Ep 111 - Boosting NOI and Vacancy By Doing Good with Dave Holman

Today we have a fantastic guest on Elevate Your Equity podcast, Dave Holman. With over a decade of experience, Dave is a triple threat; commercial broker, syndicator/investor and co-owner of Katahdin Property Management. On this show, he highlighted some important things about what he believes "Doing well by doing good", including:

• The great NOI increasing techniques
• Structure of some of their refugee placement investments
• His recommendations to maximize return on impact

More about Dave. Dave grew up in Maine and attended Carleton College in Minnesota, focusing on Latin American Studies and Environment and Technology Studies. His first investment took place right out of college when he co-founded a multilingual retail chain in Bolivia, The Spitting Llama Bookstore and Outfitter. After earning his MBA and spending 9 years in nonprofit leadership and fundraising, Dave dove into real estate investing to make the world a healthier and happier place.

Dave now co-owns over 150 commercial and residential units in Maine and has a 57 unit new construction project underway. Dave specializes in driving NOI through energy efficiency and creative solutions with refugee and immigrant tenants. Outside of real estate, Dave is a distance athlete and the author of three books: Youth Renewing the Countryside, Coffee Smugglers, and Cyber Fire.

Thanks a bunch Dave Holman for coming on the show!

Unlock 3+1 degrees of freedom (time, location, financial + health) with our 5 Point Blueprint! https://elevateequity.org/podcastgift

If you really enjoyed this content and are looking for more, you can continue to learn more about us in several different places for free!

• on our website for blogs & other podcast interviews! elevateequity.org
• our YouTube channel! youtube.com/channel/derekclifford
• our book/audiobook! amazon.com/dp/ebook

If you'd like to have a FREE copy of our 7 Ways Commercial Real Estate Syndications Protect and Build Wealth, simply click the link below. We are here and vested in your long-term success! elevateequity.org/7waysEbook

Unlock 3+1 degrees of freedom (time, location, financial + health) with our 5-Point Blueprint! https://elevateequity.org/podcastgift

If you really enjoyed this content and are looking for more, you can continue to learn more about us in several different places for free!

• on our website for blogs & other podcast interviews! elevateequity.org
• our YouTube channel! youtube.com/channel/derekclifford
• our book/audiobook! amazon.com/dp/ebook

If you'd like to have a FREE copy of our 7 Ways Commercial Real Estate Syndications Protect and Build Wealth, simply click the link below. We are here and vested in your long-term success! elevateequity.org/7waysEbook

Transcript

Introduction: 0:03

Welcome to the Elevate Your Equity podcast where we, as married busy professionals, leverage real estate investing to unlock the three plus one degrees of freedom, health, location, time and financial.

Derek Clifford: 0:16

Today we've got a very important guest on the show. We've got Mr. Dave Holman. Dave, how are you today?

Dave Holman: 0:22

Doing great, Derek. Thanks for having me.

Derek Clifford: 0:24

Awesome. Awesome. So excited to have you on the show. We got some important things to talk about. But first, I want to give the listeners a little bit more of a background about who you are, and then we can jump right in. For those listeners who don't know Dave, Dave believes in doing well by doing good. And with over a decade of experience. Dave is the triple threat, a commercial broker, syndicator investor and a co owner of Katahdin Property Management, is that correct? They say that right?

Dave Holman: 0:50

We say it Katahdin up here in Maine.

Derek Clifford: 0:53

Okay. David now co-owns over 150 commercial and residential units in Maine, and has 57 unit new construction project underway. Dave specializes driving noi through energy efficiency, and creative solutions with refugee and immigrant tenants. And outside of real estate, Dave is a distance athlete and the author of three books, youth renewing countryside, coffee, smugglers, and cyber fire all of which sounds super interesting, really, really cool. And you have a strong background in business and also in philanthropy and fundraising. So Dave, we have a whole bunch of stuff to unpack here and not a lot of time. So let's just jump right in, if you don't mind. All right, do it. Why don't you talk to us first about where the spark for real estate investing came from. Since you have a lot going on. Tell us a little bit about how that came about.

Dave Holman: 1:41

From finding out I was going to be a father, I had been content to live in fairly monastic self imposed poverty, you know, to the point when I was going to have kids with my wife, and I realized, you know, my nonprofit jobs have been non profitable for me, and I've done really well investing in the stock market, but you start with, you know, a small amount, and you turn it into a bigger small amount, you still can't live on it. And I wanted to get into other kinds of investing. And I always knew I just I didn't want to, quote unquote, sell out, I wasn't interested in just going to work in the prototypical, you know, cubicle or office, because I had an MBA, you know, at the time, and I, you know, I went from earning three grand a year with my MBA at a really small nonprofit to earning, you know, 50 to 60 grand at a bigger nonprofit, but you know, that still, it just pays the bills, you know, that's the average wage, and it gets you an average lifestyle, and I wanted to be above average. So you know, I wanted to be able to travel, like you and be able to explore the world and do different things and help other people in a more, you know, kind of scaled way. And as I was working with donors, and these nonprofits, it's like, oh, this is pretty cool, they can just give away $10,000, and they're happy to do it, and it makes them feel great. And they love supporting these different causes. Like, I can't imagine, like, that's how I feel when I give away $10 or 20, you know, that feels pretty significant to me. So, you know, I'd kind of looked behind the veil and having this motivation of nine months, and you're gonna have a baby is like, Alright, let's put the pedal down. So I just dove into podcasts, like yours, you know, reading books, meeting, taking, you know, inviting the coffee, anyone who did anything with real estate, and investing. And I was able to, in my mind, kind of think, because I had this, you know, prejudice that Oh, landlords are bad, that's like used car sales or whatever, that's just dirty, whatever. And I realized that, you know, you know, it's not that way. And in fact, you can make your own house as green and energy efficient as you want. But you're not going to move the needle on climate change or change the world doing that. But if you can get tenants, to fund renovations to other houses, you can suddenly scale something and like you're earning money and profiting, while you're able to make you know a lot of buildings much greener over time. And that actually can have an impact. And then teaching other people how to do it profitably can have an even bigger impact. So that's kind of why I'm here and how I got into real estate in the beginning and of course quickly snowballed. I had a very conservative thought process in the beginning of like, I'll buy one apartment every year to you know, kind of save up money and, and then within 10 years, I might have 10 Little apartments, and that'll be enough to have a little bit of passive income. And, you know, five years later, I have, you know, almost 200 units, and it's been a very different, you know, launch ramp than what I expected.

Derek Clifford: 4:30

Of course, of course, and thank you for telling your story there. Although, I would like to explore where you first found out about real estate because I know that you said that you started getting involved in it in like by listening to podcasts. But where did the spark come from? Did you just happen to hear it somewhere from you know, another investor that was talking or from a donor or where did the idea come from?

Dave Holman: 4:50

A couple sources. That's a good point. And there's no one like epiphany eureka moment, but in college, I took a class called Building the Eco house all about green architecture. and building, it kind of blew my mind. I didn't know like 40% of global carbon emissions come from buildings and the built environment. And we can change that, because like most of those 40% are just from dumb decisions that weren't taking energy into account. And then I ended up teaching that class, like helping teach it for the next two years. So I really got into green building, you know, in my college days, so that's one piece. And then, of course, like everyone moved down to Bolivia and South America and started a chain of camping stores and bookstores. And I was a renter, you know, I rented my premises, but as an entrepreneur and a business person, it started, I started, you know, occurring to me as like, you know, these owners have it pretty good. Like, I just pay them every month, and you know, what they do for me, nothing, they don't have to lift a finger, they're just getting paid for being so nice as to let me rent their place. And it started realizing like, man, it would actually be better if I could buy a place and go from paying, you know, $400 a month of rent to $500 a month of mortgage like that would actually be cheaper in the long run, because then I'd have an asset that I owned and can control. And so that kind of gave me a glimpse into the other side of the equation, you know, most of people in America are renters. And if they're owners, it's just a single family home or trailer. And they don't think beyond that. But I kind of woke up to the fact that you can actually earn money from renting out real estate in a pretty good way. But it was really studying it, you know, and, you know, reading the Rich Dad, Poor Dad and all the different books that that real estate investors should read that I understood a little bit more fundamentally how the business works. And, you know, I think the passion came through it, from the environmental side of things of just like, this is something where I can move the needle in person, you know, ironically, a lot of the nonprofits I worked with, they're phenomenal causes, but I was far removed from them, I was just a guy with a computer in an office, even though I was raising money to help kids, you know, get out of the Guatemala city garbage dump, or, you know, first generation kids go to college for the first time, but I never got to meet them much. And I was, you know, just doing a desk job. Ultimately, that wasn't that fulfilling.

Derek Clifford: 7:06

I love this. So there is a lot to unpack here, because there's so many different things that relate to what you're doing right now to help you know, these refugee communities. And then also to have some really, really cool noi increasing techniques, right, that are good for the environment, and then also good for the investors too. So maybe let's start with that. First, let's talk about some noi increasing techniques that maybe you've been employing or you've learned to employ. And let's talk about those a little bit. Can you get fill us in on what it is that you're using right now or have used in the past to help boost noi for investments?

Dave Holman: 7:39

Yeah, to put it very scientifically, you should insulate your dang buildings. Love it. So you know, in the Northeast, where I'm based, the average age of my buildings is like 1880s 1870s. And they're well built, usually great bones, you know, thoughtfully constructed, they've lasted 150 plus years, but the insulation in them is not great. And often, you know, the attics, you'll go up there. And if you're lucky, it's some bats of old fiberglass kind of haphazardly thrown around with mice living in them. And that doesn't get you a great insulation, and it sure doesn't get you any air sealing. And so you just take that crap out, you go in and air seal around, you know, the piping and penetrations, and then you blow in a foot and a half, two feet of cellulose, which is just you know, newspaper treated with boric acid to keep pests and stuff out. And you suddenly have a great cap, you know, of our 60 Strong insulation to your building. And that'll save you. It's like 100% ROI. In many cases, if the landlord is paying the heating bill, it is incredible. The power of insulating an attic that will have on a building's economics, you know, you can do similar things with spray foam around basements and rim joists. You know, these are small, two to four unit kind of buildings, 10 unit buildings, nothing too crazy. Most of the larger, you know, commercial size 50 100 unit buildings are usually built with that in mind. But again, if they're not, if they're from 100 years ago, you can still do that. If tenants are paying the heat, you might have a little less incentive to do it, but it's often worth it. And actually one of the tricks that most people don't know, if your attic is really well insulated, it'll like double the life of your roof. Because if you let that attic get up to like 150 degrees in the summertime with those black shingles, if there's no insulation there, it will it will cook I mean, it will get super hot. Whereas if it's well insulated and well ventilated, you know, you need gable vents or end vents are different kinds of vents, you know, getting airflow in there. It'll keep it nice and cool. And that in turn will make your roof go from lasting, you know, 15 or 20 years to lasting 30 or 40 years. That's real money. Anyone who's replaced a room.

Derek Clifford: 9:44

Yeah, for sure that there's two places where that comes in on money just on my end that I could think of especially if you're paying the heating bill, even if you're not paying the heating bill right, the amount of like the capex investment that you put into an investment properties the especially up in the northwest and where I invest in the Midwest, you still have some of this effect here, where every dollar on noi can be anywhere between 15 to $25 in value in the end, right. And whether that dollar comes out from directly your pocket, you know, as an investor, if you're paying the heating bill, or if that dollar comes out of the tenants pocket that's $1 less than they can turn around to pay you in rent, right? Because these tenants aren't dumb, they see that if their heating bill is going to be $100 a month, every single month, that's going to be an issue for them, right? Like, if it's not well insulated, they're probably going to complain, or wonder like, Man, this is too expensive. I gotta go somewhere else. And so it'll cost you. And you'd be surprised how quickly one vacancy, right will cost you lots of money. And then all of a sudden, with that 15 20x factor that you could have had, if you insulated and took care of your place. Well, that might have to pay for itself or it will cost you money.

Dave Holman: 10:52

Exactly. Yeah, another thing we're doing very aggressively right now is installing heat pumps. And I really believe in in 20 or 30 years, I mean, people are going like, wait, you you use propane to heat this do that use natural gas, are you crazy, you know, we should use that stuff to make plastics with, you know, higher uses. But no, we are still in 2022 using fossil fuels to heat buildings. And the bigger the building, the more that that used to be a pretty good trade off. But I think with you know, the Russia Ukraine war right now, with with other factors of just basic supply, that's not going to be an economic way, you know, to heat your buildings. And I think the levelized cost of electricity is going to go down over time, especially as we kind of reinvigorate nuclear power, we've got, you know, large scale wind and solar coming online. And we've got natural gas, you know, turbines kind of bridging the gap, you know, the electric base power is pretty reliable. And so that's a better way to me to plan your winter, if like, Alright, I know that I'm paying 12, you know, cents a kilowatt hour, then like, oh, I don't know, if it's going to be, you know, $2 a gallon or $10 a gallon, it just depends on if the war ends, like, that's not a good, you know, way to budget for, you know, keeping your apartment warm. So, heat pumps have been great, it gives tenants a great amenity, they provide AC and heating, highly efficient three times better than electric baseboard. And if one of them goes down, all the other units still have their heat pumps, whereas if your big central boiler goes down, you have as many units, as you have in the building all have an emergency at once. So, you know, I think those are a really key piece of the puzzle going forward. There's great rebates for them. A lot of states have, you know, see should check into that locally. I mean, we get like$800 per unit back in Maine. So that's been a big part, you know, the picture as well.

Derek Clifford: 12:41

Yeah, that's really cool, I think we'll look into that. I'm wondering for these heat pumps, they can be installed, you mentioned there for individual units. So if you have a property, for instance, that's a little bit older that didn't have architecturally like ducting, or centralized type of H back in mind, yeah, this is something that you can install on each unit, right? You just need to have a window or like hole to drill through to get outside, how does that work?

Dave Holman: 13:05

You don't need anything, you can install them anywhere. And if you see 10 or 20 of them in a building, it's because they're growing cannabis inside. Awesome, but no, really, at least here in Maine, where it's legal recreationally. But you know, they're really easy plug and play solution for any unit, there's almost always a way to get a heat pump in there, they make floor units, they make wall mounted units, I mean, those are the cheapest and most common looks like that little kind of AC type a unit you'd see in a restaurant, you have, you know, lines going out to a condenser, basically a big fan unit. And those lines have a coolant, you know, that boils at like, you know, negative 80, or I'm making it up, I forget what the temperature is, but it boils at an incredibly low temperature. So it's able to take the little bits of heat outdoors, even in the dead of winter in the coldest day and condense it transfer that heat to the inside. So outdoors, you might be negative 20 Fahrenheit, indoors, you know, your heat pump can be blown out 80 degree air, there's a cost to that, you know, electrically you're going to use more electricity that bigger that difference is but even so it's it's a really good form of heating, and you would drill through the wall somewhere to get in, but it's often in like a base plate or you can go in through a basement or on the backside of a building, you know, they're not super sightly. So we keep them usually right off, you know, wouldn't put them right on the facade towards the street necessarily, but there's almost always places to put them in on big buildings with flatter roofs, you know, you often would have the condensers up on the roof and then the lines running down the back and into each unit. And generally this is an important trick for all your listeners, that installers will tell you that you're going to need like two or three or four heat pump heads per unit. I almost never put in more than one. And because these units can work great they can produce 12 or 15,000 BTUs consistently. And lo and behold if you just keep your doors open it will heat a huge space. I mean we have an entire 1200 square foot house heated by one heat pump on the first Florida and lo and behold, heat rises. And lo and behold, you keep your doors open. You know those get heat too. It's good to put in like backup little strips of electric baseboard, the tenants can choose to use those if they want. And you just educate them to say, hey, baseboard is three times as expensive as the heat pump. So, you know if you want to keep your door shut at night and boost yourself up a little bit great, but I wouldn't use that as your baseload heating, you know, and that's why electric quote unquote heat has a bad reputation is because when you're using resistance in a baseboard, it's it's not very efficient, it is fairly expensive to do, but Heat pumps are much cheaper.

Derek Clifford: 15:31

I love it. Yeah. One last thing I want to say on this too, in terms of heating and energy efficiency. out in California, when we purchased one of our first houses that we did a house hack on, we had this something installed called the whole house fan. Have you heard of this? It's like a two stage type of cooling system, where what they did was it was similar to a heat pump type situation. But there's two stages, where what they would do is they would force air in to the attic. And then like let's say that you're in, like in California, for instance, right? Like it's really hot day in Northern California. And at night it cools off. So why can't we use the cool air from outside to force the air from the outside into the house to cool off using the natural heating and cooling of the days air right as it gets warmer and cooler. It may not apply as much in Maine, just because like the humidity may make it harder for the cool off effect to really take hold. But I know that in some of the warmer like desert areas out in the west, that whole house fan situation has been a lifesaver for us in terms of efficiency, because turning on a fan rather than running a coil and AC is way, way more energy efficient.

Dave Holman: 16:37

Oh, absolutely. Yeah. Anytime you can do stuff, simply open your windows kind of thing.

Derek Clifford: 16:42

Yeah, yeah, of course. But you know, if you have it, if you go a step further and have it tied into the fact that it's on your thermostat. So when you set the thermostat low, then the system knows and is looking outside, because all it takes is a temperature indicator outside to see what temperature it is. And then it can it can make the internal calculation as to whether or not it'll pull air from outside or blast with the AC to cool off the house.

Dave Holman: 17:05

Exactly. Yeah. And I think design plays such a key factor into it, you know, where basically, you know, for any climate, if you start from scratch, you can design a house that can be heated or cooled by the equivalent of a toaster oven, if you design it, right, yeah, some of those techniques have been around for hundreds of years, like in the southwest, you know, like there's a reason the walls are a foot thick of, you know, masonry or thermal mass and No, everything is shaded. And you know that that helps a lot higher ceilings, you know, these factors can let it be 90 degrees outside and indoors before they even had electricity, they could stay relatively cool.

Derek Clifford: 17:38

That's right, I've noticed that living here in Europe, some of the older buildings have really thick masonry. And it stays nice and cool for when it's when it's really warm and warm when it's really cool outside. So it's very, very interesting the way that goes. So I love that analogy anyway. So that's awesome. So thank you so much for the perspective on cooling and H back. And you know, that discussion for noi, which is huge. This is something that if people really take this to heart, they can really boost that bottom line and help impact the environment saving a little bit. So let's talk a little bit about refugee placement and your passion for this type of community. Can you first talk about you know where that came from? I know that it's probably from your service days early on, but talk a little bit about, like, how that works, where it came from and what you do right now?

Dave Holman: 18:24

Yeah, well, it's usually a pretty good assumption from the white color of my skin that my forefathers and mothers came to this land as immigrants and basically refugees, because most of them were not immigrating. Because everything was so great, where they were coming from, you know, most of my ancestors were Ukrainian Jews who were fleeing the Russians and why how history repeats itself, you know, that was the 80s. And, you know, here we are today, but I kind of buy into this, you know, American Dream style patriotism, where, you know, this country has been the land of opportunity for many generations. And I think it's a bipartisan, you know, goal to keep it that way. And so, you know, I think welcoming in immigrants, refugees, you know, the huddled masses of the Statue of Liberty etc, is a really important thing for us to keep focused on, you know, as Americans, and it's just very gratifying to be able to actually help someone in need, because, like, it's all well and good when I rent out, you know, one of my fancier apartments to a white collar, you know, person and get a good rent and whatever, and that's fine, but they would have found another place, they've got a good job, they're not, you know, in desperate need. It's very different. When I take a family that's living in a homeless shelter, and give them a home, you know, and their kids are going to school now and they're not embarrassed to bring their friends home and, you know, the parents can can give their kids baths in their own bathtub and have a place of their own that that's really powerful, you know, that, you know, gets you emotional when you think about it, because you've really moved the needle in a profound way. And I'm not doing it you know, for charity. Although I think charities you know, there's a there's a place for that, you know, I'm doing it to make money. And there are ways to do that. And I think a lot of people just make the assumption that like, oh, people who are refugees or immigrants are homeless, they've got no money. So therefore, I would never rent to them because they don't have jobs or money. It's like, well, no, actually having a house is often a precursor to getting a job. And most of our refugee tenants are not on public support for even a year, most of them pretty quickly, because they go to work every day, and they're paying their market rent, just like all of our other tenants. The big difference about them is that they're just really freaking grateful and nice to deal with.

Derek Clifford: 20:37

They're excited to work is what I found, too, is that they're very they want to work they want to give back to the society because they realize that this is such a great opportunity for them. Whereas where are they coming from? They may not have an opportunity like this. So the gratitude, right, and I can totally see this. So let's talk a little bit more about this side of it, right? Because maybe you can educate some people with some examples of what you have currently going on right now with your investment properties, where you are bringing in immigrant and refugee families and making this very profitable for everyone and having a great value add. Can you talk a little bit more about that for those investors to try to talk us away from that misconception you're talking about?

Dave Holman: 21:17

Yeah, let me open up the playbook and we'll start we'll give you the place because I had a vacancy at a time when Maine had this huge influx of refugees from African countries that had crossed over the Mexican border that heard that there was this place called Maine that was really nice to refugees, because there's a large Somali American community here already. And so they all 300 of them, like bust up to Maine from Texas. And the government in Portland was like, what do we do and so they had to like basically just take over the local basketball stadium and had like a crisis shelter for these families who had all just come all at once. And I kind of reached out to the city because I had a vacancy and said, Hey, if there's ever any way that one of these families can pay rent, eventually, like I'm willing to be really flexible. I understand. They don't have credit or background or whatever that I would normally screen for. And I got passed around to the right official who said, Hey, actually, like those ones are so recent, that we have like, they're not ready to get placed yet. But we have a family that came, you know, on green cards, they won the Green Card Lottery, they're from Rwanda, and they're in our homeless shelter, and they would be good candidates, and they speak some English, and maybe we can place them with you. And the only problem is that all they had was like a little backpack of stuff. And I had a vacant apartment with no furniture. So I just posted on Facebook, rather to my friends that hey, like, we've got a family moving in from Rwanda next week. And we need you know, a bed, the chair, you know, this, all these different things. And lo and behold, people really wanted to help out, you know, they were just, it's so unsatisfying to like, donate online or text to give to the Red Cross or whatever, where it's very satisfying to be like, oh, here are people that need silverware, I have extra silverware like, Here you go. You know, I think people do that very readily. So we cobbled together enough stuff for them, and they fit in. Now we're working more with other agencies that actually there's whole furniture donation nonprofits that specialize in furnishing apartments for people that don't have furniture. So you know, we partner with them. And there's programs like general assistance that most towns and cities have, which helps pay, you know, emergency rent for families in crisis, which these ones certainly are. And so that will often be the first couple of months of rent or a year of rent, while they're, you know, getting their paperwork processed. So one of my big complaints of like, we should let people work quicker when they get here, refugees are often made to wait a year. And I'm like, This is crazy. Like, we're paying money out of, you know, public budgets, to subsidize their rent and their food and all this stuff when they're desperate to go work and earn their own money and they don't want public money, like they would love to go work. And we're desperate for jobs. We this labor crisis, like there's so many reasons why we should let people that want to work work, basically. So they get jobs, they get off, you know, these different programs and start working within a year or two. And sometimes at that point, they might want to move because they you know, want a cheaper apartment, sometimes they want a nicer apartment, like, you know, I've got one success story one of these first unwanted families, we're now helping him purchase a multifamily building like he's becoming a real estate investor. You know, he's worked his butt off for two years, he's built up two years of credit history. Between he and his wife, they're working 120 hours a week, they got a little kid in the same daycare as our son. And, you know, they're truly just going after the American dream, and they're very deliberate about it. And it's really fun to see people like that succeed.

Derek Clifford: 24:33

That's incredible. Thank you for sharing that story. Very, very uplifting. Now, and I appreciate this and I can kind of get a feeling for you know, if you can think a little bit creatively, you can really create Win Win situations where you have grateful tenants. And the biggest problem that we have, as you know, multifamily operators or just landlords in general, if you guys are at that stage you listeners are there is vacancy, and if you have a grateful tenant that's there and you help them get into the situation. You bet I believe they're going to take care of your place, they're going to make sure that they pay rent on time. Or at least that's what I would feel like the tendency is towards right.

Dave Holman: 25:08

Let me take away the rose colored glasses,

Derek Clifford: 25:11

There we go.

Dave Holman: 25:12

You know, both when we're taking refugees from other countries, and when we're, you know, we've placed, you know, homeless veterans replaced homeless families, you know, from this country, I don't want to give anyone the illusion that they are easy tenants, you know, because they do require time to educate, educating them about your expectations, just about this general culture of like, this is called a, you know, oven vent fan, you run it when you're boiling water and cooking, and you don't fill the apartment with humidity, like, there are things that you don't learn in Angola growing up that you do learn here that we shouldn't take for granted. So it's definitely trade offs, pros and cons, but like, you can get a very strong rent from tenants who, you know, have a pretty low index of like mental illness, whereas, I mean, maybe I'm getting unlucky, but almost every single tenant from the section eight program that I've ever dealt with, has had some kind of mental illness or mental health issues that have made that relationship very frustrating. Sure, I can, I don't take the program, not that I don't want to help. But it's challenging, you know, when you're basically the tenants therapist and social worker, as well as their landlord, because that's how they, what they're thrown at you. So there's different pros and cons. But you're right, that the refugee community by and large, very appreciative of what you know, you're giving them and they need, and the need is very real, you know, these are families with kids, oftentimes, sometimes lots of kids, you know, we just placed our fourth family from Afghanistan, which is also really cool, I think, because, you know, these are all like, basically veterans, you know, from Afghanistan, that we're helping, you know, our troops there, and then we kind of pulled up stakes and left very abruptly, and a lot of them had to flee, you know, because it dangerous to their families that are now coming here, what I think is kind of ideal to do, we've got two different situations, you know, we're these families are living right next to each other. So you know, there's two houses where they're right next to each other, and then we got another apartment building where they're right next to each other, but I think there is some nice comfort that they're able to provide for each other, because like, oh, there's someone next door that speaks the language, we've seen a lot of cases where like, one person will watch, you know, three or four kids, while three or four adults are out working, you know, those can be really helpful situations, rather than like, Oh, I'm the only one who's a refugee in this whole building. So it's kind of a balancing act, we're buying a building now, that is all refugees, it's 16 different units that are all on GA, and it's been that way for decades. And, you know, that's, that's gonna be an interesting model, but treat it like an ATM machine. And, you know, there's whole, like sections of wall that are just plywood, and it's not been maintained to the highest standards, let's say.

Derek Clifford: 27:49

I can imagine. Yeah, yeah. And these are these are usually problem or like their, their challenges there for sure that you have to kind of overcome with these. Now, I want to ask you to how have your investors or partners responded to this? Like, are they obviously there's profitability into this, but like, is there that extra layer that people are interested in, like, where they light up and be like, oh, I want to serve and give back? Like, how have you found that to be with your investors?

Dave Holman: 28:14

Yeah, it's definitely a mix. You know, I think most of the people have pretty shared views on why this is a good thing to do. Some are only investing with me for that reason, I'd say that's a small minority. Others are kind of, they don't care, you know, like, we can fill it with whoever we want, as long as we, you know, are giving good numbers and good returns, you know, so I'm not trying to only work with people that are idealistically you know, motivated. And in fact, they can sometimes be harder to handle as investors because they're going to ask you like 30 different questions. And, you know, for their 10 or 20, grand, you're taking up hours of time, kind of explaining all the ins and outs, whereas someone putting in 100 is just like, great, thanks for the distribution, you know, so there's two sides to every coin. But yeah, in general, I think we're really proud of, of what we do. Because, you know, I think most of my friends and family and now they're friends and friends of friends and people, you know, from podcast, they would love to both earn a good return on their money, and know that it's making the world a better place. And when you give your money to Tim Cook at Apple and you invest in Apple stock, you can't tell him to like make the roofs nicer and do stuff or give input or get like little personal notes about it. So I think real estate investing, particularly the kind where we're every building we come to, you know, it's kind of this, you know, Girl Scout Boy Scout mentality of like, we're gonna leave that building a heck of a lot better than we found it. And by the way, we'll refinance it for way more money if we do that. Like it's just crazy to me that landlords let their buildings just kind of decay in place sometimes to extract rents when like, you'll sell it for so much less. Like if you had spent, you know, 50 grand on maintenance, you would have sold it for 200 grand more but, okay, there's not always that recognition.

Derek Clifford: 30:00

I think, you know, if people understood that they really, really understood it, they wouldn't have the desire to do something like that. I mean, no one would write. But I just don't think that some of these landlords think like that. That's unfortunate. And, and the good news is that it creates opportunities for us. But the bad news is that sometimes these tenants have to suffer, right? Because they're living through this situation, they can vote with their feet. But man, you know, sometimes it's really hard to move when you work in jobs, and you got kids, and it's really, really difficult to do all that.

Dave Holman: 30:28

So yeah, when I'm trying to make an acquisition, you know, what I'm really looking for is buildings that are mismanaged. Yeah, cuz it's very hard to change the neighborhood, the location, the bones of the building, like you can't change those things. But the management, you know, if they've let rent slip way under market, even if they were at market, they're low, because they've let the units decay and crappy units in a really nice location. Like, that is a great situation to be able to uncover and be like, oh, wait a minute, even though they're selling it for low low cap rate, they're getting way too much money for the current rents they have. They're only getting half the rent they could be getting, and it's actually a 10. Cap, not a five cap, even though you know, it seems that way.

Derek Clifford: 31:09

Yeah, 100%. Man, that's, that's something that we look for as well. Those are homerun deals, and they're getting harder and harder to find, because I think people are starting to get more sophisticated, and there's more people in the space, at least in multifamily. But I think you're looking in the right places, you know, the right people, then, you know, you can you can pick these up, for sure.

Dave Holman: 31:27

Yeah, I'm very much in the mind of like, if you're complaining that there's no good deals, you're not out there trying to find this. And we're in this era where like the baby boom, and you know, greatest generation are all, you know, divesting of their properties, they don't want to be active managers anymore. They don't want to deal with tenants they're selling. And a lot of these Mom and Pop owners even have big assets, have not done it in a steady, professional way. And you can find those deals that you know, by the time they get taken by a, you know, real estate agent as on the market listing? Yeah, maybe they have been positioned or priced, you know, to perfection. But if you're networking, you know, in the communities you're looking for, you can still find them out there.

Derek Clifford: 32:08

Love it. Yeah, great advice. Last question I have for you, before we head into the Rapid Round, the final segment of our show, is how would you recommend investors out there maximize their return on impact, it seems like for you, you've been able to really finesse this in two different directions, one from the point of view of noi, right, by being economically efficient, and just being good for the environment. And then the other with finding the right tenants and the right demographic for the building that you're looking to do that fits into your business plan and also serves the greater good. So coming from those two different angles, how would you recommend some people if they wanted to do what you're doing? Find a way to maximize the return on impact? Do you have any advice for them?

Dave Holman: 32:51

Yeah, I think the easiest way to maximize the return on impact is to buy in lower income areas, properties that need real safety work, and do that safety work, you know, do those smoke alarms in the bedrooms, you know, put a sprinkler system in the big giant apartment building, I mean, do these kinds of things that low income people deserve, and are not getting done, because the landlord you're buying from didn't know or didn't care. And maybe they're a good person, but they just, they weren't taught this stuff, they didn't learn it on podcasts. And you can really move the needle if you find a building that has, you know, led paint and all the doors and windows and you go and change that. That is literally life saving and life changing for the kids and toddlers living in that building. So to me looking for impact, like that's where to do it. And every state has those communities. I mean, there is no excuse New York and California absolutely have, you know, cheap low income areas that are not doing great and could use some investment. But it's often scary, you know, if you're an affluent personal investor, and you know that that's like the hood for you, and you might be scared of it. But I think it takes getting a little bit out of your comfort zone to you know, make a big impact and also make a big profit.

Derek Clifford: 34:06

I agree. And I think the big part of the big profit there is the fact that you can pick these properties up for relatively cheap, you know how to negotiate with the broker or with the seller, because if there's a lot of problems, then that is a problem you can solve, which means you should be compensated for that in some way. So, you know, I just want to make sure that people understand that you're not going to go in here and do this completely at a charity. While that's definitely the spirit of it. You need to make money so that you can continue operating and your investors are happy so you can continue to do this business and continue to make more impact other people, right, I'm hoping that that's something you agree with as well.

Dave Holman: 34:40

100% it has to be sustainable. And that means that you earn more than you spend, you can't do it as a charity. You're no charity, all charities are businesses, okay. And they all earn more than they spend or they go out of business to pay.

Derek Clifford: 34:52

Yeah, that's a good point. Very, very good.

Dave Holman: 34:54

I mean, worked in them for a good part of my career. I can attest to that. Yeah, just slightly different ways.

Derek Clifford: 35:00

For sure, no, that's, that's great. I love that. I think also, one last thing I'm going to comment on this and would love your thoughts, too, is layering on dynamics of where demographics are heading as well. So if you're targeting is these acquisitions in areas where, you know, for instance, the building itself is holding back the area, right? Like it's the blight of the area, or it's these, like, you can find a way to really impact everyone in the whole community. Right, not only people that are living there, but the people that are in the direct vicinity of your building, we've done this before, right? Where we impact that building and bring it up to a higher standard. And then you'll see the whole neighborhood start to lift up, which is really, really amazing, right, very profitable, and also great for the community. And you're creating a very, like it's a win win for everyone. Because for that extra margin of like 100 bucks and extra rent, you're providing them all of these extra amenities. Right. And we as investors are getting stable renters and stable income because people are now able to work jobs, and these feel safe where they are. So it's just a win win win situation.

Dave Holman: 36:00

Absolutely. I completely agree that you want your building exterior to be presentable. You know, you don't need to splurge and go crazy. But, you know, just decent paint, you know, you don't want it to look like a haunted house. And a lot of times, like putting some, like motion sensor, exterior lighting, that helps a lot, you know, and people going out to the parking lot at night, you know, if they have some lights coming on that that gives them a real different sense of safety.

Derek Clifford: 36:24

100% I love that. All right, cool. So Dave, this has been a fantastic conversation, we could talk all day about these these awesome techniques for enhancing NOI and finding property. But what we're gonna do is we're gonna head into the final segment of the show, which is called the Rapid Round. And it's five questions that we asked every single one of our guests, and we're going to ask them of you. And the idea is that we can get them answered in 30 seconds or less for each one. And if you're ready, we can go for it. Are you ready to go?

Dave Holman: 36:51

Bring it on. Let's do it.

Derek Clifford: 36:51

All right, cool. Question number one, what book has had the biggest impact on you and why? And we ask that it not be the Rich Dad, Poor Dad or the Bible, because we get that every single time.

Dave Holman: 37:05

There's been a lot of them. One that I'll mention today that none of your listeners have read and if they have kudos to them, it's called Cradle to Cradle. And it's about environmental design of buildings, and it really of the whole industrial environment. But it's a fascinating book that basically says everything should be completely recyclable or completely compostable. And we have the technology to do that.

Derek Clifford: 37:27

Cool. Love it, man. That's great. Good stuff. Number two, if people wanted to emulate your success, what do you think is the first actionable thing that they could do to follow in your footsteps?

Dave Holman: 37:39

Buy a building. I mean, I, I wish it was more inspirational or motivational. But that is fundamental. Like, I think most people that are great people that could be amazing, amazing. landlords have analysis paralysis, they're afraid to do it, and they never get started. And they just gotta buy something and take that leap of faith.

Derek Clifford: 37:58

I think this is fantastic advice. And I know it sounds very simplistic, but really, I agree with your analysis paralysis thing. And also, you just don't know what you don't know. Like, if you think that you're going to be out there understanding everything you can from books, there are things that you just have to learn the hard way. And once you realize that, and take the action, make it happen, you'll start learning faster, and then your growth curve will be way, way, way much, much improved from the other.

Dave Holman: 38:23

people lived most of the worst case scenario is that you'll sell it for about what you bought it for.

Derek Clifford: 38:27

Yeah, exactly. Love it, love it. Number three, what is one tool process or hack in the last three to six months that you have employed to help you save time and or effort?

Dave Holman: 38:38

Our team had this productivity software called Asana, just kind of like checklists, and so forth. But we weren't really using it because we're all just so busy that we were kind of neglecting it. And we've had one of our back end like, you know, virtual assistant members, just do a quick five or 10 minute interview with each of us once a week to update those lists. And it's been really transformational and helpful, at least for me. And I think for the rest of our team to have a little helper come in and help you stay on track.

Derek Clifford: 39:05

What a great thing. I use Asana for tracking work with my assistants, and also with my own team members. And using it as like a hub for SOPs and also for tasks has been a complete game changer. So I love that you mentioned Asana, and I love the way that you're using it now to that, that's fantastic. I'm going to take that back as well. Awesome. Number four, if the people that you know had to describe you with one word, what do you think that word would be?

Dave Holman: 39:33

Nice.

Derek Clifford: 39:35

Oh, yeah, I would agree with you on that one. Definitely.

Dave Holman: 39:38

I hope so. I've had some less than stellar bosses in my working career. So I strive to be the opposite of that. And you know, I hope that reflects in my actions.

Derek Clifford: 39:49

Yes, absolutely. All right, number five. Last question. What small thing do most people not know about you?

Dave Holman: 39:56

Ooh, probably you know that I grew up as a huge nerd. So I have a pretty good you know, lexicon of any fantasy sci fi, you know, Dungeons and Dragons kind of lore that you may need to reference. You know, I sort of became an athlete and a jock after that and a different life.

Derek Clifford: 40:15

Very cool. Well, I'm sure there's gonna be some people in the audience that that would love to reach out to you and talk more about that for sure and I may be one of them. So maybe we'll talk a little bit after the show, then go.

Dave Holman: 40:27

We'd love to we'd love to connect with you and anyone listening?

Derek Clifford: 40:30

Sounds good. All right. So Dave, thank you, again, so much for coming on the show and providing us with all this wisdom and perspective on how to provide impact both on the NOI side with environmental type approaches, and then also working with communities that really want and are thankful for these amazing projects that you're putting together. How can people find out more about what you have going on and just you in general.

Dave Holman: 40:53

absolutely. Best place is HolmanHomes.com, they can contact me their, reach out to me, and I'm happy to give out my cell phone. Very few people ever, you know, give me a shout. But it's 207-517-5700 and I'd love to hear from you.

Derek Clifford: 41:08

That sounds awesome. David, thank you so much, again, for coming on the show. This was awesome. And we cannot wait to share this with the audience. And so thanks for coming on.

Dave Holman: 41:16

Awesome. Thanks for having me, Derek.

Derek Clifford: 41:17

Absolutely. And for you listeners out there who have listened all the way to the very end. We want to thank you especially and please, wherever you're listening or watching this podcast, whether it's YouTube or Stitcher, iTunes, Spotify, please make sure that you like review or you comment with us engage with us so that we can appease those algorithm gods and start to get more and more exposure to more people and bring on incredible guests like Dave and so we can keep the podcast going. So thank you guys for everything. This is Derek. We're signing off for the day. Thanks everyone. Have a great week.