JF1657: Using Real Estate To Raise Money For Non-Profits #SkillSetSunday with Adam Capes

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Adam is here to talk fundraising with us today. Not necessarily fundraising to purchase real estate, but rather for non profit organizations. Adam and his company use real estate to raise the money for different charities. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Adam Capes Real Estate Background:

  • Co-founder and president of Getaway2Give, a company changing the way non-profits raise money
  • Their mission is to be the best in the country at helping charities and schools raise money, they’ve helped raise over $10M so far.
  • Based in Atlanta, GA
  • Say hi to him at https://www.getaway2give.net/

 


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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Adam Capes. How are you doing, Adam?

Adam Capes: Doing great. How are you, Joe?

Joe Fairless: I am doing great as well, and looking forward to interviewing and having you on the show. A little bit about Adam – he’s the co-founder and president of Getaway2Give, which is a company changing the way non-profits raise money. Their mission is to be the best in the country at helping charities and schools raise money, and so far they’ve helped raise over 10 million dollars. They’ve got a real estate slant to their business, and we’re gonna talk about that. Based in Atlanta, Georgia. With that being said, Adam, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Adam Capes: Yeah, absolutely. Thanks, Joe. Our company, Getaway2Give – as you said, our mission is to be the best in the country at helping charities and schools raise money. We do that by putting together packages of vacations; we currently lease about 35 residences in 25 destinations, mostly in North America. We do have property in London, in Costa Rica, and some other experiences in places like Africa and Asia. But most of them are private two to five-bedroom residences,  that we do long-term leases on… Typically two-year leases, with the ability to renew those; we typically have renewed leases. We’ve been around about seven years, and we have some properties that we’ve been leasing for that long.

We’ve put together these packages that charities will put in their live auctions, typically. It might be a fortnight beach vacation in one of our two-bedroom oceanfront beach properties, and there’s a reserve on it, and the charity gets everything over and above the reserve, which is how we’ve been able to raise over ten million dollars for organizations. But as you said, we do it using real estate, and specifically vacation residences. The vast majority of those are owned by individuals that we have found that we lease the properties from. They love it, because they don’t have to worry about managing the home; they can still have some personal usage, and we work with them on that on a case-by-case basis… And they get a check every month. It’s totally turnkey, and they usually make as much or more than they would make if they rented it out. And as I said, we take great care of the properties. So that’s kind of the business model and how we help real estate investors, specifically in resort and vacation destinations, both make a wise investment, get a good return, and help make a big difference for lots of organizations, as we’ve raised over ten million dollars for charities since we started.

Joe Fairless: Wow. Was it your idea?

Adam Capes: Yeah, it was.

Joe Fairless: How did you come up with this?

Adam Capes: I joined a destination club back in 2003. A little over 15 years ago my wife and I, at the time, our daughter – we’ve since had a son – but we joined this destination club, which is kind of like a private country club, but instead of everybody having rights to go play golf or tennis and socialize, it’s rights to stay in vacation homes around the world. So I joined one of these destination clubs, and it was great from an experience standpoint; we traveled all over, didn’t have to worry about any issues of home ownership. It was a great alternative to home ownership, but it was mismanaged and the company went bankrupt… So I decided to start one that was built on a little more sound financial model, where we had very strict limits on the amount of debt we could take on.

So we did a luxury residence fund that’s still around today called Equity Estates. A few years ago – I guess seven years ago, in 2012 – the fund was fully subscribed, and I decided that I wanted to do something that didn’t cost in the hundreds of thousands of dollars, and have a private placement memorandum, a 120-page legal document that you had to go through, and just something that was much more affordable, that pretty much everybody could partake in, and have better vacations, save money and make a difference in the world by helping charities.

Joe Fairless: What is a greater challenge for your organization – getting landlords on board, or getting non-profits to participate? Or something else, that I didn’t mention.

Adam Capes: That’s interesting – the supply side or the demand side, and we’re scaling very quickly. We have a national sales force now of about ten people around the country that work with charities and schools, and I think I would say they can both be challenging. We have different challenges. On the demand side, with the charities, I think the challenge is this is very new for most of them. They are used to a model of just getting donated items for their auctions and trying to make 100% of what often times is a small amount of money… And what we are trying to show them is that it’s more of a capitalist business idea, that the non-profit sector is not always as open to.

Our properties and our packages are always no-risk. If it doesn’t sell for the reserve, nothing happens. The charity can’t lose. But getting them to understand that — you know, Dan Pallotta I think makes a great point in his TED talk, which is focused on non-profits, and he’s also got a couple great books on this topic. But he says “Would you rather have 100% of a $70 bake sale, or 70% of a $70,000 fundraiser?” Because a lot of the charities are so focused on what percentage is going to their cause, and not on the real dollars that are going to the cause. So that’s the challenge that we have on the demand side.

On the supply side, we kind of add destinations and residences as we need them, and I think it’s been getting easier for us, because we have over 400 members around the country that travel with us. We’ve gotten more people, even friends of members, that say “Hey, I wanna buy a place at this same resort in Costa Rica. If we buy it, will you lease it from us?” and we actually just did that. That is a real example. But we’re doing that in other destinations as well.

I think the supply side is getting a little bit easier. The challenge there is there’s a million non-profits on the demand side. There’s 1.5 million non-profits in the U.S. The supply side – there’s tons of vacation homes, but finding the right ones and having conversations with those homeowners is not always easy. So it could be that some of your listeners are interested in buying a vacation home for investment purposes, and using it, and we might be able to help them make that a live investment by leasing it from them for a period of time.

Joe Fairless: It seems like that would be pretty time-intensive for your side, when you’re talking to all these landlords and coordinating schedules, and blocking off, and then whenever someone gets there for a week, then you have to clean it up… What’s that like?

Adam Capes: Great question. We take over the property — so if a homeowner just bought a place in San Diego (true story) and they wanna go for a couple weeks a year, not a problem. They can book those out in advance, or whenever they know what dates they have, we build that into the lease. And then we manage the calendar. So we don’t go to them every time someone wants to come; we have a two-year lease (typical) and we manage the calendar, and our charity trip winners and our members stay there, and we have a destination manager on the ground that acts as a concierge and helps them with their stay, shows them around. They’re kind of a  property manager for us as well. They’re our eyes and ears, as well as the homeowner’s, to make sure that the property is being taken care of. Then we have housekeeping that comes in and cleans it up between stays, and makes it ready to go for the next guests. We do that all the time, 365 days a year.

Joe Fairless: Have you ever defaulted on a lease with an owner?

Adam Capes: Nope.

Joe Fairless: How do you commit to a two-year lease if you don’t have charities lined up to pay for that lease for the next two years?

Adam Capes: We know just based on surveying our members and talking with charities, we know what the demand-side wants, and there is so much demand that it hasn’t been a challenge for us. We’re not perfect; occasionally we will make a mistake and pick a property, a specific residence or a destination that is not as big of a home run as we thought…

Joe Fairless: Like what?

Adam Capes: We had one home where it was very vertical, a lot of stairs… A big house, but just a lot of stairs, and there was construction going on in the area that was kind of problematic, and just some issues with the house… So we waited until the lease was up and decided to move somewhere else in that same region, but to a different property.

Joe Fairless: So vacation homes and stairs – not a good match.

Adam Capes: Yeah, typically you don’t wanna have four floors. That’s a lot. I think the bigger issue, honestly, is vacation homes and loud construction next door, or in the general vicinity, where it could be bothersome, is not a good match. And that’s something we’ve gotta be cognizant about, especially in resort destinations that are growing and popular and expanding – there’s always construction going on, so we really try and make sure that we don’t have a property that is gonna affect the quality of the stay.

Joe Fairless: How do you screen for that?

Adam Capes: I’ll give an example – I was just in New York City; we have a property there. They’re building a huge building right near there – it’s a major corporation tower – but you can’t year it. So in places like major cities – really not a problem. And if there’s a ton of construction going on, like right next to the unit, we won’t lease it. We’d rather be somewhere where it’s not gonna be an issue. But that’s usually not a problem; that just happened to be the case with this one residence in the example, where we had to make a change.

Joe Fairless: What’s been the most desirable property?

Adam Capes: That’s a good question. I would say for the past year, in 2018, Costa Rica was up there. We have five residences there, so as a destination – hugely popular. There’s really no bad month to go to Costa Rica. You don’t have hurricanes, really, in Guanacaste, on the Pacific side. You have the rainy season, but it’s really great year-round, and eco-tourism is amazing, the temperature is great… So I think that makes Costa Rica — and also the people, and the beaches… It’s voted one of the top two or three happiest countries, best countries to live in every year, so… I’m a big fan of Costa Rica, and our charity trip winners and members are, as well.

Joe Fairless: What’s a success story that a charity has told you when they’ve auctioned off one of your trips? I’m specifically wondering really how much money has a charity raised on one package, that would be something that’s eye-opening?

Adam Capes: Sure. Do you wanna know what our record is?

Joe Fairless: That’s what I want. You’ve phrased it so much more succinctly than me. Yes, I wanna know the record.

Adam Capes: Our record is $118,000 in under three minutes.

Joe Fairless: $118,000… And what were they bidding on?

Adam Capes: We had four individuals or groups all purchase our private island in Belize, and they paid $40,000 each for it.

Joe Fairless: So those four groups went in together and purchased one private island in Belize?

Adam Capes: No, no. Each of those four groups or individuals bought a five-day/four-night stay on a private island in Belize, for ten people.

Joe Fairless: Alright, that makes more sense. [laughs] “Where is this private island for $40,000…?” Okay…

Adam Capes: They each paid $40,000 for four nights… Which, actually the charity is getting the bulk of that money, so they’ve raised a ton of money. There were some other packages that sold as well, but that was most of it, and they netted $118,000.

Joe Fairless: They netted that. That’s how much was the money that they raised for their own charity. Okay.

Adam Capes: Yup.

Joe Fairless: What was the reserve on that for you?

Adam Capes: I think the reserve at that time was just under $20,000. And that’s kind of typical. We usually sell most of our packages for about two times the reserves. Sometimes it’ll be 50% more, sometimes it’ll be three or four or five times the reserves. We’ve sold trips that have a reserve of $2,750 for $15,000 before.

Joe Fairless: Yeah, that’s interesting. Well, anything else as we wrap this up, anything else that you think we should talk about as it relates to your business tying into real estate, non-profits, that you think the Best Ever listeners should know?

Adam Capes: Well, I’m sure you’ve got a lot of amazing real estate investors that listen to your podcast, and they’re making plenty of money (hopefully) on their investments, and that’s great; I would say what’s more important is what do you do with that money? I’m obviously passionate about travel and vacationing and seeing the world, and creating those memories, and about contributions and giving back and helping make a difference to causes that you care about… So I would just challenge your listeners to think about “The better I do and the more money I make from my real estate investments, how am I putting that to use to make  a difference in my life, in the life of those that I care most about, and the causes that I care most about?”

Joe Fairless: Yup, I concur. Well, Adam, thank you for being on the show. Best Ever listeners, I should have mentioned this at the very beginning – I hope you’re having a Best Ever weekend. This is a Skillset Sunday episode, and we are clearly talking about the specific skill of incorporating a philanthropic component to our real estate investing. I find it very interesting your business model and how you’re structuring this with non-profits, and how you’re being the match-maker… And the idea that you came up with, and the challenges that you are overcoming while having launched this company.

Thanks again for being on the show, Adam. I hope you have a best ever weekend, and we’ll talk to you soon.

Adam Capes: Sounds great, Joe. Thanks so much.

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