By KIMBERLEY HAAS
The co-founder and CEO of a platform that provides cash flow based financing to real estate entrepreneurs says there are opportunities arising for commercial property owners and managers.
Derrick Barker said in a recent interview with The Mortgage Note that he predicts there will be a deleveraging throughout the nation in 2024, explaining that there were people who bought assets in 2021 and 2022 at the top of the market with aggressive assumptions in terms of occupancy, price appreciation, and rent growth.
Many of the loans were for three years so with expectations not panning out, that is putting pressure on those commercial and rental real estate owners, Barker said.
“A lot of these people are going to be forced to sell, or renegotiate, or refinance in some way,” Barker said.
Barker said in some markets, such as Phoenix, Arizona, and Austin, Texas, where there was a lot of hype and a bigger run-up, there are already opportunities driven by property owners who would rather sell off their assets than refinance in a high interest rate environment.
“These are the times where there are deals in the market. Right now. Deals are happening in the market right now. And we’re going to go through a period where there’s just going to be deals that will be asymmetric opportunities,” Barker said.
Nectar is based in Atlanta, Georgia, and does business in 27 states. Before starting Nectar with his wife, Brittany Mosely, Barker had bought, renovated, and developed more than 4,500 apartment units and managed $400 million in assets.
“Our company, what we do is we find those prudent investors who own stabilized cash flowing assets with moderate leverage and we provide them flexible capital. We provide them the liquidity they need to build their portfolio in times like this,” Barker said.
Barker’s advice for people interested in opportunities in commercial and rental real estate is to have extra money for unexpected costs built into their budget.
“If you have a $1 million budget, buy something that has an $800,000 total deal cost,” Barker said.
Examples of business leaders that have benefitted from an infusion of flexible capital from Nectar include an owner of storage units in Indiana with plans to expand to 500 locations, an owner of small to mid-sized multifamily properties in the Northeast, and the co-principal of a hospitality company based in Florida who also has his own real estate investment business focused on multifamily apartment buildings.
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