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Show Summary
In this conversation, Nicholas Abraham, an investor relations professional, shares his journey into the world of investing, focusing on accredited investors and private equity. He discusses the importance of building relationships in the industry, educating investors on trends, and providing resources like InvestorDD.com for due diligence. Nicholas emphasizes the value of adding connections and resources to help others succeed in their investment journeys.
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Investor Fuel Show Transcript:
Nicholas Abraham (00:00)
We only had it open for six months, but we are promoting a 30 % annualized rate of return with a two year hold. And I just launched fund number two with them and we have adjusted those returns down based off the investor feedback, which was I want shorter hold times, I want more flexibility on my exit and I want consistent cash flow. So what we did, we just said, we’re gonna do 16 % preferred returns. We’re gonna pay you out quarterly.Kristen (01:33)
Welcome back to the Real Estate Post podcast. I’m Kristen and I’m here with Nicholas Abraham. He’s got a lot going on. He’s a real estate investing relations professional working in the industry for half a decade now. He’s the founder of investordd.com and he’s also the author of the Sophisticated Investor Newsletter. So we’re going to talk about everything from marketing to syndicates to due diligence. There’s a lot to cover here. So thanks for being here, Nicholas.Nicholas Abraham (01:57)
Absolutely. Thanks for having me, Kristen.Kristen (01:59)
So let’s get to the beginning. mean, I know you have so much on your plate. How did you kind of get into this line of work?Nicholas Abraham (02:06)
Yeah, started a family business. My grandfather had a 10 unit apartment complex. grew up mowing the lawn, doing the tree trimming, bushwhacking, all that stuff on my weekends. And then ⁓ I also saw my father, ⁓ he has to pay a lot of taxes every year. And so he bought a piece of ⁓ land in Ohio. And we started during our summers in middle school going down and bailing hay. And so I had to work on big heavy machinery.I had a lot of time to sit in that seat in the tractor and, and mo grass and bail it up. And I would take all those, uh, funds that I’d make every year and I’d put them into a Roth account and start day trading back in a, yeah. So back to middle school, I started day trading and which I’m going to date myself. was 2009, which was a really good time to get into that market, but it was a lot of the.
Kristen (02:46)
Wow.Nicholas Abraham (02:59)
Principles that you start to read about and rich dad poor dad I had never read that book but I saw my dad work hard for his capital and his money was never working for him and I said I want to do something a little bit different than spending my time for money and Just started getting my money working for me very early. So that’s how I got into the space ⁓ That sent me down to econ finance route. I end up graduating early while working for two fortune 500sUpon graduating, I developed a $25 million business right out of college and a hurricane put me out of business. I had to lay off about 2000 folks and I got a lot of marketing skills. was spending maybe 50 grand a month on lead flow and we’re in 10 different States. When that hurricane came through and wiped us out. And I said, all right, need to go into a better industry and just pivoted into real estate since I already knew about it, understood it was stabilized and
That was a really, really fun and good turning point for me and my career and just niching down into something that a lot of people understood outside of, you know, the company I had been running to that point.
Kristen (04:05)
I mean, I can’t get over how you were day trading in middle school and you had a Roth IRA. Like, that’s incredible to me. How did you even know what that was? I feel like I just learned that, like, as an adult.Nicholas Abraham (04:18)
Yeah,unfortunately that’s, feel like that’s when most people learn about these kinds of things. And even within those accounts, they don’t know that they can self-direct them into real estate opportunities. Now there’s a little bit more, ⁓ flexibility coming out with Trump and some of the policies to open up 401ks, but it was just all thanks to my, to my grandfather and my father who, you know, set it up for me and just said, Hey, put your money here. And, ⁓ it was like a light bulb moment. One day I saw more money in that account that had made.
in a day than I had all ⁓ summer long laboring out in the field. And so for me, that was a big light bulb moment. so from that point, I just started day trading one stock. started reading all the books, you know, intelligent investor, little green book of value investing by Benjamin Graham. So a lot of my foundational investment philosophy comes from Warren Buffett and Warren Buffett’s mentor. And it’s like, you know, you buy a stake at sale, you know, and you just, you value invest. so.
Kristen (04:52)
Wow.Nicholas Abraham (05:16)
That was one regional bank I was trading day trading. then fast forward a couple of years, the big thing that started happening was, was iPhones. Everybody was giving up their, their Juke, their razor, their Nokia, the NV touch and V touch too. And they started raving about iPhones. And so I just dumped everything I had into Apple and just rode that train over the last decade and a half. And, um, you know,Kristen (05:39)
All right.My gosh.
Nicholas Abraham (05:43)
Now that’s funding my self-directed investments into real estate. So it’s been a really, really powerful tool, especially when you have that compounding effect, you know, over a few years.Kristen (05:53)
Wow, I mean, I think a lot of people would have loved to get in on Apple earlier. I mean, such amazing foresight. So it’s no shock to me that you’re now designing funds and you’re the one kind of leading these syndicates. So tell me more about that. Tell me about your work in that space.Nicholas Abraham (05:57)
YouYeah. So transitioning into the real estate syndication space, I moved up to Charlotte almost a half a decade ago and started working with a private equity firm as an investor relations professional. know, my company I used to have was a solar company. So this is back in 2016, 2017, 2018. And a lot of times I was selling a $50,000 system. And I just said, there’s not really a big difference between a $50,000 solar system and putting on your roof and a $50,000 investment.
And so for me, that was the big kind of transition into more of a high value skill and something I was always working towards because my background was at econ and finance degree. you know, relative, my plan was to go to wall street and do all that stuff. And between college classes, I was in there with the Bloomberg server, the 360 ticker going around the room and I was day trading. ⁓ So investments has always been a passion of mine, but real estate always, you know, was something I understood and.
So pivoted into that with the private equity groups. And that’s when the multifamily space was just taken off. Self storage was taking off shortly after we see car washes. So, you you do a, did a roll up strategy through that. And ⁓ most recently it’s been new construction. So I try to align myself with the groups that have some kind of competitive advantage. I want to invest my own funds. I don’t qualify as an accredited investor. I don’t have that kind of net worth personally, but as someone who works for the firm, I can loophole.
through the SEC guidelines as a knowledgeable employee and I can invest in the funds myself. And so most recently I got hired on with Red Cedar, they’re Charlotte’s fifth largest home builder. We’re actually the largest provider of built to rent in the state with a Southeast ⁓ regional presence and we’re vertically integrated from developing the land to construction supply company to tile company sales team, mortgage company. And we are pretty much set up just like a…
a DR Horton or a Linar kind of, you know, price per square foot to build, which you saw probably Warren Buffett just did another $800 million investment into that group. So, you know, you follow the trail of the guys who know what they’re doing and you tend to be pretty successful. You don’t have to reinvent the wheel. You just got to recreate it.
Kristen (08:26)
Wow, I mean, that’s so impressive. Can you talk about more about the opportunity in new builds right now?Nicholas Abraham (08:32)
Yeah, yeah. mean, my jaw dropped when I came in. ⁓ I’d actually met this group about five years ago and I moved to Charlotte. I was going to use them to build my house I had designed and I was just looking for land. And then when rates started going up, I never found land. So ⁓ they ended up calling me about a year ago and they said, hey, Nick, we’re getting more sophisticated. We have a bunch of investors. We want to, youhave someone who understands the SEC capital raising rules. It can help us design the fund and launch it. And so I came in, I pulled together their whole track record and my jaw dropped when they were telling me the returns. You know, they’re building a and selling a house for 400,000 roughly, and they are building it for about 300,000 and they’re taking a $50,000 investment from the investor to buy the land, the reserves, and to build the house and a six to eight month turnaround time.
And so when you think about those margins, they’re building it for three, they got an investment for 50 and they’re selling it for 400. So you’re putting 50 in, you’re getting 50 back out. They’re doubling money every six months to eight months on average. And I said, that’s extremely powerful relative to multifamily or commercial real estate where you have to wait three, four, five years in the pro forma a few years ago. Now it’s more like seven, eight, nine, 10. And we have a bunch of people who are now buy and hold.
commercial investors relative to what the market’s been producing with rates and some of the liquidity events that are going on with the distressed ⁓ nature of those deals. So I have seen a huge turn from the investors into more short-term ⁓ trend forward things. And so one of the large things that’s been really trendy is the build to rent space. So we actually just did a deal with Carlisle and Newstar. And then we supply a couple other institutions like Mandrake and Quinn.
Kristen (10:09)
ThankNicholas Abraham (10:23)
⁓ with BTR projects and ⁓ very interesting. think it’s really coming down to the firms themselves and how they’ve positioned themselves relative to stand out and be a little bit more competitive and risk adverse. So relative to like a 2007, 2008 builder, they would have all these subdivision deals they would have on their own balance sheet. But what Red Cedar does is they’ll buy the land, they’ll develop out the lots, but then they will sell that land to the institution.the institution now takes that onto their balance sheet. They take the risk and then they hire us per diem per house. We make a set fee. So it de-risks the builder platform as well. And these guys did about a hundred million dollars in revenue last year, ranked 36 fastest growing company in Charlotte by Charlotte business journal. And it’s been a terrific year with them. So it’s actually been a record year for me and the investors. So our first fund we launched earlier this year.
Kristen (11:05)
on.Nicholas Abraham (11:22)
We only had it open for six months, but we are promoting a 30 % annualized rate of return with a two year hold. And I just launched fund number two with them and we have adjusted those returns down based off the investor feedback, which was I want shorter hold times, I want more flexibility on my exit and I want consistent cash flow. So what we did, we just said, we’re gonna do 16 % preferred returns. We’re gonna pay you out quarterly.And then I specifically designed the fund with the share classes to be exit ⁓ hold times. So if you want our class A, that’s a one year, class B is a two year and class C is a three year hold. So customizing the design of the fund around the investor preferences is a huge benefit in my line of work. Whereas most groups are just trying to give you a class A, class B, here’s a straight pref, here’s a pref plus promote. And you’re, you’re stuck no matter what for three, four or five years, if you’re lucky at this point, right?
So that’s how that’s been going.
Kristen (12:20)
Wow, that’s amazing. I mean, so much going on. I think that it makes so much sense with the new bills. It sounds like a really exciting opportunity. And I love how you’re all about transparency around capital raising. And that’s kind of the angle you’re approaching with these funds.Nicholas Abraham (12:35)
Yeah, absolutely. I’m just a middle man of ethics between the general partners and the LPs. Right. I think a lot of GPs are just, how do I get the money? LPs are, how do I make sure I’m doing the right deal with the right group? And they’ve never looked at underwriting before. They don’t mostly know about cap rates or how IRR is manipulable. so with my background being econ finance and having looked at a lot of these deals, it’s okay. Here are some spooky things inside the underwriting that give me some qualms. Here’s some.pretty aggressive assumptions on lease up or maybe the rent bumps relative or, you know, more specifically in the most recent environment, think groups were still targeting these loan assumptions, but their entry cap rates were compressed for four and a half, five, but you know, most of the market average was, you know, five and a half to six to six and a half, depending on what asset class. And so there’s yield sitting there day one that
some investors may be overlooked and maybe some syndicators didn’t really understand how it was competitive or not competitive relative to what the market was dictating with the increase of rates. So it does get very complex, very fast, but you need someone. And that’s why I always say, Hey, even if you’re not, you know, Mr. Mrs. Investor, even if you’re not going to go with me and my deal, if you have a deal you like, send me your underwriting, I’ll take a look at it. And I’ll just be that point of value, save my number. Cause I know this is a long-term relationship business.
And I want to be your, your go-to guy, you know, no matter what it is. And I know that will pay me dividends over the decades. Cause my goal is one to be a master communicator. And two, I want to be able to pick up the phone in 10 years and be able to raise $10 million in 10 days. Right. So it’s all day by day, brick by brick, investor by investor relationship by relationship.
Kristen (14:25)
Absolutely, it definitely is an industry where the more value you give, the more you do end up receiving in the future. But I mean, it’s just great to make the connections and really help people out. ⁓ I’d love to talk about your newsletter, the Sophisticated Investor, kind of going off of that. How are you, I imagine you’re educating people on kind of best practices.Nicholas Abraham (14:47)
Yeah, yeah. Not so much, I would say maybe best practices, but just like my recent article was just a view from the investor relations desk, what I’m noticing in trends, that one’s a little bit more geared towards the GPs and some of that design structuring of your funds and how it is able to create a little bit more demand relative to the investors and what the investor preferences have been recently. most of my articles aregeared towards the LPs, educating them around. ⁓ Like a lot of investors don’t know, but they think the Fed controls interest rates, but it’s actually a function of the 10-year treasury relative. so there’s small things like that I try to help educate folks on that maybe aren’t as ⁓ easily understood, especially if you have limited knowledge and you were introduced to IRAs when you’re in middle school.
been doing this your whole life. A lot of folks get started late in their 30s and their 40s and their 50s and their 60s and they’re just trying to catch up and they see these wild return metrics on commercial real estate. And they said, I never knew this existed. But to be fair, they never had access or unless you knew somebody, that was the old way of doing private equity. You had to know someone who knew someone who was doing these deals and that’s how you got into these. And ⁓ unfortunately for most Americans, that’s just not
the network that we keep, know, we’re doctors, we’re lawyers, we’re trading time for money. And ⁓ those were the wealthy folks that, you know, we saw as community leaders and that’s how that all just kind of transpired with social media and getting more access to folks that are doing this.
Kristen (16:25)
Yeah, absolutely. mean, it’s so impressive everything you’re doing because we’re not even scratching the surface. We have so much more than you’re up to. InvestorDD.com, tell us about that. Due diligence, helping people in that way now.Nicholas Abraham (16:38)
Yes,yeah, investor-dd.com. That is a free resource that I actually coded myself using some of that vibe coding AI technology out there. ⁓ But I always have these great ideas and I always wish I could make them come true. And I tried to learn how to code way back in the day, but it was like learning Spanish just didn’t click for me. So ⁓ I did vibe code that myself. And that is a platform that basically takes the general partners. They can sign up.
and then they can send their investors reviews ⁓ to take out on the firm. And so it goes way into depth. What deal you’re involved with, what your level of experience is, ⁓ all the top questions that they’re typically asking the investor they want me to introduce them to so they can ask them some due diligence questions. ⁓ The problem with that for most groups is, investor asks you for a referral. Well, as an investor relations professional, most of the time you’re
probably going to give them the best investor that you can to give a good review, right? Who’s going to help sell that project, which is a little biased, right? And so part of that ethics and transparency is, let’s just apply all those top questions to all the investors and give the context of how long they’ve been investing, how many deals they’re a part of. And so now you have some background on, this one star review, was this a guy who’s been investing for 10 years and has done 25 plus deals, or is this the folk who
You know, just got involved. put $50,000 in for their first investment and it wasn’t what they thought it was going to be because someone didn’t explain it properly. So you’re able to get a little bit more of context around the reviews, a more well-rounded perspective of the due diligence process. And then I actually added in some additional AI matchmaking. So when you felt your profile as the investor and you have your profile as the general sponsor, the AI will match you with firms that you are.
looking for or maybe represent the deals that you’ve done before, but you can select on their multifamily, self-storage, debt products, all these types of ⁓ asset classes that most of the you probably don’t know about. Most know about multifamily now, but there is a whole host of opportunities out there relative. Now me personally, I like the real estate backed stuff. That’s where I tend to spend my time and where I recommend investors go because I can see it, I can touch it, you can lick it. ⁓
Kristen (19:01)
ThanksNicholas Abraham (19:02)
It just is the thing that gives me the most security, but it’s also my background growing up. So I’m familiar with that the most.Kristen (19:10)
That’s incredible. mean, you’re giving so many resources to people to really feel confident in their investments.Nicholas Abraham (19:18)
Yeah. Yep. Again, my motto is add as much value as you can to everyone you meet, ⁓ anywhere you go and don’t expect anything in return. And that, you know, just play the power connector. ⁓ you know, relative, just got off the phone this morning with a gentleman. He’s looking for 700,000. I have an investor who meets the criteria. I can’t use it for my own fun, but I said, Hey, let me connect you with him and hopefully you guys can do the deal. And if you want to hire us to be the builder on it, let us know. Right.Kristen (19:25)
Great.Nicholas Abraham (19:45)
And if it works, works. it doesn’t, it doesn’t, but he’s probably going to pick up the phone next time he has someone he needs to pair them with an opportunity and say, Nick’s your guy. And so I get stuff like that all the time. That just comes back to me and dividends.Kristen (20:00)
Absolutely, I mean it’s so amazing. You’re establishing such strong relationships that I’m sure you have repeat people working with you all the time. So yeah, thank you so much for kind of breaking down kind of the different elements that you’re a part of and the free resources that you’re providing. Tell everybody where to find you, how to subscribe to your newsletter, all of the things to reach you with.Nicholas Abraham (20:11)
all theYeah, LinkedIn is the best. I don’t do anything else. don’t post on Instagram. I don’t have a TikTok. I don’t have a Snapchat, no Twitter. I’m a LinkedIn man. ⁓ That’s my most active platform. Pretty much the only thing that I’ll do, but you can find my profile. Just type in Nicholas Abraham and you’ll see ⁓ my profile pop up there. But yes, you can find a link to the investor-dd.com on there and you can subscribe to the Sophisticated Newsletter as well.
Kristen (20:56)
Incredible. Well, I really encourage everyone to check out all of these resources. I’m sure they can be very valuable to your business. Thank you so much for being here, Nicholas. I really appreciate your time.Nicholas Abraham (21:09)
Yeah, I appreciate your time. Thanks so much for having me on, Kristen.Kristen (21:11)
Incredible. Well, everybody check out the newsletter, check out those websites and yeah, reach out to Nicholas on LinkedIn. He has a lot of info to share. I can’t even get over how early you started in the investing world. Thank you so much everyone for listening. We will see you back next time. Okay.Nicholas Abraham (21:29)
Thank you.
