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Show Summary
In this episode of the Investor Fuel podcast, host Michelle Kesil speaks with Raamie Ibrahim, principal of D&T Consulting Corp, about the intricacies of investing and funding. Raamie shares his extensive experience in banking and how it informs his approach to helping investors navigate the complex landscape of funding options. The conversation covers the importance of understanding risk, strategic planning, and the need for ongoing evaluation of investments. Raamie emphasizes the significance of building strong relationships between investors and lenders to ensure successful outcomes.
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Investor Fuel Show Transcript:
Raamie Ibrahim (00:00)
Quite often I find the biggest opportunities is, they’re not evaluating it. They’re not even doing a look back on a year by year basis. ⁓ So one thing that I’ve kind of built is the system that we do a quarterly look back. We should make assumptions when we go into this deal and say, hey, we’re investing $2 million into this investment. Here’s the project. Here’s what we expect the ROI to be. Here’s our cap number. And then do a quarterly evaluation to say,Did we overestimate? Did we underestimate that the market changed?
Michelle Kesil (02:03)
Hey everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil Today I’m joined by someone I’ve been looking forward to chatting with, Raamie Ibrahim, who’s been making serious moves in the investing space, helping investors obtain funding. So excited to have you here on the show today.Raamie Ibrahim (02:24)
excited to be here.Michelle Kesil (02:25)
Awesome, I think our listeners are really going to take away something from how you’re approaching guiding investors to make smart decisions and yeah, learning how there’s different sources of funding available to them. So let’s dive in.Raamie Ibrahim (02:38)
Absolutely, let’s get started.Michelle Kesil (02:40)
Perfect. So yeah, first off, for those who are not familiar with you and your world yet, can you give the short version of what your main focus is?Raamie Ibrahim (02:49)
Absolutely. So I am the principal of DNT Consulting Corp. And really what my organization focuses on is just really helping investors not only understand the landscape, manage the relationship that they have with lenders, offer some alternative lending solutions to them, but also kind of help them understand the landscape when it comes and really understanding the relationship between risk and how businesses should be properly run. I am a career banker.I’ve been in the banking industry, the senior executive level for 20 plus years now. And really I’m bringing all that experience over to D &T Consulting Corporation for the simple fact that I really think there’s an opportunity for investors to really understand what the proper way to structure deals are. I think that’s very important, but also what their options are because sometimes bank lending is not always the easiest or most straightforward or even optimal solution.
especially what we’ve seen lately with the high interest rate.
Michelle Kesil (03:45)
Yeah, absolutely. And what markets are you offering your services in or as a nationwide?Raamie Ibrahim (03:53)
Yeah, I’m currently available nationwide. ⁓ I’ve spent a majority of my career in both the Chicagoland and Tampa markets, so very familiar with the Southeast and then the Midwest. I’ve also done extensive work within the West Coast, specifically the Los Angeles, California market. So really, there’s an opportunity not only for investors to reach out just to say, hey, Raamie, I have some questions. What do you think about this?I think the first opportunity that comes to mind is investors will reach out to me and just ask for evaluations, right? What do you think this business is worth? I’m looking at acquiring this building, this property, whether it’s residential, whether it’s commercial, whether it’s mixed use, ⁓ understanding what the value is. And really the point of that is to understand the cash flow model, what this building is able to create in terms of cash flow, what this building is able to create this term of.
you know, equity, but then also what’s the lendable asset that this bank presents. I think for our more sophisticated listeners, they understand the difference between a commercial property and a residential property and how values are determined. But quite often with first time or newer investors that are looking to enter to that space, I think commonly the biggest mistake that I hear is like, we’ll just do an appraisal and we’ll see.
The property next door is worth X. Well, this is not residential. The property values differ ⁓ basically based off the cash flow, not necessarily just what, you know, like a traditional residential. So kind of helping them understand that the principles are a little bit different and what they’re used to, but then also understanding, hey, why is a four flat more valuable than a six flat, for example, right? And why some of them are conforming and nonconforming and really help them understand the options that are out there.
Michelle Kesil (06:23)
Yeah, that’s so important and valuable. How did you get into this? How did you like obtain your expertise on these subjects?Raamie Ibrahim (06:32)
Yeah, absolutely. So by training, you know, I went to went to school for economics. I really wanted to do the public sector and really ⁓ urban economics was really my passion. And that’s really just city layout, how to optimize cities and stuff like that. And to be honest with you, I kind of got into banking by mistake 20 plus years ago. And I’ve enjoyed every minute of it since I hold a couple of advanced degrees from the Graduate School of Banking.I have my MBA from University of Wisconsin-Madison, and I’m also a CFA from the ⁓ University of Chicago Booth School of Business. So really put a lot of emphasis into education, my career, but then also spent the last eight years transforming community banks. ⁓ Basically coming in, evaluating what some of their strengths are, prepping them for sale, whether that’s from the regulatory side.
or the asset size and the biggest opportunity that I’ve always come in with is just taking a look at their portfolio, understanding the credit risk. And then now taking all that experience and understanding how banks structure their portfolios, why they make certain decisions, really offering that context now to investors. Not only do I think it’s very valuable to them, but there isn’t a lot of bankers that are sharing the secrets per se.
And really my goal is just to be that trusted advisor to say, here’s what I think four options are. Here’s my recommendation. What I believe is to be the most optimum. And from there kind of game plan a strategy to say, okay, what’s your goal with this investment, right? If it’s a, it’s a four flat, are you keeping it for income? Is this like a hold for the next 20, 30 years? Or is this something you look to hold for five years and then move on to the next project, right?
Whether it’s
different type of assets, whether it’s a commercial asset, regardless. So really having that, you know, what’s next also is something I think that’s not really out there in the industry. You know, you might be partnering up with a lender and the lender’s always going to say, yep, we can do that deal. We can do that deal. We can do that deal. But is that lender really asking you, hey, what’s your optimal outcome with this deal? Do you want to keep it for the next 30, 40 years or do you want to move on to different asset types, right?
really helping investors understand, know, superficially, a lot of investors will come to me and say, Raamie, I have this property, the real estate agent or the brokers telling me that it has an eight cap. I said, great, that sounds like a great investment. ⁓ How are they coming up with that calculation? I don’t know, they just told me it’s an eight cap. Okay, kind of do the education piece, here’s what we’re looking at, right? And really understanding that, you know, the risk that they’re taking.
If they can get, for example, 5 % on a CD, that extra 3 % that you’re going to gain, you’re taking a whole lot of risk. Is that even the most optimal investment that you’re choosing at this moment? Depending on the circumstances of the property of the area. I think the other thing is really helping educate investors on how banks just structure notes. Because I think that’s also important. I think quite often I’ve seen customers that kind of suffer from
Well, I didn’t understand and I didn’t know. And now all of a sudden, their notes coming up for a five-year balloon and their bank is not interested in renewing. Great. Where am I supposed to come up with like $2 million right now? I don’t have it, right? Quite often they have to then try to sell the asset. They sell it for a lower price because they’re just desperate to get out of the deal. So kind of having that plan in place and understanding that, hey, this is not just a transaction and then one and done. Like there’s got to be continuous communication.
economic environment changes, right? How banks are making those decisions. But then also, you as an investor, how do you pivot, right, in a marketplace? I would say quite often a lot of investors will come and they want to do a shopping strip, right, or a shopping mall or some kind of strip center. And those are great investments. Those are high dollars. The number of lenders that will actually do those is probably shrinking. It’s just
There’s not a huge appetite for it because there’s a huge risk. But there’s two varying philosophies. Some banks, some lenders love it if you have something called an anchor tenant, which is like a big box store that occupies 50,000 square feet, triple net lease, blah, blah. Great. And there’s other banks that shy away from those because they just say, well, if you lose that big tenant, now you’re all of sudden at 60 % occupancy. The deal doesn’t cash flow, right? So kind of.
almost interviewing the bank and just understanding what they value, what their credit policy dictates, to make sure that they’re the right lender, especially if your goal is to acquire, in this example, a strip center, transform it, you have relationships, you can bring big box stores in, a Bed Bath & Beyond or a grocery store, something like that. Is this lender, is this bank the optimal partner for that? And quite often, I can tell you those conversations never happen.
Right? That open communication doesn’t happen because the investor doesn’t know to ask those questions quite honestly. And the banks themselves are not going to volunteer that information. I feel it’s unfortunate within the industry, but that’s really my goal is just to kind of bring a lot of clarity, transparency, really bring to light just all these, I don’t want to call them secrets, but you know, how the banking industry is really functioning.
and how they’re evaluating business decisions from day to day. ⁓ I can’t tell you how many deals that, you know, when I was in the banking world, we’d do it. They’d come up for renewal five years later. Not much has changed and we decide not to renew it, right? And there’s a number of reasons why we choose not to renew it. But again, nothing on the investor’s fault, but now they’re the ones kind of dealing with the crisis, right? They’re applying for extension.
You know, quite often they’ll pay fees, extension fees. I need to get a six month extension. I’m desperate to find another lender or go the private route. And, you know, that’s not optimal sometimes as well. So really just bringing it all together, really offer a professional viewpoint, kind of top-down lens on what the strategy is, how we’re going to structure that strategy. But then also how do we create some efficiencies? You know, quite often I see investors
specifically real estate investors that don’t treat their investments as a business, right? They’re not evaluating, hey, can I do this better? Can I cut this corner? Are they shopping for insurance? Are they renegotiating leases? Are they actively looking to improve? They’re just kind of looking at it as a passive income source, which is fine. It will generate that, but can it generate more, right? And then are you structuring it in a way
that allows you to optimize your investment. So kind of offering all that guidance and insight is really what I’m trying to bring to the market.
Michelle Kesil (13:54)
Yeah, absolutely. I think that is so valuable and not a lot of people are doing that. So very important. And when you were just saying like people aren’t necessarily treating it like a business, where are those gaps that you normally find with your clients of where they can take it to that next level of having it be more of a secure business?Raamie Ibrahim (14:59)
Quite often I find the biggest opportunities is, they’re not evaluating it. They’re not even doing a look back on a year by year basis. ⁓ So one thing that I’ve kind of built is the system that we do a quarterly look back. We should make assumptions when we go into this deal and say, hey, we’re investing $2 million into this investment. Here’s the project. Here’s what we expect the ROI to be. Here’s our cap number. And then do a quarterly evaluation to say,Did we overestimate? Did we underestimate that the market changed?
Did something change within the industry that’s now changing just the landscape or the regulatory space, right? Are banks changing their appetite because interest rates are going up or interest rates are going down? Or is there a mass exodus in a zip code and you just so happen to be neighboring that zip code, right? So ⁓ number one is doing that evaluation on a quarterly basis, doing that look back.
Being agile, right, to say, hey, if it consistently underperforms because of circumstances outside of our control, there needs to be an exit strategy in place, right? ⁓ The whole adage of, you know, we’re just going to hold it until the market improves. You know, you’ve seen a lot of people do that the last three or four years. And all you’ve seen is market conditions specifically for commercial real estate deteriorate completely, you know.
I was involved in a project most recently in a 200,000 square foot commercial building in the Schomburg location, which is a very desirable business kind of hub center, not far from O’Hare, was previously occupied by a very large corporation. Normally those types of buildings go for 20 to 25 dollars a square foot, depending on the conditions.
This property went for three dollars a square foot just because that had been vacant for such a long time right couldn’t really cash flow was a cash deal and all that so if you’re an investor holding that you’ve now lost a Substantial amount of money because you couldn’t pivot right you didn’t have an exit strategy in place to say You know if I’m losing X amount of tenants. What do I do? How do I react? How do I supplement? do I augment all of that? ⁓
There’s some organizations that I’ve been having communications with that are kind of taking that commercial space and repurposing it as residential and green space specifically. So self-sustainable, there’s a lot of support for that. The hard part about that is it’s very labor intensive and therefore it’s very costly, right? It’s very skilled labor intensive. So is that an option? Does that make sense for the investor?
I think the other thing that a lot of investors are really suffering from is there’s a lot of pressure from foreign investors that are coming with cash. ⁓ If that happens, how do we pivot? If we are offered to sell, are we prepared to sell? Great. If we are going to sell that 1031 exchange, where are we moving those investment funds to? We’re not going to take capital gains. We need to have a plan. So what are we doing with that?
So being agile and kind of understanding everything is just constantly fluid and changing is one opportunity. I think the other opportunity is just having a really honest conversation on saying, this successful? Is this not successful? And having an investor define success, right? If the goal is to generate X amount of dollars per month and we’re hitting that benchmark, we’ll consider that success. If we fall short,
Is there anything that we can do, whether it’s raise rents, renegotiate leases, whatever the case is, to kind of bring closer to that number. If just the market conditions dictate, so how do we then exit just to maximize our value before it’s too late, right? So kind of understanding all of that ⁓ is a way you can become more efficient. And I think the word that comes to mind is agility. You have to be agile. A lot of people think
Real estate is more of a long-term play, long-term project. There’s not a lot of flexibility you have. You get a tenant. It’s a one-unit tenant. They stay in for 12 months. Well, is there an opportunity to be a little bit more creative with the lease terms? Can you attract a different type of tenant? Can you make a little bit of improvement to now raise the rents? What’s that cost and what’s that offset? So there’s a lot of opportunities to run your business efficiently. Having a game plan is very important.
Having a look back is very important, but also have an understanding of what the definition of success and the optimal outcome is as well.
Michelle Kesil (19:24)
Yeah, absolutely. think those are such important factors to have in mind when making these big investment decisions. So what is like a goal that you personally have for where your business is heading?Raamie Ibrahim (19:39)
really I got into this business and I got into banking because I just enjoy the relationships I’m able to build with people and I really enjoy helping people. ⁓ I would love to bridge the gap between the lending space, the banking space and the investor space. Quite often there’s just too much disconnect. And I see that just across not only investor space, but just banking in general. So I would really love to kind of bridge that gap.offer that open communications. It’s interesting because as a whole, everyone does banking on a daily basis, right? Whether it’s swiping your debit card, whether it’s logging into your account, paying bills, paying rent, car, whatever. Yet so many of us are just not really sure how the industry works. And then once you get to a little bit more complex, complicated, real estate investing, your first mortgage, you buy a secondary home, like all of those types of decisions, I would love to bring more transparency into it. And I think the
The biggest opportunity is the relationships that I build, they’re not transactional. They’re not just, hey, call me about this deal. I’ll give you a valuation. help you get funding. And then I wish you good luck. Like, I want to be a partner with you to help guide you throughout the way. And then once you have a really good understanding of the process and what it takes to be successful, I’m happy to walk away from that relationship. But quite often, I’ve seen that
sophisticated investors really want that trusted advisor where they can just pick up the phone, hey, here’s the deal, tell me what you think, yes or no, ⁓ what deal should we get out of to get into this one? What do you think, you know, I’ve got a note due in 12 months, 16 months, 18 months, whatever, what should we do with this property? Should we keep it? Should we get out? And I think the other goal is what role crypto is going to play in all of this.
Right. I think I get a lot of investors that are crypto investors that want to now pivot their crypto into real estate. What’s the most optimal way to kind of transition from crypto to real estate and what really build a system where you can acquire real estate and crypto? Part of my banking career was successfully building the first stable coin that’s currently out right now, the U.S. dollar backed stable coin.
So really understanding some of those metrics kind of working behind the scenes, but also having those relationships in order to get it done as well.
Michelle Kesil (22:05)
Yeah, totally. Relationships are everything in this space. So before we wrap up here, if someone wants to reach out, connect, learn more from you, where are some of the places that they can find you?Raamie Ibrahim (22:20)
Absolutely. So you can find me on LinkedIn, Raamie Ibrahim. I have a personal website, raamieibrahim.com, dntconsultancorp.com. Also, you can reach me there. And then you can always, you know, just, I’m available 24-7. I’m on Manect, if anyone’s on Manect. That’s a great social tool that people use to connect if you just had a quick question. But all my social media is, can find me at Raamie Ibrahim.I’m always happy to answer a question, ⁓ just to offer guidance.
Michelle Kesil (22:50)
Well, I really appreciate your time, your story, and your perspective. So thank you for being here.Raamie Ibrahim (22:56)
Thank you for having me. really enjoyed our time together.Michelle Kesil (22:59)
Yes, absolutely. And for the listeners tuning in, if you got value from this, make sure that you’ve subscribed. We have more conversations with operators just like Remy who are building real businesses and we’ll see you all on our next episode.
