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Tikkun Olam One Apartment at a Time: A New Funding Model for Affordable Housing

Tikkun Olam One Apartment at a Time: A New Funding Model for Affordable Housing by Eddie Lorin, published in Jewish Philantropy: I have been in the “workforce/affordable” housing business for many years by taking blight and making light. Having lost my father at 10 months old and my mother at 17 years of age, I struggled to make ends meet and have never forgotten the humiliation and fear that being poor grates on your psyche. For my entire real estate career, I have remained committed to the right of each of our fellow citizens to a clean, safe and affordable place to live, to treat all who dwell under our roofs with respect and dignity so they can stay, pay and refer their friends. This is the ultimate impact investment above all others in my opinion. It’s hard to educate a child when they are sleeping on the streets, hard to support solar when these folks are only exposed to the sun, hard to worry about clean water or low flush toilets when a family has neither a toilet nor water. Out of the Great Recession I have seen how rents have dramatically risen and the result on hard working folks finding it next to impossible to afford the basics. We need to keep units affordable before they become out of reach as we have seen in major cities across the country like San Francisco and New York.

According to the National Coalition for Affordable Housing there is a 7.2 million unit shortage of affordable housing in the United States and growing as we only build about 50,000 units per year and lose to attrition over 150,000 units per year as affordability covenants expire.

Traditional methods using housing credits, rent controls and other government sector solutions are great but not enough by themselves. The issue is definitely a basic supply and demand issue where we need to build as many units as we can but also at the same time we need to stabilize the existing affordable units before they get gentrified and rents rise there as well. I believe that we, as Jewish foundation stakeholders, can join forces together to use program-related investments (PRIs), grants and mission-related investments (MRIs) in public-private partnerships to make a difference with a great new solution.

How can we do it?

Our HAPI foundation, in conjunction with another Jewish funder, the KBVF Foundation of Malibu, CA, just purchased the first pilot program with the City of Los Angeles to provide supportive housing to affordable residents. This Koreatown 1920’s building is 50 units comprised of studio and one-bedrooms and what we call NOAH (Naturally Occurring Affordable Housing), which, simply put, is taking older, neglected apartment buildings and deeming them affordable for 55 years. This makes a lot of sense for two reasons: 1) it is a purchase at 40% of replacement cost; and 2) it avoids the issues of “NIMBY” (Not In My Backyard) because the building already exists and neighbors can’t stop us from doing it. This approach may seem obvious, but of course some of the best solutions are common sense rather than something sexy, shiny and new.

How did this public-private partnership come together? Our two foundations provided a 2% interest Program Related Investment in the amount of $3.2 million to a bridge loan of $7.2 mm in order to purchase the asset. Our $3.2 mm of PRI loans will be refinanced out down to as little as $500K with new financing from the state of California and “soft money” loans from the State of California and the City of Los Angeles. As a “quid pro quo” for providing all the units as affordable at various levels of Area Median Income, we expect a property tax abatement from the County Assessor to help offset this reduction in market rents.

In addition, the current affordable rents are in most instances not quite high enough to make these older rehab deals work. An additional solution we have come up with is a “supplemental voucher” program which would be in the form of a grant (as opposed to a PRI). As little as $150 per month in rent per affordable unit can often be what is needed to bridge the gap to break even and after 3 or 4 years the affordable rents will catch up to the rents needed on such NOAH investments.

This is a prime example of how collaboration is the only way to solve these challenges, and we at the HAPI Foundation are doing our part by proving a model for others to follow.

Please join and collaborate with us and we can help repair the world (Tikkun Olam) one apartment at a time. We have taken the hardest step in proving the model – now it is time for everyone else to jump in too! I am looking to form the first “PRI Affordable Housing Fund” and invite you to email me to join us as we make history at elorin@strategicrh.com.

Article originally published in Jewish Philanthropy.

 

Cash Flow Diary Podcast: Eddie Lorin on Having a Vision in Real Estate

Eddie Lorin sits down with full-time real estate investor, entrepreneur, author, speaker, coach, all-around problem solver, and Cash Flow Diary podcast host, J. Massey, well known for providing best-in-class advice and strategies to help new and experienced investors the world over. In episode #478, Eddie shares his experience, his empathic observation of the working poor, opinion on the inflated housing market and his vision of wanting to make a difference in the world. Eddie’s mission is to provide clean, safe, and affordable housing for working class and to include all types of investors on his journey. He does this through Impact Housing REIT.

Having a vision in the real estate industry wasn’t the easiest road to take when he started in real estate. While trying to make a name for himself in the industry, there were so many bumps on the road he had to pass through. He learned that he had to be firm and also respectful to get his message across.

If one thing was made clear during those times, it was the fact that real estate is where he needed to be. At first, he tried dealing with commercial and industrial properties. But then he discovered that in multifamily business he can make a lot of money and at the same time help the masses. And thus, the birth of Impact Housing. Eddie says that his ultimate gift is having a vision in renovation. Just one look at an old property, he already knows how to turn it into something different. He says that he finds those properties through his connections or a brokerage community.

For the future entrepreneur who’s about to enter real estate, Eddie Lorin advises that you look for appreciative capital. Go for people who are going to appreciate you and what you do. Make sure they are on the same page as you do. Also, investing has more impact if people who are really in need will be the ones who’ll benefit.

If you’re still on the fence, Eddie says to let go and remember that fear is not rational. Whatever you’re compelled to do, if it’s sound and you’ve done your research, get ready to bounce and let go. If you don’t let go, it will keep you from being who you want to be.

Listen Now –>>

Visit Website –>> 

 

Money Tree Investing Podcast: Impact Investing with Eddie Lorin

Money Tree Investing podcast aims to help you consistently grow your wealth by letting money work for you. Each week one of their panel members interviews a special guest on topics related to money, investing, personal finance and passive income. Episodes end with a panel discussion on the content of the interview, which allows us to give you a deeper understanding of what has been said by looking at it from different perspectives.

In the below episode, Eddie Lorin shares ways to invest well while doing good. Eddie helps people invest in ways that help people through the investments they purchase, such as REITs that invest in multi-family properties.

 

 

 

 

 

Listen Now –>>

Subscribe Now –>>

Change Your Story, Change Your Life: Create Your Reality with Eddie Lorin

Eddie recently sat down with Louis Di Bianco host of “Change Your Story, Change Your Life” for an in-depth and very personal discussion about the importance of self-empowerment, overcoming obstacles, rising to challenges, and how to create your own reality. Overarching themes: You can run from challenges, or make friends with them. Choose the latter, and you will create your reality. Actually, you always create your reality. When you embrace all challenges, you create the reality you want.

Powerful lessons and takeaways:

  • A message of hope and forgiveness from a holocaust survivor
  • The power of the Serenity Prayer
  • The rich meaning of Impact Investing (Read more.)
  • How to create wealth through contribution
  • How to develop an abundance mindset
  • How to turn blight into light
  • Luxurious living on a budget
  • Slashing taxes with Opportunity Zones
  • Why you should be thankful for what you don’t have

Listen Now –>

Louis created Change Your Story, Change Your Life podcast everyone to learn how to tap into and harness storytelling power to enrich personal and business growth. The people interviewed offer golden insights that help  break through limiting beliefs. You will learn to truly step into your personal and financial power. You will be able to reinvent yourself on command.

 

 

Stacking Benjamins Podcast: Do Well by Doing Good w/ Real Estate (with Eddie Lorin)

Eddie Lorin joins Joe, OG and the gang of Stacking Benjamins Podcast for the episode Do Well by Doing Good w/ Real Estate (with Eddie Lorin). Joe describes Eddie as “at least one real estate investor is doing his best work by bringing affordable real estate to the masses.” In this episode they also talk about real estate in different areas of the country and about trends in real estate investing and rehabilitation. Whether you’re a seasoned real estate investor or a newbie, there’ll be something for you to like.

Listen Now –>

Stacking Benjamins is only Academy of Podcasters Award-Winning show broadcasting live from Joe’s mom’s basement. While it may seem like Joe, OG, and the gang are messing around during an episode of Stacking Benjamins, they’re actually deadly serious about financial literacy. Literacy rates around the world are dropping, and this podcast is meant to help foster much needed conversations about money.

 

Press Mentions:

 

Simple Wholesaling Podcast with Brett Snodgrass: Eddie Lorin on Real Estate Apartment Investing and Creating Community

Simple Wholesaling podcast hosted by Brett Snodgrass supplies simple, yet effective content for real estate investors and business entrepreneurs. Get advice, tips, and tricks so that you can stay true to your values and achieve your dreams with real estate investing you can trust.

In this episode, you’ll learn:

  • Eddie’s origin story
  • Where he is right now and the number of units he owns
  • The difference between accredited and non-accredited investors
  • What he means when he says “value add”
  • Ways he adds value to his properties
  • Value add comes in 3 spokes—financial, environmental, and social returns
  • HAPI (Healthy Apartment Property Initiative)
  • Lessons for newbies
  • His goal of helping homeless people
  • Advice for people who invests in multiple areas in terms of organizing and keeping track of it all

Listen Now –>>

Subscribe –>>

Eddie Quotes:

“Leave enough meat on the bone for your investors.”
“You can be poor but you got to be clean.”
“When people are alone, they tend to do bad things.”
“By changing their environment, you can change their lives.”
“You need to see something someone else doesn’t.”
“You need to do what others don’t do.”
“Everybody in society can either be a winner or a loser.”
“It’s all about your people on the ground.”
“Neglect brings problems regardless of what you’re doing in this world.”
“Just be careful that we don’t push people out.”

High Return Real Estate Podcast: Socially Conscious Real Estate Investing With Eddie Lorin

Eddie Lorin joins the High Return Real Estate Podcast team for an in-depth discussion on socially conscious investing as applied to real estate — which he’s been doing for 30 years! This is the episode for investors that want to create wealth and change the world at the same time! 

What You’ll Learn:

  • How To Do Deals That Make You Money & Impact The Entire Neighborhood
  • What To Put Into Your Properties To Create A Sense Of Community, AND Keep Lower Income Residents Happy, And Paying Their Rents ON TIME
  • How To Make “Affordable Housing” VERY Profitable
  • How To Leverage Local & National Non-Profit Agencies To Help Your Tenants Have A Better Life
  • The Upcoming $40 TRILLION Wealth Transfer And How It Impacts Real Estate
  • The Secret To NOAH – Naturally Occurring Affordable Housing

Listen Now –>>

Subscribe –>>

How You Can Help Fix America’s Affordable Housing Crisis – Originally Published in Forbes

 

housing crisisEvery day across America, individuals and families are looking for clean, safe houses and apartments that are affordable, a term the U.S. Department of Housing and Urban Development defines as “housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities.” Homes that are affordable are a necessary and tangible asset for any adult or family to survive and thrive, but there simply aren’t enough of them to go around.

Federal Reserve findings indicate a growing percentage of renters are either cost-burdened or extremely cost-burdened by rising rents and stagnating incomes. The Joint Center for Housing Studies (JCHS) of Harvard University published a 2017 study that found more than one-third of U.S. households were rental units. The research further suggests that overall household growth will be strong over the next decade as larger numbers of the extremely large millennial generation move out on their own — therefore pushing the number of households in our country, higher.

So what can we do? Eddie Lorin, Member of the Forbes Real Estate Council, presents to ForbesCommunityVoice readers a few ways we can help fix the housing affordability crisis (and potentially earn financial returns along the way).

Read Forbes Article –>>

Download PDF Version –>>

Ambitious Entrepreneur with Annemarie Cross: Make a difference in the world WHILE making money

On the Ambitious Entrepreneur with Annemarie Cross Podcast, Eddie Lorin shares how can you make a difference in the world WHILE making money; the first of its kind Investment Opportunity “ Impact Housing REIT; and the Impact Meets Real Estate Investment Strategy.

The Ambitious Entrepreneur Podcast Network is the voice for Entrepreneurs and Small Business, featuring business experts, Thought Leaders, Disruptors, Innovators and Change Makers who are making a real impact in the world with their message.

Listen Now –>

Subscribe to the Podcast –>

Old Dawg’s REI Network Podcast: Investing in Affordable Housing with Eddie Lorin

Eddie Lorin joins Bill Manassero to talk investing in Affordable Housing with the Old Dawg’s REI Network Podcast on Episode 203. Listen to learn about Impact Investing (see blog post: What is Impact Investing?), what’s in it for investors who opt to do Impact Investing, how to invest in doing well by doing good without sacrificing sufficient financial returns, what are practical things real estate investors can do to help solve the housing crisis in this US, what is Naturally Occurring Affordable Housing (NOAH), how to cost-effectively transform neglected properties into safe, attractive, affordable places for low- and middle-income Americans to live, tips for inexpensively adding value to distressed property for maximum profit and understanding what the “Art of Real Estate Investing” is and more.

The Old Dawg’s REI Network was founded by Bill Manassero — a real estate investor who is using his business to create ample cash flow for his retirement, help support his nonprofit mission in Haiti and to create a legacy for his children.

The purpose of the Old Dawg’s web site, blog, newsletter and podcast is to provide valuable information and resources for others who seek real estate investing as their means to fund their retirement years.

Listen Now->>

Show Notes->>

Impact Housing REIT, LLC.
$1,000
Minimum
Quarterly
Dividend
A reservation is not an investment. A reservation is non-binding and you will need to confirm your reservation when Impact Housing REIT, LLC offering is live to invest. By making a reservation, you are requesting an allocation in Impact Housing REIT's upcoming offering. A copy of the Preliminary Offering Circular may be obtained here. A reservation is non-binding and you may change the amount at any time. Reservations may be accepted in whole, or in part, or not at all by Impact Housing REIT. If granted, you will be asked to confirm your investment once Impact Housing REIT's offering has been qualified by applicable authorities and the fundraise has officially begun.


Disclaimer
Impact Housing REIT, LLC will invest in multifamily properties, income-producing real estate, a market that may produce returns that are different than the returns an investor could expect from other markets, including the stock market. Before our Sponsor receives anything, investors are entitled to a 7% annual return on their investment. Note: There is no guaranty that investors will receive any return on their investment, or get their capital back. In the last 5 years, the Sponsor has completed 28 projects (totaling 40 multifamily properties) which have achieved an average annual cash on cash return of 8.55% and an average project IRR of 24.74%. For more information about the Sponsor’s track record, see the Offering Circular, here. However, Impact Housing REIT, LLC is itself a newly formed company with no historical data of returns, and there is no assurance that it will achieve comparable success. The results that the Sponsor has achieved in the past do not guaranty that it will achieve similar results in the future. Like any investment, there is the potential to lose some or all of your investment. The ability to make distributions will depend on the availability of cash flow each quarter. There is no guarantee that we will be able to make a distribution in any given quarter. For a list of the most significant risks, click here.
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Under Contract: Maryland
* Highrise with spectacular views
* Twelve Floors, 143 Units
* Built in 1969
* Strong 96% Occupancy
* Naturally Occurring Affordable Housing
* RUBS / Water Conservation Potential
* Purchase Price: $7m to $8m
*Note that this property may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that this specific property will end up being one of the multiple assets owned by the fund.
Target: Colorado Springs
* Mountain views
* Near commercial district
* 64 Units
* Built in 1967
* New roofs recently installed
* Units currently renting below market
* Purchase Price: $5m to $6m
*Note that this property may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that this specific property will end up being one of the multiple assets owned by the fund.
Target: Mesquite, Texas
* Strong submarket: 96% Occupancy
* Located in suburb just outside of Dallas
* Multifamily, 190 Units
* Built in 1959 -1972
* New roofs recently installed
* Renting at 25% - 50% below market
* Purchase Price: $8m to $9m
*Note that this property may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that this specific property will end up being one of the multiple assets owned by the fund.
Disclaimer
Impact Housing REIT investments are expected to be spread throughout the United States. The Manager expects Impact Housing REIT’s investment portfolio to consist of direct equity interests in individual properties. The Manager will generally target equity investments ranging from approximately $3 million to $10 million. Note that these properties may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that these specific properties will end up being one of the multiple assets owned by the fund or that investors will receive any return on their investment, or get their capital back. In the last 5 years, the Sponsor has completed 28 projects (totaling 40 multifamily properties) which have achieved an average annual cash on cash return of 8.55% and an average project IRR of 24.74%. Past performance cannot guaranty future results. For information on our Sponsor’s track record, see the Offering Circular, here.