Stefan Schimenes: Using AI to Improve OZ Investing

Stefan Schimenes

How can AI be used to improve Opportunity Zone investing?

Former AirBNB executive Stefan Schimenes founded InvestReal last month with a mission to create the first data-driven real estate marketplace for Opportunity Zones, using AI to support investment decisions with data from numerous sources.

Click the play button below to listen to my conversation with Stefan.

Episode Highlights

  • The two components of InvestReal — 1) a network connecting investors and developers; and 2) a data platform for analyzing Opportunity Zones.
  • Some of the biggest mistakes that Stefan sees early OZ investors making.
  • Why there is a need for better real estate data.
  • How InvestReal scores Opportunity Zones and classifies them into eight different segments.
  • How real estate data can be applied to business investing.

Industry Spotlight: InvestReal

InvestReal

InvestReal is a data-enabled marketplace that connects Opportunity Zones investors with real estate developers. Their data platform allows its users to utilize advanced analytics and data to analyze Opportunity Zones throughout the country using 88 key indicators.

Learn More About InvestReal

About the Opportunity Zones Podcast

Hosted by OpportunityDb.com founder Jimmy Atkinson, the Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in opportunity zones.

Show Transcript

Note: This podcast episode was re-recorded for better audio quality. The transcript below is from the original recording and therefore does not match the new audio perfectly.

Jimmy: Welcome to “The Opportunity Zones Podcast.” I’m your host, Jimmy Atkinson. In these early days of the Opportunity Zones program, there has been an influx of interest from investors who are seeking the amazing capital gains tax benefits that the policy offers. But many of them don’t have real estate portfolios or relationships with developers. And on the other side, there are thousands of real estate developers seeking Opportunity Zone capital, and that’s where InvestReal comes in. InvestReal is a data platform for Opportunity Zones that helps connect investors with developers, and I have the pleasure today of speaking with InvestReal’s founder and CEO, Stefan Schimenes. He joins me from his office in New York City. Stefan, thanks for joining me, and welcome to the podcast.

Stefan: Thank you. Pleasure to be here, and it’s a pleasure to be a part of your podcast, for sure.

Jimmy: Yeah. I’m glad that you’ve joined us today. I’m excited about our conversation. So to start us off, could you tell me and my listeners what is InvestReal and what was your impetus for starting it?

Stefan: Well, I see you’ve already made an incredible introduction. I should try to hire you.

Jimmy: Thank you.

Stefan: But it’s like…so InvestReal is a data-enabled marketplace connecting Opportunity Zone investors and developers. So, as you mentioned, Opportunity Zone is a billion-dollar industry that was created by Donald Trump signing a law, right? And on one hand, like, it just created a lot of interest from investors to put their money into work and, like, be a part of the program. On the other hand, we’ve got a lot of developers who have projects inside Opportunity Zones and are looking to just take advantage of the opportunity and raise equity money with those investors. But the problem is the country’s a very big country and there are 8,700 Opportunity Zones out there, a lot of projects, a lot of investors, how do you connect A to B? So we basically are the platform that connects investors and developers, and we’re just basically trying to build efficiencies into this new industry by connecting A to B very efficiently. And also, what we’re also doing is we’re empowering transactions by utilizing advanced analytics and data by analyzing all the Opportunity Zones that are available in the market and basically providing an analysis on each one of them through over 88 different indicators and scoring them against each other. So whenever an investor sees a project, not only does he see, like, a potential return, a proforma from the developer, he also has a substantial amount of information from our platform that helps him understand that neighborhood, that area without even having to be in there. So anybody that goes to our platform becomes a specialist in that given neighborhood without even having to visit it.

So answering what was my impetus for launching InvestReal, so basically, first of all, I’ve got a lot of experience in building marketplaces. Oh, I think I’ll tell a little bit more about my background later, but I build marketplaces in my life. I know how to build this, and I had seen that there’s this massive need on a market. And my previous company, which is basically we were doing, like, almost like a real estate quant fund where we were using the technology that now we’re leveraging for InvestReal. We were using that technology on a proprietary way to acquire and buy real estate all across the U.S. So when the law came into play, we realized that our technology that we were using only for ourselves, for own fund with our own money, could basically empower this industry and really help both sides of the marketplace. So that’s kind of what we decided, like, we had the right technology, we had the right team with the right expertise, and so a really interesting market meeting, so that’s why we decided to create InvestReal.

Jimmy: That’s great. I wanna tap into those 88 indicators that you mentioned that go into your analytics platform. And you briefly touched upon your background. I wanna hear a little bit more about your background first, Stefan. I know you’ve got a German name, Stefan Schimenes, but you are originally from Brazil, is that right? Where are you from exactly, and tell me a little bit the story about your career path, how you got to where you are today?

Stefan: Yeah, absolutely. So even though I’ve got a German name, my full name is Stefan Iket [SP] Schimenes. I’ve got German roots. I’m a German-Swiss-Polish-Brazilian individual, so it’s a big mix, and I was raised in Brazil only speaking German to my mother and English to my father. So I was raised even, like, in a German school and German church, so I kinda have, like, this interesting background. My father had built his own business, so I was very much inspired by my father. And, you know, like, since I was in college, I realized, like, I never really wanted to work for anybody else. I decided I wanted to be an entrepreneur and started building my own businesses. Like, for example, I’ve done different things in my life. At the beginning, I was very young, like, 20 or something, nothing was very successful. A few of them were very cool, like, from traveling to Africa in a humanitarian trip, and on my way back, I had bought a bunch of handcrafted goods that I just wanted to give as gifts to my family. I built a business out of it by selling, like, handcrafted goods as high-end furniture and built a sustainable business on, like, traveling to Mozambique and enabling this very interesting business out there where it’s, like, buying furniture in Mozambique and exporting it to Brazil in a sustainable concept. It was really cool. I had done that then, but I really couldn’t scale the business, I was very young. So I had also went to work for my father’s company for a year, realized I couldn’t do that.

I couldn’t work for my father, so I openly started working with a German investor to build something else. And we started building a few businesses, and that’s when Airbnb decided to build the same international expansion back in 2011 and, somehow, Airbnb got connected to this investor I was working together with. And Airbnb recruited me to be the person in charge of the international expansion of Airbnb down to Latin America, so I built Airbnb in Latin America, was responsible for its growth. Like, right now, it’s a really cool thing, but at the time, it was a big absurdity. Not a lot of people knew what Airbnb was, and certainly, people in Latin America did not think that it was gonna be a success. It turns out, it’s, like, one of the most successful markets. I built Airbnb, and then I built another company after Airbnb which became one of the largest ad network companies, which is, like, a digital media marketplace which became one of the largest ones in Brazil, but then I wanted to go back into real estate.

A lot of people don’t see, but Airbnb, at the end of the day, it’s a real estate business. It’s just basically creating an efficient way of, like, renting out a new space, and I was very much impressed by how Airbnb was revolutionizing real estate. And I had this idea that, you know, like, real estate is the largest industry in the world, but one of the least sophisticated in terms of utilizing technology for investments. So I decided together with friends to create a technology that would enable us to be better investors than anybody else in the market using machine learning, big data, advanced analytics, a lot of people will call it artificial intelligence technology. So we did that, and we ended up, like, raising our fund which I had previously mentioned in my first question. We were buying real estate all across the country in the U.S., and by luck, we saw that our technology was perfect for the Opportunity Zones industry that we decided now to create InvestReal. So, as you could see, my background, serial entrepreneur, built different things specializing in growing businesses and marketplace businesses with a lot of expertise in real estate.

Jimmy: And I wanna talk with you more about your technology and your AI platform that you’ve developed, but, first, I wanna ask you a big picture question. What is your overall view of the Opportunity Zones program?

Stefan: No, absolutely. You know, I think it’s a very well-crafted idea. You know, I’m not really…like, some people say there’s roughly $6 trillion of unrealized capital gains in the U.S., roughly $507 billion of realized capital gains in the U.S. Even for the critics in the program that say it’s just a way of rich people to get even richer, you know, I think just the fact that you’re creating an incentive for someone to sell something and put the money to work on the economy and not by a government bond that would give you some fees or just buying, you know, like, a loan or something, you’re actually creating jobs. Because at the end of the day, the big thing about the Opportunity Zones is creating wealth, you know, creating growth for neighborhoods, and that will come through jobs, that will come through development, that will come through redevelopment. And redevelopment cities I think is an incredible idea, and I really believe, I’m very bullish that the industry, it will be a great success if everything turns out correctly as we all assume, you know, that the investors…or, actually, once the regulations come out, investors really start investing into it, which I believe they will and already are investing, so I’m very bullish on it. It will create economic development for sure.

Jimmy: I am bullish on it as well. That’s kind of what led me to create OpportunityDb was I believed in the program and I think it’s gonna do great things for this country. But we are in the early days right now, and we don’t have final regulations from the IRS yet, and we have been seeing a lot of mistakes being made and a lot of misconceptions. In your view, what are some of the common mistakes that you see being made by Opportunity Zone participants in these early days before everything’s clear and the marketplace has really developed?

Stefan: Well, a few things, like, I think the first mistake someone could do is hire a bad attorney just because it’s cheap and an attorney that thinks he knows a lot…The regulations are still pretty complicated, and some people can just make bad decisions right now that will have huge impacts on their taxes, right? The second thing I’m seeing which a lot of people in the industry are also discussing is, like, the blind pool funds are being created. You know, how are they actually doing this? Like, everybody is a little bit concerned of people that are just raising a lot of money but don’t have work to deploy them. And especially when you’re doing, like, big real estate private equity groups which you’re investing in multiple assets, I think it’s tough to do that before the regulations. I think this is…I have talked with a lot of attorneys, and they feel also pre-occupied with companies that are doing that.

Jimmy: Companies that are kinda moving ahead too quickly before the final regs are in place? But, at the same time, you can kind of appreciate where these private equity firms are coming from because there’s a little bit of a rush to get it on the ground floor, and there’s also some different time deadlines that they have to meet for their investors, the 180-day timeline, to be specific, from when the investor has to realize his capital gain to when he has to deploy it.

Stefan: Yeah, absolutely. I think, you know, like, at the end of the day, everybody, all of the…even us, right? And like I mean, I’m not saying it’s…I’m just saying for the ones that don’t have all of the plans set up yet, just doing it for the economic, you know, opportunity, saying, “Hey, just park your money with me and we’ll figure it out.” If they don’t figure it out, it can create a bad name for the industry. I’m not saying that everybody that’s raising a blind pool fund is doing it wrong, I’m just saying, like, you know, a few people, there might be one or two that are doing it, and if they are not able to meet all of their deadlines, there might be some problems, right? And I think it can affect the industry later on in the later stage.

Jimmy: Right. You’re right. No, the guest I had on last week was John Cochrane from the U.S. Impact Investing Alliance, and he made a similar point saying that he thinks there’s gonna be…that, you know, right now, we’re in a first wave of Opportunity Zone investing and setting up the marketplace, and he just hopes that there aren’t so many bad actors in this… I’m paraphrasing him now, but his main point was he was hoping that there weren’t gonna be so many bad actors in this first wave as to taint the second wave, which he thinks is gonna be very key to the program in the long term once we have the final regs and that second wave of capital starts pouring in once we understand the policy better.

Stefan: Yeah, exactly. You know, like, if you look at… As you all know, I mentioned I was first in charge of the international expansion of Airbnb, so I got Airbnb stocks and Airbnb IPO of my stock…and I got a lot of my friends who’s gonna be extremely wealthy, and Uber’s IPO, and the Lyft IPO, you know, all of those companies, having a lot of capital gains from individuals that were never rich before. They were paper-rich, but they weren’t…they didn’t already have a net worth. And so they might be eager and someone might just convince them that this is a good strategy and they can be big actors, but they don’t know better because they don’t have family offices. They’ve never done this before, and, you know, hope that in a few years, you don’t see an ex-Airbnb or an ex-Uber, Lyft alumni saying, “I put my money in this and it sucks,” you know?

Jimmy: Yeah. That would be a bad outcome to the program, and I hope that doesn’t happen. I’m sure it will happen in some cases, but, hopefully, the program ends up doing more good than harm.

Stefan: Yeah. I think it depends on the individuals, right?

Jimmy: Right. Right, that’s true. That’s very true. So, InvestReal, you started it because there was a need for better real estate data, essentially. So what was missing from real estate data? What data points are we typically used to seeing, and what data points are you starting to bring in right now?

Stefan: No, I think even…a lot of people are just…you know, like, there are 8,700 Opportunity Zones out there. What we’re trying to answer is which Opportunity Zones actually represent a good investment opportunity in terms of, if I’m staying in this area for 10 years, will I actually experience growth? Will this neighborhood actually experience growth, right? I think that’s really what we’re trying to answer, and we try to answer it through multiple different indicators. For example, one indicator is the quality of life. So how does the quality of life of someone who lives in one Opportunity Zone compares to all of the other Opportunity Zones out there? So, basically, the way our technology works is we score all of our indicators and we score the Opportunity Zones against each other in those indicators. Meaning, if someone in our platform has, let’s just say, a quality of life of 90, it means that it’s better to live in this Opportunity Zone than in 90% of all the other Opportunity Zones out there, right?

So, basically, what we’ve seen is we basically created a way for an investor or developer, like, a fund that will lend money to the industry to basically look at this and say, “How does this Opportunity Zone compare to all of the other ones in the country,” right? It’s really a comparison tool that allows investors to understand, and through comparison, you can actually build very specific investment strategies. Like, for example, going back to the quality of life. So if this neighborhood has a quality of life of 90, means it’s better than 9% of all the other Opportunity Zones. We’ll say, “Okay, it looks like it’s a better place to live in there.” And you might ask, like, “How do we calculate quality of life?” So we’d look at, for example, the income, we’d look at jobs, we’d look at crime, we’d look at commuting scores, we’d look at educational levels, which seems pretty straightforward but it’s not. Like, for example, if you look at crime rate, certain areas, for example, South Chicago has, you know, like, less crime than some areas which we would never estimate but the type of crime is very different, right? So we gotta create algorithms to try and understand which type of crime impacts their quality of life more than other types of crime. So, you know, like, we score it, and then, like, this is just one indicator, just understanding the quality of life.

The other one is, okay, but is the quality of life in this Opportunity Zone accelerating? Like, do I see a process of change to the extent of people that live in this area? So we call it a quality of life trend score. And then only one, the biggest ones we have is the what we call, like, the growth score. And the growth score is a little bit complicated, but it’s really important, which, at the end of the day, is how much return will I have compared to all the other Opportunity Zones if I invest in this neighborhood? Like, how much more will this neighborhood appreciate in comparison to all the other Opportunity Zones? And we basically built an algorithm that looks into the volatility in the market, it looks into forecasting growth in the market and health of the market as well. So we have, like, the smart algorithms that try to look…and we can very effectively say which Opportunity Zones are going to grow, experience the most growth.

And also what we’ve done which is, I think, very unique is we’ve created a tool for investors and developers to create very specific queries, and through those queries, being able to identify where you wanna be in. So we actually have a system where someone says, “Okay, I’m interested in investing in the areas that have high income, high growth, where rents are still high, rents are growing.” You know, you just really input what’s your investment strategy, and our system will output, “You should be in this area. This is the first area you should be in, this is the second one, this is the third one.” And through that, you can basically start looking for assets in those neighborhoods that would make sense from an investment standpoint. So, you know, I think, really, what we’re trying to do is bring clarity and helping investors compare if the Opportunity Zones actually make sense or not.

Jimmy: And it’s all based on that quality of life, is that right? Are there other components or are you mainly just looking at quality of life and then how it breaks down in terms of income, job…?

Stefan: It’s a lot. So, for example, if I’m printing a list of all the components that we’d look into an investment, we have, for example, quality of life, quality of life real score, the growth of the neighborhood, rent real scores, occupancy levels in the neighborhood, historical value of real estate in the area, median household income, rent price roles, volatility on the market. So, volatility, we’re talking about, like, expected shortfall, value of risk, crime levels, educational levels, income trend scores, building density, … structure build. It’s really a lot. Like, forecasting, as I mentioned, beta, rent resilience, market health, population growth rates. So it’s like a lot of it is public data, a lot of it is data we scrape, a lot of it is data we buy, so multiple…like, affordability index is rent affordability is price to rent, a lot of densification indexes, unemployment. So we look at a lot of stuff.

Jimmy: It sounds like it, a lot of data points that you need to cobble together to kind of put together a good sense of how Opportunity Zones compare to one another. Are you collecting these data points…at what level? Are you able to collect them at the census tract level, at the neighborhood level, or…?

Stefan: Almost everything we do is on the census tract level. So our platform is still talking about our business and all of the rents. So, like, we basically have the marketplace that connects Opportunity Zone investors and developers, and we also have, like, the analytics page. So from the analytics standpoint, investors can just…anybody can just subscribe to it, and we basically sell it. In the analytics platform, the data is on a metro area ZIP code and Opportunity Zone level. So we do all of those levels of analysis, ZIP code and census tracts.

Jimmy: And where are you pulling the data from? You said there are some public sources, but you’re also paying for some proprietary data as well. What are all the ways you get data?

Stefan: Yeah, a lot of it is just census data, you know, like, income. A lot of it, for example, crime, it’s like FBI, you know, where, like, FBI is just one of our crime indexes. We’ve got other…like, cities have their own. Like, the cities have some ties around crime data, they had the aggregated data, so, like, for crime to go to the FBI. For, like, market health, we have another company where we use our own indicators for average rents being practiced in the market, we actually scrape the web and we see…we basically analyze every rental listing in the U.S. to see what are rents being practiced in the area, so, really, a lot of different data sources.

Jimmy: And I was looking through your website earlier today, and I see that you were talking about how you can score each of these data points and the Opportunity Zone as a whole, I believe, an overall score on a scale of 0 to 100, and that is a way to compare how it scores relative to the other Opportunity Zones in the country. But you also classify each Opportunity Zone into one of eight different segments, is that correct? At least, that’s what your website…

Stefan: Exactly. So what we’re trying to do is try to make, like…each investor has their own…Let’s just say, like, we got the most comprehensive and detailed tool for someone who wants to do it, like Crazy Queries and, like, you know…or we would try to exactly create, like, the segmentation, which is more, like, a simpler way of aggregating data and a few things are very relevant. So we segment every Opportunity Zone into basically eight different segments. So, like, for example, so the first big segmentation’s urban and suburban, and each one of them, like, urban and suburban, we basically classify all of that based on income and density. So we look at income and density, so, for example, we look at strong urban markets over the ones that have high-density areas with high income and high growth rates. And then if you have, like, a slow urban or something that has…it’s still a high-dense area with low income and low growth. A stable urban is something that has a high density with high income and low growth, and an emergent urban is something that is high density with low income and high growth.

And we basically average it out. So, like, for example, if I go into stronger urban, when someone goes into our marketing, clicks on the strong urban, first, we have a map where we say which are all the strong urban Opportunity Zones in the country. So they can just scroll over in a map, and then we basically look at how many people live in the area, what is the household income, household income growth, and what is the average risk of investing in those Opportunity Zones compared to the other ones, so on and so on. So we have, like, the average indicators for medians and means to dual segmentation. So it’s a very powerful tool for an investor, you know, that basically has all the data science compiled into three very, very important things which is growth, density, and income growth.

Jimmy: And you do that for both urban and for…?

Stefan: Suburban.

Jimmy: Suburban/rural, yeah. And so what tools do you offer to your users who are using the analytics platform? I know you mentioned a map. What other tools do they have?

Stefan: Basically, we offer them a mapping feature and the ability for them to create queries. So that is basically a system where if I’m an investor, I come in, I create, like…I’ve got the map or I can just rank everything. So I come in here, and, like, right now, we’ve got, like, one, two, three, four, one… So, yeah, we’ve got a lot of different indicators, for example, high income, high population growth, … young people, close to city, a lot of different features, high education improvement, stable rent prices, affordable housing, where investors can basically create…just select one of those indicators that are relevant for them as an investor, and then they can just click if they wanna look for metro areas at closer Opportunity Zones, and then we will rank them for them. So it’s basically, yeah, the segmentation, the ranking, and mapping features.

Jimmy: Good. Yeah, so the ranking’s a little bit more specific and the segmentation’s just kind of like a quick glance, high-level overview of where the Opportunity Zone fits in. I gotcha.

Stefan: Yeah. Also, another two we’re seeing some interest is for developers or even funds that don’t…Let’s just say a developer doesn’t really necessarily needs to discover a lot of places because let’s just say he already has a project, so there’s no point for him to pay a license if he already has…Like, what they’re using our data for is to put our data as a third-party validation that their Opportunity Zone is actually very good and use that data in their offering documents, you know? So the other day, we had a meeting with a developer from a region which is just, for any given reason, investors don’t like investing in. And we talked to him, and after seeing our data and he basically saying, “Hey, I’ve got a project in the Opportunity Zone.” He gave us the address, and through the address, he basically clicked on…we basically saw the address, and the Opportunity Zone was very good. And he was ecstatic. He was like, “Oh, my gosh. … my Opportunity Zone is good because they just, not even because they just don’t like my market in the metro area. But I can see from your data, it’s actually an incredible market.” And so it was very powerful for him to do that.

Jimmy: That’s great. So you were providing that third-party validation, and that must’ve been incredible for him to see that, I’m sure.

Stefan: Yeah. Exactly. Another tool used is, you know, once investors are part of our membership, they can basically use their phones or even a computer to see this geolocation, to see if they’re actually inside an Opportunity Zone or not. And we basically show all of the Opportunity Zones surrounding where they basically are. It looks, like, pretty simple, but we haven’t seen an … like that because, a lot of the times, you know, you’re just walking the streets and it’s like, “Hey, is this an opportunity zone or not?” And it’s very tough to gather the map and figure it out, so we’ve got the geolocation where you’re just basically…like, you go through our platform and click on it, and you have access to are you in that Opportunity Zone or not.

Jimmy: That’s very cool. Yeah, I haven’t seen anything like that that uses a user’s phone’s geolocation. That’s neat. So who are your users right now, and how are they using the platform differently? How are investors using the platform, and how are developers using the platform? I guess you already alluded a little bit to how that one particular case is using it to, you know, highlight this offering.

Stefan: So we are a brand new company, so we lost very recently because before, we were using everything for a fund. What we’re seeing is the investors are using it to…You know, like, from the discovery, like, for example, we’re having tons of meetings with family offices, … like a multi-family office that works for helping their investors into real estate practice, right? So that kind of a family office, they wanna use our data. Sometimes, they know the area very well but the investor does not. So whenever they send a report, they can basically send a report of a given project with a third-party validation, so it’s been relevant even from the investor standpoint. The developers are definitely using our platform either to connect with investors. So, right now, we’re in a process of adding…like, we basically launched our company three weeks ago. We had three development projects on it. Right now, we’re adding, like, 15 to 20 development projects in the next few weeks, so they’re using it to connect with capital gains investors. And we also have, like, connecting with, like, all of the family offices out there who are dying to invest in the project. As we mentioned, there’s so much access and there’s so much demand for projects right now. They’re using it also to connect with developers. This one other thing is if you were an investor and you wanna have access, you’ve got capital gains. Right now, I would just find projects through your network, which is not efficient, and that’s almost it, right, or you invest in a fund. But if you wanna invest directly, you’re not gonna take 20, 30, 40 meetings to find a project that makes sense for you because, sometimes, you know, you just don’t physically have the time or even the network to do that. So that’s where we’re adding a lot of value to the investors, through aggregating all of those development projects that are available so whenever an investor can go to our platform and very easily fill out the ones you actually are interested in. Say, okay, there are, like, 20 projects in here. I’m interested in those two. Those are two that I will connect with and spend my time with. So we’re basically saving a lot of time for the investors.

Jimmy: Yeah, it’s an incredible service that you’re offering. The biggest challenge for funds so far hasn’t really been raising capital, it’s been finding good projects. So if you can automate or at least automate some of the process for, you know, funds and investors to screen these developments, that would help clear a huge challenge that funds and investors are having. But I wanna ask you, what is your biggest challenge in putting all of this together and putting together this platform and getting it to become widely adopted?

Stefan: Well, as I mentioned, I’ve built marketplaces before. Every marketplace out there, it always has a chicken and the egg problem, right? You need supply to build up demand, you need demand to build up the supply, right? So, right now, our biggest…it’s just resources whereas a company we’re a resource-constrained, because there’s just so many development opportunities and we’re just not reaching out to them. So let’s just say there’s someone in Kansas City that’s doing a development project. They haven’t heard about us, and right now, just because we’re resource-constrained, we sometimes don’t have any way of getting to them. Ideally, we wanna have as many projects as we can on our platform because the more projects we have on our platform, the more value it has to the investors, right? So that’s our biggest challenge right now, ensuring that we can get as many good projects in our platform as possible because the more projects we have, the more value it adds for the investor to actually go in and scroll through the platforms. And it’s just resource. We need more…like, we’re recruiting, so if anybody’s listening, you know, we’re always recruiting people in the business development team, let us know, you know? And if anybody’s listening to us and has an interesting Opportunity Zone project, please reach out to us. A little bit of marketing. I’m sorry. I can’t avoid it.

Jimmy: No, that’s fine. That’s fine. That’s what this is all about, giving you an opportunity to plug your product and service and letting people know about it, so I’m happy to help with that. So your platform, it’s clearly geared around real estate investing, and that’s been where much of the Opportunity Zones market has been investing in these early days before we have the final regulations. But do you anticipate that it could be used for venture investing as well?

Stefan: So I hear this a lot, right? Right now, we really wanna stay focused on real estate, though through the data perspective, we do believe our data can be some type, like, not…it might be very valuable for businesses, you know, especially…Let’s just take a startup out of the equation like in Airbnb, a tech startup or whatever, like an Uber. If you wanna build a factory, all right, like, if you wanna be something like this, you need some kind of data to help you understand, “Am I actually gonna find quality employees?” “Do I want my employees to commute a lot,” because we have commuting scores. So if I wanna build a factory, like, those kind of businesses, we might support them on the marketplace…so only for the data perspective. On the marketplace perspective, right now, we’re very focused on the real estate side.

Jimmy: Good. That’s understandable. And especially with the IRS regulations not being finalized yet, a lot of people aren’t really sure what’s gonna happen with business investing anyway. What are you looking for from the IRS in the weeks to come as we get ready for the final regulations to come out? Is there anything in particular that you’re curious about seeing more clarity on?

Stefan: Oh, I think one of the things that’s still a big concern is how debt will be treated for real estate. If I take my money out, what happens, right? Like, so that’s kind of one of the big things. And, also, the second thing is if I sell…like, the ability to recycle the Opportunity Zone money, right? I sell it as an Opportunity Zone fund, repurpose it, like, to another Opportunity Zone project, how is that gonna be treated? I think those are the two questions we’re hearing the most from investors and eager to hear how that’s being treated. But I think the debt part is almost the key part because debt is a key part of real estate, right?

Jimmy: It is, yeah. It absolutely is. Yeah, there’s probably 20 or 50, or even more topics that people are waiting to receive clarity on. It seems like everybody I talked to has two or three favorites that they wanna get more clarity on.

Stefan: Yeah. Yeah, exactly. I could build a big list, but I think I’ll leave that to the attorneys’ podcast.

Jimmy: Oh, sure. Yeah.

Stefan: Like, answer it with a full list, those are two, you know…

Jimmy: Yeah. Those are two of them. And, no, I think everybody listening knows that are a lot of questions out there I still. I just wanted to hear which one or two you were keen on getting more clarity from, so that answer was perfect. Thank you. Well, we’re getting toward the end of our conversation here, Stefan. I appreciate you having some time in your day to speak with me. But before we go, I wanna ask you a question that I pose to a lot of my guests, and that is what is your favorite investment that you’ve ever made all time? Is there anything in particular that stands out for you?

Stefan: Well, certainly the time and money I put into InvestReal for sure. I’m pretty sure it’s gonna be the biggest investment in my life. It’s gonna be the best one.

Jimmy: That’s awesome, like, the one that you’re currently invested in? That’s great.

Stefan: Exactly, exactly. It will be very profitable. But if you wanna put a second one, well, probably buying my Airbnb stock when I was in Airbnb, so that would be my second one.

Jimmy: In its relatively early days too, right?

Stefan: Yeah, yeah, yeah. So, hopefully, Airbnb will have a nice IPO.

Jimmy: Good. Well, I wish you luck in both of those, InvestReal and Airbnb. So InvestReal, you mentioned, just launched a few weeks ago in March of this year. Are you currently taking sign-ups now? Is your product ready? And where can listeners go to learn more about you and InvestReal?

Stefan: Yeah, yeah. It’s live, it’s ready. You know, we’ve got projects, we’ve got data, and anybody can just go, investreal.com. So that’s where you can find more information, and if they need anybody, they can just reach out to me directly. I’ll give my email. So my email is my complicated German name, [email protected] I’ll spell it, it’s [email protected] Do not feel shy to send me an email, so I’ll always try to be as responsive as I can.

Jimmy: That’s great. I love it when my guests give their personal email addresses. You’ll get spammed by everybody and all of my listeners now.

Stefan: … like, I used to…like, as we were mentioning, Brazil, I was giving…and in the U.S. because of the fund, we weren’t really talking to anybody, the media or anything like that. But then, Brazil, I was giving speeches and conferences, and I even gave my phone number and my email. Nobody called. … “Hey, guys, you can call me. No problems, I’m not busy. I’ll take your phone call as long as…you know, if you provide value, I’ll take it. And if there’s any way that I can provide value to you, so feel free to reach out.”

Jimmy: Well, I have a feeling you’re gonna get a few emails from my listeners, no doubt about that.

Stefan: I welcome that. Please, do.

Jimmy: Oh, no, yeah, I think it’ll be good for you and for my listeners. And for my listeners out there, I’ll have the show notes for this episode available on the Opportunity Zones Database website at opportunitydb.com/podcast. And you’ll find links to all of the resources that Stefan and I discussed on today’s show. I’ll have links to InvestReal, and, of course, I’ll have Stefan’s email address on there as well and exactly how to spell it so you can get ahold of them.

Stefan: Excellent.

Jimmy: Well, good. Stefan, it was a pleasure speaking with you today. And I know you’re gonna be in the Dallas area coming up next week, so I’m looking forward to seeing you there.

Stefan: Yeah, absolutely. It was a pleasure spending this time with you, Jimmy, and wish you all the luck, and see you in Dallas next week.

Jimmy: Will do. Thanks, Stefan.

Stefan: Thank you.

Jimmy Atkinson

Jimmy Atkinson

Hi, I'm Jimmy Atkinson... I founded OpportunityDb in August 2018. I'm a veteran Internet entrepreneur with a background in economics and Web marketing. I previously founded ETFdb.com. These days, I am passionate about impact investing and tax-advantaged investment opportunities. At the crossroads of these two ideals is the opportunity zones program, a place-based tax policy intended to economically transform some of the poorest areas of the United States with new real estate and business development.

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