Converting Affordable & Workforce Housing Shortages into Profitable Multifamily Deals

Sam Datta (00:00)

So if their hotels could be a 20 million dollars value from an asset perspective but if the hotel is doing a million dollar revenue nobody in the marketplace will provide them three million to four million dollar purchase price. So imagine that and if you have more rooms fantastic we bought a hotel in Monroe Louisiana

260 room hotels. We bought it for $7,000 a unit. And then we spent another $40,000 a unit and we made 187 beautiful apartments. again, our cost was total less than $10 million, less than $50,000. And that whole building is now valued like $30 million.

Dylan Silver (00:26)

Hmm. Yeah.

Hey folks, welcome back to the show. Today’s guest, Sam Datta in Atlanta, helps the middle class with workforce and affordable housing. Sam, welcome to the show.

Sam Datta (02:31)

Thank you very much Dylan, I appreciate it.

Dylan Silver (02:34)

It’s great to have you on here. I am very interested personally in this segment of real estate when we talk about multifamily and we talk about affordable housing, workforce housing. Before we dive deep into that, I wanna ask you, how did you get into real estate in general?

Sam Datta (02:56)

Absolutely very good question. ⁓ It’s in my blood. My dad has been doing real estate in another country since I remember. He’s also a very renowned attorney, but that was his side business. So I saw a little bit. I came in this country when I was 19 and did all my education.

In around 1999 or 2000, I joined from an industry to Ernst & Young in the consulting side. And we had a program in Atlanta that time to go to Habitat for Humanity for voluntary work. And it was a blessing. I went almost 10 to 12 weekends in Atlanta under Jimmy Carter, you know, Habitat for Humanity, to learn the process, what we do in building homes.

And that gave me an opening. And since then, I have been very passionate about this. I have corporate jobs, but in the side, I was always doing that. So I would say Habitat for Humanity is the starting point where I am today.

Dylan Silver (04:04)

Now, when we talk about the multifamily space and getting in on that, a different ballgame than single family. Were you always in this segment, the workforce, affordable housing? Did you look at other segments of real estate as well?

Sam Datta (04:21)

just kept it in the…

Housing side of this on the real estate so not always been in the affordable housing Did a lot of new housing as well ⁓ over the years ⁓ I have been working with government quite a lot in my consulting engagements for last 25 years And so we have tons of clients from city government local government state government and every time I talk to the mayor’s and the governor’s one of the major things comes out on the top is workforce and

affordable housing and their shortage. Today there are almost 10 million shortage of workforce housing and then on top of that probably 15 to 20 million affordable housing shortage. And so I think that also gave me a guideline of where to focus and make some impact in this space.

Dylan Silver (05:14)

Yeah.

When we talk about the workforce and affordable housing, I became aware recently these terms are not interchangeable, right? So affordable is a specific designation. Workforce can generally be used to describe, you know, the people that are making the city run, right? That’s your teachers, your construction workers, folks who are, you know, I’ve heard this term renters by necessity. Is that generally the distinction there between workforce versus affordable?

Sam Datta (06:31)

Yes, I think so. many cities, generally when people call it an affordable, they feel a negative connotation because they think the people who can’t afford it is coming there and government is giving them subsidy. So that’s really lot of the affordable people think about, but it’s actually not. On the workforce housing, as you mentioned, Dylan, is very simple, exactly like that. Our workforce people, the people are in the bracket of 30,000 to 60,000

60,000

income range and they’re the one getting squeezed because everything has gone up And from taxes insurances cost of everything, but they’re not getting any breaks. They work hard Two jobs sometimes but they can’t afford to have a nice home or anything like that. So government give them subsidies, but

you know, they work also. So it is mainly focused on those people that they can probably pay 80%, 60%, 90 % of the rent and government will give some subsidy of those if needed based on their income level. But we’re trying to help that middle class, that’s 60 % of America.

Dylan Silver (07:44)

Now when we talk about this type of housing, I’m imagining that there’s a number of factors that come into play. Of course you have to identify the deals, but you also have to work with the local government, right? And so this is an aspect that some people may choose to stay away from or some people may dive heavier into. I wanna…

touch on affordable housing specifically. How would this differ from let’s say as a section eight in the way that you would be interacting with the local government.

Sam Datta (08:26)

Yes.

So very good point. the section eight is again the government people go to the government housing authority that they need housing and they can’t afford the current rent based on their income level whether they’re making any money or some money there is a calculation of that and the government lists them and then provide what’s available in the marketplace and then so as an owner as an affordable housing so let’s say you’re an investor or you own that property you can

go and discuss with them and register your property for that section 8 and there is a process for that. So good bad you know good thing is there are so much of demand and if you want to get into the affordable housing

you can still select who is going to come there for sure from background checks and everything. But there is a pool of people that the government will allow so you have access to those. So that’s where the affordable housing and the section eight comes in and that the term means the government provide a significant, you know, the payment. It’s most of the time or many times that payment comes many times from the government directly.

even section 8. So they pay certain portion, even 100 percent, sometimes the tenant will pay certain percent based on their income level. So you have a steady income if you look at section 8 from that perspective because it can be 100 percent occupied. ⁓ But again, that is not giving people what we look into a push to

Dylan Silver (09:42)

Right.

Right, right.

Sam Datta (10:03)

get up and really let them own something, right?

So we started focusing more on workforce housing. We want to give them a break of 10 % to 30 % on rent and utilities together, what we do. So that way they get a break. Go ahead.

Dylan Silver (10:53)

Now

Now when we talk about the Atlanta market specifically I’ve had ⁓ quite a number of investors from the Atlanta market I’ve also seen that there does seem to be more interest from you know folks who are getting in in the multifamily segment. ⁓ So Atlanta’s is a hot market. Is there currently right now that trend to hey let’s provide more housing for folks in this.

workforce housing segment, not just from folks who are doing deals at scale, like let’s say, you know, apartment complexes, hundreds of doors, but also from folks who may be smaller investors looking to provide, you know, that small multifamily housing for folks as well in Atlanta.

Sam Datta (11:39)

Absolutely, this is significant difference I talked to the mayor of Atlanta many times and you go and tell them worse What do you need and tell you we need like 40,000 housing? There’s a shortage of everywhere and because the cost is going up so you will see many places when there’s a new new place They’re asking they have to ask three thousand four thousand dollar rent a majority of the people can’t even afford to have that so the demand

Dylan Silver (12:07)

Right.

Sam Datta (12:07)

is

in where the affordable site. So there many ways to look into that. You can find, I think there’s an opportunity where the older properties are. There are a lot of what we do, a lot of hotels that we convert them to apartments. Yes, the size gets smaller, but now it becomes affordable.

because the cost is way cheaper to build a new one. And you can compress that from a timing, from a renovation perspective. If you buy an older property and renovate, you can get it done between one month to four months versus if you wanted to start from scratch, from a land development to a new apartment complex, it’s going to take you two years. And it’s going to cost you $300,000, $300,000 to $250,000 per unit to build. What we do when we do housing from

let’s say we buy even old apartment complex and then renovate from a C- to B- and our cost structure we keep it between $60,000 to $80,000 per door. So when we do that acquisition and renovation I can afford to give those units as a lot more better attractive rate in the marketplace helping the middle class from that perspective.

So there is a huge demand for those old schools, ⁓ the closed down schools, we buy those too. lot of older properties and high-rise buildings that even older apartments, you can get those, but you need to know how to renovate this properly according to the codes. And if you do well, it’s actually huge benefit from an investor’s perspective and you can make way more money than building something new. I can show you the numbers and we are doing this

Dylan Silver (13:34)

Hmm.

Sam Datta (13:52)

in the last six years and we have grown very nicely ⁓ and investors are

Dylan Silver (13:57)

I’ve heard this

from multiple people, actually from a gentleman who was in the ⁓ senior care facilities, elder care facilities, basically explaining that in multifamily, for you to build new, it’s so cost prohibitive that especially if you’re looking at any type of affordability, it just kills the deal. And so you mentioned ⁓ basically repositioning some of these

Sam Datta (14:24)

rehabbing.

Dylan Silver (14:26)

Some of these deals whether it was a ⁓ hotel or you mentioned I believe school as well into some other ⁓ Asset right affordable housing workforce housing when you’re looking at these deals I’m imagining there’s there’s some degree of either distress or urgency on the seller side ⁓ For for this type of thing to happen

How are you finding these deals? Is this on market, Crexie, Loopnet, that type of thing? Are you finding these deals off market as well through kind of a network that you have out there?

Sam Datta (15:40)

Very good point. You can do both. So, Craigsea Loopnet also provides those. The hotel markets are really lot of internal selling. So, you got to have a network in the hotels area. Schools. These are not most of the time in Craigsea closed down schools. You got to go to the government, find out to the school department or the mayor’s office or zoning office what’s available for the city. Talking to the councillors. Those people can guide you what’s available or not.

So government is a very good source from that to understand what’s available then also off-market deals Looking into hotels or buildings big buildings pretty much, you know abandoned or really high not really in a good place and it’s not kept up well go find your ⁓ Broker they can go talk to them directly or you can go talk to them directly and find those so it’s a little bit of harder work, but

returns are amazing on these things because your cost structure is way low.

Dylan Silver (16:46)

Right right when

talk about

offers on these deals and the acquisition side of these multifamily deals there’s a lot of different strategies especially as a realtor that I’ve seen of course I’m familiar with folks dealing on market but also I’ve heard from folks that especially if you’re working investor to investor versus you know investor to maybe a retail buyer they tend to want to work

off market or get to know each other in that regard. I’m curious to get your perspective on what’s the best way to go about ⁓ negotiations. Should folks be using a experienced commercial ⁓ broker to handle that or is it better to reach out to sellers and potential sellers yourself?

Sam Datta (17:40)

I think both way it works because you will find a lot of brokers they’re very prudent they know and they know the market prices right so they will bring that both sides of the coin versus if you go there then you need to have the knowledge about the market what’s going on

So there’s a give or take from that. think you should use more you experience in this. You should use both elements. You should really go out find those property talk to the owners because those are not in the market. But you also should use some good experienced brokers. They know the market. They will give you guidelines. What’s going on. What’s the prices should be. Because that way that information will help you to negotiate. ⁓ Example when you’re buying a hotel in the

whole country other than big cities the hotels are sold based on revenue multiplier.

So if their hotels could be a 20 million dollars value from an asset perspective but if the hotel is doing a million dollar revenue nobody in the marketplace will provide them three million to four million dollar purchase price. So imagine that and if you have more rooms fantastic we bought a hotel in Monroe Louisiana

260 room hotels. We bought it for $7,000 a unit. And then we spent another $40,000 a unit and we made 187 beautiful apartments. again, our cost was total less than $10 million, less than $50,000. And that whole building is now valued like $30 million.

Dylan Silver (19:00)

Hmm. Yeah.

Sam Datta (19:20)

So and less than 18 months. So you can do that. You have to you know the money you make at the time of purchase. That’s where you know you got a good deal. Then once you improve it obviously the rent will create the value for you. It’s rent based value. The loans are better that way and you can go on and on from how to structure these things later on.

Dylan Silver (19:21)

Yeah.

Yeah, you know.

Where do you think, Sam, that people might have been making mistakes in purchasing maybe too deep around 2020, 2021? Because there’s, course, some distress in multifamily at large on the operator side in funds and syndications. Were they looking at the wrong markets? Were they buying too deep? Were they not doing enough evaluation of these properties? Where did so many multifamily buyers go wrong?

Sam Datta (20:20)

I think it’s the market as you mentioned example For me is very difficult to find good deals in Atlanta because there’s so many people Want to buy and the value is so high you can’t make hardly any money So we focus on what you call it the market so I got Macon, Birmingham Monroe, Louisiana New Orleans Baton Rouge you look at this market. They have 250,000 to million dollar million

people and there’s so much demand and you can find very good deals. Augusta Georgia there like 10 schools are closed down in Augusta Georgia. So you need to know these things when you talk to them and go to the cities in Atlanta even if you have a property it will be bidded out and there’s so many buyers. So you need to think about going a little bit outside of the big cities that’s where you get the best deals.

Dylan Silver (21:18)

Now when you’re looking at some of these deals in these secondary markets, ⁓ how much experience would you say is important to have personally, know, especially for someone who let’s say they may be coming not from the multifamily space, but from single family. Let’s say because I’m a Texas realtor, let’s say they’re based out of Dallas. So they may be looking at some markets, let’s say an hour outside of Dallas.

Do they need to have then boots on the ground over there? Would it be advisable to find those teams first before you start making offers on those deals? How does that team element come into play when you’re making these offers?

Sam Datta (21:59)

And very good. think you need to find people who are willing to go there and stay there at the property. It’s very important. So from your team or find local people who are already managing, let’s say, multifamily in that area. What we do, example, I’m from Atlanta, Monroe, Louisiana, people in a beautiful city. We bought a property and first thing what we did, we

hired a local real ⁓ property manager and sits there from day one even during my renovation time because that helped me because we can’t just go there every day but that is your eyes and ears and then we have that relationship with the city to make sure everything is being taken care of on right time right way.

and taking the support from city officials, police chief, commissioners, fire chief, mayor’s office. Those are very, very important when you do workforce housing and affordable housing. You’ve got to do what we call a very collaborative approach with the city. Whether you take section eight or not, that doesn’t matter.

Dylan Silver (22:48)

Right.

Sam Datta (23:09)

But when you are there in a city, you will going to have a property. You need to know the city officials. You need to know all the city agencies and the groups and get to know them because they will guide you many ways what’s needed for the city. And bingo. Then that will help.

Dylan Silver (23:26)

Right? You know,

Sam Datta (23:27)

And I’ll give you good example that what we did in

Dylan Silver (23:28)

those… Yeah.

Sam Datta (23:31)

Monroe, Louisiana, we did it. They were almost demolishing that property. he said, hold on, hold on. We will bring the capital. We brought $10 million investment over there. Now today, six months ago, we did not know that time. Metta came in with a $10 billion investment 20 minutes from our property.

And now they want the whole property for five years because there’s so many new people coming in and they have no risk, no housing available. So again, things happen and I knew that from day one when I went in from mayor’s office that okay, there are investment coming in in this city. So knowing those inside, you can take very calculated risk.

and your returns will be way better and you will be making a very very positive impact in the community because that whole area you’re getting new investment new people are coming in the rest of the air in that area is also going to improve a lot versus you stay in a big city you have so much of competition you might get more rent but you’re going to be paying way more it’s going to cost you way more it’s going to take way longer to do that I

I got zoning done in many cities in less than 30 days from a hotel to an apartment. It doesn’t happen in big cities.

Dylan Silver (24:49)

Wow. Knowing that which

area to stay in so that you can be most effective rather than getting caught up in some of this bureaucratic red tape is huge. ⁓ We are coming.

Sam Datta (25:00)

Exactly. So the opportunity is huge.

Go ahead.

Dylan Silver (25:05)

We are coming up on time here though, Sam. I did wanna ask you, you’re involved in deals in multiple different markets. How can folks reach out to you, either if they have a deal that they’d like to present you, or if they’d like to reach out to you and your team and get some feedback maybe on something that they’ve got going.

Sam Datta (25:25)

Absolutely. My telephone number 678-571-3895. My email sdata at pgvaisors.com. Go to our website pgvcapital.com. Myhome-studios.com. That’s our brand called My Home.

And PGV Capital is our capital company. So anywhere I am in LinkedIn, there’s a Facebook office page, not personally, my home page. You can reach me anywhere you want. There are many ways to reach me. And generally, we are very good to helping you. I’m here to help people then, because, you know, God’s grace, we have done well. But we are helping many people, many hotel owners, many small business owners, how to do this. We can help you from getting zoned.

done, to loan done, to renovation done, as well as operation done. And so we have all the expertise in-house start to finish as a supplier.

Dylan Silver (26:22)

Well.

Sam, thank you again. Thank you so much for coming on the show today. Thank you.

Sam Datta (26:32)

Thank you very much, Dylan. I look forward working with you.