December 25, 2024

A group of Atlanta-based, seasoned business professionals and executives founded Roots Real Estate Investment Community in 2020 to provide its members with a residential real estate investment option that produces good returns and generates newfound riches for the locals who generate those profits. Today on the Atlanta Small Business Show, we’re pleased to welcome back Mr. Larry Dorfman, who’s the co-founder and partner of Roots Real Estate Investment Community.
Transcription:
Jim Fitzpatrick:
Welcome to the show, Larry, or welcome back to the show, I should say.
Larry Dorfman:
Thank you, Jim, for having us.
Jim Fitzpatrick:
Sure.
Larry Dorfman:
Appreciate it.
Jim Fitzpatrick:
So we had you in here, I guess, about a year or so ago, your partners and such. And you guys described a really cool mission. For some of the viewers that either missed that show or not as familiar with Roots Real Estate Investment Community, tell us about the company.
Larry Dorfman:
Yeah, it’s really interesting. I mean, as you know, we’ve been working together for almost 10 years in my old company and now into this one. I have a 34-year-old son out of my five kids who came up with this brilliant idea, in my opinion, that sort of wanted to open up and democratize the concept of real estate investment for everybody, because in the United States, it’s really not available to everybody. You can buy your home. Well, you used to be able to buy your home. Now with interest rates, it’s the price of the new home where it is, it’s so high. That American dream may be fading just a little bit.
Jim Fitzpatrick:
Sure, sure.
Larry Dorfman:
But to invest in a real estate read or an investment of an equity group, whatever else, you typically have to be an accredited investor.
Jim Fitzpatrick:
That’s right, that’s right.
Larry Dorfman:
So his vision was to build a real estate investment opportunity, a community, if you would, that not only opened up real estate investment to anyone, but also to the residents who pay the rent.
Jim Fitzpatrick:
Yeah, that’s a good idea.
Larry Dorfman:
And that was probably the most unique part. It’s the part that hook me on coming out of retirement and actually playing this game with him.
Jim Fitzpatrick:
Sure.
Larry Dorfman:
Because these residents in Atlanta, Georgia, the average resident makes about $46,000 a year. The average renting family rents around 1,300 bucks. It’s going up very quickly.
Jim Fitzpatrick:
Wow. That’s a big chunk of that 46,000.
Larry Dorfman:
It’s crazy. Do you know that rented Atlanta since January of ’21 has gone up 22%?
Jim Fitzpatrick:
Oh my gosh.
Larry Dorfman:
Now, they call it inflation. We tend to call it a little bit of greed.
Jim Fitzpatrick:
Yeah. Yes, yes.
Larry Dorfman:
Okay? Because if your property doesn’t cost you more and you didn’t have to refinance, then you really don’t need to get 22% more rent. But if the market lets you, that’s what people have done.
Jim Fitzpatrick:
That’s right. This keeps those families even further away from building any kind of equity or wealth for themselves.
Larry Dorfman:
It’s impossible.
Jim Fitzpatrick:
Yeah, really.
Larry Dorfman:
I mean, if you think about 46 grand, spendable income at the end of the month is almost zero. What do you have to save?
Jim Fitzpatrick:
That’s right.
Larry Dorfman:
These average families, according to Prosperity Now, which is a big group out in Washington, DC, they have about $650 or less in lifetime savings. Now, that number’s sort of understandable in the renting community. Do you know that 69% of Americans have less than a thousand dollars in savings?
Jim Fitzpatrick:
No kidding. Wow.
Larry Dorfman:
So this building wealth in the environment we’re in is stuff for everybody. And Daniel’s concept was to, what can we do to actually bring those people who pay the rent, by the way, without that rent, nobody makes any money, to the same table and let them eat with the investors? So he created this concept called living it like you own it. So if the resident will pay their rent on time, be a good neighbor, and walk around and do a video every 90 days, just let us know what needs to be done and show us you’re taking care of the property. So it’s taking care of the asset everybody’s invested in, right?
Jim Fitzpatrick:
Sure.
Larry Dorfman:
Well, if they’ll do that, we give them a rental rebate. They don’t have to come out of pocket. It’s not like rent-to-own where you put up seven, eight grand and then you put up more money along the way and you end up not buying the property and losing all that. This is more like you take care of the property-
Jim Fitzpatrick:
It’s kind of like sweat equity, really, when you think.
Larry Dorfman:
It is sweat equity.
Jim Fitzpatrick:
Yeah.
Larry Dorfman:
They’re working for this.
Jim Fitzpatrick:
That’s right.
Larry Dorfman:
And when Daniel came up with this, I said, “You’re talking about them doing a video every 90 days. Hey buddy, you sure that’s going to happen?”
Jim Fitzpatrick:
Yeah.
Larry Dorfman:
First year results are in, 78% of our residents earned a hundred percent of their rebate capability.
Jim Fitzpatrick:
Wow. No kidding. Wow.
Larry Dorfman:
Yeah. It’s pretty exciting.
Jim Fitzpatrick:
That’s fantastic.
Larry Dorfman:
So the whole concept behind it is to make it available not just to anyone to invest in, but for the residents to be able to start to build wealth where they’ve never… the wealth gap’s not getting bridged under the current conditions.
Jim Fitzpatrick:
Sure. So does the monthly rebate that they’re entitled to go right into the fund? Is that how that works?
Larry Dorfman:
Yeah. Great question. So first year, in order to have anyone be able to invest, you have to be what’s called a reggae company. A reggae fund with the SEC. Took us a while to get prepared for that. We filed for it just before Memorial Day, and we actually got approved in seven business days, which is unheard of.
Jim Fitzpatrick:
Wow. That’s fantastic.
Larry Dorfman:
I think it’s because of the way Daniel and our attorneys wrote the explanation of what we’re doing, and the SEC person who called me said, “Look, we got it. We like this. Go do it.” So the first year, we just simply paid them 5% interest on their security deposit and paid them their rental rebates. This is a lot of fun. They said, my security deposit, I never get it back anyway, why would I worry about what you’re paying me interest on? 81% of the people in this category do not get their security deposit back.
Jim Fitzpatrick:
No kidding. Wow.
Larry Dorfman:
Nope.
Jim Fitzpatrick:
The landlords find some reason to hold onto that.
Larry Dorfman:
There’s always a reason.
Jim Fitzpatrick:
There’s always something.
Larry Dorfman:
And these folks are used to being taken advantage of, so they just don’t argue. They figure they got to get another security deposit, another month’s rent.
Jim Fitzpatrick:
They just write it off as that’s what it’s going to cost to rent that place.
Larry Dorfman:
Exactly. And if I rent another one, I got to save up enough money to do that. That’s why they get stuck in bad places that aren’t taken care of well. So the first folks didn’t really believe us. Well, after a quarter or two of getting their statement and seeing their money start to grow, they continued to be part of the program.
Jim Fitzpatrick:
So how many homes are we talking about under the program currently?
Larry Dorfman:
Yeah. So in the first-
Jim Fitzpatrick:
How many families?
Larry Dorfman:
In the first year, we have 64 families, so that was not bad. We started in July, opened the fund for investment in July. So we took our first 12 months and just sort of finished that first 12 months. We got both sides of the equation. We wanted to have a commercially motivated, community inspired fund. So commercially motivated because we don’t believe you can keep helping people if you’re not making money. There’s this conscious capitalism thought process. So we didn’t know what the returns would be exactly, but we ended up finishing pretty well the first year with 18%.
Jim Fitzpatrick:
Well, there’s your proof of concept right there.
Larry Dorfman:
Well, 18% included 6% dividend payout over the course of the quarterly dividends that were paid out, and then a 12% lift in value of the property. And what’s important is that that lift in the value of the property didn’t come from the appraised values. It came from being able to buy properties back of appraised value.
Jim Fitzpatrick:
Well, that’s what I was just going to ask you. In this market, how do you do that? I mean, how do you buy anything right now back of appraised value, right?
Larry Dorfman:
Yeah. Well, it’s cooled off a little bit at the moment. But previously during the last two years, everything’s got five, six, seven offers on it. Well, Daniel’s been in this for about eight years with his wife, Roseanne. And he had started syndicating properties about six years ago and figured out a way to find the right seller. A lot of times it’s a tired investor. He’s already made some money on it, ready to go. Other cases, they got a house they need to close on and this house hasn’t moved. Some houses don’t move as quickly. So if you look at houses that might need some work, that might not pass inspection the first time, they run into problems, you go buy those kinds of houses. And so far, we’ve purchased-
Jim Fitzpatrick:
And you’re also in a position, correct me if I’m wrong, but you can stroke a check, which is a lot of it, right? Because if you got to go in with an offer on a house and say, “Well, we have our 20% down. We got some contingencies. We’re going to get financing.” That buyer is looking for that cash buyer, right?
Larry Dorfman:
That’s exactly right.
Jim Fitzpatrick:
I mean, that’s seller, rather.
Larry Dorfman:
We’ll close it in 14 to 21 days with nothing but inspection. No finance.
Jim Fitzpatrick:
Wow, that’s great.
Larry Dorfman:
So we can walk in with a price that actually works out for them because they need to go ahead and make that move. If they get the cash, they can do what they need to do. We got our own construction team. We can look at it and know what we need to do.
Jim Fitzpatrick:
And these are not condos. These are all single family homes and town homes, right?
Larry Dorfman:
It’s a mix, Jim. I mean, we look at anything that’ll fit our category. We like single family homes that have enough room for one or two families to live in, or we like condos. The only reason for condos really is they’re a little bit of a higher rent situation. And sometimes you need some place for someone to move into. We bought 17 units in southwest Atlanta that are a little higher rent because somebody, as people in our community move up, they want to be able to get a three bedroom too, or a four bedroom, whatever.
Jim Fitzpatrick:
That’s right. And you could follow that family all the way through.
Larry Dorfman:
And they can stay in the family invested. So we bought 53 properties so far. Of those, 25 are actually in the fund and 27 are over here being prepared to go on the fund. And so as we get them ready, rented, and ready to go, then they go into the fund. And the first year results were great. Those 64 families accumulated an average of $1,877 in wealth during the first year. So if they had less $650, they quadruple. Actually, if you add what they had, it’s almost four times what they had. Over a five or six-year period of time, they can have eight to $10,000 put away. And that’s money they’ve never had to date.
Jim Fitzpatrick:
That’s right, that’s right.
Larry Dorfman:
It’s not going to buy them a house, but they own real estate with that money. They own part of the fund just like we do. Yes, are they invested? Well, first, we paid them 5% for a year. Last week, we started to approach them about taking their 18, 1,900, $2,000 and investing in the fund. And five for five of our residents have all agreed that that’s what they want to do.
Jim Fitzpatrick:
That’s pretty cool.
Larry Dorfman:
Yeah.
Jim Fitzpatrick:
So it’s really a sense of, when you think about it, they’re living in this home, they’re paying their rent on time. But really, at the end of the day, they also are part of the group that owns the house. So it’s renting while you’re also an owner.
Larry Dorfman:
Yeah. Well, tell you what it’s proving too, the other proof of concept. We’ve had about four people move out. Our turn cost compared to typically three, $4,000 to turn a unit after somebody’s living there for more than a year. Our turn cost has been under a thousand dollars a unit.
Jim Fitzpatrick:
And that’s because everybody’s taking such good care of their homes.
Larry Dorfman:
They’ll call you and say, “Look, I got a dark spot in my bathroom.” Well, that could be a little water leak now that might be a mold problem in two years. So the water leak’s 200 bucks. The mold problem’s 3,500, which one you want?
Jim Fitzpatrick:
That’s right, that’s right.
Larry Dorfman:
So we actually have people on property looking at their and our property and helping us take care of that.
Jim Fitzpatrick:
And then you got the video reviews coming in every 90 days on your investment.
Larry Dorfman:
Yeah. It’s a self-fulfilling prophecy in a way, in that everybody’s working together.
Jim Fitzpatrick:
Sure. And not only that, but you’re helping out families. I mean, at the end of the day, you’re doing right by these families that would never, I shouldn’t say never, but maybe for a very long period of time are they’re going to see home ownership.
Larry Dorfman:
Yeah. Let’s be real. If you make 46 grand and you have less than $600 in the bank, never is the right word.
Jim Fitzpatrick:
Never. You’re not buying a house.
Larry Dorfman:
You’re not buying a house.
Jim Fitzpatrick:
You’re still housing your future.
Larry Dorfman:
So let’s take Atlanta, real estate in Atlanta. Everything’s cooling off. Everything’s not going down. It went down, what, 18, 19% in 2008 and nine. What’s the price difference between real estate in eight and nine and now?
Jim Fitzpatrick:
That’s incredible.
Larry Dorfman:
Significant difference. Well, it’s not going down. What it’s doing is it’s going to cool off instead of going up 12, 15%, and it’ll show up five or 6%. Or maybe it’ll go to the three and a half, 4% that the last 50 years is at. Okay. So the values aren’t going down. They’re just going to flatten out a little bit. That’s fine. Residential real estate investment is about having them full. And when you have people who want to live there because they’re becoming a partner with you, and because they’re building wealth, they’re not leaving. We believe we will get much longer residential stays.
Jim Fitzpatrick:
Yeah. There’s no question about it. So for people that want to learn more, we’ll show the information on the screen. What do they need to do?
Larry Dorfman:
Just InvestWithRoots.com.
Jim Fitzpatrick:
Okay, okay.
Larry Dorfman:
Very simple.
Jim Fitzpatrick:
As I said, we’ll show it on the screen here. I encourage everyone to take a look at this program. If you’re looking to invest and you want a sound investment, and at the same time help others realize a little bit of home ownership here and doing right by families right here in Atlanta, this is the place to go. It’s the right thing to do with a phenomenal return on your investment. So. Mr. Larry Dorfman, thank you so much for joining us.
Larry Dorfman:
Thanks Jim. Appreciate it.
Jim Fitzpatrick:
Really appreciate it.
The Atlanta Small Business Network, from start-up to success, we are your go-to resource for small business news, expert advice, information, and event coverage.

While you’re here, don’t forget to subscribe to our email newsletter for all the latest business news know-how from Atlanta Small Business Network.




We are using cookies to give you the best experience on our website.
You can find out more about which cookies we are using or switch them off in settings.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.

source

About Author