Offering

Jamison loves real estate crowdfunding.

October 20, 2021

Jamison Manwaring is the co-founder and CEO of Neighborhood Ventures, a remarkable Arizona-based real estate crowdfunding company, focused on value-add multi-family properties.

It’s a real estate company, for sure – they buy, hold and sell property. But the capital plan is innovative, with a growing pool of state residents who are permitted to invest through Arizona intrastate securities law. Nine successful projects later, Jamison is now taking his plan to the national stage with their latest project, a short-stay hotel he wants to repurpose into affordable housing. And he’s raising funds on my crowdfunding platform, SmallChange.co.

Jamison attended business school at the University of Utah where he graduated with a BS in Finance. He was always interested in finance. He loved it enough to become president of the finance club. Even at a young age Jamison’s determination shone through. He wanted to work in New York, at a top finance firm. But those companies have their pick of Ivy league school graduates, which he was not. So every Thursday night he flew the red eye to New York to network. You’ll have to listen in to hear the rest of the story.

Insights and Inspirations

Jamison’s determination and stick-to-itness has taken him to Wall Street, and on to con-founding his own successful real estate company.
His mission? To let everyone invest in real estate opportunities.
Value add real estate projects, with less construction time than ground up, generally mean distributions to investors can start more quickly.

Read the podcast transcript here

Eve Picker: [00:00:05] Hi there. Thanks for joining me on Re-Think Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. If you haven’t already, check out all of my podcasts on our website at rethinkrealestateforgood.co or you can find them at your favorite podcast station. You’ll find lots worth listening to.

Eve: [00:00:56] Today, I’m talking with Jamison Manwaring. Jamison is enjoying success as the Co-founder and CEO of Neighborhood Ventures, an Arizona based real estate crowdfunding company focused on value-add multi-family properties. Always interested in finance, Jamison went to business school and studied finance. He loved it enough to become President of the Finance Club. Even at a young age, Jamison’s determination shone through. He wanted to work in New York at a top finance firm, but those companies have their pick of Ivy League school graduates, which he was not. So, every Thursday night, he flew the Red Eye to New York to network. But wait, if I tell you what happened next, I’d be a spoiler, so you’ll have to listen in to hear the rest of the story. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co., where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:02:14] Hi, Jamison, thanks so much for joining me today.

Jamison Manwaring: [00:02:17] Hey, thanks for having me, I’m happy to be on your podcast straight out of Pittsburgh. I’m here in Phoenix, still in the nineties here and…

Eve: [00:02:27] Oh wow.

Jamison: [00:02:29] Happy we have the technology we can be talking and doing this remotely.

Eve: [00:02:32] Well, I’m in the snow belt, at the moment. It’s in the low 60s here, so that’s a pretty big differential. So, your background is solidly in finance, all the way back to college when you majored in finance. And I want to know what led you to, you know, your early career was with Goldman Sachs and places like that. And I want to know what led you to launch Neighborhood Ventures and your focus on real estate.

Jamison: [00:03:02] Yeah, yeah. Great. Well, you know, I was always an entrepreneur type of person as a kid and did, I had several businesses. My most successful one was either dog walking or picking up, hauling off people’s Christmas trees into the field where the city wanted them to go for for a couple of bucks. That was a big business. And I ended up doing a bunch of telemarketing when I was in high school because you don’t have to have any experience there if you can produce results quickly. So, I started doing telemarketing and by my senior year I had 10 of my friends from school working for me and we were calling doing lead generation for mortgage company, insurance company and and I was just always pulled into business in general and in specifically real estate. My brother was in the mortgage business. My dad’s a real estate broker and has been for a long time. I always loved real estate, especially seeing a project go from what it was right now, but having a vision around what it could be and then seeing that vision come to fruition is really gratifying. And I started a real estate business right out of when I was in my early 20s before I went to college, and it was a for sale by owner business service. People want to sell their homes on their own. And we would help them with that and then charge them a flat fee. And that worked OK for a little while. But I also realized I was I had a lot of limitations when it came to my understanding of business, and even though I thought I knew everything, I clearly didn’t. And when the financial crisis happened and I was living in Phoenix at the time, you know, it really slowed things way down here. And when with real estate and with building and with the real estate market in general. And I hadn’t gone to college university and at that point decided, boy, right now is probably a good time to go to school because there’s not a lot happening economically. So I started in 2008 and I did a year at Arizona State, and then I transferred and finished at University of Utah in Salt Lake City. And when I was there, I realized finance is kind of what what helps you understand what is going on with the business. If you understand the financials, you understand the lifeblood, you’re kind of like the doctor of a company. You can really look at it, see where the problems are, see where the the great things are. See where areas that need focus. And if you can really understand how to give how to analyze a business or a real estate project financially, then then you have a really key skill set. And so that’s why I decided to study finance.

Eve: [00:06:19] Yeah. So you’ve had a kind of a you always had a background in real estate, but still it’s a pretty big leap to go from that to launching a crowdfunding platform. And tell me about that and what made you take that leap?

Jamison: [00:06:34] When I was studying at the University of Utah, I had a lot of friends who had done, a few friends who had done some internships with some investment banks. And as I talked to them, I realized and came to conclude that that would be a great option for me to try to get the experience of working in an investment bank. Most of them are were either going to be in San Francisco for us because we’re more. I was in Utah and then some people even made it all the way to New York. That was a little bit further than than most of us get to and um, I decided to go for that, not just to work on Wall Street, for the the brand or, you know, the status. I was more wanting to really go because I heard how how much they learned about companies, public companies and the markets. And so my junior year of school at University of Utah, I started going out to New York on a redeye flight, JetBlue flight on a Thursday night. I would leave at 11:30 p.m. and I’d arrive in New York at about 5:30 a.m. And then I would go out to the investment banks and try to network with with folks. And because the investment banks, they recruited their core schools, which tend to be the Ivy League schools, they are not recruiting at University of Utah, so we have to go to them. And I did that.

Eve: [00:08:06] That’s pretty intense.

Jamison: [00:08:10] Yeah, it’s, you know, I’d get on that flight and get there at six a.m., grab a little breakfast and then just try to have the most productive Friday that I could. And that usually meant meeting two or three folks face to face. And I would just, I got some some email addresses from some professors who have friends working on Wall Street, former students. Uh, from University of Utah, who maybe later went on and got an MBA at Wharton or Chicago or one of the the schools where a lot of them end up on Wall Street. And I ended up meeting probably half a dozen people, maybe 15 people who would have a 15 20 minute meeting with me. And I just said, Hey, I just want to learn about your business. I’d ask them a few questions about what they do. And it gave an opportunity for for them to get to know me and ask me questions, too. And I was hoping that something would happen, but I didn’t know exactly what would happen, and I made probably half a dozen or eight trips there. I’d stay in a hostel with eight other people snoring. You know that Friday night it was it was miserable. But I was in New York and it was fun. I had never I had never experienced New York, so I would stay there until usually Sunday night and fly back Sunday night and really grew a love for, for all things, New York. And luckily, one of the people who I met he was at Barclays, which bought Lehman Brothers after the financial crash. Barclays is a UK based bank. They came in kind of bailed out Lehman and they were one of the biggest investment banks in the world, and he was there and he helped me get an internship. And he actually he helped me get an interview, and they flew me out from Utah for the interview, for a super day and ended up getting an internship, full time summer internship, the junior year to my senior year. And that’s really what kind of got me into finance in Wall Street.

Eve: [00:10:22] It also certainly shows your determination, which you really need for a startup business.

Jamison: [00:10:28] Yes. Yeah, there’s there’s no giving up. It’s just it hasn’t happened yet. I’ve just got to keep going. As you know.

Eve: [00:10:37] I know that feeling really well. Not giving up.

Jamison: [00:10:42] Yeah. One of the things I found is a lot of times right when you’re at your worst and you’re about ready to give up that a lot of times means you’re almost there. So it’s kind of like…

Eve: [00:10:55] Oh, that’s awful.

Jamison: [00:10:56] I feel that so many times. And I was paying for this out of pocket. And luckily, JetBlue had a special, I think it was $129 round trip on that flight. And so I spent about $1,000 in the travel and stayed as cheap as I could. But, you know, had a great experience. And I ended up at Goldman Sachs after college.

Eve: [00:11:19] That’s a testament to your stick-to-itness.

Jamison: [00:11:23] You know, some folks, they might go to Ivy League and go right into a company like that, and those companies are out recruiting them, trying to get them to work there. For me, it was a little different. I had to come in the side door, not the front door, but I was in the door. And then once you’re in there, you know, you’re all equal. It’s it’s a meritocracy. It’s about what can you do? What ideas do you have? And I love that. I love the, you know, it’s kind of a low drama atmosphere. It’s just about what do you do and what can you produce. At that point, once you get the job, it’s not who you know. And I love the fact that I could be from Idaho, you know, going to school in Utah and I’m here on a level playing field and it really motivated me and I was I felt like I was with some of the smartest people I’d ever been around, for sure.

Eve: [00:12:15] That’s a great story.

Jamison: [00:12:18] Yeah, thank you. One of the companies that went public that I worked on their IPO was LifeLock in 2012, and they were based in Arizona. And I had some family in Arizona and I had lived in Arizona for a little while. And when they went public, I was always a little drawn to them because they were one of the few companies in Arizona that’s kind of like a tech company. And long story short, in 2015, they offered me a job to run their investor relations. I had been working with their investors as a Goldman Sachs equity analyst for several years, three years.

Eve: [00:12:58] Oh, okay.

Jamison: [00:12:58] And then they brought me basically from Goldman Sachs into their own into internally. And a year and a half after joining, LifeLock got bought out for three times our share price. From the time I joined. When I joined, it was about eight dollars a share and we ended up getting bought out for twenty-four dollars a share. So that was a good outcome for everybody. And at that point, I had an opportunity to do something new and different, and that kind of leads us to where we are here now with with Neighborhood Ventures and the current company. I had bought a few buildings when I was in New York, including a 10-unit building, renovated it. The buildings weren’t in New York. They were in Idaho where I was from. And I really was drawn back to real estate. Kind of came full circle back to some of my roots and where my family had spent so much time. And so I went from wanting to go to Wall Street, getting to Wall Street, seeing everything that was there and saying, you know, I kind of want to go back to the. tangible assets in real estate.

Eve: [00:14:10] But with a pocket full of different experience, right, that you could apply.

Jamison: [00:14:14] Yes, and realizing that, you know, a lot of people don’t have the opportunity to put money in real estate. They invest it in the market because you can do it from home and you don’t have to manage anything, you don’t have to be a landlord. And a lot of people think, Well, if I’m going to invest in real estate, that means I’m going to have to become a landlord and I’m going to have to get that phone call on a Saturday afternoon that the toilet’s broke. And I don’t want anything to do with that. And that’s kind of when this idea came together, about how can we make real estate more attainable as an asset class for people to own, because I saw an opportunity where it’s very easy to invest in the market, but the market has a lot of downsides. It’s a roller coaster. There’s a lot of risk there. And as I was drawn to real estate, I think a lot of people, other people are too. If we could find ways for them to invest in real estate without them having to become a landlord.

Eve: [00:15:18] Yeah, it’s definitely a more stable investment if you invest in it correctly.

Jamison: [00:15:23] Yes. And there’s REITs and there’s some of these big instruments you can invest with in real estate, but they’re also very Wall Street in many ways because they don’t really, they don’t disclose much about what they’re doing.

Eve: [00:15:37] Yes, that’s right and you don’t have a choice. You don’t have a choice about what you invest in. You’re investing in a big bucket, almost a blind pool of funds that could be invested into something you really hate, quite frankly. So…

Jamison: [00:15:52] Yeah.

Eve: [00:15:52] Yeah.

Jamison: [00:15:52] It’s more of a financial decision where they’re just saying, I want to invest in real estate, let me invest in a REIT. But there’s not that, you know, the thing that’s fun with real estate, just like piggybacking on what you’re saying is, you know where it is, and you see the, you can drive by it and you can touch it and you can… There’s a pride of ownership there that you don’t get when you just own a bond, you know, or something that…

Eve: [00:16:16] Right, especially if it’s in your own city, right? If it’s somewhere where you care about, yeah.

Jamison: [00:16:21] You can drive by it. We have investors now that drive by the assets that they own every month, and they just drive by it. And I think they do it just because it feels good. And you can’t do that with a financial instrument that’s traded on Wall Street. So…

Eve: [00:16:36] Do they send you comments about what you have to fix?

Jamison: [00:16:39] Yeah. And you know what? We think it’s an advantage because we have a couple of hundred owners keeping their eye on it.

Eve: [00:16:48] That’s right.

Jamison: [00:16:51] Our property managers do a great job, so we don’t get that feedback very often. But we’ve gotten it before. And when we say thank you, we’ll get it fixed and happy to have more sets of eyes on things.

Eve: [00:17:01] So just tell me about Neighborhood Ventures. Like, how does it work and why did you develop that? Like after this wanting to get into real estate, looking for something new? Why Neighborhood Ventures and how does it work?

Jamison: [00:17:15] Yeah. So, after I came out of the sale of LifeLock, I wanted to figure out a way to get more people to be able to invest in real estate projects. And I actually wanted to just create a platform similar to what you’ve done at Small Change. And as I dug into it, I realized that is going to be a ton of work. And thankfully. for people like me, there’s people like you that you went out and did that work. And around that same time, I met my now Co-founder John Kobierowski, and he basically convinced me instead of creating a platform, why don’t we just create a company, and I can lead all of the financial aspects of that fundraising. And he would be the real estate expert. He’s been in commercial real estate in Phoenix for 30 years. He’s been an apartment broker, very, very great reputation, and knows this market extremely well. And so, we decided to launch Neighborhood Ventures as a crowdfunding company. So, we raised funds via the Arizona intrastate laws on our first nine projects. $1,000 minimum investment. And I don’t know if I can say that or not. Maybe you can edit that out, but we raised money.

Eve: [00:18:42] No, you can say that. You can say whatever you like about Arizona intrastate.

Jamison: [00:18:46] Yes, we raised funds through the Arizona intrastate crowdfunding laws, $1,000 minimum investment. And in each of our first several projects, we had 100 or 150 investors. The first project we did…

Eve: [00:19:02] Hey, let me just stop for a second for the benefit of our listeners. So, there’s this rule called regulation crowdfunding that lets everyone 18 and over invest, but it took the SEC four and a half years to write it. So, in that four-and-a-half-year period, many states just didn’t want to wait any longer, and Arizona was one of those, and they created their own crowdfunding rules, which are called intrastate, which really only permit Arizona residents to invest. And they sort of bypassed the Federal SEC. It’s kind of like marijuana laws in individual states. Yeah, everyone, sort of, just looked away and said, okay, this has to happen because it’s happening so slowly at the Federal level. Is that a good explanation of it?

Jamison: [00:19:52] Yeah that’s, you hit the nail right on the head. Because it took so long for the SEC to implement The Jobs Act that was passed in 2012. A lot of the states like Arizona, I think we passed our intrastate law in 2015 and it’s nice in some ways, because we our regulator is the corporation commission in Arizona. And then there’s also very various and obvious limitations that we can only raise money in Arizona. So, for us, it gave us a good opportunity to start our business, but we knew at some point that we would need to grow nationally with our investors. But for our first nine projects, they were all in Arizona and all Arizona investors.

Eve: [00:20:41] So what sort of real estate projects do you focus on?

Jamison: [00:20:45] So John’s experience had been in multi-family and specifically in value-add multi-family, in walkable core areas. So, in Phoenix, what has happened in the last 15, 20 years is there had been a mass exodus of the downtown area in the eighties and nineties and moved to the suburbs, and the downtown area was kind of like the place nobody wanted to go. And then in the late nineties, the Arizona Diamondbacks built their stadium right downtown and there was became this energy around downtown. And then millennials and pre-millennial, but the younger folks decided downtown is kind of cool, and I don’t want to live way out in the suburbs where it’s a 45-minute drive in traffic anywhere. And in the 2000s and in the 2010s, we started seeing this urban migration back to these core areas, and we’re still seeing that. And what we do is we find buildings in those core areas that haven’t been renovated for a long time. A lot of them have been owned by the same owners for decades, and they’re just basically cash flowing them, and we’ll go in and fix these, kind of, cool, unique buildings. A lot of them kind of mid-century architecture that has been covered up over the years and not brought out, and we’ll go make them cool again. And people really love to move into a newly renovated building that’s in these core areas. So that’s really been our focus.

Eve: [00:22:22] And what are the limitations for you, like how are you feeling? Well, you know, financing altogether or just the Arizona rules like…

Jamison: [00:22:31] Well, our first project was a small building in Tempe, which is where Arizona State is. So, it’s a great area because there’s a lot of activity there, not only the college, but just in general. And we thought we might raise that. We’re only looking to raise half a million dollars. And we thought we might raise that in the first couple of weeks, and we launched the project on our website. We had done a little bit of PR and marketing before that. And I think the first day we got five or six investors who invested a few thousand dollars, and it became really clear about two or three weeks into it that I think we had hit maybe 100,000, but we had a long ways to go.

Eve: [00:23:15] Yes, it takes a while. Yeah, yeah.

Jamison: [00:23:18] It was our first project. So even though I had a finance background, John had a commercial real estate background, it was our first project and one of the things we committed to do, he and I, was that we wouldn’t call our friends that have deep pockets and have them invest. We want to really build a real business here with organic new investor base. Not just, kind of, call the rich folks and have them write quarter-million-dollar checks. And there’s a lot of people out there that can do that and do do that in real estate. But we wanted to open it up to a broader group of people with a 1,000-dollar minimum investment, and that’s going to take time to build. We knew that, but we didn’t anticipate how long it would take. Long story short, we ended up barely being able to close on time, it took six months to close. We had a friendly seller who gave us a six-month escrow and we literally got our, the 500,000 we needed two or three days before we needed to close. We barely made it.

Eve: [00:24:25] Wow.

Jamison: [00:24:26] We ended up having 103 investors, all Arizona residents, none of whom were our friends, that were juicing the deal. All real folks. It was painful because it was like, what are we doing? Is this really a business? But we wanted to see if there was a business here, if it was…

Eve: [00:24:47] I’m sure it was very gratifying as well.

Jamison: [00:24:49] Yeah, absolutely.

Eve: [00:24:50] A hundred people who want to invest in your project, that’s significant. You know, for first project, it really is.

Jamison: [00:24:57] Yeah. And it took a lot of work and people don’t realize that, you know, raising funds from people for investments is one of the hardest things to do because whether it’s 1,000 dollars, 100,000 dollars, that means a lot to that person. And they’re not getting any product today. They’re not driving out with a new car today. It’s just a promise that we’re going to not only pay that back, but with a nice return and good communication along the way. So, it’s hard. It’s hard and it takes time.

Eve: [00:25:27] It’s very hard. Yeah, I do agree with you.

Jamison: [00:25:29] Yeah.

Eve: [00:25:29] Facebook followers do not become investors.

Jamison: [00:25:32] Right.

Eve: [00:25:34] So I have to ask how many of those investors, original 103, have invested again?

Jamison: [00:25:40] Well, that’s really what’s built our business is those folks. We did another project two or three months later, might have been six months later that about 80 percent of those invested again.

Eve: [00:25:55] And they probably told their friends too, right?

Jamison: [00:25:59] They’ve told their friends to the point now, so we’ve just hit four years, we’ve only been working in Arizona, and we have over 500 investors in Arizona, and we have 1,500 investments, in that period of time. So, those 500 investors on average have invested in three of our projects.

Eve: [00:26:18] Pretty fabulous.

Jamison: [00:26:19] And our average investment is 5,000 dollars. So, some people invest 1,000, some people invest more than that. But it’s hard work. It’s real, it’s education because people before they’re going to place an investment, rightfully so want to feel very comfortable with our team with our strategy. And this isn’t a get rich quick for anybody. It’s slow progress. And then we sold. Now we’ve sold three of our projects, including that first project. And so, it’s gone full cycle. So, our investors have received all their principal back and all their returns. And now we’ve done that on three projects total. And that’s where things really start to click in for people and they start to see that what we’re doing works.

Eve: [00:27:08] That’s a fabulous story. So, what is your latest project?

Jamison: [00:27:15] So one of the things that’s happening in Arizona is that there had always been a lot of migration to Arizona from other states. Mid-West, California, even northeast. On average, Maricopa County, which is basically the Greater Phoenix area. It’s about four or four and a half million, folks. About 100,000 people, 100 to 125,000 people move here every year, so it’s like 10,000 people a month are relocating.

Eve: [00:27:46] That’s a lot of people. Yeah.

Jamison: [00:27:49] And when COVID happened, that accelerated because you had folks in California who were tied to working in and living in the Bay Area, for example, and now they could go, move somewhere else and start working remotely. And maybe that would be a short term. And then it’s kind of turned into more of a hybrid model. And we’re seeing a lot of these companies saying Hey, you want to keep working remotely? Go ahead. Live in Colorado, live in Utah, live in Arizona.” I’m talking about the western states because a lot of that’s from California, but we saw an acceleration in that migration. And so we’ve had a shortage of housing. And in Mesa, which is one of the fastest growing large cities in the country. I think 800,000 people live there close to a million people in Mesa alone, which is a suburb of Phoenix. There’s very little housing available, and we found a deal of a hotel owner who owned 120 unit extended stay hotel. And that meant that all of the units had full kitchens. And we went and looked at the building as a potential conversion to an apartment to meet the growing demand of folks moving here. And it had actually looked and felt like an apartment building already. We did our due diligence. We have a great attorney who’s helping us and helped us with our due diligence, and we purchased the building with the intent to convert it to an apartment where we actually have already started that process with the city and have got a lot of great initial feedback. And so, our current project is this 120-unit hotel to apartment conversion. And the great thing is, it’s not a big, heavy lift when it comes to renovations, and we’ve done some projects that are extensive renovations. It’s really cosmetic. So, we’re going in and updating the carpet and the paint and the fixtures and the appliances. And we don’t have to do plumbing and moving things around to accommodate and turn it into apartment because it was already an extended stay project. There’s 20 studios, 12 two bed two bath and the balance, I think that’s 88 one bedroom one bath, which is a really great mix when it comes to apartments.

Eve: [00:30:28] Yeah, that looks like your biggest project. What’s the total cost, development, purchase price and everything? How big a project is it?

Jamison: [00:30:36] Yeah. So, it’s just over 13 million to purchase, and our renovations are going to end up being about 6,500 per unit.

Eve: [00:30:49] Okay.

Jamison: [00:30:50] Or a total of 800,000 in renovations.

Eve: [00:30:56] Ok. Ok. So then I have to ask, how are you financing this?

Jamison: [00:31:00] Well, yeah, we have some great lender relationships we’ve built over the years. And so, we had a great lender who loved the project. They’re helping us with the purchase, and we’ve already closed on the project about over a month ago. And then they’re also helping finance some of the renovation expenses. And then we’re raising money for the equity, as we have historically in Arizona from Arizona residents. And then this is our first project that we’ve opened up nationally, through the Small Change platform, and we have 25 investors or more now from that platform. And so, we’re between raising money here in Arizona and on the Small Change platform. We’ve already had enough to close on the building a month ago and now just filling out the rest of our financing needs over the next several months as we continue to fundraise on this.

Eve: [00:32:01] So, you know, you and I talked about this national push. We must have been talking about it for years. I think before you sort of…

Jamison: [00:32:09] We have, you know, I’ve been following you for a long time. Actually, you didn’t even know, but I was watching what you were doing because you’re one of the early folks in the crowdfunding.

Eve: [00:32:19] Feeling just as much pain as you were, right?

Jamison: [00:32:23] You are definitely feeling more because you’ve been in the mix of it all. And we’re, you know, from our standpoint, so appreciative that you spent a lot of time there where it wasn’t, it was a thankless job, because you had to deal with the three-and-a-half-year wait before the thing was launched and then once it was launched following all the rules correctly, you know, doing anything new as a pioneer is going to be difficult.

Eve: [00:32:50] Yeah. And actually, you know, the interesting thing about Reg CF and is that, you know, we’re regulated by the SEC and members of FINRA. So, you know, they’ve grown up with this as well. So, I don’t want to say their interpretation, but they over the years they focused on different things in the rules. And we have to change things as their opinions have changed. And so, it’s a kind of ever moving target. It is pretty tough. But so what you, like we, were talking about this for years. So this is the goal to go national and to find some alternative investment tools to be able to let people invest in your projects all over the country.

Jamison: [00:33:38] Yeah, that’s right, and I think one of the things that prompted our discussion just to go back to your point was when they did raise the limit to five million.

Eve: [00:33:50] Yes.

Jamison: [00:33:51] It was a million for so long. And so they have improved some of those rules. And I hope that continues to open things up. And the timing worked out well for us because we were now, got to a project where it was our biggest project and we wanted to go outside of Arizona and let folks who wanted to invest in Arizona. All of our projects have been in Arizona so far. We don’t think that will always be the case, but we know the market very, very well. Our projects have done well here. And so, your platform gave us a great opportunity to start building our investor base nationally and with the same idea in mind. You know, these are these are folks who are trying to put a few thousand dollars away. And we will and they’re more comfortable investing in something that is tangible that they can see and that they can understand rather than investing in crypto or something on Wall Street. That’s so far out there.

Eve: [00:34:56] I think the advantage with the value-add is interesting, too, because value-add properties, they might even be cash flowing all along, whereas a brand new ground up project, you have to wait a while for the return. So, what I find interesting about what we do is, you know, some people can’t wait for a return because they’re on a fixed income. So, they’re looking for projects that will sort of provide more continuous cash flow and other people can wait and are more excited by an idea. And it’s just, it’s fascinating to me because you say the word investor, but investor can mean very, very many different things to different people.

Jamison: [00:35:33] That’s a great point. And if you do a ground up project, you could be a few years out before you get any cash flow coming in the door.

Eve: [00:35:40] But the returns might be better. Maybe not. It’s a risk.

Jamison: [00:35:44] Yeah, yeah, but that’s not what we do. So we take an asset that’s already generating cash flow, but that is underperforming. And that’s what we had here with this hotel.

Eve: [00:35:56] Right.

Jamison: [00:35:57] And we did liquidate the building, had everybody move out because we’re doing a renovation. But the renovations are ahead of schedule, and we have, we’ll end up being closed for about two months and then it’s we start generating cash flow again.

Eve: [00:36:12] That’s fantastic.

Jamison: [00:36:13] We’ll start sending distributions in December.

Eve: [00:36:17] Yeah.

Jamison: [00:36:18] From cash flow. So, it’s a…

Eve: [00:36:20] It’s a great model. And then the other thing, you know, while you’re opening up the market to people you don’t know, I know that some of your investors on Small Change have been following you for a while in Arizona and have been frustrated that they haven’t been able to invest in your projects.

Jamison: [00:36:35] Right.

Eve: [00:36:36] And we’re pretty early in the Small Change offering, which is nice that you sort of already started developing your crowd outside those arbitrary borders.

Jamison: [00:36:48] Yeah, that came from word of mouth because, you know, we have a lot of snowbirds in Arizona, people who live elsewhere and then they come here in the winter to golf and enjoy Arizona winters, which are amazing, but they live elsewhere and then they talk to their friends there. And so, we had a lot of folks, kind of a backlog of folks, who wanted to invest and weren’t able to because we were only open to Arizona. So yeah, that’s the great thing about Arizona, and I’ve lived in multiple places, but it’s kind of a bit of a melting pot, and it’s only because we have a lot of part-time residents. We have a lot of people who have just moved here in the last year, and it’s become a really, kind of, eclectic place with a nice southwest and Mexican influence. You know, we’re two hours from the border. I have a property in Mexico that’s an Airbnb property on the beach. That’s a three-hour drive from Phoenix, so I can go to get to the beach in three hours. And then the other thing is, in Phoenix, you’re two hours from Flagstaff to the north, where there’s snow and skiing, so you can live in Phoenix and you can be, you know, three hours from the beach in Mexico, and you can be two hours from the snow in Flagstaff.

Eve: [00:38:02] You know what? That sounds like Australia where I grew up. Sydney. On the beach, you know, two hours to the mountains.

Jamison: [00:38:12] Yes and, no knock against New York, I love New York, but when I was living there, the coolest thing you could do is get out to the Hamptons, which I couldn’t afford, right? So, you know, when you get used to living in the West and you grow up out here and you’re by West Yellowstone, you’re by the Grand Canyon and the trails, it’s tough to not have that in your life. And so, I’m happy to be back out West.

Eve: [00:38:41] So, tell me, you’ve got that building purchase, do you have another one targeted?

Jamison: [00:38:46] We’re basically slated through the end of the year to finish out our existing projects, including mostly this hotel conversion, which should be done by the end of the year. So, we’re always looking for our next project, but we’re not actively making offers on anything just yet. It’ll be a few months before we’re doing that.

Eve: [00:39:07] So one last question and that is, what’s your big, hairy, audacious goal?

Jamison: [00:39:14] That’s a good question, I don’t share that with everybody, but I will share it here, is we want to double our size every year for the next five years. So, we want to double the number of investors that we have. We want to double the number of projects, assets, the funds that we’re raising for projects for the next five years. And that means, you know, that’s kind of easy the first year and maybe the second year, but the third year, now you continue to double that as the numbers get larger, you have to double it. So that’s our goal. The next five years is doubling the business, but ultimately, it’s to bring more people who have never been able to invest in these types of assets into the game. In our early days when we were struggling, we had an open house at one of our projects, right when we had got it renovated and I was kind of like, oh man, I don’t know if this is the business for me. I’d given up a lot of other opportunities to start this, and we went to the open house and there was a man there in a U.S. Postal uniform and I thought is, I went over and talked to him, I wondered, is he an investor? And he immediately said, I’m so appreciative to what you guys are doing, because I never thought I would be able to invest in something like this.

Eve: [00:40:39] Isn’t that fantastic?

Jamison: [00:40:41] I’ve been delivering mail in this neighborhood for 20 years. I saw your flyer and I thought I could actually invest in this. $1000 minimum. And he showed up to the open house before work. You know, they have to work on Saturdays, so it was a Saturday morning. And he just said, I’m so happy to be here and to be able to invest in this, and that gave me, personally, the juice that I needed that day to get through it. This is why we’re doing what we’re doing.

Eve: [00:41:15] Well, I’m really impressed, Jamison, and I hope you’re wildly successful and I can’t wait to see what you do next.

Jamison: [00:41:23] Same to you and thank you for all your support and everything that you’re doing, and we’re all in this together. So, hoping more folks get the opportunity to get involved in these great projects.

Eve: [00:41:42] That was Jamison Manwaring, CEO of Neighborhood Ventures. Jamison’s putting his determination to work, building his innovative company in Arizona. It’s a real estate company, for sure. They buy, hold and sell property. But the capital plan is innovative, with a growing pool of Arizona residents permitted to invest through Arizona intrastate securities law. He’s seen early success, and now he’s taking his plan to the national stage raising funds on my crowdfunding platform, SmallChange.co. We can’t wait to see how it turns out.

Eve: [00:42:35] You can find out more about this episode or others you might have missed on the show notes page at rethinkrealestateforgood.co. You’ll find lots to listen to there. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending time with me today. We’ll talk again soon, but for now, this is Eve Picker signing off to go make some change.

Image courtesy of Jamison Manwaring, Neighborhood Ventures

From Wall Street to Main Street.

September 22, 2021

Daniel Dus, founder of Shared Estates, has forged a career taking him to the top of his class in the solar industry. But his heart is someplace else – in the Berkshires. That’s where he grew up and that’s where he’s building his next act.

The Berkshires, Massachusetts is rich with travel destinations, and has an amazing inventory of luxury estates dating back to the 1800s. As industry collapsed, so did the use of these estates. Many of them stand dramatically under-utilized today. And that’s where Daniel and his team come in. They are purchasing, renovating and repositioning the Great Estates of Massachusetts for the sharing economy.

Daniel wants to take luxury estates out of the hands of the 0.1% and into the hands of … well … everyone!. The luxury estates that he and his team restore will still be luxurious, but sustainably carbon neutral and available for middle class families to enjoy. And Daniel is taking the democratization of these estates one step further by offering the community an opportunity to invest in them through equity crowdfunding. These estates won’t just be owned by the wealthy any longer.

Insights and Inspirations

There’s an amazing inventory of luxury estates in the Berkshires. We call them estates, but the Vanderbilts called them weekend cottages.
Daniel’s time is repurposing these historic estates in a meaningful way, taking them out of the hands of the 0.1% and into the hands of, well, everyone!
You can rent one of Daniel’s shared estates, with luxurious interiors and spectacular grounds, for your next small event – for about the same price as a Holiday Inn.
Daniel’s audacious goal is democratize the ownership of these estates as well. Anyone can invest through an equity crowdfunding campaign and be treated just like the 0.1%!.

Read the podcast transcript here

Eve Picker: [00:00:06] Hi there, thanks for joining me on Re-Think Real Estate. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad. Rich or poor. Beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo, in order to build better for everyone.

Eve: [00:00:40] Today, I’m talking to Daniel Dus, founder of Shared Estates. While Daniel has forged a career taking him to the top of the solar industry, his heart is someplace else, in the Berkshires. That’s where he grew up, and that’s where he’s building his next act. The Berkshires, Massachusetts, is rich with travel destinations and has an amazing inventory of luxury estates dating back to the 1800s. As industry collapsed, so did the use of these estates. Many of them stand dramatically underutilized today, and that’s where Daniel and his team come in. They are purchasing, renovating and repositioning the great estates of Massachusetts for the sharing economy. I’m going to learn a lot from Daniel, and so will you. So listen in.

Eve: [00:01:37] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or go to Patreon.com/rethinkrealestate to learn about special opportunities for my friends and followers and subscribe if you can. Hello, Daniel, thanks for joining me today.

Daniel Dus: [00:02:06] Eve, thank you for having me.

Eve: [00:02:08] So you’re the president of a solar company, but now you’ve moved onto quite a different area as well. I want to hear about your plan for the historic great estates of Massachusetts.

Daniel: [00:02:21] Yes, and I’m still in solar. So the real estate business is nights and weekends and has been since at least 2014. My plan for the historic estates of the beautiful Berkshire Hills in western Massachusetts, and frankly nationally, is to take them often out of the hands of the .1 Percent and bring them to the middle class group travel markets and to make them investment vehicles that anyone can participate in rather than just the .1 percent.

Eve: [00:02:59] That’s a pretty big plan.

Daniel: [00:03:00] Yes, and it has been really, I would say it’s an honor to really shepherd these historic properties. Our first property in this category was built by George Westinghouse, who was actually the first place in the world ever powered by AC electricity. And so, to be the custodian of a property like that and to renovate it, rehabilitate it, that property was actually structurally failed, required hundreds of thousands of pounds of structural materials to preserve it. And it’s really an honor to be able to do that and help play a role in preserving what is, really, just a fascinating part of American history.

Eve: [00:03:38] That is exciting. So like in the Berkshires, you’re starting there. Like, how many great estates are there?

Daniel: [00:03:45] It happened during the Gilded Age, America’s Gilded Age post and pre-war. The wealthiest families, really in the world established what they called Berkshire Cottages in western Massachusetts. And I think Cottage is a bit of a misnomer. These were often 15 plus thousand square foot mansion houses on 40 to 200 plus acres. And these families included JP Morgan, the Chases, the Vanderbilts, of course, Westinghouse, and the list is long. And there were dozens and dozens of these properties. And then in addition to those, sort of, truly great estates, of course, the social circles of the time followed, and many other wealthy families built smaller but still very impressive. And now I would still consider historic properties in the late eighteen early nineteen-hundreds.

Eve: [00:04:44] So what led you to the idea to take them and renovate them, really, for the sharing economy?

Daniel: [00:04:51] Oh, it was just total mistake. It was just all a series of mistakes,Eve, is really, truly what happened. I had bought the George Westinghouse property to use personally for nights, and I was working in Manhattan, and I wanted to spend long weekends in the Berkshires. And so I undertook that renovation with that plan. Unfortunately, I took another role based outside of Philadelphia during renovation, and I just couldn’t use it. It was too far and too expensive for me to maintain. And so I put it into the vacation rental market VRBO, Airbnb, etc.. With the initial hope that it would book at an average of 300, 350 a night, and it would book maybe 20 percent of the time and cover its own mortgage. I thought that would be a huge win. Well, it booked so much in the first four or five days that I had to increase the price three or four times, and it ended up very quickly rising to number one on VRBO, the most booked and most reviewed and most highly reviewed property in Berkshire County out of over 600 properties and was subsequently featured on Netflix’s world’s most amazing vacation rentals. I think it was really a combination of sort of a high-end luxury finish with this amazing history to the property and a focus on small to midsize group travel groups of 10,15 often multigenerational family events. We have lots of 80th birthday parties and 50th wedding anniversaries where grandparents and children and grandchildren and sometimes great grandchildren can enjoy some time together. And so, really just completely fell into the market and then realized that it’s a really compelling market segment.

Eve: [00:06:38] So since then, how many of these estates have you renovated?

Daniel: [00:06:43] After we sold the George Westinghouse property, we acquired it for 340,000. We put roughly 500 K into it. We sold it for 1.3 million. It was cash flowing over 200,000 dollars per year. And when we exited that, I acquired what was originally developed by actor Christopher Reeve, a childhood icon of mine, had an estate in Williamstown, Massachusetts, that hadn’t really been touched since the 80s early 90s and just finished a total renovation of that property. I listed that on VRBO sixty five ish days ago now, and it booked over a quarter million dollars of fully prepaid no cancellation rentals and its first 60 days. So just another testament to the model. We also acquired what was previously senior executive at Mercedes-Benz Estate in the Berkshires, 11,300 square feet on 40 acres. We call that project the Freeman Berkshires, which we listed on Small Change and raised about 890,000 dollars across 141 investors from Wall Street to Main Street. And that property is currently wrapping up renovations, right now. We have deliveries in process to begin rentals here in the next 30 days, which we’re extremely excited about. And then we have under contract the Kemble, which was built for a U.S. Secretary of State in the 1880s and is just a phenomenal roughly 15,000 square foot estate in downtown Lenox, Mass, which is truly the heart of the Berkshires, walking distance to some of the Berkshires’ best arts and restaurant locations, so we’re absolutely excited about the project.

Eve: [00:08:31] So the Kemble Berkshires, tell me a little bit about that building. That’s your current one.

Daniel: [00:08:35] Yes, the Kemble, the current, the owner of the Kemble, he had some rough times in the early days of COVID. The property exceeded 960,000 dollars of revenue pre-COVID, 2019. He really poured his heart and soul into the renovation of two of the four floors of the Kemble to bring them back to just a phenomenal finish. Rooms, their individual rooms often book 350, I think 400 plus dollars per night, and we will focus our renovations on the third floor, which is unfinished. There are four more bedrooms there which would increase the finished room count by 40 percent, and we’ll focus on some upgrades to the basement and also the outside of the property, the grounds. There’s not much or anything in the way of outside amenities. We will add pickle ball court, a pool, pergola, grill area, large patios, sculpture garden, small vineyard, in order for guests to enjoy some of the best views that the Berkshires has to offer off the back patio of the Kemble property. So we’re really excited it’s a short term, I think, raise here, we’re moving pretty quickly, but we’re looking forward to closing and starting renovations and continue the success that the property’s had historically.

Eve: [00:09:57] So can you describe the look and feel of the property when you when you’ll be finished? Because, you know, when I think about great estates, I was thinking about kind of a cloying, dark, gloomy atmosphere which was, you know, popular in the 1800s. But, you know, we’re not there anymore. So what’s it going to look and feel like?

Daniel: [00:10:17] Yeah, absolutely. Great point. And we think that this is actually a key point of differentiation in our finishes. It is currently finished with some dark purples and dark wood stains, and we will dramatically change that. We’re going to do 100 percent interior and exterior paint, and we will significantly lighten up the interior with Scandinavian lime wash floors in public areas to brighten the spaces and really help center on the views through the windows on the back side of the property. And we will finish in a more modern, minimalist manner. We’ll take and really clean up spaces. We will hang very high-end fine art so that folks get a gallery feel while they stay in the property as well. Our other properties have hung artists, including John Lennon, signed by Yoko Ono, Maurice Sendak originals, Jared Pinkney, Caldecott winners, originals. And so we really do like to bring those name brand artists and a mix of local artists, leading artists such as Camille Peters and Amherst Mass, to do sculpture and art to hang as well. And so we definitely want our properties. One of the things we really want is for them to be very accessible. So, in the Freeman Berkshires renovation, we removed all of the very nice and very fancy chandeliers, crystal chandeliers, and we replaced those with hand-blown glass. And we actually toned down many of the finishes because the finishes were so high-end. In fact, some of the floors look like they were a plastic laminate, but they were just factory finished flooring. And so, by actually bringing the finish down, it actually makes them more comfortable and more accessible, I think, to more people. And it makes folks feel comfortable versus feeling intimidated by this sort of historic regal finish that a lot of these properties still have today. So we do aim to bring these to a broader market.

Eve: [00:12:27] When will this one be ready for use?

Daniel: [00:12:29] We will continue booking immediately after closing. The seller has already booked, I think, over $50,000 of rentals post-closing. What we will keep and honor those. I think he’s booked at an average of over 3,500 dollars a night or so, post-closing. And we will work around those scheduled and booked rentals and probably complete renovations in the slowest time of year, which is usually January, February and into March. Our objective will be to have them completed in advance of the summer season next year so that we can change that aesthetic, bring those additional amenities to the property for folks to enjoy in advance of the 2022 season in the Berkshires, which extends really from April all the way into October with the foliage and the change of leaves, etc. So we can’t wait to get it planned and started.

Eve: [00:13:25] Yes. Yeah. So, if I want to stay there, how much is it going to cost and how does it compare to a local hotel?

Daniel: [00:13:33] So that’s really another reason that we feel we’ve been so successful is because the small and medium sized groups that we target end up paying less for these high-end properties with leading amenities than they would for a standard holiday and hotel room in terms of cost per person per night. Because if you’re going to stay in a standard hotel, you for a large family of 15, you may have to book six or seven rooms. And so, we were regularly significantly less than a traditional hotel stay. So we think that it’s that macroeconomic advantage combined with the superiority of the product that results in our properties, regularly booking 250, 270 plus nights a year. So that’s really our focus is to make these properties accessible to investors that otherwise never would have had an opportunity to participate in real estate like this. Make them accessible for rental. And we have to do that by keeping our pricing quite modest.

Eve: [00:14:38] And what are the locals think in Lenox?

Daniel: [00:14:41] Lenox is a long-time hospitality town, and it is the home of Tanglewood, which is the home of the Boston Symphony Orchestra in the summer. It’s home to a number of other cultural centers. The largest yoga center in North America, Kripalu is there. Shakespeare and company, a variety of leading cultural institutions. And so the Berkshires, I think, has some three million visitors per year, roughly tourist visitors per year, and is, I believe, a majority second homeowners. And so it’s no stranger to the hospitality industry and business. The Kemble is a registered Great Estate Inn which is one of the things that really attracts us to it. And so it has the right to book these rooms and for this use specifically by right, and that’s very important to us. We aim always aim to be extraordinarily good neighbors, so, all of our current properties disallow outside amplified music. We have property managers on call accessible to the public if there are any issues, 24/7 and we have since 2014 had only one incident where someone had a band with amplified outside music against the terms of the lease agreement they’d signed, and we had to shut it down. And the neighbor was not extremely happy with that, but it was shut down within 30 minutes. And so we take it very seriously being a good neighbor and again, our groups, there’s a limit to 30 plus years old for renters. We spend a lot of time and effort targeting and aiming for family renters. And that’s, I think, a really important part of our being a good neighbor too.

Eve: [00:16:29] And what about community programming? Are you planning anything like that?

Daniel: [00:16:35] Yes, every one of our properties donates one percent of net income to a local charity. So, the Freeman Berkshires project will donate one percent to the Freeman Center, which fights to end the cycle of domestic violence and the Kemble Inn will provide one percent of net income to the Lenox Library system, in order to support its various community programs, which are among the best in Lenox. And so that’s also a big part of what we do. We, on our properties often install large gardens, fruits, vegetable gardens and provide a property to table ingredients for dining experience. Whatever is left over in terms of production is donated to local charities. So, we participate in the local community in a variety of ways. We also are developing a proprietary software application specifically to connect the local community to our renters, the local community, businesses, and service providers. So if our renters want to book a massage, they can go directly to the property app and find sort of hand-selected massage therapists to come to property. Photographers, wedding planners. There’s a whole laundry list of phenomenal services available in the Berkshires. Leadership, programming can all be done at our properties in order to have just a phenomenal experience base stay if that’s what guests are looking for and they often are. And that’s also really important to us to drive value to the local economy.

Eve: [00:18:11] Ok, well, now I’m going to get back to the actual project because I’ve seen a photo of this building and it is big and fancy. So how much do you expect this project to cost?

Daniel: [00:18:22] The renovation plan is just under a million dollars. We are acquiring this property out of a foreclosure process. And so the prior owner, I forget, I think he had about 4.5 million invested in this property in the extensive renovations he’s already conducted, so the bones of the property are phenomenal. The mechanical systems are phenomenal. Two of the four floors are beautifully finished and require only aesthetic updates. And then the third floor is where we’ll do some limited structural new bathrooms, tile, glass, and hardwood floors and refinish those floors. The majority of our renovation is in aesthetics and amenities, adding the pool, pergola, grill areas, et cetera. Delivering games, delivering a library, delivering other things that guests can experience while they’re there. Virtual reality headsets and gaming rooms so the renovation is just under a million dollars, is what we have planned right now. And again, really, we’re especially excited about this because that is really focused entirely almost entirely on aesthetic updates.

Eve: [00:19:38] But it has to be tough financing the whole project because, you know, this is not a very traditional project. So how do banks view it and how are you? I know a piece of this is crowdfunding, but how do you finance the rest of it?

Daniel: [00:19:52] That’s exactly right. And when I said that Shared Estates was based on a series of sort of happenstance and in some cases, mistakes. Our plan for our original project was to use traditional bank financing, which we then found was not available for this segment of vacation rentals, which is to be fair to traditional banks, quite a new segment. Airbnb, VRBO and similar platforms have taken around a third of the global hotel industry over the past just five to ten years. And so it’s still a new segment when you look at things in terms of a traditional bank. And so, we ended up turning to Small Change to help solve this problem and to raise a significant portion of the capital through equity crowdfunding. And then what we found happened on our first raise was that many of our historic renters invested because they really understood the value of these properties and what we were bringing to them. And we had a lot of investors then become renters and asked to book the property. We have some families who have requested to book properties year after year. We’ve had families stay with us for four or five plus years in a row, and we found that the equity crowdfunding process, it allowed us to expand on our mission to bring these estates to the middle class and in a new way for them to actually participate in our last project, the Freeman Berkshires, investors actually owned membership interest in the LLC, which fully owns the property. And you can imagine we’ve had the local town librarian invest. I think local truck drivers invest. We’ve had folks from Wall Street, major banks invest. It completely levels the playing field, and everyone’s investment is treated on the exact same terms. And so it’s now become very core to our plan DNA to really help finance these projects by acting through real estate syndication to acquire them and for the benefits of the cash flow from these properties to go to an investor base that is really a new option.

Eve: [00:22:13] So you’re democratizing the use of the building and you’re also democratizing the ownership.

Daniel: [00:22:19] Yes, exactly. Yep.

Eve: [00:22:21] Pretty fabulous. Yeah. Do you think you’ll have different investors this time around?

Daniel: [00:22:25] Yeah. Every property, I think, will speak differently to different folks. We already have, I think a different investor set teed up for the current offering. We will have some, quite a few larger check sizes in this raise. The total raised value is larger than our our past one and so lends itself well to larger family offices and some more institutional investors. But we do have multiple smaller investors as well. And so I think this property is going to speak to relatively wide range of folks. Folks that are interested in its history and preserving its history, folks who are interested purely for economic reasons and the cash flow potential. The passive past cash flow potential from real estate investing. And I think there are folks who are very compelled by the model, generally both Small Change’s model as well as Shared Estates’ model. And so I think it’s going to be a pretty diverse set. Certainly, we’ve had national, international investors invest in our projects. The broader the better, as far as we’re concerned and also a lot of local community folks, we’ve got a huge focus on telling the story of the local community, the folks who really drive the economic engine in the towns where we operate. We have a series on our website called In Their Own Words, where we interview local business leaders and professional service providers that really help our guests have extraordinary experiences in the Berkshires. This leading cultural destination, so it’s a key part now of what we do.

Eve: [00:24:12] So then shifting to the big picture, what are your goals for the company? Shared Estates, on the whole.

Daniel: [00:24:18] The initial goal was to establish one hundred bedrooms in the Berkshires in these historic properties in the vacation rental market. And as we’ve worked through that goal, there’s been an increasing amount of interest from the financing community, from our partners and from the public in expanding our offering. And so our thesis is and has always been that rural real estate was undervalued vis-a-vis urban real estate. And we launched remember pre-COVID, and we believed pre-COVID that the work from home revolution was real and that it would bring folks out of the cities into beautiful rural American locations and that those locations were underserved in terms of development, developer’s investment, et cetera. And so we have a real focus on any property that can be developed to provide extraordinary experiences within a two hour drive of a major metropolitan area. Because if you want to get a group of 15 or 20 folks together in downtown Manhattan, your only option is a hotel. Or if you can find a rental where you can all sleep, then it’s going to be, I don’t know, 10,000 plus dollars a night. It’s going to be economically prohibitive because those properties would be so expensive. On average, Manhattan real estate can easily be 2,000 plus dollars a square foot. In the Berkshires we acquired a luxury estate for 126, I think dollars per square foot, so the talking less than 10 percent. So we believe that the macroeconomic potential of that arbitrage will continue to drive a lot of vacationers to these properties. And now with COVID, everything just dramatically accelerated. And that’s why our vision has expanded is because COVID accelerated the work from home revolution. Real estate properties are up significantly. Our last property, the Freeman Berkshires, we acquired for 1.6 million. Zillow’s estimated value today without it being refinished, is 3 million dollars, I believe. So, just the market has already sort of risen…

Eve: [00:26:36] Changed a lot. Yeah, interesting.

Daniel: [00:26:37] We believe it continues. There’s very little inventory of sort of gorgeous rural. And when we say rural, we’re still in towns that to me, feel somewhat suburban ish. But are, you know, within rural communities, very bucolic.

Eve: [00:26:52] Yes, yeah. So, I’ve got to ask this question because I’ve gotten to know you and I know you don’t sit still for long, but do you have the next building in sight yet?

Daniel: [00:27:01] We certainly do. We have our hearts set on another historic property. And, you know, we can’t talk about it yet. We actually did have it under agreement briefly. And so we were very excited to sort of work through this process. And I think in addition to that, we do have offers prepared for land acquisition and to execute some new construction because what we find is that folks really enjoy massive open floor plans, with very wide open spaces and that there’s very little inventory like that in rural America. The Westinghouse property kind of felt sort of like a massive open barn, right? And people really loved it. So we’ll likely do some new construction with this market focus in mind as well here in the near term.

Eve: [00:27:55] Ok, so one more question I’d like to know what your big, hairy, audacious goal is?

Daniel: [00:28:01] Well, in solar. Right now, I’m president of a company with a utility focus that is number three in commercial and industrial solar and my goal and our goal here is to be number one in that space. In real estate? My goal is actually to be a phenomenal fiduciary for the investor base that we kind of curate through these processes. Being a fiduciary is also an honor, right? So, when you’re investing other people’s money and acting in that capacity, it’s a lot of responsibility, right?

Eve: [00:28:01] It is, yes.

Daniel: [00:28:49] My audacious goal is really to deliver returns that the market historically has never delivered, right? S&P 500, I forget if it’s seven or eight percent or something historic returns, or maybe even a little less. You know, we want to consistently deliver returns. Honestly, my personal goal is over 30 percent. You know, we often state goals lower than that and investing, you never know. Things happen. Issues arise. You know, we are doing a lot of construction and permitting and other things. But yeah, audacious goal is to smoke the S&P 500, year after year and deliver over 25 percent. Really, over 30 percent returns to our investors, which I think is just would be phenomenal from what I consider a low-risk asset class like real estate.

Eve: [00:29:38] Well, thank you very much, Daniel. It’s been a pleasure talking to you. I don’t have a big enough family here to come and rent one of your estates. I wish I did. I’m going to have to think about how to get 15 to 20 people together to enjoy one of them soon.

Daniel: [00:29:51] Oh, we have tons of friend groups too. We have knitting groups. We’ve had a lot of yoga groups. We’ve had all kinds of groups of friends, college friends, industry friends. So you can keep that in mind.

Eve: [00:30:08] I will, thank you so much. I’m looking forward to seeing more.

Daniel: [00:30:12] Thanks, Eve. Keep it up.

Eve: [00:30:20] That was Daniel Dus. He wants to take luxury estates out of the hands of the 0.1 percent and into the hands of, well, everyone. The luxury estates that he restores will still be luxurious, but carbon neutral and available for middle class families to enjoy. And Daniel is taking the democratization of these estates one step further by offering the community an opportunity to invest in them. These estates won’t just be owned by the wealthy any longer.

Eve: [00:31:06] You can find out more about this episode or others you might have missed on the show notes page at EvePicker.com or you can support us at Patreon.com/rethinkrealestate for the price of a cup of coffee. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon, but for now, this is Eve Picker signing off to go make some change.

Images courtesy of Daniel Dus, Shared Estates

Homage to Sutro Baths.

September 15, 2021

Anne Nickel Cannady was born and raised in Minnesota but has lived an international life. Over the past 20 years she has worked in brand strategy, culture, innovation and immersive experience design with start-ups and leading brands including Starbucks, Avalon Bay, Choice Hotels, Royal Caribbean, and Honda to name just a few. And she’s lived all over the world in London, Cape Town, Detroit, New York, and now San Francisco.

After leaving college in North Carolina, Ann dove into a marketing and HR career in London working with a variety of organizations. Her skillset expanded into workplace culture. By 2010 she was working in the U.S., first at the consultancy Kantar, then as an independent consultant. She joined the PayPal community for six years, becoming Head of Culture, followed by her most recent job as Head of Employee Experience at Fastly.

Now Anne is challenging herself with a project called Alchemy Springs that brings all her skills to play … and more. The plan is ambitious – a social community bath house. The building is ambitious – the transformation of an historic warehouse into a biophilic wonderland. The location is ambitious – a neighborhood on the cusp of gentrification. And the financing is ambitious – she’s raising funds through an equity crowdfunding raise in order to let anyone over the age of 18 invest.

We can’t wait to see how it turns out.

Insights and Inspirations

Biophilic design incorporates natural lighting, ventilation and landscape features in order to create more productive and healthy spaces.
Anne envisions Alchemy Springs as a modern urban oasis. Winding ‘riverbaths’ and lush surroundings will define it. Blazing steam saunas, frigid cold plunges, a starscape moon bath, an outdoor sun bath, greenhouse and gardens will be built for all to enjoy.
Anne is based in the Bay Area. But it feels as if she could live anywhere.

Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad. Rich or poor. Beautiful or not. In this show, I’m interviewing the disruptors. Those creative thinkers and doers that are shrugging off the status quo, in order to build better for everyone. When I’m not hosting this show, I’m running my real estate crowdfunding platform, SmallChange.co, where you’ll find impact real estate investment opportunities open to everyone. Or you can learn more about me and catch up on some podcasts at my website, rethinkrealestateforgood.co.

Eve: [00:01:11] Today I’m talking with Anne Nickel Cannady. Anne was born and raised in Minnesota, but she’s lived an international life. Over the past 20 years, she has worked in brand strategy, culture, innovation, and immersive experience design with startups and leading brands, including Starbucks, AvalonBay, Choice Hotels, Royal Caribbean and Honda, to name just a few. She’s lived all over the world – in London, Cape Town, Detroit, New York, and now San Francisco. Anne is challenging herself with a project that brings all her skills to play and more. The plan is ambitious – a social community bathhouse. She plans to transform an historic warehouse into a biophilic wonderland. The location is ambitious – a neighborhood on the cusp of gentrification. And the financing is ambitious – she’s raising funds through crowdfunding on my funding platform, Small Change. You’ll want to hear more.

Eve: [00:02:19] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or go to patreon.com/rethinkrealestate to support this podcast. For the price of a cup of coffee.

Eve: [00:02:41] Hi, Anne, I’m just really pleased to have you with me today.

Anne Nickel Cannady: [00:02:45] Thanks, Eve. It’s great to be here.

Eve: [00:02:47] You’ve had some really interesting titles like Head of Culture at PayPal and head of Employee Experience at Fastly. But now you’ve moved on to a very different project. And I’d really love you to tell us about Alchemy Springs.

Anne: [00:03:01] Sure. It’s interesting because while I’ve held a lot of different roles, they sort of have all come together for all the skills that I needed to bring this new sort of project to life. But Alchemy Springs came about because in San Francisco, there was a huge community built around some of the hot springs that were, you know, within a couple of hours outside of the city, and one, in particular, burned down in a wildfire several years back. And everyone really missed that community, a community that would gather and be up there. You could, you know, spend the night. There was all these events. And at the same time, we started seeing this rise and this kind of model of these urban bathhouses popping up across the country, so there was one called the Schvitz in Detroit, there’s one, Banya 5, in Seattle. And, all of these really started to bring this community together. You know, for example, I was shocked to learn that, you know, members of the one in Seattle would go four to five days a week. And this whole community was even extended beyond the bathhouse into their local community as a sort of a friendship circle and mentorship circle. So, we looked around at San Francisco, and while we do have a number of spas and sort of bathhouse spas, none of them were quite hitting the mark.

Anne: [00:04:26] There was only one real communal one where you could be social. Most spas, where you really went to kind of check out on your own, not just sort of connect with people. And the one social one that there was, a sort of Russian style banya, it’s a little bit more like a sort of a glorified locker room experience, right? And, you know, maybe wasn’t designed with the guest experience in mind. And so, we really saw this opportunity. And on top of that, San Francisco has this rich history in Sutro Baths. And we met with SF Heritage, who introduced us to the gentleman who wrote one of the famous books on Sutro Baths. And we wanted to learn what the story was behind it, why the mayor at the time wanted to build this grand structure. It was sort of 1894, and it was huge. It was right out over the waters. And at the time, it was quite innovative. He built these almost like little windows, hatches, that would open and close to allow the waters to come in…

Eve: [00:05:37] Oh beautiful, yeah.

Anne: [00:05:37] Yeah. And then he would heat them to different temperatures and all this. And he was inspired by sort of the grand European bathhouses, right? And back then, people were working six days a week and they only had one day off. So, he wanted to find a way that people could socialize with friends or family, but also do something restorative because they only had one day off. And, you know, hydrothermal bathing and all the properties of that, the health properties, he decided to build Sutro Baths. And it really was a place for everybody. So, everyone could have access to this grand experience. And he had gardens, and there was places for, you know, the police and fire department to meet. And it really was a

Eve: [00:06:19] Community gathering place. Yeah.

Anne: [00:06:21] Yeah. A very iconic piece of San Francisco history. So, all of those ingredients together, we thought, this is it. You know, we’ve got to build this in San Francisco. And when the pandemic hit, it only became more important than ever to reconnect the city, which has lost a lot of people, we’ve gotten a lot of new people coming in, but we miss our community. So, it’s kind of perfect timing.

Eve: [00:06:45] Well, what happened to the Sutro Baths?

Anne: [00:06:48] The Sutro Baths actually, there was one point in time it ended up being converted into an ice rink, of all things.

Eve: [00:06:55] Interesting.

Anne: [00:06:57] Yeah. And then it burned down. Gosh, I want to say in the maybe 50s. Yeah, 50s, or early 60s. It burned down. And so now, today, out near Land’s End in San Francisco, there’s these beautiful ruins. I mean, it’s kind of an iconic, you know, tourist destination now right on the cliff side where you can go when you can see a lot of the old cement structures of the different pools.

Eve: [00:07:28] Oh, wow.

Anne: [00:07:28] So it’s, yeah, pretty amazing.

Eve: [00:07:28] You know where I grew up in Australia and they always had rock pools in the ocean, like on the ocean’s edge. Sort of reminds me of the sutro baths but a little bit less grand. They were fabulous places to go and bathe, really fabulous. So, like, where’s your sutro baths? Where’s Alchemy Springs going to be located?

Anne: [00:07:49] Yeah. So, Alchemy Springs is in a neighborhood, kind of the blending of two different neighborhoods. Technically, it’s lower Nob Hill area or sort of upper Tenderloin, right? So they call this neighborhood the Tendernob in San Francisco. And it’s a great up and coming area, right? You know, I think below the Tenderloin has really gone through somewhat of a gentrification. You know, the neighborhood can be a little bit rough, but it’s also been an opportunity for a lot of hospitality, sort of, restaurants and retail to come in. So, a lot of the coolest new bars and restaurants are sort of popping up around there. And then Nob Hill is a great more slightly more higher end neighborhood, tons of residentials, new developments, and then some hotels as well. And it’s about 10- to 15-minute walk west of Union Square, which is obviously sort of the tourist capital for San Francisco with all the hotels

Eve: [00:08:48] And what does the building look like that you’ve chosen?

Anne: [00:08:52] The building’s beautiful. It took us a while to find a building. We looked at so many different buildings, but this one is a 1919 masonry warehouse. A beautiful brick, gorgeous thick wood timber beams. It’s kind of two and a half stories. So, there’s a ground floor and then sort of the mezzanine above which we’re actually going to be raising the roof to create a sort of proper second floor there. And then there’s this basement level, which right now is sort of being used as a parking garage. But we’ll do some excavation and sort of turn that into the baths floor. But the thing that’s super exciting is that it has a 2500 square foot parking lot out back. So our concept has been able to translate into sort of an indoor outdoor flow in this space and being inspired by nature, which Alchemy Springs is, we can bring a lot of those elements, you know, both indoors and outdoors. So, we’re super excited.

Eve: [00:09:50] I’ve seen some renderings of this. It looks pretty fabulous. But maybe you could describe like what the building will contain or what you’re hoping it’ll contain when you, when it’s complete.

Anne: [00:10:00] Sure. I’ll walk you through the guest experience. It’s probably the best. So, from the street level, on Post Street, you’ll see a small retail boutique and there’ll be an entrance into the bathhouse. It’s going to be quite an inspiring grand entrance in that there’s a sort of giant living wall and double storey ceilings right as you walk in, A beautiful sort of rock carved desk area to sit with your friends or family that you’re waiting to go to the baths with. And you’ll check in. And then in the middle of this building is this gorgeous atrium that runs all three levels, with giant skylights at the top that just bring tons of natural light in. And there’s also tons of natural light from the back of this warehouse building. There’s beautiful, most of the walls are windows in the back, so tons of natural light. You’ll get your towel and your, you know, your robe and your slippers, and you’ll walk on either side of this atrium back to the locker rooms. And in addition to male and female, we also have gender neutral locker room and changing room. That was really important to us.

Anne: [00:11:01] So you’ll change and go downstairs to the bath floor. So, you can overlook the baths through the atrium from that locker room floor. But on the baths floor, we’ve got a series of different thermal pools at different temperatures that sort of wind along a path as if it was a river sort of built into these different platforms for accessibility and A.D.A. But we’ll have, on one end is what we’re calling the moon pool, which is going to be, sort of, you know, body temperature, sort of mild in temperature waters with a higher salt content, so it won’t quite be a flotation tank, but you will feel a little more buoyant in those waters, with a sort of domed ceiling above it that drops down a bit with lights and stars. And then lights in the pool as well with some sound. And then around this, the moon pool, and this is one of my favorite things that Lundberg Design, our Architect, has designed. We have a rain shower curtain. So, it almost creates a cave-like experience around the moon pool.

Eve: [00:12:14] Oh, fabulous!

Anne: [00:12:14] Yeah, I’m excited for that one. And then we have a mineral pool, which will be, kind of, mimicking the natural hot springs healing waters with all the minerals, which, you know, are very good for you. We’ll have then a sun pool, which is our warm pool. It’s not the hottest, but it’s warm. The sun pool, and that will be directly across from the cold plunge, which is kind of on this, you know, bath house circuit. You always want to move between the different contrasts of, you know, warm to cold or hot to cold. And then outside, we have a massage pool, which will be a lot of different water jets, maybe some different textures inside, rocks and things that you can sit on to sort of get that massage and that’ll be outdoors in a greenhouse. So that’s the pool part. We also have thermal rooms. So, we have a Himalayan salt cave. Think of it like a Finnish style dry sauna, but with Himalayan salt bricks and a kind of a salt nebulizer that brings amazing detoxification qualities. And then we have a snow shower. So, when you step outside of the hot salt cave, you can take a shower of snow to cool off before you get back in the bath. And then we also have an herbal infusion steam room, which we’ll do with different herbs that have, you know, different healing properties at different times of the day. So, waking up, relaxing,

Eve: [00:13:45] It sounds fabulous, so I want to move to like the financing. And when do you expect to open the doors?

Anne: [00:13:52] We expect the process from closing the capital to opening doors to take about three years. And so right now, we’re looking at probably September of 2024.

Eve: [00:14:03] And how long has it taken you to get to this point?

Anne: [00:14:07] Oh, gosh, there’s been a lot of stops and starts. It’s taken probably just shy of three years.

Eve: [00:14:17] So this is like a five-year project from inception to opening the doors. It’s a long time.

Anne: [00:14:23] Yeah, I think it’s taken many twists and turns. It started as something small. But as we looked into the business model for bathhouses, it made sense for us to actually do something on a bigger scale. Doing something on a bigger scale allows you to have both, sort of, drop ins for not non-members will say or tourists or anyone that wants to come in, but also have enough capacity to cater for members, because building that membership base in the community was really important to us and the bathhouses that exist today, they can’t really do memberships because their capacity is so small and you wouldn’t want members showing up and not being able to get in.

Eve: [00:15:07] Oh, well, I’m going to come back to that. But I do have to ask, so how much is this going to cost to build?

Anne: [00:15:14] Yeah. So right now, the total project cost is about 20 million. And the last sort of six months has been a pretty heavy and detailed due diligence process. My developer, Michael Jarne, has been an absolute gift to the team. He’s got a lot of experience in this. And there’s always that trade off of, how much do you spend upfront to minimize the risk. And, you know, he’s more on the side of, you know, this is a big project and, you know, somewhat unknown concepts in cities. So, we’ve taken the route of, hey let’s spend more and make sure we’re really clear on what this is going to take financially. And, also, you know, that we can do this concept in this space with the city. So, we’re feeling good about that.

Eve: [00:16:05] And then usual concept equals probably no bank interested? Is that right?

Anne: [00:16:13] I think the banks, you know, typically will want to see operating income, right? So, we’ve reached out to some lenders. We have a fantastic relationship with a bank here in San Francisco, does a lot of real estate stuff, and we’ve tested the waters for them of when in our sort of timeline, we might be able to to leverage that. And now most likely, that would be after we open doors. Right now, it looks like a very sort of good net operating income. And so, we would likely be able to get a loan off of that, you know, within the first few years.

Eve: [00:16:49] So, full disclosure, you’ve listed this project on Small Change as a crowdfunding raise for the first phase of it. So, that’s a pretty bold move in amongst all of this. Lots of bold moves here.

Anne: [00:17:06] Yeah, I mean, it felt right. You know, the essence of the Alchemy brand is positive transformation. And that ties back to this idea of alchemy, right? And, you know, we want our space to be a place where people feel transformed, right? But that’s also important to us as a company for our employees, right? We want this to to have improved people’s lives, right? So, there’s things we have, like we’re paying more than minimum wage and giving health care benefits to people that work, you know, I think it’s 30 hours a week, not 40. But the other side of that is that we want to make sure we’re positively transforming the community that we’re in. And so, for us, part of that was allowing San Francisco, or anyone, to own a piece of Alchemy. If it’s for the community, why should the community not benefit from us being here.

Eve: [00:18:07] I love that idea. So, I’m also going to ask you about, this is sort of an edge neighborhood, right? Between a pretty rough one, slightly rough, I don’t know, changing, and one that’s more established. And I’m just wondering how you’re planning to include that community in this space. And, you know, how that will work. I mean, if you’re really going to emulate that mayor’s desire to have a place for community, how does it look there?

Anne: [00:18:38] Yeah, there’s a few things that we’re exploring. And obviously, you know, it’s early days – we’re three years out. But there’s a couple of things. So, built in, right now, we have some sort of basic community programming of offering up our space before we open. So, our opening hours are 10:00 a.m. to 10 p.m. But there is an opportunity to give our back gardens. You know, we’ve got a sort of a Zen meditation garden and a back dining patio. We could absolutely offer that up to the community to host free events. We have a round-up at purchase, which we want to partner with local community groups and give guests the option to sort of round-up and donate to some groups that align with our sort of mission and vision and values. And then the third thing, which, it’s early days but I’m quite excited to pursue this opportunity, is almost sort of kitty corner to us. At the intersection of Post and Hyde, is at-risk Youth Navigation Center that’s just being developed. It was just rented by the city for 20 years. And when I learned about this, I spoke with one of our advisors, who’s the president of the San Francisco Chamber of Commerce and he said, you know, these centers have more bark than bite. And usually, neighbors are afraid that they’re coming into their neighborhood. But a big light bulb went off for me, that this was, actually, an incredible opportunity for us to partner with a group like that and provide job training, apprenticeships, you know, training these these at-risk youth in service industries. So, I’m incredibly excited to pursue that. And I think we could be a sort of model business citizen for how we embrace and support those centers popping up in our neighborhoods.

Eve: [00:20:32] Yeah, I’m sure you’re going to find lots of other opportunities too as you move along. You’ve barely started, right? What about some of the challenges you’ve been confronted with? You said lots of twists and turns. I think finding a building sounded like a really big challenge,

Anne: [00:20:47] Having been new to this, a few years ago, you know, there’s always this chicken or egg scenario you run into, which is, you can’t raise money without the space and you can’t get the space without the money. So, it’s this dance of timing and, you know, unfortunately, we’ve just missed out on some spaces when some of the, you know, initial capital couldn’t come through. So that was certainly one. And then another one was obviously Covid. There was a lot of initial sort of knee-jerk reaction to anything in hospitality and, you know, bath houses. And, you know, is that safe and clean? And, you know, from that standpoint we’re really lucky in that, you know, all of these spas and bath houses have had to convert a lot of their amenities and their procedures around hygiene to now meet new standards. Well, we can design from the beginning, so in a way, we’re three years out, right? So, you know, knock on wood, hopefully we’ll be out of this by then. So that was another major twist and turn. And then the other one on a on a personal level, which, you know, has deep meaning for me in this project, is a dedication to my mother who passed. And she passed away two years ago now, and she passed from cancer. It was her fourth one. She beat three different stage one cancers prior to that across ten years. But from her first cancer onwards, when she’d find out, she would go to Esalin, this beautiful retreat center in Big Sur, and she really found her acceptance and peace in nature. And that was absolutely a huge inspiration for Alchemy Springs and this sort of element of bringing nature indoors. And so, I promised her that she would have her own little heart shaped rock in our gardens and it would be one of her resting places for her ashes. So there has been nothing insurmountable. I have had the most incredible determination to make this happen in her honor so, from a personal standpoint, that was another setback. But also, what has super-charged me to bring this to life.

Eve: [00:23:07] I’m sure she’d be super proud of you.

Anne: [00:23:09] Yeah.

Eve: [00:23:10] So Alchemy Springs is a big new beginning for you. Right? But what’s your big hairy, audacious goal?

Anne: [00:23:18] Wow, what’s my big, hairy, audacious goal? I mean, I would love for Alchemy Springs to just be the first flagship location of a bunch of Alchemys across the country and to use this brand and these spaces as one of many ways to bring the community together around social bathing. So, there’s, you know, different communities out there for the spa industry and sort of the business end, but there are people across the country that are really into this ritual and little micro communities, you know, in all these cities, but we’re not all coming together as one. And so, another grand vision of ours is to pull this community together, you know, online and kind of connect the global bathing community across the U.S., maybe even internationally, so.

Eve: [00:24:14] That’s a pretty big goal.

Anne: [00:24:16] Yeah.

Eve: [00:24:18] Well, my goal is to come out there in three years and try it. So, that’s my goal.

Anne: [00:24:22] I know, I keep saying, phew, with this ride, I’m going to need it at the end of it. So,

[00:24:28] Yes, that’s right

[00:24:28] …selfish reasons. I’m going to need a spa at the end of this.

Eve: [00:24:33] Well, thanks so much, Anne. It sounds like a fantastic project. I can’t wait to see how it turns out.

Anne: [00:24:40] Thank you. We’re really excited and we’re thrilled to be raising money on Small Change. And I just can’t wait to see how it goes.

Eve: [00:24:48] Me, too. Bye.

Anne: [00:24:50] Bye. Thank you.

Eve: [00:24:56] That was Anne Nickel Cannady. Anne is challenging herself with a project that brings all her skills to play and more. The plan is ambitious – a social community bathhouse. The building is ambitious – the transformation of an historic warehouse into a biophilic wonderland. The location is ambitious – a neighborhood on the cusp of gentrification. And the financing is ambitious – she’s raising funds through crowdfunding on my funding platform, SmallChange.co. I can’t wait to see how it turns out.

Eve: [00:25:40] You can find out more about this episode or others you might have missed on the show notes page at rethinkrealestateforgood.co, or you can support us at patreon.com/rethinkrealestate for the price of a cup of coffee. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Anne Nickel Cannady

She’s breaking barriers.

September 1, 2021

Joanna Bartholomew, owner of O’Hara Developments, is a woman who’s breaking all barriers.

While Joanna’s background is in social work, community health and financial education, real estate is in her blood. Her father was a developer, and as a young girl she spent time with him, both in the office and on job sites. So it’s no surprise that she launched her own real estate company.

But being a Black woman in the real estate industry is not quite enough of a challenge. On one hand, Joanna is focusing on broad community development by tackling decaying properties in East Baltimore (one block at a time) and breathing new life into them. But on the other, she is committed to providing outreach to the people who will occupy them. To make sure that what she is building will serve the community effectively, Joanna’s organization offers up financial literacy courses and down payment programs, to both educate and support new potential home-owners. All of it to make sure everyone can have a chance at home ownership.

Insights and Inspirations

Joanna is one of a few. A black woman with her own real estate company.
She’s focussing on community development one block at a time, tackling decaying properties and breathing new life into them.
Her past career in social work creeps into her real estate work. She offers up financial literacy and down payment programs so that everyone can have a chance at home ownership.

Read the podcast transcript here

Eve Picker: [00:00:17] Hi there, thanks for joining me on Rethink Real Estate. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo, in order to build better for everyone. When I’m not hosting the show, I’m running my real estate crowdfunding platform, SmallChange.co, where you’ll find impact real estate investment opportunities open to everyone, or you can learn more about me and catch up on some podcasts at my website EvePicker.com.

Eve: [00:01:14] Today, I’m talking with Joanna Bartholomew, owner of O’Hara Developments and a woman who’s breaking all barriers. While Joanna’s background is in social work, community health and financial education, real estate is in her blood. Her father had a real estate company. And as a young girl, she spent time with him in the office and on job sites. So it’s no surprise that she launched her own real estate company. But being a black woman in the real estate industry is not quite enough of a challenge for Joanna. She’s focusing on community development one block at a time, tackling decaying properties and breathing new life into them. You’ll want to hear more.

Eve: [00:02:04] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or go to Patreon.com/rethinkrealestate to support this podcast for the price of a cup of coffee.

Eve: [00:02:25] Good morning, Joanna. Thanks so much for joining me.

Joanna Bartholomew: [00:02:28] Hi, Eve. Good morning. Thanks for having me. Yeah.

Eve: [00:02:32] So you’re a pretty rare breed, a black woman developer. And I was wondering how you got there from your initial career choice of social work. That’s quite a journey.

Joanna: [00:02:46] It quite is. So I actually was raised in real estate. My father was a developer. So, growing up, I knew him to just be the person that always would have me in these rooms of either going to a settlement or going to the old Hechinger, which was the former Home Depot, picking up the lumber and looking at like design sketches and things like that. I still remember having to take a construction class in an elementary school. And I have to be honest, I probably picked the classes I knew I could pass. My house, that I had to build it looked better than all the other kids in the class because of my dad. But fast forward, you know, being in the field of social work for some years and working with families that were facing various challenges, one of the most common things that we saw was their access to equity, their access to wealth. And in the population that I worked with were people that looked like me and other brown families that had limited access. And it wasn’t because of anything other than the knowledge and knowing where to get information. So what I wanted to do, expanding on, I said, you know, it’s time for me to fire my boss, get into the roots of what I know, and bring both worlds together so we could be able to provide access to equity. And one of the first places you could do that with is in real estate.

Eve: [00:04:11] So isn’t that interesting? Because my parents sort of grew up always investing that I grew up with my parents, always investing in real estate. They actually were refugees, so they had very little, but that’s when they had money and that’s what they invested in. So I was also very comfortable with real estate. And it really is about a comfort level, isn’t it, with something you don’t understand.

Joanna: [00:04:33] Right. Right.

Eve: [00:04:35] It’s really interesting.

Joanna: [00:04:37] And it does take a level of comfort to know what you know in your brain and have to manifest that into reality. And it requires some guts. And if you have the privilege of seeing that in your younger years, when you get older, it does feel a little bit more comfortable vs. a family that doesn’t know anything about these type of financial terms and systems. And now you’re adding on a big house responsibility onto it. So we want to be able to be that line of support.

Eve: [00:05:06] So what sort of projects do you focus on?

Joanna: [00:05:10] So our projects primarily are residential. The majority of them are three level homes, three story homes where they’re row homes there in the urban community. And we are either transitioning them into single family homes where they can use the whole space for their family or we are actually converting them into duplexes, most of them being bi level units, two bedrooms, two baths, where people can also be able to rent from them for a period of time. Now, with our renters, we do something a little different because, again, we’re encouraging homeownership. We take a portion of their rent and we put it into escrow. So when they’re ready to be able to transition to being a homeowner, they could actually use those funds, especially if they’re purchasing one of our properties towards either down-payment or any moving costs.

Eve: [00:06:02] Oh, wow. So how long does it take for someone to save enough that way to purchase a house?

Joanna: [00:06:11] Well, it really just depends. I mean, everybody’s situation is different. How much they need for down payment, is different and they may not even use it. They may use it towards their moving costs. They can use it however they choose. But I would say if I had to put a number on it, most people could be able to use those funds at least in about a year and a half. Right. So.

Eve: [00:06:35] Right. So this is the social worker in you emerging in real estate.

Joanna: [00:06:42] Yes. Most developers could care less about where you’re moving to next.

Eve: [00:06:46] This is really, this is really cool. So you’re really working on the whole thing. The real estate project and the people who live in the projects.

Joanna: [00:06:57] Yes.

Eve: [00:06:59] So where do you focus on your projects?

Joanna: [00:07:02] So as of right now, we have I would consider it to be our staple development site, which is in Baltimore City. We’re actually restoring a nice portion of the neighborhood. Some people say that we bought the neighborhood, but I don’t feel that way. It’s about two continuous blocks, I would say, in that area that we’re focusing on. And majority of them are actually not all of them are three story buildings. And we’re planning for about 15 single family homes and eight buildings that will actually be duplexes.

Eve: [00:07:35] So I’ve seen the blocks and the architecture is really stunning. And these buildings have been vacant for a while, haven’t they?

Joanna: [00:07:45] Yes, they have, unfortunately in a lot of urban neighborhoods, what we hear and what we see is the aftermath and some of it we’re still fighting that’s affiliated to redlining. And redlining is something that has caused a lot of funds to not be placed in certain neighborhoods over the years, which would have allowed people to become homeowners, which then also brings in other things as far as, you know, very poor behaviors in terms of drugs and things of those nature. So these are neighborhoods that have that are being revamped. But we have to be intentional in how we do it in these spaces, because these are people that have lived here in some shape or form for a long time. But in this particular area of Baltimore, Baltimore had a great flight at one point where a lot of these homes became became vacant. So we’re working with various city programs and some individuals in terms of the acquisition of the properties. And we also make sure that we work with some of the neighborhood associations as well, making sure that they are aware of some of the programs that we have. One of the beauties about adding in the social work piece is that because of our program and through our non-profit, we’re also able to provide up to 43,000 dollars in down-payment assistance as well.

Eve: [00:09:00] Wow. So you have to tell me more about the non-profit. You’re throwing things at me really fast. So what condition are the buildings in?

Joanna: [00:09:11] It varies. Some of them. I mean, you have to, I tell people all the time what we see in like the Home Depot and Lowe’s now as lumber is nothing in comparison to some of the true lumber that was there way, way back in the day. So these houses have stood the test of times. I mean, they have great solid bones. Some of them are still pretty intact and maybe they just need heavy cosmetic work. But there’s also some of them where the roof has already caved in and now we’re doing a lot more extensive work. There’s a good portion of them that are also considered to be historic. So when we restore those, we have to follow certain architectural guidelines. So we have to put back like wood windows. If the staircase was still intact, we have to restore the staircase to its original state as much as possible. We have to take certain pictures, submit it to the historic alliance there to be able to make sure that we’re following things to code. So it’s a little bit a mixture of both that we experience.

Eve: [00:10:18] Cool. So when it’s done, how many units will there be? What will this project look like?

Joanna: [00:10:24] So in this phase of the project, which I consider to be Phase A, there will be a total of 31 units. Between the single families, the units from the duplexes and one of the duplexes has a commercial space at the bottom. So it’ll be 31 units and the the duplexes will bi-level two bedroom, two bath, kind of give you that New York feel a little bit. So it will have that, that feel of a home because you can be able to go upstairs and downstairs. One of the things that we did during the time of when the pandemic first hit and really, really heavy, we readjusted the layout for the single-family homes because we know some people are not going back into the office for work for some time and some children are still going to do hybrid learning or they’ll be learning 100 percent from home. So those homes have a loft area that could be converted back to a bedroom later on, if they chose to. And it also has a private office for whomever wants to use that as well. So we wanted to meet the families where they are in the times that we’re living in because we don’t know how long we’re going to be living this way. So it’s a very convertible house. I would say that can truly grow with you.

Eve: [00:11:40] And what is Phase Two?

Joanna: [00:11:43] Well, Eve, maybe I could say a little bit about that. So,t Phase Two is at very, very early stages. We have some land there that we are considering to do some development on. We can’t talk too much about it, but it could be some brand new construction with some condos. So we’ll see.

Eve: [00:12:04] Ok, and I know you’ve talked to me in the past about open space as well and how that knits into your overall strategy. And can you talk about that?

Joanna: [00:12:15] Yes. So through our non-profit, we manage about 27, 25 lots, give or take, in the East Baltimore section of the city. Our biggest thing is, is reducing vacant lots. So right now, a lot of the lots, we’re just keeping them clean as much as possible. Some of them are side lots next to homes. Some of them are just completely wide open spaces where they used to be homes, but they had to be demolished for whatever reason, more than likely because it was a safety hazard to the neighborhood and they’re just completely open. So what we’ve been doing with one of the particular areas, which is about a little over a quarter acre of land, that space, we’re actually transitioning that to a community park. So on our in our neighborhood, right behind some of the houses that we’re planning to build to restore there, you would now have a community park right in your backyard where you could really be in your kitchen and look out and see your kids playing or any of those things there. It’s going to be really nice. We’re using a concept that we like to call It Takes a Village. So we are blurring the lines of Baltimore City and really allowing people from different cities and states to donate and be a part of reducing vacant lots in urban neighborhoods, period. And that has been going pretty well. So we’re excited to see what it looks like when it comes together.

Eve: [00:13:39] So I want to come back to the non-profit. You said you have a non-profit as well, which is kind of unusual for a developer. Why? And what do you accomplish with that?

Joanna: [00:13:48] So through our non-profit, we only manage space, the green spaces, because they are not providing us any rent. So through our reinvestment model, we donate a portion of our profit from our developments into our non-profit. That helps us to be able to provide financial wellness workshops for the neighborhood. We’ve recently partnered with JPMorgan Chase Bank, which we’re really, really excited about, to be able to offer workshops to the neighborhood. We also have a summer financial literacy program that we’re actually in our fifth year. I couldn’t believe it, the other day when I saw the number. We’re in our fifth summer providing financial literacy specifically for young women. And then we also have our housing and financial counseling program. So for us with a non-profit, it’s not necessarily totally focused on real estate, but it does manage the last that we adopt and or that we own under that umbrella.

Eve: [00:14:46] It’s a really interesting strategy because often in neighborhoods like the one you’re working in you would only be able to have a non-profit developer to accomplish all of this. This is not yet. I’m sure it’s still a soft market. Is that what you’re experiencing? I mean, the market values are going to be different in a in a more established neighborhood in Baltimore, certainly. Right.

Joanna: [00:15:12] Right. So I would say that right now we are still in the early transition part of this neighborhood. We do have some brand new development that has already happened. They they did modular homes right in our backyard where we are. And those were eight. Yeah, I think we’re eight of modular homes and they look beautiful. And we have some other homes that have already been restored and they vary. In terms of price point, you do have some non-profits that have actually built those homes and they were able to take advantage of different funding and they were able to offer them under three 300,000. And then you have some of your traditional developers who have come in and done restoration projects and they’re selling for over 300,000. So we’re still very much in the early phase in this particular area. And it just it does vary.

Eve: [00:16:03] Right. So not absolutely ground zero.

Joanna: [00:16:05] Right.

Eve: [00:16:06] So tell me about some of the challenges you’re being confronted with, both as a developer and with this project.

Joanna: [00:16:15] Right, so as a female developer, one of the challenges is that I’m often taken as the secretary when I walk into most places then the owner. And it’s nothing wrong with being a secretary or an administrative assistant. But it’s the assumption of the fact that she could actually be the owner, that sometimes can be a bit frustrating. And so that can kind of get underneath my skin a little bit. I try my best for it not to get to me, but it can be a bit uncomfortable. I feel like when I get into spaces and I get in and I get a chance to connect with other female developers, I almost feel like it’s a sorority. Like you haven’t seen your sorority sister since college. You’re like, oh my God, just another person like me. And we’re able to connect. Thank God. I had somebody call me yesterday and they were all the way in Boston and they said, Joanna, do you have like two minutes just to say hi to someone? They saw you online. She also female developer. Can you just say hi? And we were like, oh, my gosh, this is great. We have to connect. And, you know, I say that to say Eve, we need more females in this space. We need to have more women investing for sure. But we need to also have more women in the real estate industry. And this has been a very much a male dominated space for a very long time. I still come across in business meetings, in business meetings where men will say, sweetie, honey and I have to correct them.

Eve: [00:17:41] Yeah, oh yeah.

Joanna: [00:17:43] I’m not sweetie, would you say this if I was a man and we were talking about the deal? No, let’s you know, so I have to, often, correct that as well. So that’s some of the challenges that I face on the female side of being a developer. But building in Covid-19, I mean, who would have thought that this would be the time that we would really be doing this would be right in the middle of Covid-19. And it’s like, oh, my goodness. I think the beauty for me, though, because I’m often the person that’s thinking outside of the box, Covid has made every industry have to think outside of the box. So now when I’m going into spaces and I’m talking about for profit and non-profit and down payment assistance and thinking about the actual individual and how it affects their family, people are actually more open-minded now than they were three years ago when we first started.

Eve: [00:18:39] I think that’s very true. Yeah. Yeah, yeah. So so what about financing? I mean, you know, most of the honeys I’ve received have been at banks. I sometimes want to come back with sugar, but that won’t work.

Joanna: [00:18:58] Well, in regards to financing, we’ve been able to be in a good position. I mean, Baltimore’s is one of the places that we that we have our our staple project. We’re also doing some work in the Philadelphia area. And this is this is not the beginning. This is not a very this is the beginning of this level of how we’re going about things. But I’ve been able to do some projects in the past where I was strategic with those funds and really allowed that to be the spark of what we’re working on now. We’ve also done…

Eve: [00:19:28] I think I think it was asking more like how did banks treat you when you walk in the door? You know…

Joanna: [00:19:35] Banks are a little bit a little bit different. I think I’ve come across more of the honeys and the sweeties in the private the private conversations. That could be a little frustrating, but I think the bank so far has been pretty good. And we haven’t had to really work with too many of them. Most of our financing when we’ve done construction and things of that nature has been more of your alternative options. Some people call them hard money and things like that. But I haven’t had a bad experience at the bank, knock on wood that they won’t.

Eve: [00:20:10] Well, that’s an improvement. OK, so no other serious challenges. It looks like you’re roaring along. What about perception, like in the neighborhood?

Joanna: [00:20:23] Well, I would tie that in. And that’s part of where I was going with that. Perception in the neighborhood especially, and I’ll focus on Baltimore because Philadelphia is home for me. When you’re going into a city where you’re not from there, it does require another layer of work. You have to understand how their systems work. But right down to how can you get your utilities turned on is a whole new system, even with some of the things that we’re coming from a different city. Not necessarily using Philadelphia systems and trying to put them into Baltimore, but you’re looking at different systems from various cities. In addition to things that you have learned from a different industry and you’re bringing them into a city that you’re now in a room with other creatives, but now you’re bringing a different process to them because they may have only understood how things go in Baltimore, but now you’re bringing in new information and you want to do this in a strategic way where you’re not trying to flex a muscle and so to speak to them. But you want them to start thinking outside of the box of how they can be able to address some of the challenges. So I would say in a nutshell, it’s been positive overall, but at the same time, we’ve had situations where you do have people wondering, well, who is this woman? Where does she come from? How does she know this and how does….but now I could say that we’ve gotten past that part. And I want to say 95 percent is very much welcome in opening. We can pick up the phone, ask questions, get the support that we need with no problem. And Baltimore has become almost like a second home for me.

Eve: [00:22:08] That’s nice. But what about the neighborhood itself, the people who live there?

Joanna: [00:22:12] Right. So the people that live there? One of the things that I did from the very beginning, and this is before we did any construction on any property, I went I knocked on the door of the local church and I sat with one of the associate pastors asking them questions about what, how the neighborhood operates, what’s the vibe in the neighborhood, and I did not I did that not only with the church but even when we were out, some of my meetings are not just your formal neighborhood association meetings or your land use committee meetings. Some of these meetings, Eve, is right on a stoop. Sitting with someone that lives in the neighborhood. Asking questions and engaging with them before your you know, they just see you doing demo. And that has been very helpful. So, I mean, I think I might have one of the best security systems in the area, and that’s called neighbors now because of the fact that we have this relationship. So we will welcomed very early on with positivity. I didn’t have any issues with neighbors because I went to them. I didn’t wait for them to come to me.

Eve: [00:23:16] That’s great. So they trust you and they’re looking forward to what you’re building, right?

Joanna: [00:23:20] Oh, yes, absolutely.

Eve: [00:23:22] That’s wonderful. So you just made it a little harder for yourself. You added crowd funding to the mix. Your project of Aruka Midway in Baltimore is listed on my platform, Small Change. And that’s just another layer of complexity. Why did you do that? What do you hope to, what do you hope the outcome is?

Joanna: [00:23:50] What I hope for the outcome to be is for in urban neighborhoods, for wealth to be more normalized by the people that live there. And this is what I mean by this. Growing up I grew up in North Philly. That’s considered, quote unquote, the hood for some people. And when we will see development happening, even if you went off to college or came back, you’re like, oh, my goodness, what happened here? Ms. so-and-so used to live here. This school building used to be here. One of the common threads in the neighborhood and not just in North Philadelphia is, well, I didn’t even know what happened. Nobody ever talked to us about it. And we often feel boxed out, left out. And then definitely there was no one saying to us, well, how we could be able to at least reap some part of the return for things that are happening right in our neighborhood, that they also want us to patronize it. You want us to come shop at these retail places and things of that nature. So while we’re doing the crowdfunding raise, is to now provide an opportunity for people that live in the neighborhood, people that can relate in urban neighborhoods or those that want to support this type of development structure for them to also have a piece of what we’re also going to be reaping as well. That’s why we’re really creating it. We’re already doing the education in the community. We’re already providing the housing counseling through partnerships. We’re providing down payment assistance. So now the thing is, where can we do this in a way that, yes, we are able to raise the funds to do the development, but we also strategically do it in a way where those that can connect with this area in some shape or form can also be able to see what it looks like when you get that dividend check every year or see what it looks like when you can say, I own a piece of that restaurant that I go to every Sunday for family, a family breakfast. Those things start to matter. So that’s why I decided to create Aruka Midway. It’s a part of restoration for the neighborhood. And Aruka actually means restore in Hebrew.

Eve: [00:25:55] Oh, I didn’t know that. Thank you.

Joanna: [00:25:57] Yeah.

Eve: [00:26:00] Yeah. So, yeah, there’s something very palpable about people wanting to be involved in and engaged. And crowdfunding seems to just go that extra step. They can actually say I own a piece of that. I made it happen. Right?

Joanna: [00:26:13] Yes, absolutely. It’s the story that’s able to be told.

Eve: [00:26:17] Right. So what’s next for you? What’s ultimately your big, hairy, audacious goal, Joanna?

Joanna: [00:26:26] Believe it or not, and some people are often like, what, you don’t want to do this in 20 other cities? I absolutely do not. I want to live. I want to be able to enjoy the fruits of my labor and be able to enjoy time with my family. So doing this in more than three cities is not the goal. Three cities will be our max. We’re still identifying what that third will be. And ultimately, what we want to be able to do is for companies that see this to be a structure of purpose in their real estate development, is to be able to sow a seed and be their partner in helping them get started. Be a part of that funding for them where they could be able to come to O’Hara Developments and say, hey, I found a block, I found a neighborhood, or maybe it’s just one house. I know it fits into your model. Is there a way that you could support me? So if we could do that in a way of being some form of an equity partner in the beginning, giving them the consultation that they need, the support that they need. As long as they are looking to mirror a socially conscious and impactful model, the way that we have it, we want to be able to be that source for other developers in urban development.

Eve: [00:27:41] That’s a great goal. So thank you. Thank you very much for talking with me today. I hope that listeners will go check out your offering on SmallChange.co. We can’t talk too much about it here, but there’s lots about it there. So here’s to your success, Joanna.

Joanna: [00:28:00] Thank you, Eve. Thank you and thank you for having me today.

Eve: [00:28:09] That was Joanna Bartholomew. Joanna Bartholomew changed her career path from social work to real estate, and yet she didn’t. It’s not just about the vacant and decrepit row houses that she’s rehabbing one block at a time. For Joanna, it’s also about the people who will occupy them. She immerses herself in the community to make sure that what she is building will serve it well. And she offers up financial literacy and down-payment programs so that everyone can have a chance at home ownership.

Eve: [00:28:51] You can find out more about this episode or others you might have missed on the show notes page at EvePicker.com, or you can support us at Patreon.com/rethink real estate for the price of a cup of coffee. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Joanna Bartholomew, O’Hara Developments

Building generational wealth.

January 20, 2021

Last May, Lyneir Richardson told us about his audacious goal to help 1,000 urban entrepreneurs grow their businesses, through a nine-month program run by the Center for Urban Entrepreneurship & Economic Development (CUEED) at Rutgers University in Newark, NJ. This year we are talking to him again about his latest project, implemented through The Chicago TREND Corporation, where Lyneir is co-founder and CEO, to buy 100 community shopping centers with 100 community members. The first one will be Walbrook Junction, in Baltimore, MD.

The Chicago TREND Corporation is a social enterprise that was initially funded by the John D. and Catherine T. MacArthur Foundation and Chicago Community Trust. It was created as a centralized resource, for real estate developers, retailers and community development organizations wanting to invest in and understand Chicago’s neighborhoods, that can drive transformative change. Describing himself as an urban entrepreneur who is interested in strengthening economic conditions in underserved areas, Lyneir says he likes to work on bringing together private, public and philanthropic funds to support these kinds of projects. And he does that with incredible energy.

Lyneir was also formerly the CEO of Brick City Development Corporation, where he had responsibility for real estate development, small business services and business attraction in Newark, N.J. He is an experienced commercial and residential real estate developer with almost two decades of experience in urban retail development.

Insights and Inspirations

Wealth is generated by owning assets that generate revenue and appreciate over time.
Retail can be catalytic.
Lyneir started his career as a bank lawyer, but found his passion in smaller loans that made a serious impact.
His big hairy audacious goal is to buy 100 community shopping centers with 100 community members.
Lyneir’s first offering on Small Change, Walbrook Junction, can be found here!

Read the podcast transcript here

Eve Picker: [00:00:10] Hi there! Thanks so much for joining me today for the latest episode of Impact Real Estate Investment. Wealth is created by owning assets that generate revenue and appreciate over time. And today, I’m talking to Lyneir Richardson, the CEO of The Chicago Trend Corporation, about his wealth creation strategy, a strategy that he is sharing with those who have missed out on wealth generation opportunities before. Lyneir is planning to buy 100 community shopping centers. He and his team have developed a rigorous set of criteria for finding and buying shopping centers that have solid cash flow and also added value over time. He wants to empower Black entrepreneurs and community residents to have a meaningful ownership stake in the revitalization and continued vibrancy of commercial corridors and Black shopping districts. And now he’s onto the next phase of his plan with a crowdfunding campaign for a shopping center he wants to purchase in Baltimore, which everyone over the age of 18 can invest in. You’ll want to hear more. Be sure to go to EvePicker.com, to find out more about Lyneir on the show notes page for this episode. And be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:01:54] Hello, Lyneir, thanks so much for joining me today.

Lyneir Richardson: [00:01:57] Thank you for having me.

Eve: [00:01:59] So, you’ve lived a life in economic development and I’m just wondering how you got there from your initial career choice of the law.

Lyneir: [00:02:08] I tell people all the time that hopefully life is long and the world is big. I started my career as a bank lawyer. I worked in a law department of 90 lawyers and every day we’d work on transactions where we were making loans of 50 million or a 100 million dollars to some big corporate institution. Every day in the afternoon, around two o’clock, I started to fall asleep on the loan documents. The work was boring. It wasn’t until I had an opportunity to do a pro-bono assignment, which was making a 100,000 dollar loan to a local business on the west side of Chicago, and it was at that point that the work came alive. It was the same loan documents and, you know, mortgage and guarantee, and it was a 100,000 dollar loan as opposed to a 100 million dollar loan. But it was a lot of fun. And, you know, giving resources to people and places, that other people overlooked or undervalued, became my mantra. So, I’ve had a lot of fun with that. I left the bank shortly thereafter.

Eve: [00:03:17] Yeah. And what did you do after that?

Lyneir: [00:03:19] So, I went to a homebuilder who was building houses in on the south side of Chicago. I worked for him for a couple of years and really saved up some money. I was 27. I’d saved about 70,000 dollars of my own money. And I jumped out and I started my own little business. The first year I developed, built and sold, and I want to come back to ‘and sold’, six single-family homes in Chicago. I grew that business over the next maybe six and a half, seven years to about nine million dollars of annual revenue, building 80 to 100 homes every year.

Eve: [00:03:54] Wow.

Lyneir: [00:03:55] And it was, it was a wild ride. I was a ‘Young Entrepreneur of the Year.’ And I always tell people I’d won what we would call today a pitch competition. I won a business plan competition and I won a 100,000 dollar prize. And what they said was the 100,000 dollars was rocket fuel, but no one ever told me that rocket fuel is highly flammable. So, I had all the highs and lows. Couple of claims, the need to sell that business, in like, a fire sale. But luckily, I was able to keep my reputation and sort of figure out what my next move is, would be. And now it’s sort of fun to talk about failure, and failure is necessary. And you learn it’s only lessons that failure can teach. But I’m telling you, at that point, it was hard for me.

Eve: [00:04:41] Yeah, I’m sure.

Lyneir: [00:04:44] But I got lucky. I met a guy at an Urban Land Institute meeting who was being honored, you know, for real, in the real estate industry, a guy named Matthew Bucksbaum and who was the founder and CEO of General Growth Properties. He ultimately gave me an opportunity. I send him a letter and said, I’m trying to figure out what to do next. And it worked. I got an opportunity to work at General Growth and and work directly with the CEO to formulate an urban development group. Again, back at passion work. How do you get retail development in ethnic, urban and underserved areas was the charge. The CEO had a personal interest there. I formed a national group and I got the resources in General Growth to do projects in Baltimore, in New York, in Detroit and Birmingham, Alabama. Worked on projects in Milwaukee. It just was a lot of fun. So, you know, step two, I always tell people the career is long and winding road. In 2007, General Growth experiences the financial, was the poster child for financial, financial sort of illiquidity, had great assets, but couldn’t refinance. It was the recession. And so, I left General Growth. Same way, trying to figure out what do I do next? And I moved to Newark and found this great opportunity working for Cory Booker and heading the Economic Development Corporation in Newark, New Jersey. And when the recession thawed out, we did two billion dollars of new projects, hotels, grocery stores, office towers for Panasonic and others. It just was a lot of fun. And then, when he became Senator Booker is when I started my current sort of career path. I lead an entrepreneurship center at Rutgers Business School and I am CEO of a social enterprise, again, focusing on development and getting capital to underserved, changing ethnic neighborhoods. So, it’s been a lot of fun.

Eve: [00:06:44] That’s really what we’re going to talk about today. So, you founded and lead The Chicago TREND Corporation?

Lyneir: [00:06:50] Yes.

Eve: [00:06:51] And what does TREND do?

Lyneir: [00:06:53] So, TREND aims to empower entrepreneurs and strengthen neighborhoods. That’s really our mission. We were formed out of a research assignment from the MacArthur Foundation and the Chicago Community Trust that really aimed to determine how retail impacted neighborhood change. And so, it was what every community kind of wanted, a grocery store or a coffee shop or sit-down restaurant. And the foundation at the time was trying to determine where to put its resources. They didn’t want to put grant and investment in neighborhoods that didn’t need it, that would act on it, would have that development on its own market forces. It also didn’t want to do grants in neighborhoods where the project would fail. And so my co-founder and I, Bob Weisbord, worked on a process, a data analytic tool, leveraging our retail relationships and then ultimately getting capital. We launched in 2016 with about seven million dollars of support from philanthropically motivated impact investors: MacArthur Foundation, Chicago Community Trust. We subsequently raised another 10 million dollars from Fifth Third Bank and something called Benefit Chicago, and the American Baptist Home Mission Society, and a host of other, again, philanthropic impact investors. Really excited.

Eve: [00:08:20] What do you do with that money?

Lyneir: [00:08:22] We find projects. We’ve now invested about nine million dollars in projects really largely led by the Black entrepreneurs or nonprofit organizations. Initially, all of our work has been in Chicago. We’re just starting to expand outside of Chicago. We invested in everything from, our first project was an urgent care and health care center, urgent care and a daycare center right next door to each other. A second project was relocating a historic restaurant in Southside neighborhood, literally across the street in a new building; a new restaurant in there. I think the restaurant was more than 70 years, 80 years old. And we brought in additional retail and African American UPS store franchisee, Military Veterans Doing Great Work. We’ve invested in land with the developer, two million dollars to buy land for a mixed-use project. We invested in a performing arts center. So, it’s that type of work. The theory is retail can be catalytic and can either stem the neighborhood’s decline or strengthen the neighborhood. That your first impression of a community is the commercial corridor, right? You drive in there, you see it. And so we try to use data and analytic tools to identify strategic commercial corridors where investment could happen. We then use a whole host of, we call it deal facilitation, relationships with URI, our relationship that ICSE, going to the shopping center convention and talking to the retailers, leveraging my old relationships at General Growth, but then ultimately finding projects and developers and investing 200,000 dollars to two million dollars on projects that have been our work up until the start of 2020.

Eve: [00:10:18] What are some of the challenges that you’ve been confronted with with this work?

Lyneir: [00:10:23] Well, this work again, I’ve been doing this since my time at General Growth in 2004. It is about perception, in some instances, that still redlining, retail redlining of neighborhoods. That’s been a challenge in communicating that it really is income and market viability to sites and finding the right location that has components that will work for retail. Accessible and visible, and finding projects that work and assembling land. So, just the nature of real estate development and getting tenants attracted is a challenge. Of course, retail, the industry is changing. So, right now there’s this thought about everything is Amazon, and Amazon sells everything. And so what retail is still necessary to communities are: restaurants, entertainment, necessity-type goods, health services and other things of that sort. And then finally, I always say it’s the narrative in the numbers. It’s sort of making sure that the project works, the project proforma works. There’s clearly often a narrative around communities. Maybe it’s a food desert, or a community doesn’t have a sit down restaurant. But you got to find a place where the numbers work, both from a development standpoint as well as for the retailer or the entrepreneurs operating the business. So, intelligently identifying, structuring, using data to identify opportunity and invest in it, all of that’s the challenge. Then just communicating and building relationships to get people to take a look at the projects.

Eve: [00:12:05] It sounds like up until now, in Chicago, transferral hasn’t really been as development, but more investment in development projects.

Lyneir: [00:12:13] That’s correct. That is correct.

Eve: [00:12:14] And so, now you’re shifting gears a little bit because you’ve listed a project on Small Change.

Lyneir: [00:12:20] Yes.

Eve: [00:12:21] And it seems you shifted into development mode. And why is that?

Lyneir: [00:12:27] Yes, I’m really excited about it. So, you know, 2020, we all know it was the year of pandemic, of protests and a political pandemonium. That’s what I call it, the PPP. And in Chicago, right after the murder of George Floyd, there was looting in commercial corridors. And as I, as I watched the news and sort of talked to friends who were on the ground, and community, people were lamenting the fact that we just got these stores open. We fought for everywhere to get a Wal-Mart open or Walgreens open in the community. And there was looting even to some of the Black-owned business. There was looting. I’ve just observed that, that my thought was a very few people of color-owned commercial real estate. People of color didn’t have opportunities, sufficient opportunities to be commercial real estate agents or commercial property managers. And so, my thought was we should own assets. And as you remember, I talked about my initial business of developing, building and selling homes. Then, when I got to General Growth and met, you know, the Bucksbaums, when I got to Newark, I met a guy named Jerry Gottesman where they said, you know, we don’t sell. That wealth is created by owning assets that generate revenue and appreciate over time. So, my thought was, why don’t I start to buy assets? Commercial, small strip centers that generate revenue, have the potential to appreciate over time, are important to the community and provide services. And so, we bought our first shopping mall. It literally was our Chicago TREND business. You know, it was a pilot. So, literally, the first project, my wife and I put our own money alongside of our philanthropic capital. And one of the industry icons invest with us. And we bought the first center. And what we found is even during the tough part of the pandemic, the first center had non-Amazonable retail tenants. It had an MRI center, a carry-out chicken restaurant, State Farm dealer, Dunkin Donuts, a beauty salon. Right? So, those tenants, there were entrepreneurs. They were fighting and finding ways and finding grants to stay open. They paid their rent. They continued to provide services to the community. I say, essential services, and again, essential in the context of the pandemic is taking on different meanings. But these are places that people still went to that are, quote unquote, not Amazonable. And so, we bought our first one in the early part of 2020. We bought a second one in October of 2020. The second one we bought in partnership intentionally with local entrepreneurs and we decided that we could do that more. And so, that’s the project we’ve listed on Small Change and we’re really excited about continuing to grow this business line.

Eve: [00:15:41] Tell us about that particular offering that you have on Small Change. What does the building look like?

Lyneir: [00:15:46] So, we’ve put under contract a 47,000 square foot shopping center in West Baltimore. West Baltimore is a largely African American community, densely populated, median household income of a little over fifty thousand dollars a year. And we found a community essential services shopping center. Now, I want to brand the name. I want to call it SOCS, Service Oriented Community Shopping. Right, everybody needs SOCS. Everybody needs black socks, right? Service Oriented Community Shopping. You know, it’s a small shopping center, nothing glamorous. But even during the pandemic, it continued to perform. It has a Save-a-lot grocery, RiteAid Drugstore, carryout pizza, Papa John’s, a laundromat, a liquor store, all of those things, as you can imagine, even though the pandemic were still needed services for the community.

Eve: [00:16:50] Right.

Lyneir: [00:16:50] And over time, we’re going to own it. We put a contract. We’re going to invest. Initially, our plan was let’s buy it. Let’s talk to the city of Baltimore. But we intentionally have created this structure where we want to co-own with local residents and entrepreneurs and people that have some connection to the community. And so we create we create an opportunity. We’re investing half of the money, up to 70, 80 percent of the money if necessary. With our Small Change offering, we’re providing an opportunity for people with a little amount of money, anyone over the age 18 to invest with us and to co-own the asset with us.

Eve: [00:17:36] That’s pretty great. What’s the overall strategy? So, this is shopping center, number two, right?

Lyneir: [00:17:42] It would be number three, actually.

Eve: [00:17:44] OK, number three, what’s the overall strategy?

Lyneir: [00:17:47] So, our goal, it depends on who you’re talking to. Right? So some people only get excited by the big numbers and some people say, oh, big numbers are too, too aggressive, why be greedy? Our initial goal is we want to own 10 more shopping centers in partnership with local residents and impact investors, and sort of structuring these deals. We want 10 more of these in 2021. And the big business … could we own 100? Could we form the first urban shopping center that’s owned by people of color and have local investment? Can we make these assets better over time? So, imagine the conversation with the city is not just Lyneir and Chicago TREND saying to the city of Baltimore, you know, let’s help us make the center better. But it’s the community. It’s sort of the crowd. There’s power in the crowd. I believe in that. And then over time, just lastly, just measuring impact. Imagine if the neighborhood continues to get stronger. Imagine if more entrepreneurs found opportunity in the center. Imagine if the center becomes more profitable. The neighborhood becomes safer because there’s ownership here. All of those big, old, dreamy impact goals really excite me.

Eve: [00:19:00] Yeah, it is very exciting. Wow. Who do you hope the investors will be? What what do you hope they will look like? Do you have some avatars in mind?

Lyneir: [00:19:12] Yes. But, I mean, literally, we started with the thought of could we find more people of color? Right? That right now there’s a real conversation going on around racial justice investing and racial wealth gap closing. I firmly believe it can. I woke up one day with this sentence in my head, ‘that wealth is created by owning assets that generate revenue and hopefully appreciate over time.’ And by owning those assets over the long term and having a long term perspective, you have different opportunities. Maybe it’s a redevelopment, maybe it’s new tenant, maybe it’s a new program that provides capital. So, I really would love to have a whole lot of local community residents .. open a shopping center in Baltimore, have some Baltimore residents own it with me, open a center in Cleveland or Pittsburgh or Greensboro or Columbus, Ohio, or more shopping centers in Chicago. That there’s a place in our offering for local Black entrepreneurs so that they’re learning about commercial real estate development and ownership and also benefiting from the appreciation of the income that might be generated from the asset. But then lastly, I’m hoping that impact investors, not just them, I’m hoping that people who want a good return, want to strengthen neighborhoods, want a project that has the narrative, what we’re strengthening neighborhoods and bridging the racial wealth gap, but also has a return. So it doesn’t just have to be Black entrepreneurs. It doesn’t just have to be Baltimore residents or Columbus, Ohio residents or Chicago residents. It’s impact investors who want to believe that a commercial asset, community owned, well managed, managed from an advantage point of social impact as well as profitability. People want to invest and get a return. So foundation programming officers, impact investors, small people around the country, outside of the country. Anyone who wants to help neighborhoods get better. That’s my passion. I always tell you this this thing, you know, I have a younger brother who is financially much wealthier than I am, much more financially. But my goal was not to be because I never wanted to be the poor nonprofit executive. But I wasn’t, I didn’t want to be the billionaire either. Right. That was my first objective.

Eve: [00:21:53] Right. That’s pretty clear when the 100,000 dollar deal excited you, right.

Lyneir: [00:21:58] Exactly. I never want to be the poor nonprofit executive, but I wasn’t profit maximizing either. Right. So, it’s about impact. It’s about strength in the neighborhood. It’s about the small deal that again, seeing value where other people say that’s too small. You know, people will tell me all the time is just as easy to do a 60 million dollar deal or a 100 million dollar deal as it is to do a six million dollar deal.

Eve: [00:22:22] But do you feel as good about it?

Lyneir: [00:22:24] I don’t feel as good about it.

Eve: [00:22:26] No, you and I are alike.

Lyneir: [00:22:26] So, I’m hoping that some of those people want to do the big deals, but know that it’s important to do the little deals will also invest with us.

Eve: [00:22:34] Yeah.

Lyneir: [00:22:34] They’ll say, all right, I see he’s doing good work. I see that they’re intelligent about it. They understand how to operate it. Again, this is not just about imaginary goals or, you know, we’re going to close the laundromat and tomorrow we’re going to bring in Starbucks and Cheesecake Factory. We’re going to see opportunities. We’re going to find things that can also work with the municipality, we’re going to hopefully continue to own and improve the project in a way that both makes money and makes sense and is valued and appreciated by the community and by our investors.

Eve: [00:23:12] Yeah, it’s a really exciting strategy. And I think sometimes these little projects are harder to pull off than being one so big is not necessarily better.

Lyneir: [00:23:22] Yeah, I want to do this 100 times. I don’t know what you call that. I want to just bang my head against the wall. But I believe that local ownership, that if I can use the MacArthur Foundation, and Chicago Community Trust, and Fifth Third Bank, and Rockefeller Foundation, and Child Care Foundation and others … Farash Foundation, I don’t want to leave anyone out. They all invested in our little social enterprise to create capacity. And so, I’m hoping to use that capacity in other places around the country and further working in Chicago and in Baltimore and in Rochester, New York and other places to really make communities better to, you know, again, get resources to places that are overlooked and to help create wealth for people who, you know, who just haven’t had as many opportunities as some other communities.

Eve: [00:24:13] One of the things I find most exciting about this is that, I don’t want to call them unsophisticated investors, but investors who’ve never had an opportunity to invest in real estate before can invest right alongside people who do know what they’re doing. And it’s an educational enterprise as well.

Lyneir: [00:24:32] Yeah.

Eve: [00:24:33] Embarking on this idea of, put a little bit of money in and see where it takes you. And it’s the beginning of a journey to create wealth. You know, along the way you can learn from the other people around you. I think it’s an amazing opportunity.

Lyneir: [00:24:49] I started out, I went to law school, a great law school, but no one ever told me, hey, you know, you hold some assets, you try to let them appreciate.

Eve: [00:25:01] Right.

Lyneir: [00:25:02] You know, there’s value in compounding, you know, you know, all those things. You know what really goes into the discussion with the retailer? So, it’s not just Starbucks is not coming to our community or it’s how do we create a structure that makes it attractive, the win/win for the community. And maybe it’s not Starbucks, maybe it’s a local entrepreneur. How do we get resources, but also shop there and patronize in a way that allows the entrepreneur to make money and stay open and continue to grow. So all of those things are byproducts. But first, it makes money, right? At first, it pencils.

Eve: [00:25:41] Right.

Lyneir: [00:25:42] Because of it doesn’t pencil, what I learned in my early period of entrepreneurship, is while you can do passion work if you’re not doing it in a way that’s profitable, it becomes exasperating, you run out of energy. So, I want to do passion work profitably.

Eve: [00:25:58] Yes, yep.

Lyneir: [00:26:00] That’s what this is about.

Eve: [00:26:01] So, there’s one other thing we haven’t touched on, and that is how you’re planning to staff and fill these shopping centers. I know that’s sort of an added value for the communities. Talk about that?

Lyneir: [00:26:13] So, literally the shopping centers that we are acquiring, first a shopping center we acquired, it was a little less than 70 percent occupied. And we initially identified an African American restaurant and signed a lease with them. It was a State Farm office, it’s an African American State Farm owner. We signed a lease with them. So we would love to find other ways to have local and people of color becoming tenants in our centers. We love to have people of color leasing, doing property management at our centers. There are these opportunities again, that by owning and being able to lead the decision making, you know, you’ll find opportunities, you’ll deal with a more diverse tenants. Over time, Baltimore has a center that has some tenants that people might turn their nose up to, or can make the case that they’re extractive, you know, things like check cashing and stuff, things like that.

Eve: [00:27:10] Right.

Lyneir: [00:27:10] Over time, we’ll find new opportunities. So, you don’t go in there tomorrow and say, OK, Mr. Tenant, we don’t like, that’s been paying rent that’s been operating here for 10 years, that obviously is serving a customer, you don’t go in there and want to say, you’re out.

Eve: [00:27:25] Yeah.

Lyneir: [00:27:26] You go on there and say, is there a way to improve the operation in some way or can we make the case with another potential operator that may not pay as much rent as the extractive tenant?

Eve: [00:27:37] I’ve done that myself in a neighborhood where I had what I suppose you would call an extractive operator. And it really took me 10 years to be in a position to replace them with someone who paid less rent but added much more value at the street. And it’s it’s a really long haul. It can take a long time because you’ve got to stabilize the entire building to really kind of get to the point where you can afford to do that and not lose investor’s money, you know.

Lyneir: [00:28:03] So that, again, that’s the advantage, I believe, of our expertise and experience.

Eve: [00:28:08] Yes.

Lyneir: [00:28:09] So, from an economic development standpoint. So, my objective is how could I make the case to the city to, you know, the foundation community, to, you know, other government support sources, though, say, all right, we do want this tenant who we think would offer more goods and services and be, you know, a better asset or benefit to the community, but they’ll pay 40 percent less than the tenant is there that we are not as happy with.

Eve: [00:28:37] Right.

Lyneir: [00:28:38] Can we find resources to structure that? The other thing is, again, this is long term work. All of the work, I’ve been doing this work now for, in June, I’ll call it 28 years.

Eve: [00:28:51] Wow.

Lyneir: [00:28:52] This is evolution, not revolution. Right. That things get better progressively. We’re trying to have long term ownership not going in here, buying the center, flipping. Our goal is can we create wealth by a pool of shopping centers. This is the third, the first outside of Chicago. I’ve had great conversations about other markets. I’m very optimistic about how we will grow. And I’m hoping that we’ll do more with this crowdfunding approach of really democratizing investor interest and making opportunities locally, but also making opportunities available for people who are, you know, any place but want to have an impact. I’m really, this is our pilot test with this. And if it works, maybe we’ll do it 98 more times, Eve. Let’s do it ninety eight more times.

Eve: [00:29:40] I sure hope so. Well, thank you very, very much. I’ve really enjoyed getting to know you, Lyneir, and I’m just dying to see what happens with your offering. So, thank you. Thank you very much for everything you do.

Lyneir: [00:29:54] Great. Thank you again.

Eve: [00:30:17] That was Lyneir Richardson. Not only has Lyneir crafted a wealth creation strategy that could empower Black communities, he’s also being purposeful about driving inclusively in other ways. He plans to assemble a team of Black experts to provide hands on property management, stay on top of issues, retain existing tenants and attract new ones to improve financial performance of each shopping center. This culturally informed team will have a positive community impact by employing black people and cultivating and incubating Black-owned businesses in these shopping centers. If you want to know more, check out Walbrook Junction at SmallChange.co. You can find out more about Impact Real Estate Investing and access the show notes for today’s episode at my website EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities. Thank you so much for spending your time with me today and thank you Lyneir for sharing your thoughts. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Lyneir Richardson/The Chicago TREND

« Previous Page

Jamison loves real estate crowdfunding.

Insights and Inspirations

From Wall Street to Main Street.

Insights and Inspirations

Homage to Sutro Baths.

Insights and Inspirations

She’s breaking barriers.

Insights and Inspirations

Building generational wealth.

Insights and Inspirations

Recent

Search

Categories

Offering

Insights and Inspirations

Insights and Inspirations

Insights and Inspirations

Insights and Inspirations

Insights and Inspirations

Footer

Recent

Search

Categories