Multifamily Investor Expo 2023 Keynote Address

Martin Muoto opened the Multifamily Investor Expo on February 15 with a keynote address touching on his unique background and the opportunity that currently exists in multifamily housing.

Keynote Presenters

• Jimmy Atkinson, WealthChannel
• Martin Muoto, SoLa Impact

Keynote Highlights

• Background on SoLa Impact, a major real estate developer in Southern Los Angeles focused on areas that have historically been avoided by investors.
• Martin’s unique background growing up in Africa and seeing the impact of poverty.
• The importance of using “every tool in the toolkit” to give everyone access to education, information, and wealth creating opportunities.
• Why the best opportunities can be found in niches that others overlook.
• How SoLa is guided by the principle of “Doing Well by Doing Good” and committed to breaking the cycle of poverty in the communities where it invests.
• Live Q&A with webinar attendees.

Connect With SoLa Impact

• SoLa Impact – Official Website
• SoLa Impact on LinkedIn
• Martin Muoto on LinkedIn

Keynote Transcript

Jimmy: Now, I believe that multifamily can be a great investment that can help a high-net-worth investor protect and grow his or her wealth over the long term. But multifamily is more than just a great investment. It is housing. It’s someone’s home. And it’s a crucial societal need that, frankly, this country needs a lot more of, and particularly, the need is often greatest in places where it’s hard to build and hard to form a community. And that’s why I’m really excited to introduce Martin Muoto, founder and CEO of SoLa Impact as our keynote speaker.

Martin began investing in real estate in South Central Los Angeles, Compton, Watts, and other neglected communities more than a decade ago. And today, Martin’s firm, SoLa Impact, is the largest purchaser of multifamily apartments in South L.A. And their double bottom line funds have been improving the lives of thousands of residents in some of Los Angeles’s toughest neighborhoods. Their $100 million Opportunity Zone Fund was recognized in 2020 as the nation’s leading urban OZ Fund. Martin, there you are. It’s great to have you join us on “Multifamily Investor Expo” today. How are you?

Martin: I’m doing well. Can you hear me okay?

Jimmy: We can. Yeah, we can see you, we can hear you just great. So, if you’re ready to deliver your keynote address, please take it away, Martin.

Martin: Well, it’s not so much a keynote, but just welcome remarks. And Jimmy and Scott, you guys have done an incredible job of putting together some high-quality content. I’m looking forward to hearing some of the other speakers. And I’ve been a big fan, Jimmy. I think you were one of the very early folks that really started to try to understand the Opportunity Zone opportunity and really share that knowledge with your ecosystem. And I think that was great, and you were certainly a pioneer in that regard. So, I’m really pleased to participate in this incredible session with WealthChannel.

Jimmy: Thank you, Martin.

Martin: With that, I’m gonna just very briefly try to give you a bit of the history of how I got into investing in multifamily, investing in Opportunity Zones as a vehicle. And then, you know, a very brief outlook on what’s happening today. We only have about 10 minutes, so I’m gonna try not to throw everybody off their agenda. But as Jimmy referenced, I run SoLa Impact. We are now on our fourth fund, which is a side-by-side Opportunity Zone Fund, a Non-Opportunity Zone Fund focused in areas that are both Opportunity Zones in spirit, and in reality, and in the legal sense, meaning these are areas that, historically, folks have not invested heavily in, and in many respects have avoided for a number of reasons. And they’re exclusively black and brown communities. We focus very heavily in California, where it is very difficult to build and there’s a very limited supply of housing, and therefore, there’s this incredible opportunity and this incredible need for high-quality affordable housing.

My journey in getting here was perhaps different. I grew up in West Africa, and I saw firsthand the ravages of poverty. I grew up very modestly and saw what the impact of the lack of hope and the lack of opportunity, and in many respects, because I lived in northern Nigeria, which ultimately became the groundswell for things like Boko Haram, I saw what the lack of hope and the lack of education led to. And it really singed in my mind the importance of really using every tool in the toolkit to give people access to education, access to information, and access to jobs, and wealth-creating opportunities. And so that was really a guiding principle in much of my life.

But I came to the United States a little bit over 30 years ago, and I came with $440 and a suitcase and a return ticket back to Nigeria. My parents could not afford to pay anything towards my education, but I was fortunate in getting a full scholarship to go to the University of Pennsylvania’s Wharton School of Business. And that changed my life. And I spent the first half of my career broadly in investing in technology companies. I was with a firm called Gartner Group, and then subsequently with a private equity firm called General Atlantic partners. General Atlantic has been responsible for some of the household name investments from Uber to Facebook to Priceline to Fandango. And while I was there, we worked on Fandango, Priceline, and a lot of incredible investments.

What I did learn was how to analyze macro trends and how to analyze patterns, how to use data to look for investment opportunities. And what you learn is that really the best opportunities are found in niches that other people overlook. And I think that that translated was I left the private equity world and started investing on my own, and ultimately landed in real estate. What I saw was that a lot of the true Opportunity Zones, areas that have been historically overlooked and underinvested in are some of the best niches to invest in. And when you can couple that with the ability to impact your community and your tenant’s lives positively, you can really make a material difference and provide a good financial return.

Our motto at SoLa from our outset has been “Doing well by doing good.” By the way, it’s not doing well and doing good, but it’s doing well by doing good. And we have been able to bring that to life in our strategy we believe in. Back in 2006, 2007, I was investing in multifamily sort of on nights and weekends. I actually was doing private equity investing and operating companies still during the day. But I started buying apartment buildings in Venice, California, which at the time was a little bit dog-eared and then became one of the hottest markets in the L.A. among L.A. neighborhoods. I invested in Echo Park, which also did very well.

But I started really looking at the data and it led me to areas like South L.A., where on paper, the numbers looked incredibly good, the GRMs, the price per square foot, the cap rates, the proforma cap rates, everything that traditional real estate investors look at. On paper, it said, “This would be a great place to invest.”

I started spending time in South L.A., which is really a euphemism for South Central and learned that… You know, everybody was telling me, “Well, where are you investing? Well, have you lost your mind? You’re gonna have bad tenants, you’re gonna have crime, you’re going to be dealing with drug dealers and pimps.” And, you know, I said, “Really?” An entire community has this stigma. And what you realize is that people were judging communities like South L.A., Compton, and Watts from things that had happened 20, 30, 40 years ago, the crack, cocaine epidemic, the Bloods in the Crips, the L.A. riots.

And so certainly, while there were certainly some elements to consider, I realized that they were 97.3% wrong, 2.7%, yes. There were tenants that gave me a run for my money. But really started investing there with that central thesis that the vast majority of people were good, hardworking people that wanted a safe place for their kids, and if you could give them a good rehabbed, refurbished property, you could get them to work with you. And that has spawned multiple funds now with a true intention and demonstration of social impact.

We last year launched an entrepreneurship and technology center with the help of Riot Games. This is a 13,000-square-foot state-of-the-art facility. We have over 1,000 young people that go through there on an annual basis. While it is technically run by our affiliated nonprofit, it is part and parcel of our strategy, which is that, look, we want to build, we want to preserve affordable housing in Los Angeles, but we really want to use other tools to ensure that we’re breaking the cycle of poverty.

And we now have multiple funds raised over $400 million of equity, almost $500 million of equity. We will have deployed close to $2 billion using leverage. A lot of that is, you know, leveraging the Opportunity Zone vehicle which forces investors to have a long-term perspective and really encourages them to invest in areas where capital is really desperately needed.

And that is perhaps the shortest summary of a very, very long, involved, exciting, and very purposeful journey that we’re still on. We still have a lot to learn. We’re still continuing to refine our model, but it really has been incredible, and along the way have made incredible relationships with investors that have joined shoulder-to-shoulder looking for great financial returns but also caring deeply about the social impact mission of what we do. And so with that, I will pause to see if there are questions, but really appreciate the opportunity to share part of that journey with you all.

Jimmy: Yeah, that’s great. Well, thank you, Martin, and thanks for being here with us today. Great opening remarks. Really appreciate the time you’ve taken to spend with us today. By the way, if you do have any questions for Martin or for any of our presenters throughout the course of the day, please use the Q&A tool in your Zoom toolbar to submit questions. We’re gonna try to get as many questions answered as we can.

Martin, we’ve got two or three more minutes left. A question for you is, you’re on this journey, as you mentioned, what does the end of the journey look like? Or what does success look like along the way for you?

Martin: Well, one of the things I often say is, look, we have been able to work with a lot of nonprofits in our journey that are soldiering away doing the good work that they do. But the thing that I want to do is put myself out of business in the sense that we wanna solve some of the problems that have been plaguing these communities, the lack of access to education, lack of access to jobs and capital, and improving ownership rates and providing access to home ownership and other types of ownership.

So, what success looks like, for me, is getting out of business, and at least having made very meaningful improvements in these communities so that they need us less. And while we will still always face income inequality and other issues, I think that free enterprise, capitalism, Opportunity Zones, and other of these tools can really meaningfully impact communities like South L.A.

Jimmy: No, 100% agree. I love free-market, capitalism. One more question for you before I cut you loose, Martin. This one comes from Andy. He asks, “How can investors or anyone really get involved with or support what you are doing at SoLa Impact?”

Martin: You know, look us up on the website. We just closed our fourth Opportunity Zone Fund. We are deploying that very quickly. We’re actually about 70% deployed. So, we will certainly have future funds coming up. But the truth is we also say we want people to beg, borrow, and steal our best ideas. We want them to implement them in Philadelphia, in Atlanta, in Tulsa, in wherever. And so, you know, we hope we have imitators, replicators, and folks that take some of what we do and maybe do it much better in their community. So, that to us is also success.

Jimmy: That’s terrific. Well, Martin, again, thank you so much for joining us. It’s great to see you again, too. We’ve collaborated on numerous events over the past several years, and it’s great to have you here join us and give the opening remarks at “Multifamily Investor Expo” by WealthChannel. Thank you so much, Martin.

Martin: Thank you for having me, Jimmy.