Read this article last week and was impressed by this guy's story.
https://www.forbes.com/sites/nathanvardi/2017/07/…
Something that struck me: I just read through the thread about how tough it is to get funding no matter who you are and how much experience you have-- so it's crazy to think that Paul, a 22-year-old college dropout, convinced the Austin Police Retirement System to invest 25 million in '09. Even before then, to convince people to put money into deals with him when he had just dropped out as a 19/20-year-old kid is pretty wild to me. I guess this dude must be one hell of a salesman, on top of being a good investor.
Just wanted to share this, and see what you guys think. Especially about how this guy got started.
Oh man... I love when this guy comes up. Somehow the law suits and people not getting their money never come up. Ego the size of his home state, and top level execs bailing on a regular basis. Ask the locals how they feel about him, and you'll hear people singing a very different tune.
Something stinks about this guy... "The first property Paul acquired, in 2007, was a 13-unit apartment building in south Austin that he bought for $1.1 million" How'd he get $1.1M tutoring? Even at 70% LTV, he still needed $400k. Who has $400k lying around at 20 years old?
My interpretation of the article is that his capital first came from his Dad's fellow OBGYN colleagues. What the guy has done is really impressive, but don't be fooled. He's a rich kid who started with his rich dad and his friends. The "rags to riches" story in America so few and far between it's practically nonexistent. Where I see a success story of some guy who made a shit load of money, 99.9% of time they came from money. Nothing wrong with that by the way, but to put things into context it's a lot easier to multiply capital when you have easy access to it.
He got "a small loan of a million dollars"
My understanding is that the old adage of "If it's too good to be true..." applied here in spades.
"Paul's World Class Holdings"
Name reminds me of Prestige Worldwide.
Just because AUM is claimed to be over $1bn doesn't make him anywhere close to a billionaire. Think about what % of the equity he has in these deals. I'd guess less than 5%. You aren't raising huge sums as a young guy and keeping a big part of it unless you have a mega rich family member (which he may).
I've seen these things negotiated and it can really go either way: there's a chance he has a very small amount of equity share in these deals and gets lots of management fees and there's also some non-zero probability that he has a rich uncle that gave him a sweetheart deal when he started.
It's extremely unrealistic unless he was hitting massive returns and even then it would likely be only a portion of the overall promote.
Look, when you're younger and getting big capital commitments the investors tend to have you by the balls. There's no reason for them not to. What's your argument? "But I've been buying buildings for 5-7 years!" The big LPs have been doing it for as long as he's been alive. He's probably just a bullshit artist. But if he's not, then great for him. Some random 30 year old is worth 50-100mil on paper! He's not exactly rivaling Zucks.
Screw Forbes and their terrible website.
Well shit my bad for posting about it, just seemed like a cool story from a reputable source. Thanks for the color everybody!
And with regards to the billionaire forum title, Forbes put him at a net worth of 800MM in the article and I rounded up.
You're good dude; you're neither the first nor last person to be impressed with the guy.
The dude is a living, breathing PSA to always operate with the highest integrity and to protect your reputation viciously.
No animosity toward you. It's a cool story in concept - there are just so many questions it doesn't answer, plus the article is dogshit. On top of everything already said:
He's not even a billionaire. I'm closer to being worth $150,000,000 than he is to being a billionaire. The title is pure clickbait, as if him being worth $800,000,000, if he is, wouldn't be impressive enough.
"If commercial real estate prices stay strong, he could be a billionaire soon." is a sentence with minimal meaning. "If" and "could be" mean it's pure conjecture. What does "stay strong" mean? What's his path to the remaining $200,000,000?
"In order to buy, he hit up his obstetrician father's buddies, charmed high-net-worth individuals, and then landed pension and insurance money." This sentence shows that the author doesn't really know what he's talking about. Thre is an absolutely massive difference between raising money from your "father's buddies" and getting pension fund and insurance (lifeco?) money. The two are not even on the same level.
"He raised funds in dozens of partnerships to do deals and kept upwards of 50% of the profits." "Profits" here is way too vague. He might get to keep 50% of the free cash flow after hitting certain return thresholds as it goes through the waterfall. He might refi, pay down LP equity, and then sell, meaning overall he gets 50% of the money. "Profits" just, again, doesn't mean anything, and is a clear reflection on the writer's industry knowledge.
"With the $25 million he started raising from the Austin Police Retirement System in 2009, he produced an annual (and now fully realized) internal rate of return of 24.8%, net of fees." First of all, 2009 was a very unique year in the industry. Second, is this a project IRR? An IRR for his investors? His GP IRR?
"Joseph Liemandt, founder and CEO of Austin's Trilogy Software, adds, "His general business acumen is unbelievable, and he is always talking about the long term."" Sounds like the kid is missing out on some short-term profits if he's always thinking long-term.
"Driving around his hometown in a Bentley, Paul proudly points out key development properties he owns in the heart of Austin." Lol
inbefore Nate joins WSO like that Tobin lady did in the IB forum.
http://www.ausprs.org/files/events_REGSPECIAL.509.pdf
http://www.aijiuyujia.com/nate-paul-world-class-capital-group.pdf
http://www.ausprs.org/files/events_REGULAR.812.pdf
One of my favorite things about reading about Paul is that every Austin Business Journal article describes him as a "magnate", "wunderkind", "powerhouse", "whiz", or "tycoon". I think it's in his press release contract.
He loves to use basically meaningless buzzwords that attract rich doctors:
“Arboretum Crossing is a flagship asset **in a **prime Austin location with significant barriers to entry,” said Nate Paul, President and CEO of World Class. “This is a unique opportunity to reposition a significant shopping center in a** highly visible location. This **asset has tremendous potential **due to its recent vacancy, which allows us to attract the right tenants in a **supply-constrained market. Arboretum Crossing is a great fit for our long-term** investment horizon **in the Austin market.”
I think Paul somehow censored my earlier comments out of existence.
He's great at raising money. (As mentioned above, started with his father's doctor friends).
There are numerous red flags and questions. In summary, He'll generate buzz, but is not known for delivering. Among unfulfilled projects, a high-rise in CBD Austin, a debt provider platform, a co-working space brand (new, TBD).
Many, many of his holdings are no/low cash-flow sites with good locations, but no development in the past 10 years in red hot Austin. What's going to happen when a downturn happens and he has to meet debt service obligations with limited cash flow?
He's recruited Jamaal Charles on his team (to raise capital?). Look up Ty Detmer and Triton to see what happened to the last Austin based CRE guy who teamed up with a NFL player to raise capital.