In this webinar, Clint Edgington shares some before and after results from his OZ focusing on rehab in Ohio and Kentucky.

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Webinar Highlights

• How Nest takes a relatively conservative approach within the OZ universe.
• Nest’s focus on the Ohio market, which includes a unique additional tax credit.
• Nest’s focus on rehabilitating single family and multifamily buildings in Ohio and Kentucky.
• Demographic factors that make the Midwest an attractive place to develop and do business.
• Virtual walkthrough of an improved property in the Nest fund.
• Fund structure, minimums, and timelines.
• Live Q&A with OZ Pitch Day attendees.

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

Webinar Transcript

Jimmy: Clint Edgington is presenting Nest Opportunity Fund. It’s a Qualified Opportunity Zone Fund, a multi-asset fund, doing opportunistic strategy with low-risk, or lower-risk, residential investments in Ohio and Kentucky. We were talking a lot about risk earlier today. There’s no such thing as a risk-free investment, and Opportunity Zones aren’t really low-risk, but, in terms of the Opportunity Zone universe, this might be on the lower-risk end of that spectrum. Clint, enough from me. Let’s hear from you. You’ve got 15 minutes. Please dive in when you’re ready.

Clint E.: Thanks, Jimmy. Yeah. We like to think we’ve put together an offering that is, you know, relative to, in the OZ world, a relatively low-risk…you know, and it is gonna have slightly lower returns, most likely, than some of the other things that will be in favor in the next 10 years. But we’re conservatively-run. And Jimmy, I’m excited to tell you that this summer, when you and I were on this, I did a kind of walk-through of one of the bombed-out, you know, properties we purchased. And it was a little aggressive. There was a basement, you know, scene that was a little Blair Witch-ish. But we actually put together a video of, kind of, side-by-side, of, you know, going through that tour, and then also, kind of, where we’re at now in the process. So, you know, that property is, you know, it’s got some issues with permitting and whatnot, since it’s a burn property, so it takes some time. But I think we’re gonna be pretty happy with where we’re at with it. So, I’m gonna go ahead and share my screen.

Jimmy: That was a big game-changer, last time around, Clint, that live walkthrough of a property. That was the first time we’ve ever seen one of those on OZ Pitch Day. You broke new ground with that one. I can see your screen, so…

Clint E.: It was a little, it felt a little aggressive when I was trying to set it up and make sure I didn’t [crosstalk 00:01:53]

Jimmy: It was fun. It was a lot of fun.

Clint E.: Yeah. So, Clint Edgington, with Nest Opportunity Fund. We are a multi-asset fund, working in kind of smaller properties, residential real estate, in the urban core. We do heavy rehab of kind of the worst property on a street that’s trying to turn. So, it’s what we built for ourselves originally, before we even knew that we were gonna open up to outside investors. And so, it just seemed to make sense. We had an operator that was working in the area that we now know to be an Opportunity Zone, so we kind of just continued doing what we were doing.

So, walking you through, I’ll let you read our forward-looking statements, but, you know, in the OZ world, as in any other investments, there are risks. And although our fund is relatively, I guess comparatively, on the conservative side of OZ Funds, there’s still certainly risks. But while you’re reading that, just wanna mention that we have a webinar that we’re gonna do next, two Thursdays from now, March 21st, 11 a.m., and that’s really gonna give more information than what I’m able to today, so, if you’re interested, let’s talk about it.

We’re located in Columbus, Ohio. And Ohio is very supportive of the Opportunity Zone legislation. In fact, there’s a 10% tax credit that we’re working with Andrew on, kind of, we’re testing demand, see if folks are interested right now, but we have entities that are solely investing in Ohio, so it would be easy for us. Most of our investments are either in Columbus, Ohio or Lexington, Kentucky, and, just, sometimes I like to just start with the [inaudible 00:03:39] side of the Opportunity Zone act, and that’s really to kind of broaden some of the gains out amongst folks who maybe haven’t had it. And this is Clint, who, Clint Capelle, who runs the Columbus group. He kinda has the passion for helping folks on the road to recover from addiction. And that’s the people that he hires to do some of this kind of demo work and whatnot. And they become kind of skilled, and has actually been pretty successful, and something that we can get behind.

Clint C.: We are currently, 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.

Clint E.: And that’s really Clint’s passion. He brings folks in that might have a hard time getting that first job once they’ve graduated from some sort of recovery program, and then starts to give them skills. And there’s a little bit more turnover in the beginning. Some people, you know, will relapse, but we never had issues with theft, and those that stay become more skilled, which are the more difficult people to employ and retain. And they’re incredibly loyal to him. So, you know, just thinking about why, you know, we’re on the more conservative side. Both in our asset class, you know, kind of where we’re at in the Midwest, we have a good chunk of our assets are in single-family, and, you know, single-family doesn’t make a lot of income, but it does have relatively lower volatility. In particular, it doesn’t have the volatility and the exposure to interest rates to the extent that multifamily does. So, we also have some multifamily. So, you know, over the last year or two, you know, it’d be a tough place to be, [inaudible 00:05:27] in multifamily. Cap rates are starting to, you know, to move up a bit, as you would think they would when interest rates go up. And so, you know, we know in 10 years folks are gonna wanna live in single-family houses, but we also have multifamily as well. And single-family, you know, residential in general is gonna be on the more conservative side of real estate, but we all have a pretty aggressive activity, in that we’re doing heavy rehab or new development. And so, we’re in the heavy rehab area.

Our locations, you know, Columbus. Columbus, Ohio and Lexington, Kentucky, kind of fly-over country. But within the Midwest, you know, those are two of the areas that are sort of magnets. They’ve got large universities, and they’re in the, kind of, the growth areas. Columbus is the, I think it’s the top Midwest MSA for growth that’s over a million people. And we’ve got really stable employment. So, you know, it’s like a lot of things in the Midwest. It’s kind of boring but stable, but, you know, we are not in the Rust Belt. So, it’s a good place to do business. In particular, Lexington, there’s supply constraints, because there’s the desire to keep that kind of rural view, and that rural lifestyle, so there’s a lot of the horse farmers around there that have had their land, they sold their development rights off. Everything you see that’s green there, the development rights have been sold off. And then everything outside of the outer belt is in the urban growth boundary, and they don’t provide city services outside of it. And there’s also lot split restrictions, so you can only split your lot, once in your lifetime, in half. So, they’re not gonna vote on that again until 2028. So, for a while, there’s a lot of, I think, you know, good, kind of, supply constraints to help out pricing with rents.

Columbus is a little bit more of a growth story. There’s no real supply constraint, other than, kind of, urban sprawl is starting to happen, and we don’t like driving an hour to work here in the Midwest. But it’s the largest city for population growth, or, of large Midwest cities, has the highest population growth, private sector job growth, and we have good, kind of, educated youth to stay. In particular, you might have heard that Intel is creating a pretty large silicon production facility here, and it’s a real thing. I went by it a month or so ago, and you just see a lot of giant cranes there, and, you know, everyone who I know who’s in the trades in larger firms, you know, they’re all being kept pretty busy with it. And it’s ricocheting down some to folks that do work on our properties as well. But we are starting to see labor prices come down a little bit, in both spaces, and our calls are getting returned, by plumbers and HVAC techs. So we think we’re in kind of a good place.

In Lexington, we’re located kind of in the NoLi area and some of the Georgetown areas. So, we’ve got 43 single-family properties, 4 multifamilies, couple duplexes, and then we have some lots in Lexington as well. In particular, when we kind of zoom in where we’re at, we think we’re in the path of, you know, improving area. Rupp Arena is going to expand its convention area by, I think, 10, and it’s currently in construction now. But you’ll see, there’s kind of an old bus line, the Greyline, that was just a dilapidated old building. And then there’s The Artists’ Village. And there’s really, kind of, our line of properties goes right in between those, and they’re really doing a lot of work on that, and they’re connecting everything with the bike paths. It’s gonna be pretty cool. Columbus, the properties are bigger, more expensive. However, we have fewer. So, we’ve got just a single-family here, couple multifamily, and then eight duplexes. And here is where I’ll walk through one of the duplexes.

Jimmy: Clint is doing something that has never been attempted in the history of OZ Pitch Day. This is our ninth Opportunity Zone Pitch Day. Clint is doing something crazy. He’s gonna actually do a live site tour of two different Opportunity Zone properties, and we’ve broken up his presentation into part one and part two. So, in part one, he’s going to do the “before” walkthrough, what a dilapidated property looks like. So, tell us about it. Tell us what you’re doing. Take a few minutes to give us the little rundown here, Clint.

Clint E.: This is a property in Franklinton, a neighborhood of Columbus, close to the central business district. It is part of, kind of, the urban revitalization that’s occurring here. In the distance, you can see some high rises there. And so, we’re within walking, really a bicycle ride of the downtown. But this Franklinton area is kind of undergoing a lot of change. There’s a lot of properties that have already been rehabbed, like this, which would be nice to take you through, but we’re gonna get a little bit dirty. I’m gonna don my favorite rehab piece of equipment, the headlamp, and we’re gonna go in.

Oscar, guys, sneak by. Thanks. This is Oscar. He’s working on some of the demo work here. Just really kicked off the party. I’m gonna take you where I always look first in a property. All of our properties are gonna look like this, generally, when we buy them. We are usually buying the worst property on a block. Almost never. This property was a burn property, so we’re gonna have additional structural and permitting that needs to go into place, and because they’re all gonna start off as condemned. This is a 2500-square-foot-ish unit. And…[inaudible 00:11:00] Excuse me, fellas. [inaudible 00:11:09] and then [inaudible 00:11:10] gabling and stuff can get very expensive. So, you can see, this property, here’s where the burn was. This upper third floor is always an issue for us, because we have issues with when you create this firewall, if we’re gonna keep it as one issue, or firewall the floors if we’re gonna have one full unit. So, this is the beauty of 869 and 871 Bellows.

Jimmy: This was a first on OZ Pitch Day. Again, this is Clint, with Nest Opportunity Fund, and [inaudible 00:11:37]

Clint E.: So, where we were at was the Franklinton area. And you can see there’s been a good chunk of renovations done. For a burn property like that, there’s a lot of structural that has to go into it. We have to get, kind of, engineer letters, and go back to permitting and have approval. So, takes a bit of time, but I think, you know, in a few months, you know, there’s gonna be, it’s gonna be a nice-looking place. And it’s kind of cool, you know, you briefly saw the front of the property before, and then where we’re at now. And it’s, so, for us, it’s a good feeling to kind of look and see that we’re also, like, improving the neighborhood, but retaining some of the character of it. And even, we even do the ones that are kind of hard, you know, like Bellows. So, that’s where we’re at in Columbus.

So, we’ve got really two series within the same fund, our Series A. And I think it’s helpful. You can look at the Series A to see what the Series B will kind of become. We’ve got, you know, properties in Lexington that we’ll also do a quick review of as well. Let’s see if I’m sharing that. Yes. So, this is a property we purchased, you know, during the demo stage. And then, once we get done with the property, we think we’ve kind of added some value to the community. So, you know, these are kind of workforce housing type of build-outs. You know, there’s nothing fancy. There’s not, you know, chandeliers or anything in there, but it certainly looks nicer than when we originally got it, so, I’m proud of what we do. So, the Series A, you can see our capital position, as of September 30. It was a little bit over 50% debt to equity. So, we’ve got a pretty conservative capital structure. Makes times where the interest rates go up easier for us. We might continue to refinance and reinvest in our Series A, but right now, we’re not a lot.

Our Series B is currently open. So, we’ve got nine properties that we’ve completed, four that we’re kind of in what we call final. And Bellows is almost in the final stage. You know, once drywall is complete, all the finishing work. Eight that are in the initial, and four that are in inventory. And we’ve really kind of picked up the pace. So, you can see in the last six months, you know, we’ve completed five properties. The Series B breakdown of assets. This is as of September 30 as well. We’ve gotten a financing package for the Bs, so there’s a little bit more debt there. Not much. It’s gonna be 5%, you know, debt. But we’ve started to deploy the cash into real estate.

And here’s one of the properties that’s finished. So, just, the before picture right here. I’m sure it’s a place that many of you would like to spend your Saturday afternoon in. And then, you know, when it’s complete. We are able to do, we kind of systemize… You know, scattered site construction and rehab is tough to manage, but we systemized some things. So, for example, in Lexington, we’ll have them just take a cheap $30 plastic template, and they just take a blowtorch and blow over the, you know, horse’s head, because folks in Lexington like that, and in general, the younger clientele, someone who might be a barista, would think that’s pretty cool. And then we’ll try to retain this one unit, one piece of architecturally interesting structure. And so far, that’s worked pretty well. But the guy who runs Lexington is very systems-oriented there.

You have seven paint colors that they use. Five primary, two, you know, accent colors. And he keeps it running pretty well there. So, running short on time right now. Just walk you through, kind of, our basic terms. But again, I recommend you to talk to us, get on our webinar, talk to us. Or, if you’re not sure if you want to invest in an OZ Fund, or not generally, we’re happy to work with you. We create a, kind of, customized calculator for folks. They can walk through, kind of, your personal situation. What is your deadline? What would the benefit to being in an OZ be? It kind of measures the quantitative benefit, and then you kind of can figure out it makes sense for you. Most of the drawbacks to being in an OZ Fund are sort of qualitative. You know, having another K-1, being tied up for 10 years. But a lot of folks kind of find that to be helpful, and we’re happy to do it gratis, whether or not Nest is the right choice for you. So, we’re a quirky fund. We wanna find partners that are gonna be happy with us for 10 years.

But, so, this is our basic terms. We’ve got target leverage of 65%. We’re way under that right now. Management fee of 1.5% percent net assets. Relatively low pref, you know, because the single-families are not high-yielding properties. But we offset that with a relatively low profit share. So far, in the fund overall, we’ve got $11 million contributed capital. We’ve put in a little less than a million ourselves. We’ve gotten a grant from the City of Lexington for about a quarter million. So, we think we’re doing good work. It’s a battle. We’re kind of always working on it. There’s always fires to put out and things to improve. But we’re pretty proud of what we’ve done. And I’ll leave you with some of our contact information. I’ll send to you, afterwards, the ability to hop on to our webinar, and then download some resources on Nest Opportunity Fund. Jimmy, do I have any time for any of the questions?

Jimmy: That was awesome. No, but I’m gonna give you one anyway. Clint, you did get one question. A little bit of pushback from Dan, on an earlier chart that you had up, showing the different risk spectrum of different property types within real estate, where you had single-family and multifamily near the lower-risk end of the spectrum, and then he was pushing back on how you had office rated as lower risk than industrial and self-storage. Would you like to address that?

Clint E.: I mean, yeah, I think, today, it’s easy to say that office is probably one of the highest-risk areas. But historically, you really haven’t considered that. But yeah, I think…listen. Self-storage, where do you put that? I don’t know. It’s in miscellaneous, is generally where people put it, but I think self-storage could be, you know, I think it could be kind of the most conservative thing. But also, you know, maybe people will change how they store things or what they do with it. Maybe the POD systems will change that industry. But we know people probably will wanna live, you know, in homes.

Jimmy: Good answer. Okay. Well, Clint, we posted links to your website in the chat, and Anne just posted a link to your Zoom session that you are hosting next Thursday, March 21st, at 1 p.m. Eastern Time. So, please do click on that Zoom link that Anne just posted in the chat, if you’d like to join Clint’s webinar next week.

Clint E.: Two Thursdays.

Jimmy: Two Thursdays from now. Yeah. That’s right.

Clint E.: You’re making me nervous.

Jimmy: Yeah. Two weeks from today. Excuse me. I’m getting ahead of myself. That’s two weeks from today, so you got plenty of time. But go ahead and register now for that, so you don’t forget. Clint, been a pleasure. Thank you so much for joining us today on another OZ Pitch Day. Really appreciated you.

Clint E.: Hey, thanks, Jimmy. It was fun.