How to Build Affordable Housing Profitably Without Losing Money

LaSonya Lawrence (00:00)
Currently, I am building a four-bedroom, two-bath house. It started out as a duplex.

The lot, it zoned for duplex. ⁓ the build cost was in line of what you know I was willing I was willing to ⁓ spend for this. But when I got the realtor out there to do ⁓ what they call a CMA and that is a market analysis, that duplex was not it wasn’t gonna appraise. So if I would have just went ahead and built it without even consulting a a real estate agent, I would have lost money.

Joseph Crooms (02:04)
Hey everyone. Welcome to Investor Fuel Real Estate Pros Podcast. ⁓ it gives me a pleasure to be here. ⁓ my name is Joseph Crooms. Today I’m joined by someone I’ve been looking forward to chatting with.

Her name is LaSonya. She will tell you her last name. And she’s going to also tell you about a niche. But I’m going to sort of drop a a line because ⁓ something caught my interest. She was very interested in affordable housing, and she’s going to talk about challenges and how to get there for those that are in the real estate and those that are just may be listening to our podcast. So ⁓ LaSonya, say hello to everyone.

LaSonya Lawrence (02:44)
Hi, and thank you for having me. I really appreciate. I’ve been looking forward to speaking with everyone.

Joseph Crooms (02:49)
I think our listeners is going to take something away from how you’re approaching business, especially the affordable housing, talking about how to get capital and things like that. So let’s dive in. So, first off, for people who may not be familiar with your world, give us the short version, what’s your main focus these days and what market you’re operating in.

LaSonya Lawrence (03:11)
⁓ My main focus is providing affordable housing to communities. Our market is outside of the main city. So I’m located in North Carolina in the area. And so my company, we build outside of the Raleigh area. Reason being is because we can build faster and we don’t have to wait us, the permitting time is shorter as well.

Joseph Crooms (03:36)
And how does that work? Is it because that you’re connected with the city planners and people of that nature? Can you g you know, ex elaborate a little bit more on that?

LaSonya Lawrence (03:48)
Absolutely. ⁓ when I started this, I hit the pavement, started going into the ⁓ the town halls and the city and talking to the economic development department, the zoning department, and I found out all the steps that I needed to take and how long it was gonna take. So that’s inside of a large capital city that we’re waiting anywhere from eight to 12 months for permits before we can even break ground. And I was like, well.

It’s no way in the world that anyone can actually get this affordable housing if we gotta wait that long to take us forever to provide this. So I started going to other ⁓ cities that the smaller towns and come to find out the smaller towns they may have different challenges, but we can still break ground. It doesn’t take as long. So we are right now we are dealing, ⁓ we had an interview last week with another town.

outside ⁓ outside of Raleigh where we’re gonna just keep that one on the on the shelf for right now because they are having some water issues. they’re having a water shortage and you know that’s a lot around right now because of AI.

Joseph Crooms (05:46)
Mm-hmm. Mm-hmm. Yeah. What does those meetings look like in the very beginning for ⁓ our listeners and from those that are in similar situations? Can you share with how the introduction goes, how the next meeting goes? Can you give us a layout on that land?

LaSonya Lawrence (06:03)
How it looks is first you find out when the next town meeting is. Every city has a town meeting. You find out who is in charge of ⁓ the town meeting, like who can come. So maybe it might be the secretary that’s making the appointments or making the meeting dates, or it might be her boss. You don’t take no for an answer. You go in and you can call, or you can just go into the office and ask, What is your next town meeting? Because you want to know.

what your town has planned in the over the next five years. ⁓ Planning, the planning department knows exactly what’s going on in the city over the next five to ten years. They have, they know all the plans. We don’t know because we don’t go to those town meetings and they’re open to the public. So that that’s where you start. You start there, you f and in those meetings you’ll find out what they need, what that town needs or what that county needs. Whether it’s their housing or

whether they’re that’s how we found out about utility issues, you find out everything right then and there. And when you find that out, you’re able to ask questions. So for me, ⁓ the first few that I went to, I just sat and I listened. Because I didn’t wanted to know what was going on in the city. So I sat and I listened. And I found out they need affordable housing. So then after the meeting and everyone’s talking, that’s a networking event, you want to know, do you have any ⁓

affordable housing initiatives that that you’re trying to around. Every town or every county always has an affordable housing initiative. There’s always some areas in the town where they’re trying to bring up. So they’re trying to bring those up. Small builders like myself, we’re there to save the day.

Joseph Crooms (07:41)
After you made a couple of those ⁓ introductions, how have you strengthened those relationships?

LaSonya Lawrence (07:48)
⁓ I contact them at least once or twice a month. I make sure that my name and my ⁓ name, my my personal name and my company name stays on the forefront of their brain. Whether it’s going just popping in and bringing them donuts or coffee, I make sure they know who I am. So when I need something, I don’t need them to say, ⁓ well, go down the hall to this department. I want an actual person’s name.

Joseph Crooms (08:13)
Mm.

LaSonya Lawrence (08:14)
if

I’m nice to them, they’ll be nice to me.

Joseph Crooms (08:16)
That’s not ⁓ easy, especially in this climate right now. So, ⁓ and and that can mean a lot of things. What’s been keeping you running your machine running smoothly?

LaSonya Lawrence (08:20)
Right.

The love I have for it. I have a love for real estate that I never knew that I had. ⁓ I started back in 2003. I started with just buying homes because my 13 year old son told me he wanted to go to s ⁓ Yale School of Architecture. And I’m a single mom. I’m like, how am I gonna pay for that? ⁓ I had a friend of mine that had just bought her a multifamily.

And she introduced me to it. And I started learning about it. And it was just the love that I had. I never really wanted to be a real estate agent, but to supply housing to people that couldn’t afford it. And me as a single mom, I understood what it meant to not be able to afford a certain ⁓ level of living that you want your children to be at.

When she taught me that and she well when she introduced me to that ⁓ world and I started learning about it and just online all the time, just Googling and just researching, I just fell in love with real estate and I’ve been in it ever since.

Joseph Crooms (10:03)
This is a to pronged question, LaSonya. When you land your first piece of property, what was that like? And also when did you know that you needed to pivot, say from the big city to those cities around?

LaSonya Lawrence (10:15)
My first property was the house right next door to where I was living. I bought my house where I was living with me and my kids, but then next door went up for sale. And it was, you know, when you something seems too good to be true. Well, this is what it sounded like to me. It was too good to be true, but it actually was true. ⁓ she was moving out of state and she needed somebody to buy her place. And she offered to pay everything.

Joseph Crooms (10:29)
No.

LaSonya Lawrence (10:41)
All I had to do was come with a down payment. She would do, she would pay for inspections, she would pay for closing. And I’m like, that’s too good to be true, which that’s how she was getting a house built in the South. And she needed the money so she could move.

Joseph Crooms (10:54)
So she was a motivated seller. Yeah.

LaSonya Lawrence (10:57)
Yes. And

that’s what you look for. Motivated self.

Joseph Crooms (11:00)
so let me ask you this question, So when you identify motivated sellers, how did your conversation change?

LaSonya Lawrence (11:09)
Motivated sellers are ⁓ they can be people that are moving for their job. A lot when you if you look in a military town, a lot of those are motivated sellers because military, you know, every few years they have to go to another base. A lot of those are motivated sellers. They need to sell like right now. Another motivated seller is someone that is ⁓ behind on their payments. They need to sell.

⁓ another motivated seller, inheritance. They inherited from a grandparent or a parent they inherited some land or they inherited the house. A lot of them they already have if they’re adults and they have their family, they already have their own home.

Motivated seller.

Joseph Crooms (11:47)
You follow I’m sorry.

LaSonya Lawrence (11:49)
When

you get a motivated seller, ⁓ the negotiation goes a lot smoother.

Joseph Crooms (11:53)
And I guess from your intellect from prior engaging through you know when you’re dealing with the military, you know what to say to them, you know what those that are inheriting. Give us a little brief on on all of them. How would you deal with someone going to the military?

LaSonya Lawrence (12:05)
Yes.

⁓ when they’re going when they’re moving, I’m just asking them questions and they’re filling me in. I’m asking them when are they leaving? ⁓ how long they’ve been in their home. Are they behind on any payment? Though and that’s how the conversation starts. And then it’s like, okay, well, they what you’re doing is you’re finding out their needs. And then you meet their needs. So if they just say, you know, I’m just looking to leave because I have to move to another ⁓ another station and

They may be looking for just to break even, or they may be just looking, you know what, I just need a profit of $10,000. Okay. Then I go back and I already know what their house is worth before I even go to talk to them because I’ve already had a realtor do a CMA for me. So I already know what their house is are worth. I already know what they paid for the house. So I have a number when I go in there and I stick to my number. It’s a range.

I know I’m not going about over this and I know I’m not gonna lowball. But I’m gonna meet them somewhere in the middle. Because I want I want it to be a win-win.

Joseph Crooms (13:06)
That’s negotiation. LaSonya, let’s leave the other question because you answered that very thoroughly. You talked about capital. It can be a challenge. How have you overcome certain hurdles in the beginning and how do you get to where are you at right now?

LaSonya Lawrence (13:08)
Mm-hmm.

Yeah.

Yes.

When I first started back in 2003, it was so much easier to get capital than it is now. In 2003, how I got my capital, ⁓ I refinanced the house I was living in, pulled some out, and that’s how I got the down payment for the one next door. It was easy. Now

You if you’re buying the home, ⁓ it’s just a multifamily that you’re gonna rent, you’re gonna have to come up with 20, which back in 2003, you can do it for conventional for five percent down. You have to come up with 20. So look at 401k. If you already own a home, you could look at ⁓ pulling the money out of your home, you could look at out look at investments, however.

This is another, this is the great thing. If you do not own a home yet, the best thing I would say is do something they call house hacking. I would buy my first home as a first-time home buyer. You can be a first-time home buyer for up to a four unit ⁓ property and it’s still considered a residential property. So you can get an FHA loan, which is three and a half percent down, and you live in one unit and you rent the other three.

Joseph Crooms (15:15)
What about if you already have a home? Do ⁓ so can you qualify for the four unit and still have a home on the side or ⁓ if did I hear you correctly?

LaSonya Lawrence (15:25)
Not as if you already have a home and it’s in your name, you don’t qualify as that ⁓ as that being your home that you’re gonna live in. So you will have to come up with that 20%. And that is where it does get difficult because you do have to look and see, you know, what you have. If you have a 401k, if you have a IRA or some stocks, you know, or you want to refinance your home and pull money out. what the way the rates are right now, I probably would not refinance my home, but I would do a HELOC.

Which is a home equity line of credit. I would do that to buy a rental property if I already have a home. Because the way that these interest rates are, you don’t want to touch your rate, especially if you have a rate back when it was to and three percent. You do not want to touch your rate. So I would get a a HELOC, which is something like a second mortgage, but you only pay for what you borrow, what you take off that line of credit.

Joseph Crooms (16:17)
Hmm. So the HELOC is was that a rescue for you?

LaSonya Lawrence (16:21)
⁓ I didn’t actually do that. That could be a rescue, but I didn’t use HELOC. I actually went and used ⁓ I used my stocks and bonds to get to start off with property.

Joseph Crooms (16:32)
So you’re operating in that velocity the multiple streams of income.

LaSonya Lawrence (16:36)
Yes. You always have to have multiple streams of income and multiple streams of savings. Always. You never put all your eggs in one basket. My father always told me that. Never put all your eggs in one basket. If you just have one nine to five and you don’t have anything else, you’re one paycheck from being broken homeless. So you always have to have ⁓ well more than one stream. And then when it comes to your savings, why put it in a brick and mortar?

Joseph Crooms (16:54)
Mm-hmm.

LaSonya Lawrence (17:02)
You there’s so many other things that you can put it in, products that they have out there, that interest rates are so much better. You want your money working for you, not you working for it.

Joseph Crooms (17:11)
Can give us an example?

LaSonya Lawrence (17:13)
⁓ for me, just for my liquid that I can just pull from day to day, I have it in a high yield savings account. I always utilize a high yield savings account and I utilize a money market. ⁓ a high yield savings account, I keep that as a daily. So I keep it always have at least $1,000 in there. And that’s for emergencies. ⁓ anything can happen. I can need something, I can need my car breakdown and I need something. That thousand dollars, all I gotta do is go to the bank and pull it right out.

⁓ money market is a higher interest. I would call around to the banks and see what their interest rate is for their money market. ⁓ what else do they have? Well, the IRAs. But you know, IRAs is for retirement. So make sure the money that you put in there, you’re not gonna touch until you’re at least 59 and a half, because if not, you’ll get a penalty. And you’ll get you’ll get that interest charge and you’ll get that penalty on the front and the back.

Joseph Crooms (18:04)
Thank you for sharing that. So let’s take a little shift now. Okay. Now every operator I know has a moment when things just get real. Maybe a deal that went sideways or a time they had to pivot fast. Would you mind sharing one of those moments with us?

LaSonya Lawrence (18:20)
Currently, I am building a four-bedroom, two-bath house. It started out as a duplex.

The lot, it zoned for duplex. ⁓ the build cost was in line of what you know I was willing I was willing to ⁓ spend for this. But when I got the realtor out there to do ⁓ what they call a CMA and that is a market analysis, that duplex was not it wasn’t gonna appraise. So if I would have just went ahead and built it without even consulting a a real estate agent, I would have lost money.

My money would have been sunk in there because

Where I’m building it, there was no comps to sustain what I wanted to build, what I wanted to ⁓ sell it for. So we had to, I transferred, I switched over to a four-bedroom, two-bath house. The comps are good, the build cost is good. So, you know, we’ll make a little bit of change on that, but it is going to be priced affordable. And in this market, it is very hard to find anything under 350.

Ours is under three hundred.

Joseph Crooms (19:21)
Thank you for sharing that. ⁓ when you were talking about the appraisal, you didn’t sort of mention that. How important, how much knowledge have you gained from probably making mistakes that you know when you build relationships with appraisers, what are you looking for? You get the report, you look into it, what kind of things do you jump out at you?

LaSonya Lawrence (19:46)
the distance that that house that they used to compare to my house, the distance. I’m looking for something that is within a mile from my house. If they go something that’s five miles down the street, that market can change so fast from one block to two blocks. Market can switch because you can have a ⁓ you can have an area where it is ⁓ middle class and then two blocks down the street,

It’s not middle class anymore. Or you can have sub suburb area and two, three blocks down the street is downtown. Downtown is gonna be a lot higher than the suburban area because of all the convenience. So I’m definitely looking for the distance between ⁓ where my project is and the houses that they use ⁓ to compare mine to get the pricing. I’m definitely look at looking at distance. ⁓ another thing I’m looking at is

what those other the comps that they use, what do they have that my house doesn’t have? Or what does my house have that they doesn’t they don’t have? And how much did they take away from that my price on my house or how much did they give for that particular thing? So say my house has a deck, but this comp doesn’t have a deck. My house I’m trying to sell for $250 and this house sold for $300. Well if my house has a deck and this one doesn’t and it sold for $300, I might be able to raise my price on my house.

And then also you’re looking at the square footage. So if my square footage was smaller than their house, then that’s another reason why their house was more than mine. So you have to take an effect what the house, the footage of the house, and the distance.

Joseph Crooms (21:19)
So when you actually when an appraiser comes, what else jumps out about the inspection itself? You know, ’cause I’ve heard some disaster stories. Have you experienced anything with inspectors? What do you look over look at when you look at the report? You don’t just look at it and take their word anymore. I’m pretty sure you don’t do that. What is it that you’re looking for?

LaSonya Lawrence (21:41)
When it comes to inspections, ⁓ I’m looking to see if there’s anything wrong with the house. Is there any dry rock? Did the inspector actually get up on the roof and look at the roof? Did the inspector, if it’s a crawl space, did the inspector go under the crawl space to see if there’s a barrier down or when the house was built? It may not have need it may not have been ⁓ needed to have a barrier because that law wasn’t there then. You never know. So I’m looking to see where.

How thorough was this inspector when they inspected this house that I’m getting ready to buy? I need to know everything that’s wrong with the house.

And that will determine if I’m gonna go through with it. It’s if it’s a house and I’m rehabbing, then maybe some things that that I’m like, yeah, okay, I will do it. But ⁓ depend what if the house has any foundation error foundational things going wrong, I kind of try to stay away from that. Yeah.

Joseph Crooms (22:30)
Yeah. And and thank you for sharing that because I’ve heard some disaster stories because people just trusted the inspector and they didn’t, you know, they did a quick read instead of an in depth reading of it. Right. Yeah. Yeah.

LaSonya Lawrence (22:45)
If they are in and out your house in about thirty, forty minutes, they did not they were not thorough. I have had inspectors inspect the house for me and it took on every bit of an hour and a half.

And depending and then if it’s bad weather, if you get buying a house, try to make sure that you schedule on a clear day because if there is snow on the roof, they can’t do they can’t even inspect that roof. They can’t get up there. So try to get it inspected on a clear day.

Joseph Crooms (23:11)
Thank you, LaSonya yes, that’s the kind of stuff people don’t talk about enough. And honestly, it’s what separates the folks who are just dabble from the ones who stay in the game ⁓ for the long term. Let me ask you this. What are you most focused on solving or scaling next? What’s the real goal for you?

LaSonya Lawrence (23:30)
The real goal for me is I want a whole complex. Right now we’re focusing on infield lots and we’ll build a one house, you know, on an infield lot. I want a complex. I want an entire affordable housing complex. And I want it it’s going to be a brand new construction. Just because it’s affordable housing does not mean it doesn’t it should be run down. I don’t believe in that. I believe that people should have safe, nice, clean.

places to live. And they should not have to break the bank to have it.

Joseph Crooms (23:59)
That’s huge. ⁓ I failed to say something to you, ⁓ LaSonya. ⁓ we have a real big gift that we wanna offer to you right after this you share something that we wanna do for you. and I’ll get a little more into that when we get to that point, but forgive me for not bringing up. for a person that you’re how you’re talking, I think you’re gonna love this gift that we do. Okay. I like gifts. All right, all right. So

So let’s get back to this. That’s big, especially when you when you’ve already got your team in place. ⁓ you learned about inspection. You shared with us how you started building relationships. And so the next move can either compound things or create chaos, depending on how you play it. Now I know a lot of people listening are early in their journey or looking to level up. I think their benefit from hearing this. When it comes to building relationships.

and growing your network. What’s made the biggest difference to you?

LaSonya Lawrence (25:00)
Ам, the biggest difference to me, is to keep that relationship, you have to keep showing your face. You can’t just meet someone one time and think, I have a connection. No, because they have so many people that come across their desks at all day and all week. You have to keep your face. Have to keep seeing them, have to keep talking to them. Even if you drop my email, you know, I’m just following up to see if anything new has popped up, any new initiatives that my company can help with. Always, even if it’s once a month, keep in contact.

And your ⁓ small business centers, they are a really good resource. So whether I don’t care what business you’re in, whether if you want to be in real estate and do buy and hold, or you wanna be in real estate and do new construction, there is always something at the small business center that can help you. Look for your local community college. They have a small business center. Make sure you sign up. Make sure you sign up.

Joseph Crooms (25:54)
What’s made the biggest difference for you?

LaSonya Lawrence (25:56)
my connections. There’s the I didn’t I went to a small business center, a networking event a few weeks ago, and there were so many people there. GCs, real estate agents, ⁓ people that had nothing to do with ⁓ real estate. They had the local radio station was there. Everyone has something to offer your business, whether it’s real estate or whatever it is.

Sit down and talk with them. It may not be, they may what they’re offering may not be for you right now, but it may be for you down the road. So don’t turn any connections away. You never know who they know. Never turn them away. Listen to everybody.

Joseph Crooms (26:33)
Lesson, you have that that ⁓ flair about you. I think you’re you you’re very easy to connect with. So Yeah, you can’t fake that. Relationships are everything in this space. All right. Before we wrap up, if someone wanted to reach out to you, connect with you, maybe collaborate and learn more about what you’re doing, what’s the best way to reach out? Say it twice.

Because some people may be fumbling for paper at this point. So if they’re not fast enough, repeat it one more time for them, okay? You

LaSonya Lawrence (27:06)
You can on my website is onetooneenterprises.com. And that’s all spelt out. O-N-E-T-O-O-N-E enterprises.com. ⁓ you can go on my website and you can book a call with me, or you can drop me an email at [email protected]. And that’s [email protected] and Enterprises is plural. And drop me an email and I’ll email you back and we can get on a call.

Joseph Crooms (27:41)
LaSonya’s gonna do it one more time, just for us. One more time for em, LaSonya.

LaSonya Lawrence (27:45)
[email protected] O-N-E-T-O-O-N-E enterprises.com and just book a call.

Joseph Crooms (27:58)
Perfect. Well listen, I appreciate the time, your story, your perspective, your philosophy on how you are approach business. We need more people in this space who are doing the right ⁓ doing it the right way. Thanks again for being here, LaSonya. And for those of you tuning in, if you got value from this, which I’m pretty sure you did, make sure you subscribe. We got more conversations with operators just like LaSonya.

who are out there building real businesses. And I’ll see you at the next episode of Investor Fuel Real Estate Pros Podcast.