From Grounds to Greatness: Bethany Finch on Real Estate Revolution

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Hello there. Jenny Bolling here with Pivot to Prosperity brought to you by Pivotal Real Estate Investments where we help investors build wealth and income through commercial real estate that also improves communities. And today we have the one and only Bethany Finch with us. Thank you Bethany for coming.

Hey Jenny, thank you so much for having me. So excited to be here today.

Well, Bethany has a company called American Made Home Solutions. She's been in real estate 27 plus years, very experienced and she is very much entrenched in community. She cares a lot. She teams with people that are looking to make a difference in communities. Gone after grants, gone after affordable housing. Done a lot of things all throughout the country because she is a remote and RV housed interpreter. So welcome. Why don't you expand more on what I didn't cover?

Oh sure, sure. So yes, we literally started from the ground up in our real estate adventure as groundskeepers on our very first apartment complex and worked our way all the way up. At the high point we had 5,000 doors, assets under management and like everything in real estate, they wax and wane depending on selling and acquisitions and moving and all of that. And so then when we branched out and decided to do it, we expanded also into single family. So we have multifamily, we have single family, we have a capital fund, we have executive rentals. Now we have, we're, we've expanded into our build to rent. We've been in that for about three years now and Just doing gangbusters with that. So we have the opportunity that a lot of people don't because we invest in real estate to be able to be 100% remote. So because of that, we are we time in an RV and we go where the projects need us or more as my husband likes to say, we like to chase 70 degrees. So when Florida is too hot, we're out of Dodge and we're coming back to the Pacific Northwest.

That's terrific. That really is. And so, and we've talked in the past here on the show about multifamily and this and that, but. So why don't we talk about your build to rent and your capital fund today?

Sure, sure. So we launched our build to rent in Covid. We had, my partners and I, we had been working together for two and a half years at that point. And really the Lord was just really pushing us to do something bigger than us. And we weren't sure how to do that. And he really just exposed to us the build to rent concept. And in this case we do it differently. So build to rent. Think horizontal, multifamily. So we're building. Our smallest one is 100 units, but they're all single family. So it's single family houses in a gated community with the amenities that you would have in apartments. But it's not apartments, it's single family houses. They have yards that most of them will have fences. So to look, act and feel like a regular subdivision. But you get the amenities that go along. You have pools, clubhouses, dog parks, different things like that. A lot more security with a gated, all of that. But then on the other flip side of it, it's all rentals. So we have property management in place, we have maintenance teams, we have landscaping. So somebody is taking care of all of that. You know, the, the guests and tenants don't have to. And then our largest complex is 241 units, and that is the majority of that is single family. A few town homes in there, but most of it is all single family. So that's why we call it horizontal multifamily because we're not stacking units on top of each other.

So what's your typical household size? That's, that's your tenant for one unit.

Three bedroom, two bath. Our tenants generally our average square foot imprint is about 1100, 1300 square feet. And our tenants for the most part have been families. And oftentimes it's been, it's been interesting to see because we've had families that Were just like starting out and they now need an office because of the remote work people are doing and things of that. So their two bedroom no longer worked and they wanted that office space. Or it's been older ones with teens that now the teens and everybody are all remotely doing things and they all need more space because they in the apartment, it was too small. So that's who we're generally seeing. We haven't seen very many individual roommates like coming together. We haven't seen that too much.

And are you in downtown areas, outskirts? Where geographically do you.

So we focus only on workforce housing. So we focus on where high density work is. But we want to keep it reasonable. Right. So we don't want. We're not focused in downtown urban areas. We're in more of those secondary markets. So 20 minutes, 30 minutes at most to get to work.

And are you calling it affordable or attainable housing?

No, that is a government term that links itself to section 8. And that is not what we do. Workforce housing means what the median income worker can afford. So whatever the income for that area is, can they afford the rent? If the answer is yes, that's us. The answer is no, probably not us.

Are you doing the typical 30% multiplier of gross or net income?

Yeah, we try to. Although with the market shift this last year, most everybody has gone down to two and a half or 25%.

Okay. And that's a struggle here in Florida.

It is, it is. Well, mostly in Florida because they had such a large supply that came into the market, just flooded the market. So there's so much more competition than there used to be. We're in areas that there's not as much competition and we kind of are the competition.

Right, and so you're doing block construction, frame construction. Anything unique about the construction?

Yeah, actually. So it is ground up construction. So we're developing areas that the cities want to see developed, but we're keeping with zoning ordinances. So they're not having to necessarily change things for us. And they like that. But it also gives them a quick opportunity. So because we're doing single family, our first, all of them have been stick built, but we're moving some of them into modular where those governments will let us not manufactured. Modular and manufactured is different and people do need to understand that. So this is modular. This. They're able to basically build the walls in a plant somewhere and then they truck or train those walls in and then a crew can set up usually 25 houses in one week. So it's A huge night and day difference, supply chain wise. But you can also control a lot of the cost and expense and reduce the waste, which is also what we're trying to be very mindful of too. So we can also get a greener unit so we're able to keep costs down for there. We have the potential to bring in solar on one of our units projects. Again, that all depends on what the city or will or state will let us do in each of our projects. But so we are trying to do things that again, keep those costs down, but it makes for a better product on the back side because if it's built to rent, it needs to last. So we're not building, we're not doing any Dr. Horton Shady, you know, shopmanship. This is quality work. We're doing sealed concrete floors, granite countertops, stainless appliances. I mean, nice, you know, more of that, you know, class A product just at that in a reduced way that keeps the cost down.

Gotcha. Okay, for the modular, is there a particular manufacturer you're working with?

I cannot negotiate those yet. We have been in negotiations with a lot of them. The reason is because as things have shifted in the market, their numbers have shifted. So we're still trying to solidify the different numbers and get them to stick to a number. Right. Because when we want to be able to go and grow, we've got, you know, the next three projects already lined out and we got to get those suppliers locked in. So that's what we're in the process of doing. So I can't say that yet.

Well, it is the asset class I consider the dark horse or surprise asset class for the decade. Towards the end of this decade, I think there's going to be a lot of modular. A lot of them are trying to get up and running to where they can do volume more. And I think it's an exciting time because that really could help solve a lot of problems for housing. Like, particularly in catastrophic situations.

Exactly, exactly. So when we're in situations where we need to get massive housing up and get it up quick because we have employers that need to put three to 500 new workers and they have no place for them to live. You can't expect that, you know, you're, you're stalemate in your economy. So you've got to be able to meet the one with the other. And you can't do it if you, if you keep using an old system that's not up to speed.

Right, right.

Yeah.

And I should mention, if I, if you didn't know the, the annual modular housing conference was just here in Orlando. And I'm sitting here thinking, it's down the street. I'm going for sure. I went to get tickets and they were sixteen hundred dollars. I'm like, don't you want government officials coming? They must, yeah.

They probably gave them to the government officials. Everybody else paying 1600, that's why they're giving them away.

I really wanted to go, but I didn't for that price.

Yeah, well, and we, we actually didn't go. Instead we had some of our, what we would call liaisons meet up with them after the fact.

There you go.

Right.

Well, it's an exciting thing.

It really.

There's a lot of potential there. So if somebody is getting involved, is that a 506C or B, whether you're building?

We actually have. We, we incentivize our investors in multiple ways. So for instance, when you're doing ground up construction, there's different levels of risk and the more risk early on, the less risk later on. So what we're doing is investors that come in early on get to participate in a safe agreement. Oftentimes we'll have a bonus again, offsetting the risk. And then the next phase, some of the projects we've opened up for 506B and for a very, very short time. And then we'll convert it to a 506C if necessary. If the 506B, that doesn't fill it all up. So we try to do what's right for our investors. So a lot of our investors know that we 1031 exchange. So they want to be able to roll stuff in and in doing so that fills up a lot of things pretty quick. So we're trying to make sure there's ways for everybody to participate.

Good, good, good. All right. And then you want to talk about the fund that you have as well.

Yeah. So I have been working with my partners for over three years now. And in doing so we. I have. They're all men. Surprise, surprise.

Right.

We are in a male dominated space. So I have been busting their chops about letting me run their funds forever and they've done none of it. And I said, okay, too bad. So sad. So I started the girls only club and we started Empower her capital and we have our own fund and I told the boys that they can just take a hike. So boys are allowed to invest. It's not just that, but it's women run. So we're getting things done and we have oil and gas in there. We have a debt fund. We'll have mobile homes in there. We'll have multifamily and build to rent as well. So it'll be an exciting thing, an exciting time. Opportunities that very good for diversifying across multiple asset classes and. But also the opportunity to have one person that you're dealing with that handles it all and deals with it all and you just get the 1k1 at the end of the year, you know, which is so much nicer.

Yes. And they get to pick between the asset types. This is considered a cafeteria fund. Customizable fund or.

Yes, customizable. Yes. So they'll be able to pick which investments they want. They'll be able to pick. Sometimes people don't realize that you have the opportunity when you have a distribution. You can cash that distribution out or you could just roll it into something else. So if maybe their investment was in, say our build to rent, but they wanted to roll over any of their earnings into the debt side, that would give them opportunities to do that as well.

Gotcha. Okay, so talk about what you're going to do with the debt side.

So on the debt side, it'll be a combination of what we call transactional funding up to short term, short term meaning no longer than 24 months. And it'll be a combination of both. Again, we've been so many years in the industry, there's never a shortage. So it's going to be a combination of those quick turns on the transactional side to give quick cash flow, but also those longer steady eddy to keep our preferred return where we want it to be.

Great. Great. Well, that's interesting. It is. And what do you see on the horizon?

An expansion of the team. Because Kylie and I are already way overworked and if there's not enough fun in my day, it's time to get. Get somebody else. So we'll be expanding for sure. I have a lot more opportunities speaking this year, so we'll be in more conferences and more stages as well. So that'll be an exciting time as well. And so it'll be, it'll be great. It'll be great to see the communities that we're moving into. And being able to expand in because of our local reach with the county and city governments is absolutely exciting because like State of Louisiana just awarded us $60 million in bonds. That's huge. But that's only because they've been working with us and we're getting along. Right. Everybody's pulling their team team along and making things happen. And so we want to see that continue to happen in all the other states that we're in. And so I am excitedly hopeful that this will be the year we'll get the modular component locked in. And with that we'll be able to get the expenses where we need to that we potentially could go into Washington state, which will be exciting. I've got so many people clambering in Washington state, but the build cost is just too great up here, so we had to find other ways to bring those things down. So hopefully getting that locked in, we'll be able to move into Washington state and as well as some of our other states. It seems crazy, but states like Arkansas, their towns are strictly limited by their housing. So they have employers publicly going out on their news channels begging builders to come build homes because they can't bring these workers in that they need because there's no homes, because their workers would be driving an hour to two hours to get there. And so if we can make a difference in these communities that want to grow and want to be a part of the next generation and the boom that's going to happen, then that's the excitement for us.

Right? Right. Yeah. These like we say the modular is going to really boom. I'm convinced. So good for you. Cutting edge stuff. I need to get a, some kind of sound effect of Woohoo.

You know, to blow the canned. Canned laughter or the canned applause.

Yeah, applause, yeah, applause for. Because getting a grant like that is no easy feat. How long did it take for you to get that, you think? To get the, to get the grant? Were you chasing it?

Oh, the bonds. Oh my. Yeah. Well, we've been three years working with them, so that's how long. Right. I mean they've, they've sat and watched us, you know, and it's. There really is distinct differences between the south and the west and the East. So how we react and respond in the west and how we talk, you know, to, you know, in our politicians and those relationships is 100% different than it is in the South. My guys in the south are like, bethany, we need you to go back home. I'm too direct. And that's because I'm from the west. And in the west we're very direct. We don't want to waste people's time. We're very respectful of that. Get in, get out, move along, you know, and that's how we do things in the South. It's all about the song and dance and the slow, easy pace and that literally, I'm I'm crawling up the walls like, let's get this done. Come on. Can we go? So it is. It is totally different. And that is why it's so important that our teams that we have in each of our markets is key. Right. Because they know those nuances. They know the need to have those local people that are able to network within those groups and make a difference. So it's been great. It's been great because we've been able to add folks to our team that really bring value simply because they can understand that and they can work through those. One of our part of our development team had worked on maiden grid stuff for a long time, and so he knew key things that saved us hundreds of thousands of dollars, and just because of one little thing that nobody else would have even thought of, but because he had the experience. Right?

Yeah, it works.

That's.

That's definitely true. I don't know if you've been following the live local legislation here in Florida. We passed a law last year that made it possible to put multifamily on any industrial or commercial property. And in fact, it even forced the cities and counties to make a list of available properties.

They did not like that.

Of course. They didn't.

They did not.

They didn't like the state telling them what to do most especially because home rule here in Florida is precious. They all want their own, you know, way of doing business.

Right.

It also preempted rent control, so it's no longer legal in Florida to have rent control. But in return, this live local legislation gave to the cities and counties lots of tools for doing tax incentives and all kinds of abatements and other things, not only for new construction, but it favors new construction most, but for renovations as well. But so there was a lot of things like you can go to the maximum height for any other building within a mile radius, maximum density for anything in that jurisdiction. Lots of. I mean, you could go to, wow.

Lots of flexibility then.

Yeah, it's substantial. But so there's been a little fighting, though, because the cities and counties haven't felt that they have the control over some of the things like impact fees and developer forced improvements like road widenings and that kind of stuff. But there was some clarification done just in this last couple months here in the legislature, and so that's bubbling down, and I think that'll be helpful.

Yeah, I think the biggest thing about Florida that's the bigger challenge this year is the. So many of the insurance companies that have left the state as of this last year, and I mean, all of our property, they all doubled. You know, the insurance premiums doubled. And that's a huge. Yeah, that's a huge hit. And so if they can't find a way. And with citizens, you know, that was the state's way to try to offset that. But it stops. It's only. It only goes so far. Right. So there's. There's got to be a way to continue to incentivize. So if the cities are smart, they'll recognize we don't want to just gouge them because they still have this high premium and insurance, you know, you've got to offset that. Right. If I'm paying triple the insurance to come there, you better make it worth my while. Otherwise I'll go and continue operating in other areas that don't have those problems.

Right.

That's a huge problem for the state.

Yeah, yeah. Well. And as you mentioned, we've got a lot more supplies, so rents are stabilizing and coming down a little bit, in fact. So there's rent control. We argued it won't be necessary as we get more supply, and it's proving true. But that means the underwriters looking to buy need to be very cognizant of what's going on.

Right? Yeah, they do. And. And I think too many times people don't understand how that can play in there. Because if they built a performer out based on the rents always going up over the next five years, what did that do to that performer? Well, that blew it out of the water. Right. So you got to understand how that plays in there for sure.

Right, right. Well, I know you're very experienced on this. We hit it off right away when we met. I know that, and I love being in touch with you and glad you're on the show here. Now, I've got to ask you the big question. What pivotal person or event brought you to where you are today or is compelling you forward to some goal?

I would say my Kingdom Capital mastermind group. So years ago, I. Every year I focus on being a part of learning or educating somehow, and I focus on that. And this one particular year, Ellis Hammond was the founder, and this one particular year, him and I had struck it off on a. He had. I had heard him on a podcast. I reached out to him. He told me about this group he was starting up, but he didn't have any females in this group. Once again, it was going to be the All Boys Boys Club, and this was only going to be a second cohort. You know, And I'm like, I don't think you're ready for a girl in there, especially me. I'm pretty sure you're not. He's like, no, no. I said, no, you need to take two weeks and pray about this and don't call me before two weeks and then I'll pray about it as well and we'll see. And then in two weeks he called back like almost on the dot. We're ready everybody. I've even talked with the group, we're ready. And I'm like, okay, here we go. And of course I'm. The group has turned completely upside down since I've joined. But that group as a group, when we are, everybody can come together, haven't be a real estate investor and still not necessarily be like minded. So for us to come together as Christians and recognize what are we truly doing with our businesses that is still focused and Christ centered and doing it in a way that's making a difference so we can all do things individually, but now how can we collectively do it as a group? And that's actually where our build to rent partnerships have come from. All of us are from that group. So all of us have honesty and integrity at the core. So that when times got tough, right, we had to look each other across the table and say, okay, we could potentially lose money here. We still going to be okay? We shake hands. Yep. Okay, love you, brother. Let's go. And you know, we walk, get up and walk away because it's a difference when we have that same like mindedness and in doing so, on the flip side, we're putting community resource officers on our properties. We're doing things differently than a lot of other folks because the numbers that we're measuring isn't always our occupancy rate. Yes, that matters, but it matters more. How many people are, are staying, how long are they staying in our units? Are they, is everybody, for instance, immediately getting evicted because they fudged their stuff and couldn't get in and now they qualified because of some program and now they're not qualified. What can we do to help them? And are we making a difference in that community? Are the veterans getting the resources, other seniors getting to their appointments and doing things right? So issues that those communities have that are real and valid issues and working one on one with not just our residents but with those local 501C3s to address those issues, those are things that matter more to us. And so those are what we're actively addressing and that we wouldn't have done that had I not gone and become a part and been the first woman in this group. And, you know, we all tested each other out because we've been in business a long time, so we all knew the need to be very. To do your due diligence on your partners, for sure. And we've done that. And so that makes. That's. That's been the biggest pivot in my life and my business and, and recognizing. So when one of them is thinking too small, it's like, wait, wait, wait, wait, wait. My God is way bigger than that. Let's correct that statement. You know, so it's very challenging to all of us. Yeah.

Nice. And what's the name of the group again?

It originally it was Kingdom Capitalist, but he had to rename it and now it's Kingdom rei.

Gotcha. Okay. And I haven't seen Ellis in a while. Please give him my best. Yeah, yeah, he's a good guy.

He actually moved. Moved to Arizona, so now he's in Arizona.

Gotcha. Okay. Okay. And when are you coming back to Florida?

Hopefully this winter. Oh, my goodness. We. This having. Having to be back in Washington state for the winter was brutal. Yeah.

No, I get it, I get it.

My sunshine and warm weather of Florida for sure.

Yeah. Well, very good. I want to go ahead and have you say how people can get in touch with you, if you would.

Yeah. So they can always look me up on LinkedIn, Bethany Finch on LinkedIn or our company, American Made Home Solutions.com they can. Everything is on there from our executive rentals. If they're just looking to find a place to stay that's furnished all the way up to our multifamily investments and built to rent. All of that information is on there. If they want to know more about investing or empower her capital. We also. Same thing. All of that's linked on my American made homesolutions.com website. So they can always reach out to us on either one of those and we're happy to connect.

Very good. Well, thank you again and we'll have to stay in touch and hear how things proceed. And the build to rent. Have you. Have you completed a property house yet or.

Oh, yeah, we've got lots of houses already completed and one of the. One of the projects will be fully completed within the year, so.

Awesome. That's important to know, too.

Yeah, good. Exactly.

Well, thank you again.

All right, well, thank you for having me, Jenny. I appreciate it.