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Alex Rodriguez and Jennifer Lopez boost program that teaches inner city kids about real estate

  • Project Destined teaches kids how to value and finance local apartment buildings, and then given the opportunity to share in real profits from those properties.
  • Alex Rodriguez and Jennifer Lopez are two of the program's biggest backers.
  • "Real estate is a way out of the 'hood," Rodriguez said.

How do you get inner-city kids off the streets? Give them a vested interest in those streets and a stake in the property around them.

That is the philosophy behind a new program that teaches teens financial literacy through investments in real estate. Kids are taught how to value and finance local apartment buildings, and then given the opportunity to share in real profits from those properties.

"Everything we do is pragmatic. You buy a building and then they share in the upside," said Cedric Bobo, principal and co-founder of Project Destined.

Project Destined, barely two years old, is Bobo's baby. A former executive with the Carlyle group, the idea came to him after he saw a movie that centered on a child who was selling drugs on the street. The movie gave two possible outcomes, one where he was caught by police and ended up back selling drugs, and another where he got away and ultimately became an architect. Bobo was struck by the idea of real estate changing a child's destiny.

"Real estate is tangible, and having grown up in a household where you've seen your parents lose your home, real estate plays an ever-present part of your life," said Bobo, who has been called one of the most powerful black investors on Wall Street. "I also think it's easy to understand for kids, so my philosophy in life is I want you to be a part of your neighborhood's change, I don't want you just to be watching."

Bobo launched the project with just a dozen or so students in Detroit. Just afterwards, he happened to meet former baseball legend Alex Rodriguez at a Jennifer Lopez concert. Rodriguez now runs A-Rod Corp, a real estate investment and development firm. Rodriguez joined immediately and floated the idea to bring Project Destined to the Bronx.

"I was born right down the street in Washington Heights. I have always loved baseball and business. Real estate is a way out of the 'hood," Rodriguez said.

The Bronx program accepted about 50 teens from three different high schools as well as the City University of New York. They began taking classes through Project Destined, learning the lingo of real estate finance.

Jessica Golden | CNBC

"I learned about cap rates, which I didn't know what it was before I came here. I also learned about due diligence," said Zainabou Darboe, a high school senior. "We had to talk to a lawyer, a banker and a broker."

The program culminated in a Saturday 'boot camp' in the Viacom building in Times Square. Students were divided into six teams, each with a mentor student from Harvard Business School.

"I wanted to bridge two worlds," said Bobo, himself a graduate of Harvard Business School.

They developed presentations for two Bronx apartment buildings, writing offer letters, and explaining their strategies to finance the properties.

Then Sunday, it was off to Yankee Stadium, dressed in business attire, to make their pitches, "Shark Tank"-style, to a panel of experts. Rodriguez brought along Bronx native, and partner, Jennifer Lopez.

"This project is such a special thing because it's teaching children at this level in inner cities to know what it is to actually own something very early," Lopez said.

"I have been in entertainment and branding for 25 years now, but this is a whole other language that most people don't know, and to be able to teach this to kids that don't have the Harvard education is a beautiful thing because it's not just about owning your life, it's not about owning property," Lopez said. "It's about learning how to manage everything about your life."

Jessica Golden | CNBC

The program has major sponsors and partners, including Viacom, MasterCard, the James and Judith Diamond Foundation, and the Gray Foundation. Blackstone's former head of global real estate, who was recently named president and chief operating officer, Jonathan Gray, was on the panel questioning the kids.

"I think this works pretty much anywhere. What you need is people on the ground, community, local real estate people who say I want to take some time to educate some kids and give them some opportunity," Gray said. "Even though yes, it's one of the oldest businesses around, I still think it's very attractive. If you are trying to create value over time, I can't think of anything better than real estate."

In the end, whether they win the competition or not, all the kids have the opportunity to continue within the program, both in classes and online. If they do, they can receive actual cash from the two buildings, which Project Destined bought.

"We give 20 percent of our profits to a 501(c)3 that issues scholarships, so every quarter we'll give you a scholarship if you continue to be engaged," Bobo said.

In other words, it's not about taking a swing at real estate, but really following through. A large percentage of graduates from the first programs are staying on and some are now helping run subsequent programs. The idea is to grow Project Destined across cities nationwide and, in doing so, create a network of new investors who all came up together and can potentially work together in the future.

"The thing I like about this program is it doesn't matter where you were born," said Stella Maris, an eleventh grader. "They took us as we were. They showed us how to learn the math correctly. The best, important thing is that anybody can do it."