The Self Funding House with Derek Lobo, Commercial Real-Estate Titan

Derek Lobo talks with Alan Olsen, CPA and Host of the American dreams show about his book; “The Self Funding House”.

Transcript (software generated):

Alan Olsen

Welcome to American Dreams. My guest today is Derek Lobo. Derek, welcome to today’s show.


Derek Lobo

All him great to be here, man.


Alan Olsen

Derek you have a new book you’re putting out. But let’s let’s go through a couple areas I want to touch on. So you’re an immigrant. And you have a very interesting story. Maybe we can start out by talking about your experience in life a little bit and how you arrived at the point you came to today?

Well, you know, Alan, my I think my story is the same as a lot of people right to a large percentage of the population in North America sort of has sort of moved here. I was lucky, I moved at a relatively young age, I was eight years old. Right?

So that allowed me to sort of know the old country, but sort of, you know, learn learn the new world better, right. And then and I think that, for me, I had a, a typical middle class upbringing, okay.

And you know, as, as me probably like you as a baby boomer, maybe towards the, you know, the tail end of the baby boom, when it came to home ownership.


Derek Lobo

My first house was three times my income. Okay, today for my children, and my grandchildren. That number is 10 to 15 times their income. Right? So housing has become a problem. And when we first moved here, housing was plentiful, you know, my father got a good working class

job, we could afford a decent place to rent. After one year, you know, we were able to afford a house and things like that. So I think for housing ownership, that dream for for newcomers, is broken. Okay, and is broken for their children too. So we can’t just say it’s broken, we’ve got to rethink it.

And so what I’ve had them and when I bought, I’ve written the book, a vote is the mind shift that we need to have about homeownership. Okay.


Alan Olsen

So we didn’t talk about your book today. But before we get into that, I want to talk a little bit about life and legacies. So fast forward, you’re 93 years old and your deathbed, how do you want to be remembered after this life?


Derek Lobo

Oh, that’s that’s such a great question. Because I went through this. Okay. So in my day to day profession, I’m a commercial real estate broker, I sell apartment buildings, I work for large developers. Okay. I kind of and I say this jokingly, and there’s no, I helped make wealthy developers wealthier.

That’s my job. Right. And I thought this the question you asked me, I thought it’d be 105, maybe not 92. But you know, whatever that date is, right. I said, What’s the legacy I’m leaving behind? Well, there wasn’t that much of a legacy. Right. And so I asked myself that and we all do ask ourselves question, right?

How do I sort of make a difference? Well, I had an expertise in rental housing, we have a crisis in Rental Affordability, right? In most of the world, probably. And I thought, if we let government solve this problem, it’s just gonna get bigger and bigger and more expensive.

Right. So how do we solve this problem of the government? So the legacy is this rethinking that I’ve had and gone through, called the self funding house, and the subtitle is rebuilding the dream of homeownership. And it’s specifically aimed at Gen Xers millennials and things like that.

But But I think it’s pretty broadly based. So it’s my legacy. This this book. Yes.


Alan Olsen

Excellent. So what now what type of projects are you working on right now to build your legacy?


Derek Lobo

Well, the book is not just a book, the book is the beginning of three books. So there’s one book on the mind shift. There’s the second book on how you do it. Okay, so the first book is called the self funding house. The second book is called the blueprint for the self funding house.

That’s how you do it. And it comes with a learning portal with all the instructions to do it, whether you’re a contractor or a builder or a do it yourselfer. Okay. And the third book is a policy book. And that is the stakeholders of the self funding house.

What do municipalities, politicians, planners, and lenders have to do to facilitate policy that will quickly solve the self funded the housing crisis? Right, and this is a big problem, and it’s multivariate Allen, right. So there’s no one solution to it. But I thought, what’s the biggest, fastest, cheapest, easiest way to solve this?

That is to get the common man involved? Right. And then you create an army that’s scalable, and that’s that’s kind of what my thought was the philosophy behind it.


Alan Olsen

Yeah, the self funding house is intrigues me. And you know from a title and Is this something that a lot of people can do?


Derek Lobo

I’m saying that this is something everybody can do if they choose to do it. Okay? Because it’s like the technology of building a house, or building a laneway apartment or accessory dwelling unit and adu is 100 years old, right? We know how to build houses and building them for a long, long time, right, the materials have changed.

But essentially, that technology as it exists, it’s the mind shift change for someone who wants to own a house that otherwise thinks they can’t. Fair enough.

And basically, it is you build a unit and accessory dwelling unit within your property legally properly, that revenue that you get from that unit will allow you now to buy a house you could normally afford or Allen, buy a bigger house than you normally couldn’t afford, right.

And now, if you think about that house is maybe Lego blocks, okay? And let’s say there’s three units in it, you might live in one unit at the beginning, and then you might switch to the larger unit as your family grows, then you might take over two units, right?

And you might, and then you might take all three, and then as your children grow up and you retire, you go back to renting it again for additional income, right? So think about it as this, these blocks on top of each other. Like, everybody knows someone who’s done this, this is not a new idea.

Okay? I mean, you think about probably your grandparents, your great grandparents and so on when they came, you know, to the new world, right? They shared housing, they, they that two families lived together until they could save up enough money to buy it, whatever.

The it wasn’t a bad thing. And now and here’s what made it particularly meaningful for me. The very first house I bought was a triplex. I bought a house and I triplex that I lived in the basement apartment. Okay. And then when I got married, my wife and I, we moved up to the middle apartment.

And then so I mean, an upstairs tenant and a Downstairs Tenant, right? My upstairs tenant married my Downstairs Tenant,


Alan Olsen

You’re quite a matchmaker in there.


Derek Lobo

It’s unbelievable. I went to their wedding, they came to my wedding, they, they babysat my children, I interviewed my first tenant, for the book. And it was amazing. And it was 30 years. And I called her up. And she started telling me how she thought about the house.

Right? So I also think that so what this does is it creates a model for someone to buy a house or young person. Fair enough, it creates affordable housing for the tenant to live there. Because this isn’t the palace in the sky costing four or $5,000. Right? This is a $1,000 $2,000 rent that we’re talking about here.

Right? So if it solves two problems, it helps the young person or wherever it is by house, it creates affordable housing. Okay. But the other thing that it solves is it actually generates money for the government, instead of them spending money because now you’re paying taxes on the duplex.

Right now remember, the infrastructure is all there on the road? Is there the lights? Are there, the schools are there the plaza is there, the transits there, right? It really is about optimizing infrastructure. Right. So it’s good for everyone.


Alan Olsen

You know, Derek, you are you have a niche practice in the real estate market. But this, this business in itself, is kind of one off what you normally do, yes. What really caused you to write the book?


Derek Lobo

You know, you’ve asked me this in two different ways, right? You’re clever interviewer. I wanted to make a difference. I just want to make a difference. This was my passion project was my Saturday morning project, right? And I thought, I never thought like, I’m a business guy. I’ve got employees, and I didn’t think about money, right? I thought about a moonshot. And in a moonshot, you can think about money. Right? You anybody knows what I mean by a moonshot, right? So number one, money wasn’t my issue.

Number two, I didn’t know where this was going. Okay, I trusted I said, like, everybody I told and everybody I told the idea of, right. The self funding I was I got that idea early. The title. I just got encouragement from people right here. Derek, I know what you’re gonna do with this.

I don’t know what’s going to happen. But it was one of those things where I said, I’m just going to start. Yeah, and I thought there’s one in 100 chance one in 10 chance it would work.


Alan Olsen

Now that you got the book out, who’s who’s your target audience then up?


Derek Lobo

Audience is, is the younger person, probably someone that 20s 30s 35 somewhere, but it’s also their parents. Alan, you’ve got seven kids and 21 grandchildren. Okay? This would be a great stocking stuffer. Right? It’s to say, look, I start thinking about a house now.

Right? I’m not talking here about LM changing neighborhoods, you’re going to drive buying that house is gonna look the house next door. This my point, right? We’re not where we’re talking about good urban design. We’re talking about following planning guidelines.


But a mind shift has to occur at many, many levels. California has had it they allow ad use in California, right backyard houses, accessory dwelling units are doing 24,000 units built last year, there only 1000 units built, I think in 2016. Right. So when municipal planning gets now.

It’s formed all kinds of entrepreneurial ventures, right developers in our building property managers who manage them and things like that.


Alan Olsen

What are the biggest stumbling blocks encountered when crafting your message?


Derek Lobo

I think I’m not sure there’s a the biggest stumbling block to the self funding house. I’ll tell you by way of a story. Okay. So when I bought my triplex and converted the house, I wasn’t married, right. I started dating a girl who’s now my wife, but I came with a triplex. Fair enough. She dated me I came with a triplex right. Had I not on that triplex and I had married Celia. And I don’t think she would have allowed me to triplex our house, because she would have been afraid of

tenants. Yeah. And that’s this weird thing that people have they are afraid of tenants. Well, you know, I think that’s more of a media story in a movie star. Like I’ve stayed in 100 hotel rooms, okay. I’ve never trashed one. Not yet. Okay. I’ve been in hundreds of Ubers.

I haven’t, I haven’t spilt my meal all over the backseat. People don’t do that. Okay, people generally take the bribe. But here was the one trick I learned. When I was renting the triplex, whoever I rent it to, I visited them at the house they lived in. That was my number.

Look, I did credit check, landlord, checking all that sounds easy to do, okay, but I would actually go to their house and Zelicah just the neighborhood, we’ve got to fill in the lease. And I go and look at the house, you can tell a ton by how somebody’s living. Fair enough.

And then firm but fair property manager, I can tell you, I’ve never had a tenant problem. In the years I lived in that triplex. I’m thinking I had maybe eight or 10 people, I would say every one of them today, if I may stay in touch with one of them in particular.

But I would be happy to meet all of them, and all of them would be happy to meet me. Right. The other thing that my former tenant told me said there by you living in the house, I knew you would take care of it. It was your house, your family was here and the interesting.

That was actually a bonus. I was living there. Right. Not necessary. That’s essentially how people think. And then when the Downstairs Tenant married the upstairs tenant, they moved downstairs, she found me a new tenant for the upstairs, because she cared who lived there.

You see my point? So it was like, she felt like she was a stakeholder in the house.


Alan Olsen

In a way Derek, what you’re doing here seems like a global message. It’s absolutely huge. Are you looking for help from others?


Derek Lobo

You know, I am a commercial real estate broker. Okay, I’ve written a book that maybe it’s a bit of a nerve. Okay. What I would love to do Alan is to just get this message out there. Okay. And it’s not just an it’s not just an American story.

Okay. I could see all visualize someone in Kenya building a thatched hut and building a small one beside it, sharing the same driveway and roadway, right? It just makes so much sense. Yeah. So I would welcome people who want to join this, right. As I said, I didn’t have a financial mission.

When I started this, I had an idea of saying, this was my story. So it was kind of romantic for me, you know, when I was young, and did this thing when we got married had about our first children. I work in the rental housing business. So I understand the shortage right?

And then I guess what excited me was the an Alan, you’re an entrepreneur, right? So we kind of have these ideas. And we love connecting ideas together, right? So when I was able to connect the shared economy idea, with the idea of we have enough capacity and capability in the world to do this, right?

We want to have exponential growth because you can’t solve this problem over 2030 years. It’s got to be solved quickly, right? And building big buildings just takes too long. And then the idea of the online learning portal, okay, was to say, okay, the book that the idea of the book have a true picture of it.

Here’s, here’s the book self funding. It’s only about 110 pages. It’s a two hour read. It’s a 90 minute read, okay? This isn’t one piece. It’s simple, right?

The second book will be probably about the same length, right, the blueprint for the self funding house, but it’ll come with a learning portal that you can subscribe to a lot of the detail that you need, right? And the third book and I’m writing this order is is the one that we need to write for the stakeholders because

this is a solvable problem. There is enough land. There is enough everything here, right? We just need to get financing politicians policy people lined up thinking the same way. And I think this could this could move quickly.

If there’s the political will, but then we also have to inspire the, you know, us the common men, right to do this. And I love the idea island of aging in place, you know, I did wind up selling that triplex. And I regret selling it.

Because if I still live there today, my kids are growing up, they married, I wouldn’t be renting those apartments, again, preparing for, you know, I can age in place. So I was a single guy living in the basement.

I was a married guy living on the ground on the middle floor, there was a family guy living on the first and second floor, there was a business guy. So I converted my basement to an office when I first started my business, right.

And then when the business got too big, I moved out, we use all hubs, but I couldn’t go back to reconverting it again, right? Or Island. My children when they got married, couldn’t live there. Golly, gosh, you have 21 grandchildren.

What would it mean to you one of your grandchildren, when they went to college, came back to your town and lived in one of your units is on there. So I just see this as just my story, a business story. Right, and, and a real problem.

And they just came together that we wrote the book in about, I’m gonna say eight weeks it flowed? It just looked. Yes.


Alan Olsen

Well, congratulations on the spec. And for those who want to get a copy, how would they go ahead and do that? Derek?


Derek Lobo

Well we have a portal or a landing page called the self funding house And you can go there and you can preorder it, and and also, we’d be delighted in your feedback on it. We’d also like to hear your thoughts on what needs to go into book two, and two, Book Three.

But the first part was the mind shift. Right? How do you become a homeowner today? Well, it’s becoming a landlord. Right? And then I say this, that your first house is also your first business, Alan. Because now you’ve got to file taxes, you’ve got to take track income, right?

And I would say that had I not converted that house in my 20s. I wouldn’t be where I am here today. It started teaching me about the fundamentals. Simple enough, one unit two units, right. But it started teaching about marketing. I had to rent the apartment.

It taught me about sales. It taught me about you know what I mean? Like yeah, all the business skills you need for business can start with this. So I say to people that your first house, maybe your first business as well.


Alan Olsen

All right well Derek thanks for being on today’s show. And it’s been wonderful having you here and talking about your new book, The Self Funding House.


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    Derek Lobo on Alan Olsen's American Dreams Radio
    Derek Lobo

    Derek Lobo is the CEO & Broker of Record of SVN Rock Advisors Inc., Brokerage, a boutique commercial real estate firm with an exclusive focus on the purpose built rental and student housing industries. Derek started consulting in the apartment industry in 1986 in response to the growing need for industry specific products and solutions, and I’ve been a passionate part of the purpose built rental community ever since: There’s no part of the industry he hasn’t been involved in. His current focus is on assisting developers with feasibility, lease-up, and sales, and JV structures but has spent 30 years of experience to bring to the table for any developer who wants to make their development a success. Outside of work, Derek is passionate about health and fitness. He also is the proud father of 3 daughters, and grandfather to 8 grandchildren.

    Alan Olsen on Alan Olsen's American Dreams Radio
    Alan Olsen

    Alan is managing partner at Greenstein, Rogoff, Olsen & Co., LLP, (GROCO) and is a respected leader in his field. He is also the radio show host to American Dreams. Alan’s CPA firm resides in the San Francisco Bay Area and serves some of the most influential Venture Capitalist in the world. GROCO’s affluent CPA core competency is advising High Net Worth individual clients in tax and financial strategies. Alan is a current member of the Stanford Institute for Economic Policy Research (S.I.E.P.R.) SIEPR’s goal is to improve long-term economic policy. Alan has more than 25 years of experience in public accounting and develops innovative financial strategies for business enterprises. Alan also serves on President Kim Clark’s BYU-Idaho Advancement council. (President Clark lead the Harvard Business School programs for 30 years prior to joining BYU-idaho. As a specialist in income tax, Alan frequently lectures and writes articles about tax issues for professional organizations and community groups. He also teaches accounting as a member of the adjunct faculty at Ohlone College.

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