David Bacon has a background in digital marketing, investor acquisition, and growth strategy, with a focus on alternative investments and expanding access to real estate backed opportunities. At Worthy Wealth, he focuses on investor education and connecting everyday investors to income generating real estate strategies, including senior living and other demographic driven sectors.
In this episode, John talks with David Bacon about how Worthy Wealth is democratizing real estate investing through $10 senior living shares and housing bonds. David explains how pooling small investments into a diversified portfolio spreads risk, why the company charges no fees, and how its value add strategy of buying and modernizing functionally obsolete senior living facilities meets the surging demand created by an aging population.]
Make sure to download our free guide, 7 Questions Every Passive Investor Should Ask, here.
Key Takeaways
- Open your capital raise to many small investors instead of relying on a few large checks
- Spread risk across a portfolio of assets rather than concentrating it in a single deal
- Understand how a deal is structured and who gets paid first before you invest
- Follow demographic demand, like the aging population, to find supply gaps in the market
- Modernize functionally obsolete properties to create inventory faster than new construction
Topics
Democratizing Real Estate Investing
- The 2012 Jobs Act opened investments once reserved for accredited investors to retail investors
- Worthy Wealth offers senior living shares and housing bonds at $10 each, with a $100 minimum first purchase for senior living
Why Volume Beats Big Checks
- David would rather have a thousand investors at $10 each than one investor at $10,000
- Recurring investments, automation, and round ups on everyday purchases add up to meaningful funds
The Portfolio Approach to Risk
- Traditional real estate investments localize risk in a single asset
- Worthy Wealth pools investor money into a portfolio, so one problem property does not affect the rest
Who the Typical Investor Is
- Millennials seeking financial independence are the sweet spot, while Gen Z investors are getting started early through mobile apps
- The model also serves gig workers without traditional retirement plans and higher end investors who see the supply and demand imbalance in senior housing
Returns, Fees, and Deal Structure
- Worthy Wealth charges no fees and makes its money on the back end of each investment
- Investors earn a 5 to 7% quarterly dividend during a two to five year hold, plus 60% of sale profits, targeting a 15% annualized return
- The senior living product is a Reg D offering, while the housing bonds are a Reg A Tier 2 offering
Understanding How Deals Are Structured
- John breaks down Reg A and Reg D offerings and the limitations each places on raising capital
- He urges investors to understand the capital stack and who gets paid first before committing to any deal
The Silver Tsunami in Senior Housing
- More than 11,000 baby boomers turn 65 every day, and the 80 plus population will double in the next 20 years
- Occupancy at senior living facilities sits at 90% and has grown for 19 straight quarters
Why Supply Cannot Keep Up
- The nation needs $1 trillion in senior living construction over the next decade, yet new construction is at a two decade low
- Banks charge 50 to 100% higher interest rates on horizontal work like utilities and dirt work, creating a financing bottleneck
The Value Add Play in Senior Living
- 40% of existing facilities were built before the smartphone and are functionally obsolete
- Worthy Wealth buys these facilities at a discount, modernizes them, hands them to professional management, and sells them for appreciative income
📢 Announcement: Learn about our Apartment Investing Mastermind here.
Round of Insights
Failure that set David up for success: Starting his career as a poor manager with a lead from behind attitude. He learned that his success rests on the people he manages, and today he leads by understanding what motivates others and building intentional cooperation.
Digital or mobile resource: AI tools. He believes learning to use AI strategically is critical, and that AI will never take the job of someone who knows how to manage it.
Book recommendation: Then Everything Changed by Jeff Greenfield.
Daily habit: Working out a few times a week to manage stress and stay physically, mentally, and emotionally balanced.
#1 insight for investing with purpose: Align your investments with your values. Alternative investments let you know exactly where your money is going, so you can earn an attractive return while benefiting others.
Favorite restaurant near Atlanta, GA: Stone House Tap.
Next Steps
- Learn more about Worthy Wealth here: worthywealth.com
- Evaluate whether alternative investments fit your goals, time frame, and risk tolerance
- Understand how each deal is structured, including the offering type and who gets paid first
- Compare single asset investments against portfolio based approaches for spreading risk
- Study the supply and demand imbalance in senior housing and other demographic driven sectors
- Look for investments that align with both your financial goals and your values
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