April 18, 2024 • 31 mins
MapableUSA.com: Is the opportunity Zones program working? By the looks of what’s happening at the Caliber Companies, the answer is a resounding YES! In this podcast, their VP of Wealth Development – Brion Crum – goes over his company’s vision, the state of the market in general, and provides a number of real world examples of why you should be looking into his fund if you have capital gains tax exposure.
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(00:23):
We want to welcome to the NobleUSA podcast, where we've put you on
the officers. Ron Costa Broadcasting livesfrom Mavmo USA Studios in Las Vegas,
Lada, and today folks were putopportunity zones. Are they working? We've
got a few interesting topics to goover. But before we do that,
let's in to this Vicky Hutchmala fromthe to USB Buketplace. Vicky, how
are you today? Oh? I'mfabulous today, Ron, and it was
(00:46):
exciting we got to see the eclipseand all of that stuff. And now
we have one of our uh previousguests on and we're going to talk our
favorite topic, opportunity zones and exciteneed ways to use them. So let's
get started. Okay, that soundsgreat. Let's introduce Brian Crumb. Brian
is the VP of Wealth Development overat the Caliber Companies. Brian, how
(01:10):
are you doing today? I amdoing fantastic, Ryn, And Vicky is
great to be on the show againwith you. All right, Yeah,
this is a this is great.I'm glad we got your It took a
while, but we got you backon there. So that's I know.
You're probably one of the buggiest peopleout there. You're always traveling around.
It's like, you know, howmany phone numbers do you have these days?
Fortunately only only two numbers. Andthey can reach me from anywhere in
(01:34):
the world. And can you rememberwhat time zone it is? That's actually
the tricky part. Yes, welllisten before we get into this whole opportunity
z On stings Brian in case somebodyto hear our last podcast with you a
while back, why don't you giveus a little bit of background on yourself
and you know how you got tobe where you are right now? Yeah,
(01:57):
thanks a lot for that. Iwork at a company called Caliber.
Caliber is a Scotch stal Arizona basedvertically integrated real estate asset manager and developer,
and I've been working at Caliber fromonce a decade now. Prior to
working at Caliber, I was workingin more traditional financial services, but I
was also helping some entrepreneurs start andgrow businesses. So between my background and
(02:23):
helping people start and grow businesses andfinancial services, when I learned what Caliber
was doing finding opportunistic real estate investmentsin America that could be invested in by
successful business owners that can invest directlyinto let's say building an apartment complex or
a hospital or a hotel that willhave an impact on their own community.
(02:45):
It really was an exciting opportunity tomove from traditional financial services into what's now
known as alternative investments. So,just to kind of fast forward, how
we got from beginning a Caliber intwo thousand fourteen when I first joined there
from Merrill Lynch and what happened intwenty eighteen, which was when the Opportunity
(03:06):
Zone program was created. Caliber hasbeen making acquisitions of existing properties. Typically
we'd buy an apartment complex and agood location. Oftentimes near a university,
we would do a renovation converted intolet's say, off campus student housing.
So when the Opportunity Zone program wascreated, Caliber actually looked at our business
(03:27):
model. We looked at the areasthat we're investing in and the types of
investments we're making, and there wasso many similarities between what our current business
model was and what the Opportunity Zoneprogram was intended to do that we made
the decision to jump on board,go all in, and became one of
the first vertically integrated real estate companiesto launch opportunities Zone funds. Back in
(03:51):
twenty eighteen. Oh well, youknow, what's you know, what's interesting
about Opportunity Zones, Brian is it's, as you said, started in twenty
eighteen, but now after almost sixyears, it's amazing how many people,
even real estate people, still haveno idea that it even exists, or
(04:15):
what it is or anything about it. Do you find that in areas where
you decide to put in a project. You know, I've always been interested
in educating people about different types offinancial services and investments, and the fact
that there's still a lot of peopleeven though we're you know, starting in
(04:38):
twenty eighteen, we're starting in thetwenty twenty four now, so the program's
been around for a while, thereare still a lot of people that maybe
have either heard of it but don'thave a lot of understanding, or that
have never heard of it before.So I do like the fact that we
get to educate people, whether they'refinancial advisors, CPA, real estate professionals,
business owners that might a bill totake advantage of the program. So
(05:00):
I do like the fact that weare able to be one of those educational
resources for the program. And youknow, that's that's what we're all about,
Ron and I in our podcast,We're all about educating people in a
way that's interesting and knowledgeable. Andthat's one of the reasons why we love
(05:21):
to have guests like you who haveso much experience but are able to provide
real life education and experience so thatit doesn't seem so kind of not at
all scaries the word, but apprehensiveabout doing it or learning it or going
(05:42):
into it or yeah. So that'sthat's fabulous. That's what we are all
about as well. What do youwhat do you what would you say the
best parts or the worst parts ofthe program are or what needs to be
revised or changed. So I thinkI think that some of the most positive
aspects of the Opportunities On program isthe fact that we have now proven that
(06:08):
by making these investments in the communities, whether it's you know, launching a
factor that's creating jobs, building aschool, building a hospital that is now
providing better educational opportunities, or healthcareresults, I think there's a lot of
metrics behind it proving that these areasare seeing investments that they wouldn't have otherwise
(06:29):
seen without the program. And ofcourse, from the investors standpoint, you
know, the ability to prevent payingfuture capital gains after the tenure holding period
is pretty powerful. As an example, we like sharing with people that might
have some familiarity with both iras andten three when exchanges. When it comes
to real estate, in some ways, it's like putting a raw ira on
(06:54):
the background of the tenth thirty oneexchange, except those programs Previously there wasn't
really a way to combine them.So I think there's a lot of upside
educational opportunity, there's a lot ofsignificant tax benefits from the program, but
my favorite part is the true impactthat has been made in some of these
communities. And one of the examplesthat I like to share, which I
(07:15):
find is also an example of howyou can invest into companies and innovation,
but it also creates jobs in anopportunity zone is an investment that Caliber made
a couple of years ago where ourOpportunity Zone Fund became the lead angel investor
in a sustainable housing startup that ison Avajo Territory YEP. So I think
you'll find this really interesting. So, as you may know, a lot
(07:40):
of opportunity zones in the country areactually on tribal communities, both urban and
rural. So the example of thisis a Caliber's opportuniti Zone Fund invested into
basically a startup manufacturing company that hasa manufacturing facility building sustainable homes inside of
(08:01):
what used to be a coal firedpower plant at the edge of the Grand
Canyon. So the park was shutdown, hundreds of jobs were lost,
mostly by Native Americans in the Navajotribal community that live in the area,
and we were able to through thatinvestment, convert one of the empty warehouse
(08:22):
buildings into a manufacturing facility where nowthere are homes being built by Navajo tribal
numbers for other people, including forsustainable housing. And it was all made
possible through the Opportunity Zone programs.And that was the whole point of the
program, was to help people inareas that had been distressed for whatever reason
(08:45):
and to bring them back to life. That's fabulous, and I didn't.
I guess people when they think ofopportunities zones think of them in terms of
distressed areas in cities. But it'sunusual for people to think of opportunity zones
in areas like reservations or just outin rural areas where it's not the city,
(09:13):
where you're helping people that aren't citydwellers. That's you know, the
possibilities of the program. Yeah,when the program was created, there were
definitely a lot of communities that weretrying to figure out, both urban and
rural, how to take advantage ofthis program. And so a couple examples,
like some smaller towns in America,they might have old warehouse or old
(09:37):
factory buildings that were shut down andthey've done renovations, They've done mixed use
adaptive reuse. They've turned an oldfactory into a loft that might have living
on the top floors and then retailon the bottom, and sometimes they even
build coworking spaces into them. Iknow that some of the examples that Caliber
(09:58):
has been working with actually our urbanSo typically Caliber likes investing near areas of
innovation, including near growing universities.So an example of an urban adaptive reuse
investment that Caliber's opportunes on Funts havemade. We bought an old It was
actually the original downtown Mesa, Arizonadepartment store. It had since been converted
(10:22):
into a an antique store, andwe bought that building and renovated it kept
a lot of historic nature, butconverted into a coworking space, So that
means we're actually helping small businesses growand then you know, maybe it might
be their first office summer, andthen once they'll grow that they might take
up some office space in other partsof the city. So I've also seen
(10:45):
that happening in some rural communities whereyou're able to take an older, unused
building and adapt it for current uses. That's incredible that, yeah, that's
just the purpose of the program.And what would you like to see going
forward in changes if any Well,yeah, no, I think the biggest
(11:11):
change that anyone that's been actively involvedin the Opportunity Zone program would like to
see is an actual extension of theprogram. So just to hit a couple
of the highlights for people that mightbe listening about Opportunity Zones for the first
time or just need a refresher.There were several main tax benefits, each
of them had their own time window. So one of the initial timelines of
(11:33):
the program was the fact that ifyou made an investment of your capital gains
into an Opportunity Zone fund by theend of twenty twenty six, you still
had to pay a deferred amount ofyour original capital gains taxes. So unless
the subtle government extends the program throughan Act of Congress and stretches it out
(11:54):
or makes it permanent. You know, technically the program from its initial tax
benefit is going to sunset in twentytwenty six, So having an extension in
the program would be one of thethings I would love to see. Another
thing that I think will happen isif we do see an extension, they're
also going to make some improvements inthe program, and I think one of
(12:16):
those improvements would be actually measuring theimpact that these investments have had. So
if we already know a Caliber thatif we're doing a renovation from a business
that maybe had five employees to helpinghundreds of people start their own business,
there's a positive economic impact for that. The same thing with converting a Wells
Fargo corporate campus into a Monstersory school, which is one of the other adaptive
(12:41):
reuse projects we did, or somethingthat is pretty obvious that it's got a
positive impact not just for the peoplethat you create jobs for, but the
outcomes from more behavioral healthcare treatment.So Caliber also had converted an old assistant
(13:01):
living facility into a brand new behaviorhealthcare hospital. So I'd also like to
see more examples of older underutilized propertiesget converted not just into you know,
apartments, but into something that hasa lot of job creation and have a
way to track that better and withbig impact. Yeah, definitely measure the
(13:24):
impact. Yeah. Yeah. Soanyway, I have a couple of questions
on what you just went over.You know, Caliber is obviously into a
lot of different projects and development productsand everything I was out there. When
an investor comes in and invests intothe company, is he investing in a
top level fund or is he investingin a fund created by each particular project.
(13:46):
You know that that's a great question, and there's actually two answers to
that. If if an investor comesto Caliber with a capital gain and they
have not gone to the next stepof creating their own opportunities on fund,
they're going to be investing with usas a limited partner into one of our
funds. And our two main fundsare vertically integrated, they're diversified, they're
(14:09):
in multiple states. Right now,we're in Arizona in California. So someone
is going to become an investor ina diversified portfolio. The other option is
someone who had a capital gain thatwas large enough that it made sense for
them to actually create their own OpportunityZone fund. They can then take their
fund and invest it side by sideinto CALIBER created Opportunity Zone Fund eligible investments.
(14:35):
And we have a couple examples thatwe've done that with. Both of
them so far have been apartment complexes. So remember I mentioned earlier that we
like to build in areas that arenear economic innovation created by universities. So
one of the first investments to Calibermade in downtown Mesa, Arizona, which
(14:58):
is where Arizona State you know Diversityhas built an extended technology campus, was
one of these types of investments.It was one hundred and forty four unit
ground ground up workforce housing and wedid make that eligible so that people that
had their own opportunities on fund couldactually invest side by side with us.
And then we just created that sameopportunity in downtown Brian, which is a
(15:22):
sister city, was with College Stationin Texas and this is where Texas A
and M is headquartered. So rightnow we're getting ready to break ground on
the ninety two unit multifamily apartment complexthat also has a multi use facility with
ground floor retail in a parking garage. So we do have some investments.
(15:43):
If you've created your own Opportunities onfund, you can invest side by side
with Caliber. Is that something newthe ability to do that. I thought
that if you weren't able to dothat when the program first started. So
they still have a restriction that hasn'treally been fully worked out, where an
Opportunities on fund doesn't necessarily invest directlyinto another fund, but a fund can
(16:07):
go into an opportunities one project thatanother fund has invested. So it's basically
it's a co investment opportunity. Althoughwe have Yeah, we have worked with
attorneys and people that are are kindof overlooking the whole program at the government
level, and we have developed away where if you already had your own
(16:30):
Opportunities on fund and you decided thatyou didn't want to operate it anymore,
but you wanted to keep it active, Caliber could look at actually doing a
fund merger. So we actually dohave a fund merger program that we've taken
a look at. So I'll giveyou a quick example. Let's say a
business owner sold their business, theyset up their own Opportunities on fund,
they identified a few investments that theywanted to make but then realize they didn't
(16:53):
want to basically, you know,have this whole new job that they created
for themselves. So Caliber could comein, take a look at the current
investments and the other fund, includingyou know, cash that they had in
there that hadn't been deployed, andthen determine whether or not it made sense
for us basically to merge that fundwith our fund. So it gets a
(17:14):
little deep in the weeds from atechnical standpoint, but it is something that
we have taken a look at onbehalf of other opportunities on fund operators.
Yeah, because I think that's ahuge because I think a lot a lot
of people I think want to starttheir own funds, and the process actually
is pretty easy from what I understand, but the compliance end of it is
also very difficult, and if you'renot correctly the long run, you're going
(17:40):
to be paying a hefty tax thingwhen the IRS comes to order you way
back when when you say, hey, I don't want to pay any capital
game taxes, right, So Ithink that makes a lot of sense to
do what you just mentioned. Yeah, Now it's it's like you said,
it's relatively easy to set the fundup if you're working with right professionals,
but then you have an ongoing obligationannually and semi annually even just to keep
(18:03):
up with the compliance all the IRISfiling and also making sure that you're coming
up with enough quality deal flow sothat your investments that you're making are you
know, some of the best thatare out there right right right, And
that's that's where the Caliber calibers,you guys are huge. Your fund sizes
(18:25):
are enormous, so that's pretty impressivetoo. So so you are you looking
to branch in other states now orwhat. Caliber's first expansion in the Opportunity
Zone program outside of Arizona was intoTexas, So we're definitely excited about seeing
new investment opportunities in Texas. Wealso have land that we've been developing in
(18:45):
Colorado. It's not in an opportunityzone, but because we have a presence
there, we do see we dosee opportunities zone type investments. So Caliber
has been looking at and underwriting opportunitieszone investments in a number of states.
We do prefer to stay in theSouthwest United States. Geographically, we're talking
(19:06):
about Arizona, Nevada, Utah,Colorado, Texas. You know, we've
looked at some investments on the coasts, but frankly, between everything being very
expensive and having a lot more hoopsto jump through, and even some states
that don't really necessarily fully support theprogram, we're pretty happy with the investments
(19:26):
that we've been making in the amountof deals that we're seeing in in our
current markets, which is predominantly Arizonaand Texas, with with you know,
potential expand ins to some of theseother you know, high growth, low
tax friendly government related states. Youknow what you could do too. You
(19:49):
can maybe enter Las Vegas and implodein existing casino down to the ground and
build it up again. I thinkwe've heard, we've heard that those types
of things are happening and amazing howsome of amazing how there's opportunity zones on
the strip, that's for sure aswell. But another question, Brian,
(20:12):
as you mentioned that these funds arevertically integrated, what do you mean by
that exactly? So Caliber is notjust raising capital into a fund and then
going and finding and hiring other realestate companies. So, as an example,
Caliber will create the investment opportunity,will source it, will fund the
(20:34):
debt, will hire a third partyconstruction company and create a successful investment through
that. So Caliber is vertically integrated. So that means that each of our
funds also is all controlled directly byCaliber at the parent company level. Okay,
(20:55):
all right, and then you mentionedalso you're doing a multi family project.
What other projects do you do?Do anything kind of original? Interesting?
Yes. In addition to the investmentthat we made into Zenny Home,
which is the sustainable modular housing companyheadquartered up at the Grand Canyon, we're
also partnering with what would be oneof the premier national and likely global pickleball
(21:22):
facilities. So pickleball, as youmay know, has just been taken off
like crazy. It's one of thefastest growing sports. And we have entered
a partnership with the founders of PurePickleball so Pure p U r E Pickleball.
So we're going to be building aworld class facility right down the street
from the Caliber office. It's actuallyin an opportunity zone on another tribal community.
(21:48):
This one's with the Salt River PimaMaricopa Indian community, and for people
familiar with Scottsdale or just Central Arizonain general, is right across the street
from Talking Stick Field, which iswhere Arizona Diamondbacks and the Colorado Colorado Rockies
play spring training. It's also rightnext to Top Golf. So Top Golf,
which is now part of Callaway,is one of the premier uh uh,
(22:15):
you know, sporting and entertainment venuesin the country. So we already
have a lot of people come intothis area for sports and entertainment related businesses.
And just like everywhere else in America, there's really a shortage of courts.
So there's public courts, but there'sa relatively number of private courts out
there. And typically most of thesepickleball facilities are not big enough to do,
(22:37):
you know, large competitions. Sothis is going to have a stadium,
it's going to have production capabilities wherepeople could actually film like reality reality
TV shows about pickleball. So thisis going to be a premier pickuball facility,
and we're going to be building andinvesting in developing the first of these
pure pickleball facilities across the County Treeright there in Scottsdale. That's amazing.
(23:03):
Yeah, I haven't played pickaball really, but somebody told me that pickable is
ping pong, But you're standing onthe table, so it's kind of like,
yeah, it's like a ping pongon half of a tennis court.
I think is a good way tosimplify it. But I know everyone used
(23:23):
to be playing on the here aswell. So yeah, that's a that's
a great, great opportunity. Soyou got that going on, You've got
you got the funds. Uh,what's the story in terms of how you're
getting investors? Are are you doingactive marketing or is it word of mouth
or a lot of point? Yeah, A lot of it is active marketing.
(23:44):
Uh. We Caliber. We createa lot of educational content. Sometimes
it might be Chris Loeffler, ourco founder and CEO, doing a presentation,
uh, typically as some sort ofa conference, getting on other podcasts
like this, uh, but alsogetting in front of business advisors. Sometimes
it's a financial advisor, sometimes it'sa CPA. So Caliber likes to be
(24:08):
able to get in front of anaudience of business professionals that may themselves or
within their networks of people that they'readvising, have some sort of a capital
gain. A lot of upside opportunityfrom an educational standpoint is getting inside of
groups that are working with business ownersthat are selling their company to their employees
(24:30):
through and ESOP as an example,or to get in front of the investors
of private equity and venture funds,because anytime those funds that they've invested into
have a successful exit is typically goingto create a capital gain that they'll learn
about on their K one partnership returnand then at that point they'll realize,
(24:52):
Hey, I'm going to have apre significant tax bill. How do I
find a way to take advantage ofhis opportunities on program and Caliber wants to
be fron and center in those conversationsfrom an educational opportunity standpoint. Yeah,
and some of these people have alot of gains where they don't they don't
know how to invest in real estate, or they don't know how to you
know, with business to get into. So you guys are there to pick
(25:14):
up a slock for that and sayyou're going to hold your hands and take
you through the whole process, right, correct. Yeah, a lot of
our investors are successful business owners.Some of them may still be actively you
know, operating their business because maybethere was an acquisition, but they're still
actively involved. Maybe they're a doctorand their practice was sold to a bigger
group, but they're still actively,you know, acting in their profession.
(25:38):
So we work with a lot ofpeople that don't have the time and expertise
to basically recreate what we've done withthe opportunities on fun program. So that's
one of the areas that I thinkthat we can add a lot of value
for people in any of those situations. Yeah, and one more question we
closed out. You mentioned at thetop of the show that some people all
(26:00):
that you're encountering or doing ten thirtyone exchanges into this How is that possible?
So they're not actually doing a tenthirty one into an opportunity zone.
What they're doing is we're using thisas an alternative to a ten thirty one
exchange. So for anyone that's notfamiliar with that term, if you have
a business asset, and it's typicallybeen real estate, but if you have
(26:22):
a piece of real estate and yousell it in order to defer and then
eventually eliminate your capital gains, textyou could do what's called a ten thirty
one exchange, But that basically meansthat you have to find a like type
of property and you have to rollthe whole amount of the transaction from one
investment to the next, meaning thatincludes the value of your original cost basis
(26:45):
and the property, and you alsohave to incorporate any type of debt you
might have had on the property.So a ten thirty one doesn't work for
every real estate transaction. So welike to be in the conversation with people
that maybe they've started a ten thirtyone exchange and they got to the point
where they didn't find any suitable investmentsto do the exchange through, or maybe
(27:07):
they did identify within their time periodand the deal didn't close. So there's
a lot of situations where an opportunityis on fund will serve as an alternative
when it's ten thirty one either isn'tsuitable or it just actually didn't work out
as initially planned. Okay, allright, So now if somebody is listening
to this podcast and they want moreinformation or they want to get into some
(27:29):
of your funds and just some ofyour opportunities, what's the best way to
contact you? Phone, email,website, what do you like? Yeah,
they can reach out to me directly, so I'll get my phone number.
An email address is Brian b rIo N Crumb c r U M
and My direct line is four eightzero eight eight one one nine zero six.
(27:52):
Caliver's website. We actually have twoof them. One is for the
parent company, which is not relatedjust to opportunities on funds pretty much everything
that we do. So that's CaliberCo c A L I B E r
c O dot com. And thenfor the security side of things, including
our opportunities on fund itself, wehave a website called Caliber Funds dot co
(28:15):
o. So that's C A LI B E R f U n d
S dot co o. Okay,that sounds great. I'm challenged. I'll
link to all that in the shownotes for sure. But I'm telling you
you you got me, You gotme one to move to Arizona. Stuff
you got you know. It's yeah, that's what all the cool kids are
(28:36):
doing. We continuously a lot ofpeople and companies moving from other states,
especially the West coast California, Washington, Oregon. We continuously see a lot
of people and companies, you know, move in Arizona. You know,
we don't see as many people movingfrom Vegas because you have very similar type
(28:56):
of weather. You already have lowtaxes and very business friendly. But then
of course we continuously see Canadians andfeel from the Midwest. They might come
on vacation, they might have asecond home. Uh, and then they
decide that they want to spend alittle more time in Arizona. So we
continuously see an uptick in the numberof people and companies move into Arizona.
(29:19):
Yeah, give me, give metop, give me top golf, pick
a bowl and a bowling alley andI'm in. So that's but there you
go. You can live. Youcan live in this any home. Next
for bowling alliance, pick a ballanytime you want. Perfect There you go.
It sounds like Kevin watch my baseballgames. All right, Vicky,
(29:40):
what do you think do you wantto close this out? Or you have
any questions for Brian? Well,you know, Brian, you're This is
why we love to have you asa guest because you you kind of you
and Caliber. You you represent whatwe what we like to do on our
(30:00):
podcast, and that is find acompany like Caliber that's forward thinking, that
sees an opportunity while pun intended likeopportunity zones, and then actually takes advantage
of the program and makes it workto its the best well advantage. But
(30:22):
also at the same time, you'reworking to change the world and making life
better for so many people at somany levels that it's spectacular. Kudos to
you, Brian for choosing a companythat's working to make the world better for
a lot of people. That's fabulous. Yeah, Vicky, I really appreciate
(30:48):
you saying that. Thank you verymuch and I've always enjoyed meeting with you
guys and being on the show,and we love you. Brian. All
Right, Bryan, listen, thanksfor being a guess on the show.
Visky, thanks for co hosting thisand folks listen to the Mappable USA podcast
at MAPPABLEUSA dot com. Cod thatwebsite. You scroll down, you see
all our syndication sources, pick theone you like best and subscribe so you'll
(31:08):
never miss another one of our episodes. Or do you want to be a
guest in the show like Brian Wastedis a guest stab there. Fill that
out. We'll see what you cando about getting you on the show.
And if you'd like me to hurttoday, send us an email at info
at MAPLELEUSA dot com or just leavea comment on whatever page you listening to
the phone right now. So thanksfor listening. Thanks for you will be
at the next time with another mappableUSA podcast, how Less Lay Everyone
We want to welcome to the NobleUSA podcast, where we've put you on
the officers. Ron Costa Broadcasting livesfrom Mavmo USA Studios in Las Vegas,
Lada, and today folks were putopportunity zones. Are they working? We've
got a few interesting topics to goover. But before we do that,
let's in to this Vicky Hutchmala fromthe to USB Buketplace. Vicky, how
are you today? Oh? I'mfabulous today, Ron, and it was
(00:46):
exciting we got to see the eclipseand all of that stuff. And now
we have one of our uh previousguests on and we're going to talk our
favorite topic, opportunity zones and exciteneed ways to use them. So let's
get started. Okay, that soundsgreat. Let's introduce Brian Crumb. Brian
is the VP of Wealth Development overat the Caliber Companies. Brian, how
(01:10):
are you doing today? I amdoing fantastic, Ryn, And Vicky is
great to be on the show againwith you. All right, Yeah,
this is a this is great.I'm glad we got your It took a
while, but we got you backon there. So that's I know.
You're probably one of the buggiest peopleout there. You're always traveling around.
It's like, you know, howmany phone numbers do you have these days?
Fortunately only only two numbers. Andthey can reach me from anywhere in
(01:34):
the world. And can you rememberwhat time zone it is? That's actually
the tricky part. Yes, welllisten before we get into this whole opportunity
z On stings Brian in case somebodyto hear our last podcast with you a
while back, why don't you giveus a little bit of background on yourself
and you know how you got tobe where you are right now? Yeah,
(01:57):
thanks a lot for that. Iwork at a company called Caliber.
Caliber is a Scotch stal Arizona basedvertically integrated real estate asset manager and developer,
and I've been working at Caliber fromonce a decade now. Prior to
working at Caliber, I was workingin more traditional financial services, but I
was also helping some entrepreneurs start andgrow businesses. So between my background and
(02:23):
helping people start and grow businesses andfinancial services, when I learned what Caliber
was doing finding opportunistic real estate investmentsin America that could be invested in by
successful business owners that can invest directlyinto let's say building an apartment complex or
a hospital or a hotel that willhave an impact on their own community.
(02:45):
It really was an exciting opportunity tomove from traditional financial services into what's now
known as alternative investments. So,just to kind of fast forward, how
we got from beginning a Caliber intwo thousand fourteen when I first joined there
from Merrill Lynch and what happened intwenty eighteen, which was when the Opportunity
(03:06):
Zone program was created. Caliber hasbeen making acquisitions of existing properties. Typically
we'd buy an apartment complex and agood location. Oftentimes near a university,
we would do a renovation converted intolet's say, off campus student housing.
So when the Opportunity Zone program wascreated, Caliber actually looked at our business
(03:27):
model. We looked at the areasthat we're investing in and the types of
investments we're making, and there wasso many similarities between what our current business
model was and what the Opportunity Zoneprogram was intended to do that we made
the decision to jump on board,go all in, and became one of
the first vertically integrated real estate companiesto launch opportunities Zone funds. Back in
(03:51):
twenty eighteen. Oh well, youknow, what's you know, what's interesting
about Opportunity Zones, Brian is it's, as you said, started in twenty
eighteen, but now after almost sixyears, it's amazing how many people,
even real estate people, still haveno idea that it even exists, or
(04:15):
what it is or anything about it. Do you find that in areas where
you decide to put in a project. You know, I've always been interested
in educating people about different types offinancial services and investments, and the fact
that there's still a lot of peopleeven though we're you know, starting in
(04:38):
twenty eighteen, we're starting in thetwenty twenty four now, so the program's
been around for a while, thereare still a lot of people that maybe
have either heard of it but don'thave a lot of understanding, or that
have never heard of it before.So I do like the fact that we
get to educate people, whether they'refinancial advisors, CPA, real estate professionals,
business owners that might a bill totake advantage of the program. So
(05:00):
I do like the fact that weare able to be one of those educational
resources for the program. And youknow, that's that's what we're all about,
Ron and I in our podcast,We're all about educating people in a
way that's interesting and knowledgeable. Andthat's one of the reasons why we love
(05:21):
to have guests like you who haveso much experience but are able to provide
real life education and experience so thatit doesn't seem so kind of not at
all scaries the word, but apprehensiveabout doing it or learning it or going
(05:42):
into it or yeah. So that'sthat's fabulous. That's what we are all
about as well. What do youwhat do you what would you say the
best parts or the worst parts ofthe program are or what needs to be
revised or changed. So I thinkI think that some of the most positive
aspects of the Opportunities On program isthe fact that we have now proven that
(06:08):
by making these investments in the communities, whether it's you know, launching a
factor that's creating jobs, building aschool, building a hospital that is now
providing better educational opportunities, or healthcareresults, I think there's a lot of
metrics behind it proving that these areasare seeing investments that they wouldn't have otherwise
(06:29):
seen without the program. And ofcourse, from the investors standpoint, you
know, the ability to prevent payingfuture capital gains after the tenure holding period
is pretty powerful. As an example, we like sharing with people that might
have some familiarity with both iras andten three when exchanges. When it comes
to real estate, in some ways, it's like putting a raw ira on
(06:54):
the background of the tenth thirty oneexchange, except those programs Previously there wasn't
really a way to combine them.So I think there's a lot of upside
educational opportunity, there's a lot ofsignificant tax benefits from the program, but
my favorite part is the true impactthat has been made in some of these
communities. And one of the examplesthat I like to share, which I
(07:15):
find is also an example of howyou can invest into companies and innovation,
but it also creates jobs in anopportunity zone is an investment that Caliber made
a couple of years ago where ourOpportunity Zone Fund became the lead angel investor
in a sustainable housing startup that ison Avajo Territory YEP. So I think
you'll find this really interesting. So, as you may know, a lot
(07:40):
of opportunity zones in the country areactually on tribal communities, both urban and
rural. So the example of thisis a Caliber's opportuniti Zone Fund invested into
basically a startup manufacturing company that hasa manufacturing facility building sustainable homes inside of
(08:01):
what used to be a coal firedpower plant at the edge of the Grand
Canyon. So the park was shutdown, hundreds of jobs were lost,
mostly by Native Americans in the Navajotribal community that live in the area,
and we were able to through thatinvestment, convert one of the empty warehouse
(08:22):
buildings into a manufacturing facility where nowthere are homes being built by Navajo tribal
numbers for other people, including forsustainable housing. And it was all made
possible through the Opportunity Zone programs.And that was the whole point of the
program, was to help people inareas that had been distressed for whatever reason
(08:45):
and to bring them back to life. That's fabulous, and I didn't.
I guess people when they think ofopportunities zones think of them in terms of
distressed areas in cities. But it'sunusual for people to think of opportunity zones
in areas like reservations or just outin rural areas where it's not the city,
(09:13):
where you're helping people that aren't citydwellers. That's you know, the
possibilities of the program. Yeah,when the program was created, there were
definitely a lot of communities that weretrying to figure out, both urban and
rural, how to take advantage ofthis program. And so a couple examples,
like some smaller towns in America,they might have old warehouse or old
(09:37):
factory buildings that were shut down andthey've done renovations, They've done mixed use
adaptive reuse. They've turned an oldfactory into a loft that might have living
on the top floors and then retailon the bottom, and sometimes they even
build coworking spaces into them. Iknow that some of the examples that Caliber
(09:58):
has been working with actually our urbanSo typically Caliber likes investing near areas of
innovation, including near growing universities.So an example of an urban adaptive reuse
investment that Caliber's opportunes on Funts havemade. We bought an old It was
actually the original downtown Mesa, Arizonadepartment store. It had since been converted
(10:22):
into a an antique store, andwe bought that building and renovated it kept
a lot of historic nature, butconverted into a coworking space, So that
means we're actually helping small businesses growand then you know, maybe it might
be their first office summer, andthen once they'll grow that they might take
up some office space in other partsof the city. So I've also seen
(10:45):
that happening in some rural communities whereyou're able to take an older, unused
building and adapt it for current uses. That's incredible that, yeah, that's
just the purpose of the program.And what would you like to see going
forward in changes if any Well,yeah, no, I think the biggest
(11:11):
change that anyone that's been actively involvedin the Opportunity Zone program would like to
see is an actual extension of theprogram. So just to hit a couple
of the highlights for people that mightbe listening about Opportunity Zones for the first
time or just need a refresher.There were several main tax benefits, each
of them had their own time window. So one of the initial timelines of
(11:33):
the program was the fact that ifyou made an investment of your capital gains
into an Opportunity Zone fund by theend of twenty twenty six, you still
had to pay a deferred amount ofyour original capital gains taxes. So unless
the subtle government extends the program throughan Act of Congress and stretches it out
(11:54):
or makes it permanent. You know, technically the program from its initial tax
benefit is going to sunset in twentytwenty six, So having an extension in
the program would be one of thethings I would love to see. Another
thing that I think will happen isif we do see an extension, they're
also going to make some improvements inthe program, and I think one of
(12:16):
those improvements would be actually measuring theimpact that these investments have had. So
if we already know a Caliber thatif we're doing a renovation from a business
that maybe had five employees to helpinghundreds of people start their own business,
there's a positive economic impact for that. The same thing with converting a Wells
Fargo corporate campus into a Monstersory school, which is one of the other adaptive
(12:41):
reuse projects we did, or somethingthat is pretty obvious that it's got a
positive impact not just for the peoplethat you create jobs for, but the
outcomes from more behavioral healthcare treatment.So Caliber also had converted an old assistant
(13:01):
living facility into a brand new behaviorhealthcare hospital. So I'd also like to
see more examples of older underutilized propertiesget converted not just into you know,
apartments, but into something that hasa lot of job creation and have a
way to track that better and withbig impact. Yeah, definitely measure the
(13:24):
impact. Yeah. Yeah. Soanyway, I have a couple of questions
on what you just went over.You know, Caliber is obviously into a
lot of different projects and development productsand everything I was out there. When
an investor comes in and invests intothe company, is he investing in a
top level fund or is he investingin a fund created by each particular project.
(13:46):
You know that that's a great question, and there's actually two answers to
that. If if an investor comesto Caliber with a capital gain and they
have not gone to the next stepof creating their own opportunities on fund,
they're going to be investing with usas a limited partner into one of our
funds. And our two main fundsare vertically integrated, they're diversified, they're
(14:09):
in multiple states. Right now,we're in Arizona in California. So someone
is going to become an investor ina diversified portfolio. The other option is
someone who had a capital gain thatwas large enough that it made sense for
them to actually create their own OpportunityZone fund. They can then take their
fund and invest it side by sideinto CALIBER created Opportunity Zone Fund eligible investments.
(14:35):
And we have a couple examples thatwe've done that with. Both of
them so far have been apartment complexes. So remember I mentioned earlier that we
like to build in areas that arenear economic innovation created by universities. So
one of the first investments to Calibermade in downtown Mesa, Arizona, which
(14:58):
is where Arizona State you know Diversityhas built an extended technology campus, was
one of these types of investments.It was one hundred and forty four unit
ground ground up workforce housing and wedid make that eligible so that people that
had their own opportunities on fund couldactually invest side by side with us.
And then we just created that sameopportunity in downtown Brian, which is a
(15:22):
sister city, was with College Stationin Texas and this is where Texas A
and M is headquartered. So rightnow we're getting ready to break ground on
the ninety two unit multifamily apartment complexthat also has a multi use facility with
ground floor retail in a parking garage. So we do have some investments.
(15:43):
If you've created your own Opportunities onfund, you can invest side by side
with Caliber. Is that something newthe ability to do that. I thought
that if you weren't able to dothat when the program first started. So
they still have a restriction that hasn'treally been fully worked out, where an
Opportunities on fund doesn't necessarily invest directlyinto another fund, but a fund can
(16:07):
go into an opportunities one project thatanother fund has invested. So it's basically
it's a co investment opportunity. Althoughwe have Yeah, we have worked with
attorneys and people that are are kindof overlooking the whole program at the government
level, and we have developed away where if you already had your own
(16:30):
Opportunities on fund and you decided thatyou didn't want to operate it anymore,
but you wanted to keep it active, Caliber could look at actually doing a
fund merger. So we actually dohave a fund merger program that we've taken
a look at. So I'll giveyou a quick example. Let's say a
business owner sold their business, theyset up their own Opportunities on fund,
they identified a few investments that theywanted to make but then realize they didn't
(16:53):
want to basically, you know,have this whole new job that they created
for themselves. So Caliber could comein, take a look at the current
investments and the other fund, includingyou know, cash that they had in
there that hadn't been deployed, andthen determine whether or not it made sense
for us basically to merge that fundwith our fund. So it gets a
(17:14):
little deep in the weeds from atechnical standpoint, but it is something that
we have taken a look at onbehalf of other opportunities on fund operators.
Yeah, because I think that's ahuge because I think a lot a lot
of people I think want to starttheir own funds, and the process actually
is pretty easy from what I understand, but the compliance end of it is
also very difficult, and if you'renot correctly the long run, you're going
(17:40):
to be paying a hefty tax thingwhen the IRS comes to order you way
back when when you say, hey, I don't want to pay any capital
game taxes, right, So Ithink that makes a lot of sense to
do what you just mentioned. Yeah, Now it's it's like you said,
it's relatively easy to set the fundup if you're working with right professionals,
but then you have an ongoing obligationannually and semi annually even just to keep
(18:03):
up with the compliance all the IRISfiling and also making sure that you're coming
up with enough quality deal flow sothat your investments that you're making are you
know, some of the best thatare out there right right right, And
that's that's where the Caliber calibers,you guys are huge. Your fund sizes
(18:25):
are enormous, so that's pretty impressivetoo. So so you are you looking
to branch in other states now orwhat. Caliber's first expansion in the Opportunity
Zone program outside of Arizona was intoTexas, So we're definitely excited about seeing
new investment opportunities in Texas. Wealso have land that we've been developing in
(18:45):
Colorado. It's not in an opportunityzone, but because we have a presence
there, we do see we dosee opportunities zone type investments. So Caliber
has been looking at and underwriting opportunitieszone investments in a number of states.
We do prefer to stay in theSouthwest United States. Geographically, we're talking
(19:06):
about Arizona, Nevada, Utah,Colorado, Texas. You know, we've
looked at some investments on the coasts, but frankly, between everything being very
expensive and having a lot more hoopsto jump through, and even some states
that don't really necessarily fully support theprogram, we're pretty happy with the investments
(19:26):
that we've been making in the amountof deals that we're seeing in in our
current markets, which is predominantly Arizonaand Texas, with with you know,
potential expand ins to some of theseother you know, high growth, low
tax friendly government related states. Youknow what you could do too. You
(19:49):
can maybe enter Las Vegas and implodein existing casino down to the ground and
build it up again. I thinkwe've heard, we've heard that those types
of things are happening and amazing howsome of amazing how there's opportunity zones on
the strip, that's for sure aswell. But another question, Brian,
(20:12):
as you mentioned that these funds arevertically integrated, what do you mean by
that exactly? So Caliber is notjust raising capital into a fund and then
going and finding and hiring other realestate companies. So, as an example,
Caliber will create the investment opportunity,will source it, will fund the
(20:34):
debt, will hire a third partyconstruction company and create a successful investment through
that. So Caliber is vertically integrated. So that means that each of our
funds also is all controlled directly byCaliber at the parent company level. Okay,
(20:55):
all right, and then you mentionedalso you're doing a multi family project.
What other projects do you do?Do anything kind of original? Interesting?
Yes. In addition to the investmentthat we made into Zenny Home,
which is the sustainable modular housing companyheadquartered up at the Grand Canyon, we're
also partnering with what would be oneof the premier national and likely global pickleball
(21:22):
facilities. So pickleball, as youmay know, has just been taken off
like crazy. It's one of thefastest growing sports. And we have entered
a partnership with the founders of PurePickleball so Pure p U r E Pickleball.
So we're going to be building aworld class facility right down the street
from the Caliber office. It's actuallyin an opportunity zone on another tribal community.
(21:48):
This one's with the Salt River PimaMaricopa Indian community, and for people
familiar with Scottsdale or just Central Arizonain general, is right across the street
from Talking Stick Field, which iswhere Arizona Diamondbacks and the Colorado Colorado Rockies
play spring training. It's also rightnext to Top Golf. So Top Golf,
which is now part of Callaway,is one of the premier uh uh,
(22:15):
you know, sporting and entertainment venuesin the country. So we already
have a lot of people come intothis area for sports and entertainment related businesses.
And just like everywhere else in America, there's really a shortage of courts.
So there's public courts, but there'sa relatively number of private courts out
there. And typically most of thesepickleball facilities are not big enough to do,
(22:37):
you know, large competitions. Sothis is going to have a stadium,
it's going to have production capabilities wherepeople could actually film like reality reality
TV shows about pickleball. So thisis going to be a premier pickuball facility,
and we're going to be building andinvesting in developing the first of these
pure pickleball facilities across the County Treeright there in Scottsdale. That's amazing.
(23:03):
Yeah, I haven't played pickaball really, but somebody told me that pickable is
ping pong, But you're standing onthe table, so it's kind of like,
yeah, it's like a ping pongon half of a tennis court.
I think is a good way tosimplify it. But I know everyone used
(23:23):
to be playing on the here aswell. So yeah, that's a that's
a great, great opportunity. Soyou got that going on, You've got
you got the funds. Uh,what's the story in terms of how you're
getting investors? Are are you doingactive marketing or is it word of mouth
or a lot of point? Yeah, A lot of it is active marketing.
(23:44):
Uh. We Caliber. We createa lot of educational content. Sometimes
it might be Chris Loeffler, ourco founder and CEO, doing a presentation,
uh, typically as some sort ofa conference, getting on other podcasts
like this, uh, but alsogetting in front of business advisors. Sometimes
it's a financial advisor, sometimes it'sa CPA. So Caliber likes to be
(24:08):
able to get in front of anaudience of business professionals that may themselves or
within their networks of people that they'readvising, have some sort of a capital
gain. A lot of upside opportunityfrom an educational standpoint is getting inside of
groups that are working with business ownersthat are selling their company to their employees
(24:30):
through and ESOP as an example,or to get in front of the investors
of private equity and venture funds,because anytime those funds that they've invested into
have a successful exit is typically goingto create a capital gain that they'll learn
about on their K one partnership returnand then at that point they'll realize,
(24:52):
Hey, I'm going to have apre significant tax bill. How do I
find a way to take advantage ofhis opportunities on program and Caliber wants to
be fron and center in those conversationsfrom an educational opportunity standpoint. Yeah,
and some of these people have alot of gains where they don't they don't
know how to invest in real estate, or they don't know how to you
know, with business to get into. So you guys are there to pick
(25:14):
up a slock for that and sayyou're going to hold your hands and take
you through the whole process, right, correct. Yeah, a lot of
our investors are successful business owners.Some of them may still be actively you
know, operating their business because maybethere was an acquisition, but they're still
actively involved. Maybe they're a doctorand their practice was sold to a bigger
group, but they're still actively,you know, acting in their profession.
(25:38):
So we work with a lot ofpeople that don't have the time and expertise
to basically recreate what we've done withthe opportunities on fun program. So that's
one of the areas that I thinkthat we can add a lot of value
for people in any of those situations. Yeah, and one more question we
closed out. You mentioned at thetop of the show that some people all
(26:00):
that you're encountering or doing ten thirtyone exchanges into this How is that possible?
So they're not actually doing a tenthirty one into an opportunity zone.
What they're doing is we're using thisas an alternative to a ten thirty one
exchange. So for anyone that's notfamiliar with that term, if you have
a business asset, and it's typicallybeen real estate, but if you have
(26:22):
a piece of real estate and yousell it in order to defer and then
eventually eliminate your capital gains, textyou could do what's called a ten thirty
one exchange, But that basically meansthat you have to find a like type
of property and you have to rollthe whole amount of the transaction from one
investment to the next, meaning thatincludes the value of your original cost basis
(26:45):
and the property, and you alsohave to incorporate any type of debt you
might have had on the property.So a ten thirty one doesn't work for
every real estate transaction. So welike to be in the conversation with people
that maybe they've started a ten thirtyone exchange and they got to the point
where they didn't find any suitable investmentsto do the exchange through, or maybe
(27:07):
they did identify within their time periodand the deal didn't close. So there's
a lot of situations where an opportunityis on fund will serve as an alternative
when it's ten thirty one either isn'tsuitable or it just actually didn't work out
as initially planned. Okay, allright, So now if somebody is listening
to this podcast and they want moreinformation or they want to get into some
(27:29):
of your funds and just some ofyour opportunities, what's the best way to
contact you? Phone, email,website, what do you like? Yeah,
they can reach out to me directly, so I'll get my phone number.
An email address is Brian b rIo N Crumb c r U M
and My direct line is four eightzero eight eight one one nine zero six.
(27:52):
Caliver's website. We actually have twoof them. One is for the
parent company, which is not relatedjust to opportunities on funds pretty much everything
that we do. So that's CaliberCo c A L I B E r
c O dot com. And thenfor the security side of things, including
our opportunities on fund itself, wehave a website called Caliber Funds dot co
(28:15):
o. So that's C A LI B E R f U n d
S dot co o. Okay,that sounds great. I'm challenged. I'll
link to all that in the shownotes for sure. But I'm telling you
you you got me, You gotme one to move to Arizona. Stuff
you got you know. It's yeah, that's what all the cool kids are
(28:36):
doing. We continuously a lot ofpeople and companies moving from other states,
especially the West coast California, Washington, Oregon. We continuously see a lot
of people and companies, you know, move in Arizona. You know,
we don't see as many people movingfrom Vegas because you have very similar type
(28:56):
of weather. You already have lowtaxes and very business friendly. But then
of course we continuously see Canadians andfeel from the Midwest. They might come
on vacation, they might have asecond home. Uh, and then they
decide that they want to spend alittle more time in Arizona. So we
continuously see an uptick in the numberof people and companies move into Arizona.
(29:19):
Yeah, give me, give metop, give me top golf, pick
a bowl and a bowling alley andI'm in. So that's but there you
go. You can live. Youcan live in this any home. Next
for bowling alliance, pick a ballanytime you want. Perfect There you go.
It sounds like Kevin watch my baseballgames. All right, Vicky,
(29:40):
what do you think do you wantto close this out? Or you have
any questions for Brian? Well,you know, Brian, you're This is
why we love to have you asa guest because you you kind of you
and Caliber. You you represent whatwe what we like to do on our
(30:00):
podcast, and that is find acompany like Caliber that's forward thinking, that
sees an opportunity while pun intended likeopportunity zones, and then actually takes advantage
of the program and makes it workto its the best well advantage. But
(30:22):
also at the same time, you'reworking to change the world and making life
better for so many people at somany levels that it's spectacular. Kudos to
you, Brian for choosing a companythat's working to make the world better for
a lot of people. That's fabulous. Yeah, Vicky, I really appreciate
(30:48):
you saying that. Thank you verymuch and I've always enjoyed meeting with you
guys and being on the show,and we love you. Brian. All
Right, Bryan, listen, thanksfor being a guess on the show.
Visky, thanks for co hosting thisand folks listen to the Mappable USA podcast
at MAPPABLEUSA dot com. Cod thatwebsite. You scroll down, you see
all our syndication sources, pick theone you like best and subscribe so you'll
(31:08):
never miss another one of our episodes. Or do you want to be a
guest in the show like Brian Wastedis a guest stab there. Fill that
out. We'll see what you cando about getting you on the show.
And if you'd like me to hurttoday, send us an email at info
at MAPLELEUSA dot com or just leavea comment on whatever page you listening to
the phone right now. So thanksfor listening. Thanks for you will be
at the next time with another mappableUSA podcast, how Less Lay Everyone
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