How Quadriplex Investing Can Make Housing Affordable and Build Wealth

Dangelo Lee (00:00)
where there was a single home that sat on that lot, we can now go in and turn it lengthwise and build four units and go up to create the square footage. And what that has been able to do is at four units, you steal that single family. So you can still apply for a regular mortgage, a single family mortgage, and it’s not five units yet, so it’s not commercial. So an individual or a family can go in and buy one unit.

Michelle Kesil (01:59)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by somebody I’m looking forward to chatting with, Dangelo Lee of the Kenza Group, who is a real estate developer and builder in the Dallas, Texas area. So excited to have you here today, Dangelo.

Dangelo Lee (02:18)
Thank you, thank you, Michelle. This has been a long time coming, right?

Michelle Kesil (02:22)
Yes.

Dangelo Lee (02:23)
Okay, good deal. I’m excited to be here and to share some exciting things that’s happening here in Dallas around real estate development and building and community. That’s real key.

Michelle Kesil (02:35)
Let’s dive in then. So first off, for those new to your world, can you share what your main focus is?

Dangelo Lee (02:42)
Yes, I build affordable housing. Well, not necessarily affordable housing, but community impact housing. And what that means is that not only do I build for profit, but I also build to renovate and to rejuvenate and gentrify communities, not just the area, but the people there as well. I partner a lot of times with private and public institutions in those communities.

sometimes churches, sometimes others, civic organizations, and partner with them and teach them about community impact and how those organizations coupled with a builder or developer can come in and add some value to communities, particularly in blighted areas. So not only do I build, which I believe is a really great product, but I also teach others to build too as well. that

the community won’t be displaced in the process and that they can, you know, allow the value to be turned back to those communities.

Michelle Kesil (03:46)
Amazing. And what do you feel have been some of those main keys that have allowed your business to be able to show up and grow and yeah, gain success?

Dangelo Lee (04:00)
Well, thanks for asking that. It has always been my desire to give back to my community. Although I I’m degreed, I’ve worked on Wall Street, I’ve had a lot of experience in the public and the private sector. I’ve always wanted to give back. I think one of the greatest marriages is that when you can build something great, transform people’s lives, you just have to make good money doing it.

I think that’s a great marriage. And so being able to provide multifamily housing, to see families to go into a beautiful, safe, affordable apartment complex that I built, and not only did I build, I was able to have community partnerships, municipality partnerships. And when you see the smiles upon these families that are going into these beautiful.

developments in their community that, you know, a few blocks down may be still blighted. And you are able to do well doing that. I mean, that is like the best marriage that one can have. And so I tend to want to go in and look at those opportunities where not only I prosper, meaning my company prosper, how does the company prosper as well as all of those neighboring social communities in their neighborhood? And primarily sometimes it’s the church.

It’s that 501c3 organization and going in and educating them that not only are you responsible for a person’s soul, but you also can be responsible and be a good steward over their community. Being able to provide housing, be able to provide banking, whatever the community might need, your 501c3 status allows you to do that. So just kind of educating them on that as well and partnering with them to get that done.

It’s been most rewarding.

Michelle Kesil (06:36)
amazing. And what have been the biggest challenges or roadblocks that you’ve had to overcome and learn from in this role?

Dangelo Lee (06:43)
always is money, Michelle. It’s always getting the necessary equity investors involved and just making sure that you have a consistent reservoir of those relationships because money is cyclical. Individuals may have it right now, but they may have it in a long-term investment. And so you can’t get a hold of it right now because it’s in that development cycle. And so being able to get those dollars and cents and

getting those individuals that are committed to you, whether it’s through their companies, whether they’re private donors, whether they’re public donors or just average individuals that may want to take self-direct their retirement and get involved. How do you keep a reservoir of those in place? And particularly when you have good relationship with your banks, where they’re not giving you 100%, but they’re giving you 90%, that’s real close. And so how do you get that 10 % particularly as your projects grow?

Michelle Kesil (07:41)
Yeah, absolutely. And what would you say has been the biggest lesson that you have learned?

Dangelo Lee (07:52)
there’s money out there. There are individuals, I mean, that really want to make an impact and just providing those connections. I remember so vividly when I first got into impact community development, I started off as a pastor in a community. And prior to that time, the community was blighted.

working on Wall Street and I have a real estate degree and MBA and finance. And so I understood money, understood how to, know, capital bill, capital stack, you might say, but rolling that out into the community and making it have a community impact was something I had to learn. And so I remember so vividly when I was in this community and there was a very, very, very, very, very well.

wealthy donor that I did not know. And I was new to the community. And to make a long story short, he took a liking to me and really opened up his resources and really made it possible for me to do some incredible things in that community. There was a lot of conflict because the donor of course didn’t look like the community and the community want to make sure that these were authentic people that were coming into the community that really wanted to return value and not take value.

from the community. So it was this struggle to really nurture that relationship. It proved to be not as genuine as it appeared. In the long run, there was a lot of value taken out, meaning that there was a lot of displacement. There was an opportunity to buy massive pieces of land with my face or my organization’s face when the intent was to do something very different with it. And so that’s…

was a struggle. And then getting faith-based communities to look beyond the pulpit as ministry.

beyond the soul, meaning that when you finish ministry, whatever your faith is, that’s a person that needs housing. They may need childcare, they need a bank, a credit union.

They need all of these things, so why can’t you provide those too as you’re providing for the person? And getting these communities of faith, these leaders to see that as their responsibility, you know, was a struggle. But Michelle, we did it. We were able to get an ecumenical group of faith leaders from all religions and all denominations may not have agreed upon the Macculloch conception, but they all agreed that they needed homes.

And so we were able to build over a five year period, almost 500 homes with these denominations and were able to sell them to their congregants who now live in homes and now able to pass it down to their family members and begin to create wealth. So it was a challenge, but it was a challenge that really turned out to be favorable and allowed me the knowledge and the success to know that

We can do this when you’re willing to do it, regardless of what your denomination and your faith and your dogma might be, that we can come together because we’ve done it.

Michelle Kesil (11:47)
Yeah, amazing. And what are you most focused on solving or scaling to next?

Dangelo Lee (11:54)
Portable housing, I mean, it’s just, it’s crazy. I mean, the price of a home in America is crazy. And it is getting farther and farther out of reach of, you know, just average Americans that are working. It’s tough. And so I want to do my part to provide inventory that is affordable.

And sometime that affordability or that type of affordability may not be at the level, unfortunately, that you would want it to be, meaning all the bells and whistles, but how do you go into affordability and provide?

You know those bells and whistles that’s not so expensive, like case in point, you might want to come in and do hardware flows, but you can’t do hardware flows, but you can do another version of that. You can go in and do the open concept. You may not can do granite, comatose, but I can do something similar to that. And now that we have the former markets open, you can get a lot of the bells and whistles a lot cheaper.

So just kind of being creative on how do you make affordability look nice and feel nice and gain a value. Because at the end of the day, you want that, what you call affordable to eventually build wealth for that individual. So being kind of creative on how you can get that done and stay within your price range and your affordability so it can be affordable to them is it’s a balance.

Michelle Kesil (13:22)
Yeah, absolutely. And the housing that you’re creating and you’re like it’s for the like average working person. Is it also for investors? How does that work?

Dangelo Lee (13:36)
Yeah, both. My product, I build quadriplexes. And I don’t know if you’re familiar with the tri-level units that are connected. I don’t know if they’re building them. Where are you from?

Michelle Kesil (13:51)
California.

Dangelo Lee (13:52)
I’m originally from Los Angeles. Yeah, they have them there. You when you park on one level and then you have living on the second and the third or sometimes the fourth floor, and then you have four units that are connected. ⁓ So we call those quadriplexes here. And what the city have done in order to increase affordability is that they rezoned a lot of these blighted areas so that we can go in and build quadriplexes that were one single family.

where there was a single home that sat on that lot, we can now go in and turn it lengthwise and build four units and go up to create the square footage. And what that has been able to do is at four units, you steal that single family. So you can still apply for a regular mortgage, a single family mortgage, and it’s not five units yet, so it’s not commercial. So an individual or a family can go in and buy one unit.

by the entire complex live in one and rent out the other. So we make that product affordable because most families can’t necessarily go in and afford a five or six or $800,000 home on their salaries, but they can go and qualify for $1.4 million quadruplex that cash flows.

for them and their DSCR, they can meet their DSCR in those products. So that’s what I mean by affordability. Affordability may not be a single family, which I try to encourage families right now to always go on to four units because you can still get a single family mortgage, what do we call the regular mortgages? Jesse evaded me right now. But you can go get a federally approved program.

and get you a 90 % financing on your units and coming with 3 % because you get set for units. So when I talk about affordability, I’m looking at the bigger picture and really encouraging individuals to go into quadriplexes, triplexes, duplexes, just for the affordability purposes for the DSCR coverage.

Michelle Kesil (16:37)
Yeah, absolutely. And are you working with like the local community in Texas on that or how is that educational process going?

Dangelo Lee (16:48)
Yeah, I’ve been a part of the zoning process here in the city and you know, lot of the opportunities, the grants, the grant programs are available to go into those communities. And I just try to provide a product that I think is not only affordable, but that it builds wealth for those families. And again, as I mentioned, a single family may not be affordable to them, but four units and you still get your 15,

1700 square feet, your three bathrooms, I three bedrooms, your two and a half baths, your full living room and dining room, and then you are able to rent your other units out for 2000. So you’re getting $8,000 excluding your rent on it and your mortgage on it is probably 5,300. So you not only pay, you don’t pay rent in your place, but then you may cast for another 900 bucks, which can make a difference in someone’s life, particularly if they’re still

you know, have full time jobs and they have a two family income. It can radically change their life. They instantly jump into a millionaire status, least on paper.

Michelle Kesil (17:55)
Yeah, what an incredible opportunity. Thank you so much for sharing all of that.

So before we begin to wrap up here, if someone wants to reach out, connect, and learn more, where can people find you?

Dangelo Lee (18:08)
My website is dangelolee.com. That’s dangelolee.com You can go there. I have all of my websites up there. I’m also an author too as well. I’ve published a couple of books. And so my whole story is there. You can reach me at Land to Legacy too, which is same email, the same website. And you can go there. And then of course my…

website is dangelolee.com

Michelle Kesil (18:36)
Perfect. Well, appreciate your time and your story. Thank you for being here.

Dangelo Lee (18:40)
Absolutely, thank you, Michelle. And I know this was a long time coming. We’ve tried to connect. I hope that, ⁓ you know, you can transform lives. My dad always told me this. said, son, said, Edie, you’re going to collect rent or pay rent. You make the choice.

Michelle Kesil (18:53)
Yes, thank you so much for everything that you’ve shared. And for the listeners that are tuning into the show, if you got value, make sure you’ve subscribed. We have more conversations with operators like Dangelo who are building real businesses. And we’ll see you on the next episode.