Nicole Pendergrass started her career in value-add commercial multifamily with a three-family house hack in the Bronx. Today, she is the founder of Noirvest Holdings, which focuses on value-add commercial multifamily with a mission to increase equity and net worth for communities of color. In this episode, Nicole shares how her first property helped her to become an LP investor, the hardest lesson she’s learned so far, and how she plans to execute her mission.
Nicole Pendergrass | Real Estate Background
- Founder of Noirvest Holdings, which focuses on value-add commercial multifamily. Their mission is to increase the equity/net worth of communities of color by providing access to investment opportunities.
- Portfolio:
- Owns three properties, totaling 14 units. Three are owned solely and 11 owned 50/50 as JV.
- LP of 96 units
- Full-time career is in health care administration.
- Based in: Bronx, NY
- Say hi to her at:
- Best Ever Book: The Gap and The Gain: The High Achievers' Guide to Happiness, Confidence, and Success by Dan Sullivan
- Greatest lesson: Patience. Keep pushing and hustle, but be patient. Chips will fall into place and momentum will build.
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TRANSCRIPT
Ash Patel: Hello, Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I'm Ash Patel, and I'm with today's guest, Nicole Pendergrass. Nicole is joining us from the Bronx. She is the founder of Noirvest Holdings, which focuses on value-add multifamily. Their mission is to increase the equity and net worth in communities of color by providing access to investment opportunities. Nicole owns 14 units across three properties and is also an LP investor. Nicole, thank you for joining us and how are you today?
Nicole Pendergrass: I'm doing great. Thank you for having me. I appreciate being on the show. I'm excited.
Ash Patel: Fantastic. We're happy to have you as well. Nicole, before we get started, can you give the Best Ever listeners a little bit more about your background and what you're focused on now?
Nicole Pendergrass: Okay. My background is I started with a three-family house hack. I actually took my first real estate investing course through Rich Dad Poor Dad. I don't even know if I read the book first or if I went to their three-day seminar first. But in any case, I was introduced to that community, and of course, that's the impetus for a lot of people getting started into real estate. Once I discovered that real estate was possible for normal people, I said, “This is for me. This is what I've been looking for. This is my way to create my own future, my destiny, and take control of my life.” I just jumped in, and I was learning a bunch of different strategies.
I always liked the idea of multifamily properties, and when I got the opportunity to buy my three-family in the Bronx and house-hack, I just jumped on there. I actually had to do some wholesaling type of techniques to find that property. I used a direct mail campaign, sending out cards to owners of properties in the area, because I couldn't find anything that I was looking for in price range or whatever, but that can go into a lot of detail. I'm just going to cut to the chase.
In any case, that one property completely changed my life; it changed my financial future, it changed my opportunities, I learned how to be a landlord, I learned how to properly manage, I learned how to deal with contractors and the whole nine yards, I learned how to have to control my emotions when payments weren't coming in, and you have to still be professional. It was a great learning experience through all the trials and tribulations.
A few years later, I was able to refinance, pull out some equity, and that was the start of me going into the commercial side and growing my portfolio. I was able to join a multifamily community and get more education, get a coach and mentor, which I knew was necessary if I really wanted to grow. From that, and networking, and just digging into a market that was nearby me... I happened to come across someone and I met someone who was already established in the market that I wanted to go into. We ended up partnering on a property, that was a six-unit property.
From there, it was a heavy value-add. We've put in a lot of time and effort turning that property over, and that happened to be during COVID, so rents ended up skyrocketing more than we had even underwritten from the beginning. Now, we've basically doubled the income of that property. We just did a cash-out refi and purchased another property together in the same market, but a couple of towns over.
So I basically used that first house hack to scale my portfolio and just refinancing, pulling out equity, improving the property and operations, and scale that into three properties, and also using that first property. That was how I got into my first LP position and as a syndicator in the Houston, Texas area. It's just the power of real estate, and that's why I love talking about it, I post about it all the time, because I want people to know that even if you're starting from very little or not a lot of resources, you can start small and really work your way up and grow your portfolio starting with one property.
Ash Patel: Nicole, I love that story. Let's dive into some numbers. The three-family in the Bronx that you house-hacked, what was the purchase price on that?
Nicole Pendergrass: 505k. Let me say, when I first started looking for property, I actually was going to use a grant for first-time homeowners, and I got pre-approved for 250k. I couldn't do multifamily with that and there were time limitations on that grant. I ended up looking for condos because, with that grant, I didn't think I would be able to qualify on my own to purchase a property. That ended up falling out. Long story short, two condos, failed contracts fell out, and I ended up just like, “You know what? I don't have this grant. Let me just do what I was going to do and look for a multifamily property anyway.” That's when I decided to do the direct mail campaign. So I would have never even found this property, because I wasn't looking at anything $500,000 like, "Are you kidding? I'm approved for 250k. I can't afford $500,000."
I even went into this first property telling the owner, I said, “Okay, I looked at it--", I knew how to use Acuris, which is a system in New York City to look up property records and owners. I knew the owner had just bought it, I knew he paid cash, so I knew he was a flipper or a rehabber. I say, “Okay, so this guy's an investor, he doesn't live there, and I'm going to negotiate with him for seller financing.” That's the only reason. I didn't even know what purchase price he wanted at first. I just said, “I'm going to negotiate seller financing.” That didn't work. He said his mortgage broker was the best in town, he would get me approved, "Don't worry about it, don't worry about it, don't worry about it." I'm thinking in my head, “Alright, I'll go through the steps, and as soon as that doesn't go through, I'm going to come back to you for my owner financing.” This is what I'm thinking in my head. And then it went through. You've just got to keep pushing through, you never know.
Ash Patel: Alright, that's [unintelligible 00:06:52.22] so 505k. Was it leased out or did it need rehab?
Nicole Pendergrass: No, he "rehabbed" it. It was a newish build, it was built in 2007, so I don't think there was much that he needs to do. It was basically vacant until he bought it. I think the original person who was going to purchase the property never moved into it, because that was right at the crash. So it sat vacant for a while. He bought it, he did probably very minimal to it, but it still was move-in-ready, so I didn't have to do anything. It was vacant when I saw it. He placed tenants to help me out when I closed that I would already have rental income coming in.
Ash Patel: What did your loan look like on that property for 505?
Nicole Pendergrass: FHA, and I used 3.5% down. I came in with $17,500 was the down payment, and then plus closing costs and some other things. I probably came out $21,000, $22,000 total to purchase that.
Ash Patel: Nicole, what are the rents on that property? Or what were they back then and what are they now?
Nicole Pendergrass: The two units were $1,750 each. It was a three-bedroom, three-bedroom, and two-bedroom. I took the two-bedroom, because I wanted more rent from both of the three-bedroom apartments, and I was alone. I had a boyfriend at the time, so they were both renting for $1,750.
Ash Patel: And the three-bedroom was also $1,750?
Nicole Pendergrass: Yeah, they're both three-bedrooms, and I was staying in the two-bedroom.
Ash Patel: Got it.
Nicole Pendergrass: $1,750, and now they're $2,100, $2,000 and -- I've moved out, so my two-bedroom, I'm renting for $1,950. Now, I'm in the process of selling that property actually, so it is vacant now again. But that was where the last rents were a couple of months ago when our tenants were still there.
Break: [00:08:33.03] – [00:09:34]
Ash Patel: Why is the property vacant? Is it because you're expecting an owner-user for the entire building?
Nicole Pendergrass: No, the buyer hasn’t accepted the offer. It was not vacant when he first saw the property, but he wanted it vacant, because that's just how they purchase properties. I really wanted the tenants to stay, because the tenants that I have now are really good tenants. They paid on time all the time, these were the best tenants. Of course, I had problems with my first set of tenants, because I did not screen them. But after one set I did have to evict for non-payment for about a year. But after that, like now, I had great tenants and I wanted them to stay. But unfortunately, this buyer, the best offer that I got, they wanted it vacant. You know what I did, because I felt bad about that and because they were such great tenants, I paid -- in New York City, renters normally pay a broker's fee to find good apartments, so I paid all their broker's fees for them moving out, so they wouldn’t have that extra expense.
Ash Patel: That's great. What's the sale price?
Nicole Pendergrass: Oh, man. 905k, cash offer.
Ash Patel: That's a big win. And you said that property helped you become an LP investor.
Nicole Pendergrass: Yes. Actually, when I refinanced... I purchased it in 2015, I refinanced it in 2019, so I was able to cash out. A portion of that equity, I used as an LP position in a 96-unit property in Houston, Texas. It might be not exactly in the city, but in that MSA area. That was 2019; they actually have an accepted offer, and so we should be getting a closing... It was supposed to be the end of this month; I'm sure I'll get an email soon about that. But that was great, because I didn't have to do anything.
Ash Patel: What made you want to be an LP investor? When you took down your own deal, you know how to make money, you know how to grow money, why invest in someone else's deal when you could have been investing in yours?
Nicole Pendergrass: You know what? To be 100% honest, at that point, the person I invested with had a program where you could come in as an LP investor... I have a learning curve, so you kind of split the LP and GP position. It was more for the learning when I was just debating which kind of community and mentorship group that I wanted to go with. I was debating on with them versus another group. With them, I was going to invest in the deal, but then I also was going to learn as we were repositioning that property. It didn’t end up that I got to be in that position that I thought I was going to be in, but my money was already invested. I said, “You know what, it's fine. It’s invested. This is a great learning experience, for me to be on the LP side.” Actually, I'm not upset at all, because I'm getting great returns and I didn't have to actually do anything. That gave me the freedom to actually still join my other group and still take down other properties as a joint venture.
Ash Patel: Nicole, do you know what the returns are and over what period of time on that LP deal?
Nicole Pendergrass: It was an 8% preferred return. That was 2019. We're getting quarterly distributions; we didn't get the first quarter because that was right when COVID hit. We got the second one, and then they actually refinanced and we got 50% of our capital back on the refinance. Then we've been getting our quarterly distributions at the 8% preferred return. Now, at the end, the last email that we got about the sale, it should be, I believe, like a 23% IRR, which is not shabby at all.
Ash Patel: Yeah, you did well. Nicole, in your bio, it says the mission of your company is to increase the equity and net worth and communities of color. How do you do that?
Nicole Pendergrass: I haven't had the opportunity to actually implement that part of my mission as of yet, because I'm still looking for opportunities large enough that we need to syndicate. The two properties that I've taken down as a more ownership kind of control position, they've both been joint ventures. I am currently implementing a direct-to-seller strategy to contact corners in the neighborhood and areas that I'm looking in. I'm partnered with some really great operators and people who have done syndications before. Within my mastermind and the community that I have, we can take down much larger deals. As soon as that happens, I want to do a 506B syndication, so that people who are unaccredited or maybe don't have the net worth requirements are still able to come in and invest. We'll see what those minimums are. But another idea that I wanted to implement is potentially creating a fund in the future where people who don't even have the standard minimums that most syndications require would still be able to come in and invest.
Those are all things that are work in progress. Otherwise, the way I'm giving back is actually just helping family and friends and whoever needs to have a phone call with me. I post a lot on social media, just to educate and inspire people. And then as people schedule calls and I give advice, I kind of see what their goals are, where they're at now, and what resources they have. I go from there and try to give them as many resources that I have and share that with them and give people ideas of where to get more information, or how to move forward, and what kind of goals I can give advice on based on my experience.
Ash Patel: Nicole, what has been the hardest lesson you've learned so far?
Nicole Pendergrass: Oh, man. Trust, but verify, I guess. That comes actually from my very first property, the three-family house hack. The seller had the guise of being extremely helpful, but he played around with his wording, so as to not lie, but not completely tell the truth. He likes to say, “Trust me. Trust me," all the time. "Trust me. Don't worry. Don't worry" for anything. That I learned after closing. There were a lot of things that weren't presented in the same way that he made it seem.
So I would say trust but verify, and stick to your guns. Especially if you have gotten the education and you have done some of the work upfront, don't let other people either dictate your dreams or tell you what can or can't be done, even if they're more experienced than you. That's why a community is important. Make sure you have community, reach out to other people who you trust, verify the information that's being told to you or presented to you in different ways. Just keep moving forward and don't let the small things impede you or stop you from progress.
Ash Patel: Good advice. Nicole, are you ready for the Best Ever lightning round?
Nicole Pendergrass: Yes, of course.
Ash Patel: Alright. Nicole, what's the Best Ever book you recently read?
Nicole Pendergrass: Right now, I'm actually reading Atomic Habits right now. I would say it's really good. But the last one that I read and completed that really shifted my mindset a ton was The Gap and The Gain. Please read that. That really helps.
Ash Patel: Nicole, what's the Best Ever way you like to give back?
Nicole Pendergrass: Right now, it's kind of like what I said is sharing information and helping people get out of their own way mindset-wise, and getting out of their own funk, so that they can build wealth and live abundantly.
Ash Patel: Nicole, how can the Best Ever listeners reach out to you?
Nicole Pendergrass: I'm very active on LinkedIn, Instagram, and Facebook. LinkedIn or Instagram probably -- or any of them are great. Or you can visit my website at noirvestholdings.com. I have a page there with all my LinkedIn channels, you can contact me through a request form there, you can send me an email and I answer as quickly as possible.
Ash Patel: Nicole, thank you for your time today. You being inspired by reading Rich Dad Poor Dad, finding your own first house hack through direct mail marketing, and you're on your way to your first syndication. Thank you for your time.
Nicole Pendergrass: Thank you so much for having me, Ash, and have a great day.
Ash Patel: Best Ever listeners, thank you so much for joining us. If you enjoyed this episode, please leave us a five-star review. Share this podcast with someone you think can benefit from it. Please also follow, subscribe, and have a Best Ever day!
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