Impact Investing in Workforce Housing with DLP’s Rich Delgado

 

Join host, Jim Pfeifer on the Passive Investing from Left Field podcast as he interviews Rich Delgado, Managing Director at DLP Capital, an impact-focused real estate investment firm. Rich provides an inside look at DLP’s unique approach to workforce and affordable housing, how they enrich communities, and the resilient funds fueling investor returns.

About DLP Capital

DLP Capital combines real estate investing and lending to advance affordable housing across the Southeast and Sunbelt. As Managing Director, Rich Delgado oversees DLP’s structured finance arm that provides over $300 million in capital to sponsors annually. The company also manages nearly $500 million in equity funds from global investors.

DLP’s stated purpose is “to build thriving communities.” This manifests through affordable long-term housing, enrichment programs, sustainability, and attractive returns benefitting all stakeholders.

The Needs Behind Affordable Housing

Much dialogue centers on America’s affordable housing crisis. However, the true impacts on everyday citizens often get overlooked.

Rich explained that many vital workers like teachers, healthcare professionals, and first responders cannot find residences near their jobs. DLP aims to bridge this gap by developing workforce housing in the very areas where these critical roles serve.

To enable community building, DLP structures standard leases for two years. Their data shows an average tenure around eight years, indicating happy residents and organic neighborhood connections. DLP also designates its property managers “enrichment directors” to improve onsite life. This resident-first mentality requires extra effort but pays dividends.

Executing the Ground Up Strategy

Constructing new or renovating existing properties poses cost hurdles when ensuring affordable rent rates. DLP’s strategy hinges on securing advantageous land basis for flexibility.

Rich elaborated, “If you can buy land at the right price, you have options in terms of structures, materials, and what you build.” DLP determines construction specs and floorplans balancing utility for residents and profitability for investors.

He also explained that layered tax advantages in regions like Cleveland help boost returns through vehicles like opportunity zones. So site selection ties closely to rental rate feasibility. Markets exhibiting strong growth via in-migration bring added tailwinds too.

Layering in Debt & Equity for Returns

DLP taps various capital sources using both equity funds and debt vehicles to finance projects. Investors can participate based on preferred risk-return profiles.

On the equity side, DLP leverages a value-add fund acquiring existing properties and a development fund for ground-up builds. As Managing Director, Rich overseas DLP’s lending arm supporting third-party sponsors with affordable housing debt financing.

The combination allows experienced teams to deploy expertise across the capital stack while providing fund diversification. Rich noted the DLP Lending Fund has delivered 10%+ annualized returns since inception by starting with first lien positions. The Preferred Credit Fund targets 10-11% through a mix of loan types.

Thriving Through Market Shifts

Navigating recent volatility, most real estate investors suffered, but DLP’s funds have shown resilience and upside. In 2021 the DLP Housing Fund returned 45%, strategically selling select repositioned assets. Despite turbulence in 2022, performance still exceeded targets.

Rich credits on-site enrichment programs driving occupancy and retention. With cap rates and valuations in flux, enhancing net operating income offers some measure of control. And with evergreen funds without forced sales, assets can overcome temporary dips. Conservatively managing leverage also helps mitigate risk when conditions tighten.

Preparing for Future Growth

The widening affordable housing shortage bodes well for companies tackling the problem like DLP. Despite economic concerns nationally, Rich remains bullish on Sunbelt markets where factors like positive migration and job growth fuel fundamental demand long term.

Countercyclical sectors like affordable housing often rebound faster, especially given the overwhelming housing deficit. As the Fed rights the rate ship, Rich expects measured reductions will ease policy-induced market strains by mid-2024.

DLP also continues expanding its outdoor resort hospitality arm given promising lifestyle demographic shifts. Rich said RV ownership tops 11 million U.S. households as retirement-age couples pursue road trip dreams. And with single sites topping $50 million in value, the niche holds scale potential.

Ultimately DLP’s impact vision stays grounded through localized community enrichment and sustainable practices. Solar initiatives help properties achieve net zero carbon emissions for example. But a solid financial foundation lets all ambitions flourish.

In summary, Rich Delgado and DLP Capital deliver unique real estate fund offerings advancing affordable housing where the need runs deepest. Investors gain access to an ESG-friendly asset class with structural headwinds through thoughtful strategies. Those interested in learning more can visit DLPcapital.com for fund details.

Enriching The Affordable Housing Landscape

DLP Capital’s differentiated approach spotlights why workforce and affordable multifamily housing investments present such compelling opportunities. As both developer and lender, they attack escalating societal challenges from all angles.

The combination of equity funds and debt vehicles allows capital deployment flexibility. Investors enjoy choice between renovation value-add plays, ground-up development projects, or financing other specialized sponsors – each path’s risk-return profile fitting different preferences.

Plus the evergreen fund structures avoid elevated liquidation pressures. As long as adequate reserves and distributions satisfy investors, holdings ride out market fluctuations smoothed over long durations.

Dedicated enrichment directors developing tenant communities also showcase DLP’s resident-first mentality. Happy renters renew reliably, avoiding turnover expenses. Holistic programs nurturing mental, physical, and social health make real impacts.

Solar panels and sustainable materials help in achieving net zero emissions targets too. Though cost and profit realities still dominate decision making as in any business.

When asked why DLP entered the RV hospitality sector, Rich described its alignment with affordable housing principles despite the divergent asset type. Outdoor resort properties build communal bonds through shared amenities like pools, recreational facilities and golf courses.

Providing budget-friendly hospitality, particularly for retiree road trippers preferring tiny cottage rentals over RVs, fills a societal need just like workforce apartments. And the lucrative investment returns ensure business logic holds in diversifying, as DLP can cycle profits back into its mission.

Evaluating Operator Track Records

Real estate sponsors tout impressive returns but markets expose weaknesses when conditions tighten. How should investors assess durable partnerships?

According to Rich, evaluating operator histories requires scrutinizing performance through numerous cycles, not just periods of prosperity. Established groups like DLP Capital demonstrate resilience by hitting targets consistently from 2014 through 2022’s turbulence.

He also advises examining investor communications. Do quarterly updates offer transparency around challenges and resolutions alongside successes? This fosters trust in tough stretches when issues surface if strategy adjustments follow open discourse.

Additionally, understanding organizational dynamics aids due diligence as fiduciaries oversee funds beyond founding partners’ lifespans. Seek operators emphasizing strong governance, ethics and transparency while allowing flexibility for innovation to avoid stagnation.

Ultimately search for demonstrated stewardship and duty of care extending equally to investors, tenants, and communities. For partnerships like Rich Delgado and DLP Capital with vision embedded throughout the company’s DNA, it makes riding out uncertainties far easier.

While past returns set baseline expectations, projecting future fund results has grown complex as tighter policies and high inflation disrupt economic flows.

Rich Delgado believes the combination of slowing growth, weakening labor markets, improved supply chain functioning and shifting geopolitics will likely prompt Fed rate reductions by mid-2024. This policy pivot could ease market stresses and stabilize valuations but broader directionality hinges on several bifurcating prospects. Will corporate earnings hold up or crack if consumers pull back, seriously denting growth? Can the Fed navigate a deflationary soft landing? Will they trigger needed resets, or have delayed policy moves already sealed a harder outcome?

On housing specifically, supply-demand mismatches may drive durable strength for workforce apartments as occupancy stays high even as rents and prices wane at peak levels. Yet fears loom around shadow inventory if distress hits white-collar households or investors during slumps.

Under less sanguine scenarios, small businesses and peripheral retail would bear the brunt as consumers prioritize essentials, priming the economy for potential recession. However opportunistic buying could follow as discounted assets hit markets.

According to Rich, reasonable probability weights make a middling path of muted growth more likely over severely adverse ones – salves eventually resolving inflation and income constraints. But uncertainty lingers as all parties feel out new dynamics, counseling patience and vigilance.

Takeaways For Passive Investors

In closing, Rich Delgado delivered several key insights beneficial for passive investors evaluating positions in private real estate:

  • Consider evergreen fund structures allowing assets reaching income generation to ride through near-term volatility compared to holding periods requiring prompt exits
  • Assess communications across operators for transparency differences that indicate integrity priorities and risk management
  • Keep apprised of market developments to understand macroeconomic conditions influencing portfolio returns beyond sponsor strategy
  • Target impact areas like affordable housing enjoying durable demand drivers providing innate hedges when broader factors weaken

This final point resonates given the vast societal needs for affordable living options enabling vital workforces to reside securely in the same communities they serve.

Companies embracing thoughtful innovation around tenant enrichment, like DLP Capital, seem poised to keep advancing housing availability across regions where economic mobility otherwise diminishes. Rich sees no stopping groundswells lifting affordable residential communities.

Take Your Passive Investing to the Next Level with Left Field Investors

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Don’t miss out on the unparalleled resources, support and camaraderie LFI provides for investors at all stages. Sign up now at https://community.leftfieldinvestors.com/subscriptions/ to accelerate your passive investing journey!

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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