In this episode, Lisa Hylton welcomes commercial real estate aficionado, Vernon J., to discuss affordable housing and blockchain real estate. Vernon is a social entrepreneur and real estate investor passionate about helping communities of color build generational wealth. Giving back has always been a major part of Vernon’s career, and he has managed to create a couple of different community programs that are still thriving today. With over 15 years of experience in the multifamily real estate industry, five years of immersive global blockchain exposure, six continents traveled, and a growing affordable housing portfolio, Vernon looks forward to using his contacts and broad expertise to uplift underserved communities from coast to coast. Listen in as Vernon shares how he got to where he is now and why he decided to choose this path.
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Blockchain Backed By Affordable Housing With Vernon J
I’m super excited to have on this episode Vernon J. Vernon is from Brooklyn by way of Los Angeles. He’s a social entrepreneur and real estate investor with a passion for helping communities of color build generational wealth. Since 2005, Vernon has dedicated his life to community building through multifamily acquisitions and asset management, facilitating over $150 million worth of real estate transactions around the United States.
This episode is going to be a part of the blockchain episodes that I have featuring a few other blockchain guests. I want to talk about his experience connected to the blockchain. With several years of experience in the multifamily real estate industry, a few years of immersive global blockchain exposure, six continents traveled, and a growing affordable housing portfolio, Vernon looks forward to using his contacts and broad expertise to uplift underserved communities from coast to coast. Welcome to the show. I appreciate you coming on.
Lisa, I am over the top excited to dig into blockchain and real estate. I can talk about this all day, every day. This is an absolute pleasure for me. Thank you for having me.
It’s awesome that you’re here. We met at the Blockchain Real Estate Conference in Austin in 2021. A part of the benefit of going to these conferences is you meet all these amazing people who are doing all these amazing things. To kick off the episode, a little bit of background about yourself. Do you live in the New York area?
I’ve got a property in New York, but we’re bi-coastal now. Probably around nine months out of the year, I’m in California. Three months out of the year, I’m in New York. Cali is my home. New York is where I’m from, and I was born and raised. That’s where my heart is. There’s this funny saying, “Live in New York, but move before it makes you too hard. You should live in California, but leave before it makes you too soft.” I haven’t been gotten too soft yet. I’ve been in California for a few years. That’s where I’m at.
What do you and your family like to do for fun?
I’m an avid snowboarder. I consider myself a pool shark with billiards. I truly enjoy what I do on a daily basis. Finding acquisition opportunities, helping people build wealth are things that you would expect to be like a job, but for me, it’s what energizes me and gets me up in the morning. That’s what I love to do.
Jumping a little bit into your experience, some of the things I didn’t cover is that you are a social entrepreneur. You’ve created a couple of different community programs that are still thriving now. I’m torn. I want to start with how your story evolved. How did you get to where you are now? Why have you chosen the path that you’ve chosen?
I would go further back into my childhood and talk about how my dad was an entrepreneur. Even from a young age, he owned a large cleaning and media company. Me and my younger brother, when we were young, like 8 or 9, on Fridays, we would all come together as a family and put together his marketing and postcards for his businesses.
As a young person, entrepreneurialism and marketing come to you naturally when you do that. It’s something that I’ve always seen my father be a boss and take his own hours. He’s always been able to take me to football, basketball, and baseball practice all days, morning, noon, night. He had that time and the ability to control his own time, which is super underrated in our society, especially as you have kids. That gave me the foundation of being an entrepreneur.
Even going to prep school in Massachusetts, where I was a scholarship kid, costs about $60,000 a year to go to these schools. I went to school with a bunch of the creme de la creme of society’s kids. I would ask a lot of these kids, “What are your parents doing? Why are they multimillionaires? How do they make this happen?” I saw a common theme when I was 16, 17 asking my peers about this, and it’s real estate.
All of them owned and had real estate in their portfolio in some way, form, or fashion. When I was 17, 16, I knew that real estate was the way to wealth from an early age. Even within our family, we have a portfolio of probably about $12 million in assets in Brooklyn. We started investing in the 1950s. Those properties have allowed me how I live and my family as well. Throughout my life, I’ve always had this theme. After college, I got right into real estate and became a real estate agent in New York. I did a lot of deals, mostly in multifamily.
Being in real estate has shaped and given me the tools that I needed to own my own real estate throughout this time. A few years ago, I started investing in my own portfolio, buying my own properties in Brooklyn, New York. It was at that same time that I started to get into blockchain. I got in heavy. I was traveling all over the world in Dubai, Hongkong, going to different events all over the United States to learn who the players and how do real estate and blockchain intersect and what are the voids that blockchain can fill and make the real estate process more efficient.
Fast forward to 2020, after a few years of blockchain experience and traveling the world, learning from the people leading the way, I had this epiphany when I started renting out some of our units to homeless families. We rented out one of our units in 2020 to a family that came from a homeless shelter using a program called CityFHEPS. CityFHEPS provides five years of guaranteed rent and one year of rent upfront for the landlord, and then it also gives other incentives.
I thought about this and said, “This is a win-win all around.” First, me as the landlord, I get guaranteed income. Second, the tenant is able to get off the streets and out of a shelter, which is major, especially when you’re talking about child development. Third, the city is able to get people off of the streets and provide a more stable environment. This is the perfect storm of what I can do.
When we handed her the keys for that apartment, she broke down in the craziest tears, and the gratitude poured out of her. It was at that very moment that I knew that I wanted to do this forever or for as long as I could live. I wanted to take what I’ve been able to do in my knowledge and exponentially grow that so I can do that for thousands of people who are homeless.
The way that I was going to be able to grow exponentially is through blockchain because I’ve been able to build communities such as EastNewYork.com, which takes the community of East New York. It doesn’t matter if you are building a property, opening up a business, or running for office. All roads lead through EastNewYork.com.
We’ve got over 30,000 members on the site, and that started in 2014. My transition and the reason why I bring this up is that community and blockchain go hand in hand. You cannot have blockchain systems without a community. It’s not going to work. I’ve been building out these communities, such as EastNewYork.com, also Mastermind Connect, where we connected hundreds of young Black men and young Latino Black men to come together. Thinking about it brings me back because bringing people together definitely changes your perspective of how things should work and how you can go about business.
That’s why I had that epiphany about creating an exponential company that can provide housing for thousands of homeless families. I thought about the people who could help me bring this to life. It’s those community members who come together, and they say, “I would love to own affordable housing where I can get guaranteed income for the rest of my life and pass that onto my children as well.” It becomes a win-win all around.
That gives you a 360 view of my experience in real estate, how it evolved into the blockchain, and how real estate and blockchain came together to create EquityCoin, the first digital token on the blockchain-backed by affordable housing. Our goal is to create $1 billion worth of value and generational wealth for people in the country when it comes to affordable housing.Having time and the ability to control your own time is so underrated in today’s society. Click To Tweet
There are a lot of different things to break down here. I want to start with first to think about what you said, the programs that allow the government to guarantee the rent. Could you talk a little bit about how those work? Is that the same as Section 8, or is that different?
Section 8 is one of the programs. We do have Section 8 tenants as well, but there are so many different programs that help people who might have HIV, are elderly or are veterans. You have so many programs that are out there to help people who are in danger of becoming homeless, especially in those coastal cities. You’ve got New York, California, even Seattle and Miami, Florida. These are areas that are seeing high inequality.
Those are the areas that are seen the most when it comes to homelessness. That’s why we’re focusing on those areas first. Not only do they have the incessant need for affordable housing, but those cities have the programs available to facilitate these people giving them permanent housing. The ecosystem is already there. What’s required right now and missing is the infrastructure and facilitators, people who can marry the government programs, and the people who need the housing.
There needs to be a bridge between the two. That’s how we see ourselves. EquityCoin is a public benefit corporation, but we are a for-profit company. This is where we’re headed with the sharing equity economy. We’re heading to a place where people can do good and well at the same time. It doesn’t have to be singular.
You mentioned what EquityCoin is. How does it physically work in terms of the identification of a property and the process of people even investing?
We’ve got this delicate dance or choreography. I can explain it like that, where you’ve got the SEC, rules and regulations, SEC FINRA, and traditional real estate acquisitions. You’ve got that component and the technology component to it, smart contract. You are making sure that your smart contract aligns with the rules and regulations of FINRA, SIPC, and the SEC. With that being said, 2020 has been instrumental for EquityCoin. Everything you need to build a security token and integrate it with real estate and income, most of this stuff you cannot find on Google.
This is not googleable. You’ve got to get into it and speak with the players and the regulators. They’re going to give you the information that you can use to put together this infrastructure. That’s what we’ve been working on for 2021. When you’re talking about how it works, it works by having these components of regulation, traditional real estate investing, and then the blockchain component, which is smart contracts. I’ll give a specific when we talk about smart contracts.
For example, EquityCoin uses the ERC-884 token. It’s on the Ethereum blockchain, but the 884 token is specific to Delaware Corporations. It allows a Delaware Corporation to be broken down into shares, but those shares can be on the blockchain. There’s a one-to-one ratio. If you own an EquityCoin token, that means you own one EquityCoin share. The beauty of having your shares on the blockchain is it provides added liquidity for the investor.
Eventually, you’ll be able to take your token and place that token on a plethora of different platforms that allow you to buy and sell. Essentially, take your token, put it on an exchange, and now people from all over the world can invest in that token and be able to join your community in a snap of a finger. If you think about the opposite of that, you do it the traditional way. It becomes exponentially harder for you to find investors and liquidate your positions. Integrating blockchain into real estate creates more efficiencies. It’s not so much that the old way of doing real estate is defunct and doesn’t work. It works, but there are some efficiencies that can be created by tapping into the blockchain.
It sounds to me that this process also provides some liquidity as well. When you speak about the traditional way, in order for the process to get started, someone does have to purchase the real estate. In the properties that you are working with, you’ve purchased them outright and chosen to tokenize some of them through EquityCoin. That’s the company where people can come through to then gain access to some of these tokens. It could be even the people that are living at these different properties could have the opportunity to invest. You’re taking the approach of making it affordable for people to also invest in some of these tokens as well. Is that correct, or have I gone beyond my skis?
No, that is 100% correct. The goal with EquityCoin is to democratize real estate investing. That’s one of the goals to break it down into fractionalized shares, which makes it easier for someone to invest. Most people don’t have $100,000 to put down for their first investment property, but people do have $200 or $500 that they can put down and start to create not only their income but changing their thought process.
If you’ve never invested before and created residual income for yourself, the introduction to EquityCoin and products like EquityCoin can begin to shift the way you think. Even though you only invested $1,000, but that $1,000 is now making you money every quarter. As an EquityCoin holder, you get quarterly dividends sent directly to your bank account. Once you start seeing those things hit your account every quarter, you’re like, “I’m going to start thinking a little differently.” That’s our goal here.
Clarify this for me, in the sense that people choosing to invest in tokens, do they get the same type of benefits as owning real estate directly?
There are pluses and minuses to owning real estate directly. The plus to owning real estate directly is that you control it. You have full autonomy over it. The minus with it is that you have to manage it. Property management is a whole other beast. If you want to be a passive investor, this is one of your best options. Our goal for EquityCoin is that each EquityCoin holder has their own portfolio of properties that they own as individuals.
The goal for the community that we’re building is that once you have entered this community of EquityCoin, not only are you making residual income, but now you can tap into the different community members that we have, who are lawyers, mortgage brokers and investors. You can tap into that knowledge base and begin creating your own portfolio outside of EquityCoin.
This EquityCoin, we’re not here to take a market and be the one and only. We want this to be very open-source and community-driven. That’s the main difference between us and the traditional in the traditional sense, where it’s all about the bottom line and money. Here we’re trying to create community and increase generational wealth for an entire group of people.
This might be early in the process. The primary and secondary markets, as people think about perhaps in the future, buy into these tokenized securities and seek to sell it because they want to go into a different tokenized investment or something of that nature. What do you foresee the future of that now?
Mike Novogratz, who’s one of the biggest crypto investors, his portfolio is over $1 billion. What he predicted in 2020 is that security tokens are going to blow up in the next two years. He said that the biggest industry that’s going to benefit from this blow-up is going to be real estate. When you’re talking about the tokenization of real estate, what it provides is a gamification of the asset class. That’s where we’re going as a species of people. People don’t want to invest because that’s pretty boring. This is why Robin Hood, these meme coins, and NFTs have become so big because people are yearning.
You could be a super professional, but you’re yearning to have fun with your investment. With the tokenization of real estate, you can begin to have fun with that. For example, with cryptocurrencies, people have their team. You’ve got Team Ethereum. That’s their team. You’ve got Team Bitcoin. They’re like, “This is our squad.” You’ve got Team XRP and Shiba coin. It’s creating a sense of community again. With EquityCoin, if you are interested in affordable housing or blockchain, we are your community.
The next step that we’re doing with EquityCoin is creating a platform called Equity Share. Equity Share takes the infrastructure we built with security tokens and allows it to be white-labeled. Another real estate operator, owner, or fund manager can come in and say, “Guys, I want to create my own token on the Equity Share blockchain.” We provide them the infrastructure to do that so that they can now create their own community.Take what you’re able to do with your own knowledge and work to exponentially grow that. Click To Tweet
If they have, let’s say, senior housing across the nation, they can create the senior housing token on the Equity Share system. If you’re interested in senior housing and helping senior citizens, that’s going to be my coin for my community because I have an affiliation with it. That’s how we see it. Our goal by 2030 is to have 100 different tokens on our Equity Share platform that allows people to buy and sell these tokens on the blockchain.
At the moment, is most of this restricted to accredited investors, or are there opportunities for non-accredited investors too?
This is that dance when you’re dealing with the SEC and all of these regulatory bodies. A lot of things have happened in the last few years that have opened the flood gates for normal investors or retail investors. I’ll give you an example. At the beginning of 2021, for Regulation CF, Regulation Crowdfund, the amount you can crowdfund from the public was raised from $1.07 million to $5 million. That’s a huge difference.
That’s a difference between creating a small little startup and having the funding, $5 million, to do something remarkable. Taking into consideration that the SEC is starting to change their way and give more flexibility for retail investors or non-accredited investors to take part in the process. This shared equity economy is where we’re headed.
We’re heading more towards allowing the everyday person to invest, but it’s still a dance. You still need to figure things out. A lot of crowdfunding platforms do not want to work with tokens specifically because of the gray areas with the SEC, FINRA, and SIPC. If you are looking to create your own token and raise capital for that token, your options are pretty limited when it comes to Regulation CF.
For you, the opportunity to do equity share helps there as well.
There we are in a prime example. In 2021, we tried maybe a dozen different Regulation CF platforms to raise capital. They didn’t want us mainly because we were a token. I know for me, it was hard. I know that it’s going to be difficult for other operators as well. That’s why we’re so focused on creating this platform that’s going to allow people to tokenize simply. People overthink it, and it’s a simple process that can be systemized and automated, but it takes somebody with courage to make it happen.
You mentioned that someone noted that real estate is going to be the area that’s going to be impacted the most with the tokenization of the blockchain and all this stuff. What are some of the actionable ways people reading this can capitalize on what’s going on in the real estate space when it comes to blockchain?
I’m going to break it into two parts. I want to break it into the part of the investors out there, people who want to invest and are syndicators, as well as non-syndicators, real estate investors who are buying their deals directly and might want to tokenize some of their investment but haven’t done syndication in the past.
To the first point, what can people do to prepare for this moment when things are going to change? The best thing that they can do is research, learn about the tokenization process, understand the Delaware blockchain initiative, and look into different companies like tZERO tokenizing securities. That’s the best ammunition that you can have for somebody looking to get in.
When the opportunity arises for you to invest, if you’re backing yourself up with the knowledge, you’re equipping yourself with the tools you need to strike when the time is right. The time is about to be right, and there are about to be some opportunities, but if you’re not sure about it, you’re going to stand on the fence and not take that leap.
You won’t be able to recognize the opportunities. However, you noted that googling wasn’t something you could have done back in that time. Do you feel that things have changed in the aspect of the web? Do people need to think about going to conferences and looking for those kinds of conferences that are focused on the blockchain?
It’s absolutely key to go to these conferences and meet people face to face. Getting that word-of-mouth knowledge is exponentially better than trying to google and learn things from YouTube University. This is a testament to that. We met at an event and connected and bring our players in the same room and had this. Showing up is probably the best thing you can do.
The tokenization of real estate is going to change the game for syndicators completely. As a syndicator, it’s pretty tough out there. It’s pretty tough to find investors and put these deals together. There’s no real specific infrastructure where people can find a 360 solution where people can find investors. They can have a platform to get investments coming in. Not only that, they have a platform that once the capital comes in from their real estate assets, they can distribute to their investors seamlessly.
For example, with EquityCoin, we’re paying out dividends of $4 per token. Our investors are all on the blockchain, and it shows exactly how many tokens you own. When it’s payout time, there is no arguing what you are to be paid when it comes to dividend day. You’re looking at the blockchain and ledger that says, “If you own ten tokens, you get X amount of dollars for that payout.” With that, it adds to the level of transparency where I don’t need to go back and forth with an investor about how many tokens they own because we all can see it. As long as you have an internet connection, you can be sure that you have this amount of tokens.
Are they able to see the amount of cash that comes off of that property that’s ultimately split across all the different investors? Is that part not necessarily provided as well?
That part, for now, is not provided, but in the future, I can see us providing breakdowns of all of the income and expenses for investors. At the end of the year, you need to understand how much money we made and you’re making as an investor. Those are two important metrics that we provide.
For people who own real estate directly and never thought about syndication because of whatever reason, they’re reading this and are like, “Maybe I want to tokenize properties that I have in my portfolio,” what would you say to them in terms of getting started?
I got a little lucky because one of my best friends is a cryptographer and helped Venmo and PayPal build out their blockchain system. He’s been a good friend of mine for ten years. In 2020, I tapped him to become the CTO of EquityCoin, and he agreed. He’s been instrumental in making sure our smart contract is up to par with all of the regulations and that we’re building out an app. He’s creating an infrastructure for that.
As a real estate guy, most of the time, my real estate guys that I know don’t have much tech knowledge. That’s your lane as a syndicator and do that well, but you’re going to need to employ a whole other department for cryptography if you’re looking to do this. You’re also going to need to amp up your compliance costs, which go up as well. There are some drawbacks to trying to tokenize it rather than the traditional way.Bringing people together definitely changes your perspective of how things should work and how you can go about business. Click To Tweet
At EquityCoin, we believe that tokenization is the future. It’s like Wayne Gretzky said that his success came from knowing where the puck is going to be, not necessarily where the puck is now. It’s traditional. I might seem crazy for tokenizing my properties. In the long run, people are going to look back and say, “That guy had it right. Tokenization is the way to go.”
For people who are thinking, does this impact their long-term wealth strategy? They might be buying portfolios of properties, and then if they tokenize it, they’re introducing other people into their portfolio of properties. Do you have any thoughts on that aspect as well?
It has to do with what your process is and your beliefs as an investor. For EquityCoin and me, it’s imperative that we get communities involved and increase generational wealth across the board. We have an approach that says, “When I win, everybody wins.” I wouldn’t be mad at somebody who says, “I want my whole portfolio for my family and don’t want any outside investors.” That’s to each its own. That’s great. For us, it’s about community building and making sure that everybody eats, not just my family.
I want to pivot a little bit. I don’t know if you know too much about Bitcoin mining. I feel like those pieces go together with the blockchain in mining and data centers, but maybe they don’t. That’s now getting into cryptocurrency land. Let me know what your thoughts are on that and whether there’s any impact on what we’re discussing here.
That is crypto land. What you’re talking about mining, you’re talking about proof of stake. You have these mining machines that are pretty much working as an inspector. Each one is like an Inspector Gadget, making sure that each blockchain transaction takes place successfully. That is something that is needed for decentralized systems such as Bitcoin, but for security tokens, that’s not needed.
You don’t need to have this third-party system providing that authentication. The reason why you don’t need it is that it’s a security token. It’s backed by real assets. When you have a currency, that’s like a dollar or euro or Bitcoin or all these other currencies. You need that proof of stake and transaction that took place.
Is it a part of it with the centralized? Is that more decentralized when you’re doing the security tokens with real estate? Whereas when you’re doing tokens on cryptocurrencies and those things that are not touchable assets, is it more decentralized and not necessarily one person perhaps running the show?
When you’re dealing with the regulatory agencies, you cannot be decentralized. I’ll give an example. CZ was the CEO of Binance. He tried to create this decentralized cryptocurrency exchange, but as he grew bigger and bigger, the regulatory agencies asked him for his office, like, “Where’s your office space? Who are your employees? Who’s managing your books?” A decentralized organization doesn’t have any of that. They don’t have an office space, a place where they keep all of their finances. It’s decentralized, all in different places.
As you make a good amount of money and are dealing with the SEC and these other regulatory bodies, you need to have some centralization and look at the most popular cryptocurrency exchanges, such as Coinbase. Coinbase is a centralized place that allows you to transfer tokens. It’s the most popular. When it comes to the decentralization of real estate itself, we’re pretty ways away at this point.
Even what you’re building now, which is Equity Share, that further supports the centralization. When someone sets it up, it’s white-labeled. If they decide to set up their own security token, it’s connected to them. They’re the ones who are setting it up. Most likely, they’re the ones who’ve purchased the real estate, which they might not tokenize all of it because they probably are going to keep some of it underneath their ownership and then tokenize only portions of it to investors to come on in.
What you guys are doing is pretty awesome in the sense that affordable housing is not an issue that’s going to go away. Focusing on the coastal cities, New York, LA, these areas are chronic. It’s not going anywhere and always going to be there. It’s beautiful to continue to have these kinds of conversations. One of the questions I asked you about the accredited and non-accredited, I do feel that right now, this area is still very much underneath the accredited investor wing.
With time, as you expanded on here, obviously like syndication was for a long time for accredited investors. The JOBS Act, which wasn’t that long ago, has enabled a lot of sophisticated investors to gain access to this. I agree with you. It’s time to get educated, get out there, and learn. I hope that all of these episodes will help people to gain further knowledge about the blockchain and how it works. There are people like yourself that’s already done it. To wrap up, I want to confirm, you’ve tokenized real estate that people have purchased.
That’s right. Our first raise was a friend and family raise that we did earlier in 2021, but our next raise is going to be public. That’s going to be announced soon. I’m excited about that. I’ll be sure to share that with you. I want to end off by saying this, as a wealth manager, I think we spoke about this before, but I’m also a wealth manager for family offices around the country. In 2021 alone, we’ve done over $100 million in transactions. We do a lot of multifamily and retail strip centers. The reality is those deals are very easy to finance.
When I say very easy, there are a plethora of options when it comes to financing a luxury apartment building, or a value-add strip center, or any of these. One time in 2021, we tried to buy an affordable housing property in San Francisco. It was by far the hardest acquisition to make happen because there’s a disconnect. When you’re trying to create affordable housing, obviously, the banks’ main goal is the bottom line. They want to make that money, no matter what.
They don’t want to lose people’s money that they’ve put into the bank. They’re taking people’s savings and lending it out. That’s what’s going on.
In those affordable housing properties, it’s much harder to finance than other properties. This is why EquityCoin is so needed right now because the banks are not providing the necessary funding to make it happen. We can’t rely on the banks anymore because it doesn’t align with their mantra or investment thesis.
For EquityCoin, I’m thinking, “I can create a high income for the rest of my life and help people build up a community.” I could do all these things while building generational wealth and feel good about when I go to sleep at night, that I’m doing the right thing. I can feed my family. I don’t see anything better than that. That’s why I feel so strongly about the need for companies like EquityCoin.
Now that you point that out, it crystallized for me that if you are buying this affordable housing, many times, sometimes even the community that you’re in, that could offer opportunities for that community to invest. They’re more interested in investing and seeing their own communities continue to grow and come up. They might not have that $50,000 or $100,000 to invest in full-on syndication. Syndicators are probably not going to be syndicating in those areas. Let’s be honest.
As you started out this whole conversation about community and I can see how it all comes full circle because the reality is this is an initiative that enables the community to be empowered, be able to financially put money into their own communities and improve their communities and help the people that are living in their communities that might be living on the street to now have housing, which then changes the game for everyone.
You hit it on the nail. I even think about being in the hood. If you go to the hood in Brooklyn and Los Angeles, I see people throwing garbage around in front of my buildings. The reason that happens is that there’s a lack of a sense of ownership. If you take the strategy of EquityCoin, and now people who are in the community own $500 or $100 worth of property. Even though they only own a little bit, you’re going to say, “Maybe I’m not going to throw this wrap on the ground. I own a piece of this community. This is a part of my community. I’m not going to do that.”The most beautiful things can happen in your life if you stick with it and refuse to quit. Click To Tweet
When people see another person throwing wrappers on the floor, they’ll say, “I own a piece of this community, pick that up. This is not a community for that.” It starts to make a shift. You have to combine the private and public sectors in order to make real change. I don’t think there’s any other way. The public center sector alone can’t do it. If you’re a nonprofit, your goal is not to make money. How are you sustaining in the long-term if you’re not making money?
On the other side, you’ve got the highly capitalistic people who don’t give a crap about people’s needs. There’s a middle point that’s required here. I hope that EquityCoin can usher in this new sharing equity economy where other companies start to think about, “We could do better and do some good things in this world.”
Thank you so much for coming on. This now leads me to the level-up questions that I ask all my guests. The first one is, what are you grateful for in your life now?
The first thing that popped up was my fiancé and my dog. Family keeps me strong and going.
What has attributed to your success and continuous growth?
Fearlessness and relentlessness. Most of the beautiful things that have happened in my life are because I stuck with it, and I didn’t quit. It’s the only difference between when things worked out, and things didn’t work out.
What do you now know that you wish you knew at the beginning of your journey?
I was thinking about this very thing because back in 2008, I was in the real estate industry back then. You had this panic that happened back in the financial crisis of 2008. I was somewhat prepared to invest, but I didn’t. I was shocked like the rest of the country. I was thinking, now, if that moment ever happens again, and if we ever have a moment that is an awakening moment where people are panicking, and things are going crazy, you don’t want to be on the side of the people panicking. Be on the 1% side of people who can see through the BS and can make investments that are going to be great for the long-term. One thing I wish I could do better is when you have your coffers ready and pockets lined, you’ve got to be ready, willing, and able to invest.
I’ll say one more thing, and people are saying, “The worst thing you could do right now is hold cash because of inflation.” I would almost push against that and say, “You want to have the cash right now.” When the crap hits the fan, it’s the people with the cash who win. Make sure you have cash on the side. Don’t listen to everybody that’s saying, “Don’t hold your money in dollars.”
It was Cardone saying how he’s ending 2021 with $10,000 in his bank account or something like that. It’s all in for real estate assets. Before I let you go, two things. The first is what’s your outlook and perspective on real estate going into 2022, 2023 in terms of interest rates and commercial properties and stuff like that. What are your thoughts?
Interest rates are going to go way up in the next few years, maybe not 2022. Obviously, the fed has already signaled that they’re going to do at least three increases for 2022. Everything is going up with higher inflation and prices at the gas pumps, grocery store, movie theater, dinner. On the commercial real estate side, what I’m starting to do is look a little closer at delinquencies, especially when you’re talking about large properties and CMBS loans. What I’ve been working on is collecting my database of lis pendens.
We’re going to see an increase in foreclosures and bankruptcies because, in 2020 and most of 2019, there was an artificial bridging up of the economy by America and helping property owners sustain through this time. All of that is gone. Investors should start to prepare to buy more notes. Note buying is going to be increased. I read an article that the purchase of promissory and mortgage notes has increased by 17% from this time in 2020. That trend is going to continue. You want to look out for that lis pendens.
That makes me think about bridge loans, which is always a hot topic for people because folks like to buy using the bridge for a variety of different reasons. What are your thoughts when you help investors to purchase assets now through your practice? What are your thoughts when it comes to bridging?
That’s always the last option. For us, it’s always the last option because it’s so expensive. That interest rate for bridge loans is exponentially higher than traditional. If anything were to go wrong during that time in that bridge and when that money is due, and if your business plan isn’t tight, it could cause big problems for you. Especially if you’re about to refinance once that term is done, and let’s say something happened to your credit report or something that you can’t control happen, you can be in some hot water and potentially lose that property to that bridge lender.
Bridge lenders are investors themselves. You mentioned that you would have an offering in 2022. If my readers want to learn more about you, your offering and EquityCoin, Equity Share, all of the community initiatives, and even about the Mastermind Connect, which we didn’t get into, where’s the best place they can go to learn more?
EquityCoin.org is our website. We have so many events that take place during the year. We did an event in Miami where we rented out a mansion and did an event at Art Basel in Miami. It’s called Equity House that we do around the country. If you sign up for the white paper on EquityCoin.org, you’ll be one of the first people to get notification of our next raise. That’ll be big. When it comes to myself, you can go to VernonJ.com. That’s either Vernon J or VernonJay.com. It doesn’t matter, either one of the two.
I loved the event that you had in Miami. I’m like, “How do I get on the list for that?”
This is the beauty of community. In order to get into that building, you needed to be an EquityCoin holder and investor. This is why people are looking at the Board API Club. I don’t know if you’ve seen it. It’s the biggest valued NFT group ever to date. The reason why it’s so big is that celebrities are buying these NFTs. As a bonus of owning the NFT, you get exclusive invites to events that only celebrities and people who can afford the NFT can go to. When people say, “People are buying, paying millions of dollars for a JPEG,” they don’t quite understand the value of community and how much that gets applied to this NFT or this token.
That makes me think of one more thing. Virtual real estate, what are your thoughts about that?
It’s so funny. I was going to buy a piece of land. It was Decentraland. I was going to do it as a joke to one of my partners because we always laugh. He’s pissed off that people are paying so much money for these pieces of land. I wanted to buy it for him as a joke. I went to the site and tried to buy it. It’s like the minimum to buy a piece of land in Decentraland is like $14,000 for a little square. I don’t know how to call it. Let’s say, for example, if you’ve invested in Decentraland or you bought some land at the Decentraland, you’re betting on Decentraland as the key metaverse.The only difference between things working out and things not working out is the fearlessness and relentlessness in you. Click To Tweet
There’s going to be a metaverse that wins it all. Everybody’s going to be going to that metaverse as opposed to some of these other ones. Zuckerberg is going to win. Ninety-five percent of people are going to be in the Meta metaverse with Zuckerberg, and all of these other metaverses that have been created and gotten big up to this point will begin to get phased out. That’s what I think.
People don’t realize, but I’ve been invested in crypto since 2016. I had seen the crazy wave up in 2017. I’m still blown away by that meteoric rise. Most people haven’t felt the downturn yet. We haven’t had a downturn like 2007, 2018 since then. Anybody who came into the market from 2018 until 2021 hasn’t experienced that pain. It’s going to be a rude awakening once we see 80% or 70% of the crypto market wiped out in a matter of two weeks’ time, which is extremely probable, not even possible, probable. You got to be prepared for it. You’ve got to make investments that make sense. You can lose and make sure you have some capital on the sideline for when that moment comes because it’s coming. We’re not talking about a dip that’s coming.
What do you think about a wipe-out?
Wipeout is good. These are healthy cleansings. There’s a lot of fraud and BS in the market, these cycles where they wash away. The top cryptocurrencies become stronger. That’s what I look forward to.
Thank you so much for coming on. This is so good. Thank you.
- Vernon J.
- Mike Novogratz
About Vernon J
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