R&G #10: From buying bando’s to developing a block with Charmcity Buyers

[Music] welcome back to another incredible episode of the ransom gems real estate podcast my name is matt garland nmls number 58700 better known as mgd mortgage guy and my name is kiana watson license number three one seven five seven six real estate broker extraordinaire okay you're looking extraordinary today too i mean this color is like you know you know matt i'm trying to tell you i'm playing with the fashions if you're doing it if you want to do anything if you watch this show you just need to come for the fashions i i came to deliver now you came with a cake that's what i knew it was serious i said this woman came on the cape oh all right so enough of this right let's introduce our lovely guest to to the left all right right here to the left of me we have charm city buyers let's give it up for them so you guys they're going to tell a little bit a little bit about themselves but they are from baltimore they are basically developing almost the entire city of baltimore if you leave it up to me to sell it and what i love about them is they have been out here from bandos to blocks so they're they have started from the bottom and now they are here and they're here to share a lot of their gifts with us um some special announcements and just let's talk about how you've started to build this wealth and build community through real estate let's talk about it yeah thanks for having us though i'm kiara and i'm khalil and so we really started investing in real estate fresh out of college we were a year out um we were really kind of going through this transition even as a couple to say if we're doing this thing together like what does that look like long term you know if i have my own goals he has his own goals if we're going to do this together what does this look like as a unit and so we started to play around with a lot of different ideas of investing in businesses and at that time i guess it's kind of new new because now everyone's doing like uh vending machines and stuff like that like we looked at a little bit of everything and real estate was just one of those things that checked the most boxes and we dove really far into making that happen yeah our criteria was basically like community building right positive impact on the world generating wealth and something we can pass on so real estate was it for us yeah and um ever since we started we never turned back we just kept moving full steam ahead nice i love it so when did you guys fall in love with real estate so i real estate was actually something i had always been interested in so we take all the way back so i'm close born and raised in baltimore i'm from pennsylvania and so growing up i learned about a town called hensonville that my ancestors started in 1820s in the 1820s wait your ancestors started a town yeah yes so this is good already so it's called hensonville and it's actually the land that link university the first hbcu sits on is the land of hensonville wow and so i was raised learning that story and the power of that and owning land and real estate and those types of things and so it kind of was like ingrained in me as a seed to be really interested in that transformation right building neighborhoods building communities doing real estate um so that was kind of my start and then for him he's always been really entrepreneurial yeah for me it was entrepreneurship from the jump always period the corporate world it wasn't quite my thing it didn't resonate it wasn't something that i knew i would love um so from like starting at high school with a little uh uh company dancing and and doing parties and hosting events and things to like college and then moving forward i always knew that something about me was going to be in the leadership role uh owning some kind of business and when kiara introduced the idea of real estate and buying properties and stuff like say less say less keep it going yeah look i love the partnership yeah how long you guys been together for about 13 years yeah we met in college so you know how college is but we fell in love immediately and it was like all right this is it immediately so check it out check it out how we met right um um a week before we met my mom i saw her in a dream he said you said what a week before we met i saw her in a dream and i like i could barely see her there was a silhouette on the outside and i woke up i'm like i don't know what that was but whatever all right cool a week later my boys hit me up on the um the football team we going to lafayette college heard college it was a rival school i went to lehigh and um i landed at her apartment and it was like three guys three girls the music was good the drinks were pouring it was just a vibe right so um when i saw her sitting on the couch i'm like that's her so of course i had to introduce myself one thing led to another all right eight years later eight years of marriage later here we are man that's amazing i love that's amazing i love that that's that's dope college sweethearts to buying freaking bandos yeah how the hell did y'all start buying bamboos together talk to us about that so when we so we're um i graduated co-graduate a year before me when i graduated college i actually moved to connecticut um so i was in hartford connecticut and um clue always says he followed love because he was in baltimore so he moved to connecticut with me for a little while and so we're both working full-time and i was like you know this really isn't isn't it like i'm not i can't sit here and wait into a pension i'm not about to fool with these people and put all of everything i want into you know what this this company decides to do for for me and he was the same way and he was already entrepreneurial he was like well what are we gonna do and so um we bought our first property um and it was a three unit shell in hartford connecticut and our goal at first was we were going to wholesale because that's what everybody wants to do when they start real estate right and so we're going to wholesale so all the numbers were good we bought the property all cash twenty six thousand dollars because we are saved up and what year was this this was 20 2012 2012. um we bought it all cash and uh we're going to wholesale it and so what happened was at that time we're going to ria meetings like we were trying to get in the room with people and and network and um nobody would touch it and so what we realized at one point we were sitting on the soup of the house after we bought it because we were feeling ourselves at that point like we're young i'm gonna sit on my stoop so we sat on there and somebody was walking on the street was like hey yo y'all just bought this house and we were like yeah and it was like don't y'all know this street called murder and we was like what excuse me say that it's called murder don't you know this street called murder and we was like like sir i did not know that you're right and so what we learned was that because we're in a new area a new neighborhood i'm not from connecticut clue's not from connecticut so we didn't know all the pieces we knew the numbers and so what we found was that people were shying away from this neighborhood this space because of reputation that he had gained over all this time and so but we doubled down and we're like no our numbers are good this is a three unit property there's tons of opportunity we finna do this ourselves and so um we did some networking connected with actually a non-profit in the area that was focused on that neighborhood ended up doing 120 000 renovation for our very first deal so you're 150 000 and about 150 thousand dollars in um we finished our renovation probably about six months or so and we brought in about 2700 a month um in that cash flow you know after everything probably cash flow about eleven twelve hundred dollars a month on that first deal on a murder street on the murder street on murder street and let me tell you that at that time it was just us right fast forward to now there's a community garden across the street they repave the street their speed humps to slow people down there are multiple other rehabs and developments happening we feel like we transformed the area or at least played a part in it mm-hmm that's dope that's the whole thing the opportunity because what we found and this kind of laid the foundation for everything that we do even in baltimore now that we have to see opportunities in our neighborhoods first right and so just because someone said and name this street murder doesn't mean that this street the people on the street and these properties don't have value right and so it's only as valuable as we decide and we put that energy in that and so we put that energy there and decided like we can do this and these people deserve to have quality housing you know we don't need to walk past vandals every day on our way to school how do we take that ownership and be able to do that all right i love that so bandos vandals you know that's that's that's slang term can we kind of break that down for the audience what people you know people may not know what that is yeah so vandals that's like the boarded up especially in baltimore right you think of the boarded up shelled up houses they've fallen down like the houses we buy are a front wall and a tree growing up the middle yeah they're making properties yeah okay properties that have been disinvested for years yep properties that um like here i said there's trees and vegetation growing out spray paint negative energy in and around them um those are the bandos and the vacants yeah so how did you guys go from connecticut to baltimore so we came back home i convinced her that i came up to connecticut for love let's go back home right um so we came back home we transferred our jobs it was a whole thing right we had a rehab happening i was in grad school kiara transferred her job she was pregnant at the time there was a lot of stuff happening at once but we told our story to our friends and our family like look we bought this property we didn't tell them beforehand we told them after the fact after it was stable after we started getting some tenants um and they were like well you're not in real estate you don't have a history of this you don't have friends and family or background and how are you doing it right and then text after text and picture message and email after and call after call like people want to know how to do this and how we got started mm-hmm so we started in baltimore mm-hmm what year did y'all go about the ball tomorrow 2013. 2013. yeah yeah and what was your first project in baltimore how did that look yeah baltimore yeah you know baltimore you don't know what you're doing it's kind of the wire in some places there's a trigger for me but let's keep it on it though let's talk about balls like really like you you come back home yeah and now you're looking at these numbers and you're looking at these vandals you're looking at these opportunities yeah you're saying create your own opportunity how did you guys get started in baltimore yeah so the connecticut property really set that foundation for stand the opportunity right and so we got to baltimore and it said okay how do we find that same opportunity here because we're driving around and to me all i saw was opportunity and i saw you know kind of that same thing like this street called murder so i'm not touching that that's what i saw in baltimore and so um what we did was pay attention to what was happening and what was coming and so the very first property in baltimore um there was this area that was developed developing called patterson park um which probably five ten years before that was tons of vandals right um and so it was a lot of development happening and so we're seeing a lot of gentrification starting to pop off at patterson park and we also knew johns hopkins hospital was is still the largest property owner in baltimore and so they were buying up everything and so we knew that they were making plans to do something um and so we bought in the middle of those two areas right so we bought a property smack dab in the middle understanding that there's only so many properties and so the patterson park development was going to grow and push and so was johns hopkins and so it was going to hit that property at some point so we're being strategic right so that's number one number two we bought it well so we bought it from and um it was an auctioneer that was selling the property um in mcelderry park actually and um so we were selling it and that's cool but in real estate right you only get what you can ask for and so most people with the auctioneer you think you gotta buy it all cash or something fast we asked them to sell or finance it and we said we young we both we just did our first triplex like ain't nothing we can't do boy ask the question see what they say yeah and we had just done that deal with a non-profit so it set that foundation for how creative you can get with getting access to funding and money for deals and so our second property the one in baltimore we sell or finance that so breakdown seller financing for folks who don't know what that is absolutely so we said rather than paying you um whatever it was like 20 little less than 30. yeah a little less than 30 000 rather than paying that to you all at once would you be willing to hold the note would you be willing for me to pay you over time instead of paying you all up front um so we end up having a mortgage similar to what you would have with a bank but it was just the seller was the one that was the bank was the bank um and so we did um i think it was like three years um a three-year seller finance deal with them um so the we were paying them 675 a month for that three years we did we worked with a private lender so an individual who had money that was just sitting there they paid we had a down payment so they put money up towards the down payment um and then we rented that property for about 1100 a month um so that was that was the second deal we probably put maybe 10 to 15 into it bought it for about 30 10 and 15 into it so we're all in 45 and rented it for 1100 a month now fast forward um about five five six years later houses in that same neighborhood are selling for 160 170 000 wow oh that's good so how did you guys find out about john hopkins you know because i think that's one key thing that people miss out on is research and finding out what the corporations are doing so how did you guys go about finding out that john hopkins was going to go up was buying on this property in the area so for us it's um it's really important to get specific and like zero down and get very niche so baltimore is it right we focus on baltimore and we can learn as much as possible about baltimore through other developers through newspapers through tv shows news a little bit of everything and like being able to focus and find out about those things and hone in on those things and knowing that anchor institutions are real and that key developments happen and then when a key commercial development happens those residential properties around are going to benefit from it because the rising ship i mean rising tide lifts all ships we saw the opportunity immediately i'm like alright let's jump on this yeah like we always talk about following the money right so even if you don't have all the cash there's all these entities putting this money into different projects across the city the city the state everyone that put all those millions of dollars in there have skin in the game of making sure that this is successful so that's going to drive kind of that that flow right it's going to create that wave to be able to raise all those property values and start to get the interest and so even for folks that have no idea about baltimore because everyone always wants to ask about zip codes or whatever else about the city the very least you can do is read the newspaper like online just really diving into what's happening what's going on on the ground locally so that you can start seeing things like patterns wow i just saw them talking about this neighborhood you know last week now they're talking about a whole nother development happening over there well how do i dive down like how far are those in between what properties are over there so following the money that's already being spent really helps to narrow those types of things down specifically yeah the real estate section yeah right the business section not the sports section you know i mean that's all fun and dandy but that real estate section when you see that the state of maryland just put 20 million dollars into a specific area that piques your interest 30 million or there's a 100 million dollar tif a tax increment financing structure that goes into an area where they they basically make make a circle and say everybody who pays property taxes in this area those a portion of those property taxes are going to go towards this specific development um that type of stuff is public knowledge yeah so now you have your your one home you already purchased in baltimore how did you continue to build your portfolio uh most people start with one and you know you guys seem like you kind of came out really like really lucky because you didn't seem like you had any hiccups but as you started to build your business to build your portfolio let's share some of some some of the challenges that you face with building your portfolio and how you overcame those so you can continue to build out what you have now yeah absolutely i mean at first the very first deal we could go through we could spend yeah we bought the first one wrong right so not only was it on a street called murder we were like um so again you're out of college you're trying to save money right um so we had the option of doing a full warranty deed or um and that will cost another twelve hundred dollars or quick claim d and we said well let's just save the twelve hundred dollars what's the difference between the two so the difference between the two um i explain a quick claim deed as buying a house with all its baggage right so what's the baggage that is the taxes the water bill any old mortgages or liens right anything against the property so we do a quick claim deed you're buying the property and all is baggage versus a full warranty deed you're able to buy a property free of all liens and encumbrances no baggage right just the property um so we bought the property and all its baggage and in those bags was an 8 000 water bill and tax bill so we didn't swing a hammer before we had to write a check and listen the lender who provided us the construction loan they weren't going to give us anything until those things were cleared because the lender wanted to be in first position correct yeah yeah so that i mean so we could go all day long we're so not the people to sit here and act like we went through like we are valedictorians of school partnerships we're walking through the auctioneers giving us all the terms and so all right cool cool we close on it we acquire get the private lender the seller financing terms work we open up the sink in in in the kitchen and like the plumbing's loose like plumbing ain't supposed to be loose is it tied in behind the wall turns out they just stuck some plumbing in there and made it look like it was cool no plumbing running yeah we got stories for days and this is your property yes second property second one the difference between us and anybody else is that we didn't stop jim um keep going period that's it like there's that's the only that's why we didn't have a trust fund we didn't have an uncle that had been in real estate we didn't have you know we just had i think at the beginning um the we were kind of too young and naive to be scared to start um so we didn't deal with that fear and the second thing i think that was really big for us is that we kept we kept things tight to the chest like we didn't go and tell everybody everything that we were doing until we had too much for anybody tell us anything right that was really the difference because for me um and khalil like we didn't need any help to be scared you don't need a house to have fear going through the process um and so we were able to lean on each other to be able to navigate that or sometimes he would be on and i'd be off and i'd be on and he'd be off so we had the benefit of balancing between each other um but but we we just kept going man bad boy's moving science that's the key you got to keep things close to your vest because your family and friends don't know a damn thing no and they will tell you everything under the blue sun and they'd be wrong as hell no and and sometimes out of their own like it's hard to explain to somebody that you're doing a hundred and thirty thousand dollar renovation when they make 45 000 a year yeah that's a different conversation so sometimes you can't even fought them for not being able to wrap their heads around it because the things that a lot of people are doing right now are just so big compared to anything that our parents or their parents really understood and so now they just look at us and kind of laugh and like you know what they do but yeah like you gotta you gotta keep that to your chest and make sure you're surrounding yourself with people who are either headed in the direction that you're trying to go or have been where you're trying to get to like that's it you got to check yourself birds of a feather flock together right exactly yeah so i mean you know he said you went from bandos to blocks yes so now we're not talking about just one single property how did you guys start building out blocks like what made you start saying okay i'm focusing on this area and we're going to start developing our own community so that way we can it's this is no longer murder street this is happy street now yeah absolutely um the first time was actually a an accident to be completely honest so we were doing marketing so we were looking for for new deals and new properties we knew of again kind of following the money we knew of some projects that were coming along and some other developers that were doing some great work and we found one property on a street um that was nearby but as we were analyzing the deal we looked across the street and the whole street was empty like and half the street we was on we're empty and we're like we didn't appraiser told us the appraiser was like i mean it's hard to appraise when you got all these other vacants yeah all around so it was like if we're gonna do this one we gotta do them all and that's how that started so we took that one property and then started to marketing to other owners because a lot of the properties and this is something people don't realize about baltimore a lot of the vacant properties are actually not city owned they're owned by individuals they're owned by people who bought those houses thinking they could get something really cheap and just weren't held accountable to actually getting it done about 90 of them yeah so how did you guys go about finding who's the owner of these properties it's a public record so the land records shows you who the owner is they give you the address where the owner currently lives or receives mail yeah um and if that information is hard to find somebody's paying the property taxes somebody's paying the water bill you can always look at those records to find those two yeah and we're very old school we still send letters our letters are pretty they when we were doing them ourselves and everything old school taxes old school taxes we were in cold calling nobody so we um but yeah we sent letters and reached out to them they would call us back and because we were so targeted and knew exactly what we're looking for we get a lot of really good responses on on when we're actually doing marketing because we're not out here just trying to do everything everywhere but really intentional about what it is we're trying to accomplish say that again yeah intentionality like i think sometimes maybe because of the internet and social media or whatever it's it's a lot of just kind of jumping around to whatever is cute at the time um but we like to do things with purpose and so we spend a lot of time if if we're going to do it's like a marketing push or a campaign we know what our goals are like what we're trying to accomplish with these properties so that even when we're sending the letters down it's speaking to the owners right we know what your situation is because you know we targeting this one block i know what's wrong with this block yeah so let us help you you know let us help you get it done and just like our very first one we we sit on the block and we'll talk to the neighbors and we'll understand what's going on in the area and get to know people and that's really how you find not only people who will help you out and hey i just saw somebody walk into your property is that cool yeah that's a plumber but but you'll also find people who care right and want to help you and and do things politically um uh uh and and and otherwise to make sure that you're doing well um and you got all the tools you need to be as successful as possible yeah um man i i'm liking this conversation so far and i think the common theme from a lot of our successful investors is they're very everyone's very intentional mm-hmm and yeah yeah you're hyper focused on what you need to be focused on you're not scattered all over the place and then another thing is every all the successful investors are doing recon in these areas they're speaking to the neighbors they're speaking they're going to the bodegas you're going you're meeting the people you're in the barber shops you're doing everything that you need to do in those areas to learn the pulse of that area whereas a lot of people just because of the internet they just see things like oh i want to go there right i want to go there and they don't really know what the hell they doing they don't know the post or the community they don't know anything and they wind up losing absolutely you know and then they get that bad experience and then they say you shouldn't invest in real estate right right and the thing about baltimore too another thing that we're really big on is going to the community association meetings so like going to where the people who are making the rule making the decisions who are pulling the strings for the city about um if we're trying to do you know a city-owned project or whatever they're going to go to the community association to sign off well we already have relationships there right and so being able to build those relationships here understand what the um goals of the community are and so for us we're going into these neighborhoods and spaces looking to add value there right we can't do that from you know a thousand foot view we have to know what the people next door want right if we want to to grow and transform baltimore in a way that's different than oakland or harlem or brooklyn or some other places where people felt dc felt like things just happened and they had no say in it for us to not be part of that um we have to be on the ground and next to the people who have been there and always been there so that we're also fulfilling their mission for their own neighborhoods and communities so that we can have development without displacement we can be able to you know develop that without that placement that's that's a development without displacement that's important like we can we're buying vacant houses and turning them into homes right we don't have to push everybody out and and it's so crazy to me because you know gentrification by definition is raising the values of a community to middle class standards so we can't argue all day about middle what middle class actually means right but at the end of the day auntie mabel up the street likes to walk her dog right she wants to be able to get fresh food on the corner and she wants to you know be able to do whatever as well like you don't have to leave there we shouldn't have to leave our communities um and be there when they have their challenges and not be there when you know we can have they become beautiful yeah when they're beautiful yeah and so that's part of what we're trying to do is bring and add more life but not take out and remove the life that's already there that's dope i love that that's though you can top that up for that one man so with your homes that you're that you're developing and you guys are building out these communities so i imagine that you have programs that you're using to help these help help the community as far as renting back from you and you know how how did you go about creating those type of relationships and holding these properties and making sure that you're not displacing people that you're beautifying the community you are gentrifying the community but you're not displacing them yeah that's multi-fold there's so many like we house kids who are aging out of foster care in our homes well we've helped our tenants um edit resumes and keep custody of their kids right so it's part of that like as a landlord being able to do more and add more value to our tenants um but also kind of working within the community association like what is it that you need like how do we help bring in additional resources being able to close bin doing this for a really long time we work with some affordable housing nonprofits so that we can work alongside them bring the expertise and understand how to actually do the homes and they help make sure that the houses are permanently affordable in the same neighborhoods where we're doing market rate housing so you have that diversity of housing stock and incomes and so as we're you know we might be flipping a house there's always that home there for i'm able if she needs it right and so being able to balance all that out there's an income restriction that disallows anybody who makes a certain income to live in that house the houses are selling for um you know 33 percent less than what the market is which is fantastic because it allows for that person to truly afford a permanently affordable house and because we we develop houses in a way that makes sure that the the uh the house that's a market rate is um seamless and extremely similar to the house that's a permanently affordable rate you can't tell we put islands in our permanently affordable housing we do resets lights and not permanently affordable housing they're really beautiful in products people want to live there and they want to take care of it right yeah they're not going to turn it back into a band though right yeah and they can be homeowners and these houses they're buying these houses so then you're you're you're going from being a tenant to being a homeowner as well which shifts kind of that's a mindset shift you might be the first person your whole family just ever owned a house and so that is is also a piece because homeownership is a cornerstone to being able to feel that well and then we also share um information with the community association about like the homestead tax credit yeah that keeps your property taxes low and then phases it in so that you're not all of a sudden hit with a developer like us coming in doing a bunch of houses your property taxes shoot up immediately instead it phases in over 10 10 years yeah um the renter's tax credit there's all kind of different programs tax credits yeah so the state of maryland has a renter's tax credit the idea is that a renter part of their rent is going towards the property taxes for the for the owner um so that's how it's justified but the renter's tax rate is a check from the state it's between a thousand and fifteen hundred dollars um and it's just it's written out to the tenant so that the tenant can afford to live right in their home yeah so if the property value is increasing and then the taxes are increasing they're assuming that the home the landlord is also increasing your rent and so they're able to offset the rent increase through the the rentals you have to apply for that the landlord or the tenant that's the tenant the tenant has to apply which is part of the challenge of you know getting people into doing that right so making sure that um the community association knows so that the people in the community know and that information is disseminated to everybody who needs it man that's interesting yeah maryland the state of maryland and the home has to be at a certain price point what is tax credit like what are some of the qualifications no no no so it's it's really just is as long as um uh the renter kind of shows that they are uh income restricted and they need the help that's the only real criteria of course there's documents and paperwork and things that they have to fill out in the process mostly paperwork yeah and so that's when the challenge comes in because they don't want to do the paperwork so you as a landlord will probably have to step in hold their hand a little bit tell them everything's gonna be okay let them know it's gonna be all right yeah let's get this paperwork done so you can you can get this benefit how long does it take for you know because you know dealing with the government always some time restraints right yeah how long does it take for this to kick in so i've heard what a month or two yeah it's not terribly long i think the biggest thing because they have a pretty strong pot of money because it's not a whole lot of people doing it so it's not usually a long waiting period it's really just the math of how they calculate how much cash you get but they they do it every single year the state of maryland is a very wealthy state it's one of the top yeah look um i like that i've never heard that before um so everybody who's watching us everybody here if you're looking to invest in maryland baltimore they just start looking into these different programs and you know a couple of our investors are heavy with with them especially with your rentals using all these programs because people only think section 8 section 8 but there's so many different programs yeah in baltimore like what same name something else that that might be an interesting oil so um b i always get it mixed up bhrp or brhp i get the the letters mixed up all the time um brhp um that's a baltimore regional housing partnership is another organization in baltimore that's similar to section 8 in that they provide vouchers usually it's above market but some of the differences are that the the tenant actually has an assigned worker like a signed manager case manager who will come to the house and like check things out and you know they are making sure that your house isn't is in good standing they're making sure that the tenant has the resources to find the jobs and keep jobs and they're kind of balancing based on the market rate and how much the tenant's making how you know how much they're subsidizing um but that's one of like personally that's one of my favorite programs because it is seamless and you still get it on the first of the month but there's more resources and support for the tenant um and then you have saint ambrose is a great program it's a non-profit in baltimore that um basically provides tenants and and and uh funding for tenants for landlords and owners who want a house hack so if you have an extra room or an extra um uh apartment or something um you can get a tenant subsidize it and uh and saint ambrose will provide the funding right hold on so they they're promoting house hacking right yeah indirectly yeah exactly right this yeah and then you don't even have to have a separate unit right so you cannot be in a single family home and sometimes people feel like they can't house hack that right you need multiple units well with st ambrose you can rent a room through st ambrose to an individual person and they have a voucher to help support that oh that's amazing that's a gem right there yeah house hacking through programs i was talking through programs gotta love it's real gotta love maryland i love this so let's talk about you you guys own blocks about how many how many properties you own right now and um are you cash flowing and of course you're buying a whole so i can imagine you're not you guys aren't in this to flip you're here to create community and hold onto these properties yeah so we have a mixture so one of the things that is we've found especially as we tapped into what the communities want in the city wants is that they want to build home ownership they have plenty of renters right and so they want to build home ownership to help create that wealth make sure people have ownership in what's happening in their neighborhoods you tend to see when people own that they place a little bit more value to what's going on so we've been kind of balancing between our rental portfolio which we had you know well over 20 units by the time we were 30 um but the but some of the block projects has been how do we transfer these vacant houses into homes and create homeowners in the process um and so um right now i mean we have what i mean six or seven active renovation projects like right this moment um these are for sale flips yeah these are for sale um we have three that are about to close in the next like yeah four weeks uh we've been in control of because it's not necessarily how much you own right it's what you're in control of um and we all know that through different entities and and things like that but hundreds of different properties yeah um that we've been in control of over the years so just to give a little timeline we we started with the rentals we built our rental portfolio so that back in 2015-16 we both left our permanent jobs um and and you know we had enough money from our rental incomes to sustain our life and then we decided to flip we could have definitely sat on those rentals paid them off kept you know snowballing by another rental every year and then completely fine um but we wanted to flip so we started doing that and then we scaled that business up um so that we have multiple flips that are in the different processes and different phases currently yeah um to the point where uh we looked at our construction company our a team right our primary gc um he had an event where one of his partners exited he was looking for a partner so we acquired it um so we recently acquired a construction company which is great and increased our standing and increased our bandwidth and capacity and controlled our cost vertically integrated um prices got too high we had to make sure we controlled yeah yeah yeah price is up yeah and it was kind of stuck you know how we doing here so let's speak about bandwidth right yeah you guys got a new project that you're working on right so the floor is yours with this one because this is something special on the screen i see something yeah so it's on the screen right now let's talk about your new baby yeah it is my new baby this one's fun so um the rfe came out so for those who don't know rfp is a request for proposals so a city or a private person has some land and they say i don't know what to to do with it give me a proposal multiple people um whoever has the best they they they win um so we submitted a bunch of people did and we we won right so we're going to be building about 50 houses brand new town houses right by johns hopkins hospital wow that's amazing so it's on the screen right now so tell us about what we're looking at on the screen right now because this is this look this rendering looks beautiful thank you appreciate it yes our architect is great um this is in an area called eager park it's a brand new area in baltimore city like i said right by johns hopkins hospital unfortunately back in early 2000s a lot of people were displaced out of this area and eminent domain allowed the city to capture a lot of houses they were bandos they were they were vacants they were boarded um now people got paid to leave right and and they happily received their check and what's eminent domain for the people who don't know what that is eminent domain is basically when um a property is uh so um dis in invested that um the city has to take over right okay well the city decided they had something better to do with that space right so between those two yeah they basically come and say look we're going to commandeer your and get the hell out of the basement we're taking it yeah yeah or we're taking it or we're taking it yeah exactly yeah they're taking it out because they're doing that in parts of parts of atlanta yeah and they start expanding highways they will just literally they're going to take your home yep and um that happens often so now what happened from there yeah so from there um this 88 acre area was parceled off and then sold to different folks this was beginning in call it 2005 until now so now there's a new hotel there there's a bunch of new food retail in the area there's a beautiful books there's a starbucks there's a brand new beautiful school state of the art it was the first school built in uh in this area in the last 25 years or so um there's a brand new park with outdoor workout equipment with um playground and all that kind of stuff but it's it's it's a beautiful area it does have a difficult history so part of the rfp was okay we need people who can bring back displaced folks folks who left and want to come back we have to provide housing for them so affordable housing was part of it economic inclusion was part of it so providing opportunities to businesses that are minority owned women owned local businesses and a whole bunch of different things but we put the team together um shout out to the other uh small minority owned developer mason dixon in properties um and uh and we have a very strong team and we won but the best part about this and um uh the best part about this for me i should say is that my my former employer who i left a while ago um competed for this [Applause] sometimes you project so hard it's okay just to be a little petty that's okay over here so you guys got all this going on i think we want to start with okay you started with one property you started going into buying blocks you know what were some like what are some small simple steps like this is this is huge like you you've gotten here let's talk about let's talk to someone that is looking to just develop a block tell them how you went about it like financing just some something some quick things and where they need to go to find this government funding and get all these resources so that way that most of us think we just got to do all these things out of pocket and talking to you all you're like oh no i'm using the resources that that are that are available to me so i can you know leverage those to congrat to create my um portfolio so the first thing because everyone wants to buy the block right that's a pretty dope hashtag not everybody really knows and understand the work that becomes that goes behind being able to say like i did that right and so for me it's really important to set that stage because it i'm very glad that we started with you know kind of building up as we got there because buying a block that means that there is a block of properties that have been disinvested or sitting vacant for you to buy and renovate and develop this block especially for not only rental housing but also in particular being able to flip the property you're not just selling the house you're selling the entire neighborhood right then when you think about trying to finance the properties and doing things like that your appraisals the evaluations and stuff you're creating the market you're creating your own comps like that's work so when we talk about that as developers we talk about being the first loser because that's the truth of the matter when you're starting on that block you're starting from behind because you're creating the wave that you're going to get to at the end and so i'm big on i'm so big on setting that foundation like you're not going to get the bs for me you have to understand that they're going into that project you have to know that um that that's hard to do and um and so okay so get over there so how do you find it okay i'm gonna get off of that no i like that you stayed there because now let's talk about it so let's say you bought your first block you got the first property how did you work how are you able to develop this property set the comps to get the next one and the next one and the next one yeah like what did you do to ensure that you can continue to bring these values up because that is what buying the block is about that's what it's all about so the first one we had to set the stage to be able to really tell our story like you have to control that narrative and be very intentional about who your listening agent is do they do they bite into your entire vision and then really being able to market the entire neighborhood we started to work with the community associations and other developers in the area about what they were doing because now your success is my success so how do i help you get your project that you said you were going to start six months ago off the ground right because we all need to be able to do this together so it's a lot of networking you get from um you get out of you know really analyzing this individual deal to really working through like how do i underwrite this entire neighborhood like this it's a different conversation um and then you bring in you know um uh city councilman and all this political stuff comes in as well you see it's it's different than just i'm gonna do the 65 or 70 rule at this point it doesn't work but for your first project you have to really budget that that's not going to sell as quickly as your other ones if you're going to um if you're trying to flip or even if you're doing rentals chances are you're funding with probably short-term capital money that you're kind of coming in you've got a construction loan or something you have to pay those off faster typically and so you have to build into your budget the fact that you're probably gonna need to sit on this one a little bit longer than the others um and um you have to have you're gonna you need to have that plan you gotta have money this isn't like the no money that there's death you're not there yet if that's the conversation you're trying to have um but but yes you want to get you want to have everything set up where if you're going to work with short-term capital you have more patient capital or money that can 15 30 year refinance money that you have ready to go if you're trying to keep keep the property as a as a rental and whoever you're working with um we always talk about you want to build your well before you're thirsty so you're building those relationships with those lenders early on so that they even they're not paying as much attention to the numbers of the properties because they might be a little bit janky when you're starting right yeah but they know and understand you right they're investing in you and your vision and what you're able to do more so than the the numbers on the first few deals because that can be that can be hard so you have to have like a bigger game and you know a larger vision to really be able to do it especially in spaces like baltimore so you know baltimore is one of those cities that i personally feel gets redline a lot oh absolutely it's the birthplace of red lights yeah it's definitely the birthplace of yeah right so now how are you guys getting the funding and the financing for a project of this scale when it's the birthplace of redlining yeah that's those relationships the relationships right now we're fortunate in this project where a lot of the other developments have already happened right the comps are stronger yep at this point um like here i said there's a starbucks we got the walgreens there's a hotel there um there's a lot of different amenities in the area so the market is there at this point but when you're first starting out buying a block i mean it's it's tough yeah and what we learned that um that had we gone back in time for our first block and and done it again over um you got to get the city involved as quickly as possible department of housing um the housing authority whomever has cash because it's a mindset shift every city wants to increase the population um they want to provide housing they want to provide jobs right so um when you think about it okay if the city wants to provide housing they want to incentivize that and they will pay dollars through grants in order to help people build houses in areas that otherwise are disinvested so when you have the idea and the plan and the numbers don't quite work you reach out to the city look this is the pro forma the financial model the capital stack this is the gap yeah this is what i need you mr or mrs mayer to participate in yeah so let me let's talk about capital stock right we on the same page break down what is a capital stack and how do you go about on the capital scott yeah yeah yep so the capital stack is essentially a stack of money right it's it's how the project is funded um so you got your debt at you know somewhere between 60 to 80 loan to value typically it's 65 you got your equity on the money that you're putting in or your investors are putting in and then you have like tax credits you can have grants you can have um uh a few other other items but that's the capital stack it's the stack of money that allows you to do a development deal whether it's one house or it's 50 houses i like that that was a good breakdown that was a gem for those because i know a lot of people when they head cap they don't know what the hell right that means so you know you got to break that down for that yeah so when you guys first started off like you know i always like to bring it back down to step one because everybody always looks at you know don't look at someone's chapter 20 when you're on chapter one right absolutely so let's just say they want to buy one property or develop one property they could still go to um go and find these programs that will help them develop one property because what the key word here and what i'm starting to find is you're not talking about what you're doing for yourself so if you're like i'm going to develop this property because i want it to be affordable housing for this area right so it's going to help this community and if i can do this property and set the compton i can buy this property in that one so how do you kind of create that package and um like you said just google go to different places but you're finding the money what i see the key sense is you're using other people's money but you're not using lender's money you are going for the government grants and programs and you're basically changing communities yeah and there's something really specific that you said i want to touch on it really quickly and the next one and the next one and then do more right you have to be able to articulate the vision at the end of the day um yes 40 000 into a house from from a grant is great um everybody has to start with one house but they also have to know what that vision is that that bigger vision they want to put they want to put four hundred thousand dollars into ten houses right right they don't wanna just do one one house and then you leave and back out and and that's it yeah um so being able to say yes we're doing one now because we have to get started but this one's vacant this one's vacant i've contacted the owner here under contract we have everything ready to to to rock and roll let's do this first one year year one and then let's scale up very quickly very aggressively so that you guys can see what we can do that's important for people who are looking to uh leverage those funds yeah and well close especially with in baltimore specifically having kind of that vision and a bigger package is really how you get most of that money right in baltimore it's so easy to get money to buy a property that you're going to live in they give in they just like throwing money at that which is amazing but as an investor if you don't have like a package it's harder to get the grant funds until you're in like a bigger space until you're doing a block or things like that um but in the meantime it's about being creative with your funding sources so um having the audacity to ask an auctioneer to seller finance right talking about having the audacity to act you asked me to sell her i'm an auction right yeah right yeah having the audacity to ask and being okay with hearing no because a no now isn't a no forever especially in this in this market and then this is just real estate yeah don't get fat period at all um and so um and so be having that audacity to ask being creative understanding like checking your own mindset around money like they literally print that 24 hours a day seven days a week and in this past year they had that on overdrive right everybody had to get money so so understanding kind of shifting that mindset because the money is out there it's just really about you putting yourself in a position to to get a hold of that because you probably know somebody that has a bunch of money just sitting in a bank account somewhere earning nothing on it well maybe you can put that money to work a little bit better and be able to leverage that to do your own portfolio so we've always been really creative with how we've structured our rental property to be able to roll those funds or whatever we want to do into other projects that we're doing if we're using hard money or non-profits or whatever else to do more everything's a tool yeah everything yeah everything well how about this you said there was there has to be a package right yeah you know from a realtor standpoint i pretty much know what should be in the package but i want you to share with someone that listen i want to buy this house and i know it's an area that's a little challenging what are three things i need to put in my package before i start googling the government what government funding and funding for my community what are three main things i need to know so i can also create my own package so i can start leveraging these funds the first one is the finances period yes you got to have your numbers yeah i mean that's just that's that's where you where you can ask for the gap yeah um whether that's ten thousand or a hundred thousand that's where you can um uh know what your construction costs are or your closing costs your acquisition all the different expenses that go through your carry costs which a lot of people miss yeah um you got to have those fine financials yeah in that package yeah the numbers are important and then you got to be able to show your capacity to actually do the job so what's your experience who's on your team what's your construction company doing what have they done what have you done so haven't shown receipts where the give me the receipts bro let me know that if i'm giving you this money that you know what to do with it right um and so that's going to be really big as as number two and then the third is is the vision you got to be able to tell the story you have to be able to connect with the person making the decisions and and controlling the purse strings that they're investing in something that's larger so that they have a story to tell to whoever their their accountant is you got to give them the language to sell it man lots of gems in this episode from bandeau to blocks man a lot of information um so ransom gems we like to always end with uh a rant no i do that well so give us a rant what's pissing you off right now we want to know all right so i'm gonna take it back because y'all mentioned the wire and so i said okay i'm mad i'm sorry look at this on the outside that's what she [Applause] from omar is you know what that put such a um like the wire in baltimore became synonymous right and it was a great show but it's terrible branding for the city like it's terrible branding and the truth of the matter is um you know baltimore has bandos and they have multi-million dollar houses and they don't ain't but two three miles apart right and so when we talk about baltimore we have to be very careful about um labeling it with one one broad brush understanding that there is a lot and even the things that you think about with baltimore with crime or whatever else a lot of times if you really narrow that down to where a lot of that stuff's happening you might pick four or five six corners and that's it right and so we have like i'm very like sensitive on that specifically because it just it paints one broad brush there's so much going on in baltimore we well we live i'm gonna say this but we are you know in a space where we got four floors that all look at water and we're in a beautiful elevator inside girls what's the name of that place you guys got um it's the outdoor place you can go eat the food and um come on that's what i want the seafood all the seafood that not the wharf though not the wood at the not a big deal to harbor but let me tell you for us out of town it's a big deal yeah and you can go out there you can eat and it's so beautiful there and it's so gorgeous so i can understand your frustrations there's a lot of beautiful places we got the best food yeah we have amazing culture i ain't going to hold you up on the field next level and we have so many new restaurants like there's a lot of development there's a lot of money hitting the street in baltimore right now there's so much happening and so like you know we got to see that we got to see opportunity in our neighborhood so to rent and stop calling the white house can i get a rent i get one right yo when people come in they buy a house and they don't know what they're doing yeah they buy a band or they want these dollar houses they heard about some ancient program from once upon a time you got it okay you said that like a like it was like a quick little clip but you have to kind of expand about that just a little bit just a little bit about these dollar houses how it works if they're still available and i understand your rent but you got to say this is my rent but this is the solution yes all right give me the rent in the gym on that yeah yeah yeah so the randa gym all right so the dollar house program back in the 80s 1980s um they had a program you can buy a dollar house um uh and then you fix it up right um the caveats to that the uh the city had a bunch of money they could lend it out right so you got low interest loans to help fix it out these dollar houses were in very specific areas they weren't the whole city um the program is no longer here um it's just not and and in our opinion it's probably not going to come back on whether that's good or bad so like when people come into baltimore they find for affordable vacant houses that they want to buy and they want to fix up and they want to rent and sell um but then they get stuck that's my rent right so my my gym on that is like find some mentors run the numbers know the comps drive the area understand the area can you be successful in baltimore absolutely absolutely right we have been we have mentioned yeah we have tons of people who we know who are very successful in scaling and growing um specifically in the area but like take the time to make sure that you uh you do it the right way right that's the gym that's the job do your due diligence right and your research all five thousand dollar houses ain't good deals yeah everything that glitters ain't gold right that's what they say right that's what they said that's what they do you got a gym for us because you gave us some rent i have i'm great at rants no the the gem i think i i mean i think the gem really is like we we really have we're in a time where we have the opportunity and the ability to take control of what's happening in our neighborhoods and we just it's time to do it it's time to do it i love that gentle fire on hood all right do we have any questions anyone have any questions for us stay quiet okay they're quiet they cry so look this was a a great episode um thank you guys for coming all the way from all the way down here to wakanda right yeah um you know showing us our project because this is something that you guys haven't told anyone in um internet world yet so thank you for dropping the exclusive here on the ransom gem show we definitely appreciate you guys um telling people how to find you how to hit you guys up if they want to join on your programs let them know yeah you can find us at charmcitybuyerseverywhere so on instagram and twitter and youtube and you can check us out at charmcitybuyers.com we have a really dope completely free class all about what's happening in baltimore and why people all over the country need to be investing in baltimore right alongside us so you can find that at shawncitybuyers.com i love that thank you i love it so look man thank you guys again matt garland here in mls number five eight seven zero zero better known as mg the mortgage guy and i am kiana watson broker extraordinaire license number three one seven five seven six thank you guys for tuning in to the rants and jim show peace [Music] you

Channel: Earn Your Leisure

Views: 11,703

Rating: 4.9630198 out of 5

Keywords: earn your leisure, business, finance, sports, entertainment

Id: MlsIN60JXlI

Length: 60min 22sec (3622 seconds)

Published: Wed Aug 04 2021