Meet Nicole Pendergrass, a real estate investor who is persevering despite several early setbacks on her journey to retire early. Her “why”? Escaping the rat race in order to raise her two daughters and create lasting wealth for generations to come.
Name: Nicole Pendergrass
Location: Bronx, NY
What were you doing prior to real estate?
I’m still at my W-2, running various outpatient clinics at a well-known cancer hospital.
What got you interested in real estate investing, and how did you get started?
My dad passed in 2010. He really didn’t have much life insurance or any type of inheritance to pass down. My mom got a very small amount—about a year’s salary. It was definitely nothing she could retire with.
That same year, my boyfriend (now husband) bought a three-day boot camp from Rich Dad.com; he was going to take his sister. She couldn’t go, so he took me. The rest is history!
I had already been looking for that “something else,” because after working at a hospital, I decided I needed to be really sure I wanted to go to med school before I took out ALL that money in student loans. The boot camp changed my life—I realized that real estate investing wasn’t for the “other guys.” A normal person like me could do it, too.
I had seen my mom work two to three jobs most of my childhood because my dad couldn’t work (he was on disability) and there were five kids to feed. REI could allow me to pay for my mom’s retirement.
After going through the Rich Dad education, I attended countless real estate meetups, webinars, seminars, multi-day conferences, and joined the NYC REIA. In 2011, I started trying to wholesale on my own by walking Queens neighborhoods, looking for abandoned/disheveled homes, and sending direct mail. I started with that just because it’s the strategy everyone tells you to do when you have no money and no credit (messed my credit up badly in college). People make wholesaling seem easy… It may be a simple process, but it’s not easy.
In 2012, I co-founded Colvi Carver Property Solutions, a four-person partnership. The goal was to wholesale properties in Brooklyn to create capital, then expand into other investment strategies like purchasing notes. I figured it would be easier to do this with partners. However, after two years, we had never done a deal. The partnership fell apart—not because of lack of a deal but because of some shady actions by one of the partners.
During that time, I started taking measures to increase my cash flow and save, even though I didn’t know for what exactly. I just knew from my Rich Dad classes that I needed to. In NYC, your housing expense is huge, so that was the biggest move I could make to decrease my expenses. (At the time, I couldn’t think of options to increase my income.) So, I moved out of my studio apartment, which I LOVED. It was the symbol of my independence and that I was an “adult” who could afford her own place. Instead, I rented a room in an apartment with three other females.
In 2013, I was a founding member of N.E.A.R. US LLC, a group formed by some members of the NYC REIA. We were interested in investing in Detroit after going on a property tour around the city. I was the board handling the day-to-day tasks and was voted the acquisitions committee chair. We purchased four single-family rehabs via online tax auction to rent out. I don’t think we were quite ready for that city (especially long-distance) and encountered a lot of problems. After a couple of years and a lawsuit, we sold all the properties at a loss.
After years of saving and improving my credit, I was able to buy a three-family house in the Bronx in 2015. The rent from the other two units plus two parking spaces paid for all the expenses of the building and an additional $400 that could go toward R&M reserves (although I never saved it officially as such). But one to two months after I closed, there were issues with the electricity meters and water meter, which cost me around $5K to have remedied. Then the next year, after a spotty payment history, one apartment stopped paying rent.
I filed for eviction in November 2016. (They had been paying less than half the rent since June, but I was too nice and kept trying to work with them.) However, the marshal didn’t come to physically remove the last tenant until September 2017. (BTW, I started getting $0 rent in January 2017.) My total uncovered rent? About $20K.
I survived because my job provided tuition reimbursement for grad school, and I ended up using that to pay the mortgage and expenses, leaving me with student loans I shouldn’t have (still a blessing)! Those tenants were inherited, but I have since made sure to implement heavy screening. These financial issues and big life changes (got married and had a baby) kept me from actively pursuing additional investments.
But 2019 was a big year! I was able to refinance the house and get a HELOC because of significant appreciation in the Bronx. I used the equity for a few different investments. I invested passively as an LP into syndication, and I opened an Infinity Banking-type whole life policy. The biggest thing I did was join the Jake and Gino community to officially start my journey into multifamily by surrounding myself with people who were experienced and enabling me to access community resources and a coach.
We also moved out of the three-family because we needed more space—I was pregnant with our second child (7 months when I joined J&G). We use the cash flow to subsidize our rent until we can buy the next house hack (aiming for mid-2021).
In 2020, I started out the year strong, but then COVID hit. So, I networked heavily (virtually) and also joined the MIH Mastermind group because I needed another level of constant connection and accountability. All the networking and implementing my MIH mentors’ advice led to me getting the phone call about partnering on a six-unit deal! Now I’m officially a commercial multifamily investor. Woohoo!
What is your preferred investing strategy?
Multifamily and buy and hold.
What is your current real estate investment plan?
My immediate aim is to purchase another 15- to 50-unit multifamily building in 2021. Overall, I focus on value-add, working-class housing. I need to be able to step in, increase the net operating income, refinance in a few years, and pull my money out (plus more, ideally) to roll into the next bigger deal. Cash flow pays the bills, but equity makes you wealthy!
How much did you have to invest when you first started?
$5,000. That’s how much all the members put into the Detroit group. But otherwise, for my wholesaling and such, I never had one large lump sum. It was what I could save month to month from my W-2.
What was your first deal?
Technically, it was the four single-family houses in Detroit.
How many deals have you done to date?
What is the most important part of a deal for you?
Primarily, the ability to force value through a value-add play. The property must also not be negative cash flow.
How do you know if a property fits your goals?
For my house hack, all I was concerned about was living for free, so the other metrics didn’t really concern me. But now I mostly look at cash-on-cash return. I do consider cap rates, but that’s not the most important stand-alone metric. You buy based on where the property is, but you have to figure out where you can take it. So, some non-numeric variables are really important. Is it under-rented? Mismanaged? Does it have high expenses? Etc.
What red flags do you look out for when purchasing property?
To be honest, I kind of jumped into my two properties without looking out for the red flags like I should have up front. (I’m definitely not perfect.) I was way too eager to just get it done. But going forward, I’ll be looking at the major systems—CapEx issues—especially roof, foundation, water. I hear constant warnings about watching out for water pipes in really old buildings.
How has real estate investing changed your life?
I’m just scratching the surface, but it’s already broken the traditional school-work-struggle-save-
What’s your “why”—the reason you pursued real estate investing and your drive to keep going when things get tough?
My mom had to work two to three jobs to take care of her five kids. Unfortunately, that meant she couldn’t be around for a lot of our activities. She definitely made a concerted effort to be there when she could, but five kids in multiple extracurriculars are impossible to keep up with (even if you only have one job!). I still don’t know how she did it.
In any case, I want to be available to take my daughters to school and pick them up after (at least until they’re old enough to tell me not to because it’s not “cool”). I want to be able to attend most, if not all, of their activities. I don’t want to be stuck behind a desk and answering to someone else’s schedule for my entire life.
Over the past couple of years, another “why” has been gaining clarity, as well. There are not a lot of women or Blacks in the REI world. Also, Blacks have historically not had as many opportunities to invest in real estate, even as a primary residence, with policies like redlining putting us on the sidelines. I feel super fortunate to now have access to some of the deal flow and investment opportunities in the multifamily space—and I want to share that. I want to do my part to provide opportunities to the communities that haven’t had them.
Good deals shouldn’t only be for accredited or wealthy investors. Everyone has to start somewhere. But it’s a catch-22—deals that can accept unaccredited investors can’t be advertised, plus the operator has to know you. Most people in my community don’t KNOW someone who’s investing in multifamily, let alone someone who’s operating the deal. So even if they are looking for an investment, the only ones they’ll find are the ones that can be advertised and are therefore limited to accredited investors with money.
I want to open deals I’m involved with to unaccredited investors and have lower investment minimums than most operators accept. I don’t just want to change MY family’s life through real estate investing. I want to help change other people’s lives, as well.
What should people consider before getting involved in real estate investing?
I never considered myself a good networker. I’d make myself go to meetups but then stand there awkwardly and maybe slowly join into a group of people who were already talking. Or, I’d wait for someone to come up to me. I know it’s hard sometimes if you don’t feel like you’re a “real” investor yet because you haven’t done a deal. But get out there and just do it!
I think I wasn’t “successful” sooner because I didn’t have (and couldn’t afford) and coach/mentor. If I was better at networking, that may have solved that block. The saying is either “pay to play or seek to serve.” So if you can’t afford a mentor, do a self-evaluation, figure out what transferable skills you have, and offer to help an experienced investor with whatever you’re good at.
If you don’t know what you’re good at, do you at least have time? You can do the tedious tasks that an investor doesn’t have time or doesn’t want to do: enter info into spreadsheets or manage their CRM, maybe run their social media (or create one if they don’t have it). Be creative, do anything to learn from them, and observe the day to day. I didn’t have money and I didn’t know what I was good at. In hindsight, there are things I could’ve done to get a mentor. However, at the time, I hindered myself.
How did you find out about BiggerPockets? How has it helped you?
I’ve been on BiggerPockets for so long now, I don’t even remember how I found out about it! I probably started looking at the site before Brandon was even beginning his time with the company!
Man, the amount of free information on BiggerPockets is wild. Talk about value! Especially when I was newer, I could find almost any answer in the forums, and then I could get lost for hours reading through all the different posts, comments, articles. The podcasts and going to the in-person meetups were so valuable, as well.
The site has definitely helped with so much information… I wish I knew about it before I paid for Rich Dad classes—LOL!
Is your real estate investing journey similarly inspiring? Share here for a chance to be featured in the next Investor Spotlight!
What questions do you have for investors about their REI journey?
Share and we’ll include in the next Investor Spotlight.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.