29FINANCE
truly affordable housing could actually be more
profitable than other market-rate alternatives,”
LeBlanc says. Immergluck thinks this effect could
eventually run out of steam, as property values
keep going up and selling becomes more profit-
able than running a PadSplit.
More than half of metro Atlanta tenants spend
more than a third of their income on rent, accord-
ing to the Atlanta Regional Commission. The area’s
rents rose more than those in all but two urban mar-
kets in the U.S. last year. Although Atlanta has been
adding housing, much of it has been on the high
end: The area ranked third in the percentage of new
construction going to luxury rentals, at 90%. “The
gravitational pull for almost everyone is to do every-
thing upmarket,” says Shütte. Atlanta Mayor Keisha
Lance Bottoms won office in 2017 pledging to fix the
affordable housing shortage. In June she announced
a $1 billion plan to create or preserve 20,000 units
of affordable housing by 2026. LeBlanc predicts
PadSplit rooms will contribute 8,000 of them.
LeBlanc got into the low-income rental busi-
ness in 2007, when Atlanta’s black neighborhoods
were flooded with foreclosures. “It was almost as
if a bomb had gone off in Southwest Atlanta, and
no one was talking about it,” he says. Starting with
a $70,000 line of credit, $230,000 from family and
friends, and high-interest “hard money” loans, he
bought 100 single-family homes and 450 apartments.
Most of his own rentals, then and now, were part of
Section 8. He got $750,000 from the Department of
Housing and Urban Development’s Neighborhood
Stabilization Program in 2009 but found the pro-
gram cumbersome and slow.
LeBlanc got the PadSplit idea from a man who
was being kicked out of a shabby, illegal rooming
house next door. The man wanted to rent a sin-
gle room in LeBlanc’s house. Some PadSplit rent-
ers may never afford anything else, he says. Others
move on, as did security guard Tiffany Ellis, who
came to PadSplit from a dicey cheap motel. “It felt
so safe there,” she says of the PadSplit. She paid off
two credit cards, bought a used car, saved a secu-
rity deposit, and then found her own place.
The concept is catching on with landlords.
PadSplit has 300 more rooms in development.
Atlanta real estate agent Josh Stanton is buying
homes to convert with partners in New York and
London and says he’s out to persuade other inves-
tors to buy homes to turn into PadSplits. “When
you boil this down, it’s simply an amazing bottom
line,” he says.—Margaret Newkirk
THE BOTTOM LINE PadSplit says it can expand low-cost housing
by showing landlords how to profit from it. But tenants get fewer
rights and can be evicted more easily than in traditional apartments.
Stephen Schwarzman
BW Talks
“There is no net,” says Blackstone’s CEO.
He spoke with Carol Massar and Jason
Kelly about his new book on his career○ Co-founded the giant private equity firm with Pete
Peterson in 1985 ○ Worked at Lehman Brothers in the 1970s
and ’80s ○ A prominent Trump adviser, he’s also cultivated
ties in China ○ His new book is What It Takes: Lessons in the
Pursuit of Excellence○ Interviews are edited for clarity and length. Listen to Bloomberg Businessweek With
Carol Massar and Jason Kelly, weekdays from 2 p.m. to 5 p.m. ET on Bloomberg Radio.How has Wall Street changed over the
course of your career?It’s a Wall Street that can
mobilize much more capital.
It’s a world that has printed
so much money that it’s
easy to aggregate a lot of
money to do a lot of things.What did you take from your experience
at Lehman Brothers?My first day somebody
said, “You’re very lucky to
work here, because nobody
here will ever stab you in the
back. They’ll just walk right
up to you and stab you in
the front.” On the other
hand, it was a fascinating
place. The people
who worked there were
ex-CIA agents, somebody
from the entertainment
business, somebody from
the oil patch. Everybody had
different points of view.What was it like when you and Pete
Peterson first struck out on your own?You find that the world is not
always waiting for you. In
fact, sometimes the world
doesn’t even respond to you.When we started we sent
out 500 letters, expecting
people we used to do
business with to call. And
the phone never rang.You say you can’t learn to be an
entrepreneur. Why?Because it involves seeing a
lot of things simultaneously
and having the ability to
say, OK, this is gonna
work. There is no fallback.
Entrepreneurs don’t think
they are at risk: When I
do anything, I like to be
completely convinced it’s
going to work. But hardly
anyone competes with us
when we start. Because
people are comfortable
doing what they do. It’s part
of the human condition.^How do you see things working out
between the U.S. and China?I think China recognizes that
there’s a structural issue.
It’s not one U.S. president.
So getting something to
lower the temperature and
help growth globally is in
everybody’s interest.