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There’s a breakthrough for the entire real estate industry coming your way…

It will hold you to a higher standard and hand out grades like a report card.

So, what’s this new breakthrough?

It’s called ESG.

ESG will help you pick the best buildings which not only adds more money into your pockets, but also helps the environment and the community.

In this episode, Bob Greenlee, from E³SG Realty Investments joins us to discuss the future standards for real estate. Don’t get left behind ESG will impact your property value.

Listen Now!

Show highlights include:

  • How to get access to government incentive funds when you develop real estate (5:21)
  • The “ESG” formula that sets your portfolio up for a stronger exit strategy and more money in your bank account (7:31)
  • The “premium plug” strategy to increase market rents for your property that spits out cash (8:13)
  • A quick and dirty trick to decrease your cap rate so that others want to buy your properties at a premium (8:57)
  • How to access this secret buyer pool that are desperately looking to acquire your property (10:13)
  • Get your property valued in 3 minutes with the use of AI (so you can get ready to sell at any time) (22:59)

To connect with Bob Greenlee, please contact him at: rhgreenlee@e3sg.net or visit him at https://e3sg.net/

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: http://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We'll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: http://adwordsnerds.com/strategy

Read Full Transcript

(0:07) You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

(0:40) All right, hello, and welcome to this week's episode of the REI marketing nerds podcast. As always, this is Daniel Barrett here from AdWords nerds.com. And look, you know, if you want to get more motivated seller leads and deals online, you have to go over to AdWords nerds.com, get on a phone call with one of my team, we will help you put together a custom strategy for your market. And without any further ado, I want to get into my interview with Bob Greenlee. Now, if you don't know, Bob, it may be because Bob is sort of on the periphery of what I think a lot of real estate investors think of as the real estate investing landscape.

But he is incredibly influential. Now if you don't know what he does, he works at a company called E three s g, you can find them over at E three s g.net. And what Bob is working on is essentially the interplay and the sort of interface between ESG regulation, artificial intelligence, multi party deal making with industry and with academia and with government. We are getting into deep waters here, folks.

And I will tell you, of all the people I've ever had on this podcast, Bob is the only one who told me when I asked him why he does what he does, why gets up every day, Bob looked me straight in the eyes and said he gets up every day to save the world. And I'll tell you, I believe him because Bob is one of the most deeply knowledgeable people I've had on this podcast. And if you don't know a lot about ESG, or the regulation around it, this is going to be a mind expanding episode. So without any further ado, let's get into my interview with Bob Greenlee from E three s g dotnet. Bob, how are you? Welcome to the show. I'm so happy to have here. Good afternoon. I'm delighted to be here as well, thank you.

There's a bunch of different directions we can head in. There's a bunch of things I want to ask about. Let's just start with you and what you do for people who aren't familiar with the three SG give people just kind of a broad overview of the company and what you guys do inside the real estate space. You three SG is a provider of ESG scores, data and education to the real estate space. Many are familiar with ESG as it relates to application to entities and equities on Wall Street.

We specifically applied to real estate and that's what differentiates us in this market. And in this conversation for that matter. Dar we have developed a set of algorithms, KPIs, key performance indicators, BMPs best management practices, all as it relates to excuse me with scoring of real estate, we expand the ESG moniker the acronym, if you will, which stands for environmental, social, and governance. And we do two things. Three things actually. One is we retake the H, the hell component out of s. And it's a standalone entity or as a standalone pillar in our standardization in our definitions, because it otherwise it gets lost in the ass.

And moreover, the S then doesn't have the runway to gather the B at first attached to social causes. And we want to be able to target that we want to be sure that ass is really about social Trojans not about kill. So we isolated help them they from aspelin. The other thing we've done is we read on we add impact and impacted ESG which seem very similar to most people they are actually none of that they're in a little bit of a battleground now turret which is kind of interesting to see, but they are they want to differentiate themselves. We are very tuned in to the fact that in storing ESG and thinking about ESG and applying it to real estate, we're here to make an impact. We want to be advancing social causes. We want to be improving real estate. We want to be approving the

(5:00) neighborhoods and communities and the planet, for that matter. So we are all about in, even though the impact world may want to be separated siloed, if you will, from ESG. The last thing we do, which is kind of interesting, and which no one has done to date we're aware of is we have redefined governance as government. So when you think about what is the governance of real estate, it is governance. Government is the one that writes zoning and comprehensive plan. And instead of districts and incentive bonds, and our you know, so much of what we're trying to accomplish, as it relates to GE comes through governance of government.

And that's, that's actually an a government besides is 2.2 million properties across the country. And when there's a government building, whether it's a community center, an act of government building, it's an anchor to a community or a neighborhood. And when you're thinking about stabilizing a neighborhood or improving or reinvigorating a neighborhood, you know, the government tenant, if you will, is huge to that. I'll go back to age for one second, and then lead to the next question. But yeah, medical kind of fits in that mold as well. So you think about the anchor attributes of a hospital or a medical office building or some other kind of community medical place, right.

(6:27) That's another reason for having broken the H. S, to give it a little extra boost with medical. So we're not necessarily redefining ESG, we're just giving it some we're giving it some practical application to real estate, which is, which just, you know, coming out of equities that doesn't lend itself the guard returned up emissions from equities just simply apply in floor to real estate. And that's, that's really what we're all about. So let me ask, there's so many for people who are and I think you gave a really sort of powerful and succinct sort of definition of what ESG is, right? But for people who are, you know, maybe not used to thinking about real estate through that lens, right, what do you view as the primary benefits of applying ESG? Or scoring via that lens to real estate specifically, right? Is it that things become more efficient? Is it that the like you said, the impact you're having on the community at large is more positive?

Like what do you view is the benefit of applying that ESG lens to real estate, we're all about the economic. So we come at this as appraisers, and growers, primarily economic development people. And when we think about what ESG really does, it is improved the economics of real estate. So many people today is you know, the handler on a sustainability journey of some kind. So that was start at the top of the economic structure. So that includes tenants, tenants want to be at a building where there's attention paid to sustainability, they can feel good about where they go to work, or where they live, or whatever it happens to be every day.

So if there's more demand, by virtue of there being a more sustainable building, then tenants will pay a premium they do. And that's costar CBRE, numerous studies point to the premium that pugs will pay to be in a sustainable building. So now that's the top side, right, so you've got a higher rent and you've got more demand. So then, with energy efficiency and whatnot, now you're reducing costs. And that's also a big part. So now you've got higher revenue and lower costs, higher net operating income. And there you also have your mitigated risk. And so you have less leasing risk, less selling risk loves less operating risks. And as a result, the cap rate is lower. And as a result of that the value is increased.

So just within a single building, paying attention to ESG, and sustainability in the way that we describe, that all matters to a car related value. That is higher. Right? We also as we go through the scoring process, we're identifying or the building owners or tenants there from things that they can do to improve the sustainability, we're gonna get students score of that building. And they and it's not just kind of a one time deal there are there's a sequential order that kind of make sense when you're thinking about I want to make my building more sustainable. What am I going to do birth and sort of, you know, lighting is and we wanted maybe plumbing and insulation and whatnot, but there is a an order to it, the method to the madness. And so, if you have a score and a correlated value before, then you can apply what we call sustainable asset management strategies or Sam's, and then you have an app

(10:00) their value and score, right. And so then you can do that incrementally over time, adding on your holding period, your objectives and so forth. That's really the, it's the economics matter. And then at the end, you have a whole nother buyer that's available to you. And we're warming up on today that is all about green or sustainability legged investors, who are desperate triple Stein. So you can point to the greenness, the sustainability of your your building your project, your your business, all of it, then you'd have really opened the door to buyers who are not only to larger pool of buyers, that they're willing to pay a premium to what you're then able to offer them.

The benefit is real. And I could go on to community and a side benefit. But I think for the moment, that's it, it's really economically driven, we'd love that it's appeal. You know, we love that it's improving the planet. But in the end, economic struggle. So I have a bunch of questions about how you guys actually do what you do before we dive too much into ESG. In general, are you three ESG? In specific, I want to ask a little bit about you and kind of your background.

So like what was your story of how did you get to where you are today? Was this something you were always interested in? Is this something that you studied, I don't like today, you guys are very involved in the kind of academic world as well in terms of, you know, doing research on these measures and everything. So I'm just curious, like how you got to this particular application of what you do. So I live in God's country, thanks for asking, which is the eastern shore of Maryland, and my wife and family and I chose this place many years ago now. Because of its ecological, the surroundings environmental aspects, it seems to me this is a sustainable place to start with. And it is where we wanted to be over time, I have specialized in conservation and preservation and economic development.

And, you know, we have this, this kind of rural environment in which to work and I leapt at Eden will likely never return to the city. But I just, you know, but but I'm here. And so one of the things that we began thinking about was the creation of a business park. And we were sponsors of this, the Chesapeake triangle, it's called and it's an 6000 acre bar, it's land that could be a park, I don't want to say that it exists in a dozen, but it's framed by a highway system. It's 40 minutes from university from the Department of Ag or Federal Department of Agricultural Greenbelt farms, outside the Beltway DC. So we wanted to create this circular economy, green, everything green, everything, agricultural, everything, environmental, or it's kind of a take off on Research Triangle Park in North Carolina, which generates hundreds of billions of dollars of economic impact every year.

And we felt like this is just a great opportunity on the eastern shore of Maryland, where we connect to the agriculture on the eastern shore of Maryland, when you look at the satellite imagery, the nighttime satellite imagery of the eastern seaboard, you know, you'll see this though it's dense lighting from Richmond, Virginia to Boston, and in the middle of that is, um, is is an area that's dark and that's Eastern Shore I mean it really is a very it's a it's a protected lovely area. So I mean I'm this is very authentic to be mean this is this is what I've made my living doing from you know, as I mentioned, the conservation piece and sustainability piece, you know, that's so when we got into the park, you know, that Park was a $50 million project or so and I thought wow, this is gonna be a good sized project now. That would be one of the smallest projects we'd be involved with.

(13:53) We have access now to people and companies institutions Mani that are thinking on on such a scale, it's it's pretty remarkable. And then to be able to put this park in the middle of it and you know, hopefully that's one of our next steps wants to find motivated seller leads online but don't know where to start. Download our FREE motivated seller keyword report today. AdWords nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads and you can grab these exact keywords when you download a report at www dot AdWords nerds.com/keywords.

(14:42) So did you when you were coming up and in school basically going to college was conservation and you know economic development. That was what you were studying. Did you know that was your angle? Or did it sort of emerge over time because you kind of became enmeshed in that that sort of thing? airland culture where you saw this kind of beautiful landscape all around you, I, that this is one of my favorite stories, I won't go too deeply into it. But I was in Mobile, Alabama, at one point in my life that I was the project or a grad student at University of South Alabama.

And it was career development stuff. And I walked in and a semester later, I walked out. And he had identified everything that I should be that everything my everything that I love, everything that I'm good at everything I think about. At that point, he came out and said, You should do three things you should you should a you should write being should crunch numbers. And so you should be in some kind of a public facing out of a business. And so, at the end in hospitality, I'd had some background

(15:49) here for two companies that do it. And here's the resume to kind of smell through the filter we've just done for the last three months. And one of these two companies hired me in Atlanta, the other one dinner. And that started this life of economic analysis and feasibility studies, market studies of appraisal, and so forth and so on. But it's true to me, not that the audience cares about all that. But it's important to me, and and I loved what I've done every day, I beat the alarm every day. And you know, I'm doing I'm kind of doing a very cool part, my own life for that matter. Do you know what grade they get? They get an A plus on this. This project? It did it? Because it seems like it worked out pretty well. I live a pretty good life. Where did

(16:36) well, alright, so I want to talk a little bit about what you guys do at three ESG. And I think we could get really technical, we could leave it more broad. So we'll kind of follow it wherever it goes. But I am curious about the role that AI in sort of modern tech plays in what you guys do. I think that one of the things that really strikes me about you particularly about the business in general is just like you said, like it being analytical is key to what you do, it's key to what you do well, but also, you guys have to constantly be updating, you know, sort of updating your prior assumptions about what is going on in this world, right? Like, you can't just apply a static intellectual model and just assume that it's right and go on. Right.

So what I'm curious about the role that AI plays in your business right now, if any, into just you can take this as a broader question. What is it like to run a business where learning is such a key part of what you do? Because you do have to constantly update what you're doing? What has it been like running a business like that? Does that make sense? This is a multi part question. That's actually a it's a great question. Thank you. So the AI piece to start with, I would not start a company today that wasn't grounded in AI. That just doesn't make any sense to me.

(17:55) And so, to back up four years, four years ago, I went to a conference of all the NAI appraisers in the state of Maryland. And the content for the day was big data in real estate appraisal, at a gentleman that came talked about kind of walk through each chapter of your appraisal report that here's where you go for this, and here's yours and other great data source for you. And we've all dealt with through the report. And I thought that was fascinating and stimulating and gotten exactly what I was their data sources. And then at the end, we collectively in the room, we probably had 1000 years of experience. And that's you think about it. And we had come up with a value we had during that the exercise during the study was that we're going to appraise the building that we're in until we walked through that process.

And at the end, we had a number. And then this gentleman stood up and said, Alright, so I before I left, Houston, the dreary, I also upgrade since filming. And I came up with a number that's within 2% of that number of it, you all just derived after 1000s of years of collective experience and going through this whole process. He said my number would have been 2% It took me three minutes before I left the office.

(19:10) And so I had a couple big takeaways from Napa one is that big data or is as the answer to the real estate agents and brokerage and vital nature appraisal and in every aspect to goals. There's a difference obviously, in data science and AR. And, and there the that gap is narrowing. But AI is certainly the future internet of things, all the pros out you know that's not in certainly the future. I went to MIT and MIT.

MIT is actually where I began in the, I think in the 1950s. Yep, so let's say 65 ish years ago, and I mean, who knew? I didn't even know the computers. But nonetheless, they had AI and so We have, we've been working with them and other universities, you're talking about learning and education and whatnot. But that's really where the AI starts. For this business, we're the first to automate. Let me back up for a minute. That gentleman from Houston, who came to the present to our appraiser group is now my business partner.

(20:22) And so I called him at some point when we were getting ready to go up to MIT for one of our first information sessions and asked him if he wanted his first ball headset, we'd written know me from Adam, but you know, you did cover because that and so anyway, we now well, he brought to the table, what's the database, we have every property in country 150 odd million, at least every property has a tax record.

And so we have every property and we are, what makes us different from anybody else who's doing ESG storing in real estate or business or anything else is that we are trying to automate process. This is what ties back to AR. So we'd have to develop enough critical mass that we can give the AI room to work. And that is exactly the stage we're in today is developing that critical mass. And the more algorithms, you know, that we can apply the more KPIs big guys are great with a measure pull the metrics, right. But it's the it's the algorithms that will drive this to, you know, to a reliable estimate of value, and reliable score from for every property.

That's, that's really what we're all about I was born. So as someone who is very interested in AI, but I would still classify myself as very much not an expert. Right? My watching. Yeah, my sort of sense of it is that there's basically a sort of bifurcated view of what ai me and so there's one view of it that says this is largely about replacing human activity. And there's another view of it that is saying, No, it's more about what people do with AI rather than AI replacing people altogether, right. So as a non sort of ESG related example, you have AI, art generation or image generation, and there's some people say that's going to replace artists.

And some other people say like, No, it's not going to replace artists, artists are going to work with AI, and it's going to make their work faster, yada, yada, yada. So I'm curious, just as a general point of view, if you think that one of those is more accurate than the other, or if there's some sort of middle ground, like what do you view the the kind of future of AI in terms of its economic impact as as BA, so I would bring very much a layman's approach to addressing that without being an expert, myself, right. But kind of relates back to what I was thinking about a minute ago.

And one of the things that, again, when so when Mike Miller's name is Rich data are induced. And when he came out and said, I did this in three minutes before I let Brad, in itself takes a lot of the detail tedium out of the appraisal process. Right, there's nothing artistic or creative about binding about and processing a bunch of details, right, Eddie? I should say, my books, I can't but but I I certainly can. And then. So those are. So I would say yes, those jobs are replaceable, and likely will be, if not already, but the person who knows how to how to deal with that he knows how to make art out of all that he knows how to find and draw conclusions about value, and that next steps and strategy and none of everything that real estate requires of ours today, that date of the and there's a lot of noise out there today. And you do have to have kind of a well articulated process flow of information.

But if you can get AI to do that for you, it's a faster and one of the benefits. So one of the one of the ease and E three SG is efficient. And we're gearing hopefully to a time when we can make commercial real estate particularly less so maybe residential, but commercial, make it an efficient marketplace, like a stock exchange. And it's moving in that direction today. We feel like we can take months for example, out of due diligence process, that we can take months out of the selling process if we're better at matching buyer and seller. You know, there's a lot of efficiencies that can be a AI and data science generated over the course of this exercise. That's that's going to be an outcome that's not Moreover, it I think it's an advantage that we can Charlie, you're certainly doing

Hey guys, hope you enjoyed part one of this episode. It's just too good to limit one show. Join us next week to hear the rest

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