How This Investor Is Converting Hotels Into Affordable Housing

Donna Nadegès Smith (00:00)
I have you find deals for me. And and being funny and realistic, I create a flyer where I create what is called finder fee. So you get paid to actually find properties for me or find deals for me. So I’ll get a call in. So still I never went anywhere. They may have called, hey, I found a property that was, you know, over here, find out how much it costs, what it’s worth. I pay them for finding the property and I get the property if especially if it’s ⁓

where ⁓ it’s abandoned, I find out who the owner is, get a hold of them, see if we can work something out, either for them to sell it, either for me to take it on as a project to be able to lease or rent it out so that they can start recouping money from it, even putting my own money in and working out a deal where they’re kind of like I’m like kind of acting as a bank where they’re paying me back, but allowing them to still be able to receive money from the home because I grew up as a foster kid and I went real estate crazy.

Dylan Silver (02:25)
Hey folks, welcome back to the show. Today we’re joined by Donna Nadegès Smith, a Los Angeles based real estate developer and community builder. Donna, thanks for taking the time today.

Donna Nadegès Smith (02:38)
Thank

you for having me. I appreciate this.

Dylan Silver (02:40)
Now Los Angeles community building and real estate development encompasses so many different spaces and segments of real estate. What what kind of projects are you working on right now?

Donna Nadegès Smith (02:52)
Right now I am working on a project with helping Los Angeles County grow with the housing crisis and employment and business opportunities for people.

Dylan Silver (03:03)
Now when we talk about, you know, affordable housing, this is a an area specifically where there’s national attention on but there’s not everyone is sure exactly how to handle this. Are you involved in that affordable housing segment?

Donna Nadegès Smith (03:15)
A hundred percent. ⁓ that’s the main thing that I am geared geared towards. I literally I am a real estate investor and a mentor and I teach people how to make two to ten thousand dollars a month. but along with that strategy of teaching them, I have properties that I rent lease, you know, or purchase or sell for others to be able to be able to be in that market to be able to purchase or even be able to rent. But I do them at a much lesser cost than

⁓ most people. So a lot of times when I’m doing my investment deals, I’m looking for something very cheap so that I can be able to keep it at a low rent so that people can afford to make money doing their business and people have affordable places to live where they can even be charged cheaper. And I’ll tell you about that project shortly.

Dylan Silver (03:58)
Now

when we talk about affordable housing, there’s a number of different ways where the this breaks down. And and I think people are becoming more and more creative, whether that’s through ⁓ creative acquisition strategies or having more targeted acquisitions ⁓ strategies as a whole to find people who are looking to sell for cash. But then you also

Litech housing, right? And where you have these, you know, massive communities, but you also have some i investors and developers who may be doing a quadplex, right, and just able to find cost effective housing that way. What’s your strategy with, you know, the current deals that you have right now?

Donna Nadegès Smith (04:35)
Okay, so one of the deals is I’m looking to build, well, we’re working on now building a community in the city of Lancaster, California. ⁓ and with that project is it is about helping people get started, get back on the right track with their lives as far as with employment and housing, ⁓ and also again with business opportunities. So here we’re building a small community that would ⁓ invite that that audience to that prop to that area.

I’m sorry, I’m a little nervous.

Dylan Silver (05:03)
Hey, that’s okay. That’s okay. I I can be certainly empathetic to that. I remember when we were starting this this show, I sometimes joke with guests like, It’s amazing how far that we’ve come. And one of the things about being a a real estate investor is you certainly have to be a master networker, right? And speaking of, you know, these community opportunities, it’s not always straightforward, right? Because you don’t just have to find the deal, you also have to get community buy-in and you have to get pull the permits for these as well.

What’s your approach to not just finding the the land and being able to acquire these properties, but then also getting that community buy in?

Donna Nadegès Smith (06:26)
Well, usually well for me and for anybody, it’s word of mouth. People get to know who you are by the things that you’re doing in the community or what you’re doing for someone else. So a lot of times my deals, well, all the times my deals come from somebody giving me a call. I was in Lancaster short story. And while I was in Lancaster, I have a resource center that was there where I was helping the community with over twenty one resources. So as I was there,

We were getting a bunch of people coming in from Los Angeles, coming into Lancaster. And, you know, it just would hurt my heart. And I just said, you what? I’m going close this place down. I’m going to go find a resource center in LA. So now reopening Lancaster and LA to be able to kind of help close that gap to those that are in need because I would hurt for those that would come into Lancaster, you know, and they have workers, no sense to those that are out there, but some of the workers where they’re saying, hey, you have to go away to Lancaster to get the services you need. And then they would run into us.

You know, we were on the boulevard. So just seeing that and understanding that need, I packed up my kids and my family and found the fastest place near around and moved here. And before I could even get settled, I got a text on my phone, not even two months later. Hey Donna, I got a property in LA which is ⁓ which is a hotel and it was a house. And it’s exactly what I needed for ⁓ the resource center that I had in Lancaster. so

with that happening. We’re going through a bunch of back and forth on that. But I decided to come up this week actually with a plan to be able to find a way where how can I help somebody else with a project like this? Because I don’t want to do housing. I want to provide opportunity for people to have that. So I purchased to be able to allow people to get what it is that they need. So in that this next opportunity that I’m I’m just presenting would be the apartment complex to this

Plus it’s a two-bedroom house on there and I’m willing to share the house with my resource center. That way I can continue to develop and help people in the community as we’re doing, but also help them build their business. But for them to take it, maybe start, you know, some type of housing. I have different ones that I’ve that I have rolled out, I don’t have it here. but for them to be able to not even have the experience, I can help them literally walk them right through it. The project is probably about 135,000.

⁓ to rebuild and remove forward. And at the end of the day, my prayer and the goal is for me to pitch a grant to pay the property off so that I can then charge them much less than what the heck they would be paying right now, which I don’t even want to charge them. And for them for me to to go in contract with me an agreement that they will be charging less for the tenants as well. As long as they do that, I can move on to the next project.

Dylan Silver (09:07)
Now you mentioned a hotel. Is this project that you’re working on a a h a hotel to apartment complex conversion?

Donna Nadegès Smith (09:14)
Yeah, it ’cause it it ac yes, it is. It’s actually what’s happening.

Dylan Silver (09:17)
And so that’s, you know, ⁓ very interesting. And I imagine there’s a lot of moving pieces there from from acquisitions to then rehab and and you know, re envisioning some of these spaces. On a granular level, you know, maybe without giving away all of it, but a nugget here for us. What does that look like, you know, converting a hotel to an apartment complex?

Donna Nadegès Smith (09:37)
It’s not that hard because you be because because what you have to remember, and I can say that because guess what? That’s not my department. I’m a real estate investor. My job is to hire those that that that is their title. Let them do what they do, you know, and the team that I have, I’m able to reach out to them. They got everything done. We’re pretty much through that part anyway. So anybody coming in anyway, we’re we’re already pretty much ready to go.

So as far as to get ready to start the doing the building, it’s not too much left. but yeah, that that would be my answer.

Dylan Silver (10:08)
When we talk about having, you know, role players as an investor, you know, you’ve got your contractors who are coming in and they’re able to rehab these spaces and and transition them from a hotel to an apartment. You know, one of the the biggest bottlenecks that that investors and flippers face w whether you’re doing a single family home or a hotel is managing contractors and subcontractors. how have you managed to be successful over the years, you know, managing those those roles and and those

Yeah.

Donna Nadegès Smith (11:11)
Well, ⁓ I I had to laugh when I when you said that. and I and I know it may sound b bizarre, but I really think it’s how you treat people. a lot of times or a lot of stories I hear, I can’t I can’t I can’t say that that happened to me. And I’ve been doing real estate for over twenty five years, easy. And the issues with tenants or evictions and things like that, no, not not really on my part.

And I believe it’s the relationship and it’s how you treat your it’s it’s how you treat people. And I think that is the that’s the main thing that I’m trying to get across the board, period. You know, any anybody can do anything. It’s not about even having the experience. Because a lot of times even in real estate, when I started in real estate, I started very young, you know, I didn’t know anything, you know, but it was somebody giving me an opportunity and a chance because they saw what I wanted. ⁓

Dylan Silver (12:00)
Yeah, well.

Donna Nadegès Smith (12:02)
So I definitely want to be one of those persons.

Dylan Silver (12:04)
When we talk ⁓ specifically about scaling a portfolio, ⁓ one of the the big challenges that comes up is you know, when do I self manage versus when do I hire out a property manager? Is there a certain number of doors, you know, and how far out from you know where I live can I buy these properties before it becomes an issue of me driving to it and so forth. What is your feedback on, you know, when you should self manage versus when you should hire a property manager?

Donna Nadegès Smith (12:31)
Well, I would say I would do it immediately. ⁓ when I first started I was I had got a lot of bumps and bruises and scars. That’s why I’m pretty good at it now. but you know, as far as just trying to like just make sure that I knew but but at the end of the day it’s I still was safe. Even even in not knowing, you know, knowing who the person was or or knowing that information. I built a relationship. Before I go out to the property, I got, you know,

I get the information, you’re calling around, you’re checking the area, you talk to people. I won’t say that there’s some properties I have out of state. I have still not even seen these properties yet. You know, but some of the but I know the neighbors and I have neighbors looking after them. And then some are are are by management companies. So you wanna go and again, you wanna go and get familiar with the people ⁓ that are around, even if it’s not necessary physically going, thank God for the internet and phones.

I think that you you will be fine. But it’s definitely a choice because honestly, you’re supposed to go see properties. You’re never supposed to to buy with a with a with a blind eye. Yes, all real estate is good, but not necessarily.

Dylan Silver (13:34)
Right. Sight unseen can be dangerous for a lot of reasons, right? Now pivoting here, ⁓ when we talk about acquisitions strategies

whether it’s a single family home or a hotel with a a a home on it, right? People tend to have very targeted means of acquiring properties. And sometimes that that means, you know, hey, I’m gonna be intensely networking and mind my referral network so the deals are coming to me. Some people will have funnels, some people will, you know, find and pull distressed seller lists of some kind, right? Do you have a preferred acquisition strategy or way that you find deals?

Donna Nadegès Smith (14:09)
Yes, I have you find deals for me. And and being funny and realistic, I create a flyer where I create what is called finder fee. So you get paid to actually find properties for me or find deals for me. So I’ll get a call in. So still I never went anywhere. They may have called, hey, I found a property that was, you know, over here, find out how much it costs, what it’s worth. I pay them for finding the property and I get the property if especially if it’s ⁓

where ⁓ it’s abandoned, I find out who the owner is, get a hold of them, see if we can work something out, either for them to sell it, either for me to take it on as a project to be able to lease or rent it out so that they can start recouping money from it, even putting my own money in and working out a deal where they’re kind of like I’m like kind of acting as a bank where they’re paying me back, but allowing them to still be able to receive money from the home because I grew up as a foster kid and I went real estate crazy.

So I love real estate. So for me to see an empty home, empty property, anything empty, it just drives me crazy. It’s like, why is this left like this? But the biggest issue to that is too, it brings the property value down. Crime is happening, different things are happening because nobody is is is is monitoring this or seeing what’s going on. So I’ve created my own crime investigation team.

Where that’s what we do, you know. So I’m I’m gonna put it more out publicly, especially for LA County, ⁓ for those that are looking to get things started so that way I’m able to grab that audience and I’m sure at very reasonable cost, that’s the point. This is the point that I’m making. So if the property that’s very cheap, I got it cheap. Of course I can charge you fifteen hundred dollars for a three-bed round. Why not?

Dylan Silver (16:31)
Now, when we talk about ⁓ being able to have consistency in this, and not just over, you know, a couple of years, but over decades, right? And acquiring properties from one market cycle to another. People have to pivot. You know, the same strategy that would work five years ago might not work today, certainly ten years ago, right? Talk me through some of those pivots that you’ve made over time and you know the different types of deals that you’ve seen over the years.

Donna Nadegès Smith (16:57)
⁓ my God. It it is it’s it’s so many ways to do real estate. and I I think that’s the biggest thing for me is is based on the person on what strategy you’re using. Because some you know all every every strategy isn’t the same. And ⁓ because when I go and I’m looking at a property or I’m helping somebody out of that situation, I’m really going with my heart in it.

You I want to hear what’s going on, what happened. I’m listening to everything that’s going on to even see if this is something you even want to deal with. Because sometimes on the flip side, everybody isn’t honest about how they got into the situation, you know, with their home.

Dylan Silver (17:32)
Yeah, no, absolutely, right. And and once you start to uncover real motivation, ⁓ as a former wholesaler, and I still consider myself a wholesaler ⁓ these days in in some capacity, you know, you realize that you’re as much like a family triage coordinator in some of these cases where you’re bringing together like, you know, brothers and sisters who haven’t spoken, and then, you know, they’ve got descendants, maybe if it’s a probate deal and they they w weren’t able to get on the same page, and now you’re having to bring people together. And so you realize like

You know, does this person who lives in the home even do they have any rights here? And so am I talking to the right person, right? As soon as you and it’s the same thing for on a structural level, like a a fix and flip, right? You take down a wall and you see there’s electrical issues. You take up the floor, you see you got foundation issues. It’s it becomes like an onion in that way, peeling back the layers.

Donna Nadegès Smith (18:20)
Yeah.

Dylan Silver (18:21)
You know. pivoting here, Donna one of the things that you mentioned is you are helping people with building businesses and and businesses in real estate and outside people want that that mentorship, but oftentimes don’t know where to to turn. So what kinds of folks are are you mentoring? Is it is it mostly real estate investors? Is it you know folks from businesses outside of real estate specifically? Walk us through that.

Donna Nadegès Smith (18:45)
So so so I’ll be funny and real and and realistic. Everything is real estate. All of that is real estate. You can’t stand in the air. That’s not gonna be considered, you know. So everything is real estate. So I help my whole thing is I I ask you what is it that you like doing? I don’t care what you’re making money from. I don’t care how you’re making the money. I wanna know what is it that makes you happy. What is that? Once I hear that, then that’s where my

my ears turn up to where I’m saying, okay, well, this is what you love doing. This is what this is what you need to be doing. That’s your gift. That’s your purpose. That’s your talent. Let’s call that out. You know, so that’s one of you one of the ways that I go about working with people as far as when they’re they’re interested in getting started, especially if they don’t know where. I like to give them easy strategies. One of the easiest strategies is example for having a home. Like I say, I teach you how to make

two to ten thousand two thousand to ten thousand dollars a month. So with a strategy like that, you can do room for rent with one room. Hey, get out of your bedroom and rent that room. Go get on the couch. It’s gonna save you in a minute. But it’s definitely a way to get started on real estate investing right there. You know, it’s it’s a start. You already started your business. Of course we have to you have to join come to my course and you’ll get all the information. My course is $150 because I want people to get the information.

I’m not here to get the money from them. I just want you to get the information. Because as long as you have the information, you’re good to go. You know, you’re good to go. I have another person that’s on my team that’ll literally walk you through the entire step. So you just pay them and they’ll do everything for you. But I tell you exactly what it is you need to do, where you need to go to be able to get your business started. So I’ll show them how and then I show them what I call a spider web, how they’re able they’re still able to make money from that business.

within their business.

Dylan Silver (20:35)
You know, there’s a lot of different y like vertical integrations that I see people doing, you know, especially if they’ve got some type of, you know, larger residential deal. They might have a property management company, in-house, they might have a maintenance company, and then of course they’ve got the investment arm and they all service each other as and the money stays in the ecosystem longer, right? we are actually coming up on time here, ⁓ Donna. anything you’d like to mention directly to our audience?

Donna Nadegès Smith (21:02)
Well, directly to our audience, because it’s mine too right now. ⁓ I’d like to say ⁓ thank you for joining. If you were here to look for information, I think this was a good place to come get your information that he’s reaching out to to different investors who is familiar with the market. I myself, again, is a real estate investor and mentor, teaching you how to make $2,000 to $10,000 a month and even more. I also help with

With the course that I teach you on how to get started, we also have a website for properties for rent, lease, purchase and sale, and resources. The resources is the biggest piece to me because on with those resources, they have opportunities for starting businesses, for getting employment and starting housing.

Dylan Silver (21:47)
Donna, thank you so much for joining us today. Thanks for your time.

Donna Nadegès Smith (21:50)
Thank

you. I appreciate being here.