June 11, 2024 • 23 mins
Can a new way of thinking solve the housing crisis? Tune in to hear from Sibley Simon of New Way Homes who left the corporate world to tackle housing challenges in Santa Cruz, California. Sibley shares how traditional high-return and publicly funded models fall short and how his nonprofit leverages impact investment funds to build sustainable, community-focused affordable housing. From using nonprofit-owned properties to reducing parking requirements, discover the innovative strategies that make New Way Homes a game-changer in the sector.
We also explore how individuals can get involved through platforms like EquityVest and create their community investment funds with guidance from firms like Cutting Edge Counsel. Sibley discusses the triple bottom line approach—social, environmental, and financial sustainability—and the growing interest in these community investments. Learn about the potential of church-owned properties, the positive changes in housing regulations, and how blending for-profit and nonprofit models can lead to environmentally responsible, workforce housing. Don't miss out on this insightful conversation about fostering community growth and collaboration through innovative housing solutions.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Joel (00:00):
What if investing in each other could change the world?
I'm Joel Skeen with bizradiousand this is the Mindful
Marketplace.
Welcome back to part two ofthis excellent conversation I'm
getting to have with SibleySimon of New Way Homes out in
California, in Santa Cruz.
(00:21):
Is that right?
Sibley (00:22):
Yeah, that's right.
Joel (00:23):
Yeah, yeah.
So if you didn't get a chanceto listen to part one of this
episode, go back and do that.
Sibley and I really talkedabout why he left kind of
corporate world and moved intothe world of trying to really
solve some serious housingissues and we shed some light on
what those issues are.
But what I'm really excited toget to talk with him today about
(00:45):
is this new model that New WayHomes is using to both construct
and create affordable housingfor people, but also to give
local residents a way to investinto their local communities.
We've talked a lot on this showabout how there are so many
people out there who are lookingfor alternative ways to invest
(01:06):
their money.
That isn't just Wall Street,whether that's because they are
kind of sick of the boom andbust or whether it's because
maybe they don't really want tosupport Wall Street for one
reason or another.
There's a lot of people lookingfor ways to invest their money
in their local communities theirmoney in their local
communities, and I thought whatNew Way Homes is doing was just
(01:26):
a really brilliant way to allowpeople to do that and to do some
good with their money whileearning a return on investment.
So, sibley, tell us a little.
What's the story of New WayHomes?
How did this happen?
Sibley (01:35):
Yeah, so I talked a little bit last episode that had
been helping with challenges onhomelessness.
But seeing that our housingproblem was much broader than
that, pl, plenty of people whohave important jobs in our
communities not being able toafford to live here anymore and
in the greater Bay Area, youknow, etc.
And so I really dug into youknow what's the problem on
(01:57):
housing and, more importantly,what can we do about it, and saw
that, oh, almost all thehousing we're developing it's in
one of two models.
It's either this very highreturn, one big project at a
time where institutionalinvestment money comes in and,
once you know again, 18% IRR andone tower, you know, and that
(02:19):
only works in like condo towersor big subdivisions with big
homes.
You know where you can do thatand so, okay, higher end of the
market in a lot of places beingtaken care of that way.
And then the public sectorputting some money into a
smaller amount of housing,publicly funded affordable
housing, which is great for lowand very low income affordable
(02:40):
housing.
The main problem with that isthere's not enough of it
remotely to solve the issue.
So you have lottery winners youknow literal lotteries to see a
thousand families that areeligible, which one family gets
this apartment at an affordablerate.
So again, that's great, but ifthose are the only two things
(03:00):
we're doing, you know we're notgoing to solve the problem.
It's really clear.
And so realize that, oh, youcan create apartment buildings
that are rental housing, wherethe rent does not have to go up
much year over year.
You can create those and returncapital to investors and bring
the risk down, was my argumentstarting out, partly because
(03:23):
you're not going for the verytop of the market, which rents
do go up and down with theeconomy.
But if you're below that, at amore affordable rent, you're
going to have a real line outthe door but a lot more
flexibility because you'reprivately funded.
So that was the concept.
Let's get into that.
And so I formed New Way Homes asa nonprofit to run an impact
(03:44):
investment fund specifically forthis purpose.
And we also have a companycalled Workbench that we've
grown bootstrapped through thisand we even get hired by other
developers where we have adesign team and a construction
team, development team, etcetera.
So trying to integrate a lot offunctions so that we can really
have a whole project that makessense, because we're thinking
(04:05):
pretty differently.
We're not under all the many,many requirements of publicly
funded projects, but we're notgoing for the top of the market,
you know.
And so how do we do this?
And we can figure out, oh,locations where you don't need
to build a big parking garage,where people there are folks who
are happy to live with muchfewer cars maybe not zero cars,
but much fewer cars.
That saves a lot of money,makes the housing more
(04:26):
affordable, but all kinds ofthings get unlocked that you can
do differently to make thehousing really great quality and
more community oriented, butalso more affordable If all that
gets unlocked.
If you start with investmentsources that are not trying to
maximize profit, they're tryingto get a solid, steady return,
(04:46):
but not maximize profit, right.
So we try to flip the scriptand say we're trying to maximize
affordability and a greatlong-term project that's
environmentally sustainable andgreat for the community and
return our promised return toinvestors, not maximize the
return to investors.
So by flipping that, it justopens up your thinking to all
(05:08):
kinds of creative things you cando to make it more affordable,
more environmentally sustainable, think more long-term.
So we created this New WayHomes Fund and in particular, we
have over $10 million fund nowand growing.
That's for pre-development andthat's normally what's seen as
the most the riskiest stage,which is starting out with the
projects and getting theplanning permits and then the
(05:29):
building permit.
And I just want to mentionbefore I stop here, that the one
other thing that I didn't thinkof when starting this but
started it raised some moneyfrom people I knew who were
pretty philanthropic but wantedto do an impact investment,
(05:50):
seeded this, got it going andthen had a terrible time getting
any sites because the sitesthemselves are super expensive
and hard to come by and you knowhow do you make this work.
And then what has happened isthat it turns out like even just
in California, there's hundredsof thousands of properties
owned by nonprofits and thebiggest category of that is
churches, and so many of thesenonprofits and churches are
mission aligned.
They see the housing crisis andthey're like we're not trying
(06:12):
to maximize profit, but we mightwant some income stream, but we
could put our land, our site,our building into helping create
this kind of mission-driven,more affordable housing.
And so we've gone around makinglots of partnerships.
So if we have impact investmentthat gets a reasonable return
and we have a site owner willingto invest the land.
(06:33):
We don't have to buy up front.
Now we're really on a path tohelp make the housing more
affordable.
Joel (06:38):
Yeah, and when you mentioned return on investment
for the people who are investinginto these housing projects,
you mentioned the differencebetween making a profit and
maximizing a profit.
But I also think, if I'mthinking about things like we've
talked about the triple bottomline here planet, people, profit
.
I think there's also aquadruple.
Now there's a fourth one, I'mforgetting what other P there is
(06:59):
but one of the ways that I'vealways thought about this is
that people who invest locallyand invest in ways that are
geared towards impact aregetting not just a financial
rate of return, but they're alsogetting a social rate of return
.
Have you seen that in theseprojects?
What does that social returnlook like for?
(07:22):
I guess, both on the people whoget the housing but also for
the people who make theinvestment.
Sibley (07:26):
A hundred percent of our investors are really motivated
to help solve this housingcrisis to help people, families
you know young folks, seniors,you know all these veterans you
know you can go on and on whoare really struggling because of
the cost of housing.
You know a hundred% part of themotivation, so partly they just
feel great.
(07:46):
When we then build a buildingand people occupy it who you
know, clearly we have, you know,videos, people who moved in and
we didn't ask to have made avideo.
You know just how thrilled theyare to have this housing, with
the family showing it to theirkids.
We have folks who have come outof prison who are really
motivated to get a job.
It's very hard to get housingwith the applications, you know,
(08:10):
if you're coming out of prison,but the folks who then go on
and you know, do really well,you know it's interesting.
So A just feel good hearingthose stories.
But also, more specifically,we've had some businesses or
nonprofit employers, you know,like our health care system, you
know, et cetera invest and we,what we offer to those folks is
a marketing preference, sothey're investing in the New Way
Homes Fund.
(08:31):
When we have vacancies we'll goto them and say hey, before we
market this even more widely, doyou want to see if any of your
staff want to apply for thisapartment and if they fit the
bill, you know, we'll rent tothem.
And so that's a very, becauseall these employers are saying,
oh my gosh, you know, and I justhad a hospital.
(08:51):
Somebody from a hospitalyesterday said we really want to
meet and talk about, you know,housing for staff or folks
coming to us for training, youknow, et cetera.
So you know that that's a.
You know.
You could still say that'sfinancial because it's motivated
to help their business work.
But the, the business doesn'tget involved in being a landlord
or anything.
They just want something tooffer to employees, you know, to
(09:12):
help be there.
But just folks who have, youknow, plenty of, are not really
wealthy, they're not in that 1%,but they have their retirement
set and they're like oh, how canI invest some of this?
Because my kids cannot affordto live in this community where
they grew up?
How can I make an investmentthat provides a steady return,
that helps solve that problem,even if they're not going to
(09:34):
live in your building maybe theywill, maybe they won't but just
like, help solve this problemso we can have a community?
And so everybody here feelsthat of like personal stories.
Even if they're set with theirhousing.
They have plenty of personalstories about people who haven't
been able to live in thiscommunity, and so they want to
help solve that.
Joel (09:54):
And the way you're describing it to it almost like
when, when we invest into ourcommunities, it seems like it's
it's about investing more with along term mindset.
Right, like if you do communityinvesting or you do local
investing, like you said, likeyou know, ok, maybe you, you,
you hit the lottery on a reallygreat, fast growing company
that's local to you.
(10:14):
That's cool and you can get afast rate of return.
But a lot of times what I'mseeing is it's not that the rate
of return is actually alwaysall that bad, it's just more
that it's more takes more of along-term mindset.
Can you speak any at all to thelong-term mindset around how
you think about investing at NewWay?
Sibley (10:34):
Yeah, we definitely think longer term.
So we've had a lot offoundations invest in New Way
Home Fund who want to invest ata 3% return.
But that's the practice in thefoundation world.
But for individuals, businesseswe've done some offerings at
4.25% return that are 10-yearnotes and send an interest check
(10:54):
every year, a couple of thingslike that.
And then we're also gettingvehicles set up for equity
investment in the project.
So then someone's a part ownerof the projects themselves and
they have to think even longerterm.
You know it might be 15 years,you know, to get liquidity but a
little higher return you knowmight get, you know, six plus
percent return on that, you know, year after year after year.
(11:16):
So you know that's kind of.
You know those are modestreturns but can be a solid part
of someone's overall portfoliobecause these are real buildings
that are really there.
You know they're not somethingthat could just disappear
overnight.
You know and and so and.
But the other thing is we thinkvery long term.
You know we're not trying tobuild these buildings and sell
them.
We're trying to build them,manage them, keep them more
(11:38):
affordable over time, havepartners like nonprofits,
churches, communityorganizations, and we're helping
their balance sheet and they'redoing things for the community.
A lot of the churches we workwith who are motivated for this.
They're not just some church upthe hill that people go to on
Sunday.
They're like doing food banking, they're like just helping
folks who don't have a place tosleep.
(11:59):
They're just, you know so much,providing places for COVID
shots, like you know, just allthis stuff in the community.
We've been so impressed so youknow it helps fund some of that
stuff.
So we think long term.
Also, the triple bottom line Iwant to mention, you know, the
environmental sustainability isso important.
We go above and beyond in thatwe're always trying to find the
(12:19):
latest things we can do.
And it does affect the otherbottom lines in that if we're
thinking long term, we can lookat something and be like, oh, if
we do this extra waterconservation measure or take the
extra step to be net zeroenergy, that it might take 15
years for that to pay offfinancially.
(12:40):
But we're looking at the 30year mortgage and the operating
costs over that whole time andwe can borrow a little more
because of that lower operatingcosts, right.
So you know we can think ofdoing things that can pay off
over the very long term and wereally are trying to figure out
how do we, you know, lowercarbon footprint, make these
buildings extremely sustainable?
Joel (13:02):
So let's say I'm saving a couple hundred dollars a month
for my retirement and I'm okaywith using half of that to do an
impact investment where I mightnot get the highest rate of
return possible, but it meanssomething to my community and
it's giving and it's taking careof something that I really care
about.
(13:22):
I guess how does that work?
I know normally most peopleneed an advisor.
They need a lot of these thingsin order to make any Wall
Street investments.
Is this done throughcrowdfunding?
How would someone, how would anordinary person just saving for
retirement, make an investmentinto affordable housing through
New Way?
Sibley (13:40):
Yeah, you hit it on the head.
If someone qualifies as anaccredited investor, which
typically the most common way is, someone has a million dollars
of assets that are not theirprimary residence, so it's quite
a bit.
But sometimes people get intoretirement, you know, have that,
for example, then they can.
There's all kinds ofinvestments they can make that
are open to accredited investors.
(14:00):
We always have that going on.
But what we've wanted todemocratize this to a greater
extent, and so we'veparticipated in those
crowdfunding investment vehiclesthat are now legal, and so we
have one up right now, you cansee, on newwayhomesorg.
You go to it, it'll take you tothe page specifically for that.
It's on a platform calledEquityVest that only does
(14:23):
mission related.
You know, investments impactinvestments, but you can see it
on our newwayhomesorg websiteand that is one where, yes,
someone can invest.
Start said I think it's $250 inminimum investment, but you
know, got to go look and see allthe terms there.
But, um, but you can see avideo about what we're doing and
and a lot of easy to readthings about how it works, and
(14:45):
so one can just do it throughthe website then.
So the federal government hasput rules in place, um, and all
kinds of things we have tofollow so that this isn't
something that's going to go.
You know, scam thousands ofpeople.
So now there's rules andcompliance so that we can offer
these kinds of impactinvestments to, you know, in a
retail way, to anyone who wantsto participate.
Joel (15:07):
You know, it kind of reminds me.
There is a group that I wastalking with, with Kevin Jones
and Michael Schumann, and hethey were in, I want to say in
Louisville Kentucky.
They were in I want to say inLouisville Kentucky and they
actually you were able to usethe fund that they had to match
crowdfunded community donationsfor startup businesses, and so
(15:28):
there's just it's just thecrowdfunding stuff seems like if
you're out there and you'rewondering, like how do I invest
outside of Wall Street andlocally, I would say, take a
look at some of those platformsfor crowdfunding, whether it's
WeFunder, what was the one thatyou mentioned?
Sibley (15:41):
EquityVest.
It's a newer one that is morefocused on that.
There's billions of stuff onWeFunder, right, but you can
find some impact investments onthere too.
Joel (15:50):
Yeah, exactly, and the other thing that I wanted to ask
you too let's say that someoneout there listening isn't just
interested in maybe making apersonal investment into an
impact, into an impact project,but maybe they're interested in
actually trying to start somekind of fund or actually create
something like this in their owncommunity.
You mentioned the you know,housing with Airbnb issues.
(16:13):
Here in my hometown ofAsheville, North Carolina, we
have more Airbnb saturation thanany other city in the country,
and it's like by double thesecond highest, and so that's
that that workforce housing isone of the biggest issues that
my my community faces.
So I'm Curious like what wouldyou, what would your kind of
guidance or advice be to someonewho wants to possibly try to
(16:35):
create something like this intheir own communities?
Sibley (16:38):
Yeah, I mean, if someone is going to create an impact
investment vehicle for fundingmultiple mission driven housing
projects, just contact us.
We'll send you everything we'veever done.
You know we see ourselves aswanting to have impact in the
world and part of that is tellpeople what we've learned, right
, so we can't spend a ton oftime, you know, helping someone
(16:59):
set it up somewhere, but wecertainly give you everything
we've learned.
So, but yes, absolutely, I meanfirst things, you know,
identify some sources.
Hopefully you can find someindividuals, businesses,
foundations.
You know who will make someinitial investments to help you
get started.
But you know there is quite abit of compliance and legal
(17:19):
stuff to set up.
But that's where again, talk topeople who've done it we have
great legal help from gosh.
They just changed their name.
They've been Cutting EdgeCouncil, so you can still find
them under that name, but theyjust changed their name, which
is escaping me.
But Cutting Edge Council is alegal firm in Oakland but
they're national experts inworking all over all kinds of
(17:41):
states specifically helpingpeople on impact investment.
You know that's what they doReally cool for just the legal
side.
But absolutely, you know, it'ssomething I really recommend
because there's huge interestout there.
A lot of people don't even knowhow to take action in investing
in their own community.
But if you can just go aroundand talk to people in your own
(18:02):
community about doing it, youwill find a lot of interest.
You just have to do a bunch ofthat setup to do it right.
Joel (18:08):
Yeah, we've been talking a lot about these diversified
community investment funds thatI think that Cutting Edge and
NC3 worked on to put together,where you can actually invest
your money directly into localbusinesses and real estate at
the same time, and it makes theprocess a lot, lot easier.
If you're out there listeningand you're interested in that.
(18:29):
Twice a month on YouTube, I doanother show on my YouTube
channel called community capitallive with, uh, michael Schumann
and Kevin Doyle Jones.
Um, and so if you areinterested in that in the, in
the fun side of things, starttuning into that, because that's
a that's a really greatresource and we're building out
a database through impact alphaand the main street journal on
(18:51):
that.
Um, so, yeah, I, uh, I, whatare?
Yeah, what are you excitedabout right now or, I guess,
when you're thinking about kindof the future, of what this is
going to do for your community?
What does it mean really tohave these investors coming
directly from your community?
Sibley (19:09):
Yeah, it's incredible because, again, this long-term
approach it allows us to take.
Yeah, it's incredible because,again, this long-term approach
it allows us to take and we havemore and more site owners
coming to us because they see ushaving some success and like,
oh, what you did with thisnonprofit over there, what you
did with this church over there,oh, can you do that with us.
Or even just families that haveowned a business property for a
(19:29):
long time that has sort of anold one-story commercial
building on it for a long time,that has sort of an old
one-story commercial building onit that at the end of this life
, oh, could we build this, a newstorefront with housing that's
really needed on top of it.
So just being able to do thishas brought more and more people
from the community out to help,seeing that like, oh, we can
all work together here to buildthe housing that's needed.
(19:51):
The other thing I'm reallyexcited about and absolutely
love is that in all kinds ofplaces across our country and I
literally mean that, um, rural,urban, blue states, red states,
et cetera the uh legal regimethat has and regulation that has
helped, um, in some casesunknowingly, you know, in some
places knowingly, californiainvented single family homes,
(20:14):
only zoning to have, you know,lock in segregation.
But that created the housingcrisis or these crises.
Is is going in the rightdirection.
It is changing and statelegislators, you know, across
the country, are doing things.
You know I'm working out west,I'm paying attention to like, oh
, montana is doing a lot ofchanges, california is doing a
(20:36):
lot of changes, every singlestate.
And that is so cool because youwork on a cause it could be
climate change, whatever andsometimes you're like, oh,
government can't get anythingdone on this.
And here there's a lot ofbipartisan support for the
details get challenging andeverything but by and large, so
like, let's make change.
(20:56):
So private sector, publicsector, blended sector, you know
, can come together and justlike, build the infill,
environmentally responsibleworkforce housing that we really
need.
So that is really fun andparticipating in that policy
change is really fun too, to tryto get it right sorry the audio
.
Joel (21:14):
the audio cut out.
Can you hear me?
Yeah, I can hear you, fine.
Okay, all right, I'll have toedit this, but that's okay.
Well, sibley, I think it's anincredible project.
I think it's really worthpeople taking a look at, to get
to learn more about how you guysare doing as an example, as I
said, because this is the kindof thing you know when we talk
about big changes that need tohappen in our economy, in our
(21:36):
world, like you said, a lot oftimes, we look from top down or
we look from you know kind ofold structures of you know
nonprofit do good work is overon one side with one pocket and
you know making money is on theother side.
But your ability to combine theinnovativeness and the
flexibility of a for-profitbusiness with the mission and
the goal and really just theimpact of a nonprofit, I think
(22:02):
is such a cool thing and really,really admirable.
So check out New Way Homes andfollow what they're doing and to
stay in touch with them.
I am Joel Skeen.
This is Biz Radio US.
Make sure to subscribe onYouTube, spotify, itunes,
stitcher, wherever you get yourpodcasts.
And until next time, rememberwe are each other.
What if investing in each other could change the world?
I'm Joel Skeen with bizradiousand this is the Mindful
Marketplace.
Welcome back to part two ofthis excellent conversation I'm
getting to have with SibleySimon of New Way Homes out in
California, in Santa Cruz.
(00:21):
Is that right?
Sibley (00:22):
Yeah, that's right.
Joel (00:23):
Yeah, yeah.
So if you didn't get a chanceto listen to part one of this
episode, go back and do that.
Sibley and I really talkedabout why he left kind of
corporate world and moved intothe world of trying to really
solve some serious housingissues and we shed some light on
what those issues are.
But what I'm really excited toget to talk with him today about
(00:45):
is this new model that New WayHomes is using to both construct
and create affordable housingfor people, but also to give
local residents a way to investinto their local communities.
We've talked a lot on this showabout how there are so many
people out there who are lookingfor alternative ways to invest
(01:06):
their money.
That isn't just Wall Street,whether that's because they are
kind of sick of the boom andbust or whether it's because
maybe they don't really want tosupport Wall Street for one
reason or another.
There's a lot of people lookingfor ways to invest their money
in their local communities theirmoney in their local
communities, and I thought whatNew Way Homes is doing was just
(01:26):
a really brilliant way to allowpeople to do that and to do some
good with their money whileearning a return on investment.
So, sibley, tell us a little.
What's the story of New WayHomes?
How did this happen?
Sibley (01:35):
Yeah, so I talked a little bit last episode that had
been helping with challenges onhomelessness.
But seeing that our housingproblem was much broader than
that, pl, plenty of people whohave important jobs in our
communities not being able toafford to live here anymore and
in the greater Bay Area, youknow, etc.
And so I really dug into youknow what's the problem on
(01:57):
housing and, more importantly,what can we do about it, and saw
that, oh, almost all thehousing we're developing it's in
one of two models.
It's either this very highreturn, one big project at a
time where institutionalinvestment money comes in and,
once you know again, 18% IRR andone tower, you know, and that
(02:19):
only works in like condo towersor big subdivisions with big
homes.
You know where you can do thatand so, okay, higher end of the
market in a lot of places beingtaken care of that way.
And then the public sectorputting some money into a
smaller amount of housing,publicly funded affordable
housing, which is great for lowand very low income affordable
(02:40):
housing.
The main problem with that isthere's not enough of it
remotely to solve the issue.
So you have lottery winners youknow literal lotteries to see a
thousand families that areeligible, which one family gets
this apartment at an affordablerate.
So again, that's great, but ifthose are the only two things
(03:00):
we're doing, you know we're notgoing to solve the problem.
It's really clear.
And so realize that, oh, youcan create apartment buildings
that are rental housing, wherethe rent does not have to go up
much year over year.
You can create those and returncapital to investors and bring
the risk down, was my argumentstarting out, partly because
(03:23):
you're not going for the verytop of the market, which rents
do go up and down with theeconomy.
But if you're below that, at amore affordable rent, you're
going to have a real line outthe door but a lot more
flexibility because you'reprivately funded.
So that was the concept.
Let's get into that.
And so I formed New Way Homes asa nonprofit to run an impact
(03:44):
investment fund specifically forthis purpose.
And we also have a companycalled Workbench that we've
grown bootstrapped through thisand we even get hired by other
developers where we have adesign team and a construction
team, development team, etcetera.
So trying to integrate a lot offunctions so that we can really
have a whole project that makessense, because we're thinking
(04:05):
pretty differently.
We're not under all the many,many requirements of publicly
funded projects, but we're notgoing for the top of the market,
you know.
And so how do we do this?
And we can figure out, oh,locations where you don't need
to build a big parking garage,where people there are folks who
are happy to live with muchfewer cars maybe not zero cars,
but much fewer cars.
That saves a lot of money,makes the housing more
(04:26):
affordable, but all kinds ofthings get unlocked that you can
do differently to make thehousing really great quality and
more community oriented, butalso more affordable If all that
gets unlocked.
If you start with investmentsources that are not trying to
maximize profit, they're tryingto get a solid, steady return,
(04:46):
but not maximize profit, right.
So we try to flip the scriptand say we're trying to maximize
affordability and a greatlong-term project that's
environmentally sustainable andgreat for the community and
return our promised return toinvestors, not maximize the
return to investors.
So by flipping that, it justopens up your thinking to all
(05:08):
kinds of creative things you cando to make it more affordable,
more environmentally sustainable, think more long-term.
So we created this New WayHomes Fund and in particular, we
have over $10 million fund nowand growing.
That's for pre-development andthat's normally what's seen as
the most the riskiest stage,which is starting out with the
projects and getting theplanning permits and then the
(05:29):
building permit.
And I just want to mentionbefore I stop here, that the one
other thing that I didn't thinkof when starting this but
started it raised some moneyfrom people I knew who were
pretty philanthropic but wantedto do an impact investment,
(05:50):
seeded this, got it going andthen had a terrible time getting
any sites because the sitesthemselves are super expensive
and hard to come by and you knowhow do you make this work.
And then what has happened isthat it turns out like even just
in California, there's hundredsof thousands of properties
owned by nonprofits and thebiggest category of that is
churches, and so many of thesenonprofits and churches are
mission aligned.
They see the housing crisis andthey're like we're not trying
(06:12):
to maximize profit, but we mightwant some income stream, but we
could put our land, our site,our building into helping create
this kind of mission-driven,more affordable housing.
And so we've gone around makinglots of partnerships.
So if we have impact investmentthat gets a reasonable return
and we have a site owner willingto invest the land.
(06:33):
We don't have to buy up front.
Now we're really on a path tohelp make the housing more
affordable.
Joel (06:38):
Yeah, and when you mentioned return on investment
for the people who are investinginto these housing projects,
you mentioned the differencebetween making a profit and
maximizing a profit.
But I also think, if I'mthinking about things like we've
talked about the triple bottomline here planet, people, profit
.
I think there's also aquadruple.
Now there's a fourth one, I'mforgetting what other P there is
(06:59):
but one of the ways that I'vealways thought about this is
that people who invest locallyand invest in ways that are
geared towards impact aregetting not just a financial
rate of return, but they're alsogetting a social rate of return
.
Have you seen that in theseprojects?
What does that social returnlook like for?
(07:22):
I guess, both on the people whoget the housing but also for
the people who make theinvestment.
Sibley (07:26):
A hundred percent of our investors are really motivated
to help solve this housingcrisis to help people, families
you know young folks, seniors,you know all these veterans you
know you can go on and on whoare really struggling because of
the cost of housing.
You know a hundred% part of themotivation, so partly they just
feel great.
(07:46):
When we then build a buildingand people occupy it who you
know, clearly we have, you know,videos, people who moved in and
we didn't ask to have made avideo.
You know just how thrilled theyare to have this housing, with
the family showing it to theirkids.
We have folks who have come outof prison who are really
motivated to get a job.
It's very hard to get housingwith the applications, you know,
(08:10):
if you're coming out of prison,but the folks who then go on
and you know, do really well,you know it's interesting.
So A just feel good hearingthose stories.
But also, more specifically,we've had some businesses or
nonprofit employers, you know,like our health care system, you
know, et cetera invest and we,what we offer to those folks is
a marketing preference, sothey're investing in the New Way
Homes Fund.
(08:31):
When we have vacancies we'll goto them and say hey, before we
market this even more widely, doyou want to see if any of your
staff want to apply for thisapartment and if they fit the
bill, you know, we'll rent tothem.
And so that's a very, becauseall these employers are saying,
oh my gosh, you know, and I justhad a hospital.
(08:51):
Somebody from a hospitalyesterday said we really want to
meet and talk about, you know,housing for staff or folks
coming to us for training, youknow, et cetera.
So you know that that's a.
You know.
You could still say that'sfinancial because it's motivated
to help their business work.
But the, the business doesn'tget involved in being a landlord
or anything.
They just want something tooffer to employees, you know, to
(09:12):
help be there.
But just folks who have, youknow, plenty of, are not really
wealthy, they're not in that 1%,but they have their retirement
set and they're like oh, how canI invest some of this?
Because my kids cannot affordto live in this community where
they grew up?
How can I make an investmentthat provides a steady return,
that helps solve that problem,even if they're not going to
(09:34):
live in your building maybe theywill, maybe they won't but just
like, help solve this problemso we can have a community?
And so everybody here feelsthat of like personal stories.
Even if they're set with theirhousing.
They have plenty of personalstories about people who haven't
been able to live in thiscommunity, and so they want to
help solve that.
Joel (09:54):
And the way you're describing it to it almost like
when, when we invest into ourcommunities, it seems like it's
it's about investing more with along term mindset.
Right, like if you do communityinvesting or you do local
investing, like you said, likeyou know, ok, maybe you, you,
you hit the lottery on a reallygreat, fast growing company
that's local to you.
(10:14):
That's cool and you can get afast rate of return.
But a lot of times what I'mseeing is it's not that the rate
of return is actually alwaysall that bad, it's just more
that it's more takes more of along-term mindset.
Can you speak any at all to thelong-term mindset around how
you think about investing at NewWay?
Sibley (10:34):
Yeah, we definitely think longer term.
So we've had a lot offoundations invest in New Way
Home Fund who want to invest ata 3% return.
But that's the practice in thefoundation world.
But for individuals, businesseswe've done some offerings at
4.25% return that are 10-yearnotes and send an interest check
(10:54):
every year, a couple of thingslike that.
And then we're also gettingvehicles set up for equity
investment in the project.
So then someone's a part ownerof the projects themselves and
they have to think even longerterm.
You know it might be 15 years,you know, to get liquidity but a
little higher return you knowmight get, you know, six plus
percent return on that, you know, year after year after year.
(11:16):
So you know that's kind of.
You know those are modestreturns but can be a solid part
of someone's overall portfoliobecause these are real buildings
that are really there.
You know they're not somethingthat could just disappear
overnight.
You know and and so and.
But the other thing is we thinkvery long term.
You know we're not trying tobuild these buildings and sell
them.
We're trying to build them,manage them, keep them more
(11:38):
affordable over time, havepartners like nonprofits,
churches, communityorganizations, and we're helping
their balance sheet and they'redoing things for the community.
A lot of the churches we workwith who are motivated for this.
They're not just some church upthe hill that people go to on
Sunday.
They're like doing food banking, they're like just helping
folks who don't have a place tosleep.
(11:59):
They're just, you know so much,providing places for COVID
shots, like you know, just allthis stuff in the community.
We've been so impressed so youknow it helps fund some of that
stuff.
So we think long term.
Also, the triple bottom line Iwant to mention, you know, the
environmental sustainability isso important.
We go above and beyond in thatwe're always trying to find the
(12:19):
latest things we can do.
And it does affect the otherbottom lines in that if we're
thinking long term, we can lookat something and be like, oh, if
we do this extra waterconservation measure or take the
extra step to be net zeroenergy, that it might take 15
years for that to pay offfinancially.
(12:40):
But we're looking at the 30year mortgage and the operating
costs over that whole time andwe can borrow a little more
because of that lower operatingcosts, right.
So you know we can think ofdoing things that can pay off
over the very long term and wereally are trying to figure out
how do we, you know, lowercarbon footprint, make these
buildings extremely sustainable?
Joel (13:02):
So let's say I'm saving a couple hundred dollars a month
for my retirement and I'm okaywith using half of that to do an
impact investment where I mightnot get the highest rate of
return possible, but it meanssomething to my community and
it's giving and it's taking careof something that I really care
about.
(13:22):
I guess how does that work?
I know normally most peopleneed an advisor.
They need a lot of these thingsin order to make any Wall
Street investments.
Is this done throughcrowdfunding?
How would someone, how would anordinary person just saving for
retirement, make an investmentinto affordable housing through
New Way?
Sibley (13:40):
Yeah, you hit it on the head.
If someone qualifies as anaccredited investor, which
typically the most common way is, someone has a million dollars
of assets that are not theirprimary residence, so it's quite
a bit.
But sometimes people get intoretirement, you know, have that,
for example, then they can.
There's all kinds ofinvestments they can make that
are open to accredited investors.
(14:00):
We always have that going on.
But what we've wanted todemocratize this to a greater
extent, and so we'veparticipated in those
crowdfunding investment vehiclesthat are now legal, and so we
have one up right now, you cansee, on newwayhomesorg.
You go to it, it'll take you tothe page specifically for that.
It's on a platform calledEquityVest that only does
(14:23):
mission related.
You know, investments impactinvestments, but you can see it
on our newwayhomesorg websiteand that is one where, yes,
someone can invest.
Start said I think it's $250 inminimum investment, but you
know, got to go look and see allthe terms there.
But, um, but you can see avideo about what we're doing and
and a lot of easy to readthings about how it works, and
(14:45):
so one can just do it throughthe website then.
So the federal government hasput rules in place, um, and all
kinds of things we have tofollow so that this isn't
something that's going to go.
You know, scam thousands ofpeople.
So now there's rules andcompliance so that we can offer
these kinds of impactinvestments to, you know, in a
retail way, to anyone who wantsto participate.
Joel (15:07):
You know, it kind of reminds me.
There is a group that I wastalking with, with Kevin Jones
and Michael Schumann, and hethey were in, I want to say in
Louisville Kentucky.
They were in I want to say inLouisville Kentucky and they
actually you were able to usethe fund that they had to match
crowdfunded community donationsfor startup businesses, and so
(15:28):
there's just it's just thecrowdfunding stuff seems like if
you're out there and you'rewondering, like how do I invest
outside of Wall Street andlocally, I would say, take a
look at some of those platformsfor crowdfunding, whether it's
WeFunder, what was the one thatyou mentioned?
Sibley (15:41):
EquityVest.
It's a newer one that is morefocused on that.
There's billions of stuff onWeFunder, right, but you can
find some impact investments onthere too.
Joel (15:50):
Yeah, exactly, and the other thing that I wanted to ask
you too let's say that someoneout there listening isn't just
interested in maybe making apersonal investment into an
impact, into an impact project,but maybe they're interested in
actually trying to start somekind of fund or actually create
something like this in their owncommunity.
You mentioned the you know,housing with Airbnb issues.
(16:13):
Here in my hometown ofAsheville, North Carolina, we
have more Airbnb saturation thanany other city in the country,
and it's like by double thesecond highest, and so that's
that that workforce housing isone of the biggest issues that
my my community faces.
So I'm Curious like what wouldyou, what would your kind of
guidance or advice be to someonewho wants to possibly try to
(16:35):
create something like this intheir own communities?
Sibley (16:38):
Yeah, I mean, if someone is going to create an impact
investment vehicle for fundingmultiple mission driven housing
projects, just contact us.
We'll send you everything we'veever done.
You know we see ourselves aswanting to have impact in the
world and part of that is tellpeople what we've learned, right
, so we can't spend a ton oftime, you know, helping someone
(16:59):
set it up somewhere, but wecertainly give you everything
we've learned.
So, but yes, absolutely, I meanfirst things, you know,
identify some sources.
Hopefully you can find someindividuals, businesses,
foundations.
You know who will make someinitial investments to help you
get started.
But you know there is quite abit of compliance and legal
(17:19):
stuff to set up.
But that's where again, talk topeople who've done it we have
great legal help from gosh.
They just changed their name.
They've been Cutting EdgeCouncil, so you can still find
them under that name, but theyjust changed their name, which
is escaping me.
But Cutting Edge Council is alegal firm in Oakland but
they're national experts inworking all over all kinds of
(17:41):
states specifically helpingpeople on impact investment.
You know that's what they doReally cool for just the legal
side.
But absolutely, you know, it'ssomething I really recommend
because there's huge interestout there.
A lot of people don't even knowhow to take action in investing
in their own community.
But if you can just go aroundand talk to people in your own
(18:02):
community about doing it, youwill find a lot of interest.
You just have to do a bunch ofthat setup to do it right.
Joel (18:08):
Yeah, we've been talking a lot about these diversified
community investment funds thatI think that Cutting Edge and
NC3 worked on to put together,where you can actually invest
your money directly into localbusinesses and real estate at
the same time, and it makes theprocess a lot, lot easier.
If you're out there listeningand you're interested in that.
(18:29):
Twice a month on YouTube, I doanother show on my YouTube
channel called community capitallive with, uh, michael Schumann
and Kevin Doyle Jones.
Um, and so if you areinterested in that in the, in
the fun side of things, starttuning into that, because that's
a that's a really greatresource and we're building out
a database through impact alphaand the main street journal on
(18:51):
that.
Um, so, yeah, I, uh, I, whatare?
Yeah, what are you excitedabout right now or, I guess,
when you're thinking about kindof the future, of what this is
going to do for your community?
What does it mean really tohave these investors coming
directly from your community?
Sibley (19:09):
Yeah, it's incredible because, again, this long-term
approach it allows us to take.
Yeah, it's incredible because,again, this long-term approach
it allows us to take and we havemore and more site owners
coming to us because they see ushaving some success and like,
oh, what you did with thisnonprofit over there, what you
did with this church over there,oh, can you do that with us.
Or even just families that haveowned a business property for a
(19:29):
long time that has sort of anold one-story commercial
building on it for a long time,that has sort of an old
one-story commercial building onit that at the end of this life
, oh, could we build this, a newstorefront with housing that's
really needed on top of it.
So just being able to do thishas brought more and more people
from the community out to help,seeing that like, oh, we can
all work together here to buildthe housing that's needed.
(19:51):
The other thing I'm reallyexcited about and absolutely
love is that in all kinds ofplaces across our country and I
literally mean that, um, rural,urban, blue states, red states,
et cetera the uh legal regimethat has and regulation that has
helped, um, in some casesunknowingly, you know, in some
places knowingly, californiainvented single family homes,
(20:14):
only zoning to have, you know,lock in segregation.
But that created the housingcrisis or these crises.
Is is going in the rightdirection.
It is changing and statelegislators, you know, across
the country, are doing things.
You know I'm working out west,I'm paying attention to like, oh
, montana is doing a lot ofchanges, california is doing a
(20:36):
lot of changes, every singlestate.
And that is so cool because youwork on a cause it could be
climate change, whatever andsometimes you're like, oh,
government can't get anythingdone on this.
And here there's a lot ofbipartisan support for the
details get challenging andeverything but by and large, so
like, let's make change.
(20:56):
So private sector, publicsector, blended sector, you know
, can come together and justlike, build the infill,
environmentally responsibleworkforce housing that we really
need.
So that is really fun andparticipating in that policy
change is really fun too, to tryto get it right sorry the audio
.
Joel (21:14):
the audio cut out.
Can you hear me?
Yeah, I can hear you, fine.
Okay, all right, I'll have toedit this, but that's okay.
Well, sibley, I think it's anincredible project.
I think it's really worthpeople taking a look at, to get
to learn more about how you guysare doing as an example, as I
said, because this is the kindof thing you know when we talk
about big changes that need tohappen in our economy, in our
(21:36):
world, like you said, a lot oftimes, we look from top down or
we look from you know kind ofold structures of you know
nonprofit do good work is overon one side with one pocket and
you know making money is on theother side.
But your ability to combine theinnovativeness and the
flexibility of a for-profitbusiness with the mission and
the goal and really just theimpact of a nonprofit, I think
(22:02):
is such a cool thing and really,really admirable.
So check out New Way Homes andfollow what they're doing and to
stay in touch with them.
I am Joel Skeen.
This is Biz Radio US.
Make sure to subscribe onYouTube, spotify, itunes,
stitcher, wherever you get yourpodcasts.
And until next time, rememberwe are each other.
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