He built a $450M real estate portfolio—hear his thoughts on todays market.

TL;DR – Nectar is positioned to win in the current tough environment.

• Our strict underwriting standards mean we only work with proven owners and operators whose portfolios can withstand 15%+ revenue declines or more.
• We’ve taken the biggest risks completely off the table by only lending against stabilized, cash flowing assets with fixed rate debt that matures after we’re paid back.
• We’re helping prudent investors with low leverage and high coverage take advantage of opportunities from distressed sellers.

–

It’s a hard time out there for real estate.

Fewer transactions are happening in the market. Credit standards tightening. Capital is just harder to come by. This will be a problem for the people who are not well positioned.?

But there is another group of people going through this environment also — people who are well positioned. For them, this environment is exciting. The economy is reshuffling the deck to put the prudent and strategic investor back on top, awaiting the good deals that they know have come in historical pullbacks.

Let me explain.

In 2021-2022, many investors purchased properties at high prices, using 2 and 3 year bridge loans with aggressive assumptions. They have to find a way to meet their obligations, which they took on by promising to achieve these aggressive assumptions. They will have to refinance or sell their properties in an environment where capital is scarce and expensive (if available at all).

Meeting their obligations will be difficult for these aggressive operators. Some will make it. Many will underperform. And when their high leverage debt obligations come due, they will have no choice but to recapitalize by paying down their existing loans or selling. This is called deleveraging.?

The capital to allow for this deleveraging will have to come from somewhere and it will not be traditional banks... It typically comes from prudent investors who are well positioned to take advantage of an environment like this.?

My co-founder Brittany and I are investors. We started building our portfolio in 2010 when prices were low. We learned so many lessons. We made money, and we lost money—but the market always went up and always bailed us out. We sold the vast majority of our real estate assets in 2020 when we were unable to purchase lucrative deals. When apartments built in the 1970s were selling for 4% cap rates (cap rate is the annual returns that they would make before debt service), we decided to sell into that market and look for a better way to make money in real estate.?

To accomplish this, we started Nectar . At Nectar, we invest in properties that do not have high leverage loans. Our current portfolio leverage is 55%.?

We invest in deals that are already cash flowing very well and can rely on actual performance instead of unrealistic or just unknowable projections. And we ensure that all of our properties can withstand revenue declines of 15% that persist for the entirety of our term.?

At Nectar, we partner with prudent investors.

The nature of finance and compounding is that even if you are a prudent investor and have lower leverage, it just takes a long time to amass a large volume of liquidity. Most real estate investors have their net worth tied up in their properties which are not liquid, especially investors in my generation who are still in the building phase of life. They have their wealth in a stable, but very illiquid place, which is well-managed, low-leveraged properties.?

Nectar is arming these prudent investors with the liquidity that they need to take full advantage of this environment. We provide the capital needed to rightsize over-levered or destabilized investors by using collateral from low leveraged and cash flowing properties.?

Some investors have both kinds of properties and need to mend their own portfolio. Some will use our capital to purchase over levered properties from others as they are forced to sell because their loans are coming due.?

Since capital is scarce for both prudent and aggressive investors, this is an outstanding environment for Nectar. We get to have strict guidelines, targeting our most ideal customers. And we don’t have to compete with a lot of other capital providers,

??

These are the environments where Warren Buffet, Sam Zell at Equity Group Investments , Ray Dalio , J.P. 摩根 (the list goes on) made their fortunes.?

A generation of investors is finally getting a chance to prove ourselves. Future business leaders will create wealth just like those above in this environment. I believe that the coming deleveraging is going to be the first time that my generation will get a shot at creating real wealth. And I have been waiting for this for my entire career.?

We look forward to continuing to align with like minded investors as we build! Stay up to date with Nectar News here.

Derrick Barker , Co-Founder CEO, Nectar

Update on Nectar:

Right now, we’re in the calm before the storm. ?

We are continuing to amass well-aligned capital and positioning ourselves to be able to distribute capital to prudent investors throughout the country. As anticipated, many capital providers are not wanting to take risk in this environment. That lets us know that now is the time.

We are doing strong deals with prudent investors who are leveraging their strong, cash flowing properties to improve and expand their portfolio.?

As a company, our team is in place and our distribution network is growing substantially.?

We look forward to taking full advantage of the wealth building opportunities that will come about as we get deeper into this deleveraging cycle.?

If you are interested in learning more about how you can build wealth via Nectar, please reach out!

About Derrick Barker:

Derrick Barker is the co-founder and CEO of Nectar , the cash flow based financing platform for experienced short term rental owners and managers. Derrick has 12 years of experience in real estate development, operations, and finance.

Prior to starting Nectar, Derrick began his career as a trader at Goldman Sachs. He eventually left that position to focus on real estate, growing his portfolio to more than 4,700 units and $400 million in asset value. Since then, Derrick has helped build multiple successful real estate businesses. He and his Nectar co-founder, Brittany Mosely, are members of ScaleUp ATL and graduates of the TechStars Atlanta accelerator.