The Chris Voss Show - The Chris Voss Show 198 Eddie Lorin, CEO of Strategic Realty Holdings, LLC.

Episode Date: May 5, 2018

Eddie Lorin, CEO of Strategic Realty Holdings, LLC.

Hi, this is Voss here from thechrisvossshow.com, thechrisvossshow.com. Hey, we're coming here with another podcast. We certainly appreciate you guys tuning in as our audience. Thanks as always for showing up, especially those of you who listen to the end when the show usually gets the best. Be sure to refer the show to your friends, neighbors, relatives, dogs, cats, pool boys, mistresses, you know, get everybody involved in the show. Tell them to go to Google Play, iTunes, go to YouTube.com,

Forge has Chris Voss, and hit the bell notification so you get all the notifications of all the new shows. Be sure, of course, to check out all the great reviews. We soon will have the ATTS9 Galaxy Samsung up there. Of course, we have the new puppy videos, the new Siberian Husky. I want to welcome to the show a wonderful guest, and as always, we have the best guest. His name is Eddie Loren. He is the founder of Strategic Realty Holdings and Impact Housing, REIT, and he's the co-founder of HAPI Foundation.

H-A-P-I Foundation. Over the past 30 years, Eddie Lauren has successfully purchased and transformed $3 billion worth of multifamily real estate, and it amounts to more than 180 thriving communities that cover approximately 40,000 apartment units throughout the United States. And he's going to talk to us about the steps and things that he did to become successful and possibly how you can do it as well. Welcome to the show, Eddie. Thanks for having me. Pleasure to be here. Thanks for coming. So give us some of your plugs, some websites that people can check

you out on, look you up and understand more about you? Well, our latest launch of a venture is www.impacthousing.com. It's an opportunity for anyone and everyone through the crowd to invest directly in institutional real estate with us and at the same time get a triple bottom line. The first bottom line is financial. Of course, we provide very solid returns. Second bottom line is financial. Of course, we provide very solid returns. Second bottom line is environmental. We save water and we save electricity and we do a lot of great things for the environment. And the third thing is a social return.

We're trying to help solve the housing crisis in America, one property, one apartment at a time, where we lease to only people that make 80% of the area median income. So it's affordable as well as we provide health and wellness programming through our nonprofit, Happy. And we have on-site gardens and various opportunities for people to learn about their health, eat better, and have a sense of community, and we build community through health. That's interesting you guys have the thing,

because I've known a lot of real estate investors over the years, both commercial and residential. And it sounds like you guys have really kind of taken that level of community and focused that onto what you're doing. I would imagine doing something like that, certainly a much happier community that surrounds rental properties and renters makes for a better renter, I guess. A happy resident stays, pays, and refers their friends. That's our motto.

If you don't have happy residents, a lot of people are in this business. They're all about the money. Yeah. Money's important. We've got to be able to provide a good, clean, safe house for people. But more important, we need to make sure that we realize these are people under our roofs. And if we create a sense of community, they really are happier. Everybody deserves a good, clean place to live.

So, you know, we found that thriving communities are better and easier to manage and we get better returns as a result of their happiness. And it probably helps them keep from, I forget the word, but when a community cycles in through, you know, with age and the homes get older and sometimes a different type of renters come in and of course the homes are older so they can't support a higher income and sometimes they become communities that become almost ghetto like because they go through a degradation of just age and people and affordability and stuff like that. And then at that point, you know, you end up with higher crime rates and all that sort of good stuff. So it sounds like what you guys have done. It's called neglect. Yeah.

Yeah. stuff so it sounds like what you guys call them neglect yeah yeah and so it sounds like what you guys have done is what a lot of brands are doing now is what a lot of the advocates like me and social media are talking to brands about and saying you need to build community around your brand you need to have these support mechanisms you just don't think about selling products anymore or services you think about the community that goes around them, the support and everything else in building that. And that really creates a better brand loyalty to people. It helps people interact and engage with the brand. And it also helps the brand resolve issues that may come up. A good example was like when Starbucks recently had their issues. And of course, they had to address their community uh deal with it in a community sort of format so I think it's really cool what you

guys are doing here I'm looking at your website now uh you guys are I I forgive me if I'm using the wrong word here but you guys are creating like a pool for investors to to work with you guys it's called called a read and the great thing is it's a crowdfunded REIT that goes direct to us around all the Wall Street middlemen. So it's cheaper, everybody gets a better direct investment and the funny thing is a lot of the Wall Street firms, they don't invest in what we call impact. Impact is the concept of doing well by doing good. You can actually get a financial return and a social return at the same time. And there are very few if any publicly traded REITs that will play in that arena.

And this is the business I've been in for 20 years, giving people value. You give your shareholders value and you give your residents value. And for those that are listening, a REIT is Real Estate Investment Trust. So this is a trust thing you have of investors and uh is there a minimum uh amount that or that a portfolio needs to invest or net worth that they need to be able to invest in the crowdsource trust well let's discuss the difference between accredited and non-accredited investors traditionally, offerings like mine could only be offered to accredited investors, which means they make $200,000 a year and have a minimum net

worth of $1 million. Well, the JOBS Act of 2012 and the last administration actually democratized the playing field by allowing crowdfunding to be available to non-accredited investors. That means whatever you make, as long as you don't invest more than 10% of your net worth. So let's say our minimum investment, which it is, it's only $1,000. If your net worth is less than $10,000, you cannot invest the $1,000. But if you have a net worth of more than10,000, you're free to invest the minimum. So that's the only response. A $1,000 minimum investment.

And what's cool about it is we've gone through the SEC, which is the government, and it's very been scrutinized up and down. Believe me, I could show you some scars. But the bottom line is it's here to protect the consumer. And that's the great thing about this. You and I, you the consumer, can come direct to me where you never could before and be able to take advantage of offerings that we have. So it's really exciting.

And I'm thankful to the JOBS Act to be able to create this democratization of investment for people. That's pretty awesome, especially where people can make investments like this. You know, I saw, I remember seeing when I was like, I think about 18, I was studying to be a stockbroker. I was reading about how a lot of the baby boomers back in the day, and their parents actually had invested a lot into real estate, into multifamily housing, commercial real estate, et cetera, estate etc etc and a lot of the the baby boomers i think i think the end of the baby boomers in the beginning of the kind of the millennials in that whole era um they they were just taking the um inheritances that they were getting and they were just liquidating them and going and buying nice cars with rims and stereos.

And so, you know, I think now we've come full circle with a couple of generations where now they're realizing that investing is important. I'm seeing the proliferation of a lot of different apps that help you build your savings by taking small amounts of money out of your bank account. Different things like yours that are crowdfunded where people can, you know, they get in where the bar is not too high and they can, you know, they can make small steps forward to retire in the future as it comes down to it. Right. You know, we do have a housing crisis in this country and the best way to solve that is through housing of people that are workforce, the working poor, they're getting squeezed, they're working harder, and we cater to that

environment and we feel that the returns are much more solid and better when we cater to this demographic. You know, A properties, we call A properties when the rents are three, four thousand a month, they're going to be a problem. And a lot of the smart money, or they say the REITs have invested in these a class properties at a certain point, three and $4,000 a month is unaffordable. Our sweet spot is 800 to a thousand dollar rents.

And we know that people can afford that and it will be solid. And you know, you can't build C properties anymore. So this speak C properties are 30, 40 years old, but we make them clean and safe and wonderful. And the basis is oftentimes 30% of what it costs to build new. So that's value and that's safety. So I call what we do as a defensive play. And a lot of people may say, oh, well, that's housing the workforce. That's not sexy. I can't put it on my brochure yeah you're right because cash flows sexy the so I think it's cool and then so tell me you guys I'm looking at the

website you guys have value-added updates free on-site fitness health and wellness programming for residents and I imagine you know, that I saw the same sort of thing that Tony Heisch of Zappos, the CEO of Zappos, did here in Las Vegas, where he renovated Fremont Street and the east side of Las Vegas downtown. And one of the things he did bring in to help do that was some free clinics and different things to support the community entertainment wise and parks he just didn't do a commercial renovation of the area and residential and he integrated the whole he really was focused on building a community that could support that

area and he turned what used to be a very blighted area and an area where even I was kind of afraid to go into into just a renaissance of renovation when it comes to being a place people want to go and now all these great restaurants open there and and everything else and I imagine taking care of the health and offering different ways for people to have resources whether it's exercise, being more healthy, parks they can go to, things they can do. That's got to be something that is a good investment in them because healthy people tend to pay the rent. And you know what?

They like to be appreciated. The working class is so often overlooked in our society, and if they get attention and the respect and decency they really are so appreciative and happy and they just want to be part of society we give a amenities to bnc residents so our residents actually in our apartments have every single amenity that you'd get in and brand new property but you know it's in a scaled down version there's resort style pool like in Vegas, state-of-the-art fitness center. We have outdoor fitness. We have social areas. We have

beautiful paint jobs and wonderful appointments on the interior. So people can feel you can either buy a fake Gucci bag or a real Gucci bag. All the same, it makes you feel good. Yeah. Yeah, most definitely. You know i i love what you guys are doing and it sounds like you guys have a passion for this in in not just being a landlord who's like give me my rent and screw you and have fun in my have fun in my uh rental property and uh and you know you're you're constantly going hey can you fix this can you fix that you know sounds like you guys really care about what you guys are doing. And according to the PR stuff that's sent,

you guys have a life mission to fix the affordable housing crisis in America and make safe, quality housing and community support available for all. I think that's really great. Housing, of course, eats up a ton of people's paycheck when it comes to a percentage basis. I own a mortgage company for almost 20 years, and housing is one of the biggest costs that people have to deal with when it comes to their expenses. Is this the best way to fix the affordable housing crisis? It's unfortunately one of the ways. We still have to build our way out of this problem,

but it's very expensive to build. We can buy at 40% of replacement costs and deem it's affordable. That's kind of common sense to me, but there's still not enough housing, period. So you're not going to get hurt investing in housing because everybody needs that roof over their head. And René Thoreau. Yes, it's one great solution. And hopefully the people that don't belong in the lower blighted properties, we like to say we take blight and make light. Hopefully those people move up the scale so the affordable residents can come into these

properties. And that's the way the market should run. Unfortunately, there are winners and losers in capitalist society and so we have to take care of the losers. Sometimes we have a situation where they work their butts off and they're only able to afford $5.50 in rent because they make $11 an hour working full time. But the fact is the rents are not $5.50, they're $800 or $900. They need those vouchers and we take those vouchers and we are thrilled, but they have to pass a background check, criminal check, all those things. But, you know, rest assured that taking vouchers is no, is no shame and it's no shame to get a voucher. Definitely. Definitely. And then you have a 501c3 nonprofit called the Healthy

Apartment Property Initiative non-profit that provides free unsigned social health and wellness programming right to the doorsteps of the community i i think that's brilliant i just i a better community you know just makes everyone happier and then of course if there's jobs that come from that you know certainly jobs and stores and shops aren't going to move into a community that's blighted that's ghetto like um they're certainly not going to open in there and that of course i think impacts the community with jobs and the potential or opportunity for jobs if people can't get jobs locally then then you know the community is probably going to disintegrate or devalue itself.

Yeah, well, we do the opposite. We're, like I said, taking tired, neglected properties and making them thrive. You know, you can have programming at your local synagogue or church or YMCA, or you can have programming right where you have 200 units and a beautiful clubhouse. What's more likely to happen for people that are working all day? They're going to come and come to the clubhouse. And we have Walgreens come and do health screening, and we have awareness in gardens, community gardens, because a lot of these places can be food deserts.

What's a food desert? A food desert is a place that doesn't have access to real quality produce and so we can see the eyes of the kids when they actually grow corn and eat it. It's just awesome to see. So what's the biggest thing that can help the housing crisis nationwide? Do we need to lift wages as a portion of this thing? Do we need to be doing more of what you guys are doing maybe require landlords to do more of this sort of thing investors or um you know i've talked i've talked to different people like in san francisco like i talked to a a taxi driver and he

has to drive four hours back and forth every day to just to get to san francisco to do his job which you know he doesn't make a lot of money he's a tax driver and and he's spending four hours a day commuting because he can he can in no way live close to that city because of their their insane uh rent prices we need to stop making bombs and start building housing and subsidizing it that's the answer i know nobody wants to hear it on the right but it's true yeah yeah it's it really is and and i think job i mean we've had wage increases stagnant now for over 40 years where we had incredible inflation and haven't been stagnant they've been going up yeah yeah everything goes up i mean it's insane um and yet wages don't increase and you know we we we have more and more people that are just being told uh no we can't Everything goes up. I mean, it's insane. And yet wages don't increase.

And, you know, we have more and more people that are just being told, no, we can't increase the minimum wage. You see this real war on the poor going on when it comes down to it. So it's great that you guys have a thing like this. Now, you have in the REIT pool itself, you have, let me see if I bring it back to this page you have it to where they can they can invest in some easy steps with your with your trust and gone to the site very simple so they can sign up review the offering submit an offer to invest in a specific amount. It's all done online, looks like. They can send in their funds, wire them in, whatever. And they own shares of a value-added income-generating apartment portfolio,

and they can get easy returns, up to 7% preferred annual returns before our sponsors get paid. So pretty interesting that way. And this is one way that people can build their investment. We've had a few different investors, real estate investors, on the show. And, you know, the nice thing about real estate investing is, like you say, everybody needs it. But it's good, steady, slow income that, you know, isn't going to go through. It's probably a lot better investment than maybe investing in, say, Bitcoin,

where the house is high lows and crashes and everything else. What I see about housing is it's... Yeah, real estate's boring, especially in my apartment. Yeah, and I remember my dad used to tell me, and I think this came from... If I recall rightly, this either came from... I don't think it came from Warren Buffett. It came from Howard Hughes, I believe.

At least that's what my old man would tell me. But he used to tell me the example of, would you rather have a penny a day into a 6% passbook savings account, which back when I grew up there was, or would you rather have like a million dollars or something or $100,000? I don't remember the total scenario. And, you know, as a kid, you'd always be like, I'll take the million dollars. And then he would show the compounding of a proper investment of getting the, I think it was a penny a day or something like that, over, you know, a lifetime or 10-year or 15-year period in the amortization that that would break down to

with the compounding of compound interest. And that's the one thing about housing investing that you have. Everyone's always going to need housing and a place to live. And things usually appreciate, especially with inflation when it comes to housing costs and pricing and value of properties. And then you just have that steady income that just comes to you. And it may not be the most outrageous, crazy appreciation like you might get with Bitcoin, but you might have your money at the end of the day plus the interest you can take and make. So there's that.'s great yeah we all have those wonderful quips that we remember and you know the bottom line is never bad time to do a good deal or a good time to do a bad deal i've been doing so many deals in my life i can smell

it i can see it and i can see the value, you know, I listened to a very famous developer here in Southern California called USC Conference. And, you know, I'm on the Commission for Affordable Housing at the Price School there. And he just said the basic thing you have to remember is people want to feel like they have an experience. It's very simple. So if you give people a nice experience, he's in this instance, he's a retailer, you know, he has malls and outdoor shopping. But if you're building a hotel, or you're building an office building and building apartments or rehabbing, you've got to think of the end user. And if the end user is happy, everything else gets to be easier. If you've got neglect, and you've got to think of the end user. And if the end user is happy, everything else gets to be easier.

If you've got neglect and you've got unhappy people, it's a nightmare. And that's what so many people don't realize. It's a common sense business, but it takes real aggressive on-site management to grab these properties by the throat and make sure that they're running properly and if not it's easy to fall in disarray and it just snowballs badly yeah most definitely most definitely well give us the plugs where we can go look at the websites there's impact housing comm of course any place else they need to look you up it's all there you know sometimes I get some Forbes magazines,

has written some articles. And, yeah, everything we have we post on the site. So keep up with the blog and, you know, look forward to having everybody join us in changing the world one apartment at a time. Sounds good, Eddie. Well, thanks for coming on the show. We certainly appreciate you.

Be sure to check out Eddie Loren on the web, and of course you can check out his website and probably invest into his property REIT. We certainly appreciate you guys in the audience tuning in. You guys are the best audience, especially those who listen this far, so there you go. Be sure to go to iTunes and Google Play to subscribe to the show and YouTube.com forward slash Chris Voss, and you can hit that bell notification button to get all the notifications of all the updates we do.

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