Free Event - Alts Expo on Dec 13th
In this webinar, Clint Edgington presents a “boring” OZ fund and discusses how this approach thrives in turbulent environments.
Interested In Learning More About This Opportunity?
You can visit the Official OpportunityDb Partner Page for the Nest Opportunity Fund to:
- View beautiful high-resolution images.
- Learn key details about the fund and related projects.
- Request more information from the fund sponsor.
- History of Nest’s operations and focus on investing in employees.
- Comparison of various asset classes in the OZ space.
- The importance of maintaining control over when to sell that Clint’s father instilled in him.
- Overview of the geographic markets where Nest focuses, including the presence of stable employers and urban growth restrictions.
- Investment options for the Nest fund, including Series A and Series B offerings.
- Live Q&A with OZ Pitch Day attendees.
Featured On This Webinar
Industry Spotlight: Nest Opportunity Fund
The Nest Opportunity Fund is an OZ investment program designed to not only do well for investors, but also do good for those in the communities targeted for fund investments. The fund invests in single-family homes and smaller multi-family homes because they present a lower risk to investors while maintaining the culture and character of the neighborhoods.
Learn More About Nest Opportunity Fund
- Visit NestOpportunityFund.com
Jimmy: Clint Edgington with Nest Opportunity Fund. Clint loves OZ Pitch Day. He keeps coming back for more. Presenting what he’s doing, his residential improvement properties in Columbus, Ohio, Lexington, Kentucky, and maybe elsewhere in the Midwest. I’m not sure. Hey, Clint, we can see you. Clint, you got 10 minutes. Without further ado, please dive in when you’re ready.
Clint E.: Okay. Well, hey. Thanks for having me, Jimmy. Congratulations on your tenth Pitch Day.
Jimmy: Yeah. Hey, thank you.
Clint E.: This is pretty exciting stuff.
Jimmy: Yeah. People keep coming. More and more people figuring out Opportunity Zones, steady stream of new potential investors who wanna learn more. It’s great to see everybody here today, too. It’s been really phenomenal engagement today.
Clint E.: So, my fund is the Nest Opportunity Zone Fund, and we are a boring, conservative fund. And sometimes that’s bad. Sometimes when COVID hits, or interest rates double, it’s less bad. But we’re focused in the Midwest, in Columbus, Ohio, and Lexington, Kentucky, and we’re focused here because this is where we’re from. And we do small, small-scale residential real estate projects, heavy rehab, and having boots on the ground is probably the most important thing. So, won’t take you through too much of it, since Jimmy’s got me on kind of a tight time frame.
Our attorneys are gonna have us send our disclaimers up. But, you know, the Opportunity Zone legislation is pretty cool because it’s effectively what we had always been doing. But now we can actually get some tax benefits, and go with the spirit of the law, and kind of help some of the lower-income areas. And what I kind of do, as far as running the fund, is basically, I just kind of get out of the way of the operators, who are the boots on the ground, and, like, what they’re passionate in, we just make sure that it’s, you know, net-net beneficial to investors, and also the community. So, our Columbus operator, Clint Capelle, he basically hires folks who have graduated from halfway house. So, folks who have had addiction issues in the past, might have a tough time getting that first job out, but then come in and get trained up. And, you know, I was a little concerned about it at first. We kept kind of a tight leash on it, but it’s been fantastic. There’s a little bit more turnover in the beginning of hiring someone, but once someone’s kind of hired, and they get those skills, that, in the trades, you know, a skilled plumber, skilled carpenter, they’re hard to keep nowadays. That’s getting a little bit better, but it’s been great financially and…
Clint C.: …daily impacting our community. We are providing safe, secure housing, for people to have the opportunity to live their best life. We are providing the opportunity for those in transition to utilize their current skill set, or develop a new skill set, so they can live their best life. We are providing, on a daily basis, good houses, for good people, built by good people, managed by good people and funded by good people.
Clint E.: Yeah, I need to work on my timing of my clicks a little bit, but he says it better than I do. So, he really gives folks who would have a hard time getting that first job, out of some sort of program, get them trained, and get them in trade, and then have them be productive members of society. I kind of like the idea of the path to the middle class is through home ownership, so we have some programs set up where if someone’s a good tenant for a certain amount of time, they can buy the property from us for a discounted rate. And then, our Lexington guy, he just is into kind of the real estate, and kind of making Lexington, you know, cool, in areas that were once cool that aren’t now. Peter had this almost exact same graph up. So, we have both single families, and smaller multifamily, gonna be sub-institutional-level multifamily. Our largest is in a 31-unit, but most of ours are in the 2, 4, 8-unit size range. So, they’re not gonna really trade just based on cap rates, like a lot of the larger multifamily offerings will. But what we see is, is that, and this is what my dad told me. They were small-time landlords. And he’s like, “Listen, as long as you get to decide when you wanna sell a house, you’ll do all right with it. But it’s not gonna throw out a bunch of income in your first year. You’re not gonna make a bunch of money at first, but if you have good properties, take care of them well, it’ll end up being a good investment for you as long as you get to decide when to sell.”
So, then he would go into a tirade about, you know, over-leveraging yourself and whatnot. And I would say, “Dad, I just need the keys so I can mow the yard for that property.” But having that blend of single-family and multifamily is good for us. The multifamily gives us a bit more income, and then that single-family gives us some ballast, and although there will be another asset class that has more capital gains in 10 years, I’m sure, we’re relatively confident that single-families will give us decent capital gains. Looking where we’re at. So, yeah, we’re out of Columbus and Lexington. We were previously investing in Lexington. We like Columbus as well. You know, Columbus and Lexington have never been the COVID darlings, or the darlings of any economy. But we’re in the Midwest, so it’s boring, but sometimes boring can be good. I’ve been doing these for a few years, and I’ve noticed that some of the names have dropped off here. You know, our strategy is sort of evergreen, that there’s always gonna be, kind of, these run-down properties, and you can turn a street by rehabbing that property. And we do that. But, Lexington and Columbus, within the Midwest, are not what you would consider Rust Belt. They’re both growth cities. And we’ve got, you know, the fastest-growing cities or areas in our states right around Columbus and Lexington. So, they are growth areas. Not gonna be crazy growth. It’s not, you know, San Francisco in the 2000s, or Austin in the last 10 years. But we also have pretty stable employment, and that’s what we want. We want reasonable growth, with good, stable employment, and that’s what gives us our tenant base.
So, for both Columbus and Lexington, these are university towns, so we have a large amount of, you know, education. Obviously, state government is in Columbus. There’s a large government population in Lexington as well. But even our financial industry, which you would think of as generally somewhat volatile, it’s all the insurance companies. So, it’s the State Auto, Nationwide, relatively economically resistant stuff. In addition, Lexington has what’s called the urban growth boundary. So, if you’ve ever driven from Louisville to Lexington, it’s kind of pictorial horse farms. If you watch the Derby, they have the outtakes of the horses grazing. Well, they’ve really worked to kind of preserve that. So, around Lexington, there’s kind of a donut, where there’s different restrictions in place so that large developments can’t come in. There’s lot of division rules. Can’t divide by more than two in your lifetime. And then a lot of the properties have sold off their development rights. And so, what we see is that there’s, a lot of those cities that are growing very fast around Lexington are a bit outside. So, we are in the urban core of both Lexington and Columbus. Columbus is actually kind of a pure growth play right now. I was just driving out in Johnstown, which is 20 minutes outside of Columbus, where Intel is putting their big plant, and got a picture today, and it’s… I had to get around a corn silo to get a picture of just 30 giant cranes that are back there.
Intel is piling the money in with their new chip plant. It’s gonna be the largest chip plant, I think, in North America. They’re putting a $10 billion partnership with The Ohio State University to create a specific school for that. And then, we have a ton of, since nothing happens in Columbus, there’s no earthquakes, fires, floods, beautiful beaches, our data centers, we have large data centers, and that’s a big growth industry for us as well. So, Columbus is just growing, and it’s growing at a reasonable rate, but there’s really no…there’s nothing that makes it seem like that that’s gonna stop. Looking where we’re at in Lexington, we’ve got about 50 properties in Lexington right now, and it’s in the urban core, close to Transylvania University, for those that are familiar with Lexington, the NoLi district area. They’re doing some pretty major expansions as well, expanding Rupp Arena. And they’re gonna create, kind of, this, what’s kind of a decayed neighborhood now, it’s starting to swing up already, and it’s gonna, it’s already becoming somewhat of a trendy area. Columbus, same story. So, we’re in kind of Franklinton, which is the area that feels like it’s downtown but isn’t and Olde Town East, which is where all the old judges used to live.
So, we have two funds. Basically, we have our Series A, and that is now closed out. And I show this to you so you can get an idea of what our Series B will become. Our projects are not identified beforehand, but a crappy house on one block of the street that we’ve already rehabbed, the financials, everything, looks a lot like the crappy house that we’re gonna buy in a week or two weeks on the next block. So, just to give you an idea of some of the heavy rehab we do, it’s not, you know, lipstick rehab. We’re doing heavy rehab, effectively almost rebuilds. And you can see kind of how, over the last four years, we’ve gone from nothing to about 50 properties in the A series, of which about 45 are complete. And what our capital position is, and our monthly rent growth, we’ve grown it from zero to $80 grand a month.
Nest Fund B, we’ll spend a little bit more time on, since that’s what’s kind of open right now. But the graph at the top left, it just shows you how, you know, in the last year, we’ve started these projects, and we’ve kind of moved them from available for rent… I’m sorry. From inventory, when we just get it and haven’t done any architectural or blueprinting or permit work, into the initial phase, which is everything until we get the drywall up. So, we’re starting to get some of our properties complete. So, you can kind of get an idea of the final product. But we’re moving them down the path pretty quick. Jimmy, you will hop on if this does not come on your screen, but I’ll just share… This property that you can see here is one of our first completions. And here is the completed version. So, just looking to see where you’re looking at here. You can see, we… It’s lower-income. It’s not…this is market rate…
Jimmy: I don’t see the completed version, by the way. I just see the before pictures.
Clint E.: Okay.
Jimmy: But we can fix that in post, for the recording.
Clint E.: Okay. Yeah. We’ll also have, on our webinar next week, we will have, we’ll be able to dig into some of the final ones, and I will send you a link in the comments, after this as well, with the, kind of, the final. But it shows some of the things we do that don’t cost much money, that I think add some character to our properties, and more important, since we’re gonna own them for 10 years, we want them to be easy to maintain. So, quickly, just walking through, kind of, the financials of our fund. And again, I recommend signing up for our webinar next Thursday. We can walk you through this a little bit more. You can ask some questions. But again, it’s gonna be boring and generic. We’ve got…our management fee is 1.5% of our net assets. Preferred distribution’s 4% per year. We have a little lower carry, a 15% carry. We’ve raised $11 million, I think about $11.5 million now, of which, myself, my family, our partners have put in a million. Our Lexington GC, he puts in 20% of his earnings as a limited partner. We project 12% post-tax rate of return on the fund. And just to give you an idea of kind of execution, we’ve gone, when we opened the fund up to outside investors, because originally it was just me and my parents, and our Lexington operator, and then we spread it out to our investment advisory firm’s clients. We started with 23 units. We put a half million in, and then we, now, at 117 units, and we invest kind of pari-passu with our investors.
If you’d like more information, I’d love to talk to you. Reach out to us. The QR code for our webinar is front and center, and then also, for our deck. And then we also do an OZ calculator for folks who are just kind of thinking, do I want to do an OZ fund? Do I not want to? It’s not perfect, but I actually do it before I have a conversation with most investors, for myself, so I can just think through, like, okay, here’s when they’re gonna have to pay this capital gain. Here’s the deferral. Okay, if they think that the rate of return’s gonna be 8% or 10% or 9%, I can plug it in, and it just kind of helps me chunk it through. Nothing’s complicated in the OZ world pertaining to your particular facts, but figuring out which are your particular facts can sometimes be a little bit confusing. Any questions? Or Jimmy, are you shooing me off the stage right now?
Jimmy: Amazing. Well, you gotta put the Opportunity Zone podcast on there. I’ve had you on, haven’t I? Or maybe I haven’t. If I haven’t had you on, you gotta come on.
Clint E.: You haven’t had me on, Jimmy.
Jimmy: Well, we gotta have you come on then. Let’s have you join pretty soon. We can…
Clint E.: It’s one thing to be slowly, silently rejected by you, Jimmy, but another thing to announce it, here on Pitch Day.
Jimmy: Well, that’s my mistake. Let’s get you on the podcast right away there, Clint, because I wanna be on this slide for the next OZ Pitch Day. We got one question. What’s your minimum investment amount?
Clint E.: Our minimum is $200,000. It’s a soft minimum, though. So, if you’ve got $100,000, you think you’ll do another $100,000, we would just do, we do a handshake, and just make sure we’re gonna be good partners, that we would get that follow-on at some point in time, if you have it.
Jimmy: Yeah. Tell Clint Jimmy sent you. Maybe he can cut you a deal.
Clint E.: Maybe not today. Maybe before you made me realize I haven’t been on your podcast.
Jimmy: Once we get you on the podcast. All right, Clint. Well, we’re at time, so I’m gonna cut you loose there, but thank you so much for your continued support. Really appreciate it. Appreciate your time today. Thanks so much.
Clint E.: It was fun.