From Homeless at 17 to Solving the Affordable Housing Crisis


The affordable housing crisis is an ongoing challenge here in the United States, but this developer has cracked the code in her own backyard—providing more opportunities for low and median-income households without gentrifying their communities. The cherry on top? She’s making a huge profit while doing it.

In 2005, during Hurricane Katrina, Terrica Lynn Smith couldn’t scrounge up a few hundred dollars to evacuate her and her two children from New Orleans. After this traumatic event, Terrica was determined to break the curse of generational poverty and create a better financial future for her family. Little did she know that she would be creating a better life for countless people in her community as well. After seven failed attempts, Terrica passed her real estate exam and started selling homes. She jumped at any opportunity to learn something new, which allowed her to advance from a real estate agent to an investor, and finally, to a developer.

If you want to have a powerful impact with real estate but lack the resources to do it, this episode is for you. Terrica provides the blueprint for delivering affordable housing to your community at a profit. She also shares the best ways to bring value to a real estate investing partnership, how to get bank financing for large developments, and why cultivating the right mindset is so crucial to your success as an investor!

Rob:
This is the BiggerPockets Podcast show 883. Hey everyone. I’m here with my good friend Henry Washington for a very, very powerful investor story today.

Henry:
Man, that’s right, Rob. We are here talking to Terrica Smith. Terrica is single-handedly solving affordable housing in Louisiana while turning a profit. This is one of the best episodes that I’ve ever been a part of. It is an understatement. Terrica is an investor who started out with nothing in terms of resources, in terms of finances, in terms of understanding what real estate investing is. We hear all the time that affordable housing is this puzzle that no one knows how to solve, and she’s literally doing it right now in her backyard and started at ground zero where a lot of new investors find themselves right now without money and without knowledge. And so if you are in that boat where you know I want to do something extremely powerful with real estate and I just don’t feel like I have the resources to be able to do that, this is the show for you because this is somebody who was in your shoes and is now changing her community and it’s now changing the lives of the people within her community and building wealth while doing it.

Rob:
And she’s solving affordable housing for Louisiana and actually turning a profit, which just makes this whole story all that more inspiring. So you’re going to definitely want to stick around until the very end. I know you’re going to love it. And without further ado, let’s bring in Terrica.
Terrica, to start the show, can you tell us a little bit about your upbringing in New Orleans?

Terrica:
Oh yeah, absolutely. So for those who don’t know, my name is Terrica Lynn Smith. I’m a real estate developer and coaching. So I actually got started in real estate back in 2005, and that was the year of Hurricane Katrina. We were trapped in the city and honestly thought I was going to die. I thought it was the end of the world during that time. And so I had two kids at that particular point in my life and I knew that I did not want to leave them here without a mother. I also didn’t want to lose our lives because we didn’t have any money. So it was a life-changing moment for me being trapped in the city. And I said, “If I can get out this city, then I’m going to work and not rely on the government ever again in my life.”
And that’s what I did. We relocated to a foreign city called Lafayette, Louisiana. I didn’t know nobody, didn’t have no referrals. I had nothing. I started with nothing and I ended up at CENTURY 21, and I got started selling real estate. I think the key point of that though is I didn’t just go get my real estate license. I knew absolutely nothing about real estate at this time. I just knew I was trapped in the city for a few days and I did not want to experience that again. I wanted to be able to fly out the next time a natural disaster happens. And so because I knew that and I knew because I didn’t have no money, I couldn’t leave the city, I was one of those people who was poor in New Orleans at the time. I had to do something to be able to better my life for my children.

Rob:
So you mentioned you didn’t really know much about real estate or anything like that. What were you doing? Tell us a little bit about some of the careers or some of the jobs you had growing up.

Terrica:
Well, I was homeless at 17, so I didn’t really have no career. I didn’t go to college and have no fancy degrees or anything like that. At that point in time in my life, I was working at a temp service during Hurricane Katrina and I would hold stop signs at the construction sites early in the morning to be able to let people know when to stop and slow down and do different things like that. So I absolutely knew nothing about real estate, but before Hurricane Katrina, I actually traveled the road selling magazines going door to door. I would ask people what they did for a living, and these people would always say that they were in real estate. So the term real estate always stuck inside my head because I never knew what it was. I always thought it was buildings. I never knew it was actual dirt.
So after Hurricane Katrina and being trapped in the city, when I realized I needed to find something to be able to make money, I remembered all those people doors I was knocking upon and they lived in these big beautiful homes and they all said they were in real estate. And so for me, that’s why I ended up going into real estate because of the simple fact I was a door knocker and that’s really how I got my start in real estate.

Henry:
I think that’s super cool. There’s a lot of people who get their start in real estate because they, through whatever profession they have, see people closing real estate deals and they end up on that. I’ve talked to people like title agents, they’re closing transactions all day long and they’re all of a sudden they’re like, “I want to be receiving some of these checks. How do I do that?” And then the same thing, people see real estate agents, they know they get commissions and that’s kind of what gets them in. It’s interesting too that you were knocking on doors because as real estate investors, that’s still something we have to do and we’re getting started sometimes.
So I wanted to kind of clarify, you said you were trapped in the city during Hurricane Katrina. I just want to clarify for the audience what you mean by that. You don’t mean trapped in the city in terms of like you couldn’t get out because traffic was bad. You mean you were trapped in the city because you just financially didn’t have any way to leave? Is that what you’re saying?

Terrica:
Right. Both. So when I say trapped in the city, I mean that, one, we did not have no money to be able to leave ahead of time to be able to evacuate when they told us to evacuate. If you don’t have much money and you’re living on welfare, that is a lot of money when you have to up and leave and you have that small amount of income. So not only that, it took us three days to be able to get to a city called Breaux Bridge, Louisiana, which is only two hours away from New Orleans. That’s how bad traffic was, and that’s how long it was taking people to be able to evacuate because people was running out of gas, the gas stations wasn’t opening. So we stayed trapped in the city literally in the same area until we was able to get assistance with the police, the army, and all those different people that came in to help us evacuate. But we literally was trapped in the city.

Henry:
Okay. So essentially, what you’re saying is, because of the conditions and your financial situation, there was no other options for you. And then you kind of put two and two together and said, “I know all these people that have this money are in real estate and I never want to put myself or my family in a position where I can’t get away from trouble like this if I need to due to my own financial circumstances,” so you said “I’m going to get into real estate because of those situations”?

Terrica:
Absolutely. Let me tell you this. They were asking for our city council and all these different people and they were like, “Yo, they flew out already.” So it just planted a seed when I heard that, right? So we asking for help from our leaders, but they not there. They already gone. So it’s like, “Okay, well I don’t want to be here next time something like this happened.” So it just really resonated to know, yo, people really did leave. And if we would’ve had money to be able to leave, we wouldn’t be in this situation. And so it was a big eye open for me.
You never know what you need until you really need it. And at that time, if we had the resources to be able to evacuate… And I’m talking just a few hundred dollars, I’m not talking thousands of dollars. If we had a few extra a hundred dollars, we could have left and evacuated and stayed at a hotel again. For those who don’t know what evacuation is, you got to literally leave your house. You got to go and stay at a hotel room, you got to be able to afford the hotel room. You got to afford the food when going to that. So it’s not just oh, up and leave and go by a cousin or a relative. It’s also counting the cost of that as well.

Rob:
Absolutely. It’s hard. I think it’s hard for anybody to move so you put in any kind of financial constraints or stress and it’s super, super difficult. So thank you so much for sharing that with us, Terrica. I want to move along a little bit in your story because eventually you do end up getting into real estate. Did you know getting into real estate when you were doing this, did you know what it would become? Did you have an idea? Were you like, “This is my way out”? Or were you like, “I’m going to try this and see how it goes”?

Terrica:
Rob, I was poor with a negative bank account, okay? Let me just be clear. I just needed some money at the time. I didn’t join real estate because I was going to be Warren Buffett or Donald Trump. I joined because I needed some zeros in my bank account and I seen people with big houses and it looked like they put zeros in their bank account with real estate. I failed that exam seven times. I could not pass that exam. I did not know what a mortgage was, a lien was, an encroachment, an encumbrance. I knew no real estate terms. So for me to literally know nothing, be the dumbest one in the classroom, asking the most simplest questions to those who got family who’s been owning real estate, it is unheard of, right? So I had no clue that I would be a leading woman in my area, pioneering smart girl. I just didn’t know that. My mind didn’t comprehend that. It comprehended I needed a few more zeros at that time. So I started where I was.

Rob:
Cool. And give us a little bit of clarification. When did you go to real estate school? Give us what was that timeframe relative to Hurricane Katrina? Yeah, give us some context there.

Terrica:
That’s a great question, Rob. So I got started in real estate. So Katrina was in August of ’05. So right after Hurricane Katrina, we got relocated to a place called Lafayette, Louisiana. By December, I was already going to real estate school. I was sitting in the class trying to figure out what the heck real estate was and just trying to figure out how to pass exam. In early ’06, I got my license and I finally passed it. Got my license and I became a real estate agent during that time.

Rob:
Got it. Okay. And you said you took that test a few times?

Terrica:
Seven.

Rob:
Okay, seven times.

Terrica:
Let’s not dismiss that seven, okay?

Rob:
Okay. Okay. I love that by the way. Most people would not do that. So that just honestly just goes to show your tenacity and how much you wanted this. You pass. I’m sure that’s a really big day for you. And you get into your first year of being a real estate agent. What was that like?

Terrica:
I made a whopping $5,000 my first year. I could have made more money working at McDonald’s is what my exact thought was. I’ll never forget that moment. I just knew when I passed that exam hearing… I just knew that I was going to be rich. I just was like, “Oh my gosh. I got the paper that everybody had been getting to get these big houses.” And my first year I was a WOB. I call that walking around broke, okay? I did horrible my first year. But, I didn’t give up. I went back to my roots. I found my niche in real estate. I door knocked for business. You know what I’m saying? I door knocked to sell magazines. I door knocked to get my real estate doors and I went on to be CENTURY 21 Rookie of the Year Top Producing Agent, and then they honored me with the Centurion Award and different things like that. So my second year was a lot better. I did over a million dollars in sales.

Rob:
Wow, okay. Yeah, that’s a big jump.

Henry:
When you said WOB, walking around broke?

Terrica:
Walking around broke. That’s right. I was a WOB.

Henry:
Man, it made me chuckle because I’m like, “I think there’s a few real estate investors online right now look like who look like they got it, but they’re wobbing around too.”

Terrica:
Yeah, that’s it.

Henry:
But no. So you talked a little bit about 5,000 the first year and then the second year, Rookie of The Year, and all these awards. So obviously, a lot went into how you go from one to the other. But you said to yourself, I could have made more working at McDonald’s. What made you stick with this plan that didn’t work like you thought it would in the first year versus just going ahead and saying, “You know what? I’m going to go get a different job.” What drove that decision for you?

Terrica:
So I always tell people this, “I’m street strong. It take a lot to break you, girl, okay?” I’ve been through hell and back. I feel like you literally got to kill me to take me out this game. And so I refuse to go down. I refuse to be defeated. I didn’t get this far just to get this far. And I knew that if I went and took that test seven times and I eventually passed, I can eventually pick up how this is supposed to go into real estate and start making money from it. So I was always very conscious of my mindset and the way I thought about things because the moment I say I’m done with something, the moment I don’t want to do something, I’m done and I’m not doing it. So I had to be very careful not to let those words come out my mouth because I would’ve walked away if I would’ve been like, “Oh, I give up,” or “I quit.”
I made $5,000 this year. This is horrible. But when you see people around you doing 1, 2, 3, 5, $10 million, you’re like, they’re no different than me. And I’ve always told myself that I’m no different than the next person, other than they just kept on going to the next opportunity. If I stop here, I won’t get to my next opportunity. So I think that’s what was different for me.

Henry:
There’s a lot of value in what you just said. There’s a lot of lessons for new investors in what you just said because what you expressed is really the mindset that people need to have when they’re not just approaching real estate, but any new business venture. It ain’t supposed to be easy. It’s not supposed to be easy. The only thing in my opinion that sets apart successful investors from those who haven’t found success yet, it’s not that the successful people found the super secret sauce or super secret bag of money nobody else found or the super secret deal source nobody else found. It’s just that they didn’t quit. They didn’t quit when it got hard. They didn’t quit when they didn’t make any money. They didn’t quit when they spent money and didn’t get a return. They didn’t quit when a tenant destroyed their property. They didn’t quit when the deal fell apart at the closing table. It’s the tenacity.
When people say you have to have the right mindset, I think a lot of the times it kind of just goes in people’s one ear and out the other. There is so much gold in this story already. We’re about to learn how Terrica has used that grit and tenacity to learn how to turn any deal into a yes and build a massive portfolio right after this break.

Rob:
And we’re back. We’re here with Terrica Smith who is sharing her astounding story on how she got into real estate on the heels of one of the hardest times in her life. She committed to real estate hard. She took the real estate exams seven times to get her license. We’re about to see how that tenacity paid off throughout her journey.

Henry:
That’s huge. Not allowing yourself to say, “Hey, this isn’t going to work,” or “Hey, I’m done with this.” Even playing it in your mind can really change the actions that you take, so I love that. I think that’s valuable lessons for people.

Rob:
I mean, I think pretty much what it comes down to is like, we all suck when we get started at something and the really successful people are just willing to be bad at something for a lot longer. And that’s really the big difference in this world. I think people look around at real estate investors and they say, “Oh, they’re all smarter than me.” But it’s like, what are the chances that every single successful real estate investors actually smarter than you? And it’s like zero. They’re all just regular people that who are willing to be bad at something for a long time until they’re good.
Terrica, I don’t want to gloss over this whole thing. I mean, you said the first year you made 5,000 bucks. It sounds like this is rough math here, but that means you sold roughly 150K worth of homes that first year. Then the second year you said you did about a million dollars in sales, which rough math here would say you almost 10X your revenue or your closed sales. So what was that? What happened? What was the big moment there that was like, “Oh, okay, I’m just going to 10X the amount of output that I’m doing this year.”

Terrica:
I’ve always been big on research and education. I have self-taught myself a lot of things. Literally, it’s by giving myself access to information. And I remember the big change for me was buying this CD. It was like a comeback CD. It was literally being able to get over every single objection that a seller and/or a buyer would face you with. I would listen to that. It was like how I read my Bible from sunup to sundown. Soon as I get in the car, I get out the car. If I’m in the shower, I have the cassette playing in the bathroom. I’m constantly doing it and I’m constantly role playing. So now when I get on the phone, I need enough tenacity to be able to get prepared for these notes I’m about to get, because I already know Ms. Jones is about to tell me no. I already know I’m about to get 10 of them nos, right? So I got to prepare myself to be able to get to the yes with all of those notes. And for me, once I had that mindset, I was like, “Yo, that’s really cool.”
The second thing was when I door knocked, I ended up getting my own subdivision from a lady because she was impressed with me door knocking. She wanted to know why should she go with me versus going with the top agent that she was going to go with, and I said, “Well, I can tell you. Number one, I have time, okay? I got way more time than anybody. I’m out here knocking on doors trying to get your business. Okay, your realtor’s not knocking on doors. That’s the first thing. The second thing is, you’re not going to be a number to me. You’re going to remember me.” So I made my relationships more personable with the sellers. I treated them as if they were actually a friend of mine and that their property was the only property in the world for me, and it landed me my first subdivision. So-

Rob:
Hold on really fast, Terrica. What do you mean by that? When you say it landed you your own subdivision, is it one of those subdivisions where a lot of them are pre-built and you’re just the exclusive agent?

Terrica:
Yes. At that point in time, yes. This was a lady who she had, I think it was like 60 lots or something like that. And so she literally allowed me to be the listing agent for that community. Every single property she built, I was the listing agent to be able to sell those homes back there.

Rob:
Wow.

Henry:
Whoa.

Terrica:
Yes. So that went for me. And this is important for those that’s on here, that’s in real estate, I went to a foreign place. I knew nobody, I was not a Thibodeau or Recio or a B [inaudible 00:18:52]. I didn’t have a popular last name. I didn’t have no referrals in the pipeline. I literally just started with what I was good at. And some of us have superpowers that we just don’t access, but I think if we start accessing the superpowers that we have, we’ll realize our talents is more than enough.

Henry:
So what a cool… Well, first of all, the story’s amazing, but you knock on the door and you kind of have, this lady kind of gives you your moment, right? She said, “Okay, tell me why you.” There’s not many people that can point to a very specific moment that probably changed their life. But that 30-second elevator pitch moment right there was probably extremely life-changing for you because it seems like, and I’m speculating here, but it sounds like you being the listing agent for this developer probably gave you a lot of insights and education into the other side of the real estate world on the investor side. Is that kind of how you transitioned?

Terrica:
Well, yeah, absolutely. So this is a funny story that goes into this, right? So of course it gave me name recognition in the area. When you have a whole subdivision, of course people are going to see your names. Real estate is its own world, so everybody know everybody in real estate who’s doing something. If you ain’t doing that, nobody know you, right?
Well, long story short, I had started working with investors only. I realized there was a niche for investors that agents wasn’t really working with. And so I would start working with investors. I remember sitting at the closing table with one of my investors, and I literally would do all of the work on these projects for them. Meaning, I would find a property, I would bring the contractors in to fix up the property, I would oversee the contractors, pick out the paint colors. I would do everything, list it, sell it, everything, right? I was sitting at the closing table one day and the attorney gave me the folder, the closing folder, which was supposed to have my commission check in it as a realtor.
Now I should be grateful because I have investors that’s let me come in or whatever, and they’re buying it with me, they’re selling it with me. I should be very grateful. Well, they end up giving me that investor folder. And when I seen those zeros in his folder, I couldn’t unsee what I see. I was like, “Yo.”
Now mind you, I said, “Oh, I’m sitting at the wrong end of the table. I need to be on that end where they’re getting the big zeros and doing the least amount of work.” So I had a conversation with all my investors at that time and I said, “Hey, I’m going to work for you guys, but we’re going to split it 50/50 and I’m not putting up no money. I’m not putting up no money. I’m going to do all the work, I’m going to do everything I’ve been doing, but you got to split it with me 50/50.” I lost all my investors except one. One investor stayed with me. Me and him did about 10 homes following. And then he started telling all his friends about me. And guess what? When his friends came to the table, they knew if they was going to work with me, it was going to be a 50/50 deal and I wasn’t putting up no money.

Rob:
Okay, all right, so let’s go back because I love this. So you’re basically saying, “I want to use OPM. I want to use other people’s money to fund my real estate journey,” I suppose. So you go, you’re a listing agent and you’re starting to talk to investors. And basically you come in, I don’t want to say making demands, but you come in with your terms. You say, “Hey, I want this.” And you had a group, I think you said, of 10 or so investors. Most of them said, “Yeah, those terms don’t work for us. Thanks, but no thanks.” They all left. And then one person was like, “Actually, I’m good with this.” And then that was kind of the beginning of working with someone to fuel the empires of that. Did I hear that correctly?

Terrica:
Yeah. It was way more than 10 investors. I lost all my investors except one. But that one investor went on to do 10 deals with me, and that got the attention with his other friends.

Henry:
And the draw for the investor was you were the workhorse. You were finding them the property, managing the build, the renovation, the contractors. All they had to do was show up and get paid essentially.

Terrica:
That’s it.

Henry:
Okay.

Rob:
I like this. Were you negotiable at all on this or were you like, “This is what I want”?

Henry:
Rob, Rob, have you been on this interview? Do you think she was negotiating?

Terrica:
Rob, let me just tell you something. I mentioned earlier, right? I said, I’m street strong. One thing I know how to do is make it out of a struggle. So if I had to struggle back from the beginning with zero to get to where I’m at, I was willing to do it. And pretty much I did. I only had one buddy that stayed with me. Shout out to him. We still rock together to this day.

Rob:
Well, I ask because most of the time we’re like, “Hey, this is what I want.” And when someone’s like, “No thanks,” it’s always like, “Oh, okay, well, I mean, what do you want? And then maybe I can come down a little bit.” But you didn’t take.

Henry:
I love it. It is sticking to your guns. This guy did 10 deals with you. Of those 10 deals, it was a 50/50 split for you and him, but he didn’t have to do any work. And so you said you did 10 deals, but you guys are still working together now. Is the relationship different? What?

Terrica:
Oh, it’s much different. Yeah, it’s much different because I’m a developer now, so…

Rob:
You make him do the work.

Terrica:
I think I’d impasse him on what he’s comfortable with doing. But yeah, no, we still work. I mean, we still hang out. We go out and eat. We do things like that. But I’m pretty aggressive in this market. I like filet mignon. So that mean I like to eat good in this market. He still does a lot of the fix and flips. And from here at everyone, I feel bored in developments, I go dabble over there. We go make it like old times. But for the most part, we’re just really good friends.

Rob:
Okay. So you keep revealing just massive aspects of your story that I’m like, “Hold on, wait.” So you’re working with these investors, you do the work, you split it 50/50, and then there comes a moment in this, I guess, transition of doing renovations and flips where you’re like, “I want to start developing.” Tell us a little bit about that. What was that moment or that change in your career?

Terrica:
So what happened was-

Henry:
Wait, let me guess. Every transition in her career, it’s because she saw somebody was making more zeros and she said, “I’m going to go figure out how to be better than you at that and get them zeros.”

Terrica:
That’s right. That’s right. So I was at a builders meeting and I was sitting on the UDC board, which is the Urban Development Committee. That’s a committee where all of the builders and developers and everybody like that join together. They give input on ways that they can get different developers to come into the areas and things like that. And so I was sitting there and one builder was talking about the new home he was going to build. Now mind you, I never thought about building new homes. At this point in time I’m just a fix and flipper. He was saying how he was buying lots and he was just putting them up in different communities and I’m like, “Wait, you’re building new homes in older communities? I never even thought of that.”
So I went and partnered with a builder. What that partnership looked like was, I found the lots and I paid for the lots and then I had the builder come in and we would build on those lots together and we would split the profit 50/50. The reason why I did that was because I needed to understand how to build new construction. I knew nothing about it. And being in a fix and flip, depending on the type of home, you’re pretty much rebuilding it anyway. So I knew that I could possibly do it, but I wanted to make sure that I had some type of experience from someone with experience. And so I partnered with a builder. We built four homes in an existing community. We sold those homes before we even finished building them. And I’m like, “Yo, this is some really great money.”
So then I was like, “Okay, if I can do this, then I’m sure I can be a developer.” But I didn’t know how to be a developer until one of my friends at a dinner said, “Hey, I’m putting my grandchildren name on the street sign” and I’m like, “What? You can put people name on the street signs. I didn’t even know that was a thing.” I didn’t know people sit down and have conversations about that, right? It’s about being in the right room and having the right access to the right information you start learning these things. So me being who I am, I’m like, “I want my children name on the street sign too.” So I go and I develop a community, it’s called Madeline Cove, and then I put my son name on the street sign.
Now, I didn’t just become a developer. What I did was I actually worked with the builder. We built a few more properties, and then I eventually ended up in a few more development partnerships with other builders who wanted to be developers. So I was able to witness on the back end that operation, and then I was like, “Okay, I felt confident enough to be able to go do my own development.” And that’s how I was able to start Madeline Cove and put my children name on street signs.

Henry:
First of all, I think you’re just a good storyteller because within these stories, there’s so many great lessons for people if they’re wanting to get into real estate or into development. I think one of the lessons that we’re hearing here is you didn’t just say, “I’m going to go be a developer and jump off the cliff” because there’s a lot of risk in being a developer, right? Especially if you have to go acquire the land and you don’t know what that land has use for or if you can even do what you want to do and the cost of it. There’s so many variables and so much money gets spent with development before a 2X4 is ever put in the ground. And so what you did that was super smart was you said, “I’m going to go partner with somebody who knows how to do this and I’m going to structure it in a way that’s beneficial to that partner and myself so that I get a lesson while I make money.”
I always stress to people, if you’re going to get into something that’s not your bread and butter, there are people who are good at it, and there are ways that you can set yourself up to partner with those people or be successful. You need to bring them the thing that they don’t have. I wanted to do a self-storage deal. I wanted to do one so bad, and I thought the only way I’m going to do a self-storage deal is I got to go find a self-storage deal. Because if I get a self-storage deal, I know I can find a guy who does self-storage to come be a 50/50 partner with me. And that’s exactly how I did my first self-storage deal. I got a lead and it just so happened to be a lead on a self-storage facility that this guy had been trying to market to.
And so once I got the lead, I called him and I was like, “Hey, I think this is a good deal. How do we take it down? And if we do, do you want to be 50/50 partners?” And that ended up netting us our first storage deal. So I think that there’s a valuable lesson there. Find someone who’s doing it and bring them some value and you can get a deal. And then you worked with this developer, you built this relationship, you did a few projects until you felt like, “Okay, I know how to go do this,” and then you went and found your neighborhood to put your family’s name on. Is that what I’m hearing?

Terrica:
That’s absolutely correct.

Henry:
It gives me goosebumps.

Terrica:
Yeah, it’s amazing. So can I ask a little bit about the details of working with the developer? I think you mentioned you found someone, you said, “Hey, let’s split this 50/50.” How does that work? Do they have a fund or do they have a commercial line of credit with the bank and then they fund it all through there and they’re basically on the hook for that commercial loan financially? And then yeah, basically after all that loan is paid back and you make your sale, you’re just splitting profits from there. Is it that easy or is it even more complex than that?

Terrica:
No, it’s not even complex. So I think it all depends on the builder/developer, whatever, whichever route you want to go. For us, we had a relationship with a local bank. So this is how development goes, whenever we find a partial of land and we do the subdivide and we do all of our civil, we are already pre-selling lots. So by the time we get to 50% sold in our community, before we even do shovel, before we even shovel ready, we’re already 50% sold, we go to the bank and we pledge that book of business with the bank.
And they see the LOIs, the letter of commitments we have, letter of intent, but the letter of commitments we have from other builders in the area who has agreed to purchase these lots from us. And then they give us the finance and for the hard costs to be able to get started with the infrastructure. And then of course, you got your lot allocation with the bank where they’re going to have a certain portion that’s due on each lot. Every time you close, you got to pay down your loan on it. And then from there, we’re able to split the profits.
Now how you come in as a partner, for me, I’m adding value is I’m going to do all the city council meetings. I’m going to go to all the civil. Most developers, they want to do that anyway, but if they have somebody that’s going to be in the weeds with them, it’s a great partnership opportunity. And so I’m also going to put in whatever the bank requires for that 20% down. I’m going to come in, I got to bring in my 10% of the portion if I want to be an equal partner in that deal. And that usually looked like me bringing in other investors on the back end of under me creating some type of GPLP situation to be able to get my 10% if it’s a multimillion dollar development.

Rob:
For anybody at home that may not know that is, that’s general partner and limited partner.

Terrica:
Thank you, Rob. Thank you, Rob. Yeah, and so we put those together. And then from there we’re able to go and acquire it and split the profits at the end whenever we sell the property.

Rob:
Very cool. Very cool. Okay. This is really amazing, by the way. I mean, I think you know. This is such a cool story. Obviously, you’re crushing it. You go into the development world. I’d imagine it’s a little competitive. So what was sort of your angle or what was your idea for making your neighborhood different or your subdivision different from some of the competition in New Orleans?

Terrica:
So just so we cleared, this community is in a few hours away from New Orleans. People be trying to dagger you on the internet. But anyways-

Rob:
Yeah, I do know, unfortunately.

Terrica:
Yeah. So I’m big on prevent and gentrification and I’m big on community projects and allowing people that come from situations such as myself, low income, Section 8, affordable housing subsidy. I’m big on catering to that audience. So Rob, I see no competition in my lane. There’s nobody in the United States that can compete. And I say this aggressively. Now, this is national builders. If they want to come on down to this level, I think it’ll be a party for 80% of Americans, right? But there’s nobody building homes less than $200,000 in this marketplace today, but me. So I am okay with making 40,000 to $60,000 on a real estate deal. New construction home, brand new, three bedrooms, two baths. I’m talking a garage. I’m not even putting these people in carports. Granite countertops, energy, fish and windows, architectural shingles. It’s a really nice home that we’re building for the people. There’s nobody who can compete with that.
And so whenever I’m bringing these communities to these neighborhoods, I’m door knocking back to my roots, back to my superpower. If you put me in front of you, Rob, I can sell your furniture back to you when I go to your house. That’s how good I am. I really believe that. So because I know who I am when I go and knock on these people doors and I’m addressing their pain points and I’m letting them know, “I’m not coming in here to push you out your neighborhood. I’m coming in here to include you in your neighborhood. What is it that you would like to see in the neighborhood?”
“Oh, we’ll like to see the violence calm down.”
“Okay, great. How about we create an opportunity where, one, we create some type of recreational activity where kids have a place to go and play.” Maybe we have a bookstore in the area because bookstores don’t go into the hood, period. So maybe I create bookstores that go into these neighborhoods that don’t normally get bookstores. Maybe I create a coffee shop where kids can go sit down, study and want to learn. Maybe I create these environments that these neighborhoods wouldn’t normally see, and now you’re able to address the pain points of what some of these people have.
Another pain point they have is that they don’t feel like people are here now. Their voices are not heard. So I’m like, “Not only do I hear you, I am here physically. I’m from where you from. I come from where you come from.” So I’m not afraid of these gang bangers and all these other people that may scare people in the area. I’m not scared of them. I’ll just look at the drug dealer. I don’t care. I’ll stand up to him, period.
So because I have that tenacity about me and because I’m that hometown girl and because I’m not an outreach developer, people in the community, they rock with me more. We went door to door explaining to everyone what we was doing, passing out flyers, but also just doing neighborhood cookouts, community events, making them know that, “Hey, we’re here for you guys. We want this to be for you.” And my audience, the people who I build home for, the people who I’m selling homes for is the cafeteria workers in the hospital. I’m focused on that median income of anywhere from 30,000 a year to about 60,000 to 70,000 a year. That’s who I’m focused on building homes for, because that’s kind of like what the middle class in the south is making. So if I can focus on providing homeownership to those individuals who’s been working at the same job for 10 to 15 years, then I feel like there’s no competition in my lane, Rob. I hope that answered that question.

Rob:
It did. It absolutely did.

Henry:
I’m just going to be frank. This is why I wanted to have you on here telling this story, because all we hear right now is there’s no affordable housing. There’s no way to build affordable housing. We can’t solve this problem. No one wants to solve this problem. And you’ve essentially laid out a blueprint for how people can solve this problem. So I think what you’re proving is that, yeah, this problem can be solved, right? This problem is being solved. What it’s taking is for somebody to get down and go meet people where they’re at. And I think that’s what sets you apart from everybody else, is nobody else is willing to do that.
And you are building homes and improving communities without displacing the people within that community. And so many times we see people come in and build these beautiful homes and these beautiful neighborhoods and these beautiful amenities, but they’re not for the people in that neighborhood. They price them at a price point where the people in that neighborhood can’t have access to those amenities. And you’re doing the exact opposite. You’re building these beautiful communities, but building it in a way that allows the people within that community to have access, and I want to commend you for that. I think that that’s incredible. More people need to see that it is currently happening and can be done and can be profitable.

Rob:
That’s huge. I think a lot of people get super scared to go into the affordable housing side of things because they think that there’s no money to be made. But you said that these are, I mean, each build is a relatively profitable build?

Terrica:
That’s right. And I don’t use the government money. So a lot of people associate affordable housing with subsidy. I don’t use government money. This is my own money that we use to go to the bank. I’m using traditional funding just like anybody else. So I’m not getting no tax credits, I’m not getting any of that. This is literally us working with Home Depot and working with the Lowe’s around the world and getting corporate discounts and being able to sit down and have these hours at a time meeting to drive the pricing down, price per square foot so we can build them at the price that these people need. And also not just focusing on building homes. It’s more than that, right? There’s a food desert, there’s a healthcare desert.
In the area that I’m building it, if a railroad train is passing, there’s no healthcare. That means you can’t get to an emergency room if a train is passing. So we’re more focused on bringing those type of opportunities back into these communities where these people don’t have transportation. They rely on public transportation. So if we can provide food, housing, and medical, I think that that’s a start to getting our community back to where it needs to be.

Henry:
This is incredibly powerful and there’s a lot more depth to explore here. Now that we’ve uncovered how Terrica is single-handedly tackling the affordability crisis, let’s dive into how she opens up opportunities for other investors in her region. Plus, we’ll discuss the insightful advice she offers to new investors. Right after the break.
One thing you mentioned was that you go door to door and you talk to the people in the community and you ask them what they want. Obviously, I think strategically that helps you know what to build. But are you also doing that because is it a way you get approvals for the things that you need from the city based on what the community members are asking for?

Terrica:
I do it because they be having my back, Henry. I’m not going to lie. People be stealing in these neighborhoods and robbing you blind. You know what I’m saying? So I’d be needing a few people to have my back in this neighborhood. So if they know Terrica is in here and I’m trying to help them, and I’m trying to keep them in an environment that they’re used to, that they’ve been there for generations, but I’m just trying to uplift them and bring them better product in their community, then I need for them to have my back. But also if they have a particular pain point, like for instance, they want children to be able to have a basketball court or things like that, I do put those into my designs because that is so important for them and it helps them know that I’m a woman of my word and that I’m going to be true to what they’re asking. Absolutely.

Henry:
Irritates me, every time I go into a community and I see somebody build a park and not put a basketball court because then I know you ain’t built that park for the people that’s there. You’re trying to push the people that’s there out. If I see a new park go up with a basketball court, I’m like, “That’s for my people right there.”

Terrica:
Yes. Yes.

Henry:
I love it.

Rob:
So let me ask you, Terrica, because you’re building and you’re developing a lot of new homes, what does that do to the equity of existing homes? Does that help them? Does that hurt them? Does it build up the entire community? How does that look from a grander view?

Terrica:
Oh, that’s such a great question, Rob. So where I build that, nobody want to come at right now anyway, unless they want to come bulldoze everything down in the area and then just start fresh. So everything that I do, like where I’m building at, before I started building, home values have not increased in over 10 years. Could you imagine not having appreciation in your house in over 10 years, right?
So we took a property, these homes didn’t sell for more than 30,000 to $40,000 in this area. Now they’re selling at about $85,000 because of our new construction homes that we’re building in proximity. Not only are those home values increasing, now we’re increasing the property value in those areas so you just can’t come and steal it from nobody anymore. You got to pay what it’s worth. And so now with us having homes that’s being built at 175,000, 180,000, everything of under 200,000, now people are like, “Yo.” First, the bank didn’t even want to give us no money, Rob. I didn’t tell you that. They was like, “Yo, nobody’s going to buy over there.” So the first 12 homes we had to build out of our own pocket without the bank. Now they’re throwing money at us because we can’t keep them on the ground. It’s a high need for, it’s a high demand. So that’s why I say we don’t have no competition because nobody can build and do what we’re doing right now. They can, they just don’t want to.

Henry:
And I believe that somebody listening to this is going to be inspired. I believe that you are going to light a fire under somebody who’s going to hear like, “Oh my goodness, this is what I need to be doing for my community. This is what I need to be doing in the community around where I live.” And so what advice or what would you say to those people who are new and they want to implement a strategy like what you’re doing in 2024?

Terrica:
I would say this, get around people who’s doing exactly what you want to do. This is to me… I mean I can be biased, but I think BiggerPockets is the number one podcast in the world on real estate information. I don’t know of another podcast in the world that gives as much resources as this podcast. And it’s not to fluff y’all feathers because I’m on here. It’s true.

Henry:
No, go ahead.

Terrica:
Right. It’s true, right? And so being in rooms like this, listening to conversations like this, going to BiggerPockets and looking at the fix and flip calculator, looking at the multifamily, all of the resources and tools, if there’s an article on anything real estate, I bet you your last dollar, it’s on BiggerPockets. And so, just becoming a sponge with all of the information and the resources that are already given to you, I think people dismiss that. They dismiss all of calculators that you guys give just for free. I’m like, “Yo, I’d be charging for this. I don’t get this away for free.” So you know what I’m saying? So to know that it’s a platform out there that’s a hub of information that’s given this, I would say start there.
The second thing I would say is get a coach or a mentor. If you hear my story, I had to learn it through someone else, and I was okay with paying for what I needed to learn. I was okay with paying to take my real estate exam seven times. So I think it’s important to know that you have to be willing to make some type of investment in yourself to be able to get where you want to go and not be afraid to make that investment. And then I would say the most important thing is to believe in yourself. Everybody’s going to tell you it’s crazy. They’re going to say it don’t make sense. They’re not going to understand it. But I think I go to the bank more than anybody in my family, and now they can appreciate advice from me when it comes out my mouth.

Rob:
That’s amazing. Well, Terrica, we so appreciate this. This is what I always dub as an instant classic. I think a lot of people are going to listen to this and they’re going to be super inspired to take action today. And for anyone that was at home that if you’re in need of some of these tools and resources, you can always head over to biggerpockets.com. There’s a little tab there that’s called tools. If you click on that, it’ll take you to all of our calculators. And if you want to connect with Terrica or Henry or myself, all of our contact information, all of our good stuff for connecting on the internet will be in the show notes at the bottom of this podcast. Thank you again so much, Terrica. We greatly enjoyed having you on.

Terrica:
Thanks for having me.

Rob:
Yes, of course. And we’ll catch everyone on the next episode of BiggerPockets.

 

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected].

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.


Leave a Reply

Your email address will not be published. Required fields are marked *