Why do we as a society keep building more and more housing for people who already have the most options, all the while we are forcing people who most need housing to scramble amidst shortage? How do we not just understand what is happening, but also make something better? Jimmy Wright and Michael Hall were motivated by their Christian faith to do just that via their business Launch Capital. Listen in to get inspired by their creative and hopeful work.

This excerpt has been edited for length and clarity.

CURTIS CHANG: There’s economic incentive for developers to chase after Class A, top-tier housing because that’s where the highest returns are. But there’s a certain social nonsensicalness to this because it means we’re building more and more and better and better housing for the people that need it less, that already have options available to them, that have more resources, more privilege. And we aren’t building housing for the people who most need housing, the people for whom it would make a big difference in their life. We’re shifting capital away from where the need is greatest. Is that an accurate summary?

JIMMY WRIGHT: That’s a great summary, yeah.

CURTIS CHANG: All right, so Michael, what is Launch Capital doing about this? 

MICHAEL HALL: Yeah, we mobilize capital. We work with investors, raise funds, and buy existing affordable housing. We buy workforce housing and we try to stabilize it. Often these are properties that investors are buying and trying to flip. They’re trying to make quick, short money, which means they don’t invest the capital necessary to sustain these properties long term. They’re going to have plumbing issues. They’re going to have heating and air conditioning issues. They’re going to have roof issues. So we come in, mobilize capital, bring the property up to standard, and then we work our specific niche – the refugee resettlement community – to provide housing to newly arriving Americans. 

So we’re buying existing apartment communities where newly arriving Americans want to live, work, play. We’re going up against competitors who want to buy the properties and push rents up $400, $500. But instead of trying to do that, we try to drive down the turnover. We try to make it as hospitable of an apartment community as possible, knowing that if we can drive down that turnover, we can still get the financial return that investors are looking for while preserving some of this affordable housing stock that’s out there.

CURTIS CHANG: I want to emphasize the impact housing has on people living in that tier you’re talking about, especially refugees. My wife and I have a guest house in our backyard and last year we worked with a large resettlement agency in the Afghan refugee crisis to make our house available for Afghan refugees. And we got a single mom of seven kids. Her husband used to work as a translator for the American military. He died from a sudden disease right as they were being evacuated. 

So she arrives in the United States with seven kids and no housing. We were temporary housing for three months. It turned into three months because there was no housing stock available in our region. The resettlement agency took forever because of the exact dynamics described. All of the housing stock in the Bay Area gravitates towards the higher-end market or it’s low-quality with people turning a quick flip. 

So Jimmy, you are deliberately targeting refugee populations to provide housing for them. Say more about the human need and impact for housing.

JIMMY WRIGHT: Yeah, so Michael and I sponsored a Chinese family, asylum seekers who fled China in 2017 and then flew over to Ecuador. From Ecuador, they walked to the southern border. This family has experienced every kind of housing instability I can think of. 

So they walked to the border, and once they got there, they were the only Chinese speakers. No other Chinese people were crossing the border at that time. So they didn’t even have translators to help with anything. So the father was detained and then the mother and their two young boys were put into a Catholic homeless shelter. 

This homeless shelter put a call out to everyone they knew who served refugees and Michael and I heard about this family and brought them into my basement. And then from there, they were able to get some services and start to work a little bit. And then we moved them into a neighborhood thinking that they would be safer and affordable. Long story short, the husband gets out of detainment miraculously only to get shot in this neighborhood. He’s okay, thank God, but now he can’t work. So then we move them again to another neighborhood that’s a little bit better, but the public schools are bad. And now they have a kid that’s getting beat up at school. Then what?

We have donors that are interested in helping them with private school, but based on where they currently live, they can’t even get a bus there. Walking with this family and worrying about housing with them along the way, Michael and I have really come to see the human need. It’s kind of like being hungry. When you’re hungry, you don’t think of anything except for getting something to eat, you know? It’s the same in these situations – people can’t think about education or progressing in society or anything else because they’re thinking about where they’re going to sleep in the next few days.

CURTIS CHANG: This is just where I think of that common narrative of, “Hey, why can’t poor people just pull themselves up by their bootstraps?” If you start with housing insecurity from the get-go, you don’t have a place to put your boots, much less pull them up, right? 

MICHAEL HALL: Yeah, we’ve gotten into this problem over the course of 20-30 years and we’re not going to solve the problem overnight. But we can plug some of the holes in the boat. That’s really what we set out to do. We’re trying to create a capital structure that views return not just in a monetary sense, right? So that we’re not only looking at the dollars out the door to the investors. We do care about that and we believe we have to make profit to be sustainable and address this problem at the necessary scale. We have to prove that you can actually make money by doing the right thing – buying these affordable units and structuring an investment vehicle so that they can be preserved the way that they are. 

All the economic drivers are pushing for jacking these rents up. They’re pushing for putting in subway tile backsplashes and trying to move this upmarket because that’s the quickest way to make money, but it’s not actually creating long-term value in these properties.

Cities and communities are standing by while their workforce housing is being bought up oftentimes by people not from that city, who jack up the rents. And the bulk of their workforce who staff their warehouses, who work in their grocery stores, who work in their businesses, who do construction, they’re just not able to access any form of housing. 

The supply and demand curve is so misaligned that if you were in an apartment and you got sick and missed a rent payment – you didn’t even get evicted, you just skipped out –  that’ll probably keep you from being able to get an apartment in America. If you have a negative credit score, that’s going to keep you from being able to access an apartment. If your income isn’t high enough to afford the rent that they’re charging, even if you’re willing to pay it, they won’t rent you that apartment. There are so many people looking for these apartments that anybody who doesn’t fit into a perfect box, who can be a perfect tenant, is not able to access housing. It’s easy to think of recently incarcerated people as those who struggle to access housing, and that is true, but it also includes nurses and police officers and people who are just trying to work a good job and provide for their family and are struggling to find any place to live. And the rising interest rates making home ownership even more unattainable for most people is only making this problem worse.

CURTIS CHANG: Yes, listeners, I strongly recommend a great book on how unstable housing can be for the working class. It’s a book called Evicted by Matthew Desmond. It’s a well-reported, well-told story that illustrates in a very readable fashion exactly what Michael was talking about – how one trauma, one crisis, one medical bill for people living on the margins can actually send them spiraling down a pathway towards eviction, which gets them even in a further spiral of instability and narrowed options. 

So I love that you guys are trying to flip that and actually build more housing. How have you done? Jimmy, what’s the scale of Launch Capital’s work? How many properties have you guys been able to redo in this fashion? How many families have you been serving? Give us a sense of the scale.

JIMMY WRIGHT: Sure. We started eight years ago with one house and now we’re at 1,300 units here in Louisville. We have around 250 under contract in Dallas. We’ve been able to serve thousands of people in our apartments over the past years. The vast majority of refugees and immigrants who come through the pipeline in Louisville, Kentucky, come through our apartments now. So Louisville is the only city in the US that resettles refugees straight into permanent housing, where they don’t make a pit stop at Curtis’ house or my basement.

CURTIS CHANG: And that’s because of Launch Capital’s impact?

DAVID HALL: Yeah, that’s what resettlement agencies have said.

CURTIS CHANG: That’s amazing. One of the things I so love about your model is that it makes so much sense. Like, not just in the spiritual sense – pointing towards the kingdom – but you’re bringing economic sense to a situation. It seems that the capital markets have mispriced the value of a refugee family. They think it’s a risky bet to create and rent housing to a refugee family. And Michael, I remember you telling me how the refugee family is actually a more stable, financially favorable investment. So tell us more about how you guys discovered that, Michael.

 MICHAEL HALL: Yeah, the market is mispricing the risk associated with newly arriving Americans. And so when we were working with refugee families, we saw that these families had a strong desire for stability, they had a remarkable work ethic, and that they were unbelievably resilient. They were really the bedrock of these apartment communities. We’d go in and try to provide ESL or afterschool tutoring or whatever it was and they were this foundational block. The rest of the apartment community was turning over and turning over and turning over and the refugee families stayed there. And we saw that and thought, “Hey, there’s arbitrage here between what the property manager thinks and reality,” because people are more than their credit score or rental history. 

Refugees were seen as unstable because they weren’t given the option to be stable. They were thrust into substandard housing that they would leave because things weren’t getting fixed or there was violence in the neighborhood or their kids were at risk and so they would move on from those initial places of resettlement. And we want to flip the narrative and say, “These families are not a risk. These are an asset.” 

So we build a real estate company that views refugees and the resettlement agencies as customers, and then through that, we are able to build a firm whose NOI grows, not because we’re pricing families out of their housing, but because we’re making the housing so attractive that our turnover is half the industry standard. We don’t have vacancy. We don’t have the cost of turning those units and making those units available. 

CURTIS CHANG: All things which typically drain the bottom line, you guys are avoiding because you’re serving the poor, you’re serving the needy, you’re serving the refugees.

MICHAEL HALL: Right, exactly.

CURTIS CHANG:  That’s beautiful.