20 Under 40 Overall Winners: No. 7 Jenifer Acosta

On the job, Acosta says opening doors for people is her responsibility.

“It may be a door of a vacant historic building that becomes their home or the space for their business to grow into,” she stated. “I envision new life for properties, finance the reinvestment, collaborate with partners, project manage construction, and stabilize properties as a developer. As a commercial agent, I share my expertise with property owners, investors, and businesses in finding places to prosper.”

Dust off your Vacant Uppers

You know your downtown is hiding them everywhere. No need to be ashamed. Mine is too. It can be hard enough to get an owner to make the windows look simply presentable from the street view and here I am asking you to do more. 

It’s time to get serious about the levels above your Main Street. 

Housing is hot and there’s more demand than ever for loft living, condos with character, co-living, and apartments that are cute as hell. 

Downtown housing gives a built in customer base to Main Street businesses. Keeps more eyes on the street for safety. Most importantly, it gives your community housing choice so you can retain citizens by having the homes they want to live in. If housing seems like a stretch, think about spaces for a dance studio, offices, or maker space for small scale manufacturing. 

A Missing Middle makeover: Developer Jenifer Acosta takes on flood-impacted property in Midland

After a quick call from her realtor and a short diversion from a preschool picnic with her family in tow, Acosta happened to stumble on her next project – Westwood Village, a 10-unit condo development in Midland that was impacted by the dam breaches and subsequent flooding.

Choosing to Redevelop a Vacant Building

There’s a sense of despair with vacant properties. We stare at them when they first wind up empty. Hoping someone comes along. Daydreaming of what it might be. As time goes on we find ourselves ignoring more and daydreaming less. People grumble that some properties are cursed or that despite the location, nothing survives there. In my small rustbelt hometown, vacant buildings litter the downtown, dominate the neighborhood business districts, and speckle the hundred-year-old neighborhoods.

Find Your Match

Real estate deals can be a lot like relationships. Being that it’s love month here at Proud Places, it is my privilege to give you advice as your matchmaker. Like any relationship, knowing where you stand and what you want is the foundation of good relationship decision making. Are you interested in a long-term investment or short-term? Is immediate cash flow your goal or investing for retirement?  The great thing about real estate investing is you don’t have to have one strategy or one property; it’s a great way for happily married people like myself to play the field 

Finding your soulmate(s) in real estate is very achievable with some care and consideration. Many people find it adds value to their relationships with their community as well as helping them build wealth.

1. The Fix & Flip. It’s the equivalent of serial dating without the long-term commitment. The thrill of the chase is alive and well in this field. Perfect for people new to engaging in real estate. Buying a property and making improvements to resell it can be a great short-term investment. Investors should be mindful of the market so they don’t overspend on an asset that will only take without there being a reward. Strategically, look to the urban acupuncture method. Find the worst house on a great block and fix it up. Improving the dynamics block by block eventually building up values in a neighborhood can have a long-lasting community impact and create a good return on investment. The downside to this method is that it doesn’t have as many tax benefits of other strategies and can gentrify neighborhoods if it’s done excessively in a moderate to high market without a concern for ensuring neighborhood economic health. This investment requires an understanding of the local real estate market and a solid team to renovate the property. From here you can build wealth to move into other portfolio building arenas or be a serial bachelor/bachelorette and continue to hit it and quit it.

2. The BRRRR. Not the cold shoulder, this acronym stands for Buy Rehab Rent Refinance Repeat. It’s being set up by a pushy family member and scared of what you’re about to walk into yet finding value exists. Long-term monogamy and dedication is alive and well with the BRRRR method. You may start this endeavor wearily but love grows over time. It’s similar to the fix and flip but instead with a hold and lease. Most of the challenges are tackled early on and then it’s smooth sailing. This can be done for commercial and residential properties. It’s a great way to build portfolio value and leverage that renovation value in the refinance. Often investors do this with multiple similar properties. It can strengthen blocks, neighborhoods, and downtowns but in order to do so requires you to be an advocate for strong tenants driven to do great work or love where they live. You’re adding value and holding on. It’s an excellent strategy for markets that aren’t as hot because long-term investment is rewarded. When you decide to move on, you can shift that value into your next relationship with a 1031 exchange as you move on to bigger and better things.

3. Vacation Rentals/Airbnb. Depending on location and the way you chose to structure this, it could vary on the level of return. Often people rent out second homes as a way to help cover the ownership costs but utilize it themselves most often. If you meet someone on vacation, deciding how much energy and potential exists are elements to tackle early on. You’ll have to decide how much time to spend together, the cost and investment that time together involves compared to the opportunity cost of staying home and earning rental income.

4. Commercial investments. Generally more long term but offer more variation in the level of time and dedication they require. For the sake of this discussion, we’ll focus on the most hands off approach. A triple net lease structure offers exactly that. Find a good tenant to love and maintain the property as their own while you own it and reap the depreciation and rental income. Akin to having a marriage with separate lives. Along with commercial investments come commercial mortgages which are more costly as they pay back in shorter horizons and often involve a balloon payment. Even if you have a wife with a separate life, be prepared for expensive milestone anniversary gifts that will cost you.

5. Land. Buying vacant land on the promise that your community will expand is the equivalent of making self-improvements to render yourself more attractive. An expensive endeavor that requires a commitment to be made at some point. It’s all going to depend on location and time. The great thing is that land values are steady and only tend to go up in value. The downside is you’re sitting on an investment that doesn’t bring in any cash flow but has the operating costs to mow it. The brilliant Alli Quinlan says, “Farm it, develop it, or even put a food truck on it. Don’t project your commitment issues on vacant land by taking up its time and never putting a ring on it.”

6. Real Estate Investment Trusts (REITs). Investing in REITs is a very traditional option but you won’t be choosing your place. These real estate corporations own and often operate a variety of residential and commercial real estate but in choosing this you’re deciding to have a purely financial relationship while living separate lives. You will not see your money work for you in your place or any improvement on main street from this investment. A mail order bride you’ll never meet but one that’s going to contribute to your investment portfolio.

7. Gold digger. Beware of the gold digger. The investments that look pretty and have great public perception but only drain your savings. Enough said.

These scratch the surface of some major options for real estate investments. When you’re ready to get out there, find yourself a matchmaker. A commercial real estate broker that knows the local market, can get you information for you to analyze a deal’s potential. It is much more effective than swiping right on Zillow yourself. Who’s the person that comes to mind when you think of your local deal maker? As a commercial agent myself, I called clients and set meetings late last year to ask them what their goals were for real estate investments this year. It’s my job to ensure my clients have the cashflow they’re looking for or to find properties if they need a 1031 exchange. This offers the ability to help shape more positive investments in my place and support the client’s goals. I thrive on making deals and helping investors find their match.

EP 87 | The Juggling Act of Life and Being Confident in Yourself

EP 87 is LIVE and our host Lisa Thompson is chatting with not one but two guests: Justis Heppner, Real Estate Agent, Co-Owner of Populace Coffee, mom and empowering woman and Jen Acosta, Owner of Jen Acosta Development, mom, investor in communities.

This episode, Lisa shares she officially launched her book 'The Strong Women of Haiti', and chats with Jen and Justis on juggling all the things in life, not having it together all the time and being true to themselves.

So pull out a glass of wine, coffee or tea and sit back and enjoy!

Links:
- Host, Lisa Thompson's Instagram: @lisathompsonofficial

womenempowermentselfcareselfloveconfidenceconfidentwellbeing

EP 87 | The Juggling Act of Life and Being Confident in Yourself by The Confident Podcast is licensed under a Creative Commons License.

10 Truths About Tackling Your Own Development

Creating spaces and places for people is my passion. From creating beautiful downtown living spaces to the storefronts and offices where their businesses can flourish, being a developer is all about making a positive impact for others. Development can be a robust investment with a community impact return that is deeply satisfying as well as a financial return for your livelihood.

Want to take on your own small scale development project? Here are my Top 10 truths for tackling a development of your own. 

Truth #1: You’ll learn on the job so don’t think you know everything going into it. 

Development is both an art and a science. It’s a mix of book smarts and street smarts. You can study and learn as much as possible about finance, construction, urban planning, and property management (which is incredibly important to do), but no matter what, you’ll learn on the job. The fact that new projects present new challenges and learning opportunities is great if you’re a lifelong learner. The best way to start is to take stock of the knowledge you do have and the gaps you have to fill. You can partner or create a team to help fill those gaps or work to learn more in that area. 

Truth #2: Even if you’re an architect or urban planner, your first project should be the rehab of an existing building you can pull off by right without any variances.

Stepping past the rehab of an existing building with a future use you can do as of right opens the door to many more risks. Those risks might be public meetings, barriers to financing, additional carrying time and needing a longer purchase option to get all the entitlements, and construction costs potentially changing in this time frame. It’s not worth all the risks considering how much you’ll learn in the process of your first project. Old buildings often need new uses and are worth the care and consideration. Consider creating a mixed-use building out of a commercial downtown building versus building housing on a vacant lot zoned for office use. Rehabs often allow for phasing, quicker timelines, and are incredibly appreciated by people in your community as the past is given a future. 

Truth #3: Define the value proposition… you’re creating a product. This is not your personal home. You need to have a vision and a goal in mind for exactly what you’re delivering to which market segment. 

People sometimes look at me and start to treat me like a housewife with a hobby. It could not be further from the truth. Not only do I abstain from HGTV watching but this is a business full of risks that is serious. You wouldn’t start a restaurant without knowing what the menu and price points will be. The same mindset here. Who will use and appreciate the property? What price point fits the market, covers project costs, and gives them the ability to stay there long term? Elevate the character of an existing building and make sure it fits your community’s needs. My current project takes mid-century modern condos in a wooded setting and transformed them into serene scandi havens. Have fun with it. Make it as classic as possible to hold the long-term value. 

Truth #4: Start with whatever you can finance. Whatever equity you have or can utilize. Start where you are and not where you want to be. 

I raise investor capital so I understand that this can be hypocritical advice but I strongly urge anyone starting to start on their own accord where they can. Once you’ve completed a project you can raise investor capital because you’ve proven your ability to deliver. Ahead of completing something, it will be a harder road with an investor who will keep you on a short leash. 

Truth #5: Investors simply want to know you can deliver. That requires proof of project completion. See  – start wherever you are and then plan to grow. 

Momentum drives development. Investors are attracted to areas that have momentum and people with projects in the works. To get in the game you have to start with something and complete it. Tactical urbanism parklets count. Project management for a storefront to handle a small businesses build-out. Rehabilitate a land bank house. Rehab and profit off your personal home. It is easier to prove your worth when you can point to something. 

Truth #6: Have a Plan and have a Plan B

You’ll need a strong building program (what the building will be used for), a proforma financial analysis (how that use makes money and can cover its operating costs), and a prospectus or bank package (the overall business plan for the property). Within this process, you need to have backup plans. Do the analysis on these and run the financials, know the pros and cons to each as well as be prepared to tell anyone why Plan A was your preferred method of delivery. Can you phase the construction to get the building making money along the way? Is there a secondary use that would work? If you planned to sell, what happens if you lease instead for 5 years? Alternative options that are well thought out should be in your business plan and discussed with your key stakeholders. Namely your investors and lender from the start. 

Truth #7: It isn’t war and there are no enemies. To develop you are conducting an orchestra of different specialties. The work starts with respecting the value they bring, finding common language, and then making music among each specialty. 

If you’re thinking you need a fancy suit and the ability to strong-arm negotiations, think again. Meet people where they are. Understand their priorities. Collaborate with them. Acknowledge what you don’t know and show a willingness to learn. Remember that you’re creating spaces and places for people. 

Truth #8: There will be tears. 

Happy tears, sad tears, scream-singing in your car tears of exhaustion and tears when you call a friend asking for help. It’s risky, rewarding, emotional, and I’m telling you right now prepare yourself for an emotional rollercoaster. 

Truth #9: You’ll hear NO a lot. No is a word that you analyze and determine if you’re moving past it, with it, or around it. 

The hardest NO will be the ones when you walk away from projects. When you yourself decide it’s a no. I’d rather have those than potentially lose everything. More often you’ll have stakeholders tell you no. It’s your job to decide if they are right for the team when building one or if someone else is a better fit. These things take time and you’re going to be working with people for years. You need the patience and persistence to hear the word NO as well as the intuition to trust when a NO means something or someone has to change. 

Truth #10: Know that stupid jokes on job sites and watching small businesses succeed will mean so much more to you than a silly ribbon cutting. 

The happiness comes from the positive impact on others. Their business having a home to thrive in. Their lives having a home they love. The ribbon cuttings and awards will help you rationalize your risk-taking craze but the big win is by helping others. 

The elements you’ll have to pull together, work through, and refine:

For those of you looking for the business approach of what goes into it, here’s a list of the process you’ll endure. Don’t forget the above – because creating spaces and places for people is much more than paperwork. 

1. Property Selection

2. Building Program

3. Proforma Analysis

4. Operational costs and model

5. Project Costs & Financing

6. Review, refine, and assess risks of numbers 2-5.

7. Compile Bank Package & Pitch

8. Build a strong team that understands the vision

9. Ensure the project is executed.

10. Closeout construction and lease it up / sell.

11. Manage the property if holding and ensure it meets the agreed upon operational costs.

12. Continuously evaluate until the time comes to sell the property. Ideally, refinance or get the loan paid off so it’s debt free with a healthy pool of reserves to support lifecycle needs.

The Foundations of Development Capital

“Charity feeds a person who is hungry. Philanthropy is meant to go upstream and innovate.” 

-Helen Davis Johnson 

President, Michigan Municipal League Foundation

This comment from Helen is resonating with me now more than ever. This year has turned most communities upside down. Small business owners have taken on grants and public financing, a first for many. Local foundations in communities have stepped up to help provide relief which I am in awe of their generosity. But how does capital move through these layers in our places and how should they participate?

Let’s start with the most straightforward capital.  

Private Capital

Real estate developers don’t make a lot of money. Sure, the big specialty developers doing high rises in cities or bringing Walgreens to a corner near you…likely across from a CVS… those developers make money. Small town generalists like myself are a different story. I raise equity from investors for every project and take out bank loans. Projects always have a developer fee to cover the cost of the work they involve to deliver but I often defer half of that fee into an equity stake so I have some long-term investment and ownership in projects. Mentors of mine have waited 10 years for their developer fees on some projects! 

Why am I telling you this? Because if we’re going to have an honest conversation about public, private, and philanthropic capital shaping your community – you need some background about the private risks people are taking to improve your place. Historically, the people who developed your place were lauded by the community but as industrialization, regulations in land use, financial systems, and construction methods evolved developers built bigger, uglier, more specialty buildings and quickly earned their reputation for being greedy. 

We’re not here to talk about that extractive development, we’re here to talk about additive development and generalists like myself. Locals who choose to invest their time and energy into place, taking countless risks along the way. It also means the only stakeholders are the lender, investors, and developer. 

Whenever you can simply use private capital to complete a project and it makes sense… do it. I tell this to clients who approach me asking about grants for their projects or for local initiatives I’m part of. If you have to pull the numbers apart and put them back together or get financing from a lender but it can work, do it. 

How will a project make money and how much will it make? I’m beginning to sound like the investors I work with. 

Private capital has to make financial sense. Private capital makes sure there’s food on their own table.

Public Financing

Like it or not, this is where charity comes in to play. Public or government funding programs exist to solve for a variety of issues in our communities. Hunger is in the above-mentioned quote but when we talk about community, charitable sources are your government housing programs, economic development initiatives, and small business support. Incentives to save a historic building? Public financing. Affordable housing? Public financing. That new manufacturing facility on the edge of town? Public financing. 

There is always a specific purpose behind these sources. Many are competitive and complex to earn. You’ll be up against your neighboring place, or the one across the state, or if it’s a federal program something across the country. Proving your place as a good and trustworthy investment is crucial. Following the guidelines, dotting every i, and crossing every t is the only way to get the capital. 

It is a lot of brain damage. R John Anderson calls this the Return on Brain Damage or ROBD scale…. The more complicated the financing you need or capital stack you assemble, the higher the ROBD. The Legacy for example had equity and bank debt, private capital up to a certain point. It only went to a certain level because of the future appraised value. Our small town rents and future revenues will never be that of Chicago or a larger city to make the redevelopment make sense (when the end value is say $6M but the cost of the project is $12M you have a gap. That $6M gap is what has to be filled for your project to move forward). The Legacy utilized historic tax credits, a loan from the Michigan Economic Development Corporation, a grant from the Michigan Economic Development Corporation, Brownfield Tax Increment Financing, and a local Obsolete Property Redevelopment tax incentive program. It took lots of public financing to help us close the gap and redevelop the property. A very high ROBD. 

I’ll add this work isn’t easy and if your work doesn’t fit the mission, the public financing will find a better fit. Remember all of these funds are available thanks to state and federal tax dollars so if you can’t compete locally for any of them, funds from your place will help support that awesome new thing you wish you had in another place. 

Public financing feeds the hungry and whomever can feed the most people for less or make the biggest impact gets the food. 

Philanthropy

Admittedly, I do not and have not ever run a foundation but I do serve on two foundation boards and am the daughter of a philanthropist. Perhaps what I love most about Helen’s quote is that it well-articulates my opposition to a donation my dad may mention over the dinner table. Often, he’s telling me about something he’s proud to contribute toward and occasionally I push back citing that there is public financing for that and it shouldn’t be philanthropy. 

There’s the rub. Innovation is crucial to philanthropy. Grantmaking often seems to mimic public support but it’s typically different as foundations look for how sustainable organizations and efforts will be. Both public and philanthropic capital work to build the economic mainstream and close the gaps. Philanthropy is risk capital looking for new ways to solve problems. 

Partnerships are a big part of that. Not only in collaboration with like-minded organizations but in leveraging other sources of capital and coming in for the final ask. Philanthropy is meant to support strategy. Accelerate ideas that catalyze on the foundations of public and private capital. 

No one owes you an annual gift or operating funds. A foundation is not and should not give you a million-dollar grant for a building. It is not philanthropy’s job to come in and help with a real estate development project… At least not on the grant side but some foundations are willing to join the capital stack as equity in their pursuit of having a well-rounded investment portfolio. 

Philanthropic capital’s goal is to divert people from ever becoming hungry or to create sustainable food ecosystems for their longevity. 

How do you get the capital needed to thrive?

This year threw us all a curveball. Like it or not, you can stay the course or pivot. Many jobs and organizations can happily stay the course. Some need to pivot and won’t. Many already have and are seeing ways it’s better as well as improvements they can make. Tech companies launch without knowing their audience so they can fix it and try. They know they may fail but it’s better to fail then wait years in darkness trying to perfect a product. This year gave us all an opportunity to launch. Risk it. Pilot that new strategy. 

With public and private capital being more reserved or scarce in some instances, you need to innovate if you want change. It doesn’t have to be big. Incremental and small strategies or pilots are incredibly impactful plus give you a track record. Do you want to look back on this year where you could have more easily embraced innovation and realize it passed you by? Regardless of the resources you have or where you’re operating at for your community… it’s time to get creative.