How to Scale Affordable Housing Development as a Small Team

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2:39Ian Dunlap:so you said last time like in order for a developer to really get into the game most time you have to like work under like a jv with an established developer right absolutely um so at what point can you branch out on your own and not have to ride with another person in in the car

2:59Kashif Ansari:uh from a tax credit type perspective so community development let's break out community development and commercial real estate commercial real estate if you have money you can go tomorrow you know like a billionaire can literally go and hire development consultants and just put up a development if you wanted to so you can do that with no problem community development tax credit i wouldn't recommend it because the returns are probably not going to be what you want them to be and they don't have the same vested interest and you don't know what's going on you probably can lose your money but you can do it from a community development perspective when you're trying to develop these communities and tax credit deals and affordable housing um a heck is the governing council of all tax credit equity investors they set a standard that was a million dollars of liquidity and five million in net worth so that's really the start and the finish again if you do what to develop to to to be able to get the tax credit equity investor to allow you to be the

3:58Ian Dunlap:developer you have to have a million dollars in liquid and five million that's pretty much the

4:03Kashif Ansari:the standard but as deals get larger if you're doing a 50 plus million dollar deal they're gonna want to see a little bit more and typically they want to see the experience but like that is if there was a benchmark that would be it and most of the time when we start now a million dollars of cash and or five million in net worth is not really there for folks so you got a jv and partner like we explained in the last episode to be able to get to that point so now like i'm there i'm doing like harvard district it's on my own i'm bringing in a good friend of mine who's been doing my development consultant michael mem and we're just gonna partner on it i i stand on my own and everything but he's a brother that i really trust and respect so it's like no let's just do this together so it's not like i needed him at all and frankly he doesn't need me but it makes sense for us to like share divide and conquer that to answer your question earlier about like how do you know when it's too much um right now i mean it's only i just hired my first person a couple months ago it's been me this whole time full time that's why i don't put out this content i'll just be working literally like i'm a staff of i've been a staff of one i had people assisting and even the person that i hired she's been helping for like two two years or so but full time it's just me and one other person right now i didn't know that yeah wow i am i i am primarily doing the work it's not like i'm having team members do it like i'm at these community meetings i'm meeting with the folks i'm putting together the financial models i'm looking at the construction plans like

5:34Ian Dunlap:i'm doing it when you when you broke down the financial model by square foot the last time we spoke i was i mean that blew me away and so i'm now looking at you going from 140 unit development to now in Birmingham where we got 1100 mixed unit yeah talk about scaling that what that looks like for you since you're I mean you're talking about just being the sole person doing for sure so

5:56Kashif Ansari:partnerships that's another key um one I knew I felt the market was changing I didn't know it would be this stark in terms of the interest rates but I knew like we've been on the wave like 08 hit boom really from 2010 to like 21 22 we that was a run that real estate hasn't seen real estate is cyclical it goes up and it goes down it's literally like this all the time so i'm like yo it's time that it's gonna go down so i intentionally didn't do any new developments i was just working on the construction of 1402 1887 and montella so i have right now three projects little around little over 300 units under construction right now in wisconsin so i was like let me just focus on that but simultaneously i was looking for how do i plan for the future where my time right now may not yield this return but my time later will so i started to reach out to i built a partnership with integral egbert and their team and i started looking at master plan developments.

7:01Kashif Ansari:So that's what I was talking about before. I, I didn't really get hit by the recession much because all of my stuff was already kind of out the ground. It's just being built. All my financing is in order. I put a pause on anything new, but as I was pausing, I was working on this larger term stuff. So I ended up getting 1100 units awarded that we're developing with Smithfield court. That's in Birmingham. And we just received the$50 million grant on that. And I also got about 900 units awarded. Thank you. Thank you. Yeah. So that's about three, 300 with the market race, about 350 million in just 1100.

7:38Kashif Ansari:And then I have 900 units at Tom Brown in Birmingham that I'm developing as well. The way you can do that is like, I looked at capacity. We're doing the$50 million broken out into seven deals. I'm doing a deal a year for the next seven years. and when I talked about the funding gaps right okay you have the the loan you have the tax credit equity but then you got to fill the rest the 50 million dollars is the gap filler for the rest so I have a pre pre-funded seven deal run based on 50 million dollars of a grant that was awarded from the federal government so for me that was capacity like I don't need to do seven eight deals right now because I'm a small team but if I could build seven eight nine ten deals on my pipeline over however much time that was the key so I'm doing seven mark seven affordable deals for Birmingham and Smithfield with two market rate deals and then the other one I have about seven phases so every year I'm gonna do really two deals a year in Birmingham so that secretary fudges who

8:44Ian Dunlap:the person you were I mean if people don't know she's the head of she is so how did you develop a relationship with her? Were you on her radar? Did somebody introduce you? Because relationships are important. We always talk about that. When did that relationship develop?

8:58Kashif Ansari:You know, what's interesting, I knew people around, but I didn't meet her until the day she brought the award. I didn't meet her until that day. She brought the$50 million check and we met then. Prior to that, who does know her? Randall Woodfin, Mayor Woodfin out of Birmingham, him, he knows it, you know, so it's relationships. Like you said, if the mayor knows her and the councilwoman knows her and we are all aligned in this development together, I mean, this is what we are pushing for at that point. I didn't need to know her because they knew her, you know, and I will say we put together one of the best proposals they've probably ever seen.

9:38Kashif Ansari:It's super unique to get that choice neighborhood grant was, it's been around for some years. It really was hope six first so egbert is the pioneer of hope six hud asked him consulting on a model etc now we have this it's broken out into three tiers housing neighborhood and people those three tiers are super important to hud because it's not just about housing like you were saying earlier like we need food we need shelter we're doing we're moving a library putting that into the development we are also doing a social innovation campus that the city is going to run and govern in our senior building that's 101 units that we just applied for tax credits on the lower level is an early child here at the education center so we have 101 seniors that will now volunteer with the kids so the kids will be teaching the seniors and the seniors to be teaching the kids like they're models within models it's not about the buildings it's about you know the broader play but hud realized that the applicant was the housing authority of birmingham district 100 % black led.

10:40Kashif Ansari:The co-applicant is the city of Birmingham 100 % black led. The housing leads is a partnership between rural enterprises and the integral group 100 % black led and owned. The Scent Project is running the people side 100 % black led which is a subsidiary of integral and the neighborhood again is the city of Birmingham. First time we've ever seen one of these really really large scale developments be 100 % black which I think tells a story so that might have been why Secretary Fletcher.

11:08Ian Dunlap:As you were saying, I'm thinking a common thing. We saw this happen in Milwaukee, and we've seen it happen in Birmingham. We had the opportunity to sit down with Mayo. And he was telling us, we were in Atlanta, but we flew over. And he was like, look, everything that they have, we can have here. 100%. And we can control it. Hey, Ernest, what's up? One thing we always say on this show is you've got to be intentional with your money. Because it's not just about how much you make. It's about how you manage what you spend. Exactly. That's why tools like Klana are interesting. It gives you flexibility when you're making purchases.

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