Multifamily Development in Opportunity Zones with Nazar Vincent of Avatar Construction

Erika (01:31)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and today I’m thrilled to be joined by Nazar Vincent, a powerhouse in construction. He runs Avatar Design and Construction. Nazar, it is so good to have you on the show.

Nazar Vincent (01:48)
Thank you. Thank you.

Erika (01:50)
I think our listeners are really in for a treat with all the knack of knowledge that you have, so let’s dive in. Nizar, how did you get started in real estate?

Nazar Vincent (02:01)
Well, first of all, want to say I’m in my home office, so I don’t have my suit on. ⁓ I’m in my white t-shirt in my home office, but ⁓ pleasure to meet you and thank you for having me on this podcast. ⁓ How did I start in real estate? Real estate was ⁓ something that I saw from childhood. ⁓ I remember back in my homestead,

⁓ I grew up on a farm and going into the fields and watching the, you know, watching after the farm and cows and herd and sheep. ⁓ Fields were just filled with grain and trees and grass and things like that. And I said to myself,

Wouldn’t that be great to put buildings on all this land? And what would it be like? A community with beautiful buildings, skyscrapers, and ⁓ underground tunnels and things of that nature. And all that I knew back then was what I was exposed to. When I, ⁓ after my early youth came to United States, landed in New York,

I served with my real eyes and that’s when the real beginning began. When I saw New York Towers and how New York was built on a landfill, I said to myself, wow, this is all possible.

So I was very much inspired. And from there on, I started from nothing. I started my career with a $300 credit card, at which point I would buy tools at Home Depot. Thank goodness for Home Depot return policies. That would help me a lot. I would buy the tools that I needed for the day for my assignment, and I would then return them.

and buy new tools that I needed for the next day. ⁓ And that’s how I started growing the business back when I was roughly 18 years old.

Erika (04:19)
Wow, that is pretty awesome, Nazar. Can you share today what ⁓ is your main specialty these days and which markets are you active in?

Nazar Vincent (05:20)
⁓ Beautiful question. ⁓ The markets that we’re in are multifamily and single family as a developer and as a general contractor, design, build general contractor. We are in tenant improvements on a smaller scale. ⁓ We don’t do many projects that are under a million for tenant improvements, an existing structure for a landlord. And then they go all the way up to

50, 60, 100 million. And those are warehouses, ⁓ biotech buildings, labs, we have done a lot of labs. So educational, medical. ⁓ In the last ⁓ four years, we’ve been switching strongly to multifamily, mixed use, ground up, and opportunity zones. ⁓

for those that don’t know Opportunity Zones, there’s a great, great, it’s a great investment vehicle that virtually operates without ⁓ capital gains and taxes. ⁓ So that adds to the bottom line. ⁓ And single family, shortage of single family is in Rhode Island, in New Hampshire, New Hampshire especially, and.

parts of Massachusetts. We tried to stay in ⁓ those that are very ⁓ much in need and ⁓ in the market that’s between a million and three new construction homes that are ranging between 3,000 square feet and 6,000 square feet. And we seem to do very well with that. There’s a, there’s…

The land is always good to buy and build on, but essentially the land pools dry up and you have to go outside of ⁓ metro areas. So we are now ⁓ testing and building in sub markets and it’s going very well. ⁓ We are finishing up. ⁓

Mid-high-rise eight-story 77 unit apartment building that’s going to get stabilization with tenants in the month of November this year. And we’re starting another project that’s the same structure except three times bigger, 252 units with beautiful amenities and parking.

that a sub market city needs and that is going to be starting next spring. That’s 252 units.

Erika (08:01)
That’s exciting. With all the opportunities out there, Nazar, how do you decide which projects to pursue?

Nazar Vincent (08:09)
Another good question, which projects to pursue? That starts with not the design so much. lot of ⁓ young investors and ⁓ landowners, typically what I’ve seen will design a project, hire an architect, engineer, and nothing for nothing. But ⁓ I find that architects and engineers are good at what they do.

but they’re not investors, they’re not builders especially. And really they don’t understand the agronomics between ⁓ cost and underwriting. And that’s not their field. So they need to be constantly guided. And most landowners that are inexperienced will trust that the engineer slash architect, any other professional will guide them.

but that’s not the case. And so what I mean by that, it’s very important to get the right consultant like Avatar, like myself, to underwrite the deal before it’s even designed.

So in other words, you take the land cost, you take the construction cost, you take the debt cost, you take the operating expense, and then you look at your revenue and see if it works. If it doesn’t work with the right criteria, with the right… ⁓

DSCR, that coverage ratio, that numbers is gold. If that doesn’t work, something’s got to change or this project is dead. And as Kevin O’Leary says, take it behind the bar and shoot it.

Erika (10:27)
Yep. Speaking of which, ⁓ every operator has a crazy story or two, a difficult time. Can you share a moment where a deal went sideways and you had to pivot fast? What did you learn from it?

Nazar Vincent (10:43)
that seems like many times. Deals go sideways almost all the time. ⁓ And how you reflect to that and how you prepare for that is how you come out of it. So for example, my latest deal was

Erika (10:45)
you

Nazar Vincent (11:03)
difficult to overcome during ⁓ rates when they went from, I want to say the prime rate in 2022 went from four and a quarter to seven and a quarter or maybe even higher. I don’t recall exactly, but it doubled basically. So what does that mean? Your cost of debt went up.

twice as much. if your mortgage is say $300,000, now it’s going to be $600,000. Your expenses went up to operate the building, but your revenue did not go up double. All of sudden the rent did not go from $3,000 for a two-bedroom apartment to $6,000.

So that became very, very difficult. ⁓ And what helped in my situation and why I love design build because we can control the cost. So if I was just a developer and my team was just strictly ⁓ focused on underwriting on

all the numbers, which is great, but if you have no control over the construction cost and you have to rely on bids from general contractors who could at some point say inflation, increase in cost.

And we didn’t carry as much contingency. Therefore we chewed up all the contingency. Now it’s a change order of X amount of dollars, blah, blah, blah. In other words, construction costs is going up. You’re not ready for it. You’re in deep trouble. Now, how is that different with us? Or at least with my setup is that we are in-house design, construction, entitlement, everything besides banking.

we have everything in house. So our deals are off market. We don’t have to rely on any ⁓ real estate agents, how the deal can go sideways. We control it. ⁓ Everything is pretty much from A to B, meaning A being say the seller, B being the buyer, us, and vice versa. this communication is very much.

⁓ dialed in and there is no interpretation of someone who thinks maybe something went otherwise. We also are in charge of negotiating of the construction cost. So it’s our internal setup and we could defer the profit of the construction cost because it’s us. So we could say we don’t need the profit right now. We just need the overhead to operate and we’ll defer the rest later. So what does that mean? When the cost of debt goes up,

You have to decrease something somewhere or increase your revenue. If you can’t increase your revenue, you have to decrease the cost somewhere. we are able to decrease the cost internally and still playing out. So with that being said, that was what helped me pivot with this difficult situation. And of course the interest rates went down a little bit. I was lucky a little, and the compilation between, ⁓

the combination between the construction cost, control of construction cost and the interest rate going down, i.e. ⁓ lower cost of debt helped out to plane out and get underwritten and get the construction loan and move forward. So construction loans are tough. ⁓ lot of banks and lenders will ⁓ shoot for giving you less than more.

and ask you to put more to lessen their risk. And hence why it brings to the next subject is equity is where we’re seeking in the market.

Erika (15:54)
Nazar, I want to rewind a little bit. You were talking about how like almost everything you do is in-house, which is fantastic. That’s an awesome strength that you have with your company. Can you break down for people and give some advice for how you build out a team like that?

Nazar Vincent (16:15)
Vice is, the team is built on strength, it’s built on foundation, it’s built on a few that can hold, like the Hercules that can hold the weight.

Because if your first two fail, or your first one out of two fails, now you’re kind of like a, let’s just say, let’s use three as a three-legged stool. Now you have no leg. You have to fix that leg until you have a three-legged stool. And to get that three-legged stool could take some time, because that’s your core. And those people cannot fail you pretty much. Then you start building another three-legged stool on top of that, and you start stacking them.

⁓ That’s the best analogy I can come up with and that is just simply vetting those people out. I don’t believe in going to a

Employment broker and saying we’re gonna take this guy from this company bring it to you and he’s the best in sliced bread and he might be but until he’s tested he’s not so it that goes back to the time is I’ve seen people be with me for a year and come to find out they’re no good and I’ve seen people be with me for Five years seven years and saying where am I gonna go?

I’ve been with you for seven years, might as well stay. If it came to that discussion. And I look for people that, if I look at a resume and I call them grasshoppers, not because they’re green, but they hop around.

It’s like same thing if in a marriage somebody’s divorced three times. I think the problem is not with that person, not with the people that they divorced, but the person itself because something’s wrong. ⁓ It’s the same thing with employer, employee. ⁓ If you went from one company for a year, you’ve been there, then another company, another company, another company. And it’s always the same answer.

it’s the employer. it’s the issue with them. it’s a bad company. yeah, they have hundreds of employees and you’re the only one that has that opinion and the other ones are there. I think something’s off here. So that’s probably my biggest thing is if somebody’s been with someone for 10 years and then there’s a divorce. Well, at least they can be with someone for 10 years. So that’s, that’s, that’s key.

Kind like underwriting key for employment. and I think the rest is just testing. I don’t think you can hire someone thinking they’re going to be the best for you and this and that, which is why brings to another, I guess, answer a question why people ask me, how come you don’t have, you know, the president of the company and the vice president and this, I go.

I don’t think the company is ready for vice president because the underlying keys are what’s that three legged stool on top of a three legged stool on top of that other one. And those people have been with me for a long time and this new guy is going to come in and tell him what’s up. Not going to work very well. It’s very much important to promote within that way people know that person and maybe jealous a bit of but hey.

you promote the right person. Bringing new people on, I think maybe works in large corporations, not in a small business.

Erika (20:06)
I love what you said and it makes sense that you’re so intentional about who you bring in the work with you. Now talking a little bit more outside of that circle, but still in the circle that you know, what’s been the biggest game changer for you when it comes to building relationships in the industry and growing your network?

Nazar Vincent (20:29)
Biggest game changer, I would say.

I think when I moved to more ⁓ metro area, I met my wife, ⁓ she was from DC. I lived in New Hampshire and we decided to connect in Boston and stay.

⁓ opened up a lot of doors from the fact that you constantly, I constantly meet new people. So it’s important in my opinion to stay in the city if you’re gonna meet new people. It’s cool and chill and you can go hiking and relax and park your car without issues and traffic when you’re in suburbs. We don’t expect to meet too many people that will help you along in your life. So I think that’s a big lesson to me that I didn’t do that sooner.

I met a

guess a platform a teen called Mastermind Boardroom ⁓ by Ken Clothier who’s an entrepreneur and some people know him he’s from California, San Diego. ⁓

I started networking, I started going to meetings in Chicago, like I mentioned, every quarter. We met in Seattle, we met in Tampa, we met in Miami, we met in Boston. And through those meetings, the same and better people are in those rooms. It’s a very selective team, about 350 people.

And everyone gets to work with each other in different rooms. So we get to meet each other. And some are in similar industries. Most of us are in real estate, ⁓ but different, I mean, real estate is vast. I you can be in so many things, ⁓ lenders and brokers and yadda yadda yadda, wholesalers, developers. ⁓ So that helped me a lot. And I think, ⁓

another lesson learned which I kind of knew but I wish I stepped on it a lot quicker in my life is not to associate yourself with people that are when I say less than you I don’t mean that in an egoistic way but they know less than you they’ve achieved less than you what could you gain from them

Not much. Maybe good friends. That’s not nothing wrong with that. Loyal friends help you move furniture. Maybe, you know, I don’t know what else they could do, but, you know, support you in some way. But I personally, if I’m going through a hard time, I would want to be around someone who’s stronger than me. Who can say, get up, wipe your snot and let’s go. Not, you’ll be fine. Don’t worry about it.

You know, things happen. That doesn’t help.

Erika (23:38)
Yeah, totally. So let’s look ahead, Nazar. Can you share more about what do you see on the horizon? Is there a dream project that you’ve got your eyes on? Are you looking to scale? Tell us more.

Nazar Vincent (23:52)
Scalability has been my, well, talking about S’s, ⁓ the strength that I have is scalability. Everything I look at, any business, anybody who invited me to ⁓ another business to invest into, I always say, is there a scale? That’s instantly what I look at. Scale, cash flow. If you don’t have both, not interested.

⁓ Cash flow is key. It’s blood to our body. If you compare, if you don’t have your blood circulating, you’re dead. ⁓ You go home at work, as I always say. We don’t have cash flow. We all pack up and leave. There will be no business. And if we don’t scale, I mean, what is this for? Just to go to work, get a paycheck, go home.

feed the kids, go to bed. Fine, to some people, but it’s not exciting at all. hence why we’re finishing up a 77 unit building going to 250 units. You may say, what a great jump, crazy jump, three times. ⁓ Well, it just worked out that way. It was just a project that was available.

Erika (25:12)
All right, Nazar, before we let you go, if someone wants to connect with you, learn more about avatar design and construction, maybe they want to collaborate, what’s the best way for them to reach you?

Nazar Vincent (25:25)
My email is Nazar at avatarconstructioninc.com.

So it’s Nizar at AvatarConstructionInc.com. My name is spelled N-A-Z-A-R and my number is 781-488-8509. 781-488-8509. Text me, call me. Leaving a message is okay, but text or call is better.

Erika (25:52)
and Nazar. Thanks so much for dropping all that knowledge today. Your focus on strategic growth and building the right team is exactly the kind of insight that our listeners need to level up.

Nazar Vincent (26:03)
All right, thank you for having me.

Erika (26:04)
everyone tuning in. If you got value from this episode, make sure you’re subscribed. We got more conversations like this from operators like Nazar who are building incredible real estate empires. We’ll see you on the next episode.