With the housing crisis heating up in the United States and millions of tenants facing increasing rental costs, you may be tempted to believe that the problem is spiraling and cannot be solved. Before you do, however, you will be interested to learn about Dr. Van Williams, CPEP, a graduate of Madison University, real estate expert, and 22-year veteran of fighting against gentrification. Dr. Williams, the Founder and Managing Partner of The Proactive Realty Income Fund, LLC, is running full force into the problem of providing affordable, dignified housing by renovating and managing Class B and C properties and building manufactured home communities. As hundreds of people across the United States receive keys to safe homes they can afford, Dr. Williams is proving that impact-investing can be both effective and profitable. I met up with Dr. Williams in Orangeburg, South Carolina, where he gave me a tour of the mobile home community built through his team’s dedication and the generosity of the fund’s investors.
As Dr. Williams drove me to the entrance of the community, he stopped to point out the street signs erected by his team. “It’s a simple thing, a sign, don’t you think?” he asked, reflecting. “Yet, they didn’t have any here. It made this place almost nonexistent, I suppose, and when we put up the signs, people felt like they really were real human beings.”
We drove past some of the mobile homes, which were decorated with holiday lights and neatly maintained. “98% of the homes you’re seeing are owned by single moms and low-income families,” Dr. Williams mentioned. “Because of our investors, they were able to rent-to-own at only 6% and with just a $3,500-$8,500 down payment. You can’t imagine how happy people were when they realized they were no longer going to be working 300 hours each month to pay for housing.”
Dr. Williams parked in front of the administration building, where he was warmly welcomed by his staff. “Have a seat,” he offered, pulling one up for me. “Let me tell you a little bit more about how all of this got started.”
In 2019, he said, he formed The Proactive Realty Income Fund because he was convinced that everyone deserved to have good housing at a reasonable cost. “I was tired of seeing single moms struggling to provide for their families. It frustrated me that domestic violence victims had nowhere to live that was safe. Homeless people needed a stable home so that they could get back on their feet. There weren’t enough options for them, though, and I had to find a solution.”
After several decades in real estate, Dr. Williams knew the industry and realized that Class B and C properties held the solution. “I liked what Sam Zell said, that you should dance on the skeletons of other people’s mistakes and profit off distressed deals. Why couldn’t these old properties be renovated and managed? They could immediately begin generating cash flow, and that would solve the problem for so many people,” he said.
Dr. Williams pulled together a team of equally committed advocates and formed the fund with the intention of renting units at reasonable costs and building manufactured home communities. “That would help our tenants, but the key to doing so would be taking care of our investors, who weren’t so sure that impact-investing was really wise. I knew that as soon as they invested, they would need to receive a payment at the start of the very next quarter. We would need to generate immediate income to show them that ‘ESG’ and ‘social impact’ could mean excellent returns.”
Dr. Williams and his team set a target return of at least 12%. “That was the minimum our investors would consistently earn every quarter, and we’ve done it!” he said. “Even last year, in the midst of the global recession and pandemic, we beat the S&P 500 and gave our investors a 12% return. To top it off, we obtained 100% rent collection during this period and experienced no distribution interruptions.”
He explained that he found a way to make impact-investing profitable by maintaining careful control over every aspect of the program. “We are experts at negotiating the best prices for properties and at avoiding additional financing or leverage. What that means for the investor is that they are in first position on every asset they buy.”
Risk, he continued, is mitigated because they use only A-rated insurers. “Importantly, we also actively manage our portfolio. This all has led to our ability to generate consistent cash flow and long-term capital appreciation.”
Also crucial to the fund’s success is trust. “Our investors believe in us in part because we use a third party, Impact Fund Administrator, and we employ a strong fiduciary standard,” Dr. Williams stated. “It’s a seamless program that consistently generates returns for our investors while putting keys in the hands of people who need them the most.”
Orangeburg, he said, will always be one of the biggest successes of The Proactive Realty Income Fund. “This place is doing so much better now. In the beginning, people were really struggling because their 2019 unemployment rate was 133.33%. Just think about that for a second. The poverty rate was 31.32%, and with their household income about half of what it was nationwide, families didn’t have any ability to save money. You can see what a difference being able to afford a good home makes in the lives of low-income people.”
As we wrapped up our interview, I asked Dr. Williams what is next for The Proactive Realty Income Fund.
“We’ve got big plans for 2022,” he answered. “The $10 million we’re raising will really fill out this park. We also aim to have at least 2,500 units by December 2022, and there’s a sixty-room property in Memphis that we believe is capable of generating up to $55,000 monthly. We’re going to keep working hard and doing everything we can to put more people in affordable homes. I’ll never stop this work so long as someone is denied the ability to live with dignity.”
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