I'm like, yo, it's. It's time that it's gonna go down. So I intentionally didn't do any new developments. I was just working on the construction of 1402, 1887 and Montala. So I have right now three projects, little around a little over 300 units under construction right now in Wisconsin. So I was like, let me just focus on that. But simultaneously, I was looking for how do I plan for the future where my time right now may not yield this return, but my time later will. So I started to reach out to. I built a partnership with Integral and Egbert and their team, and I started looking at master plan developments. So that's what I was talking about before. I. I didn't really get hit by the recession much because all of my stuff was already kind of out the ground. It's just being built. All my financing is in order. I put a pause on anything new, but as I was pausing, I was working on this larger term stuff. So I ended up getting 1100 units awarded that we're developing with Smithfield Court, that's in Birmingham. And we just received the 50 million dollar grant on that. And I also got about 900 units awarded. Congrats. Thank you. Thank you. Yeah, so that's about 3, 300 with the market rate. So about 350 million in just 1100. And then I have 900 units at Tom Brown in Birmingham that I'm developing as well. The way you can do that is like I looked at capacity. We're doing the $50 million broken out into seven deals. I'm doing a deal a year for the next seven years. And when I talked about the funding, gas, right, okay. You have the, the loan, you have the tax credit equity, but then you got to fill the rest. The $50 million is the gap filler for the rest of the. So I have a Pre, pre funded 7 deal run based on $50 million of a grant that was awarded from the federal government. So for me that was capacity. Like I don't need to do 7, 8 deals right now because I'm a small team. But if I could build 7, 8, 9, 10 deals in my pipeline over however much time, that was the key. So I'm doing seven mark seven affordable deals for Birmingham in Smithfield with two market rate deals. And then the other one I have about seven phases. So every year I'm going to do really two deals a year in Birmingham.

Host 2 (8:29)

So that Secretary Fudge is who? The person you were working with?

Guest Expert (Developer) (8:32)

Yeah, Secretary Fudge.

Host 2 (8:33)

I mean, if people don't know she's the head of hud.

Guest Expert (Developer) (8:36)

She is.

Host 2 (8:37)

So how did you develop a relationship with her? Were you on her radar? Did somebody introduce you? Because relationships are important. We always talk about that. When did that relationship develop?

Guest Expert (Developer) (8:45)

You know what's interesting, I knew people around, but I didn't meet her until the day she brought the award.

Host 2 (8:51)

Wow.

Guest Expert (Developer) (8:51)

I didn't meet her until that day. She brought the 50 million dollar check. And we, you know, met then prior to that. Who does know her? Randall Woodfin. Mayor Woodfin out of Birmingham. He knows it, you know, so it's relationships. Like you said, if the mayor knows her and the councilwoman knows her and we are all aligned in this development together, I mean, this is what we are pushing for at that point. I didn't need to know her because they knew her, you know, And I will say we put together one of the best proposals they've probably ever seen. It's super unique to get that choice. Neighborhood grant was. It's been around for some years. It really was Hope 6 first. So Egbert is the pioneer of Hope 6. HUD asked him, consultant on a model, etc. Now we have this is broken out into three tiers. Housing, neighborhood and people. Those three tiers are super important to HUD because it's not just about housing. Like you were saying earlier, like we need food, we need shelter. We're doing, we're moving a library, putting that into the development. We are also doing a social innovation campus that the city is going to run and govern. In our senior building, that's 101 units that we just applied for tax credits. On the lower level is an early childhood education center. So we have 101 seniors that will now volunteer with the kids. So the kids will be teaching the seniors and the seniors will be teaching the kids. Like there are models within models. It's not about the buildings, it's about, you know, the broader play. But HUD realized that the applicant was the Housing Authority of Birmingham District, 100% black LED. The co applicant is a city of Birmingham 100% black LED. The housing lease is a partnership between Rural Enterprises and the integral group. 100% black led and owned. The Scent project is running the people side, 100% black lead, which is a subsidiary of Integral. And the neighborhood again is the city of Birmingham. First time we've ever seen one of these really, really large scale developments be 100% black. Which I think tells a story. So that might have been why, Secretary,

Host 2 (10:55)

as, as you were saying, I'm thinking the common thing. We saw this happen in Milwaukee and we've seen it happen in Birmingham. We had the opportunity to sit down with Mayor Wolfin and he was telling us like we were in Atlanta. But we flew over and he was like, look, everything that they have, we can have here 100 and we can control it.

Host 1 (11:11)

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Host 2 (11:18)

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Commercial Narrator 2 (12:07)

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