I gotta be honest with you. I didn’t think this topic would make it to the show. I was skeptical about the concept and the structure of what you are about to hear about didn’t sit well with me. But Derrick Barker won me over, as I’m sure he will for you also. So today on Flipping America we are going to learn how you can sell your cash flow.
Derrick Barker from Nectar is joining us in a few minutes to talk about an interesting way of raising money that doesn’t involve debt. Nectar is an online financing and data platform built to provide fast, flexible capital to short term rental owners and operators. They provide experienced real estate entrepreneurs access to cash flow based financing and sell diversified, fully passive cash flow backed investments to accredited investors.
Derrick is the co-founder and CEO of Nectar, the first-ever cash flow marketplace for real estate entrepreneurs. He 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.
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I went to Google and searched on the phrase, “sell my cash flow” and got multiple pages with people who want to give me a cash offer for my house and other links to articles debating the wisdom of selling my rental property.
So I googled cash flow marketplace. Nope. I wonder what search terms you have to enter to bring up usenectar.com organically. I haven’t figured it out yet and it’s time to air this episode. But it doesn’t matter. If you are an experienced short term rental operator and need cash, I suggest you look seriously at this option.
Tags: real estate, real estate investing, Flipping America, Roger Blankenship, rental houses, flipping houses, short term rentals, airbnb, cash flow, capitalization, real estate loans,
Twitter Tags: #realestate #realestateinvesting #realestateinvestments #realestateeducation #flippinghouses #RogerBlankenship #FlippingAmerica
Expected Air Date: Fri 9/16/2022
Guest: firstname.lastname@example.org 404-788-3434
2022, Roger Blankenship
I gotta be honest with you. I didn’t think this topic would make it to the show. I was skeptical about the concept and the structure of what you are about to hear about didn’t sit well with me. But Derrick Barker won me over, as I’m sure he will for you also. So today on Flipping America we are going to learn how you can sell your cash flow. Derrick Barker from Nectar is joining us in a few minutes to talk about an interesting way of raising money that doesn’t involve debt. Nectar is an online financing and data platform built to provide fast, flexible capital to short term rental owners and operators. They provide experienced real estate entrepreneurs access to cash flow based financing and sell diversified, fully passive cash flow backed investments to accredited investors. Derrick is the co-founder and CEO of Nectar, the first-ever cash flow marketplace for real estate entrepreneurs. He 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.
[0:00] I gotta be honest with you.
I didn’t think this topic would make it to the show i was skeptical about the concept and the structure of what you are about to hear just didn’t sit well with me something felt a little bit like a con,
Derek Barker won me over as i’m sure he will for you also so today I’m flipping America we are going to learn how you can sell your cash flow.
[0:41] Wherever you are, whatever your situation, there is an opportunity for you. And now, here’s that flipping America guy, Roger Blankenship.
I know those words in the opening were strong and I hope Derek that you will forgive me for feeling that way but I know we were doing the interview with had a video component as well and I know that as you looked into my eyes you could see me,
You can see the skepticism in my eyes but good job my man in,
Winning me over in convincing me Derek Barker from nectar is joining us in just a few minutes he’s gonna talk about an interesting way of raising money that doesn’t involve debt.
[1:21] Nectar is an online financing and data platform built to provide fast flexible capital to short term rental owners and operators okay,
Specific audience today,
For this product anyway short short term rental owners and operators they provide experience real estate entrepreneurs access to cash flow but cash flow based financing and they sell diverse five fully passive,
Cash flow backed investments to accredited investors now I’m a little interested in that.
[1:55] That’s NECTAR the first ever casual marketplace for real estate entrepreneurs. He has 12 years of experience in real estate development.
Operations and finance and prior to starting nectar derek began his career as a traitor at Goldman Sax eventually left that positioned folks on real estate and grooves portfolio listen to this y’all to more than
4700 units and 400 1 million in asset value since then,
Derek has helped build multiple successful real estate businesses. He and his nectar co-founder,
Britney Mosley are members of scale up ATL that’s Atlanta for all those you are not from Atlanta and graduate,
Graduates of the tech stars Atlanta Accelerator it just is a coincidence that Derek is in Atlanta and I am in Atlanta as well,
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[4:15] Hey thanks for having me. Alright. So tell us tell us a little bit about nectar and what it is you provide.
So nectar is a platform that provides cash flow based financing,
To people who own and manage rental properties in most of the time short terminals that’s who we focus on.
And we provide financial products to investors wanna invest.
Okay so give me example let’s say alright let’s say I’ve got a rental property.
I’m the the rents $1500 a month.
[5:03] My tenants moved out and they left the place kind of trash. I eat 10 grand.
Mom I’ve done maybe I’ve done something stupid and relied on my rents to pay my bills or.
If I come to you for help what’s the process like.
[5:27] So typically we’re working with people who are pretty experienced operators so you have 3 years of experience,
I eat a lot of our a lot of our,
The process is you come to our website.
We give you a quote.
Based on the data that we have in your market and your own financials.
You we think you can you know pay back in advance of $10 thousand. So yo you go through. We ask you a few questions.
To your account and you pay us back over the course of 1 to 5 years depending on,
What you prefer. Okay. Now, you told me before we started the recording that this is not alone. So, what are you doing there in that 5 to 7 days? Some sort of underwriting process.
[6:50] Yeah this is cash flow base financing we’re effectively buying a portion of your cash flow,
So the agreement that you’re gonna sign is a cash flow assignment agreement where a portion of that cash flow net if you’re mortgage.
[7:05] It’s hours we own it,
It’s something where you’re just selling the net casual that you generate over an above your yo your interest in your expenses. And so that and that’s kinda how it works. That’s how,
Five six properties they wanna buy another property,
The buy another property with no investors no lps so they aren’t giving up any of the upside you know LP they’re gonna take 7580 percent of Europe side when you know,
So it allows them to expand their portfolio.
Without having to give up any amount of ownership.
Been net off that 15 1000 a month.
[8:15] So I wanna go buy another $100 thousand property.
Yeah, if you you’re making about 15 1000 net. I mean, we typically get you one to one and a half times. Your annual net cash flow.
So, you know, you’re making,
Yeah 100 1000 my mental math isn’t that great one. 580 thousand I mean we can get you 200 or so $1000 so you need 100 rand it’s pretty easy you can probably do that in a you know.
[8:52] Two 3 year term you can pay us back a portion of your cash flow you still be 50 to 6565% is the max will do,
You pay that over the term of,
Alright, let’s go back to the original example. Let’s try to keep the math simple. Let’s assume that all the approvals are done and I’ve got I’ve got $10 thousand from you,
I wanna I’m gonna wanna know as any business owner would.
What’s it gonna cost me to use this $10 thousand over the next couple of years.
[9:35] So if you’re so,
Always gonna depend on.
And how long you’re paying it back and then just like the risk profile of you as a you know as a you know cash flow seller,
So for a year.
Is based on the steadiness of cash flow or something?
Think you got exactly right. So, if you’re somebody you’ve been doing it for 15 years, yo, you have a bunch of properties. I can look back and you know, say, hey, pass me European L in Boom, you send me 2 or 3 years of PNL.
And you know, it’s like rock solid. Then, you’re super low ribs. It’s like, you know, I can look in pretty much every month.
Really experience operators,
So, you know, the.
[10:53] A lot of them are taking the money to buy properties or to.
At furniture to a new unit we added we did a deal with a guy who,
Took the money to hold his ballot sheet,
I side track you.
1 year is gonna cost about.
[11:35] Eight to 10%.
Yo, the video we discounted more. You know, it’s just time value, money, plus more risks. So, for,
So, if you go out 5 years, then, it’s gonna be more expensive. I’m taking more risks.
Text Yvonne to get my money back.
[12:03] Alright so.
[12:09] The seats let’s say it’s a 10% just to try to keep some of the math simpler because I’m doing all this in my head so.
[12:25] Sounds about right yeah.
[12:32] That sounds like a better deal than I thought one you and I first started talking.
[12:37] See when we first,
When I when I looked at the interest rates they wound up being around 40% even though that’s not what they advertised.
We’re back by real estate by like,
We do get more expensive. If you’re talking about a 5 year term, you know, you know, talking about a slightly riskier,
Portfolio we can get up in the you know mid tide 20s we’ve done a deal at 30%,
You know, 5 year deal. You know, I had it, you know, there’s some little bit of hair on it. You know, the point is, we’re okay with taking a little bit of risk. You know, that in taking equity like returns for that risk,
I will be taking less risk you get the benefit.
[13:32] Alright, we gotta take a quick break Derek. When we come back, I’ve got a couple more questions for you and then, then, we’re gonna do the round robin questions. Which you don’t know about?
Hang up. We’ll be right back. Bye.
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[14:47] Okay I’m with Derek,
What should I say Derek? I’m forgetting it. Sorry. Parker. Derek Barker, there it is. It’s right there on the screen,
Derek Barker and he’s with nectar and the website is tell me that website say it out about the nectar. Com nectar. Com,
Really use nectar. Com. Com.
Yes nectar. Com.
So use nectar. Com you’re gonna go there and if you need money for project,
You got demonstrable or verifiable cash flows you’ve got some experience in business,
Then you’re gonna supply some documents and apply for this loan. It’s not really alone. You’re going to sell some of your cash flow.
To this to Derek’s company.
You’re on the hook to pay them back and so tell me.
If you’re not doing a deed to secure debt because this is not debt,
How are you protecting yourself and making sure you get paid,
We do put a lean on your entity so not on the property there’s only in the property but your property instantly just to make sure that if you sell the property.
Cash proceeds from sale goes to your NC it’s you but I have some you know,
Notice that hey I’m here in that money’s mind.
People sign yo rubs and warranties and a,
Guarantee of adherence.
And you are have a break even off.
[16:58] Yo we’re waiting till next month till things get back up and running.
But if you change your bank account or if you otherwise do something to hinder our ability to,
Be repaid then it conversed a personal record so we can go after you.
[17:20] Oh no.
[17:26] Looks like we have a connection issue.
[17:41] Okay, cool.
[17:58] So this is not alone and,
Done a deed to secure dead.
So you know they’re.
Three main ways. The first way is like you are underwriting process. We make sure that like you have strong cash flow and that yo and we are yo we’re not,
Over levering you. This is the number one. I just underwriting. And making sure that you’re legit. You’ll see an operator.
But then we have to protect ourselves in case you’re a bad actor and we don’t have a lean against the property,
We we do have a lean against your property on an entity and that’s just so that you know if they’re say you sell the property,
We have some way to like show, hey, that that cash, some of those proceeds are our proceeds. And it gives us a seal, a position there.
[18:56] What we do have though do you have a question here.
I mean yeah just a I don’t know how you can stop the sale of the property if you don’t have a lean on it.
Because we have a lean against the property on the entity and that’s where the cash is gonna go. Now, it’s gonna go to you. We haven’t believe it. It’s you. And that’s of an event of the fall. Like you’re you’re not adhering to the to the agreement. And we do require,
Personal guarantee of adherence,
If you do something.
[19:58] The property under performs. That’s the risk we’re taking. I mean, ultimately, the way structure is, if you, we have a cash reserve.
We have the right to assign a new manager.
And that’s our main remedy in order to you know combat under performing property. Okay. Otherwise the the actual the risk we’re taking is the performance risk.
So you are clearly providing this type of funding only for the real estate business I was about to ask you if you know my wife has an Amazon business and we’ve looked into.
Different types of funding to, you know, help her.
[21:00] There are some bigger companies out there.
Hi, that takes me to my next question. Tell us a little bit about your background.
Starting various companies adventure since really I was a kid my first release is accessible when I started my freshman year at Harvard,
Ended up asking it the senior year and started buying real estate,
But by 2013 I built my real estate portfolio up to about 500 units,
In four times so I started flipping apartments so back then there are a lot of bladder departments especially from like the neighborhood that I grew up in. It was like a lot of just old apartment complexes. Not bottom.
Renovated made them nice soda and I was a really good business model did about 5000 units of that of that I you know typology no did you all be excited,
I did rob that lander. Yep, Southwest.
[22:21] Oh yeah it’s just it is a couple of you know slightly well known institutions that I was able to,
And okay so use nectar. Com as the website and he’s Derek Barker,
And now we’re gonna enter the round robin phase we’re gonna we’ve got about 2 minutes left and I’ve got 10 questions for you,
Just answer the first thing that comes to your mind and as always everybody that listens to the show knows that you’re you’ve not been made aware of these questions in advance,
Because we just like can dancers. It’s sort of a getting to know you think. Alright. I’m nervous.
[23:13] What if people’s if it’s a really really bad recession,
Then, it hurts it because you know, people aren’t gonna pay but with interest rates going up, it really helps us because ultimately,
Banks pull back and we get to fill in the gap where banks used to be so it’s been really good so far and things aren’t so bad where people aren’t paying you know that it’s good.
Okay when you’re a kid what did you wanna be when you grew up.
Are old men.
Wow that’s a big question,
Idiot changed the world where they believe in even them or not. Yeah, well, you know, we have AD and BC are now which still BCE but still, that’s the dividing point.
In the real estate capital markets are created to fit into a box.
We want to blow that box up. We wanna be outside the box and expand the, you know, and use creativity.
Well, I think your whole business model is creative. What are the business or economic trends you watch most closely?
[25:06] In different markets. I look at.
Yo, just generally what’s going on in the actual really economy. So, employment data,
Yeah that’s that’s that’s the most important to me. Like if people still have jobs then people are still gonna travel. And like ultimately that ill that’s what the majority of my book is based off of.
You know, I don’t necessarily believe that you have to pursue your passion in your career. That being said, I’ve been blessed to be able to pursue mine. Does I just love building things? And like, I get to wake up every morning.
Business, a culture, a team.
In your personal planning and goal setting how far ahead do you normally look.
[26:27] I’d say.
Yo, 20 years. I have children. So, I’m thinking, I’m thinking about like, you know, how do I get these girls out of here?
If someone walked into your life and ask I wanna get started in real estate investing what are the first three things I should do what would you say.
[26:53] Doesn’t how much money they have.
No bout cheap.
[27:15] Understanding it is impossible to accommodate every person’s lifestyle and spending habits with this answer what would you say is the minimum amount of money a person needs in order to retire.
[27:30] Please use fire. You just need to, you know, you can go off grid. Go to Costa Rica, live off the earth,
That’s not gonna be how I do it.
Yo, you you buy five% coupon, you know, five% coupon bonds. You know, you can live off a 50 grand potentially if you already have a place to live.
I don’t know. That’ll be really, really,
Yeah. Alright, if you were picking someone who is alive today.
[28:15] Jeff Bezos.
[28:17] Okay I love,
Brewing Greg grew and grew an investigative investor they built a culture and they took over the world.
Alright. Well, you’ve run the game with my friend. Those are the 10 questions. And you did very well. And everybody, this is Derek Barker and he is with,
Nectar and website is use nectar. Com if you need funding for some aspect of your business and you have reliable verifiable cash flows that you are willing to sell Derek’s your guy did I get it right.
Exactly right. Alright, my man. Thanks for joining us on the show. Let’s talk again soon.
And that’s all the time we have for today but here’s a word of wisdom for our from our very own archive.
Take small steps and evaluate is more likely the way of wisdom.
[29:23] Keep that in mind next time you’re looking at a new deal and as always, my friend, you know what I say? Keep your eyes open.
You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app,
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